**FORM 10-Q**

** **

**SECURITIES AND EXCHANGECOMMISSION**

**Washington, D.C. 20549**

** **

**ý****QUARTERLY REPORT PURSUANT TO SECTION 13OR 15 (d) OFTHE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended SEPTEMBER 30,2005**

** **

**OR**

 

**o****TRANSITION REPORT PURSUANT TO SECTION 13OR 15 (d) OFTHE SECURITIES EXCHANGE ACT OF 1934**

 

**Commission File Number: 0-24920**

 

**ERP OPERATING LIMITEDPARTNERSHIP**

(Exact Name of Registrant as Specified in its Charter)

 
| **Illinois**                                                    | ** ** | **36-3894853**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State or Other  Jurisdiction of Incorporation or Organization) |       | (I.R.S. Employer  Identification No.) |
|                                                            |       |                                  |
| **Two  North Riverside Plaza, Chicago, Illinois**               | ** ** | **60606**                             |
| (Address of  Principal Executive Offices)                       |       | (Zip Code)                            |

 

**(312) 474-1300**

 (Registrant’s Telephone Number, Including AreaCode)

 

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days.  Yes  ý  No  o

 

Indicate by check mark whether the registrant is anaccelerated filer (as defined in Rule 12b-2 of the Act).  Yes  ý  No  o

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  ý

 

 

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**ERP OPERATING LIMITED PARTNERSHIP**

**CONSOLIDATED BALANCE SHEETS**

**(Amounts in thousands)**

**(Unaudited)**

 
| ** **                                               | ** ** | **September 30,  2005** | ** **     | **December 31,  2004** | ** ** |
|----------------------------------------------------------|------------|------------------------------|----------------|-----------------------------|------------|
| **ASSETS**                                               | ** ** | ** **                   | ** **     | ** **                  | ** ** |
| Investment in real estate                                |       |                         |           |                        |       |
| Land                                                     |       | $                            | 2,283,157      |                        | $          | 2,183,818 |   |
| Depreciable  property                                    |       | 12,670,716                   |           | 12,350,900                  |       |
| Construction in  progress (including land)               |       | 330,965                      |           | 317,903                     |       |
| Investment in real estate                                |       | 15,284,838                   |           | 14,852,621                  |       |
| Accumulated  depreciation                                |       | (2,805,552                   | )              | (2,599,827                  | )          |
| Investment in real estate, net                           |       | 12,479,286                   |           | 12,252,794                  |       |
|                                                     |       |                         |           |                        |       |
| Cash and cash equivalents                                |       | 306,933                      |           | 83,505                      |       |
| Investments in unconsolidated entities                   |       | 11,390                       |           | 11,461                      |       |
| Rents receivable                                         |       | 940                          |           | 1,681                       |       |
| Deposits – restricted                               |       | 305,366                      |           | 82,194                      |       |
| Escrow deposits – mortgage                          |       | 36,389                       |           | 35,800                      |       |
| Deferred financing costs, net                            |       | 40,041                       |           | 34,986                      |       |
| Goodwill, net                                            |       | 30,000                       |           | 30,000                      |       |
| Other assets                                             |       | 101,484                      |           | 112,854                     |       |
| **Total  assets**                                        | ** ** | **$**                        | **13,311,829** | ** **                  | **$**      | **12,645,275** | ** ** |
|                                                     |       |                         |           |                        |       |
| **LIABILITIES AND PARTNERS’ CAPITAL**               |       |                         |           |                        |       |
| Liabilities:                                             |       |                         |           |                        |       |
| Mortgage notes  payable                                  |       | $                            | 3,323,932      |                        | $          | 3,166,739 |   |
| Notes, net                                               |       | 3,443,588                    |           | 3,143,067                   |       |
| Lines of credit                                          |       | —                       |           | 150,000                     |       |
| Accounts payable  and accrued expenses                   |       | 124,908                      |           | 87,422                      |       |
| Accrued interest  payable                                |       | 64,201                       |           | 70,411                      |       |
| Rents received  in advance and other liabilities         |       | 490,894                      |           | 227,588                     |       |
| Security  deposits                                       |       | 49,977                       |           | 49,501                      |       |
| Distributions  payable                                   |       | 143,572                      |           | 142,437                     |       |
| **Total  liabilities**                                   | ** ** | **7,641,072**                | ** **     | **7,037,165**               | ** ** |
|                                                     |       |                         |           |                        |       |
| *Commitments and contingencies*                          |       |                         |           |                        |       |
| **Minority Interests – Partially Owned Properties** | ** ** | **10,716**                   | ** **     | **9,557**                   | ** ** |
|                                                     |       |                         |           |                        |       |
| Partners’ capital:                                  |       |                         |           |                        |       |
| Preference Units                                         |       | 504,741                      |           | 636,216                     |       |
| Preference  Interests                                    |       | 60,000                       |           | 206,000                     |       |
| Junior  Preference Units                                 |       | 184                          |           | 184                         |       |
| General Partner                                          |       | 4,772,642                    |           | 4,457,700                   |       |
| Limited Partners                                         |       | 340,037                      |           | 319,841                     |       |
| Deferred  compensation                                   |       | —                       |           | (18                         | )          |
| Accumulated  other comprehensive loss                    |       | (17,563                      | )              | (21,370                     | )          |
| **Total  partners’ capital**                        | ** ** | **5,660,041**                | ** **     | **5,598,553**               | ** ** |
| **Total  liabilities and partners’ capital**        | ** ** | **$**                        | **13,311,829** | ** **                  | **$**      | **12,645,275** | ** ** |

 

**Seeaccompanying notes**

 

2

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**ERP OPERATING LIMITED PARTNERSHIP**

**CONSOLIDATED STATEMENTS OFOPERATIONS**

**(Amounts in thousands except perOP Unit data)**

**(Unaudited)**

 
| ** **                                                                                                                                                                             | ** ** | **Nine Months Ended September 30,** | ** ** | **Quarter Ended September 30,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                                                                                                                                             | ** ** | **2005**                                 | ** ** | **2004**                             | ** ** | **2005** | ** ** | **2004** | ** ** |
| **REVENUES**                                                                                                                                                                           |       |                                     |       |                                 |       |   |   |   |   |
| Rental income                                                                                                                                                                          |       | $                                        | 1,453,829  |                                 | $          | 1,316,790 |   | $ | 501,776 |   | $ | 454,128 |   |
| Fee and asset  management                                                                                                                                                              |       | 8,456                                    |       | 9,268                                |       | 2,630 |   | 2,436 |   |
| Total revenues                                                                                                                                                                         |       | 1,462,285                                |       | 1,326,058                            |       | 504,406 |   | 456,564 |   |
|                                                                                                                                                                                   |       |                                     |       |                                 |       |   |   |   |   |
| **EXPENSES**                                                                                                                                                                           |       |                                     |       |                                 |       |   |   |   |   |
| Property and  maintenance                                                                                                                                                              |       | 411,187                                  |       | 362,372                              |       | 146,341 |   | 129,612 |   |
| Real estate  taxes and insurance                                                                                                                                                       |       | 162,711                                  |       | 159,407                              |       | 59,701 |   | 62,480 |   |
| Property  management                                                                                                                                                                   |       | 63,254                                   |       | 56,850                               |       | 21,924 |   | 18,865 |   |
| Fee and asset  management                                                                                                                                                              |       | 7,518                                    |       | 6,500                                |       | 2,595 |   | 2,144 |   |
| Depreciation                                                                                                                                                                           |       | 378,123                                  |       | 334,352                              |       | 129,701 |   | 116,170 |   |
| General and  administrative                                                                                                                                                            |       | 45,012                                   |       | 34,778                               |       | 14,243 |   | 11,961 |   |
| Total expenses                                                                                                                                                                         |       | 1,067,805                                |       | 954,259                              |       | 374,505 |   | 341,232 |   |
| Operating income                                                                                                                                                                       |       | 394,480                                  |       | 371,799                              |       | 129,901 |   | 115,332 |   |
|                                                                                                                                                                                   |       |                                     |       |                                 |       |   |   |   |   |
| Interest and  other income                                                                                                                                                             |       | 65,471                                   |       | 6,841                                |       | 2,878 |   | 2,655 |   |
| Interest:                                                                                                                                                                              |       |                                     |       |                                 |       |   |   |   |   |
| Expense  incurred, net                                                                                                                                                                 |       | (281,762                                 | )          | (242,361                             | )          | (97,997 | ) | (81,862 | ) |
| Amortization of  deferred financing costs                                                                                                                                              |       | (4,996                                   | )          | (4,583                               | )          | (1,730 | ) | (1,781 | ) |
|                                                                                                                                                                                   |       |                                     |       |                                 |       |   |   |   |   |
| Income before  allocation to Minority Interests, income (loss) from investments in  unconsolidated entities, net gain on sales of unconsolidated entities and  discontinued operations |       | 173,193                                  |       | 131,696                              |       | 33,052 |   | 34,344 |   |
| Allocation to  Minority Interests – Partially Owned Properties                                                                                                                    |       | 672                                      |       | 1,107                                |       | (1,624 | ) | 811 |   |
| Income (loss) from investments in unconsolidated  entities                                                                                                                             |       | (450                                     | )          | (7,468                               | )          | (235 | ) | 329 |   |
| Net gain on sales of unconsolidated entities                                                                                                                                           |       | 124                                      |       | 4,407                                |       | — |   | 2 |   |
| Income from continuing operations                                                                                                                                                      |       | 173,539                                  |       | 129,742                              |       | 31,193 |   | 35,486 |   |
| Net gain on sales of discontinued operations                                                                                                                                           |       | 513,419                                  |       | 207,653                              |       | 254,178 |   | 58,394 |   |
| Discontinued operations, net                                                                                                                                                           |       | 2,585                                    |       | 21,866                               |       | 1,416 |   | 5,288 |   |
| Net income                                                                                                                                                                             |       | $                                        | 689,543    |                                 | $          | 359,261 |   | $ | 286,787 |   | $ | 99,168 |   |
| **ALLOCATION OF NET INCOME:**                                                                                                                                                          |       |                                     |       |                                 |       |   |   |   |   |
| Preference Units                                                                                                                                                                       |       | $                                        | 39,004     |                                 | $          | 40,671 |   | $ | 12,961 |   | $ | 13,346 |   |
| Preference Interests                                                                                                                                                                   |       | $                                        | 6,431      |                                 | $          | 15,158 |   | $ | 1,159 |   | $ | 5,052 |   |
| Junior Preference Units                                                                                                                                                                |       | $                                        | 11         |                                 | $          | 67 |   | $ | 4 |   | $ | 5 |   |
| Premium on redemption of Preference Units                                                                                                                                              |       | $                                        | 4,316      |                                 | $          | — |   | $ | 4,316 |   | $ | — |   |
| Premium on redemption of Preference Interests                                                                                                                                          |       | $                                        | 4,134      |                                 | $          | 1,117 |   | $ | 22 |   | $ | 1,117 |   |
| General Partner                                                                                                                                                                        |       | $                                        | 592,587    |                                 | $          | 281,025 |   | $ | 250,247 |   | $ | 74,163 |   |
| Limited Partners                                                                                                                                                                       |       | 43,060                                   |       | 21,223                               |       | 18,078 |   | 5,485 |   |
| Net income available to OP Units                                                                                                                                                       |       | $                                        | 635,647    |                                 | $          | 302,248 |   | $ | 268,325 |   | $ | 79,648 |   |
|                                                                                                                                                                                   |       |                                     |       |                                 |       |   |   |   |   |
| **Earnings per OP Unit – basic:**                                                                                                                                                 |       |                                     |       |                                 |       |   |   |   |   |
| Income from continuing operations available to OP  Units                                                                                                                               |       | $                                        | 0.39       |                                 | $          | 0.24 |   | $ | 0.04 |   | $ | 0.05 |   |
| Net income available to OP Units                                                                                                                                                       |       | $                                        | 2.08       |                                 | $          | 1.01 |   | $ | 0.87 |   | $ | 0.26 |   |
| Weighted average OP Units outstanding                                                                                                                                                  |       | 306,171                                  |       | 299,929                              |       | 306,915 |   | 300,900 |   |
|                                                                                                                                                                                   |       |                                     |       |                                 |       |   |   |   |   |
| **Earnings per OP Unit – diluted:**                                                                                                                                               |       |                                     |       |                                 |       |   |   |   |   |
| Income from continuing operations available to OP  Units                                                                                                                               |       | $                                        | 0.39       |                                 | $          | 0.24 |   | $ | 0.04 |   | $ | 0.05 |   |
| Net income available to OP Units                                                                                                                                                       |       | $                                        | 2.05       |                                 | $          | 1.00 |   | $ | 0.86 |   | $ | 0.26 |   |
| Weighted average OP Units outstanding                                                                                                                                                  |       | 310,211                                  |       | 302,739                              |       | 311,564 |   | 304,028 |   |
| Distributions declared per OP Unit outstanding                                                                                                                                         |       | $                                        | 1.2975     |                                 | $          | 1.2975 |   | $ | 0.4325 |   | $ | 0.4325 |   |

 

**Seeaccompanying notes**

 

3

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**ERP OPERATING LIMITED PARTNERSHIP**

**CONSOLIDATED STATEMENTS OFOPERATIONS (Continued)**

**(Amounts in thousands except perOP Unit data)**

**(Unaudited)**

 
| ** **                                                                                  | ** ** | **Nine Months Ended September 30,** | ** ** | **Quarter Ended September 30,** | ** ** |
|---------------------------------------------------------------------------------------------|------------|------------------------------------------|------------|--------------------------------------|------------|
| ** **                                                                                  | ** ** | **2005**                                 | ** ** | **2004**                             | ** ** | **2005** | ** ** | **2004** | ** ** |
|                                                                                        |       |                                     |       |                                 |       |   |   |   |   |
| Comprehensive income:                                                                       |       |                                     |       |                                 |       |   |   |   |   |
|                                                                                        |       |                                     |       |                                 |       |   |   |   |   |
| Net income                                                                                  |       | $                                        | 689,543    |                                 | $          | 359,261 |   | $ | 286,787 |   | $ | 99,168 |   |
| Other  comprehensive income (loss) – derivative and other instruments:                 |       |                                     |       |                                 |       |   |   |   |   |
| Unrealized  holding gains (losses) arising during the period                                |       | 2,010                                    |       | (5,394                               | )          | 13,684 |   | (11,130 | ) |
| Equity in  unrealized holding gains arising during the period –unconsolidated entities |       | —                                   |       | 3,667                                |       | — |   | — |   |
| Losses  reclassified into earnings from other comprehensive income                          |       | 1,797                                    |       | 1,494                                |       | 629 |   | 524 |   |
| Comprehensive income                                                                        |       | $                                        | 693,350    |                                 | $          | 359,028 |   | $ | 301,100 |   | $ | 88,562 |   |

 

**Seeaccompanying notes**

 

4

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**ERPOPERATING LIMITED PARTNERSHIP**

**CONSOLIDATEDSTATEMENTS OF CASH FLOWS**

**(Amountsin thousands)**

**(Unaudited)**

 
| ** **                                                                           | ** ** | **Nine Months Ended September 30,** | ** ** |
|--------------------------------------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                                                           | ** ** | **2005**                                 | ** ** | **2004** | ** ** |
| **CASH FLOWS FROM OPERATING ACTIVITIES:**                                            | ** ** | ** **                               | ** ** | ** ** | ** ** |
| Net income                                                                           |       | $                                        | 689,543    |   | $ | 359,261 |   |
| *Adjustments to reconcile net income to net cash  provided by operating activities:* |       |                                     |       |   |   |
| Allocation to  Minority Interests – Partially Owned Properties                  |       | (672                                     | )          | (1,107 | ) |
| Depreciation                                                                         |       | 391,151                                  |       | 367,882 |   |
| Amortization of  deferred financing costs                                            |       | 5,470                                    |       | 5,449 |   |
| Amortization of  discounts and premiums on debt                                      |       | (1,677                                   | )          | (458 | ) |
| Amortization of  deferred settlements on derivative instruments                      |       | 761                                      |       | 769 |   |
| Loss from  investments in unconsolidated entities                                    |       | 450                                      |       | 7,468 |   |
| Income from technology investments                                                   |       | (57,054                                  | )          | — |   |
| Net (gain) on sales of unconsolidated entities                                       |       | (124                                     | )          | (4,407 | ) |
| Net (gain) on  sales of discontinued operations                                      |       | (513,419                                 | )          | (207,653 | ) |
| Debt  extinguishments                                                                |       | 10,977                                   |       | 108 |   |
| Unrealized loss  on derivative instruments                                           |       | 10                                       |       | 249 |   |
| Compensation paid with Company Common Shares                                         |       | 26,799                                   |       | 12,791 |   |
| Other operating  activities, net                                                     |       | 480                                      |       | (1,445 | ) |
|                                                                                 |       |                                     |       |   |   |
| *Changes in assets and liabilities:*                                                 |       |                                     |       |   |   |
| Decrease  (increase) in rents receivable                                             |       | 762                                      |       | (2,156 | ) |
| Decrease  (increase) in deposits – restricted                                   |       | 12,319                                   |       | (2,478 | ) |
| (Increase) in  other assets                                                          |       | (1,468                                   | )          | (10,718 | ) |
| Increase in  accounts payable and accrued expenses                                   |       | 29,462                                   |       | 35,244 |   |
| (Decrease)  increase in accrued interest payable                                     |       | (6,146                                   | )          | 7,323 |   |
| (Decrease)  increase in rents received in advance and other liabilities              |       | (7,123                                   | )          | 10,019 |   |
| Increase in  security deposits                                                       |       | 452                                      |       | 2,050 |   |
| Net cash  provided by operating activities                                           |       | 580,953                                  |       | 578,191 |   |
|                                                                                 |       |                                     |       |   |   |
| **CASH FLOWS FROM INVESTING ACTIVITIES:**                                            |       |                                     |       |   |   |
| Investment in  real estate – acquisitions                                       |       | (871,477                                 | )          | (585,153 | ) |
| Investment in  real estate – development/other                                  |       | (131,460                                 | )          | (77,613 | ) |
| Improvements to  real estate                                                         |       | (167,274                                 | )          | (150,491 | ) |
| Additions to  non-real estate property                                               |       | (12,447                                  | )          | (4,181 | ) |
| Interest  capitalized for real estate under development                              |       | (9,105                                   | )          | (7,995 | ) |
| Interest  capitalized for unconsolidated entities under development                  |       | —                                   |       | (2,282 | ) |
| Proceeds from  disposition of real estate, net                                       |       | 1,476,746                                |       | 658,760 |   |
| Proceeds from  disposition of unconsolidated entities                                |       | 124                                      |       | 7,453 |   |
| Proceeds from  technology and other investments                                      |       | 82,054                                   |       | — |   |
| Investments in  unconsolidated entities                                              |       | (1,377                                   | )          | (406,370 | ) |
| Distributions  from unconsolidated entities                                          |       | 330                                      |       | 26,389 |   |
| (Increase)  decrease in deposits on real estate acquisitions, net                    |       | (235,491                                 | )          | 53,682 |   |
| (Increase)  decrease in mortgage deposits                                            |       | (564                                     | )          | 947 |   |
| *Consolidation  of previously Unconsolidated Properties:*                            |       |                                     |       |   |   |
| Via acquisition  (net of cash acquired)                                              |       | (65                                      | )          | (49,183 | ) |
| Via FIN 46 (cash  consolidated)                                                      |       | —                                   |       | 3,628 |   |
| Acquisition of  Minority Interests – Partially Owned Properties                 |       | (1,712                                   | )          | (72 | ) |
| Other investing  activities, net                                                     |       | 67,200                                   |       | 16,802 |   |
| Net cash  provided by (used for) investing activities                                |       | 195,482                                  |       | (515,679 | ) |
|                                                                                      |            |                                          |            |  |  |  |  |

