0000920522ess:UnencumberedApartmentCommunitiesMemberess:TiffanyCourtMember2023-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

 
(MARK ONE)

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended December 31, 20172023

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
For the transition period from ___________ TOto _____________
Commission file number:   1-13106
001-13106 (Essex Property Trust, Inc.)
Commission file number:   333-44467-01 (Essex Portfolio, L.P.)

(Commission File Number)

ESSEX PROPERTY TRUST, INC.
ESSEX PORTFOLIO, L.P.

(Exact name of Registrant as Specified in its Charter)

Maryland77-0369576
Maryland (Essex Property Trust, Inc.)
California (Essex Portfolio, L.P.)
77-0369576 (Essex(Essex Property Trust, Inc.)
California77-0369575 (Essex
(Essex Portfolio, L.P.)(Essex Portfolio, L.P.)
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification Number)


1100 Park Place, Suite 200
San Mateo, California 94403
(Address of Principal Executive Offices including Zip Code)
(650) 655-7800
(Registrant's Telephone Number, Including Area Code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading
Symbol(s)		Name of each exchange on which registered
Common Stock, $.0001 par value (Essex Property Trust, Inc.)ESSNew York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Essex Property Trust, Inc.    Yes x   No o
Yes
☒No☐Essex Portfolio, L.P.Yeso☐Nox☒


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Essex Property Trust, Inc.    Yes o  No x
Yes
☐No☒Essex Portfolio, L.P.Yeso☐Nox☒


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Essex Property Trust, Inc.    Yes x   No o
Yes
☒No☐Essex Portfolio, L.P.Yesx☒Noo☐


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Essex Property Trust, Inc.    Yes x   No o
Yes
☒No☐Essex Portfolio, L.P.Yesx☒Noo☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405)
is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K, or any amendment to this Form 10-K.
Essex Property Trust, Inc.    o
Essex Portfolio, L.P.    x


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large"large accelerated filer,” “accelerated" "accelerated filer,” “smaller" "smaller reporting company,”" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):


Essex Property Trust, Inc.:
Large accelerated filerx
☒
Accelerated filero
☐
Non-accelerated filero   (Do not check if a smaller reporting company)
☐
Smaller reporting companyo☐
Emerging growth companyo

☐


Essex Portfolio, L.P.:
Large accelerated filero
☐
Accelerated filero
☐
Non-accelerated filerx   (Do not check if a smaller reporting company)
☒
Smaller reporting companyo☐
Emerging growth companyo

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Essex Property Trust, Inc.o
☐
Essex Portfolio, L.P.o☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Essex Property Trust, Inc.☒Essex Portfolio, L.P.☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Essex Property Trust, Inc.    Yes o   No x
Yes
☐No☒Essex Portfolio, L.P.Yeso☐Nox☒


As of June 30, 2017,2023, the aggregate market value of the voting stock held by non-affiliates of Essex Property Trust, Inc. was $16,856,375,295.$14,926,731,683. The aggregate market value was computed with reference to the closing price on the New York Stock Exchange on the last trading day preceding such date. Shares of common stock held by executive officers, directors and holders of more than ten percent of the outstanding common stock have been excluded from this calculation because such persons may be deemed to be affiliates. This exclusion does not reflect a determination that such persons are affiliates for any other purposes. There is no public trading market for the common units of Essex Portfolio, L.P. As a result, the aggregate market value of the common units held by non-affiliates of Essex Portfolio, L.P. cannot be determined.


As of February 15, 2018, 66,040,30321, 2024, 64,203,497 shares of common stock ($.0001 par value) of Essex Property Trust, Inc. were outstanding.


DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the definitive Proxy Statement to be filed with the Securities and Exchange Commission (the “SEC”"SEC") pursuant to Regulation 14A in connection with the 20182024 annual meeting of stockholders of Essex Property Trust, Inc. are incorporated by reference in Part III of this Annual Report on Form 10-K. Such Proxy Statement will be filed with the SEC within 120 days of
December 31, 2017.2023.

Auditor Name: KPMG LLP            Location: San Francisco, California         PCAOB ID: 185





EXPLANATORY NOTE


This report combines the annual reports on Form 10-K for the year ended December 31, 20172023 of Essex Property Trust, Inc., a Maryland corporation, and Essex Portfolio, L.P., a Delaware limited partnership of which Essex Property Trust, Inc. is the sole general partner.

Unless stated otherwise or the context otherwise requires, references to the "Company," "we," "us," or "our" mean collectively Essex Property Trust, Inc. and those entities/subsidiaries owned or controlled by Essex Property Trust, Inc., including Essex Portfolio, L.P., and references to the "Operating Partnership," or "EPLP" mean Essex Portfolio, L.P. and those entities/subsidiaries owned or controlled by Essex Portfolio, L.P. Unless stated otherwise or the context otherwise requires, references to “Essex”"Essex" mean Essex Property Trust, Inc., a Maryland corporation thatnot including any of its subsidiaries.

Essex operates as a self-administered and self-managed real estate investment trust (“REIT”("REIT"), and references to “EPLP” mean Essex Portfolio, L.P., a California limited partnership of which Essex is the general partner. References to the “Company,” “we,” “us” or “our” mean collectively Essex, EPLP and those entities/subsidiaries owned or controlled by Essex and/or EPLP. References to the “Operating Partnership” mean collectively EPLP and those entities/subsidiaries owned or controlled by EPLP.

Essex is thesole general partner of and asthe Operating Partnership. As of December 31, 20172023, Essex owned approximately 96.7%96.6% of the ownership interest in EPLPthe Operating Partnership with the remaining 3.3%3.4% interest owned by limited partners. As the sole general partner of EPLP,the Operating Partnership, Essex has exclusive control of EPLP'sthe Operating Partnership's day-to-day management.


The Company is structured as an umbrella partnership REIT (UPREIT)("UPREIT") and Essex contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, Essex receives a number of Operating Partnership limited partnership units ("OP Units"Units," and the holders of such OP Units, "Unitholders") equal to the number of shares of common stock Essexit has issued in the equity offerings. Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of OP Units, which is one of the reasons why the Company is structured in the manner outlined above. Based on the terms of EPLP'sthe Operating Partnership's partnership agreement, OP Units can be exchanged for shares ofinto Essex common stock on a one-for-one basis. The Company maintains a one-for-one relationship between the OP Units of the Operating Partnership issued to Essex and shares of Essex common stock.


The Company believes that combining the reports on Form 10-K of Essex and EPLPthe Operating Partnership into this single report provides the following benefits:


•enhances investors' understanding of Essex and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;
•eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both Essex and the Operating Partnership; and
•creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.


Management operates Essex and the Operating Partnership as one business. The management of Essex consists of the same members as the management of EPLP.the Operating Partnership.


All of the Company's property ownership, development, and related business operations are conducted through the Operating Partnership and Essex has no material assets, other than its investment in EPLP.the Operating Partnership. Essex's primary function is acting as the general partner of EPLP.the Operating Partnership. As general partner with control of the Operating Partnership, Essex consolidates the Operating Partnership for financial reporting purposes. Therefore, the assets and liabilities of Essex and the Operating Partnership are the same on their respective financial statements. Essex also issues equity from time to time and guarantees certain debt of EPLP,the Operating Partnership, as disclosed in this report. The Operating Partnership holds substantially all of the assets of the Company, including the Company's ownership interests in its joint ventures.co-investments. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by the Company, which are contributed to the capital of the Operating Partnership in exchange for OP Units (on a one-for-one share of common stock per OP Unit basis), the Operating Partnership generates all remaining capital required by the Company's business. These sources of capital include the Operating Partnership's working capital, net cash provided by operating activities, borrowings under its revolving credit facilities, the issuance of secured and unsecured debt and equity securities and proceeds received from disposition of certain properties and joint ventures.co-investments.


The Company believes it is important to understand the few differences between Essex and EPLPthe Operating Partnership in the context of how Essex and EPLPthe Operating Partnership operate as a consolidated company. Stockholders' equity, partners' capital and noncontrolling interest are the main areas of difference between the consolidated financial statements of Essex and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners' capital in the Operating Partnership's consolidated financial statements and as noncontrolling interest in Essex's consolidated financial statements. The noncontrolling interest in the Operating Partnership's consolidated financial statements include the interest of unaffiliated partners in various consolidated partnerships and joint ventureco-investment partners.
iii

The noncontrolling interest in Essex's consolidated financial statements include (i) the same noncontrolling interest as presented in the Operating Partnership’s consolidated financial statements and (ii) OP Unit holders.Unitholders. The differences between stockholders' equity and partners' capital result from differences in the equity issued at Essex and Operating Partnership levels.

iii



To help investors understand the significant differences between Essex and the Operating Partnership, this report on Form 10-K provides separate consolidated financial statements for Essex and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of stockholders' equity or partners' capital, and earnings per share/unit, as applicable; and a combined Management's Discussion and Analysis of Financial Condition and Results of Operations.


This report on Form 10-K also includes separate Part II, Item 9A. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of Essex and the Operating Partnership in order to establish that the requisite certifications have been made and that Essex and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. §1350.


In order to highlight the differences between Essex and the Operating Partnership, the separate sections in this report on Form 10-K for Essex and the Operating Partnership specifically refer to Essex and the Operating Partnership. In the sections that combine disclosure of Essex and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and joint venturesco-investments and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership. The separate discussions of Essex and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.


The information furnished in the accompanying consolidated balance sheets, statements of income, comprehensive income, equity, capital, and cash flows of the Company and the Operating Partnership reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the aforementioned consolidated financial statements for the periods and are normal and recurring in nature, except as otherwise noted.

The accompanying consolidated financial statements should be read in conjunction with the notes to such consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations herein.
iv


ESSEX PROPERTY TRUST, INC.
ESSEX PORTFOLIO, L.P.
20172023 ANNUAL REPORT ON FORM 10-K


TABLE OF CONTENTS

Part I.Page
Part I.Page
Item 1.
12
Item 1A.
710
Item 1B.
2624
Item 2.1C.
2724
Item 2.
25
Item 3.
3532
Item 4.
3532
Part II.
Item 5.
3633
Item 6.
3936
Item 7.
4337
Item 7A.
5648
Item 8.
5749
Item 9.
5749
Item 9A.
5749
Item 9B.
5850
Part III.Item 9C.
51
Part III.
Item 10.
5852
Item 11.
5852
Item 12.
5852
Item 13.
5852
Item 14.
5952
Part IV.
Item 15.
6053
Item 16.
53
S-1S-1



v
Table of Contents

PART I
Forward-Looking Statements
 
•This Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act").Act.  Such forward-looking statements are described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Forward-Looking"Forward-Looking Statements.”" Actual results could differ materially from those set forth in each forward-looking statement.  Certain factors that might cause such a difference are discussed in this report, including in Item 1A, Risk Factors of this Form 10-K.

1
Table of Contents
Item 1. Business


OVERVIEW


Essex Property Trust, Inc. (“("Essex"), a Maryland corporation, is an S&P 500 company that operates as a self-administered and self-managed real estate investment trust (“REIT”("REIT"). The CompanyEssex owns all of its interest in its real estate and other investments directly or indirectly through Essex Portfolio, L.P. (the “Operating Partnership”"Operating Partnership" or “EPLP”"EPLP"). The CompanyEssex is the sole general partner of the Operating Partnership and as of December 31, 2017 owns a 96.7%2023, had an approximately 96.6% general partnership interest.partner interest in the Operating Partnership. In this report, the terms the “Company,”"Company," "we," "us," and "our" also refer to Essex Property Trust, Inc., the Operating Partnership and those entities/subsidiaries owned or controlled by Essex and/or the Operating Partnership.


The CompanyEssex has elected to be treated as a REIT for federal income tax purposes, commencing with the year ended December 31, 1994. The CompanyEssex completed its initial public offering on June 13, 1994. In order to maintain compliance with REIT tax rules, the Company utilizes taxable REIT subsidiaries for various revenue generating or investment activities. All taxable REIT subsidiaries are consolidated by the Company.Company for financial reporting purposes.


The Company is engaged primarily in the ownership, operation, management, acquisition, development and redevelopment of predominantly apartment communities, located along the West Coast.Coast of the United States. As of December 31, 2017,2023, the Company owned or held an interesthad ownership interests in 247252 operating apartment communities, aggregating 60,23961,997 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, as well as onethree operating commercial building (totaling approximately 106,564 square feet),buildings, and seven activea development pipeline comprised of one unconsolidated joint venture project and various predevelopment projects with 1,982aggregating 264 apartment homes in various stages of development (collectively, the “Portfolio”"Portfolio").


The Company’s website address is http://www.essex.com. The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, and the Proxy Statement for its Annual Meeting of Stockholders are available, free of charge, on its website as soon as practicable after the Company files the reports with the U.S. Securities and Exchange Commission (“SEC”("SEC"). The information contained on the Company's website shall not be deemed to be incorporated into this report.


BUSINESS STRATEGIES


The following is a discussion of the Company’s business strategies in regards to real estate investment and management.


Business Strategies


Research Driven Approach to Investments– The Company believes that successful real estate investment decisions and portfolio growth begin with extensive regional economic research and local market knowledge. The Company continually assesses markets where the Company operates, as well as markets where the Company considers future investment opportunities by evaluating markets and focusing on the following strategic criteria:


•Major metropolitan areas that have regional population in excess of one million;
•Constraints on new supply driven by: (i) low availability of developable land sites where competing housing could be economically built; (ii) political growth barriers, such as protected land, urban growth boundaries, and potential lengthy and expensive development permit processes; and (iii) natural limitations to development, such as mountains or waterways;
•Rental demand enhanced by affordability of rents relative to costs of for-sale housing; and
•Housing demand based on job growth, proximity to jobs, high median incomes and the quality of life including related commuting factors.


Recognizing that all real estate markets are cyclical, the Company regularly evaluates the results of its regional economic, and local market research, and adjusts the geographic focus of its portfolio accordingly. The Company seeks to increase its portfolio

allocation in markets projected to have the strongest local economies and to decrease allocations in markets projected to have declining economic conditions. Likewise, the Company also seeks to increase its portfolio allocation in markets that have attractive property valuations and to decrease allocations in markets that have inflated valuations and low relative yields.


Property Operations – The Company manages its communities by focusing on activities that may generate above-average rental growth, tenant retention/satisfaction and long-term asset appreciation.  The Company intends to achieve this by utilizing the strategies set forth below:


2
Table of Contents
•Property Management– Oversee delivery of and quality of the housing provided to our tenants and manage the properties financial performance.
•Capital Preservation – The Company's asset management services are responsible for the planning, budgeting and completion of major capital improvement projects at the Company’s communities.
•Business Planning and Control – Comprehensive business plans are implemented in conjunction with significant investment decisions. These plans include benchmarks for future financial performance based on collaborative discussions between on-site managers, the operations leadership team, and senior management.
•Development and Redevelopment – The Company focuses on acquiring and developing apartment communities in supply constrained markets, and redeveloping its existing communities to improve the financial and physical aspects of the Company’s communities.


CURRENT BUSINESS ACTIVITIES


Acquisitions of Real Estate Interests

Acquisitions are an important component of the Company’s business plan, and during 2017, the Company acquired ownership interests in five communities comprised of 1,897 apartment homes for $566.8 million. 


The following is a summary of 2017 acquisitionstable below summarizes acquisition activity for the year ended December 31, 2023 ($ in millions):
Property NameLocationApartment HomesEssex Ownership PercentageOwnershipQuarter in 2023Purchase Price
Hacienda at Camarillo OaksCamarillo, CA73 100 %EPLPQ2$23.1 
Total 202373    $23.1 
Property Name Location Apartment Homes Essex Ownership Percentage Ownership Quarter in 2017 Purchase Price 
Palm Valley(1)
 San Jose, CA 1,098
 100% EPLP Q1 $183.0
 
Sage at Cupertino(2)
 San Jose, CA 230
 41% EPLP Q1 90.0
 
8th & Republican Seattle, WA 211
 50% Wesco V Q3 101.3
(3) 
360 Residences San Jose, CA 213
 50% Wesco V Q3 133.5
(3) 
Village at Toluca Lake Burbank, CA 145
 50% BEX III Q4 59.0
(3) 
Total 2017 1,897
  
     $566.8
 

(1)
In January 2017, the Company purchased its joint venture partner's 50.0% membership interest in the Palm Valley co-investment for a purchase price of $183.0 million.
(2)
In March 2017, the Company converted its existing $15.3 million preferred equity investment in Sage at Cupertino into a 40.5% equity ownership interest in the property. The Company issued DownREIT limited partnership units to the seller for the remaining equity based on an estimated property valuation of $90.0 million and an encumbrance of $52.0 million of mortgage debt. Based on a consolidation analysis performed by the Company, the property is consolidated.
(3)
8th & Republican, 360 Residences, and Village at Toluca Lake purchase prices represent the total contract price at 100%.


Dispositions of Real Estate


As part of its strategic plan to own quality real estate in supply-constrained markets, the Company continually evaluates all of its communities and sells those whichcommunities that no longer meet itsthe Company's strategic criteria. The Company may use the capital generated from the dispositions to invest in higher-return communities, or other real estate investments or to repay debts.fund other commitments. The Company believes that the sale of these communities will not have a material impact on its future results of operations or cash flows nor will theirthe sale of these communities materially affect itsthe Company's ongoing operations. Generally,In general, the Company seeks to have anyoffset the dilutive impact ofon long-term earnings dilution resultingand funds from operations from these dispositions offset bythrough the positive impact of its acquisitions, development and redevelopment activities.reinvestment of proceeds.



The table below summarizes disposition activity for the year ended December 31, 2023 ($ in millions):
Property Name (1)
LocationApartment HomesOwnershipQuarter in 2023Sales Price
CBC and The SweepsGoleta, CA239 EPLPQ1$91.7 (2)
Total 2023239   $91.7 

(1)In January 2017,March 2023, the Company sold Jefferson at Hollywood, a 270 apartment home communityland parcel located in Hollywood,Moorpark, CA, that had been held for $132.5future development, for $8.7 million resulting inand recognized a gain on sale of $26.2$4.7 million.
(2)    The Company recognized a $54.5 million for the Company.gain on sale.


In August 2017, a Company co-investment, Wesco I, LLC ("Wesco I") sold Madrid, a 230 apartment home community located in Mission Viejo, CA, for $83.0 million, which resulted in a gain














3
Table of $10.1 million for the Company.Contents

In December 2017, a Company co-investment, BEXAEW, LLC ("BEXAEW") sold two apartment home communities, consisting of 587 total apartment homes, located in Seattle, WA, for $160.3 million, which resulted in an aggregate gain of $34.8 million for the Company.

Development Pipeline


The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations. As of December 31, 2017,2023, the Company had five consolidatedCompany's development projects and twopipeline was comprised of one unconsolidated joint venture project under development projects comprised of 1,982aggregating 264 apartment homes and various predevelopment projects, with total incurred costs of $557.0 million, and$114.0 million. The estimated remaining project costs ofare approximately $752.0 million, $572.0$12.0 million, of which $6.5 million represents the Company's share of estimated remaining costs,for total estimated project costs of $1.3 billion.$126.0 million.


The Company defines predevelopment projects as proposed communities in negotiation or in the entitlement process with an expected high likelihood of becoming entitled development projects. As of December 31, 2017,2023, the Company had various consolidated predevelopment projects. The Company may also acquire land for future development purposes or sale.purposes.


The following table sets forth information regarding the Company’s development pipeline ($ in millions):

   As of
12/31/2023
   EssexEstimatedIncurredEstimated
Development PipelineLocationOwnership%Apartment Homes
Project Cost (1)
Project Cost(1)
Development Projects - Joint Venture     
LIVIA at Scripps Ranch (2)
San Diego, CA51%264 $90 $102 
Total Development Projects - Joint Venture  264 90 102 
Predevelopment Projects - Consolidated     
Other ProjectsVarious100%— 24 24 
Total - Consolidated Predevelopment Projects  — 24 24 
Grand Total - Development and Predevelopment Pipeline  264 $114 $126 

         As of
        12/31/2017
     Essex   Incurred Estimated
Development Pipeline Location Ownership% Apartment Homes 
Project Cost (1)
 
Project Cost(1)
Development Projects - Consolidated          
Station Park Green - Phase I San Mateo, CA 100% 121
 $95
 $98
Station Park Green - Phase II San Mateo, CA 100% 199
 57
 141
Station Park Green - Phase III San Mateo, CA 100% 172
 43
 124
Gateway Village Santa Clara, CA 100% 476
 81
 226
Hollywood Hollywood, CA 100% 200
 27
 105
Total - Consolidated Development Projects    
 1,168
 303
 694
Development Projects - Joint Venture    
  
  
  
Ohlone San Jose, CA 50% 269
 30
 136
500 Folsom (2)
 San Francisco, CA 50% 545
 160
 415
Total - Joint Venture Development Projects    
 814
 190
 551
Predevelopment Projects - Consolidated    
  
  
  
Other Projects Various 100% —
 64
 64
Total - Predevelopment Projects    
 —
 64
 64
Grand Total - Development and Predevelopment Pipeline    
 1,982
 $557
 $1,309
(1)Includes costs related to the entire project, including both the Company's and joint venture partners' costs. Includes incurred costs and estimated costs to complete these development projects. For predevelopment projects, only incurred costs are included in estimated costs.

(1)
Includes costs related to the entire project, including both the Company's and joint venture partners' costs. Includes incurred costs and estimated costs to complete these development projects. For predevelopment projects, only incurred costs are included in estimated costs.
(2)
Estimated project cost for this development is net of a projected value for low-income housing tax credit proceeds and the value of the tax exempt bond structure.

(2)Incurred project cost and estimated project cost are net of a projected value for low income housing tax credit proceeds and the value of the tax-exempt bond structure.


Redevelopment Pipeline

The Company defines the redevelopment pipeline as existing properties owned or recently acquired, which have been targeted for additional investment by the Company with the expectation of increased financial returns through property improvement.  During redevelopment, apartment homes may not be available for rent and, as a result, may have less than stabilized operations.  As of December 31, 2017, the Company had ownership interests in five major redevelopment communities aggregating 1,727 apartment homes with estimated redevelopment costs of $138.8 million, of which approximately $43.6 million remains to be expended.

Long Term Debt


During 2017,2023, the Company made regularly scheduled principal payments and loan payoffs of $219.5$2.9 million ofto its secured mortgage notes payable at an average interest rate of 5.2%3.7%.


In March 2017,July 2023, the Company paid off $300closed $298.0 million of 5.500% senior unsecured notes,in 10-year secured loans priced at maturity.5.08% fixed interest rates encumbering four properties located in Northern California.

In April 2017, the Company issued $350.0 million of 3.625% senior unsecured notes that mature on May 1, 2027. The interest is payable semi-annually in arrears on May 1st and November 1st of each year, commencing November 1, 2017, until the maturity date on May 1, 2027. The Company used the net proceeds of this offering to repay indebtedness under its unsecured lines of credit and for other general corporate and working capital purposes.


Bank Debt


As of December 31, 2017, Fitch Ratings,2023, Moody’s Investor Service and Standard and Poor's (“("S&P”&P") credit agencies rated Essex Property Trust, Inc. and Essex Portfolio, L.P. BBB+/Stable, Baa1/Stable and BBB+/Stable, respectively.


At December 31, 2017,2023, the Company had two unsecured lines of unsecured credit aggregating $1.03$1.24 billion. The Company's $1.0$1.2 billion credit facility had an interest rate of LIBORAdjusted Secured Overnight Financing Rate ("Adjusted SOFR") plus 0.90%. In January 2018, the Company's $1.0 billion credit facility was amended and the line's capacity was increased to $1.2 billion and the scheduled maturity date was extended to December 2021, with one 18-month extension, exercisable at the Company's option. The underlying interest rate on the amended line0.75% which is based on a tiered rate structure tied to the Company's corporatecredit ratings, adjusted for the Company's sustainability metric grid, and isa scheduled maturity date of January 2027 with two six-month extensions, exercisable at LIBOR plus 0.875%.the Company's option. The Company's $25.0$35.0 million working capital unsecured line of credit had an interest rate of LIBORAdjusted SOFR plus 0.90%. In January 2018, this line of credit facility was amended and the line's capacity was increased to $35.0 million and the scheduled maturity date was extended to January 2020. The underlying interest rate on the amended line0.75%, which is based on a tiered rate structure tied to the Company's corporatecredit ratings, adjusted for the Company's sustainability metric grid, and is at LIBOR plus 0.875%.a scheduled maturity date of July 2024.



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Equity Transactions


During 2017,the year ended December 31, 2023, the Company issued 345,444did not issue any shares of common stock through its equity distribution program atagreement entered into in September 2021 (the "2021 ATM Program"). As of December 31, 2023, there were no outstanding forward sale agreements, and $900.0 million of shares remain available to be sold under the 2021 ATM Program.

In September 2022, the Company's Board of Directors approved a new stock repurchase plan to allow the Company to acquire shares of common stock up to an average priceaggregate value of $260.38 for aggregate proceeds of $89.1 million, net of fees and commissions.$500.0 million. The plan supersedes the Company's previous common stock repurchase plan announced in December 2015. During the first quarteryear ended December 31, 2023, the Company repurchased and retired 437,026 shares of 2018 through February 15, 2018, Essex has not issued any sharesits common stock totaling $95.7 million, including commissions. As of December 31, 2023, the Company had $302.7 million of purchase authority remaining under its equity distribution program.$500.0 million stock repurchase plan.


Co-investments


The Company has entered into, and may continue in the future to enter into, joint ventures or partnerships (including limited liability companies) through which we ownit owns an indirect economic interest in less than 100% of the community or land or other investments owned directly by the joint venture or partnership. For each joint venture the Company holds a non-controlling interest in the venture and, earnsin most cases, may earn customary management fees, and may earn development fees, asset property management fees, and a promote interest.


The Company has also made, and may continue in the future to make, preferred equity investments in various multi-familymultifamily development projects. The Company earns a preferred rate of return on these investments.


OFFICES AND EMPLOYEESHUMAN CAPITAL MANAGEMENT


Company Overview and Values

The Company is headquartered in San Mateo, CA, and has regional corporate offices in Woodland Hills, CA; San Jose, CA; Irvine, CA; San Diego, CA and Bellevue, WA. As of December 31, 2017,2023, the Company had 1,8351,750 employees, 99.8% of whom were full-time employees. A total of 1,321 employees worked on-site at our operating communities and 429 worked in our corporate offices. The Company's mission is to create quality communities in premier locations and it is critical to the Company's mission that it attracts, trains and retains a talented and diverse team by providing a better place to work and significant opportunities for professional growth. The Company's culture supports its mission and is guided by its core values: to act with integrity, to care about what matters, to do right with urgency, to lead at every level and to seek fairness.



Workplace Diversity


The Company believes it has one of the most diverse workforces among its peers in the real estate industry in part due to its robust and integrated diversity, equity, and inclusion strategy, which allows the Company to broaden its perspective and better serve both the communities it operates in and the associates it employs. The Company has a Diversity, Equity, and Inclusion ("DEI") Committee which directs the overarching goal setting, implementation, and follow-up for DEI initiatives and whose chairperson reports directly to the CEO on the Committee’s activities. All Company associates are offered training aimed at preventing workplace harassment, including harassment based on age, gender or ethnicity, training covering the foundations of DEI and awareness of unconscious bias in the workplace, and all managers are required to complete anti-harassment training. The Company supports the employee-led affinity groups, including Women at Essex and the LGBTQ+ focused Rainbow Alliance, which foster a sense of community and inclusion for a diverse mix of associates at the Company through discussions and activities that are intended to engage, educate, enable, and empower the Company's employees. The DEI Committee’s goals for 2023 included increasing the Company’s training offerings, integrating DEI into talent recruitment processes, strengthening employee resource and affinity groups, making contributions to local DEI organizations, and improving recognition.

The Company’s notable diversity achievements for 2023 include the following data as of December 31, 2023:

–The Company’s workforce self-identified as 71% ethnically or culturally diverse.

–53%oftheCompany’smanageriallevelemployees, including 38%ofitsseniorexecutives, self-identified as ethnically or culturally diverse.

–There were 216 women in positions of manager or higher, equating to 61% of managerial positions in the Company.

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–The Company’s workforce self-identified as 42% female and 57% male (1% chose not to disclose their gender).

–60% of the Company’s corporate associates self-identified as female.

The charts below detail the Company’s diverse representation as of December 31, 2023:

Total Workforce

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Executives & Management

Ethnicity

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Gender
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Training and Development

The Company values leadership at every level and enables the same by providing opportunities for all associates to develop personal and professional skills through programs that encourage associate retention and advancement. The Company currently offers training courses to its associates via Workday Learning, and its associates spent 22,373 hours learning in 2023. The Company also provides its associates with an annual $3,000 tuition reimbursement to further support outside professional growth opportunities. To identify, retain and reward top performers, the Company engages in meaningful internal succession planning and offers a tenure program, excellence awards, and a spot bonus recognition program to reward associates for good teamwork, good ideas, and good service. The Company encourages internal promotions and hiring for open positions, and the executive team actively mentors the Company’s top talent to ensure strong leadership at the Company for the future. 37% of the Company’s associates have approached or surpassed the Company’s average tenure of 6.35 years, with 21% reaching beyond 10 years of service. In 2023, the Company promoted 13% of its employees to higher positions in the Company.

Employee Health, Safety and Wellness

Providing a safe working environment and promoting employee safety is imperative to the Company, and the Company continued to prioritize its associates’ health and safety throughout 2023. The Company has safety policies in place that align with its health and safety goals and seeks to proactively prevent workplace accidents and protect the health and safety of the Company's associates through training and analysis of incident reports. Additionally, the Company offers retirement support, associate discount programs, a mental health program, which includes counseling and coaching sessions for mental well-being support at no cost, and refresh days for our operations teams, and health benefit credits for participation in wellness programs.

Compensation and Benefits

The Company offers competitive compensation to secure and retain top talent. The Company engages in an annual compensation study to align compensation with market standards and to ensure the Company is appropriately compensating its top performers. Alongside competitive pay, the Company is committed to pay equity and parity, and conducts a pay equity analysis on an annual basis which includes the development and use of a robust, multiple regression analysis model to confirm the Company’s continued achievement of gender pay parity.

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The Company’s total rewards program further reinforces its commitment to investing in the well-being of its associates while incentivizing its employees to promote fulfillment of the Company’s mission. Beyond competitive compensation, the Company offers a suite of benefits, including health insurance, a retirement plan with a $6,000 annual matching potential benefit, life and disability coverage, supplemental paid parental leave, and the robust health and wellness support programs noted above. Additionally, the Company offers an associate housing discount.

Community and Social Impact

The Company believes volunteering can create positive change in the communities where our associates live and work and that the Company's commitment to giving back helps it attract and retain associates. The Company's Volunteer Program is aimed at supporting and encouraging eligible associates to become actively involved in their communities through the Company's support of charity initiatives and offering paid hours for volunteer time. Additionally, the Company’s “Essex Cares” program provides direct aid to the Company’s residents, associates, and local communities, including those who have experienced financial hardships.

Employee Engagement

In order to engage and promote communication with our associates and solicit meaningful feedback on our efforts to create a positive work environment, the Company issues engagement surveys to all associates to measure 10 key drivers of employee engagement including goal setting, organizational fit, DEI, well-being, freedom of opinion, meaningful work, management support and recognition, among others. Engagement surveys are split into three phases: new hire surveys, Company-wide bi-annual surveys, and exit surveys. 85% of Company employees participated in the surveys in 2023. The Company’s overall engagement score on the surveys was 8.0 out of 10. Goal setting, meaningful work, management support, DEI, and social well-being were recognized as the top 5 areas of strength for the organization.

INSURANCE


The Company purchases general liability and property insurance coverage, including loss of rent, for each of its communities. The Company also purchases limited earthquake, terrorism, environmental and flood insurance. There are certain types of losses which may not be covered or could exceed coverage limits. The insurance programs are subject to deductibles and self-insured retentions in varying amounts. The Company utilizes a wholly owned insurance subsidiary, Pacific Western Insurance LLC ("PWI"), to self-insure certain earthquake and property losses. As of December 31, 2017,2023, PWI had cash and marketable securities of approximately $81.8$125.5 million, and is consolidated in the Company's financial statements.


All of the Company's communities are located in areas that are subject to earthquake activity. The Company evaluates its financial loss exposure to seismic events by using actuarial loss models developed by the insurance industry and in most cases property vulnerability analysis based on structural evaluations by seismic consultants. The Company manages this exposure, where considered appropriate, desirable, and cost-effective, by upgrading properties to increase their resistance to forces caused by seismic events, by considering available funds and coverages provided by PWI and/or by purchasing seismic insurance. In most cases the Company also purchases limited earthquake insurance for certain properties owned by the Company's co-investments.
In addition, the Company carries other types of insurance coverage related to a variety of risks and exposures.  
Based on market conditions, the Company may change or potentially eliminate insurance coverages, or increase levels of self-insurance. Further, the Company may incur losses, which could be material, due to uninsured risks, deductibles and self-insured retentions, and/or losses in excess of coverage limits.
COMPETITION


There are numerous housing alternatives that compete with the Company’s communities in attracting tenants. These include other apartment communities, condominiums and single-family homes. If the demand for the Company’s communities is reduced or if competitors develop and/or acquire competing housing, rental rates and occupancy may drop which may have a material adverse effect on the Company’s financial condition and results of operations.


The Company faces competition from other REITs, businesses and other entities in the acquisition, development and operation of apartment communities. Some competitors are larger and have greater financial resources than the Company. This competition may result in increased costs of apartment communities the Company acquires and and/or develops.


WORKING CAPITAL

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The Company believes that cash flows generated by its operations, existing cash and cash equivalents, marketable securities balances, availability under existing lines of credit, access to capital markets and the ability to generate cash from the disposition of real estate are sufficient to meet all of its reasonably anticipated cash needs during 2018.2024.


The timing, source and amounts of cash flows provided by financing activities and used in investing activities are sensitive to changes in interest rates, stock price, and other fluctuations in the capital markets environment, which can affect the Company’s plans for acquisitions, dispositions, development and redevelopment activities.


ENVIRONMENTAL CONSIDERATIONS


As a real estate owner and operator, we are subject to various federal, state and local environmental laws, regulations and ordinances and may be subject to liability and the costs of removal or remediation of certain potentially hazardous materials that may be present in our communities. See the discussion under the caption, “Risks"Risks Related to Real Estate Investments and Our Operations - The Company’s Portfolioportfolio may have environmental liabilities”liabilities" in Item 1A, Risk Factors, for information concerning the potential effect of environmental regulations on its operations, which discussion under the caption “The Company’s Portfolio may have environmental liabilities” is incorporated by reference into this Item 1.


OTHER MATTERS


Certain Policies of the Company


The Company intends to continue to operate in a manner that will not subject it to regulation under the Investment Company Act of 1940. The Company may in the future (i) issue securities senior to its common stock, (ii) fund acquisition activities with borrowings under its line of credit and (iii) offer shares of common stock and/or units of limited partnership interest in the Operating Partnership or affiliated partnerships as partial consideration for property acquisitions. The Company from time to

time acquires partnership interests in partnerships and joint ventures, either directly or indirectly through subsidiaries of the Company, when such entities’ underlying assets are real estate.


The Company invests primarily in apartment communities that are located in predominantly coastal markets within Southern California, the San Francisco Bay Area,Northern California, and the Seattle metropolitan area. The Company currently intends to continue to invest in apartment communities in such regions. However, these practicesthe geographical composition of the portfolio is evaluated periodically and may be reviewed and modified periodically by management.

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ITEM 1A: RISK FACTORS
For purposes of this section, the term “stockholders”"stockholders" means the holders of shares of Essex Property Trust, Inc.’s common stock. Set forth below are the risks that we believe are material to Essex Property Trust, Inc.’s stockholders and Essex Portfolio, L.P.’s unitholders. You should carefully consider the following factors in evaluating our Company, our properties and our business.

Our business, operating results, cash flows and financial condition are subject to various risks and uncertainties, including, without limitation, those set forth below, any one of which could cause our actual operating results to vary materially from recent results or from our anticipated future results.

Risks Related to Our Real Estate Investments and Operations

General real estate investment risks may adversely affect property income and values. Real estate investments are subject to a variety of risks. values, and therefore our stock price may be adversely affected.If the communities and other real estate investments, including development and redevelopment properties, do not generate sufficient income to meet operating expenses, including debt service and capital expenditures,financing expenses, cash flow and the ability to make distributions to Essex's stockholders or the Operating Partnership's unitholders will be adversely affected. Income and growth from the communities may be further adversely affected by, among other things, the following factors:factors, in addition to the other risk factors listed in this Item 1A:
•changes in the general economic or local economic climate that could affect demand for housing, including layoffs, plant closings, industry slowdowns, relocationsdue to an increase in the use of significant local employersnew technologies to replace workers, slowing job growth, and other events negatively impacting local employment rates, wages and the local economy;
local economic conditions in which the communities are located, such as oversupply of housing or a reduction•changes in demand for rental housing;housing due to a variety of factors, including relocations of employees from local employers, increased worker locational flexibility and changing demographics, which could lead to a relative decrease in the renting population as the domestic population skews older due to the aging of baby boomers and older people may be more likely to purchase, rather than rent, homes,
the attractiveness•changes in supply and cost of our communities to tenants;housing;
•changes in economic conditions, such as high inflationary environmentsperiods in which theour operating and financing costs to operate and maintain communitiesmay increase at a rate greater than our ability to increase rents, or deflationary environmentsperiods where werents may be exposed to declining rentsdecline more quickly under our short-term leases;relative to operating and financing costs; and
competition from other available housing alternatives;
changes in rent control or stabilization laws or other laws regulating housing;
•the Company’s ability to provide for adequate maintenanceappeal and insurance;
declines in the financial condition of our tenants, which may make it more difficult for us to collect rents from some tenants;
tenants' perceptions of the safety, convenience and attractivenessdesirability of our communities to tenants relative to other housing alternatives, including the size and the neighborhoods where they are located;amenity offerings, safety and location convenience, and our technology offerings.
changes in interest rates and availability of financing.

As leases at the communities expire, tenants may enter into new leases on terms that are less favorable to the Company. Income and real estate values also may be adversely affected by such factors as applicable laws, including, without limitation, the Americans with Disabilities Act of 1990 (the "Disabilities Act"), Fair Housing Amendment Act of 1988 (the "FHAA") and tax laws. Real estate investments are relatively illiquid and, therefore, the Company’s ability to vary its portfolio promptly in response to changes in economic or other conditions may be limited.
Real estate in our markets can also at times be difficult to sell at prices we find acceptable. These potential difficulties in selling real estate in our markets may limit our ability to change or reduce the apartment communities in our portfolio promptly in response to changes in economic or other conditions, which could have a material adverse effect on our financial condition and results of operations. In addition, if we are found to have held, acquired or developed a community as inventory or primarily for sale to customers in the ordinary course of business, federal tax laws may limit our ability to sell the community without incurring a 100% tax on the gain on the sale of the community and potentially adversely impacting our status as a real estate investment trust (“REIT”) unless we own the community through one of our taxable REIT subsidiaries (“TRSs”).
Short-term leases expose us to the effects of declining market rents, and the Company may be unable to renew leases or relet units as leases expire. Substantially all of our apartment leases are for a term of one year or less. If the Company is unable to promptly renew theor re-let existing leases, or relet the units, or if the rental rates upon renewal or reletting are significantly lower than expected rates, then the Company’s results of operations and financial condition will be adversely affected. With these short term leases, our rental revenues are impacted by declines in market rents more quickly than if our leases were for longer terms.
National and regional economic
Economic environments can negatively impact the Company’s liquidity and operating results. The Company's forecast for the national economy assumes growth of the gross domestic product of the national economy and the economies of the west coast states. In the event of a recession or other negative economic effects, the Company could incur reductions in rental rates,and occupancy levels,rates, property valuations and increases in operating costscosts. Any such as advertising and turnover expenses. Further, a recession or economic downturn may

also affect consumer confidence and spending and negatively impact the volume and pricing of real estate transactions, which could negatively affect the Company’s liquidity and its ability to vary its portfolio promptly in response to changes to the economy. Furthermore, if residents do not increase their income, they may be unable or unwilling to pay rent.

Rent control, or other changes in applicable laws, or noncompliance with applicable laws, could adversely affect the Company's operations, property values or expose us to liability. The Company must own, operate, manage, acquire, develop and redevelop its properties in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, rent control or stabilization laws, emergency orders, laws benefiting disabled persons, federal, state and local tax laws, landlord tenant laws, environmental laws, employment laws, immigration laws and other laws regulating housing or that are generally applicable to the Company's business and operations. Changes in, or noncompliance with, laws and regulations could expose the Company to liability and could require the Company to make significant unanticipated expenditures to address noncompliance.

Existing and future rent control or rent stabilization laws and regulations, along with similar laws and regulations that expand tenants’ rights or impose additional costs on landlords, may reduce rental revenues or increase operating costs. Such laws and regulations limit our ability to charge market rents, increase rents, evict tenants or recover increases in our operating expenses and could reduce the value of our communities or make it more difficult for us to dispose of properties in certain circumstances. Expenses associated with our investment in these communities, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in rental income from the community.


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The future outbreak of contagious diseases could materially affect our business, financial condition, and results of operations. If there is a future outbreak of contagious diseases, such as COVID-19, the Company may be subject to eviction moratoria or limits on rent increases and collection efforts, or may be legally required to or otherwise agree to restructure tenants’ rent obligations on less favorable terms than those currently in place. In the event of tenant nonpayment, default or bankruptcy, we may incur costs in protecting our investment, collecting delinquent rents, and re-leasing our property and we may have limited ability to renew existing leases or sign new leases at levels consistent with market rents. A new pandemic or disease outbreak may also cause increased costs, lower profitability and market fluctuations that may affect our ability to obtain necessary funds for our business or may otherwise negatively impact the ability of the Company’s third-party mezzanine loan borrowers and preferred equity investment sponsors to repay the Company. Additionally, the Company may be subject to temporary or permanent legislative restrictions that may inhibit our ability to conduct normal business activities including timely repairs, maintenance and customer service

Acquisitions of communities involve various risks and uncertainties and may fail to meet expectations. The Company intends to continue to acquireCompany’s acquisition of apartment communities. However, there are risks that acquisitions willcommunities may fail to meet the Company’s expectations. The Company’sexpectations due to factors including inaccurate estimates of future income, expenses and the costs of improvements or redevelopment, that are necessarywhich may be exacerbated by the lack of current market data due to allow the Company to market an acquired apartment community as originally intended may prove to be inaccurate. In addition, following an acquisition,limited deal flow. Further, the value and operational performance of an apartment community may be diminished if obsolescence or neighborhood changes occur before we are able to redevelop or sell the community. Also, in connection with such acquisitions, we may assume unknown or contingent liabilities, which could ultimately lead to material costs for us. The Company expectsus that we did not expect to finance future acquisitions, in whole or in part, under various formsincur. In addition, the total amount of secured or unsecured financing or through the issuancecosts and expenses that may be incurred with respect to liabilities associated with apartment communities may exceed our expectations, and we may experience other unanticipated adverse effects, all of partnership units by the Operating Partnership or related partnerships or joint ventures or additional equity by the Company.which may adversely affect our business, financial condition and results of operations. The use of equity financing rather than debt, for future developments or acquisitions could dilute the interest of the Company’s existing stockholders. If the Company finances new acquisitions under existing lines of credit, there is a risk that, unless the Company obtains substitute financing, the Company may not be able to undertake additional borrowing for further acquisitions or developments or such borrowing may not be not available on advantageous terms.

Development and redevelopment activities may be delayed, not completed, and/or not achieve expected results. The Company pursues development and redevelopment projects, and these projects generally require various governmental and other approvals, which have no assurance of being received and/or the timing of which may be delayed from the Company’s expectations. The Company defines development projects as new communities that are being constructed or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations, and redevelopment projects as existing properties owned or recently acquired that have been targeted for additional investment by the Company with the expectation of increased financial returns through property improvement. As of December 31, 2017, the Company had five consolidated developmentincluding densification projects and two joint venture development projects comprised of 1,982 apartment homes for an estimated cost of $1.3 billion, of which $752.0 million remains to be expended, and $572.0 million is the Company's share. In addition, at December 31, 2017, the Company had ownership interests in five major redevelopment projects aggregating 1,727 apartment homes with estimated redevelopment costs of $138.8 million, of which approximately $43.6 million remains to be expended.
The Company’s development and redevelopmentthose activities generally entail certain risks, including, among others, the following:including:

•funds may be expended and management's time devoted to projects that may not be completed;completed on time or at all;
•construction costs of a project may exceed original estimates possibly making the projectsome projects economically unfeasible;
•projects may be delayed or abandoned due to, without limitation, adverse weather conditions, labor or material shortage,shortages, municipal office closures and staff shortages, government recommended or mandated work stoppages, or environmental remediation;
•occupancy rates and rents at a completed project may be less than anticipated;
•expenses at completed development or redevelopment projects may be higher than anticipated, including, without limitation, due to inflationary pressures, supply chain issues, costs of litigation over construction contracts, environmental remediation;remediation or increased costs for labor, materials and leasing;
•we are reliant on third party contractors’ and vendors’ ability to deliver services and products as planned, and if the timeframe, quality or scope of such services and products are different than we expected, our projects may be subject to increased costs and our future income may be lower than expected;
•we may be unable to obtain, or experience a delay in obtaining, necessary zoning, occupancy, or other required governmental approvals or third party permits and authorizations, which could result in increased costs or delay or abandonment of opportunities;
•we may be unable to obtain financing with favorable terms, or at all, for the proposed development or redevelopment of a community, which may cause us to delay or abandon an opportunity; and
•we may incur liabilities to third parties during the development process, for example, in connection with managing existing improvements on the site prior to tenant terminations and demolition (such as commercial space) or in connection with providing services to third parties (such as the construction of shared infrastructure or other improvements.)process.


These risks may reduce the funds available for distribution to the Essex’s stockholders and the Operating Partnership's unitholders. Further, the development and redevelopment of communities is also subject to the general risks associated with real estate investments. For further information regarding these risks, please see the risk factor above titled “General real estate investment risks may adversely affect property income and values.”
Investments in mortgages, mezzanine loans, subordinated debt, other real estate, and other marketable securities could adversely affect the Company’s cash flow from operations. The Company may invest in equity, preferred equity or debt securities related to real estate and/or other investment securities and/or cash investments, which could adversely affect the Company’s ability to make distributions to Essex's stockholders or the Operating Partnership's unitholders, including, without

limitation, due to a decline in the value of such investments. The Company may also purchase or otherwise invest in securities issued by entities which own real estate and/or invest in mortgages or unsecured debt obligations. Such mortgages may be first, second or third mortgages, and these mortgages and/or other investments may not be insured or otherwise guaranteed. The Company may make or acquire mezzanine loans, which take the form of subordinated loans secured by second mortgages on the underlying property or loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity or entities that owns the interest in the entity owning the property. In general, investments in mortgages include the following risks:
that the value of mortgaged property may be less than the amounts owed, causing realized or unrealized losses;
the borrower may not pay indebtedness under the mortgage when due, requiring the Company to foreclose, and the amount recovered in connection with the foreclosure may be less than the amount owed;
that interest rates payable on the mortgages may be lower than the Company’s cost of funds;
in the case of junior mortgages, that foreclosure of a senior mortgage could eliminate the junior mortgage; and
delays in the collection of principal and interest if a borrower claims bankruptcy.

If any of the above were to occur, it could adversely affect the Company’s cash flows from operations.
Our apartment communities may be subject to unknown or contingent liabilities which could cause us to incur substantial costs. The properties that the Company owns or may acquire are or may be subject to unknown or contingent liabilities for which the Company may have no recourse, or only limited recourse, against the sellers. In general, the representations and warranties provided under the transaction agreements related to the sales of the properties may not survive the closing of the transactions. While the Company will seek to require the sellers to indemnify us with respect to breaches of representations and warranties that survive, such indemnification may be limited and subject to various materiality thresholds, a significant deductible or an aggregate cap on losses. As a result, there is no guarantee that we will recover any amounts with respect to losses due to breaches by the sellers of their representations and warranties. In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with apartment communities may exceed our expectations, and we may experience other unanticipated adverse effects, all of which may adversely affect our business, financial condition and results of operations.
The geographic concentration of the Company’s communities and fluctuations in local markets may adversely impact the Company’s financial condition and operating results. The Company generated significant amounts of rental revenues for the year ended December 31, 2017, from the Company’s communities are concentrated in Northern and Southern California (Los Angeles, Orange, Santa Barbara, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area), and the Seattle metropolitan area. Forarea, which exposes the year ended December 31, 2017, 83% of the Company’s rental revenues were generated from communities located in California. This geographic concentration could present risks if local property market performance falls below expectations. In general, factorsCompany to greater economic risks. Factors that may adversely affect local market and economic conditions include among others, the following:

the economic climate, which may be adversely impacted by a reduction in jobs or income levels, industry slowdowns and other factors;
local conditions, such as oversupply of, or reduced demand for, apartment homes;
declines in household formation or employment or lack of employment growth;
rent control or stabilization laws, or other laws regulating rental housing, which could prevent the Company from raising rents to offset increases in operating costs, or the inability or unwillingness of tenants to pay rent increases;
competition from other available apartments and other housing alternatives and changes in market rental rates;
economic conditions that could cause an increase in our operating expenses, including increases in property taxes, utilities and routine maintenance; and
regional specific acts of nature (e.g., earthquakes, fires, floods, etc.)., layoffs affecting specific or broad sectors of the economy (such as technology-based companies), and those other factors listed in the risk factor titled “General real estate investment risks may adversely affect property income and values” and elsewhere in this Item 1A.


Because the Company’s communities are primarily located in Southern California, Northern California and the Seattle metropolitan area, the Company is exposed to greater economic concentration risks than if it owned a more geographically diverse portfolio. The Company is susceptible to adverse developments in California and Washington economic and regulatory environments, such as increases in real estate and other taxes, and increased costs of complying with governmental regulations or increased regulation and other factors. In addition, theregulations. The State of California recently experienced increased relocation out of the state and is generally regarded as more litigious, and more highly regulated and taxed than many states, which may reduce demand for the Company’s communities and increase costs related to compliance with governmental regulations. communities.
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Any adverse developments in the economy or real estate markets in California or Washington, or any decrease in demand for the Company’s communities resulting from the California or Washington regulatory or business environments, could have an adverse effect on the Company’s business and results of operationsoperations. Additionally, the political climates in California and Washington, in combination with the states’ and certain local governments’ relatively long suspension of rent payments and the corresponding restriction on evicting tenants due to non-payment of rent in connection with the COVID-19 pandemic, may have shifted some residents’ attitudes about the necessity of making rent payments. This shift could reduce some residents’ willingness to pay rent and therefore the Company may continue to experience higher than historical average delinquency rates, which could adversely impact the Company’s financial condition and results of operations.



The Company may experience various increased costs, including increased property taxes, to own and maintain its properties.Real property taxes on our properties may increase as our properties are reassessed by taxing authorities or as property tax rates change. Thus, ourOur real estate taxes in the State of Washington could increase as a result of property value reassessments or increased property tax rates in that state.rates. A current California law commonly referred to as Proposition 13 (“Prop 13”) generally limits annual real estate tax increases on California properties to 2% of assessed value. However, under PropositionProp 13, property tax reassessment generally occurs as a result of a “change"change in ownership”ownership" of a property, as specially defined for purposes of those rules.property. Because the property taxing authorities may not determine whether there has been a “change"change in ownership”ownership" or the actual reassessed value of a property for a period of time after a transaction has occurred, we may not know the impact of a potential reassessment for a considerable amount of time following a particular transaction. Therefore, the amount of property taxes we are required to pay could increase substantially from the property taxes we currently pay or have paid in the past, including on a retroactive basis. In addition, from time to time voters and lawmakers have announcedVarious initiatives to repeal or amend PropositionProp 13, to eliminate its application to commercial and industrialresidential property, to increase the permitted annual real estate tax increases, and/or to introduce split tax roll legislation. Such initiatives, if successful,legislation could increase the assessed value and/or tax rates applicable to commercial property in California, including our apartment communities.California. Further, changes in U.S. federal tax law including recently enacted U.S. tax legislation (the “2017 Tax Legislation”), could cause state and local governments to alter their taxation of real property.


The Company may experience increased costs associated with capital improvements and routine property maintenance such as repairs to the foundation, exterior walls, and rooftops of its properties, as its properties advance through their life-cycles.life cycles. In some cases, we may spend more than budgeted amounts to make necessary improvements or maintenance. Increases in the Company’s expenses to own and maintain its propertiesmaintenance, which could adversely impact the Company’s financial condition and results of operations.


Competition in the apartment community market and other housing alternatives may adversely affect operations and the rental demand for the Company’s communities. There are numerous housing alternatives that compete with the Company’s communities in attracting tenants. These includetenants, including other apartment communities, condominiums and single-family homes that are available for rent or for sale in the markets in which the communities are located.homes. Competitive housing in a particular area and the increasing affordabilityfluctuations in cost of owner occupied singleowner-occupied single- and multi-familymultifamily homes caused by lowera decrease in housing prices, mortgage interest rates andand/or government programs to promote home ownership or create additional rental and/or other types of housing, or an increase in desire for more space due to work-from-home needs or increased time spent at home, could adversely affect the Company’s ability to retain its tenants, lease apartment homes and increase or maintain rents. If the demand for the Company’s communities is reduced, or if competitors develop and/or acquire competing apartment communities, rental rates may drop, which may have a material adverse effect on the Company’s financial condition and results of operations. The Company also faces competition from other companies, REITs, businesses and other entities in the acquisition, development and operation of apartment communities. This competition may result in an increase in prices andincreased costs ofto acquire or develop apartment communities or impact the Company’s ability to identify suitable acquisition or development transactions.

Investments in mortgages, mezzanine loans, subordinated debt, other real estate, and other marketable securities could adversely affect the Company’s cash flow from operations. The Company may purchase or otherwise invest in securities issued by entities which own real estate and/or invest in mortgages or unsecured debt obligations. The Company may make or acquire mezzanine loans, which are generally subordinated loans. In general, investing in mortgages involves risk, including that the value of mortgaged property may be less than the amounts owed, causing realized or unrealized losses; the borrower may not pay indebtedness under the mortgage when due and amounts recovered by the Company acquires and/in connection with related foreclosures may be less than the amount owed; interest rates payable on the mortgages may be lower than the Company’s cost of funds; in the case of junior mortgages, foreclosure of a senior mortgage could eliminate the junior mortgage; delays in the collection of principal and interest if a borrower claims bankruptcy; possible senior lender default or develops.overconcentration of senior lenders in portfolio; and unanticipated early prepayments may limit the Company’s expected return on its investment. If any of the above were to occur, it could adversely affect the Company’s cash flows from operations.

The Company’s ownership of co-investments, including joint ventures and joint ownership of communities, its ownership of properties with shared facilities with a homeowners' association or other entity, its ownership of properties subject to a ground lease and its preferred equity investments and its other partial interests in entities that own communities, could limit the Company’s ability to control such communities and may restrict our ability to finance, refinance, sell or otherwise transfer our interests in these properties and expose us to loss of the properties if such agreements are breached by us or terminated.
The Company has entered into, and may continue in the future to enter into, certain co-investments, including joint ventures or partnerships through which it owns an indirect economic interest in less than 100% of the community or land or other investments owned directly by the joint venture or partnership. As
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Table of December 31, 2017, the Company had, through several joint ventures, an interest in 10,810 apartment homes in operating communities for a total book value of $780.3 million.Contents

Joint venture partners often have shared control over the development and operation of the joint venture assets. Therefore, it is possible that aassets, which may prevent the Company from taking action without the partners’ approval. A joint venture partner in an investment might become bankrupt, ormay have economic or business interests or goals that are inconsistent with those of the Company’s business interestsCompany or goals, or be in a position tomay take action contrary to the Company’s instructionsinterests or requests, or its policies or objectives.policies. Consequently, a joint venture partners’partner's actions might subject property owned by the joint venture to additional risk. Although the Company seeks to maintain sufficient influence over any joint venture to achieve its objectives, the Company may be unable to take action without its joint venture partners’ approval. A joint venture partner might fail to approve decisions that are in the Company’s best interest. Should a joint venture partner become bankrupt, the Company could become liable for such partner’s share of joint venture liabilities. In some instances, the Company and the joint venture partner may each have the right to triggerexercise a buy-sell arrangement, which could cause the Company to sell its interest, or acquire a partner’s interest, at a time when the Company otherwise would have not have initiated such a transaction.transaction, and may result in the valuation of our interest or our partner’s interest at levels which may not be representative of the valuation that would result from an arm’s length marketing process and could cause us to recognize unanticipated capital gains or losses or the loss of fee income. Should a joint venture partner become bankrupt, the Company could become liable for such partner’s share of joint venture liabilities.


From time to time, the Company, through the Operating Partnership, investsmakes certain co-investments in corporations, limited partnerships, limited liability companies or otherthe form of preferred equity investments in third-party entities that have been formed for the purpose of acquiring, developing, financing, or managing real property. For example, the Company has made preferred equity investments in third party entities that own real estate and may continue in the future to make such preferred equity or other investments. With preferred equity investments and certain other investments, theThe Operating Partnership’s interest in a particular entitythese entities is typically less than a majority of the outstanding voting interests of that entity. Therefore,entity, which may limit the Operating Partnership’s ability to control the daily operations of such an entity may be limited. Furthermore, the Operating Partnership may not have the power to remove a majority of the board of directors (in the case of a corporation) or the general partner or partners (in the case of a limited partnership) of such an entity in the event that its operations conflict with the Operating Partnership’s objectives.co-investment. The Operating Partnership may not be able to dispose of its interests in such an entity.co-investment. In the event that such an entity becomesco-investment or the partners in such co-investment become insolvent or bankrupt or fail to develop or operate the property in the manner anticipated, or are unable to refinance or sell their interest as planned, the Operating Partnership may not receive the expected return in its expected timeframe or at all and may lose up to its entire investment in and any advances toinvestment. Additionally, the entity.preferred return negotiated on these co-investments may be lower than the Company's cost of funds. The Company may also incur losses if any guarantees or indemnifications were made by the Company.

The Company also owns properties indirectly under "DownREIT" structures. The Company has entered into, and in the future may enter into, transactions that could require the Company to pay the tax liabilities of partners whichthat contribute assets into DownREITs, joint ventures or the Operating Partnership, in the event that certain taxable events, which are generally within the Company’s control, occur. Although the Company plans to hold the contributed assets or, if such assets consist of real property, defer recognition of gain on sale of such assets pursuant to the like-kind exchange rules under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), the Company can provide no assurance that the Company willmay not be able to do so and if such tax liabilities were incurred they could have a material impact on its financial position.

Also, from time to time, the Company invests in properties (i) which may be subject to certain shared facilities agreements with homeowners'homeowners’ associations and other entities and/or invests in properties(ii) subject to ground leases where a subtenant may have certain similar rights to that of a party under such a shared facilities agreement. For such properties, the Company's abilityagreements or where a master landlord may have certain rights to control the expenditureuse, operation and/or repair of capital improvementsthe property. In these arrangements, we cannot guarantee that the terms of the shared facilities agreements will be enforced or interpreted in favor of the Company, and its allocation with such other partiesthe Company’s inability to control expenditures, make necessary repairs and/or control certain decisions may adversely affect the Company's business,Company’s financial condition and results of operations.operations, and/or the property’s safety, compliance with applicable laws, marketability or market value.

We may pursue acquisitions of other REITs and real estate companies, which may not yield anticipated results and could adversely affect our results of operations.We may make acquisitions of andand/or investments in other REITs and real estate companies that offer properties and communities to augment our market coverage, or enhance our property offerings. We may also enter into strategic alliances or joint ventures, to achieve these goals. There canwhich involves risks and uncertainties and may not be no assurance that we willsuccessful. We may not be able to identify suitable acquisition, investment, alliance, or joint venture opportunities, that we will be able to consummate any such transactions or relationships on terms and conditions acceptable to us, or that such transactions or relationships will be successful. In addition, our original estimates and assumptions used in assessing any acquisition may be inaccurate, and we may not realize the expected financial or strategic benefits of any such acquisition.
These transactions or any other acquisitions involve risks and uncertainties. For example, as a consequence of such transactions, we may assume unknown liabilities, which could ultimately lead to material costs for us. In addition, the The integration of acquired businesses or other acquisitions may not be successful and could result in disruption to other parts of our business. To integrate acquired businesses or other acquisitions, we must implement our management information systems, operating systems and internal controls, and assimilate and manage the personnel of the acquired operations. The expected synergies from acquisitions may not be fully realized, which could result in increased costs or other issues and have an adverse effect on our business. There can be no assurance that all pre-acquisitionPre-acquisition property due diligence will have identifiedmay not identify all material issues that might arise with respect to such acquired business and its properties or as to any such other acquisitions. Any future acquisitions we make may also require significant additional debt or equity financing, which, in the case of debt financing, would increase our leverage and potentially affect our credit ratings and, in the case of equity or equity-linked financing, could be dilutive to Essex's existing stockholders and the Operating Partnership's unitholders. Additionally, the value of these investments could decline for a variety of reasons. These and other factors could harm our ability to achieve anticipated levels of profitability at acquired operations or realize other anticipated benefits of an acquisition, and could adversely affect our business, financial condition and results of operations.
Changes
Real estate investments are relatively illiquid and, therefore, the Company's ability to vary its portfolio promptly in applicable laws,response to changes in economic or noncompliance with applicable laws, couldother conditions may be limited. Real estate investments are illiquid and, in our markets, can at times be difficult to sell at prices we find acceptable, which may limit our ability to promptly reduce our portfolio in response to changes in economic or other conditions and otherwise may adversely affect the Company’s operations or expose us to liability. The Company must own, operate, manage, acquire, develop and redevelop its properties in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, rent control or stabilization laws or other laws regulating housing, federal, state and local tax laws, landlord tenant laws, environmental laws, employment laws, immigration laws and other laws generally applicable to the Company’s business and operations. Noncompliance with laws could expose the Company to liability. If the Company does not comply with all of these requirements, it may have to pay fines to government authorities or damage awards to private litigants. The Company does not know whether these requirements will change or whether new requirements will be imposed. Changes in, or noncompliance with, these regulatory requirements could require the Company to make significant unanticipated expenditures, which could have a material adverse effect on the Company’sour financial condition and results of operations or cash flows.operations.


Compliance with laws benefiting disabled persons may require the Company to make significant unanticipated expenditures or impact the Company’s investment strategy. Under the Disabilities Act, all places

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Table of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The FHAA requires that multifamily communities first occupied after March 13, 1991 be accessible to handicapped tenants and visitors. These and other federal, state and local laws and regulations may require modifications to existing buildings or restrict certain renovations by requiring improved access to such buildings by disabled persons and may require other structural features which add to the cost of buildings under construction. Legislation or regulations adopted in the future may impose further burdens or restrictions on the Company with respect to improved access by disabled persons. The costs of compliance with these laws and regulations may be substantial. Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any noncomplying feature, which could result in substantial capital expenditures.Contents
The Company may not be able to lease its retail/commercial space consistent with its projections or at market rates. The Company has retail/commercialrates and the longer-term leases for existing space could result in its portfolio, which represents approximately 2% of our total revenue. The retail/commercial space at our properties, among other things, serve as additional amenity for our tenants. The long term nature of our retail/commercial leases, and characteristics of many of our tenants (small, local businesses) may subject us to certain risks. We may not be able to lease new space forbelow market rents that are consistent with our projections or at market rates. Also, whenover time. When leases for our existing retail/commercial space expire, the space may not be relet on a timely basis, or at all, or the terms of reletting, including the cost of allowances and concessions to tenants, may be less favorable thatthan the current lease terms. Our properties compete with other properties with retail/commercial space. The presence of competitive alternatives may affect our ability to lease space and the level of rents we can obtain. If our retail/commercial tenants experience financial distress or bankruptcy, they may fail to comply with their contractual obligations, seek concessions in order to continue operations or cease their operations, which could adversely impact our results of operations and financial condition.

The Company’s portfolio may have environmental liabilities.Under various federal, state and local environmental and public health laws, regulations and ordinances, we have been from time to time,required, and may be required in the future, regardless of our knowledge or responsibility, to provide warnings about certain chemicals, investigate and remediate the effects of hazardous or toxic substances or petroleum product releases at our properties (including in some cases naturally occurring substances such as methane and radon gas) andor properties that we acquire, develop, manage or directly or indirectly invest in. We may be held liable under these laws or common law to a governmental entity or to third parties for compliance and response costs, property damage, personal injury or natural resources damages and for investigation and remediation costs incurred as a result of the impacts resulting from such releases. While the Company is unaware of any such response action required or damage claims associated with its existing properties which individually or in aggregate would have a materiallymaterial adverse effect on our business, assets, financial condition or results of operations, potential future costs and damage claims may be substantial and could exceed any insurance coverage we may have for such events or such coverage may not exist.substantial. Further, the presence of such substances, or the failure to properly remediate any such impacts, may adversely affect our ability to borrow against, develop, sell or rent the affected property. In addition, some environmental laws create or allow a government agencyproperty, including due to impose a lienany liens imposed on the impacted property in favor of theby any government agencies for damages and costs it incurs as a result of responding to hazardouspenalties or toxic substance or petroleum product releases.damages.
Investments in real property create a potential for environmental liabilities on the part of the owner of such real property. 
The Company carries certain limited insurance coverage for this type of environmental risk as to its properties; however, such coverage is not fully available for all properties and, as to those properties for which limited coverage is fully available, it may be insufficient or may not apply to certain claims arising from known conditions present on those properties. In general, in connection with the ownership (direct or indirect), operation, financing, managementWhile we conduct pre-acquisition and development of its communities, the Company could be considered as the owner or operator of such properties or as having arranged for disposal or treatment of hazardous substances present there and therefore may be potentially liable for removal or clean-up costs, as well as certain other costs and environmental liabilities. The Company may also be subject to governmental fines and costs related to injuries to third persons and damage to their property.
Properties which we intend to acquire undergo a pre-acquisition Phase I environmental site assessment, which is intended to afford the Company protection against so-called “owner liability” under the primary federal environmental law, as well as further environmental assessment, which may involve invasive techniques such as soil or ground water sampling where conditions warranting such further assessment are identified and seller’s consent is obtained. Whileassessments, such assessments are conducted in accordance with applicable “all appropriate inquiry" standards, no assurance can be given that allmay not discover, ascertain or quantify the full extent of the environmental conditions present onat or beneath or emanating fromnear a given property will be discovered or that the full nature and extent of those conditions which are discovered will be adequately ascertained and quantified.property.
In connection with our ownership, operation and development of communities, from time to time we undertake remedial action in response to the presence of subsurface or other contaminants, including contaminants in soil, groundwater and soil vapor

beneath or affecting our buildings. The Company does so pursuant to appropriate environmental regulatory requirements with the objective of obtaining regulatory closure or a no further action determination that will allow for future use, development and sale of any impacted community.
Certain environmental laws impose liability for release of asbestos-containing materials ("ACMs") into the air or exposure to lead-based paint ("LBP"), and third parties may seek recovery from owners or operators of apartment communities for personal injury associated with ACMs or LBP.
Mold growth may occur when excessive moisture accumulates in buildings or on building materials, particularly if the moisture problem remains undiscovered or is not addressed in a timely manner. Although the occurrence of mold at multi-family and other structures, and the need to remediate such mold, is not a new phenomenon, there has been increased awareness in recent years that certain molds may in some instances lead to adverse health effects, including allergic or other reactions.materials. The Company has adopted policies for promptly addressingto address and resolvingresolve reports of mold when it is detected, and to minimize any impact mold might have on tenants of the property. The Company believes its mold policies and proactive response to address any known mold existence reduce its risk of loss from these cases;affected property, however, no assurance can be provided that the Company has identifiedmay not identify and respondedrespond to all mold occurrences.
California has enacted legislation, commonly referred to as "Proposition 65," requiring that "clear and reasonable" warnings be given to persons who are exposed to chemicals known to the State of California to cause cancer or reproductive toxicity, including tobacco smoke.  Although the Company has sought to comply with Proposition 65 requirements, the Company cannot assure you that the Company will not be adversely affected by litigation relating to Proposition 65.
Methane gas is a naturally-occurring gas that is commonly found below the surface in several areas, particularly in the Southern California coastal areas. Methane is a non-toxic gas, but is flammable and can be explosive at sufficient concentrations when in confined spaces and exposed to an ignition source. Naturally-occurring, methane gas is regulated at the state and federal level as a greenhouse gas but is not otherwise regulated as a hazardous substance; however some local governments, such as Los Angeles County, require that new buildings constructed in areas designated methane gas zones install detection and/or venting systems. Methane gas is also associated with certain industrial activities, such as former municipal waste landfills. Radon is also a naturally-occurring gas that is found below the surface and can pose a threat to human health requiring abatement action if present in sufficient concentration within occupied areas. The Company cannot assure you that it will not be adversely affected by costs related to its compliance with methane or radon gas related requirements or litigation costs related to methane or radon gas.
We cannot assure you that costs or liabilities incurred as a result of environmental matters will not affect our ability to make distributions to Essex's stockholders or the Operating Partnership's unitholders, or that such costs or liabilities will not have a material adverse effect on our financial condition and results of operations; provided, however, the Company is unaware of any pending or threatened alleged claim resulting from such matters which would have a material adverse effect on the Company’s financial condition, results of operations or cash flows.
The Company may incur general uninsured losses.losses or may experience market conditions that impact the procurement of certain insurance policies. The Company purchases general liability and property, including loss of rent, insurance coverage for each of its communities.communities and cyber risk insurance. The Company may also purchase limited earthquake, terrorism, environmental and flood insurance for some of its communities. However, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, pollution, environmental matters or extreme weather conditions such as hurricanes, fires and floods that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential terrorist acts could sharply increase the premiums the Company pays for coverage against property and casualty claims.insurable. The Company utilizes a wholly owned insurance subsidiary, Pacific Western Insurance LLC ("PWI"), to self-insure certain earthquake and property losses for some of the communities in its portfolio. As of December 31, 2017, PWI has cash and marketable securities of approximately $81.8 million, and is consolidatedA decline in the Company's financial statements.
Allvalue of the communities are located in areas that are subject to earthquake activity. The Company evaluates its financial loss exposure to seismic events by using actuarial loss models developed by the insurance industry and in most cases property vulnerability analysis based on structural evaluations of seismic consultants. The Company manages this exposure, where considered appropriate, desirable, and cost-effective, by upgrading properties to increase their resistance to forces caused by seismic events, by considering available funds and coverages providedsecurities held by PWI and/may adversely affect PWI’s ability to cover all or in some cases, by purchasing seismic insurance. Purchasing seismicany portion of the amount of any insured losses. Despite our insurance coverage, can be costly and such seismic insurance is in limited supply. As a result, the Company may experience a shortage in desired coverage levels if market conditions are such that insurance is not available, or the cost of the insurance makes it, in management's view, not economically practical. The Company may purchase limited earthquake insurance for certain high-density properties and in most cases assets owned by the Company's co-investments.

The Company carries other types of insurance coverage related to a variety of risks and exposures. Based on market conditions, the Company may change or potentially eliminate insurance coverages, or increase levels of self-insurance. Further, we cannot assure you that the Company will not incur material losses which could be material, due to uninsured risks, deductibles and self-insured retentions, and/or losses in excess of coverage limits.


WeOur communities are located in areas that are subject to earthquake activity. The Company manages and evaluates its financial loss exposure to seismic events by using actuarial loss models and property vulnerability analyses based on structural evaluations by seismic consultants, and by making upgrades to certain properties to better resist seismic events and/or by purchasing seismic insurance in some cases. While the properties were built to the seismic codes in place at the time of construction, not all properties have been, or are required to be, retrofitted to the current seismic codes. Thus, some properties may be subject to physical risk associated with earthquakes, and may suffer significant investments in large metropolitan markets, such asdamage, including, but not limited to, collapse for any number of reasons, including structural deficiencies. Seismic coverage is limited and may not cover the metropolitan markets in Southern California, the San Francisco Bay Area and Seattle. TheseCompany’s seismic related losses.

Our properties or markets may in the future be the target of actual or threatened terrorist attacks. Future terrorist attacks, in these marketsshootings, or other acts of violence, which could directly or indirectly damage our communities both physically and financially, or cause uninsured losses, that exceed our insurance coverage. Our communities could also directly or indirectly be the location or target of actual or threatened terrorist attacks, crimes, shootings, other acts of violence or other incidents beyond our control, the occurrence of which could directly impactadversely affect the value of our communities through damage, destruction, loss or increased security costs, as well as operational losses due to reduction of traffic and rental demand for our communities, and the availability of insurance for such acts may be limited or may be subject to substantial costs. If such an incident were to occur at one of our communities, we may also be subject to significant liability claims. Such events and losses could significantly affect our ability to operate thoseour communities, and materiallysubject us to significant liability claims, or otherwise impair our ability to achieve our expected results.


Although the Company may carry insurance for potential losses associated with its communities, employees, tenants, and compliance with applicable laws, it may still incur material losses due to uninsured risks, deductibles, copayments or losses in excess of applicable insurance coverage and those losses may be material.coverage. In the event of a substantial loss, insurance coverage may not be able to cover the full replacement cost of the Company’s lost investment, or the insurance carrier may become insolvent and not be able to cover the full amount of the insured losses.
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Changes in building codes and ordinances, environmental considerations and other factors might also affect the Company’s ability to replace or renovate an apartment community after it has been damaged or destroyed. In addition, certain causalities and/or losses incurred may expose the Company in the future to higher insurance premiums.

Climate change may adversely affect our business.To the extent that As a result of climate change, does occur, we may experience extreme weather, an increased number of natural disasters and changes in precipitation, temperature and temperature,wild fire and drought exposure, all of which may result in physical damage, or a decrease in demand for our communities located in these areas or affected by these conditions.conditions, damage to our properties, disruption of services at our properties or increased costs associated with water or energy use and maintaining or insuring our communities. Transition risks associated with climate change may result in interruptions in energy access, increased energy costs, or increased regulatory requirements and stakeholder expectations regarding reporting and energy efficiency. Should the impact of climate change be material in nature or occur for lengthy periods of time, even if not directly impacting the Company’s current markets, the types and pricing of insurance the Company is able to procure may be negatively impacted and our financial condition or results of operations wouldmay be adversely affected.

We could experience increased costs related to further developing our communities to mitigate the effects of climate change or repairing damage related to the effects of climate change that may or may not be fully covered by insurance. In addition, changes in federal, state and statelocal legislation and regulation on climate change could result in increased operating costs (for example, increased utility costs) and/or increased capital expenditures to improve the energy efficiency of our existing communities (for example, increased costs associated with meeting electric vehicle charging mandates) and could also require us to spend more on our new development communities without a corresponding increase in revenue. For example, various federal, regional and state laws and regulations have been implemented or are under consideration to mitigate the effects of climate change caused by greenhouse gas emissions, including the recently updated California energy efficiency standards, referred to as Title 24 or The Energy Efficiency Standards for Residential and Nonresidential Buildings. Among other things, “green” building codes may seek to reduce emissions through the imposition of standards for design, construction materials, water and energy usage and efficiency and waste management. The imposition of such requirements in the future could increase the costs of maintaining or improving our existing properties or developing properties (for example, to improve their energy efficiency and/or resistance to inclement weather) without a corresponding increase in revenue, resulting in adverse impacts to our operating results.


Accidental death or severe injuries at our communities due to fires, floods, other natural disasters or hazards could adversely affect our business and results of operations. The accidental death or severe injuries of persons living in our communities due to fires, floods, other natural disasters or hazards could have a material adverse effect on our business and results of operations. Our insurance coverage may not cover all losses associated with such events, and we may experience difficulty marketing communities where any such events have occurred, which could have a material adverse effect on our business and results of operations. Further, we may not have the ability to respond immediately to a major event, which may cause increased losses.

Adverse changes in laws may adversely affect the Company's liabilities and/or operating costs relating to its properties and its operations. Increases in real estate taxes and income, service and transfer taxes cannot always be passed through to tenants or users in the form of higher rents, and may adversely affect the Company's cash available for distribution and its ability to make distributions to Essex's stockholders or the Operating Partnership's unitholders and pay amounts due on its debt. Similarly,debts. Additionally, ongoing political volatility may increase the likelihood of significant changes in laws that could affect the Company's overall strategy. Changes in laws increasing the potential liability of the Company and/or its operating costs on a range of issues, including those regarding potential liability for other environmental conditions existing on properties or increasing the restrictions on discharges or other conditions, as well as changes in laws affecting development, construction and safety requirements, may result in significant unanticipated expenditures, including without limitation, those related to structural or seismic retrofit or more costly operational safety systems and programs, which could have a material adverse effect on the Company. For example, (1) the California statute, the "Sustainable Communities and Climate Protection Act of 2009, also known as "SB375"", provides that, in order to reduce greenhouse emissions, there should be regional planning to coordinate housing needs with regional transportation and such planning could lead to restrictions on, or increases in, property


development that adversely affect the Company and (2) the Environmental Protection Agency has implemented a program for long-term phase out of HCFC-22 coolant (freon) by 2030, which could lead to increased capital and/or operating costs.
In addition, rent control or rent stabilization laws and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our tenants. For example, in Richmond and Mountain View, CA, both of which are in the San Francisco Bay Area, rent control initiatives were recently passed by the voters. These initiatives and any other future enactments of rent control or rent stabilization laws or other laws regulating multi-family housing, as well as any lawsuits against the Company arising from such rent control or other laws, may reduce rental revenues or increase operating costs. Such laws and regulations limit our ability to charge market rents, increase rents, evict tenants or recover increases in our operating expenses and could make it more difficult for us to dispose of properties in certain circumstances. Expenses associated with our investment in these communities, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in rental income from the community. Furthermore, such regulations may negatively impact our ability to attract higher-paying tenants to such communities.

The soundness of financial institutions could adversely affect us. We maintain cash and cash equivalent balances, including significant cash amounts of our wholly owned insurance subsidiary, PWI, as well as 401(k) plan assets in a limited number of financial institutions. Our cash balances are generally in excess of federally insured limits. The failure or collapse of one or more of these financial institutions may materially adversely affect our ability to recover our cash balances or the 401(k) assets. Certain financial institutions are lenders under our credit facilities, and, from time to time, we execute transactions with counterparties in the financial services industry. In the event that the volatility of the financial markets adversely affects these financial institutions or counterparties, we or other parties to the transactions with us may be unable to complete transactions as intended, which could adversely affect our business and results of operations.
Failure to succeed in new markets or with new community operations formats may limit the Company’s growth. The Company may make acquisitions or commence development activity outside of its existing market areas if appropriate opportunities arise. The Company’s historical experience in its existing markets doesarise, which may expose the Company to new risks, including, but not ensure that it will be ablelimited to operate successfully in new markets. The Company may be exposed to a variety of risks if it chooses to enter new markets. These risks include, among others:
an inability to evaluate accurately local apartment market conditions and local economies;
an inability to identify appropriate acquisition opportunities or to obtain land for development;
an inability to hire and retain key personnel; and
a lack of familiarity with local governmental and permitting procedures. Additionally, we have recently adjusted our operating model to reduce the number of staff on-site at individual properties and moved towards a hub model where specialized staff can service multiple properties from a central location and rely on certain technologies, such as virtual apartment tours, to further reduce the need for on-site staffing. There may be resistance to such change from our employees and residents, and if we experience difficulty in retaining and/or hiring employees or residents, as applicable, this could adversely affect the Company’s results of operations. Further, there are unknown risks with relying on new technologies and operating models, such as whether there is consumer preference for in-person tours or if we are not able to as rapidly respond to resident demands, and we cannot guarantee that this model will be successful, which could adversely affect our results of operations.


Current volatility in market and economic conditions may impact the accuracy of the various estimates used in the preparation of our financial statements and footnotes to the financial statements. Various estimates are used in the preparation of our financial statements, including estimates related to the fair value of tangible and intangible assets and the carrying value of our real estate investments. Often these estimates require the use of local market knowledge and data that is difficult to assess, as well as estimates of future cash flows associated with our real estate investments that can also be difficult to accurately predict. Although our management believes it has been prudent and used reasonable judgment in making these estimates, it is possible that actual results may differ materially from these estimates.

Our business and reputation depend on our ability to continue providing high quality housing and consistent operation of our communities, the failure of which could adversely affect our business, financial condition and results of operations. Our business and reputation depend on providingWe provide tenants with quality housing with highly reliable services, including with respect to water and electric power, along with the consistent operation of our communities, including a wide variety of amenities such as covered parking, swimming pools, clubhouses with fitness facilities, playground areas, tennis courts and the like.amenities. Public utilities, especially those that provide water and electric power, are fundamental for the consistent operation of our communities. The delayed delivery or any material reduction or prolonged interruption of these services could allowmay cause tenants to terminate their leases reduce their rents or may result in ana reduction of rents and/or increase in our costs or other issues. In addition, we may fail to provide quality housing and continuous access to amenities as a result of other factors, including government mandated closures, mechanical failure, power outage, human error, vandalism, physical or electronic security breaches, war, terrorism or similar events.
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Such service interruptions, mechanical failures or other events may also expose us to additional liability claims and damage our reputation and brand and could cause tenants to terminate or not renew their leases, or prospective tenants to seek housing elsewhere. Any such failures could impair our ability to continue providing quality housing and consistent operation of our communities, which could adversely affect our business, financial condition and results of operations.


The Company’s real estate assets may be subject to impairment charges.The Company continually evaluates the recoverability of the carrying value of its real estate assets, including those assets it invests in indirectly or places subordinated loans on through its preferred equity and mezzanine lending program, under U.S. generally accepted accounting principles ("U.S. GAAP"). Factors considered in evaluating impairment of the Company’s existing multi-familymultifamily real estate assets held for investment

include significant declines in property operating profits, recurring property operating losses and other significant adverse changes in general market conditions that are considered permanent in nature. Generally, a multi-familymultifamily real estate asset held for investment is not considered impaired if the undiscounted, estimated future cash flows of the asset over its estimated holding period are in excess of the asset’s net book value at the balance sheet date. Assumptions used to estimate annual and residual cash flow and the estimated holding period of such assets require the judgment of management. There can be no assurance that the Company will not take charges in the future related to the impairment of the Company’s assets.assets, including those assets it invests in indirectly or places subordinated loans on through its preferred equity and mezzanine lending program. Any future impairment charges could have a material adverse effect on the Company’s results of operations.

We face risks associated with land holdings for future developments and related activities. We hold land for future development and may in the future acquire additional land holdings. The risks inherent in purchasing, owning and developing land increase as demand for apartments, or rental rates, decrease. Real estate markets are highly uncertain and as a result, the value of undeveloped land may fluctuate significantly. In addition, carrying costs can be significant and can result in losses or reduced profitability. As a result, we hold certain land, and may, in the future acquire additional land, in our development pipeline at a cost we may not be able to fully recover or at a cost which may preclude our developing a profitable multi-family community. If there are subsequent changes in the fair value of our land holdings which we determine is less that the carrying basis of our land holdings reflected in our financial statements plus estimated costs to sell, we may be required to take future impairment changescharges which could have a material adverse effect on our financial condition and results of operations.
Under certain circumstances, assets owned
We are subject to laws and regulations relating to the handling of personal information and we rely on information technology to sustain our operations. Any failure by us to comply with applicable requirements or material failure, inadequacy, interruption or breach of the Company’s privacy or information systems, or those of our vendors or other third parties, could materially adversely affect the Company’s business, results of operations and financial condition. We rely on information technology hardware, software, networks and systems (collectively, “IT Systems”), some of which are provided by vendors, to process, transmit and store personal information, tenant and lease data, and other electronic information (collectively, “Confidential Information”), and to manage or support a subsidiary REITvariety of business processes, including financial transactions and records. Our business requires us and some of our vendors to use and store personal and other sensitive information of our tenants and employees. The collection, use and other processing of personal information is governed by federal and state laws and regulations. Privacy and cybersecurity laws continue to evolve, with several states passing new data privacy laws that govern the processing of information about state residents, and laws may be requiredinconsistent from one jurisdiction to another. The Company endeavors to comply with privacy laws and regulations applicable to it, including the California Consumer Privacy Act (“CCPA”) which governs the collection, use, disclosure and security of information about California residents. The CCPA requires the Company to, among other things, provide certain disclosures to California residents, promptly respond to certain consumer requests related to their data, and contractually impose certain obligations on vendors. Compliance with existing and future laws and regulations related to data privacy and protection may increase the Company’s operating costs and adversely impact the Company’s ability to market the Company’s properties and services, and any failure to comply with such laws and regulations could harm our business, reputation and financial results.

Although we have taken steps to abide by applicable privacy and cybersecurity laws, and strive to protect the security of our IT Systems and Confidential Information, the compliance and security measures put in place by the Company and its vendors cannot guarantee perfect compliance or provide absolute security, and the Company and its vendors' IT Systems may be vulnerable to cyber-attacks or cybersecurity incidents that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information, including through ransomware distributed denial-of-service attempts, data theft, account takeovers, social engineering/phishing, technological error, employee error, malfeasance, misconfigurations, “bugs”, or other vulnerabilities in Company, or vendor, IT Systems. These threats can also come from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists. Any incident could compromise the Company’s or our vendors’ IT Systems (or the IT Systems of third parties that facilitate the Company’s or such vendors’ business activities), and the Confidential Information stored by or on behalf of the Company or such vendors could be accessed, misused, publicly disclosed, corrupted, lost, or stolen, resulting in fraud, including wire fraud related to Company assets or tenant payments, or other harm. Moreover, if there is a compliance failure, or if a cybersecurity incident affects the Company’s or vendors’ systems, whether through a breach of the Company’s IT Systems or a breach of the IT Systems of third parties, or results in the unauthorized release of Confidential Information, the Company’s reputation and brand could be materially damaged, which could increase our costs in attracting and retaining tenants, and other serious consequences may result.
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Potential other consequences include potential exposure to litigation, including government enforcement actions, private litigation (including class actions), fines or criminal penalties; and potential exposure to a risk of loss including loss related to the fact that agreements with such vendors, or such vendors’ financial condition, may not allow the Company to recover all costs related to a cybersecurity incident for which they alone or they and the Company should be jointly responsible for, which could result in a material adverse effect on the Company’s business, results of operations and financial condition.

Privacy and cybersecurity risks have generally increased in recent years because of the proliferation of new technologies, such as ransomware and generative AI, and the increased sophistication, techniques and activities of threat actors; accordingly, the Company may be unable to anticipate these techniques or implement adequate preventative measures . We maintain cyber risk insurance which may be insufficient type or amount to cover us against claims related to a cybersecurity incident, and we cannot be certain that such insurance will continue to be disposed of viaavailable to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claims.

In the future, the Company may expend additional resources to continue to enhance the Company’s cybersecurity measures to investigate and remediate any cybersecurity vulnerabilities and/or to further ensure compliance with privacy and cybersecurity laws. Despite these steps, the Company may suffer a sale of capital stock rather than an asset sale. Under certain circumstances, assets owned by a subsidiary REITsignificant cybersecurity incident in the future, unauthorized parties may be requiredgain access to be disposed of via a sale of capital stock rather than as an asset sale by that subsidiary REIT, which may limitConfidential Information stored on the number of persons willing to acquire indirectlyCompany’s or its vendors’ IT Systems, and any assets held by that subsidiary REIT. As a result, wesuch incident may not be able to realize a return on our investmentdiscovered in a joint venturetimely manner. Any cybersecurity incident or failure in the implementation, compliance with or effectiveness of the Company’s IT Systems or cybersecurity program or those of third party service providers, or a breach of other third party systems that utilizesultimately impacts the operational or IT Systems of the could result in a subsidiary REIT structure, atwide range of potentially serious harm to our business and results of operations.

Reliance on third party software providers to host systems is critical to our operations and to provide the timeCompany with data. We rely on certain key software vendors to support business practices critical to our operations, including the collection of rent and ancillary income and communication with our tenants, and to provide us with data, such as environmental, social and governance (“ESG”) data. The market is currently experiencing a consolidation of these software vendors, particularly in the multi-family space, which may negatively impact the Company’s choice of vendor and pricing options. Moreover, if any of these key vendors were to terminate our relationship or onaccess to data, or fail, we could suffer losses while we seek to replace the terms we desire.services and information provided by the vendors. Further, our failure, or our software vendors’ failure, to adopt, anticipate or keep pace with the new technologies, such as generative AI solutions, may harm our ability to compete with our peers, decrease the value of our assets and/or impact our future growth.


We may from time to time be subject to litigation, which could have a material adverse effect on our business, financial condition and results of operations.We may be a party to various claims and routine litigation arising in the ordinary course of business. Some of these claims or others to which we may be subject from time to time may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance. Paymentinsurance, the payment of any such costs, settlements, fines or judgments that are not insuredwhich could have an adverse impact on our financial position and results of operations. In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage which could adversely impact our results of operations and cash flow, expose us to increased risks that would be uninsured, oruninsured. Litigation, even if resolved in our favor, could adversely impact our abilityreputation and divert the attention of our management, which could negatively impact our operations and cash flow. In late 2022 and early 2023, a number of purported anti-trust class actions were filed against RealPage, Inc., a seller of revenue management software, and various lessors of multifamily housing which utilize this software, including the Company. The complaints allege collusion among defendants to attract officersartificially increase rents of multifamily residential real estate above competitive levels. The Company intends to vigorously defend against these lawsuits. Given their early stage, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from such matters. The Company is also subject to various other legal and/or regulatory proceedings arising in the normal course of its business operations, including California private attorney general actions (“PAGA Claims”). The current political climate in California may continue to encourage plaintiffs’ attorneys to bring PAGA Claims and directors.other class actions.


Risks Related to Our Indebtedness and Financings


Capital and credit market conditions and volatility, including significant fluctuations in the price of the Company’s stock, may affect the Company’s access to sources of capital and/or the cost of capital, which could negatively affect the Company’s business, stock price, results of operations, cash flows and financial condition. In periods when the capital and credit markets experience significant volatility, the amounts, sources and cost of capital available to the Company may be adversely affected. Our current balance sheet, the debt capacity available on the unsecured line of credit with a diversified bank group, access to the public and private placement debt markets and secured debt financing providers such as Fannie Mae and Freddie Mac providesprovide some insulation from volatile capital markets. We primarily use external financing, including sales of debt and equity securities, to fund acquisitions, developments, and redevelopments and to refinance indebtedness as it matures. If sufficient sources of external financing are not available to us on cost effective terms, we could be forced to limit our acquisition, development and redevelopment activity and/or take other actions to fund our business activities and repayment of debt, such as selling assets, reducing our cash dividend or paying outdistributing less than 100% of our REIT taxable income.
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In general, to the extent that the Company’s access to capital and credit is at a higher cost than the Company has experienced in recent years (reflected in higher interest rates for debt financing or a lower stock price for equity financing without a corresponding change to investment cap rates) the Company’s ability to make acquisitions, develop or redevelop communities, obtain new financing, and refinance existing borrowing at competitive rates could be adversely affected, which would impact the Company's financial standing and related credit rating.
In addition, if our ability to obtain financing is adversely affected, the Company’s stock price may be adversely affected, and we may be unable to satisfy scheduled maturities on existing financing through other sources of our liquidity, which, in the case of secured financings, could result in lender foreclosure on the apartment communities securing such debt.foreclosure.

Debt financing has inherent risks. At December 31, 2017, the Company had approximately $5.7 billion of indebtedness (including $799.2 million of variable rate indebtedness, of which $175.0 million is subject to an interest rate swap effectively fixing the interest rate on $175.0 million in debt. $20.7 million is subject to interest rate cap protection). The Company is subject to the risks normally associated with debt financing, including among others, the following:
that cash flow may not be sufficient to meet required payments of principal and interest;

interest and the REIT distribution requirements of the Code; inability to renew, repay, or refinance maturing indebtedness on encumbered apartment communities;
communities on favorable terms or at all, possibly requiring the Company to sell a property or properties on disadvantageous terms; inability to comply with debt covenants could trigger cash management provisions limiting our ability to control cash flows, cause defaults, andor an acceleration of maturity dates; and
paying debt before the scheduled maturity date could result in prepayment penalties.

The Companypenalties; and defaulting on secured indebtedness may not be able to renew, repay or refinance its indebtedness when due or may be required to refinance its indebtedness at higher interest rates or on terms that may not be as favorable as the terms of existing indebtedness. If the Company is unable to refinance its indebtedness on acceptable terms, or not at all, the Company might be forced to dispose of one or more of its properties on disadvantageous terms, which might result in losses. Such losses could have an adverse effect onlenders seeking a foreclosure or pursuing other remedies which would reduce the CompanyCompany’s income and net asset value, its ability to make distributions to Essex's stockholdersservice other debt, or the Operating Partnership's unitholders and pay amounts due on its debt. Furthermore, if a property is mortgaged to secure payment of indebtedness and the Company is unable to meet mortgage payments, the mortgagee could foreclose on the property, appoint a receiver and exercise rights under an assignment of rents and leases, or pursue other remedies, all with a consequential loss of revenues and asset value. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet REIT distribution requirements.
Debt financing Any of communities maythese risks might result in insufficient cash flow to service debt and fund distributions. Where appropriate,losses that could have an adverse effect on the Company intendsand its ability to continue to use leverage to increase the rate of returnmake distributions and pay amounts due on the Company’s investments and to provide for additional investments that the Company could not otherwise make. There is a risk that the cash flow from the communities will be insufficient to meet both debt payment obligations and the REIT distribution requirements of the Code.its debt. Our ability to make payments on and to refinance our indebtedness and to fund our operations, working capital and capital expenditures, depends on our ability to generate cash in the future. There is a risk that we may not be able to refinance existing indebtedness or that a refinancing will not be done on as favorable terms, which in either case could have an adverse effect on our financial condition, results of operations and cash flows. To a certain extent, our cash flow is subject to general economic, industry, regional, financial, competitive, operating, legislative, regulatory, taxation and other factors, many of which are beyond our control.
As of December 31, 2017, the Company had 56 consolidated communities encumbered by debt. With respect to the 56 communities encumbered by debt, all of them are secured by deeds of trust relating solely to those communities. The holders of this indebtedness will have rights with respect to these communities and, if debt payment obligations are not met, lenders may seek foreclosure of communities which would reduce the Company’s income and net asset value, and its ability to service other debt.
Compliance requirements of tax-exempt financing and below market rent requirements may limit income from certain communities. At December 31, 2017, the The Company had approximately $270.2 million ofhas, and expects to continue using, variable rate tax-exempt financing. This tax-exempt financing, which provides for certain deed restrictions and restrictive covenants. The Company expects to engage in tax-exempt financings in the future. If the compliance requirements of the tax-exempt financing restrict our ability to increase our rental rates with respect to low or moderate income tenants, or eligible/qualifiedcertain tenants, then our income from these properties may be limited. While we generally believe that the interest rate benefit attendant to properties with tax-exempt bonds more than outweighoutweighs any loss of income due to restrictive covenants or deed restrictions, this may not always be the case. Some of these requirements are complex and our failure to comply with them may subject us to material fines or liabilities. Certain state and local authorities may impose additional rental restrictions. These restrictions, which may limit income from the tax-exempt financed communities if the Company is required to lowerdecrease its rental rates to attract tenants who satisfy the median income test.rates. If the Company does not reserve the required number of apartment homes for tenants satisfying these income requirements, the tax-exempt status of the bonds may be terminated, the obligations under the bond documents may be accelerated and the Company may be subject to additional contractual liability. BesidesNotwithstanding the limitations due to tax-exempt financing requirements, the income from certain communities may be limited due to below marketbelow-market rent ("BMR") requirements imposed by local authorities in connection with the original development of the community.

The indentures governing our notes and other financing arrangements contain restrictive covenants that limit our operating flexibility. The indentures that govern our publicly registered notes contain financialflexibility and operating covenants that, among other things, restrict our ability to take specific actions, even if we believe themsuch actions to be in our best interest,interests, including restrictions on our ability to:
to consummate a merger, consolidation or sale of all or substantially all of our assets; and
incur additional secured and unsecured indebtedness.

The instruments governing our other unsecured indebtedness require us to meet specified financial and other covenants, including covenants relating to net worth, fixed charge coverage, debt service coverage, the amounts of total indebtedness and secured indebtedness, leverage and certain investment limitations. These covenantswhich may restrict our ability to expand or fully pursue

our business strategies. Our ability to comply with these provisions and those contained in the indentures governing the notes, may be affected by changes in our operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events adversely impacting us. TheA breach of any of these covenants including those contained in our indentures, could result in a default under our indebtedness, which could cause those and other obligations to become due and payable. If any of our indebtedness is accelerated, we may not be able to repay it.
Rising interest rates may affect the Company’s costs of capital and financing activities and results of operation. Interest rates could increase, which could result in higher interest expense on the Company’s variable rate indebtedness or increase interest rates when refinancing maturing fixed rate debt. Prolonged interest rate increases could negatively impact the Company’s ability to make acquisitions and develop apartment communities with positive economic returns on investment and the Company’s ability to refinance existing borrowings.
Interest rate hedging arrangements may result in losses. The Company from time to time uses interest rate swaps and interest rate caps contracts to manage certain interest rate risks. Although these agreements may partially protect against rising interest rates, they also may reduce the benefits to the Company if interest rates decline. If a hedging arrangement is not indexed to the same rate as the indebtedness that is hedged, the Company may be exposed to losses to the extent that the rate governing the indebtedness and the rate governing the hedging arrangement change independently of each other. Finally, nonperformance by the other party to the hedging arrangement may subject the Company to increased credit risks. In order to minimize counterparty credit risk, the Company enters into hedging arrangements only with investment grade financial institutions.

A downgrade in the Company's investment grade credit rating could materially and adversely affect its business and financial condition. The Company plans to manage its operations to maintain its investment grade credit rating with a capital structure consistent with its current profile but there can be no assurance that it will be able to maintain its current credit ratings. Any downgrades in terms of ratings or outlook by any of the rating agencies could have a material adverse impact on the Company’s cost and availability of capital, which could in turn have a material adverse impact on its financial condition, results of operations and liquidity.liquidity, as well as the Company's stock price.
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Changes in the Company’s financing policy may lead to higher levels of indebtedness. The Company’s organizational documents do not limit the amount or percentage of indebtedness that may be incurred. The Company has adopted a policy of maintaining a limit on debt financing consistent with the existing covenants required to maintain the Company’s unsecured line of credit bank facility, unsecured debt and senior unsecured bonds. Although pursuant to this policy the Company manages its debt to be in compliance with the debt covenants under its unsecured bank facilities and senior unsecured bonds. However, the Company may increase the amount of outstanding debt at any time without a concurrent improvement in the Company’s ability to service the additional debt. Accordingly, the Company could become more leveraged,debt, resulting in an increased risk of default ofon its debt covenants or on its debt obligations and in an increase in debt service requirements. Any covenant breach or significant increase in the Company’s leverage could materially adversely affect the Company’s financial condition and ability to access debt and equity capital markets in the future.

If the Company or any of its subsidiaries defaults on an obligation to repay outstanding indebtedness when due, the default could trigger a cross-default or cross-acceleration under other indebtedness. If the Company or one of its subsidiaries defaults on its obligations to repay outstanding indebtedness, the default could cause a cross-default or cross-acceleration under other indebtedness. A default, under the agreements governing the Company’s or its subsidiaries’ indebtedness, including a default under mortgage indebtedness, lines of credit, bank term loan, or the indenture for the Company’s outstanding senior notes, or the Company’s interest rate hedging arrangements that is not waived by the applicable required lenders, or holders of outstanding notes or counterparties could trigger cross-default or cross-acceleration provisions under one or more agreements governing the Company’s indebtedness, which could cause an immediate default or allow the lenders to declare all funds borrowed thereunder to be due and payable.

The Company could be negatively impacted by the condition of Fannie Mae or Freddie Mac and by changes in government support for multi-familymultifamily housing.Historically, the Company has utilized borrowing from Fannie Mae and Freddie Mac. There are no assurances that these entities will lend to the Company in the future. Beginning in 2011, the Company has primarily utilized unsecured debt and has repaid secured debt at or near their respective maturity and has placed less reliance on agency mortgage debt financing. Potential options have been proposed for the future of agency mortgage finance in the U.S. that could involve the phase out of Fannie Mae and Freddie Mac. While we believe Fannie Mae and Freddie Mac will continue to provide liquidity to our sector, should they discontinue doing so, have their mandates changed or reduced, become more resistant to allowing preferred equity or mezzanine financing on assets where they have purchased the senior loan, or be disbanded or reorganized by the government or if there is reduced government support for multi-familymultifamily housing more generally, it may adversely affect interest rates, capital availability, development of multi-familymultifamily communities and the value of multi-familymultifamily residential real estate and, as a result, may adversely affect the Company and its growth and operations.



Risks Related to the Company in General and the Ownership of Essex’s StockPersonnel

The Company depends on its key personnel, whose continued service is not guaranteed.The Company’s success depends on its ability to attract, train and retain executive officers, senior officers and company managers. There is substantial competition for qualified personnel in the real estate industry and the lossdeparture of any of the Company’s key personnel could have an adverse effect on the Company.
The price per share of While the Company engages in regular succession planning for key positions, the Company’s stockplans may fluctuate significantly. be impacted and therefore adjusted due to the departure of any key personnel. Additionally, executive leadership transitions can be inherently difficult to manage and, as a result, we may experience some disruption to our business. The market price per share of theCompany must continue to recruit, train and retain qualified operational staff at its properties, which may be difficult in a highly competitive job market. Changes to our Company’s common stockoperational structure could result in an increase in issues or departures among our operational staff. Our ability to timely deliver quality customer service or to respond to building repair and maintenance requests may fluctuate significantly in response to many factors, includingbe negatively impacted without limitation:
regional, national and global economic conditions;
actual or anticipated variations in the Company’s quarterly operating results or dividends;
changes in the Company’s funds from operations or earnings estimates;
issuances of common stock, preferred stock or convertible debt securities, or the perception that such issuances might occur;
publication of research reports about the Company or the real estate industry;
the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate based companies);
general stock and bond market conditions, including changes in interest rates on fixed income securities, that may lead prospective purchasers of the Company’s stock to demand a higher annual yield from dividends;
shifts in our investor base to a higher concentration of passive investors such as exchange traded fund and index funds,adequate operational staff, which may adversely affect our ability to communicate effectively with our investors;
availability to capital markets and cost of capital;
a change in analyst ratings orimpact the Company’s credit ratings;
terrorist activity may adversely affect the markets in which the Company’s securities trade, possibly increasing market volatility and causing erosion of business and consumer confidence and spending;
natural disasters such as earthquakes; and
changes in public policy and tax law.

Many of the factors listed above are beyond the Company’s control. These factors may cause the market price of shares of the Company’s common stock to decline, regardless of the Company’s financial condition, results of operations, or business prospects.

The Company’s future issuances of common stock, preferred stock or convertible debt securitiesoperations. Additionally, we could be dilutivesubject to current stockholderslabor union efforts to organize our employees from time to time and, adversely affect the market price of the Company’s common stock. In order to finance the Company’s acquisitionif successful, those organizational efforts may decrease our operational flexibility and development activities, the Company has issued and sold common stock, preferred stock and convertible debt securities. For example, during the year ended December 31, 2017, the Company issued 345,444 shares of common stock for $89.1 million, net of fees and commissions. The Company may in the future sell further shares of common stock, including pursuant to its equity distribution programs with Cantor Fitzgerald & Co., Barclays Capital Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., Capital One Securities, Inc., Citigroup Global Markets Inc., Jefferies LLC, J.P. Morgan Securities LLC, Mitsubishi UFJ Securities (USA), Inc., and UBS Securities LLC.increase operational costs.


In 2016, the Company filed a new shelf registration statement with the SEC, allowing the Company to sell an undetermined number of equity and debt securities as defined in the prospectus. Future sales of common stock, preferred stock or convertible debt securities may dilute stockholder ownership in the Company and could adversely affect the market price of the common stock.
The Company’s Chairman is involved in other real estate activities and investments, which may lead to conflicts of interest. The Company’s Chairman, George M. Marcus, is not an employee of the Company, and is involved in other real estate activities and investments, which may lead to conflicts of interest. Mr. Marcus owns interests in various other real estate-related businesses and investments. He is the Chairman of the Marcus & Millichap Company (“MMC”("MMC"), which is a parent company of a diversified group of real estate service, investment and development firms. Mr. Marcus is also the Co-Chairman of Marcus & Millichap, Inc. (“MMI”), and Mr. Marcus owns a controlling interest in MMI. MMI is a national brokerage firm listed on the NYSE that underwent its initial public offering in 2013.
Mr. Marcus has agreed not to divulge any confidential or proprietary information that may be received by him in his capacity as Chairman of the Company to any of his affiliated companies and that he will absent himself from any and all discussions by the Company's Board of Directors regarding any proposed acquisition and/or development of an apartment community where it appears that there may be aWhile conflict of interest with any of his affiliated companies. Notwithstanding this agreement,protocols and agreements are in place, Mr.

Marcus and his affiliated entities may potentially compete with the Company in acquiring and/or developing apartment communities, which competition may be detrimentalcommunities. Due to the Company. In addition, due to such potential competition for real estate investments, Mr. Marcus and his affiliated entities may have a conflict of interest with the Company, which may be detrimental to the interests of the Essex's stockholders and the Operating Partnership's unitholders.

The influence of executive officers, directors, and significant stockholders may be detrimental to holders of common stock.As of December 31, 2017, George M. Marcus, the Chairman of the Company’s Board of Directors, wholly or partially owned approximately 1.7 million shares of common stock (including shares issuable upon exchange of limited partnership interests in the Operating Partnership and certain other partnerships, indirectly held shares of common stock and assuming exercise of all vested options). Mr. Marcus currently does not have majority control over the Company. However, he currently has, and likely will continue to have, significant influence with respect to the election of directors and approval or disapproval of significant corporate actions. Consequently, his influence could result in decisions that do not reflect the interests of all the Company’s stockholders.

Under the partnership agreement of the Operating Partnership, the consent of the holders of limited partnership interests is generally required for certain amendments of the agreement and for certain extraordinary actions. Through their ownership of limited partnership interests and their positions with the Company, the Company’s directors and executive officers, including Mr. Marcus, have substantial influence on the Company. Consequently, their influence could result in decisions that do not reflect the interests of all stockholders.
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Our related party guidelines may not adequately address all of the issues that may arise with respect to related party transactions. The Company has adopted "Related Party Transaction Approval Process Guidelines" that provide generally that any transaction in which a director or executive officer has an interest must have the prior approval of the Audit Committee of the Company's Board of Directors. The review and approval procedures in these guidelines are intended to determine whether a particular related party transaction is fair, reasonable and serves the interests of the Company'sCompany’s stockholders. Pursuant to these guidelines, related party transactions have been approved by the Audit Committee of the Company’s Board of Directors (“Board”) from time to time. There is no assurance that this policy will be adequate for determining whether a particular related party transaction is suitable and fair for the Company. Also, the policy'spolicy’s procedures may not identify and address all the potential issues and conflicts of interests with a related party transaction.
Stockholders have limited control over changes
Employee theft or fraud could result in loss. Should any employee compromise our policies and operations. The Company’s Board of Directors determines our major policies, including our policies regarding investments, financing, growth, debt capitalization, REIT qualification and distributions. The Company’s Board of Directors may amendinformation technology systems, commit fraud or revise these and other policies without a vote of the stockholders. Under the Company’s Charter and the Maryland General Corporation Law, stockholders currently have a right to vote only on the following matters:

the electiontheft of the Company’s Board of Directorsassets, or the removal of any member of the Company’s Board of Directors;
any amendment of the Company’s Charter, except that the Company’s Board of Directors may amend the Charter without stockholder approval to:
◦change our name or the name or other designation or the par value of any class or series of our stock and the aggregate par value of our stock;
◦increase or decrease the number of our shares of any class or series of stock that we have the authority to issue;
◦classify or reclassify any unissued shares of stock by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms and conditions of redemption of such shares; and
◦effect certain reverse stock splits;
our liquidation and dissolution; and
except as otherwise permitted by law, our being a party to any merger, consolidation, conversion, salemisappropriate tenant or other disposition of allinformation, we could incur losses, including significant financial or substantially all of our assets or similar reorganization.

All other matters are subject to the discretion of the Company’s Board of Directors. In addition, pursuant to Maryland law, all matters other than the election or removal of a director mustreputational harm, from which full recovery cannot be declared advisable by the Company’s Board of Directors prior to a stockholder vote.

Our score or rating by proxy advisory firms or other corporate governance consultants advising institutional investors could have an adverse effect on the perception of our corporate governance, and thereby negatively impact the market price of our common stock. Various proxy advisory firms and other corporate governance consultants advising institutional investors provide scores or ratings of our governance measures, nominees for election as directors, executive compensation practices, and other matters that may be submitted to stockholders for consideration at our annual meetings. From time to time certain

matters that we propose for approvalassured. We also may not receive a favorable scorehave insurance that covers any losses in full or rating, or may result in a negative score or rating or recommendation against the nominee or matter proposed. These unfavorable scores or ratings may leadthat covers losses from particular criminal acts.

Risks Related to rejected proposals or a loss of stockholder confidence in our corporate governance measures, which could adversely affect the market price of our common stock.

We periodically review our corporate governance measures and consider implementing changes that we believe are responsive to concerns that have been raised, but there may be times where we decide not to implement changes or other measures recommended by proxy advisors or other corporate governance consultants that we believe are contrary to the best interests of our stockholders, notwithstanding the adverse effect this decision may have on our scores or ratings or the perception of our corporate governance, thereby negatively impacting the market price of our common stock.

We could face adverse consequencesTaxes, Our Status as a result of actions of activist investors. Campaigns by stockholders to effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company. Responding to stockholder activism or engaging in a process or proxy contest may be costlyREIT and time-consuming, disrupt our operations and divert the attention of our management team and our employees from executing our business plan, which could adversely affect our business and results of operations.Our Organizational Structure


Failure to generate sufficient rental revenue or other liquidity needs and impacts of economic conditions could limit cash flow available for dividend distributions, as well as the form and timing of such distributions, to Essex's stockholders or the Operating Partnership's unitholders. A decrease in rental revenue, or liquidity needs such as the repayment of indebtedness or funding of our acquisition and development activities, could have an adverse effect on our ability to pay distributions to Essex's stockholders or the Operating Partnership's unitholders. Significant expenditures associated with each community such as debt service payments, if any, real estate taxes, insurance and maintenance costs are generally not reduced when circumstances cause a reduction in income from a community.

The form, timing and/or amount of dividend distributions in future periods may vary and be impacted by economic and other considerations. The form, timing and/or amount of dividend distributions will be declared at the discretion of the Board of Directors and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as the Board of Directors may consider relevant. The Board of Directors may modify our dividend policy from time to time.


Essex may choose to pay dividends in its own stock, in which case stockholders may be required to pay tax in excess of the cash they receive. We may distribute taxable dividends that are payable in part in Essex's stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as income to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of the cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax,applicable taxes, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, the trading price of Essex's stock wouldcould experience downward pressure if a significant number of our stockholders sell shares of Essex's stock in order to pay taxes owed on dividends.


The Company’s future issuances of common stock, preferred stock or convertible debt securities could be dilutive to current stockholders and adversely affect the market price of the Company’s common stock. In order to finance the Company’s acquisition and development activities, the Company could issue and sell common stock, preferred stock and convertible debt securities, including pursuant to its equity distribution program, issue partnership units in the Operating Partnership, or enter into joint ventures which may dilute stockholder ownership in the Company and could adversely affect the market price of the common stock.

The Maryland Business Combination Act may delay, defer or prevent a transaction or change in control of the Company that might involve a premium price for the Company's stock or otherwise be in the best interest of our stockholders. Under the Maryland General Corporation Law,Business Combination Act (the “MBCA”), certain “business combinations”"business combinations", including a merger, between a Maryland corporation and an interested stockholdercertain “interested stockholders” or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as any person (and certain affiliates of such person) who beneficially owns ten percent or more of the voting power of the then-outstanding voting stock of the corporation. The law also requires a two supermajority stockholder votes for such transactions. This means that the transactionand must be approved by at least:
80% of the votes entitledpursuant to be cast by holders of outstandingcertain supermajority voting shares; and
Two-thirds of the votes entitledrequirements, subject to be cast by holders of outstanding voting shares other than shares held by the interested stockholder with whom the business combination is to be effected.

The statute permits variouscertain exemptions from its provisions, includingwhich include business combinations that are exempted by the board of directorsBoard prior to the time that the interested stockholder becomes an interested stockholder. These voting provisions do not apply ifPursuant to this exemption, the stockholders receive a minimum price, as defined under the Maryland General Corporation Law. As permitted by

the statute, the Board of Directors of the Company irrevocably has elected to exempt any business combination among the Company, George M.Mr. Marcus who is the chairman of the Company, and MMC or any entity owned or controlled by Mr. Marcus and MMC. Consequently,However, other transactions with interested stockholders subject to the five-year prohibition andMBCA may be delayed or may not meet the related supermajority votevoting or other requirements described above will not apply to any business combination between the Company, Mr. Marcus, or MMC. As a result, the Company may in the future enter into business combinations with Mr. Marcus and MMC, without compliance with the supermajority vote requirements and other provisions of the Maryland Business Combination Act.MBCA, which may delay or prevent the consummation of such transactions.

Certain provisions contained in the Operating Partnership agreement, Charter and Bylaws, and certain provisions of the Maryland General Corporation Law could delay, defer or prevent a change in control.While the Company is the sole general partner of the Operating Partnership, and generally has full and exclusive responsibility and discretion in the management and control of the Operating Partnership, certain provisions of the Operating Partnership agreement place limitations onmay limit the Company’s power to act with respect to the Operating Partnership. Such limitationsPartnership, which could delay, defer or prevent a transaction or a change in control that might involve a premium price for the Company’s stock ormay otherwise be in the best interests of its stockholders or that could otherwise adversely affect their interests. The partnership agreement provides that if the limited partners own at least 5% of the outstanding units of partnership interest in the Operating Partnership, the Company may not, without first obtaining the consent of a majority in interest of the limited partners in the Operating Partnership, transfer all or any portion of the Company’s general partner interest in the Operating Partnership to another entity. Such limitations on the Company’s power to act may result in the Company’s being precluded from taking action that the Board of Directors otherwise believes is in the best interests of the Company or its stockholders.
The Company’s Charter authorizes the issuance of additional shares of common stock or preferred stock and the setting of the preferences, rights and other terms of such stock without the approval of the holders of the common stock.
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The Company may establish one or more classes or series of stock that could delay, defer or prevent a transaction or a change in control. Such a transaction might involve a premium price for the Company’s stockcontrol, or otherwise be in the best interests of the holders of common stock. Also, such a class or series of stock could have dividend, voting or othercreate rights that could adversely affect the interests of holders of common stock.
The Additionally, the Company’s Charter contains provisions limiting the transferability and ownership of shares of capital stock, which may delay, defer or prevent a transaction or a change in control. For example, subject to receiving an exemption from the Board of Directors, potential acquirers may not purchase more than 6% in value of the stock (other than qualified pension trusts which can acquire 9.9%). This maycontrol, or discourage tender offers that may be attractive to the holders of common stock and limit the opportunity for stockholders to receive a premium for their shares of common stock.offers.

The Maryland General Corporation Law (the “MGCL”) restricts the voting rights of holders of shares deemed to be “control"control shares.” Under the Maryland General Corporation Law, “control shares” are those which, when aggregated with any other shares held by the acquirer, entitle the acquirer to exercise voting power within specified ranges." Although the Bylaws exempt the Company from the control share provisions of the Maryland General Corporation Law,MGCL, the Board of Directors may amend or eliminate the provisions of the Bylaws at any time in the future. Moreover, any such amendment or elimination of such provision of the Bylaws may result in the application of the control share provisions of the Maryland General Corporation Law not only to control shares which may be acquired in the future, but also to control shares previously acquired.MGCL. If the provisions of the Bylaws are amended or eliminated, the control share provisions of the Maryland General Corporation LawMGCL could delay, defer or prevent a transaction or change in control that might involve a premium price for the stock or otherwise be in the best interests of the Company’s stockholders.control.

The Company’s Charter and Bylaws as well as Maryland General Corporation Lawthe MGCL also contain other provisions that may impede various actions by stockholders without approval ofby the Company’s Board, of Directors, and that in turn may delay, defer or prevent a transaction, including a change in control that might involve a premium price for the stock or otherwise be in the best interests of the Company's stockholders.transaction. Those provisions include, among others:
others, directors may be removed by stockholders, without cause, only upon the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of the directors, and with cause, only upon the affirmative vote of a majority of the votes entitled to be cast generally in the election of the directors;
the Company’s boardBoard can fix the number of directors and fill vacant directorships upon the vote of a majority of the directors and the Company's boardBoard can classify the board such that the entire board is not up for re-election annually;
stockholders must give advance notice to nominate directors or propose business for consideration at a stockholders’ meeting; and
for stockholders to call a special meeting, the meeting must be requested by not less than a majority of all the votes entitled to be cast at the meeting.



Rising interest rates could increase interest costsStockholders have limited control over changes in our policies and otherwise adversely affectoperations. The Board determines our major policies, including our policies regarding investments, financing, growth, debt capitalization, REIT qualification and distributions. The Board may amend or revise these and other policies without a vote of the market price of our common stock. We are subject to interest rate risk which could adversely affect the market price of our common stock. As noted above, we are primarily exposed to interest rate risk as a result of our lines of credit, where fluctuations in interest rates may cause our interest expense to rise, which could have an adverse effect on our financial condition, results of operations and cash flows.stockholders. In addition, an increase in market interest rates may lead purchasers of our common stock to demand a greater annual dividend yield, which could adversely affect the market price of our common stock.

A breach of the Company’s privacy or information security systems, or those of our vendors or other third parties, could materially adversely affect the Company’s business and financial condition. The protection of tenant, employee, and company data is critically importantpursuant to the Company. Our business requires us, including someMGCL, all matters other than the election or removal of our vendors, to use and store personally identifiable and other sensitive information of our tenants and employees. The collection and use of personally identifiable information is governed by federal and state laws and regulations. Privacy and information security laws continue to evolve and maya director must be inconsistent from one jurisdiction to another. Compliance with all such laws and regulations may increase the Company’s operating costs and adversely impact the Company’s ability to market the Company’s properties and services.
The security measures put in placedeclared advisable by the Company, and such vendors, cannot provide absolute security, and the Company and our vendors' information technology infrastructure may be vulnerable to criminal cyber-attacks or data security incidents, including, ransom of data, such as, without limitation, tenant and/or employee information, due to employee error, malfeasance, or other vulnerabilities. Any such incident could compromise the Company’s or such vendors' networks (or the networks or systems of third parties that facilitate the Company’s or such vendors’ business activities), and the information stored by the Company or such vendors could be accessed, misused, publicly disclosed, corrupted, lost, or stolen, resulting in fraud, including wire fraud related to Company assets, or other harm. Moreover, if a data security incident or breach affects the Company’s systems or such vendors' systems, whether through a breach of the Company’s systems or a breach of the systems of third parties, or results in the unauthorized release of personally identifiable information, the Company’s reputation and brand could be materially damaged and the Company may be exposedBoard prior to a risk of loss or litigation and possible liability, including, without limitation, loss related to the fact that agreements with such vendors, or such vendors' financial condition, may not allow the Company to recover all costs related to a cyber breach for which they alone or they and the Company should be jointly responsible for, which could result in a material adverse effect on the Company’s business, results of operations, and financial condition.stockholder vote.
Privacy and information security risks have generally increased in recent years because of the proliferation of new technologies, such as ransomware, and the increased sophistication and activities of perpetrators of cyber-attacks. In light of the increased risks, we have dedicated additional Company resources to strengthening the security of the Company’s computer systems. In the future, the Company may expend additional resources to continue to enhance the Company’s information security measures and/or to investigate and remediate any information security vulnerabilities. Despite these steps, there can be no assurance that the Company will not suffer a significant data security incident in the future, that unauthorized parties will not gain access to sensitive data stored on the Company’s systems, or that any such incident will be discovered in a timely manner. Any failure in or breach of the Company's information security systems, those of third party service providers, or a breach of other third party systems that ultimately impacts the operational or information security systems of the Company. as a result of cyber-attacks or information security breaches could result in a wide range of potentially serious harm to our business and results of operations. Further, the techniques used by criminals to obtain unauthorized access to sensitive data, such as phishing and other forms of human engineering, are increasing in sophistication and are often novel or change frequently; accordingly, the Company may be unable to anticipate these techniques or implement adequate preventative measures.
Expanding social media vehicles present new risks. The use of social media could cause us to suffer brand damage or information leakage. Negative posts or comments about us on any social networking website could damage our reputation. In addition, employees or others might disclose non-public sensitive information relating to our business through external media channels. The continuing evolution of social media will present us with new challenges and risks.
Employee theft or fraud could result in loss. Certain of our employees have access to, or signature authority with respect to, bank accounts or other Company assets, which exposes us to the risk of fraud or theft. In addition, certain employees have access to key information technology (IT) infrastructure and to tenant and other information that is commercially valuable. Should any employee compromise our IT systems, or misappropriate tenant or other information, we could incur losses, including significant financial or reputational harm, from which full recovery cannot be assured. We also may not have insurance that covers any losses in full or that covers losses from particular criminal acts. As of December 31, 2017, potential liabilities for theft or fraud are not quantifiable and an estimate of possible loss cannot be made.
Any material weaknesses identified in the Company's internal control over financial reporting could have an adverse effect on the Company’s stock price. Section 404 of the Sarbanes-Oxley Act of 2002 requires the Company to evaluate and report on

its internal control over financial reporting. If the Company identifies one or more material weaknesses in its internal control over financial reporting, the Company could lose investor confidence in the accuracy and completeness of its financial reports, which in turn could have an adverse effect on the Company’s stock price.
Tax Risks
Sales of apartment communities could incur tax risks. If we are found to have held, acquired or developed a community primarily with the intent to resell the community, federal tax laws may limit our ability to sell the community without incurring a 100% tax on the gain on the sale of the community and potentially adversely impacting our status as a REIT unless we own the community through one of our TRSs.
Loss of the Company's REIT status would have significant adverse consequences to the Company and the value of the Company's common stock. The Company has elected to be taxed as a REIT, under the Code. The Company’s qualification as a REITwhich requires it to satisfy numerousvarious annual and quarterly requirements, including income, asset and distribution tests, established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations. 
To qualify under the income test, (i) at least 75% of the Company’s annual gross income generally must be derived from rents from real property, mortgage interest, gain from the sale or other disposition of real property held for investment, dividends or other distributions on, and gain from the sale or other disposition of shares of other REITs and certain other limited categories of income and (ii) at least 95% of the Company’s annual gross income generally must be derived from the preceding sources plus other dividends, interest other than mortgage interest, and gain from the sale or other disposition of stock and securities held for investment. To qualify under the asset test, at the end of each quarter, at least 75% of the value of the Company’s assets must consist of cash, cash items, government securities and qualified real estate assets and there are significant additional limitations regarding the Company’s investment in securities other than government securities and qualified real estate assets, including limitations on the percentage of our assets that can be represented by the Company’s TRSs. To comply with the distribution test, the Company generally must distribute to its stockholders each calendar year at least 90% of its REIT taxable income, determined before a deduction for dividends paid and excluding any net capital gain.  In addition, to the extent the Company satisfies the 90% test, but distributes less than 100% of its REIT taxable income, it will be subject to corporate income tax on such undistributed income and could be subject to an additional 4% excise tax. Because the Company needs to meet these tests to maintain its qualification as a REIT, it could cause the Company to have to forego certain business opportunities and potentially require the Company to liquidate otherwise attractive investments.
In addition to the income, asset and distribution tests described above, the Company’s qualification as a REIT involves the determination of various factual matters and circumstances not entirely within the Company’s control.tests. Although the Company intendsbelieves that its current organization and method of operation enable it to qualify as a REIT, it cannot assure you that it so qualifies or that it will be able to remain so qualified in the future. If the Company fails to qualify as a REIT in any taxable year, the Company would be subject to U.S. federal corporate income tax on the Company’s taxable income, at corporate rates, and the Company would not be allowed to deduct dividends paid to its stockholders in computing its taxable income. The Company would also be disqualified from treatment as a REIT for the four taxable years following the year in which the Company failed to qualify, unless we areit is entitled to relief under statutory provisions. The additional tax liability would reduce its net earnings available for investment or distribution to Essex stockholders and Operating Partnership unitholders,distributions, and the Company would no longer be required to make distributions to its stockholders for the purpose of maintaining REIT status. As a result of all these factors, the Company’s failure to qualify as a REIT also could impair its ability to expand its business and raise capital, and could adversely affect the value and market price of the Company’s common stock.

Complying with REIT requirements may affect our profitability and may force us to liquidate or forgo otherwise attractive investments. To qualify as a REIT, we must continually satisfy certain asset, income and distribution tests and other requirements, which could materially and adversely affect us. We may be required to liquidate or forgo otherwise attractive investments in order to satisfy the asset and income tests or to qualify under certain statutory relief provisions. If we do not acquire new assets, we may not have sufficient depreciation expense to offset income and may have to make special distributions to stockholders. We also may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. As a result, having to comply with the distribution requirement could cause us to: (1) sell assets in adverse market conditions; (2) borrow on unfavorable terms; or (3) distribute amounts that would otherwise be invested in future acquisitions, capital expenditures or repayment of debt. Moreover, if we are compelled to liquidate our investments to meet any of these asset, income or distribution tests, or to repay obligations to our lenders, we may be unable to comply with one or more of the requirements applicable to REITs or may be subject to a 100% tax on any resulting gain if such sales constitute prohibited transactions.

Legislative or other actions affecting REITs could have a negative effect on the Company or its stockholders. The rules dealing withChanges to federal income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Department of the Treasury. Changes to the tax laws, with or without retroactive legislation, could adversely affect the Company or its stockholders. New legislation, Treasury Regulations, administrative interpretations or court decisions could significantly and negatively affect the Company’s ability to qualify as a REIT, the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in the Company. Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT.

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The 2017 Tax Legislation has significantly changed the U.S. federal income taxation of U.S. businesses and their owners, including REITs and their stockholders. Changes made by the 2017 Tax Legislation that could affect the Company and its stockholders include:


temporarily reducing individual U.S. federal income tax rates on ordinary income (the highest individual U.S. federal income tax rate has been reduced from 39.6% to 37% for taxable years beginning after December 31, 2017 and before January 1, 2026);
permanently eliminating the progressive corporate tax rate structure, which previously imposed a maximum corporate tax rate of 35%, and replacing it with a flat corporate tax rate of 21%;
permitting a deduction for certain pass-through business income, including dividends distributed by the Company and received by its stockholders that are not designated by the Company as capital gain dividends or qualified dividend income, which will allow individuals, trusts and estates to deduct up to 20% of such amounts for taxable years beginning after December 31, 2017 and before January 1, 2026;
reducing the highest rate of withholding with respect to the Company’s distributions to non-U.S. stockholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%;
limiting the Company’s deduction for net operating losses arising in taxable years beginning after December 31, 2017 to 80% of REIT taxable income (prior to the application of the dividends paid deduction);
generally limiting the deduction for net business interest expense in excess of 30% of a business’s “adjusted taxable income,” except for taxpayers (including most equity REITs) that engage in certain real estate businesses and elect out of this rule (provided that such electing taxpayers must use an alternative depreciation system with longer depreciation periods); and
eliminating the corporate alternative minimum tax.

Many of these changes are effective immediately, without any transition periods or grandfathering for existing transactions. The legislation is unclear in many respects and could be subject to potential amendments and technical corrections, as well as interpretations and implementing regulations by the U.S. Department of the Treasury and Internal Revenue Service, any of which could lessen or increase certain adverse impacts of the legislation. In addition, it is unclear how these U.S. federal income tax changes will affect state and local taxation, which often uses federal taxable income as a starting point for computing state and local tax liabilities. Because state and local tax laws may adopt some of the base-broadening provisions of the 2017 Tax Legislation, such as the limitation on the deduction for net interest expense, while not adopting corresponding rate reductions, state and local tax liabilities may increase. While some of the changes made by the tax legislation may adversely affect the Company in one or more reporting periods and prospectively, other changes may be beneficial on a going forward basis. The Company continues to work with its tax advisors and auditors to determine the full impact that the recent tax legislation as a whole will have on the Company.

The Company’s ownership of taxable REIT subsidiaries is subject to certain restrictions, and it will be required to pay a 100% penalty tax on certain income or deductions if transactions with the Company’s taxable REIT subsidiaries are not conducted on arm’s length terms. The Company has established several TRSs. The TRSs must pay U.S. federal income tax on their taxable income. While the Company will attempt to ensure that its dealings with its TRSs do not adversely affect its REIT qualification, it cannot provide assurances that it will successfully achieve that result. Furthermore, the Company may be subject to a 100% penalty tax, to the extent dealings between the Company and its TRSs are not deemed to be arm’s length in nature. The Company intends that its dealings with its TRSs will be on an arm’s length basis. No assurances can be given, however, that the Internal Revenue Service will not assert a contrary position.

Failure of one or more of the Company’s subsidiaries to qualify as a REIT could adversely affect the Company’s ability to qualify as a REIT. The Company owns interests in multiple subsidiary REITs that have elected to be taxed as REITs under the Code. These subsidiary REITs are subject to the various REIT qualification requirements and other limitations that are applicable to the Company. If any of the Company’s subsidiary REITs were to fail to qualify as a REIT, then (i) the subsidiary REIT would become subject to federal income tax and (ii) thetax. The Company’s ownership of shares in such subsidiary REIT would cease to be a qualifying asset for purposes of the asset tests applicable to REITs.  If any of the Company’s subsidiary REITs were to fail to qualify as REITs,and it is possible that the Company could also fail to qualify as a REIT.


The tax imposed on REITs engaging in “prohibited transactions”"prohibited transactions" may limit the Company’s ability to engage in transactions which would be treated as sales for federal income tax purposes. From time to time, the Company may transfer or otherwise dispose of some of its properties.  Under the Code, unless certain exceptions apply, any gain resulting from transfers or dispositions of properties that the Company holds as inventory or primarily for sale to customers in the ordinary course of business could be treated as income from a prohibited transaction subject to a 100% penalty tax.tax, which could potentially adversely impact our status as a REIT. Since the Company acquires properties for investment purposes, it does not believe that its occasional transfers or disposals of property should be treated as prohibited transactions. However, whether property is held for investment purposes depends on allif the facts and circumstances surrounding the particular transaction. The Internal Revenue Service may contendsuccessfully contends that certain transfers or disposals of properties by the Company are prohibited transactions. If the Internal Revenue Service were to argue successfully that a transfer or disposition of property constituted a prohibited transaction,transactions, then the Company would be required to pay a 100%

penalty tax on any gain allocable to it from the prohibited transaction, and the Company’s ability to retain proceeds from real property sales may be jeopardized.


Dividends payable by REITs may be taxed at higher rates than dividends of non-REIT corporations, which could reduce the net cash received by stockholders and may be detrimental to the Company’s ability to raise additional funds through any future sale of its stock. Dividends paid by REITs to U.S. stockholders that are individuals, trusts or estates are generally not eligible for the reduced tax rate applicable to qualified dividends received from non-REIT corporations but, under the 2017 Tax Legislation,corporations. U.S. stockholders that are individuals, trusts and estates generally may deduct 20% of ordinary dividends from a REIT for taxable years beginning after December 31, 2017 and before January 1, 2026).2026. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs, such tax rate is still higher than the tax rate applicable to regular corporate qualified dividends. This may cause investors to view REIT investments as less attractive than investments in non-REIT corporations, which in turn may adversely affect the value of stock in REITs, including the Company's stock.REITs.


Non-U.S. investors that invest in the Company should be aware of the following U.S. federal income tax considerations in connection with such investment. First, distributions by the Company from its current and accumulated earnings and profits are subject to a 30% U.S. withholding tax in the hands of non-U.S. investors, unless the 30% is reduced by an applicable income tax treaty.  Such distributions may also be subject to a 30% withholding tax under the “Foreign Account Tax Compliance Act” (“FATCA”) unless a non-U.S. investor complies with certain requirements prescribed by FATCA. Second, distributions by the Company that are attributable to gains from dispositions of U.S. real property (“capital gain dividends”) will be treated as income that is effectively connected with a U.S. trade or business in the hands of a non-U.S. investor, such that a non-U.S. investor will have U.S. federal income tax payment and filing obligations with respect to capital gain dividends. Furthermore, capital gain dividends may be subject to an additional 30% “branch profits tax” (which may be reduced by an applicable income tax treaty) in the hands of a non-U.S. investor that is a corporation. Third, any gain derived by a non-U.S. investor on a disposition of such investor’s stock in the Company will subject such investor to U.S. federal income tax payment and filing requirements unless the Company is treated as a domestically-controlled REIT. A REIT is “domestically controlled” if less than 50% of the REIT’s capital stock, by value, has been owned directly or indirectly by persons who are not qualifying U.S. persons during a continuous five-year period ending on the date of disposition or, if shorter, during the entire period of the REIT’s existence. The Company believes that it is a domestically-controlled REIT, but no assurances can be given in this regard. Notwithstanding the foregoing, even if the Company were not a domestically-controlled REIT, under a special exception non-U.S. investors should not have U.S. federal income tax payment and filing obligations on capital gain dividends or a disposition of their stock in the Company if (i) they did not own more than 10% of such stock at any time during the one-year period ending on the date of the disposition, and (ii) the Company’s stock continues to be regularly traded on an established securities market located in the United States and certain other non-U.S. investors may also not be subject to these payment and filing obligations. Non-U.S. investors should consult with their independent advisors as to the above U.S. tax considerations and other U.S. tax consequences of an investment in the Company’s stock, in light of their particular circumstances.
We may face risks in connection with Section 1031 exchanges. From time to time weWe occasionally dispose of real properties in transactions
intended to qualify as “like-kind exchanges”"like-kind exchanges" under Section 1031 of the Code. If a transaction intended to qualify as a Section
1031 exchange is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such
transactions are amended or repealed, we may not be able to dispose of real properties on a tax deferred basis.


IfPartnership tax audit rules could have a material adverse effect on us. It is possible that partnerships in which we directly or indirectly invest would be required to pay additional taxes, interest, and penalties as a result of a partnership tax audit adjustment. We, as a direct or indirect partner of these partnerships, could be required to bear the economic burden of those taxes, interest, and penalties even though Essex, as a REIT, may not otherwise have been required to pay additional corporate-level taxes had we owned the assets of the partnership directly. The partnership tax audit rules apply to Essex Portfolio, L.P. failed to qualifyand its subsidiaries that are classified as a partnership for federal income tax purposes, the Company could cease to qualify as a REIT and suffer other adverse consequences. The Company believes that its operating partnership, Essex Portfolio, L.P., will continue to be treated as a partnershippartnerships for U.S. federal income tax purposes. AsThere can be no assurance that these rules will not have a partnership, Essex Portfolio, L.P. is not subject to U.S. federal income taxmaterial adverse effect on its income.  Instead, eachus.

General Risks

Rising interest rates may affect the Company’s costs of its partners is required to pay taxcapital and financing activities and results of operation and otherwise adversely affect the market price of our common stock. Interest rates could increase, which could result in higher interest expense on the partner’s allocableCompany’s variable rate indebtedness or increase interest rates when refinancing maturing fixed rate debt. Prolonged interest rate increases could negatively impact the Company’s ability to make acquisitions and develop projects with positive economic returns on investment and to refinance existing borrowings.

The soundness of financial institutions could adversely affect us. We maintain cash and cash equivalent balances generally in excess of federally insured limits at a limited number of financial institutions. The failure of one or more of these financial institutions may materially adversely affect our ability to recover our cash balances or our 401(k) assets. Certain financial institutions are lenders under our credit facilities, and, from time to time, we execute transactions with counterparties in the financial services industry. In the event that the volatility of the financial markets adversely affects these financial institutions or counterparties, we, or other parties to the transactions with us, may be unable to complete transactions as intended, which could adversely affect our business and results of operations. Additionally, certain of our tax-exempt bond financing documents require us to obtain a guarantee from a financial institution of payment of the principal and interest on the bonds.
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If the financial institution defaults in its guarantee obligations, or if we are unable to renew the applicable guarantee or otherwise post satisfactory collateral, a default will occur under the applicable tax-exempt bonds and the community could be foreclosed upon if we do not redeem the bonds.

The price per share of the incomeCompany’s stock may fluctuate significantly. The market price per share of Essex Portfolio, L.P. No assurances canthe Company’s common stock may fluctuate significantly in response to many factors, including the factors discussed in this Item 1A, and actual or anticipated variations in the Company’s quarterly operating results, earnings estimates, or dividends, the resale of substantial amounts of the Company's stock, or the anticipation of such resale, general stock and bond market conditions, actual or anticipated actions taken by the Federal Reserve Bank, the general reputation of REITs and the Company, shifts in our investor base, the inability of the United States Congress to pass bills that continue to timely fund the federal government and its obligations, including due to the current political climate or partisanship, natural disasters, armed conflict or geopolitical impacts, or an active shooter incident. Many of these factors are beyond the Company’s control and may cause the market price of the Company’s common stock to decline, regardless of the Company’s financial condition, results of operations, or business prospects.

