0000920522 ess:SeriesZIncentiveUnitsMember 2010-01-01 2011-12-31 0000920522 ess:UnencumberedApartmentCommunitiesMember srt:MinimumMember ess:CarnelLandingMember 2019-01-01 2019-12-310000920522ess:TheLandingatJackLondonSquareMemberess:UnencumberedApartmentCommunitiesMember2022-12-31

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

FORM 10-K

FORM 10-K
 
(MARK ONE)

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

For the fiscal year ended December 31, 20192022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to _____________
Commission file number:  
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
 (Essex Property Trust, Inc.)(Essex Property Trust, Inc.)
California77-0369575
(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,, California94403
(Address of Principal Executive Offices including Zip Code)
(650) (650) 655-7800
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: 
Title of each class
Trading

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☒No☐Essex Portfolio, L.P.Yes☐No☒
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☐No☒Essex Portfolio, L.P.Yes☐No☒

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☒No☐Essex Portfolio, L.P.Yes☒No☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Essex Property Trust, Inc.Yes☒No☐Essex Portfolio, L.P.Yes☒No☐

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 accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. 

Essex Property Trust, Inc.:
Large accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐

Essex Portfolio, L.P.:
Large accelerated filer☐Accelerated filer☐Non-accelerated filer☒Smaller reporting company☐
Emerging growth company☐
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.☐Essex Portfolio, L.P.☐

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☐No☒Essex Portfolio, L.P.Yes☐No☒

As of June 30, 2019,2022, the aggregate market value of the voting stock held by non-affiliates of Essex Property Trust, Inc. was $19,060,937,030.$16,906,398,955. 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 18, 2020, 66,172,08021, 2023, 64,518,322 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") pursuant to Regulation 14A in connection with the 20202023 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, 20192022.
.
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, 20192022 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" mean Essex Property Trust, Inc., not including any of its subsidiaries.

Essex operates as a self-administered and self-managed real estate investment trust ("REIT"), and is the sole general partner of the Operating Partnership. As of December 31, 2019,2022, Essex owned approximately 96.6% of the ownership interest in the Operating Partnership with the remaining 3.4% interest owned by limited partners. As the sole general partner of the Operating Partnership, Essex has exclusive control of the Operating Partnership's day-to-day management.

The Company is structured as an umbrella partnership REIT ("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," and the holders of such OP Units, "Unitholders") equal to the number of shares of common stock it 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 the Operating Partnership's partnership agreement, OP Units can be exchanged into Essex common stock on a one-for-one basis. The Company maintains a one-for-one relationship between the OP Units issued to Essex and shares of common stock.

The Company believes that combining the reports on Form 10-K of Essex and the 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 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 the Operating Partnership. Essex's primary function is acting as the general partner of 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 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 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 co-investments.

The Company believes it is important to understand the few differences between Essex and the Operating Partnership in the context of how Essex and the 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 co-investment partners. The noncontrolling interest in Essex's

iii

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

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 co-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.
20192022 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Part I.Page
Item 1.
1
Item 1A.
8
Item 1B.
2921
Item 2.
3022
Item 3.
3729
Item 4.
3729
Part II.
Item 5.
3830
Item 6.
4134
Item 7.
4535
Item 7A.
5747
Item 8.
5848
Item 9.
5848
Item 9A.
5848
Item 9B.
5949
Part III.Item 9C.
49
Part III.
Item 10.
6050
Item 11.
6050
Item 12.
6050
Item 13.
6050
Item 14.
6050
Part IV.
Item 15.
6151
Item 16.
6151
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 Exchange Act.  Such forward-looking statements are described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, "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.


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"). Essex owns all of its interest in its real estate and other investments directly or indirectly through Essex Portfolio, L.P. (the "Operating Partnership" or "EPLP"). Essex is the sole general partner of the Operating Partnership and as of December 31, 2019,2022, had an approximately 96.6% general partnershippartner interest in the Operating Partnership. In this report, the terms the "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.

Essex has elected to be treated as a REIT for federal income tax purposes, commencing with the year ended December 31, 1994. Essex 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 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 of the United States. As of December 31, 2019,2022, the Company owned or had ownership interests in 250252 operating apartment communities, aggregating 60,57062,147 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, onethree operating commercial building,buildings, and a development pipeline comprised of five consolidated projects and twoone unconsolidated joint venture project and various predevelopment projects aggregating 1,960264 apartment homes (collectively, the "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"). 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.

1
Table of Contents
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:

•
•Property Management– Oversee delivery 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.

– Oversee delivery 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 2019,plan. For the year ended December 31, 2022, the Company acquired ownershippurchased or increased its interests in eightthree communities comprisedconsisting of 2,007590 apartment homes for a total contract price of $856.5approximately $215.9 million.

The following is a summary of 2019 acquisitionstable below summarizes acquisition activity for the year ended December 31, 2022 ($ in millions):
Property NameLocationApartment HomesEssex Ownership PercentageOwnershipQuarter in 2022Purchase Price
VelaWoodland Hills, CA379 50 %Wesco VIQ1$183.0 (1)
Regency Palm Court and Windsor CourtLos Angeles, CA211 100 %EPLPQ332.9(2)
Total 2022590    $215.9 

Property Name Location Apartment Homes Essex Ownership Percentage Ownership Quarter in 2019 Purchase Price 
One South Market(1)
 San Jose, CA 312
 100% EPLP Q1 $80.6
 
Brio(2)
 Walnut Creek, CA 300
 N/A
 EPLP Q2 164.9
(3) 
The Courtyards at 65th Street Emeryville, CA 331
 50% WESCO V Q3 178.0
(3) 
777 Hamilton Menlo Park, CA 195
 50% BEX IV Q3 148.0
(3) 
Township Redwood City, CA 132
 100% EPLP Q3 88.7
 
Velo and Ray Seattle, WA 308
 50% WESCO V Q4 133.0
(3) 
Pure Redmond Redmond, WA 105
 100% EPLP Q4 39.1
 
Hidden Valley(4)
 Simi Valley, CA 324
 100% EPLP Q4 24.2
 
Total 2019 2,007
  
     $856.5
 
(1) Represents the contract price for the entire property, not the Company’s share.

(1)(2)    In July 2022, the Company acquired its joint venture partner’s 49.8% minority interest in two apartment communities, consisting of 211 apartment homes located in Los Angeles, CA, for a contract price of $32.9 million.
In March 2019, the Company purchased the joint venture partner's 45% membership interest in the One South Market co-investment based on an estimated property valuation of $179.0 million. In conjunction with the acquisition, $86.0 million of mortgage debt that encumbered the property was repaid.
(2)
In June 2019, the Company acquired Brio for a total contract price of $164.9 million in a DownREIT transaction. As part of the acquisition, the Company assumed $98.7 million of mortgage debt in the community.
(3)
Contract prices represent the total contract price at 100%.
(4)
In December 2019, the Company purchased the joint venture partner's 25% ownership interest in Hidden Valley, a consolidated community, based on an estimated property valuation of $97.0 million and an encumbrance of $29.7 million of mortgage debt.



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 of longer-termon long-term earnings dilution resultingand funds from operations from these dispositions offset bythrough the positive impact from reinvestingof reinvestment of proceeds.

In October 2019, a Canada Pension Plan Investment Board ("CPPIB" or "CPP") joint venture, in whichFor the Company had a 55.0% ownership interest at the time, sold Mosso, a 463 unit apartment home community located in San Francisco, CA, for $311.0 million, resulting in a gain of $50.2 million for the Company.

In October 2019,year ended December 31, 2022, the Company sold a land parcel adjacent to the Mylo developmentone community located in Santa Clara, CA,consisting of 250 apartment homes for $10.8 million and recorded an immaterial gain.

In December 2019, the Company sold land located in San Mateo, CA, that had been held for future development for $12.5 million and recorded a loss of $3.2approximately $160.0 million.
Property NameLocationApartment HomesOwnershipQuarter in 2022Sales Price
(in millions)
AnaviaAnaheim, CA250 EPLPQ4$160.0 (1)
Total 2022250   $160.0 

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(1)    The Company recognized a $94.4 million gain on sale.

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, 2019,2022, the Company's development pipeline was comprised of five consolidated projects under development and twoone unconsolidated joint venture projectsproject under development aggregating 1,960264 apartment homes and various predevelopment projects, with total incurred costs of $1.0 billion, and$102.0 million. The estimated remaining project costs ofare approximately $222.0 million, $193.0$25.0 million, of which $12.8 million represents the Company's share of estimated remaining costs, for total estimated project costs of $1.3 billion.$127.0 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, 2019,2022, the Company had various consolidated predevelopment projects. The Company may also acquire land for future development purposes or sale.


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

   As of
12/31/2022
   EssexEstimatedIncurredEstimated
Development PipelineLocationOwnership%Apartment Homes
Project Cost (1)
Project Cost(1)
Development Projects - Joint Venture     
LIVIA (fka Scripps Mesa Apartments) (2)
San Diego, CA51%264 $77 $102 
Total Development Projects - Joint Venture  264 77 102 
Predevelopment Projects - Consolidated     
Other ProjectsVarious100%— 25 25 
Total - Consolidated Predevelopment Projects  — 25 25 
Grand Total - Development and Predevelopment Pipeline  264 $102 $127 

         As of
        12/31/2019
     Essex Estimated Incurred Estimated
Development Pipeline Location Ownership% Apartment Homes 
Project Cost (1)
 
Project Cost(1)
Development Projects - Consolidated          
Station Park Green - Phase II San Mateo, CA 100% 199
 $135
 $141
Station Park Green - Phase III San Mateo, CA 100% 172
 119
 134
Station Park Green - Phase IV San Mateo, CA 100% 107
 16
 94
Mylo (2)
 Santa Clara, CA 100% 476
 197
 226
Wallace on Sunset (3)
 Hollywood, CA 100% 200
 70
 105
Total Development Projects - Consolidated     1,154
 537
 700
Development Projects - Joint Venture      
  
  
Patina at Midtown (4)
 San Jose, CA 50% 269
 115
 136
500 Folsom (5)
 San Francisco, CA 50% 537
 377
 415
Total Development Projects - Joint Venture     806
 492
 551
Predevelopment Projects - Consolidated      
  
  
Other Projects Various 100% —
 20
 20
Total - Consolidated Predevelopment Projects     —
 20
 20
Grand Total - Development and Predevelopment Pipeline     1,960
 $1,049
 $1,271
(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)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.

(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)
Mylo was previously named Gateway Village.
(3)
Wallace on Sunset was previously named Essex Hollywood.
(4)
Patina at Midtown was previously named Ohlone.
(5)
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.

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, 2019, the Company had ownership interests in four major redevelopment communities aggregating 1,327 apartment homes with estimated redevelopment costs of $132.7 million, of which approximately $14.9 million remains to be expended.

Long Term Debt

During 2019,2022, the Company made regularly scheduled principal payments and loan payoffs of $951.6$43.2 million ofto its secured mortgage notes payable at an average interest rate of 4.2%3.6%.

In February 2019,October 2022, the Company issued $350.0obtained a $300.0 million unsecured term loan priced at Adjusted Secured Overnight Financing Rate ("SOFR") plus 0.85%. The loan has been swapped to an all-in fixed rate of senior4.2% and matures in October 2024 with three 12-month extension options, exercisable at the Company's option. The loan includes a six-month delayed draw feature with the proceeds expected to be drawn in April 2023 to repay the Company's $300.0 million 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 seniorMay 2023.

unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex Property Trust, Inc. In March 2019, the Company issued an additional $150.0 million of the 2029 Notes at a price of 100.717% of the principal amount thereof. 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.

In August 2019, the Company issued $400.0 million of senior unsecured notes due on January 15, 2030, with a coupon rate of 3.000% per annum (the "2030 Notes"), which are payable 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 Company 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 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.

Bank Debt

As of December 31, 2019, Fitch Ratings,2022, Moody’s Investor Service and Standard and Poor's ("S&P") credit agencies rated Essex Property Trust, Inc. and Essex Portfolio, L.P. BBB+/Stable, Baa1/Stable and BBB+/Stable, respectively.

At December 31, 2019,2022, the Company had two unsecured lines of credit aggregating $1.24 billion. The Company's $1.2 billion credit facility had an interest rate of the London Interbank Offered Rate ("LIBOR")Adjusted SOFR plus 0.825%, with a scheduled maturity date in December 2022 with one 18-month extension, exercisable at the Company's option. In January 2020, the line of credit facility was amended such that the scheduled maturity date was extended to December 2023 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 is currentlya scheduled maturity date of January 2027 with two six-month extensions, exercisable at LIBOR plus 0.825%.the Company's option. The Company's $35.0 million working capital unsecured line of
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credit had an interest rate of LIBORAdjusted SOFR plus 0.825%0.75%, withwhich 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 date in February 2021.of July 2024.

Equity Transactions

During the year ended December 31, 2019,2022, the Company issued 228,271did not issue any shares of common stock through its equity distribution program at an average price of $321.56 per share for proceeds of $73.4 million.agreement entered into in September 2021 (the "2021 ATM Program"). As of December 31, 2019,2022, there were no outstanding forward sale agreements, and $826.6$900.0 million of shares remain available to be sold under this program.the 2021 ATM Program.

In January 2019,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 aggregate value of $500.0 million. The plan supersedes the Company's previous common stock repurchase plan announced in December 2015. During the year ended December 31, 2022, the Company repurchased and retired 234,061740,053 shares of its common stock totaling $57.0$189.7 million, including commissions, at an average price of $243.48 per share. In February 2019,which 420,606 shares of common stock totaling $101.7 million were repurchased under the boardnew plan after its approval. As of directors approved the replenishment of the stock repurchase plan such that, as of such date,December 31, 2022, the Company had $250.0$398.3 million of purchase authority remaining under the replenished plan. The Company did not repurchase any additional shares during the year ended December 31, 2019, such that as of December 31, 2019, the Company had $250.0its $500.0 million of purchase authority remaining under the 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 multifamily 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; Irvine, CA; San Diego, CA and Bellevue, WA. As of December 31, 2019,2022, the Company had 1,8221,772 employees, 99.9% of whom were full-time employees. A total of 1,327 employees worked on-site at our operating communities and 445 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. The Company seeks to reinforce those values within its workforce.


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 utilizes training programs, employee committees, and executive sponsorships to strengthen and promote diversity, equal opportunity, and fair treatment for all Company associates. As of December 31, 2022, the Company's workforce was, based on the voluntary self-identification of our employee base, approximately 45% Hispanic or Latino, 28% White, 12% Asian, 7% Black or African American, 1% Native Hawaiian or other Pacific Islander, 1% American Indian or Alaska Native, and 5% two or more races. 3% of employees chose to not disclose their race. 54% of the Company’s managerial level employees, 22% of its senior executives, and 20% of its named executive officers self-identified as Hispanic or Latino, Asian, Black or African American, Native Hawaiian or other Pacific Islander, American Indian or Alaska Native, or two or more races. As of December 31, 2022, the Company’s workforce was 41% female, 58% male, and 1% chose not to disclose their gender. 57% of our corporate associates and 36% of our on-site operational associates self-identified as female. The Company had 249 women in positions of manager or higher, representing 60% of managerial positions, a decrease from 65% in 2021. The slight decrease is primarily attributable to the Company’s new operational structure which resulted in 62 operational associates moving into non-managerial roles. While some oversight duties were realigned, salary and benefits were not impacted, and women continue to hold a majority of the managerial roles at the Company. Gender diversity within the Company’s leadership is similar to the overall gender diversity of the Company’s employees and managers, with women composing 60% of the Company’s executive officers and 56% of the Company’s senior executives. The tables below detail the Company’s gender representation by position and the age diversity of its workforce.

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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. The Company supports the employee-led affinity groups, 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. All 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 is committed to pay equity and conducts a pay equity analysis on an annual basis. The Company developed a robust, multiple regression analysis model, which confirmed that we continue to maintain our gender pay parity. Our robust statistical analysis confirmed that gender was not a significant factor in determining pay decisions in 2022.

The following aligns with the Company’s EE0-1 data for 2022:

Gender Representation by Position (1)
December 31, 2022
Male # (2)
Female # (2)
Male %Female %
Corporate - Top Executives, VPs, Assistant VPs, Directors, & Managers747649%51%
Corporate - Below manager position10017337%63%
Field - Regional Directors/Managers, Community Managers8917334%66%
Field - Leasing Specialists, Leasing Managers, Relationship Reps, Bookkeepers11021634%66%
Field - Maintenance Supervisors and Techs5481198%2%
Field - Porter, Landscaper, Painter, Security Guard, Amenities Attendant1098955%45%
(1) Table excludes 4 associates that did not declare gender and does not include board directors and consultants.
(2) Gender is labeled as how respondents elected to be self-identified.


Total Workforce by
Age Group
December 31, 2022
#%
<= 251669%
26-3553430%
36-4542224%
46-5534820%
56-6526215%
> 65402%

Training and Development

The Company values leadership at every level and demonstrates such value with respect to its associates by providing opportunities for all associates to develop personal and professional skills and by offering programs to encourage employee retention and advancement. These programs include leadership training, communication training, individual learning plans, Community Manager and Maintenance Manager training, investments in learning technology, and mentorship programs. Additionally, the Company provides its associates with outside educational benefits by offering an annual $3,000 tuition reimbursement to further support professional growth. To identify, retain and reward top performers, the Company offers a tenure program, which involves a cash gift for every five years of service, as well as 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. In 2022, the Company promoted 12% of its employees to higher positions in the Company, a slight decrease from 2021 when the Company promoted 16% of its employees primarily due to the Company’s focus on ensuring proper fit for its associates entering into new roles in the new operational structure. The Company engages in succession planning for its leadership and managerial positions and its executive team identifies and mentors the Company's top talent in order to ensure strong leadership at the Company for the future.

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Employee Well-Being and Safety

The Company's compensation and benefits program and safety practices further reinforce its commitment to investing in the well-being of its associates while incentivizing its employees to promote fulfillment of the Company’s mission. The Company offers competitive compensation and a standard suite of benefits, including health insurance, a retirement plan with a $6,000 annual matching potential benefit, life and disability coverage, paid parental leave, and commuter benefits. Additionally, the Company offers a housing discount for associates that live at Company communities, and additionally offers retirement support, associate discount programs, mental health support, including a mental health program and refresh days for our operations teams, and health benefit credits for participation in wellness programs. 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.

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 2022. The Company has safety policies in place that align with an Injury & Illness Prevention Program, which seeks to proactively prevent workplace accidents and protect the health and safety of the Company's associates through training and analysis of incident reports. The Company provides safety training to Community Managers, Maintenance Supervisors, and Maintenance Technicians on a wide-range of topics, including Industrial Safety and Health, Confined Space Awareness, Electrical Safety and Protection, Active Shooter Event, Fire Extinguishing, Safety Data Sheets, Safe Lifting the E-Way, Ladder Safety, and Heat Stress in the Workplace. Additionally, in 2022, the Company continued to provide associates with additional paid time off for COVID-19 related illness and care through its Special Circumstances Leave policy in order to enable associates with adequate time to recover and to help prevent the spread of COVID-19.

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 experience including organizational fit, DEI, 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. 89% of Company employees participated in the surveys in 2022. The Company’s overall score on the surveys was 8.3 out of 10.

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, 2019,2022, PWI had cash and marketable securities of approximately $78.4$107.6 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.  
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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/or develops.

WORKING CAPITAL

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 2020.2023.

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 Related to Real Estate Investments and Our Operations - The Company’s Portfolio may have environmental 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, 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" 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.values, and therefore our stock price may be adversely affected. Real estate investments are subject to a variety of risks. 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 or local economic climate and demand for housing, including layoffs, plant closings, industry slowdowns, relocations of significantemployees from local employers, changing demographics, increased worker locational flexibility, and other events negatively impacting local employment rates, and wages and the local economy;
local•changes in supply and cost of housing;
•changing economic conditions, such as high inflationary periods in which the communities are located, such as oversupply of housing or a reduction in demand for rental housing;
the attractivenessour operating and desirability of our communities to tenants, including, without limitation, our technology offerings and our ability to identify and cost effectively implement new, relevant technologies, and to keep up with constantly changing consumer demand for the latest innovations;
inflationary environments in which thefinancing 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"), permanent and temporary rent control laws, rent stabilization laws, other laws regulating housing that may prevent the Company from raising rents to offset increased operating expenses, and tax laws.
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 in place 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. A recession or economic downturn may 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 experience increases inincrease their income, they may be unable or unwilling to pay rent increases, and delinquencies in rent payments and rent defaults may increase.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. NoncomplianceChanges in, or noncompliance with, laws and regulations could expose the Company to liability. If the Company does not comply with any or all of these requirements, it may have to pay fines to government authorities or damage awards to private litigants, and/or may have to decrease rents in order to comply with such requirements. The Company does not know whether these requirements will change or whether new requirements will be imposed. Changes in, or noncompliance with, these regulatory requirementsliability and could require the Company to make significant unanticipated expenditures which could have a material adverse effect on the Company's financial condition, results of operations or cash flows.to address noncompliance.
In addition, rent control or rent stabilization laws
Existing and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our tenants. There has been a recent increase in municipalities, including those in which we own properties, considering or being urged by advocacy groups to considerfuture rent control or rent stabilization laws and regulations, along with similar laws and regulations that expand tenants’ rights or take other actions which could limit our ability to raise rents based solelyimpose additional costs on market conditions. These initiatives and any other future enactments of rent control or rent stabilization laws or other laws regulating multifamily housing, as well as any lawsuits against the Company arising from such rent control or other laws,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. Furthermore, such regulations




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The COVID-19 pandemic and the future outbreak of other contagious diseases could materially affect our business, financial condition, stock price, and results of operations. Uncertainty still surrounds the long-term impact of COVID-19. If there is a future outbreak of COVID-19 or other contagious diseases, the Company may negatively impactagain be subject to eviction moratoria, limits on rent increases and collection efforts, or may be legally required to or otherwise agree to restructure tenants’ rent obligations and may not be able to do so on terms as favorable to us as 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 have limited ability to renew existing leases or sign new leases at levels consistent with market rents. A new pandemic or disease outbreak may cause increased costs, lower profitability and market fluctuations that may affect our ability to attract higher-paying tenantsobtain necessary funds for our business or negatively impact the ability of the Company’s third-party mezzanine loan borrowers and preferred equity investment sponsors to such communities.repay the Company.

Acquisitions of communities involve various risks and uncertainties and may fail to meet expectations. The Company intends to continue to acquire apartment communities. However, there are risks that acquisitions willmay 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 necessary to allow the Company to market an acquired apartment community as originally intended may prove to be inaccurate. In addition, following an acquisition,redevelopment. 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 that we did not expect to incur. Theincur and for which the Company expectsmay have no recourse, or only limited recourse, against the sellers. In addition, the total amount of costs and expenses that may be incurred with respect to finance future acquisitions, in whole or in part, under various formsliabilities associated with apartment communities may exceed our expectations, and we may experience other unanticipated adverse effects, all of secured or unsecured financing or through the issuancewhich may adversely affect our business, financial condition and results of partnership units by the Operating Partnership or related partnerships or joint ventures or additional equity by the Company.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 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, 2019, the Company had five consolidated development projects and two unconsolidated joint venture development projects comprised of 1,960 apartment homes for an estimated cost of $1.3 billion, of which $222.0 million remains to be expended, and $193.0 million is the Company's share. In addition, at December 31, 2019, the Company had ownership interests in four major redevelopment projects aggregating 1,327 apartment homes with estimated redevelopment costs of $132.7 million, of which approximately $14.9 million remains to be expended.
The Company’s development and redevelopmentthose activities generally entail certain risks, including, among others:including:

•funds may be expended and management's time devoted to projects that may not be 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 or increased costs for labor, materials and leasing;
•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.)

These risks may reduce the funds available for distribution to 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."process.
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, 2019, from the Company’s communities are concentrated in Northern and Southern California (primarily 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, 2019, 82% 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, changing demographics 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. In addition, theThe 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. 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 operations.


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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. Our real estate taxes in 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 in 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 in 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 U.S. tax legislation enacted in December 2017 (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 our communities are located.homes. Competitive housing in a particular area and fluctuations in cost of owner-occupied single- and multifamily homes caused by a decrease in housing prices, mortgage interest rates and/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 thator impact the Company acquires and/Company’s ability to identify suitable acquisition or develops.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. 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 ofare generally 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.loans. In general, investmentsinvesting in mortgages include the following risks:
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 requiringand amounts recovered by the Company to foreclose, and the amount recovered in connection with the foreclosurerelated foreclosures 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.

bankruptcy; possible senior lender default or 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, 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 of December 31, 2019, the Company had, through several joint ventures, an interest in 10,672 apartment homes in stabilized operating communities for a total book value of $743.5 million.

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 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 interests. 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 trigger 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 not have initiated such a transaction. Should a joint venture partner become bankrupt, the Company could become liable for such partner’s share of joint venture liabilities.

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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. The Company makes certain co-investments in the form of preferred equity investments in third party entities that own real estate. With preferred equity investments and certain other co-investments, the 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 co-investment 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 co-investment 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 co-investment. In the event that such co-investment or the partners in such co-investment become insolvent or bankrupt or fail to develop or operate the property in the manner anticipated, and expected, 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 to, the co-investment.investment. Additionally, the 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 that 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 and/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 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 affect 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.

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 investments are illiquid and, in our markets, can at times be difficult to sell at prices we find acceptable. We may be unable to consummate dispositions of properties or interests in properties in a timely manner, on attractive terms, or at all. These potential difficulties in selling real estate in our marketsacceptable, which may limit our ability to change orpromptly reduce the apartment communities in our portfolio promptly in response to changes in economic or other conditions which could have a material adverse effect onand otherwise may adversely affect 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 REIT unless we own the community through one of our taxable REIT subsidiaries ("TRSs").
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 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.
The Company may not be able to lease its retail/commercial space consistent with its projections or at market rates. The Company has retail/commercial space in its portfolio, which represents approximately 2% of our total revenue. The retail/commercial space at our properties, among other things, serves as an additional amenity for our tenants. The long term nature of our retail/commercial leases, and the characteristics of many of our retail/commercial tenants (small, local businesses), may subject us to certain risks. We may not be able to lease new space for rents that are consistent with our projections or at market rates and the longer termlonger-term leases for existing space could result in below market rents over time. Also, when 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 than the current lease terms. Our properties compete with other properties with retail/commercial space. The presence










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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 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). or 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 material 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, costs related to injuries to third parties and/or damage to a third party's property.
Properties which we plan to acquire undergo a pre-acquisition Phase I environmental site assessment, which is intended to affordassessments, such assessments may not discover, ascertain or quantify the Company protection against so-called "owner liability" underfull extent of 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. Despite these assessments, no assurance can be given that all 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 multifamily 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 affected property. The Company believes its mold policies and proactive response to address any known mold existence reduce its risk of loss from these cases;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, we 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. 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; 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.deductibles. 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, 2019, PWI, which is consolidatedA decline in the Company's financial statements, had cash and marketable securities of approximately $78.4 million. The value of the marketable securities ofheld by PWI could decline, and if a decline in value were to occur, PWI'smay adversely affect PWI’s ability to cover all or any portion of the amount of any insured losses could be adversely affected.
All oflosses. Despite our 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 property vulnerability analyses 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, in some cases, by purchasing seismic insurance. Purchasing seismic 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, properties owned by the Company's co-investments.

The Company carries other types of insurance coverage related to a variety of risks and exposures, including cyber risk insurance. 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, Northern California, and Seattle. TheseCompany’s seismic related losses. Thus, we cannot assure you that an earthquake would not cause damage or losses greater than our current insured levels.

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 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 impactcoverage, adversely 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. Additionally, we may be obligated to continue to pay any mortgage indebtedness and other obligations relating to affected properties.

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. 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.



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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 maintaining or insuring our communities. Should the impact of climate change be material in nature or occur for lengthy periods of time, the types and pricing of insurance the Company is able to procure may be negatively impacted and our financial condition or results of operations may 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. Forrevenue and could increase our exposure to new physical risks and liabilities (for example, various federal, regional and state laws and regulations have been implemented or are under consideration to mitigate the effects of climate changewe may see an increase in fires 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. Further, the impact of climate change may increase the cost of, or make unavailable, property insurance or other hazard insurance on terms we find acceptable or necessary to adequately protect our properties.electric vehicle chargers).

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.

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 debts. Similarly,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 2008," 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.
The soundness of financial institutions could adversely affect us. We maintain cash and cash equivalent balances, including significant cash amounts at 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. 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. The guarantee may take the form of a letter of credit, surety bond, guarantee agreement or other additional collateral. 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.
Failure to succeed in new markets 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
lack of familiarity with local governmental and permitting procedures.


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 similar features.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 may cause tenants to terminate their leases or may result in a 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. 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.









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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 under U.S. generally accepted accounting principles ("U.S. GAAP"). Factors considered in evaluating impairment of the Company’s existing multifamily 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 multifamily 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. 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 multifamily 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 changes which could have a material adverse effect on our financial condition and results of operations.
Under certain circumstances, assets owned
We rely on information technology in our operations, and any material failure, inadequacy, interruption or 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. We rely on information technology networks and systems to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personally identifiable information (“PII”), and tenant and lease data. Our business requires us and some of our vendors to use and store PII and other sensitive information of our tenants and employees. The collection and use of PII is governed by a subsidiary REITfederal and state laws and regulations. Privacy and information security laws continue to evolve and may be inconsistent from one jurisdiction to another. The Company endeavors to comply with all such laws and regulations, including by providing required disclosures, promptly responding to be disposedconsumer requests for data, and seeking vendor compliance with applicable privacy and information security laws. 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.

Although we have taken steps to abide by privacy and security laws, and to protect the security of via a sale of capital stock rather than an asset sale. Under certain circumstances, assets ownedour information systems and maintain confidential tenant, prospective tenant and employee information, the compliance and security measures put in place by a subsidiary REITthe Company, and such vendors, cannot guarantee perfect compliance or provide absolute security, and the Company and our vendors' compliance systems and/or information technology infrastructure may be requiredvulnerable to criminal cyber-attacks or data security incidents, including ransom of data (such as, 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 disposedaccessed, misused, publicly disclosed, corrupted, lost, or stolen, resulting in fraud, including wire fraud related to Company assets, or other harm. Moreover, if there is a compliance failure, or if a data security incident or breach affects the Company’s systems or such vendors’ systems, whether through a breach of viathe Company’s systems or a salebreach of capital stock rather than as an asset sale bythe systems of third parties, or results in the unauthorized release of PII, 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. Potential other consequences include that subsidiary REIT, whichthe Company may limitbe exposed to a risk of litigation, including government enforcement actions, private litigation or criminal penalties; and that the numberCompany may be exposed to a risk of persons willingloss including loss related to acquire indirectly any assets held bythe fact that subsidiary REIT. As a result, weagreements 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 able to realize a return on our investment in a joint venture that utilizes a subsidiary REIT structure, at the time or on the terms we desire.

We may from time to time be subject to litigation,jointly responsible for, which could haveresult in a material adverse effect on the Company’s results of operations and financial condition.

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. We maintain cyber risk insurance which may be insufficient in the event of a cyber-incident.







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In the future, the Company may expend additional resources to continue to enhance the Company’s information security measures to investigate and remediate any information security vulnerabilities and/or to further ensure compliance with privacy and information security laws. Despite these steps, the Company may suffer a significant data security incident in the future, unauthorized parties may gain access to sensitive data stored on the Company’s systems, and any such incident may not be discovered in a timely manner. Further, the techniques used by criminals to obtain unauthorized access to sensitive data, such as phishing 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. 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 financial condition and results of operations.

Reliance on third party software providers to host systems critical to our operations and to provide the Company with data. We may berely 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. The market is currently experiencing a party to various claims and routine litigation arisingconsolidation of these software vendors, particularly in the ordinary coursemulti-family space, which may negatively impact the Company’s choice of business. Somevendor and pricing options. Moreover, if any of these claims may result in defense costs, settlements, fineskey vendors were to terminate our relationship or judgments against us, some of which are not,access to data, or cannot be, coveredto fail, we could suffer losses while we sought to replace the services and information provided by insurance. Payment of any such costs, settlements, fines or judgments that are not insured 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, or adversely impact our ability to attract officers and directors.vendors.


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 provide 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. 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.

Debt financing has inherent risks. At December 31, 2019, the Company had approximately $5.8 billion of indebtedness (including $660.4 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). 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 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 effectlenders seeking a foreclosure on communities 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





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As of December 31, 2019, the Company had 24 consolidated communities encumbered by debt. With respect to such communities, 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, 2019, theThe Company had approximately $255.4 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 to low or moderate incomecertain tenants, or eligible/qualified 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 may limit income from the tax-exempt financed communities if the Company is required to decrease 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. Notwithstanding the limitations due to tax-exempt financing requirements, the income from certain communities may be limited due to below marketbelow-market rent 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 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 and otherwise adversely affect the market price of our common stock. 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. 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.
Uncertainty relating to the transition from LIBOR calculation process and potential phasing out of LIBOR after 2021to SOFR may materially adversely affect us.The interest rate on certain of the Company’s secured and unsecured debt obligations including the Company’s two unsecured lines of credit, ishas been based on the LIBOR. In July 2017, the United Kingdom regulator that regulates LIBOR, announced its intentionwhich is expected to phasebe fully phased out LIBOR rates by the end of 2021. Furthermore, inJune 2023. As of December 31, 2022, the United States,Company has transitioned its unsecured debt obligations and the Alternative Reference Rates Committeemajority of its secured debt obligations to SOFR, the Federal Reserve Boardconsensus alternative rate to LIBOR. While the transition to SOFR has proposed replacing U.S. dollar LIBOR with a new index calculated by short-term repurchase agreements - the Secured Overnight Financing Rate (SOFR). Atnot at this time no consensus exists ascaused any material impact to what rate or rates may become accepted alternatives to LIBOR, andthe Company’s debt costs, it is impossible to predict the extent to which SOFR will increase or decrease in the future, whether and to what extent banks will continue to provide LIBOR submissions touse SOFR as the administrator of LIBOR, whether LIBOR ratesstandard benchmark interest rate or if there will cease to be published or supported before or after 2021 or whether any additional reforms to LIBOR may be enacted in the United Kingdom, the United States or elsewhere. Any changes in the method used for determining LIBORSOFR which may result in a sudden or prolonged increase or decrease in LIBOR.SOFR. If a published U.S. dollar LIBORSOFR rate is unavailable, after 2021, the interest rates on certain of the Company’s debt obligations could change. Uncertainty as to the nature of such potential changes, phase out, alternative reference rates or other reforms may materially adversely affect the trading market for LIBOR-based securities. Any of these proposals or consequences could have a material adverse effect on our financing costs, and as a result, our financial condition and results of operations.

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.

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, resulting in an increased risk of default on 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.




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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 any 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 multifamily 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. The Company primarily utilizes unsecured debt and repays secured debt at or near its respective maturity and places less reliance on agency mortgage debt financing. Potential options have been proposed for the future of agency mortgage finance in the United States 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 or be disbanded or reorganized by the government or if there is reduced government support for multifamily housing more generally, it may adversely affect interest rates, capital availability, development of multifamily communities and the value of multifamily 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 departure of any of the Company’s key personnel could have an adverse effect on the Company. While the Company engages in regular succession planning for key positions, the Company’s plans may 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 Company 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 operational structure could result in an increase in issues or departures among our operational staff. Additionally, we could be subject to labor union efforts to organize our employees from time to time and, if successful, those organizational efforts may decrease our operational flexibility and increase operational costs.
The price per share of the Company’s stock may fluctuate significantly.
The market price per share of the Company’s common stock may fluctuate significantly in response to many factors, including 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, which may adversely affect our ability to communicate effectively with our investors;
the resale of substantial amounts of the Company's stock, or the anticipation of such resale, by large holders of our securities;
availability of capital markets and cost of capital;
a change in analyst ratings or the Company’s credit ratings;
terrorist activity adversely affecting 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;
changes in public policy and tax law; and
the issuance of ratings and scores related to corporate social responsibility ("CSR") and environmental, social and governance ("ESG") reports and disclosures.

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 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 has issued and sold common stock, preferred stock and convertible debt securities. The Company may in the future sell further shares of common stock, including pursuant to its equity distribution program with Citigroup Global Markets Inc., Barclays Capital Inc., BNP Paribas Securities Corp., BTIG, LLC, Capital One Securities, Inc., Jefferies LLC, J.P. Morgan Securities LLC, Mizuho Securities USA LLC, MUFG Securities Americas Inc., and Scotia Capital (USA) Inc.

In 2018, 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"), 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 and holds a controlling interest in, 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 Essex's Board of Directors regarding any proposed acquisition and/or development of an apartment community where it appears that there may be afirm. While 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 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, 2019, Mr. Marcus wholly or partially owned approximately 1.9 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.

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 Essex'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 in our policies and operations.
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Essex’s BoardTable of Directors determines our major policies, including our policies regarding investments, financing, growth, debt capitalization, REIT qualification and distributions. Essex’s Board of Directors may amendContents
Employee theft 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 on the following matters:

the election of Essex’s Board of Directors or the removal of any member of Essex’s Board of Directors;
any amendment of Essex’s Charter, except that Essex’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, sale or other disposition of all or substantially all of our assets or similar reorganization.

In addition, stockholders are permitted to vote upon certain proposals submitted by stockholders to amend the Company's Bylaws, subject to various requirements and limitations set forth in the Bylaws. All other matters are subject to the discretion of Essex’s Board of Directors. In addition, pursuant to Maryland law, all matters other than the election or removal of a director must be declared advisable by Essex’s Board of Directors prior to a stockholder vote.

Our score or rating by proxy advisory firms or other corporate governance consultants advising institutional investorsfraud 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, ESG or sustainability matters, 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 approval may not receive a favorable score or rating, or may result in a negative scoreloss. Should any employee compromise our information technology systems, commit fraud or rating or recommendation against the nominee or matter proposed. These unfavorable scores or ratings 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.

We periodically review our corporate governance measures, including our ESG business practices, 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.


Corporate responsibility, specifically related to ESG factors, may impose additional costs and expose us to new risks. The Company and many of its investors and potential investors are focused on corporate responsibility, specifically related to ESG factors. Some investors may use ESG factors to guide their investment strategies. Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s sustainability efforts and/or score when making an investment decision. In addition, investors, particularly institutional investors, may use ESG or sustainability scores to benchmark companies against their peers. Although the Company makes ESG disclosures and undertakes sustainability initiatives, there can be no assurance that the Company will score highly on ESG matters in the future. In addition, the criteria by which companies are rated may change, which could cause the Company to perform differently or worse than it has in the past. The Company may face reputational damage in the event its corporate responsibility procedures or standards do not meet the standards set by various constituencies. The occurrence of any of the foregoing could have an adverse effect on the pricetheft of the Company’s stock and the Company’s business,assets, or misappropriate tenant or other information, we could incur losses, including significant financial condition and results of operations, including increased development costs, capital expenditures and operating expenses.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.

We could face adverse consequencesRisks Related to Taxes, 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 would 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 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", 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 Essex 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. 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 couldcould. 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 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 of Essex’sby the 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 intereststransaction. Those provisions
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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;
Essex’s the Board of Directors can fix the number of directors and fill vacant directorships upon the vote of a majority of the directors and Essex'sthe Board of Directors 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.

We rely on information technology in our operations, and any material failure, inadequacy, interruption or 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 important to the Company. We rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personally identifiable information, and tenant and lease data. Our business requires us, including some 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 may be inconsistent from one jurisdiction to another. The Company endeavors to ensure compliance with all such laws and regulations, including by providing required disclosures, promptly responding to consumer requests for data, and seeking vendor compliance with applicable privacy and information security laws. 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.
Although we have taken steps to abide by privacy and security laws, and to protect the security of our information systems and maintain confidential tenant, prospective tenant and employee information, the compliance and security measures put in place by the Company, and such vendors, cannot guarantee perfect compliance or provide absolute security, and the Company and our vendors' compliance systems and/or 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 there is a compliance failure, or 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, which could increase our costs in attracting and retaining tenants, and other serious consequences may result. Such potential other consequences include, without limitation, that the Company and certain executive officers may be exposed to a risk of litigation and possible liability, including, without limitation, government enforcement actions and private litigation; and that the Company may be exposed to a risk of loss 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.
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, including maintaining cyber risk insurance which may provide some coverage for certain risks arising out of cyber breaches. However, there can be no assurance that our cyber risk insurance will be sufficient in the event of a cyber incident.
In the future, the Company may expend additional resources to continue to enhance the Company’s information security measures to investigate and remediate any information security vulnerabilities and/or to further ensure compliance with privacy and information security laws. 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. Additionally, government agencies involved in investigating any potential data security incidents may impose injunctive relief or other civil or criminal penalties on the Company and/or certain executives, which could, among other things, divert the attention of management, impact the Company's ability to collect and use tenant information, materially increase data security costs and/or otherwise require us to alter how we operate our business. 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. 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 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 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 various 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 forgo 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 intends 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 could be subject to the federal alternative minimum tax for taxable years prior to 2018), 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 are 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. 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.

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. The legislation remains 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 remains 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 2017 Tax Legislation as a whole will have on the Company.

The Company’s ownership of TRSs 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 TRSs 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) 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, it is possible that the Company could also fail to qualify as a REIT.

The tax imposed on REITs engaging in "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.

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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. However, under the

2017 Tax Legislation, 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. 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" 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.

If the Operating Partnership failed to qualify 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 the Operating Partnership will continue to be treated as a partnership for U.S. federal income tax purposes. As a partnership, the Operating Partnership is not subject to U.S. federal income tax on its income.  Instead, each of its partners is required to pay tax on the partner’s allocable share of the income of the Operating Partnership. No assurances can be given, however, that the Internal Revenue Service will not challenge the Operating Partnership’s status as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge.  If the Internal Revenue Service were successful in treating the Operating Partnership as a corporation for U.S. federal income tax purposes, the Company could fail to meet the income tests and/or the asset tests applicable to REITs and, accordingly, cease to qualify as a REIT. Also, the failure of the Operating Partnership 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.

Partnership tax audit rules could have a material adverse effect on us. The Bipartisan Budget Act of 2015 changed the rules applicable to U.S. federal income tax audits of partnerships. Under the rules, effective for taxable years beginning in 2018, among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and a partner’s allocable share thereof) is determined, and taxes, interest, and penalties attributable thereto are assessed and collected, at the partnership level. Unless the partnership makes an election permitted under the new law or takes certain steps to require the partners to pay their tax on their allocable shares of the adjustment, itIt 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 ana 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‑levelcorporate-level taxes had we owned the assets of the partnership directly. The partnership tax audit rules apply to Essex Portfolio, L.P. and its subsidiaries that are classified as partnerships for U.S. federal income tax purposes. The changes created

by these rules are significant for collecting tax in partnership audits and, accordingly, thereThere can be no assurance that these rules will not have a material adverse effect on us.

General Risks

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. Some of these claims may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance, the payment of which 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 and expose us to increased risks that would be uninsured. Litigation, including anti-trust litigation, even if resolved in our favor, could adversely impact our reputation, which could negatively impact our operations and cash flow.

Rising interest rates may affect the Company’s costs of capital 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 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 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. The guarantee may take the form of a letter of credit, surety bond, guarantee agreement or other additional collateral. 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 Company’s stock may fluctuate significantly. The market price per share of the 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, the general reputation of REITs and the Company, shifts in our investor base, natural disasters, armed conflict or geopolitical impacts, including, the ongoing conflict in Ukraine, or an active shooter incident. Many of these factors are beyond the
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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.

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.

Stockholders have limited control over changes in our policies and operations. 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 stockholders. In addition, pursuant to the MGCL, all matters other than the election or removal of a director must be declared advisable by the Board prior to a stockholder vote.

Our score by proxy advisory firms or other corporate governance consultants advising institutional investors, as well as the increased attention to certain environmental, social and governance 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, environmental, social and governance (“ESG”) matters, 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 approval may not receive a favorable score, or may result in a recommendation against the nominee 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. The Company and many of its 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 have issued new laws or regulations relating to board structure. Although the Company makes ESG disclosures and undertakes sustainability and diversity initiatives, the Company may not score highly on ESG matters in the future and may face increased costs in order 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. 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 result of actions of activist investors. Responding to stockholder activism or engaging in a process or proxy 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 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.

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.

Item 1B. Unresolved Staff Comments

None.

21

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Item 2. Properties

The Company’s portfolio as of December 31, 20192022 (including communities owned by unconsolidated joint ventures, but excluding communities underlying preferred equity investments) was comprised of 250252 stabilized operating apartment communities (comprising 60,57062,147 apartment homes), of which 26,69526,374 apartment homes are located in Southern California, 21,64223,248 apartment homes are located in Northern California, and 12,23312,525 apartment homes are located in the Seattle metropolitan area. The Company’s apartment communities accounted for 99.3%99.0% of the Company’s revenues for the year ended December 31, 2019.2022.

Occupancy Rates

Financial occupancy is defined as the percentage resulting from dividing actual rental income by total potentialscheduled rental income. Total potentialscheduled rental income 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 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.

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 income is not considered the best metric to quantify occupancy.

Communities

The Company’s communities are primarily urban and 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, 2019,2022, the Company’s communities include 103104 garden-style, 137138 mid-rise, and 10 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 242247 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, playground areas and 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 buildingthree commercial buildings with approximately 106,716283,000 square feet located in Irvine, CA,California and Washington, of which the Company occupied approximately 14,00013,000 square feet as of December 31, 2019.2022. Furthermore, as of December 31, 2019,2022, the office building'scommercial buildings' physical occupancy rate was 83% consisting of 67 tenants, including the Company.

