Published: 2022-10-28 16:17:54 ET

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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 September 30, 2022

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 October 21, 2022 was 377,918,920.

 

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EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended September 30, 2022 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 September 30, 2022 owned an approximate 96.7% ownership interest in, ERPOP. The remaining 3.3% 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.

 

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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.

 

 

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TABLE OF CONTENTS

 

	PAGE
PART I.
Item 1. Financial Statements of Equity Residential:
Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	2
Consolidated Statements of Operations and Comprehensive Income for the nine months and quarters ended September 30, 2022 and 2021	3
Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	5
Consolidated Statements of Changes in Equity for the nine months and quarters ended September 30, 2022 and 2021	8
Financial Statements of ERP Operating Limited Partnership:
Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	10
Consolidated Statements of Operations and Comprehensive Income for the nine months and quarters ended September 30, 2022 and 2021	11
Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	13
Consolidated Statements of Changes in Capital for the nine months and quarters ended September 30, 2022 and 2021	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	35
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

 

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EQUITY RESIDENTIAL

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except for share amounts)

(Unaudited)

 

		September 30,				December 31,
		2022				2021
ASSETS
Land		$	5,580,878			$	5,814,790
Depreciable property			22,251,673				22,370,811
Projects under development			89,347				24,307
Land held for development			60,165				62,998
Investment in real estate			27,982,063				28,272,906
Accumulated depreciation			(8,813,578	)			(8,354,282	)
Investment in real estate, net			19,168,485				19,918,624
Investments in unconsolidated entities			256,311				127,448
Cash and cash equivalents			44,788				123,832
Restricted deposits			76,679				236,404
Right-of-use assets			465,814				474,713
Other assets			253,328				288,220
Total assets		$	20,265,405			$	21,169,241
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net		$	1,967,827			$	2,191,201
Notes, net			5,340,807				5,835,222
Line of credit and commercial paper			189,557				315,030
Accounts payable and accrued expenses			175,843				107,013
Accrued interest payable			49,652				69,510
Lease liabilities			309,548				312,335
Other liabilities			287,955				353,102
Security deposits			69,247				66,141
Distributions payable			242,695				233,502
Total liabilities			8,633,131				9,483,056
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership			370,537				498,977
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 September 30, 2022 and December 31, 2021			37,280				37,280
Common Shares of beneficial interest, $0.01 par value;    1,000,000,000 shares authorized; 376,169,253 shares issued    and outstanding as of September 30, 2022 and 375,527,195    shares issued and outstanding as of December 31, 2021			3,762				3,755
Paid in capital			9,267,450				9,121,122
Retained earnings			1,737,107				1,827,063
Accumulated other comprehensive income (loss)			(872	)			(34,272	)
Total shareholders’ equity			11,044,727				10,954,948
Noncontrolling Interests:
Operating Partnership			218,577				214,094
Partially Owned Properties			(1,567	)			18,166
Total Noncontrolling Interests			217,010				232,260
Total equity			11,261,737				11,187,208
Total liabilities and equity		$	20,265,405			$	21,169,241

 

See accompanying notes

2

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per share data)

(Unaudited)

 

		Nine Months Ended September 30,								Quarter Ended September 30,
		2022				2021				2022				2021
REVENUES
Rental income		$	2,035,477			$	1,818,867			$	695,099			$	623,206
EXPENSES
Property and maintenance			365,277				341,261				124,048				116,461
Real estate taxes and insurance			302,899				297,780				100,361				96,909
Property management			83,035				74,357				25,729				23,772
General and administrative			47,033				43,102				13,372				13,041
Depreciation			667,896				616,032				214,129				215,397
Total expenses			1,466,140				1,372,532				477,639				465,580
Net gain (loss) on sales of real estate properties			304,346				587,623				196,551				363,928
Operating income			873,683				1,033,958				414,011				521,554
Interest and other income			4,844				25,293				720				973
Other expenses			(9,191	)			(10,908	)			(3,755	)			(3,456	)
Interest:
Expense incurred, net			(217,093	)			(202,733	)			(72,412	)			(68,251	)
Amortization of deferred financing costs			(6,421	)			(6,172	)			(2,220	)			(2,048	)
Income before income and other taxes, income (loss) from    investments in unconsolidated entities and net gain (loss)    on sales of land parcels			645,822				839,438				336,344				448,772
Income and other tax (expense) benefit			(725	)			(679	)			(152	)			(284	)
Income (loss) from investments in unconsolidated entities			(3,456	)			(3,028	)			(1,027	)			(1,156	)
Net gain (loss) on sales of land parcels			—				5				—				—
Net income			641,641				835,736				335,165				447,332
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership			(21,024	)			(27,903	)			(10,997	)			(14,847	)
Partially Owned Properties			(2,726	)			(1,957	)			(1,143	)			(534	)
Net income attributable to controlling interests			617,891				805,876				323,025				431,951
Preferred distributions			(2,318	)			(2,318	)			(773	)			(773	)
Net income available to Common Shares		$	615,573			$	803,558			$	322,252			$	431,178
Earnings per share – basic:
Net income available to Common Shares		$	1.64			$	2.15			$	0.86			$	1.15
Weighted average Common Shares outstanding			375,710				373,474				375,850				374,308
Earnings per share – diluted:
Net income available to Common Shares		$	1.63			$	2.14			$	0.86			$	1.15
Weighted average Common Shares outstanding			389,394				387,642				389,300				388,374

 

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)

(Amounts in thousands except per share data)

(Unaudited)

		Nine Months Ended September 30,								Quarter Ended September 30,
		2022				2021				2022				2021
Comprehensive income:
Net income		$	641,641			$	835,736			$	335,165			$	447,332
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period			23,413				—				24,672				—
Losses reclassified into earnings from other comprehensive    income			9,987				7,000				5,106				2,363
Other comprehensive income (loss)			33,400				7,000				29,778				2,363
Comprehensive income			675,041				842,736				364,943				449,695
Comprehensive (income) attributable to Noncontrolling Interests			(24,853	)			(30,100	)			(13,123	)			(15,459	)
Comprehensive income attributable to controlling interests		$	650,188			$	812,636			$	351,820			$	434,236

