Equity Residential Reports 2007 Results

Equity Residential (NYSE:EQR) today reported results for the quarter and year ended December 31, 2007 and provided its outlook for 2008 performance. All per share results are reported on a fully-diluted basis. "Across our core markets we see very little new supply being delivered, declining home ownership rates, continued significant premiums to own a home versus the cost to rent and a favorable demographic picture. While the weakening economy and slowing job growth give us good reason to be cautious as we enter 2008, our portfolio is currently 94.5 percent occupied. These factors lead us to believe that in 2008 we will produce same-store revenue growth of 3.0-4.0 percent, which, while not as strong as what we had anticipated ninety days ago, is good growth on a historical basis,” said David J. Neithercut, Equity Residential’s President and CEO. Fourth Quarter 2007 For the quarter ended December 31, 2007, the company reported earnings of $0.44 per share compared to $1.57 per share in the fourth quarter of 2006. The decrease is primarily attributable to higher gains on property sales due to significantly greater property dispositions in the fourth quarter of 2006, partially offset by the $30.0 million impairment charge taken on the company’s corporate housing business in the fourth quarter of 2006. Funds from Operations (FFO) for the quarter ended December 31, 2007 were $0.67 per share compared to $0.49 per share in the same period of 2006. The company’s FFO of $0.67 per share exceeded the guidance range of $0.59 to $0.62 per share provided by the company in its third quarter 2007 earnings release. The items describing the difference between actual FFO per share for the quarter and the midpoint of the company’s guidance range for the quarter are listed on page 27 of this release. The difference is primarily a result of the following: Higher property net operating income (NOI) as a result of higher than expected same-store NOI, slightly lower than expected non same-store NOI and approximately $11.5 million of insurance recoveries from property damage in prior years and certain reserve adjustments not included in same-store NOI; The receipt of $4.1 million in December 2007 related to the settlement of insurance litigation claims from 2000 through 2002; Income tax refunds of prior years’ taxes of approximately $6.1 million; and Other items including lower interest expense. The difference between the fourth quarter 2007 FFO of $0.67 per share and the fourth quarter 2006 FFO of $0.49 per share was primarily due to: Higher same-store NOI of approximately $16.0 million in the fourth quarter of 2007; Dilution from property transactions of approximately $8.0 million; Lower preferred share distributions of approximately $4.0 million; and A number of non-comparable items which are listed on page 27 of this release. Year Ended December 31, 2007 For the year ended December 31, 2007, the company reported earnings of $3.39 per share compared to $3.50 per share for 2006. FFO for the year ended December 31, 2007 was $2.39 per share compared to $2.27 per share for 2006. Same-Store Results On a same-store fourth quarter to fourth quarter comparison, which includes 123,639 apartment units, revenues increased 3.9 percent, expenses increased 0.3 percent and NOI increased 6.0 percent. The increase in same-store revenues was driven primarily by increases in average rental rates. On a same-store year over year comparison, which includes 115,857 apartment units, revenues increased 4.3 percent, expenses increased 2.1 percent and NOI increased 5.6 percent. Acquisitions/Dispositions "The strong pricing we realized on our property sales in late 2007 clearly demonstrates that Main Street continues to value multifamily assets significantly more than does Wall Street. In 2008, we will continue to take advantage of Main Street’s demand for our non-core assets. However we expect continued difficulty justifying the acquisition of new assets while the disparity between property prices and our share price remains,” said Mr. Neithercut. During the fourth quarter of 2007, the company acquired two properties, consisting of 547 apartment units, for an aggregate purchase price of $67.0 million at an average capitalization (cap) rate of 6.3 percent. The company also acquired a land parcel for $64.0 million during the quarter. Also during the quarter, the company sold seven properties, consisting of 1,882 apartment units, for an aggregate sale price of $172.9 million at an average cap rate of 5.8 percent generating an unlevered internal rate of return (IRR) of 10.3 percent. In addition, the company sold 65 condominium units for $16.0 million and air rights to a previously sold land parcel for $4.3 million. During 2007, the company acquired 36 properties, consisting of 8,167 apartment units, for an aggregate purchase price of $1.7 billion at an average cap rate of 4.8 percent. The company also acquired eight land parcels for $212.8 million during 2007. During 2007, the company sold 73 properties, consisting of 21,563 apartment units, for an aggregate sale price of $1.9 billion at an average cap rate of 5.6 percent generating an unlevered IRR of 11.1 percent. In addition, the company sold 617 condominium units for $164.2 million and two land parcels and air rights adjoining a land parcel for $50.0 million. Share Repurchase During the fourth quarter of 2007, the company repurchased and retired 2,390,000 of its common shares at an average price of $37.44 per share for an aggregate purchase of approximately $89.5 million. During 2007, the company repurchased and retired 27,484,346 of its common shares at an average price of $44.62 per share for an aggregate purchase of approximately $1.2 billion. Since the end of the fourth quarter, the company has repurchased and retired 100,000 of its common shares at an average price of $35.74 per share for an aggregate purchase of approximately $3.6 million. The company has authorization to repurchase an additional $472.0 million under its share repurchase program. Unsecured Term Loan On October 11, 2007, the company closed on a new $500.0 million senior unsecured term loan. The new loan matures on October 5, 2010, subject to two one-year extension options exercisable by the company. The rate on the loan will generally be LIBOR plus a spread which is dependent on the current credit rating on the company’s long-term senior unsecured debt and is currently 42.5 basis points. Proceeds from the loan were used to pay down the company’s unsecured revolving credit facility, which had approximately $1.3 billion available as of February 4, 2008. First Quarter and Full Year 2008 Earnings Guidance The company has established an FFO guidance range of $0.56 to $0.60 per share for the first quarter of 2008. The difference between the company’s actual fourth quarter 2007 FFO of $0.67 per share to the midpoint of the first quarter 2008 FFO guidance range is primarily a result of the following items: Lower first quarter same-store NOI of approximately $7.0 million. While revenues are expected to modestly increase sequentially, operating expenses, primarily utilities, will be higher consistent with the seasonality of the company’s business; Dilution of approximately $2.0 million resulting from property