<PAGE>
 
                                   FORM 10-Q


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


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

                 For the quarterly period ended MARCH 31, 1997

                                      OR

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


                        Commission File Number: 0-24920


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


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


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

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


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


<TABLE>
<CAPTION>


                                                                    March 31,               December 31,
                                                                      1997                      1996
                                                                   ----------                ----------
<S>                                                                 <C>                      <C>  

ASSETS
Investment in rental property
  Land                                                             $  325,198                $  284,879
  Depreciable property                                              2,876,383                 2,698,631
                                                                   ----------                ----------
                                                                    3,201,581                 2,983,510
  Accumulated depreciation                                           (328,321)                 (301,512)
                                                                   ----------                ----------
    Investment in rental property, net of accumulated depreciation  2,873,260                 2,681,998

Cash and cash equivalents                                              84,829                   147,271
Investment in mortgage notes, net                                      86,895                    86,596
Rents receivable                                                        1,351                     1,450
Deposits - restricted                                                   9,007                    20,637
Escrow deposits - mortgage                                             17,582                    15,434
Deferred financing costs, net                                          14,425                    14,555
Other assets                                                           25,886                    18,186
                                                                   ----------                ----------
       Total assets                                                $3,113,235                $2,986,127
                                                                   ==========                ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
  Mortgage notes payable                                           $  795,723                $  755,434
  Notes, net                                                          498,918                   498,840
  Accounts payable and accrued expenses                                31,243                    33,117
  Accrued interest payable                                             15,447                    12,737
  Due to affiliates                                                       656                       628
  Rents received in advance and other liabilities                      18,904                    15,838
  Security deposits                                                    15,123                    14,128
  Distributions payable                                                47,220                    45,938
                                                                   ----------                ----------
          Total liabilities                                         1,423,234                 1,376,660
                                                                   ----------                ----------
Commitments and contingencies

  9 3/8% Series A Cumulative Redeemable Preference Units              153,000                   153,000
                                                                   ----------                ----------
  9 1/8% Series B Cumulative Redeemable Preference Units              125,000                   125,000
                                                                   ----------                ----------
  9 1/8% Series C Cumulative Redeemable Preference Units              115,000                   115,000
                                                                   ----------                ----------
Partners' capital:
     General Partner                                                1,152,737                 1,065,830
     Limited Partners                                                 144,264                   150,637
                                                                   ----------                ----------
          Total partners' capital                                   1,297,001                 1,216,467
                                                                   ----------                ----------
          Total liabilities and partners' capital                  $3,113,235                $2,986,127
                                                                   ==========                ==========


</TABLE>
                            See accompanying notes.

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

<TABLE> 
<CAPTION> 
                                                        Quarters Ended March 31,
                                                        ------------------------
                                                          1997            1996
                                                        ------------------------
<S>                                                     <C>             <C> 
REVENUES
 Rental income                                          $134,235        $101,443
 Fee and asset management                                  1,578           1,545
 Interest income - investment in mortgage notes            3,683           2,710
 Interest and other income                                 1,891             623
                                                        --------        --------

   Total revenues                                        141,387         106,321
                                                        --------        --------

EXPENSES
 Property and maintenance                                 32,334          28,530
 Real estate taxes and insurance                          13,911          10,279
 Property management                                       5,671           4,435
 Fee and asset management                                    967           1,106
 Depreciation                                             28,877          20,616
 Interest:
   Expense incurred                                       23,293          18,241
   Amortization of deferred financing costs                  603             944
 General and administrative                                2,975           2,215
                                                        --------        --------

   Total expenses                                        108,631          86,366
                                                        --------        --------

Income before gain on disposition of properties           32,756          19,955
 Gain on disposition of properties                         3,632           1,340
                                                        --------        --------
Net income                                              $ 36,388        $ 21,295
                                                        ========        ========

ALLOCATION OF NET INCOME:

Redeemable Preference Interests                         $    -          $    263
                                                        ========        ========

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

9 1/8% Series B Cumulative Redeemable
 Preference Units                                       $  2,852        $  2,851
                                                        ========        ========

9 1/8% Series C Cumulative Redeemable
 Preference Units                                       $  2,623        $    -
                                                        ========        ========

General Partner                                           23,901          11,957
Limited Partners                                           3,426           2,638
                                                        --------        --------
                                                        $ 27,327        $ 14,595
                                                        ========        ========

Net income per weighted average OP Unit outstanding     $   0.46        $   0.32
                                                        ========        ========

Weighted average OP Units outstanding                     59,269          46,210
                                                        ========        ========
</TABLE>

                            See accompanying notes.

