<PAGE>
 
                                   FORM 10-Q


               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


         [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                 For the quarterly period ended MARCH 31, 1998

                                      OR

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


                        Commission File Number: 0-24920


                       ERP OPERATING LIMITED PARTNERSHIP
            (Exact Name of Registrant as Specified in Its Charter)


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

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

                                (312) 474-1300
             (Registrant's Telephone Number, Including Area Code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.     Yes   X      No
                                           -----       -----
             
<PAGE>
   
                       ERP OPERATING LIMITED PARTNERSHIP
                          CONSOLIDATED BALANCE SHEETS
                            (Amounts in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                              March 31,   December 31,
                                                                1998          1997
                                                             ----------   -----------
<S>                                                          <C>          <C>       
ASSETS
Investment in real estate
  Land                                                       $  829,111    $  791,980
  Depreciable property                                        6,486,759     6,293,415
  Construction in progress                                       47,059        36,040
                                                             ----------    ----------
                                                              7,362,929     7,121,435
Accumulated depreciation                                       (508,394)     (444,762)
                                                             ----------    ----------
  Investment in real estate, net of accumulated
    depreciation                                              6,854,535     6,676,673

Cash and cash equivalents                                        77,575        33,295
Investment in mortgage notes, net                               175,532       176,063
Rents receivable                                                  3,798         3,302
Deposits - restricted                                            39,645        36,374
Escrow deposits - mortgage                                       45,314        44,864
Deferred financing costs, net                                    23,283        23,092
Other assets                                                    109,660       100,968
                                                             ----------    ----------
    Total assets                                             $7,329,342    $7,094,631
                                                             ==========    ==========

LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
  Mortgage notes payable                                     $1,655,635    $1,582,559
  Notes, net                                                  1,130,461     1,130,764
  Line of credit                                                    --        235,000
  Accounts payable and accrued expenses                          66,787        67,699
  Accrued interest payable                                       35,514        28,048
  Rents received in advance and other liabilities                41,417        38,750
  Security deposits                                              29,711        28,193
  Distributions payable                                          89,015        20,223
                                                             ----------    ----------
    Total liabilities                                         3,048,540     3,131,236
                                                             ----------    ----------

Commitments and contingencies

  9 3/8% Series A Cumulative Redeemable Preference Units        153,000       153,000
                                                             ----------    ----------
  9 1/8% Series B Cumulative Redeemable Preference Units        125,000       125,000
                                                             ----------    ----------
  9 1/8% Series C Cumulative Redeemable Preference Units        115,000       115,000
                                                             ----------    ----------
  8.60% Series D Cumulative Redeemable Preference Units         175,000       175,000
                                                             ----------    ----------
  Series E Cumulative Convertible Preference Units               99,950        99,963
                                                             ----------    ----------
  9.65% Series F Cumulative Redeemable Preference Units          57,500        57,500
                                                             ----------    ----------
  7 1/4% Series G Convertible Cumulative Preference Units       316,250       316,250
                                                             ----------    ----------
Partners' capital:
  General Partner                                             2,956,862     2,648,278
  Limited Partners                                              282,240       273,404
                                                             ----------    ----------
    Total partners' capital                                   3,239,102     2,921,682
                                                             ----------    ----------

    Total liabilities and partners' capital                  $7,329,342    $7,094,631
                                                             ==========    ==========
</TABLE>

                            See accompanying notes.

                                       2
<PAGE>
                       ERP OPERATING LIMITED PARTNERSHIP
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                (Amounts in thousands, except per OP Unit data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                      Quarter Ended March 31,
                                                     --------------------------
                                                         1998          1997
                                                     --------------------------
<S>                                                 <C>              <C>
REVENUES
   Rental income                                     $   277,226     $  134,235
   Fee and asset management                                1,360          1,578
   Interest income - investment in mortgage notes          4,931          3,683
   Interest and other income                               2,824          1,891
                                                      -----------      ---------

        Total revenues                                   286,341        141,387
                                                      -----------      ---------

EXPENSES
   Property and maintenance                               66,713         32,334
   Real estate taxes and insurance                        27,443         13,911
   Property management                                    11,579          5,671
   Fee and asset management                                1,052            967
   Depreciation                                           64,390         28,877
   Interest:
        Expense incurred                                  50,254         23,293
        Amortization of deferred financing costs             624            603
   General and administrative                              4,880          2,975
                                                      -----------      ---------

        Total expenses                                   226,935        108,631
                                                      -----------      ---------

Income before gain on disposition of properties           59,406         32,756
   Gain on disposition of properties                       1,869          3,632
                                                      -----------      ---------
Net income                                           $    61,275     $   36,388
                                                      ==========        ========

ALLOCATION OF NET INCOME:

9 3/8% Series A Cumulative Redeemable
   Preference Units                                  $     3,586     $    3,586
                                                      ==========        ========

9 1/8% Series B Cumulative Redeemable
   Preference Units                                  $     2,852     $    2,852
                                                      ==========        ========
9 1/8% Series C Cumulative Redeemable
   Preference Units                                  $     2,623     $    2,623
                                                      ==========        ========
8.60% Series D Cumulative Redeemable
   Preference Units                                  $     3,763     $      -
                                                      ==========        ========
Series E Cumulative Convertible
   Preference Units                                  $     1,749     $      -
                                                      ==========        ========
9.65% Series F Cumulative Redeemable
   Preference Units                                  $     1,387     $      -
                                                      ==========        ========
7 1/4% Series G Convertible Cumulative
   Preference Units                                  $     5,732     $      -
                                                      ==========        ========

General Partner                                           35,895         23,901
Limited Partners                                           3,688          3,426
                                                      ----------        --------
Net income available to OP Unit holders              $    39,583     $   27,327
                                                      ==========        ========

Net income per weighted average OP Unit outstanding  $      0.38     $     0.46
                                                      ==========        ========

Weighted average OP Units outstanding                    102,948         59,269
                                                      ==========        ========

Net income per weighted average OP Unit outstanding -
     assuming dilution                               $      0.38     $     0.45
                                                      ==========        ========

</TABLE>

                            See accompanying notes.

