Equity Residential Reports Full Year 2017 Results

Provides Outlook for 2018

CHICAGO--(BUSINESS WIRE)--Equity Residential (NYSE: EQR) today reported results for the quarter and year ended December 31, 2017. All per share results are reported as available to common shares/units on a diluted basis. Earnings per Share (EPS) was $0.34, Funds From Operations (FFO) was $0.82 per share and Normalized FFO was $0.83 per share for the fourth quarter of 2017, each as described in further detail below.

“A growing economy resulting in record low unemployment and rising wages combined with extremely favorable demographics continue to provide strong and steady demand for rental housing across our markets,” said David J. Neithercut, Equity Residential’s President and CEO. “In 2017, strong occupancy, record retention and favorable renewal pricing helped mitigate the impact of elevated levels of new supply driving growth in same store revenue, net operating income and Normalized FFO to the upper end of our original expectations.”

“While 2018 will see no letup in the demand for Equity Residential’s high quality rental housing, our markets will experience another year of elevated levels of new supply, reduced pricing power and slowing revenue growth,” Mr. Neithercut continued. “However, the outlook in our coastal markets with high cost of home ownership will soon improve significantly as new apartment supply reduces while favorable demographics, low unemployment and rising incomes continue to produce extraordinarily strong demand and excellent risk adjusted returns to our shareholders.”

Highlights

• Increased same store revenues by 2.2% over the fourth quarter of 2016. Achieved same store Physical Occupancy of 96.0% and a 2.0% increase in Average Rental Rate.
• For the full year 2017, increased same store revenues by 2.2%, achieved Physical Occupancy of 96.0%, increased Average Rental Rate 2.3% and produced Same Store Turnover of 52.9%, which is the lowest in the Company’s history.
• Planned annualized increase of 7.2% in the Company’s 2018 common share dividend.
• Named the 2017 recipient of the NAREIT Residential Leader in the Light award for the Company’s accomplishments in sustainability.

Fourth Quarter 2017

EPS for the fourth quarter of 2017 was $0.34 compared to $0.75 in the fourth quarter of 2016. The difference is due primarily to lower property sale gains in the fourth quarter of 2017, the various adjustment items listed on page 25 of this release and the items described below.

FFO as defined by the National Association of Real Estate Investment Trusts (NAREIT) was $0.82 per share for the fourth quarter of 2017 compared to $0.80 per share in the fourth quarter of 2016. The difference is due primarily to the various adjustment items listed on page 25 of this release and the items described below.

Normalized FFO for the fourth quarter of 2017 was $0.83 per share compared to $0.79 per share in the fourth quarter of 2016. The difference is due primarily to:

• A positive impact of approximately $0.02 per share from increased same store net operating income (NOI);
• A positive impact of approximately $0.03 per share from Lease-Up NOI; and
• A negative impact of approximately $0.01 per share from other items including higher corporate overhead (property management and general and administrative expenses).

The Company has a glossary of defined terms and related reconciliations of Non-GAAP financial measures on pages 27 through 30 of this release. Reconciliations and definitions of FFO and Normalized FFO are provided on pages 7, 28 and 29 of this release and the Company has included guidance for Normalized FFO on page 26 and FFO and EPS on page 29 of this release.

Year Ended December 31, 2017

EPS for the year ended December 31, 2017 was $1.63 compared to $11.68 for the full year 2016. The difference is due primarily to $10.16 per share in higher property sale gains as a result of the Company’s significant property sales activity in 2016, the various adjustment items listed on page 25 of this release and the items described below.

FFO for the year ended December 31, 2017 was $3.15 per share compared to $2.94 per share for the full year 2016. The difference is due primarily to the various adjustment items listed on page 25 of this release and the items described below.

Normalized FFO for the year ended December 31, 2017 was $3.13 per share compared to $3.09 per share for the full year 2016. The difference is due primarily to:

• A positive impact of approximately $0.08 per share from increased same store NOI;
• A positive impact of approximately $0.11 per share from Lease-Up NOI;
• A negative impact of approximately $0.12 per share due primarily to the Company’s significant property sale activity in 2016;
• A negative impact of approximately $0.02 per share from higher total interest expense, driven primarily by a reduction in capitalized interest offset by interest savings from favorable refinancing activity; and
• A negative impact of approximately $0.01 per share from other items including lower interest and other income.

Same Store Results

On a same store fourth quarter to fourth quarter comparison, which includes 72,529 apartment units, revenues increased 2.2%, expenses increased 2.5% and NOI increased 2.1%. Average Rental Rate increased 2.0% and Physical Occupancy remained flat at 96.0%.

On a same store year to year comparison, which includes 70,117 apartment units, revenues increased 2.2%, expenses increased 2.7% and NOI increased 2.0%. Average Rental Rate increased 2.3% and Physical Occupancy remained flat at 96.0%.

Investment Activity

The Company did not acquire any consolidated apartment properties during the fourth quarter of 2017. During the quarter, the Company sold one consolidated apartment property in southern New Jersey, consisting of 170 apartment units, for a sale price of approximately $35.3 million, at a Disposition Yield of 5.1%, generating an Unlevered IRR of 6.8%. Also during the quarter, the Company completed Cascade, a 477-unit apartment development project in Seattle, for a total cost of approximately $176.4 million and an anticipated Development Yield of 6.6%.

During the full year 2017, the Company acquired four consolidated apartment properties, consisting of 947 apartment units, for an aggregate purchase price of approximately $468.0 million at a weighted average Acquisition Capitalization Rate of 4.8%. During the full year 2017, the Company sold five consolidated apartment properties, consisting of 1,194 apartment units, for an aggregate sale price of approximately $355.0 million, at a weighted average Disposition Yield of 5.1%, generating an Unlevered IRR of 12.4%. During 2017, the Company also sold a land parcel located in New York City for a sale price of approximately $33.5 million. During 2017, the Company completed four new apartment development projects, consisting of 1,393 apartment units, at an aggregate total cost of approximately $584.2 million and an anticipated weighted average Development Yield of 6.0%.

First Quarter 2018 Guidance

The Company has established an EPS guidance range of $0.48 to $0.52 for the first quarter of 2018. The difference between the Company’s fourth quarter 2017 EPS of $0.34 and the midpoint of the first quarter 2018 guidance range of $0.50 is due primarily to higher expected gains on property sales and the items described below.

The Company has established an FFO guidance range of $0.69 to $0.73 per share for the first quarter of 2018. The difference between the Company’s fourth quarter 2017 FFO of $0.82 per share and the midpoint of the first quarter 2018 guidance range of $0.71 per share is due primarily to higher expected debt extinguishment costs and the items described below.

The Company has established a Normalized FFO guidance range of $0.74 to $0.78 per share for the first quarter of 2018. The difference between the Company’s fourth quarter 2017 Normalized FFO of $0.83 per share and the midpoint of the first quarter 2018 guidance range of $0.76 per share is due primarily to:

• A negative impact of approximately $0.04 per share from lower same store NOI;
• A negative impact of approximately $0.01 per share as a result of the Company’s 2017 and 2018 transaction activity; and
• A negative impact of approximately $0.02 per share from higher overhead costs (property management and general and administrative expenses), which are typically front-end loaded for the year.

Full Year 2018 Guidance

The Company is providing guidance for its full year 2018 same store operating performance, EPS, FFO per share, Normalized FFO per share, transactions and debt offerings as listed below:

Same Store:
Physical Occupancy	96.0%
Revenue change	1.0% to 2.25%
Expense change	3.5% to 4.5%
NOI change	0.0% to 1.5%
EPS	$1.71 to $1.81
FFO per share	$3.10 to $3.20
Normalized FFO per share	$3.17 to $3.27
Transactions:
Consolidated rental acquisitions	$500.0 million
Consolidated rental dispositions	$500.0 million
Acquisition Cap Rate/Disposition Yield spread	50 basis points
Debt offerings:	$800.0 million to $1.0 billion

The Company anticipates using the proceeds of any debt offerings to repay debt maturing in 2018 (excluding commercial paper) and to prepay a $550.0 million secured debt pool maturing in 2020 that the Company intends to call in 2018 and to prepay a $500.0 million secured debt pool that matures in 2019 but is pre-payable at par in late 2018 (see page 17 of this release for details). The Company anticipates incurring approximately $23.7 million in debt extinguishment costs/prepayment penalties in connection with all of its debt repayment activities in 2018, which will not be included in the Company’s Normalized FFO.

