ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

	March 31, 2007			December 31, 2006			June 30, 2007			December 31, 2006
ASSETS
Investment in real estate
Land	$	3,391,105		$	3,217,672		$	3,582,455		$	3,217,672
Depreciable property	13,784,447			13,376,359			13,855,981			13,376,359
Projects under development	384,534			399,131			392,616			399,131
Land held for development	296,990			242,013			313,360			242,013
Investment in real estate	17,857,076			17,235,175			18,144,412			17,235,175
Accumulated depreciation	(3,103,329		)	(3,022,480		)	(3,125,555		)	(3,022,480		)
Investment in real estate, net	14,753,747			14,212,695			15,018,857			14,212,695

Cash and cash equivalents	171,742			260,277			66,266			260,277
Investments in unconsolidated entities	4,196			4,448			4,225			4,448
Deposits – restricted	188,958			391,825
Escrow deposits – mortgage	23,426			25,528
Deposits — restricted							350,934			391,825
Escrow deposits — mortgage							21,214			25,528
Deferred financing costs, net	46,434			43,384			54,889			43,384
Other assets	133,391			124,062			152,279			124,062
Total assets	$	15,321,894		$	15,062,219		$	15,668,664		$	15,062,219

LIABILITIES AND PARTNERS’ CAPITAL
Liabilities:
Mortgage notes payable	$	3,105,938		$	3,178,223		$	3,188,395		$	3,178,223
Notes, net	4,420,467			4,419,433			5,363,139			4,419,433
Lines of credit	947,500			460,000			780,000			460,000
Accounts payable and accrued expenses	118,319			96,699			111,140			96,699
Accrued interest payable	70,303			91,172			95,183			91,172
Other liabilities	367,567			311,557			332,927			311,557
Security deposits	60,474			58,072			62,812			58,072
Distributions payable	150,577			151,382			145,112			151,382
Total liabilities	9,241,145			8,766,538			10,078,708			8,766,538

Commitments and contingencies
Minority Interests – Partially Owned Properties	20,995			26,814
Minority Interests — Partially Owned Properties							23,392			26,814

Partners’ capital:
Preference Units	386,171			386,574			385,681			386,574
Preference Interests and Junior Preference Units	11,684			11,684			184			11,684
General Partner	5,322,828			5,511,658			4,854,510			5,511,658
Limited Partners	352,639			372,961			333,056			372,961
Accumulated other comprehensive loss	(13,568		)	(14,010		)	(6,867		)	(14,010		)
Total partners’ capital	6,059,754			6,268,867			5,566,564			6,268,867
Total liabilities and partners’ capital	$	15,321,894		$	15,062,219		$	15,668,664		$	15,062,219

~~See accompanying notes~~

~~ERP OPERATING LIMITED PARTNERSHIP~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(Amounts in thousands except per OP Unit data)~~

~~(Unaudited)~~

Quarter Ended March 31,

2007

2006

REVENUES

Rental income

$
523,898

$
459,971

Fee and asset management

2,267

2,487

Total revenues

526,165

462,458

EXPENSES

Property and maintenance

141,581

122,061

Real estate taxes and insurance

58,977

46,071

Property management

24,904

23,642

Fee and asset management

2,341

2,168

Depreciation

152,821

128,676

General and administrative

9,966

13,040

Impairment

236

566

Total expenses

390,826

336,224

Operating income

135,339

126,234

Interest and other income

2,444

2,352

Interest:

Expense incurred, net

(111,660
)
(104,555
)
Amortization of deferred financing costs

(2,564
)
(2,738
)

Income before allocation to Minority Interests, loss from investments in unconsolidated entities, net gain on sales of unconsolidated entities and discontinued operations

23,559

21,293

Allocation to Minority Interests – Partially Owned Properties

(592
)
(1,521
)
Loss from investments in unconsolidated entities

(229
)
(230
)
Net gain on sales of unconsolidated entities

—

329

Income from continuing operations

22,738

19,871

Discontinued operations, net

111,608

385,677

Net income

$
134,346

$
405,548

ALLOCATION OF NET INCOME:

Preference Units

$
7,424

$
10,095

Preference Interests and Junior Preference Units

$
223

$
1,099

Premium on redemption of Preference Interests

$
—

$
674

General Partner

$
118,813

$
367,720

Limited Partners

7,886

25,960

Net Income available to OP Units

$
126,699

$
393,680

Earnings per OP Unit – basic:

Income from continuing operations available to OP Units

$
0.05

$
0.03

Net income available to OP Units

$
0.41

$
1.27

Weighted average OP Units outstanding

311,697

309,334

Earnings per OP Unit – diluted:

Income from continuing operations available to OP Units

$
0.05

$
0.03

Net income available to OP Units

$
0.40

$
1.25

Weighted average OP Units outstanding

316,265

314,049

Distributions declared per OP Unit outstanding

$
0.4625

$
0.4425

~~See accompanying notes~~

~~ERP OPERATING LIMITED PARTNERSHIP~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)~~

~~(Amounts in thousands except per OP Unit data)~~

~~(Unaudited)~~

Quarter Ended March 31,

2007

2006

Comprehensive income:

Net income

$
134,346

$
405,548

Other comprehensive income (loss) – derivative and other instruments:

Unrealized holding (losses) gains arising during the period

(121
)
1,523

Losses reclassified into earnings from other comprehensive income

563

589

Comprehensive income

$
134,788

$
407,660

~~See accompanying notes~~

~~ERP OPERATING LIMITED PARTNERSHIP~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Amounts in thousands)~~

~~(Unaudited)~~

Quarter Ended March 31,

2007

2006

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$
134,346

$
405,548

Adjustments to reconcile net income to net cash provided by operating activities:

Allocation to Minority Interests – Partially Owned Properties

592

1,521

Depreciation

154,674

146,771

Amortization of deferred financing costs

2,564

2,790

Amortization of discounts and premiums on debt

(1,396
)
(1,894
)
Amortization of deferred settlements on derivative instruments

218

244

Impairment

236

792

Loss from investments in unconsolidated entities

229

230

Distributions from unconsolidated entities – return on capital

23

68

Net (gain) on sales of unconsolidated entities

—

(329
)
Net (gain) on sales of discontinued operations

(111,767
)
(372,501
)
Loss on debt extinguishments

141

2,867

Compensation paid with Company Common Shares

4,902

6,294

Other operating activities, net

—

(1
)

Changes in assets and liabilities:

(Increase) in deposits – restricted

(746
)
(2,303
)
Decrease in other assets

5,381

2,664

Increase in accounts payable and accrued expenses

16,317

4,627

(Decrease) in accrued interest payable

(20,869
)
(8,580
)
(Decrease) in other liabilities

(20,147
)
(29,290
)
Increase in security deposits

2,402

1,559

Net cash provided by operating activities

167,100

161,077

CASH FLOWS FROM INVESTING ACTIVITIES:

Investment in real estate – acquisitions

(677,058
)
(444,901
)
Investment in real estate – development/other

(79,926
)
(34,831
)
Improvements to real estate

(57,354
)
(51,414
)
Additions to non-real estate property

(1,738
)
(1,620
)
Interest capitalized for real estate under development

(7,866
)
(4,016
)
Proceeds from disposition of real estate, net

280,592

810,898

Proceeds from disposition of unconsolidated entities

—

333

Investments in unconsolidated entities

—

(1,010
)
Distributions from unconsolidated entities – return of capital

—

92

Decrease (increase) in deposits on real estate acquisitions, net

218,224

(46,090
)
Decrease in mortgage deposits

2,102

3,391

Consolidation of previously Unconsolidated Properties:

Via EITF 04-5 (cash consolidated)

—

1,436

Acquisition of Minority Interests – Partially Owned Properties

—

(1
)
Other investing activities, net

—

2

Net cash (used for) provided by investing activities

(323,024
)
232,269

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS (Continued)~~

OPERATIONS
(Amounts in ~~thousands)~~

thousands except per OP Unit data)
(Unaudited)

	Six Months Ended June 30,						Quarter Ended June 30,
	2007			2006			2007			2006
REVENUES
Rental income	$	1,037,668		$	910,242		$	529,310		$	465,213
Fee and asset management	4,703			4,807			2,436			2,320

Total revenues	1,042,371			915,049			531,746			467,533

EXPENSES
Property and maintenance	273,801			238,594			136,682			120,823
Real estate taxes and insurance	112,017			88,963			55,302			45,132
Property management	47,254			46,661			22,412			23,077
Fee and asset management	4,504			4,326			2,163			2,158
Depreciation	304,052			257,683			155,032			132,771
General and administrative	21,515			22,378			11,549			9,338
Impairment	394			805			158			239
Total expenses	763,537			659,410			383,298			333,538
Operating income	278,834			255,639			148,448			133,995

Interest and other income	6,228			4,246			3,784			1,894
Interest:
Expense incurred, net	(233,075		)	(203,862		)	(122,019		)	(103,120		)
Amortization of deferred financing costs	(6,162		)	(4,383		)	(3,615		)	(1,752		)

Income before allocation to Minority Interests, loss from investments in unconsolidated entities, net gain on sales of unconsolidated entities and land parcels and discontinued operations	45,825			51,640			26,598			31,017
Allocation to Minority Interests — Partially Owned Properties	(779		)	(2,068		)	(187		)	(547		)
Loss from investments in unconsolidated entities	(363		)	(375		)	(134		)	(145		)
Net gain on sales of unconsolidated entities	—			352			—			23
Net gain on sales of land parcels	4,516			246			4,516			246
Income from continuing operations	49,199			49,795			30,793			30,954
Discontinued operations, net	385,978			526,915			270,038			140,568
Net income	$	435,177		$	576,710		$	300,831		$	171,162

ALLOCATION OF NET INCOME:
Preference Units	$	14,840		$	20,168		$	7,416		$	10,073
Preference Interests and Junior Preference Units	$	434		$	1,556		$	211		$	457
Premium on redemption of Preference Interests	$	—		$	683		$	—		$	9

General Partner	$	393,798		$	517,804		$	274,985		$	150,084
Limited Partners	26,105			36,499			18,219			10,539
Net income available to OP Units	$	419,903		$	554,303		$	293,204		$	160,623

Earnings per OP Unit — basic:
Income from continuing operations available to OP Units	$	0.11		$	0.09		$	0.08		$	0.07
Net income available to OP Units	$	1.37		$	1.79		$	0.97		$	0.52
Weighted average OP Units outstanding	307,582			309,678			303,511			310,017

Earnings per OP Unit — diluted:
Income from continuing operations available to OP Units	$	0.11		$	0.09		$	0.08		$	0.06
Net income available to OP Units	$	1.35		$	1.76		$	0.95		$	0.51
Weighted average OP Units outstanding	311,963			314,420			307,631			314,698

Distributions declared per OP Unit outstanding	$	0.9250		$	0.8850		$	0.4625		$	0.4425

Quarter Ended March 31,

2007

2006

CASH FLOWS FROM FINANCING ACTIVITIES:

Loan and bond acquisition costs

$
(5,691
)
$
(4,464
)
Mortgage notes payable:

Proceeds

33,559

168,787

Restricted cash

(14,611
)
—

Lump sum payoffs

(135,611
)
(141,183
)
Scheduled principal repayments

(6,046
)
(6,810
)
Prepayment premiums/fees

(141
)
(2,867
)
Notes, net:

Proceeds

—

398,052

Lines of credit:

Proceeds

4,052,000

1,884,500

Repayments

(3,564,500
)
(2,508,500
)
(Payments on) proceeds from settlement of derivative instruments

(29
)
10,729

Proceeds from sale of OP Units

3,347

3,308

Proceeds from exercise of EQR options

7,041

22,155

OP Units repurchased and retired

(142,754
)
(44,758
)
Redemption of Preference Interests

—

(25,500
)
Payment of offering costs

(64
)
(16
)
Contributions – Minority Interests – Partially Owned Properties

1,337

815

Distributions:

OP Units – General Partner

(135,829
)
(127,911
)
Preference Units

(7,431
)
(11,150
)
Preference Interests and Junior Preference Units

(223
)
(1,137
)
OP Units – Limited Partners

(9,217
)
(9,181
)
Minority Interests – Partially Owned Properties

(7,748
)
(266
)
Net cash provided by (used for) financing activities

67,389

(395,397
)
Net (decrease) in cash and cash equivalents

(88,535
)
(2,051
)
Cash and cash equivalents, beginning of period

260,277

88,828

Cash and cash equivalents, end of period

$
171,742

$
86,777

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(Amounts in thousands except per OP Unit data)
(Unaudited)

	Six Months Ended June 30,				Quarter Ended June 30,
	2007		2006		2007		2006

Comprehensive income:
Net income	$	435,177	$	576,710	$	300,831	$	171,162
Other comprehensive income — derivative and other instruments:
Unrealized holding gains arising during the period	6,091		2,409		6,212		886
Losses reclassified into earnings from other comprehensive income	1,052		1,136		489		547
Comprehensive income	$	442,320	$	580,255	$	307,532	$	172,595

