EQUITY RESIDENTIAL Fair Value Disclosure
A three-level valuation hierarchy exists for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels are defined as follows:
The following table summarizes the inputs to the valuations for each type of fair value measurement:
Fair Value Measurement Type |
|
Valuation Inputs |
Employee holdings (other than Common Shares) within the supplemental executive retirement plan (the “SERP”) |
|
Quoted market prices for identical assets. These holdings are included in other assets and other liabilities on the consolidated balance sheets. |
Redeemable Noncontrolling Interests – Operating Partnership/Redeemable Limited Partners |
|
Quoted market price of Common Shares. |
Mortgage notes payable and private unsecured debt (including its commercial paper and line of credit, if applicable) |
|
Indicative rates provided by lenders of similar loans. |
Public unsecured notes |
|
Quoted market prices for each underlying issuance. |
Derivatives |
|
Readily observable market parameters such as forward yield curves and credit default swap data. |
The fair values of the Company’s financial instruments (other than the items listed above and the investments disclosed below) approximate their carrying or contract value. The following table provides a summary of the carrying and fair values for the Company’s mortgage notes payable and unsecured debt (including its commercial paper and line of credit, if applicable) at December 31, 2025 and 2024, respectively (amounts in thousands):
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
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|
|
Carrying Value |
|
|
Estimated Fair |
|
|
Carrying Value |
|
|
Estimated Fair |
|
||||
Mortgage notes payable, net |
|
$ |
1,589,904 |
|
|
$ |
1,532,421 |
|
|
$ |
1,630,690 |
|
|
$ |
1,506,955 |
|
Unsecured debt, net |
|
|
6,585,106 |
|
|
|
6,333,952 |
|
|
|
6,491,055 |
|
|
|
6,036,591 |
|
Total debt, net |
|
$ |
8,175,010 |
|
|
$ |
7,866,373 |
|
|
$ |
8,121,745 |
|
|
$ |
7,543,546 |
|
The following tables provide a summary of the fair value measurements for each major category of assets and liabilities measured at fair value on a recurring basis and the location within the accompanying consolidated balance sheets at December 31, 2025 and 2024, respectively (amounts in thousands):
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
||||||||||
Description |
|
Balance Sheet |
|
12/31/2025 |
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Supplemental Executive Retirement Plan |
|
Other Assets |
|
$ |
107,365 |
|
|
$ |
107,365 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Supplemental Executive Retirement Plan |
|
Other Liabilities |
|
$ |
107,365 |
|
|
$ |
107,365 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Redeemable Noncontrolling Interests – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Partnership/Redeemable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Limited Partners |
|
Mezzanine |
|
$ |
176,289 |
|
|
$ |
— |
|
|
$ |
176,289 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
Fair Value Measurements at Reporting Date Using |
|
||||||||||
Description |
|
Balance Sheet |
|
12/31/2024 |
|
|
Quoted Prices in |
|
|
Significant Other |
|
|
Significant |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Supplemental Executive Retirement Plan |
|
Other Assets |
|
$ |
109,935 |
|
|
$ |
109,935 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Supplemental Executive Retirement Plan |
|
Other Liabilities |
|
$ |
109,935 |
|
|
$ |
109,935 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Redeemable Noncontrolling Interests – |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Partnership/Redeemable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Limited Partners |
|
Mezzanine |
|
$ |
338,563 |
|
|
$ |
— |
|
|
$ |
338,563 |
|
|
$ |
— |
|
The following tables provide a summary of the effect of cash flow hedges on the Company’s accompanying consolidated statements of operations and comprehensive income for the years ended December 31, 2025, 2024 and 2023, respectively (amounts in thousands):
December 31, 2025 |
|
Amount of |
|
|
Location of |
|
Amount of |
|
||
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
||
Interest Rate Contracts: |
|
|
|
|
|
|
|
|
||
Forward Starting Swaps |
|
$ |
(3,550 |
) |
|
Interest expense |
|
$ |
(1,511 |
) |
Total |
|
$ |
(3,550 |
) |
|
|
|
$ |
(1,511 |
) |
December 31, 2024 |
|
Amount of |
|
|
Location of |
|
Amount of |
|
||
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
||
Interest Rate Contracts: |
|
|
|
|
|
|
|
|
||
Forward Starting Swaps |
|
$ |
(3,989 |
) |
|
Interest expense |
|
$ |
(2,499 |
) |
Total |
|
$ |
(3,989 |
) |
|
|
|
$ |
(2,499 |
) |
December 31, 2023 |
|
Amount of |
|
|
Location of |
|
Amount of |
|
||
Derivatives designated as hedging instruments: |
|
|
|
|
|
|
|
|
||
Interest Rate Contracts: |
|
|
|
|
|
|
|
|
||
Forward Starting Swaps |
|
$ |
4,514 |
|
|
Interest expense |
|
$ |
(3,737 |
) |
Total |
|
$ |
4,514 |
|
|
|
|
$ |
(3,737 |
) |
As of December 31, 2025 and 2024, there were approximately $2.2 million and $4.2 million in deferred gains, net, included in accumulated other comprehensive income (loss), respectively, related to previously settled and/or unsettled derivative instruments, of which an estimated $1.0 million may be recognized as additional interest expense during the twelve months ending December 31, 2026.