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                               Quarter Ended March 31,
                                                                                            ---------------------------
                                                                                               1998             1997
                                                                                            ---------------------------
<S>                                                                                         <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                                                 $  61,275         $  36,388
 Adjustments to reconcile net income to net cash provided by operating activities:
  Depreciation                                                                                 64,390            28,877
  Amortization of deferred financing costs (including discounts and premiums on debt)             100               681
  Amortization of discount on investment in mortgage notes                                          -              (750)
  Gain on disposition of properties                                                            (1,869)           (3,632)
  Changes in assets and liabilities:
  (Increase) decrease in rents receivable                                                        (496)               99
  Decrease in deposits - restricted                                                               357               127
  (Increase) in other assets                                                                   (2,471)           (4,299)
  (Decrease) in accounts payable and accrued expenses                                            (912)           (1,874)
  Increase in accrued interest payable                                                          7,466             2,710
  Increase in rents received in advance and other liabilities                                   3,600             3,379
                                                                                            ---------         ---------
 Net cash provided by operating activities                                                    131,440            61,706
                                                                                            ---------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Investment in real estate, net                                                              (142,203)         (152,612)
 Improvements to real estate                                                                  (14,091)           (6,276)
 Additions to non-real estate property                                                         (2,385)           (1,515)
 Proceeds from disposition of real estate                                                      16,665             4,771
 Purchase of management contract rights                                                          (119)           (3,500)
 (Increase) in mortgage deposits                                                                 (450)           (2,148)
 Deposits (made) on real estate acquisitions                                                  (11,898)           (5,258)
 Deposits applied on real estate acquisitions                                                   8,270            16,761
 Decrease in investment in mortgage notes                                                         531               451
 Investment in partnerships - development                                                     (11,094)                -
 Costs related to mergers                                                                        (987)                -
 Other investing activities                                                                       398              (101)
                                                                                            ---------         ---------
  Net cash (used for) investing activities                                                   (157,363)         (149,427)
                                                                                            ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Capital contributions from General Partner                                                   348,384            91,101
 Distributions paid to partners                                                               (23,547)          (45,938)
 Principal receipts on employee notes                                                             158               184
 Repayments on line of credit                                                                (235,000)                -
 Principal payments on mortgage notes payable                                                 (20,542)          (20,562)
 Loan and bond acquisition costs                                                                 (768)             (501)
 Increase in security deposits                                                                  1,518               995
                                                                                            ---------         ---------
  Net cash provided by financing activities                                                    70,203            25,279
                                                                                            ---------         ---------
Net increase (decrease) in cash and cash equivalents                                           44,280           (62,442)
Cash and cash equivalents, beginning of period                                                 33,295           147,271
                                                                                            ---------         ---------
Cash and cash equivalents, end of period                                                    $  77,575         $  84,829
                                                                                            =========         =========
</TABLE>

                            See accompanying notes.

                                       4
<PAGE>
 

                   ERP OPERATING LIMITED PARTNERSHIP
           CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                        (Amounts in thousands)
                              (Unaudited)
<TABLE>
<CAPTION>
                                                                                         Quarter Ended March 31,
                                                                                         -----------------------
                                                                                          1998             1997
                                                                                         -----------------------
<S>                                                                                       <C>            <C>
Supplemental information:

 Cash paid during the period for interest                                                $42,788         $20,583
                                                                                         =======         =======

 Mortgage loans assumed through acquisitions of real estate                              $93,617         $60,851
                                                                                         =======         =======

 Net real estate contributed in exchange for OP units or Common Shares                   $    50         $     -
                                                                                         =======         =======
</TABLE>
                            See accompanying notes.

                                       5
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
 

Definition of Special Terms:

Capitalized terms used but not defined in this Quarterly Report on Form 10-Q are
as defined in the Operating Partnership's Annual Report on Form 10-K for the
year ended December 31, 1997 ("Form 10-K").

1.   Business

     ERP Operating Limited Partnership (the "Operating Partnership"), an
Illinois limited partnership, was formed to conduct the multifamily property
business of Equity Residential Properties Trust ("EQR"). EQR is a Maryland real
estate investment trust formed on March 31, 1993. As used herein, the term
"Company" means EQR, and its subsidiaries, as the survivor of the mergers
between EQR and each of Wellsford Residential Property Trust ("Wellsford") (the
"Wellsford Merger") and Evans Withycombe Residential, Inc. ("EWR") (the "EWR
Merger"). The Company conducts substantially all of its operations through the
Operating Partnership. As of March 31, 1998, the Operating Partnership
controlled a portfolio of 476 multifamily properties (individually a "Property"
and collectively the "Properties"). The Operating Partnership's interest in six
of the Properties at the time of acquisition thereof consisted solely of
ownership of the debt collateralized by such Properties. The Operating
Partnership also has an investment in partnership interests and subordinated
mortgages collateralized by 21 properties and mortgage loans collateralized by
five properties (the "Additional Properties").

2.   Basis of Presentation

     The balance sheet and statements of operations and cash flows as of and for
the quarter ended March 31, 1998 represent the consolidated financial
information of the Operating Partnership and its subsidiaries.

     Due to the Operating Partnership's ability to control, either through
ownership or by contract, the Management Partnerships, the Financing
Partnerships, the LLCs and the EWR Operating Partnership, each such entity has
been consolidated with the Operating Partnership for financial reporting
purposes. In regard to Management Corp., Management Corp. II and Evans
Withycombe Management, Inc., the Operating Partnership does not have legal
control; however, these entities are consolidated for financial reporting
purposes, the effects of which are immaterial.

     These unaudited Consolidated Financial Statements of the Operating
Partnership have been prepared pursuant to the Securities and Exchange
Commission ("SEC") rules and regulations and should be read in conjunction with
the Financial Statements and Notes thereto included in the Operating
Partnership's Annual Report on Form 10-K. The following Notes to Consolidated
Financial Statements highlight significant changes to the notes included in the
Form 10-K and present interim disclosures as required by the SEC. The
accompanying Consolidated Financial Statements reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the interim
financial statements. All such adjustments are of a normal and recurring nature.