The Company has established an EPS guidance range of $1.71 to $1.81 for the full year 2018. The difference between the Company’s full year 2017 EPS of $1.63 and the midpoint of the full year 2018 guidance range of $1.76 is due primarily to higher expected gains on property sales, higher expected depreciation expense and the items described below.

The Company has established an FFO guidance range of $3.10 to $3.20 per share for the full year 2018. The midpoint of the full year 2018 FFO guidance range of $3.15 per share is identical to the Company’s full year 2017 FFO of $3.15 per share with variances in line items due primarily to higher expected debt extinguishment costs, lower expected gains on sales of non-operating assets and the items described below.

The Company has established a Normalized FFO guidance range of $3.17 to $3.27 per share for the full year 2018. The difference between the Company’s full year 2017 Normalized FFO of $3.13 per share and the midpoint of the full year 2018 guidance range of $3.22 per share is due primarily to:

• A positive impact of approximately $0.04 per share from increased same store NOI;
• A positive impact of approximately $0.09 per share from Lease-Up NOI;
• A negative impact of approximately $0.01 per share as a result of the Company’s 2017 and 2018 transaction activity;
• A negative impact of approximately $0.01 per share from higher total interest expense driven primarily by a reduction in capitalized interest and an expected increase in short term rates offset by interest savings from favorable refinancing activity; and
• A negative impact of approximately $0.02 per share from other items including higher overhead costs (property management and general and administrative expenses).

2018 Dividends

The Company has decided that it will no longer determine its common share dividend as a fixed percentage of estimated Normalized FFO but will instead adopt a more conventional policy based on actual and projected financial conditions, the Company’s actual and projected liquidity and operating results, the Company’s projected cash needs for capital expenditures and other investment activities and such other factors as the Company’s Board of Trustees deems relevant. The Company currently expects to declare a common share dividend for the first quarter of $0.54 per share, an annualized increase of 7.2% over the amount paid in 2017. This policy change is supported by the Company’s strong growth in property operations since the recent economic downturn and a significant reduction in its development activity resulting in a material increase in available cash flow. The first quarter dividend and all future dividends remain subject to the discretion of the Company’s Board of Trustees.

First Quarter 2018 Earnings and Conference Call

Equity Residential expects to announce its first quarter 2018 results on Tuesday, April 24, 2018 and host a conference call to discuss those results at 10:00 a.m. CT on Wednesday, April 25, 2018.

About Equity Residential

Equity Residential is an S&P 500 company focused on the acquisition, development and management of rental apartment properties in urban and high-density suburban coastal gateway markets where today’s renters want to live, work and play. Equity Residential owns or has investments in 305 properties consisting of 78,611 apartment units, primarily located in Boston, New York, Washington, D.C., Seattle, San Francisco and Southern California. For more information on Equity Residential, please visit our website at www.equityapartments.com.

Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements and information within the meaning of the federal securities laws. These statements are based on current expectations, estimates, projections and assumptions made by management. While Equity Residential’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, including, without limitation, changes in general market conditions, including the rate of job growth and cost of labor and construction material, the level of new multifamily construction and development, competition and local government regulation. Other risks and uncertainties are described under the heading “Risk Factors” in our Annual Report on Form 10-K and subsequent periodic reports filed with the Securities and Exchange Commission (SEC) and available on our website, www.equityapartments.com. Many of these uncertainties and risks are difficult to predict and beyond management’s control. Forward-looking statements are not guarantees of future performance, results or events. Equity Residential assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events.

A live web cast of the Company’s conference call discussing these results will take place tomorrow, Wednesday, January 31, at 10:00 a.m. Central. Please visit the Investor section of the Company’s web site at www.equityapartments.com for the link. A replay of the web cast will be available for two weeks at this site.

Equity Residential Consolidated Statements of Operations (Amounts in thousands except per share data) (Unaudited)
	Year Ended December 31,						Quarter Ended December 31,
	2017			2016			2017			2016
REVENUES
Rental income	$	2,470,689		$	2,422,233		$	630,519		$	605,273
Fee and asset management		717			3,567			185			216
Total revenues		2,471,406			2,425,800			630,704			605,489
EXPENSES
Property and maintenance		405,281			406,823			98,636			97,135
Real estate taxes and insurance		335,495			317,387			82,177			78,433
Property management		85,493			82,015			20,791			18,012
General and administrative		52,224			57,840			11,858			10,432
Depreciation		743,749			705,649			200,785			177,407
Impairment		1,693			—			1,693			—
Total expenses		1,623,935			1,569,714			415,940			381,419
Operating income		847,471			856,086			214,764			224,070
Interest and other income		6,136			65,773			428			681
Other expenses		(5,186	)		(10,368	)		(2,026	)		4,112
Interest:
Expense incurred, net		(383,890	)		(482,246	)		(95,311	)		(95,930	)
Amortization of deferred financing costs		(8,526	)		(12,633	)		(2,079	)		(2,633	)
Income before income and other taxes, income (loss) from
investments in unconsolidated entities, net gain (loss)
on sales of real estate properties and land parcels
and discontinued operations		456,005			416,612			115,776			130,300
Income and other tax (expense) benefit		(478	)		(1,613	)		232			(424	)
Income (loss) from investments in unconsolidated entities		(3,370	)		4,801			(1,217	)		(1,045	)
Net gain (loss) on sales of real estate properties		157,057			4,044,055			15,296			173,184
Net gain (loss) on sales of land parcels		19,167			15,731			(3	)		(28	)
Income from continuing operations		628,381			4,479,586			130,084			301,987
Discontinued operations, net		—			518			—			394
Net income		628,381			4,480,104			130,084			302,381
Net (income) loss attributable to Noncontrolling Interests:
Operating Partnership		(22,604	)		(171,511	)		(4,673	)		(11,069	)
Partially Owned Properties		(2,323	)		(16,430	)		31			(14,062	)
Net income attributable to controlling interests		603,454			4,292,163			125,442			277,250
Preferred distributions		(3,091	)		(3,091	)		(773	)		(773	)
Net income available to Common Shares	$	600,363		$	4,289,072		$	124,669		$	276,477
Earnings per share – basic:
Income from continuing operations available to Common Shares	$	1.64		$	11.75		$	0.34		$	0.76
Net income available to Common Shares	$	1.64		$	11.75		$	0.34		$	0.76
Weighted average Common Shares outstanding		366,968			365,002			367,442			365,256
Earnings per share – diluted:
Income from continuing operations available to Common Shares	$	1.63		$	11.68		$	0.34		$	0.75
Net income available to Common Shares	$	1.63		$	11.68		$	0.34		$	0.75
Weighted average Common Shares outstanding		382,678			381,992			383,105			381,860
Distributions declared per Common Share outstanding	$	2.015		$	13.015		$	0.50375		$	0.50375

