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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-24920
ERP OPERATING LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in Its Charter)
Illinois 36-3894853
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Two North Riverside Plaza, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
(312) 474-1300
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
7.57% Notes due August 15, 2026 New York Stock Exchange
(Title of Class) (Name of Each Exchange on Which Registered)
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
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. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
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DOCUMENTS INCORPORATED BY REFERENCE
Part II incorporates by reference the Registrant's Current Report on Form 8-K
dated March 1, 1996 and filed on March 7, 1996.
Part III incorporates by reference the Equity Residential Properties Trust
definitive proxy statement relating to Part III, Item 11. Executive
Compensation.
Part IV incorporates by reference the following exhibit as filed with Equity
Residential Properties Trust's Form S-11 on May 21, 1993 (Registration No. 33-
63158) and as amended thereafter: Exhibit 10.2.
Part IV incorporates by reference the following exhibits as filed with the
Registrant's Form 10 on October 7, 1994 (Registration No. 0-24920) and as
amended thereafter: Exhibits 4.1, 4.2 and 10.3.
Part IV incorporates by reference the following exhibit as filed with the
Registrant's Form 10-Q for the quarter ended September 30, 1995 on November 9,
1995 and as amended thereafter: Exhibit 10.1.
Part IV incorporates by reference the following exhibit as filed with the
Registrant's Form 10-K for the year ended December 31, 1996 filed on March 20,
1997: Exhibit 10.4.
Part IV incorporates by reference the following exhibit as filed with the
Registrant's Form 8-K dated October 9, 1997 filed on October 9, 1997: Exhibit
10.5.
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ERP OPERATING LIMITED PARTNERSHIP
TABLE OF CONTENTS
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PART I. PAGE
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Item 1. Business 4
Item 2. Properties 16
Item 3. Legal Proceedings 45
Item 4. Submission of Matters to a Vote of Security Holders 45
PART II.
Item 5. Market for the Registrant's Common Equity and Related
Shareholder Matters 46
Item 6. Selected Financial Data 46
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 49
Item 8. Financial Statements and Supplementary Data 61
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 61
PART III.
Item 10. Trustees and Executive Officers of the Registrant 62
Item 11. Executive Compensation 66
Item 12. Security Ownership of Certain Beneficial Owners and Management 67
Item 13. Certain Relationships and Related Transactions 69
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 72
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3
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PART I
Item 1. Business
General
ERP Operating Limited Partnership, an Illinois limited partnership formed
in May 1993 (the "Operating Partnership"), is managed by Equity Residential
Properties Trust ("EQR"), a Maryland real estate investment trust (the
"Company"), its general partner. The Company is a self-administered and self-
managed equity real estate investment trust ("REIT"). EQR was organized in March
1993 and commenced operations on August 18, 1993 upon completion of its initial
public offering (the "EQR IPO") of 13,225,000 common shares of beneficial
interest, $0.01 par value per share ("Common Shares"). EQR was formed to
continue the multifamily residential business objectives and acquisition
strategies of certain affiliated entities controlled by Mr. Samuel Zell,
Chairman of the Board of Trustees of the Company. These entities had been
engaged in the acquisition, ownership and operation of multifamily residential
properties since 1969. As used herein, the term "Company" includes EQR and those
entities owned or controlled by it, as the survivor of the mergers between EQR
and each of Wellsford Residential Property Trust ("Wellsford") (the "Wellsford
Merger") and Evans Withycombe Residential, Inc. ("EWR") (the "EWR Merger").
The Company's subsidiaries include the Operating Partnership, Evans
Withycombe Residential, L.P. (the "EWR Operating Partnership"), Equity
Residential Properties Management Limited Partnership and Equity Residential
Properties Management Limited Partnership II (collectively, the "Management
Partnerships"), a series of partnerships (the "Financing Partnerships") and
limited liability companies ("LLCs") which beneficially own certain properties
encumbered by mortgage indebtedness.
As of December 31, 1997, the Operating Partnership owned or had interests
in 489 multifamily properties of which it controlled a portfolio of 463
multifamily properties (individually, a "Property" and collectively, the
"Properties") containing 135,200 units. The remaining 26 properties represent an
investment in partnership interests and subordinated mortgages collateralized by
21 properties and mortgage loans collateralized by five properties
(collectively, the "Additional Properties") containing 5,267 units. Of the 5,267
units, 1,371 units are property managed by third party unaffiliated entities.
The Operating Partnership's Properties and the Additional Properties are located
throughout the United States in the following states: Alabama, Arizona,
Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois,
Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan,
Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, North
Carolina, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah,
Virginia, Washington and Wisconsin. In addition, Equity Residential Properties
Management Corp. ("Management Corp.") and Equity Residential Properties
Management Corp. II ("Management Corp. II") also provide residential property
and asset management services to 29 properties containing 9,295 units owned by
affiliated entities. The Company is, together with the Operating Partnership,
one of the largest publicly traded REITs (based on the aggregate market value of
its outstanding Common Shares) and is the largest publicly traded REIT owner of
multifamily properties (based on the number of apartment units owned and total
revenues earned).
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PART I
Since the EQR IPO and through December 31, 1997, the Operating Partnership
has acquired direct or indirect interests in 412 properties (which included the
debt collateralized by six Properties) containing 118,510 units in the aggregate
for a total purchase price of approximately $6.5 billion, including the
assumption of approximately $1.5 billion of mortgage indebtedness. The Operating
Partnership also made an $89 million investment in partnership interests and
subordinated mortgages collateralized by 21 of the Additional Properties (its
"$89 Million Mortgage Note Investment") and an $88 million investment in
mortgage loans collateralized by five of the Additional Properties (its "$88
Million Mortgage Note Investment"). Since the EQR IPO and through December 31,
1997, the Operating Partnership has disposed of 18 properties and a portion of
one Property, containing 5,035 units, and a vacant land parcel for a total sales
price of approximately $129.8 million and the release of mortgage indebtedness
in the amount of $20.5 million.
The Company's corporate headquarters and executive offices are located in
Chicago, Illinois. In addition, the Company has 29 management offices in the
following cities: Chicago, Illinois; Dallas, Houston and San Antonio, Texas;
Denver, Colorado; Bethesda, Maryland; Atlanta, Georgia; Las Vegas, Nevada;
Scottsdale and Tucson, Arizona; Portland, Oregon; Ypsilanti, Michigan; Charlotte
and Raleigh, North Carolina; Tampa, Jacksonville and Ft. Lauderdale, Florida;
Irvine, Pleasant Hill and Stockton, California; Kansas City, Kansas;
Minneapolis, Minnesota; Louisville, Kentucky; Tulsa, Oklahoma; Boston,
Massachusetts; Federal Way, Redmond and Seattle, Washington; and Nashville and
Memphis, Tennessee. The Company has approximately 4,200 employees. Each of the
Operating Partnership's Properties is directed by an on-site manager, who
supervises the on-site employees and is responsible for the day-to-day
operations of the Property. The manager is generally assisted by a leasing
administrator and/or property administrator. In addition, a maintenance director
at each Property supervises a maintenance staff whose responsibilities include a
variety of tasks, including responding to service requests, preparing vacant
apartments for the next resident and performing preventive maintenance
procedures year-round.
Business Objectives and Operating Strategies
The Operating Partnership seeks to maximize both current income and long-
term growth in income, thereby increasing: (i) the value of the Properties; (ii)
distributions on a per limited partnership interest ("OP Unit") basis; and (iii)
partners' value.
The Operating Partnership's strategies for accomplishing these objectives
are:
. maintaining and increasing Property occupancy while increasing rental rates;
. controlling expenses, providing regular preventive maintenance, making
periodic renovations and enhancing amenities;
. pursuing acquisitions that: (i) are available at prices below estimated
replacement costs; (ii) have potential for rental rate and/or occupancy
increases; (iii) have attractive locations in their
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PART I
respective markets; and (iv) provide anticipated total returns that will
increase the Operating Partnership's distributions per OP Unit.
. purchasing newly developed as well as co-investing in the development of
multifamily communities in the Operating Partnership's existing target markets
where the market conditions warrant such development.
The Operating Partnership is committed to tenant satisfaction by striving
to anticipate industry trends and implementing strategies and policies
consistent with providing quality tenant services. In addition, the Operating
Partnership continuously surveys rental rates of competing properties and
conducts satisfaction surveys of residents to determine the factors they
consider most important in choosing a particular apartment unit.
Acquisition Strategies
The Operating Partnership anticipates that future property acquisitions
will be located in the continental United States. Management will continue to
use market information to evaluate acquisition opportunities. The Operating
Partnership's market data base allows it to review the primary economic
indicators of the markets where the Operating Partnership currently manages
Properties and where it expects to expand its operations. Acquisitions may be
financed from various sources of capital, which may include undistributed funds
from operations ("FFO"), issuances of additional equity securities by the
Company and debt securities by the Operating Partnership, sales of Properties
and collateralized and uncollateralized borrowings. In addition, the Operating
Partnership may acquire additional multifamily properties in transactions that
include the issuance of OP Units as consideration for the acquired properties.
Such transactions may, in certain circumstances, partially defer the sellers'
tax consequences.
When evaluating potential acquisitions, the Operating Partnership will
consider: (i) the geographic area and type of community; (ii) the location,
construction quality, condition and design of the property; (iii) the current
and projected cash flow of the property and the ability to increase cash flow;
(iv) the potential for capital appreciation of the property; (v) the terms of
resident leases, including the potential for rent increases; (vi) the potential
for economic growth and the tax and regulatory environment of the community in
which the property is located; (vii) the occupancy and demand by residents for
properties of a similar type in the vicinity (the overall market and submarket);
(viii) the prospects for liquidity through sale, financing or refinancing of the
property; and (ix) competition from existing multifamily properties and the
potential for the construction of new multifamily properties in the area. The
Operating Partnership expects to purchase multifamily properties with physical
and market characteristics similar to the Properties.
Development Strategies
The Operating Partnership seeks to acquire newly constructed properties and
make investments towards the development of properties in markets where it
discerns strong demand, which the Operating Partnership believes will enable it
to achieve superior rates of return. The Operating Partnership's current
communities under development and future developments are in
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PART I
markets or will be in markets where certain market demographics justify the
development of high quality multifamily communities. In evaluating whether to
develop an apartment community in a particular location, the Operating
Partnership analyzes relevant demographic, economic and financial data.
Specifically, the Operating Partnership considers the following factors, among
others, in determining the viability of a potential new apartment community: (i)
income levels and employment growth trends in the relevant market, (ii)
uniqueness of location, (iii) household growth and net migration of the relevant
market's population, (iv) supply/demand ratio, competitive housing alternatives,
sub-market occupancy and rent levels (v) barriers to entry that would limit
competition, and (vi) the purchase price and yields of available existing
stabilized communities, if any.
Disposition Strategies
Management will use market information to evaluate potential dispositions.
Factors the Operating Partnership considers in deciding whether to dispose of
its Properties include the following: (i) potential increases in new
construction; (ii) areas where the economy is expected to decline substantially;
and (iii) markets where the Operating Partnership does not intend to establish
long-term concentrations. The Operating Partnership will reinvest the proceeds
received from property dispositions to fund property acquisitions. In addition,
when feasible the Operating Partnership will structure these transactions as tax
deferred exchanges.
Financing Strategies
It is the Company's policy that EQR shall not incur indebtedness other than
short-term trade, employee compensation, dividends payable or similar
indebtedness that will be paid in the ordinary course of business, and that
indebtedness shall instead be incurred by the Operating Partnership to the
extent necessary to fund the Operating Partnership and its subsidiaries.
Equity Offerings For the Years Ended December 31, 1997, 1996 and 1995
In June 1995, the Company sold 6,120,000 of its 9 3/8% Series A Cumulative
Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share
(liquidation preference $25 per share) (the "Series A Preferred Shares"), at $25
per share. The Company raised gross proceeds of $153 million from this offering
(the "Series A Preferred Share Offering"). The net proceeds of approximately
$148.2 million from the Series A Preferred Share Offering have been contributed
by the Company to the Operating Partnership in exchange for 6,120,000 of the
Operating Partnership's 9 3/8% cumulative redeemable preference units (the
"Series A Cumulative Redeemable Preference Units").
In November 1995, the Company sold 5,000,000 depositary shares (the "Series
B Depositary Shares"). Each Series B Depositary Share represents a 1/10
fractional interest in a 9 1/8% Series B Cumulative Redeemable Preferred Share
of Beneficial Interest, $0.01 par value per share (the "Series B Preferred
Shares"). The liquidation preference of each of the Series B Preferred Shares is
$250.00 (equivalent to $25 per Series B Depositary Share). The Company raised
gross proceeds of $125 million from the sale of the Series B Depositary Shares.
The net proceeds of approximately $121 million have been contributed by the
Company to the Operating Partnership in exchange for 500,000 of the Operating
Partnership's 9 1/8% cumulative redeemable preference units (the "Series B
Cumulative Redeemable Preference Units").
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PART I
In January 1996, the Company completed an offering of 1,725,000 registered
Common Shares, which were sold at a net price of $29.375 per share (the "January
1996 Common Share Offering"), and contributed to the Operating Partnership net
proceeds of approximately $50.7 million in connection therewith in exchange for
OP Units. In February 1996, the Company completed an offering of 2,300,000
registered Common Shares, which were sold at a net price of $29.50 per share
(the "February 1996 Common Share Offering"), and contributed to the Operating
Partnership net proceeds of approximately $67.8 million in connection therewith
in exchange for OP Units.
On May 21, 1996, the Company completed an offering of 2,300,000 publicly
registered Common Shares, which were sold at a net price of $30.50 per share. On
May 28, 1996, the Company completed the sale of 73,287 publicly registered
Common Shares to employees of the Company and to employees of Equity Group
Investments, Inc. ("EGI") and certain of their respective affiliates and
consultants at a net price equal to $30.50 per share. On May 30, 1996, the
Company completed an offering of 1,264,400 publicly registered Common Shares,
which were sold at a net price of $30.75 per share. The Company contributed to
the Operating Partnership net proceeds of approximately $111.3 million in
connection with the sale of the 3,637,687 Common Shares mentioned above
(collectively, the "May 1996 Common Share Offerings") in exchange for OP Units.
In September 1996, the Company sold 4,600,000 depositary shares (the
"Series C Depositary Shares"). Each Series C Depositary Share represents a 1/10
fractional interest in a 9 1/8% Series C Cumulative Redeemable Preferred Share
of Beneficial Interest, $0.01 par value per share (the "Series C Preferred
Shares"). The liquidation preference of each of the Series C Preferred Shares is
$250.00 (equivalent to $25 per Series C Depositary Share). The Company raised
gross proceeds of $115 million from this offering (the "Series C Preferred Share
Offering"). The net proceeds of approximately $111.4 million from the Series C
Preferred Share Offering were contributed by the Company to the Operating
Partnership in exchange for 460,000 of the Operating Partnership's 9 1/8%
cumulative redeemable preference units (the "Series C Cumulative Redeemable
Preference Units").
Also in September 1996, the Company completed the sale of 2,272,728
publicly registered Common Shares which were sold at a net price of $33 per
share. The Company contributed to the Operating Partnership net proceeds of
approximately $75 million in connection with this offering (the "September 1996
Common Share Offering") in exchange for OP Units.
In November, 1996, the Company issued 39,458 Common Shares pursuant to the
1996 Nonqualified Employee Share Purchase Plan (the "Employee Share Purchase
Plan") at a net price of $30.44. The Company contributed to the Operating
Partnership net proceeds of approximately $1.2 million in exchange for OP Units.
In December 1996, the Company completed offerings of 4,440,000 publicly
registered Common Shares, which were sold to the public at a price of $41.25 per
share (the "December 1996 Common Share Offerings"). The Company contributed to
the Operating Partnership net proceeds of approximately $177.4 million in
exchange for OP Units.
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PART I
In March 1997, the Company completed three separate public offerings
relating to an aggregate of 1,921,000 publicly registered Common Shares, which
were sold to the public at a price of $46 per share (the "March 1997 Common
Share Offerings"). The Company contributed to the Operating Partnership net
proceeds of approximately $88.3 million in exchange for OP Units.
On May 14, 1997, the Company filed with the SEC a Form S-3 Registration
Statement to register $500 million of equity securities (the "June 1997 Equity
Shelf Registration"). The SEC declared this registration statement effective on
June 5, 1997.
In May 1997, the Company sold 7,000,000 depositary shares (the "Series D
Depositary Shares") pursuant to the June 1997 Equity Shelf Registration. Each
Series D Depositary Share represents a 1/10 fractional interest in a 8.60%
Series D Cumulative Redeemable Preferred Share of Beneficial Interest, $0.01 par
value per share (the "Series D Preferred Shares"). The liquidation preference of
each of the Series D Preferred shares is $250.00 (equivalent to $25 per Series D
Depositary Share). The Company raised gross proceeds of approximately $175
million from this offering (the "Series D Preferred Share Offering"). The net
proceeds of approximately $169.5 million from the Series D Preferred Share
Offering were contributed by the Company to the Operating Partnership in
exchange for 700,000 of the Operating Partnership's 8.60% cumulative redeemable
preference units (the "Series D Cumulative Redeemable Preference Units").
In June 1997, the Company completed five separate public offerings
comprising an aggregate of 8,992,023 publicly registered Common Shares, which
were sold to the public at prices ranging from $44.06 to $45.88 per share (the
"June 1997 Common Share Offerings"). The Company contributed to the Operating
Partnership net proceeds of approximately $398.9 million therewith in exchange
for additional OP Units.
On July 28, 1997, the Company filed with the SEC a Form S-3 Registration
Statement to register $750 million of equity securities (the "August 1997 Equity
Shelf Registration"). The SEC declared this registration statement effective on
August 4, 1997.
In September 1997, the Company completed the sale of 498,000 publicly
registered Common Shares which were sold to the public at a price of $51.125 per
share. The Company contributed to the Operating Partnership net proceeds of
approximately $24.2 million in connection with this offering (the "September
1997 Common Share Offering") in exchange for OP Units.
In September 1997, the Company sold 11,000,000 depositary shares (the
"Series G Depositary Shares") pursuant to the August 1997 Equity Shelf
Registration. Each Series G Depositary Share represents a 1/10 fractional
interest in a 7 1/4% Series G Convertible Cumulative Preferred Share of
Beneficial Interest, $0.01 par value per share (the "Series G Preferred
Shares"). Series G Depositary Shares representing Series G Preferred Shares are
convertible at the option of the holder thereof at any time into Common Shares
at a conversion price of $58.58 per Common Share (equivalent to a conversion
rate of approximately .4268 Common Shares for each Series G Depositary Share).
The liquidation preference of each of the Series G Preferred Shares is $250.00
per share (equivalent to $25 per Series G Depositary Share). In addition, in
October 1997, the Company sold 1,650,000 additional Series G Depositary Shares
pursuant to an
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PART I
over-allotment option granted to the underwriters. The Company contributed to
the Operating Partnership the net proceeds of approximately $303.6 million in
connection with this offering (the "Series G Preferred Share Offering") in
exchange for 1,265,000 of the Operating Partnership's 7 1/4% convertible
cumulative preference units (the "Series G Convertible Cumulative Preference
Units").
In October 1997, in connection with the acquisition of a portfolio of
Properties, the Company issued 3,315,500 publicly registered Common Shares,
which were issued at a price of $45.25 per share with a value of approximately
$150 million (the "October 1997 Common Share Offering"). The Company contributed
its interest in the portfolio of Properties acquired with Common Shares to the
Operating Partnership in exchange for additional OP Units.
On November 3, 1997, the Company filed with the SEC a Form S-3 Registration
Statement to register 7,000,000 Common Shares pursuant to a Distribution
Reinvestment and Share Purchase Plan. This registration statement was declared
effective on November 25, 1997. The Distribution Reinvestment and Share
Purchase Plan (the "DRIP Plan") of the Company provides holders of record and
beneficial owners of Common Shares, Preferred Shares, and limited partnership
interests in the Operating Partnership with a simple and convenient method of
investing cash distributions in additional Common Shares. Common Shares may
also be purchased on a monthly basis with optional cash payments made by
participants in the Plan and interested new investors, not currently
shareholders of the Company, at the market price of the Common Shares less a
discount ranging between 0% and 5% (as determined in accordance with the DRIP
Plan).
In December 1997, in connection with an acquisition of a Property, the
Company issued 736,296 publicly registered Common Shares, which were issued at a
price of $48.85 per share with a value of approximately $36 million. The Company
contributed the Property acquired with Common Shares to the Operating
Partnership in exchange for additional OP Units.
Also in December 1997, the Company completed the sale of 467,722 publicly
registered Common Shares, which were sold at a price of $51.3125 per share. The
Company contributed to the Operating Partnership net proceeds of approximately
$22.8 million in connection with this offering (the "December 1997 Common Share
Offering") in exchange for additional OP Units.
During 1997, the Company issued 84,183 Common Shares pursuant to the
Employee Share Purchase Plan at net prices which ranged from $35.63 per share to
$42.08 per share and contributed to the Operating Partnership proceeds in the
amount of approximately $3.2 million in connection therewith in exchange for
additional OP Units.
Debt Offerings For the Years Ended December 31, 1997, 1996 and 1995
- -------------------------------------------------------------------
In April 1995, the Operating Partnership issued $125 million of 7.95%
unsecured fixed rate notes (the "2002 Notes") in a public debt offering (the
"Second Public Debt Offering"). The Operating Partnership received net proceeds
of approximately $123.1 million in connection with the Second Public Debt
Offering.
In August 1996, the Operating Partnership issued $150 million of 7.57%
unsecured fixed rate notes (the "2026 Notes") in a public debt offering (the
"Third Public Debt Offering"). The
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PART I
Operating Partnership received net proceeds of approximately $149 million in
connection with this issuance.
On September 18, 1996, the Operating Partnership filed with the SEC a Form
S-3 Registration Statement to register $500 million of debt securities (the
"1996 Debt Shelf Registration").
In October 1997, the Operating Partnership issued $150 million of unsecured
fixed rate notes (the "2017 Notes") pursuant to the 1996 Debt Shelf Registration
in a public debt offering (the "October 1997 Public Debt Offering"). The 2017
Notes are due on October 15, 2017 and bear interest at 7.125%, which is payable
semiannually in arrears on April 15 and October 15, commencing April 15, 1998.
The 2017 Notes are redeemable at any time by the Operating Partnership pursuant
to the terms thereof. The Operating Partnership received net proceeds of
approximately $147.4 million in connection with this issuance.
In November 1997, the Operating Partnership issued $200 million of
unsecured fixed rate notes pursuant to the 1996 Debt Shelf Registration in a
public debt offering (the "November 1997 Public Debt Offering"). Of the $200
million issued, $150 million of these notes are due November 15, 2001 (the "2001
Notes") and bear interest at a rate of 6.55%, which is payable semiannually in
arrears on May 15 and November 15, commencing on May 15, 1998. The remaining $50
million of these notes are due November 15, 2003 (the "2003 Notes") and bear
interest at a rate of 6.65%, which is payable semiannually in arrears on May 15
and November 15, commencing on May 15, 1998. The Operating Partnership received
net proceeds of approximately $198.5 million in connection with the 2001 Notes
and the 2003 Notes.
Credit Facility
On November 15, 1996, the Operating Partnership completed an agreement with
Morgan Guaranty Trust Company of New York ("Morgan Guaranty") and Bank of
America Illinois ("Bank of America") to provide the Operating Partnership a $250
million unsecured line of credit. In September 1997, this agreement was amended
to increase the potential borrowings to $500 million. This line of credit
matures in November 1999 and borrowings generally will bear interest at a per
annum rate of one, two, three or six month London Interbank Offered Rate
("LIBOR"), plus a certain rate dependent upon the Operating Partnership's credit
rating, which rate is currently at 0.45%, and is subject to an annual facility
fee of $750,000. As of December 31, 1997, $235 million of borrowings were
outstanding on this line of credit, bearing interest at a weighted average rate
of 6.46%.
Business Combinations
On May 30, 1997, the Company completed the acquisition of the multifamily
property business of Wellsford through the tax-free Wellsford Merger. The
transaction was valued at approximately $1 billion and included 72 Properties of
Wellsford containing 19,004 units which were contributed to the Operating
Partnership. The purchase price consisted of 10.8 million Common Shares issued
by the Company with a market value of $443.7 million, the liquidation value of
$157.5 million for the Wellsford Series A Cumulative Convertible Preferred
Shares of Beneficial Interest and the Wellsford Series B
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PART I
Cumulative Redeemable Preferred Shares of Beneficial Interest, the assumption of
mortgage indebtedness and unsecured notes in the amount of $345 million, the
assumption of other liabilities of approximately $33.5 million and other merger
related costs of approximately $23.4 million. In the Wellsford Merger, each
outstanding common share of beneficial interest of Wellsford was converted into
.625 of a Common Share. In addition, Wellsford Series A Cumulative Convertible
Preferred Shares of Beneficial Interest were redesignated as the Company's
3,999,800 Series E Cumulative Convertible Preferred Shares of Beneficial
Interest, $0.01 par value per share (the "Series E Preferred Shares") and
Wellsford's Series B Cumulative Redeemable Preferred Shares of Beneficial
Interest were redesignated as the Company's 2,300,000 9.65% Series F Cumulative
Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share
(the "Series F Preferred Shares").
On December 23, 1997, the Company completed the acquisition of the
multifamily property business of EWR, through the tax-free EWR Merger. The
transaction was valued at approximately $1.2 billion and included 53 Properties
of EWR containing 15,331 units and three Properties under construction expected
to contain 953 units. The purchase price consisted of the Company's contribution
of the EWR Operating Partnership OP Units to the Operating Partnership at a
market value of approximately $501.6 million, issuance of approximately 2.2
million Operating Partnership OP Units in exchange for approximately 4.4 million
EWR Operating Partnership OP Units at a market value of approximately $107.3
million, the assumption of mortgage indebtedness and unsecured notes in the
amount of $498 million, the assumption of other liabilities of approximately
$28.2 million and other EWR Merger related costs of approximately $16.7 million.
In the EWR Merger, each outstanding common share of beneficial interest of EWR
was converted into .50 of a Common Share.
Recent Transactions
From January 1, 1998 through March 13, 1998, the Operating Partnership
acquired 12 properties from unaffiliated third parties for a total purchase
price of approximately $158.2 million, which included the assumption of mortgage
indebtedness of approximately $50.8 million. These properties were Cityscape, a
156-unit property located in St. Louis Park, Minnesota; 740 River Drive, a 162-
unit property located in St. Paul, Minnesota; Prospect Towers, a 157-unit
property located in Hackensack, New Jersey; Park Westend, a 312-unit property
located in Richmond, Virginia; Park Place, a 229-unit property located in
Houston, Texas; Emerald Bay at Winter Park, a 431-unit property located in
Winter Park, Florida; Farnham Park, a 216-unit property located in Houston,
Texas; Plantation, a 232-unit property located in Houston, Texas; Balcones Club,
a 312-unit property located in Austin, Texas; Coach Lantern, a 90-unit property
located in Scarborough, Maine; Foxcroft, a 104-unit property located in
Scarborough, Maine; and Yarmouth Woods, a 138-unit property located in Yarmouth,
Maine.
In January 1998, the Company completed the sale of 4,000,000 publicly
registered Common Shares which were sold to the public at a price of $50.4375
per share. The Company contributed to the Operating Partnership net proceeds of
approximately $195.3 million in connection with this offering (the "January 1998
Common Share Offering") in exchange for additional OP Units.
In February 1998, the Company completed offerings in the aggregate of
1,988,340 publicly registered Common Shares which were sold to the public at
prices ranging from $48 to $50.625
12
<PAGE>
PART I
per share (the "February 1998 Common Share Offerings"). The Company contributed
to the Operating Partnership net proceeds of approximately $95 million
therefrom in exchange for additional OP Units.
Through February 1998, the Company sold approximately 639,000 Common Shares
pursuant to the DRIP Plan and contributed to the Operating Partnership proceeds
of approximately $31.7 million therefrom in exchange for additional OP Units.
On February 3, 1998, the Company filed with the SEC a Form S-3 Registration
Statement to register $1 billion of equity securities. The SEC declared this
registration statement effective on February 27, 1998.
On February 3, 1998, the Operating Partnership filed a Form S-3
Registration Statement to register $1 billion of debt securities. The SEC
declared this registration statement effective on February 27, 1998.
On March 12, 1998, the Operating Partnership disposed of two Properties for
a total sales price of $16.7 million.
Competition
All of the Properties are located in developed areas that include other
multifamily properties. The number of competitive multifamily properties in a
particular area could have a material effect on the Operating Partnership's
ability to lease units at the Properties or at any newly acquired properties and
on the rents charged. The Operating Partnership may be competing with other
entities that have greater resources than the Operating Partnership and whose
managers have more experience than the Operating Partnership's officers and
trustees. In addition, other forms of multifamily properties, including
multifamily properties and manufactured housing controlled by Mr. Zell, and
single-family housing, provide housing alternatives to potential residents of
multifamily properties.
Risk Factors
The Operating Partnership's results of operations are subject to certain
risks and uncertainties relating to the operations of its Properties. Investors
should carefully consider, among other factors, the matters described below
prior to making an investment decision regarding the securities of the Operating
Partnership.
Adverse Consequences of Debt Financing and Preferred Shares
General Risks. As of December 31, 1997, the Properties were subject to
approximately $1.6 billion of mortgage indebtedness and the Operating
Partnership's total debt equaled approximately $2.9 billion. Of the total debt
outstanding, $912.7 million, including the line of credit balance of $235
million, represented floating rate debt, of which approximately $611 million was
issued at tax exempt rates. In addition, from June 1995 through October 1997,
the Company issued Preferred Shares and Depositary Shares pursuant to offerings
previously mentioned and utilized the proceeds to repay indebtedness and to
acquire additional Properties. The Operating Partnership is subject to
13
<PAGE>
PART I
the risks normally associated with debt or preferred equity financing, including
the risk that the Operating Partnership's cash flow will be insufficient to meet
required payments of principal and interest, the risk that existing indebtedness
may not be refinanced or that the terms of such refinancing will not be as
favorable as the terms of current indebtedness and the risk that necessary
capital expenditures for such purposes as renovations and other improvements may
not be financed on favorable terms or at all. If the Operating Partnership were
unable to refinance its indebtedness on acceptable terms, or at all, the
Operating Partnership might be forced to dispose of one or more of the
Properties on disadvantageous terms, which might result in losses to the
Operating Partnership and might adversely affect the cash available to meet
required payments of principal and interest and for distributions to
unitholders. If interest rates or other factors at the time of the refinancing
result in higher interest rates upon refinancing, the Operating Partnership's
interest expense would increase, which would affect the Operating Partnership's
ability to meet required payments of principal and interest and to make
distributions to its unitholders. Furthermore, if a Property is mortgaged to
secure payment of indebtedness and the Operating Partnership is unable to meet
mortgage payments, the mortgagee could foreclose upon the Property, appoint a
receiver and receive an assignment of rents and leases or pursue other remedies,
all with a consequent loss of income and asset value to the Operating
Partnership. Foreclosures could also create taxable income without accompanying
cash proceeds, thereby hindering the Company's ability to meet the REIT
distribution requirements of the Internal Revenue Code of 1986, as amended (the
"Code").
Restrictions on the Operating Partnership's Activities. A substantial
portion of the Operating Partnership's debt has been issued pursuant to certain
indentures (the "Indentures") which restrict the amount of indebtedness
(including acquisition financing) the Operating Partnership may incur.
Accordingly, if the Company or the Operating Partnership is unable to raise
additional equity or borrow money, respectively, because of the debt
restrictions in the Indentures, the Operating Partnership's ability to acquire
additional properties may be limited. If the Operating Partnership is unable to
acquire additional properties, its ability to increase funds from operations,
and thereby cash available to meet required payments of principal and interest,
will be limited to increasing funds from operations of the existing Properties
in the Operating Partnership's portfolio at such time.
Bond Compliance Requirements. Certain of the Operating Partnership's
Properties are subject to restrictive covenants or deed restrictions relating to
current or previous tax-exempt bond financing and owns the bonds collateralized
by several additional Properties. The Operating Partnership has retained an
independent outside consultant to monitor compliance with the restrictive
covenants and deed restrictions that affect these Properties. The bond
compliance requirements may have the effect of limiting the Operating
Partnership's income from these Properties if the Operating Partnership is
required to lower its rental rates to attract low or moderate income tenants, or
eligible/qualified tenants.
Potential Environmental Liability Affecting the Operating Partnership
Under various federal, state and local environmental laws, ordinances and
regulations, an owner of real estate may be liable for the costs of removal or
remediation of certain hazardous or toxic substances on such property. These
laws often impose environmental liability without regard
14
<PAGE>
PART I
to whether the owner knew of, or was responsible for, the presence of such
hazardous or toxic substances. The presence of such substances, or the failure
properly to remediate such substances, may adversely affect the owner's ability
to sell or rent the property or to borrow using the property as collateral.
Persons who arrange for the disposal or treatment of hazardous or toxic
substances may also be liable for the costs of removal or remediation of such
substances at a disposal or treatment facility, whether or not such facility is
owned or operated by such person. Certain laws impose liability for release of
asbestos-containing materials ("ACMs") into the air and third parties may seek
recovery from owners or operators of real properties for personal injury
associated with ACMs. In connection with the ownership (direct or indirect),
operation, management and development of real properties, the Operating
Partnership or the Subsidiaries, as the case may be, may be considered an owner
or operator of such properties or as having arranged for the disposal or
treatment of hazardous or toxic substances and, therefore, potentially liable
for removal or remediation costs, as well as certain other related costs,
including governmental fines and injuries to persons and property.
All of the Properties have been the subject of a Phase I, and in certain
cases a supplemental, environmental assessment completed by qualified
independent environmental consultant companies. The most recent environmental
assessments for each of the Properties were conducted within the last five
years. Environmental assessments were obtained prior to the acquisition by the
Operating Partnership of each of the Properties. These environmental assessments
have not revealed, nor is the Operating Partnership aware of, any environmental
liability that the Operating Partnership's management believes would have a
material adverse effect on the Operating Partnership's business, results of
operations, financial condition or liquidity.
No assurance can be given that existing environmental assessments with
respect to any of the Properties reveal all environmental liabilities, that any
prior owner of a Property did not create any material environmental condition
not known to the Operating Partnership, or that a material environmental
condition does not otherwise exist as to any one or more Properties.
General Real Estate Investment Considerations, Changes in Laws
General. Real property investments are subject to varying degrees of risk
and are relatively illiquid. Income from real property investments and the
Operating Partnership's resulting ability to make expected interest payments on
debt securities may be adversely affected by the general economic climate, local
conditions such as oversupply of apartment units or a reduction in demand for
apartment units in the area, the attractiveness of the Properties to tenants,
zoning or other regulatory restrictions, the ability of the Operating
Partnership to provide adequate maintenance and insurance, and increased
operating costs (including insurance premiums and real estate taxes). The
Operating Partnership's income would also be adversely affected if tenants were
unable to pay rent or the Operating Partnership were unable to rent apartment
units on favorable terms. If the Operating Partnership were unable to promptly
relet or renew the leases for a significant number of apartment units, or if the
rental rates upon such renewal or reletting were significantly lower than
expected rates, then the Operating Partnership's income and ability to meet
required payments of principal and interest and to make expected distributions
to unitholders may be adversely affected. In addition, certain expenditures
associated with each equity investment
15
<PAGE>
PART I
(such as real estate taxes and maintenance costs) generally are not reduced when
circumstances cause a reduction in income from the investment. The Operating
Partnership intends to purchase newly developed, as well as invest in the
development of multifamily communities. Such projects generally require the
expenditure of capital, and consequently there can be no assurance that any of
such projects will be completed or that such projects will prove to be
profitable. The failure of the Operating Partnership to complete or to
profitably operate planned development projects may have an adverse affect on
the Operating Partnership's results of operations and financial position.
Furthermore, real estate investments are relatively illiquid and, therefore,
will tend to limit the ability of the Operating Partnership to vary its
portfolio promptly in response to changes in economic or other conditions.
Changes in Laws. Increases in real estate taxes, income taxes and service
or other taxes generally are not passed through to tenants under existing leases
and may adversely affect the Operating Partnership's cash provided by operations
and its ability to make interest payments on debt securities. Similarly, changes
in laws increasing the potential liability for environmental conditions existing
on properties or increasing the restrictions on discharges or other conditions
may result in significant unanticipated expenditures, which would adversely
affect the Operating Partnership's income and its ability to make interest
payments on debt securities.
Dependence on Key Personnel
The Operating Partnership is dependent on the efforts of the Company's
executive officers. While the Operating Partnership believes that it could find
replacements for these key personnel, the loss of their services could have a
temporary adverse effect on the operations of the Operating Partnership. Only
one of these officers has entered into an employment agreement with the Company.
Distribution Requirements Potentially Increasing Indebtedness of the Operating
Partnership
The Operating Partnership may be required from time to time, under certain
circumstances, to accrue as income for tax purposes, interest and rent earned
but not yet received. In such event, or upon the repayment by the Operating
Partnership or its subsidiaries of principal on debt, the Company could have
taxable income without sufficient cash to enable the Company to meet the
distribution requirements of a REIT. Accordingly, the Operating Partnership
could be required to borrow funds or liquidate investments on adverse terms in
order to allow the Company to meet such distribution requirements.
Item 2. The Properties
As of December 31, 1997, the Operating Partnership controlled a portfolio
of 463 multifamily properties located in 34 states containing 135,200 apartment
units. The average number of units per Property was approximately 293. The units
are typically contained in a series of two-story buildings. The Properties
contain an aggregate of approximately 118.9 million rentable square feet, with
an average unit size of 886 square feet. The average rent per unit was $696, and
the average rent per square foot was $0.79.
As of December 31, 1997, the Properties had an average occupancy rate of
95%. Tenant leases are generally year-to-year and require security deposits. The
Properties typically provide residents with attractive amenities, which may
include a clubhouse, swimming pool, laundry facilities and cable television
access. Certain Properties offer additional amenities such as saunas,
whirlpools, spas, sports courts and exercise rooms.
16
<PAGE>
PART I
The Operating Partnership believes that the Properties provide amenities
and common facilities that create an attractive residence for tenants. It is
management's role to monitor compliance with Property policies and to provide
preventive maintenance of the Properties including common areas, facilities and
amenities. The Operating Partnership holds periodic meetings of its Property
management personnel for training and implementation of the Operating
Partnership's strategies. The Operating Partnership believes that, due in part
to this strategy, the Properties historically have had high occupancy rates.
The distribution of the Properties throughout the United States reflects
the Operating Partnership's belief that geographic diversification helps
insulate the portfolio from regional and economic influences. At the same time,
the Operating Partnership has sought to create clusters of Properties within
each of its primary markets in order to achieve economies of scale in management
and operation; however, the Operating Partnership may acquire additional
multifamily properties located anywhere in the United States.
The Operating Partnership beneficially owns fee simple title to 456 of the
Properties and holds a 73-year leasehold interest with respect to one Property
(Mallgate). Direct fee simple title for certain of the Properties is owned by
single-purpose nominee corporations or land trusts that engage in no business
other than holding title to the Property for the Operating Partnership. Holding
title in such a manner is expected to make it less costly to transfer such
Property in the future in the event of a sale and should facilitate financing
since lenders often require title to a Property to be held in a single purpose
entity in order to isolate that Property from potential liabilities of other
Properties. Direct fee simple title for certain other Properties is owned by an
LLC. In addition, with respect to two Properties, the Operating Partnership owns
the debt collateralized by such Properties and with respect to four Properties,
the Operating Partnership owns an interest in the debt collateralized by the
properties.
As of December 31, 1997, the Operating Partnership had an investment in
partnership interests and subordinated mortgages and mortgage loans
collateralized by the Additional Properties. The Additional Properties contain
5,267 units, located in seven states.