 

**Seeaccompanying notes**

 

5

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**ERP OPERATING LIMITED PARTNERSHIP**

**CONSOLIDATED STATEMENTS OF CASHFLOWS (Continued)**

**(Amounts in thousands)**

**(Unaudited)**

 
| ** **                                                                 | ** ** | **Nine Months Ended September 30,** | ** ** |
|----------------------------------------------------------------------------|------------|------------------------------------------|------------|
| ** **                                                                 | ** ** | **2005**                                 | ** ** | **2004** | ** ** |
| **CASH FLOWS FROM FINANCING ACTIVITIES:**                                  |       |                                     |       |   |   |
| Loan and bond  acquisition costs                                           |       | $                                        | (10,525    | ) | $ | (7,648 | ) |
| *Mortgage  notes payable:*                                                 |       |                                     |       |   |   |
| Proceeds                                                                   |       | 249,491                                  |       | 395,361 |   |
| Lump sum payoffs                                                           |       | (351,492                                 | )          | (395,671 | ) |
| Scheduled  principal repayments                                            |       | (21,060                                  | )          | (18,955 | ) |
| Prepayment  premiums/fees                                                  |       | (10,977                                  | )          | (445 | ) |
| *Notes, net:*                                                              |       |                                     |       |   |   |
| Proceeds                                                                   |       | 499,435                                  |       | 898,014 |   |
| Lump sum payoffs                                                           |       | (190,000                                 | )          | (475,000 | ) |
| Scheduled  principal repayments                                            |       | (4,286                                   | )          | (4,286 | ) |
| *Lines of credit:*                                                         |       |                                     |       |   |   |
| Proceeds                                                                   |       | 3,573,300                                |       | 1,209,500 |   |
| Repayments                                                                 |       | (3,723,300                               | )          | (1,219,500 | ) |
| (Payments on) settlement of derivative instruments                         |       | (7,823                                   | )          | (7,346 | ) |
| Proceeds from sale of OP Units                                             |       | 7,369                                    |       | 5,989 |   |
| Proceeds from exercise of EQR options                                      |       | 34,610                                   |       | 44,113 |   |
| Redemption of Preference Interests                                         |       | (146,000                                 | )          | — |   |
| Premium on redemption of Preference Interests                              |       | (322                                     | )          | — |   |
| Payment of offering costs                                                  |       | (26                                      | )          | (24 | ) |
| Contributions – Minority Interests – Partially Owned  Properties |       | 1,746                                    |       | 100 |   |
| *Distributions:*                                                           |       |                                     |       |   |   |
| OP Units –  General Partner                                           |       | (371,373                                 | )          | (362,244 | ) |
| Preference Units                                                           |       | (39,118                                  | )          | (41,006 | ) |
| Preference  Interests                                                      |       | (6,603                                   | )          | (15,158 | ) |
| Junior  Preference Units                                                   |       | (11                                      | )          | (144 | ) |
| OP Units –  Limited Partners                                          |       | (26,926                                  | )          | (27,499 | ) |
| Minority  Interests – Partially Owned Properties                      |       | (9,116                                   | )          | (25,249 | ) |
| Net cash (used  for) financing activities                                  |       | (553,007                                 | )          | (47,098 | ) |
| Net increase in cash and cash equivalents                                  |       | 223,428                                  |       | 15,414 |   |
| Cash and cash equivalents, beginning of period                             |       | 83,505                                   |       | 49,579 |   |
| Cash and cash equivalents, end of period                                   |       | $                                        | 306,933    |   | $ | 64,993 |   |

 

**Seeaccompanying notes**

 

6

----

 

**ERP OPERATING LIMITED PARTNERSHIP**

**CONSOLIDATED STATEMENTS OF CASHFLOWS (Continued)**

**(Amounts in thousands)**

**(Unaudited)**

 
| ** **                                                                       | ** ** | **Nine Months Ended  September 30,** | ** ** |
|----------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
| ** **                                                                       | ** ** | **2005**                                  | ** ** | **2004** | ** ** |
|                                                                             |       |                                      |       |   |   |
| **SUPPLEMENTAL INFORMATION:**                                                    | ** ** | ** **                                | ** ** | ** ** | ** ** |
| Cash paid during the period for interest                                         |       | $                                         | 303,071    |   | $ | 254,863 |   |
| Valuation of OP Units issued – Other transactions                           |       | $                                         | 19,164     |   | $ | 9,087 |   |
|                                                                             |       |                                      |       |   |   |
| *Real estate acquisitions/dispositions:*                                         |       |                                      |       |   |   |
| Mortgage loans  assumed                                                          |       | $                                         | 318,424    |   | $ | 50,942 |   |
|                                                                             |       |                                      |       |   |   |
| Valuation of OP  Units issued                                                    |       | $                                         | 1,800      |   | $ | — |   |
|                                                                             |       |                                      |       |   |   |
| Mortgage loans  (assumed) by purchaser                                           |       | $                                         | (35,031    | ) | $ | (16,778 | ) |
|                                                                             |       |                                      |       |   |   |
| *Consolidation of previously Unconsolidated  Properties – Via acquisition:* |       |                                      |       |   |   |
| Investment in  real estate                                                       |       | $                                         | (2,892     | ) | $ | (960,331 | ) |
|                                                                             |       |                                      |       |   |   |
| Mortgage loans  assumed                                                          |       | $                                         | 2,012      |   | $ | 274,818 |   |
|                                                                             |       |                                      |       |   |   |
| Minority  Interests – Partially Owned Properties                            |       | $                                         | 59         |   | $ | 445 |   |
|                                                                             |       |                                      |       |   |   |
| Investments in  unconsolidated entities                                          |       | $                                         | 668        |   | $ | 608,681 |   |
|                                                                             |       |                                      |       |   |   |
| Net other  liabilities recorded                                                  |       | $                                         | 88         |   | $ | 27,204 |   |
|                                                                             |       |                                      |       |   |   |
| *Consolidation of previously Unconsolidated  Properties – Via FIN 46:*      |       |                                      |       |   |   |
| Investment in  real estate                                                       |       | $                                         | —     |   | $ | (548,342 | ) |
|                                                                             |       |                                      |       |   |   |
| Mortgage loans  consolidated                                                     |       | $                                         | —     |   | $ | 294,722 |   |
|                                                                             |       |                                      |       |   |   |
| Minority  Interests – Partially Owned Properties                            |       | $                                         | —     |   | $ | 3,074 |   |
|                                                                             |       |                                      |       |   |   |
| Investments in  unconsolidated entities                                          |       | $                                         | —     |   | $ | 234,984 |   |
|                                                                             |       |                                      |       |   |   |
| Net other  liabilities recorded                                                  |       | $                                         | —     |   | $ | 19,190 |   |

 

**Seeaccompanying notes**

 

7

----

 

**ERP OPERATING LIMITED PARTNERSHIP**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

**(Unaudited)**

 

**1.             Business**

** **

ERP Operating LimitedPartnership (“ERPOP”), an Illinois limited partnership, was formed in May 1993to conduct the multifamily residential property business of Equity Residential(“EQR”).  EQR is a Maryland real estateinvestment trust (“REIT”) formed in March 1993 and is a fully integratedreal estate company engaged in the acquisition, development, ownership,management and operation of multifamily properties.

 

EQR is the general partnerof, and as of September 30, 2005 owned an approximate 93.3% ownershipinterest in ERPOP.  EQR is structured asan umbrella partnership REIT (“UPREIT”), under which all property ownership andbusiness operations are conducted through ERPOP and its subsidiaries.  As used herein, the term “OperatingPartnership” includes ERPOP and those entities owned or controlled by it.  As used herein, the term “Company” means EQRand the Operating Partnership.

 

As of September 30,2005, the Operating Partnership, directly or indirectly through investments intitle holding entities, owned all or a portion of 922****propertiesin 32 states and the District of Columbia consisting of 195,575 units.  The ownership breakdown includes:

 
| ** **                                | ** ** | **Properties** | ** ** | **Units** | ** ** |
|-------------------------------------------|------------|----------------|------------|-----------|------------|
| Wholly Owned Properties                   |       | 829            |       | 173,411   |       |
| Partially Owned Properties (Consolidated) |       | 36             |       | 6,134     |       |
| Unconsolidated Properties                 |       | 57             |       | 16,030    |       |
|                                      |       | 922            |       | 195,575   |       |

 

**2.**                                      Summary of Significant Accounting Policies

** **

*Basis ofPresentation*

* *

The accompanyingunaudited condensed consolidated financial statements have been prepared inaccordance with accounting principles generally accepted in the United Statesfor interim financial information and with the instructions to Form 10-Qand Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotesrequired by accounting principles generally accepted in the United States forcomplete financial statements.  In theopinion of management, all adjustments (consisting of normal recurringaccruals) and certain reclassifications considered necessary for a fairpresentation have been included.  Certainreclassifications have been made to the prior period financial statements inorder to conform to the current year presentation.  Operating results for the nine months ended September 30,2005 are not necessarily indicative of the results that may be expected for theyear ending December 31, 2005.

 

The balance sheet at December 31,2004 has been derived from the audited financial statements at that date butdoes not include all of the information and footnotes required by accountingprinciples generally accepted in the United States for complete financial statements.

 

For further information,including definition of capitalized terms not defined herein, refer to theconsolidated financial statements and footnotes thereto included in the OperatingPartnership’s annual report on Form 10-K for the year ended December 31,2004.

 

8

----

 

*Stock-Based Compensation*

* *

TheCompany elected to account for its stock-based compensation in accordance withSFAS No. 123 and its amendment (SFAS No. 148), *Accounting for Stock Based Compensation*,effective in the first quarter of 2003, which resulted in compensation expensebeing recorded based on the fair value of the stock compensation granted.

 

TheCompany elected the “Prospective Method” which requires expensing of employeeawards granted or modified after January 1, 2003.  Compensation expense under all of the Company’splans is generally recognized over periods ranging from three months to fiveyears.

 

AnyCommon Shares issued pursuant to EQR’s incentive equity compensation and employeeshare purchase plans will result in the Operating Partnership issuing units oflimited partnership interest (“OP Units”) to EQR on a one-for-one basis, withthe Operating Partnership receiving the net cash proceeds of such issuances.

 

TheCompany will adopt SFAS No. 123(R), Share-Based Payment, as requiredeffective January 1, 2006.  SFAS No. 123(R)will require all companies to expense stock-based compensation (such as stockoptions), as well as making other revisions to SFAS No. 123.  As the Company began expensing allstock-based compensation effective January 1, 2003, it does not anticipatethat the adoption of SFAS No. 123(R) will have a material effect on itsconsolidated statements of operations or financial position.

 

Thecost related to stock-based employee compensation included in the determinationof net income for the nine months and quarter ended September 30, 2005 isequal to that which would have been recognized if the fair value based methodhad been applied to all awards since the original effective date of SFAS No. 123.  The cost related to stock-based employeecompensation included in the determination of net income for the nine monthsand quarter ended September 30, 2004 is less than that which would havebeen recognized if the fair value based method had been applied to all awardssince the original effective date of SFAS No. 123.  The following table illustrates the effect onnet income and earnings per OP Unit if the fair value based method had beenapplied to all outstanding and unvested awards for the nine months and quarterended September 30, 2004 (amounts in thousands except per OP Unit amounts):

 
| ** **                                                                                                   | ** ** | **Nine Months Ended**       | ** ** | **Quarter Ended**           | ** ** |
|--------------------------------------------------------------------------------------------------------------|------------|-----------------------------|------------|-----------------------------|------------|
| ** **                                                                                                   | ** ** | **September 30, 2004** | ** ** | **September 30, 2004** | ** ** |
| Net income available to OP Units – as reported                                                          |       | $                           | 302,248    |                        | $          | 79,648 |   |
| Add: Stock-based employee compensation expense  included in reported net income:                             |       |                        |       |                        |       |
| EQR’s  restricted/performance shares                                                                    |       | 9,399                       |       | 3,144                       |       |
| EQR’s share  options                                                                                    |       | 2,266                       |       | 718                         |       |
| EQR’s ESPP  discount                                                                                    |       | 1,126                       |       | 188                         |       |
| Deduct:  Stock-based employee compensation expense determined under fair value based  method for all awards: |       |                        |       |                        |       |
| EQR’s  restricted/performance shares                                                                    |       | (9,399                      | )          | (3,144                      | )          |
| EQR’s share  options                                                                                    |       | (4,207                      | )          | (1,200                      | )          |
| EQR’s ESPP  discount                                                                                    |       | (1,126                      | )          | (188                        | )          |
| Net income available to OP Units – pro forma                                                            |       | $                           | 300,307    |                        | $          | 79,166 |   |
| Earnings per OP Unit:                                                                                        |       |                        |       |                        |       |
| Basic – as  reported                                                                                    |       | $                           | 1.01       |                        | $          | 0.26 |   |
| Basic – pro  forma                                                                                      |       | $                           | 1.00       |                        | $          | 0.26 |   |
| Diluted – as  reported                                                                                  |       | $                           | 1.00       |                        | $          | 0.26 |   |
| Diluted – pro  forma                                                                                    |       | $                           | 0.99       |                        | $          | 0.26 |   |

 

9

----

 

*Other*

* *

TheOperating Partnership adopted FASB Interpretation (“FIN”) No. 46, *Consolidation of Variable Interest Entities,*asrequired, effective March 31, 2004. The adoption required the consolidation of all previously unconsolidateddevelopment projects.  FIN No. 46requires the Operating Partnership to consolidate the assets, liabilities andresults of operations of the activities of a variable interest entity, whichfor the Operating Partnership includes only its development partnerships, ifthe Operating Partnership is entitled to receive a majority of the entity’sresidual returns and/or is subject to a majority of the risk of loss from suchentity’s activities.  Due to the March 31,2004 effective date, the Operating Partnership has only consolidated theresults of operations beginning April 1, 2004.  The adoption of FIN No. 46 did not haveany effect on net income as the aggregate results of operations of thesedevelopment properties were previously included in income (loss) frominvestments in unconsolidated entities.

 

The Operating Partnershipadopted the disclosure provisions of SFAS No. 150 and FSP No. FAS 150-3,*Accounting for Certain Financial Instruments withCharacteristics of both Liabilities and Equity,* effective December 31,2003.  SFAS No. 150 and FSP No. FAS150-3 require the Operating Partnership to make certain disclosures regardingnoncontrolling interests that are classified as equity in the financialstatements of a subsidiary but would be classified as a liability in the parent’sfinancial statements under SFAS No. 150 (e.g., minority interests inconsolidated limited-life subsidiaries). The Operating Partnership is presently the controlling partner invarious consolidated partnerships consisting of 36 properties and 6,134 units andvarious uncompleted development properties having a minority interest bookvalue of $10.7 million at September 30, 2005.  Some of these partnerships contain provisionsthat require the partnerships to be liquidated through the sale of its assetsupon reaching a date specified in each respective partnership agreement.  The Operating Partnership, as controllingpartner, has an obligation to cause the property owning partnerships todistribute proceeds of liquidation to the Minority Interests in these PartiallyOwned Properties only to the extent that the net proceeds received by thepartnerships from the sale of its assets warrant a distribution based on thepartnership agreements.  As of September 30,2005, the Operating Partnership estimates the value of Minority Interestdistributions would have been approximately $75.9 million (“Settlement Value”)had the partnerships been liquidated. This Settlement Value is based on estimated third party considerationrealized by the partnerships upon disposition of the Partially Owned Propertiesand is net of all other assets and liabilities, including yield maintenance onthe mortgages encumbering the properties, that would have been due on September 30,2005 had those mortgages been prepaid. Due to, among other things, the inherent uncertainty in the sale of realestate assets, the amount of any potential distribution to the MinorityInterests in the Operating Partnership’s Partially Owned Properties is subjectto change.  To the extent that the partnerships’underlying assets are worth less than the underlying liabilities, the OperatingPartnership has no obligation to remit any consideration to the MinorityInterests in Partially Owned Properties.