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

	Six Months Ended June 30,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	435,177		$	576,710
Adjustments to reconcile net income to net cash provided by operating activities:
Allocation to Minority Interests — Partially Owned Properties	779			2,068
Depreciation	311,741			297,472
Amortization of deferred financing costs	7,484			5,146
Amortization of discounts and premiums on debt	(2,686		)	(3,644		)
Amortization of deferred settlements on derivative instruments	362			446
Impairment	394			1,156
Loss from investments in unconsolidated entities	363			375
Distributions from unconsolidated entities — return on capital	47			101
Net (gain) on sales of unconsolidated entities	—			(352		)
Net (gain) on sales of land parcels	(4,516		)	(246		)
Net (gain) on sales of discontinued operations	(385,323		)	(502,297		)
Loss on debt extinguishments	3,041			2,892
Unrealized (gain) on derivative instruments	(1		)	—
Compensation paid with Company Common Shares	10,243			10,858
Other operating activities, net	—			(1		)

Changes in assets and liabilities:
(Increase) in deposits — restricted	(837		)	(9,570		)
(Increase) decrease in other assets	(6,741		)	8,525
Increase in accounts payable and accrued expenses	5,828			9,272
Increase in accrued interest payable	4,011			7,931
(Decrease) in other liabilities	(28,313		)	(48,065		)
Increase in security deposits	4,740			4,954
Net cash provided by operating activities	355,793			363,731

CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate — acquisitions	(1,142,440		)	(907,963		)
Investment in real estate — development/other	(195,354		)	(122,771		)
Improvements to real estate	(117,845		)	(106,441		)
Additions to non-real estate property	(4,185		)	(4,086		)
Interest capitalized for real estate under development	(17,894		)	(7,780		)
Proceeds from disposition of real estate, net	839,114			1,002,714
Proceeds from disposition of unconsolidated entities	—			355
Investments in unconsolidated entities	(187		)	(1,030		)
Distributions from unconsolidated entities — return of capital	—			92
Decrease in deposits on real estate acquisitions, net	178,246			10,178
Decrease in mortgage deposits	4,314			6,794
Consolidation of previously Unconsolidated Properties:
Via EITF 04-5 (cash consolidated)	—			1,436
Acquisition of Minority Interests — Partially Owned Properties	—			(13		)
Other investing activities, net	—			2
Net cash (used for) investing activities	(456,231		)	(128,513		)

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)
(Unaudited)

	Six Months Ended June 30,
	2007			2006
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan and bond acquisition costs	$	(19,384	)	$	(4,880	)
Mortgage notes payable:
Proceeds	262,026			208,937
Restricted cash	(139,262		)	(19,196		)
Lump sum payoffs	(310,128		)	(232,532		)
Scheduled principal repayments	(12,507		)	(13,644		)
Prepayment premiums/fees	(3,041		)	(2,892		)
Notes, net:
Proceeds	993,031			398,052
Lump sum payoffs	(50,000		)	—
Lines of credit:
Proceeds	10,703,000			3,207,500
Repayments	(10,383,000		)	(3,429,500		)
Proceeds from settlement of derivative instruments	2,370			10,729
Proceeds from sale of OP Units	4,520			5,218
Proceeds from exercise of EQR options	9,751			24,159
OP Units repurchased and retired	(837,334		)	(81,981		)
Redemption of Preference Interests	—			(25,500		)
Premium on redemption of Preference Interests	—			(9		)
Payment of offering costs	(137		)	(23		)
Other financing activities, net	(7		)	-
Contributions — Minority Interests — Partially Owned Properties	6,941			3,327
Distributions:
OP Units — General Partner	(271,049		)	(256,591		)
Preference Units	(14,856		)	(21,243		)
Preference Interests and Junior Preference Units	(446		)	(1,609		)
OP Units — Limited Partners	(18,149		)	(18,012		)
Minority Interests — Partially Owned Properties	(15,912		)	(2,184		)
Net cash (used for) financing activities	(93,573		)	(251,874		)
Net (decrease) in cash and cash equivalents	(194,011		)	(16,656		)
Cash and cash equivalents, beginning of period	260,277			88,828
Cash and cash equivalents, end of period	$	66,266		$	72,172

~~(Unaudited)~~

Quarter Ended March 31,

2007

2006

SUPPLEMENTAL INFORMATION:

Cash paid during the period for interest

$
141,879

$
124,870

Cash paid during the period for income, franchise and excise taxes

$
77

$
899

Real estate acquisitions/dispositions/other:

Mortgage loans assumed

$
40,672

$
50,604

Valuation of OP Units issued

$
—

$
27,855

Mortgage loans (assumed) by purchaser

$
(4,845
)
$
(14,205
)

Consolidation of previously Unconsolidated Properties – Via EITF 04-5:

Investment in real estate, net

$
—

$
(24,637
)
Mortgage loans consolidated

$
—

$
22,545

Investments in unconsolidated entities

$
—

$
2,602

Net other liabilities recorded

$
—

$
926

See accompanying notes

ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
(Unaudited)

	Six Months Ended June 30,
	2007			2006

SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest	$	251,180		$	222,774
Net cash paid (received) during the period for income, franchise and excise taxes	$	(733	)	$	7,509

Real estate acquisitions/dispositions/other:
Mortgage loans assumed	$	152,697		$	63,243
Valuation of OP Units issued	$	—		$	46,472
Mortgage loans (assumed) by purchaser	$	(76,744	)	$	(117,949	)

Consolidation of previously Unconsolidated Properties — Via EITF 04-5:
Investment in real estate, net	$	—		$	(24,637	)
Mortgage loans consolidated	$	—		$	22,545
Investments in unconsolidated entities	$	—		$	2,602
Net other liabilities recorded	$	—		$	926

See accompanying notes

	Consolidated										Unconsolidated
	Development Projects
	Held for and/or Under Development		Completed, Not Stabilized (4)		Completed and Stabilized		Other		Total		Institutional Joint Ventures

Total projects (1)	—		2		4		21		27		45

Total units (1)	—		572		977		3,896		5,445		10,846

Debt — Secured (2):
EQR Ownership (3)	$	262,878	$	97,596	$	61,000	$	286,891	$	708,365	$	121,200
Minority Ownership	—		—		—		13,321		13,321		363,600
Total (at 100%)	$	262,878	$	97,596	$	61,000	$	300,212	$	721,686	$	484,800

(1) Project and unit counts exclude all uncompleted development projects until those projects are substantially completed.

(2) All debt is non-recourse to the Operating Partnership with the exception of $28.3 million in mortgage bonds on one development project.

(3) Represents the Operating Partnership’s current economic ownership interest.

(4) Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing.

7. Deposits –— Restricted

The following table presents the deposits –— restricted as of ~~March 31,~~June 30, 2007 and December 31, 2006 (amounts in thousands):

	June 30, 2007		December 31, 2006

Tax-deferred (1031) exchange proceeds	$	112,588	$	299,392
Earnest money on pending acquisitions	14,070		13,170
Other acquisitions	7,658		—
Restricted deposits on debt (1)	159,435		22,917
Resident security and utility deposits	39,852		36,260
Other	17,331		20,086
Totals	$	350,934	$	391,825

(1) Primarily represents amounts held in escrow by the lender and released as draw requests are made on fully-funded development mortgage loans.

March
31, 2007

December
31, 2006

Tax-deferred (1031) exchange proceeds

$
81,468

$
299,392

Earnest money on pending acquisitions

12,870

13,170

Resident security and utility deposits

37,727

36,260

Restricted deposits on debt

34,805

20,194

Other

22,088

22,809

Totals

$
188,958

$
391,825

8. Mortgage Notes Payable

As of ~~March 31,~~June 30, 2007, the Operating Partnership had outstanding mortgage debt of approximately ~~$3.1~~$3.2 billion.

During the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, the Operating Partnership:

· Repaid ~~$141.7~~$322.6 million of mortgage loans;

· Assumed ~~$40.7~~$152.7 million of mortgage debt on certain properties in connection with their acquisitions;

· Obtained ~~$33.6~~$262.0 million of new mortgage loans on certain properties; and

· Was released from ~~$4.8~~$76.7 million of mortgage debt assumed by the purchaser on disposed properties.

The Operating Partnership recorded approximately ~~$0.1~~$3.0 million and ~~$0.3~~$3.4 million of prepayment

penalties and write-offs of unamortized deferred financing costs, respectively, as additional interest related to debt extinguishment of mortgages during the ~~quarter~~six months ended ~~March 31,~~June 30, 2007.

As of ~~March 31,~~June 30, 2007, scheduled maturities for the Operating Partnership’s outstanding mortgage indebtedness were at various dates through September 1, 2045. At ~~March 31,~~June 30, 2007, the interest rate range on the Operating Partnership’s mortgage debt was 3.32% to 12.465%. During the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, the weighted average interest rate on the Operating Partnership’s mortgage debt was 5.73%.

9. Notes

As of ~~March 31,~~June 30, 2007, the Operating Partnership had outstanding unsecured notes of approximately ~~$4.4~~$5.4 billion. ~~There were no significant transactions during~~

During the ~~quarter~~six months ended ~~March 31, 2007.~~June 30, 2007, the Operating Partnership:

·Issued $350.0 million of five year 5.50% fixed rate public notes, receiving net proceeds of $346.1 million;

·Issued $650.0 million of ten year 5.75% fixed rate public notes, receiving net proceeds of $640.6 million; and

·Repaid $50.0 million of 7.625% fixed rate public notes at maturity.

As of ~~March 31,~~June 30, 2007, scheduled maturities for the Operating Partnership’s outstanding notes were at various dates through 2029. At ~~March 31,~~June 30, 2007, the interest rate range on the Operating Partnership’s notes was 3.85% to ~~7.625%~~7.57%. During the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, the weighted average interest rate on the Operating Partnership’s notes was ~~5.70%~~5.66%.

10. Lines of Credit

On February 28, 2007, the Operating Partnership entered into an unsecured revolving credit facility with potential borrowings of up to $1.5 billion maturing on February 28, 2012. The Operating Partnership 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. Advances under the credit facility bear interest at variable rates based upon LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating or based on bids received from the lending group. EQR has guaranteed the Operating Partnership’s credit facility up to the maximum amount and for the full term of the facility.

On April 1, 2005, the Operating Partnership obtained a three-year $1.0 billion unsecured revolving credit facility maturing on May 29, 2008. Advances under the credit facility bore interest at variable rates based upon LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating or based on bids received from the lending group. EQR guaranteed the Operating Partnership’s credit facility up to the

maximum amount and for the full term of the facility. This credit facility was repaid in full and terminated on February 28, 2007. The Operating Partnership recorded $0.4 million of write-offs of unamortized deferred financing costs as additional interest in connection with this termination.

On May 7, 2007, the Operating Partnership obtained a one-year $500.0 million unsecured revolving credit facility maturing on May 5, 2008. Advances under this facility bore interest at variable rates based on LIBOR at various interest periods plus a spread dependent upon the Operating Partnership’s credit rating. EQR guaranteed this credit facility up to the maximum amount and for its full term. This credit facility was repaid in full and terminated on June 4, 2007.

As of ~~March 31,~~June 30, 2007, ~~$947.5~~$780.0 million was outstanding and ~~$70.8~~$70.6 million was restricted (dedicated to support letters of credit and not available for borrowing) on the $1.5 billion revolving credit facility. During the ~~quarter~~

six months ended ~~March 31,~~June 30, 2007, the weighted average interest rate under the credit facilities was ~~5.63%~~5.65%.

11. Derivative Instruments

The following table summarizes the consolidated derivative instruments at ~~March 31,~~June 30, 2007 (dollar amounts are in thousands):

Fair Value
Hedges (1)

Forward Starting
Swaps (2)

Development
Cash Flow
Hedges (3)

Current Notional Balance

$
370,000

$
100,000

$
—

Lowest Possible Notional

$
370,000

$
100,000

$
—

Highest Possible Notional

$
370,000

$
100,000

$
54,947

Lowest Interest Rate

3.245
%
5.596
%
N/A

Highest Interest Rate

3.787
%
5.596
%
5.850
%
Earliest Maturity Date

2009

2017

2009

Latest Maturity Date

2009

2017

2009

Estimated Asset (Liability) Fair Value

$
(10,713
)
$
(3,230
)
$
19

	Fair Value Hedges (1)			Development Cash Flow Hedges (2)
Current Notional Balance	$	370,000		$	27,970
Lowest Possible Notional	$	370,000		$	17,942
Highest Possible Notional	$	370,000		$	131,675
Lowest Interest Rate	3.245		%	4.928		%
Highest Interest Rate	3.787		%	5.850		%
Earliest Maturity Date	2009			2009
Latest Maturity Date	2009			2009
Estimated Asset (Liability) Fair Value	$	(12,196	)	$	391

(1) Fair Value Hedges –— Converts outstanding fixed rate debt to a floating interest rate.

(2) ~~Forward Starting Swaps – Designed to partially fix the interest rate in advance of a planned future debt issuance.~~

~~(3)~~Development Cash Flow Hedges –— Converts outstanding floating rate debt to a fixed interest rate (swaps) and/or locks-in a maximum interest rate (caps).

On ~~March 31,~~ June 30, 2007, the net derivative instruments were reported at their fair value as other liabilities of approximately ~~$13.9~~$12.2 million and other assets of ~~$19,000.~~$391,000. As of ~~March 31,~~June 30, 2007, there were approximately ~~$14.2~~$7.7 million in deferred losses, net, included in accumulated other comprehensive loss. Based on the estimated fair values of the net derivative instruments at ~~March 31,~~June 30, 2007, the Operating Partnership may recognize an estimated ~~$2.5~~$1.8 million of accumulated other comprehensive loss as additional interest expense during the twelve months ending ~~March 31,~~June 30, 2008.

