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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, 1998
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
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(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
------- -------
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. [X]
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DOCUMENTS INCORPORATED BY REFERENCE
None.
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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 18
Item 3. Legal Proceedings 43
Item 4. Submission of Matters to a Vote of Security Holders 43
PART II.
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters 44
Item 6. Selected Financial Data 44
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 47
Item 7A. Quantitative and Qualitative Disclosure About Market Risk 59
Item 8. Financial Statements and Supplementary Data 60
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 60
PART III.
Item 10. Trustees and Executive Officers of the Registrant 61
Item 11. Executive Compensation 65
Item 12. Security Ownership of Certain Beneficial Owners and Management 65
Item 13. Certain Relationships and Related Transactions 68
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 72
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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"), Evans Withycombe Residential, Inc. ("EWR") (the "EWR Merger") and
Merry Land & Investment Company, Inc. ("MRY") (the "MRY Merger") (collectively,
the "Mergers").
The Operating Partnership's subsidiaries include 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, and Merry Land DownREIT I LP.
As of December 31, 1998, the Operating Partnership owned or had interests
in 681 multifamily properties of which it controlled a portfolio of 654
multifamily properties (individually, a "Property" and collectively, the
"Properties") containing 187,002 units. The remaining 27 properties represent an
investment in partnership interests and subordinated mortgages collateralized by
21 properties containing 3,896 units and an investment in six joint ventures
consisting of six properties containing 1,297 units (collectively, the
"Additional Properties"). 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 52 properties containing 12,890 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 the Company's outstanding Common Shares) and is one of the
largest publicly traded REIT owner of multifamily properties (based on the
number of apartment units wholly-owned and total revenues earned).
Since the EQR IPO and through December 31, 1998, the Operating Partnership
has acquired direct or indirect interests in 650 properties (which included the
debt collateralized by six Properties) containing 180,224 units in the aggregate
for a total purchase price of approximately $10.6 billion, including the
assumption of approximately $2.6 billion of mortgage indebtedness and $845.9
million of unsecured notes. Since the EQR IPO and through December 31, 1998, the
Operating Partnership has disposed of 38 properties and a portion of one
Property, containing 9,754 units, and a vacant land parcel for a total sales
price of approximately $306.8 million.
The Company's corporate headquarters and executive offices are located in
Chicago, Illinois. In
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PART I
addition, the Operating Partnership has 30 management offices in the following
cities:
. Chicago, Illinois;
. Dallas, Houston and San Antonio, Texas;
. Denver, Colorado;
. Bethesda, Maryland;
. Atlanta and Augusta, Georgia;
. Las Vegas, Nevada;
. Scottsdale and Tucson, Arizona;
. Portland, Oregon;
. Ypsilanti, Michigan;
. Charlotte and Raleigh, North Carolina;
. Tampa, Jacksonville, Ft. Lauderdale and Orlando, Florida;
. Irvine, Pleasant Hill and Stockton, California;
. Kansas City, Kansas;
. Minneapolis, Minnesota;
. Louisville, Kentucky;
. Tulsa, Oklahoma;
. Seattle and Redmond, Washington; and
. Nashville and Memphis, Tennessee.
The Operating Partnership has approximately 6,000 employees. An on-site manager,
who supervises the on-site employees and is responsible for the day-to-day
operations of the Property, directs each of the Operating Partnership's
Properties. A leasing administrator and/or property administrator generally
assists the manager. 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: (a) the value of the Properties; (b)
distributions on a per limited partnership interest ("OP Unit") basis; and (c)
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:
a) are available at prices below estimated replacement costs;
b) have potential for rental rate and/or occupancy increases;
c) have attractive locations in their respective markets;
d) provide anticipated total returns that will increase the Operating
Partnership's distributions per OP Unit; and
. 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
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PART I
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:
. the geographic area and type of community;
. the location, construction quality, condition and design of the
property;
. the current and projected cash flow of the property and the ability to
increase cash flow;
. the potential for capital appreciation of the property;
. the terms of resident leases, including the potential for rent
increases;
. the potential for economic growth and the tax and regulatory
environment of the community in which the property is located;
. the occupancy and demand by residents for properties of a similar type
in the vicinity (the overall market and submarket);
. the prospects for liquidity through sale, financing or refinancing of
the property;
. the benefits of integration into existing operations; and
. 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 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:
. income levels and employment growth trends in the relevant market;
. uniqueness of location;
. household growth and net migration of the relevant market's population;
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PART I
. supply/demand ratio, competitive housing alternatives, sub-market occupancy
and rent levels;
. barriers to entry that would limit competition; and
. the purchase prices and yields of available existing stabilized
communities, if any.
Disposition Strategies
Management will use market information to evaluate dispositions. Factors
the Operating Partnership considers in deciding whether to dispose of its
Properties include the following:
. potential increases in new construction;
. areas where the economy is expected to decline substantially; and
. 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 may 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 business activities conducted by the Operating
Partnership and its susidiaries.
Equity Offerings For the Years Ended December 31, 1996, 1997 and 1998
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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
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PART I
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.
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
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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 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 (which is referred to herein as the
"Dividend Reinvestment - DRIP Plan"). 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) (which is referred to herein as the
"Share Purchase - DRIP Plan"). The proceeds from sales were contributed to the
Operating Partnership in exchange for OP Units.
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
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Operating Partnership proceeds in the amount of approximately $3.2 million in
connection therewith in exchange for OP Units.
On January 27, 1998, the Company completed an offering of 4,000,000
publicly registered Common Shares, which were sold to the public at a price of
$50.4375 per share (the "January 1998 Common Share Offering"). The Company
contributed to the Operating Partnership net proceeds of approximately $195.3
million in exchange for 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 18, 1998, the Company completed two offerings of 988,340
publicly registered Common Shares, which were sold to the public at a price of
$50.625 per share. On February 23, 1998, the Company completed an offering of
1,000,000 publicly registered Common Shares, which were sold to the public at a
price of $48 per share. The Company contributed to the Operating Partnership net
proceeds from these offerings (collectively, the "February 1998 Common Share
Offerings") of approximately $95 million in exchange for OP Units.
On March 30, 1998, the Company completed an offering of 495,663 publicly
registered Common Shares, which were sold at a price of $47.9156 per share (the
"March 1998 Common Share Offering"). The Company contributed to the Operating
Partnership net proceeds of approximately $23.7 million in exchange for OP
Units.
On April 29, 1998, the Company completed an offering of 946,565 publicly
registered Common Shares, which were sold at a price of $46.5459 per share (the
"April 1998 Common Share Offering"). The Company contributed to the Operating
Partnership net proceeds of approximately $44.1 million in exchange for OP
Units.
On September 20, 1998, the Company completed its repurchase of 2,367,400 of
its Common Shares of beneficial interest, on the open market, for an average
price of $40 per share. The purchases were made between August 5 and September
17, 1998. The Operating Partnership paid approximately $94.7 million in
exchange for OP Units. These shares and OP Units were subsequently retired.
During 1998, the Company issued 93,521 Common Shares pursuant to the
Employee Share Purchase Plan. The Company contributed to the Operating
Partnership net proceeds of approximately $3.7 million in exchange for OP Units.
During 1998, the Company issued 1,023,184 Common Shares pursuant to the
Direct Share Purchase Plan. The Company contributed to the Operating Partnership
net proceeds of approximately $50.7 million in exchange for OP Units.
Debt Offerings For the Years Ended December 31, 1996, 1997 and 1998
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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 Operating Partnership
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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") in a public debt offering (the "Fourth
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 in a public debt offering (the "Fifth 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.
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.
In April 1998, the Operating Partnership issued $300 million of unsecured
fixed rate notes (the "2015 Notes") in a public debt offering (the "Sixth Public
Debt Offering"). The 2015 Notes were issued at a discount, which is being
amortized over the life of the notes on a straight-line basis. The 2015 Notes
are due April 13, 2015. The annual interest rate on the 2015 Notes to April 13,
2005 (the "Remarketing Date") is 6.63%, which is payable semi-annually in
arrears on October 13 and April 13, commencing October 13, 1998. The 2015 Notes
are subject to mandatory tender to the remarketing agent on the Remarketing
Date, at the election of the remarketing dealer and subject to certain
limitations. If the remarketing dealer, initially Salomon Brothers Inc., does
not purchase all tendered 2015 Notes on the Remarketing Date, or in certain
other limited circumstances, the Operating Partnership will be required to
repurchase the 2015 Notes at 100% of their principal amount plus accrued
interest. If the 2015 Notes are remarketed, the 2015 Notes will bear interest at
the rate determined by the remarketing dealer on and after the Remarketing Date.
The Operating Partnership received net proceeds of approximately $298.1 million
in connection with this issuance. The Operating Partnership also received
approximately $8.1 million from the sale of the option to remarket the 2015
Notes on the Remarketing Date, which is being amortized over the term of the
2015 Notes. Prior to the issuance of the 2015 Notes, the Operating Partnership
entered into an interest rate protection agreement to effectively fix the
interest rate cost of such issuance until the Remarketing Date. The Operating
Partnership received a one-time settlement payment from this transaction, which
was approximately $0.6 million and is being amortized over seven years.
In August 1998, the Operating Partnership issued $100 million of Remarketed
Reset Notes (the "August 2003 Notes") in a public debt offering (the "Seventh
Public Debt Offering"). The August 2003 Notes were issued at a discount, which
is being amortized over the life of the notes on a straight-line basis. The
August 2003 Notes are due August 21, 2003. During the period from and including
August 21, 1998 to but excluding August 23, 1999 (the "Initial Spread Period")
the interest rate on the August 2003 Notes will be reset quarterly, and will
equal LIBOR plus an applicable spread. The spread during the Initial Spread
Period is .45%. After the Initial Spread Period, the character (i.e. fixed or
floating rate) and duration of the interest rate on the notes and the subsequent
spread will be agreed to by the Operating Partnership and the
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remarketing underwriter, initially Merrill Lynch, Pierce, Fenner and Smith
Incorporated, on each applicable determination date. Beginning August 23, 1999,
the Operating Partnership may elect to redeem the August 2003 Notes on certain
dates and in certain circumstances. The Operating Partnership received net
proceeds of approximately $99.7 million in connection with this issuance.
In September 1998, the Operating Partnership issued $145 million of
unsecured fixed rate notes (the "2000 Notes") in a public debt offering (the
"Eighth Public Debt Offering"). The 2000 Notes were issued at a discount, which
is being amortized over the life of the notes on a straight-line basis. The 2000
Notes are due September 15, 2000. The annual interest rate on the 2000 Notes is
6.15%, which is payable semi-annually in arrears on March 15 and September 15,
commencing March 15, 1999. The Operating Partnership received net proceeds of
approximately $144.5 million in connection with this issuance.
Credit Facilities
The Operating Partnership has a revolving credit facility with Morgan
Guaranty Trust Company of New York ("Morgan Guaranty") and Bank of America
Illinois ("Bank of America") as co-agents to provide the Operating Partnership
with potential borrowings of up to $500 million. This credit facility 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 spread dependent upon the Company's credit rating, which
spread is currently 0.45%, and is subject to an annual facility fee of $750,000.
As of December 31, 1998, $245 million of borrowings were outstanding on this
credit facility, bearing interest at a weighted average rate of 6.04%.
In connection with the MRY Merger, the Operating Partnership assumed an
additional revolving credit facility with First Union Bank (as agent), with
potential borrowings of up to $120 million. This credit facility matures in
September 2000 and borrowings generally will bear interest at a per annum rate
of LIBOR, plus a certain spread dependent upon the Company's credit rating,
which spread is currently 0.50%, and is subject to an annual facility fee of
$120,000. As of December 31, 1998, $45 million was outstanding under this
facility, bearing interest at a weighted average rate of 5.74%.
Business Combinations
On May 30, 1997, the Company completed the acquisition of the multifamily
property business of Wellsford through the 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, at
the date of closing, of $443.7 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;
. liquidation value of $157.5 million for the following:
a) Wellsford Series A Cumulative Convertible Preferred Shares of Beneficial
Interest;
b) Wellsford Series B Cumulative Redeemable Preferred Shares of Beneficial
Interest;
. assumption of mortgage indebtedness and unsecured notes in the amount of $345
million;
. 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
12
<PAGE>
PART I
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 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 or expansion
containing 953 units, which were contributed to the Operating Partnership. The
purchase price consisted of:
. 10.3 million Common Shares issued by the Company with a market value, at the
date of closing, of approximately 501.6 million. Upon contribution of the net
assets by the Company to the Operating Partnership, the Operating Partnership
issued 10.3 million OP Units to the Company.
. 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;
. assumption of mortgage indebtedness and unsecured notes in the amount of $498
million;
. assumption of other liabilities of approximately $28.2 million; and
. other 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.
On October 19, 1998, the Company completed the acquisition of the
multifamily property business of MRY, through the MRY Merger. The transaction
was valued at approximately $2.2 billion and included 108 Properties containing
32,315 units, four Properties under construction and/or expansion anticipated to
contain 1,378 units and six Additional Properties containing 1,297 units that
were contributed to six joint ventures. The purchase price consisted of:
. 21.8 million Common Shares issued by the Company with a market value, at the
date of closing, of approximately $1 billion. Upon contribution of the net
assets by the Company to the Operating Partnership, the Operating Partnership
issued 21.8 million OP Units to the Company.
. issuance of approximately 0.9 million Operating Partnership OP Units, in
exchange for approximately 1.6 million MRY DownREIT I LP units at a market
value of approximately $40.2 million;
. liquidation value of $369.1 million for the following:
a) MRY Series A Cumulative Convertible Preferred Shares of Beneficial
Interest;
b) MRY Series B Cumulative Convertible Preferred Shares of Beneficial
Interest;
c) MRY Series C Cumulative Convertible Preferred Shares of Beneficial
Interest;
d) MRY Series D Cumulative Redeemable Preferred Shares of Beneficial
Interest;
e) MRY Series E Cumulative Redeemable Preferred Shares of Beneficial
Interest;
. assumption of mortgage indebtedness, unsecured notes and a line of credit
in the amount of $723.5 million;
. assumption of other liabilities of approximately $46.5 million; and
. other merger related costs of approximately $51.9 million.
In the MRY Merger, each outstanding common share of beneficial interest of
MRY was converted into .53 of a Common Share. In addition, MRY spun-off certain
assets and liabilities to Merry Land Properties, Inc. ("MRYP Spinco"). In
connection with this spin-off, each holder of MRY common shares received one
share of MRYP Spinco for each twenty shares of MRY common held. As partial
consideration for the transfer, the Operating Partnership extended a $25
million, one year, non-revolving Senior Debt Agreement to MRYP Spinco. At
December 31, 1998, approximately $18.3 million was outstanding, bearing interest
at LIBOR plus 250 basis points. As additional consideration, the Operating
Partnership extended an additional $20 million of indebtedness to MRYP Spinco
under a 15-year, Subordinated Debt Agreement, bearing interest payable
quarterly. The Operating Partnership also entered
13
<PAGE>
PART I
into the Preferred Stock Agreement and received 5,000 shares of MRYP Spinco
Preferred Stock with a liquidation preference of $1,000 per share.
In addition, MRY Series A Cumulative Convertible Preferred Shares of
Beneficial Interest were redesignated as the Company's 164,951 Series H
Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value
per share (the "Series H Preferred Shares"), the MRY Series B Cumulative
Convertible Preferred Shares of Beneficial Interest were redesignated as the
Company's 4,000,000 Series I Cumulative Convertible Preferred Shares of
Beneficial Interest, $0.01 par value per share (the "Series I Preferred
Shares"), the MRY Series C Cumulative Convertible Preferred Shares of Beneficial
Interest were redesignated as the Company's 4,599,400 Series J Cumulative
Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share
(the "Series J Preferred Shares"), the MRY Series D Cumulative Redeemable
Preferred Shares of Beneficial Interest were redesignated as the Company's
1,000,000 Series K Cumulative Redeemable Preferred Shares of Beneficial
Interest, $0.01 par value per share (the "Series K Preferred Shares") and the
MRY Series E Cumulative Redeemable Preferred Shares of Beneficial Interest were
redesignated as the Company's 4,000,000 Series L Cumulative Redeemable Preferred
Shares of Beneficial Interest, $0.01 par value per share (the "Series L
Preferred Shares"). The Operating Partnership issued to the Company Preference
Units with identical terms to the above.
Recent Transactions
From January 1, 1999 through March 12, 1999, the Operating Partnership
acquired three Properties from an affiliated party and two Properties from
unaffiliated third parties for a total purchase price of approximately $86.6
million, which included the assumption of mortgage indebtedness of approximately
$16.9 million. The three Properties acquired from an affiliated party were Aspen
Crossing, a 192-unit property located in Wheaton, Maryland; Fireside Park,
a 236-unit property located in Rockville, Maryland; and Mill Pond, a 240-unit
property located in Glen Burnie, Maryland. The two Properties acquired from
unaffiliated third parties were Copper Canyon, a 222-unit property located in
Denver, Colorado; and Siena Terrace, a 356-unit property located in Lake Forest,
California.
From January 1, 1999 through March 12, 1999, the Operating Partnership
disposed of six Properties for a total sales price of $64 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 following Risk Factors omit the use of defined terms used elsewhere
herein and contain defined terms that are different from those used in the other
sections of this report. Unless otherwise indicated, when used in this section,
the terms "we" and "us" refer to ERP Operating Limited Partnership, an Illinois
limited partnership, which is managed by its general partner Equity Residential
Properties Trust, a Maryland real estate investment trust.
Set forth below are the risks that we believe are important to investors
who purchase or own our Units of limited partnership interest or debt
securities. In this section, we refer to the Units and debt
14
<PAGE>
PART I
securities together as our "securities," and the investors who own Units and/or
debt securities as our "security holders."
Debt Financing and Preferred Shares Could Adversely Affect Our Performance
General
As of December 31, 1998, our multifamily properties were subject to
approximately $2.3 billion of mortgage indebtedness and our total debt equaled
approximately $4.7 billion. Of our total debt outstanding, $840 million
(including the balance of $290 million outstanding on our $620 million unsecured
lines of credit) was floating rate debt, which included $684.7 million issued at
tax exempt rates. In addition to debt, Equity Residential Properties Trust, our
general partner, has issued preferred shares of beneficial interest and
depositary shares. The use of debt and preferred equity financing creates
certain risks, including the following.
Scheduled Debt Payments Could Adversely Affect Our Financial Condition
In the future, our cash flow could be insufficient to pay distributions on
our securities at expected levels and to meet required payments of principal and
interest. We may not be able to refinance existing debt (which in virtually all
cases requires substantial principal payments at maturity) and, if we can, the
terms of such refinancing might not be as favorable as the terms of our existing
indebtedness. If principal payments due at maturity cannot be refinanced,
extended or paid with proceeds of other capital transactions, such as our
general partner raising new equity capital, our cash flow will not be sufficient
in all years to repay all maturing debt. As a result, we may be forced to
postpone capital expenditures necessary for the maintenance of our properties
and may have to dispose of one or more properties on terms that would otherwise
be unacceptable to us.
Financial Covenants Could Adversely Affect Our Financial Condition
If a property we own is mortgaged to secure payment of indebtedness and we
are unable to meet the mortgage payments, the holder of the mortgage could
foreclose on the property, resulting in loss of income and asset value.
Foreclosure on our mortgaged properties or an inability to refinance existing
indebtedness would likely have a negative impact on our financial condition and
results of operations. A foreclosure could also result in our recognition of
taxable income without our actually receiving cash proceeds from the disposition
of the property with which to pay the tax. This would adversely affect our cash
flow and would make it more difficult for us to service our debt and make
distributions to security holders.
The mortgages on our properties contain customary negative covenants which,
among other things, limit our ability, without the prior consent of the lender,
to further mortgage the property, to enter into new leases or materially modify
existing leases and to discontinue insurance coverage. In addition, our credit
facilities contain certain customary restrictions, requirements and other
limitations on our ability to incur indebtedness. The indentures under which a
substantial portion of our debt was issued contain certain financial and
operating covenants including, among other things, certain financial ratios, as
well as limitations on our ability to incur secured and unsecured indebtedness
(including acquisition financing), sell all or substantially all of our assets
and engage in mergers, consolidations and certain acquisitions. Accordingly, in
the event that we are unable to raise additional equity or borrow money because
of these restrictions, our ability to acquire additional properties may be
limited. Our inability to acquire additional properties may limit our
management's ability to increase funds from operations, and thereby cash
available to service debt and make distributions to security holders.
15
<PAGE>
PART I
Some of our properties were financed with tax-exempt bonds that contain
certain restrictive covenants or deed restrictions. We have retained an
independent outside consultant to monitor compliance with the restrictive
covenants and deed restrictions that affect these properties. If these bond
compliance requirements require us to lower our rental rates to attract low or
moderate income tenants, or eligible/qualified tenants, then our income from
these properties may be limited.
Our Degree of Leverage Could Limit Our Ability to Obtain Additional
Financing
The debt to market capitalization ratio (total debt as a percentage of
total debt plus the market value of the outstanding common and preferred shares
of beneficial interest and Units) of our general partner and its subsidiaries
(including us) was approximately 41% as of December 31, 1998. We have a policy
of incurring indebtedness for borrowed money only if upon such incurrence this
debt to market capitalization ratio would be approximately 50% or less. Our
degree of leverage could have important consequences to security holders. For
example, the degree of leverage could affect our ability to obtain additional
financing in the future for working capital, capital expenditures, acquisitions,
development or other general corporate purposes, making us more vulnerable to a
downturn in business or the economy generally.
Rising Interest Rates Could Adversely Affect Cash Flow
Advances under our credit facilities bear interest at variable rates based
upon one, two, three or six month LIBOR, plus a certain spread dependent upon
the Operating Partnership's credit rating. Certain of our senior unsecured debt
instruments also, from time to time, bear interest at floating rates. We may
also borrow additional money with variable interest rates in the future.
Increases in interest rates would increase our interest expenses under these
debt instruments and would increase the costs of refinancing existing
indebtedness and of issuing new debt. Accordingly, higher interest rates would
adversely affect cash flow and our ability to service our debt and to make
distributions to security holders.
Environmental Problems are Possible and Can be Costly
Federal, state and local laws and regulations relating to the protection of
the environment may require a current or previous owner or operator of real
estate to investigate and clean up hazardous or toxic substances or petroleum
product releases at such property. The owner or operator may have to pay a
governmental entity or third parties for property damage and for investigation
and clean-up costs incurred by such parties in connection with the
contamination. These laws typically impose clean-up responsibility and liability
without regard to whether the owner or operator knew of or caused the presence
of the contaminants. Even if more than one person may have been responsible for
the contamination each person covered by the environmental laws may be held
responsible for all of the clean-up costs incurred. In addition, third parties
may sue the owner or operator of a site for damages and costs resulting from
environmental contamination emanating from that site.
Environmental laws also govern the presence, maintenance and removal of
asbestos. These laws require that owners or operators of buildings containing
asbestos properly manage and maintain the asbestos, that they notify and train
those who may come into contact with asbestos and that they undertake special
precautions, including removal or other abatement, if asbestos would be
disturbed during renovation or demolition of a building. These laws may impose
fines and penalties on building owners or operators who fail to comply with
these requirements and may allow third parties to seek recovery from owners or
operators for personal injury associated with exposure to asbestos fibers.
All of our properties have been the subject of a Phase I, and in certain
cases a supplemental, environmental assessment completed by qualified
independent environmental consultant companies. Environmental assessments were
obtained prior to our acquisition of each of our properties. These
16
<PAGE>
PART I
environmental assessments have not revealed, nor are we aware of, any
environmental liability that our management believes would have a material
adverse effect on our business, results of operations, financial condition or
liquidity.
We cannot assure you that existing environmental assessments of our
properties reveal all environmental liabilities, that any prior owner of any of
our properties did not create a material environmental condition not known to
us, or that a material environmental condition does not otherwise exist as to
any one or more of our properties.
Our Ability to Service Debt and Make Distributions to Security Holders is
Subject to Risks Associated With the Real Estate Industry
General
Real property investments are subject to varying degrees of risk and are
relatively illiquid. Several factors may adversely affect the economic
performance and value of our properties. These factors include changes in the
national, regional and local economic climate, local conditions such as an
oversupply of multifamily properties or a reduction in demand for our
multifamily properties, the attractiveness of our properties to tenants,
competition from other available multifamily property owners and changes in
market rental rates. Our ability to service our debt and make distributions to
security holders also depends on our ability to collect rent from tenants and to
pay for adequate maintenance, insurance and other operating costs, including
real estate taxes, which could increase over time. Also, the expenses of owning
and operating a property are not necessarily reduced when circumstances such as
market factors and competition cause a reduction in income from the property.
We May be Unable to Renew Leases or Relet Space as Leases Expire
When our tenants decide not to renew their leases upon expiration, we may
not be able to relet their space. Even if the tenants do renew or we can relet
the space, the terms of renewal or reletting may be less favorable than current
lease terms. If we are unable to promptly renew the leases or relet the space,
or if the rental rates upon renewal or reletting are significantly lower than
expected rates, then our results of operations and financial condition will be
adversely affected. Consequently, our cash flow and ability to service debt and
make distributions to security holders would be reduced.
New Acquisitions or Developments May Fail to Perform as Expected and
Competition for Acquisitions May Result in Increased Prices for Properties
We intend to continue to actively acquire or develop multifamily
properties. Newly acquired or developed properties may fail to perform as
expected. We may underestimate the costs necessary to bring an acquired property
up to standards established for its intended market position or to develop a
property. Additionally, we expect other major real estate investors with
significant capital will compete with us for attractive investment
opportunities. This competition has increased prices for multifamily properties.
We may not be in a position or have the opportunity in the future to make
suitable property acquisitions on favorable terms.
Because Real Estate Investments Are Illiquid, We May Not Be Able To Sell
Properties When Appropriate
Real estate investments generally cannot be sold quickly. We may not be
able to vary our portfolio promptly in response to economic or other conditions.
This inability to respond promptly to changes in the performance of our
investments could adversely affect our financial condition and ability to
service our debt and make distributions to our security holders.
17
<PAGE>
PART I
Changes in Laws Could Affect Our Business
We are generally not able to pass through to our tenants under existing
leases increases in real estate taxes, income taxes and service or other taxes.
Consequently, any such increases may adversely affect our financial condition
and limit our ability to service our debt and make distributions to our security
holders. Similarly, changes that increase our potential liability under
environmental laws or our expenditures on environmental compliance would
adversely affect our cash flow and ability to service our debt and make
distributions on our securities.
We Depend on Our Key Personnel
We depend on the efforts of the executive officers of our general partner,
particularly Samuel Zell and Douglas Crocker II. If they resign, our operations
could be temporarily adversely effected. Neither Mr. Crocker nor Mr. Zell has
entered into an employment agreement with our general partner.
Our General Partner's Compliance with Real Estate Investment Trust (REIT)
Distribution Requirements May Affect Our Financial Condition
Distribution Requirements May Increase the Indebtedness of the Company
We 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 our repayment of principal on debt, we could have taxable
income without sufficient cash to enable our general partner to meet the
distribution requirements of a REIT. Accordingly, we could be required to borrow
funds or liquidate investments on adverse terms in order to meet such
distribution requirements.
We Are Dependent on External Sources of Capital
Because of our general partner's annual REIT distribution requirements, it
is not likely that we will be able to fund all future capital needs, including
for acquisitions, from income from operations. We therefore will have to rely on
third-party sources of capital, which may or may not be available on favorable
terms or at all. Our access to third-party sources of capital depends on a
number of things, including the market's perception of our growth potential and
our current and potential future earnings. Moreover, additional debt financing
may substantially increase our leverage.
Item 2. The Properties
As of December 31, 1998, the Operating Partnership controlled a portfolio
of 654 multifamily Properties, of which six are under development, located in 35
states containing 187,002 apartment units, of which 2,107 units pertain to the
development Properties. The average number of units per Property, not including
the development Properties, was approximately 285. The units are typically
contained in a series of two-story buildings. The Properties contain an
aggregate of 166.1 million rentable square feet, with an average unit size of
898 square feet (not including the development Properties). The average rent per
unit was $739 and the average rent per square foot was $0.82 (not including the
development Properties).
As of December 31, 1998, 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.
18
<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 647 of the
Properties and holds a 99-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 benefit of 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, 1998, the Operating Partnership had an investment in
partnership interests and subordinated mortgages collateralized by 21 of the
Additional Properties and an investment in six joint ventures consisting of six
of the Additional Properties. The Additional Properties contain 5,193 units,
located in six states.
The following tables include only those Properties and Additional
Properties owned by the Operating Partnership or in which the Operating
Partnership had a direct equity or mortgage interest at December 31, 1998. As
such, the properties currently under development by third parties (see
discussion in Item 7) are not included in the following tables. In addition, the
units for expansion properties are not included in the following tables until
the expansion is complete.
The following tables set forth certain information relating to the
Properties, Properties under development and the Additional Properties:
19
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December -------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALABAMA
Colony Woods, Birmingham (1) 1991/1994 414 450,892 1,089 99.8% $652 $0.60
Meadows on the Lake/Park,
Birmingham (2 properties) 1986/1987 400 418,452 1,046 95.7% $630 $0.60
Shoal Run, Birmingham 1986 276 249,300 903 96.0% $572 $0.63
ARIZONA
Acacia Creek, Scottsdale 1988-1994 508 462,280 910 97.8% $773 $0.85
Arboretum, Tucson (1) 1987 496 402,272 811 94.3% $589 $0.73
Bay Club, Phoenix 1976 420 257,790 614 93.3% $557 $0.91
Bayside at the Islands, Gilbert (1) 1989 272 236,640 870 91.9% $743 $0.85
Bear Canyon, Tucson 1996 238 231,640 973 94.5% $742 $0.76
Camellero, Scottsdale (1) 1979 344 311,526 906 93.0% $740 $0.82
Canyon Creek, Tucson 1986 242 169,946 702 97.5% $503 $0.72
Canyon Sands, Phoenix 1983 412 353,592 858 91.8% $584 $0.68
Chandler Court, Chandler 1987 311 263,338 847 95.2% $651 $0.77
Copper Creek, Phoenix 1984 144 146,024 1,014 95.1% $799 $0.79
Country Brook, Chandler (1) 1986-1996 396 381,333 963 92.2% $763 $0.79
Crown Court, Phoenix 1987 416 464,582 1,117 97.1% $869 $0.78
Crystal Creek, Phoenix 1985 273 190,140 696 91.5% $605 $0.87
Del Coronado, Mesa (1) 1985 419 394,062 940 96.6% $673 $0.72
Desert Sands, Phoenix 1982 412 353,592 858 91.8% $584 $0.68
Dos Caminos, Phoenix 1983 264 265,884 1,007 98.5% $794 $0.79
Flying Sun, Phoenix 1983 108 93,708 868 94.4% $618 $0.71
Fountain Creek, Phoenix 1984 186 144,374 776 93.0% $621 $0.80
Gateway Villas, Scottsdale 1995 180 179,664 998 95.5% $830 $0.83
Greenwood Village, Tempe (1) 1984 270 238,768 884 94.8% $696 $0.79
Harrison Park, Tucson (1) 1985 360 322,356 895 95.5% $623 $0.70
Heritage Point, Mesa 1986 148 114,436 773 91.1% $666 $0.86
Indian Bend, Scottsdale 1973 275 226,444 823 88.0% $697 $0.85
Ingleside, Phoenix 1995 120 118,664 989 96.7% $885 $0.89
Isle at Arrowhead Ranch, Glendale 1996 256 244,608 956 94.0% $817 $0.86
La Mariposa, Mesa (1) 1986 222 206,052 928 97.3% $648 $0.70
La Reserve Villas, Tucson (1) 1988 240 216,008 900 95.0% $651 $0.72
La Valencia, Mesa 1997 361 342,946 950 96.7% $675 $0.71
Ladera, Phoenix 1995 248 243,312 981 97.6% $871 $0.89
</TABLE>
20
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December -------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Legends at La Paloma, Tucson 1995 312 325,648 1,044 92.9% $804 $0.77
Little Cottonwoods, Tempe (1) 1984 379 389,012 1,026 90.7% $790 $0.77
Mirador, Phoenix 1995 316 311,928 987 98.7% $826 $0.84
Misson Palms, Tucson 1980 360 372,918 1,036 93.1% $681 $0.66
Morningside, Scottsdale (1) 1989 160 163,116 1,019 98.8% $805 $0.79
Mountain Park, Phoenix (1) 1994 240 230,560 961 95.0% $808 $0.84
Orange Grove Village, Tucson (1) 1986-1995 400 339,396 848 92.2% $563 $0.66
Park Meadow, Gilbert (1) 1986 224 197,264 881 90.6% $702 $0.80
Preserve at Squaw Park, Phoenix (1) 1990 108 92,168 853 96.3% $855 $1.00
Promontory Pointe I&II, Phoenix (1) 1984-1996 424 421,446 994 95.7% $778 $0.78
Rancho Murietta, Tempe 1983 292 253,016 866 94.5% $733 $0.85
San Tropez, Phoenix 1989 316 332,080 1,051 95.7% $899 $0.86
Scottsdale Courtyards, Scottsdale (1) 1993 274 284,175 1,037 95.8% $907 $0.87
Scottsdale Meadows, Scottsdale 1984 168 149,520 890 98.2% $739 $0.83
Sedona Ridge, Phoenix 1988 250 235,345 941 96.4% $749 $0.80
Shadow Brook, Scottsdale (1) 1984 224 226,296 1,010 95.5% $859 $0.85
Shores at Andersen Springs, Chandler (1) 1989 299 265,218 887 94.0% $768 $0.87
Silver Creek, Phoenix (1) 1986 174 134,820 775 91.3% $629 $0.81
Skyline Gateway, Tucson 1985 246 179,422 729 95.5% $587 $0.80
Sonoran, Phoenix (1) 1995 429 413,344 964 94.9% $789 $0.82
Southbank, Mesa 1985 113 99,448 880 92.0% $584 $0.66
Southcreek, Mesa (1) 1986-89 528 472,152 894 93.4% $671 $0.75
Sun Creek, Glendale (1) 1985 175 129,661 741 92.5% $605 $0.82
Suntree Village, Tucson (1) 1986 424 345,761 815 92.9% $537 $0.66
Superstition Vista, Mesa 1987 316 300,510 951 91.1% $666 $0.70
Sycamore Creek, Scottsdale (1) 1984 350 335,420 958 97.3% $775 $0.81
The Enclave, Tempe (1) 1994 204 194,142 952 96.5% $866 $0.91
The Hawthorne, Phoenix 1996 276 259,784 941 96.0% $804 $0.85
The Heritage, Phoenix (1) 1995 204 198,276 972 93.6% $821 $0.84
The Meadows, Mesa 1984 306 247,378 808 92.4% $590 $0.73
The Palms, Phoenix (1) 1990 132 135,460 1,026 98.5% $959 $0.93
The Pointe ASM, Phoenix 1988 364 309,548 850 90.9% $677 $0.80
Towne Square, Chandler 1987-1996 584 533,164 913 96.1% $697 $0.76
</TABLE>
21
<PAGE>
Item 2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December -------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Via Ventura, Scottsdale 1980 320 279,187 872 99.7% $721 $0.83
Villa Encanto, Phoenix 1983 382 309,982 811 98.0% $636 $0.78
Villa Madeira, Scottsdale 1971 332 291,280 877 90.3% $736 $0.84
Villa Manana, Phoenix 1971-85 260 212,150 816 94.6% $633 $0.78
Villa Serenas, Tucson (1) 1973 611 452,751 741 91.8% $577 $0.78
Village at Lakewood, Phoenix (1) 1988 240 205,752 857 91.2% $761 $0.89
Village at Tanque Verde, Tucson (1) 1984-1994 217 174,668 805 93.5% $559 $0.69
Vista Grove, Mesa 1997-1998 224 204,136 911 93.3% $756 $0.83
Windemere, Mesa (1) 1986 224 187,192 836 93.7% $614 $0.73
ARKANSAS
Combined Little Rock Properties (3) 1974-1975 1,039 889,416 856 92.2% $513 $0.60
CALIFORNIA
Bay Ridge, San Pedro 1987 60 46,836 781 98.2% $1,264 $1.62
Bramblewood, San Jose 1986 108 86,624 802 92.6% $1,217 $1.52
Briarwood, Sunnyvale (1) 1985 192 157,264 819 97.9% $1,292 $1.58
Canyon Crest Views, Riverside 1982-1983 178 212,292 1,193 89.3% $984 $0.83
Canyon Ridge, San Diego 1989 162 126,000 778 96.9% $952 $1.22
Carmel Terrace, San Diego 1988-89 384 298,588 778 96.1% $863 $1.11
Casa Capricorn & Casa Camino Ruiz,
San Diego (2 properties) 1976-1986 388 346,720 894 98.4% $863 $0.97
Creekside, San Mateo (1) 1985 192 142,318 741 96.9% $1,349 $1.82
Deerwood, Corona 1992 316 338,345 1,071 92.7% $899 $0.84
Deerwood, San Diego 1990 316 333,079 1,054 94.9% $1,072 $1.02
Eagle Canyon, Chino Hills 1985 252 252,493 1,002 93.7% $1,021 $1.02
Emerald Place, Bermuda Dunes 1988 240 214,072 892 99.2% $649 $0.73
Esprit Del Sol, Solana Beach 1986 146 135,416 928 91.1% $1,063 $1.15
Geary Courtyard, San Francisco (1) 1990 164 85,675 522 83.0% $1,467 $2.81
Greenhaven, Union City (1) 1983 250 193,764 775 95.2% $977 $1.26
Harborview, San Pedro (1) 1985 160 171,800 1,074 98.2% $1,264 $1.18
Hathaway, Long Beach 1987 385 266,805 693 96.4% $937 $1.35
La Mirage, San Diego 1988-1992 1,070 972,689 909 96.9% $1,151 $1.27
Lakeville Resort, Petaluma (1) 1984 492 461,798 939 97.0% $864 $0.92
Lands End, Pacifica 1974 260 161,121 620 97.3% $1,174 $1.89
Larkspur Woods, Sacramento (1) 1989/1993 232 253,134 1,091 96.1% $1,025 $0.94
</TABLE>
22
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
Occupancy
Average As of
Year(s) Square Square Footage December
Property Constructed Units Footage Per Unit 31, 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lincoln Green I & II, Sunnyvale (1) 1979 174 131,900 758 98.3%
Lincoln Village I & II, Larkspur 1980 342 293,597 858 95.9%
Marquessa, Corona 1992 336 299,744 892 99.4%
Merrimac Woods, Costa Mesa 1970 123 88,160 717 95.1%
Mountain Terrace, Stevenson Ranch 1992 510 425,612 835 92.0%
Northridge, Pleasant Hill 1974 221 236,060 1,068 95.9%
Oak Park North & South, Agoura (1) (2 properties) 1989-1990 444 368,600 830 96.2%
Park West, Los Angeles 1990 444 315,588 711 97.1%
Parkside, Union City 1979 208 143,120 688 96.6%
Parkview Terrace, Redlands (1) 1986 558 446,856 801 95.0%
Portofino, Chino Hills 1989 176 153,708 873 96.6%
Promenade Terrace, Corona Hills (1) 1990 330 360,838 1,093 96.4%
Redlands Lawn and Tennis Club, Redlands (1) 1986 496 394,560 795 95.2%
Regency Palms, Huntington Beach 1969 310 261,634 844 98.7%
Ridgewood Village, San Diego 1997 192 163,336 851 97.9%
Sierra Canyon, Canyon Cnty 1987 232 239,568 1,033 90.9%
Skylark, Union City (1) 1986 174 140,537 808 97.7%
Smoketree Polo Club, Indio (1) 1987-89 288 238,560 828 98.3%
Sonterra at Foothill Ranch, Foothill Ranch (1) 1997 300 278,560 929 97.5%
Southwood, Palo Alto 1985 99 80,084 809 98.0%
Summer Ridge, Riverside 1985 136 104,832 771 97.8%
Summerset Village, Chatsworth 1985 280 286,752 1,024 96.1%
Summerwood, Hayward 1982 162 123,066 760 96.9%
The Ashton, Corona (1) 1986 492 418,284 850 98.3%
Villa Solana, Laguna Hills 1984 272 245,104 901 97.1%
Vista Del Lago, Mission Viejo (1) 1986-88 608 512,200 842 96.5%
