##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q







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

For the quarterly period ended JUNE 30, 2010

OR



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

For the transition period
from                to

Commission File Number: 0-24920





ERP OPERATING
LIMITED PARTNERSHIP

(Exact name of Registrant as Specified in Its Charter)







|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|Illinois                                                      |  | 36-3894853                         
|(State or Other Jurisdiction ofIncorporation or Organization) |  | (I.R.S. EmployerIdentification 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   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  | x  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

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









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##### Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

TABLE OF CONTENTS



|         |  |          |  |                                                                                                    |  |         
|-------- |  | -------- |  | -------------------------------------------------------------------------------------------------- |  | --------
|         |  |          |  |                                                                                                    |  | PAGE    
|PART I.  |  |          |  |                                                                                                    |  |         
|         |  | Item 1.  |  | Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009                              |  | 2       
|         |  |          | 
|         |  |          |  | Consolidated Statements of Operations for the six months and quarters ended June 30, 2010 and 2009 |  | 3 to 4  
|         |  |          | 
|         |  |          |  | Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009              |  | 5 to 7  
|         |  |          | 
|         |  |          |  | Consolidated Statement of Changes in Capital for the six months ended June 30, 2010                |  | 8 to 9  
|         |  |          | 
|         |  |          |  | Notes to Consolidated Financial Statements                                                         |  | 10 to 28
|         |  |          | 
|         |  | Item 2.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations              |  | 29 to 48
|         |  |          | 
|         |  | Item 3.  |  | Quantitative and Qualitative Disclosures about Market Risk                                         |  | 48      
|         |  |          | 
|         |  | Item 4.  |  | Controls and Procedures                                                                            |  | 48 to 49
|         |  |          | 
|PART II. |  |          |  |                                                                                                    |  |         
|         |  | Item 1.  |  | Legal Proceedings                                                                                  |  | 50      
|         |  |          | 
|         |  | Item 1A. |  | Risk Factors                                                                                       |  | 50      
|         |  |          | 
|         |  | Item 2.  |  | Unregistered Sales of Equity Securities and Use of Proceeds                                        |  | 50      
|         |  |          | 
|         |  | Item 4.  |  | (Removed and Reserved)                                                                             |  | 50      
|         |  |          | 
|         |  | Item 6.  |  | Exhibits                                                                                           |  | 50      



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##### Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)



|                                                      |  |              |            |   |                  |   |            |  
|----------------------------------------------------- |  | ------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                      |  | June 30,2010 |            |   | December 31,2009 |  
|ASSETS                                                |  |              |            |   |                  |   |            |  
|Investment in real estate                             |  |              |            |   |                  |   |            |  
|Land                                                  |  | $            | 4,003,177  |   |                  | $ | 3,650,324  |  
|Depreciable property                                  |  |              | 14,686,447 |   |                  |   | 13,893,521 |  
|Projects under development                            |  |              | 473,280    |   |                  |   | 668,979    |  
|Land held for development                             |  |              | 251,219    |   |                  |   | 252,320    |  
|                                                      |  |              |            |   |                  |   |            |  
|Investment in real estate                             |  |              | 19,414,123 |   |                  |   | 18,465,144 |  
|Accumulated depreciation                              |  |              | (4,146,964 | ) |                  |   | (3,877,564 | )
|                                                      |  |              |            |   |                  |   |            |  
|Investment in real estate, net                        |  |              | 15,267,159 |   |                  |   | 14,587,580 |  
|                                                      |  |             
|Cash and cash equivalents                             |  |              | 47,982     |   |                  |   | 193,288    |  
|Investments in unconsolidated entities                |  |              | 2,889      |   |                  |   | 6,995      |  
|Deposits  restricted                                 |  |              | 108,654    |   |                  |   | 352,008    |  
|Escrow deposits  mortgage                            |  |              | 17,995     |   |                  |   | 17,292     |  
|Deferred financing costs, net                         |  |              | 41,862     |   |                  |   | 46,396     |  
|Other assets                                          |  |              | 138,731    |   |                  |   | 213,956    |  
|                                                      |  |              |            |   |                  |   |            |  
|Total assets                                          |  | $            | 15,625,272 |   |                  | $ | 15,417,515 |  
|                                                      |  |              |            |   |                  |   |            |  
|                                                      |  |             
|LIABILITIES AND CAPITAL                               |  |              |            |   |                  |   |            |  
|Liabilities:                                          |  |              |            |   |                  |   |            |  
|Mortgage notes payable                                |  | $            | 4,754,601  |   |                  | $ | 4,783,446  |  
|Notes, net                                            |  |              | 4,584,800  |   |                  |   | 4,609,124  |  
|Lines of credit                                       |  |              | 320,000    |   |                  |   | -          |  
|Accounts payable and accrued expenses                 |  |              | 81,791     |   |                  |   | 58,537     |  
|Accrued interest payable                              |  |              | 97,273     |   |                  |   | 101,849    |  
|Other liabilities                                     |  |              | 312,119    |   |                  |   | 272,236    |  
|Security deposits                                     |  |              | 62,568     |   |                  |   | 59,264     |  
|Distributions payable                                 |  |              | 102,520    |   |                  |   | 100,266    |  
|                                                      |  |              |            |   |                  |   |            |  
|Total liabilities                                     |  |              | 10,315,672 |   |                  |   | 9,984,722  |  
|                                                      |  |              |            |   |                  |   |            |  
|                                                      |  |             
|Commitments and contingencies                         |  |              |            |   |                  |   |            |  
|                                                      |  |             
|Redeemable Limited Partners                           |  |              | 313,735    |   |                  |   | 258,280    |  
|                                                      |  |              |            |   |                  |   |            |  
|                                                      |  |             
|Capital:                                              |  |              |            |   |                  |   |            |  
|Partners Capital:                                    |  |              |            |   |                  |   |            |  
|Preference Units                                      |  |              | 208,686    |   |                  |   | 208,773    |  
|General Partner                                       |  |              | 4,748,158  |   |                  |   | 4,833,885  |  
|Limited Partners                                      |  |              | 108,989    |   |                  |   | 116,120    |  
|Accumulated other comprehensive (loss) income         |  |              | (79,666    | ) |                  |   | 4,681      |  
|                                                      |  |              |            |   |                  |   |            |  
|Total partners capital                               |  |              | 4,986,167  |   |                  |   | 5,163,459  |  
|Noncontrolling Interests  Partially Owned Properties |  |              | 9,698      |   |                  |   | 11,054     |  
|                                                      |  |              |            |   |                  |   |            |  
|Total capital                                         |  |              | 4,995,865  |   |                  |   | 5,174,513  |  
|                                                      |  |              |            |   |                  |   |            |  
|Total liabilities and capital                         |  | $            | 15,625,272 |   |                  | $ | 15,417,515 |  
|                                                      |  |              |            |   |                  |   |            |  

See accompanying notes



2



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##### Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands except per Unit data)

(Unaudited)



|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ---------------------- | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                                                                                                                                                          |  | Six Months Ended June 30, |          |   | Quarter Ended June 30, |  
|                                                                                                                                                                          |  | 2010                      |          |   | 2009                   |   |          | 2010 |  |   | 2009     |  
|REVENUES                                                                                                                                                                  |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Rental income                                                                                                                                                             |  | $                         | 993,570  |   |                        | $ | 957,533  |      |  | $ | 507,891  |   |  | $ | 477,921  |  
|Fee and asset management                                                                                                                                                  |  |                           | 5,468    |   |                        |   | 5,275    |      |  |   | 3,046    |   |  |   | 2,412    |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Total revenues                                                                                                                                                            |  |                           | 999,038  |   |                        |   | 962,808  |      |  |   | 510,937  |   |  |   | 480,333  |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|                                                                                                                                                                          |  |                           |          |  
|EXPENSES                                                                                                                                                                  |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Property and maintenance                                                                                                                                                  |  |                           | 251,971  |   |                        |   | 241,386  |      |  |   | 125,454  |   |  |   | 116,711  |  
|Real estate taxes and insurance                                                                                                                                           |  |                           | 114,482  |   |                        |   | 103,845  |      |  |   | 56,957   |   |  |   | 51,357   |  
|Property management                                                                                                                                                       |  |                           | 41,147   |   |                        |   | 37,732   |      |  |   | 20,467   |   |  |   | 18,718   |  
|Fee and asset management                                                                                                                                                  |  |                           | 3,660    |   |                        |   | 3,985    |      |  |   | 1,646    |   |  |   | 1,982    |  
|Depreciation                                                                                                                                                              |  |                           | 326,965  |   |                        |   | 284,952  |      |  |   | 174,794  |   |  |   | 143,296  |  
|General and administrative                                                                                                                                                |  |                           | 20,811   |   |                        |   | 20,595   |      |  |   | 10,090   |   |  |   | 10,201   |  
|Impairment                                                                                                                                                                |  |                           | -        |   |                        |   | 11,124   |      |  |   | -        |   |  |   | 11,124   |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Total expenses                                                                                                                                                            |  |                           | 759,036  |   |                        |   | 703,619  |      |  |   | 389,408  |   |  |   | 353,389  |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|                                                                                                                                                                          |  |                           |          |  
|Operating income                                                                                                                                                          |  |                           | 240,002  |   |                        |   | 259,189  |      |  |   | 121,529  |   |  |   | 126,944  |  
|                                                                                                                                                                          |  |                           |          |  
|Interest and other income                                                                                                                                                 |  |                           | 5,117    |   |                        |   | 12,639   |      |  |   | 2,892    |   |  |   | 6,622    |  
|Other expenses                                                                                                                                                            |  |                           | (6,026   | ) |                        |   | (306     | )    |  |   | (1,643   | ) |  |   | (14      | )
|Interest:                                                                                                                                                                 |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Expense incurred, net                                                                                                                                                     |  |                           | (231,116 | ) |                        |   | (239,172 | )    |  |   | (115,819 | ) |  |   | (115,670 | )
|Amortization of deferred financing costs                                                                                                                                  |  |                           | (5,516   | ) |                        |   | (6,214   | )    |  |   | (2,319   | ) |  |   | (3,252   | )
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|                                                                                                                                                                          |  |                           |          |  
|Income before income and other taxes, (loss) from investments in unconsolidated entities, net gain (loss) on sales of
unconsolidated entities and discontinued operations |  |                           | 2,461    |   |                        |   | 26,136   |      |  |   | 4,640    |   |  |   | 14,630   |  
|Income and other tax (expense) benefit                                                                                                                                    |  |                           | (20      | ) |                        |   | (2,387   | )    |  |   | 146      |   |  |   | (259     | )
|(Loss) from investments in unconsolidated entities                                                                                                                        |  |                           | (923     | ) |                        |   | (2,221   | )    |  |   | (459     | ) |  |   | (2,026   | )
|Net gain (loss) on sales of unconsolidated entities                                                                                                                       |  |                           | 5,557    |   |                        |   | 2,759    |      |  |   | 5,079    |   |  |   | (6       | )
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Income from continuing operations                                                                                                                                         |  |                           | 7,075    |   |                        |   | 24,287   |      |  |   | 9,406    |   |  |   | 12,339   |  
|Discontinued operations, net                                                                                                                                              |  |                           | 60,870   |   |                        |   | 167,066  |      |  |   | 683      |   |  |   | 93,593   |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Net income                                                                                                                                                                |  |                           | 67,945   |   |                        |   | 191,353  |      |  |   | 10,089   |   |  |   | 105,932  |  
|Net loss attributable to Noncontrolling Interests  Partially Owned Properties                                                                                            |  |                           | 435      |   |                        |   | 74       |      |  |   | 185      |   |  |   | 5        |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Net income attributable to controlling interests                                                                                                                          |  | $                         | 68,380   |   |                        | $ | 191,427  |      |  | $ | 10,274   |   |  | $ | 105,937  |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|                                                                                                                                                                          |  |                           |          |  
|ALLOCATION OF NET INCOME:                                                                                                                                                 |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Preference Units                                                                                                                                                          |  | $                         | 7,238    |   |                        | $ | 7,240    |      |  | $ | 3,618    |   |  | $ | 3,620    |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Preference Interests and Junior Preference Units                                                                                                                          |  | $                         | -        |   |                        | $ | 7        |      |  | $ | -        |   |  | $ | 3        |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|                                                                                                                                                                          |  |                           |          |  
|General Partner                                                                                                                                                           |  | $                         | 58,206   |   |                        | $ | 173,760  |      |  | $ | 6,343    |   |  | $ | 96,585   |  
|Limited Partners                                                                                                                                                          |  |                           | 2,936    |   |                        |   | 10,420   |      |  |   | 313      |   |  |   | 5,729    |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Net income available to Units                                                                                                                                             |  | $                         | 61,142   |   |                        | $ | 184,180  |      |  | $ | 6,656    |   |  | $ | 102,314  |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|                                                                                                                                                                          |  |                           |          |  
|Earnings per Unit  basic:                                                                                                                                                |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Income from continuing operations available to Units                                                                                                                      |  | $                         | -        |   |                        | $ | 0.06     |      |  | $ | 0.02     |   |  | $ | 0.03     |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Net income available to Units                                                                                                                                             |  | $                         | 0.21     |   |                        | $ | 0.64     |      |  | $ | 0.02     |   |  | $ | 0.35     |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Weighted average Units outstanding                                                                                                                                        |  |                           | 295,177  |   |                        |   | 288,851  |      |  |   | 295,898  |   |  |   | 288,990  |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|                                                                                                                                                                          |  |                           |          |  
|Earnings per Unit  diluted:                                                                                                                                              |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Income from continuing operations available to Units                                                                                                                      |  | $                         | -        |   |                        | $ | 0.06     |      |  | $ | 0.02     |   |  | $ | 0.03     |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Net income available to Units                                                                                                                                             |  | $                         | 0.21     |   |                        | $ | 0.64     |      |  | $ | 0.02     |   |  | $ | 0.35     |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Weighted average Units outstanding                                                                                                                                        |  |                           | 298,244  |   |                        |   | 289,152  |      |  |   | 299,642  |   |  |   | 289,338  |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Distributions declared per Unit outstanding                                                                                                                               |  | $                         | 0.6750   |   |                        | $ | 0.9650   |      |  | $ | 0.3375   |   |  | $ | 0.4825   |  
|                                                                                                                                                                          |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  

See accompanying notes



3



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##### Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)

(Amounts in thousands except per Unit data)

(Unaudited)



|                                                                                         |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------------------- | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                         |  | Six Months Ended June 30, |         |   | Quarter Ended June 30, |  
|                                                                                         |  | 2010                      |         |   | 2009                   |   |         | 2010 |  |   | 2009    |  
|Comprehensive (loss) income:                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                         |  |                           |         |  
|Net income                                                                               |  | $                         | 67,945  |   |                        | $ | 191,353 |      |  | $ | 10,089  |   |  | $ | 105,932 |  
|Other comprehensive (loss) income  derivative instruments:                              |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|Unrealized holding (losses) gains arising during the period                              |  |                           | (85,746 | ) |                        |   | 12,655  |      |  |   | (72,243 | ) |  |   | 9,995   |  
|Losses reclassified into earnings from other comprehensive income                        |  |                           | 1,465   |   |                        |   | 2,305   |      |  |   | 739     |   |  |   | 812     |  
|Other                                                                                    |  |                           | -       |   |                        |   | 449     |      |  |   | -       |   |  |   | -       |  
|Other comprehensive (loss) income  other instruments:                                   |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|Unrealized holding (losses) gains arising during the period                              |  |                           | (66     | ) |                        |   | 3,111   |      |  |   | 93      |   |  |   | 1,203   |  
|(Gains) realized during the period                                                       |  |                           | -       |   |                        |   | (4,943  | )    |  |   | -       |   |  |   | (4,943  | )
|                                                                                         |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|Comprehensive (loss) income                                                              |  |                           | (16,402 | ) |                        |   | 204,930 |      |  |   | (61,322 | ) |  |   | 112,999 |  
|Comprehensive loss attributable to Noncontrolling Interests  Partially Owned Properties |  |                           | 435     |   |                        |   | 74      |      |  |   | 185     |   |  |   | 5       |  
|                                                                                         |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|Comprehensive (loss) income attributable to controlling interests                        |  | $                         | (15,967 | ) |                        | $ | 205,004 |      |  | $ | (61,137 | ) |  | $ | 113,004 |  
|                                                                                         |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  

See accompanying notes



4



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##### Table of Contents

ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)



|                                                                                  |  |                           |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                  |  | Six Months Ended June 30, |         
|                                                                                  |  | 2010                      |          |   | 2009 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             |  |                           |          |   |      |   |          |  
|Net income                                                                        |  | $                         | 67,945   |   |      | $ | 191,353  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                           |          |   |      |   |          |  
|Depreciation                                                                      |  |                           | 327,676  |   |      |   | 301,835  |  
|Amortization of deferred financing costs                                          |  |                           | 5,516    |   |      |   | 6,252    |  
|Amortization of discounts on investment securities                                |  |                           | -        |   |      |   | (1,658   | )
|Amortization of discounts and premiums on debt                                    |  |                           | 1,123    |   |      |   | 2,541    |  
|Amortization of deferred settlements on derivative instruments                    |  |                           | 1,198    |   |      |   | 1,604    |  
|Impairment                                                                        |  |                           | -        |   |      |   | 11,124   |  
|Write-off of pursuit costs                                                        |  |                           | 2,062    |   |      |   | 162      |  
|Property acquisition costs                                                        |  |                           | 3,964    |   |      |   | 144      |  
|Loss from investments in unconsolidated entities                                  |  |                           | 923      |   |      |   | 2,221    |  
|Distributions from unconsolidated entities  return on capital                    |  |                           | 61       |   |      |   | 82       |  
|Net (gain) on sales of investment securities                                      |  |                           | -        |   |      |   | (4,943   | )
|Net (gain) on sales of unconsolidated entities                                    |  |                           | (5,557   | ) |      |   | (2,759   | )
|Net (gain) on sales of discontinued operations                                    |  |                           | (60,253  | ) |      |   | (145,798 | )
|(Gain) on debt extinguishments                                                    |  |                           | -        |   |      |   | (1,985   | )
|Unrealized loss on derivative instruments                                         |  |                           | 1        |   |      |   | -        |  
|Compensation paid with Company Common Shares                                      |  |                           | 10,926   |   |      |   | 9,533    |  
|                                                                                  |  |                          
|Changes in assets and liabilities:                                                |  |                           |          |   |      |   |          |  
|(Increase) decrease in deposits  restricted                                      |  |                           | (1,394   | ) |      |   | 1,801    |  
|(Increase) in other assets                                                        |  |                           | (16,079  | ) |      |   | (2,656   | )
|Increase in accounts payable and accrued expenses                                 |  |                           | 31,360   |   |      |   | 14,315   |  
|(Decrease) in accrued interest payable                                            |  |                           | (5,358   | ) |      |   | (6,280   | )
|(Decrease) in other liabilities                                                   |  |                           | (6,166   | ) |      |   | (8,958   | )
|Increase (decrease) in security deposits                                          |  |                           | 2,763    |   |      |   | (2,320   | )
|                                                                                  |  |                           |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                           | 360,711  |   |      |   | 365,610  |  
|                                                                                  |  |                           |          |   |      |   |          |  
|                                                                                  |  |                          
|CASH FLOWS FROM INVESTING ACTIVITIES:                                             |  |                           |          |   |      |   |          |  
|Investment in real estate  acquisitions                                          |  |                           | (684,594 | ) |      |   | -        |  
|Investment in real estate  development/other                                     |  |                           | (66,886  | ) |      |   | (197,362 | )
|Improvements to real estate                                                       |  |                           | (59,182  | ) |      |   | (59,120  | )
|Additions to non-real estate property                                             |  |                           | (612     | ) |      |   | (1,107   | )
|Interest capitalized for real estate under development                            |  |                           | (7,940   | ) |      |   | (21,018  | )
|Proceeds from disposition of real estate, net                                     |  |                           | 105,072  |   |      |   | 347,519  |  
|Distributions from unconsolidated entities  return of capital                    |  |                           | 1,303    |   |      |   | 2,585    |  
|Purchase of investment securities                                                 |  |                           | -        |   |      |   | (52,822  | )
|Proceeds from sale of investment securities                                       |  |                           | 25,000   |   |      |   | 181,692  |  
|Property acquisition costs                                                        |  |                           | (3,964   | ) |      |   | (144     | )
|Decrease (increase) in deposits on real estate acquisitions, net                  |  |                           | 228,907  |   |      |   | (29,309  | )
|(Increase) decrease in mortgage deposits                                          |  |                           | (703     | ) |      |   | 2,188    |  
|Consolidation of previously unconsolidated properties                             |  |                           | (26,854  | ) |      |   | -        |  
|Acquisition of Noncontrolling Interests  Partially Owned Properties              |  |                           | (152     | ) |      |   | (9,220   | )
|                                                                                  |  |                           |          |   |      |   |          |  
|Net cash (used for) provided by investing activities                              |  |                           | (490,605 | ) |      |   | 163,882  |  
|                                                                                  |  |                           |          |   |      |   |          |  

See accompanying notes



5



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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)



|                                                                      |  |                           |            |   |      |   |          |  
|--------------------------------------------------------------------- |  | ------------------------- | ---------- | - | ---- | - | -------- | -
|                                                                      |  | Six Months Ended June 30, |           
|                                                                      |  | 2010                      |            |   | 2009 |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                 |  |                           |            |   |      |   |          |  
|Loan and bond acquisition costs                                       |  | $                         | (2,193     | ) |      | $ | (8,851   | )
|Mortgage notes payable:                                               |  |                           |            |   |      |   |          |  
|Proceeds                                                              |  |                           | 104,994    |   |      |   | 614,409  |  
|Restricted cash                                                       |  |                           | 58,474     |   |      |   | 21,699   |  
|Lump sum payoffs                                                      |  |                           | (400,033   | ) |      |   | (593,453 | )
|Scheduled principal repayments                                        |  |                           | (8,323     | ) |      |   | (9,666   | )
|(Loss) on debt extinguishments                                        |  |                           | -          |   |      |   | (35      | )
|Notes, net:                                                           |  |                           |            |   |      |   |          |  
|Lump sum payoffs                                                      |  |                           | -          |   |      |   | (505,849 | )
|Gain on debt extinguishments                                          |  |                           | -          |   |      |   | 2,020    |  
|Lines of credit:                                                      |  |                           |            |   |      |   |          |  
|Proceeds                                                              |  |                           | 3,679,125  |   |      |   | -        |  
|Repayments                                                            |  |                           | (3,359,125 | ) |      |   | -        |  
|Proceeds from settlement of derivative instruments                    |  |                           | -          |   |      |   | 11,251   |  
|Proceeds from sale of OP Units                                        |  |                           | 73,356     |   |      |   | -        |  
|Proceeds from EQRs Employee Share Purchase Plan (ESPP)               |  |                           | 3,546      |   |      |   | 3,960    |  
|Proceeds from exercise of EQR options                                 |  |                           | 43,809     |   |      |   | 128      |  
|OP Units repurchased and retired                                      |  |                           | (1,887     | ) |      |   | (1,124   | )
|Payment of offering costs                                             |  |                           | (723       | ) |      |   | (131     | )
|Other financing activities, net                                       |  |                           | (33        | ) |      |   | (8       | )
|Contributions  Noncontrolling Interests  Partially Owned Properties |  |                           | 222        |   |      |   | 874      |  
|Contributions  Limited Partners                                      |  |                           | -          |   |      |   | 78       |  
|Distributions:                                                        |  |                           |            |   |      |   |          |  
|OP Units  General Partner                                            |  |                           | (188,543   | ) |      |   | (263,636 | )
|Preference Units                                                      |  |                           | (7,238     | ) |      |   | (7,240   | )
|Preference Interests and Junior Preference Units                      |  |                           | -          |   |      |   | (7       | )
|OP Units  Limited Partners                                           |  |                           | (9,496     | ) |      |   | (15,914  | )
|Noncontrolling Interests  Partially Owned Properties                 |  |                           | (1,344     | ) |      |   | (1,296   | )
|                                                                      |  |                           |            |   |      |   |          |  
|Net cash (used for) financing activities                              |  |                           | (15,412    | ) |      |   | (752,791 | )
|                                                                      |  |                           |            |   |      |   |          |  
|Net (decrease) in cash and cash equivalents                           |  |                           | (145,306   | ) |      |   | (223,299 | )
|Cash and cash equivalents, beginning of period                        |  |                           | 193,288    |   |      |   | 890,794  |  
|                                                                      |  |                           |            |   |      |   |          |  
|Cash and cash equivalents, end of period                              |  | $                         | 47,982     |   |      | $ | 667,495  |  
|                                                                      |  |                           |            |   |      |   |          |  

