10-Q

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 March 31, 2024

    ☐

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

Commission File Number: 1-12252 (Equity Residential)

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

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)


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

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

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 every Interactive Data File required to be submitted 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 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 April 25, 2024 was 378,971,999.

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EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended March 31, 2024 of Equity Residential and ERP Operating Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “EQR” mean Equity Residential, a Maryland real estate investment trust (“REIT”), and references to “ERPOP” mean ERP Operating Limited Partnership, an Illinois limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. The following chart illustrates the Company’s and the Operating Partnership’s corporate structure:

EQR is the general partner of, and as of March 31, 2024 owned an approximate 97.0% ownership interest in, ERPOP. The remaining 3.0% interest is owned by limited partners. As the sole general partner of ERPOP, EQR has exclusive control of 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 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;

• 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.

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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 property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR’s primary function is acting as the general partner of ERPOP. EQR also issues equity from time to time, the net proceeds of which it is obligated to contribute to 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 ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by EQR (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 business. These sources include the Operating 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 partnership interests, and proceeds received from disposition of certain properties and joint venture interests.

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

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

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


	PAGE

PART I.

Item 1. Financial Statements of Equity Residential:

Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	2

Consolidated Statements of Operations and Comprehensive Income for the quarters ended March 31, 2024 and 2023	3

Consolidated Statements of Cash Flows for the quarters ended March 31, 2024 and 2023	5

Consolidated Statements of Changes in Equity for the quarters ended March 31, 2024 and 2023	8

Financial Statements of ERP Operating Limited Partnership:

Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023	10

Consolidated Statements of Operations and Comprehensive Income for the quarters ended March 31, 2024 and 2023	11

Consolidated Statements of Cash Flows for the quarters ended March 31, 2024 and 2023	13

Consolidated Statements of Changes in Capital for the quarters ended March 31, 2024 and 2023	16

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

Item 3. Quantitative and Qualitative Disclosures about Market Risk	43

Item 4. Controls and Procedures	43

PART II.

Item 1. Legal Proceedings	44

Item 1A. Risk Factors	44

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 3. Defaults Upon Senior Securities	45

Item 4. Mine Safety Disclosures	45

Item 5. Other Information	45

Item 6. Exhibits	45

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EQUITY RESIDENTIAL

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except for share amounts)

(Unaudited)


	March 31,			December 31,
	2024			2023
ASSETS
Land	$	5,550,882		$	5,581,876
Depreciable property		22,930,036			22,938,426
Projects under development		155,729			78,036
Land held for development		64,466			114,300
Investment in real estate		28,701,113			28,712,638
Accumulated depreciation		(9,978,012	)		(9,810,337	)
Investment in real estate, net		18,723,101			18,902,301
Investments in unconsolidated entities		289,272			282,049
Cash and cash equivalents		44,535			50,743
Restricted deposits		152,025			89,252
Right-of-use assets		454,035			457,266
Other assets		231,829			252,953
Total assets	$	19,894,797		$	20,034,564

LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net	$	1,633,870		$	1,632,902
Notes, net		5,349,938			5,348,417
Line of credit and commercial paper		225,921			409,131
Accounts payable and accrued expenses		146,072			87,377
Accrued interest payable		49,190			65,716
Lease liabilities		310,422			311,640
Other liabilities		274,919			272,596
Security deposits		68,818			69,178
Distributions payable		263,615			259,231
Total liabilities		8,322,765			8,456,188

Commitments and contingencies

Redeemable Noncontrolling Interests – Operating Partnership		298,219			289,248
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 343,100 shares issued and outstanding as of March 31, 2024 and 745,600 shares issued and outstanding as of December 31, 2023		17,155			37,280
Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 378,939,751 shares issued and outstanding as of March 31, 2024 and 379,291,417 shares issued and outstanding as of December 31, 2023		3,789			3,793
Paid in capital		9,603,743			9,601,866
Retained earnings		1,436,671			1,437,185
Accumulated other comprehensive income (loss)		6,314			5,704
Total shareholders’ equity		11,067,672			11,085,828
Noncontrolling Interests:
Operating Partnership		207,272			202,306
Partially Owned Properties		(1,131	)		994
Total Noncontrolling Interests		206,141			203,300
Total equity		11,273,813			11,289,128
Total liabilities and equity	$	19,894,797		$	20,034,564

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per share data)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
REVENUES
Rental income	$	730,818		$	705,088

EXPENSES
Property and maintenance		134,630			137,579
Real estate taxes and insurance		108,927			106,669
Property management		35,458			31,466
General and administrative		15,720			16,165
Depreciation		225,695			215,830
Total expenses		520,430			507,709

Net gain (loss) on sales of real estate properties		188,185			100,209
Interest and other income		9,329			1,538
Other expenses		(31,738	)		(8,995	)
Interest:
Expense incurred, net		(67,212	)		(66,401	)
Amortization of deferred financing costs		(1,918	)		(1,979	)
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels		307,034			221,751
Income and other tax (expense) benefit		(304	)		(298	)
Income (loss) from investments in unconsolidated entities		(1,698	)		(1,382	)
Net income		305,032			220,071
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership		(8,275	)		(7,059	)
Partially Owned Properties		(970	)		(977	)
Net income attributable to controlling interests		295,787			212,035
Preferred distributions		(547	)		(772	)
Premium on redemption of Preferred Shares		(1,444	)		—
Net income available to Common Shares	$	293,796		$	211,263

Earnings per share – basic:
Net income available to Common Shares	$	0.78		$	0.56
Weighted average Common Shares outstanding		378,812			378,341

Earnings per share – diluted:
Net income available to Common Shares	$	0.77		$	0.56
Weighted average Common Shares outstanding		390,561			390,664

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)


	Quarter Ended March 31,
	2024			2023
Comprehensive income:
Net income	$	305,032		$	220,071
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		—			(9,780	)
Losses reclassified into earnings from other comprehensive income		610			1,095
Other comprehensive income (loss)		610			(8,685	)
Comprehensive income		305,642			211,386
Comprehensive (income) attributable to Noncontrolling Interests		(9,262	)		(7,755	)
Comprehensive income attributable to controlling interests	$	296,380		$	203,631

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	305,032		$	220,071
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		225,695			215,830
Amortization of deferred financing costs		1,918			1,979
Amortization of discounts and premiums on debt		1,267			868
Amortization of deferred settlements on derivative instruments		608			1,092
Amortization of right-of-use assets		3,231			3,150
Write-off of pursuit costs		548			1,332
(Income) loss from investments in unconsolidated entities		1,698			1,382
Distributions from unconsolidated entities – return on capital		159			151
Net (gain) loss on sales of real estate properties		(188,185	)		(100,209	)
Realized (gain) loss on investment securities		—			87
Unrealized (gain) loss on investment securities		(7,061	)		—
Compensation paid with Company Common Shares		9,469			9,044
Changes in assets and liabilities:
(Increase) decrease in other assets		22,737			26,257
Increase (decrease) in accounts payable and accrued expenses		54,289			45,357
Increase (decrease) in accrued interest payable		(16,526	)		(16,534	)
Increase (decrease) in lease liabilities		(499	)		(334	)
Increase (decrease) in other liabilities		7,011			(16,032	)
Increase (decrease) in security deposits		(360	)		(212	)
Net cash provided by operating activities		421,031			393,279
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions		(837	)		—
Investment in real estate – development/other		(25,491	)		(16,786	)
Capital expenditures to real estate		(73,520	)		(55,392	)
Non-real estate capital additions		(534	)		(600	)
Interest capitalized for real estate and unconsolidated entities under development		(3,150	)		(3,393	)
Proceeds from disposition of real estate, net		247,334			133,916
Investments in unconsolidated entities – development/other		(7,812	)		(14,480	)
Distributions from unconsolidated entities – return of capital		16			6
Proceeds from sale of investment securities		—			452
Net cash provided by (used for) investing activities		136,006			43,723

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage notes payable, net:
Proceeds	$	—		$	14,090
Scheduled principal repayments		—			(40	)
Line of credit and commercial paper:
Commercial paper proceeds		1,186,790			1,323,145
Commercial paper repayments		(1,370,000	)		(1,453,100	)
Finance ground lease principal payments		(719	)		(665	)
Proceeds from Employee Share Purchase Plan (ESPP)		1,644			1,452
Proceeds from exercise of options		4,401			8,112
Common Shares repurchased and retired		(38,474	)		—
Redemption of Preferred Shares		(20,125	)		—
Premium on redemption of Preferred Shares		(1,444	)		—
Other financing activities, net		(7	)		—
Contributions – Noncontrolling Interests – Partially Owned Properties		235			—
Contributions – Noncontrolling Interests – Operating Partnership		2			—
Distributions:
Common Shares		(251,334	)		(236,561	)
Preferred Shares		(964	)		(1,544	)
Noncontrolling Interests – Operating Partnership		(8,154	)		(7,380	)
Noncontrolling Interests – Partially Owned Properties		(2,323	)		(2,598	)
Net cash provided by (used for) financing activities		(500,472	)		(355,089	)
Net increase (decrease) in cash and cash equivalents and restricted deposits		56,565			81,913
Cash and cash equivalents and restricted deposits, beginning of period		139,995			137,172
Cash and cash equivalents and restricted deposits, end of period	$	196,560		$	219,085

Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents	$	44,535		$	133,460
Restricted deposits		152,025			85,625
Total cash and cash equivalents and restricted deposits, end of period	$	196,560		$	219,085

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	77,149		$	79,693
Net cash paid (received) for income and other taxes	$	410		$	348
Amortization of deferred financing costs:
Investment in real estate, net	$	—		$	(127	)
Other assets	$	696		$	697
Mortgage notes payable, net	$	262		$	449
Notes, net	$	960		$	960
Amortization of discounts and premiums on debt:
Mortgage notes payable, net	$	706		$	306
Notes, net	$	561		$	562
Amortization of deferred settlements on derivative instruments:
Other liabilities	$	(2	)	$	(3	)
Accumulated other comprehensive income	$	610		$	1,095
Write-off of pursuit costs:
Investment in real estate, net	$	128		$	225
Investments in unconsolidated entities	$	355		$	649
Other assets	$	65		$	458
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities	$	1,390		$	1,071
Other liabilities	$	308		$	311
Realized/unrealized (gain) loss on derivative instruments:
Other assets	$	—		$	7,410
Other liabilities	$	—		$	2,370
Accumulated other comprehensive income	$	—		$	(9,780	)
Interest capitalized for real estate and unconsolidated entities under development:
Investment in real estate, net	$	(1,159	)	$	(1,422	)
Investments in unconsolidated entities	$	(1,991	)	$	(1,971	)
Investments in unconsolidated entities – development/other:
Investments in unconsolidated entities	$	(7,152	)	$	(13,700	)
Other liabilities	$	(660	)	$	(780	)
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets	$	—		$	(7,105	)
Lease liabilities	$	—		$	7,105
Non-cash share distribution and other transfers from unconsolidated entities:
Investments in unconsolidated entities	$	—		$	539
Other assets	$	—		$	(539	)
Non-cash change in Supplemental Executive Retirement Plan (SERP) balances:
Other assets	$	4,561		$	8,373
Other liabilities	$	(4,334	)	$	(8,864	)
Paid in capital	$	(227	)	$	491

