Equity Residential Reports Third Quarter 2017 Results

Equity Residential (NYSE:EQR) today reported results for the quarter and nine months ended September 30, 2017. All per share results are reported as available to common shares/units on a diluted basis. Earnings Per Share (EPS) was $0.37, Funds From Operations (FFO) was $0.81 per share and Normalized FFO was $0.80 per share for the third quarter of 2017, each as described in further detail below.

"Continued steady demand for rental housing during the peak leasing season delivered strong occupancy, retention and renewal pricing which helped mitigate the impact of elevated levels of new supply across our markets," said David J. Neithercut, Equity Residential's President and CEO. "As a result, we are pleased to expect to deliver growth in same store revenue at the upper end of our original expectations for the year. That and recent favorable real estate tax appeals should also produce growth in our same store net operating income at the upper end of our original expectations."

Highlights of the Quarter

• Increased same store revenues by 2.2% over the third quarter of 2016. Achieved same store Physical Occupancy of 96.2% and a 2.1% increase in Average Rental Rate.
• Acquired three apartment properties for a total acquisition price of approximately $411.0 million and a weighted average Acquisition Capitalization Rate of 4.8%. During the first nine months of 2017, the Company acquired four apartment properties for an aggregate purchase price of approximately $468.0 million at a weighted average Acquisition Capitalization Rate of 4.8%.
• Sold one consolidated apartment property in San Diego for $53.0 million at a Disposition Yield of 4.3%, generating an Unlevered IRR of 10.1%. During the first nine months of 2017, the Company sold four apartment properties for an aggregate sales price of approximately $319.7 million at a weighted average Disposition Yield of 5.1%, generating an Unlevered IRR of 13.8%.
• Completed new apartment development projects 455 Eye Street in Washington, DC and Helios in Seattle for a total cost of approximately $300.4 million and an anticipated weighted average Development Yield of 5.6%. During the first nine months of 2017, the Company completed three new apartment development projects at an anticipated weighted average Development Yield of 5.9%.
• Completed two unsecured debt offerings totaling $700.0 million. The Company issued $400.0 million of 10-year notes at a coupon of 3.25% and $300.0 million of 30-year notes at a coupon of 4.0%, which is the Company's lowest 30-year coupon and one of the lowest 30-year coupons in REIT sector history.
• Named the 2017 Global Residential Listed Sector Leader in ESG (environmental, social and governance) performance by GRESB. This is the fourth year in a row that the Company has been recognized as an ESG leader by GRESB.

Third Quarter 2017

EPS for the third quarter of 2017 was $0.37 compared to $0.56 in the third quarter of 2016. The difference is due primarily to lower property sale gains in the third quarter of 2017, the various adjustment items listed on page 25 of this release and the items described below.

FFO as defined by the National Association of Real Estate Investment Trusts (NAREIT) was $0.81 per share for the third quarter of 2017 compared to $0.77 per share in the third quarter of 2016. The difference is due primarily to the various adjustment items listed on page 25 of this release and the items described below.

Normalized FFO for the third quarter of 2017 was $0.80 per share compared to $0.78 per share in the third quarter of 2016. The difference is due primarily to:

• A positive impact of approximately $0.03 per share from increased same store net operating income (NOI);
• A positive impact of approximately $0.03 per share from Lease-Up NOI;
• A negative impact of approximately $0.02 per share of lower NOI from the Company's 2016 and 2017 transaction activity;
• A negative impact of approximately $0.01 per share from higher interest expense; and
• A negative impact of approximately $0.01 per share from other items including higher corporate overhead (property management and general and administrative expenses).

Reconciliations and definitions of FFO and Normalized FFO are provided on pages 7, 28 and 29 of this release and the Company has included guidance for Normalized FFO on page 26 and FFO and EPS on page 29 of this release.

Nine Months Ended September 30, 2017

EPS for the nine months ended September 30, 2017 was $1.29 compared to $10.92 for the same period of 2016. The difference is due primarily to $9.78 per share in higher property sale gains as a result of the Company's significant property sales activity in 2016, the various adjustment items listed on page 25 of this release and the items described below.

FFO for the nine months ended September 30, 2017 was $2.33 per share compared to $2.14 per share in the same period of 2016. The difference is due primarily to the various adjustment items listed on page 25 of this release and the items described below.

Normalized FFO for the nine months ended September 30, 2017 was $2.31 per share compared to $2.29 per share for the same period of 2016. The difference is due primarily to:

• A positive impact of approximately $0.06 per share from increased same store NOI;
• A positive impact of approximately $0.08 per share from Lease-Up NOI;
• A positive impact of approximately $0.01 per share from lower corporate overhead (property management and general and administrative expenses) and other items;
• A negative impact of approximately $0.11 per share of lower NOI from the Company's 2016 and 2017 transaction activity; and
• A negative impact of approximately $0.02 per share from higher interest expense.

Same Store Results

On a same store third quarter to third quarter comparison, which includes 72,049 apartment units, revenues increased 2.2%, expenses increased 1.7% and NOI increased 2.4%. Average Rental Rate increased 2.1% and Physical Occupancy increased 0.2%.

On a same store nine-month to nine-month comparison, which includes 70,285 apartment units, revenues increased 2.3%, expenses increased 2.9% and NOI increased 2.0%. Average Rental Rate increased 2.3% and Physical Occupancy remained flat at 96.0%.

Investment Activity

During the third quarter of 2017, the Company acquired three consolidated apartment properties, located in Boston, Los Angeles and Bellevue, Washington, consisting of 811 apartment units, for an aggregate purchase price of approximately $411.0 million and a weighted average Acquisition Capitalization Rate of 4.8%. Also during the quarter, the Company sold one consolidated apartment property in San Diego, consisting of 120 apartment units, for a sale price of $53.0 million, at a Disposition Yield of 4.3%, generating an Unlevered IRR of 10.1%.

During the first nine months of 2017, the Company acquired four consolidated apartment properties, consisting of 947 apartment units, for an aggregate purchase price of approximately $468.0 million at a weighted average Acquisition Capitalization Rate of 4.8%. During the first nine months of 2017, the Company sold four consolidated apartment properties, consisting of 1,024 apartment units, for an aggregate sale price of approximately $319.7 million, at a weighted average Disposition Yield of 5.1%, generating an Unlevered IRR of 13.8%. During the first nine months of 2017, the Company also sold a land parcel located in New York City for a sale price of approximately $33.5 million.

Capital Markets Activity

On August 3, 2017, the Company closed two unsecured debt offerings totaling $700.0 million. These were a $400.0 million unsecured note offering maturing August 1, 2027 with a coupon of 3.25% and an all in effective rate of 3.32% including the effect of underwriters' fees and the termination of certain interest rate hedges, and a $300.0 million unsecured note offering maturing August 1, 2047 with a coupon of 4.0% and an all in effective rate of 4.11% including the effect of underwriters' fees. Proceeds from these issuances were used to repay outstanding balances on the Company's revolving line of credit and commercial paper program.

Fourth Quarter 2017 Guidance

The Company has established an EPS guidance range of $0.59 to $0.63 for the fourth quarter of 2017. The difference between the Company's third quarter 2017 EPS of $0.37 and the midpoint of the fourth quarter 2017 guidance range of $0.61 is due primarily to higher expected gains on property sales and the items described below.

The Company has established an FFO guidance range of $0.79 to $0.83 per share for the fourth quarter of 2017. There is no difference between the Company's third quarter 2017 FFO of $0.81 per share and the midpoint of the fourth quarter 2017 guidance range of $0.81 per share.

The Company has established a Normalized FFO guidance range of $0.79 to $0.83 per share for the fourth quarter of 2017. The difference between the Company's third quarter 2017 Normalized FFO of $0.80 per share and the midpoint of the fourth quarter 2017 guidance range of $0.81 per share is due primarily to:

• A positive impact of approximately $0.01 per share from Lease-Up NOI;
• A positive impact of approximately $0.01 per share of higher NOI from the Company's 2017 acquisition activity; and
• A negative impact of approximately $0.01 per share from higher interest expense, primarily due to lower capitalized interest.