                                       3
<PAGE>


                       ERP OPERATING LIMITED PARTNERSHIP
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Amounts in thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                                  Three Months Ended March 31,
                                                                                               ----------------------------------
                                                                                                  1997                   1996
                                                                                               ----------------------------------
<S>                                                                                            <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                                    $  36,388               $ 21,295
  Adjustments to reconcile net income to net cash provided by operating activities:
     Depreciation                                                                                  28,877                 20,616
     Amortization of deferred financing costs (including discount on
        1999 and 2002 Notes)                                                                          681                  1,023
     Amortization of discount on investment in mortgage notes                                        (750)                     -
     Gain on disposition of properties                                                             (3,632)                (1,340)
     Changes in assets and liabilities:
        Decrease (increase) in rents receivable                                                        99                     (4)
        Decrease (increase) in deposits - restricted                                                  127                   (216)
        (Increase) decrease in other assets                                                        (4,299)                 1,108
        Increase (decrease) in due to affiliates                                                       33                   (260)
        (Decrease) in accounts payable and accrued expenses                                        (1,874)                  (202)
        Increase in accrued interest payable                                                        2,710                  4,443
        Increase in rents received in advance and other liabilities                                 3,346                    782
                                                                                               ----------              ----------
    Net cash provided by operating activities                                                      61,706                 47,245
                                                                                               ----------              ----------
                                              

CASH FLOWS FROM INVESTING ACTIVITIES:
  Investment in rental properties, net                                                           (152,612)               (90,824)
  Improvements to rental property                                                                  (6,276)                (5,444)
  Additions to non-rental property                                                                 (1,515)                  (384)
  Proceeds from disposition of rental property                                                      4,771                  6,252
  Purchase of contract rights                                                                      (3,500)                     -
  (Increase) decrease in mortgage deposits                                                         (2,148)                   433
  Deposits (made) on rental property acquisitions                                                  (5,258)                  (300)
  Deposits applied on rental property acquisitions                                                 16,761                 15,107
  Payments received from investment in mortgage notes                                                 451                    240
  Other investing activities                                                                         (101)                   157
                                                                                               ----------              ----------
    Net cash (used for) investing activities                                                     (149,427)               (74,763)
                                                                                               ----------              ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Capital contributions from General Partner                                                       91,101                119,550
  Redemption of Preference Interests                                                                    -                 (1,083)
  Distributions paid to partners                                                                  (45,938)               (30,817)
  Principal receipts on employee notes                                                                184                     18
  Proceeds from line of credit                                                                          -                 37,000
  Repayments on line of credit                                                                          -               (102,000)
  Principal payments on mortgage notes payable                                                    (20,562)                  (698)
  Loan and bond acquisition costs                                                                    (501)                   (51)
  Increase in security deposits                                                                       995                    667
                                                                                               ----------              ----------
    Net cash provided by financing activities                                                      25,279                 22,586
                                                                                               ----------              ----------
Net (decrease) in cash and cash equivalents                                                       (62,442)                (4,932)
Cash and cash equivalents, beginning of period                                                    147,271                 13,428
                                                                                               ----------              ---------
Cash and cash equivalents, end of period                                                       $   84,829              $   8,496
                                                                                               ==========              =========

</TABLE>

                            See accompanying notes.

                                       4
<PAGE>

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

<TABLE> 
<CAPTION> 
                                                                                      Three Months Ended March 31,
                                                                                      ----------------------------
                                                                                           1997          1996
                                                                                      ----------------------------
<S>                                                                                   <C>               <C>
Supplemental information:
 Cash paid during the period for interest                                             $      20,583  $      13,798
                                                                                      =============  =============

 Mortgage loans assumed through acquisitions of rental properties                     $      60,851  $      27,438
                                                                                      =============  =============

 Rental property assumed through foreclosure                                          $         -    $      10,854
                                                                                      =============  =============
</TABLE> 

                            See accompanying notes.

                                       5
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

 
Definition of Special Terms:

Capitalized terms used, but not defined herein are as defined in the Operating
Partnership's Annual Report on Form 10-K for the year ended December 31, 1996
("Form 10-K").

1.  Business

    ERP Operating Limited Partnership (the "Operating Partnership"), an Illinois
limited partnership, was formed to conduct the multifamily property business of
Equity Residential Properties Trust (the "General Partner" or the "Company").
The Company is a Maryland real estate investment trust formed on March 31, 1993.
The Company conducts substantially all of its operations through the Operating
Partnership. As of March 31, 1997, the Operating Partnership controlled a
portfolio of 229 multifamily properties (individually a "Property" and
collectively the "Properties"). The Operating Partnership's interest in six of
the Acquired Properties at the time of acquisition thereof consisted solely of
ownership of the debt collateralized by such Acquired Properties. The Operating
Partnership also has an investment in partnership interests and subordinated
mortgages collateralized by 21 properties (the "Additional Properties").

