-----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, B/KMSDLVc4wjEV9vz0Fho9/sM3rC57JxfJ2rCWhuwbn55OnUnz1ipybYMVlYBzPt LP0MGiYuOL1A/bMRAcPwYg== 0001157523-07-010443.txt : 20071031 0001157523-07-010443.hdr.sgml : 20071030 20071030200008 ACCESSION NUMBER: 0001157523-07-010443 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20071030 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071031 DATE AS OF CHANGE: 20071030 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: 071200900 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 a5532135.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): October 30, 2007 EQUITY RESIDENTIAL (Exact Name of Registrant as Specified in its Charter) Maryland 1-12252 13-3675988 (State or other jurisdiction of (Commission (I.R.S. Employer 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 October 30, 2007, Equity Residential issued a press release announcing its results of operations and financial condition as of September 30, 2007 and for the nine 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 October 30, 2007, announcing the results of operations and financial condition of Equity Residential as of September 30, 2007 and for the nine 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: October 30, 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 October 30, 2007, announcing the results of operations and financial condition of Equity Residential as of September 30, 2007 and for the nine months and quarter then ended. EX-99.1 2 a5532135ex991.txt EXHIBIT 99.1 Exhibit 99.1 Equity Residential Reports Third Quarter Results Announces Retirement of Chief Operating Officer Gerald A. Spector CHICAGO--(BUSINESS WIRE)--Oct. 30, 2007--Equity Residential (NYSE:EQR) today reported results for the quarter and nine months ended September 30, 2007. All per share results are reported on a fully diluted basis. "Third quarter operations were much as we expected as we continue to experience moderating yet solid market conditions," said David J. Neithercut, Equity Residential's President and CEO. "And while our quarterly results were affected by the markets which have been most negatively impacted by single family housing and condominium supply issues, our diversified portfolio delivered good overall revenue growth. For the full year we should produce same-store revenue growth of 4.25 percent and expect that 2008 could produce similar results." Third Quarter 2007 For the quarter ended September 30, 2007, the company reported earnings of $1.62 per share compared to $0.19 per share in the third quarter of 2006. The increase is primarily attributable to higher gains on property sales in the third quarter of 2007. Funds from Operations (FFO) for the quarter ended September 30, 2007 were $0.58 per share compared to $0.62 per share in the same period of 2006. The decrease is primarily the result of the following items: -- Lower net gains on sales of condominium units and land sales than in the third quarter of 2006; -- Higher interest expense due primarily to higher debt balances, partially offset by reduced share count from share repurchase; -- Lower interest and other income from items such as Rent.com proceeds and forfeited deposits received in the third quarter of 2006; and -- Lower property net operating income (NOI) primarily attributable to dilution from the Lexford sale in October 2006 and other property disposition activity throughout the past two years, which is only partially offset by NOI from new acquisitions and same-store NOI increases. Nine Months Ended September 30, 2007 For the nine months ended September 30, 2007, the company reported earnings of $2.93 per share compared to $1.95 per share in the same period of 2006. FFO for the nine months ended September 30, 2007 were $1.73 per share compared to $1.78 per share in the same period of 2006. Same-Store Results On a same-store third quarter to third quarter comparison, revenues increased 3.7 percent, expenses increased 1.1 percent and NOI increased 5.3 percent. The increase in same-store revenues was driven primarily by increases in average rental rates. On a same-store nine-month to nine-month comparison, revenues increased 4.4 percent, expenses increased 2.7 percent and NOI increased 5.5 percent. Acquisitions/Dispositions "We continue to see good pricing on assets we are selling in the markets we are exiting and are successfully executing on our portfolio transformation strategy," said Mr. Neithercut. "Having purchased $1.6 billion in assets through the first nine months of the year, we expect that our acquisitions volume will be negligible for the remainder of the year as we assess pricing trends in our target markets." During the third quarter of 2007, the company acquired six properties, consisting of 1,411 apartment units, for an aggregate purchase price of $393.7 million at an average capitalization (cap) rate of 4.8 percent. The company also acquired two land parcels for $83.4 million during the quarter. Also during the quarter, the company sold 29 properties, consisting of 9,663 apartment units, for an aggregate sale price of $957.8 million at an average cap rate of 5.3 percent generating an unlevered internal rate of return (IRR) of 11.2 percent. In addition, the company sold 169 condominium units for $45.2 million and one land parcel for $5.0 million. In the first nine months of 2007, the company acquired 34 properties, consisting of 7,620 apartment units, for an aggregate purchase price of $1.6 billion at an average cap rate of 4.8 percent. The company also acquired seven land parcels for $148.8 million during the first nine months of 2007. During the nine months ended September 30, 2007, the company sold 66 properties, consisting of 19,681 apartment units, for an aggregate sale price of $1.7 billion at an average cap rate of 5.6 percent generating an unlevered IRR of 11.2 percent. In addition, the company sold 552 condominium units for $148.2 million and two land parcels for $45.7 million. Share Repurchase During the third quarter of 2007, the company repurchased and retired 6,634,140 of its common shares at an average price of $40.82 per share for an aggregate purchase of approximately $270.8 million. Through the first nine months of 2007, the company repurchased and retired 25,094,346 of its common shares at an average price of $45.30 per share for an aggregate purchase of approximately $1.1 billion. The company has not repurchased any of its shares since the end of the third quarter and currently has authorization to repurchase an additional $65.0 million 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 recorded a non-cash 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 Offering 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. Unsecured Term Loan Facility On October 11, 2007, the company closed on a new $500.0 million senior unsecured credit facility. The new facility matures on October 5, 2010, subject to two one-year extension options exercisable by the company. The rate on the facility will generally be LIBOR plus a spread which is dependent on the current credit rating on the company's long-term senior unsecured debt and is currently 42.5 basis points. Proceeds from the issuance were used to pay down the company's unsecured revolving credit facility, which has approximately $1.36 billion available as of October 30, 2007. Retirement of Chief Operating Officer Gerald A. Spector The company also announced that Gerald A. "Gerry" Spector, Equity Residential's Executive Vice President and Chief Operating Officer, after a 35 year career with Equity Residential and its predecessor companies, will retire effective December 31, 2007. Mr. Spector, 60, will continue to serve on the company's Board of Trustees in the role of Vice Chairman. The company will not name a successor. Instead Frederick C. Tuomi, the company's Executive Vice President and President of Property Management, and David S. Santee, the company's Executive Vice President of Operations, will continue to be responsible for day to day operations of the company's portfolio and all property