UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021March 31, 2022

OR

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

For the transition period from ________to _________

001-13106 (Essex Property Trust, Inc.)
333-44467-01 (Essex Portfolio, L.P.)
(Commission File Number)

ESSEX PROPERTY TRUST, INC.
ESSEX PORTFOLIO, L.P.
(Exact name of Registrant as Specified in its Charter)
Maryland77-0369576
(Essex Property Trust, Inc.)(Essex Property Trust, Inc.)
California77-0369575
 (Essex Portfolio, L.P.)(Essex Portfolio, L.P.)
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification Number)
1100 Park Place, Suite 200
San Mateo, California 94403
(Address of Principal Executive Offices, Including Zip Code)

(650) 655-7800
(Registrant's Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Essex Property Trust, Inc.YesNoEssex Portfolio, L.P.YesNo

i


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Essex Property Trust, Inc.YesNoEssex Portfolio, L.P.YesNo

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

Essex Property Trust, Inc.:
Large accelerated filer
Accelerated filerNon-accelerated filerSmaller reporting company
Emerging growth company

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Essex Property Trust, Inc.YesNoEssex Portfolio, L.P.YesNo
 
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: 65,034,81165,333,024 shares of Common Stock ($.0001 par value) of Essex Property Trust, Inc. were outstanding as of July 28, 2021.April 25, 2022.
ii


EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the three and six month periodsperiod ended June 30, 2021March 31, 2022 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" mean Essex Property Trust, Inc., not including any of its subsidiaries.

Essex operates as a self-administered and self-managed real estate investment trust ("REIT"), and is the sole general partner of the Operating Partnership. As the sole general partner of the Operating Partnership, Essex has exclusive control of the Operating Partnership's day-to-day management.

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

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

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

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

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

The Company believes it is important to understand the few differences between Essex and the Operating Partnership in the context of how Essex and the Operating Partnership operate as a consolidated company. Stockholders' equity, partners' capital and noncontrolling interest are the main areas of difference between the condensed consolidated financial statements of Essex and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners' capital in the Operating Partnership's 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 consolidated partnerships and co-investment partners. The noncontrolling interest in 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 Unitholders. The differences between stockholders' equity and partners' capital result from differences in the equity issued at Essex and Operating Partnership levels.
 
To help investors understand the significant differences between Essex and the Operating Partnership, this report on Form 10-Q provides separate condensed consolidated financial statements for Essex and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of stockholders' equity or partners' capital, and earnings per share/unit, as applicable; and a combined Management's Discussion and Analysis of Financial Condition and Results of Operations.

This report on Form 10-Q also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of Essex and the Operating Partnership in order to establish that the requisite certifications have been made and that Essex and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. §1350.

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

The information furnished in the accompanying 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, 2020.2021.
iv


ESSEX PROPERTY TRUST, INC.
ESSEX PORTFOLIO, L.P.
FORM 10-Q
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATIONPage No.
Item 1.Condensed Consolidated Financial Statements of Essex Property Trust, Inc. (Unaudited)
 
 
 
 
 Condensed Consolidated Financial Statements of Essex Portfolio, L.P. (Unaudited) 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
PART II. OTHER INFORMATION 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
1

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)
ASSETSASSETSJune 30, 2021December 31, 2020ASSETSMarch 31, 2022December 31, 2021
Real estate:Real estate:Real estate:
Rental properties:Rental properties:Rental properties:
Land and land improvementsLand and land improvements$2,923,508 $2,929,009 Land and land improvements$3,032,678 $3,032,678 
Buildings and improvementsBuildings and improvements12,373,299 12,132,736 Buildings and improvements12,651,423 12,597,249 
15,296,807 15,061,745  15,684,101 15,629,927 
Less: accumulated depreciationLess: accumulated depreciation(4,392,056)(4,133,959)Less: accumulated depreciation(4,779,581)(4,646,854)
10,904,751 10,927,786  10,904,520 10,983,073 
Real estate under developmentReal estate under development208,330 386,047 Real estate under development112,815 111,562 
Co-investmentsCo-investments1,037,270 1,018,010 Co-investments1,144,542 1,177,802 
Real estate held for sale57,938 
12,150,351 12,389,781 12,161,877 12,272,437 
Cash and cash equivalents-unrestrictedCash and cash equivalents-unrestricted48,155 73,629 Cash and cash equivalents-unrestricted98,107 48,420 
Cash and cash equivalents-restrictedCash and cash equivalents-restricted10,021 10,412 Cash and cash equivalents-restricted10,446 10,218 
Marketable securities, net of allowance for credit losses of 0 as of both June 30, 2021 and December 31, 2020175,782 147,768 
Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.8 million as of June 30, 2021 and December 31, 2020, respectively (includes related party receivables of $57.9 million and $4.7 million as of June 30, 2021 and December 31, 2020, respectively)238,855 195,104 
Marketable securities, net of allowance for credit losses of zero as of both March 31, 2022 and December 31, 2021Marketable securities, net of allowance for credit losses of zero as of both March 31, 2022 and December 31, 2021169,702 191,829 
Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.8 million as of March 31, 2022 and December 31, 2021, respectively (includes related party receivables of $39.9 million and $176.9 million as of March 31, 2022 and December 31, 2021, respectively)Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.8 million as of March 31, 2022 and December 31, 2021, respectively (includes related party receivables of $39.9 million and $176.9 million as of March 31, 2022 and December 31, 2021, respectively)205,420 341,033 
Operating lease right-of-use assetsOperating lease right-of-use assets70,551 72,143 Operating lease right-of-use assets68,158 68,972 
Prepaid expenses and other assetsPrepaid expenses and other assets53,484 47,340 Prepaid expenses and other assets56,591 64,964 
Total assetsTotal assets$12,747,199 $12,936,177 Total assets$12,770,301 $12,997,873 
LIABILITIES AND EQUITYLIABILITIES AND EQUITY  LIABILITIES AND EQUITY  
Unsecured debt, netUnsecured debt, net$5,403,874 $5,607,985 Unsecured debt, net$5,308,841 $5,307,196 
Mortgage notes payable, netMortgage notes payable, net641,274 643,550 Mortgage notes payable, net637,778 638,957 
Lines of creditLines of credit85,000 Lines of credit98,000 341,257 
Accounts payable and accrued liabilitiesAccounts payable and accrued liabilities160,121 152,855 Accounts payable and accrued liabilities221,925 180,751 
Construction payableConstruction payable31,960 31,417 Construction payable35,484 29,136 
Dividends payableDividends payable142,810 141,917 Dividends payable150,976 143,213 
Distributions in excess of investments in co-investmentsDistributions in excess of investments in co-investments28,846 35,545 
Operating lease liabilitiesOperating lease liabilities72,363 74,037 Operating lease liabilities69,801 70,675 
Liabilities associated with real estate held for sale29,845 
Other liabilitiesOther liabilities38,068 39,140 Other liabilities40,705 39,969 
Total liabilitiesTotal liabilities6,575,470 6,720,746 Total liabilities6,592,356 6,786,699 
Commitments and contingenciesCommitments and contingencies00Commitments and contingencies00
Redeemable noncontrolling interestRedeemable noncontrolling interest35,026 32,239 Redeemable noncontrolling interest39,738 34,666 
Equity:Equity:  Equity:  
Common stock; $0.0001 par value, 670,000,000 shares authorized; 65,003,996 and 64,999,015 shares issued and outstanding, respectively
Common stock; 0.0001 par value, 670,000,000 shares authorized; 65,332,274 and 65,248,393 shares issued and outstanding, respectivelyCommon stock; 0.0001 par value, 670,000,000 shares authorized; 65,332,274 and 65,248,393 shares issued and outstanding, respectively
Additional paid-in capitalAdditional paid-in capital6,862,879 6,876,326 Additional paid-in capital6,930,072 6,915,981 
Distributions in excess of accumulated earningsDistributions in excess of accumulated earnings(899,663)(861,193)Distributions in excess of accumulated earnings(987,333)(916,833)
Accumulated other comprehensive loss, net(9,768)(14,729)
Accumulated other comprehensive income (loss), netAccumulated other comprehensive income (loss), net14,237 (5,552)
Total stockholders' equityTotal stockholders' equity5,953,455 6,000,410 Total stockholders' equity5,956,983 5,993,603 
Noncontrolling interestNoncontrolling interest183,248 182,782 Noncontrolling interest181,224 182,905 
Total equityTotal equity6,136,703 6,183,192 Total equity6,138,207 6,176,508 
Total liabilities and equityTotal liabilities and equity$12,747,199 $12,936,177 Total liabilities and equity$12,770,301 $12,997,873 

See accompanying notes to the unaudited condensed consolidated financial statements.
2

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 June 30,Six Months Ended June 30, Three Months Ended March 31,
2021202020212020 20222021
Revenues:Revenues:Revenues:
Rental and other propertyRental and other property$348,757 $368,149 $701,633 $757,899 Rental and other property$379,216 $352,876 
Management and other fees from affiliatesManagement and other fees from affiliates2,221 2,348 4,470 4,965 Management and other fees from affiliates2,689 2,249 
350,978 370,497 706,103 762,864  381,905 355,125 
Expenses:Expenses:  Expenses:  
Property operating, excluding real estate taxesProperty operating, excluding real estate taxes63,215 65,142 128,366 129,273 Property operating, excluding real estate taxes68,858 65,085 
Real estate taxesReal estate taxes44,278 44,994 89,606 88,006 Real estate taxes47,242 45,328 
Corporate-level property management expensesCorporate-level property management expenses9,105 8,646 18,052 17,405 Corporate-level property management expenses10,172 9,013 
Depreciation and amortizationDepreciation and amortization128,736 133,609 257,323 265,168 Depreciation and amortization133,533 128,587 
General and administrativeGeneral and administrative12,222 14,952 22,034 28,934 General and administrative12,242 9,812 
Expensed acquisition and investment related costsExpensed acquisition and investment related costs41 15 56 102 Expensed acquisition and investment related costs15 
257,597 267,358 515,437 528,888  272,055 257,840 
Gain on sale of real estate and landGain on sale of real estate and land16,597 100,096 16,597 Gain on sale of real estate and land— 100,096 
Earnings from operationsEarnings from operations93,381 119,736 290,762 250,573 Earnings from operations109,850 197,381 
Interest expenseInterest expense(50,971)(54,447)(102,620)(109,594)Interest expense(50,377)(51,649)
Total return swap incomeTotal return swap income2,633 2,788 5,477 4,772 Total return swap income2,544 2,844 
Interest and other income22,371 11,405 36,758 6,184 
Interest and other (loss) incomeInterest and other (loss) income(7,567)14,387 
Equity income from co-investmentsEquity income from co-investments18,248 17,257 35,259 38,554 Equity income from co-investments21,171 17,011 
Deferred tax expense on unrealized gain on unconsolidated co-investment(1,842)(1,636)(2,350)(1,636)
Deferred tax benefit (expense) on unconsolidated co-investmentsDeferred tax benefit (expense) on unconsolidated co-investments2,754 (508)
Loss on early retirement of debt, netLoss on early retirement of debt, net(16,465)(5,027)(18,982)(4,706)Loss on early retirement of debt, net— (2,517)
Gain on remeasurement of co-investment2,260 2,260 234,694 
Net incomeNet income69,615 90,076 246,564 418,841 Net income78,375 176,949 
Net income attributable to noncontrolling interestNet income attributable to noncontrolling interest(4,769)(5,618)(13,274)(19,377)Net income attributable to noncontrolling interest(5,121)(8,505)
Net income available to common stockholdersNet income available to common stockholders$64,846 $84,458 $233,290 $399,464 Net income available to common stockholders$73,254 $168,444 
Comprehensive incomeComprehensive income$70,259 $94,172 $251,700 $413,850 Comprehensive income$98,856 $181,441 
Comprehensive income attributable to noncontrolling interestComprehensive income attributable to noncontrolling interest(4,791)(5,756)(13,449)(19,208)Comprehensive income attributable to noncontrolling interest(5,813)(8,658)
Comprehensive income attributable to controlling interestComprehensive income attributable to controlling interest$65,468 $88,416 $238,251 $394,642 Comprehensive income attributable to controlling interest$93,043 $172,783 
Per share data:Per share data:  Per share data:  
Basic:Basic:  Basic:  
Net income available to common stockholdersNet income available to common stockholders$1.00 $1.29 $3.59 $6.08 Net income available to common stockholders$1.12 $2.59 
Weighted average number of shares outstanding during the periodWeighted average number of shares outstanding during the period65,001,677 65,412,407 64,995,682 65,728,119 Weighted average number of shares outstanding during the period65,275,775 64,989,620 
Diluted:Diluted:  Diluted:  
Net income available to common stockholdersNet income available to common stockholders$1.00 $1.29 $3.59 $6.07 Net income available to common stockholders$1.12 $2.59 
Weighted average number of shares outstanding during the periodWeighted average number of shares outstanding during the period65,080,746 65,427,935 65,048,016 65,855,347 Weighted average number of shares outstanding during the period65,339,378 65,114,933 

See accompanying notes to the unaudited condensed consolidated financial statements.
3

Table of Contents


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Equity for the three and six months ended June 30,March 31, 2022 and 2021 and 2020
(Unaudited)
(In thousands)
Common stockAdditional paid-in capitalDistributions
in excess of accumulated
earnings
Accumulated
other
comprehensive loss, net
Noncontrolling interestTotal Common stockAdditional paid-in capitalDistributions
in excess of accumulated
earnings
Accumulated
other
comprehensive income (loss), net
Noncontrolling interestTotal
Three months ended June 30, 2021SharesAmount
Balances at March 31, 202164,999 $$6,864,185 $(828,625)$(10,390)$185,755 $6,210,931 
Three months ended March 31, 2022Three months ended March 31, 2022SharesAdditional paid-in capitalAmountDistributions
in excess of accumulated
earnings
Accumulated
other
comprehensive income (loss), net
Noncontrolling interestTotal
Balances at December 31, 2021Balances at December 31, 202165,248 $6,176,508 
Net incomeNet income— — — 64,846 — 4,769 69,615 Net income— — — 73,254 — 5,121 78,375 
Change in fair value of derivatives and amortization of swap settlementsChange in fair value of derivatives and amortization of swap settlements— — — — 456 16 472 Change in fair value of derivatives and amortization of swap settlements— — — — 19,404 679 20,083 
Change in fair value of marketable debt securities, netChange in fair value of marketable debt securities, net— — — — 166 172 Change in fair value of marketable debt securities, net— — — — 385 13 398 
Issuance of common stock under:Issuance of common stock under:      Issuance of common stock under:      
Stock option and restricted stock plans, netStock option and restricted stock plans, net573 — — — 574 Stock option and restricted stock plans, net84 — 16,867 — — — 16,867 
Sale of common stock, netSale of common stock, net— — (84)— — — (84)Sale of common stock, net— — (141)— — — (141)
Equity based compensation costsEquity based compensation costs— — 2,571 — — 214 2,785 Equity based compensation costs— — 2,380 — — 83 2,463 
Changes in the redemption value of redeemable noncontrolling interestChanges in the redemption value of redeemable noncontrolling interest— — (2,574)— — 62 (2,512)Changes in the redemption value of redeemable noncontrolling interest— — (5,014)— — (58)(5,072)
Contributions from noncontrolling interestContributions from noncontrolling interest— — — — — 125 125 
Distributions to noncontrolling interestDistributions to noncontrolling interest— — — — — (7,303)(7,303)Distributions to noncontrolling interest— — — — — (7,619)(7,619)
Redemptions of noncontrolling interestRedemptions of noncontrolling interest— (1,792)— — (271)(2,063)Redemptions of noncontrolling interest— — (1)— — (25)(26)
Common stock dividends ($2.09 per share)— — — (135,884)— — (135,884)
Balances at June 30, 202165,004 $$6,862,879 $(899,663)$(9,768)$183,248 $6,136,703 
Common stock dividends ($2.20 per share)Common stock dividends ($2.20 per share)— — — (143,754)— — (143,754)
Balances at March 31, 2022Balances at March 31, 202265,332 $$6,930,072 $(987,333)$14,237 $181,224 $6,138,207 