                                       6
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)
 
 
3.   Partners' Capital

     The limited partners of the Operating Partnership as of March 31, 1998
include various individuals and entities that contributed their properties to
the Operating Partnership in exchange for a partnership interest (the "Limited
Partners") and are represented by 9,584,865 partnership interests ("OP Units")
which are exchangeable, subject to certain restrictions, on a one-for-one basis
into the Company's Common Shares.  As of March 31, 1998, the General Partner had
an approximate 90.95% interest in the Operating Partnership and the Limited
Partners had an approximate 9.05% interest.

     In regards to the General Partner, net proceeds from the various equity
offerings of the Company have been contributed by the Company to the Operating
Partnership in return for an increased ownership percentage. Due to the Limited
Partners' ability to convert their interest into an ownership interest in the
General Partner, the net offering proceeds are allocated between the Company (as
General Partner) and the Limited Partners (to the extent represented by OP
Units) to account for the change in their respective percentage ownership of the
equity of the Operating Partnership.

     The Operating Partnership paid a $0.67 per OP Unit distribution on April
10, 1998 to OP Unit holders of record on March 27, 1998.

     The following table summarizes the distributions paid to the Company as
holder of the various Preference Units listed below related to the quarter ended
March 31, 1998:

<TABLE>
<CAPTION>
                                                                                    For the
                                                                                    Quarter
                                          Distribution Amount    Date Paid           ended
                                          -------------------    ---------          -------
<S>                                       <C>                    <C>               <C>
     Series A Cumulative
      Redeemable Preference Units              $0.585938          04/15/98         03/31/98
     Series B Cumulative 
      Redeemable Preference Units              $0.570313          04/15/98         03/31/98
     Series C Cumulative
      Redeemable Preference Units              $0.570313          04/15/98         03/31/98
     Series D Cumulative
      Redeemable Preference Units              $0.537500          04/15/98         03/31/98
     Series E Cumulative
      Convertible Preference Units             $0.437500          04/01/98         03/31/98
     Series F Cumulative
      Redeemable Preference Units              $0.603125          04/15/98         03/31/98
     Series G Convertible
      Cumulative Preference Units              $0.453125          04/15/98         03/31/98
</TABLE>

     On January 27, 1998, the Company completed an offering of 4,000,000
publicly registered Common Shares, which were sold to the public at a price of
$50.4375 per share (the "January 1998 Common Share Offering"). The Company
contributed to the Operating Partnership net proceeds of approximately $195.3
million in connection therewith.

                                       7
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)
 
     On February 18, 1998, the Company completed offerings of 988,340 publicly
registered Common Shares, which were sold to the public at a price of $50.625
per share. On February 23, 1998, the Company completed an offering of 1 million
publicly registered Common Shares, which were sold to the public at a price of
$48 per share. The Company contributed to the Operating Partnership net proceeds
from these offerings (collectively, the "February 1998 Common Share Offerings")
of approximately $95 million.

     On March 30, 1998, the Company completed an offering of 495,663 publicly
registered Common Shares, which were sold at a price of $47.9156 per share (the
"March 1998 Common Share Offering"). The Company contributed to the Operating
Partnership net proceeds of approximately $23.7 million in connection therewith.

     Minority Interests represented by the Company's indirect 1% interest in
various Financing Partnerships and LLCs are immaterial and have not been
accounted for in the Consolidated Financial Statements. In addition, certain
amounts due from the Company for its 1% interest in the Financing Partnerships
has not been reflected in the Consolidated Balance Sheets since such amounts are
immaterial to the Consolidated Balance Sheets.

4.   Real Estate

     During the quarter ended March 31, 1998, the Operating Partnership acquired
the 15 Properties listed below from unaffiliated third parties. In connection
with certain of the acquisitions listed below, the Operating Partnership assumed
mortgage indebtedness of approximately $93.6 million and issued OP Units having
a value of approximately $0.1 million. The cash portion of these transactions
was funded primarily from proceeds raised from the January 1998 Common Share
Offering, the February 1998 Common Share Offerings and working capital.

<TABLE>
<CAPTION>
                                                                                      Total
       Date                                                            Number    Acquisition Cost
     Acquired    Property                      Location               of Units    (in thousands)
     --------    --------                      --------               --------   ----------------    
<C>              <S>                           <C>                    <C>          <C>
     01/07/98    Cityscape                     St. Louis Park, MN        156          $12,330
     01/09/98    740 River Drive               St. Paul, MN              162           12,861
     01/13/98    Prospect Towers               Hackensack, NJ            157           36,315
     01/16/98    Park Place                    Houston, TX               229           13,571
     01/16/98    Park Westend                  Richmond, VA              312           13,396
     01/29/98    Emerald Bay at Winter Park    Winter Park, FL           432           15,697
     02/05/98    Farnham Park                  Houston, TX               216           15,755
     02/25/98    Plantation                    Houston, TX               232           10,018
     02/27/98    Balcones Club                 Austin, TX                312           12,314
     03/02/98    Coach Lantern                 Scarborough, ME            90            4,849
     03/02/98    Foxcroft                      Scarborough, ME           104            5,041
     03/02/98    Yarmouth Woods                Yarmouth, ME              138            6,775
     03/20/98    Rolido Parque                 Houston, TX               369           10,835
     03/26/98    The Fairfield                 Stamford, CT              263           45,824
     03/26/98    Trails of Valley Ranch        Irving, TX                216           10,719
                                                                       -----         --------         
                                                                       3,388         $226,300
                                                                       =====         ========
</TABLE>

                                       8
<PAGE>
 
                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)

5.   Commitments to Acquire Rental Properties

     As of March 31, 1998, in addition to the properties that were subsequently
acquired as discussed in Note 13 of the Notes to Consolidated Financial
Statements, the Operating Partnership entered into separate agreements to
acquire six multifamily properties containing 1,701 units from unaffiliated
third parties. The expected combined purchase price is approximately $203.2
million, which includes the assumption of mortgage indebtedness of approximately
$40.7 million.

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

6.   Dispositions

     On March 12, 1998, the Operating Partnership sold Mountain Brook Apartments
and Ridgemont Apartments, both located in Chattanooga, Tennessee for a sales
price of $16.7 million. The gain for financial reporting purposes was
approximately $1.9 million.

7.   Calculation of Net Income Per Weighted Average OP Unit

     The following tables set forth the computation of net income per weighted
average OP Unit outstanding and net income per weighted average OP Unit
outstanding-assuming dilution.