2.  Basis of Presentation

    The balance sheet and statements of operations and cash flows as of and for
the quarter ended March 31, 1997 represent the consolidated financial
information of the Operating Partnership and its interests in the Financing
Partnerships and the Management Partnerships.

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

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

                                       6
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)

 
3.  Partners' Capital

    The limited partners of the Operating Partnership include various
individuals and entities that contributed their properties to the Operating
Partnership in exchange for a partnership interest (the "Limited Partners"). As
of March 31, 1997, the Limited Partners were represented by 7,347,710
partnership interests ("OP Units") which are exchangeable on a one-for-one basis
into the Company's Common Shares. As of March 31, 1997, the General Partner had
an approximate 87.97% interest in the Operating Partnership and the Limited
Partners had an approximate 12.03% interest.

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

    In February 1997, the Company issued 33,971 Common Shares pursuant to the
Employee Share Purchase Plan at a net price of $35.63 per share and contributed
to the Operating Partnership net proceeds of approximately $1.2 million.

    In March 1997, the Company completed offerings of an aggregate of 1,921,000
publicly registered Common Shares, which were sold to the public at a price of
$46 per share (the "March 1997 Common Share Offerings").  The Company
contributed to the Operating Partnership net proceeds of approximately $88.3
million therefrom.

    Total distributions paid in April 1997 for the quarter ended March 31, 1997
amounted to approximately $47.2 million.

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

4.  Investment in Rental Property

    During the quarter ended March 31, 1997, the Operating Partnership acquired
the 12 Properties listed below.  All of the Properties were purchased from an
unaffiliated third party, except for Sedona Ridge, which was purchased from an
affiliate of the Operating Partnership, Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership ("Zell/Merrill I").  The cash portion
of these transactions was funded primarily from proceeds raised from the
December 1996 Common Share Offerings.

                                       7
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)
 
<TABLE>
<CAPTION>
                                                                        Total    
                                                                     Acquisition 
  Date                                                    Number         Cost    
Acquired  Property                     Location          of Units   (in thousands)
--------  --------                     --------          --------   --------------
<C>       <S>                          <C>               <C>        <C>
01/02/97  Town Center                  Kingwood, TX         258       $ 12,834
01/21/97  Harborview                   San Pedro, CA        160         19,000
01/31/97  The Cardinal                 Greensboro, NC       256         13,124
02/12/97  Trails at Dominion           Houston, TX          843         38,251
02/25/97  Dartmouth Woods              Lakewood, CO         201         12,424
02/28/97  Rincon                       Houston, TX          288         21,129
02/28/97  Waterford at the Lakes       Kent, WA             344         19,246
03/17/97  Junipers at Yarmouth         Yarmouth, ME         225          9,162
03/20/97  Lincoln Harbor               Ft. Lauderdale, FL   324         22,168
03/24/97  Sedona Ridge                 Phoenix, AZ          250         15,208
03/28/97  Club at the Green            Beaverton, OR        254         14,634
03/28/97  Knight's Castle              Wilsonville, OR      296         15,014
                                                          -----       --------
                                                          3,699       $212,194
                                                          =====       ========
</TABLE>

5.  Disposition of Rental Properties

    On March 28, 1997, the Operating Partnership sold Plantation Apartments
located in Monroe, Louisiana for a sales price of $4.8 million.  The gain for
financial reporting purposes was approximately $3.6 million.

6.  Commitments to Acquire Rental Properties

    As of March 31, 1997, excluding the properties which were subsequently
acquired as discussed in Note 15 of the Notes to Consolidated Financial
Statements, the Operating Partnership had entered into an agreement to acquire
one multifamily property containing 176 units from an unaffiliated third party.
The expected purchase price is approximately $8.5 million.  The Operating
Partnership also entered into a letter of intent with Zell/Merrill I to purchase
eight multifamily properties containing 2,301 units.  The expected combined
purchase price is approximately $101.7 million, which includes the assumption of
mortgage indebtedness of approximately $82.2 million.

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

7.  Investment in Mortgage Notes, Net

    Investment in mortgage notes, net, represents the Operating Partnership's
investment in subordinated mortgages collateralized by the Additional
Properties.

