---

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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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|ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the quarterly period ended JUNE 30, 2002

OR

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -----------------------------------------------------------------------------------------

Commission File Number: 0-24920

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ERP OPERATING LIMITED PARTNERSHIP(Exact name of registrant as specified in its charter)

Illinois(State or Other Jurisdiction of
Incorporation or Organization)

36-3894853(I.R.S. Employer
Identification No.)Two North Riverside Plaza, Chicago, Illinois(Address of Principal Executive Offices)

60606(Zip Code)


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

http://www.equityapartments.com(Registrant's web site)

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

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ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)

|                                                           |                                                 | June 30,
2002                           |            | December 31,
2001 |           
|---------------------------------------------------------- | ----------------------------------------------- | --------------------------------------- | ---------- | ----------------- | ----------
|ASSETS                                                     |                                                 |                                         |            |                   |           
|Investment in real estate                                  |                                                 |                                         |            |                   |           
|                                                           | Land                                            |                                         | $          | 1,857,497         |           
|                                                           | Depreciable property                            |                                         |            | 11,205,307        |           
|                                                           | Construction in progress                        |                                         |            | 94,292            |           
|                                                           |                                                 |                                         |            |                   |           
|                                                           |                                                 |                                         | 13,157,096 |                   |           
|                                                           | Accumulated depreciation                        |                                         |            | (1,929,115        | )         
|                                                           |                                                 |                                         |            |                   |           
|Investment in real estate, net of accumulated depreciation |                                                 |                                         | 11,227,981 |                   |           
|Real estate held for disposition                           |                                                 |                                         |           |                   |           
|Cash and cash equivalents                                  |                                                 |                                         | 88,942     |                   |           
|Investments in unconsolidated entities                     |                                                 |                                         | 423,529    |                   |           
|Rents receivable                                           |                                                 |                                         | 2,627      |                   |           
|Depositsrestricted                                        |                                                 |                                         | 149,927    |                   |           
|Escrow depositsmortgage                                   |                                                 |                                         | 62,049     |                   |           
|Deferred financing costs, net                              |                                                 |                                         | 32,964     |                   |           
|Rental furniture, net                                      |                                                 |                                         |           |                   |           
|Property and equipment, net                                |                                                 |                                         |           |                   |           
|Goodwill, net                                              |                                                 |                                         | 47,122     |                   |           
|Other assets                                               |                                                 |                                         | 76,659     |                   |           
|                                                           |                                                 |                                         |            |                   |           
|                                                           |                                                 | Total assets                            |            | $                 | 12,111,800
|                                                           |                                                 |                                         |            |                   |           
|LIABILITIES AND PARTNERS' CAPITAL                          |                                                 |                                         |            |                   |           
|Liabilities:                                               |                                                 |                                         |            |                   |           
|                                                           | Mortgage notes payable                          |                                         | $          | 3,210,510         |           
|                                                           | Notes, net                                      |                                         |            | 2,438,974         |           
|                                                           | Line of credit                                  |                                         |            |                  |           
|                                                           | Accounts payable and accrued expenses           |                                         |            | 116,192           |           
|                                                           | Accrued interest payable                        |                                         |            | 62,676            |           
|                                                           | Rents received in advance and other liabilities |                                         |            | 65,226            |           
|                                                           | Security deposits                               |                                         |            | 47,098            |           
|                                                           | Distributions payable                           |                                         |            | 145,880           |           
|                                                           |                                                 |                                         |            |                   |           
|                                                           |                                                 | Total liabilities                       |            |                   | 6,086,556 
|                                                           |                                                 |                                         |            |                   |           
|Commitments and contingencies                              |                                                 |                                         |            |                   |           
|                                                           | Minority InterestsPartially Owned Properties   |                                         |            | 11,503            |           
|                                                           |                                                 |                                         |            |                   |           
|Partners' capital:                                         |                                                 |                                         |            |                   |           
|                                                           | Preference Units                                |                                         |            | 950,356           |           
|                                                           | Preference Interests                            |                                         |            | 246,000           |           
|                                                           | Junior Preference Units                         |                                         |            | 5,846             |           
|                                                           | General Partner                                 |                                         |            | 4,509,578         |           
|                                                           | Limited Partners                                |                                         |            | 364,233           |           
|                                                           | Deferred compensation                           |                                         |            | (31,607           | )         
|                                                           | Accumulated other comprehensive loss            |                                         |            | (30,665           | )         
|                                                           |                                                 |                                         |            |                   |           
|                                                           |                                                 | Total partners' capital                 |            |                   | 6,013,741 
|                                                           |                                                 |                                         |            |                   |           
|                                                           |                                                 | Total liabilities and partners' capital |            | $                 | 12,111,800
|                                                           |                                                 |                                         |            |                   |           

See
accompanying notes

2

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands except per OP Unit data)

(Unaudited)

|                                                                                                                                                                                                                                                              |                                              | Six Months Ended June 30,                |         | Quarter Ended June 30, |          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------------- | ------- | ---------------------- | ---------
|
|REVENUES                                                                                                                                                                                                                                                      |                                              |                                          |         |                        |          
|                                                                                                                                                                                                                                                              | Rental income                                |                                          | $       | 1,011,823              |          
|                                                                                                                                                                                                                                                              | Fee and asset management                     |                                          |         | 4,310                  |          
|                                                                                                                                                                                                                                                              | Interest and other income                    |                                          |         | 9,318                  |          
|                                                                                                                                                                                                                                                              | Interest incomeinvestment in mortgage notes |                                          |         |                       |          
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|                                                                                                                                                                                                                                                              |                                              | Total revenues                           |         |                        | 1,025,451
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|EXPENSES                                                                                                                                                                                                                                                      |                                              |                                          |         |                        |          
|                                                                                                                                                                                                                                                              | Property and maintenance                     |                                          |         | 257,727                |          
|                                                                                                                                                                                                                                                              | Real estate taxes and insurance              |                                          |         | 103,415                |          
|                                                                                                                                                                                                                                                              | Property management                          |                                          |         | 37,289                 |          
|                                                                                                                                                                                                                                                              | Fee and asset management                     |                                          |         | 3,577                  |          
|                                                                                                                                                                                                                                                              | Depreciation                                 |                                          |         | 232,721                |          
|                                                                                                                                                                                                                                                              | Interest:                                    |                                          |         |                        |          
|                                                                                                                                                                                                                                                              |                                              | Expense incurred, net                    |         |                        | 171,993  
|                                                                                                                                                                                                                                                              |                                              | Amortization of deferred financing costs |         |                        | 2,988    
|                                                                                                                                                                                                                                                              | General and administrative                   |                                          |         | 22,327                 |          
|                                                                                                                                                                                                                                                              | Impairment on technology investments         |                                          |         | 581                    |          
|                                                                                                                                                                                                                                                              | Amortization of goodwill                     |                                          |         |                       |          
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|                                                                                                                                                                                                                                                              |                                              | Total expenses                           |         |                        | 832,618  
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Income before allocation to Minority Interests, income from investments in unconsolidated entities, net gain (loss) on sales of unconsolidated entities, discontinued operations, extraordinary items and cumulative effect of
change in accounting principle |                                              |                                          | 192,833 |                        |          
|Allocation to Minority InterestsPartially Owned Properties                                                                                                                                                                                                   |                                              |                                          | (1,325  | )                      |          
|Income from investments in unconsolidated entities                                                                                                                                                                                                            |                                              |                                          | 233     |                        |          
|Net gain (loss) on sales of unconsolidated entities                                                                                                                                                                                                           |                                              |                                          | 5,246   |                        |          
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Income before discontinued operations, extraordinary items and cumulative effect of change in accounting principle                                                                                                                                            |                                              |                                          | 196,987 |                        |          
|Net gain on sales of discontinued operations                                                                                                                                                                                                                  |                                              |                                          | 28,446  |                        |          
|Discontinued operations, net                                                                                                                                                                                                                                  |                                              |                                          | 2,994   |                        |          
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Income before extraordinary items and cumulative effect of change in accounting principle                                                                                                                                                                     |                                              |                                          | 228,427 |                        |          
|Extraordinary items                                                                                                                                                                                                                                           |                                              |                                          | (468    | )                      |          
|Cumulative effect of change in accounting principle                                                                                                                                                                                                           |                                              |                                          |        |                        |          
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Net income                                                                                                                                                                                                                                                    |                                              | $                                        | 227,959 |                        | $        
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|ALLOCATION OF NET INCOME:                                                                                                                                                                                                                                     |                                              |                                          |         |                        |          
|Preference Units                                                                                                                                                                                                                                              |                                              | $                                        | 38,513  |                        | $        
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Preference Interests                                                                                                                                                                                                                                          |                                              | $                                        | 10,106  |                        | $        
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Junior Preference Units                                                                                                                                                                                                                                       |                                              | $                                        | 162     |                        | $        
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|General Partner                                                                                                                                                                                                                                               |                                              | $                                        | 165,394 |                        | $        
|Limited Partners                                                                                                                                                                                                                                              |                                              |                                          | 13,784  |                        |          
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Net income available to OP Units                                                                                                                                                                                                                              |                                              | $                                        | 179,178 |                        | $        
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Net income per OP Unitbasic                                                                                                                                                                                                                                  |                                              | $                                        | 0.61    |                        | $        
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Net income per OP Unitdiluted                                                                                                                                                                                                                                |                                              | $                                        | 0.60    |                        | $        
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Weighted average OP Units outstandingbasic                                                                                                                                                                                                                   |                                              |                                          | 294,957 |                        |          
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Weighted average OP Units outstandingdiluted                                                                                                                                                                                                                 |                                              |                                          | 298,422 |                        |          
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          
|Distributions declared per OP Unit outstanding                                                                                                                                                                                                                |                                              | $                                        | 0.8650  |                        | $        
|                                                                                                                                                                                                                                                              |                                              |                                          |         |                        |          

See accompanying notes

3

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|                      |                      | Six Months Ended June 30,                                 |                                                                   | Quarter Ended June 30,
|--------------------- | -------------------- | --------------------------------------------------------- | ----------------------------------------------------------------- | ----------------------
|
|Comprehensive income: |                      |                                                           |                                                                   |                       
|                      | Net income           |                                                           | $                                                                 | 227,959               
|                      |                      | Other comprehensive income (loss)derivative instruments: |                                                                   |                       
|                      |                      |                                                           | Cumulative effect of change in accounting principle               |                       
|                      |                      |                                                           | Unrealized holding gains (losses) arising during the period       |                       
|                      |                      |                                                           | Losses reclassified into earnings from other comprehensive income |                       
|                      |                      |                                                           |                                                                   |                       
|                      | Comprehensive income |                                                           | $                                                                 | 230,334               
|                      |                      |                                                           |                                                                   |                       

