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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SEPTEMBER 30, 2013
MARCH 31, 2014

OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission File Number: 1-12252 (Equity Residential)
Commission File Number: 0-24920 (ERP Operating Limited Partnership)


EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)

Maryland (Equity Residential)13-3675988 (Equity Residential)
Illinois (ERP Operating Limited Partnership)36-3894853 (ERP Operating Limited Partnership)
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
  
Two North Riverside Plaza, Chicago, Illinois 60606(312) 474-1300
 (Address of principal executive offices) (Zip Code)(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Equity Residential Yes x    No ¨
ERP Operating Limited Partnership Yes x      No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Equity Residential Yes x    No ¨
ERP Operating Limited Partnership Yes x      No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Equity Residential: 
Large accelerated filer x
Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)
Smaller reporting company ¨
ERP Operating Limited Partnership: 
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x (Do not check if a smaller reporting company)
Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 
Equity Residential Yes ¨    No x
ERP Operating Limited Partnership Yes ¨      No x 
The number of EQR Common Shares of Beneficial Interest, $0.01 par value, outstanding on October 31, 2013May 2, 2014 was 360,410,752361,203,075.



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EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended September 30, 2013March 31, 2014 of Equity Residential and ERP Operating Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “EQR” mean Equity Residential, a Maryland real estate investment trust (“REIT”), and references to “ERPOP” mean ERP Operating Limited Partnership, an Illinois limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. The following chart illustrates the Company's and the Operating Partnership's corporate structure:
    

EQR is the general partner of, and as of September 30, 2013March 31, 2014 owned an approximate 96.2% ownership interest in, ERPOP. The remaining 3.8% interest is owned by limited partners. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP's day-to-day management.

The Company is structured as an umbrella partnership REIT (“UPREIT”) and contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, the Company receives a number of OP Units (see definition below) in the Operating Partnership equal to the number of Common Shares it has issued in the equity offering. Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of OP Units in the Operating Partnership, which is one of the reasons why the Company is structured in the manner shown above. Based on the terms of ERPOP's partnership agreement, OP Units can be exchanged with Common Shares on a one-for-one basis. The Company maintains a one-for-one relationship between the OP Units of the Operating Partnership issued to EQR and the Common Shares.
    
The Company believes that combining the reports on Form 10-Q of EQR and ERPOP into this single report provides the following benefits:

enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

Management operates the Company and the Operating Partnership as one business. The management of EQR consists of the same members as the management of ERPOP.

The Company believes it is important to understand the few differences between EQR and ERPOP in the context of how EQR and ERPOP operate as a consolidated company. All of the Company's property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR's primary function is acting as the general partner of ERPOP. EQR also issues equity from time to time and guarantees certain debt of ERPOP, as disclosed in this report. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company's ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by the Company, which are contributed


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to the capital of the Operating Partnership in exchange for additional limited partnership interests in the Operating Partnership (“OP Units”) (on a one-for-one Common Share per OP Unit basis), the Operating Partnership generates all remaining capital required by the Company's business. These sources include the Operating Partnership's working capital, net cash provided by operating activities, borrowings under its revolving credit facility, the issuance of secured and unsecured debt and equity securities and proceeds received from disposition of certain properties and joint ventures.

Shareholders' equity, partners' capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners' capital in the Operating Partnership's financial statements and as noncontrolling interests in the Company's financial statements. The noncontrolling interests in the Operating Partnership's financial statements include the interests of unaffiliated partners in various consolidated partnerships and development joint venture partners. The noncontrolling interests in the Company's financial statements include the same noncontrolling interests at the Operating Partnership level and limited partner OP Unit holders of the Operating Partnership. The differences between shareholders' equity and partners' capital result from differences in the equity issued at the Company and Operating Partnership levels.

To help investors understand the significant differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of each entity's debt, noncontrolling interests and shareholders' equity or partners' capital, as applicable; and a combined Management's Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity.

This report also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 and 18 U.S.C. §1350.

 
In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership.

 
As general partner with control of the Operating Partnership, the Company consolidates the Operating Partnership for financial reporting purposes, and EQR essentially has no assets or liabilities other than its investment in ERPOP. Therefore, the assets and liabilities of the Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.


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TABLE OF CONTENTS
  
 PAGE
PART I.
 
  
Item 1. Financial Statements of Equity Residential:
 
  
     Consolidated Balance Sheets as of September 30, 2013March 31, 2014 and December 31, 20122013
2
  
Consolidated Statements of Operations and Comprehensive Income for the
nine months and quarters ended September 30,March 31, 2014 and 2013 and 2012
3 to 4
  
Consolidated Statements of Cash Flows for the nine monthsquarters ended
September 30,March 31, 2014 and 2013 and 2012
5 to 7
  
Consolidated Statement of Changes in Equity for the nine monthsquarter ended
September 30, 2013March 31, 2014
8 to 9
  
         Financial Statements of ERP Operating Limited Partnership:
 
  
     Consolidated Balance Sheets as of September 30, 2013March 31, 2014 and December 31, 20122013
10
  
Consolidated Statements of Operations and Comprehensive Income for the
nine months and quarters ended September 30,March 31, 2014 and 2013 and 2012
11 to 12
  
Consolidated Statements of Cash Flows for the nine monthsquarters ended
September 30,March 31, 2014 and 2013 and 2012
13 to 15
  
Consolidated Statement of Changes in Capital for the nine monthsquarter ended
September 30, 2013March 31, 2014
16 to 17
  
Notes to Consolidated Financial Statements of Equity Residential and ERP
     Operating Limited Partnership
18 to 4543
  
Item 2. Management’s Discussion and Analysis of Financial Condition
                      and Results of Operations
46
44 to 7264
  
Item 3. Quantitative and Qualitative Disclosures about Market Risk
72 to 73
64
  
Item 4. Controls and Procedures
73
64 to 65
  
PART II.
 
  
Item 1. Legal Proceedings
74
66
  
Item 1A. Risk Factors
74
66
  
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
74
66 to 67
  
Item 3. Defaults Upon Senior Securities
74
67
  
Item 4. Mine Safety Disclosures
74
67
  
Item 5. Other Information
74
67
  
Item 6. Exhibits
74
67


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EQUITY RESIDENTIAL
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share amounts)
(Unaudited)
 September 30,
2013		 December 31,
2012		 March 31,
2014		 December 31,
2013
ASSETS        
Investment in real estate        
Land $6,201,333
 $4,554,912
 $6,281,124
 $6,192,512
Depreciable property 19,254,957
 15,711,944
 19,623,472
 19,226,047
Projects under development 779,053
 387,750
 865,177
 988,867
Land held for development 505,494
 353,823
 295,357
 393,522
Investment in real estate 26,740,837
 21,008,429
 27,065,130
 26,800,948
Accumulated depreciation (4,654,594) (4,912,221) (4,992,877) (4,807,709)
Investment in real estate, net 22,086,243
 16,096,208
 22,072,253
 21,993,239
Cash and cash equivalents 972,761
 612,590
 37,209
 53,534
Investments in unconsolidated entities 165,898
 17,877
 205,068
 178,526
Deposits – restricted 98,874
 250,442
 91,081
 103,567
Escrow deposits – mortgage 40,901
 9,129
 43,995
 42,636
Deferred financing costs, net 66,775
 44,382
 55,754
 58,486
Other assets 379,979
 170,372
 384,271
 404,557
Total assets $23,811,431
 $17,201,000
 $22,889,631
 $22,834,545
        
LIABILITIES AND EQUITY        
Liabilities:        
Mortgage notes payable $6,230,675
 $3,898,369
 $5,167,626
 $5,174,166
Notes, net 5,476,522
 4,630,875
 5,477,656
 5,477,088
Lines of credit —
 —
 298,000
 115,000
Accounts payable and accrued expenses 166,939
 38,372
 161,838
 118,791
Accrued interest payable 85,353
 76,223
 78,140
 78,309
Other liabilities 331,797
 304,518
 321,043
 347,748
Security deposits 71,462
 66,988
 72,735
 71,592
Distributions payable 149,836
 260,176
 187,759
 243,511
Total liabilities 12,512,584
 9,275,521
 11,764,797
 11,626,205
        
Commitments and contingencies 
 
 
 
        
Redeemable Noncontrolling Interests – Operating Partnership 376,057
 398,372
 405,276
 363,144
Equity:        
Shareholders’ equity:        
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 1,000,000 shares issued and
outstanding as of September 30, 2013 and December 31, 2012		 50,000
 50,000
Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 360,395,959 shares issued
and outstanding as of September 30, 2013 and 325,054,654
shares issued and outstanding as of December 31, 2012		 3,604
 3,251
Preferred Shares of beneficial interest, $0.01 par value;    
100,000,000 shares authorized; 1,000,000 shares issued and
outstanding as of March 31, 2014 and December 31, 2013		 50,000
 50,000
Common Shares of beneficial interest, $0.01 par value;    
1,000,000,000 shares authorized; 361,148,189 shares issued
and outstanding as of March 31, 2014 and 360,479,260
shares issued and outstanding as of December 31, 2013		 3,611
 3,605
Paid in capital 8,542,822
 6,542,355
 8,541,046
 8,561,500
Retained earnings 2,171,603
 887,355
 1,944,798
 2,047,258
Accumulated other comprehensive (loss) (169,392) (193,148) (162,894) (155,162)
Total shareholders’ equity 10,598,637
 7,289,813
 10,376,561
 10,507,201
Noncontrolling Interests:        
Operating Partnership 213,518
 159,606
 215,339
 211,412
Partially Owned Properties 110,635
 77,688
 127,658
 126,583
Total Noncontrolling Interests 324,153
 237,294
 342,997
 337,995
Total equity 10,922,790
 7,527,107
 10,719,558
 10,845,196
Total liabilities and equity $23,811,431
 $17,201,000
 $22,889,631
 $22,834,545

See accompanying notes
2
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EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands except per share data)
(Unaudited)
 Nine Months Ended September 30, Quarter Ended September 30, Quarter Ended March 31,
 2013 2012 2013 2012 2014 2013
REVENUES            
Rental income $1,749,374
 $1,295,431
 $626,880
 $448,647
 $630,725
 $502,562
Fee and asset management 7,399
 7,328
 2,566
 3,052
 2,717
 2,160
Total revenues 1,756,773
 1,302,759
 629,446
 451,699
 633,442
 504,722
            
EXPENSES            
Property and maintenance 333,202
 254,009
 119,632
 86,682
 125,573
 98,529
Real estate taxes and insurance 218,777
 154,633
 76,255
 53,064
 82,094
 65,095
Property management 63,395
 62,769
 18,875
 18,493
 22,118
 22,489
Fee and asset management 4,739
 3,595
 1,516
 1,108
 1,662
 1,646
Depreciation 798,121
 422,148
 277,336
 139,337
 185,167
 196,222
General and administrative 47,018
 37,162
 14,438
 10,083
 17,576
 16,495
Total expenses 1,465,252
 934,316
 508,052
 308,767
 434,190
 400,476
            
Operating income 291,521
 368,443
 121,394
 142,932
 199,252
 104,246
            
Interest and other income 1,320
 70,514
 816
 70,087
 605
 320
Other expenses (7,530) (18,587) (3,986) (3,984) (657) (21,719)
Merger expenses (19,741) (1,921) (182) (87)
Interest:            
Expense incurred, net (437,452) (345,476) (120,035) (113,222) (113,049) (194,467)
Amortization of deferred financing costs (15,636) (10,265) (4,335) (3,320) (2,792) (6,948)
(Loss) income before income and other taxes, (loss) from
investments in unconsolidated entities, net gain (loss) on sales
of unconsolidated entities and land parcels and discontinued
operations		 (187,518) 62,708
 (6,328) 92,406
Income (loss) before income and other taxes, (loss) from investments in unconsolidated
entities, net (loss) on sales of land parcels and discontinued operations		 83,359
 (118,568)
Income and other tax (expense) benefit (1,326) (602) (493) (222) (222) (405)
(Loss) from investments in unconsolidated entities due to operations (2,984) (3) (1,454) (3)
(Loss) from investments in unconsolidated entities due to merger
expenses		 (54,781) —
 (1,771) —
Net gain on sales of unconsolidated entities 16
 —
 16
 —
Net gain (loss) on sales of land parcels 12,179
 —
 (2,437) —
(Loss) income from continuing operations (234,414) 62,103
 (12,467) 92,181
(Loss) from investments in unconsolidated entities (1,409) (46,366)
Net (loss) on sales of land parcels (30) —
Income (loss) from continuing operations 81,698
 (165,339)
Discontinued operations, net 2,023,897
 434,702
 404,184
 144,142
 1,034
 1,226,373
Net income 1,789,483
 496,805
 391,717
 236,323
 82,732
 1,061,034
Net (income) loss attributable to Noncontrolling Interests:        
Net (income) attributable to Noncontrolling Interests:    
Operating Partnership (70,947) (21,646) (14,836) (10,496) (3,093) (43,323)
Partially Owned Properties 1,101
 (457) 311
 312
 (504) (25)
Net income attributable to controlling interests 1,719,637
 474,702
 377,192
 226,139
 79,135
 1,017,686
Preferred distributions (3,109) (9,319) (1,037) (2,386) (1,036) (1,036)
Premium on redemption of Preferred Shares —
 (5,150) —
 (5,150)
Net income available to Common Shares $1,716,528
 $460,233
 $376,155
 $218,603
 $78,099
 $1,016,650
            
Earnings per share – basic:            
(Loss) income from continuing operations available to Common
Shares		 $(0.64) $0.15
 $(0.04) $0.27
Income (loss) from continuing operations available to Common Shares $0.21
 $(0.47)
Net income available to Common Shares $4.87
 $1.53
 $1.05
 $0.73
 $0.22
 $3.01
Weighted average Common Shares outstanding 352,414
 300,116
 359,811
 301,336
 360,470
 337,532
            
Earnings per share – diluted:            
(Loss) income from continuing operations available to Common
Shares		 $(0.64) $0.15
 $(0.04) $0.27
Income (loss) from continuing operations available to Common Shares $0.21
 $(0.47)
Net income available to Common Shares $4.87
 $1.52
 $1.05
 $0.72
 $0.22
 $3.01
Weighted average Common Shares outstanding 352,414
 317,265
 359,811
 318,773
 376,384
 337,532
            
Distributions declared per Common Share outstanding $1.20
 $1.0125
 $0.40
 $0.3375
 $0.50
 $0.40










See accompanying notes
3
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EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)
(Amounts in thousands except per share data)
(Unaudited)
 
  Nine Months Ended September 30, Quarter Ended September 30,
  2013 2012 2013 2012
Comprehensive income:        
Net income $1,789,483
 $496,805
 $391,717
 $236,323
Other comprehensive income (loss):        
Other comprehensive income (loss) – derivative instruments:        
Unrealized holding gains (losses) arising during the period 8,737
 (12,337) (3,600) (3,695)
Losses reclassified into earnings from other comprehensive
income		 16,084
 10,907
 3,986
 3,704
Other comprehensive income (loss) – other instruments:        
Unrealized holding gains (losses) arising during the period 554
 394
 (374) 312
(Gains) realized during the period (830) —
 (830) —
Other comprehensive (loss) – foreign currency:        
Currency translation adjustments arising during the period (789) —
 (1,730) —
Other comprehensive income (loss) 23,756
 (1,036) (2,548) 321
Comprehensive income 1,813,239
 495,769
 389,169
 236,644
Comprehensive (income) attributable to Noncontrolling Interests (69,846) (22,103) (14,525) (10,184)
Comprehensive income attributable to controlling interests $1,743,393
 $473,666
 $374,644
 $226,460
  Quarter Ended March 31,
  2014 2013
Comprehensive income:    
Net income $82,732
 $1,061,034
Other comprehensive (loss) income:    
Other comprehensive (loss) income – derivative instruments:    
Unrealized holding (losses) gains arising during the period (11,952) 2,814
Losses reclassified into earnings from other comprehensive income 4,129
 8,272
Other comprehensive income – other instruments:    
Unrealized holding gains arising during the period —
 427
Other comprehensive income (loss) – foreign currency:    
Currency translation adjustments arising during the period 91
 (873)
Other comprehensive (loss) income (7,732) 10,640
Comprehensive income 75,000
 1,071,674
Comprehensive (income) attributable to Noncontrolling Interests (3,302) (43,774)
Comprehensive income attributable to controlling interests $71,698
 $1,027,900


See accompanying notes
4
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EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

 Nine Months Ended September 30, Quarter Ended March 31,
 2013 2012 2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income $1,789,483
 $496,805
 $82,732
 $1,061,034
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation 830,097
 516,940
 185,167
 220,038
Amortization of deferred financing costs 15,864
 10,384
 2,792
 7,176
Amortization of above/below market leases 2,214
 —
 829
 292
Amortization of discounts and premiums on debt (37,612) (5,795) (2,938) (7,071)
Amortization of deferred settlements on derivative instruments 15,683
 10,506
 3,996
 8,139
Write-off of pursuit costs 3,969
 6,141
 452
 2,533
Loss from investments in unconsolidated entities 57,765
 3
 1,409
 46,366
Distributions from unconsolidated entities – return on capital 1,519
 454
 914
 257
Net (gain) on sales of investment securities (830) —
Net (gain) on sales of unconsolidated entities (16) —
Net (gain) on sales of land parcels (12,179) —
Net loss on sales of land parcels 30
 —
Net (gain) on sales of discontinued operations (1,990,577) (307,447) (71) (1,198,922)
Unrealized loss (gain) on derivative instruments 32
 (1)
Unrealized (gain) on derivative instruments (3) —
Compensation paid with Company Common Shares 29,019
 20,836
 12,981
 10,236
Changes in assets and liabilities:        
Decrease (increase) in deposits – restricted 4,152
 (2,250)
Decrease (increase) in mortgage deposits 271
 (862)
Decrease (increase) in other assets 7,315
 (14,039)
(Increase) decrease in deposits – restricted (418) 1,733
Decrease in mortgage deposits 375
 1,651
Decrease in other assets 18,613
 15,220
Increase in accounts payable and accrued expenses 65,001
 67,479
 55,263
 47,498
(Decrease) in accrued interest payable (2,175) (9,252)
(Decrease) increase in other liabilities (5,427) 68,492
(Decrease) increase in security deposits (6,475) 3,472
(Decrease) increase in accrued interest payable (169) 1,039
(Decrease) in other liabilities (26,194) (18,437)
Increase (decrease) in security deposits 1,143
 (5,268)
Net cash provided by operating activities 767,093
 861,866
 336,903
 193,514
        
CASH FLOWS FROM INVESTING ACTIVITIES:        
Acquisition of Archstone, net of cash acquired (4,000,875) —
 —
 (4,000,643)
Investment in real estate – acquisitions (108,308) (764,859) (148,535) —
Investment in real estate – development/other (256,965) (116,715) (122,340) (65,232)
Improvements to real estate (96,866) (114,535) (32,191) (26,599)
Additions to non-real estate property (3,359) (6,716) (159) (1,942)
Interest capitalized for real estate and unconsolidated entities under development (32,946) (15,776) (12,792) (8,413)
Proceeds from disposition of real estate, net 4,434,708
 610,127
 —
 2,955,398
Investments in unconsolidated entities (59,363) (5,423) (6,254) (283)
Distributions from unconsolidated entities – return of capital 25,471
 —
 7,680
 —
Proceeds from sale of investment securities 828
 —
Decrease in deposits on real estate acquisitions and investments, net 147,890
 31,677
 12,904
 101,668
Decrease in mortgage deposits 7,623
 1,682
(Increase) decrease in mortgage deposits (91) 4,473
Acquisition of Noncontrolling Interests – Partially Owned Properties —
 (87) (2,501) —
Net cash provided by (used for) investing activities 57,838
 (380,625)
Net cash (used for) investing activities (304,279) (1,041,573)







See accompanying notes
5
Table of Contents

EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
(Unaudited)
 
 Nine Months Ended September 30, Quarter Ended March 31,
 2013 2012 2014 2013
CASH FLOWS FROM FINANCING ACTIVITIES:        
Loan and bond acquisition costs $(18,254) $(4,599) $(60) $(13,869)
Mortgage deposits (3,769) (590) (1,643) (632)
Mortgage notes payable:        
Proceeds 5,951
 —
Restricted cash —
 2,370
Lump sum payoffs (701,762) (279,943) —
 (584,020)
Scheduled principal repayments (9,527) (11,022) (3,034) (3,244)
Notes, net:        
Proceeds 1,245,550
 —
 —
 750,000
Lump sum payoffs (400,000) (253,858)
Lines of credit:        
Proceeds 8,413,000
 392,000
 1,751,000
 5,850,000
Repayments (8,413,000) (385,000) (1,568,000) (5,455,000)
(Payments on) settlement of derivative instruments (44,013) —
Proceeds from sale of Common Shares —
 220,753
Proceeds from Employee Share Purchase Plan (ESPP) 2,973
 4,944
 1,741
 1,763
Proceeds from exercise of options 16,044
 46,781
 15,785
 7,174
Redemption of Preferred Shares —
 (150,000)
Premium on redemption of Preferred Shares —
 (21)
Common Shares repurchased and retired (1,777) —
Payment of offering costs (954) (2,860) —
 (406)
Other financing activities, net (33) (33)
Contributions – Noncontrolling Interests – Partially Owned Properties 11,520
 5,992
 5,684
 3,299
Contributions – Noncontrolling Interests – Operating Partnership 5
 5
 3
 3
Distributions:        
Common Shares (537,464) (371,319) (234,282) (249,330)
Preferred Shares (3,109) (11,344) (1,036) —
Noncontrolling Interests – Operating Partnership (22,216) (17,053) (9,217) (10,837)
Noncontrolling Interests – Partially Owned Properties (5,702) (4,742) (4,113) (3,345)
Net cash (used for) financing activities (464,760) (819,539)
Net increase (decrease) in cash and cash equivalents 360,171
 (338,298)
Net cash (used for) provided by financing activities (48,949) 291,556
Net (decrease) in cash and cash equivalents (16,325) (556,503)
Cash and cash equivalents, beginning of period 612,590
 383,921
 53,534
 612,590
Cash and cash equivalents, end of period $972,761
 $45,623
 $37,209
 $56,087
 





















See accompanying notes
6
Table of Contents

EQUITY RESIDENTIAL
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
(Unaudited) 
 Nine Months Ended September 30, Quarter Ended March 31,
 2013 2012 2014 2013
SUPPLEMENTAL INFORMATION:        
Cash paid for interest, net of amounts capitalized $451,495
 $353,329
 $112,152
 $182,356
Net cash paid for income and other taxes $1,064
 $573
 $596
 $483
Real estate acquisitions/dispositions/other:    
Mortgage loans assumed $—
 $137,644
Valuation of OP Units issued $—
 $66,606
Amortization of deferred financing costs:        
Investment in real estate, net $(152) $—
 $—
 $(1)
Deferred financing costs, net $16,016
 $10,384
 $2,792
 $7,177
Amortization of discounts and premiums on debt:        
Mortgage notes payable $(39,232) $(7,462) $(3,506) $(7,557)
Notes, net $1,620
 $1,667
 $568
 $486
Amortization of deferred settlements on derivative instruments:        
Other liabilities $(401) $(401) $(133) $(133)
Accumulated other comprehensive income $16,084
 $10,907
 $4,129
 $8,272
Loss from investments in unconsolidated entities:        
Investments in unconsolidated entities $51,923
 $3
 $472
 $42,213
Other liabilities $5,842
 $—
 $937
 $4,153
Unrealized loss (gain) on derivative instruments:    
Distributions from unconsolidated entities – return on capital:    
Investments in unconsolidated entities $862
 $257
Other liabilities $52
 $—
Unrealized (gain) on derivative instruments:    
Other assets $(10,609) $5,934
 $7,279
 $1,471
Mortgage notes payable $—
 $(2,589)
Notes, net $(1,523) $(3,345) $—
 $(1,471)
Other liabilities $3,427
 $12,336
 $4,670
 $(2,814)
Accumulated other comprehensive income $8,737
 $(12,337) $(11,952) $2,814
Acquisition of Archstone, net of cash acquired:        
Investment in real estate, net $(8,710,242) $—
 $39,929
 $(8,707,967)
Investments in unconsolidated entities $(217,092) $—
 $(33,993) $(218,197)
Deposits – restricted $(474) $—
 $—
 $(474)
Escrow deposits – mortgage $(35,897) $—
 $—
 $(35,898)
Deferred financing costs, net $(25,780) $—
 $—
 $(25,780)
Other assets $(203,295) $—
 $(2,586) $(204,523)
Mortgage notes payable $3,076,876
 $—
 $—
 $3,076,876
Accounts payable and accrued expenses $17,576
 $—
 $(146) $17,593
Accrued interest payable $11,305
 $—
 $—
 $11,256
Other liabilities $117,068
 $—
 $(3,204) $117,391
Security deposits $10,949
 $—
 $—
 $10,949
Issuance of Common Shares $1,929,868
 $—
 $—
 $1,929,868
Noncontrolling Interests – Partially Owned Properties $28,263
 $—
 $—
 $28,263
Interest capitalized for real estate and unconsolidated entities under development:        
Investment in real estate, net $(31,648) $(15,163) $(12,774) $(8,089)
Investments in unconsolidated entities $(1,298) $(613) $(18) $(324)
Investments in unconsolidated entities:        
Investments in unconsolidated entities $(9,317) $(5,423) $(1,454) $(283)
Other liabilities $(50,046) $—
 $(4,800) $—
Other:        
Receivable on sale of Common Shares $—
 $28,457
Foreign currency translation adjustments $789
 $—
 $(91) $873

See accompanying notes
7
Table of Contents

EQUITY RESIDENTIAL
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(Amounts in thousands)
(Unaudited)
 
 Nine Months Ended Quarter Ended
 September 30, 2013 March 31, 2014
SHAREHOLDERS’ EQUITY    
    
PREFERRED SHARES    
Balance, beginning of year $50,000
 $50,000
Balance, end of period $50,000
 $50,000
    
COMMON SHARES, $0.01 PAR VALUE    
Balance, beginning of year $3,251
 $3,605
Issuance of Common Shares 345
Exercise of share options 5
 5
Employee Share Purchase Plan (ESPP) 1
Share-based employee compensation expense:    
Restricted shares 2
 1
Balance, end of period $3,604
 $3,611
    
PAID IN CAPITAL    
Balance, beginning of year $6,542,355
 $8,561,500
Common Share Issuance:    
Conversion of OP Units into Common Shares 1,203
 480
Issuance of Common Shares 1,929,523
Exercise of share options 16,039
 15,780
Employee Share Purchase Plan (ESPP) 2,972
 1,741
Conversion of restricted shares to LTIP Units (278)
Share-based employee compensation expense:    
Restricted shares 10,248
 4,869
Share options 8,684
 3,122
ESPP discount 557
 477
Offering costs (954)
Common Shares repurchased and retired (1,777)
Supplemental Executive Retirement Plan (SERP) (439) 848
Acquisition of Noncontrolling Interests – Partially Owned Properties (553)
Change in market value of Redeemable Noncontrolling Interests – Operating Partnership 69,344
 (44,530)
Adjustment for Noncontrolling Interests ownership in Operating Partnership (36,710) (633)
Balance, end of period $8,542,822
 $8,541,046
    
RETAINED EARNINGS    
Balance, beginning of year $887,355
 $2,047,258
Net income attributable to controlling interests 1,719,637
 79,135
Common Share distributions (432,280) (180,559)
Preferred Share distributions (3,109) (1,036)
Balance, end of period $2,171,603
 $1,944,798
 













See accompanying notes
8
Table of Contents

EQUITY RESIDENTIAL
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)
(Amounts in thousands)
(Unaudited)
 
 Nine Months Ended Quarter Ended
 September 30, 2013 March 31, 2014
SHAREHOLDERS’ EQUITY (continued)    
ACCUMULATED OTHER COMPREHENSIVE (LOSS)    
Balance, beginning of year $(193,148) $(155,162)
Accumulated other comprehensive income – derivative instruments:  
Unrealized holding gains arising during the period 8,737
Accumulated other comprehensive (loss) – derivative instruments:  
Unrealized holding (losses) arising during the period (11,952)
Losses reclassified into earnings from other comprehensive income 16,084
 4,129
Accumulated other comprehensive income (loss) – other instruments:  
Unrealized holding gains arising during the period 554
(Gains) realized during the period (830)
Accumulated other comprehensive (loss) – foreign currency:  
Accumulated other comprehensive income – foreign currency:  
Currency translation adjustments arising during the period (789) 91
Balance, end of period $(169,392) $(162,894)
    
NONCONTROLLING INTERESTS    
    
OPERATING PARTNERSHIP    
Balance, beginning of year $159,606
 $211,412
Issuance of LTIP Units to Noncontrolling Interests 5
 3
Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner (1,203) (480)
Conversion of restricted shares to LTIP Units 278
Equity compensation associated with Noncontrolling Interests 11,542
 5,190
Net income attributable to Noncontrolling Interests 70,947
 3,093
Distributions to Noncontrolling Interests (17,060) (7,188)
Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership (47,029) 2,398
Adjustment for Noncontrolling Interests ownership in Operating Partnership 36,710
 633
Balance, end of period $213,518
 $215,339
    
PARTIALLY OWNED PROPERTIES    
Balance, beginning of year $77,688
 $126,583
Net (loss) attributable to Noncontrolling Interests (1,101)
Net income attributable to Noncontrolling Interests 504
Contributions by Noncontrolling Interests 11,520
 5,684
Acquisition of Archstone 28,263
Distributions to Noncontrolling Interests (5,735) (4,113)
Acquisition of Noncontrolling Interests – Partially Owned Properties (1,000)
Balance, end of period $110,635
 $127,658

See accompanying notes
9
Table of Contents

ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
 
 September 30,
2013		 December 31,
2012		 March 31,
2014		 December 31,
2013
ASSETS        
Investment in real estate        
Land $6,201,333
 $4,554,912
 $6,281,124
 $6,192,512
Depreciable property 19,254,957
 15,711,944
 19,623,472
 19,226,047
Projects under development 779,053
 387,750
 865,177
 988,867
Land held for development 505,494
 353,823
 295,357
 393,522
Investment in real estate 26,740,837
 21,008,429
 27,065,130
 26,800,948
Accumulated depreciation (4,654,594) (4,912,221) (4,992,877) (4,807,709)
Investment in real estate, net 22,086,243
 16,096,208
 22,072,253
 21,993,239
Cash and cash equivalents 972,761
 612,590
 37,209
 53,534
Investments in unconsolidated entities 165,898
 17,877
 205,068
 178,526
Deposits – restricted 98,874
 250,442
 91,081
 103,567
Escrow deposits – mortgage 40,901
 9,129
 43,995
 42,636
Deferred financing costs, net 66,775
 44,382
 55,754
 58,486
Other assets 379,979
 170,372
 384,271
 404,557
Total assets $23,811,431
 $17,201,000
 $22,889,631
 $22,834,545
        
LIABILITIES AND CAPITAL        
Liabilities:        
Mortgage notes payable $6,230,675
 $3,898,369
 $5,167,626
 $5,174,166
Notes, net 5,476,522
 4,630,875
 5,477,656
 5,477,088
Lines of credit —
 —
 298,000
 115,000
Accounts payable and accrued expenses 166,939
 38,372
 161,838
 118,791
Accrued interest payable 85,353
 76,223
 78,140
 78,309
Other liabilities 331,797
 304,518
 321,043
 347,748
Security deposits 71,462
 66,988
 72,735
 71,592
Distributions payable 149,836
 260,176
 187,759
 243,511
Total liabilities 12,512,584
 9,275,521
 11,764,797
 11,626,205
        
Commitments and contingencies 
 
 
 
        
Redeemable Limited Partners 376,057
 398,372
 405,276
 363,144
Capital:        
Partners' Capital:        
Preference Units 50,000
 50,000
 50,000
 50,000
General Partner 10,718,029
 7,432,961
 10,489,455
 10,612,363
Limited Partners 213,518
 159,606
 215,339
 211,412
Accumulated other comprehensive (loss) (169,392) (193,148) (162,894) (155,162)
Total partners' capital 10,812,155
 7,449,419
 10,591,900
 10,718,613
Noncontrolling Interests – Partially Owned Properties 110,635
 77,688
 127,658
 126,583
Total capital 10,922,790
 7,527,107
 10,719,558
 10,845,196
Total liabilities and capital $23,811,431
 $17,201,000
 $22,889,631
 $22,834,545


See accompanying notes
10
Table of Contents

ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands except per Unit data)
(Unaudited) 
 Nine Months Ended September 30, Quarter Ended September 30, Quarter Ended March 31,
 2013 2012 2013 2012 2014 2013
REVENUES            
Rental income $1,749,374
 $1,295,431
 $626,880
 $448,647
 $630,725
 $502,562
Fee and asset management 7,399
 7,328
 2,566
 3,052
 2,717
 2,160
Total revenues 1,756,773
 1,302,759
 629,446
 451,699
 633,442
 504,722
            
EXPENSES            
Property and maintenance 333,202
 254,009
 119,632
 86,682
 125,573
 98,529
Real estate taxes and insurance 218,777
 154,633
 76,255
 53,064
 82,094
 65,095
Property management 63,395
 62,769
 18,875
 18,493
 22,118
 22,489
Fee and asset management 4,739
 3,595
 1,516
 1,108
 1,662
 1,646
Depreciation 798,121
 422,148
 277,336
 139,337
 185,167
 196,222
General and administrative 47,018
 37,162
 14,438
 10,083
 17,576
 16,495
Total expenses 1,465,252
 934,316
 508,052
 308,767
 434,190
 400,476
            