In June 2007, the Operating Partnership received approximately $2.4 million to terminate five forward starting swaps in conjunction with the issuance of $650.0 million of ten year unsecured notes. The majority of the $2.4 million has been deferred as a component of accumulated other comprehensive loss and will be recognized as a reduction of interest expense over the life of the unsecured notes.

12. Earnings Per OP Unit

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

	Quarter Ended March 31,						Six Months Ended June 30,						Quarter Ended June 30,
	2007			2006			2007			2006			2007			2006
Numerator for net income per OP Unit – basic and diluted:
Numerator for net income per OP Unit — basic and diluted:
Income from continuing operations	$	22,738		$	19,871		$	49,199		$	49,795		$	30,793		$	30,594
Allocation to Preference Units	(7,424		)	(10,095		)	(14,840		)	(20,168		)	(7,416		)	(10,073		)
Allocation to Preference Interests and Junior Preference Units	(223		)	(1,099		)	(434		)	(1,556		)	(211		)	(457		)
Allocation to premium on redemption of Preference Interests	—			(674		)	—			(683		)	—			(9		)

Income from continuing operations available to OP Units	15,091			8,003			33,925			27,388			23,166			20,055
Discontinued operations, net	111,608			385,677
Numerator for net income per OP Unit – basic and diluted	$	126,699		$	393,680
Discontinued Operations, net							385,978			526,915			270,038			140,568
Numerator for net income per OP Unit — basic and diluted							$	419,903		$	554,303		$	293,204		$	160,623

	Six Months Ended				Quarter Ended
	June 30,				June 30,
	2007		2006		2007		2006
Denominator for net income per OP unit — basic and diluted:
Denominator for net income per OP Unit — basic	307,582		309,678		303,511		310,017
Effect of dilutive securities:
Dilution for OP Units issuable upon assumed exercise/vesting of EQR’s share options/restricted shares	4,381		4,742		4,120		4,681

Denominator for net income per OP Unit — diluted	311,963		314,420		307,631		314,698

Net income per OP Unit — basic	$	1.37	$	1.79	$	0.97	$	0.52
Net income per OP Unit — diluted	$	1.35	$	1.76	$	0.95	$	0.51

Net income OP Unit — basic:
Income from continuing operations available to OP Units	$	0.110	$	0.089	$	0.076	$	0.065
Discontinued operations, net	1.256		1.702		0.891		0.453
Net income per OP Unit — basic	$	1.366	$	1.791	$	0.967	$	0.518

Net income per OP Unit — diluted:
Income from continuing operations available to OP Units	$	0.109	$	0.087	$	0.075	$	0.064
Discontinued operations, net	1.237		1.676		0.878		0.446
Net income per OP Unit — diluted	$	1.346	$	1.763	$	0.953	$	0.510

Quarter Ended March 31,

2007

2006

Denominator for net income per OP Unit – basic and diluted:

Denominator for net income per OP Unit – basic

311,697

309,334

Effect of dilutive securities:

Dilution for OP Units issuable upon assumed exercise/vesting of EQR’s share options/restricted shares

4,568

4,715

Denominator for net income per OP Unit – diluted

316,265

314,049

Net income per OP Unit – basic

$
0.41

$
1.27

Net income per OP Unit – diluted

$
0.40

$
1.25

Net income per OP Unit – basic:

Income from continuing operations available to OP Units

$
0.048

$
0.026

Discontinued operations, net

0.358

1.247

Net income per OP Unit – basic

$
0.406

$
1.273

Net income per OP Unit – diluted:

Income from continuing operations available to OP Units

$
0.048

$
0.025

Discontinued operations, net

0.353

1.228

Net income per OP Unit – diluted

$
0.401

$
1.253

Convertible preference interests/units that could be converted into ~~853,151~~828,112 and ~~1,615,465~~1,443,935 weighted average Common Shares (which would be contributed to the Operating Partnership in exchange for OP Units) for the six months ended June 30, 2007 and 2006, respectively, and 803,346 and 1,274,295 weighted average Common Shares for the quarters ended ~~March 31,~~June 30, 2007 and 2006, respectively, were outstanding but were not included in the computation of diluted earnings per OP Unit because the effects would be anti-dilutive. In addition, the effect of the Common Shares/OP Units that could ultimately be issued upon the conversion/exchange of the Operating Partnership’s $650.0 million exchangeable senior notes were not included in the computation of diluted earnings per OP Unit because the effects would be anti-dilutive.

13. Discontinued Operations

The Operating Partnership has presented separately as discontinued operations in all periods the results of operations for all consolidated assets disposed of on or after January 1, 2002 (the date of adoption of SFAS No. 144) and all operations related to condominium conversion properties effective upon their respective transfer into a TRS.

The components of discontinued operations are outlined below and include the results of operations for the respective periods that the Operating Partnership owned such assets during the six months and quarters ended ~~March 31,~~June 30, 2007 and 2006 (amounts in thousands).

~~(1)~~~~Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Operating Partnership’s period of ownership.~~

~~(2)~~~~Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale.~~

For the properties sold during the ~~quarter~~six months ended ~~March 31,~~June 30, 2007 (excluding condominium conversion properties), the investment in real estate, net of accumulated depreciation, and the mortgage notes payable balances at December 31, 2006 were ~~$152.1~~$454.8 million and ~~$11.9~~$85.6 million, respectively.

The net real estate basis of the Operating Partnership’s condominium conversion properties owned by the TRS and included in discontinued operations (excludes the Operating Partnership’s five halted conversions as they are now held for use), which were included in investment in real estate, net in the consolidated balance sheets, was ~~$98.1~~$108.6 million and $95.4 million at ~~March 31,~~June 30, 2007 and December 31, 2006, respectively.

The Operating Partnership, as an owner of real estate, is subject to various Federal, state and local environmental laws. Compliance by the Operating Partnership with existing laws has not had a material adverse effect on the Operating Partnership. However, the Operating Partnership 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.

Operating Partnership 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 Operating Partnership. Accordingly, the Operating Partnership is defending the suit vigorously. Due to the

pendency of the Operating Partnership’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 and as a result, no amounts have been accrued at ~~March 31,~~June 30, 2007. While no assurances can be given, the Operating Partnership does not believe that the suit, if adversely determined, will have a material adverse effect on the Operating Partnership.

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

During the years ended December 31, 2005 and 2004, the Operating Partnership established a reserve and recorded a corresponding expense, net of insurance receivables, for estimated uninsured property damage at certain of its properties caused by various hurricanes in each respective year. During the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, the Operating Partnership received $3.8 million in insurance proceeds and recorded an additional $2.8 million of receivables in anticipation of proceeds expected. As of ~~March 31,~~June 30, 2007, a receivable of $4.1 million and a liability of ~~$2.5~~$1.7 million are included in other assets and other liabilities, respectively, on the consolidated balance sheets.

As of ~~March 31,~~June 30, 2007, the Operating Partnership has ~~ten~~nine projects totaling ~~3,228~~3,026 units in various stages of development with estimated completion dates ranging through ~~June~~September 30, 2009. Some of the projects are developed solely by the Operating Partnership, while others are co-developed with various third party development partners. The ~~primary~~ development venture agreements ~~currently in place have~~with partners are primarily deal-specific, with differing terms regarding profit-sharing, equity contributions, returns on investment, buy-sell agreements and other customary provisions. The partner is most often the ~~following key terms:~~

·“general” or “managing” partner of the development venture. The ~~first development partner has~~typical buy-sell arrangements contain appraisal rights and provisions that provide the right, ~~at any time following completion of a project,~~but not the obligation, for the Operating Partnership to ~~stipulate a value for such project and offer to sell its~~acquire the partner’s interest in the project toat fair market value upon the ~~Operating Partnership based on such value. If the Operating Partnership chooses not~~expiration of a negotiated time period (typically two to purchase the interest, the Operating Partnership must agree to a sale of the project to an unrelated third party at such value. The Operating Partnership’s partner must exercise this right as to all projects subject to the agreement within five years after ~~the receipt~~substantial completion of the ~~final certificate of occupancy on~~project). However, the ~~last developed property.~~

·~~The second development~~buy-sell provisions with one partner ~~has the right, at any time following completion of a project, to~~covering three projects does require the Operating Partnership to purchase the ~~partners’~~partner’s interest in ~~that project~~the projects at a mutually agreeable price. If the Operating Partnership and the partner are unable to agree on a price, both parties will obtain appraisals. If the appraised values vary by more than 10%, both the Operating Partnership and its partner will agree on a third appraiser to determine which original appraisal is closest to its determination of value. The Operating Partnership may elect at that time not to purchase the property and instead, authorize its partner to sell the project at or above the agreed-uponfair market value ~~to an unrelated third party. Five~~five years following the receipt of the final certificate of occupancy on the last developed ~~property, the Operating Partnership must purchase, at the agreed-upon price, any projects remaining unsold.~~property.

· The third development partner has the exclusive right for six months following stabilization, as defined, to market a subject project for sale. Thereafter, either the Operating Partnership or its development partner may market a subject project for sale. If the Operating Partnership’s development partner proposes the sale, the Operating Partnership may elect to purchase the project at the price proposed by its partner or defer the sale until two independent appraisers appraise the project. If the two appraised values vary by more than 5%, a third appraiser will be chosen to determine the fair market value of the property. Once a value has been determined, the Operating Partnership may elect to purchase the property or authorize its development partner to sell the project at the agreed-upon value.

~~In addition, the Operating Partnership has various deal-specific development agreements with partners, the overall terms of which are similar in nature to those described above.~~

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by senior management. Senior management decides how resources are allocated and assesses performance on a monthly basis.

The Operating Partnership’s primary business is owning, managing, and operating multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. Senior management evaluates the performance of each of our apartment communities individually and geographically, and both on a same store and non-same store basis; however, each of our apartment communities generally has similar economic characteristics, residents, and products and services. The Operating Partnership’s operating segments have been aggregated by geography in a manner identical to that which is provided to its chief operating decision maker.

The Operating Partnership’s fee and asset management, development (including FIN No. 46 partially owned properties), condominium conversion and corporate housing (Equity Corporate Housing or “ECH”) activities are immaterial and do not individually meet the threshold requirements of a reportable segment as provided for in SFAS No. 131 and as such, have been aggregated in the tables presented below.

All revenues are from external customers and there is no customer who contributed 10% or more of the Operating Partnership’s total revenues during the six months and quarters ended ~~March 31,~~June 30, 2007 and 2006, respectively.

The primary financial measure for the Operating Partnership’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). The Operating Partnership believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Operating Partnership’s apartment communities. Current year NOI is compared to prior year NOI and current year budgeted NOI as a measure of financial performance. The following ~~table presents~~tables present NOI for each ~~segement~~segment from our rental real estate specific to continuing operations for the six months ended June 30, 2007 and 2006, respectively, as well as total assets ~~for the quarters ended March 31,~~at June 30, 2007 ~~and 2006, respectively~~ (amounts in thousands):

	Six Months Ended June 30, 2006
	Northeast		South		West		Other (3)		Total
Rental income:
Same store (1)	$	233,466	$	292,341	$	304,477	$	—	$	830,284
Non-same store/other (2) (3)	19,757		11,205		9,273		39,723		79,958
Total rental income	253,223		303,546		313,750		39,723		910,242

Operating expenses:
Same store (1)	89,561		119,891		107,835		—		317,287
Non-same store/other (2) (3)	8,844		4,726		4,165		39,196		56,931
Total operating expenses	98,405		124,617		112,000		39,196		374,218

NOI:
Same store (1)	143,905		172,450		196,642		—		512,997
Non-same store/other (2) (3)	10,913		6,479		5,108		527		23,027
Total NOI	$	154,818	$	178,929	$	201,750	$	527	$	536,024

(1)	Properties owned for all of both periods ending June 30, 2007 and June 30, 2006 which represented 127,396 units.
(2)	Properties acquired after January 1, 2006.
(3)	Other includes ECH, condominium conversion overhead of $2.9 million, hurricane related property damage net of reimbursement from insurance companies and other corporate operations. Also reflects the $7.1 million elimination of rental income recorded in Northeast, South and West operating segments related to ECH.

The following tables present NOI for each segment from our rental real estate specific to continuing operations for the quarters ended June 30, 2007 and 2006, respectively (amounts in thousands):

	Quarter Ended June 30, 2007
	Northeast		South		West		Other (3)			Total
Rental income:
Same store (1)	$	124,134	$	157,125	$	166,221	$	—		$	447,480
Non-same store/other (2) (3)	23,007		30,573		17,040		11,210			81,830
Total rental income	147,141		187,698		183,261		11,210			529,310

Operating expenses:
Same store (1)	46,026		64,129		56,071		—			166,226
Non-same store/other (2) (3)	10,583		12,546		6,713		18,328			48,170
Total operating expenses	56,609		76,675		62,784		18,328			214,396

NOI:
Same store (1)	78,108		92,996		110,150		—			281,254
Non-same store/other (2) (3)	12,424		18,027		10,327		(7,118		)	33,660
Total NOI	$	90,532	$	111,023	$	120,477	$	(7,118	)	$	314,914

(1)	Properties owned for all of both periods ending June 30, 2007 and June 30, 2006 which represented 130,175 units.
(2)	Properties acquired after April 1, 2006.
(3)	Other includes ECH, development, condominium conversion overhead of $1.2 million and other corporate operations. Also reflects the $4.4 million elimination of rental income recorded in Northeast, South and West operating segments related to ECH.