Whispering Oaks F.K.A. Creekside Oaks, Walnut Creek (1) 1974 316 237,952 753 97.2%
Windridge, Laguna Niguel (1) 1989 344 375,312 1,091 97.7%
Wood Creek, Pleasant Hill 1987 256 257,632 1,006 95.3%
Woodleaf, Campbell (1) 1984 178 130,400 733 97.2%
COLORADO
Brookside, Boulder 1993 144 121,744 845 90.3%
Cheyenne Crest, Colorado Springs 1984 208 175,424 843 97.6%
</TABLE>
<TABLE>
<CAPTION>
December, 1998
Avg. Monthly
Rental Rate Per
------------------------------
Property Unit Square Foot
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Lincoln Green I & II, Sunnyvale (1) $1,304 $1.72
Lincoln Village I & II, Larkspur $1,359 $1.58
Marquessa, Corona $ 805 $0.90
Merrimac Woods, Costa Mesa $ 854 $1.19
Mountain Terrace, Stevenson Ranch $ 952 $1.14
Northridge, Pleasant Hill $1,075 $1.01
Oak Park North & South, Agoura (1) (2 properties) $1,100 $1.33
Park West, Los Angeles $1,061 $1.49
Parkside, Union City $1,001 $1.45
Parkview Terrace, Redlands (1) $ 724 $0.90
Portofino, Chino Hills $ 937 $1.07
Promenade Terrace, Corona Hills (1) $ 918 $0.84
Redlands Lawn and Tennis Club, Redlands (1) $ 697 $0.88
Regency Palms, Huntington Beach $ 890 $1.05
Ridgewood Village, San Diego $ 972 $1.14
Sierra Canyon, Canyon Cnty $ 830 $0.80
Skylark, Union City (1) $1,016 $1.26
Smoketree Polo Club, Indio (1) $ 528 $0.64
Sonterra at Foothill Ranch, Foothill Ranch (1) $1,014 $1.09
Southwood, Palo Alto $1,714 $2.12
Summer Ridge, Riverside $ 732 $0.95
Summerset Village, Chatsworth $1,180 $1.15
Summerwood, Hayward $ 878 $1.16
The Ashton, Corona (1) $ 737 $0.87
Villa Solana, Laguna Hills $ 984 $1.09
Vista Del Lago, Mission Viejo (1) $ 974 $1.16
Whispering Oaks F.K.A. Creekside Oaks, Walnut Creek (1) $ 938 $1.25
Windridge, Laguna Niguel (1) $1,122 $1.03
Wood Creek, Pleasant Hill $1,342 $1.33
Woodleaf, Campbell (1) $1,201 $1.64
COLORADO
Brookside, Boulder $ 914 $1.08
Cheyenne Crest, Colorado Springs $ 672 $0.80
</TABLE>
23
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
December, 1998
Average Occupancy Avg. Monthly
Square As of Rental Rate Per
Year(s) Square Footage December --------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cierra Crest, Denver (1) 1996 480 439,498 916 94.2% $ 905 $0.99
Cimmaron Ridge, Denver 1984 296 229,048 774 98.0% $ 607 $0.78
Colinas Pointe, Denver 1986 272 213,984 787 96.7% $ 655 $0.83
Crescent at Cherry Creek, Denver (1) 1994 216 189,191 876 90.2% $ 851 $0.97
Dartmouth Woods, Lakewood (1) 1990 201 165,777 825 92.0% $ 745 $0.90
Glenridge, Colorado Springs (1) 1985 220 176,792 804 94.5% $ 675 $0.84
Highland Pointe, Denver 1984 318 237,886 748 94.7% $ 608 $0.81
Highline Oaks, Denver (1) 1986 220 170,756 776 94.1% $ 703 $0.91
Indian Tree, Arvada 1983 168 140,000 833 93.4% $ 698 $0.84
Ironwood at the Ranch, Denver (1) 1986 226 184,081 815 92.4% $ 752 $0.92
Parkwood East, Fort Collins 1986 259 215,064 830 93.1% $ 697 $0.84
Sterling Point, Denver 1979 143 130,120 910 97.2% $ 752 $0.83
Summer Chase, Aurora 1983 384 302,944 789 97.4% $ 649 $0.82
The Marks, Denver (1) 1987-1996 616 520,712 845 93.8% $ 761 $0.90
The Registry, Denver 1987 208 156,558 753 97.1% $ 700 $0.93
Timberwood, Aurora 1983 336 268,256 798 97.3% $ 597 $0.75
Trails, Aurora 1986 351 286,964 818 94.9% $ 642 $0.79
Turf Club, Littleton 1986 324 256,224 791 96.0% $ 691 $0.87
Village at Bear Creek, Denver (1) 1987-1996 472 464,558 984 94.9% $ 876 $0.89
Warwick Station, Denver (1) 1986 332 250,432 754 93.7% $ 719 $0.95
Willowick, Aurora 1980 100 73,400 734 90.0% $ 621 $0.85
Windmill, Colorado Springs 1985 304 180,640 594 97.0% $ 536 $0.90
Woodridge I, II & III, Aurora (3 properties) 1980-82 584 444,224 761 94.8% $ 563 $0.74
Yuma Court, Colorado Springs 1985 40 37,400 935 97.4% $ 649 $0.69
CONNECTICUT
The Classic, Stamford 1990 144 165,727 1,151 96.5% $2,152 $1.87
Fairfield, Stamford 1996 263 223,947 852 98.1% $1,411 $1.66
Rivers Edge, Waterbury 1974 156 134,898 865 89.7% $ 808 $0.93
FLORIDA
Audubon Village, Tampa 1990 447 378,871 848 99.1% $ 696 $0.82
Augustine Club, Tallahassee 1988 222 199,700 900 88.2% $ 631 $0.70
Auvers Village, Orlando 1991 480 490,244 1,021 96.9% $ 737 $0.72
Banyan Lake, Boynton Beach 1986 288 264,636 919 97.6% $ 718 $0.78
Beach Club, Fort Myers 1990 320 278,988 872 93.4% $ 634 $0.73
</TABLE>
24
<PAGE>
2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December -----------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Beneva Place, Sarasota (1) 1986 192 174,911 911 98.4% $689 $0.76
Bermuda Cove, Jacksonville 1989 350 319,338 912 98.0% $686 $0.75
Bishop Park, Winter Park 1991 324 292,440 903 95.4% $687 $0.76
Heron Pointe, Boynton Beach 1989 192 195,840 1,020 94.3% $728 $0.71
Brierwood, Jacksonville 1974 196 263,052 1,342 95.4% $661 $0.49
Casa Cordoba, Tallahassee 1972-73 168 164,336 978 95.8% $575 $0.59
Casa Cortez, Tallahassee 1970 66 74,916 1,135 97.0% $627 $0.55
Chaparral, Largo 1976 444 451,420 1,017 90.7% $616 $0.61
Chicksaw Crossing, Orlando (1) 1986 292 248,280 850 90.7% $611 $0.72
Claire Pointe, Jacksonville 1986 256 258,560 1,010 93.3% $737 $0.73
Coconut Palm Club, Coconut Creek 1992 300 385,372 1,285 96.3% $822 $0.64
Colony Place, Fort Myers 1991 300 336,576 1,122 93.6% $774 $0.69
Combined Ft. Lauderdale
Properties (4) 1988-1991 737 528,591 717 94.7% $893 $1.25
Conway Station, Orlando 1987 242 190,438 787 90.5% $639 $0.81
Copper Terrace, Orlando 1989 300 270,568 902 94.6% $710 $0.79
Country Club Place, Pembroke Pines 1987 152 167,200 1,100 94.7% $863 $0.78
Crosswinds, St. Petersburg 1986 208 154,224 741 95.2% $585 $0.79
Cypress Cove, Melbourne 1990 326 334,680 1,027 95.1% $710 $0.69
Deerbrook, Jacksonville 1983 144 186,188 1,293 90.9% $752 $0.58
Emerald Bay, Winter Park 1972 432 394,837 914 85.0% $610 $0.67
Essex Place, Tampa 1989 148 123,456 834 95.9% $686 $0.82
Falls, Tampa 1985 240 158,016 658 95.4% $549 $0.83
Forest Place, Tampa (1) 1985 244 198,525 814 97.9% $566 $0.70
Gatehouse at Pine Lake, Plantation 1990 296 293,792 993 93.9% $868 $0.87
Gatehouse on the Green, Pembroke Pines 1990 312 310,140 994 97.7% $911 $0.92
Habitat, Orlando 1974 344 334,352 972 91.5% $614 $0.63
Hammock's Place, Miami (1) 1986 296 307,900 1,040 94.9% $754 $0.72
Heron Cove, Coral Springs 1987 198 189,932 959 94.9% $773 $0.81
Heron Landing, Lauderhill 1988 144 151,684 1,053 97.2% $788 $0.75
Heron Run, Plantation 1987 198 185,504 937 94.4% $808 $0.86
Hidden Palms, Tampa (1) 1986 256 201,518 787 94.5% $578 $0.73
Horizon Place, Tampa (1) 1985 304 255,596 841 96.4% $601 $0.71
</TABLE>
25
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December ----------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Indigo Plantation, Daytona Beach 1989 304 268,128 882 92.4% $612 $0.69
La Costa Brava, Jacksonville (2) 1970-73 464 441,268 951 94.0% $562 $0.59
La Costa Brava, Orlando 1967 194 190,780 983 94.1% $655 $0.67
Lakeridge at Moors, Miami 1991 175 169,725 970 92.0% $850 $0.88
Lexington Park, Orlando 1988 252 201,236 799 97.2% $630 $0.79
Lofton Place, Tampa 1988 280 267,725 956 95.0% $717 $0.75
Madison at Coral Square, Coral Springs 1989 384 429,960 1,120 95.3% $880 $0.79
Marbrisa, Tampa 1984 224 188,544 842 96.0% $610 $0.72
Mariner Club, Pembroke Pines (1) 1988 304 282,696 930 98.0% $837 $0.90
Mariners Wharf, Orange Park 1989 272 305,392 1,123 93.0% $784 $0.70
Mission Bay, Orlando 1991 304 330,368 1,087 90.4% $805 $0.74
Northlake, Jacksonville 1989 240 193,832 808 96.7% $614 $0.76
Oaks of Lakebridge, Ormond Beach 1984 170 120,792 711 94.1% $611 $0.86
Ocean Walk, Key West (1) 1990 296 208,256 704 100.0% $959 $1.36
Paradise Point, Dania 1987-90 320 286,740 896 87.1% $846 $0.94
Pine Harbour, Orlando 1991 366 344,204 940 93.8% $715 $0.76
Pines of Springdale, W. Palm Beach 1986 151 126,975 841 98.7% $650 $0.77
Plantations at Killearn, Tallahassee (1) 1990 184 156,920 853 95.6% $616 $0.72
Polos East, Orlando 1991 308 270,000 877 95.1% $706 $0.81
Polos, Fort Myers 1991 328 301,120 918 96.3% $671 $0.73
Princeton Square, Jacksonville 1984 288 212,640 738 95.1% $566 $0.77
Promenade, St. Petersburg 1994 334 323,688 969 93.1% $817 $0.84
Reserve at Ashley Lake, Boynton Beach (1) 1990 440 432,756 984 95.2% $703 $0.71
River Bend, Tampa 1971 296 333,580 1,127 94.9% $584 $0.52
Royal Oaks, Jacksonville 1991 284 233,700 823 92.2% $641 $0.78
Sabal Palm, Pompano Beach 1989 416 384,032 923 91.5% $783 $0.85
Sabal Palm at Carrollwood Place, Tampa 1995 432 419,040 970 97.7% $731 $0.75
Sabal Palm at Boot Ranch, Palm Harbor (1) 1996 432 437,303 1,012 95.1% $793 $0.78
Sabal Pointe, Coral Springs 1995 275 355,575 1,293 95.3% $911 $0.70
Sawgrass Cove, Bradenton 1991 336 342,880 1,020 95.4% $693 $0.68
Silver Springs, Jacksonville 1985 432 361,372 837 98.1% $568 $0.68
Spicewood Springs, Jacksonville 1986 512 388,800 759 93.9% $560 $0.74
Springs Colony, Altamonte Springs (1) 1986 188 161,168 857 92.6% $625 $0.73
</TABLE>
26
<PAGE>
Item 2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December ----------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Summit Chase, Coral Springs 1985 140 134,586 961 95.0% $732 $0.76
Timberwalk, Jacksonville 1987 284 240,304 846 96.1% $648 $0.77
Tivoli Lakes, Deerfield Beach 1991 278 247,336 890 94.2% $772 $0.87
Valencia Plantation, Orlando 1990 194 213,448 1,100 96.4% $742 $0.67
Vinings at Lake Buena Vista, Orlando (1) 1988 400 370,849 927 97.7% $688 $0.74
Vinings at Lenox Place, Orlando 1998 456 496,604 1,089 81.1% $892 $0.82
Vinings Club at Metrowest, Orlando 1997 411 510,263 1,242 93.6% $1,015 $0.82
Viridian Lake, Fort Myers 1991 320 276,064 863 91.9% $692 $0.80
Waterford, Jacksonville 1988 432 460,312 1,066 96.3% $706 $0.66
Waterford at Deerwood, Jacksonville (1) 1985 248 246,820 995 94.7% $626 $0.63
Waterford at Orange Park, Orange Park (1) 1986 280 236,596 845 94.6% $601 $0.71
Waterford at Regency, Jacksonville (1) 1985 159 134,253 844 96.8% $548 $0.65
Waterford Village, Delray Beach 1989 236 222,109 941 98.3% $816 $0.87
Welleby Lake Club, Sunrise 1991 304 290,972 957 96.0% $794 $0.83
Westwood Pines, Tamarac 1991 208 204,460 983 92.8% $861 $0.88
Wood Forest, Daytona Beach (1) 1985 144 118,392 822 93.1% $574 $0.70
Woodlake at Killearn, Tallahassee 1986-90 352 305,480 868 90.6% $608 $0.70
GEORGIA
Belmont Crossing, Riverdale 1988 316 323,230 1,023 94.3% $675 $0.66
Belmont Landing, Riverdale 1988 424 386,530 912 92.9% $650 $0.71
Champions Park, Norcross 1987 252 203,391 807 97.6% $692 $0.86
Chatelaine Park, Duluth 1995 303 334,845 1,105 95.3% $857 $0.78
Defoor Village, Atlanta 1997 156 149,983 961 94.9% $974 $1.01
Frey, Atlanta (1) 1985 489 453,760 928 97.0% $679 $0.73
Garden Lake, Riverdale 1991 278 274,256 987 96.0% $671 $0.68
Governor's Place, Augusta 1972 190 191,580 1,008 94.1% $451 $0.45
Governor's Point, Roswell (1) 1982/1986 468 587,176 1,255 94.0% $813 $0.65
Greengate, Marietta 1971 152 157,808 1,038 98.7% $661 $0.64
Greystone, Atlanta 1960 150 152,600 1,017 97.3% $697 $0.69
Gwinnett Crossing, Duluth 1989/90 574 501,384 873 94.1% $651 $0.75
Harvest Grove, Conyers 1986 376 350,432 932 94.9% $623 $0.67
Highland Grove, Stone Mountain 1988 268 243,360 908 95.8% $666 $0.73
Holcomb Bridge, Atlanta (1) 1985 437 419,150 959 95.9% $726 $0.76
</TABLE>
27
<PAGE>
Item 2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December ----------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ivy Place, Atlanta 1978 122 180,830 1,482 98.1% $953 $0.64
Lakes at Vinings, Atlanta (1) 1972/1975 464 443,178 955 94.4% $782 $0.82
Lexington Glen, Atlanta 1990 480 525,504 1,095 94.8% $887 $0.81
Lexington Village, Alpharetta (1) 1995 352 379,046 1,077 95.4% $846 $0.79
Longwood, Decatur 1992 268 216,970 810 98.9% $762 $0.94
Madison at River Sound, Lawrenceville 1996 586 634,999 1,084 95.0% $823 $0.76
Martins Landing, Atlanta (1) 1972 300 423,930 1,413 96.0% $876 $0.62
Maxwell House, Augusta 1951 216 97,173 450 94.0% $382 $0.85
North Hill, Atlanta (1) 1984 420 481,150 1,146 94.7% $778 $0.68
Paces Station Combined, Atlanta (8) 1984-1989 610 592,936 972 97.2% $784 $0.81
Park Knoll, Marietta 1983 484 587,250 1,213 93.8% $851 $0.70
Plantation Ridge, Atlanta 1975 454 513,068 1,130 95.6% $692 $0.61
Preston Lake, Tucker 1984-86 320 338,130 1,057 96.2% $693 $0.66
Roswell, Atlanta (1) 1985 236 225,598 956 94.0% $750 $0.78
Shadow Lake, Doraville 1989 228 232,120 1,018 95.6% $683 $0.67
Sweetwater Glen, Lawrenceville 1986 200 160,400 802 96.0% $639 $0.80
The Arboretum, Atlanta 1970 312 301,139 965 98.2% $866 $0.90
The Clarion, Decatur 1990 217 211,582 975 94.9% $792 $0.81
Trowbridge, Atlanta 1980 210 246,000 1,171 97.0% $770 $0.66
Willow Trail, Norcross 1985 224 195,216 872 94.6% $627 $0.72
Windridge, Dunwoody 1982 272 229,930 845 95.2% $650 $0.77
Woodland Hills, Decatur 1985 228 266,304 1,168 97.8% $835 $0.71
Wynbrook, Atlanta 1972/1976 318 322,828 1,015 95.0% $663 $0.65
IDAHO
The Seasons, Boise 1990 120 108,460 904 96.6% $631 $0.70
ILLINOIS
Bourbon Square, Palatine (1) 1984-87 612 875,160 1,430 90.0% $1,091 $0.76
Chantecleer Lakes, Naperville (1) 1986 304 280,536 923 97.1% $918 $0.99
Four Lakes III-V, Lisle (1) 1968-1988 1,420 1,108,453 781 95.0% $806 $1.03
Glengarry Club, Bloomingdale (1) (7) 1989 250 215,098 860 97.2% $887 $1.03
Glenlake Club, Glendale Heights (1) 1988 336 268,560 799 99.4% $842 $1.05
McDowell Place, Naperville (1) 1988 400 396,320 991 95.5% $899 $0.91
INDIANA
Idlewood, Indianapolis (1) 1991 320 262,355 820 98.1% $605 $0.74
</TABLE>
28
<PAGE>
Item 2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Average Occupancy Avg. Monthly
Square As of Rental Rate Per
Year(s) Square Footage December --------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IOWA
3000 Grand, Des Moines 1970 186 199,530 1,073 95.1% $834 $0.78
Regency Woods, West Des Moines (1) 1986 200 165,880 829 100.0% $589 $0.71
KANSAS
Cedar Crest, Overland Park (1) 1986 466 430,034 923 96.6% $650 $0.70
Concorde Bridge, Overland Park 1973 248 403,808 1,628 92.3% $838 $0.51
Essex Place, Overland Park 1970-84 352 429,048 1,219 95.2% $806 $0.66
Rosehill Pointe, Lenexa (1) 1984 498 459,318 922 95.6% $627 $0.68
Silverwood, Mission (1) 1986 280 234,876 839 96.4% $649 $0.77
Sunnyoak Village, Overland Park (1) 1984 548 492,700 899 96.1% $623 $0.69
KENTUCKY
Breckinridge Court, Lexington (1) 1986-1987 382 276,010 723 92.7% $516 $0.71
Cloisters on the Green, Lexington 1974 228 196,560 862 89.9% $575 $0.67
Doral, Louisville 1972 228 293,106 1,286 92.5% $627 $0.49
Mallgate, Louisville 1969 540 535,444 992 93.7% $564 $0.57
Patchen Oaks, Lexington 1990 192 161,760 843 93.7% $579 $0.69
River Oak, Louisville 1989 268 200,056 746 95.1% $574 $0.77
Sonnet Cove I-II, Lexington (2 properties) 1972-1974 331 346,675 1,047 93.4% $620 $0.59
MAINE
Coach Lantern, Scarborough 1971/1981 90 97,700 1,086 92.2% $763 $0.70
Foxcroft, Scarborough 1977/1979 104 98,800 950 96.2% $714 $0.75
Junipers of Yarmouth, Yarmouth 1970 225 188,000 836 98.7% $697 $0.83
Tamarlane, Portland 1986 115 101,801 885 95.7% $772 $0.87
Yarmouth Woods, Yarmouth 1972/1978 138 137,800 999 93.5% $682 $0.68
MARYLAND
Brookside II (MD), Frederick 1979 204 183,920 902 95.6% $614 $0.68
Canterbury, Germantown (1) 1986 544 481,083 884 95.8% $747 $0.84
Clary's Crossing, Columbia 1984 198 185,718 938 90.9% $862 $0.92
Georgian Woods I, Wheaton 1967 97 111,385 1,148 95.9% $1,024 $0.89
Georgian Woods II, Wheaton (1) 1968 371 305,693 824 95.1% $781 $0.95
Georgian Woods III, Wheaton 1968 102 89,500 877 91.2% $807 $0.92
Greenwich Woods & Hollyview, Silver Springs (6)
(2 properties) 1965-1967 606 546,518 902 95.5% $826 $0.92
Marymont, Laurel 1987-88 308 251,264 816 94.1% $785 $0.96
Northhampton I & II, Largo (1) (2 properties) 1977-1988 620 564,399 910 97.9% $814 $0.89
Oak Mill II, Germantown (1) 1985 192 165,611 863 96.4% $752 $0.87
Overlook Manor I , II & III, Frederick (9)
(3 properties) 1980/1985/1986 354 324,420 916 97.2% $644 $0.70
</TABLE>
29
<PAGE>
Item 2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Average Occupancy Avg. Monthly
Square As of Rental Rate Per
Year(s) Square Footage December --------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Scarborough Square, Rockville (1) 1967 121 154,624 1,278 100.0% $1,145 $0.90
Town Centre III & IV, Laurel (1) (2 properties) 1968-1969 562 553,083 984 94.5% $724 $0.74
Yorktowne at Olde Mill, Millersville 1974 216 195,100 903 94.4% $698 $0.77
MASSACHUSETTS
Arboretum, Canton 1989 156 139,944 897 98.7% $1,059 $1.18
Crystal Village, Attleboro 1974 91 92,880 1,021 89.0% $957 $0.94
Emerson Place Combined, Boston 1962 462 445,830 965 98.5% $1,485 $1.54
Hall Place, Quincy 1988 90 77,490 861 100.0% $1,098 $1.28
Lincoln Heights, Quincy (1) 1991 336 266,590 793 98.2% $1,194 $1.50
Mill Village, Randolph 1971-77 310 237,755 767 95.1% $848 $1.11
Tyrone Gardens, Randolph 1961/1965 165 122,717 744 97.6% $817 $1.10
MICHIGAN
Arbor Glen, Pittsfield Township 1990 220 195,996 891 96.3% $711 $0.80
Burwick Farms, Howell 1991 264 274,540 1,040 95.4% $817 $0.79
Country Ridge, Farmington Hills 1986 252 278,060 1,103 97.6% $841 $0.76
Hidden Valley, Ann Arbor 1973 324 237,348 733 97.5% $723 $0.99
Lake in the Woods, Ypsilanti 1969 1,028 971,873 945 95.2% $747 $0.79
Parkcrest, Southfield (1) 1987 210 252,980 1,205 95.7% $831 $0.69
Pines of Cloverlane, Pittsfield Township 1975-79 582 471,966 811 92.6% $645 $0.80
Townhomes of Meadowbrook, Auburn Hills (1) 1988 230 254,775 1,108 97.8% $747 $0.67
Walden Wood, Southfield (1) 1972 210 295,080 1,405 100.0% $908 $0.65
Woodcrest Villa, Westland 1970 458 425,200 928 96.3% $624 $0.67
Woodland Meadows, Ann Arbor 1987-1989 306 392,930 1,284 94.8% $1,089 $0.85
MINNESOTA
740 River Drive, St. Paul (1) 1962 162 190,388 1,175 96.9% $1,218 $1.04
Cityscape, South Louis Park 1990 156 162,304 1,040 96.2% $985 $0.95
Coachman Trails, Plymouth (1) 1987 154 167,140 1,085 97.4% $908 $0.84
Fernbrook Townhomes, Plymouth (1) 1993 72 86,400 1,200 94.4% $986 $0.82
Fountain Place I, Eden Prairie (1) 1989 332 382,170 1,151 97.3% $856 $0.74
Fountain Place II, Eden Prairie (1) 1989 158 162,598 1,029 96.8% $847 $0.82
The Gates at Carlson, Minnetonka (1) (7) 1989 435 396,300 911 97.0% $888 $0.97
Park Place I & II, Plymouth (1) 1986 500 569,768 1,140 98.6% $829 $0.73
Royal Oak, Eagan (1) 1989 231 209,384 906 98.3% $812 $0.90
Summer Creek, Plymouth (1) 1985 72 68,616 953 94.4% $986 $1.03
</TABLE>
30
<PAGE>
Item 2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Average Occupancy Avg. Monthly
Square As of Rental Rate Per
Year(s) Square Footage December --------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Trailway Pond I, Burnsville (1) 1988 75 70,283 937 94.6% $768 $0.82
Trailway Pond II, Burnsville (1) 1988 165 155,395 942 93.3% $769 $0.82
Valley Creek I, Woodbury (1) 1989 225 212,100 943 97.3% $786 $0.83
Valley Creek II, Woodbury (1) 1990 177 168,258 951 96.6% $792 $0.83
White Bear Woods I, White Bear Lake (1) 1989 225 211,992 942 96.4% $783 $0.83
Woodlands of Minnetonka, Minnetonka 1988 248 268,640 1,083 97.2% $906 $0.84
Woodlane Place I, Woodbury (1) 1989 216 297,902 1,379 97.7% $995 $0.72
Woodridge, Eagan (1) 1986 200 207,271 1,036 99.5% $786 $0.76
MISSOURI
Ethan's Glen III, Kansas City (1) 1990 48 33,600 700 93.8% $521 $0.74
Ethan's Ridge I, Kansas City (1) 1988 316 283,944 899 94.0% $592 $0.66
Ethan's Ridge II, Kansas City (1) 1990 242 196,614 812 96.7% $580 $0.71
Hunters Glen, Chesterfield 1985 192 156,489 815 93.2% $680 $0.83
Hunters Ridge, St. Louis (1) 1987 198 178,448 901 93.4% $651 $0.72
Sleepy Hollow, Kansas City (1) 1987 388 325,486 839 93.0% $562 $0.67
South Pointe, St. Louis (1) 1986 192 155,520 810 97.4% $626 $0.77
NEVADA
Catalina at South Shore, Las Vegas 1989 240 211,200 880 97.5% $713 $0.81
Catalina Shores, Las Vegas (Wellsford) 1989 256 230,872 902 94.1% $649 $0.72
Crossing at Green Valley, Las Vegas 1986 384 330,714 861 95.3% $644 $0.75
Cypress Point, Las Vegas 1989 212 179,800 848 94.8% $675 $0.80
Desert Park, Las Vegas 1987 368 172,513 469 95.9% $513 $1.09
Fountains at Flamingo, Las Vegas 1989-91 521 417,870 802 92.9% $686 $0.86
Grandview I & II, Las Vegas 1980 456 313,400 687 93.4% $574 $0.84
Reflections at the Lakes, Las Vegas 1989 326 274,992 844 98.8% $674 $0.80
Silver Shadow, Las Vegas 1992 200 194,656 973 97.0% $700 $0.72
Sunrise Springs, Las Vegas 1989 192 164,424 856 93.8% $686 $0.80
Trails, Las Vegas 1988 440 453,656 1,031 93.6% $760 $0.74
NEW HAMPSHIRE
Wellington Hill, Manchester (1) 1987 390 394,627 1,012 96.9% $796 $0.79
NEW JERSEY
Portside Towers Combined, Jersey City (1) 1992/1997 527 564,272 1,071 99.4% $1,852 $1.73
Prospect Towers, Hackensack (1) 1995 157 208,603 1,329 98.1% $1,902 $1.43
Ravens Crest, Plainsboro (1) 1984 704 583,176 828 95.2% $905 $1.09
NEW MEXICO
Mountain Run, Albuquerque 1985 472 335,744 711 91.7% $549 $0.77
</TABLE>
31
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December -------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pubelo Villas, Albuquerque 1975 232 173,118 746 90.9% $542 $0.73
NORTH CAROLINA
Adams Farm I & II, Greensboro 1987 500 520,220 1,040 92.0% $704 $0.68
Bainbridge, Durham 1984 216 191,240 885 95.8% $703 $0.79
Berkshire Place, Charlotte 1982 240 211,664 882 93.3% $645 $0.73
Bridgeport, Raleigh 1990 276 252,190 914 94.1% $742 $0.81
Chatham Woods, High Point 1986 208 168,688 811 99.0% $569 $0.70
Creekwood, Charlotte 1987-1990 384 322,868 841 92.8% $625 $0.74
Cross Creek, Charlotte (1) 1989 420 412,020 981 91.6% $651 $0.66
Deerwood Meadows, Greensboro 1986 297 217,757 733 92.2% $575 $0.78
Duraleigh Woods, Raleigh 1987 362 283,856 784 96.9% $641 $0.82
East Pointe, Charlotte (1) 1987 310 301,560 973 94.5% $657 $0.68
English Hills, Charlotte 1984 280 193,100 690 92.5% $570 $0.83
Hidden Oaks & Northwoods 1986-1988 444 345,358 778 91.9% $663 $0.85
Village, Cary (5)
Hunt Club, Charlotte 1990 300 267,192 891 96.7% $674 $0.76
Kimmerly Glen, Charlotte 1986 260 195,000 750 93.8% $582 $0.78
Lake Point, Charlotte 1984 296 271,700 918 97.0% $614 $0.67
Laurel Ridge, Chapel Hill 1975 160 158,964 994 98.0% $764 $0.77
Madison at Bridford Lake I, 1998 320 353,783 1,106 72.4% $822 $0.74
Greensboro
McAlpine Ridge, Charlotte 1989-90 320 238,125 744 94.4% $604 $0.81
Misty Woods, Cary 1984 360 275,716 766 95.3% $615 $0.80
Pine Meadow, Greensboro (1) 1974 204 226,600 1,111 91.2% $614 $0.55
Rock Creek, Corrboro 1986 188 153,548 817 92.6% $710 $0.87
Sailboat Bay, Raleigh 1986 192 123,004 641 97.4% $573 $0.89
Sommerset Place, Raleigh 1983 144 112,248 780 97.2% $637 $0.82
Steeplechase, Charlotte 1986 247 178,851 724 96.8% $572 $0.79
The Atrium, Durham 1989 208 196,596 945 95.2% $673 $0.71
The Cardinal, Greensboro (1) 1994 256 237,727 929 97.3% $595 $0.64
The Cedars, Charlotte 1983 360 312,400 868 92.2% $621 $0.72
The Chimneys, Charlotte 1974 214 150,152 702 98.6% $533 $0.76
The Oaks, Charlotte 1996 318 280,948 883 97.8% $741 $0.84
The Pointe, Charlotte 1996 340 300,582 884 94.4% $753 $0.85
The Regency, Charlotte 1986 178 178,276 1,002 92.7% $749 $0.75
</TABLE>
32
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December -------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Timber Hollow, Chapel Hill 1986 198 145,478 735 96.5% $685 $0.93
Willow Brook, Durham 1986 176 139,860 795 88.1% $701 $0.88
Winterwood, Charlotte (1) 1986 384 369,260 962 94.8% $682 $0.71
Woodbridge, Cary (1) 1993-95 344 315,624 918 90.4% $745 $0.81
Woodscape & Woods of North
Bend, Raleigh 1979-1983 475 430,167 906 96.0% $654 $0.72
OHIO
Olentangy, Columbus 1972 827 981,190 1,186 98.4% $797 $0.67
Orchard of Landen, Maineville (1) 1985-1988 312 288,514 925 92.3% $712 $0.77
Reserve Square, Cleveland 1973 765 631,803 826 84.1% $932 $1.13
University Park, Toledo 1965 99 49,950 505 96.9% $440 $0.87
Village of Hampshire Heights, Toledo 1950 304 187,624 617 96.0% $422 $0.68
OKLAHOMA
Brittany Square, Tulsa 1982 212 170,516 804 98.1% $548 $0.68
Huntington Hollow, Tulsa 1981 288 180,648 627 98.6% $399 $0.64
Lincoln Oaks, Tulsa 1991 300 216,368 721 99.7% $575 $0.80
One Eton Square, Tulsa 1985 448 313,904 701 97.5% $557 $0.79
Riverside Park, Tulsa (1) 1994 288 237,283 824 98.6% $615 $0.75
Silver Springs & Woodland
Oaks, Tulsa 1983-1984 428 323,977 757 99.1% $526 $0.69
The Lodge, Tulsa 1979 208 152,240 732 97.6% $453 $0.62
OREGON
Bridgecreek, Wilsonville 1987 315 274,236 871 95.5% $673 $0.77
Club at Tanasbourne, Hillsboro 1990 352 302,902 861 95.1% $693 $0.81
Club at the Green, Beaverton 1991 254 238,850 940 94.2% $699 $0.74
Country Gables, Beaverton (1) 1991 288 275,463 956 93.4% $735 $0.77
Kempton Downs, Gresham 1990 278 277,536 998 92.4% $718 $0.72
Boulder Creek, Wilsonville 1991 296 251,627 850 95.6% $650 $0.76
Meadowcreek, Tigard (1) 1985 304 247,690 815 95.4% $664 $0.81
Portland Center, Portland (1) 1965 525 429,371 818 79.3% $925 $1.13
Tanasbourne Terrace, Hillsboro 1986-89 373 363,758 975 94.6% $733 $0.75
Tanglewood, Lake Oswego 1976 158 200,660 1,270 96.2% $836 $0.66
Watermark Square, Portland (1) 1990 390 350,945 900 90.2% $655 $0.73
Woodcreek, Beaverton (1) 1982-84 440 335,120 762 95.7% $609 $0.80
SOUTH CAROLINA
Carolina Crossing, Greenville 1967 156 121,200 777 92.3% $451 $0.58
</TABLE>
33
<PAGE>
Item 2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December ----------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gleneagle, Greenville 1990 192 177,264 923 95.3% $544 $0.59
Greyeagle, Greenville 1991 156 154,624 991 97.4% $569 $0.57
Haywood Pointe, Greenville 1985 216 183,136 848 94.9% $570 $0.67
Hickory Ridge, Greenville 1968 90 72,392 804 97.8% $456 $0.57
Hollows, Columbia 1987 212 161,636 762 95.3% $536 $0.70
Mallard Cove, Greenville 1983 211 264,187 1,252 91.9% $611 $0.49
Tamarind at Stoneridge, Columbia 1985 240 200,976 837 92.9% $576 $0.69
TENNESSEE
Arbors at Century Center 1988/1990 420 386,912 921 96.7% $586 $0.64
Arbors of Brentwood, Nashville (1) 1986-87 346 320,993 928 93.0% $679 $0.73
Arbors of Hickory Hollow, Nashville (1) 1986 336 337,260 1,004 96.7% $619 $0.62
Brixworth, Nashville 1985 216 144,912 671 93.5% $732 $1.09
Cambridge at Hickory Hollow, Nashville 1997 360 358,776 997 95.8% $667 $0.67
Canterchase, Nashville (1) 1985 235 170,140 724 90.6% $555 $0.77
Cherry Creek I & II, Hermitage 1986/96 407 393,100 966 95.1% $773 $0.80
Farmington Gates, Germantown 1976 182 192,428 1,057 96.2% $692 $0.65
Preakness, Antioch (1) 1986 260 193,500 744 98.5% $534 $0.72
Ridgeway Commons, Memphis 1970 127 168,650 1,328 95.3% $694 $0.52
Spinnaker Cove, Nashville (1) 1986 278 238,524 858 93.9% $664 $0.77
The Landings, Memphis 1986 292 229,376 786 93.8% $586 $0.75
The Willows, Knoxville (1) 1987-1988 250 219,760 879 94.4% $619 $0.70
Trinity Lakes & Autumn Creek, Cordova
(1) (2 properties) 1985-1991 540 484,374 897 91.6% $610 $0.68
Village of Sycamore Ridge, Memphis 1977 114 148,560 1,303 95.6% $694 $0.53
Waterford Place, Nashville 1994 180 184,850 1,027 95.5% $770 $0.75
Wyndridge II & III, Memphis (1) 1988 568 527,924 929 92.4% $618 $0.66
TEXAS
7979 Westheimer, Houston 1973 459 401,571 875 97.8% $671 $0.77
Altamonte, San Antonio (1) 1985 432 322,928 748 96.7% $542 $0.73
Arbors of Las Colinas, Irving 1985 408 334,556 820 97.8% $706 $0.86
Balcones Club, Austin 1984 312 262,940 843 98.4% $650 $0.77
Blue Swan, San Antonio (1) 1985-1994 285 226,036 793 94.4% $551 $0.69
Breton Mill, Houston (1) 1986 392 294,152 750 96.9% $584 $0.78
Broadway, Garland (1) 1983 288 227,032 788 93.0% $531 $0.67
Burn Brae, Dallas 1984 282 221,966 787 96.8% $576 $0.73
</TABLE>
34
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
December, 1998
Average Occupancy Avg. Monthly
Square As of Rental Rate Per
Year(s) Square Footage December --------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Calais, Dallas 1986 264 206,210 781 98.5% $602 $0.77
Cambridge Village, Lewisville 1987 200 160,036 800 98.5% $678 $0.85
Cedar Ridge, Arlington (1) 1980 121 127,808 1,056 98.3% $715 $0.68
Celebration at Westchase, Houston 1979 367 305,609 833 98.4% $584 $0.70
Champion Oaks, Houston (1) 1984 252 190,628 756 96.4% $587 $0.78
Chartwell Court, Houston 1995 243 253,553 1,043 95.1% $822 $0.79
Copper Hill, Bedford 1983 204 155,764 764 95.1% $552 $0.72
Copperfield, San Antonio 1984 258 197,736 766 97.7% $522 $0.68
Countryside, San Antonio 1980 220 159,214 724 95.4% $491 $0.68
Coventry at City View, Fort Worth 1996 360 351,921 978 95.5% $832 $0.85
Creekside Homes at Legacy, Plano 1998 380 375,245 987 93.9% $1,028 $1.04
Dawntree, Carrollton 1982 400 370,152 925 96.2% $623 $0.67
Estate on Quarry Lake, Austin (1) 1995 302 269,889 894 96.0% $812 $0.91
Farnham Park, Houston (1) 1996 216 226,260 1,048 97.7% $933 $0.89
Fielder Crossing, Arlington (1) 1980 119 103,293 868 95.8% $626 $0.72
Forest Ridge, Arlington 1984-85 660 555,364 841 96.1% $633 $0.75
Forest Valley, San Antonio 1983 185 149,493 808 96.8% $548 $0.68
Fountainhead I-III, San Antonio (1) 1985-87 688 457,616 665 95.5% $529 $0.80
Foxchase, Grand Prairie 1983 260 243,218 935 95.0% $616 $0.66
Hampton Green, San Antonio 1979 293 222,341 759 92.8% $488 $0.64
Harbour Landing, Corpus Christi 1985 284 193,288 681 96.5% $555 $0.82
Hearthstone, San Antonio 1982 252 167,464 665 99.6% $443 $0.67
Hidden Lakes, Haltom City 1996 312 289,620 928 92.0% $763 $0.82
Hunter's Green, Fort Worth (1) 1981 248 188,720 761 96.4% $516 $0.68
Jefferson at Walnut Creek, Austin (1) 1994 342 286,188 837 95.3% $764 $0.91
Keystone, Austin (1) 1981 166 111,440 671 99.4% $579 $0.86
Kingswood Manor, San Antonio 1983 129 109,996 853 86.0% $521 $0.61
Kirby Place, Houston (1) 1994 362 359,931 994 98.9% $1,063 $1.07
La Tour Fontaine, Houston (1) 1994 162 170,334 1,051 96.9% $1,181 $1.12
Lakeshore at Preston, Plano (1) 1992 302 253,690 840 99.0% $745 $0.89
Lakewood Greens, Dallas (1) 1986 252 186,252 739 96.4% $605 $0.82
Lakewood Oaks, Dallas 1987 352 257,606 732 95.7% $715 $0.98
</TABLE>
35
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December ----------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Landera, San Antonio 1983 184 168,176 914 93.5% $575 $0.63
Lincoln Green I-III, San Antonio 1984-86 680 465,664 685 96.8% $491 $0.72
Madison at Cedar Springs, Dallas 1995 380 334,474 880 92.9% $936 $1.06
Madison at Chase Oaks, Plano 1995 470 420,734 895 93.8% $784 $0.88
Madison at Round Grove, Lewisville 1995 404 358,774 888 94.0% $783 $0.88
Madison at Stone Creek, Austin 1995 390 336,094 862 95.9% $756 $0.88
Madison at the Arboretum, Austin 1995 161 150,836 937 96.9% $832 $0.89
Madison on Melrose, Richardson 1995 200 189,478 947 94.5% $897 $0.95
Madison on the Parkway, Dallas 1995 376 339,796 904 94.4% $822 $0.91
Northgate Village, San Antonio 1984 264 214,928 814 95.8% $519 $0.64
Palms at South Shore, League City 1990 240 190,872 795 91.6% $756 $0.95
Parc Royale, Houston (1) 1994 171 166,859 976 98.2% $986 $1.01
Park Place, Houston (1) 1996 229 206,918 904 95.6% $781 $0.86
Parkridge Place, Irving 1985 536 455,496 850 97.6% $684 $0.80
Parkwest, Austin 1985 196 179,046 914 94.4% $752 $0.82
Plantation, Houston 1969 232 214,432 924 96.0% $721 $0.78
Pleasant Ridge, Arlington (1) 1982 63 57,600 914 96.8% $636 $0.70
Prairie Creek I, Richardson 1998 236 237,002 1,004 93.2% $924 $0.92
Preston Bend, Dallas (1) 1986 255 185,364 727 96.9% $635 $0.87
Preston in Willow Bend, Plano 1985 229 233,893 1,021 93.4% $781 $0.76
Ranchstone, Houston 1996 220 193,088 878 94.5% $773 $0.88
Regatta, San Antonio 1983 200 171,634 858 96.5% $581 $0.68
Richmond Townhomes, Houston (1) 1995 188 183,883 978 96.3% $920 $0.94
Ridgetree, Dallas 1983 798 597,642 749 93.7% $547 $0.73
Rincon, Houston 1996 288 240,787 836 95.1% $954 $1.14
River Hill, Grand Prairie 1996 334 297,214 890 91.5% $779 $0.88
River Park, Fort Worth (1) 1984 280 219,660 785 95.0% $550 $0.70
Rolido Parque, Houston (1) 1978 369 262,930 713 97.8% $521 $0.73
Saddle Creek, Carrollton 1980 238 244,488 1,027 96.2% $703 $0.68
Sandstone, Euless (1) 1988 40 38,236 956 95.0% $747 $0.78
Sedona Springs, Austin 1995 396 389,138 983 97.3% $844 $0.86
Songbird, San Antonio (1) 1981 262 277,720 1,060 96.9% $640 $0.60
Sutton Place, Dallas 1985 456 301,440 661 95.8% $617 $0.93
</TABLE>
36
<PAGE>
Item 2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Average Occupancy Avg. Monthly
Square As of Rental Rate Per
Year(s) Square Footage December --------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
The Lodge, San Antonio 1979 384 259,512 676 99.0% $505 $0.75
The Overlook, San Antonio 1985 411 298,133 725 97.2% $466 $0.64
The Trails, Arlington 1984 208 141,696 681 94.7% $537 $0.79
Town Center, Kingwood 1994 258 220,630 855 95.3% $777 $0.91
Trails at Briar Forest, Houston (1) 1990 476 426,724 896 95.6% $692 $0.77
Trails at Dominion, Houston (1) 1992-1995 843 766,592 909 95.7% $711 $0.78
Trails End, San Antonio 1983 308 202,376 657 92.9% $475 $0.72
Trails of Valley Ranch, Irving 1986 216 174,365 807 96.3% $727 $0.90
Village Oaks, Austin (1) 1984 280 199,152 711 97.5% $703 $0.99
Villas at Josey Ranch, Carrollton (1) 1986 198 168,020 849 97.0% $692 $0.82
Villas of Oak Creste, San Antonio 1979 280 208,446 744 97.5% $474 $0.64
Vista Pointe, Irving 1996 231 237,985 1,030 94.8% $1,001 $0.97
Walker's Mark, Dallas 1982 164 133,448 814 96.3% $644 $0.79
Waterford, San Antonio 1983 133 87,376 657 93.2% $502 $0.76
Wimberly, Dallas 1996 372 340,987 917 93.5% $840 $0.92
Wimbledon Oaks, Arlington (1) 1985 248 189,960 766 96.0% $578 $0.75
Woodmoor, Austin 1981 208 151,348 728 96.8% $603 $0.83
UTAH
Brookfield, Salt Lake City 1985 128 101,424 792 93.7% $613 $0.77
Quail Cove, Salt Lake City 1987 420 362,580 863 89.7% $583 $0.68
Settlers Point, Salt Lake City 1986 288 263,040 913 93.7% $613 $0.67
Springs of Country Woods, Salt Lake City 1982 590 486,648 825 94.7% $628 $0.76
VIRGINIA
Amberton, Manassas (1) 1986 190 143,402 755 96.3% $736 $0.98
Brookridge, Centreville (1) 1989 252 252,353 1,001 98.8% $864 $0.86
Carriage Homes at Wyndham, Glen Allen 1998 264 309,351 1,172 61.7% $1,061 $0.91
Cascade at Landmark, Alexandria 1990 277 272,720 985 95.3% $983 $1.00
Champions Club, Glen Allen 1988 212 164,580 776 97.2% $641 $0.83
Hickory Creek, Richmond 1984 294 250,068 851 96.5% $669 $0.79
Kingsport, Alexandria 1985 416 285,793 687 97.8% $712 $1.04
Park West End, Richmond (1) 1985 312 224,768 720 96.5% $591 $0.82
Saddle Ridge, Ashburn 1989 216 194,142 899 97.7% $894 $0.99
Sheffield Court, Arlington 1986 597 356,822 598 96.5% $872 $1.46
</TABLE>
37
<PAGE>
Item 2. Properties
PROPERTIES- Continued
<TABLE>
<CAPTION>
December, 1998
Average Occupancy Avg. Monthly
Square As of Rental Rate Per
Year(s) Square Footage December --------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tanglewood, Manassas (1) 1987 432 388,704 900 94.0% $751 $0.83
Wilde Lake, Richmond (1) 1989 189 172,980 915 97.9% $697 $0.76
Woodside, Lorton 1987 252 231,781 920 92.9% $825 $0.90
WASHINGTON
2300 Elliott, Seattle 1992 91 67,403 741 95.6% $938 $1.27
2900 on First, Seattle 1989-91 135 87,320 647 93.2% $915 $1.41
Alderwood Park, Lynnwood (1) 1982 188 143,696 764 96.8% $715 $0.94
Bellevue Meadows, Bellevue 1983 180 144,208 801 93.9% $891 $1.11
Brentwood, Vancouver 1990 296 286,132 967 89.2% $681 $0.70
Chandler's Bay I, Kent 1989 293 278,874 952 93.5% $784 $0.82
Charter Club, Everett 1991 201 172,773 860 97.5% $779 $0.91
Chelsea Square, Redmond 1991 113 107,912 955 96.5% $979 $1.03
Cherry Hill, Seattle 1991 108 101,390 939 99.1% $860 $0.92
Chestnut Hills, Tacoma 1991 157 143,236 912 91.1% $650 $0.71
Country Club Village, Seattle 1991 151 157,898 1,046 93.6% $922 $0.88
Creekside, Mountlake Terrace (1) 1987 512 407,296 796 94.1% $751 $0.94
Eagle Rim, Redmond 1986-88 156 137,920 884 94.9% $858 $0.97
Edgewood, Woodinville (1) 1986 203 166,299 819 96.1% $785 $0.96
Firdale Village, Seattle 1986 386 323,522 838 96.6% $772 $0.92
Fox Run, Federal Way 1988 143 127,960 895 98.6% $700 $0.78
Gates of Redmond I & II, Redmond (1) (2 properties) 1979-1989 280 249,728 892 95.7% $936 $1.05
Highland Creste, Seattle 1989 198 192,556 973 95.7% $682 $0.70
Huntington Park, Everett 1991 381 307,793 808 95.5% $743 $0.92
Indigo Springs, Kent (1) 1991 278 255,360 919 92.8% $767 $0.84
James Street Crossing, Kent (1) 1989 300 250,368 835 96.0% $726 $0.87
Martha Lake, Seattle 1991 155 135,662 875 97.6% $742 $0.85
Merrill Creek, Tacoma 1994 149 138,867 932 94.0% $681 $0.73
Metropolitan Park, Seattle 1991 82 49,702 606 98.8% $850 $1.40
Newport Heights, Seattle 1985 80 59,056 738 92.5% $760 $1.03
North Creek Heights, Seattle 1990 114 104,306 915 95.6% $854 $0.93
North Creek, Everett (1) 1986 264 227,568 862 99.2% $689 $0.80
Olde Redmond Place, Redmond (1) 1986 192 160,632 837 95.8% $898 $1.07
Orchard Ridge, Lynnwood 1988 104 86,548 832 98.1% $741 $0.89
</TABLE>
38
<PAGE>
Item 2. Properties
PROPERTIES - Continued
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December ----------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Panther Ridge, Seattle 1980 260 221,000 850 95.3% $616 $0.72
Plum Tree Park, Seattle 1991 196 174,310 889 98.0% $782 $0.88
Pointe East, Redmond 1988 76 83,280 1,096 97.4% $1,102 $1.01
Ridgegate, Seattle 1990 153 141,594 925 97.5% $764 $0.83
Seventh and James, Seattle 1992 96 61,282 638 96.9% $866 $1.36
Stoney Creek, Tacoma 1990 231 211,580 916 95.7% $669 $0.73
Summit at Lake Union 1995-1997 150 109,352 729 91.1% $997 $1.37
Surprise Lake Village, Tacoma 1986 338 328,032 971 95.0% $725 $0.75
Surry Downs, Bellevue 1986 122 94,360 773 97.7% $864 $1.12
The Hamptons, Tacoma (1) 1991 230 202,324 880 95.6% $667 $0.76
The Ridgetop, Tacoma 1988 221 197,250 893 93.0% $642 $0.72
The Village at Seeley Lake, Tacoma 1990 522 469,180 899 90.8% $675 $0.75
Village of Newport, Federal Way 1987 100 76,890 769 98.0% $651 $0.85
Waterford at the Lakes, Kent 1990 344 313,514 911 92.1% $767 $0.84
Waterstone Place, Federal Way 1990 750 616,436 822 94.9% $653 $0.79
Wellington, Silverdale (1) 1990 240 214,024 892 93.8% $640 $0.72
Westridge, Tacoma 1987-1991 714 686,675 962 93.3% $694 $0.72
Woodlake, Kirkland (1) 1984 288 233,280 810 96.5% $798 $0.99
WISCONSIN
Harbor Pointe, Milwaukee (1) 1970/1990 595 537,068 903 91.7% $644 $0.71
Plum Tree I, II & III, Hales
Corner (1) (7) 1987-1989 332 355,074 1,070 95.5% $867 $0.81
Ravinia, Greenfield (1) (7) 1991 206 219,932 1,068 97.6% $851 $0.80
Woodlands of Brookfield,
Brookfield (1) (7) 1990 148 185,320 1,252 95.9% $1,171 $0.94
----------------------------------------------------------------------------
TOTAL PROPERTIES: 184,895 166,096,925
----------------------------------------------------------------------------
AVERAGE: 285 256,322 898 95% $739 $0.82
</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, and Williamsburg.
(4) Includes Port Royale I, Port Royale II, and Port Royale III. Port Royale III
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) As of 12/31/97, the Operating Partnership had an investment in six mortgage
loans collateralized by these properties and they were included in the Form
10-K as "Additional Properties". On 4/1/98, the Operating Partnership
purchased these five properties and they are therefore no longer considered
"Additional Properties".
(8) Includes Paces Station and Paces on the Green.
(9) Overlook Manor II is encumbered by a third party mortgage.
39
<PAGE>
Item 2. Properties
PROPERTIES - Continued
Development and Construction Activity
The apartment communities under construction and/or in lease up are
listed below:
<TABLE>
<CAPTION>
Average Estimated Construction Actual Actual or Estimated
Unit Construction Cost Funded at Date of Estimated Date of
Total Size Cost 12/31/98 Construction Commencement Stabilized
Name City Units (Sq. Ft.) (Millions) (Millions)*** Commencement* of Lease-Up* Occupancy*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ARIZONA
Montierra Scottsdale 249 1,052 $21 $20 3/97 6/98 4/99
The Retreat, Phase I Phoenix 240 973 $14 $30 1/97 7/97 3/99
The Retreat, Phase II Phoenix 240 973 $17 ** 9/97 3/98 3/99
GEORGIA
Merritt Lake
(aka Satellite Place) Duluth 424 1,036 $35 $28 2/98 9/98 9/99
TENNESSEE
Cherry Creek III Hermitage 220 1,085 $16 $12 12/97 9/98 1/00
TEXAS
Prairie Creek II Richardson 228 994 $20 $ - 5/98 1/99 9/99
VIRGINIA
Madison at Spring Oak (10) Richmond 506 997 $48 $ 9 11/97 1/00 3/02
---- ---- ----
TOTAL 2,107 $171 $99
===== ==== ===
</TABLE>
(10) Development of this project is currently on hold.
* The actual date of construction commencement represents the date the
Operating Partnership began development of the first building/phase. The
actual or estimated commencement of lease-up represents the date the
Operating Partnership began or estimates to begin lease-up of the first
building/phase. The estimated date of stabilized occupancy represents the
date the Operating Partnership estimates to reach 93% physical occupancy
for all buildings/phases or two months after the certificate of occupancy
is received on the final building/phase.
** Combined with The Retreat, Phase I.
*** Amounts represent the total development cost to date at December 31, 1998.
Of this amount, $29 million was funded by EWR prior to the EWR Merger
(for Monterra and The Retreat) and $42 million was funded by MRY prior to
the MRY Merger (for Merritt Lake, Cherry Creek III, Prairie Creek II and
Madison at Spring Oak).
40
<PAGE>
Item 2. Properties
PROPERTIES - Continued
ADDITIONAL PROPERTIES
<TABLE>
<CAPTION>
December, 1998
Occupancy Avg. Monthly
Average As of Rental Rate Per
Year(s) Square Square Footage December ----------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CALIFORNIA
Brookside Place, Stockton (11) 1981 90 96,664 1,074 93% $752 $0.70
Canyon Creek, San Ramon (11) 1984 268 257,676 961 97% $1,197 $1.24
Cobblestone Village, Fresno (11) 1983 162 153,118 945 97% $584 $0.62
Country Oaks, Agoura (11) 1985 256 258,558 1,010 95% $1,329 $1.32
Edgewater, Bakersfield (11) 1984 258 240,322 931 93% $673 $0.72
Feather River, Stockton (11) 1981 128 97,328 760 96% $562 $0.74
Hidden Lake, Sacramento (11) 1985 272 261,808 963 93% $738 $0.77
Lakeview, Lodi (11) 1983 138 136,972 993 98% $732 $0.74
Lantern Cove, Foster City (11) 1985 232 228,432 985 94% $1,723 $1.75
Schooner Bay I, Foster City (11) 1985 168 167,345 996 94% $1,847 $1.85
Schooner Bay II, Foster City (11) 1985 144 143,442 996 93% $1,830 $1.84
South Shore, Stockton (11) 1979 129 141,055 1,093 96% $803 $0.74
Waterfield Square I, Stockton (11) 1984 170 160,100 942 95% $604 $0.64
Waterfield Square II, Stockton (11) 1984 158 151,488 959 96% $622 $0.65
Willow Brook, Pleasant Hill (11) 1985 228 234,840 1,030 96% $1,360 $1.32
Willow Creek, Fresno (11) 1984 116 118,422 1,021 97% $671 $0.66
COLORADO
Deerfield, Denver (11) 1983 158 146,380 926 97% $745 $0.80
Foxridge, Englewood (11) 1984 300 292,992 977 96% $816 $0.84
GEORGIA
Woodcrest, Augusta (12) 1982 248 217,064 875 84% $586 $0.67
Hammoncks at Long Point, Savannah (12) 1997 308 323,844 1,051 97% $824 $0.78
Huntington, Savannah (12) 1986 147 119,452 813 97% $564 $0.69
Magnolia Villas, Savannah (12) 1986 144 161,200 1,119 89% $640 $0.57
NEW MEXICO
Mesa Del Oso, Albuquerque (11) 1983 221 252,169 1,141 94% $865 $0.76
Tierra Antigua, Albuquerque (11) 1985 148 152,241 1,029 93% $728 $0.71
</TABLE>
41
<PAGE>
Item 2. Properties
PROPERTIES - Continued
ADDITIONAL PROPERTIES
<TABLE>
<CAPTION>
December, 1998
Average Occupancy Avg. Monthly
Square As of Rental Rate Per
Year(s) Square Footage December --------------------
Property Constructed Units Footage Per Unit 31, 1998 Unit Square Foot
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OKLAHOMA
Lakewood, Tulsa (11) 1985 152 157,372 1,035 99% $719 $0.69
SOUTH CAROLINA
Windsor Place, Goose Creek (12) 1984 224 213,440 953 98% $577 $0.61
Summit Place, North Charleston (12) 1985 226 201,818 893 98% $575 $0.64
------------------------------------------------------------
TOTAL ADDITIONAL PROPERTIES: 5,193 5,085,542
------------------------------------------------------------
AVERAGE: 192 188,353 979 95% $894 $0.91
============================================================
</TABLE>
(11) All of these Additional Properties are encumbered by mortgages, of which
the Operating Partnership has an investment in the second and third
mortgages (which are subordinate to first mortgages owned by third party
unaffiliated entities).
(12) The Operating Partnership has a 50% equity investment in each of these
properties, but receives preferential returns ranging from 9.50% to 10.25%
until its investment is recovered.
42
<PAGE>
PART I
Item 3. Legal Proceedings
Only ordinary routine litigation incidental to the business which is not
deemed material was initiated during the year ended December 31, 1998. As of
December 31, 1998, the Operating Partnership does not believe there is any other
litigation 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.
43
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder Matters
There is no established public trading market for the OP Units.
During 1998, the Operating Partnership directly issued 4,235,685 OP
Units having a value of $205.2 million and 48,328 Junior Convertible Preference
Units having a value of $4.8 million in exchange for direct or indirect
interests in multifamily Properties in private placement transactions under
section 4(2) of the Securities Exchange Act of 1934, as amended. OP Units are
exchangeable into Common Shares of the Company on a one-for-one basis or, at the
option of the Company, the cash equivalent thereof one year from the date of
issuance.
The following tables sets forth, for the periods indicated, the
distributions paid on the Operating Partnership's OP Units:
<TABLE>
<CAPTION>
Fiscal Year 1998 Distributions
----------------------------------------------------------------
<S> <C>
Fourth Quarter Ended December 31, 1998 $0.71
Third Quarter Ended September 30, 1998 $0.67
Second Quarter Ended June 30, 1998 $0.67
First Quarter Ended March 31, 1998 $0.67
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year 1998 Distributions
----------------------------------------------------------------
<S> <C>
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
</TABLE>
In addition, on February 24, 1999, the Operating Partnership declared a
$0.71 distribution on each OP Unit payable on April 9, 1999 to OP Unit holders
of record on March 19, 1999.
The number of holders of record of OP Units in the Operating Partnership,
at December 31, 1998 was 306. The number of outstanding OP Units as of December
31, 1998 was 131,417,938, which includes units held by minority interest owners
in Merry Land DownREIT I LP, which were converted to 180,585 OP Units subsequent
to December 31, 1998. In addition, the number of holders of record of Junior
Convertible Preference Units in the Operating Partnership at December 31, 1998
was three. The number of outstanding Junior Convertible Preference Units as of
December 31, 1998 was 48,328, which are convertible to 98,626 OP Units.
Item 6. Selected Financial Data
The following table sets forth selected financial and operating information
on a historical basis for the Operating Partnership. 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 and 1994 have been derived from the historical
Financial Statements of the Operating Partnership audited by Grant Thornton LLP,
independent accountants. The historical operating data for the years ended
December 31, 1998, 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.