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in thousands except per share data)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
SHAREHOLDERS’ EQUITY
PREFERRED SHARES
Balance, beginning of period	$	37,280		$	37,280
Partial redemption of 8.29% Series K Cumulative Redeemable		(20,125	)		—
Balance, end of period	$	17,155		$	37,280
COMMON SHARES, $0.01 PAR VALUE
Balance, beginning of period	$	3,793		$	3,784
Conversion of OP Units into Common Shares		—			2
Exercise of share options		1			2
Common Shares repurchased and retired		(7	)		—
Share-based employee compensation expense:
Restricted shares		2			1
Balance, end of period	$	3,789		$	3,789
PAID IN CAPITAL
Balance, beginning of period	$	9,601,866		$	9,476,085
Common Share Issuance:
Conversion of OP Units into Common Shares		254			3,671
Exercise of share options		4,400			8,110
Employee Share Purchase Plan (ESPP)		1,644			1,452
Share-based employee compensation expense:
Restricted shares		4,494			3,653
Share options		1,289			1,497
ESPP discount		296			260
Supplemental Executive Retirement Plan (SERP)		(227	)		491
Change in market value of Redeemable Noncontrolling Interests – Operating Partnership		(8,815	)		(5,946	)
Adjustment for Noncontrolling Interests ownership in Operating Partnership		(1,458	)		(953	)
Balance, end of period	$	9,603,743		$	9,488,320
RETAINED EARNINGS
Balance, beginning of period	$	1,437,185		$	1,658,837
Net income attributable to controlling interests		295,787			212,035
Common Share distributions		(255,843	)		(250,969	)
Preferred Share distributions		(547	)		(772	)
Premium on redemption of Preferred Shares – cash charge		(1,444	)		—
Common Shares repurchased and retired		(38,467	)		—
Balance, end of period	$	1,436,671		$	1,619,131
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period	$	5,704		$	(2,547	)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		—			(9,780	)
Losses reclassified into earnings from other comprehensive income		610			1,095
Balance, end of period	$	6,314		$	(11,232	)

DISTRIBUTIONS
Distributions declared per Common Share outstanding	$	0.675		$	0.6625

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)

(Amounts in thousands except per share data)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
NONCONTROLLING INTERESTS
OPERATING PARTNERSHIP
Balance, beginning of period	$	202,306		$	209,961
Issuance of restricted units to Noncontrolling Interests		2			—
Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner		(254	)		(3,673	)
Equity compensation associated with Noncontrolling Interests		4,087			4,654
Net income attributable to Noncontrolling Interests		8,275			7,059
Distributions to Noncontrolling Interests		(8,446	)		(7,904	)
Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership		(156	)		668
Adjustment for Noncontrolling Interests ownership in Operating Partnership		1,458			953
Balance, end of period	$	207,272		$	211,718
PARTIALLY OWNED PROPERTIES
Balance, beginning of period	$	994		$	(721	)
Net income attributable to Noncontrolling Interests		970			977
Contributions by Noncontrolling Interests		235			—
Distributions to Noncontrolling Interests		(2,330	)		(2,809	)
Other		(1,000	)		—
Balance, end of period	$	(1,131	)	$	(2,553	)

See accompanying notes

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)


	March 31,			December 31,
	2024			2023
ASSETS
Land	$	5,550,882		$	5,581,876
Depreciable property		22,930,036			22,938,426
Projects under development		155,729			78,036
Land held for development		64,466			114,300
Investment in real estate		28,701,113			28,712,638
Accumulated depreciation		(9,978,012	)		(9,810,337	)
Investment in real estate, net		18,723,101			18,902,301
Investments in unconsolidated entities		289,272			282,049
Cash and cash equivalents		44,535			50,743
Restricted deposits		152,025			89,252
Right-of-use assets		454,035			457,266
Other assets		231,829			252,953
Total assets	$	19,894,797		$	20,034,564

LIABILITIES AND CAPITAL
Liabilities:
Mortgage notes payable, net	$	1,633,870		$	1,632,902
Notes, net		5,349,938			5,348,417
Line of credit and commercial paper		225,921			409,131
Accounts payable and accrued expenses		146,072			87,377
Accrued interest payable		49,190			65,716
Lease liabilities		310,422			311,640
Other liabilities		274,919			272,596
Security deposits		68,818			69,178
Distributions payable		263,615			259,231
Total liabilities		8,322,765			8,456,188

Commitments and contingencies

Redeemable Limited Partners		298,219			289,248
Capital:
Partners’ Capital:
Preference Units		17,155			37,280
General Partner		11,044,203			11,042,844
Limited Partners		207,272			202,306
Accumulated other comprehensive income (loss)		6,314			5,704
Total partners’ capital		11,274,944			11,288,134
Noncontrolling Interests – Partially Owned Properties		(1,131	)		994
Total capital		11,273,813			11,289,128
Total liabilities and capital	$	19,894,797		$	20,034,564

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)


	Quarter Ended March 31,
	2024			2023
REVENUES
Rental income	$	730,818		$	705,088

EXPENSES
Property and maintenance		134,630			137,579
Real estate taxes and insurance		108,927			106,669
Property management		35,458			31,466
General and administrative		15,720			16,165
Depreciation		225,695			215,830
Total expenses		520,430			507,709

Net gain (loss) on sales of real estate properties		188,185			100,209
Interest and other income		9,329			1,538
Other expenses		(31,738	)		(8,995	)
Interest:
Expense incurred, net		(67,212	)		(66,401	)
Amortization of deferred financing costs		(1,918	)		(1,979	)
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels		307,034			221,751
Income and other tax (expense) benefit		(304	)		(298	)
Income (loss) from investments in unconsolidated entities		(1,698	)		(1,382	)
Net income		305,032			220,071
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties		(970	)		(977	)
Net income attributable to controlling interests	$	304,062		$	219,094
ALLOCATION OF NET INCOME:
Preference Units	$	547		$	772
Premium on redemption of Preference Units	$	1,444		$	—

General Partner	$	293,796		$	211,263
Limited Partners		8,275			7,059
Net income available to Units	$	302,071		$	218,322

Earnings per Unit – basic:
Net income available to Units	$	0.78		$	0.56
Weighted average Units outstanding		389,481			389,851

Earnings per Unit – diluted:
Net income available to Units	$	0.77		$	0.56
Weighted average Units outstanding		390,561			390,664

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)


	Quarter Ended March 31,
	2024			2023
Comprehensive income:
Net income	$	305,032		$	220,071
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		—			(9,780	)
Losses reclassified into earnings from other comprehensive income		610			1,095
Other comprehensive income (loss)		610			(8,685	)
Comprehensive income		305,642			211,386
Comprehensive (income) attributable to Noncontrolling Interests – Partially Owned Properties		(970	)		(977	)
Comprehensive income attributable to controlling interests	$	304,672		$	210,409

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	305,032		$	220,071
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		225,695			215,830
Amortization of deferred financing costs		1,918			1,979
Amortization of discounts and premiums on debt		1,267			868
Amortization of deferred settlements on derivative instruments		608			1,092
Amortization of right-of-use assets		3,231			3,150
Write-off of pursuit costs		548			1,332
(Income) loss from investments in unconsolidated entities		1,698			1,382
Distributions from unconsolidated entities – return on capital		159			151
Net (gain) loss on sales of real estate properties		(188,185	)		(100,209	)
Realized (gain) loss on investment securities		—			87
Unrealized (gain) loss on investment securities		(7,061	)		—
Compensation paid with Company Common Shares		9,469			9,044
Changes in assets and liabilities:
(Increase) decrease in other assets		22,737			26,257
Increase (decrease) in accounts payable and accrued expenses		54,289			45,357
Increase (decrease) in accrued interest payable		(16,526	)		(16,534	)
Increase (decrease) in lease liabilities		(499	)		(334	)
Increase (decrease) in other liabilities		7,011			(16,032	)
Increase (decrease) in security deposits		(360	)		(212	)
Net cash provided by operating activities		421,031			393,279
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions		(837	)		—
Investment in real estate – development/other		(25,491	)		(16,786	)
Capital expenditures to real estate		(73,520	)		(55,392	)
Non-real estate capital additions		(534	)		(600	)
Interest capitalized for real estate and unconsolidated entities under development		(3,150	)		(3,393	)
Proceeds from disposition of real estate, net		247,334			133,916
Investments in unconsolidated entities – development/other		(7,812	)		(14,480	)
Distributions from unconsolidated entities – return of capital		16			6
Proceeds from sale of investment securities		—			452
Net cash provided by (used for) investing activities		136,006			43,723

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage notes payable, net:
Proceeds	$	—		$	14,090
Scheduled principal repayments		—			(40	)
Line of credit and commercial paper:
Commercial paper proceeds		1,186,790			1,323,145
Commercial paper repayments		(1,370,000	)		(1,453,100	)
Finance ground lease principal payments		(719	)		(665	)
Proceeds from EQR’s Employee Share Purchase Plan (ESPP)		1,644			1,452
Proceeds from exercise of EQR options		4,401			8,112
OP Units repurchased and retired		(38,474	)		—
Redemption of Preference Units		(20,125	)		—
Premium on redemption of Preference Units		(1,444	)		—
Other financing activities, net		(7	)		—
Contributions – Noncontrolling Interests – Partially Owned Properties		235			—
Contributions – Limited Partners		2			—
Distributions:
OP Units – General Partner		(251,334	)		(236,561	)
Preference Units		(964	)		(1,544	)
OP Units – Limited Partners		(8,154	)		(7,380	)
Noncontrolling Interests – Partially Owned Properties		(2,323	)		(2,598	)
Net cash provided by (used for) financing activities		(500,472	)		(355,089	)
Net increase (decrease) in cash and cash equivalents and restricted deposits		56,565			81,913
Cash and cash equivalents and restricted deposits, beginning of period		139,995			137,172
Cash and cash equivalents and restricted deposits, end of period	$	196,560		$	219,085

Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents	$	44,535		$	133,460
Restricted deposits		152,025			85,625
Total cash and cash equivalents and restricted deposits, end of period	$	196,560		$	219,085

