##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended MARCH 31, 2011
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ________________ to ________________
 Commission File Number: 0-24920
 ERP OPERATING LIMITED PARTNERSHIP
  Illinois
    
    36-3894853(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)
 Two North Riverside Plaza, Chicago, Illinois
(Address of Principal Executive Offices)
    
    60606
(Zip Code)
 (312) 474-1300
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



ERP OPERATING LIMITED PARTNERSHIP
 TABLE OF CONTENTS
 PAGEPART I.Item 1. Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010
    
    2Consolidated Statements of Operations for the quarters ended
March 31, 2011 and 2010
    
    3 to 4Consolidated Statements of Cash Flows for the quarters ended
March 31, 2011 and 2010
    
    5 to 7Consolidated Statement of Changes in Capital for the quarter ended
March 31, 2011
    
    8 to 9Notes to Consolidated Financial Statements
    
    10 to 27Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    28 to 44Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    44Item 4. Controls and Procedures
    
    44PART II.Item 1. Legal Proceedings
    
    45Item 1A. Risk Factors
    
    45Item 6. Exhibits
    
    45EX-31.1EX-31.2EX-32.1EX-32.2




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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
 March 31,
    
    
    December 31,2011
    
    
    2010ASSETSInvestment in real estateLand
    
    $
    4,107,769
    
    
    $
    4,110,275Depreciable property
    
    
    15,279,033
    
    
    
    15,226,512Projects under development
    
    
    97,151
    
    
    
    130,337Land held for development
    
    
    211,968
    
    
    
    235,247Investment in real estate
    
    
    19,695,921
    
    
    
    19,702,371Accumulated depreciation
    
    
    (4,424,078
    )
    
    
    (4,337,357
    )Investment in real estate, net
    
    
    15,271,843
    
    
    
    15,365,014Cash and cash equivalents
    
    
    306,072
    
    
    
    431,408Investments in unconsolidated entities
    
    
    3,533
    
    
    
    3,167Deposits  restricted
    
    
    309,605
    
    
    
    180,987Escrow deposits  mortgage
    
    
    12,087
    
    
    
    12,593Deferred financing costs, net
    
    
    39,182
    
    
    
    42,033Other assets
    
    
    133,007
    
    
    
    148,992Total assets
    
    $
    16,075,329
    
    
    $
    16,184,194LIABILITIES AND CAPITALLiabilities:Mortgage notes payable
    
    $
    4,583,545
    
    
    $
    4,762,896Notes, net
    
    
    5,092,967
    
    
    
    5,185,180Lines of credit
    
    
    
    
    
    
    Accounts payable and accrued expenses
    
    
    80,385
    
    
    
    39,452Accrued interest payable
    
    
    71,972
    
    
    
    98,631Other liabilities
    
    
    260,873
    
    
    
    304,202Security deposits
    
    
    60,784
    
    
    
    60,812Distributions payable
    
    
    106,020
    
    
    
    140,905Total liabilities
    
    
    10,256,546
    
    
    
    10,592,078Commitments and contingenciesRedeemable Limited Partners
    
    
    416,334
    
    
    
    383,540Capital:Partners Capital:Preference Units
    
    
    200,000
    
    
    
    200,000General Partner
    
    
    5,129,472
    
    
    
    4,948,004Limited Partners
    
    
    115,924
    
    
    
    110,399Accumulated other comprehensive (loss)
    
    
    (50,634
    )
    
    
    (57,818
    )Total partners capital
    
    
    5,394,762
    
    
    
    5,200,585Noncontrolling Interests  Partially Owned Properties
    
    
    7,687
    
    
    
    7,991Total capital
    
    
    5,402,449
    
    
    
    5,208,576Total liabilities and capital
    
    $
    16,075,329
    
    
    $
    16,184,194
  2




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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except per Unit data)
(Unaudited)
 Quarter Ended March 31,2011
    
    
    2010REVENUESRental income
    
    $
    518,817
    
    
    $
    462,577Fee and asset management
    
    
    1,806
    
    
    
    2,422Total revenues
    
    
    520,623
    
    
    
    464,999EXPENSESProperty and maintenance
    
    
    128,357
    
    
    
    120,203Real estate taxes and insurance
    
    
    56,024
    
    
    
    55,575Property management
    
    
    22,381
    
    
    
    20,492Fee and asset management
    
    
    948
    
    
    
    1,958Depreciation
    
    
    167,968
    
    
    
    146,042General and administrative
    
    
    11,435
    
    
    
    10,721Total expenses
    
    
    387,113
    
    
    
    354,991Operating income
    
    
    133,510
    
    
    
    110,008Interest and other income
    
    
    972
    
    
    
    2,220Other expenses
    
    
    (2,164
    )
    
    
    (4,383
    )Interest:Expense incurred, net
    
    
    (121,376
    )
    
    
    (114,111
    )Amortization of deferred financing costs
    
    
    (3,023
    )
    
    
    (2,996
    )Income (loss) before income and other taxes, (loss) from investments
in unconsolidated entities, net gain on sales of unconsolidated
entities and discontinued operations
    
    
    7,919
    
    
    
    (9,262
    )Income and other tax (expense) benefit
    
    
    (192
    )
    
    
    (159
    )(Loss) from investments in unconsolidated entities
    
    
    
    
    
    
    (464
    )Net gain on sales of unconsolidated entities
    
    
    
    
    
    
    478Income (loss) from continuing operations
    
    
    7,727
    
    
    
    (9,407
    )Discontinued operations, net
    
    
    125,339
    
    
    
    67,263Net income
    
    
    133,066
    
    
    
    57,856Net loss attributable to Noncontrolling Interests 
Partially Owned Properties
    
    
    40
    
    
    
    250Net income attributable to controlling interests
    
    $
    133,106
    
    
    $
    58,106ALLOCATION OF NET INCOME:Preference Units
    
    $
    3,466
    
    
    $
    3,620General Partner
    
    $
    123,865
    
    
    $
    51,863Limited Partners
    
    
    5,775
    
    
    
    2,623Net income available to Units
    
    $
    129,640
    
    
    $
    54,486Earnings per Unit  basic:Income (loss) from continuing operations available to Units
    
    $
    0.01
    
    
    $
    (0.04
    )Net income available to Units
    
    $
    0.42
    
    
    $
    0.18Weighted average Units outstanding
    
    
    306,248
    
    
    
    294,450Earnings per Unit  diluted:Income (loss) from continuing operations available to Units
    
    $
    0.01
    
    
    $
    (0.04
    )Net income available to Units
    
    $
    0.42
    
    
    $
    0.18Weighted average Units outstanding
    
    
    310,467
    
    
    
    294,450Distributions declared per Unit outstanding
    
    $
    0.3375
    
    
    $
    0.3375
  3




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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(Amounts in thousands except per Unit data)
(Unaudited)
 Quarter Ended March 31,2011
    
    
    2010Comprehensive income:Net income
    
    $
    133,066
    
    
    $
    57,856Other comprehensive income (loss)  derivative instruments:Unrealized holding gains (losses) arising during the period
    
    
    6,082
    
    
    
    (13,503
    )Losses reclassified into earnings from other comprehensive income
    
    
    956
    
    
    
    726Other comprehensive income (loss)  other instruments:Unrealized holding gains (losses) arising during the period
    
    
    146
    
    
    
    (159
    )Comprehensive income
    
    
    140,250
    
    
    
    44,920Comprehensive loss attributable to Noncontrolling Interests 
Partially Owned Properties
    
    
    40
    
    
    
    250Comprehensive income attributable to controlling interests
    
    $
    140,290
    
    
    $
    45,170
  4




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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
 Quarter Ended March 31,2011
    
    
    2010CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    133,066
    
    
    $
    57,856Adjustments to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    169,363
    
    
    
    152,734Amortization of deferred financing costs
    
    
    3,074
    
    
    
    3,197Amortization of discounts and premiums on debt
    
    
    373
    
    
    
    565Amortization of deferred settlements on derivative instruments
    
    
    822
    
    
    
    593Write-off of pursuit costs
    
    
    1,683
    
    
    
    1,046Loss from investments in unconsolidated entities
    
    
    
    
    
    
    464Distributions from unconsolidated entities  return on capital
    
    
    41
    
    
    
    61Net (gain) on sales of unconsolidated entities
    
    
    
    
    
    
    (478
    )Net (gain) on sales of discontinued operations
    
    
    (123,754
    )
    
    
    (60,036
    )Unrealized loss on derivative instruments
    
    
    
    
    
    
    1Compensation paid with Company Common Shares
    
    
    6,524
    
    
    
    5,757Changes in assets and liabilities:Decrease (increase) in deposits  restricted
    
    
    1,557
    
    
    
    (1,000
    )Decrease in other assets
    
    
    5,771
    
    
    
    1,798Increase in accounts payable and accrued expenses
    
    
    44,531
    
    
    
    39,148(Decrease) in accrued interest payable
    
    
    (26,659
    )
    
    
    (32,954
    )(Decrease) in other liabilities
    
    
    (28,836
    )
    
    
    (20,005
    )(Decrease) increase in security deposits
    
    
    (28
    )
    
    
    3,373Net cash provided by operating activities
    
    
    187,528
    
    
    
    152,120CASH FLOWS FROM INVESTING ACTIVITIES:Investment in real estate  acquisitions
    
    
    (123,868
    )
    
    
    (498,272
    )Investment in real estate  development/other
    
    
    (29,840
    )
    
    
    (31,347
    )Improvements to real estate
    
    
    (29,891
    )
    
    
    (25,691
    )Additions to non-real estate property
    
    
    (2,677
    )
    
    
    (353
    )Interest capitalized for real estate and unconsolidated entities under development
    
    
    (1,700
    )
    
    
    (4,365
    )Proceeds from disposition of real estate, net
    
    
    258,212
    
    
    
    105,071Investments in unconsolidated entities
    
    
    (366
    )
    
    
    Distributions from unconsolidated entities  return of capital
    
    
    
    
    
    
    1,303(Increase) decrease in deposits on real estate acquisitions, net
    
    
    (107,878
    )
    
