EQUITY RESIDENTIAL (EQR)

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Fee and asset management revenues, net of fee and asset management expenses decreased $0.7 million primarily as a result of lower income earned from managing fewer properties for third parties and unconsolidated entities.  As of June 30, 2006 and 2005, the Company managed 14,784 units and 17,539 units, respectively, for third parties and unconsolidated entities.

Property management expenses from continuing operations include off-site expenses associated with the self-management of the Company’s properties as well as management fees paid to any third party management companies.  These expenses increased by approximately $5.3 million or 12.7%.  This increase is primarily attributable to higher overall payroll costs, temporary contracting costs and training costs specific to the Company’s rollout of a new property management system.

Depreciation expense from continuing operations, which includes depreciation on non-real estate assets, increased $59.7 million primarily as a result of additional depreciation expense on newly acquired properties and capital expenditures for all properties owned.

General and administrative expenses, which include corporate operating expenses, decreased approximately $8.3 million between the periods under comparison.  This decrease was primarily due to lower executive compensation expense due to severance costs for several executive officers incurred during the six months ended June 30, 2005 and a $2.8 million reimbursement of legal expenses during the quarter ended June 30, 2006.  The Company anticipates that general and administrative expenses will approximate $48.0 million for the year ending December 31, 2006.  This above assumption is based on current expectations and is forward-looking.