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	77,149		$	79,693
Net cash paid (received) for income and other taxes	$	410		$	348
Amortization of deferred financing costs:
Investment in real estate, net	$	—		$	(127	)
Other assets	$	696		$	697
Mortgage notes payable, net	$	262		$	449
Notes, net	$	960		$	960
Amortization of discounts and premiums on debt:
Mortgage notes payable, net	$	706		$	306
Notes, net	$	561		$	562
Amortization of deferred settlements on derivative instruments:
Other liabilities	$	(2	)	$	(3	)
Accumulated other comprehensive income	$	610		$	1,095
Write-off of pursuit costs:
Investment in real estate, net	$	128		$	225
Investments in unconsolidated entities	$	355		$	649
Other assets	$	65		$	458
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities	$	1,390		$	1,071
Other liabilities	$	308		$	311
Realized/unrealized (gain) loss on derivative instruments:
Other assets	$	—		$	7,410
Other liabilities	$	—		$	2,370
Accumulated other comprehensive income	$	—		$	(9,780	)
Interest capitalized for real estate and unconsolidated entities under development:
Investment in real estate, net	$	(1,159	)	$	(1,422	)
Investments in unconsolidated entities	$	(1,991	)	$	(1,971	)
Investments in unconsolidated entities – development/other:
Investments in unconsolidated entities	$	(7,152	)	$	(13,700	)
Other liabilities	$	(660	)	$	(780	)
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets	$	—		$	(7,105	)
Lease liabilities	$	—		$	7,105
Non-cash share distribution and other transfers from unconsolidated entities:
Investments in unconsolidated entities	$	—		$	539
Other assets	$	—		$	(539	)
Non-cash change in Supplemental Executive Retirement Plan (SERP) balances:
Other assets	$	4,561		$	8,373
Other liabilities	$	(4,334	)	$	(8,864	)
Paid in capital	$	(227	)	$	491

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(Amounts in thousands except per Unit data)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
PARTNERS’ CAPITAL
PREFERENCE UNITS
Balance, beginning of period	$	37,280		$	37,280
Partial redemption of 8.29% Series K Cumulative Redeemable		(20,125	)		—
Balance, end of period	$	17,155		$	37,280
GENERAL PARTNER
Balance, beginning of period	$	11,042,844		$	11,138,706
OP Unit Issuance:
Conversion of OP Units held by Limited Partners into OP Units held by General Partner		254			3,673
Exercise of EQR share options		4,401			8,112
EQR’s Employee Share Purchase Plan (ESPP)		1,644			1,452
Share-based employee compensation expense:
EQR restricted shares		4,496			3,654
EQR share options		1,289			1,497
EQR ESPP discount		296			260
OP Units repurchased and retired		(38,474	)		—
Net income available to Units – General Partner		293,796			211,263
OP Units – General Partner distributions		(255,843	)		(250,969	)
Supplemental Executive Retirement Plan (SERP)		(227	)		491
Change in market value of Redeemable Limited Partners		(8,815	)		(5,946	)
Adjustment for Limited Partners ownership in Operating Partnership		(1,458	)		(953	)
Balance, end of period	$	11,044,203		$	11,111,240
LIMITED PARTNERS
Balance, beginning of period	$	202,306		$	209,961
Issuance of restricted units to Limited Partners		2			—
Conversion of OP Units held by Limited Partners into OP Units held by General Partner		(254	)		(3,673	)
Equity compensation associated with Units – Limited Partners		4,087			4,654
Net income available to Units – Limited Partners		8,275			7,059
Units – Limited Partners distributions		(8,446	)		(7,904	)
Change in carrying value of Redeemable Limited Partners		(156	)		668
Adjustment for Limited Partners ownership in Operating Partnership		1,458			953
Balance, end of period	$	207,272		$	211,718
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period	$	5,704		$	(2,547	)
Accumulated other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		—			(9,780	)
Losses reclassified into earnings from other comprehensive income		610			1,095
Balance, end of period	$	6,314		$	(11,232	)

DISTRIBUTIONS
Distributions declared per Unit outstanding	$	0.675		$	0.6625

See accompanying notes

Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued)

(Amounts in thousands except per Unit data)

(Unaudited)


	Quarter Ended March 31,
	2024			2023
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES
Balance, beginning of period	$	994		$	(721	)
Net income attributable to Noncontrolling Interests		970			977
Contributions by Noncontrolling Interests		235			—
Distributions to Noncontrolling Interests		(2,330	)		(2,809	)
Other		(1,000	)		—
Balance, end of period	$	(1,131	)	$	(2,553	)

See accompanying notes

Table of Contents

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Business

Equity Residential (“EQR”) is an S&P 500 company focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters, a business that is conducted on its behalf by ERP Operating Limited Partnership (“ERPOP”). EQR is a Maryland real estate investment trust (“REIT”) formed in March 1993 and ERPOP is an Illinois limited partnership formed in May 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. Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership.

EQR is the general partner of, and as of March 31, 2024 owned an approximate 97.0% 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.

As of March 31, 2024, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 299 properties located in 10 states and the District of Columbia consisting of 79,688 apartment units. The ownership breakdown includes (table does not include any uncompleted development properties):


	Properties		Apartment Units
Wholly Owned Properties		285		76,628
Partially Owned Properties – Consolidated		14		3,060
		299		79,688

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 (“GAAP”) 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. Operating results for the quarter ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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

The balance sheets at December 31, 2023 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.

For further information, including definitions of capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.

Table of Contents

Income and Other Taxes

EQR has elected to be taxed as a REIT. This, along with the nature of the operations of its operating properties, resulted in no provision for federal income taxes at the EQR level. In addition, ERPOP generally is not liable for federal income taxes as the partners recognize their 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 REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses.

Recent Accounting Pronouncements

In March 2024, the Securities and Exchange Commission ("SEC") adopted final rules that will require certain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the new rules as a result of pending legal challenges. The new rules include a requirement to disclose material climate-related risks, descriptions of board and management oversight and risk management activities, the material impacts of these risks on a registrant’s strategy, business model and outlook, and any material climate-related targets or goals, as well as material effects and costs of severe weather events and other natural conditions and greenhouse gas emissions. Prior to the stay of the new rules, they would have been effective for annual periods beginning January 1, 2025, except for the greenhouse gas emissions disclosures, which would have been effective for annual periods beginning January 1, 2026. The Company is currently evaluating the impact of the new rules on its disclosures.

In December 2023, the Financial Accounting Standards Board (“FASB”) issued an amendment to the income tax standards which requires disclosure enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. The new standard will be effective for annual periods beginning January 1, 2025 and will be applied on a prospective basis with the option to apply the standard retrospectively. The Company is currently evaluating the impact of adopting the standard on its consolidated results of operations and financial position.

In November 2023, the FASB issued an amendment to the segment reporting standards which requires disclosure for each reportable segment, on an interim and annual basis, the significant expense categories and amounts that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss. Additionally, it requires disclosure of the title and position of the individual or the name of the group or committee identified as the chief operating decision maker. The new standard will be effective for annual periods beginning January 1, 2024 and interim periods beginning January 1, 2025 on a retrospective basis. The Company is currently evaluating the impact of adopting the standard on its consolidated results of operations and financial position.

In March 2020, the FASB issued an amendment to the reference rate reform standard which provides the option for a 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. The new standard was effective for the Company upon issuance and elections could be made through December 31, 2024. The Company elected to apply the hedge accounting expedients and application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

Equity, Capital and Other Interests

The Company refers to “Common Shares” and “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 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.

Table of Contents

The following table presents the changes in the Company’s issued and outstanding Common Shares and Units for the quarters ended March 31, 2024 and 2023:


	2024			2023
Common Shares
Common Shares outstanding at January 1,		379,291,417			378,429,708
Common Shares Issued:
Conversion of OP Units		7,967			144,567
Exercise of share options		82,742			173,249
Employee Share Purchase Plan (ESPP)		32,496			27,393
Restricted share grants, net		177,581			123,304
Common Shares Other:
Repurchased and retired		(652,452	)		—
Common Shares outstanding at March 31,		378,939,751			378,898,221
Units
Units outstanding at January 1,		11,581,306			12,429,737
Restricted unit grants, net		159,283			229,913
Conversion of OP Units to Common Shares		(7,967	)		(144,567	)
Units outstanding at March 31,		11,732,622			12,515,083
Total Common Shares and Units outstanding at March 31,		390,672,373			391,413,304
Units Ownership Interest in Operating Partnership		3.0	%		3.2	%

The following table presents the changes in the Operating Partnership’s issued and outstanding General Partner Units and Limited Partner Units for the quarters ended March 31, 2024 and 2023:


	2024			2023
General and Limited Partner Units
General and Limited Partner Units outstanding at January 1,		390,872,723			390,859,445
Issued to General Partner:
Exercise of EQR share options		82,742			173,249
EQR’s Employee Share Purchase Plan (ESPP)		32,496			27,393
EQR’s restricted share grants, net		177,581			123,304
Issued to Limited Partners:
Restricted unit grants, net		159,283			229,913
General Partner Other:
OP Units repurchased and retired		(652,452	)		—
General and Limited Partner Units outstanding at March 31,		390,672,373			391,413,304
Limited Partner Units
Limited Partner Units outstanding at January 1,		11,581,306			12,429,737
Limited Partner restricted unit grants, net		159,283			229,913
Conversion of Limited Partner OP Units to EQR Common Shares		(7,967	)		(144,567	)
Limited Partner Units outstanding at March 31,		11,732,622			12,515,083
Limited Partner Units Ownership Interest in Operating Partnership		3.0	%		3.2	%

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/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/Limited Partners Capital (including redeemable interests) is allocated based on the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total in proportion to the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total plus the total number of Common Shares/General Partner Units. Net income is allocated to the Noncontrolling Interests – Operating 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/Limited Partners Capital requesting an exchange of their Noncontrolling Interests – Operating Partnership/Limited Partners Capital with EQR. Once the Operating Partnership elects not to redeem the Noncontrolling Interests – Operating Partnership/Limited Partners Capital for cash, EQR is obligated to deliver Common Shares to the exchanging holder of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital.

Table of Contents

The Noncontrolling Interests – Operating 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/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/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/Limited Partners Capital that are classified in permanent equity at March 31, 2024 and December 31, 2023.

The carrying value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners is allocated based on the number of Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners in proportion to the number of Noncontrolling Interests – Operating 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/Redeemable Limited Partners is then adjusted to the greater of carrying value or fair market value as described above. As of March 31, 2024 and 2023, the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners have a redemption value of approximately $298.2 million and $323.6 million, respectively, which represents the value of Common Shares that would be issued in exchange for the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners.

