UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020

~~For the quarterly period ended September 30, 2017~~

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

~~For the transition period from to~~

Commission File Number: 1-12252 (Equity Residential)

Commission File Number: 0-24920 (ERP Operating Limited Partnership)

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

Maryland (Equity Residential)		13-3675988 (Equity Residential)
Illinois (ERP Operating Limited Partnership)		36-3894853 (ERP Operating Limited Partnership)
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Two North Riverside Plaza, Chicago, Illinois 60606		(312) 474-1300
(Address of principal executive offices) (Zip Code)		(~~Registrant's~~Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest, $0.01 Par Value (Equity Residential)	EQR	New York Stock Exchange
7.57% Notes due August 15, 2026 (ERP Operating Limited Partnership)	N/A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Equity Residential Yes ☒ No ☐	ERP Operating Limited Partnership Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).


Equity Residential Yes ☒ No ☐	ERP Operating Limited Partnership Yes ☒ No ☐

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

Equity Residential:

ERP Operating Limited Partnership:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Equity Residential ☐	ERP Operating Limited Partnership ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Equity Residential Yes ☐ No ☒	ERP Operating Limited Partnership Yes ☐ No ☒

The number of EQR Common Shares of Beneficial Interest, $0.01 par value, outstanding on ~~October 27, 2017~~July 28, 2020 was ~~367,484,786.~~372,210,138.

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EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended ~~September~~June 30, ~~2017~~2020 of Equity Residential and ERP Operating Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “EQR” mean Equity Residential, a Maryland real estate investment trust (“REIT”), and references to “ERPOP” mean ERP Operating Limited Partnership, an Illinois limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. The following chart illustrates the ~~Company's~~Company’s and the Operating ~~Partnership's~~Partnership’s corporate structure:

EQR is the general partner of, and as of ~~September~~June 30, ~~2017~~2020 owned an approximate 96.4% ownership interest in, ERPOP. The remaining 3.6% interest is owned by limited partners. As the sole general partner of ERPOP, EQR has exclusive control of ~~ERPOP's~~ERPOP’s day-to-day management. Management operates the Company and the Operating Partnership as one business. The management of EQR consists of the same members as the management of ERPOP.

The Company is structured as an umbrella partnership REIT (“UPREIT”) and EQR contributes all net proceeds from its various equity offerings to ERPOP. In return for those contributions, EQR receives a number of OP Units (see definition below) in ERPOP equal to the number of Common Shares it has issued in the equity offering. The Company may acquire properties in transactions that include the issuance of 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. This is one of the reasons why the Company is structured in the manner shown above. Based on the terms of ~~ERPOP's~~ERPOP’s partnership agreement, OP Units can be exchanged with Common Shares on a one-for-one basis because the Company maintains a one-for-one relationship between the OP Units of ERPOP issued to EQR and the outstanding Common Shares.

The Company believes that combining the reports on Form 10-Q of EQR and ERPOP into this single report provides the following benefits:

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

•

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

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

•

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

•

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

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

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

~~Table of Contents~~

equity offerings by EQR ~~which~~(which are contributed to the capital of ERPOP in exchange for additional partnership interests in ERPOP (“OP Units”) (on a one-for-one Common Share per OP Unit basis) or additional preference units in ERPOP (on a one-for-one preferred share per preference unit basis)), the Operating Partnership generates all remaining capital required by the ~~Company's~~Company’s business. These sources include the Operating ~~Partnership's~~Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility and/or commercial paper program, the issuance of secured and unsecured debt and ~~equity securities~~partnership interests, and proceeds received from disposition of certain properties and joint venture interests.

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

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

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

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

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

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	PAGE

PART I.

Item 1. Financial Statements of Equity Residential:

~~Item 1.~~ Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019	2

Consolidated Statements of Operations and Comprehensive Income for the six months and quarters ended June 30, 2020 and 2019	3

Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019	5

Consolidated Statements of Changes in Equity for the six months and quarters ended June 30, 2020 and 2019	8

Financial Statements of ~~Equity Residential:~~ERP Operating Limited Partnership:

Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2020 and December31,~~2016~~ 2019	2

~~Consolidated Statements of Operations and Comprehensive Income for the nine months and quarters ended September 30, 2017and2016~~	~~3 to 4~~

~~Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016~~	~~5 to 7~~

~~Consolidated Statement of Changes in Equity for the nine months ended September 30, 2017~~	~~8 to 9~~

~~Financial Statements of ERP Operating Limited Partnership:~~

~~Consolidated Balance Sheets as of September 30, 2017 and December31,2016~~	10

Consolidated Statements of Operations and Comprehensive Income for the ~~nine~~six months and quarters ended ~~September~~June 30, ~~2017~~2020 and~~2016~~ 2019	11 to 12

Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019	13 to 15

Consolidated ~~Statement~~Statements of Changes in Capital for the ~~nine~~six months and quarters ended ~~September~~June 30, ~~2017~~2020 and 2019	16 ~~to 17~~

Notes to Consolidated Financial Statements of Equity Residential and ERP Operating Limited Partnership	18 to 41

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	~~42 to 56~~36

Item 3. Quantitative and Qualitative Disclosures about Market Risk	5652

Item 4. Controls and Procedures	~~56 to 57~~52

PART II.

Item 1. Legal Proceedings	5753

Item 1A. Risk Factors	5753

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	5754

Item 3. Defaults Upon Senior Securities	5755

Item 4. Mine Safety Disclosures	5755

Item 5. Other Information	5755

Item 6. Exhibits	57

	55

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EQUITY RESIDENTIAL

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except for share amounts)

(Unaudited)

	September 30,			December 31,			June 30,			December 31,
	2017			2016			2020			2019
ASSETS
Investment in real estate
Land	$	5,985,004		$	5,899,862		$	5,789,307		$	5,936,188
Depreciable property		19,571,402			18,730,579			20,997,903			21,319,101
Projects under development		293,064			637,168			274,825			181,630
Land held for development		99,073			118,816			102,361			96,688
Investment in real estate		25,948,543			25,386,425			27,164,396			27,533,607
Accumulated depreciation		(5,849,110	)		(5,360,389	)		(7,537,713	)		(7,276,786	)
Investment in real estate, net		20,099,433			20,026,036			19,626,683			20,256,821
Investments in unconsolidated entities								55,310			52,238
Cash and cash equivalents		46,565			77,207			187,416			45,753
Investments in unconsolidated entities		59,029			60,141
Deposits – restricted		36,639			76,946
Escrow deposits – mortgage		10,972			64,935
Restricted deposits								58,117			71,246
Right-of-use assets								505,077			512,774
Other assets		445,195			398,883			282,348			233,937
Total assets	$	20,697,833		$	20,704,148		$	20,714,951		$	21,172,769

LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net	$	3,619,180		$	4,119,181		$	2,340,757		$	1,941,610
Notes, net		5,143,248			4,848,079			6,081,102			6,077,513
Line of credit and commercial paper		229,844			19,998			—			1,017,833
Accounts payable and accrued expenses		167,984			147,482			109,776			94,350
Accrued interest payable		72,811			60,946			67,589			66,852
Lease liabilities								330,135			331,334
Other liabilities		332,650			350,466			315,208			346,963
Security deposits		65,230			62,624			64,005			70,062
Distributions payable		192,569			192,296			232,208			218,326
Total liabilities		9,823,516			9,801,072			9,540,780			10,164,843

Commitments and contingencies

Redeemable Noncontrolling Interests – Operating Partnership		380,541			442,092			336,695			463,400
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 745,600 shares issued and outstanding as of September 30, 2017 and December 31, 2016		37,280			37,280
Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 367,462,480 shares issued and outstanding as of September 30, 2017 and 365,870,924 shares issued and outstanding as of December 31, 2016		3,675			3,659
Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 745,600 shares issued and outstanding as of June 30, 2020 and December 31, 2019								37,280			37,280
Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 372,209,012 shares issued and outstanding as of June 30, 2020 and 371,670,884 shares issued and outstanding as of December 31, 2019								3,722			3,717
Paid in capital		8,848,739			8,758,422			9,118,332			8,965,577
Retained earnings		1,464,249			1,543,626			1,505,694			1,386,495
Accumulated other comprehensive (loss)		(94,674	)		(113,909	)
Accumulated other comprehensive income (loss)								(67,355	)		(77,563	)
Total shareholders’ equity		10,259,269			10,229,078			10,597,673			10,315,506
Noncontrolling Interests:
Operating Partnership		228,332			221,297			235,169			227,837
Partially Owned Properties		6,175			10,609			4,634			1,183
Total Noncontrolling Interests		234,507			231,906			239,803			229,020
Total equity		10,493,776			10,460,984			10,837,476			10,544,526
Total liabilities and equity	$	20,697,833		$	20,704,148		$	20,714,951		$	21,172,769

See accompanying notes

~~Table of Contents~~

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per share data)

(Unaudited)

		Nine Months Ended September 30,						Quarter Ended September 30,						Six Months Ended June 30,						Quarter Ended June 30,
		2017			2016			2017			2016			2020			2019			2020			2019
REVENUES
Rental income		$	1,840,170		$	1,816,960		$	623,951		$	605,856		$	1,335,837		$	1,331,676		$	653,532		$	669,374
Fee and asset management			532			3,351			171			218
Total revenues			1,840,702			1,820,311			624,122			606,074

EXPENSES
Property and maintenance			306,645			309,688			104,721			104,216			220,268			223,531			104,452			108,461
Real estate taxes and insurance			253,318			238,954			84,087			81,343			192,770			182,888			95,038			91,446
Property management			64,702			64,003			20,861			19,517			51,317			50,765			23,608			24,369
General and administrative			40,366			47,408			12,567			12,395			26,353			29,710			11,835			14,329
Depreciation			542,964			528,242			184,100			179,230			418,398			404,723			205,976			200,508
Total expenses			1,207,995			1,188,295			406,336			396,701			909,106			891,617			440,909			439,113

Net gain (loss) on sales of real estate properties															352,243			138,835			144,266			138,856

Operating income			632,707			632,016			217,786			209,373			778,974			578,894			356,889			369,117

Interest and other income			5,708			65,092			3,945			5,509			3,471			1,925			1,511			1,152
Other expenses			(3,160	)		(14,480	)		(1,028	)		(10,420	)		(4,227	)		(8,392	)		(1,694	)		(5,117	)
Interest:
Expense incurred, net			(288,579	)		(386,316	)		(91,145	)		(86,352	)		(167,475	)		(203,840	)		(81,885	)		(108,902	)
Amortization of deferred financing costs			(6,447	)		(10,000	)		(2,064	)		(2,261	)		(4,152	)		(5,783	)		(2,111	)		(3,647	)
Income before income and other taxes, (loss) income from investments in unconsolidated entities, net gain on sales of real estate properties and land parcels and discontinued operations			340,229			286,312			127,494			115,849
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels															606,591			362,804			272,710			252,603
Income and other tax (expense) benefit			(710	)		(1,189	)		(228	)		(426	)		(240	)		(484	)		(187	)		(246	)
(Loss) income from investments in unconsolidated entities			(2,153	)		5,846			(398	)		7,750
Net gain on sales of real estate properties			141,761			3,870,871			17,328			90,036
Net gain on sales of land parcels			19,170			15,759			—			4,037
Income from continuing operations			498,297			4,177,599			144,196			217,246
Discontinued operations, net			—			124			—			246
Income (loss) from investments in unconsolidated entities															(2,199	)		68,058			(1,042	)		68,765
Net gain (loss) on sales of land parcels															—			178			—			177
Net income			498,297			4,177,723			144,196			217,492			604,152			430,556			271,481			321,299
Net (income) attributable to Noncontrolling Interests:
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership			(17,931	)		(160,442	)		(5,166	)		(8,353	)		(21,248	)		(15,429	)		(9,713	)		(11,510	)
Partially Owned Properties			(2,354	)		(2,368	)		(801	)		(823	)		(13,410	)		(1,620	)		(880	)		(821	)
Net income attributable to controlling interests			478,012			4,014,913			138,229			208,316			569,494			413,507			260,888			308,968
Preferred distributions			(2,318	)		(2,318	)		(772	)		(773	)		(1,545	)		(1,545	)		(772	)		(772	)
Net income available to Common Shares		$	475,694		$	4,012,595		$	137,457		$	207,543		$	567,949		$	411,962		$	260,116		$	308,196

Earnings per share – basic:	Earnings per share – basic:
Income from continuing operations available to Common Shares		$	1.30		$	11.00		$	0.37		$	0.57
Net income available to Common Shares		$	1.30		$	11.00		$	0.37		$	0.57
Weighted average Common Shares outstanding			366,809			364,917			366,996			365,109
Earnings per share – diluted:
Income from continuing operations available to Common Shares		$	1.29		$	10.92		$	0.37		$	0.56
Net income available to Common Shares		$	1.29		$	10.92		$	0.37		$	0.56		$	1.53		$	1.11		$	0.70		$	0.83
Weighted average Common Shares outstanding			382,640			382,284			382,945			382,373			371,689			369,952			371,795			370,342

Distributions declared per Common Share outstanding		$	1.51125		$	12.51125		$	0.50375		$	3.50375
Earnings per share – diluted:
Net income available to Common Shares														$	1.53		$	1.11		$	0.70		$	0.83
Weighted average Common Shares outstanding															386,272			385,644			385,913			386,107

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)

(Amounts in thousands except per share data)

(Unaudited)

	Nine Months Ended September 30,						Quarter Ended September 30,						Six Months Ended June 30,						Quarter Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Comprehensive income
Comprehensive income:
Net income	$	498,297		$	4,177,723		$	144,196		$	217,492		$	604,152		$	430,556		$	271,481		$	321,299
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		5,216			(4,240	)		1,709			227			(1,190	)		(33,765	)		(223	)		(19,345	)
Losses reclassified into earnings from other comprehensive income		14,019			37,262			4,768			4,340			11,398			8,902			5,764			4,509
Other comprehensive income (loss) – foreign currency:
Currency translation adjustments arising during the period		—			264			—			214
Other comprehensive income		19,235			33,286			6,477			4,781
Other comprehensive income (loss)														10,208			(24,863	)		5,541			(14,836	)
Comprehensive income		517,532			4,211,009			150,673			222,273			614,360			405,693			277,022			306,463
Comprehensive (income) attributable to Noncontrolling Interests		(20,983	)		(164,096	)		(6,201	)		(9,362	)		(35,026	)		(16,150	)		(10,792	)		(11,797	)
Comprehensive income attributable to controlling interests	$	496,549		$	4,046,913		$	144,472		$	212,911		$	579,334		$	389,543		$	266,230		$	294,666

See accompanying notes

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~~Table of Contents~~

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,						Six Months Ended June 30,
	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	498,297		$	4,177,723		$	604,152		$	430,556
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		542,964			528,242			418,398			404,723
Amortization of deferred financing costs		6,447			10,000			4,152			5,783
Amortization of above/below market lease intangibles		2,729			2,566			(35	)		(35	)
Amortization of discounts and premiums on debt		4,939			(18,328	)		2,553			17,795
Amortization of deferred settlements on derivative instruments		14,010			37,187			11,392			8,896
Amortization of right-of-use assets								5,892			6,952
Write-off of pursuit costs		2,329			3,379			3,278			2,987
Loss (income) from investments in unconsolidated entities		2,153			(5,846	)
(Income) loss from investments in unconsolidated entities								2,199			(68,058	)
Distributions from unconsolidated entities – return on capital		2,031			2,165			100			2,387
Net (gain) on sales of investment securities and other investments		—			(58,416	)
Net (gain) on sales of real estate properties		(141,761	)		(3,870,871	)
Net (gain) on sales of land parcels		(19,170	)		(15,759	)
Net (gain) on sales of discontinued operations		—			(43	)
Net (gain) loss on sales of real estate properties								(352,243	)		(138,835	)
Net (gain) loss on sales of land parcels								—			(178	)
Realized/unrealized (gain) loss on derivative instruments								25			—
Compensation paid with Company Common Shares		19,999			25,540			13,475			16,782
Other operating activities, net								1,805			—
Changes in assets and liabilities:
Decrease in deposits – restricted		788			9,992
Decrease in mortgage deposits		1,447			222
(Increase) decrease in other assets		(23,024	)		4,248			(61,422	)		1,610
Increase in accounts payable and accrued expenses		62,635			41,371
Increase (decrease) in accounts payable and accrued expenses								5,954			22,435
Increase (decrease) in accrued interest payable		11,865			(15,780	)		737			1,536
(Decrease) in other liabilities		(28,250	)		(24,749	)
Increase (decrease) in lease liabilities								(1,199	)		(1,171	)
Increase (decrease) in other liabilities								(18,070	)		(25,161	)
Increase (decrease) in security deposits		2,606			(13,522	)		(6,057	)		1,769
Net cash provided by operating activities		963,034			819,321			635,086			690,773
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions		(466,395	)		(205,881	)		—			(653,132	)
Investment in real estate – development/other		(227,187	)		(454,502	)		(95,215	)		(93,210	)
Capital expenditures to real estate		(143,258	)		(124,551	)		(61,265	)		(81,528	)
Non-real estate capital additions		(776	)		(4,467	)		(15,536	)		(1,466	)
Interest capitalized for real estate under development		(23,164	)		(41,658	)		(4,102	)		(2,679	)
Proceeds from disposition of real estate, net		350,000			6,584,126			747,600			393,439
Investments in unconsolidated entities		(5,324	)		(3,826	)		(5,626	)		(8,572	)
Distributions from unconsolidated entities – return of capital		329			13,798			—			78,262
Proceeds from sale of investment securities and other investments		—			72,815
Decrease (increase) in deposits on real estate acquisitions and investments, net		39,519			(83,668	)
(Increase) in mortgage deposits		(4,541	)		(21	)
Net cash (used for) provided by investing activities		(480,797	)		5,752,165
Purchase of investment securities and other investments								(509	)		(269	)
Net cash provided by (used for) investing activities								565,347			(369,155	)

See accompanying notes

Table of Contents

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,						Six Months Ended June 30,
	2017			2016			2020			2019
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs	$	(6,272	)	$	(507	)	$	(2,907	)	$	(6,069	)
Mortgage deposits		57,057			(6,249	)
Mortgage notes payable, net:
Proceeds								495,145			295,620
Lump sum payoffs		(493,420	)		(565,084	)		(91,500	)		(95,500	)
Scheduled principal repayments		(8,771	)		(6,644	)		(3,873	)		(3,110	)
Notes, net:
Proceeds		692,466		—				—			597,480
Lump sum payoffs		(394,077	)		(1,500,000	)
Line of credit and commercial paper:
Line of credit proceeds		1,845,000			246,000			1,870,000			1,995,000
Line of credit repayments		(1,845,000	)		(246,000	)		(1,890,000	)		(1,995,000	)
Commercial paper proceeds		3,888,675			1,324,784			6,726,167			7,775,817
Commercial paper repayments		(3,681,750	)		(1,712,472	)		(7,724,000	)		(8,275,000	)
Proceeds from settlement of derivative instruments		1,296		—
Proceeds from (payments on) settlement of derivative instruments								(1,215	)		(41,616	)
Proceeds from Employee Share Purchase Plan (ESPP)		2,963			2,778			2,359			1,652
Proceeds from exercise of options		12,967			26,939			11,322			48,487
Payment of offering costs		(36	)		(304	)		—			(155	)
Other financing activities, net		(40	)		(33	)		(31	)		(49	)
Contributions – Noncontrolling Interests – Partially Owned Properties		125		—				341			4,594
Contributions – Noncontrolling Interests – Operating Partnership		—			1			12			—
Distributions:
Common Shares		(554,267	)		(3,490,838	)		(435,427	)		(409,943	)
Preferred Shares		(2,318	)		(2,318	)		(1,545	)		(773	)
Noncontrolling Interests – Operating Partnership		(20,604	)		(137,641	)		(16,478	)		(14,728	)
Noncontrolling Interests – Partially Owned Properties		(6,873	)		(28,588	)		(10,269	)		(5,170	)
Net cash (used for) financing activities		(512,879	)		(6,096,176	)
Net (decrease) increase in cash and cash equivalents		(30,642	)		475,310
Cash and cash equivalents, beginning of period		77,207			42,276
Cash and cash equivalents, end of period	$	46,565		$	517,586
Net cash provided by (used for) financing activities								(1,071,899	)		(128,463	)
Net increase (decrease) in cash and cash equivalents and restricted deposits								128,534			193,155
Cash and cash equivalents and restricted deposits, beginning of period								116,999			116,313
Cash and cash equivalents and restricted deposits, end of period							$	245,533		$	309,468

Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents							$	187,416		$	251,273
Restricted deposits								58,117			58,195
Total cash and cash equivalents and restricted deposits, end of period							$	245,533		$	309,468

See accompanying notes

Table of Contents

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,						Six Months Ended June 30,
	2017			2016			2020			2019
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	257,805		$	383,374		$	148,164		$	171,116
Net cash paid for income and other taxes	$	964		$	1,333
Real estate acquisitions/dispositions/other:
Mortgage loans assumed	$	—		$	43,400
Net cash paid (received) for income and other taxes							$	428		$	754
Amortization of deferred financing costs:
Investment in real estate, net							$	(120	)	$	—
Other assets	$	1,810		$	2,291		$	1,169		$	1,206
Mortgage notes payable, net	$	1,943		$	3,320		$	876		$	2,344
Notes, net	$	2,694		$	4,389		$	2,227		$	2,233
Amortization of discounts and premiums on debt:
Mortgage notes payable, net	$	247		$	(21,318	)	$	1,191		$	16,426
Notes, net	$	1,771		$	2,578		$	1,362		$	1,369
Line of credit and commercial paper	$	2,921		$	412
Amortization of deferred settlements on derivative instruments:
Other liabilities	$	(9	)	$	(75	)	$	(6	)	$	(6	)
Accumulated other comprehensive income	$	14,019		$	37,262		$	11,398		$	8,902
Write-off of pursuit costs:
Investment in real estate, net	$	2,292		$	2,876		$	3,122		$	2,947
Other assets	$	17		$	399		$	140		$	37
Accounts payable and accrued expenses	$	20		$	104		$	16		$	3
Loss (income) from investments in unconsolidated entities:
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities	$	1,076		$	(6,999	)	$	1,554		$	(68,735	)
Other liabilities	$	1,077		$	1,153		$	645		$	677
Realized/unrealized (gain) loss on derivative instruments:
Other assets	$	(3,803	)	$	(4,563	)	$	—		$	2,002
Notes, net	$	(1,413	)	$	4,563		$	—		$	2,253
Other liabilities	$	—		$	4,240		$	1,215		$	29,510
Accumulated other comprehensive income	$	5,216		$	(4,240	)	$	(1,190	)	$	(33,765	)
Investments in unconsolidated entities:
Investments in unconsolidated entities	$	(2,324	)	$	(1,726	)	$	(4,726	)	$	(6,472	)
Other liabilities	$	(3,000	)	$	(2,100	)	$	(900	)	$	(2,100	)
Distributions from unconsolidated entities - return of capital:
Investments in unconsolidated entities	$	329		$	14,014
Debt financing costs:
Other assets	$	—		$	(216	)	$	(215	)	$	145
Debt financing costs:
Mortgage notes payable, net	$	—		$	(507	)	$	(2,692	)	$	(2,237	)
Notes, net	$	(6,272	)	$	—		$	—		$	(5,213	)
Other:
Foreign currency translation adjustments	$	—		$	(264	)
Other liabilities							$	—		$	1,236
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets							$	—		$	(438,705	)
Other assets							$	—		$	184,116
Lease liabilities							$	—		$	282,791
Other liabilities							$	—		$	(28,202	)

See accompanying notes

Table of Contents

EQUITY RESIDENTIAL

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN EQUITY

(Amounts in ~~thousands)~~thousands except per share data)

(Unaudited)

	Nine Months Ended			Six Months Ended June 30,						Quarter Ended June 30,
	September 30, 2017			2020			2019			2020			2019
SHAREHOLDERS’ EQUITY
PREFERRED SHARES
Balance, beginning of year	$	37,280
Balance, beginning of period				$	37,280		$	37,280		$	37,280		$	37,280
Balance, end of period	$	37,280		$	37,280		$	37,280		$	37,280		$	37,280
COMMON SHARES, $0.01 PAR VALUE
Balance, beginning of year	$	3,659
Balance, beginning of period				$	3,717		$	3,694		$	3,721		$	3,705
Conversion of OP Units into Common Shares		11			1			2			1			—
Exercise of share options		3			2			10			—			3
Employee Share Purchase Plan (ESPP)		1
Share-based employee compensation expense:
Restricted shares		1			2			2			—			—
Balance, end of period	$	3,675		$	3,722		$	3,708		$	3,722		$	3,708
PAID IN CAPITAL
Balance, beginning of year	$	8,758,422
Balance, beginning of period				$	8,965,577		$	8,935,453		$	9,092,441		$	8,925,882
Common Share Issuance:
Conversion of OP Units into Common Shares		14,706			3,855			4,869			2,011			84
Exercise of share options		12,964			11,320			48,477			171			18,624
Employee Share Purchase Plan (ESPP)		2,962			2,359			1,652			1,490			526
Share-based employee compensation expense:
Restricted shares		7,488			7,252			7,980			3,231			3,404
Share options		6,384			1,293			1,682			623			889
ESPP discount		586			416			365			263			98
Offering costs		(36	)		—			(155	)		—			(155	)
Supplemental Executive Retirement Plan (SERP)		(594	)		(506	)		(1,539	)		(655	)		(937	)
Change in market value of Redeemable Noncontrolling Interests – Operating Partnership		29,551			128,753			(56,974	)		17,304			(1,953	)
Adjustment for Noncontrolling Interests ownership in Operating Partnership		16,306			(1,987	)		7,771			1,453			3,119
Balance, end of period	$	8,848,739		$	9,118,332		$	8,949,581		$	9,118,332		$	8,949,581
RETAINED EARNINGS
Balance, beginning of year	$	1,543,626
Balance, beginning of period				$	1,386,495		$	1,261,763		$	1,469,821		$	1,155,032
Net income attributable to controlling interests		478,012			569,494			413,507			260,888			308,968
Common Share distributions		(555,071	)		(448,750	)		(420,916	)		(224,243	)		(210,419	)
Preferred Share distributions		(2,318	)		(1,545	)		(1,545	)		(772	)		(772	)
Balance, end of period	$	1,464,249		$	1,505,694		$	1,252,809		$	1,505,694		$	1,252,809
ACCUMULATED OTHER COMPREHENSIVE (LOSS)
Balance, beginning of year	$	(113,909	)
Accumulated other comprehensive income – derivative instruments:
Unrealized holding gains arising during the period		5,216
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period				$	(77,563	)	$	(64,986	)	$	(72,896	)	$	(75,013	)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period					(1,190	)		(33,765	)		(223	)		(19,345	)
Losses reclassified into earnings from other comprehensive income		14,019			11,398			8,902			5,764			4,509
Balance, end of period	$	(94,674	)	$	(67,355	)	$	(89,849	)	$	(67,355	)	$	(89,849	)

DISTRIBUTIONS
Distributions declared per Common Share outstanding				$	1.205		$	1.135		$	0.6025		$	0.5675

See accompanying notes

Table of Contents

EQUITY RESIDENTIAL

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN EQUITY (Continued)

(Amounts in ~~thousands)~~thousands except per share data)

(Unaudited)

	Nine Months Ended			Six Months Ended June 30,						Quarter Ended June 30,
	September 30, 2017			2020			2019			2020			2019
NONCONTROLLING INTERESTS
OPERATING PARTNERSHIP
Balance, beginning of year	$	221,297
Balance, beginning of period				$	227,837		$	228,738		$	235,580		$	225,081
Issuance of restricted units to Noncontrolling Interests					12			—			—			—
Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner		(14,717	)		(3,856	)		(4,871	)		(2,012	)		(84	)
Equity compensation associated with Noncontrolling Interests		8,200			7,026			10,829			1,959			2,926
Net income attributable to Noncontrolling Interests		17,931			21,248			15,429			9,713			11,510
Distributions to Noncontrolling Interests		(20,073	)		(17,037	)		(15,079	)		(7,961	)		(7,474	)
Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership		32,000			(2,048	)		45			(657	)		(1,520	)
Adjustment for Noncontrolling Interests ownership in Operating Partnership		(16,306	)		1,987			(7,771	)		(1,453	)		(3,119	)
Balance, end of period	$	228,332		$	235,169		$	227,320		$	235,169		$	227,320
PARTIALLY OWNED PROPERTIES
Balance, beginning of year	$	10,609
Balance, beginning of period				$	1,183		$	(2,293	)	$	4,739		$	(5,462	)
Net income attributable to Noncontrolling Interests		2,354			13,410			1,620			880			821
Contributions by Noncontrolling Interests		125			341			4,594			—			4,594
Distributions to Noncontrolling Interests		(6,913	)		(10,300	)		(5,219	)		(985	)		(1,251	)
Balance, end of period	$	6,175		$	4,634		$	(1,298	)	$	4,634		$	(1,298	)

See accompanying notes

Table of Contents

ERP OPERATING LI~~MITED~~LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

		September 30,			December 31,			June 30,			December 31,
		2017			2016			2020			2019
ASSETS
Investment in real estate
Land		$	5,985,004		$	5,899,862		$	5,789,307		$	5,936,188
Depreciable property			19,571,402			18,730,579			20,997,903			21,319,101
Projects under development			293,064			637,168			274,825			181,630
Land held for development			99,073			118,816			102,361			96,688
Investment in real estate			25,948,543			25,386,425			27,164,396			27,533,607
Accumulated depreciation			(5,849,110	)		(5,360,389	)		(7,537,713	)		(7,276,786	)
Investment in real estate, net			20,099,433			20,026,036			19,626,683			20,256,821
Investments in unconsolidated entities									55,310			52,238
Cash and cash equivalents			46,565			77,207			187,416			45,753
Investments in unconsolidated entities			59,029			60,141
Deposits – restricted			36,639			76,946
Escrow deposits – mortgage			10,972			64,935
Restricted deposits									58,117			71,246
Right-of-use assets									505,077			512,774
Other assets			445,195			398,883			282,348			233,937
Total assets		$	20,697,833		$	20,704,148		$	20,714,951		$	21,172,769