Equity Residential Consolidated Statements of Funds From Operations and Normalized Funds From Operations (Amounts in thousands except per share data) (Unaudited)
	Year Ended December 31,						Quarter Ended December 31,
	2017			2016			2017			2016
Net income	$	628,381		$	4,480,104		$	130,084		$	302,381
Net (income) loss attributable to Noncontrolling
Interests – Partially Owned Properties		(2,323	)		(16,430	)		31			(14,062	)
Preferred distributions		(3,091	)		(3,091	)		(773	)		(773	)
Net income available to Common Shares and Units		622,967			4,460,583			129,342			287,546
Adjustments:
Depreciation		743,749			705,649			200,785			177,407
Depreciation – Non-real estate additions		(5,023	)		(5,224	)		(1,215	)		(1,292	)
Depreciation – Partially Owned Properties		(4,526	)		(3,805	)		(2,026	)		(909	)
Depreciation – Unconsolidated Properties		4,577			4,745			1,147			1,139
Net (gain) loss on sales of unconsolidated entities
- operating assets		(73	)		(8,841	)		(5	)		—
Net (gain) loss on sales of real estate properties		(157,057	)		(4,044,055	)		(15,296	)		(173,184	)
Noncontrolling Interests share of gain (loss) on
sales of real estate properties		290			14,521			290			14,521
Discontinued operations:
Net (gain) loss on sales of discontinued operations		—			(43	)		—			—
FFO available to Common Shares and Units		1,204,904			1,123,530			313,022			305,228
Adjustments (see page 25 for additional detail):
Asset impairment and valuation allowances		1,693			—			1,693			—
Write-off of pursuit costs		3,106			4,092			777			713
Debt extinguishment (gains) losses, including
prepayment penalties, preferred share redemptions and non-cash
convertible debt discounts		11,789			121,694			—			1,418
(Gains) losses on sales of non-operating assets,
net of income and other tax expense (benefit)		(18,884	)		(73,301	)		471			299
Other miscellaneous items		(3,371	)		3,635			824			(5,038	)
Normalized FFO available to Common Shares and Units	$	1,199,237		$	1,179,650		$	316,787		$	302,620
FFO	$	1,207,995		$	1,126,621		$	313,795		$	306,001
Preferred distributions		(3,091	)		(3,091	)		(773	)		(773	)
FFO available to Common Shares and Units	$	1,204,904		$	1,123,530		$	313,022		$	305,228
FFO per share and Unit - basic	$	3.17		$	2.97		$	0.82		$	0.81
FFO per share and Unit - diluted	$	3.15		$	2.94		$	0.82		$	0.80
Normalized FFO	$	1,202,328		$	1,182,741		$	317,560		$	303,393
Preferred distributions		(3,091	)		(3,091	)		(773	)		(773	)
Normalized FFO available to Common Shares and Units	$	1,199,237		$	1,179,650		$	316,787		$	302,620
Normalized FFO per share and Unit - basic	$	3.16		$	3.11		$	0.83		$	0.80
Normalized FFO per share and Unit - diluted	$	3.13		$	3.09		$	0.83		$	0.79
Weighted average Common Shares and Units outstanding - basic		379,870			378,829			380,325			379,081
Weighted average Common Shares and Units outstanding - diluted		382,678			381,992			383,105			381,860

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

Equity Residential Consolidated Balance Sheets (Amounts in thousands except for share amounts) (Unaudited)
	December 31,			December 31,
	2017			2016
ASSETS
Investment in real estate
Land	$	5,996,024		$	5,899,862
Depreciable property		19,768,362			18,730,579
Projects under development		163,547			637,168
Land held for development		98,963			118,816
Investment in real estate		26,026,896			25,386,425
Accumulated depreciation		(6,040,378	)		(5,360,389	)
Investment in real estate, net		19,986,518			20,026,036
Cash and cash equivalents		50,647			77,207
Investments in unconsolidated entities		58,254			60,141
Restricted deposits		50,115			141,881
Other assets		425,065			398,883
Total assets	$	20,570,599		$	20,704,148
LIABILITIES AND EQUITY
Liabilities:
Mortgage notes payable, net	$	3,618,722		$	4,119,181
Notes, net		5,038,812			4,848,079
Line of credit and commercial paper		299,757			19,998
Accounts payable and accrued expenses		114,766			147,482
Accrued interest payable		58,035			60,946
Other liabilities		341,852			350,466
Security deposits		65,009			62,624
Distributions payable		192,828			192,296
Total liabilities		9,729,781			9,801,072
Commitments and contingencies
Redeemable Noncontrolling Interests – Operating Partnership		366,955			442,092
Equity:
Shareholders’ equity:
Preferred Shares of beneficial interest, $0.01 par value;
100,000,000 shares authorized; 745,600 shares issued and
outstanding as of December 31, 2017 and December 31, 2016		37,280			37,280
Common Shares of beneficial interest, $0.01 par value;
1,000,000,000 shares authorized; 368,018,082 shares issued
and outstanding as of December 31, 2017 and 365,870,924
shares issued and outstanding as of December 31, 2016		3,680			3,659
Paid in capital		8,886,586			8,758,422
Retained earnings		1,403,530			1,543,626
Accumulated other comprehensive income (loss)		(88,612	)		(113,909	)
Total shareholders’ equity		10,242,464			10,229,078
Noncontrolling Interests:
Operating Partnership		226,691			221,297
Partially Owned Properties		4,708			10,609
Total Noncontrolling Interests		231,399			231,906
Total equity		10,473,863			10,460,984
Total liabilities and equity	$	20,570,599		$	20,704,148

Equity Residential Portfolio Summary As of December 31, 2017
			% of		Average
		Apartment	Stabilized		Rental
Markets/Metro Areas	Properties	Units	NOI		Rate
Los Angeles	71	16,160	18.6	%	$	2,454
Orange County	13	4,028	4.4	%		2,142
San Diego	12	3,385	3.9	%		2,288
Subtotal – Southern California	96	23,573	26.9	%		2,375
San Francisco	54	12,961	19.5	%		3,089
Washington DC	48	15,811	17.3	%		2,360
New York	39	10,462	16.5	%		3,758
Boston	24	6,263	9.9	%		3,001
Seattle	41	8,460	9.9	%		2,365
Other Markets	1	136	—	%		1,157
Total	303	77,666	100.0	%		2,729
Unconsolidated Properties	2	945	—			—
Grand Total	305	78,611	100.0	%	$	2,729

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

Equity Residential
Portfolio as of December 31, 2017
	Properties	Apartment Units
Wholly Owned Properties	283	73,598
Master-Leased Properties - Consolidated	3	853
Partially Owned Properties - Consolidated	17	3,215
Partially Owned Properties - Unconsolidated	2	945
	305	78,611

Portfolio Rollforward Q4 2017 ($ in thousands)
		Properties		Apartment Units		Sales Price			Disposition Yield
	9/30/2017	305		78,302
Dispositions:
Consolidated:
Rental Properties		(1	)	(170	)	$	(35,250	)	(5.1	%)
Completed Developments - Consolidated		1		477
Configuration Changes		—		2
	12/31/2017	305		78,611

Portfolio Rollforward 2017 ($ in thousands)
		Properties		Apartment Units		Purchase Price			Acquisition Cap Rate
	12/31/2016	302		77,458
Acquisitions:
Consolidated:
Rental Properties – Stabilized		2		437		$	174,028		4.7	%
Rental Properties – Not Stabilized (A)		2		510		$	294,022		5.0	%
						Sales Price			Disposition Yield
Dispositions:
Consolidated:
Rental Properties		(5	)	(1,194	)	$	(354,950	)	(5.1	%)
Land Parcels		—		—		$	(33,450	)
Completed Developments - Consolidated		4		1,393
Configuration Changes		—		7
	12/31/2017	305		78,611

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

Equity Residential
Fourth Quarter 2017 vs. Fourth Quarter 2016 Same Store Results/Statistics for 72,529 Same Store Apartment Units $ in thousands (except for Average Rental Rate)
	Results									Statistics
Description	Revenues			Expenses			NOI			Average Rental Rate			Physical Occupancy			Turnover
Q4 2017	$	590,387		$	169,647		$	420,740		$	2,709			96.0	%		11.1	%
Q4 2016	$	577,809		$	165,552		$	412,257		$	2,656			96.0	%		11.2	%
Change	$	12,578		$	4,095		$	8,483		$	53			0.0	%		(0.1	%)
Change		2.2	%		2.5	%		2.1	%		2.0	%