Operating income 291,521
 368,443
 121,394
 142,932
 199,252
 104,246
            
Interest and other income 1,320
 70,514
 816
 70,087
 605
 320
Other expenses (7,530) (18,587) (3,986) (3,984) (657) (21,719)
Merger expenses (19,741) (1,921) (182) (87)
Interest:            
Expense incurred, net (437,452) (345,476) (120,035) (113,222) (113,049) (194,467)
Amortization of deferred financing costs (15,636) (10,265) (4,335) (3,320) (2,792) (6,948)
(Loss) income before income and other taxes, (loss) from investments
in unconsolidated entities, net gain (loss) on sales of unconsolidated
entities and land parcels and discontinued operations		 (187,518) 62,708
 (6,328) 92,406
Income (loss) before income and other taxes, (loss) from investments in unconsolidated
entities, net (loss) on sales of land parcels and discontinued operations		 83,359
 (118,568)
Income and other tax (expense) benefit (1,326) (602) (493) (222) (222) (405)
(Loss) from investments in unconsolidated entities due to operations (2,984) (3) (1,454) (3)
(Loss) from investments in unconsolidated entities due to merger
expenses		 (54,781) —
 (1,771) —
Net gain on sales of unconsolidated entities 16
 —
 16
 —
Net gain (loss) on sales of land parcels 12,179
 —
 (2,437) —
(Loss) income from continuing operations (234,414) 62,103
 (12,467) 92,181
(Loss) from investments in unconsolidated entities (1,409) (46,366)
Net (loss) on sales of land parcels (30) —
Income (loss) from continuing operations 81,698
 (165,339)
Discontinued operations, net 2,023,897
 434,702
 404,184
 144,142
 1,034
 1,226,373
Net income 1,789,483
 496,805
 391,717
 236,323
 82,732
 1,061,034
Net loss (income) attributable to Noncontrolling Interests – Partially
Owned Properties		 1,101
 (457) 311
 312
Net (income) attributable to Noncontrolling Interests – Partially
Owned Properties		 (504) (25)
Net income attributable to controlling interests $1,790,584
 $496,348
 $392,028
 $236,635
 $82,228
 $1,061,009
            
ALLOCATION OF NET INCOME:            
Preference Units $3,109
 $9,319
 $1,037
 $2,386
 $1,036
 $1,036
Premium on redemption of Preference Units $—
 $5,150
 $—
 $5,150
            
General Partner $1,716,528
 $460,233
 $376,155
 $218,603
 $78,099
 $1,016,650
Limited Partners 70,947
 21,646
 14,836
 10,496
 3,093
 43,323
Net income available to Units $1,787,475
 $481,879
 $390,991
 $229,099
 $81,192
 $1,059,973
            
Earnings per Unit – basic:            
(Loss) income from continuing operations available to Units $(0.64) $0.15
 $(0.04) $0.27
Income (loss) from continuing operations available to Units $0.21
 $(0.47)
Net income available to Units $4.87
 $1.53
 $1.05
 $0.73
 $0.22
 $3.01
Weighted average Units outstanding 366,150
 313,932
 373,547
 315,513
 374,201
 351,255
            
Earnings per Unit – diluted:            
(Loss) income from continuing operations available to Units $(0.64) $0.15
 $(0.04) $0.27
Income (loss) from continuing operations available to Units $0.21
 $(0.47)
Net income available to Units $4.87
 $1.52
 $1.05
 $0.72
 $0.22
 $3.01
Weighted average Units outstanding 366,150
 317,265
 373,547
 318,773
 376,384
 351,255
            
Distributions declared per Unit outstanding $1.20
 $1.0125
 $0.40
 $0.3375
 $0.50
 $0.40
 








See accompanying notes
11
Table of Contents

ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)
(Amounts in thousands except per Unit data)
(Unaudited)
 
  Nine Months Ended September 30, Quarter Ended September 30,
  2013 2012 2013 2012
Comprehensive income:        
Net income $1,789,483
 $496,805
 $391,717
 $236,323
Other comprehensive income (loss):        
Other comprehensive income (loss) – derivative instruments:        
Unrealized holding gains (losses) arising during the period 8,737
 (12,337) (3,600) (3,695)
Losses reclassified into earnings from other comprehensive
income		 16,084
 10,907
 3,986
 3,704
Other comprehensive income (loss) – other instruments:        
Unrealized holding gains (losses) arising during the period 554
 394
 (374) 312
(Gains) realized during the period (830) —
 (830) —
Other comprehensive (loss) – foreign currency:        
Currency translation adjustments arising during the period (789) —
 (1,730) —
Other comprehensive income (loss) 23,756
 (1,036) (2,548) 321
Comprehensive income 1,813,239
 495,769
 389,169
 236,644
Comprehensive loss (income) attributable to Noncontrolling
Interests – Partially Owned Properties		 1,101
 (457) 311
 312
Comprehensive income attributable to controlling interests $1,814,340
 $495,312
 $389,480
 $236,956
  Quarter Ended March 31,
  2014 2013
Comprehensive income:    
Net income $82,732
 $1,061,034
Other comprehensive (loss) income:    
Other comprehensive (loss) income – derivative instruments:    
Unrealized holding (losses) gains arising during the period (11,952) 2,814
Losses reclassified into earnings from other comprehensive income 4,129
 8,272
Other comprehensive income – other instruments:    
Unrealized holding gains arising during the period —
 427
Other comprehensive income (loss) – foreign currency:    
Currency translation adjustments arising during the period 91
 (873)
Other comprehensive (loss) income (7,732) 10,640
Comprehensive income 75,000
 1,071,674
Comprehensive (income) attributable to Noncontrolling
Interests – Partially Owned Properties		 (504) (25)
Comprehensive income attributable to controlling interests $74,496
 $1,071,649

See accompanying notes
12
Table of Contents

ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 
 Nine Months Ended September 30, Quarter Ended March 31,
 2013 2012 2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income $1,789,483
 $496,805
 $82,732
 $1,061,034
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation 830,097
 516,940
 185,167
 220,038
Amortization of deferred financing costs 15,864
 10,384
 2,792
 7,176
Amortization of above/below market leases 2,214
 —
 829
 292
Amortization of discounts and premiums on debt (37,612) (5,795) (2,938) (7,071)
Amortization of deferred settlements on derivative instruments 15,683
 10,506
 3,996
 8,139
Write-off of pursuit costs 3,969
 6,141
 452
 2,533
Loss from investments in unconsolidated entities 57,765
 3
 1,409
 46,366
Distributions from unconsolidated entities – return on capital 1,519
 454
 914
 257
Net (gain) sales of investment securities (830) —
Net (gain) on sales of unconsolidated entities (16) —
Net (gain) on sales of land parcels (12,179) —
Net loss on sales of land parcels 30
 —
Net (gain) on sales of discontinued operations (1,990,577) (307,447) (71) (1,198,922)
Unrealized loss (gain) on derivative instruments 32
 (1)
Unrealized (gain) on derivative instruments (3) —
Compensation paid with Company Common Shares 29,019
 20,836
 12,981
 10,236
Changes in assets and liabilities:        
Decrease (increase) in deposits – restricted 4,152
 (2,250)
Decrease (increase) in mortgage deposits 271
 (862)
Decrease (increase) in other assets 7,315
 (14,039)
(Increase) decrease in deposits – restricted (418) 1,733
Decrease in mortgage deposits 375
 1,651
Decrease in other assets 18,613
 15,220
Increase in accounts payable and accrued expenses 65,001
 67,479
 55,263
 47,498
(Decrease) in accrued interest payable (2,175) (9,252)
(Decrease) increase in other liabilities (5,427) 68,492
(Decrease) increase in security deposits (6,475) 3,472
(Decrease) increase in accrued interest payable (169) 1,039
(Decrease) in other liabilities (26,194) (18,437)
Increase (decrease) in security deposits 1,143
 (5,268)
Net cash provided by operating activities 767,093
 861,866
 336,903
 193,514
        
CASH FLOWS FROM INVESTING ACTIVITIES:        
Acquisition of Archstone, net of cash acquired (4,000,875) —
 —
 (4,000,643)
Investment in real estate – acquisitions (108,308) (764,859) (148,535) —
Investment in real estate – development/other (256,965) (116,715) (122,340) (65,232)
Improvements to real estate (96,866) (114,535) (32,191) (26,599)
Additions to non-real estate property (3,359) (6,716) (159) (1,942)
Interest capitalized for real estate and unconsolidated entities under development (32,946) (15,776) (12,792) (8,413)
Proceeds from disposition of real estate, net 4,434,708
 610,127
 —
 2,955,398
Investments in unconsolidated entities (59,363) (5,423) (6,254) (283)
Distributions from unconsolidated entities – return of capital 25,471
 —
 7,680
 —
Proceeds from sale of investment securities 828
 —
Decrease in deposits on real estate acquisitions and investments, net 147,890
 31,677
 12,904
 101,668
Decrease in mortgage deposits 7,623
 1,682
(Increase) decrease in mortgage deposits (91) 4,473
Acquisition of Noncontrolling Interests – Partially Owned Properties —
 (87) (2,501) —
Net cash provided by (used for) investing activities 57,838
 (380,625)
Net cash (used for) investing activities (304,279) (1,041,573)
 









See accompanying notes
13
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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
(Unaudited)
 
 Nine Months Ended September 30, Quarter Ended March 31,
 2013 2012 2014 2013
CASH FLOWS FROM FINANCING ACTIVITIES:        
Loan and bond acquisition costs $(18,254) $(4,599) $(60) $(13,869)
Mortgage deposits (3,769) (590) (1,643) (632)
Mortgage notes payable:        
Proceeds 5,951
 —
Restricted cash —
 2,370
Lump sum payoffs (701,762) (279,943) —
 (584,020)
Scheduled principal repayments (9,527) (11,022) (3,034) (3,244)
Notes, net:        
Proceeds 1,245,550
 —
 —
 750,000
Lump sum payoffs (400,000) (253,858)
Lines of credit:        
Proceeds 8,413,000
 392,000
 1,751,000
 5,850,000
Repayments (8,413,000) (385,000) (1,568,000) (5,455,000)
(Payments on) settlement of derivative instruments (44,013) —
Proceeds from sale of OP Units —
 220,753
Proceeds from EQR's Employee Share Purchase Plan (ESPP) 2,973
 4,944
 1,741
 1,763
Proceeds from exercise of EQR options 16,044
 46,781
 15,785
 7,174
Redemption of Preference Units —
 (150,000)
Premium on redemption of Preference Units —
 (21)
OP Units repurchased and retired (1,777) —
Payment of offering costs (954) (2,860) —
 (406)
Other financing activities, net (33) (33)
Contributions – Noncontrolling Interests – Partially Owned Properties 11,520
 5,992
 5,684
 3,299
Contributions – Limited Partners 5
 5
 3
 3
Distributions:        
OP Units – General Partner (537,464) (371,319) (234,282) (249,330)
Preference Units (3,109) (11,344) (1,036) —
OP Units – Limited Partners (22,216) (17,053) (9,217) (10,837)
Noncontrolling Interests – Partially Owned Properties (5,702) (4,742) (4,113) (3,345)
Net cash (used for) financing activities (464,760) (819,539)
Net increase (decrease) in cash and cash equivalents 360,171
 (338,298)
Net cash (used for) provided by financing activities (48,949) 291,556
Net (decrease) in cash and cash equivalents (16,325) (556,503)
Cash and cash equivalents, beginning of period 612,590
 383,921
 53,534
 612,590
Cash and cash equivalents, end of period $972,761
 $45,623
 $37,209
 $56,087
 





















See accompanying notes
14
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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
(Unaudited) 
 Nine Months Ended September 30, Quarter Ended March 31,
 2013 2012 2014 2013
SUPPLEMENTAL INFORMATION:        
Cash paid for interest, net of amounts capitalized $451,495
 $353,329
 $112,152
 $182,356
Net cash paid for income and other taxes $1,064
 $573
 $596
 $483
Real estate acquisitions/dispositions/other:    
Mortgage loans assumed $—
 $137,644
Valuation of OP Units issued $—
 $66,606
Amortization of deferred financing costs:        
Investment in real estate, net $(152) $—
 $—
 $(1)
Deferred financing costs, net $16,016
 $10,384
 $2,792
 $7,177
Amortization of discounts and premiums on debt:        
Mortgage notes payable $(39,232) $(7,462) $(3,506) $(7,557)
Notes, net $1,620
 $1,667
 $568
 $486
Amortization of deferred settlements on derivative instruments:        
Other liabilities $(401) $(401) $(133) $(133)
Accumulated other comprehensive income $16,084
 $10,907
 $4,129
 $8,272
Loss from investments in unconsolidated entities:        
Investments in unconsolidated entities $51,923
 $3
 $472
 $42,213
Other liabilities $5,842
 $—
 $937
 $4,153
Unrealized loss (gain) on derivative instruments:    
Distributions from unconsolidated entities – return on capital:    
Investments in unconsolidated entities $862
 $257
Other liabilities $52
 $—
Unrealized (gain) on derivative instruments:    
Other assets $(10,609) $5,934
 $7,279
 $1,471
Mortgage notes payable $—
 $(2,589)
Notes, net $(1,523) $(3,345) $—
 $(1,471)
Other liabilities $3,427
 $12,336
 $4,670
 $(2,814)
Accumulated other comprehensive income $8,737
 $(12,337) $(11,952) $2,814
Acquisition of Archstone, net of cash acquired:        
Investment in real estate, net $(8,710,242) $—
 $39,929
 $(8,707,967)
Investments in unconsolidated entities $(217,092) $—
 $(33,993) $(218,197)
Deposits – restricted $(474) $—
 $—
 $(474)
Escrow deposits – mortgage $(35,897) $—
 $—
 $(35,898)
Deferred financing costs, net $(25,780) $—
 $—
 $(25,780)
Other assets $(203,295) $—
 $(2,586) $(204,523)
Mortgage notes payable $3,076,876
 $—
 $—
 $3,076,876
Accounts payable and accrued expenses $17,576
 $—
 $(146) $17,593
Accrued interest payable $11,305
 $—
 $—
 $11,256
Other liabilities $117,068
 $—
 $(3,204) $117,391
Security deposits $10,949
 $—
 $—
 $10,949
Issuance of OP Units $1,929,868
 $—
 $—
 $1,929,868
Noncontrolling Interests – Partially Owned Properties $28,263
 $—
 $—
 $28,263
Interest capitalized for real estate and unconsolidated entities under development:        
Investment in real estate, net $(31,648) $(15,163) $(12,774) $(8,089)
Investments in unconsolidated entities $(1,298) $(613) $(18) $(324)
Investments in unconsolidated entities:        
Investments in unconsolidated entities $(9,317) $(5,423) $(1,454) $(283)
Other liabilities $(50,046) $—
 $(4,800) $—
Other:        
Receivable on sale of OP Units $—
 $28,457
Foreign currency translation adjustments $789
 $—
 $(91) $873

See accompanying notes
15
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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL
(Amounts in thousands)
(Unaudited)
 
Nine Months EndedQuarter Ended
September 30, 2013March 31, 2014
PARTNERS' CAPITAL  
  
PREFERENCE UNITS  
Balance, beginning of year$50,000
$50,000
Balance, end of period$50,000
$50,000
  
GENERAL PARTNER  
Balance, beginning of year$7,432,961
$10,612,363
OP Unit Issuance:  
Conversion of OP Units held by Limited Partners into OP Units held by General Partner1,203
480
Issuance of OP Units1,929,868
Exercise of EQR share options16,044
15,785
EQR's Employee Share Purchase Plan (ESPP)2,973
1,741
Conversion of EQR restricted shares to LTIP Units(278)
Share-based employee compensation expense:  
EQR restricted shares10,250
4,870
EQR share options8,684
3,122
EQR ESPP discount557
477
Offering costs(954)
OP Units repurchased and retired(1,777)
Net income available to Units – General Partner1,716,528
78,099
OP Units – General Partner distributions(432,280)(180,559)
Supplemental Executive Retirement Plan (SERP)(439)848
Acquisition of Noncontrolling Interests – Partially Owned Properties(553)
Change in market value of Redeemable Limited Partners69,344
(44,530)
Adjustment for Limited Partners ownership in Operating Partnership(36,710)(633)
Balance, end of period$10,718,029
$10,489,455
  
LIMITED PARTNERS  
Balance, beginning of year$159,606
$211,412
Issuance of LTIP Units to Limited Partners5
3
Conversion of OP Units held by Limited Partners into OP Units held by General Partner(1,203)(480)
Conversion of EQR restricted shares to LTIP Units278
Equity compensation associated with Units – Limited Partners11,542
5,190
Net income available to Units – Limited Partners70,947
3,093
Units – Limited Partners distributions(17,060)(7,188)
Change in carrying value of Redeemable Limited Partners(47,029)2,398
Adjustment for Limited Partners ownership in Operating Partnership36,710
633
Balance, end of period$213,518
$215,339
  
ACCUMULATED OTHER COMPREHENSIVE (LOSS)  
Balance, beginning of year$(193,148)$(155,162)
Accumulated other comprehensive income – derivative instruments: 
Unrealized holding gains arising during the period8,737
Accumulated other comprehensive (loss) – derivative instruments: 
Unrealized holding (losses) arising during the period(11,952)
Losses reclassified into earnings from other comprehensive income16,084
4,129
Accumulated other comprehensive income (loss) – other instruments: 
Unrealized holding gains arising during the period554
(Gains) realized during the period(830)
Accumulated other comprehensive (loss) – foreign currency: 
Accumulated other comprehensive income – foreign currency: 
Currency translation adjustments arising during the period(789)91
Balance, end of period$(169,392)$(162,894)
 




See accompanying notes
16
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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL (Continued)
(Amounts in thousands)
(Unaudited)
 
Nine Months EndedQuarter Ended
September 30, 2013March 31, 2014
NONCONTROLLING INTERESTS  
  
NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES  
Balance, beginning of year$77,688
$126,583
Net (loss) attributable to Noncontrolling Interests(1,101)
Net income attributable to Noncontrolling Interests504
Contributions by Noncontrolling Interests11,520
5,684
Acquisition of Archstone28,263
Distributions to Noncontrolling Interests(5,735)(4,113)
Acquisition of Noncontrolling Interests – Partially Owned Properties(1,000)
Balance, end of period$110,635
$127,658

See accompanying notes
17
Table of Contents

EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1.Business

Equity Residential (“EQR”), a Maryland real estate investment trust (“REIT”) formed in March 1993, is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top United States growth markets. ERP Operating Limited Partnership (“ERPOP”("ERPOP"), an Illinois limited partnership, was formed in May 1993 to conduct the multifamily residential property business of Equity Residential. EQR has elected to be taxed as a REIT. References to the “Company,” “we,” “us”"Company," "we," "us" or “our”"our" mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership”"Operating Partnership" mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership.
EQR is the general partner of, and as of September 30, 2013March 31, 2014 owned an approximate 96.2% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues public equity from time to time but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.
As of September 30, 2013March 31, 2014, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 389396 properties located in 12 states and the District of Columbia consisting of 109,795111,537 apartment units. The ownership breakdown includes (table does not include various uncompleted development properties):
 Properties Apartment
Units		 Properties Apartment
Units
Wholly Owned Properties 363
 99,192
 367
 99,936
Master-Leased Properties – Consolidated 3
 853
 3
 853
Partially Owned Properties – Consolidated 19
 3,752
 20
 4,020
Partially Owned Properties – Unconsolidated 2
 837
 4
 1,669
Military Housing 2
 5,161
 2
 5,059
 389
 109,795
 396
 111,537

2.Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and certain reclassifications considered necessary for a fair presentation have been included. Certain reclassifications have been made to the prior period financial statements in order to conform to the current year presentation. Operating results for the nine monthsquarter ended September 30, 2013March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 20132014.

In preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The balance sheets at December 31, 20122013 have been derived from the audited financial statements at that date but do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.


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Table of Contents

For further information, including definitions of capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Company’s and the Operating Partnership's annual report on Form 10-K for the year ended December 31, 20122013.

Real Estate Assets and Depreciation of Investment in Real Estate

Effective for business combinations on or after January 1, 2009, an acquiring entity is required to recognize all assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. In addition, an acquiring entity is required to expense acquisition-related costs as incurred, value noncontrolling interests at fair value at the acquisition date and expense restructuring costs associated with an acquired business.

The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets/liabilities acquired. The Company allocates the purchase price of acquired real estate to various components as follows:

Land – Based on actual purchase price adjusted to fair value (as necessary) if acquired separately or market research/comparables if acquired with an operating property.
Furniture, Fixtures and Equipment – Ranges between $3,000 and $13,000 per apartment unit acquired as an estimate of the fair value of the appliances and fixtures inside an apartment unit. The per-apartment unit amount applied depends on the type of apartment building acquired. Depreciation is calculated on the straight-line method over an estimated useful life of five to ten years.
Lease Intangibles – The Company considers the value of acquired in-place leases and above/below market leases and the amortization period is the average remaining term of each respective acquired lease. In-place residential leases' average term at acquisition approximates six months. See Note 4 for more information on above and below market leases.
Other Intangible Assets – The Company considers whether it has acquired other intangible assets, including any customer relationship intangibles and the amortization period is the estimated useful life of the acquired intangible asset.
Building – Based on the fair value determined on an “as-if vacant” basis. Depreciation is calculated on the straight-line method over an estimated useful life of thirty years.
Site Improvements – Based on replacement cost, which approximates fair value. Depreciation is calculated on the straight-line method over an estimated useful life of eight years.
Long-Term Debt – The Company calculates the fair value by discounting the remaining contractual cash flows on each instrument at the current market rate for those borrowings.

Income and Other Taxes
Due to the structure of EQR as a REIT and the nature of the operations of its operating properties, no provision for federal income taxes has been made at the EQR level. In addition, ERPOP generally is not liable for federal income taxes as the partners recognize their proportionate share of income or loss in their tax returns; therefore no provision for federal income taxes has been made at the ERPOP level. Historically, the Company has generally only incurred certain state and local income, excise and franchise taxes. The Company has elected Taxable REIT Subsidiary (“TRS”) status for certain of its corporate subsidiaries and as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses.
Deferred tax assets and liabilities applicable to the TRS are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates for which the temporary differences are expected to be recovered or settled. The effects of changes in tax rates on deferred tax assets and liabilities are recognized in earnings in the period enacted. The Company’s deferred tax assets are generally the result of tax affected amortization of goodwill,suspended interest deductions, net operating losses, differing depreciable lives on capitalized assets and the timing of expense recognition for certain accrued liabilities. As of September 30, 2013March 31, 2014, the Company has recorded a deferred tax asset, which is fully offset by a valuation allowance due to the uncertainty in forecasting future TRS taxable income.



19
Table of Contents

Other

The Company is the controlling partner in various consolidated partnerships owning 1920 properties and 3,7524,020 apartment units and various completed and uncompleted development properties having a noncontrolling interest book value of $110.6127.7 million at September 30, 2013March 31, 2014. The Company is required to make certain disclosures regarding noncontrolling interests in consolidated limited-life subsidiaries. Of the consolidated entities described above, the Company is the controlling partner in limited-life partnerships owning six properties having a noncontrolling interest deficit balance of $8.510.0 million. These six partnership agreements contain provisions that require the partnerships to be liquidated through the sale of their assets upon reaching a date specified in each respective partnership agreement. The Company, as controlling partner, has an obligation to cause the property owning partnerships to distribute the proceeds of liquidation to the Noncontrolling Interests in these Partially Owned Properties only to the extent that the net proceeds received by the partnerships from the sale of their assets warrant a distribution based on the partnership agreements. As of September 30, 2013March 31, 2014, the Company estimates the value of Noncontrolling Interest distributions for these six properties would have been approximately $46.852.5 million (“Settlement Value”) had the partnerships been liquidated. This Settlement Value is based on estimated third party consideration realized by the partnerships upon disposition of the six Partially Owned Properties and is net of all other assets and liabilities, including yield maintenance on the mortgages encumbering the properties, that would have been due on September 30, 2013March 31, 2014 had those mortgages been prepaid. Due to, among other things, the inherent uncertainty in the sale of real estate assets, the amount of any potential distribution to the Noncontrolling Interests in the Company's Partially Owned Properties is subject to change. To the extent that the partnerships' underlying assets are worth less than the underlying liabilities, the Company has no obligation to remit any consideration to the Noncontrolling Interests in these Partially Owned Properties.

Effective January 1, 2012, companies are required to separately disclose the amounts and reasons for any transfers of assets and liabilities into and out of Level 1 and Level 2 of the fair value hierarchy. For fair value measurements using significant unobservable inputs (Level 3), companies are required to disclose quantitative information about the significant unobservable inputs used for all Level 3 measurements and a description of the Company's valuation processes in determining fair value. In addition, companies are required to provide a qualitative discussion about the sensitivity of recurring Level 3 measurements to changes in the unobservable inputs disclosed, including the interrelationship between inputs. Companies are also required to disclose information about when the current use of a non-financial asset measured at fair value differs from its highest and best use and the hierarchy classification for items whose fair value is not recorded on the balance sheet but is disclosed in the notes. This does not have a material effect on the Company's consolidated results of operations or financial position. See Notes 4 and 9 for further discussion.

Effective January 1, 2013, companies are required to report, in one place, information about reclassifications out of accumulated other comprehensive income ("AOCI"). Companies willare also be required to report changes in AOCI balances. For significant items reclassified out of AOCI to net income in their entirety in the same reporting period, reporting is required about the effect of the reclassifications on the respective line items in the statement where net income is presented. For items that are not reclassified to net income in their entirety in the same reporting period, a cross reference to other disclosures currently required under US GAAP is required in the notes. This does not have a material effect on the Company's consolidated results of operations or financial position. See Note 9 for further discussion.

Effective January 1, 2014, companies are required to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date as the sum of the amount a company agreed to pay on the basis of its arrangement among its co-obligors and any additional amount a company expects to pay on behalf of its co-obligors. Companies are required to disclose the nature and amount of the obligation as well as other information about those obligations. This does not have a material effect on the Company's consolidated results of operations or financial position.

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Table of Contents

Effective January 1, 2015, the criteria for reporting discontinued operations will change. Only disposals representing a strategic shift in operations that has a major effect on a company’s operations and financial results will be presented as discontinued operations. Companies will be required to expand their disclosures about discontinued operations to provide more information on the assets, liabilities, income and expenses of the discontinued operations. Companies will also be required to disclose the pre-tax income attributable to a disposal of a significant part of a company that does not qualify for discontinued operations reporting. Application of this guidance is prospective from the date of adoption and early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued. The Company adopted this standard effective January 1, 2014 but did not have any dispositions in the first quarter of 2014. Adoption of this standard did not have a material effect on the Company's overall consolidated results of operations or financial position. However, adoption will result in substantially fewer of the Company's dispositions meeting the discontinued operations qualifications.
3.Equity, Capital and Other Interests

Equity and Redeemable Noncontrolling Interests of Equity Residential

The following tables present the changes in the Company’s issued and outstanding Common Shares and “Units” (which includes OP Units and Long-Term Incentive Plan (“LTIP”) Units) for the nine monthsquarter ended September 30, 2013March 31, 2014:

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Table of Contents

  20132014
Common Shares  
Common Shares outstanding at January 1, 325,054,654360,479,260
Common Shares Issued:  
Conversion of OP Units 47,939
Issuance of Common Shares34,468,08518,043
Exercise of share options 530,847493,995
Employee Share Purchase Plan (ESPP) 63,78837,928
Restricted share grants, net 230,646162,349
Common Shares Other:
Conversion of restricted shares to LTIP Units(12,146)
Repurchased and retired(31,240)
Common Shares outstanding at September 30,March 31, 360,395,959361,148,189
Units  
Units outstanding at January 1, 13,968,75814,180,376
LTIP Units, net 279,557200,840
Conversion of restricted shares to LTIP Units12,146
Conversion of OP Units to Common Shares (47,93918,043)
Units outstanding at September 30,March 31, 14,200,37614,375,319
Total Common Shares and Units outstanding at September 30,March 31, 374,596,335375,523,508
Units Ownership Interest in Operating Partnership 3.8%
The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of LTIP Units, are collectively referred to as the “Noncontrolling Interests – Operating Partnership”. Subject to certain exceptions (including the “book-up” requirements of LTIP Units), the Noncontrolling Interests – Operating Partnership may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Noncontrolling Interests – Operating Partnership (including redeemable interests) is allocated based on the number of Noncontrolling Interests – Operating Partnership Units in total in proportion to the number of Noncontrolling Interests – Operating Partnership Units in total plus the number of Common Shares. Net income is allocated to the Noncontrolling Interests – Operating Partnership based on the weighted average ownership percentage during the period.

The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing Common Shares to any and all holders of Noncontrolling Interests – Operating Partnership Units requesting an exchange of their OP Units with EQR. Once the Operating Partnership elects not to redeem the Noncontrolling Interests – Operating Partnership Units for cash, EQR is obligated to deliver Common Shares to the exchanging holder of the Noncontrolling Interests – Operating Partnership Units.

The Noncontrolling Interests – Operating Partnership Units are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Noncontrolling Interests –

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Operating Partnership are differentiated and referred to as “Redeemable Noncontrolling Interests – Operating Partnership”. Instruments that require settlement in registered shares can not be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Noncontrolling Interests – Operating Partnership are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Noncontrolling Interests – Operating Partnership Units that are classified in permanent equity at September 30, 2013March 31, 2014 and December 31, 20122013.

The carrying value of the Redeemable Noncontrolling Interests – Operating Partnership is allocated based on the number of Redeemable Noncontrolling Interests – Operating Partnership Units in proportion to the number of Noncontrolling Interests – Operating Partnership Units in total. Such percentage of the total carrying value of Units which is ascribed to the Redeemable Noncontrolling Interests – Operating Partnership is then adjusted to the greater of carrying value or fair market value as described above. As of September 30, 2013March 31, 2014, the Redeemable Noncontrolling Interests – Operating Partnership have a redemption value of approximately $376.1405.3 million, which represents the value of Common Shares that would be issued in exchange with the Redeemable Noncontrolling Interests – Operating Partnership Units.

The following table presents the changechanges in the redemption value of the Redeemable Noncontrolling Interests – Operating Partnership for the nine monthsquarter ended September 30, 2013March 31, 2014 (amounts in thousands):

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 2013 2014
Balance at January 1, $398,372
 $363,144
Change in market value (69,344) 44,530
Change in carrying value 47,029
 (2,398)
Balance at September 30, $376,057
Balance at March 31, $405,276
Net proceeds from EQR Common Share and Preferred Share (see definition below) offerings are contributed by EQR to ERPOP. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in ERPOP equal in number and having the same terms as the Preferred Shares issued in the equity offering). As a result, the net offering proceeds from Common Shares and Preferred Shares are allocated between shareholders’ equity and Noncontrolling Interests – Operating Partnership to account for the change in their respective percentage ownership of the underlying equity of ERPOP.
The Company’s declaration of trust authorizes it to issue up to 100,000,000 preferred shares of beneficial interest, $0.01 par value per share (the “Preferred Shares”), with specific rights, preferences and other attributes as the Board of Trustees may determine, which may include preferences, powers and rights that are senior to the rights of holders of the Company’s Common Shares.
The following table presents the Company’s issued and outstanding Preferred Shares as of September 30, 2013March 31, 2014 and December 31, 20122013:
     Amounts in thousands     Amounts in thousands
 Redemption
Date (1)		 Annual
Dividend per
Share (2)		 September 30,
2013		 December 31,
2012		 Redemption
Date (1)		 Annual
Dividend per
Share (2)		 March 31,
2014		 December 31,
2013
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized:		            
8.29% Series K Cumulative Redeemable Preferred; liquidation
value $50 per share; 1,000,000 shares issued and outstanding
at September 30, 2013 and December 31, 2012		 12/10/26 
$4.145
 $50,000
 $50,000
8.29% Series K Cumulative Redeemable Preferred; liquidation
value $50 per share; 1,000,000 shares issued and outstanding
at March 31, 2014 and December 31, 2013		 12/10/26 
$4.145
 $50,000
 $50,000
   $50,000
 $50,000
   $50,000
 $50,000
 
(1)On or after the redemption date, redeemable preferred shares may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation price per share, plus accrued and unpaid distributions, if any.
in part, at a redemption price equal to the liquidation price per share, plus accrued and unpaid distributions, if any.
(2)Dividends on Preferred Shares are payable quarterly.