 

In June 2005, theFASB ratified the consensus in EITF Issue No. 04-5, *DeterminingWhether a General Partner, or the General Partners as a Group, Controls aLimited Partnership or Similar Entity When the Limited Partners Have CertainRights* (“Issue 04-5”), which provides guidance in determiningwhether a general partner controls a limited partnership.  Issue 04-5 states that the general partner ina limited partnership is presumed to control that limited partnership.  The presumption may be overcome if thelimited partners have either (1) the substantive ability to dissolve thelimited partnership or otherwise remove the general partner without cause or (2) substantiveparticipating rights, which provide the limited partners with the ability toeffectively participate in significant decisions that would be expected to bemade in the ordinary course of the limited partnership’s business and therebypreclude the general partner from exercising unilateral control over thepartnership.  If the criteria in Issue 04-5are met, the Operating Partnership could be required to consolidate certain ofits existing Unconsolidated Properties.  Theadoption of Issue 04-5 by the Operating Partnership is required for new ormodified limited partnership arrangements effective June 30, 2005 andexisting limited partnership arrangements effective January 1, 2006.  The adoption is not expected to have amaterial effect on the results of operations or financial position nor is itexpected to have any effect on net equity or net income as the aggregateresults of any Unconsolidated 

 

10

----

 

Properties required to be consolidated are already included in investmentsin unconsolidated entities and income (loss) from investments in unconsolidatedentities, respectively.

 

## ***3.***                                      Partners’ Capital

## *** ***

## ***The following table presents the changes in the OperatingPartnership’s issued and outstanding OP Units and the limited partners’ OPUnits for the nine months ended September 30, 2005:***

 
| ** **                                                            | ** ** | **2005**    | ** **   |
|-----------------------------------------------------------------------|------------|-------------|--------------|
|                                                                  |       |        |         |
| OP Units outstanding at January 1,                               |       | 305,629,855 |         |
|                                                                  |       |        |         |
| Issued to General Partner:                                            |       |        |         |
| Conversion of Series E Preference Units                          |       | 286,005     |         |
| Conversion of Series H Preference Units                          |       | 2,893       |         |
| Employee Share Purchase Plan                                          |       | 258,379     |         |
| Exercise of EQR options                                               |       | 1,437,668   |         |
| Restricted EQR share grants, net                                      |       | 531,767     |         |
|                                                                  |       |        |         |
| Issued to Limited Partners:                                           |       |        |         |
| Issuance – Other transactions                                    |       | 570,812     |         |
| Issuance – Acquisitions                                          |       | 55,197      |         |
| OP Units outstanding at September 30,                            |       | 308,772,576 |         |
|                                                                  |       |        |         |
| ** **                                                            | ** ** | **2005**    | ** **   |
|                                                                  |       |        |         |
| Limited Partner OP Units outstanding at  January 1,              |       | 20,552,940  |         |
|                                                                  |       |        |         |
| Limited Partner OP Units Issued:                                      |       |        |         |
| Other  transactions                                                   |       | 570,812     |         |
| Acquisitions                                                          |       | 55,197      |         |
| Conversion of Limited Partner OP Units to EQR Common  Shares          |       | (572,137    | )            |
| Limited Partner OP Units Outstanding at  September 30,           |       | 20,606,812  |         |
| Limited Partner OP Units Ownership Interest in  Operating Partnership |       | 6.7         | %            |
|                                                                  |       |        |         |
| Limited Partner OP Units Issued:                                      |       |        |         |
| Other  transactions – per unit                                   |       | $           | 33.57        |   |
| Other  transactions – valuation                                  |       | $           | 19.2 million |   |
| Acquisitions –  per unit                                         |       | $           | 32.61        |   |
| Acquisitions –  valuation                                        |       | $           | 1.8 million  |   |

** **

**The limited partners of the OperatingPartnership as of September 30, 2005 include various individuals andentities that contributed their properties to the Operating Partnership inexchange for OP Units.** Subject to certain restrictions, the Limited Partners may exchange theirOP Units for EQR Common Shares on a one-for-one basis.

** **

**EQR contributes all net proceeds fromits various equity offerings (including proceeds from exercise of options forEQR Common Shares) to the Operating Partnership.  In return for those contributions, EQRreceives a number of OP Units in ERPOP equal to the number of Common Shares ithas issued in the equity offering (or in the case of a preferred equityoffering, a number of preference units in ERPOP equal in number and having thesame terms as the preferred shares issued in the equity offering).**

** **

The following tablepresents the Operating Partnership’s issued and outstanding Preference Units asof September 30, 2005 and December 31, 2004:

 

11

----

 
| ** **                                                                                                                                                                                                           | ** ** | ** **                        | ** ** | ** **               | ** ** | **Annual**                 | ** ** | ** **               | ** ** | ** **             | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------|------------|--------------------------|------------|----------------------------|------------|--------------------------|------------|------------------------|------------|
| ** **                                                                                                                                                                                                           | ** ** | ** **                        | ** ** | ** **               | ** ** | **Dividend**               | ** ** | **Amounts in thousands** | ** ** |
| ** **                                                                                                                                                                                                           | ** ** | **Redemption  Date (1) (2)** | ** ** | **Conversion  Rate (2)** | ** ** | **Rate per Unit (3)** | ** ** | **September  30, 2005**  | ** ** | **December  31, 2004** | ** ** |
| Preference Units                                                                                                                                                                                                     |       |                              |       |                     |       |                       |       |                     |       |                   |       |
|                                                                                                                                                                                                                 |       |                              |       |                     |       |                       |       |                     |       |                   |       |
| 9 1/8%  Series B Cumulative Redeemable Preference Units; liquidation value $250  per unit; 0 and 500,000 units issued and outstanding at September 30,  2005 and December 31, 2004, respectively      |       | 10/15/05                          |       | N/A                      |       |                       | (5)        | $                        | —     |                   | $          | 125,000 |   |
|                                                                                                                                                                                                                 |       |                              |       |                     |       |                       |       |                     |       |                   |       |
| 9 1/8%  Series C Cumulative Redeemable Preference Units; liquidation value $250  per unit; 460,000 units issued and outstanding at September 30, 2005 and  December 31, 2004 (4)                      |       | 9/9/06                            |       | N/A                      |       | $                          | 22.81252   |                     | 115,000    |                   | 115,000    |   |
|                                                                                                                                                                                                                 |       |                              |       |                     |       |                       |       |                     |       |                   |       |
| 8.60%  Series D Cumulative Redeemable Preference Units; liquidation value $250  per unit; 700,000 units issued and outstanding at September 30, 2005 and  December 31, 2004 (4)                       |       | 7/15/07                           |       | N/A                      |       | $                          | 21.50      |                     | 175,000    |                   | 175,000    |   |
|                                                                                                                                                                                                                 |       |                              |       |                     |       |                       |       |                     |       |                   |       |
| 7.00%  Series E Cumulative Convertible Preference Units; liquidation value $25  per unit; 554,696 and 811,724 units issued and outstanding at  September 30, 2005 and December 31, 2004, respectively |       | 11/1/98                           |       | 1.1128                   |       | $                          | 1.75       |                     | 13,868     |                   | 20,293     |   |
|                                                                                                                                                                                                                 |       |                              |       |                     |       |                       |       |                     |       |                   |       |
| 7.00%  Series H Cumulative Convertible Preference Units; liquidation value $25  per unit; 34,934 and 36,934 units issued and outstanding at  September 30, 2005 and December 31, 2004, respectively   |       | 6/30/98                           |       | 1.4480                   |       | $                          | 1.75       |                     | 873        |                   | 923        |   |
|                                                                                                                                                                                                                 |       |                              |       |                     |       |                       |       |                     |       |                   |       |
| 8.29%  Series K Cumulative Redeemable Preference Units; liquidation value $50  per unit; 1,000,000 units issued and outstanding at September 30, 2005  and December 31, 2004                          |       | 12/10/26                          |       | N/A                      |       | $                          | 4.145      |                     | 50,000     |                   | 50,000     |   |
|                                                                                                                                                                                                                 |       |                              |       |                     |       |                       |       |                     |       |                   |       |
| 6.48%  Series N Cumulative Redeemable Preference Units; liquidation value $250  per unit; 600,000 units issued and outstanding at September 30, 2005 and  December 31, 2004 (4)                       |       | 6/19/08                           |       | N/A                      |       | $                          | 16.20      |                     | 150,000    |                   | 150,000    |   |
|                                                                                                                                                                                                                 |       |                              |       |                     |       |                       |       | $                        | 504,741    |                   | $          | 636,216 |   |

 

----

| (1)    | On or after the redemption  date, redeemable preference units (Series C, D, K and N) may be redeemed  for cash at the option of the Operating Partnership, in whole or in part, at  a redemption price equal to the liquidation price per unit, plus accrued and  unpaid distributions, if any, in conjunction with the concurrent redemption  of the corresponding EQR Preferred Shares.                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (2)    | On or after the redemption  date, convertible preference units (Series E & H) may be  redeemed under certain circumstances at the option of the Operating  Partnership for cash (in the case of Series E) or OP Units (in the case  of Series H), in whole or in part, at various redemption prices per unit  based upon the contractual rate, plus accrued and unpaid distributions, if  any, in conjunction with the concurrent redemption/conversion of the  corresponding EQR Preferred Shares. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (3)    | Dividends on all series of  Preference Units are payable quarterly at various pay dates. Dividend rates  listed for Series C, D and N are Preference Unit rates and the  equivalent depositary unit annual dividend rates are $2.281252, $2.15 and  $1.62, respectively.                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (4)    | Series C, D and N  Preference Units each have a corresponding depositary unit that consists of  ten times the number of units and one-tenth the liquidation value and  dividend rate per unit.                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| (5)    | On September 14,  2005, the Company issued an irrevocable notice to redeem for cash on  October 17, 2005 all 500,000 shares of its Series B Preferred  Shares. The Operating Partnership elected to redeem for cash                                                                                                                                                                                                                                                                                          |

 

12

----

 
|   | its corresponding  Series B Preference Units. The liquidation value of $125.0 million was  included as a separate component of rents received in advance and other  liabilities in the accompanying consolidated balance sheets at  September 30, 2005. Additionally, the Operating Partnership recorded the  write-off of approximately $4.3 million in original issuance costs as a  premium on redemption of Preference Units in the accompanying consolidated  statements of operations. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

The following table presents the issued andoutstanding Preference Interests as of September 30, 2005 and December 31,2004:

 
| ** **                                                                                                                                                                                                      | ** ** | ** **                        | ** ** | ** **               | ** ** | **Annual**              | ** ** | ** **               | ** ** | ** **             | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------|------------|--------------------------|------------|-------------------------|------------|--------------------------|------------|------------------------|------------|
| ** **                                                                                                                                                                                                      | ** ** | ** **                        | ** ** | ** **               | ** ** | **Dividend**            | ** ** | **Amounts in thousands** | ** ** |
| ** **                                                                                                                                                                                                      | ** ** | **Redemption  Date (1) (2)** | ** ** | **Conversion  Rate (2)** | ** ** | **Rate per   Unit (3)** | ** ** | **September  30, 2005**  | ** ** | **December  31, 2004** | ** ** |
|  Preference  Interests:                                                                                                                                                                                    |       |                              |       |                     |       |                    |       |                     |       |                   |       |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       |                     |       |                   |       |
| 8.50%  Series B Cumulative Redeemable Preference Units; liquidation value $50  per unit; 0 and 1,100,000 units issued and outstanding at September 30,  2005 and December 31, 2004, respectively |       | 03/03/05                          |       | N/A                      |       |                    | (4)        | $                        | —     |                   | $          | 55,000 |   |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       |                     |       |                   |       |
| 8.50%  Series C Cumulative Redeemable Preference Units; liquidation value $50  per unit; 0 and 220,000 units issued and outstanding at September 30,  2005 and December 31, 2004, respectively   |       | 03/23/05                          |       | N/A                      |       |                    | (4)        | —                   |       | 11,000                 |       |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       |                     |       |                   |       |
| 8.375%  Series D Cumulative Redeemable Preference Units; liquidation value $50  per unit; 0 and 420,000 units issued and outstanding at September 30,  2005 and December 31, 2004, respectively  |       | 05/01/05                          |       | N/A                      |       |                    | (4)        | —                   |       | 21,000                 |       |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       |                     |       |                   |       |
| 8.50%  Series E Cumulative Redeemable Preference Units; liquidation value $50  per unit; 0 and 1,000,000 units issued and outstanding at September 30,  2005 and December 31, 2004, respectively |       | 08/11/05                          |       | N/A                      |       |                    | (4)        | —                   |       | 50,000                 |       |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       |                     |       |                   |       |
| 8.375%  Series F Cumulative Redeemable Preference Units; liquidation value $50  per unit; 0 and 180,000 units issued and outstanding at September 30,  2005 and December 31, 2004, respectively  |       | 05/01/05                          |       | N/A                      |       |                    | (4)        | —                   |       | 9,000                  |       |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       |                     |       |                   |       |
| 7.875%  Series G Cumulative Redeemable Preference Units; liquidation value $50  per unit; 510,000 units issued and outstanding at September 30, 2005 and  December 31, 2004                      |       | 03/21/06                          |       | N/A                      |       | $                       | 3.9375     |                     | 25,500     |                   | 25,500     |   |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       |                     |       |                   |       |
| 7.625%  Series H Cumulative Convertible Redeemable Preference Units; liquidation  value $50 per unit; 190,000 units issued and outstanding at  September 30, 2005 and December 31, 2004          |       | 03/23/06                          |       | 1.5108                   |       | $                       | 3.8125     |                     | 9,500      |                   | 9,500      |   |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       |                     |       |                   |       |
| 7.625% Series I  Cumulative Convertible Redeemable Preference Units; liquidation value $50 per  unit; 270,000 units issued and outstanding at September 30, 2005 and  December 31, 2004          |       | 06/22/06                          |       | 1.4542                   |       | $                       | 3.8125     |                     | 13,500     |                   | 13,500     |   |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       |                     |       |                   |       |
| 7.625%  Series J Cumulative Convertible Redeemable Preference Units; liquidation  value $50 per unit; 230,000 units issued and outstanding at  September 30, 2005 and December 31, 2004          |       | 12/14/06                          |       | 1.4108                   |       | $                       | 3.8125     |                     | 11,500     |                   | 11,500     |   |
|                                                                                                                                                                                                            |       |                              |       |                     |       |                    |       | $                        | 60,000     |                   | $          | 206,000 |   |

 

----

| (1)    | On  or after the fifth anniversary of the respective issuance (the “Redemption  Date”), all of the Preference Interests may be redeemed for cash at the  option of the Operating Partnership, in whole or in part, at any time or from  time to time, at a redemption price equal to the liquidation preference of  $50.00 per unit plus the cumulative amount of accrued and unpaid  distributions, if any.                  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| (2)    | On or after the tenth anniversary of the respective  issuance (the “Conversion Date”), all of the Preference Interests are  exchangeable at the option of the holder (in whole but not in part) on a  one-for-one basis for a respective reserved series of EQR Preferred Shares.  In addition, on or after the Conversion Date, the convertible Preference  Interests (Series H, I & J) may be converted under |

 

13

----

 
|   | certain circumstances at the option of the holder (in  whole but not in part) to Common Shares based upon the contractual conversion  rate, plus accrued and unpaid distributions, if any.                                                                                                                                                                                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (3)    | Dividends on all series of Preference Interests are  payable quarterly on March 25th, June 25th,  September 25th and December 25th of each  year.                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (4)    | During the nine months ended September 30, 2005, the  Operating Partnership redeemed or repurchased for cash all of its  Series B through F Preference Interests with a liquidation value of  $146.0 million. The Operating Partnership recorded approximately $4.1 million  as premiums on redemption of Preference Interests in the accompanying consolidated  statements of operations, which included $3.8 million in original issuance  costs and $0.3 million in cash redemption charges. |

 

The following table presents the Operating Partnership’sissued and outstanding Junior Convertible Preference Units (the “Junior PreferenceUnits”) as of September 30, 2005 and December 31, 2004:

 
| ** **                                                                                                                                                                     | ** ** | ** **          | ** ** | ** **          | ** ** | **Annual**                 | ** ** | ** **               | ** ** | ** **             | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|------------|---------------------|------------|----------------------------|------------|--------------------------|------------|------------------------|------------|
| ** **                                                                                                                                                                     | ** ** | ** **          | ** ** | ** **          | ** ** | **Dividend**               | ** ** | **Amounts in thousands** | ** ** |
| ** **                                                                                                                                                                     | ** ** | **Redemption Date** | ** ** | **Conversion Rate** | ** ** | **Rate per Unit (1)** | ** ** | **September  30, 2005**  | ** ** | **December  31, 2004** | ** ** |
| Junior Preference Units:                                                                                                                                                       |       |                |       |                |       |                       |       |                     |       |                   |       |
|                                                                                                                                                                           |       |                |       |                |       |                       |       |                     |       |                   |       |
| Series B  Junior Convertible Preference Units; liquidation value $25 per unit; 7,367  units issued and outstanding at September 30, 2005 and December 31,  2004 |       |                | (2)        |                | (2)        | $                          | 2.00       |                     | $          | 184                    |       | $ | 184 |   |
|                                                                                                                                                                           |       |                |       |                |       |                       |       | $                        | 184        |                   | $          | 184 |   |
|                                                                                                                                                                                |            |                     |            |                     |            |                            |            |                          |            |                        |            |  |  |  |

 

----

| (1)    | Dividends on the Junior Preference Units are payable  quarterly at various pay dates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| (2)    | On or after the tenth anniversary of the issuance  (the “Redemption Date”), the Series B Junior Preference Units may be  converted into OP Units at the option of the Operating Partnership based on  the contractual conversion rate. Prior to the Redemption Date, the holders  may elect to convert the Series B Junior Preference Units to OP Units  under certain circumstances based on the contractual conversion rate. The  contractual rate is based upon a ratio dependent upon the closing price of  EQR’s Common Shares. |

 

**4.**                                      Real Estate

** **

**During the nine months ended September 30,2005, the Operating Partnership acquired the entire equity interest in twenty-six**properties containing 7,168 units and threeland parcels from unaffiliated parties for a total purchase price of $1.2billion.

