UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the quarterly period ended SEPTEMBER 30, 2008MARCH 31, 2009

OR

For the transition period from            to            

Commission File Number: 0-24920

ERP OPERATING LIMITED PARTNERSHIP

(Exact Namename of Registrantregistrant as Specifiedspecified in its Charter)charter)

(312) 474-1300

(Registrant’s Telephone Number, Including Area Code)telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

See accompanying notes

2

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands except per OP Unit data)

(Unaudited)

See accompanying notes

3

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(Amounts in thousands except per OP Unit data)

(Unaudited)

See accompanying notes

4

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

See accompanying notes

5

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

See accompanying notes

6

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

See accompanying notes

7

ERP OPERATING LIMITED PARTNERSHIP

7CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL

(Amounts in thousands)

(Unaudited)

See accompanying notes

8

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL (Continued)

(Amounts in thousands)

(Unaudited)

See accompanying notes

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ERP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

EQR is the general partner of, and as of September 30, 2008March 31, 2009 owned an approximate 94.1%94.4% ownership interest in ERPOP. EQR is structured as an umbrella partnership REIT (“UPREIT”), under which all property ownership and related business operations are conducted through ERPOP and its subsidiaries. References to the “Operating Partnership” include ERPOP and those entities owned or controlled by it. References to the “Company” mean EQR and the Operating Partnership.

As of September 30, 2008,March 31, 2009, the Operating Partnership, directly or indirectly through investments in title holding entities, owned all or a portion of 554537 properties in 23 states and the District of Columbia consisting of 147,326146,232 units. The ownership breakdown includes (table does not include various uncompleted development properties):

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and certain reclassifications considered necessary for a fair presentation have been included. Certain reclassifications have been made to the prior period financial statements in order to conform to the current year presentation. Operating results for the nine monthsquarter ended September 30, 2008March 31, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.2009.

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

The balance sheet at December 31, 20072008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

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For further information, including definitions of capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Operating Partnership’s annual report on Form 10-K for the year ended December 31, 2007.2008.

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Income and Other Taxes

The Operating Partnership generally is not liable for federal income taxes as the partners recognize their proportionate share of the Operating Partnership’s income or loss in their tax returns; therefore no provision for federal income taxes has been made at the ERPOP level. Historically, the Operating Partnership has generally only incurred certain state and local income, excise and franchise taxes. The Operating Partnership has elected Taxable REIT Subsidiary (“TRS”) status for certain of its corporate subsidiaries, primarily those entities engaged in condominium conversion and corporate housing activities and as a result, these entities will incur both federal and state income taxes on any taxable income of such entities.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates for which the temporary differences are expected to be recovered or settled. The effect of deferred tax assets and liabilities are recognized in earnings in the period enacted. The Operating Partnership’s deferred tax assets are generally the result of tax affected amortization of goodwill, differing depreciable lives on capitalized assets and the timing of expense recognition for certain accrued liabilities. As of September 30, 2008,March 31, 2009, the Operating Partnership has recorded a deferred tax asset of approximately $12.5$38.5 million, which was fully offset by a valuation allowance due to the uncertainty in forecasting future TRS taxable income.

Other

The Company adoptedIn December 2008, the FASB issued FASB Staff Position (“FSP”) FAS 140-4 and FASB Interpretation (“FIN”) 46(R)-8,Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (“FAS 140-4 and FIN 46(R)-8”). FAS 140-4 and FIN 46(R)-8 amends SFAS No. 123(R),140,Share-Based PaymentAccounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, as required effective January 1, 2006. SFAS No. 123(R) requires allto require public companies to expense share-based compensation (such as share options)provide additional disclosures about transfers of financial assets. It also amends FIN No. 46(R) to require public enterprises, including sponsors that have a variable interest in a Variable Interest Entity (“VIE”), as well as making other revisions to SFASprovide additional disclosures about their involvement with VIEs. FIN No. 123. As46 requires the Company began expensingOperating Partnership to consolidate the assets, liabilities and results of operations of the activities of its VIEs, which for the Operating Partnership includes only its development partnerships since the Operating Partnership provides substantially all share-based compensationof the capital for these ventures (other than third party mortgage debt, if any). The Operating Partnership does not have any unconsolidated FIN No. 46 assets. FAS 140-4 and FIN 46(R)-8 were effective January 1, 2003,for the Operating Partnership for the year ended December 31, 2008 and affected disclosures only. The adoption of SFAS No. 123(R) did not have a material effectthis standard has no impact on itsthe Operating Partnership’s consolidated statementsresults of operations or financial position.