    
    182,203Decrease (increase) in mortgage deposits
    
    
    506
    
    
    
    (3,383
    )Acquisition of Noncontrolling Interests  Partially Owned Properties
    
    
    (504
    )
    
    
    Net cash (used for) investing activities
    
    
    (38,006
    )
    
    
    (274,834
    )
  5




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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
(Unaudited
 Quarter Ended March 31,2011
    
    
    2010CASH FLOWS FROM FINANCING ACTIVITIES:Loan and bond acquisition costs
    
    $
    (223
    )
    
    $
    (1,435
    )Mortgage notes payable:Proceeds
    
    
    707
    
    
    
    55,664Restricted cash
    
    
    (22,297
    )
    
    
    7,427Lump sum payoffs
    
    
    (200,733
    )
    
    
    (149,409
    )Scheduled principal repayments
    
    
    (4,223
    )
    
    
    (4,059
    )Notes, net:Lump sum payoffs
    
    
    (93,096
    )
    
    
    Lines of credit:Proceeds
    
    
    
    
    
    
    1,469,125Repayments
    
    
    
    
    
    
    (1,378,125
    )Proceeds from sale of OP Units
    
    
    154,508
    
    
    
    73,356Proceeds from EQRs Employee Share Purchase Plan (ESPP)
    
    
    2,742
    
    
    
    2,478Proceeds from exercise of EQR options
    
    
    32,719
    
    
    
    19,215OP Units repurchased and retired
    
    
    
    
    
    
    (1,887
    )Payment of offering costs
    
    
    (2,352
    )
    
    
    (604
    )Contributions  Noncontrolling Interests  Partially Owned Properties
    
    
    
    
    
    
    222Distributions:OP Units  General Partner
    
    
    (132,655
    )
    
    
    (93,317
    )Preference Units
    
    
    (3,466
    )
    
    
    (3,620
    )OP Units  Limited Partners
    
    
    (6,225
    )
    
    
    (4,794
    )Noncontrolling Interests  Partially Owned Properties
    
    
    (264
    )
    
    
    (625
    )Net cash (used for) financing activities
    
    
    (274,858
    )
    
    
    (10,388
    )Net (decrease) in cash and cash equivalents
    
    
    (125,336
    )
    
    
    (133,102
    )Cash and cash equivalents, beginning of period
    
    
    431,408
    
    
    
    193,288Cash and cash equivalents, end of period
    
    $
    306,072
    
    
    $
    60,186
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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Amounts in thousands)
(Unaudited)
 Quarter Ended March 31,2011
    
    
    2010SUPPLEMENTAL INFORMATION:Cash paid for interest, net of amounts capitalized
    
    $
    146,514
    
    
    $
    144,902Net cash paid (received) for income and other taxes
    
    $
    341
    
    
    $
    (1,850
    )Real estate acquisitions/dispositions/other:Mortgage loans assumed
    
    $
    26,900
    
    
    $
    145,660Valuation of OP Units issued
    
    $
    
    
    
    $
    7,383Mortgage loans (assumed) by purchaser
    
    $
    
    
    
    $
    (39,999
    )Amortization of deferred financing costs:Investment in real estate, net
    
    $
    
    
    
    $
    (600
    )Deferred financing costs, net
    
    $
    3,074
    
    
    $
    3,797Amortization of discounts and premiums on debt:Mortgage notes payable
    
    $
    (1,858
    )
    
    $
    (1,563
    )Notes, net
    
    $
    2,231
    
    
    $
    2,128Amortization of deferred settlements on derivative instruments:Other liabilities
    
    $
    (134
    )
    
    $
    (133
    )Accumulated other comprehensive income
    
    $
    956
    
    
    $
    726Unrealized loss on derivative instruments:Other assets
    
    $
    810
    
    
    $
    7,579Mortgage notes payable
    
    $
    (144
    )
    
    $
    16Notes, net
    
    $
    (1,348
    )
    
    $
    2,725Other liabilities
    
    $
    (5,400
    )
    
    $
    3,184Accumulated other comprehensive income (loss)
    
    $
    6,082
    
    
    $
    (13,503
    )Interest capitalized for real estate and unconsolidated entities under developmentInvestment in real estate, net
    
    $
    (1,659
    )
    
    $
    (4,365
    )Investments in unconsolidated entities
    
    $
    (41
    )
    
    $
    OtherReceivable on sale of OP Units
    
    $
    
    
    
    $
    37,550Transfer from notes, net to mortgage notes payable
    
    $
    
    
    
    $
    35,600
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ERP OPERATING LIMITED PARTNERSHIP



CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL
(Amounts in thousands)
(Unaudited)
 Quarter EndedMarch 31, 2011PARTNERS CAPITALPREFERENCE UNITSBalance, beginning of year
    
    $
    200,000Balance, end of period
    
    $
    200,000GENERAL PARTNERBalance, beginning of year
    
    $
    4,948,004OP Unit Issuance:Conversion of OP Units held by Limited Partners into OP Units
held by General Partner
    
    
    737Issuance of OP Units
    
    
    154,508Exercise of EQR share options
    
    
    32,719EQRs Employee Share Purchase Plan (ESPP)
    
    
    2,742Conversion of EQR restricted shares to LTIP Units
    
    
    (3,934
    )Share-based employee compensation expense:EQR restricted shares
    
    
    2,711EQR share options
    
    
    2,751EQR ESPP discount
    
    
    689Offering costs
    
    
    (2,352
    )Net income available to Units  General Partner
    
    
    123,865OP Units  General Partner distributions
    
    
    (99,354
    )Supplemental Executive Retirement Plan (SERP)
    
    
    (108
    )Acquisition of Noncontrolling Interests  Partially Owned Properties
    
    
    (504
    )Change in market value of Redeemable Limited Partners
    
    
    (29,294
    )Adjustment for Limited Partners ownership in Operating Partnership
    
    
    (3,708
    )Balance, end of period
    
    $
    5,129,472LIMITED PARTNERSBalance, beginning of year
    
    $
    110,399Conversion of OP Units held by Limited Partners into OP Units
held by General Partner
    
    
    (737
    )Conversion of EQR restricted shares to LTIP Units
    
    
    3,934Equity compensation associated with Units  Limited Partners
    
    
    986Net income available to Units  Limited Partners
    
    
    5,775Units  Limited Partners distributions
    
    
    (4,641
    )Change in carrying value of Redeemable Limited Partners
    
    
    (3,500
    )Adjustment for Limited Partners ownership in Operating Partnership
    
    
    3,708Balance, end of period
    
    $
    115,924ACCUMULATED OTHER COMPREHENSIVE (LOSS)Balance, beginning of year
    
    $
    (57,818
    )Accumulated other comprehensive income  derivative instruments:Unrealized holding gains arising during the period
    
    
    6,082Losses reclassified into earnings from other comprehensive income
    
    
    956Accumulated other comprehensive income  other instruments:Unrealized holding gains arising during the period
    
    
    146Balance, end of period
    
    $
    (50,634
    )
  8




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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL (Continued)
(Amounts in thousands)
(Unaudited)
 Quarter EndedMarch 31, 2011NONCONTROLLING INTERESTSNONCONTROLLING INTERESTS  PARTIALLY OWNED PROPERTIESBalance, beginning of year
    
    $
    7,991Net (loss) attributable to Noncontrolling Interests
    
    
    (40
    )Distributions to Noncontrolling Interests
    
    
    (264
    )Balance, end of period
    
    $
    7,687
  9




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ERP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 1.
    
    Business
    Properties
    
    
    Apartment UnitsWholly Owned Properties
    
    
    417
    
    
    
    118,078Partially Owned Properties  Consolidated
    
    
    23
    
    
    
    4,828Military Housing
    
    
    2
    
    
    
    4,805442
    
    
    
    127,711
 2. Summary of Significant Accounting Policies
 Basis of Presentation
     Income and Other Taxes
  10




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Other
      11




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3. Capital and Redeemable Limited Partners
  2011General and Limited Partner UnitsGeneral and Limited Partner Units outstanding at January 1,
    
    
    303,809,279Issued to General Partner:Issuance of OP Units
    
    
    3,038,980Exercise of EQR share options
    
    
    1,146,933Employee Share Purchase Plan (ESPP)
    
    
    62,266EQR restricted share grants, net
    
    
    154,939Issued to Limited Partners:LTIP Units, net
    
    
    58,942General and Limited Partner Units outstanding at March 31,
    
    
    308,271,339Limited Partner UnitsLimited Partner Units outstanding at January 1,
    
    
    13,612,037Limited Partner LTIP Units, net
    
    
    58,942Conversion of EQR restricted shares to LTIP Units
    
    
    101,988Conversion of Limited Partner OP Units to EQR Common Shares
    
    
    (23,901
    )Limited Partner Units outstanding at March 31,
    
    
    13,749,066Limited Partner Units Ownership Interest in Operating Partnership
    
    
    4.5
    %
  12




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2011Balance at January 1,
    
    $
    383,540Change in market value
    
    
    29,294Change in carrying value
    
    
    3,500Balance at March 31,
    
    $
    416,334
   13




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Amounts in thousandsAnnualRedemption
    
    
    Dividend per
    
    
    March 31,
    
    
    December 31,Date (1)
    
    
    Unit (2)
    
    
    2011
    
    
    2010Preference Units:8.29% Series K
Cumulative
Redeemable
Preference Units;
liquidation value $50 per unit;
1,000,000 units
issued and
outstanding at
March 31, 2011 and
December 31, 2010
    
    
    12/10/26
    
    
    $
    4.145
    
    
    $
    50,000
    
    
    $
    50,0006.48% Series N
Cumulative
Redeemable
Preference Units;
liquidation value $250 per unit;
600,000 units
issued and
outstanding at
March 31, 2011 and
December 31, 2010
(3)
    
    
    6/19/08
    
    
    $
    16.20
    
    
    
    150,000
    
    
    
    150,000$
    200,000
    
    
    $
    200,000
 
 (1)
    