** **

**During the nine months ended September 30,2005, the Operating Partnership acquired additional ownership interests in twelvePartially Owned Properties, all of which remain partially owned.  The acquisitions were funded using $20.3million in cash and through the issuance of 570,812 OP Units valued at $19.2million, with $37.8 million recorded as additional building basis and $1.7million recorded as a reduction of Minority Interests – Partially OwnedProperties.  The Operating Partnershipalso acquired the majority of the remaining third party equity interests it didnot previously own in two properties, consisting of 120 units. The propertieswere previously accounted for under the equity method of accounting andsubsequent to the purchase were consolidated.**

** **

During the nine monthsended September 30, 2005, the Operating Partnership disposed of thefollowing to unaffiliated parties (including two land parcels and variousindividual condominium units) (sales price in millions):

 

14

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| ** **                                | ** ** | **Properties** | ** ** | **Units** | ** ** | **Sales Price** | ** ** |
|-------------------------------------------|------------|----------------|------------|-----------|------------|-----------------|------------|
| Wholly Owned Properties                   |       | 39             |       | 10,452    |       | $               | 1,230.9    |   |
| Partially Owned Properties (Consolidated) |       | 5              |       | 1,349     |       | 310.6           |       |
|                                      |       | 44             |       | 11,801    |       | $               | 1,541.5    |   |

** **

**The Operating Partnership recognized anet gain on sales of discontinued operations of approximately $513.4 million onthe above sales (amount is net of $5.8 million of income taxes incurred oncondominium sales – see additional discussion in Note 13).**

** **

**5.****                                      Commitmentsto Acquire/Dispose of Real Estate**

** **

**As of November 3, 2005, in additionto the properties there were subsequently acquired as discussed in Note 16, theOperating Partnership had entered into separate agreements to acquire fivemultifamily properties containing 1,750 units and two land parcels fromunaffiliated parties.  The OperatingPartnership expects a combined purchase price of approximately $333.4 million.**

** **

**As of November 3, 2005, in additionto the properties that were subsequently disposed of as discussed in Note 16,the Operating Partnership had entered into separate agreements to dispose of eightmultifamily properties containing 1,895**units to unaffiliated parties. The Operating Partnership expects a combined disposition price ofapproximately $222.4 million.

** **

The closings of thesepending transactions are subject to certain contingencies and conditions;therefore, there can be no assurance that these transactions will beconsummated or that the final terms thereof will not differ in materialrespects from those summarized in the preceding paragraphs.

** **

**6.****                                      Investmentsin Unconsolidated Entities**

** **

The Operating Partnershiphas co-invested in various properties with unrelated third parties which areaccounted for under the equity method of accounting.  The following table summarizes the OperatingPartnership’s investments in unconsolidated entities as of September 30,2005 (amounts in thousands except for project and unit amounts):

 
| ** **                                                  | ** ** | **Institutional  Joint  Ventures** | ** ** | **Other**  | ** ** | **Totals** | ** ** |
|-------------------------------------------------------------|------------|------------------------------------|------------|------------|------------|------------|------------|
|                                                        |       |                               |       |       |       |       |       |
| Total projects                                              |       | 45                                 |       | 11         |       | 56         |  (1)  |
|                                                        |       |                               |       |       |       |       |       |
| Total units                                                 |       | 10,846                             |       | 1,451      |       | 12,297     |  (1)  |
| ** **                                                  | ** ** | ** **                         | ** ** | ** ** | ** ** | ** ** | ** ** |
| Operating Partnership’s ownership percentage           |       | 25.0                               | %          | 10.7       | %          | ** ** | ** ** |
| ** **                                                  | ** ** | ** **                         | ** ** | ** ** | ** ** | ** ** | ** ** |
| Operating Partnership’s share of outstanding debt  (2) |       | $                                  | 121,200    |       | $          | 2,847      |       | $ | 124,047 | ** ** |
|                                                             |            |                                    |            |            |            |            |            |  |  |  |

 

----

| (1)    | Totals exclude Fort Lewis Military Housing  consisting of one property and 3,733 units, which is not accounted for under  the equity method of accounting but is included in the Operating Partnership’s  property/unit counts as of September 30, 2005. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                               |
| (2)    | All debt is non-recourse to the Operating  Partnership.                                                                                                                                                                                                            |

 

15

----

 

**7.****                                      Deposits– Restricted**

** **

The following table presents the deposits – restrictedas of September 30, 2005 and December 31, 2004 (amounts inthousands):

 
| ** **                                                    | ** ** | **September  30, 2005** | ** ** | **December  31, 2004** | ** ** |
|---------------------------------------------------------------|------------|-------------------------|------------|------------------------|------------|
|                                                          |       |                    |       |                   |       |
| Collateral enhancement for partially owned  development loans |       | $                       | 5,000      |                   | $          | 12,000 |   |
| Tax-deferred (1031) exchange proceeds                         |       | 217,766                 |       | —                 |       |
| Earnest money on pending acquisitions                         |       | 27,992                  |       | 3,267                  |       |
| Resident security, utility and other                          |       | 54,608                  |       | 66,927                 |       |
| Totals                                                        |       | $                       | 305,366    |                   | $          | 82,194 |   |

 

**8.****                                      MortgageNotes Payable**

 

As of September 30,2005, the Operating Partnership had outstanding mortgage indebtedness ofapproximately $3.3 billion.

 

During the nine months ended September 30, 2005,the Operating Partnership:

 

•                  Repaid $372.6million of mortgage loans;

•                  Assumed/consolidated$320.4 million of mortgage debt on certain properties in connection with theiracquisitions and/or consolidations;

•                  Obtained $249.5million of new mortgage loans on certain properties; and

•                  Was releasedfrom $35.0 million of mortgage debt assumed by the purchaser on disposedproperties.

 

As of September 30, 2005, scheduled maturities for the Operating Partnership’s outstanding mortgageindebtedness were at various dates through February 1, 2041.  At September 30, 2005, the interest raterange on the Operating Partnership’s mortgage debt was 2.22% to 12.465%.  During the nine months ended September 30,2005, the weighted average interest rate on the Operating Partnership’smortgage debt was 5.65%.

 

**9.****                                      Notes**

** **

As of September 30,2005, the Operating Partnership had outstanding unsecured notes ofapproximately $3.4 billion.

 

During the nine monthsended September 30, 2005, the Operating Partnership:

 

•                  Repaid $190.0million of fixed rate public notes at maturity.

•                  Issued $500.0million of ten and one-half year 5.125% fixed rate public notes, receiving netproceeds of $496.2 million.

 

As of September 30,2005, scheduled maturities for the Operating Partnership’s outstanding noteswere at various dates through 2029.  At September 30,2005, the interest rate range on the Operating Partnership’s notes was 4.75% to7.625%.  During the nine months ended September 30,2005, the weighted average interest rate on the Operating Partnership’s noteswas 6.14%.

 

**10.****                               Linesof Credit**

 

On April 1, 2005,the Operating Partnership obtained a new three-year $1.0 billion unsecured 

 

16

----

 

revolving credit facility maturing on May 29, 2008, and terminatedthe $700.0 million credit facility that was scheduled to expire in May 2005.  The Operating Partnership has the ability toincrease available borrowings up to $500.0 million under certaincircumstances.  Advances under the newcredit facility bear interest at variable rates based upon LIBOR at variousinterest periods plus a spread dependent upon the Operating Partnership’scredit rating or based on bids received from the lending group.  EQR has guaranteed the Operating Partnership’scredit facility up to the maximum amount and for the full term of the facility.

 

On August 30, 2005, the Operating Partnershipobtained a new one-year $600.0 million revolving credit facility maturing on August 29,2006.  Advances under the new facilitybear interest at variable rates based on LIBOR at various interest periods plusa spread dependent upon the Operating Partnership’s credit rating.  EQR has guaranteed this credit facility up tothe maximum amount and for its full term.

 

As of September 30, 2005, there were nooutstanding borrowings and $47.3 million was restricted (dedicated to supportletters of credit and not available for borrowing) on the revolving creditfacilities.  During the nine months endedSeptember 30, 2005, the weighted average interest rate under the creditfacilities was 3.52%.

 

**11.****                               DerivativeInstruments**

 

The following tablesummarizes the consolidated derivative instruments at September 30, 2005(dollar amounts are in thousands):

 
| ** **                             | ** ** | **Fair Value  Hedges (1)** | ** ** | **Forward  Starting  Swaps (2)** | ** ** | **Development  Cash Flow  Hedges (3)** | ** ** |
|----------------------------------------|------------|----------------------------|------------|----------------------------------|------------|----------------------------------------|------------|
| Current Notional Balance               |       | $                          | 370,000    |                             | $          | 300,000                                |       | $ | 30,018 |   |
| Lowest Possible Notional               |       | $                          | 370,000    |                             | $          | 300,000                                |       | $ | 18,568 |   |
| Highest Possible Notional              |       | $                          | 370,000    |                             | $          | 300,000                                |       | $ | 65,739 |   |
| Lowest Interest Rate                   |       | 3.245                      | %          | 4.435                            | %          | 3.310                                  | %          |
| Highest Interest Rate                  |       | 3.787                      | %          | 4.589                            | %          | 4.530                                  | %          |
| Earliest Maturity Date                 |       | 2009                       |       | 2016                             |       | 2006                                   |       |
| Latest Maturity Date                   |       | 2009                       |       | 2017                             |       | 2007                                   |       |
| Estimated Asset (Liability) Fair Value |       | $                          | (14,134    | )                                | $          | 7,226                                  |       | $ | 24 |   |

 

----

(1) Fair ValueHedges – Converts outstanding fixed rate debt to a floating interest rate.

(2) Forward StartingSwaps – Designed to partially fix the interest rate in advance of a plannedfuture debt issuance.

(3) Development CashFlow Hedges – Converts outstanding floating rate debt to a fixed interest rate.

 

**On September 30, 2005, thenet derivative instruments were reported at their fair value as other assets ofapproximately $7.3 million and as other liabilities of approximately $14.2million.  As of September 30, 2005,there were approximately $18.0 million in deferred losses, net, included inaccumulated other comprehensive loss. Based on the estimated fair values of the net derivative instruments at September 30,2005, the Operating Partnership may recognize an estimated $3.3 million ofaccumulated other comprehensive loss as additional interest expense during thetwelve months ending September 30, 2006.**

** **

**During the nine months ended September 30,2005, the Operating Partnership paid approximately $7.8 million to terminateeight forward starting swaps in conjunction with the issuance of $500.0 millionof ten and one-half year unsecured notes. The $7.8 million cost has been deferred and will be recognized asadditional interest expense over the life of the unsecured notes.**

** **

**12.**                               Earnings Per OP Unit

** **

The following tables setforth the computation of net income per OP Unit – basic and net income per 

 

17

----

 

OP Unit – diluted (amounts in thousands except per OP Unit amounts):

 
| ** **                                                                                                   | ** ** | **Nine Months Ended  September 30,** | ** ** | **Quarter Ended  September 30,** | ** ** |
|--------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                                                                   | ** ** | **2005**                                  | ** ** | **2004**                              | ** ** | **2005** | ** ** | **2004** | ** ** |
| **Numerator  for net income per OP Unit – basic:**                                                      |       |                                      |       |                                  |       |   |   |   |   |
| Income from  continuing operations                                                                           |       | $                                         | 173,539    |                                  | $          | 129,742 |   | $ | 31,193 |   | $ | 35,486 |   |
| Allocation to  Preference Units                                                                              |       | (39,004                                   | )          | (40,671                               | )          | (12,961 | ) | (13,346 | ) |
| Allocation to  Preference Interests                                                                          |       | (6,431                                    | )          | (15,158                               | )          | (1,159 | ) | (5,052 | ) |
| Allocation to  Junior Preference Units                                                                       |       | (11                                       | )          | (67                                   | )          | (4 | ) | (5 | ) |
| Allocation to  premium on redemption of Preference Units                                                     |       | (4,316                                    | )          | —                                |       | (4,316 | ) | — |   |
| Allocation to  premium on redemption of Preference Interests                                                 |       | (4,134                                    | )          | (1,117                                | )          | (22 | ) | (1,117 | ) |
|                                                                                                         |       |                                      |       |                                  |       |   |   |   |   |
| Income from  continuing operations available to OP Units                                                     |       | 119,643                                   |       | 72,729                                |       | 12,731 |   | 15,966 |   |
| Net gain on  sales of discontinued operations                                                                |       | 513,419                                   |       | 207,653                               |       | 254,178 |   | 58,394 |   |
| Discontinued  operations, net                                                                                |       | 2,585                                     |       | 21,866                                |       | 1,416 |   | 5,288 |   |
| Numerator for  net income per OP Unit – basic                                                           |       | $                                         | 635,647    |                                  | $          | 302,248 |   | $ | 268,325 |   | $ | 79,648 |   |
|                                                                                                         |       |                                      |       |                                  |       |   |   |   |   |
| **Numerator  for net income per OP Unit – diluted:**                                                    |       |                                      |       |                                  |       |   |   |   |   |
| Income from  continuing operations                                                                           |       | $                                         | 173,539    |                                  | $          | 129,742 |   | $ | 31,193 |   | $ | 35,486 |   |
| Allocation to  Preference Units                                                                              |       | (39,004                                   | )          | (40,671                               | )          | (12,961 | ) | (13,346 | ) |
| Allocation to  Preference Interests                                                                          |       | (6,431                                    | )          | (15,158                               | )          | (1,159 | ) | (5,052 | ) |
| Allocation to  Junior Preference Units                                                                       |       | (11                                       | )          | (67                                   | )          | (4 | ) | (5 | ) |
| Allocation to  premium on redemption of Preference Units                                                     |       | (4,316                                    | )          | —                                |       | (4,316 | ) | — |   |
| Allocation to  premium on redemption of Preference Interests                                                 |       | (4,134                                    | )          | (1,117                                | )          | (22 | ) | (1,117 | ) |
|                                                                                                         |       |                                      |       |                                  |       |   |   |   |   |
| Income from  continuing operations available to OP Units                                                     |       | 119,643                                   |       | 72,729                                |       | 12,731 |   | 15,966 |   |
| Net gain on  sales of discontinued operations                                                                |       | 513,419                                   |       | 207,653                               |       | 254,178 |   | 58,394 |   |
| Discontinued  operations, net                                                                                |       | 2,585                                     |       | 21,866                                |       | 1,416 |   | 5,288 |   |
| Numerator for  net income per OP Unit – diluted                                                         |       | $                                         | 635,647    |                                  | $          | 302,248 |   | $ | 268,325 |   | $ | 79,648 |   |
|                                                                                                         |       |                                      |       |                                  |       |   |   |   |   |
| **Denominator  for net income per OP Unit – basic and diluted:**                                        |       |                                      |       |                                  |       |   |   |   |   |
| Denominator for  net income per OP Unit – basic                                                         |       | 306,171                                   |       | 299,929                               |       | 306,915 |   | 300,900 |   |
| Effect of  dilutive securities:                                                                              |       |                                      |       |                                  |       |   |   |   |   |
| Dilution for OP  Units issuable upon assumed exercise/vesting of EQR’s share  options/restricted shares |       | 4,040                                     |       | 2,810                                 |       | 4,649 |   | 3,128 |   |
|                                                                                                         |       |                                      |       |                                  |       |   |   |   |   |
| Denominator for  net income per OP Unit – diluted                                                       |       | 310,211                                   |       | 302,739                               |       | 311,564 |   | 304,028 |   |
|                                                                                                         |       |                                      |       |                                  |       |   |   |   |   |
| Net income per  OP Unit – basic                                                                         |       | $                                         | 2.08       |                                  | $          | 1.01 |   | $ | 0.87 |   | $ | 0.26 |   |
|                                                                                                         |       |                                      |       |                                  |       |   |   |   |   |
| Net income per  OP Unit – diluted                                                                       |       | $                                         | 2.05       |                                  | $          | 1.00 |   | $ | 0.86 |   | $ | 0.26 |   |

 

18

----

 
| ** **                                               | ** ** | **Nine Months Ended  September 30,** | ** ** | **Quarter Ended  September 30,** | ** ** |
|----------------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------------|------------|
| ** **                                               | ** ** | **2005**                                  | ** ** | **2004**                              | ** ** | **2005** | ** ** | **2004** | ** ** |
| **Net  income per OP Unit – basic:**                |       |                                      |       |                                  |       |   |   |   |   |
| Income from  continuing operations available to OP Units |       | $                                         | 0.391      |                                  | $          | 0.242 |   | $ | 0.041 |   | $ | 0.053 |   |
| Net gain on  sales of discontinued operations            |       | 1.678                                     |       | 0.692                                 |       | 0.828 |   | 0.194 |   |
| Discontinued  operations, net                            |       | 0.008                                     |       | 0.073                                 |       | 0.005 |   | 0.017 |   |
|                                                     |       |                                      |       |                                  |       |   |   |   |   |
| Net income per  OP Unit – basic                     |       | $                                         | 2.077      |                                  | $          | 1.007 |   | $ | 0.874 |   | $ | 0.264 |   |
|                                                     |       |                                      |       |                                  |       |   |   |   |   |
| **Net  income per OP Unit – diluted:**              |       |                                      |       |                                  |       |   |   |   |   |
| Income from  continuing operations available to OP Units |       | $                                         | 0.386      |                                  | $          | 0.240 |   | $ | 0.041 |   | $ | 0.053 |   |
| Net gain on sales of discontinued operations             |       | 1.655                                     |       | 0.686                                 |       | 0.816 |   | 0.192 |   |
| Discontinued  operations, net                            |       | 0.008                                     |       | 0.072                                 |       | 0.004 |   | 0.017 |   |
|                                                     |       |                                      |       |                                  |       |   |   |   |   |
| Net income per  OP Unit – diluted                   |       | $                                         | 2.049      |                                  | $          | 0.998 |   | $ | 0.861 |   | $ | 0.262 |   |

 

 

*Convertible preference units/interests that could beconverted into 1,807,587 and 3,462,296 weighted average Common Shares (whichwould be contributed to the Operating Partnership in exchange for OP Units) forthe nine months ended September 30, 2005 and 2004, respectively, and 1,720,246and 3,298,945 weighted average Common Shares for the quarters ended September 30,2005 and 2004, respectively, were outstanding but were not included in thecomputation of diluted earnings per OP Unit because the effects would beanti-dilutive.*

* *

**13.****                               Discontinued Operations**

** **

The Operating Partnershiphas presented separately as discontinued operations in all periods the resultsof operations for all consolidated assets disposed of on or after January 1,2002 (the date of adoption of SFAS No. 144).