See
accompanying notes

4

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

|                                                                                  |                                                                             | Six Months Ended June 30, |        
|--------------------------------------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------- | -------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |                                                                             |                           |        
|Net income                                                                        |                                                                             | $                         | 227,959
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                                             |                           |        
|                                                                                  | Allocation to Minority InterestsPartially Owned Properties                 |                           |        
|                                                                                  | Cumulative effect of change in accounting principle                         |                           |        
|                                                                                  | Depreciation                                                                |                           |        
|                                                                                  | Amortization of deferred financing costs                                    |                           |        
|                                                                                  | Amortization of discount on investment in mortgage notes                    |                           |        
|                                                                                  | Amortization of goodwill                                                    |                           |        
|                                                                                  | Amortization of discounts and premiums on debt                              |                           |        
|                                                                                  | Amortization of deferred settlements on interest rate protection agreements |                           |        
|                                                                                  | Impairment on technology investments                                        |                           |        
|                                                                                  | Income from investments in unconsolidated entities                          |                           |        
|                                                                                  | Net gain on sales of discontinued operations                                |                           |        
|                                                                                  | Net gain on sales of unconsolidated entities                                |                           |        
|                                                                                  | Extraordinary items                                                         |                           |        
|                                                                                  | Unrealized loss (gain) on interest rate protection agreements               |                           |        
|                                                                                  | Book value of furniture sales and rental buyouts                            |                           |        
|                                                                                  | Compensation paid with Company Common Shares                                |                           |        
|Changes in assets and liabilities:                                                |                                                                             |                           |        
|                                                                                  | (Increase) in rents receivable                                              |                           |        
|                                                                                  | Decrease (increase) in depositsrestricted                                  |                           |        
|                                                                                  | Additions to rental furniture                                               |                           |        
|                                                                                  | Decrease (increase) in other assets                                         |                           |        
|                                                                                  | Increase in accounts payable and accrued expenses                           |                           |        
|                                                                                  | Increase in accrued interest payable                                        |                           |        
|                                                                                  | (Decrease) in rents received in advance and other liabilities               |                           |        
|                                                                                  | (Decrease) increase in security deposits                                    |                           |        
|                                                                                  |                                                                             |                           |        
|                                                                                  | Net cash provided by operating activities                                   |                           |        
|                                                                                  |                                                                             |                           |        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |                                                                             |                           |        
|                                                                                  | Investment in real estateacquisitions                                      |                           |        
|                                                                                  | Investment in real estatedevelopment                                       |                           |        
|                                                                                  | Improvements to real estate                                                 |                           |        
|                                                                                  | Additions to non-real estate property                                       |                           |        
|                                                                                  | Interest capitalized for real estate under development                      |                           |        
|                                                                                  | Interest capitalized for unconsolidated entities under development          |                           |        
|                                                                                  | Proceeds from disposition of real estate, net                               |                           |        
|                                                                                  | Proceeds from disposition of furniture rental business                      |                           |        
|                                                                                  | Investment in property and equipment                                        |                           |        
|                                                                                  | Principal receipts on investment in mortgage notes                          |                           |        
|                                                                                  | Investments in unconsolidated entities                                      |                           |        
|                                                                                  | Distributions from unconsolidated entities                                  |                           |        
|                                                                                  | Proceeds from disposition of unconsolidated entities                        |                           |        
|                                                                                  | Proceeds from refinancing of unconsolidated entities                        |                           |        
|                                                                                  | Decrease in deposits on real estate acquisitions, net                       |                           |        
|                                                                                  | Decrease (increase) in mortgage deposits                                    |                           |        
|                                                                                  | Business combinations, net of cash acquired                                 |                           |        
|                                                                                  | Other investing activities, net                                             |                           |        
|                                                                                  |                                                                             |                           |        
|                                                                                  | Net cash (used for) provided by investing activities                        |                           |        
|                                                                                  |                                                                             |                           |        

See accompanying notes

5

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|                                                                                                |                                               | Six Months Ended June 30, |         
|----------------------------------------------------------------------------------------------- | --------------------------------------------- | ------------------------- | --------
|
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                           |                                               |                           |         
|Loan and bond acquisition costs                                                                 |                                               | $                         | (9,124  
|Mortgage notes payable:                                                                         |                                               |                           |         
|                                                                                                | Proceeds                                      |                           |         
|                                                                                                | Lump sum payoffs                              |                           |         
|                                                                                                | Scheduled principal repayments                |                           |         
|                                                                                                | Prepayment premiums/fees                      |                           |         
|Notes, net:                                                                                     |                                               |                           |         
|                                                                                                | Proceeds                                      |                           |         
|                                                                                                | Lump sum payoffs                              |                           |         
|                                                                                                | Scheduled principal repayments                |                           |         
|Lines of credit:                                                                                |                                               |                           |         
|                                                                                                | Proceeds                                      |                           |         
|                                                                                                | Repayments                                    |                           |         
|(Payments) from settlement of interest rate protection agreements                               |                                               |                           | (1,533  
|Proceeds from sale of OP Units                                                                  |                                               |                           | 6,354   
|Proceeds from sale of Preference Interests                                                      |                                               |                           |        
|Proceeds from exercise of EQR options                                                           |                                               |                           | 27,030  
|Redemption of Preference Units                                                                  |                                               |                           |        
|Payment of offering costs                                                                       |                                               |                           | (158    
|Distributions:                                                                                  |                                               |                           |         
|                                                                                                | OP UnitsGeneral Partner                      |                           |         
|                                                                                                | Preference Units                              |                           |         
|                                                                                                | Preference Interests                          |                           |         
|                                                                                                | Junior Preference Units                       |                           |         
|                                                                                                | OP UnitsLimited Partners                     |                           |         
|                                                                                                | Minority InterestsPartially Owned Properties |                           |         
|Principal receipts on employee notes, net                                                       |                                               |                           | 173     
|                                                                                                |                                               |                           |         
|Net cash (used for) financing activities                                                        |                                               |                           | (401,554
|                                                                                                |                                               |                           |         
|Net increase in cash and cash equivalents                                                       |                                               |                           | 37,339  
|Cash and cash equivalents, beginning of period                                                  |                                               |                           | 51,603  
|                                                                                                |                                               |                           |         
|Cash and cash equivalents, end of period                                                        |                                               | $                         | 88,942  
|                                                                                                |                                               |                           |         
|SUPPLEMENTAL INFORMATION:                                                                       |                                               |                           |         
|Cash paid during the period for interest                                                        |                                               | $                         | 184,216 
|                                                                                                |                                               |                           |         
|Mortgage loans assumed through real estate acquisitions                                         |                                               | $                         | 14,000  
|                                                                                                |                                               |                           |         
|Mortgage loans (assumed) by purchaser in real estate and furniture rental business dispositions |                                               | $                         | (1,680  
|                                                                                                |                                               |                           |         
|Transfers to real estate held for disposition                                                   |                                               | $                         |        
|                                                                                                |                                               |                           |         

See
accompanying notes

6

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ERP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.    Business

ERP Operating Limited Partnership ("ERPOP"), an Illinois limited partnership, was formed in May 1993 to conduct the multifamily residential property
business of Equity Residential ("EQR"). EQR is a Maryland real estate investment trust ("REIT") formed on March 31, 1993 and is a fully integrated real estate company engaged in the
acquisition, ownership, management and operation of multifamily properties.

EQR
is the general partner of, and as of June 30, 2002, owned an approximate 92.4% ownership interest in ERPOP. The Company conducts substantially all of its business and owns
substantially all of its assets through ERPOP. ERPOP is, in turn, directly or indirectly, a partner, member or shareholder of numerous partnerships, limited liability companies and corporations which
have been established primarily to own fee simple title to multifamily properties or to conduct property management activities and other businesses related to the ownership and operation of
multifamily residential real estate. As used herein, the term "Operating Partnership" includes ERPOP and those entities owned or controlled by it. As used herein, the term "Company" means EQR and the
Operating Partnership.

As
of June 30, 2002, the Operating Partnership owned or had interests in a portfolio of 1,065 multifamily properties containing 227,963 apartment units located in 36 states
consisting of the following:

Number of
Properties

Number of
UnitsWholly Owned Properties

943

198,676Partially Owned Properties (Consolidated)

36

6,931Unconsolidated Properties

86

22,356Total Properties

1,065

227,963


2.    Summary of Significant Accounting Policies



The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) and certain reclassifications considered necessary for a fair presentation have been included. Certain reclassifications have been made to the prior period
financial statements in order to conform to the current year presentation. Operating results for the six months ended June 30, 2002 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2002.

The
balance sheet at December 31, 2001 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by
accounting principles generally accepted in the United States for complete financial statements.

7

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For
further information, including definition of capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Operating
Partnership's annual report on Form 10-K for the year ended December 31, 2001.



The following table summarizes the Operating Partnership's consolidated derivative instruments and hedging activities at June 30, 2002 (amounts are in
thousands):

|                                       |  | Cash Flow
Hedges |         | Fair Value
Hedges |   | Offsetting
Swaps/Caps |   | Offsetting
Reverse
Swap/Caps |        
|-------------------------------------- |  | ---------------- | ------- | ----------------- | - | --------------------- | - | ---------------------------- | -------
|Current Notional Balance               |  | $                | 400,000 |                   | $ | 220,000               |   | $                            | 255,117
|Lowest Possible Notional               |  | $                | 400,000 |                   | $ | 220,000               |   | $                            | 251,410
|Highest Possible Notional              |  | $                | 400,000 |                   | $ | 220,000               |   | $                            | 431,444
|Lowest Interest Rate                   |  |                  | 3.65125 | %                 |   | 5.3325                | % |                              | 4.528  
|Highest Interest Rate                  |  |                  | 5.81000 | %                 |   | 7.2500                | % |                              | 6.000  
|Earliest Maturity Date                 |  |                  | 2003    |                   |   | 2005                  |   |                              | 2003   
|Latest Maturity Date                   |  |                  | 2005    |                   |   | 2011                  |   |                              | 2007   
|Estimated Asset (Liability) Fair Value |  | $                | (14,664 | )                 | $ | 4,258                 |   | $                            | (5,093 

At
June 30, 2002, certain unconsolidated development partnerships in which the Company invested had entered into swaps to hedge the interest rate risk exposure on unconsolidated
floating rate construction mortgage loans. The Operating Partnership has recorded its proportionate share of these qualifying hedges on its consolidated balance sheets. These swaps have been
designated as cash flow hedges with a current aggregate notional amount of $379.3 million (notional amounts range from $123.9 million to $562.3 million over the terms of the
swaps) at interest rates ranging from 2.28% to 6.94% maturing at various dates ranging from 2002 to 2005 with a net liability fair value of $11.3 million.

