ERP OPERATING LTD PARTNERSHIP 10-Q

10-Q Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 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: 1-12252 (Equity Residential) Commission File Number: 0-24920 (ERP Operating Limited Partnership) EQUITY RESIDENTIAL ERP OPERATING LIMITED PARTNERSHIP ( Exact name of registrant as specified in its charter) Maryland (Equity Residential) 13-3675988 (Equity Residential) Illinois (ERP Operating Limited Partnership) 36-3894853 (ERP Operating Limited Partnership) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Two North Riverside Plaza , Chicago , Illinois 60606 ( 312 ) 474-1300 (Address of principal executive offices) (Zip Code) (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Shares of Beneficial Interest, $0.01 Par Value (Equity Residential) EQR New York Stock Exchange 7.57% Notes due August 15, 2026 (ERP Operating Limited Partnership) N/A New York Stock Exchange 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. Equity Residential Yes ☒ No ☐ ERP Operating Limited Partnership Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Equity Residential Yes ☒ No ☐ ERP Operating Limited Partnership Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Equity Residential: Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ l ERP Operating Limited Partnership: Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Equity Residential ☐ ERP Operating Limited Partnership ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Equity Residential Yes ☐ No ☒ ERP Operating Limited Partnership Yes ☐ No ☒ The number of EQR Common Shares of Beneficial Interest, $0.01 par value, outstanding on July 26, 2023 was 379,032,411 . Table of Contents EXPLANATORY NOTE This report combines the reports on Form 10-Q for the quarterly period ended June 30, 2023 of Equity Residential and ERP Operating Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “EQR” mean Equity Residential, a Maryland real estate investment trust (“REIT”), and references to “ERPOP” mean ERP Operating Limited Partnership, an Illinois limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. The following chart illustrates the Company’s and the Operating Partnership’s corporate structure: EQR is the general partner of, and as of June 30, 2023 owned an approximate 96.8% ownership interest in, ERPOP. The remaining 3.2% interest is owned by limited partners. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. Management operates the Company and the Operating Partnership as one business. The management of EQR consists of the same members as the management of ERPOP. The Company is structured as an umbrella partnership REIT (“UPREIT”) and EQR contributes all net proceeds from its various equity offerings to ERPOP. In return for those contributions, EQR receives a number of OP Units (see definition below) in ERPOP equal to the number of Common Shares it has issued in the equity offering. The Company may acquire properties in transactions that include the issuance of 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. This is one of the reasons why the Company is structured in the manner shown above. Based on the terms of ERPOP’s partnership agreement, OP Units can be exchanged with Common Shares on a one-for-one basis because the Company maintains a one-for-one relationship between the OP Units of ERPOP issued to EQR and the outstanding Common Shares. The Company believes that combining the reports on Form 10-Q of EQR and ERPOP into this single report provides the following benefits: • enhances investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; • eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and • creates time and cost efficiencies through the preparation of one combined report instead of two separate reports. Table of Contents The Company believes it is important to understand the few differences between EQR and ERPOP in the context of how EQR and ERPOP operate as a consolidated company. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR’s primary function is acting as the general partner of ERPOP. EQR also issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by EQR (which are contributed to the capital of ERPOP in exchange for additional partnership interests in ERPOP (“OP Units”) (on a one-for-one Common Share per OP Unit basis) or additional preference units in ERPOP (on a one-for-one preferred share per preference unit basis)), the Operating Partnership generates all remaining capital required by the Company’s business. These sources include the Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility and/or commercial paper program, the issuance of secured and unsecured debt and partnership interests, and proceeds received from disposition of certain properties and joint venture interests. Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and as noncontrolling interests in the Company’s financial statements. The noncontrolling interests in the Operating Partnership’s financial statements include the interests of unaffiliated partners in various consolidated partnerships. The noncontrolling interests in the Company’s financial statements include the same noncontrolling interests at the Operating Partnership level and limited partner OP Unit holders of the Operating Partnership. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at the Company and Operating Partnership levels. To help investors understand the differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of each entity’s debt, noncontrolling interests and shareholders’ equity or partners’ capital, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity. This report also includes separate Part I, Item 4, Controls and Procedures , sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350. In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership. As general partner with control of ERPOP, EQR consolidates ERPOP for financial reporting purposes, and EQR essentially has no assets or liabilities other than its investment in ERPOP. Therefore, the assets and liabilities of the Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company. Table of Contents TABLE OF CONTENTS PAGE PART I. Item 1. Financial Statements of Equity Residential: Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 2 Consolidated Statements of Operations and Comprehensive Income for the six months and quarters ended June 30, 2023 and 2022 3 Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 5 Consolidated Statements of Changes in Equity for the six months and quarters ended June 30, 2023 and 2022 8 Financial Statements of ERP Operating Limited Partnership : Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 10 Consolidated Statements of Operations and Comprehensive Income for the six months and quarters ended June 30, 2023 and 2022 11 Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 13 Consolidated Statements of Changes in Capital for the six months and quarters ended June 30, 2023 and 2022 16 Notes to Consolidated Financial Statements of Equity Residential and ERP Operating Limited Partnership 18 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 36 Item 3. Quantitative and Qualitative Disclosures about Market Risk 46 Item 4. Controls and Procedures 46 PART II. Item 1. Legal Proceedings 47 Item 1A. Risk Factors 47 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47 Item 3. Defaults Upon Senior Securities 47 Item 4. Mine Safety Disclosures 47 Item 5. Other Information 47 Item 6. Exhibits 47 1 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED B ALANCE SHEETS (Amounts in thousands except for share amounts) (Unaudited) June 30, December 31, 2023 2022 ASSETS Land $ 5,579,211 $ 5,580,878 Depreciable property 22,697,597 22,334,369 Projects under development 50,916 112,940 Land held for development 61,334 60,567 Investment in real estate 28,389,058 28,088,754 Accumulated depreciation ( 9,428,549 ) ( 9,027,850 ) Investment in real estate, net 18,960,509 19,060,904 Investments in unconsolidated entities 304,710 279,024 Cash and cash equivalents 35,701 53,869 Restricted deposits 88,941 83,303 Right-of-use assets 463,704 462,956 Other assets 292,164 278,206 Total assets $ 20,145,729 $ 20,218,262 LIABILITIES AND EQUITY Liabilities: Mortgage notes payable, net $ 1,913,069 $ 1,953,438 Notes, net 5,345,373 5,342,329 Line of credit and commercial paper 184,474 129,955 Accounts payable and accrued expenses 118,316 96,028 Accrued interest payable 66,238 66,310 Lease liabilities 313,866 308,748 Other liabilities 294,263 306,941 Security deposits 69,427 68,940 Distributions payable 258,841 244,621 Total liabilities 8,563,867 8,517,310 Commitments and contingencies Redeemable Noncontrolling Interests – Operating Partnership 355,319 318,273 Equity: Shareholders' equity: Preferred Shares of beneficial interest, $ 0.01 par value; 100,000,000 shares authorized; 745,600 shares issued and outstanding as of June 30, 2023 and December 31, 2022 37,280 37,280 Common Shares of beneficial interest, $ 0.01 par value; 1,000,000,000 shares authorized; 379,032,722 shares issued and outstanding as of June 30, 2023 and 378,429,708 shares issued and outstanding as of December 31, 2022 3,790 3,784 Paid in capital 9,472,628 9,476,085 Retained earnings 1,506,460 1,658,837 Accumulated other comprehensive income (loss) 3,708 ( 2,547 ) Total shareholders’ equity 11,023,866 11,173,439 Noncontrolling Interests: Operating Partnership 207,405 209,961 Partially Owned Properties ( 4,728 ) ( 721 ) Total Noncontrolling Interests 202,677 209,240 Total equity 11,226,543 11,382,679 Total liabilities and equity $ 20,145,729 $ 20,218,262 See accompanying notes 2 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF O PERATIONS AND COMPREHENSIVE INCOME (Amounts in thousands except per share data) (Unaudited) Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 REVENUES Rental income $ 1,422,397 $ 1,340,378 $ 717,309 $ 687,030 EXPENSES Property and maintenance 262,350 241,229 124,771 116,355 Real estate taxes and insurance 209,749 202,538 103,080 101,850 Property management 62,145 57,306 30,679 26,559 General and administrative 35,041 33,661 18,876 16,423 Depreciation 437,185 453,767 221,355 223,806 Total expenses 1,006,470 988,501 498,761 484,993 Net gain (loss) on sales of real estate properties 100,122 107,795 ( 87 ) 107,897 Operating income 516,049 459,672 218,461 309,934 Interest and other income 3,669 4,124 2,131 596 Other expenses ( 15,559 ) ( 5,436 ) ( 6,564 ) ( 2,380 ) Interest: Expense incurred, net ( 131,991 ) ( 144,681 ) ( 65,590 ) ( 71,889 ) Amortization of deferred financing costs ( 3,996 ) ( 4,201 ) ( 2,017 ) ( 2,124 ) Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels 368,172 309,478 146,421 234,137 Income and other tax (expense) benefit ( 634 ) ( 573 ) ( 336 ) ( 291 ) Income (loss) from investments in unconsolidated entities ( 2,605 ) ( 2,429 ) ( 1,223 ) ( 1,168 ) Net income 364,933 306,476 144,862 232,678 Net (income) loss attributable to Noncontrolling Interests: Operating Partnership ( 11,613 ) ( 10,027 ) ( 4,554 ) ( 7,633 ) Partially Owned Properties ( 2,082 ) ( 1,583 ) ( 1,105 ) ( 944 ) Net income attributable to controlling interests 351,238 294,866 139,203 224,101 Preferred distributions ( 1,545 ) ( 1,545 ) ( 773 ) ( 773 ) Net income available to Common Shares $ 349,693 $ 293,321 $ 138,430 $ 223,328 Earnings per share – basic: Net income available to Common Shares $ 0.92 $ 0.78 $ 0.37 $ 0.59 Weighted average Common Shares outstanding 378,492 375,640 378,642 375,769 Earnings per share – diluted: Net income available to Common Shares $ 0.92 $ 0.78 $ 0.37 $ 0.59 Weighted average Common Shares outstanding 391,063 389,463 391,187 389,363 See accompanying notes 3 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF OPERATIO NS AND COMPREHENSIVE INCOME (Continued) (Amounts in thousands except per share data) (Unaudited) Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 Comprehensive income: Net income $ 364,933 $ 306,476 $ 144,862 $ 232,678 Other comprehensive income (loss): Other comprehensive income (loss) – derivative instruments: Unrealized holding gains (losses) arising during the period 4,054 ( 1,259 ) 13,834 ( 1,259 ) Losses reclassified into earnings from other comprehensive income 2,201 4,881 1,106 2,456 Other comprehensive income (loss) 6,255 3,622 14,940 1,197 Comprehensive income 371,188 310,098 159,802 233,875 Comprehensive (income) attributable to Noncontrolling Interests ( 13,890 ) ( 11,730 ) ( 6,135 ) ( 8,617 ) Comprehensive income attributable to controlling interests $ 357,298 $ 298,368 $ 153,667 $ 225,258 See accompanying notes 4 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEM ENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Six Months Ended June 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 364,933 $ 306,476 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 437,185 453,767 Amortization of deferred financing costs 3,996 4,201 Amortization of discounts and premiums on debt 1,740 2,891 Amortization of deferred settlements on derivative instruments 2,195 4,875 Amortization of right-of-use assets 6,357 6,103 Write-off of pursuit costs 1,993 2,515 (Income) loss from investments in unconsolidated entities 2,605 2,429 Distributions from unconsolidated entities – return on capital 290 164 Net (gain) loss on sales of real estate properties ( 100,122 ) ( 107,795 ) Realized (gain) loss on sale of investment securities 87 ( 2,064 ) Compensation paid with Company Common Shares 20,845 18,600 Changes in assets and liabilities: (Increase) decrease in other assets ( 13,258 ) ( 2,096 ) Increase (decrease) in accounts payable and accrued expenses 25,424 22,615 Increase (decrease) in accrued interest payable ( 72 ) ( 473 ) Increase (decrease) in lease liabilities ( 658 ) ( 817 ) Increase (decrease) in other liabilities ( 8,047 ) ( 23,985 ) Increase (decrease) in security deposits 487 3,468 Net cash provided by operating activities 745,980 690,874 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate – acquisitions ( 186,676 ) ( 113,046 ) Investment in real estate – development/other ( 46,815 ) ( 55,491 ) Capital expenditures to real estate ( 135,247 ) ( 83,304 ) Non-real estate capital additions ( 1,043 ) ( 981 ) Interest capitalized for real estate and unconsolidated entities under development ( 6,979 ) ( 2,267 ) Proceeds from disposition of real estate, net 133,916 255,922 Investments in unconsolidated entities – acquisitions ( 989 ) — Investments in unconsolidated entities – development/other ( 25,413 ) ( 48,577 ) Distributions from unconsolidated entities – return of capital 15 9 Purchase of investment securities and other investments ( 2,500 ) ( 1,034 ) Proceeds from sale of investment securities 452 3,434 Net cash provided by (used for) investing activities ( 271,279 ) ( 45,335 ) See accompanying notes 5 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Amounts in thousands) (Unaudited) Six Months Ended June 30, 2023 2022 CASH FLOWS FROM FINANCING ACTIVITIES: Debt financing costs $ — $ ( 228 ) Mortgage notes payable, net: Proceeds 22,896 14,586 Lump sum payoffs ( 64,722 ) ( 260,874 ) Scheduled principal repayments ( 54 ) ( 2,985 ) Line of credit and commercial paper: Commercial paper proceeds 2,382,619 2,836,037 Commercial paper repayments ( 2,328,100 ) ( 2,966,121 ) Finance ground lease principal payments ( 1,329 ) ( 1,229 ) Proceeds from Employee Share