At times we have entered into agreements providing for joint and several liability with our partners.  We also have in the past and could choose in the future to guarantee part of or all of certain joint venture debt.  Frequently, weWe and our respective joint venture partners may each have the right to trigger a buy-sell arrangement whichthat could cause us to sell our interest, or acquire our partners'partner's interest, at a time when we otherwise would not have initiated such a transaction. Anytransaction.  In some instances, joint venture partners may also have competing interests or objectives that could create conflicts of these risksinterest similar to those noted above. These objectives may be contrary to our compliance with the REIT requirements, and our REIT status could materially and adversely affect

Risks Related to our businessFinancing Strategy and results of operations.

Dislocations and liquidity disruptions in capital and credit markets could impact liquidityresult in the debt markets, resulting in financing terms that are less attractive to us and/increased costs or the unavailabilitylack of certain typesavailability of debt financing (including under our $1.0 billion commercial paper program) and equity financing. Should the capital and credit markets experience volatility and the availability of funds again become limited, or be available only on unattractive terms, we will incur increased costs associated with issuing debt instruments. In addition, it is possible that our ability to access the capital and credit marketsSuch events may be limited or precluded by these or other factors at a time when we would like, or need, to do so, which would adversely impactaffect our ability to refinance maturingexisting debt, require us to utilize higher cost alternatives and/or reactimpair our ability to adjust to changing economic and business conditions.  Uncertainty in the credit marketsCapital market disruptions could negatively impact our ability to make acquisitions andor make it more difficult or not possible for us to sell properties or may adverselyunfavorably affect the price we receive for properties that we do sell, as prospective buyers may experience increased costs of debt financing or difficulties in obtaining debt financing. Potential continuedsell.  Such disruptions in the financial markets could also have other unknown adverse effects on us or the economy generally and may cause the price of our securities to fluctuate significantly and/or to decline.

Our financial counterparties could adversely affect our performance.

Although we have not experienced any material counterparty non-performance, disruptions in financial and credit markets or other events could among other things, impedeimpair the ability of our counterparties to perform onunder their contractual obligations.obligations to us.  There are multiple financial institutions that are individually committed to lend us varying amounts as part ofprovide borrowings under our revolving credit facility.  Should any of these institutions fail to fundperform their committed amountsobligations when contractually required, our financial condition could be adversely affected. Should several of these institutions fail to fund, we could experience significant financial distress.

Rising interest rates can increase costs.

The Company also has developed assetsis exposed to market risk from financial instruments primarily from changes in market interest rates.  Such risks derive from the refinancing of debt, exposure to interest rate fluctuations in floating rate debt and from derivative instruments utilized to swap fixed rate debt to floating rates or to hedge rates in anticipation of future debt issuances.  Increases in interest rates would increase our interest expense and the costs of refinancing existing debt.

Insufficient cash flow could affect our ability to service existing debt and create refinancing risk.

We are subject to risks normally associated with joint venture partners which were financed by financial institutionsdebt financing, including the risk that have experienced varying degreesour cash flow will be insufficient to meet required payments.  We may not be able to refinance existing debt and if we can, the terms of distress in the past and could experience similar distress as economic conditions change. If one or more of these lenders fail to fund when contractually required, the Company or its joint venture partnersuch refinancing may be unableless favorable than the terms of existing indebtedness.  Our inability to complete constructionrefinance, extend or repay debt with proceeds from other capital market transactions would negatively impact our financial condition.  If the debt is secured, the mortgage holder may also foreclose on the property.  

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Table of its development properties.

A significant downgrade in our credit ratings, while not affecting our ability to draw proceeds under the Company’s revolving credit facility, would cause ourthe corresponding borrowing costs to increase, under the revolving credit facility, impact our ability to borrow secured and unsecured debt, and potentially impair our ability to access the commercial paper market or otherwise limit our access to capital.  In addition, a downgrade below investment grade would require us to post cash collateral and/or letters of credit in favor of some of our secured lenders to cover our self-insured property and liability insurance deductibles or to obtain lower deductible insurance compliant with the lenders'lenders’ requirements at the lower ratings level.

Financial covenants could adverselylimit operational flexibility and affect the Company'sour overall financial condition.