Fourth Quarter 2017 vs. Third Quarter 2017 Same Store Results/Statistics for 73,822 Same Store Apartment Units $ in thousands (except for Average Rental Rate)
	Results									Statistics
Description	Revenues			Expenses			NOI			Average Rental Rate			Physical Occupancy			Turnover
Q4 2017	$	602,878		$	173,089		$	429,789		$	2,720			96.0	%		11.1	%
Q3 2017	$	604,414		$	178,672		$	425,742		$	2,725			96.2	%		16.7	%
Change	$	(1,536	)	$	(5,583	)	$	4,047		$	(5	)		(0.2	%)		(5.6	%)
Change		(0.3	%)		(3.1	%)		1.0	%		(0.2	%)

2017 vs. 2016 Same Store Results/Statistics for 70,117 Same Store Apartment Units $ in thousands (except for Average Rental Rate)
	Results									Statistics
Description	Revenues			Expenses			NOI			Average Rental Rate			Physical Occupancy			Turnover
2017	$	2,248,564		$	656,321		$	1,592,243		$	2,670			96.0	%		52.9	%
2016	$	2,200,094		$	639,342		$	1,560,752		$	2,611			96.0	%		54.7	%
Change	$	48,470		$	16,979		$	31,491		$	59			0.0	%		(1.8	%)
Change		2.2	%		2.7	%		2.0	%		2.3	%

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

Equity Residential Fourth Quarter 2017 vs. Fourth Quarter 2016 Same Store Results/Statistics by Market
														Increase (Decrease) from Prior Year's Quarter
Markets/Metro Areas	Apartment Units		Q4 2017 % of Actual NOI			Q4 2017 Average Rental Rate		Q4 2017 Weighted Average Physical Occupancy %			Q4 2017 Turnover			Revenues			Expenses			NOI			Average Rental Rate			Physical Occupancy			Turnover
Los Angeles		14,432		17.6	%	$	2,445		95.9	%		13.0	%		3.2	%		0.7	%		4.1	%		3.4	%		0.0	%		(0.5	%)
Orange County		3,684		4.1	%		2,109		96.1	%		11.0	%		4.0	%		2.3	%		4.5	%		4.2	%		(0.1	%)		(0.7	%)
San Diego		3,385		4.0	%		2,288		96.0	%		14.1	%		4.6	%		3.8	%		4.8	%		4.7	%		(0.1	%)		(0.1	%)
Subtotal – Southern California		21,501		25.7	%		2,363		95.9	%		12.8	%		3.5	%		1.4	%		4.3	%		3.7	%		(0.1	%)		(0.5	%)
New York		10,462		18.8	%		3,758		96.4	%		7.6	%		0.4	%		0.9	%		0.2	%		(0.3	%)		0.4	%		(0.9	%)
San Francisco		11,848		18.6	%		3,007		95.9	%		11.7	%		1.9	%		4.7	%		1.1	%		2.1	%		(0.1	%)		0.6	%
Washington DC		15,475		18.1	%		2,356		96.5	%		9.8	%		1.2	%		2.3	%		0.8	%		0.7	%		0.5	%		(0.5	%)
Boston		6,009		10.1	%		2,981		95.8	%		10.3	%		2.3	%		1.7	%		2.4	%		1.4	%		0.1	%		0.2	%
Seattle		7,098		8.6	%		2,285		95.1	%		13.5	%		5.4	%		8.6	%		4.3	%		6.1	%		(0.5	%)		1.8	%
Other Markets		136		0.1	%		1,157		96.1	%		11.8	%		(0.1	%)		9.8	%		(4.4	%)		1.0	%		(0.8	%)		(2.9	%)
Total		72,529		100.0	%	$	2,709		96.0	%		11.1	%		2.2	%		2.5	%		2.1	%		2.0	%		0.0	%		(0.1	%)

Equity Residential Fourth Quarter 2017 vs. Third Quarter 2017 Same Store Results/Statistics by Market
														Increase (Decrease) from Prior Quarter
Markets/Metro Areas	Apartment Units		Q4 2017 % of Actual NOI			Q4 2017 Average Rental Rate		Q4 2017 Weighted Average Physical Occupancy %			Q4 2017 Turnover			Revenues			Expenses			NOI			Average Rental Rate			Physical Occupancy			Turnover
Los Angeles		14,717		17.6	%	$	2,446		95.8	%		13.1	%		(0.6	%)		2.4	%		(1.7	%)		0.2	%		(0.7	%)		(5.1	%)
Orange County		3,684		4.0	%		2,109		96.1	%		11.0	%		0.1	%		(5.7	%)		1.9	%		0.4	%		(0.3	%)		(5.8	%)
San Diego		3,385		3.9	%		2,288		96.0	%		14.1	%		0.1	%		(3.1	%)		1.2	%		0.8	%		(0.7	%)		(4.6	%)
Subtotal – Southern California		21,786		25.5	%		2,365		95.9	%		12.9	%		(0.4	%)		0.5	%		(0.7	%)		0.3	%		(0.6	%)		(5.1	%)
San Francisco		12,720		19.8	%		3,059		95.9	%		11.6	%		0.3	%		(2.9	%)		1.5	%		0.1	%		0.2	%		(5.9	%)
New York		10,462		18.4	%		3,758		96.4	%		7.6	%		(1.1	%)		(3.9	%)		0.6	%		(0.8	%)		0.0	%		(5.4	%)
Washington DC		15,475		17.7	%		2,356		96.5	%		9.8	%		(0.9	%)		(5.3	%)		1.0	%		(1.1	%)		0.2	%		(6.6	%)
Boston		6,009		9.9	%		2,981		95.8	%		10.3	%		1.9	%		(4.5	%)		4.5	%		0.5	%		0.0	%		(8.0	%)
Seattle		7,234		8.6	%		2,284		95.0	%		13.6	%		(0.2	%)		(4.4	%)		1.4	%		0.2	%		(0.4	%)		(2.8	%)
Other Markets		136		0.1	%		1,157		96.1	%		11.8	%		(0.9	%)		(3.4	%)		0.4	%		0.2	%		(1.0	%)		1.5	%
Total		73,822		100.0	%	$	2,720		96.0	%		11.1	%		(0.3	%)		(3.1	%)		1.0	%		(0.2	%)		(0.2	%)		(5.6	%)

Equity Residential 2017 vs. 2016 Same Store Results/Statistics by Market
														Increase (Decrease) from Prior Year
Markets/Metro Areas	Apartment Units		2017 % of Actual NOI			2017 Average Rental Rate		2017 Weighted Average Physical Occupancy %			2017 Turnover			Revenues			Expenses			NOI			Average Rental Rate			Physical Occupancy			Turnover
Los Angeles		14,040		17.9	%	$	2,419		96.0	%		59.1	%		3.6	%		0.7	%		4.8	%		3.8	%		(0.1	%)		(2.0	%)
Orange County		3,684		4.2	%		2,076		96.2	%		52.2	%		4.7	%		4.6	%		4.7	%		4.5	%		0.1	%		(1.5	%)
San Diego		3,385		4.1	%		2,249		96.3	%		64.2	%		4.6	%		3.2	%		5.1	%		4.5	%		0.1	%		(0.1	%)
Subtotal – Southern California		21,109		26.2	%		2,332		96.1	%		58.7	%		3.9	%		1.6	%		4.9	%		4.1	%		0.0	%		(1.7	%)
Washington DC		15,475		18.9	%		2,362		96.1	%		50.3	%		1.3	%		2.8	%		0.7	%		1.4	%		0.1	%		(0.4	%)
New York		9,837		18.3	%		3,706		96.2	%		40.4	%		0.1	%		3.7	%		(1.8	%)		(0.1	%)		(0.1	%)		(1.5	%)
San Francisco		11,021		18.0	%		2,942		95.9	%		53.6	%		2.0	%		1.5	%		2.1	%		2.2	%		(0.2	%)		(5.5	%)
Boston		6,009		10.4	%		2,952		95.8	%		52.2	%		1.6	%		0.8	%		2.0	%		1.2	%		0.3	%		(3.1	%)
Seattle		6,530		8.1	%		2,241		95.6	%		59.2	%		5.6	%		6.8	%		5.2	%		6.0	%		0.0	%		1.3	%
Other Markets		136		0.1	%		1,150		97.6	%		44.9	%		2.3	%		14.9	%		(3.5	%)		2.9	%		(0.4	%)		(9.5	%)
Total		70,117		100.0	%	$	2,670		96.0	%		52.9	%		2.2	%		2.7	%		2.0	%		2.3	%		0.0	%		(1.8	%)

Equity Residential
Fourth Quarter 2017 vs. Fourth Quarter 2016 Same Store Operating Expenses for 72,529 Same Store Apartment Units $ in thousands
	Actual Q4 2017		Actual Q4 2016		$ Change			% Change			% of Actual Q4 2017 Operating Expenses
Real estate taxes	$	73,064	$	70,011	$	3,053			4.4	%		43.1	%
On-site payroll (1)		37,720		36,241		1,479			4.1	%		22.2	%
Utilities (2)		22,897		22,460		437			1.9	%		13.5	%
Repairs and maintenance (3)		20,327		20,185		142			0.7	%		12.0	%
Insurance		4,367		4,561		(194	)		(4.3	%)		2.6	%
Leasing and advertising		2,364		2,666		(302	)		(11.3	%)		1.4	%
Other on-site operating expenses (4)		8,908		9,428		(520	)		(5.5	%)		5.2	%
Same store operating expenses	$	169,647	$	165,552	$	4,095			2.5	%		100.0	%

2017 vs. 2016 Same Store Operating Expenses for 70,117 Same Store Apartment Units $ in thousands
	Actual 2017		Actual 2016		$ Change			% Change			% of Actual 2017 Operating Expenses
Real estate taxes	$	276,762	$	268,084	$	8,678			3.2	%		42.2	%
On-site payroll (1)		148,781		142,248		6,533			4.6	%		22.7	%
Utilities (2)		89,938		88,159		1,779			2.0	%		13.7	%
Repairs and maintenance (3)		83,683		82,378		1,305			1.6	%		12.7	%
Insurance		16,683		17,345		(662	)		(3.8	%)		2.5	%
Leasing and advertising		9,282		10,118		(836	)		(8.3	%)		1.4	%
Other on-site operating expenses (4)		31,192		31,010		182			0.6	%		4.8	%
Same store operating expenses	$	656,321	$	639,342	$	16,979			2.7	%		100.0	%

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

Equity Residential
Debt Summary as of December 31, 2017 ($ in thousands)
	Amounts (1)		% of Total			Weighted Average Rates (1)			Weighted Average Maturities (years)
Secured	$	3,618,722		40.4	%		4.33	%		5.6
Unsecured		5,338,569		59.6	%		4.17	%		10.6
Total	$	8,957,291		100.0	%		4.24	%		8.6
Fixed Rate Debt:
Secured – Conventional	$	2,982,344		33.3	%		4.90	%		4.0
Unsecured – Public		4,591,373		51.3	%		4.61	%		12.2
Fixed Rate Debt		7,573,717		84.6	%		4.73	%		9.0
Floating Rate Debt:
Secured – Conventional		6,948		0.1	%		1.05	%		12.2
Secured – Tax Exempt		629,430		7.0	%		1.56	%		12.2
Unsecured – Public (2)		447,439		5.0	%		1.82	%		1.5
Unsecured – Revolving Credit Facility (3)		—		—			2.00	%		3.9
Unsecured – Commercial Paper Program (4)		299,757		3.3	%		1.41	%		—
Floating Rate Debt		1,383,574		15.4	%		1.62	%		6.3
Total	$	8,957,291		100.0	%		4.24	%		8.6

(1)	Net of the effect of any derivative instruments. Weighted average rates are for the year ended December 31, 2017.
(2)	Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%.
(3)	The Company’s $2.0 billion unsecured revolving credit facility matures January 10, 2022. The interest rate on advances under the credit facility will generally be LIBOR plus a spread (currently 0.825%), or based on bids received from the lending group, and an annual facility fee (currently 12.5 basis points). Both the spread and the facility fee are dependent on the credit rating of the Company’s long-term debt. As of December 31, 2017, there was approximately $1.69 billion available on the Company’s unsecured revolving credit facility (net of $6.6 million which was restricted/dedicated to support letters of credit and net of $300.0 million in principal outstanding on the commercial paper program).
(4)	The Company may borrow up to a maximum of $500.0 million on the commercial paper program subject to market conditions. The notes bear interest at various floating rates with a weighted average of 1.41% for the year ended December 31, 2017 and a weighted average maturity of 18 days as of December 31, 2017.

Note: The Company capitalized interest of approximately $26.3 million and $51.5 million during the years ended December 31, 2017 and 2016, respectively. The Company capitalized interest of approximately $3.1 million and $9.8 million during the quarters ended December 31, 2017 and 2016, respectively.

Equity Residential
Debt Maturity Schedule as of December 31, 2017 ($ in thousands)
Year	Fixed Rate (1)				Floating Rate (1)				Total			% of Total			Weighted Average Rates on Fixed Rate Debt (1)			Weighted Average Rates on Total Debt (1)
2018	$	49,734			$	397,235		(2)	$	446,969			4.9	%		5.55	%		2.17	%
2019		506,731		(3)		468,603				975,334			10.8	%		5.17	%		3.62	%
2020		1,678,592		(4)		400				1,678,992			18.5	%		5.49	%		5.49	%
2021		927,506				300				927,806			10.2	%		4.64	%		4.64	%
2022		265,341				400				265,741			2.9	%		3.26	%		3.26	%
2023		1,326,800				4,400				1,331,200			14.7	%		3.74	%		3.73	%
2024		1,272				10,500				11,772			0.1	%		4.79	%		2.07	%
2025		451,334				12,800				464,134			5.1	%		3.38	%		3.33	%
2026		593,424				14,000				607,424			6.7	%		3.59	%		3.54	%
2027		401,468				15,200				416,668			4.6	%		3.26	%		3.20	%
2028+		1,424,969				520,065				1,945,034			21.5	%		4.41	%		3.67	%
Subtotal		7,627,171				1,443,903				9,071,074			100.0	%		4.48	%		3.97	%
Deferred Financing Costs and Unamortized (Discount)		(53,454	)			(60,329	)			(113,783	)	N/A			N/A			N/A
Total	$	7,573,717			$	1,383,574			$	8,957,291			100.0	%		4.48	%		3.97	%

(1)	Net of the effect of any derivative instruments. Weighted average rates are as of December 31, 2017.
(2)	Includes $300.0 million in principal outstanding on the Company's commercial paper program.
(3)	Includes a $500.0 million 5.19% mortgage loan with a maturity date of October 1, 2019 that can be prepaid at par beginning October 1, 2018. The Company currently intends to prepay this mortgage loan on October 1, 2018.
(4)	Includes a $550.0 million 6.08% mortgage loan with a maturity date of March 1, 2020 that can be prepaid at par beginning March 1, 2019. The Company currently intends to prepay this mortgage loan on January 31, 2018 and incur approximately $22.5 million in debt extinguishment costs/prepayment penalties. Also includes a $500.0 million 5.78% mortgage loan with a maturity date of July 1, 2020 that can be prepaid at par beginning July 1, 2019.

Equity Residential
Selected Unsecured Public Debt Covenants
	December 31,	September 30,
	2017	2017
Total Debt to Adjusted Total Assets (not to exceed 60%)	34.6%	34.8%
Secured Debt to Adjusted Total Assets (not to exceed 40%)	14.0%	14.0%
Consolidated Income Available for Debt Service to
Maximum Annual Service Charges
(must be at least 1.5 to 1)	4.17	4.07
Total Unsecured Assets to Unsecured Debt
(must be at least 150%)	381.0%	377.6%

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

Selected Credit Ratios
	December 31,	September 30,
	2017	2017
Total debt to Normalized EBITDA	5.62x	5.70x
Net debt to Normalized EBITDA	5.59x	5.67x
Unencumbered NOI as a % of total NOI	74.2%	74.0%

Note: See page 24 for the Normalized EBITDA reconciliations.