On
June 30, 2002, the net derivative instruments were reported at their fair value as other liabilities of approximately $10.7 million and as a reduction to investment in
unconsolidated entities of approximately $11.3 million. As of June 30, 2002, there were approximately $30.8 million in deferred losses, net, included in accumulated other
comprehensive loss. Based on the estimated fair values of the net derivative instruments at June 30, 2002, the Operating Partnership may recognize an estimated $16.4 million of
accumulated other comprehensive loss as additional interest expense during the twelve months ending June 30, 2003, of which $6.0 million is related to the unconsolidated development
partnerships.



In June 2001, the FASB issued SFAS No. 141,Business Combinations. SFAS No. 141 requires
companies to account for all business combinations using the purchase method of accounting. SFAS No. 141 is
effective for fiscal years beginning after December 15, 2001. The Operating Partnership adopted the standard effective January 1, 2002, but it has not had any impact on the Operating
Partnership's financial condition and results of operations.

In
June 2001, the FASB issued SFAS No. 142,Goodwill and Other Intangible Assets. SFAS No. 142 requires companies to
eliminate the amortization of goodwill in favor of a periodic impairment based

8

---

approach. SFAS No. 142 is effective for the fiscal years beginning after December 15, 2001. The Operating Partnership adopted the standard effective January 1, 2002, but it has
not had a material impact on the Operating Partnership's financial condition and results of operations.

In
April 2002, the FASB issued SFAS No. 145,Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections. SFAS No. 145, among other items, rescinds the automatic classification of costs incurred on debt extinguishment as extraordinary charges. Instead,
gains and losses from debt extinguishment should only be classified as extraordinary if they meet the "unusual and infrequently occurring" criteria outlined in APB No. 30. SFAS No. 145
is effective for fiscal years beginning after May 15, 2002. The Operating Partnership will adopt the standard effective January 1, 2003, but does not expect it to have a material impact
on its financial condition and results of operations.

3.    Partners' Capital

The following table presents the changes in the Operating Partnership's issued and outstanding OP Units for the six months ended June 30, 2002:

2002Operating Partnership's OP Units outstanding at January 1,

294,818,566Issued to General Partner:Conversion of Series E Preference Units

723,048Conversion of Series H Preference Units

4,050Employee Share Purchase Plan

212,395Dividend ReinvestmentDRIP Plan

26,843Share PurchaseDRIP Plan

21,819Exercise of EQR options

1,301,917Restricted EQR share grants, net

912,128Issued to Limited Partners:Issuance through acquisitions

2,520Operating Partnership's OP Units outstanding at June 30,

298,023,286


The
limited partners of the Operating Partnership as of June 30, 2002 include various individuals and entities that contributed their properties to the Operating Partnership in
exchange for OP Units (the "Limited Partners") and own an approximate 7.57% ownership interest in ERPOP. Subject to applicable securities law restrictions, the Limited Partners may exchange their OP
Units for EQR Common Shares on a one-for-one basis.

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

9

---

The
following table presents the Operating Partnership's issued and outstanding "Preference Units" as of June 30, 2002 and December 31, 2001:

|                                                                                                                                                                                            |  |   |          | Amounts in thousands
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | -------- | --------------------
|
|
|Preference Units:                                                                                                                                                                           |  |   |          |                     
|91/8% Series B Cumulative Redeemable Preference Units; liquidation value $250 per unit; 500,000 units issued and outstanding at June 30, 2002 and December 31, 2001                         |  | $ | 22.81252 |                     
|91/8% Series C Cumulative Redeemable Preference Units; liquidation value $250 per unit; 460,000 units issued and outstanding at June 30, 2002 and December 31, 2001                         |  | $ | 22.81252 |                     
|8.60% Series D Cumulative Redeemable Preference Units; liquidation value $250 per unit; 700,000 units issued and outstanding at June 30, 2002 and December 31, 2001                         |  | $ | 21.50000 |                     
|Series E Cumulative Convertible Preference Units; liquidation value $25 per unit; 2,716,012 and 3,365,794 units issued and outstanding at June 30, 2002 and December 31, 2001, respectively |  | $ | 1.75000  |                     
|71/4% Series G Convertible Cumulative Preference Units; liquidation value $250 per unit; 1,264,700 units issued and outstanding at June 30, 2002 and December 31, 2001                      |  | $ | 18.12500 |                     
|7.00% Series H Cumulative Convertible Preference Units, liquidation value $25 per unit; 51,228 and 54,027 units issued and outstanding at June 30, 2002 and December 31, 2001, respectively |  | $ | 1.75000  |                     
|8.29% Series K Cumulative Redeemable Preference Units; liquidation value $50 per unit; 1,000,000 units issued and outstanding at June 30, 2002 and December 31, 2001                        |  | $ | 4.14500  |                     
|7.625% Series L Cumulative Redeemable Preference Units; liquidation value $25 per unit; 4,000,000 units issued and outstanding at June 30, 2002 and December 31, 2001                       |  | $ | 1.90625  |                     
|                                                                                                                                                                                            |  |   |          |                     
|                                                                                                                                                                                            |  |   |          |                     
|                                                                                                                                                                                            |  |   |          |                     

---

10

---

The
following table presents the issued and outstanding Preference Interests as of June 30, 2002 and December 31, 2001:

|                                                                                                                                                                                |  |   |        | Amounts in thousands
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------ | --------------------
|
|
|Preference Interests:                                                                                                                                                           |  |   |        |                     
|8.00% Series A Cumulative Redeemable Preference Interests; liquidation value $50 per unit; 800,000 units issued and outstanding at June 30, 2002 and December 31, 2001          |  | $ | 4.0000 |                     
|8.50% Series B Cumulative Redeemable Preference Units; liquidation value $50 per unit; 1,100,000 units issued and outstanding at June 30, 2002 and December 31, 2001            |  | $ | 4.2500 |                     
|8.50% Series C Cumulative Redeemable Preference Units; liquidation value $50 per unit; 220,000 units issued and outstanding at June 30, 2002 and December 31, 2001              |  | $ | 4.2500 |                     
|8.375% Series D Cumulative Redeemable Preference Units; liquidation value $50 per unit; 420,000 units issued and outstanding at June 30, 2002 and December 31, 2001             |  | $ | 4.1875 |                     
|8.50% Series E Cumulative Redeemable Preference Units; liquidation value $50 per unit; 1,000,000 units issued and outstanding at June 30, 2002 and December 31, 2001            |  | $ | 4.2500 |                     
|8.375% Series F Cumulative Redeemable Preference Units; liquidation value $50 per unit; 180,000 units issued and outstanding at June 30, 2002 and December 31, 2001             |  | $ | 4.1875 |                     
|7.875% Series G Cumulative Redeemable Preference Units; liquidation value $50 per unit; 510,000 units issued and outstanding at June 30, 2002 and December 31, 2001             |  | $ | 3.9375 |                     
|7.625% Series H Cumulative Convertible Redeemable Preference Units; liquidation value $50 per unit; 190,000 units issued and outstanding at June 30, 2002 and December 31, 2001 |  | $ | 3.8125 |                     
|7.625% Series I Cumulative Convertible Redeemable Preference Units; liquidation value $50 per unit; 270,000 units issued and outstanding at June 30, 2002 and December 31, 2001 |  | $ | 3.8125 |                     
|7.625% Series J Cumulative Convertible Redeemable Preference Units; liquidation value $50 per unit; 230,000 units issued and outstanding at June 30, 2002 and December 31, 2001 |  | $ | 3.8125 |                     
|                                                                                                                                                                                |  |   |        |                     
|                                                                                                                                                                                |  |   |        |                     
|                                                                                                                                                                                |  |   |        |                     

---

11

---

The
following table presents the Operating Partnership's issued and outstanding Junior Convertible Preference Units (the "Junior Preference Units") as of June 30, 2002 and
December 31, 2001:

|                                                                                                                                                          |  |   |         | Amounts in thousands
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------- | --------------------
|
|
|Junior Preference Units:                                                                                                                                  |  |   |         |                     
|Series A Junior Convertible Preference Units; liquidation value $100 per unit; 56,616 units issued and outstanding at June 30, 2002 and December 31, 2001 |  | $ | 5.46934 |                     
|Series B Junior Convertible Preference Units; liquidation value $25 per unit; 7,367 units issued and outstanding at June 30, 2002 and December 31, 2001   |  | $ | 2.00000 |                     
|                                                                                                                                                          |  |   |         |                     
|                                                                                                                                                          |  |   |         |                     
|                                                                                                                                                          |  |   |         |                     

---

4.    Real Estate Acquisitions

During the six months ended June 30, 2002, the Operating Partnership acquired the seven properties listed below from unaffiliated parties for a total
purchase price of $166.5 million.

|Date
Acquired |  | Property                    |  | Location               |  | Number of
Units |  | Acquisition
Price
|------------- |  | --------------------------- |  | ---------------------- |  | --------------- |  | -----------------
|
|3/28/02       |  | Isles at Sawgrass           |  | Sunrise, FL            |  | 368             |  | $                
|4/24/02       |  | Center Pointe               |  | Beaverton, OR          |  | 264             |  |                  
|4/30/02       |  | Mira Flores                 |  | Palm Beach Gardens, FL |  | 352             |  |                  
|5/15/02       |  | Gramercy Park               |  | Houston, TX            |  | 384             |  |                  
|5/31/02       |  | Enclave at Winston Park     |  | Coconut Creek, FL      |  | 278             |  |                  
|5/31/02       |  | St. Andrews at Winston Park |  | Coconut Creek, FL      |  | 284             |  |                  
|6/21/02       |  | Westside Villas VII         |  | Los Angeles, CA        |  | 53              |  |                  
|              |  |                             |  |                        |  |                 |  |                  
|              |  |                             |  |                        |  | 1,983           |  | $                
|              |  |                             |  |                        |  |                 |  |                  

