QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
MARCH 31, 2012
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
| Maryland (Equity Residential) | 13-3675988 (Equity Residential) | |
| Illinois (ERP Operating Limited Partnership) | 36-3894853 (ERP Operating Limited Partnership) | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
| ||
| Two North Riverside Plaza, Chicago, Illinois 60606 | (312) 474-1300 | |
| ( | ||
Equity Residential Yes x No ¨ ERP Operating Limited Partnership Yes x No ¨
Equity Residential Yes x No ¨ | ERP Operating Limited Partnership Yes x No o |
Equity Residential Yes x No ¨ ERP Operating Limited Partnership Yes x No ¨
Equity Residential Yes x No ¨ | ERP Operating Limited Partnership Yes x No o |
Equity Residential:
| Equity Residential: | ||||||
Large accelerated filerx | Accelerated filer | ¨ | ||||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
ERP Operating Limited Partnership:
| ERP Operating Limited Partnership: | ||||||
Large accelerated filer¨ | Accelerated filer | ¨ | ||||
Non-accelerated filer | x (Do not check if a smaller reporting company) | Smaller reporting company | ¨ | |||
Equity Residential Yes ¨ No x | ERP Operating Limited Partnership Yes ¨ No x |
The number of EQR Common Shares of Beneficial Interest, $0.01 par value, outstanding on October 27, 2011April 26, 2012 was 296,628,624.
300,624,108.
Shareholders’
ASSETS Investment in real estate Land Depreciable property Projects under development Land held for development Investment in real estate Accumulated depreciation Investment in real estate, net Cash and cash equivalents Investments in unconsolidated entities Deposits – restricted Escrow deposits – mortgage Deferred financing costs, net Other assets Total assets LIABILITIES AND EQUITY Liabilities: Mortgage notes payable Notes, net Lines of credit Accounts payable and accrued expenses Accrued interest payable Other liabilities Security deposits Distributions payable Total liabilities Commitments and contingencies Redeemable Noncontrolling Interests – Operating Partnership Equity: Shareholders’ equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 1,600,000 shares issued and outstanding as of September 30, 2011 and December 31, 2010 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 296,620,833 shares issued and outstanding as of September 30, 2011 and 290,197,242 shares issued and outstanding as of December 31, 2010 Paid in capital Retained earnings Accumulated other comprehensive (loss) Total shareholders’ equity Noncontrolling Interests: Operating Partnership Partially Owned Properties Total Noncontrolling Interests Total equity Total liabilities and equity REVENUES Rental income Fee and asset management Total revenues EXPENSES Property and maintenance Real estate taxes and insurance Property management Fee and asset management Depreciation General and administrative Total expenses Operating income Interest and other income Other expenses Interest: Expense incurred, net Amortization of deferred financing costs Income (loss) before income and other taxes, (loss) income from investments in unconsolidated entities, net gain (loss) on sales of unconsolidated entites and land parcels and discontinued operations Income and other tax (expense) benefit (Loss) income from investments in unconsolidated entities Net gain on sales of unconsolidated entities Net gain (loss) on sales of land parcels Income (loss) from continuing operations Discontinued operations, net Net income Net (income) loss attributable to Noncontrolling Interests: Operating Partnership Partially Owned Properties Net income attributable to controlling interests Preferred distributions Net income available to Common Shares Earnings per share – basic: Income (loss) from continuing operations available to Common Shares Net income available to Common Shares Weighted average Common Shares outstanding Earnings per share – diluted: Income (loss) from continuing operations available to Common Shares Net income available to Common Shares Weighted average Common Shares outstanding Distributions declared per Common Share outstanding Comprehensive income (loss): Net income Other comprehensive (loss): Other comprehensive (loss) – derivative instruments: Unrealized holding (losses) arising during the period Losses reclassified into earnings from other comprehensive income Other comprehensive income (loss) – other instruments: Unrealized holding gains (losses) arising during the period Other comprehensive (loss) Comprehensive income (loss) Comprehensive (income) attributable to Noncontrolling Interests Comprehensive income (loss) attributable to controlling interests CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Amortization of deferred financing costs Amortization of discounts and premiums on debt Amortization of deferred settlements on derivative instruments Write-off of pursuit costs Income from technology investments Loss from investments in unconsolidated entities Distributions from unconsolidated entities – return on capital Net (gain) on sales of unconsolidated entities Net (gain) loss on sales of land parcels Net (gain) on sales of discontinued operations Loss on debt extinguishments Unrealized loss on derivative instruments Compensation paid with Company Common Shares Changes in assets and liabilities: Decrease in deposits – restricted Decrease (increase) in other assets Increase in accounts payable and accrued expenses (Decrease) in accrued interest payable (Decrease) in other liabilities Increase in security deposits Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate – acquisitions Investment in real estate – development/other Improvements to real estate Additions to non-real estate property Interest capitalized for real estate and unconsolidated entities under development Proceeds from disposition of real estate, net Investments in unconsolidated entities Distributions from unconsolidated entities – return of capital Proceeds from sale of investment securities Proceeds from technology investments (Increase) decrease in deposits on real estate acquisitions, net Decrease (increase) in mortgage deposits Consolidation of previously unconsolidated properties Deconsolidation of previously consolidated properties Acquisition of Noncontrolling Interests – Partially Owned Properties Net cash provided by (used for) investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Loan and bond acquisition costs Mortgage notes payable: Proceeds Restricted cash Lump sum payoffs Scheduled principal repayments (Loss) on debt extinguishments Notes, net: Proceeds Lump sum payoffs Lines of credit: Proceeds Repayments (Payments on) settlement of derivative instruments Proceeds from sale of Common Shares Proceeds from Employee Share Purchase Plan (ESPP) Proceeds from exercise of options Common Shares repurchased and retired Payment of offering costs Other financing activities, net Contributions – Noncontrolling Interests – Partially Owned Properties Distributions: Common Shares Preferred Shares Noncontrolling Interests – Operating Partnership Noncontrolling Interests – Partially Owned Properties Net cash (used for) provided by financing activities Net (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period SUPPLEMENTAL INFORMATION: Cash paid for interest, net of amounts capitalized Net cash paid (received) for income and other taxes Real estate acquisitions/dispositions/other: Mortgage loans assumed Valuation of OP Units issued Mortgage loans (assumed) by purchaser Amortization of deferred financing costs: Investment in real estate, net Deferred financing costs, net Amortization of discounts and premiums on debt: Mortgage notes payable Notes, net Amortization of deferred settlements on derivative instruments: Other liabilities Accumulated other comprehensive income Unrealized loss on derivative instruments: Other assets Mortgage notes payable Notes, net Other liabilities Accumulated other comprehensive (loss) Interest capitalized for real estate and unconsolidated entities under development: Investment in real estate, net Investments in unconsolidated entities Consolidation of previously unconsolidated properties: Investment in real estate, net Investments in unconsolidated entities Deposits – restricted Mortgage notes payable Net other assets recorded Deconsolidation of previously consolidated properties: Investment in real estate, net Investments in unconsolidated entities (Payments on) settlement of derivative instruments: Other liabilities Other: Receivable on sale of Common Shares Transfer from notes, net to mortgage notes payable SHAREHOLDERS’ EQUITY PREFERRED SHARES Balance, beginning of year Balance, end of period COMMON SHARES, $0.01 PAR VALUE Balance, beginning of year Conversion of OP Units into Common Shares Issuance of Common Shares Exercise of share options Employee Share Purchase Plan (ESPP) Conversion of restricted shares to LTIP Units Share-based employee compensation expense: Restricted shares Balance, end of period PAID IN CAPITAL Balance, beginning of year Common Share Issuance: Conversion of OP Units into Common Shares Issuance of Common Shares Exercise of share options Employee Share Purchase Plan (ESPP) Conversion of restricted shares to LTIP Units Share-based employee compensation expense: Restricted shares Share options ESPP discount Offering costs Supplemental Executive Retirement Plan (SERP) Acquisition of Noncontrolling Interests – Partially Owned Properties Change in market value of Redeemable Noncontrolling Interests – Operating Partnership Adjustment for Noncontrolling Interests ownership in Operating Partnership Balance, end of period RETAINED EARNINGS Balance, beginning of year Net income attributable to controlling interests Common Share distributions Preferred Share distributions Balance, end of period ACCUMULATED OTHER COMPREHENSIVE (LOSS) Balance, beginning of year Accumulated other comprehensive (loss) – derivative instruments: Unrealized holding (losses) arising during the period Losses reclassified into earnings from other comprehensive income Accumulated other comprehensive income – other instruments: Unrealized holding gains arising during the period Balance, end of period NONCONTROLLING INTERESTS OPERATING PARTNERSHIP Balance, beginning of year Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner Conversion of restricted shares to LTIP Units Equity compensation associated with Noncontrolling Interests Net income attributable to Noncontrolling Interests Distributions to Noncontrolling Interests Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership Adjustment for Noncontrolling Interests ownership in Operating Partnership Balance, end of period PARTIALLY OWNED PROPERTIES Balance, beginning of year Net income attributable to Noncontrolling Interests Contributions by Noncontrolling Interests Distributions to Noncontrolling Interests Acquisition of Noncontrolling Interests – Partially Owned Properties Other Balance, end of period ASSETS Investment in real estate Land Depreciable property Projects under development Land held for development Investment in real estate Accumulated depreciation Investment in real estate, net Cash and cash equivalents Investments in unconsolidated entities Deposits – restricted Escrow deposits – mortgage Deferred financing costs, net Other assets Total assets LIABILITIES AND CAPITAL Liabilities: Mortgage notes payable Notes, net Lines of credit Accounts payable and accrued expenses Accrued interest payable Other liabilities Security deposits Distributions payable Total liabilities Commitments and contingencies Redeemable Limited Partners Capital: Partners’ Capital: Preference Units General Partner Limited Partners Accumulated other comprehensive (loss) Total partners’ capital Noncontrolling Interests – Partially Owned Properties Total capital Total liabilities and capital REVENUES Rental income Fee and asset management Total revenues EXPENSES Property and maintenance Real estate taxes and insurance Property management Fee and asset management Depreciation General and administrative Total expenses Operating income Interest and other income Other expenses Interest: Expense incurred, net Amortization of deferred financing costs Income (loss) before income and other taxes, (loss) income from investments in unconsolidated entities, net gain (loss) on sales of unconsolidated entities and land parcels and discontinued operations Income and other tax (expense) benefit (Loss) income from investments in unconsolidated entities Net gain on sales of unconsolidated entities Net gain (loss) on sales of land parcels Income (loss) from continuing operations Discontinued operations, net Net income Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties Net income attributable to controlling interests ALLOCATION OF NET INCOME: Preference Units General Partner Limited Partners Net income available to Units Earnings per Unit – basic: Income (loss) from continuing operations available to Units Net income available to Units Weighted average Units outstanding Earnings per Unit – diluted: Income (loss) from continuing operations available to Units Net income available to Units Weighted average Units outstanding Distributions declared per Unit outstanding Comprehensive income (loss): Net income Other comprehensive (loss): Other comprehensive (loss) – derivative instruments: Unrealized holding (losses) arising during the period Losses reclassified into earnings from other comprehensive income Other comprehensive income (loss) – other instruments: Unrealized holding gains (losses) arising during the period Other comprehensive (loss) Comprehensive income (loss) Comprehensive (income) loss attributable to Noncontrolling Interests – Partially Owned Properties Comprehensive income (loss) attributable to controlling interests CASH FLOWS FROM OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Amortization of deferred financing costs Amortization of discounts and premiums on debt Amortization of deferred settlements on derivative instruments Write-off of pursuit costs Income from technology investments Loss from investments in unconsolidated entities Distributions from unconsolidated entities – return on capital Net (gain) on sales of unconsolidated entities Net (gain) loss on sales of land parcels Net (gain) on sales of discontinued operations Loss on debt extinguishments Unrealized loss on derivative instruments Compensation paid with Company Common Shares Changes in assets and liabilities: Decrease in deposits – restricted Decrease (increase) in other assets Increase in accounts payable and accrued expenses (Decrease) in accrued interest payable (Decrease) in other liabilities Increase in security deposits Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate – acquisitions Investment in real estate – development/other Improvements to real estate Additions to non-real estate property Interest capitalized for real estate and unconsolidated entities under development Proceeds from disposition of real estate, net Investments in unconsolidated entities Distributions from unconsolidated entities – return of capital Proceeds from sale of investment securities Proceeds from technology investments (Increase) decrease in deposits on real estate acquisitions, net Decrease (increase) in mortgage deposits Consolidation of previously unconsolidated properties Deconsolidation of previously consolidated properties Acquisition of Noncontrolling Interests – Partially Owned Properties Net cash provided by (used for) investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Loan and bond acquisition costs Mortgage notes payable: Proceeds Restricted cash Lump sum payoffs Scheduled principal repayments (Loss) on debt extinguishments Notes, net: Proceeds Lump sum payoffs Lines of credit: Proceeds Repayments (Payments on) settlement of derivative instruments Proceeds from sale of OP Units Proceeds from EQR’s Employee Share Purchase Plan (ESPP) Proceeds from exercise of EQR options OP Units repurchased and retired Payment of offering costs Other financing activities, net Contributions – Noncontrolling Interests – Partially Owned Properties Distributions: OP Units – General Partner Preference Units OP Units – Limited Partners Noncontrolling Interests – Partially Owned Properties Net cash (used for) provided by financing activities Net (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period SUPPLEMENTAL INFORMATION: Cash paid for interest, net of amounts capitalized Net cash paid (received) for income and other taxes Real estate acquisitions/dispositions/other: Mortgage loans assumed Valuation of OP Units issued Mortgage loans (assumed) by purchaser Amortization of deferred financing costs: Investment in real estate, net Deferred financing costs, net Amortization of discounts and premiums on debt: Mortgage notes payable Notes, net Amortization of deferred settlements on derivative instruments: Other liabilities Accumulated other comprehensive income Unrealized loss on derivative instruments: Other assets Mortgage notes payable Notes, net Other liabilities Accumulated other comprehensive (loss) Interest capitalized for real estate and unconsolidated entities under development: Investment in real estate, net Investments in unconsolidated entities Consolidation of previously unconsolidated properties: Investment in real estate, net Investments in unconsolidated entities Deposits – restricted Mortgage notes payable Net other assets recorded Deconsolidation of previously consolidated properties: Investment in real estate, net Investments in unconsolidated entities (Payments on) settlement of derivative instruments: Other liabilities Other: Receivable on sale of OP Units Transfer from notes, net to mortgage notes payable PARTNERS’ CAPITAL PREFERENCE UNITS Balance, beginning of year Balance, end of period GENERAL PARTNER Balance, beginning of year OP Unit Issuance: Conversion of OP Units held by Limited Partners into OP Units held by General Partner Issuance of OP Units Exercise of EQR share options EQR’s Employee Share Purchase Plan (ESPP) Conversion of EQR restricted shares to LTIP Units Share-based employee compensation expense: EQR restricted shares EQR share options EQR ESPP discount Offering costs Net income available to Units – General Partner OP Units – General Partner distributions Supplemental Executive Retirement Plan (SERP) Acquisition of Noncontrolling Interests – Partially Owned Properties Change in market value of Redeemable Limited Partners Adjustment for Limited Partners ownership in Operating Partnership Balance, end of period LIMITED PARTNERS Balance, beginning of year Conversion of OP Units held by Limited Partners into OP Units held by General Partner Conversion of EQR restricted shares to LTIP Units Equity compensation associated with Units – Limited Partners Net income available to Units – Limited Partners Units – Limited Partners distributions Change in carrying value of Redeemable Limited Partners Adjustment for Limited Partners ownership in Operating Partnership Balance, end of period ACCUMULATED OTHER COMPREHENSIVE (LOSS) Balance, beginning of year Accumulated other comprehensive (loss) – derivative instruments: Unrealized holding (losses) arising during the period Losses reclassified into earnings from other comprehensive income Accumulated other comprehensive income – other instruments: Unrealized holding gains arising during the period Balance, end of period NONCONTROLLING INTERESTS NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES Balance, beginning of year Net income attributable to Noncontrolling Interests Contributions by Noncontrolling Interests Distributions to Noncontrolling Interests Acquisition of Noncontrolling Interests – Partially Owned Properties Other Balance, end of period Wholly Owned Properties Partially Owned Properties – Consolidated Military Housing 2012 2011 The Company is the controlling partner in various consolidated partnerships owning 21 properties and 3,916 apartment units and various completed and uncompleted development properties having a Partially Owned Properties is subject to change. To the extent that the partnerships’ underlying assets are worth less than the underlying liabilities, the Company has no obligation to remit any consideration to the Noncontrolling Interests in these Partially Owned Properties. Common Shares outstanding at January 1, Conversion of OP Units Issuance of Common Shares Exercise of share options Employee Share Purchase Plan (ESPP) Restricted share grants, net Common Shares outstanding at Units outstanding at January 1, LTIP Units, net Conversion of OP Units to Common Shares Units outstanding at Total Common Shares and Units outstanding at Units Ownership Interest in Operating Partnership 2011 Balance at January 1, Change in market value Change in carrying value Balance at September 30, Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized: 8.29% Series K Cumulative Redeemable Preferred; liquidation value $50 per share; 1,000,000 shares issued and outstanding at September 30, 2011 and December 31, 2010 6.48% Series N Cumulative Redeemable Preferred; liquidation value $250 per share; 600,000 shares issued and outstanding at September 30, 2011 and December 31, 2010 (3) General and Limited Partner Units General and Limited Partner Units outstanding at January 1, Issuance of OP Units Exercise of EQR share options EQR’s Employee Share Purchase Plan (ESPP) LTIP Units, net General and Limited Partner Units outstanding at Limited Partner Units outstanding at January 1, Limited Partner LTIP Units, net Conversion of Limited Partner OP Units to EQR Common Shares Limited Partner Units outstanding at Limited Partner Units Ownership Interest in Operating Partnership 2011 Balance at January 1, Change in market value Change in carrying value Balance at September 30, Preference Units: 8.29% Series K Cumulative Redeemable Preference Units; liquidation value $50 per unit; 1,000,000 units issued and outstanding at September 30, 2011 and December 31, 2010 6.48% Series N Cumulative Redeemable Preference Units; liquidation value $250 per unit; 600,000 units issued and outstanding at September 30, 2011 and December 31, 2010 (3) In September 2009, repurchase up to Land Depreciable property: Buildings and improvements Furniture, fixtures and equipment Projects under development: Land Construction-in-progress Land held for development: Land Construction-in-progress Investment in real estate Accumulated depreciation Investment in real estate, net Rental Properties – Consolidated Land Parcels (three) (1) Other (2) Total Rental Properties – Consolidated Land Parcel (one) (1) Total Rental Properties Land Parcels (seven) Total Rental Properties Total Total projects (1) Total apartments units (1) Balance sheet information at 9/30/11 (at 100%): ASSETS Investment in real estate Accumulated depreciation Investment in real estate, net Cash and cash equivalents Deposits – restricted Escrow deposits – mortgage Deferred financing costs, net Other assets Total assets LIABILITIES AND EQUITY/CAPITAL Mortgage notes payable Accounts payable & accrued expenses Accrued interest payable Other liabilities Security deposits Total liabilities Noncontrolling Interests – Partially Owned Properties Company equity/General and Limited Partners’ Capital Total equity/capital Total liabilities and equity/capital Debt – Secured (2): Company/Operating Partnership Ownership (3) Noncontrolling Ownership Total (at 100%) Operating information for the nine months ended 9/30/11 (at 100%): Operating revenue Operating expenses Net operating (loss) income Depreciation General and administrative/other Operating (loss) income Interest and other income Other expenses Interest: Expense incurred, net Amortization of deferred financing costs (Loss) income before income and other taxes and net gains on sales of land parcels and discontinued operations Income and other tax (expense) benefit Net gain on sales of land parcels Net gain on sales of discontinued operations Net income (loss) Tax–deferred (1031) exchange proceeds Earnest money on pending acquisitions Restricted deposits on debt Resident security and utility deposits Other Totals As of As of $5.4 billion. Company. The Company has the ability to increase available borrowings by an additional 2012 Current Notional Balance Lowest Possible Notional Highest Possible Notional Lowest Interest Rate Highest Interest Rate Earliest Maturity Date Latest Maturity Date The fair values disclosed for mortgage notes payable and unsecured notes were calculated using indicative rates provided by lenders of similar loans in the case of mortgage notes payable and the private unsecured notes and quoted market prices for each underlying issuance in the case of the public unsecured notes. Description Assets Derivatives designated as hedging instruments: Interest Rate Contracts: Fair Value Hedges Supplemental Executive Retirement Plan Available-for-Sale Investment Securities Total Liabilities Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps Supplemental Executive Retirement Plan Total Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners Description Assets Derivatives designated as hedging instruments: Interest Rate Contracts: Fair Value Hedges Forward Starting Swaps Supplemental Executive Retirement Plan Available-for-Sale Investment Securities Total Liabilities Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps Development Cash Flow Hedges Supplemental Executive Retirement Plan Total Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners 2011 September 30, 2011 Type of Fair Value Hedge Derivatives designated as hedging instruments: Interest Rate Contracts: Interest Rate Swaps Total September 30, 2010 Type of Fair Value Hedge Derivatives designated as hedging instruments: Interest Rate Contracts: Interest Rate Swaps Total September 30, 2011 Type of Cash Flow Hedge Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps/Treasury Locks Development Interest Rate Swaps/Caps Total September 30. 