Equity Residential
Capital Structure as of December 31, 2017 (Amounts in thousands except for share/unit and per share amounts)
Secured Debt					$	3,618,722	40.4	%
Unsecured Debt						5,338,569	59.6	%
Total Debt						8,957,291	100.0	%	26.9	%
Common Shares (includes Restricted Shares)		368,018,082	96.4	%
Units (includes OP Units and Restricted Units)		13,768,438	3.6	%
Total Shares and Units		381,786,520	100.0	%
Common Share Price at December 31, 2017	$	63.77
						24,346,526	99.8	%
Perpetual Preferred Equity (see below)						37,280	0.2	%
Total Equity						24,383,806	100.0	%	73.1	%
Total Market Capitalization					$	33,341,097			100.0	%

Perpetual Preferred Equity as of December 31, 2017 (Amounts in thousands except for share and per share amounts)
Series	Call Date	Outstanding Shares		Liquidation Value		Annual Dividend Per Share		Annual Dividend Amount
Preferred Shares:
8.29% Series K	12/10/26		745,600	$	37,280	$	4.145	$	3,091
Total Perpetual Preferred Equity			745,600	$	37,280			$	3,091

Equity Residential Common Share and Unit Weighted Average Amounts Outstanding
	2017		2016		Q4 2017		Q4 2016
Weighted Average Amounts Outstanding for Net Income Purposes:
Common Shares - basic		366,968,358		365,002,012		367,442,352		365,255,902
Shares issuable from assumed conversion/vesting of:
- OP Units		12,901,219		13,827,099		12,882,935		13,824,671
- long-term compensation shares/units		2,808,917		3,163,201		2,780,028		2,779,631
Total Common Shares and Units - diluted		382,678,494		381,992,312		383,105,315		381,860,204
Weighted Average Amounts Outstanding for FFO and Normalized FFO Purposes:
Common Shares - basic		366,968,358		365,002,012		367,442,352		365,255,902
OP Units - basic		12,901,219		13,827,099		12,882,935		13,824,671
Total Common Shares and OP Units - basic		379,869,577		378,829,111		380,325,287		379,080,573
Shares issuable from assumed conversion/vesting of:
- long-term compensation shares/units		2,808,917		3,163,201		2,780,028		2,779,631
Total Common Shares and Units - diluted		382,678,494		381,992,312		383,105,315		381,860,204
Period Ending Amounts Outstanding:
Common Shares (includes Restricted Shares)		368,018,082		365,870,924
Units (includes OP Units and Restricted Units)		13,768,438		14,626,075
Total Shares and Units		381,786,520		380,496,999

Equity Residential Partially Owned Entities as of December 31, 2017 (Amounts in thousands except for property and apartment unit amounts)
	Consolidated			Unconsolidated
Total properties		17			2
Total apartment units		3,215			945
Operating information for the year ended 12/31/17 (at 100%):
Operating revenue	$	93,472		$	32,141
Operating expenses		22,412			11,399
Net operating income		71,060			20,742
Property management		3,401			859
General and administrative		279			3
Depreciation		25,505			16,134
Operating income		41,875			3,746
Interest and other income		77			—
Interest:
Expense incurred, net		(13,316	)		(8,289	)
Amortization of deferred financing costs		(270	)		(1	)
Income (loss) before income and other taxes and income (loss)
from investments in unconsolidated entities		28,366			(4,544	)
Income and other tax (expense) benefit		(27	)		(13	)
Income (loss) from investments in unconsolidated entities		(1,549	)		—
Net income (loss)	$	26,790		$	(4,557	)
Debt - Secured (1):
EQR Ownership (2)	$	237,289		$	29,085
Noncontrolling Ownership		65,058			116,339
Total (at 100%)	$	302,347		$	145,424

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

Equity Residential Development and Lease-Up Projects as of December 31, 2017 (Amounts in thousands except for project and apartment unit amounts)
Projects	Location	No. of Apartment Units		Total Budgeted Capital Cost		Total Book Value to Date		Total Book Value Not Placed in Service		Total Debt		Percentage Completed			Percentage Leased			Percentage Occupied			Estimated Completion Date	Estimated Stabilization Date
Projects Under Development:
855 Brannan	San Francisco, CA		449	$	304,035	$	296,916	$	90,676	$	—		96	%		55	%		50	%	Q1 2018	Q1 2019
100 K Street	Washington, DC		222		88,023		45,603		45,603		—		33	%		—			—		Q4 2018	Q4 2019
1401 E. Madison	Seattle, WA		137		62,352		18,334		18,334		—		3	%		—			—		Q3 2019	Q1 2020
249 Third Street	Cambridge, MA		84		51,447		8,934		8,934		—		1	%		—			—		Q4 2019	Q2 2020
Projects Under Development			892		505,857		369,787		163,547		—
Completed Not Stabilized (1):
455 Eye Street	Washington, DC		174		73,157		72,972		—		—					96	%		91	%	Completed	Q1 2018
Helios (formerly 2nd & Pine)	Seattle, WA		398		227,287		220,101		—		—					54	%		48	%	Completed	Q2 2019
Cascade	Seattle, WA		477		176,378		169,597		—		—					50	%		47	%	Completed	Q2 2019
Projects Completed Not Stabilized			1,049		476,822		462,670		—		—
Completed and Stabilized During the Quarter:
Altitude (formerly Village at Howard Hughes)	Los Angeles, CA		545		192,331		191,747		—		—					96	%		95	%	Completed	Stabilized
The Alton (formerly Millikan)	Irvine, CA		344		107,381		106,795		—		—					96	%		95	%	Completed	Stabilized
One Henry Adams	San Francisco, CA		241		169,437		167,256		—		—					96	%		93	%	Completed	Stabilized
Projects Completed and Stabilized During the Quarter			1,130		469,149		465,798		—		—
Total Development Projects			3,071	$	1,451,828	$	1,298,255	$	163,547	$	—
Land Held for Development		N/A		N/A		$	98,963	$	98,963	$	—
												Total Capital			Q4 2017
NOI CONTRIBUTION FROM DEVELOPMENT PROJECTS												Cost			NOI
Projects Under Development												$	505,857		$	1,878
Completed Not Stabilized													476,822			2,793
Completed and Stabilized During the Quarter													469,149			6,215
Total Development NOI Contribution												$	1,451,828		$	10,886
Note: All development projects listed are wholly owned by the Company. (1) Properties included here are substantially complete. However, they may still require additional exterior and interior work for all apartment units to be available for leasing.

Equity Residential Capital Expenditures to Real Estate For the Year Ended December 31, 2017 (Amounts in thousands except for apartment unit and per apartment unit amounts)
	Same Store Properties		Non-Same Store Properties/Other		Total		Same Store Avg. Per Apartment Unit
Total Apartment Units (1)		70,117		7,549		77,666
Building Improvements	$	114,162	$	3,966	$	118,128	$	1,628
Renovation Expenditures (2)		44,418		888		45,306		634
Replacements		38,560		613		39,173		550
Total Capital Expenditures	$	197,140	$	5,467	$	202,607	$	2,812

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

(1)	Total Apartment Units - Excludes 945 unconsolidated apartment units for which capital expenditures to real estate are self-funded and do not consolidate into the Company's results.
(2)	Renovation Expenditures on 3,371 same store apartment units for the year ended December 31, 2017 approximated $13,200 per apartment unit renovated.