                                       8
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


8.  Calculation of Net Income Per Weighted Average OP Unit

    In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997.  At that time, the Operating Partnership will be required to change the
method currently used to compute net income per weighted average OP Unit and to
restate all prior periods.  The impact of Statement 128 on the calculation of
net income per weighted average OP Unit and net income per weighted average OP
Unit-assuming dilution for these quarters is not expected to be material.

9.  Mortgage Notes Payable

    As of March 31, 1997 the Operating Partnership had outstanding mortgage
indebtedness of approximately $795.7 million encumbering 90 of the Properties.
The carrying value of such Properties (net of accumulated depreciation of $148.1
million) was approximately $1.2 billion.  In connection with the Properties
acquired during the quarter ended March 31, 1997, the Operating Partnership
assumed the outstanding mortgage balances on five Properties in the aggregate
amount of $60.9 million. 

    Concurrent with the refinancing of certain tax-exempt bonds in 1996 and as a
requirement of the credit provider of the bonds, the Financing Partnership,
which owns certain of the Properties entered into interest rate protection
agreements, which protection agreements were assigned to the credit provider as
additional security. The Financing Partnership pays interest based on a fixed
interest rate and the counterparty of the agreement pays interest at a floating
rate which is calculated based on the Public Securities Association Index for
municipal bonds ("PSA Municipal Index"). As of March 31, 1997, the aggregate
notional amount of these agreements was approximately $166.4 million. The fixed
interest rates for these agreements were 4.81% and 4.528%. The termination dates
are October 1, 2003 and January 1, 2004. The Operating Partnership
simultaneously entered into substantially identical reverse interest rate
protection agreements. Under these agreements the Operating Partnership pays
interest monthly at a floating rate based on the PSA Municipal Index and the
counterparty pays interest based on a fixed interest rate. As of March 31, 1997,
the aggregate notional amount of these agreements was approximately $166.4
million. The fixed interest rates received by the Operating Partnership in
exchange for paying interest based on the PSA Municipal Index for these
agreements were 4.74% and 4.458%. The termination dates are October 1, 2003 and
January 1, 2004. Collectively, these agreements effectively cost the Operating
Partnership 0.07% per annum on the current outstanding aggregate notional
amount. The Operating Partnership believes that it has limited exposure to the
extent of non-performance by the counterparties of the agreements since each
counterparty is a major U.S. financial institution, and the Operating
Partnership does not anticipate their non-performance. Furthermore, any non-
performance by the counterparty is offset by non-performance by the Operating
Partnership.

                                       9
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)

 
    Scheduled maturities for the Operating Partnership's outstanding mortgage
indebtedness are at various dates through August 1, 2030.  As of March 31, 1997,
fixed interest rates on certain of these mortgage notes ranged from 4% to 10.27%
and variable interest rates on certain of the mortgage notes ranged from 2.89%
to 7.085%.  During the quarter ended March 31, 1997, the Operating Partnership
repaid the outstanding mortgage balances on three Properties in the aggregate
amount of $19.3 million.  Subsequent to March 31, 1997, the Operating
Partnership repaid the outstanding mortgage balance on two Properties in the
amount of approximately $4.8 million.  In February 1996, the Operating
Partnership entered into an interest rate protection agreement which hedged the
interest rate risk of $50 million of mortgage loans scheduled to mature in
September 1997 by locking the five year Treasury Rate, commencing October 1,
1997 through October 1, 2002.

10. Line of Credit

    The Operating Partnership has a $250 million unsecured line of credit with
Morgan Guaranty Trust Company of New York and Bank of America Illinois.  As of
March 31, 1997, there were no amounts outstanding on this line of credit.
Subsequent to March 31, 1997, the Operating Partnership borrowed $100 million
from its line of credit.

11. Notes

    Included in the note balance are the 1999 Notes, the Floating Rate Notes,
the 2002 Notes and the 2026 Notes. As of March 31, 1997, the unamortized
discount balances related to the 1999 notes and the 2002 Notes were
approximately $0.4 million and $0.7 million, respectively.

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

    In connection with the Floating Rate Notes, the Operating Partnership has
entered into interest rate protection agreements which fix the interest rate at
an effective rate of 7.075% through the term of the Floating Rate Notes.

    Prior to the issuance of the 2002 Notes, the Operating Partnership entered
into an interest rate protection agreement to effectively fix the interest rate
cost of such issuance.  The Operating Partnership made a one time settlement
payment of this protection transaction, which was approximately $0.8 million and
is being amortized over the term of the 2002 Notes.  As of March 31, 1997 the
unamortized balance of this cost was approximately $0.6 million.