5.    Real Estate Dispositions

During the six months ended June 30, 2002, the Operating Partnership disposed of the twenty-three properties listed below to unaffiliated parties. The
Operating Partnership recognized a net gain

12

---

on sales of discontinued operations of approximately $28.4 million and a net gain on sales of unconsolidated entities of approximately $5.2 million.

|Date
Disposed |  | Property                  |  | Location          |  | Number Of
Units |  | Disposition
Price
(in thousands)
|------------- |  | ------------------------- |  | ----------------- |  | --------------- |  | --------------------------------
|01/17/02      |  | Ravenwood                 |  | Mauldin, SC       |  | 82              |  | $                               
|01/24/02      |  | Larkspur I & II           |  | Moraine, OH       |  | 45              |  |                                 
|01/31/02      |  | Springwood II             |  | Austintown, OH    |  | 43              |  |                                 
|02/21/02      |  | Scottsdale Courtyards     |  | Scottsdale, AZ    |  | 274             |  |                                 
|04/11/02      |  | Applegate                 |  | Lordstown, OH     |  | 39              |  |                                 
|04/11/02      |  | Applerun                  |  | Warren, OH        |  | 48              |  |                                 
|04/11/02      |  | Brunswick                 |  | Cortland, OH      |  | 59              |  |                                 
|05/01/02      |  | The Landings              |  | Memphis, TN       |  | 292             |  |                                 
|05/03/02      |  | Waterbury                 |  | Clarksville, TN   |  | 54              |  |                                 
|05/09/02      |  | Arboretum                 |  | Tucson, AZ        |  | 496             |  |                                 
|05/09/02      |  | Orange Grove Village      |  | Tucson, AZ        |  | 400             |  |                                 
|05/09/02      |  | Village at Tanque Verde   |  | Tucson, AZ        |  | 217             |  |                                 
|05/14/02      |  | Canyon Crest Views        |  | Riverside, CA     |  | 178             |  |                                 
|05/14/02      |  | Merrimac Woods            |  | Costa Mesa, CA    |  | 123             |  |                                 
|05/14/02      |  | Sierra Canyon             |  | Santa Clarita, CA |  | 232             |  |                                 
|05/15/02      |  | Meadowood                 |  | Wellsville, OH    |  | 40              |  |                                 
|05/23/02      |  | Pine Meadow               |  | Greensboro, NC    |  | 204             |  |                                 
|05/23/02      |  | Palms at South Shore      |  | League City, TX   |  | 240             |  |                                 
|05/31/02      |  | California Gardens        |  | Jacksonville, FL  |  | 71              |  |                                 
|05/31/02      |  | Westcreek                 |  | Jacksonville, FL  |  | 86              |  |                                 
|06/19/02      |  | Apple Run                 |  | Hillsdale, MI     |  | 39              |  |                                 
|Various       |  | Four Lakes Condo Units    |  | Lisle, IL         |  | 57              |  |                                 
|              |  |                           |  |                   |  |                 |  |                                 
|              |  | Wholly Owned Properties   |  |                   |  | 3,319           |  |                                 
|              |  |                           |  |                   |  |                 |  |                                 
|01/31/02      |  | Mount Laurel Crossing*    |  | Mt. Laurel, NJ    |  | 296             |  |                                 
|04/23/02      |  | Foxton*                   |  | Seymour, IN       |  | 39              |  |                                 
|              |  |                           |  |                   |  |                 |  |                                 
|              |  | Unconsolidated Properties |  |                   |  | 335             |  |                                 
|              |  |                           |  |                   |  |                 |  |                                 
|Total         |  |                           |  |                   |  | 3,654           |  | $                               
|              |  |                           |  |                   |  |                 |  |                                 

---

6.    Commitments to Acquire/Dispose of Real Estate

As of June 30, 2002, in addition to the property that was subsequently acquired as discussed in Note 17, the Operating Partnership had entered into
separate agreements to acquire two multifamily properties containing 603 units from unaffiliated parties. The Operating Partnership expects a combined purchase price of approximately
$42.1 million.

13

---

As of June 30, 2002, in addition to the properties that were subsequently disposed of as discussed in Note 17, the Operating Partnership had entered into separate
agreements to dispose of fourteen multifamily properties containing 2,756 units to unaffiliated parties. The Operating Partnership expects a combined disposition price of approximately
$134.5 million.

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

7.    Investments in Unconsolidated Entities

The Operating Partnership has entered into various joint venture agreements with third party companies. The following table summarizes the Operating Partnership's
investments in unconsolidated entities as of June 30, 2002 (amounts in thousands except for project and unit amounts):

|                                                       |  | Institutional
Joint
Ventures |         | Stabilized
Development
Projects(1) |   | Projects
Under
Development |   | Lexford /
Other |         | Totals |  
|------------------------------------------------------ |  | ---------------------------- | ------- | ---------------------------------- | - | -------------------------- | - | --------------- | ------- | ------ | -
|Total projects                                         |  |                              | 45      |                                    |   | 10                         |   |                 | 18      |        |  
|                                                       |  |                              |         |                                    |   |                            |   |                 |         |        |  
|Total units                                            |  |                              | 10,846  |                                    |   | 3,038                      |   |                 | 5,523   |        |  
|                                                       |  |                              |         |                                    |   |                            |   |                 |         |        |  
|ERPOP's percentage ownership of mortgage notes payable |  |                              | 25.0    | %                                  |   | 96.4                       | % |                 | 100.0   | %      |  
|ERPOP's share of mortgage notes payable(4)             |  | $                            | 121,200 |                                    | $ | 242,431                    |   | $               | 341,703 |        | $
|                                                       |  |                              |         |                                    |   |                            |   |                 |         |        |  

---

Investments
in unconsolidated entities include the Unconsolidated Properties as well as various development properties under construction or pending construction. The Operating
Partnership does not consolidate these entities, as it does not have sole control of major decisions (such as sale and/or financing/refinancing). The Operating Partnership's common equity ownership
interests in these entities range from 4.5% to 57.0% at June 30, 2002.

These
investments are accounted for utilizing the equity method of accounting. Under the equity method of accounting, the net equity investment of the Operating Partnership is reflected
on the consolidated balance sheets and after the project is completed, the consolidated statements of operations include the Operating Partnership's share of net income or loss from the unconsolidated
entity. Prior to the project being completed, the Operating Partnership capitalizes interest on its equity contribution in accordance with the provisions of SFAS No. 58, Capitalization of Interest Cost in Financial
Statements That Include Investments Accounted for by the Equity Method.During the six months ended
June 30, 2002 and 2001, the Operating Partnership capitalized $8.0 million and

14

---

$9.3 million, respectively, in interest cost related to its unconsolidated development projects (which reduced interest expense incurred in the consolidated statements of operations).

The
Operating Partnership generally contributes between 25% and 35% of the project cost of the unconsolidated projects under development, with the remaining cost financed through
third-party construction mortgages.

8.    DepositsRestricted

As of June 30, 2002, deposits-restricted totaled $149.9 million and primarily included the following:



9.    Mortgage Notes Payable

As of June 30, 2002, the Operating Partnership had outstanding mortgage indebtedness of approximately $3.2 billion.

During
the six months ended June 30, 2002, the Operating Partnership:



As
of June 30, 2002, scheduled maturities for the Operating Partnership's outstanding mortgage indebtedness were at various dates through October 1, 2033. The interest rate
range on the Operating Partnership's mortgage debt was 1.10% to 12.465% at June 30, 2002. During the six months ended June 30, 2002, the weighted average interest rate was 6.41%.

10.  Notes

As of June 30, 2002, the Operating Partnership had outstanding unsecured notes of approximately $2.4 billion.

During
the six months ended June 30, 2002, the Operating Partnership:



As
of June 30, 2002, scheduled maturities for the Operating Partnership's outstanding notes are at various dates through 2029. The interest rate range on the Operating
Partnership's notes was 4.75% to 7.75% at June 30, 2002. During the six months ended June 30, 2002, the weighted average interest rate was 6.50%.

15

---

11.  Line of Credit

On May 30, 2002, the Operating Partnership obtained a new three-year $700.0 million unsecured revolving credit facility maturing
May 29, 2005. The new line of credit replaced the Operating Partnership's $700.0 million unsecured revolving credit facility that was scheduled to expire in August 2002. Advances
under the new credit facility bear interest at variable rates based upon LIBOR at various interest periods, plus a spread dependent upon the Operating Partnership's credit rating, or based upon bids
received from the lending group. The prior existing revolving credit facility was terminated upon the closing of the new facility. As of June 30, 2002, no amounts were outstanding and
$84.0 million was restricted (dedicated to support letters of credit and not available for borrowing) on the line of credit. During the six months ended June 30, 2002, the weighted
average interest rate was 2.50%.

12.  Calculation of Net Income Per Weighted Average OP Unit

The following tables set forth the computation of net income per OP Unitbasic and net income per OP Unitdiluted:

|                                                                                                                                                                                                                                                                                                                    |                                                         | Six Months Ended June 30, |         | Quarter Ended June 30, |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------- | ------------------------- | ------- | ---------------------- | -
|
|
|Numerator:                                                                                                                                                                                                                                                                                                          |                                                         |                           |         |                        |  
|Income before allocation to Minority Interests, income from investments in unconsolidated entities, net gain (loss) on sales of unconsolidated entities, discontinued operations, extraordinary items, cumulative effect of
change in accounting principle and allocation to preference unit/interest distributions |                                                         | $                         | 192,833 |                        | $
|Allocation to Minority InterestsPartially Owned Properties                                                                                                                                                                                                                                                         |                                                         |                           | (1,325  | )                      |  
|Income from investments in unconsolidated entities                                                                                                                                                                                                                                                                  |                                                         |                           | 233     |                        |  
|Allocation to Preference Units                                                                                                                                                                                                                                                                                      |                                                         |                           | (38,513 | )                      |  
|Allocation to Preference Interests                                                                                                                                                                                                                                                                                  |                                                         |                           | (10,106 | )                      |  
|Allocation to Junior Preference Units                                                                                                                                                                                                                                                                               |                                                         |                           | (162    | )                      |  
|                                                                                                                                                                                                                                                                                                                    |                                                         |                           |         |                        |  
|Income before net gain (loss) on sales of unconsolidated entities, discontinued operations, extraordinary items and cumulative effect of change in accounting principle                                                                                                                                             |                                                         |                           | 142,960 |                        |  
|Net gain (loss) on sales of unconsolidated entities                                                                                                                                                                                                                                                                 |                                                         |                           | 5,246   |                        |  
|Net gain on sales of discontinued operations                                                                                                                                                                                                                                                                        |                                                         |                           | 28,446  |                        |  
|Discontinued operations, net                                                                                                                                                                                                                                                                                        |                                                         |                           | 2,994   |                        |  
|Extraordinary items                                                                                                                                                                                                                                                                                                 |                                                         |                           | (468    | )                      |  
|Cumulative effect of change in accounting principle                                                                                                                                                                                                                                                                 |                                                         |                           |        |                        |  
|                                                                                                                                                                                                                                                                                                                    |                                                         |                           |         |                        |  
|Numerator for net income per OP Unitbasic                                                                                                                                                                                                                                                                          |                                                         |                           | 179,178 |                        |  
|Effect of dilutive securities:                                                                                                                                                                                                                                                                                      |                                                         |                           |         |                        |  
|                                                                                                                                                                                                                                                                                                                    | Distributions on convertible preference units/interests |                           |         |                       |  
|                                                                                                                                                                                                                                                                                                                    |                                                         |                           |         |                        |  
|Numerator for net income per OP Unitdiluted                                                                                                                                                                                                                                                                        |                                                         | $                         | 179,178 |                        | $
|                                                                                                                                                                                                                                                                                                                    |                                                         |                           |         |                        |  