The following two tables set forth certain information relating to the
Properties and the Additional Properties:
17
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Acreage Average
Year(s) (approx- Square Square Footage
Property Constructed imate) Units Footage Per Unit
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALABAMA
Meadows on the Lake/Park, Birmingham (2 properties) 1986/1987 37 400 418,452 1,046
ARIZONA
Bay Club, Phoenix 1976 13 420 257,790 614
Camellero, Scottsdale (1) 1979 15 344 311,526 906
Canyon Creek, Tucson 1986 10 242 169,946 702
Canyon Sands, Phoenix (1) 1983 20 412 353,592 858
Chandler Court, Chandler 1987 20 311 263,338 847
Crystal Creek, Phoenix 1985 10 273 190,140 696
Del Coronado, Mesa (1) 1985 19 419 394,062 940
Desert Sands, Phoenix (1) 1982 20 412 353,592 858
Flying Sun, Phoenix 1983 4 108 93,708 868
Fountain Creek, Phoenix 1984 9 186 144,374 776
Indian Bend, Scottsdale 1973 14 275 226,444 823
Southbank, Mesa 1985 5 113 99,448 880
Southcreek, Mesa (1) 1986-89 23 528 472,152 894
Via Ventura, Scottsdale 1980 19 320 279,187 872
Villa Madeira, Scottsdale 1971 17 332 291,280 877
Villa Manana, Phoenix 1971-85 8 260 212,150 816
Copper Creek, Phoenix 1984 8 144 146,024 1,014
Crown Court, Phoenix 1987 27 416 464,582 1,117
</TABLE>
<TABLE>
<CAPTION>
Occupancy December, 1997
As of Avg. Monthly
Year(s) December 31, Rental Rate Per
Property Constructed 1997 Unit Square Foot
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALABAMA
Meadows on the Lake/Park, Birmingham (2 properties) 1986/1987 94% $570 $0.54
ARIZONA
Bay Club, Phoenix 1976 95% $526 $0.86
Camellero, Scottsdale (1) 1979 95% $723 $0.80
Canyon Creek, Tucson 1986 96% $488 $0.69
Canyon Sands, Phoenix (1) 1983 92% $557 $0.65
Chandler Court, Chandler 1987 92% $641 $0.76
Crystal Creek, Phoenix 1985 96% $571 $0.82
Del Coronado, Mesa (1) 1985 93% $671 $0.71
Desert Sands, Phoenix (1) 1982 92% $557 $0.65
Flying Sun, Phoenix 1983 98% $590 $0.68
Fountain Creek, Phoenix 1984 96% $603 $0.78
Indian Bend, Scottsdale 1973 93% $692 $0.84
Southbank, Mesa 1985 96% $573 $0.65
Southcreek, Mesa (1) 1986-89 93% $663 $0.74
Via Ventura, Scottsdale 1980 97% $728 $0.83
Villa Madeira, Scottsdale 1971 95% $700 $0.80
Villa Manana, Phoenix 1971-85 93% $619 $0.76
Copper Creek, Phoenix 1984 97% $789 $0.78
Crown Court, Phoenix 1987 99% $857 $0.77
</TABLE>
18
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ARIZONA, continued
Dos Caminos, Phoenix 1983 16 264 265,884 1,007 98% $781 $0.78
The Pointe ASM, Phoenix 1988 14 364 309,548 850 93% $666 $0.78
San Tropez, Phoenix 1989 13 316 332,080 1,051 98% $886 $0.84
Misson Palms, Tucson 1980 35 360 372,918 1,036 99% $669 $0.65
Skyline Gateway, Tucson 1985 8 246 179,422 729 98% $568 $0.78
Sedona Ridge, Phoenix 1988 17 250 235,345 941 95% $728 $0.77
Windemere, Mesa (1) 1986 18 224 187,192 836 95% $591 $0.71
Sycamore Creek, Scottsdale (1) 1984 19 350 335,420 958 91% $759 $0.79
Villa Serenas, Tucson (1) 1973 18 611 452,751 741 87% $506 $0.68
Acacia Creek, Scottsdale 1988-1994 20 508 462,280 910 95% $765 $0.84
Bayside at the Islands, Gilbert (1) 1989 15 272 236,640 870 93% $736 $0.85
Country Brook, Chandler (1) 1986-1996 24 396 380,556 961 95% $739 $0.77
Gateway Villas, Scottsdale 1995 18 180 179,664 998 97% $836 $0.84
Greenwood Village, Tempe (1) 1984 13 270 238,768 884 92% $670 $0.76
Superstition Vista, Mesa 1987 16 316 300,510 951 93% $649 $0.68
Heritage Point, Mesa 1986 7 148 114,436 773 91% $797 $1.03
La Mariposa, Mesa (1) 1986 11 222 206,052 928 96% $645 $0.69
Little Cottonwoods, Tempe (1) 1984 20 379 389,012 1,026 94% $766 $0.75
Miramonte, Scottsdale 1983 4 151 118,568 785 96% $666 $0.85
</TABLE>
19
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ARIZONA, continued
Morningside, Scottsdale (1) 1989 10 160 163,116 1,019 98% $802 $0.79
Mountain Park, Phoenix (1) 1994 12 240 230,560 961 92% $800 $0.83
Park Meadow, Gilbert (1) 1986 7 224 197,120 880 97% $691 $0.79
Rancho Murietta, Tempe 1983 14 292 253,016 866 95% $698 $0.81
Scottsdale Courtyards, Scottsdale (1) 1993 18 274 284,175 1,037 99% $895 $0.86
Scottsdale Meadows, Scottsdale 1984 7 168 149,520 890 95% $727 $0.82
Shadow Brook, Scottsdale (1) 1984 17 224 226,296 1,010 98% $863 $0.85
Shores at Andersen Springs, Chandler (1) 1989 11 299 265,218 887 95% $776 $0.87
Sonoran, Phoenix (1) 1995 15 429 413,344 964 93% $770 $0.80
The Enclave, Tempe (1) 1994 25 204 194,142 952 98% $850 $0.89
The Meadows, Mesa 1984 15 306 247,378 808 92% $575 $0.71
Towne Square, Chandler 1987-1996 16 584 560,640 960 96% $683 $0.71
Villa Encanto, Phoenix 1983 21 382 309,982 811 93% $631 $0.78
Village at Lakewood, Phoenix (1) 1988 12 240 205,752 857 95% $754 $0.88
Harrison Park, Tucson (1) 1985 6 360 291,240 809 90% $623 $0.77
La Reserve Villas, Tucson (1) 1988 12 240 216,008 900 97% $619 $0.69
Orange Grove Village, Tucson (1) 1986-1995 17 400 285,600 714 90% $561 $0.79
Suntree Village, Tucson (1) 1986 16 424 345,761 815 92% $529 $0.65
Arboretum, Tucson (1) 1987 14 496 439,456 886 97% $569 $0.64
</TABLE>
20
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ARIZONA, continued
Village at Tanque Verde, Tucson (1) 1984-1994 9 217 174,668 805 91% $571 $0.71
Legends at La Paloma, Tucson 1995 20 312 325,648 1,044 95% $783 $0.75
Bear Canyon, Tucson 1996 14 238 231,640 973 92% $726 $0.75
Promontory Pointe I&II, Phoenix (1) 1984-1996 27 424 421,446 994 96% $772 $0.78
The Hawthorne, Phoenix 1996 10 276 259,784 941 91% $782 $0.83
Isle at Arrowhead Ranch, Glendale 1996 18 256 244,608 956 95% $839 $0.88
Ladera, Phoenix 1995 15 248 243,312 981 96% $832 $0.85
Ingleside, Phoenix 1995 5 120 118,664 989 98% $865 $0.87
The Heritage, Phoenix (1) 1995 8 204 198,276 972 91% $797 $0.82
Sun Creek, Glendale (1) 1985 7 175 129,661 741 94% $601 $0.81
Silver Creek, Phoenix (1) 1986 5 174 134,820 775 95% $614 $0.79
Preserve at Squaw Park, Phoenix (1) 1990 4 108 92,168 853 94% $836 $0.98
The Palms, Phoenix (1) 1990 5 132 135,460 1,026 98% $924 $0.90
Mirador, Phoenix 1995 16 316 311,928 987 92% $817 $0.83
La Valencia, Mesa 1997 18 361 342,946 950 94% $664 $0.70
ARKANSAS
Combined Little Rock Properties (1)(3) 1974-1975 44 1,039 889,416 856 93% $520 $0.61
CALIFORNIA
Carmel Terrace, San Diego 1988-89 20 384 298,588 778 97% $816 $1.05
Casa Capricorn & Pardee Casas, San Diego 1976-1986 19 388 346,720 894 97% $800 $0.90
Creekside Oaks, Walnut Creek (1) 1974 7 316 237,952 753 92% $850 $1.13
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES-Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA, continued
Deerwood, San Diego 1990 29 316 333,079 1,054 95% $1,072 $1.02
Eagle Canyon, Chino Hills 1985 32 252 252,493 1,002 93% $975 $0.97
Emerald Place, Bermuda Dunes 1988 17 240 214,072 892 97% $622 $0.70
Hathaway, Long Beach 1987 17 385 266,805 693 95% $885 $1.28
Lakeville Resort, Petaluma (1) 1984 45 492 461,798 939 98% $806 $0.86
Lands End, Pacifica 1974 7 260 161,121 620 97% $1,062 $1.71
Merrimac Woods, Costa Mesa 1970 39 123 88,160 717 98% $807 $1.13
Mountain Terrace, Stevenson Ranch 1992 39 510 425,612 835 93% $878 $1.05
Oak Park North & South, Agoura (1) 1989-1990 24 444 368,600 830 96% $1,078 $1.30
Park West, Los Angeles 1990 4 444 315,588 711 95% $1,015 $1.43
Promenade Terrace, Corona Hills (1) 1990 27 330 360,838 1,093 99% $882 $0.81
Regency Palms, Huntington Beach 1969 14 310 261,634 844 91% $866 $1.03
Summer Ridge, Riverside 1985 6 136 104,832 771 99% $695 $0.90
Summerset Village, Chatsworth 1985 29 280 286,752 1,024 96% $1,098 $1.07
Villa Solana, Laguna Hills 1984 13 272 245,104 901 97% $915 $1.02
Vista Del Lago, Mission Viejo (1) 1986-88 29 608 512,200 842 92% $941 $1.12
Windridge, Laguna Niguel (1) 1989 19 344 375,312 1,091 95% $1,046 $0.96
Bay Ridge, San Pedro 1987 2 60 46,836 781 95% $908 $1.16
La Mirage, San Diego 1988-1992 75 1,070 972,689 909 94% $1,094 $1.20
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES-Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA, continued
Harborview, San Pedro (1) 1985 7 160 171,800 1,074 89% $1,351 $1.26
Wood Creek, Pleasant Hill 1987 16 256 257,632 1,006 95% $1,253 $1.25
Geary Courtyard, San Francisco (1) 1990 0.4 164 85,675 522 86% $1,123 $2.15
Deerwood, Corona 1992 15 316 338,345 1,071 94% $871 $0.81
Larkspur Woods, Sacramento (1) 1989/1993 16 232 253,134 1,091 95% $959 $0.88
Ridgewood Village, San Diego 1997 9 192 163,336 851 95% $907 $1.07
The Ashton, Corona (1) 1986 24 492 457,184 929 90% $717 $0.77
Canyon Crest Views, Riverside 1982-1983 11 178 212,292 1,193 97% $945 $0.79
Canyon Ridge, San Diego 1989 8 162 126,000 778 99% $854 $1.10
Marquessa, Corona (1) 1992 14 336 299,744 892 94% $770 $0.86
Portofino, Chino Hills 1989 11 176 153,708 873 99% $860 $0.98
Parkview Terrace, Redlands (1) 1986 32 558 446,856 801 96% $699 $0.87
Redlands Lawn and Tennis Club, Redland (1) 1986 27 496 394,560 795 93% $658 $0.83
COLORADO
Cheyenne Crest, Colorado Springs 1984 9 208 175,424 843 96% $659 $0.78
Glenridge, Colorado Springs (1) 1985 8 220 176,792 804 96% $648 $0.81
Indian Tree, Arvada 1983 8 168 140,000 833 95% $666 $0.80
Trails, Aurora 1986 11 351 286,964 818 93% $633 $0.77
Willow Glen, Aurora 1983 20 384 302,944 789 94% $614 $0.78
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES--Continued
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COLORADO, continued
Windmill, Colorado Springs 1985 11 304 180,640 594 97% $523 $0.88
Yuma Court, Colorado Springs 1985 5 40 37,400 935 100% $620 $0.66
Village at Bear Creek, Denver 1987-1996 31 472 464,558 984 93% $848 $0.86
Cimmaron Ridge, Denver 1984 10 296 229,048 774 93% $586 $0.76
Colinas Pointe, Denver 1986 13 272 213,984 787 92% $647 $0.82
Highland Pointe, Denver 1984 14 318 237,886 748 97% $568 $0.76
Ironwood at the Ranch, Denver (1) 1986 9 226 184,081 815 97% $732 $0.90
The Marks, Denver (1) 1987-1996 24 616 520,712 845 93% $741 $0.88
The Registry, Denver 1987 9 208 156,558 753 98% $695 $0.92
Sterling Point, Denver 1979 9 143 130,120 910 94% $732 $0.80
Warwick Station, Denver (1) 1986 18 332 250,432 754 96% $689 $0.91
Parkwood East, Fort Collins 1986 25 259 215,064 830 92% $676 $0.81
Dartmouth Woods, Lakewood (1) 1990 13 201 165,777 825 97% $708 $0.86
Highline Oaks, Denver (1) 1986 10 220 170,756 776 94% $679 $0.88
Crescent at Cherry Creek, Denver (1) 1994 6 216 189,191 876 94% $821 $0.94
Cierra Crest, Denver 1996 22 480 439,498 916 95% $808 $0.88
CONNECTICUT
The Classic, Stamford 1990 1 144 165,727 1,151 97% $1,981 $1.72
FLORIDA
Brierwood, Jacksonville 1974 17 196 263,052 1,342 99% $642 $0.48
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES--Continued
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FLORIDA, continued
Casa Cordoba, Tallahassee 1972-73 12 168 164,336 978 95% $605 $0.62
Casa Cortez, Tallahassee 1970 4 66 74,916 1,135 94% $628 $0.55
Chaparral, Largo 1976 23 444 451,420 1,017 95% $613 $0.60
Gatehouse on the Green, Pembroke Pines 1990 21 312 310,140 994 90% $944 $0.95
Gatehouse at Pine Lake, Plantation 1990 25 296 293,792 993 97% $861 $0.87
Habitat, Orlando 1974 17 344 334,352 972 93% $589 $0.61
Hammock's Place, Miami (1) 1986 15 296 307,900 1,040 93% $740 $0.71
Heron Cove, Coral Springs 1987 12 198 189,932 959 98% $786 $0.82
Heron Landing, Lauderhill 1988 11 144 151,684 1,053 94% $771 $0.73
Heron Run, Plantation 1987 13 198 185,504 937 93% $814 $0.87
La Costa Brava, Orlando 1967 10 194 190,780 983 98% $639 $0.65
La Costa Brava, Jacksonville (2) 1970-73 30 464 441,268 951 92% $556 $0.58
Marbrisa, Tampa 1984 37 224 188,544 842 97% $589 $0.70
Oaks of Lakebridge, Ormond Beach 1984 12 170 120,792 711 99% $598 $0.84
Paradise Point, Dania 1987-90 13 260 226,980 873 99% $832 $0.95
Pine Harbour, Orlando 1991 20 366 344,204 940 95% $690 $0.73
Pines of Springdale, W. Palm Beach 1986 5 151 126,975 841 95% $632 $0.75
The Place, Fort Meyers 1986 9 230 183,588 798 96% $556 $0.70
Combined Ft. Lauderdale Properties (4) 1988-1991 36 737 528,591 717 97% $878 $1.22
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES--Continued
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FLORIDA, continued
River Bend, Tampa 1971 15 296 333,580 1,127 96% $565 $0.50
Sabal Pointe, Coral Springs 1995 14 275 355,575 1,293 96% $896 $0.69
Sawgrass Cove, Bradenton 1991 28 336 342,880 1,020 94% $678 $0.66
Springs Colony, Altamonte Springs (1) 1986 10 188 161,168 857 96% $589 $0.69
Stonelake Club, Ocala 1986 15 240 194,320 810 95% $511 $0.63
Woodlake at Killearn, Tallahassee 1986-90 25 352 305,480 868 91% $610 $0.70
Banyan Lake, Boynton Beach 1986 30 288 264,636 919 94% $712 $0.77
Boynton Place, Boynton Beach 1989 12 192 195,840 1,020 95% $715 $0.70
Crosswinds, St. Petersburg 1986 17 208 154,224 741 97% $567 $0.77
Sabal Palm, Pompano Beach 1989 23 416 384,032 923 96% $762 $0.83
Summit Chase, Coral Springs 1985 9 140 134,586 961 94% $714 $0.74
Mariners Wharf, Orange Park 1989 28 272 305,392 1,123 95% $753 $0.67
Northlake, Jacksonville 1989 20 240 193,832 808 94% $596 $0.74
Ocean Walk, Key West (1) 1990 16 296 208,256 704 97% $828 $1.18
Silver Springs, Jacksonville 1985 25 432 361,372 836 95% $547 $0.65
Tivoli Lakes, Deerfield Beach 1991 15 278 247,336 890 96% $789 $0.89
Westwood Pines, Tamarac 1991 15 208 204,460 983 96% $799 $0.81
Hidden Palms, Tampa (1) 1986 14 256 201,518 787 97% $542 $0.69
Vinings at Ashley Lake, Boynton Beach (1) 1990 36 440 432,756 984 93% $649 $0.66
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES--Continued
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GEORGIA
Frey, Atlanta (1) 1985 44 489 453,760 928 90% $704 $0.76
Governor's Place, Augusta 1972 9 190 191,580 1,008 91% $449 $0.45
Greengate, Marietta 1971 11 152 157,808 1,038 92% $646 $0.62
Holcomb Bridge, Atlanta (1) 1985 36 437 419,150 959 96% $703 $0.73
Ivy Place, Atlanta 1978 15 122 180,830 1,482 94% $919 $0.62
Longwood, Decatur 1992 9 268 216,970 810 96% $742 $0.92
Maxwell House, Augusta 1951 1 216 97,173 450 96% $371 $0.82
Park Knoll, Marietta 1983 41 484 587,250 1,213 97% $821 $0.68
Preston Lake, Tucker 1984-86 32 320 338,130 1,057 97% $698 $0.66
Roswell, Atlanta (1) 1985 30 236 225,598 956 98% $731 $0.76
Terraces at Peachtree, Atlanta 1987 1 96 86,800 904 98% $913 $1.01
Woodland Hills, Decatur 1985 19 228 266,304 1,168 97% $788 $0.67
Paces (combined), Atlanta (8) 1984-1989 41 610 592,936 972 94% $768 $0.79
North Hill, Atlanta (1) 1984 30 420 481,150 1,146 93% $764 $0.67
The Clarion, Decatur 1990 9 217 211,582 975 94% $756 $0.78
Garden Lake, Riverdale 1991 19 278 274,256 986 91% $645 $0.65
Highland Grove, Stone Mountain 1988 20 268 243,360 908 94% $671 $0.74
Governor's Point, Roswell (1) 1982/1986 34 468 587,176 1,255 94% $783 $0.62
The Arboretum, Atlanta 1970 18 312 301,139 965 94% $790 $0.82
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES--Continued
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
IDAHO
The Seasons, Boise 1990 6 120 108,460 904 97% $631 $0.70
ILLINOIS
Bourbon Square, Palatine (1) 1984-87 47 612 875,160 1,430 98% $1,034 $0.72
Four Lakes III-V, Lisle (1) 1968-1988 107 1,420 1,108,45 781 93% $819 $1.05
Spice Run, Naperville 1988 32 400 396,320 991 98% $862 $0.87
Chantecleer Lakes, Naperville (1) 1986 19 304 280,536 923 97% $894 $0.97
Glenlake Club, Glendale Heights (1) 1988 17 336 268,560 799 91% $767 $0.96
INDIANA
Idlewood, Indianapolis (1) 1991 28 320 262,355 820 90% $621 $0.76
IOWA
3000 Grand, Des Moines 1970 6 186 199,530 1,073 94% $829 $0.77
Regency Woods, West Des Moines (1) 1986 11 200 165,880 829 97% $515 $0.62
KANSAS
Cedar Crest, Overland Park 1986 30 466 430,034 923 98% $632 $0.68
Essex Place, Overland Park 1970-84 34 352 429,048 1,219 96% $792 $0.65
Rosehill Pointe, Lenexa 1984 35 498 459,318 922 93% $611 $0.66
Silverwood, Mission (1) 1986 15 280 234,876 839 98% $632 $0.75
Sunnyoak Village, Overland Park 1984 46 548 492,700 899 98% $588 $0.65
Concorde Bridge, Overland Park 1973 26 248 403,808 1,628 94% $798 $0.49
KENTUCKY
Cloisters on the Green, Lexington 1974 12 228 196,560 862 97% $576 $0.67
Doral, Louisville 1972 10 228 293,106 1,286 95% $618 $0.48
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
KENTUCKY, continued
Mallgate, Louisville 1969 24 540 535,444 992 93% $551 $0.56
Sonnet Cove I-II, Lexington 1972-1974 14 331 346,675 1,047 94% $627 $0.60
Breckinridge Court, Lexington (1) 1986-1987 16 382 276,010 723 95% $464 $0.64
River Oak, Louisville 1989 16 268 200,056 746 95% $516 $0.69
MAINE
Junipers of Yarmouth, Yarmouth 1970 9 225 188,000 836 97% $662 $0.79
Tamarlane, Portland 1986 19 115 101,801 885 98% $716 $0.81
MARYLAND
Canterbury, Germantown (1) 1986 23 544 481,083 884 97% $719 $0.81
Country Club I & II, Silver Spring (1) 1980-1982 20 376 371,296 987 95% $770 $0.78
Georgian Woods II, Wheaton (1) 1967 17 371 305,693 824 98% $777 $0.94
Greenwich Woods & Hollyview,
Silver Springs (6) 1965-1967 14 606 546,518 902 97% $755 $0.84
Marymont, Laurel 1987-88 10 308 251,264 816 96% $771 $0.95
Northhampton I & II, Largo (1) 1977-1988 58 620 564,399 910 96% $806 $0.89
Oak Mill II, Germantown (1) 1985 8 192 165,611 863 96% $716 $0.83
Town Centre III & IV, Laurel (1) 1968-1969 30 562 553,083 984 98% $721 $0.73
Yorktowne at Olde Mill, Millersville 1974 21 216 195,100 903 97% $691 $0.77
MASSACHUSETTS
Lincoln Heights, Quincy 1991 16 336 266,590 793 93% $1,079 $1.36
Crystal Village, Attleboro 1974 7 91 92,880 1,021 100% $871 $0.85
Mill Village, Randolph 1971-77 11 310 237,755 767 97% $735 $0.96
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MICHIGAN
Country Ridge, Farmington Hills 1986 18 252 278,060 1,103 92% $838 $0.76
Hidden Valley, Ann Arbor 1973 28 324 237,348 733 96% $717 $0.98
Lake in the Woods, Ypsilanti 1969 175 1,028 971,873 945 95% $736 $0.78
Pines of Cloverlane, Pittsfield Townsh 1975-79 63 582 471,966 811 96% $624 $0.77
Walden Wood, Southfield (1) 1972 20 210 295,080 1,405 95% $879 $0.63
Arbor Glen, Pittsfield Township 1990 22 220 195,996 891 95% $600 $0.67
Burwick Farms, Howell 1991 37 264 274,540 1,040 95% $786 $0.76
Woodcrest Villa, Westland 1970 26 458 425,200 928 93% $561 $0.60
Woodland Meadows, Ann Arbor 1987-1989 34 306 392,930 1,284 89% $1,075 $0.84
MINNESOTA
Park Place I & II, Plymouth (1) 1986 60 500 569,768 1,140 94% $800 $0.70
Fountain Place I, Eden Prairie (1)(7) 1989 22 332 382,170 1,151 97% $768 $0.67
Fountain Place II, Eden Prairie (1)(7) 1989 158 162,598 1,029 97% $771 $0.75
Royal Oaks, Eagan (1) 1989 20 231 209,384 906 98% $740 $0.82
Trailway Pond I, Burnsville (1)(7) 1988 21 75 70,283 937 95% $684 $0.73
Trailway Pond II, Burnsville (1)(7) 1988 165 155,395 942 95% $675 $0.72
Valley Creek I, Woodbury (1)(7) 1989 40 225 212,100 943 92% $713 $0.76
Valley Creek II, Woodbury (1)(7) 1990 177 168,258 951 96% $717 $0.75
White Bear Woods I, White Bear Lake (1) 1989 4 225 211,992 942 96% $736 $0.78
Woodlane Place I, Woodbury (1) 1989 32 216 297,902 1,379 95% $870 $0.63
Woodlands of Minnetonka, Minnetonka 1988 14 248 268,640 1,083 98% $880 $0.81
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MISSOURI
Hunters Glen, Chesterfield 1985 19 192 156,489 815 98% $654 $0.80
Sleepy Hollow, Kansas City (1) 1987 33 388 325,486 839 93% $566 $0.67
Hunters Ridge, St. Louis (1) 1987 13 198 178,448 901 95% $616 $0.68
South Pointe, St. Louis (1) 1986 8 192 155,520 810 92% $602 $0.74
Ethan's Ridge I, Kansas City (1)(7) 1988 316 283,944 899 92% $542 $0.60
Ethan's Ridge II, Kansas City (1)(7) 1990 52 242 196,614 812 89% $534 $0.66
Ethan's Glen III, Kansas City (1)(7) 1990 48 33,600 700 88% $484 $0.69
NEVADA
Catalina Shores, Las Vegas 1989 13 240 211,200 880 93% $716 $0.81
Cypress Point, Las Vegas 1989 9 212 179,800 848 97% $698 $0.82
Desert Park, Las Vegas 1987 15 368 172,513 469 87% $519 $1.11
Fountains at Flamingo, Las Vegas 1989-91 30 521 417,870 802 94% $687 $0.86
Newport Cove, Henderson 1983 10 140 152,600 1,090 96% $777 $0.71
Silver Shadow, Las Vegas 1992 9 200 194,656 973 90% $716 $0.74
Sunrise Springs, Las Vegas 1989 10 192 164,424 856 94% $681 $0.80
Trails, Las Vegas 1988 28 440 453,656 1,031 94% $757 $0.73
Catalina Shores, Las Vegas (Wellsford) 1989 14 256 230,872 902 97% $651 $0.72
Crossing at Green Valley, Las Vegas 1986 15 384 330,714 861 96% $654 $0.76
Reflections at the Lakes, Las Vegas 1989 16 326 274,992 844 98% $669 $0.79
NEW HAMPSHIRE
Wellington Hill, Manchester (1) 1987 40 390 394,627 1,012 96% $753 $0.74
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NEW JERSEY
Ravens Crest, Plainsboro (1) 1984 19 704 583,176 828 96% $854 $1.03
NEW MEXICO
Pueblo Villas, Albuquerque 1975 12 232 173,118 746 94% $557 $0.75
Mountain Run, Albuquerque 1985 16 472 335,744 711 95% $554 $0.78
NORTH CAROLINA
Bainbridge, Durham 1984 24 216 191,240 885 94% $705 $0.80
Bridgeport, Raleigh 1990 17 276 252,190 914 95% $724 $0.79
Deerwood Meadows, Greensboro 1986 44 297 217,757 733 94% $562 $0.77
East Pointe, Charlotte (1) 1987 29 310 301,560 973 97% $650 $0.67
Laurel Ridge, Chapel Hill 1975 13 160 158,964 994 98% $727 $0.73
McAlpine Ridge, Charlotte 1989-90 15 320 238,125 744 96% $580 $0.78
Pine Meadow, Greensboro (1) 1974 14 204 226,600 1,111 95% $633 $0.57
Rock Creek, Corrboro 1986 16 188 153,548 817 97% $682 $0.84
Winterwood, Charlotte (1) 1986 23 384 369,260 962 96% $675 $0.70
Woodbridge, Cary (1) 1993-95 28 344 315,624 918 95% $733 $0.80
Woodscape & Woods of North Bend,
Raleigh 1979-1983 55 475 430,167 906 96% $640 $0.71
The Cardinal, Greensboro (1) 1994 17 256 237,727 913 93% $574 $0.63
Willow Brook, Durham 1986 21 176 139,860 795 91% $681 $0.86
The Atrium, Durham 1989 16 208 196,596 945 95% $645 $0.68
The Cedars, Charlotte 1983 32 360 312,400 868 92% $548 $0.63
The Chimneys, Charlotte 1974 16 214 150,152 702 95% $505 $0.72
Creekwood, Charlotte 1987-1990 23 384 322,868 841 93% $792 $0.94
Hidden Oaks & Northwoods Village,
Cary (5) 1986-1988 26 444 345,358 778 95% $660 $0.85
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OHIO
Olentangy Commons, Columbus 1972 76 827 981,190 1,186 99% $773 $0.65
Reserve Square, Cleveland 1973 4 765 631,803 826 86% $917 $1.11
University Park, Toledo 1965 2 99 49,950 505 95% $456 $0.90
Village of Hampshire Heights, Toledo 1950 10 304 187,624 617 83% $431 $0.70
Eastland on the Lake, Columbus 1973 32 376 274,704 724 90% $431 $0.60
Orchard of Landen, Maineville (1) 1985-1988 33 312 288,514 925 96% $695 $0.75
OKLAHOMA
Brittany Square, Tulsa 1982 8 212 170,516 804 92% $524 $0.65
The Lodge, Tulsa 1979 11 208 152,240 732 97% $432 $0.59
Augusta, Oklahoma City 1986 7 197 153,308 778 95% $531 $0.68
Heritage Park, Oklahoma City 1983 23 452 392,218 868 95% $410 $0.47
Invitational, Oklahoma City 1983 10 344 254,976 741 97% $440 $0.59
Raindance, Oklahoma City 1984 22 504 327,248 649 94% $358 $0.55
Windrush, Oklahoma City 1982 10 160 130,112 813 99% $501 $0.62
Wellsford Oaks, Tulsa 1991 9 300 216,368 721 96% $529 $0.73
Huntington Hollow, Tulsa 1981 9 288 180,648 627 96% $371 $0.59
One Eton Square, Tulsa 1985 17 448 313,904 701 95% $531 $0.76
Silver Springs & Woodland Oaks, Tulsa 1983-1984 24 428 323,977 757 99% $503 $0.66
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES-Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OKLAHOMA, continued
Riverside Park, Tulsa (1) 1994 9 288 237,283 824 93% $576 $0.70
OREGON
Bridgecreek, Wilsonville 1987 22 315 274,236 871 92% $677 $0.78
Kempton Downs, Gresham 1990 12 278 277,536 998 88% $698 $0.70
Meadowcreek, Tigard (1) 1985 15 304 247,690 815 94% $661 $0.81
Tanasbourne Terrace, Hillsboro 1986-89 18 373 363,758 975 95% $747 $0.77
Tanglewood, Lake Oswego 1976 8 158 200,660 1,270 88% $847 $0.67
Woodcreek, Beaverton (1) 1982-84 22 440 335,120 762 95% $598 $0.79
Knight's Castle, Wilsonville 1991 22 296 251,627 850 92% $649 $0.76
Club at Tanasbourne, Hillsboro 1990 19 352 302,902 861 91% $698 $0.81
Club at the Green, Beaverton 1991 15 254 238,850 940 92% $692 $0.74
Country Gables, Beaverton (1) 1991 15 288 275,463 956 92% $720 $0.75
Watermark Square, Portland (1) 1990 12 390 350,945 900 95% $637 $0.71
SOUTH CAROLINA
Mallard Cove, Greenville 1983 14 211 264,187 1,252 99% $583 $0.47
Carolina Crossing, Greenville 1967 6 156 121,200 777 94% $432 $0.56
Gleneagle, Greenville 1990 14 192 177,264 923 94% $544 $0.59
Greyeagle, Greenville 1991 11 156 154,624 991 96% $549 $0.55
Hickory Ridge, Greenville 1968 4 90 72,392 804 98% $446 $0.55
Tamarind at Stoneridge, Columbia 1985 15 240 200,976 837 88% $534 $0.64
TENNESSEE
Arbors of Hickory Hollow, Nashville (1) 1986 31 336 337,260 1,004 95% $637 $0.63
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES--Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TENNESSEE, continued
Arbors of Brentwood, Nashville (1) 1986-87 41 346 320,993 928 92% $690 $0.74
Brixworth, Nashville 1985 6 216 144,912 671 92% $745 $1.11
Canterchase, Nashville (1) 1985 22 235 170,140 724 97% $542 $0.75
Ridgemont, Chattanooga 1988 21 280 236,530 845 97% $506 $0.60
Mountain Brook, Chattanooga 1987 43 226 192,200 850 95% $476 $0.56
Spinnaker Cove, Nashville (1) 1986 21 278 238,524 858 95% $676 $0.79
Wyndridge II , Memphis (1)(7) 1988 59 284 263,962 929 95% $616 $0.66
Wyndridge III, Memphis (1)(7) 1988 284 263,962 929 94% $613 $0.66
The Willows, Knoxville (1) 1987-1988 19 250 219,760 879 91% $612 $0.70
Farmington Gates, Germantown 1976 11 182 192,428 1,057 93% $610 $0.58
Ridgeway Commons, Memphis 1970 12 127 168,650 1,328 87% $623 $0.47
Village of Sycamore Ridge, Memphis 1977 14 114 148,560 1,313 93% $624 $0.48
Cambridge at Hickory Hollow, Nashville 1997 24 360 358,776 997 73% $717 $0.72
Trinity Lakes & Autumn Creek, Cordova(1) 1985-1991 40 540 484,374 897 94% $603 $0.67
Preakness, Antioch (1) 1986 13 260 193,500 744 96% $548 $0.74
TEXAS
7979 Westheimer, Houston 1973 15 459 401,571 875 94% $646 $0.74
Altamonte, San Antonio (1) 1985 17 432 322,928 748 97% $527 $0.70
Arbors of Las Colinas, Irving 1985 15 408 334,556 820 99% $679 $0.83
Breton Mill, Houston (1) 1986 14 392 294,152 750 99% $564 $0.75
Celebration at Westchase, Houston 1979 13 367 305,609 833 98% $565 $0.68
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES-Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TEXAS, continued
Champion Oaks, Houston (1) 1984 10 252 190,628 756 97% $561 $0.74
Dawntree, Carrollton 1982 23 400 370,152 925 96% $604 $0.65
Forest Ridge, Arlington 1984-85 29 660 555,364 841 94% $614 $0.73
Fountainhead I-III, San Antonio (1) 1985-87 23 688 457,616 665 96% $515 $0.77
Harbour Landing, Corpus Christi 1985 11 284 193,288 681 96% $543 $0.80
Hampton Green, San Antonio 1979 11 293 222,341 759 94% $483 $0.64
Hearthstone, San Antonio 1982 11 252 167,464 665 95% $434 $0.65
Hunter's Green, Fort Worth (1) 1981 10 248 188,720 761 98% $491 $0.65
Keystone, Austin (1) 1981 6 166 111,440 671 97% $570 $0.85
Kingswood Manor, San Antonio 1983 6 129 109,996 853 91% $523 $0.61
Lakewood Oaks, Dallas 1987 12 352 257,606 732 97% $678 $0.93
Lincoln Green I-III, San Antonio 1984-86 24 680 465,664 685 98% $480 $0.70
Marina Club, Ft. Worth 1987 14 387 265,475 686 95% $477 $0.70
Northgate Village, San Antonio 1984 10 264 214,928 814 98% $509 $0.63
Parkwest, Austin 1985 15 196 179,046 914 97% $736 $0.81
Preston in Willow Bend, Plano 1985 13 229 233,893 1,021 95% $768 $0.75
Ridgetree, Dallas 1983 17 798 597,642 749 93% $527 $0.70
Saddle Creek, Carrollton 1980 16 238 244,488 1,027 95% $690 $0.67
Songbird, San Antonio (1) 1981 15 262 277,720 1,060 91% $633 $0.60
Sutton Place, Dallas 1985 10 456 301,440 661 98% $601 $0.91
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TEXAS, continued
The Lodge, San Antonio 1979 10 384 259,512 676 93% $493 $0.73
The Trails, Arlington 1984 9 208 141,696 681 98% $528 $0.78
Village Oaks, Austin (1) 1984 13 280 199,152 711 99% $667 $0.94
Woodmoor, Austin 1981 9 208 151,348 728 99% $580 $0.80
Burn Brae, Dallas 1984 12 282 221,966 787 97% $556 $0.71
Calais, Dallas 1986 13 264 206,210 781 94% $593 $0.76
Copperfield, San Antonio 1984 10 258 197,736 766 95% $498 $0.65
Countryside, San Antonio 1980 9 220 159,214 724 95% $475 $0.66
Forest Valley, San Antonio 1983 8 185 149,493 808 95% $531 $0.66
Landera, San Antonio 1983 9 184 168,176 914 96% $571 $0.62
The Overlook, San Antonio 1985 16 411 298,133 725 97% $461 $0.64
Regatta, San Antonio 1983 10 200 171,634 858 98% $574 $0.67
Trails End, San Antonio 1983 19 308 202,376 657 96% $458 $0.70
Villas of Oak Creste, San Antonio 1979 10 280 208,446 744 91% $464 $0.62
Waterford, San Antonio 1983 5 133 87,376 657 93% $495 $0.75
Foxchase, Grand Prairie 1983 15 260 243,218 935 94% $584 $0.62
Cambridge Village, Lewisville 1987 10 200 160,036 800 95% $668 $0.84
Rincon, Houston 1996 5 288 240,787 836 96% $894 $1.07
Trails at Dominion, Houston (1) 1992-1995 55 843 766,592 909 94% $684 $0.75
Town Center, Kingwood 1994 10 258 220,630 855 94% $757 $0.89
Preston Bend, Dallas (1) 1986 9 255 185,364 727 93% $636 $0.87
</TABLE>
37
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TEXAS, continued
Blue Swan, San Antonio (1) 1985-1994 12 285 226,036 793 92% $540 $0.68
Jefferson at Walnut Creek, Austin (1) 1994 20 342 286,188 837 95% $776 $0.93
Kirby Place, Houston (1) 1994 9 362 359,931 994 95% $991 $1.00
Parkridge Place, Irving 1985 23 536 455,496 850 98% $625 $0.74
Chartwell Court, Houston 1995 14 243 253,553 1,043 96% $764 $0.73
UTAH
Quail Cove, Salt Lake City 1987 17 420 362,580 863 93% $581 $0.67
Settlers Point, Salt Lake City 1986 16 288 263,040 913 93% $639 $0.70
Springs of Country Woods, Salt Lake City 1982 24 590 486,648 825 94% $614 $0.74
Brookfield, Salt Lake City 1985 6 128 101,424 792 95% $603 $0.76
VIRGINIA
Amberton, Manassas (1) 1986 7 190 143,402 755 96% $706 $0.94
Kingsport, Alexandria 1985 13 416 285,793 687 99% $700 $1.02
Saddle Ridge, Ashburn 1989 14 216 194,142 899 92% $862 $0.96
Sheffield Court, Arlington 1986 14 597 356,822 598 98% $839 $1.40
Tanglewood, Manassas (1) 1987 29 432 388,704 900 93% $729 $0.81
Wilde Lake, Richmond (1) 1989 18 189 172,980 915 94% $695 $0.76
Woodside, Lorton 1987 13 252 231,781 920 96% $789 $0.86
Cascade at Landmark, Alexandria 1990 5 277 272,720 985 96% $934 $0.95
Brookridge, Centreville (1) 1989 15 252 252,353 1,001 96% $810 $0.81
WASHINGTON
2900 on First, Seattle 1989-91 1 135 87,320 647 98% $879 $1.36
</TABLE>
38
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy December, 1997
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WASHINGTON, continued
Brentwood, Vancouver 1990 14 296 286,132 967 94% $663 $0.69
Chandler's Bay I, Kent 1989 36 293 278,874 952 94% $740 $0.78
Charter Club, Everett 1991 12 201 172,773 860 97% $736 $0.86
Creekside, Mountlake Terrace (1) 1987 43 512 407,296 796 94% $714 $0.90
Eagle Rim, Redmond 1986-88 20 156 137,920 884 94% $807 $0.91
Edgewood, Woodinville (1) 1986 10 203 166,299 819 98% $743 $0.91
Fox Run, Federal Way 1988 5 143 127,960 895 96% $670 $0.75
Huntington Park, Everett 1991 14 381 307,793 808 96% $705 $0.87
Newport Heights, Seattle 1985 5 80 59,056 738 99% $721 $0.98
Orchard Ridge, Lynnwood 1988 6 104 86,548 832 97% $707 $0.85
Pointe East, Redmond 1988 6 76 83,280 1,096 91% $1,027 $0.94
Village of Newport, Federal Way 1987 4 100 76,890 769 94% $616 $0.80
Waterstone Place, Federal Way 1990 37 750 616,436 822 94% $611 $0.74
Wellington, Silverdale (1) 1990 11 240 214,024 892 88% $635 $0.71
North Creek Heights, Seattle 1990 9 114 104,306 915 97% $832 $0.91
Panther Ridge, Seattle 1980 20 260 221,000 850 94% $569 $0.67
Highland Creste, Seattle 1989 10 198 192,556 973 98% $646 $0.66
Ridgegate, Seattle 1990 9 153 141,594 925 96% $690 $0.75
Whitedove Pointe, Seattle 1992 5 96 102,834 1,071 96% $783 $0.73
Cherry Hill, Seattle 1991 7 108 101,390 939 97% $801 $0.85
</TABLE>
39
<PAGE>
Item 2. Properties
PROPERTIES--Continued
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WASHINGTON, continued
Plum Tree Park, Seattle 1991 8 196 174,310 889 96% $723 $0.81
Firdale Village, Seattle 1986 23 386 323,522 838 95% $730 $0.87
Martha Lake, Seattle 1991 8 155 135,662 875 100% $694 $0.79
Country Club Village, Seattle 1991 7 151 157,898 1,046 92% $889 $0.85
2300 Elliott, Seattle 1992 0.5 91 67,403 741 93% $892 $1.20
Metropolitan Park, Seattle 1991 0.4 82 49,702 606 92% $836 $1.38
Seventh and James, Seattle 1992 0.7 96 61,282 638 93% $827 $1.30
Merrill Creek, Tacoma 1994 15 149 138,867 932 95% $662 $0.71
Stoney Creek, Tacoma 1990 16 231 211,580 916 93% $646 $0.71
Windridge, Tacoma 1989 4 80 65,111 814 90% $563 $0.69
Surprise Lake Village, Tacoma 1986 32 338 328,032 971 93% $699 $0.72
Chestnut Hills, Tacoma 1991 8 157 143,236 912 98% $580 $0.64
The Hamptons, Tacoma (1) 1991 11 230 202,324 880 95% $955 $1.09
Gold Pointe, Tacoma 1990 5 84 88,422 1,053 92% $812 $0.77
The Village at Seeley Lake, Tacoma 1990 17 522 469,180 899 92% $634 $0.71
Westridge, Tacoma 1987-1991 38 714 686,675 962 94% $667 $0.69
The Ridgetop, Tacoma 1988 13 221 197,250 893 78% $635 $0.71
Gates of Redmond I & II, Redmond (1) 1979-1989 15 280 249,728 892 92% $892 $1.00
Summit at Lake Union 1995-1997 1 150 109,352 729 92% $959 $1.32
Indigo Springs, Kent (1) 1991 24 278 255,360 919 96% $727 $0.79
</TABLE>
<PAGE>
Item 2. Properties
PROPERTIES--Continued
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December Rental Rate Per
Property Constructed imate) Units Footage Per Unit 31, 1997 Unit Square Foot
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WASHINGTON, continued
Waterford at the Lakes, Kent 1990 18 344 313,514 911 89% $730 $0.80
James Street Crossing, Kent (1) 1989 21 300 250,368 835 99% $641 $0.77
---------------------------------------------------------------------------
TOTAL PROPERTIES: 7,873 134,247 118,928,676
---------------------------------------------------------------------------
AVERAGE: 17 293 259,670 886 95% $696 $0.79
===========================================================================
</TABLE>
(1) Encumbered by a third party mortgage.
(2) Includes La Costa Brava (JAX) and Cedar Cove.
(3) Includes Fox Run, Greenwood Forest, Walnut Ridge, Williamsburg
(4) Includes Port Royale I, Port Royale II, and Lincoln Harbor. Lincoln Harbor
is encumbered by a third party mortgage
(5) Northwoods Village is encumbered by a third party mortgage.
(6) Greenwich Woods is encumbered by a third party mortgage.
(7) Acreage is for combined phases.
(8) Includes Paces Station and Paces on the Green.
<PAGE>
Item 2. Properties
PROPERTIES--Continued
Development and Construction Activity
The apartment communities under construction and in lease up are
listed below:
<TABLE>
<CAPTION>
Actual Actual or
Average Estimated Date of Estimated Estimated
Total Unit Size Construction Cost Construction Commencement Date of Stabilized
Name City Units (Sq. Ft.) (Millions) Commencement of Lease-Up Occupancy
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ARIZONA
Montierra Scottsdale 249 1,052 $21 3:97 2:98 1:99
The Retreat, Phase I Phoenix 240 973 14 1:97 3:97 2:98
The Retreat, Phase II Phoenix 240 973 17 3:97 2:98 1:99
Vista Grove Mesa 224 911 14 1:97 3:97 2:98
--- ---
TOTAL 953 $66
=== ===
</TABLE>
42
<PAGE>
Item 2. Properties (continued)
ADDITIONAL PROPERTIES
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December 31, Rental Rate Per
Property Constructed imate) Units Footage Per Unit 1997 Unit Square Foot
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA
Brookside Place, Stockton (9) 1981 10 90 96,664 1,074 98% $738 $0.69
Canyon Creek, San Ramon (9) 1984 13 268 257,676 961 91% $1,155 $1.20
Cobblestone Village, Fresno (9) 1983 15 162 153,118 945 96% $559 $0.59
Country Oaks, Agoura (9) 1985 15 256 258,558 1,010 94% $1,245 $1.23
Edgewater, Bakersfield (9) 1984 15 258 240,322 931 95% $659 $0.71
Feather River, Stockton (9) 1981 8 128 97,328 760 94% $550 $0.72
Hidden Lake, Sacramento (9) 1985 17 272 261,808 963 95% $704 $0.73
Lakeview, Lodi (9) 1983 9 138 136,972 993 97% $706 $0.71
Lantern Cove, Foster City (9) 1985 17 232 228,432 985 87% $1,614 $1.64
Schooner Bay I, Foster City (9) 1985 12.5 168 167,345 996 91% $1,747 $1.75
Schooner Bay II, Foster City (9) 1985 12.5 144 143,442 996 94% $1,734 $1.74
South Shore, Stockton (9) 1979 8 129 141,055 1,093 94% $752 $0.70
Waterfield Square I, Stockton (9) 1984 10 170 160,100 942 93% $581 $0.62
Waterfield Square II, Stockton (9) 1984 9 158 151,488 959 98% $601 $0.63
Willow Brook, Pleasant Hill (9) 1985 12 228 234,840 1,030 93% $1,281 $1.24
Willow Creek, Fresno (9) 1984 7 116 118,422 1,021 94% $670 $0.66
COLORADO
Deerfield, Denver (9) 1983 9 158 146,380 926 96% $728 $0.79
Foxridge, Englewood (9) 1984 15 300 292,992 977 96% $789 $0.81
ILLINOIS
Glengarry Club, Bloomingdale (10) 1990 16 250 215,098 860 99% $880 $1.02
</TABLE>
<PAGE>
Item 2. Properties (continued)
ADDITIONAL PROPERTIES
<TABLE>
<CAPTION>
Average Occupancy December, 1997
Acreage Square As of Avg. Monthly
Year(s) (approx- Square Footage December 31, Rental Rate Per
Property Constructed imate) Units Footage Per Unit 1997 Unit Square Foot
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MINNESOTA
The Gates at Carlson, Minnetonka (10) 1989 17 435 396,300 911 96% $807 $0.89
NEW MEXICO
Mesa Del Oso, Albuquerque (9) 1983 25 221 252,169 1,141 94% $902 $0.79
Tierra Antigua, Albuquerque (9) 1985 9 148 152,241 1,029 96% $762 $0.74
OKLAHOMA
Lakewood, Tulsa (9) 1985 9 152 157,372 1,035 98% $676 $0.65
WISCONSIN
Plum Tree I, II & III, Hales Corner (10) 1987-1989 27 332 355,074 1,070 96% $942 $0.88
Ravinia, Greenfield (10) 1991 19 206 219,932 1,068 96% $832 $0.78
Woodlands of Brookfield, Brookfield (10) 1990 35 148 185,320 1,252 97% $1,260 $1.01
------------------------------------------------------------------------
TOTAL ADDITIONAL PROPERTIES: 371 5,267 5,220,448
------------------------------------------------------------------------
AVERAGE: 14 203 200,786 991 95% $931 $0.94
========================================================================
</TABLE>
(9) All of these Additional Properties are encumbered by mortgages, of which
the Company has an investment in the second and third mortgages (which are
subordinate to first mortgages owned by third party unaffiliated entities).
(10) The Company has an investment in six mortgage loans collateralized by these
Additional Properties.
44
<PAGE>
PART I
Item 3. Legal Proceedings
Richard M. Perlman, a former employee of companies controlled by Mr. Zell,
filed a legal proceeding against Mr. Zell and various partnerships and
corporations controlled by Mr. Zell claiming, inter alia, that he had an
----------
interest in 20 of 46 of the initial properties (the "Zell Properties") and that
he suffered damages when those Properties were transferred into the REIT. The
proceeding was filed on July 21, 1995 (Richard M. Perlman, et al. v. Samuel
------------------------------------
Zell, et al.) (United States District Court for the Northern District of
- ------------
Illinois-Eastern Division, Case No. 95 C 4242). The Company and the Operating
Partnership were not parties to this lawsuit. This action has proceeded to a
jury verdict and the Company has incurred no liability and will incur no losses
in connection with such action.
In addition, only ordinary routine litigation incidental to the business
which is not deemed material was initiated during the year ended December 31,
1997. The Operating Partnership does not believe there is any other litigation,
except as mentioned in the previous paragraph, threatened against the Operating
Partnership other than routine litigation arising out of the ordinary course of
business, some of which is expected to be covered by liability insurance, none
of which is expected to have a material adverse effect on the consolidated
financial statements of the Operating Partnership.
Item 4. Submission of Matters to a Vote of Security Holders
None.
45
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
There is no established public trading market for the OP Units.
The following table sets forth for the periods indicated, the distributions
paid on the Operating Partnership's OP Units:
<TABLE>
<CAPTION>
Distributions
-------------
<S> <C>
Fiscal Year 1997
Fourth Quarter Ended December 31, 1997 $ 0.67
Third Quarter Ended September 30, 1997 $ 0.625
Second Quarter Ended June 30, 1997 $ 0.625
First Quarter Ended March 31, 1997 $ 0.625
Fiscal Year 1996
Fourth Quarter Ended December 31, 1996 $ 0.625
Third Quarter Ended September 30, 1996 $ 0.59
Second Quarter Ended June 30, 1996 $ 0.59
First Quarter Ended March 31, 1996 $ 0.59
</TABLE>
In addition, on March 2, 1998, the Operating Partnership declared a $0.67
distribution on each OP Unit payable on April 10, 1998 to OP Unit holders of
record on March 27, 1998.
The number of holders of record of OP Units in the Operating Partnership at
December 31, 1997, was 153. The number of outstanding OP Units as of December
31, 1997 was 98,677,855.
Item 6. Selected Financial Data
The following table sets forth selected financial and operating information
on a historical basis for the Operating Partnership and EQR's Predecessor
Business. The following information should be read in conjunction with all of
the financial statements and notes thereto included elsewhere in this Form 10-K.
The historical operating data for the years ended December 31, 1995, 1994, and
1993 have been derived from the historical Financial Statements of the Operating
Partnership and EQR's Predecessor Business audited by Grant Thornton LLP,
independent accountants. The historical operating data for the years ended
December 31, 1997 and 1996 have been derived from the historical Financial
Statements of the Operating Partnership audited by Ernst & Young LLP,
independent auditors. The net income per weighted average OP Unit amounts have
been presented and, where appropriate, restated as required to comply with
Statement of Financial Accounting Standards No. 128, Earnings Per Share. For a
further discussion of net income per weighted average OP Unit and the impact of
Statement No. 128, see Note 9 of Notes to the Consolidated Financial Statements
as included elsewhere in this Form 10-K. Certain capitalized terms as used
herein, are defined in the Notes to the Consolidated Financial Statements.
46
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
AND EQR'S PREDECESSOR BUSINESS
CONSOLIDATED AND COMBINED HISTORICAL FINANCIAL INFORMATION
(Amounts in thousands except per OP Unit and property data)
<TABLE>
<CAPTION>
Year Ended December 31, (1)
---------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenues $ 747,321 $ 478,385 $ 390,384 $ 231,034 $ 112,070
=========== =========== =========== =========== ===========
Income before gain on disposition of properties,
extraordinary items and allocation to EQR's to
Predecessor Business $ 176,014 $ 97,033 $ 59,738 $ 45,988 $ 8,137
=========== =========== =========== =========== ===========
Net income $ 189,852 $ 115,923 $ 83,355 $ 45,988 $ 9,929
=========== =========== =========== =========== ===========
Net income per weighted average OP Unit outstanding $ 1.79 $ 1.70 $ 1.68 $ 1.34 $ 0.43
=========== =========== =========== =========== ===========
Net income per weighted average OP Unit outstanding --
assuming dilution $ 1.76 $ 1.69 $ 1.67 $ 1.34 $ 0.43
=========== =========== =========== =========== ===========
Weighted average OP Units outstanding 73,182 51,108 42,749 34,150 22,939
=========== =========== =========== =========== ===========
Weighted average OP Units outstanding --
assuming dilution 74,281 51,520 42,865 34,274 22,986
=========== =========== =========== =========== ===========
Distributions declared per OP Unit outstanding $ 2.55 $ 2.40 $ 2.18 $ 2.01 $ 0.68
=========== =========== =========== =========== ===========
BALANCE SHEET DATA (at end of period):
Real estate, before accumulated depreciation (2) $ 7,121,435 $ 2,983,510 $ 2,188,939 $ 1,963,476 $ 634,577
Real estate, after accumulated depreciation (2) $ 6,676,673 $ 2,681,998 $ 1,970,600 $ 1,770,735 $ 478,210
Total assets $ 7,094,631 $ 2,986,127 $ 2,141,260 $ 1,847,685 $ 535,914
Total debt $ 2,948,323 $ 1,254,274 $ 1,002,219 $ 994,746 $ 278,642
9 3/8% Series A Cumulative Redeemable Preference Units $ 153,000 $ 153,000 $ 153,000 $ - $ -
9 1/8% Series B Cumulative Redeemable Preference Units $ 125,000 $ 125,000 $ 125,000 $ - $ -
9 1/8% Series C Cumulative Redeemable Preference Units $ 115,000 $ 115,000 $ - $ - $ -
8.60% Series D Cumulative Redeemable Preference Units $ 175,000 $ - $ - $ - $ -
Series E Cumulative Convertible Preference Units $ 99,963 $ - $ - $ - $ -
9.65% Series F Cumulative Redeemable Preference Units $ 57,500 $ - $ - $ - $ -
7 1/4% Series G Convertible Cumulative Preference Units $ 316,250 $ - $ - $ - $ -
Partners' capital $ 2,921,682 $ 1,216,467 $ 750,902 $ 761,373 $ 229,644
OTHER DATA:
Total properties (at end of period) (3) 463 218 174 163 79
Total apartment units (at end of period) (3) 135,200 67,705 53,294 50,704 24,419
Funds from operations (4) $ 270,763 $ 160,267 $ 120,965 $ 83,886 $ 30,127
Cash flow provided by (used for):
Operating activities $ 331,135 $ 210,930 $ 141,534 $ 93,997 $ 25,582
Investing activities $(1,543,324) $ (635,655) $ (324,018) $ (896,515) $ (106,543)
Financing activities $ 1,098,213 $ 558,568 $ 175,874 $ 808,495 $ 94,802
</TABLE>
47
<PAGE>
PART II
Item 6. Selected Financial Data (Consolidated and Combined Historical
(continued))
(1) Historical results for the year ended December 31, 1993 included combined
results of EQR's Predecessor Business for the period January 1, 1993 through
August 17, 1993.
(2) Includes approximately $36 million of construction in progress as of
December 31, 1997.
(3) In August 1995, the Operating Partnership also made an $89 million Mortgage
Note Investment collateralized by 21 of the Additional Properties. In addition,
in April 1997, the Operating Partnership made its $88 Million Mortgage Note
Investment collateralized by five of the Additional Properties. The Additional
Properties consist of 5,267 units.
(4) The Operating Partnership generally considers funds from operations
("FFO")to be one measure of the performance of real estate companies. The new
definition of FFO adopted in March 1995 by the Board of Governors of the
National Association of Real Estate Investment Trusts ("NAREIT") defines FFO as
net income (loss) (computed in accordance with generally accepted accounting
principles ("GAAP")), excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation on real estate assets, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to reflect FFO on
the same basis. The Operating Partnership believes that FFO is helpful to
investors as a measure of the performance of a real estate company because,
along with cash flows from operating activities, financing activities and
investing activities, it provides investors an understanding of the ability of
the Operating Partnership to incur and service debt and to make capital
expenditures. FFO does not represent cash generated from operating activities in
accordance with GAAP and therefore should not be considered an alternative to
net income as an indication of the Operating Partnership's performance or to net
cash flows from operating activities as determined by GAAP as a measure of
liquidity and is not necessarily indicative of cash available to fund cash
needs. The Operating Partnership's calculation of FFO represents net income,
excluding gains on dispositions of properties, gains on early extinguishment of
debt, and write-off of unamortized costs on refinanced debt, less an allocation
of net income to preference unit holders, plus depreciation on real estate
assets and amortization of deferred financing costs related to EQR's Predecessor
Business. The Operating Partnership's calculation of FFO may differ from the
methodology for calculating FFO utilized by other companies and, accordingly,
may not be comparable to such other companies. The Operating Partnership's
calculation of FFO for 1995 and 1994 have been restated to reflect the effects
of the new definition as mentioned above. FFO for the year ended December 31,
1994 includes the effect of a one-time charge of approximately $879,000 for the
relocation of the property management headquarters to Chicago. In addition, FFO
for the year ended December 31, 1993 excludes the effect of refinancing costs of
approximately $3.3 million which represented costs associated with the
prepayment of certain mortgage loans.
48
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 7. Overview
The following discussion and analysis of the results of operations and
financial condition of the Operating Partnership should be read in conjunction
with "Selected Financial Data" and the historical Consolidated Financial
Statements thereto appearing elsewhere in this Form 10-K. Due to the Operating
Partnership's ability to control the EWR Operating Partnership, the Management
Partnerships, the Financing Partnerships and the LLCs, each entity has been
consolidated with the Operating Partnership for financial reporting purposes.
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
words "believes", "expects" and "anticipates" and other similar expressions
which are predictions of or indicate future events and trends and which do not
relate solely to historical matters, identify forward-looking statements. Such
forward-looking statements are subject to risks and uncertainties, which could
cause actual results, performance, or achievements of the Operating Partnership
to differ materially from anticipated future results, performance or
achievements expressed or implied by such forward-looking statements. Factors
that might cause such differences include, but are not limited to, the
following: the alternative sources of capital to the Operating Partnership are
too high; occupancy levels and market rents may be adversely affected by local
economic and market conditions, which are beyond the Operating Partnership's
control; and additional factors as discussed in Part I of the Annual Report as
filed on Form 10-K. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Operating Partnership undertakes no obligation to publicly release any revisions
to these forward-looking statements, which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
Results of Operations
Since the EQR IPO and through December 31, 1997, the Operating
Partnership has acquired direct or indirect interests in 412 properties (the
"Acquired Properties"), containing 118,510 units in the aggregate for a total
purchase price of approximately $6.5 billion, including the assumption of
approximately $1.5 billion of mortgage indebtedness and $0.4 billion of
unsecured notes. The Operating Partnership's interest in six of the Acquired
Properties at the time of acquisition thereof consisted solely of ownership of
the debt collateralized by such Acquired Properties. The Operating Partnership
purchased ten of such Acquired Properties or 2,694 units between the IPO and
December 31, 1993 (the "1993 Acquired Properties"); 84 of such Acquired
Properties or 26,285 units in 1994 (the "1994 Acquired Properties"); 17 of such
Acquired Properties or 5,035 units in 1995 (the "1995 Acquired Properties"); 49
of such Acquired Properties consisting of 15,665 units in 1996 (the "1996
Acquired Properties"); and 252 of such Acquired Properties consisting of 68,830
units in 1997 (the "1997 Acquired Properties"), which include the Properties
acquired in connection with the Wellsford Merger and the EWR Merger
(collectively, the "Mergers"). The Acquired Properties are presented in the
Consolidated and Combined Financial Statements of the Operating Partnership from
the date of each acquisition or the closing dates of the Mergers. In addition,
in August 1995 the Operating Partnership made its $89 Million Note Investment
collateralized by 21 of the
49
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (Continued)
Additional Properties. Also in April 1997, the Operating Partnership made its
$88 Million Mortgage Note Investment collateralized by five of the Additional
Properties.
During 1995 the Operating Partnership disposed of six properties containing
2,445 units (the "1995 Disposed Properties"). During 1996, the Operating
Partnership disposed of five properties containing 1,254 units (the "1996
Disposed Properties"). During 1997 the Operating Partnership disposed of seven
properties, a portion of one property and a vacant land parcel containing 1,336
units (the "1997 Disposed Properties").
The Operating Partnership's overall results of operations for the three
years ended December 31, 1997 have been significantly impacted by the Operating
Partnership's acquisition activity. The significant changes in rental revenues,
property and maintenance expenses, real estate taxes and insurance, depreciation
expense, property management and interest expense can all primarily be
attributed to the acquisition of the Acquired Properties. The impact of the
Acquired Properties is discussed in greater detail in the following paragraphs.