44
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED HISTORICAL FINANCIAL INFORMATION
(Amounts in thousands except per OP Unit and property data)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------
1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Total revenues $ 1,337,449 $ 747,321 $ 478,385 $ 390,384 $ 231,034
=========== =========== =========== =========== ===========
Income before gain on disposition of properties and
extraordinary items $ 255,032 $ 176,014 $ 97,033 $ 59,738 $ 45,988
=========== =========== =========== =========== ===========
Net income $ 276,735 $ 189,852 $ 115,923 $ 83,355 $ 45,988
=========== =========== =========== =========== ===========
Net income per weighted average OP Unit outstanding $ 1.65 $ 1.79 $ 1.70 $ 1.68 $ 1.34
=========== =========== =========== =========== ===========
Net income per weighted average OP Unit outstanding -
assuming dilution $ 1.63 $ 1.76 $ 1.69 $ 1.67 $ 1.34
=========== =========== =========== =========== ===========
Weighted average OP Units outstanding 111,713 73,182 51,108 42,749 34,150
=========== =========== =========== =========== ===========
Weighted average OP Units outstanding - assuming dilution 112,578 74,281 51,520 42,865 34,274
=========== =========== =========== =========== ===========
Distributions declared per OP Unit outstanding $ 2.72 $ 2.55 $ 2.40 $ 2.18 $ 2.01
=========== =========== =========== =========== ===========
BALANCE SHEET DATA (at end of period):
Real estate, before accumulated depreciation (1) $ 10,942,063 $ 7,121,435 $ 2,983,510 $ 2,188,939 $ 1,963,476
Real estate, after accumulated depreciation (1) $ 10,223,572 $ 6,676,673 $ 2,681,998 $ 1,970,600 $ 1,770,735
Total assets $ 10,700,260 $ 7,094,631 $ 2,986,127 $ 2,141,260 $ 1,847,685
Total debt $ 4,680,527 $ 2,948,323 $ 1,254,274 $ 1,002,219 $ 994,746
Redeemable Preference Interests $ 4,833 $ - $ - $ 24,578 $ 26,001
9 3/8% Series A Cumulative Redeemable Preference Units $ 153,000 $ 153,000 $ 153,000 $ 153,000 $ -
9 1/8% Series B Cumulative Redeemable Preference Units $ 125,000 $ 125,000 $ 125,000 $ 125,000 $ -
9 1/8% Series C Cumulative Redeemable Preference Units $ 115,000 $ 115,000 $ 115,000 $ - $ -
8.60% Series D Cumulative Redeemable Preference Units $ 175,000 $ 175,000 $ - $ - $ -
Series E Cumulative Convertible Preference Units $ 99,925 $ 99,963 $ - $ - $ -
9.65% Series F Cumulative Redeemable Preference Units $ 57,500 $ 57,500 $ - $ - $ -
7 1/4% Series G Convertible Cumulative Preference Units $ 316,250 $ 316,250 $ - $ - $ -
7.00% Series H Cumulative Convertible Preference Units $ 3,914 $ - $ - $ - $ -
8.82% Series I Cumulative Convertible Preference Units $ 100,000 $ - $ - $ - $ -
8.60% Series J Cumulative Convertible Preference Units $ 114,985 $ - $ - $ - $ -
8.29% Series K Cumulative Redeemable Preference Units $ 50,000 $ - $ - $ - $ -
7.625% Series L Cumulative Redeemable Preference Units $ 100,000 $ - $ - $ - $ -
Partners' capital $ 4,346,414 $ 2,921,682 $ 1,216,467 $ 750,902 $ 761,373
OTHER DATA:
Total properties (at end of period) (2) 654 463 218 174 163
Total apartment units (at end of period) (2) 187,002 135,200 67,705 53,294 50,704
Funds from operations (3) $ 458,841 $ 270,763 $ 160,267 $ 120,965 $ 83,886
Cash flow provided by (used for):
Operating activities $ 533,163 $ 338,035 $ 210,930 $ 141,534 $ 93,997
Investing activities $ (1,047,376) $ (1,550,224) $ (635,655) $ (324,018) $ (896,515)
Financing activities $ 484,883 $ 1,098,213 $ 558,568 $ 175,874 $ 808,495
</TABLE>
45
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 6. Selected Financial Data (Consolidated Historical (continued))
(1) Includes approximately $96.3 million and $36 million of construction in
progress as of December 31, 1998 and 1997, respectively.
(2) In August 1995 the Operating Partnership also made its $89 million mortgage
note investment collateralized by 21 of the Additional Properties. In April
1997, the Operating Partnership made its $88 million mortgage note
investment collateralized by five of the Additional Properties. In 1998,
these properties were acquired and are no longer included as Additional
Properties, but now are included as Properties. In addition, in October
1998, the Operating Partnership contributed six of the Additional
Properties having a value of $52.7 million to six respective joint
ventures. These 27 Additional Properties consisted of 5,193 units at
December 31, 1998. These 26 Additional Properties consisted of 5,267 units
at December 31, 1997. The Additional Properties are not included in these
numbers.
(3) The Operating Partnership generally considers FFO to be one measure of the
performance of real estate companies, including an equity REIT. 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 an equity REIT 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, 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 REIT's and, accordingly, may not be comparable to such
other REIT's. The Operating Partnership's calculation of FFO for 1995 and
1994 has 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.
46
<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 Management Partnerships, the Financing
Partnerships and the LLCs, and Merry Land DownREIT I LP, 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:
. alternative sources of capital to the Operating Partnership are higher than
anticipated;
. 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 this 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 EQR's IPO and through December 31, 1998, the Operating Partnership
has acquired direct interests in 623 properties, of which six are under
development, (the "Acquired Properties"), containing 175,031 units in the
aggregate for a total purchase price of approximately $10.4 billion, including
the assumption of approximately $2.6 billion of mortgage indebtedness and $845.9
million 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 Acquired Properties are presented in the Consolidated 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 mortgage note investment collateralized by 21
of the Additional Properties and in October 1998, the Operating Partnership
contributed 6 of the Additional Properties having a value of $52.7 million to
six joint ventures.
The following table summarizes the number of Acquired Properties and
related units acquired by year:
47
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (Continued)
<TABLE>
<CAPTION>
Number of Number of Units
Number of Properties Under Number of Under
Year of Acquisition Properties Development Units Development
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1993 10 2,694
1994 84 26,286
1995 17 5,035
1996 49 15,665
1997 250 2 68,101 729
1998 207 4 55,143 1,378
-----------------------------------------------------------------
Total Acquired Properties 617 6 172,924 2,107
=================================================================
</TABLE>
From the IPO and through December 31, 1998, the Operating Partnership
disposed of 38 Properties and a portion of one Property, including five
properties containing 1,254 units during 1996 (the "1996 Disposed Properties");
seven properties, a portion of one property and a vacant land parcel containing
1,336 units during 1997 (the "1997 Disposed Properties"); and twenty properties
containing 4,719 units during 1998 (the "1998 Disposed Properties").
The Operating Partnership's overall results of operations for the three
years ended December 31, 1998 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 1998 and
1997 (the "1998 Same Store Properties") and Properties that the Operating
Partnership owned for all of both 1997 and 1996 (the "1997 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, 1998 to the year ended December
31, 1997
For the year ended December 31, 1998, income before gain on disposition of
properties and extraordinary item increased by $79 million when compared to the
year ended December 31, 1997. 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 expense,
interest expense and general and administrative expenses.
In regard to the full year 1998 Same Store Properties, which represents
63,243 units, rental income increased by approximately $23.1 million to $527.3
million or 4.59% primarily as a result of higher rental rates charged to new
tenants and tenant renewals, a 1.01% increase in average economic occupancy
levels and an increase in income from billing tenants for their share of utility
costs. Overall, property operating expenses, which include property and
maintenance, real estate taxes and insurance and an allocation of property
management expenses increased approximately $5.3 million or 2.65%. This increase
was primarily the result of higher compensation costs, leasing and advertising
costs, utilities, and maintenance charges.
48
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (Continued)
Property management represents expenses associated with the self-management
of the Operating Partnership's Properties. These expenses increased by
approximately $25.9 million primarily due to the continued expansion of the
Operating Partnership's property management business. The 1998 amounts include a
full year effect of the various offices the Operating Partnership opened in
1997, including the Scottsdale Office, which had a significant expansion
resulting from the EWR Merger. During 1998, the Operating Partnership opened new
management offices in Jacksonville and Orlando, Florida and the Operating
Partnership assumed a management office in Augusta, Georgia, related to the MRY
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 net revenues decreased by
$0.9 million 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 $125.5 million. This increase was primarily the
result of an increase in the Operating Partnership's average indebtedness
outstanding which increased by $1.9 billion. However, the Operating
Partnership's effective interest costs decreased from 7.50% for the year ended
December 31, 1997 to 7.10% for the year ended December 31, 1998.
General and administrative expenses, which include corporate operating
expenses, increased approximately $6.7 million between the periods under
comparison. This increase was primarily due to the addition of corporate
personnel in the Operating Partnership's Human Resources, Accounting, Legal and
Management Information Systems groups, as well as higher compensation costs,
shareholder reporting costs and professional fees. However, by gaining certain
economies of scale with a much larger operation these expenses as a percentage
of total revenues were 1.62% for the year ended December 31, 1998 compared to
2.02% of total revenues for the year ended December 31, 1997.
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 item 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, which represents 49,805 units,
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.
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. In addition, the Operating Partnership was successful in reducing
its costs for leasing and advertising as well as building, maintenance and
grounds costs by consolidating its vendor services in selected sub-markets in
order to obtain volume pricing discounts and by
49
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations (Continued)
consolidating its personnel in selected sub-markets 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; 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 net revenues decreased by
$0.6 million 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.
Liquidity and Capital Resources
For the Year Ended December 31, 1998
As of January 1, 1998, the Operating Partnership had approximately $33.3
million of cash and cash equivalents and $265 million available on its line of
credit of which $24.7 million was restricted. After taking into effect the
various transactions discussed in the following paragraphs, cash and cash
equivalents at December 31, 1998 were approximately $4 million and the amounts
available on the Operating Partnership's lines of credit were $330 million of
which $12 million was 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, funding its Properties in the development stage and the
funding of the Operating Partnership's investment in a joint venture with a
multifamily real estate developer, excluding those Properties acquired through
the Mergers, is to utilize its line of credit and to subsequently repay the line
of credit
50
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
from the issuance of additional equity or debt securities or the disposition of
Properties. Utilizing this strategy during 1998 the Company and/or the Operating
Partnership:
. issued a total of approximately 8.5 million Common Shares through various
offerings and received total net proceeds of $412.5 million, which were
contributed by the Company to the Operating Partnership in exchange for OP
Units.
. issued the 2015 Notes, the August 2003 Notes and the 2000 Notes and
received net proceeds of $542.3 million;
. mortgaged fifteen previously unencumbered Properties and received net
proceeds of $223.5 million; and
. disposed of twenty properties, which generated net proceeds of
approximately $177 million.
All of these proceeds were utilized to either:
. purchase additional properties;
. provide funding for properties in the development stage; and/or
. repay the lines of credit and mortgage indebtedness on certain Properties.
With respect to the 1998 Acquired Properties, the Company issued 21.8
million Common Shares having a value of $1.0 billion and issued the following
preferred shares having a combined liquidation value of $369.1 million (upon
contribution of the net assets by the Company to the Operating Partnership, the
Operating Partnership issued OP Units and cumulative convertible or redeemable
preference units to the Company):
. Series H Preferred Shares;
. Series I Preferred Shares;
. Series J Preferred Shares;
. Series K Preferred Shares; and
. Series L Preferred Shares.
The Operating Partnership also assumed mortgage indebtedness, unsecured
notes and a line of credit of approximately $1.2 billion, issued OP Units having
a value of approximately $205.2 million and issued Junior Convertible Preference
Units having a value of approximately $4.8 million. The cash portion of these
acquisitions were primarily funded from amounts drawn on the Operating
Partnership's lines of credit and proceeds received in connection with the
transactions mentioned in the previous paragraphs.
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. During 1997 and 1998, the Operating Partnership
funded a total of $6.9 million and $23.9 million and during 1999 the Operating
Partnership expects to fund approximately $74.9 million in connection with this
agreement. Subsequent to December 31, 1998, the Operating Partnership has funded
approximately $1 million. In addition, the Operating Partnership also funded $20
million to guarantee third party construction financing and is obligated to fund
up to an additional $20 million.
In regards to certain other properties under development and/or expansion
in 1998, the Operating Partnership funded $31.6 million. In 1999, the Operating
Partnership expects to fund $53.9 million related to the continued development
and/or expansion of as many as five Properties.
51
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
In regards to certain properties having earnout/development agreements, in
1998 no amounts were funded. The Operating Partnership expects to fund $60.4
million related to three earnout/development projects expected to be finished
during 1999. Subsequent to December 31, 1998, the Operating Partnership has
funded $16.2 million relating to the completion/acquisition of Copper Canyon. In
addition, the Operating Partnership may be required to fund an additional $1
million earnout payment to the developer for Copper Canyon if certain specified
operation levels are met.
As of December 31, 1998, the Operating Partnership had total indebtedness
of approximately $4.7 billion, which included mortgage indebtedness of $2.3
billion (including premiums of $4.5 million), of which $878.3 million
represented tax-exempt bond indebtedness, and unsecured debt of $2.3 billion
(net of a $5.3 million discount), of which $35.6 million represented tax-exempt
bond indebtedness. During the year, the Operating Partnership repaid an
aggregate of $63.8 million of mortgage indebtedness on nine of its Properties.
These repayments were funded from the Operating Partnership's credit facilities
or from proceeds received from the various capital transactions mentioned in the
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 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. No such financial
instrument has been used for trading purposes.
In February 1996, the Operating Partnership entered into a Forward Starting
Swap agreement that will hedge the Operating Partnership's interest rate risk at
maturity of $125 million of indebtedness. This agreement hedged the interest
rate risk of the Operating Partnership's 1999 Notes by locking the effective
four-year Treasury Rate commencing May 15, 1999.
In August 1996, the Operating Partnership entered into an interest rate
protection agreement to effectively fix the interest rate cost of the Operating
Partnership's 2026 Notes. The agreement was for a notional amount of $150
million with a locked in treasury rate of 7.57%.
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 of 6.134%. The second agreement
was for a notional amount of $75 million with a locked in treasury rate of
6.287%.
In April 1998, the Operating Partnership entered into an interest rate
protection agreement to effectively fix the interest rate cost of the Operating
Partnership's 2015 Notes. The agreement was for a notional amount of $300
million with a locked in treasury rate of 6.63%.
In May 1998, the Operating Partnership entered into an interest rate
protection agreement to effectively fix the interest rate cost of the Evans
Withycombe Financing Limited Partnership indebtedness to within a range of 5.6%
to 6.0% upon its refinancing. The agreement was for a notional amount of $131
million with a settlement date of August 2001. There was no initial cost to the
Operating Partnership for entering into this agreement.
In August 1998, the Operating Partnership entered into an interest rate
protection agreement to effectively fix the interest rate cost of the Operating
Partnership's planned financing in the fourth quarter of
52
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
1998. This agreement was cancelled in November at a cost of approximately $3.7
million. This cost is being amortized over the life of the financing for the 15
previously unencumbered Properties that occurred in November 1998.
In August 1998, the Operating Partnership entered into an interest rate
swap agreement that fixed the Operating Partnership's interest rate risk on a
portion of the Operating Partnership's variable rate tax-exempt bond
indebtedness at a rate of 3.65125%. This agreement was for a notional amount of
$150 million with a termination date of August 2003.
In August 1998, the Operating Partnership entered into an interest rate
swap agreement that fixed the Operating Partnership's interest rate risk on a
portion of the Operating Partnership's variable rate tax-exempt bond
indebtedness at a rate of 3.683%. This agreement was for a notional amount of
$150 million with a termination date of August 2005.
The fair value of these instruments, discussed above, as of December 31,
1998 approximates 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 replacement-type items
described above, the Operating Partnership generally expects to spend $250 per
unit on an annual recurring basis.
During the year ended December 31, 1998, total capital expenditures for the
Operating Partnership approximated $102 million. Of this amount, approximately
$34.1 million related to capital improvements and major repairs for the 1996,
1997 and 1998 Acquired Properties. Capital improvements and major repairs for
all of the Operating Partnership's pre-EQR IPO properties and 1993, 1994 and
1995 Acquired Properties approximated $17.1 million, or $338 per unit. Capital
spent for replacement-type items approximated $39.4 million, or $257 per unit,
which is in line with the Operating Partnership's expected annual recurring per
unit cost. Also included in total capital expenditures was approximately $11.4
million expended for non-real estate additions such as computer software,
computer equipment, and 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 1999 are budgeted to be approximately $110 million for
all properties or $588 per unit.
Total distributions paid in 1998 amounted to $404.5 million, which included
certain distributions declared in the fourth quarters of 1997 and 1998. The
Operating Partnership paid a $0.71 per OP Unit distribution on December 31, 1998
for the quarter ended December 31, 1998 to OP Unit holders of record as of
December 20, 1998.
53
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
Subsequent to December 31, 1998 and through March 12, 1999, the Operating
Partnership acquired five additional properties representing 1,246 units for a
total purchase price of approximately $86.6 million, including the assumption of
approximately $16.9 million of mortgage indebtedness. These acquisitions were
primarily funded from the proceeds obtained from the sale of certain Properties
in 1998 and 1999. The Operating Partnership is always seeking to acquire
additional multifamily properties with physical and market characteristics
similar to the Properties.
Subsequent to December 31, 1998 and through March 12, 1999, the Operating
Partnership disposed of six Properties for a total sales price of $64 million.
These proceeds will be utilized to purchase additional Properties. The Operating
Partnership anticipates that it will continue to sell certain Properties in the
portfolio.
The Operating Partnership expects to meet its short-term liquidity
requirements, including capital expenditures relating to maintaining its
existing Properties and the funding of Properties in the development stage,
generally through its working capital, net cash provided by operating activities
and borrowings under its lines 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 lines 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 Company or the Operating Partnership or the cost of
alternative sources of capital to the Operating Partnership is too high.
The Operating Partnership has a revolving credit facility with Morgan
Guaranty and Bank of America (as co-agents) to provide the Operating
Partnership with potential borrowings of up to $500 million. This credit
facility matures in November 1999 and will continue to be used to fund property
acquisitions and short term liquidity requirements. As of March 12, 1999, $145
million was outstanding under this facility.
In connection with the MRY Merger, the Operating Partnership assumed a
second revolving credit facility with First Union Bank (as agent) with
potential borrowings of up to $120 million. This credit facility matures in
September 2000 and will also be used to fund property acquisitions, costs for
certain Properties under development and short term liquidity requirements. As
of March 12, 1999, $35 million was outstanding under this facility.
In connection with the Wellsford Merger the Operating Partnership provided
a $14.8 million credit enhancement with respect to bonds issued to finance
certain public improvements at a multifamily development project. Pursuant to
the terms of a Stock Purchase Agreement with Wellsford Real Properties, Inc.
("WRP Newco"), the Operating Partnership will agree to purchase up to 1,000,000
shares of WRP Newco Series A Preferred at $25.00 per share over a three-year
period ending on May 30, 2000. As of March 12, 1999, no shares of WRP Newco
Series A Preferred had been acquired by the Operating Partnership.
In conjunction with the MRY Merger in October 1998, the Operating
Partnership entered into six joint venture agreements with MRYP Spinco, the
entity spun-off in the MRY Merger. The Operating
54
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
Partnership contributed six properties with an initial value of $52.7 million in
return for a 50% ownership interest in each joint venture. In return for the
spin-off of certain assets and liabilities to MRYP Spinco, the Operating
Partnership received (from MRYP Spinco) a Subordinated Note receivable totaling
$20 million, a preferred stock investment with an initial value of $5 million
and a $25 million, one year, non-revolving Senior Note receivable. At December
31, 1998 approximately $18.3 million was outstanding on the Senior Note, bearing
interest at LIBOR plus 250 basis points. The Operating Partnership has a
potential obligation to fund up to an additional $6.7 million under the Senior
Note.
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 were
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. Utilizing this
strategy during 1997 the Company and/or the Operating Partnership:
. 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,
which were contributed by the Company to the Operating Partnership in
exchange for OP Units;
. completed the offerings of the Series D Preferred Shares and the Series G
Preferred Shares and received net proceeds of approximately $473.1
million, which were contributed by the Company to the Operating Partnership
in exchange for cumulative redeemable preference units and cumulative
convertible preference units, respectively; and
. issued the 2017 Notes, the 2001 Notes and the 2003 Notes and received net
proceeds of approximately $345.9 million.
With respect to Property acquisitions during 1997, 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 issuance's of 25.1 million Common Shares (which were contributed by the
Company to the Operating Partnership in exchange for OP Units), 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 (which were contributed by the Company to the
Operating Partnership in exchange for cumulative convertible preference units
and cumulative redeemable preference units, respectively), 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.
55
<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, the $100 million of floating
rate notes due December 22, 1997 were repaid at maturity. 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, 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
approximately $9.7 million expended for non real estate additions such as
computer software, computer equipment, and 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.
Year 2000 Issue
The year 2000 issue ("Year 2000") is the result of computer programs being
written using two digits rather than four to define the applicable year. Any of
the Operating Partnership's computer programs that have time-sensitive hardware
and software may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, collect rents, or engage in similar normal business
activities.
The Operating Partnership believes that it has identified all of its
information technology ("IT") and non-IT systems to assess their Year 2000
readiness. Critical systems include, but are not limited to: accounts receivable
and rent collections, accounts payable and general ledger, human resources and
payroll (both property and corporate levels), cash management, fixed assets, all
IT hardware (such as desktop/laptop computers, data networking equipment,
telephone systems, fax machines, copy machines, etc.) and software, and property
environmental, health safety and security systems (such as elevators and alarm
systems).
The Operating Partnership anticipates that previously scheduled system
upgrades to many of its IT systems will remediate any existing Year 2000
problems. The Operating Partnership is currently in the process of testing and
implementing the majority of its Year 2000 IT and non-IT system projects with
completion anticipated during the second or third quarter of 1999. The Operating
Partnership has estimated that the total Year 2000 project cost will approximate
$1 million, of which approximately 70% has been incurred as of December 31,
1998. During the fourth quarter of 1998, the primary focus of the Year 2000
remediation efforts was on testing and implementing existing and new IT systems
and on assessing the Operating Partnership's exposure regarding non-IT systems
at property sites. Of the remaining $300,000 budgeted to complete the Operating
Partnership's Year 2000 remediation project, approximately $150,000 has been
allocated to engage Year 2000 consultants to help the Operating Partnership
monitor its
56
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year 2000 Issue (Continued)
IT compliance progress and to complete final IT testing and implementation. The
remaining $150,000 has been allocated to remediate non-IT systems at various
property sites. The estimates are based on management's best estimates, which
were derived utilizing numerous assumptions of future events, and there can be
no guarantees that these estimates will be achieved.
In some cases, various third party vendors have been queried on their Year
2000 readiness. The Operating Partnership continues to query its significant
suppliers and vendors 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. To date, the Operating Partnership is
not aware of any significant suppliers or vendors with a Year 2000 issue that
would materially impact the Operating Partnership's results of operations,
liquidity, or capital resources. However, there can be no assurances that the
systems of other companies, on which the Operating Partnership's systems rely,
will be timely converted and would not have an adverse effect on the Operating
Partnership's systems.
Management of the Operating Partnership believes it has an effective
program in place to resolve the Year 2000 issue in a timely manner. In addition,
the Operating Partnership has commenced its contingency planning for critical
operational areas that might be affected by the Year 2000 issue if compliance by
the Operating Partnership is delayed. Aside from catastrophic failure of banks
or governmental agencies, the Operating Partnership believes that it could
continue its normal business operations if compliance by the Operating
Partnership is delayed. The Operating Partnership does not believe that the Year
2000 issue will materially impact its results of operations, liquidity or
capital resources.
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 deferring financing
costs and depreciation of non-real estate assets 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 Operating Partnership 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 and amortization of
deferred financing costs related to EQR's Predecessor Business less an
allocation of net income to preference unit holders. The
57
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Funds From Operations (Continued)
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, 1998, FFO increased $188.1 million
representing a 69.5% increase when compared to the year ended December 31, 1997.
For the year ended December 31, 1997, FFO increased by $110.5 million
representing a 69% increase when compared to the year ended December 31, 1996.
The following is a reconciliation of net income to FFO for the years ended
December 31, 1998, 1997 and 1996 (amounts are in thousands):
<TABLE>
<CAPTION>
================================================================================================================
Year Ended Year Ended Year Ended
12/31/98 12/31/97 12/31/96
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income $ 276,735 $ 189,852 $ 115,923
Adjustments:
Depreciation on real estate assets* 296,691 153,526 91,174
Amortization of deferred financing costs
related to predecessor business 35 235 1,075
Allocation of net income to preference
unit holders (92,917) (59,012) (29,015)
Write-off of unamortized costs on
refinanced debt -- -- 3,512
Gain on disposition of properties (21,703) (13,838) (22,402)
- ----------------------------------------------------------------------------------------------------------------
FFO $ 458,841 $ 270,763 $ 160,267
================================================================================================================
</TABLE>
* Includes $183,000 related to the Operating Partnership's share of
depreciation from unconsolidated joint ventures for the year ended December 31,
1998.
58
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
The Operating Partnership's future earnings, cash flows and fair values
relevant to financial instruments are dependent upon prevalent market rates.
Market risk is the risk of loss from adverse changes in market prices and
interest rates. The Operating Partnership manages its market risk by matching
projected cash inflows from operating properties, financing activities and
investing activities with projected cash outflows to fund debt payments,
acquisitions, capital expenditures, distributions and other cash requirements.
The Operating Partnership also utilizes certain derivative financial instruments
to limit market risk. Interest rate protection agreements are used to convert
floating rate debt to a fixed rate basis. Derivatives are used for hedging
purposes rather than speculation. The Operating Partnership does not enter into
financial instruments for trading purposes.
The Operating Partnership has total outstanding debt of approximately $4.7
billion at December 31, 1998, of which approximately $840 million, or 18%, is
floating rate debt, including the effects of any interest rate protection
agreements. If market rates of interest on the Operating Partnership's floating
rate debt increase by 54 basis points (a 10% increase), the increase in interest
expense on the Operating Partnership's floating rate debt would decrease future
earnings and cash flows by approximately $4.5 million. If market rates of
interest on the Operating Partnership's floating rate debt decrease by 54 basis
points (a 10% increase), the decrease in interest expense on the Operating
Partnership's floating rate debt would increase future earnings and cash flows
by approximately $4.5 million.
These amounts were determined by considering the impact of hypothetical
interest rates on the Operating Partnership's financial instruments. These
analyses do not consider the effects of the reduced level of overall economic
activity that could exist in such an environment. Further, in the event of a
change of such magnitude, management would likely take actions to further
mitigate its exposure to the change. However, due to the uncertainty of the
specific actions that would be taken and their possible effects, this analysis
assumes no changes in the Operating Partnership's financial structure.
59
<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
None.
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PART III
Items 10, 11, 12 and 13 (Part III) of this Form 10-K omit the use of certain
defined terms used elsewhere herein and contain certain defined terms that are
different from those used in other sections of this report.
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, 1999, of Equity Residential
Properties Trust (the "Trust"), their ages and their positions and offices are
set forth in the following table:
<TABLE>
<CAPTION>
Name Age Position
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Samuel Zell 57 Chairman of the Board of Trustees (term expires in 1999)
Douglas Crocker II 58 President, Chief Executive Officer and Trustee
(term expires in 2001)
John W. Alexander 52 Trustee (term expires in 1999)
Stephen O. Evans 53 Executive Vice President - Strategic Investments and Trustee (term
expires in 2000)
Henry H. Goldberg 60 Trustee (term expires in 1999)
Errol R. Halperin 58 Trustee (term expires in 1999)
James D. Harper, Jr. 65 Trustee (term expires in 2001)
Boone A. Knox 63 Trustee (term expires in 1999)
Edward Lowenthal 54 Trustee (term expires in 2000)
Jeffrey H. Lynford 51 Trustee (term expires in 2000)
Sheli Z. Rosenberg 57 Trustee (term expires in 2001)
Gerald A. Spector 52 Executive Vice President, Chief Operating Officer and Trustee
(term expires in 2001)
Michael N. Thompson 50 Trustee (term expires in 2001)
B. Joseph White 51 Trustee (term expires in 2000)
Alan W. George 41 Executive Vice President - Acquisitions
Edward J. Geraghty 49 Executive Vice President - Development and Asset Management
Michael J. McHugh 43 Executive Vice President, Chief Accounting Officer and Treasurer
David J. Neithercut 43 Executive Vice President and Chief Financial Officer
Gregory H. Smith 47 Executive Vice President - Asset Management
Bruce C. Strohm 44 Executive Vice President, General Counsel and Secretary
Frederick C. Tuomi 44 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 has been Chairman of the Board of the Trust since March 1993.
Since January 1999, Mr. Zell has been chairman of Equity Group Investments, LLC,
an investment company ("EGI LLC"). For more than five years prior to 1999, Mr.
Zell had been chairman of the board of directors of Equity Group Investments,
Inc., an owner, manager and financier of real estate and corporations ("EGI").
He is also chairman of the board of directors of Jacor Communications, Inc., an
owner and operator of radio stations ("Jacor"), American Classic Voyages Co., an
owner and operator of cruise lines, Anixter International Inc., a provider of
integrated network and cabling systems ("Anixter"), Manufactured Home
Communities, Inc., a real estate investment trust ("REIT") specializing in the
ownership and management of manufactured home communities ("MHC"), Chart House
Enterprises, Inc., an owner and operator of restaurants, and Capital Trust,
Inc., a specialized finance company ("Capital Trust"). 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"). He is a director of
Fred Meyer, Inc., an owner
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<PAGE>
PART III
and operator of supermarkets, Davel Communications, Inc., an operator of public
payphones, and Ramco Energy plc, an independent oil company based in the United
Kingdom.
Douglas Crocker II has been Chief Executive Officer, President and a
Trustee of the Trust since March 1993. Mr. Crocker has been a director of
Wellsford Real Properties, Inc. ("WRP"), a publicly traded real estate merchant
banking firm since its formation in June 1997, Ventas, Inc., a real estate
company focusing on the ownership and acquisition of health care properties,
since November 1998, and was a director of Horizon Group Inc., an owner,
developer and operator of outlet retail properties from July 1996 to June 1998.
Mr. Crocker has been president and chief executive officer of First Capital
Financial Corporation, 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. Mr. Crocker chairs and serves on boards or committees of
various multi-family housing associations, including the National Multi-Housing
Council and the Multifamily Council of the Urban Land Institute, and is a member
of the Board of Governors of the National Association of Real Estate Investment
Trusts ("NAREIT").
John W. Alexander has been a Trustee of the Trust 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 a
director of Jacor.
Stephen O. Evans has been Executive Vice President - Strategic Investments
and a Trustee of the Trust since December 23, 1997, the date of the merger of
Evans Withycombe Residential, Inc. ("Evans"), a multifamily property REIT, into
the Trust ("Evans Merger"). Prior to the Evans Merger, Mr. Evans served as the
chairman of the board and chief executive officer of Evans since its formation
in May 1994. Mr. Evans founded Evans Withycombe, Inc., the predecessor of Evans,
in 1977 and served as its chairman of the board and chief executive officer from
1977 to 1994. Mr. Evans is a member of NAREIT, Lambda Alpha, a national land
economic fraternity, and the Urban Land Institute.
Henry H. Goldberg has been a Trustee of the Trust 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.
Errol R. Halperin has been a Trustee of the Trust since May 1993. Mr.
Halperin has been an attorney at the law firm of Rudnick & Wolfe since 1979,
serving as a senior partner and a member of the firm's policy committee since
1981, and a director of Elkay Manufacturing Company, a manufacturer of stainless
steel sinks, faucets, water coolers and cabinets, since 1980. Mr. Halperin
specializes in federal income tax counseling and real estate and corporate
transactions.
James D. Harper, Jr. has been a Trustee of the Trust 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.
62
<PAGE>
PART III
Boone A. Knox has been a Trustee of the Trust since October 19, 1998, the
date of the merger of Merry Land & Investment Company, Inc. ("Merry Land"), a
multifamily property REIT, into the Trust ("Merry Land Merger"). Mr. Knox has
been a director of Merry Land Properties, Inc. ("MRYP"), a publicly traded
diversified real estate company, since its formation as part of the Merry Land
Merger. Prior to the Merry Land Merger, Mr. Knox had been chairman of the board
of Merry Land since December 1996. Mr. Knox has served as chairman of the board
of directors of Regions Bank, Central Georgia since January 1997, and has been a
director of Cousins Properties Incorporated, a REIT specializing in the
ownership, development and management of retail and office buildings, since
1969, and The InterCept Group, Inc., a data processing company for community
banks, since February 1998.
Edward Lowenthal has been a Trustee of the Trust since June 1997, shortly
after the merger of Wellsford Residential Property Trust ("Wellsford"), a
multifamily property REIT, and the Trust on May 30, 1997 ("Wellsford Merger").
Mr. Lowenthal has been the president, chief executive officer and a director of
WRP since its formation in January 1997, and had been the president and chief
executive officer and a trustee of Wellsford since its formation in July 1992
until the Wellsford Merger. Mr. Lowenthal is a director of Corporate Renaissance
Group, Inc., a mutual fund, Omega Healthcare, Inc., a healthcare REIT, Omega
Worldwide, Inc., a health care finance company, 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 has been a Trustee of the Trust since June 1997, shortly
after the Wellsford Merger. Mr. Lynford has been the chairman of the board and
secretary 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 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 Equity Income Fund, Inc., Cohen & Steers Realty Income
Fund, Inc., Cohen & Steers Realty Shares, Inc., Cohen & Steers Special Equity
Fund, Inc. and Cohen & Steers Total Return Realty Fund, Inc. He is also a member
of the New York bar.
Sheli Z. Rosenberg has been a Trustee of the Trust since March 1993. Ms.
Rosenberg has been chief executive officer and president of EGI LLC since
January 1999. From November 1994 until 1999, Ms. Rosenberg had been chief
executive officer, president and a director of EGI. Ms. Rosenberg had been a
principal of the law firm of Rosenberg & Liebentritt, P.C. ("R&L"), from 1980 to
1997. Ms. Rosenberg is a trustee of EOP and is a director of Capital Trust,
Jacor, 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 has been a Trustee and Executive Vice President of the
Trust since March 1993 and Chief Operating Officer of the Trust since February
1995. Mr. Spector was Treasurer of the Trust 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.
From September 1990 through November 1994, Mr. Spector was executive vice
president and chief operating officer of EF&M. Mr. Spector was executive vice
president and chief operating officer of EGI from January 1991 through January
1994.
Michael N. Thompson has been a Trustee of the Trust since October 19, 1998,
the date of the Merry Land Merger. Mr. Thompson has been president, chief
operating officer and a director of MRYP since its formation as part of the
Merry Land Merger. Prior to the Merry Land Merger, Mr. Thompson
63
<PAGE>
PART III
served as executive vice president and chief operating officer of Merry Land
since December 1996, and as a vice president of Merry Land from August 1992
until December 1996.
B. Joseph White has been a Trustee of the Trust since May 1993. Mr. White
has been a professor at the University of Michigan Business School since 1987
and has served as the dean since 1991. Mr. White is a director of Kelly
Services, Inc., a temporary services firm, Gordon Food Service, Inc., a
midwestern food distribution company, the Cummins Engine Foundation, the
philanthropic arm of Cummins Engine Co., a diesel engine manufacturer, and
several mutual funds managed by Alger Management, Inc., including the Alger
Fund, Alger American Fund, Alger Retirement Fund, Spectra Fund, and Castle
Convertible Fund.
Alan W. George has been Executive Vice President - Acquisitions of the
Trust since February 1997, Senior Vice President - Acquisitions of the Trust
from December 1995 until February 1997 and Vice President - Acquisitions and
asset manager of the Trust from August 1993 until December 1995.
Edward J. Geraghty has been Executive Vice President - Development and
Asset Management of the Trust since March 1998. Mr. Geraghty was a managing
director- real estate of The Travelers Investment Group, Inc. from June 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 June 1995.
Michael J. McHugh has been an Executive Vice President of the Trust since
January 1998, and Chief Accounting Officer and Treasurer of the Trust since
February 1995. Mr. McHugh was Senior Vice President of the Trust from February
1995 until January 1998. From May 1990 until January 1995, Mr. McHugh was a
senior vice president and chief financial officer of First Capital.
David J. Neithercut has been Executive Vice President and Chief Financial
Officer of the Trust since February 1995. Mr. Neithercut had been Vice President
- - Financing of the Trust from September 1993 until February 1995. Mr. Neithercut
was a senior vice president - finance of EGI from January 1995 until February
1995, and a vice president - finance of Equity Asset Management, Inc., a
subsidiary of EGI providing real estate ownership services, from October 1990
until December 1994.
Gregory H. Smith has been Executive Vice President - Asset Management of
the Trust 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 has been Executive Vice President and General Counsel of
the Trust since March 1995 and Secretary of the Trust since November 1995. Mr.
Strohm was a Vice President of the Trust from March 1993 through March 1995 and
an Assistant Secretary of the Trust 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.
Frederick C. Tuomi has been Executive Vice President - Property Management
of the Trust since January 1994. Mr. Tuomi had been president of RAM Partners,
Inc., a subsidiary of Post Properties, Inc., a multifamily property REIT, from
March 1991 to January 1994.
64
<PAGE>
PART III
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 representation of the
Company's trustees and executive officers and the Operating Partnership's 10%
owners. There were no such items on which to report during 1998.
Item 11. Executive Compensation
The Operating Partnership does not have any executive compensation.
Information concerning the Equity Residential Properties Trust's executive
compensation will be contained in its definitive proxy statement relating to the
1999 Annual Meeting of Shareholders to be held on May 17, 1999. Please see this
definitive proxy statement for further discussion.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, as of March 1, 1999, (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.
65
<PAGE>
PART III
<TABLE>
<CAPTION>
Shares
Number of Upon Percent of
Common Exercise of Common
Name Shares(1) Options(2) Total(1) Shares(1)
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Samuel Zell 3,076,331 (3) 391,667 3,467,998 2.85%
Douglas Crocker II 271,029 (4) 565,000 836,029 *
John W. Alexander 5,004 25,001 30,005 *
Stephen O. Evans 850,576 (5) 40,167 890,743 *
Henry H. Goldberg 425,504 (6) 15,001 440,505 *
Errol R. Halperin 5,711 (7) 25,001 30,712 *
James D. Harper, Jr. 4,586 25,001 29,587 *
Boone A. Knox 1,595,872 (8) 0 1,595,872 1.34%
Edward Lowenthal 103,200 (9) 5,001 108,201 *
Jeffrey H. Lynford 82,329 5,001 87,330 *
Sheli Z. Rosenberg 73,561 (10) 85,000 158,561 *
Gerald A. Spector 89,109 (11) 296,751 385,860 *
Michael N. Thompson 121,525 (12) 0 121,525 *
B. Joseph White 5,400 25,001 30,401 *
Edward J. Geraghty 22,407 16,666 39,073 *
Alan W. George 19,910 75,832 95,742 *
Gregory H. Smith 17,538 94,999 112,537 *
Trustees and Executive
Officers as a
Group (21 persons) 6,854,459 2,121,587 8,976,046 7.20%
</TABLE>
* Less than 1%.
(1) In accordance with SEC regulations, assumes that all OP units, convertible
preference units in the Operating Partnership and the Trust's convertible
preferred shares of beneficial interest held by the person are exchanged
for common shares, that none of the OP units, convertible preference units
or convertible shares held by other persons are so exchanged, and that no
options to acquire common shares held by other persons are exercised.
(2) Reflects common shares which may be acquired within 60 days after March 1,
1999 through the exercise of share options.
(3) Includes 2,431,350 OP units which are exchangeable on a one-for-one basis
into 2,431,350 common shares. Also includes 30,000 common shares
beneficially owned by the Samuel Zell Foundation. Mr. Zell disclaims
beneficial ownership of 567,256 common shares (including the 30,000 common
shares held by the Samuel Zell Foundation and assuming the exchange of
537,256 OP units) because the economic benefits with respect to such common
shares are attributable to other persons.
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PART III
(4) Includes 8,825 common shares beneficially owned by Mr. Crocker's spouse, as
to which Mr. Crocker disclaims beneficial ownership. Also includes 175,000
common shares beneficially owned by MWC Partners, L.P. ("MWC"), of which
Mr. Crocker is the sole general partner. The sole limited partner of MWC is
a trust created for the benefit of Mr. Crocker's wife and Mr. Crocker's
children.
(5) Includes 849,066 OP units which are exchangeable on a one-for-one basis
into 849,066 common shares.
(6) Includes 263,347 OP units held by Mr. Goldberg, which are exchangeable on a
one-for-one basis into 263,347 common shares; 5,998 Junior Convertible
Preference Units which are exchangeable into 12,240 common shares; 48,078
OP units held by Mr. Goldberg's spouse, which are exchangeable on a one-for
-one basis into 48,078 common shares; 6,047 Junior Convertible Preference
Units which are exchangeable into 12,340 common shares; and 75,714 OP units
held by GGL Investment Partners #1 ("GGL"), which are exchangeable on a one
-for-one basis into 75,714 common shares. Mr. Goldberg is a general partner
of GGL with a 66.67% percentage interest. Mr. Goldberg disclaims beneficial
ownership of the interests held by his spouse and 33.33% of the interests
held by GGL.
(7) Includes 1,000 common shares beneficially owned by Mr. Halperin's spouse,
as to which Mr. Halperin disclaims beneficial ownership.
(8) Includes 1,173,950 common shares beneficially owned by Knox, Ltd., of which
Mr. Knox is the general partner, and includes 3,178 common shares
beneficially owned by BT Investments, of which Mr. Knox is the managing
partner. Mr. Knox disclaims beneficial ownership of the common shares owned
by Knox, Ltd. and BT Investments, except to the extent of his pecuniary
interest in 151,116 common shares. Also includes 3,114 common shares
beneficially owned by Mr. Knox's spouse and 424 common shares beneficially
owned by Mr. Knox, not individually, but as custodian for his niece and
nephew, as to all of which Mr. Knox disclaims beneficial ownership. Also
includes 157,722 common shares beneficially owned by the Knox Foundation,
of which Mr. Knox is the trustee, and includes 174,429 common shares
beneficially owned by the Estate of Peter S. Knox III, of which Mr. Knox is
the co-executor. Mr. Knox disclaims beneficial ownership of the common
shares owned by the Knox Foundation and the Estate of Peter S. Knox III.
(9) Includes 726 common shares beneficially owned by Mr. Lowenthal's spouse, as
to which Mr. Lowenthal disclaims beneficial ownership.
(10) Includes 600 common shares beneficially owned by Ms. Rosenberg's spouse, as
to which Ms. Rosenberg disclaims beneficial ownership. Also includes 1,528
OP units which are exchangeable on a one-for-one basis into 1,528 common
shares. Ms. Rosenberg is a trustee of certain trusts created for the
benefit of Mr. Zell and his family. Such trusts are indirect owners of
certain partnerships or limited liability companies which own common shares
and/or OP units which are exchangeable on a one-for-one basis into common
shares. Ms.
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PART III
Rosenberg disclaims beneficial ownership of such common shares and OP units
indirectly beneficially owned by Mr. Zell's trusts.
(11) Includes 33,500 common shares beneficially owned by Mr. Spector's spouse,
and 2,337 common shares beneficially owned by Mr. Spector as custodian for
his minor children, as to all of which Mr. Spector disclaims beneficial
ownership. Also includes 1,683 OP units which are exchangeable on a one-for
-one basis into 1,683 common shares.
(12) Includes 419 common shares beneficially owned by Mr. Thompson's children
and 2,648 common shares beneficially owned by Mr. Thompson's spouse, as to
all of which Mr. Thompson disclaims beneficial ownership.
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 1996, 1997 and 1998, 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 Arthur A.
Greenberg, which provided tax advisory services. Fees paid to Rosenberg &
Liebentritt, P.C., of which Ms. Rosenberg was chairman of the board and
president until September 1997, amounted to approximately $1.3 million for
the year ended December 31, 1997. Fees paid to the other affiliate mentioned
above amounted in the aggregate to approximately $48,851 and $22,600 for the
years ended December 31, 1998 and 1997, 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 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. and certain of its subsidiaries, including,
Equity Properties & Development, L.P. and Equity Properties Management Corp.
(collectively, "EGI"), have provided certain services to the Operating
Partnership and the Company which include, but are not limited to, investor
relations, corporate secretarial, real estate tax evaluation services and market
consulting and research services. Fees paid to EGI for these services amounted
to approximately $1.1 million, $1.1 million and $1.3 million for the years ended
December 31, 1998, 1997 and 1996, respectively. Amounts due to EGI were $57,408
and $74,578 as of December 31, 1998 and 1997, respectively.
Management Corp. has lease agreements with affiliated parties covering
office space occupied by regional operation centers located in Chicago, Illinois
("Chicago Office"); Atlanta, Georgia (the "Atlanta Office"); and Tampa, Florida
("Tampa Office") and the corporate headquarters located in Chicago, Illinois. In
connection with these affiliated lease agreements, Management Corp. paid Equity
Office Holdings, L.L.C. ("EOH") $114,539 in connection with the Chicago Office,
$55,117 in connection with the Atlanta Office, $194,506 in connection with the
Tampa Office and $772,320 in connection with the space occupied
68
<PAGE>
PART III
by the corporate headquarters for the year ended December 31, 1998. As of
December 31, 1998, $136,000 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 $5.6 million for the year ended December 31, 1998.
(b) The Operating Partnership has engaged Seyfarth, Shaw, Fairweather &
Geraldson, a law firm in which Ms. Rosenberg's husband is a partner, to provide
legal services from time to time relating to employee benefit issues. The
Operating Partnership has also engaged Rudnick & Wolfe, a law firm in which Mr.
Halperin is a partner, to provide legal services from time to time relating to
securities filings.
(c) Mr. Goldberg is a two-thirds owner and chairman of the board of
directors of Artery Property Management, Inc., a real estate property management
company ("APMI"). In connection with the acquisition of certain properties from
Mr. Goldberg and his affiliates during 1995, the Operating Partnership made a
loan to Mr. Goldberg and APMI of $15,212,000 evidenced by two notes and, as of
December 31, 1998, secured by 445,540 OP units. The largest aggregate amount of
indebtedness outstanding under the loan at any time during 1998 was $15,212,000
and the amount outstanding as of December 31, 1998 was $14,558,484. 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 $287,000 per year plus the amount of
distributions payable on 414,615 of the 445,540 OP units pledged as collateral
for the loan. The loan requires mandatory prepayments upon receipt of sale
proceeds from certain of the properties. This loan matures on November 30, 2004.
In connection with the agreement to acquire certain properties from Mr.
Goldberg and his affiliates, the Operating Partnership extended a $12,000,000
non-revolving line of credit to Mr. Goldberg and his wife in September 1998. The
loan bears interest at the prime rate plus 2%. The largest principal amount owed
in 1998 was $5,000,000 and the principal balance due at December 31, 1998 was
$3,853,482. Payment is secured by a pledge of certain of their OP units as well
as additional collateral. The loan requires mandatory prepayments upon receipt
of sale proceeds from certain of the properties. The loan is due in full on
September 3, 1999.
During 1998, the Operating Partnership acquired three properties and the
related management agreements from affiliates of Mr. Goldberg for an aggregate
purchase price of approximately $21.4 million, including the assumption of
approximately $4.2 million of indebtedness. The purchase price also included the
issuance of 48,328 Junior Convertible Preference Units in the Operating
Partnership, which have a liquidation value of $100 and are exchangeable for OP
Units upon certain circumstances. On January 13, 1999, Mr. Goldberg and his wife
received 5,998 and 6,047 of these preference units, respectively, as of December
22, 1998. Mr. Goldberg's interest in these transactions equaled approximately
$3.8 million.
From January 1, 1999 through March 20, 1999, the Operating Partnership
acquired three additional properties and the related management agreements from
affiliates of Mr. Goldberg for an aggregate purchase price of approximately
$36.5 million, including the assumption of approximately $16.9 million of
indebtedness. Mr. Goldberg's interest in these transactions equaled
approximately $3.5 million.
The Operating Partnership has entered into agreements with affiliates of
Mr. Goldberg to acquire six additional properties and the related management
agreements, which acquisitions are expected to close in 1999. The aggregate
purchase price for these properties, before customary prorations, is estimated
at approximately $81.8 million, which amount will include the assumption of
indebtedness and the issuance of
69
<PAGE>
PART III
Junior Convertible Preference Units. Mr. Goldberg estimates that his interest in
these transactions will equal approximately $10.3 million.
Mr. Tuomi borrowed $100,000 from the Trust in 1994 related to his purchase
of a home in the Chicago area. The loan bears interest at the 30-day London
Interbank Offered Rate ("LIBOR") plus 2% with interest due quarterly. The
largest principal amount owed in 1998 was $72,000 and the principal balance at
December 31, 1998 was $54,000. The loan is payable in equal principal
installments of $18,000 over the next three years.
Mr. Crocker borrowed $140,000 from the Trust in April 1996 related to the
payment of a tax liability. The largest principal amount owed in 1998 was
$140,000 and the principal balance at December 31, 1998 was zero, as the loan
was paid in full in February 1998. The loan bore interest at 30-day LIBOR plus
2%.
Mr. Crocker borrowed $564,000 from the Trust in August 1996. The loan bears
interest at 30-day LIBOR plus 2% with interest due quarterly. The largest
principal amount owed in 1998 was $483,420 and the principal balance at December
31, 1998 was $402,850. 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. Crocker borrowed $100,000 from the Trust in August 1998 related to the
payment of a tax liability. The loan bears interest at 30-day LIBOR plus 2%. The
largest principal amount owed in 1998, and the principal balance at December 31,
1998, was $100,000. The loan is payable in full in August 2000.
Mr. Spector borrowed $300,000 from an affiliate of the Trust in April 1998
related to the payment of a tax liability. The largest principal amount owed in
1998 was $300,000, and the principal balance at December 31, 1998 was zero, as
the loan was paid in full in July 1998. The loan bore interest at 30-day LIBOR
plus 2%.
Mr. Spector borrowed $105,000 from an affiliate of the Trust in December
1998 related to the payment of a partnership interest expense. The loan bears
interest at 30-day LIBOR plus 2%. The largest principal amount owed in 1998, and
the principal balance at December 31, 1998, was $105,000. The loan is due in
full on April 30, 1999.