See accompanying notes



6



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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)



|                                                                |  |                           |          |   |      |   |         |  
|--------------------------------------------------------------- |  | ------------------------- | -------- | - | ---- | - | ------- | -
|                                                                |  | Six Months Ended June 30, |         
|                                                                |  | 2010                      |          |   | 2009 |  
|SUPPLEMENTAL INFORMATION:                                       |  |                           |          |   |      |   |         |  
|Cash paid for interest, net of amounts capitalized              |  | $                         | 229,507  |   |      | $ | 242,010 |  
|                                                                |  |                           |          |   |      |   |         |  
|Net cash (received) paid for income and other taxes             |  | $                         | (2,940   | ) |      | $ | 3,343   |  
|                                                                |  |                           |          |   |      |   |         |  
|                                                                |  |                          
|Real estate acquisitions/dispositions/other:                    |  |                           |          |   |      |   |         |  
|Mortgage loans assumed                                          |  | $                         | 169,428  |   |      | $ | -       |  
|                                                                |  |                           |          |   |      |   |         |  
|Valuation of OP Units                                           |  | $                         | 7,433    |   |      | $ | -       |  
|                                                                |  |                           |          |   |      |   |         |  
|Mortgage loans (assumed) by purchaser                           |  | $                         | (39,999  | ) |      | $ | (4,387  | )
|                                                                |  |                           |          |   |      |   |         |  
|                                                                |  |                          
|Amortization of deferred financing costs:                       |  |                           |          |   |      |   |         |  
|Investment in real estate, net                                  |  | $                         | (1,211   | ) |      | $ | (2,133  | )
|                                                                |  |                           |          |   |      |   |         |  
|Deferred financing costs, net                                   |  | $                         | 6,727    |   |      | $ | 8,385   |  
|                                                                |  |                           |          |   |      |   |         |  
|                                                                |  |                          
|Amortization of discounts and premiums on debt:                 |  |                           |          |   |      |   |         |  
|Investment in real estate, net                                  |  | $                         | -        |   |      | $ | (3      | )
|                                                                |  |                           |          |   |      |   |         |  
|Mortgage notes payable                                          |  | $                         | (3,130   | ) |      | $ | (3,091  | )
|                                                                |  |                           |          |   |      |   |         |  
|Notes, net                                                      |  | $                         | 4,253    |   |      | $ | 5,635   |  
|                                                                |  |                           |          |   |      |   |         |  
|                                                                |  |                          
|Amortization of deferred settlements on derivative instruments: |  |                           |          |   |      |   |         |  
|Other liabilities                                               |  | $                         | (267     | ) |      | $ | (701    | )
|                                                                |  |                           |          |   |      |   |         |  
|Accumulated other comprehensive loss                            |  | $                         | 1,465    |   |      | $ | 2,305   |  
|                                                                |  |                           |          |   |      |   |         |  
|                                                                |  |                          
|Unrealized loss (gain) on derivative instruments:               |  |                           |          |   |      |   |         |  
|Other assets                                                    |  | $                         | 16,620   |   |      | $ | (7,894  | )
|                                                                |  |                           |          |   |      |   |         |  
|Mortgage notes payable                                          |  | $                         | (13      | ) |      | $ | (1,806  | )
|                                                                |  |                           |          |   |      |   |         |  
|Notes, net                                                      |  | $                         | 7,023    |   |      | $ | (1,105  | )
|                                                                |  |                           |          |   |      |   |         |  
|Other liabilities                                               |  | $                         | 62,117   |   |      | $ | (1,850  | )
|                                                                |  |                           |          |   |      |   |         |  
|Accumulated other comprehensive (loss) income                   |  | $                         | (85,746  | ) |      | $ | 12,655  |  
|                                                                |  |                           |          |   |      |   |         |  
|                                                                |  |                          
|Proceeds from settlement of derivative instruments:             |  |                           |          |   |      |   |         |  
|Other assets                                                    |  | $                         | -        |   |      | $ | 11,251  |  
|                                                                |  |                           |          |   |      |   |         |  
|                                                                |  |                          
|Consolidation of previously unconsolidated properties:          |  |                           |          |   |      |   |         |  
|Investment in real estate, net                                  |  | $                         | (105,065 | ) |      | $ | -       |  
|                                                                |  |                           |          |   |      |   |         |  
|Investments in unconsolidated entities                          |  | $                         | 7,376    |   |      | $ | -       |  
|                                                                |  |                           |          |   |      |   |         |  
|Deposits  restricted                                           |  | $                         | (42,633  | ) |      | $ | -       |  
|                                                                |  |                           |          |   |      |   |         |  
|Mortgage notes payable                                          |  | $                         | 112,631  |   |      | $ | -       |  
|                                                                |  |                           |          |   |      |   |         |  
|Net other assets recorded                                       |  | $                         | 837      |   |      | $ | -       |  
|                                                                |  |                           |          |   |      |   |         |  
|                                                                |  |                          
|Other                                                           |  |                           |          |   |      |   |         |  
|Receivable on sale of OP Units                                  |  | $                         | 37,550   |   |      | $ | -       |  
|                                                                |  |                           |          |   |      |   |         |  
|Transfer from notes, net to mortgage notes payable              |  | $                         | 35,600   |   |      | $ | -       |  
|                                                                |  |                           |          |   |      |   |         |  

See accompanying notes



7



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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL

(Amounts in thousands)

(Unaudited)



|                                                                                      |  |                               |           |  
|------------------------------------------------------------------------------------- |  | ----------------------------- | --------- | -
|PARTNERS CAPITAL                                                                     |  | Six Months EndedJune 30, 2010 |          
|                                                                                      | 
|PREFERENCE UNITS                                                                      |  |                               |           |  
|Balance, beginning of year                                                            |  | $                             | 208,773   |  
|Conversion of 7.00% Series E Cumulative Convertible                                   |  |                               | (87       | )
|                                                                                      |  |                               |           |  
|Balance, end of period                                                                |  | $                             | 208,686   |  
|                                                                                      |  |                               |           |  
|                                                                                      | 
|GENERAL PARTNER                                                                       |  |                               |           |  
|Balance, beginning of year                                                            |  | $                             | 4,833,885 |  
|OP Unit Issuance:                                                                     |  |                               |           |  
|Conversion of Preference Units into OP Units held by General Partner                  |  |                               | 87        |  
|Conversion of OP Units held by Limited Partners into OP Units held by General Partner |  |                               | 12,264    |  
|Issuance of OP Units                                                                  |  |                               | 35,806    |  
|Exercise of EQR share options                                                         |  |                               | 43,809    |  
|EQRs Employee Share Purchase Plan (ESPP)                                             |  |                               | 3,546     |  
|Share-based employee compensation expense:                                            |  |                               |           |  
|EQR restricted shares                                                                 |  |                               | 5,226     |  
|EQR share options                                                                     |  |                               | 4,213     |  
|EQR ESPP discount                                                                     |  |                               | 997       |  
|OP Units repurchased and retired                                                      |  |                               | (1,887    | )
|Offering costs                                                                        |  |                               | (723      | )
|Net income available to Units  General Partner                                       |  |                               | 58,206    |  
|OP Units  General Partner distributions                                              |  |                               | (190,900  | )
|Supplemental Executive Retirement Plan (SERP)                                         |  |                               | 1,771     |  
|Acquisition of Noncontrolling Interests  Partially Owned Properties                  |  |                               | (104      | )
|Change in market value of Redeemable Limited Partners                                 |  |                               | (61,946   | )
|Adjustment for Limited Partners ownership in Operating Partnership                    |  |                               | 3,908     |  
|                                                                                      |  |                               |           |  
|Balance, end of period                                                                |  | $                             | 4,748,158 |  
|                                                                                      |  |                               |           |  
|                                                                                      | 
|LIMITED PARTNERS                                                                      |  |                               |           |  
|Balance, beginning of year                                                            |  | $                             | 116,120   |  
|Issuance of OP Units                                                                  |  |                               | 7,433     |  
|Conversion of OP Units held by Limited Partners into OP Units held by General Partner |  |                               | (12,264   | )
|Equity compensation associated with Units  Limited Partners                          |  |                               | 1,576     |  
|Net income available to Units  Limited Partners                                      |  |                               | 2,936     |  
|Units  Limited Partners distributions                                                |  |                               | (9,395    | )
|Change in carrying value of Redeemable Limited Partners                               |  |                               | 6,491     |  
|Adjustment for Limited Partners ownership in Operating Partnership                    |  |                               | (3,908    | )
|                                                                                      |  |                               |           |  
|Balance, end of period                                                                |  | $                             | 108,989   |  
|                                                                                      |  |                               |           |  

See accompanying notes



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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENT OF CHANGES IN CAPITAL (Continued)

(Amounts in thousands)

(Unaudited)



|                                                                  |  |                               |         |  
|----------------------------------------------------------------- |  | ----------------------------- | ------- | -
|PARTNERS CAPITAL (Continued)                                     |  | Six Months EndedJune 30, 2010 |        
|                                                                  | 
|ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME                     |  |                               |         |  
|Balance, beginning of year                                        |  | $                             | 4,681   |  
|Accumulated other comprehensive (loss)  derivative instruments:  |  |                               |         |  
|Unrealized holding (losses) arising during the period             |  |                               | (85,746 | )
|Losses reclassified into earnings from other comprehensive income |  |                               | 1,465   |  
|Accumulated other comprehensive (loss)  other instruments:       |  |                               |         |  
|Unrealized holding (losses) arising during the period             |  |                               | (66     | )
|                                                                  |  |                               |         |  
|Balance, end of period                                            |  | $                             | (79,666 | )
|                                                                  |  |                               |         |  
|                                                                  | 
|NONCONTROLLING INTERESTS                                          |  |                               |        
|                                                                  | 
|NONCONTROLLING INTERESTS  PARTIALLY OWNED PROPERTIES             |  |                               |         |  
|Balance, beginning of year                                        |  | $                             | 11,054  |  
|Net (loss) attributable to Noncontrolling Interests               |  |                               | (435    | )
|Contributions by Noncontrolling Interests                         |  |                               | 222     |  
|Distributions to Noncontrolling Interests                         |  |                               | (1,361  | )
|Other                                                             |  |                               | 218     |  
|                                                                  |  |                               |         |  
|Balance, end of period                                            |  | $                             | 9,698   |  
|                                                                  |  |                               |         |  

See accompanying notes



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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, a Maryland real estate investment trust (REIT) formed in March 1993, is an S&P 500 company focused on the acquisition, development and
management of high quality apartment properties in top United States growth markets. EQR has elected to be taxed as a REIT.

EQR is the general partner of, and as of June 30, 2010 owned an approximate 95.3% ownership interest in ERPOP. EQR
is structured as an umbrella partnership REIT (UPREIT) under which all property ownership and related business operations are conducted through ERPOP and its subsidiaries. References to the Operating Partnership include ERPOP
and those entities owned or controlled by it. References to the Company mean EQR and the Operating Partnership.

As of June 30, 2010, the Operating Partnership, directly or indirectly through investments in title holding
entities, owned all or a portion of 492 properties located in 23 states and the District of Columbia consisting of 137,091 units. The ownership breakdown includes (table does not include various uncompleted development properties):



|                            |  |            |  |        
|--------------------------- |  | ---------- |  | -------
|                            |  | Properties |  | Units  
|Wholly Owned Properties     |  | 441        |  | 121,721
|Partially Owned Properties: |  |            |  |        
|Consolidated                |  | 25         |  | 5,098  
|Unconsolidated              |  | 24         |  | 5,635  
|Military Housing            |  | 2          |  | 4,637  
|                            |  |            |  |        
|                            |  | 492        |  | 137,091



|2. | Summary of Significant Accounting Policies
|-- | ------------------------------------------

Basis of Presentation

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 promulgated under the Securities Act of 1933, as amended. 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, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

In preparation of the Operating Partnerships financial statements in conformity with accounting principles
generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The balance sheet at December 31, 2009 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.

For further information, including definitions 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, 2009.

Income and Other Taxes

The Operating Partnership generally is not liable for federal income taxes as the partners recognize their proportionate
share of the Operating Partnerships income or loss in their tax returns; therefore, no provision for federal income taxes has been made at the ERPOP level. Historically, the Operating Partnership has generally only incurred



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##### Table of Contents

certain state and local income, excise and franchise taxes. The Operating Partnership has elected Taxable REIT Subsidiary (TRS) status for certain of its corporate subsidiaries,
primarily those entities engaged in condominium conversion and corporate housing activities and as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net
operating losses.

Deferred tax assets and liabilities are recognized for future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates for which the temporary differences are expected to
be recovered or settled. The effects of changes in tax rates on deferred tax assets and liabilities are recognized in earnings in the period enacted. The Operating Partnerships deferred tax assets are generally the result of tax affected
amortization of goodwill, differing depreciable lives on capitalized assets and the timing of expense recognition for certain accrued liabilities. As of June 30, 2010, the Operating Partnership has recorded a deferred tax asset of approximately
$42.5 million, which is fully offset by a valuation allowance due to the uncertainty in forecasting future TRS taxable income.

Other

In June 2009, the FASB issued The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles, which superseded all then-existing non-SEC accounting and reporting standards and became the source of authoritative U.S. generally accepted accounting principles recognized by the FASB to be applied by non-governmental
entities. The Operating Partnership adopted the codification as required, effective for the quarter ended September 30, 2009. The adoption of the codification has no impact on the Operating Partnerships consolidated results of operations
or financial position but changed the way we refer to accounting literature in our reports.

Effective
January 1, 2010, in an effort to improve financial standards for transfers of financial assets, more stringent conditions for reporting a transfer of a portion of a financial asset as a sale (e.g. loan participations) are required, the concept
of a qualifying special-purpose entity and special guidance for guaranteed mortgage securitizations are eliminated, other sale-accounting criteria is clarified and the initial measurement of a transferors interest in transferred
financial assets is changed. This does not have a material effect on the Operating Partnerships consolidated results of operations or financial position.

Effective January 1, 2010, the analysis for identifying the primary beneficiary of a Variable Interest Entity
(VIE) has been simplified by replacing the previous quantitative-based analysis with a framework that is based more on qualitative judgments. The analysis requires the primary beneficiary of a VIE to be identified as the party that both
(a) has the power to direct the activities of a VIE that most significantly impact its economic performance and (b) has an obligation to absorb losses or a right to receive benefits that could potentially be significant to the VIE. For the
Operating Partnership, this includes only its development partnerships as the Operating Partnership provides substantially all of the capital for these ventures (other than third party mortgage debt, if any). For the Operating Partnership, these
requirements affected only disclosures and had no impact on the Operating Partnerships consolidated results of operations or financial position. See Note 6 for further discussion.

The Operating Partnership is required to make certain disclosures regarding noncontrolling interests in consolidated
limited-life subsidiaries. The Operating Partnership is the controlling partner in various consolidated partnerships owning 25 properties and 5,098 units and various completed and uncompleted development properties having a noncontrolling interest
book value of $9.7 million at June 30, 2010. Some of these partnership agreements contain provisions that require the partnerships to be liquidated through the sale of their assets upon reaching a date specified in each respective partnership
agreement. The Operating Partnership, as controlling partner, has an obligation to cause the property owning partnerships to distribute the proceeds of liquidation to the Noncontrolling Interests in these Partially Owned Properties only to the
extent that the net proceeds received by the partnerships from the sale of their assets warrant a distribution based on the partnership agreements. As of June 30, 2010, the Operating Partnership estimates the value of Noncontrolling Interest
distributions would have been approximately $54.8 million (Settlement Value) had the partnerships been liquidated. This Settlement Value is based on estimated third party consideration realized by the partnerships upon disposition of the
Partially Owned Properties and is net of all other assets and liabilities, including yield maintenance on the mortgages encumbering the properties, that would have been due on June 30, 2010 had those mortgages been prepaid. Due to, among other
things, the inherent uncertainty in the sale of real estate assets, the amount of any potential distribution to the Noncontrolling Interests in the Operating Partnerships Partially Owned Properties is subject to change. To the extent that the
partnerships underlying assets are worth less than the underlying liabilities, the Operating Partnership has no obligation to remit any consideration to the Noncontrolling Interests in these Partially Owned Properties.

Effective January 1, 2010, companies are required to separately disclose the amounts of significant transfers of



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assets and liabilities into and out of Level 1, Level 2 and Level 3 of the fair value hierarchy and the reasons for those transfers. Companies must also develop and disclose their policy for
determining when transfers between levels are recognized. In addition, companies are required to provide fair value disclosures for each class rather than each major category of assets and liabilities. For fair value measurements using significant
other observable inputs (Level 2) or significant unobservable inputs (Level 3), companies are required to disclose the valuation technique and the inputs used in determining fair value for each class of assets and liabilities. This does not have a
material effect on the Operating Partnerships consolidated results of operations or financial position. See Note 11 for further discussion.

Effective January 1, 2011, companies will be required to separately disclose purchases, sales, issuances and
settlements on a gross basis in the reconciliation of recurring Level 3 fair value measurements. The Operating Partnership does not expect this will have a material effect on its consolidated results of operations or financial position.

Effective January 1, 2009, issuers of certain convertible debt instruments that may be settled in cash on conversion
were required to separately account for the liability and equity components of the instrument in a manner that reflects each issuers nonconvertible debt borrowing rate. As the Operating Partnership is required to apply this retrospectively,
the accounting for the Operating Partnerships $650.0 million ($482.5 million outstanding at June 30, 2010) 3.85% convertible unsecured notes that were issued in August 2006 and mature in August 2026 was affected. The Operating Partnership
recognized $9.3 million and $10.4 million in interest expense related to the stated coupon rate of 3.85% for the six months ended June 30, 2010 and 2009, respectively. The amount of the conversion option as of the date of issuance calculated by
the Operating Partnership using a 5.80% effective interest rate was $44.3 million and is being amortized to interest expense over the expected life of the convertible notes (through the first put date on August 18, 2011). Total amortization of
the cash discount and conversion option discount on the unsecured notes resulted in a reduction to earnings of approximately $3.9 million and $5.0 million, respectively, or $0.01 per Unit and $0.02 per Unit, respectively, for the six months ended
June 30, 2010 and 2009, and is anticipated to result in a reduction to earnings of approximately $7.8 million or $0.03 per Unit during the full year of 2010 assuming the Operating Partnership does not repurchase any additional amounts of this
debt. In addition, the Operating Partnership decreased the January 1, 2009 balance of retained earnings (included in general partners capital) by $27.0 million, decreased the January 1, 2009 balance of notes by $17.3 million and
increased the January 1, 2009 balance of paid in capital (included in general partners capital) by $44.3 million. The carrying amount of the conversion option remaining in paid in capital (included in general partners capital) was
$44.3 million at both June 30, 2010 and December 31, 2009. The unamortized cash and conversion option discounts totaled $8.9 million and $12.8 million at June 30, 2010 and December 31, 2009, respectively.



|3. | Capital and Redeemable Limited Partners
|-- | ---------------------------------------

The following tables present the changes in the Operating Partnerships issued and outstanding Units
(which includes OP Units and Long-Term Incentive Plan (LTIP) Units) and in the limited partners Units for the six months ended June 30, 2010:



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|                                                                  |  |             |  
|----------------------------------------------------------------- |  | ----------- | -
|                                                                  |  | 2010        |  
|General and Limited Partner Units                                 |  |             |  
|General and Limited Partner Units outstanding at January 1,       |  | 294,157,017 |  
|                                                                  | 
|Issued to General Partner:                                        |  |             |  
|Conversion of Series E Preference Units                           |  | 3,894       |  
|Issuance of OP Units                                              |  | 1,057,304   |  
|Exercise of EQR share options                                     |  | 1,559,067   |  
|Employee Share Purchase Plan (ESPP)                               |  | 117,962     |  
|Restricted EQR share grants, net                                  |  | 221,067     |  
|                                                                  | 
|Issued to Limited Partners:                                       |  |             |  
|Issuance of LTIP Units                                            |  | 94,096      |  
|OP Units issued through acquisitions                              |  | 189,700     |  
|                                                                  | 
|OP Units Other:                                                   |  |             |  
|Repurchased and retired                                           |  | (58,130     | )
|                                                                  |  |             |  
|General and Limited Partner Units outstanding at June 30,         |  | 297,341,977 |  
|                                                                  |  |             |  
|                                                                  | 
|Limited Partner Units                                             |  |             |  
|Limited Partner Units outstanding at January 1,                   |  | 14,197,969  |  
|Limited Partner Issuance of LTIP Units                            |  | 94,096      |  
|Limited Partner OP Units issued through acquisitions              |  | 189,700     |  
|Conversion of Limited Partner Units to EQR Common Shares          |  | (582,462    | )
|                                                                  |  |             |  
|Limited Partner Units outstanding at June 30,                     |  | 13,899,303  |  
|                                                                  |  |             |  
|Limited Partner Units Ownership Interest in Operating Partnership |  | 4.7%        |  

In September 2009, EQR announced the establishment of an At-The-Market (ATM) share offering program which
would allow EQR to sell up to 17.0 million Common Shares from time to time over the next three years into the existing trading market at current market prices as well as through negotiated transactions. Per the terms of ERPOPs partnership
agreement, EQR contributes the net proceeds from all equity offerings to the capital of the Operating Partnership in exchange for additional OP Units (on a one-for-one Common Share per OP Unit Basis). During the six months ended June 30, 2010,
EQR issued approximately 1.1 million Common Shares at an average price of $33.87 per share for total consideration of approximately $35.8 million through the ATM program. Concurrent with these transactions, the Operating Partnership issued
approximately 1.1 million OP Units to EQR. EQRs most recent issuance under this program was on January 14, 2010. EQR has authorization to issue an additional 12.4 million of its shares as of June 30, 2010.

On March 31, 2010, the Operating Partnership issued 188,571 OP Units at a price of $39.15 per OP Unit for total
valuation of $7.4 million as partial consideration for the acquisition of one rental property. As the value of the OP Units issued was agreed by contract to be $35.00 per OP Unit, the difference between the contracted value and fair value (the
closing price of EQR Common Shares on the closing date) was recorded as an increase to the purchase price.

During the six months ended June 30, 2010, the Operating Partnership acquired all of its partners interest in
two partially owned properties consisting of 432 units and one partially owned development project for $198,000. One partially owned property buyout was funded through the issuance of 1,129 OP Units valued at $50,000. In conjunction with these
transactions, the Operating Partnership reduced paid in capital by $104,000.

During the six months ended
June 30, 2010, EQR repurchased 58,130 of its Common Shares at an average price of $32.46 per share for total consideration of $1.9 million. These shares were retired subsequent to the repurchases. Concurrent with these transactions, the
Operating Partnership repurchased and retired 58,130 OP Units previously issued to EQR. All of the shares repurchased during the six months ended June 30, 2010 were repurchased from employees at the then current market prices to cover the
minimum statutory tax withholding obligations related to the vesting of employees restricted shares. EQR has authorization to repurchase an additional $464.6 million of its shares as of June 30, 2010.

The Limited Partners of the Operating Partnership as of June 30, 2010 include various individuals and entities that
contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of LTIP Units. Subject to certain exceptions (including the book-up requirements of LTIP Units), the
Limited Partners may exchange their Units with EQR for EQR Common Shares on a one-for-one basis. The carrying value of the Limited Partner Units (including redeemable interests) is allocated based on the number of Limited Partner Units in total in



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proportion to the number of Limited Partner Units in total plus the number of General Partner Units. Net income is allocated to the Limited Partner Units based on the weighted average ownership
percentage during the period.

A portion of the Limited Partners Units are classified as mezzanine
equity as they do not meet the requirements for permanent equity classification. The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing EQR Common Shares to any and all holders of Limited Partner
Units requesting an exchange of their OP Units with EQR. Once the Operating Partnership elects not to redeem the Limited Partner Units for cash, EQR is obligated to deliver EQR Common Shares to the exchanging limited partner. If EQR is required,
either by contract or securities law, to deliver registered EQR Common Shares, such Limited Partner Units are referred to as Redeemable Limited Partner Units. Instruments that require settlement in registered shares can not be classified
in permanent equity as it is not always completely within an issuers control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership
as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Limited Partner Units are adjusted to the greater of carrying value or fair market value based on the Common Share price
of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered EQR Common Shares for the remaining portion of the Limited Partner Units that are classified in permanent equity at June 30, 2010 and
December 31, 2009.

The carrying value of the Redeemable Limited Partner Units is allocated based on the
number of Redeemable Limited Partner Units in proportion to the number of Limited Partner Units in total. Such percentage of the total carrying value of Limited Partner Units which is ascribed to the Redeemable Limited Partner Units is then adjusted
to the greater of carrying value or fair market value as described above. As of June 30, 2010, the Redeemable Limited Partner Units have a redemption value of approximately $313.7 million, which represents the value of EQR Common Shares that
would be issued in exchange with the limited partners of the Operating Partnership for Redeemable Limited Partner Units.

The following table presents the change in the redemption value of the Redeemable Limited Partners for the six months
ended June 30, 2010 (amounts in thousands):



|                         |  |      |         |  
|------------------------ |  | ---- | ------- | -
|                         |  | 2010 |        
|Balance at January 1,    |  | $    | 258,280 |  
|Change in market value   |  |      | 61,946  |  
|Change in carrying value |  |      | (6,491  | )
|                         |  |      |         |  
|Balance at June 30,      |  | $    | 313,735 |  
|                         |  |      |         |  

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).

