Equity Residential Reports First Quarter Results

Equity Residential (NYSE:EQR) today reported results for the quarter ended March 31, 2008. All per share results are reported on a fully-diluted basis. "To date, despite a slowing economy and disappointing job numbers, apartment fundamentals remain fairly healthy across most of our markets. We have performed on plan through the first four months of the year and May appears likely to continue that trend. As we enter our primary leasing season 95% occupied, we remain confident that our 2008 operating performance will meet our original expectations,” said David J. Neithercut, Equity Residential’s President and CEO. First Quarter 2008 For the quarter ended March 31, 2008, the company reported earnings of $0.51 per share compared to $0.40 per share in the first quarter of 2007. The increase is primarily attributable to higher income from continuing operations and higher gains on property sales. Funds from Operations (FFO) for the quarter ended March 31, 2008 were $0.59 per share compared to $0.55 per share in the same period of 2007. The $0.04 per share increase in the first quarter of 2008 is due primarily to: A net positive impact of approximately $0.02 per share from higher total net operating income (NOI) as a result of higher NOI from the company’s same store portfolio and the lease up of development and other non-same store properties, partially offset by dilution from the company’s 2007 and 2008 transaction activity; A net positive impact of approximately $0.03 per share due primarily to lower floating rates of interest, higher capitalized interest and lower share count partially offset by the increased interest expense associated with the company’s 2007 share buyback; A positive impact of approximately $0.01 due to lower preferred share distributions; and A reduction of approximately $0.02 per share from higher income taxes and a number of non-comparable items listed on page 23 of this release. The difference between the company’s first quarter 2008 FFO of $0.59 per share and the company’s fourth quarter 2007 FFO of $0.67 per share is primarily attributable to the following: Approximately $0.08 per share less in FFO in the first quarter of 2008 due to a number of one-time items that had a positive impact in the fourth quarter of 2007, including insurance recoveries and reserve adjustments, an insurance settlement and income tax refunds; Approximately $0.01 per share less in FFO in the first quarter of 2008 due to slightly lower same store NOI and dilution from 2008 transactions activity partially offset by the positive impact of the lease up of development and other non-same store properties; and Approximately $0.01 per share of higher FFO in the first quarter of 2008 due to lower interest expense from lower rates, partially offset by lower interest income on 1031 exchange accounts. Same Store Results On a same store first quarter to first quarter comparison, which includes 121,826 apartment units, revenues increased 3.5%, expenses increased 1.6% and NOI increased 4.7%. The increase in same store revenues was driven primarily by an increase in rental rates. Acquisitions/Dispositions During the first quarter of 2008, the company acquired two properties, consisting of 171 apartment units, for an aggregate purchase price of $41.9 million at an average capitalization (cap) rate of 5.0%. Also during the quarter, the company sold 15 properties, consisting of 3,317 apartment units, for an aggregate sale price of $271.6 million at an average cap rate of 5.8% generating an unlevered internal rate of return (IRR) of 10.7%. In addition, the company sold 41 condominium units for $9.4 million. Liquidity On March 10, 2008, the company closed a $500 million Freddie Mac secured loan with an all-in effective interest rate of 5.48%. The company currently has approximately $1.4 billion available on its unsecured revolving credit facility and approximately $325 million of unrestricted cash. The company’s liquidity is sufficient to retire all of its 2008 loan maturities as they come due. The company anticipates having approximately $1.0 billion of availability on its unsecured revolving credit facility at year end 2008. Second Quarter 2008 Earnings Guidance The company has established an FFO guidance range of $0.61 to $0.65 per share for the second quarter of 2008. The difference between the company’s actual first quarter 2008 FFO of $0.59 per share and the midpoint of the second quarter 2008 guidance range is primarily a result of higher NOI from the company’s same store properties as well as the continuing positive impact from the lease up of development and other non-same store properties offset by some transaction dilution in the second quarter of 2008. Second Quarter 2008 Conference Call Equity Residential expects