Mr. Spector borrowed $258,000 from an affiliate of the Trust in December
1998 related to the payment of a tax liability. The loan bears interest at 30-
day LIBOR plus 2%. The largest principal amount owed in 1998, and the principal
balance at December 31, 1998, was $258,000. The loan is due in full on June 1,
1999.
Mr. George borrowed $100,000 from the Trust in December 1997 related to
home improvements. The loan bears interest at 30-day LIBOR plus 2% with interest
due monthly beginning in January 1998. The largest principal amount owed in
1998, and the principal balance due at December 31, 1998, was $100,000. Payment
is secured by a pledge of Mr. George's common shares and share options and a
second mortgage on Mr. George's home. Payments of principal are due in the
amount of $30,000 on each of April 1, 1999 and April 1, 2000; and $40,000 on
April 1, 2001.
The executive officers listed below are indebted to the Trust as a result
of purchasing common shares from the Trust in June 1994. The loans accrue
interest, payable quarterly in arrears, at the applicable federal rate, as
defined in the Code in effect at the date of each loan. The loans are due and
payable on the
70
<PAGE>
PART III
first to occur of the date on which the individual leaves the Trust, other than
by reason of death or disability, or the respective loan's due date. The loans
are 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 Amount Principal Balance Interest
Name Owed in 1998 at Dec. 31, 1998 Rate
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Douglas Crocker II $ 814,909 $ 770,846 6.21%
Douglas Crocker II 931,755 894,529 6.15%
Douglas Crocker II 941,415 929,073 7.26%
Douglas Crocker II 1,864,148 1,810,368 7.93%
Frederick C. Tuomi 313,799 312,843 7.26%
Alan W. George 79,062 78,081 7.26%
</TABLE>
(d) None
71
<PAGE>
PART IV
Item 14. Exhibits,Financial Statements, 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:
<TABLE>
<C> <S>
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*** Fifth 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, LP
12 Computation of Ratio of Earnings to Fixed Charges
21 List of Subsidiaries of the Operating Partnership
23.1 Consent of Ernst & Young LLP
24.1 Power of Attorney for John W. Alexander dated March 12, 1999
24.2 Power of Attorney for James D. Harper, Jr. dated March 12, 1999
24.3 Power of Attorney for Errol R. Halperin dated March 12, 1999
24.4 Power of Attorney for B. Joseph White dated March 12, 1999
24.5 Power of Attorney for Henry H. Goldberg dated March 12, 1999
24.6 Power of Attorney for Edward Lowenthal dated March 12, 1999
24.7 Power of Attorney for Jeffrey H. Lynford dated March 12, 1999
24.8 Power of Attorney for Stephen O. Evans dated March 12, 1999
24.9 Power of Attorney for Boone A. Knox dated March 12, 1999
24.10 Power of Attorney for Michael N. Thompson dated March 12, 1999
</TABLE>
- -----------------------------
* Included as an exhibit to the Company's Form S-11 Registration Statement,
File No. 33-63158, and incorporated herein by reference.
** 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 8-K/A dated July
23, 1998, filed on August 18, 1998.
**** 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.
72
<PAGE>
PART IV
(b) Reports on Form 8-K:
None
(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>
PART IV
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.
ERP OPERATING LIMITED PARTNERSHIP
BY: EQUITY RESIDENTIAL PROPERTIES TRUST,
ITS GENERAL PARTNER
Date: March 12, 1999 By: /s/ Douglas Crocker II
-------------- -------------------------------------
Douglas Crocker II
President, Chief Executive Officer,
Trustee and *Attorney-in-Fact
Date: March 12, 1999 By: /s/ David J. Neithercut
-------------- -------------------------------------
David J. Neithercut
Executive Vice-President and
Chief Financial Officer
Date: March 12, 1999 By: /s/ Michael J. McHugh
-------------- -------------------------------------
Michael J. McHugh
Executive Vice-President, Chief Accounting
Officer, Treasurer and *Attorney-in-fact
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.
Date: March 12, 1999 By: /s/ Samuel Zell
-------------- -------------------------------------
Samuel Zell
Chairman of the Board of Trustees
Date: March 12, 1999 By: /s/ Gerald A. Spector
-------------- -------------------------------------
Gerald A. Spector
Executive Vice-President, Chief
Operating Officer and Trustee
Date: March 12, 1999 By: /s/ Sheli Z. Rosenberg
-------------- -------------------------------------
Sheli Z. Rosenberg
Trustee
74
<PAGE>
PART IV
SIGNATURES-CONTINUED
--------------------
Date: March 12, 1999 By: /s/ James D. Harper
-------------- -------------------------------------
James D. Harper
Trustee
Date: March 12, 1999 By: /s/ Errol R. Halperin
-------------- -------------------------------------
Errol R. Halperin
Trustee
Date: March 12, 1999 By: /s/ John W. Alexander
-------------- -------------------------------------
John W. Alexander
Trustee
Date: March 12, 1999 By: /s/ B. Joseph White
-------------- -------------------------------------
B. Joseph White
Trustee
Date: March 12, 1999 By: /s/ Henry H. Goldberg
-------------- -------------------------------------
Henry H. Goldberg
Trustee
Date: March 12, 1999 By: /s/ Jeffrey H. Lynford
-------------- -------------------------------------
Jeffrey H. Lynford
Trustee
Date: March 12, 1999 By: /s/ Edward Lowenthal
-------------- -------------------------------------
Edward Lowenthal
Trustee
Date: March 12, 1999 By: /s/ Stephen O. Evans
-------------- -------------------------------------
Stephen O. Evans
Trustee
Date: March 12, 1999 By: /s/ Boone A. Knox
-------------- -------------------------------------
Boone A. Knox
Trustee
Date: March 12, 1999 By: /s/ Michael N. Thompson
-------------- -------------------------------------
Michael N. Thompson
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
Consolidated Balance Sheets as of
December 31, 1998 and 1997 F-3
Consolidated Statements of Operations for
the years ended December 31, 1998, 1997 and 1996 F-4
Consolidated Statements of Cash Flows for
the years ended December 31, 1998, 1997 and 1996 F-5 to F-6
Consolidated Statements of Partners' Capital
for the years ended December 31, 1998, 1997 and 1996 F-7
Notes to Consolidated Financial Statements F-8 to F-48
SCHEDULE FILED AS PART OF THIS REPORT
Schedule III - Real Estate and Accumulated Depreciation S-1 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,
1998 and 1997 and the related consolidated statements of operations, partners'
capital and cash flows for each of the three years in the period ended December
31, 1998. 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, 1998 and 1997, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1998, 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 17, 1999
except for Note 36, as to which the date is
March 5, 1999
F-2
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, December 31,
1998 1997
-------------- --------------
ASSETS
Investment in real estate
Land $ 1,326,148 $ 791,980
Depreciable property 9,519,579 6,293,415
Construction in progress 96,336 36,040
-------------- --------------
10,942,063 7,121,435
Accumulated depreciation (718,491) (444,762)
-------------- --------------
Investment in real estate, net of accumulated depreciation 10,223,572 6,676,673
Real estate held for disposition 29,886 --
Cash and cash equivalents 3,965 33,295
Investment in mortgage notes, net 88,041 176,063
Rents receivable 4,758 3,302
Deposits - restricted 69,339 36,374
Escrow deposits - mortgage, net 68,725 44,864
Deferred financing costs, net 27,569 23,092
Other assets 184,405 100,968
-------------- --------------
Total assets $ 10,700,260 $ 7,094,631
============= ==============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $ 2,341,011 $ 1,582,559
Notes, net 2,049,516 1,130,764
Lines of credit 290,000 235,000
Accounts payable and accrued expenses 100,926 67,699
Accrued interest payable 46,176 28,048
Rents received in advance and other liabilities 54,616 38,750
Security deposits 37,439 28,193
Distributions payable 18,755 20,223
-------------- --------------
Total liabilities 4,938,439 3,131,236
-------------- --------------
Commitments and contingencies
Partners' capital:
Redeemable Preference Interests 4,833 --
-------------- --------------
Cumulative Convertible or Redeemable Preference Units 1,410,574 1,041,713
-------------- --------------
General Partner 3,919,873 2,648,278
Limited Partners 426,541 273,404
-------------- --------------
Total General Partner and Limited Partners capital 4,346,414 2,921,682
-------------- --------------
Total partners' capital 5,761,821 3,963,395
-------------- --------------
Total liabilities and partners' capital $ 10,700,260 $ 7,094,631
============= ==============
</TABLE>
See accompanying notes.
F - 3
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per OP Unit data)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1998 1997 1996
--------------------------------------------
<S> <C> <C> <C>
REVENUES
Rental income $ 1,293,560 $ 707,733 $ 454,412
Fee and asset management 5,622 5,697 6,749
Interest income - investment in mortgage notes 18,564 20,366 12,819
Interest and other income 19,703 13,525 4,405
------------ ------------ ------------
Total revenues 1,337,449 747,321 478,385
------------ ------------ ------------
EXPENSES
Property and maintenance 326,567 176,075 127,172
Real estate taxes and insurance 126,009 69,520 44,128
Property management 52,705 26,793 17,512
Fee and asset management 4,207 3,364 3,837
Depreciation 301,869 156,644 93,253
Interest:
Expense incurred 246,585 121,324 81,351
Amortization of deferred financing costs 2,757 2,523 4,242
General and administrative 21,718 15,064 9,857
------------ ------------ ------------
Total expenses 1,082,417 571,307 381,352
------------ ------------ ------------
Income before gain on disposition of properties
and extraordinary item 255,032 176,014 97,033
Gain on disposition of properties, net 21,703 13,838 22,402
------------ ------------ ------------
Income before extraordinary item 276,735 189,852 119,435
Write-off of unamortized costs on refinanced debt -- -- (3,512)
------------ ------------ ------------
Net income $ 276,735 $ 189,852 $ 115,923
============ ============ ============
ALLOCATION OF NET INCOME:
Redeemable Preference Interests $ -- $ -- $ 263
============ ============ ============
9 3/8% Series A Cumulative Redeemable Preference Units $ 14,344 $ 14,344 $ 14,345
============ ============ ============
9 1/8% Series B Cumulative Redeemable Preference Units $ 11,406 $ 11,406 $ 11,406
============ ============ ============
9 1/8% Series C Cumulative Redeemable Preference Units $ 10,494 $ 10,494 $ 3,264
============ ============ ============
8.60% Series D Cumulative Redeemable Preference Units $ 15,050 $ 9,238 $ --
============ ============ ============
Series E Cumulative Convertible Preference Units $ 6,995 $ 4,143 $ --
============ ============ ============
9.65% Series F Cumulative Redeemable Preference Units $ 5,549 $ 3,284 $ --
============ ============ ============
7 1/4% Series G Convertible Cumulative Preference Units $ 22,928 $ 6,103 $ --
============ ============ ============
7.00% Series H Cumulative Convertible Preference Units $ 55 $ -- $ --
============ ============ ============
8.82% Series I Cumulative Convertible Preference Units $ 1,764 $ -- $ --
============ ============ ============
8.60% Series J Cumulative Convertible Preference Units $ 1,978 $ -- $ --
============ ============ ============
8.29% Series K Cumulative Redeemable Preference Units $ 829 $ -- $ --
============ ============ ============
7.625% Series L Cumulative Redeemable Preference Units $ 1,525 $ -- $ --
============ ============ ============
General Partner $ 165,289 $ 117,580 $ 72,609
Limited Partners 18,529 13,260 14,036
------------ ------------ ------------
Net income available to OP Unit holders $ 183,818 $ 130,840 $ 86,645
============ ============ ============
Net income per weighted average OP Unit outstanding $ 1.65 $ 1.79 $ 1.70
============ ============ ============
Weighted average OP Units outstanding 111,713 73,182 51,108
============ ============ ============
Net income per weighted average OP Unit outstanding -
assuming dilution $ 1.63 $ 1.76 $ 1.69
============ ============ ============
</TABLE>
See accompanying notes.
F - 4
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------
1998 1997 1996
------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 276,735 $ 189,852 $ 115,923
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 301,869 156,644 93,253
Amortization of deferred financing costs (including discounts and premiums on debt) 799 2,170 4,558
Amortization of discount on investment in mortgage notes (3,015) (3,100) (613)
Gain on disposition of properties, net (21,703) (13,838) (22,402)
Write-off of unamortized costs on refinanced debt - - 3,512
Changes in assets and liabilities: - - -
(Increase) in rents receivable (1,456) (1,373) (409)
(Increase) in deposits - restricted (13,147) (23,183) (556)
(Increase) decrease in other assets (8,787) (13,708) 158
(Decrease) increase in accounts payable and accrued expenses (3,601) 20,235 9,901
Increase in accrued interest payable 7,546 12,224 4,383
(Decrease) increase in rents received in advance and other liabilities (2,077) 12,112 3,222
------------ ------------ ------------
Net cash provided by operating activities 533,163 338,035 210,930
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in real estate, net (992,348) (1,190,380) (641,015)
Improvements to real estate (90,608) (50,246) (33,001)
Additions to non-real estate property (11,412) (9,754) (2,347)
Net proceeds from disposition of real estate 174,796 35,758 40,093
Purchase of management contract rights (119) (5,000) -
(Increase) decrease in mortgage deposits (20,499) (25,521) 1,311
Deposits on real estate acquisitions (18,451) 7,946 (1,809)
Decrease (increase) in investment in mortgage notes, net 2,853 (86,367) 1,171
Investment in limited partnerships (23,946) (6,900) -
Costs related to Mergers (50,139) (176,908) -
Other investing activities (17,503) (42,852) (58)
------------ ------------ ------------
Net cash (used for) investing activities (1,047,376) (1,550,224) (635,655)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions from General Partner 428,170 1,013,789 597,752
Distributions to General Partner for Common Shares repurchased (94,705) - -
Redemption of Preference Interests - - (1,083)
Distributions paid to partners (404,519) (292,082) (142,304)
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 -
Proceeds from sale of 2015 Notes, net of discount 298,125 - -
Proceeds from sale of August 2003 Notes, net of discount 99,650 - -
Proceeds from sale of 2000 Notes, net of discount 144,452 - -
Proceeds from option to remarket the 2015 Notes 8,130 - -
Net proceeds from mortgage note issuance 223,491 - -
Payoff MRY unsecured notes (120,000) - -
Principal repayment on the Floating Rate Notes - (100,000) -
Principal receipts on employee notes 272 269 76
Proceeds from restructuring of tax-exempt bond investments - 9,350 112,209
Repayments on line of credit (881,000) (207,500) (342,000)
Proceeds from line of credit 859,000 442,500 250,000
Principal payments on mortgage notes payable (76,409) (120,546) (60,706)
Loan and bond acquisition costs (7,372) (10,799) (9,111)
Increase in security deposits 7,598 7,819 3,735
Other financing activities - 7,110 -
------------ ------------ ------------
Net cash provided by financing activities 484,883 1,098,213 558,568
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents (29,330) (113,976) 133,843
Cash and cash equivalents, beginning of year 33,295 147,271 13,428
------------ ------------ ------------
Cash and cash equivalents, end of year $ 3,965 $ 33,295 $ 147,271
============ ============ ============
</TABLE>
See accompanying notes.
F-5
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Amounts in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
1998 1997 1996
---------------------------------------------
<S> <C> <C> <C>
Supplemental information:
Cash paid during the year for interest $ 234,318 $ 109,100 $ 76,968
=========== ============ =========
Interest capitalized to real estate developments $ 1,620 $ - $ -
=========== ============ =========
Mortgage loans assumed and/or entered into through acquisitions of
real estate $ 459,820 $ 597,245 $ 142,237
=========== ============ =========
Net real estate contributed in exchange for OP Units or
Preference Interests $ 169,834 $ 191,329 $ 440
=========== ============ =========
Real estate assumed through foreclosure $ - $ - $ 10,854
=========== ============ =========
Transfers to real estate held for disposition $ 29,886 $ - $ -
=========== ============ =========
Investment in mortgage notes converted to investment in real estate $ 88,184 $ - $ -
=========== ============ =========
Refinancing of mortgage notes payable in favor of notes, net $ 35,600 $ - $ -
=========== ============ =========
Liabilities assumed net of assets acquired through Mergers $ 42,955 $ 33,237 $ -
=========== ============ =========
Mortgage loans assumed through Mergers $ 184,587 $ 333,966 $ -
=========== ============ =========
Unsecured notes assumed through Mergers $ 461,956 $ 383,954 $ -
=========== ============ =========
Line of credit assumed through Mergers $ 77,000 $ - $ -
=========== ============ =========
Market value of OP Units issued through Mergers $ 1,050,878 $ 1,052,582 $ -
=========== ============ =========
Liquidation value of Preferred Shares redesignated through Mergers $ 369,109 $ 157,495 $ -
=========== ============ =========
</TABLE>
See accompanying notes.
F-6
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
(Amounts in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1998 1997 1996
----------------------------------------
<S> <C> <C> <C>
Accumulated partners' capital, beginning of year $ 3,963,395 $ 1,609,467 $ 1,053,480
Net income for the year ended December 31, 276,735 189,852 115,923
Capital contributions from General Partner 428,170 1,014,604 598,123
Distributions to General Partner for Common Shares repurchased (94,705) - -
Liquidation value of Preferred Shares redesignated through
Mergers 369,109 157,495 -
Redemption of Preference Interests - - (1,083)
Issuance of OP Units or Preference Interests in connection
with acquisitions 169,834 191,329 440
Issuance of OP Units in connection with Mergers 1,050,878 1,052,582 -
Distributions declared to partners for the year ended
December 31, (401,595) (251,934) (157,416)
----------- ------------ -----------
Accumulated partners' capital, end of year $ 5,761,821 $ 3,963,395 $ 1,609,467
=========== =========== ===========
Allocation of partners' capital:
General Partner, partners' capital, end of year $ 3,919,873 $ 2,648,278 $ 1,065,830
=========== =========== ===========
Limited Partners, partners' capital, end of year $ 426,541 $ 273,404 150,637
=========== =========== ===========
Redeemable Preference Interests, end of year $ 4,833 $ - $ -
=========== =========== ===========
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 $ 115,000
=========== =========== ===========
8.60% Series D Cumulative Redeemable Preference Units $ 175,000 $ 175,000 $ -
=========== =========== ===========
Series E Cumulative Convertible Preference Units $ 99,925 $ 99,963 $ -
=========== =========== ===========
9.65% Series F Cumulative Redeemable Preference Units $ 57,500 $ 57,500 $ -
=========== =========== ===========
7 1/4% Series G Convertible Cumulative Preference Units $ 316,250 $ 316,250 $ -
=========== =========== ===========
7.00% Series H Cumulative Convertible Preference Units $ 3,914 $ - $ -
=========== =========== ===========
8.82% Series I Cumulative Convertible Preference Units $ 100,000 $ - $ -
=========== =========== ===========
8.60% Series J Cumulative Convertible Preference Units $ 114,985 $ - $ -
=========== =========== ===========
8.29% Series K Cumulative Redeemable Preference Units $ 50,000 $ - $ -
=========== =========== ===========
7.625% Series L Cumulative Redeemable Preference Units $ 100,000 $ - $ -
=========== =========== ===========
</TABLE>
See accompanying notes.
F-7
<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 and is the
general partner of the Operating Partnership. 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"), Evans Withycombe Residential, Inc.
("EWR") (the"EWR Merger") and Merry Land & Investment Company, Inc ("MRY") (the
"MRY Merger") (see Note 3).
The Company, through the Operating Partnership, is engaged in the
acquisition, disposition, ownership, management and operation of multifamily
properties. As of December 31, 1998, the Operating Partnership controlled a
portfolio of 654 multifamily properties (individually a "Property" and
collectively the "Properties") containing 187,002 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 an investment in six
joint ventures consisting of six 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.
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 that own certain Properties and one that has an
investment in partnership interests and subordinated mortgages collateralized by
21 of the Additional Properties (collectively, the "LLC's"). The Operating
Partnership is a 99% managing member of each LLC and a QRS Corporation is a 1%
member of each LLC.
As of December 31, 1998, 700 Properties were managed by either Equity
Residential Properties Management Limited Partnership, the successor to the
multifamily residential management services (the "Management Business")
contributed by Equity Properties Management Corp. ("EPMC") contemporaneously
with the Company's initial public offering (the "EQR IPO"), or 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.
F-8
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. Basis of Presentation
The Wellsford Merger, the EWR Merger and the MRY 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
assets acquired and the liabilities assumed of MRY were recorded at their
relative fair values as of October 19, 1998 (the "MRY Closing Date"). The
accompanying consolidated statements of operations and cash flows include the
results of the Properties purchased through the Mergers 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 Merry Land DownREIT I LP, each such entity has been
consolidated with the Operating Partnership for financial reporting purposes. In
regard to Management Corp., Management Corp. II, Evans Withycombe Management,
Inc. and ML Services, 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. In
addition, the Operating Partnership issued the Series E Cumulative Convertible
Preference Units (defined in Note 19) and the Series F Cumulative Redeemable
Preference Units (defined in Note 20).
On the EWR Closing Date, 53 Properties containing 15,331 units and three
Properties under construction or expansion containing 953 units and other
related assets were acquired for a total purchase
F-9
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 10.3 million Common Shares issued by the Company with 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.
Upon contribution of the net assets by the Company to the Operating Partnership,
the Operating Partnership issued 10.3 million OP Units to the Company.
In connection with the MRY Merger, each outstanding common share of
beneficial interest of MRY was converted into 0.53 of a Common Share of the
Company. In addition, MRY spun-off certain assets and liabilities to Merry Land
Properties, Inc. ("MRYP Spinco"). As partial consideration for the transfer, the
Company extended a $25 million, one year, non-revolving Senior Debt Agreement to
MRYP Spinco. At December 31, 1998, approximately $18.3 million was outstanding,
bearing interest at LIBOR plus 250 basis points.
In addition, MRY Series A Cumulative Convertible Preferred Shares of
Beneficial Interest were redesignated as the Company's 164,951 Series H
Cumulative Convertible Preferred Shares of Beneficial Interest, $0.01 par value
per share (the "Series H Preferred Shares"), the MRY Series B Cumulative
Convertible Preferred Shares of Beneficial Interest were redesignated as the
Company's 4,000,000 Series I Cumulative Convertible Preferred Shares of
Beneficial Interest, $0.01 par value per share (the "Series I Preferred
Shares"), the MRY Series C Cumulative Convertible Preferred Shares of Beneficial
Interest were redesignated as the Company's 4,599,400 Series J Cumulative
Convertible Preferred Shares of Beneficial Interest, $0.01 par value per share
(the "Series J Preferred Shares"), the MRY Series D Cumulative Redeemable
Preferred Shares of Beneficial Interest were redesignated as the Company's
1,000,000 Series K Cumulative Redeemable Preferred Shares of Beneficial
Interest, $0.01 par value per share (the "Series K Preferred Shares") and the
MRY Series E Cumulative Redeemable Preferred Shares of Beneficial Interest were
redesignated as the Company's 4,000,000 Series L Cumulative Redeemable Preferred
Shares of Beneficial Interest, $0.01 par value per share (the "Series L
Preferred Shares").
On the MRY Closing Date, 108 Properties containing 32,315 units, four
Properties under construction or expansion expected to contain 1,378 units, six
Additional Properties that represent an investment in six joint ventures
containing 1,297 units and other related assets were acquired for a total
purchase price of approximately $2.2 billion. The purchase price consisted of
21.8 million Common Shares issued by the Company with a market value of
approximately $1 billion, issuance of approximately 0.9 million Operating
Partnership OP Units in exchange for approximately 1.6 million Merry Land
DownREIT I LP units at a market value of approximately $40.2 million, the
liquidation value of $369.1 million for the Series H Preferred Shares, the
Series I Preferred Shares, the Series J Preferred Shares, the Series K Preferred
Shares and the Series L Preferred Shares, the assumption of mortgage
indebtedness, unsecured notes and a line of credit in the amount of $723.5
million, the assumption of other liabilities of approximately $46.5 million and
other merger related costs of approximately $51.9 million. Upon contribution of
the net assets by the Company to the Operating Partnership, the Operating
Partnership issued 21.8 million OP Units to the Company. In addition, the
Operating Partnership issued the Series H Cumulative Convertible Preference
Units (defined in Note 22), the Series I Cumulative Convertible Preference
Units (defined in Note 23), the Series J Cumulative Convertible Preference Units
(defined in Note 24), the Series K Cumulative Redeemable Preference Units
(defined in Note 25), and the Series L Cumulative Redeemable Preference Units
(defined in Note 26).
All of the amounts stated in the previous paragraphs are based on
management's current best estimates, which are subject to adjustment within one
year of the respective closing dates.
F-10
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Partners' Capital
The limited partners of the Operating Partnership as of December 31, 1998
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 13,187,929 OP Units which are exchangeable,
subject to certain restrictions, on a one-for-one basis into the Company's
Common Shares (which amount includes units held by minority interest owners in
Merry Land DownREIT I LP, which were converted to 180,585 OP Units subsequent to
December 31, 1998). In addition, on December 22, 1998, in conjunction with the
acquisition of Scarborough Square, the Operating Partnership issued 46,328
Junior Convertible Preference Units, which are convertible into 98,626 OP Units.
As of December 31, 1998, the Company (as the general partner) had an approximate
89.90% interest and the Limited Partners had an approximate 10.10% 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
Partners' 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
or Junior Convertible Preference Units) to account for the change in their
respective percentage ownership of the equity of the Operating Partnership.
The Operating Partnership paid a $0.67, $0.67, $0.67 and $0.71 per OP Unit
distribution on April 10, July 10, October 9 and December 31, 1998,
respectively, for the quarters ended March 31, June 30, September 30 and
December 31, 1998, to OP Unit holders of record on March 27, June 26, September
16 and December 20, 1998, respectively.
F-11
<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, 1998:
<TABLE>
<CAPTION>
For the
Distribution Quarter or Record
Amount Date Paid Period ended Date
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series A Cumulative
Redeemable Preference Units $0.5859380 04/15/98 03/31/98 03/27/98
0.5859370 07/15/98 06/30/98 06/26/98
0.5859380 10/15/98 09/30/98 09/16/98
0.5859370 01/15/99 12/31/98 12/20/98
Series B Cumulative
Redeemable Preference Units $0.5703130 04/15/98 03/31/98 03/27/98
0.5703120 07/15/98 06/30/98 06/26/98
0.5703130 10/15/98 09/30/98 09/16/98
0.5703120 01/15/99 12/31/98 12/20/98
Series C Cumulative
Redeemable Preference Units $0.5703130 04/15/98 03/31/98 03/27/98
0.5703120 07/15/98 06/30/98 06/26/98
0.5703130 10/15/98 09/30/98 09/16/98
0.5703120 01/15/99 12/31/98 12/20/98
Series D Cumulative
Redeemable Preference Units $0.5375000 04/15/98 03/31/98 03/27/98
0.5375000 07/15/98 06/30/98 06/26/98
0.5375000 10/15/98 09/30/98 09/16/98
0.5375000 01/15/99 12/31/98 12/20/98
Series E Cumulative
Convertible Preference Units $0.4375000 04/01/98 03/31/98 03/13/98
0.4375000 07/01/98 06/30/98 06/15/98
0.4375000 10/01/98 09/30/98 09/16/98
0.4375000 01/04/99 12/31/98 12/20/98
Series F Cumulative
Redeemable Preference Units $0.6031250 04/15/98 03/31/98 03/27/98
0.6031250 07/15/98 06/30/98 06/26/98
0.6031250 10/15/98 09/30/98 09/16/98
0.6031250 01/15/99 12/31/98 12/20/98
Series G Convertible
Cumulative Preference Units $0.4531250 04/15/98 03/31/98 03/27/98
0.4531250 07/15/98 06/30/98 06/26/98
0.4531250 10/15/98 09/30/98 09/16/98
0.4531250 01/15/99 12/31/98 12/20/98
Series H Cumulative
Convertible Preference Units $0.4375000 12/31/98 12/31/98 12/20/98
Series I Cumulative
Convertible Preference Units $0.5512500 12/31/98 12/31/98 12/20/98
Series J Cumulative
Convertible Preference Units $0.5375000 12/31/98 12/31/98 12/20/98
Series K Cumulative
Redeemable Preference Units $1.0362500 12/31/98 12/31/98 12/20/98
Series L Cumulative
Redeemable Preference Units $0.4765625 12/31/98 12/31/98 12/20/98
</TABLE>
F-12
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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.
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 Properties under development and/or
expansion and lease-up properties as construction-in-progress until construction
on the apartment community has been completed and all certificates of occupancy
permits have been obtained. The Operating Partnership also classifies land
relating to construction-in-progress as land on its balance sheet. Land
associated with construction-in-progress was $19.4 million and $8.3 million as
of December 31, 1998 and 1997, respectively.
(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.
(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. The accumulated amortization of such
deferred financing costs was $8.2
F-13
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
million and $4.2 million at December 31, 1998 and 1997, 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) Derivative Instruments and Hedging Activities
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("Statement No. 133"). Statement No. 133
requires recording all derivative instruments as assets or liabilities measured
at fair value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair value of derivatives will either be offset against
the change in fair value of the hedged assets, liabilities, or firm commitments
through earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings. Statement No. 133 is
effective for fiscal years beginning after June 15, 1999. The Operating
Partnership is planning to adopt Statement No. 133 effective January 1, 2000 and
does not anticipate that the adoption will have a material impact on the
Operating Partnership's financial condition and results of operations.
(f) 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, 1998 and 1997
was estimated to be approximately $91.8 million and $184.8 million,
respectively, compared to the Operating Partnership's carrying value of $88
million and $176.1 million, respectively. 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.
(g) 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.
F-14
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(h) Lease Agreements
The majority of the leases entered into between a tenant and a Property for
the rental of an apartment unit are year-to-year, renewable upon consent of both
parties on a year-to-year or month-to-month basis.
(i) 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 or
franchise taxes. The aggregate cost of land and depreciable property for Federal
income tax purposes as of December 31, 1998 and 1997 was approximately $9.1
billion and $6.2 billion, respectively.
(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.
(l) Reportable Segments
During the fourth quarter of 1998, the Operating Partnership adopted
Statement of Financial Accounting Standards No. 131, Disclosures about Segments
of an Enterprise and Related Information ("Statement No. 131"). Statement No.
131 superseded FASB Statement of Financial Accounting Standards No. 14,
Financial Reporting for Segments of a Business Enterprise ("Statement No. 14").
Statement No. 131 establishes standards for the way that public business
enterprises report information regarding reportable operating segments. The
adoption of Statement No. 131 did not affect the Operating Partnership's results
of operations or financial position.
The Operating Partnership has one primary reportable business segment,
which consists of investment in rental real estate. The Operating Partnership's
primary business is owning, managing and operating multifamily residential
properties which includes the generation of rental and other related income
through the leasing of apartment units to tenants. The Operating Partnership
also has a segment for corporate level activity including such items as interest
income earned on short-term investments, interest income earned on investment in
mortgage notes, general and administrative expenses, and interest expense on
mortgage notes payable and unsecured note issuances. In addition, the Operating
Partnership has a segment for third party management activity that is immaterial
and does not meet the threshold requirements of Statement No. 131 as a
reportable segment.
F-15
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Operating Partnership evaluates performance and allocates resources
primarily based on the rental and other income generated from each property less
property and maintenance expenses, real estate taxes and insurance, and property
management expenses, which is considered net operating income ("NOI"). However,
all other segment measurements are disclosed in the Operating Partnership's
consolidated financial statements, and accordingly the accounting policies of
the reportable segments are the same as those described elsewhere in the Summary
of Significant Accounting Policies.
The Operating Partnership also considers funds from operations ("FFO") to
be a primary measure of the performance of real estate companies. 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 generally
accepted accounting principles ("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 and 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 real estate
companies and, accordingly, may not be comparable to such other companies.
All revenues are from external customers and no revenues are generated from
transactions with other segments. There are no tenants who contributed 10% or
more of the Operating Partnership's total revenues during 1998, 1997 or 1996.
Interest expense on debt is not allocated to individual Properties, even if the
Properties secure such debt. There is no provision for income taxes as 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.
6. Real Estate
The following table summarizes the carrying amounts for investment in real
estate as of December 31, 1998 and 1997 (Amounts are in thousands):
<TABLE>
<CAPTION>
-------------------------------------------------------------------
1998 1997
-------------------------------------------------------------------
<S> <C> <C>
Land $ 1,326,148 $ 791,980
Buildings and Improvements 9,186,220 6,060,779
Furniture, Fixtures and Equipment 333,359 232,636
Construction in Progress 96,336 36,040
-------------------------------------------------------------------
Real Estate 10,942,063 7,121,435
Accumulated Depreciation (718,491) (444,762)
-------------------------------------------------------------------
Real Estate, net $10,223,572 $6,676,673
-------------------------------------------------------------------
</TABLE>
The following table summarizes the carrying amounts for the real estate
held for disposition as of December 31, 1998 and 1997 (Amounts are in
thousands):
F-16
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
--------------------------------------------------------------
1998 1997
--------------------------------------------------------------
<S> <C> <C>
Land $ 4,189 $ --
Buildings and Improvements 35,620 --
Furniture, Fixtures and Equipment 4,389 --
Construction in Progress -- --
--------------------------------------------------------------
Real Estate 44,198 --
Accumulated Depreciation (14,312) --
--------------------------------------------------------------
Real Estate Held for Disposition $ 29,886 $ --
--------------------------------------------------------------
</TABLE>
In addition to the MRY Merger, during the year ended December 31, 1998, the
Operating Partnership acquired the 99 Properties listed below, of which 96 were
acquired from unaffiliated third parties and 3 were acquired from an affiliated
party. In connection with certain of the acquisitions listed below, the
Operating Partnership assumed and/or entered into mortgage indebtedness of
approximately $459.8 million, issued OP Units having a value of approximately
$165 million and issued Junior Convertible Preference Units having a value of
approximately $4.8 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, the Operating Partnership's line of credit, proceeds
received from the disposition of certain Properties and working Capital.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Total
Acquisition
Date Number Cost
Acquired Property Location of Units (in thousands)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
01/07/98 Cityscape St. Louis Park, MN 156 $12,469
01/09/98 740 River Drive St. Paul, MN 162 13,181
01/13/98 Prospect Towers Hackensack, NJ 157 36,399
01/16/98 Park Place Houston, TX 229 13,612
01/16/98 Park Westend Richmond, VA 312 13,453
01/29/98 Emerald Bay at Winter Park Winter Park, FL 432 15,984
02/05/98 Farnham Park Houston, TX 216 15,811
02/25/98 Plantation Houston, TX 232 10,322
02/27/98 Balcones Club Austin, TX 312 12,556
03/02/98 Coach Lantern Scarborough, ME 90 4,917
03/02/98 Foxcroft Scarborough, ME 104 5,094
03/02/98 Yarmouth Woods Yarmouth, ME 138 6,862
03/20/98 Rolido Parque Houston, TX 369 11,070
03/26/98 The Fairfield Stamford, CT 263 46,018
03/26/98 Trails of Valley Ranch Irving, TX 216 10,868
04/01/98 Sonterra at Foothill Ranch Foothill Ranch, CA 300 31,590
04/01/98 Harbor Pointe Milwaukee, WI 595 25,566
04/01/98 Gates at Carlson Center Minnetonka, MN 435 28,296
04/01/98 GlenGarry Club Bloomingdale, IL 250 19,278
04/01/98 Plum Tree I II III Hales Corners, WI 332 22,466
04/01/98 Ravinia Greenfield, WI 206 13,445
------------------------------------------------------------------------------------------------
</TABLE>
F-17
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Total
Acquisition
Date Number Cost
Acquired Property Location of Units (in thousands)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
04/01/98 The Woodlands of Brookfield Brookfield, WI 148 15,572
04/07/98 Vista Pointe at the Valley Irving, TX 231 19,167
04/23/98 Emerson Place Boston, MA 462 72,520
05/13/98 Sierra Canyon Santa Clarita, CA 232 16,465
05/14/98 Northridge Pleasant Hill, CA 221 20,329
05/22/98 The Arboretum Canton, MA 156 15,721
05/28/98 Woodridge Eagan, MN 200 12,097
05/28/98 Townhomes of Meadowbrook Auburn Hills, MI 230 13,851
06/01/98 Brookside Boulder, CO 144 13,811
06/10/98 The Greystone Atlanta, GA 150 7,501
06/11/98 Coconut Palm Club Coconut Creek, FL 300 20,782
06/11/98 Portside Towers Jersey City, NJ 527 119,302
06/16/98 Defoor Village Atlanta, GA 156 13,543
06/16/98 Plantation Ridge Marietta, GA 454 23,652
06/18/98 Wynbrook Norcross, GA 318 13,643
06/24/98 Cross Creek Matthews, NC 420 23,530
06/26/98 Copper Hill Bedford, TX 204 7,068
06/26/98 Walker's Mark Dallas, TX 164 7,055
06/26/98 Royal Crest Estates Waterbury, CT 156 7,350
06/26/98 Tyrone Gardens Randolph, MA 165 10,771
07/01/98 Trowbridge Atlanta, GA 210 12,033
07/01/98 Bellevue Meadows Bellevue, WA 180 17,153
07/01/98 Chelsea Square Redmond, WA 113 12,733
07/01/98 Olde Redmond Place Redmond, WA 192 18,985
07/01/98 Surry Downs Bellevue, WA 122 10,948
07/01/98 Woodlake Kirkland, WA 288 23,476
07/01/98 Bramblewood San Jose, CA 108 14,883
07/01/98 Creekside San Mateo, CA 192 30,890
07/01/98 Grandview I & II Las Vegas, NV 456 18,040
07/01/98 Lincoln Green I & II Sunnyvale, CA 174 27,586
07/01/98 Lincoln Village I & II Larkspur, CA 342 48,637
07/01/98 Mountain Shadows Las Vegas, NV 300 9,413
07/01/98 Parkside Union City, CA 208 18,399
07/01/98 Summerwood Hayward, CA 162 11,857
07/01/98 Timberwood Aurora, CO 336 16,354
07/01/98 Turf Club Littleton, CO 324 17,921
07/01/98 Willowick Aurora, CO 100 4,734
07/01/98 Woodleaf Campbell, CA 178 25,605
07/08/98 Parkcrest Southfield, MI 210 11,704
07/08/98 Broadway Garland, TX 288 9,334
07/08/98 Cedar Ridge Townhomes Arlington, TX 121 4,865
07/08/98 Fielder Crossing Arlington, TX 119 4,668
07/08/98 Lakeshore at Preston Plano, TX 302 18,584
07/08/98 Lakewood Greens Dallas, TX 252 11,085
07/08/98 River Park Fort Worth, TX 280 11,107
------------------------------------------------------------------------------------------------
</TABLE>
F-18
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Total
Acquisition
Date Number Cost
Acquired Property Location of Units (in thousands)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
07/08/98 Villas of Josey Ranch Carrollton, TX 198 8,877
07/08/98 Wimbledon Oaks Arlington, TX 248 10,359
07/08/98 Pleasant Ridge Arlington, TX 63 2,451
07/08/98 Sandstone Euless, TX 40 1,846
07/09/98 Woodridge I Aurora, CO 212 8,693
07/09/98 Woodridge II Aurora, CO 116 4,756
07/09/98 Woodridge III Aurora, CO 256 10,497
07/09/98 Southwood Palo Alto, CA 99 21,340
07/10/98 Martins Landing Roswell, GA 300 17,809
07/10/98 The Lakes at Vinings Atlanta, GA 464 28,370
07/14/98 Summer Creek Plymouth, MN 72 4,467
07/15/98 Patchen Oaks Lexington, KY 192 9,541
07/15/98 Lexington Village Alpharetta, GA 352 24,607
07/15/98 Overlook Manor I Frederick, MD 108 5,236
07/15/98 Overlook Manor II Frederick, MD 182 8,491
07/15/98 Overlook Manor III Frederick, MD 64 4,063
07/15/98 Brookside II Frederick, MD 204 9,494
07/16/98 Coachman Trails Plymouth, MN 154 10,807
07/21/98 Colony Woods Birmingham, AL 414 23,504
07/22/98 Arbors at Century Center Memphis, TN 420 17,821
07/31/98 Briarwood Sunnyvale, CA 192 32,273
07/31/98 Skylark Union City, CA 174 18,389
07/31/98 Greenhaven Union City, CA 250 22,727
07/31/98 Alderwood Park Lynnwood, WA 188 11,914
08/05/98 Fernbrook Townhomes Plymouth, MN 72 7,255
08/14/98 North Creek Everett, WA 264 16,436
08/21/98 Esprit Del Sol Solana Beach, CA 146 17,054
09/25/98 Smoketree Polo Club Indio, CA 288 7,846
09/29/98 Georgian Woods I Wheaton, MD 97 5,751
09/29/98 Georgian Woods III Wheaton, MD 102 6,021
12/01/98 Portland Center Portland, OR 525 49,597
12/11/98 Hall Place Quincy, MA 90 8,267
12/22/98 Scarborough Square Rockville, MD 121 9,026
------------------------------------------------------------------------------------------------
22,768 $1,679,566
------------------------------------------------------------------------------------------------
</TABLE>
During 1997, the Operating Partnership acquired 124 Properties, excluding
the Wellsford Merger and the EWR Merger, for a total acquisition cost of $1.98
billion. Each Property was purchased from an unaffiliated third party, except
for 12 of the Properties, which were purchased from certain affiliates of the
Operating Partnership, including 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 these
acquisitions, the Operating Partnership assumed mortgage indebtedness of
approximately $597.2 million and issued OP Units having a value of approximately
$191.3 million.
F-19
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. Investment in Limited Partnerships
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 limited partnerships 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, 1998 and 1997, the Operating Partnership has
funded approximately $23.9 million and $6.9 million, respectively, in connection
with this agreement. The amounts invested are included in other assets on the
balance sheet. For additional information see Notes 28 and 32.
8. Real Estate Dispositions
During 1998, the Operating Partnership disposed of the properties listed
below. Each property was sold to an unaffiliated third party. The Operating
Partnership recognized a net gain of approximately $21.7 million on the
disposition of these twenty Properties.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Disposition
Date Number Price
Disposed Property Location Of Units (in thousands)
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
03/12/98 Mountain Brook/Ridgemont Chattanooga, TN 506 $ 16,700
05/01/98 The Place Fort Myers, FL 230 8,500
05/15/98 Terraces at Peachtree Atlanta, GA 96 7,225
06/02/98 Stonelake Club Ocala, FL 240 8,680
07/31/98 Country Club I & II Silver Springs, MD 376 20,750
09/04/98 Miramonte Scottsdale, AZ 151 9,500
09/30/98 Gold Pointe Tacoma, WA 84 5,700
10/06/98 Windridge Lakewood, WA 80 3,400
10/07/98 Augusta Oklahoma City, OK 197 8,536
10/07/98 Heritage Park Oklahoma City, OK 452 12,996
10/07/98 Invitational Oklahoma City, OK 344 11,299
10/07/98 Raindance Oklahoma City, OK 504 11,214
10/07/98 Windrush Oklahoma City, OK 160 5,805
10/29/98 Newport Cove Henderson, NV 140 8,485
12/09/98 Eastland on the Lake Columbus, OH 376 7,400
12/10/98 Mountain Shadows Las Vegas, NV 300 10,125
12/14/98 Marina Club Fort Worth, TX 387 13,802
12/14/98 Whitedove Point Kent, WA 96 6,916
----------------------------------------------------------------------------------------
4,719 $177,033
----------------------------------------------------------------------------------------
</TABLE>
During 1997, the Operating Partnership received sales proceeds of $36.5
million and recognized a total gain of approximately $13.8 million on the
disposition of seven Properties, the portion of one Property and a vacant land
parcel.
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-20
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1998 1997 1996
------------------------------------------------
(Amounts in thousands except per OP Unit amounts)
<S> <C> <C> <C>
Numerator:
Income before gain on disposition of properties, net,
extraordinary item, and allocation of income to
Redeemable Preference Interests and Redeemable
Preference Units $255,032 $176,014 $ 97,033
Income allocated to Redeemable Preference Interests -- -- (263)
Income allocated to Redeemable Preference Units (92,917) (59,012) (29,015)
-------- -------- --------
Income before gain on disposition of properties, net and
extraordinary item 162,115 117,002 67,755
Gain on disposition of properties, net 21,703 13,838 22,402
Extraordinary item -- -- (3,512)
-------- -------- --------
Numerator for net income per weighted average
OP Unit outstanding 183,818 130,840 86,645
Effect of dilutive securities:
Cumulative Convertible Preference Units -- -- --
-------- -------- --------
Numerator for net income per weighted average
OP Unit outstanding - assuming dilution $183,818 $130,840 $ 86,645
======== ======== ========
Denominator:
Denominator for net income per weighted
average OP Unit outstanding 111,713 73,182 51,108
Effect of dilutive securities (1):
OP Units issuable upon exercise of the
Company's share options (2) 865 1,099 412
-------- -------- --------
Denominator for net income per weighted average
OP Unit outstanding - assuming dilution 112,578 74,281 51,520
======== ======== ========
Net income per weighted average OP Unit outstanding $ 1.65 $ 1.79 $ 1.70
======== ======== ========
Net income per weighted average OP Unit
outstanding - assuming dilution $ 1.63 $ 1.76 $ 1.69
======== ======== ========
</TABLE>
F-21
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------
1998 1997 1996
-------------------------------------------------
(Amounts in thousands except per OP Unit amounts)
<S> <C> <C> <C>
Net income per weighted average OP Unit
outstanding:
Income before gain on disposition of properties, net
and extraordinary item per weighted average OP Unit
outstanding $1.45 $1.60 $1.33
Gain on disposition of properties, net 0.20 0.19 0.44
Extraordinary item - - (0.07)
----- ----- -----
Net income per weighted average OP Unit outstanding $1.65 $1.79 $1.70
===== ===== =====
Net income per weighted average OP Unit
outstanding - assuming dilution:
Income before gain on disposition of properties, net
and extraordinary item per weighted average OP Unit
outstanding - assuming dilution $1.44 $1.58 $1.33
Gain on disposition of properties, net 0.19 0.18 0.43
Extraordinary item - - (0.07)
----- ----- -----
Net income per weighted average OP Unit
outstanding - assuming dilution $1.63 $1.76 $1.69
===== ===== =====
</TABLE>
(1) Convertible Preference Units that could be converted into 8,739,688 and
2,763,898 weighted shares of Common Shares (which would be contributed to
the Operating Partnership in exchange for OP Units) were outstanding at
December 31, 1998 and 1997, respectively, but were not included in the
computation of diluted earnings per OP Unit because the effects 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 6.2 million, 4.1 million and 2.3 million Common Shares at a
weighted average exercise price of $40.60, $36.22 and $28.76 per Common
Share as of December 31, 1998, 1997 and 1996, respectively. As of December
31, 1998, 1997 and 1996, 2.9 million, 1.3 million and 0.9 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-22
<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 amount), $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, 1998 and 1997, the second mortgage notes had a combined
principal balance of approximately $21.7 million and $25.5 million,
respectively, 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. As of December 31, 1998 and 1997, the third mortgage notes had a
combined principal balance of approximately $71.1 million and $71.1 million,
respectively, 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 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, 1998 and 1997
was $6 million and $9 million, respectively. During 1998, 1997 and 1996, the
Operating Partnership amortized $3 million, $3.1 million and $0.6 million,
respectively, which is included in interest income-investment in mortgage notes
in the consolidated statements of operations. This discount is being amortized
utilizing the effective yield method based on the expected life of the
investment.
On April 28, 1997, the Operating Partnership made an $88 million investment
in six mortgage loans collateralized by five multifamily properties. On April
1, 1998, the Operating Partnership purchased these five multifamily Properties
and no longer has an investment in the mortgage loans, but has assumed $50
million in debt in connection with this acquisition. These five Properties are
no longer included in the Additional Properties, but are now included in the
Properties.
11. Mortgage Notes Payable
As of December 31, 1998, the Operating Partnership had outstanding mortgage
indebtedness of approximately $2.3 billion encumbering 216 of the Properties.
The carrying value of such Properties (net of accumulated depreciation of $250
million) was approximately $3.8 billion. The mortgage notes payables are
generally due in monthly installments of principal and interest. In connection
with the Properties acquired during the year ended December 31, 1998, including
the effects of the MRY Merger, the Operating Partnership assumed the outstanding
mortgage balances on 58 Properties in the aggregate amount of $608.9 million,
which includes a premium of approximately $1.5 million recorded in connection
with the MRY Merger.
F-23
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
As of December 31, 1998, scheduled maturities for the Operating
Partnership's outstanding mortgage indebtedness are at various dates through
October 1, 2033. During the year ended December 31, 1998, the effective
interest cost calculated for all the Operating Partnership's debt was 7.10%.
During the year ended December 31, 1998, the Operating Partnership repaid the
outstanding mortgage balances on nine Properties in the aggregate amount of
$63.8 million.
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>
1999 $ 25,489
2000 52,304
2001 249,754
2002 225,221
2003 83,003
Thereafter 1,700,744
Net Unamortized
Premiums 4,496
---------------------------
Total $2,341,011
---------------------------
</TABLE>
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 principal and interest. In connection
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.
During the year ended December 31, 1997, the effective interest cost
calculated for all the Operating Partnership's debt was 7.5%. During the year
ended December 31, 1997, the Operating Partnership repaid the outstanding
mortgage balances on eight Properties in the aggregate amount of $113.4 million.
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 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. No such financial
instrument has been used for trading purposes.
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.
F-24
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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, 1998 and
1997, the aggregate notional amounts of these agreements were approximately
$172.1 million and $174.3 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, 1998 and 1997,
the aggregate notional amount of these agreements was approximately $172.1
million and $174.3 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 also has an interest rate cap agreement for a
notional amount of $228 million, 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.
In May 1998, the Operating Partnership entered into an interest rate
protection agreement to effectively fix the interest rate of the Evans
Withycombe Financing Limited Partnership indebtedness to within a range of 5.6%
to 6.0% upon its refinancing. The agreement was for a notional amount of $131
million with a settlement date of August 2001. There was no initial cost to the
Operating Partnership for entering into this agreement.
In August 1998, the Operating Partnership entered into an interest rate
protection agreement to effectively fix the interest rate cost of the Operating
Partnership's planned financing in the fourth quarter of 1998. This agreement
was cancelled in November at a cost of approximately $3.7 million. This cost is
being amortized over the life of the financing for the fifteen previously
unencumbered Properties that occurred in November 1998.