The following table presents the Operating Partnerships issued and outstanding Preference Units as of
June 30, 2010 and December 31, 2009:



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|                                                                                                                                                                                              |  |                        |  |                    |  |                            |       |                      |   |                  |  |   |        
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------- |  | ------------------ |  | -------------------------- | ----- | -------------------- | - | ---------------- |  | - | -------
|                                                                                                                                                                                              |  |                        |  |                    |  |                            |       | Amounts in thousands
|                                                                                                                                                                                              |  | RedemptionDate (1) (2) |  | ConversionRate (2) |  | AnnualDividend perUnit
(3) |       | June 30,2010         |   | December 31,2009
|Preference Units:                                                                                                                                                                             |  |                        |  |                    |  |                            |       |                      |   |                  |  |   |        
|7.00% Series E Cumulative Convertible Preference Units; liquidation value $25 per unit; 324,966 and 328,466 units issued and
outstanding at June 30, 2010 and December 31, 2009, respectively |  | 11/1/98                |  | 1.1128             |  | $                          | 1.75  |                      | $ | 8,124            |  | $ | 8,211  
|7.00% Series H Cumulative Convertible Preference Units; liquidation value $25 per unit; 22,459 units issued and outstanding at
June 30, 2010 and December 31, 2009                            |  | 6/30/98                |  | 1.4480             |  | $                          | 1.75  |                      |   | 562              |  |   | 562    
|8.29% Series K Cumulative Redeemable Preference Units; liquidation value $50 per unit; 1,000,000 units issued and outstanding at
June 30, 2010 and December 31, 2009                          |  | 12/10/26               |  | N/A                |  | $                          | 4.145 |                      |   | 50,000           |  |   | 50,000 
|6.48% Series N Cumulative Redeemable Preference Units; liquidation value $250 per unit; 600,000 units issued and outstanding at
June 30, 2010 and December 31, 2009 (4)                       |  | 6/19/08                |  | N/A                |  | $                          | 16.20 |                      |   | 150,000          |  |   | 150,000
|                                                                                                                                                                                              |  |                        |  |                    |  |                            |       |                      |   |                  |  |   |        
|                                                                                                                                                                                              |  |                        |  |                    |  |                            |       |                      | $ | 208,686          |  | $ | 208,773
|                                                                                                                                                                                              |  |                        |  |                    |  |                            |       |                      |   |                  |  |   |        



|(1) | On or after the redemption date, redeemable preference units (Series K and N) may be redeemed for cash at the option of the Operating Partnership,
in whole or in part, at a redemption price equal to the liquidation price per unit, plus accrued and unpaid distributions, if any, in conjunction with the concurrent redemption of the corresponding EQR Preferred Shares.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | On or after the redemption date, convertible preference units (Series E & H) may be redeemed under certain circumstances at the option of the
Operating Partnership for cash (in the case of Series E) or OP Units (in the case of Series H), in whole or in part, at various redemption prices per unit based upon the contractual conversion rate, plus accrued and unpaid distributions, if any, in
conjunction with the concurrent redemption/conversion of the corresponding EQR Preferred Shares.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Dividends on all series of Preference Units are payable quarterly at various pay dates. The dividend listed for Series N is a Preference Unit rate
and the equivalent depositary unit annual dividend is $1.62 per unit.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | The Series N Preference Units have a corresponding depositary unit that consists of ten times the number of units and one-tenth the liquidation
value and dividend per unit.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. | Real Estate
|-- | -----------

The following table summarizes the carrying amounts for the Operating Partnerships investment in real estate (at
cost) as of June 30, 2010 and December 31, 2009 (amounts in thousands):



|                                  |  |              |            |   |                  |   |            |  
|--------------------------------- |  | ------------ | ---------- | - | ---------------- | - | ---------- | -
|                                  |  | June 30,2010 |            |   | December 31,2009 |  
|Land                              |  | $            | 4,003,177  |   |                  | $ | 3,650,324  |  
|Depreciable property:             |  |              |            |   |                  |   |            |  
|Buildings and improvements        |  |              | 13,497,285 |   |                  |   | 12,781,543 |  
|Furniture, fixtures and equipment |  |              | 1,189,162  |   |                  |   | 1,111,978  |  
|Projects under development:       |  |              |            |   |                  |   |            |  
|Land                              |  |              | 79,204     |   |                  |   | 106,716    |  
|Construction-in-progress          |  |              | 394,076    |   |                  |   | 562,263    |  
|Land held for development:        |  |              |            |   |                  |   |            |  
|Land                              |  |              | 192,542    |   |                  |   | 181,430    |  
|Construction-in-progress          |  |              | 58,677     |   |                  |   | 70,890     |  
|                                  |  |              |            |   |                  |   |            |  
|Investment in real estate         |  |              | 19,414,123 |   |                  |   | 18,465,144 |  
|Accumulated depreciation          |  |              | (4,146,964 | ) |                  |   | (3,877,564 | )
|                                  |  |              |            |   |                  |   |            |  
|Investment in real estate, net    |  | $            | 15,267,159 |   |                  | $ | 14,587,580 |  
|                                  |  |              |            |   |                  |   |            |  

During the six months ended June 30, 2010, the Operating Partnership acquired the
entire equity interest in the following from unaffiliated parties (purchase price in thousands):



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|                  |  |            |  |       |  |                |        
|----------------- |  | ---------- |  | ----- |  | -------------- | -------
|                  |  | Properties |  | Units |  | Purchase Price
|Rental Properties |  | 8          |  | 2,209 |  | $              | 849,351
|Land Parcel (one) |  | -          |  | -     |  |                | 12,000 
|                  |  |            |  |       |  |                |        
|Total             |  | 8          |  | 2,209 |  | $              | 861,351
|                  |  |            |  |       |  |                |        

During the six months ended
June 30, 2010, the Operating Partnership disposed of the following to unaffiliated parties (sales price in thousands):



|                                  |  |            |  |       |  |             |        
|--------------------------------- |  | ---------- |  | ----- |  | ----------- | -------
|                                  |  | Properties |  | Units |  | Sales Price
|Rental Properties:                |  |            |  |       |  |             |        
|Consolidated                      |  | 8          |  | 2,011 |  | $           | 145,940
|Unconsolidated (1)                |  | 3          |  | 640   |  |             | 42,650 
|Condominium Conversion Properties |  | 1          |  | 2     |  |             | 360    
|                                  |  |            |  |       |  |             |        
|Total                             |  | 12         |  | 2,653 |  | $           | 188,950
|                                  |  |            |  |       |  |             |        



| | (1) | The Operating Partnership owned a 25% interest in these unconsolidated rental properties. Sales price listed is the gross sales price.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

The Operating Partnership recognized a net gain on sales of discontinued operations of
approximately $60.3 million and a net gain on sales of unconsolidated entities of approximately $5.6 million on the above sales.

In addition to the properties discussed above, the Operating Partnership acquired the 75% equity interest it did not
previously own in seven unconsolidated properties containing 1,811 units with a real estate value of $105.1 million. See Note 6 for further discussion.



|5. | Commitments to Acquire/Dispose of Real Estate
|-- | ---------------------------------------------

In addition to the property that was subsequently acquired as discussed in Note 16, the Operating Partnership had entered
into separate agreements to acquire the following (purchase price in thousands):



|                    |  |            |  |       |  |                |        
|------------------- |  | ---------- |  | ----- |  | -------------- | -------
|                    |  | Properties |  | Units |  | Purchase Price
|Rental Properties   |  | 6          |  | 1,274 |  | $              | 334,188
|Land Parcels (five) |  | -          |  | -     |  |                | 51,700 
|                    |  |            |  |       |  |                |        
|Total               |  | 6          |  | 1,274 |  | $              | 385,888
|                    |  |            |  |       |  |                |        

In addition to the properties that
were subsequently disposed of as discussed in Note 16, the Operating Partnership had entered into separate agreements to dispose of the following (sales price in thousands):



|                  |  |            |  |       |  |             |        
|----------------- |  | ---------- |  | ----- |  | ----------- | -------
|                  |  | Properties |  | Units |  | Sales Price
|Rental Properties |  | 16         |  | 1,500 |  | $           | 146,000
|Land Parcel (one) |  | -          |  | -     |  |             | 4,000  
|                  |  |            |  |       |  |             |        
|Total             |  | 16         |  | 1,500 |  | $           | 150,000
|                  |  |            |  |       |  |             |        

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



|6. | Investments in Partially Owned Entities
|-- | ---------------------------------------

The Operating Partnership has co-invested in various properties with unrelated third parties which are either
consolidated or accounted for under the equity method of accounting (unconsolidated). The following tables summarize the Operating Partnerships investments in partially owned entities as of June 30, 2010 (amounts in thousands except for
project and unit amounts):



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|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|----------------------------------------------------- |  | ------------------------------- | ------- | - | ---------------------------- | - | ------ | ----------------------- |  | - | ------- | - |  | ----- | -------- | - | ------------------------------ | - | --------- | - |  | - | -------- | -
|                                                      |  | Consolidated                    |         |   | Unconsolidated               |  
|                                                      |  | Development Projects (VIEs)     |         |   |                              |   |        |                         |  |   |         |  
|                                                      |  | Held forand/or UnderDevelopment |         |   | Completed, NotStabilized (4) |   |        | Completed andStabilized |  |   | Other   |   |  | Total |          |   | InstitutionalJointVentures (5) |  
|Total projects (1)                                    |  |                                 | -       |   |                              |   | 1      |                         |  |   | 3       |   |  |       | 21       |   |                                |   | 25        |   |  |   | 24       |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Total units (1)                                       |  |                                 | -       |   |                              |   | 163    |                         |  |   | 1,139   |   |  |       | 3,796    |   |                                |   | 5,098     |   |  |   | 5,635    |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Balance sheet information at 6/30/10 (at 100%):       |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|ASSETS                                                |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Investment in real estate                             |  | $                               | 389,507 |   |                              | $ | 45,970 |                         |  | $ | 344,461 |   |  | $     | 425,071  |   |                                | $ | 1,205,009 |   |  | $ | 413,536  |  
|Accumulated depreciation                              |  |                                 | (740    | ) |                              |   | (1,321 | )                       |  |   | (11,020 | ) |  |       | (119,588 | ) |                                |   | (132,669  | ) |  |   | (133,066 | )
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Investment in real estate, net                        |  |                                 | 388,767 |   |                              |   | 44,649 |                         |  |   | 333,441 |   |  |       | 305,483  |   |                                |   | 1,072,340 |   |  |   | 280,470  |  
|Cash and cash equivalents                             |  |                                 | 2,222   |   |                              |   | 704    |                         |  |   | 5,988   |   |  |       | 14,458   |   |                                |   | 23,372    |   |  |   | 15,726   |  
|Deposits  restricted                                 |  |                                 | 1,550   |   |                              |   | 2,318  |                         |  |   | 748     |   |  |       | 8        |   |                                |   | 4,624     |   |  |   | 35       |  
|Escrow deposits  mortgage                            |  |                                 | -       |   |                              |   | -      |                         |  |   | 65      |   |  |       | 2,626    |   |                                |   | 2,691     |   |  |   | -        |  
|Deferred financing costs, net                         |  |                                 | 3,979   |   |                              |   | 11     |                         |  |   | 571     |   |  |       | 240      |   |                                |   | 4,801     |   |  |   | 162      |  
|Other assets                                          |  |                                 | 426     |   |                              |   | 5      |                         |  |   | 196     |   |  |       | 246      |   |                                |   | 873       |   |  |   | 398      |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Total assets                                          |  | $                               | 396,944 |   |                              | $ | 47,687 |                         |  | $ | 341,009 |   |  | $     | 323,061  |   |                                | $ | 1,108,701 |   |  | $ | 296,791  |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|                                                      |  |                                 |         |   |                              |  
|LIABILITIES AND CAPITAL                               |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Mortgage notes payable                                |  | $                               | 146,534 |   |                              | $ | 33,872 |                         |  | $ | 240,436 |   |  | $     | 301,687  |   |                                | $ | 722,529   |   |  | $ | 264,800  |  
|Accounts payable & accrued expenses                   |  |                                 | 9,318   |   |                              |   | 1,197  |                         |  |   | 2,258   |   |  |       | 1,543    |   |                                |   | 14,316    |   |  |   | 1,699    |  
|Accrued interest payable                              |  |                                 | 1,295   |   |                              |   | -      |                         |  |   | 478     |   |  |       | 1,676    |   |                                |   | 3,449     |   |  |   | 1,593    |  
|Other liabilities                                     |  |                                 | 4,555   |   |                              |   | 76     |                         |  |   | 1,315   |   |  |       | 1,433    |   |                                |   | 7,379     |   |  |   | 2,037    |  
|Security deposits                                     |  |                                 | 577     |   |                              |   | 163    |                         |  |   | 691     |   |  |       | 1,628    |   |                                |   | 3,059     |   |  |   | 1,449    |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Total liabilities                                     |  |                                 | 162,279 |   |                              |   | 35,308 |                         |  |   | 245,178 |   |  |       | 307,967  |   |                                |   | 750,732   |   |  |   | 271,578  |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|                                                      |  |                                 |         |   |                              |  
|Noncontrolling Interests  Partially Owned Properties |  |                                 | 8,944   |   |                              |   | 1,076  |                         |  |   | 3,501   |   |  |       | (3,823   | ) |                                |   | 9,698     |   |  |   | -        |  
|Accumulated other comprehensive (loss)                |  |                                 | (2,794  | ) |                              |   | -      |                         |  |   | -       |   |  |       | -        |   |                                |   | (2,794    | ) |  |   | -        |  
|Partners capital                                     |  |                                 | -       |   |                              |   | -      |                         |  |   | -       |   |  |       | -        |   |                                |   | -         |   |  |   | 18,910   |  
|General and Limited Partners Capital                 |  |                                 | 228,515 |   |                              |   | 11,303 |                         |  |   | 92,330  |   |  |       | 18,917   |   |                                |   | 351,065   |   |  |   | 6,303    |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Total capital                                         |  |                                 | 234,665 |   |                              |   | 12,379 |                         |  |   | 95,831  |   |  |       | 15,094   |   |                                |   | 357,969   |   |  |   | 25,213   |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Total liabilities and capital                         |  | $                               | 396,944 |   |                              | $ | 47,687 |                         |  | $ | 341,009 |   |  | $     | 323,061  |   |                                | $ | 1,108,701 |   |  | $ | 296,791  |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|                                                      |  |                                 |         |   |                              |  
|Debt  Secured (2):                                   |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|EQR Ownership (3)                                     |  | $                               | 146,534 |   |                              | $ | 33,872 |                         |  | $ | 240,436 |   |  | $     | 220,218  |   |                                | $ | 641,060   |   |  | $ | 66,200   |  
|Noncontrolling Ownership                              |  |                                 | -       |   |                              |   | -      |                         |  |   | -       |   |  |       | 81,469   |   |                                |   | 81,469    |   |  |   | 198,600  |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  
|Total (at 100%)                                       |  | $                               | 146,534 |   |                              | $ | 33,872 |                         |  | $ | 240,436 |   |  | $     | 301,687  |   |                                | $ | 722,529   |   |  | $ | 264,800  |  
|                                                      |  |                                 |         |   |                              |   |        |                         |  |   |         |   |  |       |          |   |                                |   |           |   |  |   |          |  



17



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|                                                                  |  |                                 |        |   |                              |   |       |                         |  |   |        |   |  |       |         |   |                                |   |         |   |  |   |         |  
|----------------------------------------------------------------- |  | ------------------------------- | ------ | - | ---------------------------- | - | ----- | ----------------------- |  | - | ------ | - |  | ----- | ------- | - | ------------------------------ | - | ------- | - |  | - | ------- | -
|                                                                  |  | Consolidated                    |        |   | Unconsolidated               |  
|                                                                  |  | Development Projects (VIEs)     |        |   |                              |   |       |                         |  |   |        |  
|                                                                  |  | Held forand/or UnderDevelopment |        |   | Completed, NotStabilized (4) |   |       | Completed andStabilized |  |   | Other  |   |  | Total |         |   | InstitutionalJointVentures (5) |  
|Operating information for the six months ended 6/30/10 (at 100%): |  |                                 |        |   |                              |   |       |                         |  |   |        |   |  |       |         |   |                                |   |         |   |  |   |         |  
|Operating revenue                                                 |  | $                               | 1,496  |   |                              | $ | 1,026 |                         |  | $ | 11,338 |   |  | $     | 27,779  |   |                                | $ | 41,639  |   |  | $ | 34,756  |  
|Operating expenses                                                |  |                                 | 2,330  |   |                              |   | 676   |                         |  |   | 4,227  |   |  |       | 9,779   |   |                                |   | 17,012  |   |  |   | 16,459  |  
|                                                                  |  |                                 |        |   |                              |   |       |                         |  |   |        |   |  |       |         |   |                                |   |         |   |  |   |         |  
|Net operating (loss) income                                       |  |                                 | (834   | ) |                              |   | 350   |                         |  |   | 7,111  |   |  |       | 18,000  |   |                                |   | 24,627  |   |  |   | 18,297  |  
|Depreciation                                                      |  |                                 | -      |   |                              |   | 886   |                         |  |   | 5,223  |   |  |       | 7,414   |   |                                |   | 13,523  |   |  |   | 9,230   |  
|General and administrative/other                                  |  |                                 | 46     |   |                              |   | -     |                         |  |   | 96     |   |  |       | 19      |   |                                |   | 161     |   |  |   | 121     |  
|                                                                  |  |                                 |        |   |                              |   |       |                         |  |   |        |   |  |       |         |   |                                |   |         |   |  |   |         |  
|Operating (loss) income                                           |  |                                 | (880   | ) |                              |   | (536  | )                       |  |   | 1,792  |   |  |       | 10,567  |   |                                |   | 10,943  |   |  |   | 8,946   |  
|Interest and other income                                         |  |                                 | 15     |   |                              |   | 6     |                         |  |   | -      |   |  |       | 11      |   |                                |   | 32      |   |  |   | 67      |  
|Other expenses                                                    |  |                                 | (401   | ) |                              |   | -     |                         |  |   | -      |   |  |       | (451    | ) |                                |   | (852    | ) |  |   | -       |  
|Interest:                                                         |  |                                 |        |   |                              |   |       |                         |  |   |        |   |  |       |         |   |                                |   |         |   |  |   |         |  
|Expense incurred, net                                             |  |                                 | (1,170 | ) |                              |   | (272  | )                       |  |   | (2,778 | ) |  |       | (10,060 | ) |                                |   | (14,280 | ) |  |   | (13,224 | )
|Amortization of deferred financing costs                          |  |                                 | -      |   |                              |   | (64   | )                       |  |   | (323   | ) |  |       | (111    | ) |                                |   | (498    | ) |  |   | (525    | )
|                                                                  |  |                                 |        |   |                              |   |       |                         |  |   |        |   |  |       |         |   |                                |   |         |   |  |   |         |  
|(Loss) before income and other taxes and discontinued operations  |  |                                 | (2,436 | ) |                              |   | (866  | )                       |  |   | (1,309 | ) |  |       | (44     | ) |                                |   | (4,655  | ) |  |   | (4,736  | )
|Income and other tax (expense) benefit                            |  |                                 | (33    | ) |                              |   | -     |                         |  |   | -      |   |  |       | (24     | ) |                                |   | (57     | ) |  |   | (127    | )
|Net gain on sales of discontinued operations                      |  |                                 | 720    |   |                              |   | -     |                         |  |   | -      |   |  |       | -       |   |                                |   | 720     |   |  |   | 9,983   |  
|                                                                  |  |                                 |        |   |                              |   |       |                         |  |   |        |   |  |       |         |   |                                |   |         |   |  |   |         |  
|Net (loss) income                                                 |  | $                               | (1,749 | ) |                              | $ | (866  | )                       |  | $ | (1,309 | ) |  | $     | (68     | ) |                                | $ | (3,992  | ) |  | $ | 5,120   |  
|                                                                  |  |                                 |        |   |                              |   |       |                         |  |   |        |   |  |       |         |   |                                |   |         |   |  |   |         |  



|(1) | Project and unit counts exclude all uncompleted development projects until those projects are substantially completed.
|--- | ----------------------------------------------------------------------------------------------------------------------

|(2) | All debt is non-recourse to the Operating Partnership with the exception of $14.0 million in mortgage debt on various development projects.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Represents the Operating Partnerships current economic ownership interest.
|--- | ---------------------------------------------------------------------------

|(4) | Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be
available for leasing.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Unconsolidated debt maturities and rates are as follows: $121.0 million, December 1, 2010, 7.54%; and $143.8 million, March 1, 2011,
6.95%. On April 30, 2010, the Operating Partnership acquired the 75% equity interest it did not previously own in seven of the unconsolidated properties containing 1,811 units in exchange for an approximate $30.0 million payment to its partner.
In addition, the Operating Partnership repaid the net $70.0 million mortgage loan, which was to mature on May 1, 2010, concurrent with closing using proceeds drawn from the Operating Partnerships line of credit. On July 30, 2010, the
Operating Partnership sold the 25% equity interest it previously owned in 13 of the unconsolidated properties containing 2,624 units in exchange for an approximate $12.5 million payment from its partner and the related $121.0 million in non-recourse
mortgage debt was extinguished by the partner at closing.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Operating Partnership is the
controlling partner in various consolidated partnership properties and development properties having a noncontrolling interest book value of $9.7 million at June 30, 2010. The Operating Partnership has identified its development partnerships as
VIEs as the Operating Partnership provides substantially all of the capital for these ventures (other than third party mortgage debt, if any) despite the fact that each partner legally owns 50% of each venture. The Operating Partnership is the
primary beneficiary as it exerts the most significant power over the ventures, absorbs the majority of the expected losses and has the right to receive a majority of the expected residual returns. The assets net of liabilities of the Operating
Partnerships VIEs are restricted in their use to the specific VIE to which they relate and are not available for general corporate use. The Operating Partnership does not have any unconsolidated VIEs.



|7. | Deposits  Restricted
|-- | ---------------------

The following table presents the Operating Partnerships restricted deposits as of June 30, 2010 and
December 31, 2009 (amounts in thousands):



18



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##### Table of Contents

|                                       |  |              |         |                  |   |        
|-------------------------------------- |  | ------------ | ------- | ---------------- | - | -------
|                                       |  | June 30,2010 |         | December 31,2009
|Taxdeferred (1031) exchange proceeds  |  | $            | 13,000  |                  | $ | 244,257
|Earnest money on pending acquisitions  |  |              | 8,350   |                  |   | 6,000  
|Restricted deposits on debt (1)        |  |              | 33,683  |                  |   | 49,565 
|Resident security and utility deposits |  |              | 42,324  |                  |   | 39,361 
|Other                                  |  |              | 11,297  |                  |   | 12,825 
|                                       |  |              |         |                  |   |        
|Totals                                 |  | $            | 108,654 |                  | $ | 352,008
|                                       |  |              |         |                  |   |        



| | (1) | Primarily represents amounts held in escrow by the lender and released as draw requests are made on fully funded development mortgage loans.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------



|8. | Mortgage Notes Payable
|-- | ----------------------

As of June 30, 2010, the Operating Partnership had outstanding mortgage debt of approximately $4.8 billion.

During the six months ended June 30, 2010, the Operating Partnership:



| |  |  | Repaid $408.4 million of mortgage loans;
| | - |  | ----------------------------------------

| |  |  | Obtained $105.0 million of new mortgage loan proceeds;
| | - |  | ------------------------------------------------------

| |  |  | Assumed $169.4 million of mortgage debt on three acquired properties;
| | - |  | ---------------------------------------------------------------------

| |  |  | Was released from $40.0 million of mortgage debt assumed by the purchaser on two disposed properties; and
| | - |  | ---------------------------------------------------------------------------------------------------------

| |  |  | Assumed $112.6 million of mortgage debt on seven previously unconsolidated properties and repaid the net $70.0 million mortgage loan (net of $42.6
million of cash collateral held by the lender) concurrent with closing using proceeds drawn from the Operating Partnerships line of credit.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Operating Partnership recorded approximately $0.9 million and $1.4 million of write-offs of unamortized deferred
financing costs during the six months ended June 30, 2010 and 2009, respectively, as additional interest related to debt extinguishment of mortgages.

As of June 30, 2010, the Operating Partnership had $605.6 million of secured  tax exempt debt of which $565.6
million is subject to third party credit enhancement.

As of June 30, 2010, scheduled maturities for the
Operating Partnerships outstanding mortgage indebtedness were at various dates through September 1, 2048. At June 30, 2010, the interest rate range on the Operating Partnerships mortgage debt was 0.20% to 12.465%. During the
six months ended June 30, 2010, the weighted average interest rate on the Operating Partnerships mortgage debt was 4.86%.



|9. | Notes
|-- | -----

As of June 30, 2010, the Operating Partnership had outstanding unsecured notes of approximately $4.6 billion.

As of June 30, 2010, scheduled maturities for the Operating Partnerships outstanding notes were at
various dates through 2026. At June 30, 2010, the interest rate range on the Operating Partnerships notes was 0.525% to 7.57%. During the six months ended June 30, 2010, the weighted average interest rate on the Operating
Partnerships notes was 5.10%.



|10. | Lines of Credit
|--- | ---------------

The Operating Partnership has a $1.425 billion (net of $75.0 million which had been committed by a now bankrupt financial
institution and is not available for borrowing) unsecured revolving credit facility maturing on February 28, 2012, with the ability to increase available borrowings by an additional $500.0 million by adding additional banks to the facility or
obtaining the agreement of existing banks to increase their commitments. Advances under the credit facility bear interest at variable rates based upon LIBOR at various interest periods plus a spread (currently 0.50%) dependent upon the Operating
Partnerships credit rating or based on bids received from the lending group. EQR has guaranteed the Operating Partnerships credit facility up to the maximum amount and for the full term of the facility.

As of June 30, 2010, the amount available on the credit facility was $1.02 billion (net of $86.1 million which was
restricted/dedicated to support letters of credit, net of $320.0 million outstanding and net of the $75.0 million discussed above). During the six months ended June 30, 2010, the weighted average interest rate was 0.66%.



19



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##### Table of Contents

|11. | Derivative and Other Fair Value Instruments
|--- | -------------------------------------------

The valuation of financial instruments 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 current instruments with similar terms and maturities or on other factors relevant to the financial instruments.

The carrying values of the Operating Partnerships mortgage notes payable and unsecured notes (including its line of
credit) were approximately $4.8 billion and $4.9 billion, respectively, at June 30, 2010. The fair values of the Operating Partnerships mortgage notes payable and unsecured notes (including its line of credit) were approximately $4.8
billion and $5.2 billion, respectively, at June 30, 2010. The fair values of the Operating Partnerships financial instruments (other than mortgage notes payable, unsecured notes, lines of credit, derivative instruments and investment
securities) including cash and cash equivalents and other financial instruments, approximate their carrying or contract values.

In the normal course of business, the Operating Partnership is exposed to the effect of interest rate changes. The
Operating Partnership seeks to limit these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments.