Full Year 2017 Guidance

The Company has revised its guidance for its full year 2017 same store operating performance, EPS, FFO per share, Normalized FFO per share and transactions as listed below:

			Previous		Revised
Same Store:
Physical Occupancy			95.8%		95.9%
Revenue change			1.75% to 2.25%		2.2%
Expense change			3.25% to 4.0%		3.2%
NOI change			0.75% to 1.75%		1.8%
EPS			$1.84 to $1.90		$1.88 to $1.92
FFO per share			$3.09 to $3.15		$3.12 to $3.16
Normalized FFO per share			$3.08 to $3.14		$3.10 to $3.14
Transactions:
Consolidated Rental Acquisitions			$500.0 million		$468.0 million
Consolidated Rental Dispositions			$500.0 million		$500.0 million
Acquisition Cap Rate/Disposition Yield Spread			50 basis points		50 basis points

The change in the full year EPS guidance range is due primarily to lower expected depreciation expense and the items described below.

The change in the full year FFO per share guidance range is due primarily to an insurance settlement recorded by the Company in the third quarter of 2017 as listed on page 25 of this release and the items described below.

The change in the full year Normalized FFO per share guidance range is due primarily to:

• A positive impact of approximately $0.02 per share from increased property NOI; and
• A negative impact of approximately $0.01 per share from other items including higher corporate overhead (property management and general and administrative expenses).

Glossary of Terms and Definitions

To improve comparability and enhance disclosure, the Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 27 through 30 of this release.

About Equity Residential

Equity Residential is an S&P 500 company focused on the acquisition, development and management of rental apartment properties in urban and high-density suburban coastal gateway markets where today's renters want to live, work and play. Equity Residential owns or has investments in 305 properties consisting of 78,302 apartment units, primarily located in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California. For more information on Equity Residential, please visit our website at www.equityapartments.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 and subsequent periodic reports filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityapartments.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 will take place tomorrow, Wednesday, October 25, at 10:00 a.m. Central. Please visit the Investor section of the Company's web site at www.equityapartments.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)
		Nine Months Ended September 30,		Quarter Ended September 30,
		2017		2016		2017		2016
REVENUES
Rental income		$	1,840,170			$	1,816,960			$	623,951			$	605,856
Fee and asset management			532				3,351				171				218
Total revenues			1,840,702				1,820,311				624,122				606,074
EXPENSES
Property and maintenance			306,645				309,688				104,721				104,216
Real estate taxes and insurance			253,318				238,954				84,087				81,343
Property management			64,702				64,003				20,861				19,517
General and administrative			40,366				47,408				12,567				12,395
Depreciation			542,964				528,242				184,100				179,230
Total expenses			1,207,995				1,188,295				406,336				396,701
Operating income			632,707				632,016				217,786				209,373
Interest and other income			5,708				65,092				3,945				5,509
Other expenses			(3,160	)			(14,480	)			(1,028	)			(10,420	)
Interest:
Expense incurred, net			(288,579	)			(386,316	)			(91,145	)			(86,352	)
Amortization of deferred financing costs			(6,447	)			(10,000	)			(2,064	)			(2,261	)
Income before income and other taxes, (loss) income from
investments in unconsolidated entities, net gain on sales of real
estate properties and land parcels and discontinued operations			340,229				286,312				127,494				115,849
Income and other tax (expense) benefit			(710	)			(1,189	)			(228	)			(426	)
(Loss) income from investments in unconsolidated entities			(2,153	)			5,846				(398	)			7,750
Net gain on sales of real estate properties			141,761				3,870,871				17,328				90,036
Net gain on sales of land parcels			19,170				15,759				—				4,037
Income from continuing operations			498,297				4,177,599				144,196				217,246
Discontinued operations, net			—				124				—				246
Net income			498,297				4,177,723				144,196				217,492
Net (income) attributable to Noncontrolling Interests:
Operating Partnership			(17,931	)			(160,442	)			(5,166	)			(8,353	)
Partially Owned Properties			(2,354	)			(2,368	)			(801	)			(823	)
Net income attributable to controlling interests			478,012				4,014,913				138,229				208,316
Preferred distributions			(2,318	)			(2,318	)			(772	)			(773	)
Net income available to Common Shares		$	475,694			$	4,012,595			$	137,457			$	207,543
Earnings per share – basic:
Income from continuing operations available to Common Shares		$	1.30			$	11.00			$	0.37			$	0.57
Net income available to Common Shares		$	1.30			$	11.00			$	0.37			$	0.57
Weighted average Common Shares outstanding			366,809				364,917				366,996				365,109
Earnings per share – diluted:
Income from continuing operations available to Common Shares		$	1.29			$	10.92			$	0.37			$	0.56
Net income available to Common Shares		$	1.29			$	10.92			$	0.37			$	0.56
Weighted average Common Shares outstanding			382,640				382,284				382,945				382,373
Distributions declared per Common Share outstanding		$	1.51125			$	12.51125			$	0.50375			$	3.50375

Equity Residential
Consolidated Statements of Funds From Operations and Normalized Funds From Operations
(Amounts in thousands except per share data)
(Unaudited)
		Nine Months Ended September 30,		Quarter Ended September 30,
		2017		2016		2017		2016
Net income		$	498,297			$	4,177,723			$	144,196			$	217,492
Net (income) attributable to Noncontrolling Interests – Partially Owned Properties			(2,354	)			(2,368	)			(801	)			(823	)
Preferred distributions			(2,318	)			(2,318	)			(772	)			(773	)
Net income available to Common Shares and Units			493,625				4,173,037				142,623				215,896
Adjustments:
Depreciation			542,964				528,242				184,100				179,230
Depreciation – Non-real estate additions			(3,808	)			(3,932	)			(1,228	)			(1,297	)
Depreciation – Partially Owned Properties			(2,500	)			(2,896	)			(834	)			(953	)
Depreciation – Unconsolidated Properties			3,430				3,606				1,145				1,139
Net (gain) on sales of unconsolidated entities - operating assets			(68	)			(8,841	)			—				(8,841	)
Net (gain) on sales of real estate properties			(141,761	)			(3,870,871	)			(17,328	)			(90,036	)
Discontinued operations:
Net (gain) on sales of discontinued operations			—				(43	)			—				(28	)
FFO available to Common Shares and Units			891,882				818,302				308,478				295,110
Adjustments (see page 25 for additional detail):
Asset impairment and valuation allowances			—				—				—				—
Write-off of pursuit costs			2,329				3,379				783				816
Debt extinguishment (gains) losses, including prepayment
penalties, preferred share redemptions and non-cash
convertible debt discounts			11,789				120,276				(613	)			112
(Gains) losses on sales of non-operating assets, net of income
and other tax expense (benefit)			(19,355	)			(73,600	)			(405	)			(7,007	)
Other miscellaneous items			(4,195	)			8,673				(3,405	)			8,159
Normalized FFO available to Common Shares and Units		$	882,450			$	877,030			$	304,838			$	297,190
FFO		$	894,200			$	820,620			$	309,250			$	295,883
Preferred distributions			(2,318	)			(2,318	)			(772	)			(773	)
FFO available to Common Shares and Units		$	891,882			$	818,302			$	308,478			$	295,110
FFO per share and Unit - basic		$	2.35			$	2.16			$	0.81			$	0.78
FFO per share and Unit - diluted		$	2.33			$	2.14			$	0.81			$	0.77
Normalized FFO		$	884,768			$	879,348			$	305,610			$	297,963
Preferred distributions			(2,318	)			(2,318	)			(772	)			(773	)
Normalized FFO available to Common Shares and Units		$	882,450			$	877,030			$	304,838			$	297,190
Normalized FFO per share and Unit - basic		$	2.32			$	2.32			$	0.80			$	0.78
Normalized FFO per share and Unit - diluted		$	2.31			$	2.29			$	0.80			$	0.78
Weighted average Common Shares and Units outstanding - basic			379,716				378,745				379,906				379,008
Weighted average Common Shares and Units outstanding - diluted			382,640				382,284				382,945				382,373

Note: See page 25 for additional detail regarding the adjustments from FFO to Normalized FFO. See pages 27 through 30 for the definitions of non-GAAP financial measures and other terms as well as the reconciliations of EPS to FFO per share and Normalized FFO per share.