Capital and Redeemable Limited Partners of ERP Operating Limited Partnership

The following tables present the changes in the Operating Partnership’s issued and outstanding Units and in the limited partners’ Units for the nine monthsquarter ended September 30, 2013March 31, 2014:

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  20132014
General and Limited Partner Units  
General and Limited Partner Units outstanding at January 1, 339,023,412374,659,636
Issued to General Partner:  
Issuance of OP Units34,468,085
Exercise of EQR share options 530,847493,995
EQR’s Employee Share Purchase Plan (ESPP) 63,78837,928
EQR's restricted share grants, net 230,646162,349
Issued to Limited Partners:  
LTIP Units, net 279,557200,840
OP Units Other:
Repurchased and retired(31,240)
General and Limited Partner Units outstanding at September 30,March 31, 374,596,335375,523,508
Limited Partner Units  
Limited Partner Units outstanding at January 1, 13,968,75814,180,376
Limited Partner LTIP Units, net 279,557200,840
Conversion of EQR restricted shares to LTIP Units12,146
Conversion of Limited Partner OP Units to EQR Common Shares (47,93918,043)
Limited Partner Units outstanding at September 30,March 31, 14,200,37614,375,319
Limited Partner Units Ownership Interest in Operating Partnership 3.8%
The Limited Partners of the Operating Partnership as of September 30, 2013March 31, 2014 include various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of LTIP Units. Subject to certain exceptions (including the “book-up” requirements of LTIP Units), Limited Partners may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Limited Partner Units (including redeemable interests) is allocated based on the number of Limited Partner Units in total in proportion to the number of Limited Partner Units in total plus the number of General Partner Units. Net income is allocated to the Limited Partner Units based on the weighted average ownership percentage during the period.
The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing Common Shares to any and all holders of Limited Partner Units requesting an exchange of their OP Units with EQR. Once the Operating Partnership elects not to redeem the Limited Partner Units for cash, EQR is obligated to deliver Common Shares to the exchanging limited partner.

The Limited Partner Units are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Limited Partner Units are differentiated and referred to as “Redeemable Limited Partner Units”. Instruments that require settlement in registered shares can not be classified in permanent equity as it is not always completely within an issuer's control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Limited Partner Units are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Limited Partner Units that are classified in permanent equity at September 30, 2013March 31, 2014 and December 31, 20122013.
The carrying value of the Redeemable Limited Partner Units is allocated based on the number of Redeemable Limited Partner Units in proportion to the number of Limited Partner Units in total. Such percentage of the total carrying value of Limited Partner Units which is ascribed to the Redeemable Limited Partner Units is then adjusted to the greater of carrying value or fair market value as described above. As of September 30, 2013March 31, 2014, the Redeemable Limited Partner Units have a redemption value of approximately $376.1405.3 million, which represents the value of Common Shares that would be issued in exchange with the Redeemable Limited Partner Units.
The following table presents the changechanges in the redemption value of the Redeemable Limited Partners for the nine monthsquarter ended September 30, 2013March 31, 2014 (amounts in thousands):

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 2013 2014
Balance at January 1, $398,372
 $363,144
Change in market value (69,344) 44,530
Change in carrying value 47,029
 (2,398)
Balance at September 30, $376,057
Balance at March 31, $405,276

EQR contributes all net proceeds from its various equity offerings (including proceeds from exercise of options for Common Shares) to ERPOP. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in ERPOP equal in number and having the same terms as the preferred shares issued in the equity offering).

The following table presents the Operating Partnership’s issued and outstanding “Preference Units” as of September 30, 2013March 31, 2014 and December 31, 20122013:
   Amounts in thousands   Amounts in thousands
 
Redemption
Date (1)
 Annual
Dividend per
Unit (2)		 September 30,
2013		 December 31,
2012		 
Redemption
Date (1)
 Annual
Dividend per
Unit (2)		 March 31,
2014		 December 31,
2013
Preference Units:            
8.29% Series K Cumulative Redeemable Preference Units;
liquidation value $50 per unit; 1,000,000 units issued and
outstanding at September 30, 2013 and December 31, 2012
 12/10/26 
$4.145
 $50,000
 $50,000
8.29% Series K Cumulative Redeemable Preference Units;
liquidation value $50 per unit; 1,000,000 units issued and
outstanding at March 31, 2014 and December 31, 2013
 12/10/26 
$4.145
 $50,000
 $50,000
   $50,000
 $50,000
   $50,000
 $50,000
 
(1)On or after the redemption date, redeemable preference units may be redeemed for cash at the option of the Operating Partnership, in whole or in part, at a redemption price equal to the liquidation price per unit, plus accrued and unpaid distributions, if any, in conjunction with the concurrent redemption of the corresponding Company Preferred Shares.
(2)Dividends on Preference Units are payable quarterly.

Other

On February 27, 2013, the Company issued 34,468,085 Common Shares to an affiliate of Lehman Brothers Holdings Inc. as partial consideration for the portion of the Archstone Portfolio acquired by the Company (as discussed in Note 4 below). The shares had a total value of $1.9 billion based on the February 27, 2013 closing price of EQR Common Shares of $55.99 per share. Concurrent with this transaction, ERPOP issued 34,468,085 OP Units to EQR. On March 7, 2013, EQR filed a shelf registration statement relating to the resale of these shares by the selling shareholders.
On November 28, 2012, as a partial source of funding for the Archstone Acquisition (see definition below), EQR priced the issuance of 21,850,000 Common Shares at a price of $54.75 per share for total consideration of approximately $1.2 billion, after deducting underwriting commissions of $35.9 million. Concurrent with this transaction, ERPOP issued 21,850,000 OP Units to EQR.
In September 2009, the Company announced the establishment of an At-The-Market (“ATM”) share offering program which would allow EQR to sell up to 17.0 millionCommon Shares from time to time over the next three years (later increased by 5.7 million Common Shares and extended to February 2014) into the existing trading market at current market prices as well as through negotiated transactions. Per the terms of ERPOP's partnership agreement, EQR contributes the net proceeds from 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). EQR has not issued any shares under this program since September 14, 2012. On July 30, 2013, the Company filed a new universal shelf registration statement to replace its existing universal shelf registration statement, which expired October 15, 2013. The Board of Trustees also approved an increase to the amount of shares which may be offered under the ATM program to 13.0 million Common Shares and extended the program maturity to July 2016. EQR has not issued any shares under this program since September 14, 2012.

EQR has a share repurchase program authorized by the Board of Trustees under which it previously had authorization to repurchase up to $464.6 million of its shares. Effective July 30, 2013, the Board of Trustees approved an increase and modification to the Company's share repurchase program to allow for the potential repurchase of up to 13.0 million Common Shares. NoConsidering the repurchase activity for the quarter ended March 31, 2014 (see discussion below), EQR has remaining authorization to repurchase an additional 12,968,760 of its shares as of March 31, 2014.

During the quarter ended March 31, 2014, EQR repurchased 31,240 of its Common Shares at a price of $56.87 per share for total consideration of approximately $1.8 million. These shares were retired subsequent to the repurchases. Concurrent with these transactions, ERPOP repurchased and retired 31,240 OP Units previously issued to EQR. All of the shares repurchased during the nine monthsquarter ended September 30, 2013.March 31, 2014 were repurchased from employees at the then current market price to cover the minimum statutory tax withholding obligations related to the vesting of employees’ restricted shares. 

During the quarter ended March 31, 2014, the Company acquired all of its partner's interest in one consolidated partially owned land parcel for $2.5 million. In conjunction with this transaction, the Company reduced paid in capital (included in general

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partner's capital in the Operating Partnership's financial statements) by $0.5 million, Noncontrolling Interests – Partially Owned Properties by $1.0 million and other liabilities by $1.0 million.

See Note 6 for a discussion of the Noncontrolling Interests assumed in conjunction with the acquisition of Archstone.



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4.Real Estate and Lease Intangibles

The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of September 30, 2013March 31, 2014 and December 31, 20122013 (amounts in thousands):
 September 30,
2013		 December 31,
2012		 March 31,
2014		 December 31,
2013
Land $6,201,333
 $4,554,912
 $6,281,124
 $6,192,512
Depreciable property:        
Buildings and improvements 17,555,388
 14,135,740
 17,843,201
 17,509,609
Furniture, fixtures and equipment 1,196,410
 1,343,765
 1,273,171
 1,214,220
In-Place lease intangibles 503,159
 232,439
 507,100
 502,218
Projects under development:        
Land 280,718
 210,632
 390,850
 353,574
Construction-in-progress 498,335
 177,118
 474,327
 635,293
Land held for development:        
Land 435,227
 294,868
 253,350
 341,389
Construction-in-progress 70,267
 58,955
 42,007
 52,133
Investment in real estate 26,740,837
 21,008,429
 27,065,130
 26,800,948
Accumulated depreciation (4,654,594) (4,912,221) (4,992,877) (4,807,709)
Investment in real estate, net $22,086,243
 $16,096,208
 $22,072,253
 $21,993,239

The following table summarizes the carrying amounts for the Company's above and below market ground and retail lease intangibles as of September 30,March 31, 2014 and December 31, 2013 (amounts in thousands):
Description Balance Sheet Location Value Balance Sheet Location March 31,
2014		 December 31,
2013
Assets          
Ground lease intangibles – below market Other Assets $178,251
 Other Assets $178,251
 $178,251
Retail lease intangibles – above market Other Assets 2,310
 Other Assets 1,260
 1,260
Lease intangible assets 180,561
 179,511
 179,511
Accumulated amortization (3,221) (5,502) (4,364)
Lease intangible assets, net $177,340
 $174,009
 $175,147
      
Liabilities      
Ground lease intangibles – above market Other Liabilities $2,400
 Other Liabilities $2,400
 $2,400
Retail lease intangibles – below market Other Liabilities 7,790
 Other Liabilities 5,500
 5,500
Lease intangible liabilities 10,190
 7,900
 7,900
Accumulated amortization (993) (1,471) (1,161)
Lease intangible liabilities, net $9,197
 $6,429
 $6,739

During the nine months and quarterquarters ended September 30,March 31, 2014 and 2013,, the Company amortized approximately $2.51.1 million and $1.1$0.4 million,, respectively, of above and below market ground lease intangibles which is included (net increase) in property and maintenance expense in the accompanying consolidated statements of operations and comprehensive income and approximately $0.3 million and $0.1$0.1 million,, respectively, of above and below market retail lease intangibles which is included (net increase) in rental income in the accompanying consolidated statements of operations and comprehensive income.

The weighted average amortization period for above and below market ground lease intangibles and retail lease intangibles is 49.8 years and 5.32.8 years, respectively.

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The following table provides a summary of the aggregate amortization expense for above and below market ground lease intangibles and retail lease intangibles for each of the next five years (amounts in thousands):

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 Remaining           Remaining          
 2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2019
                        
Ground lease intangibles $1,080
 $4,321
 $4,321
 $4,321
 $4,321
 $4,321
 $3,241
 $4,321
 $4,321
 $4,321
 $4,321
 $4,321
Retail lease intangibles (218) (1,144) (1,150) (1,042) (674) (205) (758) (1,016) (908) (540) (71) (71)
Total $862
 $3,177
 $3,171
 $3,279
 $3,647
 $4,116
 $2,483
 $3,305
 $3,413
 $3,781
 $4,250
 $4,250
    
Archstone Acquisition
    
On February 27, 2013, the Company, AvalonBay Communities, Inc. (“AVB”) and certain of their respective subsidiaries completed their previously announced acquisition (the “Archstone Acquisition” or the “Archstone Transaction”) from Archstone Enterprise LP an affiliate of Lehman Brothers Holdings, Inc. (“Enterprise”) (which subsequently changed its name to Jupiter Enterprise LP), an affiliate of Lehman Brothers Holdings, Inc. (“Lehman”) and its affiliates, of all of the assets of Enterprise (including interests in various entities affiliated with Enterprise), constituting a portfolio of apartment properties and other assets (the “Archstone Portfolio”).

The Company acquired assets representing approximately 60% of the Archstone Portfolio which consisted principally of high-quality apartment properties in major markets in the United States. The acquisition allowed the Company to accelerate the completion of its strategic shift into coastal apartment markets. Pursuant to the Archstone transaction,Transaction, the Company acquired directly or indirectly, 71 wholly owned, stabilized properties consisting of 20,160 apartment units, one partially owned and consolidated stabilized property consisting of 432 apartment units, one partially owned and unconsolidated stabilized property consisting of 336 apartment units, three consolidated master-leased properties consisting of 853 apartment units, four projects in various stages of construction (two consolidated and two unconsolidated) for 964 apartment units and fourteen land sites for approximately $9.0 billion. During the nine monthsquarter ended September 30,March 31, 2013,, the Company recorded revenues and net operating income ("NOI") of $358.052.6 million and $244.2 million, respectively, from the acquired assets. During the quarter ended September 30, 2013, the Company recorded revenues and NOI of $153.5 million and $104.236.2 million, respectively, from the acquired assets.

The consideration paid by the Company in connection with the Archstone Acquisition consisted of cash of approximately $4.0 billion (inclusive of $2.0 billion of Archstone secured mortgage principal paid off in conjunction with the closing), 34,468,085 Common Shares (which shares had a total value of $1.9 billion based on the February 27, 2013 closing price of EQR common shares of $55.99 per share) issued to the seller and the assumption of approximately $3.1 billion of mortgage debt (inclusive of a net mark-to-market premium of $127.9 million) and approximately 60% of all of the other assets and liabilities related to the Archstone Portfolio. The cash consideration was funded with proceeds from the Novemberissuance of 21,850,000 Common Shares (which shares had a total value of approximately $1.2 billion based on a price of $54.75 per share) in the November/December 2012 public equity offering, the asset sales discussed below,of approximately $4.5 billion that were completed during the year ended December 31, 2013, the Company's new $750.0 million senior unsecured delayed draw term loan facility and the Company's revolving credit facility.

The Company owns the building and improvements and leases the land underlying the improvements under long-term ground leases that expire beginning in 2042 and running through 2103 for nine of the operating properties acquired and discussed above. These properties are consolidated and reflected as real estate assets while the ground leases are accounted for as operating leases. The Company also leases the three master-leased properties discussed above to third party operators and earns monthly net rental income.

The Company is accountingaccounted for the acquisition under the acquisition method in accordance with Accounting Standards Codification ("ASC") 805, Business Combinations (“ASC 805”), and the initial accounting for this business combination is substantially complete but subject to further adjustment as certain information becomes available (see further discussion below).and final. The following table summarizes the acquisition date fair values of the assets acquired and liabilities assumed, which the Company determined using Level 1, Level 2 and Level 3 inputs (amounts in thousands):


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Land $2,239,000
 $2,239,000
Depreciable property:    
Buildings and improvements 5,832,554
 5,765,538
Furniture, fixtures and equipment 61,470
 61,470
In-Place lease intangibles 304,830
 304,830
Projects under development 36,583
 36,583
Land held for development 239,898
 244,097
Investments in unconsolidated entities 188,139
 230,608
Other assets 196,310
 195,260
Other liabilities (112,369) (108,997)
Net assets acquired $8,986,415
 $8,968,389

The allocation of fair values of the assets acquired and liabilities assumed has changed from the allocation reported in “Note 4 – Real Estate”Estate and Lease Intangibles” in the Notes to Consolidated Financial Statements included in Part III of our QuarterlyAnnual Report on Form 10-Q10-K for the quarteryear ended June 30,December 31, 2013 filed with the SEC on August 8, 2013.February 27, 2014. The changes to our valuation assumptions were based on more accurate information concerning the subject assets and liabilities. None of these changes had a material impact on our Consolidated Financial Statements. This allocation is subject to further adjustment due primarily toliabilities and resulted from information not readily available at the acquisition date, final purchase price settlement with our partner in accordance with the terms of the purchase agreement and reclassification adjustments for presentation and adjustments topresentation. None of these changes had a material impact on our valuation assumptions.Consolidated Financial Statements. The Company's assessment of the fair values and the allocation of the purchase price to the identified tangible and intangible assets/liabilities is its currentfinal and best estimate of fair value.

The fair values of investment in real estate were determined using internally developed models that were based on market assumptions and comparable sales data as well as external valuations performed by unrelated third parties. The market assumptions used as inputs to the Company’s fair value model include construction costs, leasing assumptions, growth rates, discount rates, terminal capitalization rates and development yields. The Company usesused data on its existing portfolio of properties and its recent acquisition and development properties, as well as similar market data from third party sources, when available, in determining these inputs (Level 2 and 3). The fair value of Noncontrolling Interests was calculated similar to the investment in real estate described above. The fair value of mortgage debt was calculated using indicative rates, leverage and coverage provided by lenders of similar loans (Level 2). The Common Shares issued to an affiliate of Lehman Brothers Holdings, Inc. were valued using the quoted market price of Common Shares (Level 1).

The following table summarizes the acquisition date fair values of the above and below market ground and retail lease intangibles, which we determined using Level 2 and Level 3 inputs (amounts in thousands):
Description Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Ground lease intangibles – below market Other Assets $178,251
 Other Assets $178,251
Retail lease intangibles – above market Other Assets 2,310
 Other Assets 1,260
    
Ground lease intangibles – above market Other Liabilities 2,400
 Other Liabilities 2,400
Retail lease intangibles – below market Other Liabilities 8,040
 Other Liabilities 8,040

As of September 30, 2013March 31, 2014, the Company has incurred cumulative Archstone-related expenses of approximately $95.494.7 million, of which approximately $13.5 million of this total was financing-related and approximately $81.981.2 million was merger costs. During the nine monthsquarter ended September 30, 2013,March 31, 2014, the Company expensed $19.7nominal amounts of direct and indirect merger costs. During the quarter ended March 31, 2013, the Company expensed $19.1 million of direct merger costs primarily related to investment banking and legal/accounting fees, which were included in mergerother expenses in the accompanying consolidated statements of operations and comprehensive income, and $54.8income. During the quarter ended March 31, 2013, the Company also expensed $46.0 million of indirect merger costs primarily related to severance obligations and retention bonusesobligations through our 60% interest in an unconsolidated joint venture with AVB, which were included in (loss) from investments in unconsolidated entities due to merger expenses in the accompanying consolidated statements of operations and comprehensive income. DuringFinally, during the nine monthsquarter ended September 30,March 31, 2013, the Company also expensed $2.5$2.5 million of financing-related costs, which were included in interest expense in the accompanying consolidated statements of operations and comprehensive income.


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Unaudited Pro Forma Financial Information

Equity Residential

The following table illustrates the effect on net income, earnings per share – basic and earnings per share – diluted as if the Company had consummated the Archstone Acquisition as of January 1, 2012:2012 (amounts in thousands, except per share amounts):

 Nine Months Ended September 30, Quarter Ended September 30, Quarter Ended
 2013 2012 2013 2012 March 31, 2013
 (Amounts in thousands, except per share amounts) 
Total revenues $1,854,509
 $1,726,304
 $629,446
 $596,734
 $638,499
Income (loss) from continuing operations (1) 132,592
 (179,574) 84,978
 107,024
(Loss) from continuing operations (1) (34,473)
Discontinued operations, net 2,024,346
 434,253
 403,181
 145,145
 1,213,615
Net income 2,156,938
 254,679
 488,159
 252,169
 1,179,142
Net income available to Common Shares 2,070,153
 232,053
 468,959
 234,471
 1,130,671
Earnings per share - basic:          
Net income available to Common Shares $5.76
 $0.65
 $1.30
 $0.66
 $3.15
Weighted average Common Shares outstanding (2) 359,611
 356,434
 359,811
 357,654
 359,362
Earnings per share - diluted (1):          
Net income available to Common Shares $5.74
 $0.65
 $1.30
 $0.66
 $3.15
Weighted average Common Shares outstanding (2) 375,808
 356,434
 375,883
 375,091
 359,362

(1)Potential common shares issuable from the assumed conversion of OP Units and the exercise/vesting of long-term compensation shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a pro forma loss from continuing operations for the nine monthsquarter ended September 30, 2012.March 31, 2013.
(2)Includes an adjustment for Common Shares issued to the public in November/December 2012 and to an affiliate of Lehman Brothers Holdings Inc. in February 2013 as partial consideration for the Archstone Acquisition.

ERP Operating Limited Partnership

The following table illustrates the effect on net income, earnings per Unit – basic and earnings per Unit – diluted as if the Operating Partnership had consummated the Archstone Acquisition as of January 1, 2012:2012 (amounts in thousands, except per Unit amounts):

 Nine Months Ended September 30, Quarter Ended September 30, Quarter Ended
 2013 2012 2013 2012 March 31, 2013
 (Amounts in thousands, except per Unit amounts)  
Total revenues $1,854,509
 $1,726,304
 $629,446
 $596,734
 $638,499
Income (loss) from continuing operations (1) 132,592
 (179,574) 84,978
 107,024
(Loss) from continuing operations (1) (34,473)
Discontinued operations, net 2,024,346
 434,253
 403,181
 145,145
 1,213,615
Net income 2,156,938
 254,679
 488,159
 252,169
 1,179,142
Net income available to Units 2,155,736
 242,962
 487,433
 245,725
 1,178,887
Earnings per Unit - basic:          
Net income available to Units $5.76
 $0.65
 $1.30
 $0.66
 $3.15
Weighted average Units outstanding (2) 373,347
 370,250
 373,547
 371,831
 373,085
Earnings per Unit - diluted (1):          
Net income available to Units $5.74
 $0.65
 $1.30
 $0.66
 $3.15
Weighted average Units outstanding (2) 375,808
 370,250
 375,883
 375,091
 373,085


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(1)Potential Units issuable from the assumed exercise/vesting of the Company's long-term compensation shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per Unit calculation as the Operating Partnership had a pro forma loss from continuing operations for the nine monthsquarter ended September 30, 2012.March 31, 2013.
(2)Includes an adjustment for Common Shares issued to the public in November/December 2012 and to an affiliate of Lehman Brothers Holdings Inc. in February 2013 as partial consideration for the Archstone Acquisition. Concurrent with these transactions, ERPOP issued the same number of OP Units to EQR.

For the nine monthsquarter ended September 30,March 31, 2013, and 2012, acquisition costs of $19.719.1 million and $1.9 million, respectively, and severance/retention and other costs of $53.644.8 million and none, respectively, related to the Archstone Acquisition are not expected to have a continuing impact on the Company's financial results and therefore have been excluded from these pro forma results. The pro forma results also do not include the impact of any synergies or lower borrowing costs that the Company has or may achieve as a result of the acquisition or any strategies that management has or may consider in order to more efficiently manage the Company's operations, nor do they give pro forma effect to any other acquisitions, dispositions or capital markets transactions (excluding the equity offering in November/December 2012 which proceeds were used for the Archstone Acquisition) that the Company completed during the periods presented. These pro forma results are not necessarily indicative of the operating results that would have been obtained had the Archstone Acquisition occurred at the beginning of the periods presented, nor are they necessarily indicative of future operating results.

Other

In addition toDuring the Archstone acquisition described above, during the nine monthsquarter ended September 30, 2013March 31, 2014, the Company acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands):
 Properties Apartment Units Purchase Price Properties Apartment Units Purchase Price
Rental Properties – Consolidated 1
 322
 $91,500
 1
 430
 $143,000
Land Parcel (one) —
 —
 16,500
Land Parcel – Consolidated —
 —
 5,500
Total 1
 322
 $108,000
 1
 430
 $148,500

During the nine monthsquarter ended September 30, 2013March 31, 2014, the Company disposeddid not dispose of the following to unaffiliated parties (sales price in thousands):any rental properties or land parcels.

  Properties Apartment Units Sales Price
Consolidated:      
Rental Properties 92
 28,328
 $4,362,689
Land Parcels (six) —
 —
 77,650
Other (1) —
 —
 30,734
Unconsolidated:      
Land Parcel (one) (2) —
 —
 26,350
Total 92
 28,328
 $4,497,423

(1) Represents a 97,000 square foot commercial building adjacent to our Harbor Steps apartment property in downtown Seattle that was acquired in 2011.
(2) Sales price listed is the gross sales price. EQR's share of the net sales proceeds approximated 25%.

The Company recognized a net gain on sales of discontinued operations of approximately $2.0 billion and a net gain on sales of land parcels of approximately $12.2 million on the above sales.
5.Commitments to Acquire/Dispose of Real Estate

The Company has entered into a separate agreement to acquire the following (purchase price in thousands):

 Properties Apartment Units Purchase Price Properties Apartment Units Purchase Price
Land Parcel (one) —
 —
 $12,500
 —
 —
 $16,300
Total —
 —
 $12,500
 —
 —
 $16,300


29
TableIn addition to the portion of Contents

Thethe land parcel that was subsequently disposed of as discussed in Note 14, the Company has entered into a separate agreementagreements to dispose of the following (sales price in thousands):

 Properties Apartment Units Sales Price Properties Apartment Units Sales Price
Land Parcel (one) —
 —
 $27,000
Rental Properties 4
 1,360
 $192,050
Land Parcel —
 —
 32,100
Total —
 —
 $27,000
 4
 1,360
 $224,150

The closings of these pending transactions are subject to certain conditions and restrictions, therefore, there can be no assurance that these transactions will be consummated or that the final terms will not differ in material respects from those summarized in the preceding paragraphs.

6.Investments in Partially Owned Entities

The Company has co-invested in various properties with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated). The following tables and information summarize the Company’s investments in partially owned entities as of September 30, 2013March 31, 2014 (amounts in thousands except for project and apartment unit amounts):

 Consolidated Unconsolidated
 Development Projects     Development Projects    
 Held for
and/or Under
Development		 Operating Total Held for
and/or Under
Development		 Completed, Not Stabilized (3) Operating Total
              
Total projects (1)—
 19
 19
 —
 1
 1
 2
              
Total apartment units (1)—
 3,752
 3,752
 —
 501
 336
 837
              
Balance sheet information at 9/30/13 (at 100%):             
ASSETS             
Investment in real estate$308,893
 $672,958
 $981,851
 $238,872
 $77,292
 $55,369
 $371,533
Accumulated depreciation—
 (167,457) (167,457) (84) —
 (4,165) (4,249)
Investment in real estate, net308,893
 505,501
 814,394
 238,788
 77,292
 51,204
 367,284
Cash and cash equivalents4,253
 17,659
 21,912
 1,153
 317
 1,357
 2,827
Investments in unconsolidated entities—
 55,040
 55,040
 —
 —
 —
 —
Deposits – restricted43,631
 206
 43,837
 —
 —
 —
 —
Deferred financing costs, net—
 2,521
 2,521
 —
 5
 5
 10
Other assets5,781
 27,170
 32,951
 333
 5
 1,038
 1,376
       Total assets$362,558
 $608,097
 $970,655
 $240,274
 $77,619
 $53,604
 $371,497
              
LIABILITIES AND EQUITY/CAPITAL             
Mortgage notes payable (2)$—
 $358,730
 $358,730
 $118,723
 $45,217
 $30,550
 $194,490
Accounts payable & accrued expenses27,052
 2,495
 29,547
 13,781
 2,864
 (143) 16,502
Accrued interest payable—
 1,259
 1,259
 432
 208
 —
 640
Other liabilities1,045
 1,254
 2,299
 365
 156
 1,345
 1,866
Security deposits1
 1,821
 1,822
 94
 75
 18
 187
       Total liabilities28,098
 365,559
 393,657
 133,395
 48,520
 31,770
 213,685
              
Noncontrolling Interests - Partially Owned
Properties/Partners' equity		98,126
 12,509
 110,635
 78,556
 23,205
 20,450
 122,211
Company equity/General and Limited
Partners' Capital		236,334
 230,029
 466,363
 28,323
 5,894
 1,384
 35,601
       Total equity/capital334,460
 242,538
 576,998
 106,879
 29,099
 21,834
 157,812
       Total liabilities and equity/capital$362,558
 $608,097
 $970,655
 $240,274
 $77,619
 $53,604
 $371,497



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 Consolidated Unconsolidated
 Development Projects     Development Projects    
 Held for
and/or Under
Development		     Held for
and/or Under
Development		   Operating  
       Completed, Not Stabilized (3)   
  Operating Total    Total
Operating information for the nine months ended 9/30/13 (at 100%):             
Operating revenue$12
 $59,666
 $59,678
 $1,305
 $1,861
 $3,173
 $6,339
Operating expenses407
 18,458
 18,865
 1,141
 1,023
 1,402
 3,566
              
Net operating (loss) income(395) 41,208
 40,813
 164
 838
 1,771
 2,773
Depreciation—
 26,478
 26,478
 84
 —
 4,165
 4,249
General and administrative/other520
 79
 599
 23
 —
 141
 164
              
Operating (loss) income(915) 14,651
 13,736
 57
 838
 (2,535) (1,640)
Interest and other income2
 3
 5
 —
 —
 10
 10
Other expenses(334) (4) (338) —
 —
 —
 —
Interest:             
Expense incurred, net(2) (10,615) (10,617) (152) (501) (658) (1,311)
Amortization of deferred financing costs—
 (216) (216) —
 —
 (1) (1)
              
(Loss) income before income and other taxes, (loss)
from investments in unconsolidated entities, net
(loss) gain on sales of land parcels and
discontinued operations		(1,249) 3,819
 2,570
 (95) 337
 (3,184) (2,942)
Income and other tax (expense) benefit(11) (56) (67) —
 —
 —
 —
(Loss) from investments in unconsolidated entities
—
 (1,010) (1,010) —
 —
 —
 —
Net (loss) on sales of land parcels(17) —
 (17) —
 —
 —
 —
Net gain on sales of discontinued operations—
 26,673
 26,673
 —
 —
 —
 —
              
Net (loss) income$(1,277) $29,426
 $28,149
 $(95) $337
 $(3,184) $(2,942)
 Consolidated Unconsolidated
 Development Projects     Development Projects    
 Held for
and/or Under
Development		 Completed, Not Stabilized (3) Operating Total Held for
and/or Under
Development		 Completed, Not Stabilized (3) Operating Total
                
Total projects (1)—
 1
 19
 20
 —
 3
 1
 4
                
Total apartment units (1)—
 268
 3,752
 4,020
 —
 1,333
 336
 1,669
                
Balance sheet information at
3/31/14 (at 100%):		               
ASSETS               
Investment in real estate$310,147
 $48,319
 $674,916
 $1,033,382
 $49,332
 $285,191
 $55,585
 $390,108
Accumulated depreciation—
 —
 (178,165) (178,165) —
 (4,669) (5,052) (9,721)
Investment in real estate, net310,147
 48,319
 496,751
 855,217
 49,332
 280,522
 50,533
 380,387
Cash and cash equivalents4,226
 698
 11,611
 16,535
 450
 1,803
 1,378
 3,631
Investments in
unconsolidated entities		—
 —
 53,844
 53,844
 —
 —
 —
 —
Deposits – restricted42,045
 32
 220
 42,297
 —
 120
 48
 168
Deferred financing costs, net—
 —
 2,407
 2,407
 65
 126
 4
 195
Other assets5,670
 2
 26,641
 32,313
 —
 365
 1,032
 1,397
       Total assets$362,088
 $49,051
 $591,474
 $1,002,613
 $49,847
 $282,936
 $52,995
 $385,778
                
LIABILITIES AND
EQUITY/CAPITAL		               
Mortgage notes payable (2)$—
 $—
 $360,217
 $360,217
 $16,154
 $176,232
 $30,410
 $222,796
Accounts payable & accrued
expenses
17,438
 1,413
 2,806
 21,657
 4,078
 915
 210
 5,203
Accrued interest payable—
 —
 1,283
 1,283
 32
 725
 —
 757
Other liabilities120
 49
 1,114
 1,283
 339
 867
 863
 2,069
Security deposits—
 21
 1,839
 1,860
 —
 258
 109
 367
       Total liabilities17,558
 1,483
 367,259
 386,300
 20,603
 178,997
 31,592
 231,192
                
Noncontrolling Interests –
Partially Owned Properties/
Partners' equity
117,689
 1,244
 8,725
 127,658
 27,858
 73,412
 20,450
 121,720
Company equity/General and
Limited Partners' Capital		226,841
 46,324
 215,490
 488,655
 1,386
 30,527
 953
 32,866
       Total equity/capital344,530
 47,568
 224,215
 616,313
 29,244
 103,939
 21,403
 154,586
       Total liabilities and
equity/capital		$362,088
 $49,051
 $591,474
 $1,002,613
 $49,847
 $282,936
 $52,995
 $385,778



29
Table of Contents

 Consolidated Unconsolidated
 Development Projects     Development Projects    
 Held for
and/or Under
Development		       Held for
and/or Under
Development		   Operating  
  Completed, Not
Stabilized (3)		      Completed, Not Stabilized (3)   
   Operating Total    Total
Operating information for the quarter
ended 3/31/14 (at 100%):		               
Operating revenue$—
 $468
 $21,308
 $21,776
 $—
 $4,528
 $1,353
 $5,881
Operating expenses77
 204
 6,453
 6,734
 44
 1,917
 559
 2,520
                
Net operating (loss) income(77) 264
 14,855
 15,042
 (44) 2,611
 794
 3,361
Depreciation—
 —
 5,363
 5,363
 —
 2,782
 447
 3,229
General and administrative/other(9) 116
 12
 119
 —
 12
 43
 55
                
Operating (loss) income(68) 148
 9,480
 9,560
 (44) (183) 304
 77
Interest and other income—
 —
 3
 3
 —
 —
 —
 —
Other expenses(42) —
 (7) (49) —
 —
 —
 —
Interest:               
Expense incurred, net—
 —
 (3,887) (3,887) —
 (1,992) (279) (2,271)
Amortization of deferred
financing costs		—
 —
 (88) (88) —
 (3) —
 (3)
                
(Loss) income before income and
other taxes and (loss) from
investments in unconsolidated
entities		(110) 148
 5,501
 5,539
 (44) (2,178) 25
 (2,197)
Income and other tax (expense)
benefit		—
 —
 (36) (36) —
 —
 —
 —
(Loss) from investments in
unconsolidated entities		—
 —
 (419) (419) —
 —
 —
 —
                
Net (loss) income$(110) $148
 $5,046
 $5,084
 $(44) $(2,178) $25
 $(2,197)

(1)Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed.
(2)
All debt is non-recourse to the Company with the exception of 50% of the current $5.716.2 million outstanding debt balance on one unconsolidated development project.
(3)Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing.