Any EQR common share of beneficial interest, $0.01 par value per share (the “Common Shares”) issued pursuant to EQR’s incentive equity compensation and employee share purchase plans will result in the Operating Partnership issuing units of limited partnership interest (“OP Units”) to EQR on a one-for-one basis, with the Operating Partnership receiving the net cash proceeds of such issuances.

The Operating Partnership adopted the disclosure provisions of SFAS No. 150 and FSP No. FAS 150-3,Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, effective December 31, 2003. SFAS No. 150 and FSP No. FAS 150-3 require the Operating Partnership to make certain disclosures regarding noncontrolling interests that are classified as equity in the financial statements of a subsidiary but would be classified as a liability in the parent’s financial statements under SFAS No. 150 (e.g., minoritynoncontrolling interests in consolidated limited-life subsidiaries). The Operating Partnership is presently the controlling partner in various consolidated partnerships consisting of 2826 properties and 5,7095,406 units and various uncompleted development properties having a minoritynoncontrolling interest book value of $26.5$25.5 million at September 30, 2008.March 31, 2009. Some of these partnerships contain provisions that require the partnerships to be liquidated through the sale of its assets upon reaching a date specified in each respective partnership agreement. The Operating Partnership, as controlling partner, has an obligation to cause the property owning partnerships to distribute proceeds of liquidation to the MinorityNoncontrolling Interests (see definition below) in these Partially Owned Properties only to the extent that the net proceeds received by the partnerships from the sale of its assets warrant a distribution based on the partnership agreements. As of September 30, 2008,March 31, 2009, the Operating Partnership estimates the value of MinorityNoncontrolling Interest distributions would have been approximately $102.0$62.6 million

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(“ (“Settlement Value”) had the partnerships been liquidated. This Settlement Value is based on estimated third party consideration realized by the partnerships upon disposition of the Partially Owned Properties and is net of all other assets and liabilities, including yield maintenance on the mortgages encumbering the properties, that would have been due on September 30, 2008March 31, 2009 had those mortgages been prepaid. Due to, among other things, the inherent uncertainty in the sale of real estate assets, the amount of any potential distribution to the MinorityNoncontrolling Interests in the Operating Partnership’s Partially Owned Properties is subject to change. To the extent that the partnerships’ underlying assets are worth less than the underlying liabilities, the Operating Partnership has no obligation to remit any consideration to the MinorityNoncontrolling Interests in Partially Owned Properties.

In July 2006, the FASB ratified the consensus in FIN No. 48,Accounting for Uncertainty in Income Taxes. FIN No. 48 creates a single model to address uncertainty in income tax positions and prescribes a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition and clearly scopes income taxes out of SFAS No. 5,Accounting for Contingencies. The Operating Partnership adopted FIN No. 48 as required effective January 1, 2007. The adoption of FIN No. 48 did not have a material effect on the consolidated results of operations or financial position.

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In September 2006, the FASB issued SFAS No. 157,Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosure about fair value measurements. The Operating Partnership adopted SFAS No. 157 as required effective January 1, 2008. The adoption of SFAS No. 157 did not have a material effect on the consolidated results of operations or financial position. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.

In February 2008, the FASB issued FSP No. FAS 157-2,Effective Date of FASB Statement No. 157 (“FAS 157-2”), which delays the effective date of SFAS No. 157 for all nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). FAS 157-2 partially defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008. The Operating Partnership adopted FAS 157-2 as required effective January 1, 2009. The adoption of FAS 157-2 did not have a material effect on the consolidated results of operations or financial position.

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 provides a “Fair Value Option” under which a company may irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial instruments. The Fair Value Option will be available on a contract-by-contract basis with changes in fair value recognized in earnings as those changes occur. SFAS No. 159 is effective beginning January 1, 2008, but the Operating Partnership has decided not to adopt this optional standard.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial Instruments (“FAS 107-1 and APB 28-1”), which requires disclosures about fair value of financial instruments for interim reporting periods for publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28,Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods and is effective for the Operating Partnership for the quarterly period ending June 30, 2009. The Operating Partnership does not expect the adoption of FAS 107-1 and APB 28-1 to have a material effect on the consolidated results of operations or financial position.