2010 Type of Cash Flow Hedge Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps/Treasury Locks Development Interest Rate Swaps/Caps Total Security Available-for-Sale Investment Securities Total Numerator for net income per share – basic: Income (loss) from continuing operations Allocation to Noncontrolling Interests – Operating Partnership, net Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties Preferred distributions Income (loss) from continuing operations available to Common Shares, net of Noncontrolling Interests Discontinued operations, net of Noncontrolling Interests Numerator for net income per share – basic Numerator for net income per share – diluted (1): Income from continuing operations Net (income) attributable to Noncontrolling Interests – Partially Owned Properties Preferred distributions Income from continuing operations available to Common Shares Discontinued operations, net Numerator for net income per share – diluted (1) Denominator for net income per share – basic and diluted (1): Denominator for net income per share – basic Effect of dilutive securities: OP Units Long-term compensation shares/units Denominator for net income per share – diluted (1) Net income per share – basic Net income per share – diluted Net income per share – basic: Income (loss) from continuing operations available to Common Shares, net of Noncontrolling Interests Discontinued operations, net of Noncontrolling Interests Net income per share – basic Net income per share – diluted (1): Income (loss) from continuing operations available to Common Shares Discontinued operations, net Net income per share – diluted Numerator for net income per Unit – basic and diluted (1): Income (loss) from continuing operations Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties Allocation to Preference Units Income (loss) from continuing operations available to Units Discontinued operations, net Numerator for net income per Unit – basic and diluted (1) Denominator for net income per Unit – basic and diluted (1): Denominator for net income per Unit – basic Effect of dilutive securities: Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term compensation shares/units Denominator for net income per Unit – diluted (1) Net income per Unit – basic Net income per Unit – diluted Net income per Unit – basic: Income (loss) from continuing operations available to Units Discontinued operations, net Net income per Unit – basic Net income per Unit – diluted (1): Income (loss) from continuing operations available to Units Discontinued operations, net Net income per Unit – diluted REVENUES Rental income Total revenues EXPENSES (1) Property and maintenance Real estate taxes and insurance Depreciation General and administrative Total expenses Discontinued operating income Interest and other income Interest (2): Expense incurred, net Amortization of deferred financing costs Income and other tax (expense) benefit Discontinued operations Net gain on sales of discontinued operations Discontinued operations, net Rental income: Same store (1) Non-same store/other (2) (3) Total rental income Operating expenses: Same store (1) Non-same store/other (2) (3) Total operating expenses NOI: Same store (1) Non-same store/other (2) (3) Total NOI Total assets Rental income: Same store (1) Non-same store/other (2) (3) Total rental income Operating expenses: Same store (1) Non-same store/other (2) (3) Total operating expenses NOI: Same store (1) Non-same store/other (2) (3) Total NOI Rental income: Same store (1) Non-same store/other (2) (3) Total rental income Operating expenses: Same store (1) Non-same store/other (2) (3) Total operating expenses NOI: Same store (1) Non-same store/other (2) (3) Total NOI Rental income: Same store (1) Non-same store/other (2) (3) Total rental income Operating expenses: Same store (1) Non-same store/other (2) (3) Total operating expenses NOI: Same store (1) Non-same store/other (2) (3) Total NOI Rental income Property and maintenance expense Real estate taxes and insurance expense Property management expense Total operating expenses Net operating income During the operations), which represented its final reimbursement of the 2011 Forward-looking statements and related uncertainties are also included in the Notes to Consolidated Financial Statements in this report. Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues public equity from time to time but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Acquisitions and developments may be financed from various sources of capital, which may include retained cash flow, issuance of additional equity and debt, sales of properties and joint venture agreements. In addition, the Company may acquire properties in transactions that include the issuance of limited partnership interests in the Operating Partnership (“OP Units”) as consideration for the acquired properties. Such transactions may, in certain circumstances, enable the sellers to defer, in whole or in part, the recognition of taxable income or gain that might otherwise result from the sales. The Company may acquire land parcels to hold and/or sell based on market opportunities. The Company may also seek to acquire properties by purchasing defaulted or distressed debt that encumbers desirable properties in the hope of obtaining title to property through foreclosure or deed-in-lieu of foreclosure proceedings. The Company has also, in the past, converted some of its properties and sold them as condominiums but is not currently active in this line of business. completed or partially occupied properties or land on which apartment properties can be constructed. We intend to hold a diversified portfolio of assets across our target markets. As of five years. year ended remaining In January 2012, the Company amended this facility to increase available borrowings by March 31, 2011 Description YTD 2011 YTD 2010 Change Change Real estate taxes On-site payroll (1) Utilities (2) Repairs and maintenance (3) Property management costs (4) Insurance Leasing and advertising Other on-site operating expenses (5) Same store operating expenses Operating income Adjustments: Non-same store operating results Fee and asset management revenue Fee and asset management expense Depreciation General and administrative Same store NOI Physical occupancy Revenue change Expense change NOI change 2012 See also Note 13 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s segment disclosures. ventures. Archstone. Description Q3 2011 Q3 2010 Change Change Real estate taxes On-site payroll (1) Utilities (2) Repairs and maintenance (3) Property management costs (4) Insurance Leasing and advertising Other on-site operating expenses (5) Same store operating expenses Operating income Adjustments: Non-same store operating results Fee and asset management revenue Fee and asset management expense Depreciation General and administrative Same store NOI March 31, 2011. The Company anticipates that interest expense from continuing operations will approximate $458.0 million to $468.0 million for the year ending December 31, 2012. The above assumption is based on current expectations and is forward-looking. is forward-looking. During the were repurchased during Secured Unsecured Total Fixed Rate Debt: Secured – Conventional Unsecured – Public/Private Fixed Rate Debt Floating Rate Debt: Secured – Conventional Secured – Tax Exempt Unsecured – Public/Private Unsecured – Revolving Credit Facility (2) Floating Rate Debt Total Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ Total Fixed Rate Notes: Fair Value Derivative Adjustments Floating Rate Notes: Fair Value Derivative Adjustments Term Loan Facility Revolving Credit Facility: Total Unsecured Debt Secured Debt Unsecured Debt Total Debt Common Shares (includes Restricted Shares) Units (includes OP Units and LTIP Units) Total Shares and Units Common Share Price at September 30, 2011 Perpetual Preferred Equity (see below) Total Equity Total Market Capitalization Series Preferred Shares: 8.29% Series K 6.48% Series N Total Perpetual Preferred Equity The Operating Partnership’s “Consolidated Debt-to-Total Market Capitalization Ratio” as of Secured Debt Unsecured Debt Total Debt Total outstanding Units Common Share Price at September 30, 2011 Perpetual Preference Units (see below) Total Equity Total Market Capitalization Series Preference Units: 8.29% Series K 6.48% Series N Total Perpetual Preference Units All replacements are depreciated over a five to ten-year estimated useful life. We expense as incurred all make-ready maintenance and turnover costs such as cleaning, interior painting of individual apartment units and the repair of any replacement item noted above. All building improvements are depreciated over a five to Same Store Properties (3) Non-Same Store Properties (4) Other (5) Total based on current expectations and are forward-looking. bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments. Net income Adjustments: Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties Depreciation Depreciation – Non-real estate additions Depreciation – Partially Owned and Unconsolidated Properties Net (gain) on sales of unconsolidated entities Discontinued operations: Depreciation Net (gain) on sales of discontinued operations Net incremental gain (loss) on sales of condominium units Gain (loss) on sale of Equity Corporate Housing (ECH) FFO (1) (3) Adjustments: Asset impairment and valuation allowances Property acquisition costs and write-off of pursuit costs (other expenses) Debt extinguishment (gains) losses, including prepayment penalties, preferred share/preference unit redemptions and non- (Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit) Other miscellaneous non-comparable items Normalized FFO (2) (3) FFO (1) (3) Preferred distributions FFO available to Common Shares and Units / Units (1) (3) (4) Normalized FFO (2) (3) Preferred distributions Normalized FFO available to Common Shares and Units / Units (2) (3) (4) the impact of any expenses relating to non-operating asset impairment and valuation allowances; property acquisition and other transaction costs related to mergers and acquisitions and pursuit cost write-offs (other expenses); gains and losses from early debt extinguishment, including prepayment penalties, preferred share/preference unit redemptions and the cost related to the implied option value of non-cash convertible debt discounts; gains and losses on the sales of non-operating assets, including gains and losses from land parcel and condominium sales, net of the effect of income tax benefits or expenses; and other miscellaneous non-comparable items. There have been no material changes to the risk factors that were discussed in Part I, Item 1A of September 30,
2011 December 31,
2010 $ 4,158,288 $ 4,110,275 15,055,570 15,226,512 119,433 130,337 205,476 235,247 19,538,767 19,702,371 (4,405,479 ) (4,337,357 ) 15,133,288 15,365,014 45,986 431,408 11,020 3,167 369,461 180,987 10,677 12,593 37,334 42,033 149,051 148,992 $ 15,756,817 $ 16,184,194 $ 4,136,848 $ 4,762,896 4,614,323 5,185,180 26,000 — 97,845 39,452 69,895 98,631 409,591 304,202 62,073 60,812 106,673 140,905 9,523,248 10,592,078 378,798 383,540 200,000 200,000 2,966 2,902 5,032,863 4,741,521 684,902 203,581 (185,032 ) (57,818 ) 5,735,699 5,090,186 120,786 110,399 (1,714 ) 7,991 119,072 118,390 5,854,771 5,208,576 $ 15,756,817 $ 16,184,194 ASSETS Investment in real estate Land $ 4,384,200 $ 4,367,816 Depreciable property 15,606,315 15,554,740 Projects under development 185,621 160,190 Land held for development 360,955 325,200 Investment in real estate 20,537,091 20,407,946 Accumulated depreciation (4,658,994 ) (4,539,583 ) Investment in real estate, net 15,878,097 15,868,363 Cash and cash equivalents 219,628 383,921 Investments in unconsolidated entities 14,803 12,327 Deposits – restricted 182,182 152,237 Escrow deposits – mortgage 11,428 10,692 Deferred financing costs, net 45,861 44,608 Other assets 129,248 187,155 Total assets $ 16,481,247 $ 16,659,303 LIABILITIES AND EQUITY Liabilities: Mortgage notes payable $ 4,056,976 $ 4,111,487 Notes, net 5,355,590 5,609,574 Lines of credit — — Accounts payable and accrued expenses 77,055 35,206 Accrued interest payable 79,489 88,121 Other liabilities 261,448 291,289 Security deposits 65,468 65,286 Distributions payable 109,043 179,079 Total liabilities 10,005,069 10,380,042 Commitments and contingencies Redeemable Noncontrolling Interests – Operating Partnership 457,224 416,404 Equity: Shareholders’ equity: 200,000 200,000 3,005 2,975 Paid in capital 5,152,975 5,047,186 Retained earnings 656,001 615,572 Accumulated other comprehensive (loss) (189,973 ) (196,718 ) Total shareholders’ equity 5,822,008 5,669,015 Noncontrolling Interests: Operating Partnership 123,031 119,536 Partially Owned Properties 73,915 74,306 Total Noncontrolling Interests 196,946 193,842 Total equity 6,018,954 5,862,857 Total liabilities and equity $ 16,481,247 $ 16,659,303 Nine Months Ended September 30, Quarter Ended September 30, 2011 2010 2011 2010 $ 1,470,398 $ 1,311,377 $ 509,030 $ 451,832 6,682 7,596 2,928 2,128 1,477,080 1,318,973 511,958 453,960 314,768 303,916 106,635 104,259 168,056 160,307 59,083 56,205 62,389 59,770 19,241 19,014 3,207 4,242 1,250 679 482,039 457,822 164,552 158,318 32,462 31,029 10,121 10,221 1,062,921 1,017,086 360,882 348,696 414,159 301,887 151,076 105,264 6,608 5,045 5,317 201 (9,318 ) (9,513 ) (2,528 ) (3,487 ) (354,960 ) (348,279 ) (113,370 ) (121,116 ) (12,129 ) (7,729 ) (4,721 ) (2,437 ) 44,360 (58,589 ) 35,774 (21,575 ) (669 ) (283 ) (283 ) (291 ) — (735 ) — 188 — 28,101 — 22,544 4,217 (1,161 ) — (1,161 ) 47,908 (32,667 ) 35,491 (295 ) 779,888 130,438 77,486 30,121 827,796 97,771 112,977 29,826 (36,275 ) (4,167 ) (4,742 ) (1,231 ) (418 ) 623 (387 ) 188 791,103 94,227 107,848 28,783 (10,399 ) (10,855 ) (3,466 ) (3,617 ) $ 780,704 $ 83,372 $ 104,382 $ 25,166 $ 0.12 $ (0.15 ) $ 0.10 $ (0.01 ) $ 2.65 $ 0.30 $ 0.35 $ 0.09 294,474 281,867 295,831 282,717 $ 0.12 $ (0.15 ) $ 0.10 $ (0.01 ) $ 2.62 $ 0.30 $ 0.35 $ 0.09 311,908 281,867 312,844 282,717 $ 1.0125 $ 1.0125 $ 0.3375 $ 0.3375 Quarter Ended March 31, 2012 2011 REVENUES Rental income $ 525,595 $ 464,550 Fee and asset management 2,064 1,806 Total revenues 527,659 466,356 EXPENSES Property and maintenance 112,379 105,047 Real estate taxes and insurance 55,987 52,139 Property management 23,409 22,381 Fee and asset management 1,307 948 Depreciation 174,737 158,455 General and administrative 13,688 11,433 Total expenses 381,507 350,403 Operating income 146,152 115,953 Interest and other income 172 1,011 Other expenses (7,067 ) (2,160 ) Interest: Expense incurred, net (118,703 ) (120,528 ) Amortization of deferred financing costs (2,974 ) (3,005 ) 17,580 (8,729 ) Income and other tax (expense) benefit (191 ) (184 ) Income (loss) from continuing operations 17,389 (8,913 ) Discontinued operations, net 134,778 141,979 Net income 152,167 133,066 Net (income) loss attributable to Noncontrolling Interests: Operating Partnership (6,418 ) (5,775 ) Partially Owned Properties (450 ) 40 Net income attributable to controlling interests 145,299 127,331 Preferred distributions (3,466 ) (3,466 ) Net income available to Common Shares $ 141,833 $ 123,865 Earnings per share – basic: Income (loss) from continuing operations available to Common Shares $ 0.04 $ (0.04 ) Net income available to Common Shares $ 0.47 $ 0.42 Weighted average Common Shares outstanding 298,805 292,895 Earnings per share – diluted: Income (loss) from continuing operations available to Common Shares $ 0.04 $ (0.04 ) Net income available to Common Shares $ 0.47 $ 0.42 Weighted average Common Shares outstanding 315,230 292,895 Distributions declared per Common Share outstanding $ 0.3375 $ 0.3375 Nine Months Ended September 30, Quarter Ended September 30, 2011 2010 2011 2010 $ 827,796 $ 97,771 $ 112,977 $ 29,826 (130,367 ) (123,472 ) (105,248 ) (37,726 ) 2,842 2,379 951 914 311 (52 ) (182 ) 14 (127,214 ) (121,145 ) (104,479 ) (36,798 ) 700,582 (23,374 ) 8,498 (6,972 ) (36,693 ) (3,544 ) (5,129 ) (1,043 ) $ 663,889 $ (26,918 ) $ 3,369 $ (8,015 ) Quarter Ended March 31, 2012 2011 Comprehensive income: Net income $ 152,167 $ 133,066 Other comprehensive income: Other comprehensive income – derivative instruments: Unrealized holding gains arising during the period 3,218 6,082 Losses reclassified into earnings from other comprehensive income 3,563 956 Other comprehensive (loss) income – other instruments: Unrealized holding (losses) gains arising during the period (36 ) 146 Other comprehensive income 6,745 7,184 Comprehensive income 158,912 140,250 Comprehensive (income) attributable to Noncontrolling Interests (6,868 ) (5,735 ) Comprehensive income attributable to controlling interests $ 152,044 $ 134,515 Nine Months Ended September 30, 2011 2010 $ 827,796 $ 97,771 496,383 501,695 12,769 7,981 144 1,454 2,441 1,978 4,052 3,512 (4,537 ) — — 735 318 61 — (28,101 ) (4,217 ) 1,161 (759,100 ) (69,538 ) — 158 — 1 16,722 14,716 5,101 75 3,239 (6,385 ) 60,608 66,070 (28,736 ) (31,257 ) (20,193 ) (4,150 ) 1,261 2,744 614,051 560,681 (634,581 ) (1,108,014 ) (93,761 ) (98,282 ) (106,070 ) (98,959 ) (4,879 ) (1,022 ) (5,931 ) (10,196 ) 1,402,475 134,603 (865 ) — — 26,924 — 25,000 4,537 — (210,170 ) 248,547 1,916 (2,340 ) — (26,854 ) 28,360 — (12,809 ) (1,936 ) 368,222 (912,529 ) Quarter Ended March 31, 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 152,167 $ 133,066 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 175,108 169,363 Amortization of deferred financing costs 2,974 3,074 Amortization of discounts and premiums on debt (1,567 ) 373 Amortization of deferred settlements on derivative instruments 3,429 822 Write-off of pursuit costs 1,034 1,683 Distributions from unconsolidated entities – return on capital 89 41 Net (gain) on sales of discontinued operations (132,956 ) (123,754 ) Unrealized (gain) on derivative instruments (1 ) — Compensation paid with Company Common Shares 8,968 6,524 Changes in assets and liabilities: (Increase) decrease in deposits – restricted (2,768 ) 1,557 Decrease in other assets 12,262 5,771 Increase in accounts payable and accrued expenses 41,616 44,531 (Decrease) in accrued interest payable (8,632 ) (26,659 ) (Decrease) in other liabilities (16,878 ) (28,836 ) Increase (decrease) in security deposits 182 (28 ) Net cash provided by operating activities 235,027 187,528 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate – acquisitions (183,112 ) (123,868 ) Investment in real estate – development/other (35,876 ) (29,840 ) Improvements to real estate (30,225 ) (29,891 ) Additions to non-real estate property (2,229 ) (2,677 ) Interest capitalized for real estate and unconsolidated entities under development (4,996 ) (1,700 ) Proceeds from disposition of real estate, net 204,272 258,212 Investments in unconsolidated entities (2,396 ) (366 ) (Increase) in deposits on real estate acquisitions and investments, net (27,386 ) (107,878 ) (Increase) decrease in mortgage deposits (736 ) 506 Acquisition of Noncontrolling Interests – Partially Owned Properties — (504 ) Net cash (used for) investing activities (82,684 ) (38,006 ) Nine Months Ended September 30, 2011 2010 $ (8,070 ) $ (7,897 ) 152,930 124,020 16,595 36,411 (859,066 ) (491,100 ) (12,463 ) (12,508 ) — (158 ) — 595,422 (575,641 ) — 213,000 4,375,125 (187,000 ) (4,229,125 ) — (10,040 ) 154,508 73,356 4,558 4,251 94,373 57,933 — (1,887 ) (2,770 ) (730 ) (33 ) (33 ) 64 222 (331,928 ) (284,185 ) (10,399 ) (10,858 ) (15,464 ) (14,187 ) (889 ) (1,812 ) (1,367,695 ) 202,220 (385,422 ) (149,628 ) 431,408 193,288 $ 45,986 $ 43,660 Quarter Ended March 31, 2012 2011 CASH FLOWS FROM FINANCING ACTIVITIES: Loan and bond acquisition costs $ (4,227 ) $ (223 ) Mortgage notes payable: Proceeds — 707 Restricted cash 209 (22,297 ) Lump sum payoffs (47,800 ) (200,733 ) Scheduled principal repayments (3,970 ) (4,223 ) Notes, net: Lump sum payoffs (253,858 ) (93,096 ) Proceeds from sale of Common Shares 152,058 154,508 Proceeds from Employee Share Purchase Plan (ESPP) 4,210 2,742 Proceeds from exercise of options 18,938 32,719 Payment of offering costs (1,887 ) (2,352 ) Contributions – Noncontrolling Interests – Partially Owned Properties 921 — Contributions – Noncontrolling Interests – Operating Partnership 5 — Distributions: Common Shares (168,350 ) (132,655 ) Preferred Shares (3,466 ) (3,466 ) Noncontrolling Interests – Operating Partnership (7,657 ) (6,225 ) Noncontrolling Interests – Partially Owned Properties (1,762 ) (264 ) Net cash (used for) financing activities (316,636 ) (274,858 ) Net (decrease) in cash and cash equivalents (164,293 ) (125,336 ) Cash and cash equivalents, beginning of period 383,921 431,408 Cash and cash equivalents, end of period $ 219,628 $ 306,072 Nine Months Ended September 30, 2011 2010 $ 381,194 $ 377,467 $ 607 $ (2,892 ) $ 99,131 $ 338,196 $ — $ 7,433 $ — $ (39,999 ) $ — $ (1,824 ) $ 12,769 $ 9,805 $ (6,116 ) $ (5,048 ) $ 6,260 $ 6,502 $ (401 ) $ (401 ) $ 2,842 $ 2,379 $ 5,217 $ 13,788 $ (464 ) $ 6 $ (1,476 ) $ 9,835 $ 127,090 $ 99,844 $ (130,367 ) $ (123,472 ) $ (5,760 ) $ (10,196 ) $ (171 ) $ — $ — $ (105,065 ) $ — $ 7,376 $ — $ (42,633 ) $ — $ 112,631 $ — $ 837 $ 35,495 $ — $ (7,135 ) $ — $ — $ (10,040 ) $ — $ 37,550 $ — $ 35,600 Quarter Ended March 31, 2012 2011 SUPPLEMENTAL INFORMATION: Cash paid for interest, net of amounts capitalized $ 125,435 $ 146,514 Net cash paid for income and other taxes $ 560 $ 341 Real estate acquisitions/dispositions/other: Mortgage loans assumed $ — $ 26,900 Amortization of discounts and premiums on debt: Mortgage notes payable $ (2,153 ) $ (1,858 ) Notes, net $ 586 $ 2,231 Amortization of deferred settlements on derivative instruments: Other liabilities $ (134 ) $ (134 ) Accumulated other comprehensive income $ 3,563 $ 956 Unrealized (gain) on derivative instruments: Other assets $ 1,300 $ 810 Mortgage notes payable $ (588 ) $ (144 ) Notes, net $ (712 ) $ (1,348 ) Other liabilities $ (3,219 ) $ (5,400 ) Accumulated other comprehensive income $ 3,218 $ 6,082 Interest capitalized for real estate and unconsolidated entities under development: Investment in real estate, net $ (4,827 ) $ (1,659 ) Investments in unconsolidated entities $ (169 ) $ (41 ) Other: Receivable on sale of Common Shares $ 28,457 $ — Nine Months Ended
September 30, 2011 $ 200,000 $ 200,000 $ 2,902 3 30 29 1 (1 ) 2 $ 2,966 $ 4,741,521 8,092 154,478 94,344 4,557 (3,933 ) 7,275 7,389 1,070 (2,770 ) 10,198 (4,784 ) 16,023 (597 ) $ 5,032,863 $ 203,581 791,103 (299,383 ) (10,399 ) $ 684,902 $ (57,818 ) (130,367 ) 2,842 311 $ (185,032 ) SHAREHOLDERS’ EQUITY PREFERRED SHARES Balance, beginning of year $ 200,000 Balance, end of period $ 200,000 COMMON SHARES, $0.01 PAR VALUE Balance, beginning of year $ 2,975 Issuance of Common Shares 21 Exercise of share options 7 Employee Share Purchase Plan (ESPP) 1 Share-based employee compensation expense: Restricted shares 1 Balance, end of period $ 3,005 PAID IN CAPITAL Balance, beginning of year $ 5,047,186 Common Share Issuance: Conversion of OP Units into Common Shares 1,085 Issuance of Common Shares 123,580 Exercise of share options 18,931 Employee Share Purchase Plan (ESPP) 4,209 Share-based employee compensation expense: Restricted shares 2,709 Share options 4,092 ESPP discount 743 Offering costs (1,887 ) Supplemental Executive Retirement Plan (SERP) (6,292 ) Change in market value of Redeemable Noncontrolling Interests – Operating Partnership (37,603 ) Adjustment for Noncontrolling Interests ownership in Operating Partnership (3,778 ) Balance, end of period $ 5,152,975 RETAINED EARNINGS Balance, beginning of year $ 615,572 Net income attributable to controlling interests 145,299 Common Share distributions (101,404 ) Preferred Share distributions (3,466 ) Balance, end of period $ 656,001 Nine Months Ended
