ERP OPERATING LTD PARTNERSHIP Annual Performance Highlights

ERP OPERATING LTD PARTNERSHIP, a leading real estate firm, reported a strong fiscal year, showcasing resilience and strategic growth across its diverse property portfolio. The company acquires, develops, and manages high-quality residential and commercial properties in major urban centers like Boston, Los Angeles, New York, and San Diego.

Operational Highlights & Portfolio Strength: ERP's portfolio features flagship properties such as 'Parc Cameron,' 'Ocean Crest,' and 'Heritage Ridge,' which significantly contributed to revenue. Occupancy rates remained strong, averaging 94.5% for residential units and 91.2% for commercial spaces. These figures reflect robust demand in its target markets.

During the year, ERP:

• Acquired two new properties in the Boston metropolitan area, adding 350 residential units and 50,000 sq ft of commercial space.
• Divested a non-core asset in San Diego for $45 million, optimizing its portfolio.

Financial Performance at a Glance: ERP OPERATING LTD PARTNERSHIP generated total revenues of $1.2 billion, an 8.5% increase from the prior year. This growth stemmed primarily from a 6.2% rise in residential rental income and a 12.1% surge in commercial rents, complemented by consistent contributions from parking and utility recoveries.

Net income attributable to common shareholders grew 15% year-over-year, reaching $280 million. This resulted in an Adjusted Funds From Operations (AFFO) of $3.15 per share. The company's robust profitability enabled it to declare quarterly dividends totaling $2.00 per share for the year, yielding approximately 4.5% based on recent share prices.

The company effectively managed operating expenses, including real estate taxes, on-site payroll, repairs and maintenance, and general operating costs. These expenses increased by 5% to $650 million, showcasing efficient cost control relative to revenue growth.

Financial Health: ERP holds a strong financial position, with total assets valued at $15.5 billion. Total debt reached $6.8 billion, resulting in a debt-to-asset ratio of 43.9%.

ERP successfully refinanced $750 million in maturing mortgage debt at a favorable fixed interest rate of 4.2%. It also used its $500 million revolving credit facility to support ongoing acquisitions and working capital needs, ending the year with $150 million in available liquidity. The company's diversified capital structure, which includes common and preferred stock, various mortgage types, commercial paper, and revolving credit facilities, provides flexibility and ensures access to capital.

Competitive Position: ERP OPERATING LTD PARTNERSHIP holds a strong competitive edge by concentrating on urban markets with high barriers to entry, robust demand, and limited new supply. Its portfolio of high-quality, well-located residential and commercial properties attracts and retains premium tenants. The company's operational expertise, evident in its consistently high occupancy rates and efficient property management, helps it outperform competitors. Moreover, its diversified portfolio—spanning various property types and geographies—reduces reliance on any single market segment, offering resilience against local economic shifts. Strategic investments in property upgrades and technology further enhance tenant experience and property value, distinguishing ERP in a competitive landscape.

Future Outlook: ERP OPERATING LTD PARTNERSHIP plans to pursue disciplined growth, focusing on value-add acquisitions in high-growth urban areas and optimizing its current portfolio through targeted renovations and operational efficiencies. The company also aims to improve the tenant experience through technology integration and sustainable practices. Management forecasts AFFO per share to increase by 5-7% in the upcoming fiscal year, driven by expected rent increases and sustained high occupancy. ERP is actively exploring opportunities in emerging sub-markets and evaluating potential joint ventures to strategically expand its presence.

Key Risks & Mitigation: Investors should understand several key risks:

• Potential interest rate fluctuations, which could impact borrowing costs.
• Economic downturns affecting rental demand and property values.
• Intense competition in its target markets.
• Regulatory changes, especially concerning zoning and environmental standards.

ERP addresses these risks by:

• Maintaining a diversified portfolio across geographies and property types.
• Actively managing its debt maturity profile.
• Focusing on properties with strong market fundamentals and high tenant retention rates.
• Investing in property upgrades to remain competitive and attract premium tenants.

In summary, ERP OPERATING LTD PARTNERSHIP achieved robust financial performance, supported by a strong, diversified real estate portfolio and prudent financial management. Despite inherent market risks, the company's strategic initiatives position it for continued growth and shareholder value creation.