The following table presents the changes in the redemption value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners for the quarters ended March 31, 2024 and 2023, respectively (amounts in thousands):


	2024		2023
Balance at January 1,	$	289,248	$	318,273
Change in market value		8,815		5,946
Change in carrying value		156		(668	)
Balance at March 31,	$	298,219	$	323,551

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 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.

The Company’s declaration of trust authorizes it to issue up to 100,000,000 preferred shares of beneficial interest, $0.01 par value per share (the “Preferred Shares”), with specific rights, preferences and other attributes as the Board of Trustees may determine, which may include preferences, powers and rights that are senior to the rights of holders of the Company’s Common Shares.

The following table presents the Company’s issued and outstanding Preferred Shares/Preference Units as of March 31, 2024 and December 31, 2023:


				Amounts in thousands
		Annual
	Call	Dividend Per		March 31,		December 31,
	Date (1)	Share/Unit (2)		2024		2023
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; 343,100 shares/units issued and outstanding as of March 31, 2024 and 745,600 share/units issued and outstanding as of December 31, 2023 (3)	12/10/2026	$	4.145	$	17,155	$	37,280
				$	17,155	$	37,280

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(1)

On or after the call date, redeemable 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/unit, plus accrued and unpaid distributions, if any.

(2)

Dividends on Preferred Shares/Preference Units are payable quarterly.

(3)

During the first quarter of 2024, the Company repurchased and retired 402,500 Series K Preferred Shares/Preference Units with a liquidation value of approximately $20.1 million for total cash consideration of approximately $21.8 million, inclusive of premiums and accrued dividends through the redemption date. As a result of this partial redemption, the Company incurred a cash charge of approximately $1.4 million which was recorded as a premium on the redemption of Preferred Shares/Preference Units.

Other

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 May 2022 and expires in May 2025. 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 has an At-The-Market (“ATM”) share offering program which allows EQR to issue Common Shares from time to time into the existing trading market at current market prices or through negotiated transactions, including under forward sale arrangements. The current program matures in May 2025 and gives us the authority to issue up to 13.0 million shares, all of which remain available for issuance as of March 31, 2024.

During the quarter ended March 31, 2024, the Company repurchased and subsequently retired approximately $38.5 million (652,452 shares at a weighted average price per share of $58.95) of its Common Shares in the open market under its share repurchase program. Concurrent with these transactions, ERPOP repurchased and retired the same amount of OP Units previously issued to EQR. Prior to the share repurchase activity in the first quarter of 2024, the Company had the authority to repurchase up to 13.0 million Common Shares under its share repurchase program, of which 12,347,548 shares remain authorized to repurchase as of March 31, 2024.

Real Estate

The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of March 31, 2024 and December 31, 2023 (amounts in thousands):


	March 31, 2024			December 31, 2023
Land	$	5,550,882		$	5,581,876
Depreciable property:
Buildings and improvements		19,763,823			19,809,432
Furniture, fixtures and equipment		2,648,670			2,609,600
In-Place lease intangibles		517,543			519,394
Projects under development:
Land		39,833			3,201
Construction-in-progress		115,896			74,835
Land held for development:
Land		46,160			82,026
Construction-in-progress		18,306			32,274
Investment in real estate		28,701,113			28,712,638
Accumulated depreciation		(9,978,012	)		(9,810,337	)
Investment in real estate, net	$	18,723,101		$	18,902,301

During the quarter ended March 31, 2024, the Company disposed of the following to unaffiliated parties (sales price and net gain in thousands):


	Properties		Apartment Units		Sales Price		Net Gain
Rental Properties – Consolidated		3		504	$	248,500	$	188,185
Total		3		504	$	248,500	$	188,185

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Investments in Partially Owned Entities

The Company has invested in various entities with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated).

Consolidated Variable Interest Entities (“VIEs”)

In accordance with accounting standards for consolidation of VIEs, the Company consolidates ERPOP on EQR’s financial statements. As the sole general partner of ERPOP, EQR has exclusive control of 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 primary beneficiary. EQR has the power to direct the activities of ERPOP that most significantly impact 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.

The Company has various equity interests in certain joint ventures that have been deemed to be VIEs, and the Company is the VIEs’ primary beneficiary. As a result, the joint ventures are required to be consolidated on the Company’s financial statements. The following table summarizes the Company’s consolidated joint ventures as of March 31, 2024:

         
        Operating Properties (1)

        Projects Under Development (2)

         
        Properties

        Apartment Units

        Projects

        Apartment Units (3)

Consolidated Joint Ventures (VIE)

14

3,060

1

440

(1)

The land parcel under one of the properties is subject to a long-term ground lease.

(2)

Represents separate consolidated joint ventures for the purpose of developing multifamily rental properties.

(3)

Represents the intended number of apartment units to be developed.

The following table provides consolidated assets and liabilities related to the Company's VIEs as of March 31, 2024 and December 31, 2023 (amounts in thousands):


	March 31, 2024		December 31, 2023
Consolidated Assets	$	602,865	$	599,788
Consolidated Liabilities	$	45,943	$	41,153

Investments in Unconsolidated Entities

The Company has various equity interests in certain joint ventures that are unconsolidated and accounted for using the equity method of accounting. Most of these have been deemed to be VIEs and the Company is not the VIEs' primary beneficiary. The remaining have been deemed not to be VIEs and the Company does not have a controlling voting interest.

The following table and information summarizes the Company’s investments in unconsolidated entities as of March 31, 2024 and December 31, 2023 (amounts in thousands except for ownership percentage):


	March 31, 2024			December 31, 2023			Ownership Percentage
Investments in Unconsolidated Entities:
Various Real Estate Holdings (VIE)	$	35,267		$	35,421		Varies
Projects Under Development and Land Held for Development (VIE)		227,349			220,192		62% - 95% (1)
Real Estate Technology Funds/Companies (VIE)		26,903			26,691		Varies
Other		(247	)		(255	)	Varies
Investments in Unconsolidated Entities	$	289,272		$	282,049

(1)

In certain instances, the joint venture agreements contain provisions for promoted interests in favor of our joint venture partner. If the terms of the promoted interest are attained, then our share of the proceeds from a sale or other capital event of the unconsolidated entity may be less than the indicated ownership percentage.

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The following table summarizes the Company’s unconsolidated joint ventures that were deemed to be VIEs as of March 31, 2024:

         
        Real Estate Holdings (1)

        Projects Under Development (2), (5)

        Projects Held for Development (2), (3)

         
        Entities

        Projects

        Apartment Units (4)

        Projects

        Apartment Units (4)

Unconsolidated Joint Ventures (VIE)

3

6

1,982

4

1,164

(1)

Represents entities that hold various real estate investments.

(2)

Represents separate unconsolidated joint ventures for the purpose of developing multifamily rental properties.

(3)

Represents separate unconsolidated joint ventures that have not yet started.

(4)

Represents the intended number of apartment units to be developed.

(5)

The land parcel under one of the projects is subject to a long-term ground lease.

Restricted Deposits

The following table presents the Company’s restricted deposits as of March 31, 2024 and December 31, 2023 (amounts in thousands):


	March 31, 2024		December 31, 2023
Mortgage escrow deposits:
Real estate taxes and insurance	$	510	$	307
Mortgage principal reserves/sinking funds		31,203		29,270
Mortgage escrow deposits		31,713		29,577
Restricted cash:
Tax-deferred (1031) exchange proceeds		59,310		—
Earnest money on pending acquisitions		500		524
Restricted deposits on real estate investments		2,199		2,181
Resident security and utility deposits		40,638		40,149
Replacement reserves		16,342		15,571
Other		1,323		1,250
Restricted cash		120,312		59,675
Restricted deposits	$	152,025	$	89,252

Leases

Lessor Accounting

The Company is the lessor for its residential and non-residential leases and these leases are accounted for as operating leases under the lease standard.

The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the quarters ended March 31, 2024 and 2023 (amounts in thousands):


	Quarter Ended March 31, 2024									Quarter Ended March 31, 2023
Income Type	Residential Leases			Non-Residential Leases			Total			Residential Leases			Non-Residential Leases		Total
Residential and non-residential rent	$	652,361		$	18,823		$	671,184		$	634,752		$	15,986	$	650,738
Utility recoveries (RUBS income) (1)		22,669			227			22,896			21,383			207		21,590
Parking rent		11,424			220			11,644			10,882			109		10,991
Other lease revenue (2)		(5,945	)		(92	)		(6,037	)		(7,589	)		669		(6,920	)
Total lease revenue	$	680,509		$	19,178			699,687		$	659,428		$	16,971		676,399
Parking revenue								10,678								10,203
Other revenue								20,453								18,486
Total other rental income (3)								31,131								28,689
Rental income							$	730,818							$	705,088

(1)

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

(2)

Other lease revenue consists of the revenue adjustment related to bad debt (see below for further discussion) and other miscellaneous lease revenue.

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(3)

Other rental income is accounted for under the revenue recognition standard and primarily consists of third-party transient parking revenue and ancillary income such as cable and laundry revenue.

The following table presents residential accounts receivable and straight-line receivable balances for the Company’s properties as of March 31, 2024 and December 31, 2023 (amounts in thousands):


Balance Sheet (Other assets):	March 31, 2024			December 31, 2023
Residential accounts receivable balances	$	18,710		$	21,477
Allowance for doubtful accounts		(13,571	)		(15,846	)
Net receivable balances	$	5,139		$	5,631

Straight-line receivable balances	$	9,091		$	9,183

The following table presents residential bad debt for the Company’s properties for the quarters ended March 31, 2024 and 2023 (amounts in thousands):


	Quarter Ended March 31,
Income Statement (Rental income):	2024			2023
Bad debt, net (1)	$	9,215		$	10,755
% of residential rental income		1.3	%		1.6	%

(1)

Bad debt, net benefited from additional resident payments due to governmental rental assistance programs of approximately $0.4 million and $1.2 million for the quarters ended March 31, 2024 and 2023, respectively.

Debt

EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. Weighted average interest rates noted below for the quarter ended March 31, 2024 include the 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 Company’s mortgage notes payable activity for the quarter ended March 31, 2024 (amounts in thousands):


	Mortgage notes payable, net as of December 31, 2023		Proceeds		Lump sum payoffs		Scheduled principal repayments		Amortization of premiums/ discounts		Amortization of deferred financing costs, net (1)		Mortgage notes payable, net as of March 31, 2024
Fixed Rate Debt:
Secured – Conventional	$	1,398,598	$	—	$	—	$	—	$	396	$	227	$	1,399,221
Floating Rate Debt:
Secured – Tax Exempt		234,304		—		—		—		310		35		234,649
Total	$	1,632,902	$	—	$	—	$	—	$	706	$	262	$	1,633,870

(1)

Represents amortization of deferred financing costs, net of debt financing costs.