 

Thecomponents of discontinued operations are outlined below and include theresults of operations for the respective periods that the Operating Partnershipowned such assets during the nine months and quarters ended September 30,2005 and 2004 (amounts in thousands).

 
| ** **                                | ** ** | **Nine Months Ended   September 30,** | ** ** | **Quarter Ended  September 30,** | ** ** |
|-------------------------------------------|------------|--------------------------------------------|------------|---------------------------------------|------------|
| ** **                                | ** ** | **2005**                                   | ** ** | **2004**                              | ** ** | **2005** | ** ** | **2004** | ** ** |
| **REVENUES**                              |       |                                       |       |                                  |       |   |   |   |   |
| Rental income                             |       | $                                          | 59,432     |                                  | $          | 131,939 |   | $ | 12,026 |   | $ | 39,796 |   |
| Total revenues                            |       | 59,432                                     |       | 131,939                               |       | 12,026 |   | 39,796 |   |
|                                      |       |                                       |       |                                  |       |   |   |   |   |
| **EXPENSES (1)**                          |       |                                       |       |                                  |       |   |   |   |   |
| Property and maintenance                  |       | 25,380                                     |       | 49,077                                |       | 5,219 |   | 14,993 |   |
| Real estate taxes and insurance           |       | 8,758                                      |       | 15,710                                |       | 1,486 |   | 4,851 |   |
| Property management                       |       | 338                                        |       | 374                                   |       | 135 |   | 182 |   |
| Depreciation                              |       | 13,028                                     |       | 33,530                                |       | 2,182 |   | 9,951 |   |
| Total expenses                            |       | 47,504                                     |       | 98,691                                |       | 9,022 |   | 29,977 |   |
|                                      |       |                                       |       |                                  |       |   |   |   |   |
| Discontinued operating income             |       | 11,928                                     |       | 33,248                                |       | 3,004 |   | 9,819 |   |
|                                      |       |                                       |       |                                  |       |   |   |   |   |
| Interest and other income                 |       | 210                                        |       | 142                                   |       | 64 |   | 43 |   |
| Interest (2):                             |       |                                       |       |                                  |       |   |   |   |   |
| Expense  incurred, net                    |       | (9,079                                     | )          | (10,658                               | )          | (1,415 | ) | (4,258 | ) |
| Amortization of  deferred financing costs |       | (474                                       | )          | (866                                  | )          | (237 | ) | (316 | ) |
|                                      |       |                                       |       |                                  |       |   |   |   |   |
| Discontinued operations, net              |       | $                                          | 2,585      |                                  | $          | 21,866 |   | $ | 1,416 |   | $ | 5,288 |   |

 

19

----

 

----

| *(1)* | *Includes expenses paid in the current period for  properties sold in prior periods related to the Operating Partnership’s  period of ownership.* |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| *(2)* | *Includes only interest expense specific to secured  mortgage notes payable for properties sold.*                                                      |

 

The Operating Partnershipgenerally is not liable for Federal income taxes as the partners recognizetheir proportionate share of the Operating Partnership’s income or loss intheir tax returns; therefore no provision for Federal income taxes is made inthe consolidated financial statements of the Operating Partnership.  Dueto the structure of the Company as a REIT and the nature of the operations ofits operating properties, no provision for federal income taxes has been madeat the EQR level.  The OperatingPartnership has generally only incurred certain state and local income, excise andfranchise taxes.

 

TheOperating Partnership has elected Taxable REIT Subsidiary (“TRS”) status forcertain of its corporate subsidiaries, primarily those entities engaged incondominium conversion and sale activities. The Operating Partnership recognized a provision for income taxes of$5.8 million and $5.3 million for the nine months and quarter ended September 30,2005, respectively.  These amounts wereclassified as reductions of the net gain on sales of discontinued operations inthe accompanying consolidated statements of operations.  In addition, the aggregate results ofoperations (primarily net operating income) of the Operating Partnership’scondominium conversion properties are included in discontinued operations, net,in the accompanying consolidated statements of operations.  As of September 30, 2005, the net realestate basis of the Operating Partnership’s condominium conversion activities,which was included in investment in real estate, net, in the consolidatedbalance sheets, was $144.7 million.

 

For the properties soldduring the nine months ended September 30, 2005 (excluding condominiumconversion properties), the investment in real estate, net, and the mortgagenotes payable balances at December 31, 2004 were $664.1 million and $107.6million, respectively.

 

**14.****                               Commitmentsand Contingencies**

** **

The Operating Partnership,as an owner of real estate, is subject to various Federal, state and localenvironmental laws.  Compliance by the OperatingPartnership with existing laws has not had a material adverse effect on the OperatingPartnership.  However, the OperatingPartnership cannot predict the impact of new or changed laws or regulations onits current properties or on properties that it may acquire in the future.

 

In August 2004, the OperatingPartnership tried a class action lawsuit in Palm Beach County, Florida regardingcertain charges made to residents who terminated their leases early or failedto provide sufficient notice of intent to vacate.  In December 2004, the Court issued a Findingsof Fact and Conclusions of Law holding those fees legally uncollectible underFlorida law.  In recognition of theFindings of Fact and Conclusions of Law, which awarded damages and interest tothe class in the amount of approximately $1.6 million, the OperatingPartnership established a reserve of approximately $1.6 million andcorrespondingly recorded this as a general and administrative expense in December 2004.  Due to a pending appeal, the award is neitherfinal nor enforceable.  Accordingly, it isnot possible to determine or predict the ultimate outcome of the case.  While no assurances can be given, theOperating Partnership does not believe that this lawsuit, if the ultimateoutcome is unfavorable, will have a material adverse effect on the OperatingPartnership.

 

The Operating Partnershipdoes not believe there is any other litigation pending or threatened againstthe Operating Partnership which, individually or in the aggregate, reasonablymay be expected to have a material adverse effect on the Operating Partnership.

 

During the year ended December 31,2004, the Operating Partnership established a reserve and recorded acorresponding expense of $15.2 million for estimated uninsured property damageat certain of its properties primarily located in Florida caused by HurricanesCharley, Frances, Ivan and Jeanne.  Theentire reserve had been spent for hurricane related repairs through September 30,2005.

 

20

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During the quarter ended September 30,2005, the Operating Partnership established a reserve and recorded acorresponding expense of $6.2 million for estimated uninsured property damageat certain of its properties caused by Hurricane Katrina and unrelated firedamage at three properties.  Of thisamount, approximately $0.7 million had been spent for hurricane and fire damagerelated repairs through September 30, 2005.  The remaining $5.5 million reserve isincluded in rents received in advance and other liabilities on the consolidatedbalance sheets.

 

Hurricane Wilma landed inSouth Florida during late October 2005 and has caused damages across thestate affecting many of our properties. As of the date of this filing, we have yet to quantify the damages and/oramounts covered by insurance.

 

**As of September 30, 2005, the OperatingPartnership has five projects totaling 1,465 units in various stages ofdevelopment with estimated completion dates ranging through March 31, 2007.  The three development agreements currently inplace have the following key terms:**

** **

**•**                  The first development partner hasthe right, at any time following completion of a project subject to theagreement, to stipulate a value for such project and offer to sell its interestin the project to the Operating Partnership based on such value.  If the Operating Partnership chooses not topurchase the interest, it must agree to a sale of the project to an unrelatedthird party at such value.  The OperatingPartnership’s partner must exercise this right as to all projects subject tothe agreement within five years after the receipt of the final certificate ofoccupancy on the last developed property.  In connection with this development agreement, the Operating Partnership has an obligation to provide up to $40.0 millionin credit enhancements to guarantee a portion of the third party construction financing.  As of November 1, 2005, the OperatingPartnership had no amounts outstanding related to this credit enhancement.  The Operating Partnership would be requiredto perform under this agreement only if there was a material default under athird party construction mortgage agreement. This agreement expires no later than December 31, 2018.  Notwithstanding the termination of theagreement, the Operating Partnership shall have recourse against itsdevelopment partner for any losses incurred.

** **

**•**                        The seconddevelopment partner has the right, at any time following completion of aproject subject to the agreement, to require the Operating Partnership to purchasethe partners’ interest in that project at a mutually agreeable price.  If the Operating Partnership and the partnerare unable to agree on a price, both parties will obtain appraisals.  If the appraised values vary by more than10%, both the Operating Partnership and its partner will agree on a thirdappraiser to determine which original appraisal is closest to its determinationof value.  The Operating Partnership mayelect at that time not to purchase the property and instead, authorize itspartner to sell the project at or above the agreed-upon value to an unrelatedthird party.  Five years following the receipt of the final certificate of occupancy onthe last developed property, the Operating Partnership must purchase, at theagreed-upon price, any projects remaining unsold.

** **

•                  Thethird development partner has the exclusive right for six months followingstabilization, as defined, to market a subject project for sale.  Thereafter, either the Operating Partnershipor its development partner may market a subject project for sale.  If the Operating Partnership’s developmentpartner proposes the sale, the Operating Partnership may elect to purchase theproject at the price proposed by its partner or defer the sale until twoindependent appraisers appraise the project. If the two appraised values vary by more than 5%, a third appraiser willbe chosen to determine the fair market value of the property.  Once a value has been determined, the OperatingPartnership may elect to purchase the property or authorize its developmentpartner to sell the project at the agreed-upon value.

 

**T**he Operating Partnership’s guaranty of a credit enhancementagreement with respect to certain tax-exempt bonds issued to finance certainpublic improvements at a multifamily development project was 

 

21

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**terminated effective May 2, 2005as the tax-exempt bonds were redeemed in full and the associated letter ofcredit was cancelled.**

** **

**15.****                               ReportableSegments**

** **

Operatingsegments are defined as components of an enterprise about which separatefinancial information is available that is evaluated regularly by seniormanagement.  Senior management decideshow resources are allocated and assesses performance on a monthly basis.

 

TheOperating Partnership’s primary business is owning, managing, and operatingmultifamily residential properties, which includes the generation of rental andother related income through the leasing of apartment units to residents andincludes Equity Corporate Housing (“ECH”). Senior management evaluates the performance of each of our apartmentcommunities on an individual basis; however, each of our apartment communitieshas similar economic characteristics, residents, and products and services sothey have been aggregated into one reportable segment.  The Operating Partnership’s rental realestate segment comprises approximately 99.4% and 99.3% of total revenues for thenine months ended September 30, 2005 and 2004, respectively, andapproximately 99.5% of total revenues for both the quarters ended September 30,2005 and 2004.  The Operating Partnership’srental real estate segment comprises approximately 99.8% of total assets at bothSeptember 30, 2005 and December 31, 2004.

 

Theprimary financial measure for the Operating Partnership’s rental real estatesegment is net operating income (“NOI”), which represents rental income less:1) property and maintenance expense; 2) real estate taxes and insuranceexpense; and 3) property management expense (as reflected in the accompanyingconsolidated statements of operations). The Operating Partnership believes that NOI is helpful to investors as asupplemental measure of the operating performance of a real estate companybecause it is a direct measure of the actual operating results of the OperatingPartnership’s apartment communities. Current year NOI is compared to prior year NOI and current year budgetedNOI as a measure of financial performance. The following table presents the NOI from our rental real estate from continuingoperations for the nine months and quarters ended September 30, 2005 and2004 (amounts in thousands):

 
| ** **                              | ** ** | **Nine Months Ended  September 30,** | ** ** | **Quarter Ended  September 30,** | ** ** |
|-----------------------------------------|------------|-------------------------------------------|------------|---------------------------------------|------------|
| ** **                              | ** ** | **2005**                                  | ** ** | **2004**                              | ** ** | **2005** | ** ** | **2004** | ** ** |
| Rental income                           |       | $                                         | 1,453,829  |                                  | $          | 1,316,790 |   | $ | 501,776 |   | $ | 454,128 |   |
| Property and maintenance expense        |       | (411,187                                  | )          | (362,372                              | )          | (146,341 | ) | (129,612 | ) |
| Real estate taxes and insurance expense |       | (162,711                                  | )          | (159,407                              | )          | (59,701 | ) | (62,480 | ) |
| Property management expense             |       | (63,254                                   | )          | (56,850                               | )          | (21,924 | ) | (18,865 | ) |
| Net operating income                    |       | $                                         | 816,677    |                                  | $          | 738,161 |   | $ | 273,810 |   | $ | 243,171 |   |

 

TheOperating Partnership’s fee and asset management activity is immaterial anddoes not meet the threshold requirements of a reportable segment as providedfor in SFAS No. 131.

 

Allrevenues are from external customers and there is no customer who contributed10% or more of the Operating Partnership’s total revenues during the ninemonths ended September 30, 2005 or 2004.

 

**16.****                               SubsequentEvents/Other**

 

Subsequent to September 30,2005 and through November 1, 2005, the Operating Partnership:

 

•                  Acquiredthree properties consisting of 516 units, including one land parcel, forapproximately $88.2 million and assumed $16.6 million in mortgage debt andobtained $6.8 million in new 

 

22

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mortgage debt on two of those properties;

•                  Disposedof two properties consisting of 544 units (excluding condominium units) and twoland parcels for approximately $111.2 million; and

•                  Repaid$48.0 million of mortgage loans.

 

On November 3, 2005, theOperating Partnership closed on the acquisition of three high-rise apartmenttowers, known as Trump Place, located at 140, 160 and 180 Riverside Boulevardon the Upper West Side of Manhattan.  Thepurchase price was $808.8 million and was financed through a combination ofavailable unrestricted cash, tax-deferred (1031) exchange proceeds fromproperty dispositions and the Operating Partnership’s revolving creditfacilities.  The properties contain 1,325residential apartment units, approximately 40,000 square feet of retail spaceand 424 parking spaces.

 

During the nine monthsended September 30, 2005, the Operating Partnership received proceeds fromtechnology and other investments of $82.1 million from the following:

 

•                  $25.0million in full redemption of its 1,000,000 shares of 8.25% Convertible TrustPreferred Securities; and

•                  $57.1million for its ownership interest in Rent.com in connection with theacquisition of Rent.com by eBay, Inc. The $57.1 million was recorded as interest and other income in theaccompanying consolidated statements of operations.

 

On March 28, 2005,the Company and Bruce W. Duncan, the Company’s Chief Executive Officer (“CEO”),entered into an Amended and Restated Employment Agreement (as further amendedeffective June 30, 2005, the “Amendment”) to reflect changes required inview of Mr. Duncan’s planned retirement as CEO and trustee to be effectiveDecember 31, 2005.  The Amendmentalso amended Mr. Duncan’s Deferred Compensation Agreement entered into in January 2003.  The Company recorded approximately $7.5million of additional general and administrative expense during the nine monthsended September 30, 2005, and expects to record approximately $2.3 millionduring the remainder of 2005, primarily related to accelerated vesting of shareoptions and restricted/performance shares.

 

Effective February 28,2005, the Company and Edward Geraghty, the President of the Company’s EasternDivision, entered into a Separation Agreement and General Release reflecting Mr. Geraghty’sresignation effective February 28, 2005. The Company recorded approximately $3.3 million of severance asadditional general and administrative expense during the quarter ended March 31,2005.

 

23

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

** **

**Overview**

** **

For further informationincluding definitions for capitalized terms not defined herein, refer to theconsolidated financial statements and footnotes thereto included in the OperatingPartnership’s annual report on Form 10-K for the year ended December 31,2004.

 

Forward-lookingstatements in this report are intended to be made pursuant to the safe harborprovisions of the Private Securities Litigation Reform Act of 1995.  The words “believes”, “estimates”, “expects”and “anticipates” and other similar expressions that are predictions of orindicate future events and trends and which do not relate solely to historicalmatters identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties,which could cause actual results, performance, or achievements of the OperatingPartnership to differ materially from anticipated future results, performanceor achievements expressed or implied by such forward-looking statements.  Factors that might cause such differencesinclude, but are not limited to, the following:

 
| • | We intend to actively acquire and develop  multifamily properties for rental operations and/or conversion into  condominiums, as well as upgrade and sell existing properties as individual  condominiums. We may underestimate the costs necessary to bring an acquired  or condominium conversion property up to standards established for its  intended market position or to otherwise develop a property. Additionally, we  expect that other major real estate investors with significant capital will  compete with us for attractive investment opportunities or may also develop  properties in markets where we focus our development efforts. This  competition may increase prices for multifamily properties or decrease the  price at which we expect to sell individual condominiums. Upon conversion of  properties to condominiums, we have increased our risk related to construction  performed during the conversion. Condominium associations may assert that the  construction performed was defective, resulting in litigation and/or  settlement discussions. We may not be in a position or have the opportunity  in the future to make suitable property acquisitions on favorable terms. We  also plan to develop more properties ourselves over the next few years in  addition to co-investing with our development partners for either the rental  or condominium market, depending on opportunities in each sub-market. This  may increase the overall level of risk associated with our developments. The  total number of development units, cost of development and estimated  completion dates are subject to uncertainties arising from changing economic  conditions (such as the cost of labor and construction materials),  competition and local government regulation. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Sources of capital to the Operating Partnership or  labor and materials required for maintenance, repair, capital expenditure or  development are more expensive than anticipated;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| • | Occupancy levels and market rents may be adversely  affected by national and local economic and market conditions including,  without limitation, new construction of multifamily housing, slow employment  growth, availability of low interest mortgages for single-family home buyers  and the potential for geopolitical instability, all of which are beyond the  Operating Partnership’s control; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| • | Additional factors as discussed in Part I of  the Annual Report on Form 10-K, particularly those under “Risk Factors”.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

 

Readers are cautioned notto place undue reliance on these forward-looking statements, which speak onlyas of the date hereof.  The OperatingPartnership undertakes no obligation to publicly release any revisions to theseforward-looking statements, which may be made to reflect events orcircumstances after the date hereof or to reflect the occurrence ofunanticipated events.  Forward-lookingstatements and related uncertainties are also included in Notes 5, 11, 14 and16 to the Notes to Consolidated Financial Statements in this report.