    On or after the redemption date, redeemable preference units (Series K and N) may be
redeemed for cash at the option of the Operating Partnership, in whole or in part, at a
redemption price equal to the liquidation price per unit, plus accrued and unpaid
distributions, if any, in conjunction with the concurrent redemption of the corresponding EQR
Preferred Shares.(2)
    
    Dividends on all series of Preference Units are payable quarterly at various pay dates. The
dividend listed for Series N is a Preference Unit rate and the equivalent depositary unit
annual dividend is $1.62 per unit.(3)
    
    The Series N Preference Units have a corresponding depositary unit that consists of ten times
the number of units and one-tenth the liquidation value and dividend per unit. 4. Real Estate
  March 31,
    
    
    December 31,2011
    
    
    2010Land
    
    $
    4,107,769
    
    
    $
    4,110,275Depreciable property:Buildings and improvements
    
    
    14,042,212
    
    
    
    13,995,121Furniture, fixtures and equipment
    
    
    1,236,821
    
    
    
    1,231,391Projects under development:Land
    
    
    27,505
    
    
    
    28,260Construction-in-progress
    
    
    69,646
    
    
    
    102,077Land held for development:Land
    
    
    183,674
    
    
    
    198,465Construction-in-progress
    
    
    28,294
    
    
    
    36,782Investment in real estate
    
    
    19,695,921
    
    
    
    19,702,371Accumulated depreciation
    
    
    (4,424,078
    )
    
    
    (4,337,357
    )Investment in real estate, net
    
    $
    15,271,843
    
    
    $
    15,365,014
  Properties
    
    
    Apartment Units
    
    
    Purchase PriceRental Properties
    
    
    2
    
    
    
    521
    
    
    $
    139,018Other (1)
    
    
    
    
    
    
    
    
    
    
    11,750Total
    
    
    2
    
    
    
    521
    
    
    $
    150,768
 
 (1)
    
    Represents the acquisition of a 97,000 square foot commercial building adjacent to our
Harbor Steps apartment property in downtown Seattle for potential redevelopment.  14




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##### Table of Contents



Properties
    
    
    Apartment Units
    
    
    Sales PriceRental Properties  Consolidated
    
    
    12
    
    
    
    2,731
    
    
    $
    261,771Total
    
    
    12
    
    
    
    2,731
    
    
    $
    261,771
  5. Commitments to Acquire/Dispose of Real Estate
  Properties
    
    
    Apartment Units
    
    
    Purchase PriceRental Properties
    
    
    3
    
    
    
    975
    
    
    $
    255,250Land Parcels (one)
    
    
    
    
    
    
    
    
    
    
    12,000Total
    
    
    3
    
    
    
    975
    
    
    $
    267,250
  Properties
    
    
    Apartment Units
    
    
    Sales PriceRental Properties
    
    
    7
    
    
    
    2,797
    
    
    $
    240,880Total
    
    
    7
    
    
    
    2,797
    
    
    $
    240,880
  6. Investments in Partially Owned Entities
  15




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##### Table of Contents



ConsolidatedDevelopment Projects (VIEs)Held for
    
    
    Completed,
    
    
    Completedand/or Under
    
    
    Not
    
    
    andDevelopment
    
    
    Stabilized (4)
    
    
    Stabilized
    
    
    Other
    
    
    TotalTotal projects (1)
    
    
    
    
    
    
    1
    
    
    
    3
    
    
    
    19
    
    
    
    23Total apartment units (1)
    
    
    
    
    
    
    490
    
    
    
    898
    
    
    
    3,440
    
    
    
    4,828Balance sheet information
at 3/31/11 (at 100%):ASSETSInvestment in real estate
    
    $
    44,103
    
    
    $
    257,480
    
    
    $
    263,567
    
    
    $
    439,481
    
    
    $
    1,004,631Accumulated depreciation
    
    
    
    
    
    
    (1,896
    )
    
    
    (17,162
    )
    
    
    (128,088
    )
    
    
    (147,146
    )Investment in real estate, net
    
    
    44,103
    
    
    
    255,584
    
    
    
    246,405
    
    
    
    311,393
    
    
    
    857,485Cash and cash equivalents
    
    
    536
    
    
    
    650
    
    
    
    2,454
    
    
    
    7,744
    
    
    
    11,384Deposits  restricted
    
    
    1,120
    
    
    
    1,189
    
    
    
    2,507
    
    
    
    8
    
    
    
    4,824Escrow deposits  mortgage
    
    
    
    
    
    
    
    
    
    
    163
    
    
    
    1,470
    
    
    
    1,633Deferred financing costs, net
    
    
    
    
    
    
    2,206
    
    
    
    254
    
    
    
    403
    
    
    
    2,863Other assets
    
    
    78
    
    
    
    117
    
    
    
    181
    
    
    
    258
    
    
    
    634Total assets
    
    $
    45,837
    
    
    $
    259,746
    
    
    $
    251,964
    
    
    $
    321,276
    
    
    $
    878,823LIABILITIES AND CAPITALMortgage notes payable
    
    $
    18,342
    
    
    $
    142,448
    
    
    $
    200,765
    
    
    $
    215,631
    
    
    $
    577,186Accounts payable & accrued expenses
    
    
    617
    
    
    
    1,157
    
    
    
    911
    
    
    
    2,371
    
    
    
    5,056Accrued interest payable
    
    
    1,528
    
    
    
    528
    
    
    
    465
    
    
    
    1,109
    
    
    
    3,630Other liabilities
    
    
    1,280
    
    
    
    870
    
    
    
    273
    
    
    
    795
    
    
    
    3,218Security deposits
    
    
    
    
    
    
    1,173
    
    
    
    249
    
    
    
    1,382
    
    
    
    2,804Total liabilities
    
    
    21,767
    
    
    
    146,176
    
    
    
    202,663
    
    
    
    221,288
    
    
    
    591,894Noncontrolling Interests  Partially Owned Properties
    
    
    3,418
    
    
    
    5,025
    
    
    
    4,078
    
    
    
    (4,834
    )
    
    
    7,687Accumulated other comprehensive (loss)
    
    
    
    
    
    
    (495
    )
    
    
    
    
    
    
    
    
    
    
    (495
    )General and Limited Partners Capital
    
    
    20,652
    
    
    
    109,040
    
    
    
    45,223
    
    
    
    104,822
    
    
    
    279,737Total capital
    
    
    24,070
    
    
    
    113,570
    
    
    
    49,301
    
    
    
    99,988
    
    
    
    286,929Total liabilities and capital
    
    $
    45,837
    
    
    $
    259,746
    
    
    $
    251,964
    
    
    $
    321,276
    
    
    $
    878,823Debt  Secured (2):EQR Ownership (3)
    
    $
    18,342
    
    
    $
    142,448
    
    
    $
    200,765
    
    
    $
    162,912
    
    
    $
    524,467Noncontrolling Ownership
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,719
    
    
    
    52,719Total (at 100%)
    
    $
    18,342
    
    
    $
    142,448
    
    
    $
    200,765
    
    
    $
    215,631
    
    
    $
    577,186
 16




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##### Table of Contents



ConsolidatedDevelopment Projects (VIEs)Held for
    
    
    Completed,and/or Under
    
    
    Not
    
    
    CompletedDevelopment
    
    
    Stabilized (4)
    
    
    and Stabilized
    
    
    Other
    
    
    TotalOperating information for the quarter
ended 3/31/11 (at 100%):Operating revenue
    
    $
    
    
    
    $
    2,992
    
    
    $
    4,680
    
    
    $
    13,949
    
    
    $
    21,621Operating expenses
    
    
    161
    
    
    
    1,093
    
    
    
    1,507
    
    
    
    4,733
    
    
    
    7,494Net operating (loss) income
    
    
    (161
    )
    
    
    1,899
    
    
    
    3,173
    
    
    
    9,216
    
    
    
    14,127Depreciation
    
    
    
    
    
    
    1,897
    
    
    
    2,189
    
    
    
    3,741
    
    
    
    7,827General and administrative/other
    
    
    19
    
    
    
    2
    
    
    
    9
    
    
    
    11
    
    
    
    41Operating (loss) income
    
    
    (180
    )
    
    
    
    
    
    
    975
    
    
    
    5,464
    
    
    
    6,259Interest and other income
    
    
    4
    
    
    
    
    
    
    
    2
    
    
    
    5
    
    
    
    11Other expenses
    
    
    (124
    )
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    (141
    )Interest:Expense incurred, net
    
    
    (234
    )
    
    
    (1,528
    )
    
    
    (1,389
    )
    
    
    (3,882
    )
    
    
    (7,033
    )Amortization of deferred financing costs
    
    
    
    
    
    
    (601
    )
    
    
    (139
    )
    
    
    (102
    )
    
    
    (842
    )(Loss) income before income and other taxes
and discontinued operations
    
    
    (534
    )
    
    
    (2,129
    )
    
    
    (551
    )
    
    
    1,468
    
    
    
    (1,746
    )Income and other tax (expense) benefit
    
    
    (45
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (47
    )Net gain on sales of discontinued operations
    
    
    169
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    169Net (loss) income
    
    $
    (410
    )
    
    $
    (2,129
    )
    
    $
    (551
    )
    
    $
    1,466
    
    
    $
    (1,624
    )
 
 (1)
    
    Project and apartment unit counts exclude all uncompleted development projects until
those projects are substantially completed.(2)
    
    All debt is non-recourse to the Operating Partnership with the exception of
$14.0 million in mortgage debt on one development project.(3)
    
    Represents the Operating Partnerships current economic ownership interest.(4)
    
    Projects included here are substantially complete. However, they may still
require additional exterior and interior work for all apartment units to be available
for leasing.   7. Deposits  Restricted
  17




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##### Table of Contents



March 31,
    
    
    December 31,2011
    
    
    2010Taxdeferred (1031) exchange proceeds
    
    $
    212,779
    
    
    $
    103,887Earnest money on pending acquisitions
    
    
    8,250
    
    
    
    9,264Restricted deposits on debt (1)
    
    
    41,263
    
    
    
    18,966Resident security and utility deposits
    
    
    41,283
    
    
    