16

---

|Denominator:                                   |                                                                                                               |   |         |       |   |         |       |   |         |       |   |         |      
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | - | ------- | ----- | - | ------- | ----- | - | ------- | ----- | - | ------- | -----
|Denominator for net income per OP Unitbasic   |                                                                                                               |   | 294,957 |       |   | 290,086 |       |   | 295,799 |       |   | 290,509 |      
|Effect of dilutive securities:                 |                                                                                                               |   |         |       |   |         |       |   |         |       |   |         |      
|                                               | Convertible preference units/interests                                                                        |   |         |      |   |         | 370   |   |         | 75    |   |         |     
|                                               | Dilution for OP Units issuable upon assumed exercise/vesting of the Company's share options/restricted shares |   |         | 3,465 |   |         | 3,361 |   |         | 3,620 |   |         | 3,430
|                                               |                                                                                                               |   |         |       |   |         |       |   |        
|Denominator for net income per OP Unitdiluted |                                                                                                               |   | 298,422 |       |   | 293,817 |       |   | 299,494 |       |   | 293,939 |      
|                                               |                                                                                                               |   |         |       |   |         |       |   |        
|Net income per OP Unitbasic                   |                                                                                                               | $ | 0.61    |       | $ | 0.68    |       | $ | 0.33    |       | $ | 0.28    |      
|                                               |                                                                                                               |   |         |       |   |         |       |   |        
|Net income per OP Unitdiluted                 |                                                                                                               | $ | 0.60    |       | $ | 0.67    |       | $ | 0.32    |       | $ | 0.27    |      
|                                               |                                                                                                               |   |         |       |   |         |       |   |        

|                                                                                                                                                                                            |  | Six Months Ended June 30, |      | Quarter Ended June 30,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | ---- | ----------------------
|
|
|Net income per OP Unitbasic:                                                                                                                                                               |  |                           |      |                       
|Income before net gain (loss) on sales of unconsolidated entities, discontinued operations, extraordinary items and cumulative effect of change in accounting principle per OP Unitbasic   |  | $                         | 0.48 |                       
|Net gain (loss) on sales of unconsolidated entities                                                                                                                                         |  |                           | 0.02 |                       
|Net gain on sales of discontinued operations                                                                                                                                                |  |                           | 0.10 |                       
|Discontinued operations, net                                                                                                                                                                |  |                           | 0.01 |                       
|Extraordinary items                                                                                                                                                                         |  |                           |     |                       
|Cumulative effect of change in accounting principle                                                                                                                                         |  |                           |     |                       
|                                                                                                                                                                                            |  |                           |      |                       
|Net income per OP Unitbasic                                                                                                                                                                |  | $                         | 0.61 |                       
|                                                                                                                                                                                            |  |                           |      |                       
|Net income per OP Unitdiluted:                                                                                                                                                             |  |                           |      |                       
|Income before net gain (loss) on sales of unconsolidated entities, discontinued operations, extraordinary items and cumulative effect of change in accounting principle per OP Unitdiluted |  | $                         | 0.48 |                       
|Net gain (loss) on sales of unconsolidated entities                                                                                                                                         |  |                           | 0.01 |                       
|Net gain on sales of discontinued operations                                                                                                                                                |  |                           | 0.10 |                       
|Discontinued operations, net                                                                                                                                                                |  |                           | 0.01 |                       
|Extraordinary items                                                                                                                                                                         |  |                           |     |                       
|Cumulative effect of change in accounting principle                                                                                                                                         |  |                           |     |                       
|                                                                                                                                                                                            |  |                           |      |                       
|Net income per OP Unitdiluted                                                                                                                                                              |  | $                         | 0.60 |                       
|                                                                                                                                                                                            |  |                           |      |                       

Convertible preference units/interests that could be converted into 15,648,034 and 14,921,384 weighted average Common Shares (which would be contributed to the
Operating Partnership in exchange for OP Units) for the six months ended June 30, 2002 and 2001, respectively, and 15,369,255 and 15,379,910 weighted average Common Shares for the quarters
ended June 30, 2002 and 2001, respectively, were outstanding but were not included in the computation of diluted earnings per OP Unit because the effects would be
anti-dilutive.

17

---

On October 11, 2001, the Operating Partnership effected a two-for-one split of its OP Units to unitholders of record as of
September 21, 2001. All per OP Unit data and numbers of OP Units have been retroactively adjusted to reflect the OP Unit split.

13.  Discontinued Operations

In August 2001, the FASB issued SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets, which is effective for fiscal years beginning after December 15, 2001. The Operating Partnership adopted the standard effective January 1, 2002, which did
not have a material effect on the Operating Partnership's financial condition and results of operations.

Under
the provisions of SFAS No. 144, for long-lived assets to be held and used, the Operating Partnership first determines whether any indicators of impairment exist.
If indicators exist, the Operating Partnership compares the expected future undiscounted cash flows for the long-lived asset against the carrying amount of that asset. If the sum of the
estimated undiscounted cash flows is less than the carrying amount of the asset, an impairment loss would be recorded for the difference between the estimated fair value and the carrying amount of the
asset.

For
long-lived assets to be disposed of, an impairment loss is recognized when the estimated fair value of the asset, less the estimated cost to sell, is less than the
carrying amount of the asset measured at the time that the Operating Partnership has determined it will sell the asset. Long-lived assets held for disposition are reported at the lower of
their carrying amounts or their estimated fair values, less their costs to sell.

Goodwill
and investments in unconsolidated entities accounted for under the equity method of accounting are specifically excluded from the scope of SFAS No. 144.

On
January 11, 2002, the Operating Partnership disposed of its furniture rental business for $30.0 million and received net proceeds of $28.7 million. No gain/loss
on sale was recognized as the net book value at the sale date after giving effect to a previously recorded impairment loss approximated the sales price.

The
components of discontinued operations for the six months and quarters ended June 30, 2002 and 2001 are outlined below and include the results of operations through the date of
each respective sale for the six months and quarter ended June 30, 2002 and a full six months and quarter of operations for the six months and quarter ended June 30, 2001, for the
following:



18

---



Six Months Ended June 30,

Quarter Ended June 30,2002

2001

2002

2001(Amounts in thousands)REVENUESRental income

$
8,762

$
12,858

$
2,628

$
6,432Interest and other income


3


26


1


25Furniture income


1,361


30,027


(4
)

15,155Total revenues


10,126


42,911


2,625


21,612EXPENSESProperty and maintenance


2,787


3,332


1,267


1,617Real estate taxes and insurance


881


1,162


254


589Depreciation


2,125


3,309


569


1,662Interest expense incurred, net


36


300





147Furniture expenses


1,303


30,499





15,670Amortization of goodwill





643





353Total expenses


7,132


39,245


2,090


20,038Discontinued operations, net

$
2,994

$
3,666

$
535

$
1,574


14.  Commitments and Contingencies

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

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

In
regards to the funding of properties in the development stage and the agreements with multifamily residential real estate developers, the Operating Partnership funded a net total of
$40.3 million during the six months ended June 30, 2002. In connection with one development agreement, the Operating Partnership has an obligation to fund up to an additional
$9.5 million to guarantee third party construction financing. As of June 30, 2002, the Operating Partnership has 21 projects under development (includes three consolidated projects) with
estimated completion dates ranging through March 31, 2004.

For
one development agreement, the Operating Partnership's partner has the right, at any time following completion of a project, to stipulate a value for such project and offer to sell
its interest in the project to the Operating Partnership based on such value. If the Operating Partnership chooses not to purchase the interest, it must agree to a sale of the project to an unrelated
third party at such value. The Operating Partnership's partner must exercise this right as to all projects within five years after the receipt of the final certificate of occupancy on the last
developed property.

Under
a second development agreement, the Operating Partnership's partner has the right, at any time following completion of a project, to require the Operating Partnership to purchase
the partners' interest in that project at a mutually agreeable price. If the Operating Partnership and the partner are unable to agree on a price, both parties will obtain appraisals. If the appraised
values vary by more than 10%, both the Operating Partnership and its partner will agree on a third appraiser to determine

19

---

which original appraisal is closest to its determination of value. The Operating Partnership may elect at that time not to purchase the property and instead, authorize its partner to sell the project
at or above the agreed-upon value to an unrelated third party. Five years following the receipt of the final certificate of occupancy on the last developed property, any projects remaining
unsold must be purchased by the Operating Partnership at the agreed-upon price.

The
Operating Partnership provided a credit enhancement with respect to certain tax-exempt bonds issued to finance certain public improvements at a multifamily development
project. As of June 30, 2002, this enhancement was still in effect at a commitment amount of $12.7 million.

15.  Asset Impairment

For the six months ended June 30, 2002 and 2001, the Operating Partnership recorded approximately $0.6 million and $6.8 million,
respectively, of asset impairment charges related to its technology investments. These charges were the result of review of the existing investments reflected on the consolidated balance sheet. These
impairment losses are reflected on the statement of operations in total expenses and include the write-down of assets classified as other assets and investments in unconsolidated entities.

16.  Reportable Segments

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by senior
management. Senior management decides how resources are allocated and assesses performance on a monthly basis.