Note:
The above tables exclude the Company's interests in unconsolidated joint ventures entered into with AVB in connection with the Archstone transaction.Transaction. These ventures own certain non-core Archstone assets that are held for sale and succeeded to certain residual Archstone liabilities, such as liability for various employment-related matters as well as responsibility for tax protection arrangements and third-party preferred interests in former Archstone subsidiaries. The preferred interests have an aggregate liquidation value of $88.379.3 million at September 30, 2013March 31, 2014. The ventures are owned 60% by the Company and 40% by AVB.
The Company is the controlling partner in various consolidated partnership properties and development properties having a noncontrolling interest book value of $110.6127.7 million at September 30, 2013March 31, 2014. The Company has identified one development partnership, consisting of a land parcel with a book value of $5.0 million, as a VIE. The Company does not have any unconsolidated VIEs.

Archstone Acquisition
On February 27, 2013, in conjunction with the Archstone Acquisition, the Company acquired interests in several joint ventures. Details of these interests follow by project:

Park Aire (formerly known as Enclave at Wellington) – This venture is currently developingdeveloped certain land parcels into a 268 unit apartment building located in Wellington, Florida. The Company has a 95% equity interest with an initial basis of $26.2 million. Total project costs are expected to be approximately $50.0 million. The Company is the managing member, iswas responsible for constructing the project and its partner does not have substantive kick-out or participating rights. As a result, the entity is required to be consolidated on the Company's balance sheet.

East Palmetto Park – This venture was formed to ultimately develop certain land parcels into a 377 unit apartment building located in Boca Raton, Florida. The Company has a 90% equity interest with an initial basis of $20.2 million. The Company is the

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managing member, is responsible for constructing the project and its partner does not have substantive kick-out or participating rights. As a result, the entity is required to be consolidated on the Company's balance sheet.

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Table of Contents

Wisconsin Place – This venture was formed to develop and operateproject contains a mixed-use site located in Chevy Chase, Maryland consisting of residential, retail, office and accessory uses, including underground parking facilities. The Company has a 75% equity interest with an initial basis of $198.5 million in the 432 unit residential component. The Company is the managing member, was responsible for constructing the residential project and its partner does not have substantive kick-out or participating rights. As a result, the entity that owns the residential component of this mixed-use site is required to be consolidated on the Company's balance sheet. Such entity also retains an unconsolidated interest in an entity that owns the land underlying the entire project and owns and operates the parking facility. The initial fair value of this investment is $56.5 million. The Company does not have any ownership interest in the retail and office components.

San Norterra – This venture is currently developingdeveloped certain land parcels into a 388 unit apartment building located in Phoenix, Arizona. The Company has an 85% equity interest with an initial basis of $16.9 million. Total project costs are approximately $56.353.3 million and construction is beingwas partially funded with a construction loan that is guaranteed by the partner and non-recourse to the Company. The loan has a maximum debt commitment of $34.8 million and a current unconsolidated outstanding balance of $30.833.0 million; the loan bears interest at LIBOR plus 2.00% and matures January 6, 2015. The partner is the managing member and is developingdeveloped the project. The Company does not have substantive kick-out or participating rights. As a result, the entity is unconsolidated and recorded using the equity method of accounting.

Waterton Tenside – This venture was formed to develop and operate a 336 unit apartment property located in Atlanta, Georgia. The Company has a 20% equity interest with an initial basis of $5.1 million. The partner is the managing member and developed the project. The project is encumbered by a non-recourse mortgage loan that has a current outstanding balance of $30.630.4 million, bears interest at 3.66% and matures December 1, 2018. The Company does not have substantive kick-out or participating rights. As a result, the entity is unconsolidated and recorded using the equity method of accounting.

1333 Powell (formerly known as Parkside at EmeryvilleEmeryville) – This venture is currently developing certain land parcels into a 180176 unit apartment building located in Emeryville, California. The Company has a 5% equity interest with an initial obligation of approximately $2.1 million. Total project costs are expected to be approximately $75.0 million and construction is being partially funded with a construction loan. The loan has a maximum debt commitment of $39.5 million and a current unconsolidated outstanding balance of $5.716.2 million; the loan bears interest at LIBOR plus 2.25% and matures August 14, 2015. The Company has given a repayment guaranty on the construction loan of 50% of the outstanding balance, up to a maximum of $19.7 million, and has given certain construction cost overrun guarantees. The partner is the managing member and is developing the project.member. The Company does not have substantive kick-out or participating rights. As a result, the entity is unconsolidated and recorded using the equity method of accounting.

On February 27, 2013, in connection with the Archstone Acquisition, subsidiaries of the Company and AVB entered into three limited liability company agreements (collectively, the “Residual JV”). The Residual JV owns certain non-core Archstone assets that are held for sale, such as interests in a German portfolio of apartment buildings (see Note 14 for further discussion on the German portfolio), and succeeded to certain residual Archstone liabilities, such as liability for various employment-related matters. The Residual JV is owned 60% by the Company and 40% by AVB and the Company's initial investment was $105.1147.6 million. The ventureResidual JV is managed by a Management Committee consisting of two members from each of the Company and AVB. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the ventureResidual JV is unconsolidated and recorded using the equity method of accounting.

On February 27, 2013, in connection with the Archstone Acquisition, a subsidiary of the Company and AVB entered into a limited liability company agreement (the “Legacy JV”), through which they assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements. During the nine monthsyear ended September 30,December 31, 2013,, the Company purchased with AVB $65.0 million (of which the Company's 60% share was $39.0 million) of the preferred interests assumed by Legacy JV. At September 30, 2013March 31, 2014, the remaining preferred interests have an aggregate liquidation value of $88.379.3 million, our share of which is included in other liabilities in the accompanying consolidated balance sheets. Obligations of the ventureLegacy JV are borne 60% by the Company and 40% by AVB. The ventureLegacy JV is managed by a Management Committee consisting of two members from each of the Company and AVB. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the ventureLegacy JV is unconsolidated and recorded using the equity method of accounting.

Other

In December 2011, the Company and Toll Brothers (NYSE: TOL) jointly acquired a vacant land parcel at 400 Park Avenue South in New York City. The Company's and Toll Brothers' allocated portions of the purchase price were approximately $76.1 million and $57.9 million, respectively. The Company is the managing member and Toll Brothers does not have substantive kick-out or participating rights. Until the core and shell of the building is complete, the building and land will be owned jointly and are

32
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required to be consolidated on the Company's balance sheet. Thereafter, the Company will solely own and control the rental portion

31
Table of Contents

of the building (floors 2-22) and Toll Brothers will solely own and control the for sale portion of the building (floors 23-40). Once the core and shell are complete, the Toll Brothers' portion of the property will be deconsolidated from the Company's balance sheet. The acquisition was financed through contributions by the Company and Toll Brothers of approximately $102.5 million and $75.7 million, respectively, which included the land purchase noted above, restricted deposits and taxes and fees. As of September 30, 2013March 31, 2014, the Company's and Toll Brothers' consolidated contributions to the joint venture were approximately $259.1311.6 million, of which Toll Brothers' noncontrolling interest balance totaled $95.5117.4 million.

The Company admitted an 80% institutional partner to two separate entities/transactions (Nexus Sawgrass in December 2010 and Domain in August 2011), each owning a developable land parcel, in exchange for $40.1 million in cash and retained a 20% equity interest in both of these entities. These projects are now unconsolidated. Details of these projects follow:

Nexus Sawgrass – This development project wasis substantially completed as of September 30, 2013.complete. Total project costs are expected to be approximately $78.279.0 million and construction is beingwas predominantly funded with a long-term, non-recourse secured loan from the partner. The mortgage loan has a maximum debt commitment of $48.7 million and a current unconsolidated outstanding balance of $45.248.2 million; the loan bears interest at 5.60% and matures January 1, 2021.
Domain – This development project is currently under development.substantially complete. Total project costs are expected to be approximately $154.6 million and construction is beingwas predominantly funded with a long-term, non-recourse secured loan from the partner. The mortgage loan has a maximum debt commitment of $98.6 million and a current unconsolidated outstanding balance of $82.295.0 million; the loan bears interest at 5.75% and matures January 1, 2022.

While the Company is the managing member of both of the joint ventures, was/iswas responsible for constructing both of the projects and has given certain construction cost overrun guarantees, the joint venture partner has significant participating rights and has active involvement in and oversight of the ongoing projects. The Company currently has no further funding obligations related to these projects.

7.Deposits – Restricted

The following table presents the Company’s restricted deposits as of September 30, 2013March 31, 2014 and December 31, 20122013 (amounts in thousands):

 September 30,
2013		 December 31,
2012		 March 31,
2014		 December 31,
2013
Tax–deferred (1031) exchange proceeds $—
 $152,182
Earnest money on pending acquisitions 350
 5,613
 $1,344
 $4,514
Restricted deposits on real estate investments 53,764
 44,209
 44,037
 53,771
Resident security and utility deposits 44,255
 44,199
 45,195
 44,777
Other 505
 4,239
 505
 505
Totals $98,874
 $250,442
 $91,081
 $103,567

8.    Debt

EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. EQR guarantees the Operating Partnership’s $750.0 million senior unsecured delayed draw term loan facility and also 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 September 30, 2013March 31, 2014, the Company had outstanding mortgage debt of approximately $6.25.2 billion.

During the nine monthsquarter ended September 30, 2013March 31, 2014, the Company:

▪
Repaid $711.33.0 million of mortgage loans;loans.
▪
Assumed $2.2 billion of mortgage debt held in two Fannie Mae loan pools, consisting of $1.2 billion collateralized by 16 properties with an interest rate of 6.256% and a maturity date of November 1, 2017 and $1.0 billion collateralized by 15 properties with an interest rate of 5.883% and a maturity date of November 1, 2014;

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▪
Assumed $346.6 million of tax-exempt bonds on four properties with interest rates ranging from SIFMA plus 0.860% to SIFMA plus 1.402% and maturity dates through November 15, 2036;
▪
Assumed $339.0 million of other mortgage debt on three properties with fixed interest rates ranging from 0.100% to 5.240% and maturity dates through May 1, 2061;
▪
Assumed $34.1 million of other mortgage debt on one property with a variable rate of LIBOR plus 1.75% and a maturity date of September 1, 2014; and
▪
Recorded $127.9 million of net mark-to-market premiums on the mortgage debt described in the bullets above.

The Company recorded approximately $71.4 million, $1.6 million and $3.3 million of prepayment penalties, write-offs of unamortized deferred financing costs and write-offs of unamortized discounts, respectively, during the nine months ended September 30, 2013 as additional interest expense related to debt extinguishment of mortgages.

As of September 30, 2013March 31, 2014, the Company had $700.5 million of secured debt subject to third party credit enhancement.

As of September 30, 2013March 31, 2014, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through May 1, 2061. At September 30, 2013March 31, 2014, the interest rate range on the Company’s mortgage debt was 0.05%0.04% to 7.25%. During the nine monthsquarter ended September 30, 2013March 31, 2014, the weighted average interest rate on the Company’s mortgage debt was 4.25%4.22%.

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Notes

As of September 30, 2013March 31, 2014, the Company had outstanding unsecured notes of approximately $5.5 billion.

During the nine months ended September 30, 2013, the Company:

▪
Repaid $400.0 million of 5.200% unsecured notes at maturity;
▪
Issued $500.0 million of ten-year 3.00% fixed rate public notes, receiving net proceeds of $495.6 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of 3.998%; and
▪
Entered into a senior unsecured $750.0 million delayed draw term loan facility which was fully drawn on February 27, 2013 in connection with the Archstone acquisition. The maturity date of January 11, 2015 is subject to a one-year extension option exercisable by the Company. The interest rate on advances under the term loan facility will generally be LIBOR plus a spread (currently 1.20%), which is dependent on the credit rating of the Company's long-term debt.
In November 2012, the Company obtained a commitment for a senior unsecured bridge loan facility in an aggregate principal amount not to exceed $2.5 billion to finance the acquisition of Archstone and to pay fees and expenses relating to this transaction. On January 11, 2013, the Company terminated this $2.5 billion bridge loan facility in connection with the execution of the term loan facility discussed above and the new revolving credit facility discussed below. The Company wrote off approximately $2.5 million of unamortized deferred financing costs during the nine months ended September 30, 2013 as additional interest expense.

As of September 30, 2013March 31, 2014, scheduled maturities for the Company’s outstanding notes were at various dates through 2026. At September 30, 2013March 31, 2014, the interest rate range on the Company’s notes was 1.34%1.32% to 7.57%. During the nine monthsquarter ended September 30, 2013March 31, 2014, the weighted average interest rate on the Company’s notes was 5.06%4.92%.

Lines of Credit

On January 11, 2013, the Company replaced its existing $1.75 billion facility with a $2.5 billion unsecured revolving credit facility maturing April 1, 2018. The Company has the ability to increase available borrowings by an additional $500.0 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 new credit facility will generally be LIBOR plus a spread (currently 1.05%) and the Company pays an annual facility fee (currently 15 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company's long-term debt. The existing $1.75 billion facility was scheduled to mature in July 2014.

As of September 30, 2013March 31, 2014, the amount available on the credit facility was $2.472.17 billion (net of $34.934.7 million which was restricted/dedicated to support letters of credit)credit and net of $298.0 million outstanding). During the nine monthsquarter ended September 30, 2013March 31, 2014, the weighted average interest rate was 1.28%0.98%.


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9.Derivative and Other Fair Value Instruments

The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.

The carrying values of the Company’s mortgage notes payable and unsecured notesdebt (including its line of credit) were approximately $6.25.2 billion and $5.55.8 billion, respectively, at September 30, 2013March 31, 2014. The fair values of the Company’s mortgage notes payable and unsecured notesdebt (including its line of credit) were approximately $6.45.1 billion (Level 2) and $5.86.1 billion (Level 2), respectively, at September 30, 2013March 31, 2014. The carrying values of the Company's mortgage notes payable and unsecured notesdebt (including its line of credit) were approximately $3.9$5.2 billion and $4.65.6 billion, respectively, at December 31, 2012.2013. The fair values of the Company’s mortgage notes payable and unsecured notesdebt (including its line of credit) were approximately $4.35.1 billion (Level 2) and $5.25.9 billion (Level 2), respectively, at December 31, 2012.2013. The fair values of the Company’s financial instruments (other than mortgage notes payable, unsecured notes, lines of credit and derivative instruments and investment securities)instruments), including cash and cash equivalents and other financial instruments, approximate their carrying or contract values.

In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company seeks to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments. The Company may also use derivatives to manage its exposure to foreign exchange rates or manage commodity prices in the daily operations of the business.

The following table summarizes the Company’s consolidated derivative instruments at September 30, 2013March 31, 2014 (dollar amounts are in thousands):

 Forward
Starting
Swaps (1)		 Forward
Starting
Swaps (1)
Current Notional Balance $400,000
 $450,000
Lowest Possible Notional $400,000
 $450,000
Highest Possible Notional $400,000
 $450,000
Lowest Interest Rate 2.125% 2.125%
Highest Interest Rate 3.230% 3.230%
Earliest Maturity Date 2024
 2024
Latest Maturity Date 2024
 2025

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Table of Contents

 
(1)Forward Starting Swaps – Designed to partially fix the interest raterates in advance of a planned future debt issuance.issuances. These swaps have mandatory counterparty terminations in 2015 and 2016, and are targeted to 2014 and 2015 issuances.

In April 2013, the Company's remaining fair value hedges matured.

A three-level valuation hierarchy exists for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s derivative positions are valued using models developed by the respective counterparty as well as models developed internally by the Company that use as their basis readily observable market parameters (such as forward yield curves and credit default swap data). Employee holdings other than Common Shares within the supplemental executive retirement plan (the “SERP”) are valued using quoted market prices for identical assets and are included in other assets and other liabilities on

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the consolidated balance sheet. The Company’s investment securities are valued using quoted market prices or readily available market interest rate data. Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners are valued using the quoted market price of Common Shares. The fair values disclosed for mortgage notes payable and unsecured notesdebt (including its line of credit) were calculated using indicative rates provided by lenders of similar loans in the case of mortgage notes payable and the private unsecured notesdebt (including its line of credit) and quoted market prices for each underlying issuance in the case of the public unsecured notes.

The following tables provide a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a recurring basis and the location within the accompanying Consolidated Balance Sheetsconsolidated balance sheets at September 30, 2013March 31, 2014 and December 31, 20122013, respectively (amounts in thousands):

     Fair Value Measurements at Reporting Date Using     Fair Value Measurements at Reporting Date Using
Description 
Balance Sheet
Location
 9/30/2013 
Quoted Prices in
Active Markets for
Identical Assets/Liabilities
(Level 1)
 
Significant  Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level  3)
 
Balance Sheet
Location
 3/31/2014 
Quoted Prices in
Active Markets for
Identical Assets/Liabilities
(Level 1)
 
Significant  Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level  3)
Assets                
Derivatives designated as hedging instruments:                
Interest Rate Contracts:                
Forward Starting Swaps Other Assets $12,132
 $—
 $12,132
 $—
 Other Assets $11,428
 $—
 $11,428
 $—
Supplemental Executive Retirement Plan Other Assets 78,629
 78,629
 —
 —
 Other Assets 88,010
 88,010
 —
 —
Available-for-Sale Investment Securities Other Assets 1,675
 1,675
 —
 —
Total $92,436
 $80,304
 $12,132
 $—
 $99,438
 $88,010
 $11,428
 $—
                
Liabilities                
Derivatives designated as hedging instruments:                
Interest Rate Contracts:                
Forward Starting Swaps Other Liabilities $3,456
 $—
 $3,456
 $—
 Other Liabilities $4,670
 $—
 $4,670
 $—
Supplemental Executive Retirement Plan Other Liabilities 78,629
 78,629
 —
 —
 Other Liabilities 88,010
 88,010
 —
 —
Total $82,085
 $78,629
 $3,456
 $—
 $92,680
 $88,010
 $4,670
 $—
                
Redeemable Noncontrolling Interests –                
Operating Partnership/Redeemable                
Limited Partners Mezzanine $376,057
 $—
 $376,057
 $—
 Mezzanine $405,276
 $—
 $405,276
 $—


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     Fair Value Measurements at Reporting Date Using     Fair Value Measurements at Reporting Date Using
Description 
Balance Sheet
Location
 12/31/2012 
Quoted Prices in
Active Markets for
Identical Assets/Liabilities
(Level 1)
 
Significant  Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level  3)
 
Balance Sheet
Location
 12/31/2013 
Quoted Prices in
Active Markets for
Identical Assets/Liabilities
(Level 1)
 
Significant  Other
Observable Inputs
(Level 2)
 
Significant
Unobservable Inputs
(Level  3)
Assets                
Derivatives designated as hedging instruments:                
Interest Rate Contracts:                
Fair Value Hedges Other Assets $1,524
 $—
 $1,524
 $—
Forward Starting Swaps Other Assets $18,710
 $—
 $18,710
 $—
Supplemental Executive Retirement Plan Other Assets 70,655
 70,655
 —
 —
 Other Assets 83,845
 83,845
 —
 —
Available-for-Sale Investment Securities Other Assets 2,214
 2,214
 —
 —
Total $74,393
 $72,869
 $1,524
 $—
 $102,555
 $83,845
 $18,710
 $—
                
Liabilities                
Derivatives designated as hedging instruments:        
Interest Rate Contracts:        
Forward Starting Swaps Other Liabilities $44,050
 $—
 $44,050
 $—
Supplemental Executive Retirement Plan Other Liabilities 70,655
 70,655
 —
 —
 Other Liabilities $83,845
 $83,845
 $—
 $—
Total $114,705
 $70,655
 $44,050
 $—
 $83,845
 $83,845
 $—
 $—
                
Redeemable Noncontrolling Interests –                
Operating Partnership/Redeemable                
Limited Partners Mezzanine $398,372
 $—
 $398,372
 $—
 Mezzanine $363,144
 $—
 $363,144
 $—
The following tables provide a summary of the effect of fair value hedges on the Company’s accompanying Consolidated Statementsconsolidated statements of Operationsoperations and Comprehensive Incomecomprehensive income for the nine monthsquarters ended September 30, 2013March 31, 2014 and 20122013, respectively (amounts in thousands):

September 30, 2013
Type of Fair Value Hedge
 
Location of
Gain/(Loss)
Recognized in
Income
on Derivative
 
Amount of
Gain/(Loss)
Recognized in
Income
on Derivative
 Hedged Item 
Income Statement
Location of
Hedged
Item Gain/(Loss)
 
Amount of
Gain/(Loss)
Recognized in
Income
on Hedged Item
Derivatives designated as hedging instruments:          
Interest Rate Contracts:          
Interest Rate Swaps Interest expense $(1,524) Fixed rate debt Interest expense $1,524
Total   $(1,524)     $1,524
March 31, 2014
Type of Fair Value Hedge
Location of
Gain/(Loss)
Recognized in
Income on
Derivative
Amount of
Gain/(Loss)
Recognized in
Income on
Derivative
Hedged Item
Income Statement
Location of
Hedged Item
Gain/(Loss)
Amount of
Gain/(Loss)
Recognized in
Income
on Hedged Item
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Interest Rate SwapsN/A$—
N/AN/A$—
Total$—
$—
 
September 30, 2012
Type of Fair Value Hedge
 Location of
Gain/(Loss)
Recognized in
Income
on Derivative		 Amount of
Gain/(Loss)
Recognized in
Income
on Derivative		 Hedged Item Income Statement
Location of
Hedged
Item Gain/(Loss)		 
Amount of
Gain/(Loss)
Recognized in
Income
on Hedged Item
March 31, 2013
Type of Fair Value Hedge
 Location of
Gain/(Loss)
Recognized in
Income
on Derivative		 Amount of
Gain/(Loss)
Recognized in
Income
on Derivative		 Hedged Item Income Statement
Location of
Hedged
Item Gain/(Loss)		 
Amount of
Gain/(Loss)
Recognized in
Income
on Hedged Item
Derivatives designated as hedging instruments:        
Interest Rate Contracts:        
Interest Rate Swaps Interest expense $(5,934) Fixed rate debt Interest expense $5,934
 Interest expense $(1,471) Fixed rate debt Interest expense $1,471
Total   $(5,934)     $5,934
   $(1,471)     $1,471

The following tables provide a summary of the effect of cash flow hedges on the Company’s accompanying Consolidated Statementsconsolidated statements of Operationsoperations and Comprehensive Incomecomprehensive income for the nine monthsquarters ended September 30, 2013March 31, 2014 and 20122013, respectively (amounts in thousands):
  Effective Portion Ineffective Portion
March 31, 2014
Type of Cash Flow Hedge
 
Amount of
Gain/(Loss)
Recognized in OCI
on Derivative
 
Location of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income
 Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI into Income		 
Location of
Gain/(Loss)
Recognized in
Income
 on Derivative
 Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI into Income
Derivatives designated as hedging instruments:          
Interest Rate Contracts:          
Forward Starting Swaps/Treasury Locks$(11,952) Interest expense $(4,129) N/A $—
Total $(11,952)   $(4,129)   $—

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  Effective Portion Ineffective Portion
September 30, 2013
Type of Cash Flow Hedge
 
Amount of
Gain/(Loss)
Recognized in OCI
on Derivative
 
Location of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income
 Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income		 
Location of
Gain/(Loss)
Recognized in
Income
 on Derivative
 Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income
Derivatives designated as hedging instruments:          
Interest Rate Contracts:          
Forward Starting Swaps/Treasury Locks$8,737
 Interest expense $(16,084) N/A $—
Total $8,737
   $(16,084)   $—
 
 Effective Portion Ineffective Portion Effective Portion Ineffective Portion
September 30, 2012
Type of Cash Flow Hedge
 
Amount of
Gain/(Loss)
Recognized in OCI
on Derivative
 
Location of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income
 Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income		 
Location of
Gain/(Loss)
Recognized in
Income
 on Derivative
 Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income
March 31, 2013
Type of Cash Flow Hedge
 
Amount of
Gain/(Loss)
Recognized in OCI
on Derivative
 
Location of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income
 Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income		 
Location of
Gain/(Loss)
Recognized in
Income
 on Derivative
 Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income
Derivatives designated as hedging instruments:            
Interest Rate Contracts:            
Forward Starting Swaps/Treasury Locks $(12,337) Interest expense $(10,907) N/A $—
 $2,814
 Interest expense $(8,272) N/A $—
Total $(12,337)   $(10,907)   $—
 $2,814
   $(8,272)   $—
As of September 30, 2013March 31, 2014 and December 31, 20122013, there were approximately $169.9163.6 million and $194.7155.8 million in deferred losses, net, included in accumulated other comprehensive (loss), respectively, related to derivative instruments. Based on the estimated fair values of the net derivative instruments at September 30, 2013March 31, 2014, the Company may recognize an estimated $21.721.9 million of accumulated other comprehensive (loss) as additional interest expense during the twelve months ending September 30, 2014.March 31, 2015.
In April 2013, the Company paid approximately $44.7 million to settle three forward starting swaps in conjunction with the issuance of $500.0 million of ten-year fixed rate public notes. The accrued interest of $0.7 million was recorded as interest expense. The remaining amount of $44.0 million will be deferred as a component of accumulated other comprehensive (loss) and recognized as an increase to interest expense over the approximate term of the notes.    
The following tables set forth the maturity, amortized cost, gross unrealized gains and losses, book/fair value and interest and other income of the various investment securities held as of September 30, 2013 and December 31, 2012, respectively (amounts in thousands):

    Other Assets  
September 30, 2013
Security
 Maturity 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Book/
Fair Value
 
Interest and
Other Income
Available-for-Sale Investment Securities N/A $412
 $1,263
 $—
 $1,675
 $830
Total   $412
 $1,263
 $—
 $1,675
 $830

    Other Assets  
December 31, 2012
Security
 Maturity 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Book/
Fair Value
 
Interest and
Other Income
Available-for-Sale Investment Securities N/A $675
 $1,539
 $—
 $2,214
 $—
Total   $675
 $1,539
 $—
 $2,214
 $—
During the nine months ended September 30, 2013, the Company sold certain investment securities, receiving proceeds of approximately $0.8 million (with an additional $0.3 million recorded as a receivable and received after quarter-end), and recorded a $0.8 million realized gain on sale (specific identification) which is included in interest and other income.




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10.Earning Per Share and Earnings Per Unit

Equity Residential

The following tables set forth the computation of net income per share – basic and net income per share – diluted for the Company (amounts in thousands except per share amounts):

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Table of Contents

 Nine Months Ended September 30, Quarter Ended September 30, Quarter Ended March 31,
 2013 2012 2013 2012 2014 2013
Numerator for net income per share – basic:            
(Loss) income from continuing operations $(234,414) $62,103
 $(12,467) $92,181
Income (loss) from continuing operations $81,698
 $(165,339)
Allocation to Noncontrolling Interests – Operating Partnership, net 9,402
 (2,128) 483
 (3,895) (3,053) 6,836
Net loss (income) attributable to Noncontrolling Interests – Partially
Owned Properties		 1,101
 (457) 311
 312
Net (income) attributable to Noncontrolling Interests – Partially
Owned Properties		 (504) (25)
Preferred distributions (3,109) (9,319) (1,037) (2,386) (1,036) (1,036)
Premium on redemption of Preferred Shares —
 (5,150) —
 (5,150)
(Loss) income from continuing operations available to Common Shares,
net of Noncontrolling Interests		 (227,020) 45,049
 (12,710) 81,062
Income (loss) from continuing operations available to Common Shares,
net of Noncontrolling Interests		 77,105
 (159,564)
Discontinued operations, net of Noncontrolling Interests 1,943,548
 415,184
 388,865
 137,541
 994
 1,176,214
Numerator for net income per share – basic $1,716,528
 $460,233
 $376,155
 $218,603
 $78,099
 $1,016,650
Numerator for net income per share – diluted (1):            
(Loss) income from continuing operations 
 $62,103
 
 $92,181
Net loss (income) attributable to Noncontrolling Interests – Partially
Owned Properties		 
 (457) 
 312
Income from continuing operations $81,698
  
Net (income) attributable to Noncontrolling Interests – Partially
Owned Properties		 (504)  
Preferred distributions 
 (9,319) 
 (2,386) (1,036)  
Premium on redemption of Preferred Shares 
 (5,150) 
 (5,150)
(Loss) income from continuing operations available to Common Shares 
 47,177
 
 84,957
Income from continuing operations available to Common Shares 80,158
  
Discontinued operations, net 
 434,702
 
 144,142
 1,034
  
Numerator for net income per share – diluted (1) $1,716,528
 $481,879
 $376,155
 $229,099
 $81,192
 $1,016,650
Denominator for net income per share – basic and diluted (1):            
Denominator for net income per share – basic 352,414
 300,116
 359,811
 301,336
 360,470
 337,532
Effect of dilutive securities:            
OP Units 

 13,816
 

 14,177
 13,731
  
Long-term compensation shares/units 

 3,333
 

 3,260
 2,183
  
Denominator for net income per share – diluted (1) 352,414
 317,265
 359,811
 318,773
 376,384
 337,532
Net income per share – basic $4.87
 $1.53
 $1.05
 $0.73
 $0.22
 $3.01
Net income per share – diluted $4.87
 $1.52
 $1.05
 $0.72
 $0.22
 $3.01
Net income per share – basic:            
(Loss) income from continuing operations available to Common Shares,
net of Noncontrolling Interests		 $(0.644) $0.150
 $(0.035) $0.269
Income (loss) from continuing operations available to Common Shares,
net of Noncontrolling Interests		 $0.214
 $(0.473)
Discontinued operations, net of Noncontrolling Interests 5.515
 1.384
 1.080
 0.456
 0.003
 3.485
Net income per share – basic $4.871
 $1.534
 $1.045
 $0.725
 $0.217
 $3.012
Net income per share – diluted (1):            
(Loss) income from continuing operations available to Common Shares $(0.644) $0.149
 $(0.035) $0.267
Income (loss) from continuing operations available to Common Shares $0.213
 $(0.473)
Discontinued operations, net 5.515
 1.370
 1.080
 0.452
 0.003
 3.485
Net income per share – diluted $4.871
 $1.519
 $1.045
 $0.719
 $0.216
 $3.012

(1)
Potential common shares issuable from the assumed conversion of OP Units and the exercise/vesting of long-term compensation shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a loss from continuing operations for the nine months and quartersquarter ended September 30, 2013.
March 31, 2013.





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ERP Operating Limited Partnership

The following tables set forth the computation of net income per Unit – basic and net income per Unit – diluted for the Operating Partnership (amounts in thousands except per Unit amounts):


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 Nine Months Ended September 30, Quarter Ended September 30, Quarter Ended March 31,
 2013 2012 2013 2012 2014 2013
Numerator for net income per Unit – basic and diluted (1):            
(Loss) income from continuing operations $(234,414) $62,103
 $(12,467) $92,181
Net loss (income) attributable to Noncontrolling Interests – Partially
Owned Properties		 1,101
 (457) 311
 312
Income (loss) from continuing operations $81,698
 $(165,339)
Net (income) attributable to Noncontrolling Interests – Partially
Owned Properties		 (504) (25)
Allocation to Preference Units (3,109) (9,319) (1,037) (2,386) (1,036) (1,036)
Allocation to premium on redemption of Preference Units —
 (5,150) —
 (5,150)
(Loss) income from continuing operations available to Units (236,422) 47,177
 (13,193) 84,957
Income (loss) from continuing operations available to Units 80,158
 (166,400)
Discontinued operations, net 2,023,897
 434,702
 404,184
 144,142
 1,034
 1,226,373
Numerator for net income per Unit – basic and diluted (1) $1,787,475
 $481,879
 $390,991
 $229,099
 $81,192
 $1,059,973
Denominator for net income per Unit – basic and diluted (1):            
Denominator for net income per Unit – basic 366,150
 313,932
 373,547
 315,513
Denominator for net income per Unit - basic 374,201
 351,255
Effect of dilutive securities:            
Dilution for Units issuable upon assumed exercise/vesting of the
Company's long-term compensation shares/units		 

 3,333
 

 3,260
Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term
compensation shares/units		 2,183
  
Denominator for net income per Unit – diluted (1) 366,150
 317,265
 373,547
 318,773
 376,384
 351,255
Net income per Unit – basic $4.87
 $1.53
 $1.05
 $0.73
 $0.22
 $3.01
Net income per Unit – diluted $4.87
 $1.52
 $1.05
 $0.72
 $0.22
 $3.01
Net income per Unit – basic:            
(Loss) income from continuing operations available to Units $(0.644) $0.150
 $(0.035) $0.269
Income (loss) from continuing operations available to Units $0.214
 $(0.473)
Discontinued operations, net 5.515
 1.384
 1.080
 0.456
 0.003
 3.485
Net income per Unit – basic $4.871
 $1.534
 $1.045
 $0.725
 $0.217
 $3.012
Net income per Unit – diluted (1):            
(Loss) income from continuing operations available to Units $(0.644) $0.149
 $(0.035) $0.267
Income (loss) from continuing operations available to Units $0.213
 $(0.473)
Discontinued operations, net 5.515
 1.370
 1.080
 0.452
 0.003
 3.485
Net income per Unit – diluted $4.871
 $1.519
 $1.045
 $0.719
 $0.216
 $3.012

(1)
Potential Units issuable from the assumed exercise/vesting of the Company's long-term compensation shares/units are automatically anti-dilutive and therefore excluded from the diluted earnings per Unit calculation as the Operating Partnership had a loss from continuing operations for the nine months and quartersquarter ended September 30, 2013.
March 31, 2013.