Operating Portfolio

The table below describes the Company’s operating portfolio as of December 31, 2019.2022. (See Note 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

22
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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 1984200097%
Park ViridianAnaheim, CAMid-rise320 2008201496%
Bonita CedarsBonita, CAGarden120 1983200297%
The Village at Toluca LakeBurbank, CAMid-rise145 1974201797%
Camarillo OaksCamarillo, CAGarden564 1985199696%
Camino Ruiz SquareCamarillo, CAGarden159 1990200698%
Pinnacle at Otay Ranch I & IIChula Vista, CAMid-rise364 2001201497%
Mesa VillageClairemont, CAGarden133 1963200296%
Villa SienaCosta Mesa, CAGarden272 1974201496%
Emerald PointeDiamond Bar, CAGarden160 1989201497%
Regency at EncinoEncino, CAMid-rise75 1989200998%
The Havens (5)
Fountain Valley, CAGarden440 1969201496%
Valley ParkFountain Valley, CAGarden160 1969200197%
Capri at Sunny Hills (4)
Fullerton, CAGarden102 1961200195%
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 1974199996%
The Henley IIGlendale, CAMid-rise132 1970199996%
CBC and The SweepsGoleta, CAGarden239 1962200699%
Huntington BreakersHuntington Beach, CAMid-rise342 1984199797%
The HuntingtonHuntington Beach, CAGarden276 1975201297%
Hillsborough Park (7)
La Habra, CAGarden235 1999199997%
Village GreenLa Habra, CAGarden272 1971201496%
The Palms at Laguna NiguelLaguna Niguel, CAGarden460 1988201496%
Trabuco VillasLake Forest, CAMid-rise132 1985199798%
MarbrisaLong Beach, CAMid-rise202 1987200296%
Pathways at Bixby VillageLong Beach, CAGarden296 1975199196%
5600 WilshireLos Angeles, CAMid-rise284 2008201497%
AlessioLos Angeles, CAMid-rise624 2001201496%
Ashton Sherman VillageLos Angeles, CAMid-rise264 2014201697%
AvantLos Angeles, CAMid-rise440 2014201595%
The AveryLos Angeles, CAMid-rise121 2014201496%
BelleriveLos Angeles, CAMid-rise63 2011201197%
Belmont StationLos Angeles, CAMid-rise275 2009200996%
Bunker HillLos Angeles, CAHigh-rise456 1968199895%
Catalina GardensLos Angeles, CAMid-rise128 1987201495%
Cochran ApartmentsLos Angeles, CAMid-rise58 1989199896%
Emerson Valley VillageLos Angeles, CAMid-rise144 2012201697%
Gas Company Lofts (6)
Los Angeles, CAHigh-rise251 2004201396%
The Blake LALos Angeles, CAMid-rise196 1979199797%
MarbellaLos Angeles, CAMid-rise60 1991200596%
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Table of Contents
      Apartment Year Year  
Communities (1)
 Location Type Homes Built Acquired 
Occupancy(2)
Southern California            
Alpine Village Alpine, CA Garden 301
 1971 2002 97%
Anavia Anaheim, CA Mid-rise 250
 2009 2010 97%
Barkley, The (3)(4)
 Anaheim, CA Garden 161
 1984 2000 97%
Park Viridian Anaheim, CA Mid-rise 320
 2008 2014 97%
Bonita Cedars Bonita, CA Garden 120
 1983 2002 97%
Village at Toluca Lake (5)
 Burbank, CA Mid-rise 145
 1974 2017 96%
Camarillo Oaks Camarillo, CA Garden 564
 1985 1996 97%
Camino Ruiz Square Camarillo, CA Garden 159
 1990 2006 97%
Pinnacle at Otay Ranch I & II Chula Vista, CA Mid-rise 364
 2001 2014 96%
Mesa Village Clairemont, CA Garden 133
 1963 2002 98%
Villa Siena Costa Mesa, CA Garden 272
 1974 2014 96%
Emerald Pointe Diamond Bar, CA Garden 160
 1989 2014 98%
Regency at Encino Encino, CA Mid-rise 75
 1989 2009 97%
The Havens (6)
 Fountain Valley, CA Garden 440
 1969 2014 96%
Valley Park Fountain Valley, CA Garden 160
 1969 2001 97%
Capri at Sunny Hills (4)
 Fullerton, CA Garden 102
 1961 2001 96%
Haver Hill (7)
 Fullerton, CA Garden 264
 1973 2012 97%
Pinnacle at Fullerton Fullerton, CA Mid-rise 192
 2004 2014 96%
Wilshire Promenade Fullerton, CA Mid-rise 149
 1992 1997 97%
Montejo Apartments Garden Grove, CA Garden 124
 1974 2001 98%
416 on Broadway Glendale, CA Mid-rise 115
 2009 2010 97%
The Henley I Glendale, CA Mid-rise 83
 1974 1999 97%
The Henley II Glendale, CA Mid-rise 132
 1970 1999 97%
CBC and The Sweeps Goleta, CA Garden 239
 1962 2006 98%
Devonshire Hemet, CA Garden 276
 1988 2002 97%
Huntington Breakers Huntington Beach, CA Mid-rise 342
 1984 1997 97%
The Huntington Huntington Beach, CA Garden 276
 1975 2012 96%
Axis 2300 Irvine, CA Mid-rise 115
 2010 2010 97%
Hillsborough Park (8)
 La Habra, CA Garden 235
 1999 1999 97%
Village Green La Habra, CA Garden 272
 1971 2014 96%
The Palms at Laguna Niguel Laguna Niguel, CA Garden 460
 1988 2014 97%
Trabuco Villas Lake Forest, CA Mid-rise 132
 1985 1997 97%
Marbrisa Long Beach, CA Mid-rise 202
 1987 2002 97%
Pathways at Bixby Village Long Beach, CA Garden 296
 1975 1991 96%
5600 Wilshire Los Angeles, CA Mid-rise 284
 2008 2014 97%
Alessio Los Angeles, CA Mid-rise 624
 2001 2014 96%
Ashton Sherman Village Los Angeles, CA Mid-rise 264
 2014 2016 97%
Avant Los Angeles, CA Mid-rise 440
 2014 2015 95%
The Avery Los Angeles, CA Mid-rise 121
 2014 2014 97%
Bellerive Los Angeles, CA Mid-rise 63
 2011 2011 98%
Belmont Station Los Angeles, CA Mid-rise 275
 2009 2009 97%
Bunker Hill Los Angeles, CA High-rise 456
 1968 1998 92%
Catalina Gardens Los Angeles, CA Mid-rise 128
 1987 2014 96%
Cochran Apartments Los Angeles, CA Mid-rise 58
 1989 1998 97%

ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
Pacific Electric Lofts (8)
Los Angeles, CAHigh-rise314 2006201295%
Park CatalinaLos Angeles, CAMid-rise90 2002201296%
Park PlaceLos Angeles, CAMid-rise60 1988199796%
Regency Palm CourtLos Angeles, CAMid-rise116 1987201489%
Santee CourtLos Angeles, CAHigh-rise165 2004201095%
Santee VillageLos Angeles, CAHigh-rise73 2011201195%
Tiffany CourtLos Angeles, CAMid-rise101 1987201497%
Wallace on SunsetLos Angeles, CAMid-rise200 2021202195%
Wilshire La BreaLos Angeles, CAMid-rise478 2014201496%
Windsor CourtLos Angeles, CAMid-rise95 1987201493%
Windsor CourtLos Angeles, CAMid-rise58 1988199796%
Aqua at Marina Del ReyMarina Del Rey, CAMid-rise500 2001201497%
Marina City Club (9)
Marina Del Rey, CAMid-rise101 1971200499%
MirabellaMarina Del Rey, CAMid-rise188 2000200096%
Mira MonteMira Mesa, CAGarden354 1982200297%
Hillcrest ParkNewbury Park, CAGarden608 1973199895%
Fairway Apartments at Big Canyon (10)
Newport Beach, CAMid-rise74 1972199993%
MuseNorth Hollywood, CAMid-rise152 2011201196%
Country VillasOceanside, CAGarden180 1976200297%
Mission HillsOceanside, CAGarden282 1984200596%
Renaissance at Uptown OrangeOrange, CAMid-rise460 2007201496%
Mariner's PlaceOxnard, CAGarden105 1987200097%
Monterey VillasOxnard, CAGarden122 1974199795%
Tierra VistaOxnard, CAMid-rise404 2001200196%
Arbors at Parc Rose (8)
Oxnard, CAMid-rise373 2001201196%
The HalliePasadena, CAMid-rise292 1972199797%
The StuartPasadena, CAMid-rise188 2007201497%
Villa AngelinaPlacentia, CAGarden256 1970200197%
Fountain ParkPlaya Vista, CAMid-rise705 2002200496%
Highridge (4)
Rancho Palos Verdes, CAMid-rise255 1972199796%
CortesiaRancho Santa Margarita, CAGarden308 1999201496%
Pinnacle at TalegaSan Clemente, CAMid-rise362 2002201496%
Allure at Scripps RanchSan Diego, CAMid-rise194 2002201497%
Bernardo CrestSan Diego, CAGarden216 1988201497%
Cambridge ParkSan Diego, CAMid-rise320 1998201496%
Carmel CreekSan Diego, CAGarden348 2000201496%
Carmel LandingSan Diego, CAGarden356 1989201495%
Carmel SummitSan Diego, CAMid-rise246 1989201497%
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%
Essex Skyline (11)
Santa Ana, CAHigh-rise350 2008201094%
Fairhaven Apartments (4)
Santa Ana, CAGarden164 1970200197%
Parkside Court (5)
Santa Ana, CAMid-rise210 1986201497%
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Table of Contents
      Apartment Year Year  
Communities (1)
 Location Type Homes Built Acquired 
Occupancy(2)
Emerson Valley Village Los Angeles, CA Mid-rise 144
 2012 2016 97%
Gas Company Lofts (7)
 Los Angeles, CA High-rise 251
 2004 2013 97%
The Blake LA Los Angeles, CA Mid-rise 196
 1979 1997 97%
Marbella Los Angeles, CA Mid-rise 60
 1991 2005 97%
Pacific Electric Lofts (9)
 Los Angeles, CA High-rise 314
 2006 2012 95%
Park Catalina Los Angeles, CA Mid-rise 90
 2002 2012 97%
Park Place Los Angeles, CA Mid-rise 60
 1988 1997 97%
Regency Palm Court (7)
 Los Angeles, CA Mid-rise 116
 1987 2014 96%
Santee Court Los Angeles, CA High-rise 165
 2004 2010 96%
Santee Village Los Angeles, CA High-rise 73
 2011 2011 96%
Tiffany Court Los Angeles, CA Mid-rise 101
 1987 2014 97%
Wilshire La Brea Los Angeles, CA Mid-rise 478
 2014 2014 97%
Windsor Court (7)
 Los Angeles, CA Mid-rise 95
 1987 2014 96%
Windsor Court Los Angeles, CA Mid-rise 58
 1988 1997 97%
Aqua Marina Del Rey Marina Del Rey, CA Mid-rise 500
 2001 2014 97%
Marina City Club (10)
 Marina Del Rey, CA Mid-rise 101
 1971 2004 97%
Mirabella Marina Del Rey, CA Mid-rise 188
 2000 2000 97%
Mira Monte Mira Mesa, CA Garden 354
 1982 2002 97%
Hillcrest Park Newbury Park, CA Garden 608
 1973 1998 97%
Fairway Apartments at Big Canyon (11)
 Newport Beach, CA Mid-rise 74
 1972 1999 96%
Muse North Hollywood, CA Mid-rise 152
 2011 2011 96%
Country Villas Oceanside, CA Garden 180
 1976 2002 97%
Mission Hills Oceanside, CA Garden 282
 1984 2005 97%
Renaissance at Uptown Orange Orange, CA Mid-rise 460
 2007 2014 97%
Mariner's Place Oxnard, CA Garden 105
 1987 2000 97%
Monterey Villas Oxnard, CA Garden 122
 1974 1997 97%
Tierra Vista Oxnard, CA Mid-rise 404
 2001 2001 97%
Arbors at Parc Rose (9)
 Oxnard, CA Mid-rise 373
 2001 2011 97%
The Hallie Pasadena, CA Mid-rise 292
 1972 1997 96%
The Stuart Pasadena, CA Mid-rise 188
 2007 2014 97%
Villa Angelina Placentia, CA Garden 256
 1970 2001 97%
Fountain Park Playa Vista, CA Mid-rise 705
 2002 2004 96%
Highridge (4)
 Rancho Palos Verdes, CA Mid-rise 255
 1972 1997 96%
Cortesia Rancho Santa Margarita, CA Garden 308
 1999 2014 97%
Pinnacle at Talega San Clemente, CA Mid-rise 362
 2002 2014 96%
Allure at Scripps Ranch San Diego, CA Mid-rise 194
 2002 2014 97%
Bernardo Crest San Diego, CA Garden 216
 1988 2014 96%
Cambridge Park San Diego, CA Mid-rise 320
 1998 2014 97%
Carmel Creek San Diego, CA Garden 348
 2000 2014 96%
Carmel Landing San Diego, CA Garden 356
 1989 2014 96%
Carmel Summit San Diego, CA Mid-rise 246
 1989 2014 97%
CentrePointe San Diego, CA Garden 224
 1974 1997 97%
Esplanade (6)
 San Diego, CA Garden 616
 1986 2014 96%
Form 15 San Diego, CA Mid-rise 242
 2014 2016 96%
Montanosa San Diego, CA Garden 472
 1990 2014 97%
Summit Park San Diego, CA Garden 300
 1972 2002 97%
Essex Skyline (12)
 Santa Ana, CA High-rise 349
 2008 2010 93%
Fairhaven Apartments (4)
 Santa Ana, CA Garden 164
 1970 2001 97%

ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
Pinnacle at MacArthur PlaceSanta Ana, CAMid-rise253 2002201496%
Hope RanchSanta Barbara, CAGarden108 1965200797%
Bridgeport Coast (12)
Santa Clarita, CAMid-rise188 2006201496%
Meadowood (7)
Simi Valley, CAGarden320 1986199695%
Shadow PointSpring Valley, CAGarden172 1983200296%
The Fairways at Westridge (12)
Valencia, CAMid-rise234 2004201497%
The Vistas of West Hills (12)
Valencia, CAMid-rise220 2009201497%
AllegroValley Village, CAMid-rise97 2010201097%
Lofts at Pinehurst, TheVentura, CAGarden118 1971199796%
Pinehurst (13)
Ventura, CAGarden28 1973200499%
Woodside VillageVentura, CAGarden145 1987200497%
Passage Buena Vista (14)
Vista, CAGarden179 2020202196%
Walnut HeightsWalnut, CAGarden163 1964200397%
The DylanWest Hollywood, CAMid-rise184 2014201495%
The HuxleyWest Hollywood, CAMid-rise187 2014201496%
RevealWoodland Hills, CAMid-rise438 2010201196%
Avondale at Warner CenterWoodland Hills, CAMid-rise446 1970199996%
Vela (16)
Woodland Hills, CAMid-rise379 2018202295%
  26,374   96%
Northern California     
Belmont TerraceBelmont, CAMid-rise71 1974200696%
Fourth & UBerkeley, CAMid-rise171 2010201094%
The CommonsCampbell, CAGarden264 1973201097%
Pointe at CupertinoCupertino, CAGarden116 1963199897%
Connolly StationDublin, CAMid-rise309 2014201496%
Avenue 64Emeryville, CAMid-rise224 2007201495%
The Courtyards at 65th Street (15)
Emeryville, CAMid-rise331 2004201994%
EmmeEmeryville, CAMid-rise190 2015201594%
Foster's LandingFoster City, CAGarden490 1987201496%
Stevenson PlaceFremont, CAGarden200 1975200095%
Mission PeaksFremont, CAMid-rise453 1995201496%
Mission Peaks IIFremont, CAGarden336 1989201497%
Paragon ApartmentsFremont, CAMid-rise301 2013201496%
BoulevardFremont, CAGarden172 1978199697%
Briarwood (8)
Fremont, CAGarden160 1978201197%
The Woods (8)
Fremont, CAGarden160 1978201196%
The Rexford (16)
Fremont, CAGarden203 1973202196%
City Centre (12)
Hayward, CAMid-rise192 2000201497%
City ViewHayward, CAGarden572 1975199897%
Lafayette HighlandsLafayette, CAGarden150 1973201495%
777 Hamilton (17)
Menlo Park, CAMid-rise195 2017201995%
ApexMilpitas, CAMid-rise367 2014201496%
Regency at Mountain View (6)
Mountain View, CAMid-rise142 1970201396%
Bridgeport (7)
Newark, CAGarden184 1987198797%
The Landing at Jack London SquareOakland, CAMid-rise282 2001201496%
The GrandOakland, CAHigh-rise243 2009200995%
The GallowayPleasanton, CAMid-rise506 2016201696%
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Table of Contents
      Apartment Year Year  
Communities (1)
 Location Type Homes Built Acquired 
Occupancy(2)
Parkside Court (6)
 Santa Ana, CA Mid-rise 210
 1986 2014 97%
Pinnacle at MacArthur Place Santa Ana, CA Mid-rise 253
 2002 2014 97%
Hope Ranch Santa Barbara, CA Garden 108
 1965 2007 99%
Bridgeport Coast (13)
 Santa Clarita, CA Mid-rise 188
 2006 2014 96%
Hidden Valley Simi Valley, CA Garden 324
 2004 2004 97%
Meadowood (8)
 Simi Valley, CA Garden 320
 1986 1996 96%
Shadow Point Spring Valley, CA Garden 172
 1983 2002 97%
The Fairways at Westridge (13)
 Valencia, CA Mid-rise 234
 2004 2014 96%
The Vistas of West Hills (13)
 Valencia, CA Mid-rise 220
 2009 2014 96%
Allegro Valley Village, CA Mid-rise 97
 2010 2010 97%
Lofts at Pinehurst, The Ventura, CA Garden 118
 1971 1997 97%
Pinehurst (14)
 Ventura, CA Garden 28
 1973 2004 99%
Woodside Village Ventura, CA Garden 145
 1987 2004 97%
Walnut Heights Walnut, CA Garden 163
 1964 2003 96%
The Dylan West Hollywood, CA Mid-rise 184
 2014 2014 96%
The Huxley West Hollywood, CA Mid-rise 187
 2014 2014 96%
Reveal Woodland Hills, CA Mid-rise 438
 2010 2011 97%
Avondale at Warner Center Woodland Hills, CA Mid-rise 446
 1970 1999 97%
      26,695
     97%
Northern California            
Belmont Terrace Belmont, CA Mid-rise 71
 1974 2006 96%
Fourth & U Berkeley, CA Mid-rise 171
 2010 2010 97%
The Commons Campbell, CA Garden 264
 1973 2010 96%
Pointe at Cupertino Cupertino, CA Garden 116
 1963 1998 97%
Connolly Station (15)
 Dublin, CA Mid-rise 309
 2014 2014 97%
Avenue 64 Emeryville, CA Mid-rise 224
 2007 2014 96%
The Courtyards at 65th Street (16)
 Emeryville, CA Mid-rise 331
 2004 2019 96%
Emme (15)
 Emeryville, CA Mid-rise 190
 2015 2015 96%
Foster's Landing Foster City, CA Garden 490
 1987 2014 95%
Stevenson Place Fremont, CA Garden 200
 1975 2000 97%
Mission Peaks Fremont, CA Mid-rise 453
 1995 2014 97%
Mission Peaks II Fremont, CA Garden 336
 1989 2014 97%
Paragon Apartments Fremont, CA Mid-rise 301
 2013 2014 97%
Boulevard Fremont, CA Garden 172
 1978 1996 96%
Briarwood (9)
 Fremont, CA Garden 160
 1978 2011 97%
The Woods (9)
 Fremont, CA Garden 160
 1978 2011 97%
City Centre (13)
 Hayward, CA Mid-rise 192
 2000 2014 96%
City View Hayward, CA Garden 572
 1975 1998 96%
Lafayette Highlands Lafayette, CA Garden 150
 1973 2014 97%
777 Hamilton (17)
 Menlo Park, CA Mid-rise 195
 2017 2019 94%
Apex Milpitas, CA Mid-rise 366
 2014 2014 97%
Regency at Mountain View (7)
 Mountain View, CA Mid-rise 142
 1970 2013 97%
Bridgeport (8)
 Newark, CA Garden 184
 1987 1987 97%
The Landing at Jack London Square Oakland, CA Mid-rise 282
 2001 2014 96%
The Grand Oakland, CA High-rise 243
 2009 2009 96%
The Galloway (15)
 Pleasanton, CA Mid-rise 506
 2016 2016 97%
Radius Redwood City, CA Mid-rise 264
 2015 2015 97%
Township Redwood City, CA Mid-rise 132
 2014 2019 97%

ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
RadiusRedwood City, CAMid-rise264 2015201595%
TownshipRedwood City, CAMid-rise132 2014201995%
San MarcosRichmond, CAMid-rise432 2003200396%
500 Folsom (14)
San Francisco, CAHigh-rise537 2021202195%
Bennett LoftsSan Francisco, CAMid-rise164 2004201282%
Fox PlazaSan Francisco, CAHigh-rise445 1968201396%
MB 360San Francisco, CAMid-rise360 2014201496%
Park WestSan Francisco, CAMid-rise126 1958201295%
101 San FernandoSan Jose, CAMid-rise323 2001201096%
360 Residences (15)
San Jose, CAMid-rise213 2010201794%
Bella VillagioSan Jose, CAMid-rise231 2004201096%
Century Towers (14)
San Jose, CAHigh-rise376 2017201796%
EnsoSan Jose, CAMid-rise183 2014201597%
EpicSan Jose, CAMid-rise769 2013201396%
EsplanadeSan Jose, CAMid-rise278 2002200497%
Fountains at River OaksSan Jose, CAMid-rise226 1990201497%
MarquisSan Jose, CAMid-rise166 2015201696%
Meridian at Midtown (15)
San Jose, CAMid-rise218 2015201895%
MioSan Jose, CAMid-rise103 2015201697%
Palm ValleySan Jose, CAMid-rise1,100 2008201496%
Patina at Midtown (14)
San Jose, CAMid-rise269 2021202195%
Sage at Cupertino (4)
San Jose, CAGarden230 1971201795%
Silver (14)
San Jose, CAMid-rise268 2019202194%
The Carlyle (7)
San Jose, CAGarden132 2000200096%
The WaterfordSan Jose, CAMid-rise238 2000200096%
Willow LakeSan Jose, CAMid-rise508 1989201297%
Lakeshore LandingSan Mateo, CAMid-rise308 1988201496%
Hillsdale Garden (14)
San Mateo, CAGarden697 1948200696%
Station Park GreenSan Mateo, CAMid-rise599 2018201895%
Deer ValleySan Rafael, CAGarden171 1996201497%
Bel AirSan Ramon, CAGarden462 1988199596%
Canyon OaksSan Ramon, CAMid-rise250 2005200796%
Crow CanyonSan Ramon, CAMid-rise400 1992201497%
Foothill GardensSan Ramon, CAGarden132 1985199796%
Mill Creek at WindermereSan Ramon, CAMid-rise400 2005200796%
Twin CreeksSan Ramon, CAGarden44 1985199796%
1000 KielySanta Clara, CAGarden121 1971201197%
Le ParcSanta Clara, CAGarden140 1975199497%
Marina Cove (18)
Santa Clara, CAGarden292 1974199496%
MyloSanta Clara, CAMid-rise476 2021202195%
Riley Square (8)
Santa Clara, CAGarden156 1972201297%
Villa GranadaSanta Clara, CAMid-rise270 2010201496%
Chestnut Street ApartmentsSanta Cruz, CAGarden96 2002200898%
Bristol CommonsSunnyvale, CAGarden188 1989199596%
Brookside Oaks (4)
Sunnyvale, CAGarden170 1973200098%
Lawrence StationSunnyvale, CAMid-rise336 2012201496%
Magnolia Lane (19)
Sunnyvale, CAGarden32 2001200796%
26
Table of Contents
      Apartment Year Year  
Communities (1)
 Location Type Homes Built Acquired 
Occupancy(2)
San Marcos Richmond, CA Mid-rise 432
 2003 2003 97%
Bennett Lofts San Francisco, CA Mid-rise 165
 2004 2012 95%
Fox Plaza San Francisco, CA High-rise 445
 1968 2013 95%
MB 360 San Francisco, CA Mid-rise 360
 2014 2014 97%
Park West San Francisco, CA Mid-rise 126
 1958 2012 95%
101 San Fernando San Jose, CA Mid-rise 323
 2001 2010 96%
360 Residences (16)
 San Jose, CA Mid-rise 213
 2010 2017 95%
Bella Villagio San Jose, CA Mid-rise 231
 2004 2010 96%
Century Towers (18)
 San Jose, CA High-rise 376
 2017 2017 95%
Enso San Jose, CA Mid-rise 183
 2014 2015 97%
Epic (15)
 San Jose, CA Mid-rise 769
 2013 2013 96%
Esplanade San Jose, CA Mid-rise 278
 2002 2004 96%
Fountains at River Oaks San Jose, CA Mid-rise 226
 1990 2014 96%
Marquis San Jose, CA Mid-rise 166
 2015 2016 96%
Meridian at Midtown (16)
 San Jose, CA Mid-rise 218
 2015 2018 95%
Mio San Jose, CA Mid-rise 103
 2015 2016 97%
Museum Park San Jose, CA Mid-rise 117
 2002 2014 97%
One South Market (19)
 San Jose, CA High-rise 312
 2015 2015 96%
Palm Valley San Jose, CA Mid-rise 1,099
 2008 2014 97%
Sage at Cupertino (4)
 San Jose, CA Garden 230
 1971 2017 96%
The Carlyle (8)
 San Jose, CA Garden 132
 2000 2000 97%
The Waterford San Jose, CA Mid-rise 238
 2000 2000 96%
Willow Lake San Jose, CA Mid-rise 508
 1989 2012 96%
Lakeshore Landing San Mateo, CA Mid-rise 308
 1988 2014 96%
Hillsdale Garden San Mateo, CA Garden 697
 1948 2006 97%
Park 20 (15)
 San Mateo, CA Mid-rise 197
 2015 2015 97%
Station Park Green - Phase I San Mateo, CA Mid-rise 121
 2018 2018 95%
Deer Valley San Rafael, CA Garden 171
 1996 2014 97%
Bel Air San Ramon, CA Garden 462
 1988 1995 97%
Canyon Oaks San Ramon, CA Mid-rise 250
 2005 2007 97%
Crow Canyon San Ramon, CA Mid-rise 400
 1992 2014 96%
Foothill Gardens San Ramon, CA Garden 132
 1985 1997 97%
Mill Creek at Windermere San Ramon, CA Mid-rise 400
 2005 2007 97%
Twin Creeks San Ramon, CA Garden 44
 1985 1997 97%
1000 Kiely Santa Clara, CA Garden 121
 1971 2011 97%
Le Parc Santa Clara, CA Garden 140
 1975 1994 97%
Marina Cove (20)
 Santa Clara, CA Garden 292
 1974 1994 97%
Riley Square (9)
 Santa Clara, CA Garden 156
 1972 2012 97%
Villa Granada Santa Clara, CA Mid-rise 270
 2010 2014 97%
Chestnut Street Apartments Santa Cruz, CA Garden 96
 2002 2008 95%
Bristol Commons Sunnyvale, CA Garden 188
 1989 1995 97%
Brookside Oaks (4)
 Sunnyvale, CA Garden 170
 1973 2000 97%
Lawrence Station Sunnyvale, CA Mid-rise 336
 2012 2014 97%
Magnolia Lane (21)
 Sunnyvale, CA Garden 32
 2001 2007 97%
Magnolia Square (4)
 Sunnyvale, CA Garden 156
 1963 2007 97%
Montclaire Sunnyvale, CA Mid-rise 390
 1973 1988 97%
Reed Square Sunnyvale, CA Garden 100
 1970 2011 98%
Solstice Sunnyvale, CA Mid-rise 280
 2014 2014 98%

ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
Magnolia Square (4)
Sunnyvale, CAGarden156 1963200796%
MontclaireSunnyvale, CAMid-rise390 1973198897%
Reed SquareSunnyvale, CAGarden100 1970201197%
SolsticeSunnyvale, CAMid-rise280 2014201496%
Summerhill ParkSunnyvale, CAGarden100 1988198898%
ViaSunnyvale, CAMid-rise284 2011201196%
Windsor RidgeSunnyvale, CAMid-rise216 1989198997%
Vista BelvedereTiburon, CAMid-rise76 1963200496%
Verandas (12)
Union City, CAMid-rise282 1989201497%
AgoraWalnut Creek, CAMid-rise49 2016201697%
Brio (4)
Walnut Creek, CAMid-rise300 2015201996%
23,248 96%
Seattle, Washington Metropolitan Area
BelcarraBellevue, WAMid-rise296 2009201496%
BellCentreBellevue, WAMid-rise249 2001201496%
Cedar TerraceBellevue, WAGarden180 1984200596%
Courtyard off MainBellevue, WAMid-rise110 2000201095%
EllingtonBellevue, WAMid-rise220 1994201494%
Emerald RidgeBellevue, WAGarden180 1987199497%
Foothill CommonsBellevue, WAMid-rise394 1978199096%
Palisades, TheBellevue, WAGarden192 1977199097%
Park HighlandBellevue, WAMid-rise250 1993201496%
PiedmontBellevue, WAGarden396 1969201496%
Sammamish ViewBellevue, WAGarden153 1986199497%
Woodland CommonsBellevue, WAGarden302 1978199096%
Bothell Ridge (5)
Bothell, WAGarden214 1988201496%
Canyon PointeBothell, WAGarden250 1990200397%
Inglenook CourtBothell, WAGarden224 1985199496%
Pinnacle SonataBothell, WAMid-rise268 2000201496%
Salmon Run at Perry CreekBothell, WAGarden132 2000200097%
Stonehedge VillageBothell, WAGarden196 1986199798%
Highlands at WynhavenIssaquah, WAMid-rise333 2000200896%
Park Hill at IssaquahIssaquah, WAGarden245 1999199997%
Wandering CreekKent, WAGarden156 1986199597%
AscentKirkland, WAGarden90 1988201296%
Bridle TrailsKirkland, WAGarden108 1986199797%
Corbella at Juanita BayKirkland, WAGarden169 1978201097%
Evergreen HeightsKirkland, WAGarden200 1990199797%
Slater 116Kirkland, WAMid-rise108 2013201396%
MontebelloKirkland, WAGarden248 1996201297%
Martha Lake Apartments (16)
Lynwood, WAMid-rise155 1991202197%
Aviara (19)
Mercer Island, WAMid-rise166 2013201496%
Laurels at Mill CreekMill Creek, WAGarden164 1981199698%
Monterra in Mill Creek (16)
Mill Creek, WAGarden139 2003202197%
Parkwood at Mill CreekMill Creek, WAGarden240 1989201497%
The Elliot at Mukilteo (4)
Mukilteo, WAGarden301 1981199796%
Castle CreekNewcastle, WAGarden216 1998199898%
27
Table of Contents
      Apartment Year Year  
Communities (1)
 Location Type Homes Built Acquired 
Occupancy(2)
Summerhill Park Sunnyvale, CA Garden 100
 1988 1988 98%
Via Sunnyvale, CA Mid-rise 284
 2011 2011 97%
Windsor Ridge Sunnyvale, CA Mid-rise 216
 1989 1989 98%
Vista Belvedere Tiburon, CA Mid-rise 76
 1963 2004 96%
Verandas (13)
 Union City, CA Mid-rise 282
 1989 2014 97%
Agora (22)
 Walnut Creek, CA Mid-rise 49
 2016 2016 99%
Brio (4)
 Walnut Creek, CA Mid-rise 300
 2015 2019 97%
      21,642
     96%
Seattle, Washington Metropolitan Area          
Belcarra Bellevue, WA Mid-rise 296
 2009 2014 97%
BellCentre Bellevue, WA Mid-rise 248
 2001 2014 97%
Cedar Terrace Bellevue, WA Garden 180
 1984 2005 96%
Courtyard off Main Bellevue, WA Mid-rise 110
 2000 2010 96%
Ellington Bellevue, WA Mid-rise 220
 1994 2014 97%
Emerald Ridge Bellevue, WA Garden 180
 1987 1994 97%
Foothill Commons Bellevue, WA Mid-rise 394
 1978 1990 96%
Palisades, The Bellevue, WA Garden 192
 1977 1990 97%
Park Highland Bellevue, WA Mid-rise 250
 1993 2014 96%
Piedmont Bellevue, WA Garden 396
 1969 2014 97%
Sammamish View Bellevue, WA Garden 153
 1986 1994 98%
Woodland Commons Bellevue, WA Garden 302
 1978 1990 97%
Bothell Ridge (6)
 Bothell, WA Garden 214
 1988 2014 96%
Canyon Pointe Bothell, WA Garden 250
 1990 2003 96%
Inglenook Court Bothell, WA Garden 224
 1985 1994 96%
Pinnacle Sonata Bothell, WA Mid-rise 268
 2000 2014 96%
Salmon Run at Perry Creek Bothell, WA Garden 132
 2000 2000 97%
Stonehedge Village Bothell, WA Garden 196
 1986 1997 96%
Highlands at Wynhaven Issaquah, WA Mid-rise 333
 2000 2008 97%
Park Hill at Issaquah Issaquah, WA Garden 245
 1999 1999 97%
Wandering Creek Kent, WA Garden 156
 1986 1995 98%
Ascent Kirkland, WA Garden 90
 1988 2012 96%
Bridle Trails Kirkland, WA Garden 108
 1986 1997 97%
Corbella at Juanita Bay Kirkland, WA Garden 169
 1978 2010 96%
Evergreen Heights Kirkland, WA Garden 200
 1990 1997 96%
Slater 116 Kirkland, WA Mid-rise 108
 2013 2013 97%
Montebello Kirkland, WA Garden 248
 1996 2012 96%
Aviara (23)
 Mercer Island, WA Mid-rise 166
 2013 2014 96%
Laurels at Mill Creek Mill Creek, WA Garden 164
 1981 1996 96%
Parkwood at Mill Creek Mill Creek, WA Garden 240
 1989 2014 96%
The Elliot at Mukilteo (4)
 Mukilteo, WA Garden 301
 1981 1997 96%
Castle Creek Newcastle, WA Garden 216
 1998 1998 97%
Delano Redmond, WA Mid-rise 126
 2005 2011 97%
Elevation Redmond, WA Garden 158
 1986 2010 97%
Pure Redmond Redmond, WA Mid-rise 105
 2016 2019 99%
Redmond Hill (9)
 Redmond, WA Garden 442
 1985 2011 96%
Shadowbrook Redmond, WA Garden 418
 1986 2014 96%
The Trails of Redmond Redmond, WA Garden 423
 1985 2014 97%
Vesta (9)
 Redmond, WA Garden 440
 1998 2011 97%

      Apartment Year Year  
Communities (1)
 Location Type Homes Built Acquired 
Occupancy(2)
Brighton Ridge Renton, WA Garden 264
 1986 1996 96%
Fairwood Pond Renton, WA Garden 194
 1997 2004 97%
Forest View Renton, WA Garden 192
 1998 2003 97%
Pinnacle on Lake Washington Renton, WA Mid-rise 180
 2001 2014 96%
8th & Republican (16)
 Seattle, WA Mid-rise 211
 2016 2017 97%
Annaliese Seattle, WA Mid-rise 56
 2009 2013 98%
The Audrey at Belltown Seattle, WA Mid-rise 137
 1992 2014 96%
The Bernard Seattle, WA Mid-rise 63
 2008 2011 98%
Cairns, The Seattle, WA Mid-rise 99
 2006 2007 97%
Collins on Pine Seattle, WA Mid-rise 76
 2013 2014 98%
Domaine Seattle, WA Mid-rise 92
 2009 2012 98%
Expo (18)
 Seattle, WA Mid-rise 275
 2012 2012 96%
Fountain Court Seattle, WA Mid-rise 320
 2000 2000 97%
Patent 523 Seattle, WA Mid-rise 295
 2010 2010 97%
Taylor 28 Seattle, WA Mid-rise 197
 2008 2014 97%
Velo and Ray (16)
 Seattle, WA Mid-rise 308
 2014 2019 96%
Vox Apartments Seattle, WA Mid-rise 58
 2013 2013 97%
Wharfside Pointe Seattle, WA Mid-rise 155
 1990 1994 97%
      12,233
     97%
             
Total/Weighted Average     60,570
     97%

ApartmentYearYear
Communities (1)
LocationTypeHomesBuilt
Acquired (20)
Occupancy(2)
ElevationRedmond, WAGarden158 1986201096%
Pure RedmondRedmond, WAMid-rise105 2016201996%
Redmond Hill (8)
Redmond, WAGarden442 1985201196%
ShadowbrookRedmond, WAGarden418 1986201495%
The Trails of RedmondRedmond, WAGarden423 1985201495%
Vesta (8)
Redmond, WAGarden440 1998201196%
Brighton RidgeRenton, WAGarden264 1986199696%
Fairwood PondRenton, WAGarden194 1997200498%
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 2006200795%
Collins on PineSeattle, WAMid-rise76 2013201496%
CanvasSeattle, WAMid-rise123 20142021100%
DomaineSeattle, WAMid-rise92 2009201297%
Expo (14)
Seattle, WAMid-rise275 2012201293%
Fountain CourtSeattle, WAMid-rise320 2000200095%
Patent 523Seattle, WAMid-rise295 2010201096%
Taylor 28Seattle, WAMid-rise197 2008201496%
Velo and Ray (15)
Seattle, WAMid-rise308 2014201996%
Vox ApartmentsSeattle, WAMid-rise58 2013201395%
Wharfside PointeSeattle, WAMid-rise155 1990199497%
  12,525   96%
Total/Weighted Average 62,147   96%

Footnotes to the Company’s Portfolio Listing as of December 31, 20192022


(1)(1)Unless otherwise specified, the Company consolidates each community in accordance with U.S. GAAP.
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, 2019. For an explanation of how financial occupancy is 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)
Each of these 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 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. 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, LLC ("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)
This community is subject to a ground lease, which, unless extended, will expire in 2028.
(15)
This community is owned by an entity that, as of December 31, 2019, was co-owned by the Company and the Canada Pension Plan Investment Board ("CPPIB" or "CPP"). The Company had a 55% ownership in this community, which is accounted for using the equity method of accounting. In January 2020, the Company purchased CPPIB's 45% interest.
(16)
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.

(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)
The Company has 50% ownership in this community, which is accounted for using the equity method of accounting.
(19)
In March 2019, the Company purchased its joint venture partner's 45.0% interest in the One South Market co-investment. As a result of this purchase, the Company consolidates One South Market.
(20)
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.
(21)
The community is subject to a ground lease, which, unless extended, will expire in 2070.
(22)
This community is owned by an entity that, as of December 31, 2019, was co-owned primarily by the Company and CPPIB. The Company had a 51% membership interest in this community, which is accounted for using the equity method of accounting. In January 2020, the Company purchased CPPIB's 45% interest.
(23)
This community is subject to a ground lease, which, unless extended, will expire in 2070.

(2)For communities, occupancy rates are based on financial occupancy for the year ended December 31, 2022, except for communities that were stabilized during the year, in which case occupancy as of December 31, 2022 was used. For an explanation of how financial occupancy is calculated, see "Occupancy Rates" in this Item 2.
(3)The community is subject to a ground lease, which, unless extended, will expire in 2083.
(4)Each of these 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.
(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 has a 3% interest in this community.
28
Table of Contents
(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 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 17, "Commitments and 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 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 under the symbol ESS."ESS". 
 
There is no established public trading market for the Operating Partnership's limited partnership units ("OP Units").
 
Holders
 
The approximate number of holders of record of the shares of Essex's common stock was 1,248987 as of February 18, 2020.21, 2023. 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 18, 2020,21, 2023, there were 6564 holders of record of 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, 2019, 2018,2022, 2021, and 20172020 related to common stock are as follows:
 202220212020
Common Stock
Ordinary income80.17 %70.92 %85.23 %
Capital gain16.78 %22.07 %10.68 %
Unrecaptured section 1250 capital gain3.05 %7.01 %4.09 %
 100.00 %100.00 %100.00 %
  2019 2018 2017
Common Stock      
Ordinary income 83.81% 79.72% 84.04%
Capital gain 13.78% 15.35% 13.20%
Unrecaptured section 1250 capital gain 2.41% 4.93% 2.76%
  100.00% 100.00% 100.00%

Dividends and Distributions
 
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 declared a dividend/distribution for the fourth quarter of 20192022 of $1.95$2.20 per share. The dividend/distribution was paid on January 15, 202013, 2023 to stockholders/unitholders of record as of January 2, 2020.3, 2023.

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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Table of Contents
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 20202023 Annual Meeting of Shareholders, under the headings "Equity Compensation Plan Information," to be filed with the SEC within 120 days of December 31, 2019.2022.

Issuance of Registered Equity Securities

During the year ended December 31, 2019,2022, the Company issued 228,271did not issue any shares of common stock through its equity distribution program at an average price of $321.56 per share for proceeds of $73.4 million.under the 2021 ATM Program. As of December 31, 2019,2022, there were no outstanding forward sale agreements, and $826.6$900.0 million of shares remainsremain available to be sold under this program.the 2021 ATM Program.

Issuer Purchases of Equity Securities

In December 2015, Essex's Board of Directors authorized a stock repurchase plan to allow Essex to acquire shares inof common stock up to an aggregate value of up to $250.0 million. In January 2019, pursuant to such authorization, the Company repurchased and retired 234,061 shares of its common stock totaling $57.0 million, including commissions, at an average price of $243.48 per share. In February 2019, the Board of Directors approved the replenishment of the stock repurchase plan such that, as of such date, the Company had $250.0 million of purchase authority remaining under the stock repurchase plan. In each of May and December 2020, the Board of Directors approved the replenishment of the stock repurchase plan such that, as of each such date, Essex had $250.0 million of purchase authority remaining under the replenished plan. In September 2022, the Board of Directors approved a new stock repurchase plan to allow Essex to acquire shares of common stock up to an aggregate value of $500.0 million and as of December 31, 2022, the Company had repurchased 420,606 shares of common stock under this plan, totaling $101.7 million. The Company did notplan supersedes the previous common stock repurchase any additional shares duringplan announced in December 2015. During the year ended December 31, 2019, such that as2022, the Company repurchased and retired 740,053 shares of its common stock totaling $189.7 million, including commissions, at an average price of $256.37 per share. As of December 31, 2019,2022, the Company had $250.0$398.3 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 REIT index and the FTSE NAREIT Equity Apartments 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, 20142017 and that all dividends were reinvested. The FTSE NAREIT Equity Apartments index was added in the current year as it more closely aligns with executive compensation and performance of the Company against its more directly comparable peers.

chart-924ddcb263f8546488c.jpg

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Table of Contents
  Period Ending
Index 12/31/2014
 12/31/2015
 12/31/2016
 12/31/2017
 12/31/2018
 12/31/2019
Essex Property Trust, Inc. 100.00
 118.87
 118.71
 126.79
 132.83
 167.25
NAREIT All Equity REIT Index 100.00
 102.83
 111.70
 121.39
 116.48
 149.86
S&P 500 Index 100.00
 101.38
 113.51
 138.29
 132.23
 173.86
ess-20221231_g1.jpg
Period Ending
Index12/31/201712/31/201812/31/201912/31/202012/31/202112/31/2022
Essex Property Trust, Inc.$100.00 $104.83 $132.00 $108.12 $164.77 $102.55 
FTSE NAREIT Equity Apartments Index$100.00 $103.70 $130.99 $110.89 $181.43 $123.46 
FTSE NAREIT All Equity REITs Index$100.00 $95.96 $123.46 $117.14 $165.51 $124.22 
S&P 500 Index$100.00 $95.62 $125.72 $148.85 $191.58 $156.88 
 
(1)
(1)Common stock performance data is provided by S&P Global Market Intelligence.

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

The graph and other information furnished under the above caption "Performance Graph" in this Part II Item 5 of this Form 10-K shall not deemed to be "soliciting material" or to be "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, 20192022 and 2018,2021, the Operating Partnership issued OP 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, 20192022 and 2018,2021, Essex issued an aggregate of 178,67576,246 and 39,175248,725 shares of its common stock upon the exercise of stock options, respectively. Essex contributed the proceeds from the option exercises of $37.5$19.5 million and $6.2$58.5 million to the Operating Partnership in exchange for an aggregate of 178,67576,246 and 39,175248,725 OP Units, as required by the Operating Partnership’s partnership agreement, during the years ended December 31, 20192022 and 2018,2021, respectively.
 

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During the years ended December 31, 20192022 and 2018,2021, Essex issued an aggregate of 16,11411,707 and 1,98130,360 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 16,11411,707 and 1,98130,360 OP Units during the years ended December 31, 20192022 and 2018,2021, respectively.

During the years ended December 31, 20192022 and 2018,2021, Essex issued an aggregate of 12,6338,310 and 5,25010,293 shares of its common stock in connection with the exchange of OP Units and DownREIT units by limited partners or members 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 12,6338,310 and 5,25010,293 OP Units during the year ended December 31, 20192022 and 2018,2021, respectively.

During the year ended December 31, 2019, the Company issued 228,271Essex may sell shares of common stock through its equity distribution program. Essex contributedprogram, then contribute the net proceeds from these share issuances of $73.4 million to the Operating Partnership in exchange for an aggregate of 228,271 OP units,Units as required by the Operating Partnership's partnership agreement. As of December 31, 2019, there are no outstanding forward purchase agreements. During the year ended December 31, 2018, no2022 and 2021, the Company did not issue or sell any shares of common stock pursuant to the 2021 ATM Program. As of December 31, 2022, there were no outstanding forward sale agreements.

Stock Repurchases

The following table summarizes the Company's purchase of shares of its common stock during the three months ended December 31, 2022:

Total Number of
Shares Purchased		Average Price
Paid Per Share
Total Number of Shares
Purchased as Part of a
Publicly Announced
Program(1)
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions)(1)
November 1, 2022 - November 30, 202228,200 $210.82 28,200 $424.2 
December 1, 2022 - December 31, 2022121,009 $213.45 121,009 $398.3 
Total149,209 $212.95 149,209 $398.3 

(1) In September 2022, the Board of Directors approved a new stock repurchase plan to allow the Company to acquire shares of common stock up to an aggregate of $500.0 million. The plan supersedes the Company's previous common stock repurchase plan announced in December 2015. Following the approval of the new plan, 420,606 shares of common stock totaling $101.7 million were issued or sold by Essex pursuant to its equity distribution programs.repurchased under the new plan.

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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, 2015 through December 31, 2019.

Essex Property Trust, Inc. and Subsidiaries
34
  Years Ended December 31,
  2019 2018 2017 2016 2015
  ($ in thousands, except per share amounts)
OPERATING DATA:          
Rental and other property $1,450,628
 $1,390,870
 $1,354,325
 $1,285,723
 $1,185,498
Management and other fees from affiliates 9,527
 9,183
 9,574
 8,278
 8,909
Net income 464,448
 413,599
 458,043
 438,410
 248,239
Net income available to common stockholders $439,286
 $390,153
 $433,059
 $411,124
 $226,865
Per share data:  
  
  
  
  
Basic:  
  
  
  
  
Net income available to common stockholders $6.67
 $5.91
 $6.58
 $6.28
 $3.50
Weighted average common stock outstanding 65,840
 66,041
 65,829
 65,472
 64,872
Diluted:  
  
  
  
  
Net income available to common stockholders $6.66
 $5.90
 $6.57
 $6.27
 $3.49
Weighted average common stock outstanding 65,939
 66,085
 65,898
 65,588
 65,062
Cash dividend per common share $7.80
 $7.44
 $7.00
 $6.40
 $5.76

  As of December 31,
  2019 2018 2017 2016 2015
  ($ in thousands)
BALANCE SHEET DATA:          
Investment in rental properties (before accumulated depreciation) $14,038,142
 $13,366,101
 $13,362,073
 $12,687,722
 $12,338,129
Net investment in rental properties 10,348,660
 10,156,553
 10,592,776
 10,376,176
 10,388,237
Real estate under development 546,075
 454,629
 355,735
 190,505
 242,326
Co-investments 1,335,339
 1,300,140
 1,155,984
 1,161,275
 1,036,047
Total assets 12,705,405
 12,383,596
 12,495,706
 12,217,408
 12,008,384
Total indebtedness, net 5,808,873
 5,605,942
 5,689,126
 5,563,260
 5,318,757
Redeemable noncontrolling interest 37,410
 35,475
 39,206
 44,684
 45,452
Cumulative redeemable preferred stock —
 —
 —
 —
 73,750
Stockholders' equity 6,220,427
 6,267,073
 6,277,406
 6,192,178
 6,237,733

  As of and for the years ended December 31,
  2019 2018 2017 2016 2015
  ($ 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 $439,286
 $390,153
 $433,059
 $411,124
 $226,865
Adjustments:  
  
  
  
  
Depreciation and amortization 483,750
 479,884
 468,881
 441,682
 453,423
Gains not included in FFO attributable to common stockholders and unitholders (79,468) (73,683) (159,901) (167,607) (81,347)
Impairment loss 7,105
 —
 —
 —
 —

Impairment loss from unconsolidated co-investments 11,484
 —
 —
 —
 —
Deferred tax expense on sale of real estate and land - taxable REIT subsidiary activity —
 —
 —
 4,410
 —
Depreciation and amortization from unconsolidated co-investments 60,655
 62,954
 55,531
 50,956
 49,826
Noncontrolling interest related to Operating Partnership units 15,343
 13,452
 14,825
 14,089
 7,824
Insurance reimbursements —
 —
 —
 —
 (1,751)
Depreciation attributable to third party ownership and other (1,805) (940) (286) (9) (781)
Funds from operations attributable to common stockholders and unitholders $936,350
 $871,820
 $812,109
 $754,645
 $654,059
Non-core items:  
  
  
  
  
Merger and integration expenses —
 —
 —
 —
 3,798
Expensed acquisition and investment related costs 168
 194
 1,569
 1,841
 2,414
Deferred tax expense on unrealized gain on unconsolidated co-investment (2)
 1,457
 —
 —
 —
 —
Gain on sale of marketable securities (1,271) (737) (1,909) (5,719) (598)
Unrealized (gains) losses on marketable securities (5,710) 5,159
 —
 —
 —
Equity income from non-core co-investment (3)
 (4,143) —
 —
 —
 —
Interest rate hedge ineffectiveness (4)
 181
 148
 (78) (250) —
(Gain) loss on early retirement of debt, net (3,717) —
 1,796
 606
 6,114
Gain on early retirement of debt from unconsolidated co-investment —
 (3,662) —
 —
 —
Co-investment promote income (809) (20,541) —
 —
 (192)
Income from early redemption of preferred equity investments (3,562) (1,652) (356) —
 (1,954)
Accelerated interest income from maturity of investment in mortgage backed security (7,032) —
 —
 —
 —
Excess of redemption value of preferred stock over carrying value —
 —
 —
 2,541
 —
General and administrative and other, net 1,181
 8,745
 (1,083) —
 (651)
Insurance reimbursements and legal settlements, net (858) (561) (25) (4,470) (2,319)
Core funds from operations ("Core FFO")(1) attributable to common stockholders and unitholders
 $912,235
 $858,913
 $812,023
 $749,194
 $660,671
Weighted average number of shares outstanding, diluted (FFO)(5)
 68,199
 68,322
 68,194
 67,890
 67,310
Funds from operations attributable to common stockholders and unitholders
 per share - diluted
 $13.73
 $12.76
 $11.91
 $11.12
 $9.72
Core funds from operations attributable to common stockholders and unitholders
 per share - diluted
 $13.38
 $12.57
 $11.91
 $11.04
 $9.82

(1)Table of Contents
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. 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 excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), 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 the National Association of Real Estate Investment Trusts (“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.

The table to which this footnote relates is a reconciliation of net income available to common stockholders to FFO and Core FFO for the years ended December 31, 2019, 2018, 2017, 2016, and 2015.

(2)
A deferred tax expense was recorded during the year ended December 31, 2019 related to the $4.4 million net unrealized gain on Real Estate Technology Ventures, L.P. co-investment discussed below.

(3)
Represents the Company's share of co-investment income from Real Estate Technology Ventures, L.P. Income for the year ended December 31, 2019 includes a net unrealized gain of $4.4 million.

(4)
Interest rate swaps are generally adjusted to fair value through other comprehensive income (loss). However, because certain of the Company's 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. On January 1, 2019, the Company adopted ASU No. 2017-12 "Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities," which resulted in a cumulative effect adjustment of approximately $181,000 from interest expense to accumulated other comprehensive income.

(5)
Assumes conversion of all outstanding OP Units into shares of the Company's common stock and excludes all DownREIT 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,
  2019 2018 2017 2016 2015
  ($ in thousands, except per unit amounts)
OPERATING DATA:          
Rental and other property $1,450,628
 $1,390,870
 $1,354,325
 $1,285,723
 $1,185,498
Management and other fees from affiliates 9,527
 9,183
 9,574
 8,278
 8,909
Net income 464,448
 413,599
 458,043
 438,410
 248,239
Net income available to common unitholders $454,629
 $403,605
 $447,884
 $425,213
 $234,689
Per unit data:  
  
  
  
  
Basic:  
  
  
  
  
Net income available to common unitholders $6.67
 $5.91
 $6.58
 $6.28
 $3.50
Weighted average common units outstanding 68,141
 68,316
 68,082
 67,696
 67,054
Diluted:  
  
  
  
  
Net income available to common unitholders $6.66
 $5.90
 $6.57
 $6.27
 $3.49
Weighted average common units outstanding 68,240
 68,360
 68,151
 67,812
 67,244
Cash distributions per common unit $7.80
 $7.44
 $7.00
 $6.40
 $5.76
  As of December 31,
  2019 2018 2017 2016 2015
  ($ in thousands)
BALANCE SHEET DATA:          
Investment in rental properties (before accumulated depreciation) $14,038,142
 $13,366,101
 $13,362,073
 $12,687,722
 $12,338,129
Net investment in rental properties 10,348,660
 10,156,553
 10,592,776
 10,376,176
 10,388,237
Real estate under development 546,075
 454,629
 355,735
 190,505
 242,326
Co-investments 1,335,339
 1,300,140
 1,155,984
 1,161,275
 1,036,047
Total assets 12,705,405
 12,383,596
 12,495,706
 12,217,408
 12,008,384
Total indebtedness, net 5,808,873
 5,605,942
 5,689,126
 5,563,260
 5,318,757
Redeemable noncontrolling interest 37,410
 35,475
 39,206
 44,684
 45,452
Cumulative redeemable preferred interest —
 —
 —
 —
 71,209
Partners' capital 6,281,242
 6,329,613
 6,330,415
 6,244,364
 6,287,381


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 on 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, 2019,2022, had an approximately 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, 2019,2022, the Company owned or had ownership interests in 250252 operating apartment communities, comprising 60,57062,147 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, onethree operating commercial buildingbuildings, and a development pipeline comprised of five consolidated projects and twoone unconsolidated joint venture projects.project.

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


Southern California (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, 2019,2022, 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 predevelopment projects, aggregating 1,960 apartment homes, with total incurred costs of $1.0 billion, and$102.0 million. The estimated remaining project costs ofare approximately $222.0$25.0 million, $193.0$12.8 million of which represents the Company's estimated remaining costs, for total estimated project costs of $1.3 billion.$127.0 million. 

As of December 31, 2019,2022, the Company also had an ownership interest in onethree operating commercial buildingbuildings (totaling approximately 106,716283,000 square feet).

By region, the Company's operating results for 20192022 and 20182021 and projection for 20202023 new housing supply (defined as new multifamily apartment homes and single family homes, excluding developments with fewer than 50 apartment homes as well as student, senior and 100% affordable housing), projection for 20202023 job growth, and 20202023 estimated Same-Property revenue growth are as follows:

Southern California Region:  As of December 31, 2019,2022, this region represented 45%43% of the Company’s consolidated operating apartment homes. Revenues for "2019"2022 Same-Properties" (as defined below), or "Same-Property revenues," increased 3.0%11.3% in 20192022 as compared to 2018.2021. In 2020,2023, the Company projects new residential supply of 31,40030,300 apartment homes and single family homes, which represents 0.5% of the total housing stock. The Company projects an increase of 91,8502,000 jobs or 1.2%, and an increase0.3% in 2020 Same-Property revenues of between 2.2% to 3.2% in 2020.the Southern California region.
 
Northern California Region:  As of December 31, 2019,2022, this region represented 35%37% of the Company’s consolidated operating apartment homes. Same-Property revenues increased 3.8%8.4% in 20192022 as compared to 2018.2021. In 2020,2023, the Company projects new residential supply of 17,95012,750 apartment homes and single family homes, which represents 0.8%0.5% of the total housing stock. The Company projects an increase of 72,3504,500 jobs or 2.0%, and an increase0.7% in 2020 Same-Property revenues of between 2.6% to 3.6% in 2020.the Northern California region.
 
Seattle Metro Region: As of December 31, 2019,2022, this region represented 20% of the Company’s consolidated operating apartment homes. Same-Property revenues increased 3.8%12.0% in 20192022 as compared to 2018.2021. In 2020,2023, the Company projects new residential supply of 13,40014,450 apartment homes and single family homes, which represents 1.0%1.1% of the total housing stock. The

Company projects an increase of 43,2003,000 jobs or 2.4%, and an increase0.4% in 2020 Same-Property revenues of between 3.5% to 4.5% in 2020.the Seattle Metro region.

In total, the Company projects an increase in 20202023 Same-Property revenues of between 2.6%3.25% to 3.6%, as renewal and new leases are signed at higher rents in 2020 than 2019.4.75%. Same-Property operating expenses are projected to increase in 20202023 by 2.5%4.50% to 3.5%5.50%.

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The Company’s consolidated operating communities are as follows:
 As ofAs of
December 31, 2022December 31, 2021
 Apartment Homes%Apartment Homes%
Southern California22,151 43 %22,190 43 %
Northern California19,230 37 %19,123 37 %
Seattle Metro10,341 20 %10,341 20 %
Total51,722 100 %51,654 100 %
 As of As of
 December 31, 2019 December 31, 2018
 Apartment Homes % Apartment Homes %
Southern California22,674
 45% 22,674
 46%
Northern California17,556
 35% 16,136
 33%
Seattle Metro10,343
 20% 10,238
 21%
Total50,573
 100% 49,048
 100%

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


Market Considerations, including the COVID-19 Pandemic

Though diminishing, the COVID-19 pandemic and its related variants continue to impact the U.S. and world economies. In an effort to mitigate its impact on affected populations, federal, state and local jurisdictions implemented varying forms of requirements which may continue to negatively affect profitability. While the California eviction moratorium sunsetted during the third quarter of 2021, other state and local eviction moratoriums and laws that limit rent increases during times of emergency and impair the ability to collect unpaid rent during certain timeframes continue to be in effect in various formats at various regions in which our communities are located, impacting the Company and its properties. The Company continues to work to comply with the stated intent of local, county, state and federal laws.

While COVID-19’s impact begins to dissipate, geopolitical tensions between Russian and Ukraine increased uncertainty during
2022. 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. In response, market interest rates have increased significantly during this time. At the same time, the labor market remains historically tight and companies continue to look to add employees, pushing unemployment lower.

The long-term impact of these developments will largely depend on new information which may emerge concerning the
COVID-19 pandemic, future laws that may be enacted, geopolitical tensions, inflation, 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 "Same-Property" (stabilized properties consolidated by the Company for the years ended December 31, 2022 and 2021) have generally remained higher than the pre-pandemic period due to on-going eviction moratoria related to the COVID-19 pandemic, and above the typical historical range of 0.3% to 0.4% since the second quarter of 2020. Cash delinquencies remained elevated at 1.9% for 2021 but decreased to 1.2% in 2022, attributable to government payments for Emergency Rental Assistance which was mostly depleted by December 31, 2022. The Company continues to work with residents to collect such cash delinquencies. As of December 31, 2022, 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 decreased slightly from 96.4% for the year ended December 31, 2021 to 96.1% for the year ended December 31, 2022.

The COVID-19 pandemic and the resulting 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, 2022 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, 20192022 to the Year Ended December 31, 20182021

The Company’s average financial occupancy for the Company’s stabilized apartment communities or "2019"2022 Same-Property" (stabilized properties consolidated by the Company for the years ended December 31, 20192022 and 2018)2021) decreased 10 30
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basis points to 96.6%96.1% in 20192022 from 96.7%96.4% in 2018.2021. Financial occupancy is defined as the percentage resulting from dividing actual rental income by total potentialscheduled rental income. Actual rental income represents contractual rental income pursuant to leases without considering delinquency and concessions. Total potentialscheduled rental income 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. The 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.

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 income is not considered the best metric to quantify occupancy.


The regional breakdown of the Company’s 20192022 Same-Property portfolio for financial occupancy for the years ended December 31, 20192022 and 20182021 is as follows:

Years ended
December 31,
 20222021
Southern California96.2 %96.7 %
Northern California96.1 %96.2 %
Seattle Metro95.8 %96.2 %

 
Years ended
December 31,
 2019 2018
Southern California96.6% 96.7%
Northern California96.7% 96.8%
Seattle Metro96.6% 96.5%


The following table provides a breakdown of revenue amounts, including the revenues attributable to 20192022 Same-Properties.

 Number of Apartment 
Years Ended
December 31,
 Dollar PercentageNumber of ApartmentYears Ended
December 31,		DollarPercentage
Property Revenues ($ in thousands)
 Homes 2019 2018 Change Change
Property Revenues ($ in thousands)
Homes20222021ChangeChange
2019 Same-Properties:          
2022 Same-Properties:2022 Same-Properties:
Southern California 21,979
 $590,943
 $573,658
 $17,285
 3.0%Southern California21,006 $624,907 $561,326 $63,581 11.3 %
Northern California 15,685
 530,970
 511,679
 19,291
 3.8%Northern California17,895 591,556 545,535 46,021 8.4 %
Seattle Metro 10,238
 245,398
 236,525
 8,873
 3.8%Seattle Metro10,218 268,512 239,819 28,693 12.0 %
Total 2019 Same-Property revenues 47,902
 1,367,311
 1,321,862
 45,449
 3.4%
2019 Non-Same Property Revenues  
 83,317
��69,008
 14,309
 20.7%
Total property revenues  
 $1,450,628
 $1,390,870
 $59,758
 4.3%
Total 2022 Same-Property RevenuesTotal 2022 Same-Property Revenues49,119 1,484,975 1,346,680 138,295 10.3 %
2022 Non-Same Property Revenues2022 Non-Same Property Revenues 110,700 84,738 25,962 30.6 %
Total Property RevenuesTotal Property Revenues $1,595,675 $1,431,418 $164,257 11.5 %
  
20192022 Same-Property Revenues increased by $45.4$138.3 million or 3.4%10.3% to $1.4$1.5 billion for 20192022 compared to $1.3 billion in 2018.2021. The increase was primarily attributable to an increase of 3.4%7.2% in average rental rates from $2,242 per apartment home$2,320 for 20182021 to $2,318 per apartment home$2,486 for 2019. 2022 and 2.3% of the increase was attributable to a decrease in cash concessions in 2022 compared to 2021.

20192022 Non-Same Property Revenues increased by $14.3$26.0 million or 20.7%30.6% to $83.3$110.7 million in 20192022 compared to $69.0$84.7 million in 2018.2021. The increase was primarily due to revenues generated from One South Market, which was consolidatedthe acquisitions of The Village at Toluca Lake and Canvas in March 2019, Brio, which was acquired2021, the acquisitions of Regency Palm Court and Windsor Court in June 2019, Marquis, which was consolidated2022, and an increase in December 2018, and Station Park Green - Phase I, a development community that began producingaverage rental income during the first quarterrates.

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Table of 2018. These increases were partially offset by the sales of Domain in the second quarter of 2018 and 8th & Hope in the fourth quarter of 2018.Contents

Management and other fees from affiliates increased by $0.3$2.0 million or 3.3%22.0% to $9.5$11.1 million in 20192022 from $9.2$9.1 million in 2018.2021. The increase iswas primarily due to the addition of Martha Lake Apartments, Monterra in Mill Creek, The Courtyards at 65th Street, 777 Hamilton,Rexford, and Velo and RaySilver communities to the Company's joint venture portfolio in 2019,2021 and Vela in 2022, partially offset slightly by the dispositionCompany's purchases of MossoBEX III, LLC's 50.0% interest in The Village at Toluca Lake in 2021, and its joint venture communitypartner's 49.8% interest in the fourth quarter of 2019.Essex JV LLC co-investment that owned Regency Palm Court and Windsor Court, in 2022.

Property operating expenses, excluding real estate taxes increased by $8.7$18.5 million or 3.7%7.0% to $242.5$283.4 million in 20192022 compared to $233.8$264.9 million in 2018,2021, primarily due to an increaseincreases of $3.8$9.2 million in utilities expenses, as well as an increase of $3.2$7.4 million in maintenance and repairs expenses, and $1.9 million in administrative expenses. 20192022 Same-Property operating expenses, excluding real estate taxes, increased by $6.5$15.5 million or 2.9%6.1% to $232.5$268.6 million in 20192022 compared to $226.0$253.1 million in 2018,2021, primarily due to increases of $2.7$8.0 million in both administrativeutilities expenses, $6.2 million in maintenance and repairs expenses, $0.8 million in insurance and other expenses, and utilities$0.5 million in administrative expenses.

Real estate taxes increased by $3.6$3.5 million or 2.4%1.9% to $155.2$183.9 million in 20192022 compared to $151.6$180.4 million in 2018,2021, primarily due to increasesreal estate taxes from the completion of development properties Wallace on Sunset in property valuations2021 and Station Park Green (Phase IV) in Southern2022, as well as the acquisitions of The Village at Toluca Lake, Canvas, and Northern California and property tax expenses for Brio, which was acquired in the second quarter of 2019, offset by favorable tax assessments in the Seattle Metro region. 20197 S Linden Commercial properties during 2021. 2022 Same-Property real estate taxes increased by $1.9$0.3 million or 1.3%0.2% to $145.3$164.0 million in 20192022 compared to $143.4$163.7 million in 20182021 primarily due to increases in propertyincreased valuations in Southern and Northern California, offset by favorable tax assessments in the Seattle Metro region.rates.


Corporate-level property management expenses increased by $1.8$4.5 million or 5.8%12.4% to $32.9$40.7 million in 20192022 compared to $31.1$36.2 million in 2018, primarily2021 due to an increase in corporate-levelcosts pertaining to the centralization of certain property management and staffing costs supporting the communities.level functions.

Depreciation and amortization expense increased by $3.9$19.2 million or 0.8%3.7% to $483.8$539.3 million in 20192022 compared to $479.9$520.1 million in 2018, primarily due to the completion of the Station Park Green - Phase I development during the first and second quarters of 2018, consolidation of Marquis in the fourth quarter of 2018, consolidation of One South Market in the first quarter of 2019, and the acquisition of Brio in the second quarter of 2019. The increase was partially offset by the sales of Domain in the second quarter of 2018 and 8th & Hope in the fourth quarter of 2018.

Impairment loss of $7.1 million in 2019 related to a consolidated CPPIB co-investment that owned land held for future development in Moorpark, CA. The impairment charge resulted from the Company’s offer to acquire the joint venture partner’s 45% interest in the co-investment of the land parcel at an amount lower than the carrying value.
Loss on sale of real estate and land of $3.2 million in 2019 was primarily attributable to the sale of land in San Mateo, CA that had been held for future development. The Company's $61.9 million gain in 2018 was attributable to the sales of Domain in the second quarter of 2018 and 8th & Hope in the fourth quarter of 2018, which resulted in gains of $22.3 million and $39.6 million, respectively, for the Company.

Interest expense decreased by $3.2 million or 1.5% to $217.3 million in 2019 compared to $220.5 million in 2018, primarily due to various debt that was paid off or matured and regular principal amortization during and after 2018, which resulted in a decrease in interest expense of $30.0 million for 2019. Additionally, there was a $5.5 million increase in capitalized interest during 2019, which was due to an increase in development costs as compared to 2018. These decreases in interest expense were partially offset by an increase in average outstanding debt primarily as a result of the issuance of $300.0 million of senior unsecured notes due March 15, 2048 in March 2018, $500.0 million of senior unsecured notes due March 1, 2029 in February and March 2019, and $550.0 million of senior unsecured notes due January 15, 2030 in August 2019 and October 2019, which resulted in an increase of $32.3 million interest expense for 2019 as compared to 2018.

Total return swap income of $8.4 million in 2019 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. The decrease of $0.3 million or 3.4% from $8.7 million in 2018 was due to less favorable interest rates in 2019.

Interest and other income increased $23.3 million or 101.3% to $46.3 million in 2019 compared to $23.0 million in 2018, primarily due to an increase from unrealized gains (losses) on marketable securities of $10.9 million, $7.0 million of accelerated interest income from the maturity of a mortgage backed security investment recognized in 2019, and an increase of $5.1 million in marketable securities and other income.

Equity income from co-investments increased by $23.0 million or 25.8% to $112.1 million in 2019 compared to $89.1 million in 2018,2021, primarily due to an increase in gainsdepreciation expense from the salecompletion of co-investment communities of $40.5 million from sale of the Mosso co-investment communitydevelopment properties Mylo and Wallace on Sunset in 2019, an increase of $7.3 million in income from preferred equity investments, and a net unrealized gain of $4.4 million from an unconsolidated co-investment during the third quarter of 2019. The increase was partially offset by a decrease of $19.7 million in promote income and an $11.5 million other-than-temporary impairment charge on an unconsolidated CPPIB co-investment recognized in the fourth quarter of 2019.

Deferred tax expense on unrealized gain on unconsolidated co-investment of $1.5 million in 2019 resulted from a net unrealized gain of $4.4 million from an unconsolidated co-investment during the third quarter of 2019.

Gain on early retirement of debt, net of $3.7 million in 2019 was primarily due to early repayment of a $289.1 million secured mortgage note payable in September 2019, offset slightly by early repayment of approximately $122.5 million of secured mortgage notes in the fourth quarter of 2019.

Gain on remeasurement of co-investment of $31.5 million in 2019 resulted from the purchase of the Company's joint venture partner's 45.0% membership interest in the One South Market co-investment in March 2019. Gain on remeasurement of $1.3 million in 2018 resulted from the purchase of the Company's joint venture partner's 49.9% membership interest in the Marquis co-investment in December 2018.


Comparison of Year Ended December 31, 2018 to the Year Ended December 31, 2017

The Company’s average financial occupancy for the Company’s stabilized apartment communities or "2018 Same-Property" (stabilized properties consolidated by the Company for the years ended December 31, 2018 and 2017) increased 10 basis points to 96.7% in 2018 from 96.6% in 2017. The regional breakdown of the Company's 2018 Same-Property portfolio for financial occupancy for the years ended December 31, 2018 and 2017 is as follows:

 
Years ended
December 31,
 2018 2017
Southern California96.7% 96.6%
Northern California96.8% 96.8%
Seattle Metro96.5% 96.4%

The following table provides a breakdown of revenue amounts, including the revenues attributable to 2018 Same-Properties:

  Number of Apartment 
Years Ended
December 31,
 Dollar Percentage
Property Revenues ($ in thousands)
 Homes 2018 2017 Change Change
2018 Same-Properties:          
Southern California 21,979
 $573,658
 $556,630
 $17,028
 3.1%
Northern California 14,356
 469,457
 458,241
 11,216
 2.4%
Seattle Metro 10,238
 236,525
 229,872
 6,653
 2.9%
Total 2018 Same-Property revenues 46,573
 1,279,640
 1,244,743
 34,897
 2.8%
2018 Non-Same Property Revenues  
 111,230
 109,582
 1,648
 1.5%
Total property revenues  
 $1,390,870
 $1,354,325
 $36,545
 2.7%

2018 Same-Property Revenues increased by $34.9 million or 2.8% to $1.3 billion for 2018 compared to $1.2 billion in 2017. The increase was primarily attributable to an increase of 2.5% in average rental rates from $2,177 per apartment home for 2017 to $2,231 per apartment home for 2018. 

2018 Non-Same Property Revenues increased by $1.6 million or 1.5% to $111.2 million in 2018 compared to $109.6 million in 2017. The increase was primarily due to revenue generated by2021, Station Park Green - Phase I, a development community, which began producing rental income during the first quarter of 2018, and Sage at Cupertino, which was consolidated(Phase IV) in March 2017, offset by the sales of Domain in the second quarter of 2018 and 8th & Hope in the fourth quarter of 2018.

Management and other fees from affiliates decreased by $0.4 million or 4.2% to $9.2 million in 2018 from $9.6 million in 2017. The decrease is primarily due to lower asset management fees caused by the amendment of the Wesco I joint venture operating agreement in October 2017.

Property operating expenses, excluding real estate taxes increased by $4.7 million or 2.1% to $233.8 million in 2018 compared to $229.1 million in 2017, primarily due to an increase of $2.4 million in maintenance and repairs expenses2022, as well as an increasethe acquisitions of $2.3 millionThe Village at Toluca Lake and Canvas in utilities expenses. 2018 Same-Property operating expenses excluding real estate taxes, increased by $4.2 million or 2.0% to $218.7 million2021, and Regency Palm Court and Windsor Court in 2018 compared to $214.5 million in 2017, primarily due to a $2.2 million increase in maintenance and repairs expenses as well as an increase of $2.2 million in utilities expenses.2022.

Real estate taxes increased by $5.3 million or 3.6% to $151.6 million in 2018 compared to $146.3 million in 2017, primarily due to the acquisition of Marquis and increases in tax rates and property valuations, offset by the sales of Domain in the second quarter of 2018 and 8th & Hope in the fourth quarter of 2018. 2018 Same-Property real estate taxes increased by $4.9 million or 3.7% to $138.4 million in 2018 compared to $133.5 million in 2017 due to increases in tax rates and property valuations.

Corporate-level property management expenses increased by $0.9 million or 3.0% to $31.1 million in 2018 compared to $30.2 million in 2017, primarily due to an increase in corporate-level property management and staffing costs supporting the communities.


Depreciation and amortization expense increased by $11.0 million or 2.3% to $479.9 million in 2018 compared to $468.9 million in 2017, primarily due to the completion of the Station Park Green - Phase I development during the first and second quarters of 2018, the consolidation of Sage at Cupertino in March 2017, as well as an increase in redevelopment activity in 2018 versus 2017, partially offset by a decrease due to the sales of Domain in the second quarter of 2018 and 8th & Hope in the fourth quarter of 2018.

Gain on sale of real estate and land increased by $35.5 million or 134.5% to $61.9of $94.4 million in 2018 compared to $26.4 million in 2017. The Company's 2018 gain2022 was attributable to the salessale of Domain in the second quarter of 2018 and 8th & HopeAnavia in the fourth quarter of 2018, which resulted in a gain of $22.3 million and $39.6 million, respectively, for the Company.2022. The Company's 2017$143.0 million gain on sale of real estate and land in 2021 was primarily attributable to the sale of Jefferson at Hollywood, which resulted in a gain of $26.2 million.Hidden Valley, Axis 2300, Park 20, and Devonshire Apartments during 2021.

Interest expense decreasedincreased by $2.4$1.7 million or 1.1%0.8% to $220.5$204.8 million in 20182022 compared to $222.9$203.1 million in 20172021, primarily due to debtthe issuance of new senior unsecured notes in 2021 which resulted in an increase in interest expense of $4.8 million and increased borrowing on the Company's unsecured lines of credit, and higher average interest rates, which resulted in an increase in interest expense of $3.0 million. Additionally, there was a $3.9 million decrease in capitalized interest in 2022, due to a decrease in development activity as compared to the same period in 2021. These increases in interest expense were partially offset by various debts that waswere paid off, or matured, andor regular principal amortizationpayments during and after 2017,2021 which resulted in a decrease in interest expense of $16.2$10.0 million for 2018. Additionally, there was a $4.8 million increase in capitalized interest during 2018, which was due to an increase in development costs as compared to 2017. These decreases in interest expense were partially offset by an increase in average outstanding debt primarily as a result of the issuance of $350.0 million senior unsecured notes due May 1, 2027 in April 2017 and $300.0 million senior unsecured notes due March 15, 2048 in March 2018, which resulted in an increase of $18.6 million interest expense for 2018 as compared to 2017.2022.

Total return swap income of $8.7$7.9 million in 20182022 consists of monthly settlements related to the Company's four total return swap contracts that were entered into during 2015, in connection with issuing $257.3 millionan aggregate notional amount of fixed rate tax-exempt mortgage notes payable. The decrease of $1.4 million or 13.9% from $10.1 million in 2017 was due to less favorable interest rates in 2018.$223.6 million.

Interest and other (loss) income decreased by $1.6$117.7 million or 6.5%119.3% to $23.0a loss of $19.0 million in 20182022 compared to $24.6an income of $98.7 million in 2017,2021, primarily due to unrealized losses onresulting from a decrease in the fair value of marketable securities of $5.2 million that were recognized through income during 2018, partially offset by an increase in marketable securities and other interest income of $4.2 million.securities.

Equity income from co-investments increaseddecreased by $2.7$85.7 million or 3.1%76.7% to $89.1$26.0 million in 20182022 compared to $86.4$111.7 million in 2017,2021, primarily due to $20.5decreases of $93.6 million of co-investment promotein equity income from the BEXAEW joint venture recognized during the first quarter of 2018, an increasenon-core co-investments, $5.3 million in income from preferred equity investments of $11.8 million,including income from early redemptions, and a gain$2.1 million impairment loss from an unconsolidated co-investment. These decreases were offset by $17.1 million in co-investment promote income during 2022 and an increase of $1.0 million in loss on early retirement of debt from an unconsolidated co-investment co-investments.

Deferred tax benefit on unconsolidated co-investments of $3.7$10.2 million in the third quarter of 2018, partially offset by a decrease in gains on sales of co-investment communities of $34.3 million.2022 is primarily due to net unrealized losses from non-core unconsolidated co-investments.

Gain on remeasurement of co-investment of $1.3$17.4 million in 20182022 resulted from the Company's purchase of the Company'sits joint venture partner's 49.9%49.8% membership interest in the MarquisEssex JV, LLC co-investment in December 2018.that owned Regency Palm Court and Windsor Court. Gain on remeasurement of $88.6$2.3 million in 20172021 resulted from the Company's purchase of the Company's joint venture partner's 50% membershipBEX III's 50.0% interest in The Village at Toluca Lake community in the Palm Valley co-investment in January 2017.second quarter of 2021.

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Comparison of Year Ended December 31, 2021 to the Year Ended December 31, 2020

For the comparison of the years ended December 31, 2021 and December 31, 2020, refer to Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations" on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022 under the subheading "Comparison of Year Ended December 31, 2021 to the Year Ended December 31, 2020."

Liquidity and Capital Resources

The following table sets forth the Company’s cash flows for 2019, 20182022, 2021 and 20172020 ($ in thousands):
 For the year ended December 31,
 202220212020
Cash flow provided by (used in):
Operating activities$975,649 $905,259 $803,108 
Investing activities$145,958 $(397,397)$(416,900)
Financing activities$(1,137,564)$(533,265)$(383,261)
  For the year ended December 31,
  2019 2018 2017
Cash flow provided by (used in):      
Operating activities $919,079
 $826,554
 $769,607
Investing activities $(527,691) $(59,893) $(567,940)
Financing activities $(461,689) $(676,392) $(310,843)

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. 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, 2019,2022, Essex owned a 96.6% general partner interest and the limited partners owned the remaining 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 7 and 8 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 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’s working capital needs, acquisitions and developments.

At December 31, 2019,2022, the Company had $70.1$33.3 million of unrestricted cash and cash equivalents and $144.2$112.7 million in marketable securities, of which $71.5 million were equity securities or available for sale debt 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 2023. 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 2020.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, 2019,2022, the Company had $200.0 million of private placement unsecured bonds outstanding at an average interest rate of 4.4% with maturity dates ranging from April 2021 through August 2021.

As of December 31, 2019, the Company had $4.3$5.4 billion of fixed rate public bonds outstanding at an average interest rate of 3.8%3.3% with maturity dates ranging from 20212023 to 2048.2050.
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As of December 31, 2019, 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 unsecured term loan to a fixed rate of 2.3%.

As of December 31, 2019,2022, the Company’s mortgage notes payable totaled $1.0 billion,$593.9 million, net of unamortized premiums and debt issuance costs, which consisted of $0.7 billion$371.8 million in fixed rate debt at an average interest rate of 4.7%3.6% and maturity dates ranging from 20202025 to 2028 and $254.2$222.1 million of tax-exempt variable rate demand notes with a weighted average interest rate of 2.3%3.5%. The tax-exempt variable rate demand notes have maturity dates ranging from 2027 to 2046. $255.4$223.6 million is subject to total return swaps.

As of December 31, 2019,2022, the Company had two unsecured lines of credit aggregating $1.24 billion, including a $1.2 billion unsecured line of credit and a $35.0 million working capital unsecured line of credit. As of December 31, 2019,2022, there was $55.0$40.0 million outstanding on the $1.2 billion unsecured line of credit. The underlying interest rate is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and was LIBORat Adjusted SOFR plus 0.825%0.75% as of December 31, 2019. In2022. This facility is scheduled to mature in January 2020 this line of credit was amended such that the scheduled maturity date was extended to December 20232027, with one 18-month extension,two six-month extensions, exercisable at the Company's option. As of December 31, 2022, there was $12.1 million outstanding on the Company's $35.0 million working capital unsecured line of credit. The underlying interest rate on the amended line is based on a tiered rate structure tied to the Company's credit ratings, and is currently at LIBOR plus 0.825%. As of December 31, 2019, there was no amount outstanding onadjusted for the Company's $35.0 million working capital unsecured line of credit. The interest rate on the line is based on a tiered rate structure tied to the Company's credit ratingssustainability metric grid, and was LIBORat Adjusted SOFR plus 0.825%0.75% as of December 31, 2019 with a2022. This facility is scheduled maturity dateto mature in February 2021.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, 20192022 and 2018.2021.


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 that effectively fixed the interest rate on the $175.0 million of the $350.0 million unsecured term loan at 2.3%. These derivatives qualify for hedge accounting.
 
The Company has four total return swap contracts, with an aggregate notional amount of $255.4$223.6 million, that effectively converts $255.4$223.6 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. The 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 $255.4$223.6 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting.

As of December 31, 2019, the Company had no interest rate caps. As of December 31, 2018, the Company had interest rate caps, which were not accounted for as hedges, totaling a notional amount of $9.9 million that effectively limited the Company’s exposure to interest rate risk by providing a ceiling on the variable interest rate for $9.9 million of the Company’s tax exempt variable rate debt. These interest rate caps matured in December 2019.

As of December 31, 20192022 and 2018,2021, the aggregate carrying value of the interest rate swap contracts waswere an asset of $1.0$5.6 million and $5.8zero, respectively. As of December 31, 2022 and 2021, the swap contracts were presented in the consolidated balance sheets as an asset of $5.6 million and zero, respectively, and iswere included in prepaid expenses and other assets on the consolidated balance sheets, and a liability of $0.2 million and zero, respectively, and is included in other liabilities on the consolidated balance sheets. The aggregate carrying value of the interest rate caps was zero on the balance sheets as of both December 31, 2019 and 2018. The aggregate carrying and fair value of the total return swaps was zero at both December 31, 20192022 and 2018.2021.

Hedge ineffectiveness related to cash flow hedges, which is reported in current year income as interest expense, net was a loss of $0.2 million, a loss of $0.1 million, and a gain of $0.1 million,zero for the years ended December 31, 2019, 2018,2022, 2021, and 2017, respectively.2020.

Issuance of Common Stock

In September 2018, the Company filed a new shelf registration statement with the SEC, allowing the Company to sell an undetermined number or amount of certain equity and debt securities of the Company, as defined in the prospectus contained in the shelf registration statement.

Also in September 2018,2021, the Company entered into the 2021 ATM Program, a new equity 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 (the "2018 ATM Program").million. In connection with the 20182021 ATM Program, the Company may also enter into related forward sale agreements, whereby, at the Company’s discretion, itand may sell shares of its common stock under the 2018 ATM Program under forward salepursuant to these agreements. The use of a forward sale agreement would allow the Company to
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lock in a share price on the sale of shares of its common stock at the time the agreement is executed, but defer receivingreceipt of the proceeds from the sale of shares until a later date. date should the Company elect to settle such forward sale agreement, in whole or in part, in shares of common stock.

The Company anticipates using2021 ATM Program replaced the net proceeds,prior equity distribution agreement entered into in September 2018 (the "2018 ATM Program"), which are contributed towas terminated upon the Operating Partnership, to acquire, develop, or redevelop properties, which primarily will be apartment communities, to make other investments and for working capital or general corporate purposes, which may includeestablishment of the repayment of indebtedness.


2021 ATM Program. For the year ended December 31, 2019, the Company issued 228,271 shares of common stock through the 2018 ATM Program at an average price of $321.56 per share for proceeds of $73.4 million. For the year ended December 31, 2018,2022, the Company did not sell any shares of its common stock through the 20182021 ATM Program or through the previous equity distribution agreement. For the year endedProgram. As of December 31, 2017, the Company issued 345,4442022, there were no outstanding forward purchase agreements, and $900.0 million of shares of common stock through the previous equity distribution agreement at an average price of $260.38 per share for total proceeds of $89.9 million. As of December 31, 2019, $826.6 million of shares remainsremain available to be sold under the 2021 ATM Program. For the years ended December 31, 2021 and 2020, the Company did not issue any shares of its common stock through the 2021 ATM Program or through the 2018 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, 2019,2022, non-revenue generating capital expenditures totaled approximately $1,764$2,670 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 for which the Company expects to be reimbursed. The Company expects that cash from operations and/or its lines of credit will fund such expenditures. 

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, 2019,2022, 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 1,960 apartment homes, with total incurred costs of $1.0 billion, and estimated$102.0 million. Estimated remaining project costs ofare approximately $222.0$25.0 million, $193.0$12.8 million of which represents the Company's estimated remaining costs, for total estimated project costs of $1.3 billion.$127.0 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, 2019, the Company had ownership interests in four major redevelopment communities aggregating 1,327 apartment homes with estimated redevelopment costs of $132.7 million, of which approximately $14.9 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, 2019,2022, the Company had an interest in 806264 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 $0.1 billion,$25.0 million, of which the Company estimates that its remaining investment in these development joint ventures will be approximately $29.5$12.8 million. In addition, the Company had an interest in 10,67210,425 apartment homes in operating communities with joint ventures and other investments for a total book value of $0.7 billion.$491.8 million.

Contractual Obligations and Commercial Commitments

The following table summarizes our obligations at December 31, 2019 ($ in thousands):


  For the Fiscal Years Ending
  2020 
2021 and
2022
 
2023 and
2024
 Thereafter Total
Mortgage notes payable $288,057
 $74,841
 $6,054
 $618,383
 $987,335
Unsecured debt —
 1,150,000
 1,000,000
 2,650,000
 4,800,000
Lines of credit —
 —
 55,000
 —
 55,000
Interest on indebtedness (1)
 209,711
 343,462
 254,353
 622,817
 1,430,343
Ground leases 3,506
 7,012
 7,012
 124,991
 142,521
Operating leases 3,349
 6,753
 6,433
 21,682
 38,217
  $504,623
 $1,582,068
 $1,328,852
 $4,037,873
 $7,453,416

(1)
Interest on indebtedness for variable debt was calculated using interest rates as of December 31, 2019.

We have a commitment, which is not reflected in the table above, to make additional capital contributions to a limited partnership in which we hold an equity interest. The capital contributions may be called by the general partner at any time until September 2022 after giving appropriate notice. As of December 31, 2019, we had committed to make additional capital contributions totaling up to $8.1 million if and when called by the general partner of the limited partnership until September 2022.

Real Estate and Other Commitments

The following table summarizes the Company's unfunded real estate commitmentand other future commitments at December 31, 20192022 ($ in thousands):

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  Number of Properties Investment Remaining Commitment
Joint ventures:      
Preferred equity investments 7
 $166,500
 $20,300
Real estate under development (1)
 2
 245,825
 29,500
       
Consolidated:      
Real estate under development 5
 557,415
 162,900
  

 $969,740
 $212,700
Number of PropertiesInvestmentRemaining Commitment
Joint ventures (1):
Preferred equity investments2 $98,000 $38,000 
Non-core co-investments— 87,000 50,120 
Consolidated:
Mezzanine loans2 82,110 60,932 
 $267,110 $149,052 

(1)
(1) Excludes approximately $12.8 million of the Company's share of estimated project costs for LIVIA (fka Scripps Mesa Apartments) which have been fully funded.

At December 31, 2022, the Company had operating lease commitments of $162.1 million for ground, building and garage leases with maturity dates ranging from 2025 to 2083. $7.0 million of this commitment is due within the next twelve months.

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.

Variable Interest Entities

In accordance with accounting standards for consolidation of variable interest entities ("VIEs"), the Company consolidatesconsolidated the Operating Partnership, 1718 DownREIT entities (comprising nine communities) and six co-investments as of December 31, 2019. As of December 31, 2018, the Company consolidated the Operating Partnership, 16 DownREIT entities (comprising eight communities),2022 and eight co-investments.2021. The Company consolidates these entities because it is deemed the primary beneficiary. Essex has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the above consolidated co-investments and DownREIT entities, net of intercompany eliminations, were approximately $1.0 billion$939.4 million and $364.3$324.3 million, respectively, as of December 31, 2019,2022, and $849.8$909.3 million and $261.7$320.1 million, respectively, as of December 31, 2018.2021. Noncontrolling interests in these entities were $122.5$121.5 million and $64.5$122.4 million as of December 31, 20192022 and 2018,2021, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of December 31, 2019,2022, 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.

Critical Accounting Policies and 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. The Company defines critical accounting policiesestimates as those accounting policiesestimates 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 the acquisition of investments in real estate (specifically, the allocation between land and buildings)buildings during the year ended December 31, 2020); and (ii) evaluation of events and 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 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 the capitalization of acquisition costs, and the allocation of purchase price to the assets acquired and liabilities assumed based on the relative fair value of the respective assets and liabilities.

In making estimates of relative fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent land 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 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 allocation of the value between land and
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building was a critical accounting estimate during the year ended December 31, 2020 as result of the potential material impact of the Company's acquisition of a land parcel and six communities for a total purchase price of $463.4 million.

The Company periodically assesses the carrying value of its real estate investments for 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 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. 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 the 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. 

WhenChanges in operating and market conditions may result in a change of our intent to hold the Company determines that a property is held for sale, it discontinuesthrough the periodic depreciationend of that property. The criteria for determining when a property is held for sale requires judgmentits useful life and has potential financial statementmay 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 lowerassumptions utilized to determine the future cash flows of the carrying amount or estimated fair value less costs to sell.real estate investment.

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.

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 excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), 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
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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.

The table below is a reconciliation of net income available to common stockholders to FFO and Core FFO for the years ended December 31, 2022, 2021, and 2020.

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 As of and for the years ended December 31,
 202220212020
 ($ in thousands, except per share amounts)
OTHER DATA:
Funds from operations attributable to common stockholders and unitholders:
Net income available to common stockholders$408,315 $488,554 $568,870 
Adjustments:
Depreciation and amortization539,319 520,066 525,497 
Gains not included in FFO attributable to common stockholders and unitholders(111,839)(145,253)(301,886)
Impairment loss from unconsolidated co-investments2,105 — 1,825 
Depreciation and amortization from unconsolidated co-investments72,585 61,059 51,594 
Noncontrolling interest related to Operating Partnership units14,297 17,191 19,912 
Depreciation attributable to third party ownership and other (1)
(1,421)(571)(539)
Funds from operations attributable to common stockholders and unitholders$923,361 $941,046 $865,273 
Non-core items:   
Expensed acquisition and investment related costs2,132 203 1,591 
Deferred tax (benefit) expense on unconsolidated co-investments (2)
(10,236)15,668 1,531 
Gain on sale of marketable securities(12,436)(3,400)(2,131)
Change in unrealized losses (gains) on marketable securities, net57,983 (33,104)(12,515)
Provision for credit losses(381)141 687 
Equity loss (income) from non-core co-investments (3)
38,045 (55,602)(5,289)
  Loss on early retirement of debt, net2 19,010 22,883 
Loss (gain) on early retirement of debt from unconsolidated co-investment988 25 (38)
Co-investment promote income(17,076)— (6,455)
Income from early redemption of preferred equity investments and notes receivable(1,669)(8,469)(210)
Accelerated interest income from maturity of investment in mortgage backed security— — (11,753)
General and administrative and other, net2,536 1,026 14,958 
Insurance reimbursements, legal settlements, and other, net(5,392)(35,234)(81)
Core funds from operations attributable to common stockholders and unitholders$977,857 $841,310 $868,451 
Weighted average number of shares outstanding, diluted (FFO) (4)
67,375 67,335 67,726 
Funds from operations attributable to common stockholders and unitholders per share - diluted$13.70 $13.98 $12.78 
Core funds from operations attributable to common stockholders and unitholders per share - diluted$14.51 $12.49 $12.82 

(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, 2022 was $3.3 million.
(2)Represents deferred tax (benefit) expense related to net unrealized gains or losses on technology co-investments.
(3)Represents the Company's share of co-investment loss (income) 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") and Same-Property NOI are considered by management to be important supplemental performance measures 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 revenues 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):

 202220212020
Earnings from operations$595,229 $529,995 $491,441 
Adjustments:   
Corporate-level property management expenses40,704 36,211 34,361 
Depreciation and amortization539,319 520,066 525,497 
Management and other fees from affiliates(11,139)(9,138)(9,598)
General and administrative56,577 51,838 65,388 
Expensed acquisition and investment related costs2,132 203 1,591 
Impairment loss— — 1,825 
Gain on sale of real estate and land(94,416)(142,993)(64,967)
NOI1,128,406 986,182 1,045,538 
Less: Non Same-Property NOI(76,027)(56,267)(89,865)
Same-Property NOI$1,052,379 $929,915 $955,673 

 2019 2018 2017
Earnings from operations$481,112
 $511,989
 $472,945
Adjustments: 
  
  
Corporate-level property management expenses32,899
 31,062
 30,156
Depreciation and amortization483,750
 479,884
 468,881
Management and other fees from affiliates(9,527) (9,183) (9,574)
General and administrative54,262
 53,451
 41,385
Expensed acquisition and investment related costs168
 194
 1,569
Impairment loss7,105
 —
 —
(Gain) Loss on sale of real estate and land3,164
 (61,861) (26,423)
NOI1,052,933
 1,005,536
 978,939
Less: Non Same-Property NOI(63,492) (53,044) (55,389)
Same-Property NOI$989,441
 $952,492
 $923,550

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 (the Securities Act") and Section 21E of the Exchange Act, 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," "intends," "plans," "projects," "believes," "seeks," "future," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, among other things, statements regarding the Company's expectations related to the continued evolution of the work-from-home trend in light of the COVID-19 pandemic, the Company's intent, beliefs or expectations with respect to the timing of completion of current development and redevelopment projects and the stabilization of such projects, the 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, co-investment activities, qualification as a REIT under the Internal Revenue Code 2020of 1986, as amended, 2022 Same-Property revenue and operating expenses generally and in specific regions, 2020 Same-Property operating expenses, 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, its financing activities and the use of proceeds from such 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 and ongoing hostilities between Russia and Ukraine, 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.

While 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, 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. Factors that might
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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, the following: potential future outbreaks of infectious diseases or other health concerns, which could adversely affect the Company's business 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; 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 increaseduncertainties regarding ongoing hostilities between Russia and Ukraine and the related impacts on macroeconomic conditions, including, among other things, interest rates and operating costs;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; there may be a downturn in general economic conditions, the real estate industry and the markets in which the Company's communities are located; changes in laws or regulations; the terms of any refinancing may not be as favorable as the terms of existing indebtedness; 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;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 the date hereof, and the Company assumes no obligation to update or supplement this 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, 2019,2022, 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 unsecured term debt.loan that had not been drawn and had a balance of zero. As of December 31, 2019,2022, the Company also had $255.4$223.6 million of secured variable rate indebtedness. All of theThe Company’s interest rate swaps areswap is designated as a cash flow hedgeshedge as of December 31, 2019.2022. 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, 2019.2022. 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, 2019.2022.

 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$5,556 $10,107 $851 
Total cash flow hedges$300,000 2026$5,556 $10,107 $851 
      Carrying and Estimated Carrying Value
    Maturity Estimated + 50 - 50
($ in thousands)
 Notional Amount Date Range Fair Value Basis Points Basis Points
Cash flow hedges:        
  
Interest rate swaps $175,000
 2022 $794
 $2,556
 $989
Total cash flow hedges $175,000
 2022 $794
 $2,556
 $989

Additionally, the Company has entered into total return swap contracts, with an aggregate notional amount of $255.4$223.6 million that effectively convert $255.4$223.6 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, 2019.2022. The Company is exposed to insignificant interest rate risk on these 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.

Interest Rate Sensitive Liabilities

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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 the fair value of the Company’s $5.2$5.7 billion of fixed rate debt at December 31, 2019,2022, to be $5.4$5.2 billion. Management has estimated the fair value of the Company’s $660.4$275.7 million of variable rate debt at December 31, 2019,2022, to be $655.8$273.2 million based on the terms of existing mortgage notes payable and variable rate demand notes compared to those available in the marketplace. The following table represents scheduled principal payments ($ in thousands):

 For the Years Ended December 31,
 ($ in thousands, except for interest rates)2020 2021 2022 2023 2024 ThereafterTotal Fair value
Fixed rate debt 
$287,405 $530,940 $342,408 $602,093 $402,177 $3,016,884$5,181,907 $5,410,106
Average interest rate5.8% 4.3% 3.7% 3.7% 4.0% 3.7%   
Variable rate debt (1)
$652 $713 $405,780 $852 $932 $251,499$660,428 $655,849
Average interest rate2.4% 2.4% 2.7% 2.4% 2.4% 2.3%   
 For the Years Ended December 31,
 ($ in thousands, except for interest rates)20232024202520262027ThereafterTotalFair value
Fixed rate debt
$302,093 $402,177 $632,035 $548,291 $419,558 $3,417,000 $5,721,154 $5,195,981 
Average interest rate3.4 %4.0 %3.5 %3.5 %3.8 %3.0 %  
Variable rate debt (1)
$852 $13,005 $1,019 $1,114 $84,397 $175,269 $275,656 $273,160 
Average interest rate3.6 %4.3 %3.6 %3.6 %3.4 %3.7 %  
 
(1)
(1)$223.6 million of variable rate debt is tax exempt to the note holders.

$175.0 million is subject to interest rate protection agreements ($175.0 million is subject to interest rate swaps). $255.4 million is subject to total return swaps.

The table incorporates only those exposures that exist as of December 31, 2019;2022; 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, 2019,2022, 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, 2019,2022, 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, 2019,2022, 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, 2019.2022. In making this assessment, Essex’s management used the criteria set forth in the report entitled "Internal Control-Integrated Framework (2013)" published by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Essex’s management has concluded that, as of December 31, 2019,2022, 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, 2019,2022, 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, 2019,2022, 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, 2019,2022, 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, 2019.2022. In making this assessment, the Operating Partnership’s management used the criteria set forth in the report entitled "Internal Control-Integrated Framework (2013)" published by COSO. The Operating Partnership’s management has concluded that, as of December 31, 2019,2022, its internal control over financial reporting was effective based on these criteria.


Item 9B. Other Information
NoneNone.


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 20202023 Annual Meeting of Stockholders, under the heading "Board and Corporate Governance Matters," to be filed with the SEC within 120 days of December 31, 2019.2022.

Item 11. Executive Compensation
 
The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 20202023 Annual Meeting of Stockholders, under the headings "Executive Compensation" and "Director Compensation," to be filed with the SEC within 120 days of December 31, 2019.2022.

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 20202023 Annual Meeting of Stockholders, under the heading "Security Ownership of Certain Beneficial Owners and Management," to be filed with the SEC within 120 days of December 31, 2019.2022.
 
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 20202023 Annual Meeting of Stockholders, under the heading "Certain Relationships and Related Persons Transactions," to be filed with the SEC within 120 days of December 31, 2019.2022.

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 20202023 Annual Meeting of Stockholders, under the headings "Report of the Audit Committee" and "Fees Paid to KPMG LLP," to be filed with the SEC within 120 days of December 31, 2019.2022.


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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, 20192022 and 20182021
F-6
Consolidated Statements of Income: Years ended December 31, 2019, 2018,2022, 2021, and 20172020
F-7
Consolidated Statements of Comprehensive Income: Years ended December 31, 2019, 2018,2022, 2021, and 20172020
F-8
Consolidated Statements of Equity: Years ended December 31, 2019, 2018,2022, 2021, and 20172020
F-9
Consolidated Statements of Cash Flows: Years ended December 31, 2019, 2018,2022, 2021, and 20172020
F-11
Notes to Consolidated Financial Statements
F-20
(2)   Consolidated Financial Statements of Essex Portfolio, L.P.
Report of Independent Registered Public Accounting Firm
F-4
Consolidated Balance Sheets: As of December 31, 20192022 and 20182021
F-13
Consolidated Statements of Income: Years ended December 31, 2019, 2018,2022, 2021, and 20172020
F-14
Consolidated Statements of Comprehensive Income: Years ended December 31, 2019, 2018,2022, 2021, and 20172020
F-15
Consolidated Statements of Capital: Years ended December 31, 2019, 2018,2022, 2021, and 20172020
F-16
Consolidated Statements of Cash Flows: Years ended December 31, 2019, 2018,2022, 2021, and 20172020
F-18
Notes to Consolidated Financial Statements
F-20
(3)  Financial Statement Schedule – Schedule III – Real Estate and Accumulated Depreciation as of December 31, 20192022
F- 5657
(4)   See the Exhibit Index immediately preceding 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 Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Essex Property Trust, Inc.Inc and subsidiaries (the Company) as of December 31, 20192022 and 2018,2021, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three‑yearthree-year period ended December 31, 2019,2022, and the related notes and financial statement schedule III(collectively, (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, 20192022 and 2018,2021, and the results of its operations and its cash flows for each of the years in the three‑yearthree-year period ended December 31, 2019,2022, 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, 2019,2022, 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 20, 202023, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842) and Accounting Standards Update No. 2018-11, Leases (Topic 842): Targeted Improvements.
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for the derecognition of nonfinancial assets as of January 1, 2018 due to the adoption of the Accounting Standard Codification Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets.
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 MattersMatter

The critical audit mattersmatter communicated below are mattersis a matter arising from the current period audit of the consolidated financial statements that werewas communicated or required to be communicated to the audit committee and that: (1) relaterelates 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 mattersmatter 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 mattersmatter below, providing a separate opinionsopinion on the critical audit mattersmatter or on the accounts or disclosures to which they relate.it relates.

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

As discussed in Note 2 to the consolidated financial statements, the Company had $10.3 billion in rental properties as of December 31, 2019. 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 not be fully recoverable.impaired. The Company had $10.8 billion in rental properties as of December 31, 2022.


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



F- 1
Table of Contents
The following are the primary procedures we performed to address this critical audit matter includedmatter. We evaluated the following. Wedesign and tested the operating effectiveness of certain internal controls over the Company’s process to evaluate events or changes in circumstances that would indicate rental properties may be impaired includingimpaired. This included controls over the process for determining the expectedlength of the period the Company willexpects to receive cash flows from the rental property. We evaluated the Company’s assessment by 1)(1) inquiring with the Company about events or changes in circumstances considered by the Company, 2)(2) considering certain factors related to the current economic environment, and 3)(3) reading board of director’s minutes and external communications with investors and analysts. In addition, we visited and inspected certain rental property sites to observe the property conditions and inquired of property management personnel regarding events or changes in circumstances that indicate the rental properties may be impaired.
Evaluation of the value allocated to land and buildings in certain asset acquisitions
As discussed in Notes 2 and 3 to the consolidated financial statements, the Company acquired $373.3 million of real estate properties recorded as asset acquisitions for the year ended December 31, 2019. In asset acquisitions, the Company determines the value allocated to land and buildings using their relative estimated fair values.
We identified the evaluation of the value allocated to land and buildings in certain asset acquisitions as a critical audit matter. There was a high degree of subjective and complex auditor judgment in evaluating the fair value amounts used in the allocation of the purchase price to land and building. Specifically, the relevance and reliability of market information including comparable land sales identified and replacement costs used to determine the building value.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Company’s land and building value estimation process in asset acquisitions including controls over the identification of publicly available and comparable land sales and key inputs used to estimate the replacement cost of the building. For certain asset acquisitions, with the assistance of valuation professionals with specialized skills and knowledge, we 1) compared the Company’s determination of the fair value of land to independently developed ranges of estimates based on publicly available land sales, and 2) compared the key inputs in the Company’s replacement building cost value to ranges of estimates of market data such as industry guides used for developing replacement building values.

/s/ KPMG LLP

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

San Francisco, California
February 20, 202023, 2023
F- 2
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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, 2019,2022, based on criteria established inInternal 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, 2019,2022, 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, 20192022 and 2018,2021, 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, 2019,2022, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 20, 202023, 2023 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.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

San Francisco, California
February 20, 202023, 2023
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Report of Independent Registered Public Accounting Firm

To the 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, 20192022 and 2018,2021, 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, 2019,2022, 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, 20192022 and 2018,2021, and the results of its operations and its cash flows for each of the years in the three‑yearthree-year period ended December 31, 2019,2022, in conformity with U.S. generally accepted accounting principles.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Operating Partnership has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842) and Accounting Standards Update No. 2018-11, Leases (Topic 842): Targeted Improvements.
As discussed in Note 2 to the consolidated financial statements, the Operating Partnership has changed its method of accounting for the derecognition of nonfinancial assets as of January 1, 2018 due to the adoption of the Accounting Standard Codification Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets.
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 MattersMatter

The critical audit mattersmatter communicated below are mattersis a matter arising from the current period audit of the consolidated financial statements that werewas communicated or required to be communicated to the audit committee and that: (1) relaterelates 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 mattersmatter 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 mattersmatter below, providing a separate opinionsopinion on the critical audit mattersmatter or on the accounts or disclosures to which they relate.it relates.

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

As discussed in Note 2 to the consolidated financial statements, the Operating Partnership had $10.3 billion in rental properties as of December 31, 2019. 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 not be fully recoverable.impaired. The Operating Partnership had $10.8 billion in rental properties as of December 31, 2022.


We identified the evaluation of events or changes in circumstances that indicate rental properties may be impaired as a critical audit matter. Specifically, a high degree of subjective and complex auditor judgment was required to evaluate the intent regardinglength of the expected period the Operating Partnership willexpects to receive cash flows from the rental property. Changes to shorten the expected period the Operating Partnership willexpects 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 includedmatter. We evaluated the following. Wedesign and tested the operating effectiveness of certain internal controls over the Operating Partnership’s process to evaluate events or changes in circumstances that would indicate rental properties may be impaired includingimpaired. This included controls over the process for determining the expectedlength of the period the Operating Partnership willexpects to receive cash flows from the rental property. We evaluated the Operating Partnership’s assessment by 1)(1) inquiring with the Operating Partnership about events or changes in circumstances considered by the Operating Partnership, 2)(2) considering certain factors related to the current economic environment, and 3)(3) reading board of director’s minutes and external communications with investors and analysts. In addition, we visited and inspected certain rental property sites to observe the property conditions and inquired of property management personnel regarding events or changes in circumstances that indicate the rental properties may be impaired.
Evaluation of the value allocated to land and buildings in certain asset acquisitions
As discussed in Notes 2 and 3 to the consolidated financial statements, the Operating Partnership acquired $373.3 million of real estate properties recorded as asset acquisitions for the year ended December 31, 2019. In asset acquisitions, the Operating Partnership determines the value allocated to land and buildings using their relative estimated fair values.
We identified the evaluation of the value allocated to land and buildings in certain asset acquisitions as a critical audit matter. There was a high degree of subjective and complex auditor judgment in evaluating the fair value amounts used in the allocation of the purchase price to land and building. Specifically, the relevance and reliability of market information including comparable land sales identified and replacement costs used to determine the building value.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over the Operating Partnership’s land and building value estimation process in asset acquisitions including controls over the identification of publicly available and comparable land sales and key inputs used to estimate the replacement cost of the building. For certain asset acquisitions, with the assistance of valuation professionals with specialized skills and knowledge, we 1) compared the Operating Partnership’s determination of the fair value of land to independently developed ranges of estimates based on publicly available land sales, and 2) compared the key inputs in the Operating Partnership’s replacement building cost value to ranges of estimates of market data such as industry guides used for developing replacement building values.

/s/ KPMG LLP

We have served as the Operating Partnership's auditor since 2013.

San Francisco, California
February 20, 202023, 2023
F- 5
Table of Contents

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 20192022 and 20182021
(Dollars in thousands, except share amounts)  
 20222021
ASSETS
Real estate:
Rental properties:
Land and land improvements$3,043,321 $3,032,678 
Buildings and improvements12,922,906 12,597,249 
 15,966,227 15,629,927 
Less: accumulated depreciation(5,152,133)(4,646,854)
 10,814,094 10,983,073 
Real estate under development24,857 111,562 
Co-investments1,127,491 1,177,802 
 11,966,442 12,272,437 
Cash and cash equivalents-unrestricted33,295 48,420 
Cash and cash equivalents-restricted9,386 10,218 
Marketable securities, net of allowance for credit losses of zero as of both December 31, 2022 and December 31, 2021112,743 191,829 
Notes and other receivables, net of allowance for credit losses of $0.3 million and $0.8 million as of December 31, 2022 and December 31, 2021 (includes related party receivables of $7.0 million and $176.9 million as of December 31, 2022 and December 31, 2021, respectively)103,045 341,033 
Operating lease right-of-use assets67,239 68,972 
Prepaid expenses and other assets80,755 64,964 
Total assets$12,372,905 $12,997,873 
LIABILITIES AND EQUITY
Unsecured debt, net$5,312,168 $5,307,196 
Mortgage notes payable, net593,943 638,957 
Lines of credit52,073 341,257 
Accounts payable and accrued liabilities165,461 180,751 
Construction payable23,159 29,136 
Dividends payable149,166 143,213 
Distributions in excess of investments in co-investments42,532 35,545 
Operating lease liabilities68,696 70,675 
Other liabilities43,441 39,969 
Total liabilities6,450,639 6,786,699 
Commitments and contingencies
Redeemable noncontrolling interest27,150 34,666 
Equity:  
Common stock; $0.0001 par value, 670,000,000 shares authorized; 64,604,603 and 65,248,393 shares issued and outstanding, respectively6 7 
Additional paid-in capital6,750,076 6,915,981 
Distributions in excess of accumulated earnings(1,080,176)(916,833)
Accumulated other comprehensive income (loss), net46,466 (5,552)
Total stockholders' equity5,716,372 5,993,603 
Noncontrolling interest178,744 182,905 
Total equity5,895,116 6,176,508 
Total liabilities and equity$12,372,905 $12,997,873 
 2019 2018
ASSETS
Real estate:   
Rental properties:   
Land and land improvements$2,773,805
 $2,701,356
Buildings and improvements11,264,337
 10,664,745
 14,038,142
 13,366,101
Less: accumulated depreciation(3,689,482) (3,209,548)
 10,348,660
 10,156,553
Real estate under development546,075
 454,629
Co-investments1,335,339
 1,300,140
 12,230,074
 11,911,322
Cash and cash equivalents-unrestricted70,087
 134,465
Cash and cash equivalents-restricted11,007
 16,930
Marketable securities144,193
 209,545
Notes and other receivables (includes related party receivables of $90.2 million and
$11.1 million as of December 31, 2019 and December 31, 2018, respectively)		134,365
 71,895
Operating lease right-of-use assets74,744
 —
Prepaid expenses and other assets40,935
 39,439
Total assets$12,705,405
 $12,383,596
LIABILITIES AND EQUITY
Unsecured debt, net$4,763,206
 $3,799,316
Mortgage notes payable, net990,667
 1,806,626
Lines of credit55,000
 —
Accounts payable and accrued liabilities158,017
 127,086
Construction payable48,912
 59,345
Dividends payable135,384
 128,529
Operating lease liabilities76,740
 —
Other liabilities36,565
 33,375
Total liabilities6,264,491
 5,954,277
Commitments and contingencies


 


Redeemable noncontrolling interest37,410
 35,475
Equity: 
  
Common stock; $.0001 par value, 670,000,000 shares authorized; 66,091,954 and 65,890,322 shares issued and outstanding, respectively7
 7
Additional paid-in capital7,121,927
 7,093,079
Distributions in excess of accumulated earnings(887,619) (812,796)
Accumulated other comprehensive loss, net(13,888) (13,217)
Total stockholders' equity6,220,427
 6,267,073
Noncontrolling interest183,077
 126,771
Total equity6,403,504
 6,393,844
Total liabilities and equity$12,705,405
 $12,383,596

See accompanying notes to consolidated financial statements.

F- 6
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 2019, 20182022, 2021 and 20172020
(Dollars in thousands, except per share and share amounts)
 202220212020
Revenues:
Rental and other property$1,595,675 $1,431,418 $1,486,150 
Management and other fees from affiliates11,139 9,138 9,598 
 1,606,814 1,440,556 1,495,748 
Expenses:   
Property operating, excluding real estate taxes283,351 264,869 263,601 
Real estate taxes183,918 180,367 177,011 
Corporate-level property management expenses40,704 36,211 34,361 
Depreciation and amortization539,319 520,066 525,497 
General and administrative56,577 51,838 65,388 
Expensed acquisition and investment related costs2,132 203 1,591 
Impairment loss— — 1,825 
 1,106,001 1,053,554 1,069,274 
Gain on sale of real estate and land94,416 142,993 64,967 
Earnings from operations595,229 529,995 491,441 
Interest expense(204,798)(203,125)(220,633)
Total return swap income7,907 10,774 10,733 
Interest and other (loss) income(19,040)98,744 40,999 
Equity income from co-investments26,030 111,721 66,512 
Deferred tax benefit (expense) on unconsolidated co-investments10,236 (15,668)(1,531)
Loss on early retirement of debt, net(2)(19,010)(22,883)
Gain on remeasurement of co-investment17,423 2,260 234,694 
Net income432,985 515,691 599,332 
Net income attributable to noncontrolling interest(24,670)(27,137)(30,462)
Net income available to common stockholders$408,315 $488,554 $568,870 
Per share data:   
Basic:   
Net income available to common stockholders$6.27 $7.51 $8.69 
Weighted average number of shares outstanding during the year65,079,764 65,051,465 65,454,057 
Diluted:   
Net income available to common stockholders$6.27 $7.51 $8.69 
Weighted average number of shares outstanding during the year65,098,186 65,088,874 65,564,982 
 2019 2018 2017
Revenues:     
Rental and other property$1,450,628
 $1,390,870
 $1,354,325
Management and other fees from affiliates9,527
 9,183
 9,574
 1,460,155
 1,400,053
 1,363,899
Expenses: 
  
  
Property operating, excluding real estate taxes242,525
 233,764
 229,076
Real estate taxes155,170
 151,570
 146,310
Corporate-level property management expenses32,899
 31,062
 30,156
Depreciation and amortization483,750
 479,884
 468,881
General and administrative54,262
 53,451
 41,385
Expensed acquisition and investment related costs168
 194
 1,569
Impairment loss7,105
 —
 —
 975,879
 949,925
 917,377
Gain (loss) on sale of real estate and land(3,164) 61,861
 26,423
Earnings from operations481,112
 511,989
 472,945
Interest expense(217,339) (220,492) (222,894)
Total return swap income8,446
 8,707
 10,098
Interest and other income46,298
 23,010
 24,604
Equity income from co-investments112,136
 89,132
 86,445
Deferred tax expense on unrealized gain on unconsolidated co-investment(1,457) —
 —
Gain (loss) on early retirement of debt, net3,717
 —
 (1,796)
Gain on remeasurement of co-investment31,535
 1,253
 88,641
Net income464,448
 413,599
 458,043
Net income attributable to noncontrolling interest(25,162) (23,446) (24,984)
Net income available to common stockholders$439,286
 $390,153
 $433,059
Per share data: 
  
  
Basic: 
  
  
Net income available to common stockholders$6.67
 $5.91
 $6.58
Weighted average number of shares outstanding during the year65,840,422
 66,041,058
 65,829,155
Diluted: 
  
  
Net income available to common stockholders$6.66
 $5.90
 $6.57
Weighted average number of shares outstanding during the year65,939,455
 66,085,089
 65,898,255

See accompanying notes to consolidated financial statements.

F- 7
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
Years ended December 31, 2019, 20182022, 2021 and 20172020
(Dollars in thousands)
 202220212020
Net income$432,985 $515,691 $599,332 
Other comprehensive income (loss):   
Change in fair value of derivatives and amortization of swap settlements54,158 9,170 (4,148)
Cash flow hedge losses reclassified to earnings— — 3,338 
Change in fair value of marketable debt securities, net233 329 (61)
Reversal of unrealized gains upon the sale of marketable debt securities(577)— — 
Total other comprehensive income (loss)53,814 9,499 (871)
Comprehensive income486,799 525,190 598,461 
Comprehensive income attributable to noncontrolling interest(26,466)(27,459)(30,432)
Comprehensive income attributable to controlling interest$460,333 $497,731 $568,029 
 2019 2018 2017
Net income$464,448
 $413,599
 $458,043
Other comprehensive income (loss): 
  
  
Change in fair value of derivatives and amortization of swap settlements(2,948) 7,824
 12,744
Cash flow hedge losses reclassified to earnings1,824
 —
 —
Change in fair value of marketable debt securities, net281
 (118) 3,284
Reversal of unrealized (gains) losses upon the sale of marketable debt securities(32) 13
 (1,909)
Total other comprehensive income (loss)(875) 7,719
 14,119
Comprehensive income463,573
 421,318
 472,162
Comprehensive income attributable to noncontrolling interest(25,133) (23,702) (25,451)
Comprehensive income attributable to controlling interest$438,440
 $397,616
 $446,711

See accompanying notes to consolidated financial statements.

F- 8
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statements of Equity
Years ended December 31, 2019, 20182022, 2021 and 20172020
(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, 201966,092 $7 $7,121,927 $(887,619)$(13,888)$183,077 $6,403,504 
Net income— — — 568,870 — 30,462 599,332 
Cash flow hedge losses reclassified to earnings— — — — 3,225 113 3,338 
Change in fair value of derivatives and amortization of swap settlements— — — — (4,007)(141)(4,148)
Change in fair value of marketable debt securities, net— — — — (59)(2)(61)
Issuance of common stock under:
Stock option and restricted stock plans, net95 — 9,201 — — — 9,201 
Sale of common stock, net— — (296)— — — (296)
Equity based compensation costs— — 12,453 — — 460 12,913 
Retirement of common stock, net(1,197)(1)(269,314)— — — (269,315)
Cumulative effect upon adoption of ASU No. 2016-13— — — (190)— — (190)
Changes in the redemption value of redeemable noncontrolling interest— — 4,375 — — (76)4,299 
Changes in noncontrolling interest from acquisition— — — — — 1,349 1,349 
Distributions to noncontrolling interest— — — — — (31,367)(31,367)
Redemptions of noncontrolling interest9 — (2,020)— — (1,093)(3,113)
Common stock dividends ($8.31 per share)— — — (542,254)— — (542,254)
Balances at December 31, 202064,999 $6 $6,876,326 $(861,193)$(14,729)$182,782 $6,183,192 
Net income488,554 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)
F- 9
Common stock 
Additional
paid-in
 
Distributions
in excess of
accumulated
 
Accumulated
other
comprehensive
 Noncontrolling  
Shares Amount capital earnings loss, net Interest Total
Balances at December 31, 201665,528
 $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, net179
 —
 26,635
 —
 —
 —
 26,635
Sale of common stock, net345
 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)Changes in the redemption value of redeemable noncontrolling interest— — (7,489)— — 599 (6,890)
Changes in noncontrolling interest from acquisition—
 —
 —
 —
 —
 22,506
 22,506
Contributions from noncontrolling interestContributions from noncontrolling interest— — — — — 1,900 1,900 
Distributions to noncontrolling interest—
 —
 —
 —
 —
 (27,051) (27,051)Distributions to noncontrolling interest— — — — — (29,341)(29,341)
Redemptions of noncontrolling interest2
 —
 (25,190) —
 —
 (3,390) (28,580)Redemptions of noncontrolling interest10 — (7,566)— — (891)(8,457)
Common stock dividends ($7.00 per share)—
 —
 —
 (461,376) —
 —
 (461,376)
Balances at December 31, 201766,054
 $7
 $7,129,571
 $(833,726) $(18,446) $119,419
 $6,396,825
Common stock dividends ($8.36 per share)Common stock dividends ($8.36 per share)— — — (544,194)— — (544,194)
Balances at December 31, 2021Balances at December 31, 202165,248 $7 $6,915,981 $(916,833)$(5,552)$182,905 $6,176,508 
Net income—
 —
 —
 390,153
 —
 23,446
 413,599
Net income— — — 408,315 — 24,670 432,985 
Reversal of unrealized losses upon the sale of marketable securities—
 —
 —
 —
 13
 —
 13
Reversal of unrealized gains upon the sale of marketable debt securitiesReversal of unrealized gains upon the sale of marketable debt securities— — — — (557)(20)(577)
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 7,564
 260
 7,824
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—
 —
 —
 —
 (114) (4) (118)Change in fair value of marketable debt securities, net— — — — 224 9 233 
Issuance of common stock under:             Issuance of common stock under:
Stock option and restricted stock plans, net41
 —
 6,213
 —
 —
 —
 6,213
Stock option and restricted stock plans, net89 — 17,309 — — — 17,309 
Sale of common stock, net—
 —
 (919) —
 —
 —
 (919)Sale of common stock, net— — (314)— — — (314)
Equity based compensation costs—
 —
 11,651
 —
 —
 1,200
 12,851
Equity based compensation costs— — 11,059 — — 387 11,446 
Retirement of common stock, net(210) —
 (51,233) —
 —
 —
 (51,233)Retirement of common stock, net(740)(1)(189,725)— — — (189,726)
Changes in the redemption value of redeemable noncontrolling interestChanges in the redemption value of redeemable noncontrolling interest— — 6,230 — — 808 7,038 
Contributions from noncontrolling interestContributions from noncontrolling interest— — — — — 125 125 
Distributions to noncontrolling interestDistributions to noncontrolling interest— — — — — (30,959)(30,959)
Redemptions of noncontrolling interestRedemptions of noncontrolling interest8 — (10,464)— — (988)(11,452)
Common stock dividends ($8.80 per share)Common stock dividends ($8.80 per share)— — — (571,658)— (571,658)
Balances at December 31, 2022Balances at December 31, 202264,605 $6 $6,750,076 $(1,080,176)$46,466 $178,744 $5,895,116 

Cumulative effect upon adoption of ASU No. 2016-01—
 —
 —
 2,234
 (2,234) —
 —
Cumulative effect upon adoption of ASU No. 2017-05—
 —
 —
 119,651
 —
 4,057
 123,708
Changes in the redemption value of redeemable noncontrolling interest—
 —
 (1,143) —
 —
 (21) (1,164)
Changes in noncontrolling interest from acquisition—
 —
 —
 —
 —
 7,919
 7,919
Distributions to noncontrolling interest—
 —
 —
 —
 —
 (29,233) (29,233)
Redemptions of noncontrolling interest5
 —
 (1,061) —
 —
 (272) (1,333)
Common stock dividends ($7.44 per share)—
 —
 —
 (491,108) —
 —
 (491,108)
Balances at December 31, 201865,890
 $7
 $7,093,079
 $(812,796) $(13,217) $126,771
 $6,393,844
Net income—
 —
 —
 439,286
 —
 25,162
 464,448
Reversal of unrealized gains upon the sale of marketable debt securities—
 —
 —
 —
 (31) (1) (32)
Cash flow hedge losses reclassified to earnings—
 —
 —
 —
 1,762
 62
 1,824
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 (2,849) (99) (2,948)
Change in fair value of marketable debt securities, net—
 —
 —
 —
 272
 9
 281
Issuance of common stock under:             
Stock option and restricted stock plans, net195
 —
 33,779
 —
 —
 —
 33,779
Sale of common stock, net228
 —
 72,539
 —
 —
 —
 72,539
Equity based compensation costs—
 —
 11,029
 —
 —
 1,254
 12,283
Retirement of common stock, net(234) —
 (56,989) —
 —
 —
 (56,989)
Cumulative effect upon adoption of ASU No. 2017-12—
 —
 —
 —
 175
 6
 181
Changes in the redemption value of redeemable noncontrolling interest—
 —
 (3,427) —
 —
 1,419
 (2,008)
Changes in noncontrolling interest from acquisition—
 —
 —
 —
 —
 65,472
 65,472
Distributions to noncontrolling interest—
 —
 —
 —
 —
 (28,493) (28,493)
Redemptions of noncontrolling interest13
 —
 (28,083) —
 —
 (8,485) (36,568)
Common stock dividends ($7.80 per share)—
 —
 —
 (514,109) —
 —
 (514,109)
Balances at December 31, 201966,092
 $7
 $7,121,927
 $(887,619) $(13,888) $183,077
 $6,403,504

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, 2019, 20182022, 2021 and 20172020
(Dollars in thousands)
 202220212020
Cash flows from operating activities:
Net income$432,985 $515,691 $599,332 
Adjustments to reconcile net income to net cash provided by operating activities:   
Straight-lined rents3,330 9,672 (19,426)
Depreciation and amortization539,319 520,066 525,497 
Amortization of discount on marketable securities— — (19,075)
Amortization of discount and debt financing costs, net6,712 9,538 6,674 
Gain on sale of marketable securities(12,436)(3,400)(2,131)
Income from early redemption of notes receivable(811)(4,939)— 
Provision for credit losses381 141 687 
Unrealized losses (gains) on equity securities recognized through income57,983 (33,104)(12,515)
Company's share of gain on the sales of co-investments— — (2,225)
Earnings from co-investments(26,030)(111,721)(64,287)
Operating distributions from co-investments95,256 104,833 74,419 
Accrued interest from notes and other receivables(13,953)(15,902)(3,683)
Impairment loss— — 1,825 
Gain on the sale of real estate and land(94,416)(142,993)(64,967)
Equity-based compensation7,206 7,308 8,157 
Loss on early retirement of debt, net2 19,010 22,883 
Gain on remeasurement of co-investment(17,423)(2,260)(234,694)
Changes in operating assets and liabilities:   
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets5,183 4,878 (3,730)
Accounts payable, accrued liabilities, and operating lease liabilities(17,266)22,298 (10,382)
Other liabilities9,627 6,143 749 
Net cash provided by operating activities975,649 905,259 803,108 
Cash flows from investing activities:   
Additions to real estate:   
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired(21,870)(153,481)(460,421)
Redevelopment(96,718)(61,671)(48,980)
Development acquisitions of and additions to real estate under development(27,713)(49,784)(108,781)
Capital expenditures on rental properties(163,193)(121,195)(90,085)
Investments in notes receivable(168,095)(245,144)(135,343)
Collections of notes and other receivables412,006 104,405 98,711 
Proceeds from insurance for property losses4,325 879 723 
Proceeds from dispositions of real estate157,985 297,454 339,165 
Contributions to co-investments(163,188)(306,266)(114,017)
Changes in refundable deposits(16,318)(9,486)96 
Purchases of marketable securities(18,109)(23,805)(83,379)
Sales and maturities of marketable securities71,222 16,577 113,465 
 2019 2018 2017
Cash flows from operating activities:     
Net income$464,448
 $413,599
 $458,043
Adjustments to reconcile net income to net cash provided by operating activities: 
  
  
Depreciation and amortization483,750
 479,884
 468,881
Amortization of discount on marketable securities(28,491) (17,637) (15,119)
Amortization of (premium) discount and debt financing costs, net5,689
 (2,587) (5,948)
Gain on sale of marketable securities(1,271) (737) (1,909)
Unrealized (gain) loss on equity securities recognized through income(5,710) 5,159
 —
Company's share of gain on the sales of co-investments(51,097) (10,569) (44,837)
Earnings from co-investments(61,039) (78,563) (41,608)
Operating distributions from co-investments99,277
 99,593
 76,764
Accrued interest from notes and other receivables(6,012) (5,436) (4,030)
Impairment loss7,105
 —
 —
(Gain) loss on the sale of real estate and land3,164
 (61,861) (26,423)
Equity-based compensation7,010
 7,135
 9,286
(Gain) loss on early retirement of debt, net(3,717) —
 1,796
Gain on remeasurement of co-investment(31,535) (1,253) (88,641)
Changes in operating assets and liabilities: 
  
  
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets5,751
 (1,203) (3,004)
Accounts payable, accrued liabilities, and operating lease liabilities29,551
 (145) (13,474)
Other liabilities2,206
 1,175
 (170)
Net cash provided by operating activities919,079
 826,554
 769,607
Cash flows from investing activities: 
  
  
Additions to real estate: 
  
  
Acquisitions of real estate and acquisition related capital expenditures(133,825) (15,311) (206,194)
Redevelopment(70,295) (73,000) (69,928)
Development acquisitions of and additions to real estate under development(158,234) (182,772) (137,733)
Capital expenditures on rental properties(101,689) (81,684) (72,812)
Investments in notes receivable(231,400) —
 (106,461)
Collections of notes and other receivables168,720
 29,500
 55,000
Proceeds from insurance for property losses3,734
 1,408
 648
Proceeds from dispositions of real estate23,214
 347,587
 132,039
Contributions to co-investments(402,284) (162,437) (293,363)
Changes in refundable deposits5
 (414) 837
Purchases of marketable securities(46,458) (37,952) (67,893)
Sales and maturities of marketable securities147,531
 31,521
 35,481
Non-operating distributions from co-investments273,290
 83,661
 162,439
Net cash used in investing activities(527,691) (59,893) (567,940)
Cash flows from financing activities: 
  
  
F- 11
Table of Contents
Non-operating distributions from co-investments175,624 154,120 71,946 
Net cash provided by (used in) investing activities145,958 (397,397)(416,900)
Cash flows from financing activities:   
Proceeds from unsecured debt and mortgage notes— 745,505 1,452,808 
Payments on unsecured debt and mortgage notes(64,542)(1,053,501)(916,209)
Proceeds from lines of credit1,376,452 1,050,589 1,038,426 
Repayments of lines of credit(1,665,636)(709,332)(1,093,426)
Retirement of common stock(189,726)(9,172)(269,315)
Additions to deferred charges(2,638)(8,350)(13,772)
Payments related to debt prepayment penalties— (18,342)(19,605)
Net proceeds from issuance of common stock(314)(455)(296)
Net proceeds from stock options exercised19,525 58,497 14,865 
Payments related to tax withholding for share-based compensation(2,216)(5,445)(5,664)
Contributions from noncontrolling interest125 1,900 — 
Distributions to noncontrolling interest(30,740)(29,379)(30,990)
Redemption of noncontrolling interest(11,452)(8,457)(3,113)
Redemption of redeemable noncontrolling interest(478)(4,463)(872)
Common stock dividends paid(565,924)(542,860)(536,098)
Net cash used in financing activities(1,137,564)(533,265)(383,261)
Net (decrease) increase in unrestricted and restricted cash and cash equivalents(15,957)(25,403)2,947 
Unrestricted and restricted cash and cash equivalents at beginning of period58,638 84,041 81,094 
Unrestricted and restricted cash and cash equivalents at end of period$42,681 $58,638 $84,041 
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest$198,323 $194,203 $211,732 
Interest capitalized$2,272 $6,153 $14,615 
Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows from operating leases$6,987 $6,963 $6,892 
Supplemental disclosure of noncash investing and financing activities:   
Transfers between real estate under development and rental properties, net$100,737 $328,393 $253,039 
Transfer from real estate under development to co-investments$2,276 $3,068 $1,739 
Reclassifications (from) to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest$(7,038)$6,890 $(4,299)
Debt assumed in connection with acquisition$21,303 $— $— 


Proceeds from unsecured debt and mortgage notes1,045,290
 298,773
 597,981
Payments on unsecured debt and mortgage notes(1,026,616) (230,398) (561,160)
Proceeds from lines of credit1,939,213
 742,961
 982,246
Repayments of lines of credit(1,884,213) (921,961) (928,246)
Retirement of common stock(56,989) (51,233) —
Additions to deferred charges(10,898) (4,250) (4,108)
Payments related to debt prepayment penalties(1,406) —
 (1,630)
Net proceeds from issuance of common stock72,539
 (919) 89,055
Net proceeds from stock options exercised37,467
 6,213
 26,635
Payments related to tax withholding for share-based compensation(3,688) (869) (316)
Distributions to noncontrolling interest(27,993) (29,050) (26,552)
Redemption of noncontrolling interest(36,568) (1,333) (28,580)
Redemption of redeemable noncontrolling interest(73) (144) (5,543)
Common and preferred stock dividends paid(507,754) (484,182) (450,625)
Net cash used in financing activities(461,689) (676,392) (310,843)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents(70,301) 90,269
 (109,176)
Unrestricted and restricted cash and cash equivalents at beginning of period151,395
 61,126
 170,302
Unrestricted and restricted cash and cash equivalents at end of period$81,094
 $151,395
 $61,126
      
Supplemental disclosure of cash flow information:     
Cash paid for interest, net of capitalized interest$194,418
 $203,803
 $212,163
Interest capitalized$24,169
 $18,708
 $13,860
Cash paid for amounts included in the measurement of lease liabilities:     
     Operating cash flows from operating leases$6,811
 $—
 $—
      
Supplemental disclosure of noncash investing and financing activities: 
  
  
Issuance of Operating Partnership units for contributed properties$—
 $7,919
 $—
Issuance of DownREIT units in connection with acquisition of real estate$65,472
 $—
 $22,506
Transfers between real estate under development to rental properties, net$19,812
 $100,415
 $2,413
Transfer from real estate under development to co-investments$671
 $853
 $5,075
Reclassifications to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest$2,008
 $1,165
 $65
Redemption of redeemable noncontrolling interest via reduction of note receivable$—
 $4,751
 $—
Initial recognition of operating lease right-of-use assets$77,645
 $—
 $—
Initial recognition of operating lease liabilities$79,693
 $—
 $—
Debt assumed in connection with acquisition$143,006
 $45,804
 $51,882
Repayment of mortgage note from new financing proceeds$—
 $52,000
 $—


See accompanying notes to consolidated financial statements


F- 12
Table of Contents
    ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 20192022 and 20182021
(Dollars in thousands, except per unit amounts)
 20222021
ASSETS
Real estate:
Rental properties:
Land and land improvements$3,043,321 $3,032,678 
Buildings and improvements12,922,906 12,597,249 
 15,966,227 15,629,927 
Less: accumulated depreciation(5,152,133)(4,646,854)
 10,814,094 10,983,073 
Real estate under development24,857 111,562 
Co-investments1,127,491 1,177,802 
 11,966,442 12,272,437 
Cash and cash equivalents-unrestricted33,295 48,420 
Cash and cash equivalents-restricted9,386 10,218 
Marketable securities, net of allowance for credit losses of zero as of both December 31, 2022 and December 31, 2021112,743 191,829 
Notes and other receivables, net of allowance for credit losses of $0.3 million and $0.8 million as of December 31, 2022 and December 31, 2021 (includes related party receivables of $7.0 million and $176.9 million as of December 31, 2022 and December 31, 2021, respectively)103,045 341,033 
Operating lease right-of-use assets67,239 68,972 
Prepaid expenses and other assets80,755 64,964 
Total assets$12,372,905 $12,997,873 
LIABILITIES AND CAPITAL
Unsecured debt, net$5,312,168 $5,307,196 
Mortgage notes payable, net593,943 638,957 
Lines of credit52,073 341,257 
Accounts payable and accrued liabilities165,461 180,751 
Construction payable23,159 29,136 
Distributions payable149,166 143,213 
Distributions in excess of investments in co-investments42,532 35,545 
Operating lease liabilities68,696 70,675 
Other liabilities43,441 39,969 
Total liabilities6,450,639 6,786,699 
Commitments and contingencies
Redeemable noncontrolling interest27,150 34,666 
Capital:  
General Partner:  
Common equity (64,604,603 and 65,248,393 units issued and outstanding, respectively)5,669,906 5,999,155 
 5,669,906 5,999,155 
Limited Partners:  
Common equity (2,272,496 and 2,282,464 units issued and outstanding, respectively)51,454 56,502 
Accumulated other comprehensive income (loss)52,010 (1,804)
Total partners' capital5,773,370 6,053,853 
Noncontrolling interest121,746 122,655 
Total capital5,895,116 6,176,508 
Total liabilities and capital$12,372,905 $12,997,873 
 2019 2018
ASSETS
Real estate:   
Rental properties:   
Land and land improvements$2,773,805
 $2,701,356
Buildings and improvements11,264,337
 10,664,745
 14,038,142
 13,366,101
Less: accumulated depreciation(3,689,482) (3,209,548)
 10,348,660
 10,156,553
Real estate under development546,075
 454,629
Co-investments1,335,339
 1,300,140
 12,230,074
 11,911,322
Cash and cash equivalents-unrestricted70,087
 134,465
Cash and cash equivalents-restricted11,007
 16,930
Marketable securities144,193
 209,545
Notes and other receivables (related party receivables of $90.2 million and $11.1 million as of December 31, 2019 and December 31, 2018, respectively)134,365
 71,895
Operating lease right-of-use assets74,744
 —
Prepaid expenses and other assets40,935
 39,439
Total assets$12,705,405
 $12,383,596
LIABILITIES AND CAPITAL
Unsecured debt, net$4,763,206
 $3,799,316
Mortgage notes payable, net990,667
 1,806,626
Lines of credit55,000
 —
Accounts payable and accrued liabilities158,017
 127,086
Construction payable48,912
 59,345
Distributions payable135,384
 128,529
Operating lease liabilities76,740
 —
Other liabilities36,565
 33,375
Total liabilities6,264,491
 5,954,277
Commitments and contingencies