LIABILITIES AND CAPITAL
Liabilities:	Liabilities:
Mortgage notes payable, net		$	3,619,180		$	4,119,181		$	2,340,757		$	1,941,610
Notes, net			5,143,248			4,848,079			6,081,102			6,077,513
Line of credit and commercial paper			229,844			19,998			—			1,017,833
Accounts payable and accrued expenses			167,984			147,482			109,776			94,350
Accrued interest payable			72,811			60,946			67,589			66,852
Lease liabilities									330,135			331,334
Other liabilities			332,650			350,466			315,208			346,963
Security deposits			65,230			62,624			64,005			70,062
Distributions payable			192,569			192,296			232,208			218,326
Total liabilities			9,823,516			9,801,072			9,540,780			10,164,843

Commitments and contingencies

Redeemable Limited Partners			380,541			442,092			336,695			463,400
Capital:
Partners' Capital:
Partners’ Capital:
Preference Units			37,280			37,280			37,280			37,280
General Partner			10,316,663			10,305,707			10,627,748			10,355,789
Limited Partners			228,332			221,297			235,169			227,837
Accumulated other comprehensive (loss)			(94,674	)		(113,909	)
Total partners' capital			10,487,601			10,450,375
Accumulated other comprehensive income (loss)									(67,355	)		(77,563	)
Total partners’ capital									10,832,842			10,543,343
Noncontrolling Interests – Partially Owned Properties			6,175			10,609			4,634			1,183
Total capital			10,493,776			10,460,984			10,837,476			10,544,526
Total liabilities and capital		$	20,697,833		$	20,704,148		$	20,714,951		$	21,172,769

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per Unit data)

(Unaudited)

	Nine Months Ended September 30,						Quarter Ended September 30,						Six Months Ended June 30,						Quarter Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
REVENUES
Rental income	$	1,840,170		$	1,816,960		$	623,951		$	605,856		$	1,335,837		$	1,331,676		$	653,532		$	669,374
Fee and asset management		532			3,351			171			218
Total revenues		1,840,702			1,820,311			624,122			606,074

EXPENSES
Property and maintenance		306,645			309,688			104,721			104,216			220,268			223,531			104,452			108,461
Real estate taxes and insurance		253,318			238,954			84,087			81,343			192,770			182,888			95,038			91,446
Property management		64,702			64,003			20,861			19,517			51,317			50,765			23,608			24,369
General and administrative		40,366			47,408			12,567			12,395			26,353			29,710			11,835			14,329
Depreciation		542,964			528,242			184,100			179,230			418,398			404,723			205,976			200,508
Total expenses		1,207,995			1,188,295			406,336			396,701			909,106			891,617			440,909			439,113

Net gain (loss) on sales of real estate properties														352,243			138,835			144,266			138,856

Operating income		632,707			632,016			217,786			209,373			778,974			578,894			356,889			369,117

Interest and other income		5,708			65,092			3,945			5,509			3,471			1,925			1,511			1,152
Other expenses		(3,160	)		(14,480	)		(1,028	)		(10,420	)		(4,227	)		(8,392	)		(1,694	)		(5,117	)
Interest:
Expense incurred, net		(288,579	)		(386,316	)		(91,145	)		(86,352	)		(167,475	)		(203,840	)		(81,885	)		(108,902	)
Amortization of deferred financing costs		(6,447	)		(10,000	)		(2,064	)		(2,261	)		(4,152	)		(5,783	)		(2,111	)		(3,647	)
Income before income and other taxes, (loss) income from investments in unconsolidated entities, net gain on sales of real estate properties and land parcels and discontinued operations		340,229			286,312			127,494			115,849
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels														606,591			362,804			272,710			252,603
Income and other tax (expense) benefit		(710	)		(1,189	)		(228	)		(426	)		(240	)		(484	)		(187	)		(246	)
(Loss) income from investments in unconsolidated entities		(2,153	)		5,846			(398	)		7,750
Net gain on sales of real estate properties		141,761			3,870,871			17,328			90,036
Net gain on sales of land parcels		19,170			15,759			—			4,037
Income from continuing operations		498,297			4,177,599			144,196			217,246
Discontinued operations, net		—			124			—			246
Income (loss) from investments in unconsolidated entities														(2,199	)		68,058			(1,042	)		68,765
Net gain (loss) on sales of land parcels														—			178			—			177
Net income		498,297			4,177,723			144,196			217,492			604,152			430,556			271,481			321,299
Net (income) attributable to Noncontrolling Interests – Partially Owned Properties		(2,354	)		(2,368	)		(801	)		(823	)
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties														(13,410	)		(1,620	)		(880	)		(821	)
Net income attributable to controlling interests	$	495,943		$	4,175,355		$	143,395		$	216,669		$	590,742		$	428,936		$	270,601		$	320,478
ALLOCATION OF NET INCOME:
Preference Units	$	2,318		$	2,318		$	772		$	773		$	1,545		$	1,545		$	772		$	772

General Partner	$	475,694		$	4,012,595		$	137,457		$	207,543		$	567,949		$	411,962		$	260,116		$	308,196
Limited Partners		17,931			160,442			5,166			8,353			21,248			15,429			9,713			11,510
Net income available to Units	$	493,625		$	4,173,037		$	142,623		$	215,896		$	589,197		$	427,391		$	269,829		$	319,706

Earnings per Unit – basic:
Income from continuing operations available to Units	$	1.30		$	11.00		$	0.37		$	0.57
Net income available to Units	$	1.30		$	11.00		$	0.37		$	0.57
Weighted average Units outstanding		379,716			378,745			379,906			379,008
Earnings per Unit – diluted:
Income from continuing operations available to Units	$	1.29		$	10.92		$	0.37		$	0.56
Net income available to Units	$	1.29		$	10.92		$	0.37		$	0.56		$	1.53		$	1.11		$	0.70		$	0.83
Weighted average Units outstanding		382,640			382,284			382,945			382,373			384,702			382,854			384,818			383,227

Distributions declared per Unit outstanding	$	1.51125		$	12.51125		$	0.50375		$	3.50375
Earnings per Unit – diluted:
Net income available to Units													$	1.53		$	1.11		$	0.70		$	0.83
Weighted average Units outstanding														386,272			385,644			385,913			386,107

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)

(Amounts in thousands except per Unit data)

(Unaudited)

	Nine Months Ended September 30,						Quarter Ended September 30,						Six Months Ended June 30,						Quarter Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Comprehensive income
Comprehensive income:
Net income	$	498,297		$	4,177,723		$	144,196		$	217,492		$	604,152		$	430,556		$	271,481		$	321,299
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		5,216			(4,240	)		1,709			227			(1,190	)		(33,765	)		(223	)		(19,345	)
Losses reclassified into earnings from other comprehensive income		14,019			37,262			4,768			4,340			11,398			8,902			5,764			4,509
Other comprehensive income (loss) – foreign currency:
Currency translation adjustments arising during the period		—			264			—			214
Other comprehensive income		19,235			33,286			6,477			4,781
Other comprehensive income (loss)														10,208			(24,863	)		5,541			(14,836	)
Comprehensive income		517,532			4,211,009			150,673			222,273			614,360			405,693			277,022			306,463
Comprehensive (income) attributable to Noncontrolling Interests – Partially Owned Properties		(2,354	)		(2,368	)		(801	)		(823	)		(13,410	)		(1,620	)		(880	)		(821	)
Comprehensive income attributable to controlling interests	$	515,178		$	4,208,641		$	149,872		$	221,450		$	600,950		$	404,073		$	276,142		$	305,642

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,						Six Months Ended June 30,
	2017			2016			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	498,297		$	4,177,723		$	604,152		$	430,556
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		542,964			528,242			418,398			404,723
Amortization of deferred financing costs		6,447			10,000			4,152			5,783
Amortization of above/below market lease intangibles		2,729			2,566			(35	)		(35	)
Amortization of discounts and premiums on debt		4,939			(18,328	)		2,553			17,795
Amortization of deferred settlements on derivative instruments		14,010			37,187			11,392			8,896
Amortization of right-of-use assets								5,892			6,952
Write-off of pursuit costs		2,329			3,379			3,278			2,987
Loss (income) from investments in unconsolidated entities		2,153			(5,846	)
(Income) loss from investments in unconsolidated entities								2,199			(68,058	)
Distributions from unconsolidated entities – return on capital		2,031			2,165			100			2,387
Net (gain) on sales of investment securities and other investments		—			(58,416	)
Net (gain) on sales of real estate properties		(141,761	)		(3,870,871	)
Net (gain) on sales of land parcels		(19,170	)		(15,759	)
Net (gain) on sales of discontinued operations		—			(43	)
Net (gain) loss on sales of real estate properties								(352,243	)		(138,835	)
Net (gain) loss on sales of land parcels								—			(178	)
Realized/unrealized (gain) loss on derivative instruments								25			—
Compensation paid with Company Common Shares		19,999			25,540			13,475			16,782
Other operating activities, net								1,805			—
Changes in assets and liabilities:
Decrease in deposits – restricted		788			9,992
Decrease in mortgage deposits		1,447			222
(Increase) decrease in other assets		(23,024	)		4,248			(61,422	)		1,610
Increase in accounts payable and accrued expenses		62,635			41,371
Increase (decrease) in accounts payable and accrued expenses								5,954			22,435
Increase (decrease) in accrued interest payable		11,865			(15,780	)		737			1,536
(Decrease) in other liabilities		(28,250	)		(24,749	)
Increase (decrease) in lease liabilities								(1,199	)		(1,171	)
Increase (decrease) in other liabilities								(18,070	)		(25,161	)
Increase (decrease) in security deposits		2,606			(13,522	)		(6,057	)		1,769
Net cash provided by operating activities		963,034			819,321			635,086			690,773
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions		(466,395	)		(205,881	)		—			(653,132	)
Investment in real estate – development/other		(227,187	)		(454,502	)		(95,215	)		(93,210	)
Capital expenditures to real estate		(143,258	)		(124,551	)		(61,265	)		(81,528	)
Non-real estate capital additions		(776	)		(4,467	)		(15,536	)		(1,466	)
Interest capitalized for real estate under development		(23,164	)		(41,658	)		(4,102	)		(2,679	)
Proceeds from disposition of real estate, net		350,000			6,584,126			747,600			393,439
Investments in unconsolidated entities		(5,324	)		(3,826	)		(5,626	)		(8,572	)
Distributions from unconsolidated entities – return of capital		329			13,798			—			78,262
Proceeds from sale of investment securities and other investments		—			72,815
Decrease (increase) in deposits on real estate acquisitions and investments, net		39,519			(83,668	)
(Increase) in mortgage deposits		(4,541	)		(21	)
Net cash (used for) provided by investing activities		(480,797	)		5,752,165
Purchase of investment securities and other investments								(509	)		(269	)
Net cash provided by (used for) investing activities								565,347			(369,155	)

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,						Six Months Ended June 30,
	2017			2016			2020			2019
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs	$	(6,272	)	$	(507	)	$	(2,907	)	$	(6,069	)
Mortgage deposits		57,057			(6,249	)
Mortgage notes payable, net:
Proceeds								495,145			295,620
Lump sum payoffs		(493,420	)		(565,084	)		(91,500	)		(95,500	)
Scheduled principal repayments		(8,771	)		(6,644	)		(3,873	)		(3,110	)
Notes, net:
Proceeds		692,466		—				—			597,480
Lump sum payoffs		(394,077	)		(1,500,000	)
Line of credit and commercial paper:
Line of credit proceeds		1,845,000			246,000			1,870,000			1,995,000
Line of credit repayments		(1,845,000	)		(246,000	)		(1,890,000	)		(1,995,000	)
Commercial paper proceeds		3,888,675			1,324,784			6,726,167			7,775,817
Commercial paper repayments		(3,681,750	)		(1,712,472	)		(7,724,000	)		(8,275,000	)
Proceeds from settlement of derivative instruments		1,296		—
Proceeds from EQR's Employee Share Purchase Plan (ESPP)		2,963			2,778
Proceeds from (payments on) settlement of derivative instruments								(1,215	)		(41,616	)
Proceeds from EQR’s Employee Share Purchase Plan (ESPP)								2,359			1,652
Proceeds from exercise of EQR options		12,967			26,939			11,322			48,487
Payment of offering costs		(36	)		(304	)		—			(155	)
Other financing activities, net		(40	)		(33	)		(31	)		(49	)
Contributions – Noncontrolling Interests – Partially Owned Properties		125		—				341			4,594
Contributions – Limited Partners		—			1			12			—
Distributions:
OP Units – General Partner		(554,267	)		(3,490,838	)		(435,427	)		(409,943	)
Preference Units		(2,318	)		(2,318	)		(1,545	)		(773	)
OP Units – Limited Partners		(20,604	)		(137,641	)		(16,478	)		(14,728	)
Noncontrolling Interests – Partially Owned Properties		(6,873	)		(28,588	)		(10,269	)		(5,170	)
Net cash (used for) financing activities		(512,879	)		(6,096,176	)
Net (decrease) increase in cash and cash equivalents		(30,642	)		475,310
Cash and cash equivalents, beginning of period		77,207			42,276
Cash and cash equivalents, end of period	$	46,565		$	517,586
Net cash provided by (used for) financing activities								(1,071,899	)		(128,463	)
Net increase (decrease) in cash and cash equivalents and restricted deposits								128,534			193,155
Cash and cash equivalents and restricted deposits, beginning of period								116,999			116,313
Cash and cash equivalents and restricted deposits, end of period							$	245,533		$	309,468

Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents							$	187,416		$	251,273
Restricted deposits								58,117			58,195
Total cash and cash equivalents and restricted deposits, end of period							$	245,533		$	309,468

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

	Nine Months Ended September 30,						Six Months Ended June 30,
	2017			2016			2020			2019
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	257,805		$	383,374		$	148,164		$	171,116
Net cash paid for income and other taxes	$	964		$	1,333
Real estate acquisitions/dispositions/other:
Mortgage loans assumed	$	—		$	43,400
Net cash paid (received) for income and other taxes							$	428		$	754
Amortization of deferred financing costs:
Investment in real estate, net							$	(120	)	$	—
Other assets	$	1,810		$	2,291		$	1,169		$	1,206
Mortgage notes payable, net	$	1,943		$	3,320		$	876		$	2,344
Notes, net	$	2,694		$	4,389		$	2,227		$	2,233
Amortization of discounts and premiums on debt:
Mortgage notes payable, net	$	247		$	(21,318	)	$	1,191		$	16,426
Notes, net	$	1,771		$	2,578		$	1,362		$	1,369
Line of credit and commercial paper	$	2,921		$	412
Amortization of deferred settlements on derivative instruments:
Other liabilities	$	(9	)	$	(75	)	$	(6	)	$	(6	)
Accumulated other comprehensive income	$	14,019		$	37,262		$	11,398		$	8,902
Write-off of pursuit costs:
Investment in real estate, net	$	2,292		$	2,876		$	3,122		$	2,947
Other assets	$	17		$	399		$	140		$	37
Accounts payable and accrued expenses	$	20		$	104		$	16		$	3
Loss (income) from investments in unconsolidated entities:
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities	$	1,076		$	(6,999	)	$	1,554		$	(68,735	)
Other liabilities	$	1,077		$	1,153		$	645		$	677
Realized/unrealized (gain) loss on derivative instruments:
Other assets	$	(3,803	)	$	(4,563	)	$	—		$	2,002
Notes, net	$	(1,413	)	$	4,563		$	—		$	2,253
Other liabilities	$	—		$	4,240		$	1,215		$	29,510
Accumulated other comprehensive income	$	5,216		$	(4,240	)	$	(1,190	)	$	(33,765	)
Investments in unconsolidated entities:
Investments in unconsolidated entities	$	(2,324	)	$	(1,726	)	$	(4,726	)	$	(6,472	)
Other liabilities	$	(3,000	)	$	(2,100	)	$	(900	)	$	(2,100	)
Distributions from unconsolidated entities - return of capital:
Investments in unconsolidated entities	$	329		$	14,014
Debt financing costs:
Other assets	$	—		$	(216	)	$	(215	)	$	145
Debt financing costs:
Mortgage notes payable, net	$	—		$	(507	)	$	(2,692	)	$	(2,237	)
Notes, net	$	(6,272	)	$	—		$	—		$	(5,213	)
Other:
Foreign currency translation adjustments	$	—		$	(264	)
Other liabilities							$	—		$	1,236
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets							$	—		$	(438,705	)
Other assets							$	—		$	184,116
Lease liabilities							$	—		$	282,791
Other liabilities							$	—		$	(28,202	)

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED ~~STATEMENT~~ STATEMENTS OF CHANGES IN CAPITAL

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

(Unaudited)

	Nine Months Ended			Six Months Ended June 30,						Quarter Ended June 30,
	September 30, 2017			2020			2019			2020			2019
PARTNERS' CAPITAL
PARTNERS’ CAPITAL
PREFERENCE UNITS
Balance, beginning of year	$	37,280
Balance, beginning of period				$	37,280		$	37,280		$	37,280		$	37,280
Balance, end of period	$	37,280		$	37,280		$	37,280		$	37,280		$	37,280
GENERAL PARTNER
Balance, beginning of year	$	10,305,707
Balance, beginning of period				$	10,355,789		$	10,200,910		$	10,565,983		$	10,084,619
OP Unit Issuance:
Conversion of OP Units held by Limited Partners into OP Units held by General Partner		14,717			3,856			4,871			2,012			84
Exercise of EQR share options		12,967			11,322			48,487			171			18,627
EQR's Employee Share Purchase Plan (ESPP)		2,963
EQR’s Employee Share Purchase Plan (ESPP)					2,359			1,652			1,490			526
Share-based employee compensation expense:
EQR restricted shares		7,489			7,254			7,982			3,231			3,404
EQR share options		6,384			1,293			1,682			623			889
EQR ESPP discount		586			416			365			263			98
Net income available to Units – General Partner		475,694			567,949			411,962			260,116			308,196
OP Units – General Partner distributions		(555,071	)		(448,750	)		(420,916	)		(224,243	)		(210,419	)
Offering costs		(36	)		—			(155	)		—			(155	)
Supplemental Executive Retirement Plan (SERP)		(594	)		(506	)		(1,539	)		(655	)		(937	)
Change in market value of Redeemable Limited Partners		29,551			128,753			(56,974	)		17,304			(1,953	)
Adjustment for Limited Partners ownership in Operating Partnership		16,306			(1,987	)		7,771			1,453			3,119
Balance, end of period	$	10,316,663		$	10,627,748		$	10,206,098		$	10,627,748		$	10,206,098
LIMITED PARTNERS
Balance, beginning of year	$	221,297
Balance, beginning of period				$	227,837		$	228,738		$	235,580		$	225,081
Issuance of restricted units to Limited Partners					12			—			—			—
Conversion of OP Units held by Limited Partners into OP Units held by General Partner		(14,717	)		(3,856	)		(4,871	)		(2,012	)		(84	)
Equity compensation associated with Units – Limited Partners		8,200			7,026			10,829			1,959			2,926
Net income available to Units – Limited Partners		17,931			21,248			15,429			9,713			11,510
Units – Limited Partners distributions		(20,073	)		(17,037	)		(15,079	)		(7,961	)		(7,474	)
Change in carrying value of Redeemable Limited Partners		32,000			(2,048	)		45			(657	)		(1,520	)
Adjustment for Limited Partners ownership in Operating Partnership		(16,306	)		1,987			(7,771	)		(1,453	)		(3,119	)
Balance, end of period	$	228,332		$	235,169		$	227,320		$	235,169		$	227,320
ACCUMULATED OTHER COMPREHENSIVE (LOSS)
Balance, beginning of year	$	(113,909	)
Accumulated other comprehensive income – derivative instruments:
Unrealized holding gains arising during the period		5,216
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period				$	(77,563	)	$	(64,986	)	$	(72,896	)	$	(75,013	)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period					(1,190	)		(33,765	)		(223	)		(19,345	)
Losses reclassified into earnings from other comprehensive income		14,019			11,398			8,902			5,764			4,509
Balance, end of period	$	(94,674	)	$	(67,355	)	$	(89,849	)	$	(67,355	)	$	(89,849	)

DISTRIBUTIONS
Distributions declared per Unit outstanding				$	1.205		$	1.135		$	0.6025		$	0.5675

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED~~STATEMENT~~STATEMENTSOFCHANGESINCAPITAL(Continued)

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

(Unaudited)

	Nine Months Ended			Six Months Ended June 30,						Quarter Ended June 30,
	September 30, 2017			2020			2019			2020			2019
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES
Balance, beginning of year	$	10,609
Balance, beginning of period				$	1,183		$	(2,293	)	$	4,739		$	(5,462	)
Net income attributable to Noncontrolling Interests		2,354			13,410			1,620			880			821
Contributions by Noncontrolling Interests		125			341			4,594			—			4,594
Distributions to Noncontrolling Interests		(6,913	)		(10,300	)		(5,219	)		(985	)		(1,251	)
Balance, end of period	$	6,175		$	4,634		$	(1,298	)	$	4,634		$	(1,298	)

See accompanying notes

Table of Contents

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Business

Equity Residential (“EQR”)~~, a Maryland real estate investment trust (“REIT”) formed in March 1993,~~ is an S&P 500 company focused on the acquisition, development and management of rental apartment properties located in urban and high-density suburban ~~coastal gateway markets.~~communities, a business that is conducted on its behalf by ERP Operating Limited Partnership ~~("ERPOP"~~(“ERPOP”),. EQR is a Maryland real estate investment trust (“REIT”) formed in March 1993 and ERPOP is an Illinois limited partnership ~~was~~ formed in May ~~1993 to conduct the multifamily residential property business of Equity Residential. EQR has elected to be taxed as a~~ ~~REIT.~~ 1993.References to the ~~"Company," "we," "us"~~“Company,” “we,” “us” or ~~"our"~~“our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the ~~"Operating Partnership"~~“Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the OperatingPartnership.

EQR is the general partner of, and as of ~~September~~June 30, ~~2017~~2020 owned an approximate 96.4% ownership interest in, ERPOP. All of the ~~Company's~~Company’s property ownership, development and related business operations are conducted through the Operating PartnershipandEQRhasnomaterialassetsorliabilitiesotherthanitsinvestmentinERPOP. EQRissues ~~public~~ equityfromtime totime,thenetproceedsofwhichitisobligatedtocontributetoERPOP,butdoesnothaveanyindebtednessasalldebtisincurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the ~~Company's~~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 tradedequity.

As of ~~September~~June 30, ~~2017,~~2020, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of ~~305~~304 properties located in 109 states and the District of Columbia consisting of ~~78,302~~78,410 apartment units. The ownership breakdown includes (table does not include various uncompleted development properties):

	Properties		Apartment Units		Properties		Apartment Units
Wholly Owned Properties		283		73,289		287		74,849
Master-Leased Properties – Consolidated		3		853
Master-Leased Property – Consolidated						1		162
Partially Owned Properties – Consolidated		17		3,215		16		3,399
Partially Owned Properties – Unconsolidated		2		945
		305		78,302		304		78,410

2.	Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and certain reclassifications considered necessary for a fair presentation have been included. Certain reclassifications have been made to the prior period financial statements in order to conform to the current year presentation. These reclassifications did not have an impact on net income previously reported. Operating results for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017.~~2020.

In preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. In response to the novel coronavirus (“COVID-19”) pandemic, management evaluated whether its estimates, such as lease collectibility (see discussion below) and impairment, required revised approaches and generally concluded that no revisions were necessary at this time.

The balance sheets at December 31, ~~2016~~2019 have been derived from the audited financial statements at that date but do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

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For further information, including definitions of capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Company’s and the Operating ~~Partnership's~~Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

Income and Other Taxes

~~Due~~EQR has elected to ~~the structure of EQR~~be taxed as a ~~REIT and~~REIT. This, along with the nature of the operations of its operating properties, noresulted in 0 provision for federal income taxes ~~has been made~~ at the EQR level. In addition, ERPOP generally is not liable for federal income taxes as the partners recognize their ~~proportionate~~allocable share of income or loss in their tax returns; therefore no provision for federal income taxes has been made at the ERPOP level. Historically, the Company has generally only incurred certain state and local income, excise and franchise taxes. The Company has elected ~~Taxable~~taxable REIT ~~Subsidiary~~subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses.

~~Deferred tax assets~~On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and ~~liabilities are recognized for future tax consequences attributable~~Economic Security Act (the “CARES Act”). The CARES Act was enacted to ~~differences between~~provide economic relief to companies and individuals in response to 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 earningsCOVID-19 pandemic. Included in the ~~period enacted. The Company’s deferred~~CARES Act are tax ~~assets were generally~~provisions which increase allowable interest expense deductions for 2019 and 2020 and increase the ~~result of tax affected suspended interest deductions,~~ability for taxpayers to use net operating ~~losses, differing depreciable lives on capitalized assets and~~losses. While we do not expect these provisions to result in a material impact to the ~~timing of expense recognition for certain accrued liabilities. As of September 30, 2017,~~Company’s taxable income or tax liabilities, the Company ~~has elected REIT status for its primary TRS upon filing~~will continue to analyze the ~~2016~~provisions of the CARES Act and related guidance as it is published.

The CARES Act also allows corporations to request accelerated refunds of their alternative minimum tax ~~return~~(“AMT”) credit. Prior to enactment of this provision, the remaining credits would have been refunded in ~~the third quarter~~installments in 2020, 2021 and 2022. We have filed a claim and expect to receive a refund of ~~2017, with the election retroactive to January 1, 2016. As a result, the Company wrote-off its deferred tax assets, which were fully reserved, as~~our remaining $1.6 million of ~~September 30, 2017.~~AMT credit in 2020.

Recently Issued Accounting Pronouncements

In ~~May 2014,~~March 2020, the Financial Accounting Standards Board ~~(the~~ ~~"FASB"~~(“FASB”) issued an amendment to the reference rate reform standard which provides the option for a ~~comprehensive new revenue recognition standard entitled~~ ~~Revenue~~limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on contract modifications and hedge accounting. An example of such reform is the expected market transition from ~~Contracts with Customers~~ the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. Entities that ~~will supersede nearly all existing revenue recognition guidance.~~make this optional expedient election would not have to remeasure the contracts at the modification date or reassess the accounting treatment if certain criteria are met and would continue applying hedge accounting for relationships affected by reference rate reform. The new standard specifically excludes lease revenue. The new standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Companies will likely need to use more judgment and make more estimates than under current revenue recognition guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration, if ~~any,~~ to include in the transaction price and allocating the transaction price to each separate performance obligation. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. The Company anticipates selecting the modified retrospective transition method with a cumulative effect recognized as of the date of adoption and will adopt the new standard effective January 1, 2018, when effective. The Company is continuing to evaluate the standard; however, we do not expect its adoption to have a significant impact on the consolidated financial statements, as approximately 95% of total revenues consist of rental income from leasing arrangements, which is specifically excluded from the standard. In addition, the Company's fee and asset management activities are immaterial now that it sold its interest in Joint Base Lewis McChord in 2016 and given the nature of its disposition transactions, there should be no changes in accounting under the new standard.

~~In January 2016, the~~ ~~FASB~~ issued a new standard which requires companies to measure all equity securities with readily determinable fair values at fair value on the balance sheet, with changes in fair value recognized in net income. The new standard will bewas effective for the Company ~~beginning on January 1, 2018. The Company does not expect that this will have a material effect on its consolidated results of operations or financial position.~~

~~In February 2016, the FASB issued a new leases standard which sets out principles for the recognition, measurement, presentation~~upon issuance and ~~disclosure of leases for both parties to a contract (i.e. lessors and lessees). The new standard requires the following:~~

~~Lessors – Leases will~~elections can be accounted for using an approach that is substantially equivalent to existing guidance for operating, sales-type and financing leases, but aligned with the new revenue recognition standard. Lessors will be required to allocate lease payments to separate lease and non-lease components of each lease agreement, with the non-lease components evaluated under the new revenue recognition standard.

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•

Lessees – Leases will be accounted for using a dual approach, classifying leases as either operating or finance based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized on a straight-line basis over the term of the lease (for operating leases) or based on an effective interest method with a front-loaded expense recognition (for finance leases). A lessee is also required to record a right-of-use asset and a lease liability on its balance sheet for all leases with a term of greater than 12 months regardless of their classification as operating or finance leases. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases.

The new standard will be effective for the Company beginning on January 1, 2019, with early adoption permitted, though the Company currently anticipates adopting the new standard on the effective date. The new standard must be adopted using a modified retrospective method, which requires application of the new guidance at the beginning of the earliest comparative period presented and provides for certain practical expedients, which the Company currently anticipates electing. The Company anticipates that its residential and retail/commercial leases where it is the lessor will continue to be accounted for as operating leases under the new standard. Therefore, the Company does not currently anticipate significant changes in the accounting for its lease revenues.made through December 31, 2022. The Company is ~~also the lessee under various corporate office~~currently evaluating its options with regards to existing contracts and ~~ground leases, which it will be required to recognize right of use assets~~hedging relationships and related lease liabilities on its consolidated balance sheets upon adoption. The Company currently anticipates that its corporate office leases where it is the lessee will continue to be accounted for as operating leases under the new standard. Based on its anticipated election of the practical expedients, the Company would not be required to reassess the classification of existing ground leases and therefore these leases would continue to be accounted for as operating leases. However, in the event we modify existing ground leases and/or enter into new ground leases after adoption of the new standard, such leases will likely be classified as finance leases. The Company will continue to evaluate the impact of adopting ~~the new leases standard~~this update on its consolidated results of operations and financial position.

~~In June 2016, the~~ ~~FASB~~ issued a new standard which requires companies to adopt a new approach for estimating credit losses on certain types of financial instruments, such as trade and other receivables and loans. The standard will require entities to estimate a lifetime expected credit loss for most financial instruments, including trade receivables. The new standard will be effective for the Company beginning on January 1, 2020, with early adoption permitted beginning January 1, 2019. The Company is currently evaluating the impact of adopting the new standard on its consolidated results of operations and financial position.

~~In August 2016 and October 2016, the~~ ~~FASB~~ issued new standards to clarify how specific transactions are classified and presented on the statement of cash flows. Among other clarifications, the new standards specifically provide guidance for the following items within the statement of cash flows which have required significant judgment in the past:

~~Cash payments related to debt prepayments or extinguishment costs are to be classified within financing activities;~~

The portion of the cash payment made to settle a zero-coupon bond or a bond with an insignificant cash coupon attributable to accreted interest related to a debt discount is to be classified as a cash outflow within operating activities, and the portion attributable to the principal is to be classified within financing activities;

~~Insurance settlement proceeds are to be classified based on the nature of the loss;~~

~~Companies must elect to classify distributions received from equity method investees using either a cumulative earnings approach or a look-through approach and the election must be disclosed; and~~

~~Restricted cash will be included with cash and cash equivalents on the statement of cash flows.~~ ~~Total~~ ~~cash and cash equivalents and restricted cash are to be reconciled to the related line items on the balance sheet.~~

The new standards must be applied retrospectively to all periods presented in the consolidated financial statements and they will be effective for the Company beginning on January 1, 2018, with early adoption permitted. The Company currently anticipates adopting the new standards in the fourth quarter of 2017 and plans to continue to apply the look-through approach for distributions received from equity method investees. The Company does not expect overall cash flows to change; however, there will be material changes between cash flow classifications due to the substantial debt prepayment penalties that the Company has incurred in the comparative period.