	Quarter Ended June 30, 2006
	Northeast		South		West		Other (3)			Total
Rental income:
Same store (1)	$	119,274	$	151,842	$	157,716	$	—		$	428,832
Non-same store/other (2) (3)	15,283		11,403		2,816		6,879			36,381
Total rental income	134,557		163,245		160,532		6,879			465,213

Operating expenses:
Same store (1)	44,238		62,611		55,229		—			162,078
Non-same store/other (2) (3)	7,048		4,910		1,278		13,718			26,954
Total operating expenses	51,286		67,521		56,507		13,718			189,032

NOI:
Same store (1)	75,036		89,231		102,487		—			266,754
Non-same store/other (2) (3)	8,235		6,493		1,538		(6,839		)	9,427
Total NOI	$	83,271	$	95,724	$	104,025	$	(6,839	)	$	276,181

(1)	Properties owned for all of both periods ending June 30, 2007 and June 30, 2006 which represented 130,175 units.
(2)	Properties acquired after April 1, 2006.
(3)	Other includes ECH, condominium conversion overhead of $1.2 million, hurricane related property damage net of reimbursement from insurance companies and other corporate operations. Also reflects the $3.7 million elimination of rental income recorded in Northeast, South and West operating segments related to ECH.

Note: Markets included in the above geographic segments are as follows:

(a) Northeast –— New England (excl Boston), Boston, New York Metro, DC Northern Virginia, Suburban Maryland, Chicago, Milwaukee and Minneapolis/St. Paul.

(b) South –— Charlotte, Raleigh/Durham, Atlanta, Jacksonville, Orlando, Tampa/Ft. Myers, South Florida, Nashville, Tulsa, Austin, Houston, Dallas/Ft. Worth, Albuquerque and Phoenix.

(c) West –— Seattle/Tacoma, Portland, Central Valley, San Francisco Bay Area, Inland Empire, Los Angeles, Orange County, San Diego and Denver.

The following table presents a reconciliation of NOI from our rental real estate specific to continuing operations for the six months and quarters ended ~~March 31,~~June 30, 2007 and 2006, ~~respectively.~~respectively (amounts in thousands):

	Quarter Ended March 31,
	2007			2006			Six Months Ended June 30,						Quarter Ended June 30,
	(Amounts in thousands)						2007			2006			2007			2006

Rental income	$	523,898		$	459,971		$	1,037,668		$	910,242		$	529,310		$	465,213
Property and maintenance expense	(141,581		)	(122,061		)	(273,801		)	(238,594		)	(136,682		)	(120,823		)
Real estate taxes and insurance expense	(58,977		)	(46,071		)	(112,017		)	(88,963		)	(55,302		)	(45,132		)
Property management expense	(24,904		)	(23,642		)	(47,254		)	(46,661		)	(22,412		)	(23,077		)
Total operating expenses	(225,462		)	(191,774		)	(433,072		)	(374,218		)	(214,396		)	(189,032		)
Net operating income	$	298,436		$	268,197		$	604,596		$	536,024		$	314,914		$	276,181

16. Subsequent Events/Other

Subsequent Events

Subsequent to ~~March 31,~~June 30, 2007 and through ~~May 2,~~August 1, 2007, the Operating Partnership:

· Acquired ~~$314.1 million of~~three residential properties consisting of ~~ten properties and 1,380~~830 units and ~~one~~two land ~~parcel;~~parcels for $196.9 million;

· Sold ~~ten~~six residential properties consisting of ~~2,198~~2,363 units for ~~$205.5~~$381.5 million (excluding condominium units);

· ~~Assumed $111.7~~Repaid $26.9 million of mortgage ~~debt in connection with the acquisition of eight properties;~~loans;

· Repaid ~~$69.6 million of mortgage loans and~~ $50.0 million of ~~unsecured notes;~~6.9% fixed rate public notes at maturity;

· Obtained $338.0 million in mortgage debt; and

· ~~Was released from $54.5~~Redeemed its $175.0 million ~~of mortgage debt assumed by the purchaser on disposed properties.~~Series D Preference Units (see Note 3).

~~On April 27, 2007, the Board of Trustees approved an increase of $200.1 million~~Subsequent to ~~the Company’s authorized share repurchase program. As of April 27,~~June 30, 2007 and ~~after giving effect to the above increase, the Company was authorized to repurchase $500.0 million of additional Common Shares. Following the increased authorization (from~~ ~~May 2,~~through August 3, 2007,~~through May 4, 2007),~~ the Company repurchased ~~an additional 1,296,000 of its~~2,739,000 Common Shares at an average price of ~~$46.00~~$42.12 per share for total consideration of ~~$59.6 million. As a result,~~$115.4 million, leaving $220.5 million remaining available for share repurchases. Concurrently with these transactions, the ~~Company is now authorized~~Operating Partnership repurchased 2,739,000 OP Units previously issued to ~~repurchase $440.4 million of additional Common Shares as of May 4, 2007.~~EQR.

Other

The Operating Partnership incurred impairment losses of approximately ~~$0.2~~$0.4 million and ~~$0.8~~$1.2 million (including discontinued operations) for the ~~quarters~~six months ended ~~March 31,~~June 30, 2007 and 2006, respectively, as a result of the write-off of various pursuit and out-of-pocket costs for terminated acquisition, disposition (including halted condominium conversions) and development transactions.

The Operating Partnership recorded a reduction to general and administrative expense of approximately ~~$1.6~~$1.7 million induring the ~~first quarter of~~six months ended June 30, 2007 due to the successful resolution of a certain lawsuit in Florida, resulting in the reversal of the majority of a previously established litigation reserve. The Operating Partnership had previously recorded a reduction to general and administrative expenses of approximately $2.8 million during the six months ended June 30, 2006 due to the recovery of insurance proceeds related to the same lawsuit.

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 Operating ~~Partnership’s~~Partnership’s annual report on Form 10-K for the year ended December 31, 2006.

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 Operating ~~Partnership’s~~Partnership’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 Operating Partnership 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 Operating Partnership assumes no obligation to update or supplement forward-looking statements because of subsequent events. Factors that might cause such differences include, but are not limited to the following:

· We intend to actively acquire and develop multifamily properties for rental operations and/or conversion into condominiums, as well as upgrade and sell existing properties as individual condominiums. We may underestimate the costs necessary to bring an acquired or development property up to standards established for its intended market position. Additionally, we expect that other major real estate investors with significant capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development efforts. This competition may increase prices for multifamily properties or decrease the price at which we expect to sell individual properties. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. We also plan to develop more properties ourselves in addition to co-investing with our development partners for either the rental or condominium market, depending on opportunities in each sub-market. This may increase the overall level of risk associated with our developments. The total number of development units, cost 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;

· Sources of capital to the Operating Partnership or labor and materials required for maintenance, repair, capital expenditure or development are 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 of multifamily housing, slow employment growth, availability of low interest mortgages for single-family home buyers and the potential for geopolitical instability, all of which are beyond the Operating Partnership’s control; and

· Additional factors as discussed in Part I of the Annual Report on Form 10-K, particularly those under “Risk Factors”.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Operating Partnership undertakes no obligation to publicly release any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Forward-looking statements and related uncertainties are also included in Notes 5 and 11 to the Notes to Consolidated Financial Statements in this report.

In conjunction with our business objectives and operating strategy, the Operating Partnership has continued to invest or recycle its capital investment in apartment communities located in strategically targeted markets during the ~~quarter~~six months ended ~~March 31,~~June 30, 2007. In summary, we:

· Acquired ~~$674.2 million~~$1.2 billion of properties consisting of 1328 properties and ~~3,899~~6,209 units and ~~$42.5~~$65.5 million of land parcels, all of which we deem to be in our strategic targeted markets; and

· Sold ~~$253.9~~$790.6 million of ~~apartment~~ properties consisting of 1237 properties and ~~3,711~~10,018 units, ~~as well as 157~~$40.7 million of land parcels and 383 condominium units for ~~$37.3~~$103.1 million.

The Operating ~~Partnership’s~~Partnership’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 Operating Partnership believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Operating ~~Partnership’s~~Partnership’s apartment communities.

Properties that the Operating Partnership owned for all of both of the six months ended June 30, 2007 and 2006 (the “Six-Month 2007 Same Store Properties”), which represented 127,396 units, and properties that the Operating Partnership owned for all of both of the quarters ended ~~March 31,~~June 30, 2007 and 2006 (the ~~“First~~“Second Quarter 2007 Same Store Properties”), which represented ~~133,703~~130,175 units, impacted the Operating ~~Partnership’s~~Partnership’s results of operations. ~~The First~~Both the Six-Month 2007 Same Store Properties and the Second Quarter 2007 Same Store Properties are discussed in the following paragraphs.

The Operating ~~Partnership’s~~Partnership’s acquisition, disposition, completed development and consolidation of previously unconsolidated property activities also impacted overall results of operations for the six months and quarters ended ~~March 31,~~June 30, 2007 and 2006. The impacts of these activities are also discussed in greater detail in the following paragraphs.

Comparison of the ~~quarter~~six months ended ~~March 31,~~June 30, 2007 to the ~~quarter~~six months ended ~~March 31,~~June 30, 2006

For the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, income from continuing operations ~~increased~~decreased by approximately ~~$2.9~~$0.6 million when compared to the ~~quarter~~six months ended ~~March 31,~~June 30, 2006. The ~~increase~~decrease in continuing operations is discussed below.

Revenues from the ~~First Quarter~~Six-Month 2007 ~~Same-Store~~Same Store Properties increased ~~$22.2~~$39.7 million primarily as a result of higher rental rates charged to residents. Expenses from the ~~First Quarter~~Six-Month 2007 ~~Same-Store~~Same Store Properties increased ~~$8.7~~$12.2 million primarily due to higher payroll, building/maintenance and real estate taxes. The following tables provide comparative ~~same-store~~same store results and statistics for the ~~First Quarter~~Six-Month 2007 ~~Same-Store~~Same Store Properties:

$ in Thousands (except for Average Rental Rate) ~~– 133,703 Same-Store~~— 127,396 Same Store Units

(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period.

The following table presents a reconciliation of operating income per the consolidated statements of

operations to NOI for the ~~First Quarter~~Six-Month 2007 ~~Same-Store~~Same Store Properties:

For properties that the Operating Partnership acquired prior to January 1, 2006 and expects to continue to own through December 31, 2007, the Operating Partnership anticipates the following same store results for the full year ending December 31, 2007:

2007 Same Store Assumptions

Physical Occupancy		95.0%
Revenue Change		~~5.00%~~3.75% to ~~6.00%~~4.25%
Expense Change		~~3.50%~~2.50% to ~~4.50%~~3.00%
NOI Change		~~5.50%~~4.50% to ~~7.50%~~5.25%

These 2007 assumptions are based on current expectations and are forward-looking.

~~Non-same-store~~Non-same store operating results increased ~~$16.8~~$41.1 million and consist primarily of properties acquired in calendar years 2007 and 2006 as well as our corporate housing business.

See also Note 15 in the Notes to Consolidated Financial Statements for additional discussion regarding the Operating Partnership’s segment disclosures.

Fee and asset management revenues, net of fee and asset management expenses decreased ~~$0.4~~$0.3 million primarily as a result of lower income earned from our military housing at Ft. Lewis. As of ~~March 31,~~June 30, 2007 and 2006, the Operating Partnership managed ~~15,025~~15,086 and ~~14,888~~14,784 units, respectively, for third parties and unconsolidated entities.

Property management expenses from continuing operations include off-site expenses associated with the self-management of the Operating Partnership’s properties as well as management fees paid to any third party management companies. These expenses increased by approximately ~~$1.3~~$0.6 million or ~~5.3%~~1.3%. This increase is primarily attributable to higher overall payroll-related costs.

Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased ~~$24.1~~$46.4 million primarily as a result of additional depreciation expense on newly acquired properties and capital expenditures for all properties owned.

General and administrative expenses, which include corporate operating expenses, decreased ~~$3.1~~$0.9 million primarily as a result of a decrease of $1.4 million in performance share expenses and ~~a reduction of $1.6~~$1.0 million in ~~legal expenses due~~

lower state and franchise taxes, partially offset by $1.2 million less expense recovery related to ~~the successful resolution of~~ a certain lawsuit in Florida ~~resulting in the reversal of the majority of a previously established litigation reserve.~~(see Note 16). The Operating Partnership anticipates that general and administrative expenses will approximate ~~$48.0~~$46.0 million to ~~$51.0~~$49.0 million for the year ending December 31, 2007. The above assumption is based on current expectations and is forward-looking.

Impairment from continuing operations decreased ~~$0.3~~$0.4 million primarily as a result of fewer write-offs for development properties during the ~~quarter~~six months ended ~~March 31,~~June 30, 2007.

Interest and other income from continuing operations ~~was consistent between the periods under comparison.~~increased $2.0 million primarily as a result of interest earned on 1031 exchange and earnest money deposits and other short term investments. The Operating Partnership anticipates that interest and other income will approximate ~~$5.0~~$20.0 million to ~~$7.0~~$25.0 million for the year ending December 31, 2007. The above assumption is based on current expectations and is forward-looking.