Purchase Plan (ESPP) 2,124 2,378 Proceeds from exercise of options 11,358 18,928 Payment of offering costs — ( 487 ) Other financing activities, net ( 31 ) ( 31 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 3,737 ) ( 32,178 ) Contributions – Noncontrolling Interests – Partially Owned Properties 9 603 Contributions – Noncontrolling Interests – Operating Partnership 1 1 Distributions: Common Shares ( 487,483 ) ( 461,605 ) Preferred Shares ( 2,319 ) ( 1,545 ) Noncontrolling Interests – Operating Partnership ( 15,233 ) ( 15,142 ) Noncontrolling Interests – Partially Owned Properties ( 3,230 ) ( 17,232 ) Net cash provided by (used for) financing activities ( 487,231 ) ( 887,124 ) Net increase (decrease) in cash and cash equivalents and restricted deposits ( 12,530 ) ( 241,585 ) Cash and cash equivalents and restricted deposits, beginning of period 137,172 360,236 Cash and cash equivalents and restricted deposits, end of period $ 124,642 $ 118,651 Cash and cash equivalents and restricted deposits, end of period Cash and cash equivalents $ 35,701 $ 45,010 Restricted deposits 88,941 73,641 Total cash and cash equivalents and restricted deposits, end of period $ 124,642 $ 118,651 See accompanying notes 6 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Amounts in thousands) (Unaudited) Six Months Ended June 30, 2023 2022 SUPPLEMENTAL INFORMATION: Cash paid for interest, net of amounts capitalized $ 125,518 $ 136,787 Net cash paid (received) for income and other taxes $ 911 $ 687 Amortization of deferred financing costs: Investment in real estate, net $ ( 211 ) $ ( 253 ) Other assets $ 1,392 $ 1,170 Mortgage notes payable, net $ 895 $ 1,159 Notes, net $ 1,920 $ 2,125 Amortization of discounts and premiums on debt: Mortgage notes payable, net $ 616 $ 1,545 Notes, net $ 1,124 $ 1,346 Amortization of deferred settlements on derivative instruments: Other liabilities $ ( 6 ) $ ( 6 ) Accumulated other comprehensive income $ 2,201 $ 4,881 Write-off of pursuit costs: Investment in real estate, net $ 316 $ 761 Investments in unconsolidated entities $ 1,111 $ 1,637 Other assets $ 566 $ 117 (Income) loss from investments in unconsolidated entities: Investments in unconsolidated entities $ 1,972 $ 1,797 Other liabilities $ 633 $ 632 Realized/unrealized (gain) loss on derivative instruments: Other assets $ ( 3,359 ) $ — Other liabilities $ ( 695 ) $ 1,259 Accumulated other comprehensive income $ 4,054 $ ( 1,259 ) Interest capitalized for real estate and unconsolidated entities under development: Investment in real estate, net $ ( 2,988 ) $ ( 675 ) Investments in unconsolidated entities $ ( 3,991 ) $ ( 1,592 ) Investments in unconsolidated entities – development/other: Investments in unconsolidated entities $ ( 24,633 ) $ ( 47,887 ) Other liabilities $ ( 780 ) $ ( 690 ) Debt financing costs: Mortgage notes payable, net $ — $ ( 228 ) Right-of-use assets and lease liabilities initial measurement and reclassifications: Right-of-use assets $ ( 7,105 ) $ ( 224 ) Lease liabilities $ 7,105 $ 224 Non-cash share distribution and other transfers from unconsolidated entities: Investments in unconsolidated entities $ 539 $ 4,048 Other assets $ ( 539 ) $ ( 4,048 ) See accompanying notes 7 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENT S OF CHANGES IN EQUITY (Amounts in thousands except per share data) (Unaudited) Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 SHAREHOLDERS’ EQUITY PREFERRED SHARES Balance, beginning of period $ 37,280 $ 37,280 $ 37,280 $ 37,280 Balance, end of period $ 37,280 $ 37,280 $ 37,280 $ 37,280 COMMON SHARES, $ 0.01 PAR VALUE Balance, beginning of period $ 3,784 $ 3,755 $ 3,789 $ 3,760 Conversion of OP Units into Common Shares 2 — — — Exercise of share options 2 4 — 1 Share-based employee compensation expense: Restricted shares 2 2 1 — Balance, end of period $ 3,790 $ 3,761 $ 3,790 $ 3,761 PAID IN CAPITAL Balance, beginning of period $ 9,476,085 $ 9,121,122 $ 9,488,320 $ 9,142,969 Common Share Issuance: Conversion of OP Units into Common Shares 4,657 1,484 986 1,310 Exercise of share options 11,356 18,924 3,246 4,583 Employee Share Purchase Plan (ESPP) 2,124 2,378 672 1,409 Share-based employee compensation expense: Restricted shares 7,943 7,359 4,290 3,750 Share options 3,125 1,390 1,628 514 ESPP discount 398 420 138 249 Offering costs — ( 487 ) — ( 373 ) Supplemental Executive Retirement Plan (SERP) 148 ( 269 ) ( 343 ) ( 106 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 900 ) ( 27,355 ) ( 900 ) ( 27,355 ) Change in market value of Redeemable Noncontrolling Interests – Operating Partnership ( 39,123 ) 98,140 ( 33,177 ) 97,201 Adjustment for Noncontrolling Interests ownership in Operating Partnership 6,815 6,632 7,768 5,587 Balance, end of period $ 9,472,628 $ 9,229,738 $ 9,472,628 $ 9,229,738 RETAINED EARNINGS Balance, beginning of period $ 1,658,837 $ 1,827,063 $ 1,619,131 $ 1,661,705 Net income attributable to controlling interests 351,238 294,866 139,203 224,101 Common Share distributions ( 502,070 ) ( 470,424 ) ( 251,101 ) ( 235,073 ) Preferred Share distributions ( 1,545 ) ( 1,545 ) ( 773 ) ( 773 ) Balance, end of period $ 1,506,460 $ 1,649,960 $ 1,506,460 $ 1,649,960 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balance, beginning of period $ ( 2,547 ) $ ( 34,272 ) $ ( 11,232 ) $ ( 31,847 ) Accumulated other comprehensive income (loss) – derivative instruments: Unrealized holding gains (losses) arising during the period 4,054 ( 1,259 ) 13,834 ( 1,259 ) Losses reclassified into earnings from other comprehensive income 2,201 4,881 1,106 2,456 Balance, end of period $ 3,708 $ ( 30,650 ) $ 3,708 $ ( 30,650 ) DISTRIBUTIONS Distributions declared per Common Share outstanding $ 1.325 $ 1.25 $ 0.6625 $ 0.625 See accompanying notes 8 Table of Contents EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued) (Amounts in thousands except per share data) (Unaudited) Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 NONCONTROLLING INTERESTS OPERATING PARTNERSHIP Balance, beginning of period $ 209,961 $ 214,094 $ 211,718 $ 217,451 Issuance of restricted units to Noncontrolling Interests 1 1 1 — Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner ( 4,659 ) ( 1,484 ) ( 986 ) ( 1,310 ) Equity compensation associated with Noncontrolling Interests 10,867 13,159 6,213 5,361 Net income attributable to Noncontrolling Interests 11,613 10,027 4,554 7,633 Distributions to Noncontrolling Interests ( 15,640 ) ( 15,488 ) ( 7,736 ) ( 7,593 ) Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership 2,077 2,649 1,409 371 Adjustment for Noncontrolling Interests ownership in Operating Partnership ( 6,815 ) ( 6,632 ) ( 7,768 ) ( 5,587 ) Balance, end of period $ 207,405 $ 216,326 $ 207,405 $ 216,326 PARTIALLY OWNED PROPERTIES Balance, beginning of period $ ( 721 ) $ 18,166 $ ( 2,553 ) $ 3,415 Net income attributable to Noncontrolling Interests 2,082 1,583 1,105 944 Contributions by Noncontrolling Interests 9 603 9 157 Distributions to Noncontrolling Interests ( 3,261 ) ( 17,263 ) ( 452 ) ( 1,427 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 2,837 ) ( 4,823 ) ( 2,837 ) ( 4,823 ) Balance, end of period $ ( 4,728 ) $ ( 1,734 ) $ ( 4,728 ) $ ( 1,734 ) See accompanying notes 9 Table of Contents ERP OPERATING LI MITED PARTNERSHIP CONSOLIDATED B ALANCE SHEETS (Amounts in thousands) (Unaudited) June 30, December 31, 2023 2022 ASSETS Land $ 5,579,211 $ 5,580,878 Depreciable property 22,697,597 22,334,369 Projects under development 50,916 112,940 Land held for development 61,334 60,567 Investment in real estate 28,389,058 28,088,754 Accumulated depreciation ( 9,428,549 ) ( 9,027,850 ) Investment in real estate, net 18,960,509 19,060,904 Investments in unconsolidated entities 304,710 279,024 Cash and cash equivalents 35,701 53,869 Restricted deposits 88,941 83,303 Right-of-use assets 463,704 462,956 Other assets 292,164 278,206 Total assets $ 20,145,729 $ 20,218,262 LIABILITIES AND CAPITAL Liabilities: Mortgage notes payable, net $ 1,913,069 $ 1,953,438 Notes, net 5,345,373 5,342,329 Line of credit and commercial paper 184,474 129,955 Accounts payable and accrued expenses 118,316 96,028 Accrued interest payable 66,238 66,310 Lease liabilities 313,866 308,748 Other liabilities 294,263 306,941 Security deposits 69,427 68,940 Distributions payable 258,841 244,621 Total liabilities 8,563,867 8,517,310 Commitments and contingencies Redeemable Limited Partners 355,319 318,273 Capital: Partners’ Capital: Preference Units 37,280 37,280 General Partner 10,982,878 11,138,706 Limited Partners 207,405 209,961 Accumulated other comprehensive income (loss) 3,708 ( 2,547 ) Total partners’ capital 11,231,271 11,383,400 Noncontrolling Interests – Partially Owned Properties ( 4,728 ) ( 721 ) Total capital 11,226,543 11,382,679 Total liabilities and capital $ 20,145,729 $ 20,218,262 See accompanying notes 10 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERA TIONS AND COMPREHENSIVE INCOME (Amounts in thousands except per Unit data) (Unaudited) Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 REVENUES Rental income $ 1,422,397 $ 1,340,378 $ 717,309 $ 687,030 EXPENSES Property and maintenance 262,350 241,229 124,771 116,355 Real estate taxes and insurance 209,749 202,538 103,080 101,850 Property management 62,145 57,306 30,679 26,559 General and administrative 35,041 33,661 18,876 16,423 Depreciation 437,185 453,767 221,355 223,806 Total expenses 1,006,470 988,501 498,761 484,993 Net gain (loss) on sales of real estate properties 100,122 107,795 ( 87 ) 107,897 Operating income 516,049 459,672 218,461 309,934 Interest and other income 3,669 4,124 2,131 596 Other expenses ( 15,559 ) ( 5,436 ) ( 6,564 ) ( 2,380 ) Interest: Expense incurred, net ( 131,991 ) ( 144,681 ) ( 65,590 ) ( 71,889 ) Amortization of deferred financing costs ( 3,996 ) ( 4,201 ) ( 2,017 ) ( 2,124 ) Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels 368,172 309,478 146,421 234,137 Income and other tax (expense) benefit ( 634 ) ( 573 ) ( 336 ) ( 291 ) Income (loss) from investments in unconsolidated entities ( 2,605 ) ( 2,429 ) ( 1,223 ) ( 1,168 ) Net income 364,933 306,476 144,862 232,678 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties ( 2,082 ) ( 1,583 ) ( 1,105 ) ( 944 ) Net income attributable to controlling interests $ 362,851 $ 304,893 $ 143,757 $ 231,734 ALLOCATION OF NET INCOME: Preference Units $ 1,545 $ 1,545 $ 773 $ 773 General Partner $ 349,693 $ 293,321 $ 138,430 $ 223,328 Limited Partners 11,613 10,027 4,554 7,633 Net income available to Units $ 361,306 $ 303,348 $ 142,984 $ 230,961 Earnings per Unit – basic: Net income available to Units $ 0.92 $ 0.78 $ 0.37 $ 0.59 Weighted average Units outstanding 389,942 387,531 390,032 387,664 Earnings per Unit – diluted: Net income available to Units $ 0.92 $ 0.78 $ 0.37 $ 0.59 Weighted average Units outstanding 391,063 389,463 391,187 389,363 See accompanying notes 11 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIO NS AND COMPREHENSIVE INCOME (Continued) (Amounts in thousands except per Unit data) (Unaudited) Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 Comprehensive income: Net income $ 364,933 $ 306,476 $ 144,862 $ 232,678 Other comprehensive income (loss): Other comprehensive income (loss) – derivative instruments: Unrealized holding gains (losses) arising during the period 4,054 ( 1,259 ) 13,834 ( 1,259 ) Losses reclassified into earnings from other comprehensive income 2,201 4,881 1,106 2,456 Other comprehensive income (loss) 6,255 3,622 14,940 1,197 Comprehensive income 371,188 310,098 159,802 233,875 Comprehensive (income) attributable to Noncontrolling Interests – Partially Owned Properties ( 2,082 ) ( 1,583 ) ( 1,105 ) ( 944 ) Comprehensive income attributable to controlling interests $ 369,106 $ 308,515 $ 158,697 $ 232,931 See accompanying notes 12 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STA TEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Six Months Ended June 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 364,933 $ 306,476 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 437,185 453,767 Amortization of deferred financing costs 3,996 4,201 Amortization of discounts and premiums on debt 1,740 2,891 Amortization of deferred settlements on derivative instruments 2,195 4,875 Amortization of right-of-use assets 6,357 6,103 Write-off of pursuit costs 1,993 2,515 (Income) loss from investments in unconsolidated entities 2,605 2,429 Distributions from unconsolidated entities – return on capital 290 164 Net (gain) loss on sales of real estate properties ( 100,122 ) ( 107,795 ) Realized (gain) loss on sale of investment securities 87 ( 2,064 ) Compensation paid with Company Common Shares 20,845 18,600 Changes in assets and liabilities: (Increase) decrease in other assets ( 13,258 ) ( 2,096 ) Increase (decrease) in accounts payable and accrued expenses 25,424 22,615 Increase (decrease) in accrued interest payable ( 72 ) ( 473 ) Increase (decrease) in lease liabilities ( 658 ) ( 817 ) Increase (decrease) in other liabilities ( 8,047 ) ( 23,985 ) Increase (decrease) in security deposits 487 3,468 Net cash provided by operating activities 745,980 690,874 CASH FLOWS FROM INVESTING ACTIVITIES: Investment in real estate – acquisitions ( 186,676 ) ( 113,046 ) Investment in real estate – development/other ( 46,815 ) ( 55,491 ) Capital expenditures to real estate ( 135,247 ) ( 83,304 ) Non-real estate capital additions ( 1,043 ) ( 981 ) Interest capitalized for real estate and unconsolidated entities under development ( 6,979 ) ( 2,267 ) Proceeds from disposition of real estate, net 133,916 255,922 Investments in unconsolidated entities – acquisitions ( 989 ) — Investments in unconsolidated entities – development/other ( 25,413 ) ( 48,577 ) Distributions from unconsolidated entities – return of capital 15 9 Purchase of investment securities and other investments ( 2,500 ) ( 1,034 ) Proceeds from sale of investment securities 452 3,434 Net cash provided by (used for) investing activities ( 271,279 ) ( 45,335 ) See accompanying notes 13 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Amounts in thousands) (Unaudited) Six Months Ended June 30, 2023 2022 CASH FLOWS FROM FINANCING ACTIVITIES: Debt financing costs $ — $ ( 228 ) Mortgage notes payable, net: Proceeds 22,896 14,586 Lump sum payoffs ( 64,722 ) ( 260,874 ) Scheduled principal repayments ( 54 ) ( 2,985 ) Line of credit and commercial paper: Commercial paper proceeds 2,382,619 2,836,037 Commercial paper repayments ( 2,328,100 ) ( 2,966,121 ) Finance ground lease principal payments ( 1,329 ) ( 1,229 ) Proceeds from EQR’s Employee Share Purchase Plan (ESPP) 2,124 2,378 Proceeds from exercise of EQR options 11,358 18,928 Payment of offering costs — ( 487 ) Other financing activities, net ( 31 ) ( 31 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 3,737 ) ( 32,178 ) Contributions – Noncontrolling Interests – Partially Owned Properties 9 603 Contributions – Limited Partners 1 1 Distributions: OP Units – General Partner ( 487,483 ) ( 461,605 ) Preference Units ( 2,319 ) ( 1,545 ) OP Units – Limited Partners ( 15,233 ) ( 15,142 ) Noncontrolling Interests – Partially Owned Properties ( 3,230 ) ( 17,232 ) Net cash provided by (used for) financing activities ( 487,231 ) ( 887,124 ) Net increase (decrease) in cash and cash equivalents and restricted deposits ( 12,530 ) ( 241,585 ) Cash and cash equivalents