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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or ~~15 (d)~~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.

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

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

Essex Property Trust, Inc.:

Emerging growth companyo



Essex Property Trust, Inc.o	☐	Essex Portfolio, L.P.o	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Essex Property Trust, Inc. ~~Yes~~ o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: ~~66,037,029~~65,087,831 shares of Common Stock ($~~0.0001~~.0001 par value) of Essex Property Trust, Inc. were outstanding as of October ~~30, 2017.~~

EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the three and nine month periods ended September 30, ~~2017~~2021 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" mean Essex Portfolio, L.P. and those entities/subsidiaries owned or controlled by Essex Portfolio, L.P. Unless stated otherwise or the context otherwise requires, references to ~~“Essex”~~"Essex" mean Essex Property Trust, Inc., ~~a Maryland corporation that~~not including any of its subsidiaries.

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

~~Essex~~ is ~~the general partner of EPLP and as~~ the sole general partner of ~~EPLP,~~the Operating Partnership. As the sole general partner of the Operating Partnership, Essex has exclusive control of ~~EPLP's~~the Operating Partnership's day-to-day management.

The Company is structured as an umbrella partnership REIT ~~(“UPREIT”~~("UPREIT") and Essex contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, Essex receives a number of Operating Partnership limited partnership units ("OP ~~Units"~~Units," and the holders of such OP Units, "Unitholders") equal to the number of shares of common stock it has issued in the equity ~~offering.~~offerings. Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of OP Units, which is one of the reasons why the Company is structured in the manner outlined above. Based on the terms of ~~EPLP's~~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-Q of Essex and ~~EPLP~~the Operating Partnership into this single report provides the following benefits:

•enhances investors' understanding of ~~the Company~~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 ~~the Company~~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 ~~the Company~~Essex and the Operating Partnership as one business. The management of Essex consists of the same members as the management of ~~EPLP.~~the Operating Partnership.

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

The Company believes it is important to understand the few differences between Essex and ~~EPLP~~the Operating Partnership in the context of how Essex and ~~EPLP~~the Operating Partnership operate as a consolidated company. Stockholders' equity, partners' capital and noncontrolling interest are the main areas of difference between the condensed consolidated financial statements of ~~the Company~~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 condensed consolidated financial statements and as noncontrolling interest in Essex’s condensed consolidated financial statements. The noncontrolling interest in the Operating Partnership's condensed consolidated financial statements include the interest of unaffiliated partners in various ~~condensed~~ consolidated partnerships and ~~joint venture~~co-investment partners. The noncontrolling interest in ~~the Company's~~Essex's condensed consolidated financial statements include (i) the same noncontrolling interest as

iii

presented in the Operating Partnership’s condensed consolidated financial statements and (ii) OP ~~Unit holders.~~Unitholders. The differences between stockholders' equity and partners' capital result from differences in the equity issued at ~~the Company~~Essex and Operating Partnership levels.

To help investors understand the significant differences between ~~the Company~~Essex and the Operating Partnership, this report on Form 10-Q provides separate condensed consolidated financial statements for ~~the Company~~Essex and the Operating Partnership; a single set of consolidated

~~iii~~

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-Q also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of ~~the Company~~Essex and the Operating Partnership in order to establish that the requisite certifications have been made and that ~~the Company~~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 ~~the Company~~Essex and the Operating Partnership, the separate sections in this report on Form 10-Q for ~~the Company~~Essex and the Operating Partnership specifically refer to ~~the Company~~Essex and the Operating Partnership. In the sections that combine disclosure of ~~the Company~~Essex and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and ~~joint ventures~~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 ~~the Company~~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 unaudited condensed consolidated balance sheets, statements of income and 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 condensed consolidated financial statements for the interim periods and are normal and recurring in nature, except as otherwise noted.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to such unaudited condensed consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations herein. Additionally, these unaudited condensed 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, ~~2016.~~2020.

ESSEX PROPERTY TRUST, INC.

ESSEX PORTFOLIO, L.P.

FORM 10-Q

~~INDEX~~TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION			Page No.

~~PART I. FINANCIAL INFORMATION~~		~~Page No.~~

Item 1.	Condensed Consolidated Financial Statements of Essex Property Trust, Inc. (Unaudited)

		Condensed Consolidated Balance Sheets as of September 30 ~~2017~~, 2021 and December 31, ~~2016~~2020	2

		Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020	3

		Condensed Consolidated ~~Statement~~Statements of Equity for the three and nine months ended ~~September~~Se ptember 30, ~~2017~~2021 and 2020	4

		Condensed Consolidated Statements of Cash Flows for the ~~nine~~n ine months ended ~~September~~Septem ber 30, ~~2017~~2021 and ~~2016~~2020	58

		Condensed Consolidated Financial Statements of Essex Portfolio, L.P. (Unaudited)

		Condensed Consolidated Balance Sheets as of ~~September~~Se ptem ber 30, ~~2017~~2021 and December 31, ~~2016~~2020	710

		Condensed Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020	811

		Condensed Consolidated ~~Statement~~Statements of Capital for the three and nine months ended September 30, ~~2017~~2021 and 2020	912

		Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2021 and ~~2016~~2020	1016

		Notes to Condensed Consolidated Financial Statements	1218

Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	2737

Item 3.		Quantitative and Qualitative Disclosures About Market Risks	3648

Item 4.		Controls and Procedures	3749

PART II. OTHER INFORMATION

Item 1.		Legal Proceedings	3849

Item 1A.		Risk Factors	3850

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	3850

Item 3.		Defaults Upon Senior Securities	50

Item 4.		Mine Safety Disclosures	50

Item 5.		Other Information	3850

Item 6.		Exhibits	3951

Signatures			4052

Table of Contents

Part I – Financial Information

Item 1. Condensed Consolidated Financial Statements

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except parenthetical and share amounts)


ASSETS	September 30, 2021		December 31, 2020
Real estate:
Rental properties:
Land and land improvements	$	2,997,904	$	2,929,009
Buildings and improvements	12,414,770		12,132,736
	15,412,674		15,061,745
Less: accumulated depreciation	(4,509,243)		(4,133,959)
	10,903,431		10,927,786
Real estate under development	212,426		386,047
Co-investments	1,081,861		1,018,010
Real estate held for sale	—		57,938
	12,197,718		12,389,781
Cash and cash equivalents-unrestricted	49,910		73,629
Cash and cash equivalents-restricted	11,042		10,412
Marketable securities, net of allowance for credit losses of zero as of both September 30, 2021 and December 31, 2020	183,140		147,768
Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.8 million as of September 30, 2021 and December 31, 2020, respectively (includes related party receivables of $33.9 million and $4.7 million as of September 30, 2021 and December 31, 2020, respectively)	213,985		195,104
Operating lease right-of-use assets	69,756		72,143
Prepaid expenses and other assets	63,090		47,340
Total assets	$	12,788,641	$	12,936,177
LIABILITIES AND EQUITY
Unsecured debt, net	$	5,405,520	$	5,607,985
Mortgage notes payable, net	640,118		643,550
Lines of credit	42,662		—
Accounts payable and accrued liabilities	220,428		152,855
Construction payable	32,777		31,417
Dividends payable	143,036		141,917
Distributions in excess of investments in co-investments	29,037		—
Operating lease liabilities	71,520		74,037
Liabilities associated with real estate held for sale	—		29,845
Other liabilities	38,946		39,140
Total liabilities	6,624,044		6,720,746
Commitments and contingencies	0		0
Redeemable noncontrolling interest	32,698		32,239

Equity:
Common stock; $0.0001 par value, 670,000,000 shares authorized; 65,081,032 and 64,999,015 shares issued and outstanding, respectively	7		6

Additional paid-in capital	6,875,508		6,876,326
Distributions in excess of accumulated earnings	(917,315)		(861,193)
Accumulated other comprehensive loss, net	(8,968)		(14,729)
Total stockholders' equity	5,949,232		6,000,410
Noncontrolling interest	182,667		182,782
Total equity	6,131,899		6,183,192
Total liabilities and equity	$	12,788,641	$	12,936,177

ASSETS September 30, 2017 December 31, 2016
Real estate:
Rental properties:
Land and land improvements $ 2,719,064
$ 2,559,743
Buildings and improvements 10,585,742
10,116,563
13,304,806
12,676,306
Less: accumulated depreciation (2,651,542 ) (2,311,546 )
10,653,264
10,364,760
Real estate under development 313,825
190,505
Co-investments 1,124,577
1,161,275
Real estate held for sale, net —
101,957
12,091,666
11,818,497
Cash and cash equivalents-unrestricted 46,507
64,921
Cash and cash equivalents-restricted 16,766
105,381
Marketable securities 184,574
139,189
Notes and other receivables (includes related party receivables of $65.6 million and $11.3 million as of September 30, 2017 and December 31, 2016, respectively) 121,557
40,970
Prepaid expenses and other assets 51,453
48,450
Total assets $ 12,512,523
$ 12,217,408

LIABILITIES AND EQUITY

Unsecured debt, net $ 3,501,146
$ 3,246,779
Mortgage notes payable, net 2,111,467
2,191,481
Lines of credit 2,609
125,000
Accounts payable and accrued liabilities 222,122
138,226
Construction payable 59,767
35,909
Dividends payable 121,496
110,170
Distributions in excess of investments in co-investments 36,245
—
Other liabilities 33,733
32,922
Total liabilities 6,088,585
5,880,487
Commitments and contingencies

Redeemable noncontrolling interest 40,044
44,684
Equity:

Common stock; $0.0001 par value, 670,000,000 shares authorized; 66,002,487 and 65,527,993 shares issued and outstanding, respectively 6
6
Additional paid-in capital 7,111,866
7,029,679
Distributions in excess of accumulated earnings (821,732 ) (805,409 )
Accumulated other comprehensive loss, net (24,632 ) (32,098 )
Total stockholders' equity 6,265,508
6,192,178
Noncontrolling interest 118,386
100,059
Total equity 6,383,894
6,292,237
Total liabilities and equity $ 12,512,523
$ 12,217,408

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
Rental and other property	$	360,620	$	368,464	$	1,062,253	$	1,126,363
Management and other fees from affiliates	2,237		2,347		6,707		7,312
	362,857		370,811		1,068,960		1,133,675
Expenses:
Property operating, excluding real estate taxes	69,529		68,037		197,895		197,310
Real estate taxes	45,802		44,358		135,408		132,364
Corporate-level property management expenses	9,068		8,619		27,120		26,024
Depreciation and amortization	130,564		130,202		387,887		395,370
General and administrative	12,712		13,310		34,746		42,244

Expensed acquisition and investment related costs	108		2		164		104
	267,783		264,528		783,220		793,416
Gain on sale of real estate and land	42,897		22,654		142,993		39,251
Earnings from operations	137,971		128,937		428,733		379,510
Interest expense	(50,019)		(55,430)		(152,639)		(165,024)
Total return swap income	2,660		2,977		8,137		7,749
Interest and other income	11,998		6,512		48,756		12,696
Equity income from co-investments	25,433		14,960		60,692		53,514
Deferred tax expense on unrealized gain on unconsolidated co-investment	(3,041)		—		(5,391)		(1,636)
Loss on early retirement of debt, net	—		(19,114)		(18,982)		(23,820)
Gain on remeasurement of co-investment	—		—		2,260		234,694
Net income	125,002		78,842		371,566		497,683
Net income attributable to noncontrolling interest	(6,612)		(5,181)		(19,886)		(24,558)



Net income available to common stockholders	$	118,390	$	73,661	$	351,680	$	473,125
Comprehensive income	$	125,829	$	80,818	$	377,529	$	494,668
Comprehensive income attributable to noncontrolling interest	(6,639)		(5,247)		(20,088)		(24,455)
Comprehensive income attributable to controlling interest	$	119,190	$	75,571	$	357,441	$	470,213
Per share data:
Basic:
Net income available to common stockholders	$	1.82	$	1.13	$	5.41	$	7.22
Weighted average number of shares outstanding during the period	65,048,486		65,232,837		65,013,477		65,561,820
Diluted:
Net income available to common stockholders	$	1.82	$	1.13	$	5.40	$	7.21
Weighted average number of shares outstanding during the period	65,147,781		65,241,428		65,075,174		65,676,093

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Rental and other property $ 341,974
$ 327,078
$ 1,011,908
$ 958,818
Management and other fees from affiliates 2,395
2,093
6,927
6,145
344,369
329,171
1,018,835
964,963
Expenses:

Property operating, excluding real estate taxes 66,606
63,781
193,632
185,390
Real estate taxes 37,531
35,580
108,283
104,540
Depreciation and amortization 117,451
110,467
350,893
329,847
General and administrative 9,788
9,647
30,726
28,527
Acquisition and investment related costs 324
284
1,154
1,379
231,700
219,759
684,688
649,683
Earnings from operations 112,669
109,412
334,147
315,280
Interest expense (55,938 ) (56,693 ) (167,333 ) (164,727 )
Total return swap income 2,538
3,143
7,653
9,080
Interest and other income 5,790
4,943
17,916
19,560
Equity income from co-investments 19,727
9,568
40,934
38,932
Loss on early retirement of debt —
(211 ) —
(211 )
Gain on sale of real estate and land 249
—
26,423
20,258
Deferred tax expense on gain on sale of real estate and land —
—
—
(4,279 )
Gain on remeasurement of co-investment —
—
88,641
—
Net income 85,035
70,162
348,381
233,893
Net income attributable to noncontrolling interest (5,312 ) (4,601 ) (18,935 ) (14,483 )
Net income attributable to controlling interest 79,723
65,561
329,446
219,410
Dividends to preferred stockholders —
—
—
(1,314 )
Excess of redemption value of preferred stock over the carrying value —
—
—
(2,541 )
Net income available to common stockholders $ 79,723
$ 65,561
$ 329,446
$ 215,555
Comprehensive income $ 88,870
$ 73,173
$ 356,102
$ 235,874
Comprehensive income attributable to noncontrolling interest (5,438 ) (4,700 ) (19,190 ) (14,548 )
Comprehensive income attributable to controlling interest $ 83,432
$ 68,473
$ 336,912
$ 221,326
Per share data:

Basic:

Net income available to common stockholders $ 1.21
$ 1.00
$ 5.01
$ 3.29
Weighted average number of shares outstanding during the period 65,994,896
65,507,669
65,759,450
65,455,004
Diluted:

Net income available to common stockholders $ 1.21
$ 1.00
$ 5.00
$ 3.29
Weighted average number of shares outstanding during the period 66,078,283
65,617,551
65,836,965
65,578,661
Dividend per common share $ 1.75
$ 1.60
$ 5.25
$ 4.80

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated ~~Statement~~Statements of Equity for the three and nine months ended September 30, ~~2017~~2021 and 2020

(Unaudited)

(In thousands)


	Common stock		Additional paid-in capital			Distributions in excess of accumulated earnings		Accumulated other comprehensive loss, net		Noncontrolling interest		Total
Three months ended September 30, 2021		Shares			Amount
Balances at June 30, 2021		65,004	$	7		$	6,862,879	$	(899,663)	$	(9,768)	$	183,248	$	6,136,703
Net income		—	—			—		118,390		—		6,612		125,002


Change in fair value of derivatives and amortization of swap settlements		—	—			—		—		704		24		728
Change in fair value of marketable debt securities, net		—	—			—		—		96		3		99
Issuance of common stock under:
Stock option and restricted stock plans, net		68	—			15,572		—		—		—		15,572
Sale of common stock, net		—	—			(118)		—		—		—		(118)
Equity based compensation costs		—	—			1,573		—		—		55		1,628



Changes in the redemption value of redeemable noncontrolling interest		—	—			1,253		—		—		420		1,673