    Prior to the issuance of the 2026 Notes, the Company entered into an
interest rate protection agreement to effectively fix the interest rate cost of
this issuance to 7.5%. The Operating Partnership received a one time settlement
payment of this transaction, which was approximately

                                       10
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


$0.6 million, which amount is being amortized over the term of the 2026 Notes.
As of March 31, 1997 the unamortized balance was approximately $0.5 million.

12. Deposits - restricted

    Deposits - restricted, as of March 31, 1997, primarily included deposits in
the amount of approximately $4.8 million held in a third party escrow account.
This deposit is expected to be utilized for the acquisition of an additional
property.  Also included in the deposits - restricted amount were tenant
security and utility deposits made for certain of the Operating Partnership's
Properties.

13. Commitments and Contingencies

    On March 20, 1996, a legal proceeding (Nick J. Miletich, Administrator of
the Estates of Dorothy Miletich and Madelyne Miletich, deceased, v. Equity
Residential Properties Trust, Equity Residential Properties Management
Corporation, Curt Vajgrt, Raymond Countryman and Darla Countryman) (Iowa
District Court, Polk County, Iowa, Law Case No. CL 68908) was filed against the
Company. This legal proceeding arises out of the Company's ownership and
management of the apartment building known as 3000 Grand Ave. in Des Moines,
Iowa and alleges that Raymond and Darla Countryman murdered Dorothy Miletich and
Madelyne Miletich, who were residents of the apartment complex, on June 15,
1995. Raymond Countryman is a former employee of the Company. The plaintiff
alleges, inter alia, that had the Company learned of the background of Mr.
Countryman prior to his employment, the Company would not have hired him and the
deaths of the Miletichs would have been avoided. While the Company is vigorously
contesting these claims, there is no assurance that the Company will not be held
liable for said deaths and there is no assurance that its insurance coverage
will cover all damages that may be awarded against it. At this time, an estimate
of the possible loss or range of loss that the Company may incur cannot be
determined.

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

14. Agreement and Plan of Merger

    On January 16, 1997, the Company entered into an Agreement and Plan of
Merger regarding the acquisition of the multifamily property business of
Wellsford, a Maryland real estate investment trust, through the tax free merger
of the Company and Wellsford. The transaction is valued at approximately $1
billion and includes 72 multifamily properties containing 19,004 units. In the

                                       11
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)

 
Merger, each outstanding common share of beneficial interest of Wellsford will
be converted into .625 of a common share of the surviving company. The Merger is
subject to approval of the common shareholders of the Company and Wellsford at
special meetings of such shareholders called for May 28, 1997. The completion of
the Merger is also conditioned upon certain other closing conditions. There is
no assurance that the Merger will be consummated.
 
15. Subsequent Events

    On April 4, 1997 the Operating Partnership acquired three properties from an
affiliate of the Operating Partnership, Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership II, for a total purchase price of
approximately $45.5 million, including the assumption of mortgage indebtedness
of approximately $25.5 million.  These properties were Indigo Springs, a 278-
unit property located in Kent, Washington; Country Gables, a 288-unit property
located in Portland, Oregon; and Watermark Square, a 390-unit property located
in Portland, Oregon.

    On April 28, 1997, the Operating Partnership made an $88 million investment
in six mortgage loans which are collateralized by five multifamily properties.

    On April 29, 1997, the Operating Partnership acquired Summit Chase
Apartments, a 140-unit multifamily property located in Coral Springs, Florida
from an unaffiliated third party for a purchase price of approximately $5.6
million.

                                       12
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP
 
                                    PART I

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

Overview

    The following discussion and analysis of the results of operations and
financial condition of the Operating Partnership should be read in connection
with the Consolidated Financial Statements and Notes thereto. Due to the
Operating Partnership's ability to control the Management Partnerships, the
Financing Partnerships and the LLCs, each entity has been consolidated with the
Operating Partnership for financial reporting purposes.  Capitalized terms used
herein and not defined, are as defined in the Operating Partnership's Annual
Report on Form 10-K for the year ended December 31, 1996.