 

24

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**Results of Operations**

** **

In conjunction with our business objectives and operating strategy, the OperatingPartnership has continued to invest or recycle its capital investment inapartment communities located in strategically targeted markets during the ninemonths ended September 30, 2005.  Insummary, during the nine months ended September 30, 2005, we acquired twenty-sixproperties, consisting of 7,168 units, for an aggregate purchase price of $1.1 billionand three land parcels for $46.7 million, all of which we deem to be in highbarrier to entry markets.  The OperatingPartnership sold 39 properties, consisting of 10,212 units, for an aggregatesales price of $1.1 billion, 1,341 condominium units for $382.2 million, a 248-unitproperty in the process of being converted to condominiums for $45.9 millionand two land parcels for $36.3 million during the nine months ended September 30,2005.

 

The OperatingPartnership’s primary financial measure for evaluating each of its apartmentcommunities is net operating income (“NOI”). The Operating Partnership believes that NOI is helpful to investors as asupplemental measure of the operating performance of a real estate companybecause it is a direct measure of the actual operating results of the OperatingPartnership’s apartment communities.  TheOperating Partnership defines NOI as rental income less: 1) property andmaintenance expense; 2) real estate taxes and insurance expense; and 3)property management expense.

 

Properties that theOperating Partnership owned for all of both the nine month periods ended September 30,2005 and 2004 (the “Nine-Month 2005 Same Store Properties”), which represented 158,005units and properties that the Operating Partnership owned for all of both thequarters ended September 30, 2005 and 2004 (the “Third Quarter 2005 SameStore Properties”), which represented 165,673 units, also impacted the OperatingPartnership’s results of operations. Both the Nine-Month 2005 Same Store Properties and Third Quarter 2005Same Store Properties are discussed in the following paragraphs.

 

The Operating Partnership’sacquisition, disposition, completed development and consolidation of previouslyunconsolidated property activities also impacted overall results of operationsfor the nine months and quarters ended September 30, 2005 and 2004.  The impacts of these activities are alsodiscussed in greater detail in the following paragraphs.

 

***Comparison of the nine months ended September 30, 2005to the nine months ended September 30, 2004***

*** ***

For the ninemonths ended September 30, 2005, income before allocation to MinorityInterests, income (loss) from investments in unconsolidated entities, net gainon sales of unconsolidated entities and discontinued operations increased byapproximately $41.5 million when compared to the nine months ended September 30,2004.

 

**Nine-Month 2005 Same Store Propertiesrevenues increased primarily as a result of higher rental rates charged to residents,increased occupancy and lower concessions. Nine-Month 2005 Same Store Properties expenses increased primarily dueto higher payroll, utility costs, maintenance costs and real estate taxes.  The following tables provide comparativerevenue, expense, NOI and weighted average occupancy for the Nine-Month 2005Same Store Properties:**

** **

YTDSeptember 2005 vs. YTD September 2004YTD over YTD Same-Store Results

 

$ in Millions –158,005 Same-Store Units

 

| Description |   | Revenues |    | Expenses |   | NOI    |   |
|-------------|--------|----------|---------|----------|--------|--------|--------|
|        |   |     |    |     |   |   |   |
| YTD 2005    |   | $        | 1,240.3 |     | $      | 512.9  |   | $ | 727.4 |   |
| YTD 2004    |   | $        | 1,201.5 |     | $      | 485.8  |   | $ | 715.7 |   |
| Change      |   | $        | 38.8    |     | $      | 27.1   |   | $ | 11.7 |   |
| Change      |   | 3.2      | %       | 5.6      | %      | 1.6    | %      |

 

25

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Same StoreOccupancy Statistics

 

|     |   |   |   |
|----------|--------|--------|--------|
| YTD 2005 |   | 94.2   | %      |
| YTD 2004 |   | 93.5   | %      |
| Change   |   | 0.7    | %      |

** **

**The following table presents a reconciliation of operating income per theconsolidated statements of operations to NOI for the Nine-Month 2005 Same StoreProperties:**

** **

| ** **                             | ** ** | **Nine Months Ended September 30,** | ** ** |
|----------------------------------------|------------|------------------------------------------|------------|
| ** **                             | ** ** | **2005**                                 | ** ** | **2004** | ** ** |
| ** **                             | ** ** | **(Amounts in millions)**                | ** ** |
| ** **                             | ** ** | ** **                               | ** ** | ** ** | ** ** |
| Operating income                       |       | $                                        | 394.5      |   | $ | 371.8 |   |
| Adjustments:                           |       |                                     |       |   |   |
| Insurance  (hurricane property damage) |       | —                                   |       | 14.1 |   |
| Non-same  store operating results      |       | (89.2                                    | )          | (36.6 | ) |
| Fee  and asset management revenue      |       | (8.5                                     | )          | (9.3 | ) |
| Fee  and asset management expense      |       | 7.5                                      |       | 6.5 |   |
| Depreciation                           |       | 378.1                                    |       | 334.4 |   |
| General  and administrative            |       | 45.0                                     |       | 34.8 |   |
|                                   |       |                                     |       |   |   |
| Same store NOI                         |       | $                                        | 727.4      |   | $ | 715.7 |   |

** **

**For properties that the Operating Partnership acquired prior to January 1,2004 and expects to continue to own through December 31, 2005, the OperatingPartnership anticipates the following same store results for the full yearending December 31, 2005:**

** **

2005 Same StoreAssumptions

 

| Physical Occupancy |   | 94.3 | %           |
|--------------------|--------|------|-------------|
| Revenue Change     |   | 3.6  | %           |
| Expense Change     |   | 5.3  | %           |
| NOI Change         |   | 2.5  | %           |
| Acquisitions       |   | $    | 2.0 billion |   |
| Dispositions       |   | $    | 1.4 billion |   |

** **

**These 2005 assumptions are based on current expectations and areforward-looking.**

** **

**Rental income from properties other than Nine-Month 2005 Same Store Propertiesincreased by approximately $98.2**million primarily as a result of new properties acquired/consolidated in2004 and the first nine months of 2005.

** **

Fee and assetmanagement revenues, net of fee and asset management expenses, decreased by $1.8million primarily as a result of lower income earned from Ft. Lewis.  As of September 30, 2005 and 2004, theOperating Partnership managed 17,148 units and 17,714 units, respectively, forthird parties and unconsolidated entities.

 

**Property management expenses include off-site expenses associated withthe self-management of the**

 

26

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**OperatingPartnership’s properties as well as management fees paid to third partymanagement companies.  These expenses increasedby approximately $6.4 million.  Thisincrease is primarily attributable to higher payroll costs, including bonus andlong-term compensation costs, during 2005.**

** **

Depreciationexpense, which includes depreciation on non-real estate assets, increased $43.8million primarily as a result of additional depreciation expense on newlyacquired properties and capital expenditures for all properties owned.

 

General andadministrative expenses, which include corporate operating expenses, increasedapproximately $10.2 million between the periods under comparison.  This increase is primarily attributable to higherexecutive compensation expense due to the previously announced December 2005planned retirement of Bruce W. Duncan, EQR’s Chief Executive Officer, and the March 2005resignation of Edward Geraghty, EQR’s former Eastern Division President, andadditional accruals for certain management incentive programs as a result ofthe Rent.com gain (see discussion below). The Operating Partnership anticipates that general and administrativeexpenses will approximate $57.1 million for the year ending December 31,2005.  This above assumption is based oncurrent expectations and is forward-looking.

 

**Interest and other incomeincreased by approximately $58.6**million, primarily as a result of the $57.1 million in cash received forthe Operating Partnership’s ownership interest in Rent.com, which was acquiredby eBay, Inc.

** **

Interest expense,including amortization of deferred financing costs, increased approximately $39.8****million primarily as a result of higheroverall debt balances as well as higher variable interest rates.  During the nine months ended September 30,2005, the Operating Partnership capitalized interest costs of approximately $9.1million as compared to $10.3 million for the nine months ended September 30,2004.  This capitalization of interestrelated specifically to our consolidated projects under development.  The effective interest cost on allindebtedness for the nine months ended September 30, 2005 was 6.23% as compared to 5.86% for the ninemonths ended September 30, 2004.

 

Loss frominvestments in unconsolidated entities decreased approximately $7.0 millionbetween the periods under comparison. This decrease is primarily the result of the consolidation of propertiesthat were previously unconsolidated in the first quarter of 2004.

 

Net gain on salesof discontinued operations increased approximately $305.8 million between theperiods under comparison.  This increaseis primarily the result of higher per unit sales prices and lower real estatenet book values for properties sold during the nine months ended September 30,2005 as compared to the same period in 2004, and due to the sale of WaterTerrace, a 450-unit high rise luxury apartment building in Marina del Rey,California.

 

Discontinuedoperations, net, decreased approximately $19.3 million between the periodsunder comparison.  The decrease inrevenues and expenses between periods results from the timing, size and number ofproperties sold.  Any property sold afterSeptember 30, 2004 will include a full period’s results in the nine monthsof 2004 but minimal to no results in the nine months of 2005.  See Note 13 in the Notes to ConsolidatedFinancial Statements for further discussion.

 

***Comparisonof the quarter ended September 30, 2005 to the quarter ended September 30,2004***

*** ***

For the quarterended September 30, 2005, income before allocation to Minority Interests, income(loss) from investments in unconsolidated entities, net gain on sales ofunconsolidated entities and discontinued operations decreased by approximately $1.3million when compared to the quarter ended September 30, 2004.

 

27

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Third Quarter 2005Same Store Properties revenues increased primarily as a result of higher rentalrates charged to residents, increased occupancy and lower concessions providedresidents.  Third Quarter 2005 Same StoreProperties expenses increased primarily due to higher utilities, maintenance, insuranceand real estate tax costs.  The followingtables provide comparative revenue, expense, NOI and weighted average occupancyfor the Third Quarter 2005 Same Store Properties:

 

Third Quarter 2005vs. Third Quarter 2004Quarter over Quarter Same-Store Results

 

$ in Millions –165,673 Same-Store Units

 

| **Description** | ** ** | **Revenues** | ** ** | **Expenses** | ** ** | **NOI** | ** ** |
|-----------------|------------|--------------|------------|--------------|------------|---------|------------|
|            |       |         |       |         |       |    |       |
| Q3 2005         |       | $            | 446.6      |         | $          | 187.4   |       | $ | 259.2 |   |
| Q3 2004         |       | $            | 428.2      |         | $          | 176.5   |       | $ | 251.7 |   |
| Change          |       | $            | 18.4       |         | $          | 10.9    |       | $ | 7.5 |   |
| Change          |       | 4.3          | %          | 6.2          | %          | 3.0     | %          |

 

Same StoreOccupancy Statistics

 

|    |   |   |   |
|---------|--------|--------|--------|
| Q3 2005 |   | 94.7   | %      |
| Q3 2004 |   | 93.6   | %      |
| Change  |   | 1.1    | %      |

** **

**The following table presents a reconciliation of operating income per theconsolidated statements of operations to NOI for the Third Quarter 2005 SameStore Properties:**

** **

| ** **                             | ** ** | **Quarter Ended September 30,** | ** ** |
|----------------------------------------|------------|--------------------------------------|------------|
| ** **                             | ** ** | **2005**                             | ** ** | **2004** | ** ** |
| ** **                             | ** ** | **(Amounts in millions)**            | ** ** |
| ** **                             | ** ** | ** **                           | ** ** | ** ** | ** ** |
| Operating income                       |       | $                                    | 129.9      |   | $ | 115.3 |   |
| Adjustments:                           |       |                                 |       |   |   |
| Insurance  (hurricane property damage) |       | —                               |       | 14.1 |   |
| Non-same  store operating results      |       | (14.6                                | )          | (5.6 | ) |
| Fee  and asset management revenue      |       | (2.6                                 | )          | (2.4 | ) |
| Fee  and asset management expense      |       | 2.6                                  |       | 2.1 |   |
| Depreciation                           |       | 129.7                                |       | 116.2 |   |
| General  and administrative            |       | 14.2                                 |       | 12.0 |   |
|                                   |       |                                 |       |   |   |
| Same store NOI                         |       | $                                    | 259.2      |   | $ | 251.7 |   |

 

**Rental income from properties other than Third Quarter 2005 Same StoreProperties increased by approximately $29.3**million primarily as a result of newproperties acquired/consolidated in 2004 and the first nine months of 2005.

** **

Fee and asset managementrevenues, net of fee and asset management expenses, decreased by $0.3 millionprimarily as a result of lower income earned from Ft. Lewis and managing fewerproperties for third parties and unconsolidated entities.

 

**Property management expenses include off-site expenses associated withthe self-management of the Operating Partnership’s properties as well asmanagement fees paid to third party management companies.  These expenses increased by approximately$3.1 million.  This increase is primarilyattributable to higher payroll costs, including long-term compensation costs.**

 

28

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Depreciation expense,which includes depreciation on non-real estate assets, increased $13.5 millionprimarily as a result of additional depreciation expense on newly acquiredproperties and capital expenditures for all properties owned.

 

General andadministrative expenses, which include corporate operating expenses, increasedapproximately $2.3 million between the periods under comparison.  This increase is primarily attributable tohigher executive compensation expense due to the previously announced December 2005planned retirement of Bruce W. Duncan, EQR’s Chief Executive Officer, andadditional accruals for certain management incentive programs as a result ofthe Rent.com gain (see discussion above), offset by reduced consulting servicesincurred in the third quarter of 2005 as compared to the third quarter of 2004.

 

**Interest and other income increasedby approximately $0.2**million,primarily as a result of higher balances available for investments includingdeposits in tax deferred exchange accounts.

** **

Interest expense,including amortization of deferred financing costs, increased approximately $16.1****million primarily as a result of higheroverall debt balances as well as higher variable interest rates.  During the quarter ended September 30,2005, the Operating Partnership capitalized interest costs of approximately $3.3million as compared to $3.4 million for the quarter ended September 30,2004.  This capitalization of interestrelated specifically to our consolidated projects under development.  The effective interest cost on allindebtedness for the quarter ended September 30, 2005 was 6.28% as compared to 5.69% for the quarterended September 30, 2004.

 

Loss frominvestments in unconsolidated entities increased approximately $0.6 millionbetween the periods under comparison. This increase is primarily the result of increased equity losses atselected unconsolidated properties for the third quarter of 2005 as compared tothe third quarter of 2004.

 

Net gain on salesof discontinued operations increased approximately $195.8 million between theperiods under comparison.  This increaseis primarily the result of higher per unit sales prices and lower real estatenet book values for properties sold during the quarter ended September 30,2005 as compared to the same period in 2004.

 

Discontinuedoperations, net, decreased approximately $3.9 million between the periods undercomparison.  The decrease in revenues andexpenses between periods results from the timing, size and number of propertiessold.  Any property sold after September 30,2004 will include a full quarter’s results in the third quarter of 2004 butminimal to no results in the third quarter of 2005.  See Note 13 in the Notes to ConsolidatedFinancial Statements for further discussion.

 

**Liquidity and Capital Resources**

** **

As of January 1,2005, the Operating Partnership had approximately $83.5 million of cash andcash equivalents and $484.6 million available under its revolving creditfacility (net of $65.4 million which was restricted/dedicated to supportletters of credit and not available for borrowing).  After taking into effect the varioustransactions discussed in the following paragraphs and the net cash provided byoperating activities, the Operating Partnership’s cash and cash equivalentsbalance at September 30, 2005 was approximately $306.9 million and theamount available on the Operating Partnership’s revolving credit facilities was$1,552.7 million (net of $47.3 million which was restricted/dedicated to supportletters of credit and not available for borrowing).

 

During the ninemonths ended September 30, 2005, the Operating Partnership generatedand/or obtained cash from various transactions, which included the following:

 

•                  Disposedof 44 properties, two land parcels and various individual condominium unitsreceiving 

 

29

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net proceeds of approximately $1.5 billion;

•                  Obtained$496.2 million in net proceeds from the issuance of $500.0 million of ten andone-half year 5.125% fixed rate public notes;

•                  Obtained$249.5 million in new mortgage financing;

•                  Obtained$57.1 million for its ownership interest in Rent.com;

•                  Received$25.0 million in full redemption of its 1,000,000 shares of 8.25% ConvertibleTrust Preferred Securities; and

•                  Issuedapproximately 1.7 million OP Units and received net proceeds of $42.0 million.

 

**During the nine months ended September 30, 2005, theabove proceeds were primarily utilized to:**

** **

•                  Invest$131.5 million primarily in development projects;

•                  Acquire 26properties and three land parcels, utilizing cash of $871.5 million;

•                  Repay $190.0million of fixed rate public notes at maturity;

•                  Repay$372.6 million of mortgage loans; and

•                  Redeemor repurchase the Series B through F Preference Interests at a liquidationvalue of $146.0 million.