Interest expense from continuing operations, including amortization of deferred financing costs, increased approximately ~~$6.9~~$31.0 million primarily as a result of higher overall debt levels outstanding due to the Company’s share repurchase activity as well as the timing of acquisitions and dispositions, partially offset by lower overall effective interest rates. During the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, the Operating Partnership capitalized interest costs related to development activity of approximately ~~$7.9~~$17.9 million as compared to ~~$4.0~~$7.8 million for the ~~quarter~~six months ended ~~March 31,~~June 30, 2006. ~~This capitalization of interest primarily relates to projects under development.~~ The effective interest cost on all indebtedness for the ~~quarter~~six months ended ~~March 31,~~June 30, 2007 was ~~5.93%~~6.02% as compared to ~~6.25%~~6.19% for the ~~quarter~~six months ended ~~March 31,~~June 30, 2006. The Operating Partnership anticipates that interest expense (including discontinued operations) will approximate ~~$465.0~~$495.0 million to ~~$490.0~~$510.0 million for the year ending December 31, 2007. The above assumption is based on current expectations and is forward-looking.

Loss from investments in unconsolidated entities was consistent between the periods under comparison.

Net gain on sales of unconsolidated entities decreased ~~$0.3~~$0.4 million between the periods under comparison as the Operating Partnership recognized a gain on ~~one~~two unconsolidated ~~property~~properties sold in ~~2006.~~2006 as compared to no sales in 2007.

Net gain on sales of land parcels increased $4.3 million primarily as a result of the sale of one vacant land parcel during the six months ended June 30, 2007.

Discontinued operations, net decreased approximately ~~$274.1~~$140.9 million between the periods under comparison. This decrease is primarily due to ~~a decrease in~~ the ~~number~~mix of properties sold during the ~~quarter~~six months ended ~~March 31,~~June 30, 2007 as compared to the ~~quarter~~six months ended ~~March 31,~~June 30, 2006. See Note 13 in the Notes to Consolidated Financial Statements for further discussion.

Comparison of the quarter ended June 30, 2007 to the quarter ended June 30, 2006

For the quarter ended June 30, 2007, income from continuing operations increased by approximately $0.2 million when compared to the quarter ended June 30, 2006. The increase in continuing operations is discussed below.

Revenues from the Second Quarter 2007 Same Store Properties increased $18.6 million primarily as a result of higher rental rates charged to residents. Expenses from the Second Quarter 2007 Same Store Properties increased $4.1 million primarily due to higher payroll, utilities and real estate taxes. The following tables provide comparative same store results and statistics for the Second Quarter 2007 Same Store Properties:

Second Quarter 2007 vs. Second Quarter 2006

Quarter over Quarter Same Store Results/Statistics

$ in Thousands (except for Average Rental Rate) — 130,175 Same Store Units

	Results									Statistics
Description	Revenues			Expenses			NOI			Average Rental Rate (1)			Occupancy		Turnover
Q2 2007	$	447,480		$	166,226		$	281,254		$	1,210		94.8	%	(16.5	%)
Q2 2006	$	428,832		$	162,078		$	266,754		$	1,162		94.7	%	(16.6	%)
Change	$	18,648		$	4,148		$	14,500		$	48		0.1	%	0.1	%
Change	4.3		%	2.6		%	5.4		%	4.1		%

(1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period.

The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the Second Quarter 2007 Same Store Properties:

	Quarter Ended June 30,
	2007			2006
	(Amounts in thousands)

Operating income	$	148,448		$	133,995
Adjustments:
Non-same store operating results	(33,660		)	(9,427		)
Fee and asset management revenue	(2,436		)	(2,320		)
Fee and asset management expense	2,163			2,158
Depreciation	155,032			132,771
General and administrative	11,549			9,338
Impairment	158			239
Same store NOI	$	281,254		$	266,754

Non-same store operating results increased $24.2 million and consist primarily of properties acquired in calendar years 2007 and 2006 as well as our corporate housing business.

See also Note 15 in the Notes to Consolidated Financial Statements for additional discussion regarding the Operating Partnership’s segment disclosures.

Fee and asset management revenues, net of fee and asset management expenses, was consistent between the periods under comparison.

Property management expenses from continuing operations include off-site expenses associated with the self-management of the Operating Partnership’s properties as well as management fees paid to any third party management companies. These expenses decreased by approximately $0.7 million or 2.9%. This decrease is primarily attributable to the expiration of third party management contracts and lower marketing/training costs, partially offset by higher overall payroll-related costs.

Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased $22.3 million primarily as a result of additional depreciation expense on newly acquired properties and capital expenditures for all properties owned.

General and administrative expenses, which include corporate operating expenses, increased $2.2 million primarily as a result of a $2.8 million reimbursement of prior year legal defense costs related to a

certain lawsuit in Florida (See Note 16).

Impairment from continuing operations decreased $81,000 primarily as a result of fewer write-offs for development properties during the quarter ended June 30, 2007.

Interest and other income from continuing operations increased $1.9 million primarily as a result of interest earned on 1031 exchange and earnest money deposits and other short term investments.

Interest expense from continuing operations, including amortization of deferred financing costs, increased approximately $20.8million primarily as a result of higher overall debt levels outstanding due to the Company’s share repurchase activity as well as the timing of acquisitions and dispositions, partially offset by lower overall effective interest rates. During the quarter ended June 30, 2007, the Operating Partnership capitalized interest costs related to development activity of approximately $10.0 million as compared to $3.8 million for the quarter ended June 30, 2006. The effective interest cost on all indebtedness for the quarter ended June 30, 2007 was 6.10% as compared to 6.14% for the quarter ended June 30, 2006.

Loss from investments in unconsolidated entities was consistent between the periods under comparison.

Net gain on sales of unconsolidated entities was consistent between the periods under comparison.

Net gain on sales of land parcels increased $4.3 million primarily as a result of the sale of one vacant land parcel during the quarter ended June 30, 2007.

Discontinued operations, net increased approximately $129.5 million between the periods under comparison. This increase is primarily due to an increase in the number of properties sold and the mix of those properties sold during the quarter ended June 30, 2007 as compared to the quarter ended June 30, 2006. See Note 13 in the Notes to Consolidated Financial Statements for further discussion.

Liquidity and Capital Resources

As of January 1, 2007, the Operating Partnership had approximately $260.3 million of cash and cash equivalents and $470.7 million available under its revolving credit facilities (net of $69.3 million which was restricted/dedicated to support letters of credit and not available for borrowing). After taking into effect the various transactions discussed in the following paragraphs and the net cash provided by operating activities, the Operating ~~Partnership’s~~Partnership’s cash and cash equivalents balance at ~~March 31,~~June 30, 2007 was approximately ~~$171.7~~$66.3 million and the amount available on the Operating ~~Partnership’s~~Partnership’s revolving credit facilities was ~~$481.7~~$649.4 million (net of ~~$70.8~~$70.6 million which was restricted/dedicated to support letters of credit and not available for borrowing). Effective February 28, 2007, the Operating Partnership increased its capacity on its revolving credit facility to $1.5 billion. See Note 10 for further discussion.

During the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, the Operating Partnership generated proceeds from various transactions, which included the following:

· Disposed of 1441 properties, ~~and~~ various individual condominium units and one land parcel, receiving net proceeds of approximately ~~$280.6~~$839.1 million;

· Obtained ~~$33.6~~$346.1 million in net proceeds from the issuance of $350.0 million of five year 5.50% fixed rate public notes;

· Obtained $640.6 million in net proceeds from the issuance of $650.0 million of ten year 5.75% fixed rate public notes and terminated five forward starting swaps designated to hedge the note issuance, receiving net proceeds of $2.4 million;

· Obtained $262.0 million in new mortgage financing; and

· Issued approximately ~~0.3~~0.4 million OP Units and received net proceeds of ~~$10.4~~$14.3 million.

During the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, the above proceeds were primarily utilized to:

· Invest ~~$79.9~~$195.4 million primarily in development projects;

· Acquire 1328 properties and ~~three~~five land parcels, utilizing cash of ~~$677.1 million;~~$1.1 billion;

· Repurchase ~~2.9~~18.5 million OP Units, utilizing cash of ~~$142.8~~$837.3 million (see Note 3);

· Repay $322.6 million of mortgage loans; and

· Repay ~~$141.7~~$50.0 million of ~~mortgage loans.~~fixed rate public notes.

Depending on its analysis of market prices, economic conditions, and other opportunities for the investment of available capital, the Company may repurchase its Common Shares pursuant to its existing share buyback program authorized by the Board of Trustees. On April 27, 2007, the Board of Trustees approved an increase of $200.1 million to the Company’s authorized share repurchase program. On May 24, 2007, the Board of Trustees approved an additional $500.0 million share repurchase program. As of ~~April 27,~~June 30, 2007 and after giving effect to the above ~~increase,~~increases, the Company ~~was authorized to repurchase $500.0~~had $335.8 million ~~of additional Common Shares.~~remaining available for share repurchases. EQR repurchased ~~$201.9~~$866.0 million ~~(4,140,254~~(18,460,206 shares at an average price per share of ~~$48.76)~~$46.91) of its Common Shares during the ~~quarter~~six months ended ~~March 31,~~June 30, 2007. Concurrent with these transactions, the Operating Partnership repurchased and retired ~~4,140,254~~18,460,206 OP Units previously issued to EQR. See Notes 3 and 16 for further discussion.

The Operating Partnership’s total debt summary and debt maturity schedules as of ~~March 31,~~June 30, 2007, are as follows:

Debt Summary as of ~~March 31,~~June 30, 2007

(Amounts in thousands)

Amounts (1)

% of Total

Weighted
Average
Rates (1)

Weighted
Average
Maturities
(years)

Secured

$
3,105,938

36.7
%
5.73
%
6.3

Unsecured

5,367,967

63.3
%
5.69
%
6.5

Total

$
8,473,905

100.0
%
5.71
%
6.4

Fixed Rate Debt:

Secured – Conventional

$
2,158,687

25.5
%
6.23
%
4.5

Secured – Tax Exempt

11,200

0.1
%
6.46
%
19.7

Unsecured – Public/Private

4,162,825

49.1
%
5.69
%
6.6

Unsecured – Tax Exempt

111,390

1.3
%
5.06
%
22.1

Fixed Rate Debt

6,444,102

76.0
%
5.86
%
6.2

Floating Rate Debt:

Secured – Conventional

414,162

4.9
%
6.04
%
2.0

Secured – Tax Exempt

521,889

6.2
%
3.44
%
16.9

Unsecured – Public

146,252

1.7
%
6.53
%
2.2

Unsecured – Revolving Credit Facility

947,500

11.2
%
5.63
%
4.9

Floating Rate Debt

2,029,803

24.0
%
5.13
%
7.2

Total

$
8,473,905

100.0
%
5.71
%
6.4

	Amounts (1)		% of Total		Weighted Average Rates (1)		Weighted Average Maturities (years)
Secured	$	3,188,395	34.2	%	5.73	%	7.4
Unsecured	6,143,139		65.8	%	5.65	%	6.7
Total	$	9,331,534	100.0	%	5.68	%	6.9

Fixed Rate Debt:
Secured — Conventional	$	2,135,082	22.9	%	6.13	%	4.2
Unsecured — Public/Private	5,106,127		54.7	%	5.64	%	6.8
Unsecured — Tax Exempt	111,390		1.2	%	5.06	%	21.8
Fixed Rate Debt	7,352,599		78.8	%	5.79	%	6.3

Floating Rate Debt:
Secured — Conventional	435,516		4.7	%	7.13	%	6.0
Secured — Tax Exempt	617,797		6.6	%	3.20	%	20.2
Unsecured — Public	145,622		1.5	%	6.60	%	1.9
Unsecured — Revolving Credit Facility	780,000		8.4	%	5.65	%	4.7
Floating Rate Debt	1,978,935		21.2	%	5.33	%	9.4
Total	$	9,331,534	100.0	%	5.68	%	6.9

(1) Net of the effect of any derivative instruments. Weighted average rates are for the ~~quarter~~six months ended ~~March 31,~~June 30, 2007.

Note: The Operating Partnership capitalized interest of approximately ~~$7.9~~$17.9 million and ~~$4.0~~$7.8 million for the six months ended June 30, 2007 and 2006, respectively. The Operating Partnership capitalized interest of approximately $10.0 million and $3.8 million for the quarters ended ~~March 31,~~June 30, 2007 and 2006, respectively.

