Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-12252 (Equity Residential)
Commission File Number: 0-24920 (ERP Operating Limited Partnership)
EQUITY RESIDENTIAL
ERP OPERATING LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Maryland (Equity Residential)
13-3675988 (Equity Residential)
Illinois (ERP Operating Limited Partnership)
36-3894853 (ERP Operating Limited Partnership)
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
Two North Riverside Plaza, Chicago, Illinois 60606
(312) 474-1300
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares of Beneficial Interest,$0.01 Par Value (Equity Residential)
EQR
New York Stock Exchange
7.57% Notes due August 15, 2026(ERP Operating Limited Partnership)
N/A
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Equity Residential Yes ☒ No ☐
ERP Operating Limited Partnership Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Equity Residential:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
l
ERP Operating Limited Partnership:
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Equity Residential ☐
ERP Operating Limited Partnership ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Equity Residential Yes ☐ No ☒
ERP Operating Limited Partnership Yes ☐ No ☒
The number of EQR Common Shares of Beneficial Interest, $0.01 par value, outstanding on July 31, 2025 was 381,898,057.
EXPLANATORY NOTE
This report combines the reports on Form 10-Q for the quarterly period ended June 30, 2025 of Equity Residential and ERP Operating Limited Partnership. Unless stated otherwise or the context otherwise requires, references to “EQR” mean Equity Residential, a Maryland real estate investment trust (“REIT”), and references to “ERPOP” mean ERP Operating Limited Partnership, an Illinois limited partnership. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP. The following chart illustrates the Company’s and the Operating Partnership’s corporate structure:
EQR is the general partner of, and as of June 30, 2025 owned an approximate 97.0% ownership interest in, ERPOP. The remaining 3.0% interest is owned by limited partners. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. Management operates the Company and the Operating Partnership as one business. The management of EQR consists of the same members as the management of ERPOP.
The Company is structured as an umbrella partnership REIT (“UPREIT”) and EQR contributes all net proceeds from its various equity offerings to ERPOP. In return for those contributions, EQR receives a number of OP Units (see definition below) in ERPOP equal to the number of Common Shares it has issued in the equity offering. The Company may acquire properties in transactions that include the issuance of OP Units as consideration for the acquired properties. Such transactions may, in certain circumstances, enable the sellers to defer in whole or in part, the recognition of taxable income or gain that might otherwise result from the sales. This is one of the reasons why the Company is structured in the manner shown above. Based on the terms of ERPOP’s partnership agreement, OP Units can be exchanged with Common Shares on a one-for-one basis because the Company maintains a one-for-one relationship between the OP Units of ERPOP issued to EQR and the outstanding Common Shares.
The Company believes that combining the reports on Form 10-Q of EQR and ERPOP into this single report provides the following benefits:
•enhances investors’ understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and
•creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
The Company believes it is important to understand the few differences between EQR and ERPOP in the context of how EQR and ERPOP operate as a consolidated company. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR’s primary function is acting as the general partner of ERPOP. EQR also issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP. EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by EQR (which are contributed to the capital of ERPOP in exchange for additional partnership interests in ERPOP (“OP Units”) (on a one-for-one Common Share per OP Unit basis) or additional preference units in ERPOP (on a one-for-one preferred share per preference unit basis)), the Operating Partnership generates all remaining capital required by the Company’s business. These sources include the Operating Partnership’s working capital, net cash provided by operating activities, borrowings under its revolving credit facility and/or commercial paper program, the issuance of secured and unsecured debt and partnership interests, and proceeds received from disposition of certain properties and joint venture interests.
Shareholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of the Company and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners’ capital in the Operating Partnership’s financial statements and as noncontrolling interests in the Company’s financial statements. The noncontrolling interests in the Operating Partnership’s financial statements include the interests of unaffiliated partners in various consolidated partnerships. The noncontrolling interests in the Company’s financial statements include the same noncontrolling interests at the Operating Partnership level and limited partner OP Unit holders of the Operating Partnership. The differences between shareholders’ equity and partners’ capital result from differences in the equity issued at the Company and Operating Partnership levels.
To help investors understand the differences between the Company and the Operating Partnership, this report provides separate consolidated financial statements for the Company and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of each entity’s debt, noncontrolling interests and shareholders’ equity or partners’ capital, as applicable; and a combined Management’s Discussion and Analysis of Financial Condition and Results of Operations section that includes discrete information related to each entity.
This report also includes separate Part I, Item 4, Controls and Procedures, sections and separate Exhibits 31 and 32 certifications for each of the Company and the Operating Partnership in order to establish that the requisite certifications have been made and that the Company and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 18 U.S.C. §1350.
In order to highlight the differences between the Company and the Operating Partnership, the separate sections in this report for the Company and the Operating Partnership specifically refer to the Company and the Operating Partnership. In the sections that combine disclosure of the Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint ventures and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership.
As general partner with control of ERPOP, EQR consolidates ERPOP for financial reporting purposes, and EQR essentially has no assets or liabilities other than its investment in ERPOP. Therefore, the assets and liabilities of the Company and the Operating Partnership are the same on their respective financial statements. The separate discussions of the Company and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.
TABLE OF CONTENTS
PAGE
PART I.
Item 1. Financial Statements of Equity Residential:
Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024
2
Consolidated Statements of Operations and Comprehensive Income for the six months and quarters ended June 30, 2025 and 2024
3
Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024
5
Consolidated Statements of Changes in Equity for the six months and quarters ended June 30, 2025 and 2024
9
Financial Statements of ERP Operating Limited Partnership:
11
12
14
Consolidated Statements of Changes in Capital for the six months and quarters ended June 30, 2025 and 2024
18
Notes to Consolidated Financial Statements of Equity Residential and ERP Operating Limited Partnership
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
39
Item 3. Quantitative and Qualitative Disclosures about Market Risk
48
Item 4. Controls and Procedures
PART II.
Item 1. Legal Proceedings
49
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
1
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share amounts)
(Unaudited)
June 30,
December 31,
2025
2024
ASSETS
Land
$
5,636,458
5,606,531
Depreciable property
24,711,740
24,039,412
Projects under development
168,626
261,706
Land held for development
59,956
63,142
Investment in real estate
30,576,780
29,970,791
Accumulated depreciation
(10,816,579
)
(10,412,463
Investment in real estate, net
19,760,201
19,558,328
Investments in unconsolidated entities
403,768
386,531
Cash and cash equivalents
31,276
62,302
Restricted deposits
100,678
97,864
Right-of-use assets
449,577
455,445
Other assets
282,014
273,706
Total assets
21,027,514
20,834,176
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net
1,594,765
1,630,690
Notes, net
5,994,914
5,947,376
Line of credit and commercial paper
782,147
543,679
Accounts payable and accrued expenses
108,792
99,347
Accrued interest payable
75,694
74,176
Lease liabilities
302,847
304,897
Other liabilities
290,101
310,559
Security deposits
81,179
75,611
Distributions payable
270,695
263,494
Total liabilities
9,501,134
9,249,829
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership
317,905
338,563
Equity:
Shareholders' equity:
Preferred Shares of beneficial interest, $0.01 par value; 100,000,000 shares authorized; 343,100 shares issued and outstanding as of June 30, 2025 and December 31, 2024
17,155
Common Shares of beneficial interest, $0.01 par value; 1,000,000,000 shares authorized; 379,980,440 shares issued and outstanding as of June 30, 2025 and 379,475,383 shares issued and outstanding as of December 31, 2024
3,800
3,795
Paid in capital
9,656,272
9,611,826
Retained earnings
1,329,379
1,407,570
Accumulated other comprehensive income (loss)
1,615
4,214
Total shareholders’ equity
11,008,221
11,044,560
Noncontrolling Interests:
Operating Partnership
202,717
201,942
Partially Owned Properties
(2,463
(718
Total Noncontrolling Interests
200,254
201,224
Total equity
11,208,475
11,245,784
Total liabilities and equity
See accompanying notes
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands except per share data)
Six Months Ended June 30,
Quarter Ended June 30,
REVENUES
Rental income
1,529,637
1,464,981
768,827
734,163
EXPENSES
Property and maintenance
280,247
261,128
136,274
126,498
Real estate taxes and insurance
224,084
214,498
112,332
105,571
Property management
70,602
68,969
34,786
33,511
General and administrative
36,786
34,351
18,531
18,631
Depreciation
497,635
450,093
240,889
224,398
Total expenses
1,109,354
1,029,039
542,812
508,609
Net gain (loss) on sales of real estate properties
212,432
227,994
58,280
39,809
Interest and other income
3,821
10,657
2,129
1,328
Other expenses
(8,961
(45,123
(4,805
(13,385
Interest:
Expense incurred, net
(147,431
(133,040
(75,317
(65,828
Amortization of deferred financing costs
(4,247
(3,836
(2,103
(1,918
Income before income and other taxes, income (loss) from investments in unconsolidated entities and net gain (loss) on sales of land parcels
475,897
492,594
204,199
185,560
Income and other tax (expense) benefit
(829
(635
(407
(331
Income (loss) from investments in unconsolidated entities
(11,407
(3,372
(4,996
(1,674
Net gain (loss) on sales of land parcels
(78
—
(11
Net income
463,583
488,587
198,785
183,555
Net (income) loss attributable to Noncontrolling Interests:
(12,328
(13,278
(5,226
(5,003
(2,307
(2,039
(1,203
(1,069
Net income attributable to controlling interests
448,948
473,270
192,356
177,483
Preferred distributions
(711
(902
(355
Premium on redemption of Preferred Shares
(1,444
Net income available to Common Shares
448,237
470,924
192,001
177,128
Earnings per share – basic:
1.18
1.24
0.51
0.47
Weighted average Common Shares outstanding
379,359
378,699
379,508
378,578
Earnings per share – diluted:
0.50
391,345
390,548
391,498
390,542
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Continued)
Comprehensive income:
Other comprehensive income (loss):
Other comprehensive income (loss) – derivative instruments:
Unrealized holding gains (losses) arising during the period
(3,550
(2,046
Losses reclassified into earnings from other comprehensive income
951
1,210
265
600
Other comprehensive income (loss)
(2,599
(1,781
Comprehensive income
460,984
489,797
197,004
184,155
Comprehensive (income) attributable to Noncontrolling Interests
(14,566
(15,350
(6,382
(6,088
Comprehensive income attributable to controlling interests
446,418
474,447
190,622
178,067
4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net income to net cash provided by operating activities:
4,247
3,836
Amortization of discounts and premiums on debt
2,637
2,536
Amortization of deferred settlements on derivative instruments
945
1,204
Amortization of right-of-use assets
6,395
6,470
Write-off of pursuit costs
2,048
1,369
(Income) loss from investments in unconsolidated entities
11,407
3,372
Distributions from unconsolidated entities – return on capital
243
281
Net (gain) loss on sales of real estate properties
(212,432
(227,994
Net (gain) loss on sales of land parcels
78
Realized (gain) loss on investment securities
1,316
Unrealized (gain) loss on investment securities
(5,745
Compensation paid with Company Common Shares
21,564
21,350
Changes in assets and liabilities:
(Increase) decrease in other assets
(18,706
30,297
Increase (decrease) in accounts payable and accrued expenses
10,901
18,780
Increase (decrease) in accrued interest payable
1,518
(131
Increase (decrease) in lease liabilities
(1,106
(1,020
Increase (decrease) in other liabilities
22,697
Increase (decrease) in security deposits
5,471
670
Net cash provided by operating activities
785,070
817,968
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate – acquisitions
(534,855
(63,507
Investment in real estate – development/other
(59,713
(55,253
Capital expenditures to real estate
(144,368
(153,304
Non-real estate capital additions
(1,019
(921
Interest capitalized for real estate and unconsolidated entities under development
(6,663
(6,894
Proceeds from disposition of real estate, net
343,064
330,128
Investments in unconsolidated entities – acquisitions
(31,286
Investments in unconsolidated entities – development/other
(62,050
(28,793
Distributions from unconsolidated entities – return of capital
331
16
Proceeds from sale of investment securities
359
7,457
Consolidation of previously unconsolidated entities
(54,081
Net cash provided by (used for) investing activities
(518,995
(2,357
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt financing costs
(4,518
Mortgage notes payable, net:
Lump sum payoffs
(37,940
Notes, net:
Proceeds
498,580
(450,000
Line of credit and commercial paper:
Commercial paper proceeds
18,803,963
3,532,753
Commercial paper repayments
(18,565,495
(3,771,000
Proceeds from (payments on) settlement of derivative instruments
Finance ground lease principal payments
(1,471
(1,438
Proceeds from Employee Share Purchase Plan (ESPP)
1,413
2,449
Proceeds from exercise of options
5,357
6,480
Common Shares repurchased and retired
(38,474
Redemption of Preferred Shares
(20,125
Payment of offering costs
(481
Other financing activities, net
(53
(45
Contributions – Noncontrolling Interests – Partially Owned Properties
458
Contributions – Noncontrolling Interests – Operating Partnership
Distributions:
Common Shares
(519,437
(507,111
Preferred Shares
(1,320
Noncontrolling Interests – Operating Partnership
(15,949
(15,629
Noncontrolling Interests – Partially Owned Properties
(3,999
(2,741
Net cash provided by (used for) financing activities
(294,287
(817,185
Net increase (decrease) in cash and cash equivalents and restricted deposits
(28,212
(1,574
Cash and cash equivalents and restricted deposits, beginning of period
160,166
139,995
Cash and cash equivalents and restricted deposits, end of period
131,954
138,421
38,298
100,123
Total cash and cash equivalents and restricted deposits, end of period
6
SUPPLEMENTAL INFORMATION:
Cash paid for interest, net of amounts capitalized
133,733
120,955
Net cash paid (received) for income and other taxes
920
877
Amortization of deferred financing costs:
1,393
1,392
611
524
2,243
1,920
Amortization of discounts and premiums on debt:
1,404
1,412
1,233
1,124
Amortization of deferred settlements on derivative instruments:
(6
Accumulated other comprehensive income
Write-off of pursuit costs:
187
319
1,740
866
121
184
(Income) loss from investments in unconsolidated entities:
10,804
2,736
603
636
Realized/unrealized (gain) loss on derivative instruments:
(89
3,639
Interest capitalized for real estate and unconsolidated entities under development:
(3,812
(2,592
(2,851
(4,302
Investments in unconsolidated entities – development/other:
(60,550
(28,133
(1,500
(660
Consolidation of previously unconsolidated entities:
(88,356
32,370
56
1,725
27
97
Debt financing costs:
Proceeds from (payments on) settlement of derivative instruments:
89
(3,639
7
Right-of-use assets and lease liabilities initial measurement and reclassifications:
(527
527
Non-cash share distribution and other transfers from unconsolidated entities:
676
(676
Non-cash change in Supplemental Executive Retirement Plan (SERP) balances:
8,915
3,437
(8,175
(2,839
(740
(598
8
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
SHAREHOLDERS’ EQUITY
PREFERRED SHARES
Balance, beginning of period
37,280
Partial redemption of 8.29% Series K Cumulative Redeemable
Balance, end of period
COMMON SHARES, $0.01 PAR VALUE
3,793
3,798
3,789
Conversion of OP Units into Common Shares
Exercise of share options
Employee Share Purchase Plan (ESPP)
(7
Share-based employee compensation expense:
Restricted shares
3,791
PAID IN CAPITAL
9,601,866
9,622,470
9,603,743
Common Share Issuance:
8,771
5,047
4,365
4,793
5,356
6,479
996
2,079
2,448
471
804
9,337
9,381
4,901
4,887
Share options
2,656
2,507
1,377
1,218
ESPP discount
258
501
64
205
Offering costs
Supplemental Executive Retirement Plan (SERP)
(851
(371
Change in market value of Redeemable Noncontrolling Interests – Operating Partnership
19,568
(39,058
18,813
(30,243
Adjustment for Noncontrolling Interests ownership in Operating Partnership
(1,692
1,532
4,147
2,990
9,590,105
RETAINED EARNINGS
1,437,185
1,400,511
1,436,671
Common Share distributions
(526,428
(511,720
(263,133
(255,877
Preferred Share distributions
Premium on redemption of Preferred Shares – cash charge
(38,467
1,357,922
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
5,704
3,396
6,314
Accumulated other comprehensive income (loss) – derivative instruments:
6,914
DISTRIBUTIONS
Distributions declared per Common Share outstanding
1.385
1.35
0.6925
0.675
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)
NONCONTROLLING INTERESTS
OPERATING PARTNERSHIP
202,306
207,090
207,272
Issuance of restricted units to Noncontrolling Interests
Conversion of OP Units held by Noncontrolling Interests into OP Units held by General Partner
(8,773
(5,048
(4,366
(4,794
Equity compensation associated with Noncontrolling Interests
10,593
10,236
5,492
6,149
Net income attributable to Noncontrolling Interests
12,328
13,278
5,226
5,003
Distributions to Noncontrolling Interests
(16,159
(15,875
(7,559
(7,429
Change in carrying value of Redeemable Noncontrolling Interests – Operating Partnership
1,090
665
981
821
1,692
(1,532
(4,147
(2,990
204,032
PARTIALLY OWNED PROPERTIES
994
(2,989
(1,131
2,307
2,039
1,203
1,069
Contributions by Noncontrolling Interests
223
(4,052
(2,786
(677
(456
Other
(1,000
(295
10
LIABILITIES AND CAPITAL
Redeemable Limited Partners
Capital:
Partners’ Capital:
Preference Units
General Partner
10,989,451
11,023,191
Limited Partners
Total partners’ capital
11,210,938
11,246,502
Total capital
Total liabilities and capital
(Amounts in thousands except per Unit data)
Net (income) loss attributable to Noncontrolling Interests – Partially Owned Properties
461,276
486,548
197,582
182,486
ALLOCATION OF NET INCOME:
711
902
355
Premium on redemption of Preference Units
1,444
Net income available to Units
460,565
484,202
197,227
182,131
Earnings per Unit – basic:
Weighted average Units outstanding
389,779
389,380
389,837
389,271
Earnings per Unit – diluted:
Comprehensive (income) attributable to Noncontrolling Interests – Partially Owned Properties
458,677
487,758
195,801
183,086
13
Proceeds from EQR’s Employee Share Purchase Plan (ESPP)
Proceeds from exercise of EQR options
OP Units repurchased and retired
Redemption of Preference Units
Contributions – Limited Partners
OP Units – General Partner
OP Units – Limited Partners
15
17
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
PARTNERS’ CAPITAL
PREFERENCE UNITS
GENERAL PARTNER
11,042,844
11,026,779
11,044,203
OP Unit Issuance:
Conversion of OP Units held by Limited Partners into OP Units held by General Partner
8,773
5,048
4,366
4,794
Exercise of EQR share options
997
EQR’s Employee Share Purchase Plan (ESPP)
805
EQR restricted shares
9,339
9,383
EQR share options
EQR ESPP discount
Net income available to Units – General Partner
OP Units – General Partner distributions
Change in market value of Redeemable Limited Partners
Adjustment for Limited Partners ownership in Operating Partnership
10,951,818
LIMITED PARTNERS
Issuance of restricted units to Limited Partners
Equity compensation associated with Units – Limited Partners
Net income available to Units – Limited Partners
Units – Limited Partners distributions
Change in carrying value of Redeemable Limited Partners
Distributions declared per Unit outstanding
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Continued)
NONCONTROLLING INTERESTS – PARTIALLY OWNED PROPERTIES
19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Equity Residential (“EQR”) is an S&P 500 company focused on the acquisition, development and management of residential properties located in and around dynamic cities that attract affluent long-term renters, a business that is conducted on its behalf by ERP Operating Limited Partnership (“ERPOP”). 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. Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership.
EQR is the general partner of, and as of June 30, 2025 owned an approximate 97.0% 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.
As of June 30, 2025, the Company, directly or indirectly through investments in title holding entities, owned all or a portion of 319 properties located in 10 states and the District of Columbia consisting of 86,422 apartment units. The ownership breakdown includes (table does not include any uncompleted development properties):
Properties
Apartment Units
Wholly Owned Properties
302
82,054
Partially Owned Properties – Consolidated
Partially Owned Properties – Unconsolidated
1,712
86,422
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) and certain reclassifications considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
In preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
The balance sheets at December 31, 2024 have been derived from the audited financial statements at that date but do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
For further information, including definitions of 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, 2024.
Income and Other Taxes
EQR has elected to be taxed as a REIT. This, along with the nature of the operations of its operating properties, resulted in no provision for federal income taxes at the EQR level. In addition, ERPOP generally is not liable for federal income taxes as the partners recognize their allocable share of income or loss in their tax returns; therefore no provision for federal income taxes has been made at the ERPOP level. Historically, the Company has generally only incurred certain state and local income, excise and franchise taxes. The Company has elected taxable REIT subsidiary (“TRS”) status for certain of its corporate subsidiaries and, as a result, these entities will incur both federal and state income taxes on any taxable income of such entities after consideration of any net operating losses.
Recent Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued a new standard on disaggregation of income statement expenses, which requires an entity to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items in a tabular format in the notes to the financial statements. The standard will be effective for annual reporting periods beginning after December 15, 2026 and for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of the new rules on its disclosures.
In March 2024, the Securities and Exchange Commission ("SEC") adopted final rules that will require certain climate-related information in registration statements and annual reports. In April 2024, the SEC voluntarily stayed the new rules as a result of pending legal challenges. In March 2025, the SEC voted to end its defense of the rules. The new rules include a requirement to disclose material climate-related risks, descriptions of board and management oversight and risk management activities, the material impacts of these risks on a registrant’s strategy, business model and outlook, and any material climate-related targets or goals, as well as material effects and costs of severe weather events and other natural conditions and greenhouse gas emissions. Prior to the stay of the new rules, they would have been effective for annual periods beginning January 1, 2025, except for the greenhouse gas emissions disclosures, which would have been effective for annual periods beginning January 1, 2026. The Company is currently monitoring the legal challenges and evaluating the potential impact of the new rules on its disclosures.
In December 2023, the FASB issued an amendment to the income tax standards which requires disclosure enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. The new standard will be effective for annual periods beginning January 1, 2025 and will be applied on a prospective basis with the option to apply the standard retrospectively. Due to the nature of the Company's operations and the immaterial amount of income taxes incurred/paid due to its status as a REIT, we expect the adoption of the standard to have no impact on its disclosures. See the Income and Other Taxes section above for additional discussion.
In November 2023, the FASB issued an amendment to the segment reporting standards which requires disclosure for each reportable segment, on an interim and annual basis, of the significant expense categories and amounts that are regularly provided to the chief operating decision maker and included in each reported measure of a segment’s profit or loss. Additionally, it requires disclosure of the title and position of the individual or the name of the group or committee identified as the chief operating decision maker. The Company adopted the standard when effective for annual periods beginning January 1, 2024 and interim periods beginning January 1, 2025 on a retrospective basis. See Note 12 for further discussion.
In March 2020, the FASB issued an amendment to the reference rate reform standard which provides the option for a limited period of time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on contract modifications and hedge accounting. The new standard was effective for the Company upon issuance and elections could be made through December 31, 2024. The Company elected to apply the hedge accounting expedients and application of these expedients preserves the presentation of derivatives consistent with past presentation.
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The Company refers to “Common Shares” and “Units” (which refer to both OP Units and restricted units) as equity securities for EQR and “General Partner Units” and “Limited Partner Units” as equity securities for ERPOP. To provide a streamlined and more readable presentation of the disclosures for the Company and the Operating Partnership, several sections below refer to the respective terminology for each with the same financial information and separate sections are provided, where needed, to further distinguish any differences in financial information and terminology.
The following table presents the changes in the Company’s issued and outstanding Common Shares and Units for the six months ended June 30, 2025 and 2024:
Common Shares outstanding at January 1,
379,475,383
379,291,417
Common Shares Issued:
Conversion of OP Units
224,399
90,131
83,754
119,516
23,090
47,466
Restricted share grants, net
173,814
190,804
Common Shares Other:
Repurchased and retired
(652,452
Common Shares outstanding at June 30,
379,980,440
379,086,882
Units
Units outstanding at January 1,
11,543,773
11,581,306
Restricted unit grants, net
286,898
172,667
Conversion of OP Units to Common Shares
(224,399
(90,131
Units outstanding at June 30,
11,606,272
11,663,842
Total Common Shares and Units outstanding at June 30,
391,586,712
390,750,724
Units Ownership Interest in Operating Partnership
3.0
%
The following table presents the changes in the Operating Partnership’s issued and outstanding General Partner Units and Limited Partner Units for the six months ended June 30, 2025 and 2024:
General and Limited Partner Units
General and Limited Partner Units outstanding at January 1,
391,019,156
390,872,723
Issued to General Partner:
EQR’s restricted share grants, net
Issued to Limited Partners:
General Partner Other:
General and Limited Partner Units outstanding at June 30,
Limited Partner Units
Limited Partner Units outstanding at January 1,
Limited Partner restricted unit grants, net
Conversion of Limited Partner OP Units to EQR Common Shares
Limited Partner Units outstanding at June 30,
Limited Partner Units Ownership Interest in Operating Partnership
The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units, as well as the equity positions of the holders of restricted units, are collectively referred to as the “Noncontrolling Interests – Operating Partnership” and “Limited Partners Capital,” respectively, for the Company and the Operating Partnership. Subject to certain exceptions (including the “book-up” requirements of restricted units), the Noncontrolling Interests – Operating Partnership/Limited Partners Capital may exchange their Units with EQR for Common Shares on a one-for-one basis. The carrying value of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital (including redeemable interests) is allocated
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based on the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total in proportion to the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total plus the total number of Common Shares/General Partner Units. Net income is allocated to the Noncontrolling Interests – Operating Partnership/Limited Partners Capital based on the weighted average ownership percentage during the period.
The Operating Partnership has the right but not the obligation to make a cash payment instead of issuing Common Shares to any and all holders of Noncontrolling Interests – Operating Partnership/Limited Partners Capital requesting an exchange of their Noncontrolling Interests – Operating Partnership/Limited Partners Capital with EQR. Once the Operating Partnership elects not to redeem the Noncontrolling Interests – Operating Partnership/Limited Partners Capital for cash, EQR is obligated to deliver Common Shares to the exchanging holder of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital.
The Noncontrolling Interests – Operating Partnership/Limited Partners Capital are classified as either mezzanine equity or permanent equity. If EQR is required, either by contract or securities law, to deliver registered Common Shares, such Noncontrolling Interests – Operating Partnership/Limited Partners Capital are differentiated and referred to as “Redeemable Noncontrolling Interests – Operating Partnership” and “Redeemable Limited Partners,” respectively. Instruments that require settlement in registered shares cannot be classified in permanent equity as it is not always completely within an issuer’s control to deliver registered shares. Therefore, settlement in cash is assumed and that responsibility for settlement in cash is deemed to fall to the Operating Partnership as the primary source of cash for EQR, resulting in presentation in the mezzanine section of the balance sheet. The Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners are adjusted to the greater of carrying value or fair market value based on the Common Share price of EQR at the end of each respective reporting period. EQR has the ability to deliver unregistered Common Shares for the remaining portion of the Noncontrolling Interests – Operating Partnership/Limited Partners Capital that are classified in permanent equity at June 30, 2025 and December 31, 2024.
The carrying value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners is allocated based on the number of Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners in proportion to the number of Noncontrolling Interests – Operating Partnership/Limited Partners Capital in total. Such percentage of the total carrying value of Units/Limited Partner Units which is ascribed to the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners is then adjusted to the greater of carrying value or fair market value as described above. As of June 30, 2025 and 2024, the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners have a redemption value of approximately $317.9 million and $327.6 million, respectively, which represents the value of Common Shares that would be issued in exchange for the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners.
The following table presents the changes in the redemption value of the Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners for the six months ended June 30, 2025 and 2024, respectively (amounts in thousands):
Balance at January 1,
289,248
Change in market value
(19,568
39,058
Change in carrying value
(1,090
(665
Balance at June 30,
327,641
Net proceeds from EQR Common Share and Preferred Share (see definition below) offerings and proceeds from exercise of options for Common Shares are contributed by EQR to ERPOP. In return for those contributions, EQR receives a number of OP Units in ERPOP equal to the number of Common Shares it has issued in the equity offering (or in the case of a preferred equity offering, a number of preference units in ERPOP equal in number and having the same terms as the Preferred Shares issued in the equity offering). As a result, the net proceeds from Common Shares and Preferred Shares are allocated for the Company between shareholders’ equity and Noncontrolling Interests – Operating Partnership and for the Operating Partnership between General Partner’s Capital and Limited Partners Capital to account for the change in their respective percentage ownership of the underlying equity.
The Company’s declaration of trust authorizes it to issue up to 100,000,000 preferred shares of beneficial interest, $0.01 par value per share (the “Preferred Shares”), with specific rights, preferences and other attributes as the Board of Trustees may determine, which may include preferences, powers and rights that are senior to the rights of holders of the Company’s Common Shares.
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The following table presents the Company’s issued and outstanding Preferred Shares/Preference Units as of June 30, 2025 and December 31, 2024:
Amounts in thousands
Annual
Call
Dividend Per
Date (1)
Share/Unit (2)
Preferred Shares/Preference Units of beneficial interest, $0.01 par value; 100,000,000 shares authorized:
8.29% Series K Cumulative Redeemable Preferred Shares/Preference Units; liquidation value $50 per share/unit; 343,100 shares/units issued and outstanding as of June 30, 2025 and December 31, 2024
12/10/2026
4.145
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 May 2025 and expires in May 2028. 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. In May 2025, the Company replaced the prior program (which had expired) with a new program that matures in May 2028 and gives us the authority to issue up to 13.0 million shares, all of which remain available for issuance as of June 30, 2025.
The Company may repurchase up to 13.0 million Common Shares under its share repurchase program, which was reauthorized during the first quarter of 2025. As no Common Shares have been repurchased since the reauthorization, all 13.0 million shares remain available to repurchase as of June 30, 2025.
The following table summarizes the carrying amounts for the Company’s investment in real estate (at cost) as of June 30, 2025 and December 31, 2024 (amounts in thousands):
June 30, 2025
December 31, 2024
Depreciable property:
Buildings and improvements
21,180,210
20,635,583
Furniture, fixtures and equipment
2,949,071
2,840,691
In-Place lease intangibles
582,459
563,138
Projects under development:
36,779
40,034
Construction-in-progress
131,847
221,672
Land held for development:
42,538
46,160
17,418
16,982
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During the six months ended June 30, 2025, the Company acquired the following from unaffiliated parties (purchase price and purchase price allocation in thousands):
Purchase Price Allocation (1)
Purchase Price
Depreciable Property
Rental Properties – Consolidated
2,064
533,843
67,972
466,883
During the six months ended June 30, 2025, the Company also acquired its joint venture partner's 10% interest in a previously unconsolidated 270-unit apartment property, and the property is now wholly owned. The Company recorded real estate basis of $88.4 million upon consolidation, allocated as $8.5 million to land and $79.9 million to depreciable property. See Note 5 for further discussion.
During the six months ended June 30, 2025, the Company disposed of the following to unaffiliated parties (sales price and net gain (loss) in thousands):
Sales Price
Net Gain (Loss)
835
346,600
Land Parcel (one) – Consolidated
4,300
Total
350,900
212,354
The Company has invested in various entities with unrelated third parties which are either consolidated or accounted for under the equity method of accounting (unconsolidated).
Consolidated Variable Interest Entities (“VIEs”)
In accordance with accounting standards for consolidation of VIEs, the Company consolidates ERPOP on EQR’s financial statements. As the sole general partner of ERPOP, EQR has exclusive control of ERPOP’s day-to-day management. The limited partners are not able to exercise substantive kick-out or participating rights. As a result, ERPOP qualifies as a VIE. EQR has a controlling financial interest in ERPOP and, thus, is ERPOP’s primary beneficiary. EQR has the power to direct the activities of ERPOP that most significantly impact ERPOP’s economic performance as well as the obligation to absorb losses or the right to receive benefits from ERPOP that could potentially be significant to ERPOP.
The Company has various equity interests in certain joint ventures that have been deemed to be VIEs, and the Company is the VIEs’ primary beneficiary. As a result, the joint ventures are required to be consolidated on the Company’s financial statements. The following table summarizes the Company’s consolidated joint ventures as of June 30, 2025:
Operating Properties
Projects Under Development (1)
Projects
Apartment Units (2)
Consolidated Joint Ventures (VIE)
440
25
The following table provides consolidated assets and liabilities related to the Company's VIEs as of June 30, 2025 and December 31, 2024 (amounts in thousands):
Consolidated Assets
559,732
528,076
Consolidated Liabilities
48,799
47,137
Investments in Unconsolidated Entities
The Company has various equity interests in certain joint ventures that are unconsolidated and accounted for using the equity method of accounting. Most of these have been deemed to be VIEs and the Company is not the VIEs' primary beneficiary. The remaining have been deemed not to be VIEs and the Company does not have a controlling voting interest.
The following table and information summarizes the Company’s investments in unconsolidated entities as of June 30, 2025 and December 31, 2024 (amounts in thousands except for ownership percentage):
Ownership Percentage
Investments in Unconsolidated Entities:
Various Real Estate Holdings (VIE)
34,615
34,510
Varies
Development and Lease-Up Projects and Land Held for Development (VIE)
338,984
323,998
62% - 95% (1)
Real Estate Technology Funds/Companies (VIE)
30,429
28,276
(260
(253
The following table summarizes the Company’s unconsolidated joint ventures that were deemed to be VIEs as of June 30, 2025:
Development Lease-Up Projects (1)
Real Estate Holdings (2)
Projects Under Development (3)
Projects Held for Development (4)
Entities
Apartment Units (5)
Unconsolidated Joint Ventures (VIE)
639
526
During the six months ended June 30, 2025, the Company acquired its joint venture partner's 10% interest in a previously unconsolidated 270-unit apartment property for approximately $3.6 million in cash (net of cash acquired) and also contributed $50.5 million for the joint venture to repay the third-party construction loan encumbering the property. The property is now wholly owned.
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The following table presents the Company’s restricted deposits as of June 30, 2025 and December 31, 2024 (amounts in thousands):
Mortgage escrow deposits:
621
217
Mortgage principal reserves/sinking funds
35,660
31,208
Mortgage escrow deposits
36,281
31,425
Restricted cash:
Restricted deposits on real estate investments
2,177
2,143
Resident security and utility deposits
47,938
44,287
Replacement reserves
11,909
17,914
2,373
2,095
Restricted cash
64,397
66,439
Lessor Accounting
The Company is the lessor for its residential and non-residential leases and these leases are accounted for as operating leases under the lease standard.
The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the six months ended June 30, 2025 and 2024 (amounts in thousands):
June 30, 2024
Income Type
Residential
Non-Residential
Residential and non-residential rent
1,367,197
32,253
1,399,450
1,313,208
33,710
1,346,918
Utility recoveries (RUBS income) (1)
51,033
399
51,432
45,456
435
45,891
Parking rent
23,832
808
24,640
23,035
633
23,668
Other lease revenue, net (2)
3,265
(644
2,621
(3,035
(463
(3,498
Total lease revenue
1,445,327
32,816
1,478,143
1,378,664
34,315
1,412,979
Parking revenue
832
20,719
21,551
20,894
21,715
Other revenue
29,489
454
29,943
29,549
738
30,287
Total other rental income (3)
30,321
21,173
51,494
30,370
21,632
52,002
1,475,648
53,989
1,409,034
55,947
The following table presents the lease income types relating to lease payments for residential and non-residential leases along with the total other rental income for the quarters ended June 30, 2025 and 2024 (amounts in thousands):
686,936
15,405
702,341
658,665
14,887
673,552
25,717
25,934
22,787
208
22,995
11,969
408
12,377
11,611
413
12,024
2,274
(268
2,006
(1,127
(387
(1,514
726,896
15,762
742,658
691,936
15,121
707,057
397
10,480
10,877
480
10,557
11,037
15,084
15,292
15,364
705
16,069
15,481
10,688
26,169
15,844
11,262
27,106
742,377
26,450
707,780
26,383
The following table presents residential accounts receivable and straight-line receivable balances for the Company’s properties as of June 30, 2025 and December 31, 2024 (amounts in thousands):
Balance Sheet (Other assets):
Residential accounts receivable balances
13,904
15,152
Allowance for doubtful accounts
(8,310
(9,904
Net receivable balances
5,594
5,248
Straight-line receivable balances
11,828
10,234
The following table presents residential bad debt for the Company’s properties for the six months and quarters ended June 30, 2025 and 2024 (amounts in thousands):
Income Statement (Rental income):
Bad debt, net
14,990
17,139
7,293
7,924
% of residential rental income
1.0
1.2
1.1
EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. Weighted average interest rates noted below for the six months ended June 30, 2025 include the effect of any derivative instruments and amortization of premiums/discounts/OCI (other comprehensive income) on debt and derivatives.
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Mortgage Notes Payable
The following table summarizes the Company’s mortgage notes payable activity for the six months ended June 30, 2025 (amounts in thousands):
Mortgage notes payable, net as of December 31, 2024
Scheduled principal repayments
Amortization of premiums/discounts
Amortization of deferred financing costs, net (1)
Mortgage notes payable, net as of June 30, 2025
Fixed Rate Debt:
Secured – Conventional
1,401,099
788
541
1,402,428
Floating Rate Debt:
Secured – Tax Exempt
229,591
616
70
192,337
The following table summarizes certain interest rate and maturity date information as of and for the six months ended June 30, 2025:
Interest Rate Ranges (ending)
0.10% - 5.25%
Weighted Average Interest Rate
3.77%
Maturity Date Ranges
2029-2061
As of June 30, 2025, the Company had $202.7 million of secured tax-exempt bonds subject to third-party credit enhancement.
Notes
The following table summarizes the Company’s notes activity for the six months ended June 30, 2025 (amounts in thousands):
Notes, net as of December 31, 2024
Notes, net as of June 30, 2025
Unsecured – Public
(2)
(2,275
1.85% - 7.57%
3.68%
2026-2047
The Company’s unsecured public notes contain certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was in compliance with its unsecured public debt covenants for the six months ended June 30, 2025.
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Line of Credit and Commercial Paper
The Company has a $2.5 billion unsecured revolving credit facility maturing on October 26, 2027. 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 Secured Overnight Financing Rate ("SOFR") plus a spread (currently 0.725%), or based on bids received from the 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 and other terms and conditions per the agreement. The Company did not borrow any amounts under its revolving credit facility during the six months ended June 30, 2025.
The Company has an unsecured commercial paper note program under which it may borrow up to a maximum of $1.5 billion 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 following table summarizes certain weighted average interest rate, maturity and amount outstanding information for the commercial paper program as of and for the six months ended June 30, 2025:
Weighted Average Interest Rate (1)
4.60%
Weighted Average Maturity (in days)
Weighted Average Amount Outstanding
$372.1 million
The Company limits its utilization of the revolving credit facility in order to maintain liquidity to support its $1.5 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 June 30, 2025 (amounts in thousands):
Unsecured revolving credit facility commitment
2,500,000
Commercial paper balance outstanding
(785,000
Unsecured revolving credit facility balance outstanding
Other restricted amounts
(3,448
Unsecured revolving credit facility availability
1,711,552
The valuation of financial instruments requires the Company to make estimates and judgments that affect the fair value of the instruments. The Company, where possible, bases the fair values of its financial instruments on listed market prices and third-party quotes. Where these are not available, the Company bases its estimates on current instruments with similar terms and maturities or on other factors relevant to the financial instruments.
In the normal course of business, the Company is exposed to the effect of interest rate changes. The Company may seek to manage these risks by following established risk management policies and procedures including the use of derivatives to hedge interest rate risk on debt instruments. The Company may also use derivatives to manage commodity prices in the daily operations of the business.
A three-level valuation hierarchy exists for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:
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The following table summarizes the inputs to the valuations for each type of fair value measurement:
Fair Value Measurement Type
Valuation Inputs
Employee holdings (other than Common Shares) within the supplemental executive retirement plan (the “SERP”)
Quoted market prices for identical assets. These holdings are included in other assets and other liabilities on the consolidated balance sheets.
Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners
Quoted market price of Common Shares.
Mortgage notes payable and private unsecured debt (including its commercial paper and line of credit, if applicable)
Indicative rates provided by lenders of similar loans.
Public unsecured notes
Quoted market prices for each underlying issuance.
Derivatives
Readily observable market parameters such as forward yield curves and credit default swap data.
The fair values of the Company’s financial instruments (other than the items listed above and the investments disclosed below) approximate their carrying or contract value. The following table provides a summary of the carrying and fair values for the Company’s mortgage notes payable and unsecured debt (including its commercial paper and line of credit, if applicable) at June 30, 2025 and December 31, 2024, respectively (amounts in thousands):
Carrying Value
Estimated FairValue (Level 2)
1,522,268
1,506,955
Unsecured debt, net
6,777,061
6,443,791
6,491,055
6,036,591
Total debt, net
8,371,826
7,966,059
8,121,745
7,543,546
The following tables provide a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a recurring basis and the location within the accompanying consolidated balance sheets at June 30, 2025 and December 31, 2024, respectively (amounts in thousands):
Fair Value Measurements at Reporting Date Using
Description
Balance SheetLocation
6/30/2025
Quoted Prices inActive Markets forIdentical Assets/Liabilities(Level 1)
Significant OtherObservable Inputs(Level 2)
SignificantUnobservable Inputs(Level 3)
Assets
Supplemental Executive Retirement Plan
Other Assets
101,020
Liabilities
Other Liabilities
Redeemable Noncontrolling Interests –
Operating Partnership/Redeemable
Mezzanine
12/31/2024
Significant Other Observable Inputs (Level 2)
Significant UnobservableInputs(Level 3)
109,935
31
The following tables provide a summary of the effect of cash flow hedges on the Company’s accompanying consolidated statements of operations and comprehensive income for the six months ended June 30, 2025 and 2024, respectively (amounts in thousands):
June 30, 2025Type of Cash Flow Hedge
Amount ofGain/(Loss) Recognized in OCI on Derivative
Location ofGain/(Loss) Reclassified from Accumulated OCI into Income
Amount ofGain/(Loss) Reclassified from Accumulated OCI into Income
Derivatives designated as hedging instruments:
Interest Rate Contracts:
Forward Starting Swaps
Interest expense
(951
June 30, 2024Type of Cash Flow Hedge
Amount of Gain/(Loss) Recognized in OCI on Derivative
(1,210
As of June 30, 2025 and December 31, 2024, there were approximately $1.6 million and $4.2 million in deferred gains, net, included in accumulated other comprehensive income (loss), respectively, related to previously settled and/or unsettled derivative instruments, of which an estimated $1.1 million may be recognized as additional interest expense during the twelve months ending June 30, 2026.
During the six months ended June 30, 2025, the Company paid approximately $3.5 million to settle five forward starting swaps in conjunction with the issuance of $500.0 million of seven-year unsecured public notes. The entire $3.5 million was initially deferred as a component of accumulated other comprehensive income (loss) and $2.3 million will be recognized as an increase to interest expense over the seven-year term of the notes. The remaining $1.2 million covering the final three years of the ten-year term of the swaps will be amortized in conjunction with a future note refinance.
The Company has invested in various equity securities without readily determinable fair values and has elected to measure them using the measurement alternative in accordance with the applicable accounting standards for equity securities. These investments are carried at cost less any impairment and adjusted to fair value if there are observable price changes for an identical or similar investment of the same issuer.
The following table summarizes the Company’s real estate technology investment securities included in other assets as of June 30, 2025 and December 31, 2024 (amounts in thousands):
Real Estate Technology Investments
21,760
22,159
During the six months ended June 30, 2025, the Company sold a portion of one of these investment securities for proceeds of approximately $0.4 million, which approximated the Company's basis in the investment security.
32
Equity Residential
The following tables set forth the computation of net income per share – basic and net income per share – diluted for the Company (amounts in thousands except per share amounts):
Numerator for net income per share – basic:
Allocation to Noncontrolling Interests – Operating Partnership
Numerator for net income per share – basic
Numerator for net income per share – diluted:
Numerator for net income per share – diluted
Denominator for net income per share – basic and diluted:
Denominator for net income per share – basic
Effect of dilutive securities:
OP Units
10,420
10,681
10,329
10,693
Long-term compensation shares/units
1,566
1,168
1,661
1,271
Denominator for net income per share – diluted
Net income per share – basic
Net income per share – diluted
ERP Operating Limited Partnership
The following tables set forth the computation of net income per Unit – basic and net income per Unit – diluted for the Operating Partnership (amounts in thousands except per Unit amounts):
Numerator for net income per Unit – basic and diluted:
Allocation to Preference Units
Allocation to premium on redemption of Preference Units
Numerator for net income per Unit – basic and diluted
Denominator for net income per Unit – basic and diluted:
Denominator for net income per Unit – basic
Dilution for Units issuable upon assumed exercise/vesting of the Company’s long-term compensation shares/units
Denominator for net income per Unit – diluted
Net income per Unit – basic
Net income per Unit – diluted
33
Commitments
Real Estate Development Commitments
As of June 30, 2025, the Company has both consolidated and unconsolidated real estate projects under development. The following table summarizes the gross remaining total project costs for the Company’s projects under development at June 30, 2025 (total project costs remaining in thousands):
Total Project Costs Remaining (1)
Projects Under Development
Consolidated
63,546
Unconsolidated
150,228
Total Projects Under Development
1,079
213,774
We have entered into, and may continue in the future to enter into, joint venture agreements with third-party partners for the development of multifamily rental properties. The joint venture agreements with each development partner include buy-sell provisions that provide the right, but not the obligation, for the Company to acquire each respective partner’s interests or sell its interests at any time following the occurrence of certain pre-defined events described in the joint venture agreements. See Note 5 for additional discussion.
Other Commitments
We have entered into, and may continue in the future to enter into, real estate technology and other real estate fund investments. As of June 30, 2025, the Company has invested in eleven separate such investments totaling $47.0 million with aggregate remaining commitments of approximately $21.0 million.
Contingencies
Litigation and Legal Matters
The Company, as an owner of real estate, is subject to various federal, state and local laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations on its current properties or on properties that it may acquire in the future.
The Company is involved in various pending and threatened legal proceedings which arise in the ordinary course of business. The Company evaluates these litigation matters on an ongoing basis, but in no event less than quarterly, in assessing the adequacy of its accruals and disclosures. For legal proceedings in which it has been determined that a loss is both probable and reasonably estimable, the Company records new accruals and/or adjusts existing accruals that represent its best estimate of the loss incurred based on the facts and circumstances known at that time. As of June 30, 2025 and December 31, 2024, the Company’s litigation accruals approximated $42.1 million and $42.4 million, respectively, and are included in other liabilities in the consolidated balance sheets. Actual losses may differ materially from the amounts noted above and the ultimate outcome of these legal proceedings is generally not yet determinable. As of June 30, 2025 and December 31, 2024, the Company does not believe there is any litigation pending or threatened against it that, either individually or in the aggregate and inclusive of the matters accrued for as noted above, may reasonably be expected to have a material adverse effect on the Company and its financial condition.
The Company has been named as a defendant in a number of cases filed in late 2022 and 2023 alleging antitrust violations by RealPage, Inc., a seller of revenue management software products, and various owners and/or operators of multifamily housing, including us, that have utilized these products. The complaints allege collusion among the defendants to illegally fix and inflate the pricing of multifamily rents and seek monetary damages, injunctive relief, fees and costs. All of the cases except for one have been consolidated into a single putative class action in the United States District Court for the Middle District of Tennessee. On December 28, 2023, motions to dismiss this consolidated action, filed by RealPage, Inc. as well as us and our multifamily co-defendants, were denied by the Court and the case is proceeding. Another case with similar allegations has been filed by the District of Columbia against RealPage, Inc. and a number of multifamily owners and/or operators, including us, and no assurance can be given that similar additional cases will not be filed in the future. We believe these various lawsuits are without merit and we intend to vigorously defend against them. As these proceedings are in the early stages, it is not possible for the Company to predict the outcome nor is it possible to estimate
34
the amount of loss, if any, which may be associated with an adverse decision in any of these cases.
The Company is named as a defendant in a class action in the United States District Court for the Northern District of California filed in 2016 which alleges that the amount of late fees charged by the Company were improperly determined under California law. The plaintiffs are seeking monetary damages and other relief. On April 8, 2024, the Court issued certain findings of facts and conclusions of law that are adverse to the Company’s legal position. At this time, the Company is continuing to defend the action. While the resolution of this matter cannot be predicted with certainty, the Company does not believe that the eventual outcome will have a material adverse effect on the Company and its financial condition.
Operating segments are defined as components of an enterprise that engage in business activities from which they may earn revenues and incur expenses and about which discrete financial information is available that is evaluated regularly by the chief operating decision maker. The chief operating decision maker, who is the Company’s chief executive officer, decides how resources are allocated and assesses performance on a recurring basis at least quarterly.
The Company’s primary business is the acquisition, development and management of multifamily residential properties, which includes the generation of rental and other related income through the leasing of apartment units to residents. The chief operating decision maker evaluates the Company’s operating performance of our apartment communities geographically by market on a same store basis and in total on a non-same store basis, which represent our operating segments.
The Company has aggregated its geographic same store operating segments into one reportable segment called same store. Management believes the properties in the same store reportable segment have similar economic characteristics, facilities, services and residents, which is in alignment with the required aggregation criteria. The following reflects the two reportable segments for the Company:
The Company has non-residential activities included in each of its reportable segments, which account for less than 4.0% of total revenues for the six months ended June 30, 2025 and 2024, respectively, and serve as an amenity for our residential residents. All revenues are from external customers and there is no customer who contributed 10% or more of the Company’s total revenues during the six months and quarters ended June 30, 2025 and 2024, respectively.
The primary financial measure for the Company’s reportable segments is net operating income (“NOI”), which represents rental income less: 1) property and maintenance expense and 2) real estate taxes and insurance expense (all as reflected in the accompanying consolidated statements of operations and comprehensive income). 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. Revenues for all leases are reflected on a straight-line basis in accordance with GAAP for the current and comparable periods.
35
The following table presents a reconciliation of net income per the consolidated statements of operations to NOI for the six months and quarters ended June 30, 2025 and 2024, respectively (amounts in thousands):
Adjustments:
(58,280
(39,809
(3,821
(10,657
(2,129
(1,328
8,961
45,123
4,805
13,385
147,431
133,040
75,317
65,828
2,103
1,918
Income and other tax expense (benefit)
829
635
407
4,996
1,674
Total NOI
1,025,306
989,355
520,221
502,094
The following tables present NOI from our rental real estate for the six months and quarters ended June 30, 2025 and 2024, respectively (amounts in thousands):
Six Months Ended June 30, 2025
Six Months Ended June 30, 2024
Rental Income
Operating Expenses
NOI
Same store (1)
Los Angeles
242,484
76,589
165,895
239,386
73,686
165,700
Orange County
63,811
14,221
49,590
62,272
13,805
48,467
San Diego
42,392
9,307
33,085
41,370
8,604
32,766
Subtotal - Southern California
348,687
100,117
248,570
343,028
96,095
246,933
San Francisco
223,067
67,254
155,813
214,833
64,258
150,575
Washington, D.C.
226,463
71,768
154,695
216,933
68,319
148,614
New York
254,116
104,832
149,284
246,136
101,455
144,681
Boston
164,613
49,663
114,950
162,532
47,354
115,178
Seattle
139,131
39,657
99,474
135,974
38,863
97,111
Denver
38,367
11,808
26,559
39,690
11,835
27,855
Other Expansion Markets
39,391
16,952
22,439
40,868
16,219
24,649
Total same store
1,433,835
462,051
971,784
1,399,994
444,398
955,596
Non-same store
91,124
33,292
57,832
20,162
9,509
10,653
Total reportable segments
1,524,959
495,343
1,029,616
1,420,156
453,907
966,249
Other (2)
4,678
8,988
(4,310
44,825
21,719
23,106
Totals
504,331
475,626
36
Quarter Ended June 30, 2025
Quarter Ended June 30, 2024
121,545
37,782
83,763
120,118
35,856
84,262
31,964
6,964
25,000
31,171
6,908
24,263
21,287
4,622
16,665
20,746
4,257
16,489
174,796
49,368
125,428
172,035
47,021
125,014
114,497
33,201
81,296
109,549
31,330
78,219
116,496
36,016
80,480
111,280
35,360
75,920
127,960
51,832
76,128
122,172
50,077
72,095
82,917
24,184
58,733
82,081
23,266
58,815
69,769
19,912
49,857
68,427
19,632
48,795
19,199
5,753
13,446
19,937
5,801
14,136
21,409
9,168
12,241
22,269
8,831
13,438
727,043
229,434
497,609
707,750
221,318
486,432
40,934
15,376
25,558
4,920
2,477
2,443
767,977
244,810
523,167
712,670
223,795
488,875
850
3,796
(2,946
21,493
8,274
13,219
248,606
232,069
The following tables present reconciliations of operating expenses for each reportable segment for the six months and quarters ended June 30, 2025 and 2024, respectively (amounts in thousands):
Same Store (1)
Non-Same Store
Operating expenses:
Real estate taxes
187,733
11,837
199,570
183,209
3,488
186,697
On-site payroll
85,786
6,481
92,267
83,418
1,697
85,115
Utilities
73,270
5,042
78,312
67,350
1,470
68,820
Repairs and maintenance
61,688
5,562
67,250
59,582
1,165
60,747
53,574
4,370
57,944
50,839
1,689
52,528
93,975
5,647
99,622
92,375
833
93,208
42,937
2,844
45,781
41,962
411
42,373
34,344
2,057
36,401
31,711
295
32,006
32,620
2,842
35,462
30,859
381
31,240
1,986
27,544
24,411
557
24,968
37
The following table presents a reconciliation of total assets and capital expenditures as of and for the six months ended June 30, 2025 (amounts in thousands):
17,409,992
2,907,037
710,485
Capital expenditures
128,559
15,239
570
144,368
There have been no material subsequent events occurring since June 30, 2025.
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For further information including definitions for capitalized terms not defined herein, refer to the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024.
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. 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, 2024, 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. 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.
Overview
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 affluent 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.
The Company’s corporate headquarters is located in Chicago, Illinois and the Company also operates regional property management offices in most of its markets.
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 or furnish to 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 or furnish them to 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.
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, 2024.
Results of Operations
2025 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 six months ended June 30, 2025:
Portfolio Rollforward
($ in thousands)
ApartmentUnits
Acquisition Cap Rate
311
84,249
Acquisitions:
Consolidated Rental Properties
5.1
DispositionYield
Dispositions:
(3
(835
(346,600
(5.1
%)
Consolidated Land Parcels
(4,300
Completed Developments – Consolidated
495
Completed Developments – Unconsolidated
450
Configuration Changes
(1
Acquisitions
Dispositions
Developments
See Notes 4 and 5 in the Notes to Consolidated Financial Statements for additional discussion regarding the Company’s real estate investments and investments in partially owned entities.
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Comparison of the six months and quarter ended June 30, 2025 to the six months and quarter ended June 30, 2024
The following table presents a reconciliation of diluted earnings per share/unit for the six months and quarter ended June 30, 2025 as compared to the same periods in 2024:
Six Months Ended June 30
Quarter EndedJune 30
Diluted earnings per share/unit for period ended 2024
Property NOI
0.08
0.05
(0.04
(0.02
Corporate overhead (1)
(0.01
Net gain/loss on property sales
Depreciation expense
(0.14
(0.06
0.09
0.01
Diluted earnings per share/unit for period ended 2025
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 present reconciliations of net income per the consolidated statements of operations to NOI, along with rental income, operating expenses and NOI per the consolidated statements of operations allocated between same store and non-same store/other results (amounts in thousands):
$Change
%Change
(25,004
)%
15,230
8.3
1,633
2.4
1,275
3.8
2,435
7.1
(100
(0.5
47,542
10.6
16,491
7.3
15,562
(6.8
(18,471
46.4
6,836
(64.1
(801
60.3
(36,162
(80.1
(8,580
14,391
10.8
9,489
14.4
10.7
185
9.6
194
30.6
76
23.0
8,035
238.3
3,322
198.4
100.0
35,951
3.6
18,127
Rental income:
Same store
33,841
19,293
2.7
Non-same store/other
95,802
64,987
30,815
47.4
41,784
26,413
15,371
58.2
Total rental income
64,656
4.4
34,664
4.7
17,653
4.0
8,116
3.7
42,280
31,228
11,052
35.4
19,172
10,751
8,421
78.3
Total operating expenses
28,705
6.0
16,537
NOI:
16,188
1.7
11,177
2.3
53,522
33,759
19,763
58.5
22,612
15,662
6,950
44.4
41
See Note 12 in the Notes to Consolidated Financial Statements for our disclosure of reportable segments.
The comparison discussions provided below detail the changes in results for the six months ended June 30, 2025 as compared to the prior year period.
See the Same Store Results section below for additional discussion of those results. See the reconciliation table of net income per the consolidated statements of operations to NOI above for the dollar and percentage changes related to the comparison discussions provided below.
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. The increases during the six months and quarter ended June 30, 2025 as compared to the prior year periods are primarily attributable to increases in payroll-related costs, training and marketing expenses, information technology expenses and legal and professional fees, partially offset by decreases in workforce/contractors costs.
General and administrative expenses, which include corporate operating expenses, increased during the six months ended June 30, 2025 as compared to the prior year period, primarily due to increases in payroll-related costs and other public company costs. General and administrative expenses decreased during the quarter ended June 30, 2025 compared to the prior year period, primarily due to decreases in payroll-related costs and other public company costs, partially offset by increases in workforce/contractors costs.
Depreciation expense increased during the six months and quarter ended June 30, 2025 as compared to the prior year periods, primarily as a result of additional depreciation expense on properties acquired in 2024 and 2025 and development properties placed in service during 2024 and 2025, partially offset by lower depreciation from properties sold in 2024 and 2025.
Net gain on sales of real estate properties decreased during the six months ended June 30, 2025 as compared to the prior year period, primarily as a result of a lower property volume and the mix of properties sold in 2025 vs. 2024. Net gain on sales of real estate properties increased during the quarter ended June 30, 2025 as compared to the prior year period, primarily as a result of the mix of properties sold in the periods.
Interest and other income decreased during the six months ended June 30, 2025 as compared to the prior year period, primarily due to a net decrease in realized/unrealized gains on various investment securities, lower short-term investment income on restricted deposit accounts due to a lower rate environment and lower overall invested balances and lower insurance/litigation settlement proceeds received during 2025 as compared to 2024. Interest and other income increased during the quarter ended June 30, 2025 as compared to the prior year period, primarily due to a net increase in realized/unrealized gains on various investment securities, partially offset by decreases in insurance/litigation settlement proceeds received during 2025 as compared to 2024.
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Other expenses decreased during the six months and quarter ended June 30, 2025 as compared to the prior year periods, primarily due to decreases in litigation accruals and advocacy contributions.
Interest expense, including amortization of deferred financing costs, increased during the six months and quarter ended June 30, 2025 as compared to the prior year periods, primarily due to higher overall debt balances outstanding and higher overall rates. The effective interest cost on all indebtedness, excluding debt extinguishment costs/prepayment penalties, for the six months ended June 30, 2025 was 3.93% as compared to 3.89% for the prior year period, and for the quarter ended June 30, 2025 was 3.93% as compared to 3.88% for the prior year period. The Company capitalized interest of approximately $6.7 million and $6.9 million during the six months ended June 30, 2025 and 2024, respectively, and $2.8 million and $3.8 million during the quarters ended June 30, 2025 and 2024, respectively.
Loss from investments in unconsolidated entities increased during the six months and quarter ended June 30, 2025 as compared to the prior year periods, primarily as a result of losses incurred on our unconsolidated development properties which recently started lease-up activities.
Same Store Results
Properties that the Company owned and were stabilized for all of both of the six months ended June 30, 2025 and 2024, which represented 75,072 apartment units, drove the Company’s results of operations. Properties are considered “stabilized” when they have achieved 90% Physical Occupancy for three consecutive months.
The following table provides results and statistics related to our Residential same store operations for the six months ended June 30, 2025 and 2024:
June YTD 2025 vs. June YTD 2024
Same Store Residential Results/Statistics by Market
Increase (Decrease) from Prior Year
Markets/Metro Areas
June YTD 25 % of Actual NOI
June YTD 25 Average Rental Rate
June YTD 25 Weighted Average Physical Occupancy %
June YTD 25 Turnover
AverageRental Rate
PhysicalOccupancy
Turnover
17.6
2,962
95.7
19.8
0.1
(1.5
3,718
5.3
2,966
96.4
16.7
2.1
0.4
2,209
3.5
3,290
96.6
0.5
Subtotal – Southern California
20,063
26.4
2,999
95.9
19.3
1.4
0.2
(1.2
11,093
16.4
3,405
97.0
18.5
3.1
0.7
(2.7
13,533
16.2
2,822
97.1
17.8
0.0
(0.6
8,536
14.7
4,746
97.8
15.9
3.2
0.6
(0.2
7,077
11.3
3,669
96.2
18.2
8,458
9.9
2,663
20.8
(1.0
2,792
2.8
2,350
24.1
(2.6
(0.8
(0.4
3,520
1,886
95.1
24.3
(4.2
(0.1
(5.2
75,072
3,178
96.5
19.0
2.5
(1.3
Note: The above table reflects Residential same store results only. Residential operations account for more than 96.0% of total revenues for the six months ended June 30, 2025.
During the six months ended June 30, 2025, the Company's operating business performed well, driven by good and sustained demand across most of our markets and supported by a continuing constructive job market, high employment levels and high wage growth among our target renter demographic. Competitive new supply was modest in most of our Established Markets, but continues to be elevated in our Expansion Markets. While demand has been steady, maintaining occupancy in our Expansion Markets has been challenging and has required a continued use of Leasing Concessions to attract and retain residents. On a positive note, Atlanta has shown a few months of stability, with early indications of potential improvement in market conditions.
Thus far in 2025, our best performing markets have been Washington, D.C., New York and San Francisco. Each of these markets has experienced healthy demand as evidenced by strong Physical Occupancy, healthy pricing and low Turnover. Recently, in Washington, D.C. we have seen some slowing in the market likely due to uncertainty around jobs given cuts by the government, while in San Francisco we continue to see a strong post pandemic recovery. The Seattle market also continued to improve due to large
43
employers’ return to office policies. While new supply in Seattle has temporarily affected rental rate growth, we expect this impact to lessen throughout the year as most of the concentrated deliveries are behind us.
Overall, the fundamentals of our business are healthy despite recent economic concerns. Long-term, we expect a positive forward set up for our business due to elevated single family home ownership costs, positive household formation trends, manageable competitive new supply in our Established Markets and moderating competitive new supply in our Expansion Markets. With an overall deficit in housing across the country, we believe our business is well positioned for the future. We also see our resident base as being more resilient to economic uncertainty, including elevated inflation, due to higher levels of disposable income and lower relative rent-to-income ratios.
Liquidity and Capital Resources
With approximately $1.7 billion in readily available liquidity, a strong balance sheet, well-staggered debt maturities, very strong credit metrics and ample access to capital markets, the Company believes it is well positioned to meet its future obligations and take advantage of opportunities. See further discussion below.
Statements of Cash Flows
The following table sets forth our sources and uses of cash flows for the six months ended June 30, 2025 and 2024 (amounts in thousands):
Cash flows provided by (used for):
Operating activities
Investing activities
Financing activities
The following provides information regarding the Company’s cash flows from operating, investing and financing activities for the six months ended June 30, 2025.
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 six months ended June 30, 2025 as compared to the prior year period decreased by approximately $32.9 million primarily as a result of the timing of certain real estate tax payments, partially offset by increases in 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 the six months ended June 30, 2025, key drivers were:
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Financing Activities
Our financing cash flows primarily relate to our borrowing activity (debt proceeds or repayment), distributions/dividends to shareholders/unitholders and other Common Share activity. For the six months ended June 30, 2025, key drivers were:
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 June 30, 2025 and December 31, 2024 (amounts in thousands):
1,952,067
Credit Facility and Commercial Paper Program
The Company has a $2.5 billion unsecured revolving credit facility maturing October 26, 2027. 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 Secured Overnight Financing Rate (“SOFR”) plus a spread (currently 0.725%), or based on bids received from the 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 and other terms and conditions per the agreement. See Note 8 in the Notes to Consolidated Financial Statements for additional discussion of the Company’s credit facility.
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The Company limits its utilization of the revolving credit facility in order to maintain liquidity to support its $1.5 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 July 31, 2025 (amounts in thousands):
July 31, 2025
(1,021,500
1,475,052
Dividend Policy
The Company declared a dividend/distribution for the first and second quarters of 2025 of $0.6925 per share/unit in each quarter, an annualized increase of 2.6% over the amount paid in 2024. All future dividends/distributions remain subject to the discretion of the Company’s Board of Trustees.
Total dividends/distributions paid in July 2025 amounted to $270.7 million (excluding distributions on Partially Owned Properties), which consisted of certain distributions declared during the quarter ended June 30, 2025.
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 $30.6 billion in investment in real estate on the Company’s balance sheet at June 30, 2025, $27.5 billion or 90.1% 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. For additional details, see Item 1A, Risk Factors, of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024.
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.
The Company’s total debt summary schedule as of June 30, 2025 is as follows:
Debt Summary as of June 30, 2025
DebtBalances
% of Total
Secured
Unsecured
81.0
71.6
Fixed Rate Debt
7,397,342
88.3
Unsecured – Revolving Credit Facility
Unsecured – Commercial Paper Program
9.4
Floating Rate Debt
974,484
11.7
The Company’s long-term financing and capital needs and sources have 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, 2024.
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Critical Accounting Policies and Estimates
The Company’s and the Operating Partnership’s critical accounting policies and estimates 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, 2024.
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 the six months and quarters ended June 30, 2025 and 2024:
Preferred/preference distributions
Premium on redemption of Preferred Shares/Preference Units
Net income available to Common Shares and Units / Units
Depreciation – Non-real estate additions
(1,834
(1,897
(884
(942
Depreciation – Partially Owned Properties
(963
(1,089
(485
(547
Depreciation – Unconsolidated Properties
8,735
1,452
4,340
1,117
Net (gain) loss on sales of unconsolidated entities - operating assets
(138
(174
FFO available to Common Shares and Units / Units (1) (3) (4)
751,568
704,767
382,633
366,348
727
Debt extinguishment and preferred share/preference unit redemption (gains) losses
Non-operating asset (gains) losses
624
(3,216
186
2,890
Other miscellaneous items
4,971
40,674
3,244
10,083
Normalized FFO available to Common Shares and Units / Units (2) (3) (4)
759,308
745,038
386,790
380,142
FFO (1) (3)
752,279
707,113
382,988
366,703
Normalized FFO (2) (3)
760,019
745,940
387,145
380,497
•the impact of any expenses relating to non-operating real estate asset impairment;
•pursuit cost write-offs;
•gains and losses from early debt extinguishment and preferred share/preference unit redemptions;
•gains and losses from non-operating assets; and
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•other miscellaneous items.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company’s and the Operating Partnership’s market risk has not changed materially from the amounts and information reported in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, to the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024.
Effective as of June 30, 2025, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
There were no changes to the internal control over financial reporting of the Company identified in connection with the Company’s evaluation referred to above that occurred during the second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Effective as of June 30, 2025, the Operating Partnership carried out an evaluation, under the supervision and with the participation of the Operating Partnership’s management, including the Chief Executive Officer and Chief Financial Officer of EQR, of the effectiveness of the Operating Partnership’s disclosure controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective to ensure that information required to be disclosed by the Operating Partnership in its Exchange Act filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
There were no changes to the internal control over financial reporting of the Operating Partnership identified in connection with the Operating Partnership’s evaluation referred to above that occurred during the second quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.
PART II. OTHER INFORMATION
There have been no changes to the legal proceedings discussed in Part I, Item 3 of the Company's and the Operating Partnership's Annual Report on Form 10-K for the year ended December 31, 2024. As of June 30, 2025, the Company does not believe there is any litigation pending or threatened against it that, either individually or in the aggregate, may reasonably be expected to have a material adverse effect on the Company and its financial condition. See Note 11 in the Notes to Consolidated Financial Statements for further discussion.
There have been no material changes to the risk factors that were discussed in Part I, Item 1A of the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2024.
Unregistered Common Shares Issued in the Quarter Ended June 30, 2025 (Equity Residential)
During the quarter ended June 30, 2025, EQR issued 117,000 Common Shares in exchange for 117,000 OP Units held by various limited partners of ERPOP. OP Units are generally exchangeable into Common Shares on a one-for-one basis or, at the option of ERPOP, the cash equivalent thereof, at any time one year after the date of issuance. These shares were either registered under the Securities Act of 1933, as amended (the “Securities Act”), or issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder, as these were transactions by an issuer not involving a public offering. In light of the manner of the sale and information obtained by EQR from the limited partners in connection with these transactions, EQR believes it may rely on these exemptions.
None.
Not applicable.
During the quarter ended June 30, 2025, no trustee or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.
Item 6. Exhibits – See the Exhibit Index.
EXHIBIT INDEX
The exhibits listed below are filed as part of this report. References to exhibits or other filings under the caption “Location” indicate that the exhibit or other filing has been filed, that the indexed exhibit and the exhibit referred to are the same and that the exhibit referred to is incorporated by reference. The Commission file numbers for our Exchange Act filings referenced below are 1-12252 (Equity Residential) and 0-24920 (ERP Operating Limited Partnership).
Exhibit
Location
4.1
Form of 4.950% Note due June 15, 2032.
Included as Exhibit 4.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated May 1, 2025, filed on May 2, 2025.
10.1
Distribution Agreement, dated May 15, 2025.
Included as Exhibit 1.1 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated and filed on May 15, 2025.
10.2
Form of Master Forward Sale Confirmation.
Included as Exhibit 1.2 to Equity Residential's and ERP Operating Limited Partnership's Form 8-K dated and filed on May 15, 2025.
10.3
Rule of 70 Retirement Agreement, dated June 26, 2025, by and between Equity Residential and Alexander Brackenridge.
Attached herein.
31.1
Equity Residential – Certification of Mark J. Parrell, Chief Executive Officer.
31.2
Equity Residential – Certification of Robert A. Garechana, Chief Financial Officer.
31.3
ERP Operating Limited Partnership – Certification of Mark J. Parrell, Chief Executive Officer of Registrant’s General Partner.
31.4
ERP Operating Limited Partnership – Certification of Robert A. Garechana, Chief Financial Officer of Registrant’s General Partner.
32.1
Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Executive Officer of the Company.
32.2
Equity Residential – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Robert A. Garechana, Chief Financial Officer of the Company.
32.3
ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Mark J. Parrell, Chief Executive Officer of Registrant’s General Partner.
32.4
ERP Operating Limited Partnership – Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Robert A. Garechana, Chief Financial Officer of Registrant’s General Partner.
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
50
Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date:
August 6, 2025
By:
/s/ Robert A. Garechana
Robert A. Garechana
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Ian S. Kaufman
Ian S. Kaufman
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
ERP OPERATING LIMITED PARTNERSHIP BY: EQUITY RESIDENTIAL
ITS GENERAL PARTNER