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

		Nine Months Ended September 30,
		2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	641,641			$	835,736
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			667,896				616,032
Amortization of deferred financing costs			6,421				6,172
Amortization of above/below market lease intangibles			—				(154	)
Amortization of discounts and premiums on debt			4,123				3,934
Amortization of deferred settlements on derivative instruments			9,978				6,991
Amortization of right-of-use assets			9,123				10,286
Write-off of pursuit costs			3,296				3,557
(Income) loss from investments in unconsolidated entities			3,456				3,028
Distributions from unconsolidated entities – return on capital			251				—
Net (gain) loss on sales of real estate properties			(304,346	)			(587,623	)
Net (gain) loss on sales of land parcels			—				(5	)
Realized (gain) loss on sale of investment securities			(2,061	)			(23,432	)
Compensation paid with Company Common Shares			24,559				21,919
Changes in assets and liabilities:
(Increase) decrease in other assets			20,734				16,269
Increase (decrease) in accounts payable and accrued expenses			76,274				69,170
Increase (decrease) in accrued interest payable			(19,858	)			(9,119	)
Increase (decrease) in lease liabilities			(1,166	)			(4,112	)
Increase (decrease) in other liabilities			(23,199	)			5,427
Increase (decrease) in security deposits			3,106				4,137
Net cash provided by operating activities			1,120,228				978,213
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions			(113,046	)			(1,022,275	)
Investment in real estate – development/other			(81,889	)			(172,850	)
Capital expenditures to real estate			(141,707	)			(107,706	)
Non-real estate capital additions			(2,232	)			(1,251	)
Interest capitalized for real estate and unconsolidated entities under development			(4,181	)			(12,365	)
Proceeds from disposition of real estate, net			720,302				1,014,328
Investments in unconsolidated entities – acquisitions			(49,330	)			(21,787	)
Investments in unconsolidated entities – development/other			(87,129	)			(9,294	)
Distributions from unconsolidated entities – return of capital			9				4
Purchase of investment securities and other investments			(1,045	)			(167,791	)
Proceeds from sale of investment securities			3,584				191,398
Net cash provided by (used for) investing activities			243,336				(309,589	)

 

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

 

		Nine Months Ended September 30,
		2022				2021
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs		$	(373	)		$	(6,447	)
Mortgage notes payable, net:
Proceeds			37,429				51,298
Lump sum payoffs			(260,874	)			(59,880	)
Scheduled principal repayments			(3,186	)			(5,570	)
Notes, net:
Proceeds			—				497,470
Lump sum payoffs			(500,000	)			—
Line of credit and commercial paper:
Commercial paper proceeds			5,140,685				4,305,170
Commercial paper repayments			(5,266,158	)			(4,690,000	)
Finance ground lease principal payments			(1,845	)			(349	)
Proceeds from Employee Share Purchase Plan (ESPP)			3,280				3,455
Proceeds from exercise of options			21,021				68,807
Payment of offering costs			(739	)			(267	)
Other financing activities, net			(31	)			(31	)
Acquisition of Noncontrolling Interests – Partially Owned Properties			(32,178	)			—
Contributions – Noncontrolling Interests – Partially Owned Properties			603				—
Contributions – Noncontrolling Interests – Operating Partnership			1				—
Distributions:
Common Shares			(696,679	)			(674,531	)
Preferred Shares			(2,318	)			(2,318	)
Noncontrolling Interests – Operating Partnership			(22,735	)			(23,949	)
Noncontrolling Interests – Partially Owned Properties			(18,236	)			(4,461	)
Net cash provided by (used for) financing activities			(1,602,333	)			(541,603	)
Net increase (decrease) in cash and cash equivalents and restricted deposits			(238,769	)			127,021
Cash and cash equivalents and restricted deposits, beginning of period			360,236				99,728
Cash and cash equivalents and restricted deposits, end of period		$	121,467			$	226,749
Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents		$	44,788			$	39,707
Restricted deposits			76,679				187,042
Total cash and cash equivalents and restricted deposits, end of period		$	121,467			$	226,749

 

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

 

		Nine Months Ended September 30,
		2022				2021
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized		$	221,218			$	199,799
Net cash paid (received) for income and other taxes		$	728			$	1,040
Amortization of deferred financing costs:
Investment in real estate, net		$	(380	)		$	(227	)
Other assets		$	1,754			$	1,754
Mortgage notes payable, net		$	1,620			$	1,702
Notes, net		$	3,427			$	2,943
Amortization of discounts and premiums on debt:
Mortgage notes payable, net		$	1,865			$	2,069
Notes, net		$	2,258			$	1,865
Amortization of deferred settlements on derivative instruments:
Other liabilities		$	(9	)		$	(9	)
Accumulated other comprehensive income		$	9,987			$	7,000
Write-off of pursuit costs:
Investment in real estate, net		$	948			$	3,000
Investments in unconsolidated entities		$	2,197			$	—
Other assets		$	151			$	533
Accounts payable and accrued expenses		$	—			$	24
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities		$	2,517			$	2,062
Other liabilities		$	939			$	966
Realized/unrealized (gain) loss on derivative instruments:
Other assets		$	(23,413	)		$	—
Accumulated other comprehensive income		$	23,413			$	—
Interest capitalized for real estate and unconsolidated entities under development:
Investment in real estate, net		$	(1,312	)		$	(12,260	)
Investments in unconsolidated entities		$	(2,869	)		$	(105	)
Investments in unconsolidated entities – development/other:
Investment in real estate, net		$	—			$	967
Investments in unconsolidated entities		$	(85,839	)		$	(8,251	)
Other liabilities		$	(1,290	)		$	(2,010	)
Debt financing costs:
Other assets		$	(45	)		$	228
Mortgage notes payable, net		$	(228	)		$	(2,344	)
Notes, net		$	(100	)		$	(4,331	)
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets		$	(224	)		$	11,308
Lease liabilities		$	224			$	(11,308	)
Non-cash share distribution and other transfers from unconsolidated entities:
Investments in unconsolidated entities		$	4,201			$	1,430
Other assets		$	(4,201	)		$	(1,430	)

 

See accompanying notes

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in thousands except per share data)

(Unaudited)

 