Our score by proxy advisory firms or other corporate governance consultants advising institutional investors, as well as the increased attention to certain ESG matters, could have an adverse effect on our reputation, the perception of our corporate governance, and thereby negatively impact the market price of our common stock. Various proxy advisory firms and other corporate governance consultants advising institutional investors provide scores of our governance measures, nominees for election as directors, executive compensation practices, ESG matters, and other matters that may be given, however,submitted to stockholders for consideration at our annual meetings. From time to time certain matters that we propose for approval may not receive a favorable score, or may result in a recommendation against the Internal Revenue Service willnominee or matter proposed. Some investors and financial institutions use ESG or sustainability scores, ratings or benchmarks to make financing, investment and voting decisions. These unfavorable scores may lead to rejected proposals or a loss of stockholder confidence in our corporate governance measures, which could adversely affect the market price of our common stock.

Corporate responsibility, specifically related to ESG factors, may impose additional costs and expose us to new risks. Some investors and potential investors are focused on positive ESG business practices and sustainability scores to guide their investment strategies, including the decisions whether to invest in our common stock. Additionally, the SEC continues to issue evolving rules relating to climate risk disclosures, human capital management and other ESG matters and other regulatory bodies, such as the State of California, have issued new laws or regulations relating to climate disclosures and board structure. Although the Company makes ESG disclosures and undertakes sustainability and diversity initiatives, the Company may not challenge Essex Portfolio, L.P.’s statusscore highly on ESG matters in the future and may face increased costs, such as increased capital expenditures or new expenses, in order to undertake such initiatives or to make such disclosures. If the criteria by which companies are rated changes, the Company may perform differently or worse than it has in the past, or it may become more expensive for the Company to access capital. The Company may face reputational damage in the event its corporate responsibility procedures, or its board structure, do not meet the standards set by various constituencies. Further, if we fail to comply with new ESG-related laws, regulations, expectations or reporting requirements, or if we are perceived as failing, our reputation and business could be adversely impacted. Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain ESG-related matters, and certain states are adopting or are considering adopting laws that seek to limit the use of ESG in certain contexts. In addition, both advocates and opponents to certain ESG matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives. To the extent we are subject to such activism or fragmented regulation with respect to ESG considerations, it may require us to incur costs or otherwise adversely impact our business. The occurrence of any of the foregoing could have an adverse effect on the price of the Company’s stock and the Company’s financial condition and results of operations. In addition, investments to attain an ESG outcome may not perform as expected, resulting in losses.

We could face adverse consequences as a partnership for U.S. federal income tax purposes,result of actions of activist investors. Responding to stockholder activism or thatengaging in a court would not sustainproxy contest may be costly and time-consuming, disrupt our operations and divert the attention of our management team and our employees from executing our business plan, which could adversely affect our business and results of operations.

Expanding social media vehicles present additional risks. The use of social media, such a challenge.  as unauthorized live-streaming at our properties, could cause us to suffer brand damage or information leakage. Negative posts or comments about us on any social networking website could damage our reputation. In addition, employees or others might disclose non-public sensitive information relating to our business through external media channels. The continuing evolution of social media will present us with new challenges and risks.

Any material weaknesses identified in the Company's internal control over financial reporting could have an adverse effect on the Company’s stock price. Section 404 of the Sarbanes-Oxley Act of 2002 requires the Company to evaluate and report on its internal control over financial reporting.
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If the Internal Revenue Service were successfulCompany identifies one or more material weaknesses in treating Essex Portfolio, L.P. as a corporation for U.S. federal income tax purposes,its internal control over financial reporting, the Company could fail to meetlose investor confidence in the income tests and/oraccuracy and completeness of its financial reports, which in turn could have an adverse effect on the asset tests applicable to REITs and, accordingly, cease to qualify as a REIT. Also, the failure of Essex Portfolio, L.P. to qualify as a partnership would cause it to become subject to federal and state corporate income tax, which would reduce significantly the amount of cash available for distribution to its partners.Company’s stock price.


Item 1B. Unresolved Staff Comments


None.



Item 1C. Cybersecurity

The Company has developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of its critical systems and information. The Company's cybersecurity risk management program employs several different measures, including perimeter monitoring, endpoint monitoring and user management, designed to assess and identify cybersecurity risks. The Company’s technology management team is principally responsible for managing the Company’s cybersecurity risk assessment and management processes. The Company’s technology management team performs enterprise-level risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise IT environment. The Company’s technology management team and third-party professionals perform penetration tests, vulnerability scans, and patch management to assess and protect the confidentiality, integrity and availability of its critical systems and information. The Company provides training to its employees on cybersecurity matters, performs periodic awareness testing to facilitate compliance with the Company’s cybersecurity policies, and maintains a method for its employees and consultants to communicate any suspected cybersecurity incident. In addition, the Company evaluates key third-party service providers before the Company grants the service provider access to its information systems and has a process in place to ensure that future access is appropriate.

The Company has an established incident response plan for responding to cybersecurity incidents. The goal of the incident response plan is to detect and react to cybersecurity incidents, evaluate the scope and risk, respond appropriately, communicate effectively to all stakeholders, and ultimately reduce the likelihood of an incident recurrence. The Company’s incident response team consists of seasoned information technology, legal and financial reporting Company personnel. The incident response plan, members of the incident response team and the steps to respond to a security incident are evaluated for appropriateness and effectiveness, and key personnel from cross-functional departments are involved.

The Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of enterprise level risks, including any cybersecurity-related risks faced by the Company. At least quarterly, the Audit Committee reviews cyber risks and mitigation strategies with senior management. The Audit Committee reports to the full Board regarding its activities, including those relating to cybersecurity. Additionally, on an annual basis, the Chief Technology Officer (“CTO”) presents to the Audit Committee on any material updates to the cybersecurity program, such as process improvements, new initiatives and key vendor performance. Material cybersecurity events, if any, are escalated to the Board on an ongoing basis. The Board is also briefed annually on all major enterprise risks, including cybersecurity risks.

The Company’s management team, including the CTO, is responsible for assessing and managing the Company’s material risks from cybersecurity threats. The CTO leads the technology management team and has extensive cybersecurity knowledge and expertise developed through a career of serving in various roles in information technology for over 20 years. The CTO oversees the Company’s initiatives to address existing or evolving cyber risks and is a member of the Enterprise Risk Committee. The CTO reports to the Chief Executive Officer (“CEO”) and provides updates to the Company’s senior leadership team on a regular basis, at least quarterly, about risks from cybersecurity threats, the results of penetration tests, vulnerability scans and userbase issues.

Over the past fiscal year, the Company has not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company, including its operations, business strategy, results of operations or financial condition. See “Risk Factors – We are subject to laws and regulations relating to the handling of personal information and we rely on information technology to sustain our operations. Any failure by us to comply with applicable requirements or material failure, inadequacy, interruption orbreach of the Company’s privacy or information systems, or those of our vendors or other third parties, could materially adversely affect the Company’s business, results of operations and financial condition”.
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Item 2. Properties


The Company’s portfolio as of December 31, 20172023 (including communities owned by unconsolidated joint ventures, but excluding communities underlying preferred equity investments) was comprised of 247252 stabilized operating apartment communities (comprising 60,23961,997 apartment homes), of which 27,61326,209 apartment homes are located in Southern California, 20,80623,263 apartment homes are located in the San Francisco Bay Area,Northern California, and 11,82012,525 apartment homes are located in the Seattle metropolitan area. The Company’s apartment communities accounted for 99.3%98.9% of the Company’s revenues for the year ended December 31, 2017.2023.


Occupancy Rates


Financial occupancy is defined as the percentage resulting from dividing actual rental revenueincome by total potentialscheduled rental revenue.income. Total potentialscheduled rental revenueincome represents the value of all apartment homes, with occupied apartment homes valued at contractual rental rates pursuant to leases and vacant apartment homes valued at estimated market rents. When calculating actual rents for occupied apartment homes and market rents for vacant apartment homes, delinquencies and concessions are not taken into account. The Company believes that financial occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Financial occupancy may not completely reflect short-term trends in physical occupancy and financial occupancy rates, and the Company's calculation of financial occupancy may not be comparable to financial occupancy as disclosed by other REITs. Market rates are determined using a variety of factors such as effective rental rates at the property based on recently signed leases and asking rates for comparable properties in the market. The recently signed effective rates on new leases at the property and are used as the starting point in the determination of the market rates of vacant apartment homes. The Company then increasesmay increase or decreasesdecrease these rates based on thea variety of factors, including overall supply and demand in thefor housing, concentration of new apartment community’s market. The Company will check the reasonableness of these rents based on its positiondeliveries within the marketsame submarket which can cause periodic disruption due to greater rental concessions to increase leasing velocity, and compare the rents against the asking rents by comparable properties in the market.rental affordability.


For communities that are development properties in lease-up without stabilized occupancy figures, the Company believes the physical occupancy rate is the appropriate performance metric. While a community is in the lease-up phase, the Company’s primary motivation is to stabilize the property, which may entail the use of rent concessions and other incentives, and thus financial occupancy which is based on contractual revenueincome is not considered the best metric to quantify occupancy.


Communities


The Company’s communities are primarily urban coreand suburban high density wood frame communities comprising of three to seven stories above grade construction with structured parking situated on 1-10 acres of land with densities averaging between 30-80+ units per acre. As of December 31, 2017,2023, the Company’s communities include 105104 garden-style, 128138 mid-rise, and 1410 high-rise communities. Garden-style communities are generally defined as on-grade properties with two and/or three-story buildings with no structured parking while mid-rise communities are generally defined as properties with three to seven story buildings and some structured parking. High-rise communities are typically defined as properties with buildings that are greater than seven stories, are steel or concrete framed, and frequently have structured parking. The communities have an average of approximately 244246 apartment homes, with a mix of studio, one-, two- and some three-bedroom apartment homes. A wide variety of amenities are available at the Company’s communities, including covered parking, fireplaces, swimming pools, clubhouses with fitness facilities, volleyball and playground areas and tennis courts.dog parks.

The Company hires, trains and supervises on-site service and maintenance personnel. The Company believes that the following primary factors enhance the Company’s ability to retain tenants:

•located near employment centers;
•attractive communities that are well maintained; and
•proactive customer service.


Commercial Buildings


The Company owns an office building withthree commercial buildings (totaling approximately 106,564283,000 square feetfeet) located in Irvine, CA,California and Washington, of which the Company occupiesoccupied an aggregate of approximately 8,00035,000 square feet atas of December 31, 2017.2023. Furthermore, as of December 31, 2023, the commercial buildings' physical occupancy rate was 90% consisting of 7 tenants, including the Company.





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Operating Portfolio


The following tables describetable below describes the Company’s operating portfolio as of December 31, 2017. The first table describes the Company’s communities and the second table describes the Company’s other real estate assets.2023. (See Note 7,8, "Mortgage Notes Payable" to the Company’s consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information about the Company’s secured mortgage debt and Schedule III thereto for a list of secured mortgage loans related to the Company’s portfolio.)


ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
Southern California     
Alpine VillageAlpine, CAGarden301 1971200296%
Barkley, The (3)(4)
Anaheim, CAGarden161 1984200096%
Park ViridianAnaheim, CAMid-rise320 2008201497%
Bonita CedarsBonita, CAGarden120 1983200296%
The Village at Toluca LakeBurbank, CAMid-rise145 1974201797%
Camarillo OaksCamarillo, CAGarden564 1985199697%
Camino Ruiz SquareCamarillo, CAGarden160 1990200697%
Hacienda at Camarillo OaksCamarillo, CAGarden73 1984202386%
Pinnacle at Otay Ranch I & IIChula Vista, CAMid-rise364 2001201497%
Mesa VillageClairemont, CAGarden133 1963200297%
Villa SienaCosta Mesa, CAGarden272 1974201495%
Emerald PointeDiamond Bar, CAGarden160 1989201497%
Regency at EncinoEncino, CAMid-rise75 1989200997%
The Havens (5)
Fountain Valley, CAGarden440 1969201497%
Valley ParkFountain Valley, CAGarden160 1969200196%
Capri at Sunny Hills (4)
Fullerton, CAGarden102 1961200196%
Haver Hill (6)
Fullerton, CAGarden264 1973201296%
Pinnacle at FullertonFullerton, CAMid-rise192 2004201497%
Wilshire PromenadeFullerton, CAMid-rise149 1992199797%
Montejo ApartmentsGarden Grove, CAGarden124 1974200197%
The Henley IGlendale, CAMid-rise83 1974199997%
The Henley IIGlendale, CAMid-rise132 1970199997%
Huntington BreakersHuntington Beach, CAMid-rise342 1984199797%
The HuntingtonHuntington Beach, CAGarden276 1975201296%
Hillsborough Park (7)
La Habra, CAGarden235 1999199997%
Village GreenLa Habra, CAGarden272 1971201497%
The Palms at Laguna NiguelLaguna Niguel, CAGarden460 1988201497%
Trabuco VillasLake Forest, CAMid-rise132 1985199796%
MarbrisaLong Beach, CAMid-rise202 1987200297%
Pathways at Bixby VillageLong Beach, CAGarden296 1975199198%
5600 WilshireLos Angeles, CAMid-rise284 2008201497%
AlessioLos Angeles, CAMid-rise624 2001201496%
Ashton Sherman VillageLos Angeles, CAMid-rise264 2014201698%
AvantLos Angeles, CAMid-rise440 2014201593%
The AveryLos Angeles, CAMid-rise121 2014201498%
BelleriveLos Angeles, CAMid-rise63 2011201196%
Belmont StationLos Angeles, CAMid-rise275 2009200995%
Bunker HillLos Angeles, CAHigh-rise456 1968199896%
Catalina GardensLos Angeles, CAMid-rise128 1987201493%
Cochran ApartmentsLos Angeles, CAMid-rise58 1989199897%
Emerson Valley VillageLos Angeles, CAMid-rise144 2012201697%
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Table of Contents
      Apartment Rentable Year Year  
Communities (1)
 Location Type Homes Square Footage Built Acquired 
Occupancy(2)
Southern California              
Alpine Village Alpine, CA Garden 301
 254,400
 1971 2002 97%
Anavia Anaheim, CA Mid-rise 250
 312,343
 2009 2010 96%
Barkley, The (3)(4)
 Anaheim, CA Garden 161
 139,800
 1984 2000 97%
Park Viridian Anaheim, CA Mid-rise 320
 254,600
 2008 2014 97%
Bonita Cedars Bonita, CA Garden 120
 120,800
 1983 2002 97%
Village at Toluca Lake (5)
 Burbank, CA Mid-rise 145
 132,144
 1974 2017 95%
Camarillo Oaks Camarillo, CA Garden 564
 459,000
 1985 1996 97%
Camino Ruiz Square Camarillo, CA Garden 159
 105,448
 1990 2006 98%
Enclave at Town Square (6)
 Chino Hills, CA Garden 124
 89,948
 1987 2014 97%
The Summit (7)
 Chino Hills, CA Garden 125
 98,420
 1989 2014 98%
Pinnacle at Otay Ranch I & II Chula Vista, CA Mid-rise 364
 384,192
 2001 2014 96%
Mesa Village Clairemont, CA Garden 133
 43,600
 1963 2002 97%
Villa Siena Costa Mesa, CA Garden 272
 262,842
 1974 2014 96%
Emerald Pointe Diamond Bar, CA Garden 160
 134,816
 1989 2014 97%
Regency at Encino Encino, CA Mid-rise 75
 78,487
 1989 2009 96%
The Havens (6)
 Fountain Valley, CA Garden 440
 414,040
 1969 2014 96%
Valley Park Fountain Valley, CA Garden 160
 169,700
 1969 2001 98%
Capri at Sunny Hills (4)
 Fullerton, CA Garden 102
 128,100
 1961 2001 96%
Haver Hill (7)
 Fullerton, CA Garden 264
 224,130
 1973 2012 97%
Pinnacle at Fullerton Fullerton, CA Mid-rise 192
 174,336
 2004 2014 96%
Wilshire Promenade Fullerton, CA Mid-rise 149
 128,000
 1992 1997 98%
Montejo Apartments Garden Grove, CA Garden 124
 103,200
 1974 2001 98%
CBC Apartments & The Sweeps Goleta, CA Garden 239
 179,908
 1962 2006 96%
416 on Broadway Glendale, CA Mid-rise 115
 126,782
 2009 2010 97%
Hampton Court Glendale, CA Mid-rise 83
 71,500
 1974 1999 95%
Hampton Place Glendale, CA Mid-rise 132
 141,500
 1970 1999 95%
Devonshire Hemet, CA Garden 276
 207,200
 1988 2002 97%
Huntington Breakers Huntington Beach, CA Mid-rise 342
 241,700
 1984 1997 97%
The Huntington Huntington Beach, CA Garden 276
 202,256
 1975 2012 96%
Axis 2300 Irvine, CA Mid-rise 115
 170,714
 2010 2010 98%
Hillsborough Park (8)
 La Habra, CA Garden 235
 215,500
 1999 1999 97%
Village Green La Habra, CA Garden 272
 175,762
 1971 2014 96%
The Palms at Laguna Niguel Laguna Niguel, CA Garden 460
 362,136
 1988 2014 96%
Trabuco Villas Lake Forest, CA Mid-rise 132
 131,000
 1985 1997 98%
Marbrisa Long Beach, CA Mid-rise 202
 122,800
 1987 2002 97%
Pathways at Bixby Village Long Beach, CA Garden 296
 197,700
 1975 1991 96%
8th & Hope Los Angeles, CA High-rise 290
 298,437
 2014 2015 96%
5600 Wilshire Los Angeles, CA Mid-rise 284
 243,910
 2008 2014 96%
Alessio Los Angeles, CA Mid-rise 624
 552,716
 2001 2014 96%
Ashton Sherman Village Los Angeles, CA Mid-rise 264
 296,186
 2014 2016 95%
Avant Los Angeles, CA Mid-rise 440
 305,989
 2014 2015 96%
The Avery Los Angeles, CA Mid-rise 121
 129,393
 2014 2014 98%
Bellerive Los Angeles, CA Mid-rise 63
 79,296
 2011 2011 98%

ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
Gas Company Lofts (6)
Los Angeles, CAHigh-rise251 2004201395%
The Blake LALos Angeles, CAMid-rise196 1979199798%
MarbellaLos Angeles, CAMid-rise60 1991200597%
Pacific Electric Lofts (8)
Los Angeles, CAHigh-rise314 2006201294%
Park CatalinaLos Angeles, CAMid-rise90 2002201293%
Park PlaceLos Angeles, CAMid-rise60 1988199797%
Regency Palm CourtLos Angeles, CAMid-rise116 1987201494%
Santee CourtLos Angeles, CAHigh-rise165 2004201092%
Santee VillageLos Angeles, CAHigh-rise73 2011201192%
Tiffany CourtLos Angeles, CAMid-rise101 1987201495%
Wallace on SunsetLos Angeles, CAMid-rise200 2021202195%
Wilshire La BreaLos Angeles, CAMid-rise478 2014201496%
Windsor CourtLos Angeles, CAMid-rise95 1987201494%
Windsor CourtLos Angeles, CAMid-rise58 1988199797%
Aqua at Marina Del ReyMarina Del Rey, CAMid-rise500 2001201497%
Marina City Club (9)
Marina Del Rey, CAMid-rise101 1971200497%
MirabellaMarina Del Rey, CAMid-rise188 2000200096%
Mira MonteMira Mesa, CAGarden354 1982200296%
Hillcrest ParkNewbury Park, CAGarden608 1973199897%
Fairway Apartments at Big Canyon (10)
Newport Beach, CAMid-rise74 1972199998%
MuseNorth Hollywood, CAMid-rise152 2011201197%
Country VillasOceanside, CAGarden180 1976200296%
Mission HillsOceanside, CAGarden282 1984200597%
Renaissance at Uptown OrangeOrange, CAMid-rise460 2007201497%
Mariner's PlaceOxnard, CAGarden105 1987200096%
Monterey VillasOxnard, CAGarden122 1974199796%
Tierra VistaOxnard, CAMid-rise404 2001200197%
Arbors at Parc Rose (8)
Oxnard, CAMid-rise373 2001201197%
The HalliePasadena, CAMid-rise292 1972199797%
The StuartPasadena, CAMid-rise188 2007201498%
Villa AngelinaPlacentia, CAGarden256 1970200195%
Fountain ParkPlaya Vista, CAMid-rise705 2002200495%
Highridge (4)
Rancho Palos Verdes, CAMid-rise255 1972199797%
CortesiaRancho Santa Margarita, CAGarden308 1999201497%
Pinnacle at TalegaSan Clemente, CAMid-rise362 2002201497%
Allure at Scripps RanchSan Diego, CAMid-rise194 2002201498%
Bernardo CrestSan Diego, CAGarden216 1988201498%
Cambridge ParkSan Diego, CAMid-rise320 1998201497%
Carmel CreekSan Diego, CAGarden348 2000201497%
Carmel LandingSan Diego, CAGarden356 1989201497%
Carmel SummitSan Diego, CAMid-rise246 1989201496%
CentrePointeSan Diego, CAGarden224 1974199795%
Esplanade (5)
San Diego, CAGarden616 1986201496%
Form 15San Diego, CAMid-rise242 2014201697%
MontanosaSan Diego, CAGarden472 1990201497%
Summit ParkSan Diego, CAGarden300 1972200297%
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Table of Contents
      Apartment Rentable Year Year  
Communities (1)
 Location Type Homes Square Footage Built Acquired 
Occupancy(2)
Belmont Station Los Angeles, CA Mid-rise 275
 225,000
 2009 2009 97%
Bunker Hill Los Angeles, CA High-rise 456
 346,600
 1968 1998 93%
Catalina Gardens Los Angeles, CA Mid-rise 128
 117,585
 1987 2014 96%
Cochran Apartments Los Angeles, CA Mid-rise 58
 51,400
 1989 1998 97%
Emerson Valley Village Los Angeles, CA Mid-rise 144
 179,060
 2012 2016 96%
Gas Company Lofts (7)
 Los Angeles, CA High-rise 251
 226,666
 2004 2013 96%
Kings Road Los Angeles, CA Mid-rise 196
 132,100
 1979 1997 97%
Marbella Los Angeles, CA Mid-rise 60
 50,108
 1991 2005 97%
Pacific Electric Lofts (9)
 Los Angeles, CA High-rise 314
 277,980
 2006 2012 95%
Park Catalina Los Angeles, CA Mid-rise 90
 72,864
 2002 2012 96%
Park Place Los Angeles, CA Mid-rise 60
 48,000
 1988 1997 97%
Regency Palm Court (7)
 Los Angeles, CA Mid-rise 116
 54,844
 1987 2014 96%
Santee Court Los Angeles, CA High-rise 165
 132,040
 2004 2010 96%
Santee Village Los Angeles, CA High-rise 73
 69,817
 2011 2011 96%
Tiffany Court Los Angeles, CA Mid-rise 101
 74,538
 1987 2014 98%
Wilshire La Brea Los Angeles, CA Mid-rise 478
 354,972
 2014 2014 96%
Windsor Court (7)
 Los Angeles, CA Mid-rise 95
 51,266
 1987 2014 96%
Windsor Court Los Angeles, CA Mid-rise 58
 46,600
 1988 1997 97%
Aqua Marina Del Rey Marina Del Rey, CA Mid-rise 500
 479,312
 2001 2014 96%
Marina City Club (10)
 Marina Del Rey, CA Mid-rise 101
 127,200
 1971 2004 98%
Mirabella Marina Del Rey, CA Mid-rise 188
 176,800
 2000 2000 96%
Mira Monte Mira Mesa, CA Garden 354
 262,600
 1982 2002 97%
Hillcrest Park Newbury Park, CA Garden 608
 521,900
 1973 1998 97%
Fairway Apartments at Big Canyon (11)
 Newport Beach, CA Mid-rise 74
 107,100
 1972 1999 97%
Muse North Hollywood, CA Mid-rise 152
 135,292
 2011 2011 97%
Country Villas Oceanside, CA Garden 180
 179,700
 1976 2002 97%
Mission Hills Oceanside, CA Garden 282
 244,000
 1984 2005 97%
Renaissance at Uptown Orange Orange, CA Mid-rise 460
 432,836
 2007 2014 97%
Mariner's Place Oxnard, CA Garden 105
 77,200
 1987 2000 98%
Monterey Villas Oxnard, CA Garden 122
 122,100
 1974 1997 98%
Tierra Vista Oxnard, CA Mid-rise 404
 387,100
 2001 2001 97%
Arbors at Parc Rose (9)
 Oxnard, CA Mid-rise 373
 503,196
 2001 2011 97%
The Hallie Pasadena, CA Mid-rise 292
 216,700
 1972 1997 95%
The Stuart Pasadena, CA Mid-rise 188
 168,630
 2007 2014 96%
Villa Angelina Placentia, CA Garden 256
 217,600
 1970 2001 98%
Fountain Park Playa Vista, CA Mid-rise 705
 608,900
 2002 2004 97%
Highridge (4)
 Rancho Palos Verdes, CA Mid-rise 255
 290,200
 1972 1997 97%
Cortesia Rancho Santa Margarita, CA Garden 308
 277,580
 1999 2014 97%
Pinnacle at Talega San Clemente, CA Mid-rise 362
 355,764
 2002 2014 96%
Allure at Scripps Ranch San Diego, CA Mid-rise 194
 207,052
 2002 2014 98%
Bernardo Crest San Diego, CA Garden 216
 205,548
 1988 2014 97%
Cambridge Park San Diego, CA Mid-rise 320
 317,958
 1998 2014 97%

ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
Essex Skyline (11)
Santa Ana, CAHigh-rise350 2008201093%
Fairhaven Apartments (4)
Santa Ana, CAGarden164 1970200196%
Parkside Court (5)
Santa Ana, CAMid-rise210 1986201496%
Pinnacle at MacArthur PlaceSanta Ana, CAMid-rise253 2002201497%
Hope RanchSanta Barbara, CAGarden108 1965200798%
Bridgeport Coast (12)
Santa Clarita, CAMid-rise188 2006201498%
Meadowood (7)
Simi Valley, CAGarden320 1986199697%
Shadow PointSpring Valley, CAGarden172 1983200295%
The Fairways at Westridge (12)
Valencia, CAMid-rise234 2004201498%
The Vistas of West Hills (12)
Valencia, CAMid-rise220 2009201498%
AllegroValley Village, CAMid-rise97 2010201098%
Lofts at Pinehurst, TheVentura, CAGarden118 1971199797%
Pinehurst (13)
Ventura, CAGarden28 1973200497%
Woodside VillageVentura, CAGarden145 1987200497%
Passage Buena Vista (14)
Vista, CAGarden179 2020202197%
Walnut HeightsWalnut, CAGarden163 1964200396%
The DylanWest Hollywood, CAMid-rise184 2014201495%
The HuxleyWest Hollywood, CAMid-rise187 2014201495%
RevealWoodland Hills, CAMid-rise438 2010201196%
Avondale at Warner CenterWoodland Hills, CAMid-rise446 1970199997%
Vela (16)
Woodland Hills, CAMid-rise379 2018202296%
  26,209   96%
Northern California     
Belmont TerraceBelmont, CAMid-rise71 1974200696%
Fourth & UBerkeley, CAMid-rise171 2010201096%
The CommonsCampbell, CAGarden264 1973201097%
Pointe at CupertinoCupertino, CAGarden116 1963199897%
Connolly StationDublin, CAMid-rise309 2014201497%
Avenue 64Emeryville, CAMid-rise224 2007201495%
The Courtyards at 65th Street (15)
Emeryville, CAMid-rise331 2004201994%
EmmeEmeryville, CAMid-rise190 2015201597%
Foster's LandingFoster City, CAGarden490 1987201497%
Stevenson PlaceFremont, CAGarden200 1975200097%
Mission PeaksFremont, CAMid-rise453 1995201497%
Mission Peaks IIFremont, CAGarden336 1989201497%
Paragon ApartmentsFremont, CAMid-rise301 2013201497%
BoulevardFremont, CAGarden172 1978199697%
Briarwood (8)
Fremont, CAGarden160 1978201196%
The Woods (8)
Fremont, CAGarden160 1978201197%
The Rexford (16)
Fremont, CAGarden203 1973202197%
City Centre (12)
Hayward, CAMid-rise192 2000201496%
City ViewHayward, CAGarden572 1975199895%
Lafayette HighlandsLafayette, CAGarden150 1973201497%
777 Hamilton (17)
Menlo Park, CAMid-rise195 2017201995%
ApexMilpitas, CAMid-rise367 2014201497%
Regency at Mountain View (6)
Mountain View, CAMid-rise142 1970201396%
Bridgeport (7)
Newark, CAGarden184 1987198798%
28
Table of Contents
      Apartment Rentable Year Year  
Communities (1)
 Location Type Homes Square Footage Built Acquired 
Occupancy(2)
Carmel Creek San Diego, CA Garden 348
 384,216
 2000 2014 96%
Carmel Landing San Diego, CA Garden 356
 283,426
 1989 2014 95%
Carmel Summit San Diego, CA Mid-rise 246
 225,880
 1989 2014 97%
CentrePointe San Diego, CA Garden 224
 126,700
 1974 1997 97%
Domain San Diego, CA Mid-rise 379
 345,044
 2013 2013 96%
Esplanade (6)
 San Diego, CA Garden 616
 479,600
 1986 2014 96%
Form 15 San Diego, CA Mid-rise 242
 184,190
 2014 2016 96%
Montanosa San Diego, CA Garden 472
 414,968
 1990 2014 97%
Summit Park San Diego, CA Garden 300
 229,400
 1972 2002 96%
Essex Skyline (12)
 Santa Ana, CA High-rise 349
 512,791
 2008 2010 97%
Fairhaven Apartments (4)
 Santa Ana, CA Garden 164
 135,700
 1970 2001 96%
Parkside Court (6)
 Santa Ana, CA Mid-rise 210
 152,400
 1986 2014 98%
Pinnacle at MacArthur Place Santa Ana, CA Mid-rise 253
 262,867
 2002 2014 97%
Hope Ranch Santa Barbara, CA Garden 108
 126,700
 1965 2007 98%
Bridgeport Coast (13)
 Santa Clarita, CA Mid-rise 188
 168,198
 2006 2014 96%
Hidden Valley (14)
 Simi Valley, CA Garden 324
 310,900
 2004 2004 98%
Meadowood (8)
 Simi Valley, CA Garden 320
 264,500
 1986 1996 96%
Shadow Point Spring Valley, CA Garden 172
 131,200
 1983 2002 97%
The Fairways at Westridge (13)
 Valencia, CA Mid-rise 234
 223,330
 2004 2014 96%
The Vistas of West Hills (13)
 Valencia, CA Mid-rise 220
 221,119
 2009 2014 96%
Allegro Valley Village, CA Mid-rise 97
 127,812
 2010 2010 97%
Lofts at Pinehurst, The Ventura, CA Garden 118
 71,100
 1971 1997 98%
Pinehurst (15)
 Ventura, CA Garden 28
 21,200
 1973 2004 97%
Woodside Village Ventura, CA Garden 145
 136,500
 1987 2004 98%
Walnut Heights Walnut, CA Garden 163
 146,700
 1964 2003 96%
The Dylan West Hollywood, CA Mid-rise 184
 150,678
 2014 2014 96%
The Huxley West Hollywood, CA Mid-rise 187
 154,776
 2014 2014 96%
Reveal Woodland Hills, CA Mid-rise 438
 414,892
 2010 2011 96%
Avondale at Warner Center Woodland Hills, CA Mid-rise 446
 331,000
 1970 1999 96%
      27,613

24,536,226
     96%
Northern California              
Belmont Terrace Belmont, CA Mid-rise 71
 72,951
 1974 2006 98%
Fourth & U Berkeley, CA Mid-rise 171
 146,255
 2010 2010 97%
The Commons Campbell, CA Garden 264
 153,168
 1973 2010 96%
Pointe at Cupertino Cupertino, CA Garden 116
 135,200
 1963 1998 97%
Connolly Station (16)
 Dublin, CA Mid-rise 309
 286,348
 2014 2014 97%
Avenue 64 Emeryville, CA Mid-rise 224
 196,896
 2007 2014 97%
Emme (16)
 Emeryville, CA Mid-rise 190
 148,935
 2015 2015 97%
Foster's Landing Foster City, CA Garden 490
 415,130
 1987 2014 97%
Stevenson Place Fremont, CA Garden 200
 146,200
 1975 2000 94%
Mission Peaks Fremont, CA Mid-rise 453
 404,034
 1995 2014 94%
Mission Peaks II Fremont, CA Garden 336
 294,720
 1989 2014 95%
Paragon Apartments Fremont, CA Mid-rise 301
 267,047
 2013 2014 97%
Boulevard Fremont, CA Garden 172
 131,200
 1978 1996 95%
Briarwood (9)
 Fremont, CA Garden 160
 111,160
 1978 2011 95%

ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
The Landing at Jack London SquareOakland, CAMid-rise282 2001201495%
The GrandOakland, CAHigh-rise243 2009200995%
The GallowayPleasanton, CAMid-rise506 2016201697%
RadiusRedwood City, CAMid-rise264 2015201597%
TownshipRedwood City, CAMid-rise132 2014201995%
San MarcosRichmond, CAMid-rise432 2003200396%
500 Folsom (14)
San Francisco, CAHigh-rise537 2021202194%
Bennett LoftsSan Francisco, CAMid-rise179 2004201291%
Fox PlazaSan Francisco, CAHigh-rise445 1968201395%
MB 360San Francisco, CAMid-rise360 2014201495%
Park WestSan Francisco, CAMid-rise126 1958201296%
101 San FernandoSan Jose, CAMid-rise323 2001201096%
360 Residences (15)
San Jose, CAMid-rise213 2010201794%
Bella VillagioSan Jose, CAMid-rise231 2004201095%
Century Towers (14)
San Jose, CAHigh-rise376 2017201796%
EnsoSan Jose, CAMid-rise183 2014201597%
EpicSan Jose, CAMid-rise769 2013201397%
EsplanadeSan Jose, CAMid-rise278 2002200497%
Fountains at River OaksSan Jose, CAMid-rise226 1990201497%
MarquisSan Jose, CAMid-rise166 2015201697%
Meridian at Midtown (15)
San Jose, CAMid-rise218 2015201896%
MioSan Jose, CAMid-rise103 2015201697%
Palm ValleySan Jose, CAMid-rise1,100 2008201496%
Patina at Midtown (14)
San Jose, CAMid-rise269 2021202196%
Sage at Cupertino (4)
San Jose, CAGarden230 1971201797%
Silver (14)
San Jose, CAMid-rise268 2019202195%
The Carlyle (7)
San Jose, CAGarden132 2000200096%
The WaterfordSan Jose, CAMid-rise238 2000200097%
Willow LakeSan Jose, CAMid-rise508 1989201297%
Lakeshore LandingSan Mateo, CAMid-rise308 1988201497%
Hillsdale Garden (14)
San Mateo, CAGarden697 1948200695%
Station Park GreenSan Mateo, CAMid-rise599 2018201897%
Deer ValleySan Rafael, CAGarden171 1996201496%
Bel AirSan Ramon, CAGarden462 1988199597%
Canyon OaksSan Ramon, CAMid-rise250 2005200797%
Crow CanyonSan Ramon, CAMid-rise400 1992201497%
Foothill GardensSan Ramon, CAGarden132 1985199797%
Mill Creek at WindermereSan Ramon, CAMid-rise400 2005200796%
Twin CreeksSan Ramon, CAGarden44 1985199797%
1000 KielySanta Clara, CAGarden121 1971201197%
Le ParcSanta Clara, CAGarden140 1975199497%
Marina Cove (18)
Santa Clara, CAGarden292 1974199497%
MyloSanta Clara, CAMid-rise476 2021202196%
Riley Square (8)
Santa Clara, CAGarden156 1972201296%
Villa GranadaSanta Clara, CAMid-rise270 2010201497%
Chestnut Street ApartmentsSanta Cruz, CAGarden96 2002200891%
Bristol CommonsSunnyvale, CAGarden188 1989199597%
29
Table of Contents
      Apartment Rentable Year Year  
Communities (1)
 Location Type Homes Square Footage Built Acquired 
Occupancy(2)
The Woods (9)
 Fremont, CA Garden 160
 105,280
 1978 2011 96%
City Centre (13)
 Hayward, CA Mid-rise 192
 175,420
 2000 2014 98%
City View Hayward, CA Garden 572
 462,400
 1975 1998 97%
Lafayette Highlands Lafayette, CA Garden 150
 151,790
 1973 2014 98%
Apex Milpitas, CA Mid-rise 366
 350,961
 2014 2014 96%
Regency at Mountain View (7)
 Mountain View, CA Mid-rise 142
 127,600
 1970 2013 91%
Bridgeport (8)
 Newark, CA Garden 184
 139,000
 1987 1987 97%
The Landing at Jack London Square Oakland, CA Mid-rise 282
 257,796
 2001 2014 97%
The Grand Oakland, CA High-rise 243
 205,026
 2009 2009 98%
The Galloway (16)
 Pleasanton, CA Mid-rise 506
 470,550
 2016 2016 73%
Radius Redwood City, CA Mid-rise 264
 245,862
 2015 2015 96%
San Marcos Richmond, CA Mid-rise 432
 407,600
 2003 2003 96%
Bennett Lofts San Francisco, CA Mid-rise 165
 184,713
 2004 2012 95%
Fox Plaza San Francisco, CA High-rise 444
 230,017
 1968 2013 96%
MB 360 San Francisco, CA Mid-rise 360
 441,489
 2014 2014 97%
Mosso (16)
 San Francisco, CA High-rise 463
 607,549
 2014 2014 97%
Park West San Francisco, CA Mid-rise 126
 90,060
 1958 2012 95%
101 San Fernando San Jose, CA Mid-rise 323
 296,078
 2001 2010 96%
360 Residences (17)
 San Jose, CA Mid-rise 213
 281,108
 2010 2017 95%
Bella Villagio San Jose, CA Mid-rise 231
 227,511
 2004 2010 98%
Century Towers (18)
 San Jose, CA High-rise 376
 330,178
 2017 2017 54%
Enso San Jose, CA Mid-rise 183
 179,562
 2014 2015 97%
Epic (16)
 San Jose, CA Mid-rise 769
 660,030
 2013 2013 96%
Esplanade San Jose, CA Mid-rise 278
 279,000
 2002 2004 97%
Fountains at River Oaks San Jose, CA Mid-rise 226
 209,954
 1990 2014 98%
Marquis (18)
 San Jose, CA Mid-rise 166
 136,467
 2015 2016 96%
Mio San Jose, CA Mid-rise 103
 92,405
 2015 2016 98%
Museum Park San Jose, CA Mid-rise 117
 121,329
 2002 2014 96%
One South Market (19)
 San Jose, CA High-rise 312
 283,268
 2015 2015 96%
Palm Valley (27)
 San Jose, CA Mid-rise 1,098
 1,132,284
 2008 2014 97%
Sage at Cupertino (20)
 San Jose, CA Garden 230
 178,961
 1971 2017 96%
The Carlyle (8)
 San Jose, CA Garden 132
 129,200
 2000 2000 97%
The Waterford San Jose, CA Mid-rise 238
 219,600
 2000 2000 96%
Willow Lake San Jose, CA Mid-rise 508
 471,744
 1989 2012 97%
Lakeshore Landing San Mateo, CA Mid-rise 308
 223,972
 1988 2014 97%
Hillsdale Garden San Mateo, CA Garden 697
 611,505
 1948 2006 97%
Park 20 (16)
 San Mateo, CA Mid-rise 197
 140,547
 2015 2015 97%
Deer Valley San Rafael, CA Garden 171
 167,238
 1996 2014 97%
Bel Air San Ramon, CA Garden 462
 391,000
 1988 1995 98%
Canyon Oaks San Ramon, CA Mid-rise 250
 237,894
 2005 2007 99%
Crow Canyon San Ramon, CA Mid-rise 400
 337,064
 1992 2014 97%
Foothill Gardens San Ramon, CA Garden 132
 155,100
 1985 1997 97%
Mill Creek at Windermere San Ramon, CA Mid-rise 400
 381,060
 2005 2007 98%
Twin Creeks San Ramon, CA Garden 44
 51,700
 1985 1997 97%
1000 Kiely Santa Clara, CA Garden 121
 128,486
 1971 2011 95%
Le Parc Santa Clara, CA Garden 140
 113,200
 1975 1994 98%

ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
Brookside Oaks (4)
Sunnyvale, CAGarden170 1973200097%
Lawrence StationSunnyvale, CAMid-rise336 2012201497%
Magnolia Lane (19)
Sunnyvale, CAGarden32 2001200797%
Magnolia Square (4)
Sunnyvale, CAGarden156 1963200797%
MontclaireSunnyvale, CAMid-rise390 1973198897%
Reed SquareSunnyvale, CAGarden100 1970201197%
SolsticeSunnyvale, CAMid-rise280 2014201496%
Summerhill ParkSunnyvale, CAGarden100 1988198897%
ViaSunnyvale, CAMid-rise284 2011201197%
Windsor RidgeSunnyvale, CAMid-rise216 1989198997%
Vista BelvedereTiburon, CAMid-rise76 1963200495%
Verandas (12)
Union City, CAMid-rise282 1989201497%
AgoraWalnut Creek, CAMid-rise49 2016201696%
Brio (4)
Walnut Creek, CAMid-rise300 2015201997%
23,263 96%
Seattle, Washington Metropolitan Area
BelcarraBellevue, WAMid-rise296 2009201497%
BellCentreBellevue, WAMid-rise249 2001201497%
Cedar TerraceBellevue, WAGarden180 1984200596%
Courtyard off MainBellevue, WAMid-rise110 2000201096%
EllingtonBellevue, WAMid-rise220 1994201497%
Emerald RidgeBellevue, WAGarden180 1987199496%
Foothill CommonsBellevue, WAMid-rise394 1978199097%
Palisades, TheBellevue, WAGarden192 1977199096%
Park HighlandBellevue, WAMid-rise250 1993201497%
PiedmontBellevue, WAGarden396 1969201496%
Sammamish ViewBellevue, WAGarden153 1986199497%
Woodland CommonsBellevue, WAGarden302 1978199096%
Bothell Ridge (5)
Bothell, WAGarden214 1988201496%
Canyon PointeBothell, WAGarden250 1990200396%
Inglenook CourtBothell, WAGarden224 1985199497%
Pinnacle SonataBothell, WAMid-rise268 2000201497%
Salmon Run at Perry CreekBothell, WAGarden132 2000200097%
Stonehedge VillageBothell, WAGarden196 1986199796%
Highlands at WynhavenIssaquah, WAMid-rise333 2000200898%
Park Hill at IssaquahIssaquah, WAGarden245 1999199996%
Wandering CreekKent, WAGarden156 1986199597%
AscentKirkland, WAGarden90 1988201297%
Bridle TrailsKirkland, WAGarden108 1986199796%
Corbella at Juanita BayKirkland, WAGarden169 1978201096%
Evergreen HeightsKirkland, WAGarden200 1990199797%
Slater 116Kirkland, WAMid-rise108 2013201397%
MontebelloKirkland, WAGarden248 1996201297%
Martha Lake Apartments (16)
Lynwood, WAMid-rise155 1991202196%
Aviara (19)
Mercer Island, WAMid-rise166 2013201497%
Laurels at Mill CreekMill Creek, WAGarden164 1981199697%
Monterra in Mill Creek (16)
Mill Creek, WAGarden139 2003202196%
30
Table of Contents
      Apartment Rentable Year Year  
Communities (1)
 Location Type Homes Square Footage Built Acquired 
Occupancy(2)
Marina Cove (21)
 Santa Clara, CA Garden 292
 250,200
 1974 1994 97%
Riley Square (9)
 Santa Clara, CA Garden 156
 126,900
 1972 2012 96%
Villa Granada Santa Clara, CA Mid-rise 270
 238,841
 2010 2014 97%
Chestnut Street Apartments Santa Cruz, CA Garden 96
 87,640
 2002 2008 98%
Bristol Commons Sunnyvale, CA Garden 188
 142,600
 1989 1995 98%
Brookside Oaks (4)
 Sunnyvale, CA Garden 170
 119,900
 1973 2000 97%
Lawrence Station Sunnyvale, CA Mid-rise 336
 297,188
 2012 2014 97%
Magnolia Lane (22)
 Sunnyvale, CA Garden 32
 31,541
 2001 2007 98%
Magnolia Square (4)
 Sunnyvale, CA Garden 156
 110,824
 1963 2007 98%
Montclaire Sunnyvale, CA Mid-rise 390
 294,100
 1973 1988 98%
Reed Square Sunnyvale, CA Garden 100
 95,440
 1970 2011 98%
Solstice Sunnyvale, CA Mid-rise 280
 257,659
 2014 2014 97%
Summerhill Park Sunnyvale, CA Garden 100
 78,500
 1988 1988 98%
Via Sunnyvale, CA Mid-rise 284
 309,421
 2011 2011 98%
Windsor Ridge Sunnyvale, CA Mid-rise 216
 161,800
 1989 1989 97%
Vista Belvedere Tiburon, CA Mid-rise 76
 78,300
 1963 2004 95%
Verandas (13)
 Union City, CA Mid-rise 282
 199,092
 1989 2014 97%
Agora (23)
 Walnut Creek, CA Mid-rise 49
 106,228
 2016 2016 99%
      20,806
 18,715,976
     95%
Seattle, Washington Metropolitan Area            
Belcarra Bellevue, WA Mid-rise 296
 241,567
 2009 2014 96%
BellCentre Bellevue, WA Mid-rise 248
 181,288
 2001 2014 96%
Cedar Terrace Bellevue, WA Garden 180
 174,200
 1984 2005 96%
Courtyard off Main Bellevue, WA Mid-rise 110
 108,388
 2000 2010 96%
Ellington Bellevue, WA Mid-rise 220
 165,794
 1994 2014 96%
Emerald Ridge Bellevue, WA Garden 180
 144,000
 1987 1994 96%
Foothill Commons Bellevue, WA Mid-rise 394
 288,300
 1978 1990 96%
Palisades, The Bellevue, WA Garden 192
 159,700
 1977 1990 97%
Park Highland Bellevue, WA Mid-rise 250
 224,750
 1993 2014 96%
Piedmont Bellevue, WA Garden 396
 348,969
 1969 2014 96%
Sammamish View Bellevue, WA Garden 153
 133,500
 1986 1994 98%
Woodland Commons Bellevue, WA Garden 302
 217,878
 1978 1990 97%
Bothell Ridge (6)
 Bothell, WA Garden 214
 167,370
 1988 2014 96%
Canyon Pointe Bothell, WA Garden 250
 210,400
 1990 2003 97%
Inglenook Court Bothell, WA Garden 224
 183,600
 1985 1994 97%
Pinnacle Sonata Bothell, WA Mid-rise 268
 343,095
 2000 2014 96%
Salmon Run at Perry Creek Bothell, WA Garden 132
 117,100
 2000 2000 97%
Stonehedge Village Bothell, WA Garden 196
 214,800
 1986 1997 96%
Highlands at Wynhaven Issaquah, WA Mid-rise 333
 424,674
 2000 2008 96%
Park Hill at Issaquah Issaquah, WA Garden 245
 277,700
 1999 1999 96%
Wandering Creek Kent, WA Garden 156
 124,300
 1986 1995 98%
Ascent Kirkland, WA Garden 90
 75,840
 1988 2012 97%
Bridle Trails Kirkland, WA Garden 108
 99,700
 1986 1997 97%
Corbella at Juanita Bay Kirkland, WA Garden 169
 103,339
 1978 2010 97%
Evergreen Heights Kirkland, WA Garden 200
 188,300
 1990 1997 95%
Slater 116 Kirkland, WA Mid-rise 108
 81,415
 2013 2013 97%
Montebello Kirkland, WA Garden 248
 272,734
 1996 2012 96%
ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
Parkwood at Mill CreekMill Creek, WAGarden240 1989201497%
The Elliot at Mukilteo (4)
Mukilteo, WAGarden301 1981199797%
Castle CreekNewcastle, WAGarden216 1998199897%
ElevationRedmond, WAGarden158 1986201097%
Pure RedmondRedmond, WAMid-rise105 2016201997%
Redmond Hill (8)
Redmond, WAGarden442 1985201197%
ShadowbrookRedmond, WAGarden418 1986201495%
The Trails of RedmondRedmond, WAGarden423 1985201496%
Vesta (8)
Redmond, WAGarden440 1998201197%
Brighton RidgeRenton, WAGarden264 1986199696%
Fairwood PondRenton, WAGarden194 1997200497%
Forest ViewRenton, WAGarden192 1998200397%
Pinnacle on Lake WashingtonRenton, WAMid-rise180 2001201497%
8th & Republican (15)
Seattle, WAMid-rise211 2016201796%
AnnalieseSeattle, WAMid-rise56 2009201397%
The Audrey at BelltownSeattle, WAMid-rise137 1992201496%
The BernardSeattle, WAMid-rise63 2008201196%
Cairns, TheSeattle, WAMid-rise99 2006200796%
Collins on PineSeattle, WAMid-rise76 2013201498%
CanvasSeattle, WAMid-rise123 2014202196%
DomaineSeattle, WAMid-rise92 2009201296%
Expo (14)
Seattle, WAMid-rise275 2012201296%
Fountain CourtSeattle, WAMid-rise320 2000200097%
Patent 523Seattle, WAMid-rise295 2010201096%
Taylor 28Seattle, WAMid-rise197 2008201496%
Velo and Ray (15)
Seattle, WAMid-rise308 2014201996%
Vox ApartmentsSeattle, WAMid-rise58 2013201397%
Wharfside PointeSeattle, WAMid-rise155 1990199496%
  12,525   97%
Total/Weighted Average 61,997   96%


      Apartment Rentable Year Year  
Communities (1)
 Location Type Homes Square Footage Built Acquired 
Occupancy(2)
Aviara (24)
 Mercer Island, WA Mid-rise 166
 147,033
 2013 2014 96%
Laurels at Mill Creek Mill Creek, WA Garden 164
 134,300
 1981 1996 96%
Parkwood at Mill Creek Mill Creek, WA Garden 240
 257,160
 1989 2014 96%
The Elliot at Mukilteo (4)
 Mukilteo, WA Garden 301
 245,900
 1981 1997 96%
Castle Creek Newcastle, WA Garden 216
 191,900
 1998 1998 97%
Delano Redmond, WA Mid-rise 126
 116,340
 2005 2011 98%
Elevation Redmond, WA Garden 158
 138,916
 1986 2010 97%
Redmond Hill (9)
 Redmond, WA Garden 442
 350,275
 1985 2011 97%
Shadowbrook Redmond, WA Garden 418
 338,880
 1986 2014 96%
The Trails of Redmond Redmond, WA Garden 423
 376,000
 1985 2014 97%
Vesta (9)
 Redmond, WA Garden 440
 381,675
 1998 2011 97%
Brighton Ridge Renton, WA Garden 264
 201,300
 1986 1996 96%
Fairwood Pond Renton, WA Garden 194
 189,200
 1997 2004 97%
Forest View Renton, WA Garden 192
 182,500
 1998 2003 98%
Pinnacle on Lake Washington Renton, WA Mid-rise 180
 190,908
 2001 2014 95%
8th & Republican (17)
 Seattle, WA High-rise 211
 161,371
 2016 2017 95%
Annaliese Seattle, WA High-rise 56
 48,216
 2009 2013 97%
The Audrey at Belltown Seattle, WA Mid-rise 137
 94,119
 1992 2014 96%
The Bernard Seattle, WA Mid-rise 63
 43,151
 2008 2011 96%
Cairns, The Seattle, WA Mid-rise 99
 70,806
 2006 2007 96%
Collins on Pine Seattle, WA Mid-rise 76
 48,733
 2013 2014 97%
Domaine Seattle, WA Mid-rise 92
 79,421
 2009 2012 96%
Expo (18)
 Seattle, WA Mid-rise 275
 190,176
 2012 2012 97%
Fountain Court Seattle, WA Mid-rise 320
 207,000
 2000 2000 96%
Joule (25)
 Seattle, WA Mid-rise 295
 191,109
 2010 2010 97%
Taylor 28 Seattle, WA Mid-rise 197
 155,630
 2008 2014 96%
Vox Apartments Seattle, WA Mid-rise 58
 42,173
 2013 2013 96%
Wharfside Pointe Seattle, WA Mid-rise 155
 119,200
 1990 1994 96%
      11,820
 10,166,093
     96%
               
Total/Weighted Average     60,239
 53,418,295
     96%

      Square Year Year  
Other real estate assets (1)
 Location Tenants Footage Built Acquired 
Occupancy (2)
Derian Office Building (26)
 Irvine, CA 6 106,564
 1983 2000 74%
    6 106,564
     74%

Footnotes to the Company’s Portfolio Listing as of December 31, 20172023

(1)
Unless otherwise specified, the Company has a 100% ownership interest in each community.
(2)
For communities, occupancy rates are based on financial occupancy for the year ended December 31, 2017; for the commercial buildings occupancy rates are based on physical occupancy as of December 31, 2017. For an explanation of how financial occupancy and physical occupancy are calculated, see “Occupancy Rates” in this Item 2.
(3)
The community is subject to a ground lease, which, unless extended, will expire in 2082.
(4)
The Company holds a 1% special limited partner interest in the partnerships which own these apartment communities. These investments were made under arrangements whereby Essex Management Company, a wholly-owned subsidiary of Essex, became the 1% sole general partner and the other limited partners were granted the right to require the applicable partnership to redeem their interest for cash. Subject to certain conditions, the Company may, however,


elect(1)Unless otherwise specified, the Company consolidates each community in accordance with U.S. GAAP.
(2)For communities, occupancy rates are based on financial occupancy for the year ended December 31, 2023, except for communities that were stabilized during the year, in which case physical occupancy as of December 31, 2023 was used. For an explanation of how financial occupancy is calculated, see "Occupancy Rates" in this Item 2.
(3)The community is subject to deliver an equivalent numbera ground lease, which, unless extended, will expire in 2083.
(4)Each of sharesthese communities is part of a DownREIT structure in which the Company is the general partner or manager and the other limited partners or members are granted rights of redemption for their interests.
(5)This community is owned by BEXAEW. The Company has a 50% interest in BEXAEW, which is accounted for using the equity method of accounting.
(6)This community is owned by Wesco III, LLC ("Wesco III"). The Company has a 50% interest in Wesco III, which is accounted for using the equity method of accounting.
(7)This community is owned by BEX II, LLC ("BEX II"). The Company has a 50% interest in BEX II, which is accounted for using the equity method of accounting.
(8)This community is owned by Wesco I, LLC ("Wesco I"). The Company has a 58% interest in Wesco I, which is accounted for using the equity method of accounting.
(9)This community is subject to a ground lease, which, unless extended, will expire in 2067.
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(10)This community is subject to a ground lease, which, unless extended, will expire in 2027.
(11)The Company has a 97% interest and a former Executive Vice President of the Company’s common stockCompany has a 3% interest in satisfactionthis community.
(12)This community is owned by Wesco IV, LLC ("Wesco IV") The Company has a 65.1% interest in Wesco IV, which is accounted for using the equity method of accounting.
(13)This community is subject to a ground lease, which, unless extended, will expire in 2028.
(14)The Company has an interest in a single asset entity owning this community.
(15)This community is owned by Wesco V, LLC ("Wesco V"). The Company has a 50% interest in Wesco V, which is accounted for using the applicable partnership’s cash redemption obligation.
(5)
This community is owned by BEX III, LLC ("BEX III"). The Company has a 50% interest in BEX III, which is accounted for using the equity method of accounting.
(6)
This community is owned by BEXAEW. The Company has a 50% interest in BEXAEW, which is accounted for using the equity method of accounting.
(7)
This community is owned by Wesco III, LLC ("Wesco III"). The Company has a 50% interest in Wesco III, which is accounted for using the equity method of accounting.
(8)
This community is owned by BEX II, LLC ("BEX II"). The Company has a 50% interest in BEX II, which is accounted for using the equity method of accounting.
(9)
This community is owned by Wesco I. The Company has a 58% interest in Wesco I, which is accounted for using the equity method of accounting.
(10)
This community is subject to a ground lease, which, unless extended, will expire in 2067.
(11)
This community is subject to a ground lease, which, unless extended, will expire in 2027.
(12)
The Company has a 97% interest and an Executive Vice President of the Company has a 3% interest in this community.
(13)
This community is owned by Wesco IV, LLC ("Wesco IV") The Company has a 50% interest in Wesco IV, which is accounted for using the equity method of accounting.
(14)
The Company has a 75% member interest in this community.
(15)
This community is subject to a ground lease, which, unless extended, will expire in 2028.
(16)
This community is owned by an entity that is co-owned by the Company and the Canadian Pension Plan Investment Board ("CPPIB" or "CPP"). The Company has a 55% ownership in this community, which is accounted for using the equity method of accounting.
(17)
This community is owned by Wesco V, LLC ("Wesco V"). The Company has a 50% interest in Wesco V, which is accounted for using the equity method of accounting.
(18)
The Company has 50% ownership in this community, which is accounted for using the equity method of accounting.
(19)
The Company has a 55% membership interest in this community, which is accounted for using the equity method of accounting.
(20)
The Company has a 41% ownership in this community.
(21)
A portion of this community on which 84 apartment homes are presently located is subject to a ground lease, which, unless extended, will expire in 2028.
(22)
The community is subject to a ground lease, which, unless extended, will expire in 2070.
(23)
This community is owned by an entity that is co-owned by the Company and CPP. The Company has a 51% membership interest in this community, which is accounted for using the equity method of accounting.
(24)
This community is subject to a ground lease, which, unless extended, will expire in 2070.
(25)
The Company has 99% ownership in this community.
(26)
The Company occupies 8% of space in this property.
(27)
In January 2017, the Company purchased its joint venture partner's 50% membership interest in the Palm Valley co-investment.

equity method of accounting.
(16)This community is owned by Wesco VI, LLC ("Wesco VI"). The Company has a 50% interest in Wesco VI, which is accounted for using the equity method of accounting.
(17)This community is owned by BEX IV, LLC ("BEX IV"). The Company has a 50.1% interest in BEX IV, which is accounted for using the equity method of accounting.
(18)A portion of this community on which 84 apartment homes are presently located is subject to a ground lease, which, unless extended, will expire in 2028.
(19)The community is subject to a ground lease, which, unless extended, will expire in 2070.
(20) Represents the initial year the joint venture or consolidated community was acquired.


Item 3. Legal Proceedings


The information regarding lawsuits, other proceedings and claims, set forth in Note 15, “Commitments17, "Commitments and Contingencies”Contingencies", to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K is incorporated by reference into this Item 3. In addition to such matters referred to in Note 15,17, the Company is subject to various other legal and/or regulatory proceedings arising in the course of its business operations. We believe that, with respect to such matters that we are currently a party to, the ultimate disposition of any such matter will not result in a material adverse effect on the Company’s financial condition, results of operations or cash flows.


Item 4. Mine Safety Disclosures


Not Applicable.


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Part II



Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Market Information
 
The shares of the Company’s common stock are traded on the New York Stock Exchange (“NYSE”) under the symbol ESS.  Essex's common stock has been traded on the NYSE since June 13, 1994. The high, low and closing price per share of common stock reported on the NYSE for the quarters indicated are as follows:
Quarter Ended High Low
December 31, 2017 $264.07
 $237.33
September 30, 2017 $270.04
 $249.46
June 30, 2017 $268.97
 $229.14
March 31, 2017 $238.57
 $218.41
December 31, 2016 $234.07
 $200.01
September 30, 2016 $236.56
 $217.16
June 30, 2016 $237.50
 $207.20
March 31, 2016 $240.55
 $191.25

The closing price of Essex's common stock as reported by the NYSE on February 15, 2018 was $229.57."ESS". 
 
There is no established public trading market for EPLP’sthe Operating PartnershipPartnership's limited partnership units ("OP Units").
 
Holders
 
The approximate number of holders of record of the shares of Essex's common stock was 1,2711,043 as of February 15, 2018.21, 2024. This number does not include stockholders whose shares are held in investment accounts by other entities. Essex believes the actual number of stockholders is greater than the number of holders of record.
 
As of February 15, 2018,21, 2024, there were 17462 holders of record of EPLP’s OP Units, including Essex.
 
Return of Capital
 
Under provisions of the Code, the portion of the cash dividend, if any, that exceeds earnings and profits is considered a return of capital. The return of capital is generated due to a variety of factors, including the deduction of non-cash expenses, primarily depreciation, in the determination of earnings and profits.


The status of the cash dividends distributed for the years ended December 31, 2017, 2016,2023, 2022, and 20152021 related to common stock and Series H preferred stock for tax purposes are as follows:
 202320222021
Common Stock
Ordinary income88.46 %80.17 %70.92 %
Capital gain8.32 %16.78 %22.07 %
Unrecaptured section 1250 capital gain3.22 %3.05 %7.01 %
 100.00 %100.00 %100.00 %
  2017 2016 2015
Common Stock      
Ordinary income 84.04% 86.68% 99.28%
Capital gain 13.20% 7.11% 0.72%
Unrecaptured section 1250 capital gain 2.76% 6.21% —%
  100.00% 100.00% 100.00%
       
  2017 2016 2015
Series H Preferred stock  
  
  
Ordinary income —% 86.68% 99.28%
Capital gains —% 7.11% 0.72%
Unrecaptured section 1250 capital gain —% 6.21% —%
  —% 100.00% 100.00%





Dividends and Distributions
 
Since Essex's initial public offering on June 13, 1994, Essex and the Operating Partnership have paid regular quarterly dividends/distributions to their stockholders and unitholders, respectively. Essex paid the following dividends per share of common stock and the Operating Partnership paid the following distributions per OP Unit:
Year Ended Annual Dividend/Distribution Quarter Ended 2017 2016 2015
1995 $1.69
 March 31, $1.75 $1.60 $1.44
1996 $1.72
 June 30, $1.75 $1.60 $1.44
1997 $1.77
 September 30, $1.75 $1.60 $1.44
1998 $1.95
 December 31, $1.75 $1.60 $1.44
1999 $2.15
        
2000 $2.38
 Annual Dividend/Distribution $7.00 $6.40 $5.76
2001 $2.80
        
2002 $3.08
        
2003 $3.12
        
2004 $3.16
        
2005 $3.24
        
2006 $3.36
        
2007 $3.72
        
2008 $4.08
        
2009 $4.12
        
2010 $4.13
        
2011 $4.16
        
2012 $4.40
        
2013 $4.84
        
2014 $5.11
        

Future dividends/distributions by Essex and the Operating Partnership will be at the discretion of the Board of Directors of Essex and will depend on the actual cash flows from operations of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code, applicable legal restrictions and such other factors as the Board of Directors deems relevant. There are currently no contractual restrictions on Essex's and the Operating Partnership's present or future ability to pay dividends and distributions, and we do not anticipate that our ability to pay dividends/distributions will be impaired; however, there can be no assurances in that regard.
 
The Board of Directors has declared a dividend/distribution for the fourth quarter of 20172023 of $1.75$2.31 per share. The dividend/distribution was paid on January 16, 201812, 2024 to stockholders/unitholders of record as of December 29, 2017.January 2, 2024.

Dividend Reinvestment and Share Purchase Plan


Essex has adopted a dividend reinvestment and share purchase plan designed to provide holders of common stock with a convenient and economical means to reinvest all or a portion of their cash dividends in shares of common stock and to acquire additional shares of common stock through voluntary purchases. Computershare, LLC, which serves as Essex's transfer agent, administers the dividend reinvestment and share purchase plan. For a copy of the plan, contact Computershare, LLC at (312) 360-5354.



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Securities Authorized for Issuance under Equity Compensation Plans



The information required by this section is incorporated herein by reference from our Proxy Statement, relating to our 20182024 Annual Meeting of Shareholders, under the headings “Equity"Equity Compensation Plan Information,”Plans," to be filed with the SEC within 120 days of December 31, 2017.2023.


Issuance of Registered Equity Securities


During 2017,the year ended December 31, 2023, the Company issued 345,444did not issue any shares of common stock through its equity distribution program at an average priceunder the 2021 ATM Program. As of $260.38 for proceedsDecember 31, 2023, there were no outstanding forward sale agreements, and $900.0 million of $89.1 million, net of fees and commissions. Duringshares remain available to be sold under the first quarter of 2018 through February 15, 2018, Essex has not issued any shares of common stock.2021 ATM Program.


Issuer Purchases of Equity Securities


In December 2015, Essex'sSeptember 2022, the Company's Board of Directors authorizedapproved a new stock repurchase plan to allow Essexthe Company to acquire shares inof common stock up to an aggregate value of up to $250$500.0 million. Under this program, throughThe plan supersedes the Company's previous common stock repurchase plan announced in December 2017,2015. During the year ended December 31, 2023, the Company had repurchased and retired 5,100437,026 shares of its common stock totaling $1.0$95.7 million, including commissions, at an average stock price of $204.92$218.88 per share. As of December 31, 2017,2023, the Company has $249.0had $302.7 million of purchase authority remaining under the stock repurchase plan.

Performance Graph


The line graph below compares the cumulative total stockholder return on Essex's common stock for the last five years with the cumulative total return on the S&P 500 and the FTSE NAREIT All Equity REITApartments index over the same period. This comparison assumes that the value of the investment in the common stock and each index was $100 on December 31, 20122018 and that all dividends were reinvested.



5321
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 Period Ending
Period EndingPeriod Ending
Index 12/31/2012
 12/31/2013
 12/31/2014
 12/31/2015
 12/31/2016
 12/31/2017
Index12/31/201812/31/201912/31/202012/31/202112/31/202212/31/2023
Essex Property Trust, Inc. 100.00
 101.06
 149.57
 177.79
 177.56
 189.63
NAREIT All Equity REIT Index 100.00
 102.86
 131.68
 135.40
 147.09
 159.85
FTSE NAREIT Equity Apartments Index
S&P 500 Index 100.00
 132.39
 150.51
 152.59
 170.84
 208.14
 
(1)
Common stock performance data is provided by S&P Global Market Intelligence (formerly SNL Financial).

(1)Common stock performance data is provided by S&P Global Market Intelligence.

The graph and other information furnished under the above caption “Performance Graph”"Performance Graph" in this Part II Item 5 of this Form 10-K shall not be deemed to be “soliciting material”"soliciting material" or to be “filed”"filed" with the SEC or subject to Regulation 14A or 14C, or to the liabilities of the Exchange Act.
 
Unregistered Sales of Equity Securities
 
During the years ended December 31, 20172023 and 2016,2022, the Operating Partnership issued partnership unitsOP Units in private placements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the consideration set forth below:
 
During the years ended December 31, 20172023 and 2016,2022, Essex issued an aggregate of 176,489zero and 137,62276,246 shares of its common stock upon the exercise of stock options, respectively. Essex contributed the proceeds from the option exercises of $26.6 millionno amount and $18.9$19.5 million to the Operating Partnership in exchange for an aggregate of 176,489zero and 137,62276,246 OP Units, as required by the Operating Partnership’s partnership agreement, during the years ended December 31, 20172023 and 2016,2022, respectively.
 
During the years ended December 31, 20172023 and 2016,2022, Essex issued an aggregate of 2,97322,236 and 2,01811,707 shares of its common stock in connection with restricted stock awards for no cash consideration, respectively. For each share of common stock issued by Essex in connection with such awards, the Operating Partnership issued OP Units to Essex as required by the Operating Partnership's partnership agreement, for an aggregate of 2,97322,236 and 2,01811,707 OP Units during the years ended December 31, 20172023 and 2016,2022, respectively.


During the years ended December 31, 20172023 and 2016,2022, Essex issued an aggregate of 1,50013,684 and 14,0948,310 shares of its common stock in connection with the exchange of OP Units and DownREIT limited partnership units by limited partners into shares of common stock. For each share of common stock issued by Essex in connection with such exchange, the Operating Partnership issued OP Units to Essex as required by the Operating Partnership's partnership agreement, for an aggregate of 1,50013,684 and 14,0948,310 OP Units during the yearyears ended December 31, 20172023 and 2016,2022, respectively.


During the year ended December 31, 2017, Essex issued 345,444may sell shares of Essex's common stock through its equity distribution program. Essex contributedprogram, then contribute the net proceeds from these share issuances of $89.1 million to the Operating Partnership in exchange for an aggregate of 345,444 OP Units as required by the Operating Partnership's partnership agreement. No shares ofDuring the Company's common stock were issued or sold by Essex pursuant to its equity distribution program during the yearyears ended December 31, 2016.2023 and 2022, the Company did not issue or sell any shares of common stock pursuant to the 2021 ATM Program. As of December 31, 2023, there were no outstanding forward sale agreements.


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Item 6. Selected Financial Data[Reserved]
 
The following tables set forth summary financial and operating information for Essex and the Operating Partnership from January 1, 2013 through December 31, 2017.


Essex Property Trust, Inc. and Subsidiaries
36
  Years Ended December 31,
  2017 2016 2015 2014 2013
  ($ in thousands, except per share amounts)
OPERATING DATA:          
Rental and other property $1,354,325
 $1,285,723
 $1,185,498
 $961,591
 $603,327
Management and other fees from affiliates 9,574
 8,278
 8,909
 9,347
 7,263
Income before discontinued operations $458,043
 $438,410
 $248,239
 $134,438
 $140,882
Income from discontinued operations —
 —
 —
 —
 31,173
Net income 458,043
 438,410
 248,239
 134,438
 172,055
Net income available to common stockholders $433,059
 $411,124
 $226,865
 $116,859
 $150,811
Per share data:  
  
  
  
  
Basic:  
  
  
  
  
Income before discontinued operations available to common stockholders $6.58
 $6.28
 $3.50
 $2.07
 $3.26
Net income available to common stockholders $6.58
 $6.28
 $3.50
 $2.07
 $4.05
Weighted average common stock outstanding 65,829
 65,472
 64,872
 56,547
 37,249
Diluted:  
  
  
  
  
Income before discontinued operations available to common stockholders $6.57
 $6.27
 $3.49
 $2.06
 $3.25
Net income available to common stockholders $6.57
 $6.27
 $3.49
 $2.06
 $4.04
Weighted average common stock outstanding 65,898
 65,588
 65,062
 56,697
 37,335
Cash dividend per common share $7.00
 $6.40
 $5.76
 $5.11
 $4.84

  As of December 31,
  2017 2016 2015 2014 2013
  ($ in thousands)
BALANCE SHEET DATA:          
Investment in rental properties (before accumulated depreciation) $13,348,831
 $12,676,306
 $12,331,469
 $11,244,681
 $5,443,757
Net investment in rental properties 10,579,534
 10,364,760
 10,381,577
 9,679,875
 4,188,871
Real estate under development 355,735
 190,505
 242,326
 429,096
 50,430
Co-investments 1,155,984
 1,161,275
 1,036,047
 1,042,423
 677,133
Total assets 12,495,706
 12,217,408
 12,008,384
 11,530,299
 5,164,171
Total indebtedness 5,689,126
 5,563,260
 5,318,757
 5,084,256
 3,010,856
Redeemable noncontrolling interest 39,206
 44,684
 45,452
 23,256
 —
Cumulative convertible preferred stock —
 —
 —
 —
 4,349
Cumulative redeemable preferred stock —
 —
 73,750
 73,750
 73,750
Stockholders' equity 6,277,406
 6,192,178
 6,237,733
 6,022,672
 1,884,619





  As of and for the years ended December 31,
  2017 2016 2015 2014 2013
  ($ in thousands, except per share amounts)
OTHER DATA:  
Funds from operations (FFO)(1) attributable to common stockholders and unitholders:
          
Net income available to common stockholders $433,059
 $411,124
 $226,865
 $116,859
 $150,811
Adjustments:  
  
  
  
  
Depreciation and amortization 468,881
 441,682
 453,423
 360,592
 193,518
Gains not included in FFO attributable to common stockholders and unitholders (159,901) (167,607) (81,347) (50,064) (67,975)
Deferred tax expense on sale of real estate and land - taxable REIT subsidiary activity —
 4,410
 —
 —
 —
Depreciation and amortization add back from unconsolidated co-investments 55,531
 50,956
 49,826
 33,975
 15,748
Noncontrolling interest related to Operating Partnership units 14,825
 14,089
 7,824
 4,911
 8,938
Insurance reimbursements —
 —
 (1,751) —
 —
Depreciation attributable to third party ownership and other (286) (9) (781) (1,331) (1,309)
Funds from operations attributable to common stockholders and unitholders $812,109
 $754,645
 $654,059
 $464,942
 $299,731
Non-core items:  
  
  
  
  
Merger and integration expenses —
 —
 3,798
 53,530
 4,284
Acquisition and investment related costs 1,569
 1,841
 2,414
 1,878
 1,161
Gain on sale of marketable securities, note prepayment, and other investments (1,909) (5,719) (598) (886) (2,519)
Gain on sale of land —
 —
 —
 (2,533) (1,503)
Interest rate hedge ineffectiveness (2)
 (78) (250) —
 —
 —
Loss on early retirement of debt 1,796
 606
 6,114
 268
 300
Co-investment promote income —
 —
 (192) (10,640) —
Income from early redemption of preferred equity investments (356) —
 (1,954) (5,250) (1,358)
Excess of redemption value of preferred stock over carrying value —
 2,541
 —
 —
 —
Insurance reimbursements, legal settlements, and other, net (1,108) (4,470) (2,970) 1,852
 —
Core funds from operations (Core FFO) attributable to common stockholders and unitholders $812,023
 $749,194
 $660,671
 $503,161
 $300,096
Weighted average number of shares outstanding, diluted (FFO)(3)
 68,194
 67,890
 67,310
 58,921
 39,501
Funds from operations attributable to common stockholders and unitholders
 per share - diluted
 $11.91
 $11.12
 $9.72
 $7.89
 $7.59
Core funds from operations attributable to common stockholders and unitholders
 per share - diluted
 $11.91
 $11.04
 $9.82
 $8.54
 $7.60

(1)
FFO is a financial measure that is commonly used in the REIT industry. The Company presents funds from operations as a supplemental operating performance measure. FFO is not used by the Company as, nor should it be considered to be, an alternative to net earnings computed under GAAP as an indicator of the Company’s operating performance or as an alternative to cash from operating activities computed under GAAP as an indicator of the Company's ability to fund its cash needs.


FFO is not meant to represent a comprehensive systemTable of financial reporting and does not present, nor does it intend to present, a complete picture of the Company's financial condition and operating performance. The Company believes that net earnings computed under GAAP is the primary measure of performance and that FFO is only meaningful when it is used in conjunction with net earnings. The Company considers FFO and FFO excluding non-recurring items and acquisition costs (referred to as “Core FFO”) to be useful financial performance measurements of an equity REIT because, together with net income and cash flows, FFO and Core FFO provide investors with additional bases to evaluate operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and ability to pay dividends.  Further, the Company believes that its consolidated financial statements, prepared in accordance with GAAP, provide the most meaningful picture of its financial condition and its operating performance.Contents
In calculating FFO, the Company follows the definition for this measure published by the National Association of Real Estate Investment Trusts (“NAREIT”), which is a REIT trade association. The Company believes that, under the NAREIT FFO definition, the two most significant adjustments made to net income are (i) the exclusion of historical cost depreciation, and (ii) the exclusion of gains and losses from the sale of previously depreciated properties. The Company agrees that these two NAREIT adjustments are useful to investors for the following reasons:
(a)historical cost accounting for real estate assets in accordance with GAAP assumes, through depreciation charges, that the value of real estate assets diminishes predictably over time. NAREIT stated in its White Paper on Funds from Operations “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.” Consequently, NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time and depreciation charges required by GAAP do not reflect the underlying economic realities.
(b)REITs were created as a legal form of organization in order to encourage public ownership of real estate as an asset class through investment in firms that were in the business of long-term ownership and management of real estate.  The exclusion, in NAREIT’s definition of FFO, of gains and losses from the sales of previously depreciated operating real estate assets allows investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT’s activity and assists in comparing those operating results between periods.

Management believes that it has consistently applied the NAREIT definition of FFO to all periods presented. However, there is judgment involved and other REITs' calculation of FFO may vary from the NAREIT definition for this measure, and thus their disclosure of FFO may not be comparable to the Company’s calculation.

(2)
Interest rate swaps generally are adjusted to fair value through other comprehensive income (loss). However, because certain of our interest rate swaps do not have a 0% LIBOR floor, while related hedged debt in these cases is subject to a 0% LIBOR floor, the portion of the change in fair value of these interest rate swaps attributable to this mismatch, if any, is recorded as a non-cash interest rate hedge ineffectiveness through interest expense.
(3)
Assumes conversion of all dilutive outstanding operating partnership interests in the Operating Partnership into shares of the Company's common stock and excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.


Essex Portfolio, L.P. and Subsidiaries
  Years Ended December 31,
  2017 2016 2015 2014 2013
  ($ in thousands, except per unit amounts)
OPERATING DATA:          
Rental and other property $1,354,325
 $1,285,723
 $1,185,498
 $961,591
 $603,327
Management and other fees from affiliates 9,574
 8,278
 8,909
 9,347
 7,263
Income before discontinued operations $458,043
 $438,410
 $248,239
 $134,438
 $140,882
Income from discontinued operations —
 —
 —
 —
 31,173
Net income 458,043
 438,410
 248,239
 134,438
 172,055
Net income available to common unitholders $447,884
 $425,213
 $234,689
 $121,726
 $159,749
Per unit data:  
  
  
  
  
Basic:  
  
  
  
  
Income before discontinued operations available to common unitholders $6.58
 $6.28
 $3.50
 $2.07
 $3.27
Net income available to common unitholders $6.58
 $6.28
 $3.50
 $2.07
 $4.06
Weighted average common units outstanding 68,082
 67,696
 67,054
 58,772
 39,380
Diluted:  
  
  
  
  
Income before discontinued operations available to common unitholders $6.57
 $6.27
 $3.49
 $2.07
 $3.26
Net income available to common unitholders $6.57
 $6.27
 $3.49
 $2.07
 $4.05
Weighted average common units outstanding 68,151
 67,812
 67,244
 58,921
 39,467
Cash distributions per common unit $7.00
 $6.40
 $5.76
 $5.11
 $4.84
  As of December 31,
  2017 2016 2015 2014 2013
  ($ in thousands)
BALANCE SHEET DATA:          
Investment in rental properties (before accumulated depreciation) $13,348,831
 $12,676,306
 $12,331,469
 $11,244,681
 $5,443,757
Net investment in rental properties 10,579,534
 10,364,760
 10,381,577
 9,679,875
 4,188,871
Real estate under development 355,735
 190,505
 242,326
 429,096
 50,430
Co-investments 1,155,984
 1,161,275
 1,036,047
 1,042,423
 677,133
Total assets 12,495,706
 12,217,408
 12,008,384
 11,530,299
 5,164,171
Total indebtedness 5,689,126
 5,563,260
 5,318,757
 5,084,256
 3,010,856
Redeemable noncontrolling interest 39,206
 44,684
 45,452
 23,256
 —
Cumulative convertible preferred interest —
 —
 —
 —
 4,349
Cumulative redeemable preferred interest —
 —
 71,209
 71,209
 71,209
Partners' capital 6,330,415
 6,244,364
 6,287,381
 6,073,433
 1,932,108

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations


The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements and notes thereto. These consolidated financial statements include all adjustments which are, in the opinion of management, necessary to reflect a fair statement of the results and all such adjustments are of a normal recurring nature.


OVERVIEW


Essex is a self-administered and self-managed REIT that acquires, develops, redevelops, and manages apartment communities in selected residential areas located primarily inon the West Coast of the United States. Essex owns all of its interests in its real estate investments, directly or indirectly, through the Operating Partnership. Essex is the sole general partner of the Operating Partnership and, as of December 31, 2017,2023, had an approximately 96.7%96.6% general partner interest in the Operating Partnership.


The Company’s investment strategy has two components: constant monitoring of existing markets, and evaluation of new markets to identify areas with the characteristics that underlie rental growth. The Company’s strong financial condition supports its investment strategy by enhancing its ability to quickly shift acquisition, development, redevelopment, and disposition activities to markets that will optimize the performance of the Company's portfolio.


As of December 31, 2017,2023, the Company had owned or held an interesthad ownership interests in 247252 operating apartment communities, comprising 60,23961,997 apartment homes, excluding the Company's ownership in preferred equity investments.co-investments, loan investments, three operating commercial buildings, and a development pipeline comprised of one unconsolidated joint venture project.


The Company’s apartment communities are predominately located in the following major regions:


Southern California (Los (primarily Los Angeles, Orange, San Diego, and Ventura counties)
Northern California (the San Francisco Bay Area)
Seattle Metro (Seattle metropolitan area)


As of December 31, 2017,2023, the Company’s development pipeline was comprised of five consolidated projects under development, twoone unconsolidated joint venture projectsproject under development aggregating 264 apartment homes and various consolidated predevelopment projects, aggregating 1,982 apartment homes, with total incurred costs of $557.0 million, and$114.0 million. The estimated remaining project costs ofare approximately $752.0$12.0 million, $572.0$6.5 million of which represents the Company's share of the estimated remaining costs, for total estimated project costs of $1.3 billion.$126.0 million. 


As of December 31, 2017,2023, the Company also had an ownership interest in onethree operating commercial buildingbuildings (totaling approximately 106,564283,000 square feet).


By region, the Company's operating results for 20172023 and 20162022 and projectionsprojection for 20182024 new housing supply (defined as new multi-familymultifamily apartment homes and single family homes, excluding developments with fewer than 50 apartment homes as well as student, senior and 100% affordable housing), job and 2024 estimated Same-Property revenue growth and rental income are as follows:


Southern California Region: As of December 31, 2017,2023, this region represented 47%43% of the Company’s consolidated operating apartment homes. Revenues for “2017 Same-Properties”"2023 Same-Properties" (as defined below), or “Same-Property"Same-Property revenues,”" increased 3.8%4.9% in 20172023 as compared to 2016.2022. In 2018,2024, the Company projects new residential supply of 35,15027,400 apartment homes and single family homes, which represents 0.6%0.4% of the total housing stock. The Company projects an increase of 111,000 jobs or 1.5%, and an increase in 2018 Same-Property revenues of between 1.9% to 2.9% in 2018.
 
Northern California Region: As of December 31, 2017,2023, this region represented 32%37% of the Company’s consolidated operating apartment homes. Same-Property revenues increased 2.6%4.0% in 20172023 as compared to 2016.2022. In 2018,2024, the Company projects new residential supply of 14,25010,500 apartment homes and single family homes, which represents 0.6%0.4% of the total housing stock. The Company projects an increase of 54,900 jobs or 1.6%, and an increase in 2018 Same-Property revenues of between 2.0% to 3.0% in 2018.
 
Seattle Metro Region: As of December 31, 2017,2023, this region represented 21%20% of the Company’s consolidated operating apartment homes. Same-Property revenues increased 5.8%4.0% in 20172023 as compared to 2016.2022. In 2018,2024, the Company projects new residential supply of 17,45011,700 apartment homes and single family homes, which represents 1.4%0.9% of the total housing stock. The Company projects an increase of 35,450 jobs or 2.1%, and an increase in 2018 Same-Property revenues of between 2.4% to 3.4% in 2018.


In total, the Company projects an increase in 20182024 Same-Property revenues of between 2.0%0.7% to 3.0%, as renewal and new leases are signed at higher rents in 2018 than 2017.2.7%. Same-Property operating expenses are projected to increase in 20182024 by 2.1%3.5% to 3.1%5.0%.



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The Company’s consolidated operating communities are as follows:
 As ofAs of
December 31, 2023December 31, 2022
 Apartment Homes%Apartment Homes%
Southern California21,986 43 %22,151 43 %
Northern California19,245 37 %19,230 37 %
Seattle Metro10,341 20 %10,341 20 %
Total51,572 100 %51,722 100 %
 As of As of
 December 31, 2017 December 31, 2016
 Apartment Homes % Apartment Homes %
Southern California23,343
 47% 23,613
 49%
Northern California15,848
 32% 14,519
 30%
Seattle Metro10,238
 21% 10,239
 21%
Total49,429
 100% 48,371
 100%


Co-investments, including Wesco I, Wesco III, Wesco IV, Wesco V, LLC, CPPIB, BEXAEW, BEX II, and BEX III communities, developments under construction, and preferred equity interest co-investment communities are not included in the table presented above for both periods.


RESULTS OF OPERATIONSMarket Considerations

Comparison of Year Ended December 31, 2017 to the Year Ended December 31, 2016


The Company’s average financial occupanciesCompany is emerging from restrictions resulting from the COVID-19 pandemic and continues to comply with the stated intent of local, county, state and federal laws, some of which limit rent increases during times of emergency and impair the ability to collect unpaid rent during certain timeframes and in various regions in which our communities are located, impacting the Company and its properties. Concurrently, geopolitical tensions and regional conflicts have increased uncertainty during 2022 and 2023. Inflation has caused an increase in consumer prices, thereby reducing purchasing power and elevating the risks of a recession. Due to increased inflation, the U.S. Federal Reserve raised the federal funds rate a total of seven times during 2022 and four times in 2023. In response, market interest rates have increased significantly during this time.

The long-term impact of these developments will largely depend on future laws that may be enacted, the impact on job growth and the broader economy, and reactions by consumers, companies, governmental entities and capital markets.

Primarily as a result of the impact of the COVID-19 pandemic, the Company's cash delinquencies as a percentage of scheduled rental income for the Company’s stabilized apartment communities or “2017 Same-Property”"Same-Property" (stabilized properties consolidated by the Company for the years ended December 31, 20172023 and 2016)2022) have generally remained higher than the pre-pandemic historical average of 0.35% since the second quarter of 2020. Cash delinquencies were elevated at 1.3% for 2022 and further increased to 1.9% in 2023. The lower cash delinquencies in 2022 was due to $34.5 million of Emergency Rental Assistance payments compared to $2.6 million received during 2023, however current tenant delinquencies remained well above pre-pandemic levels. The Company continues to work with residents to collect such cash delinquencies. As of December 31, 2023, the delinquencies have not had a material adverse impact to the Company's liquidity position. The Company's average financial occupancy for the Company's Same-Property portfolio increased slightly from 96.1% for the year ended December 31, 2022 to 96.4% for the year ended December 31, 2023.

The foregoing macroeconomic conditions have not negatively impacted the Company's ability to access traditional funding sources on the same or reasonably similar terms as were available in recent periods prior to the pandemic, as demonstrated by the Company's financing activity during the year ended December 31, 2023 discussed in the “Liquidity and Capital Resources" section below. The Company is not at material risk of not meeting the covenants in its credit agreements and is able to timely service its debt and other obligations.

RESULTS OF OPERATIONS

Comparison of Year Ended December 31, 2023 to the Year Ended December 31, 2022

The Company’s average financial occupancy for the Company’s stabilized apartment communities or "2023 Same-Property" (stabilized properties consolidated by the Company for the years ended December 31, 2023 and 2022) increased 30 basis points to 96.6%96.4% in 20172023 from 96.3%96.1% in 2016.2022. Financial occupancy is defined as the percentage resulting from dividing actual rental revenueincome by total potentialscheduled rental revenue.income. Actual rental revenueincome represents contractual rental revenueincome pursuant to leases without considering delinquency and concessions. Total potentialscheduled rental revenueincome represents the value of all apartment homes, with occupied apartment homes valued at contractual rental rates pursuant to leases and vacant apartment homes valued at estimated market rents. We believeThe Company believes that financial occupancy is a meaningful measure of occupancy because it considers the value of each vacant apartment home at its estimated market rate.


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Market rates are determined using the recently signed effective rates on new leases at the property and are used as the starting point in the determination of the market rates of vacant apartment homes. The Company may increase or decrease these rates based on a variety of factors, including overall supply and demand for housing, concentration of new apartment deliveries within the same submarket which can cause periodic disruption due to greater rental concessions to increase leasing velocity, and rental affordability. Financial occupancy may not completely reflect short-term trends in physical occupancy and financial occupancy rates, and the Company's calculation of financial occupancy may not be comparable to financial occupancy disclosed by other REITs.


The Company does not take into account delinquency and concessions to calculate actual rent for occupied apartment homes and market rents for vacant apartment homes. The calculation of financial occupancy compares contractual rates for occupied apartment homes to estimated market rents for unoccupied apartment homes, and thus the calculation compares the gross value of all apartment homes excluding delinquency and concessions. For apartment communities that are development properties in lease-up without stabilized occupancy figures, the Company believes the physical occupancy rate is the appropriate performance metric. While an apartment community is in the lease-up phase, the Company’s primary motivation is to stabilize the property, which may entail the use of rent concessions and other incentives, and thus financial occupancy, which is based on contractual revenueincome is not considered the best metric to quantify occupancy.


The regional breakdown of the Company’s 20172023 Same-Property portfolio for financial occupancy for the years ended December 31, 20172023 and 20162022 is as follows:

Years ended
December 31,
 20232022
Southern California96.3 %96.2 %
Northern California96.5 %96.1 %
Seattle Metro96.6 %95.8 %

 
Years ended
December 31,
 2017 2016
Southern California96.6% 96.3%
Northern California96.8% 96.3%
Seattle Metro96.4% 96.1%




The following table provides a breakdown of revenue amounts, including the revenues attributable to 20172023 Same-Properties.

 Number of Apartment 
Years Ended
December 31,
 Dollar Percentage
Number of ApartmentNumber of ApartmentYears Ended
December 31,		DollarPercentage
Property Revenues ($ in thousands)
 Homes 2017 2016 Change Change
Property Revenues ($ in thousands)
Homes20232022Change
2017 Same-Properties: (1)
          
2023 Same-Properties:
Southern California
Southern California
Southern California 21,998
 $559,113
 $538,738
 $20,375
 3.8%21,352 $$666,062 $$634,996 $$31,066 4.9 4.9 %
Northern California 13,892
 436,876
 425,823
 11,053
 2.6%Northern California18,371 633,736 633,736 609,261 609,261 24,475 24,475 4.0 4.0 %
Seattle Metro 10,238
 229,871
 217,259
 12,612
 5.8%Seattle Metro10,341 282,092 282,092 271,248 271,248 10,844 10,844 4.0 4.0 %
Total 2017 Same-Property revenues 46,128
 1,225,860
 1,181,820
 44,040
 3.7%
2017 Non-Same Property Revenues  
 128,465
 103,903
 24,562
 23.6%
Total property revenues  
 $1,354,325
 $1,285,723
 $68,602
 5.3%
Total 2023 Same-Property RevenuesTotal 2023 Same-Property Revenues50,064 1,581,890 1,515,505 66,385 4.4 %
2023 Non-Same Property Revenues2023 Non-Same Property Revenues 76,374 80,170 (3,796)(4.7)%
Total Property RevenuesTotal Property Revenues $1,658,264 $1,595,675 $62,589 3.9 %
  
(1)
Same-property excludes properties held for sale.

20172023 Same-Property Revenues increased by $44.0$66.4 million or 3.7%4.4% to $1.2$1.6 billion for 20172023 compared to $1.2$1.5 billion in 2016.2022. The increase was primarily attributable to an increase of 3.3%4.5% in average rental rates from $2,095 per apartment home$2,493 for 20162022 to $2,164 per apartment home$2,604 for 2017. 2023.


20172023 Non-Same Property Revenues increased decreased by $24.6$3.8 million or 23.6%4.7% to $128.5$76.4 million in 20172023 compared to $103.9$80.2 million in 2016.2022. The increasedecrease was primarily due to revenue generatedthe sales of Anavia in 2022 and of CBC and The Sweeps in 2023, partially offset by the acquisitions of Regency Palm Valley, which was consolidatedCourt and Windsor Court in January 2017.2022, the acquisition of Hacienda at Camarillo Oaks in 2023, and an increase in average rental rates.


Management and other fees from affiliates increased by $1.3 million or 15.7% to $9.6 stayed consistent at $11.1 million in 2017 from $8.3 million 2016. The increase is primarily due to property management fee revenue from joint venture development communities that went into lease-up from the third quarter of 2016 until the fourth quarter of 2017.2023 and 2022.


Property operating expenses, excluding real estate taxes increased $9.4by $16.3 million or 3.8%5.8% to $259.2$299.7 million in 20172023 compared to $249.8$283.4 million in 2016,2022, primarily due to increases of $5.1 million in utilities expenses, generated by Palm Valley, which was consolidated$4.7 million in January 2017. 2017maintenance and repairs expenses, $4.1 million in administrative expenses, and $2.4 million in personnel costs. 2023 Same-Property operating expenses, excluding real estate taxes, increased by $5.5$18.0 million or 2.4%6.6% to $238.1$292.0 million in 20172023 compared to $232.6$274.0 million in 2016,2022, primarily due to a $4.3increases of $5.7 million increase in utilities.utilities expenses, $5.1 million in maintenance

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and repairs expenses, $4.1 million in insurance and other expenses, $2.7 million in personnel costs, and $0.5 million in administrative expenses.

Real estate taxes increased $7.1by $1.9 million or 5.1%1.0% to $146.3$185.8 million in 20172023 compared to $139.2$183.9 million in 2016,2022, primarily due to propertyan increase of approximately 2% in California real estate taxes, at Palm Valley, which was consolidatedpartially offset by a decrease from 2022 in January 2017 and due to increasesreal estate taxes in tax rates and property valuations. 2017/2016the Seattle metro region. 2023 Same-Property real estate taxes increased by $4.1$2.1 million or 3.3%1.3% to $130.1$171.3 million in 20172023 compared to $126.0$169.2 million in 20162022 primarily due to increasesan increase of approximately 2% in tax rates and property valuations.California real estate taxes, partially offset by a decrease from 2022 in real estate taxes in the Seattle metro region.


Depreciation and amortization expense increased by $27.2$9.1 million or 6.2%1.7% to $468.9$548.4 million in 20172023 compared to $441.7$539.3 million in 2016,2022, primarily due to depreciation at Palm Valley, which was consolidated in January 2017.

Interest expense increased $3.2 million or 1.5% to $222.9 million in 2017 compared to $219.7 million in 2016, due to an increase in depreciation expense from the completion of Station Park Green (Phase IV) development property in 2022, the acquisition of the Company's joint venture partner's 49.8% interest in Essex JV LLC co-investment that owned Regency Palm Court and Windsor Court, in 2022, and the acquisition of Hacienda at Camarillo Oaks in 2023. The increase was partially offset by the sale of Anavia in 2022 and CBC and The Sweeps in 2023.

Gain on sale of real estate and land of $59.2 million in 2023 was attributable to the sale of CBC and The Sweeps apartment home community and the sale of a land parcel.

Interest expense increased by $8.1 million or 4.0% to $212.9 million in 2023 compared to $204.8 million in 2022, primarily due to borrowing on the $300.0 million unsecured term loan in April 2023, the $298.0 million of 10-year secured loans closed in July 2023, and higher average outstanding debtinterest rates resulting in an increase in interest expense of $16.3 million. Additionally, there was a $1.4 million decrease in capitalized interest in 2023, due to a decrease in development activity as compared to the same period in 2022. These increases in interest expense were partially offset by regular principal payments and various debts that matured or were paid off, primarily due to the $350.0pay down of the $300.0 million of senior unsecured notes due May 1, 2027 issued in April 20172023 and decreased borrowing on the $450.0 million seniorCompany's unsecured notes due April 15, 2026 issued in April 2016, which resulted in $19.1 millionlines of interest expense for 2017 compared to 2016. These additions were partially offset by various debts that were paid off or matured and regular principal amortizationcredit during and after 2016,2022, which resulted in a decrease in interest expense of $14.5$9.6 million for 2017. Additionally, there was a $1.4 million increase in capitalized interest in 2017 compared to 2016, which was due to an increase in development costs as compared to the same period in 2016.2023.


Total return swap income of $10.1 million in 2017 consists of monthly settlements related to the Company's total return swap contracts that were entered into during 2015, in connection with issuing $257.3 million of fixed rate tax-exempt mortgage notes payable. The decrease of $1.6 million or 13.7% from $11.7 million in 2016 was due to less favorable interest rates in 2017.

Interest and other (loss) income decreased $2.7 increased by $65.3 million or 9.9%343.7% to $24.6income of $46.3 million in 20172023 compared to $27.3a loss of $19.0 million in 2016,2022, primarily due to increases of $55.6 million in realized and unrealized gains on marketable securities, $7.3 million in marketable securities and other income, and $3.7 million in insurance reimbursements, legal settlements, and other, driven by a legal settlement claim.

Equity income from co-investments decreased by $15.4 million or 59.2% to $10.6 million in 2023 compared to $26.0 million in 2022, primarily due to a decrease of $3.8$17.1 million in co-investment promote income, from the gain on salean increase of marketable securities and other investments combined with a decrease of $3.5$31.6 million in incomeimpairment losses from insurance reimbursements, legal settlements, and other, partiallyunconsolidated co-investments offset by an increase of $4.6$39.7 million in marketable securities and other interest income.


Equityequity income from co-investments increased by $37.7 million or 77.4% to $86.4 million in 2017 compared to $48.7 million 2016, primarily due to the sale of two properties by BEXAEW and one property by Wesco I during 2017, which resulted in a total gain of $44.8 million, as well as increases in preferred equity income of approximately $7.5 million. In 2016, two co-investment properties were sold, resulting in gains of $13.0 million for the Company during 2016.non-core co-investments.


Gain on sale of real estate and land decreased by $128.2 million or 82.9% to $26.4 million in 2017 compared to $154.6 million in 2016. The Company's 2017 gain was primarily attributable to the sale of the Jefferson at Hollywood community, which resulted in a gain of $26.2 million for the Company.

Deferred tax expense on gain on sale of real estate and land of $4.4 million for 2016 was recorded primarily due to the sale of Harvest Park, which was owned by our wholly owned taxable REIT subsidiary. There was no current tax expense on the sale of real estate and land for 2016 as the Harvest Park proceeds were used in a like-kind exchange transaction. There were no such transactions during 2017.

Gain on remeasurement of co-investment of $88.6 million in 2017 resulted from the purchase of the Company's joint venture partner's 50% membership interest in the Palm Valley co-investment in January 2017. There were no such transactions during 2016.

Comparison of Year Ended December 31, 20162022 to the Year Ended December 31, 20152021


The Company’s average financial occupancies forFor the Company’s stabilized apartment communities or “2016 Same-Property” (stabilized properties consolidated by the Company forcomparison of the years ended December 31, 20162022 and 2015) increased 30 basis pointsDecember 31, 2021, refer to 96.3% in 2016 from 96.0% in 2015. The regional breakdownPart II, Item 7 “Management's Discussion and Analysis of the Company's 2016 Same-Property portfolio for financial occupancyFinancial Condition and Results of Operations" on Form 10-K for the yearsfiscal year ended December 31, 2016 and 2015 is as follows:

 
Years ended
December 31,
 2016 2015
Southern California96.4% 95.9%
Northern California96.3% 96.1%
Seattle Metro96.1% 96.1%

The following table provides a breakdown2022, filed with the SEC on February 23, 2023 under the subheading "Comparison of revenue amounts, including the revenues attributable to 2016 Same-Properties:

  Number of Apartment 
Years Ended
December 31,
 Dollar Percentage
Property Revenues ($ in thousands)
 Homes 2016 2015 Change Change
2016 Same-Properties: (1)
          
Southern California 20,698
 $497,448
 $468,614
 $28,834
 6.2%
Northern California 13,220
 401,642
 376,019
 25,623
 6.8%
Seattle Metro 10,239
 217,259
 201,417
 15,842
 7.9%
Total 2016/2015 Same-Property revenues 44,157
 1,116,349
 1,046,050
 70,299
 6.7%
2016 Non-Same Property Revenues  
 169,374
 139,448
 29,926
 21.5%
Total property revenues  
 $1,285,723
 $1,185,498
 $100,225
 8.5%

(1)
Same-property excludes properties held for sale.

2016 Same-Property Revenues increased by $70.3 million or 6.7% to $1.1 billion for 2016 compared to $1.0 billion in 2015. The increase was primarily attributable to an increase of 6.4% in average rental rates from $1,942 per apartment home for 2015 to $2,066 per apartment home for 2016. 

2016 Non-Same Property Revenues increased by $29.9 million or 21.5% to $169.4 million in 2016 compared to $139.4 million in 2015. The increase was primarily due to revenue generated by the acquisition, completed development, or consolidation of three communities, net of dispositions, since January 1, 2015.


Management and other fees from affiliates decreased by $0.6 million in 2016 compared to 2015. The decrease is primarily dueYear Ended December 31, 2022 to the loss of asset and management fees in 2016 as compared to 2015 associated with the Company's purchase of the joint venture partner's remaining membership interest in The Huxley, The Dylan, and Reveal communities during 2015 and the sale of certain communities.Year Ended December 31, 2021."


Property operating expenses, excluding real estate taxes increased $14.8 million or 6.3% in 2016 compared to 2015, primarily due to the acquisition, completed development, or consolidation of three communities, net of dispositions, since January 1, 2015. 2016 Same-Property operating expenses excluding real estate taxes, increased by $9.9 million or 4.7% in 2016 compared to 2015, due mainly to a $4.7 million increase in property management fees and a $2.3 million increase in maintenance and repairs.

Real estate taxes increased $10.6 million or 8.3% in 2016 compared to 2015, primarily due to the acquisition, completed development, or consolidation of three communities, net of dispositions, since January 1, 2015. 2016 Same-Property real estate taxes increased by $2.2 million or 2.0% for 2016 compared to 2015 due to increases in tax rates and property valuations.

Depreciation and amortization expense decreased by $11.7 million or 2.6% in 2016 compared to 2015, primarily due to the amortization of a larger amount of in-place leases during 2015 compared to 2016, offset by the acquisition, completed development, or consolidation of three communities, net of dispositions, since January 1, 2015.

Merger and integration expenses include, but are not limited to, advisor fees, legal fees, and accounting fees related to the merger with BRE Properties, Inc. ("BRE") and related integration activity. There were no merger and integration expenses for 2016 and $3.8 million for 2015.

Interest expense increased $14.8 million or 7.2% in 2016, primarily due to the $500.0 senior unsecured notes due on April 1, 2025 issued in March 2015 and the $450.0 million senior unsecured notes due on April 15, 2026 issued in April 2016, which resulted in an increase of $14.9 million in interest expense for 2016 compared to 2015. Additionally, there was a $3.1 million decrease in capitalized interest in 2016 compared to 2015, which was due to a decrease in development costs as compared to the same period in 2015. These additions were offset by a reduction in interest expense due to the payoff of $150.0 million in a private placement of bonds in 2016.

Total return swap income of $11.7 million in 2016 consisted of monthly settlements related to the Company's total return swap contracts that were entered into during 2015, in connection with $257.3 million of tax-exempt mortgage notes payable. The Company had total return swap income of $5.7 million in 2015.

Interest and other income increased $8.2 million or 42.6% in 2016, primarily due to an increase of $5.1 million in gains from the sale of marketable securities and $2.5 million in income from marketable securities and other interest income.

Equity income from co-investments increased by $26.8 million or 122.8% in 2016 compared to 2015, primarily due to $13.0 million in income on the gain on sale of two co-investment communities as well as income from five preferred equity investments originated during 2016.

Gains on sale of real estate and land increased by $107.2 million or 226.5% in 2016 compared to 2015, due primarily to a $126.6 million gain from the sale of minority membership interest in BEX II, $10.7 million gain on the sale of Harvest Park before tax expense, a $7.3 million gain on the sale of Candlewood North and a $9.6 million gain on the sale of the Company's headquarters office building during 2016, as compared to approximately $7.1 million in gains on the sales of Pinnacle South Mountain and two commercial buildings, as well as a $40.2 million gain on the sale of Sharon Green during 2015.

Deferred tax expense on gain on sale of real estate and land of $4.4 million for 2016 was recorded primarily due to the sale of Harvest Park, which was owned by our wholly owned taxable REIT subsidiary. There was no current tax expense on the sale of real estate and land for 2016 as the Harvest Park proceeds were used in a like-kind exchange transaction.

Gains on remeasurement of co-investment of $34.0 million in 2015 were due to the remeasurement of the Company's investments, caused by the Company's acquisition of a controlling interest in The Huxley and The Dylan properties, resulting in a gain of $21.3 million, and Reveal, resulting in a gain of $12.7 million. There were no gains on remeasurement of co-investments in 2016.



Liquidity and Capital Resources


The following table sets forth the Company’s cash flows for 2017, 20162023, 2022 and 20152021 ($ in thousands):
 For the year ended December 31,
 202320222021
Cash flow provided by (used in):
Operating activities$980,064 $975,649 $905,259 
Investing activities$(145,140)$145,958 $(397,397)
Financing activities$(477,271)$(1,137,564)$(533,265)
  For the year ended December 31,
  2017 2016 2015
Cash flow provided by (used in):      
Operating activities $766,151
 $711,821
 $618,168
Investing activities $(477,239) $(420,324) $(725,556)
Financing activities $(309,213) $(256,259) $107,456


Essex’s business is operated primarily through the Operating Partnership. Essex issues public equity from time to time, but does not otherwise generate any capital itself or conduct any business itself, other than incurring certain expenses from operating as a public company which are fully reimbursed by the Operating Partnership.
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Essex itself does not hold any indebtedness, and its only material asset is its ownership of partnership interests of the Operating Partnership. Essex’s principal funding requirement is the payment of dividends on its common stock and preferred stock. Essex’s sole source of funding for its dividend payments is distributions it receives from the Operating Partnership.


As of December 31, 2017,2023, Essex owned a 96.7%96.6% general partner interest and the limited partners owned the remaining 3.3%3.4% interest in the Operating Partnership.


The liquidity of Essex is dependent on the Operating Partnership’s ability to make sufficient distributions to Essex. The primary cash requirement of Essex is its payment of dividends to its stockholders. Essex also guarantees some of the Operating Partnership’s debt, as discussed further in Notes 67 and 78 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K. If the Operating Partnership fails to fulfill certain of its debt requirements, which trigger the Essex’s guarantee obligations, then Essex will be required to fulfill its cash payment commitments under such guarantees. However, Essex’s only significant asset is its investment in the Operating Partnership.


For Essex to maintain its qualification as a REIT, it must pay dividends to its stockholders aggregating annually at least 90% of its REIT taxable income, excluding net capital gains. While historically Essex has satisfied this distribution requirement by making cash distributions to its stockholders, it may choose to satisfy this requirement by making distributions of other property, including, in limited circumstances, Essex’s own stock. As a result of this distribution requirement, the Operating Partnership cannot rely on retained earnings to fund its ongoing operations to the same extent that other companies whose parent companies are not REITs can. Essex may need to continue to raise capital in the equity markets to fund the Operating Partnership’sPartnership’s working capital needs, acquisitions and developments.


At December 31, 2017,2023, the Company had $44.6$391.7 million of unrestricted cash and cash equivalents and $190.0$87.8 million in marketable securities, of which $80.5 million were held available for sale.securities. The Company believes that cash flows generated by its operations, existing cash and cash equivalents, marketable securities balances and availability under existing lines of credit accessare sufficient to meet all of its anticipated cash needs during 2024. Additionally, the capital markets continue to be available and the abilityCompany is able to generate cash from the disposition of real estate are sufficientassets to meet allfinance additional cash flow needs, including continued development and select acquisitions. In the event that economic disruptions occur, the Company may further utilize other resources such as its cash reserves, lines of the Company’s reasonably anticipatedcredit, or decreased investment in redevelopment activities to supplement operating cash needs during 2018.flows. The Company is carefully monitoring and managing its cash position in light of ongoing conditions and levels of operations. The timing, source and amounts of cash flows provided by financing activities and used in investing activities are sensitive to changes in interest rates and other fluctuations in the capital markets environment, which can affect the Company’s plans for acquisitions, dispositions, development and redevelopment activities.


As of December 31, 2017,2023, the Company had $275.0 million of private placement unsecured bonds outstanding at an average interest rate of 4.5% with maturity dates ranging from December 2019 through August 2021.

As of December 31, 2017, the Company had $2.9$5.1 billion of fixed rate public bonds outstanding at an average interest rate of 3.7%3.3% with maturity dates ranging from 20212024 to 2027.2050.


As of December 31, 2017, the Company had $350.0 million outstanding on its unsecured term loan. The unsecured term loan bears a variable interest rate of LIBOR plus 0.95%. The Company has five interest rate swap contracts, with an aggregate notional balance of $175.0 million, which effectively converts the interest rate on $175.0 million of the term loan to a fixed rate of 2.3%.


As of December 31, 2017,2023, the Company’s mortgage notes payable totaled $2.0 billion,$887.2 million, net of unamortized premiums and debt issuance costs, which consisted of $1.7 billion$665.7 million in fixed rate debt at an average interest rate of 4.6%4.3% and maturity dates ranging from 20182025 to 20272033 and $268.6$221.5 million of tax-exempt variable rate demand notes with a weighted average interest rate of 2.0%4.6%. The tax-exempt variable rate demand notes have maturity dates ranging from 20252027 to 2046, and $20.7 million is subject to interest rate caps, $10.8 million of which matured on January 1, 2018. $256.62046. $222.7 million is subject to total return swaps.


TheAs of December 31, 2023, the Company had two unsecured lines of credit aggregating $1.03$1.24 billion, as of December 31, 2017 including a $1.0$1.2 billion unsecured line of credit and a $35.0 million working capital unsecured line of credit. As of December 31, 2017,2023, there was a $179.0 million balanceno amount outstanding on thisthe $1.2 billion unsecured line of credit with an underlying interest rate of LIBOR plus 0.90%. In January 2018, the Company amended the $1.0 billion credit facility such that the line's capacity was increased to $1.2 billion and the scheduled maturity date was extended to December 2021, with one 18-month extension, exercisable at the Company's option.credit. The underlying interest rate on the amended line is based on a tiered rate structure tied to the Company's corporatecredit ratings, adjusted for the Company's sustainability metric grid, and was at Adjusted SOFR plus 0.75% as of December 31, 2023. This facility is scheduled to mature in January 2027, with two six-month extensions, exercisable at LIBOR plus 0.875%. The Company also has a $25.0the Company's option. As of December 31, 2023, there was no amount outstanding on the Company's $35.0 million working capital unsecured line of credit agreement. As of December 31, 2017, there were no amounts outstanding on this unsecured line with an underlying interest rate of LIBOR plus 0.90%. In January 2018, the Company amended the $25.0 million credit facility such that the line's capacity was increased to $35.0 million and the scheduled maturity date was extended to January 2020.credit. The underlying interest rate on the amended line is based on a tiered rate structure tied to the Company's corporatecredit ratings, adjusted for the Company's sustainability metric grid, and was at Adjusted SOFR plus 0.75% as of December 31, 2023. This facility is at LIBOR plus 0.875%.scheduled to mature in July 2024.


The Company’s unsecured lines of credit and unsecured debt agreements contain debt covenants related to limitations on indebtedness and liabilities and maintenance of minimum levels of consolidated earnings before depreciation, interest and amortization. The Company was in compliance with the debt covenants as of December 31, 20172023 and 2016.2022.


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The Company pays quarterly dividends from cash available for distribution. Until it is distributed, cash available for distribution is invested by the Company primarily in investment grade securities held available for sale or is used by the Company to reduce balances outstanding under its lines of credit.


Derivative Activity


The Company uses interest rate swaps, interest rate caps, and total return swap contracts to manage certain interest rate risks. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps and total return swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements.

The Company has entered into interest rate swap contracts with an aggregate notional amount of $175.0 million, which effectively fix the interest rate on $175.0 million of the $350.0 million unsecured term loan at 2.3%. These derivatives qualify for hedge accounting.
The Company has entered into four total return swap contracts, with an aggregate notional amount of $256.6$222.7 million, that effectively converts $256.6$222.7 million of fixed mortgage notes payable to a floating interest rate based on the Securities Industry and Financial Markets Association Municipal Swap Index ("SIFMA") plus a spread. Additionally, theThe total return swaps provide fair market value protection on the mortgage notes payable to our counterparties during the initial period of the total return swap until the Company's option to call the mortgage notes at par can be exercised. The Company can currently call all four of the total return swaps, with $256.6$222.7 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting.


As of December 31, 2017 the Company also had three interest rate caps with an aggregate notional amount of $20.7 million that effectively limit the Company’s exposure to interest rate risk by providing a ceiling on the underlying variable interest rate for a portion of the Company’s tax exempt variable rate debt. One interest rate cap, with a notional balance of $10.8 million, matured on January 1, 2018.

As of December 31, 20172023 and 2016,2022, the aggregate carrying value of the interest rate swap contracts waswere an asset of $5.4$4.3 million and $4.4$5.6 million, respectively. As of December 31, 2023 and 2022, the swap contracts were presented in the consolidated balance sheets as an asset of $4.3 million and $5.6 million, respectively, and iswere included in prepaid expenses and other assets on the consolidated balance sheets and a liability of zero and $0.03 million, respectively.sheets. The aggregate carrying value of the interest rate caps was zero on the balance sheets as of both December 31, 2017 and 2016. The aggregate carryingfair value of the total return swaps was zero as ofat both December 31, 20172023 and 2016.2022.


Hedge ineffectiveness related to cash flow hedges, which is reported in current year income as interest expense, net was income of $0.1 million and $0.3 millionzero for the years ended December 31, 20172023, 2022, and 2016, respectively. Hedge ineffectiveness was not significant for the year ended 2015.2021.


Issuance of Common Stock


In 2016,September 2021, the Company filedentered into the 2021 ATM Program, a new shelf registration statementequity distribution agreement pursuant to which the Company may offer and sell shares of its common stock having an aggregate gross sales price of up to $900.0 million. In connection with the SEC, allowing2021 ATM Program, the Company may also enter into related forward sale agreements, and may sell shares of its common stock pursuant to these agreements. The use of a forward sale agreement would allow the Company to sell an undetermined number or amountlock in a share price on the sale of certain equity and debt securitiesshares of its common stock at the time the agreement is executed, but defer receipt of the proceeds from the sale of shares until a later date should the Company as definedelect to settle such forward sale agreement, in whole or in part, in shares of common stock.

The 2021 ATM Program replaced the prospectus contained in the shelf registration statement.

Essex hasprior equity distribution agreement entered into equity distribution agreements with Cantor Fitzgerald & Co.in September 2018 (the "2018 ATM Program"), Barclays Capital Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., Capital One Securities, Inc., Citigroup Global Markets Inc., Jefferies LLC, J.P. Morgan Securities LLC, Mitsubishi UFJ Securities (USA), Inc.,which was terminated upon the establishment of the 2021 ATM Program. For the years ended December 31, 2023 and UBS Securities LLC. In 2017,2022, the Company issued 345,444did not sell any shares of its common stock through the 2021 ATM Program. As of December 31, 2023, there were no outstanding forward purchase agreements, and $900.0 million of shares of common stock through its equity distribution program at an average price of $260.38 for proceeds of $89.1 million, net of fees and commissions. Theremain available to be sold under the 2021 ATM Program. For the year ended December 31, 2021, the Company did not issue any shares of its common stock pursuant to its equity distribution program in 2016. Duringthrough the first quarter of2021 ATM Program or through the 2018 through February 15, 2018, Essex has not issued any shares of common stock pursuant to this program. Under this program, Essex may from time to time sell shares of common stock into the existing trading market at current market prices, and the Company anticipates using the net proceeds, which are contributed to the Operating Partnership, to pay down debt, acquire apartment communities, fund redevelopment and development pipelines, and for general corporate purposes. As of February 15, 2018, Essex may sell an additional 4,654,556 shares under the current equity distribution program.ATM Program.


Capital Expenditures


Non-revenue generating capital expenditures are improvements and upgrades that extend the useful life of the property. For the year ended December 31, 2017,2023, non-revenue generating capital expenditures totaled approximately $1,351$2,531 per apartment home. These expenditures do not include the improvements required in connection with the origination of mortgage loans, expenditures for deferred maintenance on acquisition properties, expenditures for property renovations and improvements which are expected to generate additional revenue or cost savings, and do not include expenditures incurred due to changes in government regulations that the Company would not have incurred otherwise, retail, furniture and fixtures, or expenditures infor which the Company has been reimbursed or expects to be reimbursed. The Company expects that cash from operations and/or its lines of credit will fund such expenditures.


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Development and Predevelopment Pipeline


The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations. As of December 31, 2017,2023, the Company's development pipeline was comprised of five consolidated projects under development, twoone unconsolidated joint venture projectsproject under development aggregating 264 apartment homes and various consolidated predevelopment projects, aggregating 1,982 apartment homes, with total incurred costs of $557.0 million, and estimated$114.0 million. Estimated remaining project costs ofare approximately $752.0$12.0 million, $572.0$6.5 million of which represents the Company's share of the estimated remaining costs, for total estimated project costs of $1.3 billion.$126.0 million.
 
The Company defines predevelopment projects as proposed communities in negotiation or in the entitlement process with an expected high likelihood of becoming entitled development projects. The Company may also acquire land for future development purposes or sale.
 
The Company expects to fund the development and predevelopment pipelinecommunities by using a combination of some or all of the following sources: its working capital, amounts available on its lines of credit, construction loans, net proceeds from public and private equity and debt issuances, and proceeds from the disposition of assets, if any.

Redevelopment Pipeline

The Company defines redevelopment communities as existing properties owned or recently acquired, which have been targeted for additional investment by the Company with the expectation of increased financial returns through property improvement.  During redevelopment, apartment homes may not be available for rent and, as a result, may have less than stabilized operations.  As of December 31, 2017, the Company had ownership interests in five major redevelopment communities aggregating 1,727 apartment homes with estimated redevelopment costs of $138.8 million, of which approximately $43.6 million remains to be expended.



Alternative Capital Sources


The Company utilizes co-investments as an alternative source of capital for acquisitions of both operating and development communities. As of December 31, 2017,2023, the Company had an interest in 814264 apartment homes in communities actively under development with joint ventures for total estimated costs of $0.6 billion.$102.0 million. Total estimated remaining costs total approximately $0.4 billion,$12.0 million, of which the Company estimates that its remaining investment in these development joint ventures will be approximately $0.2 billion.$6.5 million. In addition, the Company had an interest in 10,81010,425 apartment homes in operating communities with joint ventures and other investments for a total book value of $0.8 billion.$437.4 million.


Contractual ObligationsReal Estate and CommercialOther Commitments


The following table summarizes our obligationsthe Company's unfunded real estate and other future commitments at December 31, 20172023 ($ in thousands):

Number of PropertiesInvestmentRemaining Commitment
Joint ventures (1):
Preferred equity investments2 $98,000 $38,000 
Non-core co-investments— 86,000 37,715 
Consolidated:
Mezzanine loans1 50,000 4,305 
 $234,000 $80,020 

  For the Fiscal Years Ending
  2018 
2019 and
2020
 
2021 and
2022
 Thereafter Total
Mortgage notes payable $202,131
 $1,255,310
 $87,312
 $435,808
 $1,980,561
Unsecured debt —
 75,000
 1,150,000
 2,300,000
 3,525,000
Lines of credit —
 —
 179,000
 —
 179,000
Interest on indebtedness (1)
 222,057
 366,826
 223,740
 272,432
 1,085,055
Ground leases 2,916
 5,832
 5,832
 104,054
 118,634
Operating leases 1,807
 3,792
 4,043
 8,307
 17,949
Development commitments (including co-investments) (2)
 294,098
 277,402
 —
 —
 571,500
  $723,009
 $1,984,162
 $1,649,927
 $3,120,601
 $7,477,699
(1) Excludes approximately $6.5 million of the Company's share of estimated project costs for LIVIA at Scripps Ranch which have been fully funded.


(1)
Interest on indebtedness for variable debt was calculated using interest rates as of December 31, 2017.
(2)
Estimated project cost for development of the Company's 500 Folsom project is net of a projected value for low-income housing tax credit proceeds and the value of the tax exempt bond structure.

At December 31, 2023, the Company had operating lease commitments of $155.1 million for ground, building and garage leases with maturity dates ranging from 2025 to 2083. $7.3 million of this commitment is due within the next twelve months.

Variable Interest Entities


In accordance with accounting standards for consolidation of variable interest entities ("VIEs"), the Company consolidatesconsolidated the Operating Partnership, 1618 DownREIT limited partnershipsentities (comprising eightnine communities), and eight co-investments.six co-investments as of December 31, 2023 and 2022. The Company consolidates these entities because it is deemed the primary beneficiary. The CompanyEssex has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the eightabove consolidated co-investments and 16 DownREIT limited partnerships,entities, net of intercompany eliminations, were approximately $837.7$956.7 million and $265.5$324.5 million, respectively, as of December 31, 2017,2023, and $746.1$939.4 million and $221.3$324.3 million, respectively, as of December 31, 2016.2022. Noncontrolling interests in these entities were $66.7$121.1 million and $45.4$121.5 million as of December 31, 20172023 and 2016,2022, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of December 31, 2017,2023, the Company did not have any other VIEs of which it was deemed to be the primary beneficiary and did not have any VIEsbeneficiary.
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Critical Accounting Policies and Estimates


The preparation of consolidated financial statements, in accordance with U.S. generally accepted accounting principles,GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The Company defines critical accounting policiesestimates as those accounting policies that requireinvolve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company's management to exercise their most difficult, subjective and complex judgments.financial condition or results of operations of the Company. The Company’s critical accounting policies and estimates relate principally to the following key areas: (i) accounting for business combinations; (ii) consolidation under applicable accounting standards for entities that are not wholly owned; (iii) assessing the carrying valuesacquisition of our real estate properties and investments in real estate; and advances to joint ventures(ii) evaluation of events and affiliates; and (iv) internal cost capitalization.changes in circumstances indicating whether the Company’s rental properties may be impaired. The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates made by management.



The Company accounts for its business combinations, including the merger and other acquisitions of investments in real estate by assessing each acquisition to determine if it meets the definition of a business or if it qualifies as an asset acquisition. We expect that acquisitions of individual operating communities will generally be viewed as asset acquisitions, and result in accordance with Accounting Standards Codification ("ASC") 805-10, "Business Combinations," which requires the acquired tangiblecapitalization of acquisition costs, and intangiblethe allocation of purchase price to the assets acquired and liabilities to be recorded at fair value, with excess purchase price, if any, recorded to goodwill. The Company must make significant assumptions in determiningassumed based on the relative fair value of the tangible and intangiblerespective assets and liabilities acquired and consideration transferred. The useliabilities.

In making estimates of different assumptions in estimating the fair value could affect the measurement and timingvalues for purposes of recognition of acquired assets and liabilities and related expenses.

The consideration transferred in a business combination is generally measured at fair value. For debt assumed byallocating purchase price, the Company the fair value is determined using estimatedutilizes a number of sources, including independent land appraisals which consider comparable market interest ratestransactions, its own analysis of recently acquired or developed comparable properties in our portfolio for debt with comparable terms in place at the time of the acquisition. For equity issued by the Company, the fair value is generally based on the fair value of the Company’s equity interests at the date of issuance.

The fair value of the tangible assets, which principally includes land comparables and building is determined first by valuing the property as a whole as if it were vacant, using stabilized net operating incomereplacement costs, and other publicly available market specific capitalization rates. The fair value of the land and building is then recorded based on its estimated fair value.

data. In calculating the fair value of identified intangible assets of an acquired property, the in-place leases are valued based on in-place rent rates and amortized over the average remaining term of all acquired leases. The allocation of the total consideration exchanged for a real estate acquisition between the identifiable assets and liabilities and the depreciation we recognize over the estimated useful life of the asset could be impacted by different assumptions and estimates used in the calculation. The reasonable likelihood that the estimate could have a material impact on the financial condition of the Company is based on the total consideration exchanged for real estate during any given year.


The Company assesses each entity in which it has an investment or contractual relationship to determine if it may be deemed to be a VIE. If such an entity is a VIE, then the Company performs an analysis to determine who is the primary beneficiary. If the Company is the primary beneficiary, then the entity is consolidated. The analysis required to identify VIEs and primary beneficiaries is complex and judgmental, and the analysis must be applied to various types of entities and legal structures.

The Companyperiodically assesses the carrying value of its real estate investments byfor indicators of impairment. The judgments regarding the existence of impairment indicators are based on monitoring investment market conditions and performance compared to budget for operating properties and joint ventures, and byincluding the net operating income for the most recent 12 month period, monitoring estimated costs for properties under development. Local market knowledgedevelopment, the Company's ability to hold and dataits intent with regard to each asset, and each property's remaining useful life. Although each of these may result in an impairment indicator, the shortening of an expected holding period due to the potential sale of a property is used to assess carrying values of properties and the market value of acquisition opportunities.most likely impairment indicator. Whenever events or changes in circumstances indicate that the carrying amount of a property held for investment may not be fully recoverable, the carrying amount is evaluated. If the sum of the property’s expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the property, then the Company will recognize an impairment loss equal to the excess of the carrying amount over the fair value of the property. Adverse changesChanges in operating and market conditions or poor operating resultsmay result in a change of our intent to hold the property through the end of its useful life and may impact the assumptions utilized to determine the future cash flows of the real estate investments could result in impairment charges. When the Company determines that a property is held for sale, it discontinues the periodic depreciation of that property. The criteria for determining when a property is held for sale requires judgment and has potential financial statement impact as depreciation would cease and an impairment loss could occur upon determination of held for sale status. Assets held for sale are reported at the lower of the carrying amount or estimated fair value less costs to sell.investment.

Further, the Company evaluates whether its co-investments are other than temporarily impaired and, if so, records an impairment loss equal to the excess of the co-investments' carrying value over its estimated fair value.

The Company capitalizes all direct and certain indirect costs, including interest and real estate taxes, incurred during development and redevelopment activities. Interest is capitalized on real estate assets that require a period of time to get them ready for their intended use. The amount of interest capitalized is based upon the average amount of accumulated development expenditures during the reporting period. Included in capitalized costs are management’s accounting estimates of the direct and incremental personnel costs and indirect project costs associated with the Company's development and redevelopment activities. Indirect project costs consist primarily of personnel costs associated with construction administration and development, including accounting, legal fees, and various corporate and community onsite costs that clearly relate to projects under development.


The Company bases its accounting estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions.



Funds from Operations Attributable to Common Stockholders and Unitholders

Funds from Operations Attributable to Common Stockholders and Unitholders ("FFO") is a financial measure that is commonly used in the REIT industry. The Company presents FFO and FFO excluding non-core items (referred to as "Core FFO") as supplemental operating performance measures. FFO and Core FFO are not used by the Company as, nor should they be considered to be, alternatives to net income computed under U.S. GAAP as an indicator of the Company’s operating performance or as alternatives to cash from operating activities computed under U.S. GAAP as an indicator of the Company's ability to fund its cash needs.

FFO and Core FFO are not meant to represent a comprehensive system of financial reporting and do not present, nor do they intend to present, a complete picture of the Company's financial condition and operating performance. The Company believes that net income computed under U.S. GAAP is the primary measure of performance and that FFO and Core FFO are only meaningful when they are used in conjunction with net income.

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The Company considers FFO and Core FFO to be useful financial performance measurements of an equity REIT because, together with net income and cash flows, FFO and Core FFO provide investors with additional bases to evaluate operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and to pay dividends. By excluding gains or losses related to sales of depreciated operating properties and land, excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates) and excluding impairment write-downs from operating real estate and unconsolidated co-investments driven by a measurable decrease in the fair value of real estate held by the co-investment, FFO can help investors compare the operating performance of a real estate company between periods or as compared to different companies. By further adjusting for items that are not considered part of the Company’s core business operations, Core FFO allows investors to compare the core operating performance of the Company to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. The Company believes that its consolidated financial statements, prepared in accordance with U.S. GAAP, provide the most meaningful picture of its financial condition and its operating performance.
In calculating FFO, the Company follows the definition for this measure published by NAREIT, which is the leading REIT industry association. The Company believes that, under the NAREIT FFO definition, the two most significant adjustments made to net income are (i) the exclusion of historical cost depreciation and (ii) the exclusion of gains and losses from the sale of previously depreciated properties. The Company agrees that these two NAREIT adjustments are useful to investors for the following reasons:
(a)historical cost accounting for real estate assets in accordance with U.S. GAAP assumes, through depreciation charges, that the value of real estate assets diminishes predictably over time. NAREIT stated in its White Paper on Funds from Operations “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves." Consequently, NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time and depreciation charges required by U.S. GAAP do not reflect the underlying economic realities.

(b)REITs were created as a legal form of organization in order to encourage public ownership of real estate as an asset class through investment in firms that were in the business of long-term ownership and management of real estate.  The exclusion, in NAREIT’s definition of FFO, of gains and losses from the sales of previously depreciated operating real estate assets allows investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT’s activity and assists in comparing those operating results between periods.

Management believes that it has consistently applied the NAREIT definition of FFO to all periods presented. However, there is judgment involved and other REITs' calculation of FFO may vary from the NAREIT definition for this measure, and thus their disclosure of FFO may not be comparable to the Company’s calculation.





















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The table below is a reconciliation of net income available to common stockholders to FFO and Core FFO for the years ended December 31, 2023, 2022, and 2021.

 As of and for the years ended December 31,
 202320222021
 ($ in thousands, except per share amounts)
OTHER DATA:
Funds from operations attributable to common stockholders and unitholders:
Net income available to common stockholders$405,825 $408,315 $488,554 
Adjustments:
Depreciation and amortization548,438 539,319 520,066 
Gains not included in FFO(59,238)(111,839)(145,253)
Casualty loss433 — — 
Impairment loss from unconsolidated co-investments33,700 2,105 — 
Depreciation and amortization from unconsolidated co-investments71,745 72,585 61,059 
Noncontrolling interest related to Operating Partnership units14,284 14,297 17,191 
Depreciation attributable to third party ownership and other (1)
(1,474)(1,421)(571)
Funds from operations attributable to common stockholders and unitholders$1,013,713 $923,361 $941,046 
Non-core items:   
Expensed acquisition and investment related costs595 2,132 203 
Tax expense (benefit) on unconsolidated co-investments (2)
697 (10,236)15,668 
Realized and unrealized (gains) losses on marketable securities, net(10,006)45,547 (36,504)
Provision for credit losses70 (381)141 
Equity (income) loss from non-core co-investments (3)
(1,685)38,045 (55,602)
  Loss on early retirement of debt, net— 2 19,010 
Loss on early retirement of debt from unconsolidated co-investment— 988 25 
Co-investment promote income— (17,076)— 
Income from early redemption of preferred equity investments and notes receivable(285)(1,669)(8,469)
General and administrative and other, net6,629 2,536 1,026 
Insurance reimbursements, legal settlements, and other, net(9,821)(5,392)(35,234)
Core funds from operations attributable to common stockholders and unitholders$999,907 $977,857 $841,310 
Weighted average number of shares outstanding, diluted (FFO) (4)
66,514 67,375 67,335 
Funds from operations attributable to common stockholders and unitholders per share - diluted$15.24 $13.70 $13.98 
Core funds from operations attributable to common stockholders and unitholders per share - diluted$15.03 $14.51 $12.49 

(1)The Company consolidates certain co-investments. The noncontrolling interest's share of net operating income in these investments for the twelve months ended December 31, 2023 was $3.3 million.
(2)Represents tax related to net unrealized gains or losses on technology co-investments.
(3)Represents the Company's share of co-investment or loss from technology co-investments.
(4)Assumes conversion of all outstanding OP Units into shares of the Company's common stock and excludes DownREIT limited partnership units.

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Net Operating Income


Net operating income (“NOI”("NOI") and Same-Property NOI are considered by management to be an important supplemental performance measuremeasures to earnings from operations included in the Company’s consolidated statements of income. The presentation of Same-Property NOI assists with the presentation of the Company’s operations prior to the allocation of depreciation and any corporate-level or financing-related costs. NOI reflects the operating performance of a community and allows for an easy comparison of the operating performance of individual communities or groups of communities. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impacts to overhead by acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets. The Company defines Same-Property NOI as Same-Property revenuerevenues less Same-Property operating expenses, including property taxes. Please see the reconciliation of earnings from operations to NOI and Same-Property NOI, which in the table below is the NOI for stabilized properties consolidated by the Company for the periods presented ($ in thousands):

 202320222021
Earnings from operations$584,342 $595,229 $529,995 
Adjustments:   
Corporate-level property management expenses45,872 40,704 36,211 
Depreciation and amortization548,438 539,319 520,066 
Management and other fees from affiliates(11,131)(11,139)(9,138)
General and administrative63,474 56,577 51,838 
Expensed acquisition and investment related costs595 2,132 203 
Casualty Loss433 — — 
Gain on sale of real estate and land(59,238)(94,416)(142,993)
NOI1,172,785 1,128,406 986,182 
Less: Non Same-Property NOI(54,179)(56,058)(45,149)
Same-Property NOI$1,118,606 $1,072,348 $941,033 
 2017 2016 2015
Earnings from operations$446,522
 $420,800
 $331,174
Adjustments: 
  
  
Depreciation and amortization468,881
 441,682
 453,423
Management and other fees from affiliates(9,574) (8,278) (8,909)
General and administrative41,385
 40,751
 40,090
Merger and integration expenses—
 —
 3,798
Acquisition and investment related costs1,569
 1,841
 2,414
NOI948,783
 896,796
 821,990
Less: Non Same-Property NOI(91,096) (73,549) (71,589)
Same-Property NOI$857,687
 $823,247
 $750,401


Forward-Looking Statements


Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Annual Report on Form 10-K which are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding the Company's expectations, estimates, assumptions, hopes, intentions, beliefs and strategies regarding the future. Words such as "expects," "assumes," "anticipates," “may,” “will,”"may," "will," "intends," "plans," "projects," "believes," "seeks," "future," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-lookingSuch forward-looking statements include, among other things, statements regarding the Company's expectations asrelated to the continued evolution of the work-from-home trend, the Company's intent, beliefs or expectations with respect to the timing of completion of current development and redevelopment projects and the stabilization dates of such projects, expectations as tothe timing of lease-up and occupancy of its apartment communities, the anticipated operating performance of its apartment communities, the total projected costs of development and redevelopment projects, beliefsco-investment activities, qualification as a REIT under the Internal Revenue Code of 1986, as amended, the Company’s first quarter and full-year 2024 guidance (including net income, Total FFO and Core FFO and related assumptions, including with respect to GDP growth, job growth and market rent growth), 2024 same-property revenue, new housing growth, operating expenses and net operating income generally and in specific regions, the real estate markets in the geographies in which the Company's properties are located and in the United States in general, the adequacy of future cash flows to meet anticipated cash needs, expectations as to the amount of non-revenue generating capital expenditures, future acquisitions, the Company's development and redevelopment pipeline and the sources of funding for it, the anticipated performance of existing properties, anticipated property and growth trends in various geographic regions, statements regarding the Company’s expected 2018 Same-Property revenue generally and in various areas, and 2018 Same-Property operating expenses, statements regarding the Company'sits financing activities and the use of proceeds from such activities.activities, the availability of debt and equity financing, general economic conditions including the potential impacts from such economic conditions, inflation, the labor market, supply chain impacts, geopolitical tensions and regional conflicts, trends affecting the Company's financial condition or results of operations, changes to U.S. tax laws and regulations in general or specifically related to REITs or real estate, changes to laws and regulations in jurisdictions in which communities the Company owns are located, and other information that is not historical information.


SuchWhile the Company's management believes the assumptions underlying its forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other factors, including,many of which are beyond the Company’s control, which could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect the Company’s current expectations of the approximate outcomes of the matters discussed.
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Factors that might cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, that the Company may fail to achieve its business objectives, that the actual completionfollowing: potential future outbreaks of development and redevelopment projects will be subject to delays, that the stabilization dates of such projects will be delayed, that the total projected costs of current development and redevelopment projects will exceed expectations, that such development and redevelopment projects will not be completed, that development and redevelopment projects and acquisitions will fail to meet expectations, that estimates of future income from acquired properties may prove to be inaccurate, that there may be increased interest rates and operating costs, that future cash flows will be inadequate to meet operating requirements and/infectious diseases or will be insufficient to provide for dividend payments in accordance with REIT requirements, that actual non-revenue generating capital expenditures may exceedother health concerns, which could adversely affect the Company's current expectations, that there may bebusiness and its tenants, and cause a significant downturn in general economic conditions, the real estate industry, and the markets in which the Company's communities are located, thatlocated; the Company may fail to achieve its business objectives; the actual completion of development and redevelopment projects may be subject to delays; the stabilization dates of such projects may be delayed; the Company may abandon or defer development or redevelopment projects for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; the total projected costs of current development and redevelopment projects may exceed expectations; such development and redevelopment projects may not be completed; development and redevelopment projects and acquisitions may fail to meet expectations; estimates of future income from an acquired property may prove to be inaccurate; occupancy rates and rental demand may be adversely affected by competition and local economic and market conditions; there may be increased interest rates, inflation, escalated operating costs and possible recessionary impacts; geopolitical tensions and regional conflicts, and the related impacts on macroeconomic conditions, including, among other things, interest rates and inflation; the Company may be unsuccessful in the management of its relationships with its co-investment partners; future cash flows may be inadequate to meet operating requirements and/or may be insufficient to provide for dividend payments in accordance with REIT requirements; changes in laws or regulations; the terms of any refinancing may not be as favorable as the terms of existing indebtedness, as well asindebtedness; unexpected difficulties in leasing of development projects; volatility in financial and securities markets; the Company’s failure to successfully operate acquired properties; unforeseen consequences from cyber-intrusion; the Company’s inability to maintain our investment grade credit rating with the rating agencies; government approvals, actions and initiatives, including the need for compliance with environmental requirements; and those further risks, special considerations, and other factors discussed in Item 1A, Risk Factors, of this Form 10-K, and those risk factors and special considerations set forth in the Company’s other filings with the SEC which may cause the actual results, performance or achievements of the Company to be materially different from any

future results, performance or achievements expressed or implied by such forward-looking statements. All forward-looking statements are made as of today, andthe date hereof, the Company assumes no obligation to update or supplement this information.information for any reason, and therefore, they may not represent the Company's estimates and assumptions after the date of this report.