4

Table of Contents


 Common stockAdditional paid-in capitalDistributions
in excess of accumulated
earnings
Accumulated
other
comprehensive loss, net
Noncontrolling interestTotal
Six months ended June 30, 2021SharesAmount
Balances at December 31, 202064,999 $$6,876,326 $(861,193)$(14,729)$182,782 $6,183,192 
Net income— — — 233,290 — 13,274 246,564 
Change in fair value of derivatives and amortization of swap settlements— — — — 4,713 166 4,879 
Change in fair value of marketable debt securities, net— — — — 248 257 
Issuance of common stock under:
Stock option and restricted stock plans, net44 (3,171)— — — (3,170)
Sale of common stock, net— — (84)— — — (84)
Equity based compensation costs— — 7,599 — — 268 7,867 
Retirement of common stock, net(40)— (9,172)— — — (9,172)
Changes in the redemption value of redeemable noncontrolling interest— — (6,752)— — 157 (6,595)
Contributions from noncontrolling interest— — — — — 1,900 1,900 
Distributions to noncontrolling interest— — — — — (14,857)(14,857)
Redemptions of noncontrolling interest— (1,867)— — (451)(2,318)
Common stock dividends ($4.18 per share)— — — (271,760)— — (271,760)
Balances at June 30, 202165,004 $$6,862,879 $(899,663)$(9,768)$183,248 $6,136,703 
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Table of Contents


 Common stockAdditional paid-in capitalDistributions
in excess of accumulated
earnings
Accumulated
other
comprehensive loss, net
Noncontrolling InterestTotal
Three months ended June 30, 2020SharesAmount
Balances at March 31, 202065,412 $$6,959,523 $(708,697)$(22,668)$189,784 $6,417,949 
Net income— — — 84,458 — 5,618 90,076 
Cash flow hedge losses reclassified to earnings— — — — 3,171 111 3,282 
Change in fair value of derivatives and amortization of swap settlements— — — — 754 25 779 
Change in fair value of marketable debt securities, net— — — — 33 35 
Issuance of common stock under:      
Stock option and restricted stock plans, net— 536 — — — 536 
Sale of common stock, net— — (63)— — — (63)
Equity based compensation costs— — 5,058 — — 177 5,235 
Retirement of common stock, net(88)— (20,093)— — — (20,093)
Changes in the redemption value of redeemable noncontrolling interest— — (199)— — (399)(598)
Distributions to noncontrolling interest— — — — — (8,133)(8,133)
Redemptions of noncontrolling interest— 43 — — (378)(335)
Common stock dividends ($2.0775 per share)— — — (135,789)— — (135,789)
Balances at June 30, 202065,331 $$6,944,805 $(760,028)$(18,710)$186,807 $6,352,881 
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Table of Contents


Common stockAdditional paid-in capitalDistributions
in excess of accumulated
earnings
Accumulated
other
comprehensive loss, net
Noncontrolling InterestTotalCommon stockAdditional paid-in capitalDistributions
in excess of accumulated
earnings
Accumulated
other
comprehensive income (loss), net
Noncontrolling InterestTotal
Six months ended June 30, 2020SharesAmount
Balances at December 31, 201966,092 $$7,121,927 $(887,619)$(13,888)$183,077 $6,403,504 
Three months ended March 31, 2021Three months ended March 31, 2021SharesAdditional paid-in capitalAmountDistributions
in excess of accumulated
earnings
Accumulated
other
comprehensive income (loss), net
Noncontrolling InterestTotal
Balances at December 31, 2020Balances at December 31, 202064,999 $6,183,192 
Net incomeNet income— — — 399,464 — 19,377 418,841 Net income— — — 168,444 — 8,505 176,949 
Cash flow hedge losses reclassified to earnings— — — — 3,171 111 3,282 
Change in fair value of derivatives and amortization of swap settlementsChange in fair value of derivatives and amortization of swap settlements— — — — (7,732)(271)(8,003)Change in fair value of derivatives and amortization of swap settlements— — — — 4,257 150 4,407 
Change in fair value of marketable debt securities, netChange in fair value of marketable debt securities, net— — — — (261)(9)(270)Change in fair value of marketable debt securities, net— — — — 82 85 
Issuance of common stock under:Issuance of common stock under:Issuance of common stock under:
Stock option and restricted stock plans, netStock option and restricted stock plans, net95 — 9,201 — — — 9,201 Stock option and restricted stock plans, net39 — (3,744)— — — (3,744)
Sale of common stock, net— — (133)— — — (133)
Equity based compensation costsEquity based compensation costs— — 6,677 — — 256 6,933 Equity based compensation costs— — 5,028 — — 54 5,082 
Retirement of common stock, netRetirement of common stock, net(864)— (196,404)— — — (196,404)Retirement of common stock, net(40)— (9,172)— — — (9,172)
Cumulative effect upon adoption of ASU No. 2016-13
— — — (190)— — (190)
Changes in the redemption value of redeemable noncontrolling interestChanges in the redemption value of redeemable noncontrolling interest— — 4,542 — — (373)4,169 Changes in the redemption value of redeemable noncontrolling interest— — (4,178)— — 95 (4,083)
Changes in noncontrolling interest from acquisition— — — — — 1,349 1,349 
Contributions from noncontrolling interestContributions from noncontrolling interest— — — — — 1,900 1,900 
Distributions to noncontrolling interestDistributions to noncontrolling interest— — — — — (16,012)(16,012)Distributions to noncontrolling interest— — — — — (7,554)(7,554)
Redemptions of noncontrolling interestRedemptions of noncontrolling interest— (1,005)— — (698)(1,703)Redemptions of noncontrolling interest— (75)— — (180)(255)
Common stock dividends ($4.155 per share)— — — (271,683)— — (271,683)
Balances at June 30, 202065,331 $$6,944,805 $(760,028)$(18,710)$186,807 $6,352,881 
Common stock dividends ($2.09 per share)Common stock dividends ($2.09 per share)— — — (135,876)— — (135,876)
Balances at March 31, 2021Balances at March 31, 202164,999 $$6,864,185 $(828,625)$(10,390)$185,755 $6,210,931 

See accompanying notes to the unaudited condensed consolidated financial statements.
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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands, except parenthetical amounts) 
Six Months Ended June 30, Three Months Ended March 31,
20212020 20222021
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net incomeNet income$246,564 $418,841 Net income78,375 $176,949 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:  Adjustments to reconcile net income to net cash provided by operating activities:  
Straight-lined rentsStraight-lined rents5,825 (2,803)Straight-lined rents2,074 3,087 
Depreciation and amortizationDepreciation and amortization257,323 265,168 Depreciation and amortization133,533 128,587 
Amortization of discount on marketable securities(4,862)
Amortization of discount and debt financing costs, netAmortization of discount and debt financing costs, net6,311 3,973 Amortization of discount and debt financing costs, net1,665 2,132 
Loss on sale of marketable securities(2,499)(33)
Income form early redemption of notes receivable(4,747)
Gain on sale of marketable securitiesGain on sale of marketable securities(12,171)(2,611)
Provision for credit lossesProvision for credit losses(107)97 Provision for credit losses62 38 
Unrealized (gains) losses on equity securities recognized through income(16,681)1,073 
Unrealized losses (gains) on equity securities recognized through incomeUnrealized losses (gains) on equity securities recognized through income24,585 (6,276)
Earnings from co-investmentsEarnings from co-investments(35,259)(38,554)Earnings from co-investments(21,171)(17,011)
Operating distributions from co-investmentsOperating distributions from co-investments57,364 29,613 Operating distributions from co-investments52,281 46,355 
Accrued interest from notes and other receivablesAccrued interest from notes and other receivables(8,530)(835)Accrued interest from notes and other receivables(3,447)(4,201)
Gain on the sale of real estate and landGain on the sale of real estate and land(100,096)(16,597)Gain on the sale of real estate and land— (100,096)
Equity-based compensationEquity-based compensation3,776 4,043 Equity-based compensation2,296 1,386 
Loss on early retirement of debt, netLoss on early retirement of debt, net18,982 4,706 Loss on early retirement of debt, net— 2,517 
Gain on remeasurement of co-investment(2,260)(234,694)
Changes in operating assets and liabilities:Changes in operating assets and liabilities: Changes in operating assets and liabilities: 
Prepaid expenses, receivables, operating lease right-of-use assets, and other assetsPrepaid expenses, receivables, operating lease right-of-use assets, and other assets(5,348)(6,421)Prepaid expenses, receivables, operating lease right-of-use assets, and other assets16,026 (41,060)
Accounts payable, accrued liabilities, and operating lease liabilitiesAccounts payable, accrued liabilities, and operating lease liabilities3,209 2,565 Accounts payable, accrued liabilities, and operating lease liabilities40,300 4,976 
Other liabilitiesOther liabilities4,244 830 Other liabilities735 494 
Net cash provided by operating activitiesNet cash provided by operating activities428,071 426,110 Net cash provided by operating activities315,143 195,266 
Cash flows from investing activities:Cash flows from investing activities:  Cash flows from investing activities:  
Additions to real estate:Additions to real estate:  Additions to real estate:  
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquiredAcquisitions of real estate and acquisition related capital expenditures, net of cash acquired(18,418)(458,857)Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired(61)(1,203)
RedevelopmentRedevelopment(19,981)(32,211)Redevelopment(18,004)(9,274)
Development acquisitions of and additions to real estate under developmentDevelopment acquisitions of and additions to real estate under development(34,640)(54,994)Development acquisitions of and additions to real estate under development(6,882)(19,629)
Capital expenditures on rental propertiesCapital expenditures on rental properties(49,044)(40,013)Capital expenditures on rental properties(24,917)(16,720)
Investments in notes receivableInvestments in notes receivable(71,613)(6,669)Investments in notes receivable(134,697)(69,885)
Collections of notes and other receivablesCollections of notes and other receivables36,244 98,711 Collections of notes and other receivables270,338 — 
Proceeds from insurance for property lossesProceeds from insurance for property losses117 568 Proceeds from insurance for property losses88 102 
Proceeds from dispositions of real estateProceeds from dispositions of real estate243,365 230,935 Proceeds from dispositions of real estate— 243,365 
Contributions to co-investmentsContributions to co-investments(160,719)(43,817)Contributions to co-investments(79,284)(49,974)
Changes in refundable depositsChanges in refundable deposits(968)96 Changes in refundable deposits(6,318)11 
Purchases of marketable securitiesPurchases of marketable securities(23,509)(10,989)Purchases of marketable securities(10,826)(23,296)
Sales and maturities of marketable securitiesSales and maturities of marketable securities14,931 4,301 Sales and maturities of marketable securities27,911 14,772 
Non-operating distributions from co-investmentsNon-operating distributions from co-investments78,600 25,136 Non-operating distributions from co-investments88,370 78,600 
Net cash used in investing activities(5,635)(287,803)
Net cash provided by investing activitiesNet cash provided by investing activities105,718 146,869 
Cash flows from financing activities:Cash flows from financing activities:  Cash flows from financing activities:  
Proceeds from unsecured debt and mortgage notesProceeds from unsecured debt and mortgage notes745,505 856,630 Proceeds from unsecured debt and mortgage notes— 447,404 
Payments on unsecured debt and mortgage notesPayments on unsecured debt and mortgage notes(951,727)(286,074)Payments on unsecured debt and mortgage notes(904)(600,858)
Proceeds from lines of creditProceeds from lines of credit453,359 1,038,426 Proceeds from lines of credit391,472 204,794 
Repayments of lines of creditRepayments of lines of credit(368,359)(1,093,426)Repayments of lines of credit(634,729)(204,794)
Retirement of common stockRetirement of common stock(9,172)(196,404)Retirement of common stock— (9,172)
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Six Months Ended June 30, Three Months Ended March 31,
20212020 20222021
Additions to deferred chargesAdditions to deferred charges(6,361)(7,297)Additions to deferred charges— (3,434)
Payments related to debt prepayment penaltiesPayments related to debt prepayment penalties(18,342)(1,696)Payments related to debt prepayment penalties— (2,132)
Net proceeds from issuance of common stockNet proceeds from issuance of common stock(84)(133)Net proceeds from issuance of common stock(141)— 
Net proceeds from stock options exercisedNet proceeds from stock options exercised2,275 14,865 Net proceeds from stock options exercised19,083 1,701 
Payments related to tax withholding for share-based compensationPayments related to tax withholding for share-based compensation(5,445)(5,664)Payments related to tax withholding for share-based compensation(2,216)(5,445)
Contributions from noncontrolling interestContributions from noncontrolling interest1,900 Contributions from noncontrolling interest125 1,900 
Distributions to noncontrolling interestDistributions to noncontrolling interest(14,787)(15,613)Distributions to noncontrolling interest(7,218)(7,461)
Redemption of noncontrolling interestRedemption of noncontrolling interest(2,318)(1,703)Redemption of noncontrolling interest(26)(255)
Redemption of redeemable noncontrolling interest(3,808)
Common stock dividends paidCommon stock dividends paid(270,937)(264,837)Common stock dividends paid(136,392)(135,064)
Net cash (used in) provided by financing activities(448,301)37,074 
Net cash used in financing activitiesNet cash used in financing activities(370,946)(312,816)
Net (decrease) increase in unrestricted and restricted cash and cash equivalents(25,865)175,381 
Net increase in unrestricted and restricted cash and cash equivalentsNet increase in unrestricted and restricted cash and cash equivalents49,915 29,319 
Unrestricted and restricted cash and cash equivalents at beginning of periodUnrestricted and restricted cash and cash equivalents at beginning of period84,041 81,094 Unrestricted and restricted cash and cash equivalents at beginning of period58,638 84,041 
Unrestricted and restricted cash and cash equivalents at end of periodUnrestricted and restricted cash and cash equivalents at end of period$58,176 $256,475 Unrestricted and restricted cash and cash equivalents at end of period$108,553 $113,360 
Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:
Cash paid for interest (net of $3.8 million and $9.0 million capitalized in 2021 and 2020, respectively)$96,541 $98,358 
Cash paid for interest (net of $0.9 million and $2.1 million capitalized in 2022 and 2021, respectively)Cash paid for interest (net of $0.9 million and $2.1 million capitalized in 2022 and 2021, respectively)$51,168 $55,213 
Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leasesOperating cash flows from operating leases$5,316 $3,430 Operating cash flows from operating leases$1,738 $1,738 
Supplemental disclosure of noncash investing and financing activities:Supplemental disclosure of noncash investing and financing activities:  Supplemental disclosure of noncash investing and financing activities:  
Transfers between real estate under development and rental properties, netTransfers between real estate under development and rental properties, net$218,835 $131,960 Transfers between real estate under development and rental properties, net$4,346 $267 
Transfer from real estate under development to co-investmentsTransfer from real estate under development to co-investments$1,337 $1,473 Transfer from real estate under development to co-investments$858 $747 
Reclassifications to (from) redeemable noncontrolling interest to/from additional paid in capital and noncontrolling interest$6,593 $(4,169)
Reclassifications to redeemable noncontrolling interest from additional paid in capital and noncontrolling interestReclassifications to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest$5,073 $4,083 

See accompanying notes to the unaudited condensed consolidated financial statements.