and restricted deposits, beginning of period 137,172 360,236 Cash and cash equivalents and restricted deposits, end of period $ 124,642 $ 118,651 Cash and cash equivalents and restricted deposits, end of period Cash and cash equivalents $ 35,701 $ 45,010 Restricted deposits 88,941 73,641 Total cash and cash equivalents and restricted deposits, end of period $ 124,642 $ 118,651 See accompanying notes 14 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Amounts in thousands) (Unaudited) Six Months Ended June 30, 2023 2022 SUPPLEMENTAL INFORMATION: Cash paid for interest, net of amounts capitalized $ 125,518 $ 136,787 Net cash paid (received) for income and other taxes $ 911 $ 687 Amortization of deferred financing costs: Investment in real estate, net $ ( 211 ) $ ( 253 ) Other assets $ 1,392 $ 1,170 Mortgage notes payable, net $ 895 $ 1,159 Notes, net $ 1,920 $ 2,125 Amortization of discounts and premiums on debt: Mortgage notes payable, net $ 616 $ 1,545 Notes, net $ 1,124 $ 1,346 Amortization of deferred settlements on derivative instruments: Other liabilities $ ( 6 ) $ ( 6 ) Accumulated other comprehensive income $ 2,201 $ 4,881 Write-off of pursuit costs: Investment in real estate, net $ 316 $ 761 Investments in unconsolidated entities $ 1,111 $ 1,637 Other assets $ 566 $ 117 (Income) loss from investments in unconsolidated entities: Investments in unconsolidated entities $ 1,972 $ 1,797 Other liabilities $ 633 $ 632 Realized/unrealized (gain) loss on derivative instruments: Other assets $ ( 3,359 ) $ — Other liabilities $ ( 695 ) $ 1,259 Accumulated other comprehensive income $ 4,054 $ ( 1,259 ) Interest capitalized for real estate and unconsolidated entities under development: Investment in real estate, net $ ( 2,988 ) $ ( 675 ) Investments in unconsolidated entities $ ( 3,991 ) $ ( 1,592 ) Investments in unconsolidated entities – development/other: Investments in unconsolidated entities $ ( 24,633 ) $ ( 47,887 ) Other liabilities $ ( 780 ) $ ( 690 ) Debt financing costs: Mortgage notes payable, net $ — $ ( 228 ) Right-of-use assets and lease liabilities initial measurement and reclassifications: Right-of-use assets $ ( 7,105 ) $ ( 224 ) Lease liabilities $ 7,105 $ 224 Non-cash share distribution and other transfers from unconsolidated entities: Investments in unconsolidated entities $ 539 $ 4,048 Other assets $ ( 539 ) $ ( 4,048 ) See accompanying notes 15 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENT S OF CHANGES IN CAPITAL (Amounts in thousands except per Unit data) (Unaudited) Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 PARTNERS’ CAPITAL PREFERENCE UNITS Balance, beginning of period $ 37,280 $ 37,280 $ 37,280 $ 37,280 Balance, end of period $ 37,280 $ 37,280 $ 37,280 $ 37,280 GENERAL PARTNER Balance, beginning of period $ 11,138,706 $ 10,951,940 $ 11,111,240 $ 10,808,434 OP Unit Issuance: Conversion of OP Units held by Limited Partners into OP Units held by General Partner 4,659 1,484 986 1,310 Exercise of EQR share options 11,358 18,928 3,246 4,584 EQR’s Employee Share Purchase Plan (ESPP) 2,124 2,378 672 1,409 Share-based employee compensation expense: EQR restricted shares 7,945 7,361 4,291 3,750 EQR share options 3,125 1,390 1,628 514 EQR ESPP discount 398 420 138 249 Net income available to Units – General Partner 349,693 293,321 138,430 223,328 OP Units – General Partner distributions ( 502,070 ) ( 470,424 ) ( 251,101 ) ( 235,073 ) Offering costs — ( 487 ) — ( 373 ) Supplemental Executive Retirement Plan (SERP) 148 ( 269 ) ( 343 ) ( 106 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 900 ) ( 27,355 ) ( 900 ) ( 27,355 ) Change in market value of Redeemable Limited Partners ( 39,123 ) 98,140 ( 33,177 ) 97,201 Adjustment for Limited Partners ownership in Operating Partnership 6,815 6,632 7,768 5,587 Balance, end of period $ 10,982,878 $ 10,883,459 $ 10,982,878 $ 10,883,459 LIMITED PARTNERS Balance, beginning of period $ 209,961 $ 214,094 $ 211,718 $ 217,451 Issuance of restricted units to Limited Partners 1 1 1 — Conversion of OP Units held by Limited Partners into OP Units held by General Partner ( 4,659 ) ( 1,484 ) ( 986 ) ( 1,310 ) Equity compensation associated with Units – Limited Partners 10,867 13,159 6,213 5,361 Net income available to Units – Limited Partners 11,613 10,027 4,554 7,633 Units – Limited Partners distributions ( 15,640 ) ( 15,488 ) ( 7,736 ) ( 7,593 ) Change in carrying value of Redeemable Limited Partners 2,077 2,649 1,409 371 Adjustment for Limited Partners ownership in Operating Partnership ( 6,815 ) ( 6,632 ) ( 7,768 ) ( 5,587 ) Balance, end of period $ 207,405 $ 216,326 $ 207,405 $ 216,326 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balance, beginning of period $ ( 2,547 ) $ ( 34,272 ) $ ( 11,232 ) $ ( 31,847 ) Accumulated other comprehensive income (loss) – derivative instruments: Unrealized holding gains (losses) arising during the period 4,054 ( 1,259 ) 13,834 ( 1,259 ) Losses reclassified into earnings from other comprehensive income 2,201 4,881 1,106 2,456 Balance, end of period $ 3,708 $ ( 30,650 ) $ 3,708 $ ( 30,650 ) DISTRIBUTIONS Distributions declared per Unit outstanding $ 1.325 $ 1.25 $ 0.6625 $ 0.625 See accompanying notes 16 Table of Contents ERP OPERATING LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued) (Amounts in thousands except per Unit data) (Unaudited) Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 NONCONTROLLING INTERESTS NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES Balance, beginning of period $ ( 721 ) $ 18,166 $ ( 2,553 ) $ 3,415 Net income attributable to Noncontrolling Interests 2,082 1,583 1,105 944 Contributions by Noncontrolling Interests 9 603 9 157 Distributions to Noncontrolling Interests ( 3,261 ) ( 17,263 ) ( 452 ) ( 1,427 ) Acquisition of Noncontrolling Interests – Partially Owned Properties ( 2,837 ) ( 4,823 ) ( 2,837 ) ( 4,823 ) Balance, end of period $ ( 4,728 ) $ ( 1,734 ) $ ( 4,728 ) $ ( 1,734 ) See accompanying notes 17 Table of Contents EQUITY RESIDENTIAL ERP OPERATING LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Business Equity Residential (“EQR”) is an S&P 500 company focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters, a business that is conducted on its behalf by ERP Operating Limited Partnership (“ERPOP”). EQR is a Maryland real estate investment trust (“REIT”) formed in March 1993 and ERPOP is an Illinois limited partnership formed in May 1993. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership. EQR is the general partner of, and as of June 30, 2023 owned an approximate 96.8 % ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP, but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. As of June 30, 2023, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 304 properties located in 10 states and the District of Columbia consisting of 80,212 apartment units. The ownership breakdown includes (table does not include any uncompleted development properties): Properties Apartment Units Wholly Owned Properties 289 76,986 Partially Owned Properties – Consolidated 15 3,226 304 80,212 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. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) 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. Operating results for the six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. In preparation of the Company’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 sheets at December 31, 2022 have been derived from the audited financial statements at that date but do 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 Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022 . 18 Table of Contents Income and Other Taxes EQR has elected to be taxed as a REIT. This, along with the nature of the operations of its operating properties, resulted in no provision for federal income taxes at the EQR level. In addition, ERPOP generally is not liable for federal income taxes as the partners recognize their allocable share of income or loss in their tax returns; therefore no provision for federal income taxes has been made at the ERPOP level. Historically, the Company has generally only incurred certain state and local income, excise and franchise taxes. The Company has elected taxable REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries 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. Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (“FASB”) issued an amendment to the debt and equity financial instruments standards which simplifies the accounting for convertible instruments and accounting for contracts in an entity’s own equity. The Company adopted the standard when effective on January 1, 2022 and it had no impact on its consolidated results of operations and financial position. In March 2020, the FASB issued an amendment to the reference rate reform standard which provides the option for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on contract modifications and hedge accounting. The new standard was effective for the Company upon issuance and elections could be made through December 31, 2024. The Company elected to apply the hedge accounting expedients and application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. 3. Equity, Capital and Other Interests The Company refers to “Common Shares” and “Units” (which refer to both OP Units and restricted units) as equity securities for EQR and “General Partner Units” and “Limited Partner Units” as equity securities for ERPOP. To provide a streamlined and more readable presentation of the disclosures for the Company and the Operating Partnership, several sections below refer to the respective terminology for each with the same financial information and separate sections are provided, where needed, to further distinguish any differences in financial information and terminology. The following table presents the changes in the Company’s issued and outstanding Common Shares and Units for the six months ended June 30, 2023 and 2022: 2023 2022 Common Shares Common Shares outstanding at January 1, 378,429,708 375,527,195 Common Shares Issued: Conversion of OP Units 180,629 31,089 Exercise of share options 232,317 348,510 Employee Share Purchase Plan (ESPP) 40,346 35,669 Restricted share grants, net 149,722 175,970 Common Shares outstanding at June 30, 379,032,722 376,118,433 Units Units outstanding at January 1, 12,429,737 12,659,027 Restricted unit grants, net 166,344 223,242 Conversion of OP Units to Common Shares ( 180,629 ) ( 31,089 ) Units outstanding at June 30, 12,415,452 12,851,180 Total Common Shares and Units outstanding at June 30, 391,448,174 388,969,613 Units Ownership Interest in Operating Partnership 3.2 % 3.3 % 19 Table of Contents The following table presents the changes in the Operating Partnership’s issued and outstanding General Partner Units and Limited Partner Units for the six months ended June 30, 2023 and 2022: 2023 2022 General and Limited Partner Units General and Limited Partner Units outstanding at January 1, 390,859,445 388,186,222 Issued to General Partner: Exercise of EQR share options 232,317 348,510 EQR’s Employee Share Purchase Plan (ESPP) 40,346 35,669 EQR’s restricted share grants, net 149,722 175,970 Issued to Limited Partners: Restricted unit grants, net 166,344 223,242 General and Limited Partner Units outstanding at June 30, 391,448,174 388,969,613 Limited Partner Units Limited Partner Units outstanding at January 1, 12,429,737 12,659,027 Limited Partner restricted unit grants, net 166,344 223,242 Conversion of Limited Partner OP Units to EQR Common Shares ( 180,629 ) ( 31,089 ) Limited Partner Units outstanding at June 30, 12,415,452 12,851,180 Limited Partner Units Ownership Interest in Operating Partnership 3.2 % 3.3 % The equity positions of 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 restricted units, are collectively referred to as the “Noncontrolling Interests – Operating Partnership” and “Limited Partners Capital,” respectively, for the Company and the Operating Partnership. Subject to certain exceptions (including the “book-up” requirements of restricted units), the Noncontrolling Interests – Operating Partnership/Limited Partners Capital may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital (including redeemable interests) is allocated based on the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total in proportion to the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total plus the total number of Common Shares/General Partner Units. Net income is allocated to the Noncontrolling Interests – Operating Partnership/Limited Partners Capital based on the weighted average ownership percentage during the period. The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing Common Shares to any and all holders of Noncontrolling Interests – Operating Partnership/Limited Partners Capital requesting an exchange of their Noncontrolling Interests – Operating Partnership/Limited Partners Capital with EQR. Once the Operating Partnership elects not to redeem the Noncontrolling Interests – Operating Partnership/Limited Partners Capital for cash, EQR is obligated to deliver Common Shares to the exchanging holder of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital. The Noncontrolling Interests – Operating Partnership/Limited Partners Capital are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Noncontrolling Interests – Operating Partnership/Limited Partners Capital are differentiated and referred to as “Redeemable Noncontrolling Interests – Operating Partnership” and “Redeemable Limited Partners,” respectively. Instruments that require settlement in registered shares cannot 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 Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners 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 Common Shares for the remaining portion of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital that are classified in permanent equity at June 30, 2023 and December 31, 2022. The carrying value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners is allocated based on the number of Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners in proportion to the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total. Such percentage of the total carrying value of Units/Limited Partner Units which is ascribed to the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners is then adjusted to the greater of carrying value or fair market value as described above. As of June 30, 2023 and 2022, the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners have a redemption value of approximately $ 355.3 million and $ 398.2 million, respectively, which represents the value of Common Shares that would be issued in exchange for the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners. 20 Table of Contents The following table presents the changes in the redemption value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners for the six months ended June 30, 2023 and 2022, respectively (amounts in thousands): 2023 2022 Balance at January 1, $ 318,273 $ 498,977 Change in market value 39,123 ( 98,140 ) Change in carrying value ( 2,077 ) ( 2,649 ) Balance at June 30, $ 355,319 $ 398,188 Net proceeds from EQR Common Share and Preferred Share (see definition below) offerings and proceeds from exercise of options for Common Shares are contributed by EQR to ERPOP. 