Item 7A. Quantitative and Qualitative Disclosures About Market Risks


Interest Rate Hedging Activities


The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, the Company uses interest rate swaps as part of its cash flow hedging strategy. As of December 31, 2017,2023, the Company had entered into fiveone interest rate swap contractscontract to mitigate the risk of changes in the interest-related cash outflows on $175.0$300.0 million of the five-year unsecured term debt.loan. As of December 31, 2017,2023, the Company also had $270.2$222.7 million of secured variable rate indebtedness, of which $20.7 million is subject to interest rate cap protection. One interest rate cap with a notional balance of $10.8 million matured on January 1, 2018. All of theindebtedness. The Company’s interest rate swaps wereswap was designated as a cash flow hedgeshedge as of December 31, 2017.2023. The following table summarizes the notional amount, carrying value, and estimated fair value of the Company’s cash flow hedge derivative instruments used to hedge interest rates as of December 31, 2017.2023. The notional amount represents the aggregate amount of a particular security that is currently hedged at one time, but does not represent exposure to credit, interest rates or market risks. The table also includes a sensitivity analysis to demonstrate the impact on the Company’s derivative instruments from an increase or decrease in 10-year Treasury bill interest rates by 50 basis points, as of December 31, 2017.2023.


 Notional
Amount		Maturity
Date Range		Carrying and
Estimated
Fair Value		Estimated Carrying Value
 +50-50
($ in thousands)Basis PointsBasis Points
Cash flow hedges:  
Interest rate swaps$300,000 2026$4,274 $7,961 $502 
Total cash flow hedges$300,000 2026$4,274 $7,961 $502 
      Carrying and Estimated Carrying Value
    Maturity Estimated + 50 - 50
($ in thousands)
 Notional Amount Date Range Fair Value Basis Points Basis Points
Cash flow hedges:        
  
Interest rate swaps $175,000
 2022 $5,363
 $8,702
 $2,009
Interest rate caps 20,674
 2018-2019 —
 —
 —
Total cash flow hedges $195,674
 2017-2022 $5,363
 $8,702
 $2,009


Additionally, the Company has entered into total return swap contracts, with an aggregate notional amount of $256.6$222.7 million that effectively convert $256.6$222.7 million of fixed mortgage notes payable to a floating interest rate based on the SIFMA plus a spread and have a carrying value of zero at December 31, 2017.2023. The Company is exposed to insignificant interest rate risk on these total return swaps as the related mortgages are callable, at par, by the Company, co-terminus with the termination of any related swap. These derivatives do not qualify for hedge accounting.



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Interest Rate Sensitive Liabilities


The Company is exposed to interest rate changes primarily as a result of its lines of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Company’s real estate investment portfolio and operations. The Company’s interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives, the Company borrows primarily at fixed rates and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate its interest rate risk on a related financial instrument. The Company does not enter into derivative or interest rate transactions for speculative purposes.


The Company’s interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows. Management has estimated that the fair value of the Company’s $4.9$5.7 billion of fixed rate debt including premiums, discounts and debt financing costs, at December 31, 2017,2023, to be $5.0$5.3 billion. Management has estimated the fair value of the Company’s $792.9$522.7 million of variable rate debt net of debt financing costs, at December 31, 2017,2023, to be $793.9$519.0 million based on the terms of existing mortgage notes payable and variable rate demand notes compared to those available in the marketplace. The following table represents scheduled principal payments ($ in thousands):

 For the Years Ended December 31,
 ($ in thousands, except for interest rates)2018 2019 2020 2021 2022 ThereafterTotal Fair value
Fixed rate debt 
$201,589 $634,797 $694,273 $544,138 $341,692 $2,468,860
$4,885,349
 $4,969,682
Average interest rate5.5% 4.1% 4.8% 4.3% 3.7% 3.5% 
  
Variable rate debt (1)
$542
 $592
 $179,648
 $708
 $350,774
 $266,948
$799,212
 $793,866
Average interest rate2.1% 2.1% 2.3% 2.1% 2.4% 2.0% 
  
 For the Years Ended December 31,
 ($ in thousands, except for interest rates)20242025202620272028ThereafterTotalFair value
Fixed rate debt
$402,177$632,035$548,291$419,558$517,000$3,198,000$5,717,061$5,299,805 
Average interest rate4.0 %3.5 %3.5 %3.8 %2.2 %3.3 %  
Variable rate debt (1)
$932$1,019$1,114$384,397$1,332$133,937$522,731 $519,003 
Average interest rate4.7 %4.7 %4.7 %4.2 %4.7 %4.6 %  
 
(1)
$195.7 million is subject to interest rate protection agreements ($175.0 million is subject to interest rate swaps and $20.7 million is subject to interest rate caps, $10.8 million of which matured on January 1, 2018). $256.6 million is subject to total return swaps.

(1)$222.7 million of variable rate debt is tax exempt to the note holders.

The table incorporates only those exposures that exist as of December 31, 2017; it2023. It does not consider those exposures or positions that could arise after that date. As a result, the Company’s ultimate realized gain or loss, with respect to interest rate fluctuations and hedging strategies would depend on the exposures that arise prior to settlement.


Item 8. Financial Statements and Supplementary Data


The response to this item is submitted as a separate section of this Form 10-K. See Item 15.


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


Not applicable.


Item 9A. Controls and Procedures


Essex Property Trust, Inc.


As of December 31, 2017,2023, Essex carried out an evaluation, under the supervision and with the participation of management, including Essex's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Essex's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, Essex’s Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2017,2023, Essex’s disclosure controls and procedures were effective to ensure that the information required to be disclosed by Essex in the reports that Essex files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that Essex files or submits under the Exchange Act is accumulated and communicated to Essex’s management, including Essex’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.


There were no changes in Essex’s internal control over financial reporting, that occurred during the quarter ended December 31, 2017,2023, that have materially affected, or are reasonably likely to materially affect, Essex’s internal control over financial reporting.

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Management’s Report on Internal Control Over Financial Reporting


Essex’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Essex’s management assessed the effectiveness of Essex’s internal control over financial reporting as of December 31, 2017.2023. In making this assessment, Essex’s management used the criteria set forth in the report entitled “Internal"Internal Control-Integrated Framework (2013)”" published by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”("COSO"). Essex’s management has concluded that, as of December 31, 2017,2023, its internal control over financial reporting was effective based on these criteria. Essex’s independent registered public accounting firm, KPMG LLP, has issued an attestation report over Essex’s internal control over financial reporting, which is included herein.




Essex Portfolio, L.P.


As of December 31, 2017,2023, the Operating Partnership carried out an evaluation, under the supervision and with the participation of management, including Essex's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Operating Partnership's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2017,2023, the Operating Partnership’s disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Operating Partnership in the reports that the Operating Partnership files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that the Operating Partnership files or submits under the Exchange Act is accumulated and communicated to the Operating Partnership’s management, including Essex's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.


There were no changes in the Operating Partnership’s internal control over financial reporting, that occurred during the quarter ended December 31, 2017,2023, that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.


Management’s Report on Internal Control Over Financial Reporting


The Operating Partnership’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). The Operating Partnership’s management assessed the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2017.2023. In making this assessment, the Operating Partnership’s management used the criteria set forth in the report entitled “Internal"Internal Control-Integrated Framework (2013)”" published by COSO. The Operating Partnership’s management has concluded that, as of December 31, 2017,2023, its internal control over financial reporting was effective based on these criteria.

Item 9B. Other Information

Securities Trading Plans of Directors and Executive Officers
None.During the three months ended December 31, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non Rule 10b5-1 trading arrangement."

Severance Plan
On February 21 2024, the Company’s Board adopted the Amended and Restated Essex Property Trust, Inc. Executive Severance Plan (the “Severance Plan”) replacing the existing severance plan dating from 2013.The Severance Plan provides for the payment of severance and other benefits to participants in the event of a qualifying termination of employment with the Company.Each of the Company’s executive officers is eligible to participate in the Severance Plan.

Under the Severance Plan, in the event of a termination of employment by the Company without cause, outside of the change in control context, an executive will be eligible to receive a lump-sum cash payment equal to the sum of (i) a number of weeks’ base salary, determined based on the executive’s number of completed years of service at the time of termination, with a maximum of 52 weeks (or 24 months’ base salary for the Chief Executive Officer (“CEO”)), plus (ii) his or her pro-rated target annual bonus for the year of termination.

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In the event of a termination of employment by the Company in the change of control context, an executive will be eligible to receive: (i) a lump-sum cash payment equal to 24 months’ base salary (36 months’ base salary for the CEO), plus two-times (three-times for the CEO) his or her target annual bonus for the year of termination; plus (ii) accelerated vesting of each outstanding equity award held by the executive as of his or her termination date (except for performance-vesting awards granted prior to the change in control, which will continue to be governed by the terms of the applicable award agreement); plus (iii) the extension of other in-place benefits as set forth in the Severance Plan.

An executive’s right to receive the severance payments and benefits described above is subject to his or her delivery and non-revocation of a general release of claims in favor of the Company, and his or her continued compliance with any applicable restrictive covenants.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.
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PART III


Item 10. Directors, Executive Officers and Corporate Governance


The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20182024 Annual Meeting of Stockholders, under the heading “Board"Board and Corporate Governance Matters,”" to be filed with the SEC within 120 days of December 31, 2017.2023.


Item 11. Executive Compensation
 
The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20182024 Annual Meeting of Stockholders, under the headings “Executive Compensation”"Executive Compensation" and “Director"Director Compensation,”" to be filed with the SEC within 120 days of December 31, 2017.2023.


Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20182024 Annual Meeting of Stockholders, under the heading “Security"Security Ownership of Certain Beneficial Owners and Management,”" to be filed with the SEC within 120 days of December 31, 2017.2023.
 
Item 13. Certain Relationships and Related Transactions and Director Independence


The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20182024 Annual Meeting of Stockholders, under the heading “Certain"Certain Relationships and Related Persons Transactions,”" to be filed with the SEC within 120 days of December 31, 2017.2023.



Item 14. Principal Accounting Fees and Services


The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20182024 Annual Meeting of Stockholders, under the headings “Report"Report of the Audit Committee”Committee" and “Fees"Fees Paid to KPMG LLP,”" to be filed with the SEC within 120 days of December 31, 2017.2023.



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PART IV


Item 15. Exhibits and Financial Statement Schedules

(A) Financial Statements
(1)   Consolidated Financial Statements of Essex Property Trust, Inc.Page
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 185)
F-1
Consolidated Balance Sheets: As of December 31, 20172023 and 20162022
F- 46
Consolidated Statements of Income: Years ended December 31, 2017, 2016,2023, 2022, and 20152021
F- 57
Consolidated Statements of Comprehensive Income: Years ended December 31, 2017, 2016,2023, 2022, and 20152021
F- 68
Consolidated Statements of Equity: Years ended December 31, 2017, 2016,2023, 2022, and 20152021
F- 79
Consolidated Statements of Cash Flows: Years ended December 31, 2017, 2016,2023, 2022, and 20152021
F- 1011
Notes to Consolidated Financial Statements
F- 1920
(2)   Consolidated Financial Statements of Essex Portfolio, L.P.
Report of Independent Registered Public Accounting Firm
F- 34
Consolidated Balance Sheets: As of December 31, 20172023 and 20162022
F- 1213
Consolidated Statements of Income: Years ended December 31, 2017, 2016,2023, 2022, and 20152021
F- 1314
Consolidated Statements of Comprehensive Income: Years ended December 31, 2017, 2016,2023, 2022, and 20152021
F- 1415
Consolidated Statements of Capital: Years ended December 31, 2017, 2016,2023, 2022, and 20152021
F- 1516
Consolidated Statements of Cash Flows: Years ended December 31, 2017, 2016,2023, 2022, and 20152021
F- 1718
Notes to Consolidated Financial Statements
F- 1920
(3)  Financial Statement Schedule – Schedule III – Real Estate and Accumulated Depreciation as of December 31, 20172023
F- 5156
(4)   See the Exhibit Index immediately followingpreceding the signature page and certifications for a list of exhibits filed or incorporated by reference as part of this report.
 
(B) Exhibits

The Company hereby files, as exhibits to this Form 10-K, those exhibits listed on the Exhibit Index referenced in Item 15(A)(4) above.


Item 16. Form 10-K Summary

None.
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Report of Independent Registered Public Accounting Firm


To the Stockholders and Board of Directors
Essex Property Trust, Inc.:


Opinion on the ConsolidatedFinancial Statements

We have audited the accompanying consolidated balance sheets of Essex Property Trust, Inc. and subsidiaries (the Company) as of December 31, 20172023 and 2016,2022, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2017,2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20172023 and 2016,2022, and the results of its
operations and its cash flows for each of the years in the three-year period ended December 31, 2017,2023, in conformity with U.S. generally accepted accounting principles.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control – Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 22, 201823, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.


Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.


Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of events or changes in circumstances that indicate rental properties may be impaired

As discussed in Note 2(d) to the consolidated financial statements, the Company evaluates the carrying amount of rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of a rental property may be impaired. As of December 31, 2023, the Company had $10.5 billion in rental properties.

We identified the evaluation of events or changes in circumstances that indicate rental properties may be impaired as a critical audit matter. Specifically, subjective auditor judgment was required to evaluate the length of the period the Company expects to receive cash flows from the rental property. Changes to shorten the period the Company expects to receive cash flows from the rental property could indicate a potential impairment.

F- 1
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The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to evaluate events or changes in circumstances that would indicate rental properties may be impaired. This included controls related to the process for determining the length of the period the Company expects to receive cash flows from the rental property. We evaluated the Company’s assessment by (1) inquiring with the Company about events or changes in circumstances considered by the Company, (2) considering certain factors related to the current economic environment, and (3) reading board of director’s minutes and external communications with investors and analysts.

/S/ KPMG LLP
s/ KPMG LLP

We have served as the Company’s auditor since 1994.


San Francisco, California
February 22, 201823, 2024

F- 2
Table of Contents
Report of Independent Registered Public Accounting Firm


To the Stockholders and Board of Directors
Essex Property Trust, Inc.:


Opinion on Internal Control Over Financial Reporting

We have audited Essex Property Trust, Inc. and subsidiaries’subsidiaries' (the Company) internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control – Integrated Framework (2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.


We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 20172023 and 2016,2022, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2017,2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 22, 201823, 2024 expressed an unqualified opinion on those consolidated financial statements.


Basis for Opinion


The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’sManagement's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.


Definition and Limitations of Internal Control Over Financial Reporting


A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/S/ KPMG LLP
s/ KPMG LLP

San Francisco, California
February 22, 201823, 2024

F- 3
Table of Contents
Report of Independent Registered Public Accounting Firm


To the Unitholders and General Partner
Partners of Essex Portfolio, L.P. and the Board of Directors of Essex Property Trust, Inc.:


Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Essex Portfolio, L.P. and subsidiaries (the Operating Partnership) as of December 31, 20172023 and 2016,2022, the related consolidated statements of income, comprehensive income, capital, and cash flows for each of the years in the three‑yearthree-year period ended December 31, 2017,2023, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership as of December 31, 20172023 and 2016,2022, and the results of its operations and its cash flows for each of the years in the three‑yearthree-year period ended December 31, 2017,2023, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of events or changes in circumstances that indicate rental properties may be impaired

As discussed in Note 2(d) to the consolidated financial statements, the Operating Partnership evaluates the carrying amount of rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of a rental property may be impaired. As of December 31, 2023, the Operating Partnership had $10.5 billion in rental properties.

We identified the evaluation of events or changes in circumstances that indicate rental properties may be impaired as a critical audit matter. Specifically, subjective auditor judgment was required to evaluate the length of the period the Operating Partnership expects to receive cash flows from the rental property. Changes to shorten the period the Operating Partnership expects to receive cash flows from the rental property could indicate a potential impairment.

F- 4
Table of Contents
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Operating Partnership’s process to evaluate events or changes in circumstances that would indicate rental properties may be impaired. This included controls related to the process for determining the length of the period the Operating Partnership expects to receive cash flows from the rental property. We evaluated the Operating Partnership’s assessment by (1) inquiring with the Operating Partnership about events or changes in circumstances considered by the Operating Partnership, (2) considering certain factors related to the current economic environment, and (3) reading board of director’s minutes and external communications with investors and analysts.

/S/ KPMG LLP
s/ KPMG LLP


We have served as the Company’sOperating Partnership's auditor since 2013.


San Francisco, California
February 22, 201823, 2024

F- 5
Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 20172023 and 20162022
(Dollars in thousands, except share amounts)  
 20232022
ASSETS
Real estate:
Rental properties:
Land and land improvements$3,036,912 $3,043,321 
Buildings and improvements13,098,311 12,922,906 
 16,135,223 15,966,227 
Less: accumulated depreciation(5,664,931)(5,152,133)
 10,470,292 10,814,094 
Real estate under development23,724 24,857 
Co-investments1,061,733 1,127,491 
 11,555,749 11,966,442 
Cash and cash equivalents-unrestricted391,749 33,295 
Cash and cash equivalents-restricted8,585 9,386 
Marketable securities, net of allowance for credit losses of zero as of both December 31, 2023 and December 31, 202287,795 112,743 
Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.3 million as of December 31, 2023 and December 31, 2022 (includes related party receivables of $6.1 million and $7.0 million as of December 31, 2023 and December 31, 2022, respectively)174,621 103,045 
Operating lease right-of-use assets63,757 67,239 
Prepaid expenses and other assets79,171 80,755 
Total assets$12,361,427 $12,372,905 
LIABILITIES AND EQUITY
Unsecured debt, net$5,318,531 $5,312,168 
Mortgage notes payable, net887,204 593,943 
Lines of credit— 52,073 
Accounts payable and accrued liabilities176,401 165,461 
Construction payable20,659 23,159 
Dividends payable155,695 149,166 
Distributions in excess of investments in co-investments65,488 42,532 
Operating lease liabilities65,091 68,696 
Other liabilities46,175 43,441 
Total liabilities6,735,244 6,450,639 
Commitments and contingencies
Redeemable noncontrolling interest32,205 27,150 
Equity:  
Common stock; $0.0001 par value, 670,000,000 shares authorized; 64,203,497 and 64,604,603 shares issued and outstanding, respectively6 6 
Additional paid-in capital6,656,720 6,750,076 
Distributions in excess of accumulated earnings(1,267,536)(1,080,176)
Accumulated other comprehensive income, net33,556 46,466 
Total stockholders' equity5,422,746 5,716,372 
Noncontrolling interest171,232 178,744 
Total equity5,593,978 5,895,116 
Total liabilities and equity$12,361,427 $12,372,905 
 2017 2016
ASSETS
Real estate:   
Rental properties:   
Land and land improvements$2,719,064
 $2,559,743
Buildings and improvements10,629,767
 10,116,563
 13,348,831
 12,676,306
Less: accumulated depreciation(2,769,297) (2,311,546)
 10,579,534
 10,364,760
Real estate under development355,735
 190,505
Co-investments1,155,984
 1,161,275
Real estate held for sale, net—
 101,957
 12,091,253
 11,818,497
Cash and cash equivalents-unrestricted44,620
 64,921
Cash and cash equivalents-restricted16,506
 105,381
Marketable securities190,004
 139,189
Notes and other receivables (includes related party receivables of $41.2 million and
   $11.3 million as of December 31, 2017 and December 31, 2016, respectively)
100,926
 40,970
Prepaid expenses and other assets52,397
 48,450
Total assets$12,495,706
 $12,217,408
LIABILITIES AND EQUITY
Unsecured debt, net$3,501,709
 $3,246,779
Mortgage notes payable, net2,008,417
 2,191,481
Lines of credit179,000
 125,000
Accounts payable and accrued liabilities127,501
 138,226
Construction payable51,770
 35,909
Dividends payable121,420
 110,170
Distributions in excess of investments in co-investments36,726
 —
Other liabilities33,132
 32,922
Total liabilities6,059,675
 5,880,487
Commitments and contingencies

 

Redeemable noncontrolling interest39,206
 44,684
Equity: 
  
Common stock; $0.0001 par value, 670,000,000 shares authorized; 66,054,399 and 65,527,993 shares issued and outstanding, respectively7
 6
Additional paid-in capital7,129,571
 7,029,679
Distributions in excess of accumulated earnings(833,726) (805,409)
Accumulated other comprehensive loss, net(18,446) (32,098)
Total stockholders' equity6,277,406
 6,192,178
Noncontrolling interest119,419
 100,059
Total equity6,396,825
 6,292,237
Total liabilities and equity$12,495,706
 $12,217,408


See accompanying notes to consolidated financial statements.

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Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 2017, 20162023, 2022 and 20152021
(Dollars in thousands, except per share and share amounts)
 202320222021
Revenues:
Rental and other property$1,658,264 $1,595,675 $1,431,418 
Management and other fees from affiliates11,131 11,139 9,138 
 1,669,395 1,606,814 1,440,556 
Expenses:   
Property operating, excluding real estate taxes299,672 283,351 264,869 
Real estate taxes185,807 183,918 180,367 
Corporate-level property management expenses45,872 40,704 36,211 
Depreciation and amortization548,438 539,319 520,066 
General and administrative63,474 56,577 51,838 
Expensed acquisition and investment related costs595 2,132 203 
Casualty loss433 — — 
 1,144,291 1,106,001 1,053,554 
Gain on sale of real estate and land59,238 94,416 142,993 
Earnings from operations584,342 595,229 529,995 
Interest expense(212,905)(204,798)(203,125)
Total return swap income3,148 7,907 10,774 
Interest and other income (loss)46,259 (19,040)98,744 
Equity income from co-investments10,561 26,030 111,721 
Tax (expense) benefit on unconsolidated co-investments(697)10,236 (15,668)
Loss on early retirement of debt, net— (2)(19,010)
Gain on remeasurement of co-investment— 17,423 2,260 
Net income430,708 432,985 515,691 
Net income attributable to noncontrolling interest(24,883)(24,670)(27,137)
Net income available to common stockholders$405,825 $408,315 $488,554 
Per share data:   
Basic:   
Net income available to common stockholders$6.32 $6.27 $7.51 
Weighted average number of shares outstanding during the year64,252,232 65,079,764 65,051,465 
Diluted:   
Net income available to common stockholders$6.32 $6.27 $7.51 
Weighted average number of shares outstanding during the year64,253,385 65,098,186 65,088,874 
 2017 2016 2015
Revenues:     
Rental and other property$1,354,325
 $1,285,723
 $1,185,498
Management and other fees from affiliates9,574
 8,278
 8,909
 1,363,899
 1,294,001
 1,194,407
Expenses: 
  
  
Property operating, excluding real estate taxes259,232
 249,765
 234,953
Real estate taxes146,310
 139,162
 128,555
Depreciation and amortization468,881
 441,682
 453,423
General and administrative41,385
 40,751
 40,090
Merger and integration expenses—
 —
 3,798
Acquisition and investment related costs1,569
 1,841
 2,414
 917,377
 873,201
 863,233
Earnings from operations446,522
 420,800
 331,174
Interest expense(222,894) (219,654) (204,827)
Total return swap income10,098
 11,716
 5,655
Interest and other income24,604
 27,305
 19,143
Equity income from co-investments86,445
 48,698
 21,861
Loss on early retirement of debt(1,796) (606) (6,114)
Gain on sale of real estate and land26,423
 154,561
 47,333
Deferred tax expense on gain on sale of real estate and land—
 (4,410) —
Gain on remeasurement of co-investment88,641
 —
 34,014
Net income458,043
 438,410
 248,239
Net income attributable to noncontrolling interest(24,984) (23,431) (16,119)
Net income attributable to controlling interest433,059
 414,979
 232,120
Dividends to preferred stockholders—
 (1,314) (5,255)
Excess of redemption value of preferred stock over the carrying value—
 (2,541) —
Net income available to common stockholders$433,059
 $411,124
 $226,865
Per share data: 
  
  
Basic: 
  
  
Net income available to common stockholders$6.58
 $6.28
 $3.50
Weighted average number of shares outstanding during the year65,829,155
 65,471,540
 64,871,717
Diluted: 
  
  
Net income available to common stockholders$6.57
 $6.27
 $3.49
Weighted average number of shares outstanding during the year65,898,255
 65,587,816
 65,061,685


See accompanying notes to consolidated financial statements.

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Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Years ended December 31, 2017, 20162023, 2022 and 20152021
(Dollars in thousands)
 202320222021
Net income$430,708 $432,985 $515,691 
Other comprehensive income (loss):   
Change in fair value of derivatives and amortization of swap settlements(13,364)54,158 9,170 
Change in fair value of marketable debt securities, net— 233 329 
Reversal of unrealized gains upon the sale of marketable debt securities— (577)— 
Total other comprehensive (loss) income(13,364)53,814 9,499 
Comprehensive income417,344 486,799 525,190 
Comprehensive income attributable to noncontrolling interest(24,429)(26,466)(27,459)
Comprehensive income attributable to controlling interest$392,915 $460,333 $497,731 
 2017 2016 2015
Net income$458,043
 $438,410
 $248,239
Other comprehensive income (loss): 
  
  
Change in fair value of derivatives and amortization of swap settlements12,744
 15,926
 7,893
Changes in fair value of marketable securities, net3,284
 (828) 1,865
Reversal of unrealized gains upon the sale of marketable securities(1,909) (4,848) —
Total other comprehensive income14,119
 10,250
 9,758
Comprehensive income472,162
 448,660
 257,997
Comprehensive income attributable to noncontrolling interest(25,451) (23,768) (16,436)
Comprehensive income attributable to controlling interest$446,711
 $424,892
 $241,561


See accompanying notes to consolidated financial statements.

F- 8
Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Equity
Years ended December 31, 2017, 20162023, 2022 and 20152021
(Dollars and shares in thousands)
 Common stockAdditional
paid-in
capital		Distributions
in excess of
accumulated
earnings		Accumulated
other
comprehensive
income (loss), net		Noncontrolling
interest		Total
 SharesAmount
Balances at December 31, 202064,999 $6 $6,876,326 $(861,193)$(14,729)$182,782 $6,183,192 
Net income— — — 488,554 — 27,137 515,691 
Change in fair value of derivatives and amortization of swap settlements— — — — 8,859 311 9,170 
Change in fair value of marketable debt securities, net— — — — 318 11 329 
Issuance of common stock under:
Stock option and restricted stock plans, net279 1 53,051 — — — 53,052 
Sale of common stock, net— — (455)— — — (455)
Equity based compensation costs— — 11,286 — — 397 11,683 
Retirement of common stock, net(40)— (9,172)— — — (9,172)
Changes in the redemption value of redeemable noncontrolling interest— — (7,489)— — 599 (6,890)
Contributions from noncontrolling interest— — — — — 1,900 1,900 
Distributions to noncontrolling interest— — — — — (29,341)(29,341)
Redemptions of noncontrolling interest10 — (7,566)— — (891)(8,457)
Common stock dividends ($8.36 per share)— — — (544,194)— — (544,194)
Balances at December 31, 202165,248 $7 $6,915,981 $(916,833)$(5,552)$182,905 $6,176,508 
Net income— — — 408,315 — 24,670 432,985 
Reversal of unrealized gains upon the sale of marketable debt securities— — — — (557)(20)(577)
Change in fair value of derivatives and amortization of swap settlements— — — — 52,351 1,807 54,158 
Change in fair value of marketable debt securities, net— — — — 224 9 233 
Issuance of common stock under:
Stock option and restricted stock plans, net89 — 17,309 — — — 17,309 
Sale of common stock, net— — (314)— — — (314)
Equity based compensation costs— — 11,059 — — 387 11,446 
Retirement of common stock, net(740)(1)(189,725)— — — (189,726)
F- 9
Table of Contents
Changes in the redemption value of redeemable noncontrolling interest
Changes in the redemption value of redeemable noncontrolling interest
Changes in the redemption value of redeemable noncontrolling interest
Contributions from noncontrolling interest
Distributions to noncontrolling interest
Redemptions of noncontrolling interest
Common stock dividends ($8.80 per share)
Balances at December 31, 2022
Net income
Series H
Preferred stock
 Common stock 
Additional
paid-in
 
Distributions
in excess of
accumulated
 
Accumulated
other
comprehensive
 Noncontrolling  
Shares Amount Shares Amount capital earnings loss, net Interest Total
Balances at December 31, 20142,950
 $73,750
 63,683
 $6
 $6,651,165
 $(650,797) $(51,452) $113,396
 $6,136,068
Net income—
 —
 —
 —
 —
 232,120
 —
 16,119
 248,239
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 —
 —
 7,637
 256
 7,893
Change in fair value of marketable securities, net—
 —
 —
 —
 —
 —
 1,804
 61
 1,865
Change in fair value of derivatives and amortization of swap settlements
Change in fair value of derivatives and amortization of swap settlements
Issuance of common stock under:                 
Stock option and restricted stock plans, net
Stock option and restricted stock plans, net
Stock option and restricted stock plans, net—
 —
 207
 —
 26,540
 —
 —
 —
 26,540
Sale of common stock, net—
 —
 1,482
 —
 332,137
 —
 —
 —
 332,137
Equity based compensation costs—
 —
 —
 —
 5,946
 —
 —
 3,700
 9,646
Reclassification of noncontrolling interest to redeemable noncontrolling interest—
 —
 —
 —
 (7,657) —
 —
 (12,115) (19,772)
Retirement of common stock, net
Changes in the redemption value of redeemable noncontrolling interest—
 —
 —
 —
 (2,615) —
 —
 —
 (2,615)
Distributions to noncontrolling interest—
 —
 —
 —
 —
 —
 —
 (21,705) (21,705)
Redemptions of noncontrolling interest—
 —
 7
 —
 (2,199) —
 —
 (422) (2,621)
Common and preferred stock dividends—
 —
 —
 —
 —
 (378,652) —
 —
 (378,652)
Balances at December 31, 20152,950
 $73,750
 65,379
 $6
 $7,003,317
 $(797,329) $(42,011) $99,290
 $6,337,023
Net income—
 —
 —
 —
 —
 414,979
 —
 23,431
 438,410
Reversal of unrealized gains upon the sale of marketable securities—
 —
 —
 —
 —
 —
 (4,689) (159) (4,848)
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 —
 —
 15,403
 523
 15,926
Change in fair value of marketable securities, net—
 —
 —
 —
 —
 —
 (801) (27) (828)
Common stock dividends ($9.24 per share)
Balances at December 31, 2023

Issuance of common stock under:                 
Stock option and restricted stock plans, net—
 —
 140
 —
 18,949
 —
 —
 —
 18,949
Sale of common stock, net—
 —
 —
 —
 (384) —
 —
 —
 (384)
Equity based compensation costs—
 —
 —
 —
 8,246
 —
 —
 2,653
 10,899
Redemption of Series H preferred stock(2,950) (73,750) —
 —
 2,541
 (2,541) —
 —
 (73,750)
Retirement of common stock, net—
 —
 (5) —
 (1,045) —
 —
 —
 (1,045)
Changes in the redemption value of redeemable noncontrolling interest—
 —
 —
 —
 172
 —
 —
 596
 768
Distributions to noncontrolling interest—
 —
 —
 —
 —
 —
 —
 (25,854) (25,854)
Redemptions of noncontrolling interest—
 —
 14
 —
 (2,117) —
 —
 (394) (2,511)
Common and preferred stock dividends—
 —
 —
 —
 —
 (420,518) —
 —
 (420,518)
Balances at December 31, 2016—
 $—
 65,528
 $6
 $7,029,679
 $(805,409) $(32,098) $100,059
 $6,292,237
Net income—
 —
 —
 —
 —
 433,059
 —
 24,984
 458,043
Reversal of unrealized gains upon the sale of marketable securities—
 —
 —
 —
 —
 —
 (1,846) (63) (1,909)
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 —
 —
 12,322
 422
 12,744
Change in fair value of marketable securities, net—
 —
 —
 —
 —
 —
 3,176
 108
 3,284
Issuance of common stock under:                 
Stock option and restricted stock plans, net—
 —
 179
 —
 26,635
 —
 —
 —
 26,635
Sale of common stock, net—
 —
 345
 1
 89,054
 —
 —
 —
 89,055
Equity based compensation costs—
 —
 —
 —
 9,529
 —
 —
 1,773
 11,302
Changes in the redemption value of redeemable noncontrolling interest—
 —
 —
 —
 (136) —
 —
 71
 (65)
Contributions from noncontrolling interest—
 —
 —
 —
 —
 —
 —
 22,506
 22,506
Distributions to noncontrolling interest—
 —
 —
 —
 —
 —
 —
 (27,051) (27,051)
Redemptions of noncontrolling interest—
 —
 2
 —
 (25,190) —
 —
 (3,390) (28,580)
Common stock dividends—
 —
 —
 —
 —
 (461,376) —
 —
 (461,376)

Balances at December 31, 2017—
 $—
 66,054
 $7
 $7,129,571
 $(833,726) $(18,446) $119,419
 $6,396,825


See accompanying notes to consolidated financial statements.

F- 10
Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 2017, 20162023, 2022 and 20152021
(Dollars in thousands)
 202320222021
Cash flows from operating activities:
Net income$430,708 $432,985 $515,691 
Adjustments to reconcile net income to net cash provided by operating activities:   
Straight-lined rents2,773 3,330 9,672 
Depreciation and amortization548,438 539,319 520,066 
Amortization of discount and debt financing costs, net6,911 6,712 9,538 
Realized and unrealized (gains) losses on marketable securities, net(10,006)45,547 (36,504)
Income from early redemption of notes receivable— (811)(4,939)
Provision for credit losses70 381 141 
Equity income from co-investments(10,561)(26,030)(111,721)
Operating distributions from co-investments76,787 95,256 104,833 
Accrued interest from notes and other receivables(12,631)(13,953)(15,902)
Casualty loss433 — — 
Gain on the sale of real estate and land(59,238)(94,416)(142,993)
Equity-based compensation8,031 7,206 7,308 
Loss on early retirement of debt, net— 2 19,010 
Gain on remeasurement of co-investment— (17,423)(2,260)
Changes in operating assets and liabilities:   
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets(9,721)5,183 4,878 
Accounts payable, accrued liabilities, and operating lease liabilities5,335 (17,266)22,298 
Other liabilities2,735 9,627 6,143 
Net cash provided by operating activities980,064 975,649 905,259 
Cash flows from investing activities:   
Additions to real estate:   
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired(25,098)(21,870)(153,481)
Redevelopment(72,577)(96,718)(61,671)
Development acquisitions of and additions to development real estate(7,872)(27,713)(49,784)
Capital expenditures on rental properties(140,371)(163,193)(121,195)
Investments in notes receivable(58,127)(168,095)(245,144)
Collections of notes and other receivables— 412,006 104,405 
Proceeds from insurance for property losses3,431 4,325 879 
Proceeds from dispositions of real estate99,388 157,985 297,454 
Contributions to co-investments(37,405)(163,188)(306,266)
Changes in refundable deposits10,200 (16,318)(9,486)
Purchases of marketable securities(20,780)(18,109)(23,805)
Sales and maturities of marketable securities64,320 71,222 16,577 
Non-operating distributions from co-investments39,751 175,624 154,120 
Net cash (used in) provided by investing activities(145,140)145,958 (397,397)
Cash flows from financing activities:   
Proceeds from unsecured debt and mortgage notes598,000 — 745,505 
F- 11
Table of Contents
 2017 2016 2015
Cash flows from operating activities:     
Net income$458,043
 $438,410
 $248,239
Adjustments to reconcile net income to net cash provided by operating activities: 
  
  
Depreciation and amortization468,881
 441,682
 453,423
Amortization of discount on marketable securities and other investments(15,119) (14,211) (12,389)
Amortization of (premium) discount and financing costs, net(5,948) (15,234) (19,361)
Gain on sale of marketable securities and other investments(1,909) (5,719) (598)
Company's share of gain on the sales of co-investments(44,837) (13,046) —
Earnings from co-investments(41,608) (35,652) (21,861)
Operating distributions from co-investments76,764
 60,472
 46,608
Gain on the sale of real estate and land(26,423) (154,561) (47,333)
Equity-based compensation9,286
 9,811
 6,061
Loss on early retirement of debt, net1,796
 606
 6,114
Gain on remeasurement of co-investment(88,641) —
 (34,014)
Changes in operating assets and liabilities: 
  
  
Prepaid expenses, receivables and other assets(8,860) (2,328) 267
Accounts payable and accrued liabilities(15,104) 2,087
 (8,875)
Other liabilities(170) (496) 1,887
Net cash provided by operating activities766,151
 711,821
 618,168
Cash flows from investing activities: 
  
  
Additions to real estate: 
  
  
Acquisitions of real estate and acquisition related capital expenditures(206,194) (315,632) (515,726)
Redevelopment(69,928) (83,927) (99,346)
Development acquisitions of and additions to real estate under development(137,733) (75,367) (157,900)
Capital expenditures on rental properties(70,986) (60,013) (57,277)
Acquisition of membership interest in co-investments—
 —
 (115,724)
Collections of notes and other receivables55,000
 4,070
 —
Investments in notes receivable(106,461) (24,070) —
Proceeds from insurance for property losses648
 5,543
 16,811
Proceeds from dispositions of real estate132,039
 239,289
 319,008
Contributions to co-investments(293,363) (183,989) (127,879)
Changes in restricted cash and refundable deposits89,712
 (14,138) (14,068)
Purchases of marketable securities(67,893) (18,779) (14,300)
Sales and maturities of marketable securities and other investments35,481
 30,458
 8,907
Non-operating distributions from co-investments162,439
 76,231
 31,938
Net cash used in investing activities(477,239) (420,324) (725,556)
Cash flows from financing activities: 
  
  
Proceeds from unsecured debt and mortgage notes597,981
 669,282
 641,816
Payments on unsecured debt and mortgage notes(561,160) (532,020) (261,734)
Payments on unsecured debt and mortgage notes(302,429)(64,542)(1,053,501)
Proceeds from lines of credit844,046 1,376,452 1,050,589 
Repayments of lines of credit(896,119)(1,665,636)(709,332)
Retirement of common stock(95,657)(189,726)(9,172)
Additions to deferred charges(1,736)(2,638)(8,350)
Payments related to debt prepayment penalties— — (18,342)
Net proceeds from issuance of common stock(347)(314)(455)
Net proceeds from stock options exercised— 19,525 58,497 
Payments related to tax withholding for share-based compensation(3,825)(2,216)(5,445)
Contributions from noncontrolling interest— 125 1,900 
Distributions to noncontrolling interest(31,619)(30,740)(29,379)
Redemption of noncontrolling interest(609)(11,452)(8,457)
Redemption of redeemable noncontrolling interest— (478)(4,463)
Common stock dividends paid(586,976)(565,924)(542,860)
Net cash used in financing activities(477,271)(1,137,564)(533,265)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents357,653 (15,957)(25,403)
Unrestricted and restricted cash and cash equivalents at beginning of period42,681 58,638 84,041 
Unrestricted and restricted cash and cash equivalents at end of period$400,334 $42,681 $58,638 
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest$207,038 $198,323 $194,203 
Interest capitalized$823 $2,272 $6,153 
Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows from operating leases$6,962 $6,987 $6,963 
Supplemental disclosure of noncash investing and financing activities:   
Transfers between real estate under development and rental properties, net$1,497 $100,737 $328,393 
Transfer from real estate under development to co-investments$1,732 $2,276 $3,068 
Reclassifications to (from) redeemable noncontrolling interest from additional paid in capital and noncontrolling interest$5,055 $(7,038)$6,890 
Debt assumed in connection with acquisition$— $21,303 $— 

Proceeds from lines of credit982,246
 596,106
 704,039
Repayments of lines of credit(928,246) (486,106) (935,617)
Repayment of cumulative redeemable preferred stock—
 (73,750) —
Retirement of common stock—
 (1,045) —
Additions to deferred charges(4,108) (7,926) (8,034)
Net proceeds from issuance of common stock89,055
 (384) 332,137
Net proceeds from stock options exercised26,635
 18,949
 26,540
Payments related to tax withholding for share-based compensation(316) (386) (758)
Distributions to noncontrolling interest(26,552) (25,334) (21,055)
Redemption of noncontrolling interest(28,580) (2,511) (2,621)
Redemption of redeemable noncontrolling interest(5,543) —
 —
Common and preferred stock dividends paid(450,625) (411,134) (367,257)
Net cash (used in) provided by financing activities(309,213) (256,259) 107,456
Cash acquired from consolidation of co-investment—
 —
 4,005
Net increase in cash and cash equivalents(20,301) 35,238
 4,073
Cash and cash equivalents at beginning of year64,921
 29,683
 25,610
Cash and cash equivalents at end of year$44,620
 $64,921
 $29,683
      
Supplemental disclosure of cash flow information:     
Cash paid for interest, net of capitalized interest$212,163
 $203,743
 $181,106
Interest capitalized$13,860
 $12,486
 $15,571
      
Supplemental disclosure of noncash investing and financing activities: 
  
  
Issuance of DownREIT limited partnership units in connection with acquisition of real estate$22,506
 $—
 $—
Transfers between real estate under development to rental properties, net$2,413
 $104,159
 $308,704
Transfer from real estate under development to co-investments$5,075
 $9,919
 $6,234
Reclassifications to (from) redeemable noncontrolling interest to or from additional paid in capital and noncontrolling interest$65
 $(768) $22,387
Debt assumed in connection with acquisition$51,882
 $48,832
 $114,435
Debt deconsolidated in connection with BEX II transaction

$—
 $20,195
 $—


See accompanying notes to consolidated financial statements



F- 12
Table of Contents
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 20172023 and 20162022
(Dollars in thousands, except per unit amounts)
 20232022
ASSETS
Real estate:
Rental properties:
Land and land improvements$3,036,912 $3,043,321 
Buildings and improvements13,098,311 12,922,906 
 16,135,223 15,966,227 
Less: accumulated depreciation(5,664,931)(5,152,133)
 10,470,292 10,814,094 
Real estate under development23,724 24,857 
Co-investments1,061,733 1,127,491 
 11,555,749 11,966,442 
Cash and cash equivalents-unrestricted391,749 33,295 
Cash and cash equivalents-restricted8,585 9,386 
Marketable securities, net of allowance for credit losses of zero as of both December 31, 2023 and December 31, 202287,795 112,743 
Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.3 million as of December 31, 2023 and December 31, 2022 (includes related party receivables of $6.1 million and $7.0 million as of December 31, 2023 and December 31, 2022, respectively)174,621 103,045 
Operating lease right-of-use assets63,757 67,239 
Prepaid expenses and other assets79,171 80,755 
Total assets$12,361,427 $12,372,905 
LIABILITIES AND CAPITAL
Unsecured debt, net$5,318,531 $5,312,168 
Mortgage notes payable, net887,204 593,943 
Lines of credit— 52,073 
Accounts payable and accrued liabilities176,401 165,461 
Construction payable20,659 23,159 
Distributions payable155,695 149,166 
Distributions in excess of investments in co-investments65,488 42,532 
Operating lease liabilities65,091 68,696 
Other liabilities46,175 43,441 
Total liabilities6,735,244 6,450,639 
Commitments and contingencies
Redeemable noncontrolling interest32,205 27,150 
Capital:  
General Partner:  
Common equity (64,203,497 and 64,604,603 units issued and outstanding, respectively)5,389,190 5,669,906 
 5,389,190 5,669,906 
Limited Partners:  
Common equity (2,258,812 and 2,272,496 units issued and outstanding, respectively)44,991 51,454 
Accumulated other comprehensive income38,646 52,010 
Total partners' capital5,472,827 5,773,370 
Noncontrolling interest121,151 121,746 
Total capital5,593,978 5,895,116 
Total liabilities and capital$12,361,427 $12,372,905 
 2017 2016
ASSETS
Real estate:   
Rental properties:   
Land and land improvements$2,719,064
 $2,559,743
Buildings and improvements10,629,767
 10,116,563
 13,348,831
 12,676,306
Less: accumulated depreciation(2,769,297) (2,311,546)
 10,579,534
 10,364,760
Real estate under development355,735
 190,505
Co-investments1,155,984
 1,161,275
Real estate held for sale, net—
 101,957
 12,091,253
 11,818,497
Cash and cash equivalents-unrestricted44,620
 64,921
Cash and cash equivalents-restricted16,506
 105,381
Marketable securities190,004
 139,189
Notes and other receivables (related party receivables of $41.2 million and $11.3 million as of December 31, 2017 and December 31, 2016, respectively)100,926
 40,970
Prepaid expenses and other assets52,397
 48,450
Total assets$12,495,706
 $12,217,408
LIABILITIES AND CAPITAL
Unsecured debt, net$3,501,709
 $3,246,779
Mortgage notes payable, net2,008,417
 2,191,481
Lines of credit179,000
 125,000
Accounts payable and accrued liabilities127,501
 138,226
Construction payable51,770
 35,909
Distributions payable121,420
 110,170
Distributions in excess of investments in co-investments36,726
 —
Other liabilities33,132
 32,922
Total liabilities6,059,675
 5,880,487
Commitments and contingencies

 

Redeemable noncontrolling interest39,206
 44,684
Capital: 
  
General Partner: 
  
Common equity (66,054,399 and 65,527,993 units issued and outstanding, respectively)6,295,852
 6,224,276
 6,295,852
 6,224,276
Limited Partners: 
  
Common equity (2,268,114 and 2,237,290 units issued and outstanding, respectively)49,792
 49,436
Accumulated other comprehensive loss(15,229) (29,348)
Total partners' capital6,330,415
 6,244,364
Noncontrolling interest66,410
 47,873
Total capital6,396,825
 6,292,237
Total liabilities and capital$12,495,706
 $12,217,408


See accompanying notes to consolidated financial statements

F- 13
Table of Contents
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 2017, 2016,2023, 2022, and 20152021
(Dollars in thousands, except per unit and unit amounts)
 202320222021
Revenues:
Rental and other property$1,658,264 $1,595,675 $1,431,418 
Management and other fees from affiliates11,131 11,139 9,138 
 1,669,395 1,606,814 1,440,556 
Expenses:   
Property operating, excluding real estate taxes299,672 283,351 264,869 
Real estate taxes185,807 183,918 180,367 
Corporate-level property management expenses45,872 40,704 36,211 
Depreciation and amortization548,438 539,319 520,066 
General and administrative63,474 56,577 51,838 
Expensed acquisition and investment related costs595 2,132 203 
Casualty loss433 — — 
 1,144,291 1,106,001 1,053,554 
Gain on sale of real estate and land59,238 94,416 142,993 
Earnings from operations584,342 595,229 529,995 
Interest expense(212,905)(204,798)(203,125)
Total return swap income3,148 7,907 10,774 
Interest and other income (loss)46,259 (19,040)98,744 
Equity income from co-investments10,561 26,030 111,721 
Tax (expense) benefit on unconsolidated co-investments(697)10,236 (15,668)
Loss on early retirement of debt, net— (2)(19,010)
Gain on remeasurement of co-investment— 17,423 2,260 
Net income430,708 432,985 515,691 
Net income attributable to noncontrolling interest(10,599)(10,373)(9,946)
Net income available to common unitholders$420,109 $422,612 $505,745 
Per unit data:   
Basic:   
Net income available to common unitholders$6.32 $6.27 $7.51 
Weighted average number of common units outstanding during the year66,513,303 67,356,105 67,340,856 
Diluted:   
Net income available to common unitholders$6.32 $6.27 $7.51 
Weighted average number of common units outstanding during the year66,514,456 67,374,527 67,378,265 
 2017 2016 2015
Revenues:     
Rental and other property$1,354,325
 $1,285,723
 $1,185,498
Management and other fees from affiliates9,574
 8,278
 8,909
 1,363,899
 1,294,001
 1,194,407
Expenses: 
  
  
Property operating, excluding real estate taxes259,232
 249,765
 234,953
Real estate taxes146,310
 139,162
 128,555
Depreciation and amortization468,881
 441,682
 453,423
General and administrative41,385
 40,751
 40,090
Merger and integration expenses—
 —
 3,798
Acquisition and investment related costs1,569
 1,841
 2,414
 917,377
 873,201
 863,233
Earnings from operations446,522
 420,800
 331,174
Interest expense(222,894) (219,654) (204,827)
Total return swap income10,098
 11,716
 5,655
Interest and other income24,604
 27,305
 19,143
Equity income from co-investments86,445
 48,698
 21,861
Loss on early retirement of debt, net(1,796) (606) (6,114)
Gain on sale of real estate and land26,423
 154,561
 47,333
Deferred tax expense on gain on sale of real estate and land—
 (4,410) —
Gain on remeasurement of co-investment88,641
 —
 34,014
Net income458,043
 438,410
 248,239
Net income attributable to noncontrolling interest(10,159) (9,342) (8,295)
Net income attributable to controlling interest447,884
 429,068
 239,944
Preferred interest distributions—
 (1,314) (5,255)
Excess of redemption value of preferred units over the carrying value—
 (2,541) —
Net income available to common unitholders$447,884
 $425,213
 $234,689
Per unit data: 
  
  
Basic: 
  
  
Net income available to common unitholders$6.58
 $6.28
 $3.50
Weighted average number of common units outstanding during the year68,081,730
 67,695,640
 67,054,184
Diluted: 
  
  
Net income available to common unitholders$6.57
 $6.27
 $3.49
Weighted average number of common units outstanding during the year68,150,830
 67,811,916
 67,244,152


See accompanying notes to consolidated financial statements

F- 14
Table of Contents
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2017, 2016,2023, 2022, and 20152021
(Dollars in thousands)
 202320222021
Net income$430,708 $432,985 $515,691 
Other comprehensive income (loss):   
Change in fair value of derivatives and amortization of swap settlements(13,364)54,158 9,170 
Change in fair value of marketable debt securities, net— 233 329 
Reversal of unrealized gains upon the sale of marketable debt securities— (577)— 
Total other comprehensive (loss) income(13,364)53,814 9,499 
Comprehensive income417,344 486,799 525,190 
Comprehensive income attributable to noncontrolling interest(10,599)(10,373)(9,946)
Comprehensive income attributable to controlling interest$406,745 $476,426 $515,244 
 2017 2016 2015
Net income$458,043
 $438,410
 $248,239
Other comprehensive income (loss): 
  
  
Change in fair value of derivatives and amortization of swap settlements12,744
 15,926
 7,893
Changes in fair value of marketable securities, net3,284
 (828) 1,865
Reversal of unrealized gains upon the sale of marketable securities(1,909) (4,848) —
Total other comprehensive income14,119
 10,250
 9,758
Comprehensive income472,162
 448,660
 257,997
Comprehensive income attributable to noncontrolling interest(10,159) (9,342) (8,295)
Comprehensive income attributable to controlling interest$462,003
 $439,318
 $249,702


See accompanying notes to consolidated financial statements.

F- 15
Table of Contents
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Consolidated Statements of Capital
Years ended December 31, 2017, 2016,2023, 2022, and 20152021
(Dollars and units in thousands)
 Accumulated
other
comprehensive
income (loss), net
 General PartnerLimited PartnersNoncontrolling
interest		Total
 Common EquityCommon Equity
 UnitsAmountUnitsAmount
Balances at December 31, 202064,999 $6,015,139 2,295 $58,184 $(11,303)$121,172 $6,183,192 
Net income— 488,554 — 17,191 — 9,946 515,691 
Change in fair value of derivatives and amortization of swap settlements— — — — 9,170 — 9,170 
Change in fair value of marketable debt securities, net— — — — 329 — 329 
Issuance of common units under:
General partner's stock based compensation, net279 53,052 — — — — 53,052 
Sale of common stock by general partner, net— (455)— — — — (455)
Equity based compensation costs— 11,286 — 397 — — 11,683 
Retirement of common units, net(40)(9,172)— — — — (9,172)
Changes in the redemption value of redeemable noncontrolling interest— (7,489)— 152 — 447 (6,890)
Contributions from noncontrolling interest— — — — — 1,900 1,900 
Distributions to noncontrolling interest— — — — — (10,215)(10,215)
Redemptions10 (7,566)(13)(296)— (595)(8,457)
Distributions declared ($8.36 per unit)— (544,194)— (19,126)— — (563,320)
Balances at December 31, 202165,248 $5,999,155 2,282 $56,502 $(1,804)$122,655 $6,176,508 
Net income— 408,315 — 14,297 — 10,373 432,985 
Reversal of unrealized gains upon the sale of marketable
debt securities		— — — — (577)— (577)
Change in fair value of derivatives and amortization of swap settlements— — — — 54,158 — 54,158 
Change in fair value of marketable debt securities, net— — — — 233 — 233 
Issuance of common stock under:
General partner's stock based compensation, net89 17,309 — — — — 17,309 
Sale of common stock by general partner, net— (314)— — — — (314)
Equity based compensation costs— 11,059 — 387 — — 11,446 
Retirement of common units, net(740)(189,726)— — — — (189,726)
F- 16
Table of Contents
 General Partner Limited Partners Accumulated    
     Preferred     other    
 Common Equity Equity Common Equity comprehensive Noncontrolling  
 Units Amount Amount Units Amount loss, net Interest Total
Balances at December 31, 201463,683
 $6,002,915
 $71,209
 2,168
 $48,665
 $(49,356) $62,635
 $6,136,068
Net income—
 226,865
 5,255
 —
 7,824
 —
 8,295
 248,239
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 —
 7,893
 —
 7,893
Changes in fair value of marketable securities, net—
 —
 —
 —
 —
 1,865
 —
 1,865
Issuance of common units under: 
  
  
  
  
  
  
  
General partner's stock based compensation, net207
 26,540
 —
 —
 —
 —
 —
 26,540
Sale of common stock by the general partner, net1,482
 332,137
 —
 —
 —
 —
 —
 332,137
Equity based compensation costs—
 5,946
 —
 54
 3,700
 —
 —
 9,646
Changes in redemption value of redeemable noncontrolling interest—
 (2,615) —
 —
 —
 —
 —
 (2,615)
Reclassification of noncontrolling interest to redeemable noncontrolling interest—
 (7,657) —
 —
 —
 —
 (12,115) (19,772)
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (8,751) (8,751)
Redemptions7
 (2,199) —
 (7) —
 —
 (422) (2,621)
Distributions declared—
 (373,397) (5,255) —
 (12,954) —
 —
 (391,606)
Balances at December 31, 201565,379
 $6,208,535
 $71,209
 2,215
 $47,235
 $(39,598) $49,642
 $6,337,023
Net income—
 411,124
 3,855
 —
 14,089
 —
 9,342
 438,410
Reversal of unrealized gains upon the sale of marketable securities—
 —
 —
 —
 —
 (4,848) —
 (4,848)
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 —
 15,926
 —
 15,926
Change in fair value of marketable securities, net—
 —
 —
 —
 —
 (828) —
 (828)
Issuance of common stock under:               
Changes in redemption value of redeemable noncontrolling interest— 6,230 — 386 — 422 7,038 
Contributions from noncontrolling interest— — — — — 125 125 
Distributions to noncontrolling interest— — — — — (10,935)(10,935)
Redemptions8 (10,464)(10)(94)— (894)(11,452)
Distributions declared ($8.80 per unit)— (571,658)— (20,024)— — (591,682)
Balances at December 31, 202264,605 $5,669,906 2,272 $51,454 $52,010 $121,746 $5,895,116 
Net income— 405,825 — 14,284 — 10,599 430,708 
Change in fair value of derivatives and amortization of swap settlements— — — — (13,364)— (13,364)
Issuance of common stock under:
General partner's stock based compensation, net21 (3,825)— — — — (3,825)
Sale of common stock by general partner, net— (347)— — — — (347)
Equity based compensation costs— 11,723 — 412 — — 12,135 
Retirement of common units, net(437)(95,657)— — — — (95,657)
Changes in redemption value of redeemable noncontrolling interest— (5,150)— 75 — 20 (5,055)
Distributions to noncontrolling interest— — — — — (11,060)(11,060)
Redemptions14 (100)(13)(355)— (154)(609)
Distributions declared ($9.24 per unit)— (593,185)— (20,879)— — (614,064)
Balances at December 31, 202364,203 $5,389,190 2,259 $44,991 $38,646 $121,151 $5,593,978 

General partner's stock based compensation, net140
 18,949
 —
 —
 —
 —
 —
 18,949
Sale of common stock by general partner, net—
 (384) —
 —
 —
 —
 —
 (384)
Equity based compensation costs—
 8,246
 —
 37
 2,653
 —
 —
 10,899
Redemption of Series H preferred units—
 —
 (73,750) —
 —
 —
 —
 (73,750)
Retirement of common units, net(5) (1,045) —
 —
 —
 —
 —
 (1,045)
Changes in the redemption value of redeemable noncontrolling interest—
 172
 —
 —
 —
 —
 596
 768
Distributions to noncontrolling interest—
 —
 —
 —
 —
 —
 (11,296) (11,296)
Redemptions14
 (2,117) —
 (15) 17
 —
 (411) (2,511)
Distributions declared—
 (419,204) (1,314) —
 (14,558) —
 —
 (435,076)
Balances at December 31, 201665,528
 $6,224,276
 $—
 2,237
 $49,436
 $(29,348) $47,873
 $6,292,237
Net income—
 433,059
 —
 —
 14,825
 —
 10,159
 458,043
Reversal of unrealized gains upon the sale of marketable securities—
 —
 —
 —
 —
 (1,909) —
 (1,909)
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 —
 12,744
 —
 12,744
Change in fair value of marketable securities, net—
 —
 —
 —
 —
 3,284
 —
 3,284
Issuance of common stock under:               
General partner's stock based compensation, net179
 26,635
 —
 —
 —
 —
 —
 26,635
Sale of common stock by general partner, net345
 89,055
 —
 —
 —
 —
 —
 89,055
Equity based compensation costs—
 9,529
 —
 33
 1,773
 —
 —
 11,302
Changes in the redemption value of redeemable noncontrolling interest—
 (136) —
 —
 136
 —
 (65) (65)
Contributions from noncontrolling interest—
 —
 —
 —
 —
 —
 22,506
 22,506
Distributions to noncontrolling interest—
 —
 —
 —
 —
 —
 (11,078) (11,078)
Redemptions2
 (25,190) —
 (2) (405) —
 (2,985) (28,580)
Distributions declared—
 (461,376) —
 —
 (15,973) —
 —
 (477,349)
Balances at December 31, 201766,054
 $6,295,852
 $—
 2,268
 $49,792
 $(15,229) $66,410
 $6,396,825


See accompanying notes to consolidated financial statements

F- 17
Table of Contents
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 2017, 2016,2023, 2022, and 20152021
(Dollars in thousands)
 202320222021
Cash flows from operating activities:
Net income$430,708 $432,985 $515,691 
Adjustments to reconcile net income to net cash provided by operating activities:   
Straight-lined rents2,773 3,330 9,672 
Depreciation and amortization548,438 539,319 520,066 
Amortization of discount and debt financing costs, net6,911 6,712 9,538 
Realized and unrealized (gains) losses on marketable securities, net(10,006)45,547 (36,504)
Income from early redemption of notes receivable— (811)(4,939)
Provision for credit losses70 381 141 
Equity income from co-investments(10,561)(26,030)(111,721)
Operating distributions from co-investments76,787 95,256 104,833 
Accrued interest from notes and other receivables(12,631)(13,953)(15,902)
Casualty loss433 — — 
Gain on the sale of real estate and land(59,238)(94,416)(142,993)
Equity-based compensation8,031 7,206 7,308 
Loss on early retirement of debt, net— 2 19,010 
Gain on remeasurement of co-investment— (17,423)(2,260)
Changes in operating assets and liabilities:   
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets(9,721)5,183 4,878 
Accounts payable, accrued liabilities, and operating lease liabilities5,335 (17,266)22,298 
Other liabilities2,735 9,627 6,143 
Net cash provided by operating activities980,064 975,649 905,259 
Cash flows from investing activities:   
Additions to real estate:   
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired(25,098)(21,870)(153,481)
Redevelopment(72,577)(96,718)(61,671)
Development acquisitions of and additions to development real estate(7,872)(27,713)(49,784)
Capital expenditures on rental properties(140,371)(163,193)(121,195)
Investments in notes receivable(58,127)(168,095)(245,144)
Collections of notes and other receivables— 412,006 104,405 
Proceeds from insurance for property losses3,431 4,325 879 
Proceeds from dispositions of real estate99,388 157,985 297,454 
Contributions to co-investments(37,405)(163,188)(306,266)
Changes in refundable deposits10,200 (16,318)(9,486)
Purchases of marketable securities(20,780)(18,109)(23,805)
Sales and maturities of marketable securities64,320 71,222 16,577 
Non-operating distributions from co-investments39,751 175,624 154,120 
Net cash (used in) provided by investing activities(145,140)145,958 (397,397)
Cash flows from financing activities:   
Proceeds from unsecured debt and mortgage notes598,000 — 745,505 
F- 18
Table of Contents
 2017 2016 2015
Cash flows from operating activities:     
Net income$458,043
 $438,410
 $248,239
Adjustments to reconcile net income to net cash provided by operating activities: 
  
  
Depreciation and amortization468,881
 441,682
 453,423
Amortization of discount on marketable securities and other investments(15,119) (14,211) (12,389)
Amortization of (premium) discount and debt financing costs, net(5,948) (15,234) (19,361)
Gain on sale of marketable securities and other investments(1,909) (5,719) (598)
Company's share of gain on the sales of co-investments(44,837) (13,046) —
Earnings from co-investments(41,608) (35,652) (21,861)
Operating distributions from co-investments76,764
 60,472
 46,608
Gain on the sale of real estate and land(26,423) (154,561) (47,333)
Equity-based compensation9,286
 9,811
 6,061
Loss on early retirement of debt, net1,796
 606
 6,114
Gain on remeasurement of co-investment(88,641) —
 (34,014)
Changes in operating assets and liabilities: 
  
  
Prepaid expenses, receivables and other assets(8,860) (2,328) 267
Accounts payable and accrued liabilities(15,104) 2,087
 (8,875)
Other liabilities(170) (496) 1,887
Net cash provided by operating activities766,151
 711,821
 618,168
Cash flows from investing activities: 
  
  
Additions to real estate: 
  
  
Acquisitions of real estate and acquisition related capital expenditures(206,194) (315,632) (515,726)
Redevelopment(69,928) (83,927) (99,346)
Development acquisitions of and additions to real estate under development(137,733) (75,367) (157,900)
Capital expenditures on rental properties(70,986) (60,013) (57,277)
Acquisition of membership interest in co-investments—
 —
 (115,724)
Collections of notes and other receivables55,000
 4,070
 —
Investments in notes receivable(106,461) (24,070) —
Proceeds from insurance for property losses648
 5,543
 16,811
Proceeds from dispositions of real estate132,039
 239,289
 319,008
Contributions to co-investments(293,363) (183,989) (127,879)
Changes in restricted cash and refundable deposits89,712
 (14,138) (14,068)
Purchases of marketable securities(67,893) (18,779) (14,300)
Sales and maturities of marketable securities and other investments35,481
 30,458
 8,907
Non-operating distributions from co-investments162,439
 76,231
 31,938
Net cash used in investing activities(477,239) (420,324) (725,556)
Cash flows from financing activities: 
  
  
Proceeds from unsecured debt and mortgage notes597,981
 669,282
 641,816
Payments on unsecured debt and mortgage notes(561,160) (532,020) (261,734)
Payments on unsecured debt and mortgage notes(302,429)(64,542)(1,053,501)
Proceeds from lines of credit844,046 1,376,452 1,050,589 
Repayments of lines of credit(896,119)(1,665,636)(709,332)
Retirement of common units(95,657)(189,726)(9,172)
Additions to deferred charges(1,736)(2,638)(8,350)
Payments related to debt prepayment penalties— — (18,342)
Net proceeds from issuance of common units(347)(314)(455)
Net proceeds from stock options exercised— 19,525 58,497 
Payments related to tax withholding for share-based compensation(3,825)(2,216)(5,445)
Contributions from noncontrolling interest— 125 1,900 
Distributions to noncontrolling interest(8,558)(8,450)(8,369)
Redemption of noncontrolling interests(609)(11,452)(8,457)
Redemption of redeemable noncontrolling interests— (478)(4,463)
Common units distributions paid(610,037)(588,214)(563,870)
Net cash used in financing activities(477,271)(1,137,564)(533,265)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents357,653 (15,957)(25,403)
Unrestricted and restricted cash and cash equivalents at beginning of period42,681 58,638 84,041 
Unrestricted and restricted cash and cash equivalents at end of period$400,334 $42,681 $58,638 
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest$207,038 $198,323 $194,203 
Interest capitalized$823 $2,272 $6,153 
  Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows from operating leases$6,962 $6,987 $6,963 
Supplemental disclosure of noncash investing and financing activities:   
Transfers between real estate under development and rental properties, net$1,497 $100,737 $328,393 
Transfer from real estate under development to co-investments$1,732 $2,276 $3,068 
Reclassifications to (from) redeemable noncontrolling interest from general and limited partner capital and noncontrolling interest$5,055 $(7,038)$6,890 
Debt assumed in connection with acquisition$— $21,303 $— 

Proceeds from lines of credit982,246
 596,106
 704,039
Repayments of lines of credit(928,246) (486,106) (935,617)
Repayment of cumulative redeemable preferred stock—
 (73,750) —
Retirement of common stock—
 (1,045) —
Additions to deferred charges(4,108) (7,926) (8,034)
Net proceeds from issuance of common units89,055
 (384) 332,137
Net proceeds from stock options exercised26,635
 18,949
 26,540
Payments related to tax withholding for share-based compensation(316) (386) (758)
Distributions to noncontrolling interest(7,752) (6,960) (7,615)
Redemption of noncontrolling interests(28,580) (2,511) (2,621)
Redemption of redeemable noncontrolling interests(5,543) —
 —
Common and preferred units and preferred interests distributions paid(469,425) (429,508) (380,697)
Net cash (used in) provided by financing activities(309,213) (256,259) 107,456
Cash acquired from consolidation of co-investment—
 —
 4,005
Net increase in cash and cash equivalents(20,301) 35,238
 4,073
Cash and cash equivalents at beginning of year64,921
 29,683
 25,610
Cash and cash equivalents at end of year$44,620
 $64,921
��$29,683
      
Supplemental disclosure of cash flow information:     
Cash paid for interest, net of capitalized interest$212,163
 $203,743
 $181,106
Interest capitalized$13,860
 $12,486
 $15,571
      
Supplemental disclosure of noncash investing and financing activities: 
  
  
Issuance of DownREIT limited partnership units in connection with acquisition of real estate$22,506
 $—
 $—
Transfers between real estate under development to rental properties, net$2,413
 $104,159
 $308,704
Transfer from real estate under development to co-investments$5,075
 $9,919
 $6,234
Reclassifications (from) to redeemable noncontrolling interest to or from additional paid in capital and noncontrolling interest$65
 $(768) $22,387
Debt assumed in connection with acquisition (excluding BRE merger)$51,882
 $48,832
 $114,435
Debt deconsolidated in connection with BEX II transaction

$—
 $20,195
 $—


See accompanying notes to consolidated financial statements



F- 19
Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021


(1) Organization
 
The accompanying consolidated financial statements present the accounts of Essex Property Trust, Inc. (“Essex”("Essex" or the “Company”"Company"), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the “Operating"Operating Partnership,”" which holds the operating assets of the Company). Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership.


Essex is the sole general partner inof the Operating Partnership with a 96.7%96.6% general partner interest and the limited partners owned a 3.3%3.4% interest as of December 31, 2017.2023. The limited partners may convert their Operating Partnership units into an equivalent number of shares of Essex common stock. Total Operating Partnership limited partnership units ("OP Units," and the holders of such OP Units, "Unitholders") outstanding were 2,268,1142,258,812 and 2,237,2902,272,496 as of December 31, 20172023 and 2016,2022, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock, totaled approximately $547.5$560.0 million and $520.2$481.6 million, as of December 31, 20172023 and 2016,2022, respectively. The Company has reserved shares of common stock for such conversions.


As of December 31, 2017,2023, the Company owned or had ownership interests in 247252 operating apartment communities, aggregating 60,239comprising 61,997 apartment homes, excluding the Company's ownership interests in preferred interest co-investments, (collectively, the "Communities", and individually, a "Community"), oneloan investments, three operating commercial building,buildings, and seven active developments (collectively, the “Portfolio”).a development pipeline comprised of one unconsolidated joint venture project. The Communitiesoperating apartment communities are located in Southern California (Los(primarily Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas.


F- 20
Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

(2) Summary of Critical and Significant Accounting Policies


(a) Principles of Consolidation and Basis of Presentation


The accounts of the Company, its controlled subsidiaries and the variable interest entities (“VIEs”("VIEs") in which it is the primary beneficiary are consolidated in the accompanying financial statements and prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included and are normal and recurring in nature. All significant inter-company accounts and transactions have been eliminated. Certain reclassifications have been made in prior period amounts to conform to the current year’s presentation. Such reclassifications had no net effect on previously reported financial results.


