"Essex" or the "Company" means Essex Property Trust, Inc., a real estate investment trust incorporated in the State of Maryland, or where the context otherwise requires, Essex Portfolio, L.P., a limited partnership (the "Operating Partnership") in which Essex Property Trust, Inc. is the sole general partner.

The information furnished in the accompanying consolidated unaudited balance sheets, statements of operations, stockholders' equity and cash flows of the Company reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the aforementioned consolidated financial statements for the interim periods.

The accompanying unaudited 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. Additionally, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2003.

The unaudited consolidated financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q. 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. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2002.2003.

All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.

The unaudited consolidated financial statements for the three and nine months ended September 30,March 31, 2004 and 2003 and 2002 include the accounts of the Company and Essex Portfolio, L.P. (the "Operating Partnership", which holds the operating assets of the Company). See "Accounting Changes" section below for a description of entities retroactively consolidated by the Operating Partnership for all periods presented pursuant to its adoption of FIN 46 Revised. The Company is the sole general partner in the Operating Partnership, with a 90.1%90.5%, 90.0%90.8% and 88.7%89.9% general partnership interest as of September 30, 2003,March 31, 2004, December 31, 20022003 and September 30, 2002,March 31, 2003, respectively.

As of September 30, 2003,March 31, 2004, the Company operates and has ownership interests in 117125 multifamily properties (containing 25,09526,991 units), five recreational vehicle parks (comprising 1,717 spaces), fourfive office buildings (with approximately 63,540173,540 square feet) and two manufactured housing communities (containing 607 sites), (collectively, the "Properties"). The Properties are located in Southern California (Los Angeles, Ventura, Orange and San Diego counties), Northern California (the San Francisco Bay Area), the Pacific Northwest (the Seattle, Washington and Portland, Oregon metropolitan areas) and other areas (Houston, Texas, Las Vegas, Nevada and Hemet, California).

Essex Apartment Value Fund, L.P. (the "Fund"("Fund I"), is an investment fund organized by the Company in 2001 to add value through rental growth and asset appreciation, utilizing the Company's development, redevelopment and asset management capabilities. Currently, the Fund I is considered fully invested based on its acquisitions to date and anticipated development and redevelopment expenditures. An affiliate of the Company, Essex VFGP, L.P. ("VFGP"), is a 1% general partner and is a 20.4% limited partner. The Operating Partnership owns a 99% limited partnership interest in VFGP. The Fund I now expects to utilize leverage of approximately 61% of the valueestimated costs, of the underlying real estate portfolio.portfolio, including estimated completion costs of development projects. The Company is committed to invest 21.4% of the aggregate capital committed to the Fund. In addition, Essex will be compensated by the Fund I for its asset management, property management, development and redevelopment services and may receive incentive payments if the Fund I exceeds certain financial return benchmarks. The Company's remaining unfunded capital commitment as of March 31, 2004 is $9,614,000.

The Company investsCompany's equity in joint ventures, which generally involve multifamily property acquisitions. For joint ventures entered into afterincome from investments accounted for using the equity method was $910,000 and $651,000 for the three months ended March 31, 2004 and 2003, respectively, and is classified as a component of "Revenue- Interest and other income" in the accompanying consolidated statement of operations.

Accounting Changes

1. Variable Interest Entities

In January 31, 2003, the Company follows the guidance provided byFinancial Accounting Standards Board (FASB) issued FASB Interpretation NoNo. 46 (FIN 46), "Consolidation of Variable Interest Entities.Entities, an Interpretation of ARB No. 51." The Company didFIN 46 established new measurement techniques to evaluate whether entities should be consolidated in accordance with Accounting Research Bulletin (ARB) No. 51, "Consolidated Financial Statements." FIN 46 defined variable interest entities (VIEs), in which equity investors lack an essential characteristic of a controlling financial interest or do not enter into any new joint ventures duringhave sufficient equity investment at risk to permit the nine months ended September 30, 2003. For joint ventures entered into priorentity to January 31,finance its activities without additional subordinated financial support from other parties. In December 2003, the Company accounts for these investments under the equity or consolidation methodsFASB completed deliberations of accountingproposed modifications to FIN 46 (FIN 46 Revised) resulting in multiple effective dates based on the voting control it exercises through its ownership interests in these affiliates. Undernature and the equity methodtiming of accounting, the investment is carried at the costformation of assets contributed or distributed, plus the Company's equity in undistributed earnings or losses since its initial investment. The individual assets, liabilities, revenues and expenses of the joint venture are not recorded in the Company's consolidated financial statements.




8


---




Beginning on December 31, 2003, the Company is required to apply the provisions of FIN 46 to all investments (including joint ventures) and all other arrangements which were entered into prior to January 31, 2003 to evaluate whether such arrangements represents involvement with a variable interest entities ("VIE"). Further evaluation is required to determine whether the Company should continue using its historical accounting method or consolidate the VIE. FIN 46 Revised must be applied no later than the Company's first quarter of 2004. Special Purpose Entities (SPEs) created prior to February 1, 2003 may be accounted for under FIN 46 or FIN 46 Revised but no later than the Company's quarter ended December 31, 2003. The Company has not formed nor is it a party to any SPEs. FIN 46 Revised may be applied prospectively with a cumulative- effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative- effect adjustment as of the beginning of the first year restated. The disclosure requirements

As of January 1, 2004, the Company adopted the provisions of FIN 46 are effectiveRevised using the retroactive restatement approach, and amounts have been restated for all financial statements initially issued afterprior periods presented to reflect the adoption of FIN 46 Revised. The Company applied FIN 46 Revised to all of the Company's arrangements which were entered into prior to January 31, 2003. It is reasonably possible2003 and evaluated whether such arrangements represent involvement with a VIE and whether the Company qualifies as the primary beneficiary and should therefore consolidate the VIE. Subsequent to January 31, 2003, the Company has not entered into any arrangements that certainare deemed VIEs.

Certain of the entities through which and with which the Company conductswe conduct business including those described in Notes 3(b) and 5 of the Company's December 31, 2002 consolidated financial statements will behave been deemed to be VIEs under the provisions of FIN 46.46 Revised. Based on its preliminary evaluationour analysis of FIN 46 Revised, the Company consolidated Essex Management Corporation (EMC), Essex Fidelity I Corporation (EFC), 17 Down REIT limited partnerships (comprising ten properties), an office building that is subject to loans made by the Company, and the multifamily improvements owned by a third party in which the Company owns the land underlying these improvements and from which the Company receives fees, including land lease, subordination and property management fees. The Company consolidated these entities considered reasonably possible to be VIEs,because it is deemed the primary beneficiary. The Company's increase in total assets and liabilities netrelated to the consolidation of intercompany balances of suchthese VIEs were approximately $192,000,000 and $157,000,000, respectively, at March 31, 2004.