management activities. Both executives, who had previously reported to Mr. Spector, will report directly to David J. Neithercut, Equity Residential's President and CEO. The company will not record any additional charges to either 2007 or 2008 earnings as a result of Mr. Spector's retirement. Mr. Tuomi, 52, joined Equity Residential in 1994 as Executive Vice President and President of Property Management. In this role, Mr. Tuomi has led the company's property management organization through the tremendous expansion of the company's portfolio and is responsible for the day to day operations of the company's portfolio of more than 154,000 apartment units. Mr. Tuomi began his career in the apartment industry in 1979. Mr. Santee, 48, has been the company's Executive Vice President - Property Operations since January 2007. In this role, he is responsible for the company's Revenue, Marketing, Information Technology, Facilities and Procurement groups. Mr. Santee joined Equity Residential in 1994 and has served in various senior management roles in property operations and management including serving as Executive Vice President of the company's Eastern Division with responsibility for the day-to-day operations of 70,000 apartment units. Mr. Santee began his career in the apartment industry in 1983. Mr. Spector said, "While it is never easy to step away from something you love, this change is a result of a long planned process that allows us to have our next generation of leaders take the helm. I have worked closely with Fred Tuomi and David Santee for years and am very proud of all that we have accomplished. I have great confidence in their ability to continue the work we have done together in driving our organization to leverage our state of the art operating platform across the portfolio. I look forward to continuing to make a contribution to Equity Residential by working with David Neithercut and our Board in creating value for our shareholders." "Gerry has been a great friend and mentor to me and the entire Equity Residential family for many years. He is the architect of our property management organization and led our operations through the tremendous growth and the major transformation of our portfolio. While we will miss our daily interactions with him, he will remain an important adviser to me and our board. As a testament to the terrific organization that Gerry built, we have two very talented executives with decades of experience to lead our property operations," said Mr. Neithercut. Fourth Quarter and Full Year 2007 Earnings Guidance The company has established an FFO guidance range of $0.59 to $0.62 per share for the fourth quarter of 2007 and raised the low end of its guidance range for full year 2007 to $2.32 from $2.25, resulting in a full year guidance range of $2.32 to $2.35 per share. Equity Residential expects to announce fourth quarter 2007 results on Tuesday, February 5, 2008 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, February 6, 2008. 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 584 properties located in 24 states and the District of Columbia, consisting of 154,152 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 the remainder of 2007 will take place tomorrow, Wednesday, October 31, 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) Nine Months Ended Quarter Ended September 30, September 30, ----------------------- ----------------------- 2007 2006 2007 2006 ----------- ----------- ----------- ----------- REVENUES Rental income $1,517,357 $1,329,578 $525,222 $463,279 Fee and asset management 6,937 6,878 2,234 2,071 ----------- ----------- ----------- ----------- Total revenues 1,524,294 1,336,456 527,456 465,350 ----------- ----------- ----------- ----------- EXPENSES Property and maintenance 399,863 350,752 139,363 124,877 Real estate taxes and insurance 160,458 129,648 53,452 46,006 Property management 68,956 70,079 21,694 23,418 Fee and asset management 6,604 6,477 2,100 2,151 Depreciation 441,517 374,007 151,103 129,467 General and administrative 34,651 35,875 13,137 13,522 Impairment 1,020 1,718 626 913 ----------- ----------- ----------- ----------- Total expenses 1,113,069 968,556 381,475 340,354 ----------- ----------- ----------- ----------- Operating income 411,225 367,900 145,981 124,996 Interest and other income 12,350 11,538 6,125 7,299 Interest: Expense incurred, net (361,879) (312,206) (128,964) (108,968) Amortization of deferred financing costs (8,191) (6,254) (2,036) (1,882) ----------- ----------- ----------- ----------- Income before allocation to Minority Interests, income (loss) from investments in unconsolidated entities, net gain on sales of unconsolidated entities and land parcels and discontinued operations 53,505 60,978 21,106 21,445 Allocation to Minority Interests: Operating Partnership, net (2,246) (1,657) (907) (664) Preference Interests and Units (437) (1,779) (3) (223) Partially Owned Properties (997) (2,550) (218) (482) Premium on redemption of Preference Interests - (684) - (1) Income (loss) from investments in unconsolidated entities 185 (565) 548 (190) Net gain on sales of unconsolidated entities 2,629 370 2,629 18 Net gain on sales of land parcels 5,230 3,183 714 2,937 ----------- ----------- ----------- ----------- Income from continuing operations, net of minority interests 57,869 57,296 23,869 22,840 Discontinued operations, net of minority interests 808,476 550,487 433,838 46,971 ----------- ----------- ----------- ----------- Net income 866,345 607,783 457,707 69,811 Preferred distributions (19,157) (29,682) (4,317) (9,514) Premium on redemption of Preferred Shares (6,144) (3,941) (6,144) (3,941) ----------- ----------- ----------- ----------- Net income available to Common Shares $841,044 $574,160 $447,246 $56,356 =========== =========== =========== =========== Earnings per share - basic: Income from continuing operations available to Common Shares $0.12 $0.08 $0.05 $0.03 =========== =========== =========== =========== Net income available to Common Shares $2.97 $1.98 $1.64 $0.19 =========== =========== =========== =========== Weighted average Common Shares outstanding 282,847 289,463 272,086 290,036 =========== =========== =========== =========== Earnings per share - diluted: Income from continuing operations available to Common Shares $0.11 $0.08 $0.05 $0.03 =========== =========== =========== =========== Net income available to Common Shares $2.93 $1.95 $1.62 $0.19 =========== =========== =========== =========== Weighted average Common Shares outstanding 306,052 314,982 294,331 315,886 =========== =========== =========== =========== Distributions declared per Common Share outstanding $1.3875 $1.3275 $0.4625 $0.4425 =========== =========== =========== =========== 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, ----------------------- ----------------------- 2007 2006 2007 2006 ----------- ----------- ----------- ----------- Net income $866,345 $607,783 $457,707 $69,811 Allocation to Minority Interests - Operating Partnership, net 2,246 1,657 907 664 Adjustments: Depreciation 441,517 374,007 151,103 129,467 Depreciation - Non- real estate additions (6,137) (5,615) (1,964) (1,933) Depreciation - Partially Owned and Unconsolidated Properties 3,262 3,473 1,181 910 Net gain on sales of unconsolidated entities (2,629) (370) (2,629) (18) Discontinued operations: Depreciation 24,518 66,601 3,191 13,788 Gain on sales of discontinued operations, net of minority interests (794,700) (487,907) (433,251) (18,705) Net incremental gain on sales of condominium units 19,965 31,431 6,371 12,878 Provision for income taxes - Non-condo sales (187) - - - Minority Interests - Operating Partnership 933 4,415 41 2,004 ----------- ----------- ----------- ----------- FFO (1)(2) 555,133 595,475 182,657 208,866 Preferred distributions (19,157) (29,682) (4,317) (9,514) Premium on redemption of Preferred Shares (6,144) (3,941) (6,144) (3,941) ----------- ----------- ----------- ----------- FFO available to Common Shares and OP Units - basic (1) (2) $529,832 $561,852 $172,196 $195,411 =========== =========== =========== =========== FFO