The mortgages onterms of our properties may contain customary negative covenants that, among other things, limit our ability, without the prior consent of the lender, to further mortgage the property and to reduce or change insurance coverage. In addition,credit agreements, including our revolving credit facility contains certain restrictions, requirements and other limitations on our ability to incur debt. Thethe indentures under which a substantial portion of our unsecured debt was issued, also contain certainrequire us to comply with a number of financial covenants. These covenants may limit our flexibility to run our business and operatingbreaches of these covenants including, amongcould result in defaults under the instruments governing the applicable indebtedness and trigger a cross default of other things, maintenance of certain financial ratios, as well as limitations on our ability to incur secured and unsecured debt (including acquisition financing), and to sell all or substantially alldebt.

Some of our assets. Our revolving credit facility and indenturesproperties are cross-defaulted and also contain cross default provisions with other material debt. While the Company believes it was in compliance with its unsecured public debt covenants for both the years ended December 31, 2016 and 2015, should it fall out of compliance, it would likely have a negative impact on our financial condition and results of operations.

The decision to declare and pay dividends on our securities, as well as the timing, amount and composition of any such future dividends, is at the discretion of the Board of Trustees and will depend on actual and projected financial conditions, the Company’s actual and projected liquidity and operating results, the Company’s projected cash needs for working capital, capital expenditures acquisitions, development orand other general corporate purposes, making us more vulnerable to a downturn in business orinvestment activities and such other factors as the economy in general. Our consolidated debt-to-total market capitalization ratio was 26.8% asCompany’s Board of December 31, 2016. In addition,Trustees deems relevant.  The Board of Trustees may modify our most restrictive unsecured public debt covenants are as follows:

Changes in market conditions and volatility of share prices could decrease the market price of our Common Shares.

The stock markets, including the New York Stock Exchange on which we list our Common Shares, have experienced significant price and volume fluctuations over time.  As a result, the market price of our Common Shares could be swapped tosimilarly volatile.  Investors in our Common Shares consequently may experience a floating rate of interest.

Issuances or sales of our counterpartiesCommon Shares or Units may be dilutive.

Any potential additional issuance of Common Shares or OP Units would reduce the percentage of our Common Shares and OP Units owned by investors. In most circumstances, shareholders and unitholders will not be entitled to perform under these contracts,vote on whether or not we issue additional Common Shares or Units. In addition, depending on the terms and may involve extensive costs, suchpricing of additional offerings of our Common Shares or Units along with the value of our properties, our shareholders and unitholders could experience dilution in both book value and fair value of their Common Shares or Units, as transaction fees or breakage costs, if we terminate them. No strategy can completely insulate uswell as dilution in our actual and expected earnings per share, funds from the risks associated with interest rate or commodity pricing fluctuations.

We depend on the efforts of the Chairmanour trustees and executive officers.  If one or more of our Board of Trustees, Samuel Zell, and our executive officers, particularly David J. Neithercut, our President and Chief Executive Officer (“CEO”). If theythem resign or otherwise cease to be employed by us, our business and results of operations and financial condition could be temporarily adversely affected.  Mr. Zell

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Table of Contents

The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our reputation and business relationships, all of which could negatively impact our financial results.

A cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt payment collections and operations, corrupt data or steal confidential information, including information regarding our residents, prospective residents, employees and employees’ dependents.  

Despite system redundancy, the implementation of security measures, required employee awareness training and the existence of a disaster recovery plan for our internal information technology systems, our systems and systems maintained by third party vendors with which we do business are vulnerable to damage from any number of sources.  We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, phishing attempts or other scams, persons inside our organization or persons/vendors with access to our systems and other significant disruptions of our information technology networks and related systems, including property infrastructure.  Our information technology networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations.  Even the most well-protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not to be detected and, in fact, may not be detected.  Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.  

We collect and hold personally identifiable information of our residents and prospective residents in connection with our leasing activities, and we collect and hold personally identifiable information of our employees and their dependents.  In addition, we engage third party service providers that may have access to such personally identifiable information in connection with providing necessary information technology, security and other business services to us.  The systems of our third party service providers may contain defects in design or other problems that could unexpectedly compromise personally identifiable information.  Although we make efforts to maintain the security and integrity of our information technology networks and those of our third party providers and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.

We address potential breaches or disclosure of this confidential personally identifiable information by implementing a variety of security measures intended to protect the confidentiality and security of this information including (among others):  (a) engaging reputable, recognized firms to help us design and maintain our information technology and data security systems; (b) conducting periodic testing and verification of information and data security systems, including performing ethical hacks of our systems to discover where any vulnerabilities may exist; and (c) providing periodic employee awareness training around phishing and other scams, malware and other cyber risks.  The Company also has entered into retirement benefita cyber liability insurance policy to provide some coverage for certain risks arising out of data and noncompetition agreementsnetwork breaches and data privacy regulations which provides a policy aggregate limit and a per occurrence deductible.  Cyber liability insurance generally covers, among other things, costs associated with the Company.

