Equity Residential Reports Second Quarter Results

Equity Residential (NYSE:EQR) today reported results for the quarter and six months ended June 30, 2007. All per share results are reported on a fully diluted basis. "The first half of 2007 produced good operating results with same-store revenue growth of 4.8 percent and net operating income (NOI) growth of 5.4 percent,” said David J. Neithercut, Equity Residential’s President and CEO. "And we will put more money in the bank in the second half of the year than the first half of the year. But our revenue growth will slow in the second half of the year because we will not see the same pick up that we saw in the second half of 2006, caused primarily by markets negatively impacted by excessive condominium construction and/or reversion and high single family home inventories, specifically Florida, Phoenix, the Inland Empire and Washington, D.C. As a result, we have lowered our guidance for same-store performance, which should produce $0.05 per share less in Funds from Operations (FFO) than expected for the full year. However, we are leaving our full year FFO guidance range of $2.25 to $2.35 per share unchanged because lower than expected G&A costs and a land sale, which combined, will offset the same-store shortfall.” Second Quarter 2007 For the quarter ended June 30, 2007, the company reported earnings of $0.95 per share compared to $0.51 per share in the second quarter of 2006. The increase is primarily attributable to higher gains on property sales in the second quarter of 2007. FFO for the quarter ended June 30, 2007 were $0.60 per share compared to $0.61 per share in the same period of 2006. The decrease is primarily attributable to lower gains on sales of condominium units and higher debt extinguishment costs in the second quarter of 2007 than in the second quarter of 2006, partially offset by higher gains on the sale of a land parcel in the second quarter of 2007. The company’s FFO of $0.60 per share exceeded its second quarter guidance range of $0.54 to $0.58 per share primarily for the following reasons: A $4.5 million gain on the sale of a land parcel in New York City that had not been included in guidance; Approximately $3.0 million higher gains than expected from the company’s condominium division; and Approximately $1.5 million lower than projected debt prepayment penalties and write-offs of unamortized financing costs. These and other items describing the difference between actual FFO per share for the quarter and the midpoint of the company’s original guidance range are listed on page 26 of this release. Six Months Ended June 30, 2007 For the six months ended June 30, 2007, the company reported earnings of $1.35 per share compared to $1.76 per share in the same period of 2006. FFO for the six months ended June 30, 2007 were $1.15 per share compared to $1.17 per share in the same period of 2006. Same-Store Results On a same-store second quarter to second quarter comparison, revenues increased 4.3 percent, expenses increased 2.6 percent and NOI increased 5.4 percent. The increase in same-store revenues was driven primarily by increases in average rental rates and a slight increase in occupancy. On a same-store six-month to six-month comparison, revenues increased 4.8 percent, expenses increased 3.8 percent and NOI increased 5.4 percent. Acquisitions/Dispositions "Through the first half of the year we continued to see very stable pricing for property transactions with little or no movement in cap rates on both assets we were acquiring or selling. As a result, we were able to continue to exit non-core markets and increase our investments in our core markets at a 100 basis point cap rate spread. However, we are revising our acquisition and disposition targets for the full year to $1.75 billion each due to an expectation that the recent pull back in the debt markets will cause a reduction in transaction activity,” said Mr. Neithercut. During the second quarter of 2007, the company acquired 15 properties, consisting of 2,310 apartment units, for an aggregate purchase price of $551.6 million at an average capitalization (cap) rate of 4.1 percent. Included in the acquisitions for the quarter were three rent stabilized properties on the Upper West Side of Manhattan. This $180.0 million portfolio was acquired at a cap rate of 2.7 percent and is projected to produce a year two yield in excess of 4.0 percent. Excluding these properties, the average cap rate would have been 4.8 percent for the quarter ended June 30, 2007. The company also acquired two land parcels for $23.0 million during the quarter. Also during the quarter, the company sold 25 properties, consisting of 6,307 apartment units, for an aggregate sale price of $536.7 million at an average cap rate of 5.7 percent generating an unlevered internal rate of return (IRR) of 11.8 percent. In addition, the company sold 226 condominium units for $65.8 million and one land parcel for $40.7 million. In the first six months of 2007, the company acquired 28 properties, consisting of 6,209 apartment units, for an aggregate purchase price of $1.2 billion at an average cap rate of 4.8 percent. Excluding the acquisition of three rent stabilized properties on the Upper West Side of Manhattan, the average cap rate would have been 5.2 percent for the six months ended June 30, 2007. The company also acquired five land parcels for $65.5 million during the first six months of 2007. During the six months ended June 30, 2007, the company sold 37 properties, consisting of 10,018 apartment units, for an aggregate sale price of $790.6 million at an average cap rate of 5.8 percent generating an unlevered IRR of 11.2 percent. In addition, the company sold 383 condominium units for $103.1 million and one land parcel for $40.7 million. Share Repurchase During the second quarter of 2007, the company repurchased and retired 14,319,952 of its common shares at an average price of $46.38 per share for an aggregate purchase of approximately $664.2 million. Through the first six months of 2007, the company repurchased and retired 18,460,206 of its common shares at an average price of $46.91 per share for an aggregate purchase of approximately $866.0 million. Since the end of the second quarter, the company has repurchased and retired 1,137,900 of its common shares at an average price of $45.35 per share for an aggregate purchase of approximately $51.6 million. The company currently has $284.2 million remaining under its share repurchase program. Preferred Share Redemption On July 16, 2007, the company redeemed its 8.60 percent Series D Preferred Shares at its cash liquidation value of $175.0 million plus accrued and unpaid dividends. As a result of this redemption, the company will record an expense of approximately $6.1 million, or approximately $0.02 per share, in the third quarter of 2007 for the