Distributions to noncontrolling interest		—	—			—		—		—		(7,257)		(7,257)
Redemptions of noncontrolling interest		9	—			(5,651)		—		—		(438)		(6,089)
Common stock dividends ($2.09 per share)		—	—			—		(136,042)		—		—		(136,042)
Balances at September 30, 2021		65,081	$	7		$	6,875,508	$	(917,315)	$	(8,968)	$	182,667	$	6,131,899

Table of Contents


																											Common stock		Additional paid-in capital			Distributions in excess of accumulated earnings		Accumulated other comprehensive loss, net				Noncontrolling interest		Total
Nine months ended September 30, 2021																						Nine months ended September 30, 2021						Shares			Amount
Balances at December 31, 2020																						Balances at December 31, 2020						64,999	$	6		$	6,876,326			$	(861,193)			$	(14,729)	$	182,782	$	6,183,192
Net income																						Net income						—	—			—		351,680				—		19,886		371,566
	Common stock			Additional paid-in capital				Distributions in excess of accumulated earnings				Accumulated other comprehensive loss, net				Noncontrolling Interest
	Shares	Amount									Total
Balances at December 31, 2016	65,528	$	6				$	7,029,679			$			(805,409	)				$	(32,098	)		$	100,059	$	6,292,237
Net income	—	—		—				329,446				—				18,935			348,381
Reversal of unrealized gains upon the sale of marketable securities	—	—		—				—				(1,596		)		(54		)	(1,650		)
Change in fair value of derivatives and amortization of swap settlements	—	—		—				—				7,160				245			7,405			Change in fair value of derivatives and amortization of swap settlements						—	—			—		—				5,417		190		5,607
Change in fair value of marketable securities, net	—	—		—				—				1,902				64			1,966
Change in fair value of marketable debt securities, net																						Change in fair value of marketable debt securities, net						—	—			—		—				344		12		356
Issuance of common stock under:																						Issuance of common stock under:
Stock option and restricted stock plans, net	160	—		24,079				—				—				—			24,079			Stock option and restricted stock plans, net						112	1			12,401		—				—		—		12,402
Sale of common stock, net	312	—		80,377				—				—				—			80,377			Sale of common stock, net						—	—			(202)		—				—		—		(202)
Equity based compensation costs	—	—		3,814				—				—				1,080			4,894			Equity based compensation costs						—	—			9,172		—				—		323		9,495

Retirement of common stock, net																						Retirement of common stock, net						(40)	—			(9,172)		—				—		—		(9,172)

Changes in the redemption value of redeemable noncontrolling interest	—	—		(916		)		—				—				13			(903		)	Changes in the redemption value of redeemable noncontrolling interest						—	—			(5,499)		—				—		577		(4,922)
Contributions from noncontrolling interest	—	—		—				—				—				22,506			22,506			Contributions from noncontrolling interest						—	—			—		—				—		1,900		1,900
Distributions to noncontrolling interest	—	—		—				—				—				(21,072		)	(21,072		)	Distributions to noncontrolling interest						—	—			—		—				—		(22,114)		(22,114)
Redemptions of noncontrolling interest	2	—		(25,167		)		—				—				(3,390		)	(28,557		)	Redemptions of noncontrolling interest						10	—			(7,518)		—				—		(889)		(8,407)
Common stock dividends	—	—		—				(345,769		)		—				—			(345,769		)
Balances at September 30, 2017	66,002	$	6	$	7,111,866			$	(821,732	)		$	(24,632	)		$	118,386		$	6,383,894
Common stock dividends ($6.27 per share)																						Common stock dividends ($6.27 per share)						—	—			—		(407,802)				—		—		(407,802)
Balances at September 30, 2021																						Balances at September 30, 2021						65,081	$	7		$	6,875,508	$	(917,315)			$	(8,968)	$	182,667	$	6,131,899


	Common stock		Additional paid-in capital			Distributions in excess of accumulated earnings		Accumulated other comprehensive loss, net		Noncontrolling Interest		Total
Three months ended September 30, 2020		Shares			Amount
Balances at June 30, 2020		65,331	$	7		$	6,944,805	$	(760,028)	$	(18,710)	$	186,807	$	6,352,881
Net income		—	—			—		73,661		—		5,181		78,842


Change in fair value of derivatives and amortization of swap settlements		—	—			—		—		1,821		63		1,884
Change in fair value of marketable debt securities, net		—	—			—		—		89		3		92
Issuance of common stock under:

Sale of common stock, net		—	—			(95)		—		—		—		(95)
Equity based compensation costs		—	—			2,279		—		—		82		2,361

Retirement of common stock, net		(121)	—			(26,586)		—		—		—		(26,586)


Changes in the redemption value of redeemable noncontrolling interest		—	—			2,346		—		—		176		2,522

Distributions to noncontrolling interest		—	—			—		—		—		(7,677)		(7,677)
Redemptions of noncontrolling interest		—	—			(1,118)		—		—		(150)		(1,268)
Common stock dividends ($2.0775 per share)		—	—			—		(135,474)		—		—		(135,474)
Balances at September 30, 2020		65,210	$	7		$	6,921,631	$	(821,841)	$	(16,800)	$	184,485	$	6,267,482


	Common stock		Additional paid-in capital			Distributions in excess of accumulated earnings		Accumulated other comprehensive loss, net		Noncontrolling Interest		Total
Nine months ended September 30, 2020		Shares			Amount
Balances at December 31, 2019		66,092	$	7		$	7,121,927	$	(887,619)	$	(13,888)	$	183,077	$	6,403,504
Net income		—	—			—		473,125		—		24,558		497,683

Cash flow hedge losses reclassified to earnings		—	—			—		—		3,171		111		3,282
Change in fair value of derivatives and amortization of swap settlements		—	—			—		—		(5,911)		(208)		(6,119)
Change in fair value of marketable debt securities, net		—	—			—		—		(172)		(6)		(178)
Issuance of common stock under:
Stock option and restricted stock plans, net		95	—			9,201		—		—		—		9,201
Sale of common stock, net		—	—			(228)		—		—		—		(228)
Equity based compensation costs		—	—			8,956		—		—		338		9,294

Retirement of common stock, net		(985)	—			(222,990)		—		—		—		(222,990)
Cumulative effect upon adoption of ASU No. 2016-13		—	—			—		(190)		—		—		(190)

Changes in the redemption value of redeemable noncontrolling interest		—	—			6,888		—		—		(197)		6,691
Changes in noncontrolling interest from acquisition		—	—			—		—		—		1,349		1,349
Distributions to noncontrolling interest		—	—			—		—		—		(23,689)		(23,689)
Redemptions of noncontrolling interest		8	—			(2,123)		—		—		(848)		(2,971)
Common stock dividends ($6.2325 per share)		—	—			—		(407,157)		—		—		(407,157)
Balances at September 30, 2020		65,210	$	7		$	6,921,631	$	(821,841)	$	(16,800)	$	184,485	$	6,267,482

See accompanying notes to the unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows

(In ~~thousands)~~thousands, except parenthetical amounts)

See accompanying notes to the unaudited condensed consolidated financial statements.

September 30, 2017 December 31, 2016
ASSETS
Real estate:
Rental properties:
Land and land improvements $ 2,719,064
$ 2,559,743
Buildings and improvements 10,585,742
10,116,563
13,304,806
12,676,306
Less: accumulated depreciation (2,651,542 ) (2,311,546 )
10,653,264
10,364,760
Real estate under development 313,825
190,505
Co-investments 1,124,577
1,161,275
Real estate held for sale, net —
101,957
12,091,666
11,818,497
Cash and cash equivalents-unrestricted 46,507
64,921
Cash and cash equivalents-restricted 16,766
105,381
Marketable securities 184,574
139,189
Notes and other receivables (includes related party receivables of $65.6 million and $11.3 million as of September 30, 2017 and December 31, 2016, respectively) 121,557
40,970
Prepaid expenses and other assets 51,453
48,450
Total assets $ 12,512,523

$ 12,217,408

LIABILITIES AND CAPITAL

Unsecured debt, net $ 3,501,146
$ 3,246,779
Mortgage notes payable, net 2,111,467
2,191,481
Lines of credit 2,609
125,000
Accounts payable and accrued liabilities 222,122
138,226
Construction payable 59,767
35,909
Distributions payable 121,496
110,170
Distributions in excess of investments in co-investments 36,245
—
Other liabilities 33,733
32,922
Total liabilities 6,088,585

5,880,487
Commitments and contingencies

Redeemable noncontrolling interest 40,044
44,684
Capital:

General Partner:
Common equity (66,002,487 and 65,527,993 units issued and outstanding, respectively) 6,290,140
6,224,276
6,290,140

6,224,276
Limited Partners:
Common equity (2,251,112 and 2,237,290 units issued and outstanding, respectively) 49,498
49,436
Accumulated other comprehensive loss (21,627 ) (29,348 )
Total partners' capital 6,318,011

6,244,364
Noncontrolling interest 65,883
47,873
Total capital 6,383,894

6,292,237
Total liabilities and capital $ 12,512,523

$ 12,217,408

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Rental and other property $ 341,974
$ 327,078
$ 1,011,908
$ 958,818
Management and other fees from affiliates 2,395
2,093
6,927
6,145
344,369
329,171
1,018,835
964,963
Expenses:

Property operating, excluding real estate taxes 66,606
63,781
193,632
185,390
Real estate taxes 37,531
35,580
108,283
104,540
Depreciation and amortization 117,451
110,467
350,893
329,847
General and administrative 9,788
9,647
30,726
28,527
Acquisition and investment related costs 324
284
1,154
1,379
231,700
219,759
684,688
649,683
Earnings from operations 112,669
109,412
334,147
315,280
Interest expense (55,938 ) (56,693 ) (167,333 ) (164,727 )
Total return swap income 2,538
3,143
7,653
9,080
Interest and other income 5,790
4,943
17,916
19,560
Equity income from co-investments 19,727
9,568
40,934
38,932
Loss on early retirement of debt, net —
(211 ) —
(211 )
Gain on sale of real estate and land 249
—
26,423
20,258
Deferred tax expense on gain on sale of real estate and land —
—
—
(4,279 )
Gain on remeasurement of co-investment —
—
88,641
—
Net income 85,035
70,162
348,381
233,893
Net income attributable to noncontrolling interest (2,591 ) (2,378 ) (7,646 ) (7,026 )
Net income attributable to controlling interest 82,444
67,784
340,735
226,867
Preferred interest distributions —
—
—
(1,314 )
Excess of redemption value of preferred units over the carrying value —
—
—
(2,541 )
Net income available to common unitholders $ 82,444
$ 67,784
$ 340,735
$ 223,012
Comprehensive income $ 88,870
$ 73,173
$ 356,102
$ 235,874
Comprehensive income attributable to noncontrolling interest (2,591 ) (2,378 ) (7,646 ) (7,026 )
Comprehensive income attributable to controlling interest $ 86,279
$ 70,795
$ 348,456
$ 228,848
Per unit data:

Basic:

Net income available to common unitholders $ 1.21
$ 1.00
$ 5.01
$ 3.30
Weighted average number of common units outstanding during the period 68,246,008
67,728,621
68,011,123
67,679,240
Diluted:
Net income available to common unitholders $ 1.21
$ 1.00
$ 5.00
$ 3.29
Weighted average number of common units outstanding during the period 68,329,395
67,838,503
68,088,638
67,802,897
Distribution per common unit $ 1.75
$ 1.60
$ 5.25
$ 4.80


	General Partner				Limited Partners				Accumulated other comprehensive loss, net		Noncontrolling interest		Total
	Common Equity				Common Equity
Three months ended September 30, 2020	Units	Amount		Units		Amount
Balances at June 30, 2020	65,331	$	6,184,784		2,296		$	61,437	$	(15,423)	$	122,083	$	6,352,881
Net income	—	73,661			—		2,593		—		2,588		78,842


Change in fair value of derivatives and amortization of swap settlements	—	—			—		—		1,884		—		1,884
Change in fair value of marketable debt securities, net	—	—			—		—		92		—		92
Issuance of common units under:

Sale of common stock by general partner, net	—	(95)			—		—		—		—		(95)
Equity based compensation costs	—	2,279			—		82		—		—		2,361

Retirement of common units, net	(121)	(26,586)			—		—		—		—		(26,586)



Changes in redemption value of redeemable noncontrolling interest	—	2,346			—		98		—		78		2,522


Distributions to noncontrolling interest	—	—			—		—		—		(2,908)		(2,908)
Redemptions	—	(1,118)			—		—		—		(150)		(1,268)
Distributions declared ($2.0775 per unit)	—	(135,474)			—		(4,769)		—		—		(140,243)
Balances at September 30, 2020	65,210	$	6,099,797		2,296		$	59,441	$	(13,447)	$	121,691	$	6,267,482


	General Partner				Limited Partners				Accumulated other comprehensive loss, net		Noncontrolling interest		Total
	Common Equity				Common Equity
Nine months ended September 30, 2020	Units	Amount		Units		Amount
Balances at December 31, 2019	66,092	$	6,234,315		2,302		$	57,359	$	(10,432)	$	122,262	$	6,403,504
Net income	—	473,125			—		16,543		—		8,015		497,683

Cash flow hedge losses reclassified to earnings	—	—			—		—		3,282		—		3,282
Change in fair value of derivatives and amortization of swap settlements	—	—			—		—		(6,119)		—		(6,119)
Change in fair value of marketable debt securities, net	—	—			—		—		(178)		—		(178)
Issuance of common units under:
General partner's stock based compensation, net	95	9,201			—		—		—		—		9,201
Sale of common stock by general partner, net	—	(228)			—		—		—		—		(228)
Equity based compensation costs	—	8,956			2		338		—		—		9,294

Retirement of common units, net	(985)	(222,990)			—		—		—		—		(222,990)
Cumulative effect upon adoption of ASU No. 2016-13	—	(190)			—		—		—		—		(190)


Changes in redemption value of redeemable noncontrolling interest	—	6,888			—		(318)		—		121		6,691

Changes in noncontrolling interest from acquisition	—	—			—		—		—		1,349		1,349
Distributions to noncontrolling interest	—	—			—		—		—		(9,381)		(9,381)
Redemptions	8	(2,123)			(8)		(173)		—		(675)		(2,971)
Distributions declared ($6.2325 per unit)	—	(407,157)			—		(14,308)		—		—		(421,465)
Balances at September 30, 2020	65,210	$	6,099,797		2,296		$	59,441	$	(13,447)	$	121,691	$	6,267,482

See accompanying notes to the unaudited condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows

(In ~~thousands)~~thousands, except parenthetical amounts)

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)

(1) Organization and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements present the accounts of Essex Property Trust, Inc. ~~(“Essex”~~("Essex" or the ~~“Company”~~"Company"), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the ~~“Operating~~"Operating Partnership,”" which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles (“("U.S. ~~GAAP”~~GAAP") 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 condensed 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, ~~2016.~~2020.

All significant intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements. ~~Certain reclassifications have been made to conform to the current year’s presentation.~~

The unaudited condensed consolidated financial statements for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 include the accounts of the Company and the Operating Partnership. Essex is the sole general partner of the Operating Partnership, with a ~~96.7%~~96.6% general partnership interest as of both September 30, ~~2017~~2021 and December 31, ~~2016.~~2020. Total Operating Partnership limited partnership units ("OP ~~Units"~~Units," and the holders of such OP Units, "Unitholders") outstanding were ~~2,251,112~~2,282,464 and ~~2,237,290~~2,294,760 as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled ~~$571.8~~approximately $729.8 million and ~~$520.2~~$544.8 million as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively.

As of September 30, ~~2017,~~2021, the Company owned or had ownership interests in ~~247 stabilized~~246 operating apartment communities, aggregating ~~60,305~~60,799 apartment homes, excluding the Company’s ownership interest in preferred interest co-investments, ~~(collectively, the “Communities”, and individually, a “Community”), one~~loan investments, 3 operating commercial ~~building~~buildings, and ~~seven active developments (collectively, the “Portfolio”).~~a development pipeline comprised of 2 consolidated projects and 1 unconsolidated joint venture project. The ~~Communities~~operating apartment communities are located in Southern California ~~(Los~~(primarily Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas.

~~Recent~~ Accounting Pronouncements Adopted in the Current Year

In ~~May 2014,~~January 2021, the Financial Accounting Standards Board ~~("FASB"~~(the "FASB") issued ~~Accounting Standards Update ("ASU")~~ASU No. ~~2014-09 "Revenue from Contracts with Customers.~~2021-01 "Reference Rate Reform (Topic 848): Scope." The ~~new standard provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts)~~amendments in ASU No. 2021-01 provide optional expedients to ~~improve comparability within industries.~~the current guidance on contract modifications and hedge accounting from the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The new standard requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. In August 2015, the FASB deferred the effective date of the new standard by one year, and it is now effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted. The new standard maygenerally can be applied ~~using either a full retrospective or a modified approach upon adoption.~~to applicable contract modifications through December 31, 2022. The Company ~~does not expect to early adopt and expects to adopt using the modified approach. The Company is currently evaluating the impact the adoption of~~adopted this new ~~standard will have~~guidance in January 2021 on ~~its recording of revenue related to its revenue streams and related disclosures. The Company does~~a prospective basis. This adoption did not ~~expect that the adoption of this new standard will~~ have a material ~~effect~~impact on ~~its~~the Company's consolidated results of operations or financial position.

~~In January 2016,~~Revenues and Gains on Sale of Real Estate

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 ~~FASB issued ASU No. 2016-01 "Recognition and Measurement~~life of ~~Financial Assets and Financial Liabilities", which requires changes to~~ the ~~classification and measurement of investments in certain equity securities and to the presentation of certain fair value changes~~respective lease. See Note 3, Revenues, for financial liabilities measured at fair value. The new standard will be effective for the Company beginning on January 1, 2018 and early adoption is permitted. The Company does not expect that this amendment will have a material effect on its consolidated results of operations or financial position.additional information regarding such revenues.

In February 2016, the FASB issued ASU No. 2016-02 "Leases", which requires an entity that is a lessee to classify leases as either finance or operating and to recognize a lease liability and a right-of-use asset for all leases that have a duration of greater than 12 months. Leases of 12 months or less will be accounted for similar to existing guidance for operating leases today. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)

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.

~~initial direct costs.~~

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 ~~new standard~~contract will ~~be effective~~contain a description of the service and the fee percentage for management services. Payments from such services are one month or one quarter in arrears of the service performed.

The Company recognizes any gains on sales of real estate when it transfers control of a property and when it is probable that the Company beginning on January 1, 2019 and early adoption is permitted, including adoption in an interim period. The new standard must be applied using a modified retrospective approach. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In June 2016, 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 new standard will be effective for the Company beginning on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In August 2016, the FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments", which requires entities to adhere to a uniform classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update provide guidance on eight specific cash flow issues. The new standard will be effective for the Company beginning on January 1, 2018 and early adoption is permitted. The Company does not expect the impact of this amendment to be material on its consolidated results of operations or financial position.

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

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

In February 2017, the FASB issued ASU No. 2017-05 "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets", which adds guidance for partial sales of nonfinanical assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. This new standard reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. Partial sales of nonfinancial assets are common in the real estate industry and include transactions in which the seller retains an equity interest in the entity that owns the assets or has an equity interest in the buyer. This new standard will be effective for the Company beginning January 1, 2018 and early adoption is permitted. The Company will adopt this new standard concurrently with the adoption of ASU 2014-09 "Revenue from Contracts with Customers" and is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In August 2017, the FASB issued ASU No. 2017-12 "Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities", which, among other things, requires entities to present the earnings effect of hedging instruments in the same income statement line item in which the earnings effect of the hedged item is reported. The new standard also adds new disclosure requirements. This new standard will be effective for the Company beginning January 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

~~ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES~~

~~ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2017 and 2016~~

~~(Unaudited)~~

Marketable Securities

The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds and Level 2 for the unsecured ~~bonds and Level 3 for investments in mortgage backed securities,~~debt, as defined by the FASB standard for fair value measurements),. As of both September 30, 2021 and ~~any~~December 31, 2020, $2.5 million of equity securities were presented within common stock and stock funds in the tables below, which represent investments measured at fair value, using net asset value as a practical expedient, and are not categorized in the fair value hierarchy.

Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. ~~Realized~~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 condensed consolidated statements of income and comprehensive income.

As of September 30, ~~2017~~2021 and December 31, ~~2016, marketable~~2020, equity securities and available for sale debt securities consisted primarily of investment-grade unsecured ~~bonds,~~debt, and common stock ~~investments in mortgage backed securities,~~ and investment funds that invest in U.S. treasury or agency securities. As of September 30, 2017 and December 31, 2016, the Company classified its investments in mortgage backed securities, which mature in November 2019 and September 2020, as held to maturity, and accordingly, these securities are stated at their amortized cost. The discount on the mortgage backed securities is being amortized to interest income based on an estimated yield and the maturity date of the securities.stock funds.

As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, marketable securities ~~consist~~consisted of the following ($ in thousands):


	September 30, 2021
	Cost		Gross Unrealized Gain (Loss)		Carrying Value
Equity securities:
Investment funds - debt securities	$	61,885	$	24	$	61,909
Common stock and stock funds	80,079		39,734		119,813

Debt securities:
Available for sale

Investment-grade unsecured debt	1,050		368		1,418




Total - Marketable securities	$	143,014	$	40,126	$	183,140

September 30, 2017

Amortized
Cost

Gross
Unrealized
Gain (Loss)
Carrying Value
Available for sale:
Investment-grade unsecured bonds $ 4,450
$ (14 ) $ 4,436
Investment funds - debt securities 28,067
146
28,213
Investment funds - U.S. treasuries 10,910
(29 ) 10,881
Common stock and stock funds 33,816
1,687
35,503
Held to maturity:

Mortgage backed securities 105,541
—
105,541
Total - Marketable securities $ 182,784
$ 1,790
$ 184,574

December 31, 2016

Amortized
Cost

Gross
Unrealized
Gain (Loss)
Carrying Value
Available for sale:

Investment funds - debt securities $ 19,604
$ (73 ) $ 19,531
Investment funds - U.S. treasuries 10,022
(22 ) 10,000
Common stock and stock funds 13,696
1,569
15,265
Held to maturity:

Mortgage backed securities 94,393
—
94,393
Total - Marketable securities $ 137,715
$ 1,474
$ 139,189

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

For the three months ended September 30, 2017 and 2016, the proceeds from sales and maturities of available for sale securities totaled $4.6 million and $3.5 million, respectively, which resulted in $32,000 realized gains and $1.0 million realized gains, respectively, for such periods. For the nine months ended September 30, 2017 and 2016, the proceeds from sales and maturities of available for sale securities totaled $33.4 million and $14.7 million, respectively, which resulted in $1.7 million realized gains and $2.9 million realized gains, respectively, for such periods.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)


	December 31, 2020
	Cost		Gross Unrealized Gain (Loss)		Carrying Value
Equity securities:
Investment funds - debt securities	$	49,646	$	985	$	50,631
Common stock and stock funds	81,074		15,001		96,075

Debt securities:
Available for sale

Investment-grade unsecured debt	1,050		12		1,062




Total - Marketable securities	$	131,770	$	15,998	$	147,768

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 income for such securities.

For the three months ended September 30, 2021 and 2020, the proceeds from sales and maturities of marketable securities totaled $0.1 million and $52.6 million, respectively, which resulted in zero realized loss and $91 thousand in realized gains, respectively, for such periods. For the nine months ended September 30, 2021 and 2020, the proceeds from sales and maturities of marketable securities totaled $15.0 million and $56.9 million, respectively, which resulted in $2.5 million and $0.1 million in realized gains, respectively, for such periods.

For the three and nine months ended September 30, 2021, the portion of equity security unrealized gains that were recognized in income totaled $7.1 million and $23.8 million, respectively, and were included in interest and other income on the Company's condensed consolidated statements of income and comprehensive income. For the three and nine months ended September 30, 2020, the portion of equity security unrealized gains or losses that were recognized in income totaled $3.3 million and $2.2 million in gains, respectively, and were included in interest and other income on the Company's condensed consolidated statements of income and comprehensive income.

Variable Interest Entities

In accordance with accounting standards for consolidation of variable interest entities ("VIEs"), the Company ~~consolidates~~consolidated the Operating Partnership, 1618 DownREIT ~~limited partnerships~~entities (comprising ~~eight Communities)~~9 communities), and ~~eight~~6 co-investments as of September 30, ~~2017.~~2021. As of December 31, 2020, the Company consolidated the Operating Partnership, 17 DownREIT entities (comprising 9 communities) and 5 co-investments. 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 ~~eight~~above consolidated co-investments and 16 DownREIT ~~limited partnerships,~~entities, net of intercompany eliminations, were approximately ~~$842.7~~$909.1 million and ~~$278.7~~$323.3 million, respectively, as of September 30, ~~2017~~2021 and ~~$746.1~~$898.5 million and ~~$221.3~~$326.8 million, respectively, as of December 31, ~~2016.~~2020. Noncontrolling interests in these entities were ~~$66.1~~$122.4 million and ~~$45.4~~$120.8 million as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, 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.

Equity-based Compensation

The cost of ~~share~~share- and ~~unit based~~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 ~~12, “Equity~~14, "Equity Based Compensation Plans,”" in the Company’s annual report on Form 10-K for the year ended December 31, ~~2016)~~2020) are being amortized over the expected service periods.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(Unaudited)

Fair Value of Financial Instruments

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 September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, 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 the Company’s ~~$5.0 billion of~~ fixed rate debt ~~including unsecured debt,~~with a carrying value of $5.7 billion and $5.5 billion at ~~both~~ September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively, was approximately ~~$5.1 billion. The~~$6.1 billion and $6.0 billion, respectively. Management has estimated that the fair value of the Company’s $366.4 million and $775.1 million of variable rate debt at September 30, ~~2017~~2021 and December 31, ~~2016 approximates its fair value~~2020, respectively, was approximately $364.3 million and $770.1 million, 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 September 30, ~~2017~~2021 and December 31, ~~2016~~2020 due to the short-term maturity of these instruments. Marketable securities ~~except mortgage backed securities, and derivatives~~ are carried at fair value as of September 30, ~~2017~~2021 and December 31, ~~2016.~~2020.

At September 30, 2017, the Company’s investments in mortgage backed securities had a carrying value of $105.5 million and the Company estimated the fair value to be approximately $117.6 million. At December 31, 2016, the Company’s investments in mortgage backed securities had a carrying value of $94.4 million and the Company estimated the fair value to be approximately $108.8 million. 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.

Capitalization of Costs

The Company’s capitalized internal costs related to development and redevelopment projects were comprised primarily of interest and employee compensation and totaled ~~$4.9~~$5.6 million and ~~$4.8~~$6.1 million during the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, and ~~$15.0~~$17.5 million and ~~$14.0~~$24.9 million ~~during~~for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively. The Company capitalizes leasing commissions associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized for leasing commissions are immaterial for all periods presented.

~~ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES~~

~~ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2017 and 2016~~

~~(Unaudited)~~

Co-investments

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

Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and a gain or loss is recognized upon the remeasurement of co-investments in the ~~condensed~~ consolidated statement of ~~income and comprehensive~~ income equal to the amount by which the fair value of the Company's previously owned co-investment interest ~~the Company previously owned~~ exceeds its carrying value. A majority of the co-investments, excluding ~~the~~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 reports investments in co-investments where accumulated distributions have exceeded the Company’s investment as distributions in excess of investments in co-investments in the accompanying condensed consolidated balance sheets. The net investment of one of the Company’s co-investments is less than zero as a result of financing distributions in excess of the Company's investment in that co-investment.

Changes in Accumulated Other Comprehensive Loss, Net by Component

Essex Property Trust, Inc.

~~($ in thousands)~~

Change in fair
value and amortization
of swap settlements

Unrealized
gains/(losses) on
available for sale
securities
Total
Balance at December 31, 2016 $ (32,963 ) $ 865
$ (32,098 )
Other comprehensive income before reclassification 13,512
1,902
15,414
Amounts reclassified from accumulated other comprehensive loss (6,352 ) (1,596 ) (7,948 )
Other comprehensive income 7,160
306
7,466
Balance at September 30, 2017 $ (25,803 ) $ 1,171
$ (24,632 )

~~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, 2020										Balance at December 31, 2020	$	(14,771)	$	42	$	(14,729)
	Change in fair value and amortization of swap settlements			Unrealized gains/(losses) on available for sale securities			Total
Balance at December 31, 2016	$	(30,161	)	$	813		$	(29,348	)
Other comprehensive income before reclassification	13,974			1,966			15,940			Other comprehensive income before reclassification	5,406		344		5,750
Amounts reclassified from accumulated other comprehensive loss	(6,569		)	(1,650		)	(8,219		)	Amounts reclassified from accumulated other comprehensive loss	11		—		11
Other comprehensive income	7,405			316			7,721			Other comprehensive income	5,417		344		5,761
Balance at September 30, 2017	$	(22,756	)	$	1,129		$	(21,627	)
Balance at September 30, 2021										Balance at September 30, 2021	$	(9,354)	$	386	$	(8,968)

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)

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, 2020	$	(11,346)	$	43	$	(11,303)

Other comprehensive income before reclassification	5,595		356		5,951
Amounts reclassified from accumulated other comprehensive loss	12		—		12
Other comprehensive income	5,607		356		5,963
Balance at September 30, 2021	$	(5,739)	$	399	$	(5,340)

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

Redeemable Noncontrolling Interest

The carrying value of redeemable noncontrolling ~~interest~~interests in the accompanying condensed consolidated balance sheets was ~~$40.0~~$32.7 million and ~~$44.7~~$32.2 million as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances.

The changes to the redemption value of redeemable noncontrolling interests for the nine months ended September 30, ~~2017~~2021 is as follows ($ in thousands):


Balance at December 31, 2020	$	32,239
Reclassification due to change in redemption value and other	4,922
Redemptions	(4,463)

Balance at September 30, 2021	$	32,698

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 condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows ($ in thousands):


	September 30, 2021		December 31, 2020		September 30, 2020		December 31, 2019
Cash and cash equivalents - unrestricted	$	49,910	$	73,629	$	558,446	$	70,087
Cash and cash equivalents - restricted	11,042		10,412		10,629		11,007
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows	$	60,952	$	84,041	$	569,075	$	81,094

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(Unaudited)

Balance at December 31, 2016 $ 44,684
Reclassification due to change in redemption value and other 903
Redemptions (5,543 )
Balance at September 30, 2017 $ 40,044

Accounting Estimates

The preparation of condensed consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going 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, its notes receivables, and its qualification as a real estate investment trust ~~(“REIT”~~("REIT"). The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions.

(2) Significant Transactions During ~~The~~the Nine Months Ended ~~2017~~September 30, 2021 and Subsequent Events

Significant Transactions

Acquisitions

In ~~January 2017,~~September 2021, the Company ~~purchased~~acquired 7 South Linden, a commercial property located in South San Francisco, CA for $33.5 million. The property is fully leased to 2 commercial tenants. The Company is currently pursuing entitlements to construct an apartment community on the property.

In September 2021, Wesco VI, LLC ("Wesco VI"), a new joint venture with one of the Company's institutional partners, acquired Martha Lake Apartments, a 155 unit apartment home community located in Lynwood, WA, for a total contract price of $53.0 million. The property is encumbered by a $29.2 million related party bridge loan from the Company, with an interest rate of 2.15% and is scheduled to mature in December 2021. See the "Co-Investments" section below for further details related to the creation of Wesco VI. See Note 6, Related Party Transactions, for additional details.

In September 2021, the Company acquired Third & Broad, a fully-leased single tenant commercial property located in downtown Seattle, WA for $52.5 million. The Company will hold the property for future apartment development.

In June 2021, the Company acquired its joint venture ~~partner's~~partner, BEX III, LLC's ("BEX III") 50.0% interest in ~~Palm Valley,~~The Village at Toluca Lake, a community totaling 145 homes located in Burbank, CA, for ~~a contract price~~total consideration of ~~$183.0~~$31.8 million. ~~Prior to the purchase, an approximately $220.0 million mortgage encumbered the property.~~ Concurrent with the closing of the acquisition, the ~~entire~~Company repaid $29.5 million in mortgage ~~balance was repaid and~~debt that encumbered the ~~property is now unencumbered. Palm Valley has 1,098 apartment homes, within four communities, and is located in San Jose, CA.~~property. As a result of this acquisition, the Company realized a gain on remeasurement of co-investment of ~~$88.6~~$2.3 million upon consolidation.

Dispositions

In ~~March 2017,~~August 2021, the Company ~~converted its existing $15.3~~sold Devonshire, a non-core apartment community with 276 apartment homes, located in Hemet, CA, for a total contract price of $54.5 million. The Company recognized a $42.9 million ~~preferred equity investment~~gain on sale.

In February 2021, the Company sold Hidden Valley, a 324 apartment home community located in ~~Sage at Cupertino,~~Simi Valley, CA, for a ~~230~~total contract price of $105.0 million. The Company recognized a $69.2 million gain on sale. In conjunction with the sale, the Company repaid $29.7 million of mortgage debt that encumbered the property.

In February 2021, the Company sold Park 20, a 197 apartment home community located in San ~~Jose,~~Mateo, CA, ~~into~~for a ~~40.5% common equity ownership interest in the property.~~total contract price of $113.0 million. The Company ~~issued DownREIT units to~~recognized an immaterial gain on sale.

In February 2021, the ~~other members, including an affiliate~~Company sold Axis 2300, a 115 apartment home community located in Irvine, CA, for a total contract price of ~~the Marcus & Millichap Company, based on an estimated property valuation of $90.0~~$57.5 million. ~~See Note 5, Related Party Transactions, for additional details. At the time of acquisition, the property was encumbered by a $52.0 million bridge loan from the Company.~~ The Company ~~consolidates the property based~~recognized a $30.8 million gain on ~~a VIE analysis performed by the Company.~~sale.

The consolidated fair value of acquired communities listed in the preceding paragraphs above were included on the Company's condensed consolidated balance sheet as follows: $169.5 million was included in land and land improvements, $365.7 million was included in buildings and improvements, and $3.2 million was included in prepaid expenses and other assets.Co-Investments

Joint Ventures

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)

In August 2017, a Company co-investment, Wesco V, LLC ("Wesco V") acquired 8th & Republican, a 211 apartment home community located in Seattle, WA, for a total contract price of $101.3 million. The property is encumbered by a $55.0 million related party bridge loan from the Company, which accrues interest at 3.5% and is scheduled to mature on December 16, 2017. See the "Co-Investments" section below for further details related to the creation of Wesco V. See Note 5, Related Party Transactions, for additional details related to the related party bridge loan.

Also in August 2017, Wesco V acquired 360 Residences, a 213 apartment home community, located in San Jose, CA, for a total contract price of $133.5 million. In connection with this acquisition, Wesco V assumed $57.9 million of mortgage debt, with an effective interest rate of 3.4% and a maturity date of May 2022.

~~Dispositions~~

~~In January 2017, the Company sold Jefferson at Hollywood, a 270 apartment home community located in Los Angeles, CA, for $132.5 million, resulting in a gain of $26.2 million.~~

In August 2017, a Company co-investment, Wesco I, LLC ("Wesco I") sold Madrid, a 230 apartment home community located in Mission Viejo, CA, for $83.0 million, which resulted in a gain of $10.1 million for the Company, recorded in the statement of income as equity income in co-investments. Wesco I used $30.1 million of proceeds to repay the loan on the property.

~~Preferred Equity Investments~~

~~During the nine months ended~~ September 30, 2017, the Company made commitments to fund $89.3 million in five preferred equity investments, located in Irvine, CA, Seattle, WA, Marina del Rey, CA, Woodland Hills, CA, and San Jose, CA. These investments have initial accrued preferred returns ranging from 9.5%-11.0%, with maturities ranging from March 2020 to August 2024. As of September 30, 2017, the Company has funded $38.0 million of the $89.3 million commitment.

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

In August 2017, the Company received cash of $11.7 million for a full redemption of a preferred equity investment class and $6.9 million for a partial redemption of another preferred equity investment class in a joint venture that holds a property in San Jose, CA. The Company's remaining preferred equity investment in this joint venture was $13.4 million as of September 30, 2017.

~~Notes Receivable~~

In May 2017, the Company made a commitment to fund a mezzanine loan of $13.2 million to a limited liability company that owns a development project located in Anaheim, CA. The investment will initially accrue interest based on a 10.0% compounded return. This investment is scheduled to mature in May 2021. As of September 30, 2017, the Company had fully funded the $13.2 million commitment.

~~Co-investments~~

~~In August 2017,~~2021, the Company formed a new joint venture entity, Wesco V,VI, with an institutional partner. Each partner has a 50.0% ownership interest and an initial equity commitment of $150.0 million. The joint venture is unconsolidated for financial reporting purposes.

Preferred Equity Investments

In September 2021, the Company originated a preferred equity investment totaling $26.2 million in one multifamily community located in Southern California. The investment has an initial preferred return of 12.5% and is scheduled to mature in September 2026.

In August 2021, the Company originated a preferred equity investment totaling $11.0 million in one multifamily community located in Washington. The investment has an initial preferred return of 11.5% and is scheduled to mature in August 2026.

In January 2021, the Company originated a preferred equity investment totaling $20.0 million in one multifamily community located in Washington. The investment has an initial preferred return of 10.0% and is scheduled to mature in January 2026.

In August 2021, the Company received cash of $21.6 million, for the partial redemption of a preferred equity investment in a joint venture that holds property located in Northern California.

In March 2021, the Company received cash of $10.0 million for the full redemption of a preferred equity investment in a joint venture that holds property located in Southern California.

In March 2021, the Company received cash of $110.2 million, including an early redemption fee of $3.5 million for the full redemption of a preferred equity investment in a joint venture that holds property located in Southern California.

Notes Receivable

In September 2021, the Company provided a $29.2 million related party bridge loan to Wesco VI. The note receivable accrues interest at 2.15% and is scheduled to mature in December 2021. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets. See Note 6, Related Party Transactions for additional details.

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

In June 2021, the Company received cash of $36.5 million, including an early redemption fee of $4.7 million, for the full redemption of a mezzanine loan on a property located in Northern California.

Common Stock

During the three months ended March 31, 2021, the Company repurchased and retired 40,000 shares totaling $9.2 million, including commissions. The Company did not repurchase any shares subsequent to March 31, 2021. As of September 30, 2021, the Company had $214.5 million of purchase authority remaining under its $250.0 million stock repurchase plan.

Senior Unsecured Debt

In March ~~2017,~~2021, the ~~Company paid off $300.0~~Operating Partnership issued $450.0 million of ~~5.500%~~ senior unsecured ~~notes.~~

~~In April 2017, the Company issued $350.0 million~~notes due on March 1, 2028 with a coupon rate of ~~10-year 3.625% senior unsecured notes. The interest is paid semi-annually in arrears~~1.700% per annum (the "2028 Notes"), which are payable on ~~May~~March 1 and ~~November~~September 1 of each year, ~~commencing~~beginning on ~~November~~September 1, ~~2017 until~~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 ~~maturity date~~Operating Partnership, rank equally in right of ~~May 1, 2027.~~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 all or a portion of certain unsecured term loans, and for general corporate and working capital purposes.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)

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 ~~indebtedness under~~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 ~~lines of credit~~notes due January 2023, and for other general corporate and working capital purposes.

~~Private Placement Bond Redemption~~Subsequent Events

In ~~July 2017,~~October 2021, Wesco VI acquired Monterra, a 139 unit apartment home community in Mill Creek, WA, near Martha Lake, for a total contract price of $55.0 million.

In October 2021, the Company ~~repaid $40.0~~committed to fund a $50.0 million mezzanine loan in ~~private placement bonds~~a multifamily development community located in Northern California, with ~~a coupon~~an initial 11.0% interest rate ~~of 4.5%~~ and a ~~stated~~ maturity date of October 2025, with options to extend for up to two years. The investment will fund concurrent with the senior construction loan which is scheduled to begin funding in the second half of 2022.

(3) Revenues

Disaggregated Revenue

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Rental income	$	355,591	$	362,073	$	1,046,218	$	1,108,658
Other property	5,029		6,391		16,035		17,705
Management and other fees from affiliates	2,237		2,347		6,707		7,312
Total revenues	$	362,857	$	370,811	$	1,068,960	$	1,133,675

The following table presents the Company’s rental and other property revenues disaggregated by geographic operating segment ($ in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Southern California	$	150,807	$	136,651	$	434,926	$	426,987
Northern California	145,807		147,081		435,883		457,655
Seattle Metro	60,280		60,617		178,180		184,310
Other real estate assets (1)	3,726		24,115		13,264		57,411
Total rental and other property revenues	$	360,620	$	368,464	$	1,062,253	$	1,126,363

(1) Other real estate assets consist of revenues 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.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September ~~2017. This represented~~30, 2021 and 2020

(Unaudited)

The following table presents the Company’s rental and other property revenues disaggregated by current property category status ($ in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Same-property (1)	$	325,153	$	316,639	$	957,908	$	986,945
Acquisitions (2)	14,789		14,237		42,410		40,491
Development (3)	8,055		5,461		22,485		13,956
Redevelopment	4,340		4,277		13,079		14,774
Non-residential/other, net (4)	11,319		13,119		35,721		52,491
Straight line rent concession (5)	(3,036)		14,731		(9,350)		17,706
Total rental and other property revenues	$	360,620	$	368,464	$	1,062,253	$	1,126,363

(1) Properties that have comparable stabilized results as of January 1, 2020 and are consolidated by the Company for the three and nine months ended September 30, 2021 and 2020. A community is generally considered to have reached 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, 2020.

(3) Development includes properties developed which did not have stabilized results as of January 1, 2020.

(4) Non-residential/other, net consists of revenues 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 2 communities located in the California counties of Santa Barbara and Santa Cruz, which the Company does not consider its core markets.

(5) Same-property revenues reflect concessions on a cash basis. Total rental and other property revenues reflect concessions on a straight-line basis in accordance with U.S. GAAP.

Deferred Revenues and Remaining Performance Obligations

When cash payments are received or due in advance of the Company’s performance of contracts with customers, deferred revenue is recorded. The total ~~outstanding~~deferred revenue balance related to such contracts was $2.6 million and $3.1 million as of ~~these unsecured bonds.~~

~~Common Stock~~

~~During~~September 30, 2021 and December 31, 2020, respectively, and was included in accounts payable and accrued liabilities within the accompanying condensed consolidated balance sheets. The amount of revenue recognized for the nine months ended September 30, ~~2017,~~2021 that was included in the December 31, 2020 deferred revenue balance was $0.5 million, which was included in interest and other income within the condensed consolidated statements of income and comprehensive income.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the revenue recognition accounting standard. As of September 30, 2021, the Company ~~issued 311,873 shares~~had $2.6 million of ~~common stock,~~remaining performance obligations. The Company expects to recognize approximately 7% of these remaining performance obligations in 2021, an additional 55% through ~~our equity distribution program at an average price of $260.30 per share for proceeds of $80.4 million, net of fees~~2023, and ~~commissions. There were no such sales during~~ the ~~three months ended~~ remaining balance thereafter.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017.~~2021 and 2020

(Unaudited)

Subsequent to quarter end through October 30, 2017, the Company issued 33,571 additional shares of common stock through its equity distribution program at an average price of $261.19 per share for proceeds of $8.7 million, net of fees and commissions.

~~Subsequent Events~~

In October 2017, the Company entered into an amendment to the Wesco I operating agreement to extend the joint venture. Under the amendment, the Company received an additional ownership interest in exchange for promote interest earned which is expected to be approximately $38.0 million. As a result of the amendment, the Company's ownership interest in Wesco I increased to approximately 58.0%.

In October 2017, the Company made a commitment to fund a $40.0 million preferred equity investment in a multifamily development project located in Los Angeles, CA with an accrued initial preferred return of 11.3% and an October 2021 maturity date.

~~(3)~~(4) Co-investments

The Company has joint ventures and preferred equity investments in co-investments which are accounted for under the equity method. The co-investments, including BEXAEW, LLC ("BEXAEW"), BEX II, LLC ("BEX II"), BEX IV, LLC (""BEX IV"), 500 Folsom, Wesco I, Wesco III, LLC ("Wesco III"), Wesco IV, LLC ("Wesco IV"), Wesco V, LLC ("Wesco V"), and Wesco VI, own, operate, and develop apartment communities. The carrying values of the Company's co-investments as of September 30, ~~2017~~2021 and December 31, ~~2016~~2020 are as follows ~~(in~~($ in thousands, except ~~in parenthetical)~~parenthetical amounts):

Weighted Average Essex Ownership Percentage September 30, 2017 December 31, 2016
Membership interest/Partnership interest in:
CPPIB 54 % $ 502,419
$ 422,068
Wesco I, III, IV, and V 50 % 225,041
180,687
Palm Valley ⁽¹⁾
50 % —
68,396
BEXAEW 50 % 45,523
47,963
BEX II ⁽²⁾
50 % (36,245 ) 19,078
Other 53 % 40,471
43,713
Total operating and other co-investments, net 777,209
781,905
Total development co-investments, net 50 % 85,670
157,317
Total preferred interest co-investments (includes related party investments of $20.7 million and $35.9 million as of September 30, 2017 and December 31, 2016, respectively) 225,453
222,053
Total co-investments, net $ 1,088,332
$ 1,161,275


	Weighted Average Company Ownership Percentage (1)		September 30, 2021		December 31, 2020
Ownership interest in:

Wesco I (2), Wesco III, Wesco IV, Wesco V, and Wesco VI	52	%	138,745		178,322
BEXAEW, BEX II, BEX III (3), BEX IV, and 500 Folsom (4)	50	%	273,557		152,309
Other	46	%	58,504		27,635
Total operating and other co-investments, net			470,806		358,266
Total development co-investments	50	%	9,965		157,433
Total preferred interest co-investments (includes related party investments of $87.5 million and $81.4 million as of September 30, 2021 and December 31, 2020, respectively)			572,053		502,311
Total co-investments, net			$	1,052,824	$	1,018,010

(1) Weighted average Company ownership percentages are as of September 30, 2021.

(2) As of September 30, 2021, the Company's investment in Wesco I was classified as a liability of $29.0 million.

(3) In June 2021, the Company purchased the additional 50% interest in BEX III.

(4) 500 Folsom had not stabilized as of December 31, 2020. Its carrying value was included in the development co-investments balance as of December 31, 2020.

The combined summarized financial information of co-investments is as follows ($ in thousands):


	September 30, 2021		December 31, 2020
Combined balance sheets: (1)
Rental properties and real estate under development	$	4,216,981	$	4,242,611
Other assets	228,721		200,777
Total assets	$	4,445,702	$	4,443,388
Debt	$	2,705,882	$	2,611,365
Other liabilities	221,022		189,515
Equity	1,518,798		1,642,508
Total liabilities and equity	$	4,445,702	$	4,443,388
Company's share of equity	$	1,052,824	$	1,018,010

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Combined statements of income: (1)
Property revenues	$	71,195	$	76,581	$	211,359	$	226,125
Property operating expenses	(27,588)		(28,047)		(81,932)		(79,621)
Net operating income	43,607		48,534		129,427		146,504

Interest expense	(15,347)		(19,369)		(48,012)		(59,700)
General and administrative	(3,331)		(5,161)		(11,641)		(12,636)
Depreciation and amortization	(32,290)		(29,732)		(96,812)		(86,947)
Net loss	$	(7,361)	$	(5,728)	$	(27,038)	$	(12,779)
Company's share of net income (2)	$	25,433	$	14,960	$	60,692	$	53,514

~~(1) In January 2017, the Company purchased its joint venture partner's 50.0% interest in Palm Valley and as a result of this acquisition, the Company consolidates Palm Valley.~~

~~(2) This co-investment was classified as a liability as of September 30, 2017.~~

~~The combined summarized entity financial information of co-investments and~~(1) Includes preferred equity investments ~~is as follows ($ in thousands).~~held by the Company.

September 30, 2017 December 31, 2016
Combined balance sheets:
Rental properties and real estate under development $ 3,671,101
$ 3,807,245
Other assets 111,372
121,505
Total assets $ 3,782,473
$ 3,928,750
Debt $ 1,597,597
$ 1,617,639
Other liabilities 65,865
74,607
Equity ⁽¹⁾
2,119,011
2,236,504
Total liabilities and equity $ 3,782,473
$ 3,928,750
Company's share of equity $ 1,088,332
$ 1,161,275

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Combined statements of income:
Property revenues $ 76,303
$ 72,124
$ 224,319
$ 216,434
Property operating expenses (27,753 ) (24,976 ) (79,028 ) (75,377 )
Net operating income 48,550
47,148
145,291
141,057
Gain on sale of real estate 10,058
—
10,058
28,291
Interest expense (13,718 ) (10,978 ) (39,663 ) (35,260 )
General and administrative (2,452 ) (1,496 ) (6,147 ) (4,276 )
Depreciation and amortization (27,884 ) (25,569 ) (84,211 ) (79,676 )
Net income $ 14,554
$ 9,105
$ 25,328
$ 50,136
Company's share of net income ⁽¹⁾
$ 19,727
$ 9,568
$ 40,934
$ 38,932

~~(1)~~(2) Includes the Company's share of equity income from ~~co-investments~~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 ~~$0.5~~$2.4 million and ~~$0.8~~$2.2 million for the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, and ~~$1.5~~$7.0 million and ~~$2.5~~$6.4 million for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

(5) Notes and Other Receivables

Notes and other receivables consist of the following as of September 30, 2021 and December 31, 2020 ($ in thousands):


	September 30, 2021		December 31, 2020
Note receivable, secured, bearing interest at 9.90%, due November 2021 (Originated November 2018)	$	15,337	$	14,216
Notes receivable, secured, bearing interest at 10.50%, due February 2023 (Originated March 2020)	16,591		15,299
Note receivable, secured, bearing interest at 11.00%, due October 2023 (Originated April 2020) (1)	—		25,461
Notes receivable, secured, bearing interest at 9.00%, due December 2023 (Originated November 2020)	84,896		79,827
Notes receivable, secured, bearing interest at 11.50%, due November 2024 (Originated November 2020)	28,850		15,423
Related party note receivable, secured, bearing interest at 2.15%, due December 2021 (Originated September 2021) (2)	29,157		—
Notes and other receivables from affiliates (3)	4,744		4,744
Straight line rent receivables (4)	16,464		25,214
Other receivables	18,689		15,671
Allowance for credit losses	(743)		(751)
Total notes and other receivables	$	213,985	$	195,104

(1) In June 2021, the Company received cash of $36.5 million, including an early redemption fee of $4.7 million, from the payoff of this note receivable.

(2) See Note 6, Related Party Transactions, for additional details.

(3) These amounts consist of short-term loans outstanding and due from various joint ventures as of September 30, 2021 and

December 31, 2020. See Note 6, Related Party Transactions, for additional details.

(4) These amounts are receivables from lease concessions recorded on a straight-line basis for the Company's operating

properties.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)

~~(4) Notes and Other Receivables~~

~~Notes receivable, secured by real estate,~~The following table presents the activity in the allowance for credit losses for notes and other receivables ~~consist of the following as of September 30, 2017 and December 31, 2016~~by loan type ($ in thousands):

September 30, 2017 December 31, 2016
Notes receivable, secured, bearing interest at 10.00%, due May 2021 $ 13,416
$ —
Notes receivable, secured, bearing interest at 10.75%, due September 2020 28,532
17,685
Related party note receivable, secured, bearing interest at 9.50%, due October 2019⁽¹⁾
6,599
6,593
Related party note receivable, secured, bearing interest at 3.50%, due December 2017⁽¹⁾
55,000
—
Notes and other receivables from affiliates ⁽²⁾
3,981
4,695
Other receivables 14,029
11,997
Total notes and other receivables $ 121,557
$ 40,970


	Mezzanine Loans		Bridge Loans		Total
Balance at December 31, 2020	$	751	$	—	$	751

Provision for credit losses	(23)		15		(8)
Balance at September 30, 2021	$	728	$	15	$	743

~~(1) See Note 5, Related Party Transactions, for additional details.~~

~~(2) These amounts consist of short-term~~No loans ~~outstanding and due from various joint ventures as of~~were placed on nonaccrual status or charged off during the nine months ended September 30, ~~2017 and December 31, 2016, respectively. See Note 5, Related Party Transactions, for additional details.~~2021 or 2020.

~~(5)~~(6) Related Party Transactions

The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates totaled ~~$3.1~~$2.7 million and $3.0 million during ~~both~~ the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, and ~~$9.0~~$7.5 million and ~~$9.6~~$8.7 million during the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of ~~$0.7~~approximately $0.5 million and ~~$1.0~~$0.6 million against general and administrative expenses for the three months ended September 30, ~~2017~~2021 and ~~2016, respectively,~~2020, and ~~$2.1~~$0.8 million and ~~$3.4~~$1.4 million for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively.

The Company’s Chairman and founder, Mr. George M. Marcus, is the Chairman of the Marcus & Millichap Company ~~(“MMC”~~("MMC"), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Co-Chairman of Marcus & Millichap, Inc. ~~(“MMI”~~("MMI"), and Mr. Marcus owns a controlling interest in MMI, a national brokerage firm listed on the New York Stock Exchange. For the three and nine months ended September 30, 2021, the Company did not pay any brokerage commissions related to real estate transactions to MMC and its affiliates. For the three and nine months ended September 30, 2020, the Company paid brokerage commissions totaling zero and $0.2 million, respectively, to MMC and its affiliates related to real estate transactions.

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 accrues interest at 2.15% and is scheduled to mature in December 2021. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets and had an outstanding balance of $29.2 million as of September 30, 2021.

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 July 2021.

In November 2019, the Company provided an $85.5 million related party bridge loan to Wesco V in connection with the acquisition of Velo and Ray, a 308 unit apartment home community located in Seattle, WA. 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. The bridge loan was classified within notes and other receivables in the accompanying condensed consolidated balance sheets.

In June 2019, the Company acquired Brio, a 300 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 has an initial preferred return of 11.0% and is scheduled to mature in February 2024.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(Unaudited)

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. This investment accrues interest based on an initial 12.0% preferred return. 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 accrues interest based on a 10.25% preferred return. The investment is scheduled to mature in May 2023. As of September 30, 2021, the Company had funded $23.4 million of the commitment. The remaining committed amount will be funded if and when requested by the sponsors.

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 ~~VIE~~consolidation analysis performed by the Company.

In 2015, the Company made preferred equity investments totaling $20.0 million in three entities affiliated with MMC that own apartment communities in California. The Company earns a 9.5% preferred return on each such investment, all of which are scheduled to mature in 2022.

As described in Note 4,5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of September 30, ~~2017~~2021 and December 31, ~~2016, $4.0~~2020, $33.9 million and $4.7 million, respectively, of short-term loans remained outstanding due from joint venture affiliates and is classified within notes and other receivables in the accompanying condensed consolidated balance sheets. ~~In November 2016,~~

(7) Debt

Essex does not have indebtedness as debt is incurred by the ~~Company provided a $6.6~~Operating Partnership. Essex guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities for the full term of the facilities.

Debt consists of the following ($ in thousands):


	September 30, 2021			December 31, 2020			Weighted Average Maturity In Years as of September 30, 2021
Unsecured bonds private placement - fixed rate	$	—		$	199,950		0.0
Term loan - variable rate	99,969			549,380			0.4
Bonds public offering - fixed rate	5,305,551			4,858,655			8.9
Unsecured debt, net (1)	5,405,520			5,607,985
Lines of credit (2)	42,662			—
Mortgage notes payable, net (3)	640,118			643,550			8.7
Total debt, net	$	6,088,300		$	6,251,535
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering	3.3		%	3.4		%
Weighted average interest rate on variable rate term loan	1.1		%	1.7		%
Weighted average interest rate on lines of credit	1.0		%	1.0		%
Weighted average interest rate on mortgage notes payable	2.6		%	2.7		%

(1) Includes unamortized discount of $10.4 million ~~mezzanine loan~~and $10.1 million and unamortized debt issuance costs of $34.1 million and $31.9 million, as of September 30, 2021 and December 31, 2020, respectively.

(2) Lines of credit, related to ~~a limited liability company~~the Company's 2 lines of unsecured credit aggregating $1.24 billion as of September 30, 2021, excludes unamortized debt issuance costs of $4.6 million and $3.7 million as of September 30, 2021 and December 31, 2020, respectively. These debt issuance costs are included in ~~which MMC holds a significant ownership interest through subsidiaries. The mezzanine loan is classified within notes~~prepaid expenses and other ~~receivables in~~assets on the ~~accompanying~~ condensed consolidated balance ~~sheets and~~sheets. As of September 30, 2021, the Company’s $1.2 billion credit facility had an ~~outstanding balance~~interest rate of ~~$6.6 million as~~LIBOR plus 0.775%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of ~~both~~ September ~~30, 2017 and December 31, 2016.~~

2025 with

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)

~~In August 2017,~~3 six-month extensions, exercisable at the Company provided a $55.0 million related party bridge loan to a property acquired by Wesco V. The note receivable accrues interest at 3.5% and is scheduled to mature on December 16, 2017. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets and had an outstanding balance of $55.0 million asCompany’s option. As of September 30, ~~2017, and no balance as~~2021, the Company’s $35.0 million working capital unsecured line of ~~December 31, 2016.~~

~~(6) Debt~~

~~The Company does not have indebtedness as debt is incurred by the Operating Partnership. The Company guarantees the Operating Partnership’s unsecured debt including the revolving~~ credit ~~facilities for the full term of such debt.~~

~~Debt consists of the following ($ in thousands):~~

September 30, 2017 December 31, 2016
Weighted Average
Maturity
In Years
Unsecured bonds private placement - fixed rate $ 274,378
$ 314,190
3.3
Term loan - variable rate 348,457
98,189
4.4
Bonds public offering - fixed rate 2,878,311
2,834,400
6.7
Unsecured debt, net ⁽¹⁾
3,501,146
3,246,779

Lines of credit ⁽²⁾
2,609
125,000

Mortgage notes payable, net ⁽³⁾
2,111,467
2,191,481
5.4
Total debt, net $ 5,615,222
$ 5,563,260

Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering 3.7 % 3.6 %
Weighted average interest rate on variable rate term loan 2.4 % 2.3 %
Weighted average interest rate on lines of credit 1.9 % 1.8 %
Weighted average interest rate on mortgage notes payable 4.2 % 4.3 %

(1) Includes unamortized discount of $5.0 million and $0.1 million and unamortized debt issuance costs of $18.9 million and $18.1 million, as of September 30, 2017 and December 31, 2016, respectively.

(2) Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.03 billion as of September 30, 2017, excludes unamortized debt issuance costs of $3.4 million and $3.3 million as of September 30, 2017 and December 31, 2016, respectively. These debt issuance costs are included in prepaid expenses and other assets on the condensed consolidated balance sheets. The Company’s $1.0 billion credit facility had an interest rate of LIBOR plus ~~0.90%~~0.775%, which is based on a tiered rate structure tied to the Company’s credit ~~ratings. In January 2017, the Company’s $1.0 billion credit facility’s~~ratings, and a scheduled maturity date ~~was extended to December 2020 with one 18-month extension, exercisable at the Company’s option. The Company’s $25.0 million working capital unsecured line~~ of ~~credit had an interest rate of LIBOR plus 0.90%, which is based on a tiered rate structure tied to the Company’s credit ratings. The $25.0 million credit facility matures in January 2018.~~February 2023.

(3) Includes total unamortized premium of ~~$37.4~~$2.8 million and ~~$50.8~~$3.9 million, reduced by unamortized debt issuance costs of ~~$6.0~~$1.5 million and ~~$7.4~~$1.8 million, as of September 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively.

The aggregate scheduled principal payments of the Company’s outstanding debt, excluding lines of credit, as of September 30, ~~2017~~2021 are as follows ~~(excluding lines of credit)~~ ($ in thousands):


Remaining in 2021	$	893
2022	143,188
2023	302,945
2024	403,109
2025	633,054
Thereafter	4,605,629
Total	$	6,088,818

Remaining in 2017 $ 7,719
2018 257,108
2019 661,318
2020 694,887
2021 544,810
Thereafter 3,439,209
Total $ 5,605,051

~~ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES~~

~~ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

~~September 30, 2017 and 2016~~

~~(Unaudited)~~

~~(7)~~(8) Segment Information

The Company's segment disclosures present the measure used by the chief operating decision makers for purposes of assessing each segment's performance. ~~Essex's~~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 ~~revenue~~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 ~~three~~3 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 ~~revenue~~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.