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Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except parenthetical and unit amounts)
ASSETSASSETSJune 30, 2021December 31, 2020ASSETSMarch 31, 2022December 31, 2021
Real estate:Real estate:Real estate:
Rental properties:Rental properties:Rental properties:
Land and land improvementsLand and land improvements$2,923,508 $2,929,009 Land and land improvements$3,032,678 $3,032,678 
Buildings and improvementsBuildings and improvements12,373,299 12,132,736 Buildings and improvements12,651,423 12,597,249 
15,296,807 15,061,745  15,684,101 15,629,927 
Less: accumulated depreciationLess: accumulated depreciation(4,392,056)(4,133,959)Less: accumulated depreciation(4,779,581)(4,646,854)
10,904,751 10,927,786  10,904,520 10,983,073 
Real estate under developmentReal estate under development208,330 386,047 Real estate under development112,815 111,562 
Co-investmentsCo-investments1,037,270 1,018,010 Co-investments1,144,542 1,177,802 
Real estate held for sale, netReal estate held for sale, net57,938 Real estate held for sale, net— — 
12,150,351 12,389,781 12,161,877 12,272,437 
Cash and cash equivalents-unrestrictedCash and cash equivalents-unrestricted48,155 73,629 Cash and cash equivalents-unrestricted98,107 48,420 
Cash and cash equivalents-restrictedCash and cash equivalents-restricted10,021 10,412 Cash and cash equivalents-restricted10,446 10,218 
Marketable securities, net of allowance for credit losses of 0 as of both June 30, 2021 and December 31, 2020175,782 147,768 
Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.8 million as of June 30, 2021 and December 31, 2020, respectively (includes related party receivables of $57.9 million and $4.7 million as of June 30, 2021 and December 31, 2020, respectively)238,855 195,104 
Marketable securities, net of allowance for credit losses of zero as of both March 31, 2022 and December 31, 2021Marketable securities, net of allowance for credit losses of zero as of both March 31, 2022 and December 31, 2021169,702 191,829 
Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.8 million as of March 31, 2022 and December 31, 2021, respectively (includes related party receivables of $39.9 million and $176.9 million as of March 31, 2022 and December 31, 2021, respectively)Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.8 million as of March 31, 2022 and December 31, 2021, respectively (includes related party receivables of $39.9 million and $176.9 million as of March 31, 2022 and December 31, 2021, respectively)205,420 341,033 
Operating lease right-of-use assetsOperating lease right-of-use assets70,551 72,143 Operating lease right-of-use assets68,158 68,972 
Prepaid expenses and other assetsPrepaid expenses and other assets53,484 47,340 Prepaid expenses and other assets56,591 64,964 
Total assetsTotal assets$12,747,199 $12,936,177 Total assets$12,770,301 $12,997,873 
LIABILITIES AND CAPITALLIABILITIES AND CAPITAL  LIABILITIES AND CAPITAL  
Unsecured debt, netUnsecured debt, net$5,403,874 $5,607,985 Unsecured debt, net$5,308,841 $5,307,196 
Mortgage notes payable, netMortgage notes payable, net641,274 643,550 Mortgage notes payable, net637,778 638,957 
Lines of creditLines of credit85,000 Lines of credit98,000 341,257 
Accounts payable and accrued liabilitiesAccounts payable and accrued liabilities160,121 152,855 Accounts payable and accrued liabilities221,925 180,751 
Construction payableConstruction payable31,960 31,417 Construction payable35,484 29,136 
Distributions payableDistributions payable142,810 141,917 Distributions payable150,976 143,213 
Operating lease liabilitiesOperating lease liabilities69,801 70,675 
Distributions in excess of investments in co-investmentsDistributions in excess of investments in co-investments28,846 35,545 
Operating lease liabilities72,363 74,037 
Liabilities associated with real estate held for sale29,845 
Other liabilitiesOther liabilities38,068 39,140 Other liabilities40,705 39,969 
Total liabilitiesTotal liabilities6,575,470 6,720,746 Total liabilities6,592,356 6,786,699 
Commitments and contingenciesCommitments and contingencies00Commitments and contingencies00
Redeemable noncontrolling interestRedeemable noncontrolling interest35,026 32,239 Redeemable noncontrolling interest39,738 34,666 
Capital:Capital:  Capital:  
General Partner:General Partner:General Partner:
Common equity (65,003,996 and 64,999,015 units issued and outstanding, respectively)5,963,223 6,015,139 
Common equity (65,332,274 and 65,248,393 units issued and outstanding, respectively)Common equity (65,332,274 and 65,248,393 units issued and outstanding, respectively)5,942,746 5,999,155 
5,963,223 6,015,139 5,942,746 5,999,155 
Limited Partners:Limited Partners:Limited Partners:
Common equity (2,293,760 and 2,294,760 units issued and outstanding, respectively)56,950 58,184 
Common equity (2,282,464 and 2,282,464 units issued and outstanding, respectively)Common equity (2,282,464 and 2,282,464 units issued and outstanding, respectively)54,112 56,502 
Accumulated other comprehensive loss Accumulated other comprehensive loss(6,167)(11,303) Accumulated other comprehensive loss18,677 (1,804)
Total partners' capitalTotal partners' capital6,014,006 6,062,020 Total partners' capital6,015,535 6,053,853 
Noncontrolling interest Noncontrolling interest122,697 121,172  Noncontrolling interest122,672 122,655 
Total capitalTotal capital6,136,703 6,183,192 Total capital6,138,207 6,176,508 
Total liabilities and capitalTotal liabilities and capital$12,747,199 $12,936,177 Total liabilities and capital$12,770,301 $12,997,873 

See accompanying notes to the unaudited condensed consolidated financial statements.
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Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
(In thousands, except unit and per unit amounts)
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
2021202020212020 20222021
Revenues:Revenues:Revenues:
Rental and other propertyRental and other property$348,757 $368,149 $701,633 $757,899 Rental and other property$379,216 $352,876 
Management and other fees from affiliatesManagement and other fees from affiliates2,221 2,348 4,470 4,965 Management and other fees from affiliates2,689 2,249 
350,978 370,497 706,103 762,864  381,905 355,125 
Expenses:Expenses:  Expenses:  
Property operating, excluding real estate taxesProperty operating, excluding real estate taxes63,215 65,142 128,366 129,273 Property operating, excluding real estate taxes68,858 65,085 
Real estate taxesReal estate taxes44,278 44,994 89,606 88,006 Real estate taxes47,242 45,328 
Corporate-level property management expensesCorporate-level property management expenses9,105 8,646 18,052 17,405 Corporate-level property management expenses10,172 9,013 
Depreciation and amortizationDepreciation and amortization128,736 133,609 257,323 265,168 Depreciation and amortization133,533 128,587 
General and administrativeGeneral and administrative12,222 14,952 22,034 28,934 General and administrative12,242 9,812 
Expensed acquisition and investment related costsExpensed acquisition and investment related costs41 15 56 102 Expensed acquisition and investment related costs15 
257,597 267,358 515,437 528,888  272,055 257,840 
Gain on sale of real estate and landGain on sale of real estate and land16,597 100,096 16,597 Gain on sale of real estate and land— 100,096 
Earnings from operationsEarnings from operations93,381 119,736 290,762 250,573 Earnings from operations109,850 197,381 
Interest expenseInterest expense(50,971)(54,447)(102,620)(109,594)Interest expense(50,377)(51,649)
Total return swap incomeTotal return swap income2,633 2,788 5,477 4,772 Total return swap income2,544 2,844 
Interest and other income22,371 11,405 36,758 6,184 
Interest and other (loss) incomeInterest and other (loss) income(7,567)14,387 
Equity income from co-investmentsEquity income from co-investments18,248 17,257 35,259 38,554 Equity income from co-investments21,171 17,011 
Deferred tax expense on unrealized gain on unconsolidated co-investment(1,842)(1,636)(2,350)(1,636)
Deferred tax (benefit) expense on unconsolidated co-investmentsDeferred tax (benefit) expense on unconsolidated co-investments2,754 (508)
Loss on early retirement of debt, netLoss on early retirement of debt, net(16,465)(5,027)(18,982)(4,706)Loss on early retirement of debt, net— (2,517)
Gain on remeasurement of co-investment2,260 2,260 234,694 
Net incomeNet income69,615 90,076 246,564 418,841 Net income78,375 176,949 
Net income attributable to noncontrolling interestNet income attributable to noncontrolling interest(2,481)(2,654)(5,039)(5,427)Net income attributable to noncontrolling interest(2,558)(2,558)
Net income available to common unitholdersNet income available to common unitholders$67,134 $87,422 $241,525 $413,414 Net income available to common unitholders$75,817 $174,391 
Comprehensive incomeComprehensive income$70,259 $94,172 $251,700 $413,850 Comprehensive income$98,856 $181,441 
Comprehensive income attributable to noncontrolling interestComprehensive income attributable to noncontrolling interest(2,481)(2,654)(5,039)(5,427)Comprehensive income attributable to noncontrolling interest(2,558)(2,558)
Comprehensive income attributable to controlling interestComprehensive income attributable to controlling interest$67,778 $91,518 $246,661 $408,423 Comprehensive income attributable to controlling interest$96,298 $178,883 
Per unit data:Per unit data:  Per unit data:  
Basic:Basic:  Basic:  
Net income available to common unitholdersNet income available to common unitholders$1.00 $1.29 $3.59 $6.08 Net income available to common unitholders$1.12 $2.59 
Weighted average number of common units outstanding during the periodWeighted average number of common units outstanding during the period67,295,437 67,708,157 67,289,464 68,026,084 Weighted average number of common units outstanding during the period67,558,239 67,283,424 
Diluted:Diluted:Diluted:
Net income available to common unitholdersNet income available to common unitholders$1.00 $1.29 $3.59 $6.07 Net income available to common unitholders$1.12 $2.59 
Weighted average number of common units outstanding during the periodWeighted average number of common units outstanding during the period67,374,506 67,723,685 67,341,798 68,153,312 Weighted average number of common units outstanding during the period67,621,842 67,408,737 

See accompanying notes to the unaudited condensed consolidated financial statements.
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Condensed Consolidated Statements of Capital for the three and sixthree months ended June 30,March 31, 2022 and 2021 and 2020
(Unaudited)
(In thousands)
General PartnerLimited PartnersAccumulated other
comprehensive loss, net
Noncontrolling interestTotal General PartnerLimited PartnersAccumulated other
comprehensive income (loss), net
Noncontrolling interestTotal
Common EquityCommon Equity Common EquityCommon Equity
Three months ended June 30, 2021UnitsAmountUnitsAmountTotal
Balances at March 31, 202164,999 $6,035,566 2,294 $59,328 $(6,811)$122,848 $6,210,931 
Three months ended March 31, 2022Three months ended March 31, 2022UnitsAmountUnitsAmountAccumulated other
comprehensive income (loss), net
Noncontrolling interestTotal
Balances at December 31, 2021Balances at December 31, 202165,248 $5,999,155 2,282 $56,502 $6,176,508 
Net incomeNet income— 64,846 — 2,288 — 2,481 69,615 Net income— 73,254 — 2,563 78,375 
Change in fair value of derivatives and amortization of swap settlementsChange in fair value of derivatives and amortization of swap settlements— — — — 472 — 472 Change in fair value of derivatives and amortization of swap settlements— — — — 20,083 — 20,083 
Change in fair value of marketable debt securities, netChange in fair value of marketable debt securities, net— — — — 172 — 172 Change in fair value of marketable debt securities, net— — — — 398 — 398 
Issuance of common units under:Issuance of common units under:       Issuance of common units under:      
General partner's stock based compensation, netGeneral partner's stock based compensation, net574 — — — — 574 General partner's stock based compensation, net84 16,867 — — — — 16,867 
Sale of common stock by general partner, netSale of common stock by general partner, net— (84)— — — — (84)Sale of common stock by general partner, net— (141)— — — — (141)
Equity based compensation costsEquity based compensation costs— 2,571 — 214 — — 2,785 Equity based compensation costs— 2,380 — 83 — — 2,463 
Changes in the redemption value of redeemable noncontrolling interestChanges in the redemption value of redeemable noncontrolling interest— (2,574)— (85)— 147 (2,512)Changes in the redemption value of redeemable noncontrolling interest— (5,014)— (14)— (44)(5,072)
Contributions from noncontrolling interestContributions from noncontrolling interest— — — — — Contributions from noncontrolling interest— — — — — 125 125 
Distributions to noncontrolling interestDistributions to noncontrolling interest— — — — — (2,508)(2,508)Distributions to noncontrolling interest— — — — — (2,597)(2,597)
RedemptionsRedemptions(1,792)— (271)(2,063)Redemptions— (1)— — — (25)(26)
Distributions declared ($2.09 per unit)— (135,884)— (4,795)— — (140,679)
Balances at June 30, 202165,004 $5,963,223 2,294 $56,950 $(6,167)$122,697 $6,136,703 
Distributions declared ($2.20 per unit)Distributions declared ($2.20 per unit)— (143,754)— (5,022)— — (148,776)
Balances at March 31, 2022Balances at March 31, 202265,332 $5,942,746 2,282 $54,112 $18,677 $122,672 $6,138,207 

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 General PartnerLimited PartnersAccumulated other
comprehensive loss, net
Noncontrolling interestTotal
 Common EquityCommon Equity
Six months ended June 30, 2021UnitsAmountUnitsAmount
Balances at December 31, 202064,999 $6,015,139 2,295 $58,184 $(11,303)$121,172 $6,183,192 
Net income— 233,290 — 8,235 — 5,039 246,564 
Change in fair value of derivatives and amortization of swap settlements— — — — 4,879 — 4,879 
Change in fair value of marketable debt securities, net— — — — 257 — 257 
Issuance of common units under:      
General partner's stock based compensation, net44 (3,170)— — — — (3,170)
Sale of common stock by general partner, net— (84)— — — — (84)
Equity based compensation costs— 7,599 — 268 — — 7,867 
Retirement of common units, net(40)(9,172)— — — — (9,172)
Changes in the redemption value of redeemable noncontrolling interest— (6,752)— (12)— 169 (6,595)
Contributions from noncontrolling interest— — — — — 1,900 1,900 
Distributions to noncontrolling interest— — — — — (5,268)(5,268)
Redemptions(1,867)(1)(136)— (315)(2,318)
Distributions declared ($4.18 per unit)— (271,760)— (9,589)— — (281,349)
Balances at June 30, 202165,004 $5,963,223 2,294 $56,950 $(6,167)$122,697 $6,136,703 
13

Table of Contents
 General PartnerLimited PartnersAccumulated other
comprehensive income (loss), net
Noncontrolling interestTotal
 Common EquityCommon Equity
Three months ended March 31, 2021UnitsAmountUnitsAmount
Balances at December 31, 202064,999 $6,015,139 2,295 $58,184 $(11,303)$121,172 $6,183,192 
Net income— 168,444 — 5,947 — 2,558 176,949 
Change in fair value of derivatives and amortization of swap settlements— — — — 4,407 — 4,407 
Change in fair value of marketable debt securities, net— — — — 85 — 85 
Issuance of common units under:      
General partner's stock based compensation, net39 (3,744)— — — — (3,744)
Equity based compensation costs— 5,028 — 54 — — 5,082 
Retirement of common units, net(40)(9,172)— — — — (9,172)
Changes in redemption value of redeemable noncontrolling interest— (4,178)— 73 — 22 (4,083)
Contributions from noncontrolling interest— — — — — 1,900 1,900 
Distributions to noncontrolling interest— — — — — (2,760)(2,760)
Redemptions(75)(1)(136)— (44)(255)
Distributions declared ($2.09 per unit)— (135,876)— (4,794)— — (140,670)
Balances at March 31, 202164,999 $6,035,566 2,294 $59,328 $(6,811)$122,848 $6,210,931 


 General PartnerLimited PartnersAccumulated other
comprehensive loss, net
Noncontrolling interestTotal
 Common EquityCommon Equity
Three months ended June 30, 2020UnitsAmountUnitsAmount
Balances at March 31, 202065,412 $6,250,833 2,296 $63,550 $(19,519)$123,085 $6,417,949 
Net income— 84,458 — 2,964 — 2,654 90,076 
Cash flow hedge losses reclassified to earnings— — — — 3,282 — 3,282 
Change in fair value of derivatives and amortization of swap settlements— — — — 779 — 779 
Change in fair value of marketable debt securities, net— — — — 35 — 35 
Issuance of common units under:      
General partner's stock based compensation, net536 — — — — 536 
Sale of common stock by general partner, net— (63)— — — — (63)
Equity based compensation costs— 5,058 177 — — 5,235 
Retirement of common units, net(88)(20,093)— — — — (20,093)
Changes in redemption value of redeemable noncontrolling interest— (199)— (398)— (1)(598)
Distributions to noncontrolling interest— — — — — (3,366)(3,366)
Redemptions43 — (89)— (289)(335)
Distributions declared ($2.0775 per unit)— (135,789)— (4,767)— — (140,556)
Balances at June 30, 202065,331 $6,184,784 2,296 $61,437 $(15,423)$122,083 $6,352,881 

14

Table of Contents


 General PartnerLimited PartnersAccumulated other
comprehensive loss, net
Noncontrolling interestTotal
 Common EquityCommon Equity
Six months ended June 30, 2020UnitsAmountUnitsAmount
Balances at December 31, 201966,092 $6,234,315 2,302 $57,359 $(10,432)$122,262 $6,403,504 
Net income— 399,464 — 13,950 — 5,427 418,841 
Cash flow hedge losses reclassified to earnings— — — — 3,282 — 3,282 
Change in fair value of derivatives and amortization of swap settlements— — — — (8,003)— (8,003)
Change in fair value of marketable debt securities, net— — — — (270)— (270)
Issuance of common units under:      
General partner's stock based compensation, net95 9,201 — — — — 9,201 
Sale of common stock by general partner, net— (133)— — — — (133)
Equity based compensation costs— 6,677 256 — — 6,933 
Retirement of common units, net(864)(196,404)— — — — (196,404)
Cumulative effect upon adoption of ASU No. 2016-13
— (190)— — — — (190)
Changes in redemption value of redeemable noncontrolling interest— 4,542 — (416)— 43 4,169 
Changes in noncontrolling interest from acquisition— — — — — 1,349 1,349 
Distributions to noncontrolling interest— — — — — (6,473)(6,473)
Redemptions(1,005)(8)(173)— (525)(1,703)
Distributions declared ($4.155 per unit)— (271,683)— (9,539)— — (281,222)
Balances at June 30, 202065,331 $6,184,784 2,296 $61,437 $(15,423)$122,083 $6,352,881 

See accompanying notes to the unaudited condensed consolidated financial statements.
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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands, except parenthetical amounts)
Six Months Ended June 30, Three Months Ended March 31,
20212020 20222021
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net incomeNet income$246,564 $418,841 Net income$78,375 $176,949 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:  Adjustments to reconcile net income to net cash provided by operating activities:  
Straight-lined rentsStraight-lined rents5,825 (2,803)Straight-lined rents2,074 3,087 
Depreciation and amortizationDepreciation and amortization257,323 265,168 Depreciation and amortization133,533 128,587 
Amortization of discount on marketable securities(4,862)
Amortization of discount and debt financing costs, netAmortization of discount and debt financing costs, net6,311 3,973 Amortization of discount and debt financing costs, net1,665 2,132 
Loss on sale of marketable securities(2,499)(33)
Income from early redemption of notes receivable(4,747)
Gain on sale of marketable securitiesGain on sale of marketable securities(12,171)(2,611)
Provision for credit lossesProvision for credit losses(107)97 Provision for credit losses62 38 
Unrealized (gains) losses on equity securities recognized through income(16,681)1,073 
Unrealized losses (gains) on equity securities recognized through incomeUnrealized losses (gains) on equity securities recognized through income24,585 (6,276)
Earnings from co-investmentsEarnings from co-investments(35,259)(38,554)Earnings from co-investments(21,171)(17,011)
Operating distributions from co-investmentsOperating distributions from co-investments57,364 29,613 Operating distributions from co-investments52,281 46,355 
Accrued interest from notes and other receivablesAccrued interest from notes and other receivables(8,530)(835)Accrued interest from notes and other receivables(3,447)(4,201)
Gain on the sale of real estate and landGain on the sale of real estate and land(100,096)(16,597)Gain on the sale of real estate and land— (100,096)
Equity-based compensationEquity-based compensation3,776 4,043 Equity-based compensation2,296 1,386 
Loss on early retirement of debt, netLoss on early retirement of debt, net18,982 4,706 Loss on early retirement of debt, net— 2,517 
Gain on remeasurement of co-investment(2,260)(234,694)
Changes in operating assets and liabilities:Changes in operating assets and liabilities:  Changes in operating assets and liabilities:  
Prepaid expenses, receivables, operating lease right-of-use assets, and other assetsPrepaid expenses, receivables, operating lease right-of-use assets, and other assets(5,348)(6,421)Prepaid expenses, receivables, operating lease right-of-use assets, and other assets16,026 (41,060)
Accounts payable, accrued liabilities, and operating lease liabilitiesAccounts payable, accrued liabilities, and operating lease liabilities3,209 2,565 Accounts payable, accrued liabilities, and operating lease liabilities40,300 4,976 
Other liabilitiesOther liabilities4,244 830 Other liabilities735 494 
Net cash provided by operating activitiesNet cash provided by operating activities428,071 426,110 Net cash provided by operating activities315,143 195,266 
Cash flows from investing activities:Cash flows from investing activities:  Cash flows from investing activities:  
Additions to real estate:Additions to real estate:  Additions to real estate:  
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquiredAcquisitions of real estate and acquisition related capital expenditures, net of cash acquired(18,418)(458,857)Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired(61)(1,203)
RedevelopmentRedevelopment(19,981)(32,211)Redevelopment(18,004)(9,274)
Development acquisitions of and additions to real estate under developmentDevelopment acquisitions of and additions to real estate under development(34,640)(54,994)Development acquisitions of and additions to real estate under development(6,882)(19,629)
Capital expenditures on rental propertiesCapital expenditures on rental properties(49,044)(40,013)Capital expenditures on rental properties(24,917)(16,720)
Investments in notes receivableInvestments in notes receivable(71,613)(6,669)Investments in notes receivable(134,697)(69,885)
Collections of notes and other receivablesCollections of notes and other receivables36,244 98,711 Collections of notes and other receivables270,338 — 
Proceeds from insurance for property lossesProceeds from insurance for property losses117 568 Proceeds from insurance for property losses88 102 
Proceeds from dispositions of real estateProceeds from dispositions of real estate243,365 230,935 Proceeds from dispositions of real estate— 243,365 
Contributions to co-investmentsContributions to co-investments(160,719)(43,817)Contributions to co-investments(79,284)(49,974)
Changes in refundable depositsChanges in refundable deposits(968)96 Changes in refundable deposits(6,318)11 
Purchases of marketable securitiesPurchases of marketable securities(23,509)(10,989)Purchases of marketable securities(10,826)(23,296)
Sales and maturities of marketable securitiesSales and maturities of marketable securities14,931 4,301 Sales and maturities of marketable securities27,911 14,772 
Non-operating distributions from co-investmentsNon-operating distributions from co-investments78,600 25,136 Non-operating distributions from co-investments88,370 78,600 
Net cash used in investing activities(5,635)(287,803)
Net cash provided by investing activitiesNet cash provided by investing activities105,718 146,869 
Cash flows from financing activities:Cash flows from financing activities:  Cash flows from financing activities:  
Proceeds from unsecured debt and mortgage notesProceeds from unsecured debt and mortgage notes745,505 856,630 Proceeds from unsecured debt and mortgage notes— 447,404 
Payments on unsecured debt and mortgage notesPayments on unsecured debt and mortgage notes(951,727)(286,074)Payments on unsecured debt and mortgage notes(904)(600,858)
Proceeds from lines of creditProceeds from lines of credit453,359 1,038,426 Proceeds from lines of credit391,472 204,794 
Repayments of lines of creditRepayments of lines of credit(368,359)(1,093,426)Repayments of lines of credit(634,729)(204,794)
Retirement of common unitsRetirement of common units(9,172)(196,404)Retirement of common units— (9,172)
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Six Months Ended June 30, Three Months Ended March 31,
20212020 20222021
Additions to deferred chargesAdditions to deferred charges(6,361)(7,297)Additions to deferred charges— (3,434)
Payments related to debt prepayment penaltiesPayments related to debt prepayment penalties(18,342)(1,696)Payments related to debt prepayment penalties— (2,132)
Net proceeds from issuance of common unitsNet proceeds from issuance of common units(84)(133)Net proceeds from issuance of common units(141)— 
Net proceeds from stock options exercisedNet proceeds from stock options exercised2,275 14,865 Net proceeds from stock options exercised19,083 1,701 
Payments related to tax withholding for share-based compensationPayments related to tax withholding for share-based compensation(5,445)(5,664)Payments related to tax withholding for share-based compensation(2,216)(5,445)
Contributions from noncontrolling interestContributions from noncontrolling interest1,900 Contributions from noncontrolling interest125 1,900 
Distributions to noncontrolling interestDistributions to noncontrolling interest(4,238)(4,152)Distributions to noncontrolling interest(2,046)(2,114)
Redemption of noncontrolling interestsRedemption of noncontrolling interests(2,318)(1,703)Redemption of noncontrolling interests(26)(255)
Common units distributions paidCommon units distributions paid(281,486)(276,298)Common units distributions paid(141,564)(140,411)
Net cash (used in) provided by financing activities(448,301)37,074 
Net cash used in financing activitiesNet cash used in financing activities(370,946)(312,816)
Net (decrease) increase in unrestricted and restricted cash and cash equivalents(25,865)175,381 
Net increase in unrestricted and restricted cash and cash equivalentsNet increase in unrestricted and restricted cash and cash equivalents49,915 29,319 
Unrestricted and restricted cash and cash equivalents at beginning of periodUnrestricted and restricted cash and cash equivalents at beginning of period84,041 81,094 Unrestricted and restricted cash and cash equivalents at beginning of period58,638 84,041 
Unrestricted and restricted cash and cash equivalents at end of periodUnrestricted and restricted cash and cash equivalents at end of period$58,176 $256,475 Unrestricted and restricted cash and cash equivalents at end of period$108,553 $113,360 
Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:Supplemental disclosure of cash flow information:
Cash paid for interest (net of $3.8 million and $9.0 million capitalized in 2021 and 2020, respectively)$96,541 $98,358 
Cash paid for interest (net of $0.9 million and $2.1 million capitalized in 2022 and 2021, respectively)Cash paid for interest (net of $0.9 million and $2.1 million capitalized in 2022 and 2021, respectively)$51,168 $55,213 
Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leasesOperating cash flows from operating leases$5,316 $3,430 Operating cash flows from operating leases$1,738 $1,738 
Supplemental disclosure of noncash investing and financing activities:Supplemental disclosure of noncash investing and financing activities:  Supplemental disclosure of noncash investing and financing activities:  
Transfers between real estate under development and rental properties, netTransfers between real estate under development and rental properties, net$218,835 $131,960 Transfers between real estate under development and rental properties, net$4,346 $267 
Transfer from real estate under development to co-investmentsTransfer from real estate under development to co-investments$1,337 $1,473 Transfer from real estate under development to co-investments$858 $747 
Reclassifications to (from) redeemable noncontrolling interest to/from general and limited partner capital and noncontrolling interest$6,593 $(4,169)
Reclassifications to redeemable noncontrolling interest from general and limited partner capital and noncontrolling interestReclassifications to redeemable noncontrolling interest from general and limited partner capital and noncontrolling interest$5,073 $4,083 

See accompanying notes to the unaudited condensed consolidated financial statements.
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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)

(1) Organization and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements present the accounts of Essex Property Trust, Inc. ("Essex" or the "Company"), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the "Operating Partnership," which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles ("U.S. 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, 2020.2021.

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

The unaudited condensed consolidated financial statements for the three and six months ended June 30,March 31, 2022 and 2021 and 2020 include the accounts of the Company and the Operating Partnership. Essex is the sole general partner of the Operating Partnership, with a 96.6% general partnership interest as of both June 30, 2021March 31, 2022 and December 31, 2020.2021. Total Operating Partnership limited partnership units ("OP Units," and the holders of such OP Units, "Unitholders") outstanding were 2,293,760 and 2,294,7602,282,464 as of June 30, 2021both March 31, 2022 and December 31, 2020, respectively,2021, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $688.2$788.5 million and $544.8$804.0 million as of June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively.

As of June 30, 2021,March 31, 2022, the Company owned or had ownership interests in 246253 operating apartment communities, aggregating 60,920comprising 62,290 apartment homes, excluding the Company’s ownership interest in preferred interestequity co-investments, loan investments, 13 operating commercial building,buildings, and a development pipeline comprised of 21 consolidated projectsproject and 1 unconsolidated joint venture project. The operating apartment communities are located in Southern California (primarily Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas.

Accounting Pronouncements Adopted in the Current Year

In January 2021, the Financial Accounting Standards Board (the "FASB") issued ASUAccounting Standards Update ("ASU") No. 2021-01 "Reference Rate Reform (Topic 848)2020-06 "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Scope.Accounting for Convertible Instruments and Contracts in an Entity's Own Equity." The amendments in ASU No. 2021-01 provide optional expedients2020-06 modifies the if-converted method of calculating diluted earnings per share ("EPS"). For instruments that may be settled in cash or shares, and are not classified as a liability, the guidance requires entities to include the current guidance on contract modifications and hedge accounting fromeffect of potential share settlement in the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance generally can be applied to applicable contract modifications through December 31, 2022.diluted EPS calculation, if the effect is more dilutive. The Company adopted this new guidance inon January 20211, 2022 on a prospective basis. This adoption did not have a material impact on the Company's consolidated results of operations or financial position.

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 life of the respective lease. See Note 3, Revenues, for additional information regarding such revenues.

The Company also generates other property-related revenue associated with the leasing of apartment homes, including storage income, pet rent, and other miscellaneous revenue. Similar to rental income, such revenues are recorded when due from tenants and recognized monthly as they are earned.
18


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2021 and 2020
(Unaudited)

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
14


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Unaudited)
includes asset management and property management), the transaction price and amount of revenue to be recognized is determined each quarter based on the management fee calculated and earned for that month or quarter. The contract will contain a description of the service and the fee percentage for management services. Payments from such services are one month or one quarter in arrears of the service performed.

The Company recognizes any gains on sales of real estate when it transfers control of a property and when it is probable that the Company will collect substantially all of the related consideration.

Marketable Securities

The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds and Level 2 for the unsecured debt, as defined by the FASB standard for fair value measurements). As of both June 30, 2021March 31, 2022 and December 31, 2020, $2.52021, $0.8 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. 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 (loss) on the condensed consolidated statements of income and comprehensive income.

As of June 30, 2021March 31, 2022 and December 31, 2020,2021, equity securities and available for sale debt securities consisted primarily of investment-grade unsecured debt, andinvestment funds-debt securities, common stock and stock funds.funds, and investment-grade unsecured debt. 

As of June 30, 2021March 31, 2022 and December 31, 2020,2021, marketable securities consisted of the following ($ in thousands):
June 30, 2021 March 31, 2022
CostGross
Unrealized
Gain (Loss)
Carrying Value CostGross
Unrealized
Gain (Loss)
Carrying Value
Equity securities:Equity securities:Equity securities:
Investment funds - debt securitiesInvestment funds - debt securities$61,673 $259 $61,932 Investment funds - debt securities$62,382 $(4,638)$57,744 
Common stock and stock fundsCommon stock and stock funds80,123 32,408 112,531 Common stock and stock funds81,026 29,143 110,169 
Debt securities:Debt securities:Debt securities:
Available for saleAvailable for saleAvailable for sale
Investment-grade unsecured debtInvestment-grade unsecured debt1,050 269 1,319 Investment-grade unsecured debt1,050 739 1,789 
Total - Marketable securitiesTotal - Marketable securities$142,846 $32,936 $175,782 Total - Marketable securities$144,458 $25,244 $169,702 

1915


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)
December 31, 2020 December 31, 2021
CostGross
Unrealized
Gain (Loss)
Carrying Value CostGross
Unrealized
(Loss) Gain
Carrying Value
Equity securities:Equity securities:Equity securities:
Investment funds - debt securitiesInvestment funds - debt securities$49,646 $985 $50,631 Investment funds - debt securities$62,192 $(502)$61,690 
Common stock and stock fundsCommon stock and stock funds81,074 15,001 96,075 Common stock and stock funds79,155 49,592 128,747 
Debt securities:Debt securities:Debt securities:
Available for saleAvailable for saleAvailable for sale
Investment-grade unsecured debtInvestment-grade unsecured debt1,050 12 1,062 Investment-grade unsecured debt1,051 341 1,392 
Total - Marketable securitiesTotal - Marketable securities$131,770 $15,998 $147,768 Total - Marketable securities$142,398 $49,431 $191,829 

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 June 30,March 31, 2022 and 2021, and 2020, the proceeds from sales and maturities of marketable securities totaled $0.1$27.9 million and $4.1$14.8 million, respectively, which resulted in $0.1 million in realized losses and $46 thousand in realized gains, respectively, for such periods. For the six months ended June 30, 2021 and 2020, the proceeds from sales and maturities of marketable securities totaled $14.9$12.2 million and $4.3$2.6 million respectively, which resulted in $2.5 million and $33 thousand in realized gains, respectively, for such periods.

For the three and six months ended June 30,March 31, 2022, and 2021 the portion of equity security unrealized gains and losses that were recognized in income totaled $10.4$24.6 million in losses and $16.7$6.3 million in gains, respectively, and were included in interest and other income (loss) on the Company's condensed consolidated statements of income and comprehensive income. For the three and six months ended June 30, 2020, the portion of equity security unrealized gains or losses that were recognized in income totaled $7.6 million in gains and $1.1 million in losses, respectively, and were included in interest and other income (loss) 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 consolidated the Operating Partnership, 18 DownREIT entities (comprising 9 communities), and 6 co-investments as of June 30, 2021. As ofMarch 31, 2022 and December 31, 2020, the Company consolidated the Operating Partnership, 17 DownREIT entities (comprising 9 communities) and 5 co-investments.2021. The Company consolidates these entities because it is deemed the primary beneficiary. The Company has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the above consolidated co-investments and DownREIT entities, net of intercompany eliminations, were approximately $904.6$900.6 million and $320.8$323.7 million, respectively, as of June 30, 2021March 31, 2022 and $898.5$909.3 million and $326.8$320.1 million, respectively, as of December 31, 2020.2021. Noncontrolling interests in these entities were $122.5 million and $120.8$122.4 million as of June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the Company did not have any VIEs of which it was not deemed to be the primary beneficiary.

Equity-based Compensation

The cost of share- and unit-based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long term incentive plan units (discussed in Note 14, "Equity Based Compensation Plans," in the Company’s annual report on Form 10-K for the year ended December 31, 2020)2021) are being amortized over the expected service periods.

2016


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 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 June 30, 2021March 31, 2022 and December 31, 2020,2021, because interest rates, yields, and other terms for these instruments are consistent with interest rates, yields, and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s fixed rate debt with a carrying value of $5.7 billion and $5.5 billion at June 30, 2021as of both March 31, 2022 and December 31, 2020, respectively,2021, was approximately $6.1$5.6 billion and $6.0 billion, respectively. Management has estimated that the fair value of the Company’s $408.9$321.4 million and $775.1$564.9 million of variable rate debt at June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively, was approximately $406.6$319.4 million and $770.1$561.7 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 June 30, 2021March 31, 2022 and December 31, 20202021 due to the short-term maturity of these instruments. Marketable securities are carried at fair value as of June 30, 2021March 31, 2022 and December 31, 2020.2021.

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 $5.5$5.4 million and $8.9$6.4 million during the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively, and $11.9 million and $18.8 million for the six months ended June 30, 2021 and 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.

Co-investments

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

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

Changes in Accumulated Other Comprehensive Loss,Income (Loss), Net by Component

Essex Property Trust, Inc.
($ in thousands):
Change in fair
value and amortization
of swap settlements
Unrealized
gain on
available for sale securities
Total Change in fair
value and amortization
of swap settlements
Unrealized
gain on
available for sale securities
Total
Balance at December 31, 2020$(14,771)$42 $(14,729)
Balance at December 31, 2021Balance at December 31, 2021$(5,912)$360 $(5,552)
Other comprehensive income before reclassificationOther comprehensive income before reclassification4,706 248 4,954 Other comprehensive income before reclassification19,399 385 19,784 
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss— 
Other comprehensive incomeOther comprehensive income4,713 248 4,961 Other comprehensive income19,404 385 19,789 
Balance at June 30, 2021$(10,058)$290 $(9,768)
Balance at March 31, 2022Balance at March 31, 2022$13,492 $745 $14,237 

2117


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 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 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 $(11,303)
Balance at December 31, 2021Balance at December 31, 2021$(2,176)$372 $(1,804)
Other comprehensive income before reclassificationOther comprehensive income before reclassification4,872 257 5,129 Other comprehensive income before reclassification20,078 398 20,476 
Amounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive lossAmounts reclassified from accumulated other comprehensive loss— 
Other comprehensive incomeOther comprehensive income4,879 257 5,136 Other comprehensive income20,083 398 20,481 
Balance at June 30, 2021$(6,467)$300 $(6,167)
Balance at March 31, 2022Balance at March 31, 2022$17,907 $770 $18,677 

Amounts reclassified from accumulated other comprehensive lossincome in connection with derivatives are recorded in interest expense on the condensed consolidated 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 statements of income and comprehensive income.

Redeemable Noncontrolling Interest

The carrying value of redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets was $35.0$39.7 million and $32.2$34.7 million as of June 30, 2021March 31, 2022 and December 31, 2020,2021, 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 sixthree months ended June 30, 2021March 31, 2022 is as follows ($ in thousands):
Balance at December 31, 20202021$32,23934,666 
Reclassification due to change in redemption value and other6,5955,072 
Redemptions(3,808)
Balance at June 30, 2021March 31, 2022$35,02639,738 

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):
June 30, 2021December 31, 2020June 30, 2020December 31, 2019 March 31, 2022December 31, 2021March 31, 2021December 31, 2020
Cash and cash equivalents - unrestrictedCash and cash equivalents - unrestricted$48,155 $73,629 $246,204 $70,087 Cash and cash equivalents - unrestricted$98,107 $48,420 $103,442 $73,629 
Cash and cash equivalents - restrictedCash and cash equivalents - restricted10,021 10,412 10,271 11,007 Cash and cash equivalents - restricted10,446 10,218 9,918 10,412 
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flowsTotal unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows$58,176 $84,041 $256,475 $81,094 Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows$108,553 $58,638 $113,360 $84,041 
2218


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)

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"). 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 SixThree Months Ended June 30, 2021March 31, 2022 and Subsequent Events

Significant Transactions

Acquisitions

In June 2021, the Company acquired its joint venture partner, BEX III, LLC'sJanuary 2022, Wesco VI, LLC ("BEX III"Wesco VI") 50.0% interest in The Village at Toluca Lake, a community totaling 145 homes located in Burbank, CA, for a total consideration of $31.8 million. Concurrent with the closing, one of the acquisition, $29.5 million in mortgage debt that encumbered the property was paid off. AsCompany's joint ventures with an institutional partner, acquired Vela, a result of this acquisition, the Company realized a gain on remeasurement of co-investment of $2.3 million upon consolidation.

Dispositions

In February 2021, the Company sold Hidden Valley, a 324379-unit apartment home community located in Simi Valley,Woodland Hills, CA, for a total contract price of $105.0$183.0 million. The Company recognized a $69.2 million gain on sale. In conjunction with the sale, $29.7 million of mortgage debt that encumbered the property was repaid.

In February 2021,encumbered by a $100.7 million bridge loan from the Company, sold Park 20, a 197 apartment home community locatedwith an interest rate of 2.64% that was paid off in San Mateo, CA, for a total contract price of $113.0 million. The Company recognizedJanuary 2022 and replaced by permanent secured debt with an immaterial gain on sale.

In February 2021, the Company sold Axis 2300, a 115 apartment home community located in Irvine, CA, for a total contract price of $57.5 million. The Company recognized a $30.8 million gain on sale.institutional lender.

Co-Investments

Preferred Equity Investments

In January 2021,the first quarter of 2022, the Company originated a3 preferred equity investmentinvestments totaling $20.0$29.5 million in one multifamily communitycommunities located in Southern California and Washington. The investment has an initial preferred equity investments have a weighted average return of 10.0% and isare scheduled to mature in January 2026.March 2027.

In March 2021,the first quarter of 2022, the Company received cash proceeds 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$106.9 million, including an early redemption fee of $3.5$0.9 million, for the full redemption of a2 preferred equity investmentinvestments and partial redemption of 2 preferred equity investments in joint ventures that held properties in California.

Notes Receivable

In January 2022, the Company provided a joint venture that holds property$100.7 million related party bridge loan to Wesco VI in connection with the acquisition of Vela. The note receivable accrued interest at 2.64% and was paid off in January 2022. Additionally, the Company received cash of $121.3 million in January 2022, for the payoff of the remaining related party bridge loans to Wesco VI. See Note 6, Related Party Transactions, for additional details.

In January 2022, the Company received cash of $48.5 million, for the payoff of the related party bridge loan to a single asset entity owning apartment home community in Vista, CA. See Note 6, Related Party Transactions, for additional details.

In February 2022, the Company provided a $32.8 million related party bridge loan to BEX II in connection with the payoff of a debt related to one of its properties located in Southern California. The note receivable accrues interest at 1.35% and was scheduled to mature in March 2022, but was subsequently paid off in April 2022. 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.


2319


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)
Notes Receivable

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 is scheduled to mature in July 2021. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets.

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 0t repurchase any shares during the three months ended June 30, 2021. As a result, as of June 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 2021, the Operating Partnership issued $450.0 million of senior unsecured notes due on March 1, 2028 with a coupon rate of 1.700% per annum (the "2028 Notes"), which are payable on March 1 and September 1 of each year, beginning on September 1, 2021. The 2028 Notes were offered to investors at a price of 99.423% of par value. The 2028 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. The Company 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.

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

Subsequent Events

None.

(3) Revenues

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Rental income$343,322 $363,087 $690,627 $746,585 
Other property5,435 5,062 11,006 11,314 
Management and other fees from affiliates2,221 2,348 4,470 4,965 
Total revenues$350,978 $370,497 $706,103 $762,864 
24


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2021 and 2020
(Unaudited)
 Three Months Ended March 31,
 20222021
Rental income$373,425 $347,305 
Other property5,791 5,571 
Management and other fees from affiliates2,689 2,249 
Total revenues$381,905 $355,125 

The following table presents the Company’s rental and other property revenues disaggregated by geographic operating segment ($ in thousands):
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
2021202020212020 20222021
Southern CaliforniaSouthern California$143,230 $140,510 $286,242 $292,405 Southern California$156,969 $141,969 
Northern CaliforniaNorthern California143,386 152,118 290,076 310,574 Northern California152,590 146,690 
Seattle MetroSeattle Metro59,267 60,649 117,900 123,693 Seattle Metro64,203 58,633 
Other real estate assets (1)
Other real estate assets (1)
2,874 14,872 7,415 31,227 
Other real estate assets (1)
5,454 5,584 
Total rental and other property revenuesTotal rental and other property revenues$348,757 $368,149 $701,633 $757,899 Total rental and other property revenues$379,216 $352,876 

(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.

The following table presents the Company’s rental and other property revenues disaggregated by current property category status ($ in thousands):
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
2021202020212020 20222021
Same-property (1)
Same-property (1)
$314,949 $324,654 $632,755 $670,306 
Same-property (1)
$356,273 $334,437 
Acquisitions (2)
Acquisitions (2)
13,948 13,696 27,621 26,254 
Acquisitions (2)
1,747 — 
Development (3)
Development (3)
7,500 4,420 14,430 8,495 
Development (3)
9,427 6,930 
RedevelopmentRedevelopment4,149 5,096 8,739 10,497 Redevelopment1,435 1,632 
Non-residential/other, net (4)
Non-residential/other, net (4)
11,156 17,308 24,402 39,372 
Non-residential/other, net (4)
12,918 13,246 
Straight line rent concession (5)
Straight line rent concession (5)
(2,945)2,975 (6,314)2,975 
Straight line rent concession (5)
(2,584)(3,369)
Total rental and other property revenuesTotal rental and other property revenues$348,757 $368,149 $701,633 $757,899 Total rental and other property revenues$379,216 $352,876 

(1) Properties that have comparable stabilized results as of January 1, 20202021 and are consolidated by the Company for the three and six months ended June 30, 2021March 31, 2022 and 2020.2021. 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, 2020.2021.
(3) Development includes properties developed which did not have stabilized results as of January 1, 2020.2021.
(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
20


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Unaudited)
redevelopment criteria, and 32 communities located in the California counties of Riverside, Santa Barbara and Santa Cruz, which the Company does not consider its core markets.
(5) Same-property revenues reflect concessions on a cash basis. Total rental and other property revenues reflect concessions on a straight-line basis in accordance with U.S. GAAP.

Deferred Revenues and Remaining Performance Obligations

When cash payments are received or due in advance of the Company’s performance of contracts with customers, deferred revenue is recorded. The total deferred revenue balance related to such contracts was $2.8$2.2 million and $3.1$2.4 million as of June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively, and was included in accounts payable and accrued liabilities within the accompanying condensed consolidated balance sheets. The amount of revenue recognized for the sixthree months ended June 30, 2021March 31, 2022 that was included in the December 31, 20202021 deferred revenue balance was $0.3$0.2 million, which was included in interest and other (loss) income within the condensed consolidated statements of income and comprehensive income.


25


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2021 and 2020
(Unaudited)
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 June 30, 2021,March 31, 2022, the Company had $2.8$2.2 million of remaining performance obligations. The Company expects to recognize approximately 13%25% of these remaining performance obligations in 2021,2022, an additional 51%60% through 2023,2024, and the remaining balance thereafter.

(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, LLC ("Wesco I"), Wesco III, LLC ("Wesco III"), Wesco IV, LLC ("Wesco IV"), and 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 June 30, 2021March 31, 2022 and December 31, 20202021 are as follows ($ in thousands, except parenthetical amounts):
Weighted Average Company Ownership Percentage (1)
June 30, 2021December 31, 2020
Weighted Average Company Ownership Percentage (1)
March 31, 2022December 31, 2021
Ownership interest in:Ownership interest in:Ownership interest in:
Wesco I, Wesco III, Wesco IV, and Wesco V51 %172,709 178,322 
BEXAEW, BEX II, BEX III (2), BEX IV, and 500 Folsom (3)
50 %276,409 152,309 
Other47 %48,193 27,635 
Wesco I (2), Wesco III, Wesco IV, Wesco V, and Wesco VI
Wesco I (2), Wesco III, Wesco IV, Wesco V, and Wesco VI
52 %$221,781 $168,198 
BEXAEW, BEX II, BEX IV, and 500 FolsomBEXAEW, BEX II, BEX IV, and 500 Folsom50 %267,338 270,550 
Other (3)
Other (3)
52 %112,548 126,503 
Total operating and other co-investments, netTotal operating and other co-investments, net497,311 358,266 Total operating and other co-investments, net601,667 565,251 
Total development co-investmentsTotal development co-investments50 %9,532 157,433 Total development co-investments50 %11,836 11,076 
Total preferred interest co-investments (includes related party investments of $85.3 million and $81.4 million as of June 30, 2021 and December 31, 2020, respectively)530,427 502,311 
Total preferred interest co-investments (includes related party investments of $72.6 million and $71.1 million as of March 31, 2022 and December 31, 2021, respectively)Total preferred interest co-investments (includes related party investments of $72.6 million and $71.1 million as of March 31, 2022 and December 31, 2021, respectively)502,193 565,930 
Total co-investments, netTotal co-investments, net$1,037,270 $1,018,010 Total co-investments, net$1,115,696 $1,142,257 
 
(1) Weighted average Company ownership percentages are as of June 30, 2021.March 31, 2022.
(2)In June 2021, As of March 31, 2022, the Company purchasedCompany's investment in Wesco I was classified as a liability of $28.7 million due to distributions in excess of the additional 50% interest in BEX III.Company's investment.
(3) 500 Folsom had not stabilizedAs of March 31, 2022, the Company's investment in Expo was classified as a liability of December 31, 2020. Its carrying value was included$0.2 million due to distributions received in excess of the developmentCompany's investment. The weighted average Essex ownership percentage excludes our investments in non-core technology co-investments balance as of December 31, 2020.which are carried at fair value.

