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Debt

12 Months Ended

Dec. 31, 2018

EQR does not have any indebtedness as all debt is incurred by the Operating Partnership. EQR guarantees the Operating Partnership’s revolving credit facility up to the maximum amount and for the full term of the facility. Weighted average interest rates noted below for the years ended December 31, 2018 and 2017 are net of the effect of any derivative instruments.

Mortgage Notes Payable

As of December 31, 2018, the Company had outstanding mortgage debt of approximately $2.4 billion.

During the year ended December 31, 2018, the Company:

•

Repaid $550.0 million of 6.08% mortgage debt held in a Fannie Mae loan pool maturing in 2020 and incurred a prepayment penalty of approximately $22.1 million;

•

Repaid $500.0 million of 5.19% mortgage debt held in a Freddie Mac loan pool at par prior to the October 1, 2019 maturity date;

•

Repaid $43.7 million of conventional fixed-rate mortgage loans maturing in 2018;

•

Repaid $254.2 million of various tax-exempt mortgage bonds maturing in 2028 through 2042;

•

Repaid $6.6 million of scheduled principal repayments on various mortgage debt; and

•

Reissued $96.9 million of floating rate tax-exempt mortgage bonds which mature on April 1, 2042, remarket weekly and are guaranteed by ERPOP.

The Company recorded $3.0 million of write-offs of unamortized deferred financing costs during the year ended December 31, 2018 as additional interest expense related to debt extinguishment of mortgages. The Company also recorded $16.3 million of write-offs of net unamortized discounts during the year ended December 31, 2018 as additional interest expense related to debt extinguishment of mortgages.

As of December 31, 2018, the Company had $440.7 million of secured debt (primarily tax-exempt bonds) subject to third party credit enhancement.

As of December 31, 2018, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through May 28, 2061. At December 31, 2018, the interest rate range on the Company’s mortgage debt was 0.10% to 6.90%. During the year ended December 31, 2018, the weighted average interest rate on the Company’s mortgage debt was 4.15%.

The historical cost, net of accumulated depreciation, of encumbered properties was $3.2 billion and $4.4 billion at December 31, 2018 and 2017, respectively.

As of December 31, 2017, the Company had outstanding mortgage debt of approximately $3.6 billion.

During the year ended December 31, 2017, the Company:

•

Repaid $300.0 million of 5.987% mortgage debt held in a Fannie Mae loan pool maturing in 2019 and incurred a prepayment penalty of approximately $10.8 million;

•

Repaid $193.4 million of conventional fixed-rate mortgage loans maturing in 2017 through 2048 and incurred prepayment penalties of approximately $1.5 million; and

•

Repaid $10.7 million of scheduled principal repayments on various mortgage debt.

The Company recorded $0.3 million of write-offs of unamortized deferred financing costs during the year ended December 31, 2017 as additional interest expense related to debt extinguishment of mortgages. The Company also recorded $0.7 million of write-offs of net unamortized premiums during the year ended December 31, 2017 as a reduction of interest expense related to debt extinguishment of mortgages.

As of December 31, 2017, the Company had $598.6 million of secured debt (primarily tax-exempt bonds) subject to third party credit enhancement.

As of December 31, 2017, scheduled maturities for the Company’s outstanding mortgage indebtedness were at various dates through May 28, 2061. At December 31, 2017, the interest rate range on the Company’s mortgage debt was 0.10% to 6.90%. During the year ended December 31, 2017, the weighted average interest rate on the Company’s mortgage debt was 4.33%.

Notes

The following tables summarize the Company’s unsecured note balances and certain interest rate and maturity date information as of and for the years ended December 31, 2018 and 2017, respectively:

December 31, 2018 (Amounts in thousands)	Net Principal Balance		Interest Rate Ranges	Weighted Average Interest Rate	Maturity Date Ranges
Fixed Rate Public Notes (1)	$	5,485,884	2.85% - 7.57%	4.37%	2020-2047
Floating Rate Public Notes (1)		447,402	(1)	2.84%	2019
Totals	$	5,933,286		4.25%

December 31, 2017 (Amounts in thousands)	Net Principal Balance		Interest Rate Ranges	Weighted Average Interest Rate	Maturity Date Ranges
Fixed Rate Public Notes (1)	$	4,591,373	2.85% - 7.57%	4.61%	2020-2047
Floating Rate Public Notes (1)		447,439	(1)	1.82%	2019
Totals	$	5,038,812		4.35%

(1)	Fair value interest rate swaps convert the $450.0 million 2.375% notes due July 1, 2019 to a floating interest rate of 90-Day LIBOR plus 0.61%.