                                       9

<PAGE>

                       ERP Operating Limited Partnership

            Notes To Consolidated Financial Statements (Continued)
                                  (Unaudited)

<TABLE>
<CAPTION>


                                                                      Quarter Ended March 31,
                                                          ------------------------------------------------
                                                                   1998                      1997
                                                          ----------------------    ----------------------
                                                          (Amounts in thousands except per share amounts)
<S>                                                     <C>                       <C>
Numerator:

  Income before allocation of income to Redeemable
    Preference Units and gain on disposition
    of properties                                                       $ 59,406                   $32,756

  Income allocated to Redeemable Preference Units                        (21,692)                   (9,061)
                                                          ----------------------    ----------------------

  Income before gain on disposition of properties                         37,714                    23,695

  Gain on disposition of properties                                        1,869                     3,632
                                                          ----------------------    ----------------------

  Numerator for net income per weighted average
    OP Unit outstanding                                                 $ 39,583                   $27,327
                                                          ======================    ======================

  Effect of dilutive securities:
    Series E Cumulative Convertible Preference Units                           -                         -
    Series G Convertible Cumulative Preference Units                           -                         -
                                                          ----------------------    ----------------------

  Numerator for net income per weighted average
    OP Unit outstanding - assuming dilution                             $ 39,583                   $27,327
                                                          ======================    ======================


Denominator:

  Denominator for net income per weighted
    average OP Unit outstanding                                          102,948                    59,269

  Effect of dilutive securities (1):
    OP Units issuable upon exercise of the
     Company's share options                                               1,152                       898
                                                          ----------------------    ----------------------

  Denominator for net income per weighted average
    OP Unit outstanding - assuming dilution                              104,100                    60,167
                                                          ======================    ======================

  Net income per weighted average OP Unit outstanding                   $   0.38                   $  0.46
                                                          ======================    ======================

  Net income per weighted average OP Unit
    outstanding - assuming dilution                                     $   0.38                   $  0.45
                                                          ======================    ======================
</TABLE>

                                      10
<PAGE>
 
                       ERP Operating Limited Partnership

            Notes To Consolidated Financial Statements (Continued)
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                                    Quarter Ended March 31,
                                                        ------------------------------------------------
                                                                 1998                      1997
                                                        ----------------------    ----------------------

<S>                                                     <C>                       <C>
Net income per weighted average OP Unit
  outstanding:

Income before gain on disposition of properties
  per weighted average OP Unit outstanding                               $0.36                     $0.40
Gain on disposition of properties                                         0.02                      0.06
                                                        ----------------------    ----------------------


Net income per weighted average OP Unit outstanding                      $0.38                     $0.46
                                                        ======================    ======================


Net income per weighted average OP Unit
  outstanding - assuming dilution:

Income before gain on disposition of properties
  per weighted average OP Unit outstanding -
  assuming dilution                                                      $0.36                     $0.39
Gain on disposition of properties                                         0.02                      0.06
                                                        ----------------------    ----------------------

Net income per weighted average OP Unit
  outstanding - assuming dilution                                        $0.38                     $0.45
                                                        ======================    ======================
</TABLE>


(1)  Convertible Preference Units that could be converted into 7,623,507 Common
     Shares, which would be contributed to the Operating Partnership in exchange
     for OP Units, were outstanding at March 31, 1998 but were not included in
     the computation of diluted earnings per OP Unit because it would be anti-
     dilutive.

                                      11
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)
 
8. Mortgage Notes Payable

     As of March 31, 1998, the Operating Partnership had outstanding mortgage
indebtedness of approximately $1.66 billion encumbering 158 of the Properties.
The carrying value of such Properties (net of accumulated depreciation of $168.8
million) was approximately $2.7 billion.  The mortgage notes payables are
generally due in monthly installments of interest only.  In connection with the
Properties acquired during the quarter ended March 31, 1998, the Operating
Partnership assumed the outstanding mortgage balances on seven Properties in the
aggregate amount of $93.6 million.

     Concurrent with the refinancing of certain tax-exempt bonds and as a
requirement of the credit provider of the bonds, the Financing Partnership,
which owns certain of the Properties, entered into interest rate protection
agreements, which were assigned to the credit provider as additional security.
The Financing Partnership pays interest based on a fixed interest rate and the
counterparty of the agreement pays interest to the Company at a floating rate
that is calculated based on the Public Securities Association Index for
municipal bonds ("PSA Municipal Index"). As of March 31, 1998, the aggregate
notional amount of these agreements was approximately $173.8 million. The fixed
interest rates for these agreements were 4.81%, 4.528% and 4.90%.  The
termination dates are October 1, 2003, January 1, 2004 and April 1, 2004.  The
Operating Partnership simultaneously entered into substantially identical
reverse interest rate protection agreements. Under these agreements the Company
pays interest monthly at a floating rate based on the PSA Municipal Index and
the counterparty pays interest to the Operating Partnership based on a fixed
interest rate. As of March 31, 1998, the aggregate notional amount of these
agreements was approximately $173.8 million.  The fixed interest rates received
by the Operating Partnership in exchange for paying interest based on the PSA
Municipal Index for these agreements were 4.74%, 4.458% and 4.83%.  The
termination dates are October 1, 2003, January 1, 2004 and April 1, 2004.
Collectively, these agreements effectively cost the Operating Partnership 0.07%
per annum on the current outstanding aggregate notional amount.  The Operating
Partnership believes that it has limited exposure to the extent of non-
performance by the counterparties of the agreements since each counterparty is a
major U.S. financial institution, and the Operating Partnership does not
anticipate their non-performance.  Furthermore, any non-performance by the
counterparty is offset by non-performance by the Operating Partnership.

     The Operating Partnership also has an interest rate cap agreement for a
notional amount of $228 million, for which it will receive payments if the PSA
index exceeds 5.75%, that terminates on December 1, 1999.  Any payments by the
counterparty under this agreement have been collaterally assigned to the
provider of certain sureties related to the tax exempt bonds secured by certain
of it's Properties.  The Operating Partnership has no payment obligations to the
counterparty with respect to this agreement.