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). As a result, the net proceeds from Common Shares and Preferred Shares are allocated for the Company between shareholders’ equity and Noncontrolling Interests – Operating Partnership and for the Operating Partnership between General Partner’s Capital and Limited Partners Capital to account for the change in their respective percentage ownership of the underlying equity. The Company’s declaration of trust authorizes it to issue up to 100,000,000 preferred shares of beneficial interest, $ 0.01 par value per share (the “Preferred Shares”), with specific rights, preferences and other attributes as the Board of Trustees may determine, which may include preferences, powers and rights that are senior to the rights of holders of the Company’s Common Shares. The following table presents the Company’s issued and outstanding Preferred Shares/Preference Units as of June 30, 2023 and December 31, 2022: Amounts in thousands Annual Call Dividend Per June 30, December 31, Date (1) Share/Unit (2) 2023 2022 Preferred Shares/Preference Units of beneficial interest, $ 0.01 par value; 100,000,000 shares authorized: 8.29 % Series K Cumulative Redeemable Preferred Shares/Preference Units; liquidation value $ 50 per share/unit; 745,600 shares/units issued and outstanding as of June 30, 2023 and December 31, 2022 12/10/2026 $ 4.145 $ 37,280 $ 37,280 $ 37,280 $ 37,280 (1) On or after the call date, redeemable Preferred Shares/Preference Units may be redeemed for cash at the option of the Company or the Operating Partnership, respectively, in whole or in part, at a redemption price equal to the liquidation price per share/unit, plus accrued and unpaid distributions, if any. (2) Dividends on Preferred Shares/Preference Units are payable quarterly. Other EQR and ERPOP currently have an active universal shelf registration statement for the issuance of equity and debt securities that automatically became effective upon filing with the SEC in May 2022 and expires in May 2025. Per the terms of ERPOP’s partnership agreement, EQR contributes the net proceeds of all equity offerings to the capital of ERPOP in exchange for additional OP Units (on a one-for-one Common Share per OP Unit basis) or preference units (on a one-for-one preferred share per preference unit basis). The Company has an At-The-Market (“ATM”) share offering program which allows EQR to issue Common Shares from time to time into the existing trading market at current market prices or through negotiated transactions, including under forward sale arrangements. The current program matures in May 2025 and gives us the authority to issue up to 13.0 million shares, all of which remain available for issuance as of June 30, 2023. The Company may repurchase up to 13.0 million Common Shares under its share repurchase program. No open market repurchases have occurred since 2008. As of June 30, 2023 , EQR has remaining authorization to repurchase up to 13.0 million of its shares. ERPOP issued $ 0.9 million of 3.00 % Series Q Cumulative Redeemable Preference Units (the "Series Q Preference Units") in the second quarter of 2023 in connection with the buyout of the noncontrolling interest in a consolidated operating property (see Note 6 for additional discussion). The 933,454 Series Q Preference Units have a liquidation value of $ 1.00 per unit and pay distributions quarterly 21 Table of Contents at the annual rate of $ 0.03 per unit. The Series Q Preference Units can be redeemed for, at EQR's/ERPOP's option, Common Shares, OP Units and/or cash upon the occurrence of specific events laid out in the agreement. If redeemed for Common Shares or OP Units, the number of shares/units issued is based on the Common Share price. The Series Q Preference Units increased the balance of Noncontrolling Interests - Partially Owned Properties in the consolidated balance sheets. 4. Real Estate The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of June 30, 2023 and December 31, 2022 (amounts in thousands): June 30, 2023 December 31, 2022 Land $ 5,579,211 $ 5,580,878 Depreciable property: Buildings and improvements 19,702,354 19,471,503 Furniture, fixtures and equipment 2,479,945 2,352,050 In-Place lease intangibles 515,298 510,816 Projects under development: Land 3,200 3,201 Construction-in-progress 47,716 109,739 Land held for development: Land 46,160 46,160 Construction-in-progress 15,174 14,407 Investment in real estate 28,389,058 28,088,754 Accumulated depreciation ( 9,428,549 ) ( 9,027,850 ) Investment in real estate, net $ 18,960,509 $ 19,060,904 During th e six months ended June 30, 2023, the Company acquired the following from unaffiliated parties (purchase price in thousands): Properties Apartment Units Purchase Price Rental Properties – Consolidated (1) 2 549 $ 186,600 Total 2 549 $ 186,600 (1) Purchase price includes an allocation of approximately $ 19.3 million to land and $ 167.4 million to depreciable property (inclusive of capitalized closing costs). During the six months ended June 30, 2023, the Company disposed of the following to unaffiliated parties (sales price and net gain in thousands): Properties Apartment Units Sales Price Net Gain Rental Properties – Consolidated 7 247 $ 135,300 $ 100,122 Total 7 247 $ 135,300 $ 100,122 5. Commitments to Acquire/Dispose of Real Estate The Company has entered into an agreement to acquire the following (purchase price in thousands): Properties Apartment Units Purchase Price Rental Properties – Consolidated 1 290 $ 93,000 Total 1 290 $ 93,000 The Company has entered into an agreement to dispose of the following (sales price and net book value in thousands): Properties Apartment Units Sales Price Net Book Value at June 30, 2023 Rental Properties - Consolidated 1 166 $ 60,100 $ 31,305 Total 1 166 $ 60,100 $ 31,305 22 Table of Contents The closing of pending transactions is subject to certain conditions and restrictions; therefore there can be no assurance that the transactions will be consummated or that the final terms will not differ in material respects from any agreements summarized above. See Note 14 for discussion of the properties acquired or disposed of, if any, subsequent to June 30, 2023 . 6. Investments in Partially Owned Entities The Company has invested in various entities with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated). Consolidated Variable Interest Entities (“VIEs”) In accordance with accounting standards for consolidation of VIEs, the Company consolidates ERPOP on EQR’s financial statements. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. The limited partners are not able to exercise substantive kick-out or participating rights. As a result, ERPOP qualifies as a VIE. EQR has a controlling financial interest in ERPOP and, thus, is ERPOP’s primary beneficiary. EQR has the power to direct the activities of ERPOP that most significantly impact ERPOP’s economic performance as well as the obligation to absorb losses or the right to receive benefits from ERPOP that could potentially be significant to ERPOP. The Company has various equity interests in certain joint ventures that have been deemed to be VIEs, and the Company is the VIEs’ primary beneficiary. As a result, the joint ventures are required to be consolidated on the Company’s financial statements. The following table summarizes the Company’s consolidated joint ventures as of June 30, 2023: Operating Properties (1), (2) Properties Apartment Units Consolidated Joint Ventures (VIE) 15 3,226 (1) During the second quarter of 2023, the Company acquired its joint venture partner's 10 % interest in a 200 -unit apartment property for $ 4.6 million, of which the Company paid $ 3.7 million in cash and ERPOP issued $ 0.9 million of 3.00 % Series Q Preference Units (see Note 3 for additional discussion). The property is now wholly owned. In connection with the buyout, the carrying amount of the Noncontrolling Interests – Partially Owned Properties totaling $ 3.7 million was reduced to zero and the remaining $ 0.9 million was recorded to paid in capital/general partner capital. The Company also repaid $ 64.7 million of mortgage debt at par prior to maturity in conjunction with the buyout. (2) The land parcel under one of the projects is subject to a long-term ground lease. The following table provides consolidated assets and liabilities related to the Company's VIEs as of June 30, 2023 and December 31, 2022 (amounts in thousands): June 30, 2023 December 31, 2022 Consolidated Assets $ 579,832 $ 691,880 Consolidated Liabilities $ 107,228 $ 158,932 Certain consolidated joint ventures in which we have investments obtained mortgage debt to finance a portion of their activities. The following table and information summarizes the variable rate construction mortgage debt that is non-recourse to the Company at June 30, 2023 (aggregate and amounts borrowed under loan commitments in thousands): Recently Completed Operating Property Number of joint ventures with debt financing 1 Aggregate loan commitments $ 73,344 Amounts borrowed under loan commitments (1) $ 67,876 Maturity dates 2025 (1) See Note 9 for the proceeds of secured conventional floating rate debt under Mortgage Notes Payable and Note 14 for discussion of the loan repayment subsequent to June 30, 2023 . 23 Table of Contents Investments in Unconsolidated Entities The Company has various equity interests in certain joint ventures that are unconsolidated and accounted for using the equity method of accounting. Most of these have been deemed to be VIEs and the Company is not the VIEs' primary beneficiary. The remaining have been deemed not to be VIEs and the Company does not have a controlling voting interest. The following table and information summarizes the Company’s investments in unconsolidated entities as of June 30, 2023 and December 31, 2022 (amounts in thousands except for ownership percentage): June 30, 2023 December 31, 2022 Ownership Percentage Investments in Unconsolidated Entities: Various Real Estate Holdings (VIE) $ 36,873 $ 35,974 Varies Projects Under Development and Land Held for Development (VIE) 242,391 218,043 62 % - 95 % (1) Real Estate Technology Funds/Companies (VIE) 25,695 25,249 Varies Other ( 249 ) ( 242 ) Varies Investments in Unconsolidated Entities $ 304,710 $ 279,024 (1) In certain instances, the joint venture agreements contain provisions for promoted interests in favor of our joint venture partner. If the terms of the promoted interest are attained, then our share of the proceeds from a sale or other capital event of the unconsolidated entity may be less than the indicated ownership percentage. The following table summarizes the Company’s unconsolidated joint ventures that were deemed to be VIEs as of June 30, 2023: Real Estate Holdings (1) Projects Under Development (2), (5) Projects Held for Development (2), (3) Entities Projects Apartment Units (4) Projects Apartment Units (4) Unconsolidated Joint Ventures (VIE) 2 6 1,982 4 1,334 (1) Represents entities that hold various real estate investments. (2) Represents separate unconsolidated joint ventures for the purpose of developing multifamily rental properties. (3) Represents separate unconsolidated joint ventures that have not yet started. (4) Represents the intended number of apartment units to be developed. (5) The land parcel under one of the projects is subject to a long-term ground lease. New Development Joint Ventures The following table provides information on total unconsolidated development joint ventures entered into during the six months ended June 30, 2023 (amounts in thousands except for number of unconsolidated joint ventures and apartment units): Number of unconsolidated joint ventures (1) 1 Apartment units (2) 368 Investments in unconsolidated entities – acquisitions $ 989 (1) The entities qualify as VIEs, but the Company is not the primary beneficiary because it does not have the power to direct the activities that most significantly impact the VIE’s performance. Therefore, the entities are unconsolidated and recorded using the equity method of accounting. See Note 2 of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional discussion. (2) Represents the intended number of apartment units to be developed. 24 Table of Contents 7. Restricted Deposits The following table presents the Company’s restricted deposits as of June 30, 2023 and December 31, 2022 (amounts in thousands): June 30, 2023 December 31, 2022 Mortgage escrow deposits: Replacement reserves $ 13,440 $ 12,549 Mortgage principal reserves/sinking funds 28,802 25,304 Mortgage escrow deposits 42,242 37,853 Restricted cash: Earnest money on pending acquisitions 4,000 4,500 Restricted deposits on real estate investments 225 229 Resident security and utility deposits 39,504 38,432 Other 2,970 2,289 Restricted cash 46,699 45,450 Restricted deposits $ 88,941 $ 83,303 8. Leases Lessor Accounting The Company is the lessor for its residential and non-residential leases and these leases are accounted for as operating leases under the lease standard. The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the six months ended June 30, 2023 and 2022 (amounts in thousands): Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Income Type Residential Leases Non-Residential Leases Total Residential Leases Non-Residential Leases Total Residential and non-residential rent $ 1,276,338 $ 31,973 $ 1,308,311 $ 1,194,087 $ 32,095 $ 1,226,182 Utility recoveries (RUBS income) (1) 42,786 419 43,205 39,583 369 39,952 Parking rent 21,893 225 22,118 21,706 202 21,908 Other lease revenue (2) ( 13,420 ) 734 ( 12,686 ) ( 889 ) ( 197 ) ( 1,086 ) Total lease revenue $ 1,327,597 $ 33,351 1,360,948 $ 1,254,487 $ 32,469 1,286,956 Parking revenue 20,395 18,431 Other revenue 41,054 34,991 Total other rental income (3) 61,449 53,422 Rental income $ 1,422,397 $ 1,340,378 (1) RUBS income primarily consists of variable payments representing the recovery of utility costs from residents. (2) Other lease revenue consists of the revenue adjustment related to bad debt and other miscellaneous lease revenue. (3) Other rental income is accounted for under the revenue recognition standard. 25 Table of Contents The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the quarters ended June 30, 2023 and 2022 (amounts in thousands): Quarter Ended June 30, 2023 Quarter Ended June 30, 2022 Income Type Residential Leases Non-Residential Leases Total Residential Leases Non-Residential Leases Total Residential and non-residential rent $ 641,586 $ 15,987 $ 657,573 $ 606,307 $ 16,221 $ 622,528 Utility recoveries (RUBS income) (1) 21,403 212 21,615 19,985 188 20,173 Parking rent 11,011 116 11,127 10,923 104 11,027 Other lease revenue (2) ( 5,831 ) 65 ( 5,766 ) 5,412 ( 154 ) 5,258 Total lease revenue $ 668,169 $ 16,380 684,549 $ 642,627 $ 16,359 658,986 Parking revenue 10,192 9,623 Other revenue 22,568 18,421 Total other rental income (3) 32,760 28,044 Rental income $ 717,309 $ 687,030 (1) RUBS income primarily consists of variable payments representing the recovery of utility costs from residents. (2) Other lease revenue consists of the revenue adjustment related to bad debt and other miscellaneous lease revenue. (3) Other rental income is accounted for under the revenue recognition standard. The following table presents residential and non-residential accounts receivable and straight-line receivable balances for the Company’s properties as of June 30, 2023 and December 31, 2022 (amounts in thousands): Residential Non-Residential Balance Sheet (Other assets): June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 Resident/tenant accounts receivable balances $ 27,098 $ 35,688 $ 2,382 $ 2,820 Allowance for doubtful accounts ( 22,609 ) ( 31,405 ) ( 1,383 ) ( 2,152 ) Net receivable balances $ 4,489 $ 4,283 $ 999 $ 668 Straight-line receivable balances $ 7,072 $ 4,398 $ 13,562 $ 13,795 The following table presents residential bad debt for the Company’s properties for the six months and quarters ended June 30, 2023 and 2022 (amounts in thousands): Six Months Ended June 30, Quarter Ended June 30, Income Statement (Rental income): 2023 2022 2023 2022 Bad debt, net (1) $ 19,820 $ 8,147 $ 9,065 $ ( 1,748 ) % of rental income 1.4 % 0.6 % 1.3 % ( 0.3 %) (1) Bad debt, net benefited from additional resident payments due to governmental rental assistance programs of approximately $ 1.8 million and $ 25.1 million for the six months ended June 30, 2023 and 2022 , respectively, and $ 0.7 million and $ 15.0 million for the quarters ended June 30, 2023 and 2022 , respectively. 