transactions in the first quarter of 2008; Lower interest expense of approximately $5.0 million in the first quarter of 2008 due to lower rates; Lower condominium income and interest income from 1031 accounts of approximately $4.0 million; and The insurance recoveries and reserve adjustments, insurance settlement and income tax refunds, which are all described above, as well as other items listed on page 27 of this release, which are all non-comparable items recorded in the fourth quarter of 2007. The company has established an FFO guidance range for full year 2008 of $2.45 to $2.60 per share. The assumptions used to determine this guidance range are listed on page 28 of this release. The difference between the company’s actual 2007 FFO of $2.39 per share and the midpoint of the company’s 2008 FFO guidance range is attributable to the following factors: Higher same-store NOI of approximately $30.0 to $50.0 million; The positive impact of the lease up of development and former condominium properties of approximately $25.0 to $30.0 million; Lower interest expense of approximately $10.0 million; Lower preferred share distributions of approximately $9.0 million; The reduced number of shares outstanding due to the company’s share repurchase activity in 2007; Non-comparable items that had an approximately $17.0 million positive effect in 2007; Dilution from property sale and purchase activity of approximately $30.0 million; Lower income from condominium activity of approximately $7.0 million; and Lower interest income from 1031 accounts and other items amounting to approximately $12.0 million. Please note that the reduced share count benefit of approximately $0.10 per share that the company anticipates for 2008 is entirely offset by increased interest expense (i.e. interest expense would have been approximately $40.0 million lower instead of approximately $10.0 million lower in 2008 if not for share buybacks in 2007. First Quarter 2008 Results and Conference Call Equity Residential expects to announce first quarter 2008 results on Wednesday, April 30, 2008 and host a conference call to discuss those results at 10:00 a.m. CT on Thursday, May 1, 2008. Equity Residential is an S&P 500 company focused on the acquisition, development and management of high quality apartment properties in top U.S. growth markets. Equity Residential owns or has investments in 579 properties located in 24 states and the District of Columbia, consisting of 152,821 apartment units. For more information on Equity Residential, please visit our website at www.equityresidential.com. Forward-Looking Statements In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residential’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction material, the level of new multifamily construction and development, competition and local government regulation. Other risks and uncertainties are described under the heading "Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityresidential.com. Many of these uncertainties and risks are difficult to predict and beyond management’s control. Forward-looking statements are not guarantees of future performance, results or events. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. A live web cast of the company’s conference call discussing these results and outlook for 2008 will take place tomorrow, Wednesday, February 6, at 10:00 a.m. Central. Please visit the Investor Information section of the company’s web site at www.equityresidential.com for the link. A replay of the web cast will be available for two weeks at this site. EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands except per share data)         Year EndedDecember 31, Quarter EndedDecember 31, 2007 2006 2007 2006 REVENUES Rental income $ 2,028,901 $ 1,780,831 $ 525,820 $ 464,957 Fee and asset management 9,183   9,101   2,246   2,223     Total revenues 2,038,084   1,789,932   528,066   467,180     EXPENSES Property and maintenance 530,793 469,267 134,528 121,978 Real estate taxes and insurance 207,286 172,618 49,139 45,247 Property management 87,421 96,178 18,465 26,099 Fee and asset management 8,412 8,934 1,808 2,457 Depreciation 587,647 507,508 149,727 137,033 General and administrative 49,290 48,469 14,639 12,594 Impairment 1,418   34,002   398   32,284     Total expenses 1,472,267   1,336,976   368,704   377,692     Operating income 565,817 452,956 159,362 89,488   Interest and other income 20,176 30,976 7,826 19,438 Interest: Expense incurred, net (484,776 ) (419,812 ) (122,897 ) (107,606 ) Amortization of deferred financing costs (10,522 ) (8,120 ) (2,329 ) (1,863 )   Income (loss) before allocation to Minority Interests, income (loss) from investments in unconsolidated entities, net gain (loss) on sales of unconsolidated entities and land parcels and discontinued operations 90,695 56,000 41,962 (543 ) Allocation to Minority Interests: Operating Partnership, net (4,369 ) (784 ) (2,458 ) 600 Preference Interests and Units (441 ) (2,002 ) (4 ) (223 ) Partially Owned Properties (2,200 ) (3,132 ) (1,203 ) (582 ) Premium on redemption of Preference Interests - (684 ) - - Income (loss) from investments in unconsolidated entities 332 (631 ) 147 (66 ) Net gain on sales of unconsolidated entities 2,629 370 - - Net gain (loss) on sales of land parcels 6,360   2,792   1,130   (391 ) Income (loss) from continuing operations, net of minority interests 93,006 51,929 39,574 (1,205 ) Discontinued operations, net of minority interests 896,616   1,020,915   83,703   466,266   Net income 989,622 1,072,844 123,277 465,061 Preferred distributions (22,792 ) (37,113 ) (3,635 ) (7,431 ) Premium on redemption of Preferred Shares (6,154 ) (3,965 ) (10 ) (24 ) Net income available to Common Shares $ 960,676   $ 1,031,766   $ 119,632   $ 457,606     Earnings per share - basic: Income (loss) from continuing operations available to Common Shares $ 0.23   $ 0.04   $ 0.13   $ (0.03 ) Net income available to Common Shares $ 3.44   $ 3.56   $ 0.44   $ 1.57   Weighted average Common Shares outstanding 279,406   290,019   269,197   291,669     Earnings per share - diluted: Income (loss) from continuing operations available to Common Shares $ 0.23   $ 0.04   $ 0.13   $ (0.03 ) Net income available to Common Shares $ 3.39   $ 3.50   $ 0.44   $ 1.57   Weighted average Common Shares outstanding 302,235   315,579   290,658   291,669     Distributions declared per Common Share outstanding $ 1.87   $ 1.79   $ 0.4825   $ 0.4625   EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (Amounts in thousands except per share data)               Year EndedDecember 31, Quarter EndedDecember 31, 2007 2006 2007 2006   Net income $ 989,622 $ 1,072,844 $ 123,277 $ 465,061 Allocation to Minority Interests - Operating Partnership, net 4,369 784 2,458 (600 ) Adjustments: Depreciation 587,647 507,508 149,727 137,033 Depreciation - Non-real estate additions (8,279 ) (7,840 ) (2,142 ) (2,225 ) Depreciation - Partially Owned and Unconsolidated Properties 4,378 4,338 1,116 865 Net gain on sales of unconsolidated entities (2,629 ) (370 ) - - Discontinued operations: Depreciation 28,767 85,010 652 14,877 Gain on sales of discontinued operations, net of minority interests (880,541 ) (955,863 ) (85,871 ) (467,950 ) Net incremental gain on sales of condominium units 20,771 48,961 1,998 6,364 Provision for income