The
Operating Partnership's primary business is owning, managing, and operating multifamily residential properties, which includes the generation of rental and other related income
through the leasing of apartment units to residents. Senior management evaluates the performance of each of our apartment communities on an individual basis, however, each of our apartment communities
has similar economic characteristics, residents, and products and services so they have been aggregated into one reportable segment. The Operating Partnership's rental real estate segment comprised
approximately 98.7% and 97.6% of total revenues for the six months ended June 30, 2002, and 2001, respectively, and
approximately 98.5% and 97.5% of total revenues for the quarters ended June 30, 2002 and 2001, respectively. The Operating Partnership's rental real estate segment comprised approximately 99.6%
and 99.4% of total assets at June 30, 2002 and December 31, 2001, respectively.

The
primary financial measure for the Operating Partnership's rental real estate segment is net operating income ("NOI"), which represents rental income less: 1) property and
maintenance expense; 2) real estate taxes and insurance expense; and 3) property management expense (all as reflected in the accompanying statements of operations). Current year NOI is
compared to prior year NOI and current year budgeted NOI as a measure of financial performance. NOI from our rental real estate totaled approximately $613.4 million and $609.5 million
for the six months ended June 30, 2002 and 2001, respectively, and approximately $307.9 million and $304.8 million for the quarters ended June 30, 2002 and 2001,
respectively.

During
the acquisition, development and/or disposition of real estate, the NOI return on total capitalized costs is the primary measure of financial performance the Operating Partnership
considers.

The
Operating Partnership's fee and asset management activity is immaterial and does not meet the threshold requirements of a reportable segment as provided for in SFAS No. 131.

20

---

17.  Subsequent Events/Other

During the six months ended June 30, 2002, the Operating Partnership entered into an agreement with the U.S. Army with an initial cash investment of
$10.0 million and assumed management of 3,637 multifamily units at Fort Lewis, Washington.

Subsequent
to June 30, 2002 and through July 29, 2002, the Operating Partnership:



21

---





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

Overview

For further information including definitions for capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto
included in the Operating Partnership's annual report on Form 10-K for the year ended December 31, 2001.

Forward-looking
statements in this report are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "believes",
"expects" and "anticipates" and other similar expressions that are predictions of or indicate future events and trends and which do not relate solely to historical matters identify forward-looking
statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results, performance, or achievements of the Operating Partnership to differ materially
from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such differences include, but are not limited to, the
following:



Readers
are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Operating Partnership undertakes no obligation to
publicly release any
revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Results of Operations

The following table summarizes the number of properties and related units for the year-to-date periods presented:

|                                   |                      | Properties |       | Units  |         | Purchase / Sale
Price
$ Millions
|---------------------------------- | -------------------- | ---------- | ----- | ------ | ------- | --------------------------------
|                                   | At December 31, 2000 |            | 1,104 |        | 227,704 |                                 
|Q1/Q2 2001 Acquisitions            |                      | 8          |       | 2,017  |         | $                               
|Q1/Q2 2001 Dispositions            |                      | (28        | )     | (4,189 | )       | $                               
|Q1/Q2 2001 Completed Developments  |                      | 2          |       | 618    |         |                                 
|                                   |                      |            |       |        |         |                                 
|                                   | At June 30, 2001     |            | 1,086 |        | 226,150 |                                 
|Q3/Q4 2001 Acquisitions            |                      | 6          |       | 1,406  |         | $                               
|Q3/Q4 2001 Dispositions            |                      | (21        | )     | (4,618 | )       | $                               
|Q3/Q4 2001 Completed Developments  |                      | 5          |       | 1,887  |         |                                 
|Q4 2001 Unit Configuration Changes |                      |           |       | (24    | )       |                                 
|                                   |                      |            |       |        |         |                                 
|                                   | At December 31, 2001 |            | 1,076 |        | 224,801 |                                 
|Q1/Q2 2002 Acquisitions            |                      | 7          |       | 1,983  |         | $                               
|Q2 2002 Fort Lewis                 |                      | 1          |       | 3,637  |         |                                 
|Q1/Q2 2002 Dispositions            |                      | (23        | )     | (3,654 | )       | $                               
|Q1/Q2 2002 Completed Developments  |                      | 4          |       | 1,181  |         |                                 
|Q2 2002 Unit Configuration Changes |                      |           |       | 15     |         |                                 
|                                   |                      |            |       |        |         |                                 
|                                   | At June 30, 2002     |            | 1,065 |        | 227,963 |                                 
|                                   |                      |            |       |        |         |                                 

22

---

The
Operating Partnership's acquisition and disposition activity has impacted overall results of operations for the six months and quarters ended June 30, 2002 and 2001.
Significant changes in revenues and expenses have resulted primarily from the consolidation of previously Unconsolidated Properties in July 2001, the disposition of the furniture rental
business on January 11, 2002, as well as the properties acquired and developments completed in 2001 and 2002, which have been partially offset by the properties disposed in 2001 and 2002.
Significant change in expenses has also resulted from an increase in insurance costs and general and administrative costs and reductions in variable interest rates, impairment charges and goodwill
amortization. This impact is discussed in greater detail in the following paragraphs.

Properties
that the Operating Partnership owned for all of both the six month periods ended June 30, 2002 and June 30, 2001 (the "Six-Month 2002 Same Store
Properties"), which represented 194,491 units, and properties that the Operating Partnership owned for all of both the quarters ended June 30, 2002 and June 30, 2001 (the "Second Quarter
2002 Same Store Properties"), which represented 196,211 units, also impacted the Operating Partnership's results of operations. Both the Six-Month 2002 Same Store Properties and Second
Quarter 2002 Same Store Properties are discussed in the following paragraphs.

Comparison of the six months ended June 30, 2002 to the six months ended June 30, 2001

For
the six months ended June 30, 2002, income before allocation to Minority Interests, income from investments in unconsolidated entities, net gain (loss) on sales of
unconsolidated entities, discontinued operations, extraordinary items and cumulative effect of change in accounting principle decreased by approximately $12.1 million when compared to the six
months ended June 30, 2001.

Revenues
from the Six-Month 2002 Same Store Properties decreased primarily as a result of lower rental rates charged new residents, increased concessions and lower occupancy
at certain properties. Property operating expenses from the Six-Month 2002 Same Store Properties, which include property and maintenance, real estate taxes and insurance and an allocation
of property management expenses, remained relatively stable with increases in real estate taxes and insurance costs offset by a decrease in utility costs. The following tables provide comparative
revenue, expense, net operating income ("NOI") and weighted average occupancy for the Six-Month 2002 Same Store Properties:

June 30, 2002 Year-to-Date Same Store Results

$ in Millions194,491 Same Store Units

Description

Revenues

Expenses

NOIYTD 2002

$
918.0

$
336.8

$
581.2YTD 2001

$
930.3

$
335.4

$
594.9Change

$
(12.3
)
$
1.4

$
(13.7
)% Change


(1.3
%)

0.4
%

(2.3
%)


Same Store Occupancy Statistics

YTD 2002

93.98
%YTD 2001

94.63
%Change

(0.65
%)


23

---

For
properties that the Operating Partnership acquired prior to December 31, 2000 and expects to continue to own through December 31, 2002, the Operating Partnership
anticipates the following operating assumptions for the year ending December 31, 2002:

2002 Operating Assumptions

Physical Occupancy

93.0%Revenue Change

(2.3%) to (2.0%)Expense Change

1.0% to 1.5%NOI Change

(4.5%) to (3.75%)Dispositions

$500 millionRefinancing

$200 million at 7.0%


These
2002 operating assumptions are based on current expectations and are forward-looking.

Rental
income from properties other than Six-Month 2002 Same Store Properties increased by approximately $9.3 million primarily as a result of revenue from properties
the Operating Partnership acquired in 2001 and 2002 and additional Partially Owned Properties that the Operating Partnership consolidated in 2001.

Interest
and other income decreased by approximately $2.2 million, primarily as a result of lower balances available for investment and related interest rates being earned on the
Operating Partnership's short-term investment accounts along with lower balances on deposit in tax-deferred exchange accounts.

Interest
incomeinvestment in mortgage notes decreased by $8.8 million as a result of the Operating Partnership consolidating previously Unconsolidated Properties in
July 2001. No additional interest income will be recognized on such mortgage notes in future years as the Operating Partnership now consolidates the results related to these previously
Unconsolidated Properties.

Property
management expenses include off-site expenses associated with the self-management of the Operating Partnership's properties. These expenses increased by
approximately $0.9 million or 2.5%. These expenses increased due to higher overall compensation costs related to a current period expense associated with EQR restricted shares/awards granted to
key employees. The Operating Partnership continues to acquire properties in major metropolitan areas and dispose of assets in smaller multi-family rental markets where the Operating Partnership does
not have a significant management presence.

Fee
and asset management revenues, net of fee and asset management expenses, increased slightly as a result of the Operating Partnership managing an additional 3,637 units at Fort Lewis
starting in April 2002. As of June 30, 2002 and 2001, the Operating Partnership managed 20,142 units and 19,844 units, respectively, for third parties and unconsolidated entities.

The
Operating Partnership recorded impairment charges in 2002 totaling approximately $0.6 million, which is related to one investment in a technology entity. See Note 15 in
the Notes to the Consolidated Financial Statements for further discussion.

Interest
expense, including amortization of deferred financing costs, decreased approximately $6.5 million primarily due to lower variable interest rates. During the six months
ended June 30, 2002, the Operating Partnership capitalized interest costs of approximately $12.3 million as compared to $12.8 million for the six months ended June 30,
2001. This capitalization of interest primarily related to investments in unconsolidated entities engaged in development activities. The effective interest cost on all of the Operating Partnership's
indebtedness for the six months ended June 30, 2002 was 6.63% as compared to 7.07% for the six months ended June 30, 2001.

24

---

General
and administrative expenses, which include corporate operating expenses, increased approximately $8.2 million between the six months under comparison. This increase was
primarily due to higher state income taxes in Michigan and New Jersey as well as the income taxes incurred at one of the Operating Partnership's taxable REIT subsidiaries, which has an ownership
interest in properties that in prior periods were classified as Unconsolidated Properties. In addition, retirement plan expenses for certain key executives, and higher overall compensation expenses
including a current period expense associated with EQR restricted shares/awards granted to key employees and additional compensation charges and costs associated with EQR's new President also
contributed to the increase.

Net
gain (loss) on sales of unconsolidated entities increased by $4.9 million primarily as a result of the sale of one stabilized development property (296 units).