Properties that the Operating Partnership owned for all of both 1997 and
1996 representing 49,805 units (the "1997 Same Store Properties") and Properties
that the Operating Partnership owned for all of both 1996 and 1995 representing
45,699 units (the "1996 Same Store Properties") also impacted the Operating
Partnership's results of operations and are discussed as well in the following
paragraphs.
Comparison of the year ended December 31, 1997 to the year ended
December 31, 1996
For the year ended December 31, 1997, income before gain on disposition of
properties and extraordinary items increased by $79 million when compared to the
year ended December 31, 1996. This increase was primarily due to increases in
rental revenues net of increases in property and maintenance expenses, real
estate taxes and insurance, property management expenses, depreciation, interest
expense and general and administrative expenses. All of the increases in the
various line item accounts mentioned above can be primarily attributed to the
1997 Acquired Properties and 1996 Acquired Properties. These increases were
partially offset by the 1997 Disposed Properties and the 1996 Disposed
Properties. The increase in interest income of $7.5 million earned on the
Operating Partnership's mortgage note investments is primarily attributable to
its $88 Million Mortgage Note Investment as well as an increase in interest
income earned on its $89 Million Mortgage Note Investment.
In regard to the 1997 Same Store Properties, rental revenues increased by
approximately $11.9 million or 3.1% primarily as a result of higher rental rates
charged to new tenants and tenant renewals and higher average occupancy levels.
Overall property operating expenses which include property and maintenance, real
estate taxes and insurance and an allocation of property management expenses
decreased approximately $1.5 million or 0.9%. This decrease was primarily the
result of lower medical and health care insurance costs, which resulted in lower
payroll costs.
50
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (Continued)
In addition, the Operating Partnership was also successful in reducing its costs
for leasing and advertising as well as building, maintenance and grounds costs
by consolidating its vendor services in selected submarkets in order to obtain
volume discounts and by consolidating its personnel in selected submarkets where
Properties were centrally located. With respect to the lower medical and health
care insurance costs, the Operating Partnership believes this is not a
sustainable trend but only benefited the 1997 results.
Property management represents expenses associated with the management of
the Operating Partnership's Properties. These expenses increased by
approximately $9.3 million primarily due to the continued expansion of the
Operating Partnership's property management business to facilitate the
management of the Operating Partnership's additional properties. During 1997,
the Operating Partnership opened new management offices in Houston, Texas;
Ypsilanti, Michigan; Kansas City, Kansas City; Irvine, California; Minneapolis,
Minnesota; Charlotte, North Carolina; and Louisville, Kentucky. In addition, the
Operating Partnership assumed a management office in Tulsa, Oklahoma, related to
the Wellsford Merger and significantly expanded a management office in
Scottsdale, Arizona related to the EWR Merger.
Fee and asset management revenues and fee and asset management expenses are
associated with the management of properties not owned by the Operating
Partnership that are managed for affiliates. These revenues decreased by $0.5
million primarily due to the disposition of certain of these properties,
resulting in the Operating Partnership no longer providing fee and asset
management services to such properties.
Interest expense, including amortization of deferred financing costs,
increased by approximately $38.3 million. This increase was primarily the result
of an increase in the Operating Partnership's average indebtedness outstanding
which increased by $564.5 million, primarily due to the Wellsford Merger.
However, the Operating Partnership's effective interest costs decreased from
7.87% in 1996 to 7.5% in 1997.
General and administrative expenses, which include corporate operating
expenses, increased approximately $5.2 million between the years under
comparison. This increase was primarily due to adding corporate personnel,
higher salary costs and shareholder reporting costs as well as an increase in
professional fees. General and administrative expenses as a percentage of total
revenues were 2.02% for the year ended December 31, 1997, which was a slight
decrease from 2.06% in 1996.
Comparison of the year ended December 31, 1996 to the year ended December 31,
1995
For the year ended December 31, 1996, income before gain on disposition of
properties and extraordinary items increased by $37.3 million when compared to
the year ended December 31, 1995. This increase was primarily due to increases
in rental revenues net of increases in property and maintenance expenses, real
estate taxes and insurance, property management expenses,
51
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (Continued)
depreciation, interest expense and general and administrative expenses. All of
the increases in the various line item accounts mentioned above can be primarily
attributed to the 1996 Acquired Properties and 1995 Acquired Properties. These
increases were partially offset by the 1996 Disposed Properties and the 1995
Disposed Properties. Interest income earned on the Company's mortgage note
investment increased by approximately $8 million and was an additional factor
that impacted the year to year change.
In regard to the 1996 Same Store Properties, rental revenues increased by
approximately $15.9 million or 4.8% primarily as a result of higher rental rates
charged to new tenants and tenant renewals and higher average occupancy levels.
Overall property operating expenses which include property and maintenance, real
estate taxes and insurance and an allocation of property management expenses
increased approximately $1.7 million or 1.2%. This increase was primarily the
result of higher payroll expenses and utilities costs. For 1996 the Operating
Partnership also increased its per unit charge for property level insurance
which increased insurance expense by approximately $0.7 million. In addition,
real estate taxes increased due to reassessments on certain of the 1996 Same
Store Properties.
Property management represents expenses associated with the management of
the Operating Partnership's Properties. These expenses increased by
approximately $2.3 million primarily as a result of the expansion of the
Operating Partnership's property management business with the addition of a
management office in Seattle, Washington and during the third quarter of 1996
the addition of two new management offices located in Raleigh, North Carolina
and Ft. Lauderdale, Florida. Other factors that impacted this increase were
higher payroll and travel costs and legal and professional fees.
Fee and asset management revenues and fee and asset management expenses are
associated with the management of properties not owned by the Operating
Partnership that are managed for affiliates. These revenues decreased by $0.3
million primarily due to the disposition of certain of these properties.
Interest expense, including amortization of deferred financing costs,
increased by approximately $3.8 million. This increase was primarily the result
of an increase in the Operating Partnership's average indebtedness outstanding
which increased by $75.8 million. However, the Operating Partnership's effective
interest costs decreased from 8.09% in 1995 to 7.87% in 1996.
General and administrative expenses, which include corporate operating
expenses, increased approximately $1.7 million between the years under
comparison. This increase was primarily due to adding corporate personnel,
higher salary costs and shareholder reporting costs as well as an increase in
professional fees. General and administrative expenses as a percentage of total
revenues were 2.06% for the year ended December 31, 1996, which was a slight
decrease from 2.08% in 1995.
52
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
For the Year Ended December 31, 1997
As of January 1, 1997, the Operating Partnership had approximately $147.3
million of cash and cash equivalents and $250 million available on its line of
credit. After taking into effect the various transactions discussed in the
following paragraphs, cash and cash equivalents at December 31, 1997 was
approximately $33.3 million and the amounts available on the Operating
Partnership's line of credit were $265 million, of which $24.7 million is
restricted. In addition, the Operating Partnership had $6.6 million of proceeds
from a property sale included in deposits-restricted. The following discussion
also explains the changes in net cash provided by operating activities, net cash
(used for) investing activities and net cash provided by financing activities,
all of which are presented in the Operating Partnership's Consolidated
Statements of Cash Flows.
Part of the Operating Partnership's strategy in funding the purchase of
multifamily properties excluding those Properties acquired through the Mergers,
is to utilize its line of credit and to subsequently repay the line of credit
from the issuance of additional equity or debt securities. Continuing to employ
this strategy, during 1997 the Company and/or the Operating Partnership; (i)
issued a total of approximately 11.9 million Common Shares through various
offerings, other than issuances in connection with the acquisitions of
Properties and received total net proceeds of approximately $536.8 million, (ii)
completed the offerings of the Series D Preferred Shares and Series G Preferred
Shares and received net proceeds of approximately $473.1 million and (iii)
issued the 2017 Notes, the 2001 Notes and the 2003 Notes and received net
proceeds of approximately $345.9 million. All of these proceeds have been or
will be utilized to purchase additional properties and/or repay the line of
credit and mortgage indebtedness on certain Properties.
With respect to Property acquisitions during the year, including the
effects of the Mergers, the Operating Partnership purchased 252 Properties
containing 68,830 units for a total purchase price of approximately $4.1
billion, including the issuances of 25.1 million of Common Shares, the
assumption of EWR's minority interest with a market value of approximately
$107.3 million, the liquidation value of $157.5 million for the Series E
Preferred Shares and Series F Preferred Shares, the assumption of mortgage
indebtedness and unsecured notes of approximately $1.3 billion and issuance of
OP Units with a value of approximately $5.3 million. The cash portion of these
acquisitions were primarily funded from amounts drawn on the Operating
Partnership's line of credit and proceeds received in connection with the
transactions mentioned in the previous paragraph.
During the year ended December 31, 1997, the Operating Partnership also
disposed of seven properties, a portion of one Property and a vacant land parcel
which generated net proceeds of approximately $35.8 million. Proceeds from the
dispositions were ultimately applied to purchase additional Properties.
53
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
As of December 31, 1997, the Operating Partnership had total indebtedness
of approximately $2.9 billion, which included mortgage indebtedness of $1.6
billion (including premiums of $3.9 million), of which $723 million represented
tax exempt bond indebtedness, and unsecured debt of $1.4 billion (including net
discounts and premiums in the amount of $5.7 million). During the year, the
Operating Partnership repaid an aggregate of $113.4 million of mortgage
indebtedness on 29 of its Properties. In addition, unsecured floating rate notes
in the amount of $100 million were repaid at maturity on December 22, 1997.
These repayments were funded from the Operating Partnership's line of credit or
from proceeds received from the various capital transactions mentioned in
previous paragraphs.
The Operating Partnership has, from time to time, entered into interest
rate protection agreements (financial instruments) to reduce the potential
impact of increases in interest rates but has limited exposure to the extent of
non-performance by the counterparties of each protection agreement since each
counterparty is a major U.S. financial institution, and the Operating
Partnership does not anticipate their non-performance. No such financial
instrument has been used for trading purposes. In February 1996, the Operating
Partnership entered into two interest rate protection agreements that were
intended to hedge the Operating Partnership's interest rate risk at maturity of
$175 million of indebtedness. The first agreement hedged the interest rate risk
of $50 million of mortgage loans scheduled to mature in September 1997 by
locking the five year Treasury Rate, commencing October 1, 1997. This agreement
was cancelled in July 1997, at no cost to the Operating Partnership, in
conjunction with a new interest rate agreement discussed below. The second
agreement hedged the interest rate risk of $125 million of unsecured senior
notes issued in 1994 by the Operating Partnership by locking the four year
Treasury Rate commencing May 15, 1999. There was no current cost to the
Operating Partnership for entering into these agreements. In July 1997, the
Operating Partnership entered into two interest rate protection agreements to
effectively fix the interest rate cost of the Operating Partnership's 2001 Notes
and 2003 Notes. One agreement was for a notional amount of $100 million with a
locked in treasury rate at 6.134%. The second agreement was for a notional
amount of $75 million with a locked in treasury rate of 6.287%. The fair value
of these instruments as of December 31, 1997 approximated their carrying or
contract values.
The Operating Partnership has a policy of capitalizing expenditures made
for new assets, including newly acquired properties and the costs associated
with placing these assets into service. Expenditures for improvements and
renovations that significantly enhance the value of existing assets or
substantially extend the useful life of an asset are also capitalized. Capital
spent for replacement-type items such as appliances, draperies, carpeting and
floor coverings, mechanical equipment and certain furniture and fixtures is also
capitalized. Expenditures for ordinary maintenance and repairs are expensed to
operations as incurred. With respect to acquired properties, the Operating
Partnership has determined that it generally spends $1,000 per unit during its
first three years of ownership to fully improve and enhance these properties to
meet the Operating Partnership's standards. In regard to capital replacements,
the Operating Partnership generally expects to spend $300 per unit on an annual
recurring basis.
54
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
During the year ended December 31, 1997, total capital expenditures for the
Operating Partnership approximated $60 million. Of this amount, approximately
$9.5 million related to capital improvements and major repairs for certain of
the 1995, 1996 and 1997 Acquired Properties. Capital improvements and major
repairs for all of the Operating Partnership's pre-EQR IPO properties and
certain Acquired Properties approximated $19.4 million, or $217 per unit.
Capital spent for replacement-type items approximated $21.4 million, or $239 per
unit, which is in line with the Operating Partnership's expected annual
recurring per unit cost. Also included in total capital expenditures was $9.7
million expended for non-real estate additions such as computer software,
computer equipment, furniture and fixtures and leasehold improvements for the
Operating Partnership's property management offices and its corporate
headquarters. Such capital expenditures were primarily funded from working
capital reserves and from net cash provided by operating activities. Total
capital expenditures for 1998 are budgeted to be approximately $94.5 million,
which includes approximately $29.7 million related to capital improvements and
major repairs for certain of the 1995, 1996 and 1997 Acquired Properties.
Total distributions paid in 1997 amounted to $292.1 million, which included
the distribution declared in the fourth quarter of 1996. The fourth quarter of
1997 distributions to OP Unit holders were paid on December 30, 1997. On March
2, 1998, the Operating Partnership declared a $0.67 distribution per OP Unit
payable to holders of record on March 27, 1998. The OP Unit distribution will be
paid on April 10, 1998. Also, on March 2, 1998, the Operating Partnership
declared a $0.585938 distribution, a $0.570313 distribution, a $0.570313
distribution, a $0.5375 distribution, a $0.603125 distribution and a $0.453125
distribution to the Company as holder of the Series A Cumulative Redeemable
Preference Units, the Series B Cumulative Redeemable Preference Units, the
Series C Cumulative Redeemable Preference Units, the Series D Cumulative
Redeemable Preference Units, the Series F Cumulative Redeemable Preference Units
and the Series G Convertible Cumulative Preference Units, respectively, payable
to holders of record on March 27, 1998. These distributions will be paid on
April 15, 1998. In addition, the Operating Partnership declared on March 2,
1998, a $0.4375 distribution to the Company as holder of the Series E Cumulative
Convertible Preference Units. This distribution will be paid on April 1, 1998.
Subsequent to December 31, 1997, the Operating Partnership acquired 12
additional properties representing 2,539 units for a total purchase price of
approximately $158.2 million, including the assumption of approximately $50.8
million of mortgage indebtedness. These acquisitions were funded from proceeds
of the January 1998 Common Share Offering. The Operating Partnership is actively
seeking to acquire additional multifamily properties with physical and market
characteristics similar to the Properties. During the remainder of 1998, the
Operating Partnership expects to acquire between 10,000 to 15,000 multifamily
units. However, there is no assurance that this level of property acquisitions
can be achieved.
55
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
In January 1998, the Company contributed to the Operating Partnership net
proceeds of $195.3 million from the January 1998 Common Share Offering. These
proceeds were utilized to repay a portion on the line of credit, to purchase
additional properties and/or repay mortgage indebtedness on one Property.
In February 1998, the Company contributed to the Operating Partnership net
proceeds of $95 million from the February 1998 Common Share Offerings. These net
proceeds were utilized to repay the remaining balance outstanding on the line of
credit and to purchase additional properties.
Through February 1998, the Company contributed to the Operating Partnership
net proceeds of $31.7 million from the DRIP Plan.
The Operating Partnership anticipates that it may sell certain Properties
in the portfolio and may sell up to 2,500 multifamily units during 1998.
However, there is no assurance that this level of property dispositions may be
achieved.
In March 1998, the Operating Partnership disposed of two Properties for a
total sales price of $16.7 million. These proceeds will be utilized to purchase
additional Properties.
The Operating Partnership expects to meet its short-term liquidity
requirements, including capital expenditures relating to maintaining its
existing Properties, generally through its working capital, net cash provided by
operating activities and borrowings under its line of credit. The Operating
Partnership considers its cash provided by operating activities to be adequate
to meet operating requirements and payments of distributions. The Operating
Partnership also expects to meet its long-term liquidity requirements, such as
scheduled mortgage debt maturities, reduction of outstanding amounts under its
line of credit, property acquisitions, financing of construction and development
activities and capital improvements through the issuance of unsecured notes and
equity securities including additional OP Units as well as from undistributed
FFO and proceeds received from the disposition of certain Properties. In
addition, the Operating Partnership has certain uncollateralized Properties
available for additional mortgage borrowings in the event that the public
capital markets are unavailable to the Operating Partnership or the cost of
alternative sources of capital to the Operating Partnership is too high.
In November 1996, the Operating Partnership reached an agreement with
Morgan Guaranty and Bank of America to provide the Operating Partnership a new
credit facility with potential borrowings of up to $250 million. In September
1997, this agreement was amended whereby the potential borrowings were increased
to $500 million. This line of credit matures in November 1999 and will continue
to be used for property acquisitions and for any working capital needs. As of
March 13, 1998, no amounts were outstanding under this facility.
56
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
In connection with the Wellsford Merger, the Operating Partnership has
provided a standby obligation in the amount of $30 million pursuant to an
agreement entered into with Wellsford Real Properties, Inc., a Maryland
corporation ("WRP"), for the construction financing for a multifamily
development project located in Denver, Colorado. In addition, the Operating
Partnership has provided a $14.8 million credit enhancement with respect to
bonds issued to finance certain public improvements at the multifamily
development project.
In December 1997, the Operating Partnership entered into a joint venture
agreement with a multifamily residential real estate developer whereby the
Operating Partnership will make investments in a limited partnership to fund its
portion of the project cost. As of December 31, 1997, the Operating Partnership
funded approximately $6.9 million in connection with this agreement. In
addition, the Operating Partnership also funded $20 million to guarantee third
party construction financing and will be obligated to fund an additional $20
million in 1998. Subsequent to December 31, 1997, the Operating Partnership has
also funded approximately $9.9 million and anticipates to fund up to an
additional $85 million in 1998.
The Operating Partnership has conducted a review of its computer operating
systems and has identified those areas that could be affected by the "Year 2000"
issue and has developed a plan to resolve this issue. The Operating Partnership
believes that by modifying certain existing hardware and software and, in other
cases, converting to new application systems, the Year 2000 problem can be
resolved without significant operational difficulties. The Operating Partnership
has initiated formal communications with all of its significant suppliers to
determine the extent to which the Operating Partnership's interface systems are
vulnerable to those third parties' failure to remediate their own Year 2000
issues. The Operating Partnership has also identified the cost of the Year 2000
issue and does not expect the financial impact to be material to the Operating
Partnership's results of operations or financial position.
For the Year Ended December 31, 1996
As of January 1, 1996, the Operating Partnership had approximately $13.4
million of cash and cash equivalents and $158 million available on its line of
credit. After taking into effect the various transactions discussed in the
following paragraphs, cash and cash equivalents at December 31, 1996 was
approximately $147.3 million and the amounts available on the Operating
Partnership's line of credit were $250 million. In addition, the Operating
Partnership had $3.6 million of proceeds from a property sale included in
deposits-restricted. The following discussion also explains the changes in net
cash provided by operating activities, net cash (used for) investing activities
and net cash provided by financing activities, all of which are presented in the
Operating Partnership's Consolidated Statements of Cash Flows.
During 1996 the Company and/or the Operating Partnership: (i) issued a
total of approximately 14.4 million Common Shares through various offerings and
received total net proceeds of $483 million, (ii) completed the offering of the
Series C Preferred Shares and
57
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
received net proceeds of $111.4 million, (iii) issued the 2026 Notes and
received net proceeds of $149 million and (iv) refinanced certain of its tax-
exempt bonds in two separate transactions for a total of $112.2 million of net
proceeds. All of these proceeds were utilized to purchase additional properties
and/or repay the line of credit and mortgage indebtedness on certain Properties.
With respect to Property acquisitions during 1996, the Operating
Partnership purchased 49 Properties containing 15,665 units for a total
acquisition cost of $778.2 million, which included the assumption of $142.2
million of mortgage indebtedness, the forgiveness of debt of $2.7 million and
the issuance of OP Units having a value of approximately $0.4 million. These
acquisitions were primarily funded from amounts drawn on the Operating
Partnership's line of credit and a portion of the proceeds received in
connection with the transactions mentioned in the previous paragraph.
During the year ended December 31, 1996, the Operating Partnership also
disposed of five properties which generated net proceeds of approximately $40
million. Proceeds from the dispositions were ultimately applied to purchase
additional Properties.
As of December 31, 1996, the Operating Partnership had total indebtedness
of approximately $1.3 billion, which included mortgage indebtedness of $755.4
million, of which $274 million represented tax exempt bond indebtedness, and
unsecured debt of $498.8 million (net of a $1.2 million discount). During the
year, the Operating Partnership repaid an aggregate of $57 million mortgage
indebtedness on eight of its Properties. These repayments were funded from the
Operating Partnership's line of credit or from proceeds received from the
various capital transactions mentioned in previous paragraphs.
During the year ended December 31, 1996, total capital expenditures for the
Operating Partnership approximated $45.9 million. Of this amount, approximately
$10.6 million related to capital improvements and major repairs for certain of
the 1994, 1995 and 1996 Acquired Properties. Capital improvements and major
repairs for all of the Operating Partnership's pre-EQR IPO properties and
Acquired Properties approximated $13.8 million, or $232 per unit. Capital spent
for replacement-type items approximated $16.3 million, or $276 per unit, which
is in line with the Operating Partnership's expected annual recurring per unit
cost. In regard to capital spent for upgrades at certain properties and tenant
improvements with respect to the retail and commercial office space at one
Property, the amount was approximately $2.9 million. Also included in total
capital expenditures was approximately $2.3 million expended for non-real estate
additions such as computer software, computer equipment, furniture and fixtures
and leasehold improvements for the Operating Partnership's management offices
and its corporate headquarters. Such capital expenditures were primarily funded
from working capital reserves and from net cash provided by operating
activities.
58
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Funds From Operations
Commencing in 1996, the Operating Partnership implemented the new
definition of FFO adopted by the Board of Governors of NAREIT in March 1995.
The new definition primarily eliminates the amortization of deferred financing
costs and depreciation of non-real estate as items added back to net income when
calculating FFO.
The Operating Partnership generally considers FFO to be one measure of the
performance of real estate companies. The resolution adopted by the Board of
Governors of NAREIT defines FFO as net income (loss) (computed in accordance
with GAAP), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures are calculated to reflect FFO on the same basis.
The Operating Partnership believes that FFO is helpful to investors as a measure
of the performance of a real estate company because, along with cash flows from
operating activities, financing activities and investing activities, it provides
investors an understanding of the ability of the Operating Partnership to incur
and service debt and to make capital expenditures. FFO in and of itself does
not represent cash generated from operating activities in accordance with GAAP
and therefore should not be considered an alternative to net income as an
indication of the Operating Partnership's performance or to net cash flows from
operating activities as determined by GAAP as a measure of liquidity and is not
necessarily indicative of cash available to fund cash needs. The Operating
Partnership's calculation of FFO represents net income, excluding gains on
dispositions of properties, gains on early extinguishment of debt, and write-off
of unamortized costs on refinanced debt, plus depreciation on real estate
assets, amortization of deferred financing costs related to EQR's Predecessor
Business, less an allocation of net income to preference unit holders. The
Operating Partnership's calculation of FFO may differ from the methodology for
calculating FFO utilized by other companies and, accordingly, may not be
comparable to such other companies.
For the year ended December 31, 1997 FFO increased $110.5 million
representing a 69% increase when compared to the year ended December 31, 1996.
For the year ended December 31, 1996, FFO, based on the Operating Partnership's
calculation of FFO, increased by $39.3 million representing a 32.5% increase
when compared to the year ended December 31, 1995.
59
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a reconciliation of net income to FFO for the years ended
December 31, 1997, 1996 and 1995:
<TABLE>
<CAPTION>
(Amounts in thousands)
Year Year Year
Ended Ended Ended
12/31/97 12/31/96 12/31/95
-------- -------- --------
<S> <C> <C> <C>
Net income $189,852 $115,923 $ 83,355
Adjustments:
Depreciation on real estate assets 153,526 91,174 70,581
Amortization of deferred financing costs
related to predecessor business 235 1,075 755
Allocation of net income to preference
unit holders (59,012) (29,015) (10,109)
Write-off of unamortized costs on
refinanced debt (0) 3,512 (0)
Gain on early extinguishment of debt (0) (0) (2,000)
Gain on disposition of properties (13,838) (22,402) (21,617)
-------- -------- --------
FFO $270,763 $160,267 $120,965
======== ======== ========
</TABLE>
60
<PAGE>
PART II
Item 8. Financial Statements and Supplementary Data
See Index to Consolidated Financial Statements on page F-1 of this Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On March 7, 1996, the Operating Partnership filed a Current Report on Form
8-K, as amended, reporting the dismissal of Grant Thornton L.L.P. as its
independent public accountants that is incorporated herein by reference.
61
<PAGE>
PART II
Item 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a,b,c,d,e & f) TRUSTEES AND EXECUTIVE OFFICERS
The Operating Partnership does not have any trustees or executive officers.
The trustees and executive officers, as of March 1, 1998, of the Company, their
ages and their positions and offices are set forth in the following table:
<TABLE>
<CAPTION>
Name Age Positions and Offices Held
- ---------------------- --- -----------------------------------------------------------------
<S> <C> <C>
Samuel Zell 56 Chairman of the Board of Trustees (term expires in 1999)
Douglas Crocker II 57 President, Chief Executive Officer and Trustee (term expires in
1998)
John W. Alexander 51 Trustee (term expires in 1999)
Stephen O. Evans 52 Executive Vice President--Strategic Investments and Trustee (term
expires in 2000)
Henry H. Goldberg 59 Trustee (term expires in 1999)
Errol R. Halperin 57 Trustee (term expires in 1999)
James D. Harper, Jr. 64 Trustee (term expires in 1998)
Edward Lowenthal 53 Trustee (term expires in 2000)
Jeffrey H. Lynford 50 Trustee (term expires in 2000)
Sheli Z. Rosenberg 56 Trustee (term expires in 1998)
Gerald A. Spector 51 Executive Vice President, Chief Operating Officer and Trustee
(term expires in 1998)
Barry S. Sternlicht 37 Trustee (term expires in 2000)
B. Joseph White 50 Trustee (term expires in 2000)
Richard G. Berry 53 Executive Vice President--Development
Alan W. George 40 Executive Vice President--Acquisitions
Edward J. Geraghty 48 Executive Vice President--Development and Asset Management
Michael J. McHugh 42 Executive Vice President, Chief Accounting Officer and Treasurer
David J. Neithercut 42 Executive Vice President and Chief Financial Officer
Gregory H. Smith 46 Executive Vice President--Asset Management
Bruce C. Strohm 43 Executive Vice President, General Counsel and Secretary
Frederick C. Tuomi 43 Executive Vice President--Property Management
</TABLE>
The following is a biographical summary of the experience of the trustees
and executive officers of the Company. Officers serve at the pleasure of the
Board of Trustees.
Samuel Zell. Mr. Zell has been Chairman of the Board of the Company since
March 1993. Mr. Zell is chairman of the board of directors of Equity Group
Investments, Inc., an owner, manager and financier of real estate and
corporations ("EGI"), Jacor Communications, Inc., an owner and operator of radio
stations ("Jacor"), American Classic Voyages Co., an owner and operator of
cruise lines ("American Classic") and Anixter International Inc., a provider of
integrated network and cabling systems ("Anixter") and Manufactured Home
Communities, Inc., a REIT specializing in the ownership and management of
manufactured home communities ("MHC"). Mr. Zell is chairman of the board of
trustees of Equity Office Properties Trust, a REIT specializing in the ownership
and management of office buildings ("EOP") and Capital Trust, a specialized
finance company. He is a director of Fred Meyer, Inc., an owner and operator of
supermarkets, Chart House Enterprises, Inc., an owner and operator of
restaurants, Ramco Energy plc, an independent
62
<PAGE>
PART III
oil company based in the United Kingdom, and TeleTech Holdings, Inc., a provider
of telephone and computer based customer care solutions.
Douglas Crocker II. Mr. Crocker II has been a Trustee, Chief Executive
Officer and President of the Company since March 1993. Mr. Crocker is a director
of Horizon Group Inc., an owner, developer and operator of outlet retail
properties and has been a director of WRP, a publicly traded real estate
merchant banking firm since its formation in June 1997. Mr. Crocker has been
President and Chief Executive Officer of First Capital Financial Corporation,
previously a sponsor of public limited real estate partnerships ("First
Capital"), since December 1992 and a director of First Capital since January
1993. He was an Executive Vice President of Equity Financial and Management
Company ("EF&M"), a subsidiary of EGI, providing strategic direction and
services for EGI's real estate and corporate activities from November 1992 until
March 1997.
John W. Alexander. Mr. Alexander has been a Trustee of the Company since
May 1993 and is the President of Mallard Creek Capital Partners, Inc., an
investment company with interests in real estate and development entities. He is
also a partner of Meringoff Equities, a real estate investment and development
company, and is a director of Jacor.
Stephen O. Evans. Mr. Evans has been Executive Vice President - Strategic
Investments and Trustee of the Company since December 23, 1997, the date of the
EWR Merger. Prior to the EWR Merger, Mr. Evans served as the Chairman of the
Board and Chief Executive Officer of EWR since its formation in May 1994. Mr.
Evans founded Evans Withycombe, Inc., the predecessor of EWR, in 1977 and served
as its Chairman of the Board and Chief Executive Officer from 1977 to 1994. Mr.
Evans is a member of the National Multi-Housing Counsel, NAREIT, Lambda Alpha, a
national land economic fraternity, and the Urban Land Institute.
Henry H. Goldberg. Mr. Goldberg has been a Trustee of the Company since
January 1995. Mr. Goldberg is Chairman of the Board, Chief Executive Officer and
founder of The Artery Group, L.L.C., a diversified real estate company. Mr.
Goldberg was the direct or indirect general partner (or an executive thereof) of
four partnerships owning residential apartment communities and one commercial
office building, each of which filed petitions under the Federal bankruptcy laws
during 1993. Each of the partnerships is now out of bankruptcy through a
reorganization plan agreed to by the project lender.
Errol R. Halperin. Mr. Halperin has been a Trustee of the Company since
May 1993. Mr. Halperin has been an attorney at Rudnick & Wolfe, a law firm,
since 1979, serving as a senior partner and a member of such firm's policy
committee since 1981, specializing in Federal income tax counseling and real
estate and corporate transactions.
63
<PAGE>
PART III
James D. Harper, Jr. Mr. Harper has been a Trustee of the Company since
May 1993. Mr. Harper is the President of JDH Realty Co., a real estate
development and investment company, and is the principal partner in AH
Development, S.E. and AH HA Investments, S.E., special limited partnerships
formed to develop over 400 acres of land in Puerto Rico. He is a Trustee of EOP,
and a director of Burnham Pacific Properties Inc., a REIT that owns, develops
and manages commercial real estate properties in California and American Health
Properties, Inc., a REIT specializing in health care facilities. Mr. Harper is
also a trustee of the Urban Land Institute.
Edward Lowenthal. Mr. Lowenthal has been a Trustee of the Company since
June 1997. Mr. Lowenthal has been the President, Chief Executive Officer and
director of WRP since its formation in January 1997 and had been the President
and Chief Executive Officer and a trustee of Wellsford, a multifamily property
REIT, since its formation in July 1992 until the Wellsford Merger on May 30,
1997. Mr. Lowenthal is a director of United American Energy Corporation, a
developer, owner and operator of hydroelectric and other alternative energy
facilities, Corporate Renaissance Group, Inc., a mutual fund, Omega Healthcare,
Inc., a healthcare REIT, and Great Lakes REIT, Inc., an office building REIT. He
is also a member of the Board of Governors of NAREIT and a member of the New
York bar.
Jeffrey H. Lynford. Mr. Lynford has been a Trustee of the Company since
June 1997. Mr. Lynford has been the Chairman of the Board, Secretary and
Director of WRP since its formation in January 1997 and had been the Chairman of
the Board and Secretary of Wellsford since its formation in July 1992 until the
Wellsford Merger, and was the Chief Financial Officer of Wellsford from July
1992 until December 1994. Mr. Lynford currently serves as a trustee emeritus of
the National Trust for Historic Preservation and as a director of five mutual
funds: Cohen & Steers Total Return Realty Fund, Inc., Cohen & Steers Realty
Shares, Inc., Cohen & Steers Realty Income Fund, Inc., Cohen & Steers Special
Equity Fund, Inc. and Cohen & Steers Equity Income Fund, Inc. He is also a
member of the New York bar.
Sheli Z. Rosenberg. Ms. Rosenberg has been a Trustee of the Company since
March 1993. Ms. Rosenberg is Chief Executive Officer, President and a director
of EGI and was a principal of the law firm of Rosenberg & Liebentritt, P.C., a
law firm ("R & L") from 1980 to 1997. Ms. Rosenberg is a trustee of Capital
Trust and EOP and is a director of Jacor, American Classic, MHC, Anixter, CVS
Corporation, a drugstore chain, Illinois Power Co., a supplier of electricity
and natural gas in Illinois, and its parent holding company, Illinova Corp.
Gerald A. Spector. Mr. Spector has been a Trustee and Executive Vice
President of the Company since March 1993 and Chief Operating Officer of the
Company since February 1995. Mr. Spector was Treasurer of the Company from March
1993 through February 1995. From January 1973 until January 1996, Mr. Spector
was an officer of EF&M, most recently serving as Vice President from November
1994 through January 1996. Mr. Spector was Executive Vice President and Chief
Operating Officer of EF&M from September 1990 through November 1994. From
January 1988 until January 1996, Mr. Spector was an officer of EGI, most
recently serving as Vice President from November 1994 through January 1996. Mr.
Spector was Executive Vice President and Chief Operating Officer of EGI from
January 1991 through January 1994.
Barry S. Sternlicht. Mr. Sternlicht has been a Trustee of the Company
since May 1993. Mr. Sternlicht is Chief Executive Officer and President of
Starwood Capital Group, L.P., a privately owned real estate investment firm. Mr.
Sternlicht is Chairman of the Board and Chief Executive Officer of Starwood
Hotels & Resorts Trust, a REIT specializing in the ownership of hotels. Mr.
Sternlicht is Chairman of the Board of Starwood Financial Trust, a mortgage
REIT, and a director of U.S. Franchise Systems, a hotel franchise company, and
Starwood Hotel & Resorts Worldwide, which manages hotels owned by Starwood
Hotels & Resorts Trust.
B. Joseph White. Mr. White has been a Trustee of the Company since May
1993. Mr. White is the Dean of the University of Michigan Business School. Mr.
White is a director of Kelly Services, Inc., a temporary services firm, Gordon
Food Service, Inc., a midwestern food distribution company, and the Cummins
Engine Foundation, the philanthropic arm of Cummins Engine Co., a heavy duty
engine manufacturer.
64
<PAGE>
PART III
Richard G. Berry. Mr. Berry has been Executive Vice President-Development
of the Company since the EWR Merger. Mr. Berry was a director of EWR since its
formation in May 1994 until the EWR Merger and had been President and Chief
Operating Officer of EWR from January 1997 until the EWR Merger. Mr. Berry had
been Executive Vice President of EWR since May 1994 until December 1997 and
served as the Executive Vice President of Evans Withycombe, Inc., (the
predecessor of EWR) from 1992 until 1994.
Alan W. George. Mr. George has been Executive Vice President-Acquisitions
of the Company since February 1997, Senior Vice President-Acquisitions of the
Company from December 1995 until February 1997 and Vice President-Acquisitions
and asset manager of the Company from December 1993 until December 1995. Mr.
George was Vice President-asset management of Equity Assets Management, Inc.
("EAM"), a subsidiary of EGI providing real estate ownership services, from June
1992 to August 1993.
Edward G. Geraghty. Mr. Geraghty has been Executive Vice President-
Development and Asset Management since March 1, 1998. Mr. Geraghty was a
Managing Director-Real Estate of The Travelers Insurance Company from January
1995 to March 1998. Mr. Geraghty was an officer of The Travelers Realty
Investment Company, a subsidiary of The Travelers Insurance Company, from July
1989 to January 1995, most recently serving as an Executive Vice President from
December 1992 to January 1995.
Michael J. McHugh. Mr. McHugh has been Executive Vice President of the
Company since January 1998 and Chief Accounting Officer and Treasurer of the
Company since February 1995. Mr. McHugh was Senior Vice President of the Company
from November 1994 until January 1998 and, from May 1990 until January 1995, Mr.
McHugh was a Senior Vice President and Chief Financial Officer of First Capital.
David J. Neithercut. Mr. Neithercut has been Executive Vice President and
Chief Financial Officer of the Company since February 1995. Mr. Neithercut had
been Vice President--Financing of the Company from September 1993 until February
1995. Mr. Neithercut was a Senior Vice President--Finance of EGI from January
1995 until February 1995. He was a Vice President--Finance of EAM from October
1990 until December 1994.
Gregory H. Smith. Mr. Smith has been Executive Vice President--Asset
Management of the Company since December 1994. Mr. Smith was a Senior Vice
President of Strategic Realty Advisors, Inc., a real estate and advisory
company, from January 1994 until December 1994. Mr. Smith was employed at VMS
Realty Partners, a sponsor of public and private real estate limited
partnerships, from June 1989 until December 1993, most recently serving as First
Vice President.
Bruce C. Strohm. Mr. Strohm has been Executive Vice President and General
Counsel of the Company since March 1995 and Secretary since November 1995. Mr.
Strohm was a Vice President of the Company from March 1993 through March 1995
and an Assistant Secretary of the Company from March 1995 through November 1995.
Mr. Strohm was a Vice President of R & L from January 1988 to March 1995, most
recently serving as a member of the firm's management committee.
65
<PAGE>
PART III
Frederick C. Tuomi. Mr. Tuomi has been Executive Vice President--Property
Management of the Company since January 1994. Mr. Tuomi had been President of
RAM Partners, Inc., a subsidiary of Post Properties, Inc., a REIT, from March
1991 to January 1994.
Pursuant to the Company's declaration of trust, the trustees are divided
into three classes as nearly equal in number as possible, with each class having
a term of three years.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Operating Partnership to
report, based on its review of reports to the SEC, about transactions in its OP
Units furnished to the Operating Partnership and written representations of the
Company's trustees and executive officers and the Operating Partnership's 10%
owners.
Mr. Sternlicht filed a Form 4 late to report the exchange of 25,023 OP
Units for 25,023 Common Shares and the distribution of such Common Shares to the
beneficial owners thereof.
Item 11. Executive Compensation
The Operating Partnership does not have any executive compensation.
Information concerning the Equity Residential Properties Trust's executive
compensation is contained in its definitive proxy statement relating to the
1998 Annual Meeting of Shareholders to be held on May 14, 1998, which proxy
statement is incorporated herein by reference.
66
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
PART III
The following table sets forth information, as of March 1, 1998, (except as
otherwise indicated in the footnotes) regarding the beneficial ownership of the
OP Units by each person known by the Operating Partnership to be the beneficial
owner of more than five percent of the Operating Partnership's outstanding OP
Units, and in addition, each trustee of the Company, the executive officers of
the Company, and by all trustees and executive officers of the Company as a
group. Each person named in the table has sole voting and investment power with
respect to all OP Units shown as beneficially owned by such person, except as
otherwise set forth in the notes to the table.
<TABLE>
<CAPTION>
OP Units
Beneficially Owned
-------------------------
Name and Business Percent
Address of Beneficial Owner Amount of Class
- ------------------------------------------ -------------- --------
<S> <C> <C>
Samuel Zell and Ann Lurie and entities
controlled by or established for the
benefit of Samuel Zell and/or
Ann Lurie (1) 3,436,060 (2) 3.23%
Douglas Crocker II (1) -- *
Bruce C. Strohm (1) -- *
Gregory H. Smith (1) -- *
Gerald A. Spector (1) 1,683 *
Frederick C. Tuomi (1) -- *
John W. Alexander (3) -- *
Stephen O. Evans (4) 904,066 *
Henry H. Goldberg (5&6) 387,139 (6) *
Errol R. Halperin (7) -- *
James D. Harper Jr. (8) -- *
Sheli Z. Rosenberg (1) (9) 1,528 *
B. Joseph White (10) -- *
Barry S. Sternlicht (11) 1,831,943 (11) 1.74%
Equity Residential Properties Trust (1) 95,790,005 90.90%
All trustees and executive officers of the 5,657,684 5.37%
Company as a group including the above-
named persons (21 persons)
</TABLE>
* Less than 1%
67
<PAGE>
PART III
(1) The business address for each of these entities and individuals is Two
North Riverside Plaza, Chicago, Illinois 60606.
(2) Includes 3,436,060 OP Units deemed to be owned beneficially by Mr. Zell
and Ms. Lurie because Mr. Zell and Ms. Lurie control or share control of
power to vote and invest such OP Units, either as the indirect majority
shareholder of a corporation or a corporate general partner or as a general
partner. However, Mr. Zell disclaims ownership of 1,541,966 OP Units
because the economic benefits, with respect to such OP Units, are
attributable to others. Ms. Lurie disclaims of 1,894,763 OP Units because
the economic benefits, with respect to such OP Units, are attributable to
others.
(3) Mr. Alexander's business address is c/o Mallard Creek Capital Partners, 229
North Church Street, Suite 200 - Box E, Charlotte, North Carolina 28202.
(4) The business address for Mr. Evans is c/o Evans Withycombe Residential,
Inc., 6991 East Camelback Road, Suite A200, Scottsdale, Arizona 85251.
(5) The business address for Mr. Goldberg is c/o Artery Properties, Inc. Artery
Plaza West, 4733 Bethesda Avenue, Suite 400, Bethesda, Maryland 20814.
(6) Includes 48,078 OP Units held by Mr. Goldberg's spouse. Also includes
75,714 OP Units held by GGL Investment Partners #1 ("GGL"), a Maryland
general partnership. Mr. Goldberg is a general partner of GGL with a 66.67%
percentage interest. Mr. Goldberg disclaims beneficial ownership of the OP
Units held by his spouse and 33.33% of the OP Units held by GGL.
(7) Mr. Halperin's business address is Rudnick & Wolfe, 203 North LaSalle
Street, Suite 1800, Chicago, Illinois 60601.
(8) Mr. Harper's business address is JDH Realty Company, 3250 Mary Street,
Suite 206, Coconut Grove, Florida 33133.
(9) Ms. Rosenberg is a trustee or a co-trustee for the benefit of Ms. Lurie
and her family and certain trusts for the benefits of Mr. Zell and his
family and accordingly may be deemed to control or share control or share
the power to vote and invest OP Units attributable to Samuel Zell and Ann
Lurie. Ms. Rosenberg disclaims beneficial ownership of all OP Units owned
by trusts for which she is a trustee or co-trustee.
68
<PAGE>
PART III
(10) Mr. White's business address is Office of the Dean, School of Business
Administration, University of Michigan, 701 Tappen, Ann Arbor, Michigan
48109.
(11) The business address for Mr. Sternlicht is Three Pickwick Plaza, Suite 250,
Greenwich, Connecticut 06830. Mr. Sternlicht may be deemed to be the
beneficial owner of these 1,831,943 OP Units because each controls or
shares control of the power to vote and invest the OP Units. However, Mr.
Sternlicht disclaims beneficial ownership of 1,555,955 OP Units.
Item 13. Certain Relationships and Related Transactions
(a) Pursuant to the terms of the partnership agreement for the Operating
Partnership, the Operating Partnership is required to reimburse the Company for
all expenses incurred by the Company in excess of income earned by the Company
through its indirect 1% ownership of various Financing Partnerships. Amounts
paid on behalf of the Company are reflected in the Consolidated Statement of
Operations as general and administrative expenses.
During 1997, certain related entities provided services to the Operating
Partnership and the Company. These included, but were not limited to, Rosenberg
& Liebentritt, P.C., which provided legal services; Greenberg & Pociask, Ltd.,
which provided tax and accounting services; and First Capital Financial
Corporation, which provided accounting services. Fees paid to Rosenberg &
Liebentritt, P.C., of which Ms. Rosenberg was a principal through September
1997, amounted to approximately $1.3 million for the year ended December 31,
1997. Fees paid to the other affiliates mentioned above amounted in the
aggregate to approximately $22,600 for the year ended December 31, 1997. In
addition, The Riverside Agency, Inc., which provided insurance brokerage
services, was reimbursed loss claims in the amount of $0.3 million for the year
ended December 31, 1997. As of December 31, 1997, no amounts were owed to The
Riverside Agency, Inc. As of December 31, 1997, $0.6 million was owed to
Rosenberg & Liebentritt, P.C. for legal fees incurred in connection with new
acquisitions and securities matters.
Equity Group Investments, Inc. ("EGI") provided certain services to the
Operating Partnership and the Company which include, but are not limited to,
real estate tax evaluation services, due diligence, financial services,
telecommunication services and market consulting and research information
services. Fees paid to EGI for these services amounted to $1.1 million for the
year ended December 31, 1997. Amounts due to EGI were approximately $0.1 million
as of December 31, 1997.
Management Corp. has lease agreements with affiliated parties covering
office space occupied by regional operation centers located in Chicago, Illinois
(the "Chicago Office") and Tampa, Florida (the "Tampa Office") and the corporate
headquarters located in Chicago, Illinois. In connection with these affiliated
lease agreements, Management Corp. paid Equity Office Holdings,
69
<PAGE>
PART III
L.L.C. ("EOH") $145,511 in connection with the Chicago Office, $177,793 in
connection with the Tampa Office and $632,693 in connection with the space
occupied by the corporate headquarters for the year ended December 31, 1997. As
of December 31, 1997, $59,675 was owed to EOH.
In addition, the Operating Partnership and the Company have provided
acquisitions, asset and property management services to certain related entities
for properties not owned by the Company. Fees received for providing such
services were approximately $5.7 million for the year ended December 31, 1997.
(b) Rosenberg and Liebentritt, P.C. provides legal services to the
Operating Partnership and the Company. Sheli Z. Rosenberg, a Trustee of the
Company, was a principal of this firm through September 1997. The Operating
Partnership has also engaged Seyfarth, Shaw, Fairweather & Geraldson, a law firm
in which Ms. Rosenberg's husband is a partner, and Rudnick & Wolfe, a law firm
in which Mr. Halperin is a partner, to perform legal services for it from time
to time.
(c) Mr. Goldberg is a two-thirds owner and chairman of the board of
directors of Artery Property Management, Inc. ("APMI"), a real estate property
management company. In connection with the acquisition of certain properties
from Mr. Goldberg and his affiliates during 1995, the Operating Partnership made
a loan of $15,212,000 evidenced by two notes and secured by 465,545 OP Units.
The largest aggregate amount of indebtedness outstanding under the loan at any
time during 1997 and the amount outstanding as of December 31, 1996 was
$15,212,000. The first note issued in the amount of $1,056,000 accrues interest
at the prime rate plus 3-1/2% per annum. The second note issued in the amount of
$14,156,000 bears interest equal to approximately $300,000 per year plus the
amount of distributions payable on 433,230 of the OP Units pledged as collateral
for this loan.
Mr. Tuomi borrowed $100,000 from one of the Management Partnerships in 1994
related to his purchase of a home in the Chicago area. The loan bears interest
at 30-day LIBOR plus 2% with interest due quarterly. The largest principal
amount owed in 1997 was $72,000 and the principal balance at December 31, 1997
was $72,000. The loan is payable in equal principal installments of $18,000 over
five years.
Mr. Crocker borrowed $140,000 from the Operating Partnership in April 1996
related to the payment of a tax liability incurred. The loan bears interest at
30-day LIBOR plus 2%. The largest principal amount owed in 1997 was $140,000 and
the principal balance at December 31, 1997 was $140,000. The loan was paid in
full in February 1998.
Mr. Crocker borrowed $564,000 from the Operating Partnership during 1996.
The loan bears interest at 30-day LIBOR plus 2% with interest due quarterly.
The largest principal amount owed in 1997 was $564,000 and the principal balance
at December 31, 1997 was $483,420. Payment is secured by a pledge of Mr.
Crocker's Common Shares. The loan is payable in equal principal installments of
$80,570 over seven years commencing March 15, 1997.
Mr. George borrowed $100,000 from the Operating Partnership in December
1997 related to home improvements. The loan bears interest at 30-day LIBOR plus
2% with interest due
70
<PAGE>
PART III
monthly in 1998. The largest principal amount owed in 1997 was $100,000 and the
principal balance due at December 31, 1997 was $100,000. Payment is secured by a
pledge of Mr. George's Common Shares and options to purchase Common Shares.
Payments of principal are due in the amount of $30,000 on each April 1, 1999 and
April 1, 2000; and $40,000 on April 1, 2001.
The executive officers listed below are indebted to the Company as a result
of purchasing Common Shares from the Company in June 1994. The loans accrue
interest, payable quarterly in arrears, at the applicable federal rate, as
defined in the Internal Revenue Code in effect at the date of each loan. The
loans are due and payable on the first to occur of the date in which the
individual leaves the Company, other than by reason of death or disability, or
the respective loan's due date. The loans are with recourse to the respective
individuals and are collateralized by a pledge of the Common Shares purchased.
All distributions paid on pledged Common Shares in excess of the then marginal
tax rate on the taxable portion of such distributions are used to pay interest
and principal on the loans.
<TABLE>
<CAPTION>
Largest Principal Principal
Amount Owed Balance at Interest
Name in 1997 December 31, 1997 Rate
------------------ ----------------- ----------------- --------
<S> <C> <C> <C>
Douglas Crocker II $ 850,318 $ 814,909 6.21%
Douglas Crocker II 960,748 931,755 6.15%
Douglas Crocker II 944,584 941,415 7.26%
Douglas Crocker II 1,901,807 1,864,148 7.93%
Frederick C. Tuomi 314,861 313,799 7.26%
Alan W. George 79,062 79,062 7.26%
</TABLE>
(d) None
71
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)
(1 & 2) See Index to Financial Statements and Schedule on page F-1 of this
Form 10-K.
(3) Exhibits:
4.1** Indenture, dated as of May 16, 1994, by and among the Operating
Partnership, as obligor, the Company, as guarantor and The First
National Bank of Chicago, as trustee in connection with 8 1/2% senior
notes, due May 15, 1999
4.2*** Indenture, dated October 1, 1994, between the Operating Partnership,
as obligor and The First National Bank of Chicago, as trustee in
connection with up to $500 million of debt securities
10.1*** Fourth Amended and Restated Agreement of Limited Partnership of ERP
Operating Limited Partnership
10.2* Form of Property Management Agreement (REIT properties)
10.3** Form of Property Management Agreement (Non-REIT properties)
10.4**** Amended and Restated Master Reimbursement agreement, dated as of
November 1, 1996 by and between Federal National Mortgage Association
and EQR-Bond Partnership
10.5+ Second Amended and Restated Revolving Credit Agreement, dated as of
September 9, 1997 among the Operating Partnership and Morgan Guaranty
Trust Company of New York, as lead agent, Bank of America National
Trust and Savings Association, as co-lead agent, The First National
Bank of Chicago, as co-agent, U.S. Bank National Association f/k/a
and d/b/a First Bank National Association, as co-agent and
NationsBank of Texas, N.A., as co-agent
10.6 Amendment No. 1 to Amended and Restated Agreement of Limited
Partnership of Evans Withycombe Residential, L.P.