The combined summarized financial information of co-investments is as follows ($ in thousands):
 June 30, 2021December 31, 2020
Combined balance sheets: (1)
  Rental properties and real estate under development$4,082,553 $4,242,611 
  Other assets225,482 200,777 
   Total assets$4,308,035 $4,443,388 
  Debt$2,529,501 $2,611,365 
  Other liabilities195,048 189,515 
  Equity1,583,486 1,642,508 
  Total liabilities and equity$4,308,035 $4,443,388 
Company's share of equity$1,037,270 $1,018,010 
2621


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Combined statements of income: (1)
Property revenues$68,405 $72,175 $140,164 $149,544 
Property operating expenses(27,013)(25,859)(54,344)(51,574)
Net operating income41,392 46,316 85,820 97,970 
Interest expense(15,965)(19,478)(32,665)(40,331)
General and administrative(4,029)(3,392)(8,310)(7,475)
Depreciation and amortization(31,813)(28,778)(64,522)(57,215)
Net loss$(10,415)$(5,332)$(19,677)$(7,051)
Company's share of net income (2)
$18,248 $17,257 $35,259 $38,554 

The combined summarized financial information of co-investments is as follows ($ in thousands):
 March 31, 2022December 31, 2021
Combined balance sheets: (1)
  Rental properties and real estate under development$4,666,950 $4,603,465 
  Other assets342,271 278,411 
   Total assets$5,009,221 $4,881,876 
  Debt$3,199,607 $3,046,765 
  Other liabilities167,238 200,129 
  Equity1,642,376 1,634,982 
  Total liabilities and equity$5,009,221 $4,881,876 
Company's share of equity$1,115,696 $1,142,257 
 Three Months Ended March 31,
 20222021
Combined statements of income: (1)
Property revenues$84,600 $71,759 
Property operating expenses(35,793)(27,331)
Net operating income48,807 44,428 
Interest expense(18,302)(16,700)
General and administrative(3,967)(4,281)
Depreciation and amortization(38,807)(32,709)
Net loss$(12,269)$(9,262)
Company's share of net income (2)
$21,171 $17,011 
(1) Includes preferred equity investments held by the Company.
(2) Includes the Company's share of equity income from joint ventures and preferred equity investments, gain on sales of co-investments, co-investment promote income and income from early redemption of preferred equity investments. Includes related party income of $2.3$1.8 million and $2.1$2.3 million for the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively, and $4.6 million and $4.2 million for the six months ended June 30, 2021 and 2020, respectively.

22
(5) Notes and Other Receivables
Notes and other receivables consist of the following as of June 30, 2021 and December 31, 2020 ($ in thousands):
 June 30, 2021December 31, 2020
Note receivable, secured, bearing interest at 9.90%, due November 2021 (Originated November 2018)14,950 14,216 
Notes receivable, secured, bearing interest at 10.50%, due February 2023 (Originated March 2020)16,143 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)83,562 79,827 
Notes receivable, secured, bearing interest at 11.50%, due November 2024 (Originated November 2020)27,996 15,423 
Related party note receivable, secured, bearing interest at 2.55%, due July 2021
(Originated March 2021) (2)
52,838 
Notes and other receivables from affiliates (3)
5,086 4,744 
Straight line rent receivables (4)
19,414 25,214 
Other receivables19,606 15,671 
Allowance for credit losses(740)(751)
Total notes and other receivables$238,855 $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 June 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.



27


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)
(5) Notes and Other Receivables
Notes and other receivables consist of the following as of March 31, 2022 and December 31, 2021 ($ in thousands):
 March 31, 2022December 31, 2021
Notes receivable, secured, bearing interest at 10.50%, due February 2023 (Originated March 2020)$17,513 $17,051 
Note receivable, secured, bearing interest at 9.00%, due December 2023 (Originated November 2020)88,746 87,365 
Note receivable, secured, bearing interest at 11.50%, due November 2024 (Originated November 2020)30,614 29,729 
Related party note receivable, secured, bearing interest at 2.15%, due March 2022 (Originated September 2021) (1)
— 29,314 
Related party note receivable, secured, bearing interest at 2.30%, due April 2022 (Originated October 2021) (2)
— 30,399 
Related party note receivable, secured, bearing interest at 2.36%, due February 2022 (Originated November 2021) (3)
— 62,058 
Related party note receivable, secured, bearing interest at 2.36%, due February 2022 (Originated November 2021) (4)
— 48,562 
Related party note receivable, secured, bearing interest at 1.35%, due March 2022 (Originated February 2022) (5)
32,788 — 
Notes and other receivables from affiliates (6)
7,074 6,556 
Straight line rent receivables (7)
13,482 15,523 
Other receivables15,904 15,232 
Allowance for credit losses(701)(756)
Total notes and other receivables$205,420 $341,033 

(1) In January 2022, the Company received cash of $29.2 million to payoff the principal of this note receivable.
(2) In January 2022, the Company received cash of $30.3 million to payoff the principal of this note receivable.
(3) In January 2022, the Company received cash of $61.9 million to payoff the principal of this note receivable.
(4) In January 2022, the Company received cash of $48.4 million to payoff the principal of this note receivable.
(5) See Note 6, Related Party Transactions, for additional details.
(6) These amounts consist of short-term loans outstanding and due from various joint ventures as of March 31, 2022 and December 31, 2021, respectively. See Note 6, Related Party Transactions, for additional details.
(7) These amounts are receivables from lease concessions recorded on a straight-line basis for the Company's operating properties.

The following table presents the activity in the allowance for credit losses for notes and other receivables by loan type ($ in thousands):

Mezzanine LoansBridge LoansTotal
Balance at December 31, 2020$751 $$751 
Provision for credit losses(37)26 (11)
Balance at June 30, 2021$714 $26 $740 
Mezzanine LoansBridge LoansTotal
Balance at December 31, 2021$671 $85 $756 
Provision for credit losses14 (69)(55)
Balance at March 31, 2022$685 $16 $701 

No loans were placed on nonaccrual status or charged off during the sixthree months ended June 30, 2021March 31, 2022 or 2020.2021.

(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 $2.6$3.1 million and $2.2 million during both the three months ended June 30,March 31, 2022 and 2021, and 2020, and $4.8 million and $5.7 million during the six months ended June 30, 2021 and 2020, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company
23


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Unaudited)
netted development and redevelopment fees of approximately $0.3$0.4 million and zero against general and administrative expenses for both the three months ended June 30,March 31, 2022 and 2021, and 2020, and $0.3 million and $0.8 million for the six months ended June 30, 2021 and 2020, respectively.

The Company’s Chairman and founder, Mr. George M. Marcus, is the Chairman of the Marcus & Millichap Company ("MMC"), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Co-ChairmanChairman of Marcus & Millichap, Inc. ("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 six months ended June 30,March 31, 2022 and 2021, the Company did 0tnot pay any brokerage commissions related to real estate transactions to MMC and its affiliates. For the three and six months ended June 30, 2020,

In February 2022, the Company paid brokerage commissions totaling 0 and $0.2provided a $32.8 million respectively,related party bridge loan to MMC and its affiliatesBEX II in connection with the payoff of a debt related to real estate transactions.one of its properties located in Southern California. The note receivable accrues interest at 1.35% and was scheduled to mature in March 2022, but was subsequently paid off in April 2022. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets.

In January 2022, the Company provided a $100.7 million related party bridge loan to Wesco VI in connection with the purchase of Vela. The note receivable accrued interest at 2.64% and was scheduled to mature in February 2022, but was paid off in January 2022.

In November 2021, the Company provided a $48.4 million related party bridge loan in connection with the purchase of an interest in a single asset entity owning an apartment home community in Vista, CA. The note receivable accrued interest at 2.36% and was scheduled to mature in February 2022, but was paid off in January 2022. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets.

In November 2021, the Company provided a $61.9 million related party bridge loan to Wesco VI in connection with the acquisition of The Rexford. The note receivable accrued interest at 2.36% and was scheduled to mature in February 2022, but was paid off in January 2022. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets.

In October 2021, the Company provided a $30.3 million related party bridge to Wesco VI in connection with the acquisition of Monterra in Mill Creek. The note receivable accrued interest at 2.30% and was scheduled to mature in April 2022, but was paid off in January 2022. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets.

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

In March 2021, the Company provided a $52.5 million related party bridge loan to Wesco I in connection with the payoff of a debt related to one of its properties located in Southern California. The note receivable accrued interest at 2.55% and is scheduled to mature in July 2021. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets and had an outstanding balance of $52.8 million as of June 30, 2021. The bridge loan 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. 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 unit300-unit apartment home community located in Walnut Creek, CA. The Company issued DownREIT units to an affiliate of MMC, based on a contract price of $164.9 million. The property was encumbered by $98.7 million of mortgage debt which was assumed by the Company at the time of acquisition. As a result of this transaction, the Company consolidated the property, based on a VIE analysis performed by the Company.

In February 2019, the Company funded a $24.5 million preferred equity investment in an entity whose sponsor is an affiliate of MMC, which owns a multifamily development community located in Mountain View, CA. The investment has an initial preferred return of 11.0% and is scheduled to mature in February 2024.

In October 2018, the Company funded a $18.6 million preferred equity investment in an entity whose sponsor is an affiliate of MMC. The entity wholly owns a 268268-unit apartment home community development located in Burlingame, CA. This The
24


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 2022 and 2021
(Unaudited)
investment accruesinitially accrued interest based on an initiala 12.0% preferred return.return which was reduced to 9.0% upon completion and lease-up of the project. The investment is scheduled to mature in April 2024.

In May 2018, the Company made a commitment to fund a $26.5 million preferred equity investment in an entity whose sponsors include an affiliate of MMC. The entity wholly owns a 400400-unit apartment home community located in Ventura, CA. This
28


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2021 and 2020
(Unaudited)
The investment accruesaccrued interest based on a 10.25% preferred return. The investment iswas scheduled to mature in May 2023. As of June 30,In November 2021, the Company had funded $23.4received cash of $18.3 million, for the partial redemption of this preferred equity investment, and the maturity of the commitment.remaining commitment was extended to December 2028. As of March 31, 2022, the Company had a remaining commitment of $13.0 million and accrues interest on a 9.0% preferred return. The remaining committed amount willis expected to 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 230230-unit apartment home community located in San Jose, CA, into a 40.5% common equity ownership interest in the property. The Company issued DownREIT units to the other members, including an MMC affiliate, based on an estimated property valuation of $90.0 million. At the time of the conversion, the property was encumbered by $52.0 million of mortgage debt. As a result of this transaction, the Company consolidates the property, based on a consolidation analysis performed by the Company.

As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of June 30, 2021March 31, 2022 and December 31, 2020, $57.92021, $7.1 million and $4.7$6.6 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.

(7) Debt
 
Essex does not have indebtedness as debt is incurred by the 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):
June 30, 2021December 31, 2020Weighted Average
Maturity
In Years as of June 30, 2021
March 31, 2022December 31, 2021Weighted Average
Maturity
In Years as of March 31, 2022
Unsecured bonds private placement - fixed rate$$199,950 0.0
Term loan - variable rate99,941 549,380 0.6
Bonds public offering - fixed rate5,303,933 4,858,655 9.2
Unsecured debt, net (1)
Unsecured debt, net (1)
5,403,874 5,607,985  
Unsecured debt, net (1)
5,308,841 5,307,196 8.4
Lines of credit (2)
Lines of credit (2)
85,000 
Lines of credit (2)
98,000 341,257 
Mortgage notes payable, net (3)
Mortgage notes payable, net (3)
641,274 643,550 9.0
Mortgage notes payable, net (3)
637,778 638,957 8.2
Total debt, netTotal debt, net$6,130,148 $6,251,535  Total debt, net$6,044,619 $6,287,410  
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offeringWeighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering3.3 %3.4 % Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering3.3 %3.3 % 
Weighted average interest rate on variable rate term loan1.1 %1.7 % 
Weighted average interest rate on lines of creditWeighted average interest rate on lines of credit1.0 %1.0 %Weighted average interest rate on lines of credit1.1 %1.0 %
Weighted average interest rate on mortgage notes payableWeighted average interest rate on mortgage notes payable2.6 %2.7 % Weighted average interest rate on mortgage notes payable2.7 %2.7 % 

(1) IncludesUnsecured debt, net, consists of fixed rate public bond offerings which includes unamortized discount, net of $10.9premiums, of $9.4 million and $10.1$9.9 million and unamortized debt issuance costs of $35.2$31.8 million and $31.9$32.9 million, as of June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively.
(2) Lines of credit, related to the Company's 2 lines of unsecured credit aggregating $1.24 billion as of June 30, 2021,March 31, 2022, excludes unamortized debt issuance costs of $3.0$4.1 million and $3.7$4.4 million as of June 30, 2021March 31, 2022 and December 31, 2020,2021, respectively. These debt issuance costs are included in prepaid expenses and other assets on the condensed consolidated balance sheets. As of June 30, 2021,March 31, 2022, the Company’s $1.2 billion credit facility had an interest rate of LIBOR plus 0.825%0.775%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of December 2023September 2025 with 1 18-month extension,3 six-month extensions, exercisable at the Company’s option. Subsequent to quarter end, the borrowing spread on this facility will be reduced by 2.5 basis points to LIBOR plus 0.75% as a result of achieving the Enhanced Sustainability Metric Target for 2021 as defined by the facility's sustainability-linked pricing component. As of June 30, 2021,March 31, 2022, the Company’s $35.0 million working capital unsecured line of credit had an interest rate of LIBOR plus 0.825%, which is based on a tiered rate structure tied to the Company’s credit ratings, and a scheduled maturity date of February 2023.
(3) Includes total unamortized premium of $3.2 million and $3.9 million, reduced by unamortized debt issuance costs of $1.6 million and $1.8 million, as of June 30, 2021 and December 31, 2020, respectively.

2925


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)
working capital unsecured line of credit had an interest rate of LIBOR plus 0.775%, which is based on a tiered rate structure tied to the Company’s credit ratings, and a scheduled maturity date of February 2023.
(3) Includes total unamortized premium, net of discounts of $2.2 million and $2.5 million, reduced by unamortized debt issuance costs of $1.4 million and $1.5 million, as of March 31, 2022 and December 31, 2021, respectively.

The aggregate scheduled principal payments of the Company’s outstanding debt, excluding lines of credit, as of June 30, 2021March 31, 2022 are as follows ($ in thousands):
Remaining in 2021$1,774 
2022143,188 
Remaining in 2022Remaining in 2022$42,284 
20232023302,945 2023302,945 
20242024403,109 2024403,109 
20252025633,054 2025633,054 
20262026549,405 
ThereafterThereafter4,605,629 Thereafter4,056,224 
TotalTotal$6,089,699 Total$5,987,021 

(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. The Company's chief operating decision makers are comprised of several members of its executive management team who use net operating income ("NOI") to assess the performance of the business for the Company's reportable operating segments. NOI represents total property revenues less direct property operating expenses.

The executive management team generally evaluates the Company's operating performance geographically. The Company defines its reportable operating segments as the 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 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, 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 six months ended June 30,March 31, 2022 and 2021 and 2020 ($ in thousands):
3026


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
2021202020212020 20222021
Revenues:Revenues:Revenues:
Southern CaliforniaSouthern California$143,230 $140,510 $286,242 $292,405 Southern California$156,969 $141,969 
Northern CaliforniaNorthern California143,386 152,118 290,076 310,574 Northern California152,590 146,690 
Seattle MetroSeattle Metro59,267 60,649 117,900 123,693 Seattle Metro64,203 58,633 
Other real estate assetsOther real estate assets2,874 14,872 7,415 31,227 Other real estate assets5,454 5,584 
Total property revenuesTotal property revenues$348,757 $368,149 $701,633 $757,899 Total property revenues$379,216 $352,876 
Net operating income:Net operating income:Net operating income:
Southern CaliforniaSouthern California$99,263 $96,829 $198,514 $205,118 Southern California$110,213 $98,577 
Northern CaliforniaNorthern California98,916 109,592 200,541 226,779 Northern California104,985 101,649 
Seattle MetroSeattle Metro40,386 40,780 79,165 85,206 Seattle Metro43,296 38,792 
Other real estate assetsOther real estate assets2,699 10,812 5,441 23,517 Other real estate assets4,622 3,445 
Total net operating incomeTotal net operating income241,264 258,013 483,661 540,620 Total net operating income263,116 242,463 
Management and other fees from affiliatesManagement and other fees from affiliates2,221 2,348 4,470 4,965 Management and other fees from affiliates2,689 2,249 
Corporate-level property management expensesCorporate-level property management expenses(9,105)(8,646)(18,052)(17,405)Corporate-level property management expenses(10,172)(9,013)
Depreciation and amortizationDepreciation and amortization(128,736)(133,609)(257,323)(265,168)Depreciation and amortization(133,533)(128,587)
General and administrativeGeneral and administrative(12,222)(14,952)(22,034)(28,934)General and administrative(12,242)(9,812)
Expensed acquisition and investment related costsExpensed acquisition and investment related costs(41)(15)(56)(102)Expensed acquisition and investment related costs(8)(15)
Gain on sale of real estate and landGain on sale of real estate and land16,597 100,096 16,597 Gain on sale of real estate and land— 100,096 
Interest expenseInterest expense(50,971)(54,447)(102,620)(109,594)Interest expense(50,377)(51,649)
Total return swap incomeTotal return swap income2,633 2,788 5,477 4,772 Total return swap income2,544 2,844 
Interest and other income22,371 11,405 36,758 6,184 
Interest and other (loss) incomeInterest and other (loss) income(7,567)14,387 
Equity income from co-investmentsEquity income from co-investments18,248 17,257 35,259 38,554 Equity income from co-investments21,171 17,011 
Deferred tax expense on unrealized gain on unconsolidated co-investment(1,842)(1,636)(2,350)(1,636)
Deferred tax benefit (expense) on unconsolidated co-investmentsDeferred tax benefit (expense) on unconsolidated co-investments2,754 (508)
Loss on early retirement of debt, netLoss on early retirement of debt, net(16,465)(5,027)(18,982)(4,706)Loss on early retirement of debt, net— (2,517)
Gain on remeasurement of co-investment2,260 2,260 234,694 
Net incomeNet income$69,615 $90,076 $246,564 $418,841 Net income$78,375 $176,949 

3127


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)
Total assets for each of the reportable operating segments are summarized as follows as of June 30, 2021March 31, 2022 and December 31, 20202021 ($ in thousands):
June 30, 2021December 31, 2020 March 31, 2022December 31, 2021
Assets:Assets:Assets:
Southern CaliforniaSouthern California$3,985,599 $3,993,275 Southern California$3,981,059 $4,018,839 
Northern CaliforniaNorthern California5,527,443 5,408,019 Northern California5,425,077 5,460,701 
Seattle MetroSeattle Metro1,377,702 1,403,678 Seattle Metro1,397,195 1,407,033 
Other real estate assetsOther real estate assets14,007 122,814 Other real estate assets101,189 96,500 
Net reportable operating segment - real estate assetsNet reportable operating segment - real estate assets10,904,751 10,927,786 Net reportable operating segment - real estate assets10,904,520 10,983,073 
Real estate under developmentReal estate under development208,330 386,047 Real estate under development112,815 111,562 
Co-investmentsCo-investments1,037,270 1,018,010 Co-investments1,144,542 1,177,802 
Real estate held for sale57,938 
Cash and cash equivalents, including restricted cashCash and cash equivalents, including restricted cash58,176 84,041 Cash and cash equivalents, including restricted cash108,553 58,638 
Marketable securitiesMarketable securities175,782 147,768 Marketable securities169,702 191,829 
Notes and other receivablesNotes and other receivables238,855 195,104 Notes and other receivables205,420 341,033 
Operating lease right-of-use assetsOperating lease right-of-use assets70,551 72,143 Operating lease right-of-use assets68,158 68,972 
Prepaid expenses and other assetsPrepaid expenses and other assets53,484 47,340 Prepaid expenses and other assets56,591 64,964 
Total assetsTotal assets$12,747,199 $12,936,177 Total assets$12,770,301 $12,997,873 

(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 June 30, 2021Three Months Ended June 30, 2020 Three Months Ended March 31, 2022Three Months Ended March 31, 2021
IncomeWeighted-
average
Common
Shares
Per
Common
Share
Amount
IncomeWeighted-
average
Common
Shares
Per
Common
Share
Amount
IncomeWeighted-
average
Common
Shares
Per
Common
Share
Amount
IncomeWeighted-
average
Common
Shares
Per
Common
Share
Amount
Basic:Basic:Basic:
Net income available to common stockholdersNet income available to common stockholders$64,846 65,001,677 $1.00 $84,458 65,412,407 $1.29 Net income available to common stockholders$73,254 65,275,775 $1.12 $168,444 64,989,620 $2.59 
Effect of Dilutive Securities:Effect of Dilutive Securities: Effect of Dilutive Securities: 
Stock optionsStock options— 79,069 — 15,528 Stock options— 63,603 — 31,066 
DownREIT unitsDownREIT units— — 197 94,247 
Diluted:Diluted:      Diluted:      
Net income available to common stockholdersNet income available to common stockholders$64,846 65,080,746 $1.00 $84,458 65,427,935 $1.29 Net income available to common stockholders$73,254 65,339,378 $1.12 $168,641 65,114,933 $2.59 
32


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2021 and 2020
(Unaudited)
 Six Months Ended June 30, 2021Six Months Ended June 30, 2020
 IncomeWeighted-
average
Common
Shares
Per
Common
Share
Amount
IncomeWeighted-
average
Common
Shares
Per
Common
Share
Amount
Basic:
Net income available to common stockholders$233,290 64,995,682 $3.59 $399,464 65,728,119 $6.08 
Effect of Dilutive Securities: 
Stock options— 52,334 — 32,981 
DownREIT units392 94,247 
Diluted:      
Net income available to common stockholders$233,290 65,048,016 $3.59 $399,856 65,855,347 $6.07 

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,293,7602,282,464 and 2,295,750,2,293,804, which include vested 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units for the three months ended June 30, 2021March 31, 2022 and 2020, respectively, and 2,293,782 and 2,297,966 for the six months ended June 30, 2021 and 2020, respectively, because they were anti-dilutive.2021. The related income allocated to these convertible OP Units aggregated $2.3$2.6 million and $3.0$5.9 million for the three months ended June 30, 2021March 31, 2022 and 2020, respectively, and $8.2 million and $14.0 million for the six months ended June 30, 2021 and 2020, respectively. Additionally, the table excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.2021.

Stock options of 136,17279,687 and 431,253349,252 for the three months ended June 30,March 31, 2022 and 2021 and 2020, respectively, and 0 and 290,570 for the six months ended June 30, 2021 and 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 June 30, 2021Three Months Ended June 30, 2020
 IncomeWeighted-
average
Common Units
Per
Common
Unit
Amount
IncomeWeighted-
average
Common Units
Per
Common
Unit
Amount
Basic:
Net income available to common unitholders$67,134 67,295,437 $1.00 $87,422 67,708,157 $1.29 
Effect of Dilutive Securities: 
Stock options— 79,069 — 15,528 
Diluted:      
Net income available to common unitholders$67,134 67,374,506 $1.00 $87,422 67,723,685 $1.29 
3328


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30,March 31, 2022 and 2021 and 2020
(Unaudited)


Essex Portfolio, L.P.
Six Months Ended June 30, 2021Six Months Ended June 30, 2020 Three Months Ended March 31, 2022Three Months Ended March 31, 2021
IncomeWeighted-
average
Common Units
Per
Common
Unit
Amount
IncomeWeighted-
average
Common Units
Per
Common
Unit
Amount
IncomeWeighted-
average
Common Units
Per
Common
Unit
Amount
IncomeWeighted-
average
Common Units
Per
Common
Unit
Amount
Basic:Basic:Basic:
Net income available to common unitholdersNet income available to common unitholders$241,525 67,289,464 $3.59 $413,414 68,026,084 $6.08 Net income available to common unitholders$75,817 67,558,239 $1.12 $174,391 67,283,424 $2.59 
Effect of Dilutive Securities:Effect of Dilutive Securities: Effect of Dilutive Securities: 
Stock optionsStock options— 52,334 — 32,981 Stock options— 63,603 — 31,066 
DownREIT unitsDownREIT units392 94,247 DownREIT units— — 197 94,247 
Diluted:Diluted:      Diluted:      
Net income available to common unitholdersNet income available to common unitholders$241,525 67,341,798 $3.59 $413,806 68,153,312 $6.07 Net income available to common unitholders$75,817 67,621,842 $1.12 $174,588 67,408,737 $2.59 

Stock options of 136,17279,687 and 431,253349,252 for the three months ended June 30,March 31, 2022 and 2021 and 2020, respectively, 0 and 290,570 for the six months ended June 30, 2021 and 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 units for cash and does not consider them to be common stock equivalents.

(10) Derivative Instruments and Hedging Activities

As of June 30, 2021March 31, 2022 and December 31, 2020,2021, the aggregate carrying value of theCompany had no interest rate swap contracts were a liability of 0 and $2.4 million, respectively. As of June 30, 2021 and December 31, 2020, the swap contracts were presented in the condensed consolidated balance sheets as an asset of 0 for both periods and a liability of 0 and $2.4 million, respectively, and were included in other liabilities on the condensed consolidated balance sheets.contracts.

The Company has 4 total return swap contracts, with an aggregate notional amount of $224.7$224.2 million, that effectively convert $224.7$224.2 million of mortgage notes payable to a floating interest rate based on the Securities Industry and Financial Markets Association Municipal Swap Index ("SIFMA") plus a spread. The total return swaps provide fair market value protection on the mortgage notes payable to the counterparties during the initial period of the total return swap until the Company's option to call the mortgage notes at par can be exercised. The Company can currently call all four of its total return swaps, with $224.7$224.2 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting and had a carrying and fair value of 0zero at both June 30, 2021March 31, 2022 and December 31, 2020.2021. These total return swaps are scheduled to mature between November 2022 and December 2024. The realized gains of $2.7$2.5 million and $2.8 million for the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively, and $5.5 million and $4.8 million for the six months ended June 30, 2021 and 2020, respectively were reported in the condensed consolidated statements of income and comprehensive income as total return swap income.

(11) Commitments and Contingencies

The Company is subject to various lawsuits in the normal course of its business operations. Such lawsuits have not had a material adverse effect on the Company's financial condition, results of operations or cash flows. While no assurances can be given, the Company does not believe there is any pending or threatened litigation against the Company that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the Company.

The Company is subject to various federal, state, and local environmental and other laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new, changed or changedexpired laws or regulations on its current portfolio or on other assets that the Company may acquire in the future, including,
34


ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES
ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 2021 and 2020
(Unaudited)
without limitation, certain eviction moratoriums and other mandates that have been, or may be, enacted or extended in connection with the COVID-19 pandemic. To the extent that an environmental or other matter arises or is identified in the future that has other than a remote risk of having a material impact on the condensed consolidated financial statements, the Company will disclose the estimated range of possible outcomes associated with it, and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, impairment will be recognized.

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

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 20202021 annual report on Form 10-K for the year ended December 31, 2020.2021. 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 Statements."
 
Essex is a self-administered and self-managed REIT that acquires, develops, redevelops, and manages apartment communities in selected residential areas located on the West Coast of the United States. Essex owns all of its interests in its real estate investments, directly or indirectly through the Operating Partnership. Essex is the sole general partner of the Operating Partnership and, as of June 30, 2021,March 31, 2022, had an approximately 96.6% general partnership interest in the Operating Partnership.

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

As of June 30, 2021,March 31, 2022, the Company owned or had ownership interests in 246253 operating apartment communities, comprising 60,92062,290 apartment homes, excluding the Company’s ownership interest in preferred equity co-investments, loan investments, onethree operating commercial building,buildings, and a development pipeline comprised of twoone consolidated projectsproject and one unconsolidated joint venture project. 

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

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

As of June 30, 2021,March 31, 2022, the Company’s development pipeline was comprised of twoone consolidated projectsproject under development, one unconsolidated joint venture project under development, and various predevelopment projects aggregating 571371 apartment homes, with total incurred costs of $0.2 billion,$162.0 million, and estimated remaining project costs of approximately $96.0$55.0 million, $58.0$29.0 million of which represents the Company's share of estimated remaining costs, for total estimated project costs of $0.3 billion.$217.0 million.

The Company’s consolidated apartment communities are as follows:
As of June 30, 2021As of June 30, 2020 As of March 31, 2022As of March 31, 2021
Apartment Homes%Apartment Homes% Apartment Homes%Apartment Homes%
Southern CaliforniaSouthern California22,466 43 %22,675 43 %Southern California22,190 43 %22,121 43 %
Northern CaliforniaNorthern California19,123 37 %19,319 37 %Northern California19,230 37 %19,123 37 %
Seattle MetroSeattle Metro10,218 20 %10,343 20 %Seattle Metro10,341 20 %10,218 20 %
TotalTotal51,807 100 %52,337 100 %Total51,761 100 %51,462 100 %

Co-investments, including Wesco I, Wesco III, Wesco IV, Wesco V, Wesco VI, BEXAEW, BEX II, BEX IV, and 500 Folsom communities, developments under construction, and preferred equity interest co-investment communities are not included in the table presented above for both periods. The community previously held in the BEX III co-investment, which was consolidated in the second quarter of 2021, is excluded from the June 30, 2020March 31, 2021 table, but included in the June 30, 2021March 31, 2022 table.

Current Material Development – theThe COVID-19 Pandemic

The United StatesCOVID-19 pandemic and other countries around the world are continuing to experience an unprecedented health pandemic related to COVID-19 andits related variants which has createdcontinues to create considerable instability, disruption, and uncertainty. Governmental authorities in impacted regions are taking dramatic and unpredictable actions inIn an effort to slow COVID-19’s spread. Federal,down the spread of the viruses and mitigate its impact on affected populations, federal, state and local jurisdictions have issued and revisedimplemented varying forms of restrictions on public gatherings and requiring businessesrequirements which may continue to make changes to their operations in a manner that may negatively affect profitability, result in job lossesprofitability. While the California eviction moratorium sunsetted during the third quarter of 2021, other state and related financial impacts that may affect future operations to an unknown extent. Moreover,local eviction moratoriums and laws that limit rent increases during times of emergency and impair the ability to collect unpaid rent during certain timeframes
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increases during times of emergency and prohibit the abilitycontinue to collect unpaid rent during certain timeframes, have been enactedbe in effect in various formats at various levels of government, including regions in which Essex's communities are located, impacting Essex and its properties. The Company is workingcontinues to work to comply with the stated intent of local, county, state and federal laws. In that regard, the Company has implemented a wide range of practices to protect and support its employees and residents. Such measures include:
instituting a hybrid work model for corporate associates to work at the Company's corporate offices and remotely;
transitioning most 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.

Due to the COVID-19 pandemic, some of the Company's residents, their health, their employment, and, thus, their ability to pay rent, have been and may continue to be impacted. To support residents, the Company has implemented the following steps, including, but not limited to:
assembling a Resident Response Team to effectively and efficiently respond to resident needs and concerns with respect to the pandemic;
structuring payment plans for residents who are unable to pay their rent as a result of the outbreak and waiving late fees 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.

The long-term impact of the COVID-19 pandemic on the U.S. and world economies generally, and on the Company's results in particular has been, and may continue to be significant. The long-term impact will largely depend on uncertain future developments, which are highly uncertain and cannot be predicted, including but not limited to, whether employees and employers will continue to promote remote work if and when the pandemic concludes. This includes new information which may emerge concerning the severity of COVID-19 and related variants, the success of actions taken to contain or treat COVID-19 including but not limited to vaccination rates, future laws that may be enacted, the impact on job growth and the broader economy, and reactions by consumers, companies, governmental entities and capital markets.

