Debt

EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. EQR guarantees the Operating Partnership’s revolving credit facility up to the maximum amount and for the full term of the facility.

Mortgage Notes Payable

As of December 31, 2017, the Company had outstanding mortgage debt of approximately $3.6 billion.

During the year ended December 31, 2017, the Company:

•

Repaid $300.0 million of 5.987% mortgage debt held in a Fannie Mae loan pool maturing in 2019 and incurred a prepayment penalty of approximately $10.8 million;

•

Repaid $193.4 million of conventional fixed-rate mortgage loans maturing in 2017 through 2048 and incurred a prepayment penalty of approximately $1.5 million; and

•

Repaid $10.7 million of scheduled principal repayments on various mortgage debt.

The Company recorded $0.3 million of write-offs of unamortized deferred financing costs during the year ended December 31, 2017 as additional interest expense related to debt extinguishment of mortgages. The Company also recorded $0.7 million of write-offs of net unamortized premiums during the year ended December 31, 2017 as a reduction of interest expense related to debt extinguishment of mortgages.

As of December 31, 2017, the Company had $598.6 million of secured debt subject to third party credit enhancement.

As of December 31, 2017, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through May 28, 2061. At December 31, 2017, the interest rate range on the Company’s mortgage debt was 0.10% to 6.90%. During the year ended December 31, 2017, the weighted average interest rate on the Company’s mortgage debt was 4.33%.

The historical cost, net of accumulated depreciation, of encumbered properties was $4.4 billion and $5.0 billion at December 31, 2017 and 2016, respectively.

As of December 31, 2016, the Company had outstanding mortgage debt of approximately $4.1 billion.

During the year ended December 31, 2016, the Company:

•

Repaid $440.8 million of 6.256% mortgage debt held in a Fannie Mae loan pool maturing in 2017 and incurred a prepayment penalty of approximately $29.3 million;

•

Repaid $65.5 million of various tax-exempt mortgage bonds maturing in 2026 through 2037 and incurred a prepayment penalty of approximately $0.2 million;

•

Repaid $75.9 million of conventional fixed-rate mortgage loans and incurred prepayment penalties of approximately $2.2 million;

•

Repaid $0.9 million of conventional floating-rate mortgage loans;

•

Repaid $8.5 million of scheduled principal repayments on various mortgage debt; and

•

Assumed $43.4 million of mortgage debt on one acquired property.

The Company recorded $1.6 million of write-offs of unamortized deferred financing costs during the year ended December 31, 2016 as additional interest expense related to debt extinguishment of mortgages. The Company also recorded $20.7 million of write-offs of net unamortized premiums during the year ended December 31, 2016 as a reduction of interest expense related to debt extinguishment of mortgages.

As of December 31, 2016, the Company had $601.9 million of secured debt subject to third party credit enhancement.

As of December 31, 2016, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through May 28, 2061. At December 31, 2016, the interest rate range on the Company’s mortgage debt was 0.10% to 7.20%. During the year ended December 31, 2016, the weighted average interest rate on the Company’s mortgage debt was 4.34%.

Notes

The following tables summarize the Company’s unsecured note balances and certain interest rate and maturity date information as of and for the years ended December 31, 2017 and 2016, respectively:

December 31, 2017 (Amounts in thousands)	Net Principal Balance		Interest Rate Ranges	Weighted Average Interest Rate	Maturity Date Ranges
Fixed Rate Public Notes (1)	$	4,591,373	2.85% - 7.57%	4.61%	2020-2047
Floating Rate Public Notes (1)		447,439	(1)	1.82%	2019
Totals	$	5,038,812

December 31, 2016 (Amounts in thousands)	Net Principal Balance		Interest Rate Ranges	Weighted Average Interest Rate	Maturity Date Ranges
Fixed Rate Public Notes (1)	$	4,397,829	2.85% - 7.57%	4.90%	2017 - 2045
Floating Rate Public Notes (1)		450,250	(1)	1.28%	2019
Totals	$	4,848,079

(1)	Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%.

The Company’s unsecured public debt contains certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was in compliance with its unsecured public debt covenants for both the years ended December 31, 2017 and 2016.

EQR and ERPOP currently have an active universal shelf registration statement for the issuance of equity and debt securities that automatically became effective upon filing with the SEC on June 28, 2016 and expires on June 28, 2019. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis).