write-off of the original issuance costs. Debt Offerings On June 4, 2007, the company issued $650.0 million of unsecured notes maturing June 15, 2017 and $350.0 million of unsecured notes maturing October 1, 2012. The all-in effective interest rates are 5.89 percent and 5.74 percent, respectively. Proceeds from the issuances were used to pay down the company’s unsecured revolving credit facility. On July 19, 2007, the company issued $300.0 million of mortgage notes maturing February 1, 2019. The all-in effective interest rate is 6.0 percent. Proceeds from the issuance were used to pay down the company’s unsecured revolving credit facility. Third Quarter 2007 Guidance The company’s actual FFO of $0.60 per share for the second quarter of 2007 is higher than the guidance range of $0.54 to $0.58 per share projected for the third quarter of 2007 primarily as a result of the following items: Lower expected property NOI, which will be partially offset by lower debt extinguishment costs and higher interest and other income; Lower anticipated gains on sales of condos in the third quarter; The $6.1 million expense that the company will record in the third quarter of 2007 for the write-off of the original issuance costs related to the redemption of the Series D Preferred Shares; and The $4.5 million gain on the sale of the land parcel in New York City during the second quarter of 2007. Equity Residential expects to announce third quarter 2007 results on Tuesday, October 30, 2007 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, October 31, 2007. Equity Residential is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top U.S. growth markets. Equity Residential owns or has investments in 608 properties located in 24 states and the District of Columbia, consisting of 162,532 apartment units. For more information on Equity Residential, please visit our website at www.equityresidential.com. Forward-Looking Statements In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residential’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction material, the level of new multifamily construction and development, competition and local government regulation. Other risks and uncertainties are described under the heading "Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityresidential.com. 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. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. A live web cast of the company’s conference call discussing these results and outlook for 2007 will take place tomorrow, Wednesday, August 1, at 10:00 a.m. Central. Please visit the Investor Information section of the company’s web site at www.equityresidential.com for the link. A replay of the web cast will be available for two weeks at this site. EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands except per share data) (Unaudited)   Six Months EndedJune 30, Quarter EndedJune 30, 2007 2006 2007 2006 REVENUES Rental income $ 1,037,668 $ 910,242 $ 529,310 $ 465,213 Fee and asset management 4,703   4,807   2,436   2,320     Total revenues 1,042,371   915,049   531,746   467,533     EXPENSES Property and maintenance 273,801 238,594 136,682 120,823 Real estate taxes and insurance 112,017 88,963 55,302 45,132 Property management 47,254 46,661 22,412 23,077 Fee and asset management 4,504 4,326 2,163 2,158 Depreciation 304,052 257,683 155,032 132,771 General and administrative 21,515 22,378 11,549 9,338 Impairment 394   805   158   239     Total expenses 763,537   659,410   383,298   333,538     Operating income 278,834 255,639 148,448 133,995   Interest and other income 6,228 4,246 3,784 1,894 Interest: Expense incurred, net (233,075 ) (203,862 ) (122,019 ) (103,120 ) Amortization of deferred financing costs (6,162 ) (4,383 ) (3,615 ) (1,752 )   Income before allocation to Minority Interests, loss from investments in unconsolidated entities, net gain on sales of unconsolidated entities and land parcels and discontinued operations 45,825 51,640 26,598 31,017 Allocation to Minority Interests: Operating Partnership, net (2,097 ) (1,828 ) (1,449 ) (1,317 ) Preference Interests and Units (434 ) (1,556 ) (211 ) (457 ) Partially Owned Properties (779 ) (2,068 ) (187 ) (547 ) Premium on redemption of Preference Interests - (683 ) - (9 ) Loss from investments in unconsolidated entities (363 ) (375 ) (134 ) (145 ) Net gain on sales of unconsolidated entities - 352 - 23 Net gain on sales of land parcels 4,516   246   4,516   246   Income from continuing operations, net of minority interests 46,668 45,728 29,133 28,811 Discontinued operations, net of minority interests 361,970   492,244   253,268   131,346   Net income 408,638 537,972 282,401 160,157 Preferred distributions (14,840 ) (20,168 ) (7,416 ) (10,073 ) Net income available to Common Shares $ 393,798   $ 517,804   $ 274,985   $ 150,084     Earnings per share - basic: Income from continuing operations available to Common Shares $ 0.11   $ 0.09   $ 0.08   $ 0.07   Net income available to Common Shares $ 1.37   $ 1.79   $ 0.97   $ 0.52   Weighted average Common Shares outstanding 288,316   289,172   284,424   289,460     Earnings per share - diluted: Income from continuing operations available to Common Shares $ 0.11   $ 0.09   $ 0.08   $ 0.06   Net income available to Common Shares $ 1.35   $ 1.76   $ 0.95   $ 0.51   Weighted average Common Shares outstanding 311,963   314,420   307,631   314,698     Distributions declared per Common Share outstanding $ 0.9250   $ 0.8850   $ 0.4625   $ 0.4425   EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (Amounts in thousands except per share data) (Unaudited)     Six Months EndedJune 30, Quarter EndedJune 30, 2007 2006 2007 2006   Net income $ 408,638 $ 537,972 $ 282,401 $ 160,157 Allocation to Minority Interests - Operating Partnership, net 2,097 1,828 1,449 1,317 Adjustments: Depreciation 304,052 257,683 155,032 132,771 Depreciation - Non-real estate additions (4,173 ) (3,682 ) (2,138 ) (1,886 ) Depreciation - Partially Owned and Unconsolidated Properties 2,081 2,563 1,138 1,013 Net gain on sales of unconsolidated entities - (352 ) - (23 ) Discontinued operations: Depreciation 7,689 39,670 2,035 17,859 Gain on sales of discontinued operations, net of minority interests (361,356 ) (469,246 ) (256,568 ) (121,281 ) Net incremental gain on sales of condominium units 13,594 18,553 8,902 11,426 Provision for income taxes - Non-condo sales (187 ) - - - Minority Interests - Operating Partnership 41   1,620   (218 ) 707     FFO (1)(2) 372,476 386,609 192,033 202,060 Preferred distributions (14,840 ) (20,168 ) (7,416 ) (10,073 )   FFO available to Common Shares and OP Units - basic (1) (2) $ 357,636   $ 366,441   $ 184,617   $ 191,987     FFO available to Common Shares and OP Units - diluted (1) (2) $ 358,035   $ 366,917   $ 184,811   $ 192,217     FFO per share and OP Unit - basic $ 1.16   $ 1.18   $ 0.61   $ 0.62     FFO per share and OP Unit - diluted $ 1.15   $ 1.17   $ 0.60   $ 0.61     Weighted average Common Shares and OP Units outstanding - basic 307,582   309,678   303,511   310,017     Weighted average Common Shares and OP Units outstanding - diluted 312,478   315,034   308,131   315,289       (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 Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO available to Common Shares and OP Units is calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Minority Interests - Operating Partnership". Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis.     (2) The Company believes that FFO and FFO available to Common Shares and OP 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 Common Shares and OP 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 Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP.  Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity.  The Company's calculation of FFO and FFO available to Common Shares and OP 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.   EQUITY RESIDENTIAL CONSOLIDATED BALANCE SHEETS (Amounts in thousands except for share amounts) (Unaudited)   June 30, December 31, 2007 2006 ASSETS Investment in real estate Land $ 3,582,455 $ 3,217,672 Depreciable property 13,855,981 13,376,359 Projects under development 392,616 399,131 Land held for development 313,360   242,013   Investment in real estate 18,144,412 17,235,175 Accumulated depreciation (3,125,555 ) (3,022,480 ) Investment in real estate, net 15,018,857 14,212,695   Cash and cash equivalents 66,266 260,277 Investments in unconsolidated entities 4,225 4,448 Deposits - restricted 350,934 391,825 Escrow deposits - mortgage 21,214 25,528 Deferred financing costs, net 54,889 43,384 Other assets 152,279   124,062   Total assets $ 15,668,664   $ 15,062,219     LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 3,188,395 $ 3,178,223 Notes, net 5,363,139 4,419,433 Lines of credit 780,000 460,000 Accounts payable and accrued expenses 111,140 96,699 Accrued interest payable 95,183 91,172 Other liabilities 332,927 311,557 Security deposits 62,812 58,072 Distributions payable 145,112   151,382   Total liabilities 10,078,708   8,766,538     Commitments and contingencies Minority Interests: Operating Partnership 333,056 372,961 Preference Interests and Units 184 11,684 Partially Owned Properties 23,392   26,814   Total Minority Interests 356,632   411,459     Shareholders' equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 2,727,250 shares issued and outstanding as of June 30, 2007 and 2,762,950 shares issued and outstanding as of December 31, 2006 385,681 386,574 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 277,134,550 shares issued and outstanding as of June 30, 2007 and 293,551,633 shares issued and outstanding as of December 31, 2006 2,771 2,936 Paid in capital 4,563,630 5,349,194 Retained earnings 288,109 159,528 Accumulated other comprehensive loss (6,867 ) (14,010 ) Total shareholders' equity 5,233,324   5,884,222   Total liabilities and shareholders' equity $ 15,668,664   $ 15,062,219   EQUITY RESIDENTIAL       Portfolio Summary As of June 30, 2007   Markets Properties Units % of Total Units % of 2007Stabilized NOI Average RentalRate (1)   1 New York Metro Area 21 5,922 3.6 % 9.0 % $ 2,473 2 South Florida 37 12,193 7.5 % 8.7 % 1,305 3 Los Angeles 38 7,973 4.9 % 7.4 % 1,719 4 DC Northern Virginia 25 8,473 5.2 % 7.4 % 1,567 5 Seattle/Tacoma 49 11,285 6.9 % 6.9 % 1,214 6 Boston 37 6,826 4.2 % 6.3 % 1,501 7 Phoenix 40 11,640 7.2 % 5.7 % 949 8 San Francisco Bay Area 34 6,920 4.3 % 5.4 % 1,622 9 Orlando 25 7,825 4.8 % 4.8 % 1,042 10 Denver 28 9,327 5.7 % 4.6 % 929 11 Atlanta 33 9,862 6.1 % 4.3 % 914 12 San Diego 14 4,491 2.8 % 4.0 % 1,575 13 Inland Empire CA 15 4,655 2.9 % 3.4 % 1,391 14 Dallas/Ft Worth 31 8,731 5.4 % 3.1 % 846 15 Orange County 9 3,175 1.9 % 3.0 % 1,535 16 Suburban Maryland 21 5,145 3.2 % 2.9 % 1,082 17 New England (excl Boston) 38 5,597 3.4 % 2.9 % 1,077 18 Portland OR 11 3,713 2.3 % 1.7 % 905 19 Jacksonville 11 3,471 2.1 % 1.6 % 910 20 Raleigh/Durham 16 4,032 2.5 % 1.5 % 752   Top 20 Total 533 141,256 86.9 % 94.6 % 1,248   21 Tampa/Ft Myers 10 3,141 1.9 % 1.3 % 926 22 Austin 12 3,671 2.3 % 1.3 % 822 23 Charlotte 11 3,391 2.1 % 0.9 % 683 24 Nashville 7 1,989 1.2 % 0.7 % 869 25 Central Valley CA 10 1,595 1.0 % 0.5 % 1,060 26 Other 14 3,088 1.9 % 0.7 % 930   Total 597 158,131 97.3 % 100.0 % 1,206   Condominium Conversion 10 780 0.5 % - - Military Housing 1 3,621 2.2 % -   -   Grand Total 608 162,532 100.0 % 100.0 % $ 1,206   (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the month of June 2007. EQUITY RESIDENTIAL   Portfolio as of June 30, 2007   Properties Units   Wholly Owned Properties 535   142,620 Partially Owned Properties: Consolidated 27 5,445 Unconsolidated 45 10,846 Military Housing (Fee Managed) 1   3,621   608 162,532       Portfolio Rollforward Q2 2007   Properties Units $ Thousands Cap Rate   3/31/2007 618 166,324   Acquisitions: Rental Properties 15 2,310 $ 551,629 4.1 % (1 ) Land Parcels (two) - - $ 23,000 Dispositions: Rental Properties (25 ) (6,307 ) $ (536,699 ) 5.7 % Condominium Units (2 ) (226 ) $ (65,778 ) Land Parcel (one) - - $ (40,662 ) Completed Developments 2 366 Configuration Changes -   65     6/30/2007 608 162,532       Portfolio Rollforward 2007   Properties Units   $ Thousands Cap Rate   12/31/2006 617 165,716 Acquisitions: Rental Properties 28 6,209 $ 1,225,785 4.8 % (1 ) Land Parcels (five) - - $ 65,450 Dispositions: Rental Properties (37 ) (10,018 ) $ (790,629 ) 5.8 % Condominium Units (4 ) (383 ) $ (103,058 ) Land Parcel (one) - - $ (40,662 ) Completed Developments 4 938 Configuration Changes -   70     6/30/2007 608 162,532       (1) Excluding the acquisition of three rent stabilized properties on the Upper West Side of Manhattan, the cap rates would have been 4.8% and 5.2% for the quarter and six months ended June 30, 2007, respectively. The cap rate on this $180.0 million portfolio acquisition was 2.7%. EQUITY RESIDENTIAL   Second Quarter 2007 vs. Second Quarter 2006 Quarter over Quarter Same-Store Results/Statistics   $ in Thousands (except for Average Rental Rate)- 130,175 Same-Store Units   Results Statistics Description Revenues Expenses NOI (1) Average Rental Rate (2) Occupancy Turnover Q2 2007 $ 447,480 $ 166,226 $ 281,254 $ 1,210 94.8 % (16.5 %) Q2 2006 $ 428,832   $ 162,078   $ 266,754   $ 1,162   94.7 % (16.6 %) Change $ 18,648   $ 4,148   $ 14,500   $ 48   0.1 % 0.1 % Change 4.3 % 2.6 % 5.4 % 4.1 %       Second Quarter 2007 vs. First Quarter 2007 Sequential Quarter over Quarter Same-Store Results/Statistics   $ in Thousands (except for Average Rental Rate)- 136,234 Same-Store Units   Results Statistics Description Revenues Expenses NOI (1) Average Rental Rate (2) Occupancy Turnover Q2 2007 $ 471,000 $ 174,972 $ 296,028 $ 1,218 94.8 % (16.5 %) Q1 2007 $ 466,144   $ 180,496   $ 285,648   $ 1,206   94.7 % (13.6 %) Change $ 4,856   $ (5,524 ) $ 10,380   $ 12   0.1 % (2.9 %) Change 1.0 % (3.1 %) 3.6 % 1.0 %         June YTD 2007 vs. June YTD 2006 YTD over YTD Same-Store Results/Statistics   $ in Thousands (except for Average Rental Rate)- 127,396 Same-Store Units   Results Statistics Description Revenues Expenses NOI (1) Average Rental Rate (2) Occupancy Turnover YTD 2007 $ 869,998 $ 329,496 $ 540,502 $ 1,202 94.8 % (30.0 %) YTD 2006 $ 830,284   $ 317,287   $ 512,997   $ 1,149   94.7 % (30.6 %) Change $ 39,714   $ 12,209   $ 27,505   $ 53   0.1 % 0.6 % Change 4.8 % 3.8 % 5.4 % 4.6 %         (1) The Company'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 Company 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 Company's apartment communities.   (2) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL   Same-Store NOI Reconciliation Second Quarter 2007 vs. Second Quarter 2006   The following table presents a reconciliation of operating income perthe consolidated statements of operations to NOI for the SecondQuarter 2007 Same-Store Properties:   Quarter Ended June 30, 2007 2006 (Amounts in thousands)   Operating income $ 148,448 $ 133,995 Adjustments: Non-same-store operating results (33,660 ) (9,427 ) Fee and asset management revenue (2,436 ) (2,320 ) Fee and asset management expense 2,163 2,158 Depreciation 155,032 132,771 General and administrative 11,549 9,338 Impairment 158   239     Same-store NOI $ 281,254   $ 266,754         Same-Store NOI Reconciliation June YTD 2007 vs. June YTD 2006   The following table presents a reconciliation of operating income perthe consolidated statements of operations to NOI for the Six-Month2007 Same-Store Properties:   Six Months Ended June 30, 2007 2006 (Amounts in thousands)   Operating income $ 278,834 $ 255,639 Adjustments: Non-same-store operating results (64,094 ) (23,027 ) Fee and asset management revenue (4,703 ) (4,807 ) Fee and asset management expense 4,504 4,326 Depreciation 304,052 257,683 General and administrative 21,515 22,378 Impairment 394   805     Same-store NOI $ 540,502   $ 512,997   EQUITY RESIDENTIAL   Second Quarter 2007 vs. Second Quarter 2006 Same-Store Results by Market                     Increase (Decrease) from Prior Quarter 2Q 2007 2Q 2007 2Q 2007 % of Average Weighted Average Actual Rental Average Rental Markets Units NOI Rate (1) Occupancy % Revenues Expenses NOI Rate (1) Occupancy 1 New York Metro Area 5,288 9.6 % $ 2,585 96.5 % 6.7 % 0.7 % 9.8 % 7.0 % (0.4 %) 2 Los Angeles 6,469 7.7 % 1,680 95.4 % 5.9 % 0.5 % 8.6 % 4.3 % 1.4 % 3 Seattle/Tacoma 8,708 6.9 % 1,232 94.8 % 5.8 % 3.9 % 6.9 % 7.0 % (1.2 %) 4 South Florida 8,210 6.5 % 1,306 93.5 % 1.9 % 4.0 % 0.6 % 1.6 % 0.1 % 5 DC Northern Virginia 6,662 6.3 % 1,428 95.0 % 2.1 % 6.4 % 0.0 % 3.0 % (0.8 %) 6 San Francisco Bay Area 5,990 6.3 % 1,523 96.0 % 6.1 % 3.3 % 7.6 % 6.4 % (0.3 %) 7 Boston 5,596 6.1 % 1,727 95.0 % 2.7 % 2.5 % 2.8 % 1.9 % 0.8 % 8 Phoenix 9,023 5.5 % 934 93.8 % 5.7 % 0.2 % 9.0 % 6.2 % (0.5 %) 9 Atlanta 8,496 4.7 % 928 95.1 % 4.0 % 5.8 % 2.7 % 4.1 % 0.0 % 10 Denver 7,891 4.5 % 859 95.5 % 5.1 % 0.2 % 7.9 % 4.0 % 1.0 % 11 San Diego 3,822 4.2 % 1,589 94.8 % 4.4 % (0.7 %) 7.0 % 2.8 % 1.4 % 12 Orlando 6,473 4.2 % 1,033 93.4 % 0.5 % 5.1 % (2.1 %) 1.5 % (1.0 %) 13 Dallas/Ft Worth 7,301 3.6 % 881 95.0 % 3.3 % (1.0 %) 7.1 % 2.9 % 0.3 % 14 Orange County 3,013 3.3 % 1,541 95.5 % 4.6 % 2.9 % 5.4 % 3.2 % 1.2 % 15 New England (excl Boston) 5,597 3.3 % 1,077 94.7 % 4.9 % 3.9 % 5.7 % 3.8 % 1.0 % 16 Suburban Maryland 4,041 2.7 % 1,077 93.6 % 1.8 % 3.8 % 0.6 % 1.5 % 0.2 % 17 Inland Empire CA 3,712 2.3 % 1,331 93.9 % 4.0 % 3.3 % 4.3 % 2.6 % 1.2 % 18 Portland OR 3,409 1.9 % 913 96.1 % 8.1 % 1.0 % 13.3 % 7.2 % 0.8 % 19 Jacksonville 3,231 1.8 % 913 94.5 % 2.6 % 2.1 % 2.9 % 3.0 % (0.5 %) 20 Raleigh/Durham 3,640 1.7 % 762 95.2 % 4.5 % 3.5 % 5.2 % 4.5 % (0.1 %) Top 20 Markets 116,572 93.1 % 1,249 94.8 % 4.3 % 2.6 % 5.3 % 4.1 % 0.1 %     All Other Markets 13,603 6.9 % 880 94.8 % 4.9 % 2.0 % 7.1 % 4.7 % 0.1 % Total 130,175 100.0 % $ 1,210 94.8 % 4.3 % 2.6 % 5.4 % 4.1 % 0.1 %   (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL   Second Quarter 2007 vs. First Quarter 2007 Sequential Same-Store Results by Market                       Increase (Decrease) from Prior Quarter 2Q 2007 2Q 2007 2Q 2007 % of Average Weighted Average Actual Rental Average Rental Markets Units NOI Rate (1) Occupancy % Revenues Expenses NOI Rate (1) Occupancy 1 New York Metro Area 5,443 9.2 % $ 2,575 96.3 % 2.0 % (6.5 %) 6.8 % 1.7 % 0.3 % 2 Los Angeles 7,063 7.9 % 1,688 95.3 % 1.8 % (4.7 %) 5.1 % 1.3 % 0.4 % 3 South Florida 9,347 7.0 % 1,305 93.2 % (1.3 %) (3.1 %) 0.0 % (0.1 %) (1.1 %) 4 Seattle/Tacoma 9,060 6.8 % 1,229 94.8 % 2.8 % (1.7 %) 5.6 % 2.5 % 0.3 % 5 DC Northern Virginia 7,286 6.7 % 1,448 95.1 % 0.1 % (4.5 %) 2.7 % (0.1 %) 0.2 % 6 Boston 6,124 6.3 % 1,733 95.1 % 1.2 % (3.3 %) 4.4 % (0.8 %) 2.0 % 7 San Francisco Bay Area 6,242 6.1 % 1,508 95.9 % 2.0 % (4.0 %) 5.4 % 1.5 % 0.5 % 8 Phoenix 9,343 5.4 % 937 93.7 % (0.1 %) (4.4 %) 2.4 % 0.5 % (0.6 %) 9 Denver 8,587 4.8 % 877 95.4 % 1.6 % (3.5 %) 4.6 % 1.3 % 0.3 % 10 Orlando 7,231 4.5 % 1,040 93.7 % (1.1 %) (1.5 %) (0.8 %) (0.8 %) (0.2 %) 11 Atlanta 8,496 4.4 % 928 95.1 % 1.2 % (0.1 %) 2.2 % 1.3 % (0.1 %) 12 San Diego 3,822 4.0 % 1,589 94.8 % 1.5 % (3.7 %) 4.1 % 1.1 % 0.4 % 13 Dallas/Ft Worth 7,301 3.4 % 881 95.0 % 1.5 % (1.7 %) 4.4 % 1.2 % 0.3 % 14 Orange County 3,013 3.1 % 1,541 95.5 % 1.4 % (1.1 %) 2.5 % 1.5 % (0.1 %) 15 New England (excl Boston) 5,597 3.1 % 1,077 94.7 % 2.0 % (1.0 %) 4.7 % 1.0 % 0.9 % 16 Inland Empire CA 4,355 2.9 % 1,343 93.8 % 0.8 % (3.9 %) 3.0 % 1.1 % (0.3 %) 17 Suburban Maryland 4,041 2.6 % 1,077 93.6 % 1.6 % (10.5 %) 10.9 % 1.4 % 0.2 % 18 Portland OR 3,409 1.9 % 913 96.1 % 1.6 % (0.1 %) 2.6 % 0.6 % 0.9 % 19 Jacksonville 3,231 1.8 % 913 94.5 % 1.0 % (3.4 %) 4.0 % 1.1 % (0.1 %) 20 Raleigh/Durham 3,640 1.6 % 762 95.2 % 0.9 % 1.1 % 0.8 % 0.9 % 0.0 % Top 20 Markets 122,631 93.5 % 1,255 94.8 % 1.1 % (3.3 %) 3.8 % 0.9 % 0.1 %   All Other Markets 13,603 6.5 % 880 94.8 % 0.4 % (0.1 %) 0.8 % 1.2 % (0.8 %) Total 136,234 100.0 % $ 1,218 94.8 % 1.0 % (3.1 %) 3.6 % 1.0 % 0.1 %   (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL     June YTD 2007 vs. June YTD 2006 Same-Store Results by Market                     Increase (Decrease) from Prior Year Jun YTD 07 Jun YTD 07 Jun YTD 07 % of Average Weighted Average Actual Rental Average Rental Markets Units NOI Rate (1) Occupancy % Revenues Expenses NOI Rate (1) Occupancy 1 New York Metro Area 5,153 9.2 % $ 2,544 96.3 % 6.8 % 2.6 % 9.1 % 6.7 % 0.1 % 2 Los Angeles 6,221 7.6 % 1,682 95.4 % 5.9 % 1.3 % 8.2 % 4.6 % 1.2 % 3 Seattle/Tacoma 8,532 6.8 % 1,213 94.7 % 6.1 % 3.5 % 7.8 % 6.8 % (0.7 %) 4 DC Northern Virginia 6,662 6.4 % 1,429 94.9 % 4.0 % 10.5 % 0.7 % 4.2 % (0.1 %) 5 South Florida 7,662 6.3 % 1,314 93.9 % 2.1 % 6.3 % (0.6 %) 3.0 % (0.9 %) 6 San Francisco Bay Area 5,990 6.2 % 1,514 95.8 % 7.0 % 3.5 % 9.0 % 7.0 % 0.0 % 7 Boston 5,596 6.1 % 1,733 94.1 % 2.2 % 1.2 % 2.8 % 1.9 % 0.3 % 8 Phoenix 9,023 5.6 % 931 94.0 % 6.4 % 4.6 % 7.5 % 7.6 % (1.0 %) 9 Atlanta 7,938 4.4 % 902 95.5 % 5.1 % 3.7 % 6.1 % 4.5 % 0.5 % 10 Denver 7,555 4.4 % 854 95.4 % 4.9 % 5.5 % 4.5 % 4.1 % 0.7 % 11 Orlando 6,473 4.3 % 1,038 93.7 % 2.2 % 8.0 % (1.1 %) 3.1 % (0.9 %) 12 San Diego 3,486 3.9 % 1,575 94.6 % 4.2 % 0.6 % 6.0 % 3.6 % 0.6 % 13 Dallas/Ft Worth 7,151 3.5 % 868 94.9 % 3.2 % 1.4 % 4.8 % 2.8 % 0.4 % 14 Inland Empire CA 3,712 3.4 % 1,321 94.1 % 4.5 % 4.8 % 4.4 % 2.9 % 1.4 % 15 Orange County 3,013 3.4 % 1,529 95.5 % 4.7 % 2.4 % 5.7 % 3.8 % 0.8 % 16 New England (excl Boston) 5,597 3.3 % 1,072 94.3 % 6.0 % 2.3 % 9.6 % 3.8 % 2.0 % 17 Suburban Maryland 4,041 2.7 % 1,070 93.5 % 1.4 % 8.4 % (2.9 %) 1.9 % (0.5 %) 18 Portland OR 3,409 2.0 % 910 95.6 % 8.2 % 2.1 % 12.7 % 7.7 % 0.4 % 19 Jacksonville 3,231 1.9 % 908 94.6 % 2.6 % 3.7 % 1.9 % 3.0 % (0.4 %) 20 Austin 3,671 1.6 % 815 96.0 % 7.7 % (0.4 %) 16.7 % 6.8 % 0.8 % Top 20 Markets 114,116 93.0 % 1,242 94.8 % 4.8 % 3.8 % 5.3 % 4.6 % 0.1 %   All Other Markets 13,280 7.0 % 861 95.0 % 4.8 % 3.9 % 5.5 % 4.4 % 0.4 % Total 127,396 100.0 % $ 1,202 94.8 % 4.8 % 3.8 % 5.4 % 4.6 % 0.1 %   (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL     Debt Summary as of June 30, 2007 (Amounts in thousands)   Weighted Weighted Average Average Maturities Amounts (1) % of Total Rates (1) (years)   Secured $ 3,188,395 34.2 % 5.73 % 7.4 Unsecured 6,143,139 65.8 % 5.65 % 6.7   Total $ 9,331,534 100.0 % 5.68 % 6.9     Fixed Rate Debt: Secured - Conventional $ 2,135,082 22.9 % 6.13 % 4.2 Unsecured - Public/Private 5,106,127 54.7 % 5.64 % 6.8 Unsecured - Tax Exempt 111,390 1.2 % 5.06 % 21.8   Fixed Rate Debt 7,352,599 78.8 % 5.79 % 6.3     Floating Rate Debt: Secured - Conventional 435,516 4.7 % 7.13 % 6.0 Secured - Tax Exempt 617,797 6.6 % 3.20 % 20.2 Unsecured - Public 145,622 1.5 % 6.60 % 1.9 Unsecured - Revolving Credit Facility 780,000 8.4 % 5.65 % 4.7   Floating Rate Debt 1,978,935 21.2 % 5.33 % 9.4     Total $ 9,331,534 100.0 % 5.68 % 6.9     (1) Net of the effect of any derivative instruments. Weighted average rates are for the six months ended June 30, 2007.   Note: The Company capitalized interest of approximately $17.9 million and $7.8 million during the six months ended June 30, 2007 and 2006, respectively. The Company capitalized interest of approximately $10.0 million and $3.8 million during the quarters ended June 30, 2007 and 2006, respectively.       Debt Maturity Schedule as of June 30, 2007 (Amounts in thousands)   Weighted Weighted AverageRates AverageRates Fixed Rate Floating Rate % of on FixedRate on TotalDebt Year (1) (1) Total Total Debt (1) (1)     2007 $ 156,908 $ 40,946 $ 197,854 2.1 % 6.11 % 6.30 % 2008 470,272 136,471 606,743 6.5 % 6.65 % 6.56 % 2009 457,504 386,711 844,215 9.0 % 6.35 % 5.37 % 2010 279,484 1,654 281,138 3.0 % 7.05 % 7.05 % 2011 (2 ) 1,475,336 24,150 1,499,486 16.1 % 5.55 % 5.52 % 2012 (3 ) 890,335 780,000 1,670,335 17.9 % 6.09 % 5.87 % 2013 565,655 - 565,655 6.1 % 5.93 % 5.93 % 2014 504,708 - 504,708 5.4 % 5.27 % 5.27 % 2015 355,491 - 355,491 3.8 % 6.41 % 6.41 % 2016 1,089,241 - 1,089,241 11.7 % 5.32 % 5.32 % 2017+ 1,107,665   609,003   1,716,668 18.4 % 6.14 % 5.66 % Total $ 7,352,599   $ 1,978,935   $ 9,331,534 100.0 % 5.91 % 5.75 %   (1) Net of the effect of any derivative instruments. Weighted average rates are as of June 30, 2007.   (2) Includes $650.0 million of 3.85% convertible unsecured debt with a final maturity of 2026. The notes are callable by the Company 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 $780.0 million outstanding on the Company's $1.5 billion unsecured revolving credit facility, which matures on February 28, 2012. EQUITY RESIDENTIAL   Unsecured Debt Summary as of June 30, 2007 (Amounts in thousands)   Unamortized Coupon Due Face Premium/ Net Rate   Date     Amount   (Discount)   Balance   Fixed Rate Notes: 6.900 % 08/01/07   $ 50,000 $ (2 ) $ 49,998 7.540 % 09/01/07 (1 ) 4,286 - 4,286 4.861 % 11/30/07 50,000 - 50,000 7.500 % 08/15/08 (1 )   130,000 - 130,000 4.750 % 06/15/09 (2 )   300,000 (537 ) 299,463 6.950 % 03/02/11   300,000 3,254 303,254 6.625 % 03/15/12   400,000 (1,382 ) 398,618 5.500 % 10/01/12 350,000 (1,812 ) 348,188 5.200 % 04/01/13   400,000 (681 ) 399,319 5.250 % 09/15/14 500,000 (443 ) 499,557 6.584 % 04/13/15 300,000 (865 ) 299,135 5.125 % 03/15/16   500,000 (466 ) 499,534 5.375 % 08/01/16   400,000 (1,685 ) 398,315 5.750 % 06/15/17 650,000 (5,086 ) 644,914 7.125 % 10/15/17   150,000 (668 ) 149,332 7.570 % 08/15/26   140,000 - 140,000 3.850 % 08/15/26 (3 )   650,000 (7,786 ) 642,214 Floating Rate Adjustments (2 )   (150,000 )   -     (150,000 )   5,124,286     (18,159 )   5,106,127     Fixed Rate Tax Exempt Notes: 4.750 % 12/15/28 (1 ) 35,600 - 35,600 5.200 % 06/15/29 (1 ) 75,790     -     75,790   111,390     -     111,390     Floating Rate Notes: 06/15/09 (2 ) 150,000 - 150,000 FAS 133 Adjustments - net (2 ) (4,378 )   -     (4,378 ) 145,622     -     145,622     Revolving Credit Facility: 02/28/12 (4 ) 780,000     -     780,000     Total Unsecured Debt $ 6,161,298     $ (18,159 )   $ 6,143,139     (1) Notes are private. All other unsecured debt is public.   (2) $150.0 million in fair value interest rate swaps converts 50% of the 4.750% Notes due June 15, 2009 to a floating interest rate.   (3) Convertible notes mature on August 15, 2026. The notes are callable by the Company on or after August 18, 2011. The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021.   (4) Represents amount outstanding on the Company's $1.5 billion unsecured revolving credit facility which matures on February 28, 2012. EQUITY RESIDENTIAL   Selected Unsecured Public Debt Covenants   June 30, December 31, 2007 2006   Total Debt to Adjusted Total Assets (not to exceed 60%) 49.7 % 44.6 %     Secured Debt to Adjusted Total Assets (not to exceed 40%) 17.0 % 17.6 %     Consolidated Income Available for Debt Service to Maximum Annual Service Charges (must be at least 1.5 to 1) 2.28 2.54     Total Unsecured Assets to Unsecured Debt (must be at least 150%) 208.9 % 250.6 %     These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt. Equity Residential is the general partner of ERPOP. EQUITY RESIDENTIAL   Capital Structure as of June 30, 2007 (Amounts in thousands except for share and per share amounts)   Secured Debt $ 3,188,395 34.2 % Unsecured Debt 5,363,139 57.5 % Revolving Credit Facility 780,000 8.3 % Total Debt 9,331,534 100.0 % 40.1 %   Common Shares 277,134,550 93.6 % OP Units 19,040,440 6.4 % Total Shares and OP Units 296,174,990 100.0 % Common Share Equivalents (see below) 491,520 Total outstanding at quarter-end 296,666,510 Common Share Price at June 30, 2007 $ 45.63 13,536,893 97.3 % Perpetual Preferred Equity (see below) 375,000 2.7 % Total Equity 13,911,893 100.0 % 59.9 %   Total Market Capitalization $ 23,243,427 100.0 %   Convertible Preferred Equity as of June 30, 2007 (Amounts in thousands except for share and per share amounts)                           Series RedemptionDate OutstandingShares/Units LiquidationValue Annual Dividend Per Share/Unit Annual Dividend Amount Weighted Average Rate Conversion Ratio Common ShareEquivalents   Preferred Shares: 7.00% Series E 11/1/98 401,716 $ 10,043 $ 1.75 $ 703 1.1128 447,030 7.00% Series H 6/30/98 25,534 638 1.75 45 1.4480 36,973 Junior Preference Units: 8.00% Series B 7/29/09 7,367 184 2.00 15 1.020408 7,517 Total Convertible Preferred Equity 434,617 $ 10,865 $ 763 7.02 % 491,520 Perpetual Preferred Equity as of June 30, 2007 (Amounts in thousands except for share and per share amounts)   Series Redemption Date OutstandingShares/Units Liquidation Value Annual Dividend Per Share/Unit Annual Dividend Amount Weighted Average Rate Preferred Shares: 8.60% Series D (1) 7/15/07 700,000 $ 175,000 $ 21.50 $ 15,050 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 Preferred Equity 2,300,000 $ 375,000 $ 28,915 7.71 %   (1) The Company redeemed its Series D Preferred Shares on July 16, 2007 at its cash liquidation value of $175.0 million. EQUITY RESIDENTIAL   Common Share and Operating Partnership Unit (OP Unit) Weighted Average Amounts Outstanding   YTD 2Q07 YTD 2Q06 2Q07 2Q06   Weighted Average Amounts Outstanding for Net Income Purposes: Common Shares - basic 288,316,068 289,171,660 284,424,108 289,459,922 Shares issuable from assumed conversion/ vesting of: - OP Units 19,265,714 20,505,880 19,087,151 20,556,844 - share options/ restricted shares 4,381,549 4,742,794 4,119,457 4,680,985 Total Common Shares and OP Units - diluted 311,963,331 314,420,334 307,630,716 314,697,751   Weighted Average Amounts Outstanding for FFO Purposes: Common Shares - basic 288,316,068 289,171,660 284,424,108 289,459,922 OP Units - basic 19,265,714 20,505,880 19,087,151 20,556,844 Total Common Shares and OP Units - basic 307,581,782 309,677,540 303,511,259 310,016,766 Shares issuable from assumed conversion/vesting of: - convertible preferred shares/units 514,384 614,125 500,257 591,694 - share options/ restricted shares 4,381,549 4,742,794 4,119,457 4,680,985 Total Common Shares and OP Units - diluted 312,477,715 315,034,459 308,130,973 315,289,445   Period Ending Amounts Outstanding: Common Shares - basic 277,134,550 OP Units - basic 19,040,440 Total Common Shares and OP Units - basic 296,174,990 EQUITY RESIDENTIAL   Partially Owned Entities as of June 30, 2007 (Amounts in thousands except for project and unit amounts)   Consolidated Unconsolidated Development Projects Held for and/or UnderDevelopment Completed, Not Stabi-lized (4) Completed and Stabi-lized Other Total Institutional Joint Ventures   Total projects(1) -   2   4   21   27   45     Total units(1) -   572   977   3,896   5,445   10,846     Operating information for the six months ended 6/30/07 (at 100%): Operating revenue $ 5 $ 1,317 $ 8,093 $ 27,801 $ 37,216 $ 52,274 Operating expenses 312   1,552   2,808   9,622   14,294   24,571   Net operating income (loss) (307 ) (235 ) 5,285 18,179 22,922 27,703 Depreciation - 1,383 2,919 6,847 11,149 10,790 Other 1   -   -   65   66   191   Operating income (loss) (308 ) (1,618 ) 2,366 11,267 11,707 16,722 Interest and other income 28 8 75 600 711 269 Interest: Expense incurred, net (406 ) (1,651 ) (1,684 ) (10,035 ) (13,776 ) (18,722 ) Amortization of deferred financing costs (12 ) -   (24 ) (55 ) (91 ) (308 ) Net income (loss) $ (698 ) $ (3,261 ) $ 733   $ 1,777   $ (1,449 ) $ (2,039 )     Debt - Secured (2): EQR Ownership (3) $ 262,878 $ 97,596 $ 61,000 $ 286,891 $ 708,365 $ 121,200 Minority Ownership -   -   -   13,321   13,321   363,600   Total (at 100%) $ 262,878   $ 97,596   $ 61,000   $ 300,212   $ 721,686   $ 484,800       (1) Project and unit counts exclude all uncompleted development projects until those projects are substantially completed. See the Consolidated Development Projects schedule for more detail.   (2) All debt is non-recourse to the Company with the exception of $28.3 million in mortgage bonds on one development project.   (3) Represents the Company'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. EQUITY RESIDENTIAL   Consolidated Development Projects as of June 30, 2007 (Amounts in thousands except for project and unit amounts)     Projects   Location No. of Units   Total Capital Cost (1)   Total Book Value To Date   Total Book Value Not Placed in Service   Total Debt Percentage Completed Percentage Leased Percentage Occupied Estimated Completion Date Estimated Stabilization Date   Projects Under Development - Wholly Owned: West End Apartments (a.k.a. Emerson/CRP II) Boston, MA 310 167,953 82,245 82,245 - 66 % - - 2Q 2008 1Q 2009 Redmond Ridge Redmond, WA 321 55,457 23,534 23,534 - 38 % - - 2Q 2008 3Q 2010 77 Hudson Jersey City, NJ 480 269,958 57,702 57,702 - 17 % - - 3Q 2009 4Q 2010 Crowntree Lakes Orlando, FL 352 58,628 20,350 20,350 - 14 % - - 3Q 2008 3Q 2009 Key Isle at Windermere II Orlando, FL 165   29,058   10,474   10,474   - 10 % - - 4Q 2008 1Q 2009   Projects Under Development - Wholly Owned 1,628 581,054 194,305 194,305 -   Projects Under Development - Partially Owned: Silver Spring Silver Spring, MD 457 147,454 58,680 58,680 26,035 30 % - - 4Q 2008 3Q 2010 303 Third Street Cambridge, MA 531 248,307 79,685 79,685 1,654 23 % - - 3Q 2008 1Q 2010 City Lofts Chicago, IL 278 71,109 27,842 27,842 7,827 38 % - - 3Q 2008 2Q 2009 Alta Pacific (2) Irvine, CA 132   46,416   32,104   32,104   28,260 56 % - - 4Q 2007 3Q 2008   Projects Under Development - Partially Owned 1,398 513,286 198,311 198,311 63,776                   Projects Under Development 3,026   1,094,340   392,616   392,616   63,776   Land Held for Development N/A   -   313,360   313,360   199,102   Land/Projects Held for and/or Under Development 3,026   1,094,340   705,976   705,976   262,878   Completed Not Stabilized - Wholly Owned: 2400 M St (3) Washington, D.C. 359 111,947 107,880 - - 91 % 84 % Completed 3Q 2007 Bella Vista III (4) Woodland Hills, CA 264 73,336 71,220 - - 20 % 16 % Completed 1Q 2008 Highland Glen II (4) Westwood, MA 102   21,620   17,220   -   5,000 6 % 4 % Completed 1Q 2008   Projects Completed Not Stabilized - Wholly Owned 725 206,903 196,320 - 5,000   Completed Not Stabilized - Partially Owned (4): Mozaic (a.k.a. Union Station) Los Angeles, CA 272 69,661 68,732 - 43,788 64 % 55 % Completed 1Q 2008 Vintage Ontario, CA 300   54,013   54,013   -   53,808 73 % 58 % Completed 1Q 2008   Projects Completed Not Stabilized - Partially Owned 572 123,674 122,745 - 97,596                   Projects Completed Not Stabilized 1,297   330,577   319,065   -   102,596   Completed and Stabilized During the Quarter:                   Projects Completed and Stabilized During the Quarter -   -   -   -   -     Total Projects 4,323   $ 1,424,917   $ 1,025,041   $ 705,976   $ 365,474   Total Capital Q2 2007 NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Cost (1) NOI Projects Under Development $ 1,094,340 $ (3 ) Completed Not Stabilized 330,577 1,911 Completed and Stabilized During the Quarter -   -   Total Development/ Newly Stabilized NOI Contribution $ 1,424,917   $ 1,908         (1) Total capital cost represents estimated development cost for projects under development and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP.   (2) Debt is primarily tax-exempt bonds that are entirely outstanding, with $15.0 million held in escrow by the lender and released as draw requests are made. This amount is classified as deposits - restricted in the consolidated balance sheets at 6/30/07.   (3) EQR acquired its partner's interest on 4/28/06 and now wholly-owns the property. Total Book Value to Date does not include additional purchase consideration of $30.7 million.   (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. EQUITY RESIDENTIAL   Consolidated Condominium Conversion Projects as of June 30, 2007 (Amounts in thousands except for project and unit amounts)       Units 2007 YTD Activity 2Q 2007 Available for Sale Projects   Location   Project Start Date (1)   Estimated Close Out Date   Total   Units Closed   Sold Not Closed   Available   Units Closed   Sales Price     FFOIncremental Gain on Sale (3)   Units Closed   Sales Price     FFOIncremental Gain on Sale (3)   For Sale Milano Terrace Scotts-dale, AZ Q2 2005 Q4 2007 224 192 8 24 39 $ 9,498 $ 1,612 10 $ 2,490 $ 355 South Palm Place Tamarac, FL Q2 2005 Q4 2007 208 180 7 21 71 14,428 892 37 7,554 367 Chante-cleer Lakes Naper-ville, IL Q4 2005 Q4 2007 304 265 4 35 59 9,298 1,508 44 7,001 1,186 Parkside Seattle, WA Q4 2005 Q3 2007 44 43 - 1 7 2,680 33 1 470 (3 ) Park Blooming-dale Blooming-dale, IL Q2 2006 Q1 2008 250 133 13 104 55 8,469 887 29 4,477 564 Belle Arts Bellevue, WA Q4 2006 Q1 2008 128 81 3 44 81 26,886 3,707 45 15,159 2,242 Pacific Cove Playa Del Ray, CA Q3 2006 Q4 2007 80 57 18 5 57 27,756 4,094 57 27,756 4,094 Arrington Place Issaquah, WA Q1 2007 Q3 2008 130 - 26 104 - - - - - - Dania Beach Club Dania Beach, FL Q2 2007 Q1 2009 240 - - 240 - - - - - - Sage Everett, WA Q2 2007 Q3 2008 123   -   -   123 -     -     -   -     -     -     1,731 951 79 701 369 99,015 12,733 223 64,907 8,805   Closed Out Timber Ridge Woodin-ville, WA Q1 2005 Q1 2007 203 203 - - 4 1,059 435 - - (16 ) Braewood Bothell, WA Q2 2005 Q1 2007 84 84 - - 2 573 22 - - (69 ) Fairway Greens Pembroke Pines, FL Q1 2005 Q2 2007 152 152 - - 2 410 142 2 410 146 Fifth Avenue North Seattle, WA Q2 2005 Q2 2007 62 62 - - 6 2,001 311 1 461 89 Projects closed out prior to 2007 3,744   3,744   -   - -     -     (56 ) -     -     (52 )   4,245 4,245 - - 14 4,043 854 3 871 98   Totals 14 5,976   5,196   79   701 383   $ 103,058   $ 13,587   226   $ 65,778   $ 8,903       Gross incremental gain on sales of condominium units (3) $ 13,587 $ 8,903 Provision for income taxes 7   (1 ) Net incremental gain on sales of condominium units (3) 13,594 8,902 Corporate overhead (property management expense) (2,442 ) (1,216 ) Other expenses (218 ) (147 ) Discontinued operating income (loss) (2,578 ) (1,223 ) Operating income of halted conversions 1,170   1,083     Net Income - Condominium Division (2) $ 9,526   $ 7,399       (1)Project start date represents the date that each respective property was acquired by the taxable REIT subsidiary and included in discontinued operations.   (2)Excludes interest income, interest expense and certain other items specific to condominium conversion projects that ultimately eliminate in consolidation. Also excludes depreciation expense on halted conversions (active conversions are not depreciated).   (3)Amounts are net of $1,191,000 and $732,000 in reserves for potential homeowners' disputes for the six months and quarter ended June 30, 2007, respectively. EQUITY RESIDENTIAL Maintenance Expenses and Capitalized Improvements to Real Estate For the Six Months Ended June 30, 2007 (Amounts in thousands except for unit and per unit amounts)                                                         Maintenance Expenses Capitalized Improvements to Real Estate Total Expenditures   Total Avg. Avg. Avg. Avg. Building Avg. Avg. Avg. Units Expense Per Payroll Per Per Replacements Per Improvements Per Per Per (1) (2)   Unit (3)   Unit Total   Unit (4)   Unit (5)   Unit Total   Unit Grand Total   Unit   Established Properties (6) 114,823 $ 42,472 $ 370 $ 36,949 $ 322 $ 79,421 $ 692 $ 19,495 $ 170 $ 37,141 $ 323 $ 56,636 $ 493 $ 136,057 $ 1,185   New Acquisition Properties (7) 25,909 9,810 412 7,976 335 17,786 747 4,096 172 27,987 1,176 32,083 1,348 49,869 2,095   Other (8) 7,333 6,730 6,100 12,830 9,486 19,640 29,126 41,956   Total 148,065 $ 59,012 $ 51,025 $ 110,037 $ 33,077 $ 84,768 $ 117,845 $ 227,882           (1) Total units exclude 10,846 unconsolidated units and 3,621 military housing (fee managed) units. (2) Maintenance expenses include general maintenance costs, unit turnover costs including interior painting, regularly scheduled landscaping and tree trimming costs, security, exterminating, fire protection, snow and ice removal, elevator repairs, and other miscellaneous building repair costs. (3) Maintenance payroll includes employee costs for maintenance, cleaning, housekeeping, and landscaping. (4) Replacements include new expenditures inside the units such as appliances, mechanical equipment, fixtures and flooring, including carpeting. (5) Building improvements include roof replacement, paving, amenities and common areas, building mechanical equipment systems, exterior painting and siding, major landscaping, vehicles and office and maintenance equipment. (6) Wholly Owned Properties acquired prior to January 1, 2005. (7) Wholly Owned Properties acquired during 2005, 2006 and 2007. Per unit amounts are based on a weighted average of 23,807 units. (8) Includes properties either partially owned or sold during the period, commercial space, corporate housing, condominium conversions and $9.8 million included in building improvements spent on fifteen specific assets related to major renovations and repositioning of these assets. EQUITY RESIDENTIAL Discontinued Operations (Amounts in thousands)   Six Months Ended, Quarter Ended June 30, June 30, 2007   2006 2007   2006   REVENUES Rental income $ 31,880   $ 164,992   $ 8,591   $ 75,261   Total revenues 31,880   164,992   8,591   75,261     EXPENSES (1) Property and maintenance 15,469 56,322 6,523 26,571 Real estate taxes and insurance 4,695 22,000 1,224 10,014 Property management 272 5,937 69 3,146 Depreciation 7,689 39,789 2,035 17,930 General and administrative 11 482 9 271 Impairment -   351   -   125   Total expenses 28,136   124,881   9,860   58,057     Discontinued operating income (loss) 3,744 40,111 (1,269 ) 17,204   Interest and other income 130 1,134 43 154 Interest (2): Expense incurred, net (1,897 ) (15,864 ) (987 ) (5,982 ) Amortization of deferred financing costs (1,322 ) (763 ) (1,305 ) (604 )   Discontinued operations 655 24,618 (3,518 ) 10,772 Minority Interests - Operating Partnership (41 ) (1,620 ) 218   (707 ) Discontinued operations, net of minority interests 614   22,998   (3,300 ) 10,065     Net gain on sales of discontinued operations 385,323 502,297 273,556 129,796 Minority Interests - Operating Partnership (23,967 ) (33,051 ) (16,988 ) (8,515 ) Gain on sales of discontinued operations, net of minority interests 361,356   469,246   256,568   121,281     Discontinued operations, net of minority interests $ 361,970   $ 492,244   $ 253,268   $ 131,346         (1) Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company’s period of ownership.   (2) Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale. EQUITY RESIDENTIAL Additional Reconciliations and Non-Comparable Items (Amounts in thousands except per share data) (All per share data is diluted)   FFO Reconciliations   FFO Reconciliations Guidance Midpoint Q2 2007 to Actual Q2 2007 Amounts Per Share   Guidance midpoint Q2 2007 FFO - Diluted (1) (2) $ 177,245 $ 0.564 Property NOI (1,923 ) (0.006 ) General and administrative expense 518 0.002 Florida litigation reserve reduction (general and administrative expense) 42 - Interest and other income 2,245 0.007 Interest expense (excluding debt extinguishment): Share repurchase and transaction timing (2,851 ) (0.009 ) Capitalized interest, floating rates and other 425 0.001 Amortization of deferred financing costs (excluding debt extinguishment) (78 ) - Prepayment penalties on debt extinguishment 619 0.002 Write-off of unamortized deferred financing costs on debt extinguishment 861 0.003 Net income - Condominium division (after taxes/overhead/operations) 3,000 0.010 Gain on sale of vacant land 4,516 0.015 Other (primarily ECH NOI and impairment) 192 - Weighted average share count adjustment - 0.011     Actual Q2 2007 FFO - Diluted (1) (2) $ 184,811   $ 0.600   Non-Comparable Items (3)   Six Months Ended June 30, Quarter Ended June 30, 2007 2006 2007 2006   Florida litigation reserve reduction (general and administrative expense) $ 1,667 $ 2,843 $ 42 $ 2,843 Performance shares (general and administrative expense) (219 ) (1,571 ) (179 ) (140 ) Impairment (including discontinued operations) (394 ) (1,156 ) (158 ) (364 ) Prepayment penalties on debt extinguishment (3,041 ) (2,892 ) (2,900 ) (25 ) Write-off of unamortized deferred financing costs on debt extinguishment (3,828 ) (1,542 ) (3,110 ) (555 ) Gain on debt extinguishment - 782 - - Premium on redemption of Preference Interests - (683 ) - (9 ) Net gain on sales of land parcels 4,516 246 4,516 246 Net incremental gain on sales of condominium units 13,594   18,553   8,902   11,426   Net non-comparable items (3) $ 12,295   $ 14,580   $ 7,113   $ 13,422           Note: See page 28 for definitions, footnotes and reconciliations of EPS to FFO. EQUITY RESIDENTIAL The earnings guidance/projections provided below are based on current expectations and are forward-looking.   2007 Earnings Guidance (per share diluted)   Q3 2007 2007   Expected FFO (1) (2) $0.54 to $0.58 $2.25 to $2.35     2007 Same-Store Assumptions Physical occupancy 95.0% Revenue change 3.75% to 4.25% Expense change 2.50% to 3.00% NOI change 4.50% to 5.25% (Note: 30 basis point change in NOI percentage = $0.01 per share change in EPS/FFO)   2007 Transaction Assumptions Acquisitions $1.75 billion Dispositions $1.75 billion Capitalization rate spread 100 basis points   2007 Debt Assumptions Weighted average debt outstanding $9.2 billion - $9.6 billion Weighted average interest rate (reduced for capitalized interest and including prepayment penalties) 5.35% Interest expense (including discontinued operations) $495.0 million - $510.0 million   2007 Preferred Share Assumptions Series D Preferred Shares: Redemption timing July 2007 Liquidation value $175.0 million Premium on redemption (non-cash) $6.1 million   2007 Condominium Conversion Assumptions Net incremental gain on sales of condominium units $19.6 million - $25.9 million Net income - Condominium division (after taxes/overhead/operations) $12.6 million - $21.0 million Number of condominium unit sales 600 units - 850 units   2007 Other Guidance Assumptions General and administrative expense $46.0 million - $49.0 million Interest and other income $20.0 million - $25.0 million Net gain (loss) on sales of land parcels (all recorded in Q2 2007) $4.5 million Weighted average Common Shares and OP Units - Diluted 306.0 million         Note: See page 28 for definitions, footnotes and reconciliations of EPS to FFO. EQUITY RESIDENTIAL The earnings guidance/projections provided below are based on current expectations and are forward-looking.     Reconciliations of EPS to FFO for Pages 26 and 27   (Amounts in thousands except per share data) (All per share data is diluted)   Expected Expected Expected Q2 2007 Q3 2007 2007 Amounts Per Share Per Share Per Share   Expected EPS - Diluted (4) $ 306,700 $ 0.975 $1.79 to $1.83 $3.35 to $3.45 Add: Expected depreciation expense 154,530 0.492 0.52 2.05 Less: Expected net gain on sales (4) (283,985 ) (0.903 ) (1.77 ) (3.15 )         Expected FFO - Diluted (1) (2) $ 177,245   $ 0.564   $0.54 to $0.58 $2.25 to $2.35 Definitions and Footnotes for Pages 26 and 27   (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 Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO available to Common Shares and OP Units is calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Minority Interests - Operating Partnership". Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis. (2) The Company believes that FFO and FFO available to Common Shares and OP 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 Common Shares and OP 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 Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP. Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO and FFO available to Common Shares and OP 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. (3) Non-comparable items are those items included in FFO that by their nature are not comparable from period to period, such as net incremental gain on sales of condominium units, impairment charges, debt extinguishment costs and redemption premiums on Preferred Shares/Preference Interests. (4) Earnings per share ("EPS") represents net income per share calculated in accordance with accounting principles generally accepted in the United States. Expected EPS is calculated on a basis consistent with actual EPS. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual EPS could differ materially from expected EPS.