EQUITY RESIDENTIAL Management report and analysis of the financial situation and operating results (Form 10-Q)

For further information including definitions for capitalized terms not defined
herein, refer to the consolidated financial statements and footnotes thereto
included in the Company's and the Operating Partnership's Annual Report on Form
10-K for the year ended December 31, 2020. In addition, please refer to the
Definitions section below for various capitalized terms not immediately defined
in this Item 2, Management's Discussion and Analysis of Financial Condition and
Results of Operations.

Forward-looking statements

Forward-looking statements are intended to be made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
statements are based on current expectations, estimates, projections and
assumptions made by management. While the Company's management believes the
assumptions underlying its forward-looking statements are reasonable, such
information is inherently subject to uncertainties and may involve certain
risks, which could cause actual results, performance or achievements of the
Company to differ materially from anticipated future results, performance or
achievements expressed or implied by such forward-looking statements. Many of
these uncertainties and risks are difficult to predict and beyond management's
control, such as the current novel coronavirus ("COVID-19") pandemic (see below
for further discussion). Forward-looking statements are not guarantees of future
performance, results or events. The forward-looking statements contained herein
are made as of the date hereof and the Company undertakes no obligation to
update or supplement these forward-looking statements.

In addition, these forward-looking statements are subject to risks related to
the COVID-19 pandemic and its accompanying variants, many of which are unknown,
including the duration, severity and the extent of the adverse health impact on
the general population, our residents and employees, the rate of vaccine
distribution and effectiveness of vaccinations, the overall reopening progress
in the cities in which we operate, the potential long-term changes in customer
preferences for living in our communities and the impact of operational changes
we have implemented and may implement in response to the pandemic.

Additional factors that might cause such differences are discussed in Part I of
the Company's and the Operating Partnership's Annual Report on Form 10-K for the
year ended December 31, 2020, particularly those under Item 1A, Risk Factors.

Forward-looking statements and related uncertainties are also included in the
Notes to Consolidated Financial Statements in this report. The 2021 guidance
assumptions disclosed throughout this Item 2 are based on current expectations
and are forward-looking.


Equity Residential ("EQR") is committed to creating communities where people
thrive. The Company, a member of the S&P 500, is focused on the acquisition,
development and management of residential properties located in and around
dynamic cities that attract high quality long-term renters. ERP Operating
Limited Partnership ("ERPOP") is focused on conducting the multifamily property
business of EQR. EQR is a Maryland real estate investment trust ("REIT") formed
in March 1993 and ERPOP is an Illinois limited partnership formed in May
1993. 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.

EQR is the general partner of, and as of September 30, 2021 owned an approximate
96.7% ownership interest in, ERPOP. 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 issues equity from time to time, the net proceeds of
which it is obligated to contribute to ERPOP, but 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.

The registered office of the Company is located at Chicago, Illinois and the Company also operates regional property management offices in most of its markets.


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Available Information

You may access our Annual Report on Form 10-K, our Quarterly Reports on Form
10-Q, our Current Reports on Form 8-K, our proxy statements and any amendments
to any of those reports/statements we file with the Securities and Exchange
Commission ("SEC") free of charge on our website,
www.equityapartments.com. These reports/statements are made available on our
website as soon as reasonably practicable after we file them with the SEC. The
information contained on our website, including any information referred to in
this report as being available on our website, is not a part of or incorporated
into this report.

Business objectives and operating and investment strategies

The Company's and the Operating Partnership's overall business objectives and
operating and investing strategies have not changed from the information
included in the Company's and the Operating Partnership's Annual Report on Form
10-K for the year ended December 31, 2020. As more fully discussed in the
Company's and the Operating Partnership's Annual Report on Form 10-K, it
continues to be the Company's intention over time, through varying degrees of
both acquisitions and new wholly-owned and joint venture development projects,
to further diversify its portfolio into select new expansion markets that share
similar characteristics as its current established markets and to optimize the
mix of the Company's properties located in urban vs. dense suburban submarkets
within its markets.

COVID-19 Impact

The overall impact from the COVID-19 pandemic on the Company and the Operating
Partnership has not changed materially from the information included in the
Company's and the Operating Partnership's Annual Report on Form 10-K for the
year ended December 31, 2020. As more fully discussed in the Company's and the
Operating Partnership's Annual Report on Form 10-K, despite the impact of
COVID-19, we continue to believe that the long-term prospects for our business
remain strong. See the Results of Operations discussion below for additional
information on how the ongoing recovery from the COVID-19 pandemic is currently
impacting our markets and operations.

Results of operations

Transactions 2021

In conjunction with our business objectives and our operating and investment strategies, the following table provides an overview of the transactions that took place during the nine months ended. September 30, 2021:

                             Portfolio Rollforward

                                ($ in thousands)

                                                             Apartment                            Acquisition
                                            Properties         Units         Purchase Price        Cap Rate
                              12/31/2020            304          77,889
Consolidated Rental Properties                        8           2,128     $        684,725               3.9 %
Consolidated Rental Properties - Not
Stabilized (1)                                        3             793     $        335,700               4.1 %
Unconsolidated Land Parcels (2)                       -               -     $         55,409
                                                                              Sales Price            Yield
Consolidated Rental Properties                      (10 )        (1,842 )   $     (1,021,800 )            (3.8 )%
Completed Developments - Consolidated                 2             354
                               9/30/2021            307          79,322

(1) The Company acquired three properties during the nine months ended September

30, 2021, one each in the Denver, Atlanta and Seattle markets, which are in

rental and are expected to stabilize in their second year of ownership at

the combined acquisition ceiling rate indicated above.

(2) The Company has entered into separate unconsolidated joint ventures for the

aim to develop vacant plots in Denver, CO and suburbs New

York, New York State. The indicated purchase price represents the total consideration for

the closing of the respective joint ventures. The Company’s total investment

in these two joint ventures is approximately $ 24.9 million from September

    30, 2021. See Notes 6 and 12 in the Notes to Consolidated Financial
    Statements for additional discussion.

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The consolidated properties acquired are located in the Atlanta (3), Austin (2),
Boston, Dallas/Ft. Worth (2), Denver, Seattle and Washington D.C. markets. The
Atlanta, Austin and Dallas/Ft. Worth acquisitions marked the Company's re-entry
into these markets. The unconsolidated land parcels acquired were located in the
Denver and suburban New York markets. The consolidated properties disposed of
were located in the Los Angeles, New York, San Francisco and Seattle markets and
the sales generated an Unlevered IRR of 9.2%. The consolidated property
development completions were located in the San Francisco and Washington D.C.
markets. Finally, the Company commenced construction on one consolidated and two
unconsolidated new apartment properties, located in the Denver, New York and
Washington D.C. markets, consisting of 971 apartment units totaling
approximately $372.7 million of expected development costs. See Note 4 in the
Notes to Consolidated Financial Statements for additional discussion regarding
the Company's real estate transactions.

The Company's guidance assumes consolidated rental acquisitions of $1.5 billion
and consolidated rental dispositions of $1.5 billion and expects that the
Acquisition Cap Rate will be approximately equal to the Disposition Yield for
the full year ending December 31, 2021. We currently anticipate spending
approximately $300.0 million on development costs during the year ending
December 31, 2021, of which approximately $197.7 million was spent during the
nine months ended September 30, 2021, primarily for consolidated and
unconsolidated properties currently under construction. Certain of these costs
are expected to be funded by joint venture partner obligations and third-party
construction mortgages. Work at all of our development projects continues with
no material delays or cost overruns notwithstanding some brief disruptions from
governmental construction moratoriums due to COVID-19.

Toll Brothers Joint Ventures

In August 2021, the Company entered into a strategic partnership with Toll
Brothers, Inc. (NYSE: TOL) to develop apartment communities in key markets. The
partnership will focus on selectively acquiring and developing sites for
apartment rental communities in seven metro markets where both parties have a
significant or growing presence: Atlanta, Austin, Boston, Dallas/Ft. Worth,
Denver, Orange County/San Diego and Seattle. Toll Brothers will act as managing
member of each project overseeing approvals, design and construction. See Notes
12 and 14 in the Notes to Consolidated Financial Statements for additional

Same store results

Properties that the Company owned and were stabilized (see definition below) for
all of both of the nine months ended September 30, 2021 and 2020 (the
"Nine-Month 2021 Same Store Properties"), which represented 75,288 apartment
units, drove the Company's results of operations. The Nine-Month 2021 Same Store
Properties are discussed in the following paragraphs.

The Company's primary financial measure for evaluating each of its apartment
communities is net operating income ("NOI"). NOI represents 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.