The following table summarizes the Operating Partnerships consolidated derivative instruments at June 30, 2010
(dollar amounts are in thousands):



|                          |  |                      |         |                          |   |                                |  |   |       
|------------------------- |  | -------------------- | ------- | ------------------------ | - | ------------------------------ |  | - | ------
|                          |  | Fair ValueHedges (1) |         | ForwardStartingSwaps (2) |   | DevelopmentCash FlowHedges (3)
|Current Notional Balance  |  | $                    | 315,693 |                          | $ | 900,000                        |  | $ | 84,088
|Lowest Possible Notional  |  | $                    | 315,693 |                          | $ | 900,000                        |  | $ | 3,020 
|Highest Possible Notional |  | $                    | 317,694 |                          | $ | 900,000                        |  | $ | 91,343
|Lowest Interest Rate      |  |                      | 2.009%  |                          |   | 4.005%                         |  |   | 4.059%
|Highest Interest Rate     |  |                      | 4.800%  |                          |   | 4.695%                         |  |   | 4.059%
|Earliest Maturity Date    |  |                      | 2012    |                          |   | 2020                           |  |   | 2011  
|Latest Maturity Date      |  |                      | 2013    |                          |   | 2023                           |  |   | 2011  



| | (1) | Fair Value Hedges  Converts outstanding fixed rate debt to a floating interest rate.
| | --- | -------------------------------------------------------------------------------------

| | (2) | Forward Starting Swaps  Designed to partially fix the interest rate in advance of a planned future debt issuance. These swaps have mandatory
counterparty terminations from 2011 through 2014.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Development Cash Flow Hedges  Converts outstanding floating rate debt to a fixed interest rate.
| | --- | ------------------------------------------------------------------------------------------------

The following tables provide the location of the Operating Partnerships derivative instruments within the
accompanying Consolidated Balance Sheets and their fair market values as of June 30, 2010 and December 31, 2009, respectively (amounts in thousands):



|                                               |  |                       |  |                       |        |                       |                   |            |   |         |  
|---------------------------------------------- |  | --------------------- |  | --------------------- | ------ | --------------------- | ----------------- | ---------- | - | ------- | -
|                                               |  | Asset Derivatives     |  | Liability Derivatives |       
|June 30, 2010                                  |  | Balance SheetLocation |  | Fair Value            |        | Balance SheetLocation |                   | Fair Value |  
|Derivatives designated as hedging instruments: |  |                       |  |                       |        |                       |                   |            |   |         |  
|Interest Rate Contracts:                       |  |                       |  |                       |        |                       |                   |            |   |         |  
|Fair Value Hedges                              |  | Other assets          |  | $                     | 12,196 |                       | Other liabilities |            | $ | -       |  
|Forward Starting Swaps                         |  | Other assets          |  |                       | -      |                       | Other liabilities |            |   | (62,900 | )
|Development Cash Flow Hedges                   |  | Other assets          |  |                       | -      |                       | Other liabilities |            |   | (2,794  | )
|                                               |  |                       |  |                       |        |                       |                   |            |   |         |  
|Total                                          |  |                       |  | $                     | 12,196 |                       |                   |            | $ | (65,694 | )
|                                               |  |                       |  |                       |        |                       |                   |            |   |         |  



20



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##### Table of Contents

|                                               |  |                       |  |                       |        |                       |                   |            |   |        |  
|---------------------------------------------- |  | --------------------- |  | --------------------- | ------ | --------------------- | ----------------- | ---------- | - | ------ | -
|                                               |  | Asset Derivatives     |  | Liability Derivatives |       
|December 31, 2009                              |  | Balance SheetLocation |  | Fair Value            |        | Balance SheetLocation |                   | Fair Value |  
|Derivatives designated as hedging instruments: |  |                       |  |                       |        |                       |                   |            |   |        |  
|Interest Rate Contracts:                       |  |                       |  |                       |        |                       |                   |            |   |        |  
|Fair Value Hedges                              |  | Other assets          |  | $                     | 5,186  |                       | Other liabilities |            | $ | -      |  
|Forward Starting Swaps                         |  | Other assets          |  |                       | 23,630 |                       | Other liabilities |            |   | -      |  
|Development Cash Flow Hedges                   |  | Other assets          |  |                       | -      |                       | Other liabilities |            |   | (3,577 | )
|                                               |  |                       |  |                       |        |                       |                   |            |   |        |  
|Total                                          |  |                       |  | $                     | 28,816 |                       |                   |            | $ | (3,577 | )
|                                               |  |                       |  |                       |        |                       |                   |            |   |        |  

The following tables provide a summary of the effect of fair value hedges on the Operating
Partnerships accompanying Consolidated Statements of Operations for the six months ended June 30, 2010 and 2009, respectively (amounts in thousands):



|                                               |  |                                                          |  |                                                        |       |             |                 |                                                    |                  |                                                         |   |        |  
|---------------------------------------------- |  | -------------------------------------------------------- |  | ------------------------------------------------------ | ----- | ----------- | --------------- | -------------------------------------------------- | ---------------- | ------------------------------------------------------- | - | ------ | -
|June 30, 2010Type of Fair Value Hedge          |  | Location of Gain/(Loss)Recognized in Incomeon Derivative |  | Amount of Gain/(Loss)Recognized in Incomeon Derivative |       | Hedged Item |                 | Income StatementLocation of HedgedItem Gain/(Loss) |                  | Amount of Gain/(Loss)Recognized in Incomeon Hedged Item |  
|Derivatives designated as hedging instruments: |  |                                                          |  |                                                        |       |             |                 |                                                    |                  |                                                         |   |        |  
|Interest Rate Contracts:                       |  |                                                          |  |                                                        |       |             |                 |                                                    |                  |                                                         |   |        |  
|Interest Rate Swaps                            |  | Interest expense                                         |  | $                                                      | 7,009 |             | Fixed rate debt |                                                    | Interest expense |                                                         | $ | (7,009 | )
|                                               |  |                                                          |  |                                                        |       |             |                 |                                                    |                  |                                                         |   |        |  
|Total                                          |  |                                                          |  | $                                                      | 7,009 |             |                 |                                                    |                  |                                                         | $ | (7,009 | )
|                                               |  |                                                          |  |                                                        |       |             |                 |                                                    |                  |                                                         |   |        |  



|                                               |  |                                                          |  |                                                        |        |   |             |                 |                                                    |                  |                                                         |   |      
|---------------------------------------------- |  | -------------------------------------------------------- |  | ------------------------------------------------------ | ------ | - | ----------- | --------------- | -------------------------------------------------- | ---------------- | ------------------------------------------------------- | - | -----
|June 30, 2009Type of Fair Value Hedge          |  | Location of Gain/(Loss)Recognized in Incomeon Derivative |  | Amount of Gain/(Loss)Recognized in Incomeon Derivative |        |   | Hedged Item |                 | Income StatementLocation of HedgedItem Gain/(Loss) |                  | Amount of Gain/(Loss)Recognized in Incomeon Hedged Item
|Derivatives designated as hedging instruments: |  |                                                          |  |                                                        |        |   |             |                 |                                                    |                  |                                                         |   |      
|Interest Rate Contracts:                       |  |                                                          |  |                                                        |        |   |             |                 |                                                    |                  |                                                         |   |      
|Interest Rate Swaps                            |  | Interest expense                                         |  | $                                                      | (2,911 | ) |             | Fixed rate debt |                                                    | Interest expense |                                                         | $ | 2,911
|                                               |  |                                                          |  |                                                        |        |   |             |                 |                                                    |                  |                                                         |   |      
|Total                                          |  |                                                          |  | $                                                      | (2,911 | ) |             |                 |                                                    |                  |                                                         | $ | 2,911
|                                               |  |                                                          |  |                                                        |        |   |             |                 |                                                    |                  |                                                         |   |      

The following tables provide a summary
of the effect of cash flow hedges on the Operating Partnerships accompanying Consolidated Statements of Operations for the six months ended June 30, 2010 and 2009, respectively (amounts in thousands):



|                                               |                                                    |                   |         |                                                                    |                     |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  
|---------------------------------------------- | -------------------------------------------------- | ----------------- | ------- | ------------------------------------------------------------------ | ------------------- | ---------------------------------------------------------------- |  | - | ------------------------------------------------------- | - | ---------------------------------------------------------------- | --- |  | - | -
|June 30, 2010Type of Cash
Flow Hedge           |                                                    | Effective Portion |         |                                                                    | Ineffective Portion
|                                               | Amount ofGain/(Loss)Recognized in OCIon Derivative |                   |         | Location of Gain/(Loss)Reclassified fromAccumulated OCIinto Income |                     | Amount of Gain/(Loss)Reclassified fromAccumulated OCIinto Income |  |   | Location ofGain/(Loss)Recognized in Incomeon Derivative |   | Amount of Gain/(Loss)Reclassified fromAccumulated OCIinto
Income
|Derivatives designated as hedging instruments: |                                                    |                   |         |                                                                    |                     |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  
|Interest Rate Contracts:                       |                                                    |                   |         |                                                                    |                     |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  
|Forward Starting Swaps/Treasury Locks          |                                                    | $                 | (86,530 | )                                                                  |                     | Interest expense                                                 |  | $ | (1,465                                                  | ) |                                                                  | N/A |  | $ | -
|Development Interest Rate Swaps/Caps           |                                                    |                   | 784     |                                                                    |                     | Interest expense                                                 |  |   | -                                                       |   |                                                                  | N/A |  |   | -
|                                               |                                                    |                   |         |                                                                    |                     |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  
|Total                                          |                                                    | $                 | (85,746 | )                                                                  |                     |                                                                  |  | $ | (1,465                                                  | ) |                                                                  |     |  | $ | -
|                                               |                                                    |                   |         |                                                                    |                     |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  



|                                               |                                                    |                   |                                                                    |  |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  
|---------------------------------------------- | -------------------------------------------------- | ----------------- | ------------------------------------------------------------------ |  | ---------------------------------------------------------------- |  | - | ------------------------------------------------------- | - | ---------------------------------------------------------------- | --- |  | - | -
|June 30, 2009Type of Cash
Flow Hedge           |                                                    | Effective Portion |                                                                    |  | Ineffective Portion                                             
|                                               | Amount ofGain/(Loss)Recognized in OCIon Derivative |                   | Location of Gain/(Loss)Reclassified fromAccumulated OCIinto Income |  | Amount of Gain/(Loss)Reclassified fromAccumulated OCIinto Income |  |   | Location ofGain/(Loss)Recognized in Incomeon Derivative |   | Amount of Gain/(Loss)Reclassified fromAccumulated OCIinto
Income
|Derivatives designated as hedging instruments: |                                                    |                   |                                                                    |  |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  
|Interest Rate Contracts:                       |                                                    |                   |                                                                    |  |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  
|Forward Starting Swaps/Treasury Locks          |                                                    | $                 | 10,803                                                             |  | Interest expense                                                 |  | $ | (2,305                                                  | ) |                                                                  | N/A |  | $ | -
|Development Interest Rate Swaps/Caps           |                                                    |                   | 1,852                                                              |  | Interest expense                                                 |  |   | -                                                       |   |                                                                  | N/A |  |   | -
|                                               |                                                    |                   |                                                                    |  |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  
|Total                                          |                                                    | $                 | 12,655                                                             |  |                                                                  |  | $ | (2,305                                                  | ) |                                                                  |     |  | $ | -
|                                               |                                                    |                   |                                                                    |  |                                                                  |  |   |                                                         |   |                                                                  |     |  |   |  

As of June 30, 2010 and
December 31, 2009, there were approximately $80.1 million in deferred losses, net, included in accumulated other comprehensive loss and $4.2 million in deferred gains, net, included in accumulated other comprehensive income, respectively. Based
on the estimated fair values of the net derivative instruments at June 30, 2010,



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the Operating Partnership may recognize an estimated $6.0 million of accumulated other comprehensive loss as additional interest expense during the twelve months ending June 30, 2011.

The following table sets forth the maturity, amortized cost, gross unrealized gains and losses, book/fair
value and interest and other income of the various investment securities held as of June 30, 2010 (amounts in thousands):



|                                     |  |                                  |  |               |     |                 |   |                  |  |                 |   |                          |   |       |  |   |   
|------------------------------------ |  | -------------------------------- |  | ------------- | --- | --------------- | - | ---------------- |  | --------------- | - | ------------------------ | - | ----- |  | - | --
|                                     |  | Other Assets                     |  |              
|Security                             |  | Maturity                         |  | AmortizedCost |     | UnrealizedGains |   | UnrealizedLosses |  | Book/Fair Value |   | Interest andOther Income
|Available-for-Sale                   |  |                                  |  |               |     |                 |   |                  |  |                 |   |                          |   |       |  |   |   
|FDIC-insured certificates of deposit |  | Less than one year               |  | $             | -   |                 | $ | -                |  | $               | - |                          | $ | -     |  | $ | 61
|Other                                |  | Between one andfive years or N/A |  |               | 675 |                 |   | 397              |  |                 | - |                          |   | 1,072 |  |   | - 
|                                     |  |                                  |  |               |     |                 |   |                  |  |                 |   |                          |   |       |  |   |   
|Total                                |  |                                  |  | $             | 675 |                 | $ | 397              |  | $               | - |                          | $ | 1,072 |  | $ | 61
|                                     |  |                                  |  |               |     |                 |   |                  |  |                 |   |                          |   |       |  |   |   

A three-level valuation hierarchy
exists for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instruments categorization within the
valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:



| |  |  | Level 1  Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2  Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are
observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3  Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
| | - |  | -------------------------------------------------------------------------------------------------------------

The Operating Partnerships derivative positions are valued using models developed by the respective counterparty as
well as models developed internally by the Operating Partnership that use as their basis readily observable market parameters (such as forward yield curves and credit default swap data) and are classified within Level 2 of the valuation hierarchy.
In addition, employee holdings other than EQR Common Shares within the supplemental executive retirement plan (the SERP) have a fair value of $47.5 million as of June 30, 2010 and are included in other assets and other liabilities
on the consolidated balance sheet. These SERP investments are valued using quoted market prices for identical assets and are classified within Level 1 of the valuation hierarchy.

The Operating Partnerships investment securities are valued using quoted market prices or readily available market
interest rate data. The quoted market prices are classified within Level 1 of the valuation hierarchy and the market interest rate data are classified within Level 2 of the valuation hierarchy. Redeemable Limited Partners are valued using the quoted
market price of EQR Common Shares and are classified within Level 2 of the valuation hierarchy.

The Operating
Partnerships real estate asset impairment charge recognized in the second quarter of 2009 was the result of an analysis of the parcels estimated fair value (determined using internally developed models that were based on market
assumptions and comparable sales data) (Level 3) compared to its current capitalized carrying value. The market assumptions used as inputs to the Operating Partnerships fair value model include construction costs, leasing assumptions, growth
rates, discount rates, terminal capitalization rates and development yields, along with the Operating Partnerships current plans for each individual asset. The Operating Partnership uses data on its existing portfolio of properties and its
recent acquisition and development properties, as well as similar market data from third party sources, when available, in determining these inputs. The valuation technique used to measure fair value is consistent with how similar assets were
measured in prior periods. See Note 16 for further discussion.



|12. | Earnings Per Unit
|--- | -----------------

The following tables set forth the computation of net income per Unit  basic and net income per Unit  diluted
(amounts in thousands except per Unit amounts):



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|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------------------------------------------ |  | ------------------------- | ------- | - | ---------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                             |  | Six Months Ended June 30, |         |   | Quarter Ended June 30, |  
|                                                                                                             |  | 2010                      |         |   | 2009                   |   |         | 2010 |  |   | 2009    |  
|Numerator for net income per Unit  basic and diluted:                                                       |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|Income from continuing operations                                                                            |  | $                         | 7,075   |   |                        | $ | 24,287  |      |  | $ | 9,406   |   |  | $ | 12,339  |  
|Net loss attributable to Noncontrolling Interests  Partially Owned Properties                               |  |                           | 435     |   |                        |   | 74      |      |  |   | 185     |   |  |   | 5       |  
|Allocation to Preference Units                                                                               |  |                           | (7,238  | ) |                        |   | (7,240  | )    |  |   | (3,618  | ) |  |   | (3,620  | )
|Allocation to Preference Interests and Junior Preference Units                                               |  |                           | -       |   |                        |   | (7      | )    |  |   | -       |   |  |   | (3      | )
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Income from continuing operations available to Units                                                         |  |                           | 272     |   |                        |   | 17,114  |      |  |   | 5,973   |   |  |   | 8,721   |  
|Discontinued operations, net                                                                                 |  |                           | 60,870  |   |                        |   | 167,066 |      |  |   | 683     |   |  |   | 93,593  |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Numerator for net income per Unit  basic and diluted                                                        |  | $                         | 61,142  |   |                        | $ | 184,180 |      |  | $ | 6,656   |   |  | $ | 102,314 |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Denominator for net income per Unit  basic and diluted:                                                     |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|Denominator for net income per Unit  basic                                                                  |  |                           | 295,177 |   |                        |   | 288,851 |      |  |   | 295,898 |   |  |   | 288,990 |  
|Effect of dilutive securities:                                                                               |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|Dilution for Units issuable upon assumed exercise/vesting of EQRs long-term compensation award shares/units |  |                           | 3,067   |   |                        |   | 301     |      |  |   | 3,744   |   |  |   | 348     |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Denominator for net income per Unit  diluted                                                                |  |                           | 298,244 |   |                        |   | 289,152 |      |  |   | 299,642 |   |  |   | 289,338 |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Net income per Unit  basic                                                                                  |  | $                         | 0.207   |   |                        | $ | 0.637   |      |  | $ | 0.022   |   |  | $ | 0.354   |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Net income per Unit  diluted                                                                                |  | $                         | 0.205   |   |                        | $ | 0.637   |      |  | $ | 0.022   |   |  | $ | 0.354   |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Net income per Unit  basic:                                                                                 |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|Income from continuing operations available to Units                                                         |  | $                         | 0.001   |   |                        | $ | 0.059   |      |  | $ | 0.020   |   |  | $ | 0.030   |  
|                                                                                                             |  |                           |         |  
|Discontinued operations, net                                                                                 |  |                           | 0.206   |   |                        |   | 0.578   |      |  |   | 0.002   |   |  |   | 0.324   |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Net income per Unit  basic                                                                                  |  | $                         | 0.207   |   |                        | $ | 0.637   |      |  | $ | 0.022   |   |  | $ | 0.354   |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Net income per Unit  diluted:                                                                               |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|Income from continuing operations available to Units                                                         |  | $                         | 0.001   |   |                        | $ | 0.059   |      |  | $ | 0.020   |   |  | $ | 0.030   |  
|Discontinued operations, net                                                                                 |  |                           | 0.204   |   |                        |   | 0.578   |      |  |   | 0.002   |   |  |   | 0.324   |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  
|                                                                                                             |  |                           |         |  
|Net income per Unit  diluted                                                                                |  | $                         | 0.205   |   |                        | $ | 0.637   |      |  | $ | 0.022   |   |  | $ | 0.354   |  
|                                                                                                             |  |                           |         |   |                        |   |         |      |  |   |         |   |  |   |         |  

Convertible preference interests/units that could be converted into 397,306 and 405,791 weighted average
Common Shares (which would be contributed to the Operating Partnership in exchange for OP Units) for the six months ended June 30, 2010 and 2009, respectively, and 397,004 and 405,555 weighted average Common Shares (which would be contributed
to the Operating Partnership in exchange for OP Units) for the quarters ended June 30, 2010 and 2009, respectively, were outstanding but were not included in the computation of diluted earnings per Unit because the effects would be
anti-dilutive. In addition, the effect of the Common Shares/OP Units that could ultimately be issued upon the conversion/exchange of the Operating Partnerships $650.0 million ($482.5 million outstanding at June 30, 2010) exchangeable
senior notes was not included in the computation of diluted earnings per Unit because the effects would be anti-dilutive.



|13. | Discontinued Operations
|--- | -----------------------

The Operating Partnership has presented separately as discontinued operations in all periods the results of operations
for all consolidated assets disposed of, all operations related to condominium conversion properties effective upon their respective transfer into a TRS and all properties held for sale, if any.

The components of discontinued operations are outlined below and include the results of operations for the respective
periods that the Operating Partnership owned such assets during the six months and quarters ended June 30, 2010 and 2009 (amounts in thousands).



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|                                             |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|-------------------------------------------- |  | ------------------------- | ------ | - | ---------------------- | - | ------- | ---- |  | - | ----- | - |  | - | ------ | -
|                                             |  | Six Months Ended June 30, |        |   | Quarter Ended June 30, |  
|                                             |  | 2010                      |        |   | 2009                   |   |         | 2010 |  |   | 2009  |  
|REVENUES                                     |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|Rental income                                |  | $                         | 3,886  |   |                        | $ | 67,839  |      |  | $ | 1,019 |   |  | $ | 31,225 |  
|                                             |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|Total revenues                               |  |                           | 3,886  |   |                        |   | 67,839  |      |  |   | 1,019 |   |  |   | 31,225 |  
|                                             |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|                                             |  |                           |        |  
|EXPENSES (1)                                 |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|Property and maintenance                     |  |                           | 2,179  |   |                        |   | 21,627  |      |  |   | 662   |   |  |   | 9,963  |  
|Real estate taxes and insurance              |  |                           | 675    |   |                        |   | 7,238   |      |  |   | 92    |   |  |   | 3,234  |  
|Depreciation                                 |  |                           | 711    |   |                        |   | 16,883  |      |  |   | 148   |   |  |   | 8,051  |  
|General and administrative                   |  |                           | 16     |   |                        |   | 25      |      |  |   | 13    |   |  |   | 20     |  
|                                             |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|Total expenses                               |  |                           | 3,581  |   |                        |   | 45,773  |      |  |   | 915   |   |  |   | 21,268 |  
|                                             |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|                                             |  |                           |        |  
|Discontinued operating income                |  |                           | 305    |   |                        |   | 22,066  |      |  |   | 104   |   |  |   | 9,957  |  
|                                             |  |                           |        |  
|Interest and other income                    |  |                           | 360    |   |                        |   | 10      |      |  |   | 359   |   |  |   | 3      |  
|Interest (2):                                |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|Expense incurred, net                        |  |                           | (23    | ) |                        |   | (703    | )    |  |   | (1    | ) |  |   | (273   | )
|Amortization of deferred financing costs     |  |                           | -      |   |                        |   | (38     | )    |  |   | -     |   |  |   | (3     | )
|Income and other tax (expense) benefit       |  |                           | (25    | ) |                        |   | (67     | )    |  |   | 4     |   |  |   | (18    | )
|                                             |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|Discontinued operations                      |  |                           | 617    |   |                        |   | 21,268  |      |  |   | 466   |   |  |   | 9,666  |  
|Net gain on sales of discontinued operations |  |                           | 60,253 |   |                        |   | 145,798 |      |  |   | 217   |   |  |   | 83,927 |  
|                                             |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  
|Discontinued operations, net                 |  | $                         | 60,870 |   |                        | $ | 167,066 |      |  | $ | 683   |   |  | $ | 93,593 |  
|                                             |  |                           |        |   |                        |   |         |      |  |   |       |   |  |   |        |  



|(1) | Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Operating Partnerships
period of ownership.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale.
|--- | -------------------------------------------------------------------------------------------------------------------

For the properties sold during the six months ended June 30, 2010 (excluding
condominium conversion properties), the investment in real estate, net of accumulated depreciation, and the mortgage notes payable balances at December 31, 2009 were $85.3 million and $40.0 million, respectively.

The net real estate basis of the Operating Partnerships condominium conversion properties owned by the TRS and
included in discontinued operations (excludes the Operating Partnerships halted conversions as they are now held for use), which were included in investment in real estate, net in the consolidated balance sheets, was $11.0 million and $11.8
million at June 30, 2010 and December 31, 2009, respectively.



|14. | Commitments and Contingencies
|--- | -----------------------------

The Operating Partnership, as an owner of real estate, is subject to various Federal, state and local environmental laws.
Compliance by the Operating Partnership with existing laws has not had a material adverse effect on the Operating Partnership. 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 is party to a
housing discrimination lawsuit brought by a non-profit civil rights organization in April 2006 in the U.S. District Court for the District of Maryland. The suit alleges that the Operating Partnership designed and built approximately 300 of its
properties in violation of the accessibility requirements of the Fair Housing Act and Americans With Disabilities Act. The suit seeks actual and punitive damages, injunctive relief (including modification of non-compliant properties), costs and
attorneys fees. The Operating Partnership believes it has a number of viable defenses, including that a majority of the named properties were completed before the operative dates of the statutes in question and/or were not designed or built by
the Operating Partnership. Accordingly, the Operating Partnership is defending the suit vigorously. Due to the pendency of the Operating Partnerships defenses and the uncertainty of many other critical factual and legal issues, it is not
possible to determine or predict the outcome of the suit or a possible loss or range of loss, and no amounts have been accrued at June 30, 2010. While no assurances can be given, the Operating Partnership does not believe that the suit, if
adversely determined, would have a material adverse effect on the Operating Partnership.

The Operating
Partnership does not believe there is any other litigation pending or threatened against it that,



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individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Operating Partnership.

The Operating Partnership has established a reserve and recorded a corresponding reduction to its net gain on sales of
discontinued operations related to potential liabilities associated with its condominium conversion activities. The reserve covers potential product liability related to each conversion. The Operating Partnership periodically assesses the adequacy
of the reserve and makes adjustments as necessary. During the six months ended June 30, 2010, the Operating Partnership recorded additional reserves of approximately $0.7 million, paid approximately $1.2 million in claims and legal fees and
released approximately $0.2 million of remaining reserves for settled claims. As a result, the Operating Partnership had total reserves of approximately $6.0 million at June 30, 2010. While no assurances can be given, the Operating Partnership
does not believe that the ultimate resolution of these potential liabilities, if adversely determined, would have a material adverse effect on the Operating Partnership.

As of June 30, 2010, the Operating Partnership has five projects totaling 1,499 units in various stages of
development with estimated completion dates ranging through September 30, 2012. Some of the projects are developed solely by the Operating Partnership, while others are co-developed with various third party development partners. The development
venture agreements with partners are primarily deal-specific, with differing terms regarding profit-sharing, equity contributions, returns on investment, buy-sell agreements and other customary provisions. The partner is most often the
general or managing partner of the development venture. The typical buy-sell arrangements contain appraisal rights and provisions that provide the right, but not the obligation, for the Operating Partnership to acquire the
partners interest in the project at fair market value upon the expiration of a negotiated time period (typically two to five years after substantial completion of the project).



|15. | 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 individually and geographically, and both on a
same store and non-same store basis; however, each of our apartment communities generally has similar economic characteristics, residents, products and services. The Operating Partnerships operating segments have been aggregated by geography
in a manner identical to that which is provided to its chief operating decision maker.