~~In February 2017, the~~ ~~FASB~~ ~~issued a new standard which~~ clarifies the accounting treatment for partial sales of nonfinancial assets (i.e. real estate). The standard clarifies that partial sales transactions include contributions of nonfinancial assets to a joint venture or other noncontrolled investee. Companies must recognize a full gain or loss on transfers of nonfinancial assets to equity method investees. The standard requires companies to derecognize distinct nonfinancial assets or distinct in substance nonfinancial assets in partial sale transactions when it does not have a controlling financial interest in the legal entity that holds the asset and transfers control of the asset. Once the distinct nonfinancial asset is transferred, the company is required to measure any non-controlling interest it receives or retains at fair value and

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recognize a full gain or loss on the transaction. If a company transfers ownership interests in a consolidated subsidiary and continues to maintain a controlling financial interest, the company does not derecognize the assets or liabilities, and accounts for the transaction as an equity transaction and no gain or loss is recognized. The new standard will be effective for the Company beginning on January 1, 2018 and early adoption was permitted beginning on January 1, 2017. The Company anticipates adopting the new standard concurrently with the new revenue recognition standard. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect recognized as of the date of adoption. The Company has not had a partial sale of nonfinancial assets in the current or comparative periods. Therefore, the Company does not currently believe that the adoption of this standard will have a material impact on its consolidated results of operations and financial position.

In August 2017, the FASB issued a final standard which makes changes to the hedge accounting model to enable entities to better portray their risk management activities in the financial statements. The new standard expands an entity’s ability to hedge nonfinancial and financial risk components, reduces complexity in fair value hedges of interest rate risk and eases certain documentation and assessment requirements. The new standard also eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of any hedging instrument to be presented in the same income statement line as the hedged instrument. The new standard will be effective for the Company beginning on January 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact of adopting the new standard on its consolidated results of operations and financial position.

Recently Adopted Accounting Pronouncements

In ~~February 2015,~~April 2020, a FASB staff question and answer document was issued which intended to reduce the ~~FASB~~ ~~issued new consolidation guidance which made changes~~challenges of evaluating the enforceable rights and obligations of leases for concessions granted to ~~both~~lessees in response to the ~~variable interest model~~COVID-19 pandemic. We elected not to evaluate whether qualifying concessions provided by the Company in response to the COVID-19 pandemic are a lease modification, subject to the criteria that the total payments under the amended lease cannot result in a substantial increase in the rights of the lessor or obligations of the lessee. We also elected to treat the concessions as though they were contemplated as part of the existing contracts and therefore will not apply lease modification rules to the qualifying lease concession amendments. As such, deferrals deemed collectible are recorded as rental receivables with no change to timing of rental revenues and deferrals deemed non-collectible and abatements reduce rental revenues in the deferral/abatement period and cause rental revenues to effectively follow a cash basis related to the changes. The accounting elections provided by the FASB mainly apply to the Company’s non-residential leases and the ~~voting model. Among~~majority of the amendments will not require a straight-line adjustment. During the quarter ended June 30, 2020, we have granted rent payment deferrals/abatements to our non-residential tenants of $4.5 million, of which $4.1 million reduced rental revenues.

In June 2016, the FASBissued a standard which requires companies to adopt a new approach for estimating credit losses on certain types of financial instruments, such as trade and other ~~changes,~~receivables and loans. The standard requires entities to estimate a lifetime expected credit loss for most financial instruments, including trade receivables. In November 2018, the ~~new~~FASB issued an amendment excluding operating lease receivables accounted for under the leases standard ~~specifically eliminated~~from the ~~presumption in~~scope of the ~~current voting model that a general partner controls a limited partnership or similar entity unless that presumption can be overcome.~~ ~~Generally,~~ ~~only a single limited partner that is able to exercise substantive kick-out rights will consolidate.~~credit losses standard. The Company adopted this ~~new~~ standard as required effective January 1, ~~2016. While adoption of the new standard~~2020 and it did not ~~result in any changes to conclusions about whether~~have a ~~joint venture was~~material effect on its consolidated ~~or unconsolidated, the Company has determined that certain~~results of ~~its joint ventures~~operations and ~~the Operating Partnership will now qualify as variable interest entities ("VIEs") and therefore will require additional disclosures. See Note 6 for further discussion.~~financial position.

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In ~~March~~ February2016,the FASB issued a ~~new~~lease standard which ~~simplified several aspects~~sets out principles for the recognition, measurement, presentation and disclosure of ~~the accounting~~leases for ~~employee share-based payment transactions, including income tax consequences, classification of awards as equity or liability, statement of cash flows classification~~both parties to a contract (i.e. lessors and ~~policy election options for forfeitures.~~lessees). The Company adopted this ~~new~~ standard as required effective January 1, ~~2017.~~2019 using a modified retrospective method and the Company applied the guidance as of the adoption date and elected certain practical expedients, as described below. The standard impacted our consolidated balance sheets but did not impact our consolidated statements of operations. Right-of-use (“ROU”) assets and lease liabilities where the Company is the lessee were recognized for various corporate office leases and ground leases. The Company ~~will continue~~recorded ROU assets and related lease liabilities to ~~estimate~~its opening balance sheet upon adoption on January 1, 2019 of $434.2 million and $278.3 million, respectively.

The Company elected the ~~number~~practical expedient to not reassess the classification of ~~awards expected~~existing operating leases. As of January 1, 2019, any new or modified ground leases may be classified as financing leases unless they meet certain conditions. When there is a material lease modification, the Company is required to reassess the classification and remeasure the lease liability. The Company also elected the practical expedient to account for both its lease and non-lease components as a single component under the leases standard. See Note 8 for additional discussion regarding the lease standard.

In August 2017, the FASB issued a final standard which makes changes to the hedge accounting model to enable entities to better portray their risk management activities in the financial statements. The standard expands an entity’s ability to hedge nonfinancial and financial risk components, reduces complexity in fair value hedges of interest rate risk and eases certain documentation and assessment requirements. The standard also eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of any hedging instrument to be ~~forfeited~~presented in the same income statement line as the hedged instrument. The Company adopted this standard as required effective January 1, 2019 and ~~adjust the estimate when~~ it ~~is no longer probable that the employee will fulfill the service condition, as was required under the old standard. The adoption of this standard~~ did not have a material ~~impact~~effect on ~~our~~its consolidated results of operations orand financial position.

~~In January 2017, the~~ ~~FASB~~ issued a new standard which clarified the definition of a business. The standard's objective was to add additional guidance that assists companies in determining whether transactions should be accounted for as an asset acquisition or a business combination. The new standard first requires an entity to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If this threshold is not met, the entity next evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. Among other differences, transaction costs associated with asset acquisitions are capitalized while those associated with business combinations are expensed as incurred. In addition, purchase price in an asset acquisition is allocated on a relative fair value basis while in a business combination it is generally measured at fair value. The new standard will be applied prospectively to any transactions occurring within the period of adoption. The Company early adopted the new standard as allowed effective January 1, 2017. The Company anticipates that substantially all of its transactions will now be accounted for as asset acquisitions, which means transaction costs will largely be capitalized as noted above.

~~Other~~

The Company is the controlling partner in various consolidated partnerships owning 17 properties and 3,215 apartment units having a noncontrolling interest book value of $6.2 million at September 30, 2017. 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 four properties having a noncontrolling interest deficit balance of $7.3 million. These four 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, 2017, the Company estimates the value of

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~~Noncontrolling Interest distributions for these four properties would have been approximately $65.8 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 four 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, 2017~~ had those mortgages been prepaid. Due to, among other things, the inherent uncertainty in the sale of real estate assets, the amount of any potential distribution to the Noncontrolling Interests in the Company's Partially Owned Properties is subject to change. To the extent that the partnerships' underlying assets are worth less than the underlying liabilities, the Company has no obligation to remit any consideration to the Noncontrolling Interests in these Partially Owned Properties.

3.	Equity, Capital and OtherInterests

~~Equity~~The Company refers to “Common Shares” and ~~Redeemable Noncontrolling Interests~~“Units” (which refer to both OP Units and restricted units) as equity securities for EQR and “General Partner Units” and “Limited Partner Units” as equity securities for ERPOP. To provide a streamlined and more readable presentation of ~~Equity Residential~~the disclosures for the Company and the Operating Partnership, several sections below refer to the respective terminology for each with the same financial information and separate sections are provided, where needed, to further distinguish any differences in financial information and terminology.

The following ~~tables present~~table presents the changes in the Company’s issued and outstanding Common Shares and ~~“Units” (which includes OP~~Units for the six months ended June 30, 2020 and 2019:

	2020			2019
Common Shares
Common Shares outstanding at January 1,		371,670,884			369,405,161
Common Shares Issued:
Conversion of OP Units		97,363			188,406
Exercise of share options		217,935			1,059,674
Employee Share Purchase Plan (ESPP)		44,110			27,131
Restricted share grants, net		178,720			158,438
Common Shares outstanding at June 30,		372,209,012			370,838,810
Units
Units outstanding at January 1,		13,731,315			13,904,035
Restricted unit grants, net		245,999			140,055
Conversion of OP Units to Common Shares		(97,363	)		(188,406	)
Units outstanding at June 30,		13,879,951			13,855,684
Total Common Shares and Units outstanding at June 30,		386,088,963			384,694,494
Units Ownership Interest in Operating Partnership		3.6	%		3.6	%

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The following table presents the changes in the Operating Partnership’s issued and outstanding General Partner Units and ~~restricted units)~~Limited Partner Units for the ~~nine~~six months ended ~~September~~June 30, ~~2017:~~2020 and 2019:

	~~2017~~
~~Common Shares~~
~~Common Shares outstanding at January 1,~~		~~365,870,924~~
~~Common Shares Issued:~~
~~Conversion of OP Units~~		~~1,107,735~~
~~Exercise of share options~~		~~343,527~~
~~Employee Share Purchase Plan (ESPP)~~		~~54,843~~
~~Restricted share grants, net~~		~~85,451~~
~~Common Shares Outstanding at September 30,~~		~~367,462,480~~
~~Units~~
~~Units outstanding at January 1,~~		~~14,626,075~~
~~Restricted unit grants, net~~		~~291,647~~
~~Conversion of OP Units to Common Shares~~		~~(1,107,735~~	)
~~Units outstanding at September 30,~~		~~13,809,987~~
~~Total Common Shares and Units outstanding at September 30,~~		~~381,272,467~~
~~Units Ownership Interest in Operating Partnership~~		~~3.6~~	%

	2020			2019
General and Limited Partner Units
General and Limited Partner Units outstanding at January 1,		385,402,199			383,309,196
Issued to General Partner:
Exercise of EQR share options		217,935			1,059,674
EQR’s Employee Share Purchase Plan (ESPP)		44,110			27,131
EQR’s restricted share grants, net		178,720			158,438
Issued to Limited Partners:
Restricted unit grants, net		245,999			140,055
General and Limited Partner Units outstanding at June 30,		386,088,963			384,694,494
Limited Partner Units
Limited Partner Units outstanding at January 1,		13,731,315			13,904,035
Limited Partner restricted unit grants, net		245,999			140,055
Conversion of Limited Partner OP Units to EQR Common Shares		(97,363	)		(188,406	)
Limited Partner Units outstanding at June 30,		13,879,951			13,855,684
Limited Partner Units Ownership Interest in Operating Partnership		3.6	%		3.6	%

The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of restricted units, are collectively referred to as the “Noncontrolling Interests – Operating Partnership”. and “Limited Partners Capital,” respectively, for the Company and the Operating Partnership. Subject to certain exceptions (including the “book-up” requirements of restricted units), the Noncontrolling Interests – Operating ~~Partnership~~Partnership/Limited Partners Capital may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Noncontrolling Interests – Operating ~~Partnership~~Partnership/Limited Partners Capital (including redeemable interests) is allocated based on the number of Noncontrolling Interests – Operating ~~Partnership Units~~Partnership/Limited Partners Capital in total in proportion to the number of Noncontrolling Interests – Operating ~~Partnership Units~~Partnership/Limited Partners Capital in total plus the total number of Common ~~Shares.~~Shares/General Partner Units. Net income is allocated to the Noncontrolling Interests – Operating ~~Partnership~~Partnership/Limited Partners Capital based on the weighted average ownership percentage during the period.

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

The Noncontrolling Interests – Operating ~~Partnership Units~~Partnership/Limited Partners Capital are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Noncontrolling Interests – Operating ~~Partnership~~Partnership/Limited Partners Capital are differentiated and referred to as “Redeemable Noncontrolling Interests – Operating Partnership”. and “Redeemable Limited Partners,” respectively. Instruments that require settlement in registered shares cannot be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Noncontrolling Interests – Operating ~~Partnership~~Partnership/Redeemable Limited Partners are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Noncontrolling Interests – Operating ~~Partnership Units~~Partnership/Limited Partners Capital that are

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classified in permanent equity at ~~September~~ June 30, ~~2017~~2020 and December 31, ~~2016.~~2019.

The carrying value of the Redeemable Noncontrolling Interests – Operating ~~Partnership~~Partnership/Redeemable Limited Partners is allocated based on the number of Redeemable Noncontrolling Interests – Operating ~~Partnership Units~~Partnership/Redeemable Limited Partners in proportion to the number of Noncontrolling Interests – Operating ~~Partnership Units~~Partnership/Limited Partners Capital in total. Such percentage of the total carrying value of Units/Limited Partner Units which is ascribed to the Redeemable Noncontrolling Interests – Operating ~~Partnership~~Partnership/Redeemable Limited Partners is then adjusted to the greater of carrying value or fair market value as described above. As of ~~September~~June 30, ~~2017,~~2020 and 2019, the Redeemable Noncontrolling Interests – Operating ~~Partnership~~Partnership/Redeemable Limited Partners have a redemption value of approximately ~~$380.5~~$336.7 million and $436.0 million, respectively,which represents the value of Common Shares that would be issued in exchange for the Redeemable Noncontrolling Interests – Operating ~~Partnership Units.~~Partnership/Redeemable Limited Partners.

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The following table presents the changes in the redemption value of the Redeemable Noncontrolling Interests – Operating ~~Partnership~~Partnership/Redeemable Limited Partners for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and 2019 (amounts inthousands):

	2017			2020			2019
Balance at January 1,	$	442,092		$	463,400		$	379,106
Change in market value		(29,551	)		(128,753	)		56,974
Change in carrying value		(32,000	)		2,048			(45	)
Balance at September 30,	$	380,541
Balance at June 30,				$	336,695		$	436,035

Net proceeds from EQR Common Share and Preferred Share (see definition below) offerings and proceeds from exercise of options for Common Shares are contributed by EQR to ERPOP. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in ERPOP equal in number and having the same terms as the Preferred Shares issued in the equity offering). As a result, the net ~~offering~~ proceeds from Common Shares and Preferred Shares are allocated for the Company between shareholders’ equity and Noncontrolling Interests – Operating Partnership and for the Operating Partnership between General Partner’s Capital and Limited Partners Capital to account for the change in their respective percentage ownership of the underlying ~~equity of ERPOP.~~equity.

TheCompany’sdeclarationoftrustauthorizesittoissueupto 100,000,000preferredsharesofbeneficialinterest, ~~$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.

The following table presents the Company’s issued and outstanding Preferred ~~Shares~~Shares/Preference Units asof ~~September~~June 30, ~~2017~~ 2020andDecember 31, ~~2016:~~2019:

Amounts in thousands

Annual

Call

Dividend per

September 30,

December 31,

Date (1)

Share (2)

2017

2016

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; 745,600 shares issued and
   outstanding at September 30, 2017 and December 31, 2016

12/10/26

$
4.145

$
37,280

$
37,280

$
37,280

$
37,280

				Amounts in thousands
		Annual
	Call	Dividend Per		June 30,		December 31,
	Date (1)	Share/Unit (2)		2020		2019
Preferred Shares/Preference Units of beneficial interest, $0.01 par value; 100,000,000 shares authorized:
8.29% Series K Cumulative Redeemable Preferred Shares/Preference Units; liquidation value $50 per share/unit; 745,600 shares/units issued and outstanding as of June 30, 2020 and December 31, 2019	12/10/26	$	4.145	$	37,280	$	37,280
				$	37,280	$	37,280

(1)

On or after the call date, redeemable ~~preferred shares~~Preferred Shares/Preference Units may be redeemed for cash at the option of the Company or the Operating Partnership, respectively, in whole or in part, at a redemption price equal to the liquidation price per ~~share,~~share/unit, plus accrued and unpaid distributions, if any.

(2)	Dividends on Preferred ~~Shares are payable quarterly.~~

~~Table of Contents~~

~~Capital and Redeemable Limited Partners of ERP Operating Limited Partnership~~

~~The following tables present the changes in the Operating Partnership’s issued and outstanding Units and in the limited partners’ Units for the nine months ended September 30, 2017:~~

	~~2017~~
~~General and Limited Partner Units~~
~~General and Limited Partner Units outstanding at January 1,~~		~~380,496,999~~
~~Issued to General Partner:~~
~~Exercise of EQR share options~~		~~343,527~~
~~EQR’s Employee Share Purchase Plan (ESPP)~~		~~54,843~~
~~EQR's restricted share grants, net~~		~~85,451~~
~~Issued to Limited Partners:~~
~~Restricted unit grants, net~~		~~291,647~~
~~General and Limited Partner Units outstanding at September 30,~~		~~381,272,467~~
~~Limited Partner Units~~
~~Limited Partner Units outstanding at January 1,~~		~~14,626,075~~
~~Limited Partner restricted unit grants, net~~		~~291,647~~
~~Conversion of Limited Partner OP Units to EQR Common~~ ~~Shares~~		~~(1,107,735~~	)
~~Limited Partner Units outstanding at September 30,~~		~~13,809,987~~
~~Limited Partner Units Ownership Interest in Operating~~ ~~Partnership~~		~~3.6~~	%

~~The Limited Partners of the Operating Partnership as of September 30, 2017~~ 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 restricted units. Subject to certain exceptions (including the “book-up” requirements of restricted units), Limited Partners may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Limited Partner Units (including redeemable interests) is allocated based on the number of Limited Partner Units in total in proportion to the number of Limited Partner Units in total plus the number of General Partner Units. Net income is allocated to the Limited Partner Units based on the weighted average ownership percentage during the period.

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

The Limited Partner Units are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Limited Partner Units are differentiated and referred to as “Redeemable Limited Partner Units”. Instruments that require settlement in registered shares cannot be classified in permanent equity as it is not always completely within an issuer's control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Limited Partner Units are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Limited Partner Units that are classified in permanent equity at ~~September 30, 2017 and~~ ~~December 31, 2016~~.

The carrying value of the Redeemable Limited Partner Units is allocated based on the number of Redeemable Limited Partner Units in proportion to the number of Limited Partner Units in total. Such percentage of the total carrying value of Limited Partner Units which is ascribed to the Redeemable Limited Partner Units is then adjusted to the greater of carrying value or fair market value as described above. As of September 30, 2017, the Redeemable Limited Partner Units have a redemption value of approximately $380.5 million, which represents the value of Common Shares that would be issued in exchange for the Redeemable Limited Partner Units.

~~Table of Contents~~

~~The following table presents the changes in the redemption value of the Redeemable Limited Partners for the nine months ended September 30, 2017 (amounts in thousands):~~

2017

Balance at January 1,

$
442,092

Change in market value

(29,551
)
Change in carrying value

(32,000
)
Balance at September 30,

$
380,541

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

~~The following table presents the Operating Partnership's issued and outstanding “Preference Units” as of September 30, 2017 and~~ ~~December 31, 2016~~:

Amounts in thousands

Annual

Call

Dividend Per

September 30,

December 31,

Date (1)

Unit (2)

2017

2016

Preference Units:

8.29% Series K Cumulative Redeemable Preference Units;
liquidation value $50 per unit; 745,600 units issued and
outstanding at September 30, 2017 and December 31, 2016

12/10/26

$
4.145

$
37,280

$
37,280

$
37,280

$
37,280

~~(1)~~

On or after the call date, redeemable preference units may be redeemed for cash at the option of the Operating Partnership, in whole or in part, at a redemption price equal to the liquidation price per unit, plus accrued and unpaid distributions, if any, in conjunction with the concurrent redemption of the corresponding Company Preferred Shares.

~~(2)~~

~~Dividends on~~ Shares/Preference Units are payable quarterly.

Other

~~In September 2009,~~EQR and ERPOP currently have an active universal shelf registration statement for the issuance of equity and debt securities that automatically became effective upon filing with the SEC in June 2019 and expires in June 2022. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis).

The Company ~~announced the establishment of~~has an At-The-Market (“ATM”) share offering program which ~~would allow~~allows EQR to sell Common Shares from time to time into the existing trading market at current market prices as well as through negotiated transactions. ~~Per~~In June 2019, the ~~terms~~Company extended the program maturity to June 2022. In connection with the extension, the Company may now also sell Common Shares under forward sale agreements. The use of ~~ERPOP's partnership~~a forward sale agreement ~~EQR contributes~~would allow the ~~net~~Company to lock in a price on the sale of Common Shares at the time the agreement is executed, but defer receiving the proceeds from ~~all equity offerings to~~ the ~~capital of ERPOP in exchange for additional OP Units (on~~sale until a ~~one-for-one Common Share per OP Unit basis). The program currently has a maturity of June 2019.~~later date. EQR has the authority to issue 13.0 million shares but has not issued any shares under this program since September 2012.

The Company may repurchase up to 13.0 million Common Shares under its share repurchase program. ~~No shares were repurchased during the nine months ended September~~NaN open market repurchases have occurred since 2008, and 0 repurchases of any kind have occurred since February 2014. As of June 30, ~~2017 and as a result,~~2020, EQR

Table of Contents

has remaining authorization to repurchase up to 13.0 million of its ~~shares under the repurchase program as of September 30, 2017.~~

~~Table of Contents~~

shares.

4.	Real Estate ~~and Lease Intangibles~~

The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019 (amounts in thousands):

September 30, 2017

December 31, 2016

Land

$
5,985,004

$
5,899,862

Depreciable property:

Buildings and improvements

17,601,348

16,913,430

Furniture, fixtures and equipment

1,500,963

1,346,300

In-Place lease intangibles

469,091

470,849

Projects under development:

Land

61,047

115,876

Construction-in-progress

232,017

521,292

Land held for development:

Land

63,439

84,440

Construction-in-progress

35,634

34,376

Investment in real estate

25,948,543

25,386,425

Accumulated depreciation

(5,849,110
)

(5,360,389
)
Investment in real estate, net

$
20,099,433

$
20,026,036

~~The following table summarizes the carrying amounts for the Company's above and below market ground and retail lease intangibles as of September 30, 2017 and December 31, 2016 (amounts in thousands):~~

Description

Balance Sheet Location

September 30, 2017

December 31, 2016

Assets

Ground lease intangibles – below market

Other Assets

$
191,918

$
178,251

Retail lease intangibles – above market

Other Assets

1,260

1,260

Lease intangible assets

193,178

179,511

Accumulated amortization

(21,305
)

(17,972
)
Lease intangible assets, net

$
171,873

$
161,539

Liabilities

Ground lease intangibles – above market

Other Liabilities

$
2,400

$
2,400

Retail lease intangibles – below market

Other Liabilities

5,270

5,270

Lease intangible liabilities

7,670

7,670

Accumulated amortization

(5,113
)

(4,509
)
Lease intangible liabilities, net

$
2,557

$
3,161

The following table provides a summary of the effect of the amortization for above and below market ground and retail lease intangibles on the Company’s accompanying consolidated statements of operations and comprehensive income for the nine months and quarters ended September 30, 2017 and 2016 respectively (amounts in thousands):

Nine Months Ended

Quarter Ended

September 30,

September 30,

Description

Income Statement Location

2017

2016

2017

2016

Ground lease intangible amortization

Property and Maintenance

$
(3,253
)

$
(3,241
)

$
(1,092
)

$
(1,080
)
Retail lease intangible amortization

Rental Income

524

675

80

222

Total amortization of above/below
market lease intangibles

$
(2,729
)

$
(2,566
)

$
(1,012
)

$
(858
)

~~Table of Contents~~

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

Remaining

2017

2018

2019

2020

2021

2022

Ground lease intangibles

$
(1,116
)

$
(4,463
)

$
(4,463
)

$
(4,463
)

$
(4,463
)

$
(4,463
)
Retail lease intangibles

16

71

71

71

71

27

Total

$
(1,100
)

$
(4,392
)

$
(4,392
)

$
(4,392
)

$
(4,392
)

$
(4,436
)

	June 30, 2020			December 31, 2019
Land	$	5,789,307		$	5,936,188
Depreciable property:
Buildings and improvements		18,574,877			18,904,686
Furniture, fixtures and equipment		1,936,039			1,916,458
In-Place lease intangibles		486,987			497,957
Projects under development:
Land		23,531			23,531
Construction-in-progress		251,294			158,099
Land held for development:
Land		64,460			64,460
Construction-in-progress		37,901			32,228
Investment in real estate		27,164,396			27,533,607
Accumulated depreciation		(7,537,713	)		(7,276,786	)
Investment in real estate, net	$	19,626,683		$	20,256,821

During the ~~nine~~six months ended ~~September~~June 30, ~~2017, the Company acquired the entire equity interest in the following from unaffiliated parties (purchase price in thousands):~~

Properties

Apartment Units

Purchase Price

Rental Properties – Consolidated (1)

4

947

$
468,050

Total

4

947

$
468,050

~~(1)~~

Purchase price includes an allocation of approximately $68.3 million to land, $386.2 million to depreciable property (inclusive of capitalized closing costs) and $13.7 million to ground lease intangible (included in other assets). For one of the property acquisitions, the Company owns the building and improvements and leases the land underlying the improvements under a long-term ground lease that expires in 2113. This property is consolidated and reflected as a real estate asset while the ground lease is accounted for as an operating lease.

~~During the nine months ended September 30, 2017~~,2020, the Company disposed of the following to unaffiliated parties (sales price in thousands):

	Properties		Apartment Units		Sales Price		Properties		Apartment Units		Sales Price
Rental Properties – Consolidated		4		1,024	$	319,700		5		1,552	$	754,361
Land Parcels (one)		—		—		33,450
Total		4		1,024	$	353,150		5		1,552	$	754,361

The Company recognized a net gain on sales of real estate properties of approximately ~~$141.8 million and a net gain on sales of land parcels of approximately $19.2~~$352.2 million on the above sales.

5.	Commitments to Acquire/Dispose of RealEstate

The Company has not entered into any ~~separate~~ agreements to acquire rental properties or land parcels as of ~~October 27, 2017.~~

the date of filing.

The Company has entered into a separate ~~agreement~~agreements to dispose of the following (sales price and net book value in thousands):

	Properties		Apartment Units		Sales Price		Properties		Apartment Units		Sales Price		Net Book Value
Land Parcels (one)		—		—	$	2,700
Land Parcels (two)								—		—	$	55,150	$	19,445
Total		—		—	$	2,700		—		—	$	55,150	$	19,445

The closing of ~~this~~ pending ~~transaction~~transactions is subject to certain conditions and ~~restrictions,~~restrictions; therefore, there can be no assurance that ~~this transaction~~the transactions will be consummated or that the final terms will not differ in material respects from ~~those~~any agreements summarized above. See Note 14 for discussion of the properties acquired or disposed of, if any, subsequent to June 30, 2020.

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6.	Investments in Partially OwnedEntities

TheCompanyhasco-investedinvariouspropertieswithunrelatedthirdpartieswhichareeitherconsolidatedoraccounted for under the equity method of accounting (unconsolidated). ~~The following tables and information summarize~~

Consolidated Variable Interest Entities (“VIEs”)

In accordance with accounting standards for consolidation of VIEs, the ~~Company’s investments in partially owned entities as of~~ ~~September 30, 2017~~ ~~(amounts in thousands except for property and apartment unit amounts):~~

Consolidated

Unconsolidated

(VIE)

(Non-VIE)

(VIE) (1)

Total

Total properties

17

2

—

2

Total apartment units

3,215

945

—

945

Balance sheet information at 9/30/2017 (at 100%):

ASSETS

Investment in real estate

$
648,839

$
236,630

$
172,995

$
409,625

Accumulated depreciation

(226,607
)

(40,840
)

(48,670
)

(89,510
)
Investment in real estate, net

422,232

195,790

124,325

320,115

Cash and cash equivalents

22,914

7,194

139

7,333

Investments in unconsolidated entities

45,035

—

—

—

Deposits – restricted

385

258

—

258

Other assets

26,246

450

105

555

Total assets

$
516,812

$
203,692

$
124,569

$
328,261

LIABILITIES AND EQUITY/CAPITAL

Mortgage notes payable, net (2)

$
302,037

$
145,424

$
—

$
145,424

Accounts payable & accrued expenses

2,975

2,644

150

2,794

Accrued interest payable

1,024

691

—

691

Other liabilities

453

308

27

335

Security deposits

2,037

488

—

488

Total liabilities

308,526

149,555

177

149,732

Noncontrolling Interests – Partially Owned
Properties/Partners' equity

6,175

54,336

84,682

139,018

Company equity/General and Limited Partners' Capital

202,111

(199
)

39,710

39,511

Total equity/capital

208,286

54,137

124,392

178,529

Total liabilities and equity/capital

$
516,812

$
203,692

$
124,569

$
328,261

Consolidated

Unconsolidated

(VIE)

(Non-VIE)

(VIE) (1)

Total

Operating information for the nine months ended 9/30/2017
(at 100%):

Operating revenue

$
69,917

$
20,050

$
3,805

$
23,855

Operating expenses

17,056

6,746

1,573

8,319

Net operating income

52,861

13,304

2,232

15,536

Property management

2,463

584

56

640

General and administrative/other

239

1

127

128

Depreciation

15,569

7,960

4,126

12,086

Operating income (loss)

34,590

4,759

(2,077
)

2,682

Interest and other income

45

—

—

—

Interest:

Expense incurred, net

(9,977
)

(6,217
)

—

(6,217
)
Amortization of deferred financing costs

(203
)

(1
)

—

(1
)
Income (loss) before income and other taxes and (loss)
from investments in unconsolidated entities

24,455

(1,459
)

(2,077
)

(3,536
)
Income and other tax (expense) benefit

(34
)

(13
)

—

(13
)
(Loss) from investments in unconsolidated entities

(1,155
)

—

—

—

Net income (loss)

$
23,266

$
(1,472
)

$
(2,077
)

$
(3,549
)

~~(1)~~

Includes the Company’s unconsolidated interest in an entity that owns the land underlying our Wisconsin Place apartment property and owns and operates the parking facility. This entity is excluded from the property and apartment unit count.