Equity Residential
Consolidated Balance Sheets
(Amounts in thousands except for share amounts)
(Unaudited)
		September 30,		December 31,
		2017		2016
ASSETS
Investment in real estate
Land		$	5,985,004			$	5,899,862
Depreciable property			19,571,402				18,730,579
Projects under development			293,064				637,168
Land held for development			99,073				118,816
Investment in real estate			25,948,543				25,386,425
Accumulated depreciation			(5,849,110	)			(5,360,389	)
Investment in real estate, net			20,099,433				20,026,036
Cash and cash equivalents			46,565				77,207
Investments in unconsolidated entities			59,029				60,141
Deposits – restricted			36,639				76,946
Escrow deposits – mortgage			10,972				64,935
Other assets			445,195				398,883
Total assets		$	20,697,833			$	20,704,148
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net		$	3,619,180			$	4,119,181
Notes, net			5,143,248				4,848,079
Line of credit and commercial paper			229,844				19,998
Accounts payable and accrued expenses			167,984				147,482
Accrued interest payable			72,811				60,946
Other liabilities			332,650				350,466
Security deposits			65,230				62,624
Distributions payable			192,569				192,296
Total liabilities			9,823,516				9,801,072
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership			380,541				442,092
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 745,600 shares issued and
outstanding as of September 30, 2017 and December 31, 2016			37,280				37,280
Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 367,462,480 shares issued
and outstanding as of September 30, 2017 and 365,870,924
shares issued and outstanding as of December 31, 2016			3,675				3,659
Paid in capital			8,848,739				8,758,422
Retained earnings			1,464,249				1,543,626
Accumulated other comprehensive (loss)			(94,674	)			(113,909	)
Total shareholders' equity			10,259,269				10,229,078
Noncontrolling Interests:
Operating Partnership			228,332				221,297
Partially Owned Properties			6,175				10,609
Total Noncontrolling Interests			234,507				231,906
Total equity			10,493,776				10,460,984
Total liabilities and equity		$	20,697,833			$	20,704,148

Equity Residential
Portfolio Summary
As of September 30, 2017
										% of		Average
						Apartment		Stabilized		Rental
Markets/Metro Areas		Properties		Units		NOI		Rate
Los Angeles			71				16,160				18.3	%		$	2,455
Orange County			13				4,028				4.3	%			2,131
San Diego			12				3,385				3.7	%			2,270
Subtotal – Southern California			96				23,573				26.3	%			2,371
San Francisco			54				12,959				19.3	%			3,086
New York			40				10,632				17.7	%			3,757
Washington DC			48				15,811				17.6	%			2,388
Boston			24				6,263				9.9	%			2,986
Seattle			40				7,983				9.2	%			2,345
Other Markets			1				136				—	%			1,155
Total			303				77,357				100.0	%			2,733
Unconsolidated Properties			2				945				—				—
Grand Total			305				78,302				100.0	%		$	2,733

Note: Projects under development are not included in the Portfolio Summary until construction has been completed.

Equity Residential
Portfolio as of September 30, 2017
				Properties			Apartment Units
Wholly Owned Properties				283			73,289
Master-Leased Properties - Consolidated				3			853
Partially Owned Properties - Consolidated				17			3,215
Partially Owned Properties - Unconsolidated				2			945
				305			78,302

Portfolio Rollforward Q3 2017
($ in thousands)
				Properties		Apartment Units		Purchase Price		Acquisition Cap Rate
		6/30/2017			301				77,034
Acquisitions:
Consolidated:
Rental Properties – Stabilized					1				301			$	117,000				4.5	%
Rental Properties – Not Stabilized (A)					2				510			$	294,022				5.0	%
												Sales Price		Disposition Yield
Dispositions:
Consolidated:
Rental Properties					(1	)			(120	)		$	(53,000	)			(4.3	%)
Completed Developments - Consolidated					2				572
Configuration Changes					—				5
		9/30/2017			305				78,302

Portfolio Rollforward 2017
($ in thousands)
				Properties		Apartment Units		Purchase Price		Acquisition Cap Rate
		12/31/2016			302				77,458
Acquisitions:
Consolidated:
Rental Properties – Stabilized					2				437			$	174,028				4.7	%
Rental Properties – Not Stabilized (A)					2				510			$	294,022				5.0	%
												Sales Price		Disposition Yield
Dispositions:
Consolidated:
Rental Properties					(4	)			(1,024	)		$	(319,700	)			(5.1	%)
Land Parcels					—				—			$	(33,450	)
Completed Developments - Consolidated					3				916
Configuration Changes					—				5
		9/30/2017			305				78,302

(A)

The Company acquired two properties in the third quarter of 2017 which were in the final stages of completing lease-up and are expected to stabilize in their second year of ownership at a weighted average Acquisition Cap Rate of 5.0%.

Equity Residential
Third Quarter 2017 vs. Third Quarter 2016
Same Store Results/Statistics for 72,049 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
		Results		Statistics
Description		Revenues		Expenses		NOI		Average Rental Rate		Physical Occupancy		Turnover
Q3 2017		$	587,142			$	173,844			$	413,298			$	2,709				96.2	%			16.7	%
Q3 2016		$	574,594			$	171,019			$	403,575			$	2,654				96.0	%			17.6	%
Change		$	12,548			$	2,825			$	9,723			$	55				0.2	%			(0.9	%)
Change			2.2	%			1.7	%			2.4	%			2.1	%

Third Quarter 2017 vs. Second Quarter 2017
Same Store Results/Statistics for 73,569 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
		Results		Statistics
Description		Revenues		Expenses		NOI		Average Rental Rate		Physical Occupancy		Turnover
Q3 2017		$	602,302			$	178,454			$	423,848			$	2,725				96.2	%			16.7	%
Q2 2017		$	593,941			$	175,233			$	418,708			$	2,695				95.8	%			14.0	%
Change		$	8,361			$	3,221			$	5,140			$	30				0.4	%			2.7	%
Change			1.4	%			1.8	%			1.2	%			1.1	%

September YTD 2017 vs. September YTD 2016
Same Store Results/Statistics for 70,285 Same Store Apartment Units
$ in thousands (except for Average Rental Rate)
		Results		Statistics
Description		Revenues		Expenses		NOI		Average Rental Rate		Physical Occupancy		Turnover
YTD 2017		$	1,685,303			$	496,232			$	1,189,071			$	2,662				96.0	%			41.9	%
YTD 2016		$	1,647,988			$	482,410			$	1,165,578			$	2,601				96.0	%			43.6	%
Change		$	37,315			$	13,822			$	23,493			$	61				0.0	%			(1.7	%)
Change			2.3	%			2.9	%			2.0	%			2.3	%

Note: Same store revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods. See page 29 for reconciliations from operating income.

Equity Residential
Third Quarter 2017 vs. Third Quarter 2016
Same Store Results/Statistics by Market
																						Increase (Decrease) from Prior Year's Quarter
Markets/Metro Areas		Apartment Units		Q3 2017 % of Actual NOI		Q3 2017 Average Rental Rate		Q3 2017 Weighted Average Physical Occupancy %		Q3 2017 Turnover		Revenues		Expenses		NOI		Average Rental Rate		Physical Occupancy		Turnover
Los Angeles			14,338				18.1	%		$	2,436				96.5	%			18.1	%			4.1	%			(5.4	%)			8.1	%			3.7	%			0.3	%			(0.9	%)
Orange County			3,684				4.1	%			2,100				96.4	%			16.8	%			4.5	%			2.6	%			5.2	%			4.3	%			0.3	%			(0.3	%)
San Diego			3,385				4.0	%			2,270				96.7	%			18.7	%			4.3	%			2.2	%			5.0	%			4.2	%			0.1	%			(0.3	%)
Subtotal – Southern California			21,407				26.2	%			2,352				96.5	%			18.0	%			4.2	%			(3.3	%)			7.2	%			3.8	%			0.3	%			(0.6	%)
New York			10,632				19.1	%			3,757				96.4	%			13.1	%			0.5	%			4.5	%			(1.7	%)			0.0	%			0.3	%			(0.7	%)
Washington DC			15,475				18.2	%			2,383				96.3	%			16.4	%			1.3	%			2.0	%			1.0	%			1.2	%			0.2	%			(0.6	%)
San Francisco			11,292				17.9	%			3,003				95.7	%			17.2	%			1.6	%			1.6	%			1.6	%			1.6	%			0.1	%			(2.6	%)
Boston			6,009				9.9	%			2,965				95.8	%			18.3	%			1.2	%			(0.3	%)			1.9	%			0.9	%			0.3	%			(1.3	%)
Seattle			7,098				8.6	%			2,280				95.4	%			16.4	%			4.9	%			9.2	%			3.4	%			6.6	%			(0.5	%)			0.3	%
Other Markets			136				0.1	%			1,155				97.1	%			10.3	%			0.6	%			16.6	%			(6.2	%)			1.2	%			(0.5	%)			(5.1	%)
Total			72,049				100.0	%		$	2,709				96.2	%			16.7	%			2.2	%			1.7	%			2.4	%			2.1	%			0.2	%			(0.9	%)