    40,745Other
    
    
    6,030
    
    
    
    8,125Totals
    
    $
    309,605
    
    
    $
    180,987
 
 (1)
    
    Primarily represents amounts held in escrow by the lender and released as draw
requests are made on fully funded development mortgage loans. 8. Mortgage Notes Payable
   
    
    Repaid $205.0 million of mortgage loans;
 
    
    Obtained $0.7 million of new mortgage loan proceeds; and
 
    
    Assumed $26.9 million of mortgage debt on one acquired property.
   9. Notes
   
    
    Repaid $93.1 million of 6.95% unsecured notes at maturity.
  10. Lines of Credit
   18




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##### Table of Contents



11. Derivative and Other Fair Value Instruments
     Forward
    
    
    DevelopmentFair Value
    
    
    Starting
    
    
    Cash FlowHedges (1)
    
    
    Swaps (2)
    
    
    Hedges (3)Current Notional Balance
    
    $
    315,693
    
    
    $
    950,000
    
    
    $
    88,833Lowest Possible Notional
    
    $
    315,693
    
    
    $
    950,000
    
    
    $
    3,020Highest Possible Notional
    
    $
    317,694
    
    
    $
    950,000
    
    
    $
    91,343Lowest Interest Rate
    
    
    2.009
    %
    
    
    3.478
    %
    
    
    4.059
    %Highest Interest Rate
    
    
    4.800
    %
    
    
    4.695
    %
    
    
    4.059
    %Earliest Maturity Date
    
    
    2012
    
    
    
    2021
    
    
    
    2011Latest Maturity Date
    
    
    2013
    
    
    
    2023
    
    
    
    2011
 
 (1)
    
    Fair Value Hedges  Converts outstanding fixed rate debt to a floating interest rate.(2)
    
    Forward Starting Swaps  Designed to partially fix the interest rate in advance of a
planned future debt issuance. These swaps have mandatory counterparty terminations from
2012 through 2014, and $350.0 million, $400.0 million and $200.0 million are designated for
2011, 2012 and 2013 maturities, respectively.(3)
    
    Development Cash Flow Hedges  Converts outstanding floating rate debt to a fixed
interest rate.  Asset Derivatives
    
    
    Liability DerivativesBalance Sheet
    
    
    
    
    
    
    Balance SheetMarch 31, 2011
    
    Location
    
    
    Fair Value
    
    
    Location
    
    
    Fair ValueDerivatives designated as
hedging instruments:Interest Rate Contracts:Fair Value Hedges
    
    Other assets
    
    $
    11,029
    
    
    Other liabilities
    
    $
    Forward Starting Swaps
    
    Other assets
    
    
    3,959
    
    
    Other liabilities
    
    
    (33,184
    )Development Cash Flow Hedges
    
    Other assets
    
    
    
    
    
    Other liabilities
    
    
    (495
    )Total
    
    
    
    
    
    $
    14,988
    
    
    
    
    
    
    $
    (33,679
    )
 19




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##### Table of Contents



Asset Derivatives
    
    
    Liability DerivativesBalance Sheet
    
    
    
    
    
    
    Balance SheetDecember 31, 2010
    
    Location
    
    
    Fair Value
    
    
    Location
    
    
    Fair ValueDerivatives designated as hedging instruments:Interest Rate Contracts:Fair Value Hedges
    
    Other assets
    
    $
    12,521
    
    
    Other liabilities
    
    $
    Forward Starting Swaps
    
    Other assets
    
    
    3,276
    
    
    Other liabilities
    
    
    (37,756
    )Development Cash Flow Hedges
    
    Other assets
    
    
    
    
    
    Other liabilities
    
    
    (1,322
    )Total
    
    
    
    
    
    $
    15,797
    
    
    
    
    
    
    $
    (39,078
    )
  Location of Gain/(Loss)
    
    
    Amount of Gain/(Loss)
    
    
    
    
    
    
    Income Statement
    
    
    Amount of Gain/(Loss)March 31, 2011
    
    Recognized in Income
    
    
    Recognized in Income
    
    
    
    
    
    
    Location of Hedged
    
    
    Recognized in IncomeType of Fair Value Hedge
    
    on Derivative
    
    
    on Derivative
    
    
    Hedged Item
    
    
    Item Gain/(Loss)
    
    
    on Hedged ItemDerivatives designated
as hedging instruments:Interest Rate Contracts:Interest Rate Swaps
    
    Interest expense
    
    $
    (1,492
    )
    
    Fixed rate debt
    
    Interest expense
    
    $
    1,492Total
    
    
    
    
    
    $
    (1,492
    )
    
    
    
    
    
    
    
    
    
    $
    1,492
 Location of Gain/(Loss)
    
    
    Amount of Gain/(Loss)
    
    
    
    
    
    
    Income Statement
    
    
    Amount of Gain/(Loss)March 31, 2010
    
    Recognized in Income
    
    
    Recognized in Income
    
    
    
    
    
    
    Location of Hedged
    
    
    Recognized in IncomeType of Fair Value Hedge
    
    on Derivative
    
    
    on Derivative
    
    
    Hedged Item
    
    
    Item Gain/(Loss)
    
    
    on Hedged ItemDerivatives designated
as hedging instruments:Interest Rate Contracts:Interest Rate Swaps
    
    Interest expense
    
    $
    2,742
    
    
    Fixed rate debt
    
    Interest expense
    
    $
    (2,742
    )Total
    
    
    
    
    
    $
    2,742
    
    
    
    
    
    
    
    
    
    
    $
    (2,742
    )
  Effective Portion
    
    
    
    
    
    
    Ineffective PortionAmount of
    
    
    Location of Gain/(Loss)
    
    
    Amount of Gain/(Loss)
    
    
    Location of
    
    
    Amount of Gain/(Loss)Gain/(Loss)
    
    
    Reclassified from
    
    
    Reclassified from
    
    
    Gain/(Loss)
    
    
    Reclassified fromMarch 31, 2011
    
    Recognized in OCI
    
    
    Accumulated OCI
    
    
    Accumulated OCI
    
    
    Recognized in Income
    
    
    Accumulated OCIType of Cash Flow Hedge
    
    on Derivative
    
    
    into Income
    
    
    into Income
    
    
    on Derivative
    
    
    into IncomeDerivatives designated as hedging
instruments:Interest Rate Contracts:Forward Starting Swaps/Treasury
Locks
    
    $
    5,255
    
    
    Interest expense
    
    $
    (956
    )
    
    
    N/A
    
    
    $
    Development Interest Rate Swaps/Caps
    
    
    827
    
    
    Interest expense
    
    
    
    
    
    
    N/A
    
    
    
    Total
    
    $
    6,082
    
    
    
    
    
    
    $
    (956
    )
    
    
    
    
    
    $
    
 Effective Portion
    
    
    
    
    
    
    Ineffective PortionAmount of
    
    
    Location of Gain/(Loss)
    
    
    Amount of Gain/(Loss)
    
    
    Location of
    
    
    Amount of Gain/(Loss)Gain/(Loss)
    
    
    Reclassified from
    
    
    Reclassified from
    
    
    Gain/(Loss)
    
    
    Reclassified fromMarch 31, 2010
    
    Recognized in OCI
    
    
    Accumulated OCI
    
    
    Accumulated OCI
    
    
    Recognized in Income
    
    
    Accumulated OCIType of Cash Flow Hedge
    
    on Derivative
    
    
    into Income
    
    
    into Income
    
    
    on Derivative
    
    
    into IncomeDerivatives designated as hedging
instruments:Interest Rate Contracts:Forward Starting Swaps/Treasury
Locks
    
    $
    (13,652
    )
    
    Interest expense
    
    $
    (726
    )
    
    
    N/A
    
    
    $
    Development Interest Rate Swaps/Caps
    
    
    149
    
    
    Interest expense
    
    
    
    
    
    
    N/A
    
    
    
    Total
    
    $
    (13,503
    )
    
    
    
    
    
    $
    (726
    )
    
    
    
    
    
    $
    
  20




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##### Table of Contents



Other AssetsAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Book/
    
    
    Interest andSecurity
    
    Maturity
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Other IncomeAvailable-for-Sale Investment Securities
    
    
    N/A
    
    
    $
    675
    
    
    $
    666
    
    
    $
    
    
    
    $
    1,341
    
    
    $
    Total
    
    
    
    
    
    $
    675
    
    
    $
    666
    
    
    $
    
    
    
    $
    1,341
    
    
    $
    
  
    
    Level 1  Inputs to the valuation methodology are quoted prices (unadjusted) for
identical assets or liabilities in active markets.
    
    Level 2  Inputs to the valuation methodology include quoted prices for similar assets
and liabilities in active markets, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the full term of the financial
instrument.
    