September 30, 2011 $ 110,399 (8,095 ) 3,934 2,734 36,275 (13,777 ) (11,281 ) 597 $ 120,786 $ 7,991 418 64 (922 ) (8,025 ) (1,240 ) $ (1,714 ) SHAREHOLDERS' EQUITY (continued) ACCUMULATED OTHER COMPREHENSIVE (LOSS) Balance, beginning of year $ (196,718 ) Accumulated other comprehensive income – derivative instruments: Unrealized holding gains arising during the period 3,218 Losses reclassified into earnings from other comprehensive income 3,563 Accumulated other comprehensive (loss) – other instruments: Unrealized holding (losses) arising during the period (36 ) Balance, end of period $ (189,973 ) NONCONTROLLING INTERESTS OPERATING PARTNERSHIP Balance, beginning of year $ 119,536 Issuance of LTIP Units to Noncontrolling Interests 5 Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner (1,085 ) Equity compensation associated with Noncontrolling Interests 2,163 Net income attributable to Noncontrolling Interests 6,418 Distributions to Noncontrolling Interests (4,567 ) Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership (3,217 ) Adjustment for Noncontrolling Interests ownership in Operating Partnership 3,778 Balance, end of period $ 123,031 PARTIALLY OWNED PROPERTIES Balance, beginning of year $ 74,306 Net income attributable to Noncontrolling Interests 450 Contributions by Noncontrolling Interests 921 Distributions to Noncontrolling Interests (1,762 ) Balance, end of period $ 73,915 September 30,
2011 December 31,
2010 $ 4,158,288 $ 4,110,275 15,055,570 15,226,512 119,433 130,337 205,476 235,247 19,538,767 19,702,371 (4,405,479 ) (4,337,357 ) 15,133,288 15,365,014 45,986 431,408 11,020 3,167 369,461 180,987 10,677 12,593 37,334 42,033 149,051 148,992 $ 15,756,817 $ 16,184,194 $ 4,136,848 $ 4,762,896 4,614,323 5,185,180 26,000 — 97,845 39,452 69,895 98,631 409,591 304,202 62,073 60,812 106,673 140,905 9,523,248 10,592,078 378,798 383,540 200,000 200,000 5,720,731 4,948,004 120,786 110,399 (185,032 ) (57,818 ) 5,856,485 5,200,585 (1,714 ) 7,991 5,854,771 5,208,576 $ 15,756,817 $ 16,184,194 ASSETS Investment in real estate Land $ 4,384,200 $ 4,367,816 Depreciable property 15,606,315 15,554,740 Projects under development 185,621 160,190 Land held for development 360,955 325,200 Investment in real estate 20,537,091 20,407,946 Accumulated depreciation (4,658,994 ) (4,539,583 ) Investment in real estate, net 15,878,097 15,868,363 Cash and cash equivalents 219,628 383,921 Investments in unconsolidated entities 14,803 12,327 Deposits – restricted 182,182 152,237 Escrow deposits – mortgage 11,428 10,692 Deferred financing costs, net 45,861 44,608 Other assets 129,248 187,155 Total assets $ 16,481,247 $ 16,659,303 LIABILITIES AND CAPITAL Liabilities: Mortgage notes payable $ 4,056,976 $ 4,111,487 Notes, net 5,355,590 5,609,574 Lines of credit — — Accounts payable and accrued expenses 77,055 35,206 Accrued interest payable 79,489 88,121 Other liabilities 261,448 291,289 Security deposits 65,468 65,286 Distributions payable 109,043 179,079 Total liabilities 10,005,069 10,380,042 Commitments and contingencies Redeemable Limited Partners 457,224 416,404 Capital: Partners’ Capital: Preference Units 200,000 200,000 General Partner 5,811,981 5,665,733 Limited Partners 123,031 119,536 Accumulated other comprehensive (loss) (189,973 ) (196,718 ) Total partners’ capital 5,945,039 5,788,551 Noncontrolling Interests – Partially Owned Properties 73,915 74,306 Total capital 6,018,954 5,862,857 Total liabilities and capital $ 16,481,247 $ 16,659,303 Nine Months Ended September 30, Quarter Ended September 30, 2011 2010 2011 2010 $ 1,470,398 $ 1,311,377 $ 509,030 $ 451,832 6,682 7,596 2,928 2,128 1,477,080 1,318,973 511,958 453,960 314,768 303,916 106,635 104,259 168,056 160,307 59,083 56,205 62,389 59,770 19,241 19,014 3,207 4,242 1,250 679 482,039 457,822 164,552 158,318 32,462 31,029 10,121 10,221 1,062,921 1,017,086 360,882 348,696 414,159 301,887 151,076 105,264 6,608 5,045 5,317 201 (9,318 ) (9,513 ) (2,528 ) (3,487 ) (354,960 ) (348,279 ) (113,370 ) (121,116 ) (12,129 ) (7,729 ) (4,721 ) (2,437 ) 44,360 (58,589 ) 35,774 (21,575 ) (669 ) (283 ) (283 ) (291 ) — (735 ) — 188 — 28,101 — 22,544 4,217 (1,161 ) — (1,161 ) 47,908 (32,667 ) 35,491 (295 ) 779,888 130,438 77,486 30,121 827,796 97,771 112,977 29,826 (418 ) 623 (387 ) 188 $ 827,378 $ 98,394 $ 112,590 $ 30,014 $ 10,399 $ 10,855 $ 3,466 $ 3,617 $ 780,704 $ 83,372 $ 104,382 $ 25,166 36,275 4,167 4,742 1,231 $ 816,979 $ 87,539 $ 109,124 $ 26,397 $ 0.12 $ (0.15 ) $ 0.10 $ (0.01 ) $ 2.65 $ 0.30 $ 0.35 $ 0.09 307,705 295,572 308,884 296,348 $ 0.12 $ (0.15 ) $ 0.10 $ (0.01 ) $ 2.62 $ 0.30 $ 0.35 $ 0.09 311,908 295,572 312,844 296,348 $ 1.0125 $ 1.0125 $ 0.3375 $ 0.3375 Quarter Ended March 31, 2012 2011 REVENUES Rental income $ 525,595 $ 464,550 Fee and asset management 2,064 1,806 Total revenues 527,659 466,356 EXPENSES Property and maintenance 112,379 105,047 Real estate taxes and insurance 55,987 52,139 Property management 23,409 22,381 Fee and asset management 1,307 948 Depreciation 174,737 158,455 General and administrative 13,688 11,433 Total expenses 381,507 350,403 Operating income 146,152 115,953 Interest and other income 172 1,011 Other expenses (7,067 ) (2,160 ) Interest: Expense incurred, net (118,703 ) (120,528 ) Amortization of deferred financing costs (2,974 ) (3,005 ) 17,580 (8,729 ) Income and other tax (expense) benefit (191 ) (184 ) Income (loss) from continuing operations 17,389 (8,913 ) Discontinued operations, net 134,778 141,979 Net income 152,167 133,066 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties (450 ) 40 Net income attributable to controlling interests $ 151,717 $ 133,106 ALLOCATION OF NET INCOME: Preference Units $ 3,466 $ 3,466 General Partner $ 141,833 $ 123,865 Limited Partners 6,418 5,775 Net income available to Units $ 148,251 $ 129,640 Earnings per Unit – basic: Income (loss) from continuing operations available to Units $ 0.04 $ (0.04 ) Net income available to Units $ 0.47 $ 0.42 Weighted average Units outstanding 312,011 306,248 Earnings per Unit – diluted: Income (loss) from continuing operations available to Units $ 0.04 $ (0.04 ) Net income available to Units $ 0.47 $ 0.42 Weighted average Units outstanding 315,230 306,248 Distributions declared per Unit outstanding $ 0.3375 $ 0.3375 Nine Months Ended September 30, Quarter Ended September 30, 2011 2010 2011 2010 $ 827,796 $ 97,771 $ 112,977 $ 29,826 (130,367 ) (123,472 ) (105,248 ) (37,726 ) 2,842 2,379 951 914 311 (52 ) (182 ) 14 (127,214 ) (121,145 ) (104,479 ) (36,798 ) 700,582 (23,374 ) 8,498 (6,972 ) (418 ) 623 (387 ) 188 $ 700,164 $ (22,751 ) $ 8,111 $ (6,784 ) Quarter Ended March 31, 2012 2011 Comprehensive income: Net income $ 152,167 $ 133,066 Other comprehensive income: Other comprehensive income – derivative instruments: Unrealized holding gains arising during the period 3,218 6,082 Losses reclassified into earnings from other comprehensive income 3,563 956 Other comprehensive (loss) income – other instruments: Unrealized holding (losses) gains arising during the period (36 ) 146 Other comprehensive income 6,745 7,184 Comprehensive income 158,912 140,250 (450 ) 40 Comprehensive income attributable to controlling interests $ 158,462 $ 140,290 Nine Months Ended September 30, 2011 2010 $ 827,796 $ 97,771 496,383 501,695 12,769 7,981 144 1,454 2,441 1,978 4,052 3,512 (4,537 ) — — 735 318 61 — (28,101 ) (4,217 ) 1,161 (759,100 ) (69,538 ) — 158 — 1 16,722 14,716 5,101 75 3,239 (6,385 ) 60,608 66,070 (28,736 ) (31,257 ) (20,193 ) (4,150 ) 1,261 2,744 614,051 560,681 (634,581 ) (1,108,014 ) (93,761 ) (98,282 ) (106,070 ) (98,959 ) (4,879 ) (1,022 ) (5,931 ) (10,196 ) 1,402,475 134,603 (865 ) — — 26,924 — 25,000 4,537 — (210,170 ) 248,547 1,916 (2,340 ) — (26,854 ) 28,360 — (12,809 ) (1,936 ) 368,222 (912,529 ) Quarter Ended March 31, 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 152,167 $ 133,066 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 175,108 169,363 Amortization of deferred financing costs 2,974 3,074 Amortization of discounts and premiums on debt (1,567 ) 373 Amortization of deferred settlements on derivative instruments 3,429 822 Write-off of pursuit costs 1,034 1,683 Distributions from unconsolidated entities – return on capital 89 41 Net (gain) on sales of discontinued operations (132,956 ) (123,754 ) Unrealized (gain) on derivative instruments (1 ) — Compensation paid with Company Common Shares 8,968 6,524 Changes in assets and liabilities: (Increase) decrease in deposits – restricted (2,768 ) 1,557 Decrease in other assets 12,262 5,771 Increase in accounts payable and accrued expenses 41,616 44,531 (Decrease) in accrued interest payable (8,632 ) (26,659 ) (Decrease) in other liabilities (16,878 ) (28,836 ) Increase (decrease) in security deposits 182 (28 ) Net cash provided by operating activities 235,027 187,528 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate – acquisitions (183,112 ) (123,868 ) Investment in real estate – development/other (35,876 ) (29,840 ) Improvements to real estate (30,225 ) (29,891 ) Additions to non-real estate property (2,229 ) (2,677 ) Interest capitalized for real estate and unconsolidated entities under development (4,996 ) (1,700 ) Proceeds from disposition of real estate, net 204,272 258,212 Investments in unconsolidated entities (2,396 ) (366 ) (Increase) in deposits on real estate acquisitions and investments, net (27,386 ) (107,878 ) (Increase) decrease in mortgage deposits (736 ) 506 Acquisition of Noncontrolling Interests – Partially Owned Properties — (504 ) Net cash (used for) investing activities (82,684 ) (38,006 ) Nine Months Ended September 30, 2011 2010 $ (8,070 ) $ (7,897 ) 152,930 124,020 16,595 36,411 (859,066 ) (491,100 ) (12,463 ) (12,508 ) — (158 ) — 595,422 (575,641 ) — 213,000 4,375,125 (187,000 ) (4,229,125 ) — (10,040 ) 154,508 73,356 4,558 4,251 94,373 57,933 — (1,887 ) (2,770 ) (730 ) (33 ) (33 ) 64 222 (331,928 ) (284,185 ) (10,399 ) (10,858 ) (15,464 ) (14,187 ) (889 ) (1,812 ) (1,367,695 ) 202,220 (385,422 ) (149,628 ) 431,408 193,288 $ 45,986 $ 43,660 Quarter Ended March 31, 2012 2011 CASH FLOWS FROM FINANCING ACTIVITIES: Loan and bond acquisition costs $ (4,227 ) $ (223 ) Mortgage notes payable: Proceeds — 707 Restricted cash 209 (22,297 ) Lump sum payoffs (47,800 ) (200,733 ) Scheduled principal repayments (3,970 ) (4,223 ) Notes, net: Lump sum payoffs (253,858 ) (93,096 ) Proceeds from sale of OP Units 152,058 154,508 Proceeds from EQR’s Employee Share Purchase Plan (ESPP) 4,210 2,742 Proceeds from exercise of EQR options 18,938 32,719 Payment of offering costs (1,887 ) (2,352 ) Contributions – Noncontrolling Interests – Partially Owned Properties 921 — Contributions – Limited Partners 5 — Distributions: OP Units – General Partner (168,350 ) (132,655 ) Preference Units (3,466 ) (3,466 ) OP Units – Limited Partners (7,657 ) (6,225 ) Noncontrolling Interests – Partially Owned Properties (1,762 ) (264 ) Net cash (used for) financing activities (316,636 ) (274,858 ) Net (decrease) in cash and cash equivalents (164,293 ) (125,336 ) Cash and cash equivalents, beginning of period 383,921 431,408 Cash and cash equivalents, end of period $ 219,628 $ 306,072 Nine Months Ended September 30, 2011 2010 $ 381,194 $ 377,467 $ 607 $ (2,892 ) $ 99,131 $ 338,196 $ — $ 7,433 $ — $ (39,999 ) $ — $ (1,824 ) $ 12,769 $ 9,805 $ (6,116 ) $ (5,048 ) $ 6,260 $ 6,502 $ (401 ) $ (401 ) $ 2,842 $ 2,379 $ 5,217 $ 13,788 $ (464 ) $ 6 $ (1,476 ) $ 9,835 $ 127,090 $ 99,844 $ (130,367 ) $ (123,472 ) $ (5,760 ) $ (10,196 ) $ (171 ) $ — $ — $ (105,065 ) $ — $ 7,376 $ — $ (42,633 ) $ — $ 112,631 $ — $ 837 $ 35,495 $ — $ (7,135 ) $ — $ — $ (10,040 ) $ — $ 37,550 $ — $ 35,600 Quarter Ended March 31, 2012 2011 SUPPLEMENTAL INFORMATION: Cash paid for interest, net of amounts capitalized $ 125,435 $ 146,514 Net cash paid for income and other taxes $ 560 $ 341 Real estate acquisitions/dispositions/other: Mortgage loans assumed $ — $ 26,900 Amortization of discounts and premiums on debt: Mortgage notes payable $ (2,153 ) $ (1,858 ) Notes, net $ 586 $ 2,231 Amortization of deferred settlements on derivative instruments: Other liabilities $ (134 ) $ (134 ) Accumulated other comprehensive income $ 3,563 $ 956 Unrealized (gain) on derivative instruments: Other assets $ 1,300 $ 810 Mortgage notes payable $ (588 ) $ (144 ) Notes, net $ (712 ) $ (1,348 ) Other liabilities $ (3,219 ) $ (5,400 ) Accumulated other comprehensive income $ 3,218 $ 6,082 Interest capitalized for real estate and unconsolidated entities under development: Investment in real estate, net $ (4,827 ) $ (1,659 ) Investments in unconsolidated entities $ (169 ) $ (41 ) Other: Receivable on sale of OP Units $ 28,457 $ — Nine Months Ended
September 30, 2011 $ 200,000 $ 200,000 $ 4,948,004 8,095 154,508 94,373 4,558 (3,934 ) 7,277 7,389 1,070 (2,770 ) 780,704 (299,383 ) 10,198 (4,784 ) 16,023 (597 ) $ 5,720,731 $ 110,399 (8,095 ) 3,934 2,734 36,275 (13,777 ) (11,281 ) 597 $ 120,786 $ (57,818 ) (130,367 ) 2,842 311 $ (185,032 ) PARTNERS’ CAPITAL PREFERENCE UNITS Balance, beginning of year $ 200,000 Balance, end of period $ 200,000 GENERAL PARTNER Balance, beginning of year $ 5,665,733 OP Unit Issuance: Conversion of OP Units held by Limited Partners into OP Units held by General Partner 1,085 Issuance of OP Units 123,601 Exercise of EQR share options 18,938 EQR’s Employee Share Purchase Plan (ESPP) 4,210 Share-based employee compensation expense: EQR restricted shares 2,710 EQR share options 4,092 EQR ESPP discount 743 Offering costs (1,887 ) Net income available to Units – General Partner 141,833 OP Units – General Partner distributions (101,404 ) Supplemental Executive Retirement Plan (SERP) (6,292 ) Change in market value of Redeemable Limited Partners (37,603 ) Adjustment for Limited Partners ownership in Operating Partnership (3,778 ) Balance, end of period $ 5,811,981 LIMITED PARTNERS Balance, beginning of year $ 119,536 Issuance of LTIP Units to Limited Partners 5 Conversion of OP Units held by Limited Partners into OP Units held by General Partner (1,085 ) Equity compensation associated with Units – Limited Partners 2,163 Net income available to Units – Limited Partners 6,418 Units – Limited Partners distributions (4,567 ) Change in carrying value of Redeemable Limited Partners (3,217 ) Adjustment for Limited Partners ownership in Operating Partnership 3,778 Balance, end of period $ 123,031 ACCUMULATED OTHER COMPREHENSIVE (LOSS) Balance, beginning of year $ (196,718 ) Accumulated other comprehensive income – derivative instruments: Unrealized holding gains arising during the period 3,218 Losses reclassified into earnings from other comprehensive income 3,563 Accumulated other comprehensive (loss) – other instruments: Unrealized holding (losses) arising during the period (36 ) Balance, end of period $ (189,973 ) Nine Months Ended
September 30, 2011 $ 7,991 418 64 (922 ) (8,025 ) (1,240 ) $ (1,714 ) NONCONTROLLING INTERESTS NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES Balance, beginning of year $ 74,306 Net income attributable to Noncontrolling Interests 450 Contributions by Noncontrolling Interests 921 Distributions to Noncontrolling Interests (1,762 ) Balance, end of period $ 73,915 1.1. Business September 30, 2011March 31, 2012 owned an approximate 95.6%95.7% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues public equity from time to time but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.September 30, 2011,March 31, 2012, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 417427 properties located in 1514 states and the District of Columbia consisting of 119,011121,011 apartment units. The ownership breakdown includes (table does not include various uncompleted development properties): Properties Apartment Units 394 110,194 21 3,916 2 4,901 417 119,011 Properties Apartment Units Wholly Owned Properties 404 112,181 Partially Owned Properties – Consolidated 21 3,916 Military Housing 2 4,914 427 121,011 2.2. Summary of Significant Accounting Policies nine monthsquarter ended September 30, 2011March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.20102011 have 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.each of the Company’s and the Operating Partnership’sPartnership's annual reportsreport on Form 10-K for the year ended December 31, 2010. entities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates for which the temporary differences are expected to be recovered or settled. The effects of changes in tax rates on deferred tax assets and liabilities are recognized in earnings in the period enacted. The Company’s deferred tax assets are generally the result of tax affected amortization of goodwill, differing depreciable lives on capitalized assets and the timing of expense recognition for certain accrued liabilities. As of September 30, 2011,March 31, 2012, the Company has recorded a deferred tax asset of approximately $38.7$31.7 million, which is fully offset by a valuation allowance due to the uncertainty in forecasting future TRS taxable income.OtherEffective January 1, 2010, in an effort to improve financial standards for transfers of financial assets, more stringent conditions for reporting a transfer of a portion of a financial asset as a sale (e.g. loan participations) are required, the concept of a “qualifying special-purpose entity” and special guidance for guaranteed mortgage securitizations are eliminated, other sale-accounting criteria is clarified and the initial measurement of a transferor’s interest in transferred financial assets is changed. This does not have a material effect on the Company’s consolidated results of operations or financial position.Effective January 1, 2010, the analysis for identifying the primary beneficiary of a Variable Interest Entity (“VIE”) has been simplified by replacing the previous quantitative-based analysis with a framework that is based more on qualitative judgments. The analysis requires the primary beneficiary of a VIE to be identified as the party that both (a) has the power to direct the activities of a VIE that most significantly impact its economic performance and (b) has an obligation to absorb losses or a right to receive benefits that could potentially be significant to the VIE. For the Company, this includes its consolidated development partnerships as the Company provides substantially all of the capital for these ventures (other than third party mortgage debt, if any). For the Company, these requirements affected only disclosures and had no impact on the Company’s consolidated results of operations or financial position. See Note 6 for further discussion.negative noncontrolling interest book value of $1.7$73.9 million at September 30, 2011.March 31, 2012. The Company is required to make certain disclosures regarding noncontrolling interests in consolidated limited-life subsidiaries. Of the consolidated entities described above, the Company is the controlling partner in limited-life partnerships owning six properties. properties having a noncontrolling interest deficit balance of $4.7 million. These six partnership agreements contain provisions that require the partnerships to be liquidated through the sale of their assets upon reaching a date specified in each respective partnership agreement. The Company, as controlling partner, has an obligation to cause the property owning partnerships to distribute the proceeds of liquidation to the Noncontrolling Interests in these Partially Owned Properties only to the extent that the net proceeds received by the partnerships from the sale of their assets warrant a distribution based on the partnership agreements. As of September 30, 2011,March 31, 2012, the Company estimates the value of Noncontrolling Interest distributions for these six properties would have been approximately $32.9$36.1 million (“Settlement Value”) had the partnerships been liquidated. This Settlement Value is based on estimated third party consideration realized by the partnerships upon disposition of the six Partially Owned Properties and is net of all other assets and liabilities, including yield maintenance on the mortgages encumbering the properties, that would have been due on September 30, 2011March 31, 2012 had those mortgages been prepaid. Due to, among other things, the inherent uncertainty in the sale of real estate assets, the amount of any potential distribution to the Noncontrolling Interests in the Company’swill beare required to separately disclose the amounts and reasons for any transfers of assets and liabilities into and out of Level 1 and Level 2 of the fair value hierarchy. For fair value measurements using significant unobservable inputs (Level 3), companies will beare required to disclose quantitative information about the significant unobservable inputs used for all Level 3 measurements and a description of the Company’s valuation processes in determining fair value. In addition, companies will beare required to provide a qualitative discussion about the sensitivity of recurring Level 3 measurements to changes in the unobservable inputs disclosed, including the interrelationship between inputs. Companies willare also be required to disclose information about when the current use of a non-financial asset measured at fair value differs from its highest and best use and the hierarchy classification for items whose fair value is not recorded on the balance sheet but is disclosed in the notes. The CompanyThis does not expect this will have a material effect on itsthe Company's consolidated results of operations or financial position.Effective January 1, 2009, issuers of certain convertible debt instruments that may be settled in cash on conversion were required to separately account See Note 9 for the liability and equity components of the instrument in a manner that reflects each issuer’s nonconvertible debt borrowing rate. As the Company was required to apply this retrospectively, the accounting for its $650.0 million 3.85% convertible unsecured notes that were issued in August 2006 with a final maturity in August 2026 was affected. On August 18, 2011, the Company redeemed these notes at par ($482.5 million was outstanding on August 18, 2011) and no premium was paid. The Company recognized $11.8 million and $13.9 million in interest expense related to the stated coupon rate of 3.85% for the nine months ended September 30, 2011 and 2010, respectively. The amount of the conversion option as of the date of issuance calculated by the Company using a 5.80% effective interest rate was $44.3 million and was 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 $5.0 million and $5.8 million, respectively, or $0.02 per share/Unit and $0.02 per share/Unit, respectively, for the nine months ended September 30, 2011 and 2010, and will result in a reduction to earnings of approximately $5.0 million or $0.02 per share/Unit during the full year of 2011. In addition, the Company decreased the January 1, 2009 balance of retained earnings (included in general partner’s capital in the Operating Partnership’s financial statements) 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 (included in general partner’s capital in the Operating Partnership’s financial statements) by $44.3 million. The carrying amount of the conversion option remaining in paid in capital (included in general partner’s capital in the Operating Partnership’s financial statements) was $44.3 million at both September 30, 2011 and December 31, 2010. The cash and conversion option discounts were fully amortized at September 30, 2011 and the unamortized cash and conversion option discounts totaled $5.0 million at December 31, 2010.3.3. Equity, Capital and Other Interests nine monthsquarter ended September 30, 2011:March 31, 2012: 20112012 Common Shares Common Shares297,508,185 290,197,242Common Shares Issued: Common Shares Issued:31,361 324,6492,078,310 3,038,980690,340 2,914,47685,837 98,766128,136 148,708Common Shares Other:Conversion of restricted shares to LTIP Units(101,988) September 30,300,522,169 296,620,833Units Units13,492,543 13,612,03770,235 120,112Conversion of restricted shares to LTIP Units101,988( 324,64931,361) September 30,13,531,417 13,509,488September 30,314,053,586 310,130,3214.44.3% September 30, 2011March 31, 2012 and December 31, 2010.September 30, 2011,March 31, 2012, the Redeemable Noncontrolling Interests – Operating Partnership have a redemption value of$378.8$457.2 million, which represents the value of Common Shares that would be issued in exchange with the Redeemable Noncontrolling Interests – Operating Partnership Units.nine monthsquarter ended September 30, 2011March 31, 2012 (amounts in thousands): 2011 $ 383,540 (16,023 ) 11,281 $ 378,798 2012 Balance at January 1, $ 416,404 Change in market value 37,603 Change in carrying value 3,217 Balance at March 31, $ 457,224 $0.01$0.01 par value per share (the “Preferred Shares”), with specific rights, preferences and other attributes as the Board of Trustees may determine, which may include preferences, powers and rights that are senior to the rights of holders of the Company’s Common Shares.September 30, 2011March 31, 2012 and December 31, 2010: Annual Amounts in thousands Redemption
Date (1) Dividend per
Share (2) September 30,
2011 December 31,
2010 12/10/26 $ 4.145 $ 50,000 $ 50,000 6/19/08 $ 16.20 150,000 150,000 $ 200,000 $ 200,000 Amounts in thousands March 31,