Equity Residential Normalized EBITDA Reconciliations (Amounts in thousands)
Normalized EBITDA Reconciliations for Page 18
	Trailing Twelve Months						2017												2016
	December 31, 2017			September 30, 2017			Q4			Q3			Q2			Q1			Q4
Net income	$	628,381		$	800,678		$	130,084		$	144,196		$	204,160		$	149,941		$	302,381
Interest expense incurred, net		383,890			384,509			95,311			91,145			91,224			106,210			95,930
Amortization of deferred financing costs		8,526			9,080			2,079			2,064			2,087			2,296			2,633
Depreciation		743,749			720,371			200,785			184,100			179,896			178,968			177,407
Income and other tax expense (benefit) (includes discontinued operations)		478			1,135			(232	)		228			220			262			425
EBITDA		1,765,024			1,915,773			428,027			421,733			477,587			437,677			578,776
Impairment		1,693			—			1,693			—			—			—			—
Write-off of pursuit costs (other expenses)		3,106			3,042			777			783			831			715			713
(Income) loss from investments in unconsolidated entities		3,370			3,198			1,217			398			682			1,073			1,045
Net (gain) loss on sales of land parcels		(19,167	)		(19,142	)		3			—			23			(19,193	)		28
(Gain) loss on sale of investment securities and other investments (interest and other income)		—			7			—			—			—			—			7
Insurance/litigation settlement or reserve income (interest and other income)		(4,853	)		(5,053	)		(137	)		(3,500	)		(836	)		(380	)		(337	)
Insurance/litigation/environmental settlement or reserve expense (other expenses)		237			(4,837	)		—			—			(56	)		293			(5,074	)
Other		1,245			657			961			95			93			96			373
Net (gain) loss on sales of real estate properties		(157,057	)		(314,945	)		(15,296	)		(17,328	)		(87,726	)		(36,707	)		(173,184	)
Normalized EBITDA	$	1,593,598		$	1,578,700		$	417,245		$	402,181		$	390,598		$	383,574		$	402,347
Balance Sheet Items:	December 31, 2017			September 30, 2017
Total debt	$	8,957,291		$	8,992,272
Cash and cash equivalents		(50,647	)		(46,565	)
Mortgage principal reserves/sinking funds		(3,167	)		(1,595	)
Net debt	$	8,903,477		$	8,944,112

Equity Residential Adjustments from FFO to Normalized FFO (Amounts in thousands)
	Year Ended December 31,									Quarter Ended December 31,
	2017			2016			Variance			2017			2016			Variance
Impairment	$	1,693		$	—		$	1,693		$	1,693		$	—		$	1,693
Asset impairment and valuation allowances		1,693			—			1,693			1,693			—			1,693
Write-off of pursuit costs (other expenses)		3,106			4,092			(986	)		777			713			64
Write-off of pursuit costs		3,106			4,092			(986	)		777			713			64
Prepayment premiums/penalties (interest expense)		12,258			114,666			(102,408	)		—			2,247			(2,247	)
Write-off of unamortized deferred financing costs (interest expense)		251			3,854			(3,603	)		—			491			(491	)
Write-off of unamortized (premiums)/discounts/OCI (interest expense)		(720	)		4,494			(5,214	)		—			—			—
Noncontrolling Interests share of debt extinguishment costs		—			(1,394	)		1,394			—			(1,394	)		1,394
(Gain) loss due to ineffectiveness of forward starting swaps (interest expense)		—			74			(74	)		—			74			(74	)
Debt extinguishment (gains) losses, including prepayment penalties, preferred share redemptions and non-cash convertible debt discounts		11,789			121,694			(109,905	)		—			1,418			(1,418	)
Net (gain) loss on sales of land parcels		(19,167	)		(15,731	)		(3,436	)		3			28			(25	)
Net (gain) loss on sales of unconsolidated entities - non-operating assets		(205	)		(81	)		(124	)		—			—			—
(Gain) loss on sale of investment securities and other investments (interest and other income)		—			(58,409	)		58,409			—			7			(7	)
(Income) loss from investments in unconsolidated entities ─ non-operating assets		488			920			(432	)		468			264			204
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit)		(18,884	)		(73,301	)		54,417			471			299			172
Insurance/litigation settlement or reserve income (interest and other income)		(4,853	)		(3,228	)		(1,625	)		(137	)		(337	)		200
Insurance/litigation/environmental settlement or reserve expense (other expenses)		237			4,024			(3,787	)		—			(5,074	)		5,074
Other		1,245			2,839			(1,594	)		961			373			588
Other miscellaneous items		(3,371	)		3,635			(7,006	)		824			(5,038	)		5,862
Adjustments from FFO to Normalized FFO	$	(5,667	)	$	56,120		$	(61,787	)	$	3,765		$	(2,608	)	$	6,373

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

Equity Residential Normalized FFO Guidance and Assumptions

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

2018 Normalized FFO Guidance (per share diluted)
	Q1 2018	2018
Expected Normalized FFO Per Share	$0.74 to $0.78	$3.17 to $3.27

2018 Same Store Assumptions
Physical Occupancy	96.0%
Revenue change	1.0% to 2.25%
Expense change	3.5% to 4.5%
NOI change	0.0% to 1.5%

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

2018 Transaction Assumptions
Consolidated rental acquisitions	$500.0 million
Consolidated rental dispositions	$500.0 million
Spread between Acquisition Cap Rate and Disposition Yield	50 basis points

2018 Debt Assumptions
Weighted average debt outstanding	$8.8 billion to $9.1 billion
Weighted average interest rate (reduced for capitalized interest)	4.21%
Interest expense, net (on a Normalized FFO basis)	$370.5 million to $383.1 million
Capitalized interest	$4.0 million to $8.0 million

Note: All 2018 debt assumptions are shown on a Normalized FFO basis and therefore exclude an approximately $23.7 million impact from anticipated debt extinguishment costs/prepayment penalties described on page 4.

2018 Capital Expenditures to Real Estate Assumptions
	Per Same Store Apartment Unit	Total
Total Capital Expenditures to Real Estate	$2,900	$210.0 million

Note: During 2018, the Company expects to spend approximately $60.0 million for apartment unit Renovation Expenditures on approximately 4,500 same store apartment units at an average cost of approximately $13,300 per apartment unit renovated.

2018 Other Guidance Assumptions
Property management expense	$88.5 million to $90.5 million
General and administrative expense	$53.0 million to $55.0 million
Interest and other income	$0.5 million to $1.0 million
Income and other tax expense	$0.5 million to $1.0 million
Debt offerings	$800.0 million to $1.0 billion
Equity ATM share offerings	No amounts budgeted
Preferred share offerings	No amounts budgeted
Weighted average Common Shares and Units - Diluted	383.8 million

Equity Residential Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms (Amounts in thousands except per share and per apartment unit data) (All per share data is diluted)

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

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

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

Capital Expenditures to Real Estate:

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

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

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

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

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

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

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

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

	Year Ended December 31, 2017			Quarter Ended December 31, 2017
Net Gain (Loss) on Sales of Real Estate Properties	$	157,057		$	15,296
Accumulated Depreciation Gain		(64,619	)		(10,383	)
Economic Gain	$	92,438		$	4,913

Equity Residential Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms – Continued (Amounts in thousands except per share and per apartment unit data) (All per share data is diluted)

Funds From Operations and Normalized Funds From Operations: Funds From Operations (“FFO”) – The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO (April 2002 White Paper) as net income (computed in accordance with accounting principles generally accepted in the United States (“GAAP”)), excluding gains (or losses) from sales and impairment write-downs of depreciable operating properties, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect funds from operations on the same basis. The April 2002 White Paper states that gain or loss on sales of property is excluded from FFO for previously depreciated operating properties only. Expected FFO per share is calculated on a basis consistent with actual FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.   The Company believes that FFO and FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company, because they are recognized measures of performance by the real estate industry and by excluding gains or losses related to dispositions of depreciable property and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO and FFO available to Common Shares and Units can help compare the operating performance of a company’s real estate between periods or as compared to different companies.

Normalized Funds From Operations ("Normalized FFO") – Normalized FFO begins with FFO and excludes: the impact of any expenses relating to non-operating asset impairment and valuation allowances; pursuit cost write-offs; gains and losses from early debt extinguishment, including prepayment penalties, preferred share redemptions and the cost related to the implied option value of non-cash convertible debt discounts; gains and losses on the sales of non-operating assets, including gains and losses from land parcel sales, net of the effect of income tax benefits or expenses; and other miscellaneous items.