 


Redeemable noncontrolling interest37,410
 35,475
Capital: 
  
General Partner: 
  
Common equity (66,091,954 and 65,890,322 units issued and outstanding, respectively)6,234,315
 6,280,290
 6,234,315
 6,280,290
Limited Partners: 
  
Common equity (2,301,653 and 2,305,389 units issued and outstanding, respectively)57,359
 59,061
Accumulated other comprehensive loss(10,432) (9,738)
Total partners' capital6,281,242
 6,329,613
Noncontrolling interest122,262
 64,231
Total capital6,403,504
 6,393,844
Total liabilities and capital$12,705,405
 $12,383,596

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, 2019, 2018,2022, 2021, and 20172020
(Dollars in thousands, except per unit and unit amounts)
 202220212020
Revenues:
Rental and other property$1,595,675 $1,431,418 $1,486,150 
Management and other fees from affiliates11,139 9,138 9,598 
 1,606,814 1,440,556 1,495,748 
Expenses:   
Property operating, excluding real estate taxes283,351 264,869 263,601 
Real estate taxes183,918 180,367 177,011 
Corporate-level property management expenses40,704 36,211 34,361 
Depreciation and amortization539,319 520,066 525,497 
General and administrative56,577 51,838 65,388 
Expensed acquisition and investment related costs2,132 203 1,591 
Impairment loss— — 1,825 
 1,106,001 1,053,554 1,069,274 
Gain on sale of real estate and land94,416 142,993 64,967 
Earnings from operations595,229 529,995 491,441 
Interest expense(204,798)(203,125)(220,633)
Total return swap income7,907 10,774 10,733 
Interest and other (loss) income(19,040)98,744 40,999 
Equity income from co-investments26,030 111,721 66,512 
Deferred tax benefit (expense) on unconsolidated co-investments10,236 (15,668)(1,531)
Loss on early retirement of debt, net(2)(19,010)(22,883)
Gain on remeasurement of co-investment17,423 2,260 234,694 
Net income432,985 515,691 599,332 
Net income attributable to noncontrolling interest(10,373)(9,946)(10,550)
Net income available to common unitholders$422,612 $505,745 $588,782 
Per unit data:   
Basic:   
Net income available to common unitholders$6.27 $7.51 $8.69 
Weighted average number of common units outstanding during the year67,356,105 67,340,856 67,750,665 
Diluted:   
Net income available to common unitholders$6.27 $7.51 $8.69 
Weighted average number of common units outstanding during the year67,374,527 67,378,265 67,861,590 
 2019 2018 2017
Revenues:     
Rental and other property$1,450,628
 $1,390,870
 $1,354,325
Management and other fees from affiliates9,527
 9,183
 9,574
 1,460,155
 1,400,053
 1,363,899
Expenses: 
  
  
Property operating, excluding real estate taxes242,525
 233,764
 229,076
Real estate taxes155,170
 151,570
 146,310
Corporate-level property management expenses32,899
 31,062
 30,156
Depreciation and amortization483,750
 479,884
 468,881
General and administrative54,262
 53,451
 41,385
Expensed acquisition and investment related costs168
 194
 1,569
Impairment loss7,105
 —
 —
 975,879
 949,925
 917,377
Gain (loss) on sale of real estate and land(3,164) 61,861
 26,423
Earnings from operations481,112
 511,989
 472,945
Interest expense(217,339) (220,492) (222,894)
Total return swap income8,446
 8,707
 10,098
Interest and other income46,298
 23,010
 24,604
Equity income from co-investments112,136
 89,132
 86,445
Deferred tax expense on unrealized gain on unconsolidated co-investment(1,457) —
 —
Gain (loss) on early retirement of debt, net3,717
 —
 (1,796)
Gain on remeasurement of co-investment31,535
 1,253
 88,641
Net income464,448
 413,599
 458,043
Net income attributable to noncontrolling interest(9,819) (9,994) (10,159)
Net income available to common unitholders$454,629
 $403,605
 $447,884
Per unit data: 
  
  
Basic: 
  
  
Net income available to common unitholders$6.67
 $5.91
 $6.58
Weighted average number of common units outstanding during the year68,140,900
 68,315,999
 68,081,730
Diluted: 
  
  
Net income available to common unitholders$6.66
 $5.90
 $6.57
Weighted average number of common units outstanding during the year68,239,933
 68,360,030
 68,150,830

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, 2019, 2018,2022, 2021, and 20172020
(Dollars in thousands)
 202220212020
Net income$432,985 $515,691 $599,332 
Other comprehensive income (loss):   
Change in fair value of derivatives and amortization of swap settlements54,158 9,170 (4,148)
Cash flow hedge losses reclassified to earnings— — 3,338 
Change in fair value of marketable debt securities, net233 329 (61)
Reversal of unrealized gains upon the sale of marketable debt securities(577)— — 
Total other comprehensive income (loss)53,814 9,499 (871)
Comprehensive income486,799 525,190 598,461 
Comprehensive income attributable to noncontrolling interest(10,373)(9,946)(10,550)
Comprehensive income attributable to controlling interest$476,426 $515,244 $587,911 
 2019 2018 2017
Net income$464,448
 $413,599
 $458,043
Other comprehensive income (loss): 
  
  
Change in fair value of derivatives and amortization of swap settlements(2,948) 7,824
 12,744
Cash flow hedge losses reclassified to earnings1,824
 —
 —
Change in fair value of marketable debt securities, net281
 (118) 3,284
Reversal of unrealized (gains) losses upon the sale of marketable debt securities(32) 13
 (1,909)
Total other comprehensive income (loss)(875) 7,719
 14,119
Comprehensive income463,573
 421,318
 472,162
Comprehensive income attributable to noncontrolling interest(9,819) (9,994) (10,159)
Comprehensive income attributable to controlling interest$453,754
 $411,324
 $462,003

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, 2019, 2018,2022, 2021, and 20172020
(Dollars and units in thousands)
 Accumulated
other
comprehensive
income (loss), net
 General PartnerLimited PartnersNoncontrolling
interest		Total
 Common EquityCommon Equity
 UnitsAmountUnitsAmount
Balances at December 31, 201966,092 $6,234,315 2,302 $57,359 $(10,432)$122,262 $6,403,504 
Net income— 568,870 — 19,912 — 10,550 599,332 
Cash flow hedge losses reclassified to earnings— — — — 3,338 — 3,338 
Change in fair value of derivatives and amortization of swap settlements— — — — (4,148)— (4,148)
Change in fair value of marketable debt securities, net— — — — (61)— (61)
Issuance of common units under:
General partner's stock based compensation, net95 9,201 — — — — 9,201 
Sale of common stock by general partner, net— (296)— — — — (296)
Equity based compensation costs— 12,453 2 460 — — 12,913 
Retirement of common units, net(1,197)(269,315)— — — — (269,315)
Cumulative effect upon adoption of ASU No. 2016-13— (190)— — — — (190)
Changes in the redemption value of redeemable noncontrolling interest— 4,375 — (197)— 121 4,299 
Changes in noncontrolling interest from acquisition— — — — — 1,349 1,349 
Distributions to noncontrolling interest— — — — — (12,292)(12,292)
Redemptions9 (2,020)(9)(275)— (818)(3,113)
Distributions declared ($8.31 per unit)— (542,254)— (19,075)— — (561,329)
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)
F- 16
Table of Contents
General PartnerLimited Partners Accumulated    
        other    
Common Equity Common Equity comprehensive Noncontrolling  
Units Amount Units Amount loss, net Interest Total
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 units 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)Changes in the redemption value of redeemable noncontrolling interest— (7,489)— 152 — 447 (6,890)
Changes in noncontrolling interest from acquisition—
 —
 —
 —
 —
 22,506
 22,506
Contributions from noncontrolling interestContributions from noncontrolling interest— — — — — 1,900 1,900 
Distributions to noncontrolling interest—
 —
 —
 —
 —
 (11,078) (11,078)Distributions to noncontrolling interest— — — — — (10,215)(10,215)
Redemptions2
 (25,190) (2) (405) —
 (2,985) (28,580)Redemptions10 (7,566)(13)(296)— (595)(8,457)
Distributions declared ($7.00 per unit)—
 (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
Distributions declared ($8.36 per unit)Distributions declared ($8.36 per unit)— (544,194)— (19,126)— — (563,320)
Balances at December 31, 2021Balances at December 31, 202165,248 $5,999,155 2,282 $56,502 $(1,804)$122,655 $6,176,508 
Net income—
 390,153
 —
 13,452
 —
 9,994
 413,599
Net income— 408,315 — 14,297 — 10,373 432,985 
Reversal of unrealized gains upon the sale of marketable debt securities—
 —
 —
 —
 13
 —
 13
Reversal of unrealized gains upon the sale of marketable
debt securities		— — — — (577)— (577)
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 7,824
 —
 7,824
Change in fair value of derivatives and amortization of swap settlements— — — — 54,158 — 54,158 
Change in fair value of marketable debt securities, net—
 —
 —
 —
 (118) —
 (118)Change in fair value of marketable debt securities, net— — — — 233 — 233 
Issuance of common units under:             
Issuance of common stock under:Issuance of common stock under:— 
General partner's stock based compensation, net41
 6,213
 —
 —
 —
 —
 6,213
General partner's stock based compensation, net89 17,309 — — — — 17,309 
Sale of common stock by general partner, net—
 (919) —
 —
 —
 —
 (919)Sale of common stock by general partner, net— (314)— — — — (314)
Equity based compensation costs—
 11,651
 11
 1,200
 —
 —
 12,851
Equity based compensation costs— 11,059 — 387 — — 11,446 
Retirement of common units, net(210) (51,233) —
 —
 —
 —
 (51,233)Retirement of common units, net(740)(189,726)— — — — (189,726)
Changes in redemption value of redeemable noncontrolling interestChanges in redemption value of redeemable noncontrolling interest— 6,230 — 386 — 422 7,038 
Contributions from noncontrolling interestContributions from noncontrolling interest— — — — — 125 125 
Distributions to noncontrolling interestDistributions to noncontrolling interest— — — — — (10,935)(10,935)
RedemptionsRedemptions8 (10,464)(10)(94)— (894)(11,452)
Distributions declared ($8.80 per unit)Distributions declared ($8.80 per unit)— (571,658)— (20,024)— — (591,682)
Balances at December 31, 2022Balances at December 31, 202264,605 $5,669,906 2,272 $51,454 $52,010 $121,746 $5,895,116 

Cumulative effect upon adoption of ASU No. 2016-01—
 2,234
 —
 (6) (2,228) —
 —
Cumulative effect upon adoption of ASU No. 2017-05—
 119,651
 —
 4,057
 —
 —
 123,708
Changes in redemption value of redeemable noncontrolling interest—
 (1,143) —
 (89) —
 68
 (1,164)
Changes in noncontrolling interest from acquisition—
 —
 31
 7,919
 —
 —
 7,919
Distributions to noncontrolling interest—
 —
 —
 —
 —
 (12,174) (12,174)
Redemptions5
 (1,061) (5) (205) —
 (67) (1,333)
Distributions declared ($7.44 per unit)—
 (491,108) —
 (17,059) —
 —
 (508,167)
Balances at December 31, 201865,890
 $6,280,290
 2,305
 $59,061
 $(9,738) $64,231
 $6,393,844
Net income—
 439,286
 —
 15,343
 —
 9,819
 464,448
Reversal of unrealized gains upon the sale of marketable debt securities—
 —
 —
 —
 (32) —
 (32)
Cash flow hedge losses reclassified to earnings—
 —
 —
 —
 1,824
 —
 1,824
Change in fair value of derivatives and amortization of swap settlements—
 —
 —
 —
 (2,948) —
 (2,948)
Change in fair value of marketable debt securities, net—
 —
 —
 —
 281
 —
 281
Issuance of common units under:             
General partner's stock based compensation, net195
 33,779
 —
 —
 —
 —
 33,779
Sale of common stock by general partner, net228
 72,539
 —
 —
 —
 —
 72,539
Equity based compensation costs—
 11,029
 10
 1,254
 —
 —
 12,283
Retirement of common units, net(234) (56,989) —
 —
 —
 —
 (56,989)
Cumulative effect upon adoption of ASU No. 2017-12—
 —
 —
 —
 181
 —
 181
Changes in the redemption value of redeemable noncontrolling interest—
 (3,427) —
 109
 —
 1,310
 (2,008)
Changes in noncontrolling interest from acquisition—
 —
 —
 —
 —
 65,472
 65,472
Distributions to noncontrolling interest—
 —
 —
 —
 —
 (10,521) (10,521)
Redemptions13
 (28,083) (13) (436) —
 (8,049) (36,568)
Distributions declared ($7.80 per unit)—
 (514,109) —
 (17,972) —
 —
 (532,081)
Balances at December 31, 201966,092
 $6,234,315
 2,302
 $57,359
 $(10,432) $122,262
 $6,403,504

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, 2019, 2018,2022, 2021, and 20172020
(Dollars in thousands)
 202220212020
Cash flows from operating activities:
Net income$432,985 $515,691 $599,332 
Adjustments to reconcile net income to net cash provided by operating activities:   
Straight-lined rents3,330 9,672 (19,426)
Depreciation and amortization539,319 520,066 525,497 
Amortization of discount on marketable securities— — (19,075)
Amortization of discount and debt financing costs, net6,712 9,538 6,674 
Gain on sale of marketable securities(12,436)(3,400)(2,131)
Income from early redemption of notes receivable(811)(4,939)— 
Provision for credit losses381 141 687 
Unrealized gains on equity securities recognized through income57,983 (33,104)(12,515)
Company's share of gain on the sales of co-investments— — (2,225)
Earnings from co-investments(26,030)(111,721)(64,287)
Operating distributions from co-investments95,256 104,833 74,419 
Accrued interest from notes and other receivables(13,953)(15,902)(3,683)
Impairment loss— — 1,825 
(Gain) loss on the sale of real estate and land(94,416)(142,993)(64,967)
Equity-based compensation7,206 7,308 8,157 
Loss (gain) on early retirement of debt, net2 19,010 22,883 
Gain on remeasurement of co-investment(17,423)(2,260)(234,694)
Changes in operating assets and liabilities:   
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets5,183 4,878 (3,730)
Accounts payable, accrued liabilities, and operating lease liabilities(17,266)22,298 (10,382)
Other liabilities9,627 6,143 749 
Net cash provided by operating activities975,649 905,259 803,108 
Cash flows from investing activities:   
Additions to real estate:   
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired(21,870)(153,481)(460,421)
Redevelopment(96,718)(61,671)(48,980)
Development acquisitions of and additions to real estate under development(27,713)(49,784)(108,781)
Capital expenditures on rental properties(163,193)(121,195)(90,085)
Investments in notes receivable(168,095)(245,144)(135,343)
Collections of notes and other receivables412,006 104,405 98,711 
Proceeds from insurance for property losses4,325 879 723 
Proceeds from dispositions of real estate157,985 297,454 339,165 
Contributions to co-investments(163,188)(306,266)(114,017)
Changes in refundable deposits(16,318)(9,486)96 
Purchases of marketable securities(18,109)(23,805)(83,379)
Sales and maturities of marketable securities71,222 16,577 113,465 
Non-operating distributions from co-investments175,624 154,120 71,946 
F- 18
Table of Contents
 2019 2018 2017
Cash flows from operating activities:     
Net income$464,448
 $413,599
 $458,043
Adjustments to reconcile net income to net cash provided by operating activities: 
  
  
Depreciation and amortization483,750
 479,884
 468,881
Amortization of discount on marketable securities(28,491) (17,637) (15,119)
Amortization of (premium) discount and debt financing costs, net5,689
 (2,587) (5,948)
Gain on sale of marketable securities(1,271) (737) (1,909)
Unrealized (gain) loss on equity securities recognized through income(5,710) 5,159
 —
Company's share of gain on the sales of co-investments(51,097) (10,569) (44,837)
Earnings from co-investments(61,039) (78,563) (41,608)
Operating distributions from co-investments99,277
 99,593
 76,764
Accrued interest from notes and other receivables(6,012) (5,436) (4,030)
Impairment loss7,105
 —
 —
(Gain) loss on the sale of real estate and land3,164
 (61,861) (26,423)
Equity-based compensation7,010
 7,135
 9,286
(Gain) loss on early retirement of debt, net(3,717) —
 1,796
Gain on remeasurement of co-investment(31,535) (1,253) (88,641)
Changes in operating assets and liabilities: 
  
  
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets5,751
 (1,203) (3,004)
Accounts payable, accrued liabilities, and operating lease liabilities29,551
 (145) (13,474)
Other liabilities2,206
 1,175
 (170)
Net cash provided by operating activities919,079
 826,554
 769,607
Cash flows from investing activities: 
  
  
Additions to real estate: 
  
  
Acquisitions of real estate and acquisition related capital expenditures(133,825) (15,311) (206,194)
Redevelopment(70,295) (73,000) (69,928)
Development acquisitions of and additions to real estate under development(158,234) (182,772) (137,733)
Capital expenditures on rental properties(101,689) (81,684) (72,812)
Investments in notes receivable(231,400) —
 (106,461)
Collections of notes and other receivables168,720
 29,500
 55,000
Proceeds from insurance for property losses3,734
 1,408
 648
Proceeds from dispositions of real estate23,214
 347,587
 132,039
Contributions to co-investments(402,284) (162,437) (293,363)
Changes in refundable deposits5
 (414) 837
Purchases of marketable securities(46,458) (37,952) (67,893)
Sales and maturities of marketable securities147,531
 31,521
 35,481
Non-operating distributions from co-investments273,290
 83,661
 162,439
Net cash used in investing activities(527,691) (59,893) (567,940)
Cash flows from financing activities: 
  
  
Net cash provided by (used in) investing activities145,958 (397,397)(416,900)
Cash flows from financing activities:   
Proceeds from unsecured debt and mortgage notes— 745,505 1,452,808 
Payments on unsecured debt and mortgage notes(64,542)(1,053,501)(916,209)
Proceeds from lines of credit1,376,452 1,050,589 1,038,426 
Repayments of lines of credit(1,665,636)(709,332)(1,093,426)
Retirement of common units(189,726)(9,172)(269,315)
Additions to deferred charges(2,638)(8,350)(13,772)
Payments related to debt prepayment penalties— (18,342)(19,605)
Net proceeds from issuance of common units(314)(455)(296)
Net proceeds from stock options exercised19,525 58,497 14,865 
Payments related to tax withholding for share-based compensation(2,216)(5,445)(5,664)
Contributions from noncontrolling interest125 1,900 — 
Distributions to noncontrolling interest(8,450)(8,369)(8,409)
Redemption of noncontrolling interests(11,452)(8,457)(3,113)
Redemption of redeemable noncontrolling interests(478)(4,463)(872)
Common units distributions paid(588,214)(563,870)(558,679)
Net cash used in financing activities(1,137,564)(533,265)(383,261)
Net (decrease) increase in unrestricted and restricted cash and cash equivalents(15,957)(25,403)2,947 
Unrestricted and restricted cash and cash equivalents at beginning of period58,638 84,041 81,094 
Unrestricted and restricted cash and cash equivalents at end of period$42,681 $58,638 $84,041 
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest$198,323 $194,203 $211,732 
Interest capitalized$2,272 $6,153 $14,615 
  Cash paid for amounts included in the measurement of lease liabilities:
     Operating cash flows from operating leases$6,987 $6,963 $6,892 
Supplemental disclosure of noncash investing and financing activities:   
Transfers between real estate under development and rental properties, net$100,737 $328,393 $253,039 
Transfer from real estate under development to co-investments$2,276 $3,068 $1,739 
Reclassifications (from) to redeemable noncontrolling interest from general and limited partner capital and noncontrolling interest$(7,038)$6,890 $(4,299)
Debt assumed in connection with acquisition$21,303 $— $— 

Proceeds from unsecured debt and mortgage notes1,045,290
 298,773
 597,981
Payments on unsecured debt and mortgage notes(1,026,616) (230,398) (561,160)
Proceeds from lines of credit1,939,213
 742,961
 982,246
Repayments of lines of credit(1,884,213) (921,961) (928,246)
Retirement of common units(56,989) (51,233) —
Additions to deferred charges(10,898) (4,250) (4,108)
Payments related to debt prepayment penalties(1,406) —
 (1,630)
Net proceeds from issuance of common units72,539
 (919) 89,055
Net proceeds from stock options exercised37,467
 6,213
 26,635
Payments related to tax withholding for share-based compensation(3,688) (869) (316)
Distributions to noncontrolling interest(7,288) (8,518) (7,752)
Redemption of noncontrolling interests(36,568) (1,333) (28,580)
Redemption of redeemable noncontrolling interests(73) (144) (5,543)
Common and preferred units and preferred interest distributions paid(528,459) (504,714) (469,425)
Net cash used in financing activities(461,689) (676,392) (310,843)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents(70,301) 90,269
 (109,176)
Unrestricted and restricted cash and cash equivalents at beginning of period151,395
 61,126
 170,302
Unrestricted and restricted cash and cash equivalents at end of period$81,094
 $151,395
 $61,126
      
Supplemental disclosure of cash flow information:     
Cash paid for interest, net of capitalized interest$194,418
 $203,803
 $212,163
Interest capitalized$24,169
 $18,708
 $13,860
  Cash paid for amounts included in the measurement of lease liabilities:     
     Operating cash flows from operating leases$6,811
 $—
 $—
      
Supplemental disclosure of noncash investing and financing activities: 
  
  
Issuance of Operating Partnership units for contributed properties$—
 $7,919
 $—
Issuance of DownREIT units in connection with acquisition of real estate$65,472
 $—
 $22,506
Transfers between real estate under development to rental properties, net$19,812
 $100,415
 $2,413
Transfer from real estate under development to co-investments$671
 $853
 $5,075
Reclassifications to redeemable noncontrolling interest from general and limited partner capital and noncontrolling interest$2,008
 $1,165
 $65
Redemption of redeemable noncontrolling interest via reduction of note receivable$—
 $4,751
 $—
Initial recognition of operating lease right-of-use assets$77,645
 $—
 $—
Initial recognition of operating lease liabilities$79,693
 $—
 $—
Debt assumed in connection with acquisition$143,006
 $45,804
 $51,882
Repayment of mortgage note from new financing proceeds$—
 $52,000
 $—

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, 2019, 2018,2022, 2021, and 20172020


(1) Organization
 
The accompanying consolidated financial statements present the accounts of Essex Property Trust, Inc. ("Essex" or the "Company"), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the "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 of the Operating Partnership with a 96.6% general partner interest and the limited partners owned a 3.4% interest as of December 31, 2019.2022. 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 2,301,6532,272,496 and 2,305,3892,282,464 as of December 31, 20192022 and 2018,2021, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock, totaled approximately $692.5$481.6 million and $565.3$804.0 million, as of December 31, 20192022 and 2018,2021, respectively. The Company has reserved shares of common stock for such conversions.

As of December 31, 2019,2022, the Company owned or had ownership interests in 250252 operating apartment communities, aggregating 60,570comprising 62,147 apartment homes, excluding the Company's ownership interests in preferred interest co-investments, loan investments, 1three operating commercial building,buildings, and a development pipeline comprised of 5 consolidated projects and 2one unconsolidated joint venture projects.project. The Communitiesoperating apartment communities are located in Southern California (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, 2022, 2021, and 2020

(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") 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 to conform to the current year’s presentation.

Noncontrolling interest includes the 3.4% limited partner interests in the Operating Partnership not held by the Company at both December 31, 20192022 and 2018.2021. These percentages include the Operating Partnership’s vested long-term incentive plan units (see Note 14).

(b) Recently Adopted Accounting Pronouncements Adopted in the Current Year

In February 2016,January 2021, the Financial Accounting Standards Board ("FASB"(the "FASB") issued Accounting Standards Update ("ASU") No. 2016-02 "Leases (Topic 842)2020-06 "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity." 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 assetThe amendments in ASU 2020-06 require the use of the if-converted method for calculating diluted earnings per share ("EPS") for all leasesconvertible instruments. For instruments that have a duration of greater than 12 months. Leases of 12 monthsmay be settled in cash or lessshares, and are to be accounted for similar to prior leasing guidance (Topic 840) for operating leases. For lessors, accounting for leases under the new standard is substantially the same as prior leasing 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. In July 2018, the FASB issued ASU No. 2018-11 "Leases (Topic 842): Targeted Improvements," which includes a practical expedient that allows lessors to not separate nonlease components from the associated lease component. This provides the Company with the option of not bifurcating certain common area maintenance recoveriesclassified as a non-lease component,liability, the guidance requires entities to include the effect of potential share settlement in the diluted EPS calculation, if certain requirements are met.the effect is more dilutive. The Company adopted ASU No. 2016-02 and ASU No. 2018-11 as of January 1, 2019 using the modified retrospective approach and elected a package of practical expedients. There was no adjustment to the opening balance of retained earnings as a result of the adoption. See Note 10, Lease Agreements - Company as Lessor, and Note 11, Lease Agreements - Company as Lessee, for further details.

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

F- 20
Table of Contents
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


disclosure requirements. The Company adopted ASU No. 2017-12 as of January 1, 2019 using the modified retrospective method by applying a cumulative effect adjustment to accumulated other comprehensive loss, net of $0.2 million, representing accumulated net hedge ineffectiveness. Furthermore, as a result of the adoption of this standard, the Company will recognize qualifying hedge ineffectiveness through accumulated other comprehensive income as opposed to current earnings.

(c) Recent Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13 "Measurement of Credit Losses on Financial Instruments," which amends 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 for 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, U.S. GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. The FASB additionally issued various updates to clarify and amend the guidance provided in ASU 2016-13. In May 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments," which, with respect to credit losses, among other things, clarifies and addresses issues related to accrued interest, transfers between classifications of loans or debt securities, recoveries, and variable interest rates. Additionally, in May 2019, the FASB issued ASU 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief," which allows entities to irrevocably elect the fair value option on certain financial instruments. The new standards will be effective for the Company beginning January 1, 2020 and early adoption is permitted. The Company expects to apply the new standard on January 1, 2020 and does2022 on a prospective basis. This adoption did not expect the adoption to have a material impact on the Company's consolidated results of operations or financial position.

Effective January 1, 2022, we adopted ASU 2021-10, "Government Assistance (Topic 832), Disclosures by Business Entities About Government Assistance", which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements and any significant terms and conditions of the agreements, including commitments and contingencies.

(c) Recent Accounting Pronouncements

In August 2018,December 2022, the FASB issued ASU No. 2018-13 "Fair Value Measurement2022-06 "Reference Rate Reform (Topic 820): Disclosure Framework848) - ChangesDeferral of the Sunset Date of Topic 848". The amendments in ASU 2022-06 defer the sunset date of Topic 848 from December 31, 2022 to the Disclosure Requirements for Fair Value Measurement,"December 31, 2024, after which eliminates certain disclosure requirements affecting all levels of measurements, and modifies and adds new disclosure requirements for Level 3 measurements. The new standardentities will no longer be effective for the Company beginning January 1, 2020 and early adoption is permitted. The Company expectspermitted to apply the new standard on January 1, 2020optional expedients in Topic 848 related to the accounting for contract modifications and doeshedging transactions as a result of the global markets’ transition away from the use of LIBOR and other interbank offered rates to alternative reference rates. The Company adopted this guidance upon issuance, its effective date. This adoption did not expect the adoption to have a material impact on the Company's consolidated results of operations or financial position.

(d) 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
 
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

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 relative 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

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December 31, 2019, 2018, and 2017


relative fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent land and 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 $1.2$7.4 million and $0.1$8.9 million as of December 31, 20192022 and 2018,2021, respectively, and are included in prepaid expenses and other assets on the Company's consolidated balance sheets.

The Company periodically assesses the carrying value of its real estate investments for 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 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 may not be fully recoverable, the carrying amount 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 and/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 both December 31, 20192022 and 2018, 0December 31, 2021, no properties were classified as held for sale. The Company did not record an impairment charge for the years ended December 31, 2022 and December 31, 2021. The Company recorded an impairment charge of $7.1$1.8 million for the year ended December 31, 2019 on2020 related to one of the Company's consolidated properties as a parcel of land that was partresult of a consolidated co-investment with Canada Pension Plan Investment Board ("CPPIB" or "CPP"). The impairment charge resulted fromchange in the Company's offerintent to acquire CPPIB's 45% interest inhold the co-investment. The impairment analysis over the parcel’s fair value was determined using internally developed models based on market assumptions. No impairment charges were recordedproperty for the years ended December 31, 2018 or 2017.its remaining useful life.

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.

(e) Co-investments

The Company owns investments in joint ventures 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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

the fair value of the Company's previously owned co-investment interest in the Company previously owned exceeds its carrying value. A majority of the co-investments, excluding most 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 evaluates its investments in co-investments for impairment and records a loss if the carrying value is greater than the fair value of the investment and the impairment is other-than-temporary. The Company recorded a $2.1 million impairment loss from an other-than-temporary impairment charge of $11.5 millionunconsolidated co-investment for the year ended December 31, 2019 on2022 as a result of an unconsolidated co-investment with CPPIB which holds Agora, a 49 unit apartment home community locatedother-than-temporary decrease in Walnut Creek, CA. The other-than-temporary impairment charge resulted from the Company's offer to acquire CPPIB's 45% interest in

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


the co-investment. The impairment analysis over the co-investments fair value was determined using internally developed models based on market assumptions. The impairment is reflected in equity income from co-investments onof the consolidated statements of income.underlying investment. No other-than-temporary impairment charges were recorded for the years ended December 31, 20182021 or 2017.2020.

(f) 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 generally 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 9 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.

Subsequent to the adoption of Accounting Standards Codification ("ASC") 610-20 "Gains and Losses from the Derecognition of Nonfinancial Assets" on January 1, 2018, theThe Company recognizes any gains on sales of real estate when it transfers control of a property and when it is probable that the Company will collect substantially all of the related consideration.

(g) Cash, Cash Equivalents and Restricted Cash

Highly liquid investments 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):
 202220212020
Cash and cash equivalents - unrestricted$33,295 $48,420 $73,629 
Cash and cash equivalents - restricted9,386 10,218 10,412 
Total unrestricted and restricted cash and cash equivalents shown in the consolidated statements of cash flows$42,681 $58,638 $84,041 
 2019 2018 2017
Cash and cash equivalents - unrestricted$70,087
 $134,465
 $44,620
Cash and cash equivalents - restricted11,007
 16,930
 16,506
Total unrestricted and restricted cash and cash equivalents shown in the consolidated statements of cash flows$81,094
 $151,395
 $61,126


(h) 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, Level 2 for the unsecured bondsdebt 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). As of December 31, 20192022 and 2018, $3.62021, $0.2 million and $6.7
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

$0.8 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.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. There were no other than temporary impairment charges for the years ended December 31, 2019, 2018,2022, 2021, and 2017.2020. Unrealized gains and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income on the consolidated statements of income and comprehensive income.

As of December 31, 20192022 and 2018,2021, equity securities and available for sale debt securities consisted primarily of investment-grade unsecured bonds, U.S. treasuryinvestment funds-debt securities, and common stock, preferred stock and stock funds. As of December 31, 2019funds, and 2018, the Company classified its investments in mortgage backed securities, one of which matured in November 2019 while the other matures in September 2020, as held to maturity debt securities, 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.investment-grade unsecured debt.

As of December 31, 20192022 and 20182021, marketable securities consist of the following ($ in thousands):


 December 31, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gain
 
Carrying
Value
Equity securities:     
Investment funds - debt securities$29,588
 $544
 $30,132
Common stock and stock funds34,941
 2,927
 37,868
      
Debt securities:     
 Available for sale
     
U.S. treasury securities2,421
 13
 2,434
Investment-grade unsecured bonds1,048
 60
 1,108
Held to maturity: 
  
  
Mortgage backed securities72,651
 —
 72,651
Total - Marketable securities$140,649
 $3,544
 $144,193
 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, 2021
Amortized
Cost		Gross
Unrealized
(Loss) Gain		Carrying
Value
Equity securities:
Investment funds - debt securities$62,192 $(502)$61,690 
Common stock and stock funds79,155 49,592 128,747 
Debt securities:
 Available for sale
Investment-grade unsecured debt1,051 341 1,392 
Total - Marketable securities$142,398 $49,431 $191,829 
 December 31, 2018
 
Amortized
Cost
 
Gross
Unrealized
Loss
 
Carrying
Value
Equity securities:     
Investment funds - debt securities$31,934
 $(568) $31,366
Common stock and stock funds39,731
 (1,671) 38,060
      
Debt securities:     
 Available for sale
     
U.S. treasury securities8,983
 (31) 8,952
Investment-grade unsecured bonds4,125
 (145) 3,980
Held to maturity: 
  
  
Mortgage backed securities127,187
 —
 127,187
Total - Marketable securities$211,960
 $(2,415) $209,545

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

For the years ended December 31, 2022, 2021 and 2020, the proceeds from sales and maturities of marketable securities totaled $71.2 million, $16.6 million and $113.5 million, respectively. For the years ended December 31, 2022, 2021 and 2020, these sales resulted in gains of $12.4 million, $3.4 million, and $2.1 million, respectively.

For the years ended December 31, 2022 and 2021, the portion of equity security unrealized losses or gains that were recognized in income totaled $58.0 million in losses and $33.1 million in gains, respectively, and were included in interest and other income on the Company's consolidated statements of income and comprehensive income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020



In November 2019, the Company received cash proceeds of $83.1 million from the maturity of an investment in a mortgage backed security. The Company recognized approximately $7.0 million of accelerated interest income related to this maturity.

For the years ended December 31, 2019, 2018 and 2017, the proceeds from sales and maturities of marketable securities totaled $147.5 million, $31.5 million and $35.5 million, respectively. For the years ended December 31, 2019, 2018 and 2017 these sales resulted in gains of $1.3 million, $0.7 million, and $1.9 million, respectively.

For the years ended December 31, 2019 and 2018, the portion of equity security unrealized losses or gains that were recognized in income totaled $5.7 million in gains, and $5.2 million in losses, respectively, and were included in interest and other income on the Company's consolidated statements of income and comprehensive income.

(i) Notes Receivable
 
Notes receivable relate to real estate financing arrangements including mezzanine and bridge 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, 20192022 and 2018,2021, 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.

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.

(j) 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 $17.9$20.4 million, $18.6$23.6 million and $18.8$31.4 million for the years ended December 31, 2019, 20182022, 2021 and 2017, respectively, most of which relates to development projects.2020, 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.

(k) 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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

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.bonds. The Company uses Level 2 inputs for its investments in unsecured bonds,debt, 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 9. The Company uses Level 3 inputs to estimate the fair value of its mortgage backed securities. 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 believes 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, 20192022 and 2018,2021, 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 $5.7 billion at both December 31, 2022 and 2021, to be $5.2 billion and $5.0$6.0 billion at December 31, 20192022 and 2018, respectively, to be $5.4 billion and $5.0 billion at December 31, 2019 and 2018,2021, respectively. Management has

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December 31, 2019, 2018, and 2017


estimated the fair value of the Company’s $660.4$274.2 million and $619.6$564.9 million of variable rate debt at December 31, 20192022 and 2018,2021, respectively, to be $655.8$273.2 million and $615.2$561.7 million at December 31, 20192022 and 2018,2021, 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 believes 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, 20192022 and 20182021 due to the short-term maturity of these instruments. Marketable securities except mortgage backed securities, are carried at fair value as of December 31, 20192022 and 2018.2021.

At December 31, 2019 and 2018, the Company’s investments in mortgage backed securities had a carrying value of $72.7 million and $127.2 million, respectively. In November 2019, the Company received cash proceeds of $83.1 million from the maturity of an investment in a mortgage backed security. The Company estimated the fair value of its investment in mortgage backed securities at December 31, 2019 and 2018 to be approximately $72.7 million and $129.5 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.

(l) 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 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.

(m) Income Taxes

Generally in any year in which Essex qualifies as a real estate investment trust ("REIT") under the Internal Revenue Code (the "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, 20192022 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 subsidiaries for 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. 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, the Company remeasured its net deferred tax liabilities at December 31, 2017, accordingly a net tax benefit of $1.5 million was recorded.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


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 subsidiaries for various revenue generating or investment activities. The taxable REIT subsidiaries are consolidated by the Operating Partnership.

The status of cash dividends distributed for the years ended December 31, 2019, 2018,2022, 2021, and 20172020 related to common stock are classified for tax purposes as follows:
 202220212020
Common Stock
Ordinary income80.17 %70.92 %85.23 %
Capital gain16.78 %22.07 %10.68 %
Unrecaptured section 1250 capital gain3.05 %7.01 %4.09 %
 100.00 %100.00 %100.00 %
 2019 2018 2017
Common Stock     
Ordinary income83.81% 79.72% 84.04%
Capital gain13.78% 15.35% 13.20%
Unrecaptured section 1250 capital gain2.41% 4.93% 2.76%
 100.00% 100.00% 100.00%


(n) Equity-based Compensation

The cost of share- and unit-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-term incentive plan units (discussed in Note 14) are being amortized over the expected service periods.

(o) 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
gain on
available for sale
securities		Total
Balance at December 31, 2021$(5,912)$360 $(5,552)
Other comprehensive income before reclassification52,331 224 52,555 
Amounts reclassified from accumulated other comprehensive loss20 (557)(537)
Other comprehensive income52,351 (333)52,018 
Balance at December 31, 2022$46,439 $27 $46,466 

 
Change in fair
value and
amortization
of swap settlements
 
Unrealized
gain (loss) on
available for sale
securities
 Total
Balance at December 31, 2018$(13,077) $(140) $(13,217)
Cumulative effect upon adoption of ASU No. 2017-12175
 —
 175
Other comprehensive income before reclassification7,836
 272
 8,108
Amounts reclassified from accumulated other comprehensive loss(8,923) (31) (8,954)
Other comprehensive income (loss)(912) 241
 (671)
Balance at December 31, 2019$(13,989) $101
 $(13,888)


Changes in Accumulated Other Comprehensive Loss, by Component

Essex Portfolio, L.P. ($ in thousands)
Change in fair
value and
amortization
of swap settlements		Unrealized
gain on
available for sale
securities		Total
Balance at December 31, 2021$(2,176)$372 $(1,804)
Other comprehensive income before reclassification54,138 233 54,371 
Amounts reclassified from accumulated other comprehensive loss20 (577)(557)
Other comprehensive income54,158 (344)53,814 
Balance at December 31, 2022$51,982 $28 $52,010 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


Changes in Accumulated Other Comprehensive Loss, by Component
Essex Portfolio, L.P. ($ in thousands)
 
Change in fair
value and
amortization
of swap settlements
 
Unrealized
gain (loss) on
available for sale
securities
 Total
Balance at December 31, 2018$(9,593) $(145) $(9,738)
Cumulative effect upon adoption of ASU No. 2017-12181
 —
 181
Other comprehensive income before reclassification8,111
 281
 8,392
Amounts reclassified from accumulated other comprehensive loss(9,235) (32) (9,267)
Other comprehensive income (loss)(943) 249
 (694)
Balance at December 31, 2019$(10,536) $104
 $(10,432)

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 debt securities are included in interest and other income on the consolidated statements of income.


(p) Redeemable Noncontrolling Interest

The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $37.4$27.2 million and $35.5$34.7 million as of December 31, 20192022 and 2018,2021, 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, 2019, 2018,2022, 2021, and 2017 is2020 are as follows:

 202220212020
Balance at January 1,$34,666 $32,239 $37,410 
Reclassifications due to change in redemption value and other(7,038)6,890 (4,299)
Redemptions(478)(4,463)(872)
Balance at December 31,$27,150 $34,666 $32,239 
 2019 2018 2017
Balance at January 1,$35,475
 $39,206
 $44,684
Reclassifications due to change in redemption value and other2,008
 1,164
 65
Redemptions(73) (4,895) (5,543)
Balance at December 31,$37,410
 $35,475
 $39,206

(q) 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 ongoing 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. 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.

(r) Variable Interest Entities

In accordance with accounting standards for consolidation of VIEs, the Company consolidatesconsolidated the Operating Partnership, 1718 DownREIT entities (comprising 9nine communities), and 6six co-investments as of December 31, 2019. As of December 31, 2018, the Company consolidated the Operating Partnership, 16 DownREIT entities (comprising 8 communities),2022 and 8 co-investments.2021. 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 above consolidated co-investments and DownREIT entities, net of intercompany eliminations, were approximately $1.0

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,$939.4 million and 2017


billion and $364.3$324.3 million, respectively, as of December 31, 2019,2022, and $849.8$909.3 million and $261.7$320.1 million, respectively, as of December 31, 2018.2021. Noncontrolling interests in these entities were $122.5$121.5 million and $64.5$122.4 million as of December 31, 20192022 and 2018,2021, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE.

The DownREIT VIEs collectively own 9nine apartment communities in which the Company 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 times the number of units held. Total DownREIT units outstanding were 1,033,907938,513 and 912,269978,854 as of December 31, 20192022 and 2018,2021, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $311.1$198.9 million and $223.7$344.8 million, as of December 31, 20192022 and 2018,2021, respectively. The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $37.4$27.2 million and $35.5$34.7 million as of December 31, 20192022 and 2018,2021, respectively. Of these amounts, $13.0$9.2 million and $14.5$7.7 million as of December 31, 20192022 and 2018,2021, 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 units with Company common stock and may potentially be redeemed for cash, and are presented at either their redemption value or
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

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 units as to which it is within the control of the Company to redeem the units with its common stock was $97.7$97.0 million and $32.4$97.4 million as of December 31, 20192022 and 2018,2021, respectively, 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, 20192022 and 2018,2021, 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.

(s) Discontinued OperationsGovernment Assistance

The Employee Retention Credit, as originally enacted by the Coronavirus 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 covered period because of the effects of the COVID-19 pandemic. In December 2020, the Employee Retention Credit was amended and extended by the Taxpayer Certainty and Disaster Tax Relief Act in which eligible employers may claim a refundable tax credit against certain 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 determined thatadopted a policy to recognize a receivable when earned and to offset the disposals duringcredit against related expenses. Accordingly, the Company recorded Employee Retention Credit of $4.1 million and $4.2 million and zero for the years ended December 31, 2019, 20182022, 2021 and 2017 were not considered discontinued operations2020, respectively, and is reflected in accordance with ASU 2014-08. The gains related to these disposals are recorded in gain on sale ofgeneral and administrative expenses, property operating, excluding real estate taxes, expenses and landequity income from co-investments in the consolidated statements of income.operations.


(3) Real Estate Investments

(a) Acquisitions of Real Estate

For the year ended December 31, 2019, the Company purchased 4 communities consisting of 849 apartment homes for approximately $373.3 million. The table below summarizes acquisition activity for the year ended December 31, 20192022 ($ in millions):

Property NameLocationApartment HomesEssex Ownership PercentageQuarter in 2019Purchase Price
One South Market(1)
San Jose, CA312
100%Q1$80.6
Brio(2)
Walnut Creek, CA300
N/A
Q2164.9
TownshipRedwood City, CA132
100%Q388.7
Pure RedmondRedmond, WA105
100%Q439.1
Total 2019849
 
 $373.3
For the year ended December 31, 2022, the Company purchased two communities consisting of 211 apartment homes for approximately $32.9 million.
Property NameLocationApartment HomesEssex Ownership PercentageQuarter in 2022Purchase Price
Regency Palm Court and Windsor Court (1)
Los Angeles, CA211 100 %Q3$32.9 
Total 2022211   $32.9 

(1) In July 2022, the Company acquired its joint venture partner's 49.8% minority interest in two apartment communities, consisting of 211 apartment homes located in Los Angeles, CA, for a 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 listed above 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, $0.3 million was included in prepaid expenses and other assets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


(1)
In March 2019, the Company purchased the joint venture partner's 45% membership interest in the One South Market co-investment based on an estimated property valuation of $179.0For the year ended December 31, 2021, the Company purchased one apartment community consisting of 123 apartment homes and two commercial properties for approximately $133.6 million. Additionally, in June 2021, the Company purchased its joint venture partner's 50.0% membership interest in the BEX III, LLC's ("BEX III") co-investment that owned an apartment community consisting of 145 apartment homes, based on a property valuation of $63.5 million, for approximately $31.8 million. In conjunction with the acquisition, $29.5 million of mortgage debt that encumbered the property was paid off. As a result of this acquisition, the Company realized a gain on remeasurement of its existing co-investment of $2.3 million. In conjunction with the acquisition, $86.0 million of mortgage debt that encumbered the property was repaid.
(2)
In June 2019, the Company acquired Brio for a total contract price of $164.9 million in a DownREIT transaction. As part of the acquisition, the Company assumed $98.7 million of mortgage debt in the community. Based on a VIE analysis performed by the Company, the property was consolidated.

The consolidated fair value of thethese acquisitions listed above werewas included on the Company's consolidated balance sheet as follows: $72.4$103.3 million was included in land and land improvements, $402.4$90.2 million was included in buildings and improvements, $3.3$5.4 million was included in prepaid expenses and other assets, and $149.0 million was included in mortgage notes payable, within the Company's consolidated balance sheets.