The following tables provide a rollforward of the apartment units included in
Same Store Properties and a reconciliation of apartment units included in Same
Store Properties to those included in Total Properties for the nine months ended
September 30, 2021:

                                                     Nine Months Ended September 30, 2021
                                                   Properties                     Units
Same Store Properties at December 31, 2020                    285                        73,585
2019 acquisitions stabilized                                   12                         3,323
2021 dispositions                                             (10 )                      (1,842 )
Lease-up properties stabilized                                  1                           222
Same Store Properties at September 30, 2021                   288                        75,288

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                                                     Nine Months Ended September 30, 2021
                                                   Properties                     Units
Same Store                                                    288                        75,288
Non-Same Store:
2021 acquisitions                                              11                         2,921
2020 acquisitions                                               1                           158
2019 acquisitions not yet stabilized                            1                           217
Lease-up properties not yet stabilized (1)                      5                           737
Other                                                           1                             1
Total Non-Same Store                                           19                         4,034
Total Properties and Apartment Units                          307                        79,322

Note: Properties are considered “stabilized” when they have reached 90% occupancy for three consecutive months. Properties are included in the same store when stabilized for all current and comparable periods presented.

(1) Includes properties at various stages of rental and properties where

the lease has been concluded but the properties have not been stabilized for the

comparable periods presented. Also includes an old third

main rented property that has not been stabilized.

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 results (amounts in thousands):

                                                    Nine Months Ended September 30,
                                                     2021                    2020
Operating income                               $       1,033,958       $         961,384
Property management                                       74,357                  71,513
General and administrative                                43,102                  37,212
Depreciation                                             616,032                 619,003
Net (gain) loss on sales of real estate
properties                                              (587,623 )              (352,218 )
Total NOI                                      $       1,179,826       $       1,336,894
Rental income:
Same store                                     $       1,758,176       $       1,870,199
Non-same store/other                                      60,691                  88,071
Total rental income                                    1,818,867               1,958,270
Operating expenses:
Same store                                               612,705                 593,502
Non-same store/other                                      26,336                  27,874
Total operating expenses                                 639,041                 621,376
Same store                                             1,145,471               1,276,697
Non-same store/other                                      34,355                  60,197
Total NOI                                      $       1,179,826       $       1,336,894

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The following table presents the comparative total of comparable store results and statistics for the nine months of 2021. Same store properties:

                   September YTD 2021 vs. September YTD 2020

   Same Store Results/Statistics Including 75,288 Same Store Apartment Units

                $ in thousands (except for Average Rental Rate)

                                            September YTD 2021                                                                            September YTD 2020
                                          %             Non-               %                           %                                                    Non-
                      Residential      Change        Residential        Change         Total        Change                             Residential 

Total residential

Income $ 1,692,955 (7.3%) $ 65,221 (1) 48.7% $ 1,758,176 (6.0%) Revenue $ 1,826,344

$ 43,855 $ 1,870,199

Expenses $ 594,688 3.1% $ 18,017 8.4% $ 612,705 3.2% Spending $ 576,884 $ 16,618 $ 593,502

        NOI           $  1,098,267       (12.1 %)   $      47,204          73.3 %   $ 1,145,471       (10.3 %)           NOI           $  1,249,460    

$ 27,237 $ 1,276,697

Average Rental Rate   $      2,607        (7.8 %)                                                                Average Rental Rate   $      2,829
Physical Occupancy            95.9 %       0.6 %                                                                 Physical Occupancy            95.3 %
Turnover                      35.0 %      (4.4 %)                                                                Turnover                      39.4 %

Note: Comparable store revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current period and comparable periods.

(1) The change in non-residential same-store sales is mainly due to the

write-off of linear non-residential rental receivables in the third

quarter 2020 and a decrease in bad debts in 2021.

The following table provides results and statistics related to our Residential
same store operations for the nine months ended September 30, 2021 and 2020:

                   September YTD 2021 vs. September YTD 2020

              Same Store Residential Results/Statistics by Market


Increase (decrease) from previous year

                                                    September        September         YTD 2021
                                                     YTD 2021         YTD 2021         Weighted
                                                       % of           Average           Average        September YTD                                                  Average
                                    Apartment         Actual           Rental          Physical            2021                                                       Rental         Physical
      Markets/Metro Areas             Units            NOI              Rate          Occupancy %        Turnover         Revenues       Expenses        NOI           Rate          Occupancy        Turnover
Los Angeles                             15,739             20.4 %   $      2,439              96.5 %            32.2 %         (3.2 %)         1.3 %       (5.2 %)        (4.1 %)           0.9 %          (6.1 %)
Orange County                            4,028              5.6 %          2,281              97.7 %            27.2 %          1.9 %          2.1 %        1.8 %          0.9 %            1.1 %          (7.5 %)
San Diego                                2,706              4.1 %          2,446              97.7 %            34.5 %          3.9 %          1.7 %        4.7 %          3.0 %            0.9 %          (3.1 %)
Subtotal - Southern California          22,473             30.1 %          2,411              96.9 %            31.6 %         (1.5 %)         1.5 %       (2.7 %)        (2.5 %)           1.0 %          (5.9 %)