In August 1998, the Operating Partnership entered into an interest rate
swap agreement that fixed the Operating Partnership's interest rate risk on a
portion of the Operating Partnership's variable rate tax-exempt bond
indebtedness at a rate of 3.65125%. This agreement was for a notional amount of
$150 million with a termination date of August 2003.
In August 1998, the Operating Partnership entered into an interest rate
swap agreement that fixed the Operating Partnership's interest rate risk on a
portion of the Operating Partnership's variable rate tax-exempt bond
indebtedness at a rate of 3.683%. This agreement was for a notional amount of
$150 million with a termination date of August 2005.
F-25
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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.
The fair value of these instruments, discussed above, as of December 31,
1998 approximates their carrying or contract values.
12. Lines of Credit
The Operating Partnership has a revolving credit facility with Morgan
Guaranty Trust Company of New York ("Morgan Guaranty") and Bank of America
Illinois ("Bank of America") as co-agents to provide the Operating Partnership
with potential borrowings of up to $500 million. This credit facility 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 spread dependent upon the
Company's credit rating, which spread is currently at 0.45%, and
is subject to an annual facility fee of $750,000. As of December 31, 1998 and
1997, $245 million and $235 million of borrowings were outstanding on this
credit facility, bearing interest at a weighted average rate of 6.04% and 6.46%,
respectively.
In connection with the MRY Merger, the Operating Partnership assumed an
additional credit facility with First Union Bank (as agent) with potential
borrowings of up to $120 million. This revolving credit facility matures in
September 2000 and borrowings generally will bear interest at a per annum rate
of LIBOR, plus a certain spread dependent upon the Company's credit rating,
which spread is currently at 0.50%, and is subject to an annual facility fee of
$120,000. As of December 31, 1998, $45 million was outstanding under this
facility, bearing interest at a weighted average rate of 5.74%.
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, 1998 and 1997, the unamortized discount balance was $65,156 and
$0.2 million, respectively. 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 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, 1998 and 1997, the unamortized discount balance was approximately
$0.5 million and $0.6 million, respectively. The 2002 Notes are due on April
15, 2002 and bear interest at 7.95%, which is payable semiannually on each
October 15 and April 15. Prior to the issuance of the 2002 Notes, the Operating
Partnership entered into an interest rate protection agreement to effectively
fix the interest rate
F-26
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
cost of such issuance. The Operating Partnership made a one-time settlement
payment of this protection transaction, which was approximately $0.8 million and
is being amortized over the term of the 2002 Notes on a straight-line basis. As
of December 31, 1998 and 1997, the unamortized balance of this cost was
approximately $0.4 million and $0.5 million, respectively.
In August 1996, the Operating Partnership issued $150 million of unsecured
fixed rate notes (the "2026 Notes") 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 semiannually 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.
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 ten years on a straight-line basis. As of
December 31, 1998 and 1997, the unamortized balance was approximately $0.4
million and $0.5 million, respectively.
In October 1997, the Operating Partnership issued $150 million of unsecured
fixed rate notes (the "2017 Notes") in a public debt offering (the "Fourth
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, 1998 and 1997, the unamortized discount balance was approximately
$1.2 million and $1.2 million, respectively. 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.
In November 1997, the Operating Partnership issued $200 million of
unsecured fixed rate notes in a public debt offering (the "Fifth 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, 1998 and 1997,
the unamortized discount balance was approximately $0.2 million and $0.3
million, respectively. 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, 1998 and 1997, the unamortized discount balance was approximately
$0.1 million and $0.1 million, respectively. 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 of 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, 1998 and 1997, the unamortized balance
of these costs were approximately $3.6 million and $4.9 million and $1.4 million
and $1.6 million, respectively.
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.
In April 1998, the Operating Partnership issued $300 million of unsecured
fixed rate notes (the "2015 Notes") in a public debt offering (the "Sixth Public
Debt Offering"). The 2015 Notes were issued at a discount, which is being
amortized over the life of the notes on a straight-line basis. As of December
31, 1998 the unamortized discount balance was approximately $1.8 million. The
2015 Notes are due April 13,
F-27
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2015. The annual interest rate on the 2015 Notes to April 13, 2005 (the
"Remarketing Date") is 6.63%, which is payable semi-annually in arrears on
October 13 and April 13, commencing October 13, 1998. The 2015 Notes are subject
to mandatory tender to the remarketing agent on the Remarketing Date, at the
election of the remarketing dealer and subject to certain limitations. If the
remarketing dealer, initially Salomon Brothers Inc., does not purchase all
tendered 2015 Notes on the Remarketing Date, or in certain other limited
circumstances, the Operating Partnership will be required to repurchase the 2015
Notes at 100% of their principal amount plus accrued interest. If the 2015 Notes
are remarketed, the 2015 Notes will bear interest at the rate determined by the
remarketing dealer on and after the Remarketing Date. The Operating Partnership
received approximately $8.1 million from the sale of the option to remarket the
2015 Notes on the Remarketing Date, which is being amortized over the term of
the 2015 Notes. As of December 31, 1998 the unamortized balance was
approximately $7.8 million. Prior to the issuance of the 2015 Notes, the
Operating Partnership entered into an interest rate protection agreement to
effectively fix the interest rate cost of such issuance until the Remarketing
Date. The Operating Partnership received a one-time settlement payment from this
transaction, which was approximately $0.6 million and is being amortized over
seven years. As of December 31, 1998 the unamortized balance was approximately
$0.6 million.
In August 1998, the Operating Partnership issued $100 million of Remarketed
Reset Notes (the "August 2003 Notes") in a public debt offering (the "Seventh
Public Debt Offering"). The August 2003 Notes were issued at a discount, which
is being amortized over the life of the notes on a straight-line basis. As of
December 31, 1998 the unamortized discount balance was approximately $0.3
million. The August 2003 Notes are due August 21, 2003. During the period from
and including August 21, 1998 to but excluding August 23, 1999 (the "Initial
Spread Period") the interest rate on the August 2003 Notes will be reset
quarterly, and will equal LIBOR plus an applicable spread. The spread during
the Initial Spread Period is .45%. After the Initial Spread Period, the
character (i.e. fixed or floating rate) and duration of the interest rate on the
notes and the subsequent spread will be agreed to by the Operating Partnership
and the remarketing underwriter, initially Merrill Lynch, Pierce, Fenner and
Smith, Inc., on each applicable determination date. Beginning August 23, 1999,
the Operating Partnership may elect to redeem the August 2003 Notes on certain
dates and in certain circumstances.
In September 1998, the Operating Partnership issued $145 million of
unsecured fixed rate notes (the "2000 Notes") in a public debt offering (the
"Eighth Public Debt Offering"). The 2000 Notes were issued at a discount, which
is being amortized over the life of the notes on a straight-line basis. As of
December 31, 1998 the unamortized discount balance was approximately $0.5
million. The 2000 Notes are due September 15, 2000. The annual interest rate on
the 2000 Notes is 6.15%, which is payable semi-annually in arrears on March 15
and September 15, commencing March 15, 1999. The Operating Partnership received
net proceeds of approximately $144.5 million in connection with this issuance.
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,
1998 and 1997, the unamortized premium balance relating to the 2002 -A Notes was
approximately $3.7 million and $4.9 million, respectively.
F-28
<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,
1998 and 1997, the unamortized premium balance relating to the 2004 Notes was
approximately $1.5 million and $1.7 million, respectively.
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,
1998 and 1997, the unamortized premium balance relating to the 2007 Notes was
approximately $1.4 million and $1.6 million, respectively.
Also included in the note balance are six unsecured note issuances assumed
in connection with the MRY Merger. These are discussed in the following six
paragraphs.
In August 1995, $40 million of senior unsecured notes due October 1, 2002
(the "2002 MRY Notes") were issued. The 2002 MRY Notes bear interest at a rate
of 7.25%, which is payable semiannually in arrears on April 1 and October 1. In
connection with the assumption of the 2002 MRY Notes, the Operating Partnership
recorded a premium in the amount of $0.5 million, which is being amortized over
the remaining life of the notes on a straight-line basis. As of December 31,
1998, the unamortized premium balance relating to the 2002 MRY Notes was
approximately $0.5 million.
In November 1995, $40 million of senior unsecured notes due November 1,
2003 (the "2003 MRY Notes") were issued. The 2003 MRY Notes bear interest at a
rate of 6.875%, which is payable semiannually in arrears on May 1 and November
1. In connection with the assumption of the 2003 MRY Notes, the Operating
Partnership recorded a premium in the amount of $0.3 million, which is being
amortized over the remaining life of the notes on a straight-line basis. As of
December 31, 1998, the unamortized premium balance relating to the 2003 MRY
Notes was approximately $0.3 million.
In November 1995, $40 million of senior unsecured notes due November 1,
2004 (the "2004 MRY Notes") were issued. The 2004 MRY Notes bear interest at a
rate of 6.875%, which is payable semiannually in arrears on May 1 and November
1. In connection with the assumption of the 2004 MRY Notes, the Operating
Partnership recorded a premium in the amount of $0.2 million, which is being
amortized over the remaining life of the notes on a straight-line basis. As of
December 31, 1998, the unamortized premium
F-29
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
balance relating to the 2004 MRY Notes was approximately $0.2 million.
In June 1995, $120 million of senior unsecured notes due June 15, 2005 (the
"2005 MRY Notes") were issued. The 2005 MRY Notes bear interest at a rate of
7.25%, which is payable semiannually in arrears on June 15 and December 15. In
connection with the assumption of the 2005 MRY 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,
1998, the unamortized premium balance relating to the 2005 MRY Notes was
approximately $1.6 million.
In October 1997, $50 million of senior unsecured notes due October 30, 2006
(the "2006 MRY Notes") were issued. The 2006 MRY Notes bear interest at a rate
of 6.69%, which is payable semiannually in arrears on May 1 and November 1. In
connection with the assumption of the 2006 MRY Notes, the Operating Partnership
recorded a discount in the amount of $0.4 million, which is being amortized over
the remaining life of the notes on a straight-line basis. As of December 31,
1998, the unamortized discount balance relating to the 2006 MRY Notes was
approximately $0.4 million.
In July 1997, $50 million of senior unsecured notes due August 1, 2007 (the
"2007 MRY Notes") were issued. The 2007 MRY Notes bear interest at a rate of
6.90%, which is payable semiannually in arrears on February 1 and August 1. In
connection with the assumption of the 2007 MRY Notes, the Operating Partnership
recorded a discount in the amount of $0.2 million, which is being amortized over
the remaining life of the notes on a straight-line basis. As of December 31,
1998, the unamortized discount balance relating to the 2007 MRY Notes was
approximately $0.2 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 Interests") to certain sellers of these
Properties. The Preference Interests 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).
During the year ended December 31, 1995 the Operating Partnership redeemed
1,423 Preference Interests for a total redemption price of approximately
$1,351,900. During the year ended December 31, 1996 the Operating Partnership
redeemed 1,140 Preference Interests 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 remaining Preference Interests into
OP Units. This conversion resulted in 1,182,835 OP Units being issued.
The Operating Partnership also made loans to certain of the above sellers
in the aggregate amount of $15.2 million, which loans are fully collateralized
by 465,545 OP Units. In connection with these acquisitions, the original loans
collateralized by 465,545 OP Units have been reduced and as of December 31,
1998, these loans are collateralized by 445,540 OP Units.
F-30
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
In connection with the acquisition of one Property, which closed in
December 1998, the Company, through the Operating Partnership, issued 48,328
Junior Convertible Preference Units (also referred to as "Preference Interests")
to certain sellers of these Properties. The Junior Convertible Preference Units
have a stated value of $100 and entitle 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). These 48,328 Junior
Convertible Preference Units remain outstanding at December 31, 1998 and are
convertible into 98,626 OP Units.
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 distributions 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 distributions 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.
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
F-31
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
preference units (the "Series C Cumulative Redeemable Preference Units"). The
Series C Preferred Shares are cumulative from the date of original issue and
distributions 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 distributions 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.
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"). The Properties acquired in exchange
for the Company's Series E Preferred Shares were contributed to the Operating
Partnership in exchange for 3,999,800 of the Operating Partnership's Series E
cumulative convertible preference units (the "Series E Cumulative Convertible
Preference Units"). 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, 1998 and
1997, 2,800 and 1,300 Series E Preferred Shares, respectively, had been
converted into Common Shares. The Series E Preferred Shares are cumulative from
the date of original issue and distributions 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.
F-32
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 Properties acquired in exchange
for the Company's Series F Preferred Shares were contributed to the Operating
Partnership in exchange for 2,300,000 of the Operating Partnership's Series F
cumulative redeemable preference units (the "Series F Cumulative Redeemable
Preference Units"). The Series F Preferred Shares are cumulative from the date
of original issue and distributions 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 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 distributions 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. The Series G Preferred Shares are not redeemable prior to
September 15, 2002. On and after September 15, 2002, the Series G Preferred
Shares may be redeemed at the option of the Company, in whole or in part,
initially at $25.90625 per Depositary Share and thereafter at prices declining
to $25.00 per Depositary Share on and after September 15, 2007, plus in each
case accrued and unpaid distributions, if any, to the redemption date.
22. 7.00% Series H Cumulative Convertible Preference Units
In October 1998, the Company assumed the MRY Series A Cumulative
Convertible Preferred Shares of Beneficial Interest and redesignated them as the
Company's 164,951 Series H Cumulative Convertible Preferred Shares of Beneficial
Interest, $0.01 par value per share (the "Series H Preferred Shares"). The
Properties acquired in exchange for the Company's Series H Preferred Shares were
contributed to the Operating Partnership in exchange for 164,951 of the
Operating Partnership's Series H cumulative convertible preference units (the
"Series H Cumulative Convertible Preference Units"). The Series H Preferred
F-33
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Shares are cumulative and distributions are payable quarterly in arrears on the
last day of March, June, September and December of each year in an amount
equivalent to $1.75 per annum per share. Each Series H Preferred Share is
convertible at the option of the holder thereof at any time into Common Shares
at a conversion price of $34.53 per Common Share (equivalent to a conversion
rate of approximately .7240 Common Share for each Series H Preferred Share). The
Series H Preferred Shares may be redeemed, in whole or in part, at the option of
the Company for Common Shares only, provided the Common Shares are trading above
$34.53 (subject to adjustment in certain circumstances). During 1998, 8,400 of
the Series H Preferred Shares were converted into 6,078 Common Shares of the
Company.
23. 8.82% Series I Cumulative Convertible Preference Units
In October 1998, the Company assumed the MRY Series B Cumulative
Convertible Preferred Shares of Beneficial Interest and redesignated them as the
Company's 4,000,000 Series I Cumulative Convertible Preferred Shares of
Beneficial Interest, $0.01 par value per share (the "Series I Preferred
Shares"). The Properties acquired in exchange for the Company's Series I
Preferred Shares were contributed to the Operating Partnership in exchange for
4,000,000 of the Operating Partnership's Series I cumulative convertible
preference units (the "Series I Cumulative Convertible Preference Units"). The
Series I Preferred Shares are cumulative and distributions are payable quarterly
in arrears on the last day of March, June, September and December of each year
in an amount equivalent to $2.205 per annum per share. Each Series I Preferred
Share is convertible at the option of the holder thereof at any time into Common
Shares at a conversion price of $38.96 per Common Share (equivalent to a
conversion rate of approximately .6417 Common Share for each Series I Preferred
Share). The Series I Preferred Shares are not redeemable prior to October 31,
1999. On or after October 31, 1999, the Series I Preferred Shares may be
redeemed, in whole or in part, at the option of the Company for Common Shares
only, provided the Common Shares are trading above $38.96 (subject to adjustment
in certain circumstances).
24. 8.60% Series J Cumulative Convertible Preference Units
In October 1998, the Company assumed the MRY Series C Cumulative
Convertible Preferred Shares of Beneficial Interest and redesignated them as the
Company's 4,599,400 Series J Cumulative Convertible Preferred Shares of
Beneficial Interest, $0.01 par value per share (the "Series J Preferred
Shares"). The Properties acquired in exchange for the Company's Series J
Preferred Shares were contributed to the Operating Partnership in exchange for
4,599,400 of the Operating Partnership's Series J cumulative convertible
preference units (the "Series J Cumulative Convertible Preference Units"). The
Series J Preferred Shares are cumulative and distributions are payable quarterly
in arrears on the last day of March, June, September and December of each year
in an amount equivalent to $2.15 per annum per share. Each Series J Preferred
Share is convertible at the option of the holder thereof at any time into Common
Shares at a conversion price of $40.74 per Common Share (equivalent to a
conversion rate of approximately .6136 Common Share for each Series J Preferred
Share). The Series J Preferred Shares are not redeemable prior to March 31,
2000. On or after March 31, 2000, the Series J Preferred Shares may be redeemed,
in whole or in part, at the option of the Company for Common Shares only,
provided the Common Shares are trading above $40.74 (subject to adjustment in
certain circumstances).
25. 8.29% Series K Cumulative Redeemable Preference Units
In October 1998, the Company assumed the MRY Series D Cumulative Redeemable
Preferred Shares of Beneficial Interest and redesignated them as the Company's
1,000,000 Series K Cumulative Redeemable Preferred Shares of Beneficial
Interest, $0.01 par value per share (the "Series K Preferred Shares"). The
Properties acquired in exchange for the Company's Series K Preferred Shares were
F-34
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
contributed to the Operating Partnership in exchange for 1,000,000 of the
Operating Partnership's Series K cumulative redeemable preference units (the
"Series K Cumulative Redeemable Preference Units"). The Series K Preferred
Shares are cumulative and distributions are payable quarterly on the last day of
March, June, September and December of each year at the rate of 8.29% of the
liquidation preference per annum (equivalent to $4.145 per annum per share). The
Series K Preferred Shares are not redeemable prior to December 10, 2026. On or
after December 10, 2026, the Series K Preferred Shares may be redeemed for cash
at the option of the Company, in whole or in part, at a redemption price of
$50.00 per share, plus accrued and unpaid distributions, if any, thereon.
26. 7.625% Series L Cumulative Redeemable Preference Units
In October 1998, the Company assumed the MRY Series E Cumulative Redeemable
Preferred Shares of Beneficial Interest and redesignated them as the Company's
4,000,000 Series L Cumulative Redeemable Preferred Shares of Beneficial
Interest, $0.01 par value per share (the "Series L Preferred Shares"). The
Properties acquired in exchange for the Company's Series L Preferred Shares were
contributed to the Operating Partnership in exchange for 4,000,000 of the
Operating Partnership's Series L cumulative redeemable preference units (the
"Series L Cumulative Redeemable Preference Units"). The Series L Preferred
Shares are cumulative and distributions are payable quarterly on the last day of
March, June, September and December of each year at the rate of 7.625% of the
liquidation preference per annum (equivalent to $1.906 per annum per share). The
Series L Preferred Shares are not redeemable prior to February 13, 2003. On or
after February 13, 2003, the Series L Preferred Shares may be redeemed for cash
at the option of the Company, in whole or in part, at a redemption price of
$25.00 per share, plus accrued and unpaid distributions, if any, thereon.
27. Employee Transactions
Douglas Crocker II, President and Chief Executive Officer of the Company,
and three other officers had purchased an aggregate of 190,000 Common Shares at
prices which range from $26 to $31.625 per Common Share. These purchases were
financed by loans made by the Operating Partnership in the aggregate amount of
approximately $5.3 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 three other officers and are collateralized by
pledges of the 190,000 Common Shares purchased.
In addition, as of December 31, 1998, the outstanding principal balance on
additional notes issued to Mr. Crocker and four other officers was approximately
$1.1 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. Subsequent to December 31, 1998, Mr. Crocker paid a principal
installment on his note in the amount of $80,570. The notes are recourse to Mr.
Crocker and the four other officers and are collateralized by pledges of options
and share awards.
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
Company. If Mr. Crocker's employment is terminated without cause, he would be
entitled to annual deferred compensation for a ten-year period commencing on the
termination date in an amount equal to $500,000 (increased by a CPI index each
year beginning January 1, 1997), 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%
and the maximum paid per year would not exceed 100% of his average base salary.
F-35
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Should Mr. Crocker be terminated for cause or should he choose to leave
voluntarily without good reason, he would not be entitled to any deferred
compensation. The Operating Partnership recognized approximately $0.3 million,
$0.3 million and $0.3 million of compensation expense for the years ended 1998,
1997 and 1996, respectively, 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
without cause, he would be entitled to annual deferred 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 without
good reason, he would not be entitled to any deferred compensation. The
Operating Partnership has recognized approximately $0.2 million and $0.2 million
of compensation expense for the years ended 1998 and 1997, respectively, 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 three-year period and are
effective for ten 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 dividends that would
have been paid on these shares being exercised had he owned these
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 the Share Distributions Agreement. The Operating Partnership
recognized approximately $0.3 million, $0.2 million and $0.2 million of
compensation expense for the years ended 1998, 1997 and 1996, respectively,
related to this Share Distributions Agreement.
The Company has established a defined contribution plan (the "401(k) Plan")
that provides retirement benefits for employees that meet minimum employment
criteria. The Operating Partnership 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, on behalf of the Company, made contributions in the amount of $0.8
million and $1.4 million for the years ended December 31, 1996 and 1997,
respectively, and expects to make contributions in the amount of approximately
$2.3 million for the year ended December 31, 1998.
28. Deposits-restricted
Deposits-restricted as of December 31, 1998 primarily included the
following:
. a deposit in the amount of $20 million held in a third party escrow
account to provide collateral for third party construction
financing in connection with the Joint Venture Agreement;
. approximately $22.2 million held in third party escrow accounts
representing proceeds received in connection with the Operating
Partnership's disposition of four properties;
F-36
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
. approximately $15.3 million for tenant security and utility
deposits for certain of the Operating Partnership's Properties; and
. approximately $11.8 million of other deposits.
Deposits-restricted as of December 31, 1997 primarily included the
following:
. a deposit in the amount of $20 million held in a third party escrow
account to provide collateral for third party construction
financing in connection with the Joint Venture Agreement;
. approximately $7.6 million for tenant security and utility
deposits for certain of the Operating Partnership's Properties; and
. approximately $8.8 million of other deposits.
29. Summarized Pro Forma Condensed Statement of Operations (Unaudited)
The following Summarized Pro Forma Condensed Statement of Operations has
been prepared as if the following had occurred on January 1, 1998 (as described
in Note 3, Note 4, Note 6, Note 8, Note 11 and Note 13 of Notes to Consolidated
Financial Statements):
. the January 1998 Common Share Offering of the Company (the proceeds of
which were contributed by the Company to the Operating Partnership in
exchange for OP Units);
. the February 1998 Common Share Offerings of the Company (the proceeds of
which were contributed by the Company to the Operating Partnership in
exchange for OP Units);
. the March 1998 Common Share Offering of the Company (the proceeds of which
were contributed by the Company to the Operating Partnership in exchange
for OP Units);
. the April 1998 Common Share Offering of the Company (the proceeds of which
were contributed by the Company to the Operating Partnership in exchange
for OP Units);
. the repurchase of Common Shares in August and September 1998 by the
Company (the proceeds of which were obtained from the Operating
Partnership in exchange for OP Units owned by the Company);
. the Sixth Public Debt Offering;
. the Seventh Public Debt Offering;
. the Eighth Public Debt Offering;
. the mortgage financing of 15 previously unencumbered Properties for $226
million;
. the acquisition of an additional 99 Properties, including the related
assumption of $459.8 million of mortgage indebtedness, the issuance of
Junior Convertible Preference Units with a value of $4.8 million and the
issuance of OP Units with a value of $165 million;
. the acquisition of the 118 MRY properties, including the related
assumption of $723.5 million of debt, the issuance of Common Shares with a
market value of $1 billion, the issuance of approximately 0.9 million
Operating Partnership OP Units, in exchange for approximately 1.6 million
MRY DownREIT I LP units at a market value of approximately $40.2 million;
and the redesignation of Preferred Shares with a liquidation value of
$369.1 million (upon contribution of the net assets by the Company to the
Operating Partnership, the Operating Partnership issued OP Units and
Cumulative Convertible or Redeemable Preference Units to the Company);
. the disposition of twenty properties; and
. the repayment of the outstanding mortgage balances on nine properties
totaling $63.8 million.
F-37
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
This would result in 130,890,656 OP Units outstanding on January 1, 1998.
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, 1998, or to project results for
any future period. The amounts presented in the following statement are in
thousands except for per OP Unit amounts:
<TABLE>
<CAPTION>
Summarized Pro Forma
Condensed Statement
Of Operations
For the Twelve Months Ended
December 31, 1998
--------------------------------------------------------------------------------------------------
<S> <C>
Total Revenues $1,616,499
----------
Total Expenses $1,323,525
----------
Pro Forma net income available for OP Units $ 175,439
==========
Pro Forma net income per OP Unit $ 1.34
==========
</TABLE>
30. 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 net prices that ranged from
$35.63 per share to $42.08 per share and raised approximately $3.2 million in
connection therewith. During 1998, the Company issued 93,521 Common Shares at
net prices that ranged from $35.70 per share to $42.71 per share and raised
approximately $3.7 million in connection therewith. The net proceeds were
contributed to the Operating Partnership in exchange for OP Units.
31. Distribution Reinvestment and Share Purchase Plan
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). During 1998, the Company issued 1,023,184 Common
Shares and raised approximately $50.7 million in connection with the share
purchase portion of the DRIP Plan. The net proceeds were contributed to the
Operating Partnership in exchange for OP Units.
F-38
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
32. 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 litigation
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 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. During 1997 and 1998, the Operating Partnership
funded a total of $6.9 million and $23.9 million, respectively, and during 1999
the Operating Partnership expects to fund approximately $74.9 million in
connection with this agreement. Subsequent to December 31, 1998, the Operating
Partnership has funded approximately $1 million. In addition, the Operating
Partnership also funded $20 million to guarantee third party construction
financing and is obligated to fund up to an additional $20 million.
In regards to certain properties that were under development and/or
expansion in 1998, the Operating Partnership funded $31.6 million. In 1999, the
Operating Partnership expects to fund $53.9 million related to the continued
development and/or expansion of as many as five Properties.
In regards to certain properties that were under earnout/development
agreements in 1998, no amounts were funded. The Operating Partnership expects to
fund $60.4 million related to three earnout/development projects expected to be
finished during 1999. Subsequent to December 31, 1998, the Operating Partnership
has funded $16.2 million relating to the completion/acquisition of Copper
Canyon. In addition, the Operating Partnership may be required to fund an
additional $1 million earnout payment to the developer for Copper Canyon if
certain specified operation levels are met.
In connection with the Wellsford Merger, the Operating Partnership has
provided a $14.8 million credit enhancement with respect to bonds issued to
finance certain public improvements at a multifamily development project.
Pursuant to the terms of a Stock Purchase Agreement with Wellsford Real
Properties, Inc. ("WRP Newco"), the Operating Partnership will agree to purchase
up to 1,000,000 shares of WRP Newco Series A Preferred at $25.00 per share over
a three-year period ending on May 30, 2000. As of December 31, 1998, no shares
of WRP Newco Series A Preferred had been acquired by the Operating Partnership.
In connection with the MRY Merger, the Operating Partnership extended a $25
million, one year, non-revolving Senior Debt Agreement to MRYP Spinco. At
December 31, 1998, approximately $18.3 million was outstanding, bearing interest
at LIBOR plus 250 basis points. The Operating Partnership has a potential
obligation to fund up to an additional $6.7 million under the Senior Debt
Agreement.
F-39
<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"); Atlanta, Georgia (the "Atlanta Office"); and Chicago, Illinois
(the "Chicago Office"). The Tampa Office agreement expires on October 31, 2001,
the Atlanta Office agreement expires on June 20, 2001 and the Chicago Office
agreement expires on July 11, 2000.
Management Corp. also has six 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");
Scottsdale, Arizona (the "Scottsdale Office") and Irvine, California (the
"Irvine Office"). The lease agreement for the Dallas Office expires on September
30, 2005, the lease agreement for the Bethesda Office expires on February 1,
2004, the lease agreement for the Denver Office expires on December 31, 2002,
the lease agreement for the Seattle Office expires on June 30, 2003, the lease
agreement for the Scottsdale Office expires on July 31, 2004 and the lease
agreement for the Irvine Office expires on July 31, 2000.
Management Corp. also has a lease agreement 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 June 15, 1998, Management Corp. increased the office space occupied
by its corporate personnel. The lease agreement covering the additional space
expires on December 31, 2004. Subsequent to December 31, 1998, Management Corp.
is planning on increasing its office space again with leasing terms to be
determined.
During the years ended December 31, 1998, 1997 and 1996, total rentals,
including a portion of real estate taxes, insurance, repairs and utilities,
aggregated $2,528,150, $1,491,766 and $1,020,311, respectively.
The minimum basic aggregate rental commitment under the above described
leases in years succeeding December 31, 1998 is as follows:
<TABLE>
<CAPTION>
====================
Year Amount
--------------------
<S> <C>
1999 $ 2,689,662
2000 2,764,818
2001 2,515,258
2002 2,238,029
2003 1,979,775
--------------------
Total $12,187,542
====================
</TABLE>
33. 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.
In connection with the Wellsford Merger, 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,
F-40
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 (a
trustee of the Company) 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.
In connection with the affiliated lease agreements discussed in Note 32,
Management Corp. paid Equity Office Holdings, L.L.C. ("EOH") $114,539, $145,511
and $118,919 in connection with the Chicago Office, $194,506, $177,793 and
$137,638 in connection with the Tampa Office and $772,320, $632,693 and $409,392
in connection with the space occupied by the corporate headquarters for the
years ended December 31, 1998, 1997 and 1996, respectively. Also, Management
Corp. paid $55,117 in connection with the Atlanta Office for the year ended
December 31, 1998. Amounts due to EOH were $136,000 and $59,675 as of December
31, 1998 and 1997, respectively.
Equity Group Investments, Inc. and certain of its subsidiaries, including,
Equity Properties & Development, L.P. and Equity Properties Management Corp.
(collectively, "EGI"), have provided certain services to the Operating
Partnership and the Company which include, but are not limited to, investor
relations, corporate secretarial, real estate tax evaluation services and market
consulting and research services. Fees paid to EGI for these services amounted
to approximately $1.1 million, $1.1 million and $1.3 million for the years ended
December 31, 1998, 1997 and 1996, respectively. Amounts due to EGI were $57,408
and $74,578 as of December 31, 1998 and 1997, respectively.
Artery Property Management, Inc., a real estate property management company
("APMI") in which Mr. Goldberg, a trustee of the Company, is a two-thirds owner
and chairman of the board of directors, 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 million for the year ended December 31, 1996. In connection
with the acquisition of certain Properties from Mr. Goldberg and his affiliates
during 1995, the Operating Partnership made a loan to Mr. Goldberg and APMI of
$15,212,000 evidenced by two notes and secured by 465,541 OP Units. At December
31, 1998, approximately $14.6 million was outstanding and 445,540 OP Units
secured this loan. In connection with the acquisition of certain Properties from
Mr. Goldberg and his affiliates during 1998, the Operating Partnership made a
$12,000,000 revolving loan to Mr. Goldberg and his wife in September 1998. At
December 31, 1998, approximately $3.9 million was outstanding.
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 Arthur A. Greenberg, which provided tax
advisory services. Fees paid to these related entities in the aggregate amounted
to $1.3 million and $0.7 million for the years ended December 31, 1997 and 1996,
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 and $4.1 million for the years ended December 31, 1997
F-41
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
and 1996, respectively. As of December 31, 1997, $643,519 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.
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 $2.2 million, $2.3 million and
$4,300 for the years ended December 31, 1998, 1997 and 1996, respectively.
Seyfarth, Shaw, Fairweather & Geraldson, a law firm in which Ms. Sheli
Rosenberg's (a trustee of the Company) husband is a partner, provided legal
services to the Operating Partnership. Fees paid to this firm amounted to
$29,146, for the year ended December 31, 1998.
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 Operating Partnership. Fees received for
providing such services were approximately $5.6 million, $5.7 million and $6.7
million for the years ended December 31, 1998, 1997 and 1996, respectively.
34. Quarterly Financial Data (Unaudited):
The following unaudited quarterly data has been prepared on the basis of a
December 31 year end. The 1998 and 1997 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 9 of Notes to Consolidated Financial
Statements. Amounts are in thousands, except for per OP Unit amounts:
F-42
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
1998 3/31 6/30 9/30 12/31
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total revenues $286,341 $307,050 $339,299 $404,759
======== ======== ======== ========
Net income $ 61,275 $ 72,357 $ 61,102 $ 82,001
======== ======== ======== ========
Weighted average OP Units outstanding 102,948 107,182 109,688 126,794
======== ======== ======== ========
Net income per weighted average OP Unit outstanding $ 0.38 $ 0.47 $ 0.36 $ 0.43
======== ======== ======== ========
Net income per weighted average OP Unit outstanding
--assuming dilution $ 0.38 $ 0.47 $ 0.36 $ 0.42
======== ======== ======== ========
<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 average OP Unit outstanding
--assuming dilution $ 0.45 $ 0.40 $ 0.41 $ 0.49
======== ======== ======== ========
</TABLE>
35. Reportable Segments
The following tables set forth the reconciliation of net income and total
assets for the Operating Partnership's reportable segments for the years ended
December 31, 1998, 1997 and 1996 (see also Note 5 for further discussion).
F-43
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
Rental Real Corporate/
1998 (Amounts in Thousands) Estate (1) Other (2) Consolidated
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental income $ 1,293,560 $ - $ 1,293,560
Property and maintenance expense (326,567) - (326,567)
Real estate tax and insurance expense (126,009) - (126,009)
Property management expense (52,705) - (52,705)
-------------------------------------------------------------
Net operating income 788,279 - 788,279
Fee and asset management income - 5,622 5,622
Interest income - investment in mortgage notes - 18,564 18,564
Interest and other income - 19,703 19,703
Fee and asset management expense - (4,207) (4,207)
Depreciation expense on non-real estate assets - (5,361) (5,361)
Interest expense:
Expense incurred - (246,585) (246,585)
Amortization of deferred financing costs - (2,757) (2,757)
General and administrative expense - (21,718) (21,718)
Allocation of net income to Preference Unit holders - (92,917) (92,917)
Adjustment for amortization of deferred financing costs - 35 35
related to predecessor business
Adjustment for depreciation expense related to equity in - 183 183
unconsolidated joint ventures
-------------------------------------------------------------
Funds from operations available to OP Units (unaudited) 788,279 (329,438) 458,841
Depreciation expense on real estate assets (296,508) - (296,508)
Gain on disposition of properties, net 21,703 - 21,703
Adjustment for amortization of deferred financing costs - (35) (35)
related to predecessor business
Adjustment for depreciation expense related to equity in - (183) (183)
Unconsolidated joint ventures
-------------------------------------------------------------
Net income available to OP Unit holders $ 513,474 $(329,656) $ 183,818
=============================================================
Investment in real estate, net of accumulated $10,208,113 $ 15,459 $10,223,572
depreciation
=============================================================
Total assets $10,237,999 $ 462,261 $10,700,260
=============================================================
</TABLE>
F-44
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
Rental Real Corporate/
1997 (Amounts in Thousands) Estate (1) Other (2) Consolidated
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental income $ 707,733 $ - $ 707,733
Property and maintenance expense (176,075) - (176,075)
Real estate tax and insurance expense (69,520) - (69,520)
Property management expense (26,793) - (26,793)
-------------------------------------------------------------
Net operating income 435,345 - 435,345
Fee and asset management income - 5,697 5,697
Interest income - investment in mortgage notes - 20,366 20,366
Interest and other income - 13,525 13,525
Fee and asset management expense - (3,364) (3,364)
Depreciation expense on non-real estate assets - (3,118) (3,118)
Interest expense:
Expense incurred - (121,324) (121,324)
Amortization of deferred financing costs - (2,523) (2,523)
General and administrative expense - (15,064) (15,064)
Allocation of net income to Preference Unit holders - (59,012) (59,012)
Adjustment for amortization of deferred financing costs - 235 235
related to predecessor business
-------------------------------------------------------------
Funds from operations available to OP Units (unaudited) 435,345 (164,582) 270,763
Depreciation expense on real estate assets (153,526) - (153,526)
Gain on disposition of properties, net 13,838 - 13,838
Adjustment for amortization of deferred financing costs - (235) (235)
related to predecessor business
-------------------------------------------------------------
Net income available to OP Unit holders $ 295,657 $(164,817) $ 130,840
=============================================================
Investment in real estate, net of accumulated
depreciation $6,666,925 $ 9,748 $6,676,673
=============================================================
Total assets $6,666,925 $ 427,706 $7,094,631
=============================================================
</TABLE>
F-45
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
Rental Real Corporate/
1996 (Amounts in Thousands) Estate (1) Other (2) Consolidated
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental income $ 454,412 $ - $ 454,412
Property and maintenance expense (127,172) - (127,172)
Real estate tax and insurance expense (44,128) - (44,128)
Property management expense (17,512) - (17,512)
--------------------------------------------------------------
Net operating income 265,600 - 265,600
Fee and asset management income - 6,749 6,749
Interest income - investment in mortgage notes - 12,819 12,819
Interest and other income - 4,405 4,405
Fee and asset management expense - (3,837) (3,837)
Depreciation expense on non-real estate assets - (2,079) (2,079)
Interest expense:
Expense incurred - (81,351) (81,351)
Amortization of deferred financing costs - (4,242) (4,242)
General and administrative expense - (9,857) (9,857)
Allocation of net income to Preference Unit holders - (29,015) (29,015)
Adjustment for amortization of deferred financing costs - 1,075 1,075
related to predecessor business
--------------------------------------------------------------
Funds from operations available to OP Units (unaudited) 265,600 (105,333) 160,267
Depreciation expense on real estate assets (91,174) - (91,174)
Gain on disposition of properties, net 22,402 - 22,402
Write-off of unamortized costs on refinanced debt - (3,512) (3,512)
Allocation of net income to Preference Interest holders - (263) (263)
Adjustment for amortization of deferred financing costs - (1,075) (1,075)
related to predecessor business
--------------------------------------------------------------
Net income available to OP Unit holders $ 196,828 $(110,183) $ 86,645
==============================================================
</TABLE>
(1) The Operating Partnership has one primary reportable business segment, which
consists of investment in rental real estate. The Operating Partnership's
primary business is owning, managing, and operating multifamily residential
properties which includes the generation of rental and other related income
through the leasing of apartment units to tenants.
(2) The Operating Partnership has a segment for corporate level activity
including such items as interest income earned on short-term investments,
interest income earned on investment in mortgage notes, general and
administrative expenses, and interest expense on mortgage notes payable and
unsecured note issuances. In addition, the Operating Partnership has a
segment for third party management activity that is immaterial and does not
meet the threshold requirements of a reportable segment as provided for in
Statement No. 131. Interest expense on debt is not allocated to individual
Properties, even if the Properties secure such debt.
36. Subsequent Events
On January 6, 1999 the Operating Partnership disposed of Fox Run
Apartments, a 337-unit multifamily property located in Little Rock, Arkansas,
to an unaffiliated third party for a total sales price of $10.6 million. This
Property was classified as real estate held for disposition at December 31,
1998.
F-46
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
On January 6, 1999 the Operating Partnership disposed of Greenwood Forest
Apartments, a 239-unit multifamily property located in Little Rock, Arkansas, to
an unaffiliated third party for a total sales price of $7.5 million. This
Property was classified as real estate held for disposition at December 31,
1998.
On January 6, 1999 the Operating Partnership disposed of Walnut Ridge
Apartments, a 252-unit multifamily property located in Little Rock, Arkansas, to
an unaffiliated third party for a total sales price of $7.9 million. This
Property was classified as real estate held for disposition at December 31,
1998.
On January 6, 1999 the Operating Partnership disposed of Williamsburg
Apartments, a 211-unit multifamily property located in Little Rock, Arkansas, to
an unaffiliated third party for a total sales price of $6.7 million. This
Property was classified as real estate held for disposition at December 31,
1998.
On January 22, 1999, the Operating Partnership acquired Fireside Park
Apartments, a 236-unit multifamily property located in Rockville, Maryland, from
an affiliated party for a purchase price of approximately $14.3 million, which
included the assumption of mortgage indebtedness of approximately $8.9 million.
On January 22, 1999, the Operating Partnership acquired Mill Pond Apartments,
a 240-unit multifamily property located in Glen Burnie, Maryland, from an
affiliated party for a purchase price of approximately $11.7 million, which
included the assumption of mortgage indebtedness of approximately $8 million.
On January 27, 1999 the Operating Partnership disposed of The Hawthorne
Apartments, a 276-unit multifamily property located in Phoenix, Arizona, to an
unaffiliated third party for a total sales price of $20.5 million. This Property
was classified as real estate held for disposition at December 31, 1998.
On January 28, 1999, the Operating Partnership acquired Aspen Crossing
Apartments, a 192-unit multifamily property located in Wheaton, Maryland, from
an affiliated party for a purchase price of approximately $11.4 million.
On February 24, 1999, the Operating Partnership acquired Copper Canyon
Apartments, a 222-unit multifamily property located in Denver, Colorado, from an
unaffiliated third party for a purchase price of approximately $16.2 million.
On February 24, 1999, the Operating Partnership declared a $0.71 distribution
per OP Unit for the quarter ended March 31, 1998 to OP Unit holders of record on
March 19, 1999. The Operating Partnership also declared a $0.585938
distribution, a $0.570313 distribution, a $0.570313 distribution, a $0.5375
distribution, a $0.4375 distribution, a $0.603125 distribution, a $0.453125
distribution, a $0.4375 distribution, a $0.55125 distribution, a $0.5375
distribution, a $1.03625 distribution and a $0.4765625 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, Series G Convertible Cumulative Preference Units, Series H
Cumulative Convertible Preference Units, Series I Cumulative Convertible
Preference Units, Series J Cumulative Convertible Preference Units, Series K
Cumulative Redeemable Preference Units and Series L Cumulative Redeemable
Preference Units, respectively.
F-47
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
On February 25, 1999, the Company filed with the SEC a Form S-3 Registration
Statement to register 1,262,264 Common Shares (the "Resale Shelf Registration")
of which 1,262,264 Common Shares may be issued by the Company to holders of
1,262,264 OP Units. The SEC declared the Resale Shelf Registration effective as
of March 5, 1999.
On March 2, 1999 the Operating Partnership disposed of The Atrium
Apartments, a 208-unit multifamily property located in Durham, North Carolina,
to an unaffiliated third party for a total sales price of $10.8 million.
On March 4, 1999, the Operating Partnership acquired Siena Terrace
Apartments, a 356-unit multifamily property located in Lake Forest, California,
from an unaffiliated third party for a purchase price of approximately $33
million.