Provisions of our declarationDeclaration of trustTrust and bylawsBylaws could inhibit changes in control.

Certain provisions of our Declaration of Trust and Bylaws may delay or prevent a change in control of the Company or other transactions that could provide the security holders with a premium over the then-prevailing market price of their securities or which might otherwise be in the best interest of our security holders.  This includes the 5% Ownership Limit described below.below in this Item 1A.  While our existing preferred shares/preference units do not have all of these provisions, any future series of preferred shares/preference units may have certain voting provisions that could delay or prevent a change in control or other transactions that might otherwise be in the interest of our security holders.  Our Bylaws require certain information to be provided by any security holder, or persons acting in concert with such security holder, who proposes business or a nominee at an annual meeting of shareholders, including disclosure of information related to hedging activities and investment strategies with respect to our securities.  These requirements could delay or prevent a change in control or other transactions that might otherwise be in the interest of our security holders.

To remain qualified as a REIT for federal income tax purposes, not more than 50% in value of our outstanding Shares may be owned, directly or indirectly, by five or fewer individuals at any time during the last half of any year.  To facilitate maintenance of our REIT qualification, our Declaration of Trust, subject to certain exceptions, prohibits ownership by any single shareholder of more than 5%five percent of the lesser of the number or value of any outstanding class of common or preferred shares. We refer to this restriction as theshares (the “Ownership Limit.”Limit”). Absent anyan exemption or waiver granted by our Board of Trustees, securities acquired or held in violation of the Ownership Limit will be transferred to a trust for the exclusive benefit of a designated charitable beneficiary, and the security holder'sholder’s rights to distributions and to vote would terminate.  A transfer of Shares may be void if it causes a person to violate the Ownership Limit.  The Ownership Limit could delay or prevent a change in control and, therefore, could adversely affect our security holders'holders’ ability to realize a premium over the then-prevailing market price for their Shares.  To reduce the ability of the Board to use the Ownership Limit as an anti-takeover device, the Company'sCompany’s Ownership Limit requires, rather than permits, the Board to grant a waiver of the Ownership Limit if the individual seeking a waiver demonstrates that such ownership would not jeopardize the Company'sCompany’s status as a REIT.  We have issued several of these waivers in the past.

Tax elections regarding distributions may affect changes in control.

Under certain circumstances we have made and/or may consider making in the interestfuture, a tax election to treat future distributions to shareholders as distributions in the current year.  This election, which is provided for in the Code, may allow us to avoid increasing our dividends or paying additional income taxes in the current year.  However, this could result in a constraint on our ability to decrease our dividends in future years without creating risk of security holders.

Certain provisions of Maryland law applicable to real estate investment trustsREITs prohibit “business combinations” (including certain issuances of equity securities) with any person who beneficially owns ten percent or more of the voting power of outstanding securities, or with an affiliate who, at any time within the two-year period prior to the date in question, was the beneficial owner of ten percent or more of the voting power of the Company'sCompany’s outstanding voting securities (an “Interested Shareholder”), or with an affiliate of an Interested Shareholder.  These prohibitions last for five years after the most recent date on which the Interested Shareholder became an Interested Shareholder.  After the five-year period, a business combination with an Interested Shareholder must be approved by two super-majority shareholder votes unless, among other conditions, holders of common shares receive a minimum price for their shares and the consideration is received in cash or in the same form as previously paid by the Interested Shareholder for its common shares.  As permitted by Maryland law, however, the Board of Trustees of the Company has opted out of these restrictions with respect to any business combination involving Mr.Sam Zell and certain of his affiliates and persons acting in concert with them.  Consequently, the five-year prohibition and the super-majority vote requirements will not apply to a business combination involving us and/or any of them.  Such business combinations may not be in the best interest of our security holders.

As of December 31, 2016,2019, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 302309 properties located in 10 states and the District of Columbia consisting of 77,45879,962 apartment units.  See Note 4 in the Notes to Consolidated Financial Statements for discussion of the Starwood Transaction and the significant dispositions which occurred during 2016. See also Item 1, Business, for additional information regarding the Comapany'sCompany’s properties and the markets/metro areas upon which we are focused.The Company’s properties are summarized by building type in the following table: