EQUITY RESIDENTIAL Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

The following discussion and analysis of the results of operations and financial
condition of the Company and the Operating Partnership should be read in
connection with the Consolidated Financial Statements and Notes thereto. Due to
the Company's ability to control the Operating Partnership and its subsidiaries,
the Operating Partnership and each such subsidiary entity has been consolidated
with the Company for financial reporting purposes, except for any unconsolidated
properties/entities. Capitalized terms used herein and not defined are as
defined elsewhere in this Annual Report on Form 10-K. In addition, please refer
to the Definitions section below for various capitalized terms not immediately
defined in this Item 7, 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 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 distribution,
effectiveness and acceptance of vaccines and testing, 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
this Annual Report on Form 10-K, 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.

Overview

See Item 1, Business, for discussion regarding the Company’s overview.

Business Objectives and Operating and Investing Strategies

See Item 1, Business, for discussion regarding the Company’s business objectives
and operating and investing strategies.

COVID-19 Impact


The Company continues to monitor and respond to the ongoing effects of the
COVID-19 pandemic. Its duration, severity and the extent of its adverse health
impact on the general population, our residents and employees, along with the
distribution, effectiveness and acceptance of vaccines and testing and pace and
degree of recovery from the pandemic are among the many unknowns that have had
or could continue to have a significant impact on the Company. These, among
other items, have impacted the economy, the unemployment rate and our operations
and could materially affect our future consolidated results of operations,
financial condition, liquidity, investments and overall performance. Despite the
impact of COVID-19, we continue to believe that the long-term prospects for our
business remain strong. For additional details, see Item 1A, Risk Factors.

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Results of Operations

2020 and 2021 Transactions

In conjunction with our business objectives and operating and investing
strategies, the following table provides a rollforward of the transactions that
occurred during the years ended December 31, 2020 and 2021:


                             Portfolio Rollforward
                                ($ in thousands)

                                                             Apartment                            Acquisition
                                            Properties         Units         Purchase Price        Cap Rate
                              12/31/2019            309          79,962
Acquisitions:
Consolidated Rental Properties - Not
Stabilized (1)                                        1             158     $         48,860               4.7 %
                                                                                                  Disposition
                                                                              Sales Price            Yield
Dispositions:
Consolidated Rental Properties                       (6 )        (2,231 )   $     (1,066,861 )            (4.5 )%
                              12/31/2020            304          77,889
                                                                                                  Acquisition
                                                                             Purchase Price        Cap Rate
Acquisitions:
Consolidated Rental Properties                       13           3,533     $      1,249,679               3.7 %
Consolidated Rental Properties - Not
Stabilized (2)                                        4           1,214     $        459,700               4.0 %
                                                                                                  Disposition
                                                                              Sales Price            Yield
Dispositions:
Consolidated Rental Properties                      (14 )        (3,053 )   $     (1,716,775 )            (3.7 )%
Completed Developments - Consolidated                 3             824
                              12/31/2021            310          80,407



(1) The Company acquired one property during the year ended December 31, 2020 in

the Seattle market that was in lease-up and is expected to stabilize in its

second year of ownership.

(2) The Company acquired four properties during the year ended December 31, 2021,

one each in the Denver, Atlanta, Seattle and Dallas/Ft. Worth markets, that

are in lease-up and are expected to stabilize in their second year of

ownership at the combined Acquisition Cap Rate listed above.

Acquisitions

• The consolidated property acquired in 2020 was located in the Seattle market;

• The consolidated properties acquired in 2021 are located in the Atlanta

        (4), Austin (3), Boston, Dallas/Ft. Worth (4), Denver (3), Seattle and
        Washington D.C. markets. The Atlanta, Austin and Dallas/Ft. Worth
        acquisitions marked the Company's re-entry into these markets;

• Approximately $1.4 billion, or 82.0% of all acquisition activity in 2021,

was in expansion markets; and

• The Company funded the 2021 acquisitions by selling older assets located

within established markets that no longer met our long-term investment

        criteria.


Dispositions

• The consolidated properties disposed of in 2020 were located in the

Phoenix, San Diego, San Francisco (3) and Washington D.C. markets and the

sales generated an Unlevered IRR of 10.2%; and

• The consolidated properties disposed of in 2021 were located in the Los

        Angeles (6), New York, San Francisco (5), Seattle and Washington D.C.
        markets and the sales generated an Unlevered IRR of 10.4%.

Developments

• The Company completed construction on three consolidated apartment

properties during 2021, located in the San Francisco, Washington D.C. and

Boston markets, consisting of 824 apartment units totaling approximately

$602.8 million of development costs; and

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• The Company commenced construction on one consolidated and three

unconsolidated apartment properties during 2021, located in the Denver

(2), New York and Washington D.C. markets, consisting of 1,241 apartment

        units totaling approximately $452.7 million of expected development costs.


Investments in Unconsolidated Entities

• The Company entered into six separate unconsolidated joint ventures during

        2021 for the purpose of developing vacant land parcels in Texas (3),
        Colorado (2) and New York. The Company's total investment in these six
        joint ventures is approximately $72.2 million as of December 31,

2021. Three of the projects are related to the Company’s joint venture

development program with Toll Brothers, Inc. (“Toll”) discussed below; and

• Pursuant to our strategic partnership with Toll, the Company and Toll

entered into three separate joint venture agreements during 2021. The

projects have not yet started but are expected to do so in 2022. Toll will

act as managing member of each project overseeing approvals, design and

construction. See Notes 6 and 16 in the Notes to Consolidated Financial

Statements for additional discussion.

See Note 4 in the Notes to Consolidated Financial Statements for additional
discussion regarding the Company’s real estate transactions.

Future Outlook

• The Company’s guidance assumes consolidated rental acquisitions of

approximately $2.0 billion and consolidated rental dispositions of

approximately $2.0 billion during the year ending December 31, 2022; and

• We currently anticipate spending approximately $200.0 million on

development costs during the year ending December 31, 2022, primarily for

consolidated and unconsolidated properties currently under construction

(amount only includes our share of development costs).

The above 2022 guidance assumptions are based on current expectations and are
forward-looking.

Comparison of the year ended December 31, 2021 to the year ended December 31,
2020

The following table presents a reconciliation of diluted earnings per share/unit
for the year ended December 31, 2021 as compared to the same period in 2020:


                                                      Year Ended
                                                      December 31

Diluted earnings per share/unit for full year 2020 $ 2.45
Property NOI

                                                 (0.35 )
Interest expense                                              0.14
Debt extinguishment costs                                     0.10
Corporate overhead (1)                                       (0.03 )
Net gain/loss on property sales                               1.38
Non-operating asset gains/losses                             (0.02 )
Impairment - non-operating assets                            (0.04 )
Depreciation expense                                         (0.04 )
Other                                                        (0.05 )

Diluted earnings per share/unit for full year 2021 $ 3.54

(1) Corporate overhead includes property management and general and

administrative expenses.



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.

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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):

                                      Year Ended December 31,              2021 vs. 2020
                                        2021            2020          $ Change       % Change
Operating income                    $  1,675,841     $ 1,317,990     $  357,851            27.2 %
Adjustments:
Property management                       98,155          93,825          4,330             4.6 %
General and administrative                56,506          48,305          8,201            17.0 %
Depreciation                             838,272         820,832         17,440             2.1 %
Net (gain) loss on sales of real
estate properties                     (1,072,183 )      (531,807 )     (540,376 )         101.6 %
Impairment                                16,769               -         16,769               -
Total NOI                           $  1,613,360     $ 1,749,145     $ (135,785 )          (7.8 )%
Rental income:
Same store                          $  2,342,257     $ 2,425,025     $  (82,768 )          (3.4 )%
Non-same store/other                     121,740         146,680        (24,940 )         (17.0 )%
Total rental income                    2,463,997       2,571,705       (107,708 )          (4.2 )%
Operating expenses:
Same store                               803,995         780,381         23,614             3.0 %
Non-same store/other                      46,642          42,179          4,463            10.6 %
Total operating expenses                 850,637         822,560         28,077             3.4 %
NOI:
Same store                             1,538,262       1,644,644       (106,382 )          (6.5 )%
Non-same store/other                      75,098         104,501        (29,403 )         (28.1 )%
Total NOI                           $  1,613,360     $ 1,749,145     $ (135,785 )          (7.8 )%



Note: See Note 17 in the Notes to Consolidated Financial Statements for detail
by reportable segment/market. Non-same store/other NOI 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.
•   The decrease in same store rental income is due primarily to the negative

cumulative impact of leasing activity at lower Average Rental Rates,

particularly in late 2020 and early 2021.

• The increase in same store operating expenses is due primarily to:

• Utilities – A $10.2 million increase due to water, sewer and trash charges

(approximately 65% of total) increasing as a result of both higher usage

        and rate, as well as increases in natural gas and electric charges
        (approximately 35% of total) due to higher commodity prices;

• Real estate taxes – A $5.2 million increase due to modest rate growth,

partially offset by reduced assessed values in certain locations; and

• Repairs and maintenance – A $5.2 million increase primarily driven by low

comparable period expense growth due to the pandemic along with increases

in minimum wage on contract services and maintenance repairs in 2021.

• The decrease in non-same store/other NOI is due primarily to a negative

    impact of lost NOI from 2020 and 2021 dispositions of $50.2 million,
    partially offset by a positive impact of higher NOI from non-stabilized
    properties acquired between 2019 and 2021 of $21.1 million.

• The decrease in consolidated total 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.

See the Same Store Results section below for additional discussion of those
results.

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Property management expenses include off-site expenses associated with the
self-management of the Company's properties as well as management fees paid to
any third-party management companies. These expenses increased approximately
$4.3 million or 4.6% during the year ended December 31, 2021 as compared to
2020. This increase is primarily attributable to increases in payroll-related
costs, legal and professional fees and information technology-related costs
specifically for various operating initiatives such as sales-focused
improvements and service enhancements. The expenses in 2020 were lower than
normal due to the impact of COVID-19.

General and administrative expenses, which include corporate operating expenses,
increased approximately $8.2 million or 17.0% during the year ended December 31,
2021 as compared to 2020, primarily due to increases in payroll-related costs,
partially offset by decreases in office rent as a result of the consolidation of
space at the Company's corporate headquarters. The expenses in 2020 were lower
than normal due to the impact of COVID-19.

Depreciation expense, which includes depreciation on non-real estate assets,
increased approximately $17.4 million or 2.1% during the year ended December 31,
2021 as compared to 2020, primarily as a result of additional depreciation
expense on properties acquired in 2020 and 2021 and development properties
placed in service during 2021, partially offset by in-place leases for 2019
acquisitions being fully depreciated as of December 31, 2020 and the Company
being a net seller during 2020, which resulted in lower depreciation in the
current period.

Net gain on sales of real estate properties increased approximately $540.4
million
or 101.6% during the year ended December 31, 2021 as compared to 2020,
primarily as a result of a higher sales volume with the sale of fourteen
consolidated apartment properties in 2021 as compared to the sale of six
consolidated apartment properties in the same period in 2020.


Impairment increased approximately $16.8 million during the year ended December
31, 2021 as compared to 2020, due to an impairment charge in 2021 on one land
parcel held for development compared to no impairment charges taken during 2020.

Interest and other income increased approximately $19.7 million during the year
ended December 31, 2021 as compared to 2020. The increase is primarily due to a
gain of $23.4 million on the sale of various investment securities that occurred
during 2021 but not during 2020, partially offset by decreases in
insurance/litigation settlement proceeds and other non-comparable items that
occurred during 2020 but not during 2021.

Other expenses increased approximately $1.8 million or 10.1% during the year
ended December 31, 2021 as compared to 2020, primarily due to an increase in
various litigation and environmental reserves/settlements and an increase in
ground lease finance charges, partially offset by a decrease in advocacy
contributions.

Interest expense, including amortization of deferred financing costs, decreased
approximately $92.8 million or 24.8% during the year ended December 31, 2021 as
compared to 2020. The decrease is primarily due to lower debt extinguishment
costs as well as lower overall interest rates and debt balances in 2021 as
compared to 2020. The effective interest cost on all indebtedness, excluding
debt extinguishment costs/prepayment penalties, for the year ended December 31,
2021 was 3.52% as compared to 3.94% in 2020. The Company capitalized interest of
approximately $15.9 million and $10.2 million during the years ended
December 31, 2021 and 2020, respectively.

Net gain on sales of land parcels decreased approximately $34.2 million during
the year ended December 31, 2021 as compared to 2020, primarily as a result of
the sale of two land parcels in 2020 as compared to no sales in 2021.

Net (income) loss attributable to Noncontrolling Interests in partially owned
properties increased approximately $3.1 million or 20.9% during the year ended
December 31, 2021 as compared to 2020, primarily as a result of higher
noncontrolling interest allocations from higher gains on the sale of one
partially owned apartment property in 2021 as compared to the sale of one
partially owned apartment property in 2020.

For comparison of the year ended December 31, 2020 to the year ended December
31, 2019, refer to Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations, included in the Company's and the Operating
Partnership's Annual Report on Form 10-K for the year ended December 31, 2020.

Same Store Results


Properties that the Company owned and were stabilized for all of both 2021 and
2020 (the "2021 Same Store Properties"), which represented 74,077 apartment
units, drove the Company's results of operations. Properties are considered
"stabilized" when they have achieved 90% occupancy for three consecutive
months. Properties are included in same store when they are stabilized for all
of the current and comparable periods presented.

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The following table provides comparative total same store results and statistics
for the 2021 Same Store Properties:

                                 2021 vs. 2020
   Same Store Results/Statistics Including 74,077 Same Store Apartment Units
                $ in thousands (except for Average Rental Rate)

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

Residential Total

Revenues $ 2,253,068 (4.6 %) $ 89,189 (1) 40.1 % $ 2,342,257 (3.4 %) Revenues $ 2,361,359

$ 63,666 $ 2,425,025

Expenses $ 779,729 2.8 % $ 24,266

9.7 % $ 803,995 3.0 % Expenses $ 758,257

$ 22,124 $ 780,381

        NOI            $  1,473,339        (8.1 %)   $      64,923          56.3 %   $ 1,538,262        (6.5 %)           NOI            $  1,603,102   

$ 41,542 $ 1,644,644

Average Rental Rate    $      2,640        (5.6 %)                                                                Average Rental Rate    $      2,797
Physical Occupancy             96.1 %       1.1 %                                                                 Physical Occupancy             95.0 %
Turnover                       44.4 %      (8.5 %)                                                                Turnover                       52.9 %


Note: Same store revenues for all leases are reflected on a straight-line basis
in accordance with GAAP for the current and comparable periods.
(1) Changes in same store Non-Residential revenues are primarily driven by the

write-off of Non-Residential straight-line lease receivables in 2020 and

lower bad debt in 2021.

The following table provides results and statistics related to our Residential
same store operations for the years ended December 31, 2021 and 2020:

                                 2021 vs. 2020
              Same Store Residential Results/Statistics by Market

                                                                                                                   Increase (Decrease) from Prior Year
                                                                               2021
                                                   2021         2021         Weighted
                                                   % of       Average         Average                         Average
                                   Apartment      Actual       Rental        Physical           2021           Rental             Physical
      Markets/Metro Areas            Units          NOI         Rate       
Occupancy %       Turnover          Rate              Occupancy         Turnover
Los Angeles                            15,259        20.5 %   $  2,501              96.6 %         41.5 %           (0.7 %)              1.0 %           (10.4 %)
Orange County                           4,028         5.7 %      2,318              97.7 %         34.6 %            2.9 %               1.0 %           (10.7 %)
San Diego                               2,706         4.1 %      2,484              97.6 %         43.1 %            4.6 %               0.6 %            (5.9 %)
Subtotal - Southern California         21,993        30.3 %      2,465              96.9 %         40.4 %            0.5 %               0.9 %            (9.9 %)

San Francisco                          11,630        18.0 %      2,900              95.1 %         48.2 %          (11.3 %)              0.6 %            (8.7 %)
Washington D.C.                        14,322        17.5 %      2,332              96.5 %         45.3 %           (4.3 %)              0.9 %            (5.0 %)
New York                                9,343        12.1 %      3,497              95.2 %         37.5 %           (9.6 %)              2.4 %           (13.8 %)
Seattle                                 8,819        10.6 %      2,274              95.6 %         50.6 %           (7.1 %)              0.2 %            (4.0 %)
Boston                                  6,346         9.6 %      2,883              95.7 %         47.0 %           (7.0 %)              1.5 %            (9.3 %)
Denver                                  1,624         1.9 %      2,066              96.6 %         60.2 %            1.4 %               1.7 %            (9.8 %)

Total                                  74,077       100.0 %   $  2,640              96.1 %         44.4 %           (5.6 %)              1.1 %            (8.5 %)



Note: The above table reflects Residential same store results only. Residential
operations account for approximately 96.1% of total revenues for the year ended
December 31, 2021.


Despite the significant impact from the pandemic on our business, which is
reflected in the results for the year ended December 31, 2021, a strong recovery
continues across our portfolio. Robust economic growth coupled with reopening of
cities drove our operations to recover rapidly with significant demand for our
apartments in all of 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 during 2021 include:

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

Leasing Concessions) since the end of the fourth quarter of 2020, with

pricing reaching or exceeding pre-pandemic levels. Monthly Residential

Leasing Concessions granted have also declined significantly from their

peak of $6.1 million per month in February 2021 and have now returned to

more normalized pre-pandemic levels.

• Physical Occupancy – Physical Occupancy was 96.6% for the fourth quarter

of 2021 and remained strong for the year ended December 31, 2021 at 96.1%.

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• Percentage of Residents Renewing and Turnover – Our strategy of focusing

on resident renewals continued to deliver strong results. We reported the

lowest Turnover in our history for both the fourth quarter of 2021 (9.4%)

and the full year of 2021 (44.4%), which we believe reaffirms the demand

and desirability for our product. Results have been positive to date as

the Percentage of Residents Renewing continues to improve with the fourth

quarter of 2021 above 60%, which is higher than 2019 levels.



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 year ended December 31, 2021, the Company
received governmental rental assistance payments paid on behalf of residents of
approximately $34.7 million with approximately $16.3 million of that received in
the fourth quarter of 2021. Despite receipt of these payments, our reserves and
bad debt remained elevated in 2021. Our bad debt allowance policies remain
consistent with those in place before the pandemic.

Liquidity and Capital Resources


With approximately $2.2 billion in readily available liquidity, a strong balance
sheet, limited near-term maturities, very strong credit metrics and ample access
to capital markets, the Company believes it is well positioned to meet its
future obligations and opportunities. See further discussion below.

Statements of Cash Flows

The following table sets forth our sources and uses of cash flows for the years
ended December 31, 2021, 2020 and 2019 (amounts in thousands):


                                              Year Ended December 31,
                                       2021             2020            

2019

Cash flow provided by (used for):
Operating activities                $ 1,260,184     $  1,265,536     $ 1,456,984
Investing activities                $  (434,620 )   $    663,586     $  (771,824 )
Financing activities                $  (565,056 )   $ (1,946,393 )   $  (684,474 )



The following provides information regarding the Company’s cash flows from
operating, investing and financing activities for the year ended December 31,
2021
.


Operating Activities

Our operating cash flows are primarily impacted by NOI and its components, such
as Average Rental Rates, Physical Occupancy levels and operating expenses
related to our properties. Cash provided by operating activities for the year
ended December 31, 2021 as compared to 2020, declined by approximately $5.4
million as a direct result of the NOI and other changes discussed above in
Results of Operations.

Investing Activities

Our investing cash flows are primarily impacted by our transaction activity
(acquisitions/dispositions), development spend and capital expenditures. For
2021, key drivers were:

• Acquired seventeen consolidated rental properties for approximately $1.7

billion in cash;

• Disposed of fourteen consolidated rental properties, receiving net

proceeds of approximately $1.7 billion;

• Invested in six separate unconsolidated development joint ventures for

        approximately $48.5 million in cash;


  • Invested $206.4 million primarily in development projects;

• Purchased $168.3 million of various investment securities and other

investments;

• Sold various investment securities, receiving net proceeds of $191.4

million; and

• Invested $151.0 million in capital expenditures to real estate presented

        in the table below.


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For the year ended December 31, 2021, our actual capital expenditures to real
estate included the following (amounts in thousands except for apartment unit
and per apartment unit amounts):

                      Capital Expenditures to Real Estate
                      For the Year Ended December 31, 2021

                                                                                       Same Store Avg.
                              Same Store         Non-Same Store                              Per
                              Properties        Properties/Other         Total         Apartment Unit
Total Apartment Units               74,077                  6,330           

80,407


Building Improvements        $      87,456     $            1,570     $     89,026     $         1,181
Renovation Expenditures
(1)                                 28,558                    297           28,855                 385
Replacements                        31,374                  1,764           33,138                 424
Total Capital Expenditures
to Real Estate               $     147,388     $            3,631     $    151,019     $         1,990


(1) Renovation Expenditures – Amounts for 1,347 same store apartment units

approximated $21,201 per apartment unit renovated.

Financing Activities

Our financing cash flows primarily relate to our borrowing activity (debt
proceeds or repayment), distributions/dividends to shareholders and other Common
Share activity. In 2021, key drivers were:

• Obtained $28.5 million in 3.58% fixed rate mortgage debt maturing on March

1, 2031;

• Obtained $29.9 million in variable rate construction mortgage debt that is

        non-recourse to the Company maturing on June 25, 2022;


    •   Issued $500.0 million of ten-year 1.85% unsecured notes due 2031,

receiving net proceeds of approximately $497.5 million before underwriting

        fees and other expenses. This was the Company's second ever green bond
        offering;

• Repaid $164.3 million of mortgage loans (inclusive of scheduled principal

repayments);

• Issued Common Shares related to share option exercises and ESPP purchases

and received net proceeds of $89.7 million, which were contributed to the

capital of the Operating Partnership in exchange for additional OP Units

(on a one-for-one Common Share per OP Unit basis); and

• Paid dividends/distributions on Common Shares, Preferred Shares, Units

(including OP Units and restricted units) and noncontrolling interests in

partially owned properties totaling approximately $940.7 million.

Short-Term Liquidity and Cash Proceeds


The Company generally expects to meet its short-term liquidity requirements,
including capital expenditures related to maintaining its existing properties
and scheduled unsecured note and mortgage note repayments, through its working
capital, net cash provided by operating activities and borrowings under the
Company's revolving credit facility and commercial paper program. Currently, the
Company considers its cash provided by operating activities to be adequate to
meet operating requirements and payments of distributions.

The following table presents the Company's balances for cash and cash
equivalents, restricted deposits and the available borrowing capacity on its
revolving credit facility as of December 31, 2021 and 2020 (amounts in
thousands):

                                              December 31, 2021       December 31, 2020
Cash and cash equivalents                    $           123,832     $            42,591
Restricted deposits                          $           236,404     $            57,137
Unsecured revolving credit facility
availability                                 $         2,181,372     $         1,984,051



Credit Facility and Commercial Paper Program


The Company has a $2.5 billion unsecured revolving credit facility maturing
November 1, 2024. The Company has the ability to increase available borrowings
by an additional $750.0 million by adding lenders to the facility, obtaining the
agreement of existing lenders to increase their commitments or incurring one or
more term loans. The interest rate on advances under the facility will generally
be the London Interbank Offered Rate ("LIBOR") plus a spread (currently 0.775%),
or based on bids received from the

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lending group, and the Company pays an annual facility fee (currently
0.125%). Both the spread and the facility fee are dependent on the Company’s
senior unsecured credit rating.

The unsecured revolving credit agreement contains provisions that establish a
process for entering into an amendment to replace LIBOR under certain
circumstances, such as the anticipated phase-out of LIBOR. See Item 7A for
additional information with respect to the LIBOR transition.

The Company may borrow up to a maximum of $1.0 billion under its commercial
paper program subject to market conditions. The notes will be sold under
customary terms in the United States commercial paper note market and will rank
pari passu with all of the Company’s other unsecured senior indebtedness.


The Company limits its utilization of the revolving credit facility in order to
maintain liquidity to support its $1.0 billion commercial paper program along
with certain other obligations. The following table presents the availability on
the Company's unsecured revolving credit facility as of February 11, 2022
(amounts in thousands):

                                                           February 11, 

2022

Unsecured revolving credit facility commitment            $         

2,500,000

Commercial paper balance outstanding                                 (300,000 )
Unsecured revolving credit facility balance outstanding                     -
Other restricted amounts                                               

(3,507 )
Unsecured revolving credit facility availability $ 2,196,493





Dividend Policy

The Company determines its dividends/distributions based on actual and projected
financial conditions, the Company's actual and projected liquidity and operating
results, the Company's projected cash needs for capital expenditures and other
investment activities and such other factors as the Company's Board of Trustees
deems relevant. The Company declared a dividend/distribution for each quarter in
2021 of $0.6025 per share/unit, consistent with the amount paid in 2020. All
future dividends/distributions remain subject to the discretion of the Company's
Board of Trustees.

Total dividends/distributions paid in January 2022 amounted to $233.5 million
(excluding distributions on Partially Owned Properties), which consisted of
certain distributions declared during the quarter ended December 31, 2021.

Long-Term Financing and Capital Needs


The Company expects to meet its long-term liquidity requirements, such as lump
sum unsecured note and mortgage debt maturities, property acquisitions and
financing of development activities, through the issuance of secured and
unsecured debt and equity securities (including additional OP Units), proceeds
received from the disposition of certain properties and joint ventures, along
with cash generated from operations after all distributions. The Company has a
significant number of unencumbered properties available to secure additional
mortgage borrowings should unsecured capital be unavailable or the cost of
alternative sources of capital be too high. The value of and cash flow from
these unencumbered properties are in excess of the requirements the Company must
maintain in order to comply with covenants under its unsecured notes and line of
credit. Of the $28.3 billion in investment in real estate on the Company's
balance sheet at December 31, 2021, $24.5 billion or 86.7% was
unencumbered. However, there can be no assurances that these sources of capital
will be available to the Company in the future on acceptable terms or otherwise.

EQR issues equity and guarantees certain debt of the Operating Partnership from
time to time. EQR does not have any indebtedness as all debt is incurred by the
Operating Partnership.

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The Company's total debt summary schedule as of December 31, 2021 is as follows:

                      Debt Summary as of December 31, 2021
                                ($ in thousands)

                                           Debt
                                         Balances        % of Total
Secured                                 $ 2,191,201             26.3 %
Unsecured                                 6,150,252             73.7 %
Total                                   $ 8,341,453            100.0 %
Fixed Rate Debt:
Secured - Conventional                  $ 1,896,472             22.8 %
Unsecured - Public                        5,835,222             69.9 %
Fixed Rate Debt                           7,731,694             92.7 %
Floating Rate Debt:
Secured - Conventional                       59,890              0.7 %
Secured - Tax Exempt                        234,839              2.8 %
Unsecured - Revolving Credit Facility             -                -
Unsecured - Commercial Paper Program        315,030              3.8 %
Floating Rate Debt                          609,759              7.3 %
Total                                   $ 8,341,453            100.0 %



The following table summarizes the Company’s debt maturity schedule as of
December 31, 2021:


                 Debt Maturity Schedule as of December 31, 2021
                                ($ in thousands)


                                  Fixed        Floating
            Year                  Rate           Rate             Total         % of Total
2022                           $   264,185     $ 376,904   (1) $   641,089              7.6 %
2023                             1,325,588         3,500         1,329,088             15.8 %
2024                                     -         6,100             6,100              0.1 %
2025                               450,000         8,200           458,200              5.4 %
2026                               592,025         9,000           601,025              7.1 %
2027                               400,000         9,800           409,800              4.9 %
2028                               900,000        10,700           910,700             10.8 %
2029                               888,120        11,500           899,620             10.7 %
2030                             1,095,000        12,600         1,107,600             13.2 %
2031                               528,500        39,700           568,200              6.7 %
2032+                            1,350,850       138,900         1,489,750             17.7 %
Subtotal                         7,794,268       626,904         8,421,172            100.0 %
Deferred Financing Costs and
  Unamortized (Discount)           (62,574 )     (17,145 )         (79,719 )            N/A
Total                          $ 7,731,694     $ 609,759       $ 8,341,453            100.0 %


(1) Includes $315.1 million in principal outstanding on the Company’s commercial

paper program.



Interest expected to be incurred on the Company's secured and unsecured debt
based on obligations outstanding at December 31, 2021, inclusive of capitalized
interest, approximates $225.0 million annually for the next five years, with
total remaining obligations of approximately $2.5 billion. For floating rate
debt, the current rate in effect for the most recent payment through December
31, 2021 is assumed to be in effect through the respective maturity date of each
instrument.

See Note 9 in the Notes to Consolidated Financial Statements for additional
discussion of debt at December 31, 2021. See also Notes 8 and 16 in the Notes to
Consolidated Financial Statements for additional discussion of contractual
obligations and commitments as of December 31, 2021.

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Capital Structure

The Company's "Consolidated Debt-to-Total Market Capitalization Ratio" as of
December 31, 2021 is presented in the following table. The Company calculates
the equity component of its market capitalization as the sum of (i) the total
outstanding Common Shares and assumed conversion of all Units at the equivalent
market value of the closing price of the Company's Common Shares on the New York
Stock Exchange and (ii) the liquidation value of all perpetual preferred shares
outstanding.

                               Equity Residential
                   Capital Structure as of December 31, 2021
       (Amounts in thousands except for share/unit and per share amounts)
Secured Debt                                                          $  2,191,201         26.3 %
Unsecured Debt                                                           6,150,252         73.7 %
Total Debt                                                               8,341,453        100.0 %       19.2 %
Common Shares (includes Restricted
Shares)                                  375,527,195         96.7 %
Units (includes OP Units and
Restricted Units)                         12,659,027          3.3 %
Total Shares and Units                   388,186,222        100.0 %
Common Share Price at December 31,
2021                                   $       90.50
                                                                        35,130,853         99.9 %
Perpetual Preferred Equity                                                  37,280          0.1 %
Total Equity                                                            35,168,133        100.0 %       80.8 %
Total Market Capitalization                                           $ 43,509,586                     100.0 %




The Operating Partnership's "Consolidated Debt-to-Total Market Capitalization
Ratio" as of December 31, 2021 is presented in the following table. The
Operating Partnership calculates the equity component of its market
capitalization as the sum of (i) the total outstanding Units at the equivalent
market value of the closing price of the Company's Common Shares on the New York
Stock Exchange and (ii) the liquidation value of all perpetual preference units
outstanding.

                       ERP Operating Limited Partnership
                   Capital Structure as of December 31, 2021
          (Amounts in thousands except for unit and per unit amounts)
Secured Debt                                                          $  2,191,201         26.3 %
Unsecured Debt                                                           6,150,252         73.7 %
Total Debt                                                               8,341,453        100.0 %       19.2 %
Total Outstanding Units                     388,186,222

Common Share Price at December 31, 2021 $ 90.50

                                                                        35,130,853         99.9 %
Perpetual Preference Units                                                  37,280          0.1 %
Total Equity                                                            35,168,133        100.0 %       80.8 %
Total Market Capitalization                                           $ 43,509,586                     100.0 %




Financial Flexibility

EQR and ERPOP currently have an active universal shelf registration statement
for the issuance of equity and debt securities that automatically became
effective upon filing with the SEC in June 2019 and expires in June 2022. Per
the terms of ERPOP's partnership agreement, EQR contributes the net proceeds of
all equity offerings to the capital of ERPOP in exchange for additional OP Units
(on a one-for-one Common Share per OP Unit basis) or preference units (on a
one-for-one preferred share per preference unit basis).

The Company has an At-The-Market ("ATM") share offering program which allows EQR
to issue Common Shares from time to time into the existing trading market at
current market prices or through negotiated transactions, including under
forward sale arrangements. The current program matures in June 2022 and gives
EQR the authority to issue up to 13.0 million shares, all of which remain
outstanding as of December 31, 2021, pending the settlement of the outstanding
forward sale agreements. These forward sale agreements allow the Company, at its
election, to settle the agreements by issuing Common Shares in exchange for net
proceeds at the then-applicable forward sale price specified by the agreement
or, alternatively, to settle the agreements in whole or in part through the
delivery or receipt of Common Shares or cash. Issuances of shares under these
forward sale agreements are classified as equity transactions. Accordingly, no
amounts relating to the forward sale agreements are recorded in the consolidated
financial statements

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until settlement occurs. Prior to any settlements, the only impact to the
consolidated financial statements is the inclusion of incremental shares, if
any, within the calculation of diluted net income per share using the treasury
stock method (see Note 11 in the Notes to Consolidated Financial Statements for
additional discussion). The actual forward price per share to be received by the
Company upon settlement will be determined on the applicable settlement date
based on adjustments made to the initial forward price to reflect the
then-current overnight federal funds rate and the amount of dividends paid to
holders of the Company's Common Shares over the term of the forward sale
agreement.

As of February 11, 2022, the Company had entered into such forward sale
agreements under this program for a total of approximately 1.7 million Common
Shares at a weighted average initial forward price per share of $83.25. As of
February 11, 2022, no shares under the forward sale agreements had been
settled. These forward sale agreements must be settled by March 2023.

The Company may repurchase up to 13.0 million Common Shares under its share
repurchase program. No open market repurchases have occurred since 2008, and no
repurchases of any kind have occurred since February 2014. As of February 11,
2022, EQR has remaining authorization to repurchase up to 13.0 million of its
shares.

We believe our ability to access capital markets is enhanced by ERPOP’s
long-term senior debt ratings and short-term commercial paper ratings, as well
as EQR’s long-term preferred equity ratings. As of February 11, 2022, the
ratings are as follows:


                                             Standard & Poor's   Moody's
ERPOP's long-term senior debt rating                A-             A3
ERPOP's short-term commercial paper rating          A-2            P-2
EQR's long-term preferred equity rating             BBB           Baa1



See Note 18 in the Notes to Consolidated Financial Statements for discussion of
the events, if any, which occurred subsequent to December 31, 2021.

Definitions

The definition of certain terms described above or below are as follows:

• Acquisition 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.

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.

• 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 sales 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.

• Leasing Concessions – Reflects upfront discounts on both new move-in and

renewal leases on a straight-line basis.

• Non-Residential – Consists of revenues and expenses from retail and public

parking garage operations.

Non-Same Store Properties – For annual comparisons, primarily includes all

properties acquired during 2020 and 2021, plus any properties in lease-up

        and not stabilized as of January 1, 2020.


    •   Percentage of Residents Renewing - Leases renewed expressed as a

percentage of total renewal offers extended during the reporting period.

• 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.

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• Renovation 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).

• Residential – Consists of multifamily apartment revenues and expenses.

Same Store Properties – For annual comparisons, primarily includes all

properties acquired or completed that are stabilized prior to January 1,

2020, less properties subsequently sold. Properties are included in Same

Store when they are stabilized for all of the current and comparable

periods presented.

• Same Store Residential Revenues – Revenues from our same store properties

presented on a GAAP basis which reflects the impact of Leasing Concessions

on a straight-line basis.

• % of Stabilized Budgeted NOI – Represents original budgeted 2022 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 remaining cost for projects under

        development and/or developed plus all capitalized costs incurred to date,
        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, plus any estimates of costs remaining to be funded for all projects,

all in accordance with GAAP. Amounts for partially owned consolidated and

unconsolidated properties are presented at 100% of the project.

• Turnover – Total Residential move-outs (including inter-property and

        intra-property transfers) divided by total Residential apartment units.


    •   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.



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Critical Accounting Policies and Estimates


The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to use judgment in
the application of accounting policies, including making estimates and
assumptions. If our judgment or interpretation of the facts and circumstances
relating to various transactions had been different or different assumptions
were made, it is possible that different accounting policies would have been
applied, resulting in different financial results or different presentation of
our financial statements.

The Company’s significant accounting policies are described in Note 2 in the
Notes to Consolidated Financial Statements. These policies were followed in
preparing the consolidated financial statements at and for the year ended
December 31, 2021.


The Company has identified the significant accounting policies below as critical
accounting policies. These critical accounting policies are those that have the
most impact on the reporting of our financial condition and those requiring
significant judgments and estimates. With respect to these critical accounting
policies, management believes that the application of judgments and estimates is
consistently applied and produces financial information that fairly presents the
results of operations for all periods presented.

Impairment of Long-Lived Assets


The Company evaluates its long-lived assets, including its investment in real
estate, for indicators of impairment at least quarterly. The judgments regarding
the existence of impairment indicators are based on factors such as operational
performance, market conditions, legal, regulatory and environmental concerns,
the Company's intent and ability to hold the related asset, as well as any
significant cost overruns on development properties. Future events could occur
which would cause the Company to conclude that impairment indicators exist and
an impairment loss is warranted. Assessing impairment can be complex and
involves a high degree of subjectivity in determining if indicators are present
and in estimating the future undiscounted cash flows or the fair value of an
asset. In particular, these estimates are sensitive to significant assumptions,
including the estimation of future rental revenues, operating expenses, discount
and capitalization rates and our intent and ability to hold the related asset,
all of which could be affected by our expectations about future market or
economic conditions. Assumptions are primarily subject to property-specific
characteristics, especially with respect to our intent and ability to hold the
related asset. While these property-specific assumptions can have a significant
impact on the undiscounted cash flows or estimated fair value of a particular
asset, our evaluation of the reported carrying values of long-lived assets
during the current year were not particularly sensitive to external or market
assumptions.