Net
gain on sales of discontinued operations decreased approximately $17.8 million between the periods under comparison. This decrease is primarily the result of approximately
3,500 fewer number of units sold during the six months ended June 30, 2002 as compared to the six months ended June 30, 2001 (includes approximately 3,000 units sold into a joint venture
in February 2001).

Comparison of the quarter ended June 30, 2002 to the quarter ended June 30, 2001

For the quarter ended June 30, 2002, income before allocation to Minority Interests, income from investments in unconsolidated entities, net gain (loss) on
sales of unconsolidated entities, discontinued operations, extraordinary items and cumulative effect of change in accounting principle decreased by approximately $7.2 million when compared to
the quarter ended June 30, 2001.

Revenues
from the Second Quarter 2002 Same Store Properties decreased primarily as a result of lower rental rates charged new residents, increased concessions and lower occupancy at
certain properties. Property operating expenses from the Second Quarter 2002 Same Store Properties, which include property and maintenance, real estate taxes and insurance and an allocation of
property management expenses, decreased primarily as a result of increases in real estate taxes and insurance costs partially offset by decreases in utility costs. The following tables provide
comparative revenue, expense, NOI and weighted average occupancy for the Second Quarter 2002 Same Store Properties:

Second Quarter 2002 Same Store Results

$ in Millions196,211 Same Store Units

|Description |        | Revenues |       | Expenses |   | NOI   |    
|----------- | ------ | -------- | ----- | -------- | - | ----- | ---
|Q2 2002     |        | $        | 463.3 |          | $ | 173.3 |    
|Q2 2001     |        | $        | 473.4 |          | $ | 170.6 |    
|            |        |          |       |          |   |       |    
|            | Change |          | $     | (10.1    | ) | $     | 2.7
|            |        |          |       |          |   |       |    
|% Change    |        |          | (2.1  | %)       |   | 1.6   | %  

Same Store Occupancy Statistics

Q2 2002

94.01
%Q2 2001

94.60
%Change

(0.59
%)


Rental
income from properties other than Second Quarter 2002 Same Store Properties increased by approximately $7.6 million primarily as a result of revenue from the properties the
Operating Partnership acquired in 2001 and 2002 and additional Partially Owned Properties that the Operating Partnership consolidated in 2001.

25

---

Interest
and other income increased by approximately $0.2 million, primarily as a result of a $0.7 million one-time financing fee related to the Fort Lewis loan
closing, net of lower balances available for investment and related rates being earned on the Operating Partnership's short term investment accounts along with lower balances on deposit in
tax-deferred exchange accounts.

Interest
incomeinvestment in mortgage notes decreased by $6.0 million as a result of the Operating Partnership consolidating previously Unconsolidated Properties in
July 2001. No additional interest income will be recognized on such mortgage notes in future years as the Operating Partnership now consolidates the results related to these previously
Unconsolidated Properties.

Property
management expenses include off-site expenses associated with the self-management of the Operating Partnership's properties. These expenses increased by
approximately $0.6 million or 3.2%. These expenses increased due to higher overall compensation costs related to a current period expense associated with EQR restricted shares/awards granted to
key employees. The Operating Partnership continues to acquire properties in major metropolitan areas and dispose of assets in smaller multi-family rental markets where the Operating Partnership does
not have a significant management presence.

Fee
and asset management revenues, net of fee and asset management expenses, increased slightly as a result of the Operating Partnership managing an additional 3,637 units at Fort Lewis
starting in April 2002. As of June 30, 2002 and 2001, the Operating Partnership managed 20,142 units and 19,844 units, respectively, for third parties and unconsolidated entities.

The
Operating Partnership recorded impairment charges in 2002 totaling approximately $0.3 million, which is related to one investment in a technology entity. See Note 15 in
the Notes to the Consolidated Financial Statements for further discussion.

Interest
expense, including amortization of deferred financing costs, decreased approximately $1.4 million primarily due to lower variable interest rates. During the quarter ended
June 30, 2002, the Operating Partnership capitalized interest costs of approximately $6.4 million as compared to $6.8 million for the quarter ended June 30, 2001. This
capitalization of interest primarily related to investments in unconsolidated entities engaged in development activities. The effective interest cost on all of the Operating Partnership's indebtedness
for the quarter ended June 30, 2002 was 6.75% as compared to 7.07% for the quarter ended June 30, 2001.

General
and administrative expenses, which include corporate operating expenses, increased approximately $4.2 million between the quarters under comparison. This increase was
primarily due to higher state income taxes in Michigan and New Jersey as well as the income taxes incurred at one of the Operating Partnership's taxable REIT subsidiaries, which has an ownership
interest in properties that in prior periods were classified as Unconsolidated Properties. In addition, retirement plan expenses for certain key executives, and higher overall compensation expenses
including a current period expense associated with EQR restricted shares/awards granted to key employees and additional compensation charges and costs associated with EQR's new President also
contributed to the increase.

Net
gain on sales of discontinued operations increased approximately $21.2 million between the periods under comparison. This increase is primarily the result of more fully
depreciated properties sold during the quarter and an increase of approximately 1,000 units sold.

Liquidity and Capital Resources

As of January 1, 2002, the Operating Partnership had approximately $51.6 million of cash and cash equivalents and $505.0 million available
under its line of credit, of which $59 million was restricted (not available for borrowings). After taking into effect the various transactions discussed in the following paragraphs, the
Operating Partnership's cash and cash equivalents balance at June 30, 2002 was

26

---

approximately $88.9 million and the amount available on the Operating Partnership's line of credit was $700.0 million, of which $84.0 million was restricted (not available for
borrowings).

Part
of the Operating Partnership's acquisition and development funding strategy and the funding of the Operating Partnership's investment in various unconsolidated entities is to
utilize its line of credit and to subsequently repay the line of credit from the disposition of Properties, retained cash flows or the issuance of additional equity or debt securities. Continuing to
utilize this strategy during the six months ended June 30, 2002, the Operating Partnership:



All
of these proceeds were utilized to:



During
the six months ended June 30, 2002, the Operating Partnership:



27

---



The
Operating Partnership's total debt summary and debt maturity schedule, as of June 30, 2002, are as follows:

Debt Summary as of June 30, 2002

$ Millions

Weighted
Average RateSecured

$
3,210

6.28
%Unsecured


2,439

6.52
%Total

$
5,649

6.39
%Fixed Rate

$
4,965

6.89
%Floating Rate


684

2.72
%Total

$
5,649

6.39
%Above Totals Include:Total Tax Exempt

$
958

3.75
%Unsecured Revolving Credit Facility

$





Debt Maturity Schedule as of June 30, 2002

Year

$ Millions

% of Total2002

$
245

4.3
%2003


310

5.5
%2004


592

10.5
%2005*


684

12.1
%2006


429

7.6
%2007


273

4.8
%2008


511

9.0
%2009


405

7.2
%2010


256

4.5
%2011+


1,944

34.4
%Total

$
5,649

100.0
%


---

*Includes
$300 million with a final maturity of 2015 that is putable/callable in 2005.

The
Operating Partnership's "Consolidated Debt-to-Total Market Capitalization Ratio" as of June 30, 2002 is presented in the following table. The Operating
Partnership calculates the equity component of its market capitalization as the sum of (i) the total outstanding OP Units at the equivalent market value of the closing price of EQR's Common
Shares on the New York Stock Exchange; (ii) the "OP Unit Equivalent" of all convertible preference interests/units; and (iii) the liquidation value of all perpetual preference
interests/units outstanding.

28

---

Capitalization as of June 30, 2002

Total Debt




$
5,649,483,792OP Units


298,023,286OP Unit Equivalents (see below)


15,134,806Total Outstanding at quarter-end


313,158,092EQR Common Share Price at June 28, 2002

$
28.759,003,295,145Perpetual Preference Units Liquidation Value





565,000,000Perpetual Preference Interests Liquidation Value





211,500,000Total Market Capitalization




$
15,429,278,937Debt/Total Market Capitalization





36.62
%


Convertible Preference Units, Preference Interests
and Junior Preference Units
As of June 30, 2002

Units

Conversion
Ratio

OP Unit
EquivalentsPreference Units:Series E

2,716,012

1.1128

3,022,378Series G

1,264,700

8.5360

10,795,479Series H

51,228

1.4480

74,178Preference Interests:Series H

190,000

1.5108

287,052Series I

270,000

1.4542

392,634Series J

230,000

1.4108

324,484Junior Preference Units:Series A

56,616

4.081600

231,084Series B

7,367

1.020408

7,517Total Convertible

4,785,923



15,134,806


The
Operating Partnership's policy is to maintain a ratio of consolidated debt-to-total market capitalization of less than 50%.

From
July 1, 2002 through July 29, 2002, the Operating Partnership:



29

---





In connection with one development agreement, the Operating Partnership has an obligation to fund up to an additional $9.5 million to guarantee third party
construction financing. As of June 30, 2002, the Operating Partnership has 18 projects under development with estimated completion dates ranging through March 31, 2004.

For
one development agreement, the Operating Partnership's partner has the right, at any time following completion of a project, to stipulate a value for such project and offer to sell
its interest in the project to the Operating Partnership based on such value. If the Operating Partnership chooses not to purchase the interest, it must agree to a sale of the project to an unrelated
third party at such value. The Operating Partnership's partner must exercise this right as to all projects within five years after the receipt of the final certificate of occupancy on the last
developed property.

Under
a second development agreement, the Operating Partnership's partner has the right, at any time following completion of a project, to require the Operating Partnership to purchase
the partners' interest in that project at a mutually agreeable price. If the Operating Partnership and the partner are unable to agree on a price, both parties will obtain appraisals. If the appraised
values vary by more than 10%, both the Operating Partnership and its partner will agree on a third appraiser to determine which original appraisal is closest to its determination of value. The
Operating Partnership may elect at that time not to purchase the property and instead, authorize its partner to sell the project at or above the agreed-upon value to an unrelated third
party. Five years following the receipt of the final certificate of occupancy on the last developed property, any projects remaining unsold must be purchased by the Operating Partnership at the
agreed-upon price.