12 Computation of Ratio of Earnings to Fixed Charges
21 List of Subsidiaries of the Operating Partnership
23.1 Consent of Grant Thornton LLP
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney for John W. Alexander dated March 2, 1998
24.2 Power of Attorney for James D. Harper, Jr. dated March 2, 1998
24.3 Power of Attorney for Errol R. Halperin dated March 2, 1998
24.4 Power of Attorney for B. Joseph White dated March 2, 1998
24.5 Power of Attorney for Barry S. Sternlicht dated March 4, 1998
24.6 Power of Attorney for Henry H. Goldberg dated March 2, 1998
24.7 Power of Attorney for Edward Lowenthal dated March 2, 1998
24.8 Power of Attorney for Jeffrey H. Lynford dated March 2, 1998
24.9 Power of Attorney for Stephen O. Evans dated March 2, 1998
* Included as an exhibit to the Company's Form S-11 Registration Statement,
File No. 33-63158, and incorporated herein by reference.
72
<PAGE>
PART IV
** Included as an exhibit to the Operating Partnership's Form 10/A, dated
December 12, 1994, File No. 0-24920, and incorporated herein by
reference.
*** Included as an exhibit to the Operating Partnership's Form 10-Q for
the quarter ended September 30, 1995, dated November 7, 1995, and
incorporated herein by reference.
**** Included as an exhibit to the Operating Partnership's Form 10-K for
the year ended December 31, 1996.
+ Included as an exhibit to the Operating Partnership's Form 8-k dated
September 10, 1997, filed on September 10, 1997.
(b) Reports on Form 8-K:
A Report on Form 8-K dated October 3, 1997 filed on October 9, 1997,
reporting information in connection with the issuance of debt
securities.
A Report on Form 8-K dated October 9, 1997 filed on October 21, 1997,
reporting information on property acquisitions.
A Report on Form 8-K/A dated October 9, 1997 filed on November 13,
1997, reporting information on property acquisitions.
(c) Exhibits:
See Item 14(a)(3) above.
(d) Financial Statement Schedules:
See Index to Financial Statements attached hereto on page F-1 of this
Form 10-K.
73
<PAGE>
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
behalf by the undersigned thereunto duly authorized.
<TABLE>
<CAPTION>
ERP OPERATING LIMITED PARTNERSHIP
BY: EQUITY RESIDENTIAL PROPERTIES TRUST,
ITS GENERAL PARTNER
<S> <C> <C>
Date: March 13, 1998 By: /s/ Douglas Crocker II
-------------------------------------
Douglas Crocker II
President, Chief Executive Officer,
Trustee and *Attorney-in-Fact
Date: March 13, 1998 By: /s/ David J. Neithercut
-------------------------------------
David J. Neithercut
Executive Vice-President and
Chief Financial Officer
Date: March 13, 1998 By: /s/ Michael J. McHugh
-------------------------------------
Michael J. McHugh
Executive Vice-President, Chief Accounting
Officer, Treasurer and *Attorney-in-fact
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C>
Date: March 13, 1998 By: /s/ Samuel Zell
-------------------------------------
Samuel Zell
Chairman of the Board of Trustees
Date: March 13, 1998 By: /s/ Gerald A. Spector
-------------------------------------
Gerald A. Spector
Executive Vice-President, Chief
Operating Officer and Trustee
Date: March 13, 1998 By: /s/ Sheli Z. Rosenberg
-------------------------------------
Sheli Z. Rosenberg
Trustee
</TABLE>
74
<PAGE>
SIGNATURES-CONTINUED
--------------------
Date: March 13, 1998 By: /s/ James D. Harper
-----------------------------------
James D. Harper
Trustee
Date: March 13, 1998 By: /s/ Errol R. Halperin
-----------------------------------
Errol R. Halperin
Trustee
Date: March 13, 1998 By: /s/ Barry S. Sternlicht
-----------------------------------
Barry S. Sternlicht
Trustee
Date: March 13, 1998 By: /s/ John W. Alexander
-----------------------------------
John W. Alexander
Trustee
Date: March 13, 1998 By: /s/ B. Joseph White
-----------------------------------
B. Joseph White
Trustee
Date: March 13, 1998 By: /s/ Henry H. Goldberg
-----------------------------------
Henry H. Goldberg
Trustee
Date: March 13, 1998 By: /s/ Jeffrey H. Lynford
-----------------------------------
Jeffrey H. Lynford
Trustee
Date: March 13, 1998 By: /s/ Edward Lowenthal
-----------------------------------
Edward Lowenthal
Trustee
Date: March 13, 1998 By: /s/ Stephen O. Evans
-----------------------------------
Stephen O. Evans
Trustee
75
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
ERP OPERATING LIMITED PARTNERSHIP
<TABLE>
<CAPTION>
PAGE
----
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
<S> <C>
Report of Independent Auditors.............................................................. F-2
Report of Independent Accountants........................................................... F-3
Consolidated Balance Sheets as of
December 31, 1997 and 1996............................................................... F-4
Consolidated Statements of Operations for
the years ended December 31, 1997, 1996 and 1995......................................... F-5
Consolidated Statements of Cash Flows for
the years ended December 31, 1997, 1996 and 1995......................................... F-6 to F-7
Consolidated Statements of Partners' Capital
for the years ended December 31, 1997, 1996 and 1995..................................... F-8
Notes to Consolidated Financial Statements.................................................. F-9 to F-45
SCHEDULE FILED AS PART OF THIS REPORT
Report of Independent Accountants........................................................... S-1
Schedule III - Real Estate and Accumulated Depreciation..................................... S-2 to S-12
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners
ERP Operating Limited Partnership
We have audited the accompanying consolidated balance sheets of ERP Operating
Limited Partnership (the "Operating Partnership") as of December 31, 1997 and
1996 and the related consolidated statements of operations, partners' capital
and cash flows for the years then ended. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and schedule are the responsibility of the Operating Partnership's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of ERP
Operating Limited Partnership at December 31, 1997 and 1996, and the
consolidated results of its operations and its cash flows for the years then
ended, in conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Chicago, Illinois
February 26, 1998
except for Note 31, as to which the date is
March 12, 1998
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners
ERP Operating Limited Partnership
We have audited the accompanying consolidated statements of operations, changes
in partners' capital and cash flows for the year ended December 31, 1995, of ERP
Operating Limited Partnership (the "Operating Partnership"). These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of its operations, and cash
flows for the year ended December 31, 1995, of ERP Operating Limited Partnership
for the year ended in conformity with generally accepted accounting principles.
/s/ GRANT THORNTON LLP
GRANT THORNTON LLP
Chicago, Illinois
February 14, 1996
F-3
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Investment in real estate
Land $ 791,980 $ 284,879
Depreciable property 6,293,415 2,698,631
Construction in progress 36,040 -
---------- ----------
7,121,435 2,983,510
Accumulated depreciation (444,762) (301,512)
---------- ----------
Investment in real estate, net of accumulated depreciation 6,676,673 2,681,998
Cash and cash equivalents 33,295 147,271
Investment in mortgage notes, net 176,063 86,596
Rents receivable 3,302 1,450
Deposits - restricted 36,374 20,637
Escrow deposits - mortgage 44,864 15,434
Deferred financing costs, net 23,092 14,555
Other assets 100,968 18,186
---------- ----------
Total assets $7,094,631 $2,986,127
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $1,582,559 $ 755,434
Notes, net 1,130,764 498,840
Line of credit 235,000 -
Accounts payable and accrued expenses 67,699 33,117
Accrued interest payable 28,048 12,737
Rents received in advance and other liabilities 38,750 16,466
Security deposits 28,193 14,128
Distributions payable 20,223 45,938
---------- ----------
Total liabilities 3,131,236 1,376,660
---------- ----------
Commitments and contingencies
9 3/8% Series A Cumulative Redeemable Preference Units 153,000 153,000
---------- ----------
9 1/8% Series B Cumulative Redeemable Preference Units 125,000 125,000
---------- ----------
9 1/8% Series C Cumulative Redeemable Preference Units 115,000 115,000
---------- ----------
8.60% Series D Cumulative Redeemable Preference Units 175,000 -
---------- ----------
Series E Cumulative Convertible Preference Units 99,963 -
---------- ----------
9.65% Series F Cumulative Redeemable Preference Units 57,500 -
---------- ----------
7 1/4% Series G Convertible Cumulative Preference Units 316,250 -
---------- ----------
Partners' capital:
General Partner 2,648,278 1,065,830
Limited Partners 273,404 150,637
---------- ----------
Total partners' capital 2,921,682 1,216,467
---------- ----------
Total liabilities and partner's capital $7,094,631 $2,986,127
========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per OP Unit data)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------
1997 1996 1995
-----------------------------
<S> <C> <C> <C>
REVENUES
Rental income $707,733 $454,412 $373,919
Fee and asset management 5,697 6,749 7,030
Interest income - investment in mortgage notes 20,366 12,819 4,862
Interest and other income 13,525 4,405 4,573
-------- -------- --------
Total revenues 747,321 478,385 390,384
-------- -------- --------
EXPENSES
Property and maintenance 176,075 127,172 112,186
Real estate taxes and insurance 69,520 44,128 37,002
Property management 26,793 17,512 15,213
Fee and asset management 3,364 3,837 3,887
Depreciation 156,644 93,253 72,410
Interest:
Expense incurred 121,324 81,351 78,375
Amortization of deferred financing costs 2,523 4,242 3,444
General and administrative 15,064 9,857 8,129
-------- -------- --------
Total expenses 571,307 381,352 330,646
-------- -------- --------
Income before gain on disposition of properties
and extraordinary items 176,014 97,033 59,738
Gain on disposition of properties 13,838 22,402 21,617
-------- -------- --------
Income before extraordinary items 189,852 119,435 81,355
Write-off of unamortized costs on refinanced debt - (3,512) -
Gain on early extinguishment of debt - - 2,000
-------- -------- --------
Net income $189,852 $115,923 $ 83,355
======== ======== ========
ALLOCATION OF NET INCOME:
Redeemable Preference Interests $ - $ 263 $ 1,508
======== ======== ========
9 3/8% Series A Cumulative Redeemable
Preference Units $ 14,344 $ 14,345 $ 8,367
======== ======== ========
9 1/8% Series B Cumulative Redeemable
Preference Units $ 11,406 $ 11,406 $ 1,742
======== ======== ========
9 1/8% Series C Cumulative Redeemable
Preference Units $ 10,494 $ 3,264 $ -
======== ======== ========
8.60% Series D Cumulative Redeemable
Preference Units $ 9,238 $ - $ -
======== ======== ========
Series E Cumulative Convertible
Preference Units $ 4,143 $ - $ -
======== ======== ========
9.65% Series F Cumulative Redeemable
Preference Units $ 3,284 $ - $ -
======== ======== ========
7 1/4% Series G Convertible Cumulative
Preference Units $ 6,103 $ - $ -
======== ======== ========
General Partner $117,580 $ 72,609 $ 57,610
Limited Partners 13,260 14,036 14,128
-------- -------- --------
Net income available to OP Unit holders $130,840 $ 86,645 $ 71,738
======== ======== ========
Net income per weighted average OP Unit outstanding $ 1.79 $ 1.70 $ 1.68
======== ======== ========
Weighted average OP Units outstanding 73,182 51,108 42,749
======== ======== ========
Net income per weighted average OP Unit outstanding -
assuming dilution $ 1.76 $ 1.69 $ 1.67
======== ======== ========
</TABLE>
See accompanying notes.
F-5
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1997 1996 1995
--------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 189,852 $ 115,923 $ 83,355
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 156,644 93,253 72,410
Amortization of deferred financing costs (including discounts and premiums on debt) 2,170 4,558 3,717
Amortization of discount on investment in mortgage notes (3,100) (613) -
Gain on disposition of properties (13,838) (22,402) (21,617)
Write-off of unamortized costs on refinanced debt - 3,512 -
Gain on early extinguishment of debt - - (2,000)
Changes in assets and liabilities:
(Increase) in rents receivable (1,373) (409) (259)
(Increase) decrease in deposits-restricted (23,183) (556) (218)
(Increase) decrease in other assets (20,608) 158 1,913
Increase in accounts payable and accrued expenses 20,235 9,901 3,765
Increase in accrued interest payable 12,224 4,383 2,616
Increase (decrease) in rents received in advance and other liabilities 12,112 3,222 (2,148)
----------- ----------- -----------
Net cash provided by operating activities 331,135 210,930 141,534
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate, net (1,190,380) (641,015) (239,964)
Improvements to real estate (50,246) (33,001) (32,800)
Additions to non-real estate (9,754) (2,347) (3,669)
Proceeds from disposition of rental property, net 35,758 40,093 46,426
Purchase of management contract rights (5,000) - -
(Increase) decrease in mortgage deposits (25,521) 1,311 (1,299)
Deposits (made) on real estate acquisitions (8,815) (16,916) (15,107)
Deposits applied on real estate acquisitions 16,761 15,107 5,200
(Increase) decrease in investment in mortgage notes (86,367) 1,171 (87,154)
EWR Merger costs and related activities (114,654) - -
Wellsford Merger costs and related activities (62,254) - -
Other investing activities, net (42,852) (58) 4,349
----------- ----------- -----------
Net cash (used for) investing activities (1,543,324) (635,655) (324,018)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions from General Partner 1,013,789 597,752 270,311
Redemption of Preference Interests - (1,083) (1,352)
Distributions paid to partners (292,082) (142,304) (95,875)
Proceeds from sale of 2002 Notes, net of discount - - 124,011
Proceeds from sale of 2026 Notes - 150,000 -
Proceeds from sale of 2001 Notes, net of discount 149,684 - -
Proceeds from sale of 2003 Notes, net of discount 49,916 - -
Proceeds from sale of 2017 Notes, net of discount 148,703 - -
Principal repayment on the Floating Rate Notes (100,000) - -
Principal receipts on employee notes 269 76 143
Proceeds from restructuring of tax-exempt bond investments 9,350 112,209 -
Proceeds from line of credit 442,500 250,000 317,000
Repayments on line of credit (207,500) (342,000) (387,000)
Principal payments on mortgage notes payable (120,546) (60,706) (47,787)
Deferred financing costs (10,799) (9,111) (4,558)
Increase in security deposits 7,819 3,735 948
Other financing activities 7,110 - 33
----------- ----------- -----------
Net cash provided by financing activities 1,098,213 558,568 175,874
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents (113,976) 133,843 (6,610)
Cash and cash equivalents, beginning of year 147,271 13,428 20,038
----------- ----------- -----------
Cash and cash equivalents, end of year $ 33,295 $ 147,271 $ 13,428
=========== =========== ===========
</TABLE>
See accompanying notes.
F-6
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Amounts in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
1997 1996 1995
--------------------------------
<S> <C> <C> <C>
Supplemental information:
Cash paid during the period for interest $ 109,100 $ 76,968 $75,759
========== ======== =======
Mortgage loans assumed through Mergers $ 333,966 $ - $ -
========== ======== =======
Mortgage loans assumed through acquisitions of real estate $ 597,245 $142,237 $23,554
========== ======== =======
Unsecured notes assumed through Mergers $ 383,954 $ - $ -
========== ======== =======
Real estate assumed through foreclosure $ - $ 10,854 $ -
========== ======== =======
Net real estate contributed in exchange for OP units $ 191,329 $ 440 $18,811
========== ======== =======
Fair market value of OP Units issued in connection with Mergers $1,052,582 $ - $ -
========== ======== =======
Real estate conveyed in exchange for release of mortgage indebtedness $ - $ - $20,500
========== ======== =======
Liquidation value of Preferred Shares redesignated through Wellsford Merger $ 157,463 $ - $ -
========== ======== =======
Net liabilities assumed through Mergers $ 33,237 $ - $ -
========== ======== =======
</TABLE>
See accompanying notes
F-7
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Amounts in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1997 1996 1995
---------------------------------------
<S> <C> <C> <C>
Accumulated partners' capital, beginning of year $1,609,467 $1,053,480 $ 787,374
Net income for the year ended December 31, 189,852 115,923 83,355
Capital contributions from General Partner 1,014,604 598,123 271,273
Liquidation Value of Preferred Shares redesignated through
Wellsford Merger 157,463 - -
Redemption of Preference Interests - (1,083) (1,352)
Issuance of OP Units in connection with acquisitions 191,329 440 18,811
Issuance of OP Units in connection with Mergers 1,052,582 - -
Distributions declared to Redeemable
Preference Interests for the year ended December 31, - - (10,109)
Distributions declared to partners for the year ended December 31, (251,902) (157,416) (95,872)
---------- ---------- ----------
Accumulated partners' capital, end of year $3,963,395 $1,609,467 $1,053,480
========== ========== ==========
Allocation of partners' capital:
General Partner, partner's capital, end of year $2,648,278 $1,065,830 $ 606,517
========== ========== ==========
Limited Partners, partners' capital, end of year $ 273,404 $ 150,637 $ 144,385
========== ========== ==========
Redeemable Preference Interests, end of year $ - $ - $ 24,578
========== ========== ==========
9 3/8% Series A Cumulative Redeemable Preference Units $ 153,000 $ 153,000 $ 153,000
========== ========== ==========
9 1/8% Series B Cumulative Redeemable Preference Units $ 125,000 $ 125,000 $ 125,000
========== ========== ==========
9 1/8% Series C Cumulative Redeemable Preference Units $ 115,000 $ 115,000 $ -
========== ========== ==========
8.60% Series D Cumulative Redeemable Preference Units $ 175,000 $ - $ -
========== ========== ==========
Series E Cumulative Convertible Preference Units $ 99,963 $ - $ -
========== ========== ==========
9.65% Series F Cumulative Redeemable Preference Units $ 57,500 $ - $ -
========== ========== ==========
7 1/4% Series G Convertible Cumulative Preference Units $ 316,250 $ - $ -
========== ========== ==========
</TABLE>
See accompanying notes.
F-8
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
ERP Operating Limited Partnership (the "Operating Partnership"), an
Illinois limited partnership, was formed to conduct the multifamily residential
property business of Equity Residential Properties Trust ("EQR"). EQR is a
Maryland real estate investment trust formed on March 31, 1993. As used herein,
the term "Company" means EQR, and its subsidiaries, as the survivor of the
mergers between EQR and each of Wellsford Residential Property Trust
("Wellsford") (the "Wellsford Merger") and Evans Withycombe Residential, Inc.
("EWR") (the "EWR Merger"). The Company conducts substantially all of its
operations through the Operating Partnership. EQR, through the Operating
Partnership, is the successor to the multifamily residential property business
of Equity Properties Management Corp. ("EPMC"), an entity controlled by Mr.
Samuel Zell, Chairman of the Board of Trustees of the Company, and a series of
other entities which owned 69 of the properties (the "Initial Properties").
Forty-six of the Initial Properties (the "Zell Properties") were contributed or
sold by entities substantially controlled by Mr. Zell and primarily owned by Mr.
Zell and trusts for the benefit of Mr. Robert Lurie, a deceased partner of Mr.
Zell. The remaining 23 of the Initial Properties (the "Starwood Properties")
were acquired from entities controlled by Starwood Capital Partners, L.P.
("Starwood") and its affiliates ("Starwood Original Owners"). Prior to the
completion of the Company's initial public offering (the "EQR IPO") of
13,225,000 common shares of beneficial interest, $0.01 par value per share
("Common Shares"), EPMC provided multifamily residential management services
(the "Management Business") to the Zell Properties.
The Company, through the Operating Partnership, is engaged in the
acquisition, disposition, ownership, management and operation of multifamily
properties. As of December 31, 1997, the Operating Partnership controlled a
portfolio of 463 multifamily properties (individually a "Property" and
collectively the "Properties") containing 135,200 apartment units. The
Operating Partnership's interest in six of these Properties at the time of
acquisition thereof consisted solely of ownership of debt collateralized by such
Properties. The Operating Partnership also has an investment in partnership
interests and subordinated mortgages collateralized by 21 properties and
mortgage loans collateralized by five properties (collectively, the "Additional
Properties"). The Properties and Additional Properties are located throughout
the United States in the following 35 states: Alabama, Arizona, Arkansas,
California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana,
Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota,
Missouri, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio,
Oklahoma, Oregon, South Carolina, Tennessee, Texas, Utah, Virginia, Washington
and Wisconsin.
In exchange for contributing 33 of the Zell Properties and the Management
Business and the Starwood Properties, the 33 existing entities (the "Zell
Original Owners"), and entities controlled by Starwood and EPMC received a total
of 8,433,238 partnership interests ("OP Units") (including an additional 93,639
OP Units issued in August 1994 and 1,835 OP Units issued in September 1995) in
the Operating Partnership. The other 13 Zell Properties were acquired from 13
existing partnerships (the "Zell Sellers") for $43.5 million in cash. The
Management Business, the Zell Original Owners and the Zell Sellers are
collectively "EQR's Predecessor Business."
F-9
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Company has formed a series of partnerships (the "Financing
Partnerships") which beneficially own certain Properties encumbered by mortgage
indebtedness. The Operating Partnership owns a 1% limited partner interest and a
98% general partner interest in each Financing Partnership. The remaining 1%
general partner interest in each Financing Partnership is owned by various
qualified REIT subsidiaries wholly owned by the Company (each a "QRS
Corporation"). Rental income from the Properties that are beneficially owned by
a Financing Partnership is used first to service the applicable mortgage debt
and pay other operating expenses and any excess is then distributed 1% to the
applicable QRS Corporation, as the general partner of such Financing
Partnership, and 99% to the Operating Partnership, as the sole 1% limited
partner and as the 98% general partner. The Company has also formed a series of
limited liability companies (the "LLCs") which own certain Properties and one
such LLC which has an investment in partnership interests and subordinated
mortgages collateralized by 21 of the Additional Properties. The Operating
Partnership is a 99% managing member of each LLC and a QRS Corporation is a 1%
member of each LLC. In addition, the Company also owns a 1% general partner
interest and a 81.1% limited partner interest in Evans Withycombe Residential,
L. P. (the "EWR Operating Partnership") and the Operating Partnership owns a
16.1% limited partner interest and a 1% managing general partner interest in the
EWR Operating Partnership.
As of December 31, 1997, 451 Properties were managed by either Equity
Residential Properties Management Limited Partnership, the successor to the
Management Business contributed by EPMC contemporaneously with the EQR IPO and
Equity Residential Properties Management Limited Partnership II (collectively,
the "Management Partnerships"). The Management Partnerships collect a property
management fee consistent with a reasonable arms-length charge for the
performance of such services. The sole general partners of the Management
Partnerships with a 1% interest is the Operating Partnership. The sole limited
partners of the Management Partnerships are Equity Residential Properties
Management Corp. ("Management Corp.") and Equity Residential Properties
Management Corp. II ("Management Corp. II"), respectively, and each has a 99%
interest in the respective partnership.
2. Basis of Presentation
The Wellsford Merger and the EWR Merger (collectively, the "Mergers") were
treated as purchases in accordance with Accounting Principles Board Opinion No.
16. The fair value of the consideration given by the Company in the Mergers was
used as the valuation basis for each of the combinations. The assets acquired
and the liabilities assumed of Wellsford were recorded at their relative fair
values as of May 30, 1997 (the "Wellsford Closing Date"). The assets acquired
and the liabilities assumed of EWR were recorded at their relative fair values
as of December 23, 1997 (the "EWR Closing Date"). The accompanying consolidated
statements of operations and cash flows include the results of both Wellsford
and EWR from their respective closing dates.
Due to the Operating Partnership's ability to control, either through
ownership or by contract, the Management Partnerships, the Financing
Partnerships, the LLCs and the EWR Operating Partnership, each such entity has
been consolidated with the Operating Partnership for
F-10
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
financial reporting purposes. In regard to Management Corp., Management Corp. II
and Evans Withycombe Management, Inc., the Operating Partnership does not have
legal control; however, these entities are consolidated for financial reporting
purposes, the effects of which are immaterial. Certain reclassifications have
been made to the prior year's financial statements in order to conform to the
current year presentation.
Minority interests represented by the Company's indirect 1% interest in
various Financing Partnerships and LLCs are immaterial and have not been
accounted for in the Consolidated Financial Statements. In addition, certain
amounts due from the Company for its 1% interest in the Financing Partnerships
has not been reflected in the Consolidated Balance Sheets since such amounts are
immaterial to the Consolidated Balance Sheets.
3. Business Combinations
In connection with the Wellsford Merger each outstanding common share of
beneficial interest of Wellsford was converted into .625 of a Common Share of
the Company. In addition, Wellsford's Series A Cumulative Convertible Preferred
Shares of Beneficial Interest were redesignated as the Company's 3,999,800
Series E Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01
par value per share (the "Series E Preferred Shares") and Wellsford's Series B
Cumulative Redeemable Preferred Shares of Beneficial Interest were redesignated
as the Company's 2,300,000 9.65% Series F Cumulative Redeemable Preferred Shares
of Beneficial Interest, $0.01 par value per share (the "Series F Preferred
Shares").
On the Wellsford Closing Date, 72 Properties containing 19,004 units and
other related assets were acquired for a total purchase price of approximately
$1 billion. The purchase price consisted of 10.8 million Common Shares issued
by the Company with a market value of $443.7 million, the liquidation value of
$157.5 million for the Series E Preferred Shares and the Series F Preferred
Shares, the assumption of mortgage indebtedness and unsecured notes in the
amount of $345 million, the assumption of other liabilities of approximately
$33.5 million and other merger related costs of approximately $23.4 million.
Upon contribution of the net assets by the Company to the Operating Partnership,
the Operating Partnership issued 10.8 million OP Units to the Company.
On the EWR Closing Date, 53 Properties containing 15,331 units and three
Properties under construction or expansion expected to contain 953 units and
other related assets were acquired for a total purchase price of approximately
$1.2 billion. In connection with the EWR Merger, as of the EWR Closing Date,
each outstanding common share of beneficial interest of EWR was converted into
.50 of a Common Share of the Company. The purchase price consisted of the
Operating Partnership's contribution of the EWR Operating Partnership OP Units
to the Operating Partnership at a market value of approximately $501.6 million,
issuance of approximately 2.2 million Operating Partnership OP Units, in
exchange for approximately 4.4 million EWR Operating Partnership OP Units at a
market value of approximately $107.3 million, the assumption of mortgage
indebtedness and unsecured notes in the amount of $498 million, the assumption
of other liabilities of approximately $28.2 million and other EWR Merger related
costs of approximately $16.7 million.
F-11
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Partner's Capital
The limited partners of the Operating Partnership as of December 31, 1997
include various individuals and entities that contributed their properties to
the Operating Partnership in exchange for a partnership interest (the "Limited
Partners") and are represented by 9,592,590 OP Units which are exchangeable,
subject to certain restrictions, on a one-for-one basis into the Company's
Common Shares. As of December 31, 1997, the General Partner had an approximate
90.28% interest and the Limited Partners had an approximate 9.72% interest.
In regards to the General Partner, net proceeds from the various equity
offerings of the Company have been contributed by the Company to the Operating
Partnership in return for an increased ownership percentage. Due to the Limited
Partner's ability to convert their interest into an ownership interest in the
General Partner, the net offering proceeds are allocated between the Company (as
general partner) and the Limited Partners (to the extent represented by OP
Units) to account for the change in their respective percentage ownership of the
equity of the Operating Partnership.
F-12
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Operating Partnership paid a $0.625, $0.625, $0.625 and $0.67 per OP
Unit distribution on April 11, July 11, October 10 and December 30, 1997,
respectively, for the quarters ended March 31, June 30, September 30 and
December 31, 1997, to OP Unit holders of record on March 28, June 27, September
26 and December 15, 1997, respectively.
F-14
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The following table summarizes the distributions paid to the Company as
holder of the various Preference Units listed below related to the year ended
December 31, 1997:
<TABLE>
<CAPTION>
For the
Quarter or Period
Distribution Amount Date Paid ended
------------------- --------- -----
<S> <C> <C> <C>
Series A Cumulative
Redeemable Preference Units $0.585938 04/15/97 03/31/97
0.585937 07/15/97 06/30/97
0.585938 10/15/97 09/30/97
0.585937 01/15/98 12/31/97
Series B Cumulative
Redeemable Preference Units $0.570313 04/15/97 03/31/97
0.570312 07/15/97 06/30/97
0.570313 10/15/97 09/30/97
0.570312 01/15/98 12/31/97
Series C Cumulative
Redeemable Preference Units $0.570313 04/15/97 03/31/97
0.570312 07/15/97 06/30/97
0.570313 10/15/97 09/30/97
0.570312 01/15/98 12/31/97
Series D Cumulative
Redeemable Preference Units (A) $0.334400 07/15/97 06/30/97
0.537500 10/15/97 09/30/97
0.537500 01/15/98 12/31/97
Series E Cumulative
Convertible Preference Units $0.437500 07/01/97 06/30/97
0.437500 10/01/97 09/30/97
0.437500 01/02/98 12/31/97
Series F Cumulative
Redeemable Preference Units $0.603125 07/15/97 06/30/97
0.603125 10/15/97 09/30/97
0.603125 01/15/98 12/31/97
Series G Convertible
Cumulative Preference Units (B) $0.110800 10/15/97 09/30/97
0.453125 01/15/98 12/31/97
</TABLE>
(A) Partial distribution of $0.3344 covers the period May 21 through
July 15, 1997.
(B) Partial distribution of $0.1108 covers the period September 24
through October 15, 1997.
5. Summary of Significant Accounting Policies
(a) Real estate assets and depreciation
Real estate is recorded at cost less accumulated depreciation less an
adjustment, if any, for impairment. Real estate intended to be held and operated
by the Operating Partnership over their remaining useful life are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the particular real estate may not be recoverable. If these
events or changes in circumstances are present, the Operating Partnership
estimates the sum of the
F-15
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
expected future cash flows (undiscounted) to result from the operations and
eventual disposition of the particular real estate, and if less than the
carrying amount of the real estate, the Operating Partnership will recognize an
impairment loss. Upon recognition of any impairment loss the Operating
Partnership measures that loss based on the amount by which the carrying amount
of the real estate exceeds the estimated fair value of the real estate.
For rental properties to be disposed of, an impairment loss is recognized
when the fair value of the real estate, less the estimated cost to sell, is less
than the carrying amount of the real estate measured at the time the Operating
Partnership has a commitment to sell the property and/or is actively marketing
the property for sale. Real estate to be disposed of is reported at the lower
of its carrying amount or its estimated fair value, less its cost to sell.
Depreciation is not recorded during the period in which assets are held for
disposal.
Depreciation is computed on a straight-line basis over the estimated useful
lives of the assets. The Operating Partnership uses a 30-year estimated life
for buildings, a 10-year estimated life for land improvements and up to a seven-
year estimated life for furniture, fixtures and equipment. Expenditures for
ordinary maintenance and repairs are expensed to operations as incurred and
significant renovations and improvements that improve and/or extend the useful
life of the asset are capitalized over their estimated useful life. Initial
direct leasing costs are expensed as incurred and such expense approximates the
deferral and amortization of initial direct leasing costs over the lease terms.
Property sales or dispositions are recorded when title transfers and sufficient
consideration has been received by the Operating Partnership. Upon disposition,
the related costs and accumulated deprecation are removed from the respective
accounts. Any gain or loss on sale or disposition is recognized in accordance
with generally accepted accounting principles.
The Operating Partnership classifies developments and lease-up properties
as construction-in-progress until construction on the apartment community has
been completed and the apartment community has reached stabilized occupancy. The
Operating Partnership generally considers a property stabilized when it first
reaches 93% physical occupancy. The Operating Partnership also classifies land
relating to construction-in-progress as land on its balance sheet. Land
associated with construction-in-progress was $8.3 million as of December 31,
1997.
(b) Cash and Cash Equivalents
The Operating Partnership considers all demand deposits, money market
accounts and investments in certificates of deposit and repurchase agreements
purchased with a maturity of three months or less, at the date of purchase, to
be cash equivalents. The Operating Partnership maintains its cash and cash
equivalents at financial institutions. The combined account balances at each
institution periodically exceed the Federal Depository Insurance Corporation
("FDIC") insurance coverage, and, as a result, there is a concentration of
credit risk related to amounts on deposit in excess of FDIC insurance coverage.
The Operating Partnership believes that the risk is not significant, as the
Operating Partnership does not anticipate their non-performance.
F-16
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(c) Deferred Financing Costs
Deferred financing costs include fees and costs incurred to obtain the
Operating Partnership's lines of credit, long-term financing and costs for
certain interest rate protection agreements. These costs are amortized over the
terms of the related debt. Unamortized financing costs are written-off when
debt is retired before the maturity date. As of December 31, 1997 and 1996, the
accumulated amortization of such deferred financing costs was $4.2 million and
$3.8 million, respectively.
(d) Interest Rate Protection Agreements
The Operating Partnership from time to time enters into interest rate
protection agreements to effectively convert floating rate debt to a fixed rate
basis, as well as to hedge anticipated financing transactions. Net amounts paid
or received under these agreements are recognized as an adjustment to interest
expense when such amounts are incurred or earned. Settlement amounts paid or
received in connection with terminated interest rate protection agreements are
deferred and amortized over the remaining term of the related financing
transaction on the straight-line method. The Operating Partnership believes it
has limited exposure to the extent of non-performance by the counterparties of
each protection agreement since each counterparty is a major U.S. financial
institution, and the Operating Partnership does not anticipate their non-
performance.
(e) Fair Value of Financial Instruments
The fair values of the Operating Partnership's financial instruments,
including cash and cash equivalents, and mortgage notes payable, other notes
payable, lines of credit and other financial instruments, approximate their
carrying or contract values. With respect to the Operating Partnership's
investment in mortgage notes, the fair value as of December 31, 1997 was
estimated to be approximately $184.8 million compared to the Operating
Partnership's carrying value of $176.1 million. The estimated fair value of the
Operating Partnership's investment in mortgage notes represents the estimated
net present value based on the expected future property level cash flows and an
estimated current market discount rate.
(f) Revenue Recognition
Rental income attributable to leases is recorded when due from tenants and
is recognized monthly as it is earned, which is not materially different than on
a straight-line basis. Interest income is recorded on an accrual basis.
(g) Lease Agreements
A substantial portion of the leases entered into between the tenant and a
multifamily property for the rental of an apartment unit is month-to-month or
year-to-year, renewable upon consent of both parties.
F-17
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(h) Income Taxes
The Operating Partnership is not liable for Federal income taxes as the
partners recognize their proportionate share of the Operating Partnership income
or loss in their tax returns, therefore, no provision for Federal income taxes
is made in the financial statements of the Operating Partnership. However, the
Operating Partnership is subject to certain state and local income, excise and
franchise taxes. The aggregate cost of land and depreciable property for
Federal income tax purposes as of December 31, 1997 was approximately $6.2
billion.
(i) Income per OP Unit
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
Earnings per Share ("Statement 128"). Statement 128 replaced the calculation of
primary and fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All net income per weighted average OP Unit and net income
per weighted average OP Unit--assuming dilution amounts for all periods have
been presented and, where appropriate, restated to conform to the Statement 128
requirements.
(j) Cash Distributions and Allocation of Income (Loss)
Distributions, profits and losses are generally allocated to the General
Partner and the Limited Partners in proportion to their respective percentage
interests.
(k) Use of Estimates
In preparation of the Operating Partnership's financial statements in
conformity with generally accepted accounting principles, 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.
F-18
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. Real Estate
The following summarizes the carrying amounts for the real estate as of
December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
---- ----
(Amounts in thousands)
<S> <C> <C>
Land $ 791,980 $ 284,879
Buildings and Improvements 6,060,779 2,566,568
Furniture, Fixtures and Equipment 232,636 132,063
Construction in Progress 36,040 -
---------- ----------
Real estate 7,121,435 2,983,510
Accumulated Depreciation (444,762) (301,512)
---------- ----------
Real estate, net $6,676,673 $2,681,998
========== ==========
</TABLE>
In addition to the Mergers, during the year ended December 31, 1997, the
Operating Partnership acquired the 124 Properties listed below. Each Property
was purchased from an unaffiliated third party, except for 12 of the Properties,
which were purchased from affiliates of the Operating Partnership, Zell/Merrill
Lynch Real Estate Opportunity Partners Limited Partnership ("Zell/Merrill I")
and subsidiaries of Zell/Merrill Lynch Real Estate Opportunity Partners Limited
Partnership II ("Zell/Merrill II"). The total purchase price for the Properties
acquired from Zell/Merrill I and Zell/Merrill II was approximately $162.2
million. In connection with certain of the acquisitions listed below, the
Operating Partnership assumed mortgage indebtedness of approximately $597.2
million and issued OP Units having a value of approximately $191.3 million. The
cash portion of these transactions was funded primarily from proceeds raised
from the various equity offerings of the Company as well as from proceeds
raised from the issuances of debt securities as discussed in Note 13.
F-19
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
Total
Acquisition
Date Number Cost (in
Acquired Property Location of Units thousands)
- -------- -------- -------- -------- ------------
<C> <S> <C> <C> <C>
01/02/97 Town Center Kingwood, TX 258 $ 12,874
01/21/97 Harborview San Pedro, CA 160 19,109
01/31/97 The Cardinal Greensboro, NC 256 13,180
02/12/97 Trails at Dominion Houston, TX 843 38,525
02/25/97 Dartmouth Woods Lakewood, CO 201 12,489
02/28/97 Rincon Houston, TX 288 21,157
02/28/97 Waterford at the Lakes Kent, WA 344 19,443
03/17/97 Junipers at Yarmouth Yarmouth, ME 225 9,326
03/20/97 Lincoln Harbor Ft. Lauderdale, FL 324 22,325
03/24/97 Sedona Ridge Phoenix, AZ 250 15,262
03/28/97 Club at the Green Beaverton, OR 254 14,906
03/28/97 Boulder Creek (formerly Knight's Castle) Wilsonville, OR 296 15,239
04/04/97 Country Gables Beaverton, OR 288 16,030
04/04/97 Watermark Square Portland, OR 390 15,984
04/04/97 Indigo Springs Kent, WA 278 12,903
04/29/97 Summit Chase Coral Springs, FL 140 5,613
05/13/97 Willow Brook Durham, NC 176 8,553
05/15/97 The Willows Knoxville, TN 250 11,064
05/21/97 Cascade at Landmark Alexandria, VA 277 23,322
05/21/97 Sabal Palm Club Pompano Beach, FL 416 23,913
05/21/97 Tamarlane Portland, ME 115 5,861
05/22/97 Spinnaker Cove Hermitage, TN 278 14,700
05/29/97 Banyan Lake Boynton Beach, FL 288 14,031
05/30/97 Wyndridge III Memphis, TN 284 15,204
06/06/97 Wyndridge II Memphis, TN 284 15,285
06/13/97 Windemere Mesa, AZ 224 9,641
06/13/97 Preston Bend Dallas, TX 255 11,062
06/13/97 Highline Oaks Denver, CO 220 10,782
06/17/97 Hunter's Ridge/South Pointe St. Louis, MO 390 19,603
06/19/97 Club at Tanasbourne Hillsboro, OR 352 20,098
06/26/97 Wood Creek Pleasant Hill, CA 256 32,816
07/02/97 Ridgemont/Mountain Brook Chattanooga, TN 506 15,105
07/11/97 Foxchase Grand Prairie, TX 260 8,528
07/18/97 La Mirage San Diego, CA 1,070 128,988
07/31/97 Bay Ridge San Pedro, CA 60 4,581
08/07/97 Boynton Place Boynton Beach, FL 192 9,425
08/07/97 Gates of Redmond I Redmond, WA 180 14,445
08/12/97 Cambridge Village Lewisville, TX 200 9,614
08/12/97 Crosswinds St. Petersburg, FL 208 7,351
08/15/97 Gates of Redmond II Redmond, WA 100 8,025
08/27/97 Paces Station/Paces on the Green Atlanta, GA 610 37,432
</TABLE>
F-20
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
Total
Acquisition
Date Number Cost (in
Acquired Property Location of Units thousands)
- -------- -------- -------- -------- ------------
<C> <S> <C> <C> <C>
09/05/97 North Hill Atlanta, GA 420 21,093
09/05/97 Casa Camino Ruiz (formerly Pardee Casas) San Diego, CA 196 13,345
09/29/97 The Classic Stamford, CT 144 22,776
09/30/97 Cambridge at Hickory Hollow Nashville, TN 360 21,155
10/02/97 Brookfield Salt Lake City, UT 128 6,833
10/09/97 Atrium Durham, NC 208 11,233
10/09/97 Burwick Farms Howell, MI 264 11,026
10/09/97 Carolina Crossing Greenville, SC 156 5,481
10/09/97 Chimneys Charlotte, NC 214 9,051
10/09/97 Clarion Decatur, GA 217 15,026
10/09/97 Concorde Bridge Overland Park, KS 248 19,737
10/09/97 Creekwood Charlotte, NC 384 18,599
10/09/97 Eastland on the Lake Columbus, OH 376 8,183
10/09/97 Garden Lake Riverdale, GA 278 14,645
10/09/97 Glen Eagle Greenville, SC 192 8,340
10/09/97 Grey Eagle Greenville, SC 156 7,255
10/09/97 Hickory Ridge Greenville, SC 90 2,858
10/09/97 Hidden Oaks Cary, NC 216 11,770
10/09/97 Highland Grove Stone Mt., GA 268 16,662
10/09/97 Mariners Wharf Orange Park, FL 272 18,594
10/09/97 Northlake Jacksonville, FL 240 11,660
10/09/97 Silver Springs Jacksonville, FL 432 18,310
10/09/97 Tamarind at Stoneridge Columbia, SC 240 10,545
10/09/97 Tivoli Lakes Club Deerfield Beach, FL 278 18,051
10/09/97 Village of Sycamore Ridge Memphis, TN 114 6,228
10/09/97 Woodland Meadows Ann Arbor, MI 306 20,045
10/17/97 Deerwood Corona, CA 316 25,073
10/21/97 Autumn Creek Cordova, TN 210 11,024
10/21/97 Blue Swan San Antonio, TX 285 9,018
10/21/97 Brookridge Centreville, VA 252 18,541
10/21/97 Chantecleer Lakes Naperville, IL 304 23,038
10/21/97 Crescent at Cherry Creek Denver, CO 216 17,721
10/21/97 Governor's Pointe Roswell, GA 468 28,258
10/21/97 Hidden Palms Tampa, FL 256 8,427
10/21/97 Idlewood Indianapolis, IN 320 14,043
10/21/97 Jefferson at Walnut Creek Austin, TX 342 17,343
10/21/97 Kirby Place Houston, TX 362 29,533
10/21/97 Larkspur Woods Sacramento, CA 232 20,335
10/21/97 Northwoods Village Cary, NC 228 12,830
10/21/97 Orchard of Landen Maineville, OH 312 20,236
10/21/97 Preakness Antioch, TN 260 9,237
</TABLE>
F-21
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
Total
Acquisition
Date Number Cost (in
Acquired Property Location of Units thousands)
- -------- -------- -------- -------- ------------
<C> <S> <C> <C> <C>
10/21/97 Riverside Park Tulsa, OK 288 13,828
10/21/97 Sycamore Creek Scottsdale, AZ 350 22,232
10/21/97 Trinity Lakes Cordova, TN 330 16,944
11/21/97 Parkridge Place Irving, TX 536 23,503
11/21/97 Villa Serenas Tucson, AZ 611 16,843
12/05/97 Hollyview Silver Spring, MD 42 1,684
12/11/97 Cierra Crest Denver, CO 480 39,632
12/11/97 Arbor Glen Ypsilanti, MI 220 10,922
12/11/97 Breckenridge Lexington, KY 382 16,458
12/11/97 Ethans Ridge I Kansas City, MO 316 19,459
12/11/97 Ethans Ridge II Kansas City, MO 242 14,655
12/11/97 Ethans Glen III Kansas City, MO 48 2,441
12/11/97 Farmington Gates Germantown, TN 182 9,697
12/11/97 Fountain Place I Eden Prairie, MN 332 23,999
12/11/97 Fountain Place II Eden Prairie, MN 158 12,265
12/11/97 Geary Court Yard San Francisco, CA 164 17,194
12/11/97 James Street Crossing Kent, WA 300 20,786
12/11/97 Ocean Walk Key West, FL 296 28,353
12/11/97 Regency Woods West Des Moines, IA 200 7,451
12/11/97 Ridgeway Commons Memphis, TN 127 5,684
12/11/97 River Oak Louisville, KY 268 12,539
12/11/97 Royal Oak Eagan, MN 231 15,982
12/11/97 The Cedars Charlotte, NC 360 20,253
12/11/97 Trailway Pond I Burnsville, MN 75 4,768
12/11/97 Trailway Pond II Burnsville, MN 165 11,047
12/11/97 Valley Creek I Woodbury, MN 225 16,226
12/11/97 Valley Creek II Woodbury, MN 177 12,295
12/11/97 Westwood Pines Tamarac, FL 208 15,261
12/11/97 White Bear Woods White Bear Lake, MN 225 16,213
12/11/97 Wood Crest Villa Westland, MI 458 9,260
12/11/97 Wood Lane Place Woodbury, MN 216 20,033
12/17/97 Crystal Village Attleboro, MA 91 6,349
12/17/97 Mill Village Randolph, MA 310 19,584
12/18/97 Ridgewood Village San Diego, CA 192 19,779
12/18/97 Meadows in the Park Birmingham, AL 200 9,525
12/18/97 Meadows on the Lake Birmingham, AL 200 9,521
12/18/97 Vinings at Ashley Lake Boynton Beach, FL 440 26,860
12/23/97 Chartwell Court Houston, TX 243 14,036
12/30/97 Glenlake Club Glendale Heights, IL 336 21,708
12/31/97 Arboretum Atlanta, GA 312 20,607
------ ----------
33,542 $1,982,828
====== ==========
</TABLE>
F-22
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Investment in Limited Partnerships - Development Properties
In December 1997, the Operating Partnership entered into a joint venture
agreement with a multifamily residential real estate developer whereby the
Operating Partnership will make investments in a limited partnership to fund a
portion of the total project development cost of new multifamily developments in
certain of the Operating Partnership's target markets (the "Joint Venture
Agreement"). As of December 31, 1997, the Operating Partnership has funded
approximately $6.9 million in connection with this agreement. The amounts
invested are included in other assets on the balance sheet.
8. Real Estate Dispositions
During 1997, the Operating Partnership disposed of the properties listed
below. Each property was sold to an unaffiliated third party.
<TABLE>
<CAPTION>
Disposition
Number Price (in
Date Disposed Property Location of Units thousands)
- ------------- -------------------- ----------------- -------- -----------
<C> <S> <C> <C> <C>
03/28/97 Plantation Monroe, LA 200 $ 4,800
08/25/97 Paradise Pointe Land Hollywood, FL N/A 712
11/19/97 Quail Run Oklahoma City, OK 208 5,000
11/19/97 Stonebrook Oklahoma City, OK 360 8,850
12/11/97 Cambridge Tacoma, WA 96 3,665
12/11/97 Crown Pointe Tacoma, WA 76 2,542
12/11/97 Windemere Tacoma, WA 36 1,342
12/11/97 Diplomat South Beech Grove, IN 272 7,000
12/18/97 Village of Hampshire
Heights (Partial) Toledo, OH 88 2,600
----- -------
1,336 $36,511
===== =======
</TABLE>
The Operating Partnership recognized a total gain of approximately $13.8
million on the disposition of these seven properties, the portion of one
Property and the vacant land parcel.
During the year ended December 31, 1995, the Operating Partnership recorded
a $1 million loss which represented the estimated impairment in connection with
the potential sale of University Park located in Toledo, Ohio. This Property
had a net carrying amount as of December 31, 1995 of approximately $1.1 million
after the impairment loss. The impairment loss on real estate to be disposed of
is included in gain on disposition of properties on the statement of operations
for the year ended December 31, 1995.
9. Calculation of Net Income Per Weighted Average OP Unit
The following tables set forth the computation of net income per weighted
average OP Unit outstanding and net income per weighted average OP Unit
outstanding - assuming dilution.
F-23
<PAGE>
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1997 1996 1995
--------- --------- ---------
(Amounts in thousands except per share amounts)
<S> <C> <C> <C>
Numerator:
Income before gain on disposition of properties,
extraordinary items and allocation of income to
Redeemable Preference Interests and Redeemable
Preference Units $ 176,014 $ 97,033 $ 59,738
Income allocated to Redeemable Preference Interests -- (263) (1,508)
Income allocated to Redeemable Preference Units (59,012) (29,015) (10,109)
--------- --------- ---------
Income before gain on disposition of properties and
extraordinary items 117,002 67,755 48,121
Gain on disposition of properties 13,838 22,402 21,617
Extraordinary items -- (3,512) 2,000
--------- --------- ---------
Numerator for net income per weighted average
OP Unit outstanding $ 130,840 $ 86,645 $ 71,738
========= ========= =========
Effect of dilutive securities:
Series E Cumulative Convertible Preference Units -- -- --
Series G Convertible Cumulative Preference Units -- -- --
--------- --------- ---------
Numerator for net income per weighted average
OP Unit outstanding - assuming dilution $ 130,840 $ 86,645 $ 71,738
========= ========= =========
Denominator:
Denominator for net income per weighted
average OP Unit outstanding 73,182 51,108 42,749
Effect of dilutive securities (1):
OP Units issuable upon exercise of the Company's
share options (2) 1,099 412 116
--------- --------- ---------
Denominator for net income per weighted average
OP Unit outstanding - assuming dilution 74,281 51,520 42,865
========= ========= =========
Net income per weighted average OP Unit outstanding $ 1.79 $ 1.70 $ 1.68
========= ========= =========
Net income per weighted average OP Unit
outstanding - assuming dilution $ 1.76 $ 1.69 $ 1.67
========= ========= =========
</TABLE>
F-24
<PAGE>
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Net income per weighted average OP Unit
outstanding:
Income before gain on disposition of properties
and extraordinary items per weighted average
OP Unit outstanding $ 1.60 $ 1.33 $ 1.12
Gain on disposition of properties 0.19 0.44 0.51
Extraordinary items -- (0.07) 0.05
--------- --------- ---------
Net income per weighted average OP Unit outstanding $ 1.79 $ 1.70 $ 1.68
========= ========= =========
Net income per weighted average OP Unit
outstanding - assuming dilution:
Income before gain on disposition of properties and
extraordinary items per weighted average OP Unit
outstanding - assuming dilution $ 1.58 $ 1.33 $ 1.12
Gain on disposition of properties 0.18 0.43 0.50
Extraordinary items -- (0.07) 0.05
--------- --------- ---------
Net income per weighted average OP Unit
Share outstanding - assuming dilution $ 1.76 $ 1.69 $ 1.67
========= ========= =========
</TABLE>
(1) Convertible Preference Units that could be converted into 2,763,898 Common
Shares which would be contributed to the Operating Partnership in exchange
for OP Units were outstanding at December 31, 1997 but were not included in
the computation of diluted earnings per OP Unit because it would be anti-
dilutive.
(2) Pursuant to the Company's share option plan, the Company has offered the
opportunity to acquire Common Shares through the grant of share options
("Options") to officers, directors, key employees and consultants of the
Company for 4.1 million, 2.3 million and 1.4 million Common Shares at a
weighted average exercise price of $36.22, $28.76 and $26.97 per Common
Share as of December 31, 1997, 1996 and 1995, respectively. As of December
31, 1997, 1996 and 1995, 1.3 million, .9 million, and .7 million Common
Shares were exercisable, respectively. Any Common Shares issued pursuant to
the Company's share option plan will result in the Operating Partnership
issuing OP Units to the Company on a one-for-one basis. Accordingly, the
dilutive effect of the Company's Options have been included in the number
of OP Units outstanding - assuming dilution.