The Operating
Partnerships fee and asset management, development (including its partially owned properties), condominium conversion and corporate housing (Equity Corporate Housing or ECH) activities are immaterial and do not individually meet
the threshold requirements of a reportable segment and as such, have been aggregated in the Other segment in the tables presented below.

All revenues are from external customers and there is no customer who contributed 10% or more of the Operating
Partnerships total revenues during the six months and quarters ended June 30, 2010 and 2009, 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 consolidated statements of operations).
The Operating Partnership believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Operating Partnerships
apartment communities. Current year NOI is compared to prior year NOI and current year budgeted NOI as a measure of financial performance. The following tables present NOI for each segment from our rental real estate specific to continuing
operations for the six months and quarters ended June 30, 2010 and 2009, respectively, as well as total assets at June 30, 2010 (amounts in thousands):



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|                             |  |                                |           |           |   |           |  |           |           |           |   |           |  |   |           |  |   |           
|---------------------------- |  | ------------------------------ | --------- | --------- | - | --------- |  | --------- | --------- | --------- | - | --------- |  | - | --------- |  | - | ----------
|                             |  | Six Months Ended June 30, 2010
|                             |  | Northeast                      |           | Northwest |   | Southeast |  | Southwest |           | Other (3) |   | Total    
|Rental income:               |  |                                |           |           |   |           |  |           |           |           |   |           |  |   |           |  |   |           
|Same store (1)               |  | $                              | 296,774   |           | $ | 184,355   |  | $         | 194,762   |           | $ | 216,019   |  | $ | -         |  | $ | 891,910   
|Non-same store/other (2) (3) |  |                                | 40,946    |           |   | 4,917     |  |           | 3,664     |           |   | 11,888    |  |   | 40,245    |  |   | 101,660   
|                             |  |                                |           |           |   |           |  |           |           |           |   |           |  |   |           |  |   |           
|Total rental income          |  |                                | 337,720   |           |   | 189,272   |  |           | 198,426   |           |   | 227,907   |  |   | 40,245    |  |   | 993,570   
|                             |  |                                |           |           |   |          
|Operating expenses:          |  |                                |           |           |   |           |  |           |           |           |   |           |  |   |           |  |   |           
|Same store (1)               |  |                                | 114,866   |           |   | 70,202    |  |           | 81,883    |           |   | 78,564    |  |   | -         |  |   | 345,515   
|Non-same store/other (2) (3) |  |                                | 18,254    |           |   | 2,243     |  |           | 1,716     |           |   | 5,205     |  |   | 34,667    |  |   | 62,085    
|                             |  |                                |           |           |   |           |  |           |           |           |   |           |  |   |           |  |   |           
|Total operating expenses     |  |                                | 133,120   |           |   | 72,445    |  |           | 83,599    |           |   | 83,769    |  |   | 34,667    |  |   | 407,600   
|                             |  |                                |           |           |   |          
|NOI:                         |  |                                |           |           |   |           |  |           |           |           |   |           |  |   |           |  |   |           
|Same store (1)               |  |                                | 181,908   |           |   | 114,153   |  |           | 112,879   |           |   | 137,455   |  |   | -         |  |   | 546,395   
|Non-same store/other (2) (3) |  |                                | 22,692    |           |   | 2,674     |  |           | 1,948     |           |   | 6,683     |  |   | 5,578     |  |   | 39,575    
|                             |  |                                |           |           |   |           |  |           |           |           |   |           |  |   |           |  |   |           
|Total NOI                    |  | $                              | 204,600   |           | $ | 116,827   |  | $         | 114,827   |           | $ | 144,138   |  | $ | 5,578     |  | $ | 585,970   
|                             |  |                                |           |           |   |           |  |           |           |           |   |           |  |   |           |  |   |           
|Total assets                 |  | $                              | 5,965,873 |           | $ | 2,617,863 |  | $         | 2,710,889 |           | $ | 2,914,261 |  | $ | 1,416,386 |  | $ | 15,625,272
|                             |  |                                |           |           |   |           |  |           |           |           |   |           |  |   |           |  |   |           



|(1) | Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2009, less properties subsequently sold,
which represented 117,349 units.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Non-same store primarily includes properties acquired after January 1, 2009, plus any properties in lease-up and not stabilized as of
January 1, 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Other includes ECH, development, condominium conversion overhead of $0.3 million and other corporate operations. Also reflects a $4.8 million
elimination of rental income recorded in Northeast, Northwest, Southeast and Southwest operating segments related to ECH.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                             |  |                                |         |           |   |         |           |  |           |         |           |   |         |       |   |        |   |  |   |        
|---------------------------- |  | ------------------------------ | ------- | --------- | - | ------- | --------- |  | --------- | ------- | --------- | - | ------- | ----- | - | ------ | - |  | - | -------
|                             |  | Six Months Ended June 30, 2009
|                             |  | Northeast                      |         | Northwest |   |         | Southeast |  | Southwest |         | Other (3) |   |         | Total
|Rental income:               |  |                                |         |           |   |         |           |  |           |         |           |   |         |       |   |        |   |  |   |        
|Same store (1)               |  | $                              | 297,877 |           | $ | 192,191 |           |  | $         | 197,614 |           | $ | 223,075 |       | $ | -      |   |  | $ | 910,757
|Non-same store/other (2) (3) |  |                                | 3,079   |           |   | 782     |           |  |           | 1,999   |           |   | 8,159   |       |   | 32,757 |   |  |   | 46,776 
|                             |  |                                |         |           |   |         |           |  |           |         |           |   |         |       |   |        |   |  |   |        
|Total rental income          |  |                                | 300,956 |           |   | 192,973 |           |  |           | 199,613 |           |   | 231,234 |       |   | 32,757 |   |  |   | 957,533
|                             |  |                                |         |           |   |        
|Operating expenses:          |  |                                |         |           |   |         |           |  |           |         |           |   |         |       |   |        |   |  |   |        
|Same store (1)               |  |                                | 112,782 |           |   | 67,989  |           |  |           | 82,846  |           |   | 76,643  |       |   | -      |   |  |   | 340,260
|Non-same store/other (2) (3) |  |                                | 2,932   |           |   | 901     |           |  |           | 657     |           |   | 4,656   |       |   | 33,557 |   |  |   | 42,703 
|                             |  |                                |         |           |   |         |           |  |           |         |           |   |         |       |   |        |   |  |   |        
|Total operating expenses     |  |                                | 115,714 |           |   | 68,890  |           |  |           | 83,503  |           |   | 81,299  |       |   | 33,557 |   |  |   | 382,963
|                             |  |                                |         |           |   |        
|NOI:                         |  |                                |         |           |   |         |           |  |           |         |           |   |         |       |   |        |   |  |   |        
|Same store (1)               |  |                                | 185,095 |           |   | 124,202 |           |  |           | 114,768 |           |   | 146,432 |       |   | -      |   |  |   | 570,497
|Non-same store/other (2) (3) |  |                                | 147     |           |   | (119    | )         |  |           | 1,342   |           |   | 3,503   |       |   | (800   | ) |  |   | 4,073  
|                             |  |                                |         |           |   |         |           |  |           |         |           |   |         |       |   |        |   |  |   |        
|Total NOI                    |  | $                              | 185,242 |           | $ | 124,083 |           |  | $         | 116,110 |           | $ | 149,935 |       | $ | (800   | ) |  | $ | 574,570
|                             |  |                                |         |           |   |         |           |  |           |         |           |   |         |       |   |        |   |  |   |        



|(1) | Same store primarily includes all properties acquired or completed and stabilized prior to January 1, 2009, less properties subsequently sold,
which represented 117,349 units.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Non-same store primarily includes properties acquired after January 1, 2009, plus any properties in lease-up and not stabilized as of
January 1, 2009.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Other includes ECH, development, condominium conversion overhead of $1.0 million and other corporate operations. Also reflects a $4.6 million
elimination of rental income recorded in Northeast, Northwest, Southeast and Southwest operating segments related to ECH.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



26



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##### Table of Contents

|                             |  |                             |         |           |   |           |  |           |         |           |   |         |  |   |        |  |   |        
|---------------------------- |  | --------------------------- | ------- | --------- | - | --------- |  | --------- | ------- | --------- | - | ------- |  | - | ------ |  | - | -------
|                             |  | Quarter Ended June 30, 2010
|                             |  | Northeast                   |         | Northwest |   | Southeast |  | Southwest |         | Other (3) |   | Total  
|Rental income:               |  |                             |         |           |   |           |  |           |         |           |   |         |  |   |        |  |   |        
|Same store (1)               |  | $                           | 150,156 |           | $ | 92,744    |  | $         | 97,612  |           | $ | 108,292 |  | $ | -      |  | $ | 448,804
|Non-same store/other (2) (3) |  |                             | 24,323  |           |   | 3,467     |  |           | 2,548   |           |   | 6,320   |  |   | 22,429 |  |   | 59,087 
|                             |  |                             |         |           |   |           |  |           |         |           |   |         |  |   |        |  |   |        
|Total rental income          |  |                             | 174,479 |           |   | 96,211    |  |           | 100,160 |           |   | 114,612 |  |   | 22,429 |  |   | 507,891
|                             |  |                             |         |           |   |          
|Operating expenses:          |  |                             |         |           |   |           |  |           |         |           |   |         |  |   |        |  |   |        
|Same store (1)               |  |                             | 55,135  |           |   | 34,996    |  |           | 39,679  |           |   | 39,200  |  |   | -      |  |   | 169,010
|Non-same store/other (2) (3) |  |                             | 11,240  |           |   | 1,374     |  |           | 1,099   |           |   | 2,676   |  |   | 17,479 |  |   | 33,868 
|                             |  |                             |         |           |   |           |  |           |         |           |   |         |  |   |        |  |   |        
|Total operating expenses     |  |                             | 66,375  |           |   | 36,370    |  |           | 40,778  |           |   | 41,876  |  |   | 17,479 |  |   | 202,878
|                             |  |                             |         |           |   |          
|NOI:                         |  |                             |         |           |   |           |  |           |         |           |   |         |  |   |        |  |   |        
|Same store (1)               |  |                             | 95,021  |           |   | 57,748    |  |           | 57,933  |           |   | 69,092  |  |   | -      |  |   | 279,794
|Non-same store/other (2) (3) |  |                             | 13,083  |           |   | 2,093     |  |           | 1,449   |           |   | 3,644   |  |   | 4,950  |  |   | 25,219 
|                             |  |                             |         |           |   |           |  |           |         |           |   |         |  |   |        |  |   |        
|Total NOI                    |  | $                           | 108,104 |           | $ | 59,841    |  | $         | 59,382  |           | $ | 72,736  |  | $ | 4,950  |  | $ | 305,013
|                             |  |                             |         |           |   |           |  |           |         |           |   |         |  |   |        |  |   |        



|(1) | Same store primarily includes all properties acquired or completed and stabilized prior to April 1, 2009, less properties subsequently sold,
which represented 117,349 units.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Non-same store primarily includes properties acquired after April 1, 2009, plus any properties in lease-up and not stabilized as of
April 1, 2009.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Other includes ECH, development, condominium conversion overhead of $0.1 million and other corporate operations. Also reflects a $2.8 million
elimination of rental income recorded in Northeast, Northwest, Southeast and Southwest operating segments related to ECH.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                             |  |                             |         |           |   |        |           |  |           |        |           |   |         |  |   |        |  |   |        
|---------------------------- |  | --------------------------- | ------- | --------- | - | ------ | --------- |  | --------- | ------ | --------- | - | ------- |  | - | ------ |  | - | -------
|                             |  | Quarter Ended June 30, 2009
|                             |  | Northeast                   |         | Northwest |   |        | Southeast |  | Southwest |        | Other (3) |   | Total  
|Rental income:               |  |                             |         |           |   |        |           |  |           |        |           |   |         |  |   |        |  |   |        
|Same store (1)               |  | $                           | 149,492 |           | $ | 95,704 |           |  | $         | 98,624 |           | $ | 110,641 |  | $ | -      |  | $ | 454,461
|Non-same store/other (2) (3) |  |                             | 2,060   |           |   | 431    |           |  |           | 1,077  |           |   | 4,172   |  |   | 15,720 |  |   | 23,460 
|                             |  |                             |         |           |   |        |           |  |           |        |           |   |         |  |   |        |  |   |        
|Total rental income          |  |                             | 151,552 |           |   | 96,135 |           |  |           | 99,701 |           |   | 114,813 |  |   | 15,720 |  |   | 477,921
|                             |  |                             |         |           |   |       
|Operating expenses:          |  |                             |         |           |   |        |           |  |           |        |           |   |         |  |   |        |  |   |        
|Same store (1)               |  |                             | 54,636  |           |   | 33,697 |           |  |           | 40,610 |           |   | 37,499  |  |   | -      |  |   | 166,442
|Non-same store/other (2) (3) |  |                             | 1,948   |           |   | 435    |           |  |           | 240    |           |   | 2,511   |  |   | 15,210 |  |   | 20,344 
|                             |  |                             |         |           |   |        |           |  |           |        |           |   |         |  |   |        |  |   |        
|Total operating expenses     |  |                             | 56,584  |           |   | 34,132 |           |  |           | 40,850 |           |   | 40,010  |  |   | 15,210 |  |   | 186,786
|                             |  |                             |         |           |   |       
|NOI:                         |  |                             |         |           |   |        |           |  |           |        |           |   |         |  |   |        |  |   |        
|Same store (1)               |  |                             | 94,856  |           |   | 62,007 |           |  |           | 58,014 |           |   | 73,142  |  |   | -      |  |   | 288,019
|Non-same store/other (2) (3) |  |                             | 112     |           |   | (4     | )         |  |           | 837    |           |   | 1,661   |  |   | 510    |  |   | 3,116  
|                             |  |                             |         |           |   |        |           |  |           |        |           |   |         |  |   |        |  |   |        
|Total NOI                    |  | $                           | 94,968  |           | $ | 62,003 |           |  | $         | 58,851 |           | $ | 74,803  |  | $ | 510    |  | $ | 291,135
|                             |  |                             |         |           |   |        |           |  |           |        |           |   |         |  |   |        |  |   |        



|(1) | Same store primarily includes all properties acquired or completed and stabilized prior to April 1, 2009, less properties subsequently sold,
which represented 117,349 units.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Non-same store primarily includes properties acquired after April 1, 2009, plus any properties in lease-up and not stabilized as of
April 1, 2009.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Other includes ECH, development, condominium conversion overhead of $0.5 million and other corporate operations. Also reflects a $2.3 million
elimination of rental income recorded in Northeast, Northwest, Southeast and Southwest operating segments related to ECH.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Note:  Markets | included in the above geographic segments are as follows:
|-------------- | ---------------------------------------------------------

|(a) | Northeast  New England (excluding Boston), Boston, New York Metro, DC Northern Virginia and Suburban Maryland.
|--- | ---------------------------------------------------------------------------------------------------------------

|(b) | Northwest  Central Valley, Denver, Portland, San Francisco Bay Area and Seattle/Tacoma.
|--- | ----------------------------------------------------------------------------------------

|(c) | Southeast  Atlanta, Jacksonville, Orlando, South Florida, Tampa and Tulsa.
|--- | ---------------------------------------------------------------------------

|(d) | Southwest  Albuquerque, Inland Empire, Los Angeles, Orange County, Phoenix and San Diego.
|--- | ------------------------------------------------------------------------------------------

The following table presents a reconciliation of NOI from our rental real estate specific to continuing operations for
the six months and quarters ended June 30, 2010 and 2009, respectively (amounts in thousands):



27



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##### Table of Contents

|                                        |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|--------------------------------------- |  | ------------------------- | -------- | - | ---------------------- | - | -------- | ---- |  | - | -------- | - |  | - | -------- | -
|                                        |  | Six Months Ended June 30, |          |   | Quarter Ended June 30, |  
|                                        |  | 2010                      |          |   | 2009                   |   |          | 2010 |  |   | 2009     |  
|Rental income                           |  | $                         | 993,570  |   |                        | $ | 957,533  |      |  | $ | 507,891  |   |  | $ | 477,921  |  
|Property and maintenance expense        |  |                           | (251,971 | ) |                        |   | (241,386 | )    |  |   | (125,454 | ) |  |   | (116,711 | )
|Real estate taxes and insurance expense |  |                           | (114,482 | ) |                        |   | (103,845 | )    |  |   | (56,957  | ) |  |   | (51,357  | )
|Property management expense             |  |                           | (41,147  | ) |                        |   | (37,732  | )    |  |   | (20,467  | ) |  |   | (18,718  | )
|                                        |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Total operating expenses                |  |                           | (407,600 | ) |                        |   | (382,963 | )    |  |   | (202,878 | ) |  |   | (186,786 | )
|                                        |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  
|Net operating income                    |  | $                         | 585,970  |   |                        | $ | 574,570  |      |  | $ | 305,013  |   |  | $ | 291,135  |  
|                                        |  |                           |          |   |                        |   |          |      |  |   |          |   |  |   |          |  



|16. | Subsequent Events/Other
|--- | -----------------------

Subsequent Events

Subsequent to June 30, 2010, the Operating Partnership:



| |  |  | Acquired one apartment property consisting of 225 units for $55.0 million;
| | - |  | --------------------------------------------------------------------------

| |  |  | Sold the 25% equity interest it previously owned in 13 of the unconsolidated properties containing 2,624 units in exchange for an approximate $12.5
million payment from its partner;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Sold one consolidated apartment property consisting of 208 units for $8.6 million;
| | - |  | ----------------------------------------------------------------------------------

| |  |  | Issued $600.0 million of unsecured notes maturing July 15, 2020 with a coupon of 4.75% and an all-in effective interest rate of approximately
5.09%;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Repaid $61.5 million in mortgage loans on one property; and
| | - |  | -----------------------------------------------------------

| |  |  | Experienced the collapse of a portion of the parking garage at one of its rental properties (Prospect Towers in Hackensack, New Jersey) and
estimates that the costs (both expensed and capitalized), including providing for residents interim needs, lost revenue and garage reconstruction, will be approximately $12.0 million, after insurance reimbursements of $8.0 million.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Other

During the six months ended June 30, 2010 and 2009, the Operating Partnership incurred charges of $6.0 million and
$0.3 million, respectively, related to property acquisition costs, such as survey, title and legal fees, on the acquisition of operating properties ($4.0 million and $0.1 million, respectively) and related to the write-off of various pursuit and
out-of-pocket costs for terminated acquisition, disposition (including halted condominium conversions) and development transactions ($2.0 million and $0.2 million, respectively). These costs are included in other expenses in the accompanying
consolidated statements of operations.

During the six months ended June 30, 2010 and 2009, the Operating
Partnership received $5.2 million and $0.2 million, respectively, for the settlement of insurance/litigation claims, which are included in interest and other income in the accompanying consolidated statements of operations.

During the six months ended June 30, 2009, the Operating Partnership recorded an approximate $11.1 million non-cash
asset impairment charge on a parcel of land held for development. This charge was the result of an analysis of the parcels estimated fair value (determined using internally developed models that were based on market assumptions and comparable
sales data) compared to its current capitalized carrying value. The market assumptions used as inputs to the Operating Partnerships fair value model include construction costs, leasing assumptions, growth rates, discount rates, terminal
capitalization rates and development yields, along with the Operating Partnerships current plans for each individual asset. The Operating Partnership uses data on its existing portfolio of properties and its recent acquisition and development
properties, as well as similar market data from third party sources, when available, in determining these inputs.



28



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

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, 2009.

Forward-Looking Statements

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. These statements are based on current expectations, estimates, projections and assumptions made by management. While the Operating Partnerships management believes the assumptions underlying its
forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, 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. Many of these uncertainties and risks are difficult to predict and beyond managements control. Forward-looking statements are not
guarantees of future performance, results or events. The forward-looking statements contained herein are made as of the date hereof and the Operating Partnership undertakes no obligation to update or supplement these forward-looking statements.
Factors that might cause such differences include, but are not limited to the following:



| |  |  | We intend to actively acquire and/or develop multifamily properties for rental operations as market conditions dictate. We may underestimate the
costs necessary to bring an acquired property up to standards established for its intended market position or to complete a development property. Additionally, we expect that other major real estate investors with significant capital will compete
with us for attractive investment opportunities or may also develop properties in markets where we focus our development efforts. This competition may increase prices for multifamily properties. We may not be in a position or have the opportunity in
the future to make suitable property acquisitions on favorable terms. We expect to develop properties ourselves in addition to co-investing with our development partners. The total number of development units, costs of development and estimated
completion dates are subject to uncertainties arising from changing economic conditions (such as the cost of labor and construction materials), competition and local government regulation;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Debt financing and other capital required by the Operating Partnership may not be available or may only be available on adverse terms;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Labor and materials required for maintenance, repair, capital expenditure or development may be more expensive than anticipated;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------

| |  |  | Occupancy levels and market rents may be adversely affected by national and local economic and market conditions including, without limitation, new
construction and excess inventory of multifamily housing and single family housing, slow or negative employment growth, availability of low interest mortgages for single family home buyers and the potential for geopolitical instability, all of which
are beyond the Operating Partnerships control; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Additional factors as discussed in Part I of the Operating Partnerships Annual Report on Form 10-K, particularly those under Item 1A.
Risk Factors.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

Forward-looking statements and related uncertainties are also included
in the Notes to Consolidated Financial Statements in this report.

Overview

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, a Maryland real estate investment trust (REIT) formed in March 1993, is an S&P 500 company focused on the acquisition, development and
management of high quality apartment properties in top United States growth markets. EQR has elected to be taxed as a REIT.

EQR is one of the largest publicly traded real estate companies and is the largest publicly traded owner of multifamily
properties in the United States (based on the aggregate market value of its outstanding Common Shares, the number of apartment units wholly owned and total revenues earned). The Operating Partnerships corporate headquarters are located in
Chicago, Illinois and the Operating Partnership also operates property management offices throughout the United States. As of June 30, 2010, the Operating Partnership has approximately 4,200 employees who provide real estate operations,
leasing, legal, financial, accounting, acquisition, disposition, development and other support functions.



29



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##### Table of Contents

EQR is the general partner of, and as of June 30, 2010 owned an
approximate 95.3% ownership interest in ERPOP. EQR is structured as an umbrella partnership REIT (UPREIT) under which all property ownership and related business operations are conducted through ERPOP and its subsidiaries. References to
the Operating Partnership include ERPOP and those entities owned or controlled by it. References to the Company mean EQR and the Operating Partnership.

Business Objectives and Operating Strategies

The Operating Partnership seeks to maximize current income, capital appreciation of each property and the total return
for its shareholders. The Operating Partnerships strategy for accomplishing these objectives includes:



| |  |  | Leveraging our size and scale in four critical ways:
| | - |  | ----------------------------------------------------

| |  |  | Investing in apartment communities located in strategically targeted markets to maximize our total risk-adjusted return on an enterprise level;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Meeting the needs of our residents by offering a wide array of product choices and a commitment to service;
| | - |  | -----------------------------------------------------------------------------------------------------------

| |  |  | Engaging, retaining and attracting the best employees by providing them with the education, resources and opportunities to succeed; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Sharing resources and best practices in property management across the enterprise.
| | - |  | ----------------------------------------------------------------------------------

| |  |  | Owning a highly diversified portfolio in our target markets. Target markets are defined by a combination of the following criteria:
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------

| |  |  | High barrier-to-entry markets where because of land scarcity or government regulation it is difficult or costly to build new apartment complexes
leading to low supply;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Markets with high single family housing prices making our apartments a more economical housing choice and allowing us to more readily increase
rents;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Strong economic growth leading to high demand for apartments; and
| | - |  | -----------------------------------------------------------------

| |  |  | Markets with an attractive quality of life leading to high demand and retention.
| | - |  | --------------------------------------------------------------------------------

| |  |  | Giving residents reasons to stay with the Operating Partnership by providing a range of product choices available in our diversified portfolio and
by enhancing their experience with us through meticulous customer service by our employees and by providing various value-added services.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Being open and responsive to changes in the market in order to take advantage of investment opportunities that align with our long-term vision.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------

Acquisition, Development and Disposition Strategies

The Operating Partnership anticipates that future property acquisitions, developments and dispositions will occur within
the United States. Acquisitions and developments may be financed from various sources of capital, which may include retained cash flow, issuance of additional equity and debt securities, sales of properties, joint venture agreements and
collateralized and uncollateralized borrowings. In addition, the Operating Partnership may acquire properties in transactions that include the issuance of limited partnership interests in the Operating Partnership (OP Units) as
consideration for the acquired properties. Such transactions may, in certain circumstances, enable the sellers to defer, in whole or in part, the recognition of taxable income or gain that might otherwise result from the sales. ERPOP may also
acquire land parcels to hold and/or sell based on market opportunities. The Operating Partnership may also seek to acquire properties by purchasing defaulted or distressed debt that encumbers desirable properties in the hope of obtaining title to
property through foreclosure or deed-in-lieu of foreclosure proceedings.