In December 2007, the FASB issued SFAS No. 141(R),Business Combinations. SFAS No. 141(R) will significantly changechanges the accounting for business combinations. Under SFAS No. 141(R), an acquiring entity will beis required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141(R) will changechanges the accounting treatment for certain specific acquisition related items including: (1) expensing acquisition related costs as incurred;incurred (amounts are included in the other expenses line item in the consolidated statements of operations); (2) valuing noncontrolling interests at fair value at the acquisition date; and (3) expensing restructuring costs associated with an acquired business. SFAS No. 141(R) also includes a substantial number of new disclosure requirements. SFAS No. 141(R) is to behas been applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009. We expectDue to the current decline in the Operating Partnership’s acquisition activities, the initial adoption of SFAS No. 141(R) will have an impact on our accounting for future business combinations once adopted, but we are currently assessing the impact it will havehas not had a material effect on the consolidated results of operations or financial position.

In April 2009, the FASB issued FSP No. FAS 141(R)-1,Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies (“FAS 141(R)-1”), which amends and clarifies SFAS No. 141(R) to address application issues on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. FAS 141(R)-1 has been applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009. Due to the current decline in the Operating Partnership’s acquisition activities, the initial adoption of FAS 141(R)-1 has not had a material effect on the consolidated results of operations or financial position.

In December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statements. SFAS No. 160 establishes new accounting and reporting standards for the noncontrolling interest“Noncontrolling Interest” in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary (minority interest) is in most cases an ownership interest in the consolidated entity that should be reported as equity in the Consolidated Financial Statementsconsolidated financial statements and separate from the parent company’s equity. Among other requirements, this statement requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the Consolidated Statements of Operations, of the amounts of consolidated

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net income attributable to the parent and to the noncontrolling interest. This statement is effective for theThe Operating Partnership onadopted SFAS No. 160 as required effective January 1, 2009. The Operating Partnership is currently evaluatingOther than modifications to presentation, the impactadoption of SFAS No. 160 willdid not have a material effect on itsthe consolidated results of operations andor financial position. See Note 3 for further discussion.

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In March 2008, the FASB issued SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133. SFAS No. 161 is intended to improve financial standards for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. Among other requirements, entities are required to provide enhanced disclosures about: (1) how and why an entity uses derivative instruments; (2) how derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and (3) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. The Operating Partnership adopted SFAS No. 161 isas required effective for the Operating Partnership on January 1, 2009. The Operating Partnership is currently evaluatingOther than the impactenhanced disclosure requirements, the adoption of SFAS No. 161 willdid not have a material effect on itsthe consolidated financial statements. See Note 11 for further discussion.

In May 2008, the FASB issued FSP No. APB 14-1,Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement) (“APB 14-1”). APB 14-1 requires the issuer of certain convertible debt instruments that may be settled in cash on conversion to separately account for the liability and equity components of the instrument in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The Operating Partnership adopted APB 14-1, which is applied retrospectively, isas required effective for the Operating Partnership beginning January 1, 2009. The adoption of APB 14-1 will affectaffects the accounting for the Operating Partnership’s $650.0 million ($531.1 million outstanding at March 31, 2009) 3.85% convertible unsecured notes with a maturity date ofthat were issued in August 2006 and mature in August 2026. The amount of the conversion option as of the date of issuance calculated by the Operating Partnership believes that APB 14-1 willwas $44.3 million and is being amortized to interest expense over the expected life of the convertible notes (through the first put date on August 18, 2011). Total amortization of the cash discount and conversion option discount on the unsecured notes resulted in a reduction to earnings of approximately $2.9 million for the first quarter of 2009 and is anticipated to result in a reduction to earnings of approximately $0.03$9.3 million during the full year of 2009 assuming the Operating Partnership does not repurchase any additional amounts of this debt. As a result of the adoption of APB 14-1, the Operating Partnership decreased the January 1, 2009 balance of retained earnings by $27.0 million, decreased the January 1, 2009 balance of notes by $17.3 million and increased the January 1, 2009 balance of paid in capital by $44.3 million. Due to $0.04the required retrospective application, APB 14-1 resulted in a reduction to earnings of approximately $2.5 million or $0.01 per share in 2009.for the quarter ended March 31, 2008.