F-25
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. Investment in Mortgage Notes and Partnership Interests
In 1995, the Operating Partnership made an $89 million investment in
partnership interests and subordinated mortgages collateralized by 21 of the
Additional Properties. These 21 Additional Properties consist of 3,896 units,
located in California, Colorado, New Mexico and Oklahoma. This included an $87.1
million investment in second and third mortgages (net of an original discount of
approximately $12.7 million to their face value), $1.6 million represents a one
time payment for an interest rate protection agreement and $0.3 million
represents an investment for primarily a 49.5% limited partnership interest in
the title-holding entities. As the Operating Partnership does not control the
general partners of the title-holding entities and substantially all of the
Operating Partnership's investment is in second and third mortgages (which are
subordinate to first mortgages owned by third party unaffiliated entities), the
$87.1 million investment is accounted for as an investment in mortgage notes.
The $1.6 million payment made for the interest rate protection agreement is
included in deferred financing costs and is being amortized over the term of the
related debt. The investment in limited partnership interests is accounted for
under the equity method and is included in other assets on the balance sheet.
As of December 31, 1997 the second mortgage notes had a combined principal
balance of approximately $25.5 million, accrue interest at a rate of 9.45% per
annum, receive principal amortization from excess cash flow and have a stated
maturity date of December 31, 2019. The third mortgage notes had a combined
principal balance of approximately $71.1 million, accrue interest at a rate of
6.15% per annum, plus up to an additional 3% per annum to the extent of
available cash flow. Contingent interest on the third mortgage notes is
recognized to the extent it is determined to be received. The third mortgage
notes have a stated maturity of December 31, 2024. Receipt of principal and
interest on the second and third mortgage notes is subordinated to the receipt
of all interest on the first mortgage notes. With respect to the discount on
these notes, the unamortized balance at December 31, 1997 was $9 million. During
1997 and 1996, the Operating Partnership amortized $3.1 million and $0.6
million, respectively, which is included in interest income - investment in
mortgage notes in the consolidated statement of operations. This discount is
being amortized utilizing the effective yield method.
On April 28, 1997, the Operating Partnership made an $88 million investment
in six mortgage loans collateralized by five multifamily properties. These five
multifamily properties are included in the Additional Properties. As of December
31, 1997, these six mortgage loans had a combined principal balance of
approximately $88 million and accrue interest at a rate of 8.25%. These six
mortgage loans are scheduled to mature on January 1, 2006.
11. Mortgage Notes Payable
As of December 31, 1997, the Operating Partnership had outstanding mortgage
indebtedness of approximately of $1.6 billion encumbering 152 of the Properties.
The carrying value of such Properties (net of accumulated depreciation of $145.1
million) was approximately $2.6 billion. The mortgage notes payable are
generally due in monthly installments of interest only. In connection
F-26
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
with the Properties acquired during the year ended December 31, 1997, including
the effects of the Mergers, the Operating Partnership assumed the outstanding
mortgage balances on 90 Properties in the aggregate amount of $931 million,
which includes a premium of approximately $3.9 million recorded in connection
with the EWR Merger.
Concurrent with the refinancing of certain tax-exempt bonds and as a
requirement of the credit provider of the bonds, the Financing Partnership,
which owns certain of the Properties, entered into interest rate protection
agreements, which were assigned to the credit provider as additional security.
The Financing Partnership pays interest based on a fixed interest rate and the
counterparty of the agreement pays interest to the Operating Partnership at a
floating rate that is calculated based on the Public Securities Association
Index for municipal bonds ("PSA Municipal Index"). As of December 31, 1997 and
1996, the aggregate notional amounts of these agreements were approximately
$174.3 million and $166.8 million, respectively. The fixed interest rates for
these agreements were 4.81%, 4.528% and 4.90%. The termination dates are October
1, 2003, January 1, 2004 and April 1, 2004. The Operating Partnership
simultaneously entered into substantially identical reverse interest rate
protection agreements. Under these agreements the Operating Partnership pays
interest monthly at a floating rate based on the PSA Municipal Index and the
counterparty pays interest to the Operating Partnership based on a fixed
interest rate. As of December 31, 1997 and 1996, the aggregate notional amount
of these agreements was approximately $174.3 million and $166.8 million,
respectively. The fixed interest rates received by the Operating Partnership in
exchange for paying interest based on the PSA Municipal Index for these
agreements were 4.74%, 4.458% and 4.83%. The termination dates are October 1,
2003, January 1, 2004 and April 1, 2004. Collectively, these agreements
effectively cost the Operating Partnership 0.07% per annum on the current
outstanding aggregate notional amount. The Operating Partnership believes that
it has limited exposure to the extent of non-performance by the counterparties
of the agreements since each counterparty is a major U.S. financial institution,
and the Operating Partnership does not anticipate their non-performance.
Furthermore, any non-performance by the counterparty is offset by non-
performance by the Operating Partnership.
The Operating Partnership also has an interest rate cap agreement for a
notional amount of $228,000,000, for which it will receive payments if the PSA
index exceeds 5.75%, that terminates on December 1, 1999. Any payments by the
counterparty under this agreement have been collaterally assigned to the
provider of certain sureties related to the tax exempt bonds secured by certain
of it's Properties. The Operating Partnership has no payment obligations to the
counterparty with respect to this agreement.
As of December 31, 1997, scheduled maturities for the Operating
Partnership's outstanding mortgage indebtedness are at various dates through
October 1, 2030. During the year ended December 31, 1997, effective interest
cost on certain of these mortgage notes was 7.5%. During the year ended December
31, 1997, the Operating Partnership repaid the outstanding mortgage balances on
29 Properties in the aggregate amount of $113.4 million. Subsequent to December
31, 1997, the Operating Partnership repaid the outstanding mortgage balance on
one Property in the amount of approximately $18.2 million. In February 1996, the
Operating Partnership entered into an interest rate protection agreement, which
hedged the interest rate risk of $50 million of mortgage loans, scheduled to
mature in September 1997 by locking the five year Treasury Rate, commencing
October 1, 1997 through October 1, 2002. This agreement was cancelled in July
1997, at no cost to the Operating Partnership, in conjunction with the Operating
Partnership entering into another interest rate protection agreement to
effectively fix the cost of the Operating Partnership's unsecured notes issued
in November 1997.
F-27
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
As of December 31, 1996, the Operating Partnership had outstanding mortgage
indebtedness of approximately $755.4 million encumbering 88 of the Properties.
The carrying value of such Properties (net of accumulated depreciation of $141.2
million) was $1.1 billion. The mortgage notes payable are generally due in
monthly installments of interest only. In connection with the Properties
acquired during the year ended December 31, 1996, the Operating Partnership
assumed the outstanding mortgage balances on 14 Properties in the aggregate
amount of $142.2 million. In addition, during 1996, in two separate
transactions, certain indebtedness evidenced by tax-exempt bonds encumbering
certain Properties was refinanced resulting in an increase in mortgage
indebtedness affecting these Properties of approximately $112 million. In
connection with one of these transactions, the Operating Partnership also
recorded an extraordinary loss in the amount of approximately $3.5 million,
which represented the write-off of unamortized deferred financing costs from the
early retirement of debt.
During the year ended December 31, 1996, the effective interest cost on
these mortgage notes was 7.87%. During the year ended December 31, 1996, the
Operating Partnership repaid the outstanding mortgage balances on eight
Properties in the aggregate amount of $57 million.
During 1996 the Operating Partnership terminated two interest rate
protection agreements that were initially entered into in connection with two
mortgage loans with notional amounts totaling $64.2 million. These two
agreements effectively converted these two mortgage loans to fixed rate
instruments based on the London Interbank Offered Rate ("LIBOR"). Upon the
termination of these agreements the Operating Partnership received settlement
payments of approximately $230,000.
Aggregate payments of principal on mortgage notes payable for each of the
next five years and thereafter are as follows:
<TABLE>
<CAPTION>
Year Total
------------ ---------
(in thousands)
<S> <C>
1998 $ 61,109
1999 18,130
2000 37,154
2001 185,550
2002 178,797
Thereafter 1,101,819
----------
Total $1,582,559
==========
</TABLE>
12. Lines of Credit
On November 15, 1996, the Operating Partnership completed an agreement
with Morgan Guaranty Trust Company of New York and Bank of America Illinois to
provide the Operating Partnership a $250 million
F-28
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
unsecured line of credit. In September 1997, this agreement was amended to
increase the potential borrowings to $500 million. This line of credit matures
in November 1999 and borrowings generally will bear interest at a per annum rate
of one, two, three or six month LIBOR, plus a certain rate dependent upon the
Operating Partnership's credit rating, which rate is currently 0.45%, and is
subject to an annual facility fee of $750,000. As of December 31, 1997, $235
million was outstanding on this line of credit, bearing interest at a weighted
average rate of 6.46%.
F-29
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
13. Notes
On May 16, 1994, the Operating Partnership issued $125 million of unsecured
senior notes (the "1999 Notes") in a private placement (the "Debt Offering") to
qualified institutional buyers. The 1999 Notes were issued at a discount, which
is being amortized over the life of the 1999 Notes on a straight-line basis. As
of December 31, 1997 the unamortized discount balance was approximately $0.2
million. The 1999 Notes are due May 15, 1999 and bear interest at a rate of
8.5%, which is payable semiannually in arrears on May 15 and November 15. In
February 1996, the Operating Partnership entered into an interest rate
protection agreement that hedged the interest rate risk of the 1999 Notes by
locking the effective four year Treasury Rate commencing May 15, 1999. There was
no current cost to the Operating Partnership for entering into this agreement.
In December 1994, the Operating Partnership registered $500 million in debt
securities pursuant to a debt shelf registration statement (the "Debt Shelf
Registration") of which $100 million of unsecured floating rate notes (the
"Floating Rate Notes") were issued by the Operating Partnership on December 22,
1994 (the "Public Debt Offering"). The Floating Rate Notes were repaid at
maturity on December 22, 1997.
In April 1995, the Operating Partnership issued $125 million of unsecured
fixed rate notes (the "2002 Notes") in connection with the Debt Shelf
Registration in a public debt offering (the "Second Public Debt Offering"). The
2002 Notes were issued at a discount, which is being amortized over the life of
the 2002 Notes on a straight-line basis. As of December 31, 1997 the
unamortized discount balance was approximately $0.6 million. The 2002 Notes are
due on April 15, 2002 and bear interest at 7.95%, which is payable semi-annually
on each October 15 and April 15. The Operating Partnership received net
proceeds of $123.1 million in connection with the Second Public Debt Offering.
Prior to the issuance of the 2002 Notes, the Operating Partnership entered into
an interest rate protection agreement to effectively fix the interest rate cost
of such issuance. The Operating Partnership made a one-time settlement payment
of this protection transaction, which was approximately $0.8 million, which
amount is being amortized over the term of the 2002 Notes. As of December 31,
1997 the unamortized balance of this cost was approximately $0.5 million.
In August 1996, the Operating Partnership issued $150 million of unsecured
fixed rate notes (the "2026 Notes") in connection with the Debt Shelf
Registration in a public debt offering (the "Third Public Debt Offering"). The
2026 Notes are due on August 15, 2026 and bear interest at 7.57%, which is
payable semi-annually in arrears on February 15 and August 15, commencing
February 15, 1997. The 2026 Notes are redeemable at any time after August 15,
2006 by the Operating Partnership pursuant to the terms thereof. The Operating
Partnership received net proceeds of approximately $149 million in connection
with this issuance. Prior to the issuance of the 2026 Notes, the Operating
Partnership entered into an interest rate protection agreement to effectively
fix the interest rate cost of this issuance to 7.5%. The Operating Partnership
received a one-time settlement payment from this transaction, which was
approximately $0.6 million, which amount is being amortized over the term of the
2026 Notes on a straight-line basis. As of December 31, 1997, the unamortized
balance was approximately $0.5 million.
F-30
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
On September 18, 1996, the Operating Partnership filed with the SEC a Form
S-3 Registration Statement to register $500 million of debt securities (the
"1996 Debt Shelf Registration"). The SEC declared this Registration effective
on September 23, 1996.
In October 1997, the Operating Partnership issued $150 million of unsecured
fixed rate notes (the "2017 Notes") in connection with the 1996 Debt Shelf
Registration in a public debt offering (the "October 1997 Public Debt
Offering"). The 2017 Notes were issued at a discount, which is being amortized
over the life of the 2017 Notes on a straight-line basis. As of December 31,
1997 the unamortized discount balance was approximately $1.2 million. The 2017
Notes are due on October 15, 2017 and bear interest at 7.125%, which is payable
semiannually in arrears on April 15 and October 15, commencing April 15, 1998.
The 2017 Notes are redeemable at any time by the Operating Partnership pursuant
to the terms thereof. The Operating Partnership received net proceeds of
approximately $147.4 million in connection with this issuance.
In November 1997, the Operating Partnership issued $200 million of
unsecured fixed rate notes in connection with the 1996 Debt Shelf Registration
in a public debt offering (the "November 1997 Public Debt Offering"). Of the
$200 million issued, $150 million of these notes are due November 15, 2001 (the
"2001 Notes") and bear interest at a rate of 6.55%, which is payable
semiannually in arrears on May 15 and November 15, commencing on May 15, 1998.
The remaining $50 million of these notes are due November 15, 2003 (the "2003
Notes") and bear interest at a rate of 6.65%, which is payable semiannually in
arrears on May 15 and November 15, commencing on May 15, 1998. The 2001 Notes
were issued at a discount, which is being amortized over the life of the 2001
Notes on a straight-line basis. As of December 31, 1997 the unamortized discount
balance was approximately $0.3 million. The Operating Partnership received net
proceeds of approximately $148.9 million in connection with the 2001 Notes. The
2003 Notes were issued at a discount, which is being amortized over the life of
the 2003 Notes on a straight-line basis. As of December 31, 1997 the unamortized
discount balance was approximately $0.1 million. The Operating Partnership
received net proceeds of approximately $49.6 million in connection with the 2003
Notes. Prior to the issuance of the 2001 and 2003 Notes, the Operating
Partnership entered into two interest rate protection agreements to effectively
fix the interest rate costs of such issuances. The Operating Partnership made a
one time settlement payment for each protection transaction, which was
approximately $5 million and $1.7 million, respectively, which are being
amortized over the term of the Notes on a straight-line basis. As of December
31, 1997 the unamortized balance of these costs were approximately $4.9 million
and $1.6 million, respectively.
Included in the note balance are four unsecured note issuances assumed in
connection with the Wellsford Merger. These are discussed in the following
three paragraphs.
In January 1995, $100 million of senior unsecured notes due February 1,
2002 (the "2002-A Notes") were issued. The 2002-A Notes bear interest at a rate
of 9.375%, which is payable semiannually in arrears on August 1 and February 1.
In connection with the assumption of the 2002-A Notes, the Operating Partnership
recorded a premium in the amount of $5.6 million, which is being amortized over
the remaining life of the notes on a straight-line basis. As of December 31,
1997, the unamortized premium balance relating to the 2002-A Notes was
approximately $4.9 million.
F-31
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
In August 1995, $125 million of senior unsecured notes were issued. Of
the $125 million issued, $55 million of these notes are due August 15, 2000 (the
"2000 Notes") and bear interest at a rate of 7.25%, which is payable
semiannually in arrears on February 15 and August 15. The remaining $70 million
of these notes are due August 15, 2005 (the "2005 Notes") and bear interest at a
rate of 7.75%, which is payable semiannually in arrears on February 1 and August
1.
In November 1996, $25 million of medium term unsecured floating rate notes
due November 24, 1999 (the "1999-A Notes") were issued. The 1999-A Notes bear
interest at 90 day LIBOR plus 0.32%, which is payable quarterly in arrears on
the 25th day of each February, May, August and November.
Also included in the note balance are two unsecured note issuances assumed
in connection with the EWR Merger. These are discussed in the following two
paragraphs.
In April 1997, $75 million of senior unsecured notes due April 15, 2004
(the "2004 Notes") were issued. The 2004 Notes bear interest at a rate of 7.5%,
which is payable semiannually in arrears on October 15 and April 15. In
connection with the assumption of the 2004 Notes, the Operating Partnership
recorded a premium in the amount of $1.7 million, which is being amortized over
the remaining life of the notes on a straight-line basis. As of December 31,
1997, the unamortized premium balance relating to the 2004 Notes was
approximately $1.7 million.
In April 1997, $50 million of senior unsecured notes due April 15, 2007
(the "2007 Notes") were issued. The 2007 Notes bear interest at a rate of
7.625%, which is payable semiannually in arrears on October 15 and April 15. In
connection with the assumption of the 2007 Notes, the Operating Partnership
recorded a premium in the amount of $1.6 million, which is being amortized over
the remaining life of the notes on a straight-line basis. As of December 31,
1997, the unamortized premium balance relating to the 2007 Notes was
approximately $1.6 million.
In regard to all of the interest rate protection agreements mentioned in
the previous paragraphs, the Operating Partnership believes that it has limited
exposure to the extent of non-performance by the counterparties of each
agreement since each counterparty is a major U.S. financial institution and the
Operating Partnership does not anticipate their non-performance.
14. Redeemable Preference Interests
In connection with the acquisition of seven of the Properties which closed
in December 1994, the Company, through the Operating Partnership, issued 41,213
preferred interests ("Preference Units") to certain sellers of these Properties.
The Preference Units had a stated value of $1,000 and entitled the holders
thereof to preferential distributions from the Operating Partnership (other than
liquidating distributions) before distributions to the holders of the OP Units
and the Company (provided the Company shall be entitled to receive distributions
necessary to maintain its REIT status under U.S. tax laws). The Operating
Partnership also made loans to certain of these sellers in the aggregate amount
of $15.2 million, which loans are fully collateralized by 465,545 OP Units.
F-32
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
During the year ended December 31, 1995, the Operating Partnership redeemed
1,423 Preference Units for a total redemption price of approximately $1,351,900.
During the year ended December 31, 1996 the Operating Partnership redeemed 1,140
Preference Units for a total redemption price of approximately $1.1 million. On
March 1, 1996, the Operating Partnership exercised its option to convert all of
the Preference Units into OP Units. This conversion resulted in 1,182,835 OP
Units being issued.
15. 9 3/8% Series A Cumulative Redeemable Preference Units
In June 1995, the Company sold 6,120,000 of its 9 3/8% Series A Cumulative
Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share
(liquidation preference $25 per share) (the "Series A Preferred Shares"), at $25
per share. The Company raised gross proceeds of $153 million from this offering
(the "Series A Preferred Share Offering"). The net proceeds of approximately
$148.2 million from the Series A Preferred Share Offering were contributed by
the Company to the Operating Partnership in exchange for 6,120,000 of the
Operating Partnership's 9 3/8% cumulative redeemable preference units (the
"Series A Cumulative Redeemable Preference Units"). The Series A Preferred
Shares are cumulative from the date of original issue and are payable quarterly
on or about the fifteenth of January, April, July and October of each year, at
the annual rate of 9 3/8% of the liquidation preference of $25 per share. The
Series A Preferred Shares are not redeemable prior to June 1, 2000. On or after
June 1, 2000, the Preferred Shares may be redeemed for cash at the option of the
Company in whole or in part, at a redemption price of $25 per share, plus
accrued and unpaid distributions, if any, thereon.
16. 9 1/8% Series B Cumulative Redeemable Preference Units
In November 1995, the Company sold 5,000,000 depositary shares (the "Series
B Depositary Shares"). Each Series B Depositary Share represents a 1/10
fractional interest in a 9 1/8% Series B Cumulative Redeemable Preferred Share
of Beneficial Interest, $0.01 par value per share (the "Series B Preferred
Shares"). The liquidation preference of each of the Series B Preferred shares is
$250.00 (equivalent to $25 per Series B Depositary Share). The Company raised
gross proceeds of $125 million from this offering (the "Series B Preferred Share
Offering"). The net proceeds of approximately $121 million from the Series B
Preferred Share Offering were contributed by the Company to the Operating
Partnership in exchange for 500,000 of the Operating Partnership's 9 1/8%
cumulative redeemable preference units (the "Series B Cumulative Redeemable
Preference Units"). The Series B Preferred Shares are cumulative from the date
of original issue and are payable quarterly on or about the fifteenth day of
January, April, July and October of each year, commencing on January 15, 1996,
at the annual rate of 9 1/8% of the liquidation preference of $25 per Series B
Depositary Share. The Series B Preferred Shares are not redeemable prior to
October 15, 2005. On and after October 15, 2005, the Series B Preferred Shares
may be redeemed for cash at the option of the Company, in whole or in part, at a
redemption price of $250 per share (equivalent to $25 per Series B Depositary
Share), plus accrued and unpaid distributions, if any, thereon.
F-33
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
17. 9 1/8% Series C Cumulative Redeemable Preference Units
In September 1996, the Company sold 4,600,000 depositary shares (the
"Series C Depositary Shares"). Each Series C Depositary Share represents a 1/10
fractional interest in a 9 1/8% Series C Cumulative Redeemable Preferred Share
of Beneficial Interest, $0.01 par value share (the "Series C Preferred Shares").
The liquidation preference of each of the Series C Preferred Shares is $250.00
(equivalent to $25 per Series C Depositary Share). The Company raised gross
proceeds of $115 million from this offering (the "Series C Preferred Share
Offering"). The net proceeds of approximately $111.4 million from the Series C
Preferred Share Offering were contributed by the Company to the Operating
Partnership in exchange for 460,000 of the Operating Partnership's 9 1/8% Series
C cumulative redeemable preference units (the "Series C Cumulative Redeemable
Preference Units"). The Series C Preferred Shares are cumulative from the date
of original issue and are payable quarterly on or about the fifteenth day of
January, April, July and October of each year, commencing on October 15, 1996,
at the annual rate of 9 1/8% of the liquidation preference of $25 per Series C
Depositary Share. The Series C Preferred Shares are not redeemable prior to
September 9, 2006. On and after September 9, 2006, the Series C Preferred Shares
may be redeemed for cash at the option of the Company, in whole or in part, at a
redemption price of $250 per share (equivalent to $25 per Series C Depositary
Share), plus accrued and unpaid distributions, if any, thereon.
18. 8.60% Series D Cumulative Redeemable Preference Units
In May 1997, the Company sold 7,000,000 depositary shares (the "Series D
Depositary Shares"). Each Series D Depositary Share represents a 1/10 fractional
interest in a 8.60% Series D Cumulative Redeemable Preferred Share of Beneficial
Interest, $0.01 par value share (the "Series D Preferred Shares"). The
liquidation preference of each of the Series D Preferred Shares is $250.00
(equivalent to $25 per Series D Depositary Share). The Company raised gross
proceeds of $175 million from this offering (the "Series D Preferred Share
Offering"). The net proceeds of approximately $169.5 million from the Series D
Preferred Share Offering were contributed by the Company to the Operating
Partnership in exchange for 700,000 of the Operating Partnership's 8.60% Series
D cumulative redeemable preference units (the "Series D Cumulative Redeemable
Preference Units"). The Series D Preferred Shares are cumulative from the date
of original issue and are payable quarterly on or about the fifteenth day of
January, April, July and October of each year, commencing on June 15, 1997, at
the annual rate of 8.60% of the liquidation preference of $25 per Series D
Depositary Share. The Series D Preferred Shares are not redeemable prior to July
15, 2007. On and after July 15, 2007, the Series D Preferred Shares may be
redeemed at the option of the Company, in whole or in part, at a redemption
price of $250 per share (equivalent to $25 per Series D Depositary Share), plus
accrued and unpaid distributions, if any, thereon.
F-34
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
19. Series E Cumulative Convertible Preference Units
In May 1997, the Company assumed the Wellsford Series A Cumulative
Convertible Preferred Shares of Beneficial Interest and redesignated them as the
Company's 3,999,800 Series E Cumulative Convertible Preferred Shares of
Beneficial Interest, $0.01 par value per share (liquidation preference $25 per
share) (the "Series E Preferred Shares"). Series E Preferred Shares are
convertible at the option of the holder thereof at any time into Common Shares
at a conversion price of $44.93 per Common Share (equivalent to a conversion
rate of approximately .5564 Common Shares for each Series E Preferred Share). As
of December 31, 1997, 1,300 Series E Preferred Shares had been converted into
Common Shares. The Series E Preferred Shares are cumulative from the date of
original issue and are payable quarterly on or about the first of January,
April, July and October of each year, at the annual rate of 7.00% of the
liquidation preference of $25 per share.
20. 9.65% Series F Cumulative Redeemable Preference Units
In May 1997, the Company assumed the Wellsford Series B Cumulative
Redeemable Preferred Shares of Beneficial Interest and redesignated them as the
Company's 2,300,000 Series F Cumulative Redeemable Preferred Shares of
Beneficial Interest, $0.01 par value per share (liquidation preference $25 per
share) (the "Series F Preferred Shares"). The Series F Preferred Shares are
cumulative from the date of original issue and are payable quarterly on or about
the fifteenth of January, April, July and October of each year, at the annual
rate of 9.65% of the liquidation preference of $25 per share. The Series F
Preferred Shares are not redeemable prior to August 24, 2000. On and after
August 24, 2000, the Series F Preferred Shares may be redeemed for cash at the
option of the Company, in whole or in part, at a redemption price of $25 per
share, plus accrued and unpaid distributions, if any, thereon.
21. 7 1/4% Series G Convertible Cumulative Preference Units
In September 1997, the Company sold 11,000,000 depositary shares (the
"Series G Depositary Shares"). Each Series G Depositary Share represents a 1/10
fractional interest in a 7 1/4% Series G Convertible Cumulative Preferred Share
of Beneficial Interest, $0.01 par value share (the "Series G Preferred Shares").
Series G Depositary Shares representing Series G Preferred Shares are
convertible at the option of the holder thereof at any time into Common Shares
at a conversion price of $58.58 per Common Share (equivalent to a conversion
rate of approximately .4268 Common Shares for each Series G Depositary Share).
The liquidation preference of each of the Series G Preferred Shares is $250.00
per share (equivalent to $25 per Series G Depositary Share). The Company raised
gross proceeds of $275 million from this offering (the "Series G Preferred Share
Offering"). The net proceeds of approximately $264 million from the Series G
Preferred Share Offering were contributed by the Company to the Operating
Partnership in exchange for 1,100,000 of the Operating Partnership's 7 1/4%
Series G convertible cumulative preference units (the "Series G Convertible
Cumulative Preference Units"). In addition, in October 1997, the Company sold
1,650,000 additional Series G Depositary Shares pursuant to an over-allotment
option granted to the underwriters and contributed
F-35
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
to the Operating Partnership net proceeds of approximately $39.6 million in
exchange for 165,000 of the Operating Partnership's 7 1/4% Series G Convertible
Cumulative Preference Units. The Series G Preferred Shares are cumulative from
the date of original issue and are payable quarterly on or about the fifteenth
day of January, April, July and October of each year, commencing on October 15,
1997, at the annual rate of 7 1/4% of the liquidation preference of $25 per
Series G Depositary Share.
22. Employee Transactions
As of December 31, 1997, the outstanding principal balance on the employee
notes issued in connection with Common Shares purchased was, in the aggregate,
approximately $5.14 million. Douglas Crocker II, President and Chief Executive
Officer of the Company and four other officers had purchased an aggregate of
194,000 Common Shares at prices which range from $26 to $31.625 per Common
Share. These purchases were financed by loans made by the Company in the
aggregate amount of approximately $5.4 million. The employee notes accrue
interest, payable in arrears, at rates that range from 6.15% per annum to 7.93%
per annum. Scheduled maturities are at various dates through March 2005. The
employee notes are recourse to Mr. Crocker and the four other officers and are
collateralized by pledges of the 194,000 Common Shares purchased. Subsequent to
December 31, 1997, one of the four other officers repaid his note in full.
In addition, as of December 31, 1997, the outstanding principal balance on
additional notes issued to Mr. Crocker and one other officer was approximately
$0.7 million. These notes accrue interest, payable in arrears, at one month
LIBOR plus 2% per annum. Scheduled maturities are at various dates through
March 2003. The notes are recourse to Mr. Crocker and the other officer and are
collateralized by pledges of options, share awards and Common Shares purchased.
Mr. Crocker has a deferred compensation agreement (the "Deferred
Compensation Agreement") which Deferred Compensation Agreement will provide Mr.
Crocker with a salary benefit after his termination of employment with the
Operating Partnership. If Mr. Crocker's employment is terminated by the
Company, without cause or voluntarily by Mr. Crocker after age 65, he would be
entitled to annual deferred compensation for a 10-year period commencing on the
termination date in an amount equal to his average annual base compensation
(before bonus) for the prior five calendar years, multiplied by a percentage
equal to 10% per year since December 31, 1995. In the event Mr. Crocker's
employment is terminated as a result of his death, permanent disability or
incapacity, he would be entitled to a similar amount except the annual
percentage would be 15%, not 10%. Should Mr. Crocker be terminated for cause or
should he choose to leave voluntarily prior to age 65, without good reason, he
would not be entitled to any deferred compensation. The Operating Partnership
recognized approximately $0.5 million of compensation expense for both 1997 and
1996 related to this Deferred Compensation Agreement.
In addition, Gerald Spector, Executive Vice President and Chief Operating
Officer of the Company, entered into a Deferred Compensation Agreement in 1997,
which agreement provides Mr. Spector with a salary benefit after his termination
of employment with the Company. If Mr. Spector's employment is terminated,
by the Company, without cause or voluntarily by Mr. Spector after age 65, he
would be entitled to annual deferred
F-36
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
compensation for a 15-year period commencing on the termination date in an
amount equal to 75% of his average annual base compensation (before bonus) for
the prior five calendar years, multiplied by a percentage equal to 6.67% per
each year since December 31, 1996. In the event Mr. Spector's employment is
terminated as a result of his death, permanent disability or incapacity, he
would be entitled to a similar amount except that the annual percentage would be
10%, not 6.67%. Should Mr. Spector be terminated for cause or should he choose
to leave voluntarily prior to age 65, without good reason, he would not be
entitled to any deferred compensation. The Operating Partnership recognized
approximately $0.2 million of compensation expense in 1997 related to this
Deferred Compensation Agreement.
The Board of Trustees also approved a share distributions agreement (the
"Share Distributions Agreement") for Mr. Crocker. On January 18, 1996, Mr.
Crocker was issued options to purchase 100,000 Common Shares at the then current
market price of the Common Shares, which vest over a 3-year period and are
effective for 10 years. Pursuant to the terms of the Share Distributions
Agreement, upon the exercise of any of these options, Mr. Crocker would be
entitled to an amount equal to the amount of Common Share distributions that
would have been paid on said shares being exercised had he owned said shares for
the period from January 18, 1996 until the date of the exercise of the options
in question. Mr. Crocker's death or termination of employment would not affect
this agreement with the Company.
In May 1997, Jeffrey Lynford and Edward Lowenthal (trustees of the Company)
each executed a consulting agreement with the Company. Each consulting
agreement has a term of five years from May 30, 1997, the closing date of the
Wellsford Merger. Pursuant to the consulting agreements, each of Messrs.
Lynford and Lowenthal will serve as a senior management consultant to the
Company and will receive compensation at the rate of $200,000 per year plus
reimbursement for reasonable out-of-pocket expenses.
In connection with the EWR Merger, in December 1997, Stephen Evans executed
a consulting agreement with an affiliate of the Company. The consulting
agreement has a term of two years and expires on December 31, 1999. Pursuant to
the consulting agreement, Mr. Evans will serve as a senior management consultant
to the Company and will receive compensation at the rate of $225,000 per year.
Mr. Evans also received an option to purchase 115,500 Common Shares that will
vest in three equal annual installments and will have an exercise price equal to
$50.125 per Common Share. Mr. Evans will also be eligible to participate in all
of the Company's employee benefit plans in which persons in comparable positions
participate, treating Mr. Evans as an employee.
Also in connection with the EWR Merger, in December 1997, Richard Berry
executed an employment agreement with an affiliate of the Company which expires
on December 31, 2000 and provides for cash compensation of $250,000 per annum.
Pursuant to the agreement, Mr. Berry exchanged all unvested restricted shares of
Evans common shares at the time of the EWR Merger into 18,747 restricted Common
Shares of the Company, which will vest on December 31, 2000. Mr. Berry also
received an option to purchase 77,500 Common Shares that will vest in three
equal annual installments and will have an exercise price equal to $50.125 per
Common Share. The
F-37
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
agreement also provided that Mr. Berry will be eligible to participate in all of
the Company's employee benefit plans which persons in comparable positions
participate.
In December 1997, Mr. Berry also entered into a Deferred Compensation
Agreement with the Company, which will pay benefits only in the event Mr.
Berry's employment with the Company is terminated prior to January 1, 2000. In
such a case, the amount payable under Mr. Berry's agreement will equal the value
of any restricted Common Shares received in exchange for EWR common shares which
are forfeited upon his termination of employment. The payment will be made in
two semi-annual installments over the one-year period following termination of
employment, and interest of 9% per annum will accrue on the balance over the
one-year payment period.
The Company has established a defined contribution plan (the "401(k) Plan")
that provides retirement benefits for employees that meet minimum employment
criteria. The Company contributes 100% of the first 4% of eligible compensation
that a participant contributes to the 401(k) Plan. Participants are vested in
the Company's contributions over five years. The Operating Partnership made
contributions in the amount of $0.8 million for the year ended December 31, 1996
and expects to make contributions in the amount of approximately $1.5 million
for the year ended December 31, 1997.
23. Deposits-restricted
Deposits-restricted as of December 31, 1997, primarily included a deposit
in the amount of $20 million held in a third party escrow account made to
provide third party construction financing in connection with the Joint Venture
Agreement. Also, approximately $8.8 million was held in third party escrow
accounts made in connection with the Operating Partnership's disposition of
Diplomat South and for several expected 1998 acquisitions. In addition,
approximately $7.6 million was for tenant security and utility deposits for
certain of the Operating Partnership's Properties.
Deposits-restricted as of December 31, 1996, primarily included deposits in
the amount of approximately $16.4 million held in third party escrow accounts
which were made in connection with five Properties acquired in 1997. In
addition, approximately $3.7 million was for tenant security and utility
deposits for certain of the Operating Partnership's Properties.
24. Gain on Early Extinguishment of Debt
In June 1995, the Operating Partnership paid approximately $12.6 million in
full satisfaction of a $14.6 million mortgage note obligation related to one of
its Properties. As a result, the Operating Partnership recognized a gain of $2
million on the extinguishment of this indebtedness.
F-38
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
25. Summarized Pro Forma Condensed Statement of Operations (unaudited)
The following Summarized Pro Forma Condensed Statement of Operations has
been prepared as if the March 1997 Common Share Offerings, the Series D
Preferred Share Offering, the June 1997 Common Share Offerings, the Wellsford
Merger, the September 1997 Common Share Offering, the Series G Preferred Share
Offering, the Fourth Pubic Debt Offering, the October 1997 Common Share
Offering, the Fifth Pubic Debt Offering, the December 1997 Common Share
Offerings, the EWR Merger, the acquisition of an additional 124 Properties,
including the related assumption of $597.2 million of mortgage indebtedness, the
repayment of $113.4 million of mortgage indebtedness and the disposition of
seven Properties (as described in Note 3, Note 4, Note 6, Note 8, Note 11 and
Note 13 of Notes to Consolidated Financial Statements) had occurred on January
1, 1997. This would result in 98,677,855 Units outstanding. In management's
opinion, the Summarized Pro Forma Condensed Statement of Operations does not
purport to present what actual results would have been had the above
transactions occurred on January 1, 1997, or to project results for any future
period. The amounts presented in the following statement are in thousands
except for OP Unit amounts:
<TABLE>
<CAPTION>
Summarized Pro Forma
Condensed Statement
of Operations
For the Year Ended
December 31, 1997
--------------------
<S> <C>
Total Revenues $1,107,581
==========
Total Expenses 878,989
==========
Pro Forma net income available for OP Units $ 141,824
==========
Pro Forma net income per OP Unit $ 1.44
==========
</TABLE>
26. Employee Share Purchase Plan
Under the Company's Employee Share Purchase Plan certain eligible officers,
trustees and employees of the Company may annually acquire up to $100,000 of
Common Shares of the Company. The aggregate number of Common Shares available
under the Employee Share Purchase Plan shall not exceed 1,000,000, subject to
adjustment by the Board of Trustees. The Common Shares may be purchased
quarterly at a price equal to 85% of the lessor of: (a) the closing price for a
share on the first day of such quarter, and (b) the greater of: (i) the closing
price for a share on the first day of such quarter, and (ii) the average closing
price for a share for all the business days in the quarter. During 1996, the
Company issued 39,458 Common Shares at a net price of $30.44 per share. During
1997, the Company issued 84,183 Common Shares at
F-39
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
net prices that ranged from $35.63 per share to $42.08 per share and raised
approximately $3.2 million in connection therewith. The net proceeds were
contributed to the Operating Partnership in exchange for OP Units.
27. Distribution Reinvestment and Share Purchase Plan
On November 3, 1997, the Company filed with the SEC a Form S-3 Registration
Statement to register 7,000,000 Common Shares pursuant to a Distribution
Reinvestment and Share Purchase Plan. The registration statement was declared
effective on November 25, 1997.
The Distribution Reinvestment and Share Purchase Plan (the "DRIP Plan") of
the Company provides holders of record and beneficial owners of Common Shares,
Preferred Shares, and limited partnership interests in the Operating Partnership
with a simple and convenient method of investing cash distributions in
additional Common Shares. Common Shares may also be purchased on a monthly basis
with optional cash payments made by participants in the Plan and interested new
investors, not currently shareholders of the Company, at the market price of the
Common Shares less a discount ranging between 0% and 5% (as determined in
accordance with the DRIP Plan). The proceeds from the sale were contributed to
the Operating Partnership in exchange for OP Units.
28. Commitments and Contingencies
The Operating Partnership, as an owner of real estate, is subject to
various environmental laws of Federal and local governments. Compliance by the
Operating Partnership with existing laws has not had a material adverse effect
on the Operating Partnership's financial condition and results of operations.
However, the Operating Partnership 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 Operating Partnership does not believe there is any other litigation,
except as mentioned in the previous paragraph, threatened against the Operating
Partnership other than routine litigation arising out of the ordinary course of
business, some of which is expected to be covered by liability insurance, none
of which is expected to have a material adverse effect on the consolidated
financial statements of the Operating Partnership.
In connection with the Joint Venture Agreement, as discussed in Note 7, the
Operating Partnership is obligated to fund an additional $20 million in
connection with the third party construction financing.
In connection with the Wellsford Merger, the Operating Partnership has
provided a standby obligation in the amount of $30 million pursuant to an
agreement entered into with Wellsford Real Properties, Inc., a Maryland
corporation ("WRP"), for the construction financing for a multifamily
development project located in Denver, Colorado. In addition, the Operating
Partnership has provided a $14.8 million credit enhancement with respect to
bonds issued to finance certain public improvements at the multifamily
development project.
F-40
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Management Corp. has lease agreements with an affiliated party covering
office space occupied by the management offices located in Tampa, Florida
(the "Tampa Office") and Chicago, Illinois (the "Chicago Office"). The Tampa
Office agreement, expires on October 31, 2001 and the Chicago Office agreement
expires on July 31, 2000.
Management Corp. also has seven additional lease agreements with
unaffiliated parties covering space occupied by the management offices located
in Dallas, Texas (the "Dallas Office"); Bethesda, Maryland (the "Bethesda
Office"); Denver, Colorado (the "Denver Office"); Seattle, Washington (the
"Seattle Office"); Atlanta, Georgia (the "Atlanta Office"); Scottsdale, Arizona
(the "Scottsdale Office") and Irvine, California (the "Irvine Office"). The
lease agreement for the Dallas Office expires on February 28, 1999; the lease
agreement for the Bethesda Office expires on November 30, 1998; the lease
agreement for the Denver Office expires on December 31, 2002; the lease
agreement for the Seattle Office expires on November 30, 2000; the lease
agreement for the Atlanta Office expires on May 14, 2001; the lease agreement
for the Scottsdale Office expires on July 31, 1999 and the lease agreement for
the Irvine Office expires on July 31, 1998.
Management Corp. also has a lease with an affiliated party covering office
space occupied by the corporate headquarters located in Chicago, Illinois. This
agreement, as amended, expires on July 31, 2001. In addition, commencing
September 1, 1996, Management Corp. increased the office space occupied by its
corporate personnel. The lease agreement covering the additional office space
expires on April 29, 1998.
During the years ended December 31, 1997, 1996 and 1995, total rentals,
including a portion of real estate taxes, insurance, repairs and utilities,
aggregated $1,491,766, $1,020,311 and $1,049,731, respectively.
The minimum basic aggregate rental commitment under the above described
leases in years succeeding December 31, 1997 is as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1998 $1,755,789
1999 1,324,472
2000 1,125,808
2001 710,376
2002 208,318
-------
Total $5,124,763
==========
</TABLE>
F-41
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
29. Transactions with Related Parties
Pursuant to the terms of the partnership agreement for the Operating
Partnership, the Operating Partnership is required to reimburse the Company for
all expenses incurred by the Company in excess of income earned by the Company
through its indirect 1% ownership of various Financing Partnerships. Amounts
paid on behalf of the Company are reflected in the Consolidated Statement of
Operations as general and administrative expenses.
Certain related entities provided services to the Operating Partnership and
the Company. These included, but were not limited to, Rosenberg & Liebentritt,
P.C., which provided legal services and Greenberg & Pociask, Ltd., which
provided tax and accounting services. Fees paid to these related entities
amounted to approximately $1.3 million, $0.7 million and $2.5 million for the
years ended December 31, 1997, 1996 and 1995, respectively. In addition, The
Riverside Agency, Inc., which provided insurance brokerage services, was paid
fees and reimbursed premiums and loss claims in the amount of $0.3 million, $4.1
million and $2.6 million for the years ended December 31, 1997, 1996 and 1995,
respectively. As of December 31, 1997, 1996 and 1995, $643,500, $315,700 and
$366,300, respectively, was owed to Rosenberg & Liebentritt, P.C. for legal fees
incurred in connection with securities offerings, litigation matters, property
acquisitions and other general corporate matters.
Equity Group Investments, Inc. and certain of its subsidiaries, including
Equity Assets Management, Inc., Eagle Flight Services, Equity Properties &
Development, L.P. and EPMC ("EGI"), have provided certain services to the
Operating Partnership and the Company which include, but are not limited to,
financial and accounting services, investor relations, corporate secretarial,
computer and support services, real estate tax evaluation services, market
consulting and research services, financing services, information systems
services and property development services. Fees paid to EGI for these services
amounted to $1.1 million, $1.3 million and $3.4 million for the years ended
December 31, 1997, 1996 and 1995, respectively. Amounts due to EGI were
approximately $74,600, $0.3 million and $1.1 million as of December 31, 1997,
1996 and 1995, respectively.
In connection with the affiliated lease agreements discussed in Note 28,
Management Corp. paid Equity Office Holdings, L.L.C. ("EOH") $145,511, $118,919
and $104,421 in connection with the Chicago Office, $177,793, $137,638 and
$9,783 in connection with the Tampa Office and $632,693, $409,392 and $632,725
in connection with the space occupied by the corporate headquarters for the
years ended December 31, 1997, 1996 and 1995, respectively. Amounts due to EOH
were approximately $59,675 and $46,435 as of December 31, 1997 and 1996,
respectively. As of December 31, 1995, no amounts were owed to EOH.
In connection with the Private Equity Offering and the Shelf Offering, the
Operating Partnership paid Equity Institutional Investors, Inc. ("EII")
consulting fees in the amount of $200,000 for the year ended December 31, 1995.
As of December 31, 1997 and 1996, no amounts were owed to EII for consulting
services.
Artery Property Management, Inc. ("Artery") provided the Operating
Partnership consulting services with regard to property acquisitions and
additional business opportunities. Fees paid for those services and reimbursed
expenses amounted to approximately $0.2 and $0.7 million for the years ended
December 31, 1996 and 1995.
F-42
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Rudnick & Wolfe, a law firm in which Mr. Errol Halperin, a trustee of the
Company, is a partner, provided legal services to the Operating Partnership.
Fees paid to this firm amounted to approximately $2.3 million, $4,300 and
$41,300 for the years ended December 31, 1997, 1996 and 1995.
In addition, the Operating Partnership and the Company have provided
acquisition, asset and property management services to certain related entities
for properties not owned by the Operating Partnership. Fees received for
providing such services were approximately $5.7 million, $6.7 million and $7
million for the years ended December 31, 1997, 1996 and 1995, respectively.
30. Quarterly Financial Data (Unaudited):
The following unaudited quarterly data has been prepared on the basis of a
December 31 year end. The 1997 and 1996 net income per weighted average OP Unit
amounts have been presented and, where appropriate, restated to comply with
Statement of Financial Accounting Standards No. 128, Earnings Per Share. For
further discussion of net income per weighted average OP Unit outstanding and
impact of Statement No. 128, see Note 5 of Notes to Consolidated Financial
Statements. (Amounts are in thousands):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
1997 3/31 6/30 9/30 12/31
---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Total revenues $141,387 $164,937 $203,354 $237,643
======== ======== ======== ========
Net income $ 36,388 $ 38,628 $ 50,320 $ 64,516
======== ======== ======== ========
Weighted average
OP Units outstanding 59,269 66,266 81,134 85,682
======== ======== ======== ========
Net income per weighted
average OP Unit outstanding $ 0.46 $ 0.40 $ 0.42 $ 0.50
======== ======== ======== ========
Net income per weighted
averge OP Unit outstanding -
assuming dilution $ 0.45 $ 0.40 $ 0.41 $ 0.49
======== ======== ======== ========
First Second Third Fourth
Quarter Quarter Quarter Quarter
1996 3/31 6/30 9/30 12/31
---- -------- -------- -------- --------
Total revenues $106,321 $113,267 $124,459 $134,338
======== ======== ======== ========
Net income $ 21,295 $ 23,310 $ 22,111 $ 49,207
======== ======== ======== ========
Weighted average
OP Units outstanding 46,210 50,034 52,583 55,540
======== ======== ======== ========
Net income per weighted
average OP Unit outstanding $ 0.32 $ 0.34 $ 0.29 $ 0.72
======== ======== ======== ========
Net income per weighted
averge OP Unit outstanding -
assuming dilution $ 0.31 $ 0.34 $ 0.28 $ 0.71
======== ======== ======== ========
</TABLE>
31. Subsequent Events
On January 7, 1998, the Operating Partnership acquired Cityscape
Apartments, a 156-unit multifamily property located in St. Louis Park,
Minnesota, from an unaffiliated third party for a purchase price of
approximately $12.3 million.
On January 9, 1998, the Operating Partnership acquired 740 River Drive
Apartments, a 162-unit multifamily property located in St. Paul, Minnesota, from
an unaffiliated third party for a purchase price of approximately $12.8 million,
which included the assumption of mortgage indebtedness of approximately $7
million.
F-43
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
On January 13, 1998, the Operating Partnership acquired Prospect Towers
Apartments, a 157-unit multifamily property, including a vacant parcel of land,
located in Hackensack, New Jersey, from an unaffiliated third party for a
purchase price of approximately $36.3 million, which included the assumption of
mortgage indebtedness of approximately $14.9 million.
On January 16, 1998, the Operating Partnership acquired Park Place
Apartments, a 229-unit multifamily property located in Houston, Texas, from an
unaffiliated third party for a purchase price of approximately $13.6 million,
which included the assumption of mortgage indebtedness of approximately $10.2
million.
On January 16, 1998, the Operating Partnership acquired Park Westend
Apartments, a 312-unit multifamily property located in Richmond, Virginia, from
an unaffiliated third party for a purchase price of approximately $13.3 million,
which included the assumption of mortgage indebtedness of approximately $7.2
million.
On January 27, 1998, the Company completed an offering of 4,000,000
publicly registered Common Shares, which were sold at a price of $50.4375 per
share and contributed to the Operating Partnership net proceeds of approximately
$195.3 million in connection therewith in exchange for OP Units.
On January 29, 1998, the Operating Partnership acquired Emerald Bay at
Winter Park Apartments, a 431-unit multifamily property located in Winter Park,
Florida, from an unaffiliated third party for a purchase price of approximately
$15.7 million.
On February 3, 1998, the Operating Partnership filed with the SEC a Form
S-3 Registration Statement to register $1 billion of debt securities. The SEC
declared this Registration effective on February 27, 1998.
On February 5, 1998, the Operating Partnership acquired Farnham Park
Apartments, a 216-unit multifamily property located in Houston, Texas, from an
unaffiliated third party for a purchase price of approximately $15.7 million,
which included the assumption of mortgage indebtedness of approximately $11.5
million.
On February 18, 1998, the Company completed offerings of 988,340 publicly
registered Common Shares, which were sold at a price of $50.625 per share and
contributed to the Operating Partnership net proceeds of approximately $47.5
million in connection therewith in exchange for OP Units.
On February 23, 1998, the Company completed an offering of 1 million
publicly registered Common Shares, which were sold at a price of $48 per share
and contributed to the Operating Partnership net proceeds of approximately $47.5
million in connection therewith in exchange for OP Units.
On February 25, 1998, the Operating Partnership acquired Plantation
Apartments, a 232-unit multifamily property located in Houston, Texas, from an
unaffiliated third party for a purchase price of approximately $10 million.
On February 27, 1998, the Operating Partnership acquired Balcones Club
Apartments, a 312-unit multifamily property located in Austin, Texas, from an
unaffiliated third party for a purchase price of approximately $12.3 million.
F-44
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Through February 1998, the Company sold approximately 639,000 Common Shares
pursuant to the DRIP Plan and contributed to the Operating Partnership net
proceeds of approximately $31.7 million in connection therewith in exchange for
OP Units.
On March 2, 1998, the Operating Partnership acquired Coach Lantern
Apartments, a 90-unit multifamily property located in Scarborough, Maine, from
an unaffiliated third party for a purchase price of approximately $4.7 million.
On March 2, 1998, the Operating Partnership acquired Foxcroft Apartments, a
104-unit multifamily property located in Scarborough, Maine, from an
unaffiliated third party for a purchase price of approximately $4.9 million.
On March 2, 1998, the Operating Partnership acquired Yarmouth Woods
Apartments, a 138-unit multifamily property located in Yarmouth, Maine, from an
unaffiliated third party for a purchase price of approximately $6.6 million.
On March 2, 1998, the Operating Partnership declared a $0.67 distribution
per OP Unit for the quarter ended March 31, 1998 to OP Unit holders of record on
March 27, 1998. The Operating Partnership also declared a $0.585938
distribution, a $0.570313 distribution, a $0.5375 distribution, a $0.603125
distribution, a $0.4375 distribution and a $0.453125 distribution to the Company
as holder of the Series A Cumulative Redeemable Preference Units, Series B
Cumulative Redeemable Preference Units, Series C Cumulative Redeemable
Preference Units, Series D Cumulative Redeemable Preference Units, Series E
Cumulative Convertible Preference Units, Series F Cumulative Redeemable
Preference Units and Series G Convertible Cumulative Preference Units.