During the year ended December 31, 2025, the Company paid approximately $3.5 million to settle five forward starting swaps in conjunction with the issuance of $500.0 million of seven-year unsecured public notes. The entire $3.5 million was initially deferred as a component of accumulated other comprehensive income (loss) and $2.3 million will be recognized as an increase to interest expense over the seven-year term of the notes. The remaining $1.2 million covering the final three years of the ten-year term of the swaps will be amortized in conjunction with a future note refinance.
During the year ended December 31, 2024, the Company paid approximately $4.0 million to settle four forward starting swaps in conjunction with the issuance of $600.0 million of ten-year unsecured public notes. The entire $4.0 million was initially deferred as a component of accumulated other comprehensive income (loss) and will be recognized as an increase to interest expense over the ten-year term of the notes.
During the year ended December 31, 2023, the Company received a net $27.1 million to settle nine forward starting swaps in conjunction with the interest rate lock on $530.0 million of ten-year secured conventional mortgage notes. The Company ultimately closed on $550.0 million of secured notes. The accrued interest of approximately $1.9 million was recorded as a decrease to interest expense. The remaining $25.2 million was initially deferred as a component of accumulated other comprehensive income (loss) and will be recognized as a decrease to interest expense over the first nine years and eight months of the mortgage notes.
Other
The Company has invested in various equity securities without readily determinable fair values and has elected to measure them using the measurement alternative in accordance with the applicable accounting standards for equity securities. These investments are carried at cost less any impairment and adjusted to fair value if there are observable price changes for an identical or similar investment of the same issuer.
The following table summarizes the Company’s real estate technology investment securities included in other assets as of December 31, 2025 and 2024 (amounts in thousands):
|
|
December 31, 2025 |
|
|
December 31, 2024 |
|
||
Real Estate Technology Investments |
|
$ |
47,409 |
|
|
$ |
22,159 |
|
During the year ended December 31, 2025, the Company sold a portion of one of these investment securities for proceeds of approximately $0.4 million, which approximated the Company's basis in the investment security. During the year ended December 31, 2025, the Company adjusted certain of these investment securities to observable market prices and recorded an unrealized gain of approximately $25.4 million, which is included in interest and other income in the consolidated statements of operations.
During the year ended December 31, 2024, the Company sold certain of these investment securities for proceeds of approximately $15.0 million and realized a loss on sale of approximately $2.0 million, which is included in interest and other income in the consolidated statements of operations. During the year ended December 31, 2024, the Company adjusted certain of these investment securities to observable market prices and recorded a net unrealized gain of approximately $19.9 million, which is included in interest and other income in the consolidated statements of operations.
During the year ended December 31, 2023, the Company sold a portion of one of these investment securities for proceeds of approximately $2.5 million and realized a gain on sale of approximately $1.6 million, which is included in interest and other income in the consolidated statements of operations. During the year ended December 31, 2023, the Company adjusted certain of these investment securities to observable market prices and recorded an unrealized gain of approximately $13.5 million, which is included in interest and other income in the consolidated statements of operations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 13, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 15, 2024 | |
| 2022 | Feb 16, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 25, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.