Equity Residential
Third Quarter 2017 vs. Second Quarter 2017
Same Store Results/Statistics by Market
																						Increase (Decrease) from Prior Quarter
Markets/Metro Areas		Apartment Units		Q3 2017 % of Actual NOI		Q3 2017 Average Rental Rate		Q3 2017 Weighted Average Physical Occupancy %		Q3 2017 Turnover		Revenues		Expenses		NOI		Average Rental Rate		Physical Occupancy		Turnover
Los Angeles			14,432				17.8	%		$	2,440				96.5	%			18.2	%			2.2	%			(3.2	%)			4.4	%			1.3	%			0.8	%			2.7	%
Orange County			3,684				4.0	%			2,100				96.4	%			16.8	%			1.9	%			2.1	%			1.9	%			1.8	%			0.1	%			3.6	%
San Diego			3,385				3.9	%			2,270				96.7	%			18.7	%			2.4	%			2.4	%			2.4	%			1.9	%			0.4	%			3.0	%
Subtotal – Southern California			21,501				25.7	%			2,355				96.5	%			18.0	%			2.2	%			(1.7	%)			3.7	%			1.5	%			0.6	%			2.9	%
San Francisco			12,718				19.8	%			3,056				95.7	%			17.5	%			1.2	%			3.8	%			0.3	%			1.3	%			0.0	%			4.4	%
New York			10,632				18.6	%			3,757				96.4	%			13.1	%			1.0	%			1.2	%			0.9	%			0.3	%			0.3	%			1.9	%
Washington DC			15,475				17.8	%			2,383				96.3	%			16.4	%			1.6	%			3.7	%			0.6	%			0.7	%			0.8	%			2.1	%
Boston			6,009				9.6	%			2,965				95.8	%			18.3	%			0.0	%			6.0	%			(2.3	%)			0.8	%			0.1	%			4.2	%
Seattle			7,098				8.4	%			2,280				95.4	%			16.4	%			2.0	%			1.1	%			2.4	%			2.8	%			(0.4	%)			0.6	%
Other Markets			136				0.1	%			1,155				97.1	%			10.3	%			(0.3	%)			9.7	%			(4.9	%)			1.1	%			(1.4	%)			(7.3	%)
Total			73,569				100.0	%		$	2,725				96.2	%			16.7	%			1.4	%			1.8	%			1.2	%			1.1	%			0.4	%			2.7	%

Equity Residential
September YTD 2017 vs. September YTD 2016
Same Store Results/Statistics by Market
																						Increase (Decrease) from Prior Year
Markets/Metro Areas		Apartment Units		Sept. YTD 17 % of Actual NOI		Sept. YTD 17 Average Rental Rate		Sept. YTD 17 Weighted Average Physical Occupancy %		Sept. YTD 17 Turnover		Revenues		Expenses		NOI		Average Rental Rate		Physical Occupancy		Turnover
Los Angeles			14,040				17.8	%		$	2,410				96.0	%			46.1	%			3.8	%			0.6	%			5.2	%			3.9	%			(0.1	%)			(1.7	%)
Orange County			3,684				4.2	%			2,065				96.3	%			41.2	%			4.9	%			5.3	%			4.7	%			4.7	%			0.2	%			(0.8	%)
San Diego			3,385				4.1	%			2,237				96.4	%			50.1	%			4.6	%			3.0	%			5.1	%			4.5	%			0.1	%			0.0	%
Subtotal – Southern California			21,109				26.1	%			2,322				96.1	%			45.9	%			4.1	%			1.6	%			5.1	%			4.1	%			0.0	%			(1.2	%)
Washington DC			15,475				18.9	%			2,364				95.9	%			40.5	%			1.4	%			3.0	%			0.7	%			1.6	%			(0.1	%)			0.1	%
New York			10,007				18.5	%			3,678				96.1	%			33.1	%			0.1	%			4.8	%			(2.5	%)			0.0	%			(0.3	%)			(0.6	%)
San Francisco			11,019				18.0	%			2,937				95.9	%			42.0	%			2.2	%			1.2	%			2.5	%			2.4	%			(0.2	%)			(5.9	%)
Boston			6,009				10.3	%			2,942				95.8	%			41.9	%			1.4	%			0.5	%			1.8	%			1.2	%			0.4	%			(3.3	%)
Seattle			6,530				8.1	%			2,226				95.7	%			45.5	%			5.9	%			6.4	%			5.7	%			6.0	%			0.1	%			(0.5	%)
Other Markets			136				0.1	%			1,147				98.2	%			33.1	%			3.1	%			16.6	%			(3.2	%)			3.4	%			(0.2	%)			(6.6	%)
Total			70,285				100.0	%		$	2,662				96.0	%			41.9	%			2.3	%			2.9	%			2.0	%			2.3	%			0.0	%			(1.7	%)

Equity Residential
Third Quarter 2017 vs. Third Quarter 2016
Same Store Operating Expenses for 72,049 Same Store Apartment Units
$ in thousands
		Actual Q3 2017		Actual Q3 2016		$ Change		% Change		% of Actual Q3 2017 Operating Expenses
Real estate taxes		$	71,508			$	69,506			$	2,002				2.9	%			41.1	%
On-site payroll (1)			39,183				38,407				776				2.0	%			22.5	%
Utilities (2)			23,917				23,381				536				2.3	%			13.8	%
Repairs and maintenance (3)			23,082				23,141				(59	)			(0.3	%)			13.3	%
Insurance			4,305				4,488				(183	)			(4.1	%)			2.5	%
Leasing and advertising			2,587				3,448				(861	)			(25.0	%)			1.5	%
Other on-site operating expenses (4)			9,262				8,648				614				7.1	%			5.3	%
Same store operating expenses		$	173,844			$	171,019			$	2,825				1.7	%			100.0	%

September YTD 2017 vs. September YTD 2016
Same Store Operating Expenses for 70,285 Same Store Apartment Units
$ in thousands
		Actual YTD 2017		Actual YTD 2016		$ Change		% Change		% of Actual YTD 2017 Operating Expenses
Real estate taxes		$	208,482			$	201,645			$	6,837				3.4	%			42.0	%
On-site payroll (1)			112,607				107,514				5,093				4.7	%			22.7	%
Utilities (2)			67,788				66,472				1,316				2.0	%			13.7	%
Repairs and maintenance (3)			64,170				62,952				1,218				1.9	%			12.9	%
Insurance			12,526				13,024				(498	)			(3.8	%)			2.5	%
Leasing and advertising			7,034				7,579				(545	)			(7.2	%)			1.4	%
Other on-site operating expenses (4)			23,625				23,224				401				1.7	%			4.8	%
Same store operating expenses		$	496,232			$	482,410			$	13,822				2.9	%			100.0	%

(1)		On-site payroll - Includes payroll and related expenses for on-site personnel including property managers, leasing consultants and maintenance staff.
(2)		Utilities - Represents gross expenses prior to any recoveries under the Resident Utility Billing System ("RUBS"). Recoveries are reflected in rental income.
(3)		Repairs and maintenance - Includes general maintenance costs, apartment unit turnover costs including interior painting, routine landscaping, security, exterminating, fire protection, snow removal, elevator, roof and parking lot repairs and other miscellaneous building repair and maintenance costs.
(4)		Other on-site operating expenses - Includes ground lease costs and administrative costs such as office supplies, telephone and data charges and association and business licensing fees.