~~(2)~~

~~All debt is non-recourse to the Company.~~

~~Table of Contents~~

~~Note: The above tables exclude EQR's ownership interest in~~Company consolidates ERPOP ~~private equity fund investments, and the Company's interests in unconsolidated joint ventures~~ ~~established in connection with the acquisition of certain real estate related assets from Archstone Enterprise LP ("Archstone").~~ These ventures owned certain Archstone assets and succeeded to certain residual Archstone liabilities/litigation, as well as responsibility for tax protection arrangements and third-party preferred interests in former Archstone subsidiaries. The preferred interests had an aggregate liquidation value of $37.4 million at September 30, 2017. The ventures are owned 60% by the Company. See below for further discussion.

~~Operating Properties~~

~~The Company has various equity interests in certain limited partnerships owning 16 properties containing 2,783 apartment units.~~ Each partnership owns a multifamily property. The Company is the general partner of these limited partnerships and is responsible for managing the operations and affairs of the partnerships as well as making all decisions regarding the businesses of the partnerships. The limited partners are not able to exercise substantive kick-out or participating rights. As a result, the partnerships qualify as VIEs. The Company has a controllingon EQR’s financial interest in the VIEs and, thus, is the VIEs' primary beneficiary. The Company has both the power to direct the activities of the VIEs that most significantly impact the VIEs' economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. As a result, the partnerships are required to be consolidated on the Company's financial statements.

The Company has a 75% equity interest in the Wisconsin Place joint venture. The project contains a mixed-use site located in Chevy Chase, Maryland consisting of residential, retail, office and accessory uses, including underground parking facilities. The joint venture owns the 432 unit residential component, but has no ownership interest in the retail and office components. At September 30, 2017, the residential component had a net book value of $167.0 million. The Company is the managing member and is responsible for conducting all administrative day-to-day matters and affairs of the joint venture as well as implementing all decisions with respect to the joint venture. The limited partner is not able to exercise substantive kick-out or participating rights. As a result, the joint venture qualifies as a VIE. The Company has a controlling financial interest in the VIE and, thus, is the VIE's primary beneficiary. The Company has both the power to direct the activities of the VIE that most significantly impact the VIE's economic performance as well as the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the entity that owns the residential component is required to be consolidated on the Company's financial statements.

The Wisconsin Place joint venture also retains an unconsolidated interest in an entity that owns the land underlying the entire project and owns and operates the parking facility. At September 30, 2017, the basis of this investment was $45.0 million. The joint venture, as a limited partner, does not have substantive kick-out or participating rights in the entity. As a result, the entity qualifies as a VIE. The joint venture does not have a controlling financial interest in the VIE and is not the VIE's primary beneficiary. The joint venture does not have the power to direct the activities of the VIE that most significantly impact the VIE's economic performance or the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the entity that owns the land and owns and operates the parking facility is unconsolidated and recorded using the equity method of accounting.

The Company has a 20% equity interest in each of the Nexus Sawgrass and Domain joint ventures. The Nexus Sawgrass joint venture owns a 501 unit apartment property located in Sunrise, Florida and the Company's interest had a basis of $4.4 million at September 30, 2017. The Domain joint venture owns a 444 unit apartment property located in San Jose, California and the Company's interest had a basis of $8.4 million at September 30, 2017. Both properties were funded with long-term, non-recourse secured loans from the partner. The mortgage loan on Nexus Sawgrass has a current unconsolidated outstanding balance of $48.6 million, bears interest at 5.60% and matures January 1, 2021. The mortgage loan on Domain has a current unconsolidated outstanding balance of $96.8 million, bears interest at 5.75% and matures January 1, 2022. While the Company is the managing member of both of the joint ventures, the joint venture partner has significant participating rights and has active involvement in and oversight of the operations. As a result, the entities do not qualify as VIEs. The Company alone does not have the power to direct the activities of the entities that most significantly impact the entities' economic performance and as a result, the entities are unconsolidated and recorded using the equity method of accounting.

~~Other~~

As the sole general partner of ERPOP, EQR has exclusive control of ~~ERPOP's~~ERPOP’s day-to-day management. The limited partners are not able to exercise substantive kick-out or participating rights. As a result, ERPOP qualifies as a VIE. EQR has a controlling financial interest in ERPOP and, thus, is ~~ERPOP's~~ERPOP’s primary beneficiary. EQR has the power to direct the activities of ERPOP that most significantly impact ~~ERPOP's~~ERPOP’s economic performance as well as the obligation to absorb losses or the right to receive benefits from ERPOP that could potentially be significant to ERPOP. ~~As a result, ERPOP is required to be consolidated on EQR's financial statements.~~

The Company ~~agreed to a maximum investment of $5.0 million each for two private~~has various equity ~~funds, both of which primarily focus on real estate technology investments.~~ interests in certain joint ventures owning 16 properties containing 3,399 apartment units. The Company ~~accounts~~is the general partner or managing member of these joint ventures and is responsible for ~~both investments under~~managing the ~~equity method of accounting. As of~~

~~Table of Contents~~

~~September 30, 2017, the Company’s interest in these investments had a combined basis of $1.6 million.~~

~~On February 27, 2013, in connection with the acquisition of Archstone, subsidiaries~~operations and affairs of the ~~Company entered into three limited liability company agreements (collectively,~~joint ventures as well as making all decisions regarding the “Residual JV”). The Residual JV owned certain Archstone assets and succeeded to certain residual Archstone liabilities/litigation. The Residual JV is owned 60% by the Company and 40% by its joint venture partner. The Company's basis at September 30, 2017 was a net obligation of $0.4 million. The Residual JV is managed by a Management Committee consisting of two members from eachbusinesses of the ~~Company and its~~ joint ~~venture partner. Both~~ventures. The limited partners ~~have equal participation in the Management Committee and all significant~~or non-managing members are not able to exercise substantive kick-out or participating ~~rights are shared by both partners.~~rights. As a result, the ~~Residual JV does not~~joint ventures qualify as ~~a VIE.~~VIEs. The Company ~~alone does not have~~has a controlling financial interest in the VIEs and, thus, is the VIEs’ primary beneficiary. The Company has both the power to direct the activities of the ~~Residual JV~~VIEs that most significantly impact the ~~Residual JV's~~VIEs’ economic performance ~~and~~ as well as the obligation to absorb losses or the right to receive benefits from the VIEs that could potentially be significant to the VIEs. As a result, the ~~Residual JV is~~joint ventures are required to be consolidated on the Company’s financial statements.

The Company also has entered into two separate consolidated joint ventures which each own land parcels that are being/will be developed into multifamily rental properties. These joint ventures have been deemed to be VIEs and are consolidated due to the Company being the primary beneficiary.

The consolidated assets and liabilities related to the VIEs discussed above were approximately $753.7 million and $236.6 million, respectively, at June 30, 2020 and approximately $754.7 million and $323.1 million, respectively, at December 31, 2019.

Investments in Unconsolidated Entities

The following table and information summarizes the Company’s investments in unconsolidated ~~and recorded using~~entities, which are accounted for under the equity method of ~~accounting. The Residual JV has sold all~~accounting as the requirements for consolidation are not met, as of ~~the real estate assets that were acquired as part of the acquisition of Archstone, including all of the German assets,~~June 30, 2020 and isDecember 31, 2019 (amounts in ~~the process of winding down all remaining activities.~~thousands except for ownership percentage):

On February 27, 2013, in connection with the acquisition of Archstone, a subsidiary of the Company entered into a limited liability company agreement (the “Legacy JV”), through which they assumed obligations of Archstone in the form of preferred interests, some of which are governed by tax protection arrangements. At September 30, 2017, the remaining preferred interests had an aggregate liquidation value of $37.4 million, our share of which is included in other liabilities in the accompanying consolidated balance sheets. Obligations of the Legacy JV are borne 60% by the Company and 40% by its joint venture partner. The Legacy JV is managed by a Management Committee consisting of two members from each of the Company and its joint venture partner. Both partners have equal participation in the Management Committee and all significant participating rights are shared by both partners. As a result, the Legacy JV does not qualify as a VIE. The Company alone does not have the power to direct the activities of the Legacy JV that most significantly impact the Legacy JV's economic performance and as a result, the Legacy JV is unconsolidated and recorded using the equity method of accounting.

	June 30, 2020		December 31, 2019		Ownership Percentage
Investments in Unconsolidated Entities:
Operating Property (VIE) (1)	$	39,385	$	40,361	33.3%
Real Estate Technology/Other		15,925		11,877	Varies
Investments in Unconsolidated Entities	$	55,310	$	52,238

7.(1)

Represents an unconsolidated interest in an entity that owns the land underlying one of the consolidated joint venture properties noted above and owns and operates a related parking facility. The joint venture, as a limited partner, does not have substantive kick-out or participating rights in the entity. As a result, the entity qualifies as a VIE. The joint venture does not have a controlling financial interest in the VIE and is not the VIE’s primary beneficiary. The joint venture does not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance or the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As a result, the entity that owns the land and owns and operates the parking facility is unconsolidated and recorded using the equity method of accounting.

Table of Contents~~Deposits –~~

7.	Restricted ~~and Escrow~~ Deposits ~~– Mortgage~~

The following table presents the Company’s restricted deposits as of ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019 (amounts in thousands):

	September 30, 2017		December 31, 2016		June 30, 2020		December 31, 2019
Mortgage escrow deposits:
Replacement reserves					$	9,233	$	8,543
Mortgage principal reserves/sinking funds						11,895		9,689
Mortgage escrow deposits						21,128		18,232
Restricted cash:
Tax-deferred (1031) exchange proceeds	$	—	$	38,847		—		14,232
Restricted deposits on real estate investments		61		733		747		658
Resident security and utility deposits		35,667		37,007		34,869		37,140
Other		911		359		1,373		984
Totals	$	36,639	$	76,946
Restricted cash						36,989		53,014
Restricted deposits					$	58,117	$	71,246

Leases

Lessor Accounting

The Company is the lessor for its residential and non-residential leases and these leases will continue to be accounted for as operating leases under the standard as described in Note 2.

For the six months ended June 30, 2020, approximately 97.6% of the Company’s total lease revenue is generated from residential apartment leases that are generally twelve months or less in length. The residential apartment leases may include lease income related to such items as utility recoveries, parking, storage and pet rent that the Company treats as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore the Company subsequently recognizes lease income over the lease term on a straight-line basis. Residential leases are renewable upon consent of both parties on an annual or monthly basis.

For the six months ended June 30, 2020, approximately 2.4% of the Company’s total lease revenue is generated by non-residential leases that are generally for terms ranging between five to ten years. The non-residential leases generally consist of ground floor retail spaces and master-leased parking garages that serve as additional amenities for our residents. The non-residential leases may include lease income related to such items as utility recoveries, parking rent and storage rent that the Company treats as a single lease component because the amenities cannot be leased on their own and the timing and pattern of revenue recognition are the same. The collection of lease payments at lease commencement is probable and therefore the Company subsequently recognizes lease income over the lease term on a straight-line basis. Non-residential leases are renewable with market-based renewal options.

The following table presents the ~~Company’s escrow deposits~~lease income types relating to lease payments for ~~mortgages as of September~~residential and non-residential leases along with the total other rental income for the six months and quarter ended June 30, ~~2017 and December 31, 2016~~2020 (amounts in thousands):

September 30, 2017

December 31, 2016

Real estate taxes and insurance

$
556

$
2,003

Replacement reserves

7,969

3,428

Mortgage principal reserves/sinking funds

1,595

58,652

Other

852

852

Totals

$
10,972

$
64,935

	Six Months Ended June 30, 2020						Quarter Ended June 30, 2020
Income Type	Residential Leases		Non-Residential Leases		Total		Residential Leases		Non-Residential Leases		Total
Residential and non-residential rent	$	1,207,106	$	30,221	$	1,237,327	$	594,626	$	12,127	$	606,753
Utility recoveries (RUBS income) (1)		35,232		375		35,607		17,814		147		17,961
Parking rent		19,460		223		19,683		9,627		126		9,753
Storage rent		1,913		40		1,953		951		21		972
Pet rent		5,740		—		5,740		2,839		—		2,839
Total lease revenue	$	1,269,451	$	30,859		1,300,310	$	625,857	$	12,421		638,278
Total other rental income (2)						35,527						15,254
Rental income					$	1,335,837					$	653,532

(1)	RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.

(2)	Other rental income is accounted for under the revenue recognition standard.

Table of Contents

~~During~~The following table presents the ~~nine~~lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the six months and quarter ended June 30, 2019 (amounts in thousands):

	Six Months Ended June 30, 2019						Quarter Ended June 30, 2019
Income Type	Residential Leases		Non-Residential Leases		Total		Residential Leases		Non-Residential Leases			Total
Residential and non-residential rent	$	1,190,729	$	36,163	$	1,226,892	$	598,209	$	17,693		$	615,902
Utility recoveries (RUBS income) (1)		33,303		412		33,715		16,858		209			17,067
Parking rent		18,469		159		18,628		9,332		87			9,419
Storage rent		1,856		32		1,888		937		(12	)		925
Pet rent		5,798		—		5,798		2,911		—			2,911
Total lease revenue	$	1,250,155	$	36,766		1,286,921	$	628,247	$	17,977			646,224
Total other rental income (2)						44,755							23,150
Rental income					$	1,331,676						$	669,374

(1)	RUBS income primarily consists of variable payments representing the recovery of utility costs from residents.

(2)	Other rental income is accounted for under the revenue recognition standard.

Debt

EQRdoesnothaveanyindebtednessasalldebtisincurredbytheOperatingPartnership. Weighted average interest rates noted below for the six months ended ~~September~~June 30, ~~2017,~~2020 include the ~~Company received approximately $60.5 million from~~effect of any derivative instruments and amortization of premiums/discounts/OCI (other comprehensive income) on debt and derivatives.

Mortgage Notes Payable

The following table summarizes the ~~return~~Company’s mortgage notes payable activity for the six months ended June 30, 2020 (amounts in thousands):

	Mortgage notes payable, net as of December 31, 2019		Proceeds			Lump sum payoffs			Scheduled principal repayments			Amortization of premiums/ discounts		Amortization of deferred financing costs, net (1)			Mortgage notes payable, net as of June 30, 2020
Fixed Rate Debt:
Secured – Conventional	$	1,574,699	$	495,000	(2)	$	(91,500	)	$	(3,873	)	$	571	$	(2,035	)	$	1,972,862
Floating Rate Debt:
Secured – Conventional		7,050		145			—			—			—		120			7,315
Secured – Tax Exempt		359,861		—			—			—			620		99			360,580
Floating Rate Debt		366,911		145			—			—			620		219			367,895
Total	$	1,941,610	$	495,145		$	(91,500	)	$	(3,873	)	$	1,191	$	(1,816	)	$	2,340,757

(1)	Represents amortization of deferred financing costs, net of debt financing costs.

(2)	Obtained a 2.60% fixed rate mortgage loan pool maturing on May 1, 2030.

The following table summarizes the Company’s debt extinguishment costs on mortgages recorded as additional interest expense during the six months ended June 30, 2020 (amounts in thousands):

Description		Amount
Write-offs of unamortized deferred financing costs		$	32

The following table summarizes certain interest rate and maturity date information as of ~~various mortgage principal reserves/sinking funds on certain tax-exempt mortgage bond deals.~~and for the six months ended June 30, 2020:

8.	~~Debt~~	June 30, 2020
Interest Rate Ranges		0.07% - 5.29%
Weighted Average Interest Rate		3.51%
Maturity Date Ranges		2020-2061

EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. EQR guarantees the Operating Partnership’s revolving credit facility up to the maximum amount and for the full term of the facility.

Table of Contents

~~Table of Contents~~

~~Mortgage Notes Payable~~

As of ~~September~~June 30, ~~2017,~~2020, the Company had ~~outstanding mortgage debt of approximately $3.6 billion.~~

~~During the nine months ended September 30, 2017, the Company:~~

~~Repaid $300.0 million of 5.987% mortgage debt held in a Fannie Mae loan pool maturing in 2019 and incurred a prepayment penalty of approximately $10.8 million;~~

~~Repaid $193.4 million of conventional fixed-rate mortgage loans maturing in 2017 through 2048 and incurred a prepayment penalty of approximately $1.5 million; and~~

~~Repaid $8.8 million of scheduled principal repayments on various mortgage debt.~~

The Company recorded $0.3 million of write-offs of unamortized deferred financing costs during the nine months ended September 30, 2017 as additional interest expense related to debt extinguishment of mortgages. The Company also recorded $0.7 million of write-offs of net unamortized premiums during the nine months ended September 30, 2017 as a reduction of interest expense related to debt extinguishment of mortgages.

~~As of September 30, 2017, the Company had $598.7~~$281.7 million of secured debt (primarily tax-exempt bonds) subject to third party credit enhancement.

~~As of~~ ~~September 30, 2017~~, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through May 28, 2061. At September 30, 2017, the interest rate range on the Company’s mortgage debt was 0.10% to 6.90%. During the nine months ended September 30, 2017, the weighted average interest rate on the Company’s mortgage debt was 4.33%.

Notes

~~As of September 30, 2017, the Company had outstanding unsecured notes of approximately $5.1 billion.~~

~~During the nine months ended September 30, 2017, the Company:~~

~~Repaid $394.1 million of 5.75% unsecured notes at maturity;~~

Issued $400.0 million of ten-year 3.25% fixed rate public notes, receiving net proceeds of approximately $399.3 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of 3.32% after termination of four forward starting swaps in conjunction with the issuance (see Note 9 for further discussion); and

Issued $300.0 million of thirty-year 4.00% fixed rate public notes, receiving net proceeds of approximately $293.2 million before underwriting fees and other expenses, at an all-in effective interest rate of 4.11%.

~~As of~~ ~~September 30, 2017, scheduled maturities for the Company’s outstanding notes were at various dates through August 1, 2047. At September 30, 2017, the interest rate range on~~The following table summarizes the Company’s notes ~~was 2.375% to 7.57%. During~~activity for the ~~nine~~six months ended ~~September~~June 30, ~~2017, the weighted average~~2020 (amounts in thousands):

Notes, net as of

December 31, 2019

Proceeds

Lump sum

payoffs

Amortization

of premiums/

discounts

Amortization

of deferred

financing

costs, net (1)

Notes, net as of

June 30, 2020

Fixed Rate Debt:

Unsecured – Public

6,077,513

—

1,362

2,227

6,081,102

(1)	Represents amortization of deferred financing costs, net of debt financing costs.

The following table summarizes certain interest rate onand maturity date information as of and for the six months ended June 30, 2020:

		June 30, 2020
Interest Rate Ranges		2.50% - 7.57%
Weighted Average Interest Rate		4.06%
Maturity Date Ranges		2021-2047

The Company’s unsecured public notes contain certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was ~~4.41%.~~in compliance with its unsecured public debt covenants for the six months ended June 30, 2020.

Line of Credit and Commercial Paper

On November ~~3, 2016,~~1, 2019, the Company replaced its existing ~~$2.5~~$2.0 billion facility with a ~~$2.0~~$2.5 billion unsecured revolving credit facility maturing ~~January 10, 2022.~~November 1, 2024. The Company has the ability to increase available borrowings by an additional $750.0 million by adding ~~additional banks~~lenders to the facility, or obtaining the agreement of existing ~~banks~~lenders to increase their ~~commitments.~~commitments or incurring one or more term loans. The interest rate on advances under the facility will generally be LIBOR plus a spread (currently ~~0.825%~~0.775%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently ~~12.5 basis points)~~0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit ~~rating of~~rating. The weighted average interest rate on the ~~Company’s long term debt.~~revolving credit facility was 1.47% for the six months ended June 30, 2020.

~~Table of Contents~~

On~~February~~2,~~2015,theCompanyenteredinto~~an~~unsecuredcommercialpapernoteprogram~~in~~theUnitedStates.~~ The Company ~~may borrow up to a~~has an unsecured commercial paper note program in the United States. On November 4, 2019, the Company increased the maximum ofaggregate amount outstanding for the commercial paper program from $500.0 million ~~under this program subject~~ to ~~market conditions.~~$1.0 billion. The notes will be soldundercustomarytermsintheUnitedStatescommercialpapernotemarket subject to market conditions andwillrankparipassuwithallofthe~~Company's~~ Company’s otherunsecuredseniorindebtedness. As~~of September 30, 2017, there was a balance of$229.8 million outstanding on thecommercialpaperprogram ($230.0 million in principal outstanding net of an unamortized discount of $0.2 million).~~ Thenotesbearinterest at various floating rates with a weighted average interest rate of ~~1.37%~~1.81% for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and a~~2020. The weighted average ~~maturity~~amount outstanding for the six months ended June 30, 2020 was approximately $522.7 million.

The Company limits its utilization of ~~18 days as of~~ ~~September 30, 2017~~.

~~As of~~ ~~September 30, 2017, the amount available on~~ the revolving credit facility ~~was $1.76 billion (net of $11.1 million which was restricted/dedicated~~in order to maintain liquidity to support ~~letters of credit and net of $230.0 million in principal outstanding on the~~its $1.0 billion commercial paper ~~program).~~

~~Other~~

~~On April 24, 2017,~~program along with certain other obligations. The following table presents the ~~Company executed a new letter of credit facility with a third party financial institution which is not backed by or collateralized by borrowings~~availability on the Company’s unsecured revolving credit ~~facility. As~~facility as of ~~September~~June 30, ~~2017, there was $9.0 million~~2020 (amounts in ~~letters of credit outstanding on this facility.~~thousands):

	June 30, 2020
Unsecured revolving credit facility commitment	$	2,500,000
Commercial paper balance outstanding		—
Unsecured revolving credit facility balance outstanding		—
Other restricted amounts		(100,949	)
Unsecured revolving credit facility availability	$	2,399,051

Table of Contents

9.10.

Derivative and Other Fair ValueInstruments

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

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

Athree-levelvaluationhierarchyexistsfordisclosureoffairvaluemeasurements. Thevaluationhierarchyisbasedupon thetransparencyofinputstothevaluationofanassetorliabilityasofthemeasurementdate. Afinancialinstrument’scategorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined asfollows:

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

•

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

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

•

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

•

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

The Company’s derivative positions are valued using models developed by the respective counterparty as well as models ~~developed~~applied internally by the Company that use as their ~~basis~~inputs readily observable market parameters (such as forward yield curves and credit default swap data). Employee holdings other than Common Shares within the supplemental executive retirement plan (the “SERP”) are valued using quoted market prices for identical assets and are included in other assets and other liabilities on the consolidated balance sheets. Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners are valued using the quoted market price of Common Shares. The fair values disclosed for mortgage notes payable and unsecured debt (including its commercial ~~paper)~~paper and line of credit, if applicable) were calculated using indicative rates provided by lenders of similar loans in the case of mortgage notes payable and the private unsecured debt (including its commercial ~~paper)~~paper and line of credit, if applicable) and quoted market prices for each underlying issuance in the case of the public unsecured notes.

~~Table of Contents~~

The fair values of the Company’s financial instruments (other than mortgage notes payable, unsecured notes, commercial paper, line of credit and derivative instruments), including cash and cash equivalents and other financial instruments, approximate their carrying or contract value. Thefollowingtableprovidesasummaryofthe carrying andfairvaluesforthe Company’s mortgage notes payable and unsecured debt (including its commercial paper and line of credit, if applicable) at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively (amounts inthousands):

September 30, 2017

December 31, 2016

Estimated Fair Value (Level 2)

Carrying Value

Estimated Fair Value (Level 2)

Carrying Value

Mortgage notes payable, net

$
3,630,477

$
3,619,180

$
4,161,001

$
4,119,181

Unsecured debt, net

5,640,095

5,373,092

5,030,330

4,868,077

Total debt, net

$
9,270,572

$
8,992,272

$
9,191,331

$
8,987,258

~~The following table summarizes the Company’s consolidated derivative instruments at~~ ~~September 30, 2017~~ ~~(dollar amounts are in thousands):~~

Fair Value
Hedges (1)

Forward
Starting
Swaps (2)

Current Notional Balance
$
450,000

$
250,000

Lowest Interest Rate

2.375
%

2.1478
%
Highest Interest Rate

2.375
%

2.2895
%
Earliest Maturity Date

2019

2028

Latest Maturity Date

2019

2029

	June 30, 2020				December 31, 2019
	Carrying Value		Estimated Fair Value (Level 2)		Carrying Value		Estimated Fair Value (Level 2)
Mortgage notes payable, net	$	2,340,757	$	2,370,036	$	1,941,610	$	1,930,710
Unsecured debt, net		6,081,102		7,012,755		7,095,346		7,677,289
Total debt, net	$	8,421,859	$	9,382,791	$	9,036,956	$	9,607,999

~~(1)~~

~~Fair Value Hedges – Converts outstanding fixed rate unsecured notes ($450.0 million 2.375% notes due July 1, 2019) to a floating interest rate of 90-Day LIBOR plus 0.61%.~~

~~(2)~~

~~Forward Starting Swaps – Designed to partially fix interest rates in advance~~Table of planned future debt issuances. Of the $250.0 million notional balance, $200.0 million of these swaps have mandatory counterparty terminations in 2019 and are targeted for 2018 debt issuances while $50.0 million of these swaps have mandatory counterparty terminations in 2020 and are targeted for 2019 debt issuances.Contents

Thefollowingtablesprovideasummaryofthefairvaluemeasurementsforeachmajorcategoryofassetsandliabilities measured at fair value on a recurring basis and the location within the accompanying consolidated balance sheets at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively (amounts inthousands):

				Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
Description	Balance Sheet Location	9/30/2017		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance Sheet Location	6/30/2020		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Fair Value Hedges	Other Assets	$	444	$	—	$	444	$	—
Forward Starting Swaps	Other Assets		3,921		—		3,921		—
Supplemental Executive Retirement Plan	Other Assets		136,774		136,774		—		—	Other Assets	$	139,649	$	139,649	$	—	$	—
Total		$	141,139	$	136,774	$	4,365	$	—

Liabilities
Supplemental Executive Retirement Plan	Other Liabilities	$	136,774	$	136,774	$	—	$	—	Other Liabilities	$	139,649	$	139,649	$	—	$	—
Total		$	136,774	$	136,774	$	—	$	—

Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited Partners	Mezzanine	$	380,541	$	—	$	380,541	$	—	Mezzanine	$	336,695	$	—	$	336,695	$	—

~~Table of Contents~~

				Fair Value Measurements at Reporting Date Using									Fair Value Measurements at Reporting Date Using
Description	Balance Sheet Location	12/31/2016		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Balance Sheet Location	12/31/2019		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Fair Value Hedges	Other Assets	$	1,857	$	—	$	1,857	$	—
Supplemental Executive Retirement Plan	Other Assets		124,420		124,420		—		—	Other Assets	$	151,889	$	151,889	$	—	$	—
Total		$	126,277	$	124,420	$	1,857	$	—

Liabilities
Supplemental Executive Retirement Plan	Other Liabilities	$	124,420	$	124,420	$	—	$	—	Other Liabilities	$	151,889	$	151,889	$	—	$	—
Total		$	124,420	$	124,420	$	—	$	—

Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited Partners	Mezzanine	$	442,092	$	—	$	442,092	$	—	Mezzanine	$	463,400	$	—	$	463,400	$	—

Thefollowingtablesprovideasummaryoftheeffectoffairvaluehedges ontheCompany’saccompanyingconsolidated statements of operations and comprehensive income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively (amounts in thousands):

September 30, 2017
Type of Fair Value Hedge

Location of
Gain/(Loss)
Recognized in
Income on
Derivative

Amount of
Gain/(Loss)
Recognized in
Income on
Derivative

Hedged Item

Income Statement
Location of
Hedged Item
Gain/(Loss)

Amount of
Gain/(Loss)
Recognized in
Income
on Hedged Item

Derivatives designated as hedging instruments:

Interest Rate Contracts:

Interest Rate Swaps

Interest expense

$
(1,413
)

Fixed rate debt

Interest expense

$
1,413

Total

$
(1,413
)

$
1,413

June 30, 2020

Type of Fair Value Hedge

Location of

Gain/(Loss)

Recognized in

Income on

Derivative

Amount of

Gain/(Loss)

Recognized in

Income on

Derivative

Hedged Item

Income Statement

Location of

Hedged Item

Gain/(Loss)

Amount of

Gain/(Loss)

Recognized in

Income

on Hedged Item

Derivatives designated as hedging instruments:

Interest Rate Contracts:

Interest Rate Swaps

N/A

—

N/A

—

Total

—

September 30, 2016 Type of Fair Value Hedge	Location of Gain/(Loss) Recognized in Income on Derivative	Amount of Gain/(Loss) Recognized in Income on Derivative		Hedged Item	Income Statement Location of Hedged Item Gain/(Loss)	Amount of Gain/(Loss) Recognized in Income on Hedged Item
June 30, 2019 Type of Fair Value Hedge									Location of Gain/(Loss) Recognized in Income on Derivative	Amount of Gain/(Loss) Recognized in Income on Derivative		Hedged Item	Income Statement Location of Hedged Item Gain/(Loss)	Amount of Gain/(Loss) Recognized in Income on Hedged Item
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Interest Rate Swaps	Interest expense	$	4,563	Fixed rate debt	Interest expense	$	(4,563	)	Interest expense	$	2,253	Fixed rate debt	Interest expense	$	(2,253	)
Total		$	4,563			$	(4,563	)		$	2,253			$	(2,253	)

Table of Contents

~~Table~~ Thefollowingtablesprovideasummaryof ~~Contents~~

~~The following tables provide a summary~~ theeffectofcashflowhedgesonthe ~~effect of cash flow hedges on the~~ Company’saccompanyingconsolidated statements of operations and comprehensive income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively (amounts in thousands):

	Effective Portion						Ineffective Portion			Effective Portion
September 30, 2017 Type of Cash Flow Hedge	Amount of Gain/(Loss) Recognized in OCI on Derivative		Location of Gain/(Loss) Reclassified from Accumulated OCI into Income	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income			Location of Gain/(Loss) Recognized in Income on Derivative	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income
June 30, 2020 Type of Cash Flow Hedge										Amount of Gain/(Loss) Recognized in OCI on Derivative			Location of Gain/(Loss) Reclassified from Accumulated OCI into Income	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps	$	5,216	Interest expense	$	(14,019	)	N/A	$	—	$	(1,190	)	Interest expense	$	(11,398	)
Total	$	5,216		$	(14,019	)		$	—	$	(1,190	)		$	(11,398	)

	Effective Portion							Ineffective Portion			Effective Portion
September 30, 2016 Type of Cash Flow Hedge	Amount of Gain/(Loss) Recognized in OCI on Derivative			Location of Gain/(Loss) Reclassified from Accumulated OCI into Income	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income			Location of Gain/(Loss) Recognized in Income on Derivative	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income
June 30, 2019 Type of Cash Flow Hedge											Amount of Gain/(Loss) Recognized in OCI on Derivative			Location of Gain/(Loss) Reclassified from Accumulated OCI into Income	Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps	$	(4,240	)	Interest expense	$	(37,262	)	N/A	$	—	$	(33,765	)	Interest expense	$	(8,902	)
Total	$	(4,240	)		$	(37,262	)		$	—	$	(33,765	)		$	(8,902	)

Asof ~~September~~ June 30, ~~2017~~ 2020and December 31, ~~2016,~~ 2019,therewereapproximately ~~$94.7~~ $67.4millionand ~~$113.9~~ $77.6millionindeferred losses, net, included in accumulated other comprehensive income (loss), respectively, related to derivative ~~instruments. Based on the estimated fair values~~instruments, of ~~the net derivative instruments at~~ ~~September 30, 2017, the Company may recognize~~which an estimated ~~$21.4~~$25.7 million ~~of accumulated other comprehensive (loss)~~may be recognized as additional interest expense during the twelve months ending ~~September~~June 30, ~~2018.~~2021.