		Nine Months Ended September 30,								Quarter Ended September 30,
		2022				2021				2022				2021
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		$	3,755			$	3,723			$	3,761			$	3,744
Conversion of OP Units into Common Shares			—				11				—				—
Exercise of share options			4				14				—				6
Employee Share Purchase Plan (ESPP)			1				1				1				—
Share-based employee compensation expense:
Restricted shares			2				1				—				—
Balance, end of period		$	3,762			$	3,750			$	3,762			$	3,750
PAID IN CAPITAL
Balance, beginning of period		$	9,121,122			$	9,128,599			$	9,229,738			$	9,110,121
Common Share Issuance:
Conversion of OP Units into Common Shares			1,680				68,246				196				1,597
Exercise of share options			21,017				68,793				2,093				29,178
Employee Share Purchase Plan (ESPP)			3,279				3,454				901				788
Share-based employee compensation expense:
Restricted shares			9,524				6,571				2,165				1,758
Share options			1,856				2,541				466				565
ESPP discount			637				798				217				165
Offering costs			(739	)			(267	)			(252	)			(267	)
Supplemental Executive Retirement Plan (SERP)			(269	)			(1,335	)			—				722
Acquisition of Noncontrolling Interests – Partially Owned Properties			(27,383	)			—				(28	)			—
Change in market value of Redeemable Noncontrolling Interests –    Operating Partnership			127,570				(119,237	)			29,430				(17,271	)
Adjustment for Noncontrolling Interests ownership in Operating    Partnership			9,156				(27,085	)			2,524				3,722
Balance, end of period		$	9,267,450			$	9,131,078			$	9,267,450			$	9,131,078
RETAINED EARNINGS
Balance, beginning of period		$	1,827,063			$	1,399,715			$	1,649,960			$	1,321,875
Net income attributable to controlling interests			617,891				805,876				323,025				431,951
Common Share distributions			(705,529	)			(676,158	)			(235,105	)			(225,938	)
Preferred Share distributions			(2,318	)			(2,318	)			(773	)			(773	)
Balance, end of period		$	1,737,107			$	1,527,115			$	1,737,107			$	1,527,115
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period		$	(34,272	)		$	(43,666	)		$	(30,650	)		$	(39,029	)
Accumulated other comprehensive income (loss) – derivative    instruments:
Unrealized holding gains (losses) arising during the period			23,413				—				24,672				—
Losses reclassified into earnings from other comprehensive    income			9,987				7,000				5,106				2,363
Balance, end of period		$	(872	)		$	(36,666	)		$	(872	)		$	(36,666	)
DISTRIBUTIONS
Distributions declared per Common Share outstanding		$	1.875			$	1.8075			$	0.625			$	0.6025

 

See accompanying notes

8

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EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)

(Amounts in thousands except per share data)

(Unaudited)

 

		Nine Months Ended September 30,								Quarter Ended September 30,
		2022				2021				2022				2021
NONCONTROLLING INTERESTS
OPERATING PARTNERSHIP
Balance, beginning of period		$	214,094			$	233,162			$	216,326			$	205,691
Issuance of restricted units to Noncontrolling Interests			1				—				—				—
Conversion of OP Units held by Noncontrolling Interests into OP    Units held by General Partner			(1,680	)			(68,257	)			(196	)			(1,597	)
Equity compensation associated with Noncontrolling Interests			16,502				14,173				3,343				3,642
Net income attributable to Noncontrolling Interests			21,024				27,903				10,997				14,847
Distributions to Noncontrolling Interests			(23,078	)			(23,366	)			(7,590	)			(7,367	)
Change in carrying value of Redeemable Noncontrolling Interests –    Operating Partnership			870				(1,745	)			(1,779	)			(2,539	)
Adjustment for Noncontrolling Interests ownership in Operating    Partnership			(9,156	)			27,085				(2,524	)			(3,722	)
Balance, end of period		$	218,577			$	208,955			$	218,577			$	208,955
PARTIALLY OWNED PROPERTIES
Balance, beginning of period		$	18,166			$	4,673			$	(1,734	)		$	2,365
Net income attributable to Noncontrolling Interests			2,726				1,957				1,143				534
Contributions by Noncontrolling Interests			603				—				—				—
Distributions to Noncontrolling Interests			(18,267	)			(4,492	)			(1,004	)			(761	)
Acquisition of Noncontrolling Interests – Partially Owned Properties			(4,795	)			—				28				—
Balance, end of period		$	(1,567	)		$	2,138			$	(1,567	)		$	2,138

 

See accompanying notes

9

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)

 

		September 30,				December 31,
		2022				2021
ASSETS
Land		$	5,580,878			$	5,814,790
Depreciable property			22,251,673				22,370,811
Projects under development			89,347				24,307
Land held for development			60,165				62,998
Investment in real estate			27,982,063				28,272,906
Accumulated depreciation			(8,813,578	)			(8,354,282	)
Investment in real estate, net			19,168,485				19,918,624
Investments in unconsolidated entities			256,311				127,448
Cash and cash equivalents			44,788				123,832
Restricted deposits			76,679				236,404
Right-of-use assets			465,814				474,713
Other assets			253,328				288,220
Total assets		$	20,265,405			$	21,169,241
LIABILITIES AND CAPITAL
Liabilities:
Mortgage notes payable, net		$	1,967,827			$	2,191,201
Notes, net			5,340,807				5,835,222
Line of credit and commercial paper			189,557				315,030
Accounts payable and accrued expenses			175,843				107,013
Accrued interest payable			49,652				69,510
Lease liabilities			309,548				312,335
Other liabilities			287,955				353,102
Security deposits			69,247				66,141
Distributions payable			242,695				233,502
Total liabilities			8,633,131				9,483,056
Commitments and contingencies
Redeemable Limited Partners			370,537				498,977
Capital:
Partners’ Capital:
Preference Units			37,280				37,280
General Partner			11,008,319				10,951,940
Limited Partners			218,577				214,094
Accumulated other comprehensive income (loss)			(872	)			(34,272	)
Total partners’ capital			11,263,304				11,169,042
Noncontrolling Interests – Partially Owned Properties			(1,567	)			18,166
Total capital			11,261,737				11,187,208
Total liabilities and capital		$	20,265,405			$	21,169,241

 

See accompanying notes

10

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per Unit data)

(Unaudited)

 