available to Common Shares and OP Units - diluted (1) (2) $530,420 $562,551 $172,385 $195,630 =========== =========== =========== =========== FFO per share and OP Unit - basic $1.75 $1.81 $0.59 $0.63 =========== =========== =========== =========== FFO per share and OP Unit - diluted $1.73 $1.78 $0.58 $0.62 =========== =========== =========== =========== Weighted average Common Shares and OP Units outstanding - basic 301,986 310,012 290,977 310,671 =========== =========== =========== =========== Weighted average Common Shares and OP Units outstanding - diluted 306,557 315,584 294,819 316,455 =========== =========== =========== =========== (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) September 30, December 31, 2007 2006 ------------- ------------- ASSETS Investment in real estate Land $3,610,743 $3,217,672 Depreciable property 13,557,202 13,376,359 Projects under development 539,009 403,216 Land held for development 395,550 237,928 ------------- ------------- Investment in real estate 18,102,504 17,235,175 Accumulated depreciation (3,064,347) (3,022,480) ------------- ------------- Investment in real estate, net 15,038,157 14,212,695 Cash and cash equivalents 62,734 260,277 Investments in unconsolidated entities 3,535 4,448 Deposits - restricted 449,672 391,825 Escrow deposits - mortgage 23,042 25,528 Deferred financing costs, net 56,227 43,384 Other assets 156,218 124,062 ------------- ------------- Total assets $15,789,585 $15,062,219 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $3,576,301 $3,178,223 Notes, net 5,311,232 4,419,433 Lines of credit 640,000 460,000 Accounts payable and accrued expenses 154,363 96,699 Accrued interest payable 89,922 91,172 Other liabilities 314,696 311,557 Security deposits 62,196 58,072 Distributions payable 137,259 151,382 ------------- ------------- Total liabilities 10,285,969 8,766,538 ------------- ------------- Commitments and contingencies Minority Interests: Operating Partnership 337,613 372,961 Preference Interests and Units 184 11,684 Partially Owned Properties 26,879 26,814 ------------- ------------- Total Minority Interests 364,676 411,459 ------------- ------------- Shareholders' equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 2,014,275 shares issued and outstanding as of September 30, 2007 and 2,762,950 shares issued and outstanding as of December 31, 2006 210,357 386,574 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 271,060,946 shares issued and outstanding as of September 30, 2007 and 293,551,633 shares issued and outstanding as of December 31, 2006 2,711 2,936 Paid in capital 4,324,541 5,349,194 Retained earnings 609,991 159,528 Accumulated other comprehensive loss (8,660) (14,010) ------------- ------------- Total shareholders' equity 5,138,940 5,884,222 ------------- ------------- Total liabilities and shareholders' equity $15,789,585 $15,062,219 ============= ============= EQUITY RESIDENTIAL Portfolio Summary As of September 30, 2007 % of % of 2007 Average Total Stabilized Rental Markets Properties Units Units NOI Rate (1) ---------------- ---------- -------- -------- ---------- ---------- 1 New York Metro Area 22 6,246 4.1% 9.9% $2,538 2 South Florida 37 12,193 7.9% 8.8% 1,280 3 Los Angeles 38 7,973 5.2% 7.8% 1,730 4 DC Northern Virginia 24 8,057 5.2% 7.3% 1,605 5 Seattle/Tacoma 49 11,285 7.3% 7.0% 1,224 6 Phoenix 40 11,640 7.6% 5.8% 943 7 Boston 36 5,907 3.8% 5.8% 1,537 8 San Francisco Bay Area 33 6,623 4.3% 5.6% 1,574 9 Denver 28 9,342 6.1% 4.9% 937 10 Orlando 25 7,825 5.1% 4.8% 1,033 11 Atlanta 33 9,862 6.4% 4.4% 922 12 San Diego 14 4,491 2.9% 4.1% 1,579 13 Inland Empire CA 15 4,655 3.0% 3.5% 1,378 14 Orange County 9 3,175 2.1% 3.0% 1,563 15 Suburban Maryland 21 5,145 3.3% 3.0% 1,079 16 New England (excl Boston) 38 5,597 3.6% 2.9% 1,087 17 Dallas/Ft Worth 24 6,499 4.2% 2.5% 882 18 Portland OR 11 3,713 2.4% 1.7% 926 19 Jacksonville 11 3,471 2.3% 1.6% 911 20 Tampa/Ft Myers 11 3,414 2.2% 1.5% 931 ---------- -------- -------- ---------- ---------- Top 20 Total 519 137,113 89.0% 95.9% 1,269 21 Raleigh/Durham 16 4,032 2.6% 1.5% 770 22 Austin 9 2,985 1.9% 1.1% 863 23 Central Valley CA 10 1,595 1.0% 0.8% 1,071 24 Other EQR 18 3,942 2.6% 0.7% 840 ---------- -------- -------- ---------- ---------- Total 572 149,667 97.1% 100.0% 1,233 Condominium Conversion 11 823 0.5% - - Military Housing 1 3,662 2.4% - - ---------- -------- -------- ---------- ---------- Grand Total 584 154,152 100.0% 100.0% $1,233 ========== ======== ======== ========== ========== (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the month of September 2007. EQUITY RESIDENTIAL - ---------------------------------------------------------------------- Portfolio as of September 30, 2007 Properties Units ---------- ------------ Wholly Owned Properties 512 134,589 Partially Owned Properties: Consolidated 27 5,455 Unconsolidated 44 10,446 Military Housing (Fee Managed) 1 3,662 ---------- ------------ 584 154,152 - ---------------------------------------------------------------------- Portfolio Rollforward Q3 2007 Properties Units $ Thousands Cap Rate ---------- ---------- ------------ ---------- 6/30/2007 608 162,532 Acquisitions: Rental Properties 6 1,411 $393,680 4.8% Land Parcels (two) - - $83,397 Dispositions: Rental Properties (29) (9,663) $(957,805) 5.3% Condominium Units (1) (169) $(45,179) Land Parcel (one) - - $(5,000) Configuration Changes - 41 ---------- ---------- 9/30/2007 584 154,152 - ---------------------------------------------------------------------- Portfolio Rollforward 2007 Properties Units $ Thousands Cap Rate ---------- ---------- ------------ ---------- 12/31/2006 617 165,716 Acquisitions: Rental Properties 34 7,620 $1,619,465 4.8% Land Parcels (seven) - - $148,847 Dispositions: Rental Properties (66) (19,681) $(1,748,434) 5.6% Condominium Units (5) (552) $(148,237) Land Parcels (two) - - $(45,662) Completed Developments 4 938 Configuration Changes - 111 ---------- ---------- 9/30/2007 584 154,152 - ---------------------------------------------------------------------- EQUITY RESIDENTIAL - ---------------------------------------------------------------------- Third Quarter 2007 vs. Third Quarter 2006 Quarter over Quarter Same-Store Results/Statistics $ in Thousands (except for Average Rental Rate) - 123,139 Same-Store Units Results Statistics ------------------------------- -------------------------- Average Rental Rate Description Revenues Expenses NOI (1) (2) Occupancy Turnover - ----------- ----------- --------- --------- ------- --------- -------- Q3 2007 $439,470 $163,462 $276,008 $1,259 94.6% (18.8%) Q3 2006 $423,652 $161,658 $261,994 $1,214 94.6% (18.9%) ----------- --------- --------- ------- --------- -------- Change $15,818 $1,804 $14,014 $45 0.0% 0.1% =========== ========= ========= ======= ========= ======== Change 3.7% 1.1% 5.3% 3.7% - ---------------------------------------------------------------------- Third Quarter 2007 vs. Second Quarter 2007 Sequential Quarter over Quarter Same-Store Results/Statistics $ in Thousands (except for Average Rental Rate) - 131,011 Same-Store Units Results Statistics ------------------------------- -------------------------- Average Rental Rate Description Revenues Expenses NOI (1) (2) Occupancy Turnover - ----------- ----------- --------- --------- ------- --------- -------- Q3 2007 $469,517 $174,896 $294,621 $1,266 94.5% (19.0%) Q2 2007 $463,636 $171,833 $291,803 $1,247 94.7% (16.4%) ----------- --------- --------- ------- --------- -------- Change $5,881 $3,063 $2,818 $19 (0.2%) (2.6%) =========== ========= ========= ======= ========= ======== Change 1.3% 1.8% 1.0% 1.5% - ---------------------------------------------------------------------- September YTD 2007 vs. September YTD 2006 YTD over YTD Same-Store Results/Statistics $ in Thousands (except for Average Rental Rate) - 118,029 Same-Store Units Results Statistics ------------------------------- -------------------------- Average Rental Rate Description Revenues Expenses NOI (1) (2) Occupancy Turnover - ----------- ----------- --------- --------- ------- --------- -------- YTD 2007 $1,243,288 $463,918 $779,370 $1,237 94.7% (48.6%) YTD 2006 $1,190,619 $451,687 $738,932 $1,185 94.7% (49.5%) ----------- --------- --------- ------- --------- -------- Change $52,669 $12,231 $40,438 $52 0.0% 0.9% =========== ========= ========= ======= ========= ======== Change 4.4% 2.7% 5.5% 4.4% (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 Third Quarter 2007 vs. Third Quarter 2006 The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the Third Quarter 2007 Same-Store Properties: Quarter Ended September 30, ------------------------- 2007 2006 ------------ ------------ (Amounts in thousands) Operating income $145,981 $124,996 Adjustments: Non-same-store operating results (34,705) (6,984) Fee and asset management revenue (2,234) (2,071) Fee and asset management expense 2,100 2,151 Depreciation 151,103 129,467 General and administrative 13,137 13,522 Impairment 626 913 ------------ ------------ Same-store NOI $276,008 $261,994 ============ ============ - ---------------------------------------------------------------------- Same-Store NOI Reconciliation September YTD 2007 vs. September YTD 2006 The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the Nine-Month 2007 Same-Store Properties: Nine Months Ended September 30, ------------------------- 2007 2006 ------------ ------------ (Amounts in thousands) Operating income $411,225 $367,900 Adjustments: Non-same-store operating results (108,710) (40,167) Fee and asset management revenue (6,937) (6,878) Fee and asset management expense 6,604 6,477 Depreciation 441,517 374,007 General and administrative 34,651 35,875 Impairment 1,020 1,718 ------------ ------------ Same-store NOI $779,370 $738,932 ============ ============ EQUITY RESIDENTIAL Third Quarter 2007 vs. Third Quarter 2006 Same-Store Results by Market ------------------------------------------------------------------- 3Q 2007 3Q 2007 3Q 2007 % of Average Weighted Actual Rental Average Markets Units NOI Rate (1) Occupancy % ------------------------------------------------------------------- 1 New York Metro Area 5,288 10.0% $2,653 95.8% 2 Los Angeles 6,754 8.0% 1,712 95.0% 3 Seattle/Tacoma 8,863 7.4% 1,262 95.7% 4 South Florida 9,347 7.1% 1,302 91.9% 5 DC Northern Virginia 6,652 6.9% 1,500 94.4% 6 Boston 5,025 6.0% 1,804 95.7% 7 San Francisco Bay Area 5,541 5.9% 1,557 96.2% 8 Phoenix 9,026 5.2% 931 93.5% 9 Atlanta 8,496 4.7% 949 95.1% 10 Denver 7,349 4.3% 897 95.0% 11 San Diego 3,822 4.3% 1,606 95.4% 12 Orlando 6,473 4.2% 1,033 94.1% 13 New England (excl Boston) 5,597 3.6% 1,091 94.5% 14 Orange County 3,013 3.4% 1,566 95.8% 15 Inland Empire CA 3,712 3.3% 1,350 92.5% 16 Dallas/Ft Worth 5,469 2.9% 924 95.4% 17 Suburban Maryland 4,041 2.5% 1,089 91.4% 18 Portland OR 3,409 2.0% 938 95.9% 19 Jacksonville 3,231 1.9% 921 95.0% 20 Raleigh/Durham 3,640 1.7% 784 94.4% ------------------------------------------------ Top 20 Markets 114,748 95.3% 1,281 94.5% All Other Markets 8,391 4.7% 964 94.9% ------------------------------------------------ Total 123,139 100.0% $1,259 94.6% ================================================ ------------------------------------------ Increase (Decrease) from Prior Quarter ------------------------------------------------------------------- Average Rental Rate Markets Units Revenues Expenses NOI (1) Occupancy ------------------------------------------------------------------- 1 New York Metro Area 5,288 5.9% (0.9%) 9.4% 7.0% (1.0%) 2 Los Angeles 6,754 4.9% 1.3% 6.8% 5.5% (0.6%) 3 Seattle/Tacoma 8,863 8.8% 2.2% 12.9% 5.7% 2.6% 4 South Florida 9,347 (0.2%) 0.6% (0.8%) (0.7%) 0.3% 5 DC Northern Virginia 6,652 1.4% 1.7% 1.3% 2.4% (0.9%) 6 Boston 5,025 2.8% 0.6% 4.1% 2.2% 0.7% 7 San Francisco Bay Area 5,541 6.7% 4.0% 8.1% 6.2% 0.4% 8 Phoenix 9,026 1.6% 2.3% 1.1% 2.8% (1.1%) 9 Atlanta 8,496 4.5% 6.9% 2.7% 5.1% (0.5%) 10 Denver 7,349 5.2% 4.1% 5.9% 5.1% 0.1% 11 San Diego 3,822 3.8% (3.7%) 8.0% 3.8% 0.0% 12 Orlando 6,473 (1.6%) 2.7% (4.1%) (0.9%) (0.7%) 13 New England (excl Boston) 5,597 3.5% 0.4% 5.9% 3.5% 0.0% 14 Orange County 3,013 4.0% (4.8%) 8.5% 4.2% (0.2%) 15 Inland Empire CA 3,712 2.8% (0.7%) 4.8% 4.4% (1.6%) 16 Dallas/Ft Worth 5,469 4.3% (1.7%) 9.7% 3.5% 0.6% 17 Suburban Maryland 4,041 1.1% 7.2% (2.8%) 2.0% (0.8%) 18 Portland OR 3,409 6.7% 2.6% 9.5% 6.6% 0.0% 19 Jacksonville 3,231 4.0% 0.0% 6.7% 3.3% 0.5% 20 Raleigh/Durham 3,640 4.6% 0.2% 8.1% 5.1% (0.5%) --------------------------------------------------- Top 20 Markets 114,748 3.7% 1.4% 5.2% 3.8% (0.1%) All Other Markets 8,391 3.4% (3.0%) 8.9% 3.0% 0.4% --------------------------------------------------- Total 123,139 3.7% 1.1% 5.3% 3.7% 0.0% =================================================== (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL Third Quarter 2007 vs. Second Quarter 2007 Sequential Same-Store Results by Market ------------------------------------------------------------------- 3Q 2007 3Q 2007 3Q 2007 % of Average Weighted Actual Rental Average Markets Units NOI Rate (1) Occupancy % ------------------------------------------------------------------- 1 New York Metro Area 5,443 9.5% $2,642 95.7% 2 South Florida 11,433 8.3% 1,316 91.7% 3 Los Angeles 7,179 8.0% 1,737 94.9% 4 Seattle/Tacoma 9,262 7.2% 1,260 95.7% 5 DC Northern Virginia 6,870 6.8% 1,508 94.4% 6 Boston 5,649 6.4% 1,827 95.9% 7 San Francisco Bay Area 5,793 5.7% 1,542 95.9% 8 Phoenix 9,986 5.4% 930 92.9% 9 Orlando 7,543 4.6% 1,040 94.3% 10 Denver 8,045 4.5% 921 95.0% 11 Atlanta 8,678 4.5% 951 95.1% 12 San Diego 3,822 4.0% 1,606 95.4% 13 Inland Empire CA 4,355 3.6% 1,366 92.7% 14 New England (excl Boston) 5,597 3.3% 1,091 94.5% 15 Orange County 3,175 3.3% 1,559 95.7% 16 Dallas/Ft Worth 5,469 2.7% 924 95.4% 17 Suburban Maryland 4,041 2.4% 1,089 91.4% 18 Portland OR 3,409 1.9% 938 95.9% 19 Jacksonville 3,231 1.8% 921 95.0% 20 Raleigh/Durham 3,640 1.6% 784 94.4% -------------------------------------------------- Top 20 Markets 122,620 95.5% 1,287 94.4% All Other Markets 8,391 4.5% 964 94.9% -------------------------------------------------- Total 131,011 100.0% $1,266 94.5% ================================================== ------------------------------------------ Increase (Decrease) from Prior Quarter ------------------------------------------------------------------- Average Rental Rate Markets Units Revenues Expenses NOI (1) Occupancy ------------------------------------------------------------------- 1 New York Metro Area 5,443 1.9% (1.1%) 3.3% 2.6% (0.7%) 2 South Florida 11,433 (1.9%) (0.1%)(3.0%) (0.2%) (1.6%) 3 Los Angeles 7,179 2.0% 5.9% 0.2% 2.4% (0.4%) 4 Seattle/Tacoma 9,262 3.5% 2.7% 4.0% 2.6% 0.8% 5 DC Northern Virginia 6,870 1.6% (4.9%) 4.9% 2.3% (0.7%) 6 Boston 5,649 0.5% (5.1%) 4.0% 0.2% 0.3% 7 San Francisco Bay Area 5,793 2.4% 3.8% 1.6% 2.5% (0.1%) 8 Phoenix 9,986 (0.8%) 6.3% (4.8%) (0.4%) (0.4%) 9 Orlando 7,543 0.6% 1.8% (0.1%) 0.0% 0.6% 10 Denver 8,045 3.2% 8.6% 0.3% 3.7% (0.5%) 11 Atlanta 8,678 2.2% 5.9% (0.5%) 2.2% 0.0% 12 San Diego 3,822 1.7% 4.4% 0.5% 1.0% 0.6% 13 Inland Empire CA 4,355 0.6% 7.9% (3.1%) 1.8% (1.1%) 14 New England (excl Boston) 5,597 1.1% (6.6%) 7.8% 1.3% (0.2%) 15 Orange County 3,175 1.9% 2.4% 1.7% 1.6% 0.3% 16 Dallas/Ft Worth 5,469 2.1% 2.5% 1.8% 1.6% 0.4% 17 Suburban Maryland 4,041 (1.3%) 6.8% (6.3%) 1.1% (2.2%) 18 Portland OR 3,409 2.6% 2.8% 2.5% 2.8% (0.2%) 19 Jacksonville 3,231 1.3% 0.0% 2.2% 0.9% 0.4% 20 Raleigh/Durham 3,640 2.0% 5.4% (0.4%) 2.8% (0.7%) ---------------------------------------------------- Top 20 Markets 122,620 1.3% 1.9% 0.9% 1.6% (0.3%) All Other Markets 8,391 1.4% 0.5% 2.1% 1.1% 0.2% ---------------------------------------------------- Total 131,011 1.3% 1.8% 1.0% 1.5% (0.2%) ==================================================== (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL September YTD 2007 vs. September YTD 2006 Same-Store Results by Market ------------------------------------------------------------------- Sep YTD 07 Sep YTD 07 Sep YTD 07 % of Average Weighted Actual Rental Average Markets Units NOI Rate (1) Occupancy % ------------------------------------------------------------------- 1 New York Metro Area 5,153 9.8% $2,572 96.1% 2 Los