In ~~August 2017,~~April 2020, the Company ~~received $1.3~~paid approximately $1.2 million to settle ~~four~~2 forward starting ~~ten-year~~ swaps in conjunction with the issuance of ~~$400.0~~$495.0 million of ten-year ~~fixed rate public~~ secured conventional mortgage notes. The entire ~~$1.3~~$1.2 million was initially deferred as a component of accumulated other comprehensive income (loss) and will be recognized as ~~a decrease~~an increase to interest expense over the ~~ten-year term~~first five years of the mortgage notes.

Table of Contents

~~10.~~11.

~~Earning~~Earnings Per Share and Earnings PerUnit

Equity Residential

Thefollowingtablessetforththecomputationofnetincomepershare–basicandnetincomepershare–dilutedforthe Company (amounts in thousands except per shareamounts):

	Nine Months Ended September 30,						Quarter Ended September 30,						Six Months Ended June 30,						Quarter Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Numerator for net income per share – basic:
Income from continuing operations	$	498,297		$	4,177,599		$	144,196		$	217,246
Allocation to Noncontrolling Interests – Operating Partnership, net		(17,931	)		(160,437	)		(5,166	)		(8,344	)
Net (income) attributable to Noncontrolling Interests – Partially Owned Properties		(2,354	)		(2,368	)		(801	)		(823	)
Net income													$	604,152		$	430,556		$	271,481		$	321,299
Allocation to Noncontrolling Interests – Operating Partnership														(21,248	)		(15,429	)		(9,713	)		(11,510	)
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties														(13,410	)		(1,620	)		(880	)		(821	)
Preferred distributions		(2,318	)		(2,318	)		(772	)		(773	)		(1,545	)		(1,545	)		(772	)		(772	)
Income from continuing operations available to Common Shares, net of Noncontrolling Interests		475,694			4,012,476			137,457			207,306
Discontinued operations, net of Noncontrolling Interests		—			119			—			237
Numerator for net income per share – basic	$	475,694		$	4,012,595		$	137,457		$	207,543		$	567,949		$	411,962		$	260,116		$	308,196
Numerator for net income per share – diluted:
Income from continuing operations	$	498,297		$	4,177,599		$	144,196		$	217,246
Net (income) attributable to Noncontrolling Interests – Partially Owned Properties		(2,354	)		(2,368	)		(801	)		(823	)
Net income													$	604,152		$	430,556		$	271,481		$	321,299
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties														(13,410	)		(1,620	)		(880	)		(821	)
Preferred distributions		(2,318	)		(2,318	)		(772	)		(773	)		(1,545	)		(1,545	)		(772	)		(772	)
Income from continuing operations available to Common Shares		493,625			4,172,913			142,623			215,650
Discontinued operations, net		—			124			—			246
Numerator for net income per share – diluted	$	493,625		$	4,173,037		$	142,623		$	215,896		$	589,197		$	427,391		$	269,829		$	319,706
Denominator for net income per share – basic and diluted:
Denominator for net income per share – basic		366,809			364,917			366,996			365,109			371,689			369,952			371,795			370,342
Effect of dilutive securities:
OP Units		12,907			13,828			12,910			13,899			13,013			12,902			13,023			12,885
Long-term compensation shares/units		2,924			3,539			3,039			3,365			1,570			2,790			1,095			2,880
Denominator for net income per share – diluted		382,640			382,284			382,945			382,373			386,272			385,644			385,913			386,107
Net income per share – basic	$	1.30		$	11.00		$	0.37		$	0.57		$	1.53		$	1.11		$	0.70		$	0.83
Net income per share – diluted	$	1.29		$	10.92		$	0.37		$	0.56		$	1.53		$	1.11		$	0.70		$	0.83
Net income per share – basic:
Income from continuing operations available to Common Shares, net of Noncontrolling Interests	$	1.30		$	11.00		$	0.37		$	0.57
Discontinued operations, net of Noncontrolling Interests		—			—			—			—
Net income per share – basic	$	1.30		$	11.00		$	0.37		$	0.57
Net income per share – diluted:
Income from continuing operations available to Common Shares	$	1.29		$	10.92		$	0.37		$	0.56
Discontinued operations, net		—			—			—			—
Net income per share – diluted	$	1.29		$	10.92		$	0.37		$	0.56

~~Table of Contents~~

ERP Operating Limited Partnership

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

	Nine Months Ended September 30,						Quarter Ended September 30,						Six Months Ended June 30,						Quarter Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Numerator for net income per Unit – basic and diluted:
Income from continuing operations	$	498,297		$	4,177,599		$	144,196		$	217,246
Net (income) attributable to Noncontrolling Interests – Partially Owned Properties		(2,354	)		(2,368	)		(801	)		(823	)
Net income													$	604,152		$	430,556		$	271,481		$	321,299
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties														(13,410	)		(1,620	)		(880	)		(821	)
Allocation to Preference Units		(2,318	)		(2,318	)		(772	)		(773	)		(1,545	)		(1,545	)		(772	)		(772	)
Income from continuing operations available to Units		493,625			4,172,913			142,623			215,650
Discontinued operations, net		—			124			—			246
Numerator for net income per Unit – basic and diluted	$	493,625		$	4,173,037		$	142,623		$	215,896		$	589,197		$	427,391		$	269,829		$	319,706
Denominator for net income per Unit – basic and diluted:
Denominator for net income per Unit – basic		379,716			378,745			379,906			379,008			384,702			382,854			384,818			383,227
Effect of dilutive securities:
Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term compensation shares/units		2,924			3,539			3,039			3,365			1,570			2,790			1,095			2,880
Denominator for net income per Unit – diluted		382,640			382,284			382,945			382,373			386,272			385,644			385,913			386,107
Net income per Unit – basic	$	1.30		$	11.00		$	0.37		$	0.57		$	1.53		$	1.11		$	0.70		$	0.83
Net income per Unit – diluted	$	1.29		$	10.92		$	0.37		$	0.56		$	1.53		$	1.11		$	0.70		$	0.83
Net income per Unit – basic:
Income from continuing operations available to Units	$	1.30		$	11.00		$	0.37		$	0.57
Discontinued operations, net		—			—			—			—
Net income per Unit – basic	$	1.30		$	11.00		$	0.37		$	0.57
Net income per Unit – diluted:
Income from continuing operations available to Units	$	1.29		$	10.92		$	0.37		$	0.56
Discontinued operations, net		—			—			—			—
Net income per Unit – diluted	$	1.29		$	10.92		$	0.37		$	0.56

Table of Contents

~~11.~~12.

~~Individually Significant Dispositions~~

The Company executed an agreement with controlled affiliates of Starwood Capital Group ("Starwood") on October 23, 2015 to sell a portfolio of 72 operating properties consisting of 23,262 apartment units located in five markets across the United States for $5.365 billion (the "Starwood Transaction" or “Starwood Portfolio”). The Starwood Portfolio represented substantially all of the assets in the Company’s South Florida and Denver markets and certain suburban assets in the Washington D.C., Seattle and Los Angeles markets. On January 26 and 27, 2016, the Company closed on the sale of the entire portfolio described above.

~~Table of Contents~~

The Company concluded that the Starwood Transaction did not qualify for discontinued operations reporting as it did not represent a strategic shift that had a major effect on the Company’s operations and financial results. The Company has been investing only in its six coastal markets (Boston, New York, Washington D.C., Southern California, San Francisco and Seattle) and has not been acquiring or developing any new assets in its other markets. Over the past several years, the Company has been repositioning its portfolio by selling its suburban assets located in markets outside its six core coastal markets. The sale of the Starwood Portfolio represented the continuation of the above strategy. However, the Company concluded that the Starwood Transaction did qualify as an individually significant component of the Company as the amount received upon disposal exceeded 10% of total assets, and NOI (see definition in Note 13) of the Starwood Portfolio represented approximately 1.6% of consolidated NOI (for the approximate one-month period owned in 2016) for the nine months ended September 30, 2016 and approximately 15.7% of consolidated NOI for the year ended December 31, 2015. As a result, the following table summarizes the results of operations attributable to the Starwood Transaction for the nine months and quarter ended September 30, 2016 (amounts in thousands):

Nine Months Ended

Quarter Ended

September 30, 2016

September 30, 2016

REVENUES

Rental income

$
30,660

$
239

Total revenues

30,660

239

EXPENSES

Property and maintenance

7,839

(84
)
Real estate taxes and insurance

2,933

1

Property management

2

—

General and administrative

19

4

Total expenses

10,793

(79
)
Operating income

19,867

318

Interest and other income

21

10

Interest:

Expense incurred, net

(380
)

(6
)
Amortization of deferred financing costs

(707
)

—

Income and other tax (expense) benefit

(1
)

—

Net gain (loss) on sales of real estate properties

3,161,097

(103
)
Income from operations attributable to controlling
   interests – Operating Partnership

3,179,897

219

Income from operations attributable to Noncontrolling
   Interests – Operating Partnership

(122,146
)

(8
)
Income from operations attributable to controlling
   interests – Company

$
3,057,751

$
211

~~12.~~

Commitments andContingencies

The Company, as an owner of real estate, is subject to various Federal, state and local laws, including, but not limited to, rent regulations and environmental laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations, whether related to COVID-19 or otherwise, on its current properties or on properties that it may acquire in the future. ~~As of September 30, 2017, the Company does have environmental reserves totaling approximately $5.7 million related to two of its properties.~~

The Company has established a reserve related to various litigation matters associated with its Massachusetts properties and periodically assesses the adequacy of the reserve and makes adjustments as necessary. As of September 30, 2017, the reserve totaled approximately $0.9 million. While no assurances can be given, the Company does not believe that the ultimate resolution of any of these remaining litigation matters, if adversely determined, would have a material adverse effect on the Company.

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

As of ~~September~~June 30, ~~2017,~~2020, the Company has ~~four~~2 wholly owned projects and 1 partially owned project totaling ~~1,285~~824 apartment units in various stages of development with remaining commitments to fund of approximately ~~$127.3~~$328.0 million (inclusive of applicable construction mortgage and joint venture partner obligations) and estimated completion dates ranging through September 30, ~~2019,~~2021. Estimated completion dates and budgeted capital costs for projects under development currently remain unchanged from the Company’s estimates in the fourth quarter of 2019. The Company will reevaluate these dates and costs as ~~well as other completed development~~the impact of COVID-19 becomes clearer. The Company has 2 projects that ~~are in various stages~~were completed and stabilized during the quarter ended June 30, 2020.

As of ~~lease up or are stabilized.~~

~~As of~~ ~~September~~June 30, ~~2017~~,2020, the Company has ~~two unconsolidated operating properties (Nexus Sawgrass and Domain) that are owned~~2 joint venture agreements with ~~the same~~ third party partners for the consolidated development of multifamily rental properties, one of which is currently under construction as noted above. The development commitment to fund the project under construction is included in the development funding totals above for one of the joint ~~venture partner.~~ventures. The joint venture agreements with ~~this~~each partner ~~are primarily deal-specific~~

~~Table of Contents~~

~~regardingprofit-sharing,equitycontributions,returns~~on~~investment,~~include a buy-sell ~~agreements and other customary provisions. Thebuy-sellarrangementscontainprovisions~~provision that~~provide~~ provides the right, but not the obligation, for the Company to acquire ~~the~~each respective partner’s interests or sell its interests at any time following the occurrence of certain pre-defined events described in the joint venture agreements. See Note 6 for ~~further~~additional discussion.

13.	ReportableSegments

Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses and about which discrete financial information is available that is evaluated regularly by the chiefoperatingdecisionmaker. Thechiefoperatingdecisionmakerdecideshowresourcesareallocatedandassessesperformance on a recurring basis at leastquarterly.

The Company’s primary business is the acquisition, development and management of multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The chief operating decision maker evaluates the ~~Company's~~Company’s operating performance geographically by market and both on a same store and non-same store basis. While the Company does maintain a non-residential presence, it historically has accounted for approximately 4.0% of total revenues and is designed as an amenity for our residential residents. The chief operating decision maker evaluates the performance of each property on a consolidated residential and non-residential basis. The Company’s geographic same store operating segments located in ~~its coastal markets~~urban and high-density suburban communities represent its reportable segments. ~~The Company's operating segments located in its other markets (Phoenix) that are not material have also been included in the tables presented below.~~

The Company’s ~~fee and asset management and~~ development activities are other business activities that do not constitute an operating segment and as such, have been aggregated in the ~~"Other"~~“Other” category in the tables presented below.

Allrevenuesarefromexternalcustomersandthereis no 0customerwhocontributed10%ormoreoftheCompany’stotal revenues during the ~~nine~~six months and quarters ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively.

The primary financial measure for the Company’s rental real estate segment is net operating income (“NOI”), which representsrentalincomeless:1) propertyandmaintenanceexpenseand2) realestatetaxesandinsuranceexpense ~~(all~~ (allasreflected in the accompanying consolidated statements of operations and comprehensive income). TheCompanybelievesthat NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment properties. Revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.

Table of Contents

ThefollowingtablepresentsareconciliationofNOIfromourrentalrealestate ~~specific to continuing operations~~ forthe ~~nine~~six months and quarters ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively (amounts inthousands):

	Nine Months Ended September 30,						Quarter Ended September 30,						Six Months Ended June 30,						Quarter Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Rental income	$	1,840,170		$	1,816,960		$	623,951		$	605,856		$	1,335,837		$	1,331,676		$	653,532		$	669,374
Property and maintenance expense		(306,645	)		(309,688	)		(104,721	)		(104,216	)		(220,268	)		(223,531	)		(104,452	)		(108,461	)
Real estate taxes and insurance expense		(253,318	)		(238,954	)		(84,087	)		(81,343	)		(192,770	)		(182,888	)		(95,038	)		(91,446	)
Total operating expenses		(559,963	)		(548,642	)		(188,808	)		(185,559	)		(413,038	)		(406,419	)		(199,490	)		(199,907	)
Net operating income	$	1,280,207		$	1,268,318		$	435,143		$	420,297		$	922,799		$	925,257		$	454,042		$	469,467

~~Table of Contents~~

The following tables present NOI for each segment from our rental real estate ~~specific to continuing operations~~ for the ~~nine~~six months and quarters ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, respectively,aswellastotalassetsandcapitalexpendituresat ~~September~~ June 30, ~~2017(amounts~~2020 (amounts inthousands):

	Nine Months Ended September 30, 2017							Nine Months Ended September 30, 2016						Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
	Rental Income		Operating Expenses		NOI			Rental Income		Operating Expenses		NOI		Rental Income		Operating Expenses		NOI		Rental Income		Operating Expenses		NOI
Same store (1)
Los Angeles	$	296,345	$	83,927	$	212,418		$	285,463	$	83,459	$	202,004	$	239,914	$	71,930	$	167,984	$	240,751	$	72,145	$	168,606
Orange County		66,081		16,355		49,726			63,005		15,529		47,476		53,013		12,167		40,846		51,887		12,142		39,745
San Diego		66,052		17,386		48,666			63,171		16,884		46,287		47,848		12,417		35,431		47,023		12,126		34,897
Subtotal - Southern California		428,478		117,668		310,810			411,639		115,872		295,767		340,775		96,514		244,261		339,661		96,413		243,248

Washington DC		322,307		98,043		224,264			317,879		95,187		222,692
San Francisco															236,580		59,313		177,267		234,514		57,629		176,885
Washington D.C.															196,601		59,331		137,270		195,453		59,389		136,064
New York		345,656		126,226		219,430			345,434		120,390		225,044		227,179		98,581		128,598		230,808		96,067		134,741
San Francisco		283,654		69,053		214,601			277,666		68,246		209,420
Seattle															127,073		35,440		91,633		124,029		34,634		89,395
Boston		170,545		47,538		123,007			168,118		47,308		120,810		123,673		35,144		88,529		124,671		35,639		89,032
Seattle		133,279		37,205		96,074			125,910		34,979		90,931
Other Markets		1,384		499		885			1,342		428		914
Denver															8,944		2,419		6,525		9,125		2,417		6,708
Total same store		1,685,303		496,232		1,189,071			1,647,988		482,410		1,165,578		1,260,825		386,742		874,083		1,258,261		382,188		876,073

Non-same store/other (2) (3)
Non-same store		144,975		53,367		91,608			78,287		29,173		49,114		58,629		17,748		40,881		14,374		4,423		9,951
Other (3)		9,892		10,364		(472	)		90,685		37,059		53,626		16,383		8,548		7,835		59,041		19,808		39,233
Total non-same store/other		154,867		63,731		91,136			168,972		66,232		102,740		75,012		26,296		48,716		73,415		24,231		49,184

Totals	$	1,840,170	$	559,963	$	1,280,207		$	1,816,960	$	548,642	$	1,268,318	$	1,335,837	$	413,038	$	922,799	$	1,331,676	$	406,419	$	925,257

(1)	For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, same store primarily includes all properties acquired or completed that were stabilized prior to January 1, ~~2016,~~2019, less properties subsequently sold, which represented ~~70,285~~74,264 apartmentunits.

(2)	For the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, non-same store primarily includes properties acquired after January 1, ~~2016,~~2019, plus any properties in lease-up and not stabilized as of January 1, ~~2016.~~2019.

(3)	Other includes development, other corporate operations and operations prior to ~~sale~~disposition for properties ~~sold from 2014 through 2017 that do not meet the discontinued operations criteria.~~sold.

Table of Contents

Quarter Ended September 30, 2017

Quarter Ended September 30, 2016

Rental
Income

Operating
Expenses

NOI

Rental
Income

Operating
Expenses

NOI

Same store (1)

Los Angeles

$
102,566

$
27,768

$
74,798

$
98,542

$
29,362

$
69,180

Orange County

22,427

5,500

16,927

21,455

5,362

16,093

San Diego

22,432

5,867

16,565

21,516

5,740

15,776

Subtotal - Southern California

147,425

39,135

108,290

141,513

40,464

101,049

New York

125,351

46,219

79,132

124,709

44,223

80,486

Washington DC

108,763

33,459

75,304

107,340

32,817

74,523

San Francisco

98,805

24,875

73,930

97,259

24,487

72,772

Boston

57,071

16,351

40,720

56,368

16,399

39,969

Seattle

49,268

13,647

35,621

46,948

12,493

34,455

Other Markets

459

158

301

457

136

321

Total same store

587,142

173,844

413,298

574,594

171,019

403,575

Non-same store/other (2) (3)

Non-same store

33,974

10,371

23,603

14,128

6,120

8,008

Other (3)

2,835

4,593

(1,758
)

17,134

8,420

8,714

Total non-same store/other

36,809

14,964

21,845

31,262

14,540

16,722

Totals

$
623,951

$
188,808

$
435,143

$
605,856

$
185,559

$
420,297

~~Table of Contents~~

	Quarter Ended June 30, 2020						Quarter Ended June 30, 2019
	Rental Income		Operating Expenses		NOI		Rental Income		Operating Expenses		NOI
Same store (1)
Los Angeles	$	117,994	$	35,013	$	82,981	$	121,216	$	35,688	$	85,528
Orange County		26,318		5,953		20,365		26,058		5,966		20,092
San Diego		23,706		6,100		17,606		23,720		5,978		17,742
Subtotal - Southern California		168,018		47,066		120,952		170,994		47,632		123,362

San Francisco		116,303		29,045		87,258		118,044		28,528		89,516
Washington D.C.		97,527		28,680		68,847		98,571		29,409		69,162
New York		111,949		48,130		63,819		117,457		47,626		69,831
Seattle		63,378		18,383		44,995		63,695		17,853		45,842
Boston		59,990		16,984		43,006		62,751		17,398		45,353
Denver		6,110		1,733		4,377		6,403		1,831		4,572
Total same store		623,275		190,021		433,254		637,915		190,277		447,638

Non-same store/other (2) (3)
Non-same store		24,631		7,212		17,419		4,000		1,124		2,876
Other (3)		5,626		2,257		3,369		27,459		8,506		18,953
Total non-same store/other		30,257		9,469		20,788		31,459		9,630		21,829

Totals	$	653,532	$	199,490	$	454,042	$	669,374	$	199,907	$	469,467

(1)	For the quarters ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, same store primarily includes all properties acquired or completed that were stabilized prior to ~~July~~April 1, ~~2016,~~2019, less properties subsequently sold, which represented ~~72,049~~74,843 apartmentunits.

(2)	For the quarters ended ~~September~~June 30, ~~2017~~2020 and ~~2016,~~2019, non-same store primarily includes properties acquired after ~~July~~April 1, ~~2016,~~2019, plus any properties in lease-up and not stabilized as of ~~July~~April 1, ~~2016.~~2019.

(3)	Other includes development, other corporate operations and operations prior to ~~sale~~disposition for properties ~~sold from 2014 through 2017 that do not meet the discontinued operations criteria.~~sold.

	Nine Months Ended September 30,				Six Months Ended June 30, 2020
	Total Assets		Capital Expenditures		Total Assets		Capital Expenditures
Same store (1)
Los Angeles	$	2,620,672	$	18,952	$	3,064,404	$	13,070
Orange County		330,580		6,671		397,148		3,458
San Diego		425,241		3,776		382,082		1,993
Subtotal - Southern California		3,376,493		29,399		3,843,634		18,521

Washington DC		3,836,992		26,308
San Francisco						3,288,932		6,940
Washington D.C.						3,120,074		10,534
New York		4,181,890		23,547		4,001,050		10,429
San Francisco		2,480,069		25,896
Seattle						1,838,484		4,334
Boston		1,670,467		18,906		1,790,996		8,631
Seattle		1,172,356		15,499
Other Markets		12,778		83
Denver						251,427		245
Total same store		16,731,045		139,638		18,134,597		59,634

Non-same store/other (2) (3)
Non-same store		3,080,697		3,206		1,642,289		1,129
Other (3)		886,091		414		938,065		502
Total non-same store/other		3,966,788		3,620		2,580,354		1,631

Totals	$	20,697,833	$	143,258	$	20,714,951	$	61,265

(1)	Same store primarily includes all properties acquired or completed that were stabilized prior to January 1, ~~2016,~~2019, less properties subsequently sold, which represented ~~70,285~~74,264 apartmentunits.

(2)	Non-same store primarily includes properties acquired after January 1, ~~2016,~~2019, plus any properties in lease-up and not stabilized as of January 1, ~~2016.~~2019.

(3)	Other includes development, other corporate operations and capital expenditures for propertiessold.

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14.	SubsequentEvents

The continued rapid development and fast-changing nature of the COVID-19 pandemic creates many unknowns that could have a future material impact on the Company. Its duration and severity and the extent of the adverse health impact on the general population, our residents and our employees, as well as the potential changes in customer preferences for living in the urban and dense suburban locations in which many of the Company’s properties are located, are among the unknowns. These, among other items, will likely impact the economy, the unemployment rate and our operations and could materially affect our future consolidated results of operations, financial condition, liquidity, investments and overall performance.

Subsequent to ~~September~~June 30, ~~2017,~~2020, the ~~Company repaid $103.9 million of 7.125% unsecured notes~~Company:

•

Repaid $19.7 million of mortgage debt at par prior to maturity.

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

For further information including definitions for capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Company’s and the Operating ~~Partnership's~~Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. In addition, please refer to the Definitions section below for various capitalized terms not immediately defined in this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

Forward-looking statements are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates, projections and assumptions made by management. While the ~~Company's~~Company’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, which could cause actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Many of these uncertainties and risks are difficult to predict and beyond ~~management's control.~~management’s control, such as the current novel coronavirus (“COVID-19”) pandemic (see below for further discussion). Forward-looking statements are not guarantees of future performance, results or events. The forward-looking statements contained herein are made as of the date hereof and the Company undertakes no obligation to update or supplement these forward-looking statements.

In addition, these forward-looking statements are subject to risks related to the COVID-19 pandemic, many of which are unknown, including the duration and severity of the pandemic, the extent of the adverse health impact on the general population and on our residents, customers and employees in particular, its impact on the employment rate and the economy and the corresponding impact on our residents’ and tenants’ ability to pay their rent on time or at all, the extent and impact of governmental responses and the impact of operational changes we have implemented and may implement in response to the pandemic.

Factors that might cause such differences ~~include, but~~ are ~~not limited to the following:~~

We intend to actively acquire, develop and rehab multifamily properties for rental operations as market conditions dictate. We may also acquire multifamily properties that are unoccupied or in the early stages of lease up. We may be unable to lease up these apartment properties on schedule, resulting in decreases in expected rental revenues and/or lower yields due to lower occupancy and rental rates as well as higher than expected concessions or higher than expected operating expenses. We may not be able to achieve rents that are consistent with expectations for acquired, developed or rehabbed properties. We may underestimate the costs necessary to bring an acquired property up to standards established for its intended market position, to complete a development property or to complete a rehab. Additionally, we expect that other real estate investors with capital will compete with us for attractive investment opportunities or may also develop properties in markets where we focus our development and acquisition efforts. This competition (or lack thereof) may increase (or depress) prices for multifamily properties. We may not be in a position or have the opportunity in the future to make suitable property acquisitions on favorable terms. We have acquired in the past and intend to continue to pursue the acquisition of properties, including large portfolios of properties, 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 political, economic and market conditions including, without limitation, new construction and excess inventory of multifamily and owned housing/ condominiums, increasing portions of owned housing/condominium stock being converted to rental use, rental housing subsidized by the government, other government programs that favor single family rental housing or owner occupied housing over multifamily rental housing, slow or negative employment growth and household formation, the availability of low-interest mortgages or the availability of mortgages requiring little or no down payment for single family home buyers, changes in social preferences, governmental regulations (including rent control legislation and restrictions) 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 for the year ended December 31, 2019, particularly those under ~~“Item~~Item 1A, Risk Factors. Additional factors are also included in Part II, Item 1A, Risk Factors”., of this Quarterly Report on Form 10-Q.

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

42Due to the inherent uncertainty surrounding the social and economic disruption resulting from the COVID-19 pandemic, the Company withdrew its full-year 2020 guidance earlier this year. The Company is also suspending issuing guidance in future periods until there is greater certainty surrounding the impact of the ongoing pandemic.

~~Table of Contents~~

Overview

Equity Residential (“EQR”), is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of rental apartment properties located in urban and high-density suburban communities where today’s renters want to live, work and play. ERP Operating Limited Partnership (“ERPOP”) is focused on conducting the multifamily property business of EQR. EQR is a Maryland real estate investment trust (“REIT”) formed in March 1993 ~~is an S&P 500 company focused on the acquisition, development~~ and management of rental apartment properties in urban and high-density suburban coastal gateway markets where today's renters want to live, work and play. ERP Operating Limited Partnership (“ERPOP”),ERPOP is an Illinois limited partnership ~~was~~ formed in May ~~1993 to conduct the multifamily residential property business of Equity Residential. EQR has elected to be taxed as a REIT.~~1993. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP.

EQR is the general partner of, and as of ~~September~~June 30, ~~2017~~2020 owned an approximate 96.4% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP, but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.

The Company’s corporate headquarters is located in Chicago, Illinois and the Company also operates regional property management offices in each of its ~~six core coastal~~ markets. As of ~~September~~June 30, ~~2017,~~2020, the Company had approximately ~~2,700~~2,600 employees who provided real estate operations, leasing, legal, financial, accounting, acquisition, disposition, development and other support functions.

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Available Information

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

Business Objectives and Operating and Investing Strategies

The Company’s and the Operating Partnership’s overall business objectives and operating and investing strategies have not changed from the information included in the Company’s and the Operating ~~Partnership's~~Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019, though the Company and the Operating Partnership will continue to be focused on its response to the COVID-19 pandemic in the near-term. As more fully discussed in the Company’s and the Operating Partnership’s Annual Report on Form 10-K, it continues to be the Company’s intention over time to diversify its portfolio into new markets that have characteristics similar to its current markets and to optimize the mix of the Company’s properties located in urban vs. dense suburban submarkets.

COVID-19 Impact

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The continued rapid development and fast-changing nature of the COVID-19 pandemic creates many unknowns that could have a future material impact on the Company. Its duration and severity and the extent of the adverse health impact on the general population, our residents and our employees, as well as the potential changes in customer preferences for living in the urban and dense suburban locations in which many of the Company’s properties are located, are among the unknowns. These, among other items, will likely impact the economy, the unemployment rate and our operations and could materially affect our future consolidated results of operations, financial condition, liquidity, investments and overall performance. For additional details, see Item 1A, Risk Factors.