The Company’s unsecured public debt contains certain financial and operating covenants including, among other things, maintenance of certain financial ratios. The Company was in compliance with its unsecured public debt covenants for both the years ended December 31, 2018 and 2017.

EQR and ERPOP currently have an active universal shelf registration statement for the issuance of equity and debt securities that automatically became effective upon filing with the SEC on June 28, 2016 and expires on June 28, 2019.

During the year ended December 31, 2018, the Company:

•

Issued $500.0 million of ten-year 3.50% unsecured notes, receiving net proceeds of approximately $497.0 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of 3.61%; and

•

Issued $400.0 million of ten-year 4.15% unsecured notes, receiving net proceeds of approximately $399.3 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of approximately 3.85%.

During the year ended December 31, 2017, the Company:

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Repaid $394.1 million of 5.75% unsecured notes at maturity;

•

Repaid $103.9 million of 7.125% unsecured notes at maturity;

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Issued $400.0 million of ten-year 3.25% unsecured notes, receiving net proceeds of approximately $399.3 million before underwriting fees, hedge termination costs and other expenses, at an all-in effective interest rate of 3.32% after termination of four forward starting swaps in conjunction with the issuance (see Note 9 for further discussion); and

•

Issued $300.0 million of thirty-year 4.00% unsecured notes, receiving net proceeds of approximately $293.2 million before underwriting fees and other expenses, at an all-in effective interest rate of 4.11%.

Line of Credit and Commercial Paper

In November 2016, the Company replaced its existing $2.5 billion facility with a $2.0 billion unsecured revolving credit facility maturing January 10, 2022. The Company has the ability to increase available borrowings by an additional $750.0 million by adding additional banks to the facility or obtaining the agreement of existing banks to increase their commitments. The interest rate on advances under the facility will generally be LIBOR plus a spread (currently 0.825%), or based on bids received from the lending group, and the Company pays an annual facility fee (currently 0.125%). Both the spread and the facility fee are dependent on the Company’s senior unsecured credit rating.

In February 2015, the Company entered into an unsecured commercial paper note program in the United States. The Company may borrow up to a maximum of $500.0 million under this program subject to market conditions. The notes will be sold under customary terms in the United States commercial paper note market and will rank pari passu with all of the Company’s other unsecured senior indebtedness. As of December 31, 2018, there was a balance of $499.2 million outstanding on the commercial paper program ($500.0 million in principal outstanding net of an unamortized discount of $0.8 million). As of December 31, 2017, there was a balance of $299.8 million outstanding on the commercial paper program ($300.0 million in principal outstanding net of an unamortized discount of $0.2 million). The notes bear interest at various floating rates with a weighted average of 2.35% and 1.41% for the years ended December 31, 2018 and 2017, respectively, and a weighted average maturity of 22 days and 18 days as of December 31, 2018 and 2017, respectively.

As of December 31, 2018, there were no borrowings outstanding under the revolving credit facility and $6.7 million was restricted/dedicated to support letters of credit. In addition, the Company limits its utilization of the facility in order to maintain liquidity to support its $500.0 million commercial paper program along with certain other obligations. As a result, the Company had approximately $1.40 billion available under the facility at December 31, 2018. During the year ended December 31, 2018, the weighted average interest rate on the revolving credit facility was 2.97%.

As of December 31, 2017, there were no borrowings outstanding under the revolving credit facility and $6.6 million was restricted/dedicated to support letters of credit. In addition, the Company limits its utilization of the facility in order to maintain liquidity to support its $500.0 million commercial paper program. As a result, the Company had approximately $1.69 billion available under the facility at December 31, 2017. During the year ended December 31, 2017, the weighted average interest rate on the revolving credit facility was 2.00%.

Other

In 2017, the Company executed a letter of credit facility with a third party financial institution which is not backed or collateralized by borrowings on the Company’s unsecured revolving credit facility. As of both December 31, 2018 and 2017, there was $9.0 million in letters of credit outstanding on this facility.

The following table provides a summary of the aggregate payments of principal on all debt for each of the next five years and thereafter as of December 31, 2018 (amounts in thousands):

Year	Total
2019	$	974,954
2020		1,129,292
2021		928,106
2022		266,141
2023		1,331,600
Thereafter		4,282,668
Subtotal		8,912,761
Deferred Financing Costs and Unamortized (Discount)		(94,822	)
Total	$	8,817,939