     As of March 31, 1998, scheduled maturities for the Operating Partnership's
outstanding mortgage indebtedness are at various dates through October 1, 2030.
During the quarter ended March 31, 1998, the effective interest cost on these
mortgage notes was 7.3%.  During the quarter ended March 31, 1998, the Operating
Partnership repaid the outstanding mortgage balance on one Property in the
amount of $18.2 million. Subsequent to March 31, 1998, the Operating Partnership

                                       12
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)
 
repaid the outstanding mortgage balances on four Properties in the aggregate
amount of approximately $16 million.

9.  Line of Credit


     During the quarter ended March 31, 1998, the Operating Partnership repaid
$235 million outstanding on its line of credit with proceeds raised from the
January 1998 Common Share Offering and the February 1998 Common Share Offerings.
As of March 31, 1998, there were no amounts outstanding on this line of credit.

10.  Notes


     As of March 31, 1998, the Operating Partnership had outstanding unsecured
notes of approximately $1.1 billion (net of a $2.4 million discount and
including a $7.9 million premium).

     In February 1996, the Operating Partnership entered into an interest rate
protection agreement that hedged the interest rate risk of the 1999 Notes by
locking the effective four year Treasury Rate, commencing May 15, 1999 through
May 2003.  There was no current cost to the Operating Partnership for entering
into this agreement.

     Prior to the issuance of the 2002 Notes, the Operating Partnership entered
into an interest rate protection agreement to effectively fix the interest rate
cost of such issuance.  The Operating Partnership made a one time settlement
payment of this protection transaction, which was approximately $0.8 million and
is being amortized over the term of the 2002 Notes.  As of March 31, 1998, the
unamortized balance of this cost was approximately $0.5 million.

     Prior to the issuance of the 2026 Notes, the Operating Partnership entered
into an interest rate protection agreement to effectively fix the interest rate
cost of this issuance to 7.5%.  The Operating Partnership received a one-time
settlement payment of this transaction, which was approximately $0.6 million,
which amount is being amortized over the term of the 2026 Notes.  As of March
31, 1998, the unamortized balance was approximately $0.5 million.

     Prior to the issuance of the 2001 and 2003 Notes, the Operating Partnership
entered into two interest rate protection agreements to effectively fix the
interest rate costs of such issuances. The Operating Partnership made a one time
settlement payment of each protection transaction, which was approximately $5
million and $1.7 million, respectively, which are being amortized over the term
of the Notes on a straight-line basis.  As of March 31, 1998 the unamortized
balance of these costs were approximately $4.6 million and $1.6 million,
respectively.

     In regard to all of the interest rate protection agreements mentioned in
the previous paragraphs, the Operating Partnership believes that it has limited
exposure to the extent of non-performance by

                                       13
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)
 
the counterparties of each agreement since each counterparty is a major U.S.
financial institution, and the Operating Partnership does not anticipate their
non-performance.


11.  Deposits - restricted


     Deposits-restricted as of March 31, 1998 primarily included a deposit in
the amount of $20 million held in a third party escrow account to provide
collateral for third party construction financing in connection with the Joint
Venture Agreement. Also, approximately $12.1 million was held in third party
escrow accounts, representing proceeds received in connection with the Operating
Partnership's disposition of two properties and earnest money deposits made for
additional acquisitions. In addition, approximately $7.5 million was for tenant
security and utility deposits for certain of the Operating Partnership's
Properties.

12.  Commitments and Contingencies


     The Operating Partnership, as an owner of real estate, is subject to
various environmental laws of Federal and local governments. Compliance by the
Operating Partnership with existing laws has not had a material adverse effect
on the Operating Partnership's financial condition and results of operations.
However, the Operating Partnership cannot predict the impact of new or changed
laws or regulations on its current Properties or on properties that it may
acquire in the future.

     The Operating Partnership does not believe there is any other litigation,
except as mentioned in the previous paragraph, threatened against the Operating
Partnership other than routine litigation arising out of the ordinary course of
business, some of which is expected to be covered by liability insurance, none
of which is expected to have a material adverse effect on the consolidated
financial statements of the Operating Partnership.

     In connection with the Joint Venture Agreement, the Operating Partnership
is obligated to fund an additional $20 million in connection with the third
party construction financing.

     In connection with the Wellsford Merger, the Operating Partnership has
provided a standby obligation in the amount of $30 million pursuant to an
agreement entered into with Wellsford Real Properties, Inc., a Maryland
corporation ("WRP"), for the construction financing for a multifamily
development project located in Denver, Colorado. In addition, the Operating
Partnership has provided a $14.8 million credit enhancement with respect to
bonds issued to finance certain public improvements at the multifamily
development project.

13.  Subsequent Events


     On April 1, 1998,  the Operating Partnership acquired Harbor Pointe
Apartments, a 595-unit multifamily property located in Milwaukee, Wisconsin,
from an unaffiliated third party for a purchase price of approximately $24
million, which included securing financing in the amount of $12 million and the
issuance of OP Units having a value of approximately $2.3 million.
 
     On April 1, 1998, the Operating Partnership acquired five of the Additional
Properties containing 1,371 units, from an unaffiliated third party for a total
purchase price of approximately $95.7 million, which included mortgage
indebtedness of $50 million and the issuance of OP Units having a value of
approximately $6.3 million.  In April 1997, the Operating Partnership had made a
$88 Million Mortgage Note Investment collateralized by these five Additional
Properties.

     On April 1, 1998, the Operating Partnership acquired Sonterra at Foothill
Ranch Apartments, a 300-unit multifamily property located in Foothill Ranch,
California from an unaffiliated third party for a purchase price of
approximately $31.5 million.

     On April 7, 1998, the Operating Partnership acquired Vista Pointe at the
Valley Apartments, a 231-unit multifamily property located in Irving, Texas,
from an unaffiliated third party for a purchase price of  approximately $18.6
million.

     On April 23, 1998, the Operating Partnership acquired Emerson Place
Apartments, a 462-unit multifamily property located in Boston, Massachusetts,
from an unaffiliated third party for a purchase price of approximately $72.5
million.