9. Debt EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. Weighted average interest rates noted below for the six months ended June 30, 2023 include the effect of any derivative instruments and amortization of premiums/discounts/OCI (other comprehensive income) on debt and derivatives. 26 Table of Contents Mortgage Notes Payable The following table summarizes the Company’s mortgage notes payable activity for the six months ended June 30, 2023 (amounts in thousands): Mortgage notes payable, net as of December 31, 2022 Proceeds Lump sum payoffs Scheduled principal repayments Amortization of premiums/ discounts Amortization of deferred financing costs, net (1) Mortgage notes payable, net as of June 30, 2023 Fixed Rate Debt: Secured – Conventional $ 1,608,838 $ — $ — $ — $ — $ 460 $ 1,609,298 Floating Rate Debt: Secured – Conventional 108,378 22,896 (2) ( 64,722 ) ( 54 ) — 365 66,863 Secured – Tax Exempt 236,222 — — — 616 70 236,908 Floating Rate Debt 344,600 22,896 ( 64,722 ) ( 54 ) 616 435 303,771 Total $ 1,953,438 $ 22,896 $ ( 64,722 ) $ ( 54 ) $ 616 $ 895 $ 1,913,069 (1) Represents amortization of deferred financing costs, net of debt financing costs. (2) See Note 6 for additional discussion of the variable rate construction mortgage debt. The following table summarizes certain interest rate and maturity date information as of and for the six months ended June 30, 2023: June 30, 2023 Interest Rate Ranges 0.10 % - 7.91 % Weighted Average Interest Rate 3.63 % Maturity Date Ranges 2023 - 2061 As of June 30, 2023, the Company had $ 250.0 million of secured tax-exempt bonds subject to third-party credit enhancement. Notes The following table summarizes the Company’s notes activity for the six months ended June 30, 2023 (amounts in thousands): Notes, net as of December 31, 2022 Proceeds Lump sum payoffs Amortization of premiums/ discounts Amortization of deferred financing costs, net (1) Notes, net as of June 30, 2023 Fixed Rate Debt: Unsecured – Public $ 5,342,329 $ — $ — $ 1,124 $ 1,920 $ 5,345,373 (1) Represents amortization of deferred financing costs, net of debt financing costs. The following table summarizes certain interest rate and maturity date information as of and for the six months ended June 30, 2023: June 30, 2023 Interest Rate Ranges 1.85 % - 7.57 % Weighted Average Interest Rate 3.54 % Maturity Date Ranges 2025 - 2047 The Company’s unsecured public notes contain certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was in compliance with its unsecured public debt covenants for the six months ended June 30, 2023. 27 Table of Contents Line of Credit and Commercial Paper The Company has a $ 2.5 billion unsecured revolving credit facility maturing on October 26, 2027 . The Company has the ability to increase available borrowings by an additional $ 750.0 million by adding lenders to the facility, obtaining the agreement of existing lenders to increase their commitments or incurring one or more term loans. The interest rate on advances under the facility will generally be the Secured Overnight Financing Rate ("SOFR") plus a spread (currently 0.725 %), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 0.125 %). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating. The Company did no t borrow any amounts under its revolving credit facility during the six months ended June 30, 2023. The Company has an unsecured commercial paper note program under which it may borrow up to a maximum of $ 1.0 billion subject to market conditions. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the Company’s other unsecured senior indebtedness. The following table summarizes certain weighted average interest rate, maturity and amount outstanding information for the commercial paper program as of and for the six months ended June 30, 2023: June 30, 2023 Weighted Average Interest Rate (1) 5.12 % Weighted Average Maturity (in days) 26 Weighted Average Amount Outstanding $ 164.5 million (1) The notes bear interest at various floating rates. The Company limits its utilization of the revolving credit facility in order to maintain liquidity to support its $ 1.0 billion commercial paper program along with certain other obligations. The following table presents the availability on the Company’s unsecured revolving credit facility as of June 30, 2023 (amounts in thousands): June 30, 2023 Unsecured revolving credit facility commitment $ 2,500,000 Commercial paper balance outstanding ( 185,187 ) Unsecured revolving credit facility balance outstanding — Other restricted amounts ( 3,484 ) Unsecured revolving credit facility availability $ 2,311,329 Other The following table summarizes the Company's total debt extinguishment costs recorded as additional expense for the six months and quarters ended June 30, 2023 and 2022 (amounts in thousands): Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 Write-offs of unamortized deferred financing costs $ 47 $ 92 $ 47 $ 92 Write-offs of unamortized (premiums)/discounts/OCI — 377 — 377 Total $ 47 $ 469 $ 47 $ 469 10. Fair Value Measurements The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments on listed market prices and third-party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments. In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company may seek to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments. The Company may also use derivatives to manage commodity prices in the daily operations of the business. 28 Table of Contents 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 Company’s derivative positions are valued using models developed by the respective counterparty as well as models applied internally by the Company that use as their inputs readily observable market parameters (such as forward yield curves and credit default swap data). The following table summarizes the inputs to the valuations for each type of fair value measurement: Fair Value Measurement Type Valuation Inputs Employee holdings (other than Common Shares) within the supplemental executive retirement plan (the “SERP”) Quoted market prices for identical assets. These holdings are included in other assets and other liabilities on the consolidated balance sheets. Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners Quoted market price of Common Shares. Mortgage notes payable and private unsecured debt (including its commercial paper and line of credit, if applicable) Indicative rates provided by lenders of similar loans. Public unsecured notes Quoted market prices for each underlying issuance. The fair values of the Company’s financial instruments (other than mortgage notes payable, unsecured notes, commercial paper, line of credit and derivative instruments), including cash and cash equivalents and other financial instruments, approximate their carrying or contract value. The following table provides a summary of the carrying and fair values for the Company’s mortgage notes payable and unsecured debt (including its commercial paper and line of credit, if applicable) at June 30, 2023 and December 31, 2022, respectively (amounts in thousands): June 30, 2023 December 31, 2022 Carrying Value Estimated Fair Value (Level 2) Carrying Value Estimated Fair Value (Level 2) Mortgage notes payable, net $ 1,913,069 $ 1,773,555 $ 1,953,438 $ 1,803,525 Unsecured debt, net 5,529,847 4,975,013 5,472,284 4,874,490 Total debt, net $ 7,442,916 $ 6,748,568 $ 7,425,722 $ 6,678,015 The following table summarizes the Company’s consolidated derivative instruments at June 30, 2023 (dollar amounts are in thousands): Forward Starting Swaps (1) Current Notional Balance $ 450,000 Lowest Interest Rate 2.4470 % Highest Interest Rate 3.6995 % Maturity Date 2033 (1) Forward Starting Swaps – Designed to partially fix interest rates in advance of planned future debt issuances. These swaps have mandatory counterparty terminations i n 2024 and are targeted for certain 2023 debt issuances. All of these forward starting swaps settled subsequent to June 30, 2023. See Note 14 for additional discussion. 29 Table of Contents The following tables provide a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a recurring basis and the location within the accompanying consolidated balance sheets at June 30, 2023 and December 31, 2022, respectively (amounts in thousands): Fair Value Measurements at Reporting Date Using Description Balance Sheet Location 6/30/2023 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps Other Assets $ 25,224 $ — $ 25,224 $ — Supplemental Executive Retirement Plan Other Assets 130,135 130,135 — — Total $ 155,359 $ 130,135 $ 25,224 $ — Liabilities Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps Other Liabilities $ 515 $ — $ 515 $ — Supplemental Executive Retirement Plan Other Liabilities 130,135 130,135 — — Total $ 130,650 $ 130,135 $ 515 $ — Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners Mezzanine $ 355,319 $ — $ 355,319 $ — Fair Value Measurements at Reporting Date Using Description Balance Sheet Location 12/31/2022 Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps Other Assets $ 21,864 $ — $ 21,864 $ — Supplemental Executive Retirement Plan Other Assets 133,245 133,245 — — Total $ 155,109 $ 133,245 $ 21,864 $ — Liabilities Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps Other Liabilities $ 1,210 $ — $ 1,210 $ — Supplemental Executive Retirement Plan Other Liabilities 133,245 133,245 — — Total $ 134,455 $ 133,245 $ 1,210 $ — Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners Mezzanine $ 318,273 $ — $ 318,273 $ — 30 Table of Contents The following tables provide a summary of the effect of cash flow hedges on the Company’s accompanying consolidated statements of operations and comprehensive income for the six months ended June 30, 2023 and 2022, respectively (amounts in thousands): June 30, 2023 Type of Cash Flow Hedge Amount of Gain/(Loss) Recognized in OCI on Derivative Location of Gain/(Loss) Reclassified from Accumulated OCI into Income Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps $ 4,054 Interest expense $ ( 2,201 ) Total $ 4,054 $ ( 2,201 ) June 30, 2022 Type of Cash Flow Hedge Amount of Gain/(Loss) Recognized in OCI on Derivative Location of Gain/(Loss) Reclassified from Accumulated OCI into Income Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income Derivatives designated as hedging instruments: Interest Rate Contracts: Forward Starting Swaps $ ( 1,259 ) Interest expense $ ( 4,881 ) Total $ ( 1,259 ) $ ( 4,881 ) As of June 30, 2023 and December 31, 2022 , there were approximately $ 3.7 million in deferred gains, net, and $ 2.5 million in deferred losses, net, included in accumulated other comprehensive income (loss), respectively, related to previously settled and unsettled derivative instruments, of which an estimated $ 2.4 million may be recognized as additional interest expense during the twelve months ending June 30, 2024. 11. Earnings Per Share and Earnings Per Unit Equity Residential The following tables set forth the computation of net income per share – basic and net income per share – diluted for the Company (amounts in thousands except per share amounts): Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 Numerator for net income per share – basic: Net income $ 364,933 $ 306,476 $ 144,862 $ 232,678 Allocation to Noncontrolling Interests – Operating Partnership ( 11,613 ) ( 10,027 ) ( 4,554 ) ( 7,633 ) Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties ( 2,082 ) ( 1,583 ) ( 1,105 ) ( 944 ) Preferred distributions ( 1,545 ) ( 1,545 ) ( 773 ) ( 773 ) Numerator for net income per share – basic $ 349,693 $ 293,321 $ 138,430 $ 223,328 Numerator for net income per share – diluted: Net income $ 364,933 $ 306,476 $ 144,862 $ 232,678 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties ( 2,082 ) ( 1,583 ) ( 1,105 ) ( 944 ) Preferred distributions ( 1,545 ) ( 1,545 ) ( 773 ) ( 773 ) Numerator for net income per share – diluted $ 361,306 $ 303,348 $ 142,984 $ 230,961 Denominator for net income per share – basic and diluted: Denominator for net income per share – basic 378,492 375,640 378,642 375,769 Effect of dilutive securities: OP Units 11,450 11,891 11,390 11,895 Long-term compensation shares/units 1,121 1,863 1,155 1,698 ATM forward sales — 69 — 1 Denominator for net income per share – diluted 391,063 389,463 391,187 389,363 Net income per share – basic $ 0.92 $ 0.78 $ 0.37 $ 0.59 Net income per share – diluted $ 0.92 $ 0.78 $ 0.37 $ 0.59 31 Table of Contents ERP Operating Limited Partnership The following tables set forth the computation of net income per Unit – basic and net income per Unit – diluted for the Operating Partnership (amounts in thousands except per Unit amounts): Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 Numerator for net income per Unit – basic and diluted: Net income $ 364,933 $ 306,476 $ 144,862 $ 232,678 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties ( 2,082 ) ( 1,583 ) ( 1,105 ) ( 944 ) Allocation to Preference Units ( 1,545 ) ( 1,545 ) ( 773 ) ( 773 ) Numerator for net income per Unit – basic and diluted $ 361,306 $ 303,348 $ 142,984 $ 230,961 Denominator for net income per Unit – basic and diluted: Denominator for net income per Unit – basic 389,942 387,531 390,032 387,664 Effect of dilutive securities: Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term compensation shares/units 1,121 1,863 1,155 1,698 ATM forward sales — 69 — 1 Denominator for net income per Unit – diluted 391,063 389,463 391,187 389,363 Net income per Unit – basic $ 0.92 $ 0.78 $ 0.37 $ 0.59 Net income per Unit – diluted $ 0.92 $ 0.78 $ 0.37 $ 0.59 12. Commitments and Contingencies Commitments Real Estate Development Commitments As of June 30, 2023 , the Company has both consolidated and unconsolidated real estate projects under development. The following table summarizes the gross remaining total project costs for the Company’s projects under development at June 30, 2023 (total project costs remaining in thousands): Projects Apartment Units Total Project Costs Remaining (1) Projects Under Development Consolidated 1 225 $ 101,705 Unconsolidated 6 1,982 243,293 Total Projects Under Development 7 2,207 $ 344,998 (1) The Company’s share of the $ 345.0 million in total project costs remaining approximates $ 109.7 million, with the balance funded by the Company’s joint venture partners (approximately $ 2.7 million) and/or applicable construction loans (approximately $ 232.6 million). We have entered into, and may continue in the future to enter into, joint venture agreements with third-party partners for the development of multifamily rental properties. The joint venture agreements with each development partner include buy-sell provisions that provide the right, but not the obligation, for the Company to acquire each respective partner’s interests or sell its interests at any time following the occurrence of certain pre-defined events described in the joint venture agreements. See Note 6 for additional discussion. Other Commitments We have entered into, and may continue in the future to enter into, real estate technology and other real estate fund investments. As of June 30, 2023, t he Company has invested in nine separate such investments totaling $ 36.9 million with aggregate remaining commitments of approximately $ 16.1 million. 