When evaluating potential
acquisitions, developments and dispositions, the Operating Partnership generally considers the following factors:



| |  |  | strategically targeted markets;
| | - |  | -------------------------------

| |  |  | income levels and employment growth trends in the relevant market;
| | - |  | ------------------------------------------------------------------

| |  |  | employment and household growth and net migration in the relevant markets population;
| | - |  | --------------------------------------------------------------------------------------

| |  |  | barriers to entry that would limit competition (zoning laws, building permit availability, supply of undeveloped or developable real estate, local
building costs and construction costs, among other factors);
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



30



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##### Table of Contents

| |  |  | the location, construction quality, age, condition and design of the property;
| | - |  | ------------------------------------------------------------------------------

| |  |  | the current and projected cash flow of the property and the ability to increase cash flow;
| | - |  | ------------------------------------------------------------------------------------------

| |  |  | the potential for capital appreciation of the property;
| | - |  | -------------------------------------------------------

| |  |  | the terms of resident leases, including the potential for rent increases;
| | - |  | -------------------------------------------------------------------------

| |  |  | the potential for economic growth and the tax and regulatory environment of the community in which the property is located;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------

| |  |  | the occupancy and demand by residents for properties of a similar type in the vicinity (the overall market and submarket);
| | - |  | --------------------------------------------------------------------------------------------------------------------------

| |  |  | the prospects for liquidity through sale, financing or refinancing of the property;
| | - |  | -----------------------------------------------------------------------------------

| |  |  | the benefits of integration into existing operations;
| | - |  | -----------------------------------------------------

| |  |  | purchase prices and yields of available existing stabilized properties, if any;
| | - |  | -------------------------------------------------------------------------------

| |  |  | competition from existing multifamily properties, comparably priced single family homes or rentals, residential properties under development and the
potential for the construction of new multifamily properties in the area; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | opportunistic selling based on demand and price of high quality assets, including condominium conversions.
| | - |  | ----------------------------------------------------------------------------------------------------------

The Operating Partnership generally reinvests the proceeds received from property dispositions primarily to achieve its
acquisition, development and rehab strategies and at times to fund its debt maturities and debt and equity repurchase activities. In addition, when feasible, the Operating Partnership may structure these transactions as tax-deferred exchanges.

Current Environment

Through much of 2009, the Operating Partnership assumed a highly cautious outlook given uncertainty in the general
economy and the capital markets and deterioration in our property operations. In contrast, early 2010 seemed to warrant a cautious optimism given signs pointing to improvement in economic activity, more normalized credit markets and better
fundamentals for our business. With the second quarter of 2010 showing sequential quarter over quarter same store revenue growth, we are optimistic that the improvement realized to date in 2010 will be sustained in the short term. Longer term,
however, the rate of that growth is highly dependent on employment growth.

The credit environment improved
throughout mid to late 2009 and into 2010 and we currently have access to multiple sources of capital allowing us a less cautious posture with respect to pre-funding our maturing debt obligations. As a result of the improved credit environment, in
late 2009, we utilized $366.2 million of cash on hand to repurchase certain unsecured notes and convertible notes in public tender offers. The Operating Partnership has access to the equity markets as well as both the secured and unsecured debt
markets at what we believe are attractive rates. In July 2010, the Operating Partnership completed a $600.0 million unsecured ten year notes offering with a coupon of 4.75% and an all-in effective interest rate of 5.09%. The attractive all-in rate
combined with its accretive nature compared to maturing 2011 debt led the Operating Partnership to pursue this transaction. The Operating Partnership has minimal debt maturities for the balance of 2010. However, should the improvement we are
experiencing cease and economic conditions or credit/equity markets once again deteriorate, we may again hold material amounts of cash and prefund our maturities similar to measures taken in 2008 and early 2009 to increase liquidity and meet our
debt maturities.

Beginning in the fourth quarter of 2009, we began to see an increase in the availability of
attractive acquisition opportunities. We expect to revert from a net seller of assets during 2009 to a net buyer of assets in 2010. The Operating Partnership acquired eight properties consisting of 2,209 units for $849.4 million and one land parcel
for $12.0 million during the six months ended June 30, 2010. Competition for the properties we are interested in acquiring increased in the second quarter and as a result it has been more difficult to identify attractive acquisition
opportunities. While our acquisition pipeline has shown some recent improvement, it is unlikely we will see the same dollar volume of acquisitions close in the second half of 2010 as we did in the first half of the year. During the six months ended
June 30, 2010, the Operating Partnership sold eight consolidated properties consisting of 2,011 units for $145.9 million, as well as 2 condominium units for $0.4 million. We expect to see an increase in dispositions in the second half of the
year, primarily in the fourth quarter, as we believe there is currently an attractive market and pricing for certain of our non-core assets. We believe our access to capital and our ability to execute large, complex transactions provide us with a
competitive advantage.

We believe that cash and cash equivalents, securities readily convertible to cash,
current availability on our revolving credit facility and disposition proceeds for 2010 will provide sufficient liquidity to meet our funding obligations relating to asset acquisitions, debt maturities and existing development projects through 2010.
We expect that our remaining longer-term funding requirements will be met through some combination of new borrowings, equity issuances (including EQRs ATM share offering program), property dispositions, joint ventures and cash generated from
operations.

Despite the challenging conditions noted below, we believe that the Operating Partnership is
well-positioned



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##### Table of Contents

notwithstanding the slow economic recovery. Our properties are geographically diverse and were approximately 95.0% occupied as of June 30, 2010, little new multifamily rental supply will be
added to most of our markets over the next two years and the long-term demographic picture is positive. We believe our strong balance sheet and ample liquidity will allow us to fund our debt maturities and development fundings in the near term, and
should also allow us to take advantage of investment opportunities in the future. As economic conditions continue to improve, the short-term nature of our leases and the limited supply of new rental housing being constructed should allow us to
realize revenue growth and improvement in our operating results.

While a generally improving credit
environment and better general economic conditions provide reason for optimism, the Operating Partnership may experience declining revenues for the full year 2010, which will adversely impact the Operating Partnerships results of operations.
The vast majority of our leases are for terms of 12 months or less. Given the roll-down in lease rates that occurred throughout 2009, the full year comparison to 2010 will continue to show flat to declining revenue, even though the Operating
Partnership experienced sequential same store revenue increases in the second quarter of 2010 when compared to the first quarter of 2010 for the first time since the third quarter of 2008. Net effective new lease rates are positive and new residents
are generally occupying units at slightly higher rent than the vacating resident was previously paying. Our revenues have benefited from high resident retention, which has generally increased more significantly than expected, and our occupancy
rates, which increased more quickly than expected.

After three consecutive years of excellent expense control
(same store expenses declined 0.1% between 2009 and 2008 and grew 2.2% between 2008 and 2007 and 2.1% between 2007 and 2006), the Operating Partnership anticipates that 2010 same store expenses will increase between 1.0% and 2.0% primarily due to
increased payroll expenses related to workers compensation, health insurance and overhead cost increases, partially offset by favorable real estate tax valuation and appeals results and modest utility cost growth (same store expenses increased 1.5%
for the first six months of 2010 when compared with the same period in the prior year). The combination of expected flat to declining revenues and moderately increasing expense levels will have a negative impact on the Operating Partnerships
results of operations for 2010.

Results of Operations

In conjunction with our business objectives and operating strategy, the Operating Partnership continued to invest or
recycle its capital investment in apartment properties located in strategically targeted markets during the six months ended June 30, 2010 as follows:



| |  |  | Acquired $682.6 million of apartment properties consisting of seven properties and 1,650 units at a weighted average capitalization
(cap) rate (see definition below) of 5.6% and one land parcel for $12.0 million, all of which we deem to be in our strategic targeted markets;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Acquired an unoccupied completed development project for $166.8 million consisting of 559 units with an expected stabilized yield of 8.5% in the
third year of ownership, which we deem to be in a strategic targeted market;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Acquired the 75% equity interest it did not previously own in seven unconsolidated properties consisting of 1,811 units at an implied cap rate of
8.4% in exchange for an approximate $30.0 million payment to its joint venture partner; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Sold $145.9 million of consolidated apartment properties consisting of eight properties and 2,011 units at a weighted average cap rate of 7.5% and
$42.7 million of unconsolidated apartment properties consisting of three properties and 640 units at a weighted average cap rate of 6.5%, as well as 2 condominium units for $0.4 million, the majority of which was in exit or less desirable markets.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Operating Partnerships primary financial measure for evaluating each of its
apartment communities is net operating income (NOI). NOI represents rental income less property and maintenance expense, real estate tax and insurance expense and property management expense. The Operating Partnership believes that NOI
is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Operating Partnerships apartment communities. The cap rate is
generally the first year NOI yield (net of replacements) on the Operating Partnerships investment.

Properties that the Operating Partnership owned for all of both of the six months ended June 30, 2010 and 2009 (the
Six-Month 2010 Same Store Properties), which represented 117,349 units, and properties that the Operating Partnership owned for all of both of the quarters ended June 30, 2010 and 2009 (the Second Quarter 2010 Same Store
Properties), which represented 117,349 units, impacted the Operating Partnerships results of operations. Both the Six-Month 2010 Same Store Properties and the Second Quarter 2010 Same Store Properties are discussed in the following
paragraphs.



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The Operating Partnerships acquisition, disposition and completed
development activities also impacted overall results of operations for the six months and quarters ended June 30, 2010 and 2009. Dilution, as a result of the Operating Partnerships net asset sales last year, negatively impacts property
net operating income. The impacts of these activities are discussed in greater detail in the following paragraphs.

Comparison of the six months ended June 30, 2010 to the six months ended June 30, 2009

For the six months ended June 30, 2010, the Operating Partnership reported diluted earnings per Unit
of $0.21 compared to $0.64 per Unit in the same period of 2009. The difference is primarily due to lower gains from property sales in 2010 and lower total property net operating income driven by lower same store NOI and dilution from the Operating
Partnerships 2009 transaction activity, partially offset by the positive impact of NOI from 2010 transaction and lease-up activity.

For the six months ended June 30, 2010, income from continuing operations decreased approximately $17.2 million or
70.9% when compared to the six months ended June 30, 2009. The decrease in continuing operations is discussed below.

Revenues from the Six-Month 2010 Same Store Properties decreased $18.8 million primarily as a result of a decrease in
average rental rates charged to residents, partially offset by an increase in occupancy. Expenses from the Six-Month 2010 Same Store Properties increased $5.3 million primarily due to increases in repairs and maintenance expenses (largely due to
greater storm-related costs such as snow removal and roof repairs incurred during the first quarter), higher property management costs and increases in on-site payroll costs. The following tables provide comparative same store results and statistics
for the Six-Month 2010 Same Store Properties:

June YTD 2010 vs. June YTD 2009

Same Store Results/Statistics

$ in thousands (except for Average Rental Rate)  117,349 Same Store Units



|            |  |          |          |            |   |         |  |                       |          |           |   |          |  |       |  |       
|----------- |  | -------- | -------- | ---------- | - | ------- |  | --------------------- | -------- | --------- | - | -------- |  | ----- |  | ------
|            |  | Results  |          | Statistics
|Description |  | Revenues |          | Expenses   |   | NOI     |  | AverageRentalRate (1) |          | Occupancy |   | Turnover
|YTD 2010    |  | $        | 891,910  |            | $ | 345,515 |  | $                     | 546,395  |           | $ | 1,337    |  | 94.9% |  | 26.1% 
|YTD 2009    |  | $        | 910,757  |            | $ | 340,260 |  | $                     | 570,497  |           | $ | 1,383    |  | 93.7% |  | 28.7% 
|            |  |          |          |            |   |         |  |                       |          |           |   |          |  |       |  |       
|Change      |  | $        | (18,847) |            | $ | 5,255   |  | $                     | (24,102) |           | $ | (46)     |  | 1.2%  |  | (2.6%)
|            |  |          |          |            |   |         |  |                       |          |           |   |          |  |       |  |       
|Change      |  |          | (2.1%)   |            |   | 1.5%    |  |                       | (4.2%)   |           |   | (3.3%)   |  |       |  |       



|(1) | Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period.
|--- | ----------------------------------------------------------------------------------------------------------------------

The following table provides comparative same store operating expenses for the Six-Month 2010 Same Store Properties:



33



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##### Table of Contents

June YTD 2010 vs. June YTD 2009

Same Store Operating Expenses

$ in thousands  117,349 Same Store Units



|                              |  |                |         |                |   |         |  |   |           |   |                                        |        |  |       
|----------------------------- |  | -------------- | ------- | -------------- | - | ------- |  | - | --------- | - | -------------------------------------- | ------ |  | ------
|                              |  | ActualYTD 2010 |         | ActualYTD 2009 |   | $Change |  |   | %  Change |   | % of Actual  YTD 2010OperatingExpenses
|Real estate taxes             |  | $              | 92,136  |                | $ | 92,380  |  | $ | (244      | ) |                                        | (0.3%) |  | 26.7% 
|On-site payroll (1)           |  |                | 83,711  |                |   | 82,480  |  |   | 1,231     |   |                                        | 1.5%   |  | 24.2% 
|Utilities (2)                 |  |                | 54,062  |                |   | 53,380  |  |   | 682       |   |                                        | 1.3%   |  | 15.6% 
|Repairs and maintenance (3)   |  |                | 50,856  |                |   | 48,877  |  |   | 1,979     |   |                                        | 4.0%   |  | 14.7% 
|Property management costs (4) |  |                | 35,855  |                |   | 33,698  |  |   | 2,157     |   |                                        | 6.4%   |  | 10.4% 
|Insurance                     |  |                | 11,273  |                |   | 11,268  |  |   | 5         |   |                                        | 0.0%   |  | 3.3%  
|Leasing and advertising       |  |                | 7,421   |                |   | 7,603   |  |   | (182      | ) |                                        | (2.4%) |  | 2.1%  
|Other operating expenses (5)  |  |                | 10,201  |                |   | 10,574  |  |   | (373      | ) |                                        | (3.5%) |  | 3.0%  
|                              |  |                |         |                |   |         |  |   |           |   |                                        |        |  |       
|Same store operating expenses |  | $              | 345,515 |                | $ | 340,260 |  | $ | 5,255     |   |                                        | 1.5%   |  | 100.0%
|                              |  |                |         |                |   |         |  |   |           |   |                                        |        |  |       



| | (1) | On-site payroll  Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance
staff.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Utilities  Represents gross expenses prior to any recoveries under the Resident Utility Billing System (RUBS). Recoveries are
reflected in rental income.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Repairs and maintenance  Includes general maintenance costs, unit turnover costs including interior painting, routine landscaping, security,
exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Property management costs  Includes payroll and related expenses for departments, or portions of departments, that directly support on-site
management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information
technology.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Other operating expenses  Includes administrative costs such as office supplies, telephone and data charges and association and business
licensing fees.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

The following table presents a reconciliation of operating income per the
consolidated statements of operations to NOI for the Six-Month 2010 Same Store Properties:



|                                 |  |                           |         |   |      |   |         |  
|-------------------------------- |  | ------------------------- | ------- | - | ---- | - | ------- | -
|                                 |  | Six Months Ended June 30, |        
|                                 |  | 2010                      |         |   | 2009 |  
|                                 |  | (Amounts in thousands)    |        
|Operating income                 |  | $                         | 240,002 |   |      | $ | 259,189 |  
|Adjustments:                     |  |                           |         |   |      |   |         |  
|Non-same store operating results |  |                           | (39,575 | ) |      |   | (4,073  | )
|Fee and asset management revenue |  |                           | (5,468  | ) |      |   | (5,275  | )
|Fee and asset management expense |  |                           | 3,660   |   |      |   | 3,985   |  
|Depreciation                     |  |                           | 326,965 |   |      |   | 284,952 |  
|General and administrative       |  |                           | 20,811  |   |      |   | 20,595  |  
|Impairment                       |  |                           | -       |   |      |   | 11,124  |  
|                                 |  |                           |         |   |      |   |         |  
|Same store NOI                   |  | $                         | 546,395 |   |      | $ | 570,497 |  
|                                 |  |                           |         |   |      |   |         |  

For properties that the Operating Partnership acquired prior to January 1, 2009 and
expects to continue to own through December 31, 2010, the Operating Partnership anticipates the following same store results for the full year ending December 31, 2010:



|                            |  |                 
|--------------------------- |  | ----------------
|2010 Same Store
Assumptions
|Physical occupancy          |  | 95.0%           
|Revenue change              |  | (0.5%) to 0.0%  
|Expense change              |  | 1.0% to 2.0%    
|NOI change                  |  | (2.0%) to (0.5%)



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##### Table of Contents

The Operating Partnership anticipates consolidated rental acquisitions of
$1.25 billion and consolidated rental dispositions of $850.0 million and a capitalization rate spread of 150 basis points for the full year ending December 31, 2010.

These 2010 assumptions are based on current expectations and are forward-looking.

Non-same store operating results increased approximately $35.5 million and consist primarily of properties acquired in
calendar years 2009 and 2010, as well as operations from the Operating Partnerships completed development properties and corporate housing business. While the operations of the non-same store assets have been negatively impacted during the six
months ended June 30, 2010 similar to the same store assets, the non-same store assets have contributed a greater percentage of total NOI to the Operating Partnerships overall operating results primarily due to increasing occupancy for
properties in lease-up and a longer ownership period in 2010 than 2009. This increase primarily resulted from:



| |  |  | Development and other miscellaneous properties in lease-up of $15.7 million;
| | - |  | ----------------------------------------------------------------------------

| |  |  | Newly stabilized development and other miscellaneous properties of $1.9 million;
| | - |  | --------------------------------------------------------------------------------

| |  |  | Properties acquired in 2009 and 2010 of $20.2 million; and
| | - |  | ----------------------------------------------------------

| |  |  | Partially offset by an allocation of property management costs not included in same store results and operating activities from other miscellaneous
operations, such as the Operating Partnerships corporate housing business.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See also
Note 15 in the Notes to Consolidated Financial Statements for additional discussion regarding the Operating Partnerships segment disclosures.

Fee and asset management revenues, net of fee and asset management expenses, increased approximately $0.5 million or
40.2% primarily due to an increase in revenue earned on management of the Operating Partnerships military housing ventures at Fort Lewis and McChord Air Force Base.

Property management expenses from continuing operations include off-site expenses associated with the self-management of
the Operating Partnerships properties as well as management fees paid to any third party management companies. These expenses increased approximately $3.4 million or 9.1%. This increase is primarily attributable to an increase in
payroll-related costs, legal and professional fees, education/conference expenses and real estate tax consulting fees.

Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased
approximately $42.0 million or 14.7% primarily as a result of additional depreciation expense on properties acquired in 2009 and 2010, development properties placed in service and capital expenditures for all properties owned.

General and administrative expenses from continuing operations, which include corporate operating expenses, increased
approximately $0.2 million or 1.0% primarily due to higher payroll-related costs, partially offset by legal fees. The Operating Partnership anticipates that general and administrative expenses will approximate $40.0 million to $41.0 million for the
year ending December 31, 2010. The above assumption is based on current expectations and is forward-looking.

Impairment from continuing operations decreased approximately $11.1 million due to an impairment charge on land held for
development taken during the six months ended June 30, 2009 that did not reoccur in 2010. See Note 16 in the Notes to Consolidated Financial Statements for further discussion.

Interest and other income from continuing operations decreased approximately $7.5 million or 59.5% primarily as a result
of a decrease in interest earned on cash and cash equivalents and investment securities due to lower interest rates during the six months ended June 30, 2010 and lower overall balances as well as a gain on debt extinguishment recognized during
the six months ended June 30, 2009 that did not reoccur in 2010, partially offset by an increase in insurance/litigation settlement proceeds. The Operating Partnership anticipates that interest and other income will approximate $5.5 million to
$6.5 million for the year ending December 31, 2010. The above assumption is based on current expectations and is forward-looking.

Other expenses from continuing operations increased approximately $5.7 million primarily due to an increase in pursuit
cost write-offs as a result of the Operating Partnerships decision to reduce its development activities in prior periods as well as an increase in property acquisition costs incurred in conjunction with the Operating Partnerships
significantly higher acquisition volume. The Operating Partnership anticipates that other expenses will approximate $10.0 million to $12.0 million for the year ending December 31, 2010. The above assumption is based on current expectations and
is forward looking.



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##### Table of Contents

Interest expense from continuing operations, including amortization of
deferred financing costs, decreased approximately $8.8 million or 3.6% primarily as a result of lower overall debt balances due to the significant debt repurchases in 2009 and lower rates, partially offset by interest expense on the $500.0 million
mortgage pool that closed in June 2009 and lower capitalized interest. During the six months ended June 30, 2010, the Operating Partnership capitalized interest costs of approximately $7.9 million as compared to $21.0 million for the six months
ended June 30, 2009. This capitalization of interest primarily relates to consolidated projects under development. The effective interest cost on all indebtedness for the six months ended June 30, 2010 was 5.14% as compared to 5.38% for
the six months ended June 30, 2009. The Operating Partnership anticipates that interest expense will approximate $477.5 million to $482.5 million for the year ending December 31, 2010. The above assumption is based on current expectations
and is forward-looking.

Income and other tax expense from continuing operations decreased approximately $2.4
million or 99.2% primarily due to a decrease in franchise taxes for Texas and Tennessee as well as a decrease in business taxes for Washington, D.C. The Operating Partnership anticipates that income and other tax expense will approximate $1.0
million for the year ending December 31, 2010. The above assumption is based on current expectations and is forward-looking.

Loss from investments in unconsolidated entities decreased approximately $1.3 million or 58.4% as compared to the six
months ended June 30, 2009 primarily due to the Operating Partnerships $1.8 million share of defeasance costs incurred in conjunction with the extinguishment of cross-collateralized mortgage debt on one of the Operating Partnerships
partially owned unconsolidated joint ventures taken during the six months ended June 30, 2009 that did not reoccur in 2010.

Net gain on sales of unconsolidated entities increased approximately $2.8 million primarily due to the gain on sale and
revaluation of seven previously unconsolidated properties that were acquired from the Operating Partnerships joint venture partner, partially offset by a larger gain on sale for the property sold during the six months ended June 30, 2009
compared to the gain on sale for three properties sold during the six months ended June 30, 2010.

Discontinued operations, net decreased approximately $106.2 million or 63.6% between the periods under comparison. This
decrease is primarily due to lower gains from property sales during the six months ended June 30, 2010 compared to the same period in 2009 and the operations of those properties. In addition, properties sold reflect operations for none of or a
partial period in 2010 in contrast to a full or partial period in 2009. See Note 13 in the Notes to Consolidated Financial Statements for further discussion.

Comparison of the quarter ended June 30, 2010 to the quarter ended June 30, 2009

For the quarter ended June 30, 2010, the Operating Partnership reported diluted earnings per Unit of
$0.02 compared to $0.35 per Unit in the same period of 2009. The difference is primarily due to lower gains from property sales in 2010 and lower total property net operating income driven by lower same store NOI, dilution from the Operating
Partnerships 2009 transaction activity and lower interest and other income, partially offset by the positive impact of NOI from 2010 transaction and lease-up activity.

For the quarter ended June 30, 2010, income from continuing operations decreased approximately $2.9 million or 23.8%
when compared to the quarter ended June 30, 2009. The decrease in continuing operations is discussed below.

Revenues from the Second Quarter 2010 Same Store Properties decreased $5.7 million primarily as a result of a decrease in
average rental rates charged to residents, partially offset by an increase in occupancy. Expenses from the Second Quarter 2010 Same Store Properties increased $2.6 million primarily due to increases in property management costs and on-site payroll
costs, partially offset by lower real estate taxes. The following tables provide comparative same store results and statistics for the Second Quarter 2010 Same Store Properties:



36



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##### Table of Contents

Second Quarter 2010 vs. Second Quarter 2009

Same Store Results/Statistics

$ in thousands (except for Average Rental Rate)  117,349 Same Store Units



|            |  |          |         |   |            |   |         |  |   |                       |   |  |           |       |          |  |       |  |       |  
|----------- |  | -------- | ------- | - | ---------- | - | ------- |  | - | --------------------- | - |  | --------- | ----- | -------- |  | ----- |  | ----- | -
|            |  | Results  |         |   | Statistics |  
|Description |  | Revenues |         |   | Expenses   |   | NOI     |  |   | AverageRentalRate (1) |   |  | Occupancy |       | Turnover | 
|Q2 2010     |  | $        | 448,804 |   |            | $ | 169,010 |  | $ | 279,794               |   |  | $         | 1,342 |          |  | 95.1% |  | 14.3% |  
|Q2 2009     |  | $        | 454,461 |   |            | $ | 166,442 |  | $ | 288,019               |   |  | $         | 1,380 |          |  | 93.6% |  | 15.1% |  
|            |  |          |         |   |            |   |         |  |   |                       |   |  |           |       |          |  |       |  |       |  
|Change      |  | $        | (5,657  | ) |            | $ | 2,568   |  | $ | (8,225                | ) |  | $         | (38   | )        |  | 1.5%  |  | (0.8% | )
|            |  |          |         |   |            |   |         |  |   |                       |   |  |           |       |          |  |       |  |       |  
|Change      |  |          | (1.2%   | ) |            |   | 1.5%    |  |   | (2.9%                 | ) |  |           | (2.8% | )        |  |       |  |       |  



|(1) | Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period.
|--- | ----------------------------------------------------------------------------------------------------------------------

The following table provides comparative same store operating expenses for the Second Quarter 2010 Same Store Properties:

Second Quarter 2010 vs. Second Quarter 2009

Same Store Operating Expenses

$ in thousands  117,349 Same Store Units



|                              |  |               |         |               |   |         |  |   |           |   |                                       |        |  |       
|----------------------------- |  | ------------- | ------- | ------------- | - | ------- |  | - | --------- | - | ------------------------------------- | ------ |  | ------
|                              |  | ActualQ2 2010 |         | ActualQ2 2009 |   | $Change |  |   | %  Change |   | % of Actual  Q2 2010OperatingExpenses
|Real estate taxes             |  | $             | 45,299  |               | $ | 46,190  |  | $ | (891      | ) |                                       | (1.9%) |  | 26.8% 
|On-site payroll (1)           |  |               | 42,021  |               |   | 39,903  |  |   | 2,118     |   |                                       | 5.3%   |  | 24.9% 
|Utilities (2)                 |  |               | 25,092  |               |   | 25,018  |  |   | 74        |   |                                       | 0.3%   |  | 14.8% 
|Repairs and maintenance (3)   |  |               | 24,772  |               |   | 24,432  |  |   | 340       |   |                                       | 1.4%   |  | 14.7% 
|Property management costs (4) |  |               | 18,042  |               |   | 16,815  |  |   | 1,227     |   |                                       | 7.3%   |  | 10.7% 
|Insurance                     |  |               | 5,637   |               |   | 5,634   |  |   | 3         |   |                                       | 0.1%   |  | 3.3%  
|Leasing and advertising       |  |               | 3,619   |               |   | 3,972   |  |   | (353      | ) |                                       | (8.9%) |  | 2.1%  
|Other operating expenses (5)  |  |               | 4,528   |               |   | 4,478   |  |   | 50        |   |                                       | 1.1%   |  | 2.7%  
|                              |  |               |         |               |   |         |  |   |           |   |                                       |        |  |       
|Same store operating expenses |  | $             | 169,010 |               | $ | 166,442 |  | $ | 2,568     |   |                                       | 1.5%   |  | 100.0%
|                              |  |               |         |               |   |         |  |   |           |   |                                       |        |  |       



| | (1) | On-site payroll  Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance
staff.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Utilities  Represents gross expenses prior to any recoveries under the Resident Utility Billing System (RUBS). Recoveries are
reflected in rental income.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | Repairs and maintenance  Includes general maintenance costs, unit turnover costs including interior painting, routine landscaping, security,
exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair costs.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (4) | Property management costs  Includes payroll and related expenses for departments, or portions of departments, that directly support on-site
management. These include such departments as regional and corporate property management, property accounting, human resources, training, marketing and revenue management, procurement, real estate tax, property legal services and information
technology.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (5) | Other operating expenses  Includes administrative costs such as office supplies, telephone and data charges and association and business
licensing fees.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

The following table presents a reconciliation of operating income per the
consolidated statements of operations to NOI for the Second Quarter 2010 Same Store Properties:



37



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##### Table of Contents

|                                 |  |                        |         |   |      |   |         |  
|-------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                 |  | Quarter Ended June 30, |        
|                                 |  | 2010                   |         |   | 2009 |  
|                                 |  | (Amounts in thousands) |        
|Operating income                 |  | $                      | 121,529 |   |      | $ | 126,944 |  
|Adjustments:                     |  |                        |         |   |      |   |         |  
|Non-same store operating results |  |                        | (25,219 | ) |      |   | (3,116  | )
|Fee and asset management revenue |  |                        | (3,046  | ) |      |   | (2,412  | )
|Fee and asset management expense |  |                        | 1,646   |   |      |   | 1,982   |  
|Depreciation                     |  |                        | 174,794 |   |      |   | 143,296 |  
|General and administrative       |  |                        | 10,090  |   |      |   | 10,201  |  
|Impairment                       |  |                        | -       |   |      |   | 11,124  |  
|                                 |  |                        |         |   |      |   |         |  
|Same store NOI                   |  | $                      | 279,794 |   |      | $ | 288,019 |  
|                                 |  |                        |         |   |      |   |         |  

Non-same store operating results increased approximately $22.1 million and consist primarily
of properties acquired in calendar years 2009 and 2010, as well as operations from the Operating Partnerships completed development properties and corporate housing business. While the operations of the non-same store assets have been
negatively impacted during the quarter ended June 30, 2010 similar to the same store assets, the non-same store assets have contributed a greater percentage of total NOI to the Operating Partnerships overall operating results primarily
due to increasing occupancy for properties in lease-up and a longer ownership period in 2010 than 2009. This increase primarily resulted from:



| |  |  | Development and other miscellaneous properties in lease-up of $8.6 million;
| | - |  | ---------------------------------------------------------------------------

| |  |  | Newly stabilized development and other miscellaneous properties of $1.0 million;
| | - |  | --------------------------------------------------------------------------------

| |  |  | Properties acquired in 2009 and 2010 of $12.7 million; and
| | - |  | ----------------------------------------------------------

| |  |  | Partially offset by an allocation of property management costs not included in same store results and operating activities from other miscellaneous
operations, such as the Operating Partnerships corporate housing business.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

See also
Note 15 in the Notes to Consolidated Financial Statements for additional discussion regarding the Operating Partnerships segment disclosures.

Fee and asset management revenues, net of fee and asset management expenses, increased approximately $1.0 million
primarily due to an increase in revenue earned on management of the Operating Partnerships military housing ventures at Fort Lewis and McChord Air Force Base.

Property management expenses from continuing operations include off-site expenses associated with the self-management of
the Operating Partnerships properties as well as management fees paid to any third party management companies. These expenses increased approximately $1.7 million or 9.3%. This increase is primarily attributable to an increase in
payroll-related costs, education/conference expenses and travel expenses.

Depreciation expense from
continuing operations, which includes depreciation on non-real estate assets, increased approximately $31.5 million or 22.0% primarily as a result of additional depreciation expense on properties acquired in 2009 and 2010, development properties
placed in service and capital expenditures for all properties owned.

General and administrative expenses from
continuing operations, which include corporate operating expenses, decreased approximately $0.1 million or 1.1% primarily due to slightly lower payroll-related costs.

Impairment from continuing operations decreased approximately $11.1 million due to an impairment charge on land held for
development taken during the second quarter of 2009 that did not reoccur in 2010. See Note 16 in the Notes to Consolidated Financial Statements for further discussion.

Interest and other income from continuing operations decreased approximately $3.7 million or 56.3% primarily as a result
of a decrease in interest earned on cash and cash equivalents and investment securities due to lower interest rates during the quarter ended June 30, 2010 and lower overall balances, partially offset by an increase in insurance/litigation
settlement proceeds.

Other expenses from continuing operations increased approximately $1.6 million primarily
due to an increase in pursuit cost write-offs as a result of the Operating Partnerships decision to reduce its development activities in prior periods as well as an increase in property acquisition costs incurred in conjunction with the
Operating Partnerships significantly higher acquisition volume.



38



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Interest expense from continuing operations, including amortization of
deferred financing costs, decreased approximately $0.8 million or 0.7% primarily as a result of lower overall debt balances due to the significant debt repurchases in 2009 and lower rates, partially offset by interest expense on the $500.0 million
mortgage pool that closed in June 2009 and lower capitalized interest. During the quarter ended June 30, 2010, the Operating Partnership capitalized interest costs of approximately $3.5 million as compared to $10.4 million for the quarter ended
June 30, 2009. This capitalization of interest primarily relates to consolidated projects under development. The effective interest cost on all indebtedness for the quarter ended June 30, 2010 was 5.06% as compared to 5.35% for the quarter
ended June 30, 2009.

Income and other tax expense from continuing operations decreased approximately
$0.4 million primarily due to a decrease in franchise taxes for Texas and Tennessee.

Loss from investments in
unconsolidated entities decreased approximately $1.6 million or 77.3% as compared to the quarter ended June 30, 2009 primarily due to the Operating Partnerships $1.8 million share of defeasance costs incurred in conjunction with the
extinguishment of cross-collateralized mortgage debt on one of the Operating Partnerships partially owned unconsolidated joint ventures taken during the second quarter of 2009 that did not reoccur in 2010.

Net gain on sales of unconsolidated entities increased approximately $5.1 million due to the gain on sale and revaluation
of seven previously unconsolidated properties that were acquired from the Operating Partnerships joint venture partner.

Discontinued operations, net decreased approximately $92.9 million or 99.3% between the periods under comparison. This
decrease is primarily a result of no consolidated property sales during the quarter ended June 30, 2010 compared to the same period in 2009. In addition, properties sold reflect operations for none of or a partial period in 2010 in contrast to
a full or partial period in 2009. See Note 13 in the Notes to Consolidated Financial Statements for further discussion.

Liquidity and
Capital Resources

As of January 1, 2010, the Operating Partnership had approximately $193.3 million
of cash and cash equivalents, its restricted 1031 exchange proceeds totaled $244.3 million and it had $1.37 billion available under its revolving credit facility (net of $56.7 million which was restricted/dedicated to support letters of credit and
$75.0 million which had been committed by a now bankrupt financial institution and is not available for borrowing). After taking into effect the various transactions discussed in the following paragraphs and the net cash provided by operating
activities, the Operating Partnerships cash and cash equivalents balance at June 30, 2010 was approximately $48.0 million, its restricted 1031 exchange proceeds totaled $13.0 million and the amount available on the Operating
Partnerships revolving credit facility was $1.02 billion (net of $86.1 million which was restricted/dedicated to support letters of credit, net of $320.0 million outstanding and net of the $75.0 million discussed above).

During the six months ended June 30, 2010, the Operating Partnership generated proceeds from various transactions,
which included the following:



| |  |  | Disposed of 11 properties and 2 condominium units, receiving net proceeds of approximately $106.4 million;
| | - |  | ----------------------------------------------------------------------------------------------------------

| |  |  | Obtained $105.0 million in new mortgage financing; and
| | - |  | ------------------------------------------------------

| |  |  | Issued approximately 2.7 million Units and received net proceeds of $83.2 million.
| | - |  | ----------------------------------------------------------------------------------

During the six months ended June 30, 2010, the above proceeds were primarily utilized to:



| |  |  | Acquire eight rental properties and one land parcel for approximately $684.6 million;
| | - |  | -------------------------------------------------------------------------------------

| |  |  | Acquire the 75% equity interest it did not previously own in seven unconsolidated properties consisting of 1,811 units in exchange for an
approximate $26.9 million payment to its joint venture partner (net of $3.1 million in cash acquired);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Invest $66.9 million primarily in development projects;
| | - |  | -------------------------------------------------------

| |  |  | Repurchase 58,130 OP Units, utilizing cash of $1.9 million (see Note 3); and
| | - |  | ----------------------------------------------------------------------------

| |  |  | Repay $408.4 million of mortgage loans.
| | - |  | ---------------------------------------

In September 2009, EQR announced the establishment of an At-The-Market (ATM) share offering program which
would allow EQR to sell up to 17.0 million Common Shares from time to time over the next three years into the existing trading market at current market prices as well as through negotiated transactions. Per the terms of ERPOPs partnership
agreement, EQR contributes the net proceeds from all equity offerings to the capital of the Operating



39



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##### Table of Contents

Partnership in exchange for additional OP Units (on a one-for-one Common Share per OP Unit
basis). EQR may, but shall have no obligation to, sell Common Shares through the ATM share offering program in amounts and at times to be determined by EQR. Actual sales will depend on a variety of factors to be determined by EQR from time to time,
including (among others) market conditions, the trading price of EQRs Common Shares and determinations of the appropriate sources of funding for EQR. During the six months ended June 30, 2010, EQR issued approximately 1.1 million
Common Shares at an average price of $33.87 per share for total consideration of approximately $35.8 million through the ATM program. Cumulative to date, EQR has issued approximately 4.6 million Common Shares at an average price of $35.03 for
total consideration of approximately $159.5 million. EQRs most recent issuance under this program was on January 14, 2010. EQR has 12.4 million Common Shares remaining available for issuance under the ATM program.

Depending on its analysis of market prices, economic conditions and other opportunities for the investment of available
capital, EQR may repurchase its Common Shares pursuant to its existing share repurchase program authorized by the Board of Trustees. EQR repurchased $1.9 million (58,130 shares at an average price per share of $32.46) of its Common Shares during the
six months ended June 30, 2010. Concurrent with these transactions, the Operating Partnership repurchased and retired 58,130 OP Units previously issued to EQR. As of June 30, 2010, EQR had authorization to repurchase an additional $464.6
million of its shares. See Note 3 in the Notes to Consolidated Financial Statements for further discussion.

Depending on its analysis of prevailing market conditions, liquidity requirements, contractual restrictions and other
factors, the Operating Partnership may from time to time seek to repurchase and retire its outstanding debt in open market or privately negotiated transactions.

The Operating Partnerships total debt summary and debt maturity schedules as of June 30, 2010 are as follows:

Debt Summary as of June 30, 2010

(Amounts in thousands)



|                                      |  |             |           |            |        |                          |       |                                  |     
|------------------------------------- |  | ----------- | --------- | ---------- | ------ | ------------------------ | ----- | -------------------------------- | ----
|                                      |  | Amounts (1) |           | % of Total |        | WeightedAverageRates (1) |       | WeightedAverageMaturities(years)
|Secured                               |  | $           | 4,754,601 |            | 49.2%  |                          | 4.86% |                                  | 8.5 
|Unsecured                             |  |             | 4,904,800 |            | 50.8%  |                          | 4.91% |                                  | 4.2 
|                                      |  |             |           |            |        |                          |       |                                  |     
|Total                                 |  | $           | 9,659,401 |            | 100.0% |                          | 4.89% |                                  | 6.3 
|                                      |  |             |           |            |        |                          |       |                                  |     
|                                      |  |             |           |           
|Fixed Rate Debt:                      |  |             |           |            |        |                          |       |                                  |     
|Secured  Conventional                |  | $           | 3,796,247 |            | 39.3%  |                          | 5.77% |                                  | 7.1 
|Unsecured  Public/Private            |  |             | 3,775,953 |            | 39.1%  |                          | 5.84% |                                  | 4.9 
|                                      |  |             |           |            |        |                          |       |                                  |     
|Fixed Rate Debt                       |  |             | 7,572,200 |            | 78.4%  |                          | 5.80% |                                  | 6.0 
|                                      |  |             |           |            |        |                          |       |                                  |     
|                                      |  |             |           |           
|Floating Rate Debt:                   |  |             |           |            |        |                          |       |                                  |     
|Secured  Conventional                |  |             | 352,712   |            | 3.6%   |                          | 2.44% |                                  | 3.5 
|Secured  Tax Exempt                  |  |             | 605,642   |            | 6.3%   |                          | 0.55% |                                  | 20.9
|Unsecured  Public/Private            |  |             | 808,847   |            | 8.4%   |                          | 1.70% |                                  | 1.8 
|Unsecured  Revolving Credit Facility |  |             | 320,000   |            | 3.3%   |                          | 0.66% |                                  | 1.7 
|                                      |  |             |           |            |        |                          |       |                                  |     
|Floating Rate Debt                    |  |             | 2,087,201 |            | 21.6%  |                          | 1.36% |                                  | 7.3 
|                                      |  |             |           |            |        |                          |       |                                  |     
|Total                                 |  | $           | 9,659,401 |            | 100.0% |                          | 4.89% |                                  | 6.3 
|                                      |  |             |           |            |        |                          |       |                                  |     



| | (1) | Net of the effect of any derivative instruments. Weighted average rates are for the six months ended June 30, 2010.
| | --- | -------------------------------------------------------------------------------------------------------------------

Note: The Operating Partnership capitalized interest of approximately $7.9 million and $21.0 million during
the six months ended June 30, 2010 and 2009, respectively. The Operating Partnership capitalized interest of approximately $3.5 million and $10.4 million during the quarters ended June 30, 2010 and June 30, 2009, respectively.



40



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##### Table of Contents

Debt Maturity Schedule as of June 30, 2010

(Amounts in thousands)



|      |  |               |           |     |                  |   |           |       |  |            |           |                                             |        |                                        |       |  |      
|----- |  | ------------- | --------- | --- | ---------------- | - | --------- | ----- |  | ---------- | --------- | ------------------------------------------- | ------ | -------------------------------------- | ----- |  | -----
|Year  |  | FixedRate (1) |           |     | FloatingRate (1) |   |           | Total |  | % of Total |           | Weighted AverageRates on FixedRate Debt (1) |        | Weighted AverageRates onTotal Debt (1)
|2010  |  | $             | 27,197    |     |                  | $ | 51,797    |       |  | $          | 78,994    |                                             | 0.8%   |                                        | 7.61% |  | 4.00%
|2011  |  |               | 1,066,609 | (2) |                  |   | 740,906   | (3)   |  |            | 1,807,515 |                                             | 18.7%  |                                        | 5.51% |  | 3.87%
|2012  |  |               | 763,301   |     |                  |   | 323,834   | (4)   |  |            | 1,087,135 |                                             | 11.3%  |                                        | 5.70% |  | 4.23%
|2013  |  |               | 266,597   |     |                  |   | 309,351   |       |  |            | 575,948   |                                             | 6.0%   |                                        | 6.76% |  | 4.90%
|2014  |  |               | 517,687   |     |                  |   | 22,045    |       |  |            | 539,732   |                                             | 5.6%   |                                        | 5.28% |  | 5.20%
|2015  |  |               | 355,940   |     |                  |   | -         |       |  |            | 355,940   |                                             | 3.7%   |                                        | 6.41% |  | 6.41%
|2016  |  |               | 1,089,484 |     |                  |   | -         |       |  |            | 1,089,484 |                                             | 11.3%  |                                        | 5.32% |  | 5.32%
|2017  |  |               | 1,355,744 |     |                  |   | 456       |       |  |            | 1,356,200 |                                             | 14.0%  |                                        | 5.87% |  | 5.87%
|2018  |  |               | 336,093   |     |                  |   | 44,677    |       |  |            | 380,770   |                                             | 3.9%   |                                        | 5.95% |  | 5.45%
|2019  |  |               | 502,244   |     |                  |   | 20,766    |       |  |            | 523,010   |                                             | 5.4%   |                                        | 5.19% |  | 5.01%
|2020+ |  |               | 1,291,304 |     |                  |   | 573,369   |       |  |            | 1,864,673 |                                             | 19.3%  |                                        | 6.11% |  | 4.88%
|      |  |               |           |     |                  |   |           |       |  |            |           |                                             |        |                                        |       |  |      
|Total |  | $             | 7,572,200 |     |                  | $ | 2,087,201 |       |  | $          | 9,659,401 |                                             | 100.0% |                                        | 5.86% |  | 4.90%
|      |  |               |           |     |                  |   |           |       |  |            |           |                                             |        |                                        |       |  |      



|(1) | Net of the effect of any derivative instruments. Weighted average rates are as of June 30, 2010.
|--- | ------------------------------------------------------------------------------------------------

|(2) | Includes $482.5 million face value of 3.85% convertible unsecured debt with a final maturity of 2026. The notes are callable by the Operating
Partnership on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes the Operating Partnerships $500.0 million term loan facility, which originally matured on October 5, 2010. Effective
April 12, 2010, the Operating Partnership exercised the first of its two one-year extension options. As a result, the maturity date is now October 5, 2011 and there is one remaining one-year extension option exercisable by the Operating
Partnership.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes $320.0 million outstanding on the Operating Partnerships unsecured revolving credit facility. As of June 30, 2010, there was
approximately $1.02 billion available on this facility.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following table provides a
summary of the Operating Partnerships unsecured debt as of June 30, 2010:



41



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##### Table of Contents

Unsecured Debt Summary as of June 30, 2010

(Amounts in thousands)



|                                  |  |             |  |          |        |  |            |           |   |                               |   |         |            |  |   |           |  
|--------------------------------- |  | ----------- |  | -------- | ------ |  | ---------- | --------- | - | ----------------------------- | - | ------- | ---------- |  | - | --------- | -
|                                  |  | CouponRate  |  | DueDate  |        |  | FaceAmount |           |   | UnamortizedPremium/(Discount) |   |         | NetBalance | 
|Fixed Rate Notes:                 |  |             |  |          |        |  |            |           |   |                               |   |         |            |  |   |           |  
|                                  |  | 6.950%      |  | 03/02/11 |        |  | $          | 93,096    |   |                               | $ | 602     |            |  | $ | 93,698    |  
|                                  |  | 6.625%      |  | 03/15/12 |        |  |            | 253,858   |   |                               |   | (321    | )          |  |   | 253,537   |  
|                                  |  | 5.500%      |  | 10/01/12 |        |  |            | 222,133   |   |                               |   | (493    | )          |  |   | 221,640   |  
|                                  |  | 5.200%      |  | 04/01/13 | (1)    |  |            | 400,000   |   |                               |   | (325    | )          |  |   | 399,675   |  
|Fair Value Derivative Adjustments |  |             |  |          | (1)    |  |            | (300,000  | ) |                               |   | -       |            |  |   | (300,000  | )
|                                  |  | 5.250%      |  | 09/15/14 |        |  |            | 500,000   |   |                               |   | (259    | )          |  |   | 499,741   |  
|                                  |  | 6.584%      |  | 04/13/15 |        |  |            | 300,000   |   |                               |   | (535    | )          |  |   | 299,465   |  
|                                  |  | 5.125%      |  | 03/15/16 |        |  |            | 500,000   |   |                               |   | (305    | )          |  |   | 499,695   |  
|                                  |  | 5.375%      |  | 08/01/16 |        |  |            | 400,000   |   |                               |   | (1,129  | )          |  |   | 398,871   |  
|                                  |  | 5.750%      |  | 06/15/17 |        |  |            | 650,000   |   |                               |   | (3,560  | )          |  |   | 646,440   |  
|                                  |  | 7.125%      |  | 10/15/17 |        |  |            | 150,000   |   |                               |   | (473    | )          |  |   | 149,527   |  
|                                  |  | 7.570%      |  | 08/15/26 |        |  |            | 140,000   |   |                               |   | -       |            |  |   | 140,000   |  
|                                  |  | 3.850%      |  | 08/15/26 | (2)    |  |            | 482,545   |   |                               |   | (8,881  | )          |  |   | 473,664   |  
|                                  |  |             |  |          |        |  |            |           |   |                               |   |         |            |  |   |           |  
|                                  |  |             |  |          |        |  |            | 3,791,632 |   |                               |   | (15,679 | )          |  |   | 3,775,953 |  
|                                  |  |             |  |          |        |  |            |           |   |                               |   |         |            |  |   |           |  
|                                  |  |             |  |          |       
|Floating Rate Notes:              |  |             |  |          |        |  |            |           |   |                               |   |         |            |  |   |           |  
|                                  |  |             |  | 04/01/13 | (1)    |  |            | 300,000   |   |                               |   | -       |            |  |   | 300,000   |  
|Fair Value Derivative Adjustments |  |             |  |          | (1)    |  |            | 8,847     |   |                               |   | -       |            |  |   | 8,847     |  
|Term Loan Facility                |  | LIBOR+0.50% |  | 10/05/11 | (3)(4) |  |            | 500,000   |   |                               |   | -       |            |  |   | 500,000   |  
|                                  |  |             |  |          |        |  |            |           |   |                               |   |         |            |  |   |           |  
|                                  |  |             |  |          |        |  |            | 808,847   |   |                               |   | -       |            |  |   | 808,847   |  
|                                  |  |             |  |          |       
|Revolving Credit Facility:        |  | LIBOR+0.50% |  | 02/28/12 | (3)(5) |  |            | 320,000   |   |                               |   | -       |            |  |   | 320,000   |  
|                                  |  |             |  |          |        |  |            |           |   |                               |   |         |            |  |   |           |  
|                                  |  |             |  |          |       
|Total Unsecured Debt              |  |             |  |          |        |  | $          | 4,920,479 |   |                               | $ | (15,679 | )          |  | $ | 4,904,800 |  
|                                  |  |             |  |          |        |  |            |           |   |                               |   |         |            |  |   |           |  



|(1) | $300.0 million in fair value interest rate swaps converts a portion of the 5.200% notes due April 1, 2013 to a floating interest rate.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

|(2) | Convertible notes mature on August 15, 2026. The notes are callable by the Operating Partnership on or after August 18, 2011. The notes
are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Facilities are private. All other unsecured debt is public.
|--- | -----------------------------------------------------------

|(4) | Represents the Operating Partnerships $500.0 million term loan facility, which originally matured on October 5, 2010. Effective
April 12, 2010, the Operating Partnership exercised the first of its two one-year extension options. As a result, the maturity date is now October 5, 2011 and there is one remaining one-year extension option exercisable by the Operating
Partnership.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Represents amount outstanding on the Operating Partnerships unsecured revolving credit facility which matures on February 28, 2012. As of
June 30, 2010, there was approximately $1.02 billion available on this facility.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

An
unlimited amount of debt securities remains available for issuance by the Operating Partnership under a registration statement that became automatically effective upon filing with the SEC in December 2008 (under SEC regulations enacted in 2005, the
registration statement automatically expires on December 21, 2011 and does not contain a maximum issuance amount). An unlimited amount of equity securities remains available for issuance by EQR under a registration statement the SEC declared
effective in December 2008 (under SEC regulations enacted in 2005, the registration statement automatically expires on December 15, 2011 and does not contain a maximum issuance amount).

The Operating Partnerships Consolidated Debt-to-Total Market Capitalization Ratio as of June 30,
2010 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 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 units; and (iii) the liquidation value of all perpetual preference units outstanding.