F-48
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Operating Partnership (Improvements, net)(I)
- ------------------------------------------------ --------------------------- ----------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2300 Elliott Seattle, WA $ 0 $ 796,700 $ 7,170,461 $ 100 $ 332,080
2900 on First Combined Seattle, WA 0 1,176,400 10,588,096 1,300 311,213
3000 Grand Des Moines, IA 0 858,305 7,827,336 0 1,302,538
740 River Drive St. Paul, MN 6,826,903 1,620,000 11,179,212 6,700 375,571
7979 Westheimer Houston, TX 0 1,388,400 12,495,280 1,700 1,176,884
Acacia Creek Scottsdale, AZ 0 6,121,856 35,379,595 0 545,288
Adams Farm Greensboro, NC 0 2,350,000 30,871,672 0 11,244
Alderwood Park Lynnwood, WA 4,187,662 3,760,000 8,016,867 7,400 129,997
Altamonte San Antonio, TX (T) 1,663,100 14,968,079 1,970 835,771
Amberton Manassas, VA 10,597,067 888,800 8,352,507 11,800 1,013,019
Arbor Glen Pittsfield Twp, MI 0 1,092,300 9,830,191 3,764 281,452
Arboretum (AZ) Tucson, AZ (Q) 3,453,446 19,021,517 0 372,905
Arboretum (GA) Atlanta, GA 0 4,679,400 15,927,313 2,900 348,582
Arboretum (MA) Canton, MA 0 4,680,000 10,961,320 5,900 73,688
Arbors at Century Center Memphis, TN 0 2,520,000 15,239,044 1,700 59,958
Arbors of Brentwood Nashville, TN (D) 404,570 13,189,508 100 1,121,432
Arbors of Hickory Hollow Nashville, TN (D) 202,285 6,594,754 700 1,792,378
Arbors of Las Colinas Irving, TX 0 1,662,300 14,960,709 1,600 1,230,194
Ashton, The Corona Hills, CA 17,300,000 2,594,264 33,082,047 0 145,793
Atrium Durham, NC 0 1,122,600 10,103,027 2,400 119,775
Audubon Village Tampa, FL 0 3,576,000 26,433,022 0 12,826
Augustine Club Tallahassee, FL 0 1,110,000 8,920,213 0 8,096
Autumn Creek Cordova, TN (E) 1,680,000 9,330,921 1,900 155,799
Auvers Village Orlando, FL 0 3,840,000 29,676,167 0 17,001
Bainbridge Durham, NC 0 1,042,900 9,385,579 33,400 1,035,966
Balcones Club Austin, TX 0 2,184,000 10,114,399 1,500 256,401
Banyan Lake Boynton Beach, FL 0 2,736,000 11,204,508 2,600 430,319
Bay Club Phoenix, AZ 0 828,100 5,821,759 100 1,628,084
Bay Ridge San Pedro, CA 0 2,385,399 2,180,081 15,901 32,599
Bayside at the Islands Gilbert, AZ (P) 3,306,484 15,577,472 0 137,378
Beach Club Fort Myers, FL 0 2,080,000 14,967,104 0 64,631
Bear Canyon Tucson, AZ 0 1,660,608 11,228,097 0 31,203
Bear Creek Village Denver, CO 21,400,000 4,519,700 40,677,102 0 150,659
Bellevue Meadows Bellevue, WA 0 4,500,000 12,535,945 7,100 110,913
Belmont Crossing Riverdale, GA 0 1,580,000 18,753,653 0 5,297
Belmont Landing Riverdale, GA 0 2,120,000 22,001,656 0 11,264
Beneva Place Sarasota, FL 8,700,000 1,344,000 9,752,633 0 7,604
Berkshire Place Charlotte, NC 0 805,550 12,812,210 0 9,049
Bermuda Cove Jacksonville, FL 0 1,503,000 19,800,377 0 11,172
Bishop Park Winter Park, FL 0 2,592,000 18,211,899 0 9,711
Blue Swan San Antonio, TX (E) 1,424,800 7,589,821 700 119,365
Boulder Creek Wilsonville, OR 0 3,552,000 11,462,403 2,400 451,855
Bourbon Square Combined Palatine, IL 27,414,677 3,982,600 35,843,025 2,700 4,776,878
Bramblewood San Jose, CA 0 5,184,000 9,608,154 6,700 83,660
Breckenridge Lexington, KY 9,385,180 1,645,800 14,812,310 2,500 319,657
Brentwood Vancouver, WA 0 1,318,200 11,863,517 39,021 1,055,320
Breton Mill Houston, TX (F) 212,720 8,154,404 100 847,338
Briarwood (CA) Sunnyvale, CA 14,249,668 9,984,000 22,178,614 7,500 102,538
Bridge Creek Wilsonville, OR 0 1,294,600 11,651,108 5,290 1,396,556
Bridgeport Raleigh, NC 0 1,296,200 11,665,351 500 465,422
Brierwood Jacksonville, FL 0 546,100 4,914,681 5,800 499,241
Brittany Square Tulsa, OK 0 625,000 4,220,662 0 595,214
Brixworth Nashville, TN 0 1,172,100 10,549,371 1,700 279,322
Broadway Garland, TX 6,167,239 1,440,000 7,766,166 3,700 124,227
Brookfield Salt Lake City, UT 0 1,152,000 5,673,250 1,000 111,804
Brookridge Centreville, VA (E) 2,520,000 15,993,105 1,500 140,629
Brookside (CO) Boulder, CO 0 3,600,000 10,200,045 400 10,443
Brookside II (MD) Frederick, MD 0 2,448,000 6,912,403 2,800 131,060
Burn Brae Dallas, TX 0 1,255,000 11,294,815 0 151,697
Burwick Farms Howell, MI 0 1,102,200 9,919,799 2,400 164,452
Calais Dallas, TX 0 1,118,900 10,070,076 0 177,245
Cambridge at Hickory Hollow Nashville, TN 0 3,240,000 17,908,952 800 108,544
Cambridge Village Lewisville, TX 0 800,000 8,751,405 1,300 198,599
Camellero Scottsdale, AZ 11,725,485 1,923,600 17,312,869 1,300 811,189
Canterbury Germantown, MD 31,363,911 2,781,300 26,656,574 0 2,617,807
Canterchase Nashville, TN 5,701,841 862,200 7,759,711 1,400 440,174
Canyon Creek (AZ) Tucson, AZ 0 834,313 5,840,188 100 530,246
Canyon Crest Views Riverside, CA 0 1,744,640 17,392,607 0 136,490
Canyon Ridge San Diego, CA 0 4,869,448 12,002,216 0 114,064
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of Life Used
Dsecription Period 12/31/98 to Compute
- --------------------------- -------------------------- Depreciation in
Building & Accumulated Date of Latest Income
Apartment Name Land Fixtures(A) Total(B) Depreciation Construction Statement(C)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2300 Elliott $ 796,800 $ 7,502,541 $ 8,299,341 $ 417,256 1992 30 Years
2900 on First Combined 1,177,700 10,899,309 12,077,009 1,097,670 1989-91 30 Years
3000 Grand 858,305 9,129,874 9,988,179 4,929,785 1970 30 Years
740 River Drive 1,626,700 11,554,783 13,181,483 408,559 1962 30 Years
7979 Westheimer 1,390,100 13,672,164 15,062,264 1,832,847 1973 30 Years
Acacia Creek 6,121,856 35,924,883 42,046,739 1,337,306 1988-1994 30 Years
Adams Farm 2,350,000 30,882,916 33,232,916 260,335 1987 30 Years
Alderwood Park 3,767,400 8,146,864 11,914,264 125,590 1982 30 Years
Altamonte 1,665,070 15,803,850 17,468,920 2,590,221 1985 30 Years
Amberton 900,600 9,365,526 10,266,126 1,340,814 1986 30 Years
Arbor Glen 1,096,064 10,111,643 11,207,708 394,386 1990 30 Years
Arboretum (AZ) 3,453,446 19,394,422 22,847,868 762,350 1987 30 Years
Arboretum (GA) 4,682,300 16,275,894 20,958,194 594,299 1970 30 Years
Arboretum (MA) 4,685,900 11,035,008 15,720,908 240,324 1989 30 Years
Arbors at Century Center 2,521,700 15,299,001 17,820,701 256,760 1988/1990 30 Years
Arbors of Brentwood 404,670 14,310,940 14,715,610 2,828,235 1986 30 Years
Arbors of Hickory Hollow 202,985 8,387,132 8,590,117 1,926,949 1986 30 Years
Arbors of Las Colinas 1,663,900 16,190,903 17,854,803 3,001,553 1984/85 30 Years
Ashton, The 2,594,264 33,227,840 35,822,104 1,225,795 1986 30 Years
Atrium 1,125,000 10,222,803 11,347,803 465,771 1989 30 Years
Audubon Village 3,576,000 26,445,848 30,021,848 223,446 1990 30 Years
Augustine Club 1,110,000 8,928,309 10,038,309 79,228 1988 30 Years
Autumn Creek 1,681,900 9,486,720 11,168,620 424,230 1991 30 Years
Auvers Village 3,840,000 29,693,168 33,533,168 249,926 1991 30 Years
Bainbridge 1,076,300 10,421,545 11,497,845 1,871,029 1984 30 Years
Balcones Club 2,185,500 10,370,800 12,556,300 324,244 1984 30 Years
Banyan Lake 2,738,600 11,634,827 14,373,427 713,658 1986 30 Years
Bay Club 828,200 7,449,843 8,278,043 1,601,411 1976 30 Years
Bay Ridge 2,401,300 2,212,680 4,613,980 137,403 1987 30 Years
Bayside at the Islands 3,306,484 15,714,850 19,021,334 586,883 1989 30 Years
Beach Club 2,080,000 15,031,735 17,111,735 129,109 1990 30 Years
Bear Canyon 1,660,608 11,259,300 12,919,908 425,332 1996 30 Years
Bear Creek Village 4,519,700 40,827,761 45,347,461 2,289,393 1987 30 Years
Bellevue Meadows 4,507,100 12,646,857 17,153,957 224,589 1983 30 Years
Belmont Crossing 1,580,000 18,758,950 20,338,950 158,605 1988 30 Years
Belmont Landing 2,120,000 22,012,920 24,132,920 188,103 1988 30 Years
Beneva Place 1,344,000 9,760,237 11,104,237 83,483 1986 30 Years
Berkshire Place 805,550 12,821,259 13,626,809 109,352 1982 30 Years
Bermuda Cove 1,503,000 19,811,549 21,314,549 168,051 1989 30 Years
Bishop Park 2,592,000 18,221,609 20,813,609 154,528 1991 30 Years
Blue Swan 1,425,500 7,709,186 9,134,686 368,781 1985-1994 30 Years
Boulder Creek 3,554,400 11,914,257 15,468,657 767,819 1991 30 Years
Bourbon Square Combined 3,985,300 40,619,903 44,605,203 7,286,143 1984-87 30 Years
Bramblewood 5,190,700 9,691,814 14,882,514 169,574 1986 30 Years
Breckenridge 1,648,300 15,131,966 16,780,266 599,171 1986-1987 30 Years
Brentwood 1,357,221 12,918,837 14,276,058 1,815,610 1990 30 Years
Breton Mill 212,820 9,001,742 9,214,562 1,728,698 1986 30 Years
Briarwood (CA) 9,991,500 22,281,152 32,272,652 322,353 1985 30 Years
Bridge Creek 1,299,890 13,047,664 14,347,554 2,341,275 1987 30 Years
Bridgeport 1,296,700 12,130,773 13,427,473 2,212,393 1990 30 Years
Brierwood 551,900 5,413,921 5,965,821 523,522 1974 30 Years
Brittany Square 625,000 4,815,876 5,440,876 2,443,264 1982 30 Years
Brixworth 1,173,800 10,828,692 12,002,492 952,926 1985 30 Years
Broadway 1,443,700 7,890,393 9,334,093 149,778 1983 30 Years
Brookfield 1,153,000 5,785,054 6,938,054 268,634 1985 30 Years
Brookridge 2,521,500 16,133,734 18,655,234 699,362 1989 30 Years
Brookside (CO) 3,600,400 10,210,488 13,810,888 212,273 1993 30 Years
Brookside II (MD) 2,450,800 7,043,464 9,494,264 122,730 1979 30 Years
Burn Brae 1,255,000 11,446,512 12,701,512 693,394 1984 30 Years
Burwick Farms 1,104,600 10,084,251 11,188,851 467,353 1991 30 Years
Calais 1,118,900 10,247,321 11,366,221 627,211 1986 30 Years
Cambridge at Hickory Hollow 3,240,800 18,017,496 21,258,296 832,203 1997 30 Years
Cambridge Village 801,300 8,950,004 9,751,304 475,652 1987 30 Years
Camellero 1,924,900 18,124,058 20,048,958 2,373,643 1979 30 Years
Canterbury 2,781,300 29,274,381 32,055,681 4,191,193 1986 30 Years
Canterchase 863,600 8,199,885 9,063,485 775,416 1985 30 Years
Canyon Creek (AZ) 834,413 6,370,434 7,204,847 1,305,549 1986 30 Years
Canyon Crest Views 1,744,640 17,529,097 19,273,737 629,914 1982-1983 30 Years
Canyon Ridge 4,869,448 12,116,280 16,985,728 438,489 1989 30 Years
</TABLE>
S-1
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION> Initial Cost to
Description Operating Partnership
- --------------------------------------------------------- ----------------------------------------
Building &
Apartment Name Location Encumbrances Land Fixtures
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Canyon Sands Phoenix, AZ 0 1,475,900 13,282,737
Cardinal, The Greensboro, NC 7,401,384 1,280,000 11,838,616
Carmel Terrace San Diego, CA 0 2,288,300 20,632,540
Carolina Crossing Greenville, SC 0 547,800 4,930,347
Carriage Homes at Wyndham Glen Allen, VA 0 1,736,000 27,787,623
Casa Capricorn San Diego, CA 0 1,260,100 11,341,085
Casa Cordoba Tallahassee, FL 0 307,055 2,732,177
Casa Cortez Tallahassee, FL 0 120,590 1,196,857
Casa Ruiz San Diego, CA 0 3,920,000 9,390,192
Cascade at Landmark Alexandria, VA 0 3,601,000 19,649,825
Catalina at South Shore Las Vegas, NV 0 1,222,200 10,999,974
Catalina Shores (WRP) Las Vegas, NV 0 1,427,200 12,844,577
Cedar Crest Overland Park, KS 14,300,000 2,159,800 19,438,107
Cedar Ridge (TX) Arlington, TX 3,597,980 605,000 4,204,079
Cedars, The Charlotte, NC 0 2,025,300 18,139,423
Celebration Westchase Houston, TX 0 2,204,590 6,312,399
Champion Oaks Houston, TX 6,828,595 931,900 8,519,479
Champions Club Glen Allen, VA 0 954,000 12,695,097
Champion's Park Norcross, GA 0 1,134,000 14,853,350
Chandler Court Chandler, AZ 0 1,352,600 12,172,974
Chandler's Bay Kent, WA 0 1,503,400 13,530,223
Chantecleer Lakes Naperville, IL (E) 6,688,000 16,327,809
Chaparral Largo, FL 0 303,100 6,169,465
Charter Club Everett, WA 0 998,700 8,988,560
Chartwell Court Houston, TX 0 1,215,000 12,820,142
Chatelaine Park Duluth, GA 0 1,818,000 24,990,774
Chatham Wood High Point, NC 0 700,000 8,617,470
Chelsea Square Redmond, WA 0 3,390,000 9,237,211
Cherry Creek I&II (TN) Hermitage, TN 0 1,832,445 30,041,332
Cherry Creek III (TN) Hermitage, TN 0 1,109,900 10,705,791
Cherry Hill Seattle, WA 0 700,100 6,301,194
Chestnut Hills Tacoma, WA 0 756,300 6,806,382
Cheyenne Crest Colorado Springs, CO 0 73,950 3,936,559
Chicksaw Crossing Orlando, FL 11,714,673 2,044,000 12,517,747
Chimneys Charlotte, NC 0 904,700 8,141,844
Cierra Crest Denver, CO 21,700,000 4,800,000 34,825,500
Cimarron Ridge Denver, CO 0 1,591,100 14,319,997
Cityscape South Louis Park, MN 0 1,560,000 10,764,118
Claire Point Jacksonville, FL 0 2,048,000 14,845,563
Clarion Decatur, GA 0 1,501,900 13,517,171
Clarys Crossing Columbia, MD 0 891,000 15,897,696
Classic, The Stamford, CT 0 2,880,000 19,881,820
Cloisters on the Green Lexington, KY 0 187,074 2,193,726
Club at Tanasbourne Hillsboro, OR 0 3,520,000 16,259,589
Club at the Green Beaverton, OR 0 2,030,150 12,601,596
Coach Lantern Scarborough, ME 0 450,000 4,383,823
Coachman Trails Plymouth, MN 6,553,047 1,224,000 9,501,210
Coconut Palm Club Coconut Creek, GA 0 3,000,000 17,665,036
Colinas Pointe Denver, CO 0 1,587,400 14,287,051
Colony Place Fort Myers, FL 0 1,500,000 21,108,033
Colony Woods Birmingham, AL 12,800,000 1,656,000 21,811,535
Combined Ft. Lauderdale Properties(U) Ft. Lauderdale, FL 10,000,000 10,222,700 39,790,005
Concorde Bridge Overland Park, KS 0 1,972,400 17,751,898
Conway Station Orlando, FL 0 1,936,000 11,011,693
Copper Creek Phoenix, AZ 0 1,017,400 9,156,964
Copper Hill Bedford, TX 0 1,020,000 5,985,527
Copper Terrace Orlando, FL 0 1,200,000 18,086,977
Copperfield San Antonio, TX 0 791,200 7,121,171
Country Brook Chandler, AZ (P) 1,505,219 29,544,872
Country Club Place (FL) Pembroke Pines, FL 0 912,000 10,059,337
Country Club Village Seattle, WA 0 1,150,500 10,354,697
Country Gables Beaverton, OR 8,390,691 1,580,500 14,240,626
Country Ridge Farmington Hills, MI 0 1,605,800 14,452,066
Countryside San Antonio, TX 0 667,500 6,007,294
Coventry at Cityview Fort Worth, TX 0 2,160,000 23,174,595
Creekside (San Mateo) San Mateo, CA 14,700,000 9,600,000 21,159,532
Creekside Homes at Legacy Plano, TX 0 4,560,000 32,595,373
Creekside Village Mountlake Terrace, WA 15,222,818 2,802,900 25,226,096
Creekwood Charlotte, NC 0 1,859,300 16,733,418
</TABLE>
<TABLE>
<CAPTION>
Subsequent to Gross Amount Carried
Acquisition at Close of
(Improvements, net)(1) Period 12/31/98
--------------------------- -----------------------
Buildings & Buildings &
Land Fixtures Land Fixtures
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Canyon Sands Phoenix, AZ 16,850 657,278 1,492,750 13,940,016
Cardinal, The Greensboro, NC 1,200 115,779 1,281,200 11,954,395
Carmel Terrace San Diego, CA 0 353,202 2,288,300 20,985,742
Carolina Crossing Greenville, SC 2,400 122,451 550,200 5,052,798
Carriage Homes at Wyndham Glen Allen, VA 0 0 1,736,000 27,787,623
Casa Capricorn San Diego, CA 2,600 228,859 1,262,700 11,569,944
Casa Cordoba Tallahassee, FL 0 908,477 307,055 3,640,654
Casa Cortez Tallahassee, FL 0 569,147 120,590 1,766,004
Casa Ruiz San Diego, CA 2,400 140,496 3,922,400 9,530,688
Cascade at Landmark Alexandria, VA 2,400 179,089 3,603,400 19,828,914
Catalina at South Shore Las Vegas, NV 4,800 539,249 1,227,000 11,539,223
Catalina Shores (WRP) Las Vegas, NV 0 86,306 1,427,200 12,930,883
Cedar Crest Overland Park, KS 900 1,325,918 2,160,700 20,764,024
Cedar Ridge (TX) Arlington, TX 3,600 52,498 608,600 4,256,577
Cedars, The Charlotte, NC 2,879 236,772 2,028,179 18,376,195
Celebration Westchase Houston, TX 100 1,112,662 2,204,690 7,425,061
Champion Oaks Houston, TX 0 375,333 931,900 8,894,812
Champions Club Glen Allen, VA 0 7,442 954,000 12,702,538
Champion's Park Norcross, GA 0 8,740 1,134,000 14,862,089
Chandler Court Chandler, AZ 500 728,875 1,353,100 12,901,848
Chandler's Bay Kent, WA 3,500 822,695 1,506,900 14,352,918
Chantecleer Lakes Naperville, IL 1,400 283,260 6,689,400 16,611,068
Chaparral Largo, FL (0) 3,038,367 303,100 9,207,832
Charter Club Everett, WA 2,400 305,184 1,001,100 9,293,744
Chartwell Court Houston, TX 700 30,587 1,215,700 12,850,729
Chatelaine Park Duluth, GA 0 11,461 1,818,000 25,002,236
Chatham Wood High Point, NC 0 80,584 700,000 8,698,053
Chelsea Square Redmond, WA 7,100 99,093 3,397,100 9,336,304
Cherry Creek I&II (TN) Hermitage, TN 0 559 1,832,445 30,041,890
Cherry Creek III (TN) Hermitage, TN 0 0 1,109,900 10,705,791
Cherry Hill Seattle, WA 0 58,600 700,100 6,359,794
Chestnut Hills Tacoma, WA 0 122,343 756,300 6,928,725
Cheyenne Crest Colorado Springs, CO 100 856,409 74,050 4,792,968
Chicksaw Crossing Orlando, FL 0 19,721 2,044,000 12,537,467
Chimneys Charlotte, NC 2,400 195,920 907,100 8,337,764
Cierra Crest Denver, CO 3,100 66,090 4,803,100 34,891,590
Cimarron Ridge Denver, CO 0 782,362 1,591,100 15,102,359
Cityscape South Louis Park, MN 3,200 141,619 1,563,200 10,905,737
Claire Point Jacksonville, FL 0 33,631 2,048,000 14,879,194
Clarion Decatur, GA 2,400 85,292 1,504,300 13,602,463
Clarys Crossing Columbia, MD 0 5,618 891,000 15,903,314
Classic, The Stamford, CT 3,500 138,827 2,883,500 20,020,647
Cloisters on the Green Lexington, KY 0 1,685,407 187,074 3,879,133
Club at Tanasbourne Hillsboro, OR 1,300 531,449 3,521,300 16,791,038
Club at the Green Beaverton, OR 800 503,583 2,030,950 13,105,180
Coach Lantern Scarborough, ME 2,900 80,669 452,900 4,464,492
Coachman Trails Plymouth, MN 3,000 78,920 1,227,000 9,580,130
Coconut Palm Club Coconut Creek, GA 1,700 115,310 3,001,700 17,780,346
Colinas Pointe Denver, CO 0 116,204 1,587,400 14,403,255
Colony Place Fort Myers, FL 0 32,201 1,500,000 21,140,234
Colony Woods Birmingham, AL 1,300 35,431 1,657,300 21,846,966
Combined Ft. Lauderdale Properties(U) Ft. Lauderdale, FL 8,600 1,361,139 10,231,300 41,151,144
Concorde Bridge Overland Park, KS 2,400 293,973 1,974,800 18,045,872
Conway Station Orlando, FL 0 14,815 1,936,000 11,026,509
Copper Creek Phoenix, AZ 0 115,306 1,017,400 9,272,271
Copper Hill Bedford, TX 1,800 60,962 1,021,800 6,046,489
Copper Terrace Orlando, FL 0 10,815 1,200,000 18,097,792
Copperfield San Antonio, TX 0 318,927 791,200 7,440,099
Country Brook Chandler, AZ 0 110,306 1,505,219 29,655,178
Country Club Place (FL) Pembroke Pines, FL 0 20,694 912,000 10,080,031
Country Club Village Seattle, WA 0 156,501 1,150,500 10,511,197
Country Gables Beaverton, OR 1,200,000 373,622 2,780,500 14,614,248
Country Ridge Farmington Hills, MI 16,150 629,695 1,621,950 15,081,761
Countryside San Antonio, TX 100 265,085 667,600 6,272,378
Coventry at Cityview Fort Worth, TX 0 7,329 2,160,000 23,181,923
Creekside (San Mateo) San Mateo, CA 6,600 123,431 9,606,600 21,282,963
Creekside Homes at Legacy Plano, TX 0 7,238 4,560,000 32,602,611
Creekside Village Mountlake Terrace, WA 4,700 927,041 2,807,600 26,153,137
Creekwood Charlotte, NC 2,400 177,007 1,861,700 16,910,426
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Compute
Depreciation in
Accumulated Date of Latest Income
Total (B) Depreciation Construction Statement(C)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Canyon Sands Phoenix, AZ 15,432,766 1,425,632 1983 30 Years
Cardinal, The Greensboro, NC 13,235,595 807,778 1994 30 Years
Carmel Terrace San Diego, CA 23,274,042 3,115,053 1988-89 30 Years
Carolina Crossing Greenville, SC 5,602,998 241,856 1988-89 30 Years
Carriage Homes at Wyndham Glen Allen, VA 29,523,623 226,694 1998 30 Years
Casa Capricorn San Diego, CA 12,832,644 952,476 1981 30 Years
Casa Cordoba Tallahassee, FL 3,947,709 2,744,326 1972/1973 30 Years
Casa Cortez Tallahassee, FL 1,886,594 1,225,737 1970 30 Years
Casa Ruiz San Diego, CA 13,453,088 462,106 1976-1986 30 Years
Cascade at Landmark Alexandria, VA 23,432,314 1,153,918 1990 30 Years
Catalina at South Shore Las Vegas, NV 12,766,223 1,940,275 1989 30 Years
Catalina Shores (WRP) Las Vegas, NV 14,358,083 754,855 1989 30 Years
Cedar Crest Overland Park, KS 22,924,724 1,830,081 1986 30 Years
Cedar Ridge (TX) Arlington, TX 4,865,177 78,094 1980 30 Years
Cedars, The Charlotte, NC 20,404,374 543,516 1983 30 Years
Celebration Westchase Houston, TX 9,629,751 1,742,547 1979 30 Years
Champion Oaks Houston, TX 9,826,712 1,458,130 1984 30 Years
Champions Club Glen Allen, VA 13,656,538 107,280 1988 30 Years
Champion's Park Norcross, GA 15,996,089 125,702 1987 30 Years
Chandler Court Chandler, AZ 14,254,948 1,306,590 1987 30 Years
Chandler's Bay Kent, WA 15,859,818 2,299,096 1989 30 Years
Chantecleer Lakes Naperville, IL 23,300,468 733,549 1986 30 Years
Chaparral Largo, FL 9,510,931 6,083,759 1976 30 Years
Charter Club Everett, WA 10,294,844 1,667,474 1991 30 Years
Chartwell Court Houston, TX 14,066,429 482,228 1995 30 Years
Chatelaine Park Duluth, GA 26,820,236 206,718 1995 30 Years
Chatham Wood High Point, NC 9,398,053 75,327 1986 30 Years
Chelsea Square Redmond, WA 12,733,404 163,845 1991 30 Years
Cherry Creek I&II (TN) Hermitage, TN 31,874,335 250,233 1986/96 30 Years
Cherry Creek III (TN) Hermitage, TN 11,815,691 0 (S) 30 Years
Cherry Hill Seattle, WA 7,059,894 366,186 1991 30 Years
Chestnut Hills Tacoma, WA 7,685,025 419,014 1991 30 Years
Cheyenne Crest Colorado Springs, CO 4,867,018 1,090,158 1984 30 Years
Chicksaw Crossing Orlando, FL 14,581,467 108,935 1986 30 Years
Chimneys Charlotte, NC 9,244,864 387,319 1974 30 Years
Cierra Crest Denver, CO 39,694,690 1,315,229 1996 30 Years
Cimarron Ridge Denver, CO 16,693,459 869,720 1984 30 Years
Cityscape South Louis Park, MN 12,468,937 382,216 1990 30 Years
Claire Point Jacksonville, FL 16,927,194 125,631 1986 30 Years
Clarion Decatur, GA 15,106,763 604,440 1990 30 Years
Clarys Crossing Columbia, MD 16,794,314 131,748 1984 30 Years
Classic, The Stamford, CT 22,904,147 871,790 1990 30 Years
Cloisters on the Green Lexington, KY 4,066,207 2,742,874 1974 30 Years
Club at Tanasbourne Hillsboro, OR 20,312,338 998,077 1990 30 Years
Club at the Green Beaverton, OR 15,136,130 841,276 1991 30 Years
Coach Lantern Scarborough, ME 4,917,392 135,860 1971/1981 30 Years
Coachman Trails Plymouth, MN 10,807,130 158,448 1987 30 Years
Coconut Palm Club Coconut Creek, GA 20,782,046 357,359 1992 30 Years
Colinas Pointe Denver, CO 15,990,655 838,392 1986 30 Years
Colony Place Fort Myers, FL 22,640,234 176,381 1991 30 Years
Colony Woods Birmingham, AL 23,504,266 355,969 1991/1994 30 Years
Combined Ft. Lauderdale Properties(U) Ft. Lauderdale, FL 51,382,444 4,509,903 1988 30 Years
Concorde Bridge Overland Park, KS 20,020,672 794,379 1973 30 Years
Conway Station Orlando, FL 12,962,509 95,215 1987 30 Years
Copper Creek Phoenix, AZ 10,289,671 534,049 1984 30 Years
Copper Hill Bedford, TX 7,068,289 121,045 1983 30 Years
Copper Terrace Orlando, FL 19,297,792 152,799 1989 30 Years
Copperfield San Antonio, TX 8,231,299 487,775 1984 30 Years
Country Brook Chandler, AZ 31,160,397 1,079,189 1986-1996 30 Years
Country Club Place (FL) Pembroke Pines, FL 10,992,031 84,404 1987 30 Years
Country Club Village Seattle, WA 11,661,697 600,207 1991 30 Years
Country Gables Beaverton, OR 17,394,748 968,767 1991 30 Years
Country Ridge Farmington Hills, MI 16,703,711 1,463,402 1986 30 Years
Countryside San Antonio, TX 6,939,978 405,720 1980 30 Years
Coventry at Cityview Fort Worth, TX 25,341,923 194,769 1996 30 Years
Creekside (San Mateo) San Mateo, CA 30,889,563 369,130 1985 30 Years
Creekside Homes at Legacy Plano, TX 37,162,611 268,802 1998 30 Years
Creekside Village Mountlake Terrace, WA 28,960,737 4,013,013 1987 30 Years
Creekwood Charlotte, NC 18,772,126 776,667 1987-1990 30 Years
</TABLE>
S-2
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Cost Capitalized
subsequent
Initial Cost to Acquisition
Description Operating Partnership (Improvements, net)(1)
- ---------------------------------------------- ----------------------- ------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Crescent at Cherry Creek Denver, CO (E) 2,592,000 15,119,233 2,000 30,775
Cross Creek Charlotte, NC 12,800,000 3,150,000 20,292,137 1,600 86,325
Crossing at Green Valley Las Vegas, NV 0 2,408,500 21,676,899 0 129,958
Crosswinds St. Petersburg, FL 0 1,561,200 5,789,894 0 276,952
Crown Court Phoenix, AZ 0 3,156,600 28,409,516 0 422,213
Crystal Creek Phoenix, AZ 0 952,900 8,576,084 600 495,929
Crystal Village Attleboro, MA 0 1,365,000 4,956,700 4,000 70,760
Cypress Cove Melbourne, FL 0 1,630,000 19,265,657 0 5,086
Cypress Point Las Vegas, NV 0 953,800 8,583,719 5,890 596,251
Dartmouth Woods Denver, CO 4,346,802 1,608,000 10,815,913 1,800 116,030
Dawntree Carrollton, TX 0 1,204,600 10,841,783 900 1,246,579
Deerbrook Jacksonville, FL 0 1,008,000 8,957,019 0 105,574
Deerwood (Corona) Corona, CA 0 4,740,000 20,295,433 2,200 299,935
Deerwood (SD) San Diego, CA 0 2,075,700 18,680,801 6,395 3,017,495
Deerwood Meadows Greensboro, NC 0 986,643 6,906,503 100 837,808
Defoor Village Atlanta, GA 0 2,964,000 10,549,072 2,400 27,901
Del Coronado Mesa, AZ (O) 1,963,200 17,669,207 1,200 526,455
Desert Park Las Vegas, NV 0 1,085,400 9,401,015 0 853,083
Desert Sands Phoenix, AZ 0 1,464,200 13,177,336 16,850 763,120
Doral Louisville, KY 0 96,607 1,526,628 0 3,043,148
Dos Caminos Phoenix, AZ 0 1,727,900 15,551,044 0 227,008
Duraleigh Woods Raleigh, NC 0 1,629,000 20,342,931 0 18,362
Eagle Canyon Chino Hills, CA 0 1,806,800 16,261,336 2,100 250,448
Eagle Rim Redmond, WA 0 976,200 8,785,605 1,600 500,991
East Pointe Charlotte, NC 9,485,561 1,364,100 12,276,563 1,800 1,117,435
Edgewood Woodinville, WA 5,919,966 1,068,200 9,613,388 1,900 434,324
Emerald Bay Winter Park, FL 0 2,160,000 13,535,527 1,600 286,397
Emerald Place Bermuda Dunes, CA 0 954,400 8,589,110 2,100 601,776
Emerson Place Combined Boston, MA 0 14,850,000 57,546,530 5,000 118,283
Enclave, The Tempe, AZ (Q) 1,500,192 19,302,059 0 24,393
English Hills Charlotte, NC 0 1,260,000 12,866,368 0 4,166
Esprit Del Sol Solana Beach, CA 0 5,110,000 11,898,100 1,200 44,965
Essex Place Overland Park, KS 0 1,831,900 16,486,600 3,500 1,720,768
Essex Place (FL) Tampa, FL 0 1,188,000 7,183,244 0 8,521
Estate at Quarry Lake Austin, TX 12,556,746 1,963,000 19,058,959 0 49,400
Ethans Glen III Kansas City, MO 2,366,364 244,100 2,197,138 2,400 85,976
Ethans Ridge I Kansas City, MO 16,232,216 1,945,900 17,513,216 2,400 498,252
Ethans Ridge II Kansas City, MO 10,991,981 1,465,500 13,189,192 2,635 117,104
Fairfield Combined Stamford, CT 0 6,500,000 39,320,917 10,200 186,422
Falls Tampa, FL 0 1,440,000 8,589,001 0 14,136
Farmington Gates Germantown, TN 0 969,700 8,727,328 4,098 174,662
Farnham Park Houston, TX 11,463,097 1,512,000 14,226,229 1,900 71,320
Fernbrook Townhomes Plymouth, MN 5,232,796 576,000 6,636,774 4,100 37,859
Fielder Crossing Arlington, TX 3,414,402 714,000 3,896,081 4,100 53,596
Firdale Village Seattle, WA 0 2,279,400 20,514,917 0 247,771
Flying Sun Phoenix, AZ 0 87,120 2,035,537 100 231,803
Forest Place Tampa, FL 10,633,001 1,708,000 8,778,517 0 15,022
Forest Ridge Arlington, TX 0 2,339,300 21,053,447 23,400 1,233,734
Forest Valley San Antonio, TX 0 590,000 5,310,328 0 117,310
Fountain Creek Phoenix, AZ 0 686,000 6,173,818 500 323,928
Fountain Place I Eden Prairie, MN 24,676,652 2,399,900 21,599,215 5,168 295,696
Fountain Place II Eden Prairie, MN 12,612,600 1,226,500 11,038,139 4,850 119,864
Fountainhead Combined San Antonio, TX (T) 3,617,449 13,446,560 0 1,509,653
Fountains at Flamingo Las Vegas, NV 0 3,180,900 28,628,533 2,200 641,955
Four Lakes Lisle, IL 10,344,569 2,465,000 13,178,449 0 7,579,815
Four Lakes 5 Lisle, IL (T) 600,000 16,530,115 0 3,371,911
Fox Run (WA) Federal Way, WA 0 638,500 5,746,956 1,200 510,135
Foxchase Grand Prairie, TX 0 781,500 7,559,700 200 353,430
Foxcroft Scarborough, ME 0 520,000 4,500,118 3,400 70,289
Garden Lake Riverdale, GA 0 1,464,500 13,180,548 2,400 165,319
Gatehouse at Pine Lake Plantation, FL 0 1,886,200 16,975,382 10,400 488,935
Gatehouse on the Green Pembroke Pines, FL 0 2,216,800 19,951,085 11,400 607,575
Gates at Carlson Center Minnetonka, MN (R) 4,350,000 23,737,155 5,200 203,335
Gates of Redmond Combined Redmond, WA 9,823,367 3,603,100 18,867,454 500 158,707
Gateway Villas Scottsdale, AZ 0 1,431,048 14,933,020 0 27,078
Geary Court Yard San Francisco, CA 17,709,692 1,719,400 15,474,355 3,000 77,113
Georgian Woods Combined Wheaton, MD 10,385,719 5,034,000 27,835,267 4,400 2,639,447
Glen Eagle Greenville, SC 0 833,500 7,503,698 2,400 90,655
GlenGarry Club Bloomingdale, IL (R) 3,125,000 15,757,266 4,700 390,582
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of Life Used to
Description Period 12/31/98 Compute
- -------------- -------------------------- Depreciation in
Building & Accumulated Date of Latest Income
Apartment Name Land Fixtures (A) Total (B) Depreciation Construction Statement (C)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Crescent at Cherry Creek 2,594,000 15,150,007 17,744,007 647,996 1994 30 Years
Cross Creek 3,151,600 20,378,462 23,530,062 388,850 1989 30 Years
Crossing at Green Valley 2,408,500 21,806,857 24,215,357 1,261,589 1986 30 Years
Crosswinds 1,561,200 6,066,845 7,628,045 305,004 1986 30 Years
Crown Court 3,156,600 28,831,729 31,988,329 1,672,388 1987 30 Years
Crystal Creek 953,500 9,072,013 10,025,513 1,277,192 1985 30 Years
Crystal Village 1,369,000 5,027,460 6,396,460 190,898 1974 30 Years
Cypress Cove 1,630,000 19,270,743 20,900,743 162,961 1990 30 Years
Cypress Point 959,690 9,179,970 10,139,660 1,572,407 1989 30 Years
Dartmouth Woods 1,609,800 10,931,943 12,541,743 704,278 1990 30 Years
Dawntree 1,205,500 12,088,362 13,293,862 2,039,128 1982 30 Years
Deerbrook 1,008,000 9,062,593 10,070,593 75,513 1983 30 Years
Deerwood (Corona) 4,742,200 20,595,368 25,337,568 906,350 1992 30 Years
Deerwood (SD) 2,082,095 21,698,296 23,780,391 3,909,102 1990 30 Years
Deerwood Meadows 986,743 7,744,311 8,731,054 1,660,722 1986 30 Years
Defoor Village 2,966,400 10,576,973 13,543,373 203,790 1997 30 Years
Del Coronado 1,964,400 18,195,662 20,160,062 2,383,019 1985 30 Years
Desert Park 1,085,400 10,254,098 11,339,498 1,244,851 1987 30 Years
Desert Sands 1,481,050 13,940,456 15,421,506 1,418,665 1982 30 Years
Doral 96,607 4,569,776 4,666,383 2,216,272 1972 30 Years
Dos Caminos 1,727,900 15,778,052 17,505,952 917,932 1983 30 Years
Duraleigh Woods 1,629,000 20,361,293 21,990,293 172,843 1987 30 Years
Eagle Canyon 1,808,900 16,511,784 18,320,684 1,374,137 1985 30 Years
Eagle Rim 977,800 9,286,596 10,264,396 1,465,453 1986-88 30 Years
East Pointe 1,365,900 13,393,998 14,759,898 2,549,694 1987 30 Years
Edgewood 1,070,100 10,047,712 11,117,812 1,608,579 1986 30 Years
Emerald Bay 2,161,600 13,821,924 15,983,524 496,310 1972 30 Years
Emerald Place 956,500 9,190,886 10,147,386 1,739,960 1988 30 Years
Emerson Place Combined 14,855,000 57,664,813 72,519,813 1,372,671 1962 30 Years
Enclave, The 1,500,192 19,326,452 20,826,644 696,297 1994 30 Years
English Hills 1,260,000 12,870,535 14,130,535 111,289 1984 30 Years
Esprit Del Sol 5,111,200 11,943,065 17,054,265 152,935 1986 30 Years
Essex Place 1,835,400 18,207,368 20,042,768 3,250,413 1970-84 30 Years
Essex Place (FL) 1,188,000 7,191,765 8,379,765 61,778 1989 30 Years
Estate at Quarry Lake 1,963,000 19,108,360 21,071,360 160,294 1995 30 Years
Ethans Glen III 246,500 2,283,114 2,529,614 87,584 1990 30 Years
Ethans Ridge I 1,948,300 18,011,468 19,959,768 691,694 1988 30 Years
Ethans Ridge II 1,468,135 13,306,295 14,774,430 512,989 1990 30 Years
Fairfield Combined 6,510,200 39,507,338 46,017,538 1,042,453 1996 30 Years
Falls 1,440,000 8,603,138 10,043,138 76,338 1985 30 Years
Farmington Gates 973,798 8,901,990 9,875,788 346,779 1976 30 Years
Farnham Park 1,513,900 14,297,549 15,811,449 462,286 1996 30 Years
Fernbrook Townhomes 580,100 6,674,633 7,254,733 94,229 1993 30 Years
Fielder Crossing 718,100 3,949,677 4,667,777 72,616 1980 30 Years
Firdale Village 2,279,400 20,762,688 23,042,088 1,220,866 1986 30 Years
Flying Sun 87,220 2,267,340 2,354,560 525,702 1983 30 Years
Forest Place 1,708,000 8,793,538 10,501,538 77,929 1985 30 Years
Forest Ridge 2,362,700 22,287,181 24,649,881 2,314,291 1984/85 30 Years
Forest Valley 590,000 5,427,637 6,017,637 342,791 1983 30 Years
Fountain Creek 686,500 6,497,746 7,184,246 894,187 1984 30 Years
Fountain Place I 2,405,068 21,894,911 24,299,979 828,257 1989 30 Years
Fountain Place II 1,231,350 11,158,003 12,389,353 420,777 1989 30 Years
Fountainhead Combined 3,617,449 14,956,213 18,573,662 6,201,720 1985/1987 30 Years
Fountains at Flamingo 3,183,100 29,270,488 32,453,588 4,436,638 1989-91 30 Years
Four Lakes 2,465,000 20,758,264 23,223,264 10,427,067 1968/1988* 30 Years
Four Lakes 5 600,000 19,902,026 20,502,026 7,130,309 1968/1988* 30 Years
Fox Run (WA) 639,700 6,257,091 6,896,791 1,063,775 1988 30 Years
Foxchase 781,700 7,913,130 8,694,830 478,785 1983 30 Years
Foxcroft 523,400 4,570,408 5,093,808 140,653 1977/1979 30 Years
Garden Lake 1,466,900 13,345,867 14,812,767 604,717 1991 30 Years
Gatehouse at Pine Lake 1,896,600 17,464,317 19,360,917 1,326,298 1990 30 Years
Gatehouse on the Green 2,228,200 20,558,660 22,786,860 1,551,859 1990 30 Years
Gates at Carlson Center 4,355,200 23,940,489 28,295,689 652,565 1989 30 Years
Gates of Redmond Combined 3,603,600 19,026,162 22,629,762 954,489 1979/1982-1989 30 Years
Gateway Villas 1,431,048 14,960,098 16,391,146 542,531 1995 30 Years
Geary Court Yard 1,722,400 15,551,467 17,273,867 577,362 1990 30 Years
Georgian Woods Combined 5,038,400 30,474,714 35,513,114 3,260,449 1967 30 Years
Glen Eagle 835,900 7,594,353 8,430,253 352,969 1990 30 Years
GlenGarry Club 3,129,700 16,147,848 19,277,548 430,718 1989 30 Years
</TABLE>
S-3
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Operating Partnership (Improvements, net)(I)
Description ------------------------ -------------------------
------------------------------------------- Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Glenlake Glendale Heights. IL 14,845,000 5,040,000 16,663,439 1,700 449,309
Glenridge Colorado Springs, CO (F) 884,688 4,466,900 100 677,047
Governor's Place Augusta, GA 0 347,355 2,518,146 0 907,804
Governor's Pointe Roswell, GA (E) 3,744,000 24,480,337 2,600 436,853
Grandview I & II Las Vegas, NV 0 2,325,600 12,795,591 7,700 2,910,755
Greengate Marietta, GA 0 132,979 1,476,005 (0) 1,290,093
Greenhaven Union City, CA 10,975,000 7,500,000 15,124,124 7,000 96,346
Greenhouse - Frey Road Atlanta, GA (T) 2,464,900 22,183,783 2,300 1,256,475
Greenhouse - Holcomb Bridge Atlanta, GA (T) 2,142,400 19,281,704 900 1,218,288
Greenhouse - Roswell Atlanta, GA (T) 1,217,500 10,957,845 2,500 801,582
Greenwich Woods Silver Spring, MD 17,546,219 3,095,700 29,073,395 5,300 2,029,605
Greenwood Village Tempe, AZ (P) 2,118,781 17,259,157 0 330,230
Grey Eagle Greenville, SC 0 725,200 6,527,253 2,400 94,313
Greystone Atlanta, GA 0 2,250,000 5,188,574 2,000 59,995
Gwinnett Crossing Duluth, GA 0 2,632,000 32,681,854 0 24,545
Habitat Orlando, FL 0 600,000 494,032 0 6,207,998
Hall Place Quincy, MA 0 3,150,000 5,109,688 800 6,936
Hammock's Place Miami, FL (F) 319,080 12,216,608 100 836,568
Hampton Green San Antonio, TX 0 1,561,830 2,962,670 0 2,145,545
Hamptons Tacoma, WA 5,945,448 1,119,200 10,072,905 0 178,855
Harbor Pointe Milwaukee, WI 12,000,000 2,975,000 22,043,008 4,800 543,213
Harborview San Pedro, CA 12,316,661 6,400,000 12,608,900 2,500 190,774
Harbour Landing Corpus Christi, TX 0 761,600 6,854,524 3,400 927,104
Harrison Park Tucson, AZ (P) 1,265,094 16,348,242 0 63,040
Harvest Grove Conyers, GA 0 752,000 19,083,685 0 12,927
Hathaway Long Beach, CA 0 2,512,200 22,609,720 300 638,954
Haywood Pointe Greenville, SC 0 480,000 9,303,521 0 16,630
Hearthstone San Antonio, TX 0 1,035,700 3,375,132 200 622,678
Heritage, The Phoenix, AZ (P) 1,211,205 13,135,703 0 35,954
Heron Cove Coral Springs, FL 0 823,000 7,997,360 0 600,414
Heron Landing (K) Lauderhill, FL 0 707,100 6,363,784 4,700 447,319
Heron Pointe Boynton Beach, FL 0 1,546,700 7,883,775 0 379,949
Heron Run Plantation, FL 0 917,800 8,854,001 0 837,523
Hickory Creek Richmond, VA 0 1,323,000 18,873,059 0 99,506
Hickory Ridge Greenville, SC 0 285,800 2,571,956 2,400 78,303
Hidden Lakes Haltom City, TX 0 1,872,000 20,468,035 0 3,330
Hidden Oaks Cary, NC 0 1,176,200 10,593,460 2,400 411,961
Hidden Palms Tampa, FL (E) 2,048,000 6,365,313 1,600 226,720
Hidden Valley Club Ann Arbor, MI 0 915,000 7,583,653 0 933,661
Highland Creste Seattle, WA 0 935,200 8,416,381 0 264,418
Highland Grove Stone Mt., GA 0 1,665,700 14,996,293 2,400 136,780
Highland Point Denver, CO 0 1,631,900 14,686,971 0 123,779
Highline Oaks Denver, CO 7,100,000 1,055,000 9,651,649 2,400 155,509
Hollows Columbia, SC 0 450,000 8,995,706 0 13,546
Hollyview Silver Springs, MD 0 189,000 1,484,475 2,400 47,105
Horizon Place Tampa, FL 12,540,460 2,128,000 12,281,750 0 33,539
Hunt Club Charlotte, NC 0 1,090,000 18,358,632 0 14,319
Hunter's Glen Chesterfield, MO 0 913,500 8,221,026 1,700 472,573
Hunter's Green Fort Worth, TX (F) 524,200 3,404,622 100 847,599
Hunters Ridge/South Pointe St. Louis, MO 18,765,250 1,950,000 17,852,118 5,600 497,893
Huntington Hollow Tulsa, OK 0 668,600 6,017,211 0 102,656
Huntington Park Everett, WA 0 1,594,500 14,350,001 3,000 612,550
Idlewood Indianapolis, IN (E) 2,560,000 11,456,641 1,800 371,211
Indian Bend Phoenix, AZ 0 1,072,500 9,652,385 3,200 707,524
Indian Tree Arvada, CO 0 881,125 4,868,332 100 512,219
Indigo Plantation Daytona Beach, FL 0 1,520,000 14,890,270 0 11,019
Indigo Springs Kent, WA 7,927,695 1,270,000 11,438,562 500 530,895
Ingleside, The Phoenix, AZ 0 1,203,600 10,685,582 0 19,150
Ironwood at the Ranch Wesminster, CO 5,896,001 1,493,300 13,439,783 0 151,417
Isle at Arrowhead Ranch Glendale, AZ 0 1,650,237 19,774,074 0 (148,013)
Ivy Place (L) Atlanta, GA 0 793,200 7,139,200 9,750 314,496
James Street Crossing Kent, WA 16,395,379 2,078,600 18,707,436 2,654 155,487
Jefferson at Walnut Creek Austin, TX (E) 2,736,000 14,581,785 1,600 139,508
Junipers at Yarmouth Yarmouth, ME 0 1,350,000 7,807,113 5,700 305,644
Kempton Downs Gresham, OR 0 1,182,200 10,639,993 35,149 1,038,147
Keystone Austin, TX 2,850,747 498,000 4,482,306 500 608,330
Kimmerly Glen Charlotte, NC 0 1,040,000 12,701,846 0 6,747
Kingsport Alexandria, VA 0 1,262,250 11,454,606 0 632,015
Kingswood Manor San Antonio, TX 0 293,900 2,061,996 100 1,552,690
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of Life Used to
Period 12/31/98 Compute
----------------------------- Depreciation in
Building & Accumulated Date of Latest Income
Land Fixtures(A) Total (B) Depreciation Construction Statement(C)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Glenlake 5,041,700 17,112,748 22,154,448 631,864 1988 30 Years
Glenridge 884,788 5,143,947 6,028,735 1,119,899 1985 30 Years
Governor's Place 347,355 3,425,950 3,773,305 2,359,752 1972 30 Years
Governor's Pointe 3,746,600 24,917,190 28,663,790 1,070,498 1982-1986 30 Years
Grandview I & II 2,333,300 15,706,346 18,039,646 70,601 1980 30 Years
Greengate 132,979 2,766,098 2,899,077 1,577,623 1971 30 Years
Greenhaven 7,507,000 15,220,469 22,727,469 229,042 1983 30 Years
Greenhouse - Frey Road 2,467,200 23,440,258 25,907,458 3,843,772 1985 30 Years
Greenhouse - Holcomb Bridge 2,143,300 20,499,992 22,643,292 3,420,109 1985 30 Years
Greenhouse - Roswell 1,220,000 11,759,427 12,979,427 1,969,470 1985 30 Years
Greenwich Woods 3,101,000 31,103,000 34,204,000 4,748,175 1967 30 Years
Greenwood Village 2,118,781 17,589,387 19,708,168 654,182 1984 30 Years
Grey Eagle 727,600 6,621,566 7,349,166 305,082 1991 30 Years
Greystone 2,252,000 5,248,569 7,500,569 111,588 1960 30 Years
Gwinnett Crossing 2,632,000 32,706,399 35,338,399 277,465 1989/90 30 Years
Habitat 600,000 6,702,030 7,302,030 4,241,101 1974 30 Years
Hall Place 3,150,800 5,116,623 8,267,423 10,663 1998 30 Years
Hammock's Place 319,180 13,053,176 13,372,356 2,524,109 1986 30 Years
Hampton Green 1,561,830 5,108,215 6,670,045 1,268,962 1979 30 Years
Hamptons 1,119,200 10,251,760 11,370,960 613,771 1991 30 Years
Harbor Pointe 2,979,800 22,586,220 25,566,020 638,054 1970/1990 30 Years
Harborview 6,402,500 12,799,674 19,202,174 863,489 1985 30 Years
Harbour Landing 765,000 7,781,628 8,546,628 1,536,466 1985 30 Years
Harrison Park 1,265,094 16,411,282 17,676,376 622,119 1985 30 Years
Harvest Grove 752,000 19,096,611 19,848,611 163,652 1986 30 Years
Hathaway 2,512,500 23,248,674 25,761,174 2,813,859 1987 30 Years
Haywood Pointe 480,000 9,320,151 9,800,151 81,040 1985 30 Years
Hearthstone 1,035,900 3,997,810 5,033,710 867,029 1982 30 Years
Heritage, The 1,211,205 13,171,657 14,382,862 484,873 1995 30 Years
Heron Cove 823,000 8,597,774 9,420,774 1,369,939 1987 30 Years
Heron Landing (K) 711,800 6,811,103 7,522,903 775,811 1988 30 Years
Heron Pointe 1,546,700 8,263,724 9,810,424 461,259 1989 30 Years
Heron Run 917,800 9,691,524 10,609,324 1,512,817 1987 30 Years
Hickory Creek 1,323,000 18,972,565 20,295,565 158,665 1984 30 Years
Hickory Ridge 288,200 2,650,259 2,938,459 127,539 1968 30 Years
Hidden Lakes 1,872,000 20,471,364 22,343,364 171,872 1996 30 Years