The following table summarizes certain interest rate and maturity date information as of and for the quarter ended March 31, 2024:


		March 31, 2024
Interest Rate Ranges (ending)		0.10% - 5.25%
Weighted Average Interest Rate		3.84%
Maturity Date Ranges		2029-2061

As of March 31, 2024, the Company had $246.7 million of secured tax-exempt bonds subject to third-party credit enhancement.

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Notes

The following table summarizes the Company’s notes activity for the quarter ended March 31, 2024 (amounts in thousands):


	Notes, net as of December 31, 2023		Proceeds		Lump sum payoffs		Amortization of premiums/ discounts		Amortization of deferred financing costs, net (1)		Notes, net as of March 31, 2024
Fixed Rate Debt:
Unsecured – Public	$	5,348,417	$	—	$	—	$	561	$	960	$	5,349,938

(1)

Represents amortization of deferred financing costs, net of debt financing costs.

The following table summarizes certain interest rate and maturity date information as of and for the quarter ended March 31, 2024:


		March 31, 2024
Interest Rate Ranges (ending)		1.85% - 7.57%
Weighted Average Interest Rate		3.53%
Maturity Date Ranges		2025-2047

The Company’s unsecured public notes contain certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was in compliance with its unsecured public debt covenants for the quarter ended March 31, 2024.

Line of Credit and Commercial Paper

The Company has a $2.5 billion unsecured revolving credit facility maturing on October 26, 2027. The Company has the ability to increase available borrowings by an additional $750.0 million by adding lenders to the facility, obtaining the agreement of existing lenders to increase their commitments or incurring one or more term loans. The interest rate on advances under the facility will generally be the Secured Overnight Financing Rate ("SOFR") plus a spread (currently 0.715%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating and other terms and conditions per the agreement. The Company did not borrow any amounts under its revolving credit facility during the quarter ended March 31, 2024.

The Company has an unsecured commercial paper note program under which it may borrow up to a maximum of $1.0 billion 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 other unsecured senior indebtedness.

The following table summarizes certain weighted average interest rate, maturity and amount outstanding information for the commercial paper program as of and for the quarter ended March 31, 2024:


		March 31, 2024
Weighted Average Interest Rate (1)		5.60%
Weighted Average Maturity (in days)		3
Weighted Average Amount Outstanding		$333.1 million

(1)

The notes bear interest at various floating rates.

The Company limits its utilization of the revolving credit facility in order to maintain liquidity to support its $1.0 billion commercial paper program along with certain other obligations. The following table presents the availability on the Company’s unsecured revolving credit facility as of March 31, 2024 (amounts in thousands):


	March 31, 2024
Unsecured revolving credit facility commitment	$	2,500,000
Commercial paper balance outstanding		(226,000	)
Unsecured revolving credit facility balance outstanding		—
Other restricted amounts		(3,438	)
Unsecured revolving credit facility availability	$	2,270,562

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Fair Value Measurements

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 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 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.

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

•

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

•

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

•

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

The following table summarizes the inputs to the valuations for each type of fair value measurement:


Fair Value Measurement Type		Valuation Inputs
Employee holdings (other than Common Shares) within the supplemental executive retirement plan (the “SERP”)		Quoted market prices for identical assets. These holdings are included in other assets and other liabilities on the consolidated balance sheets.
Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners		Quoted market price of Common Shares.
Mortgage notes payable and private unsecured debt (including its commercial paper and line of credit, if applicable)		Indicative rates provided by lenders of similar loans.
Public unsecured notes		Quoted market prices for each underlying issuance.
Derivatives		Readily observable market parameters such as forward yield curves and credit default swap data.

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. The following table provides a summary of the carrying and fair values for the Company’s mortgage notes payable and unsecured debt (including its commercial paper and line of credit, if applicable) at March 31, 2024 and December 31, 2023, respectively (amounts in thousands):


	March 31, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value (Level 2)		Carrying Value		Estimated Fair Value (Level 2)
Mortgage notes payable, net	$	1,633,870	$	1,498,775	$	1,632,902	$	1,509,706
Unsecured debt, net		5,575,859		5,100,252		5,757,548		5,346,488
Total debt, net	$	7,209,729	$	6,599,027	$	7,390,450	$	6,856,194

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The following tables provide a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a recurring basis and the location within the accompanying consolidated balance sheets at March 31, 2024 and December 31, 2023, respectively (amounts in thousands):


				Fair Value Measurements at Reporting Date Using
Description	Balance Sheet Location	3/31/2024		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Supplemental Executive Retirement Plan	Other Assets	$	103,917	$	103,917	$	—	$	—

Liabilities
Supplemental Executive Retirement Plan	Other Liabilities	$	103,917	$	103,917	$	—	$	—

Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited Partners	Mezzanine	$	298,219	$	—	$	298,219	$	—


				Fair Value Measurements at Reporting Date Using
Description	Balance Sheet Location	12/31/2023		Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Supplemental Executive Retirement Plan	Other Assets	$	108,478	$	108,478	$	—	$	—

Liabilities
Supplemental Executive Retirement Plan	Other Liabilities	$	108,478	$	108,478	$	—	$	—

Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Limited Partners	Mezzanine	$	289,248	$	—	$	289,248	$	—

The following tables provide a summary of the effect of cash flow hedges on the Company’s accompanying consolidated statements of operations and comprehensive income for the quarters ended March 31, 2024 and 2023, respectively (amounts in thousands):


March 31, 2024 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	$	—	Interest expense	$	(610	)
Total	$	—		$	(610	)


March 31, 2023 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	$	(9,780	)	Interest expense	$	(1,095	)
Total	$	(9,780	)		$	(1,095	)

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As of March 31, 2024 and December 31, 2023, there were approximately $6.3 million and $5.7 million in deferred gains, net, included in accumulated other comprehensive income (loss), respectively, related to previously settled and/or unsettled derivative instruments, of which an estimated $2.2 million may be recognized as additional interest expense during the twelve months ending March 31, 2025.

Other

The Company has invested in various equity securities without readily determinable fair values and has elected to measure them using the measurement alternative in accordance with the applicable accounting standards for equity securities. These investments are carried at cost less any impairment and adjusted to fair value if there are observable price changes for an identical or similar investment of the same issuer.

The following table summarizes the Company’s real estate technology investment securities included in other assets as of March 31, 2024 and December 31, 2023 (amounts in thousands):


	March 31, 2024		December 31, 2023
Real Estate Technology Investments	$	26,373	$	19,312

During the quarter ended March 31, 2024, the Company adjusted certain of these investment securities to observable market prices and recorded a net unrealized gain of approximately $7.1 million, which is included in interest and other income in the consolidated statements of operations.

10.

Earnings Per Share and Earnings Per Unit

Equity Residential

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


	Quarter Ended March 31,
	2024			2023
Numerator for net income per share – basic:
Net income	$	305,032		$	220,071
Allocation to Noncontrolling Interests – Operating Partnership		(8,275	)		(7,059	)
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties		(970	)		(977	)
Preferred distributions		(547	)		(772	)
Premium on redemption of Preferred Shares		(1,444	)		—
Numerator for net income per share – basic	$	293,796		$	211,263
Numerator for net income per share – diluted:
Net income	$	305,032		$	220,071
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties		(970	)		(977	)
Preferred distributions		(547	)		(772	)
Premium on redemption of Preferred Shares		(1,444	)		—
Numerator for net income per share – diluted	$	302,071		$	218,322
Denominator for net income per share – basic and diluted:
Denominator for net income per share – basic		378,812			378,341
Effect of dilutive securities:
OP Units		10,669			11,510
Long-term compensation shares/units		1,080			813
Denominator for net income per share – diluted		390,561			390,664
Net income per share – basic	$	0.78		$	0.56
Net income per share – diluted	$	0.77		$	0.56

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ERP Operating Limited Partnership

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


	Quarter Ended March 31,
	2024			2023
Numerator for net income per Unit – basic and diluted:
Net income	$	305,032		$	220,071
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties		(970	)		(977	)
Allocation to Preference Units		(547	)		(772	)
Allocation to premium on redemption of Preference Units		(1,444	)		—
Numerator for net income per Unit – basic and diluted	$	302,071		$	218,322
Denominator for net income per Unit – basic and diluted:
Denominator for net income per Unit – basic		389,481			389,851
Effect of dilutive securities:
Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term compensation shares/units		1,080			813
Denominator for net income per Unit – diluted		390,561			390,664
Net income per Unit – basic	$	0.78		$	0.56
Net income per Unit – diluted	$	0.77		$	0.56

11.

Commitments and Contingencies

Commitments

Real Estate Development Commitments

As of March 31, 2024, the Company has both consolidated and unconsolidated real estate projects under development. The following table summarizes the gross remaining total project costs for the Company’s projects under development at March 31, 2024 (total project costs remaining in thousands):


	Projects		Apartment Units		Total Project Costs Remaining (1)
Projects Under Development
Consolidated		2		665	$	229,064
Unconsolidated		6		1,982		96,303
Total Projects Under Development		8		2,647	$	325,367

(1)

The Company’s share of the $325.4 million in total project costs remaining approximates $229.5 million, with the balance funded by the Company’s joint venture partners (approximately $0.2 million) and/or applicable construction loans (approximately $95.7 million).

We have entered into, and may continue in the future to enter into, joint venture agreements with third-party partners for the development of multifamily rental properties. The joint venture agreements with each development partner include buy-sell provisions that provide the right, but not the obligation, for the Company to acquire 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 5 for additional discussion.

Other Commitments

We have entered into, and may continue in the future to enter into, real estate technology and other real estate fund investments. As of March 31, 2024, the Company has invested in ten separate such investments totaling $40.0 million with aggregate remaining commitments of approximately $18.0 million.

Contingencies

Litigation and Legal Matters

The Company, as an owner of real estate, is subject to various federal, state and local 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

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changed laws or regulations on its current properties or on properties that it may acquire in the future.

The Company is involved in various pending and threatened legal proceedings which arise in the ordinary course of business. The Company evaluates these litigation matters on an ongoing basis, but in no event less than quarterly, in assessing the adequacy of its accruals and disclosures. For legal proceedings in which it has been determined that a loss is both probable and reasonably estimable, the Company records new accruals and/or adjusts existing accruals that represent its best estimate of the loss incurred based on the facts and circumstances known at that time. As of March 31, 2024 and December 31, 2023, the Company’s litigation accruals approximated $45.6 million and $17.1 million, respectively, and are included in other liabilities in the consolidated balance sheets. Actual losses may differ materially from the amounts noted above and the ultimate outcome of these legal proceedings is generally not yet determinable. As of March 31, 2024 and December 31, 2023, the Company does not believe there is any litigation pending or threatened against it that, either individually or in the aggregate and inclusive of the matters accrued for as noted above, may reasonably be expected to have a material adverse effect on the Company and its financial condition.

