Equity Residential Reports Second Quarter Results

Equity Residential (NYSE:EQR) today reported results for the quarter and six months ended June 30, 2008. All per share results are reported on a fully-diluted basis. "We are very pleased with our operating performance for the first half of the year with solid occupancy and good revenue growth across most of our major markets,” said David J. Neithercut, Equity Residential’s President and CEO. "And we will produce good results for the year, with same store revenue growth of 3% to 3.5%, which is modestly short of our original expectations as many of our markets are feeling the impact of job losses due to a challenging economic environment.” Second Quarter 2008 For the quarter ended June 30, 2008, the company reported earnings of $0.47 per share compared to $0.95 per share in the second quarter of 2007. The decrease is primarily attributable to lower gains on property sales due to a lower volume of property sales in 2008. Funds from Operations (FFO) for the quarter ended June 30, 2008 were $0.64 per share compared to $0.60 per share in the same period of 2007. The $0.04 per share increase in the second quarter of 2008 is due primarily to: A net positive impact of approximately $0.03 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 cumulative positive impact on interest expense and preferred share distributions of approximately $0.08 per share due primarily to lower floating rates of interest, the use of sales proceeds to pay down debt, higher capitalized interest, lower debt extinguishment costs and lower share count, partially offset by the increased interest expense associated with the company’s 2007 share buyback; A negative impact of approximately $0.04 per share from the company’s condominium operations; and A negative impact of approximately $0.03 per share due to higher income taxes, no gains on land sales and certain other non-comparable items listed on page 24 of this release. Six Months Ended June 30, 2008 For the six months ended June 30, 2008, the company reported earnings of $0.98 per share compared to $1.35 per share in the same period of 2007. FFO for the six months ended June 30, 2008 were $1.23 per share compared to $1.15 per share in the same period of 2007. Same Store Results On a same store second quarter to second quarter comparison, which includes 123,246 apartment units, revenues increased 4.0%, expenses increased 2.4% and NOI increased 4.9%. The increase in same store revenues was driven primarily by an increase in average rental rate. On a same store six-month to six-month comparison, which includes 119,546 apartment units, revenues increased 3.8%, expenses increased 2.0% and NOI increased 4.8%. The increase in same store revenues was driven primarily by an increase in average rental rate. Acquisitions/Dispositions During the second quarter of 2008, the company acquired four properties, consisting of 1,666 apartment units, for an aggregate purchase price of $295.0 million at an average capitalization (cap) rate of 6.0%. In addition, the company acquired an uncompleted development property for a purchase price of $31.7 million. Also during the quarter, the company sold eight properties, consisting of 1,965 apartment units, for an aggregate sale price of $206.9 million at an average cap rate of 5.6% generating an unlevered internal rate of return (IRR) of 10.9%. In addition, the company sold 32 condominium units for an aggregate sale price of $6.1 million. During the first six months of 2008, the company acquired six properties, consisting of 1,837 apartment units, for an aggregate purchase price of $336.9 million at an average cap rate of 5.9%, as well as an uncompleted development property for a purchase price of $31.7 million. Also during the first six months of 2008, the company sold 23 properties, consisting of 5,282 apartment units, for an aggregate sale price of $478.5 million at an average cap rate of 5.7% generating an unlevered IRR of 10.7%. In addition, the company sold 73 condominium units for an aggregate sale price of $15.5 million. Liquidity The company recently agreed to borrow $550 million in a loan originated by Wells Fargo (NYSE:WFC) for repurchase by Fannie Mae (NYSE:FNM). This is a secured loan with an all-in effective interest rate of approximately 6%. The loan is interest only and matures in 11.5 years with the first 10.5 years fixed and the last year at a floating rate of interest. The funding is expected to occur in late August 2008. Equity Residential currently has approximately $1.4 billion available on its unsecured revolving credit facility and approximately $145 million of unrestricted cash. These existing funding sources, combined with the new Fannie Mae/Wells Fargo borrowing, give the company ample liquidity to meet its 2008 and 2009 funding requirements. Third Quarter 2008 Earnings Guidance The company has established an FFO guidance range of $0.61 to $0.65 per share for the third quarter of 2008. When compared to the second quarter 2008, the company’s third quarter FFO results will reflect a continued contribution from good same store operating performance and be negatively impacted by approximately $0.01 per share in connection with the timing of its new secured loan from Fannie Mae. Full Year 2008 Guidance The company has revised its guidance for its full year 2008 same store operating performance, funds from operations results and transactions activities as well as other items listed on page 25 of this release. The changes to the full year same store and FFO guidance are listed below:   Previous   Revised Same store: Revenue change 3.00% to 4.00% 3.00% to 3.50% Expense change 2.50% to 3.25% 2.25% to 2.50% NOI change 3.00% to 4.75% 3.50% to 4.00%   FFO $2.45 to $2.60 $2.45 to $2.55 The company’s full year 2008 FFO results will reflect a continued contribution from good same store operating performance and be negatively impacted by approximately $0.04 per share due to losses from its condominium conversion business and $0.02 per share from the timing of its new secured loan from Fannie Mae. As a result, the company anticipates FFO results at the midpoint of the revised guidance range. Third Quarter 2008 Conference Call Equity Residential expects to announce third quarter 2008 results on Wednesday, October 29, 2008 and host a conference call to discuss those results at 10:00 a.m. CT on Thursday, October 30, 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 564 properties located in 23 states and the District of Columbia, consisting of 150,699 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, July 31, at 10:00 a.m. Central. Please visit the Investor Information section of the company’s web site at www.equityresidential.com for the link. A replay of the web cast will be available for two weeks at this site. EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands except per share data) (Unaudited)         Six Months Ended June 30, Quarter Ended June 30, 2008 2007 2008 2007 REVENUES Rental income $ 1,047,943 $ 957,654 $ 532,809 $ 489,124 Fee and asset management 5,010   4,703   2,716   2,436     Total revenues 1,052,953   962,357   535,525   491,560     EXPENSES Property and maintenance 271,876 250,832 135,769 125,446 Real estate taxes and insurance 109,940 102,455 54,613 50,686 Property management 40,587 47,262 19,450 22,420 Fee and asset management 4,171 4,504 1,991 2,163 Depreciation 290,605 280,941 145,485 143,456 General and administrative 24,191 20,816 11,774 11,447 Impairment 703   394   584   158     Total expenses 742,073   707,204   369,666   355,776     Operating income 310,880 255,153 165,859 135,784   Interest and other income 8,181 6,216 4,813 3,778 Interest: Expense incurred, net (234,731 ) (232,445 ) (117,484 ) (121,789 ) Amortization of deferred financing costs (4,340 ) (5,832 ) (2,179 ) (3,611 )   Income before income and other taxes, allocation to Minority Interests, loss from investments in unconsolidated entities, net gain on sales of land parcels and discontinued operations 79,990 23,092 51,009 14,162 Income and other tax (expense) benefit (4,624 ) (698 ) (1,628 ) (101 ) Allocation to Minority Interests: Operating Partnership, net (4,167 ) (640 ) (2,735 ) (671 ) Preference Interests and Units (7 ) (434 ) (3 ) (211 ) Partially Owned Properties (1,659 ) (779 ) (1,391 ) (187 ) Loss from investments in unconsolidated entities (190 ) (363 ) (95 ) (134 ) Net gain on sales of land parcels -   4,516   -   4,516   Income from continuing operations, net of minority interests 69,343 24,694 45,157 17,374 Discontinued operations, net of minority interests 203,751   383,944   87,455   265,027   Net income 273,094 408,638 132,612 282,401 Preferred distributions (7,259 ) (14,840 ) (3,626 ) (7,416 ) Net income available to Common Shares $ 265,835   $ 393,798   $ 128,986   $ 274,985     Earnings per share - basic: Income from continuing operations available to Common Shares $ 0.23   $ 0.03   $ 0.15   $ 0.04   Net income available to Common Shares $ 0.99   $ 1.37   $ 0.48   $ 0.97   Weighted average Common Shares outstanding 269,196   288,316   269,608   284,424     Earnings per share - diluted: Income from continuing operations available to Common Shares $ 0.23   $ 0.03   $ 0.15   $ 0.03   Net income available to Common Shares $ 0.98   $ 1.35   $ 0.47   $ 0.95   Weighted average Common Shares outstanding 289,921   311,963   290,445   307,631     Distributions declared per Common Share outstanding $ 0.9650   $ 0.9250   $ 0.4825   $ 0.4625   EQUITY RESIDENTIAL CONSOLIDATED STATEMENTS OF FUNDS FROM OPERATIONS (Amounts in thousands except per share data) (Unaudited)           Six Months Ended June 30, Quarter Ended June 30, 2008 2007 2008 2007   Net income $ 273,094 $ 408,638 $ 132,612 $ 282,401 Allocation to Minority Interests - Operating Partnership, net 4,167 640 2,735 671 Adjustments: Depreciation 290,605 280,941 145,485 143,456 Depreciation - Non-real estate additions (4,081 ) (4,173 ) (2,030 ) (2,138 ) Depreciation - Partially Owned and Unconsolidated Properties 2,040 2,081 1,006 1,138 Discontinued operations: Depreciation 3,569 30,800 1,109 13,611 Gain on sales of discontinued operations, net of minority interests (201,329 ) (361,525 ) (86,568 ) (256,569 ) Net incremental (loss) gain on sales of condominium units (3,090 ) 13,587 (3,456 ) 8,903 Minority Interests - Operating Partnership 162   1,487   58   560     FFO (1)(2) 365,137 372,476 190,951 192,033 Preferred distributions (7,259 ) (14,840 ) (3,626 ) (7,416 )   FFO available to Common Shares and OP Units - basic (1) (2) $ 357,878   $ 357,636   $ 187,325   $ 184,617     FFO available to Common Shares and OP Units - diluted (1) (2) $ 358,219   $ 358,035   $ 187,493   $ 184,811     FFO per share and OP Unit - basic $ 1.25   $ 1.16   $ 0.65   $ 0.61     FFO per share and OP Unit - diluted $ 1.23   $ 1.15   $ 0.64   $ 0.60     Weighted average Common Shares and OP Units outstanding - basic 287,260   307,582   287,440   303,511     Weighted average Common Shares and OP Units outstanding - diluted 290,360   312,478   290,878   308,131   (1) The National Association of Real Estate Investment Trusts ("NAREIT") defines funds from operations ("FFO") (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States ("GAAP")), excluding gains (or losses) from sales of depreciable property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Once the Company commences the conversion of units to condominiums, it simultaneously discontinues depreciation of such property. FFO available to Common Shares and OP Units is calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with accounting principles generally accepted in the United States. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Minority Interests - Operating Partnership". Subject to certain restrictions, the Minority Interests - Operating Partnership may exchange their OP Units for EQR Common Shares on a one-for-one basis. (2) The Company believes that FFO and FFO available to Common Shares and OP Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and OP Units can help compare the operating performance of a company's real estate between periods or as compared to different companies. FFO and FFO available to Common Shares and OP Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP. Therefore, FFO and FFO available to Common Shares and OP Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO and FFO available to Common Shares and OP Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies. EQUITY RESIDENTIAL CONSOLIDATED BALANCE SHEETS (Amounts in thousands except for share amounts) (Unaudited)     June 30, December 31, 2008 2007 ASSETS Investment in real estate Land $ 3,684,584 $ 3,607,305 Depreciable property 13,899,777 13,556,681 Projects under development 763,327 828,530 Land held for development 358,955   340,834   Investment in real estate 18,706,643 18,333,350 Accumulated depreciation (3,343,071 ) (3,170,125 ) Investment in real estate, net 15,363,572 15,163,225   Cash and cash equivalents 273,600 50,831 Investments in unconsolidated entities 3,308 3,547 Deposits - restricted 217,107 253,276 Escrow deposits - mortgage 19,637 20,174 Deferred financing costs, net 54,785 56,271 Other assets 151,214   142,453   Total assets $ 16,083,223   $ 15,689,777     LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 4,103,913 $ 3,605,971 Notes, net 5,765,803 5,763,762 Lines of credit - 139,000 Accounts payable and accrued expenses 148,660 109,385 Accrued interest payable 116,985 124,717 Other liabilities 303,806 322,975 Security deposits 64,225 62,159 Distributions payable 141,478   141,244   Total liabilities 10,644,870   10,269,213     Commitments and contingencies Minority Interests: Operating Partnership 320,754 331,626 Preference Interests and Units 184 184 Partially Owned Properties 25,842   26,236   Total Minority Interests 346,780   358,046     Shareholders' equity: Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 1,963,975 shares issued and outstanding as of June 30, 2008 and 1,986,475 shares issued and outstanding as of December 31, 2007 209,099 209,662 Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 270,927,139 shares issued and outstanding as of June 30, 2008 and 269,554,661 shares issued and outstanding as of December 31, 2007 2,709 2,696 Paid in capital 4,295,637 4,266,538 Retained earnings 604,373 599,504 Accumulated other comprehensive loss (20,245 ) (15,882 ) Total shareholders' equity 5,091,573   5,062,518   Total liabilities and shareholders' equity $ 16,083,223   $ 15,689,777   EQUITY RESIDENTIAL             Portfolio Summary As of June 30, 2008   Markets Properties Units % ofTotal Units % of 2008StabilizedNOI AverageRentalRate (1)   1 New York Metro Area 22 6,246 4.1 % 10.1 % $ 2,752 2 DC Northern Virginia 26 8,781 5.8 % 8.3 % 1,659 3 Los Angeles 37 7,714 5.1 % 8.2 % 1,783 4 South Florida 39 12,897 8.6 % 8.1 % 1,301 5 Seattle/Tacoma 48 11,071 7.4 % 7.2 % 1,338 6 Boston 37 6,217 4.1 % 6.2 % 1,867 7 San Francisco Bay Area 33 6,623 4.4 % 6.0 % 1,673 8 Phoenix 41 11,780 7.8 % 5.6 % 933 9 Denver 26 8,902 5.9 % 4.9 % 991 10 San Diego 14 4,491 3.0 % 4.3 % 1,644 11 Orlando 25 7,877 5.2 % 4.3 % 1,033 12 Atlanta 30 9,110 6.0 % 4.1 % 957 13 Inland Empire, CA 15 4,655 3.1 % 3.6 % 1,358 14 Suburban Maryland 21 5,559 3.7 % 3.2 % 1,189 15 Orange County 10 3,307 2.2 % 3.2 % 1,601 16 New England (excluding Boston) 33 4,925 3.3 % 2.5 % 1,102 17 Jacksonville 12 3,951 2.6 % 1.8 % 898 18 Portland, OR 11 3,713 2.5 % 1.8 % 957 19 Tampa/Ft. Myers 11 3,414 2.3 % 1.4 % 933 20 Dallas/Ft. Worth 15 3,631 2.4 % 1.3 % 919   Top 20 Total 506 134,864 89.5 % 96.1 % 1,345   21 Austin 9 2,985 2.0 % 1.3 % 897 22 Raleigh/Durham 12 3,058 2.0 % 1.2 % 812 23 Central Valley, CA 11 1,853 1.2 % 0.9 % 1,108 24 Other EQR 17 3,784 2.5 % 0.5 % 851   Total 555 146,544 97.2 % 100.0 % 1,309   Condominium Conversion 8 424 0.3 % - - Military Housing 1 3,731 2.5 % -   -   Grand Total 564 150,699 100.0 % 100.0 % $ 1,309 (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the month of June 2008. EQUITY RESIDENTIAL         Portfolio as of June 30, 2008       Properties Units   Wholly Owned Properties 491   130,813 Partially Owned Properties: Consolidated 28 5,709 Unconsolidated 44 10,446 Military Housing (Fee Managed) 1   3,731   564 150,699       Portfolio Rollforward Q2 2008   Properties Units $ Thousands Cap Rate   3/31/2008 565 149,769   Acquisitions: Rental Properties 4 1,666 $ 295,000 6.0 % Uncompleted Developments (1) - - $ 31,705 Dispositions: Rental Properties (8 ) (1,965 ) $ (206,906 ) 5.6 % Condominium Conversion Properties (1 ) (32 ) $ (6,053 ) Completed Developments 4   1,261     6/30/2008 564 150,699       Portfolio Rollforward 2008   Properties Units $ Thousands Cap Rate   12/31/2007 579 152,821   Acquisitions: Rental Properties 6 1,837 $ 336,863 5.9 % Uncompleted Developments (1) - - $ 31,705 Dispositions: Rental Properties (23 ) (5,282 ) $ (478,549 ) 5.7 % Condominium Conversion Properties (3 ) (73 ) $ (15,498 ) Completed Developments 5 1,393 Configuration Changes -   3     6/30/2008 564 150,699 (1) Represents the acquisition of Mosaic at Metro in Hyattsville, Maryland. See the Consolidated Development Projects on page 20 for further information. EQUITY RESIDENTIAL         Second Quarter 2008 vs. Second Quarter 2007 Quarter over Quarter Same Store Results/Statistics     $ in Thousands (except for Average Rental Rate) - 123,246 Same Store Units   Results Statistics Description Revenues Expenses NOI (1) Average RentalRate (2) Occupancy Turnover Q2 2008 $ 461,335 $ 167,284 $ 294,051 $ 1,315 95.0 % 15.9 % Q2 2007 $ 443,721   $ 163,420   $ 280,301   $ 1,268   94.8 % 16.4 % Change $ 17,614   $ 3,864   $ 13,750   $ 47   0.2 % (0.5 %) Change 4.0 % 2.4 % 4.9 % 3.7 %       Second Quarter 2008 vs. First Quarter 2008 Sequential Quarter over Quarter Same Store Results/Statistics   $ in Thousands (except for Average Rental Rate) - 128,991 Same Store Units   Results Statistics Description Revenues Expenses NOI (1) Average RentalRate (2) Occupancy Turnover Q2 2008 $ 489,456 $ 178,642 $ 310,814 $ 1,334 94.9 % 16.0 % Q1 2008 $ 481,315   $ 181,228   $ 300,087   $ 1,321   94.3 % 13.7 % Change $ 8,141   $ (2,586 ) $ 10,727   $ 13   0.6 % 2.3 % Change 1.7 % (1.4 %) 3.6 % 1.0 %       June YTD 2008 vs. June YTD 2007 YTD over YTD Same Store Results/Statistics   $ in Thousands (except for Average Rental Rate) - 119,546 Same Store Units   Results Statistics Description Revenues Expenses NOI (1) Average RentalRate (2) Occupancy Turnover YTD 2008 $ 889,236 $ 327,018 $ 562,218 $ 1,311 94.7 % 29.6 % YTD 2007 $ 856,947   $ 320,631   $ 536,316   $ 1,262   94.8 % 29.9 % Change $ 32,289   $ 6,387   $ 25,902   $ 49   (0.1 %) (0.3 %) Change 3.8 % 2.0 % 4.8 % 3.9 % (1) The Company's primary financial measure for evaluating each of its apartment communities is net operating income ("NOI").  NOI represents rental income less property and maintenance expense, real estate tax and insurance expense, and property management expense.  The Company believes that NOI is helpful to investors as a supplemental measure of the operating performance of a real estate company because it is a direct measure of the actual operating results of the Company's apartment communities.   (2) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL     Same Store NOI Reconciliation Second Quarter 2008 vs. Second Quarter 2007   The following table presents a reconciliation of operating incomeper the consolidated statements of operations to NOI for the SecondQuarter 2008 Same Store Properties:   Quarter Ended June 30, 2008 2007 (Amounts in thousands)   Operating income $ 165,859 $ 135,784 Adjustments: Non-same store operating results (28,926 ) (10,271 ) Fee and asset management revenue (2,716 ) (2,436 ) Fee and asset management expense 1,991 2,163 Depreciation 145,485 143,456 General and administrative 11,774 11,447 Impairment 584   158     Same store NOI $ 294,051   $ 280,301         Same Store NOI Reconciliation June YTD 2008 vs. June YTD 2007   The following table presents a reconciliation of operating incomeper the consolidated statements of operations to NOI for theSix-Month 2008 Same Store Properties:   Six Months Ended June 30, 2008 2007 (Amounts in thousands)   Operating income $ 310,880 $ 255,153 Adjustments: Non-same store operating results (63,322 ) (20,789 ) Fee and asset management revenue (5,010 ) (4,703 ) Fee and asset management expense 4,171 4,504 Depreciation 290,605 280,941 General and administrative 24,191 20,816 Impairment 703   394     Same store NOI $ 562,218   $ 536,316   EQUITY RESIDENTIAL                 Second Quarter 2008 vs. Second Quarter 2007 Same Store Results by Market                                           Increase (Decrease) from Prior Year's Quarter Q2 2008 Q2 2008 Q2 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 9.8 % $ 2,712 96.1 % 5.0 % 3.3 % 5.8 % 5.3 % (0.2 %) 2 South Florida 11,433 8.5 % 1,312 94.0 % 0.3 % 2.8 % (1.4 %) (0.6 %) 0.8 % 3 Los Angeles 6,864 8.0 % 1,754 94.9 % 4.3 % 3.2 % 4.7 % 4.8 % (0.5 %) 4 Seattle/Tacoma 8,604 7.4 % 1,364 95.0 % 9.2 % 4.1 % 12.2 % 9.3 % 0.0 % 5 DC Northern Virginia 6,870 7.1 % 1,543 96.1 % 5.9 % (2.9 %) 10.5 % 4.7 % 1.0 % 6 Boston 5,649 6.5 % 1,890 96.2 % 4.2 % 1.8 % 5.7 % 3.6 % 0.5 % 7 San Francisco Bay Area 5,793 6.1 % 1,627 95.6 % 7.7 % 3.5 % 9.8 % 8.1 % (0.4 %) 8 Phoenix 9,990 5.5 % 925 94.1 % (0.1 %) 2.2 % (1.4 %) (0.9 %) 0.7 % 9 Denver 7,605 4.7 % 967 95.1 % 6.6 % 4.4 % 7.8 % 7.1 % (0.4 %) 10 Orlando 7,243 4.5 % 1,032 93.8 % (1.2 %) 0.4 % (2.1 %) (1.3 %) 0.1 % 11 Atlanta 7,926 4.4 % 985 95.1 % 4.4 % 4.1 % 4.7 % 4.5 % (0.1 %) 12 San Diego 3,822 4.1 % 1,645 94.5 % 3.2 % 2.1 % 3.7 % 3.5 % (0.3 %) 13 Inland Empire, CA 4,355 3.8 % 1,358 95.0 % 2.5 % 1.3 % 3.1 % 1.2 % 1.2 % 14 Orange County 3,175 3.4 % 1,606 94.5 % 3.6 % 0.7 % 5.0 % 4.6 % (1.0 %) 15 New England (excluding Boston) 4,925 2.8 % 1,107 95.2 % 2.2 % (0.1 %) 4.2 % 2.2 % (0.1 %) 16 Suburban Maryland 3,687 2.6 % 1,172 95.2 % 9.0 % 6.6 % 10.5 % 7.0 % 1.7 % 17 Portland, OR 3,409 2.0 % 969 95.4 % 5.4 % 1.7 % 7.9 % 6.2 % (0.7 %) 18 Jacksonville 3,231 1.7 % 899 93.6 % (2.4 %) 2.8 % (5.7 %) (1.5 %) (0.9 %) 19 Dallas/Ft. Worth 2,601 1.4 % 990 96.0 % 4.8 % 7.3 % 3.0 % 4.6 % 0.2 % 20 Austin 2,985   1.4 %   901   95.6 %   6.2 %   2.4 %   9.9 %   5.7 %   0.5 % Top 20 Markets 115,610 95.7 % 1,339 95.0 % 4.0 % 2.4 % 5.0 % 3.8 % 0.2 % All Other Markets 7,636   4.3 %   952   95.1 %   2.7 %   1.0 %   3.8 %   1.8 %   0.8 % Total 123,246   100.0 %   $ 1,315   95.0 %   4.0 %   2.4 %   4.9 %   3.7 %   0.2 % (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL   Second Quarter 2008 vs. First Quarter 2008 Sequential Same Store Results by Market                                                   Increase (Decrease) from Prior Quarter Q2 2008 Q2 2008 Q2 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 10.4 % $ 2,760 95.1 % 3.5 % (7.2 %) 10.0 % 1.5 % 1.9 % 2 South Florida 11,761 8.2 % 1,308 94.1 % 0.9 % 0.7 % 1.1 % 0.3 % 0.6 % 3 DC Northern Virginia 7,661 8.1 % 1,653 96.1 % 2.7 % (5.6 %) 6.9 % 1.3 % 1.3 % 4 Los Angeles 6,864 7.5 % 1,754 94.9 % 1.9 % (0.4 %) 3.0 % 0.5 % 1.3 % 5 Seattle/Tacoma 8,708 7.1 % 1,369 95.0 % 4.0 % 0.2 % 6.2 % 3.1 % 0.9 % 6 San Francisco Bay Area 6,364 6.4 % 1,669 95.8 % 1.7 % 1.7 % 1.7 % 1.3 % 0.4 % 7 Boston 5,805 6.3 % 1,878 96.2 % 2.2 % (3.4 %) 6.0 % 1.5 % 0.6 % 8 Phoenix 10,238 5.4 % 927 94.1 % (1.6 %) 0.6 % (3.0 %) (0.4 %) (1.2 %) 9 Denver 8,355 4.9 % 981 95.2 % 1.4 % 3.9 % 0.1 % 1.2 % 0.1 % 10 San Diego 4,491 4.5 % 1,631 94.3 % 1.0 % (3.1 %) 3.1 % 0.6 % 0.4 % 11 Orlando 7,525 4.4 % 1,035 93.8 % (0.4 %) (3.5 %) 1.6 % (0.7 %) 0.3 % 12 Atlanta 7,926 4.1 % 985 95.1 % 2.1 % 1.1 % 2.8 % 1.1 % 1.0 % 13 Inland Empire, CA 4,355 3.6 % 1,358 95.0 % 1.1 % (0.9 %) 2.1 % (1.2 %) 2.2 % 14 Orange County 3,175 3.2 % 1,606 94.5 % 1.2 % 1.5 % 1.0 % 0.7 % 0.4 % 15 New England (excluding Boston) 4,925 2.7 % 1,107 95.2 % 1.4 % (7.0 %) 10.1 % 0.3 % 1.1 % 16 Suburban Maryland 3,977 2.6 % 1,148 95.3 % 4.2 % (0.8 %) 7.5 % 2.0 % 2.0 % 17 Portland, OR 3,409 1.9 % 969 95.4 % 1.4 % (1.5 %) 3.3 % 1.0 % 0.4 % 18 Jacksonville 3,711 1.8 % 914 93.6 % (1.4 %) (1.7 %) (1.2 %) (1.4 %) 0.1 % 19 Tampa 2,854 1.5 % 954 94.4 % (0.2 %) (4.1 %) 2.7 % (0.7 %) 0.5 % 20 Dallas/Ft. Worth 2,601   1.4 %   990   96.0 %   2.3 %   5.3 %   0.1 %   1.7 %   0.6 % Top 20 Markets 120,951 96.0 % 1,361 94.9 % 1.7 % (1.6 %) 3.7 % 1.0 % 0.7 % All Other Markets 8,040   4.0 %   938   95.5 %   1.4 %   2.5 %   0.6 %   1.0 %   0.4 % Total 128,991   100.0 %   $ 1,334   94.9 %   1.7 %   (1.4 %)   3.6 %   1.0 %   0.6 % (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL                   June YTD 2008 vs. June YTD 2007 Same Store Results by Market                         Increase (Decrease) from Prior Year Jun YTD 08 Jun YTD 08 Jun YTD 08 % 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 9.9 % $ 2,710 95.2 % 5.0 % 4.5 % 5.2 % 6.0 % (0.9 %) 2 Los Angeles 6,748 8.0 % 1,739 94.2 % 4.2 % 1.8 % 5.3 % 5.2 % (0.9 %) 3 Seattle/Tacoma 8,402 7.4 % 1,346 94.4 % 8.6 % 3.2 % 11.9 % 8.9 % (0.2 %) 4 DC Northern Virginia 6,870 7.2 % 1,535 95.5 % 4.5 % (2.4 %) 8.2 % 3.9 % 0.5 % 5 South Florida 9,347 7.1 % 1,295 93.9 % (0.7 %) 1.7 % (2.2 %) (0.9 %) 0.2 % 6 Boston 5,649 6.6 % 1,876 95.8 % 3.7 % 4.2 % 3.5 % 2.3 % 1.3 % 7 San Francisco Bay Area 5,793 6.3 % 1,616 95.3 % 7.8 % 1.2 % 11.4 % 8.2 % (0.4 %) 8 Phoenix 9,350 5.5 % 929 94.9 % 0.4 % 0.5 % 0.4 % (0.5 %) 0.9 % 9 Denver 7,605 4.9 % 962 95.1 % 6.9 % 0.9 % 10.1 % 7.2 % (0.3 %) 10 Orlando 6,931 4.4 % 1,037 93.6 % (1.5 %) 1.5 % (3.2 %) (1.3 %) (0.2 %) 11 Atlanta 7,744 4.4 % 978 94.6 % 3.9 % 2.8 % 4.8 % 4.7 % (0.7 %) 12 San Diego 3,822 4.3 % 1,642 94.3 % 3.5 % 2.4 % 4.0 % 3.8 % (0.3 %) 13 Inland Empire, CA 4,355 4.0 % 1,366 94.0 % 2.3 % 0.1 % 3.5 % 2.3 % 0.0 % 14 Orange County 3,013 3.4 % 1,606 94.2 % 3.6 % 0.7 % 4.9 % 5.1 % (1.3 %) 15 New England (excluding Boston) 4,925 2.8 % 1,105 94.7 % 2.2 % 3.9 % 0.6 % 2.5 % (0.4 %) 16 Suburban Maryland 3,687 2.7 % 1,160 94.3 % 7.9 % 1.0 % 12.7 % 6.7 % 1.0 % 17 Portland, OR 3,409 2.0 % 966 95.1 % 5.5 % 2.8 % 7.3 % 6.0 % (0.4 %) 18 Jacksonville 3,231 1.7 % 908 93.6 % (1.0 %) 3.2 % (3.7 %) 0.0 % (1.0 %) 19 Dallas/Ft. Worth 2,601 1.5 % 982 95.7 % 5.0 % 5.1 % 4.9 % 4.4 % 0.5 % 20 Austin 2,985   1.5 %   897   96.0 %   5.9 %   2.5 %   8.9 %   6.0 %   (0.1 %) Top 20 Markets 111,910 95.6 % 1,336 94.7 % 3.9 % 2.1 % 4.9 % 3.9 % (0.1 %)   All Other Markets 7,636   4.4 %   950   94.7 %   2.0 %   0.7 %   2.9 %   1.9 %   0.0 % Total 119,546   100.0 %   $ 1,311   94.7 %   3.8 %   2.0 %   4.8 %   3.9 %   (0.1 %) (1) Average rental rate is defined as total rental revenues divided by the weighted average occupied units for the period. EQUITY RESIDENTIAL         Debt Summary as of June 30, 2008 (Amounts in thousands)   Weighted Weighted Average Average Maturities Amounts (1) % of Total Rates (1) (years)   Secured $ 4,103,913 41.6 % 5.16 % 8.0 Unsecured 5,765,803 58.4 % 5.50 % 5.8 Total $ 9,869,716 100.0 % 5.36 % 6.7   Fixed Rate Debt: Secured - Conventional $ 2,917,404 29.6 % 6.01 % 6.0 Unsecured - Public/Private 5,003,472 50.7 % 5.68 % 5.9 Unsecured - Tax Exempt 111,390 1.1 % 5.06 % 20.8 Fixed Rate Debt 8,032,266 81.4 % 5.78 % 6.2   Floating Rate Debt: Secured - Conventional 569,136 5.8 % 3.84 % 4.6 Secured - Tax Exempt 617,373 6.2 % 2.51 % 20.9 Unsecured - Public/Private 650,941 6.6 % 4.29 % 1.9 Unsecured - Revolving Credit Facility - -   4.29 % 3.6 Floating Rate Debt 1,837,450 18.6 % 3.56 % 8.9   Total $ 9,869,716 100.0 % 5.36 % 6.7 (1) Net of the effect of any derivative instruments.  Weighted average rates are for the six months ended June 30, 2008. Note: The Company capitalized interest of approximately $29.5 million and $17.9 million during the six months ended June 30, 2008 and 2007, respectively. The Company capitalized interest of approximately $14.8 and $10.0 during the quarters ended June 30, 2008 and 2007, respectively. Debt Maturity Schedule as of June 30, 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 $ 338,298 $ 10,200 $ 348,498 3.5 % 6.61 % 6.54 % 2009 458,479 526,129 984,608 10.0 % 6.35 % 5.08 % 2010 (2) 287,526 612,525 900,051 9.1 % 7.03 % 4.62 % 2011 (3) 1,531,880 41,537 1,573,417 16.0 % 5.58 % 5.50 % 2012 907,912 - 907,912 9.2 % 6.08 % 6.08 % 2013 566,310 - 566,310 5.7 % 5.93 % 5.93 % 2014 517,460 - 517,460 5.2 % 5.28 % 5.28 % 2015 355,565 - 355,565 3.6 % 6.41 % 6.41 % 2016 1,089,312 - 1,089,312 11.0 % 5.32 % 5.32 % 2017 803,642 456 804,098 8.2 % 6.01 % 6.01 % 2018+ 1,175,882   646,603   1,822,485 18.5 % 5.75 % 5.00 % Total $ 8,032,266   $ 1,837,450   $ 9,869,716 100.0 % 5.85 % 5.44 % (1) Net of the effect of any derivative instruments. Weighted average rates are as of June 30, 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 June 30, 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 (263 ) 299,737 6.950 % 03/02/11   300,000 2,462 302,462 6.625 % 03/15/12   400,000 (1,089 ) 398,911 5.500 % 10/01/12   350,000 (1,467 ) 348,533 5.200 % 04/01/13   400,000 (562 ) 399,438 5.250 % 09/15/14 500,000 (382 ) 499,618 6.584 % 04/13/15   300,000 (754 ) 299,246 5.125 % 03/15/16 500,000 (412 ) 499,588 5.375 % 08/01/16 400,000 (1,500 ) 398,500 5.750 % 06/15/17   650,000 (4,578 ) 645,422 7.125 % 10/15/17   150,000 (603 ) 149,397 7.570 % 08/15/26 140,000 - 140,000 3.850 % 08/15/26 (3)   650,000 (7,380 ) 642,620 Floating Rate Adjustments (2)   (150,000 )   -     (150,000 ) 5,020,000     (16,528 )   5,003,472     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) 941 - 941 Term Loan Facility 10/05/10 (4) 500,000     -     500,000   650,941     -     650,941     Revolving Credit Facility: 02/28/12 (5) -     -     -     Total Unsecured Debt $ 5,782,331     $ (16,528 )   $ 5,765,803   (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 June 30, 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   June 30, March 31, 2008 2008   Total Debt to Adjusted Total Assets (not to exceed 60%) 50.9 % 51.3 %     Secured Debt to Adjusted Total Assets (not to exceed 40%) 21.2 % 21.3 %     Consolidated Income Available for DebtService to Maximum Annual Service Charges (must be at least 1.5 to 1) 2.21 2.08     Total Unsecured Assets to Unsecured Debt (must be at least 150%) 210.1 % 207.2 % These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt. Equity Residential is the general partner of ERPOP. EQUITY RESIDENTIAL   Capital Structure as of June 30, 2008 (Amounts in thousands except for share and per share amounts)           Secured Debt $ 4,103,913 41.6 % Unsecured Debt 5,765,803 58.4 % Total Debt 9,869,716 100.0 % 46.7 %   Common Shares 270,927,139 93.8 % OP Units 17,798,574 6.2 % Total Shares and OP Units 288,725,713 100.0 % Common Share Equivalents (see below) 420,378 Total outstanding at quarter-end 289,146,091 Common Share Price at June 30, 2008 $ 38.27 11,065,621 98.2 % Perpetual Preferred Equity (see below) 200,000 1.8 % Total Equity 11,265,621 100.0 % 53.3 %   Total Market Capitalization $ 21,135,337 100.0 % Convertible Preferred Equity as of June 30, 2008 (Amounts in thousands except for share/unit and per share/unit 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 11/1/98 340,616 $ 8,515 $ 1.75 $ 596 1.1128 379,037 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 371,342 $ 9,283 $ 652 7.02 % 420,378 Perpetual Preferred Equity as of June 30, 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             YTD Q208 YTD Q207 Q208 Q207   Weighted Average Amounts Outstanding for Net Income Purposes: Common Shares - basic 269,196,050 288,316,068 269,607,843 284,424,108 Shares issuable from assumed conversion/vesting of: - OP Units 18,063,520 19,265,714 17,832,334 19,087,151 - share options/ restricted shares 2,661,461 4,381,549 3,004,340 4,119,457 Total Common Shares and OP Units - diluted 289,921,031 311,963,331 290,444,517 307,630,716   Weighted Average Amounts Outstanding for FFO Purposes: Common Shares - basic 269,196,050 288,316,068 269,607,843 284,424,108 OP Units - basic 18,063,520 19,265,714 17,832,334 19,087,151 Total Common Shares and OP Units - basic 287,259,570 307,581,782 287,440,177 303,511,259 Shares issuable from assumed conversion/vesting of: - convertible preferred shares/units 438,825 514,384 433,179 500,257 - share options/ restricted shares 2,661,461 4,381,549 3,004,340 4,119,457 Total Common Shares and OP Units - diluted 290,359,856 312,477,715 290,877,696 308,130,973   Period Ending Amounts Outstanding: Common Shares - basic 270,927,139 OP Units - basic 17,798,574 Total Common Shares and OP Units - basic 288,725,713 EQUITY RESIDENTIAL   Partially Owned Entities as of June 30, 2008 (Amounts in thousands except for project and unit amounts)                 Consolidated Unconsolidated Development Projects Held for and/or Under Development Completed, Not Stabilized (4) Completed and Stabilized Other Total Institutional Joint Ventures   Total projects (1) -   2   5   21   28   44     Total units (1) -   410   1,405   3,894   5,709   10,446     Operating information for the six months ended 6/30/08 (at 100%): Operating revenue $ 180 $ 245 $ 11,932 $ 28,982 $ 41,339 $ 52,090 Operating expenses 461   914   5,845   9,701   16,921   23,742   Net operating (loss) income (281 ) (669 ) 6,087 19,281 24,418 28,348 Depreciation 185 315 4,704 7,276 12,480 10,772 Other -   -   1,538   12   1,550   156   Operating (loss) income (466 ) (984 ) (155 ) 11,993 10,388 17,420 Interest and other income 38 9 45 235 327 312 Interest: Expense incurred, net - (68 ) (3,879 ) (10,055 ) (14,002 ) (18,722 ) Amortization of deferred financing costs - (5 ) (63 ) (66 ) (134 ) (308 ) Income and other tax (expense) benefit (112 ) -   -   (46 ) (158 ) (214 ) Net (loss) income $ (540 ) $ (1,048 ) $ (4,052 ) $ 2,061   $ (3,579 ) $ (1,512 )     Debt - Secured (2): EQR Ownership (3) $ 432,582 $ 71,984 $ 141,206 $ 289,058 $ 934,830 $ 121,200 Minority Ownership -   -   -   13,321   13,321   363,600   Total (at 100%) $ 432,582   $ 71,984   $ 141,206   $ 302,379   $ 948,151   $ 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 $76.8 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 June 30, 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: Key Isle at Windermere II Orlando, FL 165 $ 29,058 $ 26,829 $ 26,829 $ - 99% 55% 34% Q3 2008 Q1 2009 Mosaic at Metro (4) Hyattsville, MD 260 61,483 33,916 33,916 26,589 60% 4% - Q4 2008 Q1 2010 70 Greene (a.k.a. 77 Hudson) Jersey City, NJ 480 269,958 148,824 148,824 - 60% - - Q4 2009 Q1 2011 Reserve at Town Center II Mill Creek, WA 100 24,464 6,029 6,029 - 6% - - Q2 2010 Q3 2010 Redmond Way Redmond, WA 250 84,382 18,572 18,572 - 1% - - Q1 2011 Q1 2012                   Projects Under Development - Wholly Owned 1,255 469,345 234,170 234,170 26,589   Projects Under Development - Partially Owned: Veridian (a.k.a. Silver Spring) Silver Spring, MD 457 147,454 117,255 117,255 79,111 82% 2% - Q4 2008 Q3 2010 Third Square (a.k.a. 303 Third Street) Cambridge, MA 482 248,307 200,415 200,415 112,524 86% 9% - Q4 2008 Q1 2010 Montclair Metro Montclair, NJ 163 48,730 21,953 21,953 7,075 40% - - Q2 2009 Q1 2010 Red Road Commons South Miami, FL 404 128,816 64,445 64,445 17,388 35% - - Q1 2010 Q3 2011 111 Lawrence Street Brooklyn, NY 492 283,968 67,324 67,324 - 9% - - Q2 2010 Q3 2011 Westgate Pasadena, CA 480 170,558 57,765 57,765 163,160 (2)   9% - - Q2 2011 Q2 2012                   Projects Under Development - Partially Owned 2,478 1,027,833 529,157 529,157 379,258                   Projects Under Development 3,733   1,497,178   763,327   763,327   405,847   Land Held for Development N/A   -   358,955   358,955   53,324   Land/Projects Held for and/or Under Development 3,733   1,497,178   1,122,282   1,122,282   459,171   Completed Not Stabilized - Wholly Owned (3): Bella Vista III Woodland Hills, CA 264 73,337 73,211 - - 97% 93% Completed Q3 2008 West End Apartments (a.k.a. Emerson/CRP II) Boston, MA 310 167,952 155,778 - - 74% 60% Completed Q1 2009 Highland Glen II Westwood, MA 102 19,872 19,835 - - 69% 66% Completed Q1 2009 Crowntree Lakes Orlando, FL 352 58,628 56,035 - - 40% 24% Completed Q4 2009 Reunion at Redmond Ridge Redmond, WA 321 55,457 52,223 - - 19% 15% Completed Q3 2010                   Projects Completed Not Stabilized - Wholly Owned 1,349 375,246 357,082 - -   Completed Not Stabilized - Partially Owned (3): Alta Pacific Irvine, CA 132 47,554 45,918 - 28,260 (2)   54% 40% Completed Q1 2009 1401 South State (a.k.a. City Lofts) Chicago, IL 278 71,109 64,908 - 43,724 35% 20% Completed Q2 2009                   Projects Completed Not Stabilized - Partially Owned 410 118,663 110,826 - 71,984                   Projects Completed Not Stabilized 1,759   493,909   467,908   -   71,984     Total Projects 5,492   $1,991,087   $ 1,590,190   $1,122,282   $ 531,155   Total Capital Q2 2008 NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS Cost (1) NOI Projects Under Development $ 1,497,178 $ (66) Completed Not Stabilized 493,909 844 Completed and Stabilized During the Quarter - - Total Development/Newly Stabilized NOI Contribution $ 1,991,087 $ 778 (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 $117.6 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 6/30/08. (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. (4) Project was acquired on 6/25/08. The previous owner commenced development in the fourth quarter of 2005. EQUITY RESIDENTIAL   Consolidated Condominium Conversion Projects as of June 30, 2008 (Amounts in thousands except for project and unit amounts)                                 Units 2008 YTD Activity Q2 2008 Available for Sale Projects   Location   Project StartDate (1)   EstimatedClose OutDate   Total   UnitsClosed   Sold NotClosed   Available UnitsClosed   Sales Price   FFO IncrementalGain on Sale (2) UnitsClosed   Sales Price   FFO IncrementalGain on Sale (2)   For Sale South Palm Place Tamarac, FL Q2 2005 Q3 2008 208 207 - 1 5 $746 $(325 ) 4 $563 $(302 ) Park Bloomingdale Bloomingdale, IL Q2 2006 Q4 2008 250 209 9 32 29 5,109 14 19 3,338 57 Belle Arts Bellevue, WA Q4 2006 Q4 2008 128 127 - 1 - - 1 - - - Arrington Place Issaquah, WA Q1 2007 Q2 2009 130 63 3 64 18 4,754 316 5 1,269 57 The Cleo (The Alexandria) Los Angeles, CA Q3 2007 Q2 2009 104 - 31 73 - - - - - - Verde (Mission Verde) San Jose, CA Q3 2007 Q3 2009 108   -   22   86 -   -   -   -   -   -     928 606 65 257 52 10,609 6 28 5,170 (188 )   Closed Out Chantecleer Lakes Naperville, IL Q4 2005 Q1 2008 304 304 - - 2 326 29 - - (5 ) Pacific Cove Playa Del Ray, CA Q3 2006 Q1 2008 80 80 - - 1 520 (61 ) - - (47 ) Milano Terrace Scottsdale, AZ Q2 2005 Q2 2008 224 224 - - 18 4,043 230 4 883 22 Projects closed out prior to 2008 (2) 4,289   4,289   -   - -   -   (3,294 ) -   -   (3,238 )   4,897 4,897 - - 21 4,889 (3,096 ) 4 883 (3,268 )   Totals 6 5,825   5,503   65   257 73   $15,498   $(3,090 ) 32   $6,053   $(3,456 )     Net incremental loss on sales of condominium units (2) $(3,090 ) $(3,456 ) Corporate overhead (property management expense) (1,412 ) (676 ) Other expenses (255 ) (51 ) Discontinued operating loss of active conversions (2,497 ) (1,185 ) Income of halted conversions (3) 709   453     Pre-tax net loss - Condominium division (4) $(6,545 ) $(4,915 ) (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 $173,000 and $71,000 in reserves for potential homeowners disputes for the six months and quarter ended June 30, 2008, respectively. The company recorded an additional reserve of $3,197,000 on various projects closed out prior to 2008. (3) Halted conversions includes the results of Sheridan Lake Club (Dania Beach Club), Sage, The Martine (Crosspointe) and The Hamilton. (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 Six Months Ended June 30, 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 Per (1) (2)   Unit (3)   Unit Total   Unit (4)   Unit (5)   Unit Total   Unit Grand Total Unit   Established Properties (6) 109,648 $ 41,756 $ 381 $ 37,485 $ 342 $ 79,241 $ 723 $ 18,999 $ 173 $ 28,510 $ 260 $ 47,509 $ 433 (9 ) $ 126,750 $ 1,156   New Acquisition Properties (7) 20,378 7,290 410 6,476 365 13,766 775 2,421 136 9,848 554 12,269 690 26,035 1,465   Other (8) 6,496     4,828     4,004     8,832   20,637     5,966     26,603   35,435   Total 136,522   $ 53,874   $ 47,965   $ 101,839 $ 42,057   $ 44,324   $ 86,381 $ 188,220     (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. Per unit amounts are based on a weighted average of 17,766 units.   (8) Other - Includes properties either partially owned or sold during the period, commercial space, corporate housing and condominium conversions. Also includes $16.4 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)         Six Months Ended Quarter Ended June 30, June 30, 2008   2007 2008   2007   REVENUES Rental income $ 16,071   $ 111,894   $ 5,357     $ 48,777   Total revenues   16,071     111,894     5,357       48,777     EXPENSES (1) Property and maintenance 8,705 38,438 3,197 17,759 Real estate taxes and insurance 1,880 14,257 645 5,840 Property management 18 264 44 61 Depreciation 3,569 30,800 1,109 13,611 General and administrative 17 10 14 8 Impairment   56     -     -     -   Total expenses   14,245     83,769     5,009     37,279     Discontinued operating income 1,826 28,125 348 11,498   Interest and other income 126 142 143 49 Interest (2): Expense incurred, net (27 ) (2,527 ) (5 ) (1,217 ) Amortization of deferred financing costs - (1,652 ) - (1,309 ) Income and other tax benefit (expense)   659     (182 )   459     (3 )   Discontinued operations 2,584 23,906 945 9,018 Minority Interests - Operating Partnership   (162 )   (1,487 )   (58 )   (560 ) Discontinued operations, net of minority interests   2,422     22,419     887     8,458     Net gain on sales of discontinued operations 214,797 385,503 92,280 273,557 Minority Interests - Operating Partnership   (13,468 )   (23,978 )   (5,712 )   (16,988 ) Gain on sales of discontinued operations, net of minority interests   201,329     361,525     86,568     256,569     Discontinued operations, net of minority interests $ 203,751   $ 383,944   $ 87,455   $ 265,027     (1) Includes expenses paid in the current period for properties sold or held for sale in prior periods related to the Company’s period of ownership.   (2) Includes only interest expense specific to secured mortgage notes payable for properties sold and/or held for sale.   EQUITY RESIDENTIAL   Additional Reconciliations and Non-Comparable Items (Amounts in thousands except per share data) (All per share data is diluted)             FFO Reconciliations   FFO Reconciliations Guidance Midpoint Q2 2008 to Actual Q2 2008 Amounts Per Share   Guidance midpoint Q2 2008 FFO - Diluted (1) (2) $ 183,886 $ 0.633 Property NOI (including reserve adjustments) 8,765 0.030 Insurance/litigation settlement proceeds 1,175 0.004 Net incremental (loss) on sales of condominium units (4,302 ) (0.015 ) Other (2,031 ) (0.007 )     Actual Q2 2008 FFO - Diluted (1) (2) $ 187,493   $ 0.645         Non-Comparable Items (3)   Six Months Ended June 30, Quarter Ended June 30, 2008 2007 Variance 2008 2007 Variance Property insurance reserve adjustments (real estate taxes and insurance expense) $ 2,042 $ (656 ) $ 2,698 $ 2,036 $ 966 $ 1,070 Workers compensation reserve adjustments (property management expense) 329 173 156 113 (40 ) 153 Medical reserve adjustments (property management expense) 454 - 454 454 - 454 Severance charges: Property management expense (193 ) (117 ) (76 ) (17 ) (117 ) 100 General and administrative expense (2,162 ) - (2,162 ) (465 ) - (465 ) Florida litigation reserve reduction (general and administrative expense) - 1,667 (1,667 ) - 42 (42 ) Performance shares (general and administrative expense) (270 ) (219 ) (51 ) (91 ) (179 ) 88 Impairment (including discontinued operations) (759 ) (394 ) (365 ) (584 ) (158 ) (426 ) Insurance/litigation settlement proceeds (interest and other income) 1,725 - 1,725 1,175 - 1,175 Forfeited deposits (interest and other income) 488 40 448 215 17 198 Debt extinguishment costs (interest): Prepayment penalties - (3,041 ) 3,041 - (2,900 ) 2,900 Write-off of unamortized deferred financing costs (6 ) (3,828 ) 3,822 - (3,110 ) 3,110 Net gain on sales of land parcels - 4,516 (4,516 ) - 4,516 (4,516 ) Net incremental (loss) gain on sales of condominium units (3,090 ) 13,587 (16,677 ) (3,456 ) 8,903 (12,359 ) Income and other tax (expense) benefit - Condo sales   727     7     720     414     (1 )   415   Net non-comparable items (3) $ (715 ) $ 11,735   $ (12,450 ) $ (206 ) $ 7,939   $ (8,145 )     Note: See page 26 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)   Q3 2008 2008   Expected FFO (1) (2) $0.61 to $0.65 $2.45 to $2.55     2008 Same Store Assumptions Physical occupancy 94.7% Revenue change 3.00% to 3.50% Expense change 2.25% to 2.50% NOI change 3.50% to 4.00% (Note: 25 basis point change in NOI percentage = $0.01 per share change in EPS/FFO)   2008 Transaction Assumptions Rental acquisitions $0.75 billion Rental dispositions $1.0 billion Capitalization rate spread 75 basis points   2008 Debt Assumptions Weighted average debt outstanding $9.8 billion to $10.0 billion Weighted average interest rate (reduced for capitalized interest and including prepayment penalties) 4.84% Interest expense (including discontinued operations) $475.0 million to $485.0 million   2008 Condominium Conversion Assumptions Net incremental (loss) gain on sales of condominium units $(2.5) million to $0.0 million Pre-tax net (loss) - Condominium division (after overhead/operations) $(10.0) million to $(7.0) million Effective tax rate 0% Number of condominium unit sales 125 units to 185 units   2008 Other Guidance Assumptions General and administrative expense $46.0 million to $48.0 million Interest and other income $12.5 million to $14.5 million Income and other tax expense $5.0 million to $6.0 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 26 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 24 and 25   (Amounts in thousands except per share data) (All per share data is diluted)   Expected Expected Expected Q2 2008 Q3 2008 2008 Amounts Per Share Per Share Per Share   Expected Earnings - Diluted (4) $ 156,749 $ 0.539 $0.59 to $0.63 $2.05 to $2.15 Add: Expected depreciation expense 145,827 0.503 0.50 2.00 Less: Expected net gain on sales (4) (118,690 ) (0.409 ) (0.48 ) (1.60 )         Expected FFO - Diluted (1) (2) $ 183,886   $ 0.633   $0.61 to $0.65 $2.45 to $2.55   Definitions and Footnotes for Pages 24 and 25   (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.