Results of Operations

    Since the Company's IPO and through March 31, 1997, the Operating
Partnership has acquired direct or indirect interests in 172 properties (the
"Acquired Properties"), containing 53,378 units in the aggregate for a total
purchase price of approximately $2.6 billion, including the assumption of
approximately $615 million of mortgage indebtedness. The Operating Partnership's
interest in six of the Acquired Properties at the time of acquisition thereof
consisted solely of ownership of the debt collateralized by such Acquired
Properties. The Operating Partnership purchased its interests in ten of such
Acquired Properties consisting of 2,694 units between the IPO and December 31,
1993; 84 of such Acquired Properties consisting of 26,285 units in 1994 (the
"1994 Acquired Properties"); 17 of such Acquired Properties consisting of 5,035
units in 1995 (the "1995 Acquired Properties"); 49 of such Acquired Properties
consisting of 15,665 units in 1996 (the "1996 Acquired Properties"); and 12 of
such Acquired Properties consisting of 3,699 units in 1997 (the "1997 Acquired
Properties"). In addition, in August 1995, the Operating Partnership made an
investment in partnership interests and subordinated mortgages collateralized by
the 21 Additional Properties. The Acquired Properties were presented in the
Consolidated Financial Statements of the Operating Partnership from the date of
each acquisition.

    During the quarter ended March 31, 1997, the Operating Partnership disposed
of one property (the "1997 Disposed Property") for a sales price of $4.8
million.  During 1996, the Operating Partnership also disposed of five
properties containing 1,254 units (the "1996 Disposed Properties") for a total
sales price of approximately $41.3 million.

    The Operating Partnership's overall results of operations for the quarter
ended March 31, 1997 have been impacted by the Operating Partnership's
acquisition and disposition activity.  The significant increases in rental
revenues, property and maintenance expenses, real estate taxes and insurance,
depreciation expense and property management can all primarily be attributed to
the acquisition of the 1996 Acquired Properties and 1997 Acquired Properties.
The impact of the 1996 Acquired Properties and 1997 Acquired Properties is
discussed in greater detail in the following 

                                       13
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP
 
                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)
 
paragraphs. The Operating Partnership's disposition activity partially offset
the increases to these same accounts.
 
    Properties that the Operating Partnership owned for all of the quarter ended
March 31, 1997 and March 31, 1996 (the "First Quarter 1997 Same Store
Properties") also impacted the Operating Partnership's results of operations and
are discussed as well in the following paragraphs.

    Comparison of the quarter ended March 31, 1997 to the quarter ended March
31, 1996

    For the quarter ended March 31, 1997, income before gain on disposition of
properties increased by $12.8 million when compared to the quarter ended March
31, 1996. This increase was primarily due to increases in rental revenues net of
increases in property and maintenance expenses, real estate taxes and insurance,
property management expenses, depreciation, interest expense and general and
administrative expenses. All of the increases in the various line item accounts
mentioned above can be primarily attributed to the 1997 Acquired Properties and
1996 Acquired Properties. These increases were partially offset by the 1996
Disposed Properties and the 1997 Disposed Properties. Interest income earned on
the Operating Partnership's mortgage note investment increased by $1 million,
which included amortization of the discount of approximately $0.8 million, and
was an additional factor that impacted the quarter to quarter changes.

    In regard to the First Quarter 1997 Same Store Properties, rental revenues
increased by approximately $2.6 million or 2.7% primarily as a result of higher
rental rates charged to new tenants and tenant renewals.  Overall property
operating expenses which include property and maintenance, real estate taxes and
insurance and an allocation of property management expenses decreased
approximately $0.4 million or 1%.  This decrease was primarily the result of
lower medical and health insurance costs, building and maintenance costs and
leasing and advertising costs.

    Property management represents expenses associated with the management of
the Operating Partnership's Properties. These expenses increased by
approximately $1.2 million primarily due to the continued expansion of the
Operating Partnership's property management business to facilitate the
management of the Operating Partnership's additional properties. The Operating
Partnership most recently opened new area offices in Houston, Texas; Ypsilanti,
Michigan; Kansas City, Kansas; and Nashville, Tennessee.

    Fee and asset management revenues and fee and asset management expenses are
associated with the management of properties not owned by the Operating
Partnership that are managed for affiliates.  These expenses decreased slightly
for the quarter ended March 31, 1997 when compared to the quarter ended March
31, 1996.

                                       14
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP
 
                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)
 
    Interest expense, including amortization of deferred financing costs,
increased by approximately $4.7 million.  This increase was primarily the result
of an increase in the Operating Partnership's average indebtedness outstanding
which increased by $313.4 million.  However, the Operating Partnership's
effective interest costs decreased from 8.05% in 1996 to 7.62% in 1997.
 
    General and administrative expenses, which include corporate operating
expenses, increased approximately $0.8 million between the periods under
comparison.  This increase was primarily due to adding corporate personnel,
higher compensation costs and shareholder reporting costs as well as an increase
in professional fees. General and administrative expenses as a percentage of
total revenues was 2.10% for the quarter ended March 31, 1997.