The Company has been named as a defendant in a number of cases filed in late 2022 and 2023 alleging antitrust violations by RealPage, Inc., a seller of revenue management software products, and various owners and/or operators of multifamily housing, including us, that have utilized these products. The complaints allege collusion among the defendants to illegally fix and inflate the pricing of multifamily rents and seek monetary damages, injunctive relief, fees and costs. All of the cases except for one have been consolidated into a single putative class action in the United States District Court for the Middle District of Tennessee. On December 28, 2023, motions to dismiss this consolidated action, filed by RealPage, Inc. as well as us and our multifamily co-defendants, were denied by the Court and the case is proceeding. Another case with similar allegations has been filed by the District of Columbia against RealPage, Inc. and a number of multifamily owners and/or operators, including us. We believe these various lawsuits are without merit and we intend to vigorously defend against them. As these proceedings are in the early stages, it is not possible for the Company to predict the outcome nor is it possible to estimate the amount of loss, if any, which may be associated with an adverse decision in any of these cases.

The Company is named as a defendant in a class action in the United States District Court for the Northern District of California filed in 2016 which alleges that the amount of late fees charged by the Company were improperly determined under California law. The plaintiffs are seeking monetary damages and other relief. On April 8, 2024, the Court issued certain findings of facts and conclusions of law that are adverse to the Company’s legal position. At this time, the Company is continuing to defend the action. While the resolution of this matter cannot be predicted with certainty, the Company does not believe that the eventual outcome will have a material adverse effect on the Company and its financial condition.

12.

Reportable Segments

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

The Company’s primary business is the acquisition, development and management of multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The chief operating decision maker evaluates the Company’s operating performance geographically by market and both on a same store and non-same store basis. While the Company does maintain a non-residential presence, it accounts for less than 5.0% of total revenues for the quarter ended March 31, 2024 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 consolidated same store operating segments represent its reportable segments.

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

All revenues are from external customers and there is no customer who contributed 10% or more of the Company’s total revenues during the quarters ended March 31, 2024 and 2023, respectively.

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

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The following table presents a reconciliation of NOI from our rental real estate for the quarters ended March 31, 2024 and 2023, respectively (amounts in thousands):


	Quarter Ended March 31,
	2024			2023
Rental income	$	730,818		$	705,088
Property and maintenance expense		(134,630	)		(137,579	)
Real estate taxes and insurance expense		(108,927	)		(106,669	)
Total operating expenses		(243,557	)		(244,248	)
Net operating income	$	487,261		$	460,840

The following tables present NOI from our rental real estate for each segment for the quarters ended March 31, 2024 and 2023, respectively, as well as total assets and capital expenditures at March 31, 2024 (amounts in thousands):


	Quarter Ended March 31, 2024							Quarter Ended March 31, 2023
	Rental Income		Operating Expenses		NOI			Rental Income		Operating Expenses		NOI
Same store (1)
Los Angeles	$	119,267	$	37,825	$	81,442		$	113,489	$	37,311	$	76,178
Orange County		31,101		6,927		24,174			29,372		6,694		22,678
San Diego		25,824		5,880		19,944			24,234		5,814		18,420
Subtotal - Southern California		176,192		50,632		125,560			167,095		49,819		117,276

Washington, D.C.		116,387		36,528		79,859			110,255		37,153		73,102
San Francisco		109,313		34,967		74,346			107,286		34,246		73,040
New York		123,964		51,275		72,689			118,045		49,488		68,557
Boston		80,451		23,738		56,713			76,878		24,163		52,715
Seattle		73,832		21,277		52,555			72,778		20,221		52,557
Denver		17,808		5,447		12,361			17,596		5,474		12,122
Other Expansion Markets		18,718		8,041		10,677			18,370		8,397		9,973
Total same store		716,665		231,905		484,760			688,303		228,961		459,342

Non-same store/other
Non-same store (2)		12,948		6,092		6,856			4,903		2,860		2,043
Other (3)		1,205		5,560		(4,355	)		11,882		12,427		(545	)
Total non-same store/other		14,153		11,652		2,501			16,785		15,287		1,498

Totals	$	730,818	$	243,557	$	487,261		$	705,088	$	244,248	$	460,840

(1)

For the quarters ended March 31, 2024 and 2023, same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2023, less properties subsequently sold, which represented 77,373 apartment units.

(2)

For the quarters ended March 31, 2024 and 2023, non-same store primarily includes properties acquired after January 1, 2023, plus any properties in lease-up and not stabilized as of January 1, 2023, and any properties undergoing major renovations.

(3)

Other includes development, other corporate operations and operations prior to disposition for properties sold.

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	Quarter Ended March 31, 2024
	Total Assets		Capital Expenditures
Same store (1)
Los Angeles	$	2,473,271	$	11,267
Orange County		335,110		2,569
San Diego		336,081		3,167
Subtotal - Southern California		3,144,462		17,003

Washington, D.C.		3,098,097		12,202
San Francisco		3,043,672		13,622
New York		3,284,640		6,085
Boston		2,068,351		6,026
Seattle		2,061,322		8,590
Denver		816,012		1,007
Other Expansion Markets		888,330		1,536
Total same store		18,404,886		66,071

Non-same store/other
Non-same store (2)		665,260		7,381
Other (3)		824,651		68
Total non-same store/other		1,489,911		7,449

Totals	$	19,894,797	$	73,520

(1)

Same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2023, less properties subsequently sold, which represented 77,373 apartment units.

(2)

Non-same store primarily includes properties acquired after January 1, 2023, plus any properties in lease-up and not stabilized as of January 1, 2023, and any properties undergoing major renovations.

(3)

Other includes development, other corporate operations and capital expenditures for properties sold.

13.

Subsequent Events

There have been no material subsequent events occurring since March 31, 2024.

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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 Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.

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 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. Additional factors that might cause such differences are 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, 2023, particularly those under Item 1A, Risk Factors. Forward-looking statements and related uncertainties are also included in the Notes to Consolidated Financial Statements in this report. 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.

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 residential properties located in and around dynamic cities that attract affluent long-term renters. 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 and ERPOP is an Illinois limited partnership formed in May 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.

The Company’s corporate headquarters is located in Chicago, Illinois and the Company also operates regional property management offices in most of its markets.

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, our proxy statements and any amendments to any of those reports/statements we file with or furnish to the Securities and Exchange Commission (“SEC”) free of charge on our website, www.equityapartments.com. These reports/statements are made available on our website as soon as reasonably practicable after we file them with or furnish them to 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 Annual Report on Form 10-K for the year ended December 31, 2023.

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Results of Operations

2024 Transactions

In conjunction with our business objectives and operating and investing strategies, the following table provides a rollforward of the transactions that occurred during the quarter ended March 31, 2024:

Portfolio Rollforward

($ in thousands)


	Properties			Apartment Units			Sales Price			Disposition Yield
12/31/2023		302			80,191
Dispositions:
Consolidated Rental Properties		(3	)		(504	)	$	(248,500	)		(5.5	%)
Configuration Changes		—			1
3/31/2024		299			79,688

Dispositions

•

The consolidated properties disposed of during the quarter ended March 31, 2024 were located in the Boston, Orange County and San Francisco markets and the sales generated an Unlevered IRR of 13.1%.

Developments

•

The Company commenced construction on one consolidated apartment property during the quarter ended March 31, 2024, located in the Boston market, consisting of 440 apartment units totaling approximately $232.2 million of expected development costs; and

•

The Company spent approximately $31.4 million during the quarter ended March 31, 2024, primarily for consolidated and unconsolidated development projects.

See Notes 4 and 5 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s real estate investments and investments in partially owned entities.

Comparison of the quarter ended March 31, 2024 to the quarter ended March 31, 2023

The following table presents a reconciliation of diluted earnings per share/unit for the quarter ended March 31, 2024 as compared to the same period in 2023:


	Quarter Ended March 31
Diluted earnings per share/unit for period ended 2023	$	0.56
Property NOI		0.06
Corporate overhead (1)		(0.01	)
Net gain/loss on property sales		0.22
Non-operating asset gains/losses		0.02
Depreciation expense		(0.03	)
Other		(0.05	)
Diluted earnings per share/unit for period ended 2024	$	0.77

(1)

Corporate overhead includes property management and general and administrative expenses.

The 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.

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The following tables present reconciliations of net 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 (amounts in thousands):


	Quarter Ended March 31,
	2024			2023			$ Change			% Change
Net income	$	305,032		$	220,071		$	84,961			38.6	%
Adjustments:
Property management		35,458			31,466			3,992			12.7	%
General and administrative		15,720			16,165			(445	)		(2.8	)%
Depreciation		225,695			215,830			9,865			4.6	%
Net (gain) loss on sales of real estate properties		(188,185	)		(100,209	)		(87,976	)		87.8	%
Interest and other income		(9,329	)		(1,538	)		(7,791	)		506.6	%
Other expenses		31,738			8,995			22,743			252.8	%
Interest:
Expense incurred, net		67,212			66,401			811			1.2	%
Amortization of deferred financing costs		1,918			1,979			(61	)		(3.1	)%
Income and other tax expense (benefit)		304			298			6			2.0	%
(Income) loss from investments in unconsolidated entities		1,698			1,382			316			22.9	%
Total NOI	$	487,261		$	460,840		$	26,421			5.7	%
Rental income:
Same store	$	716,665		$	688,303		$	28,362			4.1	%
Non-same store/other		14,153			16,785			(2,632	)		(15.7	)%
Total rental income		730,818			705,088			25,730			3.6	%
Operating expenses:
Same store		231,905			228,961			2,944			1.3	%
Non-same store/other		11,652			15,287			(3,635	)		(23.8	)%
Total operating expenses		243,557			244,248			(691	)		(0.3	)%
NOI:
Same store		484,760			459,342			25,418			5.5	%
Non-same store/other		2,501			1,498			1,003			67.0	%
Total NOI	$	487,261		$	460,840		$	26,421			5.7	%

Note: See Note 12 in the Notes to Consolidated Financial Statements for detail by reportable segment/market.

•

The increase in same store rental income is primarily driven by healthy demand and modest supply across most of our markets.

•

The increase in same store operating expenses is due primarily to:

•

Real estate taxes – A $3.4 million increase due to escalation in rates and assessed values including an approximately 1.0% contribution to growth from 421-a tax abatement burnoffs in New York City. Once the burnoffs are completed, previously rent-restricted apartment units will transition to market;

•

Other on-site operating expenses – A $1.2 million increase primarily driven by higher property-related legal expenses;

•

Insurance – A $0.9 million increase due to higher premiums on property insurance renewal due to conditions in the insurance market that while less difficult than recent years, remain challenging;

•

Utilities – A $2.0 million decrease from electric primarily driven by lower commodity prices; and

•

Repairs and maintenance – A $0.7 million decrease due primarily to lower resident Turnover compared to the same period of 2023, moderation of previous wage/staffing pressures and a benefit from a relatively easy comparable period.