The Down REIT entities were estimated at $77,775 and $55,603 at September 30, 2003. The Company's estimated maximum exposure to loss would be equal to its investments in these arrangements, which totaled $22,850, as of September 30, 2003. The disclosures provided reflect management's understanding and analysis of FIN 46 based upon information currently available. The evaluation of the impact of FIN 46 on the Company's consolidated financial statements is ongoing and is subject to change in the event additional interpretive guidance is provided by the Financial Accounting Standards Board or others.

Included in the Company's investments accounted for under the equity method are limited partnership interests in 17 partnerships (Down REIT entities), whichthat collectively own ten multifamily properties comprised of 1,831 units. These(1,831 units) were investments were made under arrangements whereby Essex Management Corporation (EMC) became the general partner, the Operating Partnership became a special limited partner, and the other limited partners were granted rights of redemption for their interests. Such limited partners can request to be redeemed and the Company 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 the above arrangements. The other limited partners receive distributions based on the Company's current dividend rate times the number of units held. At September 30, 2003,March 31, 2004, the maximum number of shares that could be issued to meet redemption of these Down REIT entities is 1,467,198. The equity in income or loss reported by1,443,668. As of March 31, 2004 and December 31, 2003, the Company under the equity methodcarrying value of accounting for these down REIT entities is the net income of these down REIT entities as reduced by the income allocated to the other limited partners whichpartners' interests is equal to the distributions they received.

All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.

The Company's equity in income from investments accounted for using the equity method was $1,848 and $1,835 for the three months ended September 30, 2003 and 2002, respectively, and $5,458 and $7,135 for the nine months ended September 30, 2003 and 2002, respectively,presented at their historical cost and is classified as "Interest and other income"within minority interests in the accompanying consolidated statementbalance sheets.

Interest holders in VIEs consolidated by the Company are allocated a priority of operations.

Certain prior year balances have been reclassified to conformnet income equal to the current year presentation.

Stock-based CompensationProperties consolidated in accordance with FIN 46 Revised were encumbered by third party, non-recourse loans totaling $152,341,000 and $152,669,000 as of March 31, 2004 and December 31, 2003, respectively.

There is one VIE as to which the Company is not deemed to be the primary beneficiary of such VIE. Total assets and liabilities of this entity as of March 31, 2004 were $14,591,000 and $14,703,000, respectively. The Company applies APB Opinion No. 25 (APB 25) and related interpretations inis not exposed to a material loss from this entity.

As of January 1, 2004, the Company adopted the fair value method of accounting for its stock-based compensation plans granted to employees and directors.using the retroactive restatement method as provided by Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." Under APB 25, nothe fair value method, stock-based compensation cost has been recognized for stock options granted to employees and directors since all such stock options were granted with an exercise price equal tois measured at the fair market value of the underlying common stock. For the Company's long-term incentive plan and phantom stock plan, no compensation expense was recognized during the three months ended September 30, 2003 and 2002 and $408 and $911 was recognized for the nine months ended September 30, 2003 and 2002, respectively. Had compensation cost for these stock options and the Company's other plans been determinedgrant date based on the fair value atof the grant dates consistent withaward and is expensed over the vesting period. For the three months ended March 31, 2004 and 2003, stock-based compensation expense under the fair value method pursuant to FAS 123, the Company's net income applicable to common stockholderswas $136,000 and $221,000, respectively. The Company did not grant stock options for the three and nine months ended September 30, 2003 and 2002 would have been reduced to the pro forma amounts indicated below:March 31, '2004.

                                             Three Months Ended      Nine Months Ended
                                                September 30,          September 30,
                                            --------------------   --------------------
                                              2003       2002        2003       2002
                                            ---------  ---------   ---------  ---------
Net income available to common stockholders:
   As reported                             $   9,260  $  10,614   $  30,141  $  43,269
   Pro forma                                   9,133     10,488      29,760     42,890

Basic earnings per common share:
   As reported                             $    0.44  $    0.58   $    1.43  $    2.34
   Pro forma                                    0.43       0.57        1.41       2.32

Diluted earnings per common share:
   As reported                             $    0.43  $    0.57   $    1.42  $    2.32
   Pro forma                                    0.43       0.57        1.40       2.30

Weighted-average fair value of stock
   options granted during the periods
   presented                               $    3.90  $    4.69   $    3.90  $    4.69

The fair value of stock options granted each period was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants:

                                  Three Months Ended
                                      Nine Months Ended
                                     September 30,            September 30,March 31,
                             -----------------------
                                ------------------------2004      2003 2002         2003        2002(1)
                             ----------- ----------- ------------ -----------
Risk-free interest rates         2.63%    3.08%-4.62%n/a        2.17%-2.78% 3.08%-4.62%
Expected lives                   6 years     6 years     6 yearsn/a       6 years
Volatility                       19.18%      18.92%    17.89%-19.18%  18.92%n/a       17.91%
Dividend yield                   5.73%       6.30%    5.73%-6.12%     6.30%n/a        6.12%

All general and administrative expenses of the Company and Essex Management Corporation, an unconsolidated preferred stock subsidiary of the Company ("EMC"), are initially borne byto be approximately $50 million.

(3)Investments

As of January 1, 2004, the Company withadopted the provisions of FIN 46 Revised using the retroactive restatement approach, and amounts have been restated for all prior periods presented to reflect the adoption of FIN 46 Revised (See Note 1). The following table details the Company's investments accounted for under the equity method of accounting (dollars in thousands):

                                                                    March 31,    December 31
                                                                      2004         2003
                                                                    ---------    ---------
Investments in joint ventures:
   Direct and indirect LLC member interests of approximately
     49.9% in Newport Beach North, LLC and Newport Beach South,
     LLC                                                          $   15,200   $   13,020
   Limited partnership interest of 20.4% and general partner
     interest of 1% in Essex Apartment Value Fund, L.P                51,131       51,110
   Limited partnership interest of 20% in AEW joint venture            4,288        4,406
   Class A member interest of 45% in Park Hill LLC                     5,673        5,731
   Preferred limited partnership interests in Mountain Vista
     Apartments                                                        6,806        5,276
   Other investments                                                      27           24
                                                                    ---------    ---------
       Total investments                                              83,125       79,567

The combined summarized financial information of investments, which are accounted for under the equity method, are as follows:

                                                        March 31,    December 31,
                                                          2004         2003
 Balance sheets:                                        ---------    ---------
    Real estate and real estate under development     $  701,365   $  667,538
    Other assets                                          15,430       11,277
                                                        ---------    ---------
        Total assets                                  $  716,795   $  678,815
                                                        =========    =========

    Mortgage notes payable                            $  448,636   $  442,419
    Other liabilities                                     21,442       13,943
    Partners' equity                                     246,717      222,453
                                                        ---------    ---------
        Total liabilities and partners' equity        $  716,795   $  678,815
                                                        =========    =========

 Company's share of equity                            $   83,125   $   79,567
                                                        =========    =========



                                                        March 31,    March 31,
                                                          2004         2003
                                                        ---------    ---------
  Statements of operations:
     Total revenue                                    $   17,357   $   12,812
     Total expenses                                       15,415       11,668
                                                        ---------    ---------
         Total net income                             $    1,942   $    1,144
                                                        =========    =========

  Company's share of net income                       $      910   $      651
                                                        =========    =========

For a portion subsequently allocated to EMC. Expenses allocated to EMCfurther discussion regarding these investments, see the Company's annual report on Form 10-K for the three monthsyear ended September 30,December 31, 2003, Notes to Consolidated Financial Statements, Note. 3, "Real Estate."

(4)Related Party Transactions  

As of January 1, 2004, the Company adopted the provisions of FIN 46 Revised using the retroactive restatement approach, and 2002 totaled $615 and $532, respectively, and $1,907 and $2,010amounts have been restated for all prior periods presented to reflect the nine months ended September 30, 2003 and 2002, respectively. The allocation is reflected as a reduction in general and administrative expenses in the accompanying consolidated statementsadoption of operations.FIN 46 Revised (see Note 1).

Interest and other income includes interest income earned on notes receivable from investees of $79 and $377 for the three months ended September 30, 2003 and 2002, respectively, and $235 and $2,535 for the nine months ended September 30, 2003 and 2002, respectively. Other income also includes management fee income and investment income from the Company's investees of $2,761$1,805,000 and $2,058$1,572,000 for the three months ended September 30,March 31, 2004 and 2003, and 2002, respectively, and $8,538 and $7,647 for the nine months ended September 30, 2003 and 2002, respectively.

Notes receivable from investees and other receivables from related party receivablesparties as of September 30, 2003March 31, 2004 and December 31, 20022003 consist of the following:following (dollars in thousands):

                                                                                   September 30,March 31,    December 31,
                                                                                      2004          2003          2002
                                                                                  ------------  ------------
   Notes receivableand other receivables from joint venture investees:related parties:

      Note receivable fromto Highridge Apartments (Down REIT) from
      The Marcus & Millichap Company, secured, bearing interest at 10%12.75%,
      due on demandOctober 1, 2004                                                        $      2,9503,000  $      2,950

      Notes receivable from Essex Fidelity I Corp ("EFC"), secured,
      bearing interest at LIBOR + 2.5%, due 2004                                        7,065        14,979

      Note receivable from EFC, unsecured, bearing interest at 7.5%, due 2011             390           7263,000

      Receivable from Newport Beach North, LLC and Newport Beach South, LLC,
      unsecured, non interest bearing, due on demand                                       1,967           376

   Other related party receivables:--           200

      Loans to officers made prior to July 31, 2002, secured, bearing interest at 8%,
      due beginning April 2006                                                            633           633

      Other related party receivables, substantially due on demand                      5,615         4,4171,705         1,905
                                                                                  ------------  ------------
                                                                                 $      18,6205,338  $      24,0815,738
                                                                                  ============  ============

The Company's officers and directors do not have substantial economic interest in these joint venture investees.

Other related party receivables consist primarily of accrued interest income on notes receivable from joint venture investees and loans to officers, and advances and accrued management fees from joint venture investees, and unreimbursed expenses due from EMC.

In May 2003, the FASB issued Statement of Financial Accounting Standard No. 150 ("FAS 150"), "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." FAS 150 requires issuers to classify as liabilities (or assets in some circumstances) three classes of freestanding financial instruments that embody obligations for the issuer. Previously, many such instruments had been classified as equity. A freestanding financial instrument is an instrument that is entered into separately and apart from any of the entity's other financial instruments or equity transactions, or that is entered into in conjunction with some other transaction and is legally detachable and separately exercisable, such as certain put and call options. These provisions are effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. On October 29, 2003, the FASB deferred indefinitely the provision within FAS 150 which required non-controlling interests in consolidated finite life entities to be presented as a liability. The adoption of FAS 150 on July 1, 2003 did not have any impact on our consolidated financial statements.

The Company defines its reportable operating segments as the three geographical regions in which its properties are located: Southern California, Northern California and the Pacific Northwest. Excluded from segment revenues are properties outside of these regions and interest and other income. Non- segment revenues and net operating income included in the following schedule also consists of revenue generated from the commercial properties, recreational vehicle parks, and manufactured housing communities. Other non-segment assets include investments, real estate under development, cash, notes receivables, other assets and deferred charges. The revenues, net operating income, and assets for each of the reportable operating segments are summarized as follows for the periods presented.presented (dollars in thousands).

                                                        Three Months Ended
                                                             September 30,March 31,
                                                        ------------------------
                                                           2004       2003 2002(1)
                                                        -----------  -----------
Revenues:
    Southern California                                $    27,18437,052  $    18,56033,079
    Northern California                                     15,099       14,39915,818       16,216
    Pacific Northwest                                       10,032       10,53412,199       11,156
    Other non-segment areas                                  2,940          1361,262        3,568
                                                        -----------  -----------
                                                            55,255       43,62966,331       64,019
Interest and other income                                    2,982        5,1663,475        2,266
                                                        -----------  -----------
        Total revenues                                 $    58,23769,806  $    48,79566,285
                                                        ===========  ===========
Net operating income:
    Southern California                                $    18,58725,262  $    13,19222,855
    Northern California                                     10,200       10,46710,741       11,362
    Pacific Northwest                                        6,773        7,0607,955        7,307
    Other non-segment areas                                    1,169           72532        1,705
                                                        -----------  -----------
        Total net operating income                          36,729       30,79144,490       43,229
Interest and other income                                    2,982        5,1663,475        2,266
Depreciation and amortization:
    Southern California                                    (5,058)      (3,522)(10,326)      (6,537)
    Northern California                                     (3,511)      (2,752)(5,501)      (3,315)
    Pacific Northwest                                       (2,633)      (2,790)(1,185)      (2,965)
    Other non-segment areas                                 (1,106)         (65)(1,420)        (485)
                                                        -----------  -----------
                                                           (12,308)      (9,129)(18,432)     (13,302)
Interest:
    Southern California                                     (3,439)      (1,839)(6,228)      (5,476)
    Northern California                                     (2,807)      (2,839)(3,051)      (3,081)
    Pacific Northwest                                       (1,001)      (1,519)(1,705)      (1,175)
    Other non-segment areas                                 (3,281)      (2,424)(3,326)      (3,475)
                                                        -----------  -----------
                                                           (10,528)      (8,621)(14,310)     (13,207)
Amortization of deferred financing costs                      (333)        (147)(273)        (220)
General and administrative                                  (1,678)      (1,482)(2,930)      (2,309)
                                                        -----------  -----------
Income from continuing operations before minority interests                       and discontinued
          operations                                   $    14,86412,020  $    16,57816,457
                                                        ===========  ===========