Expected Normalized FFO per share is calculated on a basis consistent with actual Normalized FFO per share and is considered an appropriate supplemental measure of expected operating performance when compared to expected EPS.   The Company believes that Normalized FFO and Normalized FFO available to Common Shares and Units are helpful to investors as supplemental measures of the operating performance of a real estate company because they allow investors to compare the Company's operating performance to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual operating results.   FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units do not represent net income, net income available to Common Shares or net cash flows from operating activities in accordance with GAAP. Therefore, FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units should not be exclusively considered as alternatives to net income, net income available to Common Shares or net cash flows from operating activities as determined by GAAP or as a measure of liquidity. The Company's calculation of FFO, FFO available to Common Shares and Units, Normalized FFO and Normalized FFO available to Common Shares and Units may differ from other real estate companies due to, among other items, variations in cost capitalization policies for capital expenditures and, accordingly, may not be comparable to such other real estate companies.   FFO available to Common Shares and Units and Normalized FFO available to Common Shares and Units are calculated on a basis consistent with net income available to Common Shares and reflects adjustments to net income for preferred distributions and premiums on redemption of preferred shares in accordance with GAAP. The equity positions of various individuals and entities that contributed their properties to the Operating Partnership in exchange for OP Units are collectively referred to as the "Noncontrolling Interests – Operating Partnership". Subject to certain restrictions, the Noncontrolling Interests – Operating Partnership may exchange their OP Units for Common Shares on a one-for-one basis.

Equity Residential Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms – Continued (Amounts in thousands except per share and per apartment unit data) (All per share data is diluted)
The following table presents reconciliations of EPS to FFO per share and Normalized FFO per share for pages 7 and 26 (the expected guidance/projections provided below are based on current expectations and are forward-looking):
							Actual			Actual			Expected	Expected
	Actual 2017			Actual 2016			Q4 2017			Q4 2016			Q1 2018	2018
	Per Share			Per Share			Per Share			Per Share			Per Share	Per Share
EPS - Diluted	$	1.63		$	11.68		$	0.34		$	0.75		$0.48 to $0.52	$1.71 to $1.81
Add: Depreciation expense		1.93			1.83			0.52			0.46		0.51	2.01
Less: Net (gain) loss on sales		(0.41	)		(10.57	)		(0.04	)		(0.41	)	(0.30)	(0.62)
FFO per share - Diluted		3.15			2.94			0.82			0.80		0.69 to 0.73	3.10 to 3.20
Asset impairment and valuation allowances		—			—			—			—		—	—
Write-off of pursuit costs		0.01			0.01			—			—		—	0.01
Debt extinguishment (gains) losses, including prepayment penalties, preferred share redemptions and non-cash convertible debt discounts		0.03			0.32			—			—		0.06	0.06
(Gains) losses on sales of non-operating assets, net of income and other tax expense (benefit)		(0.05	)		(0.19	)		—			—		—	—
Other miscellaneous items		(0.01	)		0.01			0.01			(0.01	)	(0.01)	—
Normalized FFO per share - Diluted	$	3.13		$	3.09		$	0.83		$	0.79		$0.74 to $0.78	$3.17 to $3.27

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

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

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

	Year Ended December 31,						Quarter Ended December 31,
	2017			2016			2017			2016
Operating income	$	847,471		$	856,086		$	214,764		$	224,070
Adjustments:
Fee and asset management revenue		(717	)		(3,567	)		(185	)		(216	)
Property management		85,493			82,015			20,791			18,012
General and administrative		52,224			57,840			11,858			10,432
Depreciation		743,749			705,649			200,785			177,407
Impairment		1,693			—			1,693			—
Total NOI	$	1,729,913		$	1,698,023		$	449,706		$	429,705
Rental income:
Same store	$	2,248,564		$	2,200,094		$	590,387		$	577,809
Non-same store/other		222,125			222,139			40,132			27,464
Total rental income		2,470,689			2,422,233			630,519			605,273
Operating expenses:
Same store		656,321			639,342			169,647			165,552
Non-same store/other		84,455			84,868			11,166			10,016
Total operating expenses		740,776			724,210			180,813			175,568
NOI:
Same store		1,592,243			1,560,752			420,740			412,257
Non-same store/other		137,670			137,271			28,966			17,448
Total NOI	$	1,729,913		$	1,698,023		$	449,706		$	429,705

Equity Residential Additional Reconciliations and Definitions of Non-GAAP Financial Measures and Other Terms – Continued (Amounts in thousands except per share and per apartment unit data) (All per share data is diluted)

Non-Same Store Properties – For annual comparisons, primarily includes all properties acquired during 2016 and 2017, plus any properties in lease-up and not stabilized as of January 1, 2016.   Normalized Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA") – Represents net income in accordance with GAAP before interest expense, income taxes, depreciation expense and amortization expense and further adjusted for non-comparable items. Normalized EBITDA, total debt to Normalized EBITDA and net debt to Normalized EBITDA are important metrics in evaluating the credit strength of the Company and its ability to service its debt obligations. The Company believes that Normalized EBITDA, total debt to Normalized EBITDA and net debt to Normalized EBITDA are useful to investors, creditors and rating agencies because they allow investors to compare the Company's credit strength to prior reporting periods and to other companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company's actual credit quality.   Physical Occupancy – The weighted average occupied apartment units for the reporting period divided by the average of total apartment units available for rent for the reporting period.   Same Store Properties – For annual comparisons, primarily includes all properties acquired or completed that are stabilized prior to January 1, 2016, less properties subsequently sold. Properties are included in Same Store when they are stabilized for all of the current and comparable periods presented.   % of Stabilized NOI – Represents budgeted 2018 NOI for stabilized properties and projected annual NOI at stabilization (defined as having achieved 90% occupancy for three consecutive months) for properties that are in lease-up.   Total Budgeted Capital Cost – Estimated cost for projects under development and/or developed and all capitalized costs incurred to date plus any estimates of costs remaining to be funded for all projects, including land acquisition costs, construction costs, capitalized real estate taxes and insurance, capitalized interest and loan fees, permits, professional fees, allocated development overhead and other regulatory fees, all in accordance with GAAP.   Total Market Capitalization – The aggregate of the market value of the Company’s outstanding common shares, including restricted shares, the market value of the Company’s operating partnership units outstanding, including restricted units (based on the market value of the Company’s common shares) and the outstanding principal balance of debt. The Company believes this is a useful measure of a real estate operating company’s long-term liquidity and balance sheet strength, because it shows an approximate relationship between a company’s total debt and the current total market value of its assets based on the current price at which the Company’s common shares trade. However, because this measure of leverage changes with fluctuations in the Company’s share price, which occur regularly, this measure may change even when the Company’s earnings, interest and debt levels remain stable.   Turnover – Total residential move-outs divided by total residential apartment units, including inter-property and intra-property transfers.   Unencumbered NOI % – Represents NOI generated by consolidated real estate assets unencumbered by outstanding secured debt as a percentage of total NOI generated by all of the Company's consolidated real estate assets.   Unlevered Internal Rate of Return (“IRR”) – The Unlevered IRR on sold properties is the compound annual rate of return calculated by the Company based on the timing and amount of: (i) the gross purchase price of the property plus any direct acquisition costs incurred by the Company; (ii) total revenues earned during the Company’s ownership period; (iii) total direct property operating expenses (including real estate taxes and insurance) incurred during the Company’s ownership period; (iv) capital expenditures incurred during the Company’s ownership period; and (v) the gross sales price of the property net of selling costs. Each of the items (i) through (v) is calculated in accordance with GAAP.   The calculation of the Unlevered IRR does not include an adjustment for the Company’s general and administrative expense, interest expense (including loan assumption costs and other loan-related costs) or property management expense. Therefore, the Unlevered IRR is not a substitute for net income as a measure of our performance. Management believes that the Unlevered IRR achieved during the period a property is owned by the Company is useful because it is one indication of the gross value created by the Company’s acquisition, development, rehab, management and ultimate sale of a property, before the impact of Company overhead. The Unlevered IRR achieved on the properties as cited in this release should not be viewed as an indication of the gross value created with respect to other properties owned by the Company, and the Company does not represent that it will achieve similar Unlevered IRRs upon the disposition of other properties. The weighted average Unlevered IRR for sold properties is weighted based on all cash flows over the investment period for each respective property, including net sales proceeds.