     In April 1998, the Operating Partnership issued 6.63% unsecured notes due
April 13, 2015 in a 

                                       14
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)
 
public debt offering. The Operating Partnership received net proceeds of
approximately $298.1 million in connection with this issuance. The Operating
Partnership also received approximately $8.1 million from the sale of an option
to remarket the 2015 Notes in April 2005. Prior to the issuance of the 2015
Notes, the Operating Partnership entered into an interest rate protection
agreement to effectively fix the interest rate cost of such issuance at 6.44%.
The Operating Partnership received a one-time settlement payment from this
transaction, which was appproximately $0.6 million, will be amortized over seven
years.

     In April 1998, the Company sold approximately 350,000 Common Shares
pursuant to the DRIP Plan and contributed to the Operating Partnership net
proceeds of approximately $17.5 million therefrom.

     On April 29, 1998, the Company completed an offering of 946,565 publicly
registered Common Shares, which were sold at a price of $46.5459 per share.  The
Company contributed to the Operating Partnership net proceeds of approximately
$44.1 million in connection therewith.

     On May 1, 1998, the Operating Partnership disposed of one Property located
in Fort Myers, Florida for a sales price of $8.5 million. The Operating
Partnership expects to record a gain for financial reporting purposes of
approximately $1.4 million.

                                       15
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

                                    PART I

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

     The following discussion and analysis of the results of operations and
financial condition of the Operating Partnership should be read in connection
with the Consolidated Financial Statements and Notes thereto.  Due to the
Operating Partnership's ability to control the EWR Operating Partnership, the
Management Partnerships, the Financing Partnerships and the LLCs, each entity
has been consolidated with the Operating Partnership for financial reporting
purposes.  Capitalized terms used herein and not defined, are as defined in the
Operating Partnership's Annual Report on Form 10-K for the year ended December
31, 1997.

     Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.  The
words "believes", "expects" and "anticipates" and other similar expressions
which are predictions of or indicate future events and trends and which do not
relate solely to historical matters, identify forward-looking statements. Such
forward-looking statements are subject to risks and uncertainties, which could
cause actual results, performance, or achievements of the Operating Partnership
to differ materially from anticipated future results, performance or
achievements expressed or implied by such forward-looking statements.  Factors
that might cause such differences include, but are not limited to, the
following:  the alternative sources of capital to the Operating Partnership are
too high; occupancy levels and market rents may be adversely affected by local
economic and market conditions, which are beyond the Operating Partnership's
control; and additional factors as discussed in Part I of the Annual Report as
filed on Form 10-K.  Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.  The
Operating Partnership undertakes no obligation to publicly release any revisions
to these forward-looking statements, which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

Results of Operations

     Since EQR's IPO and through March 31, 1998, the Operating Partnership has
acquired direct or indirect interests in 427 properties (the "Acquired
Properties"), containing 121,898 units in the aggregate for a total purchase
price of approximately $6.8 billion, including the assumption of approximately
$1.6 billion of mortgage indebtedness and $0.4 billion of unsecured notes.  The
Operating Partnership's interest in six of the Acquired Properties at the time
of acquisition thereof consisted solely of ownership of the debt collateralized
by such Acquired Properties.  The Operating Partnership purchased its interests
in 15 of such Acquired Properties consisting of 3,388 units in 1998 (the "1998
Acquired Properties").

     During the quarter ended March 31, 1998, the Operating Partnership disposed
of two properties (the "1998 Disposed Properties") for a total sales price of
$16.7 million.

                                       16
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)
 
     The Operating Partnership's overall results of operations for the quarters
ended March 31, 1998 and 1997 have been significantly impacted by the Operating
Partnership's acquisition activity.  The significant changes in rental revenues,
property and maintenance expenses, real estate taxes and insurance, depreciation
expense, property management and interest expense can all primarily be
attributed to the acquisition of the 1997 Acquired Properties and the 1998
Acquired Properties.  The impact of the 1997 Acquired Properties and the 1998
Acquired Properties is discussed in greater detail in the following paragraphs.

     Properties that the Operating Partnership owned for all of the quarter
ended March 31, 1998 and March 31, 1997 (the "First Quarter 1998 Same Store
Properties") also impacted the Operating Partnership's results of operations and
are discussed as well in the following paragraphs.

     Comparison of quarter ended March 31, 1998 to quarter ended March 31, 1997
                                        
     For the quarter ended March 31, 1998, income before gain on disposition of
properties increased by $26.7 million when compared to the quarter ended March
31, 1997.  This increase was primarily due to increases in rental revenues net
of increases in property and maintenance expenses, real estate taxes and
insurance, property management expenses, depreciation, interest expense and
general and administrative expenses.  All of the increases in the various line
item accounts mentioned above can be primarily attributed to the 1997 Acquired
Properties.  These increases were partially offset by the 1997 Disposed
Properties.  The increase in interest income of $1.2 million earned on the
Operating Partnership's mortgage note investments is primarily attributable to
its $88 Million Note Investment.

     In regard to the First Quarter 1998 Same Store Properties, rental revenues
increased by approximately $6.5 million or 5.2% primarily as a result of higher
rental rates charged to new tenants and tenant renewals, as well as a 1%
increase in average occupancy levels.  Overall property operating expenses which
include property and maintenance, real estate taxes and insurance and an
allocation of property management expenses increased approximately $1.3 million
or 2.7%.  This increase was primarily attributable to increased leasing and
advertising as well as building, maintenance and utility costs.

     Property management represents expenses associated with the management of 
the Operating Partnership's Properties.  These expenses increased by
approximately $5.9 million primarily due to the continued expansion of the
Operating Partnership's property management business to facilitate the
management of the Operating Partnership's additional properties.  Subsequent to
March 31, 1997, the Operating Partnership opened approximately 14 new management
offices.

     Fee and asset management revenues and fee and asset management expenses are
associated with the management of properties not owned by the Operating
Partnership that are managed for affiliates.  These expenses were slightly
higher for the quarter ended March 31, 1998 when compared to the quarter ended
March 31, 1997.

                                       17
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)
 
     Interest expense, including amortization of deferred financing costs,
increased by approximately $27 million.  This increase was primarily the result
of an increase in the Operating Partnership's average indebtedness outstanding,
which increased by $1.6 billion.  However, the Operating Partnership's effective
interest costs decreased from 7.62% for the quarter ended March 31, 1997 to
7.27% for the quarter ended March 31, 1998.