On March 12, 1998, the Operating Partnership disposed of two Properties for
a total sales price of $16.7 million.
F-45
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULE
To the Partners
ERP Operating Limited Partnership
In connection with our audit of the consolidated financial statements of ERP
Operating Limited Partnership referred to in our report dated February 14, 1996,
which financial statements are included in this Form 10-K, we have also audited
the 1995 information in the financial statement schedule listed in the Index to
the Financial Statements and Schedule. In our opinion, this financial statement
schedule presents fairly, in all material respects, the 1995 information
required to be set forth therein.
/s/ GRANT THORNTON LLP
GRANT THORNTON LLP
Chicago, Illinois
February 14, 1996
S-1
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Acquisition
Description Initial Cost to Company (Improvements, net)(1)
- --------------------------------------------------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2300 Elliot Seattle, WA 0 796,700 7,170,461 0 52,545
2900 on First Seattle, WA 0 1,176,400 10,588,096 1,300 204,426
3000 Grand Des Moines, IA 0 858,305 7,827,336 0 1,256,198
7979 Westheimer Houston, TX 0 1,388,400 12,495,280 1,700 964,639
Acacia Creek Scottsdale, AZ 0 6,121,856 35,300,728 0 0
Altamonte San Antonio, TX 14,600,000 1,663,100 14,968,079 1,970 664,704
Amberton Manassas, VA 10,597,067 888,800 8,352,507 11,800 862,260
Arbor Glen Pittsfield Twp, MI 0 1,092,300 9,830,191 0 (0)
Arboretum (GA) Atlanta, GA 0 4,679,400 15,927,313 0 1
Arbors of Brentwood Nashville, TN (D) 404,570 13,189,508 100 918,181
Arbors of Hickory Hollow Nashville, TN (D) 202,285 6,594,754 700 1,613,873
Arbors of Las Colinas Irving, TX 0 1,662,300 14,960,709 1,600 1,119,028
Ashton, The Corona Hills, CA 17,300,000 2,594,264 33,012,228 0 0
Atrium Durham, NC 0 1,122,600 10,103,027 0 7,769
Augusta (WRP) Oklahoma City, OK 0 873,200 7,866,622 0 31,204
Autumn Creek Cordova, TN (E) 1,680,000 9,330,921 1,300 11,719
Bainbridge Durham, NC 0 1,042,900 9,385,579 33,400 918,181
Banyan Lake Boynton Beach, FL 0 2,736,000 11,204,508 2,600 96,561
Bay Club Phoenix, AZ 0 828,100 5,821,759 100 1,222,091
Bay Ridge San Pedro, CA 0 2,385,399 2,180,081 15,701 0
Bayside at the Islands Gilbert, AZ (P) 3,306,484 15,541,586 0 0
Bear Canyon (Evans) Tucson, AZ 0 1,660,608 11,203,464 0 0
Bear Creek Village Denver, CO 0 4,519,700 40,677,102 0 60,349
Blue Swan San Antonio, TX (E) 1,424,800 7,589,821 0 4,359
Bourbon Square Palatine, IL 27,846,353 3,982,600 35,843,025 2,700 2,647,335
Breckenridge Lexington, KY 9,592,152 1,645,800 14,812,310 0 0
Brentwood Vancouver, WA 0 1,318,200 11,863,517 39,021 944,655
Breton Mill Houston, TX (F) 212,720 8,154,404 100 708,380
Bridgecreek Wilsonville, OR 0 1,294,600 11,651,108 5,290 1,079,812
Bridgeport Raleigh, NC 0 1,296,200 11,665,351 500 366,851
Brierwood Jacksonville, FL 0 546,100 4,914,681 5,800 181,788
Brittany Square Tulsa, OK 0 625,000 4,220,662 0 417,992
Brixworth Nashville, TN 0 1,172,100 10,549,371 1,700 116,540
Brookfield Salt Lake City, UT 0 1,152,000 5,673,250 300 7,652
Brookridge Centreville, VA (E) 2,520,000 15,993,105 900 26,748
Burn Brae Dallas, TX 0 1,255,000 11,294,815 0 73,217
Burwick Farms Howell, MI 0 1,102,200 9,919,799 0 3,672
Calais Dallas, TX 0 1,118,900 10,070,076 0 83,333
Cambridge at Hickory Hollow Nashville, TN 0 3,240,000 17,908,952 0 5,763
Cambridge Village Lewisville, TX 0 800,000 8,751,405 800 62,113
Camellero Scottsdale, AZ 11,842,927 1,923,600 17,312,869 1,300 512,137
Canterbury Germantown, MD 31,363,911 2,781,300 26,656,574 0 2,173,671
Canterchase Nashville, TN 5,765,286 862,200 7,759,711 1,400 333,999
Canyon Creek Tucson, AZ 0 834,313 5,840,188 100 405,082
Canyon Crest Views Riverside, CA 0 1,744,640 17,355,155 0 0
Canyon Ridge San Diego, CA 0 4,869,448 11,969,198 0 0
Canyon Sands Phoenix, AZ 8,624,067 1,475,900 13,838,616 16,850 153,409
Cardinal, The Greensboro, NC 7,472,027 1,280,000 11,898,277 1,200 60,113
Carmel Terrace San Diego, CA 0 2,288,300 20,632,540 0 175,737
Carolina Crossing Greensville, SC 0 547,800 4,930,347 0 3,171
Casa Camino Ruiz San Diego, CA 0 3,920,000 9,390,192 2,300 32,792
Casa Capricorn San Diego, CA 0 1,260,100 11,341,085 2,600 89,786
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried at
Close of Period 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
Building &
Apartment Name Location Land Fixtures(A) Total (B)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2300 Elliot Seattle, WA 796,700 7,223,006 8,019,706
2900 on First Seattle, WA 1,177,700 10,792,522 11,970,222
3000 Grand Des Moines, IA 858,305 9,083,534 9,941,839
7979 Westheimer Houston, TX 1,390,100 13,459,919 14,850,019
Acacia Creek Scottsdale, AZ 6,121,856 35,300,728 41,422,584
Altamonte San Antonio, TX 1,665,070 15,632,783 17,297,853
Amberton Manassas, VA 900,600 9,214,767 10,115,367
Arbor Glen Pittsfield Twp, MI 1,092,300 9,830,191 10,922,491
Arboretum (GA) Atlanta, GA 4,679,400 15,927,313 20,606,713
Arbors of Brentwood Nashville, TN 404,670 14,107,689 14,512,359
Arbors of Hickory Hollow Nashville, TN 202,985 8,208,627 88,411,612
Arbors of Las Colinas Irving, TX 1,663,900 16,079,737 17,743,637
Ashton, The Corona Hills, CA 2,594,264 33,012,228 35,606,492
Atrium Durham, NC 1,122,600 10,110,796 11,233,396
Augusta (WRP) Oklahoma City, OK 873,200 7,897,826 8,771,026
Autumn Creek Cordova, TN 1,681,300 9,342,640 11,023,940
Bainbridge Durham, NC 1,076,300 10,303,760 11,380,060
Banyan Lake Boynton Beach, FL 2,738,600 11,301,069 14,039,669
Bay Club Phoenix, AZ 828,200 7,043,850 7,872,050
Bay Ridge San Pedro, CA 2,401,100 2,180,081 4,581,181
Bayside at the Islands Gilbert, AZ 3,306,484 15,541,586 18,848,070
Bear Canyon (Evans) Tucson, AZ 1,660,608 11,203,464 12,864,072
Bear Creek Village Denver, CO 4,519,700 40,737,451 45,257,151
Blue Swan San Antonio, TX 1,424,800 7,594,180 9,018,980
Bourbon Square Palatine, IL 3,985,300 38,490,360 42,475,660
Breckenridge Lexington, KY 1,645,800 14,812,310 16,458,110
Brentwood Vancouver, WA 1,357,221 12,808,172 14,165,393
Breton Mill Houston, TX 212,820 8,862,784 9,075,604
Bridgecreek Wilsonville, OR 1,299,890 12,730,920 14,030,810
Bridgeport Raleigh, NC 1,296,700 12,032,202 13,328,902
Brierwood Jacksonville, FL 551,900 5,096,469 5,648,369
Brittany Square Tulsa, OK 625,000 4,638,654 5,263,654
Brixworth Nashville, TN 1,173,800 10,665,911 11,839,711
Brookfield Salt Lake City, UT 1,152,300 5,680,902 6,833,202
Brookridge Centreville, VA 2,520,900 16,019,853 18,540,753
Burn Brae Dallas, TX 1,255,000 11,368,032 12,623,032
Burwick Farms Howell, MI 1,102,200 9,923,471 11,025,671
Calais Dallas, TX 1,118,900 10,153,409 11,272,309
Cambridge at Hickory Hollow Nashville, TN 3,240,000 17,914,715 21,154,715
Cambridge Village Lewisville, TX 800,800 8,813,518 9,614,318
Camellero Scottsdale, AZ 1,924,900 17,825,006 19,749,906
Canterbury Germantown, MD 2,781,300 28,830,245 31,611,545
Canterchase Nashville, TN 863,600 8,093,710 8,957,310
Canyon Creek Tucson, AZ 834,413 6,245,270 7,079,683
Canyon Crest Views Riverside, CA 1,744,640 17,355,155 19,099,795
Canyon Ridge San Diego, CA 4,869,448 11,969,198 16,838,646
Canyon Sands Phoenix, AZ 1,492,750 13,436,146 14,928,896
Cardinal, The Greensboro, NC 1,281,200 11,898,729 13,179,929
Carmel Terrace San Diego, CA 2,288,300 20,808,277 23,096,577
Carolina Crossing Greensville, SC 547,800 4,933,518 5,481,318
Casa Camino Ruiz San Diego, CA 3,922,300 9,422,984 13,345,284
Casa Capricorn San Diego, CA 1,262,700 11,430,871 12,693,571
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Compute
- ------------------------------------------------------------------------------------ Depreciation in
Accumulated Date of Latest Income
Apartment Name Location Depreciation Construction Statement
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
2300 Elliot Seattle, WA 150,310 1992 30 Years
2900 on First Seattle, WA 666,232 1989-91 30 Years
3000 Grand Des Moines, IA 4,532,177 1970 30 Years
7979 Westheimer Houston, TX 1,133,263 1973 30 Years
Acacia Creek Scottsdale, AZ 32,729 1988-1994 30 Years
Altamonte San Antonio, TX 1,914,056 1985 30 Years
Amberton Manassas, VA 998,358 1986 30 Years
Arbor Glen Pittsfield Twp, MI 21,111 1990 30 Years
Arboretum (GA) Atlanta, GA 1,598 1970 30 Years
Arbors of Brentwood Nashville, TN 2,223,819 1986 30 Years
Arbors of Hickory Hollow Nashville, TN 1,414,692 1986 30 Years
Arbors of Las Colinas Irving, TX 2,360,743 1984/85 30 Years
Ashton, The Corona Hills, CA 28,361 1986 30 Years
Atrium Durham, NC 85,311 1989 30 Years
Augusta (WRP) Oklahoma City, OK 172,697 1986 30 Years
Autumn Creek Cordova, TN 68,100 1991 30 Years
Bainbridge Durham, NC 1,434,370 1984 30 Years
Banyan Lake Boynton Beach, FL 250,216 1986 30 Years
Bay Club Phoenix, AZ 1,233,244 1976 30 Years
Bay Ridge San Pedro, CA 52,595 1987 30 Years
Bayside at the Islands Gilbert, AZ 15,060 1989 30 Years
Bear Canyon (Evans) Tucson, AZ 10,494 1996 30 Years
Bear Creek Village Denver, CO 837,574 1987 30 Years
Blue Swan San Antonio, TX 59,138 1985-1994 30 Years
Bourbon Square Palatine, IL 5,536,065 1984-87 30 Years
Breckenridge Lexington, KY 32,070 1986-1987 30 Years
Brentwood Vancouver, WA 1,231,183 1990 30 Years
Breton Mill Houston, TX 1,355,393 1986 30 Years
Bridgecreek Wilsonville, OR 1,705,010 1987 30 Years
Bridgeport Raleigh, NC 1,755,355 1990 30 Years
Brierwood Jacksonville, FL 275,998 1974 30 Years
Brittany Square Tulsa, OK 2,234,419 1982 30 Years
Brixworth Nashville, TN 532,581 1985 30 Years
Brookfield Salt Lake City, UT 52,370 1985 30 Years
Brookridge Centreville, VA 113,182 1989 30 Years
Burn Brae Dallas, TX 248,625 1984 30 Years
Burwick Farms Howell, MI 86,052 1991 30 Years
Calais Dallas, TX 225,361 1986 30 Years
Cambridge at Hickory Hollow Nashville, TN 166,041 1997 30 Years
Cambridge Village Lewisville, TX 122,405 1987 30 Years
Camellero Scottsdale, AZ 1,622,709 1979 30 Years
Canterbury Germantown, MD 3,159,698 1986 30 Years
Canterchase Nashville, TN 405,797 1985 30 Years
Canyon Creek Tuscon, AZ 1,042,284 1986 30 Years
Canyon Crest Views Riverside, CA 14,860 1982-1983 30 Years
Canyon Ridge San Diego, CA 13,122 1989 30 Years
Canyon Sands Phoenix, AZ 826,111 1983 30 Years
Cardinal, The Greensboro, NC 382,792 1994 30 Years
Carmel Terrace San Diego, CA 2,338,102 1988-89 30 Years
Carolina Crossing Greensville, SC 43,718 1988-89 30 Years
Casa Camino Ruiz San Diego, CA 111,041 1976-1986 30 Years
Casa Capricorn San Diego, CA 522,582 1981 30 Years
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Company (Improvements, net)(1)
- ---------------------------------------------------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Casa Cordoba Tallahassee, FL 0 307,055 2,732,177 0 846,277
Casa Cortez Tallahassee, FL 0 120,590 1,196,857 0 494,584
Cascade at Landmark Alexandria, VA 0 3,601,000 19,649,825 1,600 69,440
Catalina Shores Las Vegas, NV 0 1,222,200 10,999,974 4,800 484,568
Catalina Shores (WRP) Las Vegas, NV 0 1,427,200 12,844,577 0 15,045
Cedar Crest Overland Park, KS 0 2,159,800 19,438,107 900 846,386
Cedars, The Charlotte, NC 0 2,025,300 18,139,423 0 88,336
Celebration Westchase Houston, TX 0 2,204,590 6,312,399 100 866,081
Champion Oaks Houston, TX 7,050,922 931,900 8,519,479 0 203,859
Chandler Court Chandler, AZ 0 1,352,600 12,172,974 500 408,378
Chandler's Bay Kent, WA 0 1,503,400 13,530,223 3,500 666,513
Chantecleer Lakes Naperville, IL (E) 6,688,000 16,327,809 900 21,615
Chaparral Largo, FL 0 303,100 6,169,465 0 2,749,681
Charter Club Everett, WA 0 998,700 8,988,560 2,400 252,157
Chartwell Court Houston, TX 0 1,215,000 12,820,142 400 95
Cherry Hill Seattle, WA 0 700,100 6,301,194 0 10,087
Chestnut Hills Tacoma, WA 0 756,300 6,806,382 0 59,907
Cheyenne Crest Colorado Springs, CO 0 73,950 3,936,559 100 802,593
Chimneys Charlotte, NC 0 904,700 8,141,844 0 4,184
Cierra Crest Denver, CO 0 4,800,000 34,825,500 600 5,619
Cimarron Ridge Denver, CO 0 1,591,100 14,319,997 0 77,597
Clarion Decatur, GA 0 1,501,900 13,517,171 0 6,665
Classic, The Stamford, CT 0 2,880,000 19,881,820 900 12,854
Cloisters On The Green Lexington, KY 0 187,074 2,193,726 0 1,484,959
Club at Tanasbourne Hillsboro, OR 0 3,520,000 16,259,589 800 317,522
Club at the Green Beaverton, OR 0 2,030,150 12,601,596 0 274,120
Colinas Pointe Denver, CO 0 1,587,400 14,287,051 0 43,001
Concorde Bridge Overland Park, KS 0 1,972,400 17,751,898 0 12,979
Copper Creek (WRP) Phoenix, AZ 0 1,017,400 9,156,964 0 29,668
Copperfield (WRP) San Antonio, TX 0 791,200 7,121,171 0 144,095
Country Brook Chandler, AZ (P) 1,505,219 29,485,866 0 0
Country Club I Silver Spring, MD 7,051,066 1,119,500 10,815,232 1,457 556,907
Country Club II Silver Spring, MD 5,817,446 850,000 8,255,502 2,294 23,886
Country Club Village (WRP) Seattle, WA 0 1,150,500 10,354,697 0 19,629
Country Gables Beaverton, OR 8,538,246 1,580,500 14,240,626 0 209,183
Country Ridge Farmington Hills, MI 0 1,605,800 14,452,066 16,150 449,918
Countryside (WRP) San Antonio, TX 0 667,500 6,007,294 100 141,248
Creekside Oaks Walnut Creek, CA 11,394,343 2,167,300 19,505,628 3,300 575,111
Creekside Village Mountlake Terrace, WA 15,536,616 2,802,900 25,226,096 4,700 664,333
Creekwood Charlotte, NC 0 1,859,300 16,733,418 0 6,559
Crescent at Cherry Creek Denver, CO (E) 2,592,000 15,119,233 900 8,552
Crossing at Green Valley (WRP) Las Vegas, NV 0 2,408,500 21,676,899 0 45,437
Crosswinds St. Petersburg, FL 0 1,561,200 5,789,894 0 0
Crown Court (WRP) Phoenix, AZ 0 3,156,600 28,409,516 0 193,587
Crystal Creek Phoenix, AZ 0 952,900 8,576,084 600 366,894
Crystal Village Attleboro, MA 0 1,365,000 4,956,700 2,700 24,183
Cypress Point Las Vegas, NV 0 953,800 8,583,719 5,890 530,211
Dartmouth Woods Denver, CO 4,396,157 1,608,000 10,815,913 1,800 63,769
Dawntree Carrollton, TX 0 1,204,600 10,841,783 900 1,054,940
Deerwood (Corona) Corona, CA 0 4,740,000 20,295,433 600 37,163
Deerwood (SD) San Diego, CA 0 2,075,700 18,680,801 6,395 2,903,044
Deerwood Meadows Greensboro, NC 0 986,643 6,906,503 100 749,467
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of
Description Period 12/31/97
- ----------------------------------------------------------------------------------------------------------------
Building & Accumulated
Apartment Name Location Land Fixtures(A) Total(B) Depreciation
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Casa Cordoba Tallahassee, FL 307,055 3,578,454 3,885,509 2,527,797
Casa Cortez Tallahassee, FL 120,590 1,691,441 1,812,031 1,129,397
Cascade at Landmark Alexandria, VA 3,602,600 19,719,265 23,321,865 431,609
Catalina Shores Las Vegas, NV 1,227,000 11,484,542 12,711,542 1,461,633
Catalina Shores (WRP) Las Vegas, NV 1,427,200 12,859,622 14,286,822 274,961
Cedar Crest Overland Park, KS 2,160,700 20,284,492 22,445,192 887,080
Cedars, The Charlotte, NC 2,025,300 18,227,759 20,253,059 38,641
Celebration Westchase Houston, TX 2,204,690 7,178,480 9,383,170 1,385,691
Champion Oaks Houston, TX 931,900 8,723,338 9,655,238 1,075,300
Chandler Court Chandler, AZ 1,353,100 12,581,352 13,934,452 747,295
Chandler's Bay Kent, WA 1,506,900 14,196,736 15,703,636 1,685,964
Chantecleer Lakes Naperville, IL 6,688,900 16,349,424 23,038,324 117,084
Chaparral Largo, FL 303,100 8,919,146 9,222,246 5,573,973
Charter Club Everett, WA 1,001,100 9,240,717 10,241,817 1,315,175
Chartwell Court Houston, TX 1,215,400 12,820,237 14,035,637 11,536
Cherry Hill Seattle, WA 700,100 6,311,281 7,011,381 133,334
Chestnut Hills Tacoma, WA 756,300 6,866,289 7,622,589 150,043
Cheyenne Crest Colorado Springs, CO 74,050 4,739,152 4,813,202 864,281
Chimneys Charlotte, NC 904,700 8,146,028 9,050,728 70,526
Cierra Crest Denver, CO 4,800,600 34,831,119 39,631,719 71,391
Cimarron Ridge Denver, CO 1,591,100 14,397,594 15,988,694 308,253
Clarion Decatur, GA 1,501,900 13,523,836 15,025,736 111,794
Classic, The Stamford, CT 2,880,900 19,894,674 22,775,574 175,445
Cloisters On The Green Lexington, KY 187,074 3,678,685 3,865,759 2,536,077
Club at Tanasbourne Hillsboro, OR 3,520,800 16,577,111 20,097,911 322,537
Club at the Green Beaverton, OR 2,030,150 12,875,716 14,905,866 335,656
Colinas Pointe Denver, CO 1,587,400 14,330,052 15,917,452 304,668
Concorde Bridge Overland Park, KS 1,972,400 17,764,877 19,737,277 145,402
Copper Creek (WRP) Phoenix, AZ 1,017,400 9,186,632 10,204,032 193,496
Copperfield (WRP) San Antonio, TX 791,200 7,265,266 8,056,466 169,373
Country Brook Chandler, AZ 1,505,219 29,485,866 30,991,085 24,552
Country Club I Silver Spring, MD 1,120,957 11,372,139 12,493,096 1,239,522
Country Club II Silver Spring, MD 852,294 8,279,388 9,131,682 838,309
Country Club Village (WRP) Seattle, WA 1,150,500 10,374,326 11,524,826 216,195
Country Gables Beaverton, OR 1,580,500 14,449,809 16,030,309 397,356
Country Ridge Farmington Hills, MI 1,621,950 14,901,984 16,523,934 868,662
Countryside (WRP) San Antonio, TX 667,600 6,148,542 6,816,142 143,873
Creekside Oaks Walnut Creek, CA 2,170,600 20,080,738 22,251,338 768,339
Creekside Village Mountlake Terrace, WA 2,807,600 25,890,429 28,698,029 2,981,611
Creekwood Charlotte, NC 1,859,300 16,739,977 18,599,277 142,811
Crescent at Cherry Creek Denver, CO 2,592,900 15,127,785 17,720,685 106,269
Crossing at Green Valley (WRP) Las Vegas, NV 2,408,500 21,722,336 24,130,836 459,509
Crosswinds St. Petersburg, FL 1,561,200 5,789,894 7,351,094 77,892
Crown Court (WRP) Phoenix, AZ 3,156,600 28,603,103 31,759,703 602,508
Crystal Creek Phoenix, AZ 953,500 8,942,978 9,896,478 864,913
Crystal Village Attleboro, MA 1,367,700 4,980,883 6,348,583 7,413
Cypress Point Las Vegas, NV 959,690 9,113,930 10,073,620 1,165,833
Dartmouth Woods Denver, CO 1,609,800 10,879,682 12,489,482 316,417
Dawntree Carrollton, TX 1,205,500 11,896,723 13,102,223 1,434,699
Deerwood (Corona) Corona, CA 4,740,600 20,332,596 25,073,196 151,497
Deerwood (SD) San Diego, CA 2,082,095 21,583,845 23,665,940 2,905,131
Deerwood Meadows Greensboro, NC 986,743 7,655,970 8,642,713 1,298,270
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Description Compute
- ---------------------------------------------------------------------- Depreciation in
Date of Latest Income
Apartment Name Location Construction Statement(C)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Casa Cordoba Tallahassee, FL 1972/1973 30 Years
Casa Cortez Tallahassee, FL 1970 30 Years
Cascade at Landmark Alexandria, VA 1990 30 Years
Catalina Shores Las Vegas, NV 1989 30 Years
Catalina Shores (WRP) Las Vegas, NV 1989 30 Years
Cedar Crest Overland Park, KS 1986 30 Years
Cedars, The Charlotte, NC 1983 30 Years
Celebration Westchase Houston, TX 1979 30 Years
Champion Oaks Houston, TX 1984 30 Years
Chandler Court Chandler, AZ 1987 30 Years
Chandler's Bay Kent, WA 1989 30 Years
Chantecleer Lakes Naperville, IL 1986 30 Years
Chaparral Largo, FL 1976 30 Years
Charter Club Everett, WA 1991 30 Years
Chartwell Court Houston, TX 1995 30 Years
Cherry Hill Seattle, WA 1991 30 Years
Chestnut Hills Tacoma, WA 1991 30 Years
Cheyenne Crest Colorado Springs, CO 1984 30 Years
Chimneys Charlotte, NC 1974 30 Years
Cierra Crest Denver, CO 1996 30 Years
Cimarron Ridge Denver, CO 1984 30 Years
Clarion Decatur, GA 1990 30 Years
Classic, The Stamford, CT 1990 30 Years
Cloisters On The Green Lexington, KY 1974 30 Years
Club at Tanasbourne Hillsboro, OR 1990 30 Years
Club at the Green Beaverton, OR 1991 30 Years
Colinas Pointe Denver, CO 1986 30 Years
Concorde Bridge Overland Park, KS 1973 30 Years
Copper Creek (WRP) Phoenix, AZ 1984 30 Years
Copperfield (WRP) San Antonio, TX 1984 30 Years
Country Brook Chandler, AZ 1986-1996 30 Years
Country Club I Silver Spring, MD 1980 30 Years
Country Club II Silver Spring, MD 1982 30 Years
Country Club Village (WRP) Seattle, WA 1991 30 Years
Country Gables Beaverton, OR 1991 30 Years
Country Ridge Farmington Hills, MI 1986 30 Years
Countryside (WRP) San Antonio, TX 1980 30 Years
Creekside Oaks Walnut Creek, CA 1974 30 Years
Creekside Village Mountlake Terrace, WA 1987 30 Years
Creekwood Charlotte, NC 1987-1990 30 Years
Crescent at Cherry Creek Denver, CO 1994 30 Years
Crossing at Green Valley (WRP) Las Vegas, NV 1986 30 Years
Crosswinds St. Petersburg, FL 1986 30 Years
Crown Court (WRP) Phoenix, AZ 1987 30 Years
Crystal Creek Phoenix, AZ 1985 30 Years
Crystal Village Attleboro, MA 1974 30 Years
Cypress Point Las Vegas, NV 1989 30 Years
Dartmouth Woods Denver, CO 1990 30 Years
Dawntree Carrollton, TX 1982 30 Years
Deerwood (Corona) Corona, CA 1992 30 Years
Deerwood (SD) San Diego, CA 1990 30 Years
Deerwood Meadows Greensboro, NC 1986 30 Years
</TABLE>
S-3
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Acquisition
Description Initial Cost to Company (Improvements, net)(1)
- ----------------------------------------------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Del Coronado Mesa, AZ (O) 1,963,200 17,669,207 1,200 360,176
Desert Park Las Vegas, NV 0 1,085,400 9,401,015 0 631,659
Desert Sands Phoenix, AZ 8,618,262 1,464,200 13,177,336 16,850 765,588
Doral Louisville, KY 0 96,607 1,526,628 0 2,665,189
Dos Caminos (WRP) Phoenix, AZ 0 1,727,900 15,551,044 0 74,234
Eagle Canyon Chino Hills, CA 0 1,806,800 16,261,336 2,100 133,967
Eagle Rim Redmond, WA 0 976,200 8,785,605 1,600 370,746
East Pointe Charlotte, NC 9,634,931 1,364,100 12,276,563 1,800 869,258
Eastland on the Lake Columbus, OH 0 817,400 7,356,350 0 8,979
Edgewood Woodinville, WA 6,041,999 1,068,200 9,613,388 1,900 362,053
Emerald Place Bermuda Dunes, CA 0 954,400 8,589,110 2,100 539,453
Essex Place Overland Park, KS 0 1,831,900 16,486,600 3,500 1,503,929
Ethans Glen III Kansas City, MO 2,366,364 244,100 2,197,138 0 (0)
Ethans Ridge II Kansas City, MO 10,991,981 1,465,500 13,189,192 0 0
Ethans Ridge I Kansas City, MO 16,232,216 1,945,900 17,513,216 0 0
Farmington Gates Germantown, TN 0 969,700 8,727,328 0 0
Firdale Village (WRP) Seattle, WA 0 2,279,400 20,514,917 0 92,426
Flying Sun Phoenix, AZ 0 87,120 2,035,537 100 178,012
Forest Ridge Arlington, TX 0 2,339,300 21,053,447 23,400 893,265
Forest Valley (WRP) San Antonio, TX 0 590,000 5,310,328 0 33,906
Fountain Creek Phoenix, AZ 0 686,000 6,173,818 500 233,154
Fountain Place I Eden Prairie, MN 24,676,652 2,399,900 21,599,215 0 0
Fountain Place II Eden Prairie, MN 12,612,600 1,226,500 11,038,139 0 0
Fountainhead Combined San Antonio, TX 23,275,000 3,617,449 13,446,560 0 1,317,395
Fountains at Flamingo Las Vegas, NV 0 3,180,900 28,628,533 2,200 543,785
Four Lakes Lisle, IL 10,344,569 2,465,000 13,178,449 0 6,778,000
Four Lakes 5 Lisle, IL 39,680,000 600,000 16,530,115 0 3,193,317
Fox Run (AR) Little Rock, AR 5,481,038 422,014 4,053,552 0 4,873,142
Fox Run (WA) Federal Way, WA 0 638,500 5,746,956 1,200 430,801
Foxchase Grand Prairie, TX 0 781,500 7,559,700 0 187,368
Frey Road Atlanta, GA 19,700,000 2,464,900 22,183,783 2,300 957,611
Garden Lake Riverdale, GA 0 1,464,500 13,180,548 0 182
Gatehouse at Pine Lake Plantation, FL 0 1,886,200 16,975,382 10,400 303,635
Gatehouse on the Green Pembroke Pines, FL 0 2,216,800 19,951,085 11,400 336,832
Gates of Redmond Combined Redmond, WA 9,974,725 3,603,100 18,867,454 0 (0)
Gateway Villas (Evans) Scottsdale, AZ 0 1,431,048 14,901,923 0 0
Geary Court Yard San Francisco, CA 17,709,692 1,719,400 15,474,355 0 0
Georgian Woods II Wheaton, MD 10,507,869 2,049,000 19,287,578 4,400 1,573,039
Glen Eagle Greenville, SC 0 833,500 7,503,698 0 2,898
Glenlake Glendale Heights, IL 15,045,000 5,040,000 16,663,439 500 4,136
Glenridge Colorado Springs, CO (F) 884,688 4,466,900 100 577,000
Gold Pointe (WRP) Tacoma, WA 0 528,800 4,759,015 0 3,634
Governor's Place Augusta, GA 0 347,355 2,518,146 0 845,541
Governor's Pointe Roswell, GA (E) 3,744,000 24,480,337 1,300 32,433
Greengate Marietta, GA 0 132,979 1,476,005 0 1,186,277
Greenwich Woods Silver Spring, MD 17,752,586 3,095,700 29,073,395 5,300 1,686,629
Greenwood Forest Little Rock, AR 3,562,675 559,038 1,736,549 0 2,705,648
Greenwood Village (Evans) Tempe, AZ (P) 2,118,781 17,222,332 0 0
Grey Eagle Greenville, SC 0 725,200 6,527,253 0 2,105
Habitat Orlando, FL 0 600,000 494,032 0 5,792,585
Hammock's Place Miami, FL (F) 319,080 12,216,608 100 699,083
Hampton Green San Antonio, TX 0 1,561,830 2,962,670 0 1,997,624
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried at
Description Close of Period 12/31/97
- ----------------------------------------------------------------------------------------------------------------
Building & Accumulated
Apartment Name Location Land Fixtures (A) Total (B) Depreciation
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Del Coronado Mesa, AZ 1,964,400 18,029,383 19,993,783 1,641,724
Desert Park Las Vegas, NV 1,085,400 10,032,674 11,118,074 782,460
Desert Sands Phoenix, AZ 1,481,050 13,942,924 15,423,974 826,194
Doral Louisville, KY 96,607 4,191,817 4,288,424 1,937,083
Dos Caminos (WRP) Phoenix, AZ 1,727,900 15,625,277 17,353,177 328,887
Eagle Canyon Chino Hills, CA 1,808,900 16,395,303 18,204,203 758,955
Eagle Rim Redmond, WA 977,800 9,156,351 10,134,151 1,077,791
East Pointe Charlotte, NC 1,365,900 13,145,821 14,511,721 1,966,632
Eastland on the Lake Columbus, OH 817,400 7,365,329 8,182,729 70,714
Edgewood Woodinville, WA 1,070,100 9,975,441 11,045,541 1,195,349
Emerald Place Bermuda Dunes, CA 956,500 9,128,563 10,085,063 1,350,476
Essex Place Overland Park, KS 1,835,400 17,990,529 19,825,929 2,450,711
Ethans Glen III Kansas City, MO 244,100 2,197,138 2,441,238 4,694
Ethans Ridge II Kansas City, MO 1,465,500 13,189,192 14,654,692 27,725
Ethans Ridge I Kansas City, MO 1,945,900 17,513,216 19,459,116 36,736
Farmington Gates Germantown, TN 969,700 8,727,328 9,697,028 18,719
Firdale Village (WRP) Seattle, WA 2,279,400 20,607,343 22,886,743 440,440
Flying Sun Phoenix, AZ 87,220 2,213,549 2,300,769 424,499
Forest Ridge Arlington, TX 2,362,700 21,946,712 24,309,412 1,328,842
Forest Valley (WRP) San Antonio, TX 590,000 5,344,234 5,934,234 122,414
Fountain Creek Phoenix, AZ 686,500 6,406,972 7,093,472 606,748
Fountain Place I Eden Prairie, MN 2,399,900 21,599,215 23,999,115 44,795
Fountain Place II Eden Prairie, MN 1,226,500 11,038,139 12,264,639 22,795
Fountainhead Combined San Antonio, TX 3,617,449 14,763,955 18,381,404 5,588,082
Fountains at Flamingo Las Vegas, NV 3,183,100 29,172,318 32,355,418 3,311,794
Four Lakes Lisle, IL 2,465,000 19,956,449 22,421,449 9,091,003
Four Lakes 5 Lisle, IL 600,000 19,723,432 20,323,432 6,372,664
Fox Run (AR) Little Rock, AR 422,014 8,926,694 9,348,708 4,858,010
Fox Run (WA) Federal Way, WA 639,700 6,177,757 6,817,457 769,830
Foxchase Grand Prairie, TX 781,500 7,747,067 8,528,567 141,655
Frey Road Atlanta, GA 2,467,200 23,141,394 25,608,594 2,841,384
Garden Lake Riverdale, GA 1,464,500 13,180,730 14,645,230 111,552
Gatehouse at Pine Lake Plantation, FL 1,896,600 17,279,017 19,175,617 653,865
Gatehouse on the Green Pembroke Pines, FL 2,228,200 20,287,917 22,516,117 760,545
Gates of Redmond Combined Redmond, WA 3,603,100 18,867,454 22,470,554 259,422
Gateway Villas (Evans) Scottsdale, AZ 1,431,048 14,901,923 16,332,971 12,822
Geary Court Yard San Francisco, CA 1,719,400 15,474,355 17,193,755 31,439
Georgian Woods II Wheaton, MD 2,053,400 20,860,617 22,914,017 2,317,407
Glen Eagle Greenville, SC 833,500 7,506,596 8,340,096 64,798
Glenlake Glendale Heights, IL 5,040,500 16,667,575 21,708,075 3,350
Glenridge Colorado Springs, CO 884,788 5,043,900 5,928,688 867,818
Gold Pointe (WRP) Tacoma, WA 528,800 4,762,649 5,291,449 100,860
Governor's Place Augusta, GA 347,355 3,363,687 3,711,042 2,157,305
Governor's Pointe Roswell, GA 3,745,300 24,512,770 28,258,070 149,002
Greengate Marietta, GA 132,979 2,662,282 2,795,261 1,392,136
Greenwich Woods Silver Spring, MD 3,101,000 30,760,024 33,861,024 3,449,631
Greenwood Forest Little Rock, AR 559,038 4,442,197 5,001,235 2,447,887
Greenwood Village (Evans) Tempe, AZ 2,118,781 17,222,332 19,341,113 15,417
Grey Eagle Greenville, SC 725,200 6,529,358 7,254,558 55,944
Habitat Orlando, FL 600,000 6,286,617 6,886,617 3,869,251
Hammock's Place Miami, FL 319,180 12,915,691 13,234,871 1,988,058
Hampton Green San Antonio, TX 1,561,830 4,960,294 6,522,124 963,905
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Description Compute
- ------------------------------------------------------------------ Depreciation in
Date of Latest Income
Apartment Name Location Construction Statement
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Del Coronado Mesa, AZ 1985 30 Years
Desert Park Las Vegas, NV 1987 30 Years
Desert Sands Phoenix, AZ 1982 30 Years
Doral Louisville, KY 1972 30 Years
Dos Caminos (WRP) Phoenix, AZ 1983 30 Years
Eagle Canyon Chino Hills, CA 1985 30 Years
Eagle Rim Redmond, WA 1986-88 30 Years
East Pointe Charlotte, NC 1987 30 Years
Eastland on the Lake Columbus, OH 1973 30 Years
Edgewood Woodinville, WA 1986 30 Years
Emerald Place Bermuda Dunes, CA 1988 30 Years
Essex Place Overland Park, KS 1970-84 30 Years
Ethans Glen III Kansas City, MO 1990 30 Years
Ethans Ridge II Kansas City, MO 1990 30 Years
Ethans Ridge I Kansas City, MO 1988 30 Years
Farmington Gates Germantown, TN 1976 30 Years
Firdale Village (WRP) Seattle, WA 1986 30 Years
Flying Sun Phoenix, AZ 1983 30 Years
Forest Ridge Arlington, TX 1984/85 30 Years
Forest Valley (WRP) San Antonio, TX 1983 30 Years
Fountain Creek Phoenix, AZ 1984 30 Years
Fountain Place I Eden Prairie, MN 1989 30 Years
Fountain Place II Eden Prairie, MN 1989 30 Years
Fountainhead Combined San Antonio, TX 1985/1987 30 Years
Fountains at Flamingo Las Vegas, NV 1989-91 30 Years
Four Lakes Lisle, IL 1968/1988* 30 Years
Four Lakes 5 Lisle, IL 1968/1988* 30 Years
Fox Run (AR) Little Rock, AR 1974 30 Years
Fox Run (WA) Federal Way, WA 1988 30 Years
Foxchase Grand Prairie, TX 1983 30 Years
Frey Road Atlanta, GA 1985 30 Years
Garden Lake Riverdale, GA 1991 30 Years
Gatehouse at Pine Lake Plantation, FL 1990 30 Years
Gatehouse on the Green Pembroke Pines, FL 1990 30 Years
Gates of Redmond Combined Redmond, WA 1979/1982-1989 30 Years
Gateway Villas (Evans) Scottsdale, AZ 1995 30 Years
Geary Court Yard San Francisco, CA 1990 30 Years
Georgian Woods II Wheaton, MD 1967 30 Years
Glen Eagle Greenville, SC 1990 30 Years
Glenlake Glendale Heights, IL 1988 30 Years
Glenridge Colorado Springs, CO 1985 30 Years
Gold Pointe (WRP) Tacoma, WA 1990 30 Years
Governor's Place Augusta, GA 1972 30 Years
Governor's Pointe Roswell, GA 1982-1986 30 Years
Greengate Marietta, GA 1971 30 Years
Greenwich Woods Silver Spring, MD 1967 30 Years
Greenwood Forest Little Rock, AR 1975 30 Years
Greenwood Village (Evans) Tempe, AZ 1984 30 Years
Grey Eagle Greenville, SC 1991 30 Years
Habitat Orlando, FL 1974 30 Years
Hammock's Place Miami, FL 1986 30 Years
Hampton Green San Antonio, TX 1979 30 Years
</TABLE>
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Company (Improvements, net) (1)
- ---------------------------------------------------------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hamptons (WRP) Tacoma, WA 6,025,964 1,119,200 10,072,905 0 62,118
Harborview San Pedro, CA 12,510,709 6,400,000 12,608,900 2,400 97,863
Harbour Landing Corpus Christi, TX 0 761,600 6,854,524 3,400 844,168
Harrison Park (Evans) Tucson, AZ (P) 1,265,094 16,314,580 0 0
Hathaway Long Beach, CA 0 2,512,200 22,609,720 300 362,145
Hawthorne (Evans) Phoenix, AZ 0 2,697,050 15,669,963 0 0
Hearthstone San Antonio, TX 0 1,035,700 3,375,132 100 358,136
Heritage Park (WRP) Oklahoma City, OK 0 1,325,600 11,941,770 0 52,391
Heron Cove Coral Springs, FL 0 823,000 7,997,360 0 529,581
Heron Landing (K) Lauderhill, FL 0 707,100 6,363,784 4,700 336,641
Heron Pointe Boynton Beach, FL 0 1,546,700 7,883,775 0 0
Heron Run Plantation, FL 0 917,800 8,854,001 0 647,809
Hickory Ridge Greenville, SC 0 285,800 2,571,956 0 596
Hidden Oaks Cary, NC 0 1,176,200 10,593,460 0 0
Hidden Palms Tampa, FL (E) 2,048,000 6,365,313 900 12,391
Hidden Valley Club Ann Arbor, MI 0 915,000 7,583,653 0 821,697
Highland Creste (WRP) Seattle, WA 0 935,200 8,416,381 0 207,838
Highland Grove Stone Mt., GA 0 1,665,700 14,996,293 0 (0)
Highland Point (WRP) Denver, CO 0 1,631,900 14,686,971 0 39,774
Highline Oaks Denver, CO 7,100,000 1,055,000 9,651,649 2,400 72,496
Holcomb Bridge Atlanta, GA 9,545,000 2,142,400 19,281,704 900 946,475
Hollyview Silver Springs, MD 0 189,000 1,484,475 1,000 9,281
Hunter's Glen Chesterfield, MO 0 913,500 8,221,026 1,700 306,971
Hunter's Green Fort Worth, TX (F) 524,200 3,404,622 100 748,534
Hunters Ridge/South Pointe St. Louis, MO 18,890,250 1,950,000 17,521,575 4,200 126,860
Huntington Hollow Tulsa, OK 0 668,600 6,017,211 0 28,729
Huntington Park Everett, WA 0 1,594,500 14,350,001 3,000 532,840
Idlewood Indianapolis, IN (E) 2,560,000 11,456,641 900 25,500
Indian Bend Phoenix, AZ 0 1,072,500 9,652,385 3,200 528,384
Indian Tree Arvada, CO 0 881,125 4,868,332 100 437,701
Indigo Springs Kent, WA 8,075,846 1,270,000 11,438,562 500 193,475
Invitational (WRP) Oklahoma City, OK 0 1,153,000 10,385,325 0 56,332
Ironwood at the Ranch Wesminster, CO 5,985,000 1,493,300 13,439,783 0 105,395
Isle at Arrowhead Ranch Glendale, AZ 0 1,650,237 19,733,360 0 0
Ivy Place (L) Atlanta, GA 0 793,200 7,139,200 9,750 259,057
James Street Crossing Kent, WA 16,395,379 2,078,600 18,707,436 0 0
Jefferson at Walnut Creek Austin, TX (E) 2,736,000 14,581,785 900 24,307
Junipers at Yarmouth Yarmouth, ME 0 1,350,000 7,807,113 3,200 166,009
Kempton Downs Gresham, OR 0 1,182,200 10,639,993 35,149 859,655
Keystone Austin, TX 2,907,322 498,000 4,482,306 500 469,658
Kingsport Alexandria, VA 0 1,262,250 11,454,606 0 1,576,439
Kingswood Manor San Antonio, TX 0 293,900 2,061,996 100 365,009
Kirby Place Houston, TX (E) 3,620,000 25,898,825 900 12,991
Knight's Castle (Boulder Creek) Wilsonville, OR 0 3,552,000 11,462,403 1,500 222,776
La Costa Brava (Jax) Jacksonville, FL (J) 0 835,757 4,964,681 0 5,955,711
La Costa Brava (ORL) Orlando, FL 0 206,626 1,380,505 0 5,329,782
La Mariposa (Evans) Mesa, AZ (P) 2,047,539 12,426,243 0 0
La Mirage San Diego, CA 0 6,005,200 122,982,486 0 0
La Reserve (Evans) Oro Valley, AZ (P) 3,264,562 4,923,865 0 0
La Valencia (Evans) Mesa, AZ 0 3,553,350 20,498,635 0 0
Ladera (Evans) Mesa, AZ 0 2,978,879 20,598,113 0 0
Lake in The Woods (MI) Ypsilanti, MI 0 1,859,625 16,314,064 0 5,853,066
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of
Period 12/31/97
- -------------------------------------------------------------------------------------------------------------
Building &
Apartment Name Location Land Fixtures (A) Total (B)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hamptons (WRP) Tacoma, WA 1,119,200 10,135,023 11,254,223
Harborview San Pedro, CA 6,402,400 12,706,763 19,109,163
Harbour Landing Corpus Christi, TX 765,000 7,698,692 8,463,692
Harrison Park (Evans) Tucson, AZ 1,265,094 16,314,580 17,579,674
Hathaway Long Beach, CA 2,512,500 22,971,865 25,484,365
Hawthorne (Evans) Phoenix, AZ 2,697,050 15,669,963 18,367,013
Hearthstone San Antonio, TX 1,035,800 3,733,268 4,769,068
Heritage Park (WRP) Oklahoma City, OK 1,325,600 11,994,161 13,319,761
Heron Cove Coral Springs, FL 823,000 8,526,941 9,349,941
Heron Landing (K) Lauderhill, FL 711,800 6,700,425 7,412,225
Heron Pointe Boynton Beach, FL 1,546,700 7,883,775 9,430,475
Heron Run Plantation, FL 917,800 9,501,810 10,419,610
Hickory Ridge Greenville, SC 285,800 2,572,552 2,858,352
Hidden Oaks Cary, NC 1,176,200 10,593,460 11,769,660
Hidden Palms Tampa, FL 2,048,900 6,377,704 8,426,604
Hidden Valley Club Ann Arbor, MI 915,000 8,405,350 9,320,350
Highland Creste (WRP) Seattle, WA 935,200 8,624,219 9,559,419
Highland Grove Stone Mt., GA 1,665,700 14,996,293 16,661,993
Highland Point (WRP) Denver, CO 1,631,900 14,726,745 16,358,645
Highline Oaks Denver, CO 1,057,400 9,724,145 10,781,545
Holcomb Bridge Atlanta, GA 2,143,300 20,228,179 22,371,479
Hollyview Silver Springs, MD 190,000 1,493,756 1,683,756
Hunter's Glen Chesterfield, MO 915,200 8,527,997 9,443,197
Hunter's Green Fort Worth, TX 524,300 4,153,156 4,677,456
Hunters Ridge/South Pointe St. Louis, MO 1,954,200 17,648,435 19,602,635
Huntington Hollow Tulsa, OK 668,600 6,045,940 6,714,540
Huntington Park Everett, WA 1,597,500 14,882,841 16,480,341
Idlewood Indianapolis, IN 2,560,900 11,482,141 14,043,041
Indian Bend Phoenix, AZ 1,075,700 10,180,769 11,256,469
Indian Tree Arvada, CO 881,225 5,306,033 6,187,258
Indigo Springs Kent, WA 1,270,500 11,632,037 12,902,537
Invitational (WRP) Oklahoma City, OK 1,153,000 10,441,657 11,594,657
Ironwood at the Ranch Wesminster, CO 1,493,300 13,545,178 15,038,478
Isle at Arrowhead Ranch Glendale, AZ 1,650,237 19,733,360 21,383,597
Ivy Place (L) Atlanta, GA 802,950 7,398,257 8,201,207
James Street Crossing Kent, WA 2,078,600 18,707,436 20,786,036
Jefferson at Walnut Creek Austin, TX 2,736,900 14,606,092 17,342,992
Junipers at Yarmouth Yarmouth, ME 1,353,200 7,973,121 9,326,321
Kempton Downs Gresham, OR 1,217,349 11,499,648 12,716,997
Keystone Austin, TX 498,500 4,951,964 5,450,464
Kingsport Alexandria, VA 1,262,250 13,031,045 14,293,295
Kingswood Manor San Antonio, TX 294,000 2,427,005 2,721,005
Kirby Place Houston, TX 3,620,900 25,911,816 29,532,716
Knight's Castle (Boulder Creek) Wilsonville, OR 3,553,500 11,685,178 15,238,678
La Costa Brava (Jax) Jacksonville, FL (J) 835,757 10,920,392 11,756,149
La Costa Brava (ORL) Orlando, FL 206,626 6,710,287 6,916,913
La Mariposa (Evans) Mesa, AZ 2,047,539 12,426,243 14,473,782
La Mirage San Diego, CA 6,005,200 22,982,486 128,987,686
La Reserve (Evans) Oro Valley, AZ 3,264,562 4,923,865 8,188,427
La Valencia (Evans) Mesa, AZ 3,553,350 20,498,635 24,051,985
Ladera (Evans) Mesa, AZ 2,978,879 20,598,113 23,576,992
Lake in The Woods (MI) Ypsilanti, MI 1,859,625 22,167,130 24,026,755
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Compute
- ---------------------------------------------------------------------------------------------- Depreciation
Accumulated Date of Latest Income
Apartment Name Location Depreciation Construction Statement (C)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Hamptons (WRP) Tacoma, WA 222,665 1991 30 Years
Harborview San Pedro, CA 411,773 1985 30 Years
Harbour Landing Corpus Christi, TX 1,164,132 1985 30 Years
Harrison Park (Evans) Tucson, AZ 14,484 1985 30 Years
Hathaway Long Beach, CA 1,913,780 1987 30 Years
Hawthorne (Evans) Phoenix, AZ 14,721 1996 30 Years
Hearthstone San Antonio, TX 682,606 1982 30 Years
Heritage Park (WRP) Oklahoma City, OK 278,231 1983 30 Years
Heron Cove Coral Springs, FL 1,009,310 1987 30 Years
Heron Landing (K) Lauderhill, FL 470,034 1988 30 Years
Heron Pointe Boynton Beach, FL 115,301 1989 30 Years
Heron Run Plantation, FL 1,097,027 1987 30 Years
Hickory Ridge Greenville, SC 23,136 1968 30 Years
Hidden Oaks Cary, NC 90,488 1988 30 Years
Hidden Palms Tampa, FL 42,474 1986 30 Years
Hidden Valley Club Ann Arbor, MI 4,474,589 1973 30 Years
Highland Creste (WRP) Seattle, WA 199,033 1989 30 Years
Highland Grove Stone Mt., GA 125,202 1988 30 Years
Highland Point (WRP) Denver, CO 317,666 1984 30 Years
Highline Oaks Denver, CO 192,711 1986 30 Years
Holcomb Bridge Atlanta, GA 2,525,354 1985 30 Years
Hollyview Silver Springs, MD 4,178 1965 30 Years
Hunter's Glen Chesterfield, MO 402,678 1985 30 Years
Hunter's Green Fort Worth, TX 731,261 1981 30 Years
Hunters Ridge/South Pointe St. Louis, MO 350,101 1986-1987 30 Years
Huntington Hollow Tulsa, OK 145,857 1981 30 Years
Huntington Park Everett, WA 2,087,851 1991 30 Years
Idlewood Indianapolis, IN 72,537 1991 30 Years
Indian Bend Phoenix, AZ 1,368,573 1973 30 Years
Indian Tree Arvada, CO 1,041,993 1983 30 Years
Indigo Springs Kent, WA 322,845 1991 30 Years
Invitational (WRP) Oklahoma City, OK 237,275 1983 30 Years
Ironwood at the Ranch Wesminster, CO 287,752 1986 30 Years
Isle at Arrowhead Ranch Glendale, AZ 16,870 1996 30 Years
Ivy Place (L) Atlanta, GA 432,030 1978 30 Years
James Street Crossing Kent, WA 38,781 1989 30 Years
Jefferson at Walnut Creek Austin, TX 90,510 1994 30 Years
Junipers at Yarmouth Yarmouth, ME 220,554 1970 30 Years
Kempton Downs Gresham, OR 1,120,921 1990 30 Years
Keystone Austin, TX 526,567 1981 30 Years
Kingsport Alexandria, VA 1,476,716 1986 30 Years
Kingswood Manor San Antonio, TX 422,154 1983 30 Years
Kirby Place Houston, TX 153,938 1994 30 Years
Knight's Castle (Boulder Creek) Wilsonville, OR 311,992 1991 30 Years
La Costa Brava (Jax) Jacksonville, FL (J) 5,943,831 1970/1973 30 Years
La Costa Brava (ORL) Orlando, FL 3,556,803 1967 30 Years
La Mariposa (Evans) Mesa, AZ 11,619 1986 30 Years
La Mirage San Diego, CA 1,942,975 1988-1992 30 Years
La Reserve (Evans) Oro Valley, AZ 7,043 1988 30 Years
La Valencia (Evans) Mesa, AZ 19,275 1988 30 Years
Ladera (Evans) Mesa, AZ 18,460 1995 30 Years
Lake in The Woods (MI) Ypsilanti, MI 11,131,520 1969 30 Years
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Acculated Depreciation
December 31, 1997
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Company (Improvements, net)(1)
- ---------------------------------------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lakeville Resort Petaluma, CA 20,655,022 2,734,100 24,773,523 2,400 109,861
Lakewood Oaks Dallas, TX 0 1,630,200 14,671,813 1,400 648,829
Landera (WRP) San Antonio, TX 0 766,300 6,896,811 0 45,632
Lands End Pacifica, CA 0 1,824,500 16,423,435 1,200 450,898
Larkspur Woods Sacramento, CA (E) 5,800,000 14,512,065 1,300 21,647
Laurel Ridge Chapel Hill, NC 0 160,000 1,752,118 0 2,938,512
Lincoln Green I San Antonio, TX 0 947,366 2,133,002 0 3,711,030
Lincoln Green II San Antonio, TX 0 1,052,340 5,828,311 0 (0)
Lincoln Green III San Antonio, TX 0 536,010 2,069,688 0 0
Lincoln Harbor Ft. Lauderdale, FL 10,000,000 7,454,900 14,879,369 0 (0)
Lincoln Heights Quincy, MA 0 5,925,000 33,575,000 0 0
Little Cottonwoods Tempe, AZ (P) 3,050,133 26,981,993 0 0
Lodge (OK), The Tulsa, OK 0 313,571 2,677,951 0 893,076
Lodge (TX), The San Antonio, TX 0 1,363,636 5,496,784 0 3,582,672
Longwood Decatur, GA 0 1,452,000 13,067,523 2,048 364,818
Mallard Cove Greenville, SC 0 803,700 7,233,160 9,650 282,242
Mallgate Louisville, KY 0 0 6,162,515 0 3,857,169
Marbrisa Tampa, FL 0 811,500 7,303,334 2,000 210,354
Marina Club Fort Worth, TX 0 781,000 7,028,588 3,269 1,581,230
Mariners Wharf Orange Park, FL 0 1,858,800 16,733,097 0 2,285
Marks (WRP) Denver, CO 21,085,000 4,928,500 44,356,994 0 419,868
Marquessa (Evans) Corona Hills, CA 18,169,122 6,888,500 21,767,775 0 0
Martha Lake (WRP) Seattle, WA 0 823,200 7,409,199 0 17,730
Marymont (MD) Laurel, MD 0 1,901,800 17,116,593 2,000 539,218
Maxwell House Augusta, GA 0 216,000 1,846,772 0 723,153
McAlpine Ridge Charlotte, NC 0 1,283,400 11,550,225 600 589,390
Meadow Creek Tigard, OR 8,595,327 1,298,100 11,682,684 1,000 750,229
Meadows in the Park Birmingham, AL 0 1,000,000 8,525,000 0 0
Meadows on the Lake Birmingham, AL 0 1,000,000 8,521,175 0 0
Merril Creek (WRP) Tacoma, WA 0 814,200 7,327,478 0 11,830
Merrimac Woods Costa Mesa, CA 0 673,300 6,059,722 2,400 138,194
Metropolitan Park (WRP) Seattle, WA 0 493,200 4,438,977 0 34,772
Mill Village Randolph, MA 0 6,200,000 13,249,725 2,900 131,810
Mirador (Evans) Phoenix, AZ 0 2,597,518 23,368,137 0 0
Miramonte Scottsdale, AZ 0 1,132,500 8,846,622 0 0
Mission Palms Tucson, AZ 0 2,023,400 18,210,383 0 89,971
Morningside (Evans) Scottsdale, AZ (P) 670,470 12,591,349 0 0
Mountain Park Ranch Phoenix, AZ (Q) 1,662,332 18,223,755 0 0