Angeles 6,221 7.9% 1,697 95.3% 3 Seattle/Tacoma 8,532 7.2% 1,229 95.0% 4 DC Northern Virginia 6,246 6.6% 1,470 94.8% 5 South Florida 7,662 6.5% 1,314 93.3% 6 San Francisco Bay Area 5,541 6.1% 1,527 96.0% 7 Boston 4,677 5.7% 1,804 94.8% 8 Phoenix 9,026 5.7% 931 93.8% 9 Atlanta 7,938 4.6% 910 95.4% 10 Orlando 6,473 4.5% 1,037 93.8% 11 Denver 7,013 4.3% 877 95.3% 12 San Diego 3,486 4.1% 1,583 94.9% 13 New England (excl Boston) 5,597 3.6% 1,079 94.4% 14 Inland Empire CA 3,712 3.5% 1,331 93.6% 15 Orange County 3,013 3.5% 1,541 95.6% 16 Dallas/Ft Worth 5,319 2.9% 901 95.0% 17 Suburban Maryland 4,041 2.8% 1,076 92.8% 18 Portland OR 3,409 2.1% 920 95.7% 19 Jacksonville 3,231 2.0% 912 94.7% 20 Raleigh/Durham 3,348 1.6% 764 94.9% ------------------------------------------------ Top 20 Markets 109,638 95.0% 1,259 94.7% All Other Markets 8,391 5.0% 954 95.1% ------------------------------------------------ Total 118,029 100.0% $1,237 94.7% ================================================ ------------------------------------------ Increase (Decrease) from Prior Year ------------------------------------------------------------------- Average Rental Rate Markets Units Revenues Expenses NOI (1) Occupancy ------------------------------------------------------------------- 1 New York Metro Area 5,153 6.4% 1.3% 9.2% 6.7% (0.3%) 2 Los Angeles 6,221 5.5% 0.7% 7.9% 4.8% 0.6% 3 Seattle/Tacoma 8,532 7.0% 2.7% 9.7% 6.4% 0.5% 4 DC Northern Virginia 6,246 3.3% 7.5% 1.3% 3.9% (0.5%) 5 South Florida 7,662 1.1% 4.5% (1.2%) 1.6% (0.6%) 6 San Francisco Bay Area 5,541 7.0% 3.6% 8.8% 6.7% 0.2% 7 Boston 4,677 2.5% 0.3% 3.9% 2.6% 0.0% 8 Phoenix 9,026 4.8% 3.6% 5.5% 6.0% (1.0%) 9 Atlanta 7,938 4.9% 3.8% 5.7% 4.7% 0.2% 10 Orlando 6,473 0.9% 6.0% (2.0%) 1.8% (0.8%) 11 Denver 7,013 4.9% 4.8% 4.9% 4.3% 0.5% 12 San Diego 3,486 4.2% (1.3%) 7.0% 3.8% 0.4% 13 New England (excl Boston) 5,597 5.2% 1.5% 8.4% 3.7% 1.3% 14 Inland Empire CA 3,712 4.0% 2.6% 4.6% 3.4% 0.4% 15 Orange County 3,013 4.4% (0.4%) 6.8% 3.9% 0.4% 16 Dallas/Ft Worth 5,319 3.5% 0.5% 6.1% 3.2% 0.3% 17 Suburban Maryland 4,041 1.3% 7.8% (2.7%) 1.9% (0.6%) 18 Portland OR 3,409 7.7% 2.1% 11.7% 7.4% 0.3% 19 Jacksonville 3,231 3.1% 2.3% 3.6% 3.1% (0.1%) 20 Raleigh/Durham 3,348 4.5% 2.1% 6.4% 4.9% (0.4%) -------------------------------------------------- Top 20 Markets 109,638 4.4% 2.9% 5.3% 4.4% 0.0% All Other Markets 8,391 4.8% 0.5% 8.3% 4.4% 0.3% -------------------------------------------------- Total 118,029 4.4% 2.7% 5.5% 4.4% 0.0% ================================================== (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 September 30, 2007 (Amounts in thousands) Weighted Weighted Average Average Maturities Amounts (1) % of Total Rates (1) (years) ----------- ---------- --------- ---------- Secured $3,576,301 37.5% 5.75% 7.7 Unsecured 5,951,232 62.5% 5.66% 6.6 ----------- ---------- --------- ---------- Total $9,527,533 100.0% 5.70% 7.0 =========== ========== ========= ========== Fixed Rate Debt: Secured - Conventional $2,426,424 25.4% 6.14% 4.8 Unsecured - Public/Private 5,052,255 53.0% 5.64% 6.6 Unsecured - Tax Exempt 111,390 1.2% 5.06% 21.6 ----------- ---------- --------- ---------- Fixed Rate Debt 7,590,069 79.6% 5.79% 6.3 ----------- ---------- --------- ---------- Floating Rate Debt: Secured - Conventional 494,942 5.2% 7.48% 5.4 Secured - Tax Exempt 654,935 6.9% 3.06% 20.3 Unsecured - Public 147,587 1.6% 6.61% 1.7 Unsecured - Revolving Credit Facility 640,000 6.7% 5.69% 4.4 ----------- ---------- --------- ---------- Floating Rate Debt 1,937,464 20.4% 5.37% 9.6 ----------- ---------- --------- ---------- Total $9,527,533 100.0% 5.70% 7.0 =========== ========== ========= ========== (1) Net of the effect of any derivative instruments. Weighted average rates are for the nine months ended September 30, 2007. Note: The Company capitalized interest of approximately $30.8 million and $13.2 million during the nine months ended September 30, 2007 and 2006, respectively. The Company capitalized interest of approximately $12.9 million and $5.4 million during the quarters ended September 30, 2007 and 2006, respectively. Debt Maturity Schedule as of September 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 $ 69,011 $ 37,678 $ 106,689 1.1% 5.60% 6.19% 2008 465,027 137,016 602,043 6.3% 6.65% 6.58% 2009 457,861 426,641 884,502 9.3% 6.35% 5.42% 2010 279,947 26,236 306,183 3.2% 7.05% 7.11% 2011 (2) 1,488,370 24,150 1,512,520 15.9% 5.55% 5.52% 2012 (3) 907,448 640,000 1,547,448 16.3% 6.08% 5.81% 2013 565,757 - 565,757 5.9% 5.93% 5.93% 2014 504,809 - 504,809 5.3% 5.27% 5.27% 2015 355,314 - 355,314 3.7% 6.41% 6.41% 2016 1,089,046 - 1,089,046 11.4% 5.32% 5.32% 2017+ 1,407,479 645,743 2,053,222 21.6% 6.11% 5.68% ---------- ---------- ---------- ------ -------- -------- Total $7,590,069 $1,937,464 $9,527,533 100.0% 5.91% 5.74% ========== ========== ========== ====== ======== ======== (1) Net of the effect of any derivative instruments. Weighted average rates are as of September 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 $640.0 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 September 30, 2007 (Amounts in thousands) Unamortized Coupon Due Face Premium/ Net Rate Date Amount (Discount) Balance ------------------------------------------------------- Fixed Rate Notes: 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 (468) 299,532 6.950% 03/02/11 300,000 3,061 303,061 6.625% 03/15/12 400,000 (1,309) 398,691 5.500% 10/01/12 350,000 (1,726) 348,274 5.200% 04/01/13 400,000 (651) 399,349 5.250% 09/15/14 500,000 (428) 499,572 6.584% 04/13/15 300,000 (837) 299,163 5.125% 03/15/16 500,000 (453) 499,547 5.375% 08/01/16 400,000 (1,639) 398,361 5.750% 06/15/17 650,000 (4,959) 645,041 7.125% 10/15/17 150,000 (651) 149,349 7.570% 08/15/26 140,000 - 140,000 3.850% 08/15/26 (3) 650,000 (7,685) 642,315 Floating Rate Adjustments (2) (150,000) - (150,000) ----------------------------------- 5,070,000 (17,745) 5,052,255 ----------------------------------- 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) (2,413) - (2,413) ----------------------------------- 147,587 - 147,587 ----------------------------------- Revolving Credit Facility: 02/28/12 (4) 640,000 - 640,000 ----------------------------------- Total Unsecured Debt $5,968,977 $(17,745) $5,951,232 =================================== (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 September 30, June 30, 2007 2007 ------------- ------------- Total Debt to Adjusted Total Assets (not to exceed 60%) 50.6% 49.7% Secured Debt to Adjusted Total Assets (not to exceed 40%) 19.0% 17.0% Consolidated Income Available for Debt Service to Maximum Annual Service Charges (must be at least 1.5 to 1) 2.16 2.28 Total Unsecured Assets to Unsecured Debt (must be at least 150%) 215.0% 208.9% 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 September 30, 2007 (Amounts in thousands except for share and per share amounts) Secured Debt $3,576,301 37.5% Unsecured Debt 5,311,232 55.8% Revolving Credit Facility 640,000 6.7% ----------- -------- Total Debt 9,527,533 100.0% 43.3% Common Shares 271,060,946 93.6% OP Units 18,567,974 6.4% ----------- -------- Total Shares and OP Units 289,628,920 100.0% Common Share Equivalents (see below) 477,023 ----------- Total outstanding at quarter-end 290,105,943 Common Share Price at September 30, 2007 $42.36 ----------- 12,288,888 98.4% Perpetual Preferred Equity (see below) 200,000 1.6% ----------- -------- Total Equity 12,488,888 100.0% 56.7% Total Market Capitalization $22,016,421 100.0% Convertible Preferred Equity as of September 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 11/1/98 388,916 $9,723 $1.75 7.00% Series H 6/30/98 25,359 634 1.75 Junior Preference Units: 8.00% Series B 7/29/09 7,367 184 2.00 ------------ ----------- Total Convertible Preferred Equity 421,642 $10,541 Annual Weighted Common Dividend Average Conversion Share Series Amount Rate Ratio Equivalents - ---------------------- ----------- ----------- ----------- ----------- Preferred Shares: 7.00% Series E $681 1.1128 432,786 7.00% Series H 44 1.4480 36,720 Junior Preference Units: 8.00% Series B 