     General and administrative expenses, which include corporate operating
expenses, increased approximately $1.9 million between the periods under
comparison.  This increase was primarily due to adding corporate personnel,
higher compensation costs and shareholder reporting costs as well as an increase
in professional fees.  General and administrative expenses as a percentage of
total revenues were 1.7% for the quarter ended March 31, 1998, which was a
decrease from 2.1% for the quarter ended March 31, 1997.

Liquidity and Capital Resources

     As of January 1, 1998, the Operating Partnership had approximately $33.3
million of cash and cash equivalents and $265 million available on its line of
credit, of which $24.7 million was restricted.  After taking into effect the
various transactions discussed in the following paragraphs, the Operating
Partnership's cash and cash equivalents balance at March 31, 1998 was
approximately $77.6 million and the amount available on the Operating
Partnership's line of credit was $500 million, of which $24.7 million was
restricted.  The following discussion also explains the changes in net cash
provided by operating activities, net cash (used for) investing activities and
net cash provided by financing activities, all of which are presented in the
Operating Partnership's Statements of Cash Flows.

     With respect to Property acquisitions during the quarter, the Operating
Partnership purchased 15 Properties containing 3,388 units for a total purchase
price of approximately $225.2 million, including the assumption of mortgage
indebtedness of approximately $93.6 million.  These acquisitions were primarily
funded from proceeds received from the January 1998 Common Share Offering, the
February 1998 Common Share Offerings and working capital.  Subsequent to March
31, 1998 and through May 11, 1998, the Operating Partnership acquired nine
additional properties, containing 2,959 units for a total purchase price of
approximately $242.3 million, including the assumption of mortgage indebtedness
of approximately $62 million and the issuance of OP Units having a value of
approximately $8.6 million.  These acquisitions were primarily funded with
proceeds from the February 1998 Common Share Offerings, the March 1998 Common
Share Offering and working capital.

     During the quarter ended March 31, 1998, the Operating Partnership disposed
of two properties that generated net proceeds of $16.7 million.  Subsequently,
these proceeds will be ultimately applied to purchase additional Properties.

                                       18
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)
 
     As of March 31, 1998, the Operating Partnership had total indebtedness of
approximately $2.79 billion, which included mortgage indebtedness of $1.66
billion (including premiums of $3.7 million), of which $723 million represented
tax-exempt bond indebtedness, and unsecured debt of $1.13 billion (including net
discounts and premiums in the amount of $5.5 million).  During the quarter, the
Operating Partnership repaid $18.2 million of mortgage indebtedness on one of
its Properties.  This repayment was primarily funded from proceeds received from
the January 1998 Common Share Offering.

     The Operating Partnership has, from time to time, entered into interest
rate protection agreements (financial instruments) to reduce the potential
impact of increases in interest rates but believes it has limited exposure to
the extent of non-performance by the counterparties of each protection agreement
since each counterparty is a major U.S. financial institution, and the Operating
Partnership does not anticipate their non-performance.  No such financial
instrument has been used for trading purposes.  In February, 1996, the Operating
Partnership entered into an interest rate protection agreements that will hedge
the Operating Partnership's interest rate risk at maturity of $125 million of
indebtedness.  This agreement hedged the interest rate risk of the Operating
Partnership's 1999 Notes by locking the effective four-year Treasury Rate,
commencing May 15, 1999.  There was no current cost to the Operating Partnership
for entering into this agreement.  In July 1997, the Operating Partnership
entered into two interest rate protection agreements to effectively fix the
interest rate cost of the Operating Partnership's 2001 Notes and 2003 Notes.
One agreement was for a notional amount of $100 million with a locked in
treasury rate at 6.134%.  The second agreement was for a notional amount of $75
million with a locked in treasury rate of 6.287%.  The fair value of these
instruments as of March 31, 1998 approximates their carrying or contract values.

     The Operating Partnership has a policy of capitalizing expenditures made
for new assets, including newly acquired properties and the costs associated
with placing these assets into service.  Expenditures for improvements and
renovations that significantly enhance the value of existing assets or
substantially extend the useful life of an asset are also capitalized.  Capital
spent for replacement-type items such as appliances, draperies, carpeting and
floor coverings, mechanical equipment and certain furniture and fixtures is also
capitalized.  Expenditures for ordinary maintenance and repairs are expensed to
operations as incurred.  With respect to acquired properties, the Operating
Partnership has determined that it generally spends $1,000 per unit during its
first three years of ownership to fully improve and enhance these properties to
meet the Operating Partnership's standards.  In regard to replacement-type items
described above, the Operating Partnership generally expects to spend $300 per
unit on an annual recurring basis.

     During the quarter ended March 31, 1998, total capital expenditures for the
Operating Partnership approximated $16.5 million.  Of this amount, approximately
$3.4 million related to capital improvements and major repairs for certain of
the 1995, 1996 and 1997 Acquired Properties.  Capital improvements and major
repairs for all of the Operating Partnership's pre-

                                       19
<PAGE>
 

                       ERP OPERATING LIMITED PARTNERSHIP

                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)

IPO properties and certain Acquired Properties approximated $3.8 million, or $28
per unit. Capital spent for replacement-type items approximated $6.9 million, or
$50 per unit. Also included in total capital expenditures was approximately $2.4
million expended for non-real estate additions such as computer software,
computer equipment, furniture and fixtures and leasehold improvements for the
Operating Partnership's offices and its corporate headquarters. Such capital
expenditures were primarily funded from working capital reserves and from net
cash provided by operating activities. Total capital expenditures for the
remaining portion of 1998 are budgeted to be approximately $80 million.
 
     Total distributions paid in April 1998 amounted to approximately $92
million, which included distributions declared for the quarter ended March 31,
1998.

     On April 29, 1998, the Company completed an offering of 946,565 publicly
registered Common Shares, which were sold at a price of $46.5459 per share. The
Company contributed to the Operating Partnership net proceeds of approximately
$44.1 million in connection therewith.