		Nine Months Ended September 30,								Quarter Ended September 30,
		2022				2021				2022				2021
REVENUES
Rental income		$	2,035,477			$	1,818,867			$	695,099			$	623,206
EXPENSES
Property and maintenance			365,277				341,261				124,048				116,461
Real estate taxes and insurance			302,899				297,780				100,361				96,909
Property management			83,035				74,357				25,729				23,772
General and administrative			47,033				43,102				13,372				13,041
Depreciation			667,896				616,032				214,129				215,397
Total expenses			1,466,140				1,372,532				477,639				465,580
Net gain (loss) on sales of real estate properties			304,346				587,623				196,551				363,928
Operating income			873,683				1,033,958				414,011				521,554
Interest and other income			4,844				25,293				720				973
Other expenses			(9,191	)			(10,908	)			(3,755	)			(3,456	)
Interest:
Expense incurred, net			(217,093	)			(202,733	)			(72,412	)			(68,251	)
Amortization of deferred financing costs			(6,421	)			(6,172	)			(2,220	)			(2,048	)
Income before income and other taxes, income (loss) from    investments in unconsolidated entities and net gain (loss)    on sales of land parcels			645,822				839,438				336,344				448,772
Income and other tax (expense) benefit			(725	)			(679	)			(152	)			(284	)
Income (loss) from investments in unconsolidated entities			(3,456	)			(3,028	)			(1,027	)			(1,156	)
Net gain (loss) on sales of land parcels			—				5				—				—
Net income			641,641				835,736				335,165				447,332
Net (income) loss attributable to Noncontrolling Interests – Partially Owned    Properties			(2,726	)			(1,957	)			(1,143	)			(534	)
Net income attributable to controlling interests		$	638,915			$	833,779			$	334,022			$	446,798
ALLOCATION OF NET INCOME:
Preference Units		$	2,318			$	2,318			$	773			$	773
General Partner		$	615,573			$	803,558			$	322,252			$	431,178
Limited Partners			21,024				27,903				10,997				14,847
Net income available to Units		$	636,597			$	831,461			$	333,249			$	446,025
Earnings per Unit – basic:
Net income available to Units		$	1.64			$	2.15			$	0.86			$	1.15
Weighted average Units outstanding			387,603				385,841				387,745				386,327
Earnings per Unit – diluted:
Net income available to Units		$	1.63			$	2.14			$	0.86			$	1.15
Weighted average Units outstanding			389,394				387,642				389,300				388,374

 

See accompanying notes

11

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)

(Amounts in thousands except per Unit data)

(Unaudited)

 

		Nine Months Ended September 30,								Quarter Ended September 30,
		2022				2021				2022				2021
Comprehensive income:
Net income		$	641,641			$	835,736			$	335,165			$	447,332
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period			23,413				—				24,672				—
Losses reclassified into earnings from other comprehensive    income			9,987				7,000				5,106				2,363
Other comprehensive income (loss)			33,400				7,000				29,778				2,363
Comprehensive income			675,041				842,736				364,943				449,695
Comprehensive (income) attributable to Noncontrolling Interests –    Partially Owned Properties			(2,726	)			(1,957	)			(1,143	)			(534	)
Comprehensive income attributable to controlling interests		$	672,315			$	840,779			$	363,800			$	449,161

 

See accompanying notes

12

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

 

		Nine Months Ended September 30,
		2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	641,641			$	835,736
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			667,896				616,032
Amortization of deferred financing costs			6,421				6,172
Amortization of above/below market lease intangibles			—				(154	)
Amortization of discounts and premiums on debt			4,123				3,934
Amortization of deferred settlements on derivative instruments			9,978				6,991
Amortization of right-of-use assets			9,123				10,286
Write-off of pursuit costs			3,296				3,557
(Income) loss from investments in unconsolidated entities			3,456				3,028
Distributions from unconsolidated entities – return on capital			251				—
Net (gain) loss on sales of real estate properties			(304,346	)			(587,623	)
Net (gain) loss on sales of land parcels			—				(5	)
Realized (gain) loss on sale of investment securities			(2,061	)			(23,432	)
Compensation paid with Company Common Shares			24,559				21,919
Changes in assets and liabilities:
(Increase) decrease in other assets			20,734				16,269
Increase (decrease) in accounts payable and accrued expenses			76,274				69,170
Increase (decrease) in accrued interest payable			(19,858	)			(9,119	)
Increase (decrease) in lease liabilities			(1,166	)			(4,112	)
Increase (decrease) in other liabilities			(23,199	)			5,427
Increase (decrease) in security deposits			3,106				4,137
Net cash provided by operating activities			1,120,228				978,213
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions			(113,046	)			(1,022,275	)
Investment in real estate – development/other			(81,889	)			(172,850	)
Capital expenditures to real estate			(141,707	)			(107,706	)
Non-real estate capital additions			(2,232	)			(1,251	)
Interest capitalized for real estate and unconsolidated entities under development			(4,181	)			(12,365	)
Proceeds from disposition of real estate, net			720,302				1,014,328
Investments in unconsolidated entities – acquisitions			(49,330	)			(21,787	)
Investments in unconsolidated entities – development/other			(87,129	)			(9,294	)
Distributions from unconsolidated entities – return of capital			9				4
Purchase of investment securities and other investments			(1,045	)			(167,791	)
Proceeds from sale of investment securities			3,584				191,398
Net cash provided by (used for) investing activities			243,336				(309,589	)

 

See accompanying notes

13

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

 

		Nine Months Ended September 30,
		2022				2021
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs		$	(373	)		$	(6,447	)
Mortgage notes payable, net:
Proceeds			37,429				51,298
Lump sum payoffs			(260,874	)			(59,880	)
Scheduled principal repayments			(3,186	)			(5,570	)
Notes, net:
Proceeds			—				497,470
Lump sum payoffs			(500,000	)			—
Line of credit and commercial paper:
Commercial paper proceeds			5,140,685				4,305,170
Commercial paper repayments			(5,266,158	)			(4,690,000	)
Finance ground lease principal payments			(1,845	)			(349	)
Proceeds from EQR’s Employee Share Purchase Plan (ESPP)			3,280				3,455
Proceeds from exercise of EQR options			21,021				68,807
Payment of offering costs			(739	)			(267	)
Other financing activities, net			(31	)			(31	)
Acquisition of Noncontrolling Interests – Partially Owned Properties			(32,178	)			—
Contributions – Noncontrolling Interests – Partially Owned Properties			603				—
Contributions – Limited Partners			1				—
Distributions:
OP Units – General Partner			(696,679	)			(674,531	)
Preference Units			(2,318	)			(2,318	)
OP Units – Limited Partners			(22,735	)			(23,949	)
Noncontrolling Interests – Partially Owned Properties			(18,236	)			(4,461	)
Net cash provided by (used for) financing activities			(1,602,333	)			(541,603	)
Net increase (decrease) in cash and cash equivalents and restricted deposits			(238,769	)			127,021
Cash and cash equivalents and restricted deposits, beginning of period			360,236				99,728
Cash and cash equivalents and restricted deposits, end of period		$	121,467			$	226,749
Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents		$	44,788			$	39,707
Restricted deposits			76,679				187,042
Total cash and cash equivalents and restricted deposits, end of period		$	121,467			$	226,749