•

Non-same store/other NOI results consist primarily of properties acquired in calendar year 2023, operations from the Company’s development properties, other corporate operations and operations prior to disposition from 2023 and 2024 sold properties.

•

The increase in consolidated total NOI is primarily a result of the Company’s higher NOI from same store properties, largely due to improvement in same store revenues as noted above and the Company's continued focus on same store expense efficiency.

See the Same Store Results section below for additional discussion of those results. See the reconciliation table of net income per the consolidated statements of operations to NOI above for the dollar and percentage changes related to the comparison discussions provided below.

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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. The increase during the quarter ended March 31, 2024 as compared to the prior year period is primarily attributable to increases in payroll-related costs, information technology expenses and legal and professional fees.

General and administrative expenses, which include corporate operating expenses, decreased during the quarter ended March 31, 2024 as compared to the prior year period, primarily due to decreases in payroll-related costs, partially offset by increases in workforce/contractors costs.

Depreciation expense, which includes depreciation on non-real estate assets, increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily as a result of additional depreciation expense on properties acquired in 2023 and a development property placed in service during 2023, partially offset by lower depreciation from properties sold in 2023 and 2024.

Net gain on sales of real estate properties increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily as a result of the sale of three consolidated apartment properties for a higher gain in 2024 as compared to the sale of seven consolidated apartment properties in the same period in 2023.

Interest and other income increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily due to a net unrealized gain of $7.1 million on various investment securities as well as short-term investment income on cash and restricted deposit accounts due to a higher rate environment and higher overall invested balances, partially offset by decreases in insurance/litigation settlement proceeds received during 2023 as compared to 2024.

Other expenses increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily due to increases in litigation accruals, partially offset by decreases in data transformation project costs that occurred during 2023 but not during 2024.

Interest expense, including amortization of deferred financing costs, increased during the quarter ended March 31, 2024, as compared to the prior year period, primarily due to higher rates on floating debt as compared to the prior year period. The effective interest cost on all indebtedness, excluding debt extinguishment costs/prepayment penalties, for the quarter ended March 31, 2024 was 3.89% as compared to 3.86% for the prior year period. The Company capitalized interest of approximately $3.1 million and $3.4 million during the quarters ended March 31, 2024 and 2023, respectively.

Loss from investments in unconsolidated entities increased during the quarter ended March 31, 2024 as compared to the prior year period, primarily as a result of losses incurred on our unconsolidated development properties which recently started lease-up activities.

Same Store Results

Properties that the Company owned and were stabilized for all of both of the quarters ended March 31, 2024 and 2023 (the “First Quarter 2024 Same Store Properties”), which represented 77,373 apartment units, drove the Company’s results of operations. Properties are considered “stabilized” when they have achieved 90% occupancy for three consecutive months. Properties are included in same store when they are stabilized for all of the current and comparable periods presented.

The following table provides comparative total same store results and statistics for the First Quarter 2024 Same Store Properties:

First Quarter 2024 vs. First Quarter 2023

Same Store Results/Statistics Including 77,373 Same Store Apartment Units

(includes Residential and Non-Residential)

($ in thousands except for Average Rental Rate)


	Results										Statistics
Description	Revenues				Expenses			NOI			Average Rental Rate			Physical Occupancy			Turnover
Q1 2024	$	716,665			$	231,905		$	484,760		$	3,077			96.3	%		8.6	%
Q1 2023	$	688,303			$	228,961		$	459,342		$	2,975			95.9	%		9.1	%
Change	$	28,362			$	2,944		$	25,418		$	102			0.4	%		(0.5	%)
Change		4.1	%	(1)		1.3	%		5.5	%		3.4	%

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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)

Non-Residential contributed 0.20% to quarterly same store revenue growth primarily due to improved collectibility expectations for certain Non-Residential tenants, resulting in the reinstatement of their respective straight-line receivable balances in the first quarter of 2024.

The following table provides results and statistics related to our Residential same store operations for the quarters ended March 31, 2024 and 2023:

First Quarter 2024 vs. First Quarter 2023

Same Store Residential Results/Statistics by Market


														Increase (Decrease) from Prior Year
Markets/Metro Areas	Apartment Units		Q1 2024 % of Actual NOI			Q1 2024 Average Rental Rate		Q1 2024 Weighted Average Physical Occupancy %			Q1 2024 Turnover				Average Rental Rate			Physical Occupancy			Turnover
Los Angeles		14,135		17.5	%	$	2,922		95.5	%		9.6	%			5.2	%		0.0	%		(0.4	%)
Orange County		3,718		5.2	%		2,900		96.1	%		7.4	%			5.9	%		(0.1	%)		(0.1	%)
San Diego		2,878		4.3	%		3,103		96.1	%		8.0	%			5.7	%		0.7	%		(1.7	%)
Subtotal – Southern California		20,731		27.0	%		2,943		95.7	%		9.0	%			5.4	%		0.1	%		(0.5	%)

Washington, D.C.		14,716		16.9	%		2,665		97.1	%		7.0	%			5.0	%		0.5	%		(0.4	%)
San Francisco		11,345		15.8	%		3,281		96.4	%		9.5	%			1.2	%		0.7	%		0.1	%
New York		8,536		14.1	%		4,592		97.0	%		6.5	%			3.7	%		0.2	%		(1.0	%)
Boston		7,077		11.0	%		3,557		95.7	%		7.4	%			4.6	%		0.2	%		(0.6	%)
Seattle		9,266		10.4	%		2,569		96.1	%		9.7	%			(0.6	%)		1.0	%		(1.4	%)
Denver		2,505		2.6	%		2,415		96.3	%		10.1	%			1.6	%		0.0	%		(1.0	%)
Other Expansion Markets		3,197		2.2	%		1,973		95.5	%		13.3	%			0.1	%		0.6	%		0.9	%

Total		77,373		100.0	%	$	3,077		96.3	%		8.6	%			3.4	%		0.4	%		(0.5	%)

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.0% of total revenues for the quarter ended March 31, 2024.

During the quarter ended March 31, 2024, the Company had strong performance in its operating business, with healthy demand across all of our markets supported by a continuing solid job market and high employment for our target affluent renter demographic. Supply has also been modest in most of our existing coastal markets. As expected, our East Coast and Southern California markets performed better than San Francisco, Seattle and our expansion markets (Denver, Atlanta, Dallas/Ft. Worth and Austin). Key performance drivers thus far during 2024 included:

•

Pricing – Pricing (net of Leasing Concessions) improved seasonally and was generally consistent with expectations, with particular strength in New York and Washington, D.C., and improvement in San Francisco and Seattle.

•

Physical Occupancy – Physical Occupancy of 96.3% for the first quarter of 2024 was stronger than anticipated due to the low move-out activity discussed below.

•

Percentage of Residents Renewing and Turnover – The Percentage of Residents Renewing was high at 61.1% for the first quarter of 2024, which helped translate into the lowest quarterly same store Turnover in our history of 8.6%. We believe this reflects both the strength of demand and quality of our product and team.

The Company continued to make progress in move-out activity related to delinquent residents during the quarter ended March 31, 2024, especially in our Los Angeles market, which put modest pressure on pricing and Physical Occupancy in that market. While the eviction process remains challenging and we have more progress to make in reducing delinquencies in our portfolio, we have made significant strides already and timeframes for processing evictions have recently improved.

Overall, the fundamentals of our business remain healthy. Long-term, we expect elevated single family home ownership costs, positive household formation trends, manageable competitive new supply in our established coastal markets and the overall deficit in housing across the country to buffer the impact on our business from the risks of potential economic weakness. We also see our affluent resident base as being resilient to economic uncertainty, including elevated inflation, due to higher levels of disposable income and lower relative rent-to-income ratios.

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Liquidity and Capital Resources

With approximately $2.3 billion in readily available liquidity, a strong balance sheet, limited near-term debt maturities, very strong credit metrics and ample access to capital markets, the Company believes it is well positioned to meet its future obligations and take advantage of opportunities. See further discussion below.

Statements of Cash Flows

The following table sets forth our sources and uses of cash flows for the quarters ended March 31, 2024 and 2023 (amounts in thousands):


	Quarter Ended March 31,
	2024			2023
Cash flows provided by (used for):
Operating activities	$	421,031		$	393,279
Investing activities	$	136,006		$	43,723
Financing activities	$	(500,472	)	$	(355,089	)

The following provides information regarding the Company’s cash flows from operating, investing and financing activities for the quarter ended March 31, 2024.

Operating Activities

Our operating cash flows are primarily impacted by NOI and its components, such as Average Rental Rates, Physical Occupancy levels and operating expenses related to our properties. Cash provided by operating activities for the quarter ended March 31, 2024 as compared to the prior year period, increased by approximately $27.8 million as a direct result of the NOI and other changes discussed above in Results of Operations.

Investing Activities

Our investing cash flows are primarily impacted by our transaction activity (acquisitions/dispositions), development spend and capital expenditures. For the quarter ended March 31, 2024, key drivers were:

•

Disposed of three consolidated rental properties, receiving net proceeds of approximately $247.3 million;

•

Invested $25.5 million primarily in consolidated development projects;

•

Invested $73.5 million in capital expenditures to real estate; and

•

Invested $7.8 million primarily in unconsolidated development joint venture entities as well as unconsolidated investments in real estate technology funds/companies for various technology initiatives.

Financing Activities

Our financing cash flows primarily relate to our borrowing activity (debt proceeds or repayment), distributions/dividends to shareholders/unitholders and other Common Share activity. For the quarter ended March 31, 2024, key drivers were:

•

Issued Common Shares related to share option exercises and ESPP purchases and received net proceeds of $6.0 million;

•

Paid dividends/distributions on Common Shares, Preferred Shares, Units (including OP Units and restricted units) and noncontrolling interests in partially owned properties totaling approximately $262.8 million;

•

Repurchased and retired 652,452 Common Shares, at a weighted average purchase price of $58.95 per share, for an aggregate purchased amount of approximately $38.5 million. See Note 3 in the Notes to Consolidated Financial Statements for further discussion; and

•

Repurchased and retired 402,500 Series K Preferred Shares/Preference Units with a liquidation value of approximately $20.1 million for total cash consideration of approximately $21.8 million, inclusive of premiums and accrued dividends through the redemption date. See Note 3 in the Notes to Consolidated Financial Statements for further discussion.

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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. Currently, the Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions.