taxes - Condo sales 7,319 (3,161 ) 6,127 8,005 Provision for income taxes - Non-condo sales (84 ) - 103 - Minority Interests - Operating Partnership 1,090   5,010   (148 ) 316     FFO (1)(2) 752,430 757,221 197,297 161,746 Preferred distributions (22,792 ) (37,113 ) (3,635 ) (7,431 ) Premium on redemption of Preferred Shares (6,154 ) (3,965 ) (10 ) (24 )   FFO available to Common Shares and OP Units - basic (1) (2) $ 723,484   $ 716,143   $ 193,652   $ 154,291     FFO available to Common Shares and OP Units - diluted (1) (2) $ 724,255   $ 717,041   $ 193,835   $ 154,501     FFO per share and OP Unit - basic $ 2.42   $ 2.31   $ 0.67   $ 0.49     FFO per share and OP Unit - diluted $ 2.39   $ 2.27   $ 0.67   $ 0.49     Weighted average Common Shares and OP Units outstanding - basic 298,392   310,452   287,728   311,757     Weighted average Common Shares and OP Units outstanding - diluted 302,732   316,160   291,129   317,620     (1) The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations ("FFO") (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO available to Common Shares and OP Units is calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Minority Interests - Operating Partnership". Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis. (2) The Company believes that FFO and FFO available to Common Shares and OP Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and OP Units can help compare the operating performance of a company's real estate between periods or as compared to different companies. FFO and FFO available to Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP. Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO and FFO available to Common Shares and OP Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. EQUITY RESIDENTIAL CONSOLIDATED BALANCE SHEETS (Amounts in thousands except for share amounts)       December 31, December 31, 2007 2006 ASSETS Investment in real estate Land $ 3,607,305 $ 3,217,672 Depreciable property 13,556,681 13,376,359 Projects under development 772,402 431,031 Land held for development 396,962   210,113   Investment in real estate 18,333,350 17,235,175 Accumulated depreciation (3,170,125 ) (3,022,480 ) Investment in real estate, net 15,163,225 14,212,695 Cash and cash equivalents 50,831 260,277 Investments in unconsolidated entities 3,547 4,448 Deposits - restricted 253,276 391,825 Escrow deposits - mortgage 20,174 25,528 Deferred financing costs, net 56,271 43,384 Other assets 142,453   124,062   Total assets $ 15,689,777   $ 15,062,219     LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 3,605,971 $ 3,178,223 Notes, net 5,763,762 4,419,433 Lines of credit 139,000 460,000 Accounts payable and accrued expenses 109,385 96,699 Accrued interest payable 124,717 91,172 Other liabilities 322,975 311,557 Security deposits 62,159 58,072 Distributions payable 141,244   151,382   Total liabilities 10,269,213   8,766,538     Commitments and contingencies Minority Interests: Operating Partnership 331,626 372,961 Preference Interests and Units 184 11,684 Partially Owned Properties 26,236   26,814   Total Minority Interests 358,046   411,459     Shareholders' equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 1,986,475 shares issued and outstanding as of December 31, 2007 and 2,762,950 shares issued and outstanding as of December 31, 2006 209,662 386,574 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 269,554,661 shares issued and outstanding as of December 31, 2007 and 293,551,633 shares issued and outstanding as of December 31, 2006 2,696 2,936 Paid in capital 4,266,538 5,349,194 Retained earnings 599,504 159,528 Accumulated other comprehensive loss (15,882 ) (14,010 ) Total shareholders' equity 5,062,518   5,884,222   Total liabilities and shareholders' equity $ 15,689,777   $ 15,062,219   EQUITY RESIDENTIAL             Portfolio Summary As of December 31, 2007   Markets Properties Units % ofTotalUnits % of 2008StabilizedNOI AverageRentalRate (1)   1 New York Metro Area 22 6,246 4.1 % 10.1 % $ 2,612 2 Los Angeles 38 7,973 5.2 % 8.3 % 1,803 3 South Florida 38 12,433 8.1 % 7.8 % 1,276 4 DC Northern Virginia 24 8,057 5.3 % 7.7 % 1,602 5 Seattle/Tacoma 48 11,205 7.3 % 7.3 % 1,249 6 San Francisco Bay Area 33 6,623 4.3 % 6.0 % 1,678 7 Boston 36 5,907 3.9 % 5.9 % 1,553 8 Phoenix 40 11,640 7.6 % 5.5 % 913 9 Denver 28 9,342 6.1 % 5.0 % 980 10 Atlanta 33 9,862 6.5 % 4.4 % 933 11 Orlando 25 7,825 5.1 % 4.4 % 1,031 12 San Diego 14 4,491 2.9 % 4.3 % 1,610 13 Inland Empire, CA 15 4,655 3.1 % 3.6 % 1,473 14 Orange County 9 3,175 2.1 % 3.0 % 1,582 15 New England (excluding Boston) 38 5,597 3.7 % 2.9 % 1,082 16 Suburban Maryland 20 5,081 3.3 % 2.8 % 1,106 17 Dallas/Ft. Worth 20 5,049 3.3 % 1.9 % 906 18 Jacksonville 12 3,951 2.6 % 1.8 % 1,055 19 Portland, OR 11 3,713 2.4 % 1.8 % 924 20 Raleigh/Durham 16 4,032 2.6 % 1.5 % 770   Top 20 Total 520 136,857 89.5 % 96.0 % 1,290   21 Tampa/Ft. Myers 11 3,414 2.2 % 1.4 % 919 22 Austin 9 2,985 2.0 % 1.3 % 871 23 Central Valley, CA 10 1,595 1.1 % 0.8 % 1,068 24 Other EQR 17 3,654 2.4 % 0.5 % 820   Total 567 148,505 97.2 % 100.0 % 1,259   Condominium Conversion 11 585 0.4 % - - Military Housing 1 3,731 2.4 % -   -   Grand Total 579 152,821 100.0 % 100.0 % $ 1,259   (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the month of December 2007. EQUITY RESIDENTIAL                           Portfolio as of December 31, 2007     Properties Units   Wholly Owned Properties 507   133,189 Partially Owned Properties: Consolidated 27 5,455 Unconsolidated 44 10,446 Military Housing (Fee Managed) 1   3,731   579 152,821                           Portfolio Rollforward Q4 2007   Properties Units $ Thousands Cap Rate   9/30/2007 584 154,152   Acquisitions: Rental Properties 2 547 $ 66,970 6.3 % Land Parcel (one) - - $ 63,994 Dispositions: Rental Properties (7 ) (1,882 ) $ (172,868 ) 5.8 % Condominium Units - (65 ) $ (15,989 ) Land Parcel - - $ (4,297 ) Configuration Changes -   69     12/31/2007 579 152,821                           Portfolio Rollforward 2007   Properties Units $ Thousands Cap Rate   12/31/2006 617 165,716 Acquisitions: Rental Properties 36 8,167 $ 1,686,435 4.8 % Land Parcels (eight) - - $ 212,841 Dispositions: Rental Properties (73 ) (21,563 ) $ (1,921,302 ) 5.6 % Condominium Units (5 ) (617 ) $ (164,226 ) Land Parcels (two) - - $ (49,959 ) Completed Developments 4 938 Configuration Changes -   180     12/31/2007 579 152,821                             EQUITY RESIDENTIAL               Fourth Quarter 2007 vs. Fourth Quarter 2006 Quarter over Quarter Same-Store Results/Statistics   $ in Thousands (except for Average Rental Rate) - 123,639 Same-Store Units   Results Statistics Description Revenues Expenses NOI (1) Average RentalRate (2) Occupancy Turnover Q4 2007 $ 446,820 $ 162,853 $ 283,967 $ 1,276 94.6 % 14.8 % Q4 2006 $ 430,244   $ 162,313   $ 267,931   $ 1,229   94.5 % 15.5 % Change $ 16,576   $ 540   $ 16,036   $ 47   0.1 % (0.7 %) Change 3.9 % 0.3 % 6.0 % 3.8 %       Fourth Quarter 2007 vs. Third Quarter 2007 Sequential Quarter over Quarter Same-Store Results/Statistics   $ in Thousands (except for Average Rental Rate) - 131,034 Same-Store Units   Results Statistics Description Revenues Expenses NOI (1) Average RentalRate (2) Occupancy Turnover Q4 2007 $ 476,100 $ 174,955 $ 301,145 $ 1,284 94.4 % 14.8 % Q3 2007 $ 472,982   $ 177,077   $ 295,905   $ 1,276   94.4 % 19.0 % Change $ 3,118   $ (2,122 ) $ 5,240   $ 8   0.0 % (4.2 %) Change 0.7 % (1.2 %) 1.8 % 0.6 %         2007 vs. 2006 Year over Year Same-Store Results/Statistics   $ in Thousands (except for Average Rental Rate) - 115,857 Same-Store Units   Results Statistics Description Revenues Expenses NOI (1) Average RentalRate (2) Occupancy Turnover 2007 $ 1,643,513 $ 607,691 $ 1,035,822 $ 1,250 94.7 % 63.3 % 2006 $ 1,576,322   $ 595,074   $ 981,248   $ 1,199   94.7 % 64.9 % Change $ 67,191   $ 12,617   $ 54,574   $ 51   0.0 % (1.6 %) Change 4.3 % 2.1 % 5.6 % 4.3 % (1) The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI").  