The revenues and NOI for each of the reportable operating segments are summarized as follows for the three and nine months ended September 30, ~~2017~~2021 and ~~2016~~2020 ($ in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Southern California $ 150,413
$ 142,112
$ 445,296
$ 417,114
Northern California 127,673
115,318
377,531
338,761
Seattle Metro 58,285
55,543
171,564
161,192
Other real estate assets 5,603
14,105
17,517
41,751
Total property revenues $ 341,974
$ 327,078
$ 1,011,908
$ 958,818
Net operating income:
Southern California $ 102,699
$ 96,486
$ 305,894
$ 284,345
Northern California 91,018
83,042
271,224
243,876
Seattle Metro 39,674
37,688
116,733
109,352
Other real estate assets 4,446
10,501
16,142
31,315
Total net operating income 237,837
227,717
709,993
668,888
Management and other fees from affiliates 2,395
2,093
6,927
6,145
Depreciation and amortization (117,451 ) (110,467 ) (350,893 ) (329,847 )
General and administrative (9,788 ) (9,647 ) (30,726 ) (28,527 )
Acquisition and investment related costs (324 ) (284 ) (1,154 ) (1,379 )
Interest expense (55,938 ) (56,693 ) (167,333 ) (164,727 )
Total return swap income 2,538
3,143
7,653
9,080
Interest and other income 5,790
4,943
17,916
19,560
Equity income from co-investments 19,727
9,568
40,934
38,932
Loss on early retirement of debt —
(211 ) —
(211 )
Gain on sale of real estate and land 249
—
26,423
20,258
Deferred tax expense on gain on sale of real estate and land —
—
—
(4,279 )
Gain on remeasurement of co-investment —
—
88,641
—
Net income $ 85,035
$ 70,162
$ 348,381
$ 233,893

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues:
Southern California	$	150,807	$	136,651	$	434,926	$	426,987
Northern California	145,807		147,081		435,883		457,655
Seattle Metro	60,280		60,617		178,180		184,310
Other real estate assets	3,726		24,115		13,264		57,411
Total property revenues	$	360,620	$	368,464	$	1,062,253	$	1,126,363
Net operating income:
Southern California	$	103,660	$	91,639	$	300,761	$	295,402
Northern California	98,948		102,559		299,489		329,338
Seattle Metro	39,876		41,216		119,041		126,422
Other real estate assets	2,805		20,655		9,659		45,527
Total net operating income	245,289		256,069		728,950		796,689
Management and other fees from affiliates	2,237		2,347		6,707		7,312
Corporate-level property management expenses	(9,068)		(8,619)		(27,120)		(26,024)
Depreciation and amortization	(130,564)		(130,202)		(387,887)		(395,370)
General and administrative	(12,712)		(13,310)		(34,746)		(42,244)

Expensed acquisition and investment related costs	(108)		(2)		(164)		(104)
Gain on sale of real estate and land	42,897		22,654		142,993		39,251
Interest expense	(50,019)		(55,430)		(152,639)		(165,024)
Total return swap income	2,660		2,977		8,137		7,749
Interest and other income	11,998		6,512		48,756		12,696
Equity income from co-investments	25,433		14,960		60,692		53,514
Deferred tax expense on unrealized gain on unconsolidated co-investment	(3,041)		—		(5,391)		(1,636)
Loss on early retirement of debt, net	—		(19,114)		(18,982)		(23,820)
Gain on remeasurement of co-investment	—		—		2,260		234,694
Net income	$	125,002	$	78,842	$	371,566	$	497,683

~~Total assets for each of the reportable operating segments are summarized as follows as of September 30, 2017 and December 31, 2016 ($ in thousands):~~

September 30, 2017 December 31, 2016
Assets:
Southern California $ 4,822,941
$ 4,924,792
Northern California 4,241,460
3,791,549
Seattle Metro 1,532,784
1,570,340
Other real estate assets 56,079
78,079
Net reportable operating segment - real estate assets 10,653,264
10,364,760
Real estate under development 313,825
190,505
Co-investments 1,124,577
1,161,275
Real estate held for sale, net —
101,957
Cash and cash equivalents, including restricted cash 63,273
170,302
Marketable securities 184,574
139,189
Notes and other receivables 121,557
40,970
Prepaid expenses and other assets 51,453
48,450
Total assets $ 12,512,523
$ 12,217,408

~~(8) Net Income Per Common Share and Net Income Per Common Unit~~

~~($ in thousands, except share and unit data)~~

~~Essex Property Trust, Inc.~~

Three Months Ended September 30, 2017 Three Months Ended September 30, 2016
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 $ 79,723
65,994,896
$ 1.21
$ 65,561
65,507,669
$ 1.00
Effect of Dilutive Securities:
Stock options —
83,387
—
109,882

Diluted:

Net income available to common stockholders $ 79,723
66,078,283
$ 1.21
$ 65,561
65,617,551
$ 1.00

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)

Total assets for each of the reportable operating segments are summarized as follows as of September 30, 2021 and December 31, 2020 ($ in thousands):


	September 30, 2021		December 31, 2020
Assets:
Southern California	$	3,949,224	$	3,981,650
Northern California	5,489,918		5,408,019
Seattle Metro	1,369,129		1,403,678
Other real estate assets	95,160		134,439
Net reportable operating segment - real estate assets	10,903,431		10,927,786
Real estate under development	212,426		386,047
Co-investments	1,081,861		1,018,010
Real estate held for sale	—		57,938
Cash and cash equivalents, including restricted cash	60,952		84,041
Marketable securities	183,140		147,768
Notes and other receivables	213,985		195,104
Operating lease right-of-use assets	69,756		72,143
Prepaid expenses and other assets	63,090		47,340
Total assets	$	12,788,641	$	12,936,177

(9) Net Income Per Common Share and Net Income Per Common Unit

($ in thousands, except share and unit data):

Essex Property Trust, Inc.


	Three Months Ended September 30, 2021					Three Months Ended September 30, 2020
	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	$	118,390	65,048,486	$	1.82	$	73,661	65,232,837	$	1.13
Effect of Dilutive Securities:
Stock options	—		99,295			—		8,591

Diluted:
Net income available to common stockholders	$	118,390	65,147,781	$	1.82	$	73,661	65,241,428	$	1.13

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, 2021 and 2020

(Unaudited)


	Nine Months Ended September 30, 2017					Nine Months Ended September 30, 2016						Nine Months Ended September 30, 2021					Nine Months Ended September 30, 2020
	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		Income		Weighted- average Common Shares	Per Common Share Amount
Basic:											Basic:
Net income available to common stockholders	$	329,446	65,759,450	$	5.01	$	215,555	65,455,004	$	3.29	Net income available to common stockholders	$	351,680	65,013,477	$	5.41	$	473,125	65,561,820	$	7.22
Effect of Dilutive Securities:											Effect of Dilutive Securities:
Stock options	—		77,515			—		123,657			Stock options	—		61,697			—		20,026
DownREIT units											DownREIT units	—		—			587		94,247
Diluted:											Diluted:
Net income available to common stockholders	$	329,446	65,836,965	$	5.00	$	215,555	65,578,661	$	3.29	Net income available to common stockholders	$	351,680	65,075,174	$	5.40	$	473,712	65,676,093	$	7.21

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of ~~2,251,112~~2,287,678 and ~~2,220,952,~~2,295,510, which include vested ~~Series Z Incentive Units, Series Z-1 Incentive Units,~~ 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units for the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, and ~~2,251,673~~2,291,725 and ~~2,224,236~~2,297,141 for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated ~~$2.7~~$4.2 million and ~~$2.2~~$2.6 million for the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, and ~~$11.3~~$12.4 million and ~~$7.5~~$16.5 million for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively. Additionally, the table excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the ~~DownREIT~~ units for cash and does not consider them to be common stock equivalents.

Stock options of zero and ~~40,900~~493,567 for the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, and ~~2,352~~116,380 and ~~76,054~~299,046 for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the average unearned compensation were greater than the average market price of the common stock for the periods ended and, therefore, were anti-dilutive.

Essex Portfolio, L.P.


	Three Months Ended September 30, 2017					Three Months Ended September 30, 2016						Three Months Ended September 30, 2021					Three Months Ended September 30, 2020
	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		Income		Weighted- average Common Units	Per Common Unit Amount
Basic:											Basic:
Net income available to common unitholders	$	82,444	68,246,008	$	1.21	$	67,784	67,728,621	$	1.00	Net income available to common unitholders	$	122,558	67,336,164	$	1.82	$	76,254	67,528,346	$	1.13
Effect of Dilutive Securities:											Effect of Dilutive Securities:
Stock options	—		83,387			—		109,882			Stock options	—		99,295			—		8,591

Diluted:											Diluted:
Net income available to common unitholders	$	82,444	68,329,395	$	1.21	$	67,784	67,838,503	$	1.00	Net income available to common unitholders	$	122,558	67,435,459	$	1.82	$	76,254	67,536,937	$	1.13

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)


	Nine Months Ended September 30, 2017					Nine Months Ended September 30, 2016						Nine Months Ended September 30, 2021					Nine Months Ended September 30, 2020
	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		Income		Weighted- average Common Units	Per Common Unit Amount
Basic:											Basic:
Net income available to common unitholders	$	340,735	68,011,123	$	5.01	$	223,012	67,679,240	$	3.30	Net income available to common unitholders	$	364,083	67,307,259	$	5.41	$	489,668	67,858,961	$	7.22
Effect of Dilutive Securities:											Effect of Dilutive Securities:
Stock options	—		77,515			—		123,657			Stock options	—		61,697			—		20,026
DownREIT units											DownREIT units	—		—			587		94,247
Diluted:											Diluted:
Net income available to common unitholders	$	340,735	68,088,638	$	5.00	$	223,012	67,802,897	$	3.29	Net income available to common unitholders	$	364,083	67,368,956	$	5.40	$	490,255	67,973,234	$	7.21

Stock options of ~~zero~~0 and ~~40,900~~493,567 for the three months ended September 30, ~~2017~~2021 and ~~2016,~~2020, respectively, 116,380 and ~~2,352 and 76,054~~299,046 for the nine months ended September 30, ~~2017~~2021 and ~~2016,~~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 periods ended and, therefore, were anti-dilutive. Additionally, the table excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the ~~DownREIT~~ units for cash and does not consider them to be common stock equivalents.

~~(9)~~(10) Derivative Instruments and Hedging Activities

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

September 30, ~~2017~~2021 and ~~2016~~2020

(Unaudited)

~~(10) Commitments~~including, without limitation, certain eviction moratoriums and ~~Contingencies~~

The following discussion and analysis should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and accompanying Notes thereto included elsewhere herein and with the Company’s ~~2016~~2020 annual report on Form 10-K for the year ended December 31, ~~2016. We make~~2020. Capitalized terms not defined in this section have the meaning ascribed to them elsewhere in this Quarterly Report on Form 10-Q. The Company makes statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Form 10-Q entitled ~~"Forward Looking~~"Forward-Looking Statements."

Southern California ~~(Los~~ (primarily Los Angeles, Orange, San Diego, and Ventura counties)

Northern California (the San Francisco Bay Area)

SeattleMetro (Seattle metropolitan area)

As of September 30, 2017 As of September 30, 2016
Apartment Homes % Apartment Homes %
Southern California 23,343
47 % 23,949
49 %
Northern California 15,848
32 % 14,865
30 %
Seattle Metro 10,238
21 % 10,239
21 %
Total 49,429
100 % 49,053
100 %

•instituting a hybrid work model for corporate associates to work at the Company's corporate offices and remotely;

•transitioning many public interactions with leasing staff to on-line and telephonic communications;

•increasing cleaning practices for common areas and community amenities and opening common areas and community amenities with limited hours, limited capacity or by reservation only, depending in part on jurisdictional requirements; and

•delaying the response to maintenance orders in certain circumstances in order to promote the protection of our employees and residents.

•assembling a Resident Response Team to effectively and efficiently respond to resident needs and concerns with respect to the ~~Three Months Ended September 30, 2016~~pandemic;

•structuring payment plans for residents who are unable to pay their rent as a result of the outbreak and waiving late fees where required or applicable for those residents; and

•establishing the Essex Cares fund for the purpose of supporting the Company’s residents and communities that are experiencing financial hardships caused by the COVID-19 pandemic.

Three Months Ended September 30,
2017 2016
Southern California 96.8 % 96.7 %
Northern California 96.9 % 96.5 %
Seattle Metro 96.2 % 96.1 %

Number of Apartment Three Months Ended September 30, Dollar Percentage
Property Revenues ($ in thousands) Homes 2017 2016 Change Change
Same-Property Revenues:
Southern California 21,998
$ 141,203
$ 136,368
$ 4,835
3.5 %
Northern California 13,892
109,820
108,156
1,664
1.5 %
Seattle Metro 10,238
58,285
55,545
2,740
4.9 %
Total Same-Property Revenues 46,128
309,308
300,069
9,239
3.1 %
Non-Same Property Revenues
32,666
27,009
5,657
20.9 %
Total Property Revenues
$ 341,974
$ 327,078
$ 14,896
4.6 %

Non-Same Property Revenues decreased by ~~the consolidation of Palm Valley in January 2017.~~

Management and other fees from ~~joint venture development communities that went into lease-up from~~affiliates decreased by $0.1 million or 4.3% to $2.2 million in the third quarter of ~~2016 through~~2021 from $2.3 million in the third quarter of ~~2017.~~2020. The decrease was primarily due to a decrease of the management fee rate for one of the joint ventures.

Property operating expenses, excluding real estate taxes increased ~~$2.8~~by $1.5 million or ~~4.4%~~2.2% to ~~$66.6~~$69.5 million for the third quarter of ~~2017~~2021 compared ~~$63.8~~to $68.0 million for to the third quarter of ~~2016~~2020, primarily due to ~~an increase~~increases of ~~$1.5~~$1.6 million in utilities ~~expense.~~expense

Real estate taxes increased ~~$1.9~~$1.4 million or ~~5.3%~~3.2% to ~~$37.5~~$45.8 million for the third quarter of ~~2017~~2021 compared to ~~$35.6~~$44.4 million for the third quarter of ~~2016~~2020, primarily due ~~primarily~~ to ~~the consolidation of Palm Valley in January 2017 and~~ increases in assessed valuations and tax ~~rates and property valuations.~~rates. Same-Property real estate taxes increased by ~~$0.6~~$1.1 million or ~~1.9%~~2.9% to ~~$32.7~~$39.2 million in the third quarter of ~~2017~~2021 compared to ~~$32.1~~$38.1 million in the third quarter of ~~2016~~2020, primarily due to ~~increases~~an increase in assessed valuations and tax ~~rates and~~rates.

Corporate-level property ~~valuations.~~

Gain on sale of real estate and land of $42.9 million in the third quarter of 2021 was attributable to the ~~consolidation~~sale of ~~Palm Valley in January 2017.~~Devonshire Apartments.

~~Interest~~Depreciation and amortization expense ~~decreased $0.8~~ increased by $0.4 million or ~~1.4%~~0.3% to ~~$55.9~~$130.6 million for the third quarter of ~~2017~~2021 compared to ~~$56.7~~$130.2 million for the third quarter of ~~2016,~~2020, primarily due to ~~various~~the recently completed development properties, Mylo, Station Park Green (Phase II and Phase III) and Wallace on Sunset as well as the acquisition of Village at Toluca Lake during the second quarter of 2021. The increases were partially offset by decreases in depreciation expense resulting from property dispositions in 2021, and amortization expense resulting from certain lease intangibles becoming fully amortized during 2020.

Interest expense decreased by $5.4 million or 9.7% to $50.0 million for the third quarter of 2021 compared to $55.4 million for the third quarter of 2020, primarily due to a decrease in average outstanding debt primarily as a result of debt that was paid off or matured, regular principal amortization during and after the third quarter of ~~2016,~~2020, and lower average interest rates, which resulted in a decrease in interest expense of ~~$4.1~~$11.5 million for the third quarter of ~~2017,~~2020. These decreases to interest expense were partially offset by ~~an increase primarily due to~~ the ~~$350.0~~issuance of $300 million of senior unsecured notes due June 15, 2031 in May ~~1, 2027 issued in April 2017 and the~~2021, $450.0 million of senior unsecured notes due ~~on April~~March 1, 2028 in February 2021, $650 million of senior unsecured notes due March 15, ~~2026 issued~~2032 in ~~April 2016,~~February and June 2020, and $600 million of senior unsecured notes due January 15, 2031 and September 1, 2050 in August 2020, which resulted in ~~$7.3~~an increase of $4.1 million interest expense for the third quarter of ~~2017 compared to $4.0~~2021. Additionally, there was a $2.0 million ~~for~~decrease in capitalized interest in the third quarter of ~~2016.~~2021, due to a decrease in development activity as compared to the same period in 2020.

Total return swap income of ~~$2.5~~$2.7 million in the third quarter of ~~2017~~2021 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~~an aggregate notional amount of $224.5 million.