15 1.020408 7,517 ----------- ----------- Total Convertible Preferred Equity $740 7.02% 477,023 Perpetual Preferred Equity as of September 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: 8.29% 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 1,600,000 $200,000 Annual Weighted Dividend Average Series Amount Rate - ----------------------- ----------- ----------- Preferred Shares: 8.29% Series K $4,145 6.48% Series N 9,720 ----------- Total Perpetual Preferred Equity $13,865 6.93% EQUITY RESIDENTIAL Common Share and Operating Partnership Unit (OP Unit) Weighted Average Amounts Outstanding YTD 3Q07 YTD 3Q06 3Q07 3Q06 ----------- ----------- ----------- ----------- Weighted Average Amounts Outstanding for Net Income Purposes: Common Shares - basic 282,846,740 289,462,778 272,086,433 290,035,523 Shares issuable from assumed conversion/vesting of: - OP Units 19,139,417 20,549,456 18,890,937 20,635,182 - share options / restricted shares 4,065,352 4,970,074 3,353,744 5,215,312 ----------- ----------- ----------- ----------- Total Common Shares and OP Units - diluted 306,051,509 314,982,308 294,331,114 315,886,017 Weighted Average Amounts Outstanding for FFO Purposes: Common Shares - basic 282,846,740 289,462,778 272,086,433 290,035,523 OP Units - basic 19,139,417 20,549,456 18,890,937 20,635,182 ----------- ----------- ----------- ----------- Total Common Shares and OP Units - basic 301,986,157 310,012,234 290,977,370 310,670,705 Shares issuable from assumed conversion/vesting of: - convertible preferred shares/units 505,601 601,388 488,324 568,801 - share options / restricted shares 4,065,352 4,970,074 3,353,744 5,215,312 ----------- ----------- ----------- ----------- Total Common Shares and OP Units - diluted 306,557,110 315,583,696 294,819,438 316,454,818 Period Ending Amounts Outstanding: Common Shares - basic 271,060,946 OP Units - basic 18,567,974 ----------- Total Common Shares and OP Units - basic 289,628,920 EQUITY RESIDENTIAL Partially Owned Entities as of September 30, 2007 (Amounts in thousands except for project and unit amounts) Consolidated ------------------------------------------------------ Development Projects ---------------------------------- Held for Completed, and/or Not Completed Under Stabilized and Development (4) Stabilized Other Total ------------ ---------- ---------- --------- --------- Total projects(1) - 2 4 21 27 ------------ ---------- ---------- --------- --------- Total units(1) - 572 977 3,906 5,455 ------------ ---------- ---------- --------- --------- Operating information for the nine months ended 9/30/07 (at 100%): Operating revenue $7 $3,186 $12,510 $42,006 $57,709 Operating expenses 784 3,724 4,361 14,715 23,584 ------------ ---------- ---------- --------- --------- Net operating income (loss) (777) (538) 8,149 27,291 34,125 Depreciation - 2,547 4,383 10,353 17,283 Other 28 - - 111 139 ------------ ---------- ---------- --------- --------- Operating income (loss) (805) (3,085) 3,766 16,827 16,703 Interest and other income 53 20 116 859 1,048 Interest: Expense incurred, net (406) (3,473) (2,539) (15,079) (21,497) Amortization of deferred financing costs (12) - (36) (84) (132) ------------ ---------- ---------- --------- --------- Net income (loss) $(1,170) $(6,538) $1,307 $2,523 $(3,878) ============ ========== ========== ========= ========= Debt - Secured (2): EQR Ownership (3) $336,037 $98,141 $61,000 $286,823 $782,001 Minority Ownership - - - 13,321 13,321 ------------ ---------- ---------- --------- --------- Total (at 100%) $336,037 $98,141 $61,000 $300,144 $795,322 ============ ========== ========== ========= ========= Unconsolidated ---------------- Institutional Joint Ventures ---------------- Total projects(1) 44 ---------------- Total units(1) 10,446 ---------------- Operating information for the nine months ended 9/30/07 (at 100%): Operating revenue $78,456 Operating expenses 36,105 ---------------- Net operating income (loss) 42,351 Depreciation 16,218 Other 319 ---------------- Operating income (loss) 25,814 Interest and other income 486 Interest: Expense incurred, net (28,090) Amortization of deferred financing costs (463) ---------------- Net income (loss) $(2,253) ================ 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 September 30, 2007 (Amounts in thousands except for project and unit amounts) Total Book Value Not No. Total Total Book Placed of Capital Value To in Total Projects Location Units Cost (1) Date Service Debt - ---------------------------------------------------------------------- Projects Under Development - Wholly Owned: - ------------- West End Apartments (a.k.a. Emerson/CRP II) Boston, MA 310 $167,953 $116,730 $116,730 $- Redmond Ridge Redmond, WA 321 55,457 32,401 32,401 - 70 Greene (a.k.a. 77 Jersey Hudson) City, NJ 480 269,958 88,132 88,132 - Crowntree Lakes Orlando, FL 352 58,628 25,157 25,157 - Key Isle at Windermere II Orlando, FL 165 29,058 12,995 12,995 - Reserve at Town Center Mill Creek, II WA 100 23,485 4,772 4,772 - --------------------------------------------- Projects Under Development - Wholly Owned 1,728 604,539 280,187 280,187 - Projects Under Development - Partially Owned: - ------------- Silver Silver Spring Spring, MD 457 147,454 73,101 73,101 38,546 303 Third Cambridge, Street MA 531 248,307 101,864 101,864 26,235 City Lofts Chicago, IL 278 71,109 40,588 40,588 14,899 Alta Pacific(2) Irvine, CA 132 46,416 35,916 35,916 28,260 Montclair Montclair, Metro NJ 163 48,730 7,353 7,353 1 --------------------------------------------- Projects Under Development - Partially Owned 1,561 562,016 258,822 258,822 107,941 --------------------------------------------- Projects Under Development 3,289 1,166,555 539,009 539,009 107,941 --------------------------------------------- Land Held for Development N/A - 395,550 395,550 228,096 --------------------------------------------- Land/Projects Held for and/or Under Development 3,289 1,166,555 934,559 934,559 336,037 --------------------------------------------- Completed Not Stabilized - Wholly Owned (4): - ------------- Bella Vista Woodland III Hills, CA 264 73,336 73,097 - - Highland Glen Westwood, II MA 102 21,620 18,700 - - --------------------------------------------- Projects Completed Not Stabilized - Wholly Owned 366 94,956 91,797 - - Completed Not Stabilized - Partially Owned (4): - ------------- Mozaic (a.k.a. Los Union Angeles, Station) CA 272 69,661 67,832 - 44,333 Vintage Ontario, CA 300 54,364 54,364 - 53,808 --------------------------------------------- Projects Completed Not Stabilized - Partially Owned 572 124,025 122,196 - 98,141 --------------------------------------------- Projects Completed Not Stabilized 938 218,981 213,993 - 98,141 --------------------------------------------- Completed and Stabilized During the Quarter: - ------------- Washington, 2400 M St(3) D.C. 359 111,947 107,896 - - --------------------------------------------- Projects Completed and Stabilized During the Quarter 359 111,947 107,896 - - --------------------------------------------- Total Projects 4,586 $1,497,483 $1,256,448 $934,559 $434,178 ============================================= NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Projects Under Development Completed Not Stabilized Completed and Stabilized During the Quarter Total Development / Newly Stabilized NOI Contri- bution Percentage Percentage Percentage Projects Location Completed Leased Occupied - ---------------------------------------------------------------------- Projects Under Development - Wholly Owned: - ------------------------ West End Apartments (a.k.a. Emerson/CRP II) Boston, MA 81% 14% - Redmond Ridge Redmond, WA 60% 5% - 70 Greene (a.k.a. 77 Jersey Hudson) City, NJ 35% - - Crowntree Lakes Orlando, FL 32% - - Key Isle at Windermere II Orlando, FL 31% - - Reserve at Town Center Mill Creek, II WA 4% - - Projects Under Development - Wholly Owned Projects Under Development - Partially Owned: - ------------------------ Silver Silver Spring Spring, MD 44% - - Cambridge, 303 Third Street MA 34% - - City Lofts Chicago, IL 64% - - Alta Pacific(2) Irvine, CA 