to announce second quarter 2008 results on Wednesday, July 30, 2008 and host a conference call to discuss those results at 10:00 a.m. CT on Thursday, July 31, 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 565 properties located in 24 states and the District of Columbia, consisting of 149,769 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, Thursday, May 1, at 10:00 a.m. Central. Please visit the Investor Information section of the company’s web site at www.equityresidential.com for the link. A replay of the web cast will be available for two weeks at this site. EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands except per share data) (Unaudited)     Quarter Ended March 31, 2008 2007 REVENUES Rental income $ 520,518 $ 473,582 Fee and asset management 2,294   2,267     Total revenues 522,812   475,849     EXPENSES Property and maintenance 137,491 126,781 Real estate taxes and insurance 55,925 52,420 Property management 21,168 24,842 Fee and asset management 2,183 2,341 Depreciation 146,598 138,932 General and administrative 12,481 9,369 Impairment 119   236     Total expenses 375,965   354,921     Operating income 146,847 120,928   Interest and other income 3,368 2,438 Interest: Expense incurred, net (117,247 ) (110,656 ) Amortization of deferred financing costs (2,161 ) (2,221 )   Income before income and other taxes, allocation to Minority Interests, loss from investments in unconsolidated entities and discontinued operations 30,807 10,489 Income and other tax (expense) benefit (2,898 ) (597 ) Allocation to Minority Interests: Operating Partnership, net (1,518 ) (94 ) Preference Interests and Units (4 ) (223 ) Partially Owned Properties (268 ) (592 ) Loss from investments in unconsolidated entities (95 ) (229 ) Income from continuing operations, net of minority interests 26,024 8,754 Discontinued operations, net of minority interests 114,458   117,483   Net income 140,482 126,237 Preferred distributions (3,633 ) (7,424 ) Net income available to Common Shares $ 136,849   $ 118,813     Earnings per share - basic: Income from continuing operations available to Common Shares $ 0.08   $ 0.01   Net income available to Common Shares $ 0.51   $ 0.41   Weighted average Common Shares outstanding 268,784   292,251     Earnings per share - diluted: Income from continuing operations available to Common Shares $ 0.08   $ 0.01   Net income available to Common Shares $ 0.51   $ 0.40   Weighted average Common Shares outstanding 289,317   316,265     Distributions declared per Common Share outstanding $ 0.4825   $ 0.4625   EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (Amounts in thousands except per share data) (Unaudited)     Quarter Ended March 31, 2008 2007   Net income $ 140,482 $ 126,237 Allocation to Minority Interests - Operating Partnership, net 1,518 94 Adjustments: Depreciation 146,598 138,932 Depreciation - Non-real estate additions (2,051 ) (2,035 ) Depreciation - Partially Owned and Unconsolidated Properties 1,034 943 Discontinued operations: Depreciation 982 15,742 Gain on sales of discontinued operations, net of minority interests (114,725 ) (104,983 ) Net incremental gain on sales of condominium units 366 4,684 Minority Interests - Operating Partnership (18 ) 829     FFO (1)(2) 174,186 180,443 Preferred distributions (3,633 ) (7,424 )   FFO available to Common Shares and OP Units - basic (1) (2) $ 170,553   $ 173,019     FFO available to Common Shares and OP Units - diluted (1) (2) $ 170,726   $ 173,220     FFO per share and OP Unit - basic $ 0.59   $ 0.56     FFO per share and OP Unit - diluted $ 0.59   $ 0.55     Weighted average Common Shares and OP Units outstanding - basic 287,079   311,698     Weighted average Common Shares and OP Units outstanding - diluted 289,761   316,786       (1)   The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations ("FFO") (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.  Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis.  The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only.  Once the Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO available to Common Shares and OP Units is calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Minority Interests - Operating Partnership". Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis.   (2) The Company believes that FFO and FFO available to Common Shares and OP Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and OP Units can help compare the operating performance of a company's real estate between periods or as compared to different companies.  FFO and FFO available to Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP.  Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity.  