11.Discontinued Operations

The Company has presented separately as discontinued operations in all periods the results of operations for all consolidated assets disposed of and all properties held for sale, if any.

The components of discontinued operations are outlined below and include the results of operations for the respective periods that the Company owned such assets during the nine months and quarters ended September 30, 2013March 31, 2014 and 20122013 (amounts in thousands).

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 Nine Months Ended September 30, Quarter Ended September 30, Quarter Ended March 31,
 2013 2012 2013 2012 2014 2013
REVENUES            
Rental income $110,986
 $334,968
 $8,418
 $108,459
 $1,023
 $81,782
Total revenues 110,986
 334,968
 8,418
 108,459
 1,023
 81,782
            
EXPENSES (1)            
Property and maintenance 33,181
 79,482
 3,272
 25,608
 48
 20,424
Real estate taxes and insurance 10,578
 29,599
 396
 11,480
 13
 8,594
Property management 1
 211
 —
 70
 —
 1
Depreciation 31,976
 94,792
 2,273
 29,497
 —
 23,816
General and administrative 76
 87
 3
 44
 5
 8
Total expenses 75,812
 204,171
 5,944
 66,699
 66
 52,843
            
Discontinued operating income 35,174
 130,797
 2,474
 41,760
 957
 28,939
            
Interest and other income 156
 81
 65
 34
 35
 52
Other expenses (3) (170) —
 (23) —
 (2)
Interest (2):            
Expense incurred, net (1,276) (3,357) (18) (995) —
 (1,252)
Amortization of deferred financing costs (228) (119) —
 (27) —
 (228)
Income and other tax (expense) benefit (503) 23
 (40) (1) (29) (58)
            
Discontinued operations 33,320
 127,255
 2,481
 40,748
 963
 27,451
Net gain on sales of discontinued operations 1,990,577
 307,447
 401,703
 103,394
 71
 1,198,922
            
Discontinued operations, net $2,023,897
 $434,702
 $404,184
 $144,142
 $1,034
 $1,226,373
 
(1)Includes expenses paid in the current period for properties sold 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.
ForDuring the quarter ended March 31, 2014, the Company did not dispose of any rental properties or land parcels. The amounts included in discontinued operations in the first quarter of 2014 represent trailing activity for properties sold during the nine months ended September 30,in 2013, the investment in real estate, net of accumulated depreciation, and the mortgage notes payable balances at December 31, 2012 were $2.0 billion and $34.4 million, respectively.prior years.

12.Commitments and Contingencies

The Company, as an owner of real estate, is subject to various Federal, state and local environmental laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations on its current properties or on properties that it may acquire in the future.

The Company is party to a housing discrimination lawsuit brought by a non-profit civil rights organization in April 2006 in the U.S. District Court for the District of Maryland. The suit alleges that the Company designed and built approximately 300 of its properties in violation of the accessibility requirements of the Fair Housing Act and Americans With Disabilities Act. The suit seeks actual and punitive damages, injunctive relief (including modification of non-compliant properties), costs and attorneys’attorneys' fees. The Company believes it has a number of viable defenses, including that a majority of the named properties were completed before the operative dates of the statutes in question and/or were not designed or built by the Company. Accordingly, the Company is defending the suit vigorously. Due to the pendency of the Company’s defenses and the uncertainty of many other critical factual and legal issues, it is not possible to determine or predict the outcome of the suit or a possible loss or a range of loss, and no amounts have been accrued at September 30, 2013March 31, 2014. While no assurances can be given, the Company does not believe that the suit, if adversely determined, would have a material adverse effect on the Company.

The Company does not believe there is any other litigation pending or threatened against it that, individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company.

As of September 30, 2013March 31, 2014, the Company has 1312 consolidated projects (including 400 Park Avenue South in New York City which the Company is jointly developing with Toll Brothers that is discussed below and Park Aire in which the Company acquired a 95% interest in connection with the Archstone transaction that is discussed in Note 6)below) totaling 3,3273,871 apartment units in various stages of development with commitments to fund of approximately $608.7 million1.1 billion and estimated completion dates ranging through

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ranging through JuneSeptember 30, 2016, as well as other completed development projects that are in various stages of lease up or are stabilized. Some of the projects are being developed solely by the Company, while others are being co-developed with various third party development partners. The development venture agreements with these partners are primarily deal-specific, with differing terms regarding profit-sharing, equity contributions, returns on investment, buy-sell agreements and other customary provisions. The Company is the "general" or "managing" partner of the development venture.ventures.

As of September 30, 2013March 31, 2014, the Company has threeone unconsolidated projectsproject totaling 1,012176 apartment units under development with an estimated completion dates ranging through September 30,date of December 31, 2014,, as well as onethree completed development projectprojects that isare currently in lease up. These projects are all being co-developed with various third party development partners. The development venture agreements with these partners are primarily deal-specific, with differing terms regarding profit-sharing, equity contributions, returns on investment, buy-sell agreements and other customary provisions. The Company currently has no further funding obligations for Domain, Nexus Sawgrass and San Norterra. While the Company is the managing member of the Domain and Nexus Sawgrass joint ventures, iswas responsible for constructing both projects and has given certain construction cost overrun guarantees, the joint venture partner has significant participating rights and has active involvement in and oversight of the ongoing projects. The Domain and Nexus Sawgrass buy-sell arrangements contain provisions that provide the right, but not the obligation, for the Company to acquire the partner’s interests or sell its interests at any time following the occurrence of certain pre-defined events (including at stabilization) described in the development venture agreements. The respective partner for San Norterra and 1333 Powell (formerly known as Parkside at EmeryvilleEmeryville) is the “general” or “managing” partner of the development venture and the Company does not have substantive kick-out or participating rights. The Company has given a repayment guaranty on the construction loan for Parkside at Emeryville1333 Powell of 50% of the outstanding balance, up to a maximum of $19.7 million, and has given certain construction cost overrun guarantees.
    
In December 2011, the Company and Toll Brothers (NYSE: TOL) jointly acquired a vacant land parcel at 400 Park Avenue South in New York City. The Company's and Toll Brothers' allocated portions of the purchase price were approximately $76.1 million and $57.9 million, respectively. The Company is the managing member and Toll Brothers does not have substantive kick-out or participating rights. Until the core and shell of the building is complete, the building and land will be owned jointly and are required to be consolidated on the Company's balance sheet. Thereafter, the Company will solely own and control the rental portion of the building (floors 2-22) and Toll Brothers will solely own and control the for sale portion of the building (floors 23-40). Once the core and shell are complete, the Toll Brothers' portion of the property will be deconsolidated from the Company's balance sheet. The acquisition was financed through contributions by the Company and Toll Brothers of approximately $102.5 million and $75.7 million, respectively, which included the land purchase noted above, restricted deposits and taxes and fees. As of September 30, 2013March 31, 2014, the Company's and Toll Brothers' consolidated contributions to the joint venture were approximately $259.1311.6 million, of which Toll Brothers' noncontrolling interest balance totaled $95.5117.4 million.

13.Reportable Segments

Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses and about which discrete financial information is available that is evaluated regularly by the chief operating decision maker. The chief operating decision maker decides how resources are allocated and assesses performance on a recurring basis at least quarterly.

The Company’s primary business is the acquisition, development and management of multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The chief operating decision maker evaluates the Company's operating performance geographically by market and both on a same store and non-same store basis. The Company’s operating segments (geographic markets)located in its core markets represent its reportable segments (with the aggregation of Los Angeles, Orange County and San Diego into the Southern California reportable segment). The Company's operating segments located in its non-core markets that are not material have also been aggregated into four reportable segments based uponin the geographic region in which they are located.tables presented below.

The Company’s fee and asset management and development (including its partially owned properties) activities are other business activities that do not constitute an operating segment and as such, have been aggregated in the "Other" category in the tables presented below.

All revenues are from external customers and there is no customer who contributed 10% or more of the Company’s total revenues during the nine months and quarters ended September 30, 2013March 31, 2014 and 20122013, respectively.

The primary financial measure for the Company’s rental real estate segment is net operating income (“NOI”), which represents rental income less: 1) property and maintenance expense; 2) real estate taxes and insurance expense; and 3) property management expense (all as reflected in the accompanying consolidated statements of operations and comprehensive income). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a

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direct measure of the actual operating results of the Company’s apartment communities. Current year NOI is compared to prior

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year NOI and current year budgeted NOI as a measure of financial performance. The following tables present NOI for each segment from our rental real estate specific to continuing operations for the nine months and quarters ended September 30, 2013March 31, 2014 and 20122013, respectively, as well as total assets and capital expenditures at September 30, 2013March 31, 2014 (amounts in thousands):

  Nine Months Ended September 30, 2013
  Northeast Northwest Southeast Southwest Other (3) Total
Rental income:            
Same store (1) $555,391
 $303,680
 $175,039
 $295,216
 $—
 $1,329,326
Non-same store/other (2) (3) 263,745
 99,689
 1,785
 51,492
 3,337
 420,048
Total rental income 819,136
 403,369
 176,824
 346,708
 3,337
 1,749,374
Operating expenses:            
Same store (1) 198,068
 101,982
 66,013
 96,446
 —
 462,509
Non-same store/other (2) (3) 86,820
 34,352
 696
 21,656
 9,341
 152,865
Total operating expenses 284,888
 136,334
 66,709
 118,102
 9,341
 615,374
NOI:            
Same store (1) 357,323
 201,698
 109,026
 198,770
 —
 866,817
Non-same store/other (2) (3) 176,925
 65,337
 1,089
 29,836
 (6,004) 267,183
Total NOI $534,248
 $267,035
 $110,115
 $228,606
 $(6,004) $1,134,000
             
Total assets $11,499,130
 $4,540,404
 $1,513,074
 $3,578,742
 $2,680,081
 $23,811,431
             
Capital expenditures $39,331
 $23,793
 $13,270
 $15,360
 $5,112
 $96,866
  Quarter Ended March 31, 2014 Quarter Ended March 31, 2013
  Rental Income Operating Expenses NOI Rental Income Operating Expenses NOI
Same store (1)  
  
  
  
  
  
  Boston $61,907
 $22,154
 $39,753
 $59,054
 $20,207
 $38,847
  Denver 26,611
 7,449
 19,162
 24,970
 7,217
 17,753
  New York 111,185
 46,202
 64,983
 107,997
 43,111
 64,886
  San Francisco 81,261
 26,655
 54,606
 74,945
 28,156
 46,789
  Seattle 37,725
��12,768
 24,957
 35,372
 12,237
 23,135
  South Florida 48,437
 18,184
 30,253
 46,239
 17,643
 28,596
  Southern California 102,665
 34,347
 68,318
 98,210
 34,587
 63,623
  Washington DC 110,396
 37,396
 73,000
 110,993
 35,884
 75,109
  Non-core 33,691
 13,084
 20,607
 32,672
 12,443
 20,229
Total same store 613,878
 218,239
 395,639
 590,452
 211,485
 378,967
             
Non-same store/other (2) (3)          
  Boston 1,028
 211
 817
 256
 53
 203
  Seattle 1,687
 690
 997
 25
 1
 24
  South Florida 800
 466
 334
 14
 78
 (64)
  Southern California 7,174
 3,122
 4,052
 1,292
 617
 675
  Washington DC 4,934
 1,863
 3,071
 1,806
 653
 1,153
  Other (3) 1,224
 5,194
 (3,970) 1,140
 9,955
 (8,815)
Total non-same store/other16,847
 11,546
 5,301
 4,533
 11,357
 (6,824)
             
Archstone pre-ownership (4) —
 —
 —
 (92,423) (36,729) (55,694)
Total $630,725
 $229,785
 $400,940
 $502,562
 $186,113
 $316,449


(1)
Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2012,2013, less properties subsequently sold, which represented 81,099100,984 apartment units.
Also includes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.
(2)Non-same store primarily includes properties acquired after January 1, 2012,2013, plus any properties in lease-up and not stabilized as of January 1, 2012.2013, but excludes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.
(3)Other includes development and other corporate operations.
(4)Represents pro forma Archstone pre-ownership results for the period January 1, 2013 to February 27, 2013 that is included in 2013 same store results.



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 Nine Months Ended September 30, 2012 Quarter Ended March 31, 2014
 Northeast Northwest Southeast Southwest Other (3) Total Total Assets Capital Expenditures
Rental income:            
Same store (1) $535,830
 $282,586
 $167,561
 $283,899
 $—
 $1,269,876
  
  
Boston $1,968,613
 $4,078
Denver 536,226
 762
New York 4,727,805
 3,051
San Francisco 2,769,826
 5,716
Seattle 1,053,600
 2,205
South Florida 1,178,426
 3,119
Southern California 3,000,465
 5,142
Washington DC 4,299,085
 5,529
Non-core 640,141
 1,544
Total same store 20,174,187
 31,146
    
Non-same store/other (2) (3) 15,876
 8,049
 —
 1,793
 (163) 25,555
    
Total rental income 551,706
 290,635
 167,561
 285,692
 (163) 1,295,431
Operating expenses:            
Same store (1) 190,979
 98,616
 64,878
 93,127
 —
 447,600
Non-same store/other (2) (3) 6,170
 2,581
 —
 617
 14,443
 23,811
Total operating expenses 197,149
 101,197
 64,878
 93,744
 14,443
 471,411
NOI:            
Same store (1) 344,851
 183,970
 102,683
 190,772
 —
 822,276
Non-same store/other (2) (3) 9,706
 5,468
 —
 1,176
 (14,606) 1,744
Total NOI $354,557
 $189,438
 $102,683
 $191,948
 $(14,606) $824,020
Boston 48,971
 263
Seattle 190,041
 160
South Florida 70,725
 (1)
Southern California 446,912
 173
Washington DC 305,668
 449
Other (3) 1,653,127
 1
Total non-same store/other 2,715,444
 1,045
Total $22,889,631
 $32,191

(1)
Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2012,2013, less properties subsequently sold, which represented 81,099100,984 apartment units.
Also includes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.
(2)Non-same store primarily includes properties acquired after January 1, 2012,2013, plus any properties in lease-up and not stabilized as of January 1, 2012.
(3)Other includes development2013, but excludes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and other corporate operations.



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  Quarter Ended September 30, 2013
  Northeast Northwest Southeast Southwest Other (3) Total
Rental income:            
Same store (1) $196,089
 $107,340
 $59,170
 $101,008
 $—
 $463,607
Non-same store/other (2) (3) 101,001
 38,862
 768
 21,470
 1,172
 163,273
Total rental income 297,090
 146,202
 59,938
 122,478
 1,172
 626,880
Operating expenses:            
Same store (1) 68,044
 35,784
 22,619
 32,855
 —
 159,302
Non-same store/other (2) (3) 34,191
 13,296
 289
 8,801
 (1,117) 55,460
Total operating expenses 102,235
 49,080
 22,908
 41,656
 (1,117) 214,762
NOI:            
Same store (1) 128,045
 71,556
 36,551
 68,153
 —
 304,305
Non-same store/other (2) (3) 66,810
 25,566
 479
 12,669
 2,289
 107,813
Total NOI $194,855
 $97,122
 $37,030
 $80,822
 $2,289
 $412,118

(1)
Same store primarily includes all properties acquired or completed and stabilized prior to July 1, 2012, less properties subsequently sold, which represented 82,553 apartment units.
(2)Non-same store primarily includes properties acquired after July 1, 2012, plus any properties in lease-up and not stabilized as of July 1, 2012.
(3)Other includes development and other corporate operations.

  Quarter Ended September 30, 2012
  Northeast Northwest Southeast Southwest Other (3) Total
Rental income:            
Same store (1) $190,648
 $100,280
 $56,987
 $97,606
 $—
 $445,521
Non-same store/other (2) (3) 1,658
 1,305
 —
 284
 (121) 3,126
Total rental income 192,306
 101,585
 56,987
 97,890
 (121) 448,647
Operating expenses:            
Same store (1) 65,758
 34,443
 22,435
 31,814
 —
 154,450
Non-same store/other (2) (3) 994
 235
 —
 52
 2,508
 3,789
Total operating expenses 66,752
 34,678
 22,435
 31,866
 2,508
 158,239
NOI:            
Same store (1) 124,890
 65,837
 34,552
 65,792
 —
 291,071
Non-same store/other (2) (3) 664
 1,070
 —
 232
 (2,629) (663)
Total NOI $125,554
 $66,907
 $34,552
 $66,024
 $(2,629) $290,408


(1)
Same store primarily includes all properties acquired or completed and stabilized prior to July 1, 2012, less properties subsequently sold, which represented 82,553 apartment units.
(2)Non-same store primarily includes properties acquired after July 1, 2012, plus any properties in lease-up and not stabilized as of July 1, 2012.managed by the Company.
(3)Other includes development and other corporate operations.

Note: Markets/Metro Areas included in the above geographicSouthern California and Non-core segments are as follows:
(a)Northeast – New England (excluding Boston), Boston, New York and Washington DC.
(b)Northwest – Denver, San Francisco, Seattle and Tacoma.
(c)Southeast – Atlanta, Orlando and South Florida.
(d)Southwest – Inland Empire, Los Angeles, Orange County, Phoenix and San Diego.
(a) Southern California – Los Angeles, Orange County and San Diego.
(b) Non-core – Inland Empire, CA, New England (excluding Boston), Orlando and Phoenix.
The following table presents a reconciliation of NOI from our rental real estate specific to continuing operations for the nine months and quarters ended September 30, 2013March 31, 2014 and 20122013, respectively (amounts in thousands):
  Quarter Ended March 31,
  2014 2013
Rental income $630,725
 $502,562
Property and maintenance expense (125,573) (98,529)
Real estate taxes and insurance expense (82,094) (65,095)
Property management expense (22,118) (22,489)
Total operating expenses (229,785) (186,113)
Net operating income $400,940
 $316,449







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  Nine Months Ended September 30, Quarter Ended September 30,
  2013 2012 2013 2012
Rental income $1,749,374
 $1,295,431
 $626,880
 $448,647
Property and maintenance expense (333,202) (254,009) (119,632) (86,682)
Real estate taxes and insurance expense (218,777) (154,633) (76,255) (53,064)
Property management expense (63,395) (62,769) (18,875) (18,493)
Total operating expenses (615,374) (471,411) (214,762) (158,239)
Net operating income $1,134,000
 $824,020
 $412,118
 $290,408
14.Subsequent Events/Other

Subsequent Events

Subsequent to September 30, 2013March 31, 2014, the Company:

Acquired one land parcel for $10.3 million;
Obtained $896.9 millionDisposed of newa portion of a land parcel for $8.2 million;
Repaid $3.1 million of mortgage loan proceeds, inclusiveloans;
Entered into $50.0 million of an $800.0 millionforward starting swaps to hedge changes in interest rates related to future secured loan from a large insuranceor unsecured debt issuances; and
Closed on the sale of its unconsolidated interest in the German portfolio fund and the German management company, which matures on November 10, 2023, is interest only and carries a fixed interest raterepresenting the sale of 4.21%;
Repaid $963.5 million outstandingthe majority of 5.883% mortgage debt assumedthe remaining German assets that were acquired as part of the Archstone transaction prior to the November 1, 2014 maturity date;
Repaid $825.0 million of $1.27 billion in mortgage debt assumed as part of the Archstone transaction, with the approximate $440.0 million balance remaining outstanding, continuing to mature in November 2017 and continuing to carry a fixed interest rate of 6.256%; and
Sold the remainder of its investment securities, receiving proceeds of approximately $1.7 million, and recorded a $1.3 million realized gain on sale.

In conjunction with the early debt extinguishment activity discussed above, the Company incurred cash prepayment costs of approximately $150.0 million and a net charge to earnings of approximately $43.0 million after consideration of the write-off of Archstone-related debt premiums.Acquisition.

Other

During the nine monthsquarters ended September 30, 2013March 31, 2014 and 20122013, the Company incurred charges of $0.2$0.5 million and $6.9$2.6 million,, respectively, related to property acquisition costs, such as survey, title and legal fees, on the acquisition of operating properties (excluding the Archstone transaction) and $4.0 million and $6.1 million, respectively, related to the write-off of various pursuit and out-of-pocket costs for terminated acquisition, disposition and development transactions. These costs totaling $4.2 million and $13.0 million, respectively, are included in other expenses in the accompanying consolidated statements of operations and comprehensive income. See Note 4 for details on the property acquisition costs related to the Archstone transaction.Transaction.

During the nine monthsquarter ended September 30, 2012,March 31, 2014, the Company settled a dispute with the ownersseller/co-developer of a land parcel forlocated in Florida and received $0.5 million, $4.2 million, which is included in interest and other expensesincome in the accompanying consolidated statements of operations and comprehensive income.

In June 2012, the Company received $150.0 million in Archstone-related termination fees subject to certain contingencies. Consistent with the resolution of these contingencies, the Company recognized $70.0 million of these fees as interest and other income in July 2012 and recognized the remaining $80.0 million as interest and other income in October 2012.

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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

For further information including definitions for capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Company’s and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013.

Forward-Looking Statements

Forward-looking statements in this report are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates, projections and assumptions made by management. While the Company’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, which could cause actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. 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. The forward-looking statements contained herein are made as of the date hereof and the Company undertakes no obligation to update or supplement these forward-looking statements. Factors that might cause such differences include, but are not limited to the following:

▪We intend to actively acquire, and/or develop and rehab multifamily properties for rental operations as market conditions dictate. We may also acquire multifamily properties that are unoccupied or in the early stages of lease up. We may be unable to lease up these apartment properties on schedule, resulting in decreases in expected rental revenues and/or lower yields due to lower occupancy and rates as well as higher than expected concessions. We may not be able to achieve rents that are consistent with expectations for acquired, developed or rehabbed properties. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position, to complete a development property or to complete a development property.rehab. Additionally, we expect that other real estate investors with capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development and acquisition efforts. This competition (or lack thereof) may increase (or depress) prices for multifamily properties. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. We have acquired in the past and intend to continue to pursue the acquisition of properties and portfolios of properties, including large portfolios, that could increase our size and result in alterations to our capital structure. The total number of apartment units under development, costs of development and estimated completion dates are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation;
▪Debt financing and other capital required by the Company may not be available or may only be available on adverse terms;
▪Labor and materials required for maintenance, repair, capital expenditure or development may be more expensive than anticipated;
▪Occupancy levels and market rents may be adversely affected by national and local economic and market conditions including, without limitation, new construction and excess inventory of multifamily and single family housing, increasing portions of single family housing stock being converted to rental use, rental housing subsidized by the government, other government programs that favor single family rental housing or owner occupied housing over multifamily rental housing, governmental regulations, slow or negative employment growth and household formation, the availability of low-interest mortgages or the availability of mortgages requiring little or no down payment for single family home buyers, changes in social preferences and the potential for geopolitical instability, all of which are beyond the Company's control; and
▪
Additional factors as discussed in Part I of the Company’s and the Operating Partnership's Annual Report on Form 10-K, particularly those under “Item 1A. Risk Factors”Factors”.

Forward-looking statements and related uncertainties are also included in the Notes to Consolidated Financial Statements in this report.

Overview

Equity Residential (“EQR”), a Maryland real estate investment trust (“REIT”) formed in March 1993, is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top United States growth markets. ERP Operating Limited Partnership (“ERPOP”), an Illinois limited partnership, was formed in May 1993 to conduct the multifamily residential property business of Equity Residential. EQR has elected to be taxed as a REIT. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by

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EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP.
EQR is the general partner of, and as of September 30, 2013March 31, 2014 owned an approximate 96.2% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues equity from time to time but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.
The Company’s corporate headquarters are located in Chicago, Illinois and the Company also operates property management offices in each of its markets. As of September 30, 2013March 31, 2014, the Company had approximately 3,600 employees who provided real estate operations, leasing, legal, financial, accounting, acquisition, disposition, development and other support functions.

Available Information

You may access our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and any amendments to any of those reports we file with the SEC free of charge at our website, www.equityresidential.com. These reports are made available at our website as soon as reasonably practicable after we file them with the SEC. The information contained on our website, including any information referred to in this report as being available on our website, is not a part of or incorporated into this report.

Business Objectives and Operating and Investing Strategies
The Company invests in high quality apartment communities located in strategically targeted markets with the goal of maximizing our risk adjusted total return (operating income plus capital appreciation) on invested capital.
We seek to maximize the income and capital appreciation of our properties by investing in markets that are characterized by conditions favorable to multifamily property appreciation. We are focused primarily on the six core coastal, high barrier to entry markets of Boston, New York, Washington DC, Southern California (including Los Angeles, Orange County and San Diego), San Francisco and Seattle. These markets generally feature one or more of the following characteristics that allow us to increase rents:
▪High barriers to entry where, because of land scarcity or government regulation, it is difficult or costly to build new apartment properties, creating limits on new supply;
▪High home ownership costs;
▪Strong economic growth leading to job growth and household formation, which in turn leads to high demand for our apartments;
▪Urban core locations with an attractive quality of life and higher wage job categories leading to high resident demand and retention; and
▪Favorable demographics contributing to a larger pool of target residents with a high propensity to rent apartments.
Our operating focus is on balancing occupancy and rental rates to maximize our revenue while exercising tight cost control to generate the highest possible return to our shareholders. Revenue is maximized by attracting qualified prospects to our properties, cost-effectively converting these prospects into new residents and keeping our residents satisfied so they will renew their leases upon expiration. While we believe that it is our high-quality, well-located assets that bring our customers to us, it is the customer service and superior value provided by our on-site personnel that keeps them renting with us and recommending us to their friends.

We use technology to engage our customers in the way that they want to be engaged. Many of our residents utilize our web-based resident portal which allows them to sign and renew their leases, review their accounts and make payments, provide feedback and make service requests on-line.

Acquisitions and developments may be financed from various sources of capital, which may include retained cash flow, issuance of additional equity and debt, sales of properties and joint venture agreements. In addition, the Company may acquire properties in transactions that include the issuance of limited partnership interests in the Operating Partnership (“OP Units”) as consideration for the acquired properties. Such transactions may, in certain circumstances, enable the sellers to defer, in whole or in part, the recognition of taxable income or gain that might otherwise result from the sales. The Company may acquire land parcels

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to hold and/or sell based on market opportunities.opportunities as well as options to buy more land in the future. The Company may also seek to acquire properties by purchasing defaulted or distressed debt that encumbers desirable properties in the hope of obtaining title to property through foreclosure or deed-in-lieu of foreclosure proceedings. The Company has also, in the past, converted some of its properties and sold them as condominiums but is not currently active in this line of business.
Over the past several years, the Company has done an extensive repositioning of its portfolio from low barrier to entry/non-core markets to high barrier to entry/core markets. Since 2005, the Company has sold over 161,000162,000 apartment units primarily in its non-core markets for an aggregate sales price of approximately $15.5$15.6 billion, acquired over 66,000 apartment units primarily

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in its core markets for approximately $19.1 billion and began approximately $3.7$4.7 billion of development projects primarily in its core markets. We are currently seeking to acquire and develop assets primarily in the following six core coastal metropolitan areas: Boston, New York, Washington DC, Southern California, San Francisco and Seattle. We also have investments (in the aggregate about 11.4%11.8% of our NOI at September 30, 2013March 31, 2014) in the two core markets of South Florida and Denver but do not currently intend to acquire or develop new assets in these markets. Further, we are in the process of exiting Atlanta, Phoenix Orlando and Tacoma, WAOrlando and will use sales proceeds from these markets to complete tax deferred exchanges, reduce debt assumed in conjunction with the Archstone transactionacquire and/or develop new assets and for other corporate purposes.
As part of its strategy, the Company purchases completed and fully occupied apartment properties, partially completed or partially occupied properties and takes options on land or acquires land on which apartment properties can be constructed. We intend to hold a diversified portfolio of assets across our target markets. As of September 30, 2013March 31, 2014, no single market/metropolitan area accounted for more than 19.9%18.6% of our NOI, though no guarantee can be made that NOI concentration may not increase in the future.
We endeavor to attract and retain the best employees by providing them with the education, resources and opportunities to succeed. We provide many classroom and on-line training courses to assist our employees in interacting with prospects and residents as well as extensively train our customer service specialists in maintaining the propertyour properties and its improvements, equipment and appliances. We actively promote from within and many senior corporate and property leaders have risen from entry level or junior positions. We monitor our employees' engagement by surveying them annually and have consistently received high engagement scores.
We have a commitment to sustainability and consider the environmental impacts of our business activities. Sustainability and social responsibility are key drivers of our focus on creating the best apartment communities for residents to live, work and play. We have a dedicated in-house team that initiates and applies sustainable practices in all aspects of our business, including investment activities, development, property operations and property management activities. With its high density, multifamily housing is, by its nature, an environmentally friendly property type. Our recent acquisition and development activities have been primarily concentrated in pedestrian-friendly urban locations near public transportation. When developing and renovating our properties, we strive to reduce energy and water usage by investing in energy saving technology while positively impacting the experience of our residents and the value of our assets. We continue to implement a combination of irrigation, lighting, HVAC and renewable energy improvements at our properties that will reduce energy and water consumption. For additional information regarding our sustainability efforts, see our December 2013 Corporate Social Responsibility and Sustainability Report at our website, www.equityresidential.com.

Current Environment

On February 27, 2013, the Company, AvalonBay Communities, Inc. (“AVB”) and certain of their respective subsidiaries completed their previously-announced acquisition (the “Archstone Acquisition”) from Archstone Enterprise LP, an affiliate of Lehman Brothers Holdings, Inc. (“Enterprise”) (which subsequently changed its name to Jupiter Enterprise LP) and its affiliates, of all of the assets and liabilities of Enterprise (including interests in various entities affiliated with Enterprise), constituting a portfolio of apartment properties and other assets (the “Archstone Portfolio”). As a result of the Archstone Acquisition, the Company owns assets representing approximately 60% of the Archstone Portfolio. The consideration paid by the Company in connection with the Archstone Acquisition consisted of cash in the amount of approximately $4.0 billion (inclusive of $2.0 billion of Archstone secured mortgage principal paid off in conjunction with the closing), 34,468,085 Common Shares (which shares had a total value of $1.9 billion based on the acquisition date closing price of EQR's Common Shares of $55.99 per share) and the assumption of $3.1 billion of mortgage debt (inclusive of a net mark-to-market premium of $127.9 million) and approximately 60% of all of the other assets and liabilities related to the Archstone Portfolio.

During the nine monthsquarter ended September 30, 2013,March 31, 2014, the Company acquired 73one consolidated properties consisting of 20,914 apartment units, one unconsolidated property consisting of 336430 apartment units three consolidated master-leased properties consistingand additional development rights at one of 853 apartment units, four projects in various stages of development (two consolidated and two unconsolidated) and 15its existing land parcelssites for $9.1 billion. The majority of these properties and land parcels were acquired in conjunction with the Archstone transaction and the Company has completed the integration of these properties and their operations.$148.5 million. We believe our access to capital, our ability to execute large, complex transactions and our ability to efficiently stabilize large scale lease up properties provide us with a competitive advantage, which was demonstrated in the Archstone transaction.Transaction that closed in 2013. The Company currently budgets consolidated acquisitions of approximately $500.0 million during the year ending December 31, 2014 to be funded with proceeds from dispositions (see discussion below).

The Company started construction on fivethree projects representing 1,3951,145 apartment units totaling approximately $498.5$614.3 million of development costs during the nine monthsquarter ended September 30, 2013March 31, 2014. The Company currentlyexpects to increase its development activity as compared to the past few years and has the potential to begin construction on up to $800.0budgeted approximately $750.0 million of new developmentsapartment construction starts on land currently owned during each of the years ending December 31, 2014 and 2015. We currently budget spending approximately $575.0 million on development costs during the year ending December 31, 2014. This capital will be primarily sourced with excess operating cash flow and borrowings on our revolving credit facility, which was temporarily paid down using approximately $400.0 million in theexcess sale proceeds from fourth quarter of 2013 in addition to the $498.5 million already started.dispositions.