    Level 3  Inputs to the valuation methodology are unobservable and significant to the
fair value measurement.
  Fair Value Measurements at Reporting Date UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets/Liabilities
    
    
    Observable Inputs
    
    
    Unobservable InputsDescription
    
    3/31/2011
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsDerivatives
    
    $
    14,988
    
    
    $
    
    
    
    $
    14,988
    
    
    $
    Supplemental Executive Retirement Plan
    
    
    49,466
    
    
    
    49,466
    
    
    
    
    
    
    
    Available-for-Sale Investment Securities
    
    
    1,341
    
    
    
    1,341
    
    
    
    
    
    
    
    Total
    
    $
    65,795
    
    
    $
    50,807
    
    
    $
    14,988
    
    
    $
    LiabilitiesDerivatives
    
    $
    33,679
    
    
    $
    
    
    
    $
    33,679
    
    
    $
    Supplemental Executive Retirement Plan
    
    
    49,466
    
    
    
    49,466
    
    
    
    
    
    
    
    Total
    
    $
    83,145
    
    
    $
    49,466
    
    
    $
    33,679
    
    
    $
    Redeemable Limited Partners
    
    $
    416,334
    
    
    $
    
    
    
    $
    416,334
    
    
    $
    
 21




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##### Table of Contents



Fair Value Measurements at Reporting Date UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    SignificantIdentical Assets/Liabilities
    
    
    Observable Inputs
    
    
    Unobservable InputsDescription
    
    12/31/2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsDerivatives
    
    $
    15,797
    
    
    $
    
    
    
    $
    15,797
    
    
    $
    Supplemental Executive Retirement Plan
    
    
    58,132
    
    
    
    58,132
    
    
    
    
    
    
    
    Available-for-Sale Investment Securities
    
    
    1,194
    
    
    
    1,194
    
    
    
    
    
    
    
    Total
    
    $
    75,123
    
    
    $
    59,326
    
    
    $
    15,797
    
    
    $
    LiabilitiesDerivatives
    
    $
    39,078
    
    
    $
    
    
    
    $
    39,078
    
    
    $
    Supplemental Executive Retirement Plan
    
    
    58,132
    
    
    
    58,132
    
    
    
    
    
    
    
    Total
    
    $
    97,210
    
    
    $
    58,132
    
    
    $
    39,078
    
    
    $
    Redeemable Limited Partners
    
    $
    383,540
    
    
    $
    
    
    
    $
    383,540
    
    
    $
    
  12. Earnings Per Unit
  22




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##### Table of Contents



Quarter Ended March 31,2011
    
    
    2010Numerator for net income per Unit  basic and diluted (1):Income (loss) from continuing operations
    
    $
    7,727
    
    
    $
    (9,407
    )Net loss attributable to Noncontrolling Interests  Partially Owned Properties
    
    
    40
    
    
    
    250Allocation to Preference Units
    
    
    (3,466
    )
    
    
    (3,620
    )Income (loss) from continuing operations available to Units
    
    
    4,301
    
    
    
    (12,777
    )Discontinued operations, net
    
    
    125,339
    
    
    
    67,263Numerator for net income per Unit  basic and diluted (1)
    
    $
    129,640
    
    
    $
    54,486Denominator for net income per Unit  basic and diluted (1):Denominator for net income per Unit  basic
    
    
    306,248
    
    
    
    294,450Effect of dilutive securities:Dilution for
Units issuable upon assumed exercise/vesting of EQRs long-term compensation award shares/units
    
    
    4,219Denominator for net income per Unit  diluted (1)
    
    
    310,467
    
    
    
    294,450Net income per Unit  basic
    
    $
    0.42
    
    
    $
    0.18Net income per Unit  diluted
    
    $
    0.42
    
    
    $
    0.18Net income per Unit  basic:Income (loss) from continuing operations available to Units
    
    $
    0.014
    
    
    $
    (0.043
    )Discontinued operations, net
    
    
    0.409
    
    
    
    0.228Net income per Unit  basic
    
    $
    0.423
    
    
    $
    0.185Net income per Unit  diluted (1):Income (loss) from continuing operations available to Units
    
    $
    0.014
    
    
    $
    (0.043
    )Discontinued operations, net
    
    
    0.404
    
    
    
    0.228Net income per Unit  diluted
    
    $
    0.418
    
    
    $
    0.185
 
 (1)
    
    Potential Units issuable from the assumed exercising/vesting of EQR long-term
compensation award shares/units are automatically anti-dilutive and therefore excluded from
the diluted earnings per Unit calculation as the Operating Partnership had a loss from
continuing operations for the quarter ended March 31, 2010. Convertible preference interests/units that could be converted into 0 and 397,611 weighted average
Common Shares (which would be contributed to the Operating Partnership in exchange for OP Units)
for the quarters ended March 31, 2011 and 2010, respectively, were outstanding but were not
included in the computation of diluted earnings per Unit because the effects would be
anti-dilutive. In addition, the effect of the Common Shares/OP Units that could ultimately be
issued upon the conversion/exchange of the Operating Partnerships $650.0 million ($482.5 million
outstanding at March 31, 2011) exchangeable senior notes was not included in the
computation of diluted earnings per Unit because the effects would be anti-dilutive.
 13. Discontinued Operations
   23




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##### Table of Contents



Quarter Ended March 31,2011
    
    
    2010REVENUESRental income
    
    $
    5,890
    
    
    $
    25,969Total revenues
    
    
    5,890
    
    
    
    25,969EXPENSES (1)Property and maintenance
    
    
    2,709
    
    
    
    7,831Real estate taxes and insurance
    
    
    477
    
    
    
    2,777Depreciation
    
    
    1,395
    
    
    
    6,692General and administrative
    
    
    9
    
    
    
    3Total expenses
    
    
    4,590
    
    
    
    17,303Discontinued operating income
    
    
    1,300
    
    
    
    8,666Interest and other income
    
    
    44
    
    
    
    6Interest (2):Expense incurred, net
    
    
    326
    
    
    
    (1,208
    )Amortization of deferred financing costs
    
    
    (51
    )
    
    
    (201
    )Income and other tax (expense) benefit
    
    
    (34
    )
    
    
    (36
    )Discontinued operations
    
    
    1,585
    
    
    
    7,227Net gain on sales of discontinued operations
    
    
    123,754
    
    
    
    60,036Discontinued operations, net
    
    $
    125,339
    
    
    $
    67,263
 
 (1)
    
    Includes expenses paid in the current period for properties sold or held for
sale 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 and/or held for sale.  14. Commitments and Contingencies
     24




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##### Table of Contents



15. Reportable Segments
      25




---



##### Table of Contents



Quarter Ended March 31, 2011Northeast
    
    
    Northwest
    
    
    Southeast
    
    
    Southwest
    
    
    Other (3)
    
    
    TotalRental income:Same store (1)
    
    $
    151,373
    
    
    $
    88,893
    
    
    $
    97,531
    
    
    $
    110,150
    
    
    $
    
    
    
    $
    447,947Non-same store/other (2) (3)
    
    
    28,474
    
    
    
    8,061
    
    
    
    4,787
    
    
    
    7,313
    
    
    
    22,235
    
    
    
    70,870Total rental income
    
    
    179,847
    
    
    
    96,954
    
    
    
    102,318
    
    
    
    117,463
    
    
    
    22,235
    
    
    
    518,817Operating expenses:Same store (1)
    
    
    58,874
    
    
    
    32,404
    
    
    
    39,346
    
    
    
    37,615
    
    
    
    
    
    
    
    168,239Non-same store/other (2) (3)
    
    
    11,967
    
    
    
    3,379
    
    
    
    1,867
    
    
    
    3,135
    
    
    
    18,175
    
    
    
    38,523Total operating expenses
    
    
    70,841
    
    
    
    35,783
    
    
    
    41,213
    
    
    
    40,750
    
    
    
    18,175
    
    
    
    206,762NOI:Same store (1)
    
    
    92,499
    
    
    
    56,489
    
    
    
    58,185
    
    
    
    72,535
    
    
    
    
    
    
    
    279,708Non-same store/other (2) (3)
    
    
    16,507
    
    
    
    4,682
    
    
    
    2,920
    
    
    
    4,178
    
    
    
    4,060
    
    
    
    32,347Total NOI
    
    $
    109,006
    
    
    $
    61,171
    
    
    $
    61,105
    
    
    $
    76,713
    
    
    $
    4,060
    
    
    $
    312,055Total assets
    
    $
    6,050,142
    
    
    $
    2,623,015
    
    
    $
    2,700,350
    
    
    $
    3,194,880
    
    
    $
    1,506,942
    
    
    $
    16,075,329
 
 (1)
    
    Same store primarily includes all properties acquired or completed and stabilized prior
to January 1, 2010, less properties subsequently sold, which represented 112,363 apartment
units.(2)
    
    Non-same store primarily includes properties acquired after January 1, 2010, plus any
properties in lease-up and not stabilized as of January 1, 2010.(3)
    
    Other includes ECH, development, condominium conversion overhead of $0.1 million and
other corporate operations. Also reflects a $2.4 million elimination of rental income
recorded in Northeast, Northwest, Southeast and Southwest operating segments related to
ECH. Quarter Ended March 31, 2010Northeast
    
    
    Northwest
    
    
    Southeast
    
    
    Southwest
    
    
    Other (3)
    
    
    TotalRental income:Same store (1)
    
    $
    143,813
    
    
    $
    84,971
    
    
    $
    94,389
    
    
    $
    107,500
    
    
    $
    
    
    
    $
    430,673Non-same store/other (2) (3)
    
    
    12,057
    
    
    
    1,464
    
    
    
    1,699
    
    
    
    1,062
    
    
    
    15,622
    
    
    
    31,904Total rental income
    
    
    155,870
    
    
    
    86,435
    
    
    
    96,088
    
    
    
    108,562
    
    
    
    15,622
    
    
    
    462,577Operating expenses:Same store (1)
    
    
    57,903
    
    
    
    32,308
    
    
    
    40,483
    
    
    
    39,327
    
    
    
    
    
    
    
    170,021Non-same store/other (2) (3)
    
    
    5,622
    
    
    
    754
    
    
    
    826
    
    
    
    854
    
    
    
    18,193
    
    
    
    26,249Total operating expenses
    
    
    63,525
    
    
    
    33,062
    
    
    
    41,309
    
    
    
    40,181
    
    
    
    18,193
    
    
    
    196,270NOI:Same store (1)
    
    
    85,910
    
    
    
    52,663
    
    
    
    53,906
    
    
    
    68,173
    
    
    
    
    
    
    
    260,652Non-same store/other (2) (3)
    
    
    6,435
    
    
    
    710
    
    
    
    873
    
    
    
    208
    
    
    
    (2,571
    )
    
    
    5,655Total NOI
    
    $
    92,345
    
    
    $
    53,373
    
    
    $
    54,779
    
    
    $
    68,381
    
    
    $
    (2,571
    )
    
    $
    266,307
 
 (1)
    
    Same store primarily includes all properties acquired or completed and stabilized prior
to January 1, 2010, less properties subsequently sold, which represented 112,363 apartment
units.(2)
    
    Non-same store primarily includes properties acquired after January 1, 2010, plus any
properties in lease-up and not stabilized as of January 1, 2010.(3)
    