NOI represents rental income less property and maintenance expense, real estate tax and insurance expense, and property management expense.  The Company believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Company's apartment communities.   (2) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL     Same-Store NOI Reconciliation Fourth Quarter 2007 vs. Fourth Quarter 2006   The following table presents a reconciliation of operating income perthe consolidated statements of operations to NOI for the FourthQuarter 2007 Same-Store Properties:   Quarter Ended December 31, 2007 2006 (Amounts in thousands)   Operating income $ 159,362 $ 89,488 Adjustments: Non-same-store operating results (39,721 ) (3,702 ) Fee and asset management revenue (2,246 ) (2,223 ) Fee and asset management expense 1,808 2,457 Depreciation 149,727 137,033 General and administrative 14,639 12,594 Impairment 398   32,284     Same-store NOI $ 283,967   $ 267,931         Same-Store NOI Reconciliation 2007 vs. 2006   The following table presents a reconciliation of operating income perthe consolidated statements of operations to NOI for the 2007 Same-Store Properties:   Year Ended December 31, 2007 2006 (Amounts in thousands)   Operating income $ 565,817 $ 452,956 Adjustments: Non-same-store operating results (167,579 ) (61,520 ) Fee and asset management revenue (9,183 ) (9,101 ) Fee and asset management expense 8,412 8,934 Depreciation 587,647 507,508 General and administrative 49,290 48,469 Impairment 1,418   34,002     Same-store NOI $ 1,035,822   $ 981,248   EQUITY RESIDENTIAL                 Fourth Quarter 2007 vs. Fourth Quarter 2006 Same-Store Results by Market                                           Increase (Decrease) fromPrior Year's Quarter Q4 2007 Q4 2007 Q4 2007 % of Average Weighted Average Actual Rental Average Rental Markets   Units   NOI   Rate(1)   Occupancy %   Revenues   Expenses   NOI   Rate(1)   Occupancy 1 New York Metro Area 5,288 9.8 % $ 2,690 96.0 % 6.4 % (1.2 %) 10.4 % 7.0 % (0.6 %) 2 Los Angeles 6,754 7.8 % 1,717 94.3 % 4.4 % 0.6 % 6.3 % 5.0 % (0.5 %) 3 Seattle/Tacoma 8,980 7.4 % 1,283 94.2 % 8.6 % 0.7 % 13.5 % 7.8 % 0.6 % 4 DC Northern Virginia 6,870 7.0 % 1,514 94.8 % 3.7 % 1.9 % 4.6 % 2.3 % 1.3 % 5 South Florida 9,347 6.9 % 1,293 92.8 % (2.3 %) (0.5 %) (3.5 %) (1.6 %) (0.7 %) 6 San Francisco Bay Area 5,793 6.1 % 1,569 95.1 % 7.4 % (1.1 %) 12.1 % 7.4 % 0.0 % 7 Boston 5,205 5.8 % 1,827 95.8 % 3.2 % 7.7 % 0.5 % 1.6 % 1.6 % 8 Phoenix 9,026 5.4 % 927 94.6 % 1.0 % (2.1 %) 2.9 % 0.9 % 0.1 % 9 Denver 8,045 5.0 % 939 95.3 % 8.0 % 2.2 % 11.2 % 7.3 % 0.6 % 10 Atlanta 8,496 4.7 % 959 94.7 % 4.4 % 6.6 % 2.8 % 4.8 % (0.4 %) 11 Orlando 6,959 4.4 % 1,030 93.4 % (2.2 %) (2.0 %) (2.3 %) (1.7 %) (0.5 %) 12 San Diego 3,822 4.2 % 1,622 95.0 % 4.3 % 1.0 % 6.0 % 5.1 % (0.7 %) 13 Inland Empire, CA 4,355 3.9 % 1,367 93.6 % 2.8 % 3.4 % 2.4 % 4.1 % (1.4 %) 14 New England (excluding Boston) 5,597 3.4 % 1,096 94.1 % 2.5 % (1.0 %) 5.4 % 2.9 % (0.4 %) 15 Orange County 3,013 3.3 % 1,584 94.9 % 3.5 % (2.8 %) 6.6 % 4.6 % (1.0 %) 16 Suburban Maryland 3,687 2.5 % 1,136 94.1 % 8.1 % 10.1 % 6.8 % 3.5 % 4.0 % 17 Dallas/Ft. Worth 4,019 2.2 % 958 94.8 % 5.4 % (10.3 %) 20.8 % 5.1 % 0.3 % 18 Portland, OR 3,409 2.0 % 937 95.9 % 6.9 % 0.7 % 11.3 % 5.2 % 1.5 % 19 Jacksonville 3,231 1.9 % 918 94.4 % 1.5 % (2.0 %) 3.7 % 1.4 % 0.1 % 20 Raleigh/Durham 3,640   1.7 %   786   95.1 %   2.9 %   3.7 %   2.4 %   3.7 %   (0.7 %) Top 20 Markets 115,536 95.4 % 1,298 94.5 % 3.9 % 0.8 % 5.8 % 3.8 % 0.1 %     All Other Markets 8,103   4.6 %   961   94.6 %   2.1 %   (7.2 %)   9.6 %   2.8 %   (0.7 %) Total 123,639   100.0 %   $ 1,276   94.6 %   3.9 %   0.3 %   6.0 %   3.8 %   0.1 % (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL                 Fourth Quarter 2007 vs. Third Quarter 2007 Sequential Same-Store Results by Market                                           Increase (Decrease)from Prior Quarter Q4 2007 Q4 2007 Q4 2007 % of Average Weighted Average Actual Rental Average Rental Markets   Units   NOI   Rate(1)   Occupancy %   Revenues   Expenses   NOI   Rate(1)   Occupancy 1 New York Metro Area 5,922 9.6 % $ 2,618 95.0 % 1.1 % 2.7 % 0.3 % 1.6 % (0.5 %) 2 South Florida 11,761 8.2 % 1,301 92.3 % (0.1 %) 0.9 % (0.8 %) (0.9 %) 0.8 % 3 Los Angeles 7,179 7.9 % 1,743 94.4 % (0.3 %) (1.9 %) 0.6 % 0.3 % (0.5 %) 4 Seattle/Tacoma 9,182 7.1 % 1,283 94.2 % 0.1 % (1.9 %) 1.3 % 1.7 % (1.5 %) 5 DC Northern Virginia 6,870 6.6 % 1,514 94.8 % 0.9 % 3.5 % (0.3 %) 0.4 % 0.4 % 6 San Francisco Bay Area 6,211 6.2 % 1,594 95.3 % 1.5 % (6.7 %) 6.3 % 2.0 % (0.5 %) 7 Boston 5,649 6.0 % 1,852 95.8 % 1.3 % 10.3 % (3.8 %) 1.4 % (0.1 %) 8 Phoenix 10,234 5.7 % 932 94.1 % 1.3 % (5.7 %) 5.7 % 0.0 % 1.2 % 9 Orlando 7,825 4.8 % 1,036 93.7 % (1.2 %) (5.3 %) 1.4 % (0.7 %) (0.5 %) 10 Denver 8,045 4.7 % 939 95.3 % 1.9 % (5.7 %) 6.4 % 1.6 % 0.3 % 11 Atlanta 8,678 4.6 % 962 94.7 % 0.8 % (2.6 %) 3.4 % 1.1 % (0.3 %) 12 San Diego 4,262 4.4 % 1,601 95.0 % 0.7 % (0.5 %) 1.4 % 1.0 % (0.3 %) 13 Inland Empire, CA 4,355 3.7 % 1,367 93.6 % 1.0 % (4.2 %) 3.9 % 0.0 % 0.9 % 14 Orange County 3,175 3.3 % 1,577 95.0 % 0.4 % (1.1 %) 1.2 % 1.1 % (0.7 %) 15 New England (excluding Boston) 5,597 3.2 % 1,096 94.1 % 0.0 % 1.5 % (1.1 %) 0.5 % (0.4 %) 16 Suburban Maryland 3,687 2.3 % 1,136 94.1 % 5.7 % 5.2 % 6.0 % 2.5 % 2.8 % 17 Dallas/Ft. Worth 4,019 2.1 % 958 94.8 % (0.2 %) (6.3 %) 4.8 % 0.3 % (0.5 %) 18 Portland, OR 3,409 1.9 % 937 95.9 % (0.2 %) (1.7 %) 0.8 % (0.2 %) 0.0 % 19 Jacksonville 3,231 1.7 % 918 94.4 % (0.9 %) (3.4 %) 0.6 % (0.3 %) (0.6 %) 20 Raleigh/Durham 3,640   1.6 %   786   95.1 %   1.0 %   (4.9 %)   5.4 %   0.3 %   0.7 % Top 20 Markets 122,931 95.6 % 1,305 94.4 % 0.7 % (0.9 %) 1.6 % 0.6 % 0.0 %   All Other Markets 8,103   4.4 %   961   94.6 %   0.1 %   (6.0 %)   4.7 %   0.2 %   (0.2 %) Total 131,034   100.0 %   $ 1,284   94.4 %   0.7 %   (1.2 %)   1.8 %   0.6 %   0.0 %   (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL                   2007 vs. 2006 Same-Store Results by Market                                         Increase (Decrease)from Prior Year 2007 2007 2007 % of Average Weighted Average Actual Rental Average Rental Markets   Units   NOI   Rate(1)   Occupancy %   Revenues   Expenses   NOI   Rate(1)   Occupancy 1 New York Metro Area 5,153 9.9% $ 2,595 96.1% 6.4% 0.7% 9.4% 6.7% (0.3%) 2 Los Angeles 6,221 8.0% 1,705 95.0% 5.0% 0.8% 7.1% 4.7% 0.3% 3 Seattle/Tacoma 8,452 7.3% 1,244 94.8% 7.3% 2.4% 10.4% 6.6% 0.5% 4 DC Northern Virginia 6,246 6.7% 1,477 94.8% 3.4% 6.1% 2.1% 3.5% 0.0% 5 South Florida 7,662 6.4% 1,311 93.2% 0.1% 3.8% (2.2%) 0.9% (0.8%) 6 San Francisco Bay Area 5,541 6.2% 1,540 95.9% 7.1% 2.5% 9.6% 6.8% 0.2% 7 Boston 4,677 