The Company continues to support its residents and employees during the COVID-19 pandemic. The Company is utilizing technology to allow our property teams to interact remotely with current and prospective residents, including a touchless new leasing process and a service process designed to limit contact. The Company also successfully implemented changes to the physical layout of its properties and remains focused on further enhancing its existing commitment to health and safety during the pandemic. We also continue to provide additional paid leave for employees impacted by the pandemic and paid special bonuses to certain on-site employees during the second quarter of 2020 in recognition of their significant efforts. In addition, the Company continues to support its corporate and regional employees by allowing them to work remotely during the pandemic. Among other resident support efforts, we have an extensive outreach process for residents financially impacted by the pandemic and have created payment plans to assist them.

We see good demand for our apartments, both urban and suburban, but with increased customer price sensitivity, especially in the urban cores of New York City, San Francisco and Boston/Cambridge, MA. Looking forward, we believe the rate of improvement in our business will be dictated by how effectively the COVID-19 pandemic can be controlled and more normal economic activity restored. In the meantime, we believe our strong balance sheet, state of the art operating platform and opportunistic mindset leaves us well positioned to weather the storm and to take advantage should conditions allow.

During the second quarter of 2020, the Company also:

•

Experienced a recovery in demand by late May 2020. Initial leads, Traffic and applications continue to be in-line with the same time last year;

•

Collected on average 97% of its total monthly Residential rental income. July 2020 collections continue to trend on a similar pace to prior months; and

•

Had the highest resident retention for the second quarter in the Company’s history.

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Results of Operations

~~Third Quarter 2017~~2020 Transactions

In conjunction with our business objectives and operating strategy, the Company continued to invest in apartment properties located primarily in our ~~six coastal markets~~urban and high-density suburban communities and sell apartment properties that we believe will have inferior long-term returns. The following table provides a rollforward of the transactions that occurred during the six months ended June 30, 2020:

Portfolio Rollforward

($ in thousands)

	Properties			Apartment Units			Sales Price			Disposition Yield
12/31/2019		309			79,962
Dispositions:
Consolidated Rental Properties		(5	)		(1,552	)	$	(754,361	)		(4.7	)%
6/30/2020		304			78,410

The consolidated properties disposed of were located ~~primarily~~ in the ~~less dense portion of suburban~~Phoenix, San Francisco and Washington D.C. markets ~~and/or properties that are functionally or locationally challenged during~~and the ~~quarter ended September 30, 2017 as follows:~~

Acquired three consolidated apartment properties, located in Boston, Los Angeles and Bellevue, Washington, consisting of 811 apartment units for approximately $411.0 million, at a weighted average Acquisition Cap Rate (see Definitions section below) of 4.8%;

Sold one consolidated apartment property in San Diego consisting of 120 apartment units for approximately $53.0 million, at a Disposition Yield (see Definitions section below) of 4.3% and generatingsales generated an Unlevered IRR ~~(see Definitions section below)~~ of ~~10.1%; and~~

~~Substantially completed construction on two projects in Washington, D.C. and Seattle consisting of 572 apartment units totaling approximately $300.4 million of development costs.~~

S~~ee also~~10.8%. See Note 4 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s real estate transactions.

43We currently budget spending approximately $225.0 million on development costs during the year ending December 31, 2020, of which approximately $95.2 million was spent during the six months ended June 30, 2020, primarily for properties currently under construction. Certain of these costs will be funded by third party construction mortgages and joint venture partner obligations. Work at our development project in Boston resumed after a nine-week suspension due to the city’s COVID-19-related temporary construction moratorium, and our projects in Bethesda, MD and Alameda, CA continue under construction. The expected spending noted above could change as a result of COVID-19 related impacts.

~~Table of Contents~~

Same Store Results

Properties that the Company owned and were stabilized (see definition below) for all of both of the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 (the ~~“Nine-Month 2017~~“Six-Month 2020 Same Store Properties”), which represented 70,285 apartment units, and properties that the Company owned and were stabilized for all of both of the quarters ended September 30, 2017 and 2016 (the “Third Quarter 2017 Same Store Properties”), which represented 72,04974,264 apartment units, impacted the Company’s results of operations. ~~Both the Nine-Month 2017 Same Store Properties and the Third Quarter 2017~~The Six-Month 2020 Same Store Properties are discussed in the following paragraphs.

The ~~Company's~~Company’s primary financial measure for evaluating each of its apartment communities is net operating income (“NOI”). NOI represents rental income less direct property operating expenses (including real estate taxes and insurance). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment properties.

The following tables provide a rollforward of the apartment units included in Same Store Properties and a reconciliation of apartment units included in Same Store Properties to those included in Total Properties for the ~~nine~~six months ~~and quarter~~ ended ~~September~~June 30, ~~2017:~~2020:

Nine Months Ended

Quarter Ended

September 30, 2017

September 30, 2017

Properties

Apartment
Units

Properties

Apartment
Units

Same Store Properties at Beginning of Period

272

69,879

282

71,354

2015 acquisitions

4

625

—

—

2017 dispositions

(4
)

(1,024
)

(1
)

(120
)
Lease-up properties stabilized

4

800

3

810

Other

—

5

—

5

Same Store Properties at September 30, 2017

276

70,285

284

72,049

	Six Months Ended June 30, 2020
	Properties			Apartment Units
Same Store Properties at December 31, 2019		279			71,830
2017 acquisitions		2			510
2018 acquisitions		5			1,461
2019 acquisitions		—			—
2020 dispositions		(5	)		(1,552	)
Lease-up properties stabilized		5			2,015
Same Store Properties at June 30, 2020		286			74,264

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Nine Months Ended

Quarter Ended

September 30, 2017

September 30, 2017

Properties

Apartment
Units

Properties

Apartment
Units

Same Store

276

70,285

284

72,049

Non-Same Store:

2017 acquisitions - stabilized

2

437

2

437

2017 acquisitions - not stabilized

2

510

2

510

2016 acquisitions

4

573

1

94

Properties removed from same store (1)

2

356

2

356

Master-Leased properties (2)

3

853

3

853

Lease-up properties not yet stabilized (3)

13

4,342

8

3,057

Other

1

1

1

1

Total Non-Same Store

27

7,072

19

5,308

Unconsolidated properties

2

945

2

945

Total Properties and Apartment Units

305

78,302

305

78,302

	Six Months Ended June 30, 2020
	Properties		Apartment Units
Same Store		286		74,264
Non-Same Store:
2019 acquisitions		13		3,540
Master-Leased properties (1)		1		162
Lease-up properties not yet stabilized (2)		3		443
Other		1		1
Total Non-Same Store		18		4,146
Total Properties and Apartment Units		304		78,410

Note: Properties are considered ~~"stabilized"~~“stabilized” when they have achieved 90% occupancy for three consecutive months. Properties are included in ~~Same Store~~same store when they are stabilized for all of the current and comparable periods presented.

(1)

Consists of one property containing 285 apartment units (Playa Pacifica in Hermosa Beach, California) which was removed from the same store portfolio in the first quarter of 2015 due to a major renovation in which significant portions of the property were taken offline for extended time periods and one property containing 71 apartment units (Acton Courtyard in Berkeley, California) which was removed from the same store portfolio in the third quarter of 2016 due to an affordable housing dispute which required significant portions of the property to be vacant for an extended releasing period. As of September 30, 2017 and 2016, Playa Pacifica had an occupancy of 95.8% and 63.0%, respectively. As of September 30, 2017 and 2016, Acton Courtyard had an occupancy of 93.0% and 67.6%, respectively. These properties will not return to the same store portfolio until they are stabilized for all of the current and comparable periods presented.

~~(2)~~

~~Consists of three properties containing 853~~162 apartment units that ~~are~~is wholly owned by the Company ~~but~~where the entire ~~projects are master leased~~project is master-leased to a third party corporate housing provider.

~~(3)~~(2)

Consists of 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.

~~Table of Contents~~

Revenues from the Nine-Month 2017 Same Store Properties increased $37.3 million primarily as a result of an increase in average rental rates charged to residents. Expenses from the Nine-Month 2017 Same Store Properties increased $13.8 million primarily as a result of an increase in real estate taxes, on-site payroll costs, utilities and repairs and maintenance expenses. The following tables ~~provide~~present reconciliations of operating income per the consolidated statements of operations to NOI, along with rental income, operating expenses and NOI per the consolidated statements of operations allocated between same store and non-same store results (amounts in thousands):

	Six Months Ended June 30,
	2020			2019
Operating income	$	778,974		$	578,894
Adjustments:
Property management		51,317			50,765
General and administrative		26,353			29,710
Depreciation		418,398			404,723
Net (gain) loss on sales of real estate properties		(352,243	)		(138,835	)
Total NOI	$	922,799		$	925,257
Rental income:
Same store	$	1,260,825		$	1,258,261
Non-same store/other		75,012			73,415
Total rental income		1,335,837			1,331,676
Operating expenses:
Same store		386,742			382,188
Non-same store/other		26,296			24,231
Total operating expenses		413,038			406,419
NOI:
Same store		874,083			876,073
Non-same store/other		48,716			49,184
Total NOI	$	922,799		$	925,257

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The following table provides comparative total same store results and statistics for the ~~Nine-Month 2017~~Six-Month 2020 Same Store Properties:

~~September~~

June YTD ~~2017~~2020 vs. ~~September~~June YTD ~~2016~~2019

Same Store Results/Statistics ~~for 70,285~~Including 74,264 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

Results

Statistics

Description

Revenues

Expenses

NOI

Average
Rental
Rate (1)

Physical
Occupancy (2)

Turnover (3)

YTD 2017

$
1,685,303

$
496,232

$
1,189,071

$
2,662

96.0
%

41.9
%
YTD 2016

$
1,647,988

$
482,410

$
1,165,578

$
2,601

96.0
%

43.6
%
Change

$
37,315

$
13,822

$
23,493

$
61

0.0
%

(1.7
)%
Change

2.3
%

2.9
%

2.0
%

2.3
%

June YTD 2020																		June YTD 2019
	Residential			% Change			Non- Residential			% Change			Total		% Change				Residential			Non- Residential		Total
Revenues	$	1,223,361			1.0	%	$	37,464	(1)		(20.4	%)	$	1,260,825		0.2	%	Revenues	$	1,211,210		$	47,051	$	1,258,261
Expenses	$	375,710			1.1	%	$	11,032			3.4	%	$	386,742		1.2	%	Expenses	$	371,517		$	10,671	$	382,188
NOI	$	847,651			0.9	%	$	26,432			(27.3	%)	$	874,083		(0.2	%)	NOI	$	839,693		$	36,380	$	876,073

Average Rental Rate	$	2,871			1.8	%												Average Rental Rate	$	2,821
Physical Occupancy		95.7	%		(0.7	%)												Physical Occupancy		96.4	%
Turnover		21.4	%		(1.9	%)												Turnover		23.3	%

Note: Same store revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.

(1)

~~Average Rental Rate – Total residential rental revenues reflected on a straight-line basis in accordance with GAAP divided~~Non-Residential operations have been more significantly impacted by the ~~weighted average occupied apartment units for~~COVID-19 pandemic than the ~~reporting period presented.~~

~~(2)~~

~~Physical Occupancy –~~Company’s core Residential business. The ~~weighted average occupied apartment units for the reporting period divided~~decline in Non-Residential revenues is primarily driven by ~~the average~~lower public parking income, deferral/abatement of ~~total apartment units available for~~ rent ~~for the reporting period.~~

~~(3)~~

~~Turnover – Total residential move-outs divided by total residential apartment units, including inter-property~~ and ~~intra-property transfers.~~higher bad debt expense.

The following table provides ~~comparative~~results and statistics related to our Residential same store ~~operating expenses~~operations for the ~~Nine-Month 2017 Same Store Properties:~~six months ended June 30, 2020 and 2019:

~~September~~

June YTD ~~2017~~2020 vs. ~~September~~June YTD ~~2016~~2019

Same Store ~~Operating Expenses~~Residential Results/Statistics by Market

														Increase (Decrease) from Prior Year
Markets/Metro Areas	Apartment Units		June YTD 2020 % of Actual NOI			June YTD 2020 Average Rental Rate		June YTD 2020 Weighted Average Physical Occupancy %			June YTD 2020 Turnover			Revenues			Expenses			NOI			Average Rental Rate			Physical Occupancy			Turnover
Los Angeles		15,968		19.7	%	$	2,615		95.3	%		23.2	%		0.1	%		(0.3	%)		0.2	%		1.0	%		(0.9	%)		(2.6	%)
Orange County		4,028		4.8	%		2,272		96.6	%		18.8	%		2.2	%		0.2	%		2.8	%		2.0	%		0.2	%		(5.4	%)
San Diego		3,385		4.2	%		2,435		96.4	%		23.7	%		1.9	%		2.1	%		1.9	%		2.0	%		0.0	%		(2.7	%)
Subtotal – Southern California		23,381		28.7	%		2,529		95.7	%		22.5	%		0.7	%		0.1	%		0.9	%		1.3	%		(0.6	%)		(3.1	%)

San Francisco		12,183		20.7	%		3,334		95.8	%		21.1	%		1.1	%		2.9	%		0.5	%		1.7	%		(0.6	%)		(1.9	%)
Washington DC		13,711		16.0	%		2,463		95.9	%		19.8	%		1.3	%		(0.1	%)		1.9	%		2.1	%		(0.7	%)		(0.8	%)
New York		9,475		14.0	%		3,930		95.4	%		18.7	%		(0.3	%)		2.4	%		(2.4	%)		1.1	%		(1.3	%)		0.4	%
Seattle		8,442		10.2	%		2,469		96.3	%		22.9	%		3.8	%		2.7	%		4.2	%		3.9	%		(0.1	%)		(5.1	%)
Boston		6,346		9.7	%		3,178		94.7	%		22.7	%		1.0	%		(1.9	%)		2.2	%		2.6	%		(1.4	%)		1.2	%
Denver		726		0.7	%		2,133		94.5	%		30.6	%		(1.2	%)		(0.3	%)		(1.5	%)		0.6	%		(1.9	%)		0.0	%

Total		74,264		100.0	%	$	2,871		95.7	%		21.4	%		1.0	%		1.1	%		0.9	%		1.8	%		(0.7	%)		(1.9	%)

Note: The above table reflects Residential same store results only, which historically account for ~~70,285~~approximately 96.0% of total revenues.

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We continue to work with our residents and tenants on payment plans and collections and our allowance policies remain consistent. We expect our reserves and bad debt charge-offs to remain elevated for the remainder of this year. The following table provides Residential and Non-Residential accounts receivable and straight-line receivable balances for the Company’s same store properties as of June 30, 2020 and March 31, 2020 (amounts in thousands):

Same Store Resident/Tenant Accounts Receivable Balances

Including 74,264 Same Store Apartment Units

$ in thousands

% of Actual

YTD 2017

Actual

Actual

$

%

Operating

YTD 2017

YTD 2016

Change

Change

Expenses

Real estate taxes

$
208,482

$
201,645

$
6,837

3.4
%

42.0
%
On-site payroll (1)

112,607

107,514

5,093

4.7
%

22.7
%
Utilities (2)

67,788

66,472

1,316

2.0
%

13.7
%
Repairs and maintenance (3)

64,170

62,952

1,218

1.9
%

12.9
%
Insurance

12,526

13,024

(498
)

(3.8
)%

2.5
%
Leasing and advertising

7,034

7,579

(545
)

(7.2
)%

1.4
%
Other on-site operating expenses (4)

23,625

23,224

401

1.7
%

4.8
%
Same store operating expenses

$
496,232

$
482,410

$
13,822

2.9
%

100.0
%

	Residential							Non-Residential
	June 30, 2020				March 31, 2020			June 30, 2020				March 31, 2020
Resident/tenant accounts receivable balances	$	18,175			$	5,358			$	4,815			$	2,270
Allowance for doubtful accounts		(6,518	)			(1,850	)			(2,416	)			(1,532	)
Net receivable balances	$	11,657		(1)	$	3,508			$	2,399			$	738

Straight-line receivable balances	$	2,990			$	1,633			$	24,161			$	26,154

(1)	The Company held Residential security deposits approximating 20% of the net receivable balance at June 30, 2020.

The following table provides preliminary information related to Residential same store operations for the month ended July 2020 compared to the actuals for the quarter ended June 30, 2020.

	July 2020			Second Quarter 2020
New Lease Change		(8.3	%)		(7.0	%)
Renewal Rate Achieved		(0.9	%)		0.7	%
Blended Rate (1)		(4.5	%)		(2.7	%)
Physical Occupancy		95.0	%		94.9	%

(1)	Blended Rate after applying the effect of new move-in and renewal concessions is approximately (5.5%) and (3.5%) for July 2020 and the second quarter of 2020, respectively, driven by higher usage in the urban cores of New York, San Francisco and Boston.

The July 2020 results listed above are approximately equal to the Company's June 2020 results for New Lease Change, Renewal Rate Achieved and Blended Rate. Concession use is higher in July 2020 than in June 2020.

We expected the negative impact on Physical Occupancy to be most pronounced in the second quarter and then stabilize at a new base level, which currently appears to be the case. The story is more mixed as it relates to Average Rental Rates, which remains more challenged in the urban cores of New York City, San Francisco and Boston/Cambridge, MA. Use of new lease concessions during the second quarter of 2020 was concentrated in the submarkets noted above. Traffic and application activity improved throughout the quarter as Average Rental Rates were reduced in these submarkets. Meanwhile the rest of the portfolio is showing more stability in Average Rental Rates, though those rates are still lower than last year.

As a result of the differing impact that the COVID-19 pandemic is currently having on the operating performance of our markets and submarkets, we believe it is most helpful to discuss our portfolio as follows:

•

First, our suburban properties, which represent approximately 45% of our portfolio, have been more resilient during the pandemic with Physical Occupancy declining to a low point of 95.2% during the second quarter of 2020 but since recovering fully to levels at or above the prior year. By the middle of July 2020, Physical Occupancy for this category of properties stood at 96.6%. The percentage of suburban leases renewing was very strong at 65% and continues to trend well above the prior year. Average Rental Rates have slowly recovered since early May with limited concession use, though those rates are still below the prior year level.

•

Second, our properties that are located in the urban cores of New York City, San Francisco and Boston/Cambridge, MA, which represent about 25% of our portfolio, have Physical Occupancy of 90.9% by the middle of July 2020. This group of properties has the highest use of concessions (about 50% of all new leases) and the most pressure on Average Rental Rates. For the second quarter of 2020, these urban properties renewed 58% of residents, which was 500 basis points lower than the second quarter of 2019 and was trending down throughout the quarter, ending at 53% in June 2020. We believe these properties have the highest risk of volatility in operations for the balance of the year.

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•

Our third category consists of urban properties in our other markets, such as Washington D.C., Seattle and Southern California, and constitutes about 30% of our portfolio. These properties reached a low point in Physical Occupancy of 94.0% in the middle of May 2020, but quickly rebounded and had Physical Occupancy of 95.2% by the middle of July 2020. Average Rental Rates have been stable since the middle of May, though they are down year-over-year, and concessions are being used on about 15% of our new leases. During the second quarter of 2020, 57% of residents renewed at these properties, which is 300 basis points better than the second quarter of 2019. Overall, this group of urban properties has had consistent operations for the past two months, with a slight increase in Physical Occupancy in the last couple of weeks of July 2020.

The following table provides comparative total same store operating expenses for the Six-Month 2020 Same Store Properties:

June YTD 2020 vs. June YTD 2019

Total Same Store Operating Expenses Including 74,264 Same Store Apartment Units

$ in thousands

											% of Actual
											YTD 2020
	Actual		Actual		$			%			Operating
	YTD 2020		YTD 2019		Change (5)			Change			Expenses
Real estate taxes	$	170,416	$	164,075	$	6,341			3.9	%		44.1	%
On-site payroll (1)		81,249		81,757		(508	)		(0.6	)%		21.0	%
Utilities (2)		50,654		49,787		867			1.7	%		13.1	%
Repairs and maintenance (3)		44,497		48,027		(3,530	)		(7.4	)%		11.5	%
Insurance		12,187		10,365		1,822			17.6	%		3.2	%
Leasing and advertising		4,385		4,917		(532	)		(10.8	)%		1.1	%
Other on-site operating expenses (4)		23,354		23,260		94			0.4	%		6.0	%
Total Same Store Operating Expenses (includes Residential and Non-Residential)	$	386,742	$	382,188	$	4,554			1.2	%		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 and maintenance costs.

(4)	Other on-site operating expenses – Includes ground lease costs and administrative costs such as office supplies, telephone and data charges and association and business licensing fees.

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The following tables present reconciliations of operating income per the consolidated statements of operations to NOI, along with rental income, operating expenses and NOI per the consolidated statements of operations allocated between same store and non-same store/other results for the nine months ended September 30, 2017 and 2016 (amounts in thousands):

Nine Months Ended September 30,

2017

2016

Operating income

$
632,707

$
632,016

Adjustments:

Fee and asset management revenue

(532
)

(3,351
)
Property management

64,702

64,003

General and administrative

40,366

47,408

Depreciation

542,964

528,242

Total NOI

$
1,280,207

$
1,268,318

Rental income:

Same store

$
1,685,303

$
1,647,988

Non-same store/other

154,867

168,972

Total rental income

1,840,170

1,816,960

Operating expenses:

Same store

496,232

482,410

Non-same store/other

63,731

66,232

Total operating expenses

559,963

548,642

NOI:

Same store

1,189,071

1,165,578

Non-same store/other

91,136

102,740

Total NOI

$
1,280,207

$
1,268,318

For properties that the Company acquired or completed that were stabilized prior to January 1, 2016 and that the Company expects to continue to own through December 31, 2017, the Company anticipates the following same store results for the full year ending December 31, 2017:

~~2017 Same Store Assumptions~~(5)

Theyear-to-date over year-to-date changes are due primarily to:

~~Physical Occupancy~~

•

~~95.9%~~

Real estate taxes – Higher rates and assessed values continue to drive real estate tax growth across most markets with a slight improvement from previous expectations caused by successful appeals activity and lower than expected rate growth in New York.

~~Revenue change~~

~~2.2%~~•

On-site payroll – Results better than expectations due to faster than anticipated progress in transition to enhanced operating platform, lower than expected employee benefit-related costs and less overtime, partially offset by one-time frontline worker bonuses.

~~Expense change~~

~~3.2%~~•

Utilities – Growth lower than expected due to warmer winter weather and energy rate decreases.

~~NOI change~~

~~1.8%~~•

Repairs and maintenance – Decrease primarily driven by deferral and cancellation of some projects as a result of COVID-19-related delays.

•

Insurance – Increase due to higher premiums on property insurance renewal caused by challenging conditions in the insurance market.

•

Leasing and advertising – Decrease greater than expectations due in part to suspension of resident activities.

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The Company anticipates consolidated rental acquisitions of $468.0 million and consolidated rental dispositions of $500.0 million and expects that the Acquisition Cap Rate will be 0.50% lower than the Disposition Yield for the full year ending December 31, 2017. These 2017 assumptions are based on current expectations and are forward-looking.

Same store revenues increased 2.3% during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, which was ahead of our expectations primarily driven by gains in occupancy. As a result, the Company now anticipates same store revenue growth of approximately 2.2% for 2017, as compared to the most recent updated guidance range of 1.75% to 2.25% that was provided in July 2017. The Company’s primary goal in 2017 continues to focus on retaining existing residents to drive renewal rate growth, which came in at 4.6% for the nine months ended September 30, 2017 as compared to the same period in 2016. Same store turnover declined by 1.7% for the nine months ended September 30, 2017 as compared to the same period in 2016. With same store occupancy of 96.0% for the nine months ended September 30, 2017, we also increased our occupancy expectations for full year 2017 from 95.8% to 95.9%.

Washington D.C. was originally expected to post improved same store revenue results for 2017 as compared to 2016 because we expected continuing job growth to allow the elevated levels of new supply in this market to be absorbed. During the second quarter of 2017, this job growth weakened, though it has modestly improved recently, with the impact from potential government spending initiatives still remaining unclear. Same store revenues increased 1.4% in ~~the nine months ended September 30, 2017~~ as compared to the same period in 2016, which was lower than our original February 2017 expectations. We now expect to produce same store revenue growth of approximately 1.5% in 2017, which is relatively consistent with the prior year and slightly higher than our most recent expectation provided in July 2017 of an increase of 1.4% for this market.

~~Table of Contents~~

In the New York market, elevated deliveries of new luxury supply both in established residential areas and newer residential areas like Long Island City are having an impact on our ability to raise rents as renters begin to let go of neighborhood loyalty. There has also been a reduction in the rate of job growth in the financial services sector and technology sector, which are important demand drivers in the market. Due in part to our strong same store occupancy levels (96.1% for the nine months ended September 30, 2017), we have used fewer concessions during the nine months of 2017 than we originally expected and anticipate that trend to continue in the remaining three months of 2017. As a result, same store revenues increased 0.1% in the nine months ended September 30, 2017 as compared to the same period in 2016, which was slightly above our expectations. We still expect there to be a decline in same store revenues of approximately 0.1% for full year 2017, which is better than our most recent expectation provided in July 2017 of a decline of 0.3% for this market.

We have a cautious outlook for Boston as the market continues to feel the impact from an elevated level of deliveries of new supply in the downtown and Cambridge submarkets with approximately 50% of this new supply competing with our properties. Job growth has continued to improve in the market which is a positive sign that the additional supply may be absorbed without significant disruption. Same store revenues increased 1.4% in the nine months ended September 30, 2017 as compared to the same period in 2016, which was consistent with our expectations. We expect to produce same store revenue growth of approximately 1.6% in 2017, which is slightly higher than our most recent expectation provided in July 2017 of an increase of 1.5% for this market.

Seattle is producing solid rental rate growth driven by the continued growth in technology jobs in the market, but showed signs of slowing rent growth during the quarter. While new supply remains elevated in this market, until recently strong job growth has enabled that supply to be quickly absorbed with little market disruption. Same store revenues increased 5.9% in the nine months ended September 30, 2017 as compared to the same period in 2016, which exceeded our expectations. We expect Seattle to produce same store revenue growth of approximately 5.7% in 2017, which is slightly lower than our most recent expectation provided in July 2017 of an increase of 5.75% for this market.

San Francisco is producing a slower rate of job growth in the technology sector compared to previous years. However, we continue to see strong demand throughout the market, although the rate at which we can increase rents remains somewhat modest due to new supply and a slower rate of job growth. Same store revenues increased 2.2% in the nine months ended September 30, 2017 as compared to the same period in 2016, which was ahead of our expectations. We expect to produce same store revenue growth of approximately 2.1% in 2017, which is better than our most recent expectation provided in July 2017 of an increase of 1.8% for this market.

Southern California, which includes Los Angeles, Orange County and San Diego, is performing well and is positioned to be one of our better performing markets in 2017. Widely dispersed new supply, very good economic growth and adequate levels of job growth in the market are driving strong revenue growth. Same store revenues increased 4.1% in the nine months ended September 30, 2017 as compared to the same period in 2016, which was above our expectations. We expect to produce same store revenue growth of ~~approximately~~ 4.0% in 2017, which is slightly higher than our most recent expectation provided in July 2017 of an increase of 3.8% for this market. We expect Orange County and San Diego to perform slightly better than Los Angeles for full year 2017 as compared to 2016.

Same store expenses increased 2.9% during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016. The Company now anticipates that 2017 same store expenses will increase 3.2%, ~~as compared to the most recent guidance range of 3.25% to 4.0% that was provided in July 2017, significantly impacted by the following items:~~

Real estate taxes increased 3.4% during the nine months ended September 30, 2017 as compared to the same period in 2016 and are now estimated to increase 3.4% for the full year 2017 as compared to 2016 (lower than the most recent guidance of 4.0% to 4.5% provided in July 2017), primarily driven by favorable real estate tax appeal results;

Payroll costs increased 4.7% during the nine months ended September 30, 2017 as compared to the same period in 2016 and are estimated to increase 6.0% for the full year 2017 as compared to 2016 (consistent with the most recent guidance provided in July 2017), primarily due to an increase in on-site staffing to assure the service levels necessary to remain competitive with new supply, higher on-site wages due to competition from new supply and higher medical and workers compensation costs; and

Utilities increased 2.0% during the nine months ended September 30, 2017 as compared to the same period in 2016 and are estimated to increase approximately 2.0% for the full year 2017 as compared to 2016 (consistent with the most recent guidance provided in July 2017), primarily due to moderate increases in natural gas costs, partially offset by lower gas usage and lower prices for electricity.

~~Table of Contents~~

Same store NOI increased 2.0% during the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016, which was ahead of our expectations. As a result, the Company now anticipates same store NOI growth of approximately 1.8%, as compared to the most recent guidance range of 0.75% to 1.75% that was provided in July 2017, for the full year 2017 as a result of the above same store revenue and expense expectations.

For the quarter ended September 30, 2017, same store revenue increased $12.5 million or 2.2%, same store expenses increased $2.8 million or 1.7% and same store NOI increased $9.7 million or 2.4% when compared to the prior year period. SeeSee also Note 13 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s segment disclosures.

Non-Same Store/Other Results

Non-same store/other NOI results for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 decreased approximately ~~$11.6~~$0.5 million compared to the same period of ~~2016~~2019 and consist primarily of properties acquired in calendar ~~years 2016 and 2017,~~year 2019, operations from the Company’s development properties and operations prior to disposition from ~~2016~~2019 and ~~2017~~2020 sold properties. This difference is due primarily to:

~~A positive impact of higher NOI from development and newly stabilized development properties in lease-up of $30.5 million;~~

•

A positive impact of higher NOI from development and newly stabilized development properties in lease-up of $3.4 million;

~~A positive impact of higher NOI from properties acquired in 2016 and 2017 of $6.6 million;~~

•

A positive impact of higher NOI from properties acquired in 2019 of $27.6 million; and

~~A positive impact of higher NOI from other non-same store properties (including three master leased properties) of $1.8 million; and~~

~~A negative impact of lost NOI from 2016 and 2017 dispositions of $48.4 million.~~

•

A negative impact of lost NOI from 2019 and 2020 dispositions of $29.5 million.