Noncontrolling interest includes the 3.3%3.4% limited partner interests in the Operating Partnership not held by the Company at both December 31, 20172023 and 2016.2022. These percentages include the Operating Partnership’s vested long termlong-term incentive plan units (see Note 12)14).


(b) Recent Accounting Pronouncements


In May 2014,November, 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09 "Revenue from Contracts with Customers.2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." TheAmong other new standard provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts)disclosure requirements, ASU 2023-07 requires companies to improve comparability within industries. The new standard requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. In August 2015, the FASB deferred the effective date of the new standard by one year, and it is now effective for interim and annual periods beginning after December 15, 2017. The new standard may be applied using either a full retrospective or a modified approach upon adoption. The Company adopted the new standard as of January 1, 2018, when effective, using the modified approach and recognizing a cumulative effect, if any, as of the date of adoption. The majority of the Company's revenue is derived from rental income, which will be accounted for under ASU No. 2016-02 "Leases", which is discussed below. The Company has reviewed all other revenue streamsdisclose significant segment expenses that could be impacted by the new standard and performed an evaluation of the affect that the new standard will have on its recognition of revenue and all additional required disclosures. Management determined that the new standard will not have a material impact on the Company's consolidated results of operations or financial position and will not affect the Company's debt covenant compliance. However, the Company will provide enhanced revenue recognition disclosures as required by the new standard.

F- 19
Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015


In January 2016, the FASB issued ASU No. 2016-01 "Recognition and Measurement of Financial Assets and Financial Liabilities", which requires changesare regularly provided to the classification and measurement of investments in certain equity securities and to the presentation of certain fair value changes for financial liabilities measured at fair value. The new standardchief operating decision maker. ASU 2023-07 will be effective for the Company beginning on January 1, 2018. As a result ofCompany's 2024 annual reporting. ASU 2023-07 must be applied retrospectively to all prior periods presented in the adoption of this standard, the Company will recognize changes in fair value of equity investments with readily determinable fair values through net income as opposed to other comprehensive income.financial statements. The Company does not expect that this amendment willthe adoption to have a material effect on its consolidated results of operations or financial position.

In February 2016, the FASB issued ASU No. 2016-02 "Leases", which requires an entity that is a lessee to classify leases as either finance or operating and to recognize a lease liability and a right-of-use asset for all leases that have a duration of greater than 12 months. Leases of 12 months or less will be accounted for similar to existing guidance for operating leases today. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. The new standard will be effective for the Company beginning on January 1, 2019 and early adoption is permitted, including adoption in an interim period. The new standard must be applied using a modified retrospective approach. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.


In June 2016,August 2023, the FASB issued ASU No. 2016-13 "Measurement2023-05 "Business Combinations —Joint Venture Formations (Subtopic 805-60)" under which an entity that qualifies as a joint venture is required to apply a new basis of Credit Losses on Financial Instruments", which amendsaccounting upon the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities, and other financial instruments. Generally, this amendment requires entities to establish a valuation allowance forformation of the expected lifetime losses of these certain financial assets. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. The new standard will be effective for the Company beginning on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In August 2016, the FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments", which requires entities to adhere to a uniform classification and presentation of certain cash receipts and cash payments in the statement of cash flows.joint venture. The amendments in this update provide guidanceASU 2023-05 require that a joint venture must initially measure its assets and liabilities at fair value on eight specific cash flow issues. The new standard will bethe formation date. ASU 2023-05 is effective for the Company beginningall joint ventures that are formed on or after January 1, 2018. The Company does not expect the impact of this amendment to be material on its consolidated results of operations or financial position.

In November 2016, the FASB issued ASU No. 2016-18 "Statement of Cash Flows", which requires entities to include restricted cash and restricted cash equivalents in the reconciliation of beginning-of-period to the end-of-period of cash and cash equivalents in the statement of cash flows. This new standard seeks to eliminate the current diversity in practice in how changes in restricted cash and restricted cash equivalents is presented in the statement of cash flows. This new standard will be effective for the Company beginning January 1, 2018. The Company does not expect the impact of this amendment to be material on its consolidated results of operations or financial position.

In January 2017, the FASB issued ASU No. 2017-01 "Business Combinations: Clarifying the Definition of a Business", which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Currently, GAAP does not specify the minimum inputs and processes required for an integrated set of assets and activities to meet the definition of a business, causing a broad interpretation of the definition of a business. This new standard will be effective for the Company beginning January 1, 2018. The Company expects that substantially all of its acquisitions of communities will qualify as asset acquisitions and transaction costs related to these acquisitions will be capitalized upon adoption.

In February 2017, the FASB issued ASU No. 2017-05 "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets", which adds guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. This new standard reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. Partial sales of nonfinancial assets are common in the real estate industry and include transactions in which the seller retains an equity interest in the entity that owns the assets or has an equity interest in the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015


buyer. This new standard will be effective for the Company beginning January 1, 2018. The new standard allows for either a retrospective or modified retrospective approach. The Company adopted this new standard concurrently with the adoption of ASU 2014-09 "Revenue from Contracts with Customers" as of January 1, 2018. Management has performed an evaluation of all of the Company's contracts that may be affected by the new standard. Based on its analysis, the Company expects to apply the modified retrospective approach by recording a cumulative adjustment to retained earnings of approximately $123.7 million from the sale of minority membership interest in BEX II, LLC ("BEX II") during the fourth quarter of 2016.

In August 2017, the FASB issued ASU No. 2017-12 "Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities", which, among other things, requires entities to present the earnings effect of hedging instruments in the same income statement line item in which the earnings effect of the hedged item is reported. The new standard also adds new disclosure requirements. This new standard will be effective for the Company beginning January 1, 20192025 and early adoption is permitted. The Company does not expect the impact of this amendmentadoption to behave a material impact on its consolidated results of operations orand financial position.


(c) Real Estate Rental Properties


Significant expenditures, which improve or extend the life of an asset and have a useful life of greater than one year, are capitalized. Operating real estate assets are stated at cost and consist of land and land improvements, buildings and improvements, furniture, fixtures and equipment, and other costs incurred during their development, redevelopment and acquisition. Expenditures for maintenance and repairs are charged to expense as incurred.


The depreciable life of various categories of fixed assets is as follows:
Computer software and equipment3 - 5 years
Interior apartment home improvements5 years
Furniture, fixtures and equipment5 - 10 years
Land improvements and certain exterior components of real property10 years
Real estate structures30 years
 
The Company capitalizes all costs incurred with the predevelopment, development or redevelopment of real estate assets or are associated with the construction or expansion of real property. Such capitalized costs include land, land improvements, allocated costs of the Company’s project management staff, construction costs, as well as interest and related loan fees, property taxes and insurance. Capitalization begins for predevelopment, development, and redevelopment projects when activity commences. Capitalization ends when the apartment home is completed and the property is available for a new tenant or if the development activities cease.


The Company allocates the purchase price of real estate on a fair value basis to land and building including personal property, and identifiable intangible assets, such as the value of above, below and in-place leases. In making estimates of relative fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent land and
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

building appraisals which consider comparable market transactions, its own analysis of recently acquired or developed comparable properties in our portfolio for land comparables and building replacement costs, and other publicly available market data. In calculating the fair value of identified intangible assets of an acquired property, the in-place leases are valued based on in-place rent rates and amortized over the average remaining term of all acquired leases.

The values of the above and below market leases are amortized and recorded as either a decrease (in the case of above market leases) or an increase (in the case of below market leases) to rental revenue over the remaining term of the associated leases acquired. The value of acquired in-place leases are amortized to expense over the average remaining term of the leases acquired. The net carrying value of acquired in-place leases is $0.4$6.1 million and $1.4$7.4 million as of December 31, 20172023 and 2016,2022, respectively, and are included in prepaid expenses and other assets on the Company's consolidated balance sheets.


The Company performsperiodically assesses the following evaluationcarrying value of its consolidated real estate investments for communities acquired:
(1)adjust the purchase price for any fair value adjustments resulting from such things as assumed debt or contingencies;
(2)estimate the value of the real estate “as if vacant” as of the acquisition date;
(3)allocate that value among land and buildings including personal property;
(4)compute the value of the difference between the “as if vacant” value and the adjusted purchase price, which will represent the total intangible assets;
(5)compute the value of the above and below market leases and determine the associated life of the above market/ below market leases;
(6)compute the value of the in-place leases and customer relationships, if any, and the associated lives of these assets.

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December 31, 2017, 2016,impairment. The judgments regarding the existence of impairment indicators are based on monitoring investment market conditions and 2015


performance compared to budget for operating properties including the net operating income for the most recent 12 month period, monitoring estimated costs for properties under development, the Company's ability to hold and its intent with regard to each asset, and each property's remaining useful life. Whenever events or changes in circumstances indicate that the carrying amount of a property held for investment or held for sale may not be fully recoverable, the carrying amount will be evaluated for impairment.is evaluated. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount (including intangible assets) of a property held for investment, then the Company will recognize an impairment loss equal to the excess of the carrying amount over the fair value of the property. Fair value of a property is determined using conventional real estate valuation methods, such as discounted cash flow, the property’s unleveraged yield in comparison to the unleveraged yields andand/or sales prices of similar communities that have been recently sold, and other third party information, if available. Communities held for sale are carried at the lower of cost andor fair value less estimated costs to sell. As of December 31, 2017,2023 and 2022, no properties were classified as held for sale. AsThe Company did not record an impairment charge on any of December 31, 2016, one property was classified as held for sale. No impairment charges were recordedits consolidated real estate investments for the years ended 2017, 2016 or 2015.December 31, 2023, 2022, and 2021.


In the normal course of business, the Company will receive purchase offers for its communities, either solicited or unsolicited. For those offers that are accepted, the prospective buyer will usually require a due diligence period before consummation of the transaction. It is not unusual for matters to arise that result in the withdrawal or rejection of the offer during this process. The Company classifies real estate as "held for sale" when all criteria under the accounting standardCompany has obtained necessary management approvals to sell a property and the sale of the property is expected to be completed within a year. Evaluating solicited or unsolicited offers generally does not cause properties to be classified as held for the disposals of long-lived assets have been met.sale.


(d) Co-investments


The Company owns investments in joint ventures (“co-investments”) in which it has significant influence, but its ownership interest does not meet the criteria for consolidation in accordance with U.S. GAAP. Therefore, the Company accounts for co-investments using the equity method of accounting. Under the equity method of accounting, the investment is carried at the cost of assets contributed, plus the Company’s equity in earnings less distributions received and the Company’s share of losses. The significant accounting policies of the Company’s co-investment entities are consistent with those of the Company in all material respects.


Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and a gain or loss is recognized upon the remeasurement of co-investments in the consolidated statement of income equal to the amount by which the fair value of the Company's previously owned co-investment interest the Company previously owned exceeds its carrying value. A majority of the co-investments, excluding themost preferred equity investments, compensate the Company for its asset management services and some of these investments may provide promote income if certain financial return benchmarks are achieved. Asset management fees are recognized when earned, and promote fees are recognized when the earnings events have occurred and the amount is determinable and collectible. Any promote fees are reflected in equity income from co-investments.


The Company reportsevaluates its investments in co-investments where accumulated distributions have exceededfor impairment and records a loss if the Company’scarrying value is greater than the fair value of the investment as distributions in excessand the impairment is other-than-temporary.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, the Company's net investment in one of the Company’s co-investments was negative as a result of financing distributions in excess of the Company's investment in such co-investment.2023, 2022, and 2021


(e) Revenues and Gains on Sale of Real Estate and Land


Revenues from tenants renting or leasing apartment homes are recorded when due from tenants and are recognized monthly as they are earned, which is not materially different than ongenerally approximates a straight-line basis, else, adjustments are made to conform to a straight-line basis. Apartment homes are rented under short-term leases (generally, lease terms of 69 to 12 months). Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease. See Note 4, Revenues, and Note 10, Lease Agreements - Company as Lessor, for additional information regarding such revenues.


The Company also generates other property-related revenue associated with the leasing of apartment homes, including storage income, pet rent, and other miscellaneous revenue. Similar to rental income, such revenues are recorded when due from tenants and recognized monthly as they are earned.

Apart from rental and other property-related revenue, revenues from contracts with customers are recognized as control of the promised services is passed to the customer. For customer contracts related to management and other fees from affiliates (which includes asset management and property management), the transaction price and amount of revenue to be recognized is determined each quarter based on the management fee calculated and earned for that month or quarter. The contract will contain a description of the service and the fee percentage for management services. Payments from such services are one month or one quarter in arrears of the service performed.

The Company recognizes any gains on sales of real estate when it transfers control of a contract is in place, a closing has taken place, the buyer’s initial and continuing investment is adequate to demonstrate a commitment to pay for the property and when it is probable that the Company does not have a substantial continuing involvement withwill collect substantially all of the property.related consideration.


(f) Cash, Cash Equivalents and Restricted Cash


Highly liquid investments, including certificates of deposits, generally with original maturities of three months or less when purchased are classified as cash equivalents. Restricted cash balances relate primarily to reserve requirements for capital replacement at certain communities in connection with the Company’s mortgage debt.


The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows ($ in thousands):
 202320222021
Cash and cash equivalents - unrestricted$391,749 $33,295 $48,420 
Cash and cash equivalents - restricted8,585 9,386 10,218 
Total unrestricted and restricted cash and cash equivalents shown in the consolidated statements of cash flows$400,334 $42,681 $58,638 

(g) Marketable Securities

The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds and Level 2 for the unsecured debt, as defined by the FASB standard for fair value measurements as discussed later in Note 2). As of December 31, 2023 and 2022, $0.1 million and $0.2 million, respectively, of equity securities presented within common stock and stock funds in the tables below represent investments measured at fair value, using net asset value as a practical expedient, and are not categorized in the fair value hierarchy.

Any realized and unrealized gains and losses in equity securities and interest income are included in interest and other income on the consolidated statements of income. There were no other than temporary impairment charges for the years ended December 31, 2023, 2022, and 2021. 

As of December 31, 2023 and 2022, equity securities consisted primarily of investment funds-debt securities, common stock, preferred stock and stock funds.



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December 31, 2017, 2016,2023, 2022, and 20152021



(g)  Marketable Securities

The Company reports its available for sale securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds, Level 2 for the unsecured bonds and Level 3 for investments in mortgage backed securities, as defined by the FASB standard for fair value measurements as discussed later in Note 2), and any unrealized gain or loss is recorded as other comprehensive income. There were no other than temporary impairment charges for the years ended December 31, 2017, 2016, and 2015. Realized gains and losses, interest income, and amortization of purchase discounts are included in interest and other income on the consolidated statements of income.

As of December 31, 20172023 and 2016, marketable securities consisted primarily of investment-grade unsecured bonds, common stock, investments in mortgage backed securities, and investment funds that invest in U.S. treasury or agency securities. As of December 31, 2017 and 2016, the Company classified its investments in mortgage backed securities, which mature in November 2019 and September 2020, as held to maturity, and accordingly, these securities are stated at their amortized cost. The discount on the mortgage backed securities is being amortized to interest income based on an estimated yield and the maturity date of the securities.

As of December 31, 2017 and 20162022, marketable securities consist of the following ($ in thousands):


 December 31, 2023
Amortized
Cost		Gross
Unrealized
Gain (loss)		Carrying
Value
Equity securities:
Investment funds - debt securities$26,460 $(1,584)$24,876 
Common stock, preferred stock, and stock funds51,328 11,591 62,919 
Total - Marketable securities$77,788 $10,007 $87,795 
 December 31, 2017
 
Amortized
Cost
 
Gross
Unrealized
Gain (Loss)
 
Carrying
Value
Available for sale:     
Investment-grade unsecured bonds$4,365
 $(40) $4,325
Investment funds - debt securities27,914
 (29) 27,885
Investment funds - U.S. treasuries10,999
 (55) 10,944
Common stock and stock funds34,329
 2,973
 37,302
Held to maturity: 
  
  
Mortgage backed securities109,548
 —
 109,548
Total - Marketable securities$187,155
 $2,849
 $190,004


 December 31, 2022
Amortized
Cost		Gross
Unrealized Loss		Carrying
Value
Equity securities:
Investment funds - debt securities$43,155 $(6,771)$36,384 
Common stock, preferred stock, and stock funds78,481 (2,122)76,359 
Total - Marketable securities$121,636 $(8,893)$112,743 
 December 31, 2016
 
Amortized
Cost
 
Gross
Unrealized
Gain (Loss)
 
Carrying
Value
Available for sale:     
Investment funds - debt securities$19,604
 $(73) $19,531
Investment funds - U.S. treasuries10,022
 (22) 10,000
Common stock and stock funds13,696
 1,569
 15,265
Held to maturity: 
  
  
Mortgage backed securities94,393
 —
 94,393
Total - Marketable securities$137,715
 $1,474
 $139,189

The Company uses the specific identification method to determine the cost basis of a security sold and to reclassify amounts from accumulated other comprehensive loss for securities sold.

For the years ended December 31, 2017, 2016 and 2015, the proceeds from sales and maturities of available for sale securities totaled $35.5 million, $30.5 million and $3.3 million, respectively. For the years ended December 31, 2017, 2016 and 2015 these sales resulted in gains of $1.9 million, gains of $5.7 million, and no net gains or losses, respectively.


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December 31, 2017, 2016, and 2015


For the year ended December 31, 2015, the proceeds from the sale of other investments totaled $5.6 million, which resulted in a realized gain of $0.6 million recorded in interest and other income on the consolidated statements of income. There were no such sales for the years ended December 31, 2017 and 2016.


(h) Notes Receivable
 
Notes receivable relate to real estate financing arrangements including mezzanine and bridge loans and are secured by real estate.loans. Interest is recognized over the life of the note as interest income.
 
Each note is analyzed to determine if it is impaired. A note is impaired if it is probable that the Company will not collect all contractually due principal and interest. The Company does not accrue interest when a note is considered impaired and an allowance is recorded for any principal and previously accrued interest that are not believed to be collectible. All cash receipts on impaired notes are applied to reduce the principal amount of such notes until the principal has been recovered and, thereafter, are recognized as interest income. As of December 31, 20172023 and 2016,2022, no notes were impaired.


In the normal course of business, the Company originates and holds two types of loans: mezzanine loans issued to entities that are pursuing apartment development and short-term bridge loans issued to joint ventures with the Company.

The Company categorizes development project mezzanine loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as: current financial information, credit documentation, public information, and previous experience with the borrower. The Company initially analyzes each mezzanine loan individually to classify the credit risk of the loan. On a periodic basis the Company evaluates financial information on the project, its sponsors, and its guarantors and additionallyperforms site visits of the development projects associated with the mezzanine loans to confirm whether they are on budget and whether there are any delays in development that could impact the Company's assessment of credit loss.

All bridge loans that the Company issues are, by their nature, short-term and meant only to provide time for the Company’s joint ventures to obtain long-term funding for newly acquired communities. As the Company is a partner in the joint ventures that are borrowing such funds and has performed a detailed review of each community as part of the acquisition process, there is little to no credit risk associated with such loans. As such, the Company does not review credit quality indicators for bridge loans on an ongoing basis.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

The Company estimates the allowance for credit losses for each loan type using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses.
Adjustments to historical loss information are made, if necessary, for differences in current loan-specific risk characteristics. For example, in the case of mezzanine loans, adjustments may be made due to differences in track record and experience of the mezzanine loan sponsor as well as the percent of equity that the sponsor has contributed to the project.

(i) Capitalization Policy


The Company capitalizes all direct and certain indirect costs, including interest, employee compensation costs, real estate taxes and insurance, incurred during development and redevelopment activities. Interest is capitalized on real estate assets that require a period of time to get them ready for their intended use. The amount of interest capitalized is based upon the average amount of accumulated development expenditures during the reporting period. Included in capitalized costs are management’s estimates of the direct and incremental personnel costs and indirect project costs associated with the Company's development and redevelopment activities. Indirect project costs consist primarily of personnel costs associated with construction administration and development, including accounting, legal fees, and various corporate and community onsite costs that clearly relate to projects under development. Those costs, inclusive of capitalized interest, as well as capitalized development and redevelopment fees totaled $20.3$19.5 million, $18.5$20.4 million and $17.6$23.6 million for the years ended December 31, 2017, 20162023, 2022 and 2015, respectively, most of which relates to development projects.2021, respectively. The Company capitalizes leasing costs associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized are immaterial for all periods presented.


(j) Fair Value of Financial Instruments


The Company values its financial instruments based on the fair value hierarchy of valuation techniques described in the FASB’s accounting standard for fair value measurements. Level 1 inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. The Company uses Level 1 inputs for the fair values of its cash equivalents and its marketable securities except for unsecured bonds and mortgage backed securities. The Company uses Level 2 inputs for its investments in unsecured bonds, notes receivable, notes payable, and derivative assets/liabilities. These inputs include interest rates for similar financial instruments. The Company’s valuation methodology for derivatives is described in Note 8. The Company uses Level 3 inputs to estimate the fair value of its mortgage backed securities.9. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.


Management believesestimates that the carrying amounts of the outstanding balances under its lines of credit, and notes and other receivables approximate fair value as of December 31, 20172023 and 2016,2022, because interest rates, yields and other terms for these instruments are consistent with interest rates, yields and other terms currently available for similar instruments. Management has estimated that the fair value of fixed rate debt with a carrying value of $4.9$5.7 billion at both December 31, 2023 and 2022, to be $5.3 billion and $5.1$5.2 billion including premiums, discounts and debt financing costs, at December 31, 20172023 and 2016, respectively, to be $5.0 billion and $5.1 billion.2022, respectively. Management has estimated the fair value of the Company’s $792.9$520.0 million and $499.7$274.2 million of variable rate debt net of debt financing costs, at December 31, 20172023 and 2016,2022, respectively, to be $793.9$519.0 million and $502.8$273.2 million at December 31, 2023 and 2022, respectively, based on the terms of existing mortgage notes payable, unsecured debt, and variable rate demand notes compared to those available in the marketplace. Management believesestimates that the carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, construction payables, other liabilities and dividends payable approximate fair value as of December 31, 20172023 and 20162022 due to the short-term maturity of these instruments. Marketable securities except mortgage backed securities, and derivatives are carried at fair value as of December 31, 20172023 and 2016.2022.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015


At December 31, 2017 and 2016, the Company’s investments in mortgage backed securities had a carrying value of $109.5 million and $94.4 million, respectively. The Company estimated the fair value of investment in mortgage backed securities at December 31, 2017 and 2016 to be approximately $120.7 million and $108.8 million, respectively. The Company determines the fair value of the mortgage backed securities based on unobservable inputs (Level 3 of the fair value hierarchy) considering the assumptions that market participants would make in valuing these securities. Assumptions such as estimated default rates and discount rates are used to determine expected, discounted cash flows to estimate the fair value.


(k) Interest Rate Protection, Swap, and Forward Contracts


The Company uses interest rate swaps, interest rate caps, and total return swap contracts to manage interest rate risks. The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps and interest rate caps as part of its cash flow hedging strategy. 
 
The Company records all derivatives on its consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.


For derivatives designated for accounting purposes as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated for accounting purposes as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the initial and ongoing effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction.


For derivatives not designated for accounting purposes as cash flow hedges, changes in fair value are recognized in earnings. All of the Company’s interest rate swaps are considered cash flow hedges.


(l) Income Taxes


Generally in any year in which Essex qualifies as a real estate investment trust (“REIT”("REIT") under the Internal Revenue Code (the “IRC”"IRC"), it is not subject to federal income tax on that portion of its income that it distributes to stockholders. No provision for federal income taxes, other than the taxable REIT subsidiaries discussed below, has been made in the accompanying consolidated financial statements for each of the years in the three-year period ended December 31, 20172023 as Essex has elected to be and believes it qualifies under the IRC as a REIT and has made distributions during the periods in amounts to preclude Essex from paying federal income tax.


In order to maintain compliance with REIT tax rules, the Company utilizes taxable REIT subsidiariesfor various revenue generating or investment activities. The taxable REIT subsidiaries are consolidated by the Company. In general, the activities and tax related provisions, assets and liabilities are not material. In 2016, a taxable REIT subsidiary sold two properties that it had acquired in 2007, resulting in the Company's recognition of a deferred income tax expense of approximately $4.4 million. On December 22, 2017 the Tax Cuts and Jobs Act (“Tax Act”) was signed into law, which reduced the federal income tax rate from 35% to 21% effective January 1, 2018.  As a result of the Tax Act, we remeasured our net deferred tax liabilities at December 31, 2017, accordingly a net tax benefit of $1.5 million was recorded.
As a partnership, the Operating Partnership is not subject to federal or state income taxes, except that in order to maintain Essex's compliance with REIT tax rules that are applicable to Essex, the Operating Partnership utilizes taxable REIT subsidiariesfor various revenue generating or investment activities. The taxable REIT subsidiaries are consolidated by the Operating Partnership.


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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015



The status of cash dividends distributed for the years ended December 31, 2017, 2016,2023, 2022, and 20152021 related to common stock and Series H preferred stock are classified for tax purposes as follows:
 202320222021
Common Stock
Ordinary income88.46 %80.17 %70.92 %
Capital gain8.32 %16.78 %22.07 %
Unrecaptured section 1250 capital gain3.22 %3.05 %7.01 %
 100.00 %100.00 %100.00 %
 2017 2016 2015
Common Stock     
Ordinary income84.04% 86.68% 99.28%
Capital gain13.20% 7.11% 0.72%
Unrecaptured section 1250 capital gain2.76% 6.21% —%
 100.00% 100.00% 100.00%

 2017 2016 2015
Series H Preferred stock     
Ordinary income—% 86.68% 99.28%
Capital gains—% 7.11% 0.72%
Unrecaptured section 1250 capital gain—% 6.21% —%
 —% 100.00% 100.00%


(m) Equity-based Compensation


The cost of shareshare- and unit basedunit-based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long termlong-term incentive plan units (discussed in Note 12)14) are being amortized over the expected service periods.


(n) Changes in Accumulated Other Comprehensive Loss, by Component


Changes in Accumulated Other Comprehensive Loss, Net, by Component
Essex Property Trust, Inc. ($ in thousands)
 
Change in fair
value and
amortization
of swap settlements
 
Unrealized
gains on
available for sale
securities
 Total
Balance at December 31, 2016$(32,963) $865
 $(32,098)
Other comprehensive income before reclassification24,634
 3,176
 27,810
Amounts reclassified from accumulated other comprehensive loss(12,312) (1,846) (14,158)
Other comprehensive income12,322
 1,330
 13,652
Balance at December 31, 2017$(20,641) $2,195
 $(18,446)












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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021




(n) Changes in Accumulated Other Comprehensive Income, by Component

Changes in Accumulated Other Comprehensive Loss,Income, Net, by Component
Essex Property Trust, Inc. ($ in thousands)
Change in fair
value and
amortization
of swap settlements
Balance at December 31, 2022$46,466 
Other comprehensive loss before reclassification(12,930)
Amounts reclassified from accumulated other comprehensive loss20 
Other comprehensive loss(12,910)
Balance at December 31, 2023$33,556 


Changes in Accumulated Other Comprehensive Income, by Component
Essex Portfolio, L.P. ($ in thousands)
Change in fair
value and
amortization
of swap settlements
Balance at December 31, 2022$52,010 
Other comprehensive loss before reclassification(13,384)
Amounts reclassified from accumulated other comprehensive loss20 
Other comprehensive loss(13,364)
Balance at December 31, 2023$38,646 
 
Change in fair
value and
amortization
of swap settlements
 
Unrealized
gains on
available for sale
securities
 Total
Balance at December 31, 2016$(30,161) $813
 $(29,348)
Other comprehensive income before reclassification25,477
 3,284
 28,761
Amounts reclassified from accumulated other comprehensive loss(12,733) (1,909) (14,642)
Other comprehensive income12,744
 1,375
 14,119
Balance at December 31, 2017$(17,417) $2,188
 $(15,229)


Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense on the consolidated statements of income. Realized gains and losses on available for sale securities are included in interest and other income on the consolidated statements of income.



(o) Redeemable Noncontrolling Interest


The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $39.2$32.2 million and $44.7$27.2 million as of December 31, 20172023 and 2016,2022, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances.


The changes in the redemption value of redeemable noncontrolling interests for the years ended December 31, 2017, 2016,2023, 2022, and 2015 is2021 are as follows:

 202320222021
Balance at January 1,$27,150 $34,666 $32,239 
Reclassifications due to change in redemption value and other5,055 (7,038)6,890 
Redemptions— (478)(4,463)
Balance at December 31,$32,205 $27,150 $34,666 

F- 27
 2017 2016 2015
Balance at January 1,$44,684
 $45,452
 $23,256
Reclassifications due to change in redemption value and other65
 (768) 22,196
Redemptions(5,543) —
 —
Balance at December 31,$39,206
 $44,684
 $45,452
Table of Contents

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

(p) Accounting Estimates


The preparation of consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an on-goingongoing basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate portfolio, its investments in and advances to joint ventures and affiliates, and its notes receivable.receivable, and its qualification as a REIT. The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions.


(q) Variable Interest Entities


In accordance with accounting standards for consolidation of VIEs, the Company consolidatesconsolidated the Operating Partnership, and 1618 DownREIT limited partnershipsentities (comprising eightnine communities), and eightsix co-investments as of December 31, 2017.2023 and 2022. The Company consolidates these entities because it is deemed the primary beneficiary. The Company has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the eightabove consolidated co-investments and 16 DownREIT limited partnerships,entities, net of intercompany eliminations, were approximately $837.7$956.7 million and $265.5$324.5 million, respectively, as of December 31, 2017,2023, and $746.1$939.4 million and $221.3$324.3 million, respectively, as of December 31, 2016.2022. Noncontrolling interests in these entities was $66.7were $121.1 million and $45.4$121.5 million as of December 31, 20172023 and 2016,2022, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015




The DownREIT VIEs collectively own eightnine apartment communities in which Essex Managementthe Company (“EMC”) is the general partner or manager of the DownREIT entity, the Operating Partnership is a special limited partner or member, and the other limited partners or members were granted rights of redemption for their interests. Such limited partners or members can request to be redeemed and the Company, subject to certain restrictions, can elect to redeem their rights for cash or by issuing shares of its common stock on a one share per unit basis. Conversion values will be based on the market value of the Company's common stock at the time of redemption multiplied by the number of units stipulated under various arrangements, as noted above. The other limited partners or members receive distributions based on the Company's current dividend rate timesmultiplied by the number of units held. Total DownREIT limited partnership units outstanding were 917,593936,343 and 952,140938,513 as of December 31, 20172023 and 20162022, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $221.5$232.2 million and $221.4$198.9 million, as of December 31, 20172023 and 2016,2022, respectively. The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $39.2$32.2 million and $44.7$27.2 million as of December 31, 20172023 and 2016,2022, respectively. TheOf these amounts, $12.1 million and $9.2 million as of December 31, 2023 and 2022, respectively, represent units of limited partners' or members' interests in DownREIT VIEs as to which it is outside of the Company’s control to redeem the DownREIT limited partnership units with Company common stock and may potentially be redeemed for cash, and are presented at either their redemption value or historical cost, depending on the limited partner's or members' right to redeem their units as of the balance sheet date. The carrying value of DownREIT limited partnership units as to which it is within the control of the Company to redeem the units with its common stock was $32.4 million and $18.6$97.0 million as of both December 31, 20172023 and 2016, respectively2022, and isare classified within noncontrolling interests in the accompanying consolidated balance sheets.
 
Interest holders in VIEs consolidated by the Company are allocated a priority of net income equal to the cash payments made to those interest holders or distributions from cash flow. The remaining results of operations are generally allocated to the Company.


As of December 31, 20172023 and 2016,2022, the Company did not have any other VIEs of which it was deemed to be the primary beneficiary and did not have any VIEs of which it was not deemed to be the primary beneficiary.


(r) Discontinued OperationsGovernment Assistance


The Company determined thatEmployee Retention Credit, as originally enacted by the disposalsCoronavirus Aid, Relief and Economic Security Act in March 2020, is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020 and before January 1, 2021. The purpose of the Employee Retention Credit was to encourage employers to keep employees on their payroll, even if they were not working during the years endedcovered period because of the effects of the COVID-19 pandemic. In December 31, 2017, 20162020, the Employee Retention Credit was amended and 2015 were not considered discontinued operationsextended by the Taxpayer Certainty and Disaster Tax Relief Act in accordance with ASU 2014-08. The gains related to these disposals are recorded in gain on sale of real estate and land in the consolidated statements of income.which eligible employers may claim a refundable tax credit against certain

(3) Real Estate Investments

(a) Acquisitions of Real Estate

For the year ended December 31, 2017, the Company purchased two communities consisting of 1,328 apartment homes for $273.0 million. The table below summarizes acquisition activity for the year ended December 31, 2017 ($ in millions):
Property NameLocationApartment HomesEssex Ownership PercentageQuarter in 2017Purchase Price
Palm Valley(1)
San Jose, CA1,098
100%Q1$183.0
Sage at Cupertino(2)
San Jose, CA230
41%Q190.0
Total 20171,328
 
 $273.0

(1)
In January 2017, the Company purchased its joint venture partner's 50.0% membership interest in the Palm Valley co-investment for a purchase price of $183.0 million.
(2)
In March 2017, the Company converted its existing $15.3 million preferred equity investment in Sage at Cupertino into a 40.5% equity ownership interest in the property. The Company issued DownREIT limited partnership units to the seller for the remaining equity based on an estimated property valuation of $90.0 million and an encumbrance of $52.0 million of mortgage debt. Based on a consolidation analysis performed by the Company, the property was consolidated as the Company controls the entity.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



employment taxes equal to 70% of the qualified wages an eligible employer pays to employees after December 31, 2020 through June 30, 2021. The Company adopted a policy to recognize a receivable when earned and to offset the credit against related expenses. Accordingly, the Company recorded Employee Retention Credit of zero, $4.1 million and $4.2 million for the years ended December 31, 2023, 2022 and 2021, respectively, and is reflected in general and administrative expenses, property operating, excluding real estate taxes, expenses and equity income from co-investments in the consolidated statements of operations.

(3) Real Estate Investments

(a) Acquisitions of Real Estate

The table below summarizes acquisition activity for the year ended December 31, 2023 ($ in millions):

Property NameLocationApartment HomesEssex Ownership PercentageQuarter in 2023Purchase Price
Hacienda at Camarillo OaksCamarillo, CA73 100 %Q2$23.1 
Total 202373   $23.1 

The consolidated fair value of the acquisitions listed above werewas included on the Company's consolidated balance sheet as follows: $169.5$5.5 million was included in land and land improvements, $365.7$18.0 million was included in buildings and improvements, and $3.2$0.1 million was included in prepaid expenses and other assets, within the Company's consolidated balance sheets.assets.


For the year ended December 31, 2016,2022, the Company purchased fouracquired its joint venture partner's 49.8% minority interest in two apartment communities consisting of 753211 apartment homes located in Los Angeles, CA, for $333.7a contract price of $32.9 million. As a result of this acquisition, the Company realized a gain on remeasurement of co-investment of $17.4 million upon consolidation. The consolidated fair value of the acquisitions was included on the Company's consolidated balance sheet as follows: $14.1 million was included in land and land improvements, $52.7 million was included in buildings and improvements, and $0.3 million was included in prepaid expenses and other assets.


(b) Sales of Real Estate Investments


The table below summarizes the disposition activity for the year ended December 31, 2023 ($ in millions):

Property Name (1)
LocationApartment HomesOwnershipQuarter in 2023Sales Price
CBC and The SweepsGoleta, CA239 EPLPQ1$91.7 (2)
Total 2023239   $91.7 

(1) In March 2023, the Company sold a land parcel located in Moorpark, CA, that had been held for future development, for $8.7 million and recognized a gain on sale of $4.7 million.
(2) The Company recognized a $54.5 million gain on sale.

For the year ended December 31, 2017,2022, the Company sold one community, Jefferson at Hollywood, a 270 apartment home community located in Hollywood, CA consisting of 270250 apartment homes for $132.5$160.0 million, resulting in gains totaling $26.2of $94.4 million. The table below summarizes disposition activity of operating communities for

For the year ended December 31, 2017 ($ in millions):
Property NameLocationApartment HomesEssex Ownership PercentageOwnershipQuarter in 2017Sales PriceGains
Jefferson at HollywoodHollywood, CA270
100%EPLPQ1$132.5
$26.2
Total 2017270
 
  $132.5
$26.2

During 2016,2021, the Company sold threefour apartment communities consisting of 323912 apartment homes for $80.8$330.0 million, resulting in gains totaling $14.0 million, net of $4.4 million deferred tax on gain on sale of real estate.

$143.0 million. In January 2016,conjunction with the sales, the Company sold its former headquarters office building, located in Palo Alto, CA, for gross proceedsrepaid $29.7 million of $18.0 million, resulting in a gainmortgage debt that encumbered one of $9.6 million, which is included in the line item gain on saleproperties.




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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and land in the Company's consolidated statement of income.2021


During 2015, the Company sold two communities, consisting of 848 apartment homes, for $308.8 million resulting in gains totaling $44.9 million, which are included in the line item gain on sale of real estate and land in the Company's consolidated statement of income. In March 2015, the Company sold two commercial buildings, located in Emeryville, CA for $13.0 million, resulting in gains of $2.4 million, which are included in gain on sale of real estate and land in the Company's consolidated statement of income.

(c) Real Estate Assets Held for Sale, net

As of December 31, 2017, the Company had no assets classified as held for sale.

As of December 31, 2016, Jefferson at Hollywood, a 270 apartment home community, located in Hollywood, CA, was classified as held for sale. The carrying value of $102.0 million is included in real estate assets held for sale, net, on the Company's consolidated balance sheet. See Section (b) above, Sales of Real Estate Investments, of this Note 3 for additional details on the sale of Jefferson at Hollywood in 2017.

(d) Co-investments


The Company has joint ventures and preferred equity investments in co-investments which are accounted for under the equity method. The co-investments’ accounting policies are similar to the Company’s accounting policies. The co-investments typically own, operate, and develop apartment communities.

In January 2017, Additionally, the Company purchased its joint venture partner's 50% interesthas invested in five technology co-investments and as of December 31, 2023, the Palm Valley co-investment for a contract pricebalance of $183.0these investments was $44.2 million and the aggregate commitment was $86.0 million. Prior to
As of December 31, 2022, the purchase, an approximately $220.0Company had six technology co-investments and the co-investment balance of these investments was $39.4 million mortgage encumberedand the property. Concurrent with the closingaggregate commitment was $87.0 million.

The carrying values of the acquisition,Company’s co-investments as of December 31, 2023 and 2022 are as follows ($ in thousands, except in parenthetical):
Weighted Average Essex Ownership Percentage (1)
December 31,
 20232022
Ownership interest in:
Wesco I, Wesco III, Wesco IV, Wesco V and Wesco VI (2)
54 %$144,766 $178,552 
BEXAEW, BEX II, BEX IV and 500 Folsom50 %224,119 238,537 
Other (3)
52 %68,493 74,742 
Total operating and other co-investments, net437,378 491,831 
Total development co-investments51 %14,605 12,994 
Total preferred interest co-investments (includes related party investments of $42.7 million and $87.1 million as of December 31, 2023 and 2022, respectively - Note 6 - Related Party Transactions for further discussion)544,262 580,134 
Total co-investments, net$996,245 $1,084,959 

(1)Weighted average Company ownership percentages are as of December 31, 2023.
(2)As of December 31, 2023 and 2022, the entire mortgage balance was repaidCompany's investments in Wesco I, Wesco III, and Wesco IV were classified as a liability of $61.8 million and $41.7 million, respectively, due to distributions received in excess of the property is now unencumbered. Palm Valley has 1,098 apartment homes, within four communitiesCompany's investment.
(3)As of December 31, 2023 and is located2022, the Company's investments in San Jose, CA. AsExpo and Century Towers were classified as a resultliability of this acquisition,$3.7 million and $0.8 million, respectively, due to distributions received in excess of the Company realized a gain on remeasurement of co-investment of $88.6 million upon consolidation.Company's investment. The weighted average Essex ownership percentage excludes our investments in non-core technology co-investments which are carried at fair value.



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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



The combined summarized financial information of co-investments is as follows ($ in thousands):
 December 31,
 20232022
Combined balance sheets: (1)
Rental properties and real estate under development$5,123,164 $4,955,051 
Other assets279,237 294,663 
Total assets$5,402,401 $5,249,714 
Debt$3,622,609 $3,397,113 
Other liabilities317,208 264,872 
Equity1,462,584 1,587,729 
Total liabilities and equity$5,402,401 $5,249,714 
Company's share of equity$996,245 $1,084,959 
In March 2017, the Company converted its existing $15.3 million
Years ended December 31,
 202320222021
Combined statements of income: (1)
Property revenues$409,910 $373,074 $289,680 
Property operating expenses(158,520)(140,175)(115,023)
Net operating income251,390 232,899 174,657 
Interest expense(154,038)(100,913)(65,172)
General and administrative(20,594)(20,579)(17,885)
Depreciation and amortization(174,028)(164,186)(133,787)
Net income$(97,270)$(52,779)$(42,187)
Company's share of net income (2)
$10,561 $26,030 $111,721 

(1)Includes preferred equity investment in Sage at Cupertino, a 230 apartment home community located in San Jose, CA, into a 40.5% common equity ownership interest in the property. The Company issued DownREIT limited partnership units to the other members, including an affiliate of the Marcus & Millichap Company, based on an estimated property valuation of $90.0 million. See Note 5, Related Party Transactions, for additional details. At the time of acquisition, the property was encumbered by a $52.0 million bridge loan from the Company. The Company consolidates the property based on a VIE analysis performedinvestments held by the Company.

In August 2017, a Company(2)Includes the Company's share of equity income from joint ventures and preferred equity investments, gain on sales of co-investments, co-investment Wesco I, LLC ("Wesco I"), sold Madrid, a 230 apartment home community located in Mission Viejo, CA, for $83.0promote income and income from early redemption of preferred equity investments. Includes related party income of $7.6 million, which resulted in a gain of $10.1$7.4 million, and $9.1 million for the Company, recorded in the consolidated statementyears ended December 31, 2023, 2022, and 2021, respectively.

Operating Co-investments

As of income as equity income from co-investments. Wesco I used $30.1 million of the proceeds to repay the loan on the property.

In August 2017,both December 31, 2023 and 2022, the Company, formed a newthrough several joint venture entity, Wesco V, LLC ("Wesco V"), with an institutional partner. Each partner has a 50.0% ownership interestventures, owned 10,425 apartment homes, in operating communities. The Company’s book value of these co-investments was $437.4 million and an initial equity commitment$491.8 million at December 31, 2023 and 2022, respectively.

Predevelopment and Development Co-investments

As of $150.0 million. The joint venture is unconsolidated for financial reporting purposes. Also in August 2017, Wesco V acquired 8th & Republicanboth December 31, 2023 and 360 Residences. 8th & Republican, a 211 apartment home community located in Seattle, WA, was acquired for a total contract price of $101.3 million. The property was encumbered by a $55.0 million related party bridge loan from2022, the Company, whichthrough several joint ventures, owned 264 apartment homes in predevelopment and development communities. The Company’s book value of these co-investments was paid off in November 2017. See Note 5, Related Party Transactions, for additional details related to the related party bridge loan. 360 Residences, a 213 apartment home community, located in San Jose, CA, was acquired for a total contract price of $133.5 million. In connection with this acquisition, Wesco V assumed $57.9$14.6 million of mortgage debt, with an effective interest rate of 3.4% and a maturity date of May 2022.$13.0 million at December 31, 2023 and 2022, respectively.


In October 2017, the Wesco I joint venture operating agreement was amended to extend the venture. As part of the amendment, the Company and joint venture partner agreed to a promote of $38.0 million. The Company agreed to contribute the promote to the joint venture, resulting in an increase in the Company’s ownership interest in Wesco I to approximately 58.0%.


In November 2017, the Company formed a new joint venture entity, BEX III, LLC ("BEX III), with an institutional partner. Each partner has a 50.0% ownership interest. The joint venture is unconsolidated for financial reporting purposes. Also in November 2017, BEX III acquired The Village at Toluca Lake, a 145 apartment home community, located in Burbank, CA, for a total contract price of $59.0 million. The property is encumbered by a $29.5 million related party bridge loan from the Company, which accrues interest at 3.5% and is scheduled to mature in March 2018. See Note 5, Related Party Transactions, for additional details related to the related party bridge loan.


In December 2017, a Company co-investment, BEXAEW, LLC ("BEXAEW"), sold two apartment home communities located in Seattle, WA for aggregate consideration of $160.3 million, which resulted in a gain of $34.8 million for the Company, recorded in the consolidated statement of income as equity income from co-investments. BEXAEW used $66.2 million of the proceeds to repay the loan on the property.



















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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



The carrying values of the Company’s co-investments as of December 31, 2017 and 2016 are as follows ($ in thousands):
 Weighted Average Essex Ownership December 31,
 
Percentage (1)
 2017 2016
Membership interest/Partnership interest in:     
CPPIB54% $500,287
 $422,068
Wesco I, III and IV, and V53% 214,408
 180,687
Palm Valley (2)
50% —
 68,396
BEXAEW, BEX II and BEX III (3)
50% 13,827
 67,041
Other52% 51,810
 43,713
Total operating and other co-investments, net  780,332
 781,905
Total development co-investments, net50% 73,770
 157,317
Total preferred interest co-investments (includes related party investments of $15.7 million and $35.9 million as of December 31, 2017 and December 31, 2016, respectively - FN 5 - Related Party Transactions for further discussion)  265,156
 222,053
Total co-investments  $1,119,258
 $1,161,275
(1)
Weighted average Essex ownership percentages are as of December 31, 2017.
(2)
In January 2017, the Company purchased its joint venture partner's 50.0% interest in Palm Valley and as a result of this acquisition, the Company consolidates Palm Valley.
(3)
As of December 31, 2017, the Company's investment in BEX II was classified as a liability of $36.7 million.

The combined summarized financial information of co-investments is as follows ($ in thousands):
 December 31,
 2017 2016
Combined balance sheets: (1)
   
Rental properties and real estate under development$3,722,778
 $3,807,245
Other assets110,333
 121,505
Total assets$3,833,111
 $3,928,750
Debt$1,705,051
 $1,617,639
Other liabilities45,515
 74,607
Equity2,082,545
 2,236,504
Total liabilities and equity$3,833,111
 $3,928,750
Company's share of equity$1,155,984
 $1,161,275


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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015


 
Years ended
December 31,
 2017 2016 2015
Combined statements of income: (1)
     
Property revenues$312,841
 $289,011
 $260,175
Property operating expenses(110,583) (99,637) (93,067)
Net operating income202,258
 189,374
 167,108
Gain on sale of real estate90,663
 28,291
 14
Interest expense(62,844) (46,894) (44,834)
General and administrative(9,091) (7,448) (5,879)
Depreciation and amortization(118,048) (103,986) (103,613)
Net income$102,938
 $59,337
 $12,796
Company's share of net income (2)
$86,445
 $48,698
 $21,861

(1)
Includes preferred equity investments held by the Company.
(2)
Includes the Company's share of equity income from co-investments and preferred equity investments, gain on sales of co-investments, co-investment promote income and income from early redemption of preferred equity investments. Includes related party income of $1.9 million, $3.4 million, and $3.7 million for the years ended December 31, 2017, 2016, and 2015, respectively.

Operating Co-investments

As of December 31, 2017 and 2016, the Company, through several joint ventures, owned 10,810 and 11,274 apartment homes, respectively, in operating communities. The Company’s book value of these co-investments was $780.3 million and $781.9 million at December 31, 2017 and 2016, respectively.

Development Co-Investments

As of December 31, 2017 and 2016, the Company, through several joint ventures, owned 814 and 1,427 apartment homes, respectively, in development communities. The Company’s book value of these co-investments was $73.8 million and $157.3 million at December 31, 2017 and 2016, respectively.

In 2017,2020, the Company entered into a joint venture to develop Ohlone,LIVIA at Scripps Ranch, a multi-familymultifamily community comprised of 269264 apartment homes located in San Jose,Diego, CA. The Company has a 50%51% ownership interest in the development which has a projected total cost of $136.0$102.0 million. Construction began in the third quarter of 2017 and the community is expected to open2020. The property commenced initial occupancy in the third quarter of 2019. The2023 and is projected to be fully stabilized in the first quarter of 2024. As of December 31, 2023, the Company has also committed tohad a $28.9$2.3 million preferred equity investment in the project, which accrues an annualized preferred return of 10.0% and matures in 2020.until it is redeemed.


In 2015, the Company entered into a joint venture to develop 500 Folsom, a multi-family community comprised of 545 apartment homes located in San Francisco, CA. The Company has a 50% ownership interest in the development which has a projected total cost of $415.0 million. Construction began in the fourth quarter of 2015 and the property is projected to open in the second quarter of 2019. 

Preferred Equity Investments


As of December 31, 20172023 and 2016,2022, the Company held preferred equity investment interests in several joint-venturesjoint ventures which own real estate. The Company’s book value of these preferred equity investments was $265.2$544.3 million and $222.1$580.1 million at December 31, 20172023 and 2016,2022, respectively, and is included in the co-investments line in the accompanying consolidated balance sheets.
The Company recorded a $33.7 million and a $2.1 million impairment loss from unconsolidated co-investments for the years ended December 31, 2023 and 2022, respectively, as a result of an other-than-temporary decrease in the fair value of the underlying real estate investment and is included in the equity income from co-investments line in the accompanying consolidated statements of income. The valuation for the underlying real estate investment was estimated using an income approach valuation technique.
During 2017,2023, the Company made commitments to fund $153.8$18.8 million in eightof preferred equity investments. Theseinvestment in two real estate ventures. The investments have initial accrued preferred returns ranging from 9.5%-11.3%11.0% - 13.5% with maturities ranging from October 2025 to September 2028. As of December 31, 2023, the Company had fully funded $18.8 million of the commitments.
During 2023, the Company received cash proceeds of $72.3 million, including an early redemption fee of $0.3 million, for the full redemption of two preferred equity investments and partial redemption of two preferred equity investments in joint ventures that hold properties located in California.
During 2022, the Company made commitments to fund $84.9 million of preferred equity investment in seven real estate ventures, including one with a related party. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 8.8% - 10.8%, with maturities ranging from January 2026 to September 2032. As of December 31, 2023, the Company had fully funded $84.9 million of the commitments.
During 2021, the Company made commitments to fund $67.2 million of preferred equity investment in four real estate ventures. The investments have initial preferred returns ranging from 10.0% - 12.5%, with maturities ranging from January 2026 to December 2026. As of December 31, 2023, the Company had fully funded $67.2 million of the commitments.
During 2020, the Company made commitments to fund $191.3 million of preferred equity investment in seven preferred equity investments. The investments have initial preferred returns ranging from 9.0%-11.5%, with maturities ranging from March 20202022 to AugustFebruary 2030. As of December 31, 2023, the Company had funded $182.3 million of the $191.3 million of commitments.
During 2019, the Company made commitments to fund $141.7 million of preferred equity investment in five preferred equity investments, some of which include related party sponsors. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 10.15%-11.3%, with maturities ranging from July 2022 to October 2024. As of December 31, 2017,2023, the Company had fully funded $141.7 million of the commitments.

During 2018, the Company made commitments to fund $45.1 million of preferred equity investment in two preferred equity investments, some of which include related party sponsors. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 10.25%-12.0%, with maturities ranging from May 2023 to April 2024. As of December 31, 2023, the Company had funded $77.5$42.1 million of the $153.8$45.1 million commitment.of commitments. The remaining committed amount is expected to be funded when requested by the sponsors.


In November 2021, the Company converted $11.0 million of its existing preferred equity investment in Silver, a 268-unit apartment home community located in San Jose, CA, into a 58.0% common equity interest in the property. The Company will retain its remaining $13.5 million preferred equity investment in the property at a preferred return of 8.0%. The property is encumbered by $100.0 million of mortgage debt at a fixed rate of 3.15% through December 2026.
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During 2016, the Company funded $116.1 million in five preferred equity investment. These investments have initial accrued preferred returns ranging from 10.0%-12.0%, with maturities ranging from November 2019 to November 2020.

In April 2017, the Company received cash of $12.6 million from the partial redemption of a preferred equity investment in a joint venture that holds a property located in Seattle, WA. The Company recorded a reduction of $12.4 million in its preferred equity investment. The Company recognized a gain of $0.3 million as a result of this early redemption, which is included in equity income from co-investments in the consolidated statements of income.

In August 2017, the Company received cash of $11.7 million for a full redemption of a preferred equity investment class and $6.9 million for a partial redemption of another preferred equity investment class in a joint venture that holds a property in San Jose, CA. The Company's remaining preferred equity investment in this joint venture was $13.4 million as of December 31, 2017.

In October 2017, the Company received cash of $5.1 million for the full redemption of a preferred equity investment class in a joint venture that holds property in Concord, CA. The Company recorded a reduction of $5.0 million in its preferred equity investment. The Company recognized a gain of $0.1 million as a result of this early redemption, which is included in equity income from co-investments in the consolidated statements of income.

(e)(d) Real Estate under Development


The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations. As of December 31, 2017,2023, the Company's development pipeline was comprised of five consolidated projects under development, twoone unconsolidated joint venture project under development projectsaggregating 264 apartment homes and various consolidated predevelopment projects, aggregating 1,982 apartment homes, with total incurred costs of $557.0$114.0 million.


(4) Revenues

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands):
202320222021
Rental income$1,636,070 $1,573,368 $1,410,197 
Other property22,194 22,307 21,221 
Management and other fees from affiliates11,131 11,139 9,138 
Total revenues$1,669,395 $1,606,814 $1,440,556 

The following table presents the Company’s rental and other property revenues disaggregated by geographic operating segment ($ in thousands):
202320222021
Southern California$682,116 $646,252 $574,129 
Northern California666,836 639,306 584,034 
Seattle Metro282,092 271,248 239,839 
Other real estate assets (1)
27,220 38,869 33,416 
Total rental and other property revenues$1,658,264 $1,595,675 $1,431,418 

(1)Other real estate assets consist of revenue generated from retail space, commercial properties, held for sale properties, disposition properties and straight-line rent adjustments for concessions. Executive management does not evaluate such operating performance geographically.

The following table presents the Company’s rental and other property revenues disaggregated by current property category status ($ in thousands):
202320222021
Same-property (1)
$1,581,890 $1,515,505 $1,364,379 
Acquisitions (2)
5,449 1,561 — 
Development (3)
22,883 20,425 15,807 
Redevelopment6,232 5,766 6,170 
Non-residential/other, net (4)
44,353 57,976 56,377 
Straight line rent concession (5)
(2,543)(5,558)(11,315)
Total rental and other property revenues$1,658,264 $1,595,675 $1,431,418 

(1)Properties that have comparable stabilized results as of January 1, 2022 and are consolidated by the Company for the years ended December 31, 2023, 2022, and 2021. A community is generally considered to have reach stabilized operations once it achieves an initial occupancy of 90%.
(2)Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2022.
(3)Development includes properties developed which did not have stabilized results as of January 1, 2022.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

(4)Non-residential/other, net consists of revenue generated from retail space, commercial properties, held for sale properties, disposition properties, student housing, properties undergoing significant construction activities that do not meet our redevelopment criteria, and two communities located in the California counties of Santa Barbara, and Santa Cruz, which the Company does not consider its core markets.
(5)Same-property revenues reflect concessions on a cash basis. Total rental and other property revenues reflect concessions on a straight-line basis in accordance with U.S. GAAP.

Deferred Revenues and Remaining Performance Obligations

When cash payments are received or due in advance of the Company’s performance of contracts with customers, deferred revenue is recorded. The total deferred revenue balance related to such contracts was $1.0 million and $1.7 million as of December 31, 2023 and December 31, 2022, respectively, and was included in accounts payable and accrued liabilities within the accompanying consolidated balance sheets. The amount of revenue recognized for the year ended December 31, 2023 that was included in the December 31, 2022 deferred revenue balance was $0.7 million, which was included in rental and other property revenue within the consolidated statements of income and comprehensive income.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue recognition accounting standard. As of December 31, 2023, the Company had $1.0 million of remaining performance obligations. The Company expects to recognize approximately 68% of these remaining performance obligations in 2024, an additional 27% through 2026, and the remaining balance thereafter.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less or when variable consideration is allocated entirely to a wholly unsatisfied performance obligation.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

(5) Notes and Other Receivables
 
Notes receivables, secured by real estate, and other receivables consist of the following as of December 31, 20172023 and 20162022 ($ in thousands):
 20232022
Note receivable, secured, bearing interest at 10.00%, due November 2024 (Originated November 2020)$37,582 $33,477 
Note receivable, secured, bearing interest at 11.00%, due October 2025 (Originated October 2021)50,146 21,452 
Note receivable, secured, bearing interest at 12.00%, due August 2024 (Originated August 2022)11,743 10,350 
Note receivable, secured, bearing interest at 11.25%, due October 2027 (Originated October 2022)34,929 — 
Notes and other receivables from affiliates (1)
6,111 6,975 
Straight line rent receivables (2)
9,353 12,164 
Other receivables25,444 18,961 
Allowance for credit losses(687)(334)
 Total notes and other receivables$174,621 $103,045 

 2017 2016
Notes receivable, secured, bearing interest at 10.00%, due May 2021$13,762
 $—
Note receivable, secured, bearing interest at 10.75%, due September 202029,318
 17,685
Related party note receivable, secured, bearing interest at 9.50%, due October 2019 (1)
6,656
 6,593
Related party note receivable, secured, bearing interest at 3.50%, due March 2018 (1)
29,500
 —
Notes and other receivables from affiliates (2)
5,061
 4,695
Other receivables16,629
 11,997
 Total notes and receivables$100,926
 $40,970
(1)
See Note 5, Related Party Transactions, for additional details.
(2)
(1)These amounts consist of short-term loans outstanding and due from various joint ventures as of December 31, 2023 and 2022, respectively. See Note 6, Related Party Transactions, for additional details.
(2) These amounts are receivables from lease concessions recorded on a straight-line basis for the Company's operating properties.

The following table presents the activity in the allowance for credit losses for notes and other receivables by loan type ($ in thousands):
Notes Receivable, Secured
Balance at December 31, 2017 and 2016, respectively. See Note 5, Related Party Transactions,2022$334 
Provision for additional details.credit losses353 
Balance at December 31, 2023$687 


(5)No loans were placed on nonaccrual status or charged off during the year ended December 31, 2023 or 2022.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

(6) Related Party Transactions


The Company has adopted written related party transaction guidelines that are intended to cover transactions in which the Company (including entities it controls) is a party and in which any “related person”"related person" has a direct or indirect interest. A “related person”"related person" means any person who is or was (since the beginning of the last fiscal year) a Company director, director nominee, or executive officer, any beneficial owner of more than 5% of the Company’s outstanding common stock, and any immediate family member of any of the foregoing persons. A related person may be considered to have an indirect interest in a transaction if he or she (i) is an owner, director, officer or employee of or otherwise associated with another company that is engaging in a transaction with the Company,

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015


or (ii) otherwise, through one or more entities or arrangements, has an indirect financial interest in or personal benefit from the transaction.


The related person transaction review and approval process is intended to determine, among any other relevant issues, the dollar amount involved in the transaction; the nature and value of any related person’s direct or indirect interest (if any) in the transaction; and whether or not (i) a related person’s interest is material, (ii) the transaction is fair, reasonable, and serves the best interest of the Company and its shareholders, and (iii) whether the transaction or relationship should be entered into, continued or ended.


The Company’s Chairman and founder, Mr. George Marcus, is the Chairman of the Marcus & Millichap Company (“MMC”("MMC"), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Co-ChairmanChairman of Marcus & Millichap, Inc. (“MMI”), and Mr. Marcus owns a controlling interest in MMI. MMI isMarcus & Millichap, Inc. ("MMI"), a national brokerage firm listed on the NYSE that underwent its initial public offering in 2013. For the yearyears ended December 31, 2016, the Company paid brokerage commissions totaling $1.1 million to affiliates of MMC related to real estate transactions. There2023, 2022, and 2021, there were no brokerage commissionscommission fees paid by the Company to MMI orand its affiliates during 2017 and 2015.related to real estate transactions.


The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates total $12.6totaled $12.7 million, $12.4$14.1 million, and $15.6$10.3 million for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of $1.8 million, $3.0 million, $4.2 million, and $6.7$1.1 million against general and administrative expenses for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively.


As described in Note 4,5, Notes and Other Receivables, the Company has provided short-term bridge loans to affiliates. As of December 31, 20172023 and 2016, $5.12022, $6.1 million and $4.7$7.0 million, respectively, of short-term loans remained outstanding due from joint venture affiliates and are classified within notes and other receivables in the accompanying consolidated balance sheets.

In November 2016,August 2022, the Company provided a $6.6 million mezzanine loan to a limited liability company in which MMC holds a significant ownership interest through subsidiaries. The mezzanine loan hadfunded an outstanding balance of $6.7 million and $6.6 million, as of December 31, 2017 and 2016, respectively, and is classified within notes and other receivables in the accompanying consolidated balance sheets.

In March 2017, the Company converted its existing $15.3$11.2 million preferred equity investment in Sage at Cupertino, a 230 apartment home communityan entity whose sponsor includes an affiliate of MMC. The entity owns three multifamily communities located in San Jose, CA, into a 40.5% common equity ownershipAzusa, CA. The investment initially accrues interest in the property. The Company issued DownREIT limited partnership units to the other members, including an MMC affiliate, based on an estimated property valuation of $90.0 million. At the time of the conversion, the property was encumbered by $52.0 million of mortgage debt. As a result of this transaction, the Company consolidates the property, based on a consolidation analysis performed by the Company.9.5% preferred return and is scheduled to mature in August 2027.


In August 2017,February 2022, the Company provided a $55.0$32.8 million related party bridge loan to BEX II in connection with the payoff of a property acquired bydebt related to one of its properties located in Southern California. The note receivable was scheduled to mature in March 2022, but was subsequently paid off in April 2022.

In January 2022, the Company provided a $100.7 million related party bridge loan to Wesco V, LLC.VI in connection with the acquisition of Vela. The note receivable accrued interest at 3.5%2.64% and was scheduled to mature in February 2022, but was paid off in November 2017.January 2022. Additionally, the Company received cash of $121.3 million in January 2022 for the payoff of the remaining related party bridge loans to Wesco VI as detailed below.


In November 2017,2021, the Company provided a $29.5$48.4 million related party bridge loan in connection with the purchase of an interest in a single asset entity owning an apartment home community in Vista, CA. The note receivable accrued interest at 2.36% and was scheduled to mature in February 2022 but was paid off in January 2022.

In November 2021, the Company provided a $61.9 million related party bridge loan to a property acquired by BEX III, LLC.Wesco VI in connection with the acquisition of The Rexford. The note receivable accruesaccrued interest at 3.5%2.36% and is scheduled to mature on March 9, 2018. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets and had an outstanding balance of $29.5 million as of December 31, 2017.

In 2015, the Company made preferred equity investments totaling $20.0 million in three entities affiliated with MMC that own apartment communities in California. The Company earns a 9.5% preferred return on each such investment. One $5.0 million investment, which was scheduled to mature in February 2022, but was fully redeemedpaid off in 2017. The remaining two investments are scheduled to mature inJanuary 2022.


In January 2013, the Company invested $8.6 million as a preferred equity interest investment in an entity affiliated with MMC that owns an apartment development in Redwood City, CA. In March 2015 the Company's preferred interest investment was prepaid and the Company recognized a gain of $0.5 million as a result of the prepayment.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



In 2010, an Executive Vice PresidentOctober 2021, the Company provided a $30.3 million related party bridge loan to Wesco VI in connection with the acquisition of Monterra in Mill Creek. The note receivable accrued interest at 2.30% and was scheduled to mature in April 2022, but was paid off in January 2022.

In September 2021, the Company provided a $29.2 million related party bridge loan to Wesco VI in connection with the acquisition of Martha Lake Apartments. The note receivable accrued interest at 2.15% and was scheduled to mature in December 2021. In December 2021, the maturity date of the note receivable was extended to March 2022, and in January 2022, the note receivable was paid off.

In March 2021, the Company invested $4.0provided a $52.5 million related party bridge loan to Wesco I in connection with the payoff of a debt related to one of its properties located in Southern California. The note receivable accrued interest at 2.55% and was paid off in July 2021.

In February 2019, the Company funded a $24.5 million preferred equity investment in an entity whose sponsor is an affiliate of MMC, which owns a multifamily development community located in Mountain View, CA. The investment initially accrued interest based on an 11.0% preferred return which was reduced to 9.0% upon completion and lease-up of the project. The investment was scheduled to mature in February 2024, but was paid off in December 2023.

In October 2018, the Company funded an $18.6 million preferred equity investment in an entity whose sponsor is an affiliate of MMC. The entity wholly owns a 268-unit apartment home community development located in Burlingame, CA. The investment initially accrued interest based on a 12.0% preferred return which was reduced to 9.0% upon completion and lease-up of the project. In April 2023, the investment's maturity date was extended from April 2024 to May 2026 with the investment accruing interest based on an 11.0% preferred return. In April 2023, the Company received cash of $11.2 million for the partial redemption of this preferred equity investment.

In May 2018, the Company made a 3% limited partnershipcommitment to fund a $26.5 million preferred equity investment in an entity whose sponsors include an affiliate of MMC. The entity wholly owns a 400 apartment home community located in Ventura, CA. This investment accrued interest based on a 10.25% initial preferred return. The investment was scheduled to mature in May 2023. In November 2021, the Company received cash of $18.3 million, for the partial redemption of this preferred equity investment resulting in a partnership withremaining total commitment of $13.0 million, and the maturity was extended to December 2028. As of December 31, 2023, $10.0 million of this commitment had been funded and the Company that owns Essex Skyline at MacArthur Place.continues to accrue interest based on a 9.0% preferred return. The Executive Vice President’s investmentremaining committed amount is equalexpected to a pro-rata share of the contributions to the limited partnership. The Executive Vice President’s investment also receives pro-rata distributions resulting from distributable cash generated by the propertybe funded if and when distributions are made.requested by the sponsors.


(6)(7) Unsecured Debt


Essex does not have any indebtedness as all debt is incurred by the Operating Partnership. Essex guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities up to the maximum amounts and for the full term of the facilities.
 
Unsecured debt consists of the following as of December 31, 2017 and 2016 ($ in thousands):
 2017 2016 
Weighted Average
Maturity
In Years
Unsecured bonds private placement - fixed rate$274,427
 $314,190
 3.1
Term loan - variable rate348,545
 98,189
 4.1
Bonds public offering - fixed rate2,878,737
 2,834,400
 6.4
Unsecured debt, net (1)
3,501,709
 3,246,779
  
Lines of credit (2)
179,000
 125,000
  
Total unsecured debt$3,680,709
 $3,371,779
  
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering3.7% 3.6%  
Weighted average interest rate on variable rate term loan2.5% 2.3%  
Weighted average interest rate on lines of credit2.3% 1.8%  

(1)
Includes unamortized discount of $5.2 million and $0.1 million and unamortized debt issuance costs of $18.1 million and $18.1 million as of December 31, 2017 and 2016, respectively.
(2)
Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.03 billion, excludes unamortized debt issuance costs of $3.2 million and $3.3 million as of December 31, 2017 and 2016, respectively. These debt issuance costs are included in prepaid expenses and other assets on the consolidated balance sheets.

As of December 31, 2017 and 2016, the Company had $275.0 million and $315.0 million of private placement unsecured bonds outstanding at an average effective interest rate of 4.5%, for both periods.