Interest and other income increased by $5.5 million ~~of fixed rate tax-exempt mortgage notes payable. The decrease of $0.6~~or 84.6% to $12.0 million for the third quarter of ~~2017~~2021 compared to ~~the third quarter of 2016 was due to less favorable interest rates.~~

Equity income from co-investments increased by $10.4 million or 69.3% to $25.4 million for the third quarter of ~~2016 primarily due~~2021 compared to ~~an increase in marketable securities and other interest income of $1.6 million offset by a $1.0 million decrease in gain on sale of marketable securities and other investments.~~

Deferred tax expense on unrealized gain on unconsolidated co-investment of $3.0 million for the third quarter of ~~2016 primarily due to the sale of~~2021 resulted from a ~~property by Wesco I during the third quarter of 2017, which resulted in a~~net unrealized gain of ~~$10.1~~$10.7 million ~~for the Company.~~from unconsolidated co-investments.

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


	Number of Apartment	Nine Months Ended September 30,				Dollar		Percentage
Property Revenues ($ in thousands)	Homes	2021		2020		Change		Change
Same-Property Revenues:
Southern California	20,800	$	413,384	$	407,362	$	6,022	1.5	%
Northern California	16,072	366,344		395,273		(28,929)		(7.3)	%
Seattle Metro	10,218	178,180		184,310		(6,130)		(3.3)	%
Total Same-Property Revenues	47,090	957,908		986,945		(29,037)		(2.9)	%
Non-Same Property Revenues		104,345		139,418		(35,073)		(25.2)	%
Total Property Revenues		$	1,062,253	$	1,126,363	$	(64,110)	(5.7)	%

Number of Apartment Nine Months Ended September 30, Dollar Percentage
Property Revenues ($ in thousands) Homes 2017 2016 Change Change
Same-Property Revenues:
Southern California 21,998
$ 417,651
$ 401,321
$ 16,330
4.1 %
Northern California 13,892
326,880
318,498
8,382
2.6 %
Seattle Metro 10,238
171,564
161,193
10,371
6.4 %
Total Same-Property Revenues 46,128
916,095
881,012
35,083
4.0 %
Non-Same Property Revenues
95,813
77,806
18,007
23.1 %
Total Property Revenues
$ 1,011,908
$ 958,818
$ 53,090
5.5 %

Non-Same Property Revenues ~~increased~~ decreased by ~~$18.0~~$35.1 million or ~~23.1%~~25.2% to ~~$95.8~~$104.3 million in the nine months ended September 30, ~~2017~~2021 from ~~$77.8~~$139.4 million in the nine months ended September 30, ~~2016.~~2020. The ~~increase~~decrease was primarily due to ~~revenue generated by~~property dispositions in 2020 and the ~~consolidation~~sale of ~~Palm~~Hidden Valley, Axis 2300, Park 20, and Devonshire Apartments in ~~January 2017.~~2021.

Management and other fees from affiliates ~~increased~~ decreased by ~~$0.8~~$0.6 million or ~~13.1%~~8.2% to ~~$6.9~~$6.7 million in the nine months ended September 30, ~~2017~~2021 from ~~$6.1~~$7.3 million in the nine months ended September 30, ~~2016,~~2020. The decrease was primarily due to ~~property~~a decrease in asset management ~~fee revenue from joint venture development communities that went into lease-up~~fees resulting from the ~~third~~consolidation of six communities as part of the Company's purchase of Canada Pension Plan Investment Board's ("CPPIB") 45.0% co-investment interests in the first quarter of ~~2016 through the third quarter of 2017.~~2020, and a decrease in revenues used to calculate management fees.

Property operating expenses, excluding real estate taxes increased ~~$8.2~~by $0.6 million or ~~4.4%~~0.3% to ~~$193.6~~$197.9 million for the nine months ended September 30, ~~2017~~2021 compared to ~~$185.4~~$197.3 million for the nine months ended September 30, ~~2016~~2020, primarily due to an increase of $3.9 million in utilities expense offset by decreases of $2.0 million in administrative expenses and $1.3 million in maintenance and repairs expenses partially driven by sales in 2020 and the ~~consolidation~~sales of ~~Palm~~Hidden Valley, Axis 2300, Park 20, and Devonshire Apartments in ~~January 2017.~~2021. Same-Property operating expenses, excluding real estate taxes, increased by ~~$5.7~~$3.5 million or ~~3.3%~~2.0% to ~~$178.1~~$180.6 million in the nine months ended September 30, 2021 compared to $177.1 million in the nine months ended September 30, 2020, primarily due to increases of $3.9 million in utilities expenses and $1.8 million in insurance and other expenses, offset by decreases of $1.8 million in administrative expenses and $0.4 million in maintenance and repairs expenses.

Real estate taxes increased by $3.0 million or 2.3% to $135.4 million for the nine months ended September 30, ~~2017~~2021 compared to ~~$172.4~~$132.4 million for the nine months ended September 30, ~~2016,~~2020, primarily due to ~~a $3.3~~increases in assessed valuations and tax rates. Same-Property real estate taxes increased by $3.1 million or 2.8% to $116.2 million in the nine months ended September 30, 2021 compared to $113.1 million in the nine months ended September 30, 2020, primarily due to an increase in ~~utilities~~assessed valuations and ~~an increase of $1.3 million in maintenance and repairs.~~tax rates.

~~Real estate taxes~~Corporate-level property management expenses increased ~~$3.8~~by $1.1 million or ~~3.6%~~4.2% to ~~$108.3~~$27.1 million for the nine months ended September 30, ~~2017~~2021 compared to ~~$104.5~~$26.0 million for the nine months ended September 30, ~~2016 due primarily to the consolidation of Palm Valley in January 2017~~2020.

Depreciation and ~~increases in tax rates and property valuations. Same-Property real estate taxes increased~~amortization expense decreased by ~~$2.1~~$7.5 million or ~~2.2%~~1.9% to ~~$96.7~~$387.9 million for the nine months ended September 30, ~~2017~~2021 compared to ~~$94.6~~$395.4 million for the nine months ended September 30, ~~2016~~2020, primarily due to ~~increases~~a decrease in ~~tax rates~~amortization expense resulting from certain lease intangibles becoming fully amortized during 2020 and ~~property valuations.~~the sale of Hidden Valley, Axis 2300, and Park 20 in the first quarter of 2021.

Gain on sale of real estate and ~~amortization~~land of $143.0 million in the nine months ended September 30, 2021 was attributable to the sale of Hidden Valley, Axis 2300, and Park 20 in the first quarter of 2021 and Devonshire Apartments in the third quarter of 2021.

Interest expense ~~increased~~ decreased by ~~$21.1~~$12.4 million or ~~6.4%~~7.5% to ~~$350.9~~$152.6 million for the nine months ended September 30, ~~2017~~2021 compared to ~~$329.8~~$165.0 million for the nine months ended September 30, ~~2016,~~2020, primarily due to a decrease in average outstanding debt primarily as a result of debt that was paid off or matured, regular principal amortization during and after the ~~consolidation~~third quarter of ~~Palm Valley~~2020, and lower average interest rates, which resulted in ~~January 2017.~~

Total return swap income of $8.1 million in the nine months ended September 30, ~~2016, which resulted in a decrease in interest expense of $8.6 million for the nine months ended September 30, 2017.~~

Interest and other income increased by $36.1 million or 284.3% to $48.8 million in ~~connection with issuing $257.3 million of fixed rate tax-exempt mortgage notes payable. The decrease of $1.4~~income for the nine months ended September 30, 2021 compared to $12.7 million for the nine months ended September 30, ~~2017 compared to the nine months ended September 30, 2016 was~~2020, primarily due to ~~less favorable interest rates.~~

Equity income from co-investments increased by ~~$1.7~~$7.2 million or ~~8.7%~~13.5% to ~~$17.9~~$60.7 million for the nine months ended September 30, ~~2017~~2021 compared to ~~$19.6~~$53.5 million for the nine months ended September 30, ~~2016~~2020, primarily due to ~~an decrease~~increases of ~~$3.2~~$14.9 million in equity income from non-core co-investments and $8.8 million in income from ~~insurance reimbursements, legal settlements, and other,~~preferred equity investments including income from early redemptions. The increases were partially offset by ~~an increase~~decreases of $7.8 million in ~~marketable securities and other interest income.~~

Deferred tax expense on unrealized gain on unconsolidated co-investment of $5.4 million for the nine months ended September 30, ~~2017 compared to $38.9~~2021 resulted from a net unrealized gain on $18.8 million from unconsolidated co-investments.

Loss on early retirement of debt, net of $19.0 million for the nine months ended September 30, ~~2016~~2021 was primarily due to the ~~sale~~early termination of ~~a property by Wesco I during~~ the ~~nine months ended September 30, 2017, which resulted~~Company's five interest rate swap contracts in ~~a gain~~conjunction with the partial repayment of ~~$10.1~~the Company's unsecured term debt and the early repayment of $300.0 million ~~as well as increases in preferred equity income~~ of approximately $6.2 million. This increase was offset by the sale of two properties by BEXAEW, LLC during the nine months ended September 30, 2016, which resulted in gains of $13.0 million for the Company during that period.senior unsecured notes.

Gain on ~~sale~~remeasurement of ~~real estate and land~~ ~~increased $6.1~~co-investment of $2.3 million ~~or 30.0% to $26.4~~resulted from the Company's purchase of BEX III's 50.0% interest in The Village at Toluca Lake community in the second quarter of 2021. The gain on remeasurement of $234.7 million for the nine months ended September 30, 2017 compared to $20.3 million for the nine months ended September 30, 2016 due primarily to a $26.2 million gain on the sale of Jefferson at Hollywood during the nine months ended September 30, 2017 as compared to a $10.7 million gain on the sale of Harvest Park and a $9.6 million gain on the sale of the Company's former headquarters office building during the nine months ended September 30, 2016.

The ~~Company has~~2021 ATM Program replaces the Company’s prior equity distribution agreement entered into ~~equity distribution agreements with Cantor Fitzgerald & Co, Barclays Capital Inc.~~in September 2018 (the “2018 ATM Program”), BMO Capital Markets Corp., BNP Paribas Securities Corp., Capital One Securities, Inc., Citigroup Global Markets Inc., Jefferies LLC, J.P. Morgan Securities LLC, Mitsubishi UFJ Securities (USA), Inc., and UBS Securities LLC. Pursuant to its equity distribution program, duringwhich was terminated upon the establishment of the 2021 ATM Program. During the nine months ended September 30, ~~2017,~~2021, the Company ~~issued 311,873~~did not sell any shares of its common stock through the 2021 ATM Program or through the 2018 ATM Program. As of September 30, 2021, there are no outstanding forward purchase agreements, and $900.0 million of shares remains available to be sold under the 2021 ATM Program.

Development and Predevelopment Pipeline

~~Redevelopment Pipeline~~

(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.

Essex Property Trust, Inc.

Interest rate hedge ineffectiveness ⁽¹⁾

Deferred tax expense on unrealized gain on unconsolidated co-investment (1)

Equity income from non-core co-investments (2)

Weighted average number shares outstanding, diluted (3)

(1) ~~Interest rate swaps generally are adjusted~~ Represents deferred tax expense related to ~~fair value through other comprehensive~~net unrealized gains on technology co-investments.

(2) Represents the Company's share of co-investment income (loss). However, because certain of our interest rate swaps do not have a 0% LIBOR floor, while related hedged debt in these cases is subject to a 0% LIBOR floor, the portion of the change in fair value of these interest rate swaps attributable to this mismatch, if any, is recorded as a non-cash interest rate hedge ineffectiveness through interest expense.from technology co-investments.

~~(2)~~(3) Assumes conversion of all ~~dilutive~~ outstanding ~~operating partnership interests in the~~ Operating Partnership limited partnership units ("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 ~~DownREIT limited partnership~~ units for cash and does not consider them to be common stock equivalents.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Earnings from operations	$	137,971	$	128,937	$	428,733	$	379,510
Adjustments:
Corporate-level property management expenses	9,068		8,619		27,120		26,024
Depreciation and amortization	130,564		130,202		387,887		395,370
Management and other fees from affiliates	(2,237)		(2,347)		(6,707)		(7,312)
General and administrative	12,712		13,310		34,746		42,244

Expensed acquisition and investment related costs	108		2		164		104
Gain on sale of real estate and land	(42,897)		(22,654)		(142,993)		(39,251)
NOI	245,289		256,069		728,950		796,689
Less: Non-Same Property NOI	(22,807)		(38,308)		(67,844)		(99,957)
Same-Property NOI	$	222,482	$	217,761	$	661,106	$	696,732

Interest Rate Hedging Activities

Interest Rate Sensitive Liabilities

Variable rate debt ⁽¹⁾

Variable rate debt (1)

(1) ~~$175.0 million is subject to interest rate swap agreements.~~

~~(2) $20.7 million is subject to interest rate caps.~~

~~(3) $256.8~~ $224.5 million is subject to total return swaps.

Item 4: Controls and Procedures

Essex Property Trust, Inc.

Essex Portfolio, L.P.

Part II -- Other Information

Item 1: Legal Proceedings

Item 1A: Risk Factors

In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors discussed in "Part I. Item A.1A. Risk Factors" in ~~our~~the Company's annual report on Form 10-K for the year ended December 31, ~~2016,~~2020, which could materially affect ~~our~~the Company's financial condition, results of operations or cash flows. There have been no material changes to the Risk Factors disclosed in Item 1A of the Company's annual report on Form 10-K for the year ended December 31, ~~2016,~~2020, as filed with the SEC and available at www.sec.gov. The risks described in ~~our~~the Company's annual report on Form 10-K and subsequent quarterly reports on Form 10-Q are not the only risks facing the Company. Additional risks and uncertainties not currently known ~~to us~~ or that wethe Company currently ~~deem~~deems to be immaterial may also materially adversely affect ~~our~~the Company's financial condition, results of operations or cash flows.

Unregistered Sales of Equity Securities; Essex Portfolio, L.P.

During the three months ended September 30, ~~2017,~~2021, Essex issued an aggregate of ~~13,726~~77,036 shares of its common stock upon the exercise of stock ~~options.~~options, the vesting of restricted stock awards, and the exchange of OP Units and DownREIT units by limited partners or members into shares of common stock. Essex contributed the net proceeds of ~~$2.0~~$15.6 million from the option exercises during the three months ended September 30, ~~2017~~2021 to the Operating Partnership in exchange for an aggregate of ~~13,726~~67,743 OP Units, as required by the Operating Partnership’s partnership agreement. Furthermore, for each share of common stock issued by Essex in connection with vesting of restricted stock awards and the exchange of OP Units and DownREIT units, the Operating Partnership issued OP Units to Essex, as required by the partnership agreement. During the three months ended September 30, 2021, 9,293 OP Units were issued to Essex pursuant to this mechanism.

Item 3: Defaults Upon Senior Securities

Item 4: Mine Safety Disclosures

Item 5: Other Information

Table of Contents

Item 6: Exhibits


A. Exhibits
10.1*		Third Ame nded and Restated Revolving Credit Agreement, dated as of Se ptember 30, 2021 , among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto.

~~A. Exhibits~~
~~12.1~~31.1*	~~Ratio of Earnings to Fixed Charges.~~

~~31.1~~	Certification of Michael J. Schall, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of ~~Angela L. Kleiman,~~Barbara Pak, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.3*		Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.4*		Certification of ~~Angela L. Kleiman,~~Barbara Pak, Principal Financial Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Michael J. Schall, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.2*		Certification of ~~Angela L. Kleiman,~~Barbara Pak, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.3*		Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

32.4*		Certification of ~~Angela L. Kleiman,~~Barbara Pak, Principal Financial Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS		XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

~~SIGNATURE~~* Filed or furnished herewith.

** In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on ~~its~~their behalf by the undersigned thereunto duly authorized.