5.8% 1,811 95.1% 2.8% 1.7% 3.5% 2.5% 0.3% 8 Phoenix 9,026 5.8% 930 94.0% 3.8% 2.2% 4.8% 4.7% (0.8%) 9 Atlanta 7,938 4.6% 917 95.2% 4.6% 4.1% 5.0% 4.6% 0.0% 10 Orlando 6,473 4.5% 1,034 93.7% 0.1% 4.0% (2.2%) 0.8% (0.8%) 11 Denver 7,013 4.4% 886 95.3% 5.6% 4.1% 6.4% 5.0% 0.6% 12 San Diego 3,486 4.2% 1,592 94.9% 4.3% (1.2%) 7.1% 4.2% 0.1% 13 New England (excluding Boston) 5,597 3.6% 1,083 94.3% 4.5% 0.9% 7.6% 3.5% 0.9% 14 Inland Empire, CA 3,712 3.6% 1,336 93.6% 3.6% 2.9% 3.9% 3.6% (0.1%) 15 Orange County 3,013 3.6% 1,552 95.4% 4.2% (1.0%) 6.7% 4.1% 0.1% 16 Suburban Maryland 3,687 2.6% 1,104 93.0% 3.0% 9.1% (0.7%) 2.5% 0.5% 17 Dallas/Ft. Worth 3,869 2.2% 931 95.2% 4.1% (1.7%) 9.1% 3.8% 0.2% 18 Portland, OR 3,409 2.1% 924 95.7% 7.5% 1.7% 11.6% 6.8% 0.6% 19 Jacksonville 3,231 2.0% 914 94.6% 2.7% 1.2% 3.7% 2.7% 0.0% 20 Raleigh/Durham 3,348   1.6%   769   94.9%   4.1%   2.3%   5.4%   4.6%   (0.5%) Top 20 Markets 107,754 95.1% 1,272 94.7% 4.3% 2.4% 5.4% 4.2% 0.0%   All Other Markets 8,103   4.9%   952   94.9%   4.0%   (1.6%)   8.6%   3.9%   0.1% Total 115,857   100.0%   $ 1,250   94.7%   4.3%   2.1%   5.6%   4.3%   0.0% (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL   Debt Summary as of December 31, 2007 (Amounts in thousands)         Weighted Weighted Average Average Maturities Amounts (1) % of Total Rates (1) (years)   Secured $ 3,605,971 37.9% 5.74% 7.6 Unsecured 5,902,762 62.1% 5.67% 6.2 Total $ 9,508,733 100.0% 5.69% 6.7   Fixed Rate Debt: Secured - Conventional $ 2,475,279 26.0% 6.15% 4.8 Unsecured - Public/Private 5,002,664 52.6% 5.65% 6.5 Unsecured - Tax Exempt 111,390 1.2% 5.05% 21.3 Fixed Rate Debt 7,589,333 79.8% 5.80% 6.1   Floating Rate Debt: Secured - Conventional 492,138 5.2% 6.26% 5.5 Secured - Tax Exempt 638,554 6.7% 3.81% 20.6 Unsecured - Public/Private 649,708 6.8% 6.15% 2.5 Unsecured - Revolving Credit Facility 139,000 1.5% 5.68% 4.1 Floating Rate Debt 1,919,400 20.2% 5.31% 9.1   Total $ 9,508,733 100.0% 5.69% 6.7 (1) Net of the effect of any derivative instruments. Weighted average rates are for the year ended December 31, 2007. Note: The Company capitalized interest of approximately $45.1 million and $20.7 million during the years ended December 31, 2007 and 2006, respectively. The Company capitalized interest of approximately $14.3 million and $7.5 million during the quarters ended December 31, 2007 and 2006, respectively. Debt Maturity Schedule as of December 31, 2007 (Amounts in thousands)               Weighted Weighted Average Rates Average Rates Fixed Rate Floating Rate % of on Fixed Rate on Total Debt Year (1) (1) Total Total Debt (1) (1)     2008 $ 457,610 $ 83,391 $ 541,001 5.7% 6.65% 6.54% 2009 458,326 457,432 915,758 9.6% 6.35% 5.47% 2010 (2) 280,414 550,982 831,396 8.7% 7.04% 6.07% 2011 (3) 1,503,562 41,537 1,545,099 16.3% 5.56% 5.54% 2012 (4) 907,986 139,000 1,046,986 11.0% 6.08% 5.92% 2013 566,267 - 566,267 6.0% 5.93% 5.93% 2014 517,445 - 517,445 5.4% 5.28% 5.28% 2015 355,587 - 355,587 3.7% 6.41% 6.41% 2016 1,089,320 - 1,089,320 11.5% 5.32% 5.32% 2017 803,649 456 804,105 8.5% 6.01% 6.01% 2018+ 649,167 646,602 1,295,769 13.6% 6.20% 5.38% Total $ 7,589,333 $ 1,919,400 $ 9,508,733 100.0% 5.91% 5.71% (1) Net of the effect of any derivative instruments.  Weighted average rates are as of December 31, 2007. (2) Includes the Company's $500.0 million floating rate term loan facility, which matures on October 5, 2010, subject to two one-year extension options exercisable by the Company. (3) Includes $650.0 million of 3.85% convertible unsecured debt with a final maturity of 2026.  The notes are callable by the Company on or after August 18, 2011.  The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021. (4) Includes $139.0 million outstanding on the Company's $1.5 billion unsecured revolving credit facility, which matures on February 28, 2012. EQUITY RESIDENTIAL   Unsecured Debt Summary as of December 31, 2007 (Amounts in thousands)         Unamortized Coupon Due Face Premium/ Net Rate   Date     Amount (Discount) Balance   Fixed Rate Notes: 7.500 % 08/15/08 (1) $ 130,000 $ - $ 130,000 4.750 % 06/15/09 (2) 300,000 (400 ) 299,600 6.950 % 03/02/11   300,000 2,864 302,864 6.625 % 03/15/12   400,000 (1,236 ) 398,764 5.500 % 10/01/12   350,000 (1,640 ) 348,360 5.200 % 04/01/13   400,000 (622 ) 399,378 5.250 % 09/15/14 500,000 (412 ) 499,588 6.584 % 04/13/15   300,000 (809 ) 299,191 5.125 % 03/15/16 500,000 (439 ) 499,561 5.375 % 08/01/16 400,000 (1,592 ) 398,408 5.750 % 06/15/17   650,000 (4,832 ) 645,168 7.125 % 10/15/17   150,000 (635 ) 149,365 7.570 % 08/15/26 140,000 - 140,000 3.850 % 08/15/26 (3)   650,000 (7,583 ) 642,417 Floating Rate Adjustments (2)   (150,000 ) -   (150,000 ) 5,020,000   (17,336 ) 5,002,664     Fixed Rate Tax Exempt Notes: 4.750 % 12/15/28 (1) 35,600 - 35,600 5.200 % 06/15/29 (1) 75,790   -   75,790   111,390   -   111,390     Floating Rate Notes: 06/15/09 (2) 150,000 - 150,000 FAS 133 Adjustments - net (2) (292 ) - (292 ) Term Loan Facility 10/05/10 (4) 500,000   -   500,000   649,708   -   649,708     Revolving Credit Facility: 02/28/12 (5) 139,000   -   139,000     Total Unsecured Debt $ 5,920,098   $ (17,336 ) $ 5,902,762   (1) Notes are private.  All other unsecured debt is public. (2) $150.0 million in fair value interest rate swaps converts 50% of the 4.750% Notes due June 15, 2009 to a floating interest rate. (3) Convertible notes mature on August 15, 2026.  The notes are callable by the Company on or after August 18, 2011.  The notes are putable by the holders on August 18, 2011, August 15, 2016 and August 15, 2021. (4) Represents the Company's $500.0 million term loan facility, which matures on October 5, 2010, subject to two one-year extension options exercisable by the Company. (5) Represents amount outstanding on the Company's $1.5 billion unsecured revolving credit facility which matures on February 28, 2012. EQUITY RESIDENTIAL   Selected Unsecured Public Debt Covenants     December 31, September 30, 2007 2007   Total Debt to Adjusted Total Assets (not to exceed 60%) 50.5 % 50.6 %     Secured Debt to Adjusted Total Assets (not to exceed 40%) 19.2 % 19.0 %     Consolidated Income Available for Debt Service to Maximum Annual Service Charges (must be at least 1.5 to 1) 2.09 2.16     Total Unsecured Assets to Unsecured Debt (must be at least 150%) 207.4 % 215.0 % These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt. Equity Residential is the general partner of ERPOP. EQUITY RESIDENTIAL                 Capital Structure as of December 31, 2007 (Amounts in thousands except for share and per share amounts)     Secured Debt $ 3,605,971 37.9 % Unsecured Debt 5,763,762 60.6 % Revolving Credit Facility 139,000 1.5 % Total Debt 9,508,733 100.0 % 47.0 %   Common Shares 269,554,661 93.6 % OP Units 18,420,320 6.4 % Total Shares and OP Units 287,974,981 100.0 % Common Share Equivalents (see below) 445,752 Total outstanding at quarter-end 288,420,733 Common Share Price at December 31, 2007 $ 36.47 10,518,704 98.1 % Perpetual Preferred Equity (see below) 200,000 1.9 % Total Equity 10,718,704 100.0 % 53.0 %   Total Market Capitalization $ 20,227,437 100.0 %       Convertible Preferred Equity as of December 31, 2007 (Amounts in thousands except for share and per share amounts)   Annual Annual Weighted Common Redemption Outstanding Liquidation Dividend Dividend