The Company continuesexpects to continue to sell non-core assets and reduce its exposure to non-core markets as we believe these assets will have lower long-term returns and we can sell them for prices that we believe are favorable. The Archstone transactionTransaction that closed in 2013 provided an opportunity to accelerate this strategy and do so efficiently through the use of Section 1031 tax deferred exchanges. The Company sold 92 consolidated properties consisting of 28,328 apartment units, six consolidated land parcels and one commercial

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building for $4.5 billion and one unconsolidated land parcel for $26.4 million (sales price isdeferred exchanges. Over the gross sales price and EQR's share of the net sales proceeds approximated 25%) during the nine months ended September 30, 2013. Thesepast several years, dispositions combined with reinvestment of the cash proceeds in assets with lower cap rates (see definition below) were dilutive to our earnings per share results.share. The Company defines dilution from transactions as the lost NOI from sales proceeds that were not reinvested in other apartment properties or were reinvested in properties with a lower cap rate. Beginning in 2014 and going forward, the Company expects a decrease in dilution due to our reduced disposition expectations and the locations of our planned dispositions. The Company anticipatesdid not dispose of any rental properties or land parcels in the first quarter of 2014. The Company currently budgets consolidated rental property dispositions of approximately $4.4 billion$500.0 million during the year ending December 31, 2013, most of which occurred in the first half of 2013. The Company funded a portion of the cash purchase price of the Archstone transaction with capital raised through these significant dispositions of assets and the Company expects to use future disposition proceeds to pay down debt and for other corporate purposes. While this accelerated disposition program is dilutive to our per share results, it also significantly mitigated the execution risk on the Archstone transaction.
As a result of the Archstone transaction and the property sales to help finance the transaction, the Company’s portfolio has changed significantly from the portfolio summary included in the Company's annual report on Form 10-K. The following table sets forth certain information by market relating to the Company's properties at September 30, 2013 as compared to December 31, 2012:
          
 Portfolio Summary as of December 31, 2012 Portfolio Summary as of September 30, 2013
   % ofAverage   % ofAverage
  ApartmentStabilizedRental  ApartmentStabilizedRental
Markets/Metro AreasPropertiesUnitsNOI (1)Rate (2) PropertiesUnitsNOI (1)Rate (2)
          
Core:         
Washington DC43
14,425
15.9%$1,992
 56
18,275
19.9%$2,249
New York30
8,047
13.9%3,433
 38
10,330
17.3%3,720
San Francisco40
9,094
8.6%1,902
 50
12,766
12.0%2,170
Los Angeles48
9,815
9.9%1,879
 57
11,960
11.5%2,071
Boston26
5,832
8.2%2,560
 34
7,816
10.5%2,780
South Florida36
12,253
9.0%1,463
 34
11,334
7.2%1,543
Seattle38
7,563
6.4%1,627
 38
7,734
6.0%1,741
Denver24
8,144
5.5%1,226
 19
6,935
4.2%1,309
San Diego14
4,963
5.0%1,851
 13
3,505
3.2%1,943
Orange County, CA11
3,490
3.3%1,660
 11
3,490
2.9%1,710
Subtotal – Core310
83,626
85.7%1,941
 350
94,145
94.7%2,195
Non-Core:         
Inland Empire, CA10
3,081
2.4%1,491
 10
3,081
2.1%1,498
Orlando21
6,413
3.5%1,086
 10
3,383
1.7%1,131
New England (excluding Boston)14
2,611
1.3%1,174
 11
1,965
0.9%1,233
Phoenix25
7,400
3.4%946
 3
872
0.2%898
Atlanta12
3,616
2.0%1,157
 2
666
0.2%1,339
Tacoma, WA3
1,467
0.6%951
 1
522
0.2%1,016
Jacksonville6
2,117
1.1%1,005
 —
—
—
—
Subtotal – Non-Core91
26,705
14.3%1,099
 37
10,489
5.3%1,247
Total401
110,331
100.0%1,737
 387
104,634
100.0%2,099
          
Military Housing2
5,039
—
—
 2
5,161
—
—
          
Grand Total403
115,370
100.0%$1,737
 389
109,795
100.0%$2,099
2014.

Note: Projects under development are not included in the Portfolio Summary until construction has been completed.

(1)% of Stabilized NOI includes budgeted 2013 NOI for stabilized properties, budgeted year one (March 2013 to February 2014) NOI for the Archstone properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up.

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(2)Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the last month of the period presented.

We currently have access to multiple sources of capital including the equity markets as well as both the secured and unsecured debt markets. In April 2013, the Company completed a $500.0 million unsecured ten year note offering with a coupon of 3.00% and an all-in effective interest rate of approximately 4.0%. In February 2013, the Company issued 34,468,085 Common Shares with a value of $1.9 billion based on the February 27, 2013 closing price of EQR Common Shares of $55.99 per share to an affiliate of Lehman Brothers Holdings Inc. as partial consideration for the acquisition of the Archstone Portfolio. In December 2012, the Company raised $1.2 billion in equity in a public offering of 21,850,000 Common Shares priced at $54.75 per share. We also raised $192.3 million under our ATM program in 2012. On January 11, 2013, the Company replaced its existing $1.75 billion credit facility with a $2.5 billion unsecured revolving credit facility maturing April 1, 2018. The Company believes that the new facility contains a diversified and strong bank group which increases its balance sheet flexibility going forward. On January 11, 2013, the Company also entered into a senior unsecured $750.0 million delayed draw term loan facility which was fully drawn on February 27, 2013 in connection with the Archstone Acquisition.

In October 2013, the Company used cash on hand from dispositions to repay $963.5 million outstanding of 5.883% mortgage debt assumed as part of the Archstone transactionTransaction prior to the November 1, 2014 maturity date. Also in October 2013, the Company closed a new $800.0 million mortgage loan from a large insurance company which matures on November 10, 2023, is interest only and carries a fixed interest rate of 4.21%. The Company used the loan proceeds from this new loan to simultaneously repay $825.0 million of a $1.27 billion mortgage loan assumed as part of the Archstone transaction.Transaction. The approximately $440.0 million balance will remain outstanding, continue to mature in November 2017 and continue to carry a fixed interest rate of 6.256%. In conjunction with the early debt extinguishment activity discussed above, the Company incurred cash prepayment costs of approximately $150.0 million and a net charge to earnings of approximately $43.0 million after consideration of the write-off of the Archstone-related debt premium. The Company believes it has locked in an attractive piece ofobtained favorable interest terms on this long term debt and has substantially extended the duration of its debt maturities as well as reduced its 2014 and 2017 maturities as a percentage of outstanding debt.

We believe that cash and cash equivalents, securities readily convertible to cash, current availability on our revolving credit facility and disposition proceeds for 20132014 will provide sufficient liquidity to meet our funding obligations relating to asset acquisitions, debt maturities and existing development projects through 2013.2014. We expect that our remaining longer-term funding requirements will be met through some combination of new borrowings, equity issuances, property dispositions, joint ventures and cash generated from operations.

There is significant uncertainty surrounding the futures of Fannie Mae and Freddie Mac (the “Government Sponsored Enterprises” or “GSEs”). and recent changes in leadership of the GSEs' regulator as well as proposed congressional legislation has heightened this uncertainty. Through their lender originator networks, the GSEs are significant lenders both to the Company and to buyers of the Company's properties. The GSEs have a mandate to support multifamily housing through their financing activities. Any changes to their mandates, further reductions in their size or the scale of their activities or loss of key personnel could have a significant impact on the Company and may, among other things, lead to lower values for our assets and higher interest rates on our borrowings. During the first quarter of 2013, theThe regulator of the GSEs required the GSEs to decrease their 2013 multifamily lending activities by 10% compared to 2012 levels and we believelevels. No such mandate has been announced for 2014, however, it remains unclear if further reductions or changes in lending activities may be mandated in 2014.required by the GSEs' regulator or by Congress. The GSEs' regulator may require the GSEs have also increasedto focus more of their credit spreads,lending activities on properties that the regulator deems affordable, which coupled with increases in long-term treasury rates, has caused a substantial increase in borrowing costs. As a result, GSE multifamily lending activity has declined. By sellingmay or may not include the assets required to pay for Archstone in the first half of 2013, the Company substantially mitigated the risk that changes in GSE activity would impact its Archstone-related disposition program.Company's assets. Reductions in GSE activity or increases in GSE loan pricing may also provide a competitive advantage to us by making the cost of financing multifamily properties more expensive for other multifamily owners while the Company continues to have access to cheaper capital in the public and private debt and equity markets (see examples of this access discussed above).markets. Over time, we expect that other lenders, including the commercial mortgage-backed securities market and life insurance companies, will become larger sources of debt capital to the multifamily market because multifamily properties are attractive to lenders due to their relatively stable cash flows.

We expect 2013continued growth in revenue (anticipated 2014 same store revenue growth of 4.5%increase ranging from 3.0% to 4.0%) and 2013NOI (anticipated 2014 same store NOI growthincrease ranging from 3.50% to 4.75%) and are optimistic that the continued strength in fundamentals across most of 5.1%.our markets will produce solid performance through 2014. These same-store assumptions include the 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company. During the first quarter of 2014, same store revenues increased 4.0% over the first quarter of 2013. We believe the key drivers behind the anticipated increase in revenue are base rent pricing for new residents, renewal pricing for existing residents, resident turnover and physical occupancy. During the third quarter of 2013,For 2014, we achievedexpect average base rent increases approximating 2.1% whilegrowth of 3.25%, an increase in renewal rates remained strong, increasing approximately 5.4%. Occupancy for the third quarter improved as a result of healthy demand across most markets4.75%, occupancy of 95.4% and reduced resident turnover. Move outs to buy homes increased modestly in the third quarter over the prior year period with this increase concentrated in Washington D.C., Seattle and Boston.turnover at 51.5%. Our largest market, Washington D.C., continues to show signs of stress as new supply and the impact of sequestration and furloughs have dampened the metro area economy. However, as evidenced by our continued high occupancy levels, there continues to be healthy demand for apartments in Washington D.C. even in the face of declining government payrolls and procurement. As the supply peaks in 2014, we would expect our Washington D.C. results to produce modest negativea 1% decline in same store revenues during 2014, which will likely reduce our expected Company-wide same store revenue growth.growth by 1%. Despite slow growth in the overall economy and

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the issues noted in Washington D.C., our business continues to perform well because of the combined forces of demographics, household formations and increasing consumer preference for the continued moderation in overall home ownership levels,flexibility of rental housing, all of which should ensure a continued strong demand for rental housing. Taking all of the above factors into account, the Company currently forecasts same store revenue growth of 3.0% to 4.0% in 2014.

The Company anticipates that 20132014 same store expenses will increase 3.3%2.0% to 3.0% primarily due to increases in real estate taxes, which are now expected to increase 6.2%, and utilities, which are now expected to increase in excess of 7.5%8.0%. During the first quarter of 2014, same store expenses increased 3.2% over the first quarter of 2013, with real estate taxes up 6.2% and utilities up 14.5%. The increase in 2013. Thisreal estate taxes is primarily due to rate and value increases in certain states and municipalities,

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reflecting those states' and municipalities' continued economic challenges and the dramatic improvement in apartment values and fundamentals. The other key driver of this increase isfundamentals as well as the continued burn off of 421a tax abatements in New York City. The increase in utilities is primarily due to a combination of increases in natural gas prices, increased consumption of gas and electric due to historically low temperatures and increases in water and sewer costs as many municipalities have antiquated systems with limited revenue for modernization. Expense growth in the corecontrollable property level expenses (excluding real estate taxes and utilities) continues to be modest (year to date same store expenses increased 1.3% excluding real estate taxes)declined 2.1% as the Company leverages the geographic locations of its new same-store portfolio (as a result of the Archstone Transaction and the 2013 disposition program) and technology to lower costs, which should partially offset the increase in real estate taxes and utilities. We expect that the beneficial impact resulting from Archstone synergies will diminish over the course of the year.

We believe that the Company is well-positioned as of September 30, 2013March 31, 2014 because our properties are geographically diverse, were approximately 94.4%94.7% occupied (96.1%(95.8% on a same store basis) and the long-term demographic picture is positive. CertainWe believe certain market areas, especially the NOMA area of Washington D.C., downtown Boston downtownand Cambridge and Seattle, and the San Jose sub-market area of San Francisco, will see substantial near term multifamily supply yet total new supply levels for our core markets remain within historical ranges. We believe over the longer term that our core markets will absorb future supply without material marketwide disruption because of the high occupancy levels we currently experience and increasing household formations. We have seen evidence of this in Seattle and San Jose as supply has been easily absorbed and rental rates continue to grow. We believe our strong balance sheet and ample liquidity will allow us to fund our debt maturities and development costs in the near term, and should also allow us to take advantage of investment opportunities in the future.

The current environment information presented above is based on current expectations and is forward-looking.

Results of Operations

In conjunction with our business objectives and operating strategy, the Company continued to invest in apartment properties located in strategically targeted markets during the nine monthsquarter ended September 30, 2013March 31, 2014 as follows:

▪
Acquired $8.5 billion ofone consolidated apartment propertiesproperty consisting of 73 consolidated properties and 20,914430 apartment units (inclusive of eight long-term ground leases)for $143.0 million at a weighted average cap rate (see definition below) of 4.9% and 14 consolidatedadditional development rights at one of its existing land parcelssites for $256.4 million, all of which we deem to be in our strategic targeted markets;
▪Acquired three consolidated master-leased properties consisting of 853 apartment units (inclusive of one long-term ground lease) for $251.8 million at a weighted average cap rate of 5.6%;
▪Acquired two consolidated uncompleted developments for $36.6 million;
▪Acquired one unconsolidated apartment property consisting of 336 apartment units for $5.1 million at a weighted average cap rate of 5.8% and one unconsolidated land parcel for $6.6 million;
▪Acquired two unconsolidated uncompleted developments for $14.9 million;
▪
Sold $4.4 billion of consolidated apartment properties consisting of 92 properties and 28,328 apartment units at a weighted average cap rate of 6.0% generating an unlevered internal rate of return (IRR), inclusive of management costs, of 10.0% (excluding the sale of three Archstone assets), the majority of which were in exit or less desirable markets;
▪Sold six consolidated land parcels and one consolidated commercial building for $108.4 million; and
▪Sold one unconsolidated land parcel for $26.4 million (sales price is the gross sales price and EQR's share of the net sales proceeds approximated 25%).$5.5 million.
The Company’sCompany'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 its operating performance because it is a direct measure of the actual operating results of the Company’sCompany's apartment communities. The cap rate is generally the first year NOI yield (net of replacements) on the Company’sCompany's investment.

Properties that the Company owned and were stabilized (see definition below) for all of both of the nine monthsquarters ended September 30, 2013March 31, 2014 and 20122013 as well as the 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and manged by the Company (the “Nine-Month 2013“First Quarter 2014 Same Store Properties”), which represented 81,099 apartment units, and properties that the Company owned and were stabilized for all of both of the quarters ended September 30, 2013 and 2012 (the "Third Quarter 2013 Same Store Properties"), which represented 82,553100,984 apartment units, impacted the Company's results of operations. Both the Nine-Month 2013 Same Store Properties and the ThirdThe First Quarter 20132014 Same Store Properties are discussed in the following paragraphs.

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The following tables provide a rollforward of the apartment units included in Same Store Properties and a reconciliation of apartment units included in Same Store Properties to those included in Total Properties for the nine months and quarter ended September 30, 2013March 31, 2014:


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 Nine Months Ended Quarter Ended
 September 30, 2013 September 30, 2013
 Properties
Apartment
Units
 Properties
Apartment
Units
Same Store Properties at Beginning of Period359
98,577
 310
85,509
      
2011 acquisitions21
6,198
 —
—
2011 acquisitions not stabilized(1)(95) —
—
2012 acquisitions—
—
 2
812
2013 dispositions(92)(28,328) (10)(4,131)
2013 dispositions not yet included in same store (1)5
1,896
 1
264
Lease-up properties stabilized6
2,829
 1
95
Other—
22
 —
4
      
Same Store Properties at September 30, 2013298
81,099
 304
82,553
  Quarter Ended
  March 31, 2014
  PropertiesApartment
Units
Same Store Properties at December 31, 2013 296
80,247
    
2012 acquisitions 9
1,896
2013 acquisitions 77
22,103
2013 acquisitions not yet included in same store (1) (1)(322)
2013 acquisitions not yet stabilized (2) (2)(613)
2013 acquisitions not managed by the Company (3) (3)(853)
2013 acquisitions not consolidated (1)(336)
2013 acquisitions disposed of in 2013 (4) (3)(1,536)
Lease-up properties stabilized 3
374
Other —
24
    
Same Store Properties at March 31, 2014 375
100,984
Nine Months Ended Quarter Ended Quarter Ended
September 30, 2013 September 30, 2013 March 31, 2014
Properties
Apartment
Units
 Properties
Apartment
Units
 PropertiesApartment
Units
Same Store Properties at September 30, 2013298
81,099
 304
82,553
Same Store 375
100,984
     
Non-Same Store:     
2013 acquisitions77
22,103
 77
22,103
2012 acquisitions9
1,896
 4
540
2013 dispositions not yet included in same store (1)(3)(1,536) (3)(1,536)
2014 acquisitions 1
430
2013 acquisitions not yet included in same store (1) 1
322
2013 acquisitions not yet stabilized (2) 2
613
2013 acquisitions not managed by the Company (3) 3
853
2013 acquisitions not consolidated 1
336
Lease-up properties not yet stabilized (2)5
1,063
 4
968
 10
2,939
Other1
9
 1
6
 1
1
Total Non-Same Store89
23,535
 83
22,081
 19
5,494
Military Housing (not consolidated)2
5,161
 2
5,161
 2
5,059
     
Total Properties and Apartment Units at September 30, 2013389
109,795
 389
109,795
Total Properties and Apartment Units 396
111,537

Note: Properties are considered "stabilized" when they have achieved 90% occupancy for three consecutive months. Properties are included in Same Store when they are stabilized for all of the current and comparable periods presented. Same store includes the 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company, with pro forma pre-ownership results for the period January 1, 2013 to February 27, 2013.

(1)Includes three propertiesone property containing 1,536322 apartment units acquired on February 27,in 2013 in conjunction withseparately from the Archstone Acquisition that were subsequently sold in 2013 and two properties containing 360 apartment units in lease-up that were sold in 2013.Acquisition.
(2)Includes properties in various stages of lease-up and properties where lease-up has been completed but the properties were not stabilized for the comparable periods presented.
(3)Includes three properties containing 853 apartments units acquired on February 27, 2013 in conjunction with the Archstone Acquisition that are owned by the Company but the entire projects are master leased to a third party corporate housing provider and the Company earns monthly net rental income.
(4)Includes three properties containing 1,536 apartment units acquired on February 27, 2013 in conjunction with the Archstone Acquisition that were subsequently sold in 2013.

The Company’s acquisition, disposition and completed development activities also impacted overall results of operations for the nine months and quarters ended September 30, 2013March 31, 2014 and 2012.2013. The impacts of these activities are discussed in greater detail in the following paragraphs.




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Comparison of the nine monthsquarter ended September 30, 2013March 31, 2014 to the nine monthsquarter ended September 30, 2012March 31, 2013

For the nine monthsquarter ended September 30, 2013March 31, 2014, the Company reported diluted earnings per share/unit of $4.87$0.22 compared to $1.52$3.01 per share/unit in the same period of 20122013. The difference is primarily due primarily to approximately $1.2 billion in higher gains fromon property sales in 2013 vs. 2012 and higher total property net operating income driven by the positive impact of the Company's same store and stabilized Archstone properties,2014, partially offset by $74.5$65.1 million of merger-related expenses incurred in 2013 in connection with the acquisition of the Archstone Portfolio,Acquisition, $71.4 million inof prepayment penalties incurred in 2013 in connection with early debt extinguishment of existing

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mortgage notes payable to manage the Company's post Archstone 2017 maturities profile and higher depreciation in 2013 as a direct result of in-place residential lease intangibles acquired in the Archstone transaction, the issuance of Common Shares to the public in December 2012 and to an affiliate of Lehman Brothers Holdings Inc. in February 2013 as partial consideration for the Archstone Acquisition and the Company's recognition of $70.0 million of the $150.0 million in Archstone-related termination fees in 2012.Transaction.

For the nine monthsquarter ended September 30, 2013March 31, 2014, lossincome from continuing operations increased approximately $296.5247.0 million when compared to the nine monthsquarter ended September 30, 2012.March 31, 2013. The decreaseincrease in continuing operations is discussed below.

Revenues from the Nine-MonthFirst Quarter 20132014 Same Store Properties increased $59.523.4 million primarily as a result of an increase in average rental rates charged to residents, slightly higher occupancy and a decrease in turnover. Expenses from the Nine-MonthFirst Quarter 20132014 Same Store Properties increased $14.96.8 million primarily due to increases in real estate taxes utilities and repairs and maintenance costs,utilities, partially offset by lower property managementon-site payroll costs. The following tables provide comparative same store results and statistics for the Nine-MonthFirst Quarter 20132014 Same Store Properties:
 
September YTD 2013 vs. September YTD 2012
Same Store Results/Statistics for 81,099 Same Store Apartment Units
First Quarter 2014 vs. First Quarter 2013First Quarter 2014 vs. First Quarter 2013
Same Store Results/Statistics for 100,984 Same Store Apartment UnitsSame Store Results/Statistics for 100,984 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
                        
 Results Statistics Results Statistics
Description Revenues Expenses NOI 
Average
Rental
Rate (1)
 Occupancy Turnover Revenues Expenses NOI 
Average
Rental
Rate (1)
 Occupancy Turnover
YTD 2013 $1,329,326
 $462,509
 $866,817
 $1,910
 95.4% 43.8%
YTD 2012 $1,269,876
 $447,600
 $822,276
 $1,827
 95.3% 44.0%
Q1 2014 $613,878
 $218,239
 $395,639
 $2,133
 95.1% 11.3%
Q1 2013 $590,452
 $211,485
 $378,967
 $2,053
 95.0% 12.1%
Change $59,450
 $14,909
 $44,541
 $83
 0.1% (0.2%) $23,426
 $6,754
 $16,672
 $80
 0.1% (0.8%)
Change 4.7% 3.3% 5.4% 4.5%     4.0% 3.2% 4.4% 3.9%    
                        
Note: Same store results/statistics include 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.Note: Same store results/statistics include 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.
            
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.
     
The following table provides comparative same store operating expenses for the Nine-MonthFirst Quarter 20132014 Same Store Properties:
 
September YTD 2013 vs. September YTD 2012
Same Store Operating Expenses for 81,099 Same Store Apartment Units
First Quarter 2014 vs. First Quarter 2013First Quarter 2014 vs. First Quarter 2013
Same Store Operating Expenses for 100,984 Same Store Apartment UnitsSame Store Operating Expenses for 100,984 Same Store Apartment Units
$ in thousands
                    
 Actual
YTD 2013		 Actual
YTD 2012		 $
Change		 %
Change		 % of Actual
YTD 2013
Operating
Expenses		 Actual
Q1 2014		 Actual
Q1 2013		 $
Change		 %
Change		 % of Actual
Q1 2014
Operating
Expenses
Real estate taxes $150,852
 $140,089
 $10,763
 7.7% 32.6% $72,828
 $68,603
 $4,225
 6.2% 33.4%
On-site payroll (1) 99,109
 97,775
 1,334
 1.4% 21.4% 43,674
 45,499
 (1,825) (4.0%) 20.0%
Utilities (2) 69,474
 66,885
 2,589
 3.9% 15.0% 38,262
 33,414
 4,848
 14.5% 17.5%
Repairs and maintenance (3) 63,099
 60,332
 2,767
 4.6% 13.7% 25,940
 25,217
 723
 2.9% 11.9%
Property management costs (4) 44,532
 47,620
 (3,088) (6.5%) 9.6% 19,030
 19,485
 (455) (2.3%) 8.7%
Insurance 14,779
 13,904
 875
 6.3% 3.2% 6,246
 6,321
 (75) (1.2%) 2.9%
Leasing and advertising 7,150
 6,952
 198
 2.8% 1.6% 2,568
 3,030
 (462) (15.2%) 1.2%
Other on-site operating expenses (5) 13,514
 14,043
 (529) (3.8%) 2.9% 9,691
 9,916
 (225) (2.3%) 4.4%
Same store operating expenses $462,509
 $447,600
 $14,909
 3.3% 100.0% $218,239
 $211,485
 $6,754
 3.2% 100.0%

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(1)On-site payroll – Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff.
(2)
Utilities – Represents gross expenses prior to any recoveries under the Resident Utility Billing System (“RUBS”). Recoveries are reflected in rental income.

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(3)Repairs and maintenance – Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.
(4)Property management costs – Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology.
(5)Other on-site operating expenses – Includes ground lease costs and administrative costs such as office supplies, telephone and data charges and association and business licensing fees.

The following table presents a reconciliation of operating income per the consolidated statements of operations and comprehensive income to NOI for the Nine-Month 2013 Same Store Properties:
  Nine Months Ended September 30,
  2013 2012
  (Amounts in thousands)
Operating income $291,521
 $368,443
Adjustments:    
Non-same store operating results (267,183) (1,744)
Fee and asset management revenue (7,399) (7,328)
Fee and asset management expense 4,739
 3,595
Depreciation 798,121
 422,148
General and administrative 47,018
 37,162
Same store NOI $866,817
 $822,276
For properties that the Company acquired prior to January 1, 2012 and expects to continue to own through December 31, 2013 (which is computed based on the portfolio of approximately 80,000 apartment units that the Company expects to have in its annual same store set after the completion of its planned 2013 dispositions), the Company anticipates the following same store results for the full year ending December 31, 2013:
2013 Same Store Assumptions
Physical occupancy95.4%
Revenue change4.5%
Expense change3.3%
NOI change5.1%
The Company anticipates consolidated rental acquisitions of $100.0 million (exclusive of the Archstone Acquisition) and consolidated rental dispositions of $4.4 billion and expects that acquisitions will have a 1.10% lower cap rate than dispositions for the full year ending December 31, 2013.
These 2013 assumptions are based on current expectations and are forward-looking.
Non-same store operating results increased approximately $265.4 million and consist primarily of properties acquired in calendar years 2012 and 2013, as well as operations from the Company’s completed development properties. Although the operations of both the non-same store assets and the same store assets have been positively impacted during the nine months ended September 30, 2013, the non-same store assets have contributed a greater percentage of total NOI to the Company’s overall operating results primarily due to 2012 and 2013 acquisitions, increasing occupancy for properties in lease-up and a longer ownership period in 2013 than 2012. This increase primarily resulted from:

▪Development and other miscellaneous properties in lease-up of $4.5 million;
▪
Operating properties acquired in 2013 as part of the Archstone transaction of $239.4 million;
▪
Other properties acquired in 2012 and 2013 of $21.6 million;
▪Newly stabilized development and other miscellaneous properties of $4.3 million; and
▪Partially offset by an allocation of property management costs not included in same store results and operating activities from other miscellaneous operations.


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See also Note 13 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s segment disclosures.
Fee and asset management revenues, net of fee and asset management expenses, decreased approximately $1.1 million or 28.7% as a result of higher expenses and lower revenue earned on management of the Company's military housing ventures at Fort Lewis and McChord Air Force base, partially offset by higher fees earned on management of the Company's unconsolidated development joint ventures.
Property management expenses from continuing operations include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third party management companies. These expenses increased approximately $0.6 million or 1.0%. This increase is primarily attributable to an increase in payroll-related costs and an increase in computer operations due to the modernization of employee technology, partially offset by the timing of education/conference expenses and legal and professional fees.
Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased approximately $376.0 million or 89.1% primarily as a result of additional depreciation expense on properties acquired in 2013 (including the Archstone properties), development properties placed in service and capital expenditures for all properties owned. In-place residential lease intangibles are generally amortized over a six month period and can significantly elevate depreciation expense following an acquisition, especially during 2013 as a direct result of the Archstone Acquisition.
General and administrative expenses from continuing operations, which include corporate operating expenses, increased approximately $9.9 million or 26.5% primarily due to an increase in payroll-related costs, which is largely a result of higher and accelerated long-term compensation expense for retirement eligible employees and higher compensation related to the Archstone transaction. The Company anticipates that general and administrative expenses will approximate $63.0 million for the year ending December 31, 2013. The above assumption is based on current expectations and is forward-looking.
Interest and other income from continuing operations decreased $69.2 million or 98.1% primarily due to the Company recognizing $70.0 million of the $150.0 million in Archstone-related termination fees during the nine months ended September 30, 2012.
Other expenses from continuing operations decreased approximately $11.1 million or 59.5% primarily due to the lower property pursuit costs as the Company focused on its pursuit of the Archstone Acquisition.
Merger expenses from continuing operations, which includes direct costs incurred from the Archstone Acquisition such as investment banking and legal/accounting costs, increased approximately $17.8 million as a result of the closing of the Archstone Acquisition during the nine months ended September 30, 2013.
Interest expense from continuing operations, including amortization of deferred financing costs, increased approximately $97.3 million or 27.4% primarily as a result of $71.4 million of prepayment penalties incurred on early debt extinguishments as well as write-offs of unamortized deferred financing costs and premiums/discounts of existing mortgage notes payable to manage the Company's post Archstone 2017 maturities profile, interest expense on two loan pools assumed in conjunction with the Archstone Acquisition and $500.0 million of unsecured notes that closed in April 2013, partially offset by higher capitalized interest in 2013 and the repayment of $253.9 million of 6.625% unsecured notes in March 2012, $221.1 million of 5.500% unsecured notes in October 2012, a $543.0 million mortgage pool in March 2013 and $400.0 million of 5.200% unsecured notes in April 2013. During the nine months ended September 30, 2013, the Company capitalized interest costs of approximately $32.9 million as compared to $15.8 million for the nine months ended September 30, 2012. This capitalization of interest primarily relates to consolidated projects under development. The effective interest cost on all indebtedness for the nine months ended September 30, 2013 was 4.91% (excluding prepayment penalties) as compared to 5.28% for the nine months ended September 30, 2012. The Company anticipates that interest expense from continuing operations will approximate $472.6 million to $481.1 million (excluding debt extinguishment costs) for the year ending December 31, 2013. The above assumption is based on current expectations and is forward-looking.
Income and other tax expense from continuing operations increased approximately $0.7 million primarily due to increases in taxes related to land parcel sales owned by the Company's TRS. The Company anticipates that income and other tax expense will approximate $2.6 million for the year ending December 31, 2013. The above assumption is based on current expectations and is forward-looking.
Loss from investments in unconsolidated entities due to operations increased by $3.0 million as a result of the unconsolidated joint ventures acquired as part of the Archstone transaction.

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Loss from investments in unconsolidated entities due to merger expenses, which includes indirect costs incurred from the Archstone acquisition through the Company's joint ventures with AVB such as severance and retention bonuses, increased primarily as a result of severance obligations and retention bonuses in connection with the acquisition of Archstone through our 60% interest in an unconsolidated joint venture.

Net gain on sales of unconsolidated entities increased due to the gain on sale of one unconsolidated land parcel during the nine months ended September 30, 2013 as compared to no sales during the nine months ended September 30, 2012.

Net gain on sales of land parcels increased approximately $12.2 million due to the gain on sale of six land parcels during the nine months ended September 30, 2013 as compared to no land sales during the nine months ended September 30, 2012.
Discontinued operations, net increased approximately $1.6 billion between the periods under comparison. This increase is primarily due to higher gains on sales from dispositions during the nine months ended September 30, 2013 compared to the same period in 2012, partially offset by properties sold in 2013 that reflect operations for a partial period in 2013 in contrast to a full period in 2012. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.

Comparison of the quarter ended September 30, 2013 to the quarter ended September 30, 2012

For the quarter ended September 30, 2013, the Company reported diluted earnings per share/unit of $1.05 compared to $0.72 per share/unit in the same period of 2012. The difference is due primarily to higher gains from property sales in the third quarter of 2013 vs. the third quarter of 2012 and higher total property net operating income driven by the positive impact of the Company's same store and stabilized Archstone properties, partially offset by $2.0 million of merger-related expenses incurred in connection with the Archstone Acquisition, interest expense on two loan pools assumed in conjunction with the Archstone Acquisition and $500.0 million of unsecured notes that closed in April 2013, higher depreciation as a direct result of the Archstone Acquisition, the issuance of Common Shares to the public in December 2012 and to an affiliate of Lehman Brothers Holdings Inc. in February 2013 as partial consideration for the Archstone Acquisition and the Company's recognition of $70.0 million of the $150.0 million in Archstone-related termination fees.

For the quarter ended September 30, 2013, loss from continuing operations increased approximately $104.6 million when compared to the quarter ended September 30, 2012. The decrease in continuing operations is discussed below.
Revenues from the Third Quarter 2013 Same Store Properties increased $18.1 million primarily as a result of an increase in average rental rates charged to residents and a decrease in turnover. Expenses from the Third Quarter 2013 Same Store Properties increased $4.9 million primarily due to increases in real estate taxes and on-site payroll costs, partially offset by lower property management costs. The following tables provide comparative same store results and statistics for the Third Quarter 2013 Same Store Properties:

Third Quarter 2013 vs. Third Quarter 2012
Same Store Results/Statistics for 82,553 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
             
  Results Statistics
Description Revenues Expenses NOI Average
Rental
Rate (1)		 Occupancy Turnover
Q3 2013 $463,607
 $159,302
 $304,305
 $1,957
 95.7% 16.9%
Q3 2012 $445,521
 $154,450
 $291,071
 $1,878
 95.9% 17.2%
Change $18,086
 $4,852
 $13,234
 $79
 (0.2%) (0.3%)
Change 4.1% 3.1% 4.5% 4.2%    
             
(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.

The following table provides comparative same store operating expenses for the Third Quarter 2013 Same Store Properties:


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Third Quarter 2013 vs. Third Quarter 2012
Same Store Operating Expenses for 82,553 Same Store Apartment Units
$ in thousands
           
  Actual
Q3 2013		 Actual
Q3 2012		 $
Change		 %
Change		 % of Actual
Q3 2013
Operating
Expenses
Real estate taxes $51,834
 $47,551
 $4,283
 9.0% 32.5%
On-site payroll (1) 34,266
 33,351
 915
 2.7% 21.5%
Utilities (2) 23,658
 23,058
 600
 2.6% 14.9%
Repairs and maintenance (3) 22,595
 21,976
 619
 2.8% 14.2%
Property management costs (4) 15,067
 16,707
 (1,640) (9.8%) 9.5%
Insurance 5,012
 4,717
 295
 6.3% 3.1%
Leasing and advertising 2,462
 2,536
 (74) (2.9%) 1.5%
Other on-site operating expenses (5) 4,408
 4,554
 (146) (3.2%) 2.8%
Same store operating expenses $159,302
 $154,450
 $4,852
 3.1% 100.0%

(1)On-site payroll – Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff.
(2)Utilities – Represents gross expenses prior to any recoveries under the Resident Utility Billing System (“RUBS”). Recoveries are reflected in rental income.
(3)Repairs and maintenance – Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.
(4)Property management costs – Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology.
(5)Other on-site operating expenses – Includes ground lease costs and administrative costs such as office supplies, telephone and data charges and association and business licensing fees.