16

(5)Segment Information  (continued)

                                                         Nine Months Ended
                                                              September 30,
                                                        ------------ -----------
                                                           2003         2002
                                                        -----------  -----------
Revenues:
    Southern California                                $    80,259  $    53,996
    Northern California                                     46,206       44,073
    Pacific Northwest                                       30,567       31,747
    Other non-segment areas                                  9,400          411
                                                        -----------  -----------
        Total segment revenues                             166,432      130,227
Interest and other income                                    9,247       18,961
                                                        -----------  -----------
        Total revenues                                 $   175,679  $   149,188
                                                        ===========  ===========
Net operating income:
    Southern California                                $    55,293  $    38,183
    Northern California                                     31,900       32,946
    Pacific Northwest                                       19,999       21,461
    Other non-segment areas                                  4,313          225
                                                        -----------  -----------
        Total segment net operating income                 111,505       92,815
Interest and other income                                    9,247       18,961
Depreciation and amortization:
    Southern California                                    (15,361)     (10,375)
    Northern California                                     (9,724)      (8,263)
    Pacific Northwest                                       (8,044)      (8,381)
    Other non-segment areas                                 (2,344)        (210)
                                                        -----------  -----------
                                                           (35,473)     (27,229)
Interest:
    Southern California                                    (10,328)      (5,533)
    Northern California                                     (8,397)      (8,480)
    Pacific Northwest                                       (3,082)      (4,566)
    Other non-segment areas                                (10,051)      (7,483)
                                                        -----------  -----------
                                                           (31,858)     (26,062)
Amortization of deferred financing costs                      (825)        (442)
General and administrative                                  (5,208)      (4,747)
                                                        -----------  -----------
        Income from continuing operations before
          minority interests and discontinued
          operations                                   $    47,388  $    53,296
                                                        ===========  ===========

                                                       September 30,March 31,   December 31,
                                                           2004       2003 2002(1)
                                                        -----------  -----------
Assets:
  Net real estate assets:
    Southern California                                $ 692,2551,034,553  $   700,877886,980
    Northern California                                    364,561      293,541438,373      435,041
    Pacific Northwest                                      245,698      251,252310,342      312,628
    Other non-segment areas                                 74,536       78,46583,024       83,710
                                                        -----------  -----------
        Total net real estate assets                     1,377,050    1,324,1351,866,292    1,718,359
  Other non-segment assets                                 282,031      295,599223,504      198,452
                                                        -----------  -----------
        Total assets                                   $ 1,659,0812,089,796  $ 1,619,7341,916,811
                                                        ===========  ===========

17

(1) Amounts have been restated for the retroactive adoption of FIN 46 Revised and SFAS 123 as discussed in Note 1.

(6)Net Income Per Common Share

(Amounts in thousands, except per share data)

                                                          Three Months Ended                Three Months Ended
                                                            September 30,March 31, 2004                    March 31, 2003                September 30, 2002
                                                    --------------------------------  --------------------------------
                                                                Weighted      Per                 Weighted      Per
                                                                 Average     Common                Average     Common
                                                                 Common      Share                 Common      Share
                                                     Income      Shares      Amount    Income      Shares      Amount
                                                    ---------  -----------  --------  ---------  -----------  --------
Basic - Net income available to
   common stockholders                             $   9,260   21,126,2295,962       22,843      0.26  $   0.44  $  10,614   18,345,664  $   0.58
                                                                  ========                          ========9,645       20,996      0.46

  Effect of Dilutive Securities:
    Convertible limited partnership
      Units(1)Units (1)                                           --           --                   --           --
    Stock options (2)                                     --          195,506172                   --          163,243156
    Vested series Z incentive units                       --           56,00090                   --           --56
                                                    ---------  -----------            ---------  -----------
                                                          --          251,506262                   --          163,243212
                                                    ---------  -----------            ---------  -----------
Diluted - Net income available to
   common stockholders                             $   9,260   21,377,7355,962       23,105  $   0.430.26  $   10,614   18,508,9079,645       21,208  $   0.57
                                          =========               ========  =========               ========


                                                  Nine Months Ended                  Nine Months Ended
                                                 September 30, 2003                 September 30, 2002
                                          --------------------------------  --------------------------------
                                                      Weighted      Per                 Weighted      Per
                                                       Average     Common                Average     Common
                                                       Common      Share                 Common      Share
                                           Income      Shares      Amount    Income      Shares      Amount
                                          ---------  -----------  --------  ---------  -----------  --------
Basic:
  Income from continuing operations      $  30,141   21,053,215  $   1.43  $  34,983   18,481,300  $   1.89
  Income from discontinued operations           --   21,053,215        --      8,286   18,481,300      0.45
                                          ---------               --------  ---------               --------
                                            30,141               $   1.43     43,269               $   2.34
                                                                  ========                          ========

  Effect of Dilutive Securities:
    Convertible limited partnership
      Units(1)                                  --           --                   --           --
    Stock options (2)                           --      155,975                   --      159,302
    Vested series Z incentive units             --       55,883                   --           --
                                          ---------  -----------            ---------  -----------
                                                --      211,858                   --      159,302
                                          ---------  -----------            ---------  -----------
 Diluted:
  Income from continuing operations         30,141   21,265,073  $   1.42     34,983   18,640,602  $   1.88
  Income from discontinued operations           --   21,265,073        --      8,286   18,640,602      0.44
                                          ---------               --------  ---------               --------
                                         $  30,141               $   1.42  $  43,269               $   2.32
                                                    =========               ========  =========               ========

(1) ConvertibleWeighted average convertible limited partnership units of 2,269,4902,265,248 and 2,280,3042,285,953 for the three months ended September 30,March 31, 2004 and 2003, and 2002, respectively, and 2,270,087 and 2,282,369 for the nine months ended September 30, 2003 and 2002, respectively, were not included in the determination of diluted EPS because they were anti- dilutive.anti-dilutive. The DownREIT limited partnership units have historically been redeemed for cash. The Company has never exercised its right to issue common stock to fund any redemption requests. As such, the Company does not consider these to be common stock equivalents.