Equity Residential
Debt Summary as of September 30, 2017
($ in thousands)
		Amounts (1)		% of Total		Weighted Average Rates (1)		Weighted Average Maturities (years)
Secured		$	3,619,180				40.2	%			4.33	%			5.8
Unsecured			5,373,092				59.8	%			4.22	%			10.8
Total		$	8,992,272				100.0	%			4.27	%			8.8
Fixed Rate Debt:
Secured – Conventional		$	2,983,680				33.2	%			4.91	%			4.3
Unsecured – Public			4,693,929				52.2	%			4.68	%			12.2
Fixed Rate Debt			7,677,609				85.4	%			4.77	%			9.1
Floating Rate Debt:
Secured – Conventional			7,046				0.1	%			0.98	%			16.1
Secured – Tax Exempt			628,454				6.9	%			1.49	%			12.4
Unsecured – Public (2)			449,319				5.0	%			1.77	%			1.7
Unsecured – Revolving Credit Facility (3)			—				—				2.00	%			4.2
Unsecured – Commercial Paper Program (4)			229,844				2.6	%			1.37	%			—
Floating Rate Debt			1,314,663				14.6	%			1.57	%			6.9
Total		$	8,992,272				100.0	%			4.27	%			8.8

(1)		Net of the effect of any derivative instruments. Weighted average rates are for the nine months ended September 30, 2017.
(2)		Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%.
(3)		The Company's $2.0 billion unsecured revolving credit facility matures January 10, 2022. The interest rate on advances under the credit facility will generally be LIBOR plus a spread (currently 0.825%), or based on bids received from the lending group, and an annual facility fee (currently 12.5 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company's long-term debt. As of September 30, 2017, there was approximately $1.76 billion available on the Company's unsecured revolving credit facility (net of $11.1 million which was restricted/dedicated to support letters of credit and net of $230.0 million in principal outstanding on the commercial paper program).
(4)		The Company may borrow up to a maximum of $500.0 million on the commercial paper program subject to market conditions. The notes bear interest at various floating rates with a weighted average of 1.37% for the nine months ended September 30, 2017 and a weighted average maturity of 18 days as of September 30, 2017.

Note: The Company capitalized interest of approximately $23.2 million and $41.7 million during the nine months ended September 30, 2017 and 2016, respectively. The Company capitalized interest of approximately $6.6 million and $13.3 million during the quarters ended September 30, 2017 and 2016, respectively.

Equity Residential
Debt Maturity Schedule as of September 30, 2017
($ in thousands)
Year		Fixed Rate (1)		Floating Rate (1)		Total		% of Total		Weighted Average Rates on Fixed Rate Debt (1)		Weighted Average Rates on Total Debt (1)
2017		$	105,731			$	230,100		(2)	$	335,831				3.7	%			7.08	%			3.20	%
2018			49,734				97,235				146,969				1.6	%			5.55	%			2.99	%
2019			506,731		(3)		470,644				977,375				10.7	%			5.17	%			3.58	%
2020			1,678,592		(4)		400				1,678,992				18.5	%			5.49	%			5.49	%
2021			927,506				300				927,806				10.2	%			4.64	%			4.64	%
2022			265,341				400				265,741				2.9	%			3.26	%			3.26	%
2023			1,326,800				4,400				1,331,200				14.6	%			3.74	%			3.73	%
2024			1,272				10,500				11,772				0.1	%			4.79	%			1.39	%
2025			451,334				12,800				464,134				5.1	%			3.38	%			3.31	%
2026			593,424				14,000				607,424				6.7	%			3.59	%			3.53	%
2027+			1,826,437				535,265				2,361,702				25.9	%			4.15	%			3.43	%
Subtotal			7,732,902				1,376,044				9,108,946				100.0	%			4.39	%			3.97	%
Deferred Financing Costs and Unamortized (Discount)			(55,293	)			(61,381	)			(116,674	)		N/A			N/A			N/A
Total		$	7,677,609			$	1,314,663			$	8,992,272				100.0	%			4.39	%			3.97	%

(1)		Net of the effect of any derivative instruments. Weighted average rates are as of September 30, 2017.
(2)		Includes $230.0 million in principal outstanding on the Company's commercial paper program.
(3)		Includes a $500.0 million 5.19% mortgage loan with a maturity date of October 1, 2019 that can be prepaid at par beginning October 1, 2018.
(4)		Includes a $550.0 million 6.08% mortgage loan with a maturity date of March 1, 2020 that can be prepaid at par beginning March 1, 2019. Also includes a $500.0 million 5.78% mortgage loan with a maturity date of July 1, 2020 that can be prepaid at par beginning July 1, 2019.

Equity Residential
Selected Unsecured Public Debt Covenants
		September 30,		June 30,
		2017		2017
Total Debt to Adjusted Total Assets (not to exceed 60%)		34.8%		35.0%
Secured Debt to Adjusted Total Assets (not to exceed 40%)		14.0%		14.6%
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1)		4.07		4.20
Total Unsecured Assets to Unsecured Debt
(must be at least 150%)		377.6%		378.3%

Note: These selected covenants relate to ERP Operating Limited Partnership's ("ERPOP") outstanding unsecured public debt, which represent the Company's most restrictive covenants. Equity Residential is the general partner of ERPOP.

Selected Credit Ratios
		September 30,		June 30,
		2017		2017
Total debt to Normalized EBITDA		5.70x		5.72x
Net debt to Normalized EBITDA		5.67x		5.69x
Unencumbered NOI as a % of total NOI		74.0%		72.9%

Note: See page 24 for the Normalized EBITDA reconciliations.

Equity Residential
Capital Structure as of September 30, 2017
(Amounts in thousands except for share/unit and per share amounts)
Secured Debt										$	3,619,180				40.2	%
Unsecured Debt											5,373,092				59.8	%
Total Debt											8,992,272				100.0	%			26.3	%
Common Shares (includes Restricted Shares)			367,462,480				96.4	%
Units (includes OP Units and Restricted Units)			13,809,987				3.6	%
Total Shares and Units			381,272,467				100.0	%
Common Share Price at September 30, 2017		$	65.93
											25,137,294				99.9	%
Perpetual Preferred Equity (see below)											37,280				0.1	%
Total Equity											25,174,574				100.0	%			73.7	%
Total Market Capitalization										$	34,166,846								100.0	%

Perpetual Preferred Equity as of September 30, 2017
(Amounts in thousands except for share and per share amounts)
Series			Call Date			Outstanding Shares			Liquidation Value			Annual Dividend Per Share			Annual Dividend Amount
Preferred Shares:
8.29% Series K			12/10/26			745,600			$	37,280			$	4.145			$	3,091
Total Perpetual Preferred Equity						745,600			$	37,280							$	3,091

Equity Residential
Common Share and Unit
Weighted Average Amounts Outstanding
		YTD Q3 2017		YTD Q3 2016		Q3 2017		Q3 2016
Weighted Average Amounts Outstanding for Net Income Purposes:
Common Shares - basic			366,808,624				364,916,765				366,996,226				365,109,088
Shares issuable from assumed conversion/vesting of:
- OP Units			12,907,381				13,827,914				12,910,146				13,898,660
- long-term compensation shares/units			2,924,290				3,539,383				3,038,141				3,365,546
Total Common Shares and Units - diluted			382,640,295				382,284,062				382,944,513				382,373,294
Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:
Common Shares - basic			366,808,624				364,916,765				366,996,226				365,109,088
OP Units - basic			12,907,381				13,827,914				12,910,146				13,898,660
Total Common Shares and OP Units - basic			379,716,005				378,744,679				379,906,372				379,007,748
Shares issuable from assumed conversion/vesting of:
- long-term compensation shares/units			2,924,290				3,539,383				3,038,141				3,365,546
Total Common Shares and Units - diluted			382,640,295				382,284,062				382,944,513				382,373,294
Period Ending Amounts Outstanding:
Common Shares (includes Restricted Shares)			367,462,480				365,657,065
Units (includes OP Units and Restricted Units)			13,809,987				14,627,745
Total Shares and Units			381,272,467				380,284,810

Equity Residential
Partially Owned Entities as of September 30, 2017
(Amounts in thousands except for property and apartment unit amounts)
		Consolidated		Unconsolidated
Total properties			17				2
Total apartment units			3,215				945
Operating information for the nine months ended 9/30/17 (at 100%):
Operating revenue		$	69,917			$	23,855
Operating expenses			17,056				8,319
Net operating income			52,861				15,536
Property management			2,463				640
General and administrative/other			239				128
Depreciation			15,569				12,086
Operating income			34,590				2,682
Interest and other income			45				—
Interest:
Expense incurred, net			(9,977	)			(6,217	)
Amortization of deferred financing costs			(203	)			(1	)
Income (loss) before income and other taxes and (loss)
from investments in unconsolidated entities			24,455				(3,536	)
Income and other tax (expense) benefit			(34	)			(13	)
(Loss) from investments in unconsolidated entities			(1,155	)			—
Net income (loss)		$	23,266			$	(3,549	)
Debt - Secured (1):
EQR Ownership (2)		$	237,056			$	29,085
Noncontrolling Ownership			64,981				116,339
Total (at 100%)		$	302,037			$	145,424

(1)		All debt is non-recourse to the Company.
(2)		Represents the Company's current equity ownership interest.