Debt Maturity Schedule as of ~~March 31,~~June 30, 2007

(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)

2007

$
237,777

$
85,147

$
322,924

3.8
%
6.60
%
6.67
%
2008

479,938

119,571

599,509

7.1
%
6.65
%
6.61
%
2009

457,821

380,367

838,188

9.9
%
6.35
%
5.35
%
2010

279,576

—

279,576

3.3
%
7.05
%
7.05
%
2011 (2)

1,448,748

24,150

1,472,898

17.4
%
5.52
%
5.49
%
2012 (3)

555,380

947,500

1,502,880

17.7
%
6.49
%
5.94
%
2013

567,010

—

567,010

6.7
%
5.93
%
5.93
%
2014

503,771

34,460

538,231

6.4
%
5.27
%
5.26
%
2015

357,579

—

357,579

4.2
%
6.40
%
6.40
%
2016

1,088,845

—

1,088,845

12.8
%
5.32
%
5.32
%
2017+

467,657

438,608

906,265

10.7
%
6.70
%
5.55
%
Total

$
6,444,102

$
2,029,803

$
8,473,905

100.0
%
5.97
%
5.77
%

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)
2007	$	156,908	$	40,946	$	197,854	2.1	%	6.11	%	6.30	%
2008	470,272		136,471		606,743		6.5	%	6.65	%	6.56	%
2009	457,504		386,711		844,215		9.0	%	6.35	%	5.37	%
2010	279,484		1,654		281,138		3.0	%	7.05	%	7.05	%
2011 (2)	1,475,336		24,150		1,499,486		16.1	%	5.55	%	5.52	%
2012 (3)	890,335		780,000		1,670,335		17.9	%	6.09	%	5.87	%
2013	565,655		—		565,655		6.1	%	5.93	%	5.93	%
2014	504,708		—		504,708		5.4	%	5.27	%	5.27	%
2015	355,491		—		355,491		3.8	%	6.41	%	6.41	%
2016	1,089,241		—		1,089,241		11.7	%	5.32	%	5.32	%
2017+	1,107,665		609,003		1,716,668		18.4	%	6.14	%	5.66	%
Total	$	7,352,599	$	1,978,935	$	9,331,534	100.0	%	5.91	%	5.75	%

(1)Net of the effect of any derivative instruments. Weighted average rates are as of ~~March 31,~~June 30, 2007.

(2)Includes $650.0 million of 3.85% convertible unsecured debt with a final maturity of 2026. The notes are callable by the Operating Partnership on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021.

(3)Includes ~~$947.5~~$780.0 million outstanding on the Operating Partnership’s $1.5 billion unsecured revolving credit facility, which matures on February 28, 2012.

The following table provides a summary of the Operating Partnership’s unsecured debt as of ~~March 31,~~June 30, 2007:

Unsecured Debt Summary as of ~~March 31,~~June 30, 2007

(Amounts in thousands)

Unamortized

Coupon

Due

Face

Premium/

Net

Rate

Date

Amount

(Discount)

Balance

Fixed Rate Notes:

7.625
%
04/15/07

$
50,000

$
7

$
50,007

6.900
%
08/01/07

50,000

(8
)
49,992

7.540
%
09/01/07
  (1)
4,286

—

4,286

4.861
%
11/30/07

50,000

—

50,000

7.500
%
08/15/08
  (1)
130,000

—

130,000

4.750
%
06/15/09
  (2)
300,000

(605
)
299,395

6.950
%
03/02/11

300,000

3,445

303,445

6.625
%
03/15/12

400,000

(1,456
)
398,544

5.200
%
04/01/13

400,000

(710
)
399,290

5.250
%
09/15/14

500,000

(458
)
499,542

6.584
%
04/13/15

300,000

(892
)
299,108

5.125
%
03/15/16

500,000

(480
)
499,520

5.375
%
08/01/16

400,000

(1,732
)
398,268

7.125
%
10/15/17

150,000

(684
)
149,316

7.570
%
08/15/26

140,000

—

140,000

3.850
%
08/15/26
  (3)
650,000

(7,888
)
642,112

Floating Rate Adjustments

  (2)
(150,000
)
—

(150,000
)

4,174,286

(11,461
)
4,162,825

Fixed Rate Tax Exempt Notes:

4.750
%
12/15/28
  (1)
35,600

—

35,600

5.200
%
06/15/29
  (1)
75,790

—

75,790

111,390

—

111,390

Floating Rate Notes:

06/15/09
  (2)
150,000

—

150,000

FAS 133 Adjustments - net

  (2)
(3,748
)
—

(3,748
)

146,252

—

146,252

Revolving Credit Facility:

02/28/12
  (4)
947,500

—

947,500

Total Unsecured Debt

$
5,379,428

$
(11,461
)
$
5,367,967

								Unamortized
	Coupon		Due		Face			Premium/			Net
	Rate		Date		Amount			(Discount)			Balance

Fixed Rate Notes:
	6.900	%	08/01/07		$	50,000		$	(2	)	$	49,998
	7.540	%	09/01/07	(1)	4,286			—			4,286
	4.861	%	11/30/07		50,000			—			50,000
	7.500	%	08/15/08	(1)	130,000			—			130,000
	4.750	%	06/15/09	(2)	300,000			(537		)	299,463
	6.950	%	03/02/11		300,000			3,254			303,254
	6.625	%	03/15/12		400,000			(1,382		)	398,618
	5.500	%	10/01/12		350,000			(1,812		)	348,188
	5.200	%	04/01/13		400,000			(681		)	399,319
	5.250	%	09/15/14		500,000			(443		)	499,557
	6.584	%	04/13/15		300,000			(865		)	299,135
	5.125	%	03/15/16		500,000			(466		)	499,534
	5.375	%	08/01/16		400,000			(1,685		)	398,315
	5.750	%	06/15/17		650,000			(5,086		)	644,914
	7.125	%	10/15/17		150,000			(668		)	149,332
	7.570	%	08/15/26		140,000			—			140,000
	3.850	%	08/15/26	(3)	650,000			(7,786		)	642,214
Floating Rate Adjustments				(2)	(150,000		)	—			(150,000		)
					5,124,286			(18,159		)	5,106,127
Fixed Rate Tax Exempt Notes:
	4.750	%	12/15/28	(1)	35,600			—			35,600
	5.200	%	06/15/29	(1)	75,790			—			75,790
					111,390			—			111,390

Floating Rate Notes:
			06/15/09	(2)	150,000			—			150,000
FAS 133 Adjustments - net				(2)	(4,378		)	—			(4,378		)
					145,622			—			145,622

Revolving Credit Facility:			02/28/12	(4)	780,000			—			780,000
Total Unsecured Debt					$	6,161,298		$	(18,159	)	$	6,143,139

(1) Notes are private. All other unsecured debt is public.

(2) $150.0 million in fair value interest rate swaps converts 50% of the 4.750% Notes due June 15, 2009 to a floating interest rate.

(3) Convertible notes mature on August 15, 2026. The notes are callable by the Operating Partnership on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021.

(4) Represents amount outstanding on the Operating Partnership’s $1.5 billion unsecured revolving credit facility which matures on February 28, 2012.

As of ~~May 9,~~August 1, 2007, an unlimited amount of debt securities remains available for issuance by the Operating Partnership under a registration statement that became automatically effective upon filing with the SEC in June 2006 (under SEC regulations enacted in 2005, the registration statement automatically expires

on June 29, 2009 and does not contain a maximum issuance amount) and $956.5 million in equity securities remains available for issuance by EQR under a registration statement the SEC declared effective in February

1998. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of the Operating Partnership 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 Operating Partnership’s “Consolidated Debt-to-Total Market Capitalization Ratio” as of ~~March 31,~~June 30, 2007 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 OP Units at the equivalent market value of the closing price of EQR’s Common Shares on the New York Stock Exchange; (ii) the “OP Unit Equivalent” of all convertible preference ~~units/interests;~~units; and (iii) the liquidation value of all perpetual preference units outstanding.

Capital Structure as of ~~March 31,~~June 30, 2007

(Amounts in thousands except for unit and per unit amounts)

Secured Debt			$	3,105,938	36.7	%					$	3,188,395	34.2	%
Unsecured Debt			4,420,467		52.1	%					5,363,139		57.5	%
Revolving Credit Facility			947,500		11.2	%					780,000		8.3	%
Total Debt			8,473,905		100.0	%	35.5	%			9,331,534		100.0	%	40.1	%

OP Units	310,058,285								296,174,990
OP Unit Equivalents (see below)	838,519								491,520
Total outstanding at quarter-end	310,896,804								296,666,510
EQR Common Share Price at March 31, 2007	$	48.23
EQR Common Share Price at June 30, 2007									$	45.63
			14,994,553		97.6	%					13,536,893		97.3	%
Perpetual Preference Units (see below)			375,000		2.4	%					375,000		2.7	%
Total Equity			15,369,553		100.0	%	64.5	%			13,911,893		100.0	%	59.9	%

Total Market Capitalization			$	23,843,458			100.0	%			$	23,243,427	100.0	%

Convertible ~~Preference Units/Interests as of March 31, 2007~~

~~(Amounts in thousands except for unit/interest and per unit/interest amounts)~~

Series

Redemption
Date

Outstanding
Units/Interests

Liquidation
Value

Annual
Dividend Per
Unit/Interest

Annual
Dividend
Amount

Weighted
Average Rate

Conversion
Ratio

OP Unit
Equivalents

Preference Units:

7.00% Series E

11/1/98

419,216

$
10,480

$
1.75

$
734

1.1128

466,504

7.00% Series H

6/30/98

27,634

691

1.75

48

1.4480

40,014

Preference Interests:

7.625% Series J

12/14/06

230,000

11,500

3.8125

877

1.4108

324,484

Junior Preference Units:

8.00% Series B

7/29/09

7,367

184

2.00

15

1.020408

7,517

Total Convertible Preference Units/Interests

684,217

$
22,855

$
1,674

7.32
%

838,519

~~Perpetual~~ Preference Units as of ~~March 31,~~June 30, 2007

(Amounts in thousands except for unit and per unit amounts)

Series	Redemption Date	Outstanding Units	Liquidation Value		Annual Dividend Per Unit		Annual Dividend Amount		Weighted Average Rate		Conversion Ratio	OP Unit Equivalents
Preference Units:
7.00% Series E	11/1/98	401,716	$	10,043	$	1.75	$	703			1.1128	447,030
7.00% Series H	6/30/98	25,534	638		1.75		45				1.4480	36,973
Junior Preference Units:
8.00% Series B	7/29/09	7,367	184		2.00		15				1.020408	7,517
Total Convertible Preference Units		434,617	$	10,865			$	763	7.02	%		491,520

Series

Redemption
Date

Outstanding
Units

Liquidation
Value

Annual
Dividend
PerUnit

Annual
Dividend
Amount

Weighted
Average
Rate

Preference Units:

8.60% Series D

7/15/07

700,000

$
175,000

$
21.50

$
15,050

8.29% Series K

12/10/26

1,000,000

50,000

4.145

4,145

6.48% Series N

6/19/08

600,000

150,000

16.20

9,720

Total Perpetual Preference Units

2,300,000

$
375,000

$
28,915

7.71
%

Perpetual Preference Units as of June 30, 2007

(Amounts in thousands except for unit and per unit amounts)

Series	Redemption Date	Outstanding Units	Liquidation Value		Annual Dividend Per Unit		Annual Dividend Amount		Weighted Average Rate
Preference Units:
8.60% Series D (1)	7/15/07	700,000	$	175,000	$	21.50	$	15,050
8.29% Series K	12/10/26	1,000,000	50,000		4.145		4,145
6.48% Series N	6/19/08	600,000	150,000		16.20		9,720
Total Perpetual Preference Units		2,300,000	$	375,000			$	28,915	7.71	%

(1) The Operating Partnership redeemed its Series D Preference Units on July 16, 2007 at its liquidation value of $175.0 million.

The Operating Partnership expects to meet its short-term liquidity requirements, including capital

expenditures related to maintaining its existing properties and certain scheduled unsecured note and mortgage

note repayments, generally through its working capital, net cash provided by operating activities and borrowings under its revolving credit facilities. The Operating Partnership considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions. The Operating Partnership 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 unsecured notes and equity securities, including additional OP Units, and proceeds received from the disposition of certain properties. In addition, the Operating Partnership 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 Operating Partnership must maintain in order to comply with covenants under its unsecured notes and line of credit. Of the ~~$17.9~~$18.1 billion in investment in real estate on the Operating Partnership’s balance sheet at ~~March 31,~~June 30, 2007, ~~$12.3~~$12.5 billion or ~~69.1%~~69.0%, was unencumbered.

The Operating Partnership’s senior debt credit ratings from Standard & Poors (“S&P”), Moody’s and Fitch are A-, Baa1 ~~(positive outlook)~~ and A,A-, respectively. EQR’s preferred equity ratings from S&P, Moody’s and Fitch are BBB+, Baa2 ~~(positive outlook)~~ and A-BBB+, respectively.

The Operating Partnership has a long-term revolving credit facility with potential borrowings of up to $1.5 billion which matures in February 2012. This facility may, among other potential uses, be used to fund property acquisitions, costs for certain properties under development and short term liquidity requirements. As of ~~May 4,~~August 1, 2007, ~~$1.26 billion~~$945.0 million was outstanding under this facility.

See Note 16 in the Notes to Consolidated Financial Statements for discussion of the events which occurred subsequent to ~~March 31,~~June 30, 2007.

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 unit). These include:

·o flooring such as carpets, hardwood, vinyl, linoleum or tile;

·o appliances;

·o mechanical equipment such as individual furnace/air units, hot water heaters, etc;

·o furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans, sinks, tubs, toilets, mirrors, countertops, etc; and

·o blinds/shades.

All replacements are depreciated over a five-year estimated useful life. We expense as incurred all make-ready maintenance and turnover costs such as cleaning, interior painting of individual units and the repair of any replacement item noted above.