The following is a summary of the Company’s unsecured private placement bonds as of December 31, 2017 and 2016 ($ in thousands):
 Maturity 2017 2016 
Coupon
Rate
Senior unsecured private placement notesSeptember 2017 $—
 $40,000
 4.50%
Senior unsecured private placement notesDecember 2019 75,000
 75,000
 4.92%
Senior unsecured private placement notesApril 2021 100,000
 100,000
 4.27%
Senior unsecured private placement notesJune 2021 50,000
 50,000
 4.30%
Senior unsecured private placement notesAugust 2021 50,000
 50,000
 4.37%
    $275,000
 $315,000
  

As of December 31, 2017 and 2016, the Company had unsecured term loans outstanding of $350.0 million and $100.0 million at an average interest rate of 2.5% and 2.3%, respectively. These loans are included in the line “Term loan - variable rate” in the table above, and as of December 31, 2017 and 2016, the carrying value, net of debt issuance costs, was $348.5 million and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



Unsecured debt consists of the following as of December 31, 2023 and 2022 ($ in thousands):
20232022Weighted Average
Maturity
In Years as of December 31, 2023
Term loan - variable rate, net (1)
$298,552$(1,611)3.8
Bonds public offering - fixed rate, net5,019,9795,313,7797.1
Unsecured debt, net (2)
5,318,5315,312,168 
Lines of credit (3)
—52,073N/A
Total unsecured debt$5,318,531$5,364,241 
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering3.3 %3.3 % 
Weighted average interest rate on variable rate term loan4.2 %— % 
Weighted average interest rate on lines of credit6.3 %4.4 % 
$98.2
(1)In October 2022, the Operating Partnership obtained a $300.0 million respectively,unsecured term loan priced at Adjusted SOFR plus 0.85% and matures in October 2024 with three 12-month extension options, exercisable at the Company's option. This loan has been swapped to an all-in fixed rate of 4.2% and the swap has a termination date of October 2026. In April 2023, the Company drew down the $300.0 million unsecured term loan maturesand in February 2022.May 2023 used the proceeds to repay the Company's $300.0 million unsecured notes due in May 2023. The unsecured term loan includes unamortized debt issuance costs of $1.4 million and $1.6 million of as of December 31, 2023 and 2022, respectively.
(2)Includes unamortized discount, net of premiums, of $6.1 million and $7.9 million and unamortized debt issuance costs of $25.3 million and $29.9 million as of December 31, 2023 and 2022, respectively.
(3)Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.24 billion, excludes unamortized debt issuance costs of $3.8 million and $5.1 million as of December 31, 2023 and 2022, respectively. These debt issuance costs are included in prepaid expenses and other assets on the consolidated balance sheets. As of December 31, 2023, the Company's $1.2 billion credit facility had an interest rate at the Adjusted SOFR plus 0.75%, which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity of January 2027 with two six-month extension options, exercisable at the Company's option. As of December 31, 2023, the Company's $35.0 million working capital unsecured line of credit had an interest rate of Adjusted SOFR plus 0.75%, which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity of July 2024.

In March 2021, the Operating Partnership issued $450.0 million of senior unsecured notes due on March 1, 2028 with a coupon rate of 1.700% per annum (the "2028 Notes"), which are payable on March 1 and September 1 of each year, beginning on September 1, 2021. The 2028 Notes were offered to investors at a price of 99.423% of par value. The 2028 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. The Company had entered into five interest rate swap contracts,used the net proceeds of this offering to repay upcoming debt maturities, including all or a portion of certain unsecured term loans, and for a termgeneral corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of five yearsDecember 31, 2023, and 2022, the carrying value of the 2028 Notes, net of discount and debt issuance costs, was $446.3 million and $445.4 million, respectively.

In June 2021, the Operating Partnership issued $300.0 million of senior unsecured notes due on June 15, 2031 with a notionalcoupon rate of 2.550% per annum (the "June 2031 Notes"), which are payable on June 15 and December 15 of each year, beginning on December 15, 2021. The June 2031 Notes were offered to investors at a price of 99.367% of par value. The June 2031 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. The Company used the net proceeds of this offering to repay upcoming debt maturities, including to fund the redemption of $300.0 million aggregate principal amount totaling $175.0(plus the make-whole amount and accrued and unpaid interest) of its outstanding 3.375% senior unsecured notes due January 2023, and for other general corporate and working capital purposes.
F- 38
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2023, and 2022, the carrying value of the June 2031 Notes, net of discount and debt issuance costs, was $296.7 million and $296.2 million, respectively.

In February 2020, the Operating Partnership issued $500.0 million of senior unsecured notes due on March 15, 2032, with a coupon rate of 2.650% (the "2032 Notes"), which will effectively convertare payable on March 15 and September 15 of each year, beginning on September 15, 2020. The 2032 Notes were offered to investors at a price of 99.628% of par value. The 2032 Notes are general unsecured senior obligations of the interest rate on $175.0Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. The Company used the net proceeds of this offering to repay indebtedness under its unsecured lines of credit, which had been used to fund the buyout of CPPIB's 45.0% joint venture interests, as well as repay $100.3 million of secured debt during the quarter that ended March 31, 2020. In June 2020, the Operating Partnership issued an additional $150.0 million of the term loan2032 Notes at a price of 105.660% of par value, plus accrued interest from February 2020 up to, but not including, the date of delivery of the additional notes, with an effective yield of 2.093%. These additional notes have substantially identical terms as the 2032 Notes issued in February 2020. The proceeds were used to repay indebtedness under the Company's unsecured credit facilities and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2023, and 2022, the carrying value of the 2032 Notes, net of premiums and debt issuance costs, was $650.7 million and $650.8 million respectively.

In August 2020, the Operating Partnership issued $600.0 million of senior unsecured notes, consisting of $300.0 million aggregate principal amount due on January 15, 2031 with a fixedcoupon rate of 2.3%1.650% (the “January 2031 Notes”) and $300.0 million aggregate principal amount due on September 1, 2050 with a coupon rate of 2.650% (the “2050 Notes” and together with the January 2031 Notes, the “Notes”). The January 2031 Notes were offered to investors at a price of 99.035% of par value and the 2050 Notes at 99.691% of par value. Interest is payable on the January 2031 Notes semiannually on January 15 and July 15 of each year, beginning on January 15, 2021. Interest is payable on the 2050 Notes semiannually on March 1 and September 1 of each year, beginning on March 1, 2021. The Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. The Company used the net proceeds of this offering to repay debt maturities, including certain unsecured private placement notes, secured mortgage notes, and to fund the redemption of $300.0 million aggregate principal amount of its outstanding 3.625% senior unsecured notes due August 2022, and for other general corporate and working capital purposes. These interestbonds are included in the line "Bonds public offering-fixed rate" in the table above, the carrying value of the January 2031 Notes and 2050 Notes, net of discount and debt issuance costs was $296.1 million and $296.0 million, respectively as of December 31, 2023, and $295.5 million and $295.8 million, respectively as of December 31, 2022.

In August 2019, the Operating Partnership issued $400.0 million of senior unsecured notes due on January 15, 2030, with a coupon rate swapsof 3.000% per annum (the "2030 Notes"), which are accountedpayable on January 15 and July 15 of each year, beginning on January 15, 2020. The 2030 Notes were offered to investors at a price of 98.632% of the principal amount thereof. The 2030 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex Property Trust, Inc. In October 2019, the Operating Partnership issued an additional $150.0 million of the 2030 notes at a price of 101.685% of the principal amount thereof. These additional notes have substantially identical terms as the 2030 Notes issued in August 2019. The Company used the net proceeds of these offerings to prepay, with no prepayment penalties, certain secured indebtedness under outstanding mortgage notes, to repay indebtedness under its unsecured lines of credit and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as cash flow hedges.of December 31, 2023, and 2022, the carrying value of the 2030 Notes, net of discount and debt issuance costs, was $545.5 million and $544.7 million, respectively.


In February 2019, the Operating Partnership issued $350.0 million of senior unsecured notes due on March 1, 2029, with a coupon rate of 4.000% per annum (the "2029 Notes"), which are payable on March 1 and September 1 of each year, beginning on September 1, 2019. The 2029 Notes were offered to investors at a price of 99.188% of the principal amount thereof. The 2029 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex Property Trust, Inc. In March 2019, the Operating Partnership issued an additional $150.0 million of the 2029 Notes at a price of 100.717% of the principal amount thereof.
F- 39
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

These additional notes have substantially identical terms as the 2029 Notes issued in February 2019. The Company used the net proceeds of these offerings to repay indebtedness under its unsecured lines of credit and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2023, and 2022, the carrying value of the 2029 Notes, net of discount and debt issuance costs was $496.7 million and $496.0 million, respectively.

In March 2018, the Operating Partnership issued $300.0 million of senior unsecured notes due on March 15, 2048 with a coupon rate of 4.500% per annum and are payable on March 15 and September 15 of each year, beginning on September 15, 2018 (the "2048 Notes"). The 2048 Notes were offered to investors at a price of 99.591% of par value. The 2048 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2023 and 2022, the carrying value of the 2048 Notes, net of discount and debt issuance costs was $296.2 million and $296.1 million, respectively.

In April 2017, the CompanyOperating Partnership issued $350.0 million of senior unsecured notes due on May 1, 2027 with a coupon rate of 3.625% per annum and are payable on May 1 and November 1 of each year, beginning on November 1, 2017 (the "2027 Notes"). The 2027 notesNotes were offered to investors at a price of 99.423% of par value. The 2027 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line “Bonds"Bonds public offering-fixed rate”rate" in the table above, and as of December 31, 2017,2023 and 2022, the carrying value of the 2027 Notes, net of discount and debt issuance costs was $345.2 million.$348.3 million and $347.8 million, respectively.


In April 2016, the CompanyOperating Partnership issued $450.0 million of senior unsecured notes due on April 15, 2026 with a coupon rate of 3.375% per annum and are payable on April 15th and October 15th of each year, beginning October 15, 2016 (the "2026 Notes"). The 2026 Notes were offered to investors at a price of 99.386% of par value. The 2026 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line “Bonds"Bonds public offering-fixed rate”rate" in the table above, and as of December 31, 20172023 and 2016,2022, the carrying value of the 2026 Notes, net of discount and debt issuance costs was $444.4$448.4 million and $443.7$447.8 million, respectively.


In March 2015, the CompanyOperating Partnership issued $500.0 million of senior unsecured notes due on April 1, 2025 with a coupon rate of 3.5% per annum and are payable on April 1st and October 1st of each year, beginning October 1, 2015 (the "2025 Notes"). The 2025 Notes were offered to investors at a price of 99.747% of par value. The 2025 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line “Bonds"Bonds public offering-fixed rate”rate" in the table above, and as of December 31, 20172023 and 2016,2022, the carrying value of the 2025 Notes, net of discount and debt issuance costs was $495.9$499.3 million and $495.4$498.8 million, respectively.


In April 2014, the Company assumed $900.0 million aggregate principal amount of BRE Property Inc.’s 5.500% senior notes due 2017; 5.200% senior notes due 2021; and 3.375% senior notes due 2023 (together the “BRE Notes”). These notes are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2017 and 2016, the carrying value of the BRE Notes, plus unamortized premium was $603.2 million and $907.1 million, respectively. In March 2017, the Company paid off $300.0 million of 5.500% senior notes, at maturity.

In April 2014, the CompanyOperating Partnership issued $400.0 million of senior unsecured notes due on May 1, 2024 with a coupon rate of 3.875% per annum and are payable on May 1st and November 1st of each year, beginning November 1, 2014 (the "2024 Notes"). The 2024 Notes were offered to investors at a price of 99.234% of par value. The 2024 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 20172023 and 2016,2022, the carrying value of the 2024 Notes, net of discount and debt issuance costs was $395.8$399.8 million and $395.1$399.1 million, respectively.


In April 2013, the CompanyOperating Partnership issued $300.0 million of senior unsecured notes due on May 1, 2023 with a coupon rate of 3.25% per annum and are payable on May 1st and November 1st of each year, beginning November 1, 2013 (the "2023 Notes"). The 2023 Notes were offered to investors at a price of 99.152% of par value. The 2023 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line “Bonds"Bonds public offering-fixed rate”rate" in the table above,above. These notes were paid off at maturity and as of December 31, 2017 and 2016,2023, the 2023 Notes had no amount outstanding. As of December 31, 2022, the carrying value of the 2023 Notes, net of discount and debt issuance costs was $297.0 million and $296.5 million, respectively.$299.8 million.

During the third quarter of 2012, the Company issued $300.0 million of senior unsecured notes due August 2022 with a coupon rate of 3.625% per annum and are payable on February 15th and August 15th of each year, beginning February 15, 2013 (the "2022 Notes"). The 2022 Notes were offered to investors at a price of 98.99% of par value. The 2022 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These

F- 3640
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021




bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2017 and 2016, the carrying value of the 2022 Notes, net of unamortized discount and debt issuance costs was $297.2 million and $296.6 million, respectively.

The following is a summary of the Company’s senior unsecured notes as of December 31, 20172023 and 20162022 ($ in thousands):
Maturity20232022Coupon
Rate
Senior notesMay 2023$— $300,000 3.250 %
Senior notesMay 2024400,000 400,000 3.875 %
Senior notesApril 2025500,000 500,000 3.500 %
Senior notesApril 2026450,000 450,000 3.375 %
Senior notesMay 2027350,000 350,000 3.625 %
Senior notesMarch 2028450,000 450,000 1.700 %
Senior notesMarch 2029500,000 500,000 4.000 %
Senior notesJanuary 2030550,000 550,000 3.000 %
Senior notesJanuary 2031300,000 300,000 1.650 %
Senior notesJune 2031300,000 300,000 2.550 %
Senior notesMarch 2032650,000 650,000 2.650 %
Senior notesMarch 2048300,000 300,000 4.500 %
Senior notesSeptember 2050300,000 300,000 2.650 %
   $5,050,000 $5,350,000  

 Maturity 2017 2016 Coupon
Rate
Senior notesMarch 2017 $—
 $300,000
 5.500%
Senior notesMarch 2021 300,000
 300,000
 5.200%
Senior notesAugust 2022 300,000
 300,000
 3.625%
Senior notesJanuary 2023 300,000
 300,000
 3.375%
Senior notesMay 2023 300,000
 300,000
 3.250%
Senior notesMay 2024 400,000
 400,000
 3.875%
Senior notesApril 2025 500,000
 500,000
 3.500%
Senior notesApril 2026 450,000
 450,000
 3.375%
Senior notesMay 2027 350,000
 —
 3.625%
    $2,900,000
 $2,850,000
  

The aggregate scheduled principal payments of unsecured debt payable, excluding lines of credit, at December 31, 20172023 are as follows ($ in thousands):
2024$400,000 
2025500,000 
2026450,000 
2027650,000 
2028450,000 
Thereafter2,900,000 
$5,350,000 
2018$—
201975,000
2020—
2021(1)
500,000
2022650,000
Thereafter2,300,000
 $3,525,000

(1)
Amount does not include $179.0 million outstanding on the Company's lines of credit as of December 31, 2017, that becomes due in December 2021 in accordance with the January 2018 amendment.


As of December 31, 2017,2023, the Company’s $1.0Company had two unsecured lines of credit aggregating $1.24 billion, including a $1.2 billion unsecured line of credit facility had an interest rateand a $35.0 million working capital unsecured line of LIBOR plus 0.90%, which was based on a tiered rate structure tied to the Company’s corporate ratings. The Company’s $1.0 billion credit facility was scheduled to mature in December 2020 with one 18-month extension, exercisable at the Company’s option.  credit.

As of December 31, 20172023 and 2016,2022, there was no amount and $40.0 million outstanding on the balance$1.2 billion unsecured line of the $1.0 billioncredit, respectively. As of December 31, 2023 and 2022, this credit facility was $179.0 million and $125.0 million, respectively. In January 2018, the Company amended the $1.0 billion credit facility such that the line's capacity was increased to $1.2 billion and thehad a scheduled maturity date was extended to December 2021,of January 2027 with one-18 monthtwo six-month extension options, exercisable at the Company's option. The underlying interest rate is based on a tiered rate structure tied to the Company's corporate ratings and is at LIBOR plus 0.875%. As of December 31, 2017, the Company’s $25.0 million working capital unsecured line of credit had an interest rate of LIBOR plus 0.90%, which was based on a tiered rate structure tied to the Company’s credit ratings. The $25.0 million credit facility was scheduled to mature in January 2018. As of December 31, 2017 and 2016, there was a zero balance outstanding on this unsecured line. In January 2018, the Company amended the $25.0 million credit facility such that the line's capacity was increased to $35.0 million and the scheduled maturity date was extended to January 2020. The underlying interest rate on the amended line is based on a tiered rate structure tied to the Company's corporate ratings, adjusted for the Company's sustainability metric grid, and is at LIBORthe Adjusted SOFR plus 0.875%0.75%.


As of December 31, 2023 and 2022, there was no amount and $12.1 million outstanding on the Company's $35.0 million working capital unsecured line of credit, respectively. As of December 31, 2023 and 2022, the line of credit facility had a scheduled maturity date of July 2024. The underlying interest rate on this line is based on a tiered rate structure tied to the Company's corporate ratings, adjusted for the Company's sustainability metric grid, and is at the Adjusted SOFR plus 0.75%.

The Company’s unsecured lines of credit and unsecured debt agreements contain debt covenants related to limitations on indebtedness and liabilities, and maintenance of minimum levels of consolidated earnings before depreciation, interest and amortization. The Company was in compliance with the debt covenants as of December 31, 20172023 and 2016.2022.


F- 3741
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021




(7)(8) Mortgage Notes Payable


Essex does not have any indebtedness as all debt is incurred by the Operating Partnership. Mortgage notes payable consist of the following as of December 31, 20172023 and 20162022 ($ in thousands):
 20232022
Fixed rate mortgage notes payable$665,711 $371,849 
Variable rate mortgage notes payable (1)
221,493 222,094 
Total mortgage notes payable (2)
$887,204 $593,943 
Number of properties securing mortgage notes15 11 
Remaining terms1-23 years2-24 years
Weighted average interest rate4.3 %3.5 %

 2017 2016
Fixed rate mortgage notes payable$1,739,856
 $1,911,699
Variable rate mortgage notes payable (1)
268,561
 279,782
Total mortgage notes payable (2)
$2,008,417
 $2,191,481
Number of properties securing mortgage notes56
 61
Remaining terms1-29 years
 1-30 years
Weighted average interest rate4.2% 4.3%

The aggregate scheduled principal payments of mortgage notes payable at December 31, 20172023 are as follows ($ in thousands):
2024$3,109 
2025133,054 
202699,405 
2027153,955 
202868,332 
Thereafter431,937 
 $889,792 

2018$202,131
2019560,389
2020694,921
202144,846
202242,466
Thereafter435,808
 $1,980,561
(1)Variable rate mortgage notes payable, including $222.7 million in bonds that have been converted to variable rate through total return swap contracts, consists of multifamily housing mortgage revenue bonds secured by deeds of trust on rental properties and guaranteed by collateral pledge agreements, payable monthly at a variable rate as defined in the Loan Agreement (approximately 4.6% at December 2023 and 3.5% at December 2022) including credit enhancement and underwriting fees. Among the terms imposed on the properties, which are security for the bonds, is a requirement that 20% of the apartment homes are subject to tenant income criteria. Once the bonds have been repaid, the properties may no longer be obligated to comply with such tenant income criteria. Principal balances are due in full at various maturity dates from December 2027 through December 2046. The Company had no interest rate cap agreements as of December 31, 2023 and 2022, respectively.

(1)
Variable rate mortgage notes payable, including $256.6 million in bonds that have been converted to variable rate through total return swap contracts, consists of multi-family housing mortgage revenue bonds secured by deeds of trust on rental properties and guaranteed by collateral pledge agreements, payable monthly at a variable rate as defined in the Loan Agreement (approximately 2.0% at December 2017 and 1.2% at December 2016) including credit enhancement and underwriting fees. Among the terms imposed on the properties, which are security for the bonds, is a requirement that 20% of the apartment homes are subject to tenant income criteria. Principal balances are due in full at various maturity dates from May 2025 through December 2046. Of these bonds, $20.7 million are subject to various interest rate cap agreements that limit the maximum interest rate to such bonds.
(2)
Includes total unamortized premium of $33.2 million and $50.8 million and reduced by unamortized debt issuance costs of $5.4 million and $7.4 million as of December 31, 2017 and 2016, respectively.

(2)In July 2023, the Company closed $298.0 million in 10-year secured loans priced at a 5.08% fixed interest rate. Includes total unamortized premium, net of discounts, of $0.5 million and $1.2 million and reduced by unamortized debt issuance costs of $3.1 million and $2.0 million as of December 31, 2023 and 2022, respectively.

For the Company’s mortgage notes payable as of December 31, 2017,2023, monthly interest expense and principal amortization, excluding balloon payments, totaled approximately $7.0$2.7 million and $2.5$0.3 million, respectively. Second deeds of trust accounted for none of the mortgage notes payable balance as of both December 31, 20172023 and 2016.2022. Repayment of debt before the scheduled maturity date could result in prepayment penalties. The prepayment penalty on the majority of the Company’s mortgage notes payable are computed by the greater of (a) 1% of the amount of the principal being prepaid or (b) the present value of the mortgage note payable which is calculated by multiplying the principal being prepaid multiplied by the difference between the interest rate of the mortgage note and the stated yield rate on a specified U.S. treasury security which generally has an equivalent remaining term as defined in the mortgage note agreement.note.


(8)(9) Derivative Instruments and Hedging Activities


The Company uses interest rate swaps, interest rate caps, and total return swap contracts to manage certain interest rate risks. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps and total return swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate

F- 3842
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.


In November 2016, the Company replaced its $225.0 million term loan with a $350.0 million five-year term loan with a delayed draw feature. The term loan carries a variable interest rate of LIBOR plus 95 basis points. In 2016, the Company entered into four forward starting interest rate swaps (settlement payments commenced in March 2017) and in 2017,September 2022, the Company entered into one forward starting interest rate swap, (settlementwith settlement payments commencedcommencing in March 2017) allMay 2023, related to the $350.0$300.0 million unsecured term loan entered into in October 2022. In April 2023, the Company drew down the $300.0 million term loan. These five swaps, with a total notional amount of $175.0 million bearloan priced at Adjusted SOFR plus 0.85%, which has been swapped to an averageall-in fixed interest rate of 2.3%4.2%. The term loan matures in October 2024 with three 12-month extension options, each exercisable at the Company's option and are scheduled to mature in February 2022. These derivatives qualifythe swap has a termination date of October 2026. This derivative qualifies for hedge accounting. As of December 31, 2023 and 2022, the Company had an outstanding balance on the unsecured term loan of $300.0 million and zero, respectively.


As of December 31, 20172023 and 2016,2022, the Company had no interest rate caps, which were not accounted for as hedges, with an aggregate notional amount of $20.7 million, which effectively limits the Company’s exposure to interest rate risk by providing a ceiling on the underlying variable interest rate for a portion of the Company’s tax exempt variable rate debt.caps.


As of December 31, 20172023 and 2016,2022, the aggregate carrying value of the interest rate swap contracts waswere an asset of $5.4$4.3 million and $4.4$5.6 million, respectively. As of December 31, 2023 and 2022, the swap contracts were presented in the consolidated balance sheets as an asset of $4.3 million and $5.6 million, respectively, and iswere included in prepaid expenses and other assets on the consolidated balance sheets, and a liability of zero and $0.03 million, respectively, and is included in other liabilities on the consolidated balance sheets. The aggregate carrying value of the interest rate cap was zero on the balance sheet as of December 31, 2017 and December 31, 2016.


Hedge ineffectiveness related to cash flow hedges, which is reportedincluded in current year income as interest expense was $0.1 million and $0.3 millionon the consolidated statements of income, was zero for the years ended December 31, 20172023, 2022, and 2016,2021 respectively. Hedge ineffectiveness was not significant for the year ended December 31, 2015.


Additionally, theThe Company has entered intofour total return swapsswap contracts, with an aggregate notional amount of $222.7 million, that effectively convert $256.6$222.7 million of mortgage notes payable to a floating interest rate based on SIFMAthe Securities Industry and Financial Markets Association Municipal Swap Index ("SIFMA") plus a spread. The total return swaps provide fair market value protection on the mortgage notes payable to its counterparties during the initial period of the total return swap until the Company's option to call the mortgage notes at par can be exercised. The Company can currently callsettle all four of the total return swaps with $256.6$222.7 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting and had a carrying and fair value of zero at both December 31, 20172023 and 2016.2022, respectively. These total return swaps are scheduled to mature between September 2021December 2024 and November 2022.2033. The realized gains of $10.1$3.1 million, $11.7$7.9 million, and $5.7$10.8 million as offor the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, respectively, were reported in current yearon the consolidated statements of income as total return swap income.


(9)(10) Lease Agreements - Company as Lessor


As of December 31, 2017,2023, the Company is a lessor for oneof apartment homes at all of its consolidated operating and lease-up communities, three commercial buildingbuildings, and the commercial portions of 37 mixed use communities. The tenants’apartment homes are rented under short-term leases (generally, lease terms expireof 9 to 12 months) while commercial lease terms typically range from 5 to 20 years. All such leases are classified as operating leases.

Although the majority of the Company’s apartment home and commercial leasing income is derived from fixed lease payments, some lease agreements also allow for variable payments. The primary driver of variable leasing income comes from utility reimbursements from apartment home leases and common area maintenance reimbursements from commercial leases. A small number of commercial leases contain provisions for lease payments based on a percentage of gross retail sales over set hurdles.

At the end of the term of apartment home leases, unless the lessee decides to renew the lease with the Company at various times through 2031.the market rate or gives notice not to renew, the lease will be automatically renewed for a successive, like term up to a maximum of 12 months. Apartment home leases include an option to terminate the lease, however the lessee must pay the Company for expected or actual downtime to find a new tenant to lease the space or a lease-break fee specified in the lease agreement. Most commercial leases include options to renew, with the renewal periods extending the term of the lease for no greater than the same period of time as the original lease term. The future minimum non-cancelable base rentinitial option to renew for commercial leases will typically be based on a fixed price while any subsequent renewal options will generally be based on the current market rate at the time of the renewal. Certain commercial leases contain lease termination options that would require the lessee to pay termination fees based on the expected amount of time it would take the Company to re-lease the space.

The Company’s apartment home and commercial lease agreements do not contain residual value guarantees. As the Company is the lessor of real estate assets which tend to either hold their value or appreciate, residual value risk is not deemed to be received under these operating leasessubstantial. Furthermore, the Company carries comprehensive liability, fire, extended coverage, and rental loss insurance for each of the years ending after December 31 is summarizedits communities as follows ($ in thousands):well as limited insurance coverage for certain types of extraordinary losses, such as, for example, losses from terrorism or earthquakes.
 Future
 Minimum
 Rent
2018$13,791
201913,257
202012,392
202110,745
20229,486
Thereafter28,454
 $88,125




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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021




(10)A maturity analysis of undiscounted future minimum non-cancelable base rent to be received under the above operating leases as of December 31, 2023 is summarized as follows ($ in thousands):
Future Minimum Rent
2024$751,320 
202533,230 
202615,706 
202713,946 
202811,978 
Thereafter20,164 
$846,344 

The Company accounts for operating lease (e.g., fixed payments including rent) and non-lease components (e.g., utility reimbursements and common-area maintenance costs) as a single combined lease component under ASC 842 "Leases" as the lease components are the predominant elements of the combined components.

(11) Lease Agreements - Company as Lessee

As of December 31, 2023, the Company is a lessee of corporate office space, ground leases and a parking lease associated with various consolidated properties, and equipment. Lease terms for the Company's office leases, in general, range between 5 to 10 years while ground leases and the parking lease have terms typically ranging from 20 to 85 years. The corporate office leases occasionally contain renewal options of approximately five years while certain ground leases contain renewal options that can extend the lease term from approximately 10 to 39 years.

A majority of the Company’s ground leases and the parking lease are subject to changes in the Consumer Price Index ("CPI"). Furthermore, certain of the Company’s ground leases include rental payments based on a percentage of gross or net income. While lease liabilities are not remeasured as a result of changes in the CPI or percentage of gross or net income, such changes are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred.

The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

As of December 31, 2023 and 2022, the Company had no material finance leases.

Supplemental consolidated balance sheet information related to leases as of December 31, 2023 and 2022 is as follows ($ in thousands):
ClassificationDecember 31, 2023December 31, 2022
Assets
     Operating lease right-of-use assetsOperating lease right-of-use assets$63,757 $67,239 
          Total leased assets$63,757 $67,239 
Liabilities
     Operating lease liabilitiesOperating lease liabilities$65,091 $68,696 
          Total lease liabilities$65,091 $68,696 

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

The components of lease expense for the years ended December 31, 2023 and 2022 were as follows ($ in thousands):
 December 31, 2023December 31, 2022
Operating lease cost$6,789 $6,697 
Variable lease cost1,961 1,750 
Short-term lease cost186 204 
Sublease income(500)(418)
          Total lease cost$8,436 $8,233 

A maturity analysis of lease liabilities as of December 31, 2023 is as follows ($ in thousands):
Operating Leases
2024$7,251 
20256,887 
20265,035 
20273,421 
20283,102 
Thereafter129,452 
Total lease payments$155,148 
Less: Imputed interest(90,057)
Present value of lease liabilities$65,091 

Lease term and discount rate information for leases at December 31, 2023 and 2022 are as follows:
December 31, 2023December 31, 2022
Weighted-average of remaining lease terms (years)
     Operating Leases4040
Weighted-average of discount rates
     Operating Leases5.03 %5.01 %

Practical Expedients

Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes the lease expense for such leases on a straight-line basis over the lease term.

The Company has elected to account for lease components (e.g., fixed payments including rent) and non-lease components (e.g., common-area maintenance costs) as a single combined lease component as the lease components are the predominant elements of the combined components.

(12) Equity Transactions
 
Preferred Securities Offerings

In April 2016, the Company redeemed all of the issued and outstanding 2,950,000 shares of the Company's 7.125% Series H Cumulative Redeemable Preferred Stock ("Series H") for $25.00 per share for $73.8 million in cash. In connection with the Series H redemption, the Operating Partnership redeemed the Series H 7.125% Preferred Interest. The notice of redemption was given in March 2016, which resulted in the Company and the Operating Partnership each recording $2.5 million in excess of redemption value over carrying value charge to 2016 net income attributable to common stockholders and net income related to unitholders, respectively.

Common Stock Offerings


During 2017,In September 2021, the Company issued 345,444entered into a new equity distribution agreement pursuant to which the Company may offer and sell shares of its common stock through its equity distribution program athaving an averageaggregate gross sales price of $260.38 forup to $900.0 million (the "2021 ATM Program"). In connection with the 2021 ATM Program, the Company may also enter into related forward sale agreements, and may sell shares of its common stock pursuant to these agreements. The use of a forward sale agreement would allow the Company to lock in a share price on the sale of shares of its common stock at the time the agreement is executed, but defer receipt of the proceeds from the sale of $89.1 million, netshares until a later date should the Company elect to settle such forward sale agreement, in whole or in part, in shares of feesits common stock.
F- 45
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and commissions. During 2016,2021

For the years ended December 31, 2023 and 2022, the Company did not issuesell any shares of its common stock through its equity distribution program. During the first quarter2021 ATM Program. As of 2018 through February 15, 2018, Essex has not issued anyDecember 31, 2023, there are no outstanding forward sale agreements, and $900.0 million of shares remain available to be sold under its equity distribution program.

the 2021 ATM Program.
Operating Partnership Units and Long TermLong-Term Incentive Plan (“LTIP”("LTIP") Units


As of December 31, 20172023 and 2016,2022, the Operating Partnership had outstanding 2,054,8142,161,175 and 2,056,263 operating partnership units2,166,359 OP Units respectively. As of December 31, 2023 and 213,2992022 the Operating Partnership had 97,637 and 181,027106,137 vested LTIP units respectively. The Operating Partnership’s general partner, Essex, owned 96.7%96.6% of the partnership interests in the Operating Partnership atas of both December 31, 20172023 and 2016,2022, and Essex is responsible for the management of the Operating Partnership’s business. As the general partner of the Operating Partnership, Essex effectively controls the ability to issue common stock of Essex upon a limited partner’s notice of redemption. Essex has generally acquired Operating Partnership limited partnership units ("OP Units")Units upon a limited partner’s notice of redemption in exchange for shares of its common stock. The redemption provisions of OP Units owned by limited partners that permit Essex to settle in either cash or common stock at the option of Essex were further evaluated in accordance with applicable accounting guidance to determine whether temporary or permanent equity classification on the balance sheet is appropriate. The Operating Partnership evaluated this guidance, including the requirement to settle in unregistered shares, and determined that, with few exceptions, these OP Units meet the requirements to qualify for presentation as permanent equity.


LTIP units represent an interest in the Operating Partnership for services rendered or to be rendered by the LTIP unit holderunitholder in its capacity as a partner, or in anticipation of becoming a partner, in the Operating Partnership. Upon the occurrence of specified events, LTIP units may over time achieve full parity with common units of the Operating Partnership for all purposes. Upon achieving full parity, LTIP units will be exchanged for an equal number of the OP Units.


The collective redemption value of OP Units and LTIP units owned by the limited partners, not including Essex, was approximately $547.5$560.0 million and $520.2$481.6 million based on the closing price of Essex's common stock as of December 31, 20172023 and 2016,2022, respectively.



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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



(11)(13) Net Income Per Common Share and Net Income Per Common Unit


Essex Property Trust, Inc.


Basic and diluted income per share is calculated as follows for the years ended December 31 ($ in thousands, except share and per share amounts):
 202320222021
IncomeWeighted-
average
Common
Shares		Per
Common
Share
Amount		IncomeWeighted-
average
Common
Shares		Per
Common
Share
Amount		IncomeWeighted-
average
Common
Shares		Per
Common
Share
Amount
Basic:
Net income available to common stockholders$405,825 64,252,232 $6.32 $408,315 65,079,764 $6.27 $488,554 65,051,465 $7.51 
Effect of dilutive securities
Stock options— 1,153 — 18,422 — 37,409 
Diluted:         
Net income available to common stockholders$405,825 64,253,385 $6.32 $408,315 65,098,186 $6.27 $488,554 65,088,874 $7.51 
 2017 2016 2015
 Income 
Weighted-
average
Common
Shares
 
Per
Common
Share
Amount
 Income 
Weighted-
average
Common
Shares
 
Per
Common
Share
Amount
 Income 
Weighted-
average
Common
Shares
 
Per
Common
Share
Amount
Basic:                 
Net income available to common stockholders433,059
 65,829,155
 $6.58
 411,124
 65,471,540
 $6.28
 226,865
 64,871,717
 $3.50
Effect of Dilutive Securities                 
Stock options—
 69,100
   —
 116,276
   —
 189,968
  
Diluted: 
  
  
  
  
  
  
  
  
Net income available to common stockholders433,059
 65,898,255
 $6.57
 411,124
 65,587,816
 $6.27
 226,865
 65,061,685
 $3.49


The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,252,575, 2,224,100,2,261,071, 2,276,341 and 2,182,467,2,289,391, which include vested Series Z Incentive Units, Series Z-1 Incentive Units, 2014 Long-Term Incentive Plan Units and 2015 Long-Term Incentive Plan Units, for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $14.8$14.3 million, $14.1$14.3 million and $7.8$17.2 million for the years ended December 31, 2017, 2016,2023, 2022 and 2015,2021, respectively. Additionally, the table excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.


Stock options of 154,793, 252,334,508,276, 253,845, and 54,100,116,380 for the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the average unearned compensation were greater than the average market price of the common stock for the years ended and, therefore, were anti-dilutive.

All shares of cumulative convertible Series H preferred interest have been excluded from diluted earnings per share for the years ended December 31, 2016 and 2015, as the effect was anti-dilutive.


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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015



Essex Portfolio, L.P.


Basic and diluted income per unit is calculated as follows for the years ended December 31 ($ in thousands, except unit and per unit amounts):
 202320222021
IncomeWeighted-
average
Common
Units		Per
Common
Unit
Amount		IncomeWeighted-
average
Common
Units		Per
Common
Unit
Amount		IncomeWeighted-
average
Common
Units		Per
Common
Unit
Amount
Basic:
Net income available to common unitholders$420,109 66,513,303 $6.32 $422,612 67,356,105 $6.27 $505,745 67,340,856 $7.51 
Effect of dilutive securities 
Stock options— 1,153  — 18,422  — 37,409  
Diluted:         
Net income available to common unitholders$420,109 66,514,456 $6.32 $422,612 67,374,527 $6.27 $505,745 67,378,265 $7.51 

F- 47
 2017 2016 2015
 Income 
Weighted-
average
Common
Units
 
Per
Common
Unit
Amount
 Income 
Weighted-
average
Common
Units
 
Per
Common
Unit
Amount
 Income 
Weighted-
average
Common
Units
 
Per
Common
Unit
Amount
Basic:                 
Net income available to common unitholders$447,884
 68,081,730
 $6.58
 $425,213
 67,695,640
 $6.28
 $234,689
 67,054,184
 $3.50
Effect of Dilutive Securities                 
Stock options—
 69,100
  
 —
 116,276
  
 —
 189,968
  
Diluted: 
  
  
  
  
  
  
  
  
Net income available to common unitholders$447,884
 68,150,830
 $6.57
 $425,213
 67,811,916
 $6.27
 $234,689
 67,244,152
 $3.49
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

Stock options of 154,793, 252,334,508,276, 253,845, and 54,100,116,380, for the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, respectively, were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for the years ended and, therefore, were anti-dilutive. Additionally, the table excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.


The cumulative convertible Series H preferred interest have been excluded from diluted earnings per unit for the years ended
F- 48
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20162023, 2022, and 2015, as the effect was anti-dilutive.2021


(12)(14) Equity Based Compensation Plans
 
Stock Options and Restricted Stock
 
In May 2013,2018, stockholders approved the Company’s 20132018 Stock Award and Incentive Compensation Plan (“2013 Plan”("2018 Plan"). The 20132018 Plan became effective on June 1, 2013 and serves as the successor to the Company’s 20042013 Stock Incentive Plan (the

“2004 Plan” "2013 Plan"), and no additional equity awards can be granted under the 2004 Plan after the date the 2013 Plan became effective.

. The Company’s 20132018 Plan provides incentives to attract and retain officers, directors and key employees. The 20132018 Plan provides for the grantsgrant of optionsstock-based awards to purchase sharesemployees, directors and consultants of common stock, grants of restricted stockthe Company and other award types. Under the 2013 Plan, the maximumits affiliates. The aggregate number of shares that may be issued is 1,000,000, plus any shares that have not been issuedof the Company’s common stock available for issuance pursuant to awards granted under the 20042018 Plan includingis 2,000,000 shares, plus the number of shares authorized for grants and available for issuance under the 2013 Plan as of the effective date of the 2018 Plan and the number of shares subject to outstanding awards under the 20042013 Plan that are forfeited or otherwise not issued or delivered to a participant for any reason. Theunder such awards. No further awards will be granted under the 2013 Plan is administered byand the shares that remained available for future issuance under the 2013 Plan as of the effective date of the 2018 Plan will be available for issuance under the 2018 Plan. In connection with the adoption of the 2018 Plan, the Board delegated to the Compensation Committee of the Board of Directors, which is comprised of independent directors. The Compensation Committee is authorizedthe authority to establishadminister the exercise price; however, the exercise price cannot be less than 100% of the fair market value of the common stock on the grant date. The Company’s options have a life of five to ten years. Option grants for officers and employees fully vest between zero and five years after the grant date.2018 Plan.


Stock-basedEquity-based compensation expensecosts for options and restricted stock under the fair value method totaled $9.5$12.1 million, $8.2$11.4 million, and $6.1$11.7 million for years ended December 31, 2017, 20162023, 2022 and 20152021, respectively. For each of the years ended December 31, 2017, 20162023, 2022 and 2015 stock-based2021 equity-based compensation expensecosts included $3.5 million $3.5 million, and $2.7 million related to an immediate vesting of options and restricted stock for bonuses awarded based on asset dispositions, which is recorded as a

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015


cost of real estate and land sold, respectively. Stock-based compensation for options and restricted stock related to recipients who are direct and incremental to projects under development were capitalized and totaled $1.5$0.6 million, $0.5$0.7 million, and $0.3$0.9 million for the years ended December 31, 2017, 20162023, 2022 and 2015,2021, respectively. The intrinsic value of the options exercised totaled $16.7 million, $11.9zero, $7.6 million, and $19.4$25.7 million, for the years ended December 31, 2017, 2016,2023, 2022, and 20152021 respectively. The intrinsic value of the options exercisable totaled $11.3$4.5 million and $20.8$0.2 million as of December 31, 20172023 and 2016,2022, respectively.
 
Total unrecognized compensation cost related to unvested stock options totaled $6.5$1.8 million as of December 31, 20172023 and the unrecognized compensation cost is expected to be recognized over a period of 2.51.3 years.
 
The average fair value of stock options granted for the years ended December 31, 2017, 20162023, 2022 and 20152021 was $22.41, $21.65$21.24, $23.39 and $22.78,$24.68, respectively. Certain stock options granted in 2017, 2016,2023, 2022, and 20152021 included a $100 cap or a $125 cap on the appreciation of the market price over the exercise price. The fair value of stock options was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants:

 202320222021
Stock price$216.31$245.17$329.71
Risk-free interest rates4.06 %3.50 %1.22 %
Expected lives6 years6 years6 years
Volatility36.00 %27.98 %27.00 %
Dividend yield3.30 %3.06 %2.90 %
 2017 2016 2015
Stock price$240.56
 $219.60
 $227.75
Risk-free interest rates2.30% 2.08% 1.83%
Expected lives6 years
 6 years
 6 years
Volatility24.10% 26.47% 20.06%
Dividend yield2.90% 2.89% 2.73%


A summary of the status of the Company’s stock option plans as of December 31, 2017, 2016,2023, 2022, and 20152021 and changes during the years ended on those dates is presented below:

 2017 2016 2015
 Shares 
Weighted-
average
exercise
price
 Shares 
Weighted-
average
exercise
price
 Shares 
Weighted-
average
exercise
price
Outstanding at beginning of year557,648
 $181.50
 525,094
 $154.98
 664,785
 $138.78
Granted164,677
 240.56
 207,429
 219.60
 78,600
 227.75
Exercised(176,489) 146.86
 (138,054) 138.79
 (203,556) 131.53
Forfeited and canceled(9,628) 160.40
 (36,821) 178.18
 (14,735) 136.11
Outstanding at end of year536,208
 211.41
 557,648
 181.50
 525,094
 154.98
Options exercisable at year end223,796
 191.09
 290,340
 160.90
 342,048
 152.42
The following table summarizes information about restricted stock outstanding as of December 31, 2017, 2016 and 2015 and changes during the years ended:
 2017 2016 2015
 Shares 
Weighted-
average
grant
price
 Shares 
Weighted-
average
grant
price
 Shares 
Weighted-
average
grant
price
Unvested at beginning of year58,349
 $149.11
 54,676
 $147.10
 25,820
 $168.22
Granted62,706
 177.28
 49,183
 150.13
 56,177
 155.21
Vested(29,675) 170.17
 (38,427) 147.12
 (22,939) 148.20
Forfeited and canceled(557) 119.37
 (7,083) 141.76
 (4,382) 122.06
Unvested at end of year90,823
 163.49
 58,349
 149.11
 54,676
 147.10

F- 4349
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



 202320222021
SharesWeighted-
average
exercise
price		SharesWeighted-
average
exercise
price		SharesWeighted-
average
exercise
price
Outstanding at beginning of year487,446 $279.46 463,863 $284.82 613,109 $255.86 
Granted49,908 216.31 111,757 245.17 99,479 329.71 
Exercised— — (76,246)245.43 (248,725)231.37 
Forfeited and canceled(6,542)280.21 (11,928)281.19 — — 
Outstanding at end of year530,812 $273.51 487,446 $279.46 463,863 $284.82 
Options exercisable at year end417,739 $282.30 293,377 $285.76 274,244 $270.11 

The following table summarizes information about restricted stock outstanding as of December 31, 2023, 2022 and 2021 and changes during the years ended:
 202320222021
SharesWeighted-
average
grant
price		SharesWeighted-
average
grant
price		SharesWeighted-
average
grant
price
Unvested at beginning of year182,915 $222.90 159,401 $251.03 132,603 $214.34 
Granted2,315 220.40 72,838 215.73 50,349 337.52 
Vested(37,075)247.07 (44,945)306.25 (22,387)229.90 
Forfeited and canceled(46,454)259.71 (4,379)272.12 (1,164)219.30 
Unvested at end of year101,701 $197.22 182,915 $222.90 159,401 $251.03 

The unrecognized compensation cost related to unvested restricted stock totaled $7.0$4.7 million as of December 31, 20172023 and is expected to be recognized over a period of 2.11.6 years.


Long TermLong-Term Incentive Plans – LTIP Units


On December 9, 2014, the Operating Partnership issued 44,750 LTIP units under the 2015 Long-Term Incentive Plan Award agreements to executives of the Company. The 2015 Long-Term Incentive Plan Units (the “2015"2015 LTIP Units”Units") are subject to forfeiture based on performance-based and service based conditions. An additional 24,000 LTIP units were granted subject only to performance-based criteria and were fully vested on the date granted. The 2015 LTIP Units, that are subject to vesting, will vestvested at 20% per year on each of the first five anniversaries of the initial grant date. The 2015 LTIP Units performance conditions measurement ended on December 9, 2015 and 95.75% of the units awarded were earned by the recipients. 2015 LTIP Units not earned based on the performance-based criteria were automatically forfeited by the recipients. The 2015 LTIP Units once earned and vested, are convertible one-for-one into OP Units which, in turn, are convertible into common stock of the Company subject to a ten-year liquidity restriction.


In December 2013, the Operating Partnership issued 50,500 LTIP units under the 2014 Long-Term Incentive Plan Award agreements to executives of the Company. The 2014 Long-Term Incentive Plan Units (the “2014"2014 LTIP Units”Units") were subject to forfeiture based on performance-based conditions and are currently subject to service based vesting. The 2014 LTIP Units vestvested 25% per year on each of the first four anniversaries of the initial grant date. In December 2014, the Company achieved the performance criteria and all of the 2014 LTIP Units awarded were earned by the recipients, subject to satisfaction of service based vesting conditions. The 2014 LTIP Units are convertible one-for-one into OP Units which, in turn, are convertible into common stock of the Company subject to a ten year liquidity restriction.


The estimated fair value of the 2015 LTIP Units and 2014 LTIP Units were determined on the grant date using Monte Carlo simulations under a risk-neutral premise and considered Essex’s stock price on the date of grant, the unpaid dividends on unvested units and the discount factor for 10ten years of illiquidity.


Prior to 2013, the Company issued Series Z Incentive Units and Series Z-1 Incentive Units (collectively referred to as “Z Units”) of limited partnership interest in the Operating Partnership. Vesting in the Z Units is based on performance criteria established in the plan. The criteria can be revised by the Compensation Committee of the Board of Directors if the Committee deems that the plan's criterion is unachievable for any given year. The sale of Z Units is contractually prohibited. Z Units are convertible into Operating Partnership units which are exchangeable for shares of the Company’s common stock that have marketability restrictions. The estimated fair value of Z Units were determined on the grant date and considered the Company's stock price on the date of grant, the dividends that are not paid on unvested units and a marketability discount for the 8 to 15 years of illiquidity. Compensation expense is calculated by multiplying estimated vesting increases for the period by the estimated fair value as of the grant date.

During 2011 and 2010, the Operating Partnership issued 154,500 Series Z-1 Incentive Units (the “Z-1 Units”) of limited partner interest to executives of the Company. The Z-1 Units are convertible one-for-one into common units of the Operating Partnership (which, in turn, are convertible into common stock of the Company) upon the earlier to occur of 100 percent vesting of the units or the year 2026. The conversion ratchet (accounted for as vesting) of the Z-1 Units into common units, is to increase consistent with the Company’s annual FFO growth, but is not to be less than zero or greater than 14 percent. Z-1 Unit holders are entitled to receive distributions, on vested units, that are now equal to dividends distributed to common stockholders.

Stock-based compensation expense for LTIP and Z Units under the fair value method totaled approximately $1.8 million, $2.7 million and $3.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. Stock-based compensation related to LTIP Units attributable to recipients who are direct and incremental to these projects was capitalized to real estate under development and totaled approximately $0.5 million, $0.6 million, and $0.5 million, for the years ended December 31, 2017, 2016, and 2015, respectively. The intrinsic value of the vested and unvested LTIP Units totaled $57.1 million as of December 31, 2017. Total unrecognized compensation cost related to the unvested LTIP Units under the LTIP Units plans totaled $1.6 million as of December 31, 2017. On a weighted average basis, the unamortized cost for the 2014 and 2015 LTIP Units and the Z Units is expected to be recognized over the next 1.2 years to 7.5 years, depending on certain performance targets.

F- 4450
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021





Equity-based compensation costs and total unrecognized compensation costs for LTIP units under the fair value method totaled approximately zero for the years ended December 31, 2023, 2022 and 2021. The intrinsic value of the vested and unvested LTIP Units totaled $24.2 million as of December 31, 2023.

The following table summarizes information about the LTIP Units outstanding as of December 31, 2017:2023:
 Long-Term Incentive Plan - LTIP Units
Total
Vested
Units		Total
Unvested
Units		Total
Outstanding
Units		Weighted-
average
Grant-date
Fair Value		Weighted-
average
Remaining
Contractual
Life (years)
Balance, December 31, 2020106,137 — 106,137 $84.47 3.6
Granted— — — 
Vested— — — 
Converted— — — 
Cancelled— — — 
Balance, December 31, 2021106,137 — 106,137 $84.47 2.6
Granted— — — 
Vested— — — 
Converted— — — 
Cancelled— — — 
Balance, December 31, 2022106,137 — 106,137 $84.47 1.6
Granted— — — 
Vested— — — 
Converted(8,500)— (8,500)
Cancelled— — — 
Balance, December 31, 202397,637 — 97,637 $86.16 1.0

F- 51
 Long Term Incentive Plan - LTIP Units
 
Total
Vested
Units
 
Total
Unvested
Units
 
Total
Outstanding
Units
 
Weighted-
average
Grant-date
Fair Value
 
Weighted-
average
Remaining
Contractual
Life (years)
Balance, December 31, 2014181,919
 151,067
 332,986
 $71.14
 10.5
Granted—
 —
 —
 

 
Vested36,650
 (36,650) —
 

 
Converted(74,384) —
 (74,384) 

 
Cancelled—
 (8,260) (8,260) 

 
Balance, December 31, 2015144,185
 106,157
 250,342
 $75.41
 9.5
Granted—
 —
 —
 

 
Vested36,842
 (36,842) —
 

 
Converted—
 —
 —
 

 
Cancelled—
 (9,288) (9,288) 

 
Balance, December 31, 2016181,027
 60,027
 241,054
 $75.11
 8.5
Granted—
 —
 —
    
Vested32,961
 (32,961) —
    
Converted(688) —
 (688)    
Cancelled—
 (3,854) (3,854)    
Balance, December 31, 2017213,300
 23,212
 236,512
 $75.03
 7.5

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
(13)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

(15) Segment Information


The Company's segment disclosures present the measure used by the chief operating decision makers for purposes of assessing each segment's performance. Essex'sThe Company's chief operating decision makers are comprised of several members of its executive management team who use NOInet operating income ("NOI") to assess the performance of the business for the Company's reportable operating segments. NOI represents total property revenuerevenues less direct property operating expenses.


The executive management team generally evaluates the Company's operating performance geographically. The Company defines its reportable operating segments as the three geographical regions in which its communities are located: Southern California, Northern California and Seattle Metro. 


Excluded from segment revenues and net operating incomeNOI are management and other fees from affiliates and interest and other income. Non-segment revenues and net operating incomeNOI included in the following schedule also consist of revenuerevenues generated from commercial properties and properties that have been sold. Other non-segment assets include items such as real estate under development, co-investments, real estate held for sale, net, cash and cash equivalents, marketable securities, notes and other receivables, and prepaid expenses and other assets.



F- 4552
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



The revenues and net operating incomeNOI for each of the reportable operating segments are summarized as follows for the years ended December 31, 2017, 2016,2023, 2022, and 20152021 ($ in thousands):
 Years Ended December 31,
 202320222021
Revenues:
Southern California$682,116 $646,252 $574,129 
Northern California666,836 639,306 584,034 
Seattle Metro282,092 271,248 239,839 
Other real estate assets27,220 38,869 33,416 
Total property revenues$1,658,264 $1,595,675 $1,431,418 
Net operating income:   
Southern California$483,013 $459,762 $398,576 
Northern California464,949 445,933 401,870 
Seattle Metro201,228 191,476 160,959 
Other real estate assets23,595 31,235 24,777 
Total net operating income1,172,785 1,128,406 986,182 
Management and other fees from affiliates11,131 11,139 9,138 
Corporate-level property management expenses(45,872)(40,704)(36,211)
Depreciation and amortization(548,438)(539,319)(520,066)
General and administrative(63,474)(56,577)(51,838)
Expensed acquisition and investment related costs(595)(2,132)(203)
Casualty loss(433)— — 
Gain on sale of real estate and land59,238 94,416 142,993 
Interest expense(212,905)(204,798)(203,125)
Total return swap income3,148 7,907 10,774 
Interest and other income (loss)46,259 (19,040)98,744 
Equity income from co-investments10,561 26,030 111,721 
Tax (expense) benefit on unconsolidated co-investments(697)10,236 (15,668)
Loss on early retirement of debt, net— (2)(19,010)
Gain on remeasurement of co-investment— 17,423 2,260 
Net income$430,708 $432,985 $515,691 

 Years Ended December 31,
 2017 2016 2015
Revenues:     
Southern California$596,217
 $561,094
 $507,536
Northern California505,313
 453,140
 407,590
Seattle Metro229,871
 217,259
 201,417
Other real estate assets22,924
 54,230
 68,955
Total property revenues$1,354,325
 $1,285,723
 $1,185,498
Net operating income: 
  
  
Southern California$409,133
 $382,312
 $340,797
Northern California363,238
 325,394
 291,168
Seattle Metro156,404
 148,279
 136,579
Other real estate assets20,008
 40,811
 53,446
Total net operating income948,783
 896,796
 821,990
Management and other fees from affiliates9,574
 8,278
 8,909
Depreciation and amortization(468,881) (441,682) (453,423)
General and administrative(41,385) (40,751) (40,090)
Merger and integration expenses—
 —
 (3,798)
Acquisition and investment related costs(1,569) (1,841) (2,414)
Interest expense(222,894) (219,654) (204,827)
Total return swap income10,098
 11,716
 5,655
Interest and other income24,604
 27,305
 19,143
Equity income from co-investments86,445
 48,698
 21,861
Loss on early retirement of debt(1,796) (606) (6,114)
Gain on sale of real estate and land26,423
 154,561
 47,333
Deferred tax expense on gain on sale of real estate and land—
 (4,410) —
Gain on remeasurement of co-investment88,641
 —
 34,014
Net income$458,043
 $438,410
 $248,239


F- 4653
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016,2023, 2022, and 20152021



Total assets for each of the reportable operating segments are summarized as follows as of December 31, 20172023 and 20162022 ($ in thousands):
 As of December 31,
20232022
Assets:
Southern California$3,802,648 $3,892,003 
Northern California5,242,343 5,414,467 
Seattle Metro1,333,030 1,374,379 
Other real estate assets92,271 133,245 
Net reportable operating segments - real estate assets10,470,292 10,814,094 
Real estate under development23,724 24,857 
Co-investments1,061,733 1,127,491 
Cash and cash equivalents, including restricted cash400,334 42,681 
Marketable securities87,795 112,743 
Notes and other receivables174,621 103,045 
Operating lease right-of-use assets63,757 67,239 
Prepaid expenses and other assets79,171 80,755 
Total assets$12,361,427 $12,372,905 

 As of December 31,
Assets:2017 2016
Southern California$4,788,225
 $4,924,792
Northern California4,215,449
 3,791,549
Seattle Metro1,520,372
 1,570,340
Other real estate assets55,488
 78,079
Net reportable operating segments - real estate assets10,579,534
 10,364,760
Real estate under development355,735
 190,505
Co-investments1,155,984
 1,161,275
Real estate held for sale, net—
 101,957
Cash and cash equivalents, including restricted cash61,126
 170,302
Marketable securities190,004
 139,189
Notes and other receivables100,926
 40,970
Prepaid expenses and other assets52,397
 48,450
Total assets$12,495,706
 $12,217,408

(14)(16) 401(k) Plan
 
The Company has a 401(k) benefit plan (the “Plan”"Plan") for all eligible employees. Employee contributions are limited by the maximum allowed under Section 401(k) of the Internal Revenue Code. The Company matches 50% of the employee contributions up to a specified maximum. Company contributions to the Plan were approximately $1.8$3.8 million, $1.8$3.3 million, and $1.6$3.3 million for the years ended December 31, 2017, 2016,2023, 2022, and 2015,2021, respectively.
 
(15)(17) Commitments and Contingencies
 
As of December 31, 2017, the Company had seven ground leases for certain apartment communities and buildings that expire between 2027 and 2082. Ground lease payments are typically the greater of a stated minimum or a percentage of gross rents generated by these apartment communities, some of which may be subject to future adjustments, which are not contemplated in the disclosed minimum lease commitments. The Company's total minimum lease payment commitments, under ground-leasesunderground leases, parking leases, and operating leases for each of the years ending December 31 is summarizedare disclosed in Note 11, Lease Agreements - Company as follows ($ in thousands):Lessee.
 Total Minimum
 Lease Commitments
2018$4,723
20194,782
20204,842
20214,905
20224,970
Thereafter112,361
 $136,583


To the extent that an environmental matter arises or is identified in the future that has other than a remote risk of having a material impact on the financial statements, the Company will disclose the estimated range of possible outcomes associated with it and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, the impairment will be recognized.
 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015


The Company has no way of determiningcannot determine the magnitude of any potential liability to which it may be subject arising out of unknown environmental conditions with respect to the communities currently or formerly owned by the Company. No assurance can be given that: existing environmental assessments conducted with respect to any of these communities have revealed all environmental conditions or potential liabilities associated with such conditions; any prior owner or operator of a property did not create any material environmental condition not known to the Company; or a material unknown environmental condition does not otherwise exist as to any one or more of the communities. The Company has limited insurance coverage for some of the types of environmental conditions and associated liabilities described above.


The Company has entered into transactions that may require the Company to pay the tax liabilities of the partners or members in the Operating Partnership or in the DownREIT entities. These transactions are within the Company’s control. Although the Company plansintends to hold the contributed assets or defer recognition of gain on their sale pursuant to like-kind exchange rules under Section 1031 of the Internal Revenue Code, if the Company can provide no assurance that it will be ablewere to do so and if suchsell the contributed assets, the tax liabilities were incurred they may have a material impact on the Company’s financial position.


F- 54
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2023, 2022, and 2021

There continue to be lawsuits against owners and managers of certain of the Company's apartment communities alleging personal injury and property damage caused by the presence of mold in the residential units and common areas of those communities. Some of these lawsuits have resulted in substantial monetary judgments or settlements.settlements in the past. The Company has been sued for mold related matters and has settled some, but not all, of such suits. Insurance carriers have reacted to the increase in mold related liability awards by excluding mold related claims from standard general liability policies and pricing mold endorsements at prohibitively high rates. The Company has, however, purchased pollution liability insurance which includes coverage for some mold claims. The Company has also adopted policies intended to promptly address and resolve reports of mold and to minimize any impact mold might have on tenants of its properties. The Company believes its mold policies and proactive response to address reported mold exposures reduces its risk of loss from mold claims. While no assurances can be given that the Company has identified and responded to all mold occurrences, the Company promptly addresses and responds to all known mold reports. Liabilities resulting from such mold related matters are not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. As of December 31, 2017,2023, potential liabilities for mold and other environmental liabilities are not quantifiable and an estimate of possible loss cannot be made.


The Company carries comprehensive liability, fire, extended coverage and rental loss insurance for each of the communities.  There are, however, certain types of extraordinary losses, such as, for example, losses from terrorism or earthquakes, for which the Company has limited insurance coverage. Substantially all of the communities are located in areas that are subject to earthquake activity. The Company has established a wholly-owned insurance subsidiary, Pacific Western Insurance LLC (“PWI”("PWI"). Through PWI, the Company is self-insured for earthquake related losses. Additionally, since January 2008, PWI has provided property and casualty insurance coverage for the first $5.0 million of the Company’s property level insurance claims per incident. As of December 31, 2017,2023, PWI has cash and marketable securities of approximately $81.8$125.5 million. These assets are consolidated in the Company’s financial statements. Beginning in 2013, the Company has obtained limited third party seismic insurance on selected assets in the Company's co-investments.


In late 2022 and early 2023, a number of purported class actions were filed against RealPage, Inc., a seller of revenue management software, and various lessors of multifamily housing which utilize this software, including the Company. The complaints allege collusion among defendants to artificially increase rents of multifamily residential real estate above competitive levels. The Company intends to vigorously defend against these lawsuits. Given their early stage, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from such matters. The Company is also subject to various other legal and/or regulatory proceedings arising in the normal course of its business operations. We believeThe Company believes that, with respect to such matters that we areit is currently a party to, the ultimate disposition of any such matter will not result in a material adverse effect on the Company’s financial condition, results of operations or cash flows. To the extent that such a matter arises or is identified in the future that has other than a remote risk of having a material impact on the consolidated financial statements, the Company will disclose the estimated range of possible outcomes associated with it, and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, impairment will be recognized.


(16) Subsequent Events


In January 2018, The Village at Toluca Lake, a BEX III property, repaid a $29.5 million related party bridge loan from the Operating Partnership.







F- 4855
Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015


(17) Quarterly Results of Operations (Unaudited)

Essex Property Trust, Inc.

The following is a summary of quarterly results of operations for 2017 and 2016 ($ in thousands, except per share and dividend amounts):

 
Quarter ended
December 31
 
Quarter ended
September 30
 
Quarter ended
June 30
 
Quarter ended
March 31
2017:       
Total property revenues$342,417
 $341,974
 $336,766
 $333,168
Net income$109,662
 $85,035
 $75,795
 $187,551
Net income available to common stockholders$103,613
 $79,723
 $70,759
 $178,964
Per share data: 
  
  
  
Net income: 
  
  
  
Basic (1)
$1.57
 $1.21
 $1.08
 $2.73
Diluted (1)
$1.57
 $1.21
 $1.08
 $2.72
Market price: 
  
  
  
High$264.07
 $270.04
 $268.97
 $238.57
Low$237.33
 $249.46
 $229.14
 $218.41
Close$241.37
 $254.03
 $257.27
 $231.53
Dividends declared$1.75
 $1.75
 $1.75
 $1.75
2016: 
  
  
  
Total property revenues$326,905
 $327,078
 $319,562
 $312,178
Net income$204,517
 $70,162
 $76,824
 $86,907
Net income available to common stockholders$195,569
 $65,561
 $72,013
 $77,981
Per share data: 
  
  
  
Net income: 
  
  
  
Basic (1)
$2.98
 $1.00
 $1.10
 $1.19
Diluted (1)
$2.98
 $1.00
 $1.10
 $1.19
Market price: 
  
  
  
High$234.07
 $236.56
 $237.50
 $240.55
Low$200.01
 $217.16
 $207.20
 $191.25
Close$232.50
 $222.70
 $228.09
 $233.86
Dividends declared$1.60
 $1.60
 $1.60
 $1.60

(1)
Quarterly earnings per common unit amounts may not total to the annual amounts due to rounding and the changes in the number of weighted common units outstanding and included in the calculation of basic and diluted shares.




F- 49
Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017, 2016, and 2015


Essex Portfolio, L.P.

The following is a summary of quarterly results of operations for 2017 and 2016 ($ in thousands, except per unit and distribution amounts):
 
Quarter ended
December 31
 
Quarter ended
September 30
 
Quarter ended
June 30
 
Quarter ended
March 31
2017:       
Total property revenues$342,417
 $341,974
 $336,766
 $333,168
Net income$109,662
 $85,035
 $75,795
 $187,551
Net income available to common unitholders$107,149
 $82,444
 $73,181
 $185,110
Per unit data: 
  
  
  
Net income: 
  
  
  
Basic (1)
$1.57
 $1.21
 $1.08
 $2.73
Diluted (1)
$1.57
 $1.21
 $1.08
 $2.72
Distributions declared$1.75
 $1.75
 $1.75
 $1.75
2016: 
  
  
  
Total property revenues$326,905
 $327,078
 $319,562
 $312,178
Net income$204,517
 $70,162
 $76,824
 $86,907
Net income available to common unitholders$202,201
 $67,784
 $74,463
 $80,765
Per unit data: 
  
  
  
Net income: 
  
  
  
Basic (1)
$2.98
 $1.00
 $1.10
 $1.19
Diluted (1)
$2.98
 $1.00
 $1.10
 $1.19
Distributions declared$1.60
 $1.60
 $1.60
 $1.60

(1)
Quarterly earnings per common unit amounts may not total to the annual amounts due to rounding and the changes in the number of weighted common units outstanding and included in the calculation of basic and diluted shares.