 

**Depending on its analysis of market prices, economicconditions, and other opportunities for the investment of available capital,the Company may repurchase up to an additional $585.0 million of its CommonShares pursuant to an existing $200.0 million share buyback program authorizedby the Board of Trustees in July 2002 and a new $500.0 million sharebuyback program authorized by the Board of Trustees in November 2005.  The Operating Partnership in turn wouldrepurchase $585.0 million of its OP Units held by EQR.  EQR did not repurchase any of its CommonShares during the nine months ended September 30, 2005.**

** **

**The Operating Partnership’s total debt summary and debtmaturity schedule as of September 30, 2005, are as follows:**

** **

Debt Summary

 

| ** **                          | ** ** | **$ Millions (1)** | ** ** | **Weighted Average  Rate (1)** | ** ** |
|-------------------------------------|------------|-------------------------|------------|--------------------------------|------------|
| Secured                             |       | $                       | 3,324      |                           | 5.65       | % |
| Unsecured                           |       | 3,443                   |       | 5.93                           | %          |
| Total                               |       | $                       | 6,767      |                           | 5.80       | % |
|                                |       |                    |       |                           |       |
| Fixed Rate                          |       | $                       | 5,679      |                           | 6.39       | % |
| Floating Rate                       |       | 1,088                   |       | 3.61                           | %          |
| Total                               |       | $                       | 6,767      |                           | 5.80       | % |
|                                |       |                    |       |                           |       |
| Above Totals Include:               |       |                    |       |                           |       |
| Tax Exempt:                         |       |                    |       |                           |       |
| Fixed                               |       | $                       | 135        |                           | 3.80       | % |
| Floating                            |       | 616                     |       | 2.83                           | %          |
| Total                               |       | $                       | 751        |                           | 3.14       | % |
|                                |       |                    |       |                           |       |
| Unsecured Revolving Credit Facility |       | $                       | —     |                           | 3.52       | % |

 

----

| *(1) Net of the effect of any derivative instruments.* |   |   |   |   |   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|

 

30

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Debt MaturitySchedule as of September 30, 2005

 

| **Year** | ** ** | ** ** | **$ Millions** | ** ** | **% of Total** | ** ** |
|----------|------------|------------|---------------------|------------|----------------|------------|
| 2005     |       | $          | 39                  |       | 0.6            | %          |
| 2006 (1) |       | 596        |                | 8.8        | %              |
| 2007     |       | 378        |                | 5.6        | %              |
| 2008     |       | 616        |                | 9.1        | %              |
| 2009     |       | 860        |                | 12.7       | %              |
| 2010     |       | 262        |                | 3.9        | %              |
| 2011     |       | 721        |                | 10.6       | %              |
| 2012     |       | 523        |                | 7.7        | %              |
| 2013     |       | 567        |                | 8.4        | %              |
| 2014+    |       | 2,205      |                | 32.6       | %              |
| Total    |       | $          | 6,767               |       | 100.0          | %          |

 

----

| *(1)  Includes $150 million of unsecured debt  with a final maturity of 2026 that is putable in 2006.* |
|-------------------------------------------------------------------------------------------------------------|

 

**As of the date of this filing, $980.0 million in debt securities remainsavailable for issuance by the Operating Partnership under a registrationstatement the SEC declared effective in June 2003 and $956.5 million inequity securities remains available for issuance by the Company under a registrationstatement the SEC declared effective in February 1998.  Per the terms of ERPOP’s partnershipagreement, EQR contributes the net proceeds of all equity offerings to thecapital of the Operating Partnership in exchange for additional OP Units (on aone-for-one Common Share per OP Unit basis) or preference units (on aone-for-one preferred share per preference unit basis.)**

** **

**The Operating Partnership’s “Consolidated Debt-to-Total Market CapitalizationRatio” as of September 30, 2005 is presented in the following table.  The Operating Partnership calculates theequity component of its market capitalization as the sum of (i) the totaloutstanding OP Units at the equivalent market value of the closing price of EQR’sCommon Shares on the New York Stock Exchange; (ii) the “OP Unit Equivalent”of all convertible preference units/interests; and (iii) the liquidationvalue of all perpetual preference units/interests outstanding.**

** **

Capital Structure as of September 30, 2005

(Amounts in thousands except for unit and per unit amounts)

 
| Secured  Debt                                     |       |        |       | $              | 3,323,932      |       | 49         | %          |    |   |
|---------------------------------------------------|------------|-------------|------------|----------------|----------------|------------|------------|------------|---------|--------|
| Unsecured  Debt                                   |       |        |       | 3,443,588      |           | 51         | %          |       |    |
| Lines  of Credit                                  |       |        |       | —         |           | —     |       |       |    |
| **Total Debt**                                    | ** ** | ** **  | ** ** | **$**          | **6,767,520**  | ** ** | **100**    | **%**      | **36**  | **%**  |
|                                              |       |        |       |           |           |       |       |       |    |
| OP Units                                          |       | 308,772,576 |       |           |           |       |       |       |    |
| OP Unit Equivalents (see below)                   |       | 1,679,537   |       |           |           |       |       |       |    |
| Total outstanding at quarter-end                  |       | 310,452,113 |       |           |           |       |       |       |    |
| EQR Common Share Price at September 30, 2005 |       | $           | 37.85      |           |           |       |       |       |    |   |
|                                              |       |        |       | 11,750,612     |           | 96         | %          |       |    |
| Perpetual Preference Units/Interests (see below)  |       |        |       | 515,500        |           | 4          | %          |       |    |
| **Total Equity**                                  | ** ** | ** **  | ** ** | **12,266,112** | ** **     | **100**    | **%**      | **64**     | **%**   |
|                                              |       |        |       |           |           |       |       |       |    |
| **Total Market Capitalization**                   | ** ** | ** **  | ** ** | **$**          | **19,033,632** | ** ** | ** ** | ** ** | **100** | **%**  |
|                                                   |            |             |            |                |                |            |            |            |         |        |  |

 

31

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Convertible Preference Units/Interests as ofSeptember 30, 2005

(Amounts inthousands except for unit and per unit amounts)

 
| ** **                                    | ** ** | ** **      | ** ** | ** **      | ** ** | **Annual**        | ** ** | **Annual**   | ** ** | **Weighted** | ** ** | ** **     | ** ** | ** **      | ** ** |
|-----------------------------------------------|------------|-----------------|------------|-----------------|------------|-------------------|------------|--------------|------------|--------------|------------|----------------|------------|-----------------|------------|
| ** **                                    | ** ** | **Outstanding** | ** ** | **Liquidation** | ** ** | **Dividend Rate** | ** ** | **Dividend** | ** ** | **Average**  | ** ** | **Conversion** | ** ** | **OP Unit**     | ** ** |
| **Series**                                    | ** ** | **Units**       | ** ** | **Value**       | ** ** | **Per Unit**      | ** ** | **Amount**   | ** ** | **Rate**     | ** ** | **Ratio**      | ** ** | **Equivalents** | ** ** |
| Preference Units:                             |       |            |       |            |       |              |       |         |       |         |       |           |       |            |       |
| 7.00%  Series E                          |       | 554,696         |       | $               | 13,868     |              | $          | 1.75         |       | $            | 971        |           |       |            | 1.1128     |   | 617,266 |   |
| 7.00%  Series H                          |       | 34,934          |       | 873             |       | 1.75              |       | 61           |       |         |       | 1.4480         |       | 50,584          |       |
| Preference Interests:                         |       |            |       |            |       |              |       |         |       |         |       |           |       |            |       |
| 7.625%  Series H                         |       | 190,000         |       | 9,500           |       | 3.8125            |       | 724          |       |         |       | 1.5108         |       | 287,052         |       |
| 7.625%  Series I                         |       | 270,000         |       | 13,500          |       | 3.8125            |       | 1,029        |       |         |       | 1.4542         |       | 392,634         |       |
| 7.625%  Series J                         |       | 230,000         |       | 11,500          |       | 3.8125            |       | 877          |       |         |       | 1.4108         |       | 324,484         |       |
| Junior Preference Units:                      |       |            |       |            |       |              |       |         |       |         |       |           |       |            |       |
| 8.00%  Series B                          |       | 7,367           |       | 184             |       | 2.00              |       | 15           |       |         |       | 1.020408       |       | 7,517           |       |
| Total  Convertible Preference Units/Interests |       | 1,286,997       |       | $               | 49,425     |              |       |         | $          | 3,677        |       | 7.44           | %          |            |       | 1,679,537 |   |
|                                               |            |                 |            |                 |            |                   |            |              |            |              |            |                |            |                 |            |  |  |  |

 

PerpetualPreference Units/Interests as of September 30, 2005 (1)

(Amounts inthousands except for unit and per unit amounts)

 
| ** **                                 | ** ** | ** **      | ** ** | ** **      | ** ** | **Annual**        | ** ** | **Annual**   | ** ** | ** **       | ** ** |
|--------------------------------------------|------------|-----------------|------------|-----------------|------------|-------------------|------------|--------------|------------|------------------|------------|
| ** **                                 | ** ** | **Outstanding** | ** ** | **Liquidation** | ** ** | **Dividend Rate** | ** ** | **Dividend** | ** ** | **Weighted**     | ** ** |
| **Series**                                 | ** ** | **Units**       | ** ** | **Value**       | ** ** | **Per Unit**      | ** ** | **Amount**   | ** ** | **Average Rate** | ** ** |
| Preference Units:                          |       |            |       |            |       |              |       |         |       |             |       |
| 9  1/8% Series C                      |       | 460,000         |       | $               | 115,000    |              | $          | 22.81252     |       | $                | 10,494     |   |   |   |
| 8.60%  Series D                       |       | 700,000         |       | 175,000         |       | 21.50             |       | 15,050       |       |             |       |
| 8.29%  Series K                       |       | 1,000,000       |       | 50,000          |       | 4.145             |       | 4,145        |       |             |       |
| 6.48%  Series N                       |       | 600,000         |       | 150,000         |       | 16.20             |       | 9,720        |       |             |       |
| Preference Interests:                      |       |            |       |            |       |              |       |         |       |             |       |
| 7.875%  Series G                      |       | 510,000         |       | 25,500          |       | 3.9375            |       | 2,008        |       |             |       |
| Total Perpetual Preference Units/Interests |       | 3,270,000       |       | $               | 515,500    |              |       |         | $          | 41,417           |       | 8.03 | % |
|                                            |            |                 |            |                 |            |                   |            |              |            |                  |            |  |  |  |

 

----

**(1) Excludes $125.0 million for the 91/8% Series B Preference Units which was redeemed for cash on 10/17/05 andwas included in rents received in advance and other liabilities in theconsolidated balance sheets at 9/30/05.**

** **

See Note 16 in the Notes to Consolidated FinancialStatements for discussion of the events which occurred subsequent to September 30,2005.

 

***Capitalization of Fixed Assets and Improvements to RealEstate***

*** ***

**Our policy with respect to capital expenditures is generally tocapitalize expenditures that improve the value of the property or extend theuseful life of the component asset of the property.  We track improvements to real estate in twomajor categories and several subcategories:**

 

•                  Replacements(inside the unit).  These include:

•                  carpetsand hardwood floors;

•                  appliances;

•                  mechanicalequipment such as individual furnace/air units, hot water heaters, etc;

•                  furnitureand fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans,sinks, tubs, toilets, mirrors, countertops, etc;

•                  flooringsuch as vinyl, linoleum or tile; and

•                  blinds/shades.

** **

**All replacements are depreciatedover a five-year estimated useful life. We expense as incurred all**

 

32

----

 

**maintenance and turnovercosts such as cleaning, interior painting of individual units and the repair ofany replacement item noted above.**

** **

**•**                  Buildingimprovements (*outside the unit*).  These include:

**•**                  roofreplacement and major repairs;

**•**                  pavingor major resurfacing of parking lots, curbs and sidewalks;

**•**                  amenitiesand common areas such as pools, exterior sports and playground equipment,lobbies, clubhouses, laundry rooms, alarm and security systems and offices;

**•**                  majorbuilding mechanical equipment systems;

**•**                  interiorand exterior structural repair and exterior painting and siding;

**•**                  majorlandscaping and grounds improvement; and

**•**                  vehiclesand office and maintenance equipment.

** **

**All building improvements are depreciatedover a five to ten-year estimated useful life. We expense as incurred all recurring expenditures that do not improvethe value of the asset or extend its useful life.**

** **

**For the nine months ended September 30, 2005, our actualimprovements to real estate totaled approximately $167.3 million.  This includes the following detail (amountsin thousands except for unit and per unit amounts):**

** **

Capitalized Improvements to Real EstateFor the Nine Months Ended September 30, 2005

 
| ** **                     | ** ** | **Total Units (1)** | ** ** | **Replacements** | ** ** | **Avg. Per  Unit** | ** ** | **Building   Improvements** | ** ** | **Avg. Per   Unit** | ** ** | **Total** | ** ** | **Avg. Per   Unit** | ** ** |
|--------------------------------|------------|---------------------|------------|------------------|------------|--------------------|------------|-----------------------------|------------|---------------------|------------|-----------|------------|---------------------|------------|
| Established Properties (2)     |       | 148,198             |       | $                | 43,850     |               | $          | 296                         |       | $                   | 63,303     |      | $          | 427                 |       | $ | 107,153 |   | $ | 723 |   |
| New Acquisition Properties (3) |       | 23,468              |       | 4,022            |       | 204                |       | 12,557                      |       | 637                 |       | 16,579    |       | 841                 |       |
| Other (4)                      |       | 7,879               |       | 16,719           |       |               |       | 26,823                      |       |                |       | 43,542    |       |                |       |
| Total                          |       | 179,545             |       | $                | 64,591     |               |       |                        | $          | 102,683             |       |      |       | $                   | 167,274    |   |   |   |
|                                |            |                     |            |                  |            |                    |            |                             |            |                     |            |           |            |                     |            |  |  |  |  |  |  |

 

----

(1)          Total units exclude 16,030 unconsolidatedunits.

(2)          Wholly Owned Properties acquired prior to January 1,2003.

(3)          Wholly Owned Properties acquired during 2003,2004 and 2005.  Per unit amounts arebased on a weighted average of 19,707 units.

(4)          Includes properties either Partially Owned orsold during the period, commercial space, condominium conversions and $4.5million included in building improvements spent on eight specific assetsrelated to major renovations and repositioning of these assets.

 

**The Operating Partnership expects to fund approximately $60.0**million for capital expenditures forreplacements and building improvements for all consolidated properties,exclusive of condominium conversion properties, for the remainder of 2005.

** **

**During the nine months ended September 30, 2005, the OperatingPartnership’s total non-real estate capital additions, such as computersoftware, computer equipment, and furniture and fixtures and leaseholdimprovements to the Operating Partnership’s property management offices and itscorporate offices, were approximately $12.4**million. The Operating Partnership expects to fund approximately $5.5 million intotal additions to non-real estate property for the remainder of 2005, themajority of which includes software licenses and hardware related to the OperatingPartnership’s pricing and procurement initiatives.

** **

**Improvements to real estate and additions to non-real estate propertywere funded from net cash provided by operating activities.**

 

33

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***DerivativeInstruments***

*** ***

Inthe normal course of business, the Operating Partnership is exposed to theeffect of interest rate changes.  The OperatingPartnership limits these risks by following established risk managementpolicies and procedures including the use of derivatives to hedge interest raterisk on debt instruments.

 

TheOperating Partnership has a policy of only entering into contracts with majorfinancial institutions based upon their credit ratings and other factors.  When viewed in conjunction with theunderlying and offsetting exposure that the derivatives are designed to hedge,the Operating Partnership has not sustained a material loss from thoseinstruments nor does it anticipate any material adverse effect on its netincome or financial position in the future from the use of derivatives.

 

See Note 11 in the Notes toConsolidated Financial Statements for additional discussion of derivativeinstruments at September 30, 2005.

 

***Other***

*** ***

**Total distributions paid in October 2005amounted to $145.5 million (excluding distributions on Partially OwnedProperties), which included certain distributions declared during the thirdquarter ended September 30, 2005.**

** **

**The Operating Partnership expects to meet its short-term liquidityrequirements, including capital expenditures related to maintaining itsexisting properties and certain scheduled unsecured note and mortgage noterepayments, generally through its working capital, net cash provided byoperating activities and borrowings under its revolving credit facilities.  The Operating Partnership considers its cashprovided by operating activities to be adequate to meet operating requirementsand payments of distributions.  TheOperating Partnership also expects to meet its long-term liquidityrequirements, such as scheduled unsecured note and mortgage debt maturities,property acquisitions, financing of construction and development activities andcapital improvements through the issuance of unsecured notes and equitysecurities, including additional OP Units, and proceeds received from thedisposition of certain properties.  In addition,the Operating Partnership has significant unencumbered properties available tosecure additional mortgage borrowings in the event that the public capitalmarkets are unavailable or the cost of alternative sources of capital is toohigh.  The fair value of and cash flow fromthese unencumbered properties are in excess of the requirements the OperatingPartnership must maintain in order to comply with covenants under its unsecurednotes and revolving credit facilities. Of t**he$15.3 billion in investment in real estate on the Operating Partnership’sbalance sheet at September 30, 2005, $9.6 billion or 62.8%, wasunencumbered.

** **

The Operating Partnershiphas a revolving credit facility with potential borrowings of up to $1.0 billion.  This facility matures in May 2008 andmay, among other potential uses, be used to fund property acquisitions, costsfor certain properties under development and short term liquidityrequirements.  In addition, the OperatingPartnership closed on a new one-year revolving credit facility expiring on August 29,2006 with potential borrowings of $600.0 million.  As of November 4, 2005, $705.0 million was outstanding under thesefacilities (and $40.5 million was restricted and dedicated to support lettersof credit).