     In April 1998, the Operating Partnership issued 6.63% unsecured notes due
April 13, 2015 (the "2015 Notes") in a public debt offering. The Operating
Partnership received net proceeds of approximately $298.1 million in connection
with this issuance. The Operating Partnership also received approximately $8.1
million from the sale of an option to remarket the 2015 Notes in April 2005.
Prior to the issuance of the 2015 Notes, the Operating Partnership entered into
an interest rate protection agreement to effectively fix the interest rate cost
of such issuance at 6.44%. The Operating Partnership received a one-time
settlement payment from this transaction, which was approximately $0.6 million.

     In April, 1998, the Company sold approximately 350,000 Common Shares
pursuant to the DRIP Plan and contributed to the Operating Partnership net
proceeds of approximately $17.5 million therefrom.

     The Operating Partnership expects to meet its short-term liquidity
requirements, including capital expenditures relating to maintaining its
existing Properties, generally through its working capital, net cash provided by
operating activities and borrowings under its line of credit. The Operating
Partnership considers its cash provided by operating activities to be adequate
to meet operating requirements and payments of distributions. The Operating
Partnership also expects to meet its long-term liquidity requirements, such as
scheduled mortgage debt maturities, reduction of outstanding amounts under its
line of credit, property acquisitions, financing of construction and development
activities and capital improvements through the issuance of unsecured notes and
equity securities including additional OP Units as well as from undistributed
FFO and proceeds received from the disposition of certain Properties. In
addition, the Operating Partnership has certain uncollateralized Properties
available for additional mortgage borrowings in the event that the public
capital markets are unavailable to the Operating Partnership or the cost of
alternative sources of capital to the Operating Partnership is too high.

     The Operating Partnership currently has a $500 million line of credit that
is scheduled to mature in November 1999. As of May 11, 1998, no amounts were
outstanding under the Operating Partnership's line of credit.

                                      20
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)
 
     The Operating Partnership has conducted a review of its computer operating
systems and has identified those areas that could be affected by the "Year 2000"
issue and has developed a plan to resolve this issue. The Company believes that
by modifying certain existing hardware and software and, in other cases,
converting to new application systems, the Year 2000 problem can be resolved
without significant operational difficulties. The Company has initiated formal
communications with all of its significant suppliers to determine the extent to
which the Company's interface systems are vulnerable to those third parties'
failure to remediate their own Year 2000 issues. The Company has estimated the
Year 2000 project cost to be approximately $250,000.

Funds From Operations

     The Operating Partnership generally considers FFO to be one measure of the
performance of real estate companies. The resolution adopted by the Board of
Governors of NAREIT defines FFO as net income (loss) (computed in accordance
with GAAP), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures are calculated to reflect FFO on the same basis.
The Operating Partnership believes that FFO is helpful to investors as a measure
of the performance of a real estate company because, along with cash flows from
operating activities, financing activities and investing activities it provides
investors with an understanding of the ability of the Operating Partnership to
incur and service debt and to make capital expenditures. FFO in and of itself
does not represent cash generated from operating activities in accordance with
GAAP and therefore should not be considered an alternative to net income as an
indication of the Operating Partnership's performance or to net cash flows from
operating activities as determined by GAAP as a measure of liquidity and is not
necessarily indicative of cash available to fund cash needs. The Operating
Partnership's calculation of FFO represents net income, excluding gains on
dispositions of properties and extraordinary items, plus depreciation on real
estate assets, amortization of deferred financing costs related to the
Predecessor Business and the allocation of net income to Cumulative Redeemable
Preference Units. The Operating Partnership's calculation of FFO may differ from
the methodology for calculating FFO utilized by other companies and,
accordingly, may not be comparable to such other companies. The Operating
Partnership's accounting policy with respect to replacement type items is to
capitalize such items as improvements and depreciate such improvements typically
over a five year period.

     For the quarter ended March 31, 1998, FFO increased $48.8 million,
representing a 93.5% increase when compared to the quarter ended March 31, 1997.

                                      21
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

                                    PART I

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations (Continued) 

     The following is a reconciliation of net income to FFO for the quarters 
ended March 31, 1998 and 1997:

<TABLE>
<CAPTION>
                                                     Quarter      Quarter
                                                      Ended        Ended
                                                     3/31/98      3/31/97
                                                   ----------   ----------
<S>                                                <C>          <C>
     Net income                                    $   61,275   $   36,388
     Adjustments:
       Depreciation on real estate assets              63,225       28,432
       Amortization of deferred financing costs
         related to predecessor business                   12           58
       Allocation of net income to Cumulative
         Redeemable Preference Units                  (21,692)      (9,061)
       Gain on disposition of properties               (1,869)      (3,632)
                                                      -------       ------
     FFO                                           $  100,951   $   52,185
                                                      =======       ======
</TABLE>


                                      22
<PAGE>
 
                          PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     There have been no new or significant developments related to the legal 
proceedings that were discussed in Part I, Item III of the Company's Form 10-K 
for the year ended December 31, 1997.

Item 6. Exhibits and Reports on Form 8-K
(A)  Exhibits:

12   Computation of Ratio of Earnings to Fixed Charges.

(B)  Reports on Form 8-K:

A Report on Form 8-K dated January 21, 1998, reporting information on the 
January 1998 Common Share Offering.

A Report on Form 8-K dated February 12, 1998, reporting information on the 
February 1998 Common Share Offerings.

A Report on Form 8-K dated February 12, 1998, reporting information on the 
February 1998 Common Share Offerings.

A Report on Form 8-K dated February 18, 1998, reporting information on the 
February 1998 Common Share Offerings.

A Report on Form 8-K dated March 25, 1998, reporting information on the March
1998 Common Share Offering.


                                      23
<PAGE>
 

                                  SIGNATURES
                                  ----------


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


                                       ERP OPERATING LIMITED PARTNERSHIP
                                       BY: EQUITY RESIDENTIAL PROPERTIES TRUST,
                                           ITS GENERAL PARTNER


Date: May 11, 1998                     By:        /s/ Bruce C. Strohm
      ------------                         -------------------------------------
                                                      Bruce C. Strohm
                                             Executive Vice President, General
                                                   Counsel and Secretary


Date: May 11, 1998                     By:       /s/ Michael J. McHugh
      ------------                         -------------------------------------
                                                     Michael J. McHugh
                                              Executive Vice President, Chief
                                             Accounting Officer and Treasurer

                                      24