			ESSEX PROPERTY TRUST, INC.
			(Registrant)

			~~ESSEX PROPERTY TRUST, INC.~~Date: October 27, 2021
			~~(Registrant)~~
			By: /s/ BARBARA PAK
			~~Date: November 3, 2017~~
			Barbara Pak
			~~By: /S/ ANGELA L. KLEIMAN~~

	~~Angela L. Kleiman~~
	Executive Vice President, ~~and~~ Chief Financial Officer (Authorized Officer, Principal Financial Officer)


			Date: October 27, 2021

			~~Date: November 3, 2017~~

	By: ~~/S/~~/s/ JOHN FARIAS

	~~John Farias~~
	~~Senior Vice President and Chief Accounting Officer~~



			John Farias
			Senior Vice President, Chief Accounting Officer


			ESSEX PORTFOLIO, L.P. By Essex Property Trust, Inc., its general partner
			(Registrant)

			Date: ~~November 3, 2017~~October 27, 2021

			By: ~~/S/ ANGELA L. KLEIMAN~~/s/ BARBARA PAK

			~~Angela L. Kleiman~~Barbara Pak
			Executive Vice President, ~~and~~ Chief Financial Officer (Authorized Officer, Principal Financial Officer)


			Date: October 27, 2021

			~~Date: November 3, 2017~~ By: /s/ JOHN FARIAS

			~~By: /S/ JOHN FARIAS~~John Farias

	~~John Farias~~
	Senior Vice President, ~~and~~ Chief Accounting Officer



Maryland ~~(Essex~~		77-0369576
(Essex Property Trust, Inc.)		(Essex Property Trust, Inc.)
California		77-0369575
(Essex Portfolio, L.P.)		~~77-0369576~~ ~~(Essex Property Trust, Inc.)~~ ~~77-0369575~~ ~~(Essex~~(Essex Portfolio, L.P.)

(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net income	$	371,566	$	497,683
Adjustments to reconcile net income to net cash provided by operating activities:
Straight-lined rents	8,734		(15,485)
Depreciation and amortization	387,887		395,370
Amortization of discount on marketable securities	—		(6,598)
Amortization of discount and debt financing costs, net	7,987		5,177
Gain on sale of marketable securities	(2,499)		(124)
Income from early redemption of notes receivable	(4,747)		—
Provision for credit losses	(110)		100
Unrealized gains on equity securities recognized through income	(23,772)		(2,215)


Earnings from co-investments	(60,692)		(53,514)
Operating distributions from co-investments	78,360		41,202
Accrued interest from notes and other receivables	(12,253)		(1,574)
Gain on the sale of real estate and land	(142,993)		(39,251)



Equity-based compensation	5,399		4,923
Loss on early retirement of debt, net	18,982		23,820
Gain on remeasurement of co-investment	(2,260)		(234,694)
Changes in operating assets and liabilities:
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets	2,470		(5,088)
Accounts payable, accrued liabilities, and operating lease liabilities	62,699		43,095
Other liabilities	5,119		610
Net cash provided by operating activities	699,877		653,437
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired	(105,469)		(459,355)
Redevelopment	(39,092)		(41,592)
Development acquisitions of and additions to real estate under development	(45,381)		(90,273)
Capital expenditures on rental properties	(81,063)		(64,269)

Investments in notes receivable	(102,012)		(20,431)
Collections of notes and other receivables	88,744		98,711
Proceeds from insurance for property losses	591		612
Proceeds from dispositions of real estate	297,454		280,246
Contributions to co-investments	(223,175)		(61,056)

Changes in refundable deposits	(8,356)		96
Purchases of marketable securities	(23,740)		(38,909)
Sales and maturities of marketable securities	14,995		56,890
Non-operating distributions from co-investments	131,297		37,342
Net cash used in investing activities	(95,207)		(301,988)
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes	745,505		1,452,808
Payments on unsecured debt and mortgage notes	(952,608)		(587,057)
Proceeds from lines of credit	601,435		1,038,426
Repayments of lines of credit	(558,773)		(1,093,426)

Retirement of common stock	(9,172)		(222,990)



	Nine Months Ended September 30,
	2017			2016
Cash flows from operating activities:
Net income	$	348,381		$	233,893
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	350,893			329,847
Amortization of discount on marketable securities and other investments	(11,128		)	(10,771		)
Amortization of (premium) discount and debt financing costs, net	(5,132		)	(11,432		)
Gain on sale of marketable securities and other investments	(1,650		)	(2,876		)
Company's share of gain on the sales of co-investments	(10,058		)	(13,046		)
Earnings from co-investments	(30,876		)	(25,886		)
Operating distributions from co-investments	47,702			45,342
Gain on the sale of real estate and land	(26,423		)	(20,258		)
Equity-based compensation	4,894			4,436
Loss on early retirement of debt, net	—			211
Gain on remeasurement of co-investment	(88,641		)	—
Changes in operating assets and liabilities:
Prepaid expenses, receivables and other assets	(7,862		)	656
Accounts payable and accrued liabilities	50,788			49,961
Other liabilities	399			420
Net cash provided by operating activities	621,287			580,497
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures	(200,028		)	(124,054		)
Redevelopment	(50,642		)	(62,983		)
Development acquisitions of and additions to real estate under development	(92,936		)	(58,575		)
Capital expenditures on rental properties	(46,455		)	(40,503		)
Investments in notes receivable	(76,961		)	(4,375		)
Proceeds from insurance for property losses	648			3,288
Proceeds from dispositions of real estate	132,039			48,008
Contributions to co-investments	(231,552		)	(121,972		)
Changes in restricted cash and refundable deposits	91,209			65,858
Purchases of marketable securities	(65,668		)	(18,779		)
Sales and maturities of marketable securities and other investments	33,377			14,708
Non-operating distributions from co-investments	112,572			34,564
Net cash used in investing activities	(394,397		)	(264,815		)
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes	597,981			499,724
Payments on unsecured debt and mortgage notes	(460,040		)	(244,583		)
Proceeds from lines of credit	564,833			321,373
Repayments of lines of credit	(687,224		)	(336,373		)
Repayment of cumulative redeemable preferred stock	—			(73,750		)
Additions to deferred charges	(4,108		)	(5,300		)
Net proceeds from issuance of common stock	80,377			(382		)
Net proceeds from stock options exercised	24,079			17,878
Payments related to tax withholding for share-based compensation	(118		)	(222		)
Distributions to noncontrolling interest	(20,405		)	(19,844		)
Redemption of noncontrolling interest	(4,849		)	(2,435		)
Redemption of redeemable noncontrolling interest	(720		)	—


	Nine Months Ended September 30,
	2021		2020
Additions to deferred charges	(8,237)		(13,761)
Payments related to debt prepayment penalties	(18,342)		(19,605)
Net proceeds from issuance of common stock	(202)		(228)

Net proceeds from stock options exercised	17,847		14,865
Payments related to tax withholding for share-based compensation	(5,445)		(5,664)
Contributions from noncontrolling interest	1,900		—
Distributions to noncontrolling interest	(21,979)		(23,302)
Redemption of noncontrolling interest	(8,407)		(2,971)
Redemption of redeemable noncontrolling interest	(4,463)		—
Common stock dividends paid	(406,818)		(400,563)
Net cash (used in) provided by financing activities	(627,759)		136,532

Net (decrease) increase in unrestricted and restricted cash and cash equivalents	(23,089)		487,981
Unrestricted and restricted cash and cash equivalents at beginning of period	84,041		81,094
Unrestricted and restricted cash and cash equivalents at end of period	$	60,952	$	569,075

Supplemental disclosure of cash flow information:
Cash paid for interest (net of $5.0 million and $12.3 million capitalized in 2021 and 2020, respectively)	$	147,371	$	160,927
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,225	$	5,192
Supplemental disclosure of noncash investing and financing activities:


Transfers between real estate under development and rental properties, net	$	222,055	$	252,946
Transfer from real estate under development to co-investments	$	1,853	$	1,387







Reclassifications to (from) redeemable noncontrolling interest to/from additional paid in capital and noncontrolling interest	$	4,922	$	(6,691)



	Nine Months Ended September 30,
	2017			2016
Common and preferred stock dividends paid	(335,110		)	(306,284		)
Net cash used in financing activities	(245,304		)	(150,198		)
Net (decrease) increase in cash and cash equivalents	(18,414		)	165,484
Cash and cash equivalents at beginning of period	64,921			29,683
Cash and cash equivalents at end of period	$	46,507		$	195,167

Supplemental disclosure of cash flow information:
Cash paid for interest, net of $10.0 million and $9.4 million capitalized in 2017 and 2016, respectively	$	148,742		$	140,183
Supplemental disclosure of noncash investing and financing activities:
Issuance of DownREIT units in connection with acquisition of real estate	$	22,506		$	—
Transfers between real estate under development to rental properties, net	$	2,195		$	106,255
Transfer from real estate under development to co-investments	$	4,122		$	8,332
Reclassifications to (from) redeemable noncontrolling interest to or from additional paid in capital and noncontrolling interest	$	903		$	(1,343	)
Debt assumed in connection with acquisition	$	51,882		$	48,832



ASSETS	September 30, 2017			December 31, 2016
Real estate:
Rental properties:
Land and land improvements	$	2,719,064		$	2,559,743
Buildings and improvements	10,585,742			10,116,563
	13,304,806			12,676,306
Less: accumulated depreciation	(2,651,542		)	(2,311,546		)
	10,653,264			10,364,760
Real estate under development	313,825			190,505
Co-investments	1,124,577			1,161,275
Real estate held for sale, net	—			101,957
	12,091,666			11,818,497
Cash and cash equivalents-unrestricted	46,507			64,921
Cash and cash equivalents-restricted	16,766			105,381
Marketable securities	184,574			139,189
Notes and other receivables (includes related party receivables of $65.6 million and $11.3 million as of September 30, 2017 and December 31, 2016, respectively)	121,557			40,970
Prepaid expenses and other assets	51,453			48,450
Total assets	$	12,512,523		$	12,217,408

LIABILITIES AND EQUITY
Unsecured debt, net	$	3,501,146		$	3,246,779
Mortgage notes payable, net	2,111,467			2,191,481
Lines of credit	2,609			125,000
Accounts payable and accrued liabilities	222,122			138,226
Construction payable	59,767			35,909
Dividends payable	121,496			110,170
Distributions in excess of investments in co-investments	36,245			—
Other liabilities	33,733			32,922
Total liabilities	6,088,585			5,880,487
Commitments and contingencies
Redeemable noncontrolling interest	40,044			44,684
Equity:
Common stock; $0.0001 par value, 670,000,000 shares authorized; 66,002,487 and 65,527,993 shares issued and outstanding, respectively	6			6
Additional paid-in capital	7,111,866			7,029,679
Distributions in excess of accumulated earnings	(821,732		)	(805,409		)
Accumulated other comprehensive loss, net	(24,632		)	(32,098		)
Total stockholders' equity	6,265,508			6,192,178
Noncontrolling interest	118,386			100,059
Total equity	6,383,894			6,292,237
Total liabilities and equity	$	12,512,523		$	12,217,408



	September 30, 2017
	Amortized Cost		Gross Unrealized Gain (Loss)			Carrying Value
Available for sale:
Investment-grade unsecured bonds	$	4,450	$	(14	)	$	4,436
Investment funds - debt securities	28,067		146			28,213
Investment funds - U.S. treasuries	10,910		(29		)	10,881
Common stock and stock funds	33,816		1,687			35,503
Held to maturity:
Mortgage backed securities	105,541		—			105,541
Total - Marketable securities	$	182,784	$	1,790		$	184,574

	December 31, 2016
	Amortized Cost		Gross Unrealized Gain (Loss)			Carrying Value
Available for sale:
Investment funds - debt securities	$	19,604	$	(73	)	$	19,531
Investment funds - U.S. treasuries	10,022		(22		)	10,000
Common stock and stock funds	13,696		1,569			15,265
Held to maturity:
Mortgage backed securities	94,393		—			94,393
Total - Marketable securities	$	137,715	$	1,474		$	139,189



	September 30, 2017		December 31, 2016
Combined balance sheets:
Rental properties and real estate under development	$	3,671,101	$	3,807,245
Other assets	111,372		121,505
Total assets	$	3,782,473	$	3,928,750
Debt	$	1,597,597	$	1,617,639
Other liabilities	65,865		74,607
Equity ⁽¹⁾	2,119,011		2,236,504
Total liabilities and equity	$	3,782,473	$	3,928,750
Company's share of equity	$	1,088,332	$	1,161,275



	September 30, 2017			December 31, 2016			Weighted Average Maturity In Years
Unsecured bonds private placement - fixed rate	$	274,378		$	314,190		3.3
Term loan - variable rate	348,457			98,189			4.4
Bonds public offering - fixed rate	2,878,311			2,834,400			6.7
Unsecured debt, net ⁽¹⁾	3,501,146			3,246,779
Lines of credit ⁽²⁾	2,609			125,000
Mortgage notes payable, net ⁽³⁾	2,111,467			2,191,481			5.4
Total debt, net	$	5,615,222		$	5,563,260
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering	3.7		%	3.6		%
Weighted average interest rate on variable rate term loan	2.4		%	2.3		%
Weighted average interest rate on lines of credit	1.9		%	1.8		%
Weighted average interest rate on mortgage notes payable	4.2		%	4.3		%



Remaining in 2017	$	7,719
2018	257,108
2019	661,318
2020	694,887
2021	544,810
Thereafter	3,439,209
Total	$	5,605,051


	As of September 30, 2021			As of September 30, 2020
	Apartment Homes	%		Apartment Homes	%
Southern California	22,190	43	%	22,675	43	%
Northern California	19,123	37	%	19,319	37	%
Seattle Metro	10,218	20	%	10,217	20	%
Total	51,531	100	%	52,211	100	%



	As of September 30, 2017			As of September 30, 2016
	Apartment Homes	%		Apartment Homes	%
Southern California	23,343	47	%	23,949	49	%
Northern California	15,848	32	%	14,865	30	%
Seattle Metro	10,238	21	%	10,239	21	%
Total	49,429	100	%	49,053	100	%



				Carrying and		Estimated Carrying Value
	Notional		Maturity	Estimated		50		-50
(in thousands)	Amount		Date Range	Fair Value		Basis Points		Basis Points
Cash flow hedges:
Interest rate swaps	$	175,000	2022	$	3,814	$	7,389	$	214
Interest rate caps	20,674		2018-2019	—		—		—
Total cash flow hedges	$	195,674	2018-2022	$	3,814	$	7,389	$	214


For the Years Ended	2017			2018		2019		2020		2021		Thereafter			Total			Fair value		For the Years Ended	2021			2022		2023		2024		2025		Thereafter		Total			Fair value
(in thousands, except for interest rates)
($ in thousands, except for interest rates)																				($ in thousands, except for interest rates)
Fixed rate debt	$	7,590		256,567		660,726		694,241		544,103		2,810,732			$	4,973,959		$	5,102,418	Fixed rate debt	$	709		42,408		302,093		402,177		632,035		4,384,849		$	5,764,271		$	6,057,802
Average interest rate	4.5		%	5.7	%	4.2	%	4.8	%	4.3	%	3.6	%		4.0		%			Average interest rate	3.4		%	3.7	%	3.4	%	4.0	%	3.5	%	3.1	%	3.2		%
Variable rate debt ⁽¹⁾	$	2,738		541		592		646		707		628,477		^{(2) (3)}	$	633,701		$	629,127	Variable rate debt (1)	$	184		100,780		8,514		932		1,019		255,780		$	367,209		$	364,250
Average interest rate	1.9		%	1.9	%	1.9	%	1.9	%	1.9	%	2.1	%		2.1		%			Average interest rate	1.2		%	1.1	%	1.0	%	1.2	%	1.2	%	1.0	%	1.0		%