Mountain Run (WRP) Albuquerque, NM 0 2,023,400 20,735,983 280,600 82,948
Mountain Terrace Stevenson Ranch, CA 0 3,977,200 35,794,729 1,800 209,401
Newport Cove Henderson, NV 0 698,700 6,288,245 1,600 840,955
Newport Heights Seattle, WA 0 390,700 3,516,229 500 233,100
North Creek Heights Seattle, WA 0 753,800 6,784,170 0 40,015
North Hill Atlanta, GA 16,428,599 2,520,000 18,501,949 5,000 65,715
Northampton 1 Largo, MD 13,194,809 1,843,200 17,318,363 0 1,398,297
Northampton 2 Largo, MD 0 1,494,100 14,279,723 19,400 1,134,141
Northgate Village San Antonio, TX 0 660,000 5,753,724 100 428,995
Northlake (FL) Jacksonville, FL 0 1,166,000 10,494,125 0 (0)
Northwoods Village Cary, NC (E) 1,368,000 11,443,857 900 17,260
Oak Mill 2 Germantown, MD 9,507,486 854,000 8,187,169 133 748,473
Oak Park North Agoura Hills, CA (O) 1,706,500 15,358,942 400 90,433
Oak Park South Agoura Hills, CA (O) 1,683,400 15,150,835 400 144,685
- -----------------------------------------------------------------------------------------------------------------
Gross Amount Carried
at Close of Life Used to
Description Period 12/31/97 Compute
- ----------------------------------------------------------------------------------------------------------------- Depreciation in
Building & Accumulated Date of Latest Income
Apartment Name Location Land Fixtures (A) Total (B) Depreciation Construction Statement (C)
- ------------------------------------------------------------------------------------------------------------------------------------
Lakeville Resort Petaluma, CA 2,736,500 24,883,384 27,619,884 1,073,613 1984 30 Years
Lakewood Oaks Dallas, TX 1,631,600 15,320,642 16,952,242 1,887,694 1987 30 Years
Landera (WRP) San Antonio, TX 766,300 6,942,443 7,708,743 153,078 1983 30 Years
Lands End Pacifica, CA 1,825,700 16,874,333 18,700,033 936,029 1974 30 Years
Larkspur Woods Sacramento, CA 5,801,300 14,533,712 20,335,012 102,811 1989/1993 30 Years
Laurel Ridge Chapel Hill, NC 160,000 4,690,630 4,850,630 2,145,136 1975 30 Years
Lincoln Green I San Antonio, TX 947,366 5,844,032 6,791,398 2,613,354 1984/1986 30 Years
Lincoln Green II San Antonio, TX 1,052,340 5,828,311 6,880,651 2,132,722 1984/1986 30 Years
Lincoln Green III San Antonio, TX 536,010 2,069,688 2,605,698 781,318 1984/1986 30 Years
Lincoln Harbor Ft. Lauderdale, FL 7,454,900 14,879,369 22,334,269 405,336 1989 30 Years
Lincoln Heights Quincy, MA 5,925,000 33,575,000 39,500,000 30,600 1991 30 Years
Little Cottonwoods Tempe, AZ 3,050,133 26,981,993 30,032,126 23,773 1984 30 Years
Lodge (OK), The Tulsa, OK 313,571 3,571,027 3,884,598 1,958,126 1979 30 Years
Lodge (TX), The San Antonio, TX 1,363,636 9,079,456 10,443,092 3,068,584 1979(#) 30 Years
Longwood Decatur, GA 1,454,048 13,432,341 14,886,389 1,832,622 1992 30 Years
Mallard Cove Greenville, SC 813,350 7,515,402 8,328,752 438,174 1983 30 Years
Mallgate Louisville, KY 0 10,019,684 10,019,684 5,986,361 1969 30 Years
Marbrisa Tampa, FL 813,500 7,513,688 8,327,188 356,644 1984 30 Years
Marina Club Fort Worth, TX 784,269 8,609,818 9,394,087 1,212,618 1987 30 Years
Mariners Wharf Orange Park, FL 1,858,800 16,735,382 18,594,182 138,521 1989 30 Years
Marks (WRP) Denver, CO 4,928,500 44,776,862 49,705,362 935,337 1987 30 Years
Marquessa (Evans) Corona Hills, CA 6,888,500 21,767,775 28,656,275 22,579 1992 30 Years
Martha Lake (WRP) Seattle, WA 823,200 7,426,929 8,250,129 159,637 1991 30 Years
Marymont (MD) Laurel, MD 1,903,800 17,655,811 19,559,611 2,040,482 1987-88 30 Years
Maxwell House Augusta, GA 216,000 2,569,925 2,785,925 1,098,947 1951 30 Years
McAlpine Ridge Charlotte, NC 1,284,000 12,139,615 13,423,615 1,381,439 1989-90 30 Years
Meadow Creek Tigard, OR 1,299,100 12,432,913 13,732,013 1,511,374 1985 30 Years
Meadows in the Park Birmingham, AL 1,000,000 8,525,000 9,525,000 12,178 1986 30 Years
Meadows on the Lake Birmingham, AL 1,000,000 8,521,175 9,521,175 12,178 1987 30 Years
Merril Creek (WRP) Tacoma, WA 814,200 7,339,308 8,153,508 157,161 1994 30 Years
Merrimac Woods Costa Mesa, CA 675,700 6,197,915 6,873,615 291,450 1970 30 Years
Metropolitan Park (WRP) Seattle, WA 493,200 4,473,749 4,966,949 94,680 1991 30 Years
Mill Village Randolph, MA 6,202,900 13,381,535 19,584,435 20,408 1971/1977 30 Years
Mirador (Evans) Phoenix, AZ 2,597,518 23,368,137 25,965,655 20,506 1995 30 Years
Miramonte Scottsdale, AZ 1,132,500 8,846,622 9,979,122 8,002 1983 30 Years
Mission Palms Tucson, AZ 2,023,400 18,300,354 20,323,754 392,022 1980 30 Years
Morningside (Evans) Scottsdale, AZ 670,470 12,591,349 13,261,819 10,468 1989 30 Years
Mountain Park Ranch Phoenix, AZ 1,662,332 18,223,755 19,886,087 15,697 1994 30 Years
Mountain Run (WRP) Albuquerque, NM 2,304,000 20,818,931 23,122,931 451,625 1985 30 Years
Mountain Terrace Stevenson Ranch, CA 3,979,000 36,004,130 39,983,130 1,297,678 1992 30 Years
Newport Cove Henderson, NV 700,300 7,129,200 7,829,500 1,194,422 1983 30 Years
Newport Heights Seattle, WA 391,200 3,749,329 4,140,529 468,798 1985 30 Years
North Creek Heights Seattle, WA 753,800 6,824,185 7,577,985 144,788 1990 30 Years
North Hill Atlanta, GA 2,525,000 18,567,664 21,092,664 220,601 1984 30 Years
Northampton 1 Largo, MD 1,843,200 18,716,660 20,559,860 2,346,885 1977 30 Years
Northampton 2 Largo, MD 1,513,500 15,413,864 16,927,364 1,559,004 1988 30 Years
Northgate Village San Antonio, TX 660,100 6,182,719 6,842,819 1,176,859 1984 30 Years
Northlake (FL) Jacksonville, FL 1,166,000 10,494,125 11,660,125 89,530 1989 30 Years
Northwoods Village Cary, NC 1,368,900 11,461,117 12,830,017 82,552 1986 30 Years
Oak Mill 2 Germantown, MD 854,133 8,935,642 9,789,775 923,107 1985 30 Years
Oak Park North Agoura Hills, CA 1,706,900 15,449,375 17,156,275 1,184,275 1990 30 Years
Oak Park South Agoura Hills, CA 1,683,800 15,295,520 16,979,320 1,265,504 1989 30 Years
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Company (Improvements, net)(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Oaks of Lakebridge Ormond Beach, FL 0 413,700 3,742,503 2,100 451,071
Ocean Walk Key West, FL 21,099,078 2,834,900 25,517,673 0 (0)
Olentangy Joint Venture Columbus, OH 0 3,032,336 20,862,191 0 8,151,199
One Eton Square Tulsa, OK 0 1,570,100 14,130,762 0 199,151
Orange Grove Village Tucson, AZ (P) 1,813,154 14,867,839 0 0
Orchard of Landen Maineville, OH (E) 2,496,000 17,720,225 1,300 18,489
Orchard Ridge Seattle, WA 0 482,600 4,343,826 3,000 186,875
Overlook San Antonio, TX 0 1,100,000 9,900,000 200 59,744
Paces Station/Paces on the Green Atlanta, GA 0 4,801,500 32,630,170 0 0
Panther Ridge (WRP) Seattle, WA 0 1,055,800 9,501,841 0 94,493
Paradise Pointe Dania, FL 0 1,493,800 13,452,161 0 1,369,517
Park Knoll Atlanta, GA 0 2,904,500 26,140,219 4,300 1,390,997
Park Meadow (Evans) Gilbert, AZ (P) 835,217 15,094,226 0 0
Park Place I & II Plymouth, MN 17,820,599 2,428,200 21,853,006 7,400 649,815
Park West Austin, TX 0 648,605 4,541,683 100 543,341
Park West (CA) Los Angeles, CA 0 3,033,300 27,299,323 100 425,857
Parkridge Place Las Colinas, TX 0 6,430,800 17,073,584 0 (O)
Parkview Terrace Redlands, CA 22,650,000 4,969,200 35,650,329 0 0
Parkwood East (WRP) Fort Collins, CO 0 1,644,000 14,796,301 0 26,384
Pine Harbour Orlando, FL 0 1,661,000 14,948,625 3,300 837,768
Pine Meadow Greensboro, NC 4,852,620 719,300 6,474,036 1,350 254,030
Pines at Cloverlane Pittsfield Township, MI 0 1,906,600 17,159,269 1,200 2,825,711
Pines of Springdale West Palm Beach, FL 0 471,200 4,240,800 2,667 457,139
Plum Tree Park (WRP) Seattle, WA 0 1,133,400 10,200,420 0 42,215
Pointe at South Mountain Phoenix, AZ 0 2,228,800 20,058,955 0 80,664
Pointe East Redmond, WA 0 601,800 5,416,489 800 135,313
Port Royale Ft. Lauderdale, FL 0 1,752,100 15,769,281 2,100 521,095
Port Royale II Ft. Lauderdale, FL 0 1,015,700 9,141,355 6,500 298,668
Portofino (Evans) Chino Hills, CA 0 3,572,400 14,627,241 0 0
Preakness Antioch, TN (E) 1,560,000 7,653,521 1,300 21,698
Preserve at Squaw Peak Phoenix, AZ (P) 517,788 8,518,393 0 0
Preston Bend Dallas, TX 8,719,000 1,083,000 9,925,055 2,200 52,194
Preston in Willowbend Plano, TX 0 872,500 7,852,675 0 1,355,716
Preston Lake Atlanta, GA 0 1,430,000 12,877,986 34,993 1,027,970
Promenade Terrace Corona Hills, CA 16,221,259 2,281,000 20,529,476 1,800 191,484
Promontory Pointe 1 & 2 Phoenix, AZ (P) 2,355,509 30,388,237 0 0
Pueblo Villas Albuquerque, NM 0 854,300 7,688,783 1,300 188,040
Quail Cove (WRP) Salt Lake City, UT 0 2,271,800 20,446,430 0 88,480
Raindance (WRP) Oklahoma City, OK 0 1,147,600 10,341,301 0 45,344
Rancho Murietta (Evans) Tempe, AZ 0 1,766,282 17,548,512 0 0
Ravens Crest Plainsboro, NJ (O) 4,673,000 42,057,149 2,850 1,590,420
Redlands Lawn and Tennis Redlands, CA 24,050,000 4,822,320 26,312,144 0 0
Reflections at the Lakes Las Vegas, NV 0 1,896,000 17,063,715 0 42,277
Regatta (WRP) San Antonio, TX 0 818,500 7,366,677 0 25,844
Regency Palms Huntington Beach, CA 0 1,856,500 16,708,950 900 315,425
Regency Woods Des Moines, IA 6,351,345 745,100 6,705,430 0 0
Registry (WRP) Denver, CO 0 1,303,100 11,727,649 0 22,556
Reserve Square Combined Cleveland, OH 0 2,618,352 23,565,022 500 9,291,751
Ridgegate (WRP) Seattle, WA 0 805,800 7,251,986 0 107,187
Ridgemont/Mountain Brook Chattanooga, TN 0 1,472,000 13,505,272 5,200 122,414
Ridgetop (WRP) Tacoma, WA 0 811,500 221,000 0 7,097,213
Ridgetree I & II Dallas, TX 0 2,094,600 18,851,177 20,600 1,125,099
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of
Description Period 12/31/97
- --------------------------------------------------------------------------------------------------------------------
Building &
Apartment Name Location Land Fixtures(A) Total(B)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oaks of Lakebridge Ormond Beach, FL 415,800 4,193,574 4,609,374
Ocean Walk Key West, FL 2,834,900 25,517,673 28,352,573
Olentangy Joint Venture Columbus, OH 3,032,336 29,013,390 32,045,726
One Eton Square Tulsa, OK 1,570,100 14,329,913 15,900,013
Orange Grove Village Tucson, AZ 1,813,154 14,867,839 16,680,993
Orchard of Landen Maineville, OH 2,497,300 17,738,714 20,236,014
Orchard Ridge Seattle, WA 485,600 4,530,701 5,016,301
Overlook San Antonio, TX 1,100,200 9,959,744 11,059,944
Paces Station/Paces on the Green Atlanta, GA 4,801,500 32,630,170 37,431,670
Panther Ridge (WRP) Seattle, WA 1,055,800 9,596,334 10,652,134
Paradise Pointe Dania, FL 1,493,800 14,821,678 16,315,478
Park Knoll Atlanta, GA 2,908,800 27,531,216 30,440,016
Park Meadow (Evans) Gilbert, AZ 835,217 15,094,226 15,929,443
Park Place I & II Plymouth, MN 2,435,600 22,502,821 24,938,421
Park West Austin, TX 648,705 5,085,024 5,733,729
Park West (CA) Los Angeles, CA 3,033,400 27,725,180 30,758,580
Parkridge Place Las Colinas, TX 6,430,800 17,073,584 23,504,384
Parkview Terrace Redlands, CA 4,969,200 35,650,329 40,619,529
Parkwood East (WRP) Fort Collins, CO 1,644,000 14,822,685 16,466,685
Pine Harbour Orlando, FL 1,664,300 15,786,393 17,450,693
Pine Meadow Greensboro, NC 720,650 6,728,066 7,448,716
Pines at Cloverlane Pittsfield Township, MI 1,907,800 19,984,980 21,892,780
Pines of Springdale West Palm Beach, FL 473,867 4,697,939 5,171,806
Plum Tree Park (WRP) Seattle, WA 1,133,400 10,242,635 11,376,035
Pointe at South Mountain Phoenix, AZ 2,228,800 20,139,619 22,368,419
Pointe East Redmond, WA 602,600 5,551,802 6,154,402
Port Royale Ft. Lauderdale, FL 1,754,200 16,290,376 18,044,576
Port Royale II Ft. Lauderdale, FL 1,022,200 9,440,023 10,462,223
Portofino (Evans) Chino Hills, CA 3,572,400 14,627,241 18,199,641
Preakness Antioch, TN 1,561,300 7,675,219 9,236,519
Preserve at Squaw Peak Phoenix, AZ 517,788 8,518,393 9,036,181
Preston Bend Dallas, TX 1,085,200 9,977,249 11,062,449
Preston in Willowbend Plano, TX 872,500 9,208,391 10,080,891
Preston Lake Atlanta, GA 1,465,893 13,905,956 15,371,849
Promenade Terrace Corona Hills, CA 2,282,800 20,720,960 23,003,760
Promontory Pointe 1 & 2 Phoenix, AZ 2,355,509 30,388,237 32,743,746
Pueblo Villas Albuquerque, NM 855,600 7,876,823 8,732,423
Quail Cove (WRP) Salt Lake City, UT 2,271,800 20,534,910 22,806,710
Raindance (WRP) Oklahoma City, OK 1,147,600 10,386,645 11,534,245
Rancho Murietta (Evans) Tempe, AZ 1,766,282 17,548,512 19,314,794
Ravens Crest Plainsboro, NJ 4,675,850 43,647,569 48,323,419
Redlands Lawn and Tennis Redlands, CA 4,822,320 26,312,144 31,134,464
Reflections at the Lakes Las Vegas, NV 1,896,000 17,105,992 19,001,992
Regatta (WRP) San Antonio, TX 818,500 7,392,520 8,211,020
Regency Palms Huntington Beach, CA 1,857,400 17,024,375 18,881,775
Regency Woods Des Moines, IA 745,100 6,705,430 7,450,530
Registry (WRP) Denver, CO 1,303,100 11,750,205 13,053,305
Reserve Square Combined Cleveland, OH 2,618,852 32,856,773 35,475,625
Ridgegate (WRP) Seattle, WA 805,800 7,359,173 8,164,973
Ridgemont/Mountain Brook Chattanooga, TN 1,477,200 13,627,686 15,104,886
Ridgetop (WRP) Tacoma, WA 811,500 7,318,213 8,129,713
Ridgetree I & II Dallas, TX 2,115,200 19,976,276 22,091,476
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Description Compute
- ------------------------------------------------------------------------------------------------- Depreciation in
Accumulated Date of Latest Income
Apartment Name Location Depreciation Construction Statement(C)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Oaks of Lakebridge Ormond Beach, FL 691,385 1984 30 Years
Ocean Walk Key West, FL 51,779 1990 30 Years
Olentangy Joint Venture Columbus, OH 16,047,783 1972 30 Years
One Eton Square Tulsa, OK 321,009 1985 30 Years
Orange Grove Village Tucson, AZ 13,983 1986/1995 30 Years
Orchard of Landen Maineville, OH 126,481 1985/1988 30 Years
Orchard Ridge Seattle, WA 595,509 1988 30 Years
Overlook San Antonio, TX 234,278 1985 30 Years
Paces Station/Paces on the Green Atlanta, GA 411,876 1984-1988/1989 30 Years
Panther Ridge (WRP) Seattle, WA 212,607 1980 30 Years
Paradise Pointe Dania, FL 1,864,192 1987-90 30 Years
Park Knoll Atlanta, GA 3,979,207 1983 30 Years
Park Meadow (Evans) Gilbert, AZ 12,704 1986 30 Years
Park Place I & II Plymouth, MN 1,130,133 1986 30 Years
Park West Austin, TX 819,900 1985 30 Years
Park West (CA) Los Angeles, CA 2,327,056 1987-90 30 Years
Parkridge Place Las Colinas, TX 72,945 1985 30 Years
Parkview Terrace Redlands, CA 32,340 1986 30 Years
Parkwood East (WRP) Fort Collins, CO 314,010 1986 30 Years
Pine Harbour Orlando, FL 2,228,205 1991 30 Years
Pine Meadow Greensboro, NC 391,654 1974 30 Years
Pines at Cloverlane Pittsfield Township, MI 1,526,711 1975-79 30 Years
Pines of Springdale West Palm Beach, FL 675,625 1985/87(x) 30 Years
Plum Tree Park (WRP) Seattle, WA 218,141 1991 30 Years
Pointe at South Mountain Phoenix, AZ 427,547 1988 30 Years
Pointe East Redmond, WA 631,778 1988 30 Years
Port Royale Ft. Lauderdale, FL 1,855,727 1988 30 Years
Port Royale II Ft. Lauderdale, FL 648,784 1991 30 Years
Portofino (Evans) Chino Hills, CA 14,186 1989 30 Years
Preakness Antioch, TN 58,736 1986 30 Years
Preserve at Squaw Peak Phoenix, AZ 7,128 1990 30 Years
Preston Bend Dallas, TX 199,067 1986 30 Years
Preston in Willowbend Plano, TX 1,380,925 1985 30 Years
Preston Lake Atlanta, GA 2,017,909 1984-86 30 Years
Promenade Terrace Corona Hills, CA 1,088,860 1990 30 Years
Promontory Pointe 1 & 2 Phoenix, AZ 25,964 1984/1996 30 Years
Pueblo Villas Albuquerque, NM 431,289 1975 30 Years
Quail Cove (WRP) Salt Lake City, UT 441,451 1987 30 Years
Raindance (WRP) Oklahoma City, OK 251,597 1984 30 Years
Rancho Murietta (Evans) Tempe, AZ 15,488 1983 30 Years
Ravens Crest Plainsboro, NJ 5,422,677 1984 30 Years
Redlands Lawn and Tennis Redlands, CA 25,069 1986 30 Years
Reflections at the Lakes Las Vegas, NV 364,317 1989 30 Years
Regatta (WRP) San Antonio, TX 163,257 1983 30 Years
Regency Palms Huntington Beach, CA 1,135,696 1969 30 Years
Regency Woods Des Moines, IA 14,880 1986 30 Years
Registry (WRP) Denver, CO 248,875 1987 30 Years
Reserve Square Combined Cleveland, OH 4,271,742 1973 30 Years
Ridgegate (WRP) Seattle, WA 158,777 1990 30 Years
Ridgemont/Mountain Brook Chattanooga, TN 248,558 1987/1988 30 Years
Ridgetop (WRP) Tacoma, WA 164,208 1988 30 Years
Ridgetree I & II Dallas, TX 1,175,476 1983 30 Years
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Company (Improvements, net)(1)
- ---------------------------------------------------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ridgeway Commons Memphis, TN 0 568,400 5,115,501 0 0
Ridgewood Village San Diego, CA 0 5,760,000 14,019,345 0 0
Rincon Houston, TX 0 4,400,000 16,725,229 1,700 29,725
River Bend Tampa, FL 0 602,945 2,161,915 0 2,070,955
River Oak Louisville, KY 0 1,253,900 11,285,573 0 0
Riverside Park Tulsa, OK (E) 1,440,000 12,374,977 900 12,033
Rock Creek Corrboro, NC 0 895,100 8,056,360 600 77,277
Rosehill Pointe Lenexa, KS 0 2,073,400 18,660,475 19,600 1,281,269
Roswell Atlanta, GA 8,100,000 1,217,500 10,957,845 2,500 646,187
Royal Oak Eagan, MN 13,148,135 1,598,200 14,383,478 0 (0)
Sabal Palm Pompano Beach, FL 0 3,536,000 20,167,175 2,000 219,699
Sabal Pointe (M) Coral Springs, FL 0 1,941,900 17,477,592 9,700 247,208
Saddle Creek Carrollton, TX 0 703,300 6,329,899 4,800 2,989,706
Saddle Ridge Loudoun County, VA 0 1,351,800 12,165,984 13,000 255,748
San Tropez (WRP) Phoenix, AZ 0 2,738,000 24,641,839 0 68,367
Sawgrass Cove Bradenton, FL 0 1,671,200 15,041,179 2,950 950,843
Scottsdale Courtyards Scottsdale, AZ (P) 2,979,269 25,007,146 0 0
Scottsdale Meadows Scottsdale, AZ 0 1,512,000 11,382,507 0 0
Sedona Ridge Ahwatukee, AZ 0 5,508,000 9,700,530 0 53,410
Settler's Pointe (WRP) Salt Lake City, UT 0 1,715,100 15,436,275 0 40,529
Seventh & James (WRP) Seattle, WA 0 663,800 5,974,099 0 32,273
Shadow Brook Phoenix, AZ (P) 3,065,496 18,328,501 0 0
Sheffield Court Arlington, VA 0 3,349,350 30,246,228 0 2,064,923
Shores at Andersen Springs Chandler, AZ (P) 2,743,816 22,732,844 0 0
Silver Creek Phoenix, AZ (P) 712,102 6,688,724 0 0
Silver Shadow Las Vegas, NV 0 952,100 8,568,921 1,340 302,146
Silver Springs (FL) Jacksonville, FL 0 1,828,700 16,458,192 0 23,594
Silver Springs Tulsa, OK 0 672,500 6,052,669 0 8,702
Silverwood Mission, KS 11,000,000 1,230,000 11,196,244 0 453,320
Skyline Gateway Tucson, AZ 0 1,128,400 10,155,997 0 49,230
Sleepy Hollow Kansas City, MO 12,500,000 2,193,547 13,689,443 0 1,561,709
Songbird San Antonio, TX 6,844,309 1,080,500 9,724,928 2,000 254,902
Sonnet Cove I Lexington, KY 0 183,407 2,422,860 0 1,813,961
Sonnet Cove II Lexington, KY 0 100,000 1,108,405 0 821,113
Sonoran (Evans) Phoenix, AZ (P) 2,361,922 31,760,934 0 0
South Creek Mesa, AZ 16,236,161 2,669,300 24,023,758 2,000 316,264
Southbank Mesa, AZ 0 319,600 2,876,874 10,900 344,878
Spice Run Naperville, IL 0 2,578,900 23,210,030 800 442,721
Spinnaker Cove Hermitage, TN 14,205,000 1,420,500 12,789,873 41,231 448,527
Springs Colony Orlando, FL 9,350,000 631,900 5,687,010 8,500 710,248
Springs of Country Woods Salt Lake City, UT 0 3,547,400 31,926,882 0 71,221
Sterling Point Denver, CO 0 935,500 8,419,865 0 30,474
Stonelake Club Ocala, FL 0 250,000 2,024,968 100 388,685
Stoney Creek Tacoma, WA 0 1,215,200 10,937,144 0 12,395
Summer Ridge Riverside, CA 0 600,500 5,404,571 1,900 65,362
Summerset Village Chatsworth, CA 0 2,628,500 23,656,668 2,200 125,536
Summit at Lake Union Seattle, WA 0 1,424,600 12,821,002 0 81,917
Summit Chase Coral Springs, FL 0 1,120,000 4,413,035 1,700 82,165
Sun Creek (Evans) Glendale, AZ (P) 896,929 7,044,103 0 0
Sunny Oak Village Overland Park, KS 0 2,222,600 20,003,050 22,350 1,228,997
Sunrise Springs Las Vegas, NV 0 972,600 8,753,491 2,700 249,026
Suntree Village (Evans) Oro Valley, AZ (P) 1,571,745 13,067,845 0 0
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of
Description Period 12/31/97
- ------------------------------------------------------------------------------------------------------------------
Building & Accumulated
Apartment Name Location Land Fixtures(A) Total(B) Depreciation
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ridgeway Commons Memphis, TN 568,400 5,115,501 5,683,901 11,509
Ridgewood Village San Diego, CA 5,760,000 14,019,345 19,779,345 19,152
Rincon Houston, TX 4,401,700 16,754,954 21,156,654 486,390
River Bend Tampa, FL 602,945 4,232,870 4,835,815 3,002,362
River Oak Louisville, KY 1,253,900 11,285,573 12,539,473 24,275
Riverside Park Tulsa, OK 1,440,900 12,387,010 13,827,910 90,734
Rock Creek Corrboro, NC 895,700 8,133,637 9,029,337 320,980
Rosehill Pointe Lenexa, KS 2,093,000 19,941,744 22,034,744 1,238,431
Roswell Atlanta, GA 1,220,000 11,604,032 12,824,032 1,447,662
Royal Oak Eagan, MN 1,598,200 14,383,478 15,981,678 29,864
Sabal Palm Pompano Beach, FL 3,538,000 20,386,874 23,924,874 459,000
Sabal Pointe (M) Coral Springs, FL 1,951,600 17,724,799 19,676,399 1,185,004
Saddle Creek Carrollton, TX 708,100 9,319,605 10,027,705 1,925,906
Saddle Ridge Loudoun County, VA 1,364,800 12,421,732 13,786,532 972,500
San Tropez (WRP) Phoenix, AZ 2,738,000 24,710,205 27,448,205 512,245
Sawgrass Cove Bradenton, FL 1,674,150 15,992,022 17,666,172 2,143,633
Scottsdale Courtyards Scottsdale, AZ 2,979,269 25,007,146 27,986,415 21,828
Scottsdale Meadows Scottsdale, AZ 1,512,000 11,382,507 12,894,507 10,229
Sedona Ridge Ahwatukee, AZ 5,508,000 9,753,940 15,261,940 265,997
Settler's Pointe (WRP) Salt Lake City, UT 1,715,100 15,476,804 17,191,904 329,025
Seventh & James (WRP) Seattle, WA 663,800 6,006,372 6,670,172 125,673
Shadow Brook Phoenix, AZ 3,065,496 18,328,501 21,393,997 16,746
Sheffield Court Arlington, VA 3,349,350 32,311,151 35,660,501 3,231,742
Shores at Andersen Springs Chandler, AZ 2,743,816 22,732,844 25,476,660 20,075
Silver Creek Phoenix, AZ 712,102 6,688,724 7,400,826 6,190
Silver Shadow Las Vegas, NV 953,440 8,871,067 9,824,507 1,262,807
Silver Springs (FL) Jacksonville, FL 1,828,700 16,481,786 18,310,486 142,541
Silver Springs Tulsa, OK 672,500 6,061,371 6,733,871 137,860
Silverwood Mission, KS 1,230,000 11,649,564 12,879,564 1,452,746
Skyline Gateway Tucson, AZ 1,128,400 10,205,227 11,333,627 223,810
Sleepy Hollow Kansas City, MO 2,193,547 15,251,152 17,444,699 4,866,627
Songbird San Antonio, TX 1,082,500 9,979,830 11,062,330 485,613
Sonnet Cove I Lexington, KY 183,407 4,236,821 4,420,228 2,837,430
Sonnet Cove II Lexington, KY 100,000 1,929,518 2,029,518 1,333,319
Sonoran (Evans) Phoenix, AZ 2,361,922 31,760,934 34,122,856 27,005
South Creek Mesa, AZ 2,671,300 24,340,022 27,011,322 1,316,091
Southbank Mesa, AZ 330,500 3,221,752 3,552,252 499,946
Spice Run Naperville, IL 2,579,700 23,652,751 26,232,451 882,510
Spinnaker Cove Hermitage, TN 1,461,731 13,238,400 14,700,131 291,074
Springs Colony Orlando, FL 640,400 6,397,258 7,037,658 902,698
Springs of Country Woods Salt Lake City, UT 3,547,400 31,998,103 35,545,503 680,475
Sterling Point Denver, CO 935,500 8,450,339 9,385,839 178,681
Stonelake Club Ocala, FL 250,100 2,413,653 2,663,753 467,496
Stoney Creek Tacoma, WA 1,215,200 10,949,539 12,164,739 235,210
Summer Ridge Riverside, CA 602,400 5,469,933 6,072,333 297,826
Summerset Village Chatsworth, CA 2,630,700 23,782,203 26,412,903 1,080,473
Summit at Lake Union Seattle, WA 1,424,600 12,902,919 14,327,519 266,259
Summit Chase Coral Springs, FL 1,121,700 4,495,200 5,616,900 114,037
Sun Creek (Evans) Glendale, AZ 896,929 7,044,103 7,941,032 6,593
Sunny Oak Village Overland Park, KS 2,244,950 21,232,047 23,476,997 1,197,980
Sunrise Springs Las Vegas, NV 975,300 9,002,517 9,977,817 1,077,228
Suntree Village (Evans) Oro Valley, AZ 1,571,745 13,067,845 14,639,590 12,572
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Description Compute
- ---------------------------------------------------------------------- Depreciation in
Date of Latest Income
Apartment Name Location Construction Statement(C)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ridgeway Commons Memphis, TN 1970 30 Years
Ridgewood Village San Diego, CA 1997 30 Years
Rincon Houston, TX 1996 30 Years
River Bend Tampa, FL 1971 30 Years
River Oak Louisville, KY 1989 30 Years
Riverside Park Tulsa, OK 1994 30 Years
Rock Creek Corrboro, NC 1986 30 Years
Rosehill Pointe Lenexa, KS 1984 30 Years
Roswell Atlanta, GA 1985 30 Years
Royal Oak Eagan, MN 1989 30 Years
Sabal Palm Pompano Beach, FL 1989 30 Years
Sabal Pointe (M) Coral Springs, FL 1995 30 Years
Saddle Creek Carrollton, TX 1980 30 Years
Saddle Ridge Loudoun County, VA 1989 30 Years
San Tropez (WRP) Phoenix, AZ 1989 30 Years
Sawgrass Cove Bradenton, FL 1991 30 Years
Scottsdale Courtyards Scottsdale, AZ 1993 30 Years
Scottsdale Meadows Scottsdale, AZ 1984 30 Years
Sedona Ridge Ahwatukee, AZ 1988 30 Years
Settler's Pointe (WRP) Salt Lake City, UT 1986 30 Years
Seventh & James (WRP) Seattle, WA 1992 30 Years
Shadow Brook Phoenix, AZ 1984 30 Years
Sheffield Court Arlington, VA 1986 30 Years
Shores at Andersen Springs Chandler, AZ 1989 30 Years
Silver Creek Phoenix, AZ 1986 30 Years
Silver Shadow Las Vegas, NV 1992 30 Years
Silver Springs (FL) Jacksonville, FL 1985 30 Years
Silver Springs Tulsa, OK 1984 30 Years
Silverwood Mission, KS 1986 30 Years
Skyline Gateway Tucson, AZ 1985 30 Years
Sleepy Hollow Kansas City, MO 1987 30 Years
Songbird San Antonio, TX 1981 30 Years
Sonnet Cove I Lexington, KY 1972 30 Years
Sonnet Cove II Lexington, KY 1974 30 Years
Sonoran (Evans) Phoenix, AZ 1995 30 Years
South Creek Mesa, AZ 1986-89 30 Years
Southbank Mesa, AZ 1985 30 Years
Spice Run Naperville, IL 1988 30 Years
Spinnaker Cove Hermitage, TN 1986 30 Years
Springs Colony Orlando, FL 1986 30 Years
Springs of Country Woods Salt Lake City, UT 1982 30 Years
Sterling Point Denver, CO 1979 30 Years
Stonelake Club Ocala, FL 1986 30 Years
Stoney Creek Tacoma, WA 1990 30 Years
Summer Ridge Riverside, CA 1985 30 Years
Summerset Village Chatsworth, CA 1985 30 Years
Summit at Lake Union Seattle, WA 1995-1997 30 Years
Summit Chase Coral Springs, FL 1985 30 Years
Sun Creek (Evans) Glendale, AZ 1985 30 Years
Sunny Oak Village Overland Park, KS 1984 30 Years
Sunrise Springs Las Vegas, NV 1989 30 Years
Suntree Village (Evans) Oro Valley, AZ 1986 30 Years
</TABLE>
S-8
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
<TABLE>
<CAPTION>
Cost Capitialized
Subsequent Gross Amount Carried
Initial Cost Acquisition at Close of
Description to Company (Improvements, net)(1) Period 12/31/97
- ------------------------------------------------------------------------------------------------------------------------------------
Building & Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures Land Fixtures(A)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Superstition Vista/Heritage
Point Mesa, AZ 0 2,307,357 28,479,012 0 0 2,307,357 28,479,012
Surprise Lake Village Tacoma, WA 0 1,830,200 16,471,470 0 85,303 1,830,200 16,556,773
Sutton Place Dallas, TX 0 1,316,500 11,848,717 41,900 2,512,250 1,358,400 14,360,967
Sycamore Creek Scottsdale, AZ (E) 3,150,000 19,068,201 900 13,124 3,150,900 19,081,325
Tamarind at Stoneridge Columbia, SC 0 1,053,800 9,490,859 0 (0) 1,053,800 9,490,859
Tamarlane Portland, ME 0 690,000 5,143,970 900 26,507 690,900 5,170,477
Tanasbourne Terrace Hillsboro, OR 0 1,873,000 16,857,220 3,700 844,799 1,876,700 17,702,019
Tanglewood (OR) Portland, OR 0 760,000 6,839,589 3,000 1,073,753 763,000 7,913,342
Tanglewood (VA) Manassas, VA 24,855,587 2,103,400 19,559,772 4,895 1,698,051 2,108,295 21,257,823
Terraces at Peachtree Atlanta, GA 0 582,800 5,245,560 700 399,025 583,500 5,644,585
The Arboretum Tucson, AZ (Q) 3,453,446 18,978,563 0 0 3,453,446 18,978,563
The Enclave Tempe, AZ (Q) 1,500,192 19,262,528 0 0 1,500,192 19,262,528
The Heritage Phoenix, AZ (P) 1,211,205 13,104,261 0 0 1,211,205 13,104,261
The Ingleside Phoenix, AZ 0 1,203,600 10,662,988 0 0 1,203,600 10,662,988
The Legends Tucson, AZ 0 2,729,788 17,866,476 0 0 2,729,788 17,866,476
The Meadows Mesa, AZ 0 650,000 15,408,042 0 0 650,000 15,408,042
The Palms Phoenix, AZ (P) 3,285,226 11,242,231 0 0 3,285,226 11,242,231
Place, The Fort Myers, FL 0 722,900 6,506,350 3,340 463,261 726,240 6,969,611
Seasons, The Boise, ID 0 604,400 5,439,624 3,600 296,957 608,000 5,736,581
The Trails at Dominion Houston, TX 25,859,751 2,259,000 35,693,699 2,800 299,173 2,531,800 35,992,872
The Willows Knoxville, TN 8,068,889 1,100,000 9,906,909 500 56,479 1,100,500 9,963,388
Tivoli Lakes Club Deerfield Beach,
FL 0 1,804,200 16,237,641 0 17,450 1,804,200 16,255,091
Town Centre III Laurel, MD 6,042,201 982,300 9,301,830 0 1,337,232 982,300 10,639,062
Town Centre IV Laurel, MD 9,595,674 1,564,200 14,787,362 4,700 44,169 1,568,900 14,831,531
Towne Centre Kingwood, TX 0 1,290,000 11,517,230 1,300 65,714 1,291,300 11,582,944
Towne Square Chandler, AZ 0 1,924,710 36,366,334 0 0 1,924,710 36,366,334
Trails (CO), The Aurora, CO 0 1,217,800 8,525,346 100 1,316,571 1,217,900 9,841,917
Trails (NV), The Las Vegas, NV 0 3,076,200 27,685,764 3,000 846,263 3,079,200 28,532,027
Trails (TX), The Arlington, TX 0 616,700 5,550,590 21,300 606,375 638,000 6,156,965
Trail's End (WRP) San Antonio, TX 0 951,300 8,561,640 0 32,719 951,300 8,594,359
Trailway Pond I Burnsville, MN 4,913,909 476,800 4,291,344 0 (0) 476,800 4,291,344
Trailway Pond II Burnsville, MN 11,365,354 1,104,700 9,942,611 0 0 1,104,700 9,942,611
Trinity Lakes Cordova, TN (E) 1,980,000 14,937,161 1,200 25,292 1,981,200 14,962,453
University Park Toledo, OH 0 70,000 834,378 0 1,437,570 70,000 2,271,948
Valley Creek I Woodbury, MN 12,827,815 1,622,600 14,603,730 0 0 1,622,600 14,603,730
Valley Creek II Woodbury, MN 10,110,100 1,229,500 11,065,355 0 0 1,229,500 11,065,355
Via Ventura Phoenix, AZ 0 1,476,500 13,288,894 9,600 4,442,615 1,486,100 17,711,509
Villa Encanto Phoenix, AZ 0 2,884,447 22,092,558 0 0 2,884,447 22,092,558
Villa Madeira Phoenix, AZ 0 1,580,000 14,219,907 2,100 604,467 1,582,100 14,824,374
Villa Manana Phoenix, AZ 0 951,400 8,562,443 3,900 594,025 955,300 9,156,468
Villa Serenas Tucson, AZ 9,274,638 2,424,900 14,418,493 0 0 2,424,900 14,418,493
Villa Solana Laguna Hills, CA 0 1,663,500 14,971,366 1,600 894,305 1,665,100 15,865,671
Village at Lakewood Phoenix, AZ (Q) 3,166,411 13,811,768 0 0 3,166,411 13,811,768
Village at Seeley Lake Tacoma, WA 0 2,760,400 24,843,439 0 42,914 2,760,400 24,886,353
Village at Tanque Verde Tucson, AZ (Q) 1,434,838 7,126,993 0 0 1,434,838 7,126,993
Village Oaks Austin, TX 5,348,183 1,184,400 10,659,432 1,600 333,504 1,186,000 10,992,936
Village of Hampshire Toledo, OH 0 151,912 1,320,453 0 7,039,152 151,912 8,359,605
Village of Newport Federal Way, WA 0 414,900 3,733,899 1,400 273,557 416,300 4,007,456
Village of Sycamore Ridge Memphis, TN 0 621,300 5,591,828 200 14,910 621,500 5,606,738
Villas of Oak Creste San Antonio, TX 0 905,800 8,151,738 0 41,733 905,800 8,193,471
Vinings at Ashley Boynton
Lake Beach, FL 24,150,000 3,519,900 23,340,219 0 0 3,519,900 23,340,219
Vista Del Lago Mission Viejo,
CA 32,003,439 4,524,400 41,357,681 1,400 1,146,126 4,525,800 42,503,807
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Description Compute
- ---------------------------------------------------------------------------------------------------- Depreciation in
Accumulated Date of Legal Income
Apartment Name Location Total(B) Depreciation Construction Statement (c)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Superstition Vista/Heritage
Point Mesa, AZ 30,786,369 24,680 1987 30 Years
Surprise Lake Village Tacoma, WA 18,386,973 356,880 1986 30 Years
Sutton Place Dallas, TX 15,719,367 2,281,510 1985 30 Years
Sycamore Creek Scottsdale, AZ 22,232,225 136,570 1984 30 Years
Tamarind at Stoneridge Columbia, SC 10,544,659 82,084 1985 30 Years
Tamarlane Portland, ME 5,861,377 101,568 1986 30 Years
Tanasbourne Terrace Hillsboro, OR 19,578,719 2,219,894 1986-89 30 Years
Tanglewood (OR) Portland, OR 8,676,342 1,111,520 1976 30 Years
Tanglewood (VA) Manassas, VA 23,366,118 2,379,284 1987 30 Years
Terraces at Peachtree Atlanta, GA 6,228,085 467,119 1987 30 Years
The Arboretum Tucson, AZ 22,432,009 18,632 1987 30 Years
The Enclave Tempe, AZ 20,762,720 16,197 1994 30 Years
The Heritage Phoenix, AZ 14,315,466 11,428 1995 30 Years
The Ingleside Phoenix, AZ 11,866,588 9,271 1995 30 Years
The Legends Tucson, AZ 20,596,264 16,518 1995 30 Years
The Meadows Mesa, AZ 16,058,042 13,136 1984 30 Years
The Palms Phoenix, AZ 14,527,457 11,289 1990 30 Years
Place, The Fort Myers, FL 7,695,851 923,559 1986 30 Years
Seasons, The Boise, ID 6,344,581 745,408 1990 30 Years
The Trails at Dominion Houston, TX 38,524,672 1,127,962 1992 30 Years
The Willows Knoxville, TN 11,063,888 235,907 1987-1988 30 Years
Tivoli Lakes Club Deerfield Beach, 30 Years
FL 18,059,291 134,957 1991 30 Years
Town Centre III Laurel, MD 11,621,362 1,268,507 1969 30 Years
Town Centre IV Laurel, MD 16,400,431 1,554,184 1968 30 Years
Towne Centre Kingwood, TX 12,874,244 408,693 1994 30 Years
Towne Square Chandler, AZ 38,291,044 30,725 1987-1996 30 Years
Trails (CO), The Aurora, CO 11,059,817 1,759,465 1986 30 Years
Trails (NV), The Las Vegas,, NV 31,611,227 3,302,624 1988 30 Years
Trails (TX), The Arlington, TX 6,794,965 888,529 1984 30 Years
Trail's End (WRP) San Antonio, TX 9,545,659 197,375 1983 30 Years
Trailway Pond I Burnsville, MN 4,768,144 8,964 1988 30 Years
Trailway Pond II Burnsville, MN 11,047,311 20,688 1988 30 Years
Trinity Lakes Cordova, TN 16,943,653 108,814 1985 30 Years
University Park Toledo, OH 2,341,948 1,297,134 1965 30 Years
Valley Creek I Woodbury, MN 16,226,330 30,187 1989 30 Years
Valley Creek II Woodbury, MN 12,294,855 22,949 1990 30 Years
Via Ventura Phoenix, AZ 19,197,609 2,185,107 1980 30 Years
Villa Encanto Phoenix, AZ 24,977,005 20,046 1983 30 Years
Villa Madeira Phoenix, AZ 16,406,474 1,921,248 1971 30 Years
Villa Manana Phoenix, AZ 10,111,768 1,250,094 1971-85 30 Years
Villa Serenas Tucson, AZ 16,843,393 65,839 1973 30 Years
Villa Solana Laguna Hills, CA 17,530,771 2,196,894 1984 30 Years
Village at Lakewood Phoenix, AZ 16,978,179 13,546 1988 30 Years
Village at Seeley Lake Tacoma, WA 27,646,753 534,825 1990 30 Years
Village at Tanque Verde Tucson, AZ 8,561,831 7,225 1984-1994 30 Years
Village Oaks Austin, TX 12,178,936 433,603 1984 30 Years
Village of Hampshire Toledo, OH 8,511,517 2,903,527 1950 30 Years
Village of Newport Federal Way, WA 4,423,756 504,348 1987 30 Years
Village of Sycamore Ridge Memphis, TN 6,228,238 47,175 1977 30 Years
Villas of Oak Creste San Antonio, TX 9,099,271 187,591 1979 30 Years
Vinings at Ashley Lake Boynton Beach, FL 26,860,119 32,655 1990 30 Years
Vista Del Lago Mission Viejo, 30 Years
CA 47,029,607 5,926,549 1986-88 30 Years
</TABLE>
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Company (Improvements, net)(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Walden Wood Southfield, MI 5,895,724 833,300 7,499,662 1,400 951,415
Walnut Ridge Little Rock, AR 3,654,026 196,079 2,424,631 0 3,061,884
Warwick Station(WRP) Denver, CO 10,223,000 2,281,900 20,537,450 100 56,889
Waterford(WRP) San Antonio, TX 0 457,000 4,112,840 0 5,740
Waterford at the Lakes Kent, WA 0 3,100,200 16,343,191 0 0
Watermark Square Portland, OR 8,548,333 1,580,000 14,239,426 500 164,414
Waterstone Place Seattle, WA 0 2,950,900 26,558,353 13,100 2,482,718
Wellington(Salant) Silverdale, WA 8,264,153 1,097,300 9,876,034 2,000 460,910
Wellington Hill Manchester, NH 28,625,000 1,872,500 16,852,955 17,700 1,700,778
Wellsford Oaks(WRP) Tulsa, OK 0 1,310,500 11,794,290 0 41,827
Westridge(WRP) Tacoma, WA 0 3,501,900 31,517,540 0 85,539
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of
Period 12/31/97
- ---------------------------------------------------------------------------------------------
Building &
Apartment Name Location Land Fixtures Total (B)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Walden Wood Southfield, MI 834,700 8,451,077 9,285,777
Walnut Ridge Little Rock, AR 196,079 5,486,515 5,682,594
Warwick Station(WRP) Denver, CO 2,282,000 20,594,339 22,876,339
Waterford(WRP) San Antonio, TX 457,000 4,118,581 4,575,581
Waterford at the Lakes Kent, WA 3,100,200 16,343,191 19,443,391
Watermark Square Portland, OR 1,580,500 14,403,840 15,984,340
Waterstone Place Seattle, WA 2,964,000 29,041,071 32,005,071
Wellington(Salant) Silverdale, WA 1,099,300 10,336,944 11,436,244
Wellington Hill Manchester, NH 1,890,200 18,553,733 20,443,933
Wellsford Oaks(WRP) Tulsa, OK 1,310,500 11,836,117 13,146,617
Westridge(WRP) Tacoma, WA 3,501,900 31,603,079 35,104,979
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Description Compute
- ----------------------------------------------------------------------------- Depreciation in
Accumulated Date of Latest Income
Apartment Name Location Depreciation Construction Statement(C)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Walden Wood Southfield, MI 1,285,958 1972 30 Years
Walnut Ridge Little Rock, AR 2,883,808 1975 30 Years
Warwick Station(WRP) Denver, CO 433,103 1986 30 Years
Waterford(WRP) San Antonio, TX 93,042 1983 30 Years
Waterford at the Lakes Kent, WA 480,862 1990 30 Years
Watermark Square Portland, OR 405,091 1990 30 Years
Waterstone Place Seattle, WA 4,408,853 1990 30 Years
Wellington(Salant) Silverdale, WA 1,007,298 1990 30 Years
Wellington Hill Manchester, NH 2,506,313 1987 30 Years
Wellsford Oaks(WRP) Tulsa, OK 259,729 1991 30 Years
Westridge(WRP) Tacoma, WA 686,050 1987/1991 30 Years
</TABLE>
S-10
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
<TABLE>
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Company (Improvements, net) (I)
- -------------------------------------------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Westwood Pines Tamarac, FL 0 1,526,200 13,735,152 0 0
White Bear Woods White Bear Lake, MN 14,184,170 1,621,300 14,591,904 0 0
Whitedove Pointe (WRP) Seattle, WA 0 605,300 5,447,856 0 14,340
Wilde Lake Richmond, VA 4,440,000 934,600 8,411,613 12,600 193,734
Williamsburg Square Little Rock, AR 3,288,623 315,000 1,745,958 0 3,371,274
Willow Brook (NC) Durham, NC 0 1,408,000 7,105,081 1,500 38,550
Willowglen Aurora, CO 0 1,708,000 15,371,641 1,200 572,196
Windemere Mesa, AZ 6,244,353 949,000 8,653,152 300 38,442
Windmill Colorado Springs, CO 0 395,544 4,953,156 100 561,634
Windridge Laguna Niguel, CA (O) 2,660,800 23,947,096 2,100 414,946
Windridge (WRP) Tacoma, WA 0 322,700 2,904,779 0 6,113
Windrush Oklahoma City, OK 0 588,800 5,311,532 0 54,821
Winterwood Charlotte, NC 12,127,756 1,720,100 15,481,455 1,700 1,123,101
Wood Creek (CA) Pleasant Hill, CA 0 9,728,000 22,992,918 1,900 93,025
Wood Crest Villa Westland, MI 0 925,900 8,333,827 0 (O)
Wood Lane Place Woodbury, MN 14,014,000 2,003,300 18,029,538 0 0
Woodbridge (N) Cary, NC 4,766,485 1,981,900 17,839,380 100 217,126
Woodcreek Beaverton, OR 11,345,849 1,753,700 15,783,764 2,100 1,308,090
Woodlake at Killearn Tallahassee, FL 0 1,404,300 12,638,426 3,855 953,291
Woodland Hills Decatur, GA 0 1,223,900 11,017,542 700 294,522
Woodland Meadows Ann Arbor, MI 0 2,003,600 18,032,640 0 8,575
Woodland Oaks Tulsa, OK 0 893,100 8,038,166 0 55,909
Woodlands of Minnetonka Minnetonka, MN 0 2,392,500 13,557,500 0 0
Woodmoor Austin, TX 0 649,300 5,843,200 4,500 932,671
Woods at North Bend Raleigh, NC 0 1,039,000 9,350,616 500 700,511
Woodscape Raleigh, NC 0 956,000 8,603,550 1,300 60,098
Woodside Lorton, VA 0 1,308,100 12,503,220 17,900 281,207
Wyndridge 2 Memphis, TN 14,135,000 1,486,000 13,586,157 2,000 210,964
Wyndridge 3 Memphis, TN 10,855,000 1,500,000 13,505,510 2,500 196,045
Yorktowne at Olde Mill Millersville, MD 0 216,000 1,330,710 0 4,632,854
Yuma Court Colorado Springs, CO 0 113,163 836,429 100 117,614
Development Properties (R) 0 8,271,910 36,040,199 0 0
Operating Partnership Chicago, IL 0 0 88,566 0 0
Management Business Chicago, IL 0 0 3,442,962 1,000 14,414,292
-------------- ------------ -------------- ---------- ------------
TOTAL $1,232,242,100 $790,764,741 $6,054,502,781 $1,215,488 $274,952,132
============== ============ ============== ========== ============
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of Life Used
Period 12/31/97 to Compute
- ---------------------------------------------------------------------------------------------------------------------- Depreciation
in Latest
Income
Building & Accumulated Date of Statement
Land Fixtures (A) Total (B) Depreciation Construction (C)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Westwood Pines Tamarac, FL 1,526,200 13,735,152 15,261,352 28,369 1991 30 Years
White Bear Woods White Bear Lake, MN 1,621,300 14,591,904 16,213,204 30,180 1989 30 Years
Whitedove Pointe (WRP) Seattle, WA 605,300 5,462,196 6,067,496 115,546 1992 30 Years
Wilde Lake Richmond, VA 947,200 8,605,347 9,552,547 329,313 1989 30 Years
Williamsburg Square Little Rock, AR 315,000 5,117,232 5,432,232 2,529,820 1974 30 Years
Willow Brook (NC) Durham, NC 1,409,500 7,143,631 8,553,131 170,045 1986 30 Years
Willowglen Aurora, CO 1,709,200 15,943,837 17,653,037 783,226 1983 30 Years
Windemere Mesa, AZ 949,300 8,691,593 9,640,893 169,704 1986 30 Years
Windmill Colorado Springs, CO 395,644 5,514,790 5,910,434 1,135,695 1985 30 Years
Windridge Laguna Niguel, CA 2,662,900 24,362,042 27,024,942 2,728,806 1989 30 Years
Windridge (WRP) Tacoma, WA 322,700 2,910,892 3,233,592 64,341 1989 30 Years
Windrush Oklahoma City, OK 588,800 5,366,353 5,955,153 119,419 1982 30 Years
Winterwood Charlotte, NC 1,721,800 16,604,556 18,326,356 2,431,640 1986 30 Years
Wood Creek (CA) Pleasant Hill, CA 9,729,900 23,085,943 32,815,843 416,329 1987 30 Years
Wood Crest Villa Westland, MI 925,900 8,333,827 9,259,727 21,418 1970 30 Years
Wood Lane Place Woodbury, MN 2,003,300 18,029,538 20,032,838 36,704 1989 30 Years
Woodbridge (N) Cary, NC 1,982,000 18,056,506 20,038,506 1,229,658 1993-95 30 Years
Woodcreek Beaverton, OR 1,755,800 17,091,854 18,847,654 2,198,878 1982-84 30 Years
Woodlake at Killearn Tallahassee, FL 1,408,155 13,591,717 14,999,872 1,951,520 1986 30 Years
Woodland Hills Decatur, GA 1,224,600 11,312,064 12,536,664 702,025 1985 30 Years
Woodland Meadows Ann Arbor, MI 2,003,600 18,041,215 20,044,815 149,772 1987-1989 30 Years
Woodland Oaks Tulsa, OK 893,100 8,094,075 8,987,175 178,918 1983 30 Years
Woodlands of Minnetonka Minnetonka, MN 2,392,500 13,557,500 15,950,000 12,818 1988 30 Years
Woodmoor Austin, TX 653,800 6,775,871 7,429,671 1,012,769 1981 30 Years
Woods at North Bend Raleigh, NC 1,039,500 10,051,127 11,090,627 840,918 1983 30 Years
Woodscape Raleigh, NC 957,300 8,663,648 9,620,948 416,109 1979 30 Years
Woodside Lorton, VA 1,326,000 12,784,427 14,110,427 1,402,458 1987 30 Years
Wyndridge 2 Memphis, TN 1,488,000 13,797,121 15,285,121 277,559 1988 30 Years
Wyndridge 3 Memphis, TN 1,502,500 13,701,555 15,204,055 298,409 1988 30 Years
Yorktowne at Olde Mill Millersville, MD 216,000 5,963,564 6,179,564 4,010,721 1974 30 Years
Yuma Court Colorado Springs, CO 113,263 954,043 1,067,306 170,222 1985 30 Years
Development Properties (R) 8,271,910 36,040,199 44,312,109 0 (R)
Operating Partnership Chicago, IL 0 88,566 88,566 42,766 (H)
Management Business Chicago, IL 1,000 17,857,254 17,858,254 8,109,998 (G)
------------ -------------- -------------- ------------
TOTAL $791,980,229 $6,329,454,913 $7,121,435,142 $444,761,975
============ ============== ============== ============
</TABLE>
S-11
<PAGE>
SCHEDULE III
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1997
NOTES:
(A) The balance of furniture & fixtures included in the total amount was
$232,636,142 as of December 31, 1997.