(2) The following stock options are not included in the diluted earnings per share calculation because the exercise price of the option was greater than the average market price of the common share for the quarter and, therefore, would be anti-dilutive:

                           Three Months Ended
                               Nine Months Ended
                               September 30,            September 30,March 31,
                        ------------------------
                           -----------------------2004          2003         2002        2003        2002
                        -----------  -----------
                        -----------  -----------
Number of options           --         75,750        --        75,75072,000
Range of exercise prices    n/a      $50.88-54.25    n/$51.01-54.25

(7) Subsequent Event

On April 30, 2004, the Company renewed its $185 million unsecured line of credit facility for a $50.88-54.2

The following discussion is based primarily on the consolidated unaudited financial statements of Essex Property Trust, Inc. ("Essex" or the "Company") for the three and nine months ended September 30, 2003March 31, 2004 and 2002.2003. This information should be read in conjunction with the accompanying consolidated unaudited 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.  

Substantially all of the assets of the Company are held by, and substantially all operations are conducted through, Essex Portfolio, L.P. (the "Operating Partnership"). Effective January 1, 2004, the Operating Partnership consolidated the entities discussed below pursuant to its adoption of FIN 46 Revised. The Company is the sole general partner of the Operating Partnership and, as of September 30, 2003,March 31, 2004, December 31, 20022003 and September 30, 2002, withMarch 31, 2003, held a 90.1%90.5%, 90.0%90.8% and 88.7 %89.9% general partnership interest in the Operating Partnership, respectively. The Company has elected to be treated as a real estate investment trust ("REIT") for federal income tax purposes.

Accounting Changes

Variable Interest Entities

In January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 established new measurement techniques to evaluate whether entities should be consolidated in accordance with Accounting Research Bulletin (ARB) No. 51, "Consolidated Financial Statements." FIN 46 defined variable interest entities (VIEs), in which equity investors lack an essential characteristic of a controlling financial interest or do not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support from other parties. In December 2003, the FASB completed deliberations of proposed modifications to FIN 46 (FIN 46 Revised) resulting in multiple effective dates based on the nature and the timing of formation of the VIE. FIN 46 Revised must be applied no later than the Company's first quarter of 2004. Special Purpose Entities (SPEs) created prior to February 1, 2003 may be accounted for under FIN 46 or FIN 46 Revised but no later than the Company's quarter ended December 31, 2003. The Company has not formed nor is it a party to any SPEs. FIN 46 Revised may be applied prospectively with a cumulative-effect adjustment as of the date on which it is first applied or by restating previously issued financial statements for one or more years with a cumulative-effect adjustment as of the beginning of the first year restated.

As of January 1, 2004, the Company adopted the provisions of FIN 46 Revised using the retroactive restatement approach, and amounts have been restated for all prior periods presented to reflect the adoption of FIN 46 Revised. The Company applied FIN 46 Revised to all of the Company's arrangements which were entered into prior to January 31, 2003 and evaluated whether such arrangements represent involvement with a VIE and whether the Company qualifies as the primary beneficiary and should therefore consolidate the VIE. Subsequent to January 31, 2003, the Company has not entered into any arrangements that are deemed VIEs.

Certain of the entities through which and with which we conduct business have been deemed to be VIEs under the provisions of FIN 46 Revised. Based on our analysis of FIN 46 Revised, the Company consolidated Essex Management Corporation (EMC), Essex Fidelity I Corporation (EFC), 17 Down REIT limited partnerships (comprising ten properties), an office building that is subject to loans made by the Company, and the multifamily improvements owned by a third party in which the Company owns the land underlying these improvements and from which the Company receives fees, including land lease, subordination and property management fees. The Company consolidated these entities because it is deemed the primary beneficiary. The Company's increase in total assets and liabilities related to the consolidation of these VIEs were approximately $192,000,000 and $157,000,000, respectively, at March 31, 2004.

The Down REIT entities that collectively own ten multifamily properties (1,831 units) were investments made under arrangements whereby Essex Management Corporation (EMC) became the general partner, the Operating Partnership became a special limited partner, and the other limited partners were granted rights of redemption for their interests. Such limited partners can request to be redeemed and the Company 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 the above arrangements. The other limited partners receive distributions based on the Company's current dividend rate times the number of units held. At March 31, 2004, the maximum number of shares that could be issued to meet redemption of these Down REIT entities is 1,443,668. As of March 31, 2004 and December 31, 2003, the carrying value of the other limited partners' interests is presented at their historical cost and is classified within minority 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 for services rendered or distributions from cash flow. The remaining results of operations are generally allocated to the Company.

Properties consolidated in accordance with FIN 46 Revised were encumbered by third party, non-recourse loans totaling $152,341,000 and $152,669,000 as of March 31, 2004 and December 31, 2003, respectively.

There is one VIE as to which the Company is not deemed to be the primary beneficiary of such VIE. Total assets and liabilities of this entity as of March 31, 2004 were $14,591,000 and $14,703,000, respectively. The Company is not exposed to a material loss from this entity.

Stock-Based Compensation

As of January 1, 2004, the Company adopted the fair value method of accounting for its stock-based compensation plans using the retroactive restatement method as provided by Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." Under the fair value method, stock-based compensation cost is measured at the grant date based on the fair value of the award and is expensed over the vesting period. For the three months ended March 31, 2004 and 2003, stock-based compensation expense under the fair value method was $136,000 and $221,000, respectively.The Company did not grant stock options for the three months ended March 31, 2004.