2012 December 31, 2011 12/10/26 $4.145 $ 50,000 $ 50,000 06/19/08 $16.20 150,000 150,000 $ 200,000 $ 200,000 (1) On or after the redemption date, redeemable preferred shares (Series K and N) may be redeemed for cash at the option of the Company, in whole or in part, at a redemption price equal to the liquidation price per share, plus accrued and unpaid distributions, if any. (2) $1.62$1.62 per share.(3) The Series N Preferred Shares have a corresponding depositary share that consists of ten times the number of shares and one-tenth the liquidation value and dividend per share. nine monthsquarter ended September 30, 2011:March 31, 2012: 20112012 311,000,728 303,809,279Issued to General Partner: Issued to General Partner:2,078,310 3,038,980690,340 2,914,47685,837 EQR's restricted share grants, net 98,766128,136Issued to Limited Partners: EQR restricted share grants, net148,708Issued to Limited Partners:70,235 120,112September 30,314,053,586 310,130,321Limited Partner Units Limited Partner Units13,492,543 13,612,03770,235 120,112Conversion of EQR restricted shares to LTIP Units101,988( 324,64931,361) September 30,13,531,417 13,509,4884.44.3% September 30, 2011March 31, 2012 include various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of LTIP Units. Subject to certain exceptions (including the “book-up” requirements of LTIP Units), Limited Partners may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Limited Partner Units (including redeemable interests) is allocated based on the number of Limited Partner Units in total in proportion to the number of Limited Partner Units in total plus the number of General Partner Units. Net income is allocated to the Limited Partner Units based on the weighted average ownership percentage during the period.September 30, 2011March 31, 2012 and December 31, 2010.September 30, 2011,March 31, 2012, the Redeemable Limited Partner Units have a redemption value of approximately $378.8$457.2 million, which represents the value of Common Shares that would be issued in exchange with the Redeemable Limited Partner Units.nine monthsquarter ended September 30, 2011March 31, 2012 (amounts in thousands): 2011 $ 383,540 (16,023 ) 11,281 $ 378,798 2012 Balance at January 1, $ 416,404 Change in market value 37,603 Change in carrying value 3,217 Balance at March 31, $ 457,224 September 30, 2011March 31, 2012 and December 31, 2010: Redemption
Date (1) Annual
Dividend per
Unit (2) Amounts in thousands September 30,
2011 December 31,
2010 12/10/26 $ 4.145 $ 50,000 $ 50,000 6/19/08 $ 16.20 150,000 150,000 $ 200,000 $ 200,000 Amounts in thousands Annual
Dividend per
Unit (2)March 31,
2012 December 31, 2011 Preference Units: 12/10/26 $4.145 $ 50,000 $ 50,000 06/19/08 $16.20 150,000 150,000 $ 200,000 $ 200,000 (1) On or after the redemption date, redeemable preference units (Series K and N) may be redeemed for cash at the option of the Operating Partnership, in whole or in part, at a redemption price equal to the liquidation price per unit, plus accrued and unpaid distributions, if any, in conjunction with the concurrent redemption of the corresponding Company Preferred Shares.(2) $1.62$1.62 per unit.(3) The Series N Preference Units have a corresponding depositary unit that consists of ten times the number of units and one-tenth the liquidation value and dividend per unit. OtherEQRthe Company announced the establishment of an At-The-Market (“ATM”) share offering program which would allow EQR to sell up to 17.0 million Common Shares from time to time over the next three years (later increased by 5.7 million Common Shares and extended to February 2014) into the existing trading market at current market prices as well as through negotiated transactions. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds from all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis). During the nine monthsquarter ended September 30, 2011,March 31, 2012, EQR issued approximately 3.02.1 million Common Shares at an average price of $50.84$59.47 per share for total consideration of approximately $154.5$123.6 million through the ATM program. Concurrent with these transactions, ERPOP issued approximately 3.02.1 million OP Units to EQR. EQR has not issued any shares under this program since January 13, 2011. Including its February 2011 prospectus supplement which added approximately 5.77.1 million Common Shares, EQR has 10.0 million Common Shares remaining available for issuance under the ATM program as of September 30, 2011.On June 16, 2011, the shareholders of EQR approved the Company’s 2011 Share Incentive Plan (the “2011 Plan”)March 31, 2012. The 2011 Plan reserved 12,980,741 Common Shares for issuance. In conjunction with the approval of the 2011 Plan, no further awards may be granted under the 2002 Share Incentive Plan. The 2011 Plan expires on June 16, 2021.$464.6September 30, 2011.March 31, 2012. No shares were repurchased during the nine monthsquarter ended September 30, 2011.During the nine months ended September 30, 2011, the Company acquired all of its partner’s interest in three consolidated partially owned properties consisting of 1,351 apartment units for $12.8 million. In conjunction with these transactions, the Company reduced paid in capital (included in general partner’s capital in the Operating Partnership’s financial statements) by $4.8 million and Noncontrolling Interests – Partially Owned Properties by $8.0 million.4.4. Real Estate September 30, 2011March 31, 2012 and December 31, 20102011 (amounts in thousands): September 30,
2011 December 31,
2010 $ 4,158,288 $ 4,110,275 13,822,345 13,995,121 1,233,225 1,231,391 26,772 28,260 92,661 102,077 162,355 198,465 43,121 36,782 19,538,767 19,702,371 (4,405,479 ) (4,337,357 ) $ 15,133,288 $ 15,365,014 March 31,
2012 December 31,
2011Land $ 4,384,200 $ 4,367,816 Depreciable property: Buildings and improvements 14,294,619 14,262,616 Furniture, fixtures and equipment 1,311,696 1,292,124 Projects under development: Land 76,112 75,646 Construction-in-progress 109,509 84,544 Land held for development: Land 323,017 299,096 Construction-in-progress 37,938 26,104 Investment in real estate 20,537,091 20,407,946 Accumulated depreciation (4,658,994 ) (4,539,583 ) Investment in real estate, net $ 15,878,097 $ 15,868,363 nine monthsquarter ended September 30, 2011,March 31, 2012, the Company acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands): Properties Apartment Units Purchase Price 10 2,529 $ 701,748 — — 18,450 — — 11,750 10 2,529 $ 731,948 (1)Includes entry into a long-term ground lease for a land parcel in New York City.(2)Represents the acquisition of a 97,000 square foot commercial building adjacent to our Harbor Steps apartment property in downtown Seattle for potential redevelopment. Properties Apartment Units Purchase Price Rental Properties – Consolidated 3 544 $ 159,100 Land Parcels (two) — — 23,740 Total 3 544 $ 182,840 nine monthsquarter ended September 30, 2011,March 31, 2012, the Company disposed of the following to unaffiliated parties (sales price in thousands): Properties Apartment Units Sales Price 45 13,528 $ 1,383,414 — — 22,786 45 13,528 $ 1,406,200 (1)Represents the sale of a land parcel, on which the Company no longer planned to develop, in suburban Washington, D.C. Properties Apartment Units Sales Price Rental Properties – Consolidated 3 1,522 $ 206,350 Total 3 1,522 $ 206,350 $759.1$133.0 million and a net gain on sales of land parcels of approximately $4.2 million on the above sales.5.5. Commitments to Acquire/Dispose of Real Estate propertiesproperty that werewas subsequently acquired as discussed in Note 14, the Company has entered into separate agreements to acquire the following (purchase price in thousands): Properties Apartment Units Purchase Price 6 2,466 $ 354,825 — — 157,987 6 2,466 $ 512,812 Properties Apartment Units Purchase Price Land Parcels (four) — — $ 73,500 Total — — $ 73,500 propertyproperties that waswere subsequently disposed of as discussed in Note 14, the Company has entered into separate agreements to dispose of the following (sales price in thousands): Properties Apartment Units Sales Price 4 351 $ 15,550 4 351 $ 15,550 Properties Apartment Units Sales Price Rental Properties 3 699 $ 54,100 Total 3 699 $ 54,100 6.6. Investments in Partially Owned Entities September 30, 2011March 31, 2012 (amounts in thousands except for project and apartment unit amounts): Consolidated Development Projects (VIEs) Held for
and/or Under
Development Completed
and
Stabilized Other Total — 2 19 21 — 441 3,475 3,916 $ 25,071 $ 114,570 $ 447,939 $ 587,580 — (11,186 ) (140,444 ) (151,630 ) 25,071 103,384 307,495 435,950 1,643 1,578 11,078 14,299 — 2,367 15,177 17,544 — 50 — 50 — 119 1,187 1,306 89 132 136 357 $ 26,803 $ 107,630 $ 335,073 $ 469,506 $ — $ 84,153 $ 200,337 $ 284,490 179 1,327 2,960 4,466 — 258 720 978 1,274 47 2,862 4,183 — 110 1,482 1,592 1,453 85,895 208,361 295,709 2,243 1,079 (5,036 ) (1,714 ) 23,107 20,656 131,748 175,511 25,350 21,735 126,712 173,797 $ 26,803 $ 107,630 $ 335,073 $ 469,506 $ — $ 84,153 $ 159,068 $ 243,221 — — 41,269 41,269 $ — $ 84,153 $ 200,337 $ 284,490 Consolidated Development Projects (VIEs) Held for
and/or Under
Development Completed
and
Stabilized Other Total $ — $ 6,649 $ 43,016 $ 49,665 207 3,083 14,487 17,777 (207 ) 3,566 28,529 31,888 — 3,121 11,256 14,377 115 6 50 171 (322 ) 439 17,223 17,340 5 5 10 20 (289 ) — (39 ) (328 ) (399 ) (2,465 ) (8,948 ) (11,812 ) — (202 ) (341 ) (543 ) (1,005 ) (2,223 ) 7,905 4,677 (57 ) — (6 ) (63 ) 4,217 — — 4,217 169 — 13,265 13,434 $ 3,324 $ (2,223 ) $ 21,164 $ 22,265 Consolidated Development Projects (VIEs) (4) Other Total Total projects (1) — 2 19 21 Total apartment units (1) — 441 3,475 3,916 Balance sheet information at 3/31/12 (at 100%): ASSETS Investment in real estate $ 162,547 $ 114,595 $ 450,120 $ 727,262 Accumulated depreciation — (13,269 ) (148,177 ) (161,446 ) Investment in real estate, net 162,547 101,326 301,943 565,816 Cash and cash equivalents 2,448 1,243 11,515 15,206 Deposits – restricted 43,586 2,295 5 45,886 Escrow deposits – mortgage — 70 — 70 Deferred financing costs, net — 37 1,125 1,162 Other assets 5,766 115 147 6,028 Total assets $ 214,347 $ 105,086 $ 314,735 $ 634,168 LIABILITIES AND EQUITY/CAPITAL Mortgage notes payable $ — $ 33,175 $ 200,337 $ 233,512 Accounts payable & accrued expenses 7 431 1,925 2,363 Accrued interest payable — 104 782 886 Other liabilities 1,272 51 889 2,212 Security deposits — 111 1,483 1,594 Total liabilities 1,279 33,872 205,416 240,567 Noncontrolling Interests – Partially Owned Properties 79,011 1,079 (6,175 ) 73,915 Company equity/General and Limited Partners' Capital 134,057 70,135 115,494 319,686 Total equity/capital 213,068 71,214 109,319 393,601 Total liabilities and equity/capital $ 214,347 $ 105,086 $ 314,735 $ 634,168 Debt – Secured (2): Company/Operating Partnership Ownership (3) $ — $ 33,175 $ 159,068 $ 192,243 Noncontrolling Ownership — — 41,269 41,269 Total (at 100%) $ — $ 33,175 $ 200,337 $ 233,512 Consolidated Development Projects (VIEs) (4) Other Total Operating information for the quarter
ended 3/31/12 (at 100%): Operating revenue $ — $ 2,349 $ 15,045 $ 17,394 Operating expenses (18 ) 375 4,871 5,228 Net operating income 18 1,974 10,174 12,166 Depreciation — 1,042 3,872 4,914 General and administrative/other 4 2 13 19 Operating income 14 930 6,289 7,233 Interest and other income 1 1 — 2 Other expenses (61 ) — — (61 ) Interest: Expense incurred, net — (337 ) (2,346 ) (2,683 ) Amortization of deferred financing costs — (107 ) (54 ) (161 ) (Loss) income before income and other taxes (46 ) 487 3,889 4,330 Income and other tax (expense) benefit (26 ) — (21 ) (47 ) Net (loss) income $ (72 ) $ 487 $ 3,868 $ 4,283 (1) Project and apartment unit counts exclude all uncompleted development projects until those projects are substantially completed. (2) All debt is non-recourse to the Company. (3) Represents the Company’s/Operating Partnership’s current economic ownership interest. The Company admitted an 80% institutional partner to two separate entities/transactions (one in December 2010 and the other in August 2011), each owning a developable land parcel, in exchange for $40.1 million in cash and retained a 20% equity interest in both of these entities. These land parcels are now unconsolidated. Total project costs are approximately $232.8 million and construction will be predominantly funded with long-term, non-recourse secured loans from the partner. While the Company is the managing member of both of the joint ventures, is responsible for constructing both of the projects and has given certain construction cost overrun guarantees, all major decisions are made jointly, the large majority of funding is provided by the partner and the partner has significant involvement in and oversight of the ongoing projects. The Company’s remaining funding obligations are currently estimated at approximately $6.6 million.(4) negative noncontrolling interest book value of $1.7$73.9 million at September 30, 2011.March 31, 2012. The Company has identified itscertain development partnerships as VIEs as the Company provides substantially all of the capital for these ventures (other than third party mortgage debt, if any) despite the fact that each partner legally owns 50% of each venture. The Company is the primary beneficiary as it exerts the most significant power over the ventures, absorbs the majority of the expected losses and has the right to receive a majority of the expected residual returns. The assets net of liabilities of the Company’s VIEs are restricted in their use to the specific VIE to which they relate and are not available for general corporate use. The Company does not have any unconsolidated VIEs.7.7. Deposits – Restricted September 30, 2011March 31, 2012 and December 31, 20102011 (amounts in thousands): September 30,
2011 December 31,
2010 $ 303,762 $ 103,887 19,559 9,264 2,371 18,966 39,421 40,745 4,348 8,125 $ 369,461 $ 180,987 March 31,
2012 December 31,
2011Tax–deferred (1031) exchange proceeds $ 79,145 $ 53,668 Earnest money on pending acquisitions 10,175 7,882 Restricted deposits on debt 2,161 2,370 Restricted deposits on real estate investments 43,586 43,970 Resident security and utility deposits 43,029 40,403 Other 4,086 3,944 Totals $ 182,182 $ 152,237 8.8. Debt $500.0$500.0 million unsecured senior term loan and $500.0 million unsecured senior delayed draw term loan and also guarantees the Operating Partnership’s revolving credit facility up to the maximum amount and for the full term of the facility.September 30, 2011,March 31, 2012, the Company had outstanding mortgage debt of approximately $4.1 billion.$4.1 billion.nine monthsquarter ended September 30, 2011,March 31, 2012, the Company:Repaid $871.5 million of mortgage loans;▪ Obtained $152.9 million of new mortgage loan proceeds; andAssumed $99.1 million of mortgage debt on three acquired properties.The Company recorded approximately $4.1 million of write-offs of unamortized deferred financing costs during the nine months ended September 30, 2011 as additional interest expense related to debt extinguishment of mortgages.September 30, 2011,March 31, 2012, the Company had $411.2$459.2 million of secured debt subject to third party credit enhancement.September 30, 2011,March 31, 2012, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through September 1, 2048.2048. At September 30, 2011,March 31, 2012, the interest rate range on the Company’s mortgage debt was 0.14%0.09% to 11.25%. During the nine monthsquarter ended September 30, 2011,March 31, 2012, the weighted average interest rate on the Company’s mortgage debt was 4.83%4.88%.NotesSeptember 30, 2011,March 31, 2012, the Company had outstanding unsecured notes of approximately $4.6 billion.nine monthsquarter ended September 30,March 31, 2012, the Company:▪ ▪ Company:Repaid $93.1 millionCompany obtained a commitment for a senior unsecured bridge loan facility in an aggregate principal amount not to exceed $1.0 billion to finance the potential acquisition of 6.95% unsecured notes at maturity;Exercisedan ownership interest in Archstone, a privately-held owner, operator and developer of multifamily apartment properties. On January 6, 2012, the secondCompany terminated this $1.0 billion bridge loan facility in connection with an amendment to the Company's revolving credit facility (see below for further discussion) and the execution of its two one-year extension options for its $500.0 millionthe term loan facility and as a result, the maturity date is now October 5, 2012; andRedeemed $482.5 million of its 3.85% exchangeable unsecured notes with a final maturity of 2026 at par and no premium was paid.September 30, 2011,March 31, 2012, scheduled maturities for the Company’s outstanding notes were at various dates through 2026. 2026.September 30, 2011,March 31, 2012, the interest rate range on the Company’s notes was 0.74% to 7.57%. During the nine monthsquarter ended September 30, 2011,March 31, 2012, the weighted average interest rate on the Company’s notes was 5.16%5.14%.$1.25$1.25 billion unsecured revolving credit facility maturing on July 13, 2014, subject to a one-year extension option exercisable by the$500.0$1.425$1.425 billion facility which was scheduled to mature in February 2012. The Company wrote-off $0.2 million in unamortized deferred financing costs related to the old facility.September 30, 2011,March 31, 2012, the amount available on the credit facility was $1.14$1.72 billion (net of $85.9$30.8 million which was restricted/dedicated to support letters of credit). The Company did not draw and had no balance outstanding on its revolving credit and net of $26.0 million outstanding). Duringfacility at any time during the nine monthsquarter ended September 30, 2011, the weighted average interest rate was 1.32%March 31, 2012.9.9. Derivative and Other Fair Value Instruments debt (including its line of credit)notes were approximately $4.1$4.1 billion and $4.6$5.4 billion, respectively, at September 30,March 31, 2012. The fair values of the Company’s mortgage notes payable and unsecured notes were approximately $4.3 billion (Level 2) and $5.8 billion (Level 2), respectively, at March 31, 2012. The carrying values of the Company's mortgage notes payable and unsecured notes were approximately $4.1 billion and $5.6 billion, respectively, at December 31, 2011. The fair values of the Company’s mortgage notes payable and unsecured debt (including its line of credit)notes were approximately $4.4$4.3 billion (Level 2) and $5.0$6.0 billion (Level 2), respectively, at September 30,December 31, 2011. The fair values of the Company’s financial instruments (other than mortgage notes payable, unsecured notes, lines of credit, derivative instruments and investment securities), including cash and cash equivalents and other financial instruments, approximate their carrying or contract values.September 30, 2011March 31, 2012 (dollar amounts are in thousands): Fair Value
Hedges (1) Forward
Starting
Swaps (2) $ 315,693 $ 950,000 $ 315,693 $ 950,000 $ 317,694 $ 950,000 2.009 % 3.478 % 4.800 % 4.695 % 2012 2021 2013 2023 Fair Value
Hedges (1) Forward
Starting
Swaps (2)Current Notional Balance $ 315,693 $ 200,000 Lowest Possible Notional $ 315,693 $ 200,000 Highest Possible Notional $ 317,694 $ 200,000 Lowest Interest Rate 2.009 % 3.478 % Highest Interest Rate 4.800 % 4.695 % Earliest Maturity Date 2012 2023 Latest Maturity Date 2013 2023 (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. These swaps have mandatory counterparty terminations from 2012 throughin 2014, and $750.0 million and $200.0 million are targeted to 2012 and 2013 issuances, respectively.issuances.In June 2011, the Company’s remaining development cash flow hedge matured.September 30, 2011March 31, 2012 and December 31, 2010: Fair Value Measurements at Reporting Date Using Balance Sheet
Location 9/30/2011 Quoted Prices in
Active Markets for
Identical Assets/
Liabilities
(Level 1) Significant Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Other Assets $ 10,581 $ — $ 10,581 $ — Other Assets 66,444 66,444 — — Other Assets 1,505 1,505 — — $ 78,530 $ 67,949 $ 10,581 $ — Other Liabilities $ 166,169 $ — $ 166,169 $ — Other Liabilities 66,444 66,444 — — $ 232,613 $ 66,444 $ 166,169 $ — Mezzanine $ 378,798 $ — $ 378,798 $ — Fair Value Measurements at Reporting Date Using Balance Sheet
Location 12/31/2010 Quoted Prices in
Active Markets for
Identical Assets/
Liabilities
(Level 1) Significant Other
Observable
Inputs
(Level 2) Significant
Unobservable
Inputs
(Level 3) Other Assets $ 12,521 $ — $ 12,521 $ — Other Assets 3,276 — 3,276 — Other Assets 58,132 58,132 — — Other Assets 1,194 1,194 — — $ 75,123 $ 59,326 $ 15,797 $ — Other Liabilities $ 37,756 $ — $ 37,756 $ — Other Liabilities 1,322 — 1,322 — Other Liabilities 58,132 58,132 — — $ 97,210 $ 58,132 $ 39,078 $ — Mezzanine $ 383,540 $ — $ 383,540 $ — Fair Value Measurements at Reporting Date Using Description 3/31/2012 Assets Derivatives designated as hedging instruments: Interest Rate Contracts: Fair Value Hedges Other Assets $ 7,672 $ — $ 7,672 $ — Supplemental Executive Retirement Plan Other Assets 55,572 55,572 — — Available-for-Sale Investment Securities Other Assets 1,514 1,514 — — Total $ 64,758 $ 57,086 $ 7,672 $ — Liabilities Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps Other Liabilities $ 29,061 $ — $ 29,061 $ — Supplemental Executive Retirement Plan Other Liabilities 55,572 55,572 — — Total $ 84,633 $ 55,572 $ 29,061 $ — Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners Mezzanine $ 457,224 $ — $ 457,224 $ — Fair Value Measurements at Reporting Date Using Description 12/31/2011 Assets Derivatives designated as hedging instruments: Interest Rate Contracts: Fair Value Hedges Other Assets $ 8,972 $ — $ 8,972 $ — Supplemental Executive Retirement Plan Other Assets 71,426 71,426 — — Available-for-Sale Investment Securities Other Assets 1,550 1,550 — — Total $ 81,948 $ 72,976 $ 8,972 $ — Liabilities Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps Other Liabilities $ 32,278 $ — $ 32,278 $ — Supplemental Executive Retirement Plan Other Liabilities 71,426 71,426 — — Total $ 103,704 $ 71,426 $ 32,278 $ — Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners Mezzanine $ 416,404 $ — $ 416,404 $ — nine monthsquarters ended September 30, 2011March 31, 2012 and 2010,2011, respectively (amounts in thousands): Location of Gain/(Loss)
Recognized in Income
on Derivative Amount of Gain/(Loss)
Recognized in Income
on Derivative Hedged Item Income Statement
Location of Hedged
Item Gain/(Loss) Amount of Gain/(Loss)
Recognized in Income
on Hedged Item Interest expense $ (1,940 ) Fixed rate debt Interest expense $ 1,940 $ (1,940 ) $ 1,940 Location of Gain/(Loss)
Recognized in Income
on Derivative Amount of Gain/(Loss)
Recognized in Income
on Derivative Hedged Item Income Statement
Location of Hedged
Item Gain/(Loss) Amount of Gain/(Loss)
Recognized in Income
on Hedged Item Interest expense $ 9,842 Fixed rate debt Interest expense $ (9,842 ) $ 9,842 $ (9,842 ) Hedged Item Derivatives designated as hedging instruments: Interest Rate Contracts: Interest Rate Swaps Interest expense $ (1,300 ) Fixed rate debt Interest expense $ 1,300 Total $ (1,300 ) $ 1,300 Location of
Gain/(Loss)
Recognized in
Income
on Derivative Amount of
Gain/(Loss)
Recognized in
Income
on Derivative Hedged Item Income Statement
Location of
Hedged
Item Gain/(Loss) Derivatives designated as hedging instruments: Interest Rate Contracts: Interest Rate Swaps Interest expense $ (1,492 ) Fixed rate debt Interest expense $ 1,492 Total $ (1,492 ) $ 1,492 nine monthsquarters ended September 30, 2011March 31, 2012 and 2010,2011, respectively (amounts in thousands): Effective Portion Ineffective Portion Amount of
Gain/(Loss)
Recognized in OCI
on Derivative Location of
Gain/(Loss)
Reclassified
from
Accumulated
OCI
into Income Amount of
Gain/(Loss)
Reclassified from
Accumulated
OCI
into Income Location of
Gain/(Loss)
Recognized in
Income on
Derivative Amount of
Gain/(Loss)
Reclassified from
Accumulated
OCI into Income $ (131,689 ) Interest expense $ (2,842 ) N/A $ — 1,322 Interest expense — N/A — $ (130,367 ) $ (2,842 ) $ — Effective Portion Ineffective Portion Amount of
Gain/(Loss)
Recognized in OCI
on Derivative Location of
Gain/(Loss)
Reclassified
from
Accumulated
OCI
into Income Amount of
Gain/(Loss)
Reclassified from
Accumulated
OCI
into Income Location of
Gain/(Loss)
Recognized in
Income on
Derivative Amount of
Gain/(Loss)
Reclassified from
Accumulated
OCI into Income $ (124,908 ) Interest expense $ (2,379 ) N/A $ — 1,436 Interest expense — N/A — $ (123,472 ) $ (2,379 ) $ — Effective Portion Ineffective Portion Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into IncomeDerivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps/Treasury Locks $ 3,218 Interest expense $ (3,563 ) N/A $ — Total $ 3,218 $ (3,563 ) $ — Effective Portion Ineffective Portion Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into Income Amount of Gain/
(Loss)
Reclassified from
Accumulated
OCI
into IncomeDerivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps/Treasury Locks $ 5,255 Interest expense $ (956 ) N/A $ — Development Interest Rate Swaps/Caps 827 Interest expense — N/A — Total $ 6,082 $ (956 ) $ — September 30, 2011March 31, 2012 and December 31, 2010,2011, there were approximately $185.9$190.8 million and $58.3$197.6 million in deferred losses, net, included in accumulated other comprehensive (loss), respectively, related to derivative instruments. Based on the estimated fair values of the net derivative instruments at September 30, 2011,March 31, 2012, the Company may recognize an estimated $4.4$19.6 million of accumulated other comprehensive (loss) as additional interest expense during the twelve months ending September 30, 2012.March 31, 2013.tabletables sets forth the maturity, amortized cost, gross unrealized gains and losses, book/fair value and interest and other income of the various investment securities held as of September 30,March 31, 2012 and December 31, 2011, respectively (amounts in thousands): Other Assets Maturity Amortized
