EQUITY RESIDENTIAL

Current report

The Merger is subject to conditions, some or all of which may not be satisfied or completed on a timely basis, if at all. Failure to complete the Merger could have material adverse effects on the Company.

Current report

The completion of the Merger is subject to a number of conditions, including, among others, the approval of the issuance of shares of the Company in connection with the Merger by the Company’s shareholders, the approval of the Merger by the AvalonBay stockholders and the absence of a law or order restraining, enjoining, rendering illegal or otherwise prohibiting the consummation of the Merger, which makes the completion of the Merger and timing thereof uncertain. In addition, the Company and AvalonBay are entitled to terminate the Merger Agreement under certain circumstances.

Current report

If the Merger is not completed, the Company’s ongoing business may be materially adversely affected and, without realizing any of the benefits of having completed the Merger, the Company will be subject to a number of risks, including the following:

Current report

The market price of the Common Shares could decline;

Current report

The Company could owe substantial termination fees to AvalonBay under certain circumstances;

Current report

If the Merger Agreement is terminated and the Board of Trustees seeks another business combination, the Company’s shareholders cannot be certain that the Company will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms agreed to in the Merger Agreement;

Current report

Time, resources, and costs committed by the Company’s management team to matters relating to the Merger could otherwise have been devoted to pursuing other beneficial opportunities for the Company;

Current report

The Company may experience negative reactions from the financial markets or from its customers, suppliers, employees, labor unions or other business partners; and

Current report

The Company will be required to pay its costs relating to the Merger, such as legal, accounting, financial advisory and printing fees, whether or not the Merger is completed.

Current report

In addition, if the Merger is not completed, the Company could be subject to litigation related to any failure to complete the Merger or to any enforcement proceeding commenced against the Company to perform its obligations under the Merger Agreement, and whether or not any such litigation has any merit, the cost of defending such litigation may be significant. The materialization of any of these risks could adversely impact the Company’s ongoing business.

Current report

Similarly, delays in the completion of the Merger could, among other things, result in additional transaction costs, loss of revenue, or other negative effects associated with uncertainty about completion of the Merger.

Current report

The exchange ratio will not be adjusted in the event of any change in either the Company’s or AvalonBay’s stock price. As a result, the Merger Consideration payable to AvalonBay’s stockholders may be subject to change if the Company’s stock price fluctuates.

Current report

Upon completion of the Merger, each eligible share of AvalonBay Common Stock will be converted into the right to receive 2.793 Common Shares, plus the right to receive cash in lieu of fractional Common Shares, if any, into which such AvalonBay Common Stock would have been converted. The exchange ratio will not be adjusted for changes in the market price of either Common Shares or AvalonBay Common Stock between the date the Merger Agreement was signed and completion of the Merger. Due to the fixed nature of the exchange ratio, fluctuations in the price of Common Shares will drive corresponding changes in the value of the Merger Consideration payable to each AvalonBay stockholder, and accordingly, at the time of the AvalonBay special meeting, AvalonBay stockholders will not know or be able to determine the market value of the consideration they will receive upon completion of the Merger. Factors influencing stock prices include:

Current report

Market reaction to the Merger announcement and combined company prospects;

Current report

Changes in the respective business, operations, assets, liabilities or financial outlook of either company;

Current report

Investor sentiment and perceived likelihood of closing of the Merger;

Current report

Economic conditions, geopolitical uncertainties, interest rates, regulatory developments and other factors generally affecting the market prices of Common Shares and AvalonBay Common Stock and the broader financial markets;

Current report

Federal, state and local legislation, governmental regulation and legal developments in the businesses in which the Company and AvalonBay operate; and

Current report

Other factors beyond the control of the Company and AvalonBay.

Current report

The price of Common Shares has fluctuated since the date the Merger Agreement was executed, and may continue to fluctuate through the date of each of the Company’s special meeting and the AvalonBay special meeting and the date the Merger is completed. For example, based on the range of closing prices of Common Shares during the period from May 20, 2026, the last trading day before the public announcement of the Merger Agreement, through July 24, 2026, the exchange ratio resulted in an implied value of the Merger Consideration ranging from a high of approximately $195.93 to a low of approximately $179.00 for each share of AvalonBay Common Stock. The actual market value of the Common Shares received by AvalonBay stockholders upon completion of the Merger may result in an implied value of the Merger Consideration outside this range.

Current report

The Merger Agreement contains provisions that limit the Company’s ability to pursue alternatives to the Merger, which could discourage a potential competing acquirer of the Company from making an alternative proposal and, in specified circumstances, could require the Company to pay substantial termination fees to AvalonBay.