San Francisco                           12,114             18.6 %          2,877              94.8 %            37.0 %        (13.5 %)         3.4 %      (19.4 %)       (13.0 %)          (0.5 %)         (3.4 %)
Washington D.C.                         14,569             17.8 %          2,326              96.3 %            36.4 %         (4.6 %)         3.9 %       (8.4 %)        (5.2 %)           0.6 %          (1.1 %)
New York                                 9,343             11.7 %          3,463              94.4 %            30.6 %        (11.6 %)         2.9 %      (23.8 %)       (12.1 %)           0.5 %          (8.8 %)
Seattle                                  8,819             10.5 %          2,251              95.8 %            39.1 %         (8.8 %)         4.9 %      (14.3 %)        (9.0 %)           0.2 %          (1.3 %)
Boston                                   6,346              9.5 %          2,853              95.7 %            37.5 %         (7.9 %)         4.0 %      (12.8 %)        (9.3 %)           1.4 %          (5.8 %)
Denver                                   1,624              1.8 %          2,031              96.7 %            45.9 %          1.1 %          4.1 %       (0.2 %)        (0.8 %)           1.8 %          (8.2 %)

Total                                   75,288            100.0 %   $      2,607              95.9 %            35.0 %         (7.3 %)         3.1 %      (12.1 %)        (7.8 %)           0.6 %          (4.4 %)

Note: The above table reflects Residential same store results only. Residential
operations account for approximately 96.2% of total revenues for the nine months
ended September 30, 2021.

The following table provides guidance for our expected comparable store operating performance for the full year 2021 (including residential and non-residential):

                     Revised Full Year 2021     Previous Full Year 2021
Physical Occupancy           96.0%                  95.3% to 96.3%
Revenue change               (3.7%)                (5.0%) to (4.0%)
Expense change               3.25%                  2.75% to 3.25%
NOI change                   (7.0%)                (8.5%) to (7.5%)

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Despite the significant impact from the pandemic on our business, which is
reflected in the results for the nine months ended September 30, 2021, the
recovery across our portfolio continues ahead of our prior expectations. Robust
economic growth coupled with reopening of cities are driving our operations to
recover rapidly with significant demand for our apartments in all our
markets. This has led to high Physical Occupancy, increased pricing power and a
material reduction in Leasing Concessions. Key operating drivers for this
performance include:

• Pricing – There has been a significant improvement in pricing (net of

Rental concessions) since the end of the fourth quarter of 2020, with

prices reaching or exceeding pre-pandemic levels. Portfolio-wide pricing

is now moderating in line with typical seasonal trends and is in line

with our previous expectations. Monthly residential rental concessions

granted also decreased significantly. Residential rental concessions

granted in July 2021 were $ 1.5 million, August 2021 were $ 0.5 million,

September 2021 were $ 0.2 million and preliminary October 2021 should

        to be less than $50,000, which is down from a peak of $6.1 million per
        month in February 2021.

• Physical occupancy – Physical occupancy was 96.6% in the third quarter of

2021 and is expected to remain strong for the remainder of 2021.

• Percentage of residents renewing – Our strategy of focusing on residents

renewals continues to produce excellent results. We centralized the renewal

negotiations for San Francisco, new York and Boston (the most

impacted in 2020 by the COVID-19 pandemic) in our off-site call

center. The results have been positive to date as the percentage of residents

Renewal continues to improve with September 2021 above 60%, which is

above 2019 levels. Negotiations in all our markets are expected

become more difficult given the material price improvements

compared to the previous year.

Despite strong rent collections throughout the pandemic, the financial impact
from a small subset of our residents and Non-Residential tenants not paying has
led to higher levels of bad debt than we have historically experienced. We
continue to work with our residents and Non-Residential tenants on meeting their
financial obligations. During the nine months ended September 30, 2021, the
Company received governmental rental assistance payments paid on behalf of
residents of approximately $18.3 million. Despite receipt of these payments, we
expect our reserves and bad debt to remain elevated in 2021. Our bad debt
allowance policies remain consistent with those in place before the pandemic.