 

See accompanying notes

14

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

 

		Nine Months Ended September 30,
		2022				2021
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized		$	221,218			$	199,799
Net cash paid (received) for income and other taxes		$	728			$	1,040
Amortization of deferred financing costs:
Investment in real estate, net		$	(380	)		$	(227	)
Other assets		$	1,754			$	1,754
Mortgage notes payable, net		$	1,620			$	1,702
Notes, net		$	3,427			$	2,943
Amortization of discounts and premiums on debt:
Mortgage notes payable, net		$	1,865			$	2,069
Notes, net		$	2,258			$	1,865
Amortization of deferred settlements on derivative instruments:
Other liabilities		$	(9	)		$	(9	)
Accumulated other comprehensive income		$	9,987			$	7,000
Write-off of pursuit costs:
Investment in real estate, net		$	948			$	3,000
Investments in unconsolidated entities		$	2,197			$	—
Other assets		$	151			$	533
Accounts payable and accrued expenses		$	—			$	24
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities		$	2,517			$	2,062
Other liabilities		$	939			$	966
Realized/unrealized (gain) loss on derivative instruments:
Other assets		$	(23,413	)		$	—
Accumulated other comprehensive income		$	23,413			$	—
Interest capitalized for real estate and unconsolidated entities under development:
Investment in real estate, net		$	(1,312	)		$	(12,260	)
Investments in unconsolidated entities		$	(2,869	)		$	(105	)
Investments in unconsolidated entities – development/other:
Investment in real estate, net		$	—			$	967
Investments in unconsolidated entities		$	(85,839	)		$	(8,251	)
Other liabilities		$	(1,290	)		$	(2,010	)
Debt financing costs:
Other assets		$	(45	)		$	228
Mortgage notes payable, net		$	(228	)		$	(2,344	)
Notes, net		$	(100	)		$	(4,331	)
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets		$	(224	)		$	11,308
Lease liabilities		$	224			$	(11,308	)
Non-cash share distribution and other transfers from unconsolidated entities:
Investments in unconsolidated entities		$	4,201			$	1,430
Other assets		$	(4,201	)		$	(1,430	)

 

See accompanying notes

15

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL

(Amounts in thousands except per Unit data)

(Unaudited)

 

		Nine Months Ended September 30,								Quarter Ended September 30,
		2022				2021				2022				2021
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		$	10,951,940			$	10,532,037			$	10,883,459			$	10,435,740
OP Unit Issuance:
Conversion of OP Units held by Limited Partners into OP Units    held by General Partner			1,680				68,257				196				1,597
Exercise of EQR share options			21,021				68,807				2,093				29,184
EQR’s Employee Share Purchase Plan (ESPP)			3,280				3,455				902				788
Share-based employee compensation expense:
EQR restricted shares			9,526				6,572				2,165				1,758
EQR share options			1,856				2,541				466				565
EQR ESPP discount			637				798				217				165
Net income available to Units – General Partner			615,573				803,558				322,252				431,178
OP Units – General Partner distributions			(705,529	)			(676,158	)			(235,105	)			(225,938	)
Offering costs			(739	)			(267	)			(252	)			(267	)
Supplemental Executive Retirement Plan (SERP)			(269	)			(1,335	)			—				722
Acquisition of Noncontrolling Interests – Partially Owned Properties			(27,383	)			—				(28	)			—
Change in market value of Redeemable Limited Partners			127,570				(119,237	)			29,430				(17,271	)
Adjustment for Limited Partners ownership in Operating Partnership			9,156				(27,085	)			2,524				3,722
Balance, end of period		$	11,008,319			$	10,661,943			$	11,008,319			$	10,661,943
LIMITED PARTNERS
Balance, beginning of period		$	214,094			$	233,162			$	216,326			$	205,691
Issuance of restricted units to Limited Partners			1				—				—				—
Conversion of OP Units held by Limited Partners into OP Units held    by General Partner			(1,680	)			(68,257	)			(196	)			(1,597	)
Equity compensation associated with Units – Limited Partners			16,502				14,173				3,343				3,642
Net income available to Units – Limited Partners			21,024				27,903				10,997				14,847
Units – Limited Partners distributions			(23,078	)			(23,366	)			(7,590	)			(7,367	)
Change in carrying value of Redeemable Limited Partners			870				(1,745	)			(1,779	)			(2,539	)
Adjustment for Limited Partners ownership in Operating Partnership			(9,156	)			27,085				(2,524	)			(3,722	)
Balance, end of period		$	218,577			$	208,955			$	218,577			$	208,955
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period		$	(34,272	)		$	(43,666	)		$	(30,650	)		$	(39,029	)
Accumulated other comprehensive income (loss) – derivative    instruments:
Unrealized holding gains (losses) arising during the period			23,413				—				24,672				—
Losses reclassified into earnings from other comprehensive    income			9,987				7,000				5,106				2,363
Balance, end of period		$	(872	)		$	(36,666	)		$	(872	)		$	(36,666	)
DISTRIBUTIONS
Distributions declared per Unit outstanding		$	1.875			$	1.8075			$	0.625			$	0.6025

 

See accompanying notes

16

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ERP OPERATING LIMITED PARTNERSHIP

CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued)

(Amounts in thousands except per Unit data)

(Unaudited)

 

		Nine Months Ended September 30,								Quarter Ended September 30,
		2022				2021				2022				2021
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS – PARTIALLY OWNED    PROPERTIES
Balance, beginning of period		$	18,166			$	4,673			$	(1,734	)		$	2,365
Net income attributable to Noncontrolling Interests			2,726				1,957				1,143				534
Contributions by Noncontrolling Interests			603				—				—				—
Distributions to Noncontrolling Interests			(18,267	)			(4,492	)			(1,004	)			(761	)
Acquisition of Noncontrolling Interests – Partially Owned Properties			(4,795	)			—				28				—
Balance, end of period		$	(1,567	)		$	2,138			$	(1,567	)		$	2,138

 

See accompanying notes

17

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EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

The Company may repurchase up to 13.0 million Common Shares under its share repurchase program. No open market repurchases have occurred since 2008, and no repurchases of any kind have occurred since February 2014. As of September 30, 2022, EQR has remaining authorization to repurchase up to 13.0 million of its shares.