69% - - Montclair, Montclair Metro NJ 5% - - 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 (4): - ------------------------ Woodland Bella Vista III Hills, CA 45% 39% Westwood, Highland Glen II MA 26% 19% Projects Completed Not Stabilized - Wholly Owned Completed Not Stabilized - Partially Owned (4): - ------------------------ Los Mozaic (a.k.a. Union Angeles, Station) CA 90% 87% Vintage Ontario, CA 91% 89% Projects Completed Not Stabilized - Partially Owned Projects Completed Not Stabilized Completed and Stabilized During the Quarter: - ------------------------ Washington, 2400 M St(3) D.C. 97% 96% Projects Completed and Stabilized During the Quarter Total Projects Total Q3 2007 Capital NOI CONTRIBUTION FROM Cost (1) NOI DEVELOPMENT PROJECTS ----------- ---------- Projects Under Development $1,166,555 $(199) Completed Not Stabilized 218,981 677 Completed and Stabilized During the Quarter 111,947 2,255 ----------- ---------- Total Development / Newly Stabilized NOI Contri- bution $1,497,483 $2,733 =========== ========== Estimated Estimated Completion Stabilization Projects Location Date Date - ---------------------------------------------------------------------- Projects Under Development - Wholly Owned: - ------------------------------- West End Apartments (a.k.a. 2Q 2008 1Q 2009 Emerson/CRP II) Boston, MA Redmond Ridge Redmond, WA 2Q 2008 3Q 2010 Jersey 3Q 2009 4Q 2010 70 Greene (a.k.a. 77 Hudson) City, NJ Crowntree Lakes Orlando, FL 3Q 2008 3Q 2009 Key Isle at Windermere II Orlando, FL 4Q 2008 1Q 2009 Mill Creek, 2Q 2010 4Q 2010 Reserve at Town Center II WA Projects Under Development - Wholly Owned Projects Under Development - Partially Owned: - ------------------------------- Silver 4Q 2008 3Q 2010 Silver Spring Spring, MD Cambridge, 3Q 2008 1Q 2010 303 Third Street MA City Lofts Chicago, IL 3Q 2008 2Q 2009 Alta Pacific(2) Irvine, CA 1Q 2008 3Q 2008 Montclair, 2Q 2009 1Q 2010 Montclair Metro NJ 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 (4): - ------------------------------- Woodland Completed 2Q 2008 Bella Vista III Hills, CA Westwood, Completed 2Q 2008 Highland Glen II MA Projects Completed Not Stabilized - Wholly Owned Completed Not Stabilized - Partially Owned (4): - ------------------------------- Los Completed 1Q 2008 Angeles, Mozaic (a.k.a. Union Station) CA Vintage Ontario, CA Completed 1Q 2008 Projects Completed Not Stabilized - Partially Owned Projects Completed Not Stabilized Completed and Stabilized During the Quarter: - ------------------------------- Washington, Completed Stabilized 2400 M St(3) D.C. 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 Contri- bution (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 $12.3 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 9/30/07. (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 September 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 ClosedAvailable - ---------------------------------------------------------------------- For Sale - -------------- Milano Terrace Scotts- Q2 2005 Q1 2008 dale, AZ 224 201 4 19 South Palm Tamarac, Q2 2005 Q4 2007 Place FL 208 200 4 4 Chantecleer Naper- Q4 2005 Q4 2007 Lakes ville, IL 304 295 5 4 Park Blooming- Q2 2006 Q2 2008 Bloomingdale dale, IL 250 164 11 75 Belle Arts Bellevue, Q4 2006 Q1 2008 WA 128 108 4 16 Pacific Cove Playa Del Q3 2006 Q4 2007 Ray, CA 80 77 2 1 Arrington Issaquah, Q1 2007 Q3 2008 Place WA 130 31 6 93 Sage Everett, Q2 2007 Q3 2008 WA 123 - 1 122 The Alexandria Los Q3 2007 Q4 2008 Angeles, CA 104 - - 104 Mission Verde San Jose, Q3 2007 Q1 2009 CA 108 - - 108 ---------------------------- 1,659 1,076 37 546 Closed Out - -------------- Timber Ridge Woodin- Q1 2005 Q1 2007 ville, WA 203 203 - - Braewood Bothell, Q2 2005 Q1 2007 WA 84 84 - - Fairway Greens Pembroke Q1 2005 Q2 2007 Pines, FL 152 152 - - Fifth Avenue Seattle, Q2 2005 Q2 2007 North WA 62 62 - - Parkside (2) Seattle, Q4 2005 Q3 2007 WA 44 44 - - Projects closed out prior to 2007 3,744 3,744 - - ---------------------------- 4,289 4,289 - - Totals 15 5,948 5,365 37 546 ============================ 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 (4) Net Income - Condominium Division (5) 2007 YTD Activity ------------------------------------------ FFO Incremental Gain on Sale Projects Location Units Closed Sales Price (3) - --------------------------- ------------------------------------------ For Sale - -------------- Milano Terrace Scotts- dale, AZ 48 $11,756 $2,019 South Palm Tamarac, FL Place 91 18,537 802 Chantecleer Naper- Lakes ville, IL 89 14,363 2,127 Park Blooming- Bloomingdale dale, IL 86 14,209 1,200 Belle Arts Bellevue, WA 108 35,954 4,990 Pacific Cove Playa Del Ray, CA 77 38,029 5,564 Arrington Issaquah, WA Place 31 7,584 1,063 Sage Everett, WA - - - The Alexandria Los Angeles, CA - - - Mission Verde San Jose, CA - - - ------------------------------------------ 530 140,432 17,765 Closed Out - -------------- Timber Ridge Woodin- ville, WA 4 1,059 414 Braewood Bothell, WA 2 573 (32) Fairway Greens Pembroke Pines, FL 2 410 138 Fifth Avenue Seattle, WA North 6 2,001 298 Parkside (2) Seattle, WA 8 3,762 310 Projects closed out prior to 2007 - - (120) ------------------------------------------ 22 7,805 1,008 Totals 552 $148,237 $18,773 ========================================== Gross incremental gain on sales of condominium units (3) $18,773 Provision for income taxes 1,192 -------------- Net incremental gain on sales of condominium units (3) 19,965 Corporate overhead (property management expense) (3,677) Other expenses (465) Discontinued operating income (loss) (3,925) Operating income of halted conversions (4) 2,852 -------------- Net Income - Condominium Division (5) $14,750 ============== 3Q 2007 ------------------------------------------ FFO Incremental Gain on Sale Projects Location Units Closed Sales Price (3) - --------------------------- ------------------------------------------ For Sale - -------------- Milano Terrace Scotts- dale, AZ 9 $2,258 $407 South Palm Tamarac, FL Place 20 4,109 (90) Chantecleer Naper- Lakes ville, IL 30 5,065 619 Park Blooming- Bloomingdale dale, IL 31 5,740 313 Belle Arts Bellevue, WA 27 9,068 1,283 Pacific Cove Playa Del Ray, CA 20 10,273 1,470 Arrington Issaquah, WA Place 31 7,584 1,063 Sage Everett, WA - - - The Alexandria Los Angeles, CA - - - Mission Verde San Jose, CA - - - ------------------------------------------ 168 44,097 5,065 Closed Out - -------------- Timber Ridge Woodin- ville, WA - - (21) Braewood Bothell, WA - - (54) Fairway Greens Pembroke Pines, FL - - (4) Fifth Avenue Seattle, WA North - - (13) Parkside (2) Seattle, WA 1 1,082 277 Projects closed out prior to 2007 - - (64) ------------------------------------------ 1 1,082 121 Totals 169 $45,179 $5,186 ========================================== Gross incremental gain on sales of condominium units (3) $5,186 Provision for income taxes 1,185 -------------- Net incremental gain on sales of condominium units (3) 6,371 Corporate overhead (property management expense) (1,235) Other expenses (247) Discontinued operating income (loss) (1,211) Operating income of halted conversions (4) 1,546 -------------- Net Income - Condominium Division (5) $5,224 ============== (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 approximately 2,600 square feet of retail space, which amounted to a gain of $279,600 on proceeds of $650,000. (3) Amounts are net of $1,682,000 and $491,000 in reserves for potential homeowners' disputes for the nine months and quarter ended September 30, 2007, respectively. (4) Halted conversions includes the results of Dania Beach Club, Azure Creek, Alameda Ranch, Bella Vista, Oaks at Falls Church and Regency Park. (5) 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). EQUITY RESIDENTIAL Maintenance Expenses and Capitalized Improvements to Real Estate For the Nine Months Ended September 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) 105,442 $59,147 $561 $51,463 $488 $110,610 $1,049 New Acquisition Properties (7) 27,216 15,711 634 12,846 519 28,557 1,153 Other (8) 7,386 13,246 11,869 25,115 ------- ------- ------- -------- Total 