    Other includes ECH, development, condominium conversion overhead of $0.2 million and
other corporate operations. Also reflects a $2.0 million elimination of rental income
recorded in Northeast, Northwest, Southeast and Southwest operating segments related to
ECH.  (a)
    
    Northeast  New England (excluding Boston), Boston, New York Metro, DC Northern Virginia and
Suburban Maryland.(b)
    
    Northwest  Denver, Portland, San Francisco Bay Area and Seattle/Tacoma.(c)
    
    Southeast  Atlanta, Jacksonville, Orlando, South Florida and Tampa.(d)
    
    Southwest  Albuquerque, Inland Empire, Los Angeles, Orange County, Phoenix and San Diego.
  26




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##### Table of Contents



Quarter Ended March 31,2011
    
    
    2010Rental income
    
    $
    518,817
    
    
    $
    462,577Property and maintenance expense
    
    
    (128,357
    )
    
    
    (120,203
    )Real estate taxes and insurance expense
    
    
    (56,024
    )
    
    
    (55,575
    )Property management expense
    
    
    (22,381
    )
    
    
    (20,492
    )Total operating expenses
    
    
    (206,762
    )
    
    
    (196,270
    )Net operating income
    
    $
    312,055
    
    
    $
    266,307
 16. Subsequent Events/Other
 Subsequent Events
  
    
    Repaid $193.7 million in mortgage loans;
    
    Obtained $91.5 million of new mortgage loan proceeds;
    
    Acquired one operating property consisting of 322 apartment units for $100.0 million and
one land parcel for $12.9 million;
    
    Sold 15 properties containing 4,369 apartment units for $530.2 million; and
    
    Exercised the second of its two one-year extension options for its $500.0 million term
loan facility and as a result, the maturity date is now October 5, 2012.
 Other
    27




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Forward-Looking Statements
  
    
    We intend to actively acquire and/or develop multifamily properties for rental
operations as market conditions dictate. We may also acquire multifamily properties
that are unoccupied or in the early stages of lease up. We may be unable to lease up
these apartment properties on schedule, resulting in decreases in expected rental
revenues and/or lower yields due to lower occupancy and rates as well as higher than
expected concessions. We may underestimate the costs necessary to bring an acquired
property up to standards established for its intended market position or to complete a
development property. Additionally, we expect that other 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 (or lack thereof) may increase (or depress) prices for multifamily
properties. We may not be in a position or have the opportunity in the future to make
suitable property acquisitions on favorable terms. The total number of development
apartment units, costs of development and estimated completion dates are subject to
uncertainties arising from changing economic conditions (such as the cost of labor and
construction materials), competition and local government regulation;
    
    Debt financing and other capital required by the Operating Partnership may not be
available or may only be available on adverse terms;
    
    Labor and materials required for maintenance, repair, capital expenditure or
development may be more expensive than anticipated;
    
    Occupancy levels and market rents may be adversely affected by national and local
economic and market conditions including, without limitation, new construction and
excess inventory of multifamily housing and single family housing, slow or negative
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 Operating Partnerships Annual
Report on Form 10-K, particularly those under Item 1A. Risk Factors.
  Overview
   28




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##### Table of Contents



Business Objectives and Operating Strategies
     
    
    High barriers to entry where, because of land scarcity or government regulation, it is
difficult or costly to build new apartment properties leading to low supply;
    
    High single family home prices making our apartments a more economical housing choice;
    
    Strong economic growth leading to household formation and job growth, which in turn
leads to high demand for our apartments; and
    
    An attractive quality of life leading to high demand and retention and allowing us to
more readily increase rents.
    29




---



##### Table of Contents



Current Environment
       30




---



##### Table of Contents



Results of Operations
  
    
    Acquired $139.0 million of apartment properties consisting of two consolidated
properties and 521 apartment units at a weighted average cap rate (see definition
below) of 5.7%, both of which we deem to be in our strategic targeted markets;
 
    
    Acquired a 97,000 square foot commercial building adjacent to our Harbor Steps
apartment property in downtown Seattle for $11.8 million for potential redevelopment;
and
 
    
    Sold $261.8 million of consolidated apartment properties consisting of 12 properties
and 2,731 apartment units at a weighted average cap rate of 6.7%, the majority of which
was in exit or less desirable markets.
    Comparison of the quarter ended March 31, 2011 to the quarter ended March 31, 2010
  31




---



##### Table of Contents



Results
    
    
    StatisticsAverageRentalDescription
    
    Revenues
    
    
    Expenses
    
    
    NOI
    
    
    Rate (1)
    
    
    Occupancy
    
    
    TurnoverQ1 2011
    
    $
    447,947
    
    
    $
    168,239
    
    
    $
    279,708
    
    
    $
    1,400
    
    
    
    95.0
    %
    
    
    11.6
    %Q1 2010
    
    $
    430,673
    
    
    $
    170,021
    
    
    $
    260,652
    
    
    $
    1,352
    
    
    
    94.6
    %
    
    
    11.8
    %Change
    
    $
    17,274
    
    
    $
    (1,782
    )
    
    $
    19,056
    
    
    $
    48
    
    
    
    0.4
    %
    
    
    (0.2
    %)Change
    
    
    4.0
    %
    
    
    (1.0
    %)
    
    
    7.3
    %
    
    
    3.6
    %
 
 (1)
    
    Average rental rate is defined as total rental revenues divided by the weighted average occupied apartment units for the
period.  
 % of ActualQ1 2011Actual
    
    
    Actual
    
    
    $
    
    
    %
    
    
    OperatingQ1 2011
    
    
    Q1 2010
    
    
    Change
    
    
    Change
    
    
    ExpensesReal estate taxes
    
    $
    44,613
    
    
    $
    44,445
    
    
    $
    168
    
    
    
    0.4
    %
    
    
    26.5
    %On-site payroll (1)
    
    
    39,757
    
    
    
    40,453
    
    
    
    (696
    )
    
    
    (1.7
    %)
    
    
    23.6
    %Utilities (2)
    
    
    28,285
    
    
    
    27,752
    
    
    
    533
    
    
    
    1.9
    %
    
    
    16.8
    %Repairs and maintenance (3)
    
    
    23,501
    
    
    
    25,034
    
    
    
    (1,533
    )
    
    
    (6.1
    %)
    
    
    14.0
    %Property management costs (4)
    
    
    18,097
    
    
    
    17,227
    
    
    
    870
    
    
    
    5.1
    %
    
    
    10.8
    %Insurance
    
    
    5,256
    
    
    
    5,571
    
    
    
    (315
    )
    
    
    (5.7
    %)
    
    
    3.1
    %Leasing and advertising
    
    
    3,218
    
    
    
    3,802
    
    
    
    (584
    )
    
    
    (15.4
    %)
    
    
    1.9
    %Other on-site operating expenses (5)
    
    
    5,512
    
    
    
    5,737
    
    
    
    (225
    )
    
    
    (3.9
    %)
    
    
    3.3
    %Same store operating expenses
    
    $
    168,239
    
    
    $
    170,021
    
    
    $
    (1,782
    )
    
    
    (1.0
    %)
    
    
    100.0
    %
 
 (1)
    
    On-site payroll  Includes payroll and related expenses for on-site personnel including
property managers, leasing consultants and maintenance staff.(2)
    
    Utilities  Represents gross expenses prior to any recoveries under the Resident Utility
Billing System (RUBS). Recoveries are reflected in rental income.(3)
    
    Repairs and maintenance  Includes general maintenance costs, apartment unit turnover costs
including interior painting, routine landscaping, security, exterminating, fire protection,
snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair
costs.(4)
    
    Property management costs  Includes payroll and related expenses for departments, or
portions of departments, that directly support on-site management. These include such
departments as regional and corporate property management, property accounting, human
resources, training, marketing and revenue management, procurement, real estate tax, property
legal services and information technology. 32




---



##### Table of Contents



(5)
    
    Other on-site operating expenses  Includes administrative costs such as office supplies,
telephone and data charges and association and business licensing fees.  Quarter Ended March 31,2011
    
    
    2010(Amounts in thousands)Operating income
    
    $
    133,510
    
    
    $
    110,008Adjustments:Non-same store operating results
    
    
    (32,347
    )
    
    
    (5,655
    )Fee and asset management revenue
    
    
    (1,806
    )
    
    
    (2,422
    )Fee and asset management expense
    
    
    948
    
    
    
    1,958Depreciation
    
    
    167,968
    
    
    
    146,042General and administrative
    
    
    11,435
    
    
    
    10,721Same store NOI
    
    $
    279,708
    
    
    $
    260,652
  2011 Same Store AssumptionsPhysical occupancy
    
    
    95.0
    %Revenue change
    
    4.0% to 5.0%Expense change
    
    1.0% to 2.0%NOI change
    
    5.0% to 7.5%
    
    
    Development and other miscellaneous properties in lease-up of $9.3 million;
    
    Properties acquired in 2010 and 2011 of $13.4 million;
    
    Newly stabilized development properties of $1.0 million; and
    
    Partially offset by other miscellaneous properties of $1.1 million.
    33




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Liquidity and Capital Resources
  34




---



##### Table of Contents




    
    Disposed of 12 consolidated properties, receiving net proceeds of approximately $258.2
million;
    
    Obtained $0.7 million in new mortgage financing; and
 
    
    Issued approximately 4.2 million Units (including EQR Common Shares issued under EQRs
ATM program  see further discussion below) and received net proceeds of $190.0 million.During the quarter ended March 31, 2011, the above proceeds were primarily utilized to:
 
    
    Acquire two rental properties and a 97,000 square foot commercial building for
approximately $123.9 million;
    
    Invest $29.8 million primarily in development projects; and
    
    Repay $205.0 million of mortgage loans and $93.1 million of unsecured notes.
     35




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##### Table of Contents



Debt Summary as of March 31, 2011
(Amounts in thousands)
 WeightedWeighted
    
    
    AverageAverage
    
    
    MaturitiesAmounts (1)
    
    
    % of Total
    
    
    Rates (1)
    
    
    (years)Secured
    
    $
    4,583,545
    
    
    