Cost Unrealized
Gains Unrealized
Losses Book/
Fair Value Interest and
Other Income N/A $ 675 $ 830 $ — $ 1,505 $ — $ 675 $ 830 $ — $ 1,505 $ — Other Assets Maturity Available-for-Sale Investment Securities N/A $ 675 $ 839 $ — $ 1,514 $ — Total $ 675 $ 839 $ — $ 1,514 $ — Other Assets Maturity Available-for-Sale Investment Securities N/A $ 675 $ 875 $ — $ 1,550 $ — Total $ 675 $ 875 $ — $ 1,550 $ — 10.Earnings10. Earning Per Share and Earnings Per Unit Nine Months Ended September 30, Quarter Ended September 30, 2011 2010 2011 2010 $ 47,908 $ (32,667 ) $ 35,491 $ (295 ) (1,648 ) 2,042 (1,371 ) 173 (418 ) 623 (387 ) 188 (10,399 ) (10,855 ) (3,466 ) (3,617 ) 35,443 (40,857 ) 30,267 (3,551 ) 745,261 124,229 74,115 28,717 $ 780,704 $ 83,372 $ 104,382 $ 25,166 $ 47,908 $ 35,491 (418 ) (387 ) (10,399 ) (3,466 ) 37,091 31,638 779,888 77,486 $ 816,979 $ 83,372 $ 109,124 $ 25,166 294,474 281,867 295,831 282,717 13,231 13,053 4,203 3,960 311,908 281,867 312,844 282,717 $ 2.65 $ 0.30 $ 0.35 $ 0.09 $ 2.62 $ 0.30 $ 0.35 $ 0.09 $ 0.120 $ (0.145 ) $ 0.102 $ (0.013 ) 2.531 0.441 0.251 0.102 $ 2.651 $ 0.296 $ 0.353 $ 0.089 $ 0.119 $ (0.145 ) $ 0.101 $ (0.013 ) 2.500 0.441 0.248 0.102 $ 2.619 $ 0.296 $ 0.349 $ 0.089 Quarter Ended March 31, 2012 2011 Numerator for net income per share – basic: Income (loss) from continuing operations $ 17,389 $ (8,913 ) Allocation to Noncontrolling Interests – Operating Partnership, net (582 ) 543 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties (450 ) 40 Preferred distributions (3,466 ) (3,466 ) 12,891 (11,796 ) Discontinued operations, net of Noncontrolling Interests 128,942 135,661 Numerator for net income per share – basic $ 141,833 $ 123,865 Numerator for net income per share – diluted (1): Income from continuing operations $ 17,389 Net (income) attributable to Noncontrolling Interests – Partially Owned Properties (450 ) Preferred distributions (3,466 ) Income from continuing operations available to Common Shares 13,473 Discontinued operations, net 134,778 Numerator for net income per share – diluted (1) $ 148,251 $ 123,865 Denominator for net income per share – basic and diluted (1): Denominator for net income per share – basic 298,805 292,895 Effect of dilutive securities: OP Units 13,206 Long-term compensation shares/units 3,219 Denominator for net income per share – diluted (1) 315,230 292,895 Net income per share – basic $ 0.47 $ 0.42 Net income per share – diluted $ 0.47 $ 0.42 Net income per share – basic: $ 0.043 $ (0.040 ) Discontinued operations, net of Noncontrolling Interests 0.432 0.463 Net income per share – basic $ 0.475 $ 0.423 Net income per share – diluted (1): Income (loss) from continuing operations available to Common Shares $ 0.043 $ (0.040 ) Discontinued operations, net 0.427 0.463 Net income per share – diluted $ 0.470 $ 0.423 (1) nine months and quarter ended September 30, 2010.March 31, 2011.Convertible preferred shares/units that could be converted into 0 and 396,098 weighted average Common Shares for the nine months ended September 30, 2011 and 2010, respectively, and 0 and 393,724 weighted average Common Shares for the quarters ended September 30, 2011 and 2010, respectively, were outstanding but were not included in the computation of diluted earnings per share because the effects would be anti-dilutive. In addition, theThe effect of the Common Shares that could ultimately have beenbe issued upon the conversion/exchange of the Company’s $650.0$650.0 million exchangeable senior notes ($($482.5 million outstanding were redeemed on August 18, 2011) was not included in the computation of diluted earnings per share because the effects would be anti-dilutive. Nine Months Ended September 30, Quarter Ended September 30, 2011 2010 2011 2010 $ 47,908 $ (32,667 ) $ 35,491 $ (295 ) (418 ) 623 (387 ) 188 (10,399 ) (10,855 ) (3,466 ) (3,617 ) 37,091 (42,899 ) 31,638 (3,724 ) 779,888 130,438 77,486 30,121 $ 816,979 $ 87,539 $ 109,124 $ 26,397 307,705 295,572 308,884 296,348 4,203 3,960 311,908 295,572 312,844 296,348 $ 2.65 $ 0.30 $ 0.35 $ 0.09 $ 2.62 $ 0.30 $ 0.35 $ 0.09 $ 0.120 $ (0.145 ) $ 0.102 $ (0.013 ) 2.531 0.441 0.251 0.102 $ 2.651 $ 0.296 $ 0.353 $ 0.089 $ 0.119 $ (0.145 ) $ 0.101 $ (0.013 ) 2.500 0.441 0.248 0.102 $ 2.619 $ 0.296 $ 0.349 $ 0.089 Quarter Ended March 31, 2012 2011 Numerator for net income per Unit – basic and diluted (1): Income (loss) from continuing operations $ 17,389 $ (8,913 ) Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties (450 ) 40 Allocation to Preference Units (3,466 ) (3,466 ) Income (loss) from continuing operations available to Units 13,473 (12,339 ) Discontinued operations, net 134,778 141,979 Numerator for net income per Unit – basic and diluted (1) $ 148,251 $ 129,640 Denominator for net income per Unit – basic and diluted (1): Denominator for net income per Unit – basic 312,011 306,248 Effect of dilutive securities: 3,219 Denominator for net income per Unit – diluted (1) 315,230 306,248 Net income per Unit – basic $ 0.47 $ 0.42 Net income per Unit – diluted $ 0.47 $ 0.42 Net income per Unit – basic: Income (loss) from continuing operations available to Units $ 0.043 $ (0.040 ) Discontinued operations, net 0.432 0.463 Net income per Unit – basic $ 0.475 $ 0.423 Net income per Unit – diluted (1): Income (loss) from continuing operations available to Units $ 0.043 $ (0.040 ) Discontinued operations, net 0.427 0.463 Net income per Unit – diluted $ 0.470 $ 0.423 (1) nine months and quarter ended September 30, 2010.March 31, 2011.Convertible preference interests/units that could be converted into 0 and 396,098 weighted average Common Shares (which would be contributed to the Operating Partnership in exchange for OP Units) for the nine months ended September 30, 2011 and 2010, respectively, and 0 and 393,724 weighted average Common Shares (which would be contributed to the Operating Partnership in exchange for OP Units) for the quarters ended September 30, 2011 and 2010, respectively, were outstanding but were not included in the computation of diluted earnings per Unit because the effects would be anti-dilutive. In addition, theThe effect of the Common Shares/OP Units that could ultimately have beenbe issued upon the conversion/exchange of the Company’s $650.0$650.0 million exchangeable senior notes ($($482.5 million outstanding were redeemed on August 18, 2011) was not included in the computation of diluted earnings per Unit because the effects would be anti-dilutive.11.11. Discontinued Operations nine months and quarters ended September 30, 2011March 31, 2012 and 20102011 (amounts in thousands). Nine Months Ended September 30, Quarter Ended September 30, 2011 2010 2011 2010 $ 87,279 $ 213,221 $ 3,764 $ 75,310 87,279 213,221 3,764 75,310 46,177 85,544 2,202 31,051 5,369 17,162 151 5,619 14,344 43,873 901 15,701 49 32 2 13 65,939 146,611 3,256 52,384 21,340 66,610 508 22,926 140 640 42 7 (83 ) (6,032 ) (21 ) (2,056 ) (640 ) (252 ) — (28 ) 31 (66 ) 93 (13 ) 20,788 60,900 622 20,836 759,100 69,538 76,864 9,285 $ 779,888 $ 130,438 $ 77,486 $ 30,121 Quarter Ended March 31, 2012 2011 REVENUES Rental income $ 2,931 $ 60,157 Total revenues 2,931 60,157 EXPENSES (1) Property and maintenance 422 26,019 Real estate taxes and insurance 250 4,362 Depreciation 371 10,908 General and administrative 4 11 Total expenses 1,047 41,300 Discontinued operating income 1,884 18,857 Interest and other income 25 5 Other expenses — (4 ) Interest (2): Expense incurred, net (7 ) (522 ) Amortization of deferred financing costs — (69 ) Income and other tax (expense) benefit (80 ) (42 ) Discontinued operations 1,822 18,225 Net gain on sales of discontinued operations 132,956 123,754 Discontinued operations, net $ 134,778 $ 141,979 (1)(1) Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company’s period of ownership. (2)(2) Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale. nine monthsquarter ended September 30, 2011,March 31, 2012, the investment in real estate, net of accumulated depreciation and the mortgage notes payable balances at December 31, 20102011 was $71.6 million and there were $623.7 million and $50.9 million, respectively.no mortgages outstanding on these properties.12.12. Commitments and Contingencies September 30, 2011.March 31, 2012. While no assurances can be given, the Company does not believe that the suit, if adversely determined, would have a material adverse effect on the Company.The Company had established a reserve and recorded a corresponding reduction to its net gain on sales of discontinued operations related to potential liabilities associated with its condominium conversion activities. The reserve covered potential product liability related to each conversion. The Company periodically assessed the adequacy of the reserve and made adjustments as necessary. During the nine months ended September 30, 2011, the Company recorded additional reserves of approximately $0.1 million, paid approximately $2.3 million in settlements and legal fees and released approximately $1.1 million of remaining reserves. No amounts remain accrued at September 30, 2011 as the Company does not believe it has material exposure remaining for its past condominium conversion activities.September 30, 2011,March 31, 2012, the Company has foursix consolidated projects totaling 7471,535 apartment units in various stages of development with commitments to fund of approximately $117.1$325.8 million and estimated completion dates ranging through September 30, 2013,March 31, 2014, as well as other completed development projects that are in various stages of lease up or are stabilized. The consolidated projects under development are being developed solely by the Company, while certain completed developmentSeptember 30, 2011,March 31, 2012, the Company has two unconsolidated projects totaling 945 apartment units under development with commitments to fund of approximately $6.6$3.0 million and estimated completion dates ranging through June 30, 2013.December 31, 2013. While the Company is the managing member of both of the joint ventures, is responsible for constructing both projects and has given certain construction cost overrun guarantees, all major decisions are made jointly, the large majority of funding is provided by the partner and the partner has significant involvement in and oversight of the ongoing projects. The buy-sell arrangements contain provisions that provide the right, but not the obligation, for the Company to acquire the partner’s interests or sell its interests at any time following the occurrence of certain pre-defined events (including at stabilization) described in the development venture agreements.13.13. Reportable Segments nine months and quarters ended September 30, 2011March 31, 2012 and 2010,2011, respectively.nine months and quarters ended September 30, 2011March 31, 2012 and 2010,2011, respectively, as well as total assets and capital expenditures at September 30, 2011March 31, 2012 (amounts in thousands): Nine Months Ended September 30, 2011 Northeast Northwest Southeast Southwest Other (3) Total $ 440,444 $ 255,986 $ 266,938 $ 320,840 $ — $ 1,284,208 113,008 28,544 11,283 30,069 3,286 186,190 553,452 284,530 278,221 350,909 3,286 1,470,398 160,900 91,053 106,223 109,768 — 467,944 43,631 10,911 4,162 12,257 6,308 77,269 204,531 101,964 110,385 122,025 6,308 545,213 279,544 164,933 160,715 211,072 — 816,264 69,377 17,633 7,121 17,812 (3,022 ) 108,921 $ 348,921 $ 182,566 $ 167,836 $ 228,884 $ (3,022 ) $ 925,185 $ 6,313,643 $ 2,656,529 $ 2,514,066 $ 3,230,549 $ 1,042,030 $ 15,756,817 Quarter Ended March 31, 2012 Northeast Northwest Southeast Southwest Other (3) Total Rental income: Same store (1) $ 174,263 $ 95,751 $ 91,757 $ 112,186 $ — $ 473,957 Non-same store/other (2) (3) 20,378 10,166 4,770 13,930 2,394 51,638 Total rental income 194,641 105,917 96,527 126,116 2,394 525,595 Operating expenses: Same store (1) 66,000 33,303 36,170 37,581 — 173,054 Non-same store/other (2) (3) 4,583 5,469 1,664 4,662 2,343 18,721 Total operating expenses 70,583 38,772 37,834 42,243 2,343 191,775 NOI: Same store (1) 108,263 62,448 55,587 74,605 — 300,903 Non-same store/other (2) (3) 15,795 4,697 3,106 9,268 51 32,917 Total NOI $ 124,058 $ 67,145 $ 58,693 $ 83,873 $ 51 $ 333,820 Total assets $ 6,458,496 $ 2,931,942 $ 2,483,091 $ 3,392,065 $ 1,215,653 $ 16,481,247 Capital expenditures $ 9,843 $ 6,506 $ 7,440 $ 5,419 $ 1,017 $ 30,225 (1) 2010,2011, less properties subsequently sold, which represented 102,129105,612 apartment units.(2) Non-same store primarily includes properties acquired after January 1, 2010,2011, plus any properties in lease-up and not stabilized as of January 1, 2010.2011.(3) Other includes development condominium conversion overhead of $0.3 million and other corporate operations. Nine Months Ended September 30, 2010 Northeast Northwest Southeast Southwest Other (3) Total $ 417,347 $ 240,767 $ 256,307 $ 310,950 $ — $ 1,225,371 64,743 10,698 6,429 7,629 (3,493 ) 86,006 482,090 251,465 262,736 318,579 (3,493 ) 1,311,377 158,351 91,045 106,245 113,510 — 469,151 34,241 4,531 2,728 3,490 9,852 54,842 192,592 95,576 108,973 117,000 9,852 523,993 258,996 149,722 150,062 197,440 — 756,220 30,502 6,167 3,701 4,139 (13,345 ) 31,164 $ 289,498 $ 155,889 $ 153,763 $ 201,579 $ (13,345 ) $ 787,384 Quarter Ended March 31, 2011 Northeast Northwest Southeast Southwest Other (3) Total Rental income: Same store (1) $ 164,859 $ 88,197 $ 88,061 $ 108,115 $ — $ 449,232 Non-same store/other (2) (3) 7,658 899 2,924 3,715 122 15,318 Total rental income 172,517 89,096 90,985 111,830 122 464,550 Operating expenses: Same store (1) 65,195 32,279 35,496 37,047 — 170,017 Non-same store/other (2) (3) 2,486 268 1,134 1,927 3,735 9,550 Total operating expenses 67,681 32,547 36,630 38,974 3,735 179,567 NOI: Same store (1) 99,664 55,918 52,565 71,068 — 279,215 Non-same store/other (2) (3) 5,172 631 1,790 1,788 (3,613 ) 5,768 Total NOI $ 104,836 $ 56,549 $ 54,355 $ 72,856 $ (3,613 ) $ 284,983 (1) 2010,2011, less properties subsequently sold, which represented 102,129105,612 apartment units.(2) Non-same store primarily includes properties acquired after January 1, 2010,2011, plus any properties in lease-up and not stabilized as of January 1, 2010.2011.(3) $0.4$0.1 million and other corporate operations. Quarter Ended September 30, 2011 Northeast Northwest Southeast Southwest Other (3) Total $ 163,887 $ 91,663 $ 90,979 $ 110,779 $ — $ 457,308 27,889 6,657 3,773 10,862 2,541 51,722 191,776 98,320 94,752 121,641 2,541 509,030 59,736 32,455 35,861 38,160 — 166,212 9,163 2,645 1,250 4,351 1,338 18,747 68,899 35,100 37,111 42,511 1,338 184,959 104,151 59,208 55,118 72,619 — 291,096 18,726 4,012 2,523 6,511 1,203 32,975 $ 122,877 $ 63,220 $ 57,641 $ 79,130 $ 1,203 $ 324,071 (1)Same store primarily includes all properties acquired or completed and stabilized prior to July 1, 2010, less properties subsequently sold, which represented 104,922 apartment units.(2)Non-same store primarily includes properties acquired after July 1, 2010, plus any properties in lease-up and not stabilized as of July 1, 2010.(3)Other includes development, condominium conversion overhead of $0.1 million and other corporate operations. Quarter Ended September 30, 2010 Northeast Northwest Southeast Southwest Other (3) Total $ 155,119 $ 84,969 $ 86,963 $ 106,457 $ — $ 433,508 12,963 2,158 2,002 2,537 (1,336 ) 18,324 168,082 87,127 88,965 108,994 (1,336 ) 451,832 58,184 32,805 36,219 39,173 — 166,381 10,321 855 565 1,114 242 13,097 68,505 33,660 36,784 40,287 242 179,478 96,935 52,164 50,744 67,284 — 267,127 2,642 1,303 1,437 1,423 (1,578 ) 5,227 $ 99,577 $ 53,467 $ 52,181 $ 68,707 $ (1,578 ) $ 272,354 (1)Same store primarily includes all properties acquired or completed and stabilized prior to July 1, 2010, less properties subsequently sold, which represented 104,922 apartment units.(2)Non-same store primarily includes properties acquired after July 1, 2010, plus any properties in lease-up and not stabilized as of July 1, 2010.(3)Other includes development, condominium conversion overhead of $0.1 million and other corporate operations.(a) Northeast – New England (excluding Boston), Boston, New York Metro, DC Northern Virginia and Suburban Maryland. (b) Northwest – Denver, Portland, San Francisco Bay Area and Seattle/Tacoma.(c) Southeast – Atlanta, Jacksonville, Orlando and South Florida. (d) Southwest – Inland Empire, Los Angeles, Orange County, Phoenix and San Diego. nine months and quarters ended September 30, 2011March 31, 2012 and 2010,2011, respectively (amounts in thousands): Nine Months Ended September 30, Quarter Ended September 30, 2011 2010 2011 2010 $ 1,470,398 $ 1,311,377 $ 509,030 $ 451,832 (314,768 ) (303,916 ) (106,635 ) (104,259 ) (168,056 ) (160,307 ) (59,083 ) (56,205 ) (62,389 ) (59,770 ) (19,241 ) (19,014 ) (545,213 ) (523,993 ) (184,959 ) (179,478 ) $ 925,185 $ 787,384 $ 324,071 $ 272,354 Quarter Ended March 31, 2012 2011 Rental income $ 525,595 $ 464,550 Property and maintenance expense (112,379 ) (105,047 ) Real estate taxes and insurance expense (55,987 ) (52,139 ) Property management expense (23,409 ) (22,381 ) Total operating expenses (191,775 ) (179,567 ) Net operating income $ 333,820 $ 284,983 14.14. Subsequent Events/Other September 30, 2011,March 31, 2012, the Company:four properties containing 1,000one property consisting of 511 apartment units for $253.9 million;$230.9 million;one property containing 385four properties consisting of 351 apartment units for $30.1 million;$15.6 million;$27.6$90.0 million of mortgage debt and issued 1,081,797 OP Units in conjunction with the acquisition of one property; and$12.8$30.8 million in mortgage loans; andloans.Obtained $38.0 million of new mortgage loan proceeds.Othernine monthsquarters ended September 30, 2011March 31, 2012 and 2010,2011, the Company incurred charges of $5.3$1.6 million and $6.0$0.5 million, respectively, related to property acquisition costs, such as survey, title and legal fees, on the acquisition of operating properties and $4.0$1.0 million and $3.5$1.7 million, respectively, related to the write-off of various pursuit and out-of-pocket costs for terminated acquisition, disposition and development transactions. These costs, totaling $9.3$2.6 million and $9.5$2.2 million, respectively, are included in other expenses in the accompanying consolidated statements of operations.During the nine months ended September 30,received $4.5entered into a contract with affiliates of Bank of America and Barclays PLC to acquire, for $1.325 billion, half of their interests - an approximately 26.5% interest overall - in Archstone, a privately-held owner, operator and developer of multifamily apartment properties. On January 20, 2012, Lehman Brothers Holdings Inc. ("Lehman"), the other owner of Archstone, acquired this 26.5% interest pursuant to a right of first offer and as a result, the Company's contract with the sellers was terminated. The Company now has the exclusive right, exercisable on or before May 21, 2012, to contract to purchase the remaining 26.5% interest in Archstone owned by the same sellers for a price, determined by the Company, equal to $1.5 billion or higher. Any purchase of the remaining interest by the Company would also be subject to Lehman's right of first offer, and if Lehman were to exercise such right, the Company would be entitled to a break-up fee of $80.0 million for, subject to repayment in certain limited circumstances. During the terminationquarter ended March 31, 2012, the Company incurred Archstone-related expenses of its royalty participationapproximately $1.1 million. Cumulative to date, the Company incurred Archstone-related expenses of approximately $5.5 million, of which approximately $2.6 million of this total was financing-related and $2.9 million was pursuit costs. LRO/Rainmaker, a revenue management system, whichthe second quarter of 2012. This accrual is included in interest and other incomeexpenses in the accompanying consolidated statements of operations. During the nine months ended September 30, 2010, the Company received $5.2 million for the settlement of insurance/litigation claims, which is included in interest and other income in the accompanying consolidated statements of operations.During the nine months ended September 30, 2011, the Company disposed of its corporate housing business for a sales price of approximately $4.0 million, of which the Company provided $2.0 million of seller financing to the buyer. The Company recognized a net gain on the sale of approximately $1.0 million.Company estimates that the costs related to suchthe collapse (both expensed and capitalized), including providing for residents’ interim needs, lost revenue and garage reconstruction, will bewere approximately $11.0$22.8 million after, before insurance reimbursements of $12.0 million. Costs to rebuild the$13.6 million. The garage arehas been rebuilt with costs capitalized as incurred. Other costs, like those to accommodate displaced residents, lost revenue due to a portion of the projectproperty being temporarily unavailable for occupancy and legal costs, reducereduced earnings as they arewere incurred. Generally, insurance proceeds arewere recorded as increases to earnings as they arewere received. During the nine monthsquarter ended September 30, 2011,March 31, 2012, the Company received approximately $2.7$3.5 million in insurance proceeds which offset expenses of $1.6 million that were recorded relating to this loss and are included(included in real estate taxes and insurance on the consolidated statements of operations.Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations each of the Company’s and the Operating Partnership’sPartnership's Annual ReportsReport on Form 10-K for the year ended December 31, 2010.We intend to actively acquire and/or develop multifamily properties for rental operations as market conditions dictate. We may also acquire multifamily properties that are unoccupied or in the early stages of lease up. We may be unable to lease apartment properties on schedule, resulting in decreases in expected rental revenues and/or lower yields due to lower occupancy and rates as well as higher than expected concessions. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position or to complete a development property. Additionally, we expect that other real estate investors with capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development and acquisition efforts. This competition (or lack thereof) may increase (or depress) prices for multifamily properties. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. The total number of apartment units under development, costs of development and estimated completion dates are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation;▪ We intend to actively acquire and/or develop multifamily properties for rental operations as market conditions dictate. We may also acquire multifamily properties that are unoccupied or in the early stages of lease up. We may be unable to lease up these apartment properties on schedule, resulting in decreases in expected rental revenues and/or lower yields due to lower occupancy and rates as well as higher than expected concessions. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position or to complete a development property. Additionally, we expect that other real estate investors with capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development and acquisition efforts. This competition (or lack thereof) may increase (or depress) prices for multifamily properties. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. We have acquired in the past and intend to continue to pursue the acquisition of properties and portfolios of properties, including large portfolios, that could increase our size and result in alterations to our capital structure. The total number of apartment units under development, costs of development and estimated completion dates are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation; ▪ Debt financing and other capital required by the Company may not be available or may only be available on adverse terms; ▪ Labor and materials required for maintenance, repair, capital expenditure or development may be more expensive than anticipated; ▪ Occupancy levels and market rents may be adversely affected by national and local economic and market conditions including, without limitation, new construction and excess inventory of multifamily and single family housing, rental housing subsidized by the government, other government programs that favor single family rental housing or owner occupied housing over multifamily rental housing, slow or negative employment growth and household formation, the availability of low-interest mortgages for single family home buyers, changes in social preferences and the potential for geopolitical instability, all of which are beyond the Company's control; and ▪ Additional factors as discussed in Part I of the Company’s and the Operating Partnership's Annual Report on Form 10-K, particularly those under “Item 1A. Risk Factors”. Debt financing and other capital required by the Company may not be available or may only be available on adverse terms;Labor and materials required for maintenance, repair, capital expenditure or development may be more expensive than anticipated;Occupancy levels and market rents may be adversely affected by national and local economic and market conditions including slow or negative employment growth and household formation as well as the potential for geopolitical instability, all of which are beyond the Company’s control;Our residents may choose to leave our properties or not rent at all because owned housing has become a more attractive option for them due to, among other things, the availability of low interest mortgages, government programs and changes in social preferences; andAdditional factors as discussed in Part I of both the Company’s and the Operating Partnership’s Annual Reports on Form 10-K, particularly those under “Item 1A. Risk Factors”.September 30, 2011March 31, 2012 owned an approximate 95.6%95.7% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through theSeptember 30, 2011,March 31, 2012, the Company had approximately 3,700 employees who provided real estate operations, leasing, legal, financial, accounting, acquisition, disposition, development and other support functions.at the highest rent possible,and keeping our residents satisfied and renewingso they will renew their leases at yet higher rents.upon expiration. While we believe that it is our high-quality, well-located assets that bring our customers to us, it is the customer service and superior value provided by our on-site personnel that keeps them renting with us and recommending us to their friends.High barriers to entry where, because of land scarcity or government regulation, it is difficult or costly to build new apartment properties, creating limits on new supply;▪ High barriers to entry where, because of land scarcity or government regulation, it is difficult or costly to build new apartment properties, creating limits on new supply; ▪ High single family home prices making our apartments a more economical housing choice; ▪ Strong economic growth leading to household formation and job growth, which in turn leads to high demand for our apartments; and ▪ An attractive quality of life leading to high demand and retention that allows us to increase rents. High single family home prices making our apartments a more economical housing choice;Strong economic growth leading to household formation and job growth, which in turn leads to high demand for our apartments; andAn attractive quality of life leading to high demand and retention that allows us to more aggressively increase rents.Theprimarily sources the funds for new property acquisitions inhas done an extensive repositioning of its coreportfolio from low barrier to entry/non-core markets with the proceeds from selling assets that are older or located in non-coreto high barrier to entry/core markets. Since 2005, the Company has sold over 123,000125,000 apartment units primarily in its non-core markets for an aggregate sales price of approximately $9.9$10.3 billion, acquired over 38,00042,000 apartment units in its core markets for approximately $8.7$9.5 billion and began approximately $2.4$2.7 billion of development projects.projects in its core markets. We are currently seeking to acquire and develop assets primarily in the following targeted metropolitan areas:areas (our core markets): Boston, New York, Washington DC, South Florida, Southern California, San Francisco and Seattle. We also have investments (in the aggregate about 19.6%18.8% of our NOI at September 30, 2011)March 31, 2012) in other markets including Denver, Atlanta, Phoenix, New England (excluding Boston), Orlando and Jacksonville but do not currently intend to acquire or develop new assets in these markets.September 30, 2011,16.2%15.3% of our NOI, though no guarantee can be made that NOI concentration may not increase in the future.full year2012 same store revenue (anticipated increase ofranging from 5.0% to 6.0%) and full year2012 NOI (anticipated increase of 7.7%ranging from 6.5% to 8.5%) and are optimistic that the strength in fundamentals realized in 2010 and to date in 2011 will be sustained for the foreseeable future. We believe the key drivers behind the anticipated increases in revenue are base rent pricing, renewal pricing, resident turnover and physical occupancy. Despite recent signs of weaknessslow growth in the overall economy, our business continues to perform well as evidenced by rising base and forwardrenewal rents. In the first quarter of 2012, we continued our focus on rental rate over occupancy which led to increased turnover and slightly lower occupancy than originally budgeted. As we enter our primary leasing season (June through September), we continue to expect that we will achieve same store revenue growth for the year around the mid-point of our previously provided range of 5.0% to 6.0%. Generally, the combined forces of demographics, household formations and the continued aversion to home ownership should ensure a continued strong demand indicators suchfor rental housing.rental applicationsincreases in water, sewer and e-leadstrash are better thanpartially offset by decreases in natural gas rates. On-site payroll is expected to increase by approximately 1.0% in 2012 as normal annual merit increases in payroll should be mitigated by improvements in technology and automation. This follows several years of excellent expense control, with a compounded annual growth in same store expenses of approximately 1.0% over the same time last year.Through September 30, 2011, we haveThe Company sold 45three consolidated properties consisting of 13,5281,522 apartment units for $1.38 billion. The majority of our anticipated $1.4 billion in 2011 dispositions occurred in$206.4 million during the first half of 2011 ($1.17 billion for the first six months of 2011)quarter ended March 31, 2012. The Company’s decision to accelerate the timing and increase the volume ofThese dispositions combined with limited opportunities to reinvest the cash proceeds and/or reinvestment of the cash proceeds in assets with lower cap rates (see definition below) iswere dilutive to our per share results despite our strong operating performance.results. The Company defines dilution from transactions as the lost NOI from sales proceeds that were not reinvested in other apartment properties or were reinvested in properties with a lower cap rate. The Company anticipates consolidated dispositions generated a significant amount of cash, which combined withapproximately $1.25 billion during the Company’s new unsecured revolving credit facility, allowed us to defer an unsecured debt offering that was previously targeted for the third quarter of 2011. The Company does not expect to sell a material amount of assets in the fourth quarter of 2011 due to tax and reinvestment considerations. Based on our anticipated $1.25 billion in 2011 acquisitions, a slightly greater share should occur during the latter half of the year and approximately one-third are expected to occur in the fourth quarter. We believe our access to capital, our ability to execute large, complex transactions and our ability to efficiently stabilize large scale lease up properties provide us with a competitive advantage. The Company acquired tenthree consolidated properties consisting of 2,529544 apartment units for $701.7$159.1 million one commercial building for potential redevelopment for $11.8 million, during the quarter ended March 31, 2012. The Company anticipates consolidated acquisitions of approximately $1.25 billion during the year ended December 31, 2012.$18.5$23.7 million and during the quarter ended March 31, 2012. We acquired these land parcels with the intent to develop them into approximately $168.9 million of new apartment properties. Although the Company did not start construction on any projects during the quarter ended March 31, 2012, the Company expects to start construction on seven projects representing 1,430 apartment units totaling approximately $630.0 million of development costs during the year ended December 31, 2012.long-term ground leasecontract with affiliates of Bank of America and Barclays PLC to acquire, for $1.325 billion, half of their interests - an approximately 26.5% interest overall - in Archstone, a privately-held owner, operator and developer of multifamily apartment properties. On January 20, 2012, Lehman Brothers Holdings Inc. ("Lehman"),one land parcel duringor before May 21, 2012, to contract to purchase the nine months ended September 30, 2011.July 2010,December 2011, the Company completed a $600.0 million$1.0 billion unsecured ten year note offering with a coupon of 4.75%4.625% and an all-in effective interest rate of 5.09%approximately 6.2%. EQRWe also raised $291.9$201.9 million in equity under itsour ATM Common Share offering program in 20102011 and hashave raised an additional $154.5$123.6 million under this program thus far in 2011.2012. In July 2011, the Company replaced its then existing unsecured revolving credit facility which was due to mature in February 2012 with a new $1.25$1.25 billion unsecured revolving credit facility maturing on July 13, 2014, subject to a one-year extension option exercisable by the Company. The Company believes that the new facility contains a diversified and strong bank group which increases its balance sheet flexibility going forward.20112012 will provide sufficient liquidity to meet our funding obligations relating to asset acquisitions, including an interest in Archstone, debt maturities and existing development projects through 2011.2012. We expect that our remaining longer-term funding requirements will be met through some combination of new borrowings, equity issuances (including EQR’sEQR's ATM Common Share offering program), property dispositions, joint ventures and cash generated from operations.Company’sCompany's properties. The two GSEs have a mandate to support multifamily housing through their financing activities. Any changes to their mandates, or reductions in their size or the scale of their activities or loss of key personnel could have a significant impact on the Company and may, among other things, lead to lower values for our disposition assets and higher interest rates on our borrowings. Such changes may also provide an advantage to us by making the cost of financing single family home ownership more expensive and provide us a competitive advantage given the size of our balance sheet and the multiple sources of capital to which we have access.September 30, 2011March 31, 2012 because our properties are geographically diverse, and were approximately 95.2%94.8% occupied (95.6%(95.2% on a same store basis), and the long-term demographic picture is positive. With the exception of the Washington, D.C. and Seattle market areas, little new multifamily rental supply will be added to most of our markets over the next several years and the long-term demographic picture is positive.years. We believe our strong balance sheet and ample liquidity will allow us to fund our debt maturities and development costs in the near term, and should also allow us to take advantage of investment opportunities in the future. As economic conditions continue to improve, the short-term nature of our leases and the limited supply of new rental housing being constructed, along with the customer service and superior value provided by our on-site personnel, should allow us to realize even more revenue growth and improvement in our operating results.The Company anticipates that growth in same store expenses comparing 2011 to 2010 will approximate an increase of 0.5% primarily due to modest increases in real estate tax rates and utility cost growth (same store expenses increased 0.9% for 2010 when compared with the same period in the prior year). This follows three consecutive years of excellent expense control (same store expenses declined 0.1% between 2009 and 2008 and grew 2.2% between 2008 and 2007 and 2.1% between 2007 and 2006). Effective expense controls have continued to date in 2011 as same store expenses declined 0.3% as compared to the same period in 2010.nine monthsquarter ended September 30, 2011March 31, 2012 as follows:Acquired $662.2 million of apartment properties consisting of nine consolidated properties and 2,434 apartment units at a weighted average cap rate (see definition below) of 5.1% and two land parcels for $18.5 million and entered into a long-term ground lease on one land parcel located in New York City, all of which we deem to be in our strategic targeted markets;▪ ▪ Acquired one unoccupied property in the San Francisco Bay Area in the third quarter of 2011 for $39.5 million consisting of 95 apartment units that is expected to stabilize at a 6.3% yield on cost;Acquired a 97,000 square foot commercial building adjacent to our Harbor Steps apartment property in downtown Seattle for $11.8 million for potential redevelopment; andSold $1.4 billion of consolidated apartment properties consisting of 45 properties and 13,528 apartment units at a weighted average cap rate of 6.5% generating an unlevered internal rate of return (IRR), inclusive of management costs, of 11.0% and one land parcel for $22.8 million,12.6%, the majority of which waswere in exit or less desirable markets.for all of both of the nine months ended September 30, 2011 and 2010 (the “Nine-Month 2011 Same Store Properties”), which represented 102,129 apartment units, and properties that theCompany ownedwere stabilized (see definition below) for all of both of the quarters ended September 30, 201120102011 (the “Third“First Quarter 20112012 Same Store Properties”), which represented 104,922105,612 apartment units, impacted the Company’sCompany's results of operations. Both the Nine-Month 2011 Same Store Properties and the ThirdThe First Quarter 20112012 Same Store Properties are discussed in the following paragraphs.Same Store Properties at December 31, 2011 101,312 2010 acquisitions 4,445 2010 acquisitions not stabilized (1,238 ) 2012 dispositions (1,522 ) 1,043 Lease-up properties stabilized 1,570 Other 2 Same Store Properties at March 31, 2012 105,612 Same Store 105,612 Non-Same Store: 2012 acquisitions 544 2011 acquisitions 6,198 Lease-up properties not yet stabilized (2) 3,741 Other 2 Total Non-Same Store 10,485 Military Housing (not consolidated) 4,914 Total Apartment Units 121,011 (1) In 2010, the Company consolidated 1,811 apartment units that had previously been categorized as unconsolidated. Of these 1,811 apartment units, 208 apartment units were sold in 2010 and 560 apartment units were sold in 2011. (2) Includes properties in various stages of lease-up and properties where lease-up has been completed but the properties were not stabilized for the comparable periods presented. nine months and quarters ended September 30, 2011March 31, 2012 and 2010.2011. The impacts of these activities are discussed in greater detail in the following paragraphs.nine monthsquarter ended September 30, 2011March 31, 2012 to the nine monthsquarter ended September 30, 2010nine monthsquarter ended September 30, 2011,March 31, 2012, the Company reported diluted earnings per share/Unitshare of $2.62$0.47 compared to $0.30$0.423 per share/Unitshare in the same period of 2010.2011. The difference is primarily due to higher gains from property sales in 20112012 vs. 20102011 and higher total property net operating income driven by the positive impact of the Company’sCompany's same store and lease-up activity, partially offset by dilution fromas a result of the Company’s 2010net impact of the Company's 2011 and 2011 transaction activity.2012 acquisition and disposition activities.nine monthsquarter ended September 30, 2011,March 31, 2012, income from continuing operations increased approximately $80.6$26.3 million when compared to the nine monthsquarter ended September 30, 2010.March 31, 2011. The increase in continuing operations is discussed below.Nine-Month 2011First Quarter 2012 Same Store Properties increased $58.8$24.7 million primarily as a result of an increase in average rental rates charged to residents and an increase in occupancy.residents. Expenses from the Nine-Month 2011First Quarter 2012 Same Store Properties decreased $1.2increased $3.0 million primarily due to a combination of increases and decreases in each category of operating expenses, including decreases inreal estate taxes, on-site payroll costs leasing and advertising costs, insurance and repairs and maintenanceother on-site operating expenses, partially offset by increasesdecreases in property management costs, real estate taxes and utilities. The decrease in on-site payroll costs was offset by the increase in property management costs as a result of the creation of the Company’s central business group, which moved certain administrative functions off-site. The following tables provide comparative same store results and statistics for the Nine-Month 2011First Quarter 2012 Same Store Properties:September YTD 2011 vs. September YTD 2010Same Store Results/Statistics$ in thousands (except for Average Rental Rate) – 102,129 Same Store Apartment Units Results Statistics Revenues Expenses NOI Average
Rental
Rate (1) Occupancy Turnover $ 1,284,208 $ 467,944 $ 816,264 $ 1,468 95.3 % 44.4 % $ 1,225,371 $ 469,151 $ 756,220 $ 1,407 94.9 % 44.0 % $ 58,837 $ (1,207 ) $ 60,044 $ 61 0.4 % 0.4 % 4.8 % (0.3 %) 7.9 % 4.3 % First Quarter 2012 vs. First Quarter 2011 Same Store Results/Statistics $ in thousands (except for Average Rental Rate) – 105,612 Same Store Apartment Units Results Statistics Description Revenues Expenses NOI Occupancy Turnover Q1 2012 $ 473,957 $ 173,054 $ 300,903 $ 1,578 94.9 % 12.5 % Q1 2011 $ 449,232 $ 170,017 $ 279,215 $ 1,496 94.9 % 11.5 % Change $ 24,725 $ 3,037 $ 21,688 $ 82 0.0 % 1.0 % Change 5.5 % 1.8 % 7.8 % 5.5 % (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period. Nine-Month 2011First Quarter 2012 Same Store Properties:September YTD 2011 vs. September YTD 2010Same Store Operating Expenses$ in thousands – 102,129 Same Store Apartment Units Actual
YTD 2011 Actual
YTD 2010 $
Change %
Change % of Actual
YTD 2011
Operating
Expenses $ 127,155 $ 125,516 $ 1,639 1.3 % 27.2 % 109,904 112,705 (2,801 ) (2.5 %) 23.5 % 73,831 72,297 1,534 2.1 % 15.8 % 67,958 68,653 (695 ) (1.0 %) 14.5 % 51,882 49,015 2,867 5.8 % 11.1 % 14,621 15,530 (909 ) (5.9 %) 3.1 % 8,713 11,107 (2,394 ) (21.6 %) 1.9 % 13,880 14,328 (448 ) (3.1 %) 2.9 % $ 467,944 $ 469,151 $ (1,207 ) (0.3 %) 100.0 % First Quarter 2012 vs. First Quarter 2011 Same Store Operating Expenses $ in thousands – 105,612 Same Store Apartment Units Actual
Q1 2012 Actual
Q1 2011 $
Change %
Change % of Actual
Q1 2012
Operating
ExpensesReal estate taxes $ 50,167 $ 47,730 $ 2,437 5.1 % 29.0 % On-site payroll (1) 39,913 39,168 745 1.9 % 23.1 % Utilities (2) 27,160 28,531 (1,371 ) (4.8 )% 15.7 % Repairs and maintenance (3) 23,129 22,638 491 2.2 % 13.4 % Property management costs (4) 18,247 17,969 278 1.5 % 10.5 % Insurance 5,436 5,095 341 6.7 % 3.1 % Leasing and advertising 2,700 3,354 (654 ) (19.5 )% 1.6 % Other on-site operating expenses (5) 6,302 5,532 770 13.9 % 3.6 % Same store operating expenses $ 173,054 $ 170,017 $ 3,037 1.8 % 100.0 % (1) On-site payroll – Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff. (2) Utilities – Represents gross expenses prior to any recoveries under the Resident Utility Billing System (“RUBS”). Recoveries are reflected in rental income. (3) Repairs and maintenance – Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs. (4) Property management costs – Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology. (5) Other on-site operating expenses – Includes administrative costs such as office supplies, telephone and data charges and association and business licensing fees. Nine-Month 2011First Quarter 2012 Same Store Properties: Nine Months Ended September 30, 2011 2010 (Amounts in thousands) $ 414,159 $ 301,887 (108,921 ) (31,164 ) (6,682 ) (7,596 ) 3,207 4,242 482,039 457,822 32,462 31,029 $ 816,264 $ 756,220 Quarter Ended March 31, 2012 2011 (Amounts in thousands) Operating income $ 146,152 $ 115,953 Adjustments: Non-same store operating results (32,917 ) (5,768 ) Fee and asset management revenue (2,064 ) (1,806 ) Fee and asset management expense 1,307 948 Depreciation 174,737 158,455 General and administrative 13,688 11,433 Same store NOI $ 300,903 $ 279,215 20102011 and expects to continue to own through December 31, 2011,2012, the Company anticipates the following same store results for the full year ending December 31, 2011:2012:20112012 Same Store Assumptions95.2% 95.2%5.0% 5.0% to 6.0%0.51.5 % to 2.5% 7.7% 6.5% to 8.5%$1.25$1.25 billion and consolidated rental dispositions of$1.41.25 billion and expects that acquisitions will have a 1.30%1.25% lower cap rate than dispositions for the full year ending December 31, 2011.20112012 assumptions are based on current expectations and are forward-looking.$77.8$27.1 million and consist primarily of properties acquired in calendar years 20102011 and 2011,2012, as well as operations from the Company’s completed development properties. Although the operations of both the non-same store assets and the same store assets have been positively impacted during the nine monthsquarter ended September 30, 2011,March 31, 2012, the non-same store assets have contributed a greater percentage of total NOI to the Company’s overall operating results primarily due to 20102011 and 20112012 acquisitions, increasing occupancy for properties in lease-up and a longer ownership period in 20112012 than 2010.2011. This increase primarily resulted from:Development and other miscellaneous properties in lease-up of $29.5 million;▪ ▪ ▪ Properties acquired in 2010 and 2011 of $36.7 million; andNewly stabilized development properties of $2.8 million.increaseddecreased approximately $0.1$0.1 million or 3.6%11.8% primarily due to revenueshigher expenses, partially offset by fees earned on management of the Company’s unconsolidated development joint ventures and lower expenses, partially offset by the unwinding of four institutional joint ventures during 2010.$2.6$1.0 million or 4.4%4.6%. This increase is primarily attributable to an increase in payroll-related costs, which is largely a resultthe timing of the creation of the Company’s central business group, which moved certain administrative functions off-site, and increases in education/conference costsexpenses and legal and professional fees.$24.2$16.3 million or 5.3%10.3% primarily as a result of additional depreciation expense on properties acquired in 2010 and 2011, development properties placed in service and capital expenditures for all properties owned, partially offset by a decrease in the amortization of both in-place leases due to lower acquisition volume in 2011 and a decrease in the amortization of furniture, fixtures and equipment that were fully depreciated.