Liquidity and Capital Resources

    As of January 1, 1997, the Operating Partnership had approximately $147.3
million of cash and cash equivalents and $250 million available on its line of
credit.  After taking into effect the various transactions discussed in the
following paragraphs, the Operating Partnership's cash and cash equivalents
balance at March 31, 1997 was approximately $84.8 million and the amount
available on the Operating Partnership's line of credit was $250 million. The
following discussion also explains the changes in net cash provided by operating
activities, net cash (used for) investing activities and net cash provided by
financing activities, which amounts for each period under comparison are
presented in the Operating Partnership's Statements of Cash Flows.

    In February 1997, the Company issued 33,971 Common Shares pursuant to the
Employee Share Purchase Plan and contributed to the Operating Partnership net
proceeds of approximately $1.2 million.  The Company completed the March 1997
Common Share Offerings and contributed to the Operating Partnership net proceeds
of approximately $88.3 million, which have been or will be utilized to purchase
additional properties.

    With respect to Property acquisitions during the quarter, the Operating
Partnership purchased 12 Properties containing 3,699 units for a total purchase
price of approximately $211 million, including the assumption of mortgage
indebtedness of approximately $60.9 million.  These acquisitions were primarily
funded from proceeds received from the December 1996 Common Share Offerings.
Subsequent to March 31, 1997, the Operating Partnership acquired four additional
properties, containing 1,096 units, for a total purchase price of approximately
$51.1 million, including the assumption of mortgage indebtedness of
approximately $25.5 million. These acquisitions were primarily funded with
proceeds from the March 1997 Common Share Offerings. The Operating Partnership
is actively seeking to acquire additional multifamily properties with physical
and market characteristics similar to the Properties and as of March 31, 1997
was under contract or negotiating with various sellers to purchase up to 2,477
units.  The 

                                       15
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP
 
                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)
 
combined purchase price of these probable acquisitions is approximately $110.2
million, including the assumption of mortgage indebtedness of approximately
$82.2 million. The closings of these 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 will not differ in
material respects.

    In addition, in April 1997, the Operating Partnership made an $88 million
investment in six mortgage loans collateralized by five properties.  This
investment was funded from the Operating Partnership's line of credit.

    During the quarter ended March 31, 1997, the Operating Partnership disposed
of one property which generated net proceeds of $4.8 million.  Subsequently,
these proceeds will be ultimately applied to purchase additional properties.

    As of March 31, 1997, the Operating Partnership had total indebtedness of
approximately $1.3 billion, which included mortgage indebtedness of $795.7
million, of which $274 million represented tax-exempt bond indebtedness, and
unsecured debt of $498.9 million (net of a $1.1 million discount).  During the
year, the Operating Partnership repaid an aggregate of $19.3 million of mortgage
indebtedness on three of its Properties.  These repayments were primarily funded
from proceeds received from the December 1996 Common Share Offerings.  The
Operating Partnership has, from time to time, entered into interest rate
protection agreements to reduce the potential impact of increases in interest
rates but has limited exposure to the extent of non-performance by the
counterparties of each protection agreement since each counterparty is a major
U.S. financial institution, and the Operating Partnership does not anticipate
their non-performance.  No such financial instrument has been used for trading
purposes.  In February, 1996, the Operating Partnership entered into two
interest rate protection agreements that will hedge the Operating Partnership's
interest rate risk at maturity of $175 million of indebtedness.  The first
agreement hedged the interest rate risk of $50 million of mortgage loans
scheduled to mature in September 1997 by locking the five year Treasury Rate,
commencing October 1, 1997.  The second agreement hedged the interest rate risk
of the Operating Partnership's 1999 Notes by locking the four year Treasury Rate
commencing May 15, 1999.  There was no current cost to the Operating Partnership
for entering into these agreements.

    During the quarter ended March 31, 1997, total capital expenditures for the
Operating Partnership approximated $8.8 million.  Of this amount, approximately
$1 million related to capital improvements and major repairs for certain of the
1994, 1995, 1996 and 1997 Acquired Properties.  Capital improvements and major
repairs for all of the Operating Partnership's pre-IPO properties and certain
Acquired Properties approximated $1.9 million, or $35 per unit. Capital spent
for replacement-type items approximated $3.3 million, or $48 per unit.  In
regard to capital spent for upgrades at certain properties and tenant
improvements with respect to the retail 

                                       16
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP
 
                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)
 
and commercial office space at one Property, the amount was approximately $1.1
million. Also included in total capital expenditures was approximately $1.5
million expended for non-real estate additions such as computer software,
computer equipment, furniture and fixtures and leasehold improvements for the
Operating Partnership's ROCs and its corporate headquarters. Such capital
expenditures were primarily funded from working capital reserves and from net
cash provided by operating activities. Total capital expenditures for the
remaining portion of 1997 are budgeted to be approximately $39.2 million.
 