The fair value of stock options granted was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants:

                               Three Months Ended
                                    March 31,
                             -----------------------
                                2004      2003 (1)
                             ----------- -----------
Risk-free interest rates         n/a        2.17%
Expected lives                   n/a       6 years
Volatility                       n/a       17.91%
Dividend yield                   n/a        6.12%

Reconciliation to previously reported amounts

The accounting effect of adopting FIN 46 Revised and SFAS 123 on net income previously reported for the quarter ended March 31, 2003 is as follows (dollars in thousands, except per share amounts):

Net income previously reported                      $       10,231

Adjustment for effect of adopting FAS 123                      (99)
Adjustment for effect of adopting FIN 46 Revised              (487)

Net income as reported                              $        9,645


Per diluted share previously reported               $         0.48

Adjustment for effect of adopting FAS 123                    (0.01)
Adjustment for effect of adopting FIN 46 Revised             (0.02)

Per diluted share as reported                       $         0.45

The accounting effect of adopting FIN 46 Revised and SFAS 123 on stockholders' equity at January 1, 2003 for previously reported amounts is as follows (dollars in thousands):

                                                       Additional      Distribution
                                                        paid-in        in excess of
                                                         capital   accumulated earnings
                                                       -----------   ------------------
  Statement of Stockholders' Equity:

Balance at January 1, 2003,
  as previously reported                             $    535,125  $           (43,813)

Adjustments for cumulative effect on prior years
  of retroactively applying SFAS 123                        3,606               (2,696)
Adjustments for cumulative effect on prior years
  of retroactively applying FIN 46 Revised                     --               (6,533)

Balance at January 1, 2003, as adjusted              $    538,731  $           (53,042)

Beginning in 2003, the Company implemented an upgrade to its subsidiary ledger for accounting for fixed assets. The Company completed this system upgrade in the first quarter of 2004. In conjunction with this system upgrade, the Company has determined that cumulative depreciation expense generated by consolidated or equity method rental properties was understated by approximately $2.1 million through December 31, 2003 and this amount was recorded during the quarter ended March 31, 2004. Had the correction been made in 2003, depreciation expense would have increased by approximately $640,000, $1.3 million, and $1.0 million in the first, second and third quarters of 2003, respectively. In the fourth quarter 2003, depreciation expense would have decreased by approximately $1.4 million. The Company does not believe that the correction is material to the previously reported financial statements and is not material to any consolidated any consolidated earnings trends.

Overview

The Company believes that its operating results have largely been a result of its business strategy of investing in submarkets that provide the greatest potential for rental growth at the lowest relative risk. Essex believes that its market research process, which includes an analysis of both metropolitan statistical areas (MSA's) and submarkets, provides it with a distinct competitive advantage. Essex researches markets by reviewing data from private and government sources as well as information developed or verified by its field personnel. Essex then utilizes its proprietary research model to project market rent trends, allowing the Company to allocate capital to the markets with the best risk-adjusted return potential.

Essex's research process begins with a macro-economic analysis of various MSA's, followed by an evaluation of the submarkets within that MSA. The objective of the economic research department is to estimate the amount of new demand for housing, comparing it to the number of single family and multifamily homes being constructed within a submarket. Historically, markets with demand for multifamily housing that is greater than supply generate increasing occupancy levels and growth in rents.

Key components of Essex's analysis are as follows:

Job Growth: The Company believes that quality job growth will lead to demand for multifamily and for-sale housing. Based on a variety of considerations, the Company estimates how the total demand for housing will be allocated between rental and for-sale housing.

Housing Supply: Limited housing supply, both rental and for-sale, is a very important factor in maintaining high occupancy levels, particularly in periods of recession or slow economic growth. The Company seeks to identify markets in which there is a low level of housing construction, measured as a percentage of existing housing stock.

Cost of for-sale housing: The Company prefers areas with relatively expensive for-sale housing, which is usually caused by an insufficient amount of single-family housing construction. The Company seeks to identify areas where the cost of rent is low relative to both median income levels and the cost of homeownership.

Demographic trends: The Company evaluates areas with long-term positive immigration and demographic trends, and areas that provide an attractive quality of life.

Based on its evaluation of multifamily housing supply and demand factors, the Company forecasts the occupancy and rent trends for its targeted submarkets, and actively seeks to expand its multifamily portfolio in the submarkets with the greatest risk-adjusted return.

By region, the Company's operating results and investment strategy are as follows:

Southern California Region: At the time of the Company's 1994 initial public offering (IPO), the Company had ownership interests representing 17% of its multifamily units in this region. Following the IPO, the Company, using its research process, determined that various markets in the Southern California region were attractive for multifamily property investment and, the Company, accordingly increased its ownership in such markets. As of March 31, 2004, we have ownership interests representing 59% of our multifamily units in this region. During the three months ended March 31, 2004, the region continued to perform well, with same store property revenues increasing 4.4% versus the comparable period in 2003. Same store property revenues remained flat versus the immediately preceding quarter. The Company expects this region to continue generating positive operating results in the near term.

Northern California Region: As of March 31, 2004, the Company had ownership interests representing 17% of its multifamily units in this region. Several years of job losses have resulted in declining rents. In the three months ended March 31, 2004, same store property revenues decreased 8.2% versus the comparable period in 2003 and decreased 0.7% versus the immediately preceding quarter. The Company expects market rents to remain flat in fiscal year 2004, which would result in same store property revenues to decline. The Company expects positive multifamily fundamentals in this region after 2004. As a result, the Company will begin to increase its investment focus in this region.

Pacific Northwest Region: As of March 31, 2004, the Company had ownership interests representing 22% of its multifamily units in the region. This region also lost jobs in 2003, but at a lower rate compared to the Company's Northern California region. In the three months ended March 31, 2004, same store property revenues decreased 0.1% versus the comparable period in 2003 and increased 1.5% versus the immediately preceding quarter. The Company expects job growth in this region in fiscal year 2004, and believes this region will generate a slight increase in same property revenue versus 2003. The Company expects positive multifamily fundamentals in this region after 2004, and the Company will begin to increase it investment focus in this region.

Critical Accounting Policies

See Item 7 of the Company's Annual Report on Form 10-K for the year ended December 31, 2003 for a discussion of the Company's critical accounting policies. As a result of the implementation of FIN 46 Revised, discussed in Note 1 to the condensed consolidated financial statements, the Company has identified an additional critical accounting policy regarding consolidation of VIEs.

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

General Background

The Company's property revenues are generated primarily from multifamily property operations, which accounted for greater than 96% of its property revenues for the three and nine months ended September 30, 2003March 31, 2004 and 2002.2003. The Company's multifamily properties (the "Properties"("the Properties") are located in Southern California (Los Angeles, Ventura, Orange and San Diego counties), Northern California (the San Francisco Bay Area), the Pacific Northwest (the(The Seattle, Washington and Portland, Oregon metropolitan areas), and other areas (Houston, Texas,(Hemet, California, Las Vegas, Nevada, and Hemet, California)Houston, Texas).