$1.4$2.3 million or 4.6%19.7% primarily due to an increase in payroll-related costs, which is largely a result of the acceleration of long-term compensation expense for retirement eligible employees. The Company anticipates that general and administrative expenses will approximate $43.0$47.0 million to $48.0 million for the year ending December 31, 2011.2012. The above assumption is based on current expectations and is forward-looking.increaseddecreased approximately $1.6$0.8 million or 31.0%83.0% primarily as a result of lower interest earned on cash and cash equivalents and investment securities due to largerlower overall cash balancesinvested during the nine monthsquarter ended September 30, 2011March 31, 2012 as compared to the same period in 2010,2011 and forfeited deposits for terminated disposition transactions and proceeds received from the Company’s finalCompany's royalty participation in LRO/Rainmaker partially offset by insurance/litigation settlement proceeds(a revenue management system) that both occurred during the nine monthsquarter ended September 30, 2010March 31, 2011 and did not reoccur during the nine monthsquarter ended September 30, 2011.March 31, 2012. The Company anticipates that interest and other income will approximate $0.5 million to $1.0 million for the year ending December 31, 2012. The above assumption is based on current expectations and is forward-looking.decreasedincreased approximately $0.2$4.9 million or 2.0% primarily due to the settlement of a decreasedispute with the owners of a land parcel, an increase in property acquisition costs incurred in conjunction with the Company’s lower acquisition volume in 2011, partially offset by an increase in2012 acquisitions as well as transaction costs related to the expensingpursuit of overhead (pursuit cost write-offs) as a result of a more active focus on sourcing new development opportunities.increaseddecreased approximately $11.1$1.9 million or 3.1%1.5% primarily as a result of interest expense on the $600.0 million of unsecured notes that closed in July 2010 and accrued interest on four forward starting swaps, partially offset by lower interest expense on mortgage notes payable due to lower balances during the nine monthsquarter ended September 30, 2011March 31, 2012 as compared to the same period in 2010.2011 and higher capitalized interest in 2012, partially offset by interest expense on the $1.0 billion of unsecured notes that closed in December 2011. During the nine monthsquarter ended September 30, 2011,March 31, 2012, the Company capitalized interest costs of approximately $5.9$5.0 million as compared to $10.2$1.7 million for the nine months ended September 30, 2010. This capitalization of interest primarily relates to consolidated projects under development. The effective interest cost on all indebtedness for the nine months endedSeptember 30, 2011 was 5.27% as compared to 5.14% for the nine months ended September 30, 2010. The Company anticipates that interest expense from continuing operations will approximate $460.0 million to $465.0 million for the year ending December 31, 2011. The above assumption is based on current expectations and is forward-looking.Income and other tax expense from continuing operations increased $0.4 million primarily due to Tennessee franchise tax refunds received during the nine months ended September 30, 2010 that did not reoccur during the nine months ended September 30, 2011. The Company anticipates that income and other tax expense will approximate $1.0 million for the year ending December 31, 2011. The above assumption is based on current expectations and is forward-looking.Loss from investments in unconsolidated entities decreased approximately $0.7 million as compared to the nine months ended September 30, 2010 primarily due to the unwinding of four institutional joint ventures during 2010.Net gain on sales of unconsolidated entities decreased approximately $28.1 million primarily due to the gain on sale and revaluation of seven previously unconsolidated properties that were acquired from the Company’s joint venture partner and the gain on sale for 27 unconsolidated properties that occurred during the nine months ended September 30, 2010 that did not reoccur during the nine months ended September 30, 2011.Net gain on sales of land parcels increased approximately $5.4 million due to the gain on sale of a land parcel located in suburban Washington D.C. during the nine months ended September 30, 2011 and a loss on sale of a land parcel during the same period in 2010.Discontinued operations, net increased approximately $649.5 million between the periods under comparison. This increase is primarily due to higher gains from property sales during the nine months ended September 30, 2011 compared to the same period in 2010, partially offset by properties sold in 2011 which reflect operations for none of or a partial period in 2011 in contrast to a full or partial period in 2010. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.Comparison of the quarter ended September 30, 2011 to the quarter ended September 30, 2010For the quarter ended September 30, 2011, the Company reported diluted earnings per share/Unit of $0.35 compared to $0.09 per share/Unit in the same period of 2010. The difference is primarily due to higher gains from property sales in 2011 vs. 2010 and higher total property net operating income driven by the positive impact of the Company’s same store and lease-up activity, partially offset by dilution from the Company’s 2010 and 2011 transaction activity.For the quarter ended September 30, 2011, income from continuing operations increased approximately $35.8 million when compared to the quarter ended September 30, 2010. The increase in continuing operations is discussed below.Revenues from the Third Quarter 2011 Same Store Properties increased $23.8 million primarily as a result of an increase in average rental rates charged to residents and an increase in occupancy. Expenses from the Third Quarter 2011 Same Store Properties decreased $0.2 million primarily due to decreases in on-site payroll costs, leasing and advertising costs and repairs and maintenance expenses, partially offset by increases in property management costs and real estate taxes. The following tables provide comparative same store results and statistics for the Third Quarter 2011 Same Store Properties:Third Quarter 2011 vs. Third Quarter 2010Same Store Results/Statistics$ in thousands (except for Average Rental Rate) – 104,922 Same Store Apartment Units Results Statistics Revenues Expenses NOI Average
Rental
Rate (1) Occupancy Turnover $ 457,308 $ 166,212 $ 291,096 $ 1,524 95.4 % 17.7 % $ 433,508 $ 166,381 $ 267,127 $ 1,453 94.9 % 17.8 % $ 23,800 $ (169 ) $ 23,969 $ 71 0.5 % (0.1 %) 5.5 % (0.1 %) 9.0 % 4.9 % (1)Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the period.The following table provides comparative same store operating expenses for the Third Quarter 2011 Same Store Properties:Third Quarter 2011 vs. Third Quarter 2010Same Store Operating Expenses$ in thousands – 104,922 Same Store Apartment Units Actual
Q3 2011 Actual
Q3 2010 $
Change %
Change % of Actual
Q3 2011
Operating
Expenses $ 46,887 $ 45,682 $ 1,205 2.6 % 28.2 % 38,871 39,512 (641 ) (1.6 %) 23.4 % 25,398 25,063 335 1.3 % 15.3 % 24,185 24,608 (423 ) (1.7 %) 14.6 % 18,475 17,340 1,135 6.5 % 11.1 % 4,991 5,306 (315 ) (5.9 %) 3.0 % 3,025 4,383 (1,358 ) (31.0 %) 1.8 % 4,380 4,487 (107 ) (2.4 %) 2.6 % $ 166,212 $ 166,381 $ (169 ) (0.1 %) 100.0 % (1)On-site payroll – Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff.(2)Utilities – Represents gross expenses prior to any recoveries under the Resident Utility Billing System (“RUBS”). Recoveries are reflected in rental income.(3)Repairs and maintenance – Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.(4)Property management costs – Includes payroll and related expenses for departments, or portions of departments, that directly support on-site management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information technology.(5)Other on-site operating expenses – Includes administrative costs such as office supplies, telephone and data charges and association and business licensing fees.The following table presents a reconciliation of operating income per the consolidated statements of operations to NOI for the Third Quarter 2011 Same Store Properties: Quarter Ended September 30, 2011 2010 (Amounts in thousands) $ 151,076 $ 105,264 (32,975 ) (5,227 ) (2,928 ) (2,128 ) 1,250 679 164,552 158,318 10,121 10,221 $ 291,096 $ 267,127 Non-same store operating results increased approximately $27.7 million and consist primarily of properties acquired in calendar years 2010 and 2011, as well as operations from the Company’s completed development properties. Although the operations of both the non-same store assets and the same store assets have been positively impacted during the quarter ended September 30, 2011, the non-same store assets have contributed a greater percentage of total NOI to the Company’s overall operating results primarily due to 2010 and 2011 acquisitions, increasing occupancy for properties in lease-up and a longer ownership period in 2011 than 2010. This increase primarily resulted from:Development and other miscellaneous properties in lease-up of $9.3 million;Properties acquired in 2010 and 2011 of $11.4 million;Newly stabilized development properties of $0.8 million; andOther miscellaneous properties of $0.3 million.See also Note 13 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s segment disclosures.Fee and asset management revenues, net of fee and asset management expenses, increased approximately $0.2 million or 15.8% primarily due to revenues earned on management of the Company’s unconsolidated development joint ventures, partially offset by the unwinding of four institutional joint ventures during 2010 and higher expenses.Property management expenses from continuing operations include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third party management companies. These expenses increased approximately $0.2 million or 1.2%. This increase is primarily attributable to an increase in payroll-related costs, which is largely a result of the creation of the Company’s central business group, which moved certain administrative functions off-site.Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased approximately $6.2 million or 3.9% primarily as a result of additional depreciation expense on properties acquired in 2011, partially offset by a decrease in the amortization of in-place leases due to lower acquisition volume in 2011 compared to 2010.General and administrative expenses from continuing operations, which include corporate operating expenses, decreased approximately $0.1 million or 1.0% primarily due to a decrease in tax compliance fees, partially offset by an increase in payroll-related costs, which is largely a result of the acceleration of long-term compensation expense for retirement eligible employees.Interest and other income from continuing operations increased approximately $5.1 million primarily as a result of proceeds received from the Company’s final royalty participation in LRO/Rainmaker during the quarter ended September 30 2011.Other expenses from continuing operations decreased approximately $1.0 million or 27.5% due to a decrease in property acquisition costs incurred in conjunction with the Company’s lower acquisition volume in 2011 and a decrease in the expensing of overhead (pursuit cost write-offs) during the quarter ended September 30, 2011.Interest expense from continuing operations, including amortization of deferred financing costs, decreased approximately $5.5 million or 4.4% primarily due to lower interest expense on mortgage notes payable due to lower balances during the nine months ended September 30, 2011 as compared to the same period in 2010 and lower interest expense on the $482.5 million of exchangeable senior notes that were redeemed on August 18, 2011, partially offset by increases in write-offs of unamortized loan costs. During the quarter ended September 30, 2011, the Company capitalized interest costs of approximately $2.2 million as compared to $2.3 million for the quarter ended September 30, 2010.March 31, 2011. This capitalization of interest primarily relates to consolidated projects under development. The effective interest cost on all indebtedness for the quarter ended September 30, 2011March 31, 2012 was 5.30%5.26% as compared to 5.15%5.13% for the quarter ended September 30, 2010.Income from investments in unconsolidated entities decreased approximately $0.2 The Company anticipates that income and other tax expense will approximate as compared to $1.5 million for the quarter ended September 30, 2010 primarily due to the unwinding of four institutional joint ventures during 2010.Net gainyear ending sales of unconsolidated entities decreased approximately $22.5 million primarily due to the gain on sale for 24 unconsolidated properties that occurred during the quarter ended September 30, 2010current expectations and did not reoccur during the quarter ended September 30, 2011.Net loss on sales of land parcels decreased approximately $1.2 million due to the loss on sale of one land parcel during the quarter ended September 30, 2010 as compared to no land sales during the quarter ended September 30, 2011.increaseddecreased approximately $47.4$7.2 million or 5.1% between the periods under comparison. This increasedecrease is primarily due to better operating results in 2011 vs. 2012 for properties sold, partially offset by higher gains on sales from property salesdispositions during the quarter ended September 30, 2011March 31, 2012 compared to the same period in 2010, partially offset by properties2011. Properties sold in 2011 which2012 reflect operations for none of or a partial period in 20112012in contrast to a full or partial period in 2010.2011. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.2011,2012, the Company had approximately $431.4$383.9 million of cash and cash equivalents, its restricted 1031 exchange proceeds totaled $103.9$53.7 million and it had $1.28$1.22 billion available under its then existing revolving credit facility (net of $147.3$31.8 million which was restricted/dedicated to support letters of credit and $75.0 million which had been committed by a now bankrupt financial institution and was not available for borrowing)credit). After taking into effect the various transactions discussed in the following paragraphs and the net cash provided by operating activities, the Company’s cash and cash equivalents balance at September 30, 2011March 31, 2012 was approximately $46.0$219.6 million, its restricted 1031 exchange proceeds totaled $303.8$79.1 million and the amount available on its new revolving credit facility was $1.14$1.72 billion (net of $85.9$30.8 million which was restricted/dedicated to support letters of credit and net of $26.0 million outstanding)credit).nine monthsquarter ended September 30, 2011,March 31, 2012, the Company generated proceeds from various transactions, which includedDisposed of 45 consolidated properties and one land parcel, receiving net proceeds of approximately $1.4 billion;▪ ▪ Obtained $152.9 million in new mortgage financing; andIssued approximately 6.1 million Common Shares (including Common Shares issued under the ATM program – see further discussion below) and received net proceeds of $253.4 million, which were contributed to the capital of the Operating Partnership in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis).nine monthsquarter ended September 30, 2011,March 31, 2012, the above proceeds were primarily utilized to:10three rental properties a 97,000 square foot commercial building and threetwo land parcels for approximately $634.6 million;$183.1 million;$93.8$35.9 million primarily in development projects; and$871.5$51.8 million of mortgage loans and $575.6$253.9 million of unsecured notes, inclusive of the redemption of $482.5 million of its 3.85% exchangeable unsecured notes with a final maturity of 2026 at par and no premium was paid.notes.nine monthsquarter ended September 30, 2011,March 31, 2012, EQR issued approximately 3.02.1 million Common Shares at an average price of $50.84$59.47 per share for total consideration of approximately $154.5$123.6 million through the ATM program. EQR has not issued any shares under this program since JanuaryFebruary 13, 2011.2012. Through October 27, 2011,April 26, 2012, EQR has cumulatively issued approximately 12.715.6 million Common Shares at an average price of $44.94$47.53 per share for total consideration of approximately $570.1 million. Including its February 2011 prospectus supplement which added approximately 5.7$741.2 million Common Shares,. EQR has 10.07.1 million Common Shares remaining available for issuance under the ATM program as of October 27, 2011.On June 16, 2011, the shareholders of EQR approved the Company’s 2011 Share Incentive Plan (the “2011 Plan”) The 2011 Plan reserved 12,980,741 Common Shares for issuance. In conjunction with the approval of the 2011 Plan, no further awards may be granted under the 2002 Share Incentive Plan. The 2011 Plan expires on June 16, 2021.October 27, 2011,April 26, 2012, EQR had authorization to repurchase $464.6an additional $464.6 million of its shares. No shares2011.the quarter ended March 31, 2012. See Note 3 in the Notes to Consolidated Financial Statements for further discussion.September 30, 2011March 31, 2012 are as follows:Debt Summary as of September 30, 2011(Amounts in thousands) Amounts (1) % of Total Weighted
Average
Rates (1) Weighted
Average
Maturities
(years) $ 4,136,848 47.1 % 4.83 % 8.2 4,640,323 52.9 % 5.15 % 4.4 $ 8,777,171 100.0 % 5.00 % 6.1 $ 3,587,114 40.8 % 5.57 % 7.1 3,806,478 43.4 % 5.83 % 5.0 7,393,592 84.2 % 5.71 % 6.0 115,285 1.3 % 3.07 % 1.0 434,449 5.0 % 0.27 % 20.1 807,845 9.2 % 1.66 % 1.2 26,000 0.3 % 1.32 % 2.8 1,383,579 15.8 % 1.37 % 6.8 $ 8,777,171 100.0 % 5.00 % 6.1 Debt Summary as of March 31, 2012 (Amounts in thousands) Amounts (1) % of Total Weighted
Average
Rates (1) Weighted
Average
Maturities
(years)Secured $ 4,056,976 43.1 % 4.88 % 8.1 Unsecured 5,355,590 56.9 % 5.14 % 5.1 Total $ 9,412,566 100.0 % 5.03 % 6.4 Fixed Rate Debt: Secured – Conventional $ 3,527,819 37.5 % 5.53 % 6.7 Unsecured – Public/Private 4,549,919 48.3 % 5.73 % 5.9 Fixed Rate Debt 8,077,738 85.8 % 5.64 % 6.3 Floating Rate Debt: Secured – Conventional 64,061 0.7 % 3.33 % 1.2 Secured – Tax Exempt 465,096 4.9 % 0.15 % 20.6 Unsecured – Public/Private 805,671 8.6 % 1.68 % 0.7 Unsecured – Revolving Credit Facility — — — 2.3 Floating Rate Debt 1,334,828 14.2 % 1.23 % 7.3 Total $ 9,412,566 100.0 % 5.03 % 6.4 (1) nine monthsquarter ended September 30, 2011.March 31, 2012.(2)On July 13, 2011, the Company replaced its then existing unsecured revolving credit facility with a new $1.25 billion unsecured revolving credit facility maturing on July 13, 2014, subject to a one-year extension option exercisable by the Company. The interest rate on advances under the new credit facility will generally be LIBOR plus a spread (currently 1.15%) and the Company pays an annual facility fee of 0.2%. Both the spread and the facility fee are dependent on the credit rating of the Company’s long-term debt.$5.9$5.0 million and $10.2$1.7 million during the nine months ended September 30, 2011 and 2010, respectively. The Company capitalized interest of approximately $2.2 million and $2.3 million during the quarters ended September 30, 2011March 31, 2012 and 2010,2011, respectively.Debt Maturity Schedule as of September 30, 2011(Amounts in thousands) Fixed
Rate (1) Floating
Rate (1) Total % of Total Weighted Average
Rates on Fixed
Rate Debt (1) Weighted Average
Rates on
Total Debt (1) $ 5,474 $ 50,622 $ 56,096 0.6 % 6.65 % 4.02 % 625,590 536,887 (2) 1,162,477 13.2 % 6.04 % 3.71 % 273,304 308,360 581,664 6.6 % 6.71 % 4.87 % 566,862 48,012 (3) 614,874 7.0 % 5.32 % 5.07 % 419,433 — 419,433 4.8 % 6.31 % 6.31 % 1,190,544 — 1,190,544 13.6 % 5.34 % 5.34 % 1,355,835 456 1,356,291 15.4 % 5.87 % 5.87 % 80,771 16,417 97,188 1.1 % 5.72 % 4.92 % 801,763 20,766 822,529 9.4 % 5.49 % 5.36 % 1,671,836 809 1,672,645 19.1 % 5.50 % 5.50 % 402,180 401,250 803,430 9.2 % 5.91 % 3.39 % $ 7,393,592 $ 1,383,579 $ 8,777,171 100.0 % 5.69 % 5.04 % Debt Maturity Schedule as of March 31, 2012 (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)2012 $ 315,756 $ 535,546 (2) $ 851,302 9.0 % 5.62 % 2.69 % 2013 267,869 306,182 574,051 6.1 % 6.70 % 4.86 % 2014 564,477 22,019 586,496 6.2 % 5.31 % 5.24 % 2015 418,012 — 418,012 4.4 % 6.31 % 6.31 % 2016 1,190,610 — 1,190,610 12.7 % 5.34 % 5.34 % 2017 1,355,806 456 1,356,262 14.4 % 5.87 % 5.87 % 2018 80,901 18,419 99,320 1.1 % 5.71 % 4.82 % 2019 802,043 20,766 822,809 8.7 % 5.49 % 5.36 % 2020 1,671,868 809 1,672,677 17.8 % 5.50 % 5.50 % 2021 1,165,475 856 1,166,331 12.4 % 4.64 % 4.64 % 2022+ 233,860 435,539 669,399 7.1 % 6.75 % 2.88 % Premium/(Discount) 11,061 (5,764 ) 5,297 0.1 % N/A N/A Total $ 8,077,738 $ 1,334,828 $ 9,412,566 100.0 % 5.52 % 4.95 % (1) September 30, 2011.March 31, 2012.(2) Effective April 5, 2011, the Company exercised the second of its two one-year extension options for its $500.0 million term loan facility and as a result, the maturity date is now October 5, 2012. (3)Includes $26.0 million outstanding on the Company’s unsecured revolving credit facility. As of September 30, 2011, there was approximately $1.14 billion available on this facility.September 30, 2011:Unsecured Debt Summary as of September 30, 2011March 31, 2012(Amounts in thousands): Coupon
Rate Due
Date Face
Amount Unamortized
Premium/
(Discount) Net
Balance 6.625 % 03/15/12 $ 253,858 $ (92) $ 253,766 5.500 % 10/01/12 222,133 (219) 221,914 5.200 % 04/01/13 (1) 400,000 (177) 399,823 (1) (300,000) — (300,000) 5.250 % 09/15/14 500,000 (182) 499,818 6.584 % 04/13/15 300,000 (386) 299,614 5.125 % 03/15/16 500,000 (238) 499,762 5.375 % 08/01/16 400,000 (897) 399,103 5.750 % 06/15/17 650,000 (2,924) 647,076 7.125 % 10/15/17 150,000 (392) 149,608 4.750 % 07/15/20 600,000 (4,006) 595,994 7.570 % 08/15/26 140,000 — 140,000 3,815,991 (9,513) 3,806,478 04/01/13 (1) 300,000 — 300,000 (1) 7,845 — 7,845 LIBOR+0.50 % 10/05/12 (2)(3) 500,000 — 500,000 807,845 — 807,845 LIBOR+1.15 % 07/13/14 (2)(4) 26,000 — 26,000 $ 4,649,836 $ (9,513) $ 4,640,323 Unsecured Debt Summary as of March 31, 2012 (Amounts in thousands) Coupon
Rate Due
Date Face
Amount Unamortized
Premium/
(Discount) Net
BalanceFixed Rate Notes: 5.500% 10/01/12 $ 222,133 $ (109 ) $ 222,024 5.200% 04/01/13 (1) 400,000 (118 ) 399,882 Fair Value Derivative Adjustments (1) (300,000 ) — (300,000 ) 5.250% 09/15/14 500,000 (151 ) 499,849 6.584% 04/13/15 300,000 (331 ) 299,669 5.125% 03/15/16 500,000 (211 ) 499,789 5.375% 08/01/16 400,000 (804 ) 399,196 5.750% 06/15/17 650,000 (2,670 ) 647,330 7.125% 10/15/17 150,000 (360 ) 149,640 4.750% 07/15/20 600,000 (3,777 ) 596,223 4.625% 12/15/21 1,000,000 (3,683 ) 996,317 7.570% 08/15/26 140,000 — 140,000 4,562,133 (12,214 ) 4,549,919 Floating Rate Notes: 04/01/13 �� (1) 300,000 — 300,000 Fair Value Derivative Adjustments (1) 5,671 — 5,671 Term Loan Facility LIBOR+0.50% 10/05/12 (2)(3) 500,000 — 500,000 Delayed Draw Term Loan Facility LIBOR+1.25% 01/04/13 (2)(4) — — — 805,671 — 805,671 Revolving Credit Facility: LIBOR+1.15% 07/13/14 (2)(5) — — — Total Unsecured Debt $ 5,367,804 $ (12,214 ) $ 5,355,590 (1) Fair value interest rate swaps convert $300.0 million of the 5.200% notes due April 1, 2013 to a floating interest rate. (2) Facilities are private. All other unsecured debt is public. (3) $500.0$500.0 million term loan facility and as a result, the maturity date is now October 5, 2012.(4) July 13, 2011,January 6, 2012, the Company replaced its then existing unsecured revolving credit facility withentered into a new $1.25 billionsenior unsecured revolving credit$500.0 million delayed draw term loan facility maturingthat may be drawn anytime on or before July 13, 2014,4, 2012 and is currently undrawn. If the Company elects to draw on this facility, up to the full amount of the principal will be funded in a single borrowing and the maturity date will be January 4, 2013, subject to atwo one-year extension optionoptions exercisable by the Company. The interest rate on advances under the new creditterm loan facility will generally be LIBOR plus a spread (currently 1.15%1.25%) and the Company pays an annual facility fee of 0.2%. Both the spread and the facility fee are, which is dependent on the credit rating of the Company’s long-termCompany's long term debt.(5) As of September 30, 2011,March 31, 2012, there was approximately $1.14$1.72 billion available on the Company’s unsecured revolving credit facility.On August 18, 2011 (the “Redemption Date”) the Operating Partnership redeemed all of its outstanding 3.85% exchangeable notes for $482.5 million in cash, which was equal to 100% of the principal amount of such notes plus accrued and unpaid interest up to but excluding the Redemption Date (the “Redemption Amount”). The notes were redeemable at the option of the Operating Partnership at any time on or after the Redemption Date, and were also redeemable at the option of the holders on the Redemption Date for the Redemption Amount pursuant to a repurchase right set forth in the terms of the notes. In connection with the redemption and under certain additional conditions, the notes could be exchanged for an amount of cash based on the price of the Company’s Common Shares, with the Operating Partnership having the option of delivering Common Shares instead of cash for the amount by which the exchange value exceeded the principal amount of the notes, if any. No note holder exercised its exchange rights.14,15, 2013. However, as of October 27, 2011,April 26, 2012, issuances under the ATM share offering program are limited to 10.07.1 million additional shares. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis).September 30, 2011March 31, 2012 is presented in the following table. The Company calculates the equity component of its market capitalization as the sum of (i) the total outstanding Common Shares and assumed conversion of all Units at the equivalent market value of the closing price of the Company’s Common Shares on the New York Stock Exchange and (ii) the liquidation value of all perpetual preferred shares outstanding.Equity Residential Capital Structure as of March 31, 2012 (Amounts in thousands except for share/unit and per share amounts) Secured Debt $ 4,056,976 43.1 % Unsecured Debt 5,355,590 56.9 % Total Debt 9,412,566 100.0 % 32.1 % Common Shares (includes Restricted Shares) 300,522,169 95.7 % Units (includes OP Units and LTIP Units) 13,531,417 4.3 % Total Shares and Units 314,053,586 100.0 % Common Share Price at March 31, 2012 $ 62.62 19,666,036 99.0 % Perpetual Preferred Equity (see below) 200,000 1.0 % Total Equity 19,866,036 100.0 % 67.9 % Total Market Capitalization $ 29,278,602 100.0 % Equity Residential Perpetual Preferred Equity as of March 31, 2012 (Amounts in thousands except for share and per share amounts) Series Redemption