Equity Residential
Development and Lease-Up Projects as of September 30, 2017
(Amounts in thousands except for project and apartment unit amounts)
Projects		Location		No. of Apartment Units		Total Budgeted Capital Cost		Total Book Value to Date		Total Book Value Not Placed in Service		Total Debt		Percentage Completed		Percentage Leased		Percentage Occupied		Estimated Completion Date		Estimated Stabilization Date
Projects Under Development:
Cascade		Seattle, WA			477			$	176,378			$	164,091			$	76,678			$	—				95	%			43	%			41	%		Q4 2017		Q2 2019
855 Brannan		San Francisco, CA			449				304,035				284,717				161,699				—				94	%			40	%			33	%		Q1 2018		Q1 2019
100 K Street		Washington, DC			222				88,023				38,225				38,225				—				28	%			—				—			Q4 2018		Q4 2019
1401 E. Madison		Seattle, WA			137				62,352				16,462				16,462				—				1	%			—				—			Q3 2019		Q1 2020
Projects Under Development					1,285				630,788				503,495				293,064				—
Completed Not Stabilized (1):
Altitude (formerly Village at Howard Hughes)		Los Angeles, CA			545				193,231				190,758				—				—								95	%			95	%		Completed		Q4 2017
The Alton (formerly Millikan)		Irvine, CA			344				107,981				106,651				—				—								92	%			91	%		Completed		Q4 2017
One Henry Adams		San Francisco, CA			241				169,437				166,917				—				—								92	%			90	%		Completed		Q4 2017
455 Eye Street		Washington, DC			174				73,157				72,056				—				—								80	%			69	%		Completed		Q1 2018
Helios (formerly 2nd & Pine)		Seattle, WA			398				227,287				218,000				—				—								36	%			33	%		Completed		Q2 2019
Projects Completed Not Stabilized					1,702				771,093				754,382				—				—
Completed and Stabilized During the Quarter:
Projects Completed and Stabilized During the Quarter					—				—				—				—				—
Total Development Projects					2,987			$	1,401,881			$	1,257,877			$	293,064			$	—
Land Held for Development				N/A			N/A			$	99,073			$	99,073			$	—
NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS																						Total Capital		Q3 2017
																								Cost		NOI
Projects Under Development																								$	630,788			$	1,737
Completed Not Stabilized																									771,093				5,583
Completed and Stabilized During the Quarter																									—				—
Total Development NOI Contribution																								$	1,401,881			$	7,320

Note: All development projects listed are wholly owned by the Company.

(1)

Properties included here are substantially complete. However, they may still require additional exterior and interior work for all apartment units to be available for leasing.

Equity Residential
Capital Expenditures to Real Estate
For the Nine Months Ended September 30, 2017
(Amounts in thousands except for apartment unit and per apartment unit amounts)
			Same Store Properties		Non-Same Store Properties/Other		Total		Same Store Avg. Per Apartment Unit
Total Apartment Units (1)				70,285				7,072				77,357
Building Improvements			$	75,369			$	2,379			$	77,748			$	1,072
Rehab Expenditures (2)				35,698				889				36,587				508
Replacements				28,571				352				28,923				407
Total Capital Expenditures			$	139,638			$	3,620			$	143,258			$	1,987

Note: See pages 27 through 30 for the definitions of non-GAAP financial measures and other terms.

(1)		Total Apartment Units - Excludes 945 unconsolidated apartment units for which capital expenditures to real estate are self-funded and do not consolidate into the Company's results.
(2)		Rehab Expenditures on same store properties for the nine months ended September 30, 2017 approximated $13,000 per apartment unit rehabbed.

Equity Residential
Normalized EBITDA Reconciliations
(Amounts in thousands)
Normalized EBITDA Reconciliations for Page 18
		Trailing Twelve Months		2017		2016
		September 30, 2017		June 30, 2017		Q3		Q2		Q1		Q4		Q3
Net income		$	800,678			$	873,974			$	144,196			$	204,160			$	149,941			$	302,381			$	217,492
Interest expense incurred, net			384,509				379,716				91,145				91,224				106,210				95,930				86,352
Amortization of deferred financing costs			9,080				9,277				2,064				2,087				2,296				2,633				2,261
Depreciation			720,371				715,501				184,100				179,896				178,968				177,407				179,230
Income and other tax expense (benefit) (includes discontinued operations)			1,135				1,333				228				220				262				425				426
EBITDA			1,915,773				1,979,801				421,733				477,587				437,677				578,776				485,761
Write-off of pursuit costs (other expenses)			3,042				3,075				783				831				715				713				816
Loss (income) from investments in unconsolidated entities			3,198				(4,950	)			398				682				1,073				1,045				(7,750	)
Net (gain) loss on sales of land parcels			(19,142	)			(23,179	)			—				23				(19,193	)			28				(4,037	)
Loss (gain) on sale of investment securities and other investments (interest and other income)			7				(3,253	)			—				—				—				7				(3,260	)
Insurance/litigation settlement or reserve income (interest and other income)			(5,053	)			(3,070	)			(3,500	)			(836	)			(380	)			(337	)			(1,517	)
Insurance/litigation/environmental settlement or reserve expense (other expenses)			(4,837	)			4,502				—				(56	)			293				(5,074	)			9,339
Other			657				899				95				93				96				373				337
Net (gain) on sales of discontinued operations			—				(28	)			—				—				—				—				(28	)
Net (gain) on sales of real estate properties			(314,945	)			(387,653	)			(17,328	)			(87,726	)			(36,707	)			(173,184	)			(90,036	)
Normalized EBITDA		$	1,578,700			$	1,566,144			$	402,181			$	390,598			$	383,574			$	402,347			$	389,625
Balance Sheet Items:		September 30, 2017		June 30, 2017
Total debt		$	8,992,272			$	8,964,089
Cash and cash equivalents			(46,565	)			(37,719	)
Mortgage principal reserves/sinking funds			(1,595	)			(11,525	)
Net debt		$	8,944,112			$	8,914,845

Equity Residential
Adjustments from FFO to Normalized FFO
(Amounts in thousands)
		Nine Months Ended September 30,		Quarter Ended September 30,
		2017		2016		Variance		2017		2016		Variance
Impairment		$	—			$	—			$	—			$	—			$	—			$	—
Asset impairment and valuation allowances			—				—				—				—				—				—
Write-off of pursuit costs (other expenses)			2,329				3,379				(1,050	)			783				816				(33	)
Write-off of pursuit costs			2,329				3,379				(1,050	)			783				816				(33	)
Prepayment premiums/penalties (interest expense)			12,258				112,419				(100,161	)			—				—				—
Write-off of unamortized deferred financing costs (interest expense)			251				3,363				(3,112	)			8				112				(104	)
Write-off of unamortized (premiums)/discounts/OCI (interest expense)			(720	)			4,494				(5,214	)			(621	)			—				(621	)
Debt extinguishment (gains) losses, including prepayment penalties,
preferred share redemptions and non-cash convertible debt discounts			11,789				120,276				(108,487	)			(613	)			112				(725	)
Net (gain) on sales of land parcels			(19,170	)			(15,759	)			(3,411	)			—				(4,037	)			4,037
Net (gain) on sales of unconsolidated entities - non-operating assets			(205	)			(81	)			(124	)			(205	)			(81	)			(124	)
(Gain) on sale of investment securities and other investments (interest and
other income)			—				(58,416	)			58,416				—				(3,260	)			3,260
Loss (income) from investments in unconsolidated entities ─ non-operating assets			20				656				(636	)			(200	)			371				(571	)
(Gains) losses on sales of non-operating assets, net of income and other tax
expense (benefit)			(19,355	)			(73,600	)			54,245				(405	)			(7,007	)			6,602
Insurance/litigation settlement or reserve income (interest and other income)			(4,716	)			(2,891	)			(1,825	)			(3,500	)			(1,517	)			(1,983	)
Insurance/litigation/environmental settlement or reserve expense (other expenses)			237				9,098				(8,861	)			—				9,339				(9,339	)
Other			284				2,466				(2,182	)			95				337				(242	)
Other miscellaneous items			(4,195	)			8,673				(12,868	)			(3,405	)			8,159				(11,564	)
Adjustments from FFO to Normalized FFO		$	(9,432	)		$	58,728			$	(68,160	)		$	(3,640	)		$	2,080			$	(5,720	)