 

34

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**Off-Balance Sheet Arrangements andContractual Obligations**

 

The Operating Partnership has co-invested invarious properties that are unconsolidated and accounted for under the equitymethod of accounting.  Management doesnot believe these investments have a materially different impact upon theOperating Partnership’s liquidity, capital resources, credit or market riskthan its property management and ownership activities.  The nature and business purpose of theseventures are as follows:

 

**•**                  Institutional Ventures – During 2000 and 2001, the OperatingPartnership entered into ventures with an unaffiliated partner.   At the respective closing dates, the OperatingPartnership sold and/or contributed 45 properties containing 10,846 units tothese ventures and retained a 25% ownership interest in the ventures.  The Operating Partnership’s joint venturepartner contributed cash equal to 75% of the agreed-upon equity value of theproperties comprising the ventures, which was then distributed to the OperatingPartnership.  The Operating Partnership’sstrategy with respect to these ventures was to reduce its concentration ofproperties in a variety of markets.

** **

**•**                  Other – As of September 30, 2005, the Operating Partnership hasownership interests in eleven properties containing 1,451 units acquired in aprior merger.  The current weightedaverage ownership percentage is 10.7%. The Operating Partnership’s strategy with respect to these interests iseither to acquire a majority ownership or sell the Operating Partnership’sinterest.

** **

**As of September 30, 2005, the Operating Partnership has five projectstotaling 1,465 units in various stages of development with estimated completiondates ranging through March 31, 2007. The development agreements currently in place are discussed in detail inNote 14 of the Operating Partnership’s Consolidated Financial Statements.**

** **

**See also Notes 2 and 6 in the Notes to Consolidated Financial Statementsfor additional discussion regarding the Operating Partnership’s investments inunconsolidated entities.**

** **

**The Operating Partnership’s guaranty of acredit enhancement agreement with respect to certain tax-exempt bonds issued tofinance certain public improvements at a multifamily development project wasterminated effective May 2, 2005 as the tax-exempt bonds were redeemed infull and the associated letter of credit was cancelled.**

** **

**The Operating Partnership’s contractual obligations for thenext five years and thereafter have not changed materially from the amounts anddisclosures included in its annual report on Form 10-K, other than as itrelates to scheduled debt maturities. See the updated debt maturity schedule included in Liquidity andCapital Resources for further discussion.**

** **

**Critical Accounting Policies and Estimates**

** **

**The Operating Partnership has identified six significantaccounting policies as critical accounting policies.  These critical accounting policies are thosethat have the most impact on the reporting of our financial condition and thoserequiring significant judgments and estimates. With respect to these critical accounting policies, management believesthat the application of judgments and assessments is consistently applied andproduces financial information that fairly presents the results of operations forall periods presented.  The six criticalaccounting policies are:**

 

35

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*Impairment of Long-Lived Assets, Including Goodwill*

* *

TheOperating Partnership periodically evaluates its long-lived assets, includingits investments in real estate and goodwill, for indicators of permanentimpairment.  The judgments regarding theexistence of impairment indicators are based on factors such as operationalperformance, market conditions, expected holding period of each asset and legaland environmental concerns.  Futureevents could occur which would cause the Operating Partnership to conclude thatimpairment indicators exist and an impairment loss is warranted.

 

*Depreciation of Investment in Real Estate*

* *

TheOperating Partnership depreciates the building component of its investment inreal estate over a 30-year estimated useful life, building improvements over a 5-yearto 10-year estimated useful life and both the furniture, fixtures and equipmentand replacements components over a 5-year estimated useful life, all of whichare judgmental determinations.

 

*Cost Capitalization*

 

Seethe *Capitalization of Fixed Assets andImprovements to Real Estate* section for discussion of thepolicy with respect to capitalization vs. expensing of fixed asset/repair andmaintenance costs.  In addition, theOperating Partnership capitalizes the payroll and associated costs of employeesdirectly responsible for and who spend all of their time on the supervision ofmajor capital projects.  These costs arereflected on the balance sheet as an increase to depreciable property.

 

TheOperating Partnership follows the guidance in SFAS No. 67, *Accounting for Costs and Initial Rental Operations ofReal Estate Projects*, for all development projects and uses itsprofessional judgment in determining whether such costs meet the criteria forcapitalization or must be expensed as incurred. The Operating Partnership capitalizes interest, real estate taxes andinsurance and payroll and associated costs for those individuals directlyresponsible for and who spend all of their time on development activities, withcapitalization ceasing no later than 90 days following issuance of thecertificate of occupancy.  These costsare reflected on the balance sheet as construction in progress for eachspecific property.  The OperatingPartnership expenses as incurred all payroll costs of on-site employees workingdirectly at our properties, except as noted above on our development propertiesprior to certificate of occupancy issuance and on specific major renovation atselected properties when additional incremental employees are hired.

 

*Fair Value of Financial Instruments, Including DerivativeInstruments*

* *

Thevaluation of financial instruments under SFAS No. 107 and SFAS No. 133and its amendments (SFAS Nos. 137/138/149) requires the Operating Partnershipto make estimates and judgments that affect the fair value of theinstruments.  The Operating Partnership,where possible, bases the fair values of its financial instruments, includingits derivative instruments, on listed market prices and third party quotes.Where these are not available, the Operating Partnership bases its estimates onother factors relevant to the financial instruments.

 

*Revenue Recognition*

 

Rentalincome attributable to leases is recorded when due from residents and isrecognized monthly as it is earned, which is not materially different than on astraight-line basis.  Leases entered intobetween a resident and a property for the rental of an apartment unit aregenerally year-to-year, renewable upon consent of both parties on an annual ormonthly basis.  Fee and asset managementrevenue and interest income are recorded on an accrual basis.

 

36

----

 

*Stock-Based Compensation*

* *

TheCompany elected to account for its stock-based compensation in accordance withSFAS No. 123 and its amendment (SFAS No. 148), *Accounting for Stock Based Compensation*,effective in the first quarter of 2003, which resulted in compensation expensebeing recorded based on the fair value of the stock compensation granted.

 

TheCompany elected the “Prospective Method” which requires expensing of employeeawards granted or modified after January 1, 2003.  Compensation expense under all of the Company’splans is generally recognized over periods ranging from three months to fiveyears.  See Note 2 in the Notes toConsolidated Financial Statements for further discussion and comparativeinformation regarding application of the fair value method to all outstandingemployee awards.

 

AnyCommon Shares issued pursuant to EQR’s incentive equity compensation andemployee share purchase plans will result in the Operating Partnership issuingOP Units to EQR on a one-for-one basis, with the Operating Partnershipreceiving the net cash proceeds of such issuances.

 

**Funds From Operations**

 

**For the nine months ended September 30,2005, Funds From Operations (“FFO”) available to OP Units increased $100.5million, or 21.0%, as compared to the nine months ended September 30, 2004.**

** **

**For the quarter ended September 30,2005, FFO available to OP Units increased $22.9 million, or 15.0%, as comparedto the quarter ended September 30, 2004.**

** **

The following is areconciliation of net income to FFO available to OP Units for the nine monthsand quarters ended September 30, 2005 and 2004:

 

Funds From Operations(Amounts in thousands)(Unaudited)

 
| ** **                                                         | ** ** | **Nine Months Ended  September 30,** | ** ** | **Quarter Ended  September 30,** | ** ** |
|--------------------------------------------------------------------|------------|-------------------------------------------|------------|---------------------------------------|------------|
| ** **                                                         | ** ** | **2005**                                  | ** ** | **2004**                              | ** ** | **2005** | ** ** | **2004** | ** ** |
| Net income                                                         |       | $                                         | 689,543    |                                  | $          | 359,261 |   | $ | 286,787 |   | $ | 99,168 |   |
| Adjustments:                                                       |       |                                      |       |                                  |       |   |   |   |   |
| Depreciation                                                       |       | 378,123                                   |       | 334,352                               |       | 129,701 |   | 116,170 |   |
| Depreciation –  Non-real estate additions                     |       | (3,928                                    | )          | (4,025                                | )          | (1,243 | ) | (1,308 | ) |
|                                                               |       |                                      |       |                                  |       |   |   |   |   |
| Depreciation –  Partially Owned and Unconsolidated Properties |       | 2,136                                     |       | 2,828                                 |       | 2,774 |   | (880 | ) |
| Net (gain) on  sales of unconsolidated entities                    |       | (124                                      | )          | (4,407                                | )          | — |   | (2 | ) |
| Discontinued  operations:                                          |       |                                      |       |                                  |       |   |   |   |   |
| Depreciation                                                       |       | 13,028                                    |       | 33,530                                |       | 2,182 |   | 9,951 |   |
| Net (gain) on  sales of discontinued operations                    |       | (513,419                                  | )          | (207,653                              | )          | (254,178 | ) | (58,394 | ) |
| Net incremental  gain on sales of condominium units                |       | 56,667                                    |       | 15,669                                |       | 27,631 |   | 7,199 |   |
| Net gain on  sales of land parcels                                 |       | 10,366                                    |       | 5,483                                 |       | — |   | (53 | ) |
|                                                               |       |                                      |       |                                  |       |   |   |   |   |
| FFO (1)(2)                                                         |       | 632,392                                   |       | 535,038                               |       | 193,654 |   | 171,851 |   |
|                                                               |       |                                      |       |                                  |       |   |   |   |   |
| Preferred distributions                                            |       | (45,446                                   | )          | (55,896                               | )          | (14,124 | ) | (18,403 | ) |
| Premium on redemption of Preference Units                          |       | (4,316                                    | )          | —                                |       | (4,316 | ) | — |   |
| Premium on redemption of Preference Interests                      |       | (4,134                                    | )          | (1,117                                | )          | (22 | ) | (1,117 | ) |
| FFO available to OP Units                                          |       | $                                         | 578,496    |                                  | $          | 478,025 |   | $ | 175,192 |   | $ | 152,331 |   |

 

37

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| ***(1)***  | ***The National Association of Real  Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”)  (April 2002 White Paper) as net income (computed in accordance with  accounting principles generally accepted in the United States (“GAAP”)),  excluding gains (or losses) from sales of depreciable property, plus  depreciation and amortization, and after adjustments for unconsolidated  partnerships and joint ventures. Adjustments for unconsolidated partnerships  and joint ventures will be calculated to reflect funds from operations on the  same basis. The April 2002 White Paper states that gain or loss on sales  of property is excluded from FFO for previously depreciated operating  properties only. Once the Operating Partnership commences the conversion of  units to condominiums, it simultaneously discontinues depreciation of such  property.***                                                                                                                                                                                                                                                                                   |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ***(2)***  | ***The Operating Partnership believes  that FFO is helpful to investors as a supplemental measure of the operating  performance of a real estate company, because it is a recognized measure of  performance by the real estate industry and by excluding gains or losses  related to dispositions of depreciable property and excluding real estate  depreciation (which can vary among owners of identical assets in similar  condition based on historical cost accounting and useful life estimates), FFO  can help compare the operating performance of a company’s real estate between  periods or as compared to different companies. FFO in and of itself does not  represent net income or net cash flows from operating activities in  accordance with GAAP. Therefore, FFO should not be exclusively considered as  an alternative to net income or to net cash flows from operating activities  in accordance with GAAP. The Operating Partnership’s calculation of FFO 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.*** |

 

**Item 3. Quantitative andQualitative Disclosures About Market Risk**

** **

**The Operating Partnership’s market risk has not changed materially fromthe amounts and information reported in Item 7A, *Quantitative and Qualitative Disclosures About Market Risk*,to the Operating Partnership’s Form 10-K for the year ended December 31,2004.  See also Note 11 in the Notes toConsolidated Financial Statements for additional discussion of derivativeinstruments.**

** **

**Item 4. Controls and Procedures**

** **

**Effective as of September 30, 2005, the OperatingPartnership carried out an evaluation, under the supervision and with theparticipation of the Operating Partnership’s management, including the ChiefExecutive Officer and Chief Financial Officer of EQR, of the effectiveness ofthe Operating Partnership’s disclosure controls and procedures pursuant toExchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and ChiefFinancial Officer concluded that the disclosure controls and procedures areeffective in timely alerting them to material information.  During the fiscal quarter ended September 30,2005, there were no changes to the internal controls over financial reportingof the Operating Partnership identified in connection with the OperatingPartnership’s evaluation or otherwise that has materially affected, or isreasonably likely to materially affect, the Operating Partnership’s internalcontrols over financial reporting.**

** **

**PART II.    OTHERINFORMATION**

** **

**Item 1.  LegalProceedings**

** **

In August 2004, the Operating Partnership tried aclass action lawsuit in Palm Beach County, Florida regarding certain chargesmade to residents who terminated their leases early or failed to providesufficient notice of intent to vacate. In December 2004, the Court issued a Findings of Fact andConclusions of Law holding those fees legally uncollectible under Floridalaw.  In recognition of the Findings ofFact and Conclusions of Law, which awarded damages and interest to the class inthe amount of approximately $1.6 million, the Operating Partnership establisheda reserve of approximately $1.6 million and correspondingly

 

38

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recorded this as a general and administrative expense in December 2004.  Due to a pending appeal, the award is neitherfinal nor enforceable.  Accordingly, itis not possible to determine or predict the ultimate outcome of the case.  While no assurances can be given, the OperatingPartnership does not believe that this lawsuit, if the ultimate outcome isunfavorable, will have a material adverse effect on the Operating Partnership.

 

**There have been no new or significantdevelopments related to the legal proceedings that were discussed in Part I,Item III of the Operating Partnership’s Form 10-K for the year ended December 31,2004.**

** **

**Item 2.  Unregistered Sales of Equity Securities andUse of Proceeds**

** **

***OP Units Issued in the Quarter Ended September 30,2005***

*** ***

**The Operating Partnership issued 26,080OP Units having a value of $1.0 million during the third quarter of 2005.**

** **

**These OP Units were issued in exchangefor direct or indirect interests in multifamily properties in private placementtransactions under section 4(2) of the Securities Act of 1933, asamended (the “Securities Act”).  OP Unitsare generally exchangeable into Common Shares of EQR on a one-for-one basis or,at the option of EQR and the Operating Partnership, the cash equivalent thereofat any time one year after the date of issuance.**

** **

**Item 6.    Exhibits**

** **
| **10.1***  | **Revolving Credit Agreement dated as of August 30,  2005 among ERP Operating Limited Partnership, Bank of America, N.A., as  administrative agent and a bank, Deutsche Bank Trust Company Americas, as  syndication agent and a bank, Merrill Lynch, Pierce, Fenner & Smith  Incorporated, as documentation agent, and Merrill Lynch Bank USA, as a bank  (the “Credit Agreement”).** |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                     |
| **10.2***  | **Guaranty of Payment made as of August 30, 2005  between Equity Residential and Bank of America, N.A., as administrative agent  for the banks party to the Credit Agreement.**                                                                                                                                                                                                                           |
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                     |
| **10.3**** | **Summary of Changes to Equity Residential’s Trustee  Compensation.**                                                                                                                                                                                                                                                                                                                                     |
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                     |
| **31.1**   | **Certification of Bruce W. Duncan, Chief Executive Officer  of Registrant’s General Partner.**                                                                                                                                                                                                                                                                                                           |
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                     |
| **31.2**   | **Certification of Donna Brandin, Chief Financial Officer  of Registrant’s General Partner.**                                                                                                                                                                                                                                                                                                             |
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                     |
| **32.1**   | **Certification pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of  Bruce W. Duncan, Chief Executive Officer of Registrant’s General Partner.**                                                                                                                                                                                      |
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                     |
| **32.2**   | **Certification pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of  Donna Brandin, Chief Financial Officer of Registrant’s General Partner.**                                                                                                                                                                                        |
| ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                     |

 

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| *****      | **Included as an exhibit to the Operating Partnership’s Form 8-K  dated August 30, 2005, filed on September 2, 2005.**     |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** **                                                                                                                                     |
| ******     | **Included as an exhibit to the Operating Partnership’s Form 8-K  dated September 21, 2005, filed on September 27, 2005.** |

** **

**39**

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** **

**SIGNATURES**

** **

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed on behalf by theundersigned thereunto duly authorized.

 
|   |                  |   | ERP OPERATING LIMITED PARTNERSHIP |
|--------|-----------------------|--------|-----------------------------------|
|   |                  |   | BY: EQUITY RESIDENTIAL            |
|   |                  |   |                              | ITS GENERAL PARTNER |   |
|   |                  |   |                              |   |
| Date:  | November 7, 2005 |   | By:                               | /s/ |  Donna Brandin |   |
|   |                  |   |                              | Donna Brandin |   |
|   |                  |   |                              | Executive  Vice President and |
|   |                  |   |                              | Chief  Financial Officer |
|   |                  |   |                              |   |
| Date:  | November 7, 2005 |   | By:                               | /s/ | Mark L. Wetzel |   |
|   |                  |   |                              | Mark L. Wetzel |   |
|   |                  |   |                              |  Senior Vice President and |
|   |                  |   |                              |  Chief Accounting Officer |
|        |                       |        |                                   |  |  |  |  |

 

40

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##### **EXHIBIT INDEX**

##### ** **

| **Exhibit** | ** ** | **Document**                                                                                                                                                                                                              |
|-------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |       |                                                                                                                                                                                                                      |
| **31.1**    | ** ** | **Certification of Bruce W. Duncan, Chief Executive Officer  of Registrant’s General Partner.**                                                                                                                      |
| ** **  | ** ** | ** **                                                                                                                                                                                                                |
| **31.2**    | ** ** | **Certification of Donna Brandin, Chief Financial Officer  of Registrant’s General Partner.**                                                                                                                        |
| ** **  | ** ** | ** **                                                                                                                                                                                                                |
| **32.1**    | ** ** | **Certification pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of  Bruce W. Duncan, Chief Executive Officer of Registrant’s General Partner.** |
| ** **  | ** ** | ** **                                                                                                                                                                                                                |
| **32.2**    | ** ** | **Certification pursuant to 18 U.S.C. Section 1350, as  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of  Donna Brandin, Chief Financial Officer of Registrant’s General Partner.**   |

 

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