Average Conversion Share Series Date Shares/Units Value Per Share/Unit Amount Rate Ratio Equivalents                       Preferred Shares: 7.00% Series E 11/1/98 362,116 $ 9,053 $ 1.75 $ 634 1.1128 402,963 7.00% Series H 6/30/98 24,359 609 1.75 43 1.4480 35,272 Junior Preference Units: 8.00% Series B 7/29/09 7,367 184 2.00 15 1.020408 7,517 Total Convertible Preferred Equity 393,842 $ 9,846 $ 692 7.03 % 445,752       Perpetual Preferred Equity as of December 31, 2007 (Amounts in thousands except for share and per share amounts)   Annual Annual Weighted Redemption Outstanding Liquidation Dividend Dividend Average Series Date Shares Value Per Share Amount Rate Preferred Shares: 8.29% Series K 12/10/26 1,000,000 $ 50,000 $ 4.145 $ 4,145 6.48% Series N 6/19/08 600,000 150,000 16.20 9,720 Total Perpetual Preferred Equity 1,600,000 $ 200,000 $ 13,865 6.93 % EQUITY RESIDENTIAL   Common Share and Operating Partnership Unit (OP Unit) Weighted Average Amounts Outstanding                       2007 2006 Q407 Q406 (1)   Weighted Average Amounts Outstanding for Net Income Purposes (1): Common Shares - basic 279,406,365 290,018,793 269,197,434 291,668,842 Shares issuable from assumed conversion/vesting of: - OP Units 18,985,960 20,433,196 18,530,596 - - share options / restricted shares 3,842,868 5,127,102 2,929,623 - Total Common Shares and OP Units - diluted 302,235,193 315,579,091 290,657,653 291,668,842   Weighted Average Amounts Outstanding for FFO Purposes: Common Shares - basic 279,406,365 290,018,793 269,197,434 291,668,842 OP Units - basic 18,985,960 20,433,196 18,530,596 20,088,178 Total Common Shares and OP Units - basic 298,392,325 310,451,989 287,728,030 311,757,020 Shares issuable from assumed conversion/vesting of: - convertible preferred shares/units 496,959 581,321 471,314 544,086 - share options / restricted shares 3,842,868 5,127,102 2,929,623 5,318,852 Total Common Shares and OP Units - diluted 302,732,152 316,160,412 291,128,967 317,619,958   Period Ending Amounts Outstanding: Common Shares - basic 269,554,661 OP Units - basic 18,420,320 Total Common Shares and OP Units - basic 287,974,981 (1) In accordance with SFAS No. 128, Earnings Per Share, potential common shares issuable from the assumed conversion of OP Units, the exercise of share options and the vesting of restricted shares are automatically anti-dilutive and therefore excluded from the diluted earnings per share calculation as the Company had a loss from continuing operations for the fourth quarter ended December 31, 2006. EQUITY RESIDENTIAL   Partially Owned Entities as of December 31, 2007 (Amounts in thousands except for project and unit amounts)         Consolidated Unconsolidated Development Projects Held for and/or Under Development Completed and Stabilized Other Total Institutional Joint Ventures   Total projects (1) - 6 21 27 44   Total units (1) - 1,549 3,906 5,455 10,446   Operating information for the year ended 12/31/07 (at 100%): Operating revenue $ 20 $ 22,506 $ 56,338 $ 78,864 $ 104,271 Operating expenses 1,554 10,599 19,547 31,700 47,024 Net operating income (loss) (1,534) 11,907 36,791 47,164 57,247 Depreciation - 9,563 13,843 23,406 21,582 Other 48 2,116 228 2,392 511 Operating income (loss) (1,582) 228 22,720 21,366 35,154 Interest and other income 133 195 1,073 1,401 836 Interest: Expense incurred, net (423) (8,511) (20,096) (29,030) (37,453) Amortization of deferred financing costs (12) (50) (114) (176) (617) Net income (loss) $ (1,884) $ (8,138) $ 3,583 $ (6,439) $ (2,080)     Debt - Secured (2): EQR Ownership (3) $ 395,663 $ 141,206 $ 286,755 $ 823,624 $ 121,200 Minority Ownership - - 13,321 13,321 363,600 Total (at 100%) $ 395,663 $ 141,206 $ 300,076 $ 836,945 $ 484,800 (1) Project and unit counts exclude all uncompleted development projects until those projects are substantially completed.  See the Consolidated Development Projects schedule for more detail. (2) All debt is non-recourse to the Company with the exception of $28.3 million in mortgage bonds on one development project. (3) Represents the Company's current economic ownership interest. EQUITY RESIDENTIAL                   Consolidated Development Projects as of December 31, 2007 (Amounts in thousands except for project and unit amounts)       Projects Location No. ofUnits   Total Capital Cost(1)   Total Book Value To Date   Total Book Value Not Placed in Service   Total Debt   Percentage Completed   Percentage Leased   Percentage Occupied   Estimated Completion Date   Estimated Stabilization Date   Projects Under Development - Wholly Owned: West End Apartments (a.k.a. Emerson/CRP II) Boston, MA 310 $ 167,953 $ 138,440 $ 138,440 $ - 92% 29% 25% Q2 2008 Q1 2009 Redmond Ridge Redmond, WA 321 55,457 42,991 42,991 - 83% 8% - Q2 2008 Q3 2010 Crowntree Lakes Orlando, FL 352 58,628 38,379 38,379 - 66% - - Q4 2008 Q4 2009 Key Isle at Windermere II Orlando, FL 165 29,058 17,372 17,372 - 58% - - Q4 2008 Q1 2009 70 Greene (a.k.a. 77 Hudson) Jersey City, NJ 480 269,958 109,147 109,147 - 42% - - Q4 2009 Q1 2011 Reserve at Town Center II Mill Creek, WA 100 23,485 5,464 5,464 - 6% - - Q2 2010 Q4 2010                   Projects Under Development - Wholly Owned 1,728 604,539 351,793 351,793 -   Projects Under Development - Partially Owned: Alta Pacific(2) Irvine, CA 132 46,416 41,143 41,143 28,260 88% - - Q1 2008 Q4 2008 City Lofts Chicago, IL 278 71,109 52,614 52,614 27,569 84% - - Q3 2008 Q2 2009 Silver Spring Silver Spring, MD 457 147,454 89,853 89,853 53,202 59% - - Q4 2008 Q3 2010 303 Third Street Cambridge, MA 531 248,307 140,832 140,832 50,981 52% - - Q4 2008 Q1 2010 Montclair Metro Montclair, NJ 163 48,730 11,398 11,398 1 16% - - Q2 2009 Q1 2010 Red Road Commons South Miami, FL 404 128,816 35,000 35,000 17,387 3% - - Q1 2010 Q3 2011 111 Lawrence Street Brooklyn, NY 492 283,968 49,769 49,769 - 1% - - Q2 2010 Q3 2011                   Projects Under Development - Partially Owned 2,457 974,800 420,609 420,609 177,400                   Projects Under Development 4,185   1,579,339   772,402   772,402   177,400   Land Held for Development N/A   -   396,962   396,962   218,263   Land/Projects Held for and/or Under Development 4,185   1,579,339   1,169,364   1,169,364   395,663   Completed Not Stabilized - Wholly Owned (3): Bella Vista III Woodland Hills, CA 264 73,336 73,190 - - 62% 59% Completed Q3 2008 Highland Glen II Westwood, MA 102 21,620 19,797 - - 39% 33% Completed Q3 2008                   Projects Completed Not Stabilized 366   94,956   92,987   -   -   Completed and Stabilized During the Quarter: Mozaic (a.k.a. Union Station) Los Angeles, CA 272 69,661 67,849 - 47,206 91% 90% Completed Stabilized Vintage Ontario, CA 300 54,722 54,722 - 33,000 94% 96% Completed Stabilized                   Projects Completed and Stabilized During the Quarter 572   124,383   122,571   -   80,206     Total Projects 5,123   $ 1,798,678   $ 1,384,922   $ 1,169,364   $ 475,869   NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Total Capital Cost (1)   Q4 2007 NOI Projects Under Development $ 1,579,339 $ (13) Completed Not Stabilized 94,956 366 Completed and Stabilized During the Quarter 124,383   724 Total Development / Newly Stabilized NOI Contribution $ 1,798,678   $ 1,077 (1) Total capital cost represents estimated development cost for projects under development and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all projects, all in accordance with GAAP. (2) Debt is primarily tax-exempt bonds that are entirely outstanding, with $6.7 million held in escrow by the lender and released as draw requests are made.  