Note: See pages 27 through 30 for the definitions of non-GAAP financial measures and other terms as well as the reconciliations of EPS to FFO per share and Normalized FFO per share.

Equity Residential

Normalized FFO Guidance and Assumptions

The guidance/projections provided below are based on current expectations and are forward-looking. All guidance is given on a Normalized FFO basis. Therefore, certain items excluded from Normalized FFO, such as debt extinguishment costs/prepayment penalties and the write-off of pursuit costs, are not included in the estimates provided on this page. See pages 27 through 30 for the definitions of non-GAAP financial measures and other terms as well as the reconciliations of EPS to FFO per share and Normalized FFO per share.

2017 Normalized FFO Guidance (per share diluted)
		Q4 2017		2017
Expected Normalized FFO Per Share		$0.79 to $0.83		$3.10 to $3.14
2017 Same Store Assumptions
Physical Occupancy				95.9%
Revenue change				2.2%
Expense change				3.2%
NOI change				1.8%

Note: Approximately 25 basis point change in NOI percentage = $0.01 per share change in EPS/FFO per share/Normalized FFO per share.

2017 Transaction Assumptions
Consolidated rental acquisitions						$468.0 million
Consolidated rental dispositions						$500.0 million
Spread between Acquisition Cap Rate and Disposition Yield						50 basis points

2017 Debt Assumptions
Weighted average debt outstanding		$8.95 billion to $9.05 billion
Weighted average interest rate (reduced for capitalized interest)		4.14%
Interest expense, net (on a Normalized FFO basis)		$370.5 million to $374.7 million
Capitalized interest		$25.0 million to $27.0 million

2017 Capital Expenditures to Real Estate Assumptions
					Per Same Store Apartment Unit		Total
Total Capital Expenditures to Real Estate					$2,500		$176.0 million

Note: During 2017, the Company expects to spend approximately $43.0 million for apartment unit Rehab Expenditures on same store properties at an average cost of approximately $13,000 per apartment unit rehabbed.

2017 Other Guidance Assumptions
Property management expense				$85.0 million
General and administrative expense (see Note below)				$52.0 million
Interest and other income				$1.2 million
Income and other tax expense				$1.0 million
Debt offerings				No additional amounts budgeted
Equity ATM share offerings				No amounts budgeted
Preferred share offerings				No amounts budgeted
Weighted average Common Shares and Units - Diluted				382.7 million

Note: Normalized FFO guidance excludes a duplicative charge of approximately $0.4 million, which will be recorded to general and administrative expense, related to the overlap of accounting costs for the Company's current and former executive compensation programs.

Equity Residential

Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms

(Amounts in thousands except per share and per apartment unit data)

(All per share data is diluted)

This Earnings Release and Supplemental Information includes certain non-GAAP financial measures and other terms that management believes are helpful in understanding our business. The definitions and calculations of these non-GAAP financial measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. These non-GAAP financial measures should not be considered as an alternative to net earnings or any other GAAP measurement of performance or as an alternative to cash flows from specific operating, investing or financing activities. Furthermore, these non-GAAP financial measures are not intended to be a measure of cash flow or liquidity.

Acquisition Capitalization Rate or Cap Rate – NOI that the Company anticipates receiving in the next 12 months (or the year two or three stabilized NOI for properties that are in lease-up at acquisition) less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross purchase price of the asset. The weighted average Acquisition Cap Rate for acquired properties is weighted based on the projected NOI streams and the relative purchase price for each respective property.

Average Rental Rate – Total residential rental revenues reflected on a straight-line basis in accordance with GAAP divided by the weighted average occupied apartment units for the reporting period presented.

Capital Expenditures to Real Estate:

Building Improvements – Includes roof replacement, paving, building mechanical equipment systems, exterior siding and painting, major landscaping, furniture, fixtures and equipment for amenities and common areas, vehicles and office and maintenance equipment.

Rehab Expenditures – Apartment unit renovation costs (primarily kitchens and baths) designed to reposition these units for higher rental levels in their respective markets.

Replacements – Includes appliances, mechanical equipment, fixtures and flooring (including hardwood and carpeting).

Debt Covenant Compliance – Our unsecured debt includes certain financial and operating covenants including, among other things, maintenance of certain financial ratios. These provisions are contained in the indentures applicable to each notes payable or the credit agreement for our line of credit. The Debt Covenant Compliance ratios that are provided show the Company's compliance with certain covenants governing our public unsecured debt. These covenants generally reflect our most restrictive financial covenants. The Company was in compliance with its unsecured debt covenants for all years presented (the ratios should not be used for any other purpose, including without limitation, to evaluate the Company's financial condition or results of operations, nor do they indicate the Company's covenant compliance as of any other date or for any other period).

Development Yield – NOI that the Company anticipates receiving in the next 12 months following stabilization less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $50-$150 per apartment unit depending on the type of asset) divided by the Total Capital Cost of the asset. The weighted average Development Yield for development properties is weighted based on the projected NOI streams and the relative Total Capital Cost for each respective property.

Disposition Yield – NOI that the Company anticipates giving up in the next 12 months less an estimate of property management costs/management fees allocated to the project (generally ranging from 2.0% to 4.0% of revenues depending on the size and income streams of the asset) and less an estimate for in-the-unit replacement capital expenditures (generally ranging from $100-$450 per apartment unit depending on the age and condition of the asset) divided by the gross sale price of the asset. The weighted average Disposition Yield for sold properties is weighted based on the projected NOI streams and the relative sales price for each respective property.

Earnings Per Share ("EPS") – Net income per share calculated in accordance with GAAP. Expected EPS is calculated on a basis consistent with actual EPS. Due to the uncertain timing and extent of property dispositions and the resulting gains/losses on sales, actual EPS could differ materially from expected EPS.

Economic Gain – Economic Gain is calculated as the net gain on sales of real estate properties in accordance with GAAP, excluding accumulated depreciation. The Company generally considers Economic Gain to be an appropriate supplemental measure to net gain on sales of real estate properties in accordance with GAAP because it is one indication of the gross value created by the Company's acquisition, development, rehab, management and ultimate sale of a property and because it helps investors to understand the relationship between the cash proceeds from a sale and the cash invested in the sold property. The following table presents a reconciliation of net gain on sales of real estate properties in accordance with GAAP to Economic Gain:

		Nine Months Ended September 30, 2017		Quarter Ended September 30, 2017
Net Gain on Sales of Real Estate Properties		$	141,761			$	17,328
Accumulated Depreciation Gain			(54,236	)			(6,499	)
Economic Gain		$	87,525			$	10,829

Equity Residential

Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms – Continued

(Amounts in thousands except per share and per apartment unit data)

(All per share data is diluted)

Funds From Operations and Normalized Funds From Operations:

Funds From Operations ("FFO") – The National Association of Real Estate Investment Trusts ("NAREIT") defines 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 and impairment write-downs of depreciable operating properties, 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. Expected FFO per share is calculated on a basis consistent with actual FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.

The Company believes that FFO and FFO available to Common Shares and 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 Units can help compare the operating performance of a company's real estate between periods or as compared to different companies.