Essex Apartment Value Fund, L.P. (the "Fund"("Fund I"), is an investment fund organized by the Company in 2001 to add value through rental growth and asset appreciation, utilizing the Company's development, redevelopment and asset management capabilities. Currently, the Fund I is considered fully invested based on its acquisitions to date and anticipated development and redevelopment expenditures. An affiliate of the Company, Essex VFGP, L.P. ("VFGP"), is a 1% general partner and is a 20.4% limited partner. The Operating Partnership owns a 99% limited partnership interest in VFGP. Fund I now expects to utilize leverage of approximately 61% of the valueestimated costs, of the underlying real estate portfolio.portfolio, including estimated completion costs of development projects. The Company is committed to invest 21.4% of the aggregate capital committed to the Fund. In addition, the CompanyEssex will be compensated by the Fund I for its asset management, property management, development and redevelopment services and may receive incentive payments if the Fund I exceeds certain financial return benchmarks. The Company's remaining unfunded capital commitment as of March 31, 2004 is $9,614,000.

The Company is in the process of forming the second Essex Apartment Value Fund ("Fund II"), which is expected to be similar to Fund I in size and structure. Essex anticipates an initial closing of Fund II during the second quarter of 2004, and anticipates its capital commitment by a subsidiary of the Company to be approximately $50 million.

Since its formation, the Fund I has acquired ownership interests in 17 multifamily residential properties, representing 4,926 apartment units with an aggregate purchase pricecost of approximately $500$640 million excluding(including the estimated total cost of development and redevelopment expenses,projects), and disposed of two multifamily residential property,properties, consisting of 530 apartment units at a gross sales price of approximately $73$73.2 million resulting in a net realized gain of approximately $5.7 million. In addition, threetwo development land parcels, where approximately 612480 apartment units are planned for construction, have been purchased by the Fund I with a total estimated cost for the projects of approximately $107.5$101.7 million. As of September 30, 2003,March 31, 2004, the remaining commitments to fund these development projects is approximately $48.8$25.9 million of which approximately $10.4$5.5 million is the Company's commitment. The 132- unit Kelvin Avenue development projectFund I also owns a land parcel in Irvine, California is still in the process of obtaining entitlements and its estimated total costs have not yet been finalized and is not included in the numbers above.California.  

The Company has elected to be treated as a REITreal estate investment trust ("REIT") for federal income tax purposes commencing with the year ended December 31,since 1994. The Company provides a majoritysome of its fee based asset management and disposition services as well as third-party property management and leasing services through Essex Management Corporation ("EMC"), in order to maintain compliance with REIT tax rules. The Company owns 100% of EMC's 19,000 shares of nonvoting preferred stock.  Executives ofEMC was retroactively consolidated by the Company own 100%as of EMC's 1,000 shares of Common Stock.

19

SinceJanuary 1, 2004 for all periods presented in accordance with the Company's initial public offering (the "IPO") in June 1994, the Company has acquired ownership interests in 105 multifamily residential properties, its headquarters building, three Southern California office buildings, five recreational vehicle parks, and two manufactured housing communities. With respect to the multifamily residential properties that the Company acquired, 14 are located in Northern California, 69 are located in Southern California, 15 are located in the Seattle Metropolitan Area, five are located in the Portland Metropolitan Area and two are located in other areas. In total, these acquisitions consistadoption of 21,536 units with total capitalized acquisition costs of approximately $2,005.2 million. Additionally, since its IPO, the Company has developed and has ownership interests in ten multifamily properties that have reached stabilized operations. These development properties consist of 2,406 units with total capitalized development costs of $309.5 million. As part of its active portfolio management strategy, the Company has disposed of, since its IPO, twelve multifamily residential properties (six in Northern California, five in Southern California and one in the Pacific Northwest) consisting of a total of 2,014 units, six retail shopping centers in the Portland, Oregon metropolitan area and its former headquarters building located in Northern California at an aggregate gross sales price of approximately $259.5 million resulting in a net realized gain of approximately $53.8 million.FIN 46 Revised.

The Company (excluding the Fund'sFund I's development communities) has ownership interests in and is developing threetwo multifamily residential communities, with an aggregate of 756444 multifamily units. In connection with these development projects, the Company has directly, or in some cases through its joint venture partners, entered into contractual construction related commitments with unrelated third parties and the total projected estimated cost for these projects is approximately $122.2$74.9 million. As of September 30, 2003,March 31, 2004, the remaining commitment to fund these projects is approximately $26.0$12.0 million.

Results of Operations

Comparison of the Three Months Ended September 30, 2003March 31, 2004 to the Three Months Ended September 30, 2002March 31, 2003 

Average financial occupancy rates of the Company's multifamily Quarterly Same Store Properties (stabilized properties consolidated by the Company for each of the three months ended September 30, 2003March 31, 2004 and 2002)2003) was 96.0% and 96.1%95.2%, for the three months ended September 30,March 31, 2004 and 2003, and 2002, respectively. "Financial occupancy" is defined as the percentage resulting from dividing actual rental revenue by total possible rental revenue. Actual rental revenue represents contractual rental revenue pursuant to leases without considering delinquency and concessions. Total possible rental revenue represents the value of all apartment units, with occupied units valued at contractual rental rates pursuant to leases and vacant units valued at estimated market rents. We believe 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 rates disclosed by other REITs may not be comparable to our calculation of financial occupancy.

The regional breakdown of average financial occupancy for the multifamily Quarterly Same Store Properties for the three months ended September 30,March 31, 2004 and 2003 and 2002 are as follows:

                                                      Three months ended
                                                          September 30,March 31,
                                                    ----------------------
                                                      2004        2003        2002
                                                    ---------  -----------
Southern California                                     97.0%        96.3%96.2%        95.2%
Northern California                                     95.6%        96.8%95.8%        95.9%
Pacific Northwest                                       94.8%        94.8%95.9%        94.5%

20

Total Revenues increased by $9,442,000$3,521,000 or 19.4%5.3% to $58,237,000$69,806,000 in the thirdfirst quarter of 20032004 from $48,795,000$66,285,000 in the thirdfirst quarter of 2002.2003. The following table sets forth a breakdown of these revenue amounts, including the revenues attributable to the Quarterly Same Store Properties.