This amount is classified as deposits - restricted in the consolidated balance sheets at 12/31/07. (3) Properties included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing. EQUITY RESIDENTIAL   Consolidated Condominium Conversion Projects as of December 31, 2007 (Amounts in thousands except for project and unit amounts)               Units 2007 YTD Activity Q4 2007 Available for Sale Projects   Location Project Start Date (1) Estimated Close Out Date   Total Units Closed Sold Not Closed Available Units Closed Sales Price FFO Incremental Gain on Sale (4) Units Closed Sales Price FFO Incremental Gain on Sale (4)   For Sale Milano Terrace Scotts-dale, AZ Q2 2005 Q1 2008 224 206 7 11 53 $13,044 $2,243 5 $1,288 $224 South Palm Place Tamarac, FL Q2 2005 Q1 2008 208 202 2 4 93 18,941 822 2 404 20 Chantecleer Lakes Naper-ville, IL Q4 2005 Q1 2008 304 302 1 1 96 15,533 2,319 7 1,170 192 Park Bloomingdale Blooming-dale, IL Q2 2006 Q4 2008 250 180 11 59 102 17,142 1,359 16 2,933 159 Belle Arts Bellevue, WA Q4 2006 Q1 2008 128 127 - 1 127 41,562 5,785 19 5,608 795 Pacific Cove Playa del Ray, CA Q3 2006 Q1 2008 80 79 1 - 79 39,024 5,625 2 995 61 Arrington Place Issaquah, WA Q1 2007 Q1 2009 130 45 3 82 45 11,065 1,587 14 3,481 524 Sage Everett, WA Q2 2007 Q3 2008 123 - 16 107 - - - - - - The Cleo (The Alexandria) Los Angeles, CA Q3 2007 Q4 2008 104 - - 104 - - - - - - Verde (Mission Verde) San Jose, CA Q3 2007 Q1 2009 108 - - 108 - - - - - - Crosspointe Bellevue, WA Q4 2007 Q1 2009 67 - - 67 - - - - - -   1,726 1,141 41 544 595 156,311 19,740 65 15,879 1,975   Closed Out Timber Ridge Woodin-ville, WA Q1 2005 Q1 2007 203 203 - - 4 1,059 394 - - (20) Braewood Bothell, WA Q2 2005 Q1 2007 84 84 - - 2 573 (33) - - (1) Fairway Greens Pembroke Pines, FL Q1 2005 Q2 2007 152 152 - - 2 410 139 - - 1 Fifth Avenue North (2) Seattle, WA Q2 2005 Q2 2007 62 62 - - 6 2,111 393 - 110 95 Parkside (3) Seattle, WA Q4 2005 Q3 2007 44 44 - - 8 3,762 282 - - (28) Projects closed out prior to 2007 3,744 3,744 - - - - (144) - - (24)   4,289 4,289 - - 22 7,915 1,031 - 110 23   Totals 16 6,015 5,430 41 544 617 $164,226 $20,771 65 $15,989 $1,998     Net incremental gain on sales of condominium units (4) $20,771 $1,998 Corporate overhead (property management expense) (4,801) (1,124) Other expenses (960) (495) Discontinued operating income (loss) (4,856) (931) Operating income of halted conversions (5) 4,555 1,703   Pre-tax net income - Condominium division (6) $14,709 $1,151 (1) Project start date represents the date that each respective property was acquired by the taxable REIT subsidiary and included in discontinued operations. (2) Includes the sale of approximately 310 square feet of retail space, which amounted to a gain of $101,000 on proceeds of $110,000. (3) Includes the sale of approximately 2,600 square feet of retail space, which amounted to a gain of $275,000 on proceeds of $650,000. (4) Amounts are net of $1,871,000 and $189,000 in reserves for potential homeowners disputes for the year and quarter ended December 31, 2007, respectively. (5) Halted conversions includes the results of Dania Beach Club, Azure Creek, Alameda Ranch, Bella Vista, Oaks at Falls Church and Regency Park.  All of these properties with the exception of Dania Beach Club were sold back to ERPOP on December 18, 2007. (6) Excludes interest income, interest expense and certain other items specific to condominium conversion projects that ultimately eliminate in consolidation. Also excludes depreciation expense on halted conversions (active conversions are not depreciated) and excludes provisions for income taxes on condominium sales and operations, if any. EQUITY RESIDENTIAL                             Maintenance Expenses and Capitalized Improvements to Real Estate For the Year Ended December 31, 2007 (Amounts in thousands except for unit and per unit amounts)                                                       Maintenance Expenses Capitalized Improvements to Real Estate Total Expenditures   Total Avg. Avg. Avg. Avg. Building Avg. Avg. Avg. Units Expense Per Payroll Per Per Replacements Per Improvements Per Per Per (1) (2)   Unit (3)   Unit Total   Unit (4)   Unit (5)   Unit Total   Unit Grand Total   Unit   Established Properties (6) 103,560 $ 76,803 $ 742 $ 67,536 $ 652 $ 144,339 $ 1,394 $ 37,695 $ 364 $ 77,109 $ 745 $ 114,804 $ 1,109 $ 259,143 $ 2,503   New Acquisition Properties (7) 27,696 21,674 853 17,975 708 39,649 1,561 9,433 371 66,182 2,605 75,615 2,976 115,264 4,537   Other (8) 7,388 16,490 15,096 31,586 16,398 45,858 62,256 93,842   Total 138,644 $ 114,967 $ 100,607 $ 215,574 $ 63,526 $ 189,149 $ 252,675 $ 468,249       (1) Total units exclude 10,446 unconsolidated units and 3,731 military housing (fee managed) units.   (2) Maintenance expenses include general maintenance costs, unit turnover costs including interior painting, regularly scheduled landscaping and tree trimming costs, security, exterminating, fire protection, snow and ice removal, elevator repairs, and other miscellaneous building repair costs.   (3) Maintenance payroll includes employee costs for maintenance, cleaning, housekeeping, and landscaping.   (4) Replacements include new expenditures inside the units such as appliances, mechanical equipment, fixtures and flooring, including carpeting.   (5) Building improvements include roof replacement, paving, amenities and common areas, building mechanical equipment systems, exterior painting and siding, major landscaping, vehicles and office and maintenance equipment.   (6) Wholly Owned Properties acquired prior to January 1, 2005.   (7) Wholly Owned Properties acquired during 2005, 2006 and 2007. Per unit amounts are based on a weighted average of 25,406 units.   (8) Includes properties either partially owned or sold during the period, commercial space, corporate housing, condominium conversions and $22.2 million included in building improvements spent on twenty-six specific assets related to major renovations and repositioning of these assets. EQUITY RESIDENTIAL     Discontinued Operations (Amounts in thousands)   Year Ended Quarter Ended December 31, December 31, 2007   2006 2007   2006   REVENUES Rental income $ 109,104   $ 374,411   $ 3,912   $ 56,547   Total revenues 109,104   374,411   3,912   56,547     EXPENSES (1) Property and maintenance 44,497 123,758 4,018 19,231 Real estate taxes and insurance 14,918 46,992 1,336 6,307 Property management 321 8,934 30 38 Depreciation 28,767 85,129 652 14,877 General and administrative (63 ) 575 (97 ) (129 ) Impairment 308   351   308   -   Total expenses 88,748   265,739   6,247   40,324     Discontinued operating income (loss) 20,356 108,672 (2,335 ) 16,223   Interest and other income 189 1,662 19 13 Interest (2): Expense incurred, net (2,053 ) (33,058 ) - (11,225 ) Amortization of deferred financing costs (1,327 ) (1,014 ) -   (179 )   Discontinued operations 17,165 76,262 (2,316 ) 4,832 Minority Interests - Operating Partnership (1,090 ) (5,010 ) 148   (316 ) Discontinued operations, net of minority interests 16,075   71,252   (2,168 ) 4,516     Net gain on sales of discontinued operations 940,247 1,016,443 91,752 494,115 Minority Interests - Operating Partnership (59,706 ) (66,780 ) (5,881 ) (32,365 ) Gain on sales of discontinued operations, net of minority interests 880,541   949,663   85,871   461,750     Discontinued operations, net of minority interests $ 896,616   $ 1,020,915   $ 83,703   $ 466,266         (1) Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company’s period of ownership.   (2) Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale. EQUITY RESIDENTIAL             Additional Reconciliations and Non-Comparable Items (Amounts in thousands except per share data) (All per share data is diluted)             FFO Reconciliations   FFO Reconciliations Guidance Midpoint Q4 2007 to Actual Q4 2007 Amounts Per Share   Guidance midpoint Q4 2007 FFO - Diluted (1) (2) $ 178,063 $ 0.608 Property NOI (including reserve adjustments) 3,590 0.012 Insurance litigation settlement proceeds (interest and other income) 4,100 0.014 Interest expense (excluding debt extinguishment): Share repurchase (410 ) (0.001 ) Net acquisition/disposition activity and other 1,808 0.006 Provision for income taxes - Condo sales 6,127 0.021 Other 557 0.002 Weighted average share count adjustment - 0.004     Actual Q4 2007 FFO - Diluted (1) (2) $ 193,835   $ 0.666   Non-Comparable Items (3)           Year Ended December 31, Quarter Ended December 31, 2007 2006 Variance 2007 2006 Variance Property insurance reserve adjustments (real estate taxes and insurance expense) $ 8,722 $ 5,106 $ 3,616 $ 7,334 $ (1,104 ) $ 8,438 Workers compensation reserve adjustments (property management expense) 1,750 354 1,396 2,100 826 1,274 Medical reserve adjustments (property management expense) 2,026 - 2,026 2,026 - 2,026 Florida litigation reserve reduction (general and administrative expense) 1,667 2,843 (1,176 ) - - - Performance shares (general and administrative expense) (1,114 ) (1,795 ) 681 (685 ) 907 (1,592 ) Executive severance charges (general and administrative expense) (3,426 ) - (3,426 ) (2,503 ) - (2,503 ) Income taxes on forfeited deposits (general and administrative expense) - (2,909 ) 2,909 - (2,909 ) 2,909 Impairment (including discontinued operations) (1,726 ) (34,353 ) 32,627 (706 ) (32,284 ) 31,578 Additional Rent.com proceeds (interest and other income) - 3,701 (3,701 ) - 11 (11 ) Insurance litigation settlement proceeds (interest and other income) 4,100 - 4,100 4,100 - 4,100 Forfeited deposits (interest and other income) 288 14,733 (14,445 ) 144 12,418 (12,274 ) Debt extinquishment costs (interest): - Prepayment penalties (3,339 ) (12,171 ) 8,832 - (9,270 ) 9,270 Write-off of unamortized deferred financing costs (4,032 ) (1,769 ) (2,263 ) (197 ) (161 ) (36 ) Premium on redemption of Preference Interests - (684 ) 684 - - - Premium on redemption of Preferred Shares (6,154 ) (3,965 ) (2,189 ) (10 ) (24 ) 14 Net gain (loss) on sales of land parcels 6,360 2,792 3,568 1,130 (391 ) 1,521 Net incremental gain on sales of condominium units 20,771 48,961 (28,190 ) 1,998 6,364 (4,366 ) Provision for income taxes - Condo sales 7,319 (3,161 ) 10,480 6,127 8,005 (1,878 ) Other 768   782   (14 ) 109   -   109   Net non-comparable items (3) $ 33,980   $ 18,465   $ 15,515   $ 20,967   $ (17,612 ) $ 38,579           Note: See page 29 for definitions, footnotes and reconciliations of EPS to FFO.   EQUITY RESIDENTIAL       The earnings guidance/projections provided below are based on current expectations and are forward-looking.   2008 Earnings Guidance (per share diluted)   Q1 2008 2008   Expected FFO (1) (2) $0.56 to $0.60 $2.45 to $2.60     2008 Same-Store Assumptions Physical occupancy 94.5% Revenue change 3.00% to 4.00% Expense change 2.50% to 3.25% NOI change 3.00% to 4.75% (Note: 30 basis point change in NOI percentage = $0.01 per share change in EPS/FFO)   2008 Transaction Assumptions Rental acquisitions $1.0 billion Rental dispositions $1.0 billion Capitalization rate spread 125 basis points   2008 Debt Assumptions Weighted average debt outstanding $9.7 billion - $10.1 billion Weighted average interest rate (reduced for capitalized interest and including prepayment penalties) 4.84% Interest expense (including discontinued operations) $470.0 million - $490.0 million   2008 Condominium Conversion Assumptions Net incremental gain on sales of condominium units $7.0 million - $14.4 million Pre-tax net income - Condominium division (after overhead/operations) $0.0 million - $7.5 million Effective tax rate 0% Number of condominium unit sales 225 units - 400 units   2008 Other Guidance Assumptions General and administrative expense $48.0 million - $50.0 million Interest and other income $5.0 million - $10.0 million Net gain on sales of land parcels No amounts budgeted Preferred share redemptions No amounts budgeted Weighted average Common Shares and OP Units - Diluted 290.9 million         Note: See page 29 for definitions, footnotes and reconciliations of EPS to FFO. EQUITY RESIDENTIAL   The earnings guidance/projections provided below are based on current expectations and are forward-looking.               Reconciliations of EPS to FFO for Pages 27 and 28   (Amounts in thousands except per share data) (All per share data is diluted)   Expected Expected Expected Q4 2007 Q1 2008 2008 Amounts Per Share Per Share Per Share   Expected Earnings - Diluted (4) $ 142,926 $ 0.488 $0.47 to $0.51 $2.07 to $2.22 Add: Expected depreciation expense 150,696 0.515 0.50 2.01 Less: Expected net gain on sales (4) (115,559) (0.395) (0.41) (1.63)         Expected FFO - Diluted (1) (2) $ 178,063 $ 0.608 $0.56 to $0.60 $2.45 to $2.60 Definitions and Footnotes for Pages 27 and 28   (1) The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations ("FFO") (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.  Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.  The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only.  Once the Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO available to Common Shares and OP Units is calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Minority Interests - Operating Partnership". Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis.   (2) The Company believes that FFO and FFO available to Common Shares and OP Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and OP Units can help compare the operating performance of a company's real estate between periods or as compared to different companies.  FFO and FFO available to Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP.  Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity.  The Company's calculation of FFO and FFO available to Common Shares and OP Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.   (3) Non-comparable items are those items included in FFO that by their nature are not comparable from period to period, such as net incremental gain on sales of condominium units, impairment charges, debt extinguishment costs and redemption premiums on Preferred Shares/Preference Interests.   (4) Earnings represents net income per share calculated in accordance with accounting principles generally accepted in the United States. Expected earnings is calculated on a basis consistent with actual earnings. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual earnings could differ materially from expected earnings.