Comparison of the ~~nine~~six months and quarter ended ~~September~~June 30, ~~2017~~2020 to the ~~nine~~six months and quarter ended ~~September~~June 30, ~~2016~~2019

~~For the nine months ended September 30, 2017, the Company reported~~The following table presents a reconciliation of diluted earnings per share/unit ~~of $1.29 compared~~ ~~to $10.92~~ ~~per share/unit in~~for the ~~same period of 2016.~~ ~~The difference is primarily due to approximately $9.78 per share/unit in higher gains on property sales~~ six months and ~~$0.14 per share/unit~~ ~~in higher gains on sales of non-operating assets in 2016 compared to 2017 as a direct result of the significant sales activity in 2016 compared to 2017, partially offset by~~ ~~$0.28 per share/unit~~ ~~in higher debt extinguishment costs incurred in 2016 as compared to 2017. For the~~ quarter ended ~~September~~June 30, 2017, the Company reported diluted earnings per share/unit of $0.37 compared to $0.56 per share/unit in the same period of 2016. The difference is primarily due to approximately $0.22 per share/unit in higher gains on property sales in the third quarter of 20162020 as compared to the same period in ~~2017, partially offset by improved operations in the third quarter of 2017 as compared to the third quarter of 2016.~~2019:

~~Income from continuing operations decreased approximately $3.7 billion and $73.1 million for the nine months and quarter ended September 30, 2017, respectively, compared to the prior periods.~~

	Six Months Ended June 30			Quarter Ended June 30
Diluted earnings per share/unit for period ended 2019	$	1.11		$	0.83
Property NOI		(0.01	)		(0.04	)
Interest expense		0.06			0.03
Debt extinguishment costs		0.04			0.04
Net gain/loss on property sales		0.34			(0.17	)
Other		(0.01	)		0.01
Diluted earnings per share/unit for period ended 2020	$	1.53		$	0.70

The decrease in ~~continuing operations is discussed below.~~

~~The guidance/projections provided below are based on current projections and are forward-looking.~~

~~For the nine months ended September 30, 2017,~~ consolidated rental income increased 1.3%, consolidated operating expenses (comprised of property and maintenance and real estate taxes and insurance) increased 2.1% and consolidated NOI increased 0.9% when compared to the nine months ended September 30, 2016. The increase in NOI is primarily a result of the Company’s ~~improved~~lower NOI from same store properties, largely due to the economic impact from the COVID-19 pandemic. The following table presents the changes in the components of consolidated NOI for the six months and ~~lease-up properties. For the~~ quarter ended ~~September~~June 30, 2017, consolidated rental income increased 3.0%, consolidated operating expenses (comprised of property and maintenance and real estate taxes and insurance) increased 1.8% and consolidated NOI increased 3.5% when2020 as compared to the ~~quarter ended September 30, 2016. The increase~~same periods in ~~NOI is primarily a result of improved NOI from same store and lease-up properties.~~2019:

For the nine months ended September 30, 2017, fee and asset management revenues decreased approximately $2.8 million or 84.1% primarily as a result of lower revenue earned on management of the Company's military housing ventures at Joint Base Lewis McChord due to the sale of the Company's entire interest in the management contracts and related rights associated with these ventures in the second quarter of 2016.

	Six Months Ended June 30, 2020			Quarter Ended June 30, 2020
Consolidated rental income		0.3	%		(2.4	%)
Consolidated operating expenses (1)		1.6	%		(0.2	%)
Consolidated NOI		(0.3	%)		(3.3	%)

(1)	Consolidated operating expenses are comprised of property and maintenance and real estate taxes and insurance.

Property management expenses 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 ~~$0.7~~$0.6 million or 1.1% ~~and approximately $1.3 million or 6.9%~~ for the ~~nine~~six months ~~and quarters~~ ended ~~September~~June 30, ~~2017, respectively,~~2020 as compared to the prior year ~~periods. These increases are~~period. The increase is primarily attributable to increases in ~~education/conference~~information technology related costs specifically for various operating initiatives such as sales-focused improvements and service enhancements, partially offset by decreases in payroll-related costs, travel costs and ~~legal fees. The Company anticipates that property management expenses will approximate $85.0 million for the year ending December 31, 2017.~~

~~Table of Contents~~

~~General and administrative expenses, which include corporate operating~~training/conference costs. These expenses decreased approximately ~~$7.0~~$0.8 million or ~~14.9%~~3.1% for the ~~nine months~~quarter ended ~~September~~June 30, ~~2017~~2020 as compared to the prior year period, primarily due to a decrease in payroll-related costs, ~~in 2017 compared to 2016.~~ travel costs and training/conference costs. The Company suspended the majority of all travel and training/conference activities as a result of the COVID-19 pandemic.

General and administrative expenses, ~~increased~~which include corporate operating expenses, decreased approximately ~~$0.2~~$3.4 million or ~~1.4%~~11.3% and approximately $2.5 million or 17.4% for the six months and quarter ended ~~September~~June 30, ~~2017~~2020, respectively, as compared to the prior year ~~period,~~periods, primarily due to ~~an increase~~decreases in payroll-related costs ~~in 2017. The Company anticipates that general and administrative expenses will approximate $52.0 million for~~as a result of the ~~year ending December 31, 2017, excluding charges of approximately $0.4~~ ~~million related to~~Company’s executive changes over the ~~overlap of accounting costs for the Company's current and former executive compensation programs.~~past two years.

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Depreciation expense, which includes depreciation on non-real estate assets, increased approximately ~~$14.7~~$13.7 million or ~~2.8%~~3.4% and ~~$4.9~~approximately $5.5 million or 2.7% for the ~~nine~~six months and ~~quarters~~quarter ended ~~September~~June 30, ~~2017,~~2020, respectively, as compared to the prior year periods, primarily as a result of additional depreciation expense on properties acquired in ~~2016 and 2017~~2019 and development properties placed in service ~~partially~~during 2019, offset by lower depreciation from properties sold in ~~2016~~2019 and ~~2017.~~2020.

Interest and other income decreased approximately $59.4 million or 91.2% and $1.6 million or 28.4% for the nine months and quarters ended September 30, 2017, respectively, compared to the prior year periods. The year to date decrease is primarily attributable ~~to the approximate $52.4 million~~Net gain ~~from the sale~~on sales of ~~the Company's entire interest in the management contracts and related rights associated with the military housing ventures at Joint Base Lewis McChord during the nine months ended September 30, 2016~~ ~~which did not reoccur in 2017. The year to date and quarterly decreases are also a result of the sale of the Company’s 421-a~~ real estate ~~tax certificates during the third quarter of 2016 which did not reoccur in 2017. The Company anticipates that interest and other income will approximate $1.2~~properties increased approximately $213.4 million for the ~~year ending December 31, 2017, excluding certain non-comparable insurance/litigation settlement proceeds.~~

Other expenses decreased approximately $11.3 million or 78.2% and $9.4 million or 90.1% for the nine months and quarters ended September 30, 2017, respectively, compared to the prior year periods, primarily due to a decrease in litigation settlements in 2017 as compared to 2016, as well as a decrease in annual transaction costs of approximately $1.5 million. In addition, the Company anticipates that substantially all of its transactions will now be accounted for as asset acquisitions, which means that transaction costs will largely be capitalized, as a result of its adoption of the new definition of a business standard effective January 1, 2017. See Note 2 in the Notes to Consolidated Financial Statements for further discussion.

~~Interest expense, including amortization of deferred financing costs, decreased approximately $101.3 million or 25.6% for the nine~~six months ended ~~September~~June 30, ~~2017~~2020 as compared to the prior year period, primarily as a result of ~~$108.5 million in lower debt extinguishment costs in 2017~~a higher sales volume with the sale of five consolidated apartment properties during the first half of 2020 as compared to ~~2016. The effective interest cost~~the sale of two consolidated apartment properties during the first half of 2019. Net gain on ~~all indebtedness for the nine months ended September 30, 2017 was 4.47% as compared to 4.69% for the prior year period. Interest expense, including amortization~~sales of ~~deferred financing costs,~~real estate properties increased approximately ~~$4.6~~$5.4 million or ~~5.2%~~3.9% for the quarter ended ~~September~~June 30, ~~2017~~2020 as compared to the prior ~~period. The increase is~~year period, primarily ~~due to~~as a result of ~~lower capitalized interest~~the sale of two consolidated apartment properties sold for a higher gain in the second quarter of 2020 as compared to the sale of two consolidated properties in the same period in 2019.

Interest and other income increased approximately $1.5 million or 80.3% and approximately $0.4 million or 31.2% for the ~~current period~~six months and quarter ended June 30, 2020, respectively, as compared to the prior ~~period. The effective interest cost~~year periods. These increases are primarily due to higher insurance/litigation settlement proceeds that did not occur in 2019, partially offset by decreases in short-term investment income on ~~all indebtedness for the quarter ended September 30, 2017 was 4.35%~~cash and restricted deposit accounts in 2020 as compared to ~~4.67%~~2019 due to a lower rate environment and lower overall balances.

Other expenses decreased approximately $4.2 million or 49.6% and approximately $3.4 million or 66.9% for the prior year period. The Company capitalized interest of approximately $23.2 million and $41.7 million during the nine months ended September 30, 2017 and 2016, respectively, and $6.6 million and $13.3 million during the quarters ended September 30, 2017 and 2016, respectively. The Company anticipates that interest expense from continuing operations, excluding debt extinguishment costs/prepayment penalties, will approximate $370.5 million to $374.7 million and capitalized interest will approximate $25.0 million to $27.0 million for the year ending December 31, 2017.

~~Income and other tax expense decreased approximately $0.5 million or 40.3% and $0.2 million or 46.5% for the nine~~six months and ~~quarters~~quarter ended ~~September~~June 30, ~~2017,~~2020, respectively, as compared to the prior year periods, primarily due to decreases in various ~~state and local taxes~~consulting costs related to a data analytics project which was completed last year and litigation and environmental settlements, partially offset by increases in advocacy contributions in 2020 as compared to 2019.

Interest expense, including amortization of deferred financing costs, decreased approximately $38.0 million or 18.1% and approximately $28.6 million or 25.4% for the ~~Company's elevated~~six months and quarter ended June 30, 2020, respectively, as compared to the prior year periods. The decrease is due primarily to lower debt extinguishment costs, lower overall debt balances outstanding between the periods as a result of deploying disposition ~~activity in 2016 vs. 2017.~~proceeds to repay debt, as well as lower overall interest rates. The effective interest cost on all indebtedness, excluding debt extinguishment costs/prepayment penalties, for the six months ended June 30, 2020 was 3.95% as compared to 4.34% for the prior year period, and for the quarter ended June 30, 2020 was 3.96% as compared to 4.34% for the prior year period. The Company ~~anticipates that income~~capitalized interest of approximately $4.1 million and ~~other tax expense will approximate $1.0~~$2.7 million ~~for~~during the ~~year ending December 31, 2017.~~six months ended June 30, 2020 and 2019, respectively, and $2.3 million and $1.5 million during the quarters ended June 30, 2020 and 2019, respectively.

Income from investments in unconsolidated entities decreased approximately ~~$8.0~~$70.3 million and ~~$8.1~~$69.8 million for the ~~nine~~six months and ~~quarters~~quarter ended ~~September~~June 30, ~~2017,~~2020, respectively, as compared to the prior year periods, primarily ~~due to the~~as a result of a $69.5 million gain on the sale of ~~one~~two unconsolidated ~~apartment property~~properties in ~~the prior year~~2019 that did not occur in ~~2017.~~the same periods in 2020.

Net ~~gain on sales of real estate~~(income) loss attributable to Noncontrolling Interests in partially owned properties decreased approximately ~~$3.7~~ ~~billion or 96.3% as a result of~~$11.8 million for the ~~sale of 91 consolidated apartment properties (including the Starwood Portfolio) during the nine~~six months ended ~~September~~June 30, 2016 as compared to only four consolidated apartment property sales during the nine months ended September 30, 2017, all of which did not meet the criteria for reporting discontinued operations. Net gain on sales of real estate properties decreased approximately $72.7 million and 80.8% during the quarter ended September 30, 2017 compared to the prior period as a result of the sale of one consolidated apartment property compared to the sale of eight consolidated properties in the prior year. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.

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Net gain on sales of land parcels increased approximately $3.4 million or 21.6% due to the gain on sale of one land parcel with a low basis during the nine months ended September 30, 2017 as compared to the gain on sales of four land parcels during the nine months ended September 30, 2016. Net gain on sales of land parcels decreased approximately $4.0 million during the quarter ended September 30, 20172020, as compared to the prior year period, primarily as a result of noncontrolling interest allocations related to the ~~gain on~~ sale of one ~~land parcel~~partially owned apartment property in 2020 as compared to no sales in the ~~prior year that did not occur~~same period in ~~2017.~~2019.

Liquidity and Capital Resources

The Company believes its current liquidity position is strong despite the impact of the COVID-19 pandemic. With approximately $2.4 billion in readily available liquidity, limited near-term maturities, very strong credit metricsand ample access to capital markets at historically low rates, the Companybelieves it is well positioned to meet its future obligations. See further discussion below.

Short-Term Liquidity and Cash Proceeds

The Company generally expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing properties and scheduled unsecured note and mortgage note repayments, through its working capital, net cash provided by operating activities and borrowings under the Company’s revolving credit facility and commercial paper program. ~~Under normal operating conditions,~~Currently, the Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions.

~~As of January 1, 2017,~~The following table presents the ~~Company had approximately $77.2 million of~~Company’s balances for cash and cash equivalents, restricted deposits and the ~~amount~~ available borrowing capacity on its revolving credit facility ~~was $1.96 billion (net~~as of ~~$20.6 million which was restricted/dedicated to support letters of credit~~June 30, 2020 and ~~net of $20.0 million~~December 31, 2019 (amounts in principal outstanding on the commercial paper program). 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, 2017 was approximately $46.6 million and the amount available on its revolving credit facility was $1.76 billion (net of $11.1 million which was restricted/dedicated to support letters of credit and net of $230.0 million in principal outstanding on the commercial paper program).thousands):

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	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	187,416	$	45,753
Restricted deposits	$	58,117	$	71,246
Unsecured revolving credit facility availability	$	2,399,051	$	1,379,071

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, the Company generated proceeds from various transactions, which included the following:

~~Disposed of four consolidated rental properties and one land parcel, receiving net proceeds of approximately $350.0 million;~~

•

Disposed of five consolidated rental properties, receiving net proceeds of approximately $747.6 million;

~~Issued $400.0 million of ten-year 3.25% fixed rate public notes, receiving net proceeds of approximately $399.3 million before underwriting fees, hedge termination costs and other expenses;~~

•

Obtained $495.0 million in a 2.60% fixed rate mortgage loan pool maturing on May 1, 2030; and

~~Issued $300.0 million of thirty-year 4.00% fixed rate public notes, receiving net proceeds of approximately $293.2 million before underwriting fees and other expenses; and~~

Issued approximately 0.4 million Common Shares related to share option exercises and ESPP purchases and received net proceeds of $15.9 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).

•

Issued Common Shares related to share option exercises and ESPP purchases and received net proceeds of $13.7 million, which were contributed to the capital of the Operating Partnership in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis).

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, the above proceeds along with net cash flow from operations and borrowings from the ~~Company's~~Company’s revolving line of credit and commercial paper program were primarily utilized to:

•

Invest $95.2 million primarily in development projects; and

•

Repay $95.4 million of mortgage loans (inclusive of scheduled principal repayments).

~~Acquire four consolidated rental properties for approximately $466.4~~Subsequent to June 30, 2020, the Company prepaid at par $19.7 million of the $23.7 million in ~~cash;~~

~~Invest $227.2~~debt maturities remaining in 2020. The Company has debt maturities of $834.9 million ~~primarily~~ in ~~development projects;~~

~~Repay $502.2~~2021, $750.0 million of ~~mortgage loans and incur prepayment penalties of approximately $12.3 million; and~~which is due on December 15, 2021.

~~Repay $394.1 million of 5.750% unsecured notes at maturity.~~

Credit Facility and Commercial Paper Program

~~On November 3, 2016, the~~The Company ~~replaced its existing~~has a $2.5 ~~billion facility with a $2.0~~ billion unsecured revolving credit facility maturing ~~January 10, 2022.~~November 1, 2024. The Company has the ability to increase available borrowings by an additional $750.0 million by adding ~~additional banks~~lenders to the facility, or obtaining the agreement of existing ~~banks~~lenders to increase their ~~commitments.~~commitments or incurring one or more term loans. The interest rate on advances under the facility will generally be LIBOR plus a spread (currently ~~0.825%~~0.775%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently ~~12.5 basis points)~~0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit ~~rating~~rating.

The unsecured revolving credit agreement contains provisions that establish a process for entering into an amendment to replace LIBOR under certain circumstances, such as the anticipated phase-out of LIBOR by the ~~Company's long-term debt.~~end of 2021. At this time, it cannot be determined with certainty what interest rate(s) may succeed LIBOR, if any, and how any successor or alternative rates for LIBOR may affect borrowing costs or the availability of variable interest rate borrowings.

~~On February 2, 2015, the~~The Company ~~entered into~~has an unsecured commercial paper note program in the United States. The

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Company may borrow up to a maximum of ~~$500.0 million~~$1.0 billion under this program subject to market conditions. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the ~~Company's~~Company’s other unsecured senior indebtedness. ~~As of October 27, 2017, there was~~While the COVID-19 pandemic caused a ~~balance of $440.0 million outstanding on~~temporary disruption in the commercial paper ~~program.~~market in March 2020, the Company has maintained access to such market and expects to continue to be able to do so in the future.

AsThe Company limits its utilization of ~~October 27, 2017, no amounts were outstanding and the amount available on~~ the revolving credit facility ~~was $1.55 billion (net of $6.6 million which was restricted/dedicated~~in order to maintain liquidity to support ~~letters of credit and net of $440.0 million in principal outstanding~~its $1.0 billion commercial paper program along with certain other obligations. The following table presents the availability on the ~~commercial paper program). This~~Company’s unsecured revolving credit facility ~~may, among other potential uses, be used to fund property acquisitions, costs for certain properties under development and short-term liquidity requirements.~~as of July 28, 2020 (amounts in thousands):

	July 28, 2020
Unsecured revolving credit facility commitment	$	2,500,000
Commercial paper balance outstanding		—
Unsecured revolving credit facility balance outstanding		—
Other restricted amounts		(100,949	)
Unsecured revolving credit facility availability	$	2,399,051

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Dividend Policy

The ~~Company’s~~Company determines its dividends/distributions based on actual and ~~the Operating Partnership’s dividend policy has not changed from the information included in~~projected financial conditions, the Company’s actual and projected liquidity and operating results, the ~~Operating Partnership’s Annual Report on Form 10-K~~Company’s projected cash needs for capital expenditures and other investment activities and such other factors as the Company’s Board of Trustees deems relevant. The Company declared a dividend/distribution for the ~~year ended December 31, 2016.~~ first and second quarters of 2020 of $0.6025 per share/unit in each quarter, an annualized increase of 6.2% over the amount paid in 2019. All future dividends/distributions remain subject to the discretion of the Company’s Board of Trustees.

Total dividends/distributions paid in ~~October 2017~~July 2020 amounted to ~~$192.6~~$232.2 million (excluding distributions on Partially Owned Properties), which ~~included~~consisted of certain distributions declared during the ~~third~~ quarter ended ~~September~~June 30, ~~2017.~~2020.

Long-Term Financing and Capital Needs

The Company expects to meet its long-term liquidity requirements, such as lump sum unsecured note and mortgage debt maturities, property acquisitions and financing of ~~construction and~~ development activities, through the issuance of secured and unsecured debt and equity securities ~~including~~(including additional OP ~~Units,~~Units), proceeds received from the disposition of certain properties and joint ventures, ~~and~~along with cash generated from operations after all distributions. ~~In addition, the~~The Company has a significant number of unencumbered properties available to secure additional mortgage borrowings ~~in the event that the public~~should unsecured capital ~~markets are~~be unavailable or the cost of alternative sources of capital isbe too high. The ~~fair~~ value of and cash flow from these unencumbered properties are in excess of the requirements the Company must maintain in order to comply with covenants under its unsecured notes and line of ~~credit and commercial paper program.~~ credit. Of the ~~$25.9~~$27.2 billion in investment in real estate on the Company’s balance sheet at ~~September~~June 30, ~~2017, $20.0~~2020, $23.0 billion or ~~77.1%~~84.7% was ~~unencumbered.~~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.

EQR issues ~~public~~ equity ~~from time to time~~ and guarantees certain debt of the Operating ~~Partnership.~~Partnership from time to time. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership.

The Company’s total debt summary and debt maturity schedules as of ~~September~~June 30, ~~2017~~2020 are as follows:

Debt Summary as of ~~September~~June 30, ~~2017~~2020

($ in thousands)

									Weighted										Weighted
						Weighted			Average							Weighted			Average
						Average			Maturities		Debt					Average			Maturities
	Amounts (1)		% of Total			Rates (1)			(years)		Balances		% of Total			Rates			(years)
Secured	$	3,619,180		40.2	%		4.33	%		5.8	$	2,340,757		27.8	%		3.51	%		7.0
Unsecured		5,373,092		59.8	%		4.22	%		10.8		6,081,102		72.2	%		3.85	%		10.3
Total	$	8,992,272		100.0	%		4.27	%		8.8	$	8,421,859		100.0	%		3.77	%		9.4
Fixed Rate Debt:
Secured – Conventional	$	2,983,680		33.2	%		4.91	%		4.3	$	1,972,862		23.4	%		3.94	%		5.4
Unsecured – Public		4,693,929		52.2	%		4.68	%		12.2		6,081,102		72.2	%		4.06	%		10.3
Fixed Rate Debt		7,677,609		85.4	%		4.77	%		9.1		8,053,964		95.6	%		4.03	%		9.1
Floating Rate Debt:
Secured – Conventional		7,046		0.1	%		0.98	%		16.1		7,315		0.1	%		3.35	%		2.0
Secured – Tax Exempt		628,454		6.9	%		1.49	%		12.4		360,580		4.3	%		1.49	%		15.5
Unsecured – Public (2)		449,319		5.0	%		1.77	%		1.7
Unsecured – Revolving Credit Facility		—		—			2.00	%		4.2		—		—			1.47	%		4.3
Unsecured – Commercial Paper Program		229,844		2.6	%		1.37	%		—		—		—			1.81	%		—
Floating Rate Debt		1,314,663		14.6	%		1.57	%		6.9		367,895		4.4	%		1.68	%		15.2
Total	$	8,992,272		100.0	%		4.27	%		8.8	$	8,421,859		100.0	%		3.77	%		9.4

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~~(1)~~

~~Net of the effect of any derivative instruments. Weighted average rates are for the nine months ended September 30, 2017.~~

~~(2)~~

~~Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate~~Table of ~~90-Day LIBOR plus 0.61%.~~Contents

Debt Maturity Schedule as of ~~September~~June 30, ~~2017~~2020

($ in thousands)

Year	Fixed Rate (1)				Floating Rate (1)				Total			% of Total			Weighted Average Rates on Fixed Rate Debt (1)			Weighted Average Rates on Total Debt (1)			Fixed Rate				Floating Rate			Total			% of Total			Weighted Average Coupons on Fixed Rate Debt			Weighted Average Coupons on Total Debt
2017	$	105,731			$	230,100		(2)	$	335,831			3.7	%		7.08	%		3.20	%
2018		49,734				97,235				146,969			1.6	%		5.55	%		2.99	%
2019		506,731		(3)		470,644				977,375			10.7	%		5.17	%		3.58	%
2020		1,678,592		(4)		400				1,678,992			18.5	%		5.49	%		5.49	%	$	23,669			$	—		$	23,669			0.3	%		4.75	%		4.75	%
2021		927,506				300				927,806			10.2	%		4.64	%		4.64	%		834,904		(1)		—			834,904			9.8	%		4.63	%		4.63	%
2022		265,341				400				265,741			2.9	%		3.26	%		3.26	%		264,185				7,796			271,981			3.2	%		3.25	%		3.22	%
2023		1,326,800				4,400				1,331,200			14.6	%		3.74	%		3.73	%		1,325,588				3,500			1,329,088			15.6	%		3.74	%		3.73	%
2024		1,272				10,500				11,772			0.1	%		4.79	%		1.39	%		—				6,100			6,100			0.1	%	N/A				0.15	%
2025		451,334				12,800				464,134			5.1	%		3.38	%		3.31	%		450,000				8,200			458,200			5.4	%		3.38	%		3.32	%
2026		593,424				14,000				607,424			6.7	%		3.59	%		3.53	%		592,025				9,000			601,025			7.0	%		3.58	%		3.53	%
2027+		1,826,437				535,265				2,361,702			25.9	%		4.15	%		3.43	%
2027																						400,000				9,800			409,800			4.8	%		3.25	%		3.18	%
2028																						900,000				42,380			942,380			11.1	%		3.79	%		3.62	%
2029																						888,120				11,500			899,620			10.6	%		3.30	%		3.26	%
2030+																						2,445,850				288,135			2,733,985			32.1	%		3.56	%		3.21	%
Subtotal		7,732,902				1,376,044				9,108,946			100.0	%		4.39	%		3.97	%		8,124,341				386,411			8,510,752			100.0	%		3.67	%		3.51	%
Deferred Financing Costs and Unamortized (Discount)		(55,293	)			(61,381	)			(116,674	)	N/A			N/A			N/A				(70,377	)			(18,516	)		(88,893	)	N/A			N/A			N/A
Total	$	7,677,609			$	1,314,663			$	8,992,272			100.0	%		4.39	%		3.97	%	$	8,053,964			$	367,895		$	8,421,859			100.0	%		3.67	%		3.51	%

(1)	~~Net~~$750.0 million of ~~the effect of any derivative instruments. Weighted average rates are as of September 30, 2017.~~

~~(2)~~

~~Includes $230.0 million in principal outstanding~~4.625% unsecured notes will mature on ~~the Company’s commercial paper program.~~

~~(3)~~

~~Includes a $500.0 million 5.19% mortgage loan with a maturity date of October 1, 2019 that can be prepaid at par beginning October 1, 2018.~~

~~(4)~~

Includes a $550.0 million 6.08% mortgage loan with a maturity date of March 1, 2020 that can be prepaid at par beginning March 1, 2019. Also includes a $500.0 million 5.78% mortgage loan with a maturity date of July 1, 2020 that can be prepaid at par beginning July 1, 2019.December 15, 2021.

See Note 89 in the Notes to Consolidated Financial Statements for additional discussion of debt at ~~September~~June 30, ~~2017.~~2020.

~~ERPOP's~~ERPOP’s long-term senior debt ratings and short-term commercial paper ratings, as well as ~~EQR's~~EQR’s long-term preferred equity ratings, ~~which~~have recently been reaffirmed during the COVID-19 pandemic by all ~~have~~three rating agencies listed below and all continue to maintain a stable ~~outlook, as~~outlook. As of ~~October 27, 2017~~July 28, 2020, the ratings are as follows:

	Standard & ~~Poor's~~Poor’s	~~Moody's~~Moody’s	Fitch
~~ERPOP's~~ERPOP’s long-term senior debt rating	A-	A3 ~~(1)~~	A-A
~~ERPOP's~~ERPOP’s short-term commercial paper rating	A-2	P-2	~~F-2~~F-1
~~EQR's~~EQR’s long-term preferred equity rating	BBB	Baa1 ~~(1)~~	~~BBB~~BBB+

~~(1)~~

~~The long-term credit ratings listed above reflect the one-level upgrade by Moody’s effective July 17, 2017.~~

See Note 14 in the Notes to Consolidated Financial Statements for discussion of the events, if any, which occurred subsequent to ~~September~~June 30, ~~2017.~~2020.

Debt Covenants

The Company’s unsecured debt includes certain financial and operating covenants including, among other things, maintenance of certain financial ratios. These provisions are contained in the indentures applicable to each note payable or the credit agreement for our line of credit. The Company was in compliance with its unsecured debt covenants for all periods presented. The following table presents the Company’s selected unsecured public debt covenants as of June 30, 2020, March 31, 2020 and December 31, 2019:

	June 30, 2020	March 31, 2020	December 31, 2019
Debt to Adjusted Total Assets (not to exceed 60%)	31.8%	32.5%	33.8%
Secured Debt to Adjusted Total Assets (not to exceed 40%)	9.7%	8.2%	8.2%
Consolidated Income Available for Debt Service to Maximum Annual Service Charges (must be at least 1.5 to 1)	4.96	5.09	5.07
Total Unencumbered Assets to Unsecured Debt (must be at least 125%)	439.5%	408.3%	386.1%

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Note: These selected covenants represent the most restrictive financial covenants relating to ERPOP’s outstanding public debt securities and are defined in the indenture relating to such securities. The Company maintains substantial additional borrowing capacity and, as reflected by the above selected covenant information, believes it could currently incur substantial additional debt before it would breach any of its debt covenants.

Capitalization of Fixed Assets and Improvements to Real Estate

The Company’s and the Operating Partnership’s capital expenditures policy has not changed from the information included in the Company’s and the Operating ~~Partnership's~~Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, our actual capital expenditures to real estate included the following (amounts in thousands except for apartment unit and per apartment unit amounts):

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Capital Expenditures to Real Estate

For the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020

	Same Stores Properties (5)		Non-Same Store Properties/Other (6)		Total		Same Store Avg. Per Apartment Unit		Same Store Properties (4)		Non-Same Store Properties/Other (5)		Total		Same Store Avg. Per Apartment Unit
Total Apartment Units ~~(1)~~		70,285		7,072		77,357				74,264		4,146		78,410

Building Improvements ~~(2)~~(1)	$	75,369	$	2,379	$	77,748	$	1,072	$	29,657	$	1,387	$	31,044	$	399
Rehab Expenditures (3)		35,698		889		36,587		508
Renovation Expenditures (2)										15,022		6		15,028		202
Replacements ~~(4)~~(3)		28,571		352		28,923		407		14,955		238		15,193		202
Total Capital Expenditures	$	139,638	$	3,620	$	143,258	$	1,987
Total Capital Expenditures to Real Estate									$	59,634	$	1,631	$	61,265	$	803

(1)	~~Total Apartment Units – Excludes 945 unconsolidated apartment units for which capital expenditures to real estate are self-funded and do not consolidate into the Company's results.~~

~~(2)~~

Building Improvements – Includes roof replacement, paving, building mechanical equipment systems, exterior siding and painting, major landscaping, furniture, fixtures and equipment for amenities and common areas, vehicles and office and maintenance equipment.

~~(3)~~(2)

~~Rehab~~Renovation Expenditures – Apartment unit renovation costs (primarily kitchens and baths) designed to reposition these units for higher rental levels in their respective markets. Amounts for 658 same store ~~properties~~apartment units approximated ~~$13,000~~$22,830 per apartment unit ~~rehabbed.~~renovated.

~~(4)~~(3)

Replacements – Includes appliances, mechanical equipment, fixtures and flooring (including hardwood and carpeting).