Hidden Oaks 1,178,600 11,005,420 12,184,020 495,384 1988 30 Years
Hidden Palms 2,049,600 6,592,033 8,641,633 308,103 1986 30 Years
Hidden Valley Club 915,000 8,517,314 9,432,314 4,858,571 1973 30 Years
Highland Creste 935,200 8,680,799 9,615,999 557,192 1989 30 Years
Highland Grove 1,668,100 15,133,073 16,801,173 678,853 1988 30 Years
Highland Point 1,631,900 14,810,751 16,442,651 873,920 1984 30 Years
Highline Oaks 1,057,400 9,807,158 10,864,558 555,862 1986 30 Years
Hollows 450,000 9,009,252 9,459,252 78,579 1987 30 Years
Hollyview 191,400 1,531,580 1,722,980 62,582 1965 30 Years
Horizon Place 2,128,000 12,315,289 14,443,289 107,541 1985 30 Years
Hunt Club 1,090,000 18,372,951 19,462,951 154,998 1990 30 Years
Hunter's Glen 915,200 8,693,599 9,608,799 767,597 1985 30 Years
Hunter's Green 524,300 4,252,221 4,776,521 968,355 1981 30 Years
Hunters Ridge/South Pointe 1,955,600 18,350,011 20,305,611 1,038,928 1986-1987 30 Years
Huntington Hollow 668,600 6,119,867 6,788,467 405,769 1981 30 Years
Huntington Park 1,597,500 14,962,551 16,560,051 2,655,577 1991 30 Years
Idlewood 2,561,800 11,827,851 14,389,651 525,765 1991 30 Years
Indian Bend 1,075,700 10,359,909 11,435,609 1,826,515 1973 30 Years
Indian Tree 881,225 5,380,551 6,261,776 1,297,882 1983 30 Years
Indigo Plantation 1,520,000 14,901,289 16,421,289 128,007 1989 30 Years
Indigo Springs 1,270,500 11,969,457 13,239,957 813,955 1991 30 Years
Ingleside, The 1,203,600 10,704,732 11,908,332 385,914 1995 30 Years
Ironwood at the Ranch 1,493,300 13,591,199 15,084,499 797,447 1986 30 Years
Isle at Arrowhead Ranch 1,650,237 19,626,061 21,276,298 717,949 1996 30 Years
Ivy Place (L) 802,950 7,453,696 8,256,646 729,974 1978 30 Years
James Street Crossing 2,081,254 18,862,923 20,944,176 719,489 1989 30 Years
Jefferson at Walnut Creek 2,737,600 14,721,293 17,458,893 645,560 1994 30 Years
Junipers at Yarmouth 1,355,700 8,112,756 9,468,456 533,173 1970 30 Years
Kempton Downs 1,217,349 11,678,140 12,895,489 1,649,856 1990 30 Years
Keystone 498,500 5,090,636 5,589,136 799,550 1981 30 Years
Kimmerly Glen 1,040,000 12,708,593 13,748,593 109,244 1986 30 Years
Kingsport 1,262,250 12,086,621 13,348,871 2,035,858 1986 30 Years
Kingswood Manor 294,000 3,614,686 3,908,686 536,838 1983 30 Years
</TABLE>
S-4
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Operating Partnership (Improvements, net) (I)
- ---------------------------------------------------- ------------------------- -----------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kirby Place Houston, TX (E) 3,620,000 25,898,825 1,600 76,259
La Costa Brava (JAX) Jacksonville, FL (J) 0 835,757 8,102,211 (1) 3,092,861
La Costa Brava (ORL) Orlando, FL 0 206,626 1,380,505 0 5,510,964
La Mariposa Mesa, AZ (P) 2,047,539 12,453,801 0 227,622
La Mirage San Diego, CA 0 6,005,200 122,982,486 0 653,113
La Reserve Oro Valley, AZ (P) 3,264,562 4,939,545 0 115,178
La Tour Fontaine Houston, TX 9,727,749 2,916,000 15,922,304 0 9,382
La Valencia Mesa, AZ 0 3,553,350 20,544,429 0 241,927
Ladera Mesa, AZ 0 2,978,879 20,643,003 0 28,461
Lake in the Woods (MI) Ypsilanti, MI 0 1,859,625 16,314,064 0 6,631,660
Lake Point Charlotte, NC 0 1,058,975 13,904,172 0 19,183
Lakeridge at Moors Miami, FL 0 2,100,000 9,134,273 0 7,648
Lakes at Vinings Atlanta, GA 22,420,082 6,496,000 21,821,861 2,000 50,216
Lakeshore at Preston Plano, TX 13,083,226 3,322,000 15,177,406 3,800 81,141
Lakeville Resort Petaluma, CA 20,523,132 2,734,100 24,773,523 2,400 320,134
Lakewood Greens Dallas, TX 8,385,077 2,016,000 8,997,910 3,600 67,778
Lakewood Oaks Dallas, TX 0 1,630,200 14,671,813 1,400 749,835
Landera San Antonio, TX 0 766,300 6,896,811 0 173,701
Landings (TN) Memphis, TN 0 1,314,000 14,221,751 0 7,774
Lands End Pacifica, CA 0 1,824,500 16,423,435 2,000 1,134,938
Larkspur Woods Sacramento, CA (E) 5,800,000 14,512,065 2,900 272,127
Laurel Ridge Chapel Hill, NC 0 160,000 3,434,635 22,001 1,338,976
Legends Tucson, AZ 0 2,729,788 17,905,915 0 103,532
Lexington Glen Atlanta, GA 0 5,760,000 41,097,486 0 7,067
Lexington Park Orlando, FL 0 2,016,000 12,464,122 0 17,940
Lexington Village Alpharetta, GA 18,672,575 3,520,000 21,030,169 1,900 55,275
Lincoln Green I San Antonio, TX 0 947,366 2,133,002 0 3,753,956
Lincoln Green I & II (CA) Sunnyvale, CA 12,900,000 9,048,000 18,419,243 9,300 109,486
Lincoln Green II San Antonio, TX 0 1,052,340 5,828,311 0 90,343
Lincoln Green III San Antonio, TX 0 536,010 2,069,688 0 32,629
Lincoln Heights Quincy, MA 21,700,000 5,925,000 33,575,000 3,400 117,191
Lincoln Oaks Tulsa, OK 0 1,310,500 11,794,290 0 97,102
Lincoln Village I & II (CA) Larkspur, CA 0 17,100,000 31,363,631 7,300 166,166
Little Cottonwoods Tempe, AZ (P) 3,050,133 27,039,173 0 42,916
Lodge (OK), The Tulsa, OK 0 313,571 2,677,951 (200) 1,145,535
Lodge (TX), The San Antonio, TX 0 1,363,636 5,496,784 0 3,775,750
Lofton Place Tampa, FL 0 2,240,000 16,890,077 0 23,916
Longwood Decatur, GA 0 1,452,000 13,067,523 2,048 493,235
Madison at Bridford Lake Greensboro, NC 0 2,265,314 26,415,436 0 0
Madison at Cedar Springs Dallas, TX 0 2,470,000 33,331,339 0 4,649
Madison at Chase Oaks Plano, TX 0 3,055,000 29,002,581 0 10,638
Madison at Coral Square Coral Springs, FL 0 4,800,000 26,087,012 0 26,455
Madison at River Sound Lawrenceville, GA 0 3,666,999 48,136,692 0 8,495
Madison at Round Grove Austin, TX 0 2,626,000 25,843,457 0 12,279
Madison at Stone Creek Lewisville, TX 0 2,535,000 22,665,256 0 16,533
Madison at the Arboretum Austin, TX 0 1,046,500 9,669,201 0 19,939
Madison on Melrose Richardson, TX 0 1,300,000 15,115,309 0 3,846
Madison on the Parkway Dallas, TX 0 2,444,000 22,514,520 0 5,477
Mallard Cove Greenville, SC 0 803,700 7,233,160 9,650 638,498
Mallgate Louisville, KY 0 0 6,162,515 0 4,784,159
Marbrisa Tampa, FL 0 811,500 7,303,334 2,000 836,637
Mariner Club (FL) Pembroke Pines, FL 9,586,405 1,824,000 20,912,452 500 16,773
Mariners Wharf Orange Park, FL 0 1,858,800 16,733,097 2,400 107,211
Marks Denver, CO 20,830,000 4,928,500 44,356,994 0 741,053
Marquessa Corona Hills, CA 0 6,888,500 21,823,966 0 298,447
Martha Lake Seattle, WA 0 823,200 7,409,199 (2,000) 62,852
Martins Landing Roswell, GA 12,902,947 4,800,000 12,913,715 2,000 93,488
Marymont (MD) Laurel, MD 0 1,901,800 17,116,593 2,000 595,136
Maxwell House Augusta, GA 0 216,000 1,846,772 0 795,390
McAlpine Ridge Charlotte, NC 0 1,283,400 11,550,225 600 748,260
McDowell Place Naperville, IL 16,000,000 2,578,900 23,210,030 1,500 660,187
Meadow Creek Tigard, OR 8,424,069 1,298,100 11,682,684 1,000 1,026,991
Meadows (AZ), The Mesa, AZ 0 650,000 15,438,616 0 264,739
Meadows in the Park Birmingham, AL 0 1,000,000 8,525,000 900 135,704
Meadows on the Lake Birmingham, AL 0 1,000,000 8,521,175 900 23,089
Merrill Creek Tacoma, WA 0 814,200 7,327,478 0 42,678
Merrimac Woods Costa Mesa, CA 0 673,300 6,059,722 2,400 364,456
Merritt Lake Duluth, GA 0 3,400,000 25,089,339 0 0
Metropolitan Park Seattle, WA 0 493,200 4,438,977 0 72,181
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of Life Used to
Description Period 12/31/98 Compute
- ------------------------------------------------- ---------------------- Depreciation in
Building & Accumulated Date of Latest Income
Apartment Name Location Land Fixtures(A) Total(B) Depreciation Construction Statement (C)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Kirby Place Houston, TX 3,621,600 25,975,084 29,596,684 1,080,862 1994 30 Years
La Costa Brava (JAX) Jacksonville, FL (J) 835,756 11,195,072 12,030,829 6,530,247 1970/1973 30 Years
La Costa Brava (ORL) Orlando, FL 206,626 6,891,469 7,098,095 3,841,225 1967 30 Years
La Mariposa Mesa, AZ 2,047,539 12,681,422 14,728,961 477,406 1986 30 Years
La Mirage San Diego, CA 6,005,200 123,635,599 129,640,799 6,274,402 1988/1992 30 Years
La Reserve Oro Valley, AZ 3,264,562 5,054,723 8,319,285 217,759 1988 30 Years
La Tour Fontaine Houston, TX 2,916,000 15,931,686 18,847,686 130,277 1994 30 Years
La Valencia Mesa, AZ 3,553,350 20,786,356 24,339,706 778,595 1998 30 Years
Ladera Mesa, AZ 2,978,879 20,671,464 23,650,343 748,331 1995 30 Years
Lake in the Woods (MI) Ypsilanti, MI 1,859,625 22,945,724 24,805,349 12,192,377 1969 30 Years
Lake Point Charlotte, NC 1,058,975 13,923,355 14,982,330 120,073 1984 30 Years
Lakeridge at Moors Miami, FL 2,100,000 9,141,921 11,241,921 77,914 1991 30 Years
Lakes at Vinings Atlanta, GA 6,498,000 21,872,077 28,370,077 384,185 1972/1975 30 Years
Lakeshore at Preston Plano, TX 3,325,800 15,258,547 18,584,347 268,684 1992 30 Years
Lakeville Resort Petaluma, CA 2,736,500 25,093,657 27,830,157 2,041,036 1984 30 Years
Lakewood Greens Dallas, TX 2,019,600 9,065,689 11,085,289 165,577 1986 30 Years
Lakewood Oaks Dallas, TX 1,631,600 15,421,648 17,053,248 2,547,680 1987 30 Years
Landera San Antonio, TX 766,300 7,070,513 7,836,813 433,120 1983 30 Years
Landings (TN) Memphis, TN 1,314,000 14,229,525 15,543,525 122,329 1986 30 Years
Lands End Pacifica, CA 1,826,500 17,558,373 19,384,873 1,660,591 1974 30 Years
Larkspur Woods Sacramento, CA 5,802,900 14,784,191 20,587,091 634,415 1989/1993 30 Years
Laurel Ridge Chapel Hill, NC 182,001 4,773,611 4,955,612 2,430,260 1975 30 Years
Legends Tucson, AZ 2,729,788 18,009,446 20,739,234 673,666 1995 30 Years
Lexington Glen Atlanta, GA 5,760,000 41,104,553 46,864,553 338,924 1990 30 Years
Lexington Park Orlando, FL 2,016,000 12,482,062 14,498,062 106,977 1988 30 Years
Lexington Village Alpharetta, GA 3,521,900 21,085,443 24,607,343 352,265 1995 30 Years
Lincoln Green I San Antonio, TX 947,366 5,886,958 6,834,324 2,897,048 1984/1986 30 Years
Lincoln Green I & II (CA) Sunnyvale, CA 9,057,300 18,528,729 27,586,029 322,275 1979 30 Years
Lincoln Green II San Antonio, TX 1,052,340 5,918,654 6,970,994 2,413,452 1984/1986 30 Years
Lincoln Green III San Antonio, TX 536,010 2,102,317 2,638,327 884,364 1984/1986 30 Years
Lincoln Heights Quincy, MA 5,928,400 33,692,191 39,620,591 1,211,608 1991 30 Years
Lincoln Oaks Tulsa, OK 1,310,500 11,891,392 13,201,892 715,734 1991 30 Years
Lincoln Village I & II (CA) Larkspur, CA 17,107,300 31,529,797 48,637,097 552,174 1980 30 Years
Little Cottonwoods Tempe, AZ 3,050,133 27,082,089 30,132,222 990,964 1984 30 Years
Lodge (OK), The Tulsa, OK 313,371 3,823,486 4,136,857 2,167,383 1979 30 Years
Lodge (TX), The San Antonio, TX 1,363,636 9,272,534 10,636,170 3,428,267 1979(#) 30 Years
Lofton Place Tampa, FL 2,240,000 16,913,993 19,153,993 142,634 1988 30 Years
Longwood Decatur, GA 1,454,048 13,560,758 15,014,806 2,358,769 1992 30 Years
Madison at Bridford Lake Greensboro, NC 2,265,314 26,415,436 28,680,750 212,365 (S) 30 Years
Madison at Cedar Springs Dallas, TX 2,470,000 33,335,988 35,805,988 274,712 1995 30 Years
Madison at Chase Oaks Plano, TX 3,055,000 29,013,219 32,068,219 244,441 1995 30 Years
Madison at Coral Square Coral Springs, FL 4,800,000 26,113,467 30,913,467 218,152 1989 30 Years
Madison at River Sound Lawrenceville, GA 3,666,999 48,145,186 51,812,186 398,420 1996 30 Years
Madison at Round Grove Austin, TX 2,626,000 25,855,736 28,481,736 217,324 1995 30 Years
Madison at Stone Creek Lewisville, TX 2,535,000 22,681,789 25,216,789 191,826 1995 30 Years
Madison at the Arboretum Austin, TX 1,046,500 9,689,140 10,735,640 81,638 1995 30 Years
Madison on Melrose Richardson, TX 1,300,000 15,119,155 16,419,155 125,697 1995 30 Years
Madison on the Parkway Dallas, TX 2,444,000 22,519,997 24,963,997 190,086 1995 30 Years
Mallard Cove Greenville, SC 813,350 7,871,658 8,685,008 765,864 1983 30 Years
Mallgate Louisville, KY 0 10,946,674 10,946,674 6,606,790 1969 30 Years
Marbrisa Tampa, FL 813,500 8,139,971 8,953,471 694,912 1984 30 Years
Mariner Club (FL) Pembroke Pines, FL 1,824,500 20,929,225 22,753,725 174,964 1988 30 Years
Mariners Wharf Orange Park, FL 1,861,200 16,840,309 18,701,509 750,312 1989 30 Years
Marks Denver, CO 4,928,500 45,098,047 50,026,547 2,569,934 1987 30 Years
Marquessa Corona Hills, CA 6,888,500 22,122,413 29,010,913 806,672 1992 30 Years
Martha Lake Seattle, WA 821,200 7,472,051 8,293,251 440,024 1991 30 Years
Martins Landing Roswell, GA 4,802,000 13,007,203 17,809,203 229,367 1972 30 Years
Marymont (MD) Laurel, MD 1,903,800 17,711,729 19,615,529 2,751,765 1987-88 30 Years
Maxwell House Augusta, GA 216,000 2,642,162 2,858,162 1,248,345 1951 30 Years
McAlpine Ridge Charlotte, NC 1,284,000 12,298,485 13,582,485 1,925,716 1989-90 30 Years
McDowell Place Naperville, IL 2,580,400 23,870,217 26,450,617 1,822,982 1988 30 Years
Meadow Creek Tigard, OR 1,299,100 12,709,675 14,008,775 2,091,069 1985 30 Years
Meadows (AZ), The Mesa, AZ 650,000 15,703,355 16,353,355 599,678 1984 30 Years
Meadows in the Park Birmingham, AL 1,000,900 8,660,704 9,661,604 338,365 1986 30 Years
Meadows on the Lake Birmingham, AL 1,000,900 8,544,264 9,545,164 331,222 1987 30 Years
Merrill Creek Tacoma, WA 814,200 7,370,156 8,184,356 429,585 1994 30 Years
Merrimac Woods Costa Mesa, CA 675,700 6,424,177 7,099,877 550,388 1970 30 Years
Merritt Lake Duluth, GA 3,400,000 25,089,339 28,489,339 0 (S) 30 Years
Metropolitan Park Seattle, WA 493,200 4,511,158 5,004,358 263,175 1991 30 Years
</TABLE>
S-5
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Initial Cost to
Description Operating Partnership
- ------------------------------------------------- -----------------------------------------------------
Building &
Apartment Name Location Encumbrances Land Fixtures
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mill Village Randolph, MA 0 6,200,000 13,249,725
Mirador Phoenix, AZ 0 2,597,518 23,417,575
Mission Bay Orlando, FL 0 2,432,000 21,864,876
Mission Palms Tucson, AZ 0 2,023,400 18,210,383
Misty Woods Cary, NC 0 720,790 18,446,473
Montierra Scottsdale, AZ 0 3,455,000 16,059,325
Morningside Scottsdale, AZ (P) 670,470 12,616,599
Mountain Park Ranch Phoenix, AZ (Q) 1,662,332 18,261,617
Mountain Run Albuquerque, NM 0 2,023,400 20,735,983
Mountain Terrace Stevenson Ranch, CA 0 3,977,200 35,794,729
Newport Heights Seattle, WA 0 390,700 3,516,229
North Creek (Everett) Everett, WA 8,242,891 3,960,000 12,085,772
North Creek Heights Seattle, WA 0 753,800 6,784,170
North Hill Atlanta, GA 16,252,184 2,520,000 18,501,949
Northampton 1 Largo, MD 13,042,769 1,843,200 17,318,363
Northampton 2 Largo, MD 0 1,494,100 14,279,723
Northgate Village San Antonio, TX 0 660,000 5,753,724
Northlake (FL) Jacksonville, FL 0 1,166,000 10,494,125
Northridge Pleasant Hill, CA 0 5,525,000 14,669,757
Northwoods Village Cary, NC (E) 1,368,000 11,443,857
Oak Mill 2 Germantown, MD 9,507,486 854,000 8,187,169
Oak Park North Agoura Hills, CA (O) 1,706,500 15,358,942
Oak Park South Agoura Hills, CA (O) 1,683,400 15,150,835
Oaks (NC) Charlotte, NC 0 2,196,744 24,031,587
Oaks of Lakebridge Ormond Beach, FL 0 413,700 3,742,503
Ocean Walk Key West, FL 21,099,078 2,834,900 25,517,673
Olde Redmond Place Redmond, WA 9,400,000 4,800,000 14,073,460
Olentangy Commons (OH) Columbus, OH 0 3,032,336 20,862,191
One Eton Square Tulsa, OK 0 1,570,100 14,130,762
Orange Grove Village Tucson, AZ (P) 1,813,154 14,899,780
Orchard of Landen Maineville, OH (E) 2,496,000 17,720,225
Orchard Ridge Seattle, WA 0 482,600 4,343,826
Overlook San Antonio, TX 0 1,100,000 9,900,000
Overlook Manor Frederick, MD 0 1,296,000 3,896,628
Overlook Manor II Frederick, MD 5,877,338 2,184,000 6,271,649
Overlook Manor III Frederick, MD 0 1,024,000 3,008,998
Paces Station Atlanta, GA 0 4,801,500 32,630,170
Palms at South Shore League City, TX 0 1,200,000 16,601,152
Palms, The Phoenix, AZ (P) 3,285,226 11,269,891
Panther Ridge Seattle, WA 0 1,055,800 9,501,841
Paradise Pointe Dania, FL 0 1,493,800 16,714,317
Parc Royale Houston, TX 8,850,805 2,223,000 11,921,433
Park Knoll Atlanta, GA 0 2,904,500 26,140,219
Park Meadow Gilbert, AZ (P) 835,217 15,124,555
Park Place (TX) Houston, TX 10,088,744 1,603,000 11,961,084
Park Place I & II Plymouth, MN 17,678,878 2,428,200 21,853,006
Park West (CA) Los Angeles, CA 0 3,033,300 27,299,323
Park West (TX) Austin, TX 0 648,605 4,541,683
Park West End (VA) Richmond, VA 7,168,169 1,560,000 11,849,159
Parkcrest Southfield, MI 7,230,684 1,260,000 10,366,615
Parkridge Place Las Colinas, TX 0 6,430,800 17,073,584
Parkside Union City, CA 0 6,240,000 11,809,198
Parkview Terrace Redlands, CA 22,650,000 4,969,200 35,729,978
Parkwood East Fort Collins, CO 0 1,644,000 14,796,301
Patchen Oaks Lexington, KY 0 1,344,000 8,121,317
Pine Harbour Orlando, FL 0 1,661,000 14,948,625
Pine Meadow Greensboro, NC 4,777,745 719,300 6,474,036
Pines at Cloverlane Pittsfield Township, MI 0 1,906,600 17,159,269
Pines of Springdale West Palm Beach, FL 0 471,200 4,240,800
Plantation (TX) Houston, TX 0 2,320,000 7,690,000
Plantation Ridge Marietta, GA 0 4,086,000 19,178,927
Plantations at Killearn Tallahassee, FL 5,061,305 828,000 7,646,210
Pleasant Ridge Arlington, TX 1,656,463 441,000 1,959,866
Plum Tree Corner, WI (R) 1,992,000 20,259,729
Plum Tree Park Seattle, WA 0 1,133,400 10,200,420
Point (NC) Charlotte, NC 0 1,700,000 25,876,312
Pointe at South Mountain Phoenix, AZ 0 2,228,800 20,058,955
Pointe East Redmond, WA 0 601,800 5,416,489
Polos Fort Myers, FL 0 1,640,000 18,668,025
</TABLE>
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to Gross Amount Carried
Acquisition at Close of
Description (Improvements, net) (1) Period 12/31/98
- ---------------------------------------- ---------------------------------- --------------------------------
Building & Building &
Apartment Name Location Land Fixtures Land Fixtures (A)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mill Village Randolph, MA (14,700) 63,493 6,185,300 13,313,218
Mirador Phoenix, AZ 0 51,011 2,597,518 23,468,586
Mission Bay Orlando, FL 0 11,695 2,432,000 21,876,571
Mission Palms Tucson, AZ 0 308,852 2,023,400 18,519,235
Misty Woods Cary, NC 0 32,918 720,790 18,479,391
Montierra Scottsdale, AZ 0 0 3,455,000 16,059,325
Morningside Scottsdale, AZ 0 71,928 670,470 12,688,527
Mountain Park Ranch Phoenix, AZ 0 216,502 1,662,332 18,478,120
Mountain Run Albuquerque, NM 280,600 451,013 2,304,000 21,186,996
Mountain Terrace Stevenson Ranch, CA 1,800 353,995 3,979,000 36,148,724
Newport Heights Seattle, WA 500 268,372 391,200 3,784,601
North Creek (Everett) Everett, WA 7,500 383,213 3,967,500 12,468,984
North Creek Heights Seattle, WA 0 66,194 753,800 6,850,364
North Hill Atlanta, GA 5,300 3,134,657 2,525,300 21,636,606
Northampton 1 Largo, MD 0 2,278,241 1,843,200 19,596,604
Northampton 2 Largo, MD 19,400 633,133 1,513,500 14,912,856
Northgate Village San Antonio, TX 100 706,216 660,100 6,459,940
Northlake (FL) Jacksonville, FL 2,400 93,707 1,168,400 10,587,833
Northridge Pleasant Hill, CA 2,800 131,052 5,527,800 14,800,809
Northwoods Village Cary, NC 1,700 435,629 1,369,700 11,879,486
Oak Mill 2 Germantown, MD 133 1,043,938 854,133 9,231,107
Oak Park North Agoura Hills, CA 400 125,182 1,706,900 15,484,124
Oak Park South Agoura Hills, CA 400 187,533 1,683,800 15,338,368
Oaks (NC) Charlotte, NC 0 7,017 2,196,744 24,038,604
Oaks of Lakebridge Ormond Beach, FL 2,100 565,993 415,800 4,308,496
Ocean Walk Key West, FL 3,849 163,592 2,838,749 25,681,265
Olde Redmond Place Redmond, WA 7,100 104,045 4,807,100 14,177,504
Olentangy Commons (OH) Columbus, OH (0) 8,890,595 3,032,336 29,752,786
One Eton Square Tulsa, OK 0 352,845 1,570,100 14,483,607
Orange Grove Village Tucson, AZ 0 109,073 1,813,154 15,008,854
Orchard of Landen Maineville, OH 2,400 172,678 2,498,400 17,892,902
Orchard Ridge Seattle, WA 3,000 251,695 485,600 4,595,521
Overlook San Antonio, TX 200 241,128 1,100,200 10,141,128
Overlook Manor Frederick, MD 3,100 40,128 1,299,100 3,936,756
Overlook Manor II Frederick, MD 2,300 33,224 2,186,300 6,304,873
Overlook Manor III Frederick, MD 2,300 27,952 1,026,300 3,036,950
Paces Station Atlanta, GA 0 538,550 4,801,500 33,168,720
Palms at South Shore League City, TX 0 7,041 1,200,000 16,608,194
Palms, The Phoenix, AZ 0 170,132 3,285,226 11,440,023
Panther Ridge Seattle, WA 0 327,290 1,055,800 9,829,131
Paradise Pointe Dania, FL 419,614 1,658,986 1,913,414 18,373,302
Parc Royale Houston, TX 0 7,374 2,223,000 11,928,807
Park Knoll Atlanta, GA 4,300 1,612,513 2,908,800 27,752,732
Park Meadow Gilbert, AZ 0 75,202 835,217 15,199,757
Park Place (TX) Houston, TX 0 48,402 1,603,000 12,009,486
Park Place I & II Plymouth, MN 7,800 937,147 2,436,000 22,790,153
Park West (CA) Los Angeles, CA 200 775,858 3,033,500 28,075,181
Park West (TX) Austin, TX 100 610,176 648,705 5,151,859
Park West End (VA) Richmond, VA 2,500 41,285 1,562,500 11,890,445
Parkcrest Southfield, MI 5,000 72,767 1,265,000 10,439,382
Parkridge Place Las Colinas, TX 2,100 278,799 6,432,900 17,352,383
Parkside Union City, CA 6,700 342,653 6,246,700 12,151,851
Parkview Terrace Redlands, CA 0 143,539 4,969,200 35,873,518
Parkwood East Fort Collins, CO 0 144,849 1,644,000 14,941,150
Patchen Oaks Lexington, KY 1,300 74,332 1,345,300 8,195,650
Pine Harbour Orlando, FL 3,300 968,258 1,664,300 15,916,883
Pine Meadow Greensboro, NC 1,350 593,336 720,650 7,067,372
Pines at Cloverlane Pittsfield Township, MI 1,200 3,252,603 1,907,800 20,411,872
Pines of Springdale West Palm Beach, FL 2,667 518,699 473,867 4,759,499
Plantation (TX) Houston, TX 2,900 309,026 2,322,900 7,999,026
Plantation Ridge Marietta, GA 2,900 383,733 4,088,900 19,562,659
Plantations at Killearn Tallahassee, FL 0 11,174 828,000 7,657,385
Pleasant Ridge Arlington, TX 4,100 45,544 445,100 2,005,410
Plum Tree Corner, WI 4,700 209,236 1,996,700 20,468,965
Plum Tree Park Seattle, WA 0 99,787 1,133,400 10,300,207
Point (NC) Charlotte, NC 0 9,798 1,700,000 25,886,110
Pointe at South Mountain Phoenix, AZ 0 421,967 2,228,800 20,480,922
Pointe East Redmond, WA 800 190,178 602,600 5,606,667
Polos Fort Myers, FL 0 46,063 1,640,000 18,714,088
</TABLE>
<TABLE>
<CAPTION>
Life Used to
Compute
Description Depreciation in
- ------------------------------------------- Accumulated Date of Latest Income
Apartment Name Location Total (B) Depreciation Construction Statement (C)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Mill Village Randolph, MA 19,498,518 518,244 1971/1977 30 Years
Mirador Phoenix, AZ 26,066,104 856,200 1995 30 Years
Mission Bay Orlando, FL 24,308,571 182,297 1991 30 Years
Mission Palms Tucson, AZ 20,542,635 1,092,658 1980 30 Years
Misty Woods Cary, NC 19,200,181 158,021 1984 30 Years
Montierra Scottsdale, AZ 19,514,325 0 (S) 30 Years
Morningside Scottsdale, AZ 13,358,997 464,025 1989 30 Years
Mountain Park Ranch Phoenix, AZ 20,140,452 680,537 1994 30 Years
Mountain Run Albuquerque, NM 23,490,996 1,251,274 1985 30 Years
Mountain Terrace Stevenson Ranch, CA 40,127,724 2,624,731 1992 30 Years
Newport Heights Seattle, WA 4,175,801 642,415 1985 30 Years
North Creek (Everett) Everett, WA 16,436,484 171,059 1986 30 Years
North Creek Heights Seattle, WA 7,604,164 399,608 1990 30 Years
North Hill Atlanta, GA 24,161,906 1,157,351 1984 30 Years
Northampton 1 Largo, MD 21,439,804 3,314,135 1977 30 Years
Northampton 2 Largo, MD 16,426,356 2,140,454 1988 30 Years
Northgate Village San Antonio, TX 7,120,040 1,461,952 1984 30 Years
Northlake (FL) Jacksonville, FL 11,756,233 484,058 1989 30 Years
Northridge Pleasant Hill, CA 20,328,609 335,709 1974 30 Years
Northwoods Village Cary, NC 13,249,186 519,451 1986 30 Years
Oak Mill 2 Germantown, MD 10,085,240 1,243,406 1985 30 Years
Oak Park North Agoura Hills, CA 17,191,024 1,714,877 1990 30 Years
Oak Park South Agoura Hills, CA 17,022,168 1,838,381 1989 30 Years
Oaks (NC) Charlotte, NC 26,235,348 199,692 1996 30 Years
Oaks of Lakebridge Ormond Beach, FL 4,724,296 896,364 1984 30 Years
Ocean Walk Key West, FL 28,520,013 959,073 1990 30 Years
Olde Redmond Place Redmond, WA 18,984,604 251,198 1986 30 Years
Olentangy Commons (OH) Columbus, OH 32,785,122 17,445,753 1972 30 Years
One Eton Square Tulsa, OK 16,053,707 917,323 1985 30 Years
Orange Grove Village Tucson, AZ 16,822,008 578,822 1986/1995 30 Years
Orchard of Landen Maineville, OH 20,391,302 776,517 1985/1988 30 Years
Orchard Ridge Seattle, WA 5,081,121 785,794 1988 30 Years
Overlook San Antonio, TX 11,241,328 654,566 1985 30 Years
Overlook Manor Frederick, MD 5,235,856 68,456 1980/1985 30 Years
Overlook Manor II Frederick, MD 8,491,173 110,701 1980/1985 30 Years
Overlook Manor III Frederick, MD 4,063,250 51,336 1980/1985 30 Years
Paces Station Atlanta, GA 37,970,220 1,649,641 1984-1988/1989 30 Years
Palms at South Shore League City, TX 17,808,194 138,906 1990 30 Years
Palms, The Phoenix, AZ 14,725,249 419,328 1990 30 Years
Panther Ridge Seattle, WA 10,884,931 604,524 1980 30 Years
Paradise Pointe Dania, FL 20,286,717 2,555,797 1987-90 30 Years
Parc Royale Houston, TX 14,151,807 99,492 1994 30 Years
Park Knoll Atlanta, GA 30,661,532 5,150,343 1983 30 Years
Park Meadow Gilbert, AZ 16,034,974 559,438 1986 30 Years
Park Place (TX) Houston, TX 13,612,486 421,993 1996 30 Years
Park Place I & II Plymouth, MN 25,226,153 2,073,725 1986 30 Years
Park West (CA) Los Angeles, CA 31,108,681 3,415,094 1987/90 30 Years
Park West (TX) Austin, TX 5,800,564 1,051,788 1985 30 Years
Park West End (VA) Richmond, VA 13,452,945 431,512 1985 30 Years
Parkcrest Southfield, MI 11,704,382 184,587 1987 30 Years
Parkridge Place Las Colinas, TX 23,785,283 741,369 1985 30 Years
Parkside Union City, CA 18,398,551 214,752 1979 30 Years
Parkview Terrace Redlands, CA 40,842,718 1,319,693 1986 30 Years
Parkwood East Fort Collins, CO 16,585,150 862,762 1986 30 Years
Patchen Oaks Lexington, KY 9,540,950 140,271 1990 30 Years
Pine Harbour Orlando, FL 17,581,183 2,916,928 1991 30 Years
Pine Meadow Greensboro, NC 7,788,022 715,199 1974 30 Years
Pines at Cloverlane Pittsfield Township, MI 22,319,672 2,607,112 1975-79 30 Years
Pines of Springdale West Palm Beach, FL 5,233,366 876,398 1985/87(x) 30 Years
Plantation (TX) Houston, TX 10,321,926 265,099 1969 30 Years
Plantation Ridge Marietta, GA 23,651,559 389,346 1975 30 Years
Plantations at Killearn Tallahassee, FL 8,485,385 67,650 1990 30 Years
Pleasant Ridge Arlington, TX 2,450,510 36,657 1982 30 Years
Plum Tree Corner, WI 22,465,665 552,298 1989 30 Years
Plum Tree Park Seattle, WA 11,433,607 602,359 1991 30 Years
Point (NC) Charlotte, NC 27,586,110 215,100 1996 30 Years
Pointe at South Mountain Phoenix, AZ 22,709,722 1,187,642 1988 30 Years
Pointe East Redmond, WA 6,209,267 849,394 1988 30 Years
Polos Fort Myers, FL 20,354,088 158,462 1991 30 Years
</TABLE>
S-6
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Operating Partnership (Improvements, net) (I)
- ------------------------------------------------ --------------------------------------------------------------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Polos East Orlando, FL 0 1,386,000 19,296,136 0 11,499
Portland Center Combined Portland, OR 22,147,692 6,028,000 43,503,133 4,900 61,261
Portofino Chino Hills, CA 0 3,572,400 14,662,928 0 97,036
Portside Towers Combined Jersey City, NJ 58,253,929 22,440,000 96,678,525 15,700 167,992
Prairie Creek I&II Richardson, TX 0 2,832,000 20,207,544 0 0
Preakness Antioch, TN (E) 1,560,000 7,653,521 1,900 921,368
Preserve at Squaw Peak Phoenix, AZ (P) 517,788 8,535,598 0 119,166
Preston at Willowbend Plano, TX 0 872,500 7,852,675 0 1,489,454
Preston Bend Dallas, TX 8,719,000 1,083,000 9,925,055 2,200 185,044
Preston Lake Atlanta, GA 0 1,430,900 12,877,986 34,993 1,152,176
Princeton Square Jacksonville, FL 0 864,000 12,129,072 0 6,034
Promenade (FL) St. Petersburg, FL 0 2,124,193 25,969,392 0 17,450
Promenade Terrace Corona Hills, CA 15,952,012 2,281,000 20,529,476 1,800 285,946
Promontory Pointe I & II Phoenix, AZ (P) 2,355,509 30,450,580 0 98,159
Prospect Towers Hackensack, NJ 14,774,318 8,425,000 27,891,710 1,600 176,246
Pueblo Villas Albuquerque, NM 0 854,300 7,688,783 1,300 639,184
Quail Cove Salt Lake City, UT 0 2,271,800 20,446,430 0 378,250
Rancho Murietta Tempe, AZ 0 1,766,282 17,585,287 0 102,299
Ranchstone Houston, TX 0 770,000 15,395,149 0 5,445
Ravens Crest Plainsboro, NJ (O) 4,673,000 42,057,149 2,850 1,928,046
Ravinia Greenfield, WI (R) 1,236,000 12,034,764 4,100 170,609
Redlands Lawn and Tennis Redlands, CA 24,050,000 4,822,320 26,373,194 0 229,969
Reflections at the Lakes Las Vegas, NV 0 1,896,000 17,063,715 0 126,145
Regatta San Antonio, TX 0 818,500 7,366,677 0 172,596
Regency Charlotte, NC 0 890,000 12,003,614 0 17,603
Regency Palms Huntington Beach, CA 0 1,856,500 16,708,950 900 535,399
Regency Woods Des Moines, IA 6,351,345 745,100 6,705,430 8,380 189,023
Registry Denver, CO 0 1,303,100 11,727,649 0 151,286
Reserve at Ashley Lake Boynton Beach, FL 24,150,000 3,519,900 23,340,219 500 231,249
Reserve Square Combined Cleveland, OH 0 2,618,352 23,565,022 500 10,401,164
Retreat, The Phoenix, AZ 0 3,475,114 26,544,281 0 0
Richmond Townhomes Houston, TX 9,316,217 940,000 13,881,949 0 43,054
Ridgegate Seattle, WA 0 805,800 7,251,986 0 151,473
Ridgetop Tacoma, WA 0 811,500 7,082,500 0 269,585
Ridgetree I & II Dallas, TX 0 2,094,600 18,851,177 20,600 1,381,212
Ridgeway Commons Memphis, TN 0 568,400 5,115,501 14,840 198,793
Ridgewood Village San Diego, CA 0 5,760,000 14,019,345 1,500 20,847
Rincon Houston, TX 0 4,400,000 16,725,229 1,900 64,450
River Bend Tampa, FL 0 602,945 2,161,915 0 2,286,450
River Hill Grand Prairie, TX 0 2,004,000 19,375,832 0 8,139
River Oak Louisville, KY 0 1,253,900 11,285,573 2,700 238,961
River Park Fort Worth, TX 7,721,103 2,240,000 8,769,069 5,400 92,735
Rivers Edge Waterbury, CT 0 780,000 6,544,410 1,900 23,899
Riverside Park Tulsa, OK (E) 1,440,000 12,374,977 1,400 81,122
Rock Creek Corrboro, NC 0 895,100 8,056,360 600 189,346
Rolido Parque Houston, TX 7,190,666 2,950,000 7,882,070 5,900 232,225
Rosehill Pointe Lenexa, KS 13,100,000 2,073,400 18,660,475 22,600 1,649,297
Royal Oak Eagan, MN 13,148,135 1,598,200 14,383,478 4,704 204,504
Royal Oaks (FL) Jacksonville, FL 0 1,988,000 13,845,479 0 11,341
Sabal Palm Pompano Beach, FL 0 3,536,000 20,167,175 2,600 516,806
Sabal Palm at Boot Ranch Palm Harbor, FL 16,736,610 3,888,000 29,106,931 0 26,613
Sabal Palm at Carrollwood Place Tampa, FL 0 3,888,000 27,051,346 0 11,468
Sabal Pointe (M) Coral Springs, FL 0 1,941,900 17,477,592 9,700 337,037
Saddle Creek Carrollton, TX 0 703,300 6,329,899 4,800 3,158,856
Saddle Ridge Loudoun County, VA 0 1,351,800 12,165,984 13,000 319,230
Sailboat Bay Raleigh, NC 0 960,000 9,012,118 0 6,255
San Tropez Phoenix, AZ 0 2,738,000 24,641,839 0 178,192
Sandstone Euless, TX 1,359,266 240,000 1,560,399 3,600 42,252
Sawgrass Cove Bradenton, FL 0 1,671,200 15,041,179 2,950 1,100,691
Scarborough Square Rockville, MD 4,162,256 1,815,000 7,210,774 0 0
Scottsdale Courtyards Scottsdale, AZ (P) 2,979,269 25,060,431 0 197,011
Scottsdale Meadows Scottsdale, AZ 0 1,512,000 11,407,058 0 75,409
Seasons, The Boise, ID 0 604,400 5,439,624 3,600 379,840
Sedona Ridge Ahwatukee, AZ 0 5,508,000 9,700,530 0 197,861
Sedona Springs Austin, TX 0 2,574,000 23,478,175 0 15,243
Settler's Point Salt Lake City, UT 0 1,715,100 15,436,275 0 285,970
Seventh & James Seattle, WA 0 663,800 5,974,099 0 70,560
Shadow Brook Phoenix, AZ (P) 3,065,496 18,369,234 0 156,671
Shadow Lake Doraville, GA 0 1,140,000 13,377,068 0 5,840
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of Life Used to
Period 12/31/98 Compute
---------------------------------- Depreciation in
Building & Accumulated Date of Latest Income
Land Fixtures(A) Total(B) Depreciation Construction Statement(c)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Polos East 1,386,000 19,307,635 20,693,635 162,504 1991 30 Years
Portland Center Combined 6,032,900 43,564,393 49,597,293 128,134 1965 30 Years
Portofino 3,572,400 14,759,964 18,332,364 533,039 1989 30 Years
Portside Towers Combined 22,455,700 96,846,517 119,302,217 1,838,332 1992/1997 30 Years
Prairie Creek I&II 2,832,000 20,207,544 23,039,544 166,908 1998/99 30 Years
Preakness 1,561,900 8,574,888 10,136,788 386,777 1986 30 Years
Preserve at Squaw Peak 517,788 8,654,764 9,172,552 319,358 1990 30 Years
Preston at Willowbend 872,500 9,342,129 10,214,629 1,802,923 1985 30 Years
Preston Bend 1,085,200 10,110,100 11,195,300 577,882 1986 30 Years
Preston Lake 1,465,893 14,030,162 15,496,055 2,660,435 1984-86 30 Years
Princeton Square 864,000 12,135,106 12,999,106 105,842 1984 30 Years
Promenade (FL) 2,124,193 25,986,843 28,111,036 215,668 1994 30 Years
Promenade Terrace 2,282,800 20,815,422 23,098,222 1,870,429 1990 30 Years
Promontory Pointe I & II 2,355,509 30,548,739 32,904,248 1,120,143 1984/1996 30 Years
Prospect Towers 8,426,600 28,067,956 36,494,556 922,709 1995 30 Years
Pueblo Villas 855,600 8,327,967 9,183,567 771,363 1975 30 Years
Quail Cove 2,271,800 20,824,680 23,096,480 1,227,031 1987 30 Years
Rancho Murietta 1,766,282 17,687,586 19,453,868 657,596 1983 30 Years
Ranchstone 770,000 15,400,595 16,170,595 128,681 1996 30 Years
Ravens Crest 4,675,850 43,985,195 48,661,045 7,206,475 1984 30 Years
Ravinia 1,240,100 12,205,373 13,445,473 326,931 1991 30 Years
Redlands Lawn and Tennis 4,822,320 26,603,163 31,425,483 989,172 1986 30 Years
Reflections at the Lakes 1,896,000 17,189,860 19,085,860 1,001,726 1989 30 Years
Regatta 818,500 7,539,273 8,357,773 455,368 1983 30 Years
Regency 890,000 12,021,217 12,911,217 100,588 1986 30 Years
Regency Palms 1,857,400 17,244,349 19,101,749 1,821,991 1969 30 Years
Regency Woods 753,480 6,894,453 7,647,933 276,730 1986 30 Years
Registry 1,303,100 11,878,935 13,182,035 688,044 1987 30 Years
Reserve at Ashley Lake 3,520,400 23,571,468 27,091,868 898,311 1990 30 Years
Reserve Square Combined 2,618,852 33,966,186 36,585,038 6,174,688 1973 30 Years
Retreat, The 3,475,114 26,544,281 30,019,395 0 (S) 30 Years
Richmond Townhomes 940,000 13,925,003 14,865,003 115,497 1995 30 Years
Ridgegate 805,800 7,403,459 8,209,259 438,612 1990 30 Years
Ridgetop 811,500 7,352,085 8,163,585 451,474 1988 30 Years
Ridgetree I & II 2,115,200 20,232,389 22,347,589 2,071,686 1983 30 Years
Ridgeway Commons 583,240 5,314,293 5,897,533 210,631 1970 30 Years
Ridgewood Village 5,761,500 14,040,192 19,801,692 519,276 1997 30 Years
Rincon 4,401,900 16,789,679 21,191,579 1,067,294 1996 30 Years
River Bend 602,945 4,448,365 5,051,310 3,297,277 1971 30 Years
River Hill 2,004,000 19,383,970 21,387,970 164,058 1996 30 Years
River Oak 1,256,600 11,524,533 12,781,133 453,970 1989 30 Years
River Park 2,245,400 8,861,804 11,107,204 164,553 1984 30 Years
Rivers Edge 781,900 6,568,309 7,350,209 125,628 1974 30 Years
Riverside Park 1,441,400 12,456,099 13,897,499 557,219 1994 30 Years
Rock Creek 895,700 8,245,706 9,141,406 645,889 1986 30 Years
Rolido Parque 2,955,900 8,114,295 11,070,195 260,186 1978 30 Years
Rosehill Pointe 2,096,000 20,309,772 22,405,772 2,181,785 1984 30 Years
Royal Oak 1,602,904 14,587,982 16,190,886 555,780 1989 30 Years
Royal Oaks (FL) 1,988,000 13,856,820 15,844,820 118,974 1991 30 Years
Sabal Palm 3,538,600 20,683,982 24,222,582 1,264,275 1989 30 Years
Sabal Palm at Boot Ranch 3,888,000 29,133,544 33,021,544 243,856 1996 30 Years
Sabal Palm at Carrollwood Place 3,888,000 27,062,814 30,950,814 227,623 1995 30 Years
Sabal Pointe (M) 1,951,600 17,814,628 19,766,228 1,852,893 1995 30 Years
Saddle Creek 708,100 9,488,755 10,196,855 2,693,363 1980 30 Years
Saddle Ridge 1,364,800 12,485,214 13,850,014 1,449,349 1989 30 Years
Sailboat Bay 960,000 9,018,373 9,978,373 77,810 1986 30 Years
San Tropez 2,738,000 24,820,030 27,558,030 1,405,570 1989 30 Years
Sandstone 243,600 1,602,651 1,846,251 28,313 1988 30 Years
Sawgrass Cove 1,674,150 16,141,870 17,816,020 2,853,554 1991 30 Years
Scarborough Square 1,815,000 7,210,774 9,025,774 7,138 1967 30 Years
Scottsdale Courtyards 2,979,269 25,257,442 28,236,711 912,998 1993 30 Years
Scottsdale Meadows 1,512,000 11,482,466 12,994,466 420,796 1984 30 Years
Seasons, The 608,000 5,819,464 6,427,464 995,851 1990 30 Years
Sedona Ridge 5,508,000 9,898,391 15,406,391 625,605 1988 30 Years
Sedona Springs 2,574,000 23,493,419 26,067,419 198,341 1995 30 Years
Settler's Point 1,715,100 15,722,245 17,437,345 912,770 1986 30 Years
Seventh & James 663,800 6,044,659 6,708,459 347,503 1992 30 Years
Shadow Brook 3,065,496 18,525,905 21,591,401 675,011 1984 30 Years
Shadow Lake 1,140,000 13,382,908 14,522,908 113,217 1989 30 Years
</TABLE>
S-7
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Cost Capitalized
subsequent
Initial Cost to Acquisition
Description Operating Partnership (Improvements, net)(1)
- ---------------------------------------------- ----------------------- ------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sheffield Court Arlington, VA 0 3,349,350 30,246,228 0 2,141,204
Shoal Run Birmingham, AL 0 1,380,000 12,540,007 0 11,202
Shores at Andersen Springs Chandler, AZ (P) 2,743,816 22,781,351 0 170,641
Sierra Canyon Canyon Cnty, CA 0 3,480,000 12,515,590 4,200 465,377
Silver Creek Phoenix, AZ (P) 712,102 6,705,954 0 57,100
Silver Shadow Las Vegas, NV 0 952,100 8,568,921 1,340 344,145
Silver Springs (FL) Jacksonville, FL 0 1,828,700 16,458,192 2,400 322,798
Silver Springs (OK) Tulsa, OK 0 672,500 6,052,669 0 92,874
Silverwood Mission, KS (T) 1,230,000 11,196,244 0 589,245
Skylark Union City, CA 11,790,000 1,775,000 16,660,175 6,600 (52,387)
Skyline Gateway Tucson, AZ 0 1,128,400 10,155,997 0 188,382
Sleepy Hollow Kansas City, MO (T) 2,193,547 13,689,443 (0) 1,707,643
Smoketree Polo Club Indio, CA 9,325,000 864,000 7,139,689 3,200 (160,530)
Sommerset Place Raleigh, NC 0 360,000 7,979,167 0 8,410
Songbird San Antonio, TX 6,716,744 1,080,500 9,724,928 2,000 393,734
Sonnet Cove I Lexington, KY 0 183,407 2,422,860 0 1,995,895
Sonnet Cove II Lexington, KY 0 100,000 1,108,405 0 1,133,760
Sonoran Phoenix, AZ (P) 2,361,922 31,825,903 0 194,670
Sonterra at Foothill Ranch Orange Cnty, CA 16,600,000 7,500,000 24,046,385 3,400 39,835
South Creek Mesa, AZ 15,930,389 2,669,300 24,023,758 2,000 578,419
Southbank Mesa, AZ 0 319,600 2,876,874 10,900 399,846
Southwood Palo Alto, CA 0 6,930,000 14,294,270 6,600 109,319
Spicewood Springs Jacksonville, FL 0 1,536,000 21,469,073 0 16,668
Spinnaker Cove Hermitage, TN 14,205,000 1,420,500 12,789,873 41,231 738,228
Spring Oak Richmond, VA 0 3,803,700 5,567,830 0 0
Springs Colony Orlando, FL (T) 631,900 5,687,010 8,500 768,577
Springs of Country Woods Salt Lake City, UT 0 3,547,400 31,926,882 0 419,097
Steeplechase Charlotte, NC 0 1,111,500 10,438,435 0 7,488
Sterling Point Denver, CO 0 935,500 8,419,865 0 96,378
Stoney Creek Tacoma, WA 0 1,215,200 10,937,144 0 76,743
Summer Chase Denver, CO 0 1,708,000 15,371,641 1,200 1,018,395
Summer Creek Plymouth, MN 2,344,470 576,000 3,782,049 3,600 105,165
Summer Ridge Riverside, CA 0 600,500 5,404,571 1,900 110,794
Summerset Village Chatsworth, CA 0 2,628,500 23,656,668 2,200 202,070
Summerwood Hayward, CA 0 4,860,000 6,901,739 6,600 89,116
Summit at Lake Union Seattle, WA 0 1,424,600 12,821,002 100 150,077
Summit Chase Coral Springs, FL 0 1,120,000 4,413,035 2,100 288,169
Sun Creek Glendale, AZ (P) 896,929 7,062,603 0 46,175
Sunny Oak Village Overland Park, KS 15,100,000 2,222,600 20,003,050 25,150 2,017,200
Sunrise Springs Las Vegas, NV 0 972,600 8,753,491 2,700 341,005
Suntree Village Oro Valley, AZ (P) 1,571,745 13,099,483 0 155,103
Superstition Vista Mesa, AZ 0 2,307,357 28,537,628 0 309,276
Surprise Lake Village Tacoma, WA 0 1,830,200 16,471,470 0 270,710
Surrey Downs Bellevue, WA 0 3,050,000 7,797,215 7,100 93,448
Sutton Place Dallas, TX 0 1,316,500 11,848,717 41,900 2,669,891
Sweetwater Glen Lawrenceville, GA 0 500,000 10,692,558 0 1,635
Sycamore Creek Scottsdale, AZ (E) 3,150,000 19,068,201 2,000 135,050
Tamarind at Stoneridge Columbia, SC 0 1,053,800 9,490,859 2,400 112,763
Tamarlane Portland, ME 0 690,000 5,143,970 900 59,840
Tanasbourne Terrace Hillsboro, OR 0 1,873,000 16,857,220 3,700 1,062,822
Tanglewood (OR) Portland, OR 0 760,000 6,839,589 3,000 1,509,852
Tanglewood (VA) Manassas, VA 24,855,587 2,103,400 19,559,772 4,895 1,951,542
Timber Hollow Chapel Hill, NC 0 800,000 11,441,423 0 8,928
Timberwalk Jacksonville, FL 0 1,988,000 13,400,767 0 21,018
Timberwood Aurora, CO 0 1,512,000 14,583,672 6,600 251,723
Tivoli Lakes Club Deerfield Beach, FL 0 1,804,200 16,237,641 2,400 131,915
Town Center (TX) Kingwood, TX 0 1,290,000 11,517,230 1,300 92,587
Town Centre III & IV Laurel, MD 15,456,090 2,546,500 24,089,192 4,700 1,752,434
Towne Square Chandler, AZ 0 1,924,710 36,439,239 0 (93,514)
Townhomes of Meadowbrook Auburn Hills, MI 10,184,661 1,380,000 12,343,234 2,680 125,526
Trails (CO), The Aurora, CO 0 1,217,800 8,525,346 100 1,444,276
Trails (NV), The Las Vegas, NV 0 3,076,200 27,685,764 3,000 996,449
Trails (TX), The Arlington, TX 0 616,700 5,550,590 21,300 721,314