 

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

For further information including definitions for capitalized terms not defined herein, refer to the consolidated financial statements and footnotes thereto included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2021. In addition, please refer to the Definitions section below for various capitalized terms not immediately defined in this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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, such as the current novel coronavirus (“COVID-19”) pandemic. 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, 2021, 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 September 30, 2022 owned an approximate 96.7% 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.

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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, 2021.

Results of Operations

2022 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 nine months ended September 30, 2022:

 

Portfolio Rollforward

($ in thousands)

 

		Properties				Apartment Units				Purchase Price				Acquisition Cap Rate
12/31/2021			310				80,407
Acquisitions:
Consolidated Rental Properties			1				172			$	113,000				3.5	%
Unconsolidated Land Parcels (1)			—				—			$	56,886
										Sales Price				Disposition Yield
Dispositions:
Consolidated Rental Properties			(3	)			(945	)		$	(746,150	)			(3.4	%)
Configuration Changes			—				(40	)
9/30/2022			308				79,594

 

Acquisitions

Dispositions

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Developments

Investments in Unconsolidated Entities

See Notes 4, 6 and 14 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s real estate investments and investments in partially owned entities.

Future Outlook

The above 2022 assumptions are based on current expectations and are forward-looking.

Comparison of the nine months and quarter ended September 30, 2022 to the nine months and quarter ended September 30, 2021

The following table presents a reconciliation of diluted earnings per share/unit for the nine months and quarter ended September 30, 2022 as compared to the same period in 2021:

 

		Nine Months Ended September 30				Quarter Ended September 30
Diluted earnings per share/unit for period ended 2021		$	2.14			$	1.15
Property NOI			0.49				0.17
Interest expense			(0.03	)			—
Corporate overhead (1)			(0.03	)			(0.01	)
Net gain/loss on property sales			(0.73	)			(0.43	)
Non-operating asset gains/losses			(0.06	)			—
Depreciation expense			(0.13	)			—
Other			(0.02	)			(0.02	)
Diluted earnings per share/unit for period ended 2022		$	1.63			$	0.86

 

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.

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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 results (amounts in thousands):

 

		Nine Months Ended September 30,
		2022				2021				$ Change				% Change
Operating income		$	873,683			$	1,033,958			$	(160,275	)			(15.5	)%
Adjustments:
Property management			83,035				74,357				8,678				11.7	%
General and administrative			47,033				43,102				3,931				9.1	%
Depreciation			667,896				616,032				51,864				8.4	%
Net (gain) loss on sales of real estate properties			(304,346	)			(587,623	)			283,277				(48.2	)%
Total NOI		$	1,367,301			$	1,179,826			$	187,475				15.9	%
Rental income:
Same store		$	1,882,181			$	1,694,503			$	187,678				11.1	%
Non-same store/other			153,296				124,364				28,932				23.3	%
Total rental income			2,035,477				1,818,867				216,610				11.9	%
Operating expenses:
Same store			600,987				583,471				17,516				3.0	%
Non-same store/other			67,189				55,570				11,619				20.9	%
Total operating expenses			668,176				639,041				29,135				4.6	%
NOI:
Same store			1,281,194				1,111,032				170,162				15.3	%
Non-same store/other			86,107				68,794				17,313				25.2	%
Total NOI		$	1,367,301			$	1,179,826			$	187,475				15.9	%

 

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 2021 and 2022, operations from the Company’s development properties and operations prior to disposition from 2021 and 2022 sold properties.

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 $8.7 million or 11.7% and approximately $2.0 million or 8.2% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods. These increases are primarily attributable to increases in payroll-related costs, training/conference costs, temporary help/contractors costs, travel costs and employment expenses, partially offset by decreases in legal and professional fees.

General and administrative expenses, which includes corporate operating expenses, increased approximately $3.9 million or 9.1% and approximately $0.3 million or 2.5% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods, primarily due to increases in payroll-related costs, legal and professional fees and training/conference costs.

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Depreciation expense, which includes depreciation on non-real estate assets, increased approximately $51.9 million or 8.4% for the nine months ended September 30, 2022, as compared to the prior year period, primarily as a result of additional depreciation expense on properties acquired in 2021 and 2022 and development properties placed in service during 2021, partially offset by lower depreciation from properties sold in 2021 and 2022. Depreciation expense decreased approximately $1.3 million or 0.6% for the quarter ended September 30, 2022 as compared to the prior year period, primarily as a result of lower depreciation from properties sold in the fourth quarter of 2021 and 2022 and in-place leases for 2021 acquisitions being fully depreciated as of December 31, 2021, partially offset by additional depreciation expense on properties acquired in 2022 and development properties placed in service during 2021.

Net gain on sales of real estate properties decreased approximately $283.3 million or 48.2% and approximately $167.4 million or 46.0% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods, primarily as a result of a lower sales volume with the sale of three consolidated apartment properties in 2022 as compared to the sale of ten consolidated apartment properties in the same period in 2021.

Interest and other income decreased approximately $20.4 million or 80.8% and approximately $0.3 million or 26.0% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods. These decreases are primarily due to a gain of $23.6 million on the sale of various investment securities that occurred during 2021 but not during 2022, partially offset by increases in litigation settlement proceeds that occurred during 2022 but not during 2021.

Other expenses decreased approximately $1.7 million or 15.7% for the nine months ended September 30, 2022 as compared to the prior year period, primarily due to a decline in construction defect and litigation reserves recorded between 2022 and 2021, partially offset by increases in advocacy contributions and demolition/abatement costs. Other expenses increased approximately $0.3 million or 8.7% for the quarter ended September 30, 2022 as compared to the prior year period, primarily due to increases in advocacy contributions and demolition/abatement costs, partially offset by construction defect and litigation reserves that occurred during 2021 but not during 2022.