· Building improvements (outside the unit). These include:

·o roof replacement and major repairs;

·o paving or major resurfacing of parking lots, curbs and sidewalks;

·o amenities and common areas such as pools, exterior sports and playground equipment, lobbies, clubhouses, laundry rooms, alarm and security systems and offices;

·o major building mechanical equipment systems;

·o interior and exterior structural repair and exterior painting and siding;

·o major landscaping and grounds improvement; and

·o vehicles and office and maintenance equipment.

All building improvements are depreciated over a five to ten-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 ~~quarter~~six months ended ~~March 31,~~June 30, 2007, our actual improvements to real estate totaled approximately ~~$57.4~~$117.8 million. This includes the following (amounts in thousands except for unit and per unit amounts):

Capitalized Improvements to Real Estate

For the ~~Quarter~~Six Months Ended ~~March 31,~~June 30, 2007

Total Units
(1)

Replacements

Avg. Per
Unit

Building
Improvements

Avg. Per
Unit

Total

Avg. Per
Unit

Established Properties (2)

121,126

$
10,093

$
83

$
17,230

$
142

$
27,323

$
225

New Acquisition Properties (3)

23,596

1,328

58

15,080

660

16,408

718

Other (4)

7,196

4,028

9,595

13,623

Total

151,918

$
15,449

$
41,905

$
57,354

	Total Units (1)	Replacements		Avg. Per Unit		Building Improvements		Avg. Per Unit		Total		Avg. Per Unit

Established Properties (2)	114,823	$	19,495	$	170	$	37,141	$	323	$	56,636	$	493
New Acquisition Properties (3)	25,909	4,096		172		27,987		1,176		32,083		1,348
Other (4)	7,333	9,486				19,640				29,126
Total	148,065	$	33,077			$	84,768			$	117,845

(1) Total units exclude 10,846 unconsolidated units and ~~3,560~~3,621 military housing (fee managed) units.

(2) Wholly Owned Properties acquired prior to January 1, 2005.

(3) Wholly Owned Properties acquired during 2005, 2006 and 2007. Per unit amounts are based on a weighted average of ~~22,845~~23,807 units.

(4) Includes properties either partially owned or sold during the period, commercial space, corporate housing, condominium conversions and ~~$4.7~~$9.8 million included in building improvements spent on ~~thirteen~~fifteen specific assets related to major renovations and repositioning of these assets.

The Operating Partnership expects to fund approximately ~~$94.0~~$58.2 million for capital expenditures for replacements and building improvements for all established properties for the remainder of 2007. This includes an average of approximately $1,000 per unit for capital improvements for established properties.

During the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, the Operating Partnership’s total non-real estate capital additions, such as computer software, computer equipment, and furniture and fixtures and leasehold improvements to the Operating Partnership’s property management offices and its corporate offices, were approximately ~~$1.7~~$4.2 million. The Operating Partnership expects to fund approximately ~~$5.3~~$3.0 million in total additions to non-real estate property for the remainder of 2007.

Improvements to real estate and additions to non-real estate property were funded from net cash provided by operating activities.

Derivative Instruments

In the normal course of business, the Operating Partnership is exposed to the effect of interest rate changes. The Operating Partnership limits these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments.

The Operating Partnership 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 Operating Partnership has not sustained a material loss from those instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives.

See Note 11 in the Notes to Consolidated Financial Statements for additional discussion of derivative

instruments at ~~March 31,~~June 30, 2007.

Other

Total distributions paid in ~~April~~July 2007 amounted to ~~$151.6~~$146.1 million (excluding distributions on Partially Owned Properties), which included certain distributions declared during the ~~first~~second quarter ended ~~March 31,~~June 30, 2007.

Off-Balance Sheet Arrangements and Contractual Obligations

The Operating Partnership has co-invested in various properties that are unconsolidated and accounted for under the equity method of accounting. Management does not believe these investments have a materially different impact upon the Operating Partnership’s liquidity, capital resources, credit or market risk than its property management and ownership activities. During 2000 and 2001, the Operating Partnership entered into institutional ventures with an unaffiliated partner. At the respective closing dates, the Operating Partnership sold and/or contributed 45 properties containing 10,846 units to these ventures and retained a 25% ownership interest in the ventures. The Operating Partnership’s joint venture partner contributed cash equal to 75% of the agreed-upon equity value of the properties comprising the ventures, which was then distributed to the Operating Partnership. The Operating Partnership’s strategy with respect to these ventures was to reduce its concentration of properties in a variety of markets.

As of ~~March 31,~~June 30, 2007, the Operating Partnership has ~~ten~~nine projects totaling ~~3,228~~3,026 units in various stages of development with estimated completion dates ranging through ~~June~~September 30, 2009. ~~The development agreements currently in place are discussed in detail in~~See Note 14 ofin the ~~Operating Partnership’s~~Notes to Consolidated Financial ~~Statements.~~Statements for additional discussion.

See also Notes 2 and 6 in the Notes to Consolidated Financial Statements for additional discussion regarding the Operating Partnership’s investments in partially owned entities.

The Operating ~~Partnership’s~~Partnership’s contractual obligations for the next five years and thereafter have not changed materially from the amounts and disclosures included in its annual report on Form 10-K, other than as it relates to scheduled debt maturities. See the updated debt maturity schedule included in Liquidity and Capital Resources for further discussion.

Critical Accounting Policies and Estimates

The Operating Partnership has identified six 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 assessments is consistently applied and produces financial information that fairly presents the results of operations for all periods presented. The six critical accounting policies are:

Impairment of Long-Lived Assets, Including Goodwill

The Operating Partnership periodically evaluates its long-lived assets, including its investments in real estate and goodwill, for indicators of permanent impairment. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions, expected holding period of each asset and legal and environmental concerns. Future events could occur which would cause the Operating Partnership to conclude that impairment indicators exist and an impairment loss is warranted.

Depreciation of Investment in Real Estate

The Operating Partnership depreciates the building component of its investment in real estate over a 30-year estimated useful life, building improvements over a 5-year to 10-year estimated useful life and both

the furniture, fixtures and equipment and replacements components over a 5-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 discussion of the policy with respect to capitalization vs. expensing of fixed asset/repair and maintenance costs. In addition, the Operating Partnership capitalizes the payroll and associated costs of employees directly responsible for and who spend all of their time on the supervision of major capital and/or renovation projects. These costs are reflected on the balance sheet as an increase to depreciable property.

The Operating Partnership follows the guidance in SFAS No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, for all development projects and uses its professional judgment in determining whether such costs meet the criteria for capitalization or must be expensed as incurred. The Operating Partnership capitalizes interest, real estate taxes and insurance and payroll and associated costs for those individuals directly responsible for and who spend all of 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 sheet as construction in progress for each specific property. The Operating Partnership 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 renovation at selected properties when additional incremental employees are hired.

Fair Value of Financial Instruments, Including Derivative Instruments

The valuation of financial instruments under SFAS No. 107 and SFAS No. 133 and its amendments (SFAS Nos. 137/138/149) requires the Operating Partnership to make estimates and judgments that affect the fair value of the instruments. The Operating Partnership, 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 Operating Partnership bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial statements.

Revenue Recognition

Rental income attributable to leases is recorded when due from residents and is recognized monthly as it is earned, which is not materially different than on a straight-line basis. Leases entered into between a resident and a property for the rental of an apartment unit are generally year-to-year, renewable upon consent of both parties on an annual or monthly basis. Fee and asset management revenue and interest income are recorded on an accrual basis.

Share-Based Compensation

The Company accounts for its share-based compensation in accordance with SFAS No. 123(R), Share-Based Payment, effective January 1, 2006, which results in compensation expense being recorded based on the fair value of the share compensation granted.

Any Common Shares issued pursuant to EQR’s incentive equity compensation and employee share purchase plans will result in the Operating Partnership issuing OP Units to EQR on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. This model is only one method of valuing options and the Company’s use of this model should not be interpreted as an endorsement of its accuracy. Because the Company’s share options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure

of the fair value of its share options and the actual value of the options may be significantly different.

Funds From Operations

For the ~~quarter~~six months ended ~~March 31,~~June 30, 2007, Funds From Operations (“FFO”) available to OP Units decreased ~~$1.4~~by $8.8 million or ~~0.8%~~2.4%, as compared to the six months ended June 30, 2006.

For the quarter ended June 30, 2007, FFO available to OP Units decreased $7.4 million, or 3.8%, as compared to the quarter ended ~~March 31,~~June 30, 2006.

The following is a reconciliation of net income to FFO available to OP Units for the six months and quarters ended ~~March 31,~~June 30, 2007 and 2006:

Quarter Ended March 31,

2007

2006

Net income

$
134,346

$
405,548

Adjustments:

Depreciation

152,821

128,676

Depreciation – Non-real estate additions

(2,035
)
(1,796
)
Depreciation – Partially Owned and Unconsolidated Properties

943

1,550

Net gain on sales of unconsolidated entities

—

(329
)
Discontinued operations:

Depreciation

1,853

18,047

Net (gain) on sales of discontinued operations

(111,767
)
(372,501
)
Net incremental gain on sales of condominium units

4,692

7,127

Provision for income taxes – Non-condo sales

(187
)
—

FFO (1)(2)

180,666

186,322

Preferred distributions

(7,647
)
(11,194
)
Premium on redemption of Preference Interests

—

(674
)
FFO available to OP Units

$
173,019

$
174,454

Funds From Operations

(Amounts in thousands)

(Unaudited)

	Six Months Ended June 30,						Quarter Ended June 30,
	2007			2006			2007			2006
Net income	$	435,177		$	576,710		$	300,831		$	171,162
Adjustments:
Depreciation	304,052			257,683			155,032			132,771
Depreciation — Non-real estate additions	(4,173		)	(3,682		)	(2,138		)	(1,886		)
Depreciation — Partially Owned and Unconsolidated Properties	2,081			2,563			1,138			1,013
Net gain on sales of unconsolidated entities	—			(352		)	—			(23		)
Discontinued operations:
Depreciation	7,689			39,670			2,035			17,859
Net (gain) on sales of discontinued operations	(385,323		)	(502,297		)	(273,556		)	(129,796		)
Net incremental gain on sales of condominium units	13,594			18,553			8,902			11,426
Provision for income taxes — Non-condo sales	(187		)	—			—			—

FFO (1) (2)	372,910			388,848			192,244			202,526
Preferred distributions	(15,274		)	(21,724		)	(7,627		)	(10,530		)
Premium on redemption of Preference Interests	—			(683		)	—			(9		)
FFO available to OP Units (1) (2)	$	357,636		$	366,441		$	184,617		$	191,987

(1) The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Operating Partnership commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO available to OP Units is calculated on a basis consistent with net income available to OP Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preference units/interests in accordance with accounting principles generally accepted in the United States.

(2) The Operating Partnership believes that FFO isand FFO available to OP Units are helpful to investors as a supplemental ~~measure~~measures of the operating performance of a real estate company, because ~~it is a~~they are recognized ~~measure~~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~~

(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 OP Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. FFO ~~does~~and FFO available to OP Units do not represent net income, net income available to OP Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO and FFO available to OP Units should not be exclusively considered as ~~an alternative~~alternatives to net income, net income available to OP Units or to net cash flows from operating activities as determined by GAAP or as ~~a measure~~measures of liquidity. The Operating ~~Partnership’s~~Partnership’s calculation of FFO and FFO available to OP Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Operating Partnership’s market risk has not changed materially from the amounts and information reported in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, to the Operating Partnership’s Form 10-K for the year ended December 31, 2006. See also Note 11 in the Notes to Consolidated Financial Statements for additional discussion of derivative instruments.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures:

Effective as of ~~March 31,~~June 30, 2007, 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 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 Operating Partnership identified in connection with the Operating ~~Partnership’s~~Partnership’s evaluation referred to above that occurred during the ~~first~~second quarter of 2007 that have materially affected, or are reasonably likely to materially affect, the Operating ~~Partnership’s~~Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Operating Partnership 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 Operating Partnership 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’ fees. The Operating Partnership 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 Operating ~~Partnership.~~Partnership. Accordingly, the Operating Partnership is defending the suit vigorously. Due to the pendency of the Operating ~~Partnership’s~~Partnership’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 and as a result, no amounts have been accrued at ~~March 31,~~June 30, 2007. While no assurances can be given, the Operating Partnership does not believe that the suit, if adversely determined, will have a material adverse effect on the Operating ~~Partnership.~~Partnership.

Item 1A. Risk Factors

There have been no material changes related to the risk factors that were discussed in Part I, Item 1A of the Operating Partnership’s Form 10-K for the year ended December 31, 2006.