During the year ended December 31, 2017, the Company:

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Repaid $394.1 million of 5.75% unsecured notes at maturity;

•

Repaid $103.9 million of 7.125% unsecured notes at maturity;

•

Issued $400.0 million of ten-year 3.25% unsecured notes, receiving net proceeds of approximately $399.3 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of 3.32% after termination of four forward starting swaps in conjunction with the issuance (see Note 9 for further discussion); and

•

Issued $300.0 million of thirty-year 4.00% unsecured notes, receiving net proceeds of approximately $293.2 million before underwriting fees and other expenses, at an all-in effective interest rate of 4.11%.

During the year ended December 31, 2016, the Company:

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Repaid $228.9 million of 5.125% unsecured notes maturing in 2016 and incurred a prepayment penalty of approximately $1.4 million and repaid the remaining $271.1 million of 5.125% unsecured notes at maturity;

•

Repaid $400.0 million of 5.375% unsecured notes maturing in 2016 and incurred a prepayment penalty of approximately $9.5 million;

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Repaid $255.9 million of 5.750% unsecured notes maturing in 2017 and incurred a prepayment penalty of approximately $16.5 million;

•

Repaid $46.1 million of 7.125% unsecured notes maturing in 2017 and incurred a prepayment penalty of approximately $4.6 million;

•

Repaid $250.0 million of 4.625% unsecured notes maturing in 2021 and incurred a prepayment penalty of approximately $31.6 million;

•

Repaid $48.0 million of 7.570% unsecured notes maturing in 2026 and incurred a prepayment penalty of approximately $19.3 million; and

•

Issued $500.0 million of ten-year 2.85% unsecured notes, receiving net proceeds of $496.7 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of approximately 3.10% after termination of a forward starting swap in conjunction with the issuance (see Note 9 for further discussion).

The Company recorded $1.9 million of write-offs of unamortized deferred financing costs during the year ended December 31, 2016 as additional interest expense related to debt extinguishment of unsecured notes. The Company also recorded $25.2 million of write-offs of net unamortized premiums/discounts/OCI/treasury locks during the year ended December 31, 2016 as additional interest expense related to debt extinguishment of unsecured notes.

Line of Credit and Commercial Paper

On November 3, 2016, the Company replaced its existing $2.5 billion facility with a $2.0 billion unsecured revolving credit facility maturing January 10, 2022. The Company has the ability to increase available borrowings by an additional $750.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments. The interest rate on advances under the facility will generally be LIBOR plus a spread (currently 0.825%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 12.5 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company’s long-term debt.

On February 2, 2015, the Company entered into an unsecured commercial paper note program in the United States. The Company may borrow up to a maximum of $500.0 million under this program subject to market conditions. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the Company’s other unsecured senior indebtedness. As of December 31, 2017, there was a balance of $299.8 million outstanding on the commercial paper program ($300.0 million in principal outstanding net of an unamortized discount of $0.2 million). As of December 31, 2016, there was a balance of $20.0 million on the commercial paper program. The notes bear interest at various floating rates with a weighted average of 1.41% and 0.90% for the years ended December 31, 2017 and 2016, respectively, and a weighted average maturity of 18 days and 4 days as of December 31, 2017 and 2016, respectively.

As of December 31, 2017, the amount available on the revolving credit facility was $1.69 billion (net of $6.6 million which was restricted/dedicated to support letters of credit and net of the $300.0 million in principal outstanding on the commercial paper program). During the year ended December 31, 2017, the weighted average interest rate on the revolving credit facility was 2.00%. As of December 31, 2016, the amount available on the revolving credit facility was $1.96 billion (net of $20.6 million which was restricted/dedicated to support letters of credit and net of the $20.0 million in principal outstanding on the commercial paper program). During the year ended December 31, 2016, the weighted average interest rate on the revolving credit facility was 1.37%.

Other

On April 24, 2017, the Company executed a new letter of credit facility with a third party financial institution which is not backed or collateralized by borrowings on the Company’s unsecured revolving credit facility. As of December 31, 2017, there was $9.0 million in letters of credit outstanding on this facility.

The following table provides a summary of the aggregate payments of principal on all debt for each of the next five years and thereafter as of December 31, 2017 (amounts in thousands):

Year	Total
2018	$	446,969
2019		975,334
2020		1,678,992
2021		927,806
2022		265,741
Thereafter		4,776,232
Subtotal		9,071,074
Deferred Financing Costs and Unamortized (Discount)		(113,783	)
Total	$	8,957,291