Interest expense, including amortization of deferred financing costs, increased approximately $14.6 million or 7.0% and approximately $4.3 million or 6.2% for the nine months and quarter ended September 30, 2022, respectively, as compared to the prior year periods. These increases are primarily due to higher overall interest rates and lower capitalized interest. The effective interest cost on all indebtedness, excluding debt extinguishment costs/prepayment penalties, for the nine months ended September 30, 2022 was 3.67% as compared to 3.51% for the prior year period, and for the quarter ended September 30, 2022 was 3.67% as compared to 3.46% for the prior year period. The Company capitalized interest of approximately $4.2 million and $12.4 million during the nine months ended September 30, 2022 and 2021, respectively, and $1.9 million and $4.2 million during the quarters ended September 30, 2022 and 2021, respectively.

Same Store Results

Properties that the Company owned and were stabilized for all of both of the nine months ended September 30, 2022 and 2021 (the “Nine-Month 2022 Same Store Properties”), which represented 72,869 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 Nine-Month 2022 Same Store Properties:

 

September YTD 2022 vs. September YTD 2021

Same Store Results/Statistics Including 72,869 Same Store Apartment Units

$ in thousands (except for Average Rental Rate)

 

September YTD 2022																				September YTD 2021
	Residential			% Change			Non- Residential			% Change			Total			% Change					Residential			Non- Residential			Total
Revenues	$	1,813,450			11.2	%	$	68,731			8.1	%	$	1,882,181			11.1	%		Revenues	$	1,630,928		$	63,575		$	1,694,503
Expenses	$	583,185			3.0	%	$	17,802			3.1	%	$	600,987			3.0	%		Expenses	$	566,210		$	17,261		$	583,471
NOI	$	1,230,265			15.5	%	$	50,929			10.0	%	$	1,281,194			15.3	%		NOI	$	1,064,718		$	46,314		$	1,111,032
Average Rental Rate	$	2,866			10.5	%														Average Rental Rate	$	2,594
Physical Occupancy		96.5	%		0.6	%														Physical Occupancy		95.9	%
Turnover		33.6	%		(1.6	%)														Turnover		35.2	%

 

Note: Same store revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.

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The following table provides results and statistics related to our Residential same store operations for the nine months ended September 30, 2022 and 2021:

 

September YTD 2022 vs. September YTD 2021

Same Store Residential Results/Statistics by Market

 

																					Increase (Decrease) from Prior Year
Markets/Metro Areas		Apartment Units				Sept. YTD 22 % of Actual NOI				Sept. YTD 22 Average Rental Rate				Sept. YTD 22 Weighted Average Physical Occupancy %				Sept. YTD 22 Turnover				Average Rental Rate				Physical Occupancy				Turnover
Los Angeles			14,662				20.0	%		$	2,725				96.9	%			28.3	%			11.4	%			0.2	%			(3.8	%)
Orange County			4,028				5.8	%			2,591				97.1	%			25.8	%			13.6	%			(0.6	%)			(1.4	%)
San Diego			2,706				4.1	%			2,737				97.0	%			29.3	%			11.9	%			(0.7	%)			(5.2	%)
Subtotal – Southern California			21,396				29.9	%			2,701				97.0	%			28.0	%			11.8	%			0.0	%			(3.5	%)
San Francisco			11,366				17.6	%			3,127				96.3	%			32.1	%			8.0	%			1.6	%			(5.2	%)
Washington, D.C.			14,186				16.2	%			2,432				96.9	%			33.8	%			4.7	%			0.6	%			(2.5	%)
New York			8,536				13.1	%			3,964				97.0	%			34.9	%			15.8	%			2.7	%			3.9	%
Seattle			9,331				11.4	%			2,472				95.1	%			41.9	%			10.7	%			(0.7	%)			2.5	%
Boston			6,430				9.9	%			3,165				96.2	%			37.3	%			10.9	%			0.5	%			(0.4	%)
Denver			1,624				1.9	%			2,275				96.9	%			48.4	%			12.0	%			0.2	%			2.5	%
Total			72,869				100.0	%		$	2,866				96.5	%			33.6	%			10.5	%			0.6	%			(1.6	%)

 

Note: The above table reflects Residential same store results only. Residential operations account for approximately 96.3% of total revenues for the nine months ended September 30, 2022.

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. Demand for our apartments continues to support strong Physical Occupancy with pricing that is largely in-line with expectations, including modest use of Leasing Concessions. Key operating drivers for this performance during 2022 include:

In addition to these stronger fundamentals, bad debt, net has moderated during the nine months ended September 30, 2022 with improvement in resident collections primarily driven by receipt of governmental rental assistance payments on behalf of our residents.

Transaction activity has slowed as buyers and sellers adjust their expectations to a volatile economic climate and rising interest rates. While this type of environment can be challenging, the Company has traditionally found investment opportunities during periods of market dislocation as our ability to move quickly and our relatively low cost of capital creates flexibility that can provide us a competitive advantage.

Long-term, we expect elevated single family home ownership costs, positive household formation trends and the overall deficit in housing across the country to buffer the impact on our business from 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.

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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 opportunities. See further discussion below and Note 14 in the Notes to Consolidated Financial Statements for discussion of events, if any, subsequent to September 30, 2022.

Statements of Cash Flows

The following table sets forth our sources and uses of cash flows for the nine months ended September 30, 2022 and 2021 (amounts in thousands):

 

		Nine Months Ended September 30,
		2022				2021
Cash flow provided by (used for):
Operating activities		$	1,120,228			$	978,213
Investing activities		$	243,336			$	(309,589	)
Financing activities		$	(1,602,333	)		$	(541,603	)

 

The following provides information regarding the Company’s cash flows from operating, investing and financing activities for the nine months ended September 30, 2022.

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 nine months ended September 30, 2022 as compared to the prior year period, increased by approximately $142.0 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, capital expenditures and unconsolidated joint venture activity. For the nine months ended September 30, 2022, key drivers were:

Financing Activities

Our financing cash flows primarily relate to our borrowing activity (debt proceeds or repayment), distributions/dividends to shareholders and other Common Share activity. For the nine months ended September 30, 2022, key drivers were:

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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 September 30, 2022 and December 31, 2021 (amounts in thousands):

 

		September 30, 2022				December 31, 2021
Cash and cash equivalents		$	44,788			$	123,832
Restricted deposits		$	76,679			$	236,404
Unsecured revolving credit facility availability		$	2,306,537			$	2,181,372

 

Credit Facility and Commercial Paper Program

The Company has a $2.5 billion unsecured revolving credit facility maturing November 1, 2024. 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 London Interbank Offered Rate (“LIBOR”) plus a spread (currently 0.775%), 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 unsecured revolving credit agreement contains provisions that establish a process for entering into an amendment to replace LIBOR under certain circumstances, such as the anticipated phase-out of LIBOR.