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





30

---



For
the six months ended June 30, 2002, our actual improvements to real estate totaled approximately $66.5 million. This includes the following detail (amounts in thousands
except for unit and per unit amounts):

Capitalized Improvements to Real Estate
For the Six Months Ended June 30, 2002

|                              |  | Total
Units(1) |  | Replacements(2) |        | Per
Unit |   | Building
Improvements(3) |  | Per
Unit |        | Total |   | Per
Unit
|----------------------------- |  | -------------- |  | --------------- | ------ | -------- | - | ------------------------ |  | -------- | ------ | ----- | - | --------
|Established Properties(4)     |  | 178,870        |  | $               | 22,661 |          | $ | 127                      |  | $        | 31,640 |       | $ | 177     
|New Acquisition Properties(5) |  | 19,743         |  |                 | 2,172  |          |   | 120                      |  |          | 3,084  |       |   | 171     
|Other(6)                      |  | 6,994          |  |                 | 1,639  |          |   |                          |  |          | 5,313  |       |   |         
|                              |  |                |  |                 |        |          |   |                          |  |          |        |       |   |         
|Total                         |  | 205,607        |  | $               | 26,472 |          |   |                          |  | $        | 40,037 |       |   |         

---

We
anticipate capitalizing an average of approximately $600 to $640 per unit annually for inside and outside the unit capital improvements to our real estate. Total improvements to real
estate for the remainder of 2002 are estimated to be $65.0 million.

During
the six months ended June 30, 2002, the Operating Partnership's total non-real estate capital additions, such as computer software, computer equipment, and
furniture and fixtures and leasehold improvements to the Operating Partnership's property management offices and its corporate offices, was approximately $4.6 million. Total additions to
non-real estate property for the remainder of 2002 are estimated at $2.2 million.

Improvements
to real estate and additions to non-real estate property for both 2002 and 2001 were funded from net cash provided by operating activities.

31

---



Total distributions paid in July 2002 amounted to $147.7 million (excluding distributions on Partially Owned Properties), which included certain
distributions declared during the quarter ended June 30, 2002.

The
Operating Partnership expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing properties and certain
scheduled unsecured note and mortgage note repayments, generally through its working capital, net cash provided by operating activities and borrowings under its line of credit. The Operating
Partnership considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions. The Operating Partnership also expects to meet its
long-term liquidity requirements, such as scheduled unsecured note and mortgage debt maturities, property acquisitions, financing of construction and development activities and capital
improvements through the issuance of unsecured notes and equity securities including additional OP Units, and proceeds received from the disposition of certain properties. In addition, the Operating
Partnership has certain unencumbered properties available to secure additional mortgage borrowings in the event that the public capital markets are unavailable to the Operating Partnership or the cost
of alternative sources of capital to the Operating Partnership is too high. These unencumbered properties are in excess of the value of unencumbered properties the Operating Partnership must maintain
in order to comply with covenants under its unsecured notes and line of credit.

On
May 30, 2002 the Operating Partnership obtained a new three-year $700.0 million unsecured revolving credit facility. The new line of credit replaces the
Operating Partnership's $700.0 million unsecured revolving credit facility that was scheduled to expire in August 2002. The prior existing revolving credit facility terminated upon the
closing of the new facility. This new facility matures in May 2005 and will be used to fund property acquisitions, costs for certain Properties under development and short term liquidity
requirements. As of July 31, 2002, $40.0 million was outstanding under this new facility.

The
Operating Partnership provided a credit enhancement with respect to certain tax-exempt bonds issued to finance certain public improvements at a multifamily development
project. As of July 31, 2002, this enhancement was still in effect at a commitment amount of $12.7 million.

Critical Accounting Policies and Estimates

The Operating Partnership's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States,
which require the Operating Partnership to make estimates and judgments that affect the reported amount of assets, liabilities, revenues and expenses, and the related disclosures. The Operating
Partnership believes that the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial
statements.



The Operating Partnership periodically evaluates its long-lived assets, including its investments in real estate and goodwill, for impairment
indicators. The judgments regarding the existence of impairment indicators are based on factors such as operational performance, market conditions and legal factors. Future events could occur which
would cause the Operating Partnership to conclude that impairment indicators exist and an impairment loss is warranted.

32

---



The Operating Partnership depreciates the building component of its investment in real estate over a 30-year estimated useful life, building
improvements over a 5-year to 10-year estimated useful life and both the furniture, fixtures and equipment and replacements components over a 5-year estimated
useful life, all of which are judgmental determinations.



The valuation of financial instruments under SFAS No. 107 and SFAS No. 133 requires the Operating Partnership to make estimates and judgments that
affect the fair value of the instruments. The Operating Partnership, where possible, bases the fair values of its financial instruments, including its derivative instruments, on listed market prices
and third party quotes. Where these are not available, the Operating Partnership bases its estimates on other factors relevant to the financial instruments.



The Company has chosen to account for its stock option compensation in accordance with APB No. 25, which results in no compensation expense for options
issued with an exercise price equal to or exceeding market value of the Company's Common Shares on the date of grant, instead of Statement No. 123, which would result in compensation expense
being recorded based on the fair value of the stock option compensation issued. Any Common Shares issued pursuant to EQR's share option plan will result in the Operating Partnership issuing OP Units
to EQR on a one-for-one basis.

Adjusted Net Income

For the six months ended June 30, 2002, Adjusted Net Income ("ANI") available to OP units decreased $4.3 million as compared to the six months ended
June 30, 2001.

For
the quarter ended June 30, 2002, ANI available to OP Units increased $6.4 million as compared to the quarter ended June 30, 2001.

33

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The
following is a reconciliation of net income available to OP Units to ANI available to OP Units for the six months and quarters ended June 30, 2002 and 2001:

Adjusted Net Income
(Amounts in thousands)
(Unaudited)

|                                                       |                                                              | Six Months Ended June 30, |         | Quarter Ended June 30, |  
|------------------------------------------------------ | ------------------------------------------------------------ | ------------------------- | ------- | ---------------------- | -
|
|Net income available to OP Units                       |                                                              | $                         | 179,178 |                        | $
|Adjustments:                                           |                                                              |                           |         |                        |  
|                                                       | Acquisition cost depreciation*                               |                           |         | 192,005                |  
|                                                       | Amortization of goodwill                                     |                           |         |                       |  
|                                                       | Acquisition cost depreciation accumulated on sold properties |                           |         | (22,532                | )
|                                                       | Extraordinary items                                          |                           |         | 468                    |  
|                                                       | Cumulative effect of change in accounting principle          |                           |         |                       |  
|                                                       |                                                              |                           |         |                        |  
|ANI available to OP Unitsbasic**                      |                                                              | $                         | 349,119 |                        | $
|                                                       |                                                              |                           |         |                        |  
|Depreciation for replacements and capital improvements |                                                              | $                         | 43,422  |                        | $
|                                                       |                                                              |                           |         |                        |  

---

The
Operating Partnership believes that ANI is helpful to investors as a supplemental measure of the operating performance of a real estate company because, along with cash flows from
operating activities, financing activities and investing activities, it provides investors an understanding of the ability of the Operating Partnership to incur and service debt and to make capital
expenditures. ANI in and of itself does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an
indication of the Operating Partnership's performance or to net cash flows from operating activities as determined by GAAP as a measure of liquidity and is not necessarily indicative of cash available
to fund cash needs. The Operating Partnership's calculation of ANI may differ from the methodology for calculating ANI utilized by other real estate companies and may differ, for example, due to
variations among the Operating Partnership's and other real estate companies' accounting policies for replacement type items and, accordingly, may not be comparable to such other real estate
companies.

Funds From Operations

For the six months ended June 30, 2002, Funds From Operations ("FFO") available to OP Units decreased $4.4 million as compared to the six months
ended June 30, 2001.

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For
the quarter ended June 30, 2002, FFO available to OP Units decreased $4.3 million as compared to the quarter ended June 30, 2001.

The
following is a reconciliation of net income available to OP Units to FFO available to OP Units for the six months and quarters ended June 30, 2002 and 2001:

Funds from Operations
(Amounts in thousands)
(Unaudited)

|                                 |                                                     | Six Months Ended June 30, |         | Quarter Ended June 30, |  
|-------------------------------- | --------------------------------------------------- | ------------------------- | ------- | ---------------------- | -
|
|Net income available to OP Units |                                                     | $                         | 179,178 |                        | $
|Adjustments:                     |                                                     |                           |         |                        |  
|                                 | Depreciation/amortization                           |                           |         | 235,427                |  
|                                 | Net gain on sales of discontinued operations        |                           |         | (27,576                | )
|                                 | Net (gain) loss on sales of unconsolidated entities |                           |         | (5,246                 | )
|                                 | Extraordinary items                                 |                           |         | 468                    |  
|                                 | Cumulative effect of change in accounting principle |                           |         |                       |  
|                                 | Impairment on technology investments                |                           |         | 581                    |  
|                                 |                                                     |                           |         |                        |  
|FFO available to OP Unitsbasic* |                                                     | $                         | 382,832 |                        | $
|                                 |                                                     |                           |         |                        |  

---

The
Operating Partnership believes that FFO is helpful to investors as a supplemental measure of the operating performance of a real estate company because, along with cash flows from
operating activities, financing activities and investing activities, it provides investors an understanding of the ability of the Operating Partnership to incur and service debt and to make capital
expenditures. FFO in and of itself does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an
indication of the Operating Partnership's performance or to net cash flows from operating activities as determined by GAAP as a measure of liquidity and is not necessarily indicative of cash available
to fund cash needs. The Operating Partnership's calculation of FFO may differ from the methodology for calculating FFO utilized by other real estate companies and may differ, for example, due to
variations among the Operating Partnership's and other real estate companies' accounting policies for replacement type items and, accordingly, may not be comparable to such other real estate
companies.

35

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There have been no new or significant developments related to the legal proceedings that were discussed in Part I, Item III of the Operating Partnership's
Form 10-K for the year ended December 31, 2001.

Item 6. Exhibits and Reports on Form 8-K

|(A) |  | Exhibits: |  |                                                                                                                                                                                      
|--- |  | --------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  | 10.1*     |  | Revolving Credit Agreement, dated as of May 29, 2002, among ERP Operating Limited Partnership, Banc of America Securities LLC, JP Morgan Securities Inc. and the Banks named therein.
|    |  | 10.2*     |  | Guaranty of Payment, dated as of May 29, 2002, between Equity Residential and Bank of America, N.A., as administrative agent.                                                        
|    |  | 12        |  | Computation of Ratio of Earnings to Combined Fixed Charges.                                                                                                                          

---

None.

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SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on
behalf by the undersigned thereunto duly authorized.

|                      |  | ERP OPERATING LIMITED PARTNERSHIP
|--------------------- |  | ---------------------------------
|                      |  | BY:                              
|                      |  |                                  
|Date: August 13, 2002 |  | By:                              
|Date: August 13, 2002 |  | By:                              

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