The following table presents a reconciliation of operating income per the consolidated statements of operations and comprehensive income to NOI for the ThirdFirst Quarter 20132014 Same Store Properties:
 Quarter Ended September 30, Quarter Ended March 31,
 2013 2012 2014 2013
 (Amounts in thousands) (Amounts in thousands)
Operating income $121,394
 $142,932
 $199,252
 $104,246
Adjustments:        
Archstone pre-ownership operating results —
 55,694
Non-same store operating results (107,813) 663
 (5,301) 6,824
Fee and asset management revenue (2,566) (3,052) (2,717) (2,160)
Fee and asset management expense 1,516
 1,108
 1,662
 1,646
Depreciation 277,336
 139,337
 185,167
 196,222
General and administrative 14,438
 10,083
 17,576
 16,495
Same store NOI $304,305
 $291,071
 $395,639
 $378,967
For properties that the Company acquired prior to January 1, 2013 and expects to continue to own through December 31, 2014 as well as the 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and manged by the Company, the Company anticipates the following same store results for the full year ending December 31, 2014:
2014 Same Store Assumptions
Physical occupancy95.4%
Revenue change3.0% to 4.0%
Expense change2.0% to 3.0%
NOI change3.50% to 4.75%
The Company anticipates consolidated rental acquisitions of $500.0 million and consolidated rental dispositions of $500.0 million and expects that acquisitions will have a 1.00% lower cap rate than dispositions for the full year ending December 31, 2014.

These 2014 assumptions are based on current expectations and are forward-looking.

Non-same store operating results increased approximately $108.512.1 million and consist primarily of properties acquired in calendar years 20122013 and 2013,2014 as well as operations from the Company’s completed development properties. Althoughproperties, but exclude the operations of both18,465 stabilized apartment units acquired in the non-same store assetsArchstone Acquisition that are owned and managed by the same store assets have been positively impacted during the quarter ended September 30, 2013, the non-same store assets have contributed a greater percentage of total NOI to the Company’s overall operating results primarily due to 2012 and 2013 acquisitions, increasing occupancy for properties in lease-up and a longer ownership period in 2013 than 2012.Company. This increase primarily resulted from:


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▪Development and other miscellaneous properties in lease-up of $2.1$0.6 million;
▪
Operating properties acquired in 2013 and 20132014 as part of the Archstone transaction of $102.6 million;
▪
Other$2.7 million (excluding operating properties acquired in 2012 and 2013 of $3.2 million;the Archstone Acquisition);
▪Newly stabilized development and other miscellaneous properties of $0.7$4.4 million; and

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▪Partially offset by an allocation of property management costs not included in same store results and operatingOperating activities from other miscellaneous operations.

See also Note 13 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s segment disclosures.
Fee and asset management revenues, net of fee and asset management expenses, decreasedincreased approximately $0.90.5 million or 46.0%primarily as a result of higher expenses and lower revenue earned onthe timing of receipt of an incentive management offee from the Company's military housing ventures at Fort Lewis and McChord Air Force base, partially offset by higher fees earned on management of the Company's unconsolidated development joint ventures.base.

Property management expenses from continuing operations include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third party management companies. These expenses increaseddecreased approximately $0.4$0.4 million or 2.1%1.6%. This increasedecrease is primarily attributable to an increasea decrease in payroll-related costs, partially offset bycomputer operations due to the timingmodernization of employee technology in 2013 and a decrease in legal and professional fees.

Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increaseddecreased approximately $138.011.1 million or 99.0%5.6% primarily as a result of additional depreciation expense on properties acquired in 2013 (including the Archstone properties), development properties placed in service and capital expenditures for all properties owned. In-placein-place residential lease intangibles which are generally amortized over a six month period and can significantly elevate depreciation expense following an acquisition, especially during 2013 as a direct result of the Archstone Acquisition.Acquisition, partially offset by additional depreciation expense on properties acquired in 2013 and 2014, development properties placed in service and capital expenditures for all properties owned.

General and administrative expenses from continuing operations, which include corporate operating expenses, increased approximately $4.41.1 million or 43.2%6.6% primarily due to an increase in payroll-related costs, which is largely a result of higher and accelerated long-term compensation expense for retirement eligible employees and higher compensation related to the Archstone transaction.Transaction as well as an increase in office rent. The Company anticipates that general and administrative expenses will approximate $50.0 million to $52.0 million for the year ending December 31, 2014. The above assumption is based on current expectations and is forward-looking.

Interest and other income from continuing operations decreased $69.3increased approximately $0.3 million or 98.8%89.1% primarily due to the Company recognizing $70.0 millionsettlement of a dispute with the $150.0 million in Archstone-related termination feesseller/co-developer of a land parcel during the quarter ended September 30, 2012.
March 31, 2014. The Company anticipates that interest and other income, excluding the $0.5 million settlement discussed above, will approximate $0.5 million for the year ending December 31, 2014. The above assumption is based on current expectations and is forward-looking.
Other expenses from continuing operations were consistent betweendecreased approximately $21.1 million or 97.0% primarily due to the periods under comparison.

Merger expenses from continuing operations, which includes direct costs incurred fromclosing of the Archstone Acquisition such as investment bankingduring the quarter ended March 31, 2013 and legal/accounting costs, remained relatively consistent between the periods under comparison.

significant decline in transaction activity during the quarter ended March 31, 2014.
Interest expense from continuing operations, including amortization of deferred financing costs, increaseddecreased approximately $7.8$85.6 million or 6.7%42.5% primarily as a result of interest expense on two loan pools assumed in conjunction with the Archstone Acquisition and $500.0$79.6 million of unsecureddebt extinguishment costs incurred on early debt prepayments and write-offs of unamortized deferred financing costs in 2013 on existing mortgage notes that closed in April 2013, partially offset bypayable to manage the Company's post Archstone 2017 maturities profile and higher capitalized interest in 2013 and the repayment of $221.1 million of 5.500% unsecured notes in October 2012, a $543.0 million mortgage pool in March 2013 and $400.0 million of 5.200% unsecured notes in April 2013.2014. During the quarter ended September 30, 2013March 31, 2014, the Company capitalized interest costs of approximately $12.9$12.8 million as compared to $5.7$8.4 million for the quarter ended September 30, 2012.March 31, 2013. This capitalization of interest primarily relates to consolidated projects under development. The effective interest cost on all indebtedness for the quarter ended September 30, 2013March 31, 2014 was 4.69% as compared to 5.27%5.46% (excluding prepayment penalties) for the quarter ended September 30, 2012.March 31, 2013. The Company anticipates that interest expense from continuing operations will approximate $449.1 million to $461.4 million for the year ending December 31, 2014. The above assumption is based on current expectations and is forward-looking.

Income and other tax expense from continuing operations increaseddecreased approximately $0.3$0.2 million or 45.2% primarily due to increases indecreases and timing of all other taxes. The Company anticipates that income and other tax expense will approximate $1.0 million to $2.0 million for the year ending December 31, 2014. The above assumption is based on current expectations and is forward-looking.
Loss from investments in unconsolidated entities decreased by $45.0 million or 97.0% primarily due to operations increased approximately $1.5 million as a result of the unconsolidated joint ventures acquired as part of the Archstone transaction.
Loss from investments in unconsolidated entities due to merger expenses, which includes indirect costs incurred in 2013 from the Archstone Acquisition through the Company's joint ventures with AVB such as severance and retention bonuses increased

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primarily as a result of severance obligations and retention bonusesthat did not reoccur in connection with the Archstone Acquisition through our 60% interest in an unconsolidated joint venture.2014.

Net gain on sales of unconsolidated entities increased due to the gain on sale of one unconsolidated land parcel during the quarter ended September 30, 2013 as compared to no sales during the quarter ended September 30, 2012.

Net loss on sales of land parcels increased approximately $2.4 million due towas consistent between the loss on sale of one land parcel during the quarter ended September 30, 2013 as compared to no land sales during the quarter ended September 30, 2012.periods under comparison.

Discontinued operations, net increaseddecreased approximately $260.0 million$1.2 billion between the periods under comparison. This increasedecrease is primarily due to substantially higher gains on sales from dispositionsvolume during the quarter ended September 30,March 31, 2013 compared to the same period in 2012, partially offset by properties sold in 2013 that reflect operations for a partial period in 2013 in contrast to a full period in 2012.2014. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.

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Liquidity and Capital Resources

EQR issues public equity from time to time and guarantees certain debt of ERPOP. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership.
As of January 1, 2013,2014, the Company had approximately $612.653.5 million of cash and cash equivalents its restricted 1031 exchange proceeds totaled $152.2 millionand it had $1.72$2.35 billion available under its revolving credit facility (net of $30.2$34.9 million which was restricted/dedicated to support letters of credit)credit and net of $115.0 million outstanding). After taking into effect the various transactions discussed in the following paragraphs and the net cash provided by operating activities, the Company’s cash and cash equivalents balance at September 30, 2013March 31, 2014 was approximately $972.837.2 million and the amount available on its revolving credit facility was $2.472.17 billion (net of $34.934.7 million which was restricted/dedicated to support letters of credit)credit and net of $298.0 million outstanding).
During the nine monthsquarter ended September 30, 2013March 31, 2014, the Company generated proceeds from various transactions, which included the following:

▪
Disposed of 92 consolidated properties, one commercial building and six land parcels, receiving net proceeds of approximately $4.4 billion;
▪Disposed of one unconsolidated land parcel and a portion of the Company's unconsolidated interest in German residential real estate, receiving net proceeds of $25.5 million;
▪Obtained $750.0 million of proceeds from its senior unsecured delayed draw term loan facility that was drawn upon in connection with the Archstone Acquisition;
▪
Issued $500.0 million of ten-year 3.00% fixed rate public notes, receiving net proceeds of $495.6 million before underwriting fees and other expenses, at an all-in effective interest rate of 3.998%; and
▪
Issued approximately 0.60.5 million Common Shares related to share option exercises and ESPP purchases and received net proceeds of $19.0$17.5 million, which were contributed to the capital of the Operating Partnership in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis).
During the nine monthsquarter ended September 30, 2013March 31, 2014, the above proceeds along with net cash flow from operations and availability on the Company's revolving line of credit were primarily utilized to:

▪Acquire the Archstone Portfolio for approximately $4.0 billion in cash (see Note 4 for details of the transaction);
▪Acquire one additional rental property and additional development rights at one additionalof its existing land parcelsites for approximately $108.3$148.5 million;
▪
Invest $257.0$122.3 million primarily in development projects; and
▪
Repay $711.3$3.0 million of mortgage loansloans; and $400.0
▪Repurchase 31,240 Common Shares, utilizing cash of $1.8 million of unsecured notes.(See Note 3).

On February 27, 2013, the Company issued 34,468,085 Common Shares to an affiliate of Lehman Brothers Holdings Inc. as partial consideration for the portion of the Archstone Portfolio acquired by the Company. The shares had a total value of $1.9 billion based on the February 27, 2013 closing price of EQR Common Shares of $55.99 per share. Concurrent with this transaction, ERPOP issued 34,468,085 OP Units to EQR. On March 7, 2013, EQR filed a shelf registration statement relating to the resale of these shares by the selling shareholders. Lehman has since sold all of these Common Shares.
On November 28, 2012, as a partial source of funding for the Archstone Acquisition, EQR priced the issuance of 21,850,000 Common Shares at a price of $54.75 per share for total consideration of approximately $1.2 billion, after deducting underwriting commissions of $35.9 million. Concurrent with this transaction, ERPOP issued 21,850,000 OP Units to EQR.
In September 2009, EQR announced the establishment of an At-The-Market (“ATM”) share offering program which would allow EQR to sell up to 17.0 millionCommon Shares from time to time over the next three years (later increased by 5.7

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million Common Shares and extended to February 2014) into the existing trading market at current market prices as well as through negotiated transactions. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds from 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). EQR may, but shall have no obligation to, sell Common Shares through the ATM share offering program in amounts and at times to be determined by EQR. Actual sales will depend on a variety of factors to be determined by EQR from time to time, including (among others) market conditions, the trading price of EQR’s Common Shares and determinations of the appropriate sources of funding for EQR. On July 30, 2013, the Board of Trustees approved an increase to the amount of shares which may be offered under the ATM program to 13.0 million Common Shares and extended the program maturity to July 2016. EQR has not issued any shares under this program since September 14, 2012. Through October 31, 2013,May 2, 2014, EQR has cumulatively issued approximately 16.7 million Common Shares at an average price of $48.53 per share for total consideration of approximately $809.9 million. On July 30, 2013,

Depending on its analysis of market prices, economic conditions and other opportunities for the Company filed a new universal shelf registration statement to replaceinvestment of available capital, EQR may repurchase its existing universal shelf registration statement, which expired October 15, 2013. The Board of Trustees also approved an increase to the amount of shares which be may offered under the ATM program to 13.0 million Common Shares and extended the program maturitypursuant to July 2016.

EQR has aits existing share repurchase program authorized by the Board of Trustees under which it previously had authorization to repurchase up to $464.6 million of its shares.Trustees. Effective July 30, 2013, the Board of Trustees approved an increase and modification to the Company's share repurchase program to allow for the potential repurchase of up to 13.0 million shares. NoEQR repurchased approximately $1.8 million (31,240 shares were repurchasedat a price of $56.87 per share) of its Common Shares (all related to the vesting of employees' restricted shares) during 2013 through Octoberthe quarter ended March 31, 2013 or at any time for2014. No open market repurchases have occurred since 2008. As of May 2, 2014, EQR has remaining authorization to repurchase an additional 12,968,760 of its shares. See Note 3 in the Notes to Consolidated Financial Statements for further discussion.

Depending on its analysis of prevailing market conditions, liquidity requirements, contractual restrictions and other factors, the Company may from time to time seek to repurchase and retire its outstanding debt in open market or privately negotiated transactions.

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The Company’s total debt summary and debt maturity schedules as of September 30, 2013March 31, 2014 are as follows:

Debt Summary as of September 30, 2013
Debt Summary as of March 31, 2014Debt Summary as of March 31, 2014
(Amounts in thousands)
                
 Amounts (1) % of Total Weighted
Average
Rates (1)		 Weighted
Average
Maturities
(years)		 Amounts (1) % of Total Weighted
Average
Rates (1)		 Weighted
Average
Maturities
(years)
Secured $6,230,675
 53.2% 4.25% 6.6
 $5,167,626
 47.2% 4.22% 8.2
Unsecured 5,476,522
 46.8% 4.93% 4.8
 5,775,656
 52.8% 4.70% 4.3
Total $11,707,197
 100.0% 4.58% 5.7
 $10,943,282
 100.0% 4.47% 6.1
Fixed Rate Debt:                
Secured – Conventional $5,547,506
 47.4% 4.67% 5.0
 $4,386,084
 40.1% 4.84% 6.7
Unsecured – Public/Private 4,726,522
 40.4% 5.57% 5.3
 4,727,656
 43.2% 5.49% 4.8
Fixed Rate Debt 10,274,028
 87.8% 5.09% 5.2
 9,113,740
 83.3% 5.18% 5.7
Floating Rate Debt:                
Secured – Conventional 57,133
 0.5% 2.33% 1.0
 56,868
 0.5% 2.21% 0.5
Secured – Tax Exempt 626,036
 5.3% 0.60% 19.4
 724,674
 6.6% 0.63% 17.0
Unsecured – Public/Private 750,000
 6.4% 1.66% 1.3
 750,000
 6.9% 1.33% 0.8
Unsecured – Revolving Credit Facility —
 —
 1.28% 4.5
 298,000
 2.7% 0.98% 4.0
Floating Rate Debt 1,433,169
 12.2% 1.23% 9.4
 1,829,542
 16.7% 1.02% 7.9
Total $11,707,197
 100.0% 4.58% 5.7
 $10,943,282
 100.0% 4.47% 6.1

(1)
Net of the effect of any derivative instruments. Weighted average rates are for the nine monthsquarter ended September 30, 2013March 31, 2014.
Note: The Company capitalized interest of approximately $32.9$12.8 million and $15.8 million during the nine months ended September 30, 2013 and 2012, respectively. The Company capitalized interest of approximately $12.9 million and $5.7$8.4 million during the quarters ended September 30, 2013March 31, 2014 and 2012,2013, respectively.

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Debt Maturity Schedule as of September 30, 2013
Debt Maturity Schedule as of March 31, 2014Debt Maturity Schedule as of March 31, 2014
(Amounts in thousands)
                        
Year Fixed
Rate (1)		 Floating
Rate (1)		 Total % of Total Weighted Average
Rates on Fixed
Rate Debt (1)		 Weighted Average
Rates on
Total Debt (1)		 Fixed
Rate (1)		 Floating
Rate (1)		 Total % of Total Weighted Average
Rates on Fixed
Rate Debt (1)		 Weighted Average
Rates on
Total Debt (1)
2013 $3,004
 $131
 $3,135
 0.0% 5.41% 5.32%
2014 1,517,991
(2)49,017
 1,567,008
 13.4% 5.67% 5.57% $509,160
 $48,883
 $558,043
 5.1% 5.25% 5.02%
2015 420,449
 750,000
(3)1,170,449
 10.0% 6.28% 3.12% 420,448
 750,000
(2)1,170,448
 10.7% 6.28% 3.11%
2016 1,193,251
 —
 1,193,251
 10.2% 5.34% 5.34% 1,193,250
 —
 1,193,250
 10.9% 5.34% 5.34%
2017 2,171,735
(4)456
 2,172,191
 18.6% 6.20% 6.20% 1,346,734
 456
 1,347,190
 12.3% 6.16% 6.16%
2018 84,355
 724
 85,079
 0.7% 5.61% 5.61% 84,359
 395,659
(3)480,018
 4.4% 5.61% 1.75%
2019 806,634
 20,766
 827,400
 7.1% 5.48% 5.35% 806,644
 20,766
 827,410
 7.6% 5.48% 5.35%
2020 1,678,601
 809
 1,679,410
 14.3% 5.49% 5.49% 1,678,601
 809
 1,679,410
 15.3% 5.49% 5.49%
2021 1,195,243
 856
 1,196,099
 10.2% 4.63% 4.64% 1,195,242
 856
 1,196,098
 10.9% 4.63% 4.64%
2022 228,933
 905
 229,838
 2.0% 3.17% 3.18% 228,933
 905
 229,838
 2.1% 3.17% 3.18%
2023+ 800,999
 675,944
 1,476,943
 12.6% 4.22% 2.50%
2023 1,303,079
 956
 1,304,035
 11.9% 3.75% 3.75%
2024+ 297,925
 674,988
 972,913
 8.9% 6.25% 2.23%
Premium/(Discount) 172,833
 (66,439) 106,394
 0.9% N/A
 N/A
 49,365
 (64,736) (15,371) (0.1%) N/A
 N/A
Total $10,274,028
 $1,433,169
 $11,707,197
 100.0% 5.43% 4.86% $9,113,740
 $1,829,542
 $10,943,282
 100.0% 5.20% 4.46%

(1)Net of the effect of any derivative instruments. Weighted average rates are as of September 30, 2013.March 31, 2014.
(2)On October 1, 2013, the Company paid off the $963.5 million outstanding of 5.883% mortgage debt assumed as a part of the Archstone transaction, prior to the November 1, 2014 maturity date. Following this payoff, remaining debt maturing in 2014 totals $603.5 million.
(3)Includes the Company's senior unsecured $750.0 million delayed drawunsecured term loan facility that matures on January 11, 2015 and is subject to a one-year extension option exercisable by the Company.
(4)(3)Includes $1.27$298.0 million outstanding on the Company's unsecured revolving credit facility. As of March 31, 2014, there was approximately $2.17 billion in Archstone mortgage notes payable of which $825.0 million was paid offavailable on October 31, 2013. The approximately $440.0 million balance remains outstanding and continues to mature in November 2017. The remaining debt maturing in 2017 totals $1.3 billion.this facility.

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The following table provides a summary of the Company’s unsecured debt as of September 30, 2013March 31, 2014:
 

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Unsecured Debt Summary as of September 30, 2013
Unsecured Debt Summary as of March 31, 2014Unsecured Debt Summary as of March 31, 2014
(Amounts in thousands)
            
 Coupon
Rate		 Due
Date		 Face
Amount		 Unamortized
Premium/
(Discount)		 Net
Balance		 Coupon
Rate		 Due
Date		 Face
Amount		 Unamortized
Premium/
(Discount)		 Net
Balance
Fixed Rate Notes:            
 5.250% 09/15/14    $500,000
 $(59) $499,941
 5.250% 09/15/14    $500,000
 $(28) $499,972
 6.584% 04/13/15    300,000
 (165) 299,835
 6.584% 04/13/15    300,000
 (110) 299,890
 5.125% 03/15/16    500,000
 (130) 499,870
 5.125% 03/15/16    500,000
 (103) 499,897
 5.375% 08/01/16    400,000
 (526) 399,474
 5.375% 08/01/16    400,000
 (433) 399,567
 5.750% 06/15/17    650,000
 (1,907) 648,093
 5.750% 06/15/17    650,000
 (1,653) 648,347
 7.125% 10/15/17    150,000
 (262) 149,738
 7.125% 10/15/17    150,000
 (230) 149,770
 4.750% 07/15/20    600,000
 (3,090) 596,910
 4.750% 07/15/20    600,000
 (2,861) 597,139
 4.625% 12/15/21 1,000,000
 (3,112) 996,888
 4.625% 12/15/21 1,000,000
 (2,921) 997,079
 3.000% 04/15/23 500,000
 (4,227) 495,773
 3.000% 04/15/23 500,000
 (4,005) 495,995
 7.570% 08/15/26    140,000
 —
 140,000
 7.570% 08/15/26    140,000
 —
 140,000
 4,740,000
 (13,478) 4,726,522
 4,740,000
 (12,344) 4,727,656
Floating Rate Notes:            
Delayed Draw Term Loan Facility LIBOR+1.20% 01/11/15 (1)(2) 750,000
 —
 750,000
Term Loan Facility LIBOR+1.20% 01/11/15 (1)(2) 750,000
 —
 750,000
 750,000
 —
 750,000
 750,000
 —
 750,000
Revolving Credit Facility: LIBOR+1.05% 04/01/18 (1)(3) —
 —
 —
 LIBOR+1.05% 04/01/18 (1)(3) 298,000
 —
 298,000
Total Unsecured Debt $5,490,000
 $(13,478) $5,476,522
 $5,788,000
 $(12,344) $5,775,656
(1)
Facilities are private. All other unsecured debt is public.
(2)
On January 11, 2013,Represents the Company entered into a senior unsecuredCompany's $750.0 million delayed drawunsecured term loan facility which was fully drawn on February 27, 2013 in connection with the Archstone Acquisition.facility. The maturity date of January 11, 2015 is subject to a one-year extension option exercisable by the Company. The interest rate on advances under the term loan facility will generally be LIBOR plus a spread (currently 1.20%), which is dependent on the credit rating of the Company's long-term debt.
(3)
On January 11, 2013,Represents the Company replaced its existing $1.75 billion facility with aCompany's $2.5 billion unsecured revolving credit facility maturing April 1, 2018. The interest rate on advances under the new credit facility will generally be LIBOR plus a spread (currently 1.05%) and an annual facility fee (currently 15 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company's long-term debt. As of September 30, 2013,March 31, 2014, there was approximately $2.47$2.17 billion available on the Company's unsecured revolving credit facility.

An unlimitedunspecified amount of equity and debt securities remains available for issuance by EQR and ERPOP under a universal shelf registration statement that automatically became effective upon filing with the SEC on July 30, 2013 and expires on July 30, 2016. TheIn July 2013, the Board of Trustees also approved an increase to the amount of shares which be may offered under the ATM program to 13.0 million Common Shares and extended the program maturity to July 2016. 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).

The Company’s “Consolidated Debt-to-Total Market Capitalization Ratio” as of September 30, 2013March 31, 2014 is presented in the following table. The Company calculates the equity component of its market capitalization as the sum of (i) the total outstanding Common Shares and assumed conversion of all Units at the equivalent market value of the closing price of the Company’s Common Shares on the New York Stock Exchange and (ii) the liquidation value of all perpetual preferred shares outstanding.
 

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Equity Residential
Capital Structure as of September 30, 2013
Capital Structure as of March 31, 2014Capital Structure as of March 31, 2014
(Amounts in thousands except for share/unit and per share amounts)
                    
Secured Debt     $6,230,675
 53.2%       $5,167,626
 47.2%  
Unsecured Debt     5,476,522
 46.8%       5,775,656
 52.8%  
Total Debt     11,707,197
 100.0% 36.8%     10,943,282
 100.0% 33.4%
Common Shares (includes Restricted Shares) 360,395,959
 96.2%       361,148,189
 96.2%      
Units (includes OP Units and LTIP Units) 14,200,376
 3.8%       14,375,319
 3.8%      
Total Shares and Units 374,596,335
 100.0%       375,523,508
 100.0%      
Common Share Price at September 30, 2013 $53.57
        
Common Share Price at March 31, 2014 $57.99
        
     20,067,126
 99.8%       21,776,608
 99.8%  
Perpetual Preferred Equity (see below)     50,000
 0.2%       50,000
 0.2%  
Total Equity     20,117,126
 100.0% 63.2%     21,826,608
 100.0% 66.6%
Total Market Capitalization     $31,824,323
   100.0%     $32,769,890
   100.0%
Equity Residential
Perpetual Preferred Equity as of September 30, 2013
Perpetual Preferred Equity as of March 31, 2014Perpetual Preferred Equity as of March 31, 2014
(Amounts in thousands except for share and per share amounts)
                
Series Redemption
Date		 Outstanding
Shares		 Liquidation
Value		 Annual
Dividend
Per Share		 Annual
Dividend
Amount		 Redemption
Date		 Outstanding
Shares		 Liquidation
Value		 Annual
Dividend
Per Share		 Annual
Dividend
Amount
Preferred Shares:                
8.29% Series K 12/10/26 1,000,000
 $50,000
 $4.145
 $4,145
 12/10/26 1,000,000
 $50,000
 $4.145
 $4,145
Total Perpetual Preferred Equity 1,000,000
 $50,000
   $4,145
 1,000,000
 $50,000
   $4,145

The Operating Partnership’s “Consolidated Debt-to-Total Market Capitalization Ratio” as of September 30, 2013March 31, 2014 is presented in the following table. The Operating Partnership calculates the equity component of its market capitalization as the sum of (i) the total outstanding Units at the equivalent market value of the closing price of the Company’s Common Shares on the New York Stock Exchange and (ii) the liquidation value of all perpetual preference units outstanding.
 
ERP Operating Limited Partnership
Capital Structure as of September 30, 2013
Capital Structure as of March 31, 2014Capital Structure as of March 31, 2014
(Amounts in thousands except for unit and per unit amounts)
                
Secured Debt   $6,230,675
 53.2%     $5,167,626
 47.2%  
Unsecured Debt   5,476,522
 46.8%     5,775,656
 52.8%  
Total Debt   11,707,197
 100.0% 36.8%   10,943,282
 100.0% 33.4%
Total outstanding Units 374,596,335
       375,523,508
      
Common Share Price at September 30, 2013 $53.57
      
Common Share Price at March 31, 2014 $57.99
      
   20,067,126
 99.8%     21,776,608
 99.8%  
Perpetual Preference Units (see below)   50,000
 0.2%     50,000
 0.2%  
Total Equity   20,117,126
 100.0% 63.2%   21,826,608
 100.0% 66.6%
Total Market Capitalization   $31,824,323
   100.0%   $32,769,890
   100.0%

 

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ERP Operating Limited Partnership
Perpetual Preference Units as of September 30, 2013
Perpetual Preference Units as of March 31, 2014Perpetual Preference Units as of March 31, 2014
(Amounts in thousands except for unit and per unit amounts)
                
Series Redemption
Date		 Outstanding
Units		 Liquidation
Value		 Annual
Dividend
Per Unit		 Annual
Dividend
Amount		 Redemption
Date		 Outstanding
Units		 Liquidation
Value		 Annual
Dividend
Per Unit		 Annual
Dividend
Amount
Preference Units:                
8.29% Series K 12/10/26 1,000,000
 $50,000
 $4.145
 $4,145
 12/10/26 1,000,000
 $50,000
 $4.145
 $4,145
Total Perpetual Preference Units 1,000,000
 $50,000
   $4,145
 1,000,000
 $50,000
   $4,145
The Company generally expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing properties and scheduled unsecured note and mortgage note repayments, through its working capital, net cash provided by operating activities and borrowings under the Company’s revolving credit facility. Under normal operating conditions, the Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions.
The Company has a flexible dividend policy which it believes will generate payouts closely aligned with the actual annual operating results of the Company’s core business and provide transparency to investors. Beginning in 2014, the Company's annual dividend will be paid based on 65% of the midpoint of the range of Normalized FFO guidance customarily provided as part of the Company's fourth quarter earnings release. The Company expects the annual dividend payout will be $2.00 per share and the Company intends to pay an annual cash dividend equalfour quarterly dividends of $0.50 per share in 2014. All future dividends remain subject to approximately 65%the discretion of Normalized FFO for the year. Subject to Board of Trustees approval, the Company anticipates the expected dividend payout will range from $1.84 to $1.85 per share/Unit ($0.40 per share/Unit for each of the first three quarters with the balance for the fourth quarter) for the year ending December 31, 2013 to bring the total payment to approximately 65% of Normalized FFO for the year.Trustees. The above assumption is based on current expectations and is forward-looking. While our current dividend policy makes it less likely we will over distribute, it will also lead to a dividend reduction more quickly than a fixed dividend policy should operating results deteriorate. However, whether due to changes in the dividend policy or otherwise, there may be times when the Company experiences shortfalls in its coverage of distributions, which may cause the Company to consider reducing its distributions and/or using the proceeds from property dispositions or additional financing transactions to make up the difference. Should these shortfalls occur for lengthy periods of time or be material in nature, the Company’sCompany's financial condition may be adversely affected and it may not be able to maintain its current distribution levels. The Company believes that its expected combined 2012 and 20132014 operating cash flow will be sufficient to cover capital expenditures and distributions.
The Company also expects to meet its long-term liquidity requirements, such as scheduled unsecured note and mortgage debt maturities, property acquisitions, financing of construction and development activities and capital improvements through the issuance of secured and unsecured debt and equity securities, including additional OP Units, proceeds received from the disposition of certain properties and joint ventures and cash generated from operations after all distributions. In addition, the Company has significant unencumbered properties available to secure additional mortgage borrowings in the event that the public capital markets are unavailable or the cost of alternative sources of capital is too high. The fair value of and cash flow from these unencumbered properties are in excess of the requirements the Company must maintain in order to comply with covenants under its unsecured notes and line of credit. Of the $26.727.1 billion in investment in real estate on the Company’s balance sheet at September 30, 2013March 31, 2014, $16.618.3 billion or 62.0%67.8% was unencumbered. However, there can be no assurances that these sources of capital will be available to the Company in the future on acceptable terms or otherwise.
ERPOP’s credit ratings from Standard & Poor’s (“S&P”), Moody’s and Fitch for its outstanding senior debt are BBB+, Baa1 and BBB+, respectively. EQR’s equity ratings from S&P, Moody’s and Fitch for its outstanding preferred equity are BBB+, Baa2 and BBB-, respectively.
The Archstone transaction, related financing activities and property sales have altered our unsecured public debt covenants. See the following table for a comparison of these covenants at September 30, 2013 and December 31, 2012:

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  September 30, 2013 December 31, 2012
Total Debt to Adjusted Total Assets (not to exceed 60%) 42.2% 38.6%
Secured Debt to Adjusted Total Assets (not to exceed 40%) 22.4% 17.6%
Consolidated Income Available for Debt Service to    
Maximum Annual Service Charges    
(must be at least 1.5 to 1) 2.65 3.00
Total Unsecured Assets to Unsecured Debt    
(must be at least 150%) 324.6% 346.3%
On January 11, 2013, the Company replaced its existing $1.75 billion facility with a $2.5$2.5 billion unsecured revolving credit facility maturing April 1, 2018.2018. The Company has the ability to increase available borrowings by an additional $500.0 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 1.05%) and the Company pays an annual facility fee (currently 15 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company’s long-term debt. As of October 31, 2013,May 2, 2014, there was available borrowings of $2.23$2.10 billion (net of $44.9$34.7 million which was restricted/dedicated to support letters of credit and net of $226.0$370.0 million outstanding) on the revolving credit facility. This facility may, among other potential uses, be used to fund property acquisitions, costs for certain properties under development and short-term liquidity requirements.
On January 11, 2013, the Company also entered into a new senior unsecured $750.0 million delayed draw term loan facility which was fully drawn on February 27, 2013 in connection with the Archstone Acquisition. The maturity date of January 11, 2015 is subject to a one-year extension option exercisable by the Company. The interest rate on advances under the new term loan facility will generally be LIBOR plus a spread (currently 1.20%), which is dependent on the credit rating of the Company's long-term debt.