    Total distributions paid in April 1997 for the quarter ended March 31, 1997
amounted to approximately $47.2 million.

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

    On January 16, 1997, the Company entered into an Agreement and Plan of
Merger regarding the acquisition of the multifamily property business of
Wellsford, a Maryland real estate investment trust, through the tax free merger
of the Company and Wellsford. The transaction is valued at approximately $1
billion and includes 72 multifamily properties containing 19,004 units. In the
Merger, each outstanding common share of beneficial interest of Wellsford will
be converted into .625 of a common share of the surviving company. In connection
with the Merger, the Company may have to fund up to $67 million to cover certain
transaction and termination costs, repay Wellsford's line of credit balance and
fund an investment in a company to be spun off from Wellsford. The Merger is
subject to approval of the common shareholders of the Company and Wellsford at
special meetings of such shareholders called for May 28, 1997. The completion of
the Merger is also conditioned upon certain other closing conditions. There is
no assurance that the Merger will be consummated.

    The Operating Partnership currently has a $250 million line of credit which
is scheduled to mature in November 1999.  As of May 12, 1997, $100 million was
outstanding under the Operating Partnership's line of credit.

Funds From Operations

                                       17
<PAGE>

                       ERP OPERATING LIMITED PARTNERSHIP
 
                                    PART I

Item 2. Management's Discussion and Analysis of Financial Condition and Results 
        of Operations (Continued)
  
    The Operating Partnership generally considers FFO to be one measure of the
performance of real estate companies.  The resolution adopted by the Board of
Governors of NAREIT defines FFO as net income (loss) (computed in accordance
with GAAP), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures.  Adjustments for unconsolidated
partnerships and joint ventures are calculated to reflect FFO on the same basis.
The Operating Partnership believes that FFO is helpful to investors as a measure
of the performance of a real estate company because, along with cash flows from
operating activities, financing activities and investing activities it provides
investors an understanding of the ability of the Operating Partnership to incur
and service debt and to make capital expenditures.  FFO in and of itself does
not represent cash generated from operating activities in accordance with GAAP
and therefore should not be considered an alternative to net income as an
indication of the Operating Partnership's performance or to net cash flows from
operating activities as determined by GAAP as a measure of liquidity and is not
necessarily indicative of cash available to fund cash needs. The Operating
Partnership's calculation of FFO represents net income excluding gains on
dispositions of properties plus depreciation on real estate assets, amortization
of deferred financing costs related to the Predecessor Business and the
allocation of net income to Cumulative Redeemable Preference Units. The
Operating Partnership's calculation of FFO may differ from the methodology for
calculating FFO utilized by other companies and, accordingly, may not be
comparable to such other companies.

    For the quarter ended March 31, 1997, FFO increased $18.4 million,
representing a 54.3% increase when compared to the quarter ended March 31, 1996.

    The following is a reconciliation of net income to FFO for the quarters
ended March 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                      Quarter      Quarter
                                                       Ended        Ended
                                                      3/31/97      3/31/96
                                                      -------      -------
    <S>                                               <C>          <C>
    Net income                                        $36,388      $21,295
    Adjustments:
      Depreciation on real estate assets               28,432       20,133
      Amortization of deferred financing costs
        related to predecessor business                    58          159
      Allocation of net income to Cumulative
        Redeemable Preference Units                    (9,061)      (6,437)
      Gain on disposition of properties                (3,632)      (1,340)
                                                      -------      -------
    FFO                                               $52,185      $33,810
                                                      =======      =======
</TABLE>

                                       18
<PAGE>
 
                          PART II. OTHER INFORMATION


Item 1. Legal Proceedings

The discussion in Note 13 of "Notes to Consolidated Statements" is incorporated
herein by reference.

Item 6. Exhibits and Reports on Form 8-K

(A)   Exhibits:

12    Computation of Ratio of Earnings to Fixed Charges.

(B)   Reports on Form 8-K:

      None

                                       19
<PAGE>
 
                                  SIGNATURES
                                  ----------



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



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


Date: May 12, 1997          By:   /s/            Bruce C. Strohm
      ------------                   ----------------------------------------
                                                 Bruce C. Strohm
                                     Executive Vice President, General Counsel
                                                  and Secretary

Date: May 12, 1997          By:   /s/           Michael J. McHugh
      ------------                   ----------------------------------------
                                                Michael J. McHugh
                                     Senior Vice President, Chief Accounting
                                              Officer and Treasurer

                                       20