                                                             Three Months Ended
                                                                 September 30,March 31,
                                                 Number of   --------------------   Dollar   Percentage
                                                Properties     2004       2003       2002      Change     Change
                                                -----------  ---------  ---------  --------- -----------
Revenues:                                                    (Dollars in thousands)
  Property revenues - quarterly
    Quarterly Same Store Properties
      Southern California                               2242  $  17,91424,604  $  17,26323,567  $   651         3.81,037         4.4 %
      Northern California                               16     12,189     13,589     (1,400)      (10.3)17     12,593     13,725     (1,132)       (8.2)
      Pacific Northwest                                 23     10,032     10,534       (502)       (4.8)10,311     10,321        (10)       (0.1)
                                                -----------  ---------  ---------  --------- -----------
          Properties                                    61     40,135     41,386     (1,251)       (3.0)82     47,508     47,613       (105)       (0.2)
  Property revenues - properties
    acquired or consolidated subsequent to
    June 30,December 31, 2002 (1)                                      15,120      2,243     12,877       574.118,823     16,406      2,417        14.7
                                                             ---------  ---------  --------- -----------
      Total property revenues                                  55,255     43,629     11,626        26.666,331     64,019      2,312         3.6
Interest and other income                                       2,982      5,166     (2,184)      (42.3)3,475      2,266      1,209        53.4
                                                             ---------  ---------  --------- -----------
      Total revenues                                        $  58,23769,806  $  48,79566,285  $   9,442        19.43,521         5.3 %
                                                             =========  =========  ========= ===========

                                             Nine Months Ended
                                               September 30,
                                          ----------------------
                                            2003        2002
                                          ---------  -----------
Southern California                           96.0%        94.3%
Northern California                           95.6%        95.7%
Pacific Northwest                             94.8%        92.8%

                                                 Nine Months Ended
                                                    September 30,
                                   Number of   --------------------   Dollar   Percentage
                                  Properties     2003       2002      Change     Change
                                  -----------  ---------  ---------  --------- -----------
Revenues:                                      (Dollars in thousands)
  Property revenues
  Same Store Properties
    Southern California                   22  $  52,922  $  50,413  $   2,509         5.0 %
    Northern California                   16     38,182     42,165     (3,983)       (9.4)
    Pacific Northwest                     23     30,567     31,747     (1,180)       (3.7)
                                  -----------  ---------  ---------  --------- -----------
          Properties                      61    121,671    124,325     (2,654)       (2.1)
  Property revenues - properties
    acquired subsequent to
    December 31, 2001 (1)                        44,761      5,902     38,859       658.4
                                               ---------  ---------  --------- -----------
      Total property revenues                   166,432    130,227     36,205        27.8
Interest and other income                         9,247     18,961     (9,714)      (51.2)
                                               ---------  ---------  --------- -----------
      Total revenues                          $ 175,679  $ 149,188  $  26,491        17.8 %
                                               =========  =========  ========= ===========

                                     Less Than        2-3         4-5       Over 5
                                      1 Year         Years       Years       Years        Total
(In thousands)                      -----------    ---------   ---------   ---------   ---------  --------------------
Mortgage notes payable             $    1,68915,154    $  48,90465,435   $ 83,527240,644   $ 530,476646,159   $   664,596967,392
Lines of credit                        30,000    132,700118,500 (1)       --          --      162,70080,600       199,100
Development commitments(1)        36,400commitments (2)             17,543           --          --          --        36,40017,543
Redevelopment commitments(2)       3,000commitments(3)             7,439           --          --          --         3,0007,439
Essex Apartment Value Fund, L.P.
   capital commitment                    15,2859,614           --          --          --         15,2859,614
                                    -----------    ---------   ---------   ---------   ---------  --------------------
                                   $   86,374168,250    $  181,60465,435   $ 83,527240,644   $ 530,476726,759   $ 881,9811,201,088
                                    ===========    =========   =========   =========   =========  ====================

                                                              Three Months Ended
                                                            Nine Months Ended
                                                        September 30,                 September 30,March 31,
                                                          ----------------------------
                                                              --------------------------2004         2003 2002           2003          2002(1)
                                                          -------------  -------------


------------  ------------
Income from continuing operations before minority intrusts and discontinued
  operationsinterests                         $  14,864,00012,020,000  $  16,578,000  $ 47,388,000  $ 53,296,00016,457,000

Adjustments:
    Gain on sale of co-investment activities               --        (19,000)                 (1,408,000)
    Depreciation and amortization                           12,308,000      9,129,000    35,473,000    27,229,00018,432,000     13,302,000
    Depreciation and amortization --
       unconsolidated co-investments 2,663,000      2,170,000     7,071,000     5,892,000and
       minority interests                                      834,000        591,000
    Minority interests, excluding depreciation              (4,612,000)    (4,607,000)  (13,829,000)  (13,816,000)
    Income from discontinued operations(4,872,000)    (5,648,000)
    Dividends to preferred stockholders - Series F            (488,000)            --
                                                          --            --       225,000
    Depreciation - discontinued operations                 --             --            --       191,000
                                                 -------------  -------------  ------------  ------------
    Funds From Operations                                $  25,223,00025,926,000  $  23,251,000  $ 76,103,000  $ 71,609,00024,702,000
                                                          =============  =============  ============  ============
Weighted average number
  shares outstanding diluted (1)                   23,647,225     20,829,211    23,535,160    20,962,971(2)                            25,370,177     23,494,051
                                                          =============  =============


                                                              ============  ============


                                                                                    NineThree Months Ended
                                                            September 30,
                                                                               --------------------------March 31,
                                                          ----------------------------
                                                              2004         2003 2002
                                                                               ------------  ------------(1)
                                                          -------------  -------------
Cash flow provided by (used in):
     Operating activities                                $  73,748,00035,956,000  $  67,892,00030,055,000
     Investing activities                                 (58,553,000)  (37,215,000)(105,866,000)   (12,422,000)
     Financing activities                                   (13,357,000)  (34,970,000)72,851,000    (14,633,000)

For the Years Ended           2003      2004      2005      2006       2007      2008    Thereafter        Total     Fair value
                            --------  --------  ---------  --------  --------  -----------     ---------   -------------------
Fixed rate debt
   (In thousands)
Amount                     $ 1,68915,154  $ 7,90142,583  $  41,00322,852  $ 20,39787,628  $153,016  $   63,130465,429     $ 460,904786,662   $  595,024   $ 576,894749,839
Average interest rate           6.9%      6.9%       6.9%      6.9%      6.9%6.8%      6.8%       6.8%      6.7%      6.7%         6.8%

Variable rate debt
   (In thousands)
Amount                     $ 30,000  $132,700$118,500  $     --  $      --  $     --  $     69,572--  $   261,330 (1) $ 232,272379,830   $  232,272379,830
Average interest                2.7%      2.3%2.2%       --         --        --        3.7%--          2.3%