The Company's calculation of FFO and FFO available to Common Shares and OP Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. EQUITY RESIDENTIAL CONSOLIDATED BALANCE SHEETS (Amounts in thousands except for share amounts) (Unaudited)     March 31, December 31, 2008 2007 ASSETS Investment in real estate Land $ 3,613,965 $ 3,607,305 Depreciable property 13,541,364 13,556,681 Projects under development 811,616 812,339 Land held for development 368,525   357,025   Investment in real estate 18,335,470 18,333,350 Accumulated depreciation (3,245,919 ) (3,170,125 ) Investment in real estate, net 15,089,551 15,163,225   Cash and cash equivalents 502,649 50,831 Investments in unconsolidated entities 3,429 3,547 Deposits - restricted 216,213 253,276 Escrow deposits - mortgage 19,912 20,174 Deferred financing costs, net 57,325 56,271 Other assets 121,866   142,453   Total assets $ 16,010,945   $ 15,689,777     LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 4,096,357 $ 3,605,971 Notes, net 5,767,075 5,763,762 Lines of credit - 139,000 Accounts payable and accrued expenses 154,323 109,385 Accrued interest payable 78,697 124,717 Other liabilities 288,234 322,975 Security deposits 63,186 62,159 Distributions payable 141,379   141,244   Total liabilities 10,589,251   10,269,213     Commitments and contingencies Minority Interests: Operating Partnership 323,645 331,626 Preference Interests and Units 184 184 Partially Owned Properties 24,917   26,236   Total Minority Interests 348,746   358,046     Shareholders' equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 1,980,975 shares issued and outstanding as of March 31, 2008 and 1,986,475 shares issued and outstanding as of December 31, 2007 209,524 209,662 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 270,502,249 shares issued and outstanding as of March 31, 2008 and 269,554,661 shares issued and outstanding as of December 31, 2007 2,705 2,696 Paid in capital 4,279,587 4,266,538 Retained earnings 606,045 599,504 Accumulated other comprehensive loss (24,913 ) (15,882 ) Total shareholders' equity 5,072,948   5,062,518   Total liabilities and shareholders' equity $ 16,010,945   $ 15,689,777   EQUITY RESIDENTIAL             Portfolio Summary As of March 31, 2008   Markets Properties Units % ofTotal Units % of 2008StabilizedNOI AverageRentalRate (1)   1 New York Metro Area 22 6,246 4.2% 10.2% $ 2,721 2 Los Angeles 37 7,714 5.1% 8.2% 1,769 3 South Florida 38 12,433 8.3% 7.8% 1,282 4 DC Northern Virginia 24 8,057 5.4% 7.7% 1,636 5 Seattle/Tacoma 47 10,905 7.3% 7.4% 1,286 6 San Francisco Bay Area 33 6,623 4.4% 6.1% 1,649 7 Boston 36 5,907 3.9% 6.0% 1,831 8 Phoenix 41 11,780 7.9% 5.6% 936 9 Denver 28 9,342 6.2% 5.1% 966 10 San Diego 14 4,491 3.0% 4.3% 1,599 11 Atlanta 31 9,410 6.3% 4.3% 957 12 Orlando 24 7,525 5.0% 4.3% 1,034 13 Inland Empire, CA 15 4,655 3.1% 3.7% 1,375 14 Orange County 10 3,307 2.2% 3.2% 1,606 15 Suburban Maryland 20 5,081 3.4% 2.8% 1,130 16 New England (excluding Boston) 34 5,040 3.4% 2.6% 1,107 17 Jacksonville 12 3,951 2.6% 1.9% 920 18 Portland, OR 11 3,713 2.5% 1.8% 949 19 Dallas/Ft. Worth 18 4,463 3.0% 1.7% 913 20 Tampa/Ft. Myers 11 3,414 2.3% 1.4% 937   Top 20 Total 506 134,057 89.5% 96.1% 1,319   21 Austin 9 2,985 2.0% 1.2% 879 22 Raleigh/Durham 12 3,058 2.1% 1.2% 809 23 Central Valley, CA 11 1,853 1.2% 1.0% 1,089 24 Other EQR 16 3,506 2.3% 0.5% 825   Total 554 145,459 97.1% 100.0% 1,284   Condominium Conversion 10 579 0.4% - - Military Housing 1 3,731 2.5% - -   Grand Total 565 149,769 100.0% 100.0% $ 1,284   (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the month of March 2008. EQUITY RESIDENTIAL           Portfolio as of March 31, 2008   Properties Units   Wholly Owned Properties 493   130,161 Partially Owned Properties: Consolidated 27 5,431 Unconsolidated 44 10,446 Military Housing (Fee Managed) 1   3,731   565 149,769       Portfolio Rollforward Q1 2008   Properties Units $ Thousands Cap Rate   12/31/2007 579 152,821   Acquisitions: Rental Properties 2 171 $ 41,863 5.0 % Dispositions: Rental Properties (15 ) (3,317 ) $ (271,643 ) 5.8 % Condominium Conversion Properties (2 ) (41 ) $ (9,445 ) Completed Developments 1 132 Configuration Changes -   3     3/31/2008 565 149,769 EQUITY RESIDENTIAL             First Quarter 2008 vs. First Quarter 2007 Quarter over Quarter Same Store Results/Statistics   $ in Thousands (except for Average Rental Rate) - 121,826 Same Store Units Results Statistics Description Revenues Expenses NOI (1) AverageRentalRate (2) Occupancy Turnover Q1 2008 $ 448,512 $ 167,891 $ 280,621 $ 1,302 94.4 % 13.7 % Q1 2007 $ 433,351   $ 165,219   $ 268,132   $ 1,253   94.8 % 13.5 % Change $ 15,161   $ 2,672   $ 12,489   $ 49   (0.4 %) 0.2 % Change 3.5 % 1.6 % 4.7 % 3.9 %       First Quarter 2008 vs. Fourth Quarter 2007 Sequential Quarter over Quarter Same Store Results/Statistics   $ in Thousands (except for Average Rental Rate) - 129,999 Same Store Units Results Statistics Description Revenues Expenses NOI (1) AverageRentalRate (2) Occupancy Turnover Q1 2008 $ 484,707 $ 182,588 $ 302,119 $ 1,319 94.3 % 13.7 % Q4 2007 $ 482,342   $ 176,278   $ 306,064   $ 1,311   94.4 % 14.7 % Change $ 2,365   $ 6,310   $ (3,945 ) $ 8   (0.1 %) (1.0 %) Change 0.5 % 3.6 % (1.3 %) 0.6 %     (1) The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI"). NOI represents rental income less property and maintenance expense, real estate tax and insurance expense, and property management expense. The Company believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Company's apartment communities.   (2) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL   Same Store NOI Reconciliation First Quarter 2008 vs. First Quarter 2007   The following table presents a reconciliation of operating income perthe consolidated statements of operations to NOI for the First Quarter2008 Same Store Properties:   Quarter Ended March 31, 2008 2007 (Amounts in thousands)   Operating income $ 146,847 $ 120,928 Adjustments: Non-same store operating results (25,313 ) (1,407 ) Fee and asset management revenue (2,294 ) (2,267 ) Fee and asset management expense 2,183 2,341 Depreciation 146,598 138,932 General and administrative 12,481 9,369 Impairment 119   236     Same store NOI $ 280,621   $ 268,132   EQUITY RESIDENTIAL                   First Quarter 2008 vs. First Quarter 2007 Same Store Results by Market                                       Increase (Decrease) from Prior Year's Quarter Q1 2008 Q1 2008 Q1 2008 % of Average Weighted Average Actual Rental Average Rental Markets   Units   NOI   Rate (1)   Occupancy % Revenues   Expenses   NOI   Rate (1)   Occupancy 1 New York Metro Area 5,443 9 .5% $ 2,705 94 .4% 5 .0% 5 .5% 4 .6% 6 .7% (1 .6%) 2 Los Angeles 7,063 8 .3% 1,754 93 .5% 3 .7% (0 .1%) 5 .7% 5 .3% (1 .4%) 3 Seattle/Tacoma 8,680 7 .3% 1,317 94 .0% 8 .0% 2 .8% 11 .2% 8 .6% (0 .5%) 4 South Florida 9,347 7 .1% 1,292 93 .8% (1 .7%) 0 .8% (3 .3%) (1 .1%) (0 .5%) 5 DC Northern Virginia 6,870 7 .0% 1,527 94 .8% 3 .1% (1 .7%) 5 .8% 3 .1% (0 .1%) 6 Boston 5,649 6 .4% 1,862 95 .5% 3 .3% 6 .2% 1 .3% 1 .0% 2 .2% 7 San Francisco Bay Area 5,793 6 .3% 1,601 95 .3% 7 .9% (1 .0%) 13 .0% 8 .0% (0 .2%) 8 Phoenix 9,350 5 .6% 931 95 .5% 1 .3% (1 .3%) 2 .8% 0 .0% 1 .2% 9 Denver 8,045 5 .2% 944 95 .0% 7 .0% (2 .9%) 12 .7% 7 .1% (0 .1%) 10 Atlanta 8,044 4 .5% 976 94 .1% 3 .8% 2 .0% 5 .2% 5 .1% (1 .2%) 11 Orlando 6,931 4 .4% 1,040 93 .4% (1 .9%) 2 .9% (4 .8%) (1 .4%) (0 .6%) 12 San Diego 3,822 4 .2% 1,638 94 .0% 3 .7% 2 .7% 4 .3% 4 .2% (0 .4%) 13 Inland Empire, CA 4,355 3 .9% 1,374 92 .9% 2 .1% (0 .9%) 3 .8% 3 .5% (1 .3%) 14 Orange County 3,013 3 .4% 1,601 94 .0% 3 .7% (0 .1%) 5 .4% 5 .5% (1 .7%) 15 New England (excluding Boston) 5,040 2 .8% 1,103 94 .2% 2 .3% 7 .4% (2 .4%) 2 .9% (0 .6%) 16 Suburban Maryland 3,687 2 .6% 1,148 93 .5% 6 .9% (3 .7%) 14 .8% 6 .4% 0 .4% 17 Portland, OR 3,409 2 .0% 961 94 .8% 5 .6% 3 .9% 6 .7% 5 .8% (0 .2%) 18 Dallas/Ft. Worth 3,433 2 .0% 978 95 .7% 5 .0% 3 .2% 6 .3% 4 .2% 0 .7% 19 Jacksonville 3,231 1 .7% 917 93 .6% 0 .5% 3 .6% (1 .6%) 1 .6% (1 .0%) 20 Austin 2,985   1 .5%   893   96 .3%   5 .5%   2 .6%   7 .9%   6 .2%   (0 .8%) Top 20 Markets 114,190 95 .7% 1,325 94 .4% 3 .6% 1 .7% 4 .8% 3 .9% (0 .3%) 5 .8% All Other Markets 7,636   4 .3%   947   94 .3%   1 .3%   0 .5%   1 .9%   2 .0%   (0 .7%) Total 121,826   100 .0%   $ 1,302   94 .4%   3 .5%   1 .6%   4 .7%   3 .9%   (0 .4%)   (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL                     First Quarter 2008 vs. Fourth Quarter 2007 Sequential Same Store Results by Market                     Increase (Decrease) from Prior Quarter Q1 2008 Q1 2008 Q1 2008 % 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 6,246 9 .7% $ 2,721 93 .2% (0 .8%) 8 .5% (5 .7%) 1 .2% (1 .8%) 2 South Florida 11,761 8 .3% 1,304 93 .5% 1 .5% (0 .8%) 3 .1% 0 .2% 1 .2% 3 Los Angeles 7,179 7 .9% 1,765 93 .5% 0 .3% 1 .7% (0 .4%) 1 .2% (0 .9%) 4 DC Northern Virginia 7,661 7 .8% 1,632 94 .8% 0 .7% 7 .1% (2 .2%) 0 .8% (0 .1%) 5 Seattle/Tacoma 8,986 7 .0% 1,320 94 .1% 1 .4% 3 .8% 0 .1% 1 .5% (0 .1%) 6 San Francisco Bay Area 6,364 6 .5% 1,644 95 .6% 2 .2% 4 .7% 0 .9% 2 .0% 0 .2% 7 Boston 5,805 6 .1% 1,850 95 .6% 0 .1% 4 .8% (2 .8%) 0 .4% (0 .3%) 8 Phoenix 10,238 5 .7% 931 95 .3% 1 .3% 5 .0% (0 .8%) 0 .0% 1 .2% 9 Denver 8,795 5 .3% 958 95 .0% 0 .5% (1 .0%) 1 .2% 0 .6% (0 .2%) 10 Orlando 7,525 4 .4% 1,043 93 .5% (0 .3%) 4 .0% (2 .9%) 0 .0% (0 .3%) 11 Atlanta 8,226 4 .3% 978 94 .1% (0 .6%) 3 .8% (3 .6%) 0 .1% (0 .7%) 12 San Diego 4,262 4 .3% 1,618 94 .1% 0 .0% 3 .2% (1 .6%) 1 .0% (0 .9%) 13 Inland Empire, CA 4,355 3 .7% 1,374 92 .9% (0 .2%) 0 .2% (0 .5%) 0 .6% (0 .8%) 14 Orange County 3,175 3 .3% 1,594 94 .1% 0 .0% (3 .0%) 1 .4% 1 .1% (1 .0%) 15 New England (excluding Boston) 5,040 2 .6% 1,103 94 .2% (0 .2%) 14 .2% (11 .4%) (0 .1%) (0 .1%) 16 Suburban Maryland 3,687 2 .4% 1,148 93 .5% 0 .4% (4 .8%) 4 .0% 1 .1% (0 .6%) 17 Portland, OR 3,409 1 .9% 960 95 .0% 1 .5% 4 .6% (0 .4%) 2 .5% (0 .9%) 18 Dallas/Ft. Worth 3,433 1 .8% 978 95 .7% 1 .4% (0 .5%) 2 .8% 0 .2% 1 .1% 19 Jacksonville 3,231 1 .6% 917 93 .6% (0 .9%) 7 .4% (6 .0%) (0 .1%) (0 .7%) 20 Austin 2,985   1 .4%   893   96 .3%   1 .4%   (0 .2%)   2 .7%   1 .3%   0 .0% Top 20 Markets 122,363 96 .0% 1,342 94 .3% 0 .5% 3 .6% (1 .3%) 0 .7% (0 .1%)   All Other Markets 7,636   4 .0%   947   94 .3%   0 .4%   3 .5%   (1 .6%)   0 .1%   0 .3% Total 129,999   100 .0%   $ 1,319   94 .3%   0 .5%   3 .6%   (1 .3%)   0 .6%   (0 .1%)   (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL         Debt Summary as of March 31, 2008 (Amounts in thousands)   Weighted Weighted Average Average Maturities Amounts (1) % of Total Rates (1) (years)   Secured $ 4,096,357 41.5% 5.23% 7.9 Unsecured 5,767,075 58.5% 5.59% 6.0 Total $ 9,863,432 100.0% 5.45% 6.8   Fixed Rate Debt: Secured - Conventional $ 2,935,779 29.7% 6.06% 5.8 Unsecured - Public/Private 5,003,070 50.7% 5.68% 6.2 Unsecured - Tax Exempt 111,390 1.2% 5.06% 21.1 Fixed Rate Debt 8,050,239 81.6% 5.80% 6.3   Floating Rate Debt: Secured - Conventional 533,665 5.4% 4.01% 5.0 Secured - Tax Exempt 626,913 6.4% 2.86% 20.8 Unsecured - Public/Private 652,615 6.6% 5.10% 2.2 Unsecured - Revolving Credit Facility - - 4.29% 3.9 Floating Rate Debt 1,813,193 18.4% 4.01% 9.2   Total $ 9,863,432 100.0% 5.45% 6.8   (1) Net of the effect of any derivative instruments. Weighted average rates are for the quarter ended March 31, 2008.   Note: The Company capitalized interest of approximately $14.7 million and $7.9 million during the quarters ended March 31, 2008 and 2007, respectively.               Debt Maturity Schedule as of March 31, 2008 (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 $ 399,695 $ 67,392 $ 467,087 4.7% 6.62% 6.32% 2009 458,419 476,246 934,665 9.5% 6.35% 5.28% 2010 (2) 282,829 580,960 863,789 8.8% 7.02% 5.21% 2011 (3) 1,519,782 41,537 1,561,319 15.8% 5.57% 5.50% 2012 907,993 - 907,993 9.2% 6.08% 6.08% 2013 566,295 - 566,295 5.7% 5.93% 5.93% 2014 517,454 - 517,454 5.3% 5.28% 5.28% 2015 355,622 - 355,622 3.6% 6.41% 6.41% 2016 1,089,323 - 1,089,323 11.0% 5.32% 5.32% 2017 803,653 456 804,109 8.2% 6.01% 6.01% 2018+ 1,149,174 646,602 1,795,776 18.2% 5.76% 5.10% Total $ 8,050,239 $ 1,813,193 $ 9,863,432 100.0% 5.86% 5.54%   (1) Net of the effect of any derivative instruments. Weighted average rates are as of March 31, 2008.   (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. EQUITY RESIDENTIAL             Unsecured Debt Summary as of March 31, 2008 (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 (331 ) 299,669 6.950 % 03/02/11   300,000 2,665 302,665 6.625 % 03/15/12   400,000 (1,162 ) 398,838 5.500 % 10/01/12   350,000 (1,553 ) 348,447 5.200 % 04/01/13   400,000 (592 ) 399,408 5.250 % 09/15/14 500,000 (397 ) 499,603 6.584 % 04/13/15   300,000 (782 ) 299,218 5.125 % 03/15/16 500,000 (426 ) 499,574 5.375 % 08/01/16 400,000 (1,546 ) 398,454 5.750 % 06/15/17   650,000 (4,705 ) 645,295 7.125 % 10/15/17   150,000 (619 ) 149,381 7.570 % 08/15/26 140,000 - 140,000 3.850 % 08/15/26 (3 )   650,000 (7,482 ) 642,518 Floating Rate Adjustments (2 )   (150,000 )   -     (150,000 ) 5,020,000     (16,930 )   5,003,070     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 ) 2,615 - 2,615 Term Loan Facility 10/05/10 (4 ) 500,000     -     500,000   652,615     -     652,615     Revolving Credit Facility: 02/28/12 (5 ) -     -     -     Total Unsecured Debt $ 5,784,005     $ (16,930 )   $ 5,767,075     (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 ) As of March 31, 2008, there was no 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   March 31, December 31, 2008 2007   Total Debt to Adjusted Total Assets (not to exceed 60%) 51.3% 50.5%     Secured Debt to Adjusted Total Assets (not to exceed 40%) 21.3% 19.2%     Consolidated Income Available for Debt Service to Maximum Annual Service Charges (must be at least 1.5 to 1) 2.08 2.09     Total Unsecured Assets to Unsecured Debt (must be at least 150%) 207.2% 207.4%     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 March 31, 2008 (Amounts in thousands except for share and per share amounts)   Secured Debt $ 4,096,357 41.5% Unsecured Debt 5,767,075 58.5% Total Debt 9,863,432 100.0% 44.7%   Common Shares 270,502,249 93.8% OP Units 18,001,023 6.2% Total Shares and OP Units 288,503,272 100.0% Common Share Equivalents (see below) 439,296 Total outstanding at quarter-end 288,942,568 Common Share Price at March 31, 2008 $ 41.49 11,988,227 98.4% Perpetual Preferred Equity (see below) 200,000 1.6% Total Equity 12,188,227 100.0% 55.3%   Total Market Capitalization $ 22,051,659 100.0%                       Convertible Preferred Equity as of March 