EQUITY RESIDENTIAL (EQR)

Interest expense, including amortization of deferred financing costs, increased approximately $39.8 million primarily as a result of higher overall debt balances as well as higher variable interest rates.  During the nine months ended September 30, 2005, the Company capitalized interest costs of approximately $9.1 million as compared to $10.3 million for the nine months ended September 30, 2004.  This capitalization of interest related specifically to our consolidated projects under development.  The effective interest cost on all indebtedness for the nine months ended September 30, 2005 was 6.23% as compared to 5.86% for the nine months ended September 30, 2004.

Loss from investments in unconsolidated entities decreased approximately $7.0 million between the periods under comparison.  This decrease is primarily the result of the consolidation of properties that were previously unconsolidated in the first quarter of 2004.

Net gain on sales of discontinued operations increased approximately $305.8 million between the periods under comparison.  This increase is primarily the result of higher per unit sales prices and lower real estate net book values for properties sold during the nine months ended September 30, 2005 as compared to the same period in 2004, and due to the sale of Water Terrace, a 450-unit high rise luxury apartment building in Marina del Rey, California.

Discontinued operations, net, decreased approximately $19.3 million between the periods under comparison.  The decrease in revenues and expenses between periods results from the timing, size and number of properties sold.  Any property sold after September 30, 2004 will include a full period’s results in the nine months of 2004 but minimal to no results in the nine months of 2005.  See Note 13 in the Notes to Consolidated Financial Statements for further discussion.

Interest expense, including amortization of deferred financing costs, increased approximately $11.7 million primarily as a result of higher overall debt balances due to the consolidation of previously unconsolidated development properties on March 31, 2004.  During the quarter ended March 31, 2005, the Company capitalized interest costs of approximately $2.9 million as compared to $2.7 million for the quarter ended March 31, 2004.  This capitalization of interest primarily related to investments in Partially Owned Properties (consolidated) engaged in development activities.  The effective interest cost on all indebtedness for the quarter ended March 31, 2005 was 6.18% as compared to 6.14% for the quarter ended March 31, 2004.

Loss from investments in unconsolidated entities decreased approximately $7.3 million between the periods under comparison.  This decrease is primarily the result of the consolidation of properties that were previously unconsolidated in the first quarter of 2004.

Net gain on sales of discontinued operations increased approximately $79.8 million between the periods under comparison primarily due to the previously announced sale of Water Terrace, a 450-unit high rise luxury apartment building in Marina del Rey, California.

Discontinued operations, net, decreased approximately $9.3 million between the periods under comparison.  The decrease in revenues and expenses between periods results from the timing, size and number of properties sold.  Any property sold after March 31, 2004 will include a full quarter’s results in the first quarter of 2004 but minimal to no results in the first quarter of 2005.  See Note 13 in the Notes to Consolidated Financial Statements for further discussion.