Acquisition of Investment Properties


The Company allocates the purchase price of properties that meet the definition
of an asset acquisition to net tangible and identified intangible assets
acquired based on their relative fair values using assumptions primarily based
upon property-specific characteristics. In making estimates of relative fair
values for purposes of allocating purchase price, the Company utilizes a number
of sources, including independent appraisals that may be obtained in connection
with the acquisition or financing of the respective property, our own analysis
of recently acquired or developed and existing comparable properties in our
portfolio and other market data. The Company also considers information obtained
about each property as a result of its pre-acquisition due diligence, marketing
and leasing activities in estimating the relative fair value of the tangible and
intangible assets/liabilities acquired.

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Funds From Operations and Normalized Funds From Operations


The following is the Company's and the Operating Partnership's reconciliation of
net income to FFO available to Common Shares and Units / Units and Normalized
FFO available to Common Shares and Units / Units for each of the three years
ended December 31, 2021:

           Funds From Operations and Normalized Funds From Operations
                             (Amounts in thousands)

                                                                Year Ended December 31,
                                                          2021            2020            2019
Net income                                            $  1,396,714     $   962,501     $ 1,009,708
Net (income) loss attributable to Noncontrolling
  Interests - Partially Owned Properties                   (17,964 )       (14,855 )        (3,297 )
Preferred/preference distributions                          (3,090 )        (3,090 )        (3,090 )
Net income available to Common Shares and Units /
Units                                                    1,375,660         944,556       1,003,321
Adjustments:
Depreciation                                               838,272         820,832         831,083
Depreciation - Non-real estate additions                    (4,277 )        (4,564 )        (5,585 )
Depreciation - Partially Owned Properties                   (3,673 )        (3,345 )        (3,599 )
Depreciation - Unconsolidated Properties                     2,487           2,454           2,997

Net (gain) loss on sales of unconsolidated entities
– operating assets

                                          (1,304 )        (1,636 )       (69,522 )
Net (gain) loss on sales of real estate properties      (1,072,183 )      (531,807 )      (447,637 )
Noncontrolling Interests share of gain (loss) on
sales
  of real estate properties                                 15,650          11,655               -
FFO available to Common Shares and Units / Units
(1) (3) (4)                                              1,150,632       1,238,145       1,311,058
Adjustments:
Impairment - non-operating assets                           16,769               -               -
Write-off of pursuit costs                                   6,526           6,869           5,529

Debt extinguishment and preferred share redemption
(gains) losses

                                                 744          39,292          23,991
Non-operating asset (gains) losses                         (22,283 )       (32,590 )          (940 )
Other miscellaneous items                                    8,976           4,652           8,430
Normalized FFO available to Common Shares and Units
/ Units (2) (3) (4)                                   $  1,161,364     $ 1,256,368     $ 1,348,068

FFO (1) (3)                                           $  1,153,722     $ 1,241,235     $ 1,314,148
Preferred/preference distributions                          (3,090 )        (3,090 )        (3,090 )
FFO available to Common Shares and Units / Units
(1) (3) (4)                                           $  1,150,632     $ 1,238,145     $ 1,311,058

Normalized FFO (2) (3)                                $  1,164,454     $ 1,259,458     $ 1,351,158
Preferred/preference distributions                          (3,090 )        (3,090 )        (3,090 )
Normalized FFO available to Common Shares and Units
/ Units (2) (3) (4)                                   $  1,161,364     $ 1,256,368     $ 1,348,068



(1) The National Association of Real Estate Investment Trusts (“Nareit”) defines

funds from operations (“FFO”) (December 2018 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 real estate and land when connected to the main

business of a REIT, impairment write-downs of investments in entities when

the impairment is directly attributable to decreases in the value of

depreciable real estate held by the entity and depreciation and amortization

related to real estate. Adjustments for partially owned consolidated and

unconsolidated partnerships and joint ventures are calculated to reflect

funds from operations on the same basis.

(2) Normalized funds from operations (“Normalized FFO”) begins with FFO and

excludes:

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


  • pursuit cost write-offs;

• gains and losses from early debt extinguishment and preferred share

        redemptions;


  • gains and losses from non-operating assets; and


  • other miscellaneous items.


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(3) The Company believes that FFO and FFO available to Common Shares and Units /

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 from

sales and impairment write-downs of depreciable real estate and excluding

depreciation related to real estate (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 / Units can

help compare the operating performance of a company’s real estate between

periods or as compared to different companies. The Company also believes that

Normalized FFO and Normalized FFO available to Common Shares and Units /

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 / Units, Normalized

FFO and Normalized FFO available to Common Shares and Units / Units do not

represent net income, net income available to Common Shares / Units or net

cash flows from operating activities in accordance with GAAP. Therefore, FFO,

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

Normalized FFO available to Common Shares and Units / Units should not be

exclusively considered as alternatives to net income, net income available to

Common Shares / Units 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 / Units, Normalized FFO and

Normalized FFO available to Common Shares and Units / 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.

(4) FFO available to Common Shares and Units / Units and Normalized FFO available

to Common Shares and Units / Units are calculated on a basis consistent with

net income available to Common Shares / Units and reflects adjustments to net

income for preferred distributions and premiums on redemption of preferred

shares/preference units 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.




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