31, 2008 (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 11/1/98 357,616 $ 8,940 $ 1.75 $ 626 1.1128 397,955 7.00% Series H 6/30/98 23,359 584 1.75 41 1.4480 33,824 Junior Preference Units: 8.00% Series B 7/29/09 7,367 184 2.00 15 1.020408 7,517 Total Convertible Preferred Equity 388,342 $ 9,708 $ 682 7.03% 439,296 Perpetual Preferred Equity as of March 31, 2008 (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           Q108 Q107   Weighted Average Amounts Outstanding for Net Income Purposes: Common Shares - basic 268,784,258 292,251,267 Shares issuable from assumed conversion/vesting of: - OP Units 18,294,706 19,446,271 - share options/restricted shares 2,237,869 4,567,631 Total Common Shares and OP Units - diluted 289,316,833 316,265,169   Weighted Average Amounts Outstanding for FFO Purposes: Common Shares - basic 268,784,258 292,251,267 OP Units - basic 18,294,706 19,446,271 Total Common Shares and OP Units - basic 287,078,964 311,697,538 Shares issuable from assumed conversion/vesting of: - convertible preferred shares/units 444,474 521,150 - share options/restricted shares 2,237,869 4,567,631 Total Common Shares and OP Units - diluted 289,761,307 316,786,319   Period Ending Amounts Outstanding: Common Shares - basic 270,502,249 OP Units - basic 18,001,023 Total Common Shares and OP Units - basic 288,503,272 EQUITY RESIDENTIAL               Partially Owned Entities as of March 31, 2008 (Amounts in thousands except for project and unit amounts)   Consolidated Unconsolidated Development Projects Held forand/or UnderDevelopment Completed, NotStabilized (4) Completed andStabilized Other Total InstitutionalJoint Ventures   Total projects (1 ) -   1   5   21   27   44     Total units (1 ) -   132   1,405   3,894   5,431   10,446     Operating information for the quarter ended 3/31/08 (at 100%): Operating revenue $ 94 $ - $ 5,925 $ 14,296 $ 20,315 $ 25,913 Operating expenses 252   134   2,433   4,796   7,615   11,601   Net operating (loss) income (158 ) (134 ) 3,492 9,500 12,700 14,312 Depreciation 93 - 2,350 3,504 5,947 5,379 Other -   -   738   4   742   83   Operating (loss) income (251 ) (134 ) 404 5,992 6,011 8,850 Interest and other income 30 - 32 145 207 191 Interest: Expense incurred, net - - (1,993 ) (5,014 ) (7,007 ) (9,361 ) Amortization of deferred financing costs - - (18 ) (32 ) (50 ) (154 ) Income and other tax (expense) benefit (112 ) -   -   (46 ) (158 ) (214 ) Net (loss) income $ (333 ) $ (134 ) $ (1,575 ) $ 1,045   $ (997 ) $ (688 )     Debt - Secured (2): EQR Ownership (3) $ 421,755 $ 28,260 $ 141,206 $ 289,135 $ 880,356 $ 121,200 Minority Ownership -   -   -   13,321   13,321   363,600   Total (at 100%) $ 421,755   $ 28,260   $ 141,206   $ 302,456   $ 893,677   $ 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 $68.7 million in mortgage bonds on various development projects.   (3 ) Represents the Company's current economic ownership interest.   (4 ) Projects included here are substantially complete. However, they may still require additional exterior and interior work for all units to be available for leasing. EQUITY RESIDENTIAL                 Consolidated Development Projects as of March 31, 2008 (Amounts in thousands except for project and unit amounts)     Projects Location No. ofUnits   Total CapitalCost (1)   Total Book ValueTo Date   Total BookValue NotPlaced inService   Total Debt   PercentageCompleted   PercentageLeased   PercentageOccupied   EstimatedCompletionDate   EstimatedStabilization Date   Projects Under Development - Wholly Owned: West End Apartments (a.k.a. Emerson/CRP II) Boston, MA 310 $ 167,952 $ 146,547 $ 90,212 $ - 98 % 39 % 34 % Q2 2008 Q1 2009 Reunion at Redmond Ridge Redmond, WA 321 55,457 49,642 25,165 - 95 % 11 % 4 % Q2 2008 Q3 2010 Crowntree Lakes Orlando, FL 352 58,628 50,012 50,012 - 96 % 17 % 5 % Q3 2008 Q4 2009 Key Isle at Windermere II Orlando, FL 165 29,058 22,412 22,412 - 85 % 27 % 5 % Q4 2008 Q1 2009 70 Greene (a.k.a. 77 Hudson) Jersey City, NJ 480 269,958 120,402 120,402 - 50 % - - Q4 2009 Q1 2011 Reserve at Town Center II Mill Creek, WA 100 23,485 5,837 5,837 - 6 % - - Q2 2010 Q4 2010                   Projects Under Development - Wholly Owned 1,728 604,538 394,852 314,040 -   Projects Under Development - Partially Owned: City Lofts Chicago, IL 278 71,109 61,520 61,520 37,973 90 % 3 % - Q3 2008 Q2 2009 Silver Spring Silver Spring, MD 457 147,454 105,116 105,116 67,043 72 % - - Q4 2008 Q3 2010 303 Third Street Cambridge, MA 482 248,307 165,675 165,675 80,960 68 % - - Q4 2008 Q1 2010 Montclair Metro Montclair, NJ 163 48,730 17,203 17,203 2,374 26 % - - Q2 2009 Q1 2010 Red Road Commons South Miami, FL 404 128,816 46,777 46,777 17,387 15 % - - Q1 2010 Q3 2011 111 Lawrence Street Brooklyn, NY 492 283,968 56,259 56,259 - 4 % - - Q2 2010 Q3 2011 Westgate Pasadena, CA 480 170,558 45,026 45,026 163,160 (2) 4 % Q2 2011 Q2 2012                   Projects Under Development - Partially Owned 2,756 1,098,942 497,576 497,576 368,897                   Projects Under Development 4,484   1,703,480   892,428   811,616   368,897   Land Held for Development N/A   -   368,525   368,525   52,858   Land/Projects Held for and/or Under Development 4,484   1,703,480   1,260,953   1,180,141   421,755   Completed Not Stabilized - Wholly Owned (3): Bella Vista III Woodland Hills, CA 264 73,337 73,205 - - 82 % 73 % Completed Q3 2008 Highland Glen II Westwood, MA 102 19,872 19,822 - - 49 % 41 % Completed Q4 2008                   Projects Completed Not Stabilized - Wholly Owned 366 93,209 93,027 - -   Completed Not Stabilized - Partially Owned (3): Alta Pacific Irvine, CA 132 47,554 44,734 - 28,260 (2) 4 % - Completed Q1 2009                   Projects Completed Not Stabilized - Partially Owned 132 47,554 44,734 - 28,260                   Projects Completed Not Stabilized 498   140,763   137,761   -   28,260     Total Projects 4,982   $ 1,844,243   $ 1,398,714   $ 1,180,141   $ 450,015       NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Total Capital Cost (1)   Q1 2008 NOI Projects Under Development $ 1,703,480 $ 220 Completed Not Stabilized 140,763 472 Completed and Stabilized During the Quarter -     -   Total Development / Newly Stabilized NOI Contri-bution $ 1,844,243     $ 692   (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 $125.7 million held in escrow by the lender and released as draw requests are made. This escrowed amount is classified as "Deposits - restricted" in the consolidated balance sheets at 3/31/08.   (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 March 31, 2008 (Amounts in thousands except for project and unit amounts)         Units 2008 YTD Activity Available for Sale Projects   Location   Project StartDate (1)   EstimatedClose OutDate   Total   UnitsClosed   Sold NotClosed   Available UnitsClosed   Sales Price   FFO IncrementalGain on Sale (2)   For Sale Milano Terrace Scottsdale, AZ Q2 2005 Q2 2008 224 220 4 - 14 $3,160 $208 South Palm Place Tamarac, FL Q2 2005 Q2 2008 208 203 2 3 1 183 (23 ) Park Bloomingdale Bloomingdale, IL Q2 2006 Q4 2008 250 190 4 56 10 1,771 (43 ) Belle Arts Bellevue, WA Q4 2006 Q4 2008 128 127 - 1 - - 1 Arrington Place Issaquah, WA Q1 2007 Q1 2009 130 58 2 70 13 3,485 259 The Cleo (The Alexandria) Los Angeles, CA Q3 2007 Q4 2008 104 - 25 79 - - - Verde (Mission Verde) San Jose, CA Q3 2007 Q1 2009 108 - 15 93 - - - The Martine (Crosspointe) Bellevue, WA Q4 2007 Q1 2009 67 - - 67 - - - The Hamilton Beverly Hills, CA Q1 2008 Q3 2009 35   -   -   35 - -   -     1,254 798 52 404 38 8,599 402   Closed Out Chantecleer Lakes Naperville, IL Q4 2005 Q1 2008 304 304 - - 2 326 34 Pacific Cove Playa Del Ray, CA Q3 2006 Q1 2008 80 80 - - 1 520 (14 ) Projects closed out prior to 2008 4,289   4,289   -   - - -   (56 )   4,673 4,673 - - 3 846 (36 )   Totals 12 5,927   5,471   52   404 41 $9,445   $366       Net incremental gain on sales of condominium units (2) $366 Corporate overhead (property management expense) (736 ) Other expenses (204 ) Discontinued operating loss (1,184 ) Operating income of halted conversions (3) 128     Pre-tax net loss - Condominium division (4) $(1,630 ) (1)   Project start date represents the date that each respective property was acquired by the taxable REIT subsidiary and included in discontinued operations. (2) Amounts are net of $102,000 in reserves for potential homeowners disputes for the quarter ended March 31, 2008. (3) Halted conversions includes the results of Sheridan Lake Club (Dania Beach Club) and Sage. (4) 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 income and other taxes on condominium sales and operations, if any. EQUITY RESIDENTIAL                 Maintenance Expenses and Capitalized Improvements to Real Estate For the Quarter Ended March 31, 2008 (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 Grand Per (1) (2)   Unit (3)   Unit Total   Unit (4)   Unit (5)   Unit Total   Unit Total   Unit   Established Properties (6) 111,463 $ 20,989 $ 188 $ 19,054 $ 171 $ 40,043 $ 359 $ 8,925 $ 80 $ 13,214 $ 119 $ 22,139 $199 (9) $ 62,182 $ 558   New Acquisition Properties (7) 17,879 3,592 201 3,188 178 6,780 379 1,154 65 5,096 285 6,250 350 13,030 729   Other (8) 6,250 2,144 1,978 4,122 9,391 2,964 12,355 16,477   Total 135,592 $ 26,725 $ 24,220 $ 50,945 $ 19,470 $ 21,274 $ 40,744 $ 91,689         (1) Total Units - Excludes 10,446 unconsolidated units and 3,731 military housing (fee managed) units, for which maintenance expenses and capitalized improvements to real estate are self-funded and do not consolidate into the Company's results.   (2) Maintenance Expenses - Includes 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 - Includes new expenditures inside the units such as appliances, mechanical equipment, fixtures and flooring, including carpeting.   (5) Building Improvements - Includes roof replacement, paving, amenities and common areas, building mechanical equipment systems, exterior painting and siding, major landscaping, vehicles and office and maintenance equipment.   (6) Established Properties - Wholly Owned Properties acquired prior to January 1, 2006.   (7) New Acquisition Properties - Wholly Owned Properties acquired during 2006, 2007 and 2008.   (8) Other - Includes properties either partially owned or sold during the period, commercial space, corporate housing and condominium conversions. Also includes $7.5 million included in replacements spent on various assets related to major renovations and repositioning of these assets.   (9) For 2008, the Company estimates an annual stabilized run rate of approximately $1,100 per unit of capital expenditures for its established properties. EQUITY RESIDENTIAL       Discontinued Operations (Amounts in thousands)   Quarter Ended March 31, 2008   2007   REVENUES Rental income $ 5,330   $ 58,065   Total revenues 5,330   58,065     EXPENSES (1) Property and maintenance 4,124 19,284 Real estate taxes and insurance 637 7,766 Property management (26 ) 203 Depreciation 982 15,742 General and administrative 3 2 Impairment 56   -   Total expenses 5,776   42,997     Discontinued operating (loss) income (446 ) 15,068   Interest and other income (17 ) 93 Interest (2): Expense incurred, net (22 ) (1,310 ) Amortization of deferred financing costs - (343 ) Income and other tax benefit (expense) 200   (179 )   Discontinued operations (285 ) 13,329 Minority Interests - Operating Partnership 18   (829 ) Discontinued operations, net of minority interests (267 ) 12,500     Net gain on sales of discontinued operations 122,517 111,946 Minority Interests - Operating Partnership (7,792 ) (6,963 ) Gain on sales of discontinued operations, net of minority interests 114,725   104,983     Discontinued operations, net of minority interests $ 114,458   $ 117,483         (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 Q1 2008 to Actual Q1 2008 Amounts Per Share   Guidance midpoint Q1 2008 FFO - Diluted (1) (2) $ 166,524 $ 0.574 Property NOI (including reserve adjustments) 5,200 0.018 General and administrative expense (682 ) (0.002 ) Insurance litigation settlement proceeds (interest and other income) 550 0.002 Interest expense (excluding debt extinguishment) (552 ) (0.002 ) Debt extinguishment costs: Prepayment penalties 749 0.003 Write-off of unamortized deferred financing costs 669 0.002 Income and other tax expense (including discontinued operations) (2,019 ) (0.007 ) Other 287 0.001     Actual Q1 2008 FFO - Diluted (1) (2) $ 170,726   $ 0.589   Non-Comparable Items (3)       Quarter Ended March 31, 2008 2007 Variance Property insurance reserve adjustments (real estate taxes and insurance expense) $ 6 $ (1,622 ) $ 1,628 Workers compensation reserve adjustments (property management expense) 216 213 3 Severance charges: Property management expense (176 ) - (176 ) General and administrative expense (1,697 ) - (1,697 ) Florida litigation reserve reduction (general and administrative expense) - 1,625 (1,625 ) Performance shares (general and administrative expense) (179 ) (40 ) (139 ) Impairment (including discontinued operations) (175 ) (236 ) 61 Insurance litigation settlement proceeds (interest and other income) 550 - 550 Forfeited deposits (interest and other income) 273 23 250 Debt extinguishment costs (interest): Prepayment penalties - (141 ) 141 Write-off of unamortized deferred financing costs (6 ) (718 ) 712 Net incremental gain on sales of condominium units 366 4,684 (4,318 ) Income and other tax benefit - Condo sales 313   8   305   Net non-comparable items (3) $ (509 ) $ 3,796   $ (4,305 )     Note: See page 25 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)   Q2 2008 2008   Expected FFO (1) (2) $0.61 to $0.65 $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 to $14.4 million Pre-tax net income - Condominium division (after overhead/operations) $0.0 million to $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 25 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 23 and 24   (Amounts in thousands except per share data) (All per share data is diluted)   Expected Expected Expected Q1 2008 Q2 2008 2008 Amounts Per Share Per Share Per Share   Expected Earnings - Diluted (4) $ 139,371 $ 0.480 $0.52 to $0.56 $2.08 to $2.23 Add: Expected depreciation expense 145,843 0.504 0.50 2.02 Less: Expected net gain on sales (4) (118,690 ) (0.410 ) (0.41 ) (1.65 )         Expected FFO - Diluted (1) (2) $ 166,524   $ 0.574   $0.61 to $0.65 $2.45 to $2.60 Definitions and Footnotes for Pages 23 and 24   (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.