42



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##### Table of Contents

Capital Structure as of June 30, 2010

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



|                                        |  |   |             |  |   |            |  |        |  |       |  
|--------------------------------------- |  | - | ----------- |  | - | ---------- |  | ------ |  | ----- | -
|Secured Debt                            |  |   |             |  | $ | 4,754,601  |  | 49.2%  |  |       |  
|Unsecured Debt                          |  |   |             |  |   | 4,904,800  |  | 50.8%  |  |       |  
|                                        |  |   |             |  |   |            |  |        |  |       |  
|Total Debt                              |  |   |             |  |   | 9,659,401  |  | 100.0% |  | 43.4  | %
|Units                                   |  |   | 297,341,977 |  |   |            |  |        |  |       |  
|OP Unit Equivalents (see below)         |  |   | 394,143     |  |   |            |  |        |  |       |  
|                                        |  |   |             |  |   |            |  |        |  |       |  
|Total outstanding at quarter-end        |  |   | 297,736,120 |  |   |            |  |        |  |       |  
|EQR Common Share Price at June 30, 2010 |  | $ | 41.64       |  |   |            |  |        |  |       |  
|                                        |  |   |             |  |   |            |  |        |  |       |  
|                                        |  |   |             |  |   | 12,397,732 |  | 98.4%  |  |       |  
|Perpetual Preference Units (see below)  |  |   |             |  |   | 200,000    |  | 1.6%   |  |       |  
|                                        |  |   |             |  |   |            |  |        |  |       |  
|Total Equity                            |  |   |             |  |   | 12,597,732 |  | 100.0% |  | 56.6  | %
|                                        |  |   |             | 
|Total Market Capitalization             |  |   |             |  | $ | 22,257,133 |  |        |  | 100.0 | %

Convertible Preference Units as of June 30, 2010

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



|                                   |  |                |  |                  |         |                  |   |                        |  |                      |      |                     |   |     |                 |      |                    |  |        |  |        
|---------------------------------- |  | -------------- |  | ---------------- | ------- | ---------------- | - | ---------------------- |  | -------------------- | ---- | ------------------- | - | --- | --------------- | ---- | ------------------ |  | ------ |  | -------
|Series                             |  | RedemptionDate |  | OutstandingUnits |         | LiquidationValue |   | AnnualDividendPer Unit |  | AnnualDividendAmount |      | WeightedAverageRate |   |     | ConversionRatio |      | OP UnitEquivalents
|Preference Units:                  |  |                |  |                  |         |                  |   |                        |  |                      |      |                     |   |     |                 |      |                    |  |        |  |        
|7.00% Series E                     |  | 11/1/98        |  |                  | 324,966 |                  | $ | 8,124                  |  | $                    | 1.75 |                     | $ | 569 |                 |      |                    |  | 1.1128 |  | 361,622
|7.00% Series H                     |  | 6/30/98        |  |                  | 22,459  |                  |   | 562                    |  |                      | 1.75 |                     |   | 39  |                 |      |                    |  | 1.4480 |  | 32,521 
|                                   |  |                |  |                  |         |                  |   |                        |  |                      |      |                     |   |     |                 |      |                    |  |        |  |        
|Total Convertible Preference Units |  | 347,425        |  | $                | 8,686   |                  |   |                        |  |                      |      |                     | $ | 608 |                 | 7.00 | %                  |  |        |  | 394,143

Perpetual
Preference Units as of June 30, 2010

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



|                                 |  |                |  |                  |  |                  |         |                        |   |                      |  |                     |        |  |      |  
|-------------------------------- |  | -------------- |  | ---------------- |  | ---------------- | ------- | ---------------------- | - | -------------------- |  | ------------------- | ------ |  | ---- | -
|Series                           |  | RedemptionDate |  | OutstandingUnits |  | LiquidationValue |         | AnnualDividendPer Unit |   | AnnualDividendAmount |  | WeightedAverageRate |       
|Preference Units:                |  |                |  |                  |  |                  |         |                        |   |                      |  |                     |        |  |      |  
|8.29% Series K                   |  | 12/10/26       |  | 1,000,000        |  | $                | 50,000  |                        | $ | 4.145                |  | $                   | 4,145  |  |      |  
|6.48% Series N                   |  | 6/19/08        |  | 600,000          |  |                  | 150,000 |                        |   | 16.20                |  |                     | 9,720  |  |      |  
|                                 |  |                |  |                  |  |                  |         |                        |   |                      |  |                     |        |  |      |  
|Total Perpetual Preference Units |  |                |  | 1,600,000        |  | $                | 200,000 |                        |   |                      |  | $                   | 13,865 |  | 6.93 | %

The Operating Partnership generally 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, through its working capital, net cash provided by operating activities and borrowings under its revolving credit facility. Under normal
operating conditions, the Operating Partnership considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions. However, there may be times when the Operating Partnership experiences
shortfalls in its coverage of distributions, which may cause the Operating Partnership to consider reducing its distributions and/or using the proceeds from property dispositions or additional financing transactions to make up the difference. Should
these shortfalls occur for lengthy periods of time or be material in nature, the Operating Partnerships financial condition may be adversely affected and it may not be able to maintain its current distribution levels. The Operating Partnership
reduced its quarterly OP Unit dividend beginning with the dividend for the third quarter of 2009, from $0.4825 per Unit (an annual rate of $1.93 per Unit) to $0.3375 per Unit (an annual rate of $1.35 per Unit). The Operating Partnership believes
that its expected 2010 operating cash flow is sufficient to cover budgeted capital expenditures and distributions at the current rate.

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 secured and unsecured debt and equity securities, including additional OP Units, and proceeds
received from the disposition of certain properties as well as joint ventures. In addition, the



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Operating Partnership has significant unencumbered properties available to secure additional mortgage borrowings in the event that the public capital markets are unavailable or the cost of
alternative sources of capital is too high. The fair value of and cash flow from these unencumbered properties are in excess of the requirements the Operating Partnership must maintain in order to comply with covenants under its unsecured notes and
line of credit. Of the $19.4 billion in investment in real estate on the Operating Partnerships balance sheet at June 30, 2010, $12.1 billion or 62.6% was unencumbered. However, there can be no assurances that these sources of capital
will be available to the Operating Partnership in the future on acceptable terms or otherwise.

The Operating
Partnerships credit ratings from Standard & Poors (S&P), Moodys and Fitch for its outstanding senior debt are BBB+, Baa1 and A-, respectively. EQRs equity ratings from S&P, Moodys and Fitch for
its outstanding preferred equity are BBB+, Baa2 and BBB, respectively. During the third quarter of 2009, Moodys and Fitch placed both EQR and the Operating Partnership on negative outlook.

The Operating Partnership has a $1.425 billion (net of $75.0 million which had been committed by a now bankrupt financial
institution and is not available for borrowing) long-term revolving credit facility with available borrowings as of July 29, 2010 of $1.34 billion (net of $86.1 million which was restricted/dedicated to support letters of credit and net of the
$75.0 million discussed above) that matures in February 2012 (see Note 10 in the Notes to Consolidated Financial Statements for further discussion). This facility may, among other potential uses, be used to fund property acquisitions, costs for
certain properties under development and short-term liquidity requirements.

On July 16, 2010, the Operating
Partnership experienced the collapse of a portion of the parking garage at one of its rental properties (Prospect Towers in Hackensack, New Jersey) and estimates that the costs (both expensed and capitalized), including providing for residents
interim needs, lost revenue and garage reconstruction, will be approximately $12.0 million, after insurance reimbursements of $8.0 million. Costs to rebuild the garage will be capitalized as incurred. Other costs, like those to accommodate displaced
residents, lost revenues due to the high-rise portion of the project being temporarily unavailable for occupancy and legal costs, will reduce earnings as they are incurred. Generally, insurance proceeds will be recorded as increases to earnings as
they are received, most likely in 2011 or beyond.

See Note 16 in the Notes to Consolidated Financial
Statements for discussion of other events which occurred subsequent to June 30, 2010.

Capitalization of Fixed Assets and Improvements to Real Estate

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:



| |  |  | Replacements(inside the unit). These include:
| | - |  | ---------------------------------------------

| |  |  | flooring such as carpets, hardwood, vinyl, linoleum or tile;
| | - |  | ------------------------------------------------------------

| |  |  | appliances;
| | - |  | -----------

| |  |  | mechanical equipment such as individual furnace/air units, hot water heaters, etc;
| | - |  | ----------------------------------------------------------------------------------

| |  |  | furniture and fixtures such as kitchen/bath cabinets, light fixtures, ceiling fans, sinks, tubs, toilets, mirrors, countertops, etc; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------

| |  |  | blinds/shades.
| | - |  | --------------

All replacements are depreciated over a five-year estimated useful life. We expense as incurred all make-ready
maintenance and turnover costs such as cleaning, interior painting of individual units and the repair of any replacement item noted above.



| |  |  | Building improvements (outside the unit). These include:
| | - |  | --------------------------------------------------------

| |  |  | roof replacement and major repairs;
| | - |  | -----------------------------------

| |  |  | paving or major resurfacing of parking lots, curbs and sidewalks;
| | - |  | -----------------------------------------------------------------

| |  |  | amenities and common areas such as pools, exterior sports and playground equipment, lobbies, clubhouses, laundry rooms, alarm and security systems
and offices;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | major building mechanical equipment systems;
| | - |  | --------------------------------------------

| |  |  | interior and exterior structural repair and exterior painting and siding;
| | - |  | -------------------------------------------------------------------------

| |  |  | major landscaping and grounds improvement; and
| | - |  | ----------------------------------------------

| |  |  | vehicles and office and maintenance equipment.
| | - |  | ----------------------------------------------

All building improvements are depreciated over a five to ten-year estimated useful life. We capitalize building
improvements and upgrades only if the item: (i) exceeds $2,500 (selected projects must exceed $10,000); (ii) extends the useful life of the asset; and (iii) improves the value of the asset.

For the six months ended June 30, 2010, our actual improvements to real estate totaled approximately $59.2 million.
This includes the following (amounts in thousands except for unit and per unit amounts):



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Capital Expenditures to Real Estate

For the Six Months Ended June 30, 2010



|                              |  |                |  |                  |        |              |   |                      |  |              |        |       |   |              |  |   |        |  |   |    
|----------------------------- |  | -------------- |  | ---------------- | ------ | ------------ | - | -------------------- |  | ------------ | ------ | ----- | - | ------------ |  | - | ------ |  | - | ---
|                              |  | TotalUnits (1) |  | Replacements (2) |        | Avg.Per Unit |   | BuildingImprovements |  | Avg.Per Unit |        | Total |   | Avg.Per Unit
|Same Store Properties (3)     |  | 117,349        |  | $                | 33,724 |              | $ | 287                  |  | $            | 21,683 |       | $ | 185          |  | $ | 55,407 |  | $ | 472
|Non-Same Store Properties (4) |  | 9,470          |  |                  | 1,182  |              |   | 165                  |  |              | 2,403  |       |   | 336          |  |   | 3,585  |  |   | 501
|Other (5)                     |  | -              |  |                  | 137    |              |   |                      |  |              | 53     |       |   |              |  |   | 190    |  |   |    
|                              |  |                |  |                  |        |              |   |                      |  |              |        |       |   |              |  |   |        |  |   |    
|Total                         |  | 126,819        |  | $                | 35,043 |              |   |                      |  | $            | 24,139 |       |   |              |  | $ | 59,182 |  |   |    
|                              |  |                |  |                  |        |              |   |                      |  |              |        |       |   |              |  |   |        |  |   |    



|(1) | Total Units  Excludes 5,635 unconsolidated units and 4,637 military housing units, for which repairs and maintenance expenses and capital
expenditures to real estate are self-funded and do not consolidate into the Operating Partnerships results.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Replacements  Includes new expenditures inside the units such as appliances, mechanical equipment, fixtures and flooring, including carpeting.
Replacements for same store properties also include $13.7 million spent on various assets related to unit renovations/rehabs (primarily kitchens and baths) designed to reposition these assets for higher rental levels in their respective markets.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Same Store Properties  Primarily includes all properties acquired or completed and stabilized prior to January 1, 2009, less properties
subsequently sold.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Non-Same Store Properties  Primarily includes all properties acquired during 2009 and 2010, plus any properties in lease-up and not stabilized
as of January 1, 2009. Per unit amounts are based on a weighted average of 7,153 units.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Other  Primarily includes expenditures for properties sold during the period.
|--- | ------------------------------------------------------------------------------

For 2010, the Operating Partnership estimates that it will spend approximately $1,075 per unit of capital expenditures
for its same store properties inclusive of unit renovation/rehab costs, or $825 per unit excluding unit renovation/rehab costs. The above assumptions are based on current expectations and are forward-looking.

During the six months ended June 30, 2010, 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, were approximately $0.6 million. The Operating
Partnership expects to fund approximately $1.0 million in total additions to non-real estate property for the remainder of 2010. The above assumption is based on current expectations and is forward-looking.

Improvements to real estate and additions to non-real estate property are generally funded from net cash provided by
operating activities and from investment cash flow.

Derivative Instruments

In the normal course of business, the Operating Partnership is exposed to the effect of interest rate
changes. The Operating Partnership seeks to limit these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments.

The Operating Partnership has a policy of only entering into contracts with major financial institutions based upon their
credit ratings and other factors. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Operating Partnership has not sustained a material loss from these instruments nor does it
anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives it currently has in place.

See Note 11 in the Notes to Consolidated Financial Statements for additional discussion of derivative instruments at
June 30, 2010.

Other

Total distributions paid in July 2010 amounted to $102.9 million (excluding distributions on Partially Owned Properties),
which included certain distributions declared during the second quarter ended June 30, 2010.

Off-Balance Sheet Arrangements and
Contractual Obligations

The Operating Partnership has co-invested in various properties that are
unconsolidated and accounted for under the equity method of accounting. Management does not believe these investments have a materially different



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impact upon the Operating Partnerships liquidity, cash flows, capital resources, credit or market risk than its other property management and ownership activities. During 2000 and 2001, the
Operating Partnership entered into institutional ventures with an unaffiliated partner. At the respective closing dates, the Operating Partnership sold and/or contributed 45 properties containing 10,846 units to these ventures and retained a 25%
ownership interest in the ventures. The Operating Partnerships joint venture partner contributed cash equal to 75% of the agreed-upon equity value of the properties comprising the ventures, which was then distributed to the Operating
Partnership. The Operating Partnerships strategy with respect to these ventures was to reduce its concentration of properties in a variety of markets. The Operating Partnership sold seven properties consisting of 1,684 units (including one
property containing 250 units which was acquired by the Operating Partnership) and three properties consisting of 670 units during the years ended December 31, 2009 and 2008, respectively. In addition, the Operating Partnership sold three
properties consisting of 640 units and acquired its partners interest in seven properties consisting of 1,811 units during the six months ended June 30, 2010. The Operating Partnership and its joint venture partner currently intend to
wind up these investments over the next few years by buying or selling the related assets, which may involve refinancing the assets as a majority of the debt encumbering them matures in 2010 and early 2011. See Note 6 for a description of debt
maturities.

As of June 30, 2010, the Operating Partnership has five projects totaling 1,499 units in
various stages of development with estimated completion dates ranging through September 30, 2012. The development agreements currently in place are discussed in detail in Note 14 of the Operating Partnerships Consolidated Financial
Statements.

See also Notes 2 and 6 in the Notes to Consolidated Financial Statements for additional
discussion regarding the Operating Partnerships investments in partially owned entities.

The Operating
Partnerships contractual obligations for the next five years and thereafter have not changed materially from the amounts and disclosures included in its annual report on Form 10-K, other than as it relates to scheduled debt maturities. See the
updated debt maturity schedule included in Liquidity and Capital Resources for further discussion.

Critical Accounting Policies and
Estimates

The preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to use judgment in the application of accounting policies, including making estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to various
transactions had been different or different assumptions were made, it is possible that different accounting policies would have been applied, resulting in different financial results or different presentation of our financial statements.

The Operating Partnership has identified five significant accounting policies as critical accounting
policies. These critical accounting policies are those that have the most impact on the reporting of our financial condition and those requiring significant judgments and estimates. With respect to these critical accounting policies, management
believes that the application of judgments and estimates is consistently applied and produces financial information that fairly presents the results of operations for all periods presented. The five critical accounting policies are:

Acquisition of Investment Properties

The Operating Partnership allocates the purchase price of properties to net tangible and identified intangible assets
acquired based on their fair values. In making estimates of fair values for purposes of allocating purchase price, the Operating Partnership utilizes a number of sources, including independent appraisals that may be obtained in connection with the
acquisition or financing of the respective property, our own analysis of recently acquired and existing comparable properties in our portfolio and other market data. The Operating Partnership also considers information obtained about each property
as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets acquired.

Impairment of Long-Lived Assets

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



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Depreciation of Investment in Real Estate

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.

Cost Capitalization

See the Capitalization of Fixed Assets and Improvements to Real Estate section for a discussion of the Operating
Partnerships policy with respect to capitalization vs. expensing of fixed asset/repair and maintenance costs. In addition, the Operating Partnership capitalizes the payroll and associated costs of employees directly responsible for and who
spend all of their time on the supervision of major capital and/or renovation projects. These costs are reflected on the balance sheet as an increase to depreciable property.

For all development projects, the Operating Partnership uses its professional judgment in determining whether such costs
meet the criteria for capitalization or must be expensed as incurred. The Operating Partnership capitalizes interest, real estate taxes and insurance and payroll and associated costs for those individuals directly responsible for and who spend all
of their time on development activities, with capitalization ceasing no later than 90 days following issuance of the certificate of occupancy. These costs are reflected on the balance sheet as construction-in-progress for each specific property. The
Operating Partnership expenses as incurred all payroll costs of on-site employees working directly at our properties, except as noted above on our development properties prior to certificate of occupancy issuance and on specific major renovations at
selected properties when additional incremental employees are hired.

Fair Value of Financial Instruments,
Including Derivative Instruments

The valuation of financial instruments 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 current instruments with similar terms and maturities or on other factors relevant to the financial instruments.

Funds From Operations

For the six months ended June 30, 2010, Funds From Operations (FFO) available to Units decreased by
$14.2 million or 4.2% as compared to the six months ended June 30, 2009.

For the quarter ended
June 30, 2010, FFO available to Units increased by $6.4 million or 3.8% as compared to the quarter ended June 30, 2009.

The following is a reconciliation of net income to FFO available to Units for the six months and quarters ended
June 30, 2010 and 2009:



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##### Table of Contents

Funds From Operations

(Amounts in thousands)

(Unaudited)



|                                                             |  |                           |         |   |                        |   |          |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------ |  | ------------------------- | ------- | - | ---------------------- | - | -------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                             |  | Six Months Ended June 30, |         |   | Quarter Ended June 30, |  
|                                                             |  | 2010                      |         |   | 2009                   |   |          | 2010 |  |   | 2009    |  
|Net income                                                   |  | $                         | 67,945  |   |                        | $ | 191,353  |      |  | $ | 10,089  |   |  | $ | 105,932 |  
|Adjustments:                                                 |  |                           |         |   |                        |   |          |      |  |   |         |   |  |   |         |  
|Net loss attributable to Noncontrolling Interests           |  |                           |         |   |                        |   |          |      |  |   |         |   |  |   |         |  
|Partially Owned Properties                                   |  |                           | 435     |   |                        |   | 74       |      |  |   | 185     |   |  |   | 5       |  
|Depreciation                                                 |  |                           | 326,965 |   |                        |   | 284,952  |      |  |   | 174,794 |   |  |   | 143,296 |  
|Depreciation  Non-real estate additions                     |  |                           | (3,369  | ) |                        |   | (3,792   | )    |  |   | (1,676  | ) |  |   | (1,894  | )
|Depreciation  Partially Owned and Unconsolidated Properties |  |                           | 7       |   |                        |   | 431      |      |  |   | (4      | ) |  |   | 248     |  
|Net (gain) loss on sales of unconsolidated entities          |  |                           | (5,557  | ) |                        |   | (2,759   | )    |  |   | (5,079  | ) |  |   | 6       |  
|Discontinued operations:                                     |  |                           |         |   |                        |   |          |      |  |   |         |   |  |   |         |  
|Depreciation                                                 |  |                           | 711     |   |                        |   | 16,883   |      |  |   | 148     |   |  |   | 8,051   |  
|Net (gain) on sales of discontinued operations               |  |                           | (60,253 | ) |                        |   | (145,798 | )    |  |   | (217    | ) |  |   | (83,927 | )
|Net incremental gain on sales of condominium units           |  |                           | 631     |   |                        |   | 335      |      |  |   | 243     |   |  |   | 399     |  
|                                                             |  |                           |         |   |                        |   |          |      |  |   |         |   |  |   |         |  
|                                                             |  |                           |         |  
|FFO (1) (2)                                                  |  |                           | 327,515 |   |                        |   | 341,679  |      |  |   | 178,483 |   |  |   | 172,116 |  
|Preferred distributions                                      |  |                           | (7,238  | ) |                        |   | (7,247   | )    |  |   | (3,618  | ) |  |   | (3,623  | )
|                                                             |  |                           |         |   |                        |   |          |      |  |   |         |   |  |   |         |  
|                                                             |  |                           |         |  
|FFO available to Units (1) (2)                               |  | $                         | 320,277 |   |                        | $ | 334,432  |      |  | $ | 174,865 |   |  | $ | 168,493 |  
|                                                             |  |                           |         |   |                        |   |          |      |  |   |         |   |  |   |         |  



|(1) | The National Association of Real Estate Investment Trusts (NAREIT) defines funds from operations (FFO) (April 2002 White
Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (GAAP)), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss
on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Operating Partnership commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO
available to Units is calculated on a basis consistent with net income available to Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preference units/interests in accordance with accounting
principles generally accepted in the United States.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The Operating Partnership believes that FFO and FFO available to Units are helpful to investors as supplemental measures of the operating
performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can
vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Units can help compare the operating performance of a companys real estate between periods or
as compared to different companies. FFO and FFO available to Units do not represent net income, net income available to Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO and FFO available to Units should not
be exclusively considered as alternatives to net income, net income available to Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Operating Partnerships calculation of FFO and FFO
available to Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

The Operating Partnerships market risk has not changed materially from the amounts and information reported in Part
II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, to the Operating Partnerships Annual Report on Form 10-K for the year ended December 31, 2009. See the Current Environment section of Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations relating to market risk and the current economic environment. See also Note 11 in the Notes to Consolidated Financial Statements for additional
discussion of derivative and other fair value instruments.



|Item 4. | Controls and Procedures
|------- | -----------------------

(a) Evaluation of Disclosure Controls and Procedures:

Effective as of June 30, 2010, the Operating Partnership carried out an evaluation, under the supervision and with
the participation of the Operating Partnerships management, including the Chief Executive Officer and Chief Financial Officer of EQR, of the effectiveness of the Operating Partnerships disclosure controls and procedures pursuant to
Exchange



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Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Operating Partnership in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms.

(b) Changes in Internal Control over Financial Reporting:

There were no changes to the internal control over financial reporting of the Operating Partnership identified in
connection with the Operating Partnerships evaluation referred to in Item 4(a) above that occurred during the second quarter of 2010 that have materially affected, or are reasonably likely to materially affect, the Operating
Partnerships internal control over financial reporting.



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##### Table of Contents

|PART II. | OTHER INFORMATION
|-------- | -----------------



|Item 1. | Legal Proceedings
|------- | -----------------

The Operating Partnership does not believe that there have been any material developments in the legal proceedings that
were discussed in Part I, Item 3 of the Operating Partnerships Annual Report on Form 10-K for the year ended December 31, 2009.



|Item 1A. | Risk Factors
|-------- | ------------

There have been no material changes to the risk factors that were discussed in Part I, Item 1A of the Operating
Partnerships Annual Report on Form 10-K for the year ended December 31, 2009.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

(a) Unregistered OP Units Issued in the Quarter Ended June 30, 2010

During the quarter ended June 30, 2010, the Operating Partnership issued 1,129 OP Units having a value of $50,000.
OP Units are generally exchangeable into Common Shares of EQR on a one-for-one basis or, at the option of EQR and the Operating Partnership, the cash equivalent thereof, at any time one year after the date of issuance. These OP Units were issued in
exchange for direct or indirect interest in multifamily properties in private placement transactions under Section 4(2) of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as these were transactions
by an issuer not involving a public offering. In light of the manner of the sale and information obtained by the Operating Partnership from the limited partners in connection with these transactions, the Operating Partnership believes it may rely on
these exemptions.



|Item 4. | (Removed and Reserved).
|------- | -----------------------



|Item 6. | Exhibits  See the Exhibit Index
|------- | --------------------------------



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##### Table of Contents

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
ITS GENERAL PARTNER
|                     |  |  | 
|Date: August 5, 2010 |  |  |  | By:                                                                          |  | /s/    Mark J. Parrell      
|                     |  |  |  |                                                                              |  | Mark J. Parrell             
|                     |  |  |  |                                                                              |  | Executive Vice President and
|                     |  |  |  |                                                                              |  | Chief Financial Officer     
|                     |  |  | 
|Date: August 5, 2010 |  |  |  | By:                                                                          |  | /s/    Ian S. Kaufman       
|                     |  |  |  |                                                                              |  | Ian S. Kaufman              
|                     |  |  |  |                                                                              |  | Senior Vice President and   
|                     |  |  |  |                                                                              |  | Chief Accounting Officer    



51



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##### Table of Contents

EXHIBIT INDEX

The exhibits listed below are filed as part of this report. References to exhibits or other filings under the caption
Location indicate that the exhibit or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is incorporated by reference. The Commission file number for our
Exchange Act filings referenced below is 0-24920.



|        |  |                                                                                                                                                                                                              |  |                                                                                                             
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                                  |  | Location                                                                                                    
|        |  |                                                                                                                                                                                                             
|4.1     |  | Form of 4.75% Note due July 15, 2020.                                                                                                                                                                        |  | Included as Exhibit 4.1 to the Operating Partnerships Form 8-K dated July 12, 2010, filed on July 15, 2010.
|        |  |                                                                                                                                                                                                             
|10.1*   |  | Amendment to the Equity Residential Supplemental Executive Retirement Plan.                                                                                                                                  |  | Included as Exhibit 10.1 to Equity Residentials Form 10-Q for the quarterly period ended June 30, 2010.    
|        |  |                                                                                                                                                                                                             
|31.1    |  | Certification of David J. Neithercut, Chief Executive Officer of Registrants General Partner.                                                                                                               |  | Attached herein.                                                                                            
|        |  |                                                                                                                                                                                                             
|31.2    |  | Certification of Mark J. Parrell, Chief Financial Officer of Registrants General Partner.                                                                                                                   |  | Attached herein.                                                                                            
|        |  |                                                                                                                                                                                                             
|32.1    |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of David J. Neithercut, Chief Executive Officer of the
Registrants General Partner. |  | Attached herein.                                                                                            
|        |  |                                                                                                                                                                                                             
|32.2    |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Financial Officer of the
Registrants General Partner.     |  | Attached herein.                                                                                            



|* | Management contracts and compensatory plans or arrangements filed as exhibits to this report are identified by an asterisk.
|- | ---------------------------------------------------------------------------------------------------------------------------