    47.4
    %
    
    
    4.76
    %
    
    
    8.1Unsecured
    
    
    5,092,967
    
    
    
    52.6
    %
    
    
    5.08
    %
    
    
    4.3Total
    
    $
    9,676,512
    
    
    
    100.0
    %
    
    
    4.93
    %
    
    
    6.1Fixed Rate Debt:Secured  Conventional
    
    $
    3,737,865
    
    
    
    38.6
    %
    
    
    5.60
    %
    
    
    6.9Unsecured  Public/Private
    
    
    4,284,995
    
    
    
    44.3
    %
    
    
    5.71
    %
    
    
    5.0Fixed Rate Debt
    
    
    8,022,860
    
    
    
    82.9
    %
    
    
    5.66
    %
    
    
    5.8Floating Rate Debt:Secured  Conventional
    
    
    251,305
    
    
    
    2.6
    %
    
    
    2.85
    %
    
    
    0.7Secured  Tax Exempt
    
    
    594,375
    
    
    
    6.2
    %
    
    
    0.32
    %
    
    
    19.1Unsecured  Public/Private
    
    
    807,972
    
    
    
    8.3
    %
    
    
    1.68
    %
    
    
    1.1Unsecured  Revolving Credit Facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.9Floating Rate Debt
    
    
    1,653,652
    
    
    
    17.1
    %
    
    
    1.38
    %
    
    
    7.2Total
    
    $
    9,676,512
    
    
    
    100.0
    %
    
    
    4.93
    %
    
    
    6.1
 
 (1)
    
    Net of the effect of any derivative instruments. Weighted average rates are for the quarter
ended March 31, 2011.  Debt Maturity Schedule as of March 31, 2011
(Amounts in thousands)
 Weighted Average
    
    
    Weighted AverageFixed
    
    
    Floating
    
    
    
    
    
    
    
    
    
    
    Rates on Fixed
    
    
    Rates onYear
    
    Rate (1)
    
    
    Rate (1)
    
    
    Total
    
    
    % of Total
    
    
    Rate Debt (1)
    
    
    Total Debt (1)2011
    
    $
    694,503
    (2)
    
    $
    685,347
    (3)
    
    $
    1,379,850
    
    
    
    14.3
    %
    
    
    4.80
    %
    
    
    3.03
    %2012
    
    
    779,271
    
    
    
    37,676
    
    
    
    816,947
    
    
    
    8.4
    %
    
    
    5.62
    %
    
    
    5.55
    %2013
    
    
    269,502
    
    
    
    308,489
    
    
    
    577,991
    
    
    
    6.0
    %
    
    
    6.72
    %
    
    
    4.88
    %2014
    
    
    562,921
    
    
    
    22,007
    
    
    
    584,928
    
    
    
    6.0
    %
    
    
    5.31
    %
    
    
    5.24
    %2015
    
    
    358,051
    
    
    
    
    
    
    
    358,051
    
    
    
    3.7
    %
    
    
    6.40
    %
    
    
    6.40
    %2016
    
    
    1,192,909
    
    
    
    
    
    
    
    1,192,909
    
    
    
    12.3
    %
    
    
    5.35
    %
    
    
    5.35
    %2017
    
    
    1,355,833
    
    
    
    456
    
    
    
    1,356,289
    
    
    
    14.0
    %
    
    
    5.87
    %
    
    
    5.87
    %2018
    
    
    80,767
    
    
    
    44,677
    
    
    
    125,444
    
    
    
    1.3
    %
    
    
    5.72
    %
    
    
    4.26
    %2019
    
    
    801,759
    
    
    
    20,766
    
    
    
    822,525
    
    
    
    8.5
    %
    
    
    5.49
    %
    
    
    5.36
    %2020
    
    
    1,671,836
    
    
    
    809
    
    
    
    1,672,645
    
    
    
    17.3
    %
    
    
    5.50
    %
    
    
    5.50
    %2021+
    
    
    255,508
    
    
    
    533,425
    
    
    
    788,933
    
    
    
    8.2
    %
    
    
    6.62
    %
    
    
    2.66
    %Total
    
    $
    8,022,860
    
    
    $
    1,653,652
    
    
    $
    9,676,512
    
    
    
    100.0
    %
    
    
    5.60
    %
    
    
    4.91
    %
 
 (1)
    
    Net of the effect of any derivative instruments. Weighted average rates are as of March 31,
2011.(2)
    
    Includes $482.5 million face value of 3.85% convertible unsecured debt with a final maturity
of 2026. The notes are callable by the Operating Partnership on or after August 18, 2011.
The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021.(3)
    
    Effective April 5, 2011, the Operating Partnership exercised the second of its two one-year
extension options for its $500.0 million term loan facility and as a result, the maturity date
is now October 5, 2012.  36




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##### Table of Contents



Unsecured Debt Summary as of March 31, 2011
(Amounts in thousands)
 UnamortizedCoupon
    
    
    Due
    
    
    Face
    
    
    Premium/
    
    
    NetRate
    
    
    Date
    
    
    Amount
    
    
    (Discount)
    
    
    BalanceFixed Rate Notes:6.625
    %
    
    
    03/15/12
    
    
    $
    253,858
    
    
    $
    (183
    )
    
    $
    253,6755.500
    %
    
    
    10/01/12
    
    
    
    222,133
    
    
    
    (329
    )
    
    
    221,8045.200
    %
    
    
    04/01/13
    (1)
    
    
    400,000
    
    
    
    (237
    )
    
    
    399,763Fair Value Derivative Adjustments
    
    
    
    
    
    
    
    (1)
    
    
    (300,000
    )
    
    
    
    
    
    
    (300,000
    )5.250
    %
    
    
    09/15/14
    
    
    
    500,000
    
    
    
    (213
    )
    
    
    499,7876.584
    %
    
    
    04/13/15
    
    
    
    300,000
    
    
    
    (441
    )
    
    
    299,5595.125
    %
    
    
    03/15/16
    
    
    
    500,000
    
    
    
    (264
    )
    
    
    499,7365.375
    %
    
    
    08/01/16
    
    
    
    400,000
    
    
    
    (989
    )
    
    
    399,0115.750
    %
    
    
    06/15/17
    
    
    
    650,000
    
    
    
    (3,179
    )
    
    
    646,8217.125
    %
    
    
    10/15/17
    
    
    
    150,000
    
    
    
    (424
    )
    
    
    149,5764.750
    %
    
    
    07/15/20
    
    
    
    600,000
    
    
    
    (4,235
    )
    
    
    595,7657.570
    %
    
    
    08/15/26
    
    
    
    140,000
    
    
    
    
    
    
    
    140,0003.850
    %
    
    
    08/15/26
    (2)
    
    
    482,545
    
    
    
    (3,047
    )
    
    
    479,4984,298,536
    
    
    
    (13,541
    )
    
    
    4,284,995Floating Rate Notes:04/01/13
    (1)
    
    
    300,000
    
    
    
    
    
    
    
    300,000Fair Value Derivative Adjustments
    
    
    
    
    
    
    
    (1)
    
    
    7,972
    
    
    
    
    
    
    
    7,972Term Loan Facility
    
    LIBOR+0.50%
    
    
    10/05/11
    (3)(4)
    
    
    500,000
    
    
    
    
    
    
    
    500,000807,972
    
    
    
    
    
    
    
    807,972Revolving Credit Facility:
    
    LIBOR+0.50%
    
    
    02/28/12
    (3)(5)
    
    
    
    
    
    
    
    
    
    
    Total Unsecured Debt
    
    
    
    
    
    
    
    
    
    $
    5,106,508
    
    
    $
    (13,541
    )
    
    $
    5,092,967
 
 (1)
    
    Fair value interest rate swaps convert $300.0 million of the 5.200% notes due April 1,
2013 to a floating interest rate.(2)
    
    Convertible notes mature on August 15, 2026. The notes are callable by the Operating
Partnership on or after August 18, 2011. The notes are putable by the holders on August
18, 2011, August 15, 2016 and August 15, 2021.(3)
    
    Facilities are private. All other unsecured debt is public.(4)
    
    Effective April 5, 2011, the Operating Partnership exercised the second of its two
one-year extension options for its $500.0 million term loan facility and as a result, the
maturity date is now October 5, 2012.(5)
    
    As of March 31, 2011, there was approximately $1.34 billion available on the Operating
Partnerships unsecured revolving credit facility.   37




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##### Table of Contents



Capital Structure as of March 31, 2011
(Amounts in thousands except for unit and per unit amounts)
 Secured Debt
    
    
    
    
    
    $
    4,583,545
    
    
    
    47.4
    %Unsecured Debt
    
    
    
    
    
    
    5,092,967
    
    
    
    52.6
    %Total Debt
    
    
    
    
    
    
    9,676,512
    
    
    
    100.0
    %
    
    
    35.5
    %Total outstanding Units
    
    
    308,271,339EQR Common Share Price at March 31, 2011
    
    $
    56.4117,389,586
    
    
    
    98.9
    %Perpetual Preference Units (see below)
    
    
    
    
    
    
    200,000
    
    
    
    1.1
    %Total Equity
    
    
    
    
    
    
    17,589,586
    
    
    
    100.0
    %
    
    
    64.5
    %Total Market Capitalization
    
    
    
    
    
    $
    27,266,098
    
    
    
    
    
    
    
    100.0
    %
 Perpetual Preference Units as of March 31, 2011
(Amounts in thousands except for unit and per unit amounts)
 Annual
    
    
    Annual
    
    
    WeightedRedemption
    
    
    Outstanding
    
    
    Liquidation
    
    
    Dividend
    
    
    Dividend
    
    
    AverageSeries
    
    Date
    
    
    Units
    
    
    Value
    
    
    Per Unit
    
    
    Amount
    
    
    RatePreference Units:8.29% Series K
    
    
    12/10/26
    
    
    
    1,000,000
    
    
    $
    50,000
    
    
    $
    4.145
    
    
    $
    4,1456.48% Series N
    
    
    6/19/08
    
    
    
    600,000
    
    
    
    150,000
    
    
    
    16.20
    
    
    
    9,720Total Perpetual Preference Units
    
    
    
    
    
    
    1,600,000
    
    
    $
    200,000
    
    
    
    
    
    
    $
    13,865
    
    
    
    6.93
    %
    38




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##### Table of Contents



Capitalization of Fixed Assets and Improvements to Real Estate
  
    
    Replacements (inside the apartment unit). These include:
 
    
    flooring such as carpets, hardwood, vinyl, linoleum or tile;
    
    appliances;
    
    mechanical equipment such as individual furnace/air units, hot water heaters, etc;
    
    furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans,
sinks, tubs, toilets, mirrors, countertops, etc; and
    
    blinds/shades.
  