32 Table of Contents Contingencies Litigation and Legal Matters The Company, as an owner of real estate, is subject to various federal, state and local laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company 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 Company does not believe there is any litigation pending or threatened against it that, individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company. 13. Reportable Segments Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses and about which discrete financial information is available that is evaluated regularly by the chief operating decision maker. The chief operating decision maker decides how resources are allocated and assesses performance on a recurring basis at least quarterly. The Company’s primary business is the acquisition, development and management of multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The chief operating decision maker evaluates the Company’s operating performance geographically by market and both on a same store and non-same store basis. While the Company does maintain a non-residential presence, it accounts for approximately 3.8 % of total revenues for the six months ended June 30, 2023 and is designed as an amenity for our residential residents. The chief operating decision maker evaluates the performance of each property on a consolidated residential and non-residential basis. The Company’s geographic consolidated same store operating segments represent its reportable segments. The Company’s development activities are other business activities that do not constitute an operating segment and as such, have been aggregated in the “Other” category in the tables presented below. All revenues are from external customers and there is no customer who contributed 10% or more of the Company’s total revenues during the six months and quarters ended June 30, 2023 and 2022, respectively. The primary financial measure for the Company’s rental real estate segment is net operating income (“NOI”), which represents rental income less: 1) property and maintenance expense and 2) real estate taxes and insurance expense (all as reflected in the accompanying consolidated statements of operations and comprehensive income). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment properties. Revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods. The following table presents a reconciliation of NOI from our rental real estate for the six months and quarters ended June 30, 2023 and 2022, respectively (amounts in thousands): Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 Rental income $ 1,422,397 $ 1,340,378 $ 717,309 $ 687,030 Property and maintenance expense ( 262,350 ) ( 241,229 ) ( 124,771 ) ( 116,355 ) Real estate taxes and insurance expense ( 209,749 ) ( 202,538 ) ( 103,080 ) ( 101,850 ) Total operating expenses ( 472,099 ) ( 443,767 ) ( 227,851 ) ( 218,205 ) Net operating income $ 950,298 $ 896,611 $ 489,458 $ 468,825 33 Table of Contents The following tables present NOI from our rental real estate for each segment for the six months and quarters ended June 30, 2023 and 2022, respectively, as well as total assets and capital expenditures at June 30, 2023 (amounts in thousands): Six Months Ended June 30, 2023 Six Months Ended June 30, 2022 Rental Income Operating Expenses NOI Rental Income Operating Expenses NOI Same store (1) Los Angeles $ 234,243 $ 73,597 $ 160,646 $ 227,809 $ 67,243 $ 160,566 Orange County 63,904 14,372 49,532 60,018 13,013 47,005 San Diego 45,452 10,348 35,104 42,410 9,605 32,805 Subtotal - Southern California 343,599 98,317 245,282 330,237 89,861 240,376 San Francisco 216,121 66,067 150,054 206,019 61,753 144,266 Washington, D.C. 217,282 71,075 146,207 203,973 68,523 135,450 New York 237,830 97,859 139,971 206,162 93,941 112,221 Seattle 149,291 41,726 107,565 140,114 40,195 99,919 Boston 143,127 43,383 99,744 131,779 41,074 90,705 Denver 35,469 10,500 24,969 33,065 9,331 23,734 Other Expansion Markets 32,359 15,324 17,035 30,598 13,008 17,590 Total same store 1,375,078 444,251 930,827 1,281,947 417,686 864,261 Non-same store/other Non-same store (2) 44,677 17,236 27,441 33,690 15,357 18,333 Other (3) 2,642 10,612 ( 7,970 ) 24,741 10,724 14,017 Total non-same store/other 47,319 27,848 19,471 58,431 26,081 32,350 Totals $ 1,422,397 $ 472,099 $ 950,298 $ 1,340,378 $ 443,767 $ 896,611 (1) For the six months ended June 30, 2023 and 2022 , same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2022, less properties subsequently sold, which represented 76,952 apartment units. (2) For the six months ended June 30, 2023 and 2022, non-same store primarily includes properties acquired after January 1, 2022, plus any properties in lease-up and not stabilized as of January 1, 2022, and any properties undergoing major renovations. (3) Other includes development, other corporate operations and operations prior to disposition for properties sold. Quarter Ended June 30, 2023 Quarter Ended June 30, 2022 Rental Income Operating Expenses NOI Rental Income Operating Expenses NOI Same store (1) Los Angeles $ 118,562 $ 35,795 $ 82,767 $ 118,840 $ 33,060 $ 85,780 Orange County 32,316 7,186 25,130 31,252 6,482 24,770 San Diego 24,691 5,747 18,944 23,067 5,220 17,847 Subtotal - Southern California 175,569 48,728 126,841 173,159 44,762 128,397 San Francisco 108,641 32,062 76,579 105,403 30,081 75,322 Washington, D.C. 109,660 34,807 74,853 103,268 34,311 68,957 New York 119,785 48,088 71,697 106,332 46,067 60,265 Seattle 74,729 21,246 53,483 71,577 20,269 51,308 Boston 72,469 20,747 51,722 67,117 20,016 47,101 Denver 17,873 5,010 12,863 16,833 4,697 12,136 Other Expansion Markets 18,718 8,346 10,372 17,685 7,375 10,310 Total same store 697,444 219,034 478,410 661,374 207,578 453,796 Non-same store/other Non-same store (2) 19,664 7,219 12,445 14,848 6,064 8,784 Other (3) 201 1,598 ( 1,397 ) 10,808 4,563 6,245 Total non-same store/other 19,865 8,817 11,048 25,656 10,627 15,029 Totals $ 717,309 $ 227,851 $ 489,458 $ 687,030 $ 218,205 $ 468,825 (1) For the quarters ended June 30, 2023 and 2022 , same store primarily includes all properties acquired or completed that were stabilized prior to April 1, 2022, less properties subsequently sold, which represented 77,545 apartment units. 34 Table of Contents (2) For the quarters ended June 30, 2023 and 2022, non-same store primarily includes properties acquired after April 1, 2022, plus any properties in lease-up and not stabilized as of April 1, 2022, and any properties undergoing major renovations. (3) Other includes development, other corporate operations and operations prior to disposition for properties sold. Six Months Ended June 30, 2023 Total Assets Capital Expenditures Same store (1) Los Angeles $ 2,522,130 $ 23,582 Orange County 349,363 4,230 San Diego 229,569 7,907 Subtotal - Southern California 3,101,062 35,719 San Francisco 3,023,790 19,750 Washington, D.C. 3,039,410 23,142 New York 3,375,622 10,072 Seattle 2,141,765 14,237 Boston 1,773,166 11,998 Denver 840,581 1,773 Other Expansion Markets 796,218 1,805 Total same store 18,091,614 118,496 Non-same store/other Non-same store (2) 1,321,994 16,682 Other (3) 732,121 69 Total non-same store/other 2,054,115 16,751 Totals $ 20,145,729 $ 135,247 (1) Same store primarily includes all properties acquired or completed that were stabilized prior to January 1, 2022, less properties subsequently sold, which represented 76,952 apartment units. (2) Non-same store primarily includes properties acquired after January 1, 2022, plus any properties in lease-up and not stabilized as of January 1, 2022, and any properties undergoing major renovations. (3) Other includes development, other corporate operations and capital expenditures for properties sold. 14. Subsequent Events Subsequent to June 30, 2023, the Company: • Repaid $ 67.9 million of mortgage debt at par prior to maturity; • Locked the interest rate on secured notes totaling $ 530.0 million, which, subject to customary conditions, are anticipated to close in September 2023 , at an all-in effective interest rate of approximately 4.7 %; and • Received approximately $ 27.1 million to settle nine forward starting swaps in conjunction with the interest rate lock of the $ 530.0 million of secured notes discussed above. 35 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 Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022. Forward-Looking Statements Forward-looking statements 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 Company’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 Company 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. Additional factors that might cause such differences are discussed in Part I of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022, 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 . 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 Company undertakes no obligation to update or supplement these forward-looking statements. Overview Equity Residential (“EQR”) is committed to creating communities where people thrive. The Company, a member of the S&P 500, is focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters. ERP Operating Limited Partnership (“ERPOP”) is focused on conducting the multifamily property business of EQR. EQR is a Maryland real estate investment trust (“REIT”) formed in March 1993 and ERPOP is an Illinois limited partnership formed in May 1993. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. EQR is the general partner of, and as of June 30, 2023 owned an approximate 96.8% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP, but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. The Company’s corporate headquarters is located in Chicago, Illinois and the Company also operates regional property management offices in most of its markets. On May 18, 2023, the Company announced that Samuel Zell, its Founder and Chairman of the Board of Trustees, had passed away earlier that same day. David J. Neithercut, the Company’s former Chief Executive Officer and a member of the Company’s Board of Trustees since 2006, has been appointed as Chairman. Available Information You may access our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, our proxy statements and any amendments to any of those reports/statements we file with or furnish to the Securities and Exchange Commission (“SEC”) free of charge on our website, www.equityapartments.com. These reports/statements are made available on our website as soon as reasonably practicable after we file them with or furnish them to the SEC. The information contained on our website, including any information referred to in this report as being available on our website, is not a part of or incorporated into this report. Business Objectives and Operating and Investing Strategies The Company’s and the Operating Partnership’s overall business objectives and operating and investing strategies have not changed from the information included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022. 36 Table of Contents Results of Operations 2023 Transactions In conjunction with our business objectives and operating and investing strategies, the following table provides a rollforward of the transactions that occurred during the six months ended June 30, 2023: Portfolio Rollforward ($ in thousands) Properties Apartment Units Purchase Price Acquisition Cap Rate 12/31/2022 308 79,597 Acquisitions: Consolidated Rental Properties 1 287 $ 108,000 5.0 % Consolidated Rental Properties – Not Stabilized (1) 1 262 $ 78,600 6.6 % Sales Price Disposition Yield Dispositions: Consolidated Rental Properties (7 ) (247 ) $ (135,300 ) (5.3 %) Completed Developments – Consolidated 1 312 Configuration Changes — 1 6/30/2023 304 80,212 (1) The Company acquired one property in the Atlanta market in the second quarter of 2023 that is in lease-up and is expected to stabilize in its second year of ownership at the Acquisition Cap Rate listed above. Acquisitions • The consolidated properties acquired during the six months ended June 30, 2023 are located in the Atlanta and Denver markets; and • During the second quarter of 2023, the Company acquired its joint venture partner's 10% interest in a 200-unit apartment property in Alameda, CA for $4.6 million, of which the Company paid $3.7 million in cash and ERPOP issued $0.9 million of 3.00% Series Q Preference Units. The property is now wholly owned. The Company also repaid $64.7 million of mortgage debt at par prior to maturity in conjunction with the buyout. Dispositions • The consolidated properties disposed of during the six months ended June 30, 2023 were located in the Los Angeles market and the sales generated an Unlevered IRR of 8.7%. Developments • The Company stabilized one consolidated apartment property during the six months ended June 30, 2023, located in the San Francisco market, consisting of 200 apartment units totaling approximately $116.4 million of development costs; • The Company completed construction on one consolidated apartment property during the six months ended June 30, 2023, located in the Washington, D.C. market, consisting of 312 apartment units totaling approximately $108.0 million of development costs; and • The Company spent approximately $67.6 million during the six months ended June 30, 2023, primarily for consolidated and unconsolidated development projects. 37 Table of Contents See Notes 4 and 6 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s real estate investments and investments in partially owned entities. Comparison of the six months and quarter ended June 30, 2023 to the six months and quarter ended June 30, 2022 The following table presents a reconciliation of diluted earnings per share/unit for the six months and quarter ended June 30, 2023 as compared to the same periods in 2022: Six Months Ended June 30 Quarter Ended June 30 Diluted earnings per share/unit for period ended 2022 $ 0.78 $ 0.59 Property NOI 0.17 0.06 Interest expense 0.03 0.01 Corporate overhead (1) (0.01 ) (0.02 ) Net gain/loss on property sales (0.03 ) (0.28 ) Depreciation expense 0.05 0.02 Other (0.07 ) (0.01 ) Diluted earnings per share/unit for period ended 2023 $ 0.92 $ 0.37 (1) Corporate overhead includes property management and general and administrative expenses. The Company’s primary financial measure for evaluating each of its apartment communities is net operating income (“NOI”). NOI represents rental income less direct property operating expenses (including real estate taxes and insurance). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment properties. The following tables present reconciliations of operating income per the consolidated statements of operations to NOI, along with rental income, operating expenses and NOI per the consolidated statements of operations allocated between same store and non-same store/other results (amounts in thousands): Six Months Ended June 30, 2023 2022 $ Change % Change Operating income $ 516,049 $ 459,672 $ 56,377 12.3 % Adjustments: Property management 62,145 57,306 4,839 8.4 % General and administrative 35,041 33,661 1,380 4.1 % Depreciation 437,185 453,767 (16,582 ) (3.7 )% Net (gain) loss on sales of real estate properties (100,122 ) (107,795 ) 7,673 (7.1 )% Total NOI $ 950,298 $ 896,611 $ 53,687 6.0 % Rental income: Same store $ 1,375,078 $ 1,281,947 $ 93,131 7.3 % Non-same store/other 47,319 58,431 (11,112 ) (19.0 )% Total rental income 1,422,397 1,340,378 82,019 6.1 % Operating expenses: Same store 444,251 417,686 26,565 6.4 % Non-same store/other 27,848 26,081 1,767 6.8 % Total operating expenses 472,099 443,767 28,332 6.4 % NOI: Same store 930,827 864,261 66,566 7.7 % Non-same store/other 19,471 32,350 (12,879 ) (39.8 )% Total NOI $ 950,298 $ 896,611 $ 53,687 6.0 % Note: See Note 13 in the Notes to Consolidated Financial Statements for detail by reportable segment/market. Non-same store/other NOI results consist primarily of properties acquired in calendar years 2022 and 2023, operations from the Company’s development properties and operations prior to disposition from 2022 and 2023 sold properties. 38 Table of Contents • The increase in same store rental income is primarily driven by healthy demand, limited new supply and lower than anticipated bad debt, net. • The increase in same store operating expenses is due primarily to: • Utilities – A $4.4 million increase primarily driven by higher commodity prices for gas and electric and higher trash expense; • Repairs and maintenance – An $8.0 million increase primarily driven by increased outsourcing due to higher internal staffing utilization to address issues from California rain storms during the first quarter of 2023 and wage pressure on contract services; • Real estate taxes – A $4.2 million increase due to modest escalation in rates and assessed values; and • On-site Payroll – A $4.6 million increase due primarily to a challenging comparable period and elevated employee benefit costs, partially offset by the impact of innovation initiatives. • The decrease in non-same store/other NOI is due primarily to a negative impact of lost NOI from 2022 and 2023 dispositions of $11.9 million, a negative impact of $1.6 million in lower NOI from one former master-leased property and two properties that have been removed from same store while undergoing major renovations and a negative impact of $6.8 million from property damage associated with the California rain storms, partially offset by a positive impact of higher NOI from properties acquired during 2021, 2022 and 2023 of $2.7 million and higher NOI from development properties in lease-up of $8.0 million. • The increase in consolidated total NOI is a result of the Company’s higher NOI from same store properties, largely due to improvement in same store revenues as noted above. See the Same Store Results section below for additional discussion of those results. Property management expenses include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third-party management companies. These expenses increased approximately $4.8 million or 8.4% and approximately $4.1 million or 15.5% for the six months and quarter ended June 30, 2023, respectively, as compared to the prior year periods. These increases are primarily attributable to increases in payroll-related costs, workforce/contractors costs and legal and professional fees, partially offset by decreases in training/marketing costs and third-party management fees. General and administrative expenses, which include corporate operating expenses, increased approximately $1.4 million or 4.1% and approximately $2.5 million or 14.9% for the six months and quarter ended June 30, 2023, respectively, as compared to the prior year periods, primarily due to increases in payroll-related costs, partially offset by legal and professional fees and training/marketing costs. Depreciation expense, which includes depreciation on non-real estate assets, decreased approximately $16.6 million or 3.7% and approximately $2.5 million or 1.1% for the six months and quarter ended June 30, 2023, respectively, as compared to the prior year periods. These decreases are primarily due to in-place leases for 2021 and 2022 acquisitions being fully depreciated as of December 31, 2022 and lower depreciation from properties sold in 2022 and 2023. Net gain on sales of real estate properties decreased approximately $7.7 million or 7.1% during the six months ended June 30, 2023 as compared to the prior year period, primarily as a result of the sale of seven consolidated apartment properties for a lower gain in 2023 as compared to the sale of one consolidated apartment property in the same period in 2022. Net gain on sales of real estate properties decreased approximately $108.0 million for the quarter ended June 30, 2023 as compared to the prior year period, primarily as a result of no consolidated property sales in the second quarter of 2023 as compared to the sale of one consolidated apartment property in the same period in 2022. Other expenses increased approximately $10.1 million and approximately $4.2 million for the six months and quarter ended June 30, 2023, respectively, as compared to the prior year periods, primarily due to increases in litigation reserves and data transformation project costs that occurred during 2023 but not during 2022. 39 Table of Contents Interest expense, including amortization of deferred financing costs, decreased approximately $12.9 million or 8.7% and approximately $6.4 million or 8.7% for the six months and quarter ended June 30, 2023, respectively, as compared to the prior year periods. These decreases are primarily due to lower overall debt balances outstanding as compared to prior year periods and higher capitalized interest, partially offset by higher rates on floating debt. The effective interest cost on all indebtedness, excluding debt extinguishment costs/prepayment penalties, for the six months ended June 30, 2023 was 3.81% as compared to 3.66% for the prior year period, and for the quarter ended June 30, 2023 was 3.75% as compared to 3.68% for the prior year period. The Company capitalized interest of approximately $7.0 million and $2.3 million during the six months ended June 30, 2023 and 2022, respectively, and $3.6 million and $1.3 million during the quarters ended June 30, 2023 and 2022, respectively. Same Store Results Properties that the Company owned and were stabilized for all of both of the six months ended June 30, 2023 and 2022 (the “Six-Month 2023 Same Store Properties”), which represented 76,952 apartment units, drove the Company’s results of operations. Properties are considered “stabilized” when they have achieved 90% occupancy for three consecutive months. Properties are included in same store when they are stabilized for all of the current and comparable periods presented. The following table provides comparative total same store results and statistics for the Six-Month 2023 Same Store Properties: June YTD 2023 vs. June YTD 2022 Same Store Results/Statistics Including 76,952 Same Store Apartment Units $ in thousands (except for Average Rental Rate) June YTD 2023 June YTD 2022 Residential % Change Non- Residential % Change Total % Change Residential Non- Residential Total Revenues $ 1,324,993 7.3 % $ 50,085 7.0 % $ 1,375,078 7.3 % Revenues $ 1,235,134 $ 46,813 $ 1,281,947 Expenses $ 430,638 6.2 % $ 13,613 11.6 % $ 444,251 6.4 % Expenses $ 405,484 $ 12,202 $ 417,686 NOI $ 894,355 7.8 % $ 36,472 5.4 % $ 930,827 7.7 % NOI $ 829,650 $ 34,611 $ 864,261 Average Rental Rate $ 2,995 8.0 % Average Rental Rate $ 2,772 Physical Occupancy 95.9 % (0.7 %) Physical Occupancy 96.6 % Turnover 20.6 % 0.4 % Turnover 20.2 % Note: Same store revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods. 40 Table of Contents The following table provides results and statistics related to our Residential same store operations for the six months ended June 30, 2023 and 2022: June YTD 2023 vs. June YTD 2022 Same Store Residential Results/Statistics by Market Increase (Decrease) from Prior Year Markets/Metro Areas Apartment Units June YTD 23 % of Actual NOI June YTD 23 Average Rental Rate June YTD 23 Weighted Average Physical Occupancy % June YTD 23 Turnover Average Rental Rate Physical Occupancy Turnover Los Angeles 14,415 17.8 % $ 2,818 95.2 % 21.1 % 4.6 % (1.7 %) 3.5 % Orange County 4,028 5.5 % 2,752 96.1 % 17.8 % 7.7 % (1.1 %) 2.7 % San Diego 2,706 3.9 % 2,931 95.6 % 19.1 % 8.8 % (1.5 %) 0.7 % Subtotal – Southern California 21,149 27.2 % 2,820 95.4 % 20.2 % 5.7 % (1.6 %) 2.9 % San Francisco 11,368 16.5 % 3,265 95.6 % 20.4 % 5.9 % (1.0 %) 1.6 % Washington, D.C. 14,400 16.0 % 2,555 96.7 % 17.9 % 6.7 % (0.1 %) (1.7 %) New York 8,536 14.3 % 4,459 96.9 % 17.6 % 16.4 % (0.2 %) (2.5 %) Seattle 9,525 11.3 % 2,583 95.1 % 25.6 % 6.2 % 0.1 % (0.3 %) Boston 6,700 10.2 % 3,374 96.1 % 19.2 % 9.3 % (0.2 %) (0.5 %) Denver 2,498 2.7 % 2,402 96.3 % 28.3 % 6.7 % 0.0 % 0.0 % Other Expansion Markets 2,776 1.8 % 1,984 94.7 % 25.4 % 7.0 % (1.9 %) 1.1 % Total 76,952 100.0 % $ 2,995 95.9 % 20.6 % 8.0 % (0.7 %) 0.4 % Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.2% of total revenues for the six months ended June 30, 2023. Despite geopolitical and economic uncertainties, demand to live in our apartment communities remained healthy, which our financial results reflected, as we continued to capture the gap between in-place rent levels and market rent levels. This steady demand for our apartments continues to support Physical Occupancy with pricing that is largely in-line with our improved expectations updated in May 2023, with our East Coast markets continuing to outperform our West Coast markets, as we expected. Key operating drivers for this performance during 2023 include: • Pricing – Pricing (net of Leasing Concessions) has continued to be healthy, particularly driven by strength in New York, our top performing market with very limited competitive new supply. Washington, D.C. has also shown stronger resilience despite high levels of new supply. Pricing remained positive during the six months ended June 30, 2023, following typical, albeit slightly muted, seasonal patterns. • Physical Occupancy – Physical Occupancy of 95.9% for the six months ended June 30, 2023 remained strong, despite increased move-out activity (see further discussion below). • Percentage of Residents Renewing and Turnover – We continue to see a high Percentage of Residents Renewing in our portfolio, which we believe reflects both the strength of demand and quality of our product. The Percentage of Residents Renewing has been strong at 57.0% for the second quarter of 2023. Turnover remains low at 20.6% for the six months ended June 30, 2023, reflecting a healthy and consistent trend of historically high resident retention. In addition to these stronger fundamentals, the Company had increased move-out activity related to delinquent residents, especially in Los Angeles, during the six months ended June 30, 2023. This improved activity reduced bad debt, net, while putting modest pressure on Physical Occupancy during the six months ended June 30, 2023, but was not sufficient to offset the decline in governmental rental assistance payments received on behalf of our residents during the six months ended June 30, 2023 as compared to the prior year period. Overall, the fundamentals of our business remain strong. Long-term, we expect elevated single family home ownership costs, positive household formation trends, favorable competitive new supply in most of our major markets and the overall deficit in housing across the country to buffer the impact on our business from the risks of potential economic weakness. We also see our affluent resident base as being more resilient to rising inflation due to higher levels of disposable income and lower relative rent-to-income ratios. 41 Table of Contents Liquidity and Capital Resources With approximately $2.3 billion in readily available liquidity, a strong balance sheet, limited near-term maturities, very strong credit metrics and ample access to capital markets, the Company believes it is well positioned to meet its future obligations and take advantage of opportunities. See further discussion below. Statements of Cash Flows The following table sets forth our sources and uses of cash flows for the six months ended June 30, 2023 and 2022 (amounts in thousands): Six Months Ended June 30, 2023 2022 Cash flows provided by (used for): Operating activities $ 745,980 $ 690,874 Investing activities $ (271,279 ) $ (45,335 ) Financing activities $ (487,231 ) $ (887,124 ) The following provides information regarding the Company’s cash flows from operating, investing and financing activities for the six months ended June 30, 2023. Operating Activities Our operating cash flows are primarily impacted by NOI and its components, such as Average Rental Rates, Physical Occupancy levels and operating expenses related to our properties. Cash provided by operating activities for the six months ended June 30, 2023 as compared to the prior year period, increased by approximately $55.1 million as a direct result of the NOI and other changes discussed above in Results of Operations . Investing Activities Our investing cash flows are primarily impacted by our transaction activity (acquisitions/dispositions), development spend and capital expenditures. For the six months ended June 30, 2023, key drivers were: • Acquired two consolidated rental properties for approximately $186.7 million in cash; • Disposed of seven consolidated rental properties, receiving net proceeds of approximately $133.9 million; • Invested $46.8 million primarily in development projects; • Invested $135.2 million in capital expenditures to real estate; and • Invested $26.4 million primarily in unconsolidated development joint venture entities as well as unconsolidated investments in real estate technology funds/companies for various technology initiatives. Financing Activities Our financing cash flows primarily relate to our borrowing activity (debt proceeds or repayment), distributions/dividends to shareholders/unitholders and other Common Share activity. For the six months ended June 30, 2023, key drivers were: • Obtained $22.9 million in variable rate construction mortgage debt that is non-recourse to the Company; • Repaid $64.8 million on mortgage loans (inclusive of scheduled principal repayments); • Acquired our joint venture partner’s 10% interest in an apartment property for $3.7 million in cash (remaining $0.9 million was funded by ERPOP's issuance of 3.00% Series Q Preference Units); • Issued Common Shares related to share option exercises and ESPP purchases and received net proceeds of $13.5 million; and • Paid dividends/distributions on Common Shares, Preferred Shares, Units (including OP Units and restricted units) and noncontrolling interests in partially owned properties totaling approximately $508.3 million. 