Date Outstanding
Shares Liquidation
Value Annual
Dividend
Per Share Annual
Dividend
Amount Weighted
Average
RatePreferred Shares: 8.29% Series K 12/10/26 1,000,000 $ 50,000 $ 4.145 $ 4,145 6.48% Series N 06/19/08 600,000 150,000 16.20 9,720 Total Perpetual Preferred Equity 1,600,000 $ 200,000 $ 13,865 6.93 % Equity ResidentialCapital Structure as of September 30, 2011(Amounts in thousands except for share/unit and per share amounts) $ 4,136,848 47.1 % 4,640,323 52.9 % 8,777,171 100.0 % 35.0 % 296,620,833 95.6 % 13,509,488 4.4 % 310,130,321 100.0 % $ 51.87 16,086,460 98.8 % 200,000 1.2 % 16,286,460 100.0 % 65.0 % $ 25,063,631 100.0 % Equity ResidentialPerpetual Preferred Equity as of September 30, 2011(Amounts in thousands except for share and per share amounts) Redemption
Date Outstanding
Shares Liquidation
Value Annual
Dividend
Per Share Annual
Dividend
Amount Weighted
Average
Rate 12/10/26 1,000,000 $ 50,000 $ 4.145 $ 4,145 6/19/08 600,000 150,000 16.20 9,720 1,600,000 $ 200,000 $ 13,865 6.93 % September 30, 2011March 31, 2012 is presented in the following table. The Operating Partnership calculates the equity component of its market capitalization as the sum of (i) the total outstanding Units at the equivalent market value of the closing price of the Company’s Common Shares on the New York Stock Exchange and (ii) the liquidation value of all perpetual preference units outstanding.ERP Operating Limited PartnershipCapital Structure as of September 30, 2011(Amounts in thousands except for unit and per unit amounts) $ 4,136,848 47.1 % 4,640,323 52.9 % 8,777,171 100.0 % 35.0 % 310,130,321 $ 51.87 16,086,460 98.8 % 200,000 1.2 % 16,286,460 100.0 % 65.0 % $ 25,063,631 100.0 % ERP Operating Limited PartnershipPerpetual Preference Units as of September 30, 2011(Amounts in thousands except for unit and per unit amounts) Redemption
Date Outstanding
Units Liquidation
Value Annual
Dividend
Per Unit Annual
Dividend
Amount Weighted
Average
Rate 12/10/26 1,000,000 $ 50,000 $ 4.145 $ 4,145 6/19/08 600,000 150,000 16.20 9,720 1,600,000 $ 200,000 $ 13,865 6.93 % ERP Operating Limited Partnership Capital Structure as of March 31, 2012 (Amounts in thousands except for unit and per unit amounts) Secured Debt $ 4,056,976 43.1 % Unsecured Debt 5,355,590 56.9 % Total Debt 9,412,566 100.0 % 32.1 % Total outstanding Units 314,053,586 Common Share Price at March 31, 2012 $ 62.62 19,666,036 99.0 % Perpetual Preference Units (see below) 200,000 1.0 % Total Equity 19,866,036 100.0 % 67.9 % Total Market Capitalization $ 29,278,602 100.0 % ERP Operating Limited Partnership Perpetual Preference Units as of March 31, 2012 (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
RatePreference Units: 8.29% Series K 12/10/26 1,000,000 $ 50,000 $ 4.145 $ 4,145 6.48% Series N 06/19/08 600,000 150,000 16.20 9,720 Total Perpetual Preference Units 1,600,000 $ 200,000 $ 13,865 6.93 % certain scheduled unsecured note and mortgage note repayments, through its working capital, net cash provided by operating activities and borrowings under the Company’s revolving credit facility. Under normal operating conditions, the Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions.During the fourth quarter of 2010, the Company announced a new dividend policy which it believes will generate payouts more closely aligned with the actual annual operating results of the Company’s core business andprovide transparency to investors. The Company intends to pay an annual cash dividend equal to approximately 65% of Normalized FFO for the year. Subject to Board of Trustees approval, the Company anticipates the expected dividend payout will be $1.57 to $1.59 per share/Unit ($0.3375 per share/Unit for each of the first three quarters with the balance for the fourth quarter) for the year ending December 31, 2011 to bring the total payment for the year to approximately 65% of Normalized FFO for the year. The above assumption is based on current expectations and is forward-looking. The new dividend policy will lead to a dividend reduction more quickly than in the past should operating results deteriorate and make it less likely that the Company will over distribute. The Company believes that its expected 2011$19.5$20.5 billion in investment in real estate on the Company’s balance sheet at September 30, 2011, $13.1March 31, 2012, $14.2 billion or 67.0%68.9% was unencumbered. However, there can be no assurances that these sources of capital will be available to the Company in the future on acceptable terms or otherwise.fourth quarter of 2010, Fitch downgraded ERPOP’s credit rating from A- to BBB+ and EQR’s equity rating from BBB+ to BBB-, which did not have an effect on EQR’s cost of funds. During the first quarter of 2011, Moody’s raised its outlook for both EQR and ERPOP from negative outlook to stable outlook.The Company’s $1.425 billion (netoutlook and in the fourth quarter of $75.0 million which had been committed by a now bankrupt financial institution and was not available for borrowing) long-term2011 revised its outlook from stable outlook to developing outlook.was replaced with a new $1.25$1.25 billion unsecured revolving credit facility maturing on July 13, 2014, subject to a one-year extension option exercisable by the Company. The interest rate on advances under the new credit facility will generally be LIBOR plus a spread (currently 1.15%) and the Company pays an annual facility fee of 0.2%. Both the spread and the facility fee are dependent on the credit rating of the Company’s long-term debt. Effective January 6, 2012, the Company amended this facility to increase available borrowings by $500.0 million to $1.75 billion. The terms did not change, including the July 13, 2014 maturity date. As of October 27, 2011,April 26, 2012, there was available borrowings of $1.02$1.68 billion (net of $85.9$30.8 million which was restricted/dedicated to support letters of credit and net of $143.0$40.0 million outstanding) on the new revolving credit facility. This facility may, among other potential uses, be used to fund property acquisitions, costs for certain properties under development and short-term liquidity requirements.Company estimates that the costs related to suchthe collapse (both expensed and capitalized), including providing for residents’residents' interim needs, lost revenue and garage reconstruction, will bewere approximately $11.0$22.8 million, afterbefore insurance reimbursements of $12.0$13.6 million. Costs to rebuild theThe garage arehas been rebuilt with cumulative costs approximating $13.3 million capitalized as incurred. Other costs approximating $9.5 million, like those to accommodate displaced residents, lost revenue due to a portion of the projectproperty being temporarily unavailable for occupancy and legal costs, reducereduced earnings as they arewere incurred. Generally, insurance proceeds arewere recorded as increases to earnings as they arewere received. During the nine monthsquarter ended September 30, 2011,March 31, 2012, the Company received approximately $2.7$3.5 million in insurance proceeds which offset expenses of $1.6 million that were recorded relating to this loss and are included(included in real estate taxes and insurance on the consolidated statements of operations. In addition,operations), which represented its final reimbursement of the $13.6 million in cumulative insurance proceeds. The Company estimates that itsdoes not anticipate any remaining costs or additional lost revenues approximated $0.7 million duringas the nine months ended September 30, 2011 as a result of lost occupancy in the high-rise tower following the collapse. Through October 27, 2011, the Companyproject has cumulatively received approximately $9.2 million in insurance proceeds which partially offsets expenses of $7.1 millionbeen stabilized and the Company’s estimate of its lost revenues, which approximated $2.3 million.garage reconstruction has been completed. None of the amounts referenced above impact same store results.September 30, 2011.March 31, 2012.•▪ (inside(inside the apartment unit). These include:▪ flooring such as carpets, hardwood, vinyl, linoleum or tile; ▪ appliances; ▪ mechanical equipment such as individual furnace/air units, hot water heaters, etc; ▪ furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans, sinks, tubs, toilets, mirrors, countertops, etc; and ▪ blinds/shades. flooring such as carpets, hardwood, vinyl, linoleum or tile;appliances;mechanical equipment such as individual furnace/air units, hot water heaters, etc;furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans, sinks, tubs, toilets, mirrors, countertops, etc; andblinds/shades.•▪ ▪ roof replacement and major repairs; ▪ paving or major resurfacing of parking lots, curbs and sidewalks; ▪ amenities and common areas such as pools, exterior sports and playground equipment, lobbies, clubhouses, laundry rooms, alarm and security systems and offices; ▪ major building mechanical equipment systems; ▪ interior and exterior structural repair and exterior painting and siding; ▪ major landscaping and grounds improvement; and ▪ vehicles and office and maintenance equipment. roof replacement and major repairs;paving or major resurfacing of parking lots, curbs and sidewalks;amenities and common areas such as pools, exterior sports and playground equipment, lobbies, clubhouses, laundry rooms, alarm and security systems and offices;major building mechanical equipment systems;interior and exterior structural repair and exterior painting and siding;major landscaping and grounds improvement; andvehicles and office and maintenance equipment.ten-yearfifteen-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.nine monthsquarter ended September 30, 2011,March 31, 2012, our actual improvements to real estate totaled approximately $106.1 million.$30.2 million. This includes the following (amounts in thousands except for apartment unit and per apartment unit amounts):Capital Expenditures to Real EstateFor the Nine Months Ended September 30, 2011 Total
Apartment
Units (1) Replacements (2) Avg. Per
Apartment
Unit Building
Improvements Avg. Per
Apartment
Unit Total Avg. Per
Apartment
Unit 102,129 $ 53,872 $ 528 $ 35,948 $ 352 $ 89,820 $ 880 11,981 4,787 449 9,388 880 14,175 1,329 — 1,862 213 2,075 114,110 $ 60,521 $ 45,549 $ 106,070 Capital Expenditures to Real Estate For the Quarter Ended March 31, 2012 Total
Apartment
Units (1) Replacements (2) Avg. Per
Apartment
Unit Building
Improvements Avg. Per
Apartment
Unit Total Avg. Per
Apartment
UnitSame Store Properties (3) 105,612 $ 15,185 $ 144 $ 9,949 $ 94 $ 25,134 $ 238 Non-Same Store Properties (4) 10,485 1,299 130 3,682 369 4,981 499 Other (5) — 83 27 110 Total 116,097 $ 16,567 $ 13,658 $ 30,225 (1) 4,9014,914 military housing apartment units for which repairs and maintenance expenses and capital expenditures to real estate are self-funded and do not consolidate into the Company’s results.(2) $29.2$7.3 million spent during the nine months ended September 30, 2011in Q1 2012 on apartment unit renovations/rehabs (primarily kitchens and baths) on 4,1601,027 apartment units (equating to about $7,000$7,100 per apartment unit rehabbed) designed to reposition these assets for higher rental levels in their respective markets.(3) Same Store Properties – Primarily includes all properties acquired or completed and stabilized prior to January 1, 2010,2011, less properties subsequently sold.(4) 20102011 and 2011,2012, plus any properties in lease-up and not stabilized as of January 1, 2010.2011. Per apartment unit amounts are based on a weighted average of 10,6669,988 apartment units.(5) Other – Primarily includes expenditures for properties sold during the period. 2011,2012, the Company estimates that it will spend approximately $1,200$1,225 per apartment unit of capital expenditures for its same store properties inclusive of apartment unit renovation/rehab costs, or $850$850 per apartment unit excluding apartment unit renovation/rehab costs. For 2011,2012, the Company estimates that it will spend $41.0approximately $39.2 million rehabbing 5,5004,700 apartment units (equating to about $7,500$8,300 per apartment unit rehabbed). The above assumptions arenine monthsquarter ended September 30, 2011,March 31, 2012, the Company’s total non-real estate capital additions, such as computer software, computer equipment, and furniture and fixtures and leasehold improvements to the Company’s property management offices and its corporate offices, were approximately $4.9 million.$2.2 million. The Company expects to fund approximately $3.6$4.5 million in total additions to non-real estate property for the remainder of 2011.2012. The above assumption is based on current expectations and is forward-looking.September 30, 2011.March 31, 2012.October 2011April 2012 amounted to $107.1$109.4 million (excluding distributions on Partially Owned Properties), which included certain distributions declared during the thirdfirst quarter ended September 30, 2011.March 31, 2012.$40.1$40.1 million in cash and retained a 20% equity interest in both of these entities. These land parcels are now unconsolidated. Total project costs are approximately $232.8$232.8 million and construction will be predominantly funded withtwo separate long-term, non-recourse secured loans from the partner. While the Company is the managing member of both of the joint ventures, is responsible for constructing both of the projects and has given certain construction cost overrun guarantees, all major decisions are made jointly, the large majority of funding is provided by the partner and the partner has significant involvement in and oversight of the ongoing projects. The Company’s remaining funding obligations are currently estimated at approximately $6.6 million.$3.0 million. The Company’s strategy with respect to these ventures was to reduce its financial risk related to the development of thesethe properties. However, management does not believe that these investments have a materially different impact upon the Company’s liquidity, cash flows, capital resources, credit or market risk than its other consolidated development activities.As of September 30,foura materially different impact upon the Company's liquidity, cash flows, capital resources, credit or market risk than its other consolidated development activities.7471,535 apartment units and two unconsolidated projects totaling 945 apartment units in various stages of development with estimated completion dates ranging through September 30, 2013,March 31, 2014, as well as other completed development projects that are in various stages of lease up or are stabilized. The development agreements currently in place are discussed in detail in Note 12 ofin the Company’sNotes to Consolidated Financial Statements.each of the Company’s and the Operating Partnership’s annual reportsreport 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.10-year15-year estimated useful life and both the furniture, fixtures and equipment and replacements components over a 5-year to 10-year estimated useful life, all of which are judgmental determinations.nine monthsquarter ended September 30, 2011,March 31, 2012, Funds From Operations (“FFO”) available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units increased $64.4$14.8 million, or 13.2%8.6%, and $57.1$16.6 million, or 11.5%, respectively, as compared to the nine months ended September 30, 2010.For the quarter ended September 30, 2011, FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units increased $30.5 million, or 18.4%, and $20.5 million, or 11.9%September 30, 2010.March 31, 2011.nine months and quarters ended September 30, 2011March 31, 2012 and 2010:Funds From Operations and Normalized Funds From Operations2011(Amounts in thousands): Nine Months Ended September 30, Quarter Ended September 30, 2011 2010 2011 2010 $ 827,796 $ 97,771 $ 112,977 $ 29,826 (418 ) 623 (387 ) 188 482,039 457,822 164,552 158,318 (4,202 ) (4,842 ) (1,297 ) (1,585 ) (2,263 ) (849 ) (758 ) (856 ) — (28,101 ) — (22,544 ) 14,256 43,706 901 15,646 (759,100 ) (69,538 ) (76,864 ) (9,285 ) 2,050 619 935 (12 ) 1,022 — (2 ) — 561,180 497,211 200,057 169,696 — — — — 9,318 9,513 2,528 3,487
cash convertible debt discounts 9,250 6,673 677 1,854 (6,554 ) 577 (1,025 ) 1,189 (7,762 ) (5,192 ) (5,662 ) — $ 565,432 $ 508,782 $ 196,575 $ 176,226 $ 561,180 $ 497,211 $ 200,057 $ 169,696 (10,399 ) (10,855 ) (3,466 ) (3,617 ) $ 550,781 $ 486,356 $ 196,591 $ 166,079 $ 565,432 $ 508,782 $ 196,575 $ 176,226 (10,399 ) (10,855 ) (3,466 ) (3,617 ) $ 555,033 $ 497,927 $ 193,109 $ 172,609 Funds From Operations and Normalized Funds From Operations (Amounts in thousands) Quarter Ended March 31, 2012 2011 Net income $ 152,167 $ 133,066 Adjustments: Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties (450 ) 40 Depreciation 174,737 158,455 Depreciation – Non-real estate additions (1,354 ) (1,385 ) Depreciation – Partially Owned and Unconsolidated Properties (800 ) (750 ) Discontinued operations: Depreciation 371 10,855 Net (gain) on sales of discontinued operations (132,956 ) (123,754 ) Net incremental gain on sales of condominium units 49 395 FFO (1) (3) 191,764 176,922 Adjustments: Asset impairment and valuation allowances — — Property acquisition costs and write-off of pursuit costs (other expenses) 2,626 2,164 (41 ) 2,063 (4 ) (376 ) Other miscellaneous non-comparable items 974 (2,100 ) Normalized FFO (2) (3) $ 195,319 $ 178,673 FFO (1) (3) $ 191,764 $ 176,922 Preferred/preference distributions (3,466 ) (3,466 ) FFO available to Common Shares and Units / Units (1) (3) (4) $ 188,298 $ 173,456 Normalized FFO (2) (3) $ 195,319 $ 178,673 Preferred/preference distributions (3,466 ) (3,466 ) Normalized FFO available to Common Shares and Units / Units (2) (3) (4) $ 191,853 $ 175,207 (1)(1) The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales and impairment write-downs of depreciable property,operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of apartment units to condominiums, it simultaneously discontinues depreciation of such property.(2)(2) Normalized funds from operations (“Normalized FFO”) begins with FFO and excludes: •▪ •▪ •▪ •▪ •▪ (3)(3) The Company believes that FFO and FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates) ,. FFO and FFO available to Common Shares and Units / Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. The company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the company’s operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units do not represent net income, net income available to Common Shares / Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units should not be exclusively considered as alternatives to net income, net income available to Common Shares / Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company’s calculation of FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.(4)(4) FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units are calculated on a basis consistent with net income available to Common Shares / Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares/preference units in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the “Noncontrolling Interests – Operating Partnership”. Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis. Item 3. Quantitative and Qualitative Disclosures About Market Risk each of the Company’s and the Operating Partnership’sPartnership's Annual ReportsReport on Form 10-K for the year ended December 31, 2010.2011. See theCurrent Environment section of Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations relating to market risk and the current economic environment. See also Note 9 in the Notes to Consolidated Financial Statements for additional discussion of derivative and other fair value instruments.Item 4. Controls and Procedures September 30, 2011,March 31, 2012, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.thirdfirst quarter of 20112012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.September 30, 2011,March 31, 2012, the Operating Partnership carried out an evaluation, under the supervision and with the participation of the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of EQR, of the effectiveness of the Operating Partnership’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Operating Partnership in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.thirdfirst quarter of 20112012 that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.Item 1. Legal Proceedings both the Company’s and the Operating Partnership’sPartnership's Annual ReportsReport on Form 10-K for the year ended December 31, 2010.2011. Risk Factorsboth the Company’s and the Operating Partnership’sPartnership's Annual ReportsReport on Form 10-K for the year ended 2010.2011.Item 2. Unregistered Sales of Equity Securities and Use of Proceeds September 30, 2011March 31, 2012 – Equity ResidentialSeptember 30, 2011,March 31, 2012, EQR issued 39,95831,361 Common Shares in exchange for 39,95831,361 OP Units held by various limited partners of the Operating Partnership. OP Units are generally exchangeable into Common Shares on a one-for-one basis or, at the option of the Operating Partnership, the cash equivalent thereof, at any time one year after the date of issuance. These shares were either registered under the Securities Act of 1933, as amended (the “Securities Act”), or issued in reliance on an exemption from registration under Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder, as these were transactions by an issuer not involving a public offering. In light of the manner of the sale and information obtained by EQR from the limited partners in connection with these transactions, EQR believes it may rely on these exemptions.Item 3. Defaults Upon Senior Securities Item 4. Mine Safety Disclosures Item 5. Other Information Item 6. EQUITY RESIDENTIAL Date: November 4, 2011May 3, 2012 By: /s/ MARKMark J. PARRELL Parrell Mark J. Parrell Mark J. Parrell (Principal Financial Officer) Date: November 4, 2011May 3, 2012 By: /s/ IANIan S. KAUFMAN Kaufman Ian S. Kaufman Ian S. Kaufman (Principal Accounting Officer) Date: November 4, 2011May 3, 2012 By: /s/ MARKMark J. PARRELL Parrell Mark J. Parrell Mark J. Parrell (Principal Financial Officer) Date: November 4, 2011May 3, 2012 By: /s/ IANIan S. KAUFMAN Kaufman Ian S. Kaufman Ian S. Kaufman (Principal Accounting Officer) Exhibit Description LocationExhibit Description Location 10.1 Revolving CreditSecond Amendment to Other Interest Agreement, dated as of July 13, 2011April 18, 2012, by and among ERP Operating Limited Partnership, BIH ASN LLC, Archstone Equity Holdings Inc., Bank of America, N.A., as Administrative Agent, JPMorgan Chase Bank, N.A., as Syndication Agent, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and Wells Fargo Securities, LLC, as Joint Lead Arrangers and Joint Book Runners, Suntrust Bank, U.S. Bank National Association, and Wells Fargo Bank, National Association, as Documentation Agents, and Citibank, N.A., Deutsche Bank SecuritiesBanc of America Strategic Ventures, Inc., and Morgan Stanley Senior Funding, Inc., as Co-Documentation Agents, and a syndicate of other banks (the “Credit Agreement”). Included as Exhibit 10.1 to Equity Residential’sResidential's and ERP Operating Limited Partnership’sPartnership's Form 8-K dated July 13, 2011,April 18, 2012, filed on July 14, 2011.April 19, 2012. 10.2 Guaranty of Payment made as of July 13, 2011 between Equity Residential and Bank of America, N.A., as administrative agent for the banks party to the Credit Agreement. Included as Exhibit 10.2 to Equity Residential’s and ERP Operating Limited Partnership’s Form 8-K dated July 13, 2011, filed on July 14, 2011.31.1 Equity Residential – Certification of David J. Neithercut, Chief Executive Officer. Attached herein. 31.2 Equity Residential – Certification of Mark J. Parrell, Chief Financial Officer. Attached herein. 31.3 ERP Operating Limited Partnership – Certification of David J. Neithercut, Chief Executive Officer of Registrant’s General Partner. Attached herein. 31.4 ERP Operating Limited Partnership – Certification of Mark J. Parrell, Chief Financial Officer of Registrant’s General Partner. Attached herein. 32.1 Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of the Company. Attached herein. 32.2 Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of the Company. Attached herein. 32.3 ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of Registrant’s General Partner. Attached herein. 32.4 ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of Registrant’s General Partner. Attached herein. 101 XBRL (Extensible Business Reporting Language). The following materials from Equity Residential’s and ERP Operating Limited Partnership’s Quarterly Report on Form 10-Q for the period ended September 30, 2011,March 31, 2012, formatted in XBRL: (i) consolidated balance sheets, (ii) consolidated statements of operations, (iii) consolidated statements of cash flows, (iv) consolidated statement of changes in equity (Equity Residential), (v) consolidated statement of changes in capital (ERP Operating Limited Partnership) and (vi) notes to consolidated financial statements. Attached herein.