Trails at Briar Forest Houston, TX 14,458,059 2,380,000 25,108,895 0 28,588
Trails at Dominion Park Houston, TX 25,484,338 2,529,000 35,693,699 2,800 730,990
Trail's End San Antonio, TX 0 951,300 8,561,640 0 96,510
Trails of Valley Ranch Irving, TX 0 2,808,000 7,910,908 1,400 147,242
Trailway Pond I Burnsville, MN 4,913,909 476,800 4,291,344 2,484 99,574
Trailway Pond II Burnsville, MN 11,365,354 1,104,700 9,942,611 2,588 89,679
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of Life Used to
Period 12/31/98 Compute
-------------------------- Depreciation in
Building & Accumulated Date of Latest Income
Apartment Name Land Fixtures (A) Total (B) Depreciation Construction Statement (C)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sheffield Court 3,349,350 32,387,432 35,736,782 4,402,412 1986 30 Years
Shoal Run 1,380,000 12,551,210 13,931,210 108,569 1986 30 Years
Shores at Andersen Springs 2,743,816 22,951,992 25,695,808 841,280 1989 30 Years
Sierra Canyon 3,484,200 12,980,967 16,465,167 291,565 1987 30 Years
Silver Creek 712,102 6,763,053 7,475,155 261,766 1986 30 Years
Silver Shadow 953,440 8,913,066 9,866,506 1,592,098 1992 30 Years
Silver Springs (FL) 1,831,100 16,780,990 18,612,090 784,691 1985 30 Years
Silver Springs (OK) 672,500 6,145,543 6,818,043 380,309 1984 30 Years
Silverwood 1,230,000 11,785,489 13,015,489 1,965,748 1986 30 Years
Skylark 1,781,600 16,607,788 18,389,388 234,131 1986 30 Years
Skyline Gateway 1,128,400 10,344,378 11,472,778 615,634 1985 30 Years
Sleepy Hollow 2,193,547 15,397,086 17,590,633 5,504,753 1987 30 Years
Smoketree Polo Club 867,200 6,979,159 7,846,359 71,497 1987-89 30 Years
Sommerset Place 360,000 7,987,577 8,347,577 67,916 1983 30 Years
Songbird 1,082,500 10,118,662 11,201,162 910,976 1981 30 Years
Sonnet Cove I 183,407 4,418,755 4,602,162 3,122,166 1972 30 Years
Sonnet Cove II 100,000 2,242,165 2,342,165 1,475,001 1974 30 Years
Sonoran 2,361,922 32,020,572 34,382,494 1,173,925 1995 30 Years
Sonterra at Foothill Ranch 7,503,400 24,086,220 31,589,620 639,167 1997 30 Years
South Creek 2,671,300 24,602,177 27,273,477 2,285,177 1986-89 30 Years
Southbank 330,500 3,276,720 3,607,220 660,549 1985 30 Years
Southwood 6,936,600 14,403,589 21,340,189 230,864 1985 30 Years
Spicewood Springs 1,536,000 21,485,741 23,021,741 187,497 1986 30 Years
Spinnaker Cove 1,461,731 13,528,101 14,989,832 806,926 1986 30 Years
Spring Oak 3,803,700 5,567,830 9,371,530 0 (S) 30 Years
Springs Colony 640,400 6,455,587 7,095,987 1,228,258 1986 30 Years
Springs of Country Woods 3,547,400 32,345,979 35,893,379 1,878,269 1982 30 Years
Steeplechase 1,111,500 10,445,922 11,557,422 91,036 1986 30 Years
Sterling Point 935,500 8,516,243 9,451,743 493,541 1979 30 Years
Stoney Creek 1,215,200 11,013,887 12,229,087 644,241 1990 30 Years
Summer Chase 1,709,200 16,390,036 18,099,236 1,488,539 1983 30 Years
Summer Creek 579,600 3,887,213 4,466,813 64,870 1985 30 Years
Summer Ridge 602,400 5,515,365 6,117,765 514,021 1985 30 Years
Summerset Village 2,630,700 23,858,737 26,489,437 1,942,692 1985 30 Years
Summerwood 4,866,600 6,990,855 11,857,455 128,908 1982 30 Years
Summit at Lake Union 1,424,700 12,971,079 14,395,779 734,696 1995 - 1997 30 Years
Summit Chase 1,122,100 4,701,204 5,823,304 317,110 1985 30 Years
Sun Creek 896,929 7,108,778 8,005,707 274,232 1985 30 Years
Sunny Oak Village 2,247,750 22,020,250 24,268,000 2,228,846 1984 30 Years
Sunrise Springs 975,300 9,094,496 10,069,796 1,445,279 1989 30 Years
Suntree Village 1,571,745 13,254,586 14,826,331 528,183 1986 30 Years
Superstition Vista 2,307,357 28,846,904 31,154,261 1,073,092 1987 30 Years
Surprise Lake Village 1,830,200 16,742,179 18,572,379 992,712 1986 30 Years
Surrey Downs 3,057,100 7,890,664 10,947,764 140,737 1986 30 Years
Sutton Place 1,358,400 14,518,608 15,877,008 3,050,334 1985 30 Years
Sweetwater Glen 500,000 10,694,193 11,194,193 91,284 1986 30 Years
Sycamore Creek 3,152,000 19,203,251 22,355,251 838,947 1984 30 Years
Tamarind at Stoneridge 1,056,200 9,603,622 10,659,822 448,239 1985 30 Years
Tamarlane 690,900 5,203,810 5,894,710 297,714 1986 30 Years
Tanasbourne Terrace 1,876,700 17,920,042 19,796,742 2,976,124 1986-89 30 Years
Tanglewood (OR) 763,000 8,349,441 9,112,441 1,573,962 1976 30 Years
Tanglewood (VA) 2,108,295 21,511,314 23,619,609 3,148,554 1987 30 Years
Timber Hollow 800,000 11,450,351 12,250,351 96,991 1986 30 Years
Timberwalk 1,988,000 13,421,785 15,409,785 115,581 1987 30 Years
Timberwood 1,518,600 14,835,394 16,353,994 272,118 1983 30 Years
Tivoli Lakes Club 1,806,600 16,369,556 18,176,156 731,691 1991 30 Years
Town Center (TX) 1,291,300 11,609,817 12,901,117 822,732 1994 30 Years
Town Centre III & IV 2,551,200 25,841,626 28,392,826 3,911,974 1968, 1969 30 Years
Towne Square 1,924,710 36,345,725 38,270,435 1,350,135 1987-1996 30 Years
Townhomes of Meadowbrook 1,382,600 12,468,760 13,851,360 269,617 1988 30 Years
Trails (CO), The 1,217,900 9,969,622 11,187,522 2,234,382 1986 30 Years
Trails (NV), The 3,079,200 28,682,213 31,761,413 4,447,219 1988 30 Years
Trails (TX), The 638,000 6,271,904 6,909,904 1,169,450 1984 30 Years
Trails at Briar Forest 2,380,000 25,137,483 27,517,483 214,305 1990 30 Years
Trails at Dominion Park 2,531,800 36,424,690 38,956,490 2,466,563 1992 30 Years
Trail's End 951,300 8,658,150 9,609,450 544,248 1983 30 Years
Trails of Valley Ranch 2,809,400 8,058,150 10,867,550 236,474 1986 30 Years
Trailway Pond I 479,284 4,390,918 4,870,202 167,328 1988 30 Years
Trailway Pond II 1,107,288 10,032,289 11,139,577 383,829 1988 30 Years
</TABLE>
S-8
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Cost Capitalized
subsequent
Initial Cost to Acquisition
Description Operating Partnership (Improvements, net)(1)
- ---------------------------------------------- ----------------------- ------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Trinity Lakes Cordova, TN (E) 1,980,000 14,937,161 2,000 249,542
Trowbridge Atlanta, GA 0 2,520,000 9,481,990 1,000 30,048
Turf Club Littleton, CO 0 2,100,000 15,479,404 7,300 333,828
Tyrone Gardens Randolph, MA 0 4,950,000 5,773,893 3,000 44,236
University Park Toledo, OH 0 70,000 834,378 0 1,480,386
Valencia Plantation Orlando, FL 0 873,000 12,963,869 0 4,006
Valley Creek I Woodbury, MN 12,827,815 1,622,600 14,603,730 4,115 353,919
Valley Creek II Woodbury, MN 10,110,100 1,229,500 11,065,355 3,159 74,890
Via Ventura Phoenix, AZ 0 1,476,500 13,288,894 10,100 4,715,757
Villa Encanto Phoenix, AZ 0 2,884,447 22,140,113 0 476,796
Villa Madeira Phoenix, AZ 0 1,580,000 14,219,907 2,100 910,748
Villa Manana Phoenix, AZ 0 951,400 8,562,443 3,900 981,507
Villa Serenas Tucson, AZ 9,210,613 2,424,900 14,418,493 1,800 149,583
Villa Solana Laguna Hills, CA 0 1,663,500 14,971,366 1,600 1,079,407
Village at Lakewood Phoenix, AZ (Q) 3,166,411 13,844,094 0 319,410
Village at Seeley Lake Tacoma, WA 0 2,760,400 24,843,439 0 174,558
Village at Tanque Verde Tucson, AZ (Q) 1,434,838 7,143,388 0 208,513
Village Oaks Austin, TX 5,175,576 1,184,400 10,659,432 1,600 430,822
Village of Hampshire Toledo, OH 0 151,912 1,320,453 (0) 7,137,172
Village of Newport Federal Way, WA 0 414,900 3,733,899 1,400 294,818
Village of Sycamore Ridge Memphis, TN 0 621,300 5,591,828 2,600 203,946
Villas at Josey Ranch Carrollton, TX 6,799,379 1,584,000 7,228,196 3,700 60,634
Villas of Oak Creste San Antonio, TX 0 905,800 8,151,738 0 369,057
Vinings at Lake Buena Vista Orlando, FL 21,170,000 2,800,000 23,859,775 0 30,211
Vinings at Lenox Place Orlando, FL 0 4,560,000 34,601,683 0 346
Vinings Club at Metrowest Orlando, FL 0 4,110,000 38,552,886 0 16,240
Viridian Lake Fort Myers, FL 0 960,000 18,005,760 0 2,849
Vista Del Lago Mission Viejo, CA 31,504,979 4,524,400 41,357,681 1,400 1,371,543
Vista Grove Mesa, AZ 0 1,341,796 12,137,222 0 0
Vista Pointe Irving, TX 0 2,079,000 17,012,647 1,800 73,454
Walden Wood Southfield, MI 5,804,346 833,300 7,499,662 1,400 1,240,947
Walker's Mark Dallas, TX 0 984,000 6,021,752 800 47,982
Warwick Station Denver, CO 9,968,000 2,281,900 20,537,450 100 129,254
Waterford San Antonio, TX 0 457,000 4,112,840 0 42,475
Waterford (Jax) Jacksonville, FL 0 3,024,000 23,967,147 0 184,412
Waterford at Deerwood Jacksonville, FL 10,621,531 1,736,000 10,803,663 0 10,773
Waterford at Orange Park Orange Park, FL 9,540,000 1,960,000 12,300,406 0 87,402
Waterford at Regency Jacksonville, FL 7,100,630 1,113,000 5,284,699 0 37,557
Waterford at the Lakes Kent, WA 0 3,100,200 16,343,191 0 120,920
Waterford Place (TN) Nashville, TN 0 900,000 12,154,387 0 6,410
Waterford Village (Broward) Delray Beach, FL 0 1,888,000 15,496,595 0 99,705
Watermark Square Portland, OR 8,334,615 1,580,000 14,239,426 500 363,214
Waterstone Place Seattle, WA 0 2,950,900 26,558,353 13,100 2,724,349
Welleby Lake Club Sunrise, FL 0 3,648,000 17,726,342 0 16,165
Wellington (WA) Silverdale, WA 8,171,488 1,097,300 9,876,034 2,000 509,181
Wellington Hill Manchester, NH (T) 1,872,500 16,852,955 17,700 1,966,145
Westridge Tacoma, WA 0 3,501,900 31,517,540 0 297,973
Westwood Pines Tamarac, FL 0 1,526,200 13,735,152 2,400 148,373
Whispering Oaks Walnut Creek, CA 11,191,482 2,167,300 19,505,628 3,500 889,988
White Bear Woods White Bear Lake, MN 14,184,170 1,621,300 14,591,904 3,441 213,842
Wilde Lake Richmond, VA 4,440,000 934,600 8,411,613 12,600 293,064
Willow Brook (NC) Durham, NC 0 1,408,000 7,105,081 1,500 144,764
Willow Trail Norcross, GA 0 1,120,000 11,662,382 0 2,393
Willowick Aurora, CO 0 500,000 4,122,331 6,900 105,108
Willows (TN) Knoxville, TN 8,007,915 1,100,000 9,906,909 1,300 130,198
Wimberly Dallas, TX 0 2,232,000 27,992,123 0 8,615
Wimbledon Oaks Arlington, TX 7,505,424 1,488,000 8,815,023 3,700 52,736
Windemere Mesa, AZ 6,134,479 949,000 8,653,152 300 328,801
Windmill Colorado Springs, CO 0 395,544 4,953,156 100 612,003
Windridge (CA) Laguna Niguel, CA (O) 2,660,800 23,947,096 2,100 726,174
Windridge (GA) Dunwoody, GA 0 1,224,000 14,002,428 0 13,671
Winterwood Charlotte, NC 11,939,752 1,720,100 15,481,455 1,900 1,409,783
Wood Creek (CA) Pleasant Hill, CA 0 9,728,000 22,992,918 1,900 207,145
Wood Crest Villa Westland, MI 0 925,900 8,333,827 7,922 632,764
Wood Forest Daytona Beach, FL 6,147,044 1,008,000 5,028,880 0 2,997
Wood Lane Place Woodbury, MN 14,014,000 2,003,300 18,029,538 5,847 335,393
Woodbridge (N) Cary, NC 4,745,414 1,981,900 17,839,380 100 330,735
Woodcreek Beaverton, OR 11,119,787 1,753,700 15,783,764 2,100 1,579,346
Woodlake (WA) Kirkland, WA 11,800,000 6,624,000 16,427,124 7,400 417,295
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of Life Used to
Description Period 12/31/98 Compute
- -------------- -------------------------- Depreciation in
Building & Accumulated Date of Latest Income
Apartment Name Land Fixtures (A) Total (B) Depreciation Construction Statement (C)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Trinity Lakes 1,982,000 15,186,703 17,168,703 679,454 1985 30 Years
Trowbridge 2,521,000 9,512,038 12,033,038 175,515 1980 30 Years
Turf Club 2,107,300 15,813,232 17,920,532 285,496 1986 30 Years
Tyrone Gardens 4,953,000 5,818,130 10,771,130 113,205 1961/1965 30 Years
University Park 70,000 2,314,764 2,384,764 1,361,238 1965 30 Years
Valencia Plantation 873,000 12,967,875 13,840,875 108,688 1990 30 Years
Valley Creek I 1,626,715 14,957,649 16,584,364 559,948 1989 30 Years
Valley Creek II 1,232,659 11,140,244 12,372,903 424,790 1990 30 Years
Via Ventura 1,486,600 18,004,651 19,491,251 3,149,935 1980 30 Years
Villa Encanto 2,884,447 22,616,910 25,501,357 848,752 1983 30 Years
Villa Madeira 1,582,100 15,130,655 16,712,755 2,565,253 1971 30 Years
Villa Manana 955,300 9,543,950 10,499,250 1,694,791 1971-85 30 Years
Villa Serenas 2,426,700 14,568,076 16,994,776 662,760 1973 30 Years
Villa Solana 1,665,100 16,050,773 17,715,873 2,838,943 1984 30 Years
Village at Lakewood 3,166,411 14,163,504 17,329,915 538,265 1988 30 Years
Village at Seeley Lake 2,760,400 25,017,997 27,778,397 1,464,619 1990 30 Years
Village at Tanque Verde 1,434,838 7,351,900 8,786,738 298,882 1984-1994 30 Years
Village Oaks 1,186,000 11,090,254 12,276,254 906,277 1984 30 Years
Village of Hampshire 151,912 8,457,625 8,609,537 3,339,648 1950 30 Years
Village of Newport 416,300 4,028,717 4,445,017 686,113 1987 30 Years
Village of Sycamore Ridge 623,900 5,795,774 6,419,674 264,662 1977 30 Years
Villas at Josey Ranch 1,587,700 7,288,830 8,876,530 132,840 1986 30 Years
Villas of Oak Creste 905,800 8,520,795 9,426,595 522,350 1979 30 Years
Vinings at Lake Buena Vista 2,800,000 23,889,986 26,689,986 201,584 1988 30 Years
Vinings at Lenox Place 4,560,000 34,602,030 39,162,030 287,651 1998 30 Years
Vinings Club at Metrowest 4,110,000 38,569,125 42,679,125 316,570 1997 30 Years
Viridian Lake 960,000 18,008,609 18,968,609 153,055 1991 30 Years
Vista Del Lago 4,525,800 42,729,224 47,255,024 7,568,800 1986-88 30 Years
Vista Grove 1,341,796 12,137,222 13,479,018 275,076 1997 - 1998 30 Years
Vista Pointe 2,080,800 17,086,101 19,166,901 444,549 1996 30 Years
Walden Wood 834,700 8,740,609 9,575,309 1,700,255 1972 30 Years
Walker's Mark 984,800 6,069,734 7,054,534 117,747 1982 30 Years
Warwick Station 2,282,000 20,666,704 22,948,704 1,188,568 1986 30 Years
Waterford 457,000 4,155,316 4,612,316 256,882 1983 30 Years
Waterford (Jax) 3,024,000 24,151,559 27,175,559 203,652 1988 30 Years
Waterford at Deerwood 1,736,000 10,814,436 12,550,436 93,896 1985 30 Years
Waterford at Orange Park 1,960,000 12,387,808 14,347,808 107,338 1986 30 Years
Waterford at Regency 1,113,000 5,322,256 6,435,256 47,349 1985 30 Years
Waterford at the Lakes 3,100,200 16,464,110 19,564,310 1,084,618 1990 30 Years
Waterford Place (TN) 900,000 12,160,797 13,060,797 101,823 1994 30 Years
Waterford Village (Broward) 1,888,000 15,596,300 17,484,300 129,996 1989 30 Years
Watermark Square 1,580,500 14,602,640 16,183,140 991,463 1990 30 Years
Waterstone Place 2,964,000 29,282,702 32,246,702 5,757,244 1990 30 Years
Welleby Lake Club 3,648,000 17,742,507 21,390,507 149,861 1991 30 Years
Wellington (WA) 1,099,300 10,385,215 11,484,515 1,470,639 1990 30 Years
Wellington Hill 1,890,200 18,819,100 20,709,300 3,328,126 1987 30 Years
Westridge 3,501,900 31,815,513 35,317,413 1,884,733 1987/1991 30 Years
Westwood Pines 1,528,600 13,883,525 15,412,125 528,020 1991 30 Years
Whispering Oaks 2,170,800 20,395,615 22,566,415 1,576,700 1974 30 Years
White Bear Woods 1,624,741 14,805,746 16,430,487 557,703 1989 30 Years
Wilde Lake 947,200 8,704,677 9,651,877 668,750 1989 30 Years
Willow Brook (NC) 1,409,500 7,249,846 8,659,346 445,201 1986 30 Years
Willow Trail 1,120,000 11,664,775 12,784,775 99,720 1985 30 Years
Willowick 506,900 4,227,439 4,734,339 77,835 1980 30 Years
Willows (TN) 1,101,300 10,037,107 11,138,407 623,349 1987-1988 30 Years
Wimberly 2,232,000 28,000,738 30,232,738 232,852 1996 30 Years
Wimbledon Oaks 1,491,700 8,867,759 10,359,459 162,112 1985 30 Years
Windemere 949,300 8,981,952 9,931,252 497,073 1986 30 Years
Windmill 395,644 5,565,159 5,960,803 1,427,951 1985 30 Years
Windridge (CA) 2,662,900 24,673,270 27,336,170 3,660,971 1989 30 Years
Windridge (GA) 1,224,000 14,016,099 15,240,099 119,832 1982 30 Years
Winterwood 1,722,000 16,891,238 18,613,238 3,176,053 1986 30 Years
Wood Creek (CA) 9,729,900 23,200,063 32,929,963 1,265,382 1987 30 Years
Wood Crest Villa 933,822 8,966,591 9,900,413 409,776 1970 30 Years
Wood Forest 1,008,000 5,031,877 6,039,877 44,752 1985 30 Years
Wood Lane Place 2,009,147 18,364,931 20,374,077 684,847 1989 30 Years
Woodbridge (N) 1,982,000 18,170,115 20,152,115 1,931,990 1993-95 30 Years
Woodcreek 1,755,800 17,363,110 19,118,910 3,041,111 1982-84 30 Years
Woodlake (WA) 6,631,400 16,844,420 23,475,820 303,913 1984 30 Years
</TABLE>
S-9
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
<TABLE>
<CAPTION>
Cost Capitalized
Subsequent to
Initial Cost to Acquisition
Description Operating Partnership (Improvements, net)(1)
- ---------------------------------------------- ----------------------- -------------------------
Building & Building &
Apartment Name Location Encumbrances Land Fixtures Land Fixtures
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Woodlake at Killearn Tallahassee, FL 0 1,404,300 12,638,426 3,855 1,033,554
Woodland Hills Decatur, GA 0 1,223,900 11,017,542 700 427,622
Woodland Meadows Ann Arbor, MI 0 2,003,600 18,032,640 2,400 202,265
Woodland Oaks Tulsa, OK 0 893,100 8,038,166 0 155,808
Woodlands of Brookfield Brookfield, WI (R) 1,480,000 13,986,442 4,600 101,275
Woodlands of Minnetonka Minnetonka, MN 0 2,392,500 13,557,500 2,000 225,210
Woodleaf Campbell, CA 11,700,000 8,544,000 16,944,339 6,600 109,858
Woodmoor Austin, TX 0 649,300 5,843,200 4,500 1,105,805
Woodridge (CO) Aurora, CO 0 2,774,000 20,974,636 6,700 190,065
Woodridge (MN) Eagan, MN 7,784,303 1,600,000 10,408,740 2,300 86,126
Woods of North Bend Raleigh, NC 0 1,039,000 9,350,616 500 907,431
Woodscape Raleigh, NC 0 956,000 8,603,550 1,300 225,871
Woodside Lorton, VA 0 1,308,100 12,503,220 17,900 381,594
Wynbrook Atlanta, GA 0 2,544,000 10,993,900 2,500 102,267
Wyndridge 2 Memphis, TN 14,135,000 1,486,000 13,586,157 2,000 537,255
Wyndridge 3 Memphis, TN 10,855,000 1,500,000 13,505,510 2,500 309,751
Yarmouth Woods Yarmouth, ME 0 690,000 6,076,673 2,800 92,869
Yorktowne at Olde Mill Millersville, MD 0 216,000 1,330,710 0 4,781,195
Yuma Court Colorado Springs, CO 0 113,163 836,429 100 138,674
Miscellaneous 0 3,100,100 5,557,176 0 1,290,355
Operating Partnership Chicago, IL 0 0 88,566 0 0
Management Business Chicago, IL 0 0 3,442,962 1,000 25,801,308
-------------- -------------- -------------- ---------- ------------
Total Investment in $1,765,973,005 $1,322,723,071 $9,256,895,218 $3,424,616 $359,020,229
Real Estate ============== ============== ============== ========== ============
Real Estate Held for Disposition
Fox Run (AR) Little Rock, AR $ 0 $ 422,014 $ 4,053,552 $ 0 $ 4,997,960
Greenwood Forest Little Rock, AR 0 559,038 1,736,549 0 2,794,166
Walnut Ridge Little Rock, AR 0 196,079 2,424,631 0 3,155,217
Williamsburg Little Rock, AR 0 315,000 1,745,958 0 3,449,424
Hawthorne Phoenix, AZ 0 2,697,050 15,669,963 0 (18,590)
-------------- -------------- -------------- ---------- ------------
Total Real Estate Held for Disposition $ 0 $ 4,189,181 $ 25,630,653 $ 0 $ 14,378,177
============== ============== ============== ========== ============
Total Real Estate $1,765,973,005 $1,326,912,252 $9,282,525,871 $3,424,617 $373,398,406
============== ============== ============== ========== ============
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Amount Carried
at Close of Life Used to
Description Period 12/31/98 Compute
- ---------------------- --------------------------- Depreciation in
Building & Accumulated Date of Latest Income
Apartment Name Land Fixtures (A) Total (B) Depreciation Construction Statement (C)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Woodlake at Killearn 1,408,155 13,671,980 15,080,135 2,517,124 1986 30 Years
Woodland Hills 1,224,600 11,445,164 12,669,764 1,169,015 1985 30 Years
Woodland Meadows 2,006,000 18,234,905 20,240,905 811,464 1987-1989 30 Years
Woodland Oaks 893,100 8,193,975 9,087,075 502,272 1983 30 Years
Woodlands of Brookfield 1,484,600 14,087,717 15,572,317 217,174 1990 30 Years
Woodlands of Minnetonka 2,394,500 13,782,710 16,177,210 515,997 1988 30 Years
Woodleaf 8,550,600 17,054,197 25,604,797 297,985 1984 30 Years
Woodmoor 653,800 6,949,005 7,602,805 1,354,595 1981 30 Years
Woodridge (CO) 2,780,700 21,164,701 23,945,401 383,078 1980-82 30 Years
Woodridge (MN) 1,602,300 10,494,865 12,097,165 228,166 1986 30 Years
Woods of North Bend 1,039,500 10,258,047 11,297,547 1,341,487 1983 30 Years
Woodscape 957,300 8,829,421 9,786,721 734,106 1979 30 Years
Woodside 1,326,000 12,884,814 14,210,814 1,885,850 1987 30 Years
Wynbrook 2,546,500 11,096,167 13,642,667 224,163 1972/1976 30 Years
Wyndridge 2 1,488,000 14,123,412 15,611,412 835,702 1988 30 Years
Wyndridge 3 1,502,500 13,815,261 15,317,761 842,170 1988 30 Years
Yarmouth Woods 692,800 6,169,541 6,862,341 189,251 1971/1978 30 Years
Yorktowne at Olde Mill 216,000 6,111,905 6,327,905 4,292,629 1974 30 Years
Yuma Court 113,263 975,103 1,088,366 215,244 1985 30 Years
Miscellaneous 3,100,100 6,847,530 9,947,630 58,968
Operating Partnership 0 88,566 88,566 55,470 (H)
Management Business 1,000 29,244,270 29,245,270 13,786,394 (G)
-------------- -------------- --------------- ------------
Total Investment
in Real Estate $1,326,147,687 $9,615,915,445 $10,942,063,132 $718,491,400
============== ============== =============== ============
Real Estate Held For Disposition
Fox Run (AR) $ 422,014 $ 9,051,512 $ 9,473,526 $ 5,252,326 1974 30 Years
Greenwood Forest 559,038 4,530,715 5,089,753 2,628,938 1975 30 Years
Walnut Ridge 196,079 5,579,848 5,775,928 3,109,736 1975 30 Years
Williamsburg 315,000 5,195,382 5,510,382 2,736,573 1974 30 Years
Hawthorne 2,697,050 15,651,373 18,348,423 584,198 1996 30 Years
-------------- -------------- --------------- ------------
Total Real Estate Held
For Disposition $ 4,189,181 $ 40,008,830 $ 44,198,012 $ 14,311,771
============== ============== =============== ============
$1,330,336,868 $9,655,924,276 $10,986,261,144 $732,803,171
============== ============== =============== ============
</TABLE>
S-10
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation
December 31, 1998
NOTES:
(A) The balance of furniture & fixtures included in the total investment in real
estate amount was $333,358,567 as of December 31, 1998. The balance of
furniture & fixtures included in the total real estate held for disposition
amount was $4,388,863 as of December 31, 1998.
(B) The aggregate cost for Federal Income Tax purposes as of December 31, 1998
was approximately $9.1 billion.
(C) The life to compute depreciation for furniture & fixtures is 5 to 7 years.
(D) These two properties are encumbered by $14,700,888 in bonds.
(E) These 17 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 of $176,375,000.
(P) These 21 properties are encumbered by $132,936,821 in bonds.
(Q) These 5 properties are encumbered by a $49,525,506 note payable.
(R) These 5 properties are encumbered by $50,000,000 of mortgage debt.
(S) These properties are currently under development and will be completed
subsequent to December 31, 1998.
(T) These ten properties are encumbered by $176,375,000 in bonds.
(U) Includes Port Royale I, Port Royale II and Port Royale III. Port Royale III
is encumbered by a third party mortgage.
NOTES:
* 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>
Schedule III
ERP OPERATING LIMITED PARTNERSHIP
Real Estate and Accumulated Depreciation (continued)
(Amounts In Thousands)
The changes in total real estate for the years ended December 31, 1998, 1997,
and 1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ---------- ----------
<S> <C> <C> <C>
Balance, beginning of year $7,121,435 $2,983,510 $2,188,939
Acquisitions 3,927,768 4,112,126 789,056
Improvements 102,020 60,043 33,001
Write-off of fully depreciated assets
which are no longer in service (25) (930) (20)
Dispositions and other (164,937) (33,314) (27,466)
----------- ---------- ----------
Balance, end of year $10,986,261 $7,121,435 $2,983,510
=========== ========== ==========
</TABLE>
The changes in accumulated depreciation for the years ended December 31, 1998,
1997, and 1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ---------- ----------
<S> <C> <C> <C>
Balance, beginning of year $ 444,762 $ 301,512 $ 218,339
Depreciation 301,869 156,644 93,253
Write-off of fully depreciated assets
which are no longer in service (25) (930) (20)
Dispositions and other (13,803) (12,464) (10,060)
----------- ---------- ----------
Balance, end of year $ 732,803 $ 444,762 $ 301,512
=========== ========== ==========
</TABLE>
S-12
<PAGE>
Exhibit 12
ERP OPERATING LIMITED PARTNERSHIP
Consolidated and Combined Historical, Including Predecessor Business
Earnings to Combined Fixed Charges and Preferred Distributions Ratio
<TABLE>
<CAPTION>
Historical
------------------------------------------------------------------
12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
----------- ---------- ---------- ---------- -------------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
REVENUES
Rental income $1,293,560 $ 707,733 $ 454,412 $ 373,919 $ 220,727
Fee income - outside managed 5,622 5,697 6,749 7,030 4,739
Interest income - investment in mortgage notes 18,564 20,366 12,819 4,862 -
Interest and other income 19,703 13,525 4,405 4,573 5,568
---------- -------- --------- --------- ----------
Total revenues 1,337,449 747,321 478,385 390,384 231,034
---------- -------- --------- --------- ----------
EXPENSES
Property and maintenance 326,567 176,075 127,172 112,186 66,534
Real estate taxes and insurance 126,009 69,520 44,128 37,002 23,028
Property management 52,705 26,793 17,512 15,213 10,249
Property management - non-recurring - - - - 879
Fee and asset management 4,207 3,364 3,837 3,887 2,056
Depreciation 301,869 156,644 93,253 72,410 37,273
Interest:
Expense incurred 246,585 121,324 81,351 78,375 37,044
Amortization of deferred financing costs 2,757 2,523 4,242 3,444 1,930
Refinancing costs - - - - -
General and administrative 21,718 15,064 9,857 8,129 6,053
---------- -------- --------- --------- ----------
Total expenses 1,082,417 571,307 381,352 330,646 185,046
---------- -------- --------- --------- ----------
Income (loss) before extraordinary items $ 255,032 $ 176,014 $ 97,033 $ 59,738 $ 45,988
========== ======== ========= ========= ==========
Combined Fixed Charges and Preferred Distributions:
Interest and other financing costs $ 246,585 $ 121,324 $ 81,351 $ 78,375 $ 37,044
Refinancing costs - - - - -
Amortization of deferred financing costs 2,757 2,523 4,242 3,444 1,930
Preferred distributions 92,917 59,012 29,015 10,109 -
---------- -------- --------- --------- ----------
Total Combined Fixed Charges
and Preferred Distributions $ 342,259 $ 182,859 $ 114,608 $ 91,928 $ 38,974
========== ======== ========= ========= ==========
Earnings before combined fixed charges
and preferred distributions $ 504,374 $ 299,861 $ 182,626 $ 141,557 $ 84,962
========== ======== ========= ========= ==========
Funds from operations before combined fixed
charges and preferred distributions $ 806,243 $ 456,505 $ 275,879 $ 213,967 $ 123,114
========== ======== ========= ========= ==========
Ratio of earnings before combined fixed charges
and preferred distributions to combined fixed
charges and preferred distributions 1.47 1.64 1.59 1.54 2.18
========== ======== ========= ========= ==========
Ratio of funds from operations before combined fixed
charges and preferred distributions to combined
fixed charges and preferred distributions 2.36 2.50 2.41 2.33 3.16
========== ======== ========= ========= ==========
</TABLE>
<PAGE>
Exhibit 21
EQUITY RESIDENTIAL PROPERTIES TRUST
SUBSIDIARIES
1 ERP OPERATING LIMITED PARTNERSHIP
2 EVANS WITHYCOMBE RESIDENTIAL LIMITED PARTNERSHIP
3 MERRY LAND DOWNREIT I LP
4 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT CORP
5 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT L.P.
6 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT CORP II
7 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT L.P. II
8 EQUITY RESIDENTIAL PROPERTIES MANAGEMENT CORP III
9 EVANS WITHYCOMBE MANAGEMENT INC.
10 WADLINGTON INVESTMENTS GENERAL PARTNERSHIP
11 ARTERY NORTHAMPTON LIMITED PARTNERSHIP
12 BUENA VISTA PLACE ASSOCIATES
13 Capital Realty Investors Tax Exempt Fund, L.P.
14 CAPREIT Arbor Glen L.P.
15 CAPREIT ATRIUM, L.P.
16 CAPREIT BOTANY ARMS, L.P.
17 CAPREIT BRECKENRIDGE
18 CAPREIT BURWICK FARMS, L.P.
19 CAPREIT Cedars L.P.
20 CAPREIT CHIMNEYS, L.P.
21 CAPREIT CLARION, L.P.
22 CAPREIT CONCORDE BRIDGE, L.P.
23 CAPREIT CREEKWOOD, L.P.
24 CAPREIT EASTLAND ON THE LAKE, L.P.
25 CAPREIT Farmington Gates L.P.
26 CAPREIT GARDEN LAKE, L.P.
27 CAPREIT GLENEAGLE, L.P.
28 CAPREIT GREYEAGLE, L.P.
29 CAPREIT HAMPTON ARMS, L.P.
30 CAPREIT HIDDEN OAKS, L.P.
31 CAPREIT HIGHLAND GROVE, L.P.
32 CAPREIT MARINER'S WHARF, L.P.
33 CAPREIT NORTHLAKE, L.P.
34 CAPREIT Ridgeway Commons L.P.
35 CAPREIT River Oak L.P.
36 CAPREIT SILVER SPRINGS, L.P.
37 CAPREIT SYCAMORE RIDGE, L.P.
38 CAPREIT TARMARIND AT STONEBRIDGE, L.P.
39 CAPREIT TIVOLI LAKES CLUB, L.P.
40 CAPREIT Westwood Pines L.P.
41 CAPREIT Woodcrest Villa L.P.
42 CAPREIT WOODLAND MEADOWS, L.P.
43 CARROLLWOOD LP
44 CEDAR CREST GENERAL PARTNERSHIP
45 COUNTRY CLUB ASSOCIATES LIMITED PARTNERSHIP
46 COUNTRY RIDGE GENERAL PARTNERSHIP
47 CRICO of Trailway Pond II, L.P.
48 CRICO of White Bear Woods I, L.P.
49 CRICO of Ethan's I, L.P.
50 CRICO of Ethan's II, L.P.
51 CRICO of Fountain Place, L.P.
52 CRICO of James Street Crossing, L.P.
53 CRICO of Ocean Walk, L.P.
54 CRICO of Regency Woods, L.P.
55 CRICO of Trailway Pond I, L.P.
56 CRICO of Valley Creek I, L.P.
57 CRICO of Valley Creek II, L.P.
58 CRICO of Woodlane Place, L.P.
59 CRICO Royal Oaks, L.P.
60 E-G-ONE ASSOCIATES
61 E-G-TWO ASSOCIATES
62 E-LODGE ASSOCIATES LIMITED PARTNERSHIP
63 EQR-ARBORS FINANCING LIMITED PARTNERSHIP
64 EQR-IRONWOOD, L.L.C.
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
SUBSIDIARIES
65 EQR-WYNDRIDGE II, LLC
66 EQR-740 RIVER DRIVE, LLC
67 EQR-ALDERWOOD LP
68 EQR-ARBORETUM, LLC
69 EQR-ARIZONA, L.L.C.
70 EQR-ARTBHOLDER, L.L.C.
71 EQR-ARTCAPLOAN, L.L.C.
72 EQR-BELLEVUE MEADOW GP LP
73 EQR-BELLEVUE MEADOW LP
74 EQR-BOND PARTNERSHIP
75 EQR-BRAMBLEWOOD GP LP
76 EQR-BRAMBLEWOOD LP
77 EQR-BRETON HAMMOCKS FINANCING LIMITED PARTNERSHIP
78 EQR-BRIARWOOD GP LP
79 EQR-BRIARWOOD LP
80 EQR-BROADWAY LP
81 EQR-BROOKSIDE, LLC
82 EQR-BS FINANCING LIMITED PARTNERSHIP
83 EQR-CALIFORNIA, L.L.C
84 EQR-CAMELLERO FINANCING LIMITED PARTNERSHIP
85 EQR-CANTER CHASE GENERAL PARTNERSHIP
86 EQR-CEDAR POINTE GP LP
87 EQR-CEDAR POINTE LP
88 EQR-CEDAR RIDGE GP, LLC
89 EQR-CEDAR RIDGE LP
90 EQR-CHARDONNAY PARK, L.L.C.
91 EQR-CHELSEA SQUARE GP LP
92 EQR-CHELSEA SQUARE LP
93 EQR-COACHMAN TRIALS, LLC
94 EQR-CONNOR, LLC
95 EQR-CONTINENTAL VILLAS FINANCING LIMITED PARTNERSHIP
96 EQR-CREEKSIDE GP LP
97 EQR-CREEKSIDE LP
98 EQR-CREEKSIDE OAKS GENERAL PARTNERSHIP
99 EQR-DARTMOUTH WOODS GENERAL PARTNERSHIP
100 EQR-DORAL FINANCING LIMITED PARTNERSHIP
101 EQR-EMERALD PLACE FINANCING LIMITED PARTNERSHIP
102 EQR-EOI FINANCING LIMITED PARTNERSHIP
103 EQR-ESSEX PLACE FINANCING LIMITED PARTNERSHIP
104 EQR-FAIRFIELD, LLC
105 EQR-FERNBROOK, LLC
106 EQR-FIELDERS CROSSING GP, LLC
107 EQR-FIELDERS CROSSING LP
108 EQR-FIRESIDE, LLC
109 EQR-FLATLANDS, LLC
110 EQR-GOVERNOR'S PLACE FINANCING LIMITED PARTNERSHIP
111 EQR-GRANDVIEW I GP LP
112 EQR-GRANDVIEW I LP
113 EQR-GRANDVIEW II GP LP
114 EQR-GRANDVIEW II LP
115 EQR-GREENHAVEN GP LP
116 EQR-GREENHAVEN LP
117 EQR-HIGHLINE OAKS, L.L.C.
118 EQR-IRONWOOD, LLC
119 EQR-KEYSTONE FINANCING GENERAL PARTNERSHIP
120 EQR-LAKESHORE AT PRESTON LP
121 EQR-LAKEVILLE RESORT GENERAL PARTNERSHIP
122 EQR-LAKEWOOD GREENS GP, LLC
123 EQR-LAKEWOOD GREENS LP
124 EQR-LEXINGTON FARM, LLC
125 EQR-LINCOLN GREEN I AND II GP LIMITED PARTNERSHIP
126 EQR-LINCOLN VILLAGE (CA) I LP
127 EQR-LINCOLN VILLAGE (CA) II LP
128 EQR-LODGE (OK) GP LIMITED PARTNERSHIP
129 EQR-MARKS A, L.L.C.
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
SUBSIDIARIES
130 EQR-MARKS B, LLC
131 EQR-MARTINS LANDING, LLC
132 EQR-MET CA FINANCING LIMITED PARTNERSHIP
133 EQR-MET FINANCING LIMITED PARTNERSHIP
134 EQR-MILL POND, LLC
135 EQR-MISSOURI, L.L.C.
136 EQR-MOUNTAIN SHADOWS GP LP
137 EQR-MOUNTAIN SHADOWS LP
138 EQR-MUIRFIELD, LLC
139 EQR-NORTH CREEK, LLC
140 EQR-NORTH HILL, L.L.C.
141 EQR-OLDE REDMOND GP LP
142 EQR-OLDE REDMOND LP
143 EQR-OLDE REDMOND LP LP
144 EQR-OREGON, L.L.C.
145 EQR-OVERLOOK MANOR II, LLC
146 EQR-PARK PLACE I GENERAL PARTNERSHIP
147 EQR-PARK PLACE II GENERAL PARTNERSHIP
148 EQR-PARKCREST, LLC
149 EQR-PARKSIDE LP
150 EQR-PINE MEADOWS GARDEN GENERAL PARTNERSHIP
151 EQR-PLANTATION FINANCING LIMITED PARTNERSHIP
152 EQR-PLANTATION, L.L.C.
153 EQR-PLEASANT RIDGE LP
154 EQR-PORTLAND CENTER, LLC
155 EQR-PRESTON BEND, G.P.
156 EQR-RESERVE SQUARE LIMITED PARTNERSHIP
157 EQR-RIDGEMONT/MOUNTAIN BROOK, L.L.C.
158 EQR-RIVER PARK LP
159 EQR-SANDSTONE LP
160 EQR-SMOKETREE, LLC
161 EQR-SONTERRA AT FOOTHILLS RANCH LP
162 EQR-SOUTHWOOD GP LP
163 EQR-SOUTHWOOD LP
164 EQR-SOUTHWOOD LP I LP
165 EQR-SOUTHWOOD LP II LP
166 EQR-SPINNAKER COVE, L.L.C.
167 EQR-SUMMER CREEK, LLC
168 EQR-SUMMERWOOD LP
169 EQR-SURREY DOWNS GP LP
170 EQR-SURREY DOWNS LP
171 EQR-SURREY DOWNS LP LP
172 EQR-SWN LINE FINANCING LIMITED PARTNERSHIP
173 EQR-TANASBOURNE TERRACE FINANCING LIMITED PARTNERSHIP
174 EQR-THE LAKES AT VININGS, LLC
175 EQR-TIMBERWOOD GP LP
176 EQR-TIMBERWOOD LP
177 EQR-TOWNHOMES OF MEADOWBROOK, LLC
178 EQR-TRAILS AT DOMINION GENERAL PARTNERSHIP
179 EQR-VALLEY PARK SOUTH FINANCING LIMITED PARTNERSHIP
180 EQR-VILLA SERENAS GENERAL PARTNERSHIP
181 EQR-VILLAGE OAKS GENERAL PARTNERSHIP
182 EQR-VILLAS OF JOSEY RANCH GP, LLC
183 EQR-VILLAS OF JOSEY RANCH LP
184 EQR-VININGS AT ASHLEY LAKE, L.L.C.
185 EQR-VIRGINIA, L.L.C.
186 EQR-WARWICK, L.L.C.
187 EQR-WASHINGTON, L.L.C.
188 EQR-WATERFALL, L.L.C.
189 EQR-WATSON G.P.
190 EQR-WELLINGTON, L.L.C.
191 EQR-WEST COAST PORTFOLIO GP, LLC
192 EQR-WIMBLEDON OAKS LP
193 EQR-WOODLAKE GP LP
194 EQR-WOODLAKE LP
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
SUBSIDIARIES
195 EQR-WOODLEAF GP LP
196 EQR-WOODLEAF LP
197 EQR-WOODRIDGE I LP
198 EQR-WOODRIDGE II LP
199 EQR-WOODRIDGE III LP
200 EQR-WOODRIDGE, LLC
201 EQR-WYNDRIDGE III, L.L.C.
202 EQR-YORKTOWNE FINANCING LIMITED PARTNERSHIP
203 EQUITY-GREEN I VENTURE LIMITED PARTNERSHIP
204 EQUITY-GREEN II VENTURE LIMITED PARTNERSHIP
205 EQUITY-LODGE VENTURE LTD.
206 ERP-SOUTHEAST PROPERTIES, LLC
207 EVANS WITHYCOMBE FINANCE, L.P.
208 EW CHANDLER, L.P.
209 FOREST PLACE ASSOCIATES
210 FOURTH TOWNE CENTRE LIMITED PARTNERSHIP
211 FPAII, L.P.
212 Geary Courtyard Associates
213 GEORGIAN WOODS ANNEX ASSOCIATES
214 GLENLAKE CLUB L.P.
215 GREENWICH WOODS LIMITED PARTNERSHIP
216 HAMMOCKS AT LONG POINT, LLC
217 HORIZON PLACE ASSOCIATES
218 HUNTERS'S GLEN GENERAL PARTNERSHIP
219 HUNTINGTON, LLC
220 LANDON LEGACY PARTNERS LIMITED
221 LANDON PRAIRIE CREEK PARTNERS LIMITED
222 LENOX PLACE LP
223 MAGNOLIA VILLA, LLC
224 MCCASLIN HIDDEN LAKES, LTD.
225 MCCASLIN RIVERHILL, LTD.
226 MCKINLEY HILLS PARTNERS-85,
227 MERRY LAND, LLC
228 ML NORTH CAROLINA APARTMENTS LP
229 ML TENNESSEE APARTMENTS LP
230 ML TEXAS APARTMENTS LP
231 NORTHRIDGE LAKES LP
232 NRL ASSOCIATES LP
233 OAKS AT BAYMEADOWS ASSOCIATES
234 OAKS AT REGENCY ASSOCIATES
235 ROLIDO PARQUE GP
236 ROSEHILL POINTE GENERAL PARTNERSHIP
237 SARASOTA BENEVA PLACE ASSOICATES, LTD.
238 SEAGULL DRIVE JOINT VENTURE
239 SECOND COUNRTY CLUB ASSOCIATES LIMITED PARTNERSHIP
240 SECOND GEORGIAN WOODS LIMITED PARTNERSHIP
241 SONGBIRD GENERAL PARTNERSHIP
242 SUMMIT PLACE, LLC
243 SUNNY OAK VILLAGE GENERAL PARTNERSHIP
244 THE CROSSINGS ASSOCIATES
245 THE GATES OF REDMOND, L.L.C.
246 THE WIMBERLY APARTMENT HOMES, LTD.
247 THIRD TOWNE CENTRE LIMITED PARTNERSHIP
248 TOWERS AT PORTSIDE URBAN RENEWAL COMPANY, LLC
249 VININGS CLUB AT METROWEST LP
250 WINDSOR PLACE, LLC
251 WOOD FOREST ASSOCIATES
252 WOODCREST (AUGUSTA), LLC
<PAGE>
Exhibit 23.1
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 17, 1999, except for Note 36, as to
which the date is March 5, 1999, 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, 1998.
/s/ Ernst & Young LLP
Ernst & Young LLP
Chicago, Illinois
March 26, 1999
<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
255 Colville Rd., Charlotte, NC 28207, 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 12th
day of March, 1999.
/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 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 12th day of March, 1999.
/s/ Lisa Currie
------------------------------
(Notary Public)
[SEAL APPEARS HERE]
My Commission Expires: 02/07/01
<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 11120 McCann Road, Amity, OR, 97101, 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
12th day of March, 1999.
/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 12th day of March, 1999.
Lisa Currie
------------------------------
(Notary Public)
[SEAL APPEARS HERE]
My Commission Expires:____________________
<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
107 W. Delaware, Unit F, Chicago, IL 60610, 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
12th day of March, 1999.
/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 12th day of March, 1999.
Lisa Currie
------------------------------
(Notary Public)
[SEAL APPEARS HERE]
My Commission Expires: 02/07/01
<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
3000 Hunting Valley, Ann Arbor, MI, 48104, 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 12th
day of March, 1999.
/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 12th day of March, 1999.
/s/ Lisa Currie
-----------------------------------
[SEAL APPEARS HERE] (Notary Public)
My Commission Expires:____________________
<PAGE>
Exhibit 24.5
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Henry H. Goldberg, having an address at
c/o Artery Properties Inc. 4733 Bethesda Ave. #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
12th day of March, 1999.
/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 12th day of March, 1999.
Lisa Currie
------------------------------
(Notary Public)
[SEAL APPEARS HERE]
My Commission Expires: 02/07/01
<PAGE>
Exhibit 24.6
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Edward Lowenthal, having an address at
13 Ackerman Road, Saddle River, NJ 07458, 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 and
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 12th
day of March, 1999.
/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
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 12th day of March, 1999.
/s/ Lisa Currie
______________________________
(Notary Public)
[SEAL APPEARS HERE]
My Commission Expires: ____________________
<PAGE>
Exhibit 24.7
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Jeffrey H. Lynford, having an address
at 10 Holly Branch Road, Katomah, NY 10536, 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 and
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
12th day of March, 1999.
/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 12th day of March, 1999.
/s/ Lisa Currie
______________________________
(Notary Public)
[SEAL APPEARS HERE]
My Commission Expires: 2/07/01
<PAGE>
Exhibit 24.8
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Stephen O. Evans, having an address at
5825 E. Starlight Way, Paradise Valley, AZ 85253, 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 12th
day of March, 1999.
/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 12th day of March, 1999.
/s/ Lisa Currie
------------------------------
(Notary Public)
My Commission Expires: 02/07/01
<PAGE>
Exhibit 24.9
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Boone A. Knox, having an address at
3133 Washington Rd., Thompson, GA 30824, 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 and
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, Boone A. Knox, has hereunto set his hand this 12th
day of March, 1999.
/s/ Boone A. Knox
______________________________
Boone A. Knox
I, Lisa Currie, a Notary Public in and for said County in the State of
aforesaid, do hereby certify that Boone A. Knox, 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 12th day of March, 1999.
/s/ Lisa Currie
______________________________
(Notary Public)
[SEAL APPEARS HERE]
My Commission Expires: 02/07/01
<PAGE>
Exhibit 24.10
POWER OF ATTORNEY
-----------------
STATE OF ILLINOIS
COUNTY OF COOK
KNOW ALL MEN BY THESE PRESENTS that Michael N. Thompson, having an address
at 5 Brijartrie Court, Savannah, GA 31410, 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 and
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, Michael N. Thompson, has hereunto set his hand this
12th day of March, 1999.
/s/ Michael N. Thompson
------------------------------
Michael N. Thompson
I, Lisa Currie, a Notary Public in and for said County in the State of
aforesaid, do hereby certify that Michael N. Thompson, 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 12th day of March, 1999.
/s/ Lisa Currie
------------------------------
(Notary Public)
[SEAL APPEARS HERE]
My Commission Expires:____________________
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<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
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