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

The Operating Partnership repurchased the following OP Units during the quarter ended ~~March 31,~~June 30, 2007:

Period

Total Number
of OP Units
Purchased (1)

Average Price
Paid Per Unit (1)

Total Number of OP
Units Purchased as Part
of Publicly Announced
Plans or Programs (1)

Dollar Value of OP
Units that May Yet
Be Purchased
Under the Plans or
Programs (1)

February 2007

786,254

$
50.80

786,254

$
461,831,676

March 2007

3,354,000

$
48.29

3,354,000

$
299,881,328

First Quarter 2007

4,140,254

$
48.76

4,140,254

Period	Total Number of OP Units Purchased (1)	Average Price Paid Per Unit (1)		Total Number of OP Units Purchased as Part of Publicly Announced Plans or Programs (1)	Dollar Value of OP Units that May Yet Be Purchased Under the Plans or Programs (1)

May 2007	8,297,552	$	46.30	8,297,552	$	615,841,198
June 2007	6,022,400	$	46.49	6,022,400	$	335,849,333
Second Quarter 2007	14,319,952	$	46.38	14,319,952

(1) The OP Units repurchased during the quarter ended ~~March 31,~~June 30, 2007 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. Of the total shares repurchased, ~~80,054~~1,052 shares were repurchased at an average price of ~~$54.37~~$50.75 per share to cover the minimum statutory tax withholding obligations related to the vesting of employees’ restricted shares. The remaining ~~4,060,200~~14,318,900 shares were repurchased in the open market at an average price of ~~$48.65~~$46.38 per share. As of ~~March 31,~~June 30, 2007, transactions to repurchase ~~1,245,100~~627,300 of the ~~4,140,254~~14,319,952 Common Shares had not yet settled. On April 27, 2007, the Board of Trustees approved an increase of $200.1 million to the Company’s authorized share repurchase program. ~~As a result under this program,~~On May 24, 2007, the Board of Trustees approved an additional $500.0 million share repurchase program. Considering the above additional authorizations and the repurchase activity for the quarter, the Company ~~may repurchase in open market or privately negotiated transactions up to $500.0~~has $335.8 million remaining available for share repurchases as of ~~its Common Shares, of which the same amount remains available at April 27, 2007 ($299.9 million was remaining at March 31, 2007 prior to the authorization increase).~~June 30, 2007.

Item 6. Exhibits – — See the Exhibit Index

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		ERP OPERATING LIMITED ~~PARTNERSHIP~~
			~~BY: EQUITY RESIDENTIAL~~
			~~ITS GENERAL PARTNER~~
PARTNERHIP

~~Date:~~	~~May 9, 2007~~BY: EQUITY RESIDENTIAL		~~By:~~		~~/s/ Donna Brandin~~
			~~Donna Brandin~~
ITS GENERAL PARTNER				~~Executive Vice President and~~
				~~Chief Financial Officer~~


Date: August 7, 2007	~~May 9, 2007~~By:	/s/ Donna Brandin
		~~By:~~Donna Brandin
		~~/s/ Ian S. Kaufman~~Executive Vice President and
		Chief Financial Officer
			~~Ian S. Kaufman~~

Date: August 7, 2007	By:	/s/ Ian S. Kaufman
		Ian S. Kaufman
		First Vice President and

		Chief Accounting Officer

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 number for our Exchange Act filings referenced below is 0-24920.

Exhibit	Description	Location
10.1	Third Amendment to ~~Revolving Credit Agreement.~~Equity Residential 1993 Share Option and Share Award Plan.	Included as Exhibit 10.1 to the Company’s Form 10-Q for the quarterly period ended ~~March 31,~~June 30, 2007.

10.2	Revolving Credit Agreement dated as of February 28, 2007 among ERP Operating Limited Partnership, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., as syndication agent, Banc of America Securities LLC and J.P. Morgan Securities Inc., as joint lead arrangers and joint book runners, Suntrust Bank, Wachovia Bank, National Association, Wells Fargo Bank, N.A., LaSalle Bank National Association, The Royal Bank of Scotland plc, and US Bank National Association, as co-documentation agent, and a syndicate of other banks (the “Credit Agreement”).Sixth Amendment to Equity Residential 2002 Share Incentive Plan.	Included as Exhibit ~~10.1~~10.2 to the Company’s Form ~~8-K dated February 28, 2007, filed on March 5,~~10-Q for the quarterly period ended June 30, 2007.

10.3	Revolving Credit Agreement dated as of May 7, 2007 between ERP Operating Limited Partnership and Bank of America, N.A., as administrative agent and a lender, JPMorgan Chase Bank, N.A., as syndication agent and a lender, and Deutsche Bank AG, New York Branch, as documentation agent and a lender (the “Credit Agreement”).	Included as Exhibit 10.1 to the Company’s Form 8-K dated May 7, 2007, filed on May 10, 2007.

10.4	Guaranty of Payment made as of ~~February 28,~~May 7, 2007 between Equity Residential and Bank of America, N.A., as administrative agent for the ~~banks~~lenders party to the Credit Agreement.	Included as Exhibit 10.2 to the Company’s Form 8-K dated ~~February 28,~~May 7, 2007, filed on ~~March 5,~~May 10, 2007.

31.1	Certification of David J. Neithercut, Chief Executive Officer of Registrant’s General Partner.	Attached herein.

31.2	Certification of Donna Brandin, Chief Financial Officer of Registrant’s General Partner.	Attached herein.

32.1	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.

32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Donna Brandin, Chief Financial Officer of Registrant’s General Partner.	Attached herein.

Illinois		36-3894853
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)


Two North Riverside Plaza, Chicago, Illinois		60606
(Address of Principal Executive Offices)		(Zip Code)

	2007

OP Units outstanding at January 1,	313,466,216

Issued to General Partner:
Conversion of Series E Preference Units	~~17,358~~36,831
Conversion of Series H Preference Units	~~724~~3,764
Conversion of Series J Preference Interests	324,484
Exercise of EQR options	~~217,165~~304,588
Employee Share Purchase Plan	~~77,537~~106,617
Restricted EQR share grants, net	~~419,539~~392,696

OP Units Other:
Repurchased and retired	(~~4,140,254~~18,460,206	)

OP Units outstanding at ~~March 31,~~June 30,	~~310,058,285~~296,174,990

	2007

Limited Partner OP Units outstanding at January 1,	19,914,583

Conversion of Limited Partner OP Units to EQR Common Shares	(~~603,298~~874,143	)
Limited Partner OP Units Outstanding at ~~March 31,~~June 30,	~~19,311,285~~19,040,440
Limited Partner OP Units Ownership Interest in Operating Partnership	~~6.2~~6.4	%

	June 30, 2007			December 31, 2006
Land	$	3,582,455		$	3,217,672
Depreciable property:
Buildings and improvements	12,970,642			12,563,807
Furniture, fixtures and equipment	885,339			812,552
Projects under development:
Land	113,513			137,505
Construction-in-progress	279,103			261,626
Land held for development:
Land	263,114			202,695
Construction-in-progress	50,246			39,318
Investment in real estate	18,144,412			17,235,175
Accumulated depreciation	(3,125,555		)	(3,022,480		)
Investment in real estate, net	$	15,018,857		$	14,212,695

3.Partners’ Capital

The following tables present the changes in the Operating Partnership’sPartnership’s issued and outstanding OP Units and the limited partners’ OP Units for the quartersix months ended March 31,June 30, 2007:

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
		x ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF~~ THE SECURITIES EXCHANGE ACT OF 1934

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

	Properties	Units	Properties	Units
Wholly Owned Properties	545	146,473	535	142,620
Partially Owned Properties:
Consolidated	27	5,445	27	5,445
Unconsolidated	45	10,846	45	10,846
Military Housing (Fee Managed)	1	3,560	1	3,621
	618	166,324	608	162,532

			Annual		Amounts in thousands
	Redemption Date (1) (2)	Conversion Rate (2)	Dividend per Unit (3)		March 31, 2007		December 31, 2006
Preference Units:

8.60% Series D Cumulative Redeemable Preference Units; liquidation value $250 per unit; 700,000 units issued and outstanding at March 31, 2007 and December 31, 2006 (4)	7/15/07	N/A	$	21.50	$	175,000	$	175,000

7.00% Series E Cumulative Convertible Preference Units; liquidation value $25 per unit; 419,216 and 434,816 units issued and outstanding at March 31, 2007 and December 31, 2006, respectively	11/1/98	1.1128	$	1.75	10,480		10,871

7.00% Series H Cumulative Convertible Preference Units; liquidation value $25 per unit; 27,634 and 28,134 units issued and outstanding at March 31, 2007 and December 31, 2006, respectively	6/30/98	1.4480	$	1.75	691		703

8.29% Series K Cumulative Redeemable Preference Units; liquidation value $50 per unit; 1,000,000 units issued and outstanding at March 31, 2007 and December 31, 2006	12/10/26	N/A	$	4.145	50,000		50,000

6.48% Series N Cumulative Redeemable Preference Units; liquidation value $250 per unit; 600,000 units issued and outstanding at March 31, 2007 and December 31, 2006 (4)	6/19/08	N/A	$	16.20	150,000		150,000

					$	386,171	$	386,574

			Annual		Amounts in thousands
	Redemption Date (2)	Conversion Rate (2)	Dividend per Unit (1)		March 31, 2007		December 31, 2006
Junior Preference Units:

Series B Junior Convertible Preference Units; liquidation value $25 per unit; 7,367 units issued and outstanding at March 31, 2007 and December 31, 2006	07/29/09	1.020408	$	2.00	$	184	$	184
					$	184	$	184

	March 31, 2007			December 31, 2006
Land	$	3,391,105		$	3,217,672
Depreciable property:
Buildings and improvements	12,918,797			12,563,807
Furniture, fixtures and equipment	865,650			812,552
Projects under development:
Land	125,006			137,505
Construction-in-progress	259,528			261,626
Land held for development:
Land	246,114			202,695
Construction-in-progress	50,876			39,318
Investment in real estate	17,857,076			17,235,175
Accumulated depreciation	(3,103,329		)	(3,022,480		)
Investment in real estate, net	$	14,753,747		$	14,212,695

	Properties	Units	Purchase Price		Properties	Units	Purchase Price
Rental Properties	13	3,899	$	674,156	28	6,209	$	1,225,785
Land Parcels (three)	—	—	42,450
Land Parcels (five)					—	—	65,450
	13	3,899	$	716,606	28	6,209	$	1,291,235

	Properties	Units	Sales Price
Rental Properties	12	3,711	$	253,930
Condominium Units	2	157	37,280
	14	3,868	$	291,210

	Properties/ Parcels	Units	Purchase Price		Properties/ Parcels	Units	Purchase Price
Operating Properties	6	1,528	$	361,200	5	1,061	$	329,400
Land Parcels	1	—	53,052		5	—	143,653
Total	7	1,528	$	414,252	10	1,061	$	473,053

	Fair Value Hedges (1)			Forward Starting Swaps (2)			Development Cash Flow Hedges (3)
Current Notional Balance	$	370,000		$	100,000		$	—
Lowest Possible Notional	$	370,000		$	100,000		$	—
Highest Possible Notional	$	370,000		$	100,000		$	54,947
Lowest Interest Rate	3.245		%	5.596		%	N/A
Highest Interest Rate	3.787		%	5.596		%	5.850		%
Earliest Maturity Date	2009			2017			2009
Latest Maturity Date	2009			2017			2009
Estimated Asset (Liability) Fair Value	$	(10,713	)	$	(3,230	)	$	19

(1)	Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Operating Partnership’s period of ownership.
(2)	Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale.

	Quarter Ended March 31, 2007											Six Months Ended June 30, 2007
	Northeast		South		West		Other (3)			Total		Northeast		South		West		Other (3)			Total
Rental income:
Same store (1)	$	127,100	$	161,334	$	159,967	$	—		$	448,401	$	243,899	$	304,362	$	321,737	$	—		$	869,998
Non-same store/other (2) (3)	15,688		23,805		15,443		20,561			75,497		34,065		50,201		36,092		47,312			167,670
Total rental income	142,788		185,139		175,410		20,561			523,898		277,964		354,563		357,829		47,312			1,037,668

Operating expenses:
Same store (1)	50,709		67,313		56,818		—			174,840		93,531		124,595		111,370		—			329,496
Non-same store/other (2) (3)	8,111		10,447		6,871		25,193			50,622		15,869		20,695		14,505		52,507			103,576
Total operating expenses	58,820		77,760		63,689		25,193		��	225,462		109,400		145,290		125,875		52,507			433,072

NOI:
Same store (1)	76,391		94,021		103,149		—			273,561		150,368		179,767		210,367		—			540,502
Non-same store/other (2) (3)	7,577		13,358		8,572		(4,632		)	24,875		18,196		29,506		21,587		(5,195		)	64,094
Total NOI	$	83,968	$	107,379	$	111,721	$	(4,632	)	$	298,436	$	168,564	$	209,273	$	231,954	$	(5,195	)	$	604,596

Total assets	$	4,429,632	$	4,647,198	$	4,642,573	$	1,602,491		$	15,321,894	$	4,482,793	$	4,562,317	$	4,867,696	$	1,755,858		$	15,668,664

	Quarter Ended March 31, 2006
	Northeast		South		West		Other (3)			Total
Rental income:
Same store (1)	$	121,135	$	154,085	$	151,016	$	—		$	426,236
Non-same store/other (2) (3)	9,056		3,725		3,024		17,930			33,735
Total rental income	130,191		157,810		154,040		17,930			459,971

Operating expenses:
Same store (1)	48,453		63,524		54,156		—			166,133
Non-same store/other (2) (3)	4,468		1,525		1,496		18,152			25,641
Total operating expenses	52,921		65,049		55,652		18,152			191,774

NOI:
Same store (1)	72,682		90,561		96,860		—			260,103
Non-same store/other (2) (3)	4,588		2,200		1,528		(222		)	8,094
Total NOI	$	77,270	$	92,761	$	98,388	$	(222	)	$	268,197