F- 50
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(Dollars in thousands)



Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Encumbered communities
Belmont Station275 Los Angeles, CA$29,263 $8,100 $66,666 $10,397 $8,267 $76,896 $85,163 $(42,204)2009Mar-09   3-30
Brio300 Walnut Creek, CA90,827 16,885 151,741 4,751 16,885 156,492 173,377 (26,551)2015Jun-19   3-30
Fountain Park705 Playa Vista, CA82,776 25,073 94,980 47,232 25,203 142,082 167,285 (97,729)2002Feb-04   3-30
Highridge255 Rancho Palos Verdes, CA69,451 5,419 18,347 38,782 6,073 56,475 62,548 (47,254)1972May-97   3-30
Lawrence Station336 Sunnyvale, CA76,848 45,532 106,735 7,740 45,532 114,475 160,007 (42,735)2012Apr-14   5-30
Magnolia Square/Magnolia
Lane (2)
188 Sunnyvale, CA52,400 8,190 24,736 19,633 8,191 44,368 52,559 (31,367)1963Sep-07   3-30
Marquis166 San Jose, CA44,991 20,495 47,823 1,919 20,495 49,742 70,237 (8,532)2015Dec-183-30
Paragon Apartments301 Fremont, CA59,169 32,230 77,320 4,595 32,230 81,915 114,145 (26,880)2013Jul-14   3-30
Sage at Cupertino230 San Jose, CA51,855 35,719 53,449 14,039 35,719 67,488 103,207 (20,213)1971Mar-17   3-30
The Barkley (3)
161 Anaheim, CA14,925 — 8,520 9,277 2,353 15,444 17,797 (12,780)1984Apr-00   3-30
The Commons264 Campbell, CA57,703 12,555 29,307 12,511 12,556 41,817 54,373 (22,749)1973Jul-10   3-30
The Dylan184 West Hollywood, CA57,299 19,984 82,286 4,223 19,990 86,503 106,493 (27,116)2015Mar-15   3-30
The Galloway506 Pleasanton, CA102,841 32,966 184,499 6,342 32,966 190,841 223,807 (27,546)2016Jan-203-30
The Huxley187 West Hollywood, CA52,156 19,362 75,641 5,421 19,371 81,053 100,424 (25,347)2014Mar-15   3-30
Township132 Redwood City, CA44,700 19,812 70,619 2,375 19,812 72,994 92,806 (11,257)2014Sep-19   3-30
4,190 $887,204 $302,322 $1,092,669 $189,237 $305,643 $1,278,585 $1,584,228 $(470,260)
Unencumbered Communities
Agora49 Walnut Creek, CA— 4,932 60,423 1,818 4,934 62,239 67,173 (8,536)2016Jan-20   3-30
Alessio624 Los Angeles, CA— 32,136 128,543 25,661 32,136 154,204 186,340 (57,633)2001Apr-14   5-30
Allegro97 Valley Village, CA— 5,869 23,977 3,758 5,869 27,735 33,604 (14,318)2010Oct-10   3-30
Allure at Scripps Ranch194 San Diego, CA— 11,923 47,690 4,505 11,923 52,195 64,118 (18,217)2002Apr-14   5-30
Alpine Village301 Alpine, CA— 4,967 19,728 13,953 4,982 33,666 38,648 (22,978)1971Dec-02   3-30
Annaliese56 Seattle, WA— 4,727 14,229 1,196 4,726 15,426 20,152 (5,943)2009Jan-13   3-30
Apex367 Milpitas, CA— 44,240 103,251 11,509 44,240 114,760 159,000 (36,789)2014Aug-14   3-30
Aqua Marina Del Rey500 Marina Del Rey, CA— 58,442 175,326 26,945 58,442 202,271 260,713 (75,176)2001Apr-14   5-30
Ascent90 Kirkland, WA— 3,924 11,862 3,685 3,924 15,547 19,471 (6,867)1988Oct-12   3-30
Ashton Sherman Village264 Los Angeles, CA— 23,550 93,811 3,301 23,550 97,112 120,662 (24,127)2014Dec-16   3-30
Avant440 Los Angeles, CA— 32,379 137,940 9,879 32,379 147,819 180,198 (42,593)2014Jun-15   3-30
Avenue 64224 Emeryville, CA— 27,235 64,403 18,098 27,235 82,501 109,736 (28,266)2007Apr-14   5-30
      Costs
       
    Initial cost capitalized
Gross amount carried at close of period     
 Apartment
   Buildings and
subsequent to
Land and
Buildings and
 Accumulated
Date ofDateLives
PropertyHomes
LocationEncumbrance
Land
improvements
acquisition
improvements
improvements
Total (1)

depreciation
constructionacquired(years)
Encumbered communities             
Avondale at Warner Center446
Woodland Hills, CA$42,844
$10,536
$24,522
$21,096
$10,601
$45,553
$56,154
$(30,410)1970Jan-99   3-30
Bel Air462
San Ramon, CA50,386
12,105
18,252
35,236
12,682
52,911
65,593
(33,713)1988Jan-95   3-30
Belcarra296
Bellevue, WA50,337
21,725
92,091
1,266
21,725
93,357
115,082
(12,712)2009Apr-14   5-30
BellCentre248
Bellevue, WA38,024
16,197
67,207
3,529
16,197
70,736
86,933
(10,053)2001Apr-14   5-30
Belmont Station275
 Los Angeles, CA29,654
8,100
66,666
6,176
8,267
72,675
80,942
(26,071)2009Mar-09   3-30
Brookside Oaks170
Sunnyvale, CA18,152
7,301
16,310
25,695
10,328
38,978
49,306
(20,377)1973Jun-00   3-30
Carmel Creek348
San Diego, CA61,009
26,842
107,368
5,271
26,842
112,639
139,481
(16,153)2000Apr-14   5-30
City View572
Hayward, CA64,094
9,883
37,670
26,670
10,350
63,873
74,223
(44,300)1975Mar-98   3-30
Courtyard off Main110
Bellevue, WA14,846
7,465
21,405
3,757
7,465
25,162
32,627
(6,700)2000Oct-10   3-30
Domaine92
Seattle, WA14,029
9,059
27,177
920
9,059
28,097
37,156
(5,183)2009Sep-12   3-30
Elevation158
Redmond, WA10,406
4,758
14,285
6,476
4,757
20,762
25,519
(7,508)1986Jun-10   3-30
Ellington220
Bellevue, WA20,684
15,066
45,249
3,191
15,066
48,440
63,506
(5,793)1994Jul-14   3-30
Fairhaven Apartments164
Santa Ana, CA18,533
2,626
10,485
7,741
2,957
17,895
20,852
(9,600)1970Nov-01   3-30
Form 15242
San Diego, CA46,189
24,510
72,221
4,734
25,540
75,925
101,465
(4,850)2014Mar-16   3-30
Foster's Landing490
Foster City, CA93,585
61,714
144,000
8,245
61,714
152,245
213,959
(22,269)1987Apr-14   5-30
Fountains at River Oaks226
San Jose, CA31,056
26,046
60,773
3,652
26,046
64,425
90,471
(9,116)1990Apr-14   3-30
Fountain Park705
Playa Vista, CA82,503
25,073
94,980
31,832
25,203
126,682
151,885
(65,049)2002Feb-04   3-30
Hidden Valley324
Simi Valley, CA29,327
14,174
34,065
4,607
9,674
43,172
52,846
(19,168)2004Dec-04   3-30
Highlands at Wynhaven333
Issaquah, WA30,240
16,271
48,932
12,255
16,271
61,187
77,458
(21,289)2000Aug-08   3-30
Highridge255
Rancho Palos Verdes, CA69,238
5,419
18,347
30,726
6,073
48,419
54,492
(33,537)1972May-97   3-30
Hillcrest Park608
Newbury Park, CA62,780
15,318
40,601
19,704
15,755
59,868
75,623
(37,377)1973Mar-98   3-30
Huntington Breakers342
Huntington Beach, CA35,192
9,306
22,720
20,267
9,315
42,978
52,293
(25,931)1984Oct-97   3-30
Inglenook Court224
Bothell, WA8,216
3,467
7,881
7,588
3,474
15,462
18,936
(12,067)1985Oct-94   3-30
1000 Kiely121
Santa Clara, CA34,868
9,359
21,845
7,652
9,359
29,497
38,856
(8,954)1971Mar-11   3-30
Magnolia Square/Magnolia
Lane (2)
188
Sunnyvale, CA52,205
8,190
24,736
16,649
8,191
41,384
49,575
(18,214)1963Sep-07   3-30
Mill Creek at Windermere400
San Ramon, CA45,419
29,551
69,032
4,700
29,551
73,732
103,283
(26,212)2005Sep-07   3-30
Mirabella188
Marina Del Rey, CA41,509
6,180
26,673
14,952
6,270
41,535
47,805
(22,805)2000May-00   3-30
Montanosa472
San Diego, CA61,222
26,697
106,787
4,611
26,697
111,398
138,095
(15,660)1990Apr-14   5-30
Montclaire390
Sunnyvale, CA43,261
4,842
19,776
24,901
4,997
44,522
49,519
(37,862)1973Dec-88   3-30
Montebello248
Kirkland, WA25,569
13,857
41,575
4,524
13,858
46,098
59,956
(9,729)1996Jul-12   3-30

F- 5156
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(Dollars in thousands)



Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Aviara (4)
166 Mercer Island, WA— — 49,813 3,145 — 52,958 52,958 (19,372)2013Apr-14   5-30
Avondale at Warner Center446 Woodland Hills, CA— 10,536 24,522 33,446 10,601 57,903 68,504 (44,086)1970Jan-99   3-30
Bel Air462 San Ramon, CA— 12,105 18,252 50,318 12,682 67,993 80,675 (53,742)1988Jan-95   3-30
Belcarra296 Bellevue, WA— 21,725 92,091 6,974 21,725 99,065 120,790 (34,031)2009Apr-14   5-30
Bella Villagio231 San Jose, CA— 17,247 40,343 8,891 17,247 49,234 66,481 (22,441)2004Sep-10   3-30
BellCentre249 Bellevue, WA— 16,197 67,207 7,536 16,197 74,743 90,940 (27,769)2001Apr-14   5-30
Bellerive63 Los Angeles, CA— 5,401 21,803 1,940 5,401 23,743 29,144 (10,973)2011Aug-11   3-30
Belmont Terrace71 Belmont, CA— 4,446 10,290 8,603 4,473 18,866 23,339 (12,941)1974Oct-06   3-30
Bennett Lofts179 San Francisco, CA— 21,771 50,800 35,727 28,371 79,927 108,298 (33,192)2004Dec-12   3-30
Bernardo Crest216 San Diego, CA— 10,802 43,209 8,363 10,802 51,572 62,374 (19,230)1988Apr-14   5-30
Bonita Cedars120 Bonita, CA— 2,496 9,913 7,317 2,503 17,223 19,726 (12,311)1983Dec-02   3-30
Boulevard172 Fremont, CA— 3,520 8,182 16,885 3,580 25,007 28,587 (21,654)1978Jan-96   3-30
Brookside Oaks170 Sunnyvale, CA— 7,301 16,310 29,386 10,328 42,669 52,997 (31,628)1973Jun-00   3-30
Bridle Trails108 Kirkland, WA— 1,500 5,930 7,708 1,531 13,607 15,138 (10,907)1986Oct-97   3-30
Brighton Ridge264 Renton, WA— 2,623 10,800 9,940 2,656 20,707 23,363 (16,472)1986Dec-96   3-30
Bristol Commons188 Sunnyvale, CA— 5,278 11,853 12,588 5,293 24,426 29,719 (20,375)1989Jan-95   3-30
Bunker Hill456 Los Angeles, CA— 11,498 27,871 105,664 11,639 133,394 145,033 (108,050)1968Mar-98   3-30
Camarillo Oaks564 Camarillo, CA— 10,953 25,254 11,444 11,075 36,576 47,651 (31,531)1985Jul-96   3-30
Cambridge Park320 San Diego, CA— 18,185 72,739 7,558 18,185 80,297 98,482 (28,576)1998Apr-14   5-30
Camino Ruiz Square160 Camarillo, CA— 6,871 26,119 3,686 6,931 29,745 36,676 (17,207)1990Dec-06   3-30
Canvas123 Seattle, WA— 10,489 36,924 647 10,489 37,571 48,060 (2,760)2014Dec-21   3-30
Canyon Oaks250 San Ramon, CA— 19,088 44,473 10,665 19,088 55,138 74,226 (30,637)2005May-07   3-30
Canyon Pointe250 Bothell, WA— 4,692 18,288 12,017 4,693 30,304 34,997 (21,204)1990Oct-03   3-30
Capri at Sunny Hills102 Fullerton, CA— 3,337 13,320 12,137 4,048 24,746 28,794 (18,155)1961Sep-01   3-30
Carmel Creek348 San Diego, CA— 26,842 107,368 11,508 26,842 118,876 145,718 (43,830)2000Apr-14   5-30
Carmel Landing356 San Diego, CA— 16,725 66,901 17,394 16,725 84,295 101,020 (31,906)1989Apr-14   5-30
Carmel Summit246 San Diego, CA— 14,968 59,871 9,529 14,968 69,400 84,368 (24,358)1989Apr-14   5-30
Castle Creek216 Newcastle, WA— 4,149 16,028 8,333 4,833 23,677 28,510 (19,463)1998Dec-98   3-30
Catalina Gardens128 Los Angeles, CA— 6,714 26,856 4,745 6,714 31,601 38,315 (11,166)1987Apr-14   5-30
Cedar Terrace180 Bellevue, WA— 5,543 16,442 11,649 5,652 27,982 33,634 (17,938)1984Jan-05   3-30
CentrePointe224 San Diego, CA— 3,405 7,743 24,377 3,442 32,083 35,525 (26,545)1974Jun-97   3-30
Chestnut Street Apartments96 Santa Cruz, CA— 6,582 15,689 3,055 6,582 18,744 25,326 (10,012)2002Jul-08   3-30
City View572 Hayward, CA— 9,883 37,670 41,860 10,350 79,063 89,413 (63,724)1975Mar-98   3-30
      Costs
       
    Initial cost capitalized
Gross amount carried at close of period     
 Apartment
   Buildings and
subsequent to
Land and
Buildings and
 Accumulated
Date ofDateLives
PropertyHomes
LocationEncumbrance
Land
improvements
acquisition
improvements
improvements
Total (1)

depreciation
constructionacquired(years)
Montejo Apartments124
Garden Grove, CA13,196
1,925
7,685
3,871
2,194
11,287
13,481
(5,901)1974Nov-01   3-30
Park Highland250
Bellevue, WA25,910
9,391
38,224
11,622
9,391
49,846
59,237
(8,048)1993Apr-14   5-30
Park Hill at Issaquah245
Issaquah, WA26,607
7,284
21,937
7,460
7,284
29,397
36,681
(13,241)1999Feb-99   3-30
Pinnacle at Fullerton192
Fullerton, CA26,094
11,019
45,932
2,707
11,019
48,639
59,658
(6,843)2004Apr-14   5-30
Pinnacle on Lake Washington180
Renton, WA17,794
7,760
31,041
1,880
7,760
32,921
40,681
(4,530)2001Apr-14   5-30
Pinnacle at MacArthur Place253
Santa Ana, CA37,726
15,810
66,401
4,039
15,810
70,440
86,250
(9,747)2002Apr-14   5-30
Pinnacle at Otay Ranch I & II364
Chula Vista, CA38,649
17,023
68,093
3,245
17,023
71,338
88,361
(10,033)2001Apr-14   5-30
Pinnacle at Talega362
San Clemente, CA43,166
19,292
77,168
2,228
19,292
79,396
98,688
(11,091)2002Apr-14   5-30
Sage at Cupertino230
San Jose, CA51,938
35,719
53,449
1,495
35,719
54,944
90,663
(1,457)1971Mar-17   3-30
Stevenson Place200
Fremont, CA20,247
996
5,582
11,717
1,001
17,294
18,295
(12,155)1975Apr-00   3-30
Summerhill Park100
Sunnyvale, CA12,538
2,654
4,918
10,949
2,656
15,865
18,521
(8,777)1988Sep-88   3-30
The Audrey at Belltown137
Seattle, WA20,521
9,228
36,911
778
9,228
37,689
46,917
(5,163)1992Apr-14   5-30
The Barkley (3)
161
Anaheim, CA15,358
—
8,520
6,515
2,353
12,682
15,035
(7,483)1984Apr-00   3-30
The Bernard63
Seattle, WA8,531
3,699
11,345
584
3,689
11,939
15,628
(2,587)2008Sep-11   3-30
The Dylan184
West Hollywood, CA59,468
19,984
82,286
608
19,990
82,888
102,878
(9,097)2015Mar-15   3-30
The Huntington276
Huntington Beach, CA28,799
10,374
41,495
4,741
10,374
46,236
56,610
(9,671)1975Jun-12   3-30
The Huxley187
West Hollywood, CA54,155
19,362
75,641
1,033
19,371
76,665
96,036
(8,608)2014Mar-15   3-30
The Landing at Jack London Square282
Oakland, CA51,246
33,554
78,292
5,314
33,554
83,606
117,160
(12,370)2001Apr-14   5-30
The Palisades192
Bellevue, WA19,338
1,560
6,242
12,709
1,565
18,946
20,511
(16,021)1977May-90   3-30
The Palms at Laguna Niguel460
Laguna Niguel, CA54,450
23,584
94,334
6,569
23,584
100,903
124,487
(14,019)1988Apr-14   5-30
The Waterford238
San Jose, CA29,760
11,808
24,500
14,581
15,165
35,724
50,889
(20,491)2000Jun-00   3-30
Valley Park160
Fountain Valley, CA21,400
3,361
13,420
5,744
3,761
18,764
22,525
(9,907)1969Nov-01   3-30
Villa Angelina256
Placentia, CA27,869
4,498
17,962
7,044
4,962
24,542
29,504
(13,340)1970Nov-01   3-30
Villa Granada270
Santa Clara, CA56,474
38,299
89,365
1,449
38,299
90,814
129,113
(12,672)2010Apr-14   5-30
Wandering Creek156
Kent, WA5,239
1,285
4,980
4,203
1,296
9,172
10,468
(7,166)1986Nov-95   3-30
Wilshire Promenade149
Fullerton, CA16,567
3,118
7,385
8,781
3,797
15,487
19,284
(9,891)1992Jan-97   3-30
 14,988
 $2,008,417
$764,224
$2,416,739
$510,489
$774,421
$2,917,031
$3,691,452
$(868,971)   
              
Unencumbered Communities             
8th & Hope290
Los Angeles, CA$—
$29,279
$169,350
$2,207
$29,279
$171,557
$200,836
$(18,558)2014Feb-15   3-30
Alessio624
Los Angeles, CA—
32,136
128,543
7,794
32,136
136,337
168,473
(19,336)2001Apr-14   5-30
Allegro97
Valley Village, CA—
5,869
23,977
1,968
5,869
25,945
31,814
(8,463)2010Oct-10   3-30

F- 5257
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(Dollars in thousands)



Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Collins on Pine76 Seattle, WA— 7,276 22,226 1,076 7,276 23,302 30,578 (7,783)2013May-14   3-30
Connolly Station309 Dublin, CA— 19,949 123,428 5,503 19,949 128,931 148,880 (18,748)2014Jan-20   3-30
Corbella at Juanita Bay169 Kirkland, WA— 5,801 17,415 5,758 5,801 23,173 28,974 (11,369)1978Nov-10   3-30
Cortesia308 Rancho Santa Margarita, CA— 13,912 55,649 6,220 13,912 61,869 75,781 (21,883)1999Apr-14   5-30
Country Villas180 Oceanside, CA— 4,174 16,583 7,719 4,187 24,289 28,476 (17,013)1976Dec-02   3-30
Courtyard off Main110 Bellevue, WA— 7,465 21,405 7,676 7,465 29,081 36,546 (14,010)2000Oct-10   3-30
Crow Canyon400 San Ramon, CA— 37,579 87,685 19,142 37,579 106,827 144,406 (41,200)1992Apr-14   5-30
Deer Valley171 San Rafael, CA— 21,478 50,116 6,200 21,478 56,316 77,794 (20,508)1996Apr-14   5-30
Domaine92 Seattle, WA— 9,059 27,177 2,016 9,059 29,193 38,252 (11,604)2009Sep-12   3-30
Elevation158 Redmond, WA— 4,758 14,285 8,926 4,757 23,212 27,969 (13,693)1986Jun-10   3-30
Ellington220 Bellevue, WA— 15,066 45,249 6,721 15,066 51,970 67,036 (18,149)1994Jul-14   3-30
Emerald Pointe160 Diamond Bar, CA— 8,458 33,832 3,854 8,458 37,686 46,144 (13,690)1989Apr-14   5-30
Emerald Ridge180 Bellevue, WA— 3,449 7,801 8,762 3,449 16,563 20,012 (14,422)1987Nov-94   3-30
Emerson Valley Village144 Los Angeles, CA— 13,378 53,240 2,731 13,378 55,971 69,349 (14,061)2012Dec-16   3-30
Emme190 Emeryville, CA— 15,039 80,532 1,602 15,039 82,134 97,173 (11,594)2015Jan-20   3-30
Enso183 San Jose, CA— 21,397 71,135 3,565 21,397 74,700 96,097 (21,195)2014Dec-15   3-30
Epic769 San Jose, CA— 89,111 307,769 5,723 89,111 313,492 402,603 (43,577)2013Jan-20   3-30
Esplanade278 San Jose, CA— 18,170 40,086 18,769 18,429 58,596 77,025 (40,654)2002Apr-04   3-30
Essex Skyline350 Santa Ana, CA— 21,537 146,099 19,047 21,537 165,146 186,683 (68,901)2008Apr-10   3-30
Evergreen Heights200 Kirkland, WA— 3,566 13,395 9,409 3,649 22,721 26,370 (18,796)1990Jun-97   3-30
Fairhaven Apartments164 Santa Ana, CA— 2,626 10,485 11,748 2,957 21,902 24,859 (17,103)1970Nov-01   3-30
Fairway Apartments at Big Canyon (5)
74 Newport Beach, CA— — 7,850 9,654 — 17,504 17,504 (15,324)1972Jun-99   3-28
Fairwood Pond194 Renton, WA— 5,296 15,564 6,603 5,297 22,166 27,463 (14,306)1997Oct-04   3-30
Foothill Commons394 Bellevue, WA— 2,435 9,821 44,756 2,440 54,572 57,012 (51,045)1978Mar-90   3-30
Foothill Gardens/Twin Creeks176 San Ramon, CA— 5,875 13,992 15,512 5,964 29,415 35,379 (24,065)1985Feb-97   3-30
Forest View192 Renton, WA— 3,731 14,530 5,619 3,731 20,149 23,880 (13,213)1998Oct-03   3-30
Form 15242 San Diego, CA— 24,510 72,221 14,885 25,540 86,076 111,616 (24,271)2014Mar-16   3-30
Foster's Landing490 Foster City, CA— 61,714 144,000 18,648 61,714 162,648 224,362 (60,005)1987Apr-14   5-30
Fountain Court320 Seattle, WA— 6,702 27,306 16,464 6,985 43,487 50,472 (35,378)2000Mar-00   3-30
Fountains at River Oaks226 San Jose, CA— 26,046 60,773 9,144 26,046 69,917 95,963 (26,176)1990Apr-14   3-30
Fourth & U171 Berkeley, CA— 8,879 52,351 5,944 8,879 58,295 67,174 (27,867)2010Apr-10   3-30
Fox Plaza445 San Francisco, CA— 39,731 92,706 43,656 39,731 136,362 176,093 (63,688)1968Feb-13   3-30
      Costs
       
    Initial cost capitalized
Gross amount carried at close of period     
 Apartment
   Buildings and
subsequent to
Land and
Buildings and
 Accumulated
Date ofDateLives
PropertyHomes
LocationEncumbrance
Land
improvements
acquisition
improvements
improvements
Total (1)

depreciation
constructionacquired(years)
Allure at Scripps Ranch194
San Diego, CA—
11,923
47,690
1,195
11,923
48,885
60,808
(6,765)2002Apr-14   5-30
Alpine Village301
Alpine, CA—
4,967
19,728
8,111
4,982
27,824
32,806
(14,106)1971Dec-02   3-30
Anavia250
Anaheim, CA—
15,925
63,712
7,649
15,925
71,361
87,286
(17,162)2009Dec-10   3-30
Annaliese56
Seattle, WA—
4,727
14,229
525
4,726
14,755
19,481
(2,501)2009Jan-13   3-30
Apex366
Milpitas, CA—
44,240
103,251
2,512
44,240
105,763
150,003
(11,748)2014Aug-14   3-30
Aqua Marina Del Rey500
Marina Del Rey, CA—
58,442
175,326
11,921
58,442
187,247
245,689
(27,261)2001Apr-14   5-30
Ascent90
Kirkland, WA—
3,924
11,862
1,806
3,924
13,668
17,592
(2,937)1988Oct-12   3-30
Ashton Sherman Village264
Los Angeles, CA—
23,550
93,811
373
23,550
94,184
117,734
(3,442)2014Dec-16   3-30
Avant440
Los Angeles, CA—
32,379
137,940
1,349
32,379
139,289
171,668
(11,397)2014Jun-15   3-30
Avenue 64224
Emeryville, CA—
27,235
64,403
14,013
27,235
78,416
105,651
(10,003)2007Apr-14   5-30
Aviara (4)
166
Mercer Island, WA—
—
49,813
680
—
50,493
50,493
(7,820)2013Apr-14   5-30
Axis 2300115
Irvine, CA—
5,405
33,585
1,559
5,405
35,144
40,549
(11,130)2010Aug-10   3-30
Bella Villagio231
San Jose, CA—
17,247
40,343
3,060
17,247
43,403
60,650
(11,390)2004Sep-10   3-30
Bellerive63
Los Angeles, CA—
5,401
21,803
1,104
5,401
22,907
28,308
(6,181)2011Aug-11   3-30
Belmont Terrace71
Belmont, CA—
4,446
10,290
6,203
4,473
16,466
20,939
(7,161)1974Oct-06   3-30
Bennett Lofts165
San Francisco, CA—
21,771
50,800
28,948
28,371
73,148
101,519
(13,218)2004Dec-12   3-30
Bernardo Crest216
San Diego, CA—
10,802
43,209
2,738
10,802
45,947
56,749
(6,542)1988Apr-14   5-30
Bonita Cedars120
Bonita, CA—
2,496
9,913
3,985
2,503
13,891
16,394
(6,742)1983Dec-02   3-30
Boulevard172
Fremont, CA—
3,520
8,182
12,963
3,580
21,085
24,665
(16,059)1978Jan-96   3-30
Bridle Trails108
Kirkland, WA—
1,500
5,930
5,812
1,531
11,711
13,242
(8,081)1986Oct-97   3-30
Brighton Ridge264
Renton, WA—
2,623
10,800
4,966
2,656
15,733
18,389
(11,110)1986Dec-96   3-30
Bristol Commons188
Sunnyvale, CA—
5,278
11,853
8,861
5,293
20,699
25,992
(12,709)1989Jan-95   3-30
416 on Broadway115
Glendale, CA—
8,557
34,235
2,296
8,557
36,531
45,088
(9,509)2009Dec-10   3-30
Bunker Hill456
Los Angeles, CA—
11,498
27,871
75,593
11,639
103,323
114,962
(43,100)1968Mar-98   3-30
Camarillo Oaks564
Camarillo, CA—
10,953
25,254
6,100
11,075
31,232
42,307
(21,946)1985Jul-96   3-30
Cambridge Park320
San Diego, CA—
18,185
72,739
2,492
18,185
75,231
93,416
(10,691)1998Apr-14   5-30
Camino Ruiz Square159
Camarillo, CA—
6,871
26,119
1,886
6,931
27,945
34,876
(10,569)1990Dec-06   3-30
Canyon Oaks250
San Ramon, CA—
19,088
44,473
3,404
19,088
47,877
66,965
(17,672)2005May-07   3-30
Canyon Pointe250
Bothell, WA—
4,692
18,288
7,017
4,693
25,304
29,997
(13,092)1990Oct-03   3-30
Capri at Sunny Hills102
Fullerton, CA—
3,337
13,320
9,040
4,048
21,649
25,697
(12,460)1961Sep-01   3-30
Carmel Landing356
San Diego, CA—
16,725
66,901
6,128
16,725
73,029
89,754
(10,364)1989Apr-14   5-30
Carmel Summit246
San Diego, CA—
14,968
59,871
2,886
14,968
62,757
77,725
(8,747)1989Apr-14   5-30

F- 5358
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(Dollars in thousands)



Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Hacienda at Camarillo Oaks73 Camarillo, CA— 5,497 17,572 2,464 5,497 20,036 25,533 (522)1984Apr-23   3-30
The Henley I/The Henley II215 Glendale, CA— 6,695 16,753 31,710 6,733 48,425 55,158 (39,183)1970Jun-99   3-30
Highlands at Wynhaven333 Issaquah, WA— 16,271 48,932 17,578 16,271 66,510 82,781 (39,218)2000Aug-08   3-30
Hillcrest Park608 Newbury Park, CA— 15,318 40,601 29,837 15,755 70,001 85,756 (53,986)1973Mar-98   3-30
Hillsdale Garden697 San Mateo, CA— 22,000 94,681 42,417 22,000 137,098 159,098 (81,397)1948Sep-06   3-30
Hope Ranch108 Santa Barbara, CA— 4,078 16,877 3,986 4,208 20,733 24,941 (11,834)1965Mar-07   3-30
Huntington Breakers342 Huntington Beach, CA— 9,306 22,720 26,749 9,315 49,460 58,775 (41,562)1984Oct-97   3-30
Inglenook Court224 Bothell, WA— 3,467 7,881 10,148 3,474 18,022 21,496 (15,994)1985Oct-94   3-30
Lafayette Highlands150 Lafayette, CA— 17,774 41,473 9,261 17,774 50,734 68,508 (18,567)1973Apr-14   5-30
Lakeshore Landing308 San Mateo, CA— 38,155 89,028 15,358 38,155 104,386 142,541 (38,936)1988Apr-14   5-30
Laurels at Mill Creek164 Mill Creek, WA— 1,559 6,430 9,494 1,595 15,888 17,483 (13,520)1981Dec-96   3-30
Le Parc140 Santa Clara, CA— 3,090 7,421 16,203 3,092 23,622 26,714 (20,121)1975Feb-94   3-30
Marbrisa202 Long Beach, CA— 4,700 18,605 12,518 4,760 31,063 35,823 (22,713)1987Sep-02   3-30
Marina City Club (6)
101 Marina Del Rey, CA— — 28,167 35,482 — 63,649 63,649 (41,034)1971Jan-04   3-30
Marina Cove (7)
292 Santa Clara, CA— 5,320 16,431 19,363 5,324 35,790 41,114 (32,469)1974Jun-94   3-30
Mariner's Place105 Oxnard, CA— 1,555 6,103 3,639 1,562 9,735 11,297 (7,468)1987May-00   3-30
MB 360360 San Francisco, CA— 42,001 212,648 16,253 42,001 228,901 270,902 (73,498)2014Apr-14   3-30
Mesa Village133 Clairemont, CA— 1,888 7,498 3,507 1,894 10,999 12,893 (7,755)1963Dec-02   3-30
Mill Creek at Windermere400 San Ramon, CA— 29,551 69,032 14,805 29,551 83,837 113,388 (45,026)2005Sep-07   3-30
Mio103 San Jose, CA— 11,012 39,982 2,153 11,012 42,135 53,147 (11,663)2015Jan-16   3-30
Mirabella188 Marina Del Rey, CA— 6,180 26,673 20,139 6,270 46,722 52,992 (33,524)2000May-00   3-30
Mira Monte354 Mira Mesa, CA— 7,165 28,459 16,734 7,186 45,172 52,358 (32,198)1982Dec-02   3-30
Miracle Mile/Marbella236 Los Angeles, CA— 7,791 23,075 20,649 7,886 43,629 51,515 (34,078)1988Aug-97   3-30
Mission Hills282 Oceanside, CA— 10,099 38,778 15,512 10,167 54,222 64,389 (35,135)1984Jul-05   3-30
Mission Peaks453 Fremont, CA— 46,499 108,498 13,839 46,499 122,337 168,836 (44,778)1995Apr-14   5-30
Mission Peaks II336 Fremont, CA— 31,429 73,334 12,394 31,429 85,728 117,157 (32,318)1989Apr-14   5-30
Montanosa472 San Diego, CA— 26,697 106,787 15,499 26,697 122,286 148,983 (43,193)1990Apr-14   5-30
Montclaire390 Sunnyvale, CA— 4,842 19,776 32,229 4,997 51,850 56,847 (47,688)1973Dec-88   3-30
Montebello248 Kirkland, WA— 13,857 41,575 15,803 13,858 57,377 71,235 (23,364)1996Jul-12   3-30
Montejo Apartments124 Garden Grove, CA— 1,925 7,685 6,287 2,194 13,703 15,897 (9,460)1974Nov-01   3-30
Monterey Villas122 Oxnard, CA— 2,349 5,579 8,980 2,424 14,484 16,908 (11,089)1974Jul-97   3-30
Muse152 North Hollywood, CA— 7,822 33,436 7,109 7,823 40,544 48,367 (19,798)2011Feb-11   3-30
Mylo476 Santa Clara, CA— 6,472 206,098 867 6,472 206,965 213,437 (35,556)2021Jun-21   3-30
      Costs
       
    Initial cost capitalized
Gross amount carried at close of period     
 Apartment
   Buildings and
subsequent to
Land and
Buildings and
 Accumulated
Date ofDateLives
PropertyHomes
LocationEncumbrance
Land
improvements
acquisition
improvements
improvements
Total (1)

depreciation
constructionacquired(years)
Castle Creek216
Newcastle, WA—
4,149
16,028
3,760
4,833
19,104
23,937
(13,088)1998Dec-98   3-30
Catalina Gardens128
Los Angeles, CA—
6,714
26,856
1,043
6,714
27,899
34,613
(3,890)1987Apr-14   5-30
CBC Apartments & The Sweeps239
Goleta, CA—
11,841
45,320
6,162
11,906
51,417
63,323
(22,887)1962Jan-06   3-30
Cedar Terrace180
Bellevue, WA—
5,543
16,442
5,923
5,652
22,256
27,908
(10,561)1984Jan-05   3-30
CentrePointe224
San Diego, CA—
3,405
7,743
21,252
3,442
28,958
32,400
(16,021)1974Jun-97   3-30
Chestnut Street Apartments96
Santa Cruz, CA—
6,582
15,689
1,750
6,582
17,439
24,021
(5,821)2002Jul-08   3-30
Collins on Pine76
Seattle, WA—
7,276
22,226
262
7,276
22,488
29,764
(2,737)2013May-14   3-30
Corbella at Juanita Bay169
Kirkland, WA—
5,801
17,415
2,603
5,801
20,018
25,819
(5,368)1978Nov-10   3-30
Cortesia308
Rancho Santa Margarita, CA—
13,912
55,649
1,958
13,912
57,607
71,519
(8,058)1999Apr-14   5-30
Country Villas180
Oceanside, CA—
4,174
16,583
4,772
4,187
21,342
25,529
(11,005)1976Dec-02   3-30
Crow Canyon400
San Ramon, CA—
37,579
87,685
7,616
37,579
95,301
132,880
(13,111)1992Apr-14   5-30
Deer Valley171
San Rafael, CA—
21,478
50,116
2,113
21,478
52,229
73,707
(7,425)1996Apr-14   5-30
Delano126
Redmond, WA—
7,470
22,511
1,167
7,470
23,678
31,148
(4,984)2005Dec-11   3-30
Devonshire276
Hemet, CA—
3,470
13,786
3,935
3,482
17,709
21,191
(9,455)1988Dec-02   3-30
Domain379
San Diego, CA—
23,848
95,394
1,298
23,848
96,692
120,540
(13,510)2013Nov-13   3-30
Emerald Pointe160
Diamond Bar, CA—
8,458
33,832
1,468
8,458
35,300
43,758
(5,018)1989Apr-14   5-30
Emerald Ridge180
Bellevue, WA—
3,449
7,801
5,199
3,449
13,000
16,449
(9,551)1987Nov-94   3-30
Emerson Valley Village144
Los Angeles, CA—
13,378
53,240
284
13,378
53,524
66,902
(1,953)2012Dec-16   3-30
Enso183
San Jose, CA—
21,397
71,135
1,153
21,397
72,288
93,685
(5,238)2014Dec-15   3-30
Esplanade278
San Jose, CA—
18,170
40,086
11,945
18,429
51,772
70,201
(24,281)2002Apr-04   3-30
Essex Skyline349
Santa Ana, CA—
21,537
146,099
6,340
21,537
152,439
173,976
(29,843)2008Apr-10   3-30
Evergreen Heights200
Kirkland, WA—
3,566
13,395
5,345
3,649
18,657
22,306
(12,816)1990Jun-97   3-30
Fairway Apartments at Big Canyon (5) 
74
Newport Beach, CA—
—
7,850
7,583
—
15,433
15,433
(9,692)1972Jun-99   3-28
Fairwood Pond194
Renton, WA—
5,296
15,564
3,122
5,297
18,685
23,982
(8,928)1997Oct-04   3-30
Foothill Commons394
Bellevue, WA—
2,435
9,821
39,142
2,440
48,958
51,398
(38,723)1978Mar-90   3-30
Foothill Gardens/Twin Creeks176
San Ramon, CA—
5,875
13,992
10,086
5,964
23,989
29,953
(15,203)1985Feb-97   3-30
Forest View192
Renton, WA—
3,731
14,530
2,362
3,731
16,892
20,623
(8,351)1998Oct-03   3-30
Fountain Court320
Seattle, WA—
6,702
27,306
11,409
6,585
38,832
45,417
(23,649)2000Mar-00   3-30
Fourth & U171
Berkeley, CA—
8,879
52,351
2,775
8,879
55,126
64,005
(15,677)2010Apr-10   3-30
Fox Plaza444
San Francisco, CA—
39,731
92,706
20,638
39,731
113,344
153,075
(21,219)1968Feb-13   3-30
Hampton Place/Hampton Court215
Glendale, CA—
6,695
16,753
24,885
6,733
41,600
48,333
(18,798)1970Jun-99   3-30

F- 5459
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(Dollars in thousands)



Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
1000 Kiely121 Santa Clara, CA— 9,359 21,845 11,284 9,359 33,129 42,488 (17,925)1971Mar-11   3-30
Palm Valley1,100 San Jose, CA— 133,802 312,205 33,448 133,802 345,653 479,455 (91,453)2008Jan-17   3-30
Park Catalina90 Los Angeles, CA— 4,710 18,839 4,825 4,710 23,664 28,374 (10,795)2002Jun-12   3-30
Park Highland250 Bellevue, WA— 9,391 38,224 15,944 9,391 54,168 63,559 (25,009)1993Apr-14   5-30
Park Hill at Issaquah245 Issaquah, WA— 7,284 21,937 15,309 7,284 37,246 44,530 (24,420)1999Feb-99   3-30
Park Viridian320 Anaheim, CA— 15,894 63,574 7,165 15,894 70,739 86,633 (25,521)2008Apr-14   5-30
Park West126 San Francisco, CA— 9,424 21,988 14,824 9,424 36,812 46,236 (19,991)1958Sep-12   3-30
Parkwood at Mill Creek240 Mill Creek, WA— 10,680 42,722 4,885 10,680 47,607 58,287 (17,576)1989Apr-14   5-30
Patent 523295 Seattle, WA— 14,558 69,417 8,927 14,558 78,344 92,902 (38,284)2010Mar-10   3-30
Pathways at Bixby Village296 Long Beach, CA— 4,083 16,757 24,405 6,239 39,006 45,245 (35,534)1975Feb-91   3-30
Piedmont396 Bellevue, WA— 19,848 59,606 20,462 19,848 80,068 99,916 (32,025)1969May-14   3-30
Pinehurst (8)
28 Ventura, CA— — 1,711 943 — 2,654 2,654 (2,051)1973Dec-04   3-24
Pinnacle at Fullerton192 Fullerton, CA— 11,019 45,932 7,172 11,019 53,104 64,123 (19,644)2004Apr-14   5-30
Pinnacle on Lake Washington180 Renton, WA— 7,760 31,041 5,950 7,760 36,991 44,751 (14,124)2001Apr-14   5-30
Pinnacle at MacArthur Place253 Santa Ana, CA— 15,810 66,401 10,646 15,810 77,047 92,857 (27,583)2002Apr-14   5-30
Pinnacle at Otay Ranch I & II364 Chula Vista, CA— 17,023 68,093 8,560 17,023 76,653 93,676 (27,583)2001Apr-14   5-30
Pinnacle at Talega362 San Clemente, CA— 19,292 77,168 9,934 19,292 87,102 106,394 (30,087)2002Apr-14   5-30
Pinnacle Sonata268 Bothell, WA— 14,647 58,586 9,882 14,647 68,468 83,115 (25,042)2000Apr-14   5-30
Pointe at Cupertino116 Cupertino, CA— 4,505 17,605 14,682 4,505 32,287 36,792 (24,253)1963Aug-98   3-30
Pure Redmond105 Redmond, WA— 7,461 31,363 2,360 7,461 33,723 41,184 (5,042)2016Dec-19   3-30
Radius264 Redwood City, CA— 11,702 152,336 5,077 11,702 157,413 169,115 (54,824)2015Apr-14   3-30
Reed Square100 Sunnyvale, CA— 6,873 16,037 9,418 6,873 25,455 32,328 (14,905)1970Jan-12   3-30
Regency at Encino75 Encino, CA— 3,184 12,737 5,428 3,184 18,165 21,349 (9,945)1989Dec-09   3-30
Regency Palm Court116 Los Angeles, CA— 7,763 28,019 1,637 7,763 29,656 37,419 (1,586)1987Jul-22   3-30
Renaissance at Uptown Orange460 Orange, CA— 27,870 111,482 11,968 27,870 123,450 151,320 (43,931)2007Apr-14   5-30
Reveal438 Woodland Hills, CA— 25,073 121,314 7,805 25,073 129,119 154,192 (42,223)2010Apr-15   3-30
Salmon Run at Perry Creek132 Bothell, WA— 3,717 11,483 4,828 3,801 16,227 20,028 (11,529)2000Oct-00   3-30
Sammamish View153 Bellevue, WA— 3,324 7,501 9,177 3,331 16,671 20,002 (14,681)1986Nov-94   3-30
101 San Fernando323 San Jose, CA— 4,173 58,961 19,870 4,173 78,831 83,004 (40,019)2001Jul-10   3-30
San Marcos432 Richmond, CA— 15,563 36,204 40,073 22,866 68,974 91,840 (45,615)2003Nov-03   3-30
Santee Court/Santee Village238 Los Angeles, CA— 9,581 40,317 19,087 9,582 59,403 68,985 (28,730)2004Oct-10   3-30
Shadow Point172 Spring Valley, CA— 2,812 11,170 7,859 2,820 19,021 21,841 (12,353)1983Dec-02   3-30
Shadowbrook418 Redmond, WA— 19,292 77,168 11,517 19,292 88,685 107,977 (31,940)1986Apr-14   5-30
      Costs
       
    Initial cost capitalized
Gross amount carried at close of period     
 Apartment
   Buildings and
subsequent to
Land and
Buildings and
 Accumulated
Date ofDateLives
PropertyHomes
LocationEncumbrance
Land
improvements
acquisition
improvements
improvements
Total (1)

depreciation
constructionacquired(years)
Hillsdale Garden697
San Mateo, CA—
22,000
94,681
22,145
22,000
116,826
138,826
(49,216)1948Sep-06   3-30
Hope Ranch108
Santa Barbara, CA—
4,078
16,877
2,825
4,208
19,572
23,780
(7,105)1965Mar-07   3-30
Joule295
Seattle, WA—
14,558
69,417
4,295
14,558
73,712
88,270
(21,397)2010Mar-10   3-30
Kings Road196
Los Angeles, CA—
4,023
9,527
14,593
4,031
24,112
28,143
(14,090)1979Jun-97   3-30
Lafayette Highlands150
Lafayette, CA—
17,774
41,473
2,065
17,774
43,538
61,312
(6,023)1973Apr-14   5-30
Lakeshore Landing308
San Mateo, CA—
38,155
89,028
5,920
38,155
94,948
133,103
(14,103)1988Apr-14   5-30
Laurels at Mill Creek164
Mill Creek, WA—
1,559
6,430
6,231
1,595
12,625
14,220
(9,082)1981Dec-96   3-30
Lawrence Station336
Sunnyvale, CA—
45,532
106,735
1,100
45,532
107,835
153,367
(18,224)2012Apr-14   5-30
Le Parc140
Santa Clara, CA—
3,090
7,421
11,787
3,092
19,206
22,298
(14,464)1975Feb-94   3-30
Marbrisa202
Long Beach, CA—
4,700
18,605
8,640
4,760
27,185
31,945
(13,889)1987Sep-02   3-30
Marina City Club (6) 
101
Marina Del Rey, CA—
—
28,167
27,613
—
55,780
55,780
(23,105)1971Jan-04   3-30
Marina Cove (7) 
292
Santa Clara, CA—
5,320
16,431
14,699
5,324
31,126
36,450
(22,342)1974Jun-94   3-30
Mariner's Place105
Oxnard, CA—
1,555
6,103
2,314
1,562
8,410
9,972
(5,316)1987May-00   3-30
MB 360360
San Francisco, CA—
21,421
114,376
122,654
42,001
216,450
258,451
(21,619)2014Apr-14   3-30
Mesa Village133
Clairemont, CA—
1,888
7,498
1,730
1,894
9,222
11,116
(4,691)1963Dec-02   3-30
Mio103
San Jose, CA—
11,012
39,982
367
11,012
40,349
51,361
(2,786)2015Jan-16   3-30
Mira Monte354
Mira Mesa, CA—
7,165
28,459
10,588
7,186
39,026
46,212
(22,220)1982Dec-02   3-30
Miracle Mile/Marbella236
Los Angeles, CA—
7,791
23,075
14,330
7,886
37,310
45,196
(24,621)1988Aug-97   3-30
Mission Hills282
Oceanside, CA—
10,099
38,778
6,780
10,167
45,490
55,657
(20,326)1984Jul-05   3-30
Mission Peaks453
Fremont, CA—
46,499
108,498
3,457
46,499
111,955
158,454
(15,669)1995Apr-14   5-30
Mission Peaks II336
Fremont, CA—
31,429
73,334
4,469
31,429
77,803
109,232
(11,188)1989Apr-14   5-30
Monterey Villas122
Oxnard, CA—
2,349
5,579
6,410
2,424
11,914
14,338
(7,386)1974Jul-97   3-30
Muse152
North Hollywood, CA—
7,822
33,436
2,724
7,823
36,159
43,982
(11,275)2011Feb-11   3-30
Museum Park117
San Jose, CA—
13,864
32,348
1,236
13,864
33,584
47,448
(4,777)2002Apr-14   5-30
Palm Valley1,098
San Jose, CA—
133,802
312,205
2,035
133,802
314,240
448,042
(10,741)2008Jan-17   3-30
Paragon Apartments301
Fremont, CA—
32,230
77,320
1,367
32,230
78,687
110,917
(9,136)2013Jul-14   3-30
Park Catalina90
Los Angeles, CA—
4,710
18,839
3,068
4,710
21,907
26,617
(4,823)2002Jun-12   3-30
Park Viridian320
Anaheim, CA—
15,894
63,574
3,023
15,894
66,597
82,491
(9,304)2008Apr-14   5-30
Park West126
San Francisco, CA—
9,424
21,988
11,930
9,424
33,918
43,342
(7,730)1958Sep-12   3-30
Parkwood at Mill Creek240
Mill Creek, WA—
10,680
42,722
2,441
10,680
45,163
55,843
(6,492)1989Apr-14   5-30
Pathways at Bixby Village296
Long Beach, CA—
4,083
16,757
20,235
6,239
34,836
41,075
(29,186)1975Feb-91   3-30
Piedmont396
Bellevue, WA—
19,848
59,606
11,186
19,848
70,792
90,640
(9,660)1969May-14   3-30

F- 5560
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(Dollars in thousands)



Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Slater 116108 Kirkland, WA— 7,379 22,138 2,243 7,379 24,381 31,760 (8,886)2013Sep-13   3-30
Solstice280 Sunnyvale, CA— 34,444 147,262 9,114 34,444 156,376 190,820 (57,770)2014Apr-14   5-30
Station Park Green599 San Mateo, CA— 54,782 314,694 111,597 67,204 413,869 481,073 (79,930)2018Mar-18   3-30
Stevenson Place200 Fremont, CA— 996 5,582 16,131 1,001 21,708 22,709 (18,665)1975Apr-00   3-30
Stonehedge Village196 Bothell, WA— 3,167 12,603 12,242 3,201 24,811 28,012 (19,835)1986Oct-97   3-30
Summerhill Park100 Sunnyvale, CA— 2,654 4,918 11,843 2,656 16,759 19,415 (15,161)1988Sep-88   3-30
Summit Park300 San Diego, CA— 5,959 23,670 11,159 5,977 34,811 40,788 (24,448)1972Dec-02   3-30
Taylor 28197 Seattle, WA— 13,915 57,700 6,041 13,915 63,741 77,656 (22,896)2008Apr-14   5-30
The Audrey at Belltown137 Seattle, WA— 9,228 36,911 3,193 9,228 40,104 49,332 (14,169)1992Apr-14   5-30
The Avery121 Los Angeles, CA— 6,964 29,922 1,787 6,964 31,709 38,673 (10,597)2014Mar-14   3-30
The Bernard63 Seattle, WA— 3,699 11,345 1,138 3,689 12,493 16,182 (5,535)2008Sep-11   3-30
The Blake LA196 Los Angeles, CA— 4,023 9,527 25,998 4,031 35,517 39,548 (27,565)1979Jun-97   3-30
The Cairns99 Seattle, WA— 6,937 20,679 3,628 6,939 24,305 31,244 (13,858)2006Jun-07   3-30
The Elliot at Mukilteo301 Mukilteo, WA— 2,498 10,595 20,508 2,824 30,777 33,601 (26,499)1981Jan-97   3-30
The Grand243 Oakland, CA— 4,531 89,208 9,358 4,531 98,566 103,097 (51,214)2009Jan-09   3-30
The Hallie292 Pasadena, CA— 2,202 4,794 57,980 8,385 56,591 64,976 (48,352)1972Apr-97   3-30
The Huntington276 Huntington Beach, CA— 10,374 41,495 9,525 10,374 51,020 61,394 (22,312)1975Jun-12   3-30
The Landing at Jack London Square282 Oakland, CA— 33,554 78,292 10,330 33,554 88,622 122,176 (33,472)2001Apr-14   5-30
The Lofts at Pinehurst118 Ventura, CA— 1,570 3,912 6,701 1,618 10,565 12,183 (8,009)1971Jun-97   3-30
The Palisades192 Bellevue, WA— 1,560 6,242 16,768 1,565 23,005 24,570 (19,918)1977May-90   3-30
The Palms at Laguna Niguel460 Laguna Niguel, CA— 23,584 94,334 17,847 23,584 112,181 135,765 (42,182)1988Apr-14   5-30
The Stuart188 Pasadena, CA— 13,574 54,298 5,546 13,574 59,844 73,418 (21,356)2007Apr-14   5-30
The Trails of Redmond423 Redmond, WA— 21,930 87,720 9,868 21,930 97,588 119,518 (35,480)1985Apr-14   5-30
The Village at Toluca Lake145 Burbank, CA— 14,634 48,297 2,024 14,634 50,321 64,955 (4,652)1974Jun-21   3-30
The Waterford238 San Jose, CA— 11,808 24,500 19,752 15,165 40,895 56,060 (31,327)2000Jun-00   3-30
Tierra Vista404 Oxnard, CA— 13,652 53,336 11,904 13,661 65,231 78,892 (42,191)2001Jan-01   3-30
Tiffany Court101 Los Angeles, CA— 6,949 27,796 3,556 6,949 31,352 38,301 (11,191)1987Apr-14   5-30
Trabuco Villas132 Lake Forest, CA— 3,638 8,640 6,266 3,890 14,654 18,544 (11,310)1985Oct-97   3-30
Valley Park160 Fountain Valley, CA— 3,361 13,420 8,373 3,761 21,393 25,154 (15,146)1969Nov-01   3-30
Via284 Sunnyvale, CA— 22,000 82,270 7,647 22,016 89,901 111,917 (40,456)2011Jul-11   3-30
Villa Angelina256 Placentia, CA— 4,498 17,962 10,155 4,962 27,653 32,615 (20,376)1970Nov-01   3-30
Villa Granada270 Santa Clara, CA— 38,299 89,365 4,688 38,299 94,053 132,352 (32,619)2010Apr-14   5-30
      Costs
       
    Initial cost capitalized
Gross amount carried at close of period     
 Apartment
   Buildings and
subsequent to
Land and
Buildings and
 Accumulated
Date ofDateLives
PropertyHomes
LocationEncumbrance
Land
improvements
acquisition
improvements
improvements
Total (1)

depreciation
constructionacquired(years)
Pinehurst (8) 
28
Ventura, CA—
—
1,711
548
—
2,259
2,259
(1,249)1973Dec-04   3-24
Pinnacle Sonata268
Bothell, WA—
14,647
58,586
2,602
14,647
61,188
75,835
(8,496)2000Apr-14   5-30
Pointe at Cupertino116
Cupertino, CA—
4,505
17,605
11,908
4,505
29,513
34,018
(15,789)1963Aug-98   3-30
Radius264
Redwood City, CA—
11,702
152,336
18
11,702
152,354
164,056
(20,701)2015Apr-14   3-30
Reed Square100
Sunnyvale, CA—
6,873
16,037
8,023
6,873
24,060
30,933
(7,372)1970Jan-12   3-30
Regency at Encino75
Encino, CA—
3,184
12,737
3,312
3,184
16,049
19,233
(5,377)1989Dec-09   3-30
Renaissance at Uptown Orange460
Orange, CA—
27,870
111,482
4,122
27,870
115,604
143,474
(16,189)2007Apr-14   5-30
Reveal438
Woodland Hills, CA—
25,073
121,314
1,104
25,073
122,418
147,491
(12,990)2010Apr-15   3-30
Salmon Run at Perry Creek132
Bothell, WA—
3,717
11,483
2,018
3,801
13,417
17,218
(7,639)2000Oct-00   3-30
Sammamish View153
Bellevue, WA—
3,324
7,501
6,660
3,331
14,154
17,485
(11,623)1986Nov-94   3-30
101 San Fernando323
San Jose, CA—
4,173
58,961
10,473
4,173
69,434
73,607
(20,152)2001Jul-10   3-30
San Marcos432
Richmond, CA—
15,563
36,204
30,439
22,866
59,340
82,206
(28,461)2003Nov-03   3-30
Santee Court/Santee Village238
Los Angeles, CA—
9,581
40,317
6,383
9,582
46,699
56,281
(12,474)2004Oct-10   3-30
Shadow Point172
Spring Valley, CA—
2,812
11,170
3,407
2,820
14,569
17,389
(7,412)1983Dec-02   3-30
Shadowbrook418
Redmond, WA—
19,292
77,168
3,892
19,292
81,060
100,352
(11,419)1986Apr-14   5-30
Slater 116108
Kirkland, WA—
7,379
22,138
709
7,379
22,847
30,226
(3,446)2013Sep-13   3-30
Solstice280
Sunnyvale, CA—
34,444
147,262
4,598
34,444
151,860
186,304
(24,629)2014Apr-14   5-30
Stonehedge Village196
Bothell, WA—
3,167
12,603
6,516
3,201
19,085
22,286
(12,875)1986Oct-97   3-30
Summit Park300
San Diego, CA—
5,959
23,670
5,915
5,977
29,567
35,544
(15,594)1972Dec-02   3-30
Taylor 28197
Seattle, WA—
13,915
57,700
1,892
13,915
59,592
73,507
(8,120)2008Apr-14   5-30
The Avery121
Los Angeles, CA—
6,964
29,922
299
6,964
30,221
37,185
(3,810)2014Mar-14   3-30
The Cairns99
Seattle, WA—
6,937
20,679
1,459
6,939
22,136
29,075
(8,056)2006Jun-07   3-30
The Commons264
Campbell, CA—
12,555
29,307
7,370
12,556
36,676
49,232
(10,676)1973Jul-10   3-30
The Elliot at Mukilteo301
Mukilteo, WA—
2,498
10,595
15,566
2,824
25,835
28,659
(18,311)1981Jan-97   3-30
The Grand243
Oakland, CA—
4,531
89,208
6,100
4,531
95,308
99,839
(30,858)2009Jan-09   3-30
The Hallie292
Pasadena, CA—
2,202
4,794
53,126
8,385
51,737
60,122
(26,284)1972Apr-97   3-30
The Lofts at Pinehurst118
Ventura, CA—
1,570
3,912
5,029
1,618
8,893
10,511
(5,311)1971Jun-97   3-30
The Stuart188
Pasadena, CA—
13,574
54,298
2,107
13,574
56,405
69,979
(8,211)2007Apr-14   5-30
 The Trails of Redmond423
Redmond, WA—
21,930
87,720
3,693
21,930
91,413
113,343
(12,928)1985Apr-14   5-30
Tierra Vista404
Oxnard, CA—
13,652
53,336
4,972
13,661
58,299
71,960
(27,577)2001Jan-01   3-30
Tiffany Court101
Los Angeles, CA—
6,949
27,796
1,541
6,949
29,337
36,286
(4,050)1987Apr-14   5-30
Trabuco Villas132
Lake Forest, CA—
3,638
8,640
2,916
3,890
11,304
15,194
(7,610)1985Oct-97   3-30

F- 5661
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(Dollars in thousands)



Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Villa Siena272 Costa Mesa, CA— 13,842 55,367 15,491 13,842 70,858 84,700 (27,347)1974Apr-14   5-30
Village Green272 La Habra, CA— 6,488 36,768 6,463 6,488 43,231 49,719 (16,403)1971Apr-14   5-30
Vista Belvedere76 Tiburon, CA— 5,573 11,901 10,717 5,573 22,618 28,191 (15,957)1963Aug-04   3-30
Vox Apartments58 Seattle, WA— 5,545 16,635 642 5,545 17,277 22,822 (6,032)2013Oct-13   3-30
Wallace on Sunset200 Los Angeles, CA— 24,005 80,466 4,522 24,005 84,988 108,993 (18,731)2021Dec-21   3-30
Walnut Heights163 Walnut, CA— 4,858 19,168 7,315 4,887 26,454 31,341 (18,197)1964Oct-03   3-30
Wandering Creek156 Kent, WA— 1,285 4,980 6,672 1,296 11,641 12,937 (9,850)1986Nov-95   3-30
Wharfside Pointe155 Seattle, WA— 2,245 7,020 14,339 2,258 21,346 23,604 (18,915)1990Jun-94   3-30
Willow Lake508 San Jose, CA— 43,194 101,030 21,997 43,194 123,027 166,221 (53,675)1989Oct-12   3-30
5600 Wilshire284 Los Angeles, CA— 30,535 91,604 10,000 30,535 101,604 132,139 (35,335)2008Apr-14   5-30
Wilshire La Brea478 Los Angeles, CA— 56,932 211,998 22,204 56,932 234,202 291,134 (84,340)2014Apr-14   5-30
Wilshire Promenade149 Fullerton, CA— 3,118 7,385 14,938 3,797 21,644 25,441 (16,895)1992Jan-97   3-30
Windsor Court95 Los Angeles, CA6,383 23,420 1,077 6,383 24,497 30,880 (1,303)1987Jul-22   3-30
Windsor Ridge216 Sunnyvale, CA— 4,017 10,315 18,009 4,021 28,320 32,341 (27,125)1989Mar-89   3-30
Woodland Commons302 Bellevue, WA— 2,040 8,727 27,519 2,044 36,242 38,286 (28,182)1978Mar-90   3-30
Woodside Village145 Ventura, CA— 5,331 21,036 7,107 5,341 28,133 33,474 (18,428)1987Dec-04   3-30
47,382 $— $2,598,958 $9,278,341 $2,560,634 $2,649,202 $11,788,731 $14,437,933 $(5,173,880)
 Costs
 Initial cost capitalized Gross amount carried at close of period
 Buildings and subsequent Land and Buildings and Accumulated
PropertyEncumbrance Landimprovementsto acquisitionimprovementsimprovements
Total(1)
depreciation
Other real estate assets— 80,706 16,587 15,769 82,067 30,995 113,062 (20,791)
$— $80,706 $16,587 $15,769 $82,067 $30,995 $113,062 $(20,791)
Total$887,204 $2,981,986 $10,387,597 $2,765,640 $3,036,912 $13,098,311 $16,135,223 $(5,664,931)
      Costs
       
    Initial cost capitalized
Gross amount carried at close of period     
 Apartment
   Buildings and
subsequent to
Land and
Buildings and
 Accumulated
Date ofDateLives
PropertyHomes
LocationEncumbrance
Land
improvements
acquisition
improvements
improvements
Total (1)

depreciation
constructionacquired(years)
Via284
Sunnyvale, CA—
22,000
82,270
2,338
22,016
84,592
106,608
(21,879)2011Jul-11   3-30
Villa Siena272
Costa Mesa, CA—
13,842
55,367
5,382
13,842
60,749
74,591
(8,651)1974Apr-14   5-30
Village Green272
La Habra, CA—
6,488
36,768
3,298
6,488
40,066
46,554
(5,852)1971Apr-14   5-30
Vista Belvedere76
Tiburon, CA—
5,573
11,901
8,575
5,573
20,476
26,049
(9,931)1963Aug-04   3-30
Vox Apartments58
Seattle, WA—
5,545
16,635
121
5,545
16,756
22,301
(2,360)2013Oct-13   3-30
Walnut Heights163
Walnut, CA—
4,858
19,168
4,734
4,887
23,873
28,760
(11,505)1964Oct-03   3-30
Wharfside Pointe155
Seattle, WA—
2,245
7,020
11,422
2,258
18,429
20,687
(12,639)1990Jun-94   3-30
Willow Lake508
San Jose, CA—
43,194
101,030
12,392
43,194
113,422
156,616
(21,870)1989Oct-12   3-30
5600 Wilshire284
Los Angeles, CA—
30,535
91,604
1,828
30,535
93,432
123,967
(13,001)2008Apr-14   5-30
Wilshire La Brea478
Los Angeles, CA—
56,932
211,998
8,806
56,932
220,804
277,736
(35,159)2014Apr-14   5-30
Windsor Ridge216
Sunnyvale, CA—
4,017
10,315
16,224
4,021
26,535
30,556
(19,282)1989Mar-89   3-30
Woodland Commons302
Bellevue, WA—
2,040
8,727
22,839
2,044
31,562
33,606
(18,755)1978Mar-90   3-30
Woodside Village145
Ventura, CA—
5,331
21,036
3,974
5,341
25,000
30,341
(11,682)1987Dec-04   3-30
 34,441
 $—
$1,893,634
$6,586,618
$1,153,401
$1,940,335
$7,693,318
$9,633,653
$(1,887,074)   
       Costs       
     Initial cost capitalized Gross amount carried at close of period    
  Square    Buildings and subsequent Land and Buildings and  AccumulatedDate ofDateLives
Property FootageLocationEncumbrance Landimprovementsto acquisitionimprovementsimprovementsTotal(1)depreciationconstructionacquired(years)
Other real estate assets             
Derian Office Building106,564
Irvine, CA—
3,079
12,315
8,332
4,308
19,418
23,726
(13,252)1983Jul-00    3-30
 106,564
 $—
$3,079
$12,315
$8,332
$4,308
$19,418
$23,726
$(13,252)   
              
Total$2,008,417
$2,660,937
$9,015,672
$1,672,222
$2,719,064
$10,629,767
$13,348,831
$(2,769,297)   
(1)The aggregate cost for federal income tax purposes is approximately $10.6$12.3 billion (unaudited).
(2) A portion of land is leased pursuant to a ground lease expiring 2070.
(3) The land is leased pursuant to a ground lease expiring 2082.2083.
(4) The land is leased pursuant to a ground lease expiring 2070.
(5)The land is leased pursuant to a ground lease expiring 2027.
(6) The land is leased pursuant to a ground lease expiring 2067.
(7)A portion of land is leased pursuant to a ground lease expiring in 2028.
(8) The land is leased pursuant to a ground lease expiring in 2028.

F- 5762
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20172023
(Dollars in thousands)



(8) The land is leased pursuant to a ground lease expiring in 2028.


A summary of activity for rental properties and accumulated depreciation is as follows:
 202320222021 202320222021
Rental properties:Accumulated depreciation:
Balance at beginning of year$15,966,227 $15,629,927 $15,061,745 Balance at beginning of year$5,152,133 $4,646,854 $4,133,959 
Acquisition, development, and improvement of real estate235,423 427,668 707,267 Depreciation expense545,702 536,202 528,613 
Disposition of real estate and other(66,427)(91,368)(139,085)Depreciation expense - Disposals and other(32,904)(30,923)(15,718)
Balance at the end of year$16,135,223 $15,966,227 $15,629,927 Balance at the end of year$5,664,931 $5,152,133 $4,646,854 


F- 63
 2017 2016 2015 2017 2016 2015
Rental properties:     Accumulated depreciation:     
Balance at beginning of year$12,676,306
 $12,331,469
 $11,244,681
Balance at beginning of year$2,311,546
 $1,949,892
 $1,564,806
Acquisition, development, and improvement of real estate700,892
 609,669
 1,333,102
Depreciation expense464,043
 432,165
 402,687
Disposition of real estate and other(28,367) (264,832) (246,314)Depreciation expense - Disposals and other(6,292) (70,511) (17,601)
Balance at the end of year$13,348,831
 $12,676,306
 $12,331,469
Balance at the end of year$2,769,297
 $2,311,546
 $1,949,892



EXHIBIT INDEX
Table of Contents
EXHIBIT INDEX
Exhibit No.Document
Exhibit No.Document

4.2
Indenture, dated April 15, 2013, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.25% Senior Notes due 2023 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 15, 2013, and incorporated herein by reference.
4.3
Form of Common Stock Certificate of Essex Property Trust, Inc., filed as Exhibit 4.5 to the Company's Form S-4 Registration Statement, filed January 29, 2014, and incorporated herein by reference.
4.5
Indenture governing 5.200% Senior Notes due 2021, dated April 4, 2014, by and among Essex Portfolio, L.P., Essex Property Trust, Inc. and U.S. Bank National Association, as trustee, including the form of 5.200% Senior Notes due 2021, attached as Exhibit 4.2 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 10, 2014, and incorporated herein by reference.
4.6
Indenture governing 3.375% Senior Notes due 2023, dated April 4, 2014, by and among Essex Portfolio, L.P., Essex Property Trust, Inc. and U.S. Bank National Association, as trustee, including the form of 3.375% Senior Notes due 2023, attached as Exhibit 4.3 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 10, 2014, and incorporated herein by reference.
4.7
Indenture, dated April 15, 2014, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.875% Senior Notes due 2024 and the guarantee thereof, attached as Exhibit 4.1 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 16, 2014, and incorporated herein by reference.
Indenture, dated February 11, 2019, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 4.000% Senior Notes due 2029 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed February 11, 2019, and incorporated herein by reference.

Table of Contents

10.4
Form of Indemnification Agreement between Essex Property Trust, Inc. and its directors and officers, attached as Exhibit 99.110.4 to the Company's CurrentAnnual Report on Form 8-K,10-K, filed February 25, 2011,21, 2019, and incorporated herein by reference.*
10.6
Amended and Restated Revolving Credit Agreement, dated as of September 16, 2011, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer, and other lenders as specified therein, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, and incorporated herein by reference.
10.7
Note Purchase Agreement, dated as of March 14, 2012, among Essex Portfolio, L.P., the Company and the purchasers of the notes party thereto (including the forms of the 4.27% Senior Guaranteed Notes, Series C, due April 30, 2021, the 4.30% Senior Guaranteed Notes, Series D, due June 29, 2021, and the 4.37% Senior Guaranteed Notes, Series E, due August 30, 2021), attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on March 20, 2012, and incorporated herein by reference. †
10.8
First Amendment to Amended and Restated Revolving Credit Agreement, dated May 31, 2012, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer, and the other lenders party thereto, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference.
10.9
Modification Agreement, dated July 30, 2012, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference.
10.13
Third Amendment to Amended and Restated Revolving Credit Agreement, dated January 22, 2013, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer, and the other lenders party thereto, attached as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, and incorporated herein by reference.
10.14
Essex Property Trust, Inc. 2013 Stock Award and Incentive Compensation Plan, attached as Appendix B to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 14, 2013, filed April 1, 2013, and incorporated herein by reference.*

10.20
Third Modification Agreement, dated as of January 29, 2014 by and among Essex Portfolio, L.P., U.S. Bank National Association, as Administrative Agent and Lender and the other lenders party thereto, attached as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed January 31, 2014, and incorporated herein by reference.
10.22
BRE Properties, Inc. Fifth Amended and Restated Non-Employee Stock Option and Restricted Stock Plan (assumed by Essex Property Trust, Inc.), attached as Exhibit 99.2 to Essex Property Trust, Inc.'s Registration Statement on Form S-8, filed April 1, 2014, and incorporated herein by reference.*
10.23
Form of Equity Distribution Agreement between Essex Property Trust, Inc. and various entities, dated March 8, 2016, attached as Exhibit 10.1 to the Company's Current Report of From 8-K, filed on March 9, 2016, and incorporated herein by reference.
10.24
Fifth Amendment to Amended and Restated Revolving Credit Agreement, dated as of January 22, 2015, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto, attached as Exhibit 10.27 to the Company's Annual Report on Form 10-K, filed March 2, 2015, and incorporated herein by reference.
10.25
Forms of Essex Property Trust, Inc., Essex Portfolio L.P., Long-Term Incentive Plan Award Agreements, attached as Exhibit 10.28 to the Company's Annual Report on Form 10-K, filed March 2, 2015, and incorporated herein by reference.*

Table of Contents
10.28
Seventh Amendment to Amended and Restated Revolving Credit Agreement, dated as of January 24, 2017, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto, attached as Exhibit 10.28 to the Company's Annual Report on Form 10-K, filed on February 24, 2017 and incorporated herein by reference.
10.29
Second Amended and Restated Revolving Credit Agreement, dated as of January 17, 2018, by andJuly 7, 2022, among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, and incorporated herein by reference.†
21.1
List of Subsidiaries of Essex Property Trust, Inc. and Essex Portfolio, L.P.

101.INSXBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).


* Management contract or compensatory plan or arrangement.



Table of Contents
† The schedules and certain exhibits to this agreement, as set forth in the agreement, have not been filed herewith. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.






SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Mateo, State of California, on February 22, 2018.
23, 2024.
ESSEX PROPERTY TRUST, INC.
By:  /s/ BARBARA PAK
By:  /S/ ANGELA L. KLEIMANBarbara Pak
Angela L. Kleiman
Executive Vice President and Chief Financial Officer

(Authorized Officer, Principal Financial Officer)
By:  /S//s/ JOHN FARIAS
John Farias
Senior Vice President and Chief Accounting Officer
ESSEX PORTFOLIO, L.P.
By: Essex Property Trust, Inc., its general partner
By:  /s/ BARBARA PAK
By:  /S/ ANGELA L. KLEIMANBarbara Pak
Angela L. Kleiman
Executive Vice President and Chief Financial Officer

(Authorized Officer, Principal Financial Officer)
By:  /S//s/ JOHN FARIAS
John Farias
Senior Vice President and Chief Accounting Officer


S-1
KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael J. Schall and Angela L. Kleiman and Barbara Pak, and each of them, his or her attorney-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorney-in-fact, or his or her or substitute or substitutes, may do or cause to be done by virtue hereof.
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each Registrant and in the capacities and on the dates indicated.
 
 
Signature
 
 
Title
 
 
Date
/S/ MICHAEL J. SCHALLs/ GEORGE M. MARCUS
Michael J. SchallGeorge M. Marcus
Chief Executive OfficerDirector and President, and Director (Principal Executive Officer)Chairman of the BoardFebruary 22, 201823, 2024
/S/s/ KEITH R. GUERICKE
Keith R. Guericke
Director, and Vice Chairman of the Board

 		February 22, 201823, 2024
/S/ GEORGE M. MARCUS
George M. Marcus
Director and Chairman of the BoardFebruary 22, 2018
/S/s/ IRVING F. LYONS, III
Irving F. Lyons, III
Lead DirectorFebruary 22, 201823, 2024
/S/ GARY P. MARTINs/ JOHN V. ARABIA
Gary P. MartinJohn V. Arabia
DirectorFebruary 22, 201823, 2024
/S/ ISSIE N. RABINOVITCHs/ ANNE B. GUST
Issie N. RabinovitchAnne B. Gust
DirectorFebruary 22, 201823, 2024
/S/s/ MARIA R. HAWTHORNE
Maria R. Hawthorne
DirectorFebruary 23, 2024
/s/ AMAL M. JOHNSON
Amal M. Johnson
DirectorFebruary 23, 2024
/s/ MARY KASARIS
Mary Kasaris
DirectorFebruary 23, 2024
/s/ ANGELA L. KLEIMAN
Angela L. Kleiman
Chief Executive Officer and President, and Director
(Principal Executive Officer)		February 23, 2024
/s/ THOMAS E. ROBINSON
Thomas E. Robinson
DirectorFebruary 22, 201823, 2024
/S/s/ MICHAEL J. SCHALL
Michael J. Schall
DirectorFebruary 23, 2024
/s/ BYRON A. SCORDELIS
Byron A. Scordelis
DirectorFebruary 22, 2018
/S/ JANICE L. SEARS
Janice L. Sears
DirectorFebruary 22, 201823, 2024


S-2