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 October 21, 2022 (amounts in thousands):

 

		October 21, 2022
Unsecured revolving credit facility commitment		$	2,500,000
Commercial paper balance outstanding			(145,000	)
Unsecured revolving credit facility balance outstanding			—
Other restricted amounts			(3,463	)
Unsecured revolving credit facility availability		$	2,351,537

 

Dividend Policy

The Company declared a dividend/distribution for the first, second and third quarters of 2022 of $0.625 per share/unit in each quarter, an annualized increase of 3.7% over the amount paid in 2021. All future dividends/distributions remain subject to the discretion of the Company’s Board of Trustees.

Total dividends/distributions paid in October 2022 amounted to $242.7 million (excluding distributions on Partially Owned Properties), which consisted of certain distributions declared during the quarter ended September 30, 2022.

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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 $28.0 billion in investment in real estate on the Company’s balance sheet at September 30, 2022, $24.3 billion or 87.0% 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.

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 settled all of its outstanding forward sales agreements under its At-The-Market (“ATM”) share offering program subsequent to September 30, 2022. See Note 14 in the Notes to Consolidated Financial Statements for additional discussion.

The Company’s total debt summary schedule as of September 30, 2022 is as follows:

Debt Summary as of September 30, 2022

($ in thousands)

 

		Debt Balances				% of Total
Secured		$	1,967,827				26.2	%
Unsecured			5,530,364				73.8	%
Total		$	7,498,191				100.0	%
Fixed Rate Debt:
Secured – Conventional		$	1,634,342				21.8	%
Unsecured – Public			5,340,807				71.2	%
Fixed Rate Debt			6,975,149				93.0	%
Floating Rate Debt:
Secured – Conventional			97,611				1.3	%
Secured – Tax Exempt			235,874				3.1	%
Unsecured – Revolving Credit Facility			—				—
Unsecured – Commercial Paper Program			189,557				2.6	%
Floating Rate Debt			523,042				7.0	%
Total		$	7,498,191				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, 2021.

Definitions

The definition of certain terms described above or below are as follows:

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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, 2021.

 

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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 nine months and quarters ended September 30, 2022 and 2021:

 

Funds From Operations and Normalized Funds From Operations

(Amounts in thousands)

 

		Nine Months Ended September 30,								Quarter Ended September 30,
		2022				2021				2022				2021
Net income		$	641,641			$	835,736			$	335,165			$	447,332
Net (income) loss attributable to Noncontrolling    Interests – Partially Owned Properties			(2,726	)			(1,957	)			(1,143	)			(534	)
Preferred/preference distributions			(2,318	)			(2,318	)			(773	)			(773	)
Net income available to Common Shares and Units / Units			636,597				831,461				333,249				446,025
Adjustments:
Depreciation			667,896				616,032				214,129				215,397
Depreciation – Non-real estate additions			(3,189	)			(3,228	)			(1,075	)			(1,052	)
Depreciation – Partially Owned Properties			(2,097	)			(2,676	)			(543	)			(994	)
Depreciation – Unconsolidated Properties			1,897				1,867				657				634
Net (gain) loss on sales of unconsolidated entities - operating assets			(9	)			(4	)			—				—
Net (gain) loss on sales of real estate properties			(304,346	)			(587,623	)			(196,551	)			(363,928	)
FFO available to Common Shares and Units / Units (1) (3) (4)			996,749				855,829				349,866				296,082
Adjustments:
Impairment – non-operating assets			—				—				—				—
Write-off of pursuit costs			3,296				3,557				781				910
Debt extinguishment and preferred share redemption (gains) losses			4,316				264				3,847				—
Non-operating asset (gains) losses			(1,174	)			(23,014	)			156				294
Other miscellaneous items			1,832				4,520				2,017				1,179
Normalized FFO available to Common Shares and Units / Units (2) (3) (4)		$	1,005,019			$	841,156			$	356,667			$	298,465
FFO (1) (3)		$	999,067			$	858,147			$	350,639			$	296,855
Preferred/preference distributions			(2,318	)			(2,318	)			(773	)			(773	)
FFO available to Common Shares and Units / Units (1) (3) (4)		$	996,749			$	855,829			$	349,866			$	296,082
Normalized FFO (2) (3)		$	1,007,337			$	843,474			$	357,440			$	299,238
Preferred/preference distributions			(2,318	)			(2,318	)			(773	)			(773	)
Normalized FFO available to Common Shares and Units / Units (2) (3) (4)		$	1,005,019			$	841,156			$	356,667			$	298,465

 

• the impact of any expenses relating to non-operating 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.

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Item 3. Quantitative and Qualitative 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, 2021.

Item 4. Controls and Procedures

Equity Residential

Effective as of September 30, 2022, 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.

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 third quarter of 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ERP Operating Limited Partnership

Effective as of September 30, 2022, 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.

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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 third quarter of 2022 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. Legal Proceedings

As of September 30, 2022, 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. Risk 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, 2021.

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

During the quarter ended September 30, 2022, EQR issued 6,572 Common Shares in exchange for 6,572 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 Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits – See the Exhibit Index.

 

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EXHIBIT INDEX

The exhibits listed below are filed as part of this report. References to exhibits or other filings under the caption “Location” indicate that the exhibit or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is incorporated by reference. The Commission file numbers for our Exchange Act filings referenced below are 1-12252 (Equity Residential) and 0-24920 (ERP Operating Limited Partnership).

 

Exhibit		Description		Location
10.1		Amendment to the Equity Residential Supplemental Executive Retirement Plan, effective as of October 1, 2022.		Attached herein.
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).

 

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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:	October 28, 2022	By:		/s/ Robert A. Garechana
				Robert A. Garechana
				Executive Vice President and Chief Financial Officer
				(Principal Financial Officer)
Date:	October 28, 2022	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:	October 28, 2022	By:		/s/ Robert A. Garechana
				Robert A. Garechana
				Executive Vice President and Chief Financial Officer
				(Principal Financial Officer)
Date:	October 28, 2022	By:		/s/ Ian S. Kaufman
				Ian S. Kaufman
				Senior Vice President and Chief Accounting Officer
				(Principal Accounting Officer)

 

 

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