In December 2019, the Company purchased the joint venture partner's 25% ownership interest in Hidden Valley, a consolidated community consisting of 324 apartment homes, for a contract price of $24.2 million based on an estimated property valuation of $97.0 million and an encumbrance of $29.7 million of mortgage debt. The purchase was recorded as a redemption of noncontrolling interest in the consolidated statements of equity.

For the year ended December 31, 2018, the Company purchased a partial interest in 1 community consisting of 166 apartment homes for $35.4 million.

(b) Sales of Real Estate Investments

The table below summarizes the disposition activity for the year ended December 31, 2022 ($ in millions):

Property NameLocationApartment HomesOwnershipQuarter in 2022Sales Price
AnaviaAnaheim, CA250 EPLPQ4$160.0 (1)
Total 2022250   $160.0 

(1) The Company recognized a $94.4 million gain on sale.

For the year ended December 31, 2019,2021, the Company sold a land parcel adjacent tofour apartment communities consisting of 912 apartment homes for $330.0 million, resulting in gains of $143.0 million. In conjunction with the Mylo development project located in Santa Clara, CA, for $10.8sales, the Company repaid $29.7 million and recorded an immaterial gain as well as land located in San Mateo, CA,of mortgage debt that had been held for future development for $12.5 million and recorded a lossencumbered one of $3.2 million.the properties.

For the year ended December 31, 2018,2020, the Company sold 2four apartment communities consisting of 669670 apartment homes for $352.0$343.5 million, resulting in gains totaling $61.9of $65.0 million.

During 2017, the Company sold 1 community consisting of 270 apartment homes for $132.5 million resulting in a gain of $26.2 million.

(c) Real Estate Assets Held for Sale, net

As of December 31, 2019 and 2018, the Company had no assets classified as held for sale.

(d) Co-investments

The Company has joint ventures 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. Additionally, the Company has invested in six technology co-investments and as of December 31, 2022 the co-investment balance of these investments was $39.4 million and the aggregate commitment was $87.0 million.

In August 2019,January 2022, Wesco VI, LLC (“Wesco VI”), one of the Company formed a newCompany's joint venture entity, BEX IV, LLC ("BEX IV"),ventures with an institutional partner. The Company haspartner, acquired
Vela, a 50.1% ownership interest in the joint venture and an initial equity commitment of $52.2 million. The joint venture is unconsolidated for financial reporting purposes. Also, in August 2019, BEX IV acquired 777 Hamilton, a 195 unit379-unit apartment home community located in Menlo Park,Woodland Hills, CA, for a total contract price of $148.0$183.0 million. The
property was encumbered by a $44.4$100.7 million related party bridge loan from the Company, with an interest rate of 3.25%2.64% that was paid off in January 2022 and a maturity date of November 2019.replaced by permanent secured debt with an institutional lender. See Note 6, Related Party Transactions, for additional details. The scheduled maturity was extended to February 2020 but the related party bridge loan was paid off in December 2019 when BEX IV assumed $44.4 million of mortgage debt, with an interest rate of 3.23% and a maturity date of January 2030.

In August 2019,March 2022, the Wesco V,III, LLC ("Wesco V"III"), one operating agreement was amended to extend the venture. As part of the Company'samendment, the Company earned $17.1 million in promote interest.

In April 2022, the Wesco IV, LLC ("Wesco IV") joint ventures, acquired The Courtyards at 65th Street,venture operating agreement was amended to extend the venture. As part of the amendment, the Company and the joint venture partner agreed that the Company earned a 331 unit apartment home community located in Emeryville, CA, for a total contract pricepromote interest of $178.0approximately $37.5 million. The property was encumbered byCompany agreed to contribute the earned promote interest to the joint venture, resulting in an $89.0 million related party bridge loan fromincrease in the Company, with anCompany's ownership interest rate of the London Interbank Offered Rate ("LIBOR") plus 1.30% and a maturity date of December 2019. See Note 6, Related Party Transactions, forin Wesco IV to 65.1%.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


additional details. The related party bridge loan was paid off in November 2019 when Wesco V assumed $89.0 million of mortgage debt, with an interest rate of LIBOR plus 1.30% and a maturity date of January 2027.

In October 2019, a CPP joint venture, in which Essex had a 55.0% ownership interest, sold Mosso, a 463 unit apartment home community located in San Francisco, CA, for $311.0 million, resulting in a gain of $50.2 million for the Company.

In November 2019, Wesco V acquired Velo and Ray Apartments, a 308 unit apartment home community located in Seattle, WA, for a total contract price of $133.0 million. The property was encumbered by an $85.5 million related party bridge loan from the Company, with an interest rate of LIBOR plus 1.30% and a maturity date of February 2020. See Note 6, Related Party Transactions, for additional details.

The carrying values of the Company’s co-investments as of December 31, 20192022 and 20182021 are as follows ($ in thousands, except in parenthetical):
Weighted Average Essex OwnershipDecember 31,
 
Percentage (1)
20222021
Ownership interest in:
Wesco I, Wesco III, Wesco IV, Wesco V and Wesco VI (2)
54 %$178,552 $168,198 
BEXAEW, BEX II, BEX IV and 500 Folsom50 %238,537 270,550 
Other (3)
52 %74,742 126,503 
Total operating and other co-investments, net491,831 565,251 
Total development co-investments51 %12,994 11,076 
Total preferred interest co-investments (includes related party investments of $87.1 million and $71.1 million as of December 31, 2022 and December 31, 2021, respectively - Note 6 - Related Party Transactions for further discussion)580,134 565,930 
Total co-investments, net$1,084,959 $1,142,257 
 Weighted Average Essex Ownership December 31,
 
Percentage (1)
 2019 2018
Ownership interest in:     
CPPIB55% $345,466
 $482,507
Wesco I, Wesco III, Wesco IV, and Wesco V51% 216,756
 194,890
BEXAEW, BEX II, BEX III, and BEX IV50% 160,888
 121,780
Other48% 20,351
 34,093
Total operating and other co-investments, net  743,461
 833,270
Total predevelopment and development co-investments50% 146,944
 94,060
Total preferred interest co-investments (includes related party investments of $73.2 million and $51.8 million as of December 31, 2019 and December 31, 2018, respectively - Note 6 - Related Party Transactions for further discussion)  444,934
 372,810
Total co-investments, net  $1,335,339
 $1,300,140


(1)(1)Weighted average Company ownership percentages are as of December 31, 2022.
Weighted average Company ownership percentages are as of December 31, 2019.

(2)As of December 31, 2022, the Company's investments in Wesco I, Wesco III, and Wesco IV were classified as a liability of $41.7 million due to distributions received in excess of the Company's investment. As of December 31, 2021, the Company's investment in Wesco I was classified as a liability of $35.3 million due to distributions received in excess of the Company's investment.
(3)As of December 31, 2022, the Company's investments in Expo and Century Towers were classified as a liability of $0.8 million due to distributions received in excess of the Company's investment. As of December 31, 2021, the Company's investment in Expo was classified as a liability of $0.2 million due to distributions received in excess of the Company's investment. The combined summarized financial information ofweighted average Essex ownership percentage excludes our investments in non-core technology co-investments is as follows ($ in thousands):which are carried at fair value.

 December 31,
 2019 2018
Combined balance sheets: (1)
   
Rental properties and real estate under development$4,733,762
 $4,367,987
Other assets139,562
 104,119
Total assets$4,873,324
 $4,472,106
Debt$2,442,213
 $2,190,764
Other liabilities117,160
 106,316
Equity2,313,951
 2,175,026
Total liabilities and equity$4,873,324
 $4,472,106
Company's share of equity$1,335,339
 $1,300,140


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


The combined summarized financial information of co-investments is as follows ($ in thousands):
 December 31,
 20222021
Combined balance sheets: (1)
Rental properties and real estate under development$4,955,051 $4,603,465 
Other assets294,663 278,411 
Total assets$5,249,714 $4,881,876 
Debt$3,397,113 $3,046,765 
Other liabilities264,872 200,129 
Equity1,587,729 1,634,982 
Total liabilities and equity$5,249,714 $4,881,876 
Company's share of equity$1,084,959 $1,142,257 

Years ended
December 31,
Years ended
December 31,
2019 2018 2017 202220212020
Combined statements of income: (1)
     
Combined statements of income: (1)
Property revenues$336,922
 $332,164
 $312,841
Property revenues$373,074 $289,680 $300,624 
Property operating expenses(115,658) (107,584) (110,583)Property operating expenses(140,175)(115,023)(108,682)
Net operating income221,264
 224,580
 202,258
Net operating income232,899 174,657 191,942 
Gain on sale of real estate112,918
 24,218
 90,663
Interest expense(65,665) (63,913) (62,844)Interest expense(100,913)(65,172)(78,962)
General and administrative(9,575) (6,379) (9,091)General and administrative(20,579)(17,885)(17,079)
Depreciation and amortization(121,006) (126,485) (118,048)Depreciation and amortization(164,186)(133,787)(117,836)
Net income$137,936
 $52,021
 $102,938
Net income$(52,779)$(42,187)$(21,935)
Company's share of net income (2)
$112,136
 $89,132
 $86,445
Company's share of net income (2)
$26,030 $111,721 $66,512 

(1)
(1)Includes preferred equity investments held by the 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 promote income and income from early redemption of preferred equity investments. Includes related party income of $7.4 million, $9.1 million, and $8.6 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Includes preferred equity investments held by the 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 promote income and income from early redemption of preferred equity investments. Includes related party income of $7.5 million, $2.0 million, and $1.9 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Operating Co-investments

As of December 31, 20192022 and 2018,2021, the Company, through several joint ventures, owned 10,67210,425 and 10,61310,257 apartment homes, respectively, in operating communities. The Company’s book value of these co-investments was $743.5$491.8 million and $833.3$565.3 million at December 31, 20192022 and 2018,2021, respectively.

Predevelopment and Development Co-investments

As of both December 31, 20192022 and 2018,2021, the Company, through several joint ventures, owned 806 and 814264 apartment homes in predevelopment and development communities, respectively.communities. The Company’s book value of these co-investments was $146.9$13.0 million and $94.1$11.1 million at December 31, 20192022 and 2018,2021, respectively.





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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

In 2017,2020, the Company entered into a joint venture to develop Patina at Midtown (formerly known as Ohlone)LIVIA (fka Scripps Mesa Apartments), a multifamily 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 20172020. The property is projected to commence initial occupancy in the second quarter of 2023 and the community is expectedprojected to openbe fully stabilized in the first quarter of 2020.2024. The Company has also committed to a $28.9$5.9 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 multifamily community comprised of 537 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. The property began initial occupancy in the third quarter of 2019 and is expected to be fully stabilized by the fourth quarter of 2020. 

Preferred Equity Investments

As of December 31, 20192022 and 2018,2021, the Company held preferred equity investment interests in several joint ventures which own real estate. The Company’s book value of these preferred equity investments was $444.9$580.1 million and $372.8$565.9 million at December 31, 20192022 and 2018,2021, respectively, and is included in the co-investments line in the accompanying consolidated balance sheets.
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, 2022, 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, 2022, 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 2022 to February 2030. As of December 31, 2022, 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 5five 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


2024. As of December 31, 2019,2022, the Company had fully funded $125.4$141.7 million of the $141.7 million of commitments. The remaining committed amount is expected to be funded in 2020.

During 2018, the Company made commitments to fund $45.1 million of preferred equity investment in 2two 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, 2019,2022, the Company had funded $41.1$42.1 million of the $45.1 million of commitments. The remaining committed amount willis expected to be funded when requested by the sponsors.

In February 2019,During 2022, the Company received cash proceeds of $10.9 million, including an early redemption fee of $0.1 million, for the full redemption of a related party preferred equity investment in a joint venture that holds property in San Jose, CA. See Note 6, Related Party Transactions, for additional details.

In April 2019, the Company received cash of $16.3 million, including an early redemption fee of $0.7 million, for the full redemption of a preferred equity investment in a joint venture that holds property in Santa Ana, CA.

In September 2019, the Company received cash of $14.8 million, including an early redemption fee of $0.3 million, for the full redemption of a preferred equity investment in a property located in Redmond, WA.

In September 2019, the Company received cash of $16.3 million, including an early redemption fee of $1.4 million, for the full redemption of a preferred equity investment in a property located in Seattle, WA.

In October 2019, the Company received cash of $15.8 million, including an early redemption fee of $0.2 million, for the full redemption of a preferred equity investment in a property located in San Jose, CA.

In November 2019, the Company received cash of $16.0$132.6 million, including an early redemption fee of $0.9 million, for the full redemption of three preferred equity investments and partial redemption of two preferred equity investments in joint ventures that hold properties located in California. The Company recorded a $2.1 million impairment loss from a preferred equity investment in an unconsolidated co-investment for the year ended December 31, 2022.

In November 2021, the Company converted $11.0 million of its existing preferred equity investment in Silver, a property268-unit apartment home community located in Bellevue, WA.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 rate of 3.15%.

(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, 2019,2022, the Company's development pipeline was comprised of 5 consolidated projects under development, 2one unconsolidated joint venture projectsproject under development aggregating 264 apartment homes and various predevelopment projects, aggregating 1,960 apartment homes, with total incurred costs of $1.0 billion.$102.0 million.

(4) Revenues

On January 1, 2018, the Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers" using a modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported in accordance with the old revenue recognition standard.

Based on a full analysis of applicable contracts, the Company determined that the new standard did not have an impact to reported revenues from prior or current periods.

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


(4) Revenues

 2019 2018 2017
Rental income (1)
$1,425,585
 $1,366,590
 $1,326,464
Other property (1)
25,043
 24,280
 27,861
Management and other fees from affiliates9,527
 9,183
 9,574
Total revenues$1,460,155
 $1,400,053
 $1,363,899
Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands):
202220212020
Rental income$1,573,368 $1,410,197 $1,462,161 
Other property22,307 21,221 23,989 
Management and other fees from affiliates11,139 9,138 9,598 
Total revenues$1,606,814 $1,440,556 $1,495,748 

(1)
On January 1, 2019, the Company adopted ASU No. 2016-02 and ASU No. 2018-11. As a result of this adoption, certain amounts previously classified as other property revenue have been reclassified to rental income. Prior period amounts have been adjusted to conform to the current period's presentation.

The following table presents the Company’s rental and other property-leasingproperty revenues disaggregated by geographic operating segment ($ in thousands):
202220212020
Southern California$652,742 $580,305 $558,839 
Northern California639,138 584,034 604,348 
Seattle Metro271,248 239,839 243,900 
Other real estate assets (1)
32,547 27,240 79,063 
Total rental and other property revenues$1,595,675 $1,431,418 $1,486,150 

 2019 2018 2017
Southern California$610,240
 $592,281
 $574,552
Northern California569,556
 522,561
 505,313
Seattle Metro245,476
 236,525
 229,871
Other real estate assets (1)
25,356
 39,503
 44,589
Total rental and other property revenues$1,450,628
 $1,390,870
 $1,354,325
(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.

(1)
Other real estate assets consists of revenue generated from retail space, commercial properties, held for sale properties, and disposition properties. 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):
202220212020
Same-property (1)
$1,484,976 $1,346,680 $1,363,241 
Acquisitions (2)
8,793 2,239 — 
Development (3)
43,139 31,270 20,050 
Redevelopment5,766 6,169 6,931 
Non-residential/other, net (4)
58,120 55,871 74,072 
Straight line rent concession (5)
(5,119)(10,811)21,856 
Total rental and other property revenues$1,595,675 $1,431,418 $1,486,150 

(1)Properties that have comparable stabilized results as of January 1, 2021 and are consolidated by the Company for the years ended December 31, 2022, 2021, and 2020. 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, 2021.
(3)Development includes properties developed which did not have stabilized results as of January 1, 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.




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 2019 2018 2017
Same-property (1)
$1,367,311
 $1,321,862
 $1,284,030
Acquisitions (2)
22,924
 259
 —
Development (3)
7,562
 2,713
 —
Redevelopment20,988
 20,345
 19,641
Non-residential/other, net (4)
31,843
 45,691
 50,654
Total rental and other property revenues$1,450,628
 $1,390,870
 $1,354,325
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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

(1)
Properties that have comparable stabilized results as of January 1, 2018 and are consolidated by the Company for the years ended December 31, 2019, 2018, and 2017. A community is generally considered to have reach stabilized operations once it achieves an initial occupancy of 95%.
(2)
Acquisitions includes properties acquired which did not have comparable stabilized results as of January 1, 2018.
(3)
Development includes properties developed which did not have stabilized results as of January 1, 2018.
(4)
Non-residential/other, net consists of revenue generated from retail space, commercial properties, held for sale properties, disposition properties and student housing.

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 $3.9$1.7 million and $6.2$2.4 million as of December 31, 20192022 and December 31, 2018,2021, 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, 20192022 that was included in the December 31, 20182021 deferred revenue balance was $2.3$0.7 million, which was included in interest and other income within the consolidated statements of income and comprehensive income.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


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, 2019,2022, the Company had $3.9$1.7 million of remaining performance obligations. The Company expects to recognize approximately 19%40% of these remaining performance obligations in 2020,2023, an additional 38%47% through 2022,2025, 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, 2022, 2021, and 2020

(5) Notes and Other Receivables
 
Notes and other receivables consist of the following as of December 31, 20192022 and 20182021 ($ in thousands):
 20222021
Notes receivable, secured, weighted average interest rate of 10.10% as of December 31, 2022 and 10.50% as of December 31, 2021, due February 2023
(Originated March 2020) (1)
$— $17,051 
Note receivable, secured, bearing interest at 9.00%, due December 2023 (Originated November 2020) (2)
— 87,365 
Note receivable, secured, bearing interest at 11.50%, due November 2024 (Originated November 2020)33,477 29,729 
Related party note receivable, secured, bearing interest at 2.15%, due March 2022 (Originated September 2021) (3) (7)
— 29,314 
Related party note receivable, secured, bearing interest at 2.30%, due April 2022 (Originated October 2021) (4) (7)
— 30,399 
Note receivable, secured, bearing interest at 11.00%, due October 2025 (Originated October 2021)21,452 — 
Related party note receivable, secured, bearing interest at 2.36%, due February 2022 (Originated November 2021) (5) (7)
— 62,058 
Related party note receivable, secured, bearing interest at 2.36%, due February 2022 (Originated November 2021) (6) (7)
— 48,562 
Note receivable, secured, bearing interest at 12.00%, due August 2024 (Originated August 2022)10,350 — 
Notes and other receivables from affiliates (7) (8)
6,975 6,556 
Straight line rent receivables (9)
12,164 15,523 
Other receivables18,961 15,232 
Allowance for credit losses(334)(756)
 Total notes and other receivables$103,045 $341,033 

(1) In December 2022, the Company received cash of $15.0 million to payoff the principal of this note receivable.
(2) In November 2022, the Company received cash of $89.3 million to payoff the principal of this note receivable. Additionally, the Company received an early redemption fee of $0.8 million from the payoff.
(3) In January 2022, the Company received cash of $29.2 million to payoff the principal of this note receivable.
(4) In January 2022, the Company received cash of $30.3 million to payoff the principal of this note receivable.
(5) In January 2022, the Company received cash of $61.9 million to payoff the principal of this note receivable.
(6) In January 2022, the Company received cash of $48.4 million to payoff the principal of this note receivable.
(7) See Note 6, Related Party Transactions, for additional details.
(8) These amounts consist of short-term loans outstanding and due from various joint ventures as of December 31, 2022 and 2021, respectively.
(9) 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):
Mezzanine LoansBridge LoansTotal
Balance at December 31, 2021$671 $85 $756 
Provision for credit losses(337)(85)(422)
Balance at December 31, 2022$334 $— $334 

No loans were placed on nonaccrual status or charged off during the year ended December 31, 2022 or 2021.
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 2019 2018
Note receivable, secured, bearing interest at 9.00%, due May 202116,828
 15,226
Note receivable, secured, bearing interest at 10.75%, due September 2020 (1)
—
 32,650
Note receivable, secured, bearing interest at 9.90%, due November 202112,838
 —
Related party note receivable, secured, bearing interest at 9.50%, due October 2019 (2)(3)
—
 6,618
Related party note receivable, secured, bearing variable rate interest, due February 2020 (3)
85,713
 —
Notes and other receivables from affiliates (4)
4,442
 4,457
Other receivables14,544
 12,944
 Total notes and receivables$134,365
 $71,895
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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

(1)
In December 2019, the Company received cash of $36.1 million for the payoff of this note receivable.
(2)
In October 2019, the Company received cash of $6.7 million for the payoff of this note receivable.
(3)
See Note 6, Related Party Transactions, for additional details.
(4)
These amounts consist of short-term loans outstanding and due from various joint ventures as of December 31, 2019 and 2018, respectively. See Note 6, Related Party Transactions, for additional details.

(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" has a direct or indirect interest. A "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, 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"), 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 and owns a controlling interest in 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. For the yearsyear ended December 31, 2019, 20182022 and 20172021, there were 0no brokerage commissionscommission fees paid by the Company to MMI orMMC and its affiliates.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
affiliates related to real estate transactions. For the year ended December 31, 2019, 2018,2020, the Company paid brokerage commissions of $0.2 million to MMC and 2017its affiliates 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 $13.8totaled $14.1 million, $13.9$10.3 million, and $12.6$11.3 million for the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of $4.3$3.0 million, $4.8$1.1 million, and $3.0$1.7 million against general and administrative expenses for the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively.

As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of December 31, 20192022 and 2018, $4.42021, $7.0 million and $4.5$6.6 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 funded an $11.2 million preferred equity investment in an entity whose sponsor includes and affiliate of MMC. The entity owns three multifamily communities located in Azusa, CA. The investment initially accrues interest based on a 9.5% preferred return and is scheduled to mature in August 2027.

In February 2022, the Company provided a $6.6$32.8 million mezzaninerelated party bridge loan to BEX II in connection with the payoff of a limited liability companydebt related to one of its properties located in which MMC holdsSouthern 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 significant ownership$100.7 million related party bridge loan to Wesco VI in connection with the acquisition of Vela. The note receivable accrued interest through subsidiaries.at 2.64% and was scheduled to mature in February 2022, but was paid off in 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.

In November 2021, the Company provided a $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 mezzaninenote receivable accrued interest at 2.36% and was scheduled to mature in February 2022 but was paid off in January 2022. The bridge loan wasis classified within notes and other receivables in the accompanying consolidated balance sheetssheets.

In November 2021, the Company provided a $61.9 million related party bridge loan to Wesco VI in connection with the acquisition of The Rexford. The note receivable accrued interest at 2.36% and was scheduled to mature in February 2022, but
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

was paid off in January 2022. The bridge loan is classified within notes and other receivables in the accompanying consolidated balance sheets.

In October 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. The bridge loan is classified within notes and other receivables in the accompanying consolidated balance sheets.

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. The bridge loan is classified within notes and other receivables in the accompanying consolidated balance sheets.

In March 2021, the Company provided 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 October 2019.July 2021.

In November 2019, the Company provided an $85.5 million related party bridge loan to Wesco V as part ofin connection with the acquisition of Velo and Ray. The note receivable accrued interest at LIBOR plus 1.30% and was scheduled to mature in February 2020, but was paid off in January 2020. See Note 18, Subsequent Events, for further details. The bridge loan is classified within notes and other receivables in the accompanying consolidated balance sheets.

In August 2019, the Company provided an $89.0 million related party bridge loan to Wesco V as part of the acquisition of The Courtyards at 65th Street. The note receivable accrued interest at LIBOR plus 1.30% and was paid off in November 2019.

In August 2019, the Company provided a $44.4 million related party bridge loan to BEX IV as part of the acquisition of 777 Hamilton. The note receivable accrued interest at 3.25%. In November 2019, the term of the bridge loan was extended to February 2020, but was paid off in December 2019.

In June 2019, the Company acquired Brio, a 300 unit300-unit apartment home community located in Walnut Creek, CA. The Company issued DownREIT units to an affiliate of MMC, based on a contract price of $164.9 million. The property was encumbered by $98.7 million of mortgage debt which was assumed by the Company at the time of acquisition. As a result of this transaction, the Company consolidated the property, based on a VIE analysis performed by the Company.

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 hasinitially accrued interest based on an initial11.0% preferred return which was reduced to 9.0% upon completion and lease-up of 11.0% andthe project. The investment is scheduled to mature in February 2024.

In October 2018, the Company funded a $18.6 million preferred equity investment in an entity whose sponsor is an affiliate of MMC. The entity wholly owns a 268 apartment home community development located in Burlingame, CA. ThisThe investment accruesinitially accrued interest based on an initial 12.00%a 12.0% preferred return.return which was reduced to 9.0% upon completion and lease-up of the project. The investment is scheduled to mature in April 2024.

In May 2018, the Company made a commitment 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 accruesaccrued interest based on a 10.25% initial preferred return. The investment iswas 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, and the maturity of the remaining commitment was extended to December 2028. As of December 31, 2019,2022, the Company had funded $22.5a remaining commitment of $13.0 million of the commitment.and continues to accrue interest on a 9.0% preferred return. The remaining committed amount willis expected to be funded if and when requested by the sponsors.

In November 2017, the Company provided a $29.5 million related party bridge loan to a property acquired by BEX III. The note receivable accrued interest at 3.5% and was paid off in January 2018.

In March 2017, the Company converted its existing $15.3 million 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 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.

In 2015, the Company made preferred equity investments totaling $20.0 million in 3 entities affiliated with MMC that own apartment communities in California. The Company earned a 9.5% preferred return on each such investment. One $5.0 million

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


investment, which was scheduled to mature in 2022, was fully redeemed in 2017. Another $5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2018. The remaining investment was fully redeemed in February 2019.

(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, 20192022 and 20182021 ($ in thousands):
20222021Weighted Average
Maturity
In Years as of December 31, 2022
Term loan - variable rate, net (1)
$(1,611)$— N/A
Bonds public offering - fixed rate, net5,313,779 5,307,196 7.7
Unsecured debt, net (2)
5,312,168 5,307,196  
Lines of credit (3)
52,073 341,257 N/A
Total unsecured debt$5,364,241 $5,648,453  
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering3.3 %3.3 % 
Weighted average interest rate on lines of credit4.4 %1.0 % 
 2019 2018 
Weighted Average
Maturity
In Years
Unsecured bonds private placement - fixed rate$199,820
 $274,624
 1.5
Term loan - variable rate349,189
 348,813
 2.1
Bonds public offering - fixed rate4,214,197
 3,175,879
 7.4
Unsecured debt, net (1)
4,763,206
 3,799,316
  
Lines of credit (2)
55,000
 —
  
Total unsecured debt$4,818,206
 $3,799,316
  
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering3.8% 3.9%  
Weighted average interest rate on variable rate term loan2.7% 3.0%  
Weighted average interest rate on lines of credit2.5% 3.2%  


(1)(1)In October 2022, the Operating Partnership obtained a $300.0 million unsecured term loan priced at Adjusted SOFR plus 0.85%. The loan has been swapped to an all-in fixed rate of 4.2% and matures in October 2024 with three 12-month extension options, exercisable at the Company's option. The loan includes a six-month delayed draw feature. There was $1.6 million of unamortized debt issuance costs as of December 31, 2022.
Includes unamortized discount, net of premiums, of $12.2 million and $7.1 million and unamortized debt issuance costs of $24.5 million and $18.5 million as of December 31, 2019 and 2018, respectively.
(2)
Lines of credit, related to the Company's 2 lines of unsecured credit aggregating $1.24 billion, excludes unamortized debt issuance costs of $3.8 million and $3.9 million as of December 31, 2019 and 2018, respectively. These debt issuance costs are included in prepaid expenses and other assets on the consolidated balance sheets.

(2)Includes unamortized discount, net of premiums, of $7.9 million and $9.9 million and unamortized debt issuance costs of $29.9 million and $32.9 million as of December 31, 2022 and 2021, 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 $5.1 million and $4.4 million as of December 31, 2022 and 2021, respectively. These debt issuance costs are included in prepaid expenses and other assets on the consolidated balance sheets. In July 2022, the Company's $1.2 billion credit facility was amended such that the scheduled maturity date was extended to January 2027 with two 6-month extension options, exercisable at the Company's option. The underlying interest rate on the line is based on a tiered rate structure tied to the Company's corporate ratings and is at the Adjusted Secured Overnight Financing Rate ("SOFR") plus 0.75%. As of December 31, 2019 and 2018, the Company2021, this credit facility had $200.0 million and $275.0 million of private placement unsecured bonds outstanding at an average effective interest rate of 4.4%LIBOR plus 0.775%, which is based on a tiered rate structure tied to the Company's credit ratings and 4.5%, respectively.

a scheduled maturity date of September 2025 with three six-month extensions, exercisable at the Company's option. In July 2022, the Company's $35.0 million working capital unsecured line of credit was amended such that the scheduled maturity date was extended to July 2024. The followingunderlying interest rate on this line is based on a summary oftiered rate structure tied to the Company’s unsecured private placement bonds asCompany's corporate ratings and is at the Adjusted SOFR plus 0.75%. As of December 31, 20192021, the Company's working capital unsecured line of credit had an interest rate of LIBOR plus 0.775%, which is based on a tiered rate structure tied to the Company's credit ratings, and 2018 ($ in thousands):had a scheduled maturity date of February 2023.
 Maturity 2019 2018 
Coupon
Rate
Senior unsecured private placement notesDecember 2019 —
 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%
    $200,000
 $275,000
  


AsIn March 2021, the Operating Partnership issued $450.0 million of both December 31, 2019senior 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 2018,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 hadused the net proceeds of this offering to repay upcoming debt maturities, including all or a portion of certain unsecured term loans, outstanding of $350.0 million at an average interest rate of 2.7% and 3.0%, respectively.for general corporate and working capital purposes. These loansbonds are included in the line "Term loan - variable"Bonds public offering-fixed rate" in the table above, and as of December 31, 20192022, and 2018,2021, the carrying value of the 2028 Notes, net of discount and debt issuance costs, was $349.2$445.4 million and $348.8 million, respectively, and the term loan matures in February 2022. The Company had entered into 5 interest rate swap contracts, for a term of five years with a notional amount totaling $175.0 million, which will effectively convert the interest rate on $175.0 million of the term loan to a fixed rate of 2.3%. These interest rate swaps are accounted for as cash flow hedges.$444.4 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020

In June 2021, the Operating Partnership issued $300.0 million of senior unsecured notes due on June 15, 2031 with a coupon rate of 2.550% per annum (the "2031 Notes"), which are payable on June 15 and December 15 of each year, beginning on December 15, 2021. The 2031 Notes were offered to investors at a price of 99.367% of par value. The 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 (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. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2022, and 2021, the carrying value of the 2031 Notes, net of discount and debt issuance costs, was $296.2 million and $295.7 million.

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 are 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 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 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 2032 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, 2022, and 2021, the carrying value of the 2032 Notes, net of premiums and debt issuance costs, was $650.8 million and $650.6 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 coupon rate of 1.650% (the “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 2031 Notes, the “Notes”). The 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 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 bonds are included in the line "Bonds public offering-fixed rate" in the table above, the carrying value of the 2031 Notes and 2050 Notes, net of discount and debt issuance costs was $295.5 million and $295.8 million respectively as of December 31, 2022, and $295.1 million and $295.8 million respectively as of December 31, 2021.

In August 2019, the CompanyOperating Partnership issued $400.0 million of senior unsecured notes due on January 15, 2030, with a coupon rate of 3.000% per annum (the "2030 Notes"), which are payable 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 CompanyOperating 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 of December 31, 2019,2022, and 2021, the carrying value of the 2030 Notes, net of discount and debt issuance costs, was $542.3 million.$544.7 million and $543.9 million, respectively.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

In February 2019, the CompanyOperating 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 CompanyOperating Partnership issued an additional $150.0 million of the 2029 Notes at a price of 100.717% of the principal amount thereof. 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, 2019,2022, and 2021, the carrying value of the 2029 Notes, net of discount and debt issuance costs was $494.1 million.$496.0 million and $495.4 million, respectively.

In March 2018, the CompanyOperating 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, 20192022 and 2018,2021, the carrying value of the 2048 Notes, net of discount and debt issuance costs was $295.6$296.1 million and $295.4$295.9 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 Notes 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 public offering-fixed rate" in the table above, and as of December 31, 20192022 and 2018,2021, the carrying value of the 2027 Notes, net of discount and debt issuance costs was $346.3$347.8 million and $345.8$347.3 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 public offering-fixed rate" in the table above, and as of December 31, 20192022 and 2018,2021, the carrying value of the 2026 Notes, net of discount and debt issuance costs was $445.7$447.8 million and $445.0$447.1 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 public offering-fixed rate" in the table above, and as of December 31, 20192022 and 2018,2021, the carrying value of the 2025 Notes, net of discount and debt issuance costs was $497.1$498.8 million and $496.5$498.2 million, respectively.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


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, 20192022 and 2018, the carrying value of2021, the BRE Notes plus unamortized premium was $599.4 million and $601.3 million, respectively.had no amount outstanding. In March 2017, the Company paid off $300.0 million of 5.500% senior notes, at maturity. In December 2020, the Company paid off $300.0 million of 5.200% senior notes. In June 2021, the Company paid off the remaining $300.0 million of 3.375% senior notes due 2023.

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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

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, 20192022 and 2018,2021, the carrying value of the 2024 Notes, net of discount and debt issuance costs was $397.1$399.1 million and $396.5$398.5 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 public offering-fixed rate" in the table above, and as of December 31, 20192022 and 2018,2021, the carrying value of the 2023 Notes, net of discount and debt issuance costs was $298.2$299.8 million and $297.6$299.3 million, respectively.

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 bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2019 and 2018, the carrying value of the 2022 Notes, net of unamortized discount and debt issuance costs was $298.4 million and $297.8 million, respectively.

The following is a summary of the Company’s senior unsecured notes as of December 31, 20192022 and 20182021 ($ in thousands):
Maturity20222021Coupon
Rate
Senior notesMay 2023$300,000 $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 %
   $5,350,000 $5,350,000  
 Maturity 2019 2018 Coupon
Rate
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
 350,000
 3.625%
Senior notesMarch 2029 500,000
 —
 4.000%
Senior notesJanuary 2030 550,000
 —
 3.000%
Senior notesMarch 2048 300,000
 300,000
 4.500%
    $4,250,000
 $3,200,000
  


The aggregate scheduled principal payments of unsecured debt payable, excluding lines of credit, at December 31, 20192022 are as follows ($ in thousands):
2023$300,000 
2024400,000 
2025500,000 
2026450,000 
2027350,000 
Thereafter3,350,000 
$5,350,000 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


2020$—
2021500,000
2022650,000
2023600,000
2024400,000
Thereafter2,650,000
 $4,800,000


As of December 31, 2019,2022, the Company had 2two unsecured lines of credit aggregating $1.24 billion, including a $1.2 billion unsecured line of credit and a $35.0 million working capital unsecured line of credit.

As of December 31, 2019,2022, there was $55.0$40.0 million outstanding on the $1.2 billion unsecured line of credit. In July 2022, this credit facility was amended such that the scheduled maturity date was extended to January 2027 with two 6-month extension options, exercisable at the Company's option. The underlying interest rate on the line is based on a tiered rate structure tied to the Company's corporate ratings and is at the Adjusted Secured Overnight Financing Rate ("SOFR") plus 0.75%. As of December 31, 2018,2021, there was 0 amount$340.0 million outstanding on the line with an interest rate based on a tiered rate structure tied to
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

the Company's credit ratings and was LIBOR plus 0.775%. This line of credit had a scheduled maturity date in September 2025 with three 6-month extensions, exercisable at the Company's option as of December 31, 2021.

As of December 31, 2022, there was $12.1 million outstanding on the Company's $35.0 million working capital unsecured line of credit. In July 2022, the line of credit facility was amended such that the scheduled maturity date was extended to July 2024. The underlying interest rate on this line is based on a tiered rate structure tied to the Company's corporate ratings and is at the Adjusted SOFR plus 0.75%. As of December 31, 2021, there was $1.3 million outstanding on this line. Theline with an interest rate is based on a tiered rate structure tied to the Company's credit ratings and was LIBOR plus 0.825%0.775% as of December 31, 2019. In January 2020, the Company amended the $1.2 billion credit facility such that the scheduled maturity date was extended to December 2023 with 1 18-month extension, exercisable at the Company's option. The interest rate on the amended line is based on a tiered rate structure tied to the Company's credit ratings and is currently at LIBOR plus 0.825%. As of both December 31, 2019 and 2018, there was 0 amount outstanding on the Company's $35.0 million working capital unsecured line of credit. The interest rate on the line is based on a tiered rate structure tied to the Company's credit ratings and was LIBOR plus 0.825% as of December 31, 2019.2021.

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, 20192022 and 2018.2021.

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% per annum (the "2032 Notes"). See Note 18, Subsequent Events, for further details.

(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, 20192022 and 20182021 ($ in thousands):
 20222021
Fixed rate mortgage notes payable$371,849 $415,350 
Variable rate mortgage notes payable (1)
222,094 223,609 
Total mortgage notes payable (2)
$593,943 $638,959 
Number of properties securing mortgage notes11 12 
Remaining terms2-24 years1-25 years
Weighted average interest rate3.5 %2.7 %
 2019 2018
Fixed rate mortgage notes payable$736,490
 $1,538,488
Variable rate mortgage notes payable (1)
254,177
 268,138
Total mortgage notes payable (2)
$990,667
 $1,806,626
Number of properties securing mortgage notes24
 50
Remaining terms1-27 years
 1-28 years
Weighted average interest rate4.1% 4.3%


The aggregate scheduled principal payments of mortgage notes payable at December 31, 20192022 are as follows ($ in thousands):
2023$2,945 
20243,109 
2025133,054 
202699,405 
2027153,955 
Thereafter202,269 
 $594,737 

2020$288,057
202131,653
202243,188
20232,945
20243,109
Thereafter618,383
 $987,335

(1)
Variable rate mortgage notes payable, including $255.4(1)Variable rate mortgage notes payable, including $223.6 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


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 2.3%3.5% at December 20192022 and 2.5%1.1% at December 2018)2021) 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, 2019. As2022 and 2021, respectively.
(2)Includes total unamortized premium, net of discounts, of $1.2 million and $2.5 million and reduced by unamortized debt issuance costs of $2.0 million and $1.5 million as of December 31, 2018, $9.9 million of these bonds was subject to various interest rate cap agreements that limit the maximum interest rate to such bonds. The interest rate cap agreements matured in December 2019.
(2)2022 and 2021, respectively.
Includes total unamortized premium, net of discounts, of $5.9 million and $14.9 million and reduced by unamortized debt issuance costs of $2.6 million and $4.2 million as of December 31, 2019 and 2018, respectively.


For the Company’s mortgage notes payable as of December 31, 2019,2022, monthly interest expense and principal amortization, excluding balloon payments, totaled approximately $5.5$2.3 million and $1.4$0.3 million, respectively. Second deeds of trust accounted for NaNnone of the mortgage notes payable balance as of both December 31, 20192022 and 2018.2021. 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
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

value of the principal being prepaid multiplied by the difference between the interest rate of the mortgage note and the stated yield rate on a U.S. treasury security which generally has an equivalent remaining term as the mortgage note.


(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 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 September 2022, the Company entered into one forward starting interest rate swap, with settlement payments commencing in May 2023, related to the $300.0 million unsecured term loan entered into in October 2022. The term loan is priced at Adjusted SOFR plus 0.85% and has been swapped to an all-in fixed rate of 4.2%. The term loan matures in October 2024 with three 12-month extension options, each exercisable at the Company's option and the swap has a termination date of October 2026. The term loan includes a 6-month delayed draw feature and had no balance drawn as of December 31, 2022.

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 loanfeature that carries a variable interest rate of LIBOR plus 95 basis points. In 2016, the Company entered into 4four forward starting interest rate swaps (settlement payments commenced in March 2017) and in 2017, the Company entered into 1one forward starting interest rate swap (settlement payments commenced in March 2017) all related to the $350.0 million term loan. These 5five swaps, with a total notional amount of $175.0 million bear an average fixed interest rate of 2.3% and are scheduled to mature in February 2022. These derivatives qualify for hedge accounting.were terminated during the year-ended December 31, 2021.

As of December 31, 2019,2022 and 2021, the Company had 0no interest rate caps. As of December 31, 2018, the Company had interest rate caps, which were not accounted for as hedges, totaling a notional amount of $9.9 million that effectively limited the Company’s exposure to interest rate risk by providing a ceiling on the variable interest rate for $9.9 million of the Company’s tax exempt variable rate debt. These interest rate caps matured in December 2019.

As of December 31, 20192022 and 2018,2021, the aggregate carrying value of the interest rate swap contracts waswere an asset of $1.0$5.6 million and $5.8zero, respectively. As of December 31, 2022 and 2021, the swap contracts were presented in the consolidated balance sheets as an asset of $5.6 million and zero, respectively, and iswere included in prepaid expenses and other assets on the consolidated balance sheets, and a liability of $0.2 million and 0, respectively, and is included in other liabilities on the consolidated balance sheets. The aggregate carrying value of the interest rate caps was 0 on the balance sheets as of December 31, 2018.

Hedge ineffectiveness related to cash flow hedges, which is included in interest expense on the consolidated statements of income, was a loss of $0.2 million, a loss of $0.1 million, and a gain of $0.1 millionzero for the years ended December 31, 2019, 2018,2022, 2021, and 20172020 respectively.

The Company has 4four total return swap contracts, with an aggregate notional amount of $255.4$223.6 million, that effectively convert $255.4$223.6 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 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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


all 4four of the total return swaps with $255.4$223.6 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting and had a carrying and fair value of 0zero at both December 31, 20192022 and 2018,2021, respectively. These total return swaps are scheduled to mature between September 2021December 2024 and November 2022.2033. The realized gains of $8.4$7.9 million, $8.7$10.8 million, and $10.1$10.7 million as of December 31, 2019, 2018,2022, 2021, and 2017,2020, respectively, were reported in current yearon the consolidated statements of income as total return swap income.

(10) Lease Agreements - Company as Lessor

As of December 31, 2019,2022, the Company is a lessor of apartment homes at all of its consolidated operating and lease-up communities, 1three commercial building,buildings, and commercial portions of mixed use communities. The apartment homes are rented under short-term leases (generally, lease terms of 9 to 12 months) while commercial lease terms typically range from 5 to 20 years. All such leases are classified as operating leases.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

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 the market rate or gives notice not to renew, the lease will be automatically renewed on a month-to-month term. 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 initial 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 substantial. Furthermore, the Company carries comprehensive liability, fire, extended coverage, and rental loss insurance for each of its communities as well as limited insurance coverage for certain types of extraordinary losses, such as, for example, losses from terrorism or earthquakes.

A maturity analysis of undiscounted future minimum non-cancelable base rent to be received under the above operating leases as of December 31, 20192022 is summarized as follows ($ in thousands):

Future Minimum Rent
2023$697,146 
202421,421 
202517,870 
202614,853 
202712,777 
Thereafter28,820 
$792,887 
 Future Minimum Rent
2020$746,150
202117,986
202214,482
202313,302
202411,542
Thereafter26,967
 $830,429


As of December 31, 2018, in accordance with previously applicable lease accounting guidance, ASC 840 "Leases", the future minimum non-cancelable base rent to be received under one commercial building and commercial portions of mixed use communities, for which the Company was the lessor, was as follows ($ in thousands):


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December 31, 2019, 2018, and 2017


 Future Minimum Rent
2019$16,386
202015,842
202114,412
202213,324
202312,181
Thereafter33,034
 $105,179


Practical Expedients

The Company has elected to accountaccounts 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.

As part of the transition to ASC Topic 842, the Company has elected to use the modified retrospective transition method with the new standard being applied as of the January 1, 2019 adoption date. Additionally, the Company has elected, as of the adoption date, not to reassess whether expired or existing contracts contain leases under the new definition of a lease, not to reassess the lease classification for expired or existing leases, not to reassess whether previously capitalized initial direct costs would qualify for capitalization under ASC Topic 842, and not to reassess whether existing or expired land easements meet the definition of a lease.

(11) Lease Agreements - Company as Lessee

As of December 31, 2019,2022, 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

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, 20192022 and 2018,2021, the Company had no material finance leases.

Supplemental consolidated balance sheet information related to leases as of December 31, 2022 and 2021 is as follows ($ in thousands):
ClassificationDecember 31, 2022December 31, 2021
Assets
     Operating lease right-of-use assetsOperating lease right-of-use assets$67,239 $68,972 
          Total leased assets$67,239 $68,972 
Liabilities
     Operating lease liabilitiesOperating lease liabilities$68,696 $70,675 
          Total lease liabilities$68,696 $70,675 

The components of lease expense for the years ended December 31, 2022 and 2021 were as follows ($ in thousands):
 December 31, 2022December 31, 2021
Operating lease cost$6,697 $6,729 
Variable lease cost1,750 1,639 
Short-term lease cost204 287 
Sublease income(418)(438)
          Total lease cost$8,233 $8,217 

A maturity analysis of lease liabilities as of December 31, 2022 is as follows ($ in thousands):
Operating Leases
2023$6,962 
20247,251 
20256,887 
20265,035 
20273,421 
Thereafter132,556 
Total lease payments$162,112 
Less: Imputed interest(93,416)
Present value of lease liabilities$68,696 

Lease term and discount rate information for leases at December 31, 2022 and 2021 are as follows:
December 31, 2022December 31, 2021
Weighted-average of remaining lease terms (years)
     Operating Leases4040
Weighted-average of discount rates
     Operating Leases5.01 %5.01 %
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December 31, 2019, 2018,2022, 2021, and 20172020


Supplemental consolidated balance sheet information related to leases as of December 31, 2019 is as follows ($ in thousands):
 Classification December 31, 2019
Assets   
     Operating lease right-of-use assetsOperating lease right-of-use assets $74,744
          Total leased assets  $74,744
    
Liabilities   
     Operating lease liabilitiesOperating lease liabilities 76,740
          Total lease liabilities  $76,740


The components of lease expense for the year ended December 31, 2019 were as follows ($ in thousands):
 December 31, 2019
Operating lease cost$6,745
Variable lease cost783
Short-term lease cost610
Sublease income(436)
          Total lease cost$7,702


A maturity analysis of lease liabilities as of December 31, 2019 are as follows ($ in thousands):
 Operating Leases
2020$6,855
20216,877
20226,888
20236,860
20246,585
Thereafter146,673
Total lease payments$180,738
Less: Imputed interest(103,998)
Present Value of lease liabilities$76,740


Lease term and discount rate information for leases at December 31, 2019 are as follows:
Weighted-average of remaining lease terms (years)
     Operating Leases39
Weighted-average of discount rates
     Operating Leases4.99%



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


As of December 31, 2018, in accordance with previously applicable lease accounting guidance, ASC 840, the total minimum lease commitments under operating leases was as follows ($ in thousands):

 Future Minimum Rent
2019$6,811
20206,855
20216,877
20226,888
20236,860
Thereafter153,258
 $187,549


Practical Expedients

As part of the transition to ASC Topic 842, the Company elected to use the modified retrospective transition method with the new standard being applied as of the January 1, 2019 adoption date. Additionally, the Company has elected, as of the adoption date, not to reassess whether expired or existing contracts contain leases under the new definition of a lease, not to reassess the lease classification for expired or existing leases, not to reassess whether previously capitalized initial direct costs would qualify for capitalization under ASC Topic 842, and not to reassess whether existing or expired land easements meet the definition of a lease.

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
 
Common Stock Offerings

In September 2018,2021, the Company entered into a new equity 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 (the "2018"2021 ATM Program"). Upon entering into the 2018 ATM Program, the Company simultaneously terminated its existing equity distribution agreements, which were entered into in March 2016 in connection with its prior at-the-market equity offering program (the "2016 ATM Program").
In connection with the 20182021 ATM Program, the Company may also enter into related forward sale agreements, whereby, at the Company’s discretion, itand may sell shares of its common stock under the 2018 ATM Program under forward salepursuant 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 receivingreceipt of the proceeds from the sale of shares until a later date. date should the Company elect to settle such forward sale agreement, in whole or in part, in shares of its common stock.

The Company anticipates using2021 ATM Program replaced the net proceeds,Company's prior equity distribution agreement entered into in September 2018 ("the "2018 ATM Program") which are contributed towas terminated upon the Operating Partnership, to acquire, develop, or redevelop properties, which primarily will be apartment communities, to make other investments and for working capital or general corporate purposes, which may includeestablishment of the repayment of indebtedness.2021 ATM Program.
For the year ended December 31, 2019, the Company issued 228,271 shares of common stock through the 2018 ATM Program at an average price of $321.56 per share for proceeds of $73.4 million. For the year ended December 31, 2018,2022, the Company did not sell any shares of its common stock through the 2018 ATM Program or through the 20162021 ATM Program. For the yearyears ended December 31, 2017,2021 and December 31, 2020, the Company issued 345,444did not sell any shares of its common stock through the 20162021 ATM program, at an average price of $260.38 per share for proceeds of $89.9 million.Program or the 2018 ATM Program. As of December 31, 2019,2022, there wereare no outstanding forward sale agreements, and $826.6$900.0 million of shares remainedremain available to be sold under this program.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


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

As of December 31, 20192022 and 2018,2021, the Operating Partnership had outstanding 2,158,3962,166,359 and 2,171,309 operating partnership units2,176,327 OP Units respectively. As of both December 31, 2022 and 143,257 and 134,0802021 the Operating Partnership had 106,137 vested LTIP units, respectively.units. The Operating Partnership’s general partner, Essex, owned 96.6% of the partnership interests in the Operating Partnership as of both December 31, 20192022 and 2018,2021, 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 unitholder 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 $692.5$481.6 million and $565.3$804.0 million based on the closing price of Essex's common stock as of December 31, 20192022 and 2018,2021, respectively.

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December 31, 2022, 2021, and 2020

(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):
 202220212020
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$408,315 65,079,764 $6.27 $488,554 65,051,465 $7.51 $568,870 65,454,057 $8.69 
Effect of Dilutive Securities
Stock options18,422 — 37,409 — 16,678 
DownREIT units— — — — 783 94,247 
Diluted:         
Net income available to common stockholders$408,315 65,098,186 $6.27 $488,554 65,088,874 $7.51 $569,653 65,564,982 $8.69 
 2019 2018 2017
 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 stockholders$439,286
 65,840,422
 $6.67
 $390,153
 66,041,058
 $5.91
 $433,059
 65,829,155
 $6.58
Effect of Dilutive Securities                 
Stock options—
 99,033
   —
 44,031
   —
 69,100
  
Diluted: 
  
  
  
  
  
  
  
  
Net income available to common stockholders$439,286
 65,939,455
 $6.66
 $390,153
 66,085,089
 $5.90
 $433,059
 65,898,255
 $6.57


The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,300,478, 2,274,941,2,276,341, 2,289,391 and 2,252,575,2,296,608, which include vested Series Z-1 Incentive Units, 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units, for the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $15.3$14.3 million, $13.5$17.2 million and $14.8$20.0 million for the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively. Additionally, the table excludes all DownREIT 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 115,066, 160,039,253,845, 116,380, and 154,793,403,458 for the years ended December 31, 2019, 2018,2022, 2021, and 2017,2020, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the

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December 31, 2019, 2018, and 2017


average unearned compensation were greater than the average market price of the common stock for the years ended and, therefore, were anti-dilutive.

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):
 202220212020
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$422,612 67,356,105 $6.27 $505,745 67,340,856 $7.51 $588,782 67,750,665 $8.69 
Effect of Dilutive Securities 
Stock options— 18,422  — 37,409  — 16,678  
DownREIT units— — — — 783 94,247 
Diluted:         
Net income available to common unitholders$422,612 67,374,527 $6.27 $505,745 67,378,265 $7.51 $589,565 67,861,590 $8.69 

 2019 2018 2017
 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$454,629
 68,140,900
 $6.67
 $403,605
 68,315,999
 $5.91
 $447,884
 68,081,730
 $6.58
Effect of Dilutive Securities                 
Stock options—
 99,033
  
 —
 44,031
  
 —
 69,100
  
Diluted: 
  
  
  
  
  
  
  
  
Net income available to common unitholders$454,629
 68,239,933
 $6.66
 $403,605
 68,360,030
 $5.90
 $447,884
 68,150,830
 $6.57
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

Stock options of 115,066, 160,039,253,845, 116,380, and 154,793,403,458, for the years ended December 31, 2019, 2018,2022, 2021, and 2017,2020, 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 units for which the Operating Partnership has the ability

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December 31, 2022, 2021, and intention to redeem the units for cash and does not consider them to be common stock equivalents.2020

(14) Equity Based Compensation Plans
 
Stock Options and Restricted Stock
 
In May 2018, stockholders approved the Company’s 2018 Stock Award and Incentive Compensation Plan ("2018 Plan"). The 2018 Plan serves as the successor to the Company’s 2013 Stock Incentive Plan (the "2013 Plan"). The Company’s 2018 Plan provides incentives to attract and retain officers, directors and key employees. The 2018 Plan provides for the grant of stock-based awards to employees, directors and consultants of the Company and its affiliates. The aggregate number of shares of the Company’s common stock available for issuance pursuant to awards granted under the 2018 Plan is 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 2013 Plan that are forfeited or otherwise not issued under such awards. No further awards will be granted under the 2013 Plan and 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 the authority to administer the 2018 Plan.

Equity-based compensation costs for options and restricted stock under the fair value method totaled $11.4 million, $12.1$11.7 million, and $9.8$12.9 million for years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively. For each of the years ended December 31, 2019, 20182022, 2021 and 20172020 equity-based compensation costs included $3.5 million related to restricted stock for bonuses awarded based on asset dispositions, which is recorded as a 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 $1.6$0.7 million, $2.0$0.9 million, and $1.5$1.3 million for the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively. The intrinsic value of the options exercised totaled $18.7$7.6 million, $3.1$25.7 million, and $16.7$7.4 million, for the years ended December 31, 2019, 2018,2022, 2021, and 20172020 respectively. The intrinsic value of the options exercisable totaled $23.5$0.2 million and $12.5$22.5 million as of December 31, 20192022 and 2018,2021, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


 
Total unrecognized compensation cost related to unvested stock options totaled $5.3$3.7 million as of December 31, 20192022 and the unrecognized compensation cost is expected to be recognized over a period of 2.22.0 years.
 
The average fair value of stock options granted for the years ended December 31, 2019, 20182022, 2021 and 20172020 was $24.02, $26.13$23.39, $24.68 and $22.41,$20.69, respectively. Certain stock options granted in 2019, 2018,2022, 2021, and 20172020 included a $100 cap, $125 cap, or no 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:

 202220212020
Stock price$245.17 $329.71 $244.74 
Risk-free interest rates3.50 %1.22 %0.83 %
Expected lives6 years6 years6 years
Volatility27.98 %27.00 %25.72 %
Dividend yield3.06 %2.90 %2.93 %
 2019 2018 2017
Stock price$304.85
 $262.09
 $240.56
Risk-free interest rates2.01% 2.76% 2.30%
Expected lives6 years
 6 years
 6 years
Volatility19.56% 24.89% 24.10%
Dividend yield2.72% 2.81% 2.90%


A summary of the status of the Company’s stock option plans as of December 31, 2019, 2018,2022, 2021, and 20172020 and changes during the years ended on those dates is presented below:

 2019 2018 2017
 Shares 
Weighted-
average
exercise
price
 Shares 
Weighted-
average
exercise
price
 Shares 
Weighted-
average
exercise
price
Outstanding at beginning of year612,954
 $224.57
 536,208
 $211.41
 557,648
 $181.50
Granted148,147
 304.85
 119,361
 262.09
 164,677
 240.56
Exercised(182,817) 205.25
 (39,175) 159.05
 (176,489) 146.86
Forfeited and canceled(5,313) 257.87
 (3,440) 221.80
 (9,628) 160.40
Outstanding at end of year572,971
 251.10
 612,954
 224.57
 536,208
 211.41
Options exercisable at year end305,379
 223.90
 322,837
 206.63
 223,796
 191.09

The following table summarizes information about restricted stock outstanding as of December 31, 2019, 2018 and 2017 and changes during the years ended:
 2019 2018 2017
 Shares 
Weighted-
average
grant
price
 Shares 
Weighted-
average
grant
price
 Shares 
Weighted-
average
grant
price
Unvested at beginning of year91,058
 $180.99
 90,823
 $163.49
 58,349
 $149.11
Granted41,643
 235.93
 51,945
 194.70
 62,706
 177.28
Vested(13,222) 143.56
 (48,212) 150.76
 (29,675) 170.17
Forfeited and canceled(4,602) 158.06
 (3,498) 158.71
 (557) 119.37
Unvested at end of year114,877
 197.62
 91,058
 180.99
 90,823
 163.49


The unrecognized compensation cost related to unvested restricted stock totaled $12.7 million as of December 31, 2019 and is expected to be recognized over a period of 2.1 years.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020

 202220212020
SharesWeighted-
average
exercise
price		SharesWeighted-
average
exercise
price		SharesWeighted-
average
exercise
price
Outstanding at beginning of year463,863 $284.82 613,109 $255.86 572,971 $251.10 
Granted111,757 245.17 99,479 329.71 149,020 244.74 
Exercised(76,246)245.43 (248,725)231.37 (70,802)208.57 
Forfeited and canceled(11,928)281.19 — — (38,080)228.64 
Outstanding at end of year487,446 279.46 463,863 284.82 613,109 255.86 
Options exercisable at year end293,377 285.76 274,244 270.11 361,985 245.83 
The following table summarizes information about restricted stock outstanding as of December 31, 2022, 2021 and 2020 and changes during the years ended:
 202220212020
SharesWeighted-
average
grant
price		SharesWeighted-
average
grant
price		SharesWeighted-
average
grant
price
Unvested at beginning of year159,401 $251.03 132,603 $214.34 114,877 $197.62 
Granted72,838 215.73 50,349 337.52 45,196 248.16 
Vested(44,945)306.25 (22,387)229.90 (15,116)170.61 
Forfeited and canceled(4,379)272.12 (1,164)219.30 (12,354)184.11 
Unvested at end of year182,915 222.90 159,401 251.03 132,603 214.34 

The unrecognized compensation cost related to unvested restricted stock totaled $13.8 million as of December 31, 2022 and is expected to be recognized over a period of 2.0 years.

Long-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 LTIP 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 1-for-oneone-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 LTIP 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 1-for-oneone-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.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021, and 2020

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 0zero or greater than 14 percent. Z-1 Unitholders are entitled to receive distributions, on vested units, that are now equal to dividends distributed to common stockholders.

Equity-based compensation costs for LTIP and Z Units under the fair value method totaled approximately $0.9 million, $0.8 million and $1.5 millionzero for the years ended December 31, 2019, 20182022, 2021 and 2017, respectively.2020. Equity-based compensation costs 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 $0.2 million, $0.2 million, and $0.5 million,zero for the years ended December 31, 2019, 2018,2022, 2021, and 2017, respectively.2020. The intrinsic value of the vested and unvested LTIP Units totaled $43.7$22.5 million as of December 31, 2019.2022. Total unrecognized compensation cost related to the unvested LTIP Units under the LTIP Units plans was 0zero as of December 31, 2019.2022.

The following table summarizes information about the LTIP Units outstanding as of December 31, 2022:
 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, 2019143,257 1,890 145,147 $75.03 5.2
Granted— — — 
Vested1,890 (1,890)— 
Converted(39,010)— (39,010)
Cancelled— — — 
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

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


The following table summarizes information about the LTIP Units outstanding as of December 31, 2019:
 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, 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
Granted—
 —
 —
 

 
Vested12,051
 (12,051) —
 

 
Converted(91,270) —
 (91,270) 

 
Cancelled—
 —
 —
 

 
Balance, December 31, 2018134,081
 11,161
 145,242
 $75.03
 6.5
Granted—
 —
 —
    
Vested9,176
 (9,176) —
    
Converted—
 —
 —
    
Cancelled—
 (95) (95)    
Balance, December 31, 2019143,257
 1,890
 145,147
 $75.03
 5.2


(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. The Company's chief operating decision makers are comprised of several members of its executive management team who use net operating income ("NOI") to assess the performance of the business for the Company's reportable operating segments. NOI represents total property revenues 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 3three geographical regions in which its communities are located: Southern California, Northern California and Seattle Metro. 

Excluded from segment revenues and NOI are management and other fees from affiliates and interest and other income. Non-segment revenues and NOI included in the following schedule also consist of revenues 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.


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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


The revenues and NOI for each of the reportable operating segments are summarized as follows for the years ended December 31, 2019, 2018,2022, 2021, and 20172020 ($ in thousands):
 Years Ended December 31,
 202220212020
Revenues:
Southern California$652,742 $580,305 $558,839 
Northern California639,138 584,034 604,348 
Seattle Metro271,248 239,839 243,900 
Other real estate assets32,547 27,240 79,063 
Total property revenues$1,595,675 $1,431,418 $1,486,150 
Net operating income:   
Southern California$464,023 $402,608 $385,766 
Northern California445,763 401,870 431,047 
Seattle Metro191,476 160,959 166,806 
Other real estate assets27,144 20,745 61,919 
Total net operating income1,128,406 986,182 1,045,538 
Management and other fees from affiliates11,139 9,138 9,598 
Corporate-level property management expenses(40,704)(36,211)(34,361)
Depreciation and amortization(539,319)(520,066)(525,497)
General and administrative(56,577)(51,838)(65,388)
Expensed acquisition and investment related costs(2,132)(203)(1,591)
Impairment loss— — (1,825)
Gain on sale of real estate and land94,416 142,993 64,967 
Interest expense(204,798)(203,125)(220,633)
Total return swap income7,907 10,774 10,733 
Interest and other (loss) income(19,040)98,744 40,999 
Equity income from co-investments26,030 111,721 66,512 
Deferred tax benefit (expense) on unconsolidated co-investments10,236 (15,668)(1,531)
Loss on early retirement of debt, net(2)(19,010)(22,883)
Gain on remeasurement of co-investment17,423 2,260 234,694 
Net income$432,985 $515,691 $599,332 
 Years Ended December 31,
 2019 2018 2017
Revenues:     
Southern California$610,240
 $592,281
 $574,552
Northern California569,556
 522,561
 505,313
Seattle Metro245,476
 236,525
 229,871
Other real estate assets25,356
 39,503
 44,589
Total property revenues$1,450,628
 $1,390,870
 $1,354,325
Net operating income: 
  
  
Southern California$434,267
 $421,274
 $407,771
Northern California420,320
 385,483
 371,597
Seattle Metro173,875
 165,244
 162,111
Other real estate assets24,471
 33,535
 37,460
Total net operating income1,052,933
 1,005,536
 978,939
Management and other fees from affiliates9,527
 9,183
 9,574
Corporate-level property management expenses(32,899) (31,062) (30,156)
Depreciation and amortization(483,750) (479,884) (468,881)
General and administrative(54,262) (53,451) (41,385)
Expensed acquisition and investment related costs(168) (194) (1,569)
Impairment loss(7,105) —
 —
Gain (loss) on sale of real estate and land(3,164) 61,861
 26,423
Interest expense(217,339) (220,492) (222,894)
Total return swap income8,446
 8,707
 10,098
Interest and other income46,298
 23,010
 24,604
Equity income from co-investments112,136
 89,132
 86,445
Deferred tax expense on unrealized gain on unconsolidated co-investment(1,457) —
 —
Gain (loss) on early retirement of debt, net3,717
 —
 (1,796)
Gain on remeasurement of co-investment31,535
 1,253
 88,641
Net income$464,448
 $413,599
 $458,043



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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


Total assets for each of the reportable operating segments are summarized as follows as of December 31, 20192022 and 20182021 ($ in thousands):
 As of December 31,
20222021
Assets:
Southern California$3,925,251 $3,956,814 
Northern California5,414,467 5,460,701 
Seattle Metro1,374,379 1,407,033 
Other real estate assets99,997 158,525 
Net reportable operating segments - real estate assets10,814,094 10,983,073 
Real estate under development24,857 111,562 
Co-investments1,127,491 1,177,802 
Cash and cash equivalents, including restricted cash42,681 58,638 
Marketable securities112,743 191,829 
Notes and other receivables103,045 341,033 
Operating lease right-of-use assets67,239 68,972 
Prepaid expenses and other assets80,755 64,964 
Total assets$12,372,905 $12,997,873 
 As of December 31,
 2019 2018
Assets:   
Southern California$4,233,110
 $4,368,882
Northern California4,622,268
 4,289,232
Seattle Metro1,481,061
 1,485,040
Other real estate assets12,221
 13,399
Net reportable operating segments - real estate assets10,348,660
 10,156,553
Real estate under development546,075
 454,629
Co-investments1,335,339
 1,300,140
Cash and cash equivalents, including restricted cash81,094
 151,395
Marketable securities144,193
 209,545
Notes and other receivables134,365
 71,895
Operating lease right-of-use assets74,744
 —
Prepaid expenses and other assets40,935
 39,439
Total assets$12,705,405
 $12,383,596


(16) 401(k) Plan
 
The Company has a 401(k) benefit plan (the "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 $2.4$3.3 million, $2.1$3.3 million, and $1.8$2.7 million for the years ended December 31, 2019, 2018,2022, 2021, and 2017,2020, respectively.
 
(17) Commitments and Contingencies
 
The Company's total minimum lease payment commitments, under groundunderground leases, parking leases, and operating leases are disclosed in Note 11, Lease Agreements - Company as Lessee.

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.
 
The Company has no way of determining 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 plans 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, the Company can provide no assurance that it will be able to do so and if such tax liabilities were incurred they may have a material impact on the Company’s financial position.


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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018,2022, 2021, and 20172020


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, 2019,2022, 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"). 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, 2019,2022, PWI has cash and marketable securities of approximately $78.4$107.6 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.

The Company is subject to various other legal and/or regulatory proceedings arising in the course of its business operations. The Company believes that, with respect to such matters that it 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.

(18) Subsequent Events

In January 2020, the Company purchased CPPIB's 45.0% interest in a land parcel and 6 communities, totaling 2,020 apartment homes, valued at approximately $1.0 billion on a gross basis.

In January 2020, the Company received $85.8 million for the payoff of a related party bridge loan to Wesco V.

In February 2020, the Company issued $500.0 million of the 2032 Notes, with a coupon rate of 2.650%, which are 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 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. The Company used the net proceeds of this offering to repay indebtedness under its unsecured lines of credit and for other general corporate purposes.


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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


(19) Quarterly Results of Operations (Unaudited)

Essex Property Trust, Inc.

The following is a summary of quarterly results of operations for 2019 and 2018 ($ in thousands, except per share and dividend amounts):

 
Quarter ended
December 31
 
Quarter ended
September 30
 
Quarter ended
June 30
 
Quarter ended
March 31
2019:       
Total property revenues$372,861
 $364,504
 $359,375
 $353,888
Net income$135,182
 $105,700
 $98,061
 $125,505
Net income available to common stockholders$128,818
 $99,335
 $92,275
 $118,858
Per share data: 
  
  
  
Net income: 
  
  
  
Basic (1)
$1.95
 $1.51
 $1.40
 $1.81
Diluted (1)
$1.95
 $1.51
 $1.40
 $1.81
Dividends declared$1.95
 $1.95
 $1.95
 $1.95
2018: 
  
  
  
Total property revenues$350,787
 $348,610
 $346,526
 $344,947
Net income$124,440
 $86,110
 $106,410
 $96,639
Net income available to common stockholders$117,820
 $80,975
 $100,440
 $90,918
Per share data: 
  
  
  
Net income: 
  
  
  
Basic (1)
$1.78
 $1.23
 $1.52
 $1.38
Diluted (1)
$1.78
 $1.22
 $1.52
 $1.38
Dividends declared$1.86
 $1.86
 $1.86
 $1.86

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




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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2019, 2018, and 2017


Essex Portfolio, L.P.

The following is a summary of quarterly results of operations for 2019 and 2018 ($ in thousands, except per unit and distribution amounts):
 
Quarter ended
December 31
 
Quarter ended
September 30
 
Quarter ended
June 30
 
Quarter ended
March 31
2019:       
Total property revenues$372,861
 $364,504
 $359,375
 $353,888
Net income$135,182
 $105,700
 $98,061
 $125,505
Net income available to common unitholders$133,298
 $102,799
 $95,503
 $123,029
Per unit data: 
  
  
  
Net income: 
  
  
  
Basic (1)
$1.95
 $1.51
 $1.40
 $1.81
Diluted (1)
$1.95
 $1.51
 $1.40
 $1.81
Distributions declared$1.95
 $1.95
 $1.95
 $1.95
2018: 
  
  
  
Total property revenues$350,787
 $348,610
 $346,526
 $344,947
Net income$124,440
 $86,110
 $106,410
 $96,639
Net income available to common unitholders$121,891
 $83,764
 $103,900
 $94,050
Per unit data: 
  
  
  
Net income: 
  
  
  
Basic (1)
$1.78
 $1.23
 $1.52
 $1.38
Diluted (1)
$1.78
 $1.23
 $1.52
 $1.38
Distributions declared$1.86
 $1.86
 $1.86
 $1.86

(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 units.

F- 55
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20192022
(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, CA29,209 8,100 66,666 9,778 8,267 76,277 84,544 (39,299)2009Mar-09   3-30
Brio300 Walnut Creek, CA93,602 16,885 151,741 4,423 16,885 156,164 173,049 (20,332)2015Jun-19   3-30
Fountain Park705 Playa Vista, CA82,577 25,073 94,980 44,493 25,203 139,343 164,546 (92,190)2002Feb-04   3-30
Highridge255 Rancho Palos Verdes, CA69,416 5,419 18,347 35,981 6,073 53,674 59,747 (45,470)1972May-97   3-30
Magnolia Square/Magnolia
Lane (2)
188 Sunnyvale, CA52,368 8,190 24,736 19,395 8,191 44,130 52,321 (30,002)1963Sep-07   3-30
Marquis166 San Jose, CA44,686 20,495 47,823 1,508 20,495 49,331 69,826 (6,651)2015Dec-183-30
Sage at Cupertino230 San Jose, CA51,824 35,719 53,449 12,695 35,719 66,144 101,863 (16,631)1971Mar-17   3-30
The Barkley (3)
161 Anaheim, CA14,909 — 8,520 8,824 2,353 14,991 17,344 (11,861)1984Apr-00   3-30
The Dylan184 West Hollywood, CA57,741 19,984 82,286 2,792 19,990 85,072 105,062 (24,097)2015Mar-15   3-30
The Huxley187 West Hollywood, CA52,564 19,362 75,641 3,148 19,371 78,780 98,151 (22,518)2014Mar-15   3-30
Township132 Redwood City, CA45,047 19,812 70,619 1,749 19,812 72,368 92,180 (8,510)2014Sep-19   3-30
2,783 $593,943 $179,039 $694,808 $144,786 $182,359 $836,274 $1,018,633 $(317,561)
Unencumbered Communities
Agora49 Walnut Creek, CA— 4,932 60,423 1,534 4,934 61,955 66,889 (6,249)2016Jan-203-30
Alessio624 Los Angeles, CA— 32,136 128,543 22,598 32,136 151,141 183,277 (50,612)2001Apr-14   5-30
Allegro97 Valley Village, CA— 5,869 23,977 3,456 5,869 27,433 33,302 (13,310)2010Oct-10   3-30
Allure at Scripps Ranch194 San Diego, CA— 11,923 47,690 3,730 11,923 51,420 63,343 (16,204)2002Apr-14   5-30
Alpine Village301 Alpine, CA— 4,967 19,728 11,728 4,982 31,441 36,423 (21,352)1971Dec-02   3-30
Annaliese56 Seattle, WA— 4,727 14,229 1,110 4,726 15,340 20,066 (5,346)2009Jan-13   3-30
Apex367 Milpitas, CA— 44,240 103,251 9,638 44,240 112,889 157,129 (32,041)2014Aug-14   3-30
Aqua Marina Del Rey500 Marina Del Rey, CA— 58,442 175,326 22,117 58,442 197,443 255,885 (67,620)2001Apr-14   5-30
Ascent90 Kirkland, WA— 3,924 11,862 3,121 3,924 14,983 18,907 (6,136)1988Oct-12   3-30
Ashton Sherman Village264 Los Angeles, CA— 23,550 93,811 2,865 23,550 96,676 120,226 (20,592)2014Dec-16   3-30
Avant440 Los Angeles, CA— 32,379 137,940 7,427 32,379 145,367 177,746 (37,061)2014Jun-15   3-30
Avenue 64224 Emeryville, CA— 27,235 64,403 17,507 27,235 81,910 109,145 (25,061)2007Apr-14   5-30
Aviara (4)
166 Mercer Island, WA— — 49,813 2,707 — 52,520 52,520 (17,435)2013Apr-14   5-30
Avondale at Warner Center446 Woodland Hills, CA— 10,536 24,522 31,247 10,601 55,704 66,305 (41,427)1970Jan-99   3-30
Bel Air462 San Ramon, CA— 12,105 18,252 48,315 12,682 65,990 78,672 (50,470)1988Jan-95   3-30
Belcarra296 Bellevue, WA— 21,725 92,091 5,848 21,725 97,939 119,664 (30,235)2009Apr-14   5-30
Bella Villagio231 San Jose, CA— 17,247 40,343 7,214 17,247 47,557 64,804 (20,346)2004Sep-10   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)
Encumbered communities             
Belmont Station275
Los Angeles, CA29,703
8,100
66,666
6,642
8,267
73,141
81,408
(31,302)2009Mar-09   3-30
Brio300
Walnut Creek, CA101,540
16,885
151,741
704
16,885
152,445
169,330
(2,972)2015Jun-19   3-30
Brookside Oaks170
Sunnyvale, CA17,318
7,301
16,310
27,158
10,328
40,441
50,769
(24,680)1973Jun-00   3-30
City View572
Hayward, CA60,841
9,883
37,670
31,487
10,350
68,690
79,040
(50,256)1975Mar-98   3-30
Domaine92
Seattle, WA12,845
9,059
27,177
1,296
9,059
28,473
37,532
(7,309)2009Sep-12   3-30
Fairhaven Apartments164
Santa Ana, CA17,602
2,626
10,485
9,757
2,957
19,911
22,868
(12,157)1970Nov-01   3-30
Form 15242
San Diego, CA43,616
24,510
72,221
8,167
25,540
79,358
104,898
(10,490)2014Mar-16   3-30
Fountain Park705
Playa Vista, CA82,639
25,073
94,980
34,339
25,203
129,189
154,392
(74,993)2002Feb-04   3-30
Hidden Valley324
Simi Valley, CA29,392
14,174
34,065
7,501
9,674
46,066
55,740
(22,843)2004Dec-04   3-30
Highridge255
Rancho Palos Verdes, CA69,309
5,419
18,347
32,286
6,073
49,979
56,052
(39,463)1972May-97   3-30
1000 Kiely121
Santa Clara, CA33,260
9,359
21,845
8,294
9,359
30,139
39,498
(12,313)1971Mar-11   3-30
Magnolia Square/Magnolia
Lane (2)
188
Sunnyvale, CA52,270
8,190
24,736
18,388
8,191
43,123
51,314
(23,557)1963Sep-07   3-30
Marquis166
San Jose, CA43,772
20,495
47,823
46
20,495
47,869
68,364
(1,664)2015Dec-183-30
Montanosa472
San Diego, CA59,723
26,697
106,787
6,299
26,697
113,086
139,783
(24,590)1990Apr-14   5-30
Montebello248
Kirkland, WA23,682
13,857
41,575
5,542
13,858
47,116
60,974
(13,781)1996Jul-12   3-30
Montejo Apartments124
Garden Grove, CA12,536
1,925
7,685
4,365
2,194
11,781
13,975
(7,013)1974Nov-01   3-30
Sage at Cupertino230
San Jose, CA51,724
35,719
53,449
6,442
35,719
59,891
95,610
(6,349)1971Mar-17   3-30
The Barkley (3)
161
Anaheim, CA14,857
—
8,520
7,440
2,353
13,607
15,960
(9,240)1984Apr-00   3-30
The Dylan184
West Hollywood, CA58,854
19,984
82,286
1,202
19,990
83,482
103,472
(15,578)2015Mar-15   3-30
The Huxley187
West Hollywood, CA53,589
19,362
75,641
1,385
19,371
77,017
96,388
(14,609)2014Mar-15   3-30
The Waterford238
San Jose, CA28,713
11,808
24,500
17,347
15,165
38,490
53,655
(23,732)2000Jun-00   3-30
Township132
Redwood City, CA46,087
19,812
70,619
251
19,812
70,870
90,682
(713)2014Sep-19   3-30
Valley Park160
Fountain Valley, CA20,327
3,361
13,420
6,186
3,761
19,206
22,967
(11,634)1969Nov-01   3-30
Villa Angelina256
Placentia, CA26,468
4,498
17,962
7,744
4,962
25,242
30,204
(15,684)1970Nov-01   3-30
 5,966
 $990,667
$318,097
$1,126,510
$250,268
$326,263
$1,368,612
$1,694,875
$(456,922)   
              
Unencumbered Communities             
Alessio624
Los Angeles, CA—
32,136
128,543
12,865
32,136
141,408
173,544
(31,530)2001Apr-14   5-30
Allegro97
Valley Village, CA—
5,869
23,977
2,530
5,869
26,507
32,376
(10,365)2010Oct-10   3-30
Allure at Scripps Ranch194
San Diego, CA—
11,923
47,690
1,653
11,923
49,343
61,266
(10,557)2002Apr-14   5-30

F- 5657
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20192022
(Dollars in thousands)


Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
BellCentre249 Bellevue, WA— 16,197 67,207 7,137 16,197 74,344 90,541 (24,768)2001Apr-14   5-30
Bellerive63 Los Angeles, CA— 5,401 21,803 1,843 5,401 23,646 29,047 (10,151)2011Aug-11   3-30
Belmont Terrace71 Belmont, CA— 4,446 10,290 8,155 4,473 18,418 22,891 (12,182)1974Oct-06   3-30
Bennett Lofts164 San Francisco, CA— 21,771 50,800 34,664 28,371 78,864 107,235 (29,400)2004Dec-12   3-30
Bernardo Crest216 San Diego, CA— 10,802 43,209 7,169 10,802 50,378 61,180 (16,949)1988Apr-14   5-30
Bonita Cedars120 Bonita, CA— 2,496 9,913 6,765 2,503 16,671 19,174 (11,489)1983Dec-02   3-30
Boulevard172 Fremont, CA— 3,520 8,182 15,812 3,580 23,934 27,514 (20,846)1978Jan-96   3-30
Brookside Oaks170 Sunnyvale, CA— 7,301 16,310 28,417 10,328 41,700 52,028 (30,093)1973Jun-003-30
Bridle Trails108 Kirkland, WA— 1,500 5,930 7,268 1,531 13,167 14,698 (10,387)1986Oct-97   3-30
Brighton Ridge264 Renton, WA— 2,623 10,800 9,253 2,656 20,020 22,676 (15,329)1986Dec-96   3-30
Bristol Commons188 Sunnyvale, CA— 5,278 11,853 11,741 5,293 23,579 28,872 (19,266)1989Jan-95   3-30
Bunker Hill456 Los Angeles, CA— 11,498 27,871 103,729 11,639 131,459 143,098 (99,288)1968Mar-98   3-30
Camarillo Oaks564 Camarillo, CA— 10,953 25,254 10,529 11,075 35,661 46,736 (29,837)1985Jul-96   3-30
Cambridge Park320 San Diego, CA— 18,185 72,739 6,538 18,185 79,277 97,462 (25,495)1998Apr-14   5-30
Camino Ruiz Square159 Camarillo, CA— 6,871 26,119 3,370 6,931 29,429 36,360 (16,048)1990Dec-06   3-30
Canvas123 Seattle, WA— 10,489 36,924 421 10,489 37,345 47,834 (1,378)2014Dec-213-30
Canyon Oaks250 San Ramon, CA— 19,088 44,473 9,920 19,088 54,393 73,481 (28,146)2005May-07   3-30
Canyon Pointe250 Bothell, WA— 4,692 18,288 11,235 4,693 29,522 34,215 (19,838)1990Oct-03   3-30
Capri at Sunny Hills102 Fullerton, CA— 3,337 13,320 10,738 4,048 23,347 27,395 (17,157)1961Sep-01   3-30
Carmel Creek348 San Diego, CA— 26,842 107,368 10,837 26,842 118,205 145,047 (39,336)2000Apr-14   5-30
Carmel Landing356 San Diego, CA— 16,725 66,901 16,210 16,725 83,111 99,836 (27,661)1989Apr-14   5-30
Carmel Summit246 San Diego, CA— 14,968 59,871 6,766 14,968 66,637 81,605 (21,491)1989Apr-14   5-30
Castle Creek216 Newcastle, WA— 4,149 16,028 8,020 4,833 23,364 28,197 (18,140)1998Dec-98   3-30
Catalina Gardens128 Los Angeles, CA— 6,714 26,856 3,420 6,714 30,276 36,990 (9,805)1987Apr-14   5-30
CBC Apartments & The Sweeps239 Goleta, CA— 11,841 45,320 8,155 11,906 53,410 65,316 (32,068)1962Jan-06   3-30
Cedar Terrace180 Bellevue, WA— 5,543 16,442 10,082 5,652 26,415 32,067 (16,498)1984Jan-05   3-30
CentrePointe224 San Diego, CA— 3,405 7,743 23,359 3,442 31,065 34,507 (25,525)1974Jun-97   3-30
Chestnut Street Apartments96 Santa Cruz, CA— 6,582 15,689 2,689 6,582 18,378 24,960 (9,272)2002Jul-08   3-30
City View572 Hayward, CA— 9,883 37,670 39,609 10,350 76,812 87,162 (59,999)1975Mar-983-30
Collins on Pine76 Seattle, WA— 7,276 22,226 994 7,276 23,220 30,496 (6,904)2013May-14   3-30
Connolly Station309 Dublin, CA— 19,949 123,428 4,003 19,949 127,431 147,380 (13,666)2014Jan-203-30
Corbella at Juanita Bay169 Kirkland, WA— 5,801 17,415 4,925 5,801 22,340 28,141 (10,276)1978Nov-10   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)
Alpine Village301
Alpine, CA—
4,967
19,728
9,094
4,982
28,807
33,789
(16,958)1971Dec-02   3-30
Anavia250
Anaheim, CA—
15,925
63,712
8,796
15,925
72,508
88,433
(22,599)2009Dec-10   3-30
Annaliese56
Seattle, WA—
4,727
14,229
701
4,726
14,931
19,657
(3,613)2009Jan-13   3-30
Apex366
Milpitas, CA—
44,240
103,251
3,857
44,240
107,108
151,348
(19,343)2014Aug-14   3-30
Aqua Marina Del Rey500
Marina Del Rey, CA—
58,442
175,326
14,430
58,442
189,756
248,198
(44,329)2001Apr-14   5-30
Ascent90
Kirkland, WA—
3,924
11,862
2,172
3,924
14,034
17,958
(4,169)1988Oct-12   3-30
Ashton Sherman Village264
Los Angeles, CA—
23,550
93,811
976
23,550
94,787
118,337
(10,157)2014Dec-16   3-30
Avant440
Los Angeles, CA—
32,379
137,940
3,203
32,379
141,143
173,522
(21,614)2014Jun-15   3-30
Avenue 64224
Emeryville, CA—
27,235
64,403
14,656
27,235
79,059
106,294
(15,897)2007Apr-14   5-30
Aviara (4)
166
Mercer Island, WA—
—
49,813
1,412
—
51,225
51,225
(11,908)2013Apr-14   5-30
Avondale at Warner Center446
Woodland Hills, CA—
10,536
24,522
24,703
10,601
49,160
59,761
(34,453)1970Jan-99   3-30
Axis 2300115
Irvine, CA—
5,405
33,585
1,963
5,405
35,548
40,953
(13,576)2010Aug-10   3-30
Bel Air462
San Ramon, CA—
12,105
18,252
40,856
12,682
58,531
71,213
(40,414)1988Jan-95   3-30
Belcarra296
Bellevue, WA—
21,725
92,091
2,283
21,725
94,374
116,099
(19,774)2009Apr-14   5-30
Bella Villagio231
San Jose, CA—
17,247
40,343
4,001
17,247
44,344
61,591
(14,888)2004Sep-10   3-30
BellCentre248
Bellevue, WA—
16,197
67,207
5,041
16,197
72,248
88,445
(15,892)2001Apr-14   5-30
Bellerive63
Los Angeles, CA—
5,401
21,803
1,312
5,401
23,115
28,516
(7,768)2011Aug-11   3-30
Belmont Terrace71
Belmont, CA—
4,446
10,290
7,294
4,473
17,557
22,030
(9,414)1974Oct-06   3-30
Bennett Lofts165
San Francisco, CA—
21,771
50,800
30,544
28,371
74,744
103,115
(19,437)2004Dec-12   3-30
Bernardo Crest216
San Diego, CA—
10,802
43,209
4,737
10,802
47,946
58,748
(10,574)1988Apr-14   5-30
Bonita Cedars120
Bonita, CA—
2,496
9,913
5,583
2,503
15,489
17,992
(8,551)1983Dec-02   3-30
Boulevard172
Fremont, CA—
3,520
8,182
14,248
3,580
22,370
25,950
(17,944)1978Jan-96   3-30
Bridle Trails108
Kirkland, WA—
1,500
5,930
6,614
1,531
12,513
14,044
(8,949)1986Oct-97   3-30
Brighton Ridge264
Renton, WA—
2,623
10,800
6,174
2,656
16,941
19,597
(12,601)1986Dec-96   3-30
Bristol Commons188
Sunnyvale, CA—
5,278
11,853
10,206
5,293
22,044
27,337
(15,631)1989Jan-95   3-30
416 on Broadway115
Glendale, CA—
8,557
34,235
3,407
8,557
37,642
46,199
(12,466)2009Dec-10   3-30
Bunker Hill456
Los Angeles, CA—
11,498
27,871
91,959
11,639
119,689
131,328
(67,010)1968Mar-98   3-30
Camarillo Oaks564
Camarillo, CA—
10,953
25,254
8,562
11,075
33,694
44,769
(25,023)1985Jul-96   3-30
Cambridge Park320
San Diego, CA—
18,185
72,739
3,642
18,185
76,381
94,566
(16,732)1998Apr-14   5-30
Camino Ruiz Square159
Camarillo, CA—
6,871
26,119
2,349
6,931
28,408
35,339
(12,693)1990Dec-06   3-30
Canyon Oaks250
San Ramon, CA—
19,088
44,473
4,988
19,088
49,461
68,549
(21,478)2005May-07   3-30
Canyon Pointe250
Bothell, WA—
4,692
18,288
9,096
4,693
27,383
32,076
(15,931)1990Oct-03   3-30

F- 5758
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20192022
(Dollars in thousands)


Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Cortesia308 Rancho Santa Margarita, CA— 13,912 55,649 5,145 13,912 60,794 74,706 (19,483)1999Apr-14   5-30
Country Villas180 Oceanside, CA— 4,174 16,583 6,848 4,187 23,418 27,605 (15,961)1976Dec-02   3-30
Courtyard off Main110 Bellevue, WA— 7,465 21,405 6,737 7,465 28,142 35,607 (12,660)2000Oct-10   3-30
Crow Canyon400 San Ramon, CA— 37,579 87,685 17,342 37,579 105,027 142,606 (36,252)1992Apr-14   5-30
Deer Valley171 San Rafael, CA— 21,478 50,116 5,688 21,478 55,804 77,282 (18,191)1996Apr-14   5-30
Domaine92 Seattle, WA— 9,059 27,177 1,902 9,059 29,079 38,138 (10,526)2009Sep-123-30
Elevation158 Redmond, WA— 4,758 14,285 8,555 4,757 22,841 27,598 (12,820)1986Jun-10   3-30
Ellington220 Bellevue, WA— 15,066 45,249 6,047 15,066 51,296 66,362 (15,982)1994Jul-14   3-30
Emerald Pointe160 Diamond Bar, CA— 8,458 33,832 3,448 8,458 37,280 45,738 (12,180)1989Apr-14   5-30
Emerald Ridge180 Bellevue, WA— 3,449 7,801 8,212 3,449 16,013 19,462 (13,488)1987Nov-94   3-30
Emerson Valley Village144 Los Angeles, CA— 13,378 53,240 2,409 13,378 55,649 69,027 (11,963)2012Dec-16   3-30
Emme190 Emeryville, CA— 15,039 80,532 1,287 15,039 81,819 96,858 (8,568)2015Jan-203-30
Enso183 San Jose, CA— 21,397 71,135 2,869 21,397 74,004 95,401 (18,494)2014Dec-15   3-30
Epic769 San Jose, CA— 89,111 307,769 3,917 89,111 311,686 400,797 (32,155)2013Jan-203-30
Esplanade278 San Jose, CA— 18,170 40,086 18,162 18,429 57,989 76,418 (38,046)2002Apr-04   3-30
Essex Skyline350 Santa Ana, CA— 21,537 146,099 17,029 21,537 163,128 184,665 (61,800)2008Apr-10   3-30
Evergreen Heights200 Kirkland, WA— 3,566 13,395 8,494 3,649 21,806 25,455 (17,748)1990Jun-97   3-30
Fairhaven Apartments164 Santa Ana, CA— 2,626 10,485 11,279 2,957 21,433 24,390 (16,156)1970Nov-013-30
Fairway Apartments at Big Canyon (5)
74 Newport Beach, CA— — 7,850 9,123 — 16,973 16,973 (14,555)1972Jun-99   3-28
Fairwood Pond194 Renton, WA— 5,296 15,564 5,629 5,297 21,192 26,489 (13,281)1997Oct-04   3-30
Foothill Commons394 Bellevue, WA— 2,435 9,821 43,866 2,440 53,682 56,122 (50,019)1978Mar-90   3-30
Foothill Gardens/Twin Creeks176 San Ramon, CA— 5,875 13,992 14,662 5,964 28,565 34,529 (22,734)1985Feb-97   3-30
Forest View192 Renton, WA— 3,731 14,530 4,842 3,731 19,372 23,103 (12,291)1998Oct-03   3-30
Form 15242 San Diego, CA— 24,510 72,221 13,697 25,540 84,888 110,428 (20,661)2014Mar-16   3-30
Foster's Landing490 Foster City, CA— 61,714 144,000 15,419 61,714 159,419 221,133 (53,500)1987Apr-14   5-30
Fountain Court320 Seattle, WA— 6,702 27,306 16,129 6,985 43,152 50,137 (33,603)2000Mar-00   3-30
Fountains at River Oaks226 San Jose, CA— 26,046 60,773 8,210 26,046 68,983 95,029 (23,318)1990Apr-14   3-30
Fourth & U171 Berkeley, CA— 8,879 52,351 5,119 8,879 57,470 66,349 (25,729)2010Apr-10   3-30
Fox Plaza445 San Francisco, CA— 39,731 92,706 42,615 39,731 135,321 175,052 (56,408)1968Feb-13   3-30
The Henley I/The Henley II215 Glendale, CA— 6,695 16,753 30,898 6,733 47,613 54,346 (36,596)1970Jun-99   3-30
Highlands at Wynhaven333 Issaquah, WA— 16,271 48,932 17,285 16,271 66,217 82,488 (36,521)2000Aug-08   3-30
Hillcrest Park608 Newbury Park, CA— 15,318 40,601 28,006 15,755 68,170 83,925 (50,836)1973Mar-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)
Capri at Sunny Hills102
Fullerton, CA—
3,337
13,320
9,503
4,048
22,112
26,160
(14,445)1961Sep-01   3-30
Carmel Creek348
San Diego, CA—
26,842
107,368
6,878
26,842
114,246
141,088
(25,679)2000Apr-14   5-30
Carmel Landing356
San Diego, CA—
16,725
66,901
9,043
16,725
75,944
92,669
(16,943)1989Apr-14   5-30
Carmel Summit246
San Diego, CA—
14,968
59,871
4,154
14,968
64,025
78,993
(13,876)1989Apr-14   5-30
Castle Creek216
Newcastle, WA—
4,149
16,028
5,185
4,833
20,529
25,362
(14,880)1998Dec-98   3-30
Catalina Gardens128
Los Angeles, CA—
6,714
26,856
1,970
6,714
28,826
35,540
(6,159)1987Apr-14   5-30
CBC Apartments & The Sweeps239
Goleta, CA—
11,841
45,320
6,718
11,906
51,973
63,879
(26,615)1962Jan-06   3-30
Cedar Terrace180
Bellevue, WA—
5,543
16,442
8,092
5,652
24,425
30,077
(12,765)1984Jan-05   3-30
CentrePointe224
San Diego, CA—
3,405
7,743
21,698
3,442
29,404
32,846
(20,349)1974Jun-97   3-30
Chestnut Street Apartments96
Santa Cruz, CA—
6,582
15,689
2,057
6,582
17,746
24,328
(7,206)2002Jul-08   3-30
Collins on Pine76
Seattle, WA—
7,276
22,226
562
7,276
22,788
30,064
(4,337)2013May-14   3-30
Corbella at Juanita Bay169
Kirkland, WA—
5,801
17,415
3,815
5,801
21,230
27,031
(7,273)1978Nov-10   3-30
Cortesia308
Rancho Santa Margarita, CA—
13,912
55,649
3,034
13,912
58,683
72,595
(12,706)1999Apr-14   5-30
Country Villas180
Oceanside, CA—
4,174
16,583
5,358
4,187
21,928
26,115
(12,942)1976Dec-02   3-30
Courtyard off Main110
Bellevue, WA—
7,465
21,405
4,911
7,465
26,316
33,781
(8,924)2000Oct-10   3-30
Crow Canyon400
San Ramon, CA—
37,579
87,685
11,695
37,579
99,380
136,959
(22,121)1992Apr-14   5-30
Deer Valley171
San Rafael, CA—
21,478
50,116
3,175
21,478
53,291
74,769
(11,659)1996Apr-14   5-30
Delano126
Redmond, WA—
7,470
22,511
1,655
7,470
24,166
31,636
(6,762)2005Dec-11   3-30
Devonshire276
Hemet, CA—
3,470
13,786
5,988
3,482
19,762
23,244
(11,177)1988Dec-02   3-30
Elevation158
Redmond, WA—
4,758
14,285
7,182
4,757
21,468
26,225
(9,807)1986Jun-10   3-30
Ellington220
Bellevue, WA—
15,066
45,249
3,914
15,066
49,163
64,229
(9,897)1994Jul-14   3-30
Emerald Pointe160
Diamond Bar, CA—
8,458
33,832
2,098
8,458
35,930
44,388
(7,907)1989Apr-14   5-30
Emerald Ridge180
Bellevue, WA—
3,449
7,801
6,444
3,449
14,245
17,694
(10,963)1987Nov-94   3-30
Emerson Valley Village144
Los Angeles, CA—
13,378
53,240
979
13,378
54,219
67,597
(5,806)2012Dec-16   3-30
Enso183
San Jose, CA—
21,397
71,135
1,630
21,397
72,765
94,162
(10,555)2014Dec-15   3-30
Esplanade278
San Jose, CA—
18,170
40,086
15,809
18,429
55,636
74,065
(29,746)2002Apr-04   3-30
Essex Skyline349
Santa Ana, CA—
21,537
146,099
10,028
21,537
156,127
177,664
(41,718)2008Apr-10   3-30
Evergreen Heights200
Kirkland, WA—
3,566
13,395
6,886
3,649
20,198
23,847
(14,843)1990Jun-97   3-30
Fairway Apartments at Big Canyon (5) 
74
Newport Beach, CA—
—
7,850
8,180
—
16,030
16,030
(11,744)1972Jun-99   3-28
Fairwood Pond194
Renton, WA—
5,296
15,564
4,408
5,297
19,971
25,268
(10,643)1997Oct-04   3-30
Foothill Commons394
Bellevue, WA—
2,435
9,821
41,492
2,440
51,308
53,748
(45,513)1978Mar-90   3-30

F- 5859
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20192022
(Dollars in thousands)


Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Hillsdale Garden697 San Mateo, CA— 22,000 94,681 38,356 22,000 133,037 155,037 (75,372)1948Sep-06   3-30
Hope Ranch108 Santa Barbara, CA— 4,078 16,877 3,536 4,208 20,283 24,491 (11,071)1965Mar-07   3-30
Huntington Breakers342 Huntington Beach, CA— 9,306 22,720 25,258 9,315 47,969 57,284 (39,444)1984Oct-97   3-30
Inglenook Court224 Bothell, WA— 3,467 7,881 9,621 3,474 17,495 20,969 (15,240)1985Oct-94   3-30
Lafayette Highlands150 Lafayette, CA— 17,774 41,473 8,271 17,774 49,744 67,518 (15,989)1973Apr-14   5-30
Lakeshore Landing308 San Mateo, CA— 38,155 89,028 13,716 38,155 102,744 140,899 (34,590)1988Apr-14   5-30
Laurels at Mill Creek164 Mill Creek, WA— 1,559 6,430 9,215 1,595 15,609 17,204 (12,809)1981Dec-96   3-30
Lawrence Station336 Sunnyvale, CA— 45,532 106,735 7,155 45,532 113,890 159,422 (38,670)2012Apr-14   5-30
Le Parc140 Santa Clara, CA— 3,090 7,421 14,806 3,092 22,225 25,317 (19,170)1975Feb-94   3-30
Marbrisa202 Long Beach, CA— 4,700 18,605 11,653 4,760 30,198 34,958 (21,451)1987Sep-02   3-30
Marina City Club (6)
101 Marina Del Rey, CA— — 28,167 34,966 — 63,133 63,133 (38,015)1971Jan-04   3-30
Marina Cove (7)
292 Santa Clara, CA— 5,320 16,431 18,362 5,324 34,789 40,113 (30,972)1974Jun-94   3-30
Mariner's Place105 Oxnard, CA— 1,555 6,103 3,221 1,562 9,317 10,879 (7,071)1987May-00   3-30
MB 360360 San Francisco, CA— 42,001 212,648 15,158 42,001 227,806 269,807 (65,764)2014Apr-14   3-30
Mesa Village133 Clairemont, CA— 1,888 7,498 3,413 1,894 10,905 12,799 (7,198)1963Dec-02   3-30
Mill Creek at Windermere400 San Ramon, CA— 29,551 69,032 13,524 29,551 82,556 112,107 (41,320)2005Sep-07   3-30
Mio103 San Jose, CA— 11,012 39,982 1,941 11,012 41,923 52,935 (10,129)2015Jan-16   3-30
Mirabella188 Marina Del Rey, CA— 6,180 26,673 19,252 6,270 45,835 52,105 (31,594)2000May-00   3-30
Mira Monte354 Mira Mesa, CA— 7,165 28,459 14,669 7,186 43,107 50,293 (30,231)1982Dec-02   3-30
Miracle Mile/Marbella236 Los Angeles, CA— 7,791 23,075 18,861 7,886 41,841 49,727 (32,361)1988Aug-97   3-30
Mission Hills282 Oceanside, CA— 10,099 38,778 14,162 10,167 52,872 63,039 (32,289)1984Jul-05   3-30
Mission Peaks453 Fremont, CA— 46,499 108,498 11,824 46,499 120,322 166,821 (39,719)1995Apr-14   5-30
Mission Peaks II336 Fremont, CA— 31,429 73,334 11,073 31,429 84,407 115,836 (28,568)1989Apr-14   5-30
Montanosa472 San Diego, CA— 26,697 106,787 13,318 26,697 120,105 146,802 (38,148)1990Apr-145-30
Montclaire390 Sunnyvale, CA— 4,842 19,776 31,894 4,997 51,515 56,512 (46,546)1973Dec-88   3-30
Montebello248 Kirkland, WA— 13,857 41,575 12,941 13,858 54,515 68,373 (20,666)1996Jul-123-30
Montejo Apartments124 Garden Grove, CA— 1,925 7,685 5,778 2,194 13,194 15,388 (8,799)1974Nov-013-30
Monterey Villas122 Oxnard, CA— 2,349 5,579 8,321 2,424 13,825 16,249 (10,397)1974Jul-97   3-30
Muse152 North Hollywood, CA— 7,822 33,436 6,823 7,823 40,258 48,081 (18,197)2011Feb-11   3-30
Mylo476 Santa Clara, CA— 6,472 206,098 647 6,472 206,745 213,217 (25,842)2021Jun-213-30
1000 Kiely121 Santa Clara, CA— 9,359 21,845 10,650 9,359 32,495 41,854 (16,631)1971Mar-113-30
Palm Valley1,100 San Jose, CA— 133,802 312,205 28,233 133,802 340,438 474,240 (76,852)2008Jan-17   3-30
Paragon Apartments301 Fremont, CA— 32,230 77,320 3,781 32,230 81,101 113,331 (23,759)2013Jul-14   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)
Foothill Gardens/Twin Creeks176
San Ramon, CA—
5,875
13,992
11,404
5,964
25,307
31,271
(18,366)1985Feb-97   3-30
Forest View192
Renton, WA—
3,731
14,530
3,095
3,731
17,625
21,356
(9,840)1998Oct-03   3-30
Foster's Landing490
Foster City, CA—
61,714
144,000
10,178
61,714
154,178
215,892
(35,111)1987Apr-14   5-30
Fountain Court320
Seattle, WA—
6,702
27,306
13,162
6,985
40,185
47,170
(28,006)2000Mar-00   3-30
Fountains at River Oaks226
San Jose, CA—
26,046
60,773
5,104
26,046
65,877
91,923
(14,742)1990Apr-14   3-30
Fourth & U171
Berkeley, CA—
8,879
52,351
3,967
8,879
56,318
65,197
(19,549)2010Apr-10   3-30
Fox Plaza445
San Francisco, CA—
39,731
92,706
35,532
39,731
128,238
167,969
(34,285)1968Feb-13   3-30
The Henley I/The Henley II215
Glendale, CA—
6,695
16,753
27,953
6,733
44,668
51,401
(26,394)1970Jun-99   3-30
Highlands at Wynhaven333
Issaquah, WA—
16,271
48,932
14,851
16,271
63,783
80,054
(27,806)2000Aug-08   3-30
Hillcrest Park608
Newbury Park, CA—
15,318
40,601
21,179
15,755
61,343
77,098
(42,560)1973Mar-98   3-30
Hillsdale Garden697
San Mateo, CA—
22,000
94,681
28,988
22,000
123,669
145,669
(58,877)1948Sep-06   3-30
Hope Ranch108
Santa Barbara, CA—
4,078
16,877
2,989
4,208
19,736
23,944
(8,757)1965Mar-07   3-30
Huntington Breakers342
Huntington Beach, CA—
9,306
22,720
21,487
9,315
44,198
53,513
(32,546)1984Oct-97   3-30
Inglenook Court224
Bothell, WA—
3,467
7,881
8,307
3,474
16,181
19,655
(13,291)1985Oct-94   3-30
Lafayette Highlands150
Lafayette, CA—
17,774
41,473
3,526
17,774
44,999
62,773
(9,732)1973Apr-14   5-30
Lakeshore Landing308
San Mateo, CA—
38,155
89,028
8,183
38,155
97,211
135,366
(22,592)1988Apr-14   5-30
Laurels at Mill Creek164
Mill Creek, WA—
1,559
6,430
8,202
1,595
14,596
16,191
(10,517)1981Dec-96   3-30
Lawrence Station336
Sunnyvale, CA—
45,532
106,735
2,006
45,532
108,741
154,273
(27,218)2012Apr-14   5-30
Le Parc140
Santa Clara, CA—
3,090
7,421
13,782
3,092
21,201
24,293
(16,474)1975Feb-94   3-30
Marbrisa202
Long Beach, CA—
4,700
18,605
9,755
4,760
28,300
33,060
(17,214)1987Sep-02   3-30
Marina City Club (6)
101
Marina Del Rey, CA—
—
28,167
31,783
—
59,950
59,950
(28,367)1971Jan-04   3-30
Marina Cove (7)
292
Santa Clara, CA—
5,320
16,431
15,948
5,324
32,375
37,699
(26,197)1974Jun-94   3-30
Mariner's Place105
Oxnard, CA—
1,555
6,103
2,589
1,562
8,685
10,247
(6,020)1987May-00   3-30
MB 360360
San Francisco, CA—
42,001
212,648
11,373
42,001
224,021
266,022
(41,021)2014Apr-14   3-30
Mesa Village133
Clairemont, CA—
1,888
7,498
2,591
1,894
10,083
11,977
(5,624)1963Dec-02   3-30
Mill Creek at Windermere400
San Ramon, CA—
29,551
69,032
6,201
29,551
75,233
104,784
(31,986)2005Sep-07   3-30
Mio103
San Jose, CA—
11,012
39,982
557
11,012
40,539
51,551
(5,695)2015Jan-16   3-30
Mirabella188
Marina Del Rey, CA—
6,180
26,673
16,790
6,270
43,373
49,643
(26,253)2000May-00   3-30
Mira Monte354
Mira Mesa, CA—
7,165
28,459
11,933
7,186
40,371
47,557
(25,280)1982Dec-02   3-30
Miracle Mile/Marbella236
Los Angeles, CA—
7,791
23,075
15,151
7,886
38,131
46,017
(27,856)1988Aug-97   3-30
Mission Hills282
Oceanside, CA—
10,099
38,778
11,134
10,167
49,844
60,011
(24,458)1984Jul-05   3-30
Mission Peaks453
Fremont, CA—
46,499
108,498
7,387
46,499
115,885
162,384
(25,036)1995Apr-14   5-30

F- 5960
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20192022
(Dollars in thousands)


Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Park Catalina90 Los Angeles, CA— 4,710 18,839 4,461 4,710 23,300 28,010 (9,892)2002Jun-12   3-30
Park Highland250 Bellevue, WA— 9,391 38,224 15,311 9,391 53,535 62,926 (22,330)1993Apr-14   5-30
Park Hill at Issaquah245 Issaquah, WA— 7,284 21,937 14,134 7,284 36,071 43,355 (22,322)1999Feb-99   3-30
Park Viridian320 Anaheim, CA— 15,894 63,574 6,770 15,894 70,344 86,238 (22,770)2008Apr-14   5-30
Park West126 San Francisco, CA— 9,424 21,988 13,872 9,424 35,860 45,284 (18,018)1958Sep-12   3-30
Parkwood at Mill Creek240 Mill Creek, WA— 10,680 42,722 4,289 10,680 47,011 57,691 (15,712)1989Apr-14   5-30
Patent 523295 Seattle, WA— 14,558 69,417 7,456 14,558 76,873 91,431 (35,368)2010Mar-10   3-30
Pathways at Bixby Village296 Long Beach, CA— 4,083 16,757 23,185 6,239 37,786 44,025 (34,740)1975Feb-91   3-30
Piedmont396 Bellevue, WA— 19,848 59,606 18,453 19,848 78,059 97,907 (27,927)1969May-14   3-30
Pinehurst (8)
28 Ventura, CA— — 1,711 859 — 2,570 2,570 (1,907)1973Dec-04   3-24
Pinnacle at Fullerton192 Fullerton, CA— 11,019 45,932 6,248 11,019 52,180 63,199 (17,490)2004Apr-14   5-30
Pinnacle on Lake Washington180 Renton, WA— 7,760 31,041 5,020 7,760 36,061 43,821 (12,439)2001Apr-14   5-30
Pinnacle at MacArthur Place253 Santa Ana, CA— 15,810 66,401 9,116 15,810 75,517 91,327 (24,482)2002Apr-14   5-30
Pinnacle at Otay Ranch I & II364 Chula Vista, CA— 17,023 68,093 7,263 17,023 75,356 92,379 (24,508)2001Apr-14   5-30
Pinnacle at Talega362 San Clemente, CA— 19,292 77,168 7,794 19,292 84,962 104,254 (26,568)2002Apr-14   5-30
Pinnacle Sonata268 Bothell, WA— 14,647 58,586 9,054 14,647 67,640 82,287 (21,944)2000Apr-14   5-30
Pointe at Cupertino116 Cupertino, CA— 4,505 17,605 13,837 4,505 31,442 35,947 (23,231)1963Aug-98   3-30
Pure Redmond105 Redmond, WA— 7,461 31,363 1,836 7,461 33,199 40,660 (3,654)2016Dec-19   3-30
Radius264 Redwood City, CA— 11,702 152,336 4,553 11,702 156,889 168,591 (49,503)2015Apr-14   3-30
Reed Square100 Sunnyvale, CA— 6,873 16,037 9,107 6,873 25,144 32,017 (13,891)1970Jan-12   3-30
Regency at Encino75 Encino, CA— 3,184 12,737 4,959 3,184 17,696 20,880 (9,169)1989Dec-09   3-30
Regency Palm Court116 Los Angeles, CA— 7,763 28,019 1,138 7,763 29,157 36,920 (467)1987Jul-22   3-30
Renaissance at Uptown Orange460 Orange, CA— 27,870 111,482 10,042 27,870 121,524 149,394 (39,208)2007Apr-14   5-30
Reveal438 Woodland Hills, CA— 25,073 121,314 6,099 25,073 127,413 152,486 (37,131)2010Apr-15   3-30
Salmon Run at Perry Creek132 Bothell, WA— 3,717 11,483 3,550 3,801 14,949 18,750 (10,837)2000Oct-00   3-30
Sammamish View153 Bellevue, WA— 3,324 7,501 8,398 3,331 15,892 19,223 (14,091)1986Nov-94   3-30
101 San Fernando323 San Jose, CA— 4,173 58,961 17,835 4,173 76,796 80,969 (36,704)2001Jul-10   3-30
San Marcos432 Richmond, CA— 15,563 36,204 38,058 22,866 66,959 89,825 (42,507)2003Nov-03   3-30
Santee Court/Santee Village238 Los Angeles, CA— 9,581 40,317 17,391 9,582 57,707 67,289 (25,651)2004Oct-10   3-30
Shadow Point172 Spring Valley, CA— 2,812 11,170 6,339 2,820 17,501 20,321 (11,291)1983Dec-02   3-30
Shadowbrook418 Redmond, WA— 19,292 77,168 8,886 19,292 86,054 105,346 (28,188)1986Apr-14   5-30
Slater 116108 Kirkland, WA— 7,379 22,138 1,915 7,379 24,053 31,432 (7,903)2013Sep-13   3-30
Solstice280 Sunnyvale, CA— 34,444 147,262 8,105 34,444 155,367 189,811 (52,443)2014Apr-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)
Mission Peaks II336
Fremont, CA—
31,429
73,334
7,308
31,429
80,642
112,071
(17,908)1989Apr-14   5-30
Montclaire390
Sunnyvale, CA—
4,842
19,776
28,185
4,997
47,806
52,803
(41,752)1973Dec-88   3-30
Monterey Villas122
Oxnard, CA—
2,349
5,579
6,873
2,424
12,377
14,801
(8,553)1974Jul-97   3-30
Muse152
North Hollywood, CA—
7,822
33,436
3,466
7,823
36,901
44,724
(13,932)2011Feb-11   3-30
Museum Park117
San Jose, CA—
13,864
32,348
2,012
13,864
34,360
48,224
(7,530)2002Apr-14   5-30
One South Market312
San Jose, CA—
28,290
148,649
162
28,290
148,811
177,101
(3,931)2015Mar-19   3-30
Palm Valley1,099
San Jose, CA—
133,802
312,205
15,296
133,802
327,501
461,303
(35,244)2008Jan-17   3-30
Paragon Apartments301
Fremont, CA—
32,230
77,320
2,173
32,230
79,493
111,723
(14,796)2013Jul-14   3-30
Park Catalina90
Los Angeles, CA—
4,710
18,839
3,372
4,710
22,211
26,921
(7,029)2002Jun-12   3-30
Park Highland250
Bellevue, WA—
9,391
38,224
12,981
9,391
51,205
60,596
(13,942)1993Apr-14   5-30
Park Hill at Issaquah245
Issaquah, WA—
7,284
21,937
10,119
7,284
32,056
39,340
(16,614)1999Feb-99   3-30
Park Viridian320
Anaheim, CA—
15,894
63,574
3,789
15,894
67,363
83,257
(14,776)2008Apr-14   5-30
Park West126
San Francisco, CA—
9,424
21,988
12,500
9,424
34,488
43,912
(11,971)1958Sep-12   3-30
Parkwood at Mill Creek240
Mill Creek, WA—
10,680
42,722
3,376
10,680
46,098
56,778
(10,263)1989Apr-14   5-30
Patent 523295
Seattle, WA—
14,558
69,417
5,923
14,558
75,340
89,898
(26,798)2010Mar-10   3-30
Pathways at Bixby Village296
Long Beach, CA—
4,083
16,757
21,850
6,239
36,451
42,690
(31,839)1975Feb-91   3-30
Piedmont396
Bellevue, WA—
19,848
59,606
12,913
19,848
72,519
92,367
(16,747)1969May-14   3-30
Pinehurst (8)
28
Ventura, CA—
—
1,711
731
—
2,442
2,442
(1,517)1973Dec-04   3-24
Pinnacle at Fullerton192
Fullerton, CA—
11,019
45,932
3,983
11,019
49,915
60,934
(11,134)2004Apr-14   5-30
Pinnacle on Lake Washington180
Renton, WA—
7,760
31,041
3,513
7,760
34,554
42,314
(7,545)2001Apr-14   5-30
Pinnacle at MacArthur Place253
Santa Ana, CA—
15,810
66,401
5,238
15,810
71,639
87,449
(15,689)2002Apr-14   5-30
Pinnacle at Otay Ranch I & II364
Chula Vista, CA—
17,023
68,093
4,227
17,023
72,320
89,343
(15,862)2001Apr-14   5-30
Pinnacle at Talega362
San Clemente, CA—
19,292
77,168
3,097
19,292
80,265
99,557
(17,314)2002Apr-14   5-30
Pinnacle Sonata268
Bothell, WA—
14,647
58,586
4,597
14,647
63,183
77,830
(13,613)2000Apr-14   5-30
Pointe at Cupertino116
Cupertino, CA—
4,505
17,605
12,637
4,505
30,242
34,747
(19,206)1963Aug-98   3-30
Pure Redmond105
Redmond, WA—
7,461
31,363
—
7,461
31,363
38,824
(46)2016Dec-19   3-30
Radius264
Redwood City, CA—
11,702
152,336
904
11,702
153,240
164,942
(33,929)2015Apr-14   3-30
Reed Square100
Sunnyvale, CA—
6,873
16,037
8,451
6,873
24,488
31,361
(10,156)1970Jan-12   3-30
Regency at Encino75
Encino, CA—
3,184
12,737
3,911
3,184
16,648
19,832
(6,945)1989Dec-09   3-30
Renaissance at Uptown Orange460
Orange, CA—
27,870
111,482
6,212
27,870
117,694
145,564
(25,469)2007Apr-14   5-30
Reveal438
Woodland Hills, CA—
25,073
121,314
2,446
25,073
123,760
148,833
(22,720)2010Apr-15   3-30
Salmon Run at Perry Creek132
Bothell, WA—
3,717
11,483
2,941
3,801
14,340
18,141
(8,857)2000Oct-00   3-30

F- 6061
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20192022
(Dollars in thousands)


Costs
Initial costcapitalizedGross amount carried at close of period
ApartmentBuildings andsubsequent toLand andBuildings andAccumulatedDate ofDateLives
PropertyHomesLocationEncumbranceLandimprovementsacquisitionimprovementsimprovements
Total (1)
depreciationconstructionacquired(years)
Station Park Green599 San Mateo, CA— 54,782 314,694 110,657 67,204 412,929 480,133 (58,895)2018Mar-183-30
Stevenson Place200 Fremont, CA— 996 5,582 15,544 1,001 21,121 22,122 (17,733)1975Apr-00   3-30
Stonehedge Village196 Bothell, WA— 3,167 12,603 11,219 3,201 23,788 26,989 (18,480)1986Oct-97   3-30
Summerhill Park100 Sunnyvale, CA— 2,654 4,918 11,661 2,656 16,577 19,233 (14,478)1988Sep-88   3-30
Summit Park300 San Diego, CA— 5,959 23,670 10,112 5,977 33,764 39,741 (22,902)1972Dec-02   3-30
Taylor 28197 Seattle, WA— 13,915 57,700 5,127 13,915 62,827 76,742 (20,376)2008Apr-14   5-30
The Audrey at Belltown137 Seattle, WA— 9,228 36,911 3,046 9,228 39,957 49,185 (12,553)1992Apr-14   5-30
The Avery121 Los Angeles, CA— 6,964 29,922 1,423 6,964 31,345 38,309 (9,394)2014Mar-14   3-30
The Bernard63 Seattle, WA— 3,699 11,345 1,097 3,689 12,452 16,141 (5,066)2008Sep-11   3-30
The Blake LA196 Los Angeles, CA— 4,023 9,527 25,573 4,031 35,092 39,123 (25,348)1979Jun-97   3-30
The Cairns99 Seattle, WA— 6,937 20,679 3,407 6,939 24,084 31,023 (12,852)2006Jun-07   3-30
The Commons264 Campbell, CA— 12,555 29,307 11,676 12,556 40,982 53,538 (20,972)1973Jul-10   3-30
The Elliot at Mukilteo301 Mukilteo, WA— 2,498 10,595 19,851 2,824 30,120 32,944 (25,366)1981Jan-97   3-30
The Galloway506 Pleasanton, CA— 32,966 184,499 4,810 32,966 189,309 222,275 (20,181)2016Jan-203-30
The Grand243 Oakland, CA— 4,531 89,208 8,950 4,531 98,158 102,689 (47,729)2009Jan-09   3-30
The Hallie292 Pasadena, CA— 2,202 4,794 57,103 8,385 55,714 64,099 (45,569)1972Apr-97   3-30
The Huntington276 Huntington Beach, CA— 10,374 41,495 8,888 10,374 50,383 60,757 (20,123)1975Jun-12   3-30
The Landing at Jack London Square282 Oakland, CA— 33,554 78,292 9,533 33,554 87,825 121,379 (30,122)2001Apr-14   5-30
The Lofts at Pinehurst118 Ventura, CA— 1,570 3,912 6,219 1,618 10,083 11,701 (7,542)1971Jun-97   3-30
The Palisades192 Bellevue, WA— 1,560 6,242 15,618 1,565 21,855 23,420 (19,371)1977May-90   3-30
The Palms at Laguna Niguel460 Laguna Niguel, CA— 23,584 94,334 16,019 23,584 110,353 133,937 (37,515)1988Apr-14   5-30
The Stuart188 Pasadena, CA— 13,574 54,298 5,096 13,574 59,394 72,968 (19,069)2007Apr-14   5-30
The Trails of Redmond423 Redmond, WA— 21,930 87,720 8,769 21,930 96,489 118,419 (31,532)1985Apr-14   5-30
The Village at Toluca Lake145 Burbank, CA— 14,634 48,297 1,354 14,634 49,651 64,285 (2,767)1974Jun-213-30
The Waterford238 San Jose, CA— 11,808 24,500 18,880 15,165 40,023 55,188 (29,398)2000Jun-003-30
Tierra Vista404 Oxnard, CA— 13,652 53,336 10,699 13,661 64,026 77,687 (39,508)2001Jan-01   3-30
Tiffany Court101 Los Angeles, CA— 6,949 27,796 3,123 6,949 30,919 37,868 (9,943)1987Apr-14   5-30
Trabuco Villas132 Lake Forest, CA— 3,638 8,640 5,542 3,890 13,930 17,820 (10,618)1985Oct-97   3-30
Valley Park160 Fountain Valley, CA— 3,361 13,420 7,055 3,761 20,075 23,836 (14,229)1969Nov-013-30
Via284 Sunnyvale, CA— 22,000 82,270 6,904 22,016 89,158 111,174 (37,128)2011Jul-11   3-30
Villa Angelina256 Placentia, CA— 4,498 17,962 9,357 4,962 26,855 31,817 (19,266)1970Nov-013-30
Villa Granada270 Santa Clara, CA— 38,299 89,365 3,231 38,299 92,596 130,895 (29,256)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)
Sammamish View153
Bellevue, WA—
3,324
7,501
7,285
3,331
14,779
18,110
(12,571)1986Nov-94   3-30
101 San Fernando323
San Jose, CA—
4,173
58,961
13,374
4,173
72,335
76,508
(26,862)2001Jul-10   3-30
San Marcos432
Richmond, CA—
15,563
36,204
33,430
22,866
62,331
85,197
(33,909)2003Nov-03   3-30
Santee Court/Santee Village238
Los Angeles, CA—
9,581
40,317
11,607
9,582
51,923
61,505
(17,070)2004Oct-10   3-30
Shadow Point172
Spring Valley, CA—
2,812
11,170
4,305
2,820
15,467
18,287
(8,864)1983Dec-02   3-30
Shadowbrook418
Redmond, WA—
19,292
77,168
5,704
19,292
82,872
102,164
(18,117)1986Apr-14   5-30
Slater 116108
Kirkland, WA—
7,379
22,138
1,194
7,379
23,332
30,711
(5,181)2013Sep-13   3-30
Solstice280
Sunnyvale, CA—
34,444
147,262
6,544
34,444
153,806
188,250
(36,993)2014Apr-14   5-30
Station Park Green - Phase I121
San Mateo, CA—
14,923
96,229
5,610
14,924
101,838
116,762
(8,241)2018Mar-183-30
Stevenson Place200
Fremont, CA—
996
5,582
13,651
1,001
19,228
20,229
(14,432)1975Apr-00   3-30
Stonehedge Village196
Bothell, WA—
3,167
12,603
8,669
3,201
21,238
24,439
(14,829)1986Oct-97   3-30
Summerhill Park100
Sunnyvale, CA—
2,654
4,918
11,180
2,656
16,096
18,752
(11,728)1988Sep-88   3-30
Summit Park300
San Diego, CA—
5,959
23,670
8,485
5,977
32,137
38,114
(18,375)1972Dec-02   3-30
Taylor 28197
Seattle, WA—
13,915
57,700
3,391
13,915
61,091
75,006
(13,005)2008Apr-14   5-30
The Audrey at Belltown137
Seattle, WA—
9,228
36,911
1,290
9,228
38,201
47,429
(8,013)1992Apr-14   5-30
The Avery121
Los Angeles, CA—
6,964
29,922
726
6,964
30,648
37,612
(5,957)2014Mar-14   3-30
The Bernard63
Seattle, WA—
3,699
11,345
800
3,689
12,155
15,844
(3,574)2008Sep-11   3-30
The Blake LA196
Los Angeles, CA—
4,023
9,527
22,158
4,031
31,677
35,708
(18,135)1979Jun-97   3-30
The Cairns99
Seattle, WA—
6,937
20,679
2,389
6,939
23,066
30,005
(9,915)2006Jun-07   3-30
The Commons264
Campbell, CA—
12,555
29,307
9,206
12,556
38,512
51,068
(14,792)1973Jul-10   3-30
The Elliot at Mukilteo301
Mukilteo, WA—
2,498
10,595
17,699
2,824
27,968
30,792
(21,381)1981Jan-97   3-30
The Grand243
Oakland, CA—
4,531
89,208
7,334
4,531
96,542
101,073
(37,589)2009Jan-09   3-30
The Hallie292
Pasadena, CA—
2,202
4,794
54,674
8,385
53,285
61,670
(35,599)1972Apr-97   3-30
The Huntington276
Huntington Beach, CA—
10,374
41,495
5,741
10,374
47,236
57,610
(13,725)1975Jun-12   3-30
The Landing at Jack London Square282
Oakland, CA—
33,554
78,292
6,329
33,554
84,621
118,175
(19,726)2001Apr-14   5-30
The Lofts at Pinehurst118
Ventura, CA—
1,570
3,912
5,499
1,618
9,363
10,981
(6,164)1971Jun-97   3-30
The Palisades192
Bellevue, WA—
1,560
6,242
13,743
1,565
19,980
21,545
(17,648)1977May-90   3-30
The Palms at Laguna Niguel460
Laguna Niguel, CA—
23,584
94,334
9,442
23,584
103,776
127,360
(23,149)1988Apr-14   5-30
The Stuart188
Pasadena, CA—
13,574
54,298
2,693
13,574
56,991
70,565
(12,753)2007Apr-14   5-30
 The Trails of Redmond423
Redmond, WA—
21,930
87,720
5,406
21,930
93,126
115,056
(20,366)1985Apr-14   5-30
Tierra Vista404
Oxnard, CA—
13,652
53,336
6,023
13,661
59,350
73,011
(32,123)2001Jan-01   3-30

F- 6162
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 20192022
(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 11,919 13,842 67,286 81,128 (24,118)1974Apr-14   5-30
Village Green272 La Habra, CA— 6,488 36,768 5,658 6,488 42,426 48,914 (14,607)1971Apr-14   5-30
Vista Belvedere76 Tiburon, CA— 5,573 11,901 9,706 5,573 21,607 27,180 (15,005)1963Aug-04   3-30
Vox Apartments58 Seattle, WA— 5,545 16,635 543 5,545 17,178 22,723 (5,400)2013Oct-13   3-30
Wallace on Sunset200 Los Angeles, CA— 24,005 80,466 4,041 24,005 84,507 108,512 (13,371)2021Dec-21   3-30
Walnut Heights163 Walnut, CA— 4,858 19,168 6,829 4,887 25,968 30,855 (17,053)1964Oct-03   3-30
Wandering Creek156 Kent, WA— 1,285 4,980 6,079 1,296 11,048 12,344 (9,315)1986Nov-95   3-30
Wharfside Pointe155 Seattle, WA— 2,245 7,020 14,184 2,258 21,191 23,449 (17,924)1990Jun-94   3-30
Willow Lake508 San Jose, CA— 43,194 101,030 20,592 43,194 121,622 164,816 (48,482)1989Oct-12   3-30
5600 Wilshire284 Los Angeles, CA— 30,535 91,604 8,228 30,535 99,832 130,367 (31,251)2008Apr-14   5-30
Wilshire La Brea478 Los Angeles, CA— 56,932 211,998 19,434 56,932 231,432 288,364 (75,779)2014Apr-14   5-30
Wilshire Promenade149 Fullerton, CA— 3,118 7,385 13,987 3,797 20,693 24,490 (15,554)1992Jan-97   3-30
Windsor Court95 Los Angeles, CA6,383 23,420 816 6,383 24,236 30,619 (389)1987Jul-22   3-30
Windsor Ridge216 Sunnyvale, CA— 4,017 10,315 17,579 4,021 27,890 31,911 (26,204)1989Mar-89   3-30
Woodland Commons302 Bellevue, WA— 2,040 8,727 26,278 2,044 35,001 37,045 (27,128)1978Mar-90   3-30
Woodside Village145 Ventura, CA— 5,331 21,036 6,494 5,341 27,520 32,861 (17,226)1987Dec-04   3-30
48,939 $— $2,728,585 $9,703,950 $2,396,447 $2,778,895 $12,050,087 $14,828,982 $(4,815,957)
      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)
Tiffany Court101
Los Angeles, CA—
6,949
27,796
1,857
6,949
29,653
36,602
(6,429)1987Apr-14   5-30
Trabuco Villas132
Lake Forest, CA—
3,638
8,640
4,061
3,890
12,449
16,339
(8,740)1985Oct-97   3-30
Via284
Sunnyvale, CA—
22,000
82,270
3,189
22,016
85,443
107,459
(27,803)2011Jul-11   3-30
Villa Granada270
Santa Clara, CA—
38,299
89,365
2,200
38,299
91,565
129,864
(19,559)2010Apr-14   5-30
Villa Siena272
Costa Mesa, CA—
13,842
55,367
8,399
13,842
63,766
77,608
(14,671)1974Apr-14   5-30
Village Green272
La Habra, CA—
6,488
36,768
4,061
6,488
40,829
47,317
(9,428)1971Apr-14   5-30
Vista Belvedere76
Tiburon, CA—
5,573
11,901
8,844
5,573
20,745
26,318
(12,068)1963Aug-04   3-30
Vox Apartments58
Seattle, WA—
5,545
16,635
408
5,545
17,043
22,588
(3,543)2013Oct-13   3-30
Walnut Heights163
Walnut, CA—
4,858
19,168
5,645
4,887
24,784
29,671
(13,726)1964Oct-03   3-30
Wandering Creek156
Kent, WA—
1,285
4,980
5,152
1,296
10,121
11,417
(7,945)1986Nov-95   3-30
Wharfside Pointe155
Seattle, WA—
2,245
7,020
12,465
2,258
19,472
21,730
(14,892)1990Jun-94   3-30
Willow Lake508
San Jose, CA—
43,194
101,030
15,998
43,194
117,028
160,222
(32,271)1989Oct-12   3-30
5600 Wilshire284
Los Angeles, CA—
30,535
91,604
4,495
30,535
96,099
126,634
(20,175)2008Apr-14   5-30
Wilshire La Brea478
Los Angeles, CA—
56,932
211,998
11,252
56,932
223,250
280,182
(52,822)2014Apr-14   5-30
Wilshire Promenade149
Fullerton, CA—
3,118
7,385
10,727
3,797
17,433
21,230
(11,640)1992Jan-97   3-30
Windsor Ridge216
Sunnyvale, CA—
4,017
10,315
16,759
4,021
27,070
31,091
(22,682)1989Mar-89   3-30
Woodland Commons302
Bellevue, WA—
2,040
8,727
24,610
2,044
33,333
35,377
(22,838)1978Mar-90   3-30
Woodside Village145
Ventura, CA—
5,331
21,036
5,387
5,341
26,413
31,754
(13,691)1987Dec-04   3-30
 43,932
 $—
$2,415,080
$8,256,799
$1,643,811
$2,443,633
$9,872,057
$12,315,690
$(3,217,204)   
       Costs
       
     Initial cost  capitalized
 Gross amount carried at close of period    
      Buildings and
 subsequent
 Land and
 Buildings and
  Accumulated
   
  PropertyEncumbrance
 Land
improvements
to acquisition
improvements
improvements
Total(1)

depreciation
   
  Other real estate assets—
3,079
12,315
12,183
3,909
23,668
27,577
(15,356)   
 

 $—
$3,079
$12,315
$12,183
$3,909
$23,668
$27,577
$(15,356)   
              
Total$990,667
$2,736,256
$9,395,624
$1,906,262
$2,773,805
$11,264,337
$14,038,142
$(3,689,482)   
 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 21,319 82,067 36,545 118,612 (18,615)
$— $80,706 $16,587 $21,319 $82,067 $36,545 $118,612 $(18,615)
Total$593,943 $2,988,330 $10,415,345 $2,562,552 $3,043,321 $12,922,906 $15,966,227 $(5,152,133)
(1)The aggregate cost for federal income tax purposes is approximately $11.0$12.1 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.

F- 62
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2019
(Dollars in thousands)


(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.
F- 63
ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
FINANCIAL STATEMENT SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2022
(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:
 202220212020 202220212020
Rental properties:Accumulated depreciation:
Balance at beginning of year$15,629,927 $15,061,745 $14,038,142 Balance at beginning of year$4,646,854 $4,133,959 $3,689,482 
Acquisition, development, and improvement of real estate427,668 707,267 1,426,505 Depreciation expense536,202 528,613 518,629 
Disposition of real estate and other(91,368)(139,085)(402,902)Depreciation expense - Disposals and other(30,923)(15,718)(74,152)
Balance at the end of year$15,966,227 $15,629,927 $15,061,745 Balance at the end of year$5,152,133 $4,646,854 $4,133,959 
 2019 2018 2017 2019 2018 2017
Rental properties:     Accumulated depreciation:     
Balance at beginning of year$13,366,101
 $13,362,073
 $12,687,722
Balance at beginning of year$3,209,548
 $2,769,297
 $2,311,546
Acquisition, development, and improvement of real estate672,041
 325,986
 700,892
Depreciation expense479,934
 478,721
 464,043
Disposition of real estate and other—
 (321,958) (28,367)Depreciation expense - Disposals and other—
 (38,470) (6,292)
Reclassification from other assets and into building and improvements, net—
 —
 1,826
Balance at the end of year$3,689,482
 $3,209,548
 $2,769,297
Balance at the end of year$14,038,142
 $13,366,101
 $13,362,073
 

 

 





EXHIBIT INDEX
F- 64
Table of Contents
EXHIBIT INDEX
Exhibit No.Document
Exhibit No.Document
3.4
Certificate of Limited Partnership of Essex Portfolio, L.P. and amendments thereto, attached as Exhibit 3.4 to the Company’sCompany's Annual Report on Form 10-K, filed February 21, 2019,25, 2022, and incorporated herein by reference.reference.
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.
4.5
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.
4.6
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
10.3
BRE Properties, Inc. 2005As Amended and Restated Deferred Compensation Plan (assumed by Essex Property Trust, Inc.), as amended on eachAs of May 18, 2010, November 17, 2014 and December 9, 2016, January 1, 2021,attached as Exhibit 10.3Exhibit 10.2 to the Company's Annual Report on Form 10-K, filed February 21, 2019, and25, 2022, and incorporated herein by reference.*
10.6
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. †
10.7
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.

10.19
First Amendment to Second Amended and Restated Revolving Credit Agreement, dated as of January 11, 2019, 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 10.21 to the Company's Annual Report on Form 10-K, filed February 21, 2019, and incorporated herein by reference.
10.20
Essex Property Trust, Inc. 2018 Stock Award and Incentive Compensation Plan, attached as Appendix A to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 15, 2018, filed March 23, 2018, and incorporated herein by reference.*

Table of Contents
10.24
Executive Transition Services Agreement, dated December 19, 2018, by and between Essex Property Trust, Inc. and John D. Eudy,Plan, attached as Exhibit 10.110.18 to the Company's CurrentAnnual Report on Form 8-K,10-K, filed December 19, 2018,February 25, 2022, and incorporated herein by reference.*
10.26
Second Amendment to Second Amended and Restated Revolving Credit Agreement, dated as of January 9, 2020, by and July 7, 2022, among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto.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.†

101101.INSThe following financial statements fromXBRL Instance Document - the Company’s Annual Report on Form 10-K forInstance Document does not appear in the year ended December 31, 2019, formatted inInteractive Data File because its XBRL tags are embedded within the Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets of Essex Property Trust, Inc., (ii) Consolidated Statements of Income of Essex Property Trust, Inc., (iii) Consolidated Statements of Comprehensive Income of Essex Property Trust, Inc., (iv) Consolidated Statements of Equity of Essex Property Trust, Inc., (v) Consolidated Statements of Cash Flows of Essex Property Trust, Inc., (vi) Notes to Consolidated Financial Statements of Essex Property Trust, Inc., (vii) Consolidated Balance Sheets of Essex Portfolio, L.P., (viii) Consolidated Statements of Income of Essex Portfolio, L.P., (ix) Consolidated Statements of Comprehensive Income of Essex Portfolio, L.P., (x) Consolidated Statements of Capital of Essex Portfolio, L.P., (xi) Consolidated Statements of Cash Flows of Essex Portfolio, L.P. and (xii) Notes to Consolidated Financial Statements of Essex Portfolio, L.P., tagged as blocks of text and including detailed tags.XBRL document.
104101.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.




Table of Contents
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 20, 2020.
23, 2023.
ESSEX PROPERTY TRUST, INC.
By:  /s/ ANGELA L. KLEIMANBARBARA PAK
Angela L. KleimanBarbara Pak
Executive Vice President and Chief Financial Officer

(Authorized Officer, Principal Financial Officer)
By:  /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/ ANGELA L. KLEIMANBARBARA PAK
Angela L. KleimanBarbara Pak
Executive Vice President and Chief Financial Officer
(Authorized Officer, Principal Financial Officer)
By:  /s/ JOHN FARIAS
John Farias
Senior Vice President and Chief Accounting Officer


S-1
Table of Contents
KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael J. Schall and Angela L. Kleiman,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/ GEORGE M. MARCUS
George M. Marcus
Director and Chairman of the BoardFebruary 20, 202023, 2023
/s/ KEITH R. GUERICKE
Keith R. Guericke
Director, and Vice Chairman of the Board

 		February 20, 202023, 2023
/s/ IRVING F. LYONS, III
Irving F. Lyons, III
Lead DirectorFebruary 20, 202023, 2023
/s/ MARIA R. HAWTHORNE
Maria R. Hawthorne
DirectorFebruary 23, 2023
/s/ AMAL M. JOHNSON
Amal M. Johnson
DirectorFebruary 20, 202023, 2023
/s/ MARY KASARIS
Mary Kasaris
DirectorFebruary 20, 202023, 2023
/s/ ANGELA L. KLEIMAN
Angela L. Kleiman
Chief Operating Officer and Sr. Executive Vice President, and DirectorFebruary 23, 2023
/s/ THOMAS E. ROBINSON
Thomas E. Robinson
DirectorFebruary 20, 202023, 2023
/s/ MICHAEL J. SCHALL
Michael J. Schall
Chief Executive Officer and President, and Director (Principal Executive Officer)February 20, 202023, 2023
/s/ BYRON A. SCORDELIS
Byron A. Scordelis
DirectorFebruary 20, 2020
/s/ JANICE L. SEARS
Janice L. Sears
DirectorFebruary 20, 202023, 2023

S-2