See Note 14 in the Notes to Consolidated Financial Statements for discussion of the events which occurred subsequent to September 30, 2013March 31, 2014.


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Capitalization of Fixed Assets and Improvements to Real Estate

Our policy with respect to capital expenditures is generally to capitalize expenditures that improve the value of the property or extend the useful life of the component asset of the property. We track improvements to real estate in two major categories and several subcategories:

▪
Replacements (inside the apartment unit). These include:
▪flooring such as carpets, hardwood, vinyl or tile;
▪appliances;
▪mechanical equipment such as individual furnace/air units, hot water heaters, etc;
▪furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans, sinks, tubs, toilets, mirrors, countertops, etc; and
▪blinds.
All replacements are depreciated over a five to ten-year estimated useful life. We expense as incurred all make-ready maintenance and turnover costs such as cleaning, interior painting of individual apartment units and the repair of any replacement item noted above.

▪
Building improvements (outside the apartment unit). These include:
▪roof replacement and major repairs;
▪paving or major resurfacing of parking lots, curbs and sidewalks;
▪amenities and common areas such as pools, exterior sports and playground equipment, lobbies, clubhouses, laundry rooms, alarm and security systems and offices;
▪major building mechanical equipment systems;
▪interior and exterior structural repair and exterior painting and siding;
▪major landscaping and grounds improvement; and
▪vehicles and office and maintenance equipment.

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All building improvements are depreciated over a five to fifteen-year estimated useful life. We capitalize building improvements and upgrades only if the item: (i) exceeds $2,500 (selected projects must exceed $10,000); (ii) extends the useful life of the asset; and (iii) improves the value of the asset.
For the nine monthsquarter ended September 30, 2013March 31, 2014, our actual improvements to real estate totaled approximately $96.9 million.$32.2 million. This includes the following (amounts in thousands except for apartment unit and per apartment unit amounts):

Capital Expenditures to Real Estate
For the Nine Months Ended September 30, 2013
For the Quarter Ended March 31, 2014For the Quarter Ended March 31, 2014
                            
 Total
Apartment
Units (1)		 Replacements (2) Avg. Per
Apartment
Unit		 Building
Improvements		 Avg. Per
Apartment
Unit		 Total Avg. Per
Apartment
Unit		 Total
Apartment
Units (1)		 Replacements (2) Avg. Per
Apartment
Unit		 Building
Improvements		 Avg. Per
Apartment
Unit		 Total Avg. Per
Apartment
Unit
Same Store Properties (3) 81,099
 $36,029
 $444
 $34,737
 $429
 $70,766
 $873
 100,984
 $14,926
 $148
 $16,220
 $160
 $31,146
 $308
Non-Same Store Properties (4) 22,698
 11,230
 610
 9,758
 530
 20,988
 1,140
 3,825
 45
 17
 999
 370
 1,044
 387
Other (5) —
 2,899
   2,213
   5,112
   —
 1
   —
   1
  
Total 103,797
 $50,158
   $46,708
   $96,866
   104,809
 $14,972
   $17,219
   $32,191
  
 
(1)
Total Apartment Units – Excludes 8371,669 unconsolidated apartment units and 5,1615,059 military housing apartment units for which repairs and maintenance expenses and capital expenditures to real estate are self-funded and do not consolidate into the Company’sCompany's results.
(2)
Replacements – IncludesIncludes new expenditures inside the apartment units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store properties also include $15.2$7.9 million spent duringin the nine months ended September 30, 2013first quarter of 2014 on apartment unit renovations/rehabs (primarily kitchens and baths) on 2,046980 same store apartment units (equating to about $7,400$8,100 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets.
(3)
Same Store Properties – Primarily includes all properties acquired or completed and stabilized prior to January 1, 2012,2013, less properties subsequently sold. Also includes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company.
(4)
Non-Same Store Properties – Primarily includes all properties acquired during 20122013 and 2013,2014, plus any properties in lease-up and not stabilized as of January 1, 2012.2013, but excludes 18,465 stabilized apartment units acquired in the Archstone Acquisition that are owned and managed by the Company. Per apartment unit amounts are based on a weighted average of 18,4132,698 apartment units. Includes approximately seven months of activity for the Archstone properties.

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(5)
Other – Primarily includes expenditures for properties sold during the period.sold.
For 2013,
For 2014, the Company estimates that it will spend approximately $1,200$1,700 per apartment unit of capital expenditures, for the approximately 80,000 apartment units that the Company expects to have in its annual same store set, inclusive of apartment unit renovation/rehab costs, or $950$1,250 per apartment unit excluding apartment unit renovation/rehab costs. In 2013,2014, the Company expects to spend approximately $30.0$45.0 million for all unit renovation/rehab costs of which approximately $20.0 million will be spent(primarily on same store properties,properties) at a weighted average cost of $7,000 to $8,000$8,500 per apartment unit rehabbed. These anticipated amounts represent an increase in the cost per unit over 2013, which is primarily driven by increases in building improvement costs (i.e. roofs, mechanical systems and siding) for the Archstone assets as well as certain large building improvement projects the Company had planned to complete in 2013 but will not finalize until 2014. The Company is accelerating its rehab/renovation efforts in 2014 with plans to continue to create value from our properties by doing those rehabs that meet our investment parameters. The above assumptions are based on current expectations and are forward-looking.
During the nine monthsquarter ended September 30, 2013March 31, 2014, the Company’s total non-real estate capital additions, such as computer software, computer equipment, and furniture and fixtures and leasehold improvements to the Company’s property management offices and its corporate offices, were approximately $3.4$0.2 million. The Company expects to fund approximately $0.8$2.5 million in total additions to non-real estate property for the remainder of 20132014. The above assumption is based on current expectations and is forward-looking.

Improvements to real estate and additions to non-real estate property are generally funded from net cash provided by operating activities and from investment cash flow.

Derivative Instruments

In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company seeks to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments. The Company may also use derivatives to manage its exposure to foreign exchange rates or manage commodity prices in the daily operations of the business.
The Company has a policy of only entering into contracts with major financial institutions based upon their credit ratings and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from these instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives it currently has in place.


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See Note 9 in the Notes to Consolidated Financial Statements for additional discussion of derivative instruments at September 30, 2013March 31, 2014.

Other

Total distributions paid in October 2013April 2014 amounted to $149.8187.8 million (excluding distributions on Partially Owned Properties), which included certain distributions declared during the thirdfirst quarter ended September 30, 2013March 31, 2014.

Off-Balance Sheet Arrangements and Contractual Obligations

Archstone Acquisition  
On February 27, 2013, in conjunction with the Archstone Acquisition, the Company acquired unconsolidated interests in several joint ventures. The Company does not believe that these investments have a materially different impact upon its liquidity, cash flows, capital resources, credit or market risk than its other consolidated operating and/or development activities. Details of these interests follow by project:

San Norterra – This venture is currently developingdeveloped certain land parcels into a 388 unit apartment building located in Phoenix, Arizona. The Company has an 85% equity interest with an initial basis of $16.9 million. Total project costs are approximately $56.353.3 million and construction is beingwas partially funded with a construction loan that is guaranteed by the partner and non-recourse to the Company. The loan has a maximum debt commitment of $34.8 million and a current unconsolidated outstanding balance of $30.833.0 million; the loan bears interest at LIBOR plus 2.00% and matures January 6, 2015. The partner is the managing member and is developingdeveloped the project. The Company does not have substantive kick-out or participating rights. As a result, the entity is unconsolidated and recorded using the equity method of accounting.


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Waterton Tenside – This venture was formed to develop and operate a 336 unit apartment property located in Atlanta, Georgia. The Company has a 20% equity interest with an initial basis of $5.1 million. The partner is the managing member and developed the project. The project is encumbered by a non-recourse mortgage loan that has a current outstanding balance of $30.630.4 million, bears interest at 3.66% and matures December 1, 2018. The Company does not have substantive kick-out or participating rights. As a result, the entity is unconsolidated and recorded using the equity method of accounting.

1333 Powell (formerly known as Parkside at EmeryvilleEmeryville) – This venture is currently developing certain land parcels into a 180176 unit apartment building located in Emeryville, California. The Company has a 5% equity interest with an initial obligation of approximately $2.1 million. Total project costs are expected to be approximately $75.0 million and construction is being partially funded with a construction loan. The loan has a maximum debt commitment of $39.5 million and a current unconsolidated outstanding balance of $5.7 million;$16.2 million; the loan bears interest at LIBOR plus 2.25% and matures August 14, 2015. The Company has given a repayment guaranty on the construction loan of 50% of the outstanding balance, up to a maximum of $19.7 million, and has given certain construction cost overrun guarantees. The partner is the managing member and is developing the project.member. The Company does not have substantive kick-out or participating rights. As a result, the entity is unconsolidated and recorded using the equity method of accounting.

On February 27, 2013, in connection with the Archstone Acquisition, subsidiaries of the Company and AVB entered into three limited liability company agreements (collectively, the “Residual JV”). The Residual JV owns certain non-core Archstone assets that are held for sale, such as interests in a German portfolio of apartment buildings (see Note 14 for further discussion on the German portfolio), and succeeded to certain residual Archstone liabilities, such as liability for various employment-related matters. The Residual JV is owned 60% by the Company and 40% by AVB and the Company's initial investment was $105.1147.6 million. The ventureResidual JV is managed by a Management Committee consisting of two members from each of the Company and AVB. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the ventureResidual JV is unconsolidated and recorded using the equity method of accounting.
 
On February 27, 2013, in connection with the Archstone Acquisition, a subsidiary of the Company and AVB entered into a limited liability company agreement (the “Legacy JV”), through which they assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements. During the nine monthsyear ended September 30,December 31, 2013, the Company purchased with AVB $65.0 million (of which the Company's 60% share was $39.0 million) of the preferred interests assumed by Legacy JV. At September 30, 2013,March 31, 2014, the remaining preferred interests have an aggregate liquidation value of $88.379.3 million., our share of which is included in other liabilities in the accompanying consolidated balance sheets. Obligations of the ventureLegacy JV are borne 60% by the Company and 40% by AVB. The ventureLegacy JV is managed by a Management Committee consisting of two members from each of the Company and AVB. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the ventureLegacy JV is unconsolidated and recorded using the equity method of accounting.

Other 

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The Company admitted an 80% institutional partner to two separate entities/transactions (Nexus Sawgrass in December 2010 and Domain in August 2011), each owning a developable land parcel, in exchange for $40.1 million in cash and retained a 20% equity interest in both of these entities. These projects are now unconsolidated. Details of these projects follow:

Nexus Sawgrass – This development project wasis substantially completed as of September 30, 2013.complete. Total project costs are expected to be approximately $78.2$79.0 million and construction is beingwas predominantly funded with a long-term, non-recourse secured loan from the partner. The mortgage loan has a maximum debt commitment of $48.7 million and a current unconsolidated outstanding balance of $45.248.2 million; the loan bears interest at 5.60% and matures January 1, 2021.
Domain – This development project is currently under development.substantially complete. Total project costs are expected to be approximately $154.6$154.6 million and construction is being predominantly funded with a long-term, non-recourse secured loan from the partner. The mortgage loan has a maximum debt commitment of $98.6 million and a current unconsolidated outstanding balance of $82.295.0 million; the loan bears interest at 5.75% and matures January 1, 2022.

While the Company is the managing member of both of the joint ventures, was/iswas responsible for constructing both of the projects and has given certain construction cost overrun guarantees, the joint venture partner has significant participating rights and has active involvement in and oversight of the ongoing projects. The Company currently has no further funding obligations related to these projects. The Company's strategy with respect to these ventures was to reduce its financial risk related to the development of the properties. However, management does not believe that these investments have a materially different impact upon the Company's liquidity, cash flows, capital resources, credit or market risk than its other consolidated development activities.


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As of September 30, 2013March 31, 2014, the Company has 1312 consolidated projects (including 400 Park Avenue South in New York City which the Company is jointly developing with Toll Brothers and Park Aire in which the Company acquired a 95% interest in connection with the Archstone transaction – see Note 12 in the Notes to Consolidated Financial Statements for further discussion) totaling 3,3273,871 apartment units and threeone unconsolidated projectsproject totaling 1,012176 apartment units in various stages of development with estimated completion dates ranging through JuneSeptember 30, 2016, as well as other completed development projects that are in various stages of lease up or are stabilized. The development agreements currently in place are discussed in detail in Note 12 of the Company’s Consolidated Financial Statements.

See also Notes 2 and 6 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s investments in partially owned entities.
As a result of the Archstone transaction, the
The Company’s contractual obligations for the next five years and thereafter have not changed materially from the amounts and disclosures included in the Company'sCompany’s annual report on Form 10-K10-K. See the updated debt maturity schedule included in Liquidity and are summarized below as of September 30, 2013:Capital Resources for further discussion.
Payments Due by Year (in thousands)
  Remaining              
Contractual Obligations 2013 2014 2015 2016 2017 2018 Thereafter Total
Debt:  
  
  
  
  
    
  
Principal (a) $3,135
 $1,567,008
 $1,170,449
 $1,193,251
 $2,172,191
 $85,079
 $5,516,084
 $11,707,197
Interest (b) 138,980
 533,680
 447,883
 398,298
 339,227
 259,443
 690,966
 2,808,477
Operating Leases:  
  
  
  
  
    
  
Minimum Rent Payments (c) 3,578
 14,088
 14,666
 14,734
 14,507
 10,771
 851,009
 923,353
Other Long-Term Liabilities:  
  
  
  
  
    
  
Deferred Compensation (d) 180
 1,378
 1,705
 1,705
 1,705
 1,705
 5,596
 13,974
Total $145,873
 $2,116,154
 $1,634,703
 $1,607,988
 $2,527,630
 $356,998
 $7,063,655
 $15,453,001

(a)Amounts include aggregate principal payments only.
(b)
Amounts include interest expected to be incurred on the Company’s secured and unsecured debt based on obligations outstanding at September 30, 2013 and inclusive of capitalized interest. For floating rate debt, the current rate in effect for the most recent payment through September 30, 2013 is assumed to be in effect through the respective maturity date of each instrument.
(c)Minimum basic rent due for various office space the Company leases and fixed base rent due on ground leases for 14 properties/parcels.
(d)Estimated payments to the Company's Chairman, Vice Chairman and one former CEO based on actual and planned retirement dates.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If

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our judgment or interpretation of the facts and circumstances relating to various transactions had been different or different assumptions were made, it is possible that different accounting policies would have been applied, resulting in different financial results or different presentation of our financial statements.

The Company has identified five significant accounting policies as critical accounting policies. These critical accounting policies are those that have the most impact on the reporting of our financial condition and those requiring significant judgments and estimates. With respect to these critical accounting policies, management believes that the application of judgments and estimates is consistently applied and produces financial information that fairly presents the results of operations for all periods presented. The five critical accounting policies are:

Acquisition of Investment Properties

The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets, including its investments in real estate, for indicators of impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal and environmental concerns, as well as the Company’s ability to hold and its intent with regard to each asset. Future events could occur which would cause the Company to conclude that impairment indicators exist and an impairment loss is warranted.

Depreciation of Investment in Real Estate

The Company depreciates the building component of its investment in real estate over a 30-year estimated useful life, building improvements over a 5-year to 15-year estimated useful life and both the furniture, fixtures and equipment and replacementsreplacement components over a 5-year to 10-year estimated useful life, all of which are judgmental determinations.

Cost Capitalization
See the Capitalization of Fixed Assets and Improvements to Real Estate section for a discussion of the Company’s policy with respect to capitalization vs. expensing of fixed asset/repair and maintenance costs. In addition, the Company capitalizes an allocation of the payroll and associated costs of employees directly responsible for and who spend their time on the execution and supervision of major capital and/or renovation projects. These costs are reflected on the balance sheetsheets as an increaseincreases to depreciable property.

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For all development projects, the Company uses its professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. The Company capitalizes interest, real estate taxes and insurance and payroll and associated costs for those individuals directly responsible for and who spend their time on development activities, with capitalization ceasing no later than 90 days following issuance of the certificate of occupancy. These costs are reflected on the balance sheetsheets as construction-in-progress for each specific property. The Company expenses as incurred all payroll costs of on-site employees working directly at our properties, except as noted above on our development properties prior to certificate of occupancy issuance and on specific major renovations at selected properties when additional incremental employees are hired.

During the nine monthsquarters ended September 30, 2013March 31, 2014 and 20122013, the Company capitalized $12.5$5.6 million and $11.1$4.4 million, respectively, of payroll and associated costs of employees directly responsible for and who spend their time on the execution and supervision of development activities as well as major capital and/or renovation projects.

Fair Value of Financial Instruments, Including Derivative Instruments

The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices and third party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.


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Funds From Operations and Normalized Funds From Operations

For the nine monthsquarter ended September 30, 2013, FundsMarch 31, 2014, Fund From Operations ("FFO") available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units decreasedincreased $64.2186.5 million and increased $39.5 million, or 9.4%, and increased $128.8 million, or 20.1%, respectively, as compared to the nine months ended September 30, 2012.
For the quarter ended September 30, 2013, FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units decreased $25.0 million, or 8.6%, and increased $42.2 million, or 18.1%17.5%, respectively, as compared to the quarter ended September 30, 2012.March 31, 2013.
    
The following is the Company’s and the Operating Partnership’s reconciliation of net income to FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units for the nine months and quarters ended September 30, 2013March 31, 2014 and 2012:2013:


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Funds From Operations and Normalized Funds From Operations(Amounts in thousands)
            
 Nine Months Ended September 30, Quarter Ended September 30, Quarter Ended March 31,
 2013 2012 2013 2012 2014 2013
Net income $1,789,483
 $496,805
 $391,717
 $236,323
 $82,732
 $1,061,034
Net loss (income) attributable to Noncontrolling Interests – Partially
Owned Properties
 1,101
 (457) 311
 312
Preferred/preference distributions (3,109) (9,319) (1,037) (2,386)
Premium on redemption of Preferred Shares/Preference Units —
 (5,150) —
 (5,150)
Net (income) attributable to Noncontrolling Interests – Partially Owned Properties (504) (25)
Preferred distributions (1,036) (1,036)
Net income available to Common Shares and Units / Units 1,787,475
 481,879
 390,991
 229,099
 81,192
 1,059,973
            
Adjustments:            
Depreciation 798,121
 422,148
 277,336
 139,337
 185,167
 196,222
Depreciation – Non-real estate additions (3,626) (4,211) (1,153) (1,430) (1,188) (1,216)
Depreciation – Partially Owned and Unconsolidated Properties (3,074) (2,395) (566) (798)
Net (gain) on sales of unconsolidated entities (16) —
 (16) —
Depreciation – Partially Owned Properties (1,068) (1,275)
Depreciation – Unconsolidated Properties 1,603
 260
Discontinued operations:            
Depreciation 31,976
 94,792
 2,273
 29,497
 —
 23,816
Net (gain) on sales of discontinued operations (1,990,577) (307,447) (401,703) (103,394) (71) (1,198,922)
Net incremental gain on sales of condominium units 7
 49
 —
 —
Gain on sale of Equity Corporate Housing (ECH) 709
 350
 108
 —
 —
 250
FFO available to Common Shares and Units / Units (1) (3) (4) 620,995
 685,165
 267,270
 292,311
 265,635
 79,108
            
Adjustments:            
Asset impairment and valuation allowances —
 —
 —
 —
 —
 —
Property acquisition costs and write-off of pursuit costs 78,694
 14,898
 2,578
 4,004
 474
 67,668
Debt extinguishment (gains) losses, including prepayment penalties        
preferred share/preference unit redemptions and non-cash convertible        
debt discounts 78,820
 7,491
 —
 6,114
Debt extinguishment (gains) losses, including prepayment penalties, preferred    
share/preference unit redemptions and non-cash convertible debt discounts —
 79,643
(Gains) losses on sales of non-operating assets, net of income and other
tax expense (benefit)
 (13,725) (491) 1,499
 —
 9
 (250)
Other miscellaneous non-comparable items 3,361
 (67,687) 3,361
 (69,910) (463) —
Normalized FFO available to Common Shares and Units / Units (2) (3) (4) $768,145
 $639,376
 $274,708
 $232,519
 $265,655
 $226,169
            
FFO (1) (3) $624,104
 $699,634
 $268,307
 $299,847
 $266,671
 $80,144
Preferred/preference distributions (3,109) (9,319) (1,037) (2,386) (1,036) (1,036)
Premium on redemption of Preferred Shares/Preference Units —
 (5,150) —
 (5,150)
FFO available to Common Shares and Units / Units (1) (3) (4) $620,995
 $685,165
 $267,270
 $292,311
 $265,635
 $79,108
            
Normalized FFO (2) (3) $771,254
 $648,695
 $275,745
 $234,905
 $266,691
 $227,205
Preferred/preference distributions (3,109) (9,319) (1,037) (2,386) (1,036) (1,036)
Normalized FFO available to Common Shares and Units / Units (2) (3) (4) $768,145
 $639,376
 $274,708
 $232,519
 $265,655
 $226,169

(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 and impairment write-downs of depreciable operating properties, 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 apartment units to condominiums, it simultaneously discontinues depreciation of such property.

(2)Normalized funds from operations (“Normalized FFO”) begins with FFO and excludes:
▪the impact of any expenses relating to non-operating asset impairment and valuation allowances;
▪property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs;
▪gains and losses from early debt extinguishment, including prepayment penalties, preferred share/preference unit redemptions and the cost related to the implied option value of non-cash convertible debt discounts;

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▪gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and
▪other miscellaneous non-comparable items.

(3)The Company believes that FFO and FFO available to Common Shares and Units / 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 Units / Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. The company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the company’s operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units do not represent net income, net income available to Common Shares / Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units should not be exclusively considered as alternatives to net income, net income available to Common Shares / Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company’s calculation of FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / 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.

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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 Units / Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. The Company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company’s operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units do not represent net income, net income available to Common Shares / Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units should not be exclusively considered as alternatives to net income, net income available to Common Shares / Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company’s calculation of FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / 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.

(4)FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units are calculated on a basis consistent with net income available to Common Shares / Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares/preference units 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 “Noncontrolling Interests – Operating Partnership”. Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

As a result of the Archstone transaction, certain of theThe Company’s and the Operating Partnership's market risks haverisk has not changed materially from the amounts and information reported in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, to the Company’s and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013. See the Current Environment section of Item 2. Management’s Discussion and have been updated in the following paragraphs.
Market risks relating to the Company’s financial instruments result primarily from changes in short-term LIBOR interest ratesAnalysis of Financial Condition and changes in the Securities Industry and Financial Markets Association ("SIFMA") index for tax-exempt debt. The Company also has foreign exchange exposure related to interests in German residential real estate that were acquired as partResults of the Archstone transaction.
The Company’s exposureOperations relating to market risk for changes in interest rates relates primarily to the unsecured revolving and term loan facilities as well as floating rate tax-exempt debt. The Company typically incurs fixed rate debt obligations to finance acquisitions while it typically incurs floating rate debt obligations to finance working capital needs and as a temporary measure in advance of securing long-term fixed rate financing. The Company continuously evaluates its level of floating rate debt with respect to total debt and other factors, including its assessment of the current and future economic environment. To the extent the Company carries substantial cash balances, this will tend to partially counterbalance any increase or decrease in interest rates.
The Company also utilizes certain derivative financial instruments to manage market risk. Interest rate protection agreements are used to convert floating rate debt to a fixed rate basis or vice versa as well as to partially lock in rates on future debt issuances. The Company may utilize derivative financial instruments to manage foreign exchange rate risk related to interests in German residential real estate that were acquired as part of the Archstone transaction. Derivatives are used for hedging purposes rather than speculation. The Company does not enter into financial instruments for trading purposes. See also Note 9 toin the Notes to Consolidated Financial Statements for additional discussion of derivative instruments.
The fair values of the Company’s financial instruments (including such items in the financial statement captions as cash and cash equivalents, other assets, accounts payable and accrued expenses and other liabilities) approximate their carrying or contract values based on their nature, terms and interest rates that approximate current market rates. The fair value of the Company’s mortgage notes payable and unsecured notes were approximately $6.4 billion and $5.8 billion, respectively, at instruments.September 30, 2013.
At September 30, 2013, the Company had total outstanding floating rate debt of approximately $1.4 billion, or 12.2% of total debt, net of the effects of any derivative instruments. If market rates of interest on all of the floating rate debt permanently increased by 12 basis points (a 10% increase from the Company’s existing weighted average interest rates), the increase in interest

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expense on the floating rate debt would decrease future earnings and cash flows by approximately $1.8 million. If market rates of interest on all of the floating rate debt permanently decreased by 12 basis points (a 10% decrease from the Company’s existing weighted average interest rates), the decrease in interest expense on the floating rate debt would increase future earnings and cash flows by approximately $1.8 million.
At September 30, 2013, the Company had total outstanding fixed rate debt of approximately $10.3 billion, or 87.8% of total debt, net of the effects of any derivative instruments. If market rates of interest permanently increased by 51 basis points (a 10% increase from the Company’s existing weighted average interest rates), the estimated fair value of the Company’s fixed rate debt would be approximately $9.3 billion. If market rates of interest permanently decreased by 51 basis points (a 10% decrease from the Company’s existing weighted average interest rates), the estimated fair value of the Company’s fixed rate debt would be approximately $11.4 billion.
These amounts were determined by considering the impact of hypothetical interest rates on the Company’s financial instruments. The foregoing assumptions apply to the entire amount of the Company’s debt instruments and do not differentiate among maturities. These analyses do not consider the effects of the changes in overall economic activity that could exist in such an environment. Further, in the event of changes of such magnitude, management would likely take actions to further mitigate its exposure to the changes. However, due to the uncertainty of the specific actions that would be taken and their possible effects, this analysis assumes no changes in the Company’s financial structure or results.
The Company cannot predict the effect of adverse changes in interest rates on its debt instruments and, therefore, its exposure to market risk, nor can there be any assurance that long-term debt will be available at advantageous pricing. Consequently, future results may differ materially from the estimated adverse changes discussed above.

Item 4.Controls and Procedures

Equity Residential

(a) Evaluation of Disclosure Controls and Procedures:
Effective as of September 30, 2013March 31, 2014, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

(b) Changes in Internal Control over Financial Reporting:
There were no changes to the internal control over financial reporting of the Company identified in connection with the Company’s evaluation referred to in Item 4(a) above that occurred during the thirdfirst quarter of 20132014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ERP Operating Limited Partnership

(a) Evaluation of Disclosure Controls and Procedures:
Effective as of September 30, 2013March 31, 2014, the Operating Partnership carried out an evaluation, under the supervision and with the participation of the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of EQR, of the effectiveness of the Operating Partnership’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Operating Partnership in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.





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(b) Changes in Internal Control over Financial Reporting:
There were no changes to the internal control over financial reporting of the Operating Partnership identified in connection with the Operating Partnership’s evaluation referred to in Item 4(a) above that occurred during the thirdfirst quarter of 20132014 that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.


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PART II. OTHER INFORMATION

Item 1.Legal Proceedings

The Company and the Operating Partnership do not believe that there have been any material developments in the legal proceedings that were discussed in Part I, Item 3 of the Company’s and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013.

Item 1A. Risk Factors

There have been no material changes to the risk factors that were discussed in Part I, Item 1A of the Company’s and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 20122013.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Common Shares Issued in the Quarter Ended September 30, 2013March 31, 2014 - Equity Residential

During the quarter ended September 30, 2013March 31, 2014, EQR issued 11,67718,043 Common Shares in exchange for 11,67718,043 OP Units held by various limited partners of the Operating Partnership. OP Units are generally exchangeable into Common Shares on a one-for-one basis or, at the option of the Operating Partnership, the cash equivalent thereof, at any time one year after the date of issuance. These shares were either registered under the Securities Act of 1933, as amended (the “Securities Act”), or issued in reliance on an exemption from registration under Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder, as these were transactions by an issuer not involving a public offering. In light of the manner of the sale and information obtained by EQR from the limited partners in connection with these transactions, EQR believes it may rely on these exemptions.

(c) Common Shares Repurchased in the Quarter Ended March 31, 2014 - Equity Residential

The Company repurchased the following Common Shares during the quarter ended March 31, 2014:

Period Total Number of Common Shares Purchased (1) Price Paid Per Share (1) Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs (1) Common Shares that May Yet Be Purchased Under the Plans or Programs (1)
January 2014 —
 $—
 —
 13,000,000
February 2014 31,240
 $56.87
 31,240
 12,968,760
March 2014 —
 $—
 —
 12,968,760
First Quarter 2014 31,240
 $56.87
 31,240
 

(1)The Common Shares repurchased during the quarter ended March 31, 2014 represent Common Shares repurchased under the Company’s publicly announced share repurchase program approved by its Board of Trustees. All of the shares repurchased during the quarter ended March 31, 2014 were repurchased from employees at a price of $56.87 per share to cover the minimum statutory tax withholding obligations related to the vesting of employees’ restricted shares. EQR has authorization to repurchase an additional 12,968,760 of its shares as of March 31, 2014.

(c) OP Units Repurchased in the Quarter Ended March 31, 2014 - ERP Operating Limited Partnership

The Operating Partnership repurchased the following OP Units during the quarter ended March 31, 2014:


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Period Total Number of OP Units Purchased (1) Price Paid Per Unit (1) Total Number of OP Units Purchased as Part of Publicly Announced Plans or Programs (1) OP Units that May Yet Be Purchased Under the Plans or Programs (1)
January 2014 —
 $—
 —
 13,000,000
February 2014 31,240
 $56.87
 31,240
 12,968,760
March 2014 —
 $—
 —
 12,968,760
First Quarter 2014 31,240
 $56.87
 31,240
  

(1)The OP Units repurchased during the quarter ended March 31, 2014 represent OP Units redeemed in response to repurchases of Common Shares under the Company’s publicly announced share repurchase program approved by its Board of Trustees. All of the shares repurchased during the quarter ended March 31, 2014 were repurchased from employees at a price of $56.87 per share to cover the minimum statutory tax withholding obligations related to the vesting of employees’ restricted shares. EQR has authorization to repurchase an additional 12,968,760 of its shares as of March 31, 2014.


Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

None.

Item 6.
Exhibits – See the Exhibit Index

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
      
 EQUITY RESIDENTIAL
    
Date:November 7, 2013May 8, 2014 By: /s/ Mark J. Parrell
     Mark J. Parrell
     
Executive Vice President and
Chief Financial Officer
     (Principal Financial Officer)
    
    
Date:November 7, 2013May 8, 2014 By: /s/ Ian S. Kaufman
     Ian S. Kaufman
     
Senior Vice President and
Chief Accounting Officer
     (Principal Accounting Officer)
    
 
ERP OPERATING LIMITED PARTNERSHIP
BY: EQUITY RESIDENTIAL
ITS GENERAL PARTNER
    
Date:November 7, 2013May 8, 2014 By: /s/ Mark J. Parrell
     Mark J. Parrell
     
Executive Vice President and
Chief Financial Officer
     (Principal Financial Officer)
    
    
Date:November 7, 2013May 8, 2014 By: /s/ Ian S. Kaufman
     Ian S. Kaufman
     
Senior Vice President and
Chief Accounting Officer
     (Principal Accounting Officer)



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EXHIBIT INDEX
The exhibits listed below are filed as part of this report. References to exhibits or other filings under the caption “Location” indicate that the exhibit or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is incorporated by reference. The Commission file numbers for our Exchange Act filings referenced below are 1-12252 (Equity Residential) and 0-24920 (ERP Operating Limited Partnership).
 
Exhibit  Description  Location
     
*10.1 SecondThird Amendment to 2011 Share Incentive Plan. Attached herein.
     
*10.212 Fourth AmendmentComputation of Ratio of Earnings to Second Restated 2002 Share Incentive Plan.Combined Fixed Charges. Attached herein.
     
31.1  Equity Residential – Certification of David J. Neithercut, Chief Executive Officer.  Attached herein.
   
31.2  Equity Residential – Certification of Mark J. Parrell, Chief Financial Officer.  Attached herein.
     
31.3  ERP Operating Limited Partnership – Certification of David J. Neithercut, Chief Executive Officer of Registrant’s General Partner.  Attached herein.
   
31.4  ERP Operating Limited Partnership – Certification of Mark J. Parrell, Chief Financial Officer of Registrant’s General Partner.  Attached herein.
     
32.1  Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of the Company.  Attached herein.
     
32.2  Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of the Company.  Attached herein.
   
32.3  ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of Registrant’s General Partner.  Attached herein.
   
32.4  ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of Registrant’s General Partner.  Attached herein.
     
101  XBRL (Extensible Business Reporting Language). The following materials from Equity Residential’s and ERP Operating Limited Partnership’s Quarterly Report on Form 10-Q for the period ended September 30, 2013,March 31, 2014, formatted in XBRL: (i) consolidated balance sheets, (ii) consolidated statements of operations and comprehensive income, (iii) consolidated statements of cash flows, (iv) consolidated statement of changes in equity (Equity Residential), (v) consolidated statement of changes in capital (ERP Operating Limited Partnership) and (vi) notes to consolidated financial statements.  Attached herein.

*Management contracts and compensatory plans or arrangements filed as exhibits to this report are identified by an asterisk.