Current report

The Merger Agreement contains certain provisions that restrict the Company’s ability to initiate, solicit, knowingly encourage or, subject to certain exceptions, engage in discussions or negotiations with respect to, or to approve or recommend, any alternative proposal. Further, even if the Board of Trustees withdraws or qualifies its recommendation with respect to the Share Issuance, the Company will still be required to submit the Share Issuance to a vote at its special meeting. In addition, AvalonBay generally has an opportunity to offer to modify the terms of the transactions contemplated by the Merger Agreement in response to any alternative proposal before the Board of Trustees may withdraw or qualify its recommendation with respect to the Share Issuance.

Current report

In some circumstances, upon termination of the Merger Agreement in connection with an alternative proposal, the Company may be required to pay a termination fee of approximately $1.005 billion to AvalonBay. This provision could discourage a potential third-party acquirer or merger partner that might have an interest in acquiring all or a significant portion of the Company, or pursuing an alternative acquisition transaction, from considering or proposing such a transaction, even if it were prepared to pay consideration with a higher per-share value than the per-share value proposed to be received or realized in the Merger. In particular, a termination fee, if applicable, could result in a potential third-party acquirer or merger partner proposing to pay a lower price to the Company’s shareholders than it might otherwise have proposed to pay absent such a fee.

Current report

If the Merger Agreement is terminated in accordance with its terms, and the Company determines to seek another business combination, the Company may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger Agreement.

Current report

The Merger will result in changes to the Board of Trustees that may affect the strategy of the combined company as compared to that of the Company independently.

Current report

If the Merger is completed, the composition of the Board of Trustees will change. Immediately following the Merger, the Board of Trustees will consist of fourteen (14) members, seven (7) of whom are current trustees of the Company and seven (7) of whom are current directors of AvalonBay. The composition of the Board of Trustees may affect the business strategy and operating decisions of the combined company upon the completion of the Merger.

Current report

The Company is subject to business uncertainties and contractual restrictions while the Merger is pending, which could adversely affect the Company’s business and operations.

Current report

In connection with the pendency of the Merger, some customers, suppliers and other persons with whom the Company has a business relationship have delayed or deferred or may delay or defer certain business decisions or terminate, change, or renegotiate their relationships with the Company as a result of the Merger, which could negatively affect the Company’s revenues, earnings, and cash flows, as well as the market price of the Common Shares, regardless of whether the Merger is completed.

Current report

Under the terms of the Merger Agreement, the Company is subject to certain restrictions on the conduct of its business prior to completing the Merger, which may adversely affect its ability to execute certain of its business strategies, including the ability in certain cases to enter into or amend contracts, acquire or dispose of assets, incur indebtedness, incur capital expenditures, settle litigation, amend organizational documents, declare dividends, enter new business lines and invest in third parties. Such limitations could adversely affect the Company’s businesses and operations prior to the completion of the Merger.

Current report

Uncertainties associated with the Merger may cause a loss of management personnel and other key employees, and the Company and AvalonBay may have difficulty attracting and motivating management personnel and other key employees, which could adversely affect the future business and operations of the combined company or, in the event the Merger is not completed, the Company.

Current report

The Company and AvalonBay are dependent on the experience and industry knowledge of their respective management personnel and other key employees to execute their business plans. The combined company’s success after the completion of the Merger will depend in part upon the ability of the Company and AvalonBay to attract, motivate, and retain key management personnel and other key employees. Prior to completion of the Merger, current and prospective employees of the Company and AvalonBay may experience uncertainty about their roles within the combined company following the completion of the Merger, which may have an adverse effect on the ability of each of the Company and AvalonBay to attract, motivate or retain management personnel and other key employees. In addition, no assurance can be given that the combined company will be able to attract, motivate or retain management personnel and other key employees to the same extent that the Company and AvalonBay have previously been able to attract or retain their own employees. These same risks apply to the ability of the Company to retain its key management personnel and other key employees, in the event the Merger is not completed.

Current report

If the Merger is not consummated by the outside date, either the Company or AvalonBay may terminate the Merger Agreement.

Current report

Either the Company or AvalonBay may terminate the Merger Agreement if the Merger has not been consummated by the outside date in the Merger Agreement. However, this termination right will not be available to a party if that party materially breached any of its obligations under the Merger Agreement and that breach resulted in the failure to consummate the Merger before such date. Any termination of the Merger Agreement may adversely affect the Company’s business, financial condition, results of operations and growth prospects.

Current report

The Company has been and may continue to be the target of securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the Merger from being completed, whether or not such lawsuits have any merit.

Current report

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against or otherwise resolving these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on the Company’s or the combined company’s liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, then that injunction may delay or prevent the Merger from being completed, or from being completed within the expected timeframe, which may adversely affect the Company’s business, financial position and results of operations.

Current report

The Company’s shareholders will not have appraisal rights or dissenters’ rights in the Merger.

Current report

Appraisal rights (also known as dissenters’ rights) are statutory rights that, if applicable under law, enable shareholders to

Current report

dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as

Current report

determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the

Current report

extraordinary transaction.