140,044 $88,104 $76,178 $164,282 ======= ======= ======= ======== ----------------------------------------------------- Capitalized Improvements to Real Estate ----------------------------------------------------- Avg. Building Avg. Avg. Replacements Per Improvements Per Per (4) Unit (5) Unit Total Unit ------------------- ------------------ -------------- Established Properties (6) $28,795 $273 $53,747 $510 $82,542 $783 New Acquisition Properties (7) 7,115 287 46,013 1,857 53,128 2,144 Other (8) 14,364 35,267 49,631 ------------- ------------ -------- Total $50,274 $135,027 $185,301 ============= ============ ======== ------------------ Total Expenditures ------------------ Avg. Per Grand Total Unit ------------------ Established Properties (6) $193,152 $1,832 New Acquisition Properties (7) 81,685 3,297 Other (8) 74,746 ----------- Total $349,583 =========== (1) Total units exclude 10,446 unconsolidated units and 3,662 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 24,776 units. (8) Includes properties either partially owned or sold during the period, commercial space, corporate housing, condominium conversions and $16.8 million included in building improvements spent on eighteen specific assets related to major renovations and repositioning of these assets. EQUITY RESIDENTIAL Discontinued Operations (Amounts in thousands) Nine Months Ended, Quarter Ended September 30, September 30, ------------------- ------------------ 2007 2006 2007 2006 ------------------- ------------------ REVENUES Rental income $90,916 $304,160 $13,503 $95,225 --------- --------- --------- -------- Total revenues 90,916 304,160 13,503 95,225 --------- --------- --------- -------- EXPENSES (1) Property and maintenance 36,881 101,064 8,111 32,023 Real estate taxes and insurance 11,271 38,408 1,565 11,087 Property management 291 8,896 27 2,959 Depreciation 24,518 66,720 3,191 13,788 General and administrative 34 704 22 197 Impairment - 351 - - --------- --------- --------- -------- Total expenses 72,995 216,143 12,916 60,054 --------- --------- --------- -------- Discontinued operating income 17,921 88,017 587 35,171 Interest and other income 170 1,649 37 508 Interest (2): Expense incurred, net (2,053) (21,833) 4 (5,345) Amortization of deferred financing costs (1,329) (838) - (64) --------- --------- --------- -------- Discontinued operations 14,709 66,995 628 30,270 Minority Interests - Operating Partnership (933) (4,415) (41) (2,004) --------- --------- --------- -------- Discontinued operations, net of minority interests 13,776 62,580 587 28,266 --------- --------- --------- -------- Net gain on sales of discontinued operations 848,495 522,328 463,172 20,031 Minority Interests - Operating Partnership (53,795) (34,421) (29,921) (1,326) --------- --------- --------- -------- Gain on sales of discontinued operations, net of minority interests 794,700 487,907 433,251 18,705 --------- --------- --------- -------- Discontinued operations, net of minority interests $808,476 $550,487 $433,838 $46,971 ========= ========= ========= ======== (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 Q3 2007 to Actual Q3 2007 ---------------------- Amounts Per Share ----------- ---------- Guidance midpoint Q3 2007 FFO - Diluted (1) (2) $166,762 $0.557 Property NOI 1,609 0.005 CFO charge (general and administrative expense) (923) (0.003) Interest expense (excluding debt extinguishment): Share repurchase (1,571) (0.005) Net acquisition/disposition activity and other 2,817 0.009 Amortization of deferred financing costs (excluding debt extinguishment) (127) - Debt extinquishment costs: Prepayment penalties 516 0.002 Write-off of unamortized deferred financing costs 781 0.003 Net income - Condominium division (after taxes/overhead/operations) 1,231 0.004 Net gain on sales of land parcels 714 0.002 Other 576 0.002 Weighted average share count adjustment - 0.009 ----------- ---------- Actual Q3 2007 FFO - Diluted (1) (2) $172,385 $0.585 =========== ========== Non-Comparable Items (3) Nine Months Ended Quarter Ended September 30, September 30, ----------------- ------------------ 2007 2006 2007 2006 -------- -------- --------- -------- Florida litigation reserve reduction (general and administrative expense) $1,667 $2,843 $- $- Performance shares (general and administrative expense) (429) (2,702) (210) (1,131) CFO charge (general and administrative expense) (923) - (923) - Impairment (including discontinued operations) (1,020) (2,069) (626) (913) Additional Rent.com proceeds (interest and other income) - 3,690 - 3,690 Forfeited deposits (interest and other income) 144 2,315 104 2,125 Debt extinquishment costs (interest): Prepayment penalties (3,339) (2,901) (298) (9) Write-off of unamortized deferred financing costs (3,835) (1,608) (7) (66) Premium on redemption of Preference Interests - (684) - (1) Premium on redemption of Preferred Shares (6,144) (3,941) (6,144) (3,941) Net gain on sales of land parcels 5,230 3,183 714 2,937 Net incremental gain on sales of condominium units 19,965 31,431 6,371 12,878 Other 659 782 659 - -------- -------- --------- -------- Net non-comparable items (3) $11,975 $30,339 $(360) $15,569 ======== ======== ========= ======== Note: See page 29 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) - ---------------------------------------------------------------------- Q4 2007 2007 --------------- --------------- Expected FFO (1) (2) $0.59 to $0.62 $2.32 to $2.35 2007 Same-Store Assumptions - ---------------------------------------------------------------------- Physical occupancy 94.5% Revenue change 4.25% Expense change 2.50% NOI change 5.25% (Note: 30 basis point change in NOI percentage = $0.01 per share change in EPS/FFO) 2007 Transaction Assumptions - ---------------------------------------------------------------------- Rental acquisitions $1.6 billion Rental dispositions $1.9 billion Capitalization rate spread 100 basis points 2007 Debt Assumptions - ---------------------------------------------------------------------- Weighted average debt outstanding $9.1 billion - $9.3 billion Weighted average interest rate (reduced for capitalized interest and including prepayment penalties) 5.32% Interest expense (including $484.0 million discontinued operations) - $494.0 million 2007 Condominium Conversion Assumptions - ---------------------------------------------------------------------- Net incremental gain on sales of $21.0 million - condominium units $22.8 million Net income - Condominium division (after $15.6 million - taxes/overhead/operations) $17.8 million Number of condominium unit sales 620 units - 670 units 2007 Other Guidance Assumptions - ---------------------------------------------------------------------- General and administrative expense $46.0 million - $48.0 million Interest and other income $13.5 million - $15.5 million Net gain on sales of land parcels $6.4 million Weighted average Common Shares and OP Units - Diluted 303.0 million Note: See page 29 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 27 and 28 (Amounts in thousands except per share data) (All per share data is diluted) Expected Expected Expected Q3 2007 Q4 2007 2007 Amounts Per Share Per Share Per Share --------- --------- ---------- ---------- Expected Earnings - $0.48 to $3.41 to Diluted (4) $540,200 $1.806 $0.51 $3.44 Add: Expected depreciation expense 156,700 0.524 0.52 2.03 Less: Expected net gain on sales (4) (530,138) (1.773) (0.41) (3.12) --------- --------- ---------- ---------- Expected FFO - Diluted (1) $0.59 to $2.32 to (2) $166,762 $0.557 $0.62 $2.35 ========= ========= ========== ========== Definitions and Footnotes for Pages 27 and 28 (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 represents net income per share calculated in accordance with accounting principles generally accepted in the United States. Expected earnings is calculated on a basis consistent with actual earnings. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual earnings could differ materially from expected earnings. CONTACT: Equity Residential Marty McKenna, 312-928-1901 -----END PRIVACY-ENHANCED MESSAGE-----