42 Table of Contents Short-Term Liquidity and Cash Proceeds The Company generally expects to meet its short-term liquidity requirements, including capital expenditures related to maintaining its existing properties and scheduled unsecured note and mortgage note repayments, through its working capital, net cash provided by operating activities and borrowings under the Company’s revolving credit facility and commercial paper program. Currently, the Company considers its cash provided by operating activities to be adequate to meet operating requirements and payments of distributions. The following table presents the Company’s balances for cash and cash equivalents, restricted deposits and the available borrowing capacity on its revolving credit facility as of June 30, 2023 and December 31, 2022 (amounts in thousands): June 30, 2023 December 31, 2022 Cash and cash equivalents $ 35,701 $ 53,869 Restricted deposits $ 88,941 $ 83,303 Unsecured revolving credit facility availability $ 2,311,329 $ 2,366,537 Credit Facility and Commercial Paper Program The Company has a $2.5 billion unsecured revolving credit facility maturing October 26, 2027. The Company has the ability to increase available borrowings by an additional $750.0 million by adding lenders to the facility, obtaining the agreement of existing lenders to increase their commitments or incurring one or more term loans. The interest rate on advances under the facility will generally be the Secured Overnight Financing Rate (“SOFR”) plus a spread (currently 0.725%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating. See Note 9 in the Notes to Consolidated Financial Statements for additional discussion of the Company’s credit facility. The Company may borrow up to a maximum of $1.0 billion under its commercial paper program subject to market conditions. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the Company’s other unsecured senior indebtedness. The Company limits its utilization of the revolving credit facility in order to maintain liquidity to support its $1.0 billion commercial paper program along with certain other obligations. The following table presents the availability on the Company’s unsecured revolving credit facility as of July 26, 2023 (amounts in thousands): July 26, 2023 Unsecured revolving credit facility commitment $ 2,500,000 Commercial paper balance outstanding (388,070 ) Unsecured revolving credit facility balance outstanding — Other restricted amounts (3,484 ) Unsecured revolving credit facility availability $ 2,108,446 Dividend Policy The Company declared a dividend/distribution for the first and second quarters of 2023 of $0.6625 per share/unit in each quarter, an annualized increase of 6.0% over the amount paid in 2022. All future dividends/distributions remain subject to the discretion of the Company’s Board of Trustees. Total dividends/distributions paid in July 2023 amounted to $258.8 million (excluding distributions on Partially Owned Properties), which consisted of certain distributions declared during the quarter ended June 30, 2023. 43 Table of Contents Long-Term Financing and Capital Needs The Company expects to meet its long-term liquidity requirements, such as lump sum unsecured note and mortgage debt maturities, property acquisitions and financing of development activities, through the issuance of secured and unsecured debt and equity securities (including additional OP Units), proceeds received from the disposition of certain properties and joint ventures, along with cash generated from operations after all distributions. The Company has a significant number of unencumbered properties available to secure additional mortgage borrowings should unsecured capital be unavailable or the cost of alternative sources of capital be too high. The value of and cash flow from these unencumbered properties are in excess of the requirements the Company must maintain in order to comply with covenants under its unsecured notes and line of credit. Of the $28.4 billion in investment in real estate on the Company’s balance sheet at June 30, 2023, $24.9 billion or 87.6% was unencumbered. However, there can be no assurances that these sources of capital will be available to the Company in the future on acceptable terms or otherwise. For additional details, see Item 1A, Risk Factors of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022. EQR issues equity and guarantees certain debt of the Operating Partnership from time to time. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. The Company’s total debt summary schedule as of June 30, 2023 is as follows: Debt Summary as of June 30, 2023 ($ in thousands) Debt Balances % of Total Secured $ 1,913,069 25.7 % Unsecured 5,529,847 74.3 % Total $ 7,442,916 100.0 % Fixed Rate Debt: Secured – Conventional $ 1,609,298 21.6 % Unsecured – Public 5,345,373 71.8 % Fixed Rate Debt 6,954,671 93.4 % Floating Rate Debt: Secured – Conventional 66,863 0.9 % Secured – Tax Exempt 236,908 3.2 % Unsecured – Revolving Credit Facility — — Unsecured – Commercial Paper Program 184,474 2.5 % Floating Rate Debt 488,245 6.6 % Total $ 7,442,916 100.0 % The Company’s long-term financing and capital needs and sources have not changed materially from the information included in the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2022. Critical Accounting Policies and Estimates The Company’s and the Operating Partnership’s critical accounting policies and estimates have not changed from the information included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022. 44 Table of Contents Funds From Operations and Normalized Funds From Operations The following is the Company’s and the Operating Partnership’s reconciliation of net income to FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units for the six months and quarters ended June 30, 2023 and 2022: Funds From Operations and Normalized Funds From Operations (Amounts in thousands) Six Months Ended June 30, Quarter Ended June 30, 2023 2022 2023 2022 Net income $ 364,933 $ 306,476 $ 144,862 $ 232,678 Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties (2,082 ) (1,583 ) (1,105 ) (944 ) Preferred/preference distributions (1,545 ) (1,545 ) (773 ) (773 ) Net income available to Common Shares and Units / Units 361,306 303,348 142,984 230,961 Adjustments: Depreciation 437,185 453,767 221,355 223,806 Depreciation – Non-real estate additions (2,259 ) (2,114 ) (1,103 ) (1,062 ) Depreciation – Partially Owned Properties (1,055 ) (1,554 ) (510 ) (661 ) Depreciation – Unconsolidated Properties 1,226 1,240 594 620 Net (gain) loss on sales of unconsolidated entities - operating assets — (9 ) — — Net (gain) loss on sales of real estate properties (100,122 ) (107,795 ) 87 (107,897 ) FFO available to Common Shares and Units / Units (1) (3) (4) 696,281 646,883 363,407 345,767 Adjustments: Write-off of pursuit costs 1,993 2,515 661 1,052 Debt extinguishment and preferred share redemption (gains) losses 47 469 47 469 Non-operating asset (gains) losses 1,031 (1,330 ) 317 312 Other miscellaneous items 11,343 (185 ) 5,051 186 Normalized FFO available to Common Shares and Units / Units (2) (3) (4) $ 710,695 $ 648,352 $ 369,483 $ 347,786 FFO (1) (3) $ 697,826 $ 648,428 $ 364,180 $ 346,540 Preferred/preference distributions (1,545 ) (1,545 ) (773 ) (773 ) FFO available to Common Shares and Units / Units (1) (3) (4) $ 696,281 $ 646,883 $ 363,407 $ 345,767 Normalized FFO (2) (3) $ 712,240 $ 649,897 $ 370,256 $ 348,559 Preferred/preference distributions (1,545 ) (1,545 ) (773 ) (773 ) Normalized FFO available to Common Shares and Units / Units (2) (3) (4) $ 710,695 $ 648,352 $ 369,483 $ 347,786 (1) The National Association of Real Estate Investment Trusts (“Nareit”) defines funds from operations (“FFO”) (December 2018 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains or losses from sales and impairment write-downs of depreciable real estate and land when connected to the main business of a REIT, impairment write-downs of investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and depreciation and amortization related to real estate. Adjustments for partially owned consolidated and unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. (2) Normalized funds from operations (“Normalized FFO”) begins with FFO and excludes: • the impact of any expenses relating to non-operating real estate asset impairment; • pursuit cost write-offs; • gains and losses from early debt extinguishment and preferred share redemptions; • gains and losses from non-operating assets; and • other miscellaneous items. 45 Table of Contents (3) The Company believes that FFO and FFO available to Common Shares and Units / 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 from sales and impairment write-downs of depreciable real estate and excluding depreciation related to real estate (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 Units / Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies. The Company also believes that Normalized FFO and Normalized FFO available to Common Shares and Units / Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company’s operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units do not represent net income, net income available to Common Shares / Units or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units should not be exclusively considered as alternatives to net income, net income available to Common Shares / Units or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company’s calculation of FFO, FFO available to Common Shares and Units / Units, Normalized FFO and Normalized FFO available to Common Shares and Units / Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. (4) FFO available to Common Shares and Units / Units and Normalized FFO available to Common Shares and Units / Units are calculated on a basis consistent with net income available to Common Shares / Units and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares/preference units in accordance with GAAP. 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 “Noncontrolling Interests – Operating Partnership”. Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis. Item 3. Quantitative and Qualitat ive Disclosures About Market Risk The Company’s and 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 Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022. Item 4. Controls and Procedures Equity Residential (a) Evaluation of Disclosure Controls and Procedures: Effective as of June 30, 2023, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange 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 Company 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 Company identified in connection with the Company’s evaluation referred to above that occurred during the second quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ERP Operating Limited Partnership (a) Evaluation of Disclosure Controls and Procedures: Effective as of June 30, 2023, 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 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. 46 Table of Contents (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 above that occurred during the second quarter of 2023 that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting. PART II. OTHER INFORMATION Item 1. Lega l Proceedings As of June 30, 2023, the Company does not believe there is any litigation pending or threatened against it that, individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company. Item 1A. R isk Factors There have been no material changes to the risk factors that were discussed in Part I, Item 1A of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2022. Item 2. Unregistered Sales of Equi ty Securities and Use of Proceeds During the quarter ended June 30, 2023, EQR issued 36,062 Common Shares in exchange for 36,062 OP Units held by various limited partners of ERPOP. OP Units are generally exchangeable into Common Shares on a one-for-one basis or, at the option of ERPOP, the cash equivalent thereof, at any time one year after the date of issuance. These shares were either registered under the Securities Act of 1933, as amended (the “Securities Act”), or issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act 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 EQR from the limited partners in connection with these transactions, EQR believes it may rely on these exemptions. Item 3. Defaults Up on Senior Securities None. Item 4. Mine Saf ety Disclosures Not applicable. Item 5. Other Information On June 15, 2023 , Alexander Brackenridge , Executive Vice President and Chief Investment Officer of EQR , adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act for the sale of up to 20,133 Common Shares and the exercise (and subsequent sale of underlying Common Shares) of up to 15,516 options through and including September 14, 2024. Item 6. Exhibits – S ee the Exhibit Index. 47 Table of Contents EXHIBI T 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 numbers for our Exchange Act filings referenced below are 1-12252 (Equity Residential) and 0-24920 (ERP Operating Limited Partnership). Exhibit Description Location 3.1 Form of Preference Unit Term Sheet for 3.00% Series Q Cumulative Redeemable Preference Units. Included as Exhibit 3.1 to ERP Operating Limited Partnership's Form 8-K dated April 13, 2023. 31.1 Equity Residential – Certification of Mark J. Parrell, Chief Executive Officer. Attached herein. 31.2 Equity Residential – Certification of Robert A. Garechana, Chief Financial Officer. Attached herein. 31.3 ERP Operating Limited Partnership – Certification of Mark J. Parrell, Chief Executive Officer of Registrant’s General Partner. Attached herein. 31.4 ERP Operating Limited Partnership – Certification of Robert A. Garechana, Chief Financial Officer of Registrant’s General Partner. Attached herein. 32.1 Equity Residential – 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 Executive Officer of the Company. Attached herein. 32.2 Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Robert A. Garechana, Chief Financial Officer of the Company. Attached herein. 32.3 ERP Operating Limited Partnership – 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 Executive Officer of Registrant’s General Partner. Attached herein. 32.4 ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Robert A. Garechana, Chief Financial Officer of Registrant’s General Partner. Attached herein. 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 48 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EQUITY RESIDENTIAL Date: August 2, 2023 By: /s/ Robert A. Garechana Robert A. Garechana Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: August 2, 2023 By: /s/ Ian S. Kaufman Ian S. Kaufman Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) ERP OPERATING LIMITED PARTNERSHIP BY: EQUITY RESIDENTIAL ITS GENERAL PARTNER Date: August 2, 2023 By: /s/ Robert A. Garechana Robert A. Garechana Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: August 2, 2023 By: /s/ Ian S. Kaufman Ian S. Kaufman Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)