The following table presents the Company’s balances for cash and cash equivalents, restricted deposits and the available borrowing capacity on its revolving credit facility as of March 31, 2024 and December 31, 2023 (amounts in thousands):


	March 31, 2024		December 31, 2023
Cash and cash equivalents	$	44,535	$	50,743
Restricted deposits	$	152,025	$	89,252
Unsecured revolving credit facility availability	$	2,270,562	$	2,086,585

Credit Facility and Commercial Paper Program

The Company has a $2.5 billion unsecured revolving credit facility maturing October 26, 2027. The Company has the ability to increase available borrowings by an additional $750.0 million by adding lenders to the facility, obtaining the agreement of existing lenders to increase their commitments or incurring one or more term loans. The interest rate on advances under the facility will generally be the Secured Overnight Financing Rate (“SOFR”) plus a spread (currently 0.715%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating and other terms and conditions per the agreement. See Note 8 in the Notes to Consolidated Financial Statements for additional discussion of the Company’s credit facility.

The Company may borrow up to a maximum of $1.0 billion under its commercial paper 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 other unsecured senior indebtedness.


	April 25. 2024
Unsecured revolving credit facility commitment	$	2,500,000
Commercial paper balance outstanding		(414,000	)
Unsecured revolving credit facility balance outstanding		—
Other restricted amounts		(3,438	)
Unsecured revolving credit facility availability	$	2,082,562

Dividend Policy

The Company declared a dividend/distribution for the first quarter of 2024 of $0.675 per share/unit, an annualized increase of 2.0% over the amount paid in 2023. All future dividends/distributions remain subject to the discretion of the Company’s Board of Trustees.

Total dividends/distributions paid in April 2024 amounted to $263.6 million (excluding distributions on Partially Owned Properties), which consisted of certain distributions declared during the quarter ended March 31, 2024.

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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 development activities, through the issuance of secured and unsecured debt and equity securities (including additional OP Units), proceeds received from the disposition of certain properties and joint ventures, along with cash generated from operations after all distributions. The Company has a significant number of unencumbered properties available to secure additional mortgage borrowings should unsecured capital be unavailable or the cost of alternative sources of capital be too high. The value of and cash flow from these unencumbered properties are in excess of the requirements the Company must maintain in order to comply with covenants under its unsecured notes and line of credit. Of the $28.7 billion in investment in real estate on the Company’s balance sheet at March 31, 2024, $25.6 billion or 89.1% was unencumbered. However, there can be no assurances that these sources of capital will be available to the Company in the future on acceptable terms or otherwise. For additional details, see Item 1A, Risk Factors, of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.

EQR issues equity and guarantees certain debt of the Operating 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 schedule as of March 31, 2024 is as follows:

Debt Summary as of March 31, 2024

($ in thousands)


	Debt Balances		% of Total
Secured	$	1,633,870		22.7	%
Unsecured		5,575,859		77.3	%
Total	$	7,209,729		100.0	%
Fixed Rate Debt:
Secured – Conventional	$	1,399,221		19.4	%
Unsecured – Public		5,349,938		74.2	%
Fixed Rate Debt		6,749,159		93.6	%
Floating Rate Debt:
Secured – Tax Exempt		234,649		3.3	%
Unsecured – Revolving Credit Facility		—		—
Unsecured – Commercial Paper Program		225,921		3.1	%
Floating Rate Debt		460,570		6.4	%
Total	$	7,209,729		100.0	%

The Company’s long-term financing and capital needs and sources have not changed materially from the information included in the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2023.

Critical Accounting Policies and Estimates

The Company’s and the Operating Partnership’s critical accounting policies and estimates have not changed from the information included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.

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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 quarters ended March 31, 2024 and 2023:

Funds From Operations and Normalized Funds From Operations

(Amounts in thousands)


	Quarter Ended March 31,
	2024			2023
Net income	$	305,032		$	220,071
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties		(970	)		(977	)
Preferred/preference distributions		(547	)		(772	)
Premium on redemption of Preferred Shares/Preference Units		(1,444	)		—
Net income available to Common Shares and Units / Units		302,071			218,322
Adjustments:
Depreciation		225,695			215,830
Depreciation – Non-real estate additions		(955	)		(1,156	)
Depreciation – Partially Owned Properties		(542	)		(545	)
Depreciation – Unconsolidated Properties		335			632
Net (gain) loss on sales of real estate properties		(188,185	)		(100,209	)
FFO available to Common Shares and Units / Units (1) (3) (4)		338,419			332,874
Adjustments:
Write-off of pursuit costs		548			1,332
Debt extinguishment and preferred share/preference unit redemption (gains) losses		1,444			—
Non-operating asset (gains) losses		(6,106	)		714
Other miscellaneous items		30,591			6,292
Normalized FFO available to Common Shares and Units / Units (2) (3) (4)	$	364,896		$	341,212

FFO (1) (3)	$	340,410		$	333,646
Preferred/preference distributions		(547	)		(772	)
Premium on redemption of Preferred Shares/Preference Units		(1,444	)		—
FFO available to Common Shares and Units / Units (1) (3) (4)	$	338,419		$	332,874

Normalized FFO (2) (3)	$	365,443		$	341,984
Preferred/preference distributions		(547	)		(772	)
Normalized FFO available to Common Shares and Units / Units (2) (3) (4)	$	364,896		$	341,212

(1)

The National Association of Real Estate Investment Trusts (“Nareit”) defines funds from operations (“FFO”) (December 2018 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains or losses from sales and impairment write-downs of depreciable 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 related to real estate. Adjustments for partially owned consolidated and unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis.

(2)

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

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

• pursuit cost write-offs;

• gains and losses from early debt extinguishment and preferred share/preference unit 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 real estate (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and Units / Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. The Company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company’s operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units do not represent net income, net income available to Common Shares / Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units should not be exclusively considered as alternatives to net income, net income available to Common Shares / Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company’s calculation of FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.

(4)

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 Interests – Operating Partnership”. Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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, Quantitative and Qualitative Disclosures About Market Risk, to the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4. Controls and Procedures

Equity Residential

(a)

Evaluation of Disclosure Controls and Procedures:

Effective as of March 31, 2024, 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 above that occurred during the first quarter of 2024 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 March 31, 2024, the Operating Partnership carried out an evaluation, under the supervision and with the participation of the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of EQR, of the effectiveness of the Operating Partnership’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Operating Partnership in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

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(b)

Changes in Internal Control over Financial Reporting:

There were no changes to the internal control over financial reporting of the Operating Partnership identified in connection with the Operating Partnership’s evaluation referred to above that occurred during the first quarter of 2024 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

Other than as disclosed below, there have been no changes to the legal proceedings discussed in Part I, Item 3 of the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2023. As of March 31, 2024, the Company does not believe there is any litigation pending or threatened against it that, either individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company and its financial condition. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.

Item 1A. Risk Factors

There have been no material changes to the risk factors that were discussed in Part I, Item 1A of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2023.

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

Unregistered Common Shares Issued in the Quarter Ended March 31, 2024 (Equity Residential)

During the quarter ended March 31, 2024, EQR issued 7,967 Common Shares in exchange for 7,967 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 option of ERPOP, the cash equivalent thereof, at any time one year after the date of issuance. These shares were either registered under the Securities Act of 1933, as amended (the “Securities Act”), or issued in reliance on an exemption from registration under Section 4(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 these exemptions.

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Common Shares Repurchased in the Quarter Ended March 31, 2024

The Company repurchased and retired the following Common Shares during the quarter ended March 31, 2024:


Period	Total Number of Common Shares Purchased (1)		Weighted Average Price Paid Per Share (1), (2)		Total Number of Common Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Number of Common Shares that May Yet Be Purchased Under the Plans or Programs (1), (3)
January 1, 2024 - January 31, 2024		—	$	—		—		13,000,000
February 1, 2024 - February 29, 2024		652,452	$	58.95		652,452		12,347,548
March 1, 2024 - March 31, 2024		—	$	—		—		12,347,548
Total		652,452	$	58.95		652,452

(1)

The Common Shares repurchased during the quarter ended March 31, 2024 represent Common Shares repurchased under the Company’s publicly announced share repurchase program approved by its Board of Trustees. The Company's share repurchase program was publicly announced on July 30, 2013 and the increase to its 13.0 million shares capacity was publicly announced on August 4, 2016. The program does not have an expiration date and may be suspended or discontinued at any time and does not obligate the Company to make any repurchases of its Common Shares. Following the Company's share repurchase activity in 2023, its Board of Trustees approved replenishing the Company's share repurchase program authorization back to its original 13.0 million shares in January 2024.

(2)

Weighted average price paid per share excludes costs associated with the repurchases.

(3)

The number of shares available for purchase under the Company’s publicly announced share repurchase program authorized by the Board of Trustees. The Company may repurchase Common Shares under its share repurchase program in open market or privately negotiated transactions. The timing and actual number of shares repurchased under the repurchase program depend on a variety of factors, including price, general business and market conditions and other investment opportunities.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

During the quarter ended March 31, 2024, no trustee or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Item 6. Exhibits – See the Exhibit Index.

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EXHIBIT INDEX

The exhibits listed below are filed as part of this report. References to exhibits or other filings under the caption “Location” indicate that the exhibit or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is incorporated by reference. The Commission file numbers for our Exchange Act filings referenced below are 1-12252 (Equity Residential) and 0-24920 (ERP Operating Limited Partnership).


Exhibit	Description	Location
31.1	Equity Residential – Certification of Mark J. Parrell, Chief Executive Officer.	Attached herein.

31.2	Equity Residential – Certification of Robert A. Garechana, Chief Financial Officer.	Attached herein.

31.3	ERP Operating Limited Partnership – Certification of Mark J. Parrell, Chief Executive Officer of Registrant’s General Partner.	Attached herein.

31.4	ERP Operating Limited Partnership – Certification of Robert A. Garechana, Chief Financial Officer of Registrant’s General Partner.	Attached herein.

32.1	Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Executive Officer of the Company.	Attached herein.

32.2	Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Robert A. Garechana, Chief Financial Officer of the Company.	Attached herein.

32.3	ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Executive Officer of Registrant’s General Partner.	Attached herein.

32.4	ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Robert A. Garechana, Chief Financial Officer of 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 With Embedded Linkbase Documents.

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

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SIGNATURES

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


		EQUITY RESIDENTIAL

Date:	May 2, 2024	By:	/s/ Robert A. Garechana
			Robert A. Garechana
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:	May 2, 2024	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:	May 2, 2024	By:	/s/ Robert A. Garechana
			Robert A. Garechana
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

Date:	May 2, 2024	By:	/s/ Ian S. Kaufman
			Ian S. Kaufman
			Senior Vice President and Chief Accounting Officer
			(Principal Accounting Officer)