EQUITY RESIDENTIAL (EQR)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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, 2025.

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, including, without limitation, with respect to our ability to realize the anticipated benefits of our pending Merger with AvalonBay or to complete the pending Merger on the terms or timing contemplated or at all. 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, 2025, particularly those under Item 1A, Risk Factors. Additional factors are also included in Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q. 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, owns and manages rental properties in dynamic metro areas across the U.S. ERP Operating Limited Partnership (“ERPOP”) is focused on conducting the multifamily property business of EQR. EQR is a Maryland real estate investment trust (“REIT”) formed in March 1993 and ERPOP is an Illinois limited partnership formed in May 1993. References to the “Company,” “we,” “us” or “our” mean collectively EQR, ERPOP and those entities/subsidiaries owned or controlled by EQR and/or ERPOP. References to the “Operating Partnership” mean collectively ERPOP and those entities/subsidiaries owned or controlled by ERPOP.

EQR is the general partner of, and as of June 30, 2026 owned an approximate 97.6% ownership interest in, ERPOP. All of the Company’s property ownership, development and related business operations are conducted through the Operating Partnership and EQR has no material assets or liabilities other than its investment in ERPOP. EQR issues equity from time to time, the net proceeds of which it is obligated to contribute to ERPOP, but does not have any indebtedness as all debt is incurred by the Operating Partnership. The Operating Partnership holds substantially all of the assets of the Company, including the Company’s ownership interests in its joint ventures. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity.

The Company’s corporate headquarters is located in Chicago, Illinois and the Company also operates regional property management offices in most of its markets.

Available Information

You may access our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, our proxy statements and any amendments to any of those reports/statements we file with 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.

Business Objectives and Operating and Investing Strategies

The Company’s and the Operating Partnership’s overall business objectives and operating and investing strategies have not changed from the information included in the Company’s and the Operating Partnership’s Annual Report on Form 10-K for the year ended December 31, 2025, except as it relates to the potential Merger transaction with AvalonBay as discussed further below.

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Pending Merger

On May 20, 2026, EQR, ERPOP, AvalonBay and Merger Sub entered into the Merger Agreement, which provides for the combination of EQR and AvalonBay in a merger of equals transaction. Each of the Board of Trustees of EQR and the Board of Directors of AvalonBay has unanimously approved the Merger Agreement and the transactions contemplated by the Merger Agreement. Under the terms of the Merger Agreement, at the Effective Time, stockholders of AvalonBay will receive 2.793 Common Shares for each share of AvalonBay Common Stock if the Merger is completed. The Merger, which is currently expected to be completed in the second half of 2026, is subject to the approval of the issuance of shares of the Company in connection with the Merger by the Company’s shareholders, the approval of the Merger by the AvalonBay stockholders and other customary closing conditions. See Note 11 in the Notes to Consolidated Financial Statements for additional discussion regarding the structural, accounting and conditional commitments associated with the pending Merger.

Results of Operations

2026 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, 2026:

Portfolio Rollforward

($ in thousands)

Dispositions

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The consolidated properties disposed of were located in the Los Angeles and San Francisco markets.

Developments

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Consolidated:

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Completed construction on one partially owned consolidated apartment property, located in the Boston market, consisting of 440 apartment units totaling approximately $232.2 million of development costs.

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Unconsolidated:

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Completed construction on one partially owned unconsolidated apartment property, located in the Seattle market, consisting of 369 apartment units totaling approximately $185.3 million of development costs.

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, 2026 to the six months and quarter ended June 30, 2025

The following table presents a reconciliation of diluted earnings per share/unit for the six months and quarter ended June 30, 2026 as compared to the same periods in 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):

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

Forward-Looking Statements

Forward-looking statements are intended to be made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates, projections and assumptions made by management. While the Company’s management believes the assumptions underlying its forward-looking statements are reasonable, such information is inherently subject to uncertainties and may involve certain risks, which could cause actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Many of these uncertainties and risks are difficult to predict and beyond management’s control. Additional factors that might cause such differences are discussed in Part I of this Annual Report on Form 10-K, particularly those under Item 1A, Risk Factors. Forward-looking statements and related uncertainties are also included in the Notes to Consolidated Financial Statements in this report. 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

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

Business Objectives and Operating and Investing Strategies

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

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Results of Operations

2024 and 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 years ended December 31, 2024 and 2025:

Portfolio Rollforward

($ in thousands)

Acquisitions

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The consolidated properties acquired in 2024 are located in the Atlanta (7), Boston, Dallas/Ft. Worth (5) and Denver (5) markets;

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Acquired its joint venture partner's 8.0% interest in a 312-unit apartment property in 2024, located in the Washington, D.C. market, for $3.1 million in cash. The property is now wholly owned;

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The consolidated properties acquired in 2025 are located in the Atlanta (8) and Dallas/Ft. Worth markets; and

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The consolidated land parcels acquired in 2025 are located in the Atlanta (2) market.

Dispositions

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The consolidated properties disposed of in 2024 were located in the Boston, Orange County, San Francisco (3), Washington, D.C. (5), Seattle (2) and San Diego markets;

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The consolidated properties disposed of in 2025 were located in the Boston (2), Los Angeles (2), New York, San Diego,

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Seattle (4) and Washington, D.C. markets; and

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The consolidated land parcel disposed of in 2025 was located in the New York market.

Developments

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Consolidated:

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Completed construction on two wholly owned consolidated apartment properties during 2025, located in the San Francisco and Denver markets, consisting of an aggregate of 495 apartment units totaling approximately $237.8 million of development costs; and

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Acquired its joint venture partners' interests (ranging from 10% to 25%) in three previously unconsolidated properties, consisting of an aggregate of 966 apartment units, in 2025, located in the Dallas/Ft. Worth (2) and Denver markets, for approximately $16.4 million in cash and also contributed approximately $151.9 million for the respective joint ventures to repay the construction loans encumbering the properties, one of which was held by the Company. The properties are now wholly owned.

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Unconsolidated:

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Completed construction on four unconsolidated apartment properties during 2024, located in the Denver and Dallas/Ft. Worth (3) markets, consisting of 1,262 apartment units totaling approximately $338.0 million of development costs;

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Previously entered into two separate unconsolidated joint ventures for the purpose of developing vacant land parcels in the Boston and Seattle markets. During 2024, the joint ventures acquired their respective land parcels for the total purchase price listed above; and

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Completed construction on one unconsolidated apartment property during 2025, located in the New York market, consisting of 450 apartment units totaling approximately $201.2 million of development costs.

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.

Comparison of the year ended December 31, 2025 to the year ended December 31, 2024

The following table presents a reconciliation of diluted earnings per share/unit for the year ended December 31, 2025 as compared to the same period in 2024:

(1)
Corporate overhead includes property management and general and administrative expenses.

The Company’s primary financial measure for evaluating each of its apartment communities is net operating income (“NOI”). NOI represents rental income less direct property operating expenses (including real estate taxes and insurance). The Company believes that NOI is helpful to investors as a supplemental measure of its operating performance because it is a direct measure of the actual operating results of the Company’s apartment properties.

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The following tables present reconciliations of 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):

See Note 16 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 year ended December 31, 2025 as compared to the year ended December 31, 2024.

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The increase in same store rental income is primarily driven by good demand and modest supply across most of our markets.

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

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Real estate taxes – An $8.1 million increase due to escalation in rates and assessed values;

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Utilities – An $11.3 million increase primarily driven by higher commodity prices, higher

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