Normalized Funds From Operations ("Normalized FFO") – Normalized FFO begins with FFO and excludes:

• the impact of any expenses relating to non-operating asset impairment and valuation allowances;

• pursuit cost write-offs;

• gains and losses from early debt extinguishment, including prepayment penalties, preferred share redemptions and the cost related to the implied option value of non-cash convertible debt discounts;

• gains and losses on the sales of non-operating assets, including gains and losses from land parcel sales, net of the effect of income tax benefits or expenses; and

• other miscellaneous items.

Expected Normalized FFO per share is calculated on a basis consistent with actual Normalized FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.

The Company believes that Normalized FFO and Normalized FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company's operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual operating results.

FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and 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, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and 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, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and 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.

FFO available to Common Shares and Units and Normalized FFO available to Common Shares and Units are 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 GAAP. 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 "Noncontrolling Interests – Operating Partnership". Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.

Equity Residential

Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms – Continued

(Amounts in thousands except per share and per apartment unit data)

(All per share data is diluted)

The following table presents reconciliations of EPS to FFO per share and Normalized FFO per share for pages 7 and 26 (the expected guidance/projections provided below are based on current expectations and are forward-looking):

		Actual Sept.			Actual Sept.			Actual			Actual			Expected		Expected
		YTD 2017			YTD 2016			Q3 2017			Q3 2016			Q4 2017		2017
		Per Share			Per Share			Per Share			Per Share			Per Share		Per Share
EPS - Diluted		$	1.29			$	10.92			$	0.37			$	0.56			$0.59 to $0.63		$1.88 to $1.92
Add: Depreciation expense			1.41				1.37				0.48				0.47			0.48		1.89
Less: Net gain on sales			(0.37	)			(10.15	)			(0.04	)			(0.26	)		(0.28)		(0.65)
FFO per share - Diluted			2.33				2.14				0.81				0.77			0.79 to 0.83		3.12 to 3.16
Asset impairment and valuation allowances			—				—				—				—			—		—
Write-off of pursuit costs			0.01				0.01				—				—			—		0.01
Debt extinguishment (gains) losses, including
prepayment penalties, preferred share
redemptions and non-cash convertible debt
discounts			0.03				0.31				—				—			—		0.03
(Gains) losses on sales of non-operating assets,
net of income and other tax expense (benefit)			(0.05	)			(0.19	)			—				(0.01	)		—		(0.05)
Other miscellaneous items			(0.01	)			0.02				(0.01	)			0.02			—		(0.01)
Normalized FFO per share - Diluted		$	2.31			$	2.29			$	0.80			$	0.78			$0.79 to $0.83		$3.10 to $3.14

Lease-Up NOI – Represents NOI for development properties: (i) in various stages of lease-up; and (ii) where lease-up has been completed but the properties were not stabilized (defined as having achieved 90% occupancy for three consecutive months) for all of the current and comparable periods presented.

Net Operating Income ("NOI") – NOI is the Company's primary financial measure for evaluating each of its apartment properties. NOI is defined as rental income less direct property operating expenses (including real estate taxes and insurance). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company's apartment properties. NOI does not include an allocation of property management expenses either in the current or comparable periods. Rental income for all leases and operating expense for ground leases (for both same store and non-same store properties) are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.

The following tables present reconciliations of operating income per the consolidated statements of operations to NOI, along with rental income, operating expenses and NOI per the consolidated statements of operations allocated between same store and non-same store/other results (see page 11):

		Nine Months Ended September 30,		Quarter Ended September 30,
		2017		2016		2017		2016
Operating income		$	632,707			$	632,016			$	217,786			$	209,373
Adjustments:
Fee and asset management revenue			(532	)			(3,351	)			(171	)			(218	)
Property management			64,702				64,003				20,861				19,517
General and administrative			40,366				47,408				12,567				12,395
Depreciation			542,964				528,242				184,100				179,230
Total NOI		$	1,280,207			$	1,268,318			$	435,143			$	420,297
Rental income:
Same store		$	1,685,303			$	1,647,988			$	587,142			$	574,594
Non-same store/other			154,867				168,972				36,809				31,262
Total rental income			1,840,170				1,816,960				623,951				605,856
Operating expenses:
Same store			496,232				482,410				173,844				171,019
Non-same store/other			63,731				66,232				14,964				14,540
Total operating expenses			559,963				548,642				188,808				185,559
NOI:
Same store			1,189,071				1,165,578				413,298				403,575
Non-same store/other			91,136				102,740				21,845				16,722
Total NOI		$	1,280,207			$	1,268,318			$	435,143			$	420,297

Equity Residential

Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms – Continued

(Amounts in thousands except per share and per apartment unit data)

(All per share data is diluted)

Non-Same Store Properties – For annual comparisons, primarily includes all properties acquired during 2016 and 2017, plus any properties in lease-up and not stabilized as of January 1, 2016.

Normalized Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA") – Represents net income in accordance with GAAP before interest expense, income taxes, depreciation expense and amortization expense and further adjusted for non-comparable items. Normalized EBITDA, total debt to Normalized EBITDA and net debt to Normalized EBITDA are important metrics in evaluating the credit strength of the Company and its ability to service its debt obligations. The Company believes that Normalized EBITDA, total debt to Normalized EBITDA and net debt to Normalized EBITDA are useful to investors, creditors and rating agencies because they allow investors to compare the Company's credit strength to prior reporting periods and to other companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual credit quality.

Physical Occupancy – The weighted average occupied apartment units for the reporting period divided by the average of total apartment units available for rent for the reporting period.

Same Store Properties – For annual comparisons, primarily includes all properties acquired or completed that are stabilized prior to January 1, 2016, less properties subsequently sold. Properties are included in Same Store when they are stabilized for all of the current and comparable periods presented.

% of Stabilized NOI – Represents budgeted 2017 NOI for stabilized properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up.

Total Budgeted Capital Cost – Estimated cost for projects under development and/or developed and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all projects, including land acquisition costs, construction costs, capitalized real estate taxes and insurance, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, all in accordance with GAAP.

Total Market Capitalization – The aggregate of the market value of the Company's outstanding common shares, including restricted shares, the market value of the Company's operating partnership units outstanding, including restricted units (based on the market value of the Company's common shares) and the outstanding principal balance of debt. The Company believes this is a useful measure of a real estate operating company's long-term liquidity and balance sheet strength, because it shows an approximate relationship between a company's total debt and the current total market value of its assets based on the current price at which the Company's common shares trade. However, because this measure of leverage changes with fluctuations in the Company's share price, which occur regularly, this measure may change even when the Company's earnings, interest and debt levels remain stable.

Turnover – Total residential move-outs divided by total residential apartment units, including inter-property and intra-property transfers.

Unencumbered NOI % – Represents NOI generated by consolidated real estate assets unencumbered by outstanding secured debt as a percentage of total NOI generated by all of the Company's consolidated real estate assets.

Unlevered Internal Rate of Return ("IRR") – The Unlevered IRR on sold properties is the compound annual rate of return calculated by the Company based on the timing and amount of: (i) the gross purchase price of the property plus any direct acquisition costs incurred by the Company; (ii) total revenues earned during the Company's ownership period; (iii) total direct property operating expenses (including real estate taxes and insurance) incurred during the Company's ownership period; (iv) capital expenditures incurred during the Company's ownership period; and (v) the gross sales price of the property net of selling costs. Each of the items (i) through (v) is calculated in accordance with GAAP.

The calculation of the Unlevered IRR does not include an adjustment for the Company's general and administrative expense, interest expense (including loan assumption costs and other loan-related costs) or property management expense. Therefore, the Unlevered IRR is not a substitute for net income as a measure of our performance. Management believes that the Unlevered IRR achieved during the period a property is owned by the Company is useful because it is one indication of the gross value created by the Company's acquisition, development, rehab, management and ultimate sale of a property, before the impact of Company overhead. The Unlevered IRR achieved on the properties as cited in this release should not be viewed as an indication of the gross value created with respect to other properties owned by the Company, and the Company does not represent that it will achieve similar Unlevered IRRs upon the disposition of other properties. The weighted average Unlevered IRR for sold properties is weighted based on all cash flows over the investment period for each respective property, including net sales proceeds.

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