The following table shows comparative comparable store operating expenses for the nine-month period 2021. Same store properties:

                   September YTD 2021 vs. September YTD 2020

Total Same Store Operating Expenses Including 75,288 Same Store Apartment Units

                                 $ in thousands

                                                                                                     % of September
                                                                                                        YTD 2021
                                      September      September           $               %             Operating
                                       YTD 2021       YTD 2020       Change (5)       Change            Expenses
Real estate taxes                     $  263,521     $  259,603     $      3,918           1.5 %                43.0 %
On-site payroll (1)                      123,966        124,652             (686 )        (0.6 )%               20.3 %
Utilities (2)                             85,290         78,408            6,882           8.8 %                13.9 %
Repairs and maintenance (3)               77,320         71,359            5,961           8.4 %                12.6 %
Insurance                                 20,254         18,403            1,851          10.1 %                 3.3 %
Leasing and advertising                    8,028          7,409              619           8.4 %                 1.3 %
Other on-site operating expenses
(4)                                       34,326         33,668              658           2.0 %                 5.6 %
Total Same Store Operating Expenses
(includes Residential and
Non-Residential)                      $  612,705     $  593,502     $     19,203           3.2 %               100.0 %

(1) On-site payroll – Includes payroll and related expenses for on-site staff

including property managers, leasing consultants and maintenance staff.

(2) Utilities – Represents gross expenditure before any recovery under the

Resident Utility Billing System (“RUBS”). Recoveries are reflected in the rental


(3) Repairs and maintenance – Includes general maintenance costs, apartment unit

turnover costs, including interior painting, routine landscaping, security,

extermination, fire protection, snow removal, elevator, roofing and parking

    repairs and other miscellaneous building repair and maintenance costs.

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(4) Other operating costs on site – Includes ground lease costs and

administrative costs such as office supplies, telephone and data charges and

association and business license rights.

(5) The variations from one financial year to another are mainly due to the

following factors:

• Property taxes – The increase is lower than expected due to lower rates and

evaluated values.

• On-site Payroll – Improved utilization of sales and service personnel from

various technology initiatives and higher than usual vacancies

during the current period.

• Utilities – Water, sewer and waste charges (about 65% of total)

increased due to both usage and rate. Natural gas and electricity costs

(about 35% of the total) increased due to rising commodity prices.

• Repairs and maintenance – Increase mainly due to low

spending growth over the period due to the pandemic and minimum wage increases on

contractual services and maintenance repairs (including higher turnover

charges linked to strong rental activity) in 2021.

• Insurance – Increase due to higher premiums when renewing property insurance

due to the difficult conditions in the insurance market.

• Rental and advertising – Increase mainly due to the increase in digital

The advertisement.

• Other operating expenses on site – Increase due to higher ground

lease expenses.

The Company now anticipates same store NOI to decline for the full year 2021 by
approximately 7.0% (previously was anticipated to decline between 8.5% to 7.5%)
primarily driven by the expected improvement in same store revenues. We now
anticipate same store expenses to increase by approximately 3.25% (previously
was anticipated to increase between 2.75% to 3.25%) for 2021 as compared to
2020, primarily driven by lower real estate taxes and on-site payroll.

See also note 13 of the notes to the consolidated financial statements for further analysis of the Company’s segment information.

Store different from the same/ Other results

Non-same store/other NOI results for the nine months ended September 30, 2021
decreased approximately $25.8 million compared to the same period of 2020. These
results consist primarily of properties acquired in calendar years 2020 and
2021, operations from the Company's development properties and operations prior
to disposition from 2020 and 2021 sold properties. This difference is due
primarily to:

• A negative impact of a weaker and newly stabilized development NOI

buildings under development for lease of $ 0.8 million;

• A positive impact of the increase in the NOI of non-stabilized buildings acquired in

2019, 2020 and 2021 of $ 9.3 million;

• A positive impact of a higher NOI from other non-comparable store properties

(including an old property rented by master) of $ 0.5 million; and

• A negative impact of the lost NOI of the 2020 and 2021 disposals of $ 32.5


Comparison of the nine months and quarters ended September 30, 2021 every nine months and quarter ended September 30, 2020

The following table presents a reconciliation of diluted earnings per share/unit
for the nine months and quarter ended September 30, 2021 as compared to the same
periods in 2020:

                                                Nine Months Ended        Quarter Ended
                                                  September 30            September 30
Diluted earnings per share/unit for period
ended 2020                                     $              1.77     $             0.24
Property NOI                                                 (0.40 )                (0.02 )
Interest expense                                              0.12                   0.03
Non-operating asset gains/losses                              0.06                      -
Net gain/loss on property sales                               0.63          


Other                                                        (0.04 )                (0.04 )
Diluted earnings per share/unit for period
ended 2021                                     $              2.14     $             1.15

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The decrease in consolidated NOI is primarily a result of the Company's lower
NOI from same store properties, largely due to the economic impact from the
COVID-19 pandemic. The following table presents the changes in the components of
consolidated NOI for the nine months and quarter ended September 30, 2021 as
compared to the same periods in 2020:

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