    
    Building improvements (outside the apartment unit). These include:
 
    
    roof replacement and major repairs;
    
    paving or major resurfacing of parking lots, curbs and sidewalks;
    
    amenities and common areas such as pools, exterior sports and playground equipment,
lobbies, clubhouses, laundry rooms, alarm and security systems and offices;
    
    major building mechanical equipment systems;
    
    interior and exterior structural repair and exterior painting and siding;
    
    major landscaping and grounds improvement; and
 39




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##### Table of Contents




    
    vehicles and office and maintenance equipment.
   Capital Expenditures to Real Estate
For the Quarter Ended March 31, 2011
 Total
    
    
    
    
    
    
    Avg. Per
    
    
    
    
    
    
    Avg. Per
    
    
    
    
    
    
    Avg. PerApartment
    
    
    
    
    
    
    Apartment
    
    
    Building
    
    
    Apartment
    
    
    
    
    
    
    ApartmentUnits (1)
    
    
    Replacements (2)
    
    
    Unit
    
    
    Improvements
    
    
    Unit
    
    
    Total
    
    
    UnitSame Store Properties (3)
    
    
    112,363
    
    
    $
    16,503
    
    
    $
    147
    
    
    $
    10,329
    
    
    $
    92
    
    
    $
    26,832
    
    
    $
    239Non-Same Store Properties (4)
    
    
    10,543
    
    
    
    1,054
    
    
    
    104
    
    
    
    1,743
    
    
    
    172
    
    
    
    2,797
    
    
    
    276Other (5)
    
    
    
    
    
    
    211
    
    
    
    
    
    
    
    51
    
    
    
    
    
    
    
    262Total
    
    
    122,906
    
    
    $
    17,768
    
    
    
    
    
    
    $
    12,123
    
    
    
    
    
    
    $
    29,891
 
 (1)
    
    Total Apartment Units  Excludes 4,805 military housing apartment units for which repairs
and maintenance expenses and capital expenditures to real estate are self-funded and do not
consolidate into the Operating Partnerships results.(2)
    
    Replacements  Includes new expenditures inside the apartment units such as appliances,
mechanical equipment, fixtures and flooring, including carpeting. Replacements for same store
properties also include $8.9 million spent in Q1 2011 on apartment unit renovations/rehabs
(primarily kitchens and baths) on 1,132 apartment units (equating to about $7,900 per
apartment unit rehabbed) designed to reposition these assets for higher rental levels in their
respective markets.(3)
    
    Same Store Properties  Primarily includes all properties acquired or completed and
stabilized prior to January 1, 2010, less properties subsequently sold.(4)
    
    Non-Same Store Properties  Primarily includes all properties acquired during 2010 and 2011,
plus any properties in lease-up and not stabilized as of January 1, 2010. Per apartment unit
amounts are based on a weighted average of 10,137 apartment units.(5)
    
    Other  Primarily includes expenditures for properties sold during the period.    Derivative Instruments
    40




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##### Table of Contents



Other
  Off-Balance Sheet Arrangements and Contractual Obligations
     Critical Accounting Policies and Estimates
   Acquisition of Investment Properties
  Impairment of Long-Lived Assets
  41




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##### Table of Contents



Depreciation of Investment in Real Estate
  Cost Capitalization
 Capitalization of Fixed Assets and Improvements to Real Estate
  Fair Value of Financial Instruments, Including Derivative Instruments
  Funds From Operations and Normalized Funds From Operations
   42




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##### Table of Contents



Funds From Operations and Normalized Funds From Operations  (Amounts in thousands)
 Quarter Ended March 31,2011
    
    
    2010Net income
    
    $
    133,066
    
    
    $
    57,856Adjustments:Net (income) loss attributable to Noncontrolling Interests 
Partially Owned Properties
    
    
    40
    
    
    
    250Depreciation
    
    
    167,968
    
    
    
    146,042Depreciation  Non-real estate additions
    
    
    (1,438
    )
    
    
    (1,693
    )Depreciation  Partially Owned and Unconsolidated Properties
    
    
    (750
    )
    
    
    11Net (gain) on sales of unconsolidated entities
    
    
    
    
    
    
    (478
    )Discontinued operations:Depreciation
    
    
    1,395
    
    
    
    6,692Net (gain) on sales of discontinued operations
    
    
    (123,754
    )
    
    
    (60,036
    )Net incremental gain on sales of condominium units
    
    
    395
    
    
    
    388FFO (1) (3)
    
    
    176,922
    
    
    
    149,032Adjustments:Asset impairment and valuation allowances
    
    
    
    
    
    
    Property acquisition costs and write-off of pursuit costs (other expenses)
    
    
    2,164
    
    
    
    4,383Debt extinguishment (gains) losses, including prepayment penalties,
preference unit redemptions and non-cash convertible debt discounts
    
    
    2,063
    
    
    
    2,872(Gains) losses on sales of non-operating assets, net of income and other
tax expense (benefit)
    
    
    (376
    )
    
    
    (367
    )Other miscellaneous non-comparable items
    
    
    (2,100
    )
    
    
    (2,000
    )Normalized FFO (2) (3)
    
    $
    178,673
    
    
    $
    153,920FFO (1) (3)
    
    $
    176,922
    
    
    $
    149,032Preferred distributions
    
    
    (3,466
    )
    
    
    (3,620
    )FFO available to Units (1) (3) (4)
    
    $
    173,456
    
    
    $
    145,412Normalized FFO (2) (3)
    
    $
    178,673
    
    
    $
    153,920Preferred distributions
    
    
    (3,466
    )
    
    
    (3,620
    )Normalized FFO available to Units (2) (3) (4)
    
    $
    175,207
    
    
    $
    150,300
 
 (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 apartment units to condominiums, it
simultaneously discontinues depreciation of such property.(2)
    
    Normalized funds from operations (Normalized FFO) begins with FFO and excludes:
 
    
    the impact of any expenses relating to asset impairment and valuation allowances;
    
    property acquisition and other transaction costs related to mergers and acquisitions and
pursuit cost write-offs (other expenses);
    
    gains and losses from early debt extinguishment, including prepayment penalties,
preference unit redemptions and the cost related to the implied option value of non-cash
convertible debt discounts;
    
    gains and losses on the sales of non-operating assets, including gains and losses from
land parcel and condominium sales, net of the effect of income tax benefits or expenses;
and
    
    other miscellaneous non-comparable items.
 (3)
    
    The Operating Partnership believes that FFO and FFO available to Units are helpful to
investors as supplemental measures of the operating performance of a real estate company,
because they are recognized measures of performance by the real estate industry and by
excluding gains or losses related to dispositions of depreciable property and excluding real
estate depreciation
(which can vary among owners of identical assets in similar condition based on historical cost
accounting and useful life
 43




---



##### Table of Contents



estimates), FFO and FFO available to Units can help compare the
operating performance of a companys real estate between periods or as compared to different
companies. The Operating Partnership also believes that Normalized FFO and Normalized FFO
available to Units are helpful to investors as supplemental measures of the operating
performance of a real estate company because they allow investors to compare the companys
operating performance to its performance in prior reporting periods and to the operating
performance of other real estate companies without the effect of items that by their nature are
not comparable from period to period and tend to obscure the Operating Partnerships actual
operating results. FFO, FFO available to Units, Normalized FFO and Normalized FFO available to
Units do not represent net income, net income available to Units or net cash flows from
operating activities in accordance with GAAP. Therefore, FFO, FFO available to Units,
Normalized FFO and Normalized FFO available to Units should not be exclusively considered as
alternatives to net income, net income available to Units or net cash flows from operating
activities as determined by GAAP or as a measure of liquidity. The Operating Parnterships
calculation of FFO, FFO available to Units, Normalized FFO and Normalized FFO available to Units
may differ from other real estate companies due to, among other items, variations in cost
capitalization policies for capital expenditures and, accordingly, may not be comparable to such
other real estate companies.
 (4)
    
    FFO available to Units and Normalized FFO available to Units are calculated on a basis
consistent with net income available to Units and reflects adjustments to net income for
preferred distributions and premiums on redemption of preference units in accordance with
accounting principles generally accepted in the United States.
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Quantitative and Qualitative Disclosures About Market
Risk Current Environment Managements Discussion and Analysis of
Financial Condition and Results of Operations
 
 Item 4. Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures:
  (b) Changes in Internal Control over Financial Reporting:
  44




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 6. Exhibits 
 45




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##### Table of Contents



SIGNATURES
  ERP OPERATING LIMITED PARTNERSHIP
BY: EQUITY RESIDENTIAL
ITS GENERAL PARTNERDate: May 5, 2011
    By:
    /s/   Mark J. ParrellMark J. ParrellExecutive Vice President and
Chief Financial OfficerDate: May 5, 2011
    By:
    /s/            Ian S. KaufmanIan S. KaufmanSenior Vice President and
Chief Accounting Officer 46




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##### Table of Contents



EXHIBIT INDEX
  Exhibit
    
    Description
    
    Location31.1
    
    Certification of David J. Neithercut,
Chief Executive Officer of Registrants
General Partner.
    
    Attached herein.31.2
    
    Certification of Mark J. Parrell, Chief
Financial Officer of Registrants
General Partner.
    
    Attached herein.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 David J. Neithercut, Chief
Executive Officer of the Registrants
General Partner.
    
    Attached herein.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 Mark J. Parrell, Chief
Financial Officer of the Registrants
General Partner.
    
    Attached herein.