(B) The aggregate cost for Federal Income Tax purposes as of December 31, 1997
was approximately $6.2 billion.
(C) The life to compute depreciation for furniture & fixtures is 7 years.
(D) These two properties are encumbered by $14,947,187 in bonds.
(E) These seventeen properties are encumbered by $136,000,000 in bonds.
(F) These four properties are encumbered by $15,500,000 in bonds.
(G) This asset consists of various acquisition dates and represents furniture,
fixtures and equipment owned by the Management Business.
(H) This asset consists of various acquisition dates and represents furniture,
fixtures and equipment owned by the Operating Partnership.
(I) Improvements are net of write-off of fully depreciated assets which are no
longer in service.
(J) Combined with Cedar Cove.
(K) Formerly known as Oxford & Sussex.
(L) Formerly known as Post Place.
(M) Formerly known as The Vinings at Coral Springs.
(N) Formerly known as The Plantations (NC).
(O) These five properties are pledged as additional collateral in connection
with the tax-exempt bond refinancing.
(P) These twenty-one properties are encumbered by $133,669,779 in bonds.
(Q) These five properties are encumbered by a $50,200,125 note payable.
(R) Balances represent development properties Montierra, The Retreat and Vista
Grove. These apartment communities are currently under construction and/or
are in the process of being leased up.
* Four Lakes was constructed in phases between 1968 & 1988.
(#) The Lodge-Texas was struck by a tornado that destroyed most of the property.
The property was reconstructed during 1989 & 1990.
(x) Pines of Springdale was constructed in phases between 1985 & 1987.
S-11
<PAGE>
Exhibit 10.6
AMENDMENT NO. 1 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP OF
EVANS WITHYCOMBE RESIDENTIAL, L.P.
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF EVANS WITHYCOMBE RESIDENTIAL, L.P. (this "Amendment"),
effective as of the Effective Time (as defined in the Agreement and Plan of
Merger dated as of August 27, 1997 ("Merger Agreement") between Equity
Residential Properties Trust and Evans Withycombe Residential, Inc.).
RECITALS:
A. Evans Withycombe Residential, L.P., a Delaware limited partnership (the
"Partnership"), is governed by that certain Amended and Restated Agreement of
Limited Partnership of Evans Withycombe Residential, L.P. dated as of August
17, 1994 (the "Agreement").
B. Evans Withycombe Residential, Inc., a Maryland corporation ("EWR") and
the general partner of the Partnership, and Equity Residential Properties
Trust, a Maryland real estate investment ("EQR"), have merged pursuant to the
Merger Agreement (the "Merger").
C. Pursuant to the Merger Agreement, the limited partners of the Partnership
have approved the contribution of all the assets of the Partnership, subject
to its liabilities, to ERP Operating Partnership, an Illinois limited
partnership, on the terms and conditions provided for in the Merger Agreement
(the "Asset Contribution").
D. In connection with the Merger and the Asset Contribution, the limited
partners of the Partnership desire to amend the Agreement as hereinafter set
forth.
E. The limited partners of the Partnership further desire to ratify and
confirm the decision of the Board of Directors of Evans Withycombe
Residential, Inc., in its capacity as general partner of the Partnership, not
to present for consideration by the limited partners of the Partnership that
certain proposed Amendment to the Agreement dated as of June 18, 1997 (the
"11.2 Amendment").
AGREEMENTS:
1. AMENDMENTS TO ARTICLE 1: PROVISIONS RELATING TO DEFINED TERMS.
(a) Article 1 of the Partnership Agreement is hereby amended by adding
thereto the following definitions:
"ASSET CONTRIBUTION AGREEMENT" means the Asset Contribution Agreement
dated August 27, 1997 between the Partnership and ERP.
"EFFECTIVE TIME" means the time the State Department of Assessments and
Taxation of Maryland accepts for record the Articles of Merger between EQR
and Evans Withycombe Residential, Inc.
"EQR" means Equity Residential Properties Trust, a Maryland real estate
investment trust, as successor by merger to Evans Withycombe Residential,
Inc., a Maryland corporation.
"ERP" means ERP Operating Limited Partnership, an Illinois limited
partnership of which EQR is the general partner.
"ERP COMMON UNITS" mean units of common partnership interest in ERP.
"ERP UNITS" mean units of partnership interest in ERP.
(b) The definitions of "Option Plans", "Partnership Record Date" and "Value"
are hereby amended to change the references therein to "General Partner" to
"EQR."
(c) The definition of "Common Shares" is hereby amended to read as follows:
"COMMON SHARES" mean common shares of beneficial interest, $.01 par value
per share, of EQR.
1
<PAGE>
(d) The definition of "General Partner" is hereby amended to read as
follows:
"GENERAL PARTNER" means EQR and ERP, as co-general partners, and their
respective successors as co-general partners of the Partnership.
(e) The definition of "Transaction" in Article I is hereby deleted.
(f) The definition of "Unit Adjustment Factor" is hereby amended to read as
follows:
"UNIT ADJUSTMENT FACTOR" means 1.00 until the Effective Time and from and
after the Effective Time 0.50; provided that in the event that EQR (a)
declares or pays a dividend on its outstanding Common Shares in Common
Shares or makes a distribution to all holders of its outstanding Common
Shares in Common Shares, (b) subdivides its outstanding Common Shares or
(c) combines its outstanding Common Shares into a smaller number of Common
Shares, the Unit Adjustment Factor shall be adjusted by multiplying the
Unit Adjustment Factor by a fraction, the numerator of which shall be the
number of Common Shares issued and outstanding on the record date (assuming
for such purpose that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which
shall be the actual number of Common Shares (determined without the above
assumption) issued and outstanding on the record date for such dividend,
contribution, subdivision or combination. In addition, while Section 7.5
hereof provides that EQR shall not directly or indirectly enter into or
conduct any business except as permitted in said Section, if an event were
to occur that would significantly affect the economic relationship between
a Partnership Unit and a Common Share, the Unit Adjustment Factor shall
also be appropriately adjusted. Any such adjustment to the Unit Adjustment
Factor shall be determined by the Board of Trustees of EQR, whose
determination as to whether an adjustment is necessary and the amount of
such adjustment shall be conclusive absent manifest error. Any adjustment
to the Unit Adjustment Factor shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for
such event.
2. CHANGE OF PRINCIPAL OFFICE. The second sentence of Section 2.3 of the
Agreement is hereby amended to read as follows:
"The principal office of the Partnership is located at Two North
Riverside Plaza, Suite 400, Chicago, Illinois 60606, or such other place as
the General Partner may from time to time designate by notice to the
Limited Partners."
3. AMENDMENTS TO CHANGE REFERENCES FROM GENERAL PARTNER TO EQR. The
following Sections of the Agreement are hereby amended to change references
therein to "General Partner" to references to "EQR."
(a) Section 3.1;
(b) Section 3.2;
(c) Section 4.2(e) (renumbered pursuant to this Amendment as Section
4.2(b));
(d) the last sentence of Section 4.5;
(e) Section 7.1(a)(1);
(f) the penultimate sentence of Section 7.7(a);
(g) Section 8.3(a);
(h) Section 9.3;
(i) Section 10.3; and
(j) Section 14.1(b)(6).
4. GENERAL PARTNERSHIP INTERESTS. The last sentence of Section 4.1(a) is
hereby amended to read as follows:
"A number of Partnership Units held by EQR equal to one percent (1%) of all
outstanding Partnership Units shall be deemed to be a General Partnership
Interest and a number of Partnership Units held by ERP equal to one percent
(1%) of all outstanding Partnership Units shall be deemed to be a General
Partnership Interest."
5. DELETION OF REQUIREMENT TO CONTRIBUTE FUNDS. Section 4.1(b)(2) of the
Agreement is hereby deleted in its entirety.
6. EQR'S SHARES NOT EQUATED TO PARTNERSHIP UNITS. Sections 4.2(b), 4.2(c)
and 4.2(d) of the Agreement are hereby deleted in their entirety and paragraph
(e) of Section 4.2 is hereby redesignated as paragraph (b) of Section 4.2.
7. DISTRIBUTION OF ERP COMMON UNITS IN LIQUIDATION. The Agreement is hereby
amended by adding thereto a new Section 5.5, which shall read as follows:
"5.5 DISTRIBUTION OF ERP COMMON UNITS. Notwithstanding anything to the
contrary in this Agreement, the ERP Common Units which may be received by
the Partnership pursuant to the Asset Contribution Agreement may
2
<PAGE>
be distributed to the Partners in liquidation of the Partnership on the
basis of one ERP Common Unit for each Partnership Unit then outstanding."
8. CONFORMING AMENDMENT. The proviso at the end of Section 7.1(a)(3) is
hereby amended to read as follows:
"provided, further, that the sale of all or substantially all of the assets
of the Partnership shall require the Consent of a majority of the
Percentage Interests of the Limited Partnership Interests (including
Limited Partnership Interests held by the General Partner)."
9. SALE OF ALL ASSETS PERMITTED. Section 7.2(a) of the Agreement is hereby
amended to read as follows:
"(a) take any action which would make it impossible to carry on the
ordinary business of the Partnership, except as otherwise provided in this
Agreement (it being understood and agreed that, subject to Section
7.1(a)(3), a sale of any or all of the assets of the Partnership, for
example, would be an ordinary part of the Partnership's business and
affairs and is specifically permitted hereby);"
10. OUTSIDE ACTIVITIES OF EQR. Section 7.5 of the Agreement is hereby
deleted in its entirety and the following is substituted in lieu thereof:
"Section 7.5 INTENTIONALLY OMITTED."
11. ASSET CONTRIBUTION AGREEMENT PERMITTED. Section 7.6(c) of the Agreement
is hereby amended to read as follows:
"(c) CONTRACT WITH GENERAL PARTNER. Except as expressly permitted by this
Agreement and except as contemplated by the Asset Contribution Agreement,
neither the General Partner nor any of its Affiliates shall sell, transfer
or convey any property to, or purchase any property from, the Partnership,
directly or indirectly, except pursuant to transactions that are on terms
that are fair and reasonable and no less favorable to the Partnership than
would be obtained from an unaffiliated third party in connection
therewith."
12. ACTION TO MAINTAIN REIT STATUS OF EQR. Section 7.9(d) of the Agreement
is hereby amended to read as follows:
"(d) ACTIONS TO MAINTAIN REIT STATUS OR AVOID TAXATION OF
EQR. Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision
of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is
necessary or advisable in order (i) to protect the ability of EQR to
continue to qualify as a REIT or (ii) to avoid the incurrence of any taxes
by EQR under Section 857 or Section 4981 of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the
Limited Partners."
13. TITLE TO PARTNERSHIP ASSETS TRANSFERRED TO ERP PURSUANT TO ASSET
CONTRIBUTION AGREEMENT. The third sentence of Section 7.10 of the Agreement is
hereby amended to read as follows:
"The General Partner hereby declares and warrants that, except for
Partnership assets contributed to ERP pursuant to the Asset Contribution
Agreement, any Partnership assets for which legal title is held in the name
of the General Partner or any nominee or Affiliate of the General Partner
shall be held by the General Partner for the use and benefit of the
Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause
beneficial and record title to such assets to be vested in the Partnership
as soon as reasonably practicable."
14. ADJUSTMENT TO OUTSTANDING UNITS. Section 8.5(b) of the Agreement is
hereby amended to read as follows:
"(b) ADJUSTMENTS TO OUTSTANDING PARTNERSHIP UNITS AND NOTIFICATION OF
CHANGES IN UNIT ADJUSTMENT FACTOR. The number of outstanding Partnership
Units shall be subject to adjustment from time to time by the Unit
Adjustment Factor. The Partnership shall notify each Limited Partner in
writing of any change made to the Unit Adjustment Factor within ten (10)
Business Days of the date such change becomes effective."
15. TRANSFER OF GENERAL PARTNER'S PARTNERSHIP INTEREST.
(a) Section 11.2(a) of the Agreement is hereby amended to read as follows:
"(a) GENERAL. In no event may the General Partner at any time assign,
sell, transfer, pledge, hypothecate or otherwise dispose of all or any
portion of its General Partnership Interest except by operation of law."
(b) Section 11.2(c) of the Agreement is hereby deleted in its entirety.
3
<PAGE>
16. NO REQUIREMENT TO SELL ERP UNITS RECEIVED UPON LIQUIDATION. Section 13.2
of the Agreement is hereby amended by adding at the end thereof a new sentence
which reads as follows:
"Notwithstanding anything to the contrary contained herein (including,
without limiting the generality of the foregoing, Section 13.2(a)(4)), the
General Partner shall cause the Partnership to distribute the ERP Common
Units received by the Partnership pursuant to the Asset Contribution
Agreement in liquidation of the Partnership Units on the basis of one ERP
Unit for each outstanding Partnership Unit. The General Partner shall be
under no obligation to sell such ERP Common Units. The Partnership may
remain in existence and undertake the activities as contemplated by Section
6 of the Asset Contribution Agreement as part of its winding up."
17. NO PRIOR AMENDMENT. The Limited Partners of the Partnership hereby
ratify, approve and confirm in all respects the decision of the Board of
Directors of Evans Withycombe Residential, Inc. not to present the 11.2
Amendment to the Limited Partners of the Partnership, with the same force and
effect as if the Limited Partners of the Partnership had voted against the
adoption of the 11.2 Amendment.
18. ELIMINATION OF CERTIFICATES FOR UNIT.
(a) The definition of Partnership Unit is hereby amended by deleting the
second sentence thereof.
(b) The Agreement is hereby amended by deleting Exhibit D thereof in its
entirety.
19. REFERENCE TO AND EFFECT ON THE PARTNERSHIP AGREEMENT.
(a) At and after the Effective Time, each reference in the Partnership
Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of
like import referring to the Partnership Agreement shall mean and be a
reference to the Partnership Agreement as amended by this Amendment.
(b) The Partnership Agreement as amended and restated as of August 17, 1994
and as amended by this Amendment shall remain in full force and effect and is
hereby ratified and confirmed.
20. HEADINGS. Section and subsection headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose or be given any substantive effect.
21. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
22. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically
attached to the same document.
4
<PAGE>
IN WITNESS WHEREOF, the Partners have executed this Amendment as of the
Effective Time.
GENERAL PARTNERS:
EQUITY RESIDENTIAL PROPERTIES TRUST, a
Maryland real estate investment trust,
General Partner
By: Shelley Dunck
--------------------------------------
Title: Vice President
---------------------------------
ERP OPERATING LIMITED PARTNERSHIP, an
Illinois limited partnership
By: EQUITY RESIDENTIAL PROPERTIES TRUST,
a Maryland real estate investment
trust, its general partner
By: Shelley Dunck
-----------------------------------
Title: Vice President
------------------------------
LIMITED PARTNERS:
EQUITY RESIDENTIAL PROPERTIES TRUST, a
Maryland real estate investment trust,
Limited Partner, as attorney-in-fact for
the Limited Partners
By: Shelley Dunck
--------------------------------------
Title: Vice President
--------------------------------
ERP OPERATING LIMITED PARTNERSHIP, an
Illinois limited partnership, Limited
Partner, as attorney-in-fact for the
Limited Partners
By: EQUITY RESIDENTIAL PROPERTIES TRUST,
a Maryland real estate investment
trust, its general partner
By: Shelley Dunck
-----------------------------------
Title: Vice President
------------------------------
5
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Consolidated and Combined Historical, Including Predecessor Business
Earnings to Combined Fixed Charges and Preferred Distributions Ratio
<TABLE>
<CAPTION>
Historical
--------------------------------------------------------
12/31/97 12/31/96 12/31/95 12/31/94 12/31/93
-------- -------- -------- -------- --------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income $707,733 $454,412 $373,919 $220,727 $104,388
Fee income - outside managed 5,697 6,749 7,030 4,739 4,651
Interest income - investment in mortgage notes 20,366 12,819 4,862 - -
Interest and other income 13,525 4,405 4,573 5,568 3,031
-------- -------- -------- -------- --------
Total revenues 747,321 478,385 390,384 231,034 112,070
-------- -------- -------- -------- --------
EXPENSES
Property and maintenance 176,075 127,172 112,186 66,534 35,324
Real estate taxes and insurance 69,520 44,128 37,002 23,028 11,403
Property management 26,793 17,512 15,213 10,249 3,491
Property management - non-recurring - - - 879 -
Fee and asset management 3,364 3,837 3,887 2,056 2,524
Depreciation 156,644 93,253 72,410 37,273 15,384
Interest:
Expense incurred 121,324 81,351 78,375 37,044 26,042
Amortization of deferred financing costs 2,523 4,242 3,444 1,930 3,322
Refinancing costs - - - - 3,284
General and administrative 15,064 9,857 8,129 6,053 3,159
-------- -------- -------- -------- --------
Total expenses 571,307 381,352 330,646 185,046 103,933
-------- -------- -------- -------- --------
Income (loss) before extraordinary items $176,014 $ 97,033 $ 59,738 $ 45,988 $ 8,137
======== ======== ======== ======== ========
Combined Fixed Charges and Preferred Distributions:
Interest and other financing costs $121,324 $ 81,351 $ 78,375 $ 37,044 $ 26,042
Refinancing costs - - - - 3,284
Amortization of deferred financing costs 2,523 4,242 3,444 1,930 3,322
Preferred distributions 59,012 29,015 10,109 - -
-------- -------- -------- -------- --------
Total Combined Fixed Charges
and Preferred Distributions $182,859 $114,608 $ 91,928 $ 38,974 $ 32,648
======== ======== ======== ======== ========
Earnings before combined fixed charges
and preferred distributions $299,861 $182,626 $141,557 $ 84,962 $ 40,785
======== ======== ======== ======== ========
Funds from operations before combined fixed
charges and preferred distributions $456,505 $275,879 $213,967 $123,114 $ 56,169
======== ======== ======== ======== ========
Ratio of earnings before combined fixed charges
and preferred distributions to combined fixed charges
and preferred distributions 1.64 1.59 1.54 2.18 1.25
======== ======== ======== ======== ========
Ratio of funds from operations before combined fixed
charges and preferred distributions to combined fixed
charges and preferred distributions 2.50 2.41 2.33 3.16 1.72
======== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT 21
EQUITY RESIDENTIAL PROPERTIES TRUST
SUBSIDIARIES
------------
1. ERP Operating Limited Partnership
2. Equity Residential Properties Management Limited Partnership
3. Equity Residential Properties Management Limited Partnership II
4. Equity Residential Properties Management Corp. I (own preferred stock only,
not common)
5. Equity Residential Properties Management Corp. II (own preferred stock
only, not common)
6. EQR-BS Financing Limited Partnership
7. EQR-Chaparral Creek GP Limited Partnership
8. EQR-Lincoln Green I and II GP Limited Partnership
9. EQR-Lodge (OK) GP Limited Partnership
10. EQR-Stonebrook GP Limited Partnership
11. EQR-Sleepy Hollow Financing Limited Partnership
12. EQR-EOI Financing Limited Partnership
13. EQR-Continental Villas Financing Limited Partnership
14. EQR-Doral Financing Limited Partnership
15. EQR-Governor's Place Financing Limited Partnership
16. EQR-Plantation Financing Limited Partnership
17. EQR-Valley Park South Financing Limited Partnership
18. EQR-Yorktowne Financing Limited Partnership
19. EQR-SWN Line Financing Limited Partnership
20. EQR-Arbors Financing Limited Partnership
21. EQR-Breton Hammocks Financing Limited Partnership
22. EQR-Emerald Place Financing Limited Partnership
23. EQR-Essex Place Financing Limited Partnership
24. EQR-Met Financing Limited Partnership
25. EQR-Met CA Financing Limited Partnership
26. EQR-Wellington Hill Financing Limited Partnership - (New Hampshire)
27. EQR-Tanasbourne Terrace Financing Limited Partnership
28. EQR-Reserve Square Limited Partnership - (Ohio)
29. EQR-Fountainhead I Financing General Partnership
30. EQR-Fountainhead II Financing General Partnership
31. EQR-Fountainhead III Financing General Partnership
32. E-Chaparral Associates Limited Partnership
33. Equity-Chaparral Venture Limited Partnership
34. E-G-One Associates
35. Equity Green I Venture
36. E-G-Two Associates
37. Equity-Green II Venture
38. E-Stonebrook Associates
39. Equity-Stonebrook Venture Limited Partnership
40. E-Lodge Associates Limited Partnership
<PAGE>
41. Equity-Lodge Venture Limited Partnership
42. Country Club Associates Limited Partnership
43. Second Country Club Associates Limited Partnership
44. Second Georgian Woods Limited Partnership
45. Greenwich Woods Associates Limited Partnership
46. Artery Northampton Limited Partnership
47. Third Towne Centre Limited Partnership
48. Fourth Towne Centre Limited Partnership
49. Georgian Woods Annex Associates
50. EQR-Keystone Financing General Partnership
51. EQR-Camellero Financing Limited Partnership
52. EQR-Arizona, L.L.C. - (Delaware)
53. EQR-Washington, L.L.C. - (Delaware)
54. EQR-Wellington, L.L.C. - (Delaware)
55. EQR-Oregon, L.L.C. - (Delaware)
56. EQR-Waterfall, L.L.C. - (Delaware)
57. EQR-Virginia, L.L.C. - (Delaware)
58. Multifamily Portfolio LP Limited Partnership
59. EQR-Plantation, L.L.C. - (Delaware)
60. EQR-California, L.L.C.;
61. EQR-ArtBHolder, L.L.C.;
62. EQR-ArtCapLoan, L.L.C.;
63. EQR-Keystone Financing G.P.;
64. Country Ridge General Partnership;
65. Rosehill Pointe General Partnership;
66. EQR-Canter Chase General Partnership;
67. Hunter's Glen General Partnership;
68. Sunny Oak Village General Partnership;
69. EQR-Pine Meadows Garden General Partnership;
70. EQR-Bond Partnership;
71. EQR-Park Place I General Partnership;
72. EQR-Park Place II General Partnership;
73. Songbird General Partnership;
74. Cedar Crest General Partnership;
75. EQR-Creekside Oaks General Partnership;
76. EQR-Village Oaks General Partnership;
77. EQR-Lakeville Resort General Partnership;
78. EQR-Trails at Dominion General Partnership;
79. EQR-Virginia, L.L.C.;
80. EQR-Dartmouth Woods General Partnership
81. Wadlington Investments General Partnership
82. EQR-Warwick, L.L.C.;
83. EQR-Ironwood, L.L.C.;
84. EQR-Spinnaker Cove, L.L.C.;
85. EQR-Wyndridge II, L.L.C.
86. EQR-Wyndridge III, L.L.C.;
87. EQR-Highline Oaks, L.L.C.;
88. EQR-Marks A, L.L.C.;
89. EQR-Missouri, L.L.C.;
<PAGE>
90. EQR-Ridgemont/Mountain Brook, L.L.C.;
91. EQR-Marks B, L.L.C.;
92. EQR-Coach Lantern, L.L.C.;
93. EQR-Foxcroft, L.L.C.;
94. EQR-Yarmouth, L.L.C.;
95. EQR-Chardonnay Park, L.L.C.;
96. EQR-Preston Bend General Partnership;
97. EQR-Villa Serenas General Partnership;
98. The Gates of Redmond, L.L.C.;
99. EQR-North Hill, L.L.C.;
100. EQR-Watson General Partnership;
101. CAPREIT Woodland Meadows Limited Partnership;
102. CAPREIT Burwick Farms Limited Partnership;
103. CAPREIT Mariner's Wharf Limited Partnership;
104. CAPREIT Silver Springs Limited Partnership;
105. CAPREIT Northlake Limited Partnership;
106. CAPREIT Tivoli Lakes Club Limited Partnership;
107. CAPREIT Eastland on the Lake Limited Partnership;
108. CAPREIT Concorde Bridge Limited Partnership;
109. CAPREIT Garden Lake Limited Partnership;
110. CAPREIT Highland Grove Limited Partnership;
111. CAPREIT Clarion Limited Partnership;
112. CAPREIT Atrium Limited Partnership;
113. CAPREIT Chimneys Limited Partnership;
114. CAPREIT Creekwood Limited Partnership;
115. CAPREIT Hidden Oaks Limited Partnership;
116. CAPREIT Botany Arms Limited Partnership;
117. CAPREIT Hampton Arms Limited Partnership;
118. CAPREIT Gleneagle Limited Partnership;
119. CAPREIT Greyeagle Limited Partnership;
120. CAPREIT Tarmarind at Stonebridge Limited Partnership;
121. CAPREIT Sycamore Ridge Limited Partnership;
122. Capital Realty Investors Tax Exempt Fund Limited Partnership;
123. CRICO of Fountain Place Limited Partnership;
124. CRICO of Woodland Place Limited Partnership;
125. CRICO of Royal Oaks Limited Partnership;
126. CRICO of Trailway Pond I Limited Partnership;
127. CRICO of Valley Creek I Limited Partnership;
128. CRICO of Valley Creek II Limited Partnership;
129. CRICO of White Bear Woods I Limited Partnership;
130. CRICO of James Street Crossing Limited Partnership
131. CRICO of Regency Woods Limited Partnership
132. CRICO of Ocean Walk Limited Partnership
133. CRICO of Trailway Pond II Limited Partnership;
134. CRICO of Ethan's I Limited Partnership;
135. CRICO of Ethans II Limited Partnership;
136. FPAII Limited Partnership;
137. CAPREIT Arbor Glen Limited Partnership;
138. CAPREIT Woodcrest Villa Limited Partnership;
<PAGE>
139. CAPREIT Farmington Gates Limited Partnership;
140. CAPREIT Ridgeway Commons Limited Partnership;
141. CAPREIT River Oak Limited Partnership;
142. CAPREIT Cedars Limited Partnership;
143. CAPREIT Westwood Pines Limited Partnership;
144. Geary Courtyard Associates;
145. EQR-Vinings at Ashley Lake, L.L.C.;
146. EQR-Flatlands, L.L.C.;
147. EQR-Fairfield, L.L.C.;
148. Evans Withycombe Residential, L.P.;
149. McKinley Hills Partners-85;
150. EW Chandler Limited Partnership;
151. Evans Withycombe Finance Partnership, L.P.;
152. EQR-740 River Drive, L.L.C.;
153. Rolido Park General Partnership;
154. EQR/Lincoln Guaranty Credit Limited Partnership;
155. EQR/Lincoln No. One Master Limited Partnership; and
156. Evans Withycombe Residential, L.P.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation of our reports on page F-3 and S-1 of
this Form 10-K by reference in the prospectus constituting part of the
Registration Statements on Form S-3 (No. 333-45557) of ERP Operating Limited
Partnership.
/s/ Grant Thornton LLP
GRANT THORNTON LLP
Chicago, Illinois
March 25, 1998
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 333-45557) of ERP Operating Limited Partnership and in the related
Prospectus of our report dated February 26, 1998, except for Note 31, as to
which the date is March 12, 1998, with respect to the consolidated financial
statements and schedule of ERP Operating Limited Partnership included in this
Annual Report (Form 10-K) for the year ended December 31, 1997.
/s/ Ernst & Young LLP
Ernst & Young LLP
Chicago, Illinois
March 25, 1998
<PAGE>
EXHIBIT 24.1
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that John W. Alexander, having an address at
229 N. Church St., Suite 200-Box E Charlotte, NC 28202, has made, constituted
- ------------------------------------------------------
and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas
Crocker II and Michael J. McHugh, or either of them, having an address at Two
North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-
Fact for him and his name, place and stead to sign and execute in any and all
capacities this Annual Report on Form 10-K and any or all amendments to this
Annual Report granting unto each of such, Attorney-in-Fact, full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in an about the premises, as fully, to all intents and
purposes as he might or could do if personally present at the doing thereof,
with full power of substitution and revocation, hereby ratifying and confirming
all that each of such Attorney-in-Fact or his substitutes shall lawfully do or
cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, John W. Alexander, has hereunto set his hand this
2nd day of March, 1998.
- --- -----
/s/ John W. Alexander
---------------------
John W. Alexander
I, Lisa Currie, a Notary Public in and for said County in the State of
-----------
aforesaid, do hereby certify that John W. Alexander, personally known to me to
be the same person whose name is subscribed to the foregoing instrument appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as his own free voluntary act for the uses and purposes therein set
forth.
Given under my hand and notarial seal this 2nd day of March, 1998.
--- -----
Lisa Currie
______________________________
(Notary Public)
My Commission Expires: February 7, 2001
----------------
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that James D. Harper, Jr., having an address
at 3250 Mary Street, Suite 206, Coconut Grove, FL 33133, has made, constituted
----------------------------------------------------
and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas
Crocker II and Michael J. McHugh, or either of them, having an address at Two
North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-
Fact for him and his name, place and stead to sign and execute in any and all
capacities this Annual Report on Form 10-K and any or all amendments to this
Annual Report granting unto each of such, Attorney-in-Fact, full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in an about the premises, as fully, to all intents and
purposes as he might or could do if personally present at the doing thereof,
with full power of substitution and revocation, hereby ratifying and confirming
all that each of such Attorney-in-Fact or his substitutes shall lawfully do or
cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, James D. Harper, Jr., has hereunto set his hand this
2nd day of March, 1998.
- ---- -----
/s/ James D. Harper, Jr.
------------------------
James D. Harper, Jr.
I, Lisa Currie, a Notary Public in and for said County in the State of
-----------
aforesaid, do hereby certify that James D. Harper, Jr., personally known to me
to be the same person whose name is subscribed to the foregoing instrument
appeared before me this day in person and acknowledged that he signed and
delivered said instrument as his own free voluntary act for the uses and
purposes therein set forth.
Given under my hand and notarial seal this 2nd day of March, 1998.
--- -----
Lisa Currie
_____________________________
(Notary Public)
My Commission Expires: February 7, 2001
----------------
<PAGE>
EXHIBIT 24.3
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Errol R. Halperin, having an address at
203 N. LaSalle St., Suite 1800, Chicago, IL 60601-1293, has made, constituted
- ------------------------------------------------------
and appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas
Crocker II and Michael J. McHugh, or either of them, having an address at Two
North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-
Fact for him and his name, place and stead to sign and execute in any and all
capacities this Annual Report on Form 10-K and any or all amendments to this
Annual Report granting unto each of such, Attorney-in-Fact, full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in an about the premises, as fully, to all intents and
purposes as he might or could do if personally present at the doing thereof,
with full power of substitution and revocation, hereby ratifying and confirming
all that each of such Attorney-in-Fact or his substitutes shall lawfully do or
cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, Errol R. Halperin, has hereunto set his hand this
2nd day of March, 1998.
- --- -----
/s/ Errol R. Halperin
---------------------
Errol R. Halperin
I, Lisa Currie, a Notary Public in and for said County in the State of
-----------
aforesaid, do hereby certify that Errol R. Halperin, personally known to me to
be the same person whose name is subscribed to the foregoing instrument appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as his own free voluntary act for the uses and purposes therein set
forth.
Given under my hand and notarial seal this 2nd day of March, 1998.
--- -----
Lisa Currie
______________________________
(Notary Public)
My Commission Expires: February 7, 2001
----------------
<PAGE>
EXHIBIT 24.4
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that B. Joseph White, having an address at
701 Tappan, Ann Arbor, MI 48109-1234, has made, constituted and appointed and BY
- ------------------------------------
THESE PRESENTS, does make, constitute and appoint Douglas Crocker II and Michael
J. McHugh, or either of them, having an address at Two North Riverside Plaza,
Chicago, Illinois 60606, his true and lawful Attorney-in-Fact for him and his
name, place and stead to sign and execute in any and all capacities this Annual
Report on Form 10-K and any or all amendments to this Annual Report granting
unto each of such, Attorney-in-Fact, full power and authority to do and perform
each and every act and thing, requisite and necessary to be done in an about the
premises, as fully, to all intents and purposes as he might or could do if
personally present at the doing thereof, with full power of substitution and
revocation, hereby ratifying and confirming all that each of such Attorney-in-
Fact or his substitutes shall lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, B. Joseph White, has hereunto set his hand this 2nd
---
day of March, 1998.
-----
/s/ B. Joseph White
-------------------
B. Joseph White
I, Lisa Currie, a Notary Public in and for said County in the State of
-----------
aforesaid, do hereby certify that B. Joseph White, personally known to me to be
the same person whose name is subscribed to the foregoing instrument appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as his own free voluntary act for the uses and purposes therein set
forth.
Given under my hand and notarial seal this 2nd day of March, 1998.
--- -----
Lisa Currie
______________________________
(Notary Public)
My Commission Expires: February 7, 2001
----------------
<PAGE>
EXHIBIT 24.5
POWER OF ATTORNEY
-----------------
STATE OF CONNECTICUT
COUNTY OF FAIRFIELD
-------------
KNOW ALL MEN BY THESE PRESENTS that Barry S. Sternlicht, having an address
at Three Pickwick Plaza, Suite 250, Greenwich, CT 06830 , has made,
---------------------------------------------------------------
constituted and appointed and BY THESE PRESENTS, does make, constitute and
appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an
address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and
lawful Attorney-in-Fact for him and his name, place and stead to sign and
execute in any and all capacities this Annual Report on Form 10-K and any or all
amendments to this Annual Report granting unto each of such, Attorney-in-Fact,
full power and authority to do and perform each and every act and thing,
requisite and necessary to be done in an about the premises, as fully, to all
intents and purposes as he might or could do if personally present at the doing
thereof, with full power of substitution and revocation, hereby ratifying and
confirming all that each of such Attorney-in-Fact or his substitutes shall
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, Barry S. Sternlicht, has hereunto set his hand this
4th day of March , 1998.
- ----- -----------
/s/ Barry S. Sternlicht
-----------------------
Barry S. Sternlicht
I, Karen B. Murray , a Notary Public in and for said County in the
----------------------
State of aforesaid, do hereby certify that Barry S. Sternlicht, personally known
to me to be the same person whose name is subscribed to the foregoing instrument
appeared before me this day in person and acknowledged that he signed and
delivered said instrument as his own free voluntary act for the uses and
purposes therein set forth.
Given under my hand and notarial seal this 4th day of March , 1998.
----- -----------
Karen B. Murray
---------------------------
(Notary Public)
My Commission Expires: February 28, 2002
-----------------------
<PAGE>
EXHIBIT 24.6
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Henry H. Goldberg, having an address at
4733 Bethesda Ave., Suite 400, Bethesda, MD 20814, has made, constituted and
- -------------------------------------------------
appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas
Crocker II and Michael J. McHugh, or either of them, having an address at Two
North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-
Fact for him and his name, place and stead to sign and execute in any and all
capacities this Annual Report on Form 10-K and any or all amendments to this
Annual Report granting unto each of such, Attorney-in-Fact, full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in an about the premises, as fully, to all intents and
purposes as he might or could do if personally present at the doing thereof,
with full power of substitution and revocation, hereby ratifying and confirming
all that each of such Attorney-in-Fact or his substitutes shall lawfully do or
cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, Henry H. Goldberg, has hereunto set his hand this
2nd day of March, 1998.
- --- -----
/s/ Henry H. Goldberg
---------------------
Henry H. Goldberg
I, Lisa Currie, a Notary Public in and for said County in the State of
-----------
aforesaid, do hereby certify that Henry H. Goldberg, personally known to me to
be the same person whose name is subscribed to the foregoing instrument appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as his own free voluntary act for the uses and purposes therein set
forth.
Given under my hand and notarial seal this 2nd day of March, 1998.
--- -----
Lisa Currie
_______________
(Notary Public)
My Commission Expires: February 7, 2001
----------------
<PAGE>
EXHIBIT 24.7
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Edward Lowenthal, having an address at
610 Fifth Avenue, 7th Floor, New York, NY 11020, has made, constituted and
- -----------------------------------------------
appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas
Crocker II and Michael J. McHugh, or either of them, having an address at Two
North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-
Fact for him and his name, place and stead to sign and execute in any and all
capacities this Annual Report on Form 10-K and any or all amendments to this
Annual Report granting unto each of such, Attorney-in-Fact, full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in an about the premises, as fully, to all intents and
purposes as he might or could do if personally present at the doing thereof,
with full power of substitution and revocation, hereby ratifying and confirming
all that each of such Attorney-in-Fact or his substitutes shall lawfully do or
cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, Edward Lowenthal, has hereunto set his hand this 2nd
---
day of March, 1998.
-----
/s/ Edward Lowenthal
--------------------
Edward Lowenthal
I, Lisa Currie, a Notary Public in and for said County in the State of
-----------
aforesaid, do hereby certify that Edward Lowenthal, personally known to me to be
he same person whose name is subscribed to the foregoing instrument appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as his own free voluntary act for the uses and purposes therein set
forth.
Given under my hand and notarial seal this 2nd day of March, 1998.
--- -----
Lisa Currie
_______________
(Notary Public)
My Commission Expires: February 7, 2001
----------------
<PAGE>
EXHIBIT 24.8
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Jeffrey H. Lynford, having an address
at 610 Fifth Avenue, 7th Floor, New York, NY 10020, has made, constituted and
-----------------------------------------------
appointed and BY THESE PRESENTS, does make, constitute and appoint Douglas
Crocker II and Michael J. McHugh, or either of them, having an address at Two
North Riverside Plaza, Chicago, Illinois 60606, his true and lawful Attorney-in-
Fact for him and his name, place and stead to sign and execute in any and all
capacities this Annual Report on Form 10-K and any or all amendments to this
Annual Report granting unto each of such, Attorney-in-Fact, full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in an about the premises, as fully, to all intents and
purposes as he might or could do if personally present at the doing thereof,
with full power of substitution and revocation, hereby ratifying and confirming
all that each of such Attorney-in-Fact or his substitutes shall lawfully do or
cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, Jeffrey H. Lynford, has hereunto set his hand this
2nd day of March, 1998.
- --- -----
/s/ Jeffrey H. Lynford
----------------------
Jeffrey H. Lynford
I, Lisa Currie, a Notary Public in and for said County in the State of
-----------
aforesaid, do hereby certify that Jeffrey H. Lynford, personally known to me to
be the same person whose name is subscribed to the foregoing instrument appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as his own free voluntary act for the uses and purposes therein set
forth.
Given under my hand and notarial seal this 2nd day of March, 1998.
--- -----
Lisa Currie
_______________
(Notary Public)
My Commission Expires: February 7, 2001
----------------
<PAGE>
EXHIBIT 24.9
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Stephen O. Evans, having an address at
6991 East Camelback Road, Suite A200, Scottsdale, AZ 85251, has made,
- ----------------------------------------------------------
constituted and appointed and BY THESE PRESENTS, does make, constitute and
appoint Douglas Crocker II and Michael J. McHugh, or either of them, having an
address at Two North Riverside Plaza, Chicago, Illinois 60606, his true and
lawful Attorney-in-Fact for him and his name, place and stead to sign and
execute in any and all capacities this Annual Report on Form 10-K and any or all
amendments to this Annual Report granting unto each of such, Attorney-in-Fact,
full power and authority to do and perform each and every act and thing,
requisite and necessary to be done in an about the premises, as fully, to all
intents and purposes as he might or could do if personally present at the doing
thereof, with full power of substitution and revocation, hereby ratifying and
confirming all that each of such Attorney-in-Fact or his substitutes shall
lawfully do or cause to be done by virtue hereof.
This Power of Attorney shall remain in full force and effect until
terminated by the undersigned through the instrumentality of a signed writing.
IN WITNESS WHEREOF, Stephen O. Evans, has hereunto set his hand this 2nd
---
day of March, 1998.
-----
/s/ Stephen O. Evans
--------------------
Stephen O. Evans
I, Lisa Currie, a Notary Public in and for said County in the State of
aforesaid, do hereby certify that Stephen O. Evans, personally known to me to be
he same person whose name is subscribed to the foregoing instrument appeared
before me this day in person and acknowledged that he signed and delivered said
instrument as his own free voluntary act for the uses and purposes therein set
forth.
Given under my hand and notarial seal this 2nd day of March, 1998.
--- -----
Lisa Currie
___________________
(Notary Public)
My Commission Expires: February 7, 2001
----------------
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<PAGE>
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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<CASH> 33,295
<SECURITIES> 0
<RECEIVABLES> 3,302
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<CURRENT-ASSETS> 205,521
<PP&E> 7,121,435
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<CURRENT-LIABILITIES> 182,913
<BONDS> 2,948,323
0
1,041,713
<COMMON> 0
<OTHER-SE> 2,921,682
<TOTAL-LIABILITY-AND-EQUITY> 7,094,631
<SALES> 733,796
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