~~(5)~~(4)

Same Store Properties – Primarily includes all properties acquired or completed that are stabilized prior to January 1, ~~2016,~~2019, less properties subsequently sold. Properties are included in Same Store when they are stabilized for all of the current and comparable periods presented.

~~(6)~~(5)

Non-Same Store Properties/Other – Primarily includes all properties acquired during ~~2016~~2019 and ~~2017,~~2020, plus any properties in lease-up and not stabilized as of January 1, ~~2016.~~2019. Also includes capital expenditures for properties sold.

The ~~Company estimates that during 2017 it will spend approximately $2,500 per same store apartment unit or $176.0 million of total~~COVID-19 pandemic has led us to temporarily slow our capital expenditures, including our renovation activities, to real estate. During 2017, the Company expects to spend approximately $43.0 million for apartment unit rehab expenditures on same store properties at an average cost of approximately $13,000 per apartment unit rehabbed. The anticipated total capital expenditures to real estate amounts represent an increase as a percentage of rental revenues, in the cost per unitthose deemed essential. Governmental movement restrictions, social distancing requirements, and in the absolute dollar amounts over 2016. We will continue to create value from our properties by doing those rehabs that meet our investment criteria. The above assumptions are based on current expectations and are forward-looking.some cases, difficulty in procuring materials make continuing these activities more difficult.

During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, 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 ~~$0.8~~$15.5 million. The Company expects to fund approximately ~~$0.6~~$6.2 million in total non-real estate capital additions for the remainder of ~~2017.~~2020. These year-to-date and anticipated fundings ~~represent a decrease over 2016, which is~~are significantly higher than 2019 and are primarily driven by ~~the substantial completion of the implementation of new systems~~corporate office renovations during ~~2016. The above assumption is based on current expectations and is forward-looking.~~2020.

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~~Capital expenditures to real estate and non-real estate capital additions are generally funded from net cash provided by operating activities and from investment cash flow.~~

Derivative Instruments

The Company has a policy of only entering into derivative contracts with major financial institutions based upon their credit ratings and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from these instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives it currently has in place.

See Note 910 in the Notes to Consolidated Financial Statements for additional discussion of derivative instruments at ~~September~~June 30, ~~2017.~~2020.

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Definitions

The definition of certain terms described above or below are as follows:

Acquisition Cap Rate – NOI that the Company anticipates receiving in the next 12 months (or the year two or three stabilized NOI for properties that are in lease-up at acquisition) less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross purchase price of the asset. The weighted average Acquisition Cap Rate for acquired properties is weighted based on the projected NOI streams and the relative purchase price for each respective property.

•

Disposition Yield – NOI that the Company anticipates giving up in the next 12 months less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross sale price of the asset. The weighted average Disposition Yield for sold properties is weighted based on the projected NOI streams and the relative sales price for each respective property.

•

Average Rental Rate– Total Residential rental revenues reflected on a straight-line basis in accordance with GAAP divided by the weighted average occupied apartment units for the reporting period presented.

•

Blended Rate – The weighted average of New Lease Change and Renewal Rate Achieved.

•

Development Yield – NOI that the Company anticipates receiving in the next 12 months following stabilization less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $50-$150 per apartment unit depending on the type of asset) divided by the Total Budgeted Capital Cost of the asset. The weighted average Development Yield for development properties is weighted based on the projected NOI streams and the relative Total Budgeted Capital Cost for each respective property.

•

Disposition Yield – NOI that the Company anticipates giving up in the next 12 months less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross sales price of the asset. The weighted average Disposition Yield for sold properties is weighted based on the projected NOI streams and the relative sales price for each respective property.

•

New Lease Change – The change in rent for a lease with a new or transferring resident compared to the rent for the prior lease of the identical apartment unit, regardless of lease term and without concessions or discounts being applied.

•

Non-Residential – Consists of revenues and expenses from retail and public parking garage operations.

•

Physical Occupancy – The weighted average occupied apartment units for the reporting period divided by the average of total apartment units available for rent for the reporting period.

•

Renewal Rate Achieved – The change in rent for a new lease on an apartment unit where the lease has been renewed as compared to the rent for the prior lease of the identical apartment unit, regardless of lease term and without concessions or discounts being applied.

•

Residential – Consists of multifamily apartment revenues and expenses.

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Unlevered Internal Rate of Return (“IRR”) – The Unlevered IRR on sold properties is the compound annual rate of return calculated by the Company based on the timing and amount of: (i) the gross purchase price of the property plus any direct acquisition costs incurred by the Company; (ii) total revenues earned during the Company’s ownership period; (iii) total direct property operating expenses (including real estate taxes and insurance) incurred during the Company’s ownership period; (iv) capital expenditures incurred during the Company’s ownership period; and (v) the gross sales price of the property net of selling costs. Each of the items (i) through (v) is calculated in accordance with generally accepted accounting principles (“GAAP”).

•

% of Stabilized Budgeted NOI – Represents original budgeted 2020 NOI for stabilized properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up.

•

Traffic – Consists of an expression of interest in an apartment by completing an in-person tour, self-guided tour or virtual tour that may result in an application to lease.

•

Turnover– Total Residential move-outs (including inter-property and intra-property transfers) divided by total Residential apartment units.

•

Weighted Average Coupons – Contractual interest rate for each debt instrument weighted by principal balances as of June 30, 2020. In case of debt for which fair value hedges are in place, the rate payable under the corresponding derivatives is used in lieu of the contractual interest rate.

•

Weighted Average Rates – Interest expense for each debt instrument for the six months ended June 30, 2020 weighted by its average principal balance for the same period. Interest expense includes amortization of premiums, discounts and other comprehensive income on debt and related derivative instruments. In case of debt for which derivatives are in place, the income or expense recognized under the corresponding derivatives is included in the total interest expense for the period.

Off-Balance Sheet Arrangements and Contractual Obligations

The Company has various unconsolidated interests in certain joint ventures. The Company does not believe that these unconsolidated investments have a materially different impact on its liquidity, cash flows, capital resources, credit or market risk than its consolidated operating and/or other activities. See ~~Notes 2 and~~Note 6 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s investments in partially owned entities. See also Note 12 in the Notes to Consolidated Financial Statements for discussion regarding the Company’s development projects.

The Company’s contractual obligations for the next five years and thereafter have not changed materially from the amounts and disclosures included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. See the updated debt maturity schedule included in Liquidity and Capital Resources for further discussion.

Critical Accounting Policies and Estimates

The Company’s and the Operating Partnership’s critical accounting policies and estimates have not changed ~~materially~~ from the information included in the Company’s and the Operating ~~Partnership's~~Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

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Funds From Operations and Normalized Funds From Operations

The following is the Company’s and the Operating Partnership’s reconciliation of net income to FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units for the ~~nine~~six months and quarters ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019:

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Funds From Operations and Normalized Funds From Operations

(Amounts in thousands)

	Nine Months Ended September 30,						Quarter Ended September 30,						Six Months Ended June 30,						Quarter Ended June 30,
	2017			2016			2017			2016			2020			2019			2020			2019
Net income	$	498,297		$	4,177,723		$	144,196		$	217,492		$	604,152		$	430,556		$	271,481		$	321,299
Net (income) attributable to Noncontrolling Interests – Partially Owned Properties		(2,354	)		(2,368	)		(801	)		(823	)
Preferred distributions		(2,318	)		(2,318	)		(772	)		(773	)
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties														(13,410	)		(1,620	)		(880	)		(821	)
Preferred/preference distributions														(1,545	)		(1,545	)		(772	)		(772	)
Net income available to Common Shares and Units / Units		493,625			4,173,037			142,623			215,896			589,197			427,391			269,829			319,706
Adjustments:
Depreciation		542,964			528,242			184,100			179,230			418,398			404,723			205,976			200,508
Depreciation – Non-real estate additions		(3,808	)		(3,932	)		(1,228	)		(1,297	)		(2,307	)		(2,303	)		(1,020	)		(1,121	)
Depreciation – Partially Owned Properties		(2,500	)		(2,896	)		(834	)		(953	)		(1,686	)		(1,802	)		(830	)		(899	)
Depreciation – Unconsolidated Properties		3,430			3,606			1,145			1,139			1,224			1,772			611			850
Net (gain) on sales of unconsolidated entities - operating assets		(68	)		(8,841	)		—			(8,841	)
Net (gain) on sales of real estate properties		(141,761	)		(3,870,871	)		(17,328	)		(90,036	)
Discontinued operations:
Net (gain) on sales of discontinued operations		—			(43	)		—			(28	)
Net (gain) loss on sales of unconsolidated entities - operating assets														—			(69,522	)		—			(69,522	)
Net (gain) loss on sales of real estate properties														(352,243	)		(138,835	)		(144,266	)		(138,856	)
Noncontrolling Interests share of gain (loss) on sales of real estate properties														11,655			—			—			—
FFO available to Common Shares and Units / Units (1) (3) (4)		891,882			818,302			308,478			295,110			664,238			621,424			330,300			310,666
Adjustments:
Asset impairment and valuation allowances		—			—			—			—
Impairment – non-operating assets														—			—			—			—
Write-off of pursuit costs		2,329			3,379			783			816			3,278			2,987			1,651			1,539
Debt extinguishment (gains) losses, including prepayment penalties, preferred share/preference unit redemptions and non-cash convertible debt discounts		11,789			120,276			(613	)		112
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit)		(19,355	)		(73,600	)		(405	)		(7,007	)
Debt extinguishment and preferred share redemption (gains) losses														32			16,647			32			16,647
Non-operating asset (gains) losses														670			252			229			23
Other miscellaneous items		(4,195	)		8,673			(3,405	)		8,159			(2,310	)		4,418			(1,392	)		2,843
Normalized FFO available to Common Shares and Units / Units (2) (3) (4)	$	882,450		$	877,030		$	304,838		$	297,190		$	665,908		$	645,728		$	330,820		$	331,718

FFO (1) (3)	$	894,200		$	820,620		$	309,250		$	295,883		$	665,783		$	622,969		$	331,072		$	311,438
Preferred/preference distributions		(2,318	)		(2,318	)		(772	)		(773	)		(1,545	)		(1,545	)		(772	)		(772	)
FFO available to Common Shares and Units / Units (1) (3) (4)	$	891,882		$	818,302		$	308,478		$	295,110		$	664,238		$	621,424		$	330,300		$	310,666

Normalized FFO (2) (3)	$	884,768		$	879,348		$	305,610		$	297,963		$	667,453		$	647,273		$	331,592		$	332,490
Preferred/preference distributions		(2,318	)		(2,318	)		(772	)		(773	)		(1,545	)		(1,545	)		(772	)		(772	)
Normalized FFO available to Common Shares and Units / Units (2) (3) (4)	$	882,450		$	877,030		$	304,838		$	297,190		$	665,908		$	645,728		$	330,820		$	331,718

(1)

The National Association of Real Estate Investment Trusts (“~~NAREIT”~~Nareit”) defines funds from operations (“FFO”) ~~(April 2002~~(December 2018 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains ~~(or losses)~~or losses from sales and impairment write-downs of depreciable ~~operating properties, plus~~real estate and land when connected to the main business of a REIT, impairment write-downs of investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and depreciation and amortization ~~and after adjustments~~related to real estate. Adjustments for ~~unconsolidated partnerships~~partially owned consolidated and ~~joint ventures. Adjustments for~~ unconsolidated partnerships and joint ventures ~~will be~~are 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.~~

(2)	Normalized funds from operations (“Normalized FFO”) begins with FFO and excludes:

~~the impact of any expenses relating to non-operating asset impairment and valuation allowances;~~

~~pursuit cost write-offs;~~

gains and losses from early debt extinguishment, including prepayment penalties, preferred share/preference unit redemptions and the cost related to the implied option value of non-cash convertible debt discounts;

~~gains and losses on the sales of non-operating assets, including gains and losses from land parcel sales, net of the effect of income tax benefits or expenses; and~~

~~other miscellaneous items.~~

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•

the impact of any expenses relating to non-operating asset impairment;

•

pursuit cost write-offs;

•

gains and losses from early debt extinguishment and preferred share redemptions;

•

gains and losses from non-operating assets; and

•

other miscellaneous items.

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(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 from sales and impairment write-downs of depreciable real estate and excluding depreciation 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~~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~~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~~Company’s calculation of FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.

(4)

FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units are calculated on a basis consistent with net income available to Common Shares / Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares/preference units in accordance with GAAP. 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~~“Noncontrolling Interests ~~–Operating Partnership"~~– Operating Partnership”. Subject to certain restrictions, the Noncontrolling Interests ~~–Operating~~– 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

The Company’s and the Operating Partnership’s market risk has not changed materially from the amounts and information reported in Part II, Item ~~7A.~~ 7A, Quantitative and Qualitative Disclosures About Market Risk, to the Company’s and the Operating ~~Partnership's~~Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. See Note 910 in the Notes to Consolidated Financial Statements for additional discussion of derivative and other fair value instruments.

Item 4. Controls and Procedures

Equity Residential

(a)

Evaluation of Disclosure Controls and Procedures:

Effective as of ~~September~~June 30, ~~2017,~~2020, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

(b)

Changes in Internal Control over Financial Reporting:

There were no changes to the internal control over financial reporting of the Company identified in connection with the Company’s evaluation referred to ~~in Item 4(a)~~ above that occurred during the ~~third~~second quarter of ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ERP Operating Limited Partnership

(a)

Evaluation of Disclosure Controls and Procedures:

Effective as of ~~September~~June 30, ~~2017,~~2020, the Operating Partnership carried out an evaluation, under the supervision and with the participation of the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of EQR, of the effectiveness of the Operating Partnership’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Operating Partnership in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

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(b)

Changes in Internal Control over Financial Reporting:

There were no changes to the internal control over financial reporting of the Operating Partnership identified in connection with

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the Operating Partnership’s evaluation referred to ~~in Item 4(a)~~ above that occurred during the ~~third~~second quarter of ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As of ~~September~~June 30, ~~2017,~~2020, the Company does not believe there is any litigation pending or threatened against it that, individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company.

Item 1A. Risk Factors

~~There have been no material changes to the~~The Company’s risk ~~factors that were discussed~~factor disclosures in Part I, Item 1A of the Company’s and the Operating ~~Partnership's~~Partnership’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019 are hereby supplemented as follows:

Risk of Pandemics or Other Health Crisis.

A pandemic, epidemic or other health crisis, similar to the recent outbreak of COVID-19, affecting areas where our properties, corporate/regional offices or major service providers are located could have an adverse effect on our business, results of operations, cash flows and financial condition.

The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations, cash flows and financial condition.

In December 2019, COVID-19 was first reported in Wuhan, China, and in March 2020, the World Health Organization declared COVID-19 a pandemic. The outbreak has led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to control its spread, including restrictions on movement and business operations such as travel bans, border closings, business closures, quarantines, social distancing and shelter-in-place orders. The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide. We cannot assure you conditions will not continue to deteriorate as a result of the pandemic.

The impact of the COVID-19 pandemic and measures to prevent its spread could materially negatively impact our business, results of operations, financial condition and liquidity in a number of ways, including:

•

A decrease in our rental revenues or increase in related reserves and write-offs as a potential result of:

•

Our residents’ and tenants’ ability to pay their rent on time or at all and the demand for multifamily properties within our markets;

•

Our geographic concentrations, especially in our dense urban submarketswhich often makes social distancing more difficult, may experience longer periods of economic disruption due to delays in business re-openings and/or required re-closures, as a result of which we may be more susceptible to the impact of COVID-19;

•

Changes in resident preferences, including changes due to increased employer flexibility to work from home, making them less likely to want to live in dense urban centers where we own many of our properties or to want to live in denser forms of multifamily housing like the high-rise or mid-rise housing the Company owns;

•

The concessions made, and those that continue to be made, to residents’ rent obligations, which may not be on terms as favorable to us as those currently in place;

•

The deterioration of global economic conditions as a result of the pandemic may ultimately decrease occupancy levels and pricing across our portfolio as residents reduce or defer their spending;

•

Resident or tenant nonpayment, default or bankruptcy, as a result of which we may incur costs in protecting our investment and releasing our property;

•

The risk that local and national authorities may expand or extend certain measures imposing restrictions on our ability to enforce residents’ or tenants’ contractual rental obligationsand limiting our ability to raise rents;

•

The risk that local and national authorities may not extendor may reduce the government stimulus and relief

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programs which may be providing benefits to our residents (or employers of our residents) and tenants;

•

Restrictions inhibiting our employees’ ability to meet with existing and potential residents has disrupted and could in the future further disrupt our ability to lease apartments which could adversely impact our rental rate and occupancy levels; and

•

Ground floor retail and parking garage operations in our apartment buildings are vulnerable to the effects from the COVID-19 pandemic, which we expect may adversely impact our retail tenants' and parking garage operations and, in turn, could result in an increase in tenant/garage operator defaults, rent deferrals/abatements and rent reductions.

•

The risk that our access to capital at attractive terms may be diminished due to, among other factors: (i) potential disruptions in the long-term debt and commercial paper markets; (ii) the risk that a prolonged economic slowdown or recession could negatively impact our lending counterparties; and (iii) reductions in the Company’s credit ratings as a result of a protracted increase in unemployment or reduced income of our residents and tenants;

•

The risk that we may lose our ability to borrow under our commercial paper program if our credit ratings were to fall below investment grade;

•

The risk of a prolonged outbreak and/or second wave of an outbreak causing long-term damage to economic conditions, which in turn could cause material declines in the fair value of our assets, leading to asset impairment charges;

•

A general decline in the real estate market or demand for real estate transactions could hinder our ability to acquire or dispose of properties, including through our joint ventures. Also, a possible increase in distressed sales of real estate due to the impact of COVID-19 could decrease real estate values in our markets and limit our ability to sell our properties at advantageous prices or at all;

•

The risk of delays in our development and renovation projects due to construction moratoriums (such as what occurred with our Boston development project), governmental movement restrictions, social distancing requirements, the closure of many permitting and inspection agencies and disruptions in the supply of construction materials due to problems in the supply chain or otherwise;

•

A possible further decline in the price of our common shares due to a prolonged economic recession or other impacts described herein;

•

The risk of a prolonged outbreak which could cause an adverse impact on our future financial results, cash flows and financial condition and therefore our ability to pay dividends;

•

Increased risks of potential cyber attacks due to an increased reliance on remote working and other interactions with our current and prospective residents; and

•

Potential inability to maintain adequate staffing at our properties and corporate/regional offices due to shelter-in-place orders, an outbreak at one or more of our properties or corporate/regional offices and/or the continued duration or expansion of the pandemic.

The extent of the COVID-19 pandemic’s effect on our operational and financial performance will depend on future developments including the duration, spread and intensity of the outbreak, all of which are uncertain and difficult to predict. Due to the speed with which the situation is continuing to develop, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, cash flows and financial condition could be material.

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

(a) Unregistered Common Shares Issued in the Quarter Ended ~~September~~June 30, ~~2017~~2020 - Equity Residential

During the quarter ended ~~September~~June 30, ~~2017,~~2020, EQR issued ~~6,146~~55,418 Common Shares in exchange for ~~6,146~~55,418 OP Units held by various limited partners of ERPOP. OP Units are generally exchangeable into Common Shares on a one-for-one basis or, at the optionofERPOP,thecashequivalentthereof,atanytimeoneyearafterthedateofissuance. Theseshareswereeitherregistered undertheSecuritiesActof1933,asamended ~~(the “Securities~~ (the“SecuritiesAct”),orissuedinrelianceonanexemptionfromregistrationunder Section 4(a)(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 theseexemptions.

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Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits – See the Exhibit Index.

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~~EXHIBI~~TEXHIBIT INDEX

Theexhibitslistedbelowarefiledaspartofthisreport. Referencestoexhibitsorotherfilingsunderthecaption ~~“Location”~~ “Location”indicate thattheexhibitorotherfilinghasbeenfiled,thattheindexedexhibitandtheexhibitreferredtoarethesameandthattheexhibit referredto ~~are the same and that the exhibit referred to~~ isincorporatedbyreference. TheCommissionfilenumbersforourExchangeActfilingsreferencedbeloware1-12252 (Equity Residential) and 0-24920 (ERP Operating LimitedPartnership).

Exhibit		Description	Location

~~4.1~~3.1		~~Form~~Second Amendment to Eighth Amended and Restated Bylaws of ~~3.250% Note due August 1, 2027~~Equity Residential, effective as of May 4, 2020..	Included as Exhibit ~~4.1~~3.1 to Equity ~~Residential’s and ERP Operating Limited Partnership's~~Residential's Form 8-K dated ~~July 31, 2017,~~May 4, 2020, filed on ~~August 2, 2017.~~

~~4.2~~		~~Form of 4.000% Note due August 1, 2047~~.	~~Included as Exhibit 4.2 to Equity Residential’s and ERP Operating Limited Partnership's Form 8-K dated July 31, 2017, filed on August 2, 2017.~~May 8, 2020.

10.1	*	~~Seventh~~ Amendment to ~~2011 Share Incentive~~the Equity Residential Supplemental Executive Retirement Plan,.	~~Attached herein.~~

12		~~Computation~~ effective as of ~~Ratio of Earnings to CombinedFixedCharges.~~June 1, 2020.	Attached herein.

31.1		Equity Residential – Certification of ~~David~~Mark J. ~~Neithercut,~~Parrell, ChiefExecutiveOfficer.	Attached herein.

31.2		Equity Residential – Certification of ~~Mark J. Parrell,~~Robert A. Garechana, ChiefFinancialOfficer.	Attached herein.

31.3		ERP Operating Limited Partnership – Certification of ~~David~~Mark J. ~~Neithercut,~~Parrell, Chief Executive Officer of Registrant’s GeneralPartner.	Attached herein.

31.4		ERP Operating Limited Partnership – Certification of ~~Mark J. Parrell,~~Robert A. Garechana, Chief Financial Officer of Registrant’s GeneralPartner.	Attached herein.

32.1		Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906oftheSarbanes-OxleyActof2002,of~~David~~ Mark J.~~Neithercut,~~ Parrell, ChiefExecutiveOfficeroftheCompany.	Attached herein.

32.2		Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906oftheSarbanes-OxleyActof2002,of~~Mark~~J.~~Parrell,~~ Robert A. Garechana, ChiefFinancialOfficeroftheCompany.	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 Officerof~~Registrant’sGeneralPartner.~~	~~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~~Executive Officer of Registrant’s GeneralPartner.	Attached herein.

~~101~~32.4		~~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~~Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the ~~period ended September 30, 2017, formatted in XBRL: (i) consolidated balance sheets, (ii) consolidated statements~~Sarbanes-Oxley Act of ~~operations and comprehensive income, (iii) consolidated statements~~2002, of ~~cash flows, (iv) consolidated statement~~Robert A. Garechana, Chief Financial Officer of ~~changes in equity (Equity Residential), (v) consolidated statement of changes in capital (ERP Operating Limited Partnership) and (vi) notes to consolidated financial statements.~~Registrant’s General Partner.	Attached herein.

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

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

Table of Contents

SIGNATURES

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

		EQUITY RESIDENTIAL

Date:	~~November 1, 2017~~August 3, 2020	By:	/s/ ~~Mark J. Parrell~~Robert A. Garechana
			~~Mark J. Parrell~~Robert A. Garechana
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:	~~November 1, 2017~~August 3, 2020	By:	/s/ Ian S. Kaufman
			Ian S. Kaufman
			Senior Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

		ERP OPERATING LIMITED PARTNERSHIP BY: EQUITY RESIDENTIAL ITS GENERAL PARTNER

Date:	~~November 1, 2017~~August 3, 2020	By:	/s/ ~~Mark J. Parrell~~Robert A. Garechana
			~~Mark J. Parrell~~Robert A. Garechana
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:	~~November 1, 2017~~August 3, 2020	By:	/s/ Ian S. Kaufman
			Ian S. Kaufman
			Senior Vice President and Chief Accounting Officer
			(Principal Accounting Officer)

Description	Balance Sheet Location	September 30, 2017			December 31, 2016
Assets
Ground lease intangibles – below market	Other Assets	$	191,918		$	178,251
Retail lease intangibles – above market	Other Assets		1,260			1,260
Lease intangible assets			193,178			179,511
Accumulated amortization			(21,305	)		(17,972	)
Lease intangible assets, net		$	171,873		$	161,539

Liabilities
Ground lease intangibles – above market	Other Liabilities	$	2,400		$	2,400
Retail lease intangibles – below market	Other Liabilities		5,270			5,270
Lease intangible liabilities			7,670			7,670
Accumulated amortization			(5,113	)		(4,509	)
Lease intangible liabilities, net		$	2,557		$	3,161

		Nine Months Ended						Quarter Ended
		September 30,						September 30,
Description	Income Statement Location	2017			2016			2017			2016
Ground lease intangible amortization	Property and Maintenance	$	(3,253	)	$	(3,241	)	$	(1,092	)	$	(1,080	)
Retail lease intangible amortization	Rental Income		524			675			80			222
Total amortization of above/below market lease intangibles		$	(2,729	)	$	(2,566	)	$	(1,012	)	$	(858	)

	Remaining
	2017			2018			2019			2020			2021			2022
Ground lease intangibles	$	(1,116	)	$	(4,463	)	$	(4,463	)	$	(4,463	)	$	(4,463	)	$	(4,463	)
Retail lease intangibles		16			71			71			71			71			27
Total	$	(1,100	)	$	(4,392	)	$	(4,392	)	$	(4,392	)	$	(4,392	)	$	(4,436	)

	Properties		Apartment Units		Purchase Price
Rental Properties – Consolidated (1)		4		947	$	468,050
Total		4		947	$	468,050

	Consolidated			Unconsolidated
	(VIE)			(Non-VIE)			(VIE) (1)			Total
Total properties		17			2			—			2
Total apartment units		3,215			945			—			945
Balance sheet information at 9/30/2017 (at 100%):
ASSETS
Investment in real estate	$	648,839		$	236,630		$	172,995		$	409,625
Accumulated depreciation		(226,607	)		(40,840	)		(48,670	)		(89,510	)
Investment in real estate, net		422,232			195,790			124,325			320,115
Cash and cash equivalents		22,914			7,194			139			7,333
Investments in unconsolidated entities		45,035			—			—			—
Deposits – restricted		385			258			—			258
Other assets		26,246			450			105			555
Total assets	$	516,812		$	203,692		$	124,569		$	328,261

LIABILITIES AND EQUITY/CAPITAL
Mortgage notes payable, net (2)	$	302,037		$	145,424		$	—		$	145,424
Accounts payable & accrued expenses		2,975			2,644			150			2,794
Accrued interest payable		1,024			691			—			691
Other liabilities		453			308			27			335
Security deposits		2,037			488			—			488
Total liabilities		308,526			149,555			177			149,732
Noncontrolling Interests – Partially Owned Properties/Partners' equity		6,175			54,336			84,682			139,018
Company equity/General and Limited Partners' Capital		202,111			(199	)		39,710			39,511
Total equity/capital		208,286			54,137			124,392			178,529
Total liabilities and equity/capital	$	516,812		$	203,692		$	124,569		$	328,261

	September 30, 2017				December 31, 2016
	Estimated Fair Value (Level 2)		Carrying Value		Estimated Fair Value (Level 2)		Carrying Value
Mortgage notes payable, net	$	3,630,477	$	3,619,180	$	4,161,001	$	4,119,181
Unsecured debt, net		5,640,095		5,373,092		5,030,330		4,868,077
Total debt, net	$	9,270,572	$	8,992,272	$	9,191,331	$	8,987,258

	Fair Value Hedges (1)			Forward Starting Swaps (2)
Current Notional Balance	$	450,000		$	250,000
Lowest Interest Rate		2.375	%		2.1478	%
Highest Interest Rate		2.375	%		2.2895	%
Earliest Maturity Date		2019			2028
Latest Maturity Date		2019			2029

	Nine Months Ended			Quarter Ended
	September 30, 2016			September 30, 2016
REVENUES
Rental income	$	30,660		$	239
Total revenues		30,660			239
EXPENSES
Property and maintenance		7,839			(84	)
Real estate taxes and insurance		2,933			1
Property management		2			—
General and administrative		19			4
Total expenses		10,793			(79	)
Operating income		19,867			318
Interest and other income		21			10
Interest:
Expense incurred, net		(380	)		(6	)
Amortization of deferred financing costs		(707	)		—
Income and other tax (expense) benefit		(1	)		—
Net gain (loss) on sales of real estate properties		3,161,097			(103	)
Income from operations attributable to controlling interests – Operating Partnership		3,179,897			219
Income from operations attributable to Noncontrolling Interests – Operating Partnership		(122,146	)		(8	)
Income from operations attributable to controlling interests – Company	$	3,057,751		$	211

	Quarter Ended September 30, 2017							Quarter Ended September 30, 2016
	Rental Income		Operating Expenses		NOI			Rental Income		Operating Expenses		NOI
Same store (1)
Los Angeles	$	102,566	$	27,768	$	74,798		$	98,542	$	29,362	$	69,180
Orange County		22,427		5,500		16,927			21,455		5,362		16,093
San Diego		22,432		5,867		16,565			21,516		5,740		15,776
Subtotal - Southern California		147,425		39,135		108,290			141,513		40,464		101,049

New York		125,351		46,219		79,132			124,709		44,223		80,486
Washington DC		108,763		33,459		75,304			107,340		32,817		74,523
San Francisco		98,805		24,875		73,930			97,259		24,487		72,772
Boston		57,071		16,351		40,720			56,368		16,399		39,969
Seattle		49,268		13,647		35,621			46,948		12,493		34,455
Other Markets		459		158		301			457		136		321
Total same store		587,142		173,844		413,298			574,594		171,019		403,575

Non-same store/other (2) (3)
Non-same store		33,974		10,371		23,603			14,128		6,120		8,008
Other (3)		2,835		4,593		(1,758	)		17,134		8,420		8,714
Total non-same store/other		36,809		14,964		21,845			31,262		14,540		16,722

Totals	$	623,951	$	188,808	$	435,143		$	605,856	$	185,559	$	420,297

	Results									Statistics
Description	Revenues			Expenses			NOI			Average Rental Rate (1)			Physical Occupancy (2)			Turnover (3)
YTD 2017	$	1,685,303		$	496,232		$	1,189,071		$	2,662			96.0	%		41.9	%
YTD 2016	$	1,647,988		$	482,410		$	1,165,578		$	2,601			96.0	%		43.6	%
Change	$	37,315		$	13,822		$	23,493		$	61			0.0	%		(1.7	)%
Change		2.3	%		2.9	%		2.0	%		2.3	%

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