The following tables present the changes in all of the Operating Partnership’s issued and outstanding “Units” (which includes OP Units and Long-Term Incentive Plan (“LTIP”) Units) and in the changes in limited partners’ OP Units for the nine monthsquarter ended September 30, 2008:March 31, 2009:

1113

During the nine monthsquarter ended September 30, 2008,March 31, 2009, the Company repurchased 171,16147,450 of its Common Shares at an average price of $36.78$23.69 per share for total consideration of $6.3$1.1 million. These shares were retired subsequent to the repurchases. Concurrent with these transactions, the Operating Partnership repurchased and retired 171,16147,450 OP Units previously issued to EQR. OfAll of the total shares repurchased 71,161 sharesduring the quarter ended March 31, 2009 were repurchased from employees at an average price of $38.25 per share (the average of the then current market prices)prices to cover the minimum statutory tax withholding obligations related to the vesting of employees’ restricted shares. The remaining 100,000 shares were repurchased in the open market at an average price of $35.74 per share. The Company also funded $4.6 million in January 2008 for the settlement of 125,000 Common Shares that were repurchased in December 2007 and recorded as other liabilities at December 31, 2007. EQR has authorization to repurchase an additional $469.3$466.5 million of its shares as of September 30, 2008.March 31, 2009.

The Limited Partners of the Operating Partnership as of September 30, 2008March 31, 2009 include various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the LTIP Units. Subject to certain restrictions,exceptions (including the “book-up” requirements of LTIP Units), the Limited Partners may exchange their OP Units with EQR for EQR Common Shares on a one-for-one basis. The Operating Partnership has the right but not the obligation to make a cash payment to any holder of OP Units requesting an exchange from EQR at the market price of EQR’s Common Shares. However, no aspect of an exchange requires a cash settlement by the Operating Partnership under any circumstances.

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

The following table presents the Operating Partnership’s issued and outstanding “Preference Units” as of September 30, 2008March 31, 2009 and December 31, 2007:2008:

1214

The following table presents the Operating Partnership’s issued and outstanding Junior Convertible Preference Units (the “Junior Preference Units”) as of September 30, 2008March 31, 2009 and December 31, 2007:2008:

1315

The following table summarizes the carrying amounts for the Operating Partnership’s investment in real estate (at cost) as of September 30, 2008March 31, 2009 and December 31, 20072008 (amounts in thousands):

During the nine monthsquarter ended September 30, 2008,March 31, 2009, the Operating Partnership acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands):

The Operating Partnership also acquired all of its partners’ interests in one partially owned property containing 144 units for $5.9 million and two partially owned land parcels for $1.6 million. In addition, the Company made an additional payment of $1.3 million related to an April 2006 acquisition of a partner’s interest in a now wholly-owned property,three partially funded through the issuanceowned properties consisting of 19,017 OP Units valued at $0.8833 units for $2.8 million.

During the nine monthsquarter ended September 30, 2008,March 31, 2009, the Operating Partnership disposed of the following to unaffiliated parties (sales price in thousands):

The Operating Partnership recognized a net gain on sales of discontinued operations of approximately $61.9 million and a net gain on sales of land parcelsunconsolidated entities of approximately $365.1$2.8 million and $3.0 million, respectively, on the above sales.

As of OctoberApril 30, 2008,2009, the Operating Partnership had entered into separate agreementsan agreement to acquire the following (purchase price in thousands):one land parcel for $23.5 million.

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As of OctoberApril 30, 2008, in addition to the properties that were subsequently disposed of as discussed in Note 16,2009, the Operating Partnership had entered into separate agreements to dispose of the following (sales price in thousands):17 properties consisting of 3,366 units for $287.3 million.

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

The Operating Partnership has co-invested in various properties with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated). The following table summarizes the Operating Partnership’s investments in partially owned entities as of September 30, 2008March 31, 2009 (amounts in thousands except for

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project and unit amounts):

The following table presents the Operating Partnership’s restricted deposits as of September 30, 2008March 31, 2009 and December 31, 20072008 (amounts in thousands):

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As of September 30, 2008,March 31, 2009, the Operating Partnership had outstanding mortgage debt of approximately $4.5$4.9 billion.

During the nine monthsquarter ended September 30, 2008,March 31, 2009, the Operating Partnership: