UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

Commission File Number: 1-12252 (Equity Residential)

Commission File Number: 0-24920 (ERP Operating Limited Partnership)

EQUITY RESIDENTIAL

ERP OPERATING LIMITED PARTNERSHIP

(Exact name of registrant as specified in its charter)

Maryland (Equity Residential)	13-3675988 (Equity Residential)
Illinois (ERP Operating Limited Partnership)	36-3894853 (ERP Operating Limited Partnership)
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Two North Riverside Plaza, Chicago, Illinois 60606	(312) 474-1300
(Address of principal executive offices) (Zip Code)	(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares of Beneficial Interest, $0.01 Par Value (Equity Residential)	EQR	New York Stock Exchange
7.57% Notes due August 15, 2026 (ERP Operating Limited Partnership)	N/A	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Equity Residential Yes ☒  No ☐ ERP Operating Limited Partnership Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Equity Residential Yes ☒  No ☐ ERP Operating Limited Partnership Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Equity Residential:

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

l

ERP Operating Limited Partnership:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Equity Residential ☐ ERP Operating Limited Partnership ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Equity Residential Yes ☐  No ☒ ERP Operating Limited Partnership Yes ☐  No ☒

The number of EQR Common Shares of Beneficial Interest, $0.01 par value, outstanding on July 25, 2024 was 379,135,883.

EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the quarterly period ended June 30, 2024 of Equity Residential and ERP Operating Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “EQR” mean Equity Residential, a Maryland real estate investment trust (“REIT”), and references to “ERPOP” mean ERP Operating Limited Partnership, an Illinois limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. The following chart illustrates the Company’s and the Operating Partnership’s corporate structure:

 

EQR is the general partner of, and as of June 30, 2024 owned an approximate 97.0% ownership interest in, ERPOP. The remaining 3.0% interest is owned by limited partners. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. Management operates the Company and the Operating Partnership as one business. The management of EQR consists of the same members as the management of ERPOP.

The Company is structured as an umbrella partnership REIT (“UPREIT”) and EQR contributes all net proceeds from its various equity offerings to ERPOP. In return for those contributions, EQR receives a number of OP Units (see definition below) in ERPOP equal to the number of Common Shares it has issued in the equity offering. The Company may acquire properties in transactions that include the issuance of OP Units as consideration for the acquired properties. Such transactions may, in certain circumstances, enable the sellers to defer in whole or in part, the recognition of taxable income or gain that might otherwise result from the sales. This is one of the reasons why the Company is structured in the manner shown above. Based on the terms of ERPOP’s partnership agreement, OP Units can be exchanged with Common Shares on a one-for-one basis because the Company maintains a one-for-one relationship between the OP Units of ERPOP issued to EQR and the outstanding Common Shares.

The Company believes that combining the reports on Form 10-Q of EQR and ERPOP into this single report provides the following benefits:

• enhances investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

• eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and

• creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

The Company believes it is important to understand the few differences between EQR and ERPOP in the context of how EQR and ERPOP operate as a consolidated company. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR’s primary function is acting as the general partner of ERPOP. EQR also issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by EQR (which are contributed to the capital of ERPOP in exchange for additional partnership interests in ERPOP (“OP Units”) (on a one-for-one Common Share per OP Unit basis) or additional preference units in ERPOP (on a one-for-one preferred share per preference unit basis)), the Operating Partnership generates all remaining capital required by the Company’s business. These sources include the Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility and/or commercial paper program, the issuance of secured and unsecured debt and partnership interests, and proceeds received from disposition of certain properties and joint venture interests.

Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and as noncontrolling interests in the Company’s financial statements. The noncontrolling interests in the Operating Partnership’s financial statements include the interests of unaffiliated partners in various consolidated partnerships. The noncontrolling interests in the Company’s financial statements include the same noncontrolling interests at the Operating Partnership level and limited partner OP Unit holders of the Operating Partnership. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at the Company and Operating Partnership levels.

To help investors understand the differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of each entity’s debt, noncontrolling interests and shareholders’ equity or partners’ capital, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity.

This report also includes separate Part I, Item 4, Controls and Procedures, sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.

In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership.

As general partner with control of ERPOP, EQR consolidates ERPOP for financial reporting purposes, and EQR essentially has no assets or liabilities other than its investment in ERPOP. Therefore, the assets and liabilities of the Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

TABLE OF CONTENTS

	PAGE
PART I.
Item 1. Financial Statements of Equity Residential:
Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	2
Consolidated Statements of Operations and Comprehensive Income for the six months and quarters ended June 30, 2024 and 2023	3
Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	5
Consolidated Statements of Changes in Equity for the six months and quarters ended June 30, 2024 and 2023	8
Financial Statements of ERP Operating Limited Partnership:
Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	10
Consolidated Statements of Operations and Comprehensive Income for the six months and quarters ended June 30, 2024 and 2023	11
Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023	13
Consolidated Statements of Changes in Capital for the six months and quarters ended June 30, 2024 and 2023	16
Notes to Consolidated Financial Statements of Equity Residential and ERP Operating Limited Partnership	18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3. Quantitative and Qualitative Disclosures about Market Risk	45
Item 4. Controls and Procedures	45
PART II.
Item 1. Legal Proceedings	46
Item 1A. Risk Factors	46
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 3. Defaults Upon Senior Securities	46
Item 4. Mine Safety Disclosures	46
Item 5. Other Information	46
Item 6. Exhibits	46

1

EQUITY RESIDENTIAL

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands except for share amounts)

(Unaudited)

	June 30,			December 31,
	2024			2023
ASSETS
Land	$	5,540,352		$	5,581,876
Depreciable property		23,004,377			22,938,426
Projects under development		188,283			78,036
Land held for development		64,781			114,300
Investment in real estate		28,797,793			28,712,638
Accumulated depreciation		(10,163,756	)		(9,810,337	)
Investment in real estate, net		18,634,037			18,902,301
Investments in unconsolidated entities		341,871			282,049
Cash and cash equivalents		38,298			50,743
Restricted deposits		100,123			89,252
Right-of-use assets		450,796			457,266
Other assets		214,443			252,953
Total assets	$	19,779,568		$	20,034,564
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net	$	1,634,838		$	1,632,902
Notes, net		5,351,461			5,348,417
Line of credit and commercial paper		170,884			409,131
Accounts payable and accrued expenses		114,413			87,377
Accrued interest payable		65,585			65,716
Lease liabilities		309,182			311,640
Other liabilities		292,424			272,596
Security deposits		69,848			69,178
Distributions payable		263,668			259,231
Total liabilities		8,272,303			8,456,188
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership		327,641			289,248
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value;    100,000,000 shares authorized; 343,100 shares issued and    outstanding as of June 30, 2024 and 745,600 shares issued    and outstanding as of December 31, 2023		17,155			37,280
Common Shares of beneficial interest, $0.01 par value;    1,000,000,000 shares authorized; 379,086,882 shares issued    and outstanding as of June 30, 2024 and 379,291,417    shares issued and outstanding as of December 31, 2023		3,791			3,793
Paid in capital		9,590,105			9,601,866
Retained earnings		1,357,922			1,437,185
Accumulated other comprehensive income (loss)		6,914			5,704
Total shareholders’ equity		10,975,887			11,085,828
Noncontrolling Interests:
Operating Partnership		204,032			202,306
Partially Owned Properties		(295	)		994
Total Noncontrolling Interests		203,737			203,300
Total equity		11,179,624			11,289,128
Total liabilities and equity	$	19,779,568		$	20,034,564

See accompanying notes

2

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Amounts in thousands except per share data)

(Unaudited)

	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
REVENUES
Rental income	$	1,464,981		$	1,422,397		$	734,163		$	717,309
EXPENSES
Property and maintenance		261,128			262,350			126,498			124,771
Real estate taxes and insurance		214,498			209,749			105,571			103,080
Property management		68,969			62,145			33,511			30,679
General and administrative		34,351			35,041			18,631			18,876
Depreciation		450,093			437,185			224,398			221,355
Total expenses		1,029,039			1,006,470			508,609			498,761
Net gain (loss) on sales of real estate properties		227,994			100,122			39,809			(87	)
Interest and other income		10,657			3,669			1,328			2,131
Other expenses		(45,123	)		(15,559	)		(13,385	)		(6,564	)
Interest:
Expense incurred, net		(133,040	)		(131,991	)		(65,828	)		(65,590	)
Amortization of deferred financing costs		(3,836	)		(3,996	)		(1,918	)		(2,017	)
Income before income and other taxes, income (loss) from    investments in unconsolidated entities and net gain (loss)    on sales of land parcels		492,594			368,172			185,560			146,421
Income and other tax (expense) benefit		(635	)		(634	)		(331	)		(336	)
Income (loss) from investments in unconsolidated entities		(3,372	)		(2,605	)		(1,674	)		(1,223	)
Net income		488,587			364,933			183,555			144,862
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership		(13,278	)		(11,613	)		(5,003	)		(4,554	)
Partially Owned Properties		(2,039	)		(2,082	)		(1,069	)		(1,105	)
Net income attributable to controlling interests		473,270			351,238			177,483			139,203
Preferred distributions		(902	)		(1,545	)		(355	)		(773	)
Premium on redemption of Preferred Shares		(1,444	)		—			—			—
Net income available to Common Shares	$	470,924		$	349,693		$	177,128		$	138,430
Earnings per share – basic:
Net income available to Common Shares	$	1.24		$	0.92		$	0.47		$	0.37
Weighted average Common Shares outstanding		378,699			378,492			378,578			378,642
Earnings per share – diluted:
Net income available to Common Shares	$	1.24		$	0.92		$	0.47		$	0.37
Weighted average Common Shares outstanding		390,548			391,063			390,542			391,187

See accompanying notes

3

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)

(Amounts in thousands except per share data)

(Unaudited)

	Six Months Ended June 30,						Quarter Ended June 30,
	2024			2023			2024			2023
Comprehensive income:
Net income	$	488,587		$	364,933		$	183,555		$	144,862
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period		—			4,054			—			13,834
Losses reclassified into earnings from other comprehensive    income		1,210			2,201			600			1,106
Other comprehensive income (loss)		1,210			6,255			600			14,940
Comprehensive income		489,797			371,188			184,155			159,802
Comprehensive (income) attributable to Noncontrolling Interests		(15,350	)		(13,890	)		(6,088	)		(6,135	)
Comprehensive income attributable to controlling interests	$	474,447		$	357,298		$	178,067		$	153,667

See accompanying notes

4

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)

	Six Months Ended June 30,
	2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	488,587		$	364,933
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		450,093			437,185
Amortization of deferred financing costs		3,836			3,996
Amortization of discounts and premiums on debt		2,536			1,740
Amortization of deferred settlements on derivative instruments		1,204			2,195
Amortization of right-of-use assets		6,470			6,357
Write-off of pursuit costs		1,369			1,993
(Income) loss from investments in unconsolidated entities		3,372			2,605
Distributions from unconsolidated entities – return on capital		281			290
Net (gain) loss on sales of real estate properties		(227,994	)		(100,122	)
Realized (gain) loss on investment securities		1,316			87
Unrealized (gain) loss on investment securities		(5,745	)		—
Compensation paid with Company Common Shares		21,350			20,845
Changes in assets and liabilities:
(Increase) decrease in other assets		30,297			(13,258	)
Increase (decrease) in accounts payable and accrued expenses		18,780			25,424
Increase (decrease) in accrued interest payable		(131	)		(72	)
Increase (decrease) in lease liabilities		(1,020	)		(658	)
Increase (decrease) in other liabilities		22,697			(8,047	)
Increase (decrease) in security deposits		670			487
Net cash provided by operating activities		817,968			745,980
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions		(63,507	)		(186,676	)
Investment in real estate – development/other		(55,253	)		(46,815	)
Capital expenditures to real estate		(153,304	)		(135,247	)
Non-real estate capital additions		(921	)		(1,043	)
Interest capitalized for real estate and unconsolidated entities under development		(6,894	)		(6,979	)
Proceeds from disposition of real estate, net		330,128			133,916
Investments in unconsolidated entities – acquisitions		(31,286	)		(989	)
Investments in unconsolidated entities – development/other		(28,793	)		(25,413	)
Distributions from unconsolidated entities – return of capital		16			15
Purchase of investment securities and other investments		—			(2,500	)
Proceeds from sale of investment securities		7,457			452
Net cash provided by (used for) investing activities		(2,357	)		(271,279	)

See accompanying notes

5

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

	Six Months Ended June 30,
	2024			2023
CASH FLOWS FROM FINANCING ACTIVITIES:
Mortgage notes payable, net:
Proceeds	$	—		$	22,896
Lump sum payoffs		—			(64,722	)
Scheduled principal repayments		—			(54	)
Line of credit and commercial paper:
Commercial paper proceeds		3,532,753			2,382,619
Commercial paper repayments		(3,771,000	)		(2,328,100	)
Finance ground lease principal payments		(1,438	)		(1,329	)
Proceeds from Employee Share Purchase Plan (ESPP)		2,449			2,124
Proceeds from exercise of options		6,480			11,358
Common Shares repurchased and retired		(38,474	)		—
Redemption of Preferred Shares		(20,125	)		—
Premium on redemption of Preferred Shares		(1,444	)		—
Other financing activities, net		(45	)		(31	)
Acquisition of Noncontrolling Interests – Partially Owned Properties		—			(3,737	)
Contributions – Noncontrolling Interests – Partially Owned Properties		458			9
Contributions – Noncontrolling Interests – Operating Partnership		2			1
Distributions:
Common Shares		(507,111	)		(487,483	)
Preferred Shares		(1,320	)		(2,319	)
Noncontrolling Interests – Operating Partnership		(15,629	)		(15,233	)
Noncontrolling Interests – Partially Owned Properties		(2,741	)		(3,230	)
Net cash provided by (used for) financing activities		(817,185	)		(487,231	)
Net increase (decrease) in cash and cash equivalents and restricted deposits		(1,574	)		(12,530	)
Cash and cash equivalents and restricted deposits, beginning of period		139,995			137,172
Cash and cash equivalents and restricted deposits, end of period	$	138,421		$	124,642
Cash and cash equivalents and restricted deposits, end of period
Cash and cash equivalents	$	38,298		$	35,701
Restricted deposits		100,123			88,941
Total cash and cash equivalents and restricted deposits, end of period	$	138,421		$	124,642

See accompanying notes

6

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(Amounts in thousands)

(Unaudited)

	Six Months Ended June 30,
	2024			2023
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized	$	120,955		$	125,518
Net cash paid (received) for income and other taxes	$	877		$	911
Amortization of deferred financing costs:
Investment in real estate, net	$	—		$	(211	)
Other assets	$	1,392		$	1,392
Mortgage notes payable, net	$	524		$	895
Notes, net	$	1,920		$	1,920
Amortization of discounts and premiums on debt:
Mortgage notes payable, net	$	1,412		$	616
Notes, net	$	1,124		$	1,124
Amortization of deferred settlements on derivative instruments:
Other liabilities	$	(6	)	$	(6	)
Accumulated other comprehensive income	$	1,210		$	2,201
Write-off of pursuit costs:
Investment in real estate, net	$	319		$	316
Investments in unconsolidated entities	$	866		$	1,111
Other assets	$	184		$	566
(Income) loss from investments in unconsolidated entities:
Investments in unconsolidated entities	$	2,736		$	1,972
Other liabilities	$	636		$	633
Realized/unrealized (gain) loss on derivative instruments:
Other assets	$	—		$	(3,359	)
Other liabilities	$	—		$	(695	)
Accumulated other comprehensive income	$	—		$	4,054
Interest capitalized for real estate and unconsolidated entities under development:
Investment in real estate, net	$	(2,592	)	$	(2,988	)
Investments in unconsolidated entities	$	(4,302	)	$	(3,991	)
Investments in unconsolidated entities – development/other:
Investments in unconsolidated entities	$	(28,133	)	$	(24,633	)
Other liabilities	$	(660	)	$	(780	)
Right-of-use assets and lease liabilities initial measurement and reclassifications:
Right-of-use assets	$	—		$	(7,105	)
Lease liabilities	$	—		$	7,105
Non-cash share distribution and other transfers from unconsolidated entities:
Investments in unconsolidated entities	$	—		$	539
Other assets	$	—		$	(539	)
Non-cash change in Supplemental Executive Retirement Plan (SERP) balances:
Other assets	$	3,437		$	3,110
Other liabilities	$	(2,839	)	$	(3,258	)
Paid in capital	$	(598	)	$	148

See accompanying notes

7

EQUITY RESIDENTIAL

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Amounts in thousands except per share data)

(Unaudited)

	Six Months Ended June 30,					Quarter Ended June 30,
	2024			2023		2024		2023
SHAREHOLDERS’ EQUITY
PREFERRED SHARES
Balance, beginning of period	$	37,280		$	37,280	$	17,155	$	37,280
Partial redemption of 8.29% Series K Cumulative Redeemable		(20,125	)		—		—		—
Balance, end of period	$	17,155		$	37,280	$	17,155	$	37,280
COMMON SHARES, $0.01 PAR VALUE
Balance, beginning of period	$	3,793		$	3,784	$	3,789	$	3,789