Primarily as a result of the impact of the COVID-19 pandemic, the Company's cash delinquencies as a percentage of scheduled rental income for the Company’s stabilized apartment communities or "Same-Property" (stabilized properties consolidated by the Company for the quarters ended June 30, 2021March 31, 2022 and 2020)2021) remained higher than the pre-pandemic period but improved from 4.3%typical range of 0.3% to 0.4% and remained elevated at 2.1% for the three months ended June 30, 2020 to 2.6%March 31, 2021 and 2.2% for the three months ended June 30, 2021.March 31, 2022. The Company has executed some payment plans and will continue to work with residents to collect such cash delinquencies. As of June 30, 2021,March 31, 2022, the increase in delinquencies has not had a material adverse impact on the Company's liquidity position. The Company's average financial occupancy for the Company’s Same-Property portfolio increasedslightly decreased from 94.9%96.7% for the three months ended June 30, 2020March 31, 2021 to 96.6%96.3% for the three months ended June 30, 2021.March 31, 2022.

The COVID-19 pandemic has not negatively impacted the Company's ability to access traditional funding sources on the same or reasonably similar terms as were available in recent periods prior to the pandemic, as demonstrated by the Company's financing activity during the three months ended June 30, 2021March 31, 2022 discussed in the "Liquidity and Capital Resources" section below. The Company is not at material risk of not meeting the covenants in its credit agreements and is able to timely service its debt and other obligations.

Comparison of the Three Months Ended June 30, 2021March 31, 2022 to the Three Months Ended June 30, 2020March 31, 2021

The Company’s average financial occupancy for the Company’s Same-Property portfolio was 96.6%96.3% and 94.9%96.7% for the three months ended June 30,March 31, 2022 and 2021, and 2020, respectively. Financial occupancy is defined as the percentage resulting from dividing actual rental income by total scheduled rental income. Actual rental income represents contractual rental income pursuant to leases without considering delinquency and concessions. Total scheduled rental income represents the value of all apartment homes, with occupied apartment homes valued at contractual rental rates pursuant to leases and vacant apartment homes valued at estimated market rents. The Company believes that financial occupancy is a meaningful measure of occupancy because it considers the value of each vacant apartment home at its estimated market rate.

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

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

The regional breakdown of the Company’s Same-Property portfolio for financial occupancy for the three months ended June 30,March 31, 2022 and 2021 and 2020 is as follows:
 Three Months Ended June 30,
 20212020
Southern California97.0 %94.6 %
Northern California96.2 %95.0 %
Seattle Metro96.7 %95.3 %
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 Three Months Ended March 31,
 20222021
Southern California96.3 %96.7 %
Northern California96.5 %96.7 %
Seattle Metro95.9 %96.6 %

The following table provides a breakdown of revenues amounts, including revenues attributable to the Same-Properties:
Number of ApartmentThree Months Ended June 30,DollarPercentage Number of ApartmentThree Months Ended March 31,DollarPercentage
Property Revenues ($ in thousands)Property Revenues ($ in thousands)Homes20212020ChangeChangeProperty Revenues ($ in thousands)Homes20222021ChangeChange
Same-Property Revenues:Same-Property Revenues:Same-Property Revenues:
Southern CaliforniaSouthern California20,800 $135,476 $132,759 $2,717 2.0 %Southern California21,256 $150,653 $138,418 $12,235 8.8 %
Northern CaliforniaNorthern California16,072 120,206 131,246 (11,040)(8.4)%Northern California17,895 142,002 137,386 4,616 3.4 %
Seattle MetroSeattle Metro10,218 59,267 60,649 (1,382)(2.3)%Seattle Metro10,218 63,618 58,633 4,985 8.5 %
Total Same-Property RevenuesTotal Same-Property Revenues47,090 314,949 324,654 (9,705)(3.0)%Total Same-Property Revenues49,369 356,273 334,437 21,836 6.5 %
Non-Same Property RevenuesNon-Same Property Revenues 33,808 43,495 (9,687)(22.3)%Non-Same Property Revenues 22,943 18,439 4,504 24.4 %
Total Property RevenuesTotal Property Revenues $348,757 $368,149 $(19,392)(5.3)%Total Property Revenues $379,216 $352,876 $26,340 7.5 %

Same-Property Revenues decreasedincreased by $9.7$21.8 million or 3.0%6.5% to $314.9$356.3 million in the secondfirst quarter of 20212022 from $324.7$334.4 million in the secondfirst quarter of 2020.2021. The decreaseincrease was primarily attributable to an additional $8.5 millionincrease of cash concessions compared to the prior year period and a decrease of 3.6%4.5% in average rental rates from $2,372 per apartment home$2,299 in the secondfirst quarter of 20202021 to $2,287 per apartment home$2,402 in the secondfirst quarter of 2022 and decreased cash concessions in the first quarter of 2022 compared to the first quarter of 2021.

Non-Same Property Revenues decreasedincreased by $9.7$4.5 million or 22.3%24.4% to $33.8$22.9 million in the second quarter of 2021 from $43.5 million in the second quarter of 2020. The decrease was primarily due to sales in 2020 and the sales of Hidden Valley, Axis 2300, and Park 20 in the first quarter of 2022 from $18.4 million in the first quarter of 2021. The increase was primarily due to the acquisitions of The Village at Toluca Lake and Canvas in 2021 and an increase in average rental rates.

Management and other fees from affiliates decreasedincreased by $0.1$0.5 million or 4.3%22.7% to $2.7 million in the first quarter of 2022 from $2.2 million in the secondfirst quarter of 2021 from $2.3 million in the second quarter of 2020.2021. The decreaseincrease was primarily due to a decreasethe addition of Martha Lake Apartments, Monterra in revenues usedMill Creek, The Rexford, and Silver communities to calculate management fees.the Company's joint venture portfolio in 2021 and Vela in 2022, partially offset by the Company's purchase of BEX III's 50.0% interest in The Village at Toluca Lake.
Property operating expenses, excluding real estate taxes decreasedincreased by $1.9$3.8 million or 2.9%5.8% to $63.2$68.9 million for the secondfirst quarter of 20212022 compared to $65.1 million for the secondfirst quarter of 2020,2021, primarily due to a decreaseincreases of $2.8$3.0 million in utilities expense and $1.0 million in maintenance and repairs expenses, partially driven by sales in 2020 and the sales of Hidden Valley, Axis 2300, and Park 20 in the first quarter of 2021, offset by an increasea decrease of $0.9$0.2 million in utilitiesadministrative expenses. Same-Property operating expenses, excluding real estate taxes, decreasedincreased by $0.3$3.6 million or 0.5%5.8% to $58.2$65.7 million in the secondfirst quarter of 2022 compared to $62.1 million in the first quarter of 2021, compared to $58.5 million in the second quarter of 2020, primarily due to decreasesincreases of $2.1$2.7 million in utilities expense, and $0.9 million in maintenance and repairs expenses and $0.2expenses.
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million in administrative expenses, offset by increases of $1.2 million in utilities expenses and $0.8 million in insurance and other expenses.

Real estate taxes decreased $0.7increased by $1.9 million or 1.6%4.2% to $44.3$47.2 million for the secondfirst quarter of 2022 compared to $45.3 million for the first quarter of 2021, compared to $45.0 million for the second quarter of 2020, primarily due to the sale of Hidden Valley, Axis 2300,real estate taxes for development properties Station Park Green (Phase II and Park 20III) and Wallace on Sunset, that were completed in 2021 and the portfolio saleacquisition of One South MarketThe Village at Toluca Lake during 2021, as well as an increase in assessed valuation and Museum Park, Delano, and 416 on Broadway in 2020.tax rates. Same-Property real estate taxes increased by $0.1$1.3 million or 0.4%3.2% to $38.1$42.8 million in the secondfirst quarter of 20212022 compared to $38.0$41.4 million in the secondfirst quarter of 2020,2021, primarily due to an increase in assessed valuations and tax rates.

Corporate-level property management expenses increased by $0.5$1.2 million or 5.8%13.3% to $9.1$10.2 million for the secondfirst quarter of 2022 compared to $9.0 million for the first quarter of 2021 compareddue to $8.6 million forcosts pertaining to the second quartercentralization of 2020.certain property level functions.

Depreciation and amortization expense decreasedincreased by $4.9 million or 3.7%3.8% to $128.7$133.5 million for the second quarter of 2021 compared to $133.6 million for the second quarter of 2020, primarily due to a decrease in amortization expense resulting from certain lease intangibles becoming fully amortized during 2020 and the sale of Hidden Valley, Axis 2300, and Park 20 in the first quarter of 2022 compared to $128.6 million for the first quarter of 2021, primarily due an increase in depreciation expense from the completion of the development properties Mylo, Station Park Green (Phase II and Phase III), and Wallace on Sunset as well as the acquisitions of The Village at Toluca Lake and Canvas during 2021.
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Interest expense decreased by $3.4$1.2 million or 6.3%2.3% to $51.0$50.4 million for the secondfirst quarter of 2022 compared to $51.6 million for the first quarter of 2021, compared to $54.4 million for the second quarter of 2020, primarily due to a decrease in average outstanding debt primarily as a result ofvarious debt that was paid off, matured, or matured, regular principal amortization during and after the secondfirst quarter of 2020, and lower average interest rates,2021, which resulted in a decrease in interest expense of $12.3$5.8 million for the secondfirst quarter of 2020.2022. These decreases to interest expense were partially offset by the issuance of $300 million of senior unsecured notes due June 15, 2031 in Mayissued during and after the first quarter of 2021, $450.0 million of senior unsecured notes due March 1, 2028 in February 2021, $650 million of senior unsecured notes due March 15, 2032 in 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 an increase of $6.3$3.5 million interest expense for the secondfirst quarter of 2021.2022. Additionally, there was a $2.6$1.1 million decrease in capitalized interest in the secondfirst quarter of 2021,2022, due to a decrease in development activity as compared to the same period in 2020.2021.

Total return swap income of $2.6$2.5 million in the secondfirst quarter of 20212022 consists of monthly settlements related to the Company's total return swap contracts with an aggregate notional amount of $224.7$224.2 million.

Interest and other (loss) income increased by $11.0 million or 96.5% to $22.4 million for the second quarter of 2021 compared to $11.4 million for the second quarter of 2020, primarily due to increases of $4.7 million in income from early redemption of notes receivable, $3.4 million in marketable securities and other income, $2.8 million in unrealized gains on marketable securities, and $0.3 million in provision for credit losses.

Equity income from co-investments increased by $0.9 million or 5.2% to $18.2 million for the second quarter of 2021 compared to $17.3 million for the second quarter of 2020, primarily due to increases of $2.1 million in equity income from non-core co-investments and $0.7 million in income from preferred equity investments, offset by a decrease of $1.8 million in equity loss from co-investments.

Deferred tax expense on unrealized gain on unconsolidated co-investment of $1.8 million for the second quarter of 2021 resulted from a net unrealized gain on $6.9 million from unconsolidated co-investments.

Loss on early retirement of debt, net of $16.5 million for the second quarter of 2021 was primarily due to the early repayment of $300.0 million of senior unsecured notes.

Gain on remeasurement of co-investment of $2.3 million for the second quarter of 2021 resulted from the Company's purchase of BEX III's 50.0% interest in The Village at Toluca Lake community.

Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

The Company's average financial occupancy for its stabilized apartment communities or "Same-Property" (stabilized properties consolidated by the Company for the six months ended June 30, 2021 and 2020) was 96.7% and 95.8% for the six months ended June 30, 2021 and 2020, respectively.

The regional breakdown of the Company's Same-Property portfolio for financial occupancy for the six months ended June 30, 2021 and 2020 is as follows:

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 Six Months Ended June 30,
 20212020
Southern California96.9 %95.6 %
Northern California96.4 %96.0 %
Seattle Metro96.6 %96.1 %

 Number of ApartmentSix Months Ended
June 30,
DollarPercentage
Property Revenues ($ in thousands)Homes20212020ChangeChange
Same-Property Revenues:
Southern California20,800 $270,937 $276,533 $(5,596)(2.0)%
Northern California16,072 243,918 270,080 (26,162)(9.7)%
Seattle Metro10,218 117,900 123,693 (5,793)(4.7)%
Total Same-Property Revenues47,090 632,755 670,306 (37,551)(5.6)%
Non-Same Property Revenues 68,878 87,593 (18,715)(21.4)%
Total Property Revenues $701,633 $757,899 $(56,266)(7.4)%

Same-Property Revenues decreased by $37.6$22.0 million or 5.6%152.8% to $632.8$7.6 million in the six months ended June 30, 2021 from $670.3 million in the six months ended June 30, 2020. The decrease was primarily attributable to an additional $18.9 million of cash concessions compared to the prior year period and a decrease of 3.5% in average rental rates from $2,370 per apartment home in the six months ended June 30, 2020 to $2,288 per apartment home in the six months ended June 30, 2021.  

Non-Same Property Revenues decreased by $18.7 million or 21.4% to $68.9 million in the six months ended June 30, 2021 from $87.6 million in the six months ended June 30, 2020. The decrease was primarily due to sales in 2020 and the sales of Hidden Valley, Axis 2300, and Park 20 inloss for the first quarter of 2021.

Management and other fees from affiliates decreased by $0.52022 compared to $14.4 million or 10.0% to $4.5 million inincome for the six months ended June 30,first quarter of 2021, from $5.0 million in the six months ended June 30, 2020. The decrease was primarily due to a decrease in asset management fees resulting from the 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 2020, and a decrease in revenues used to calculate management fees.
Property operating expenses, excluding real estate taxes decreased by $0.9 million or 0.7% to $128.4 million for the six months ended June 30, 2021 compared to $129.3 million for the six months ended June 30, 2020, primarily due to decreases of $2.6 million in maintenance and repairs expenses and $0.6 million in administrative expenses partially driven by sales in 2020 and the sales of Hidden Valley, Axis 2300, and Park 20 in the first quarter of 2021, offset by an increase of $2.2 million in utilities expenses. Same-Property operating expenses, excluding real estate taxes, increased by $0.7 million or 0.6% to $117.0 million in the six months ended June 30, 2021 compared to $116.3 million in the six months ended June 30, 2020, primarily due to increases of $2.4 million in utilities expenses and $1.4 million in insurance and other expenses, offset by decreases of $1.8 million in maintenance and repairs expenses and $1.2 million in administrative expenses.

Real estate taxes increased by $1.6 million or 1.8% to $89.6 million for the six months ended June 30, 2021 compared to $88.0 million for the six months ended June 30, 2020, primarily due to an increase in assessed valuations and tax rates. Same-Property real estate taxes increased by $2.1 million or 2.7% to $77.1 million in the six months ended June 30, 2021 compared to $75.0 million in the six months ended June 30, 2020, primarily due to an increase in assessed valuations and tax rates.

Corporate-level property management expenses increased by $0.7 million or 4.0% to $18.1 million for the six months ended June 30, 2021 compared to $17.4 million for the six months ended June 30, 2020.

Depreciation and amortization expense decreased by $7.9 million or 3.0% to $257.3 million for the six months ended June 30, 2021 compared to $265.2 million for the six months ended June 30, 2020, primarily due to a decrease in amortization expense resulting from certain lease intangibles becoming fully amortized during 2020 and the sale of Hidden Valley, Axis 2300, and Park 20 in the first quarter of 2021.

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Gain on sale of real estate and land of $100.1 million in the six months ended June 30, 2021 was attributable to the sale of Hidden Valley, Axis 2300, and Park 20 in the first quarter of 2021.

Interest expense decreased by $7.0 million or 6.4% to $102.6 million for the six months ended June 30, 2021 compared to $109.6 million for the six months ended June 30, 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 second quarter of 2020, and lower average interest rates, which resulted in a decrease in interest expense of $25.1 million for the second quarter of 2020. These decreases to interest expense were partially offset by the issuance of $300 million of senior unsecured notes due June 15, 2031 in May 2021, $450.0 million of senior unsecured notes due March 1, 2028 in February 2021, $650 million of senior unsecured notes due March 15, 2032 in 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 an increase of $12.8 million interest expense for the six months ended June 30, 2021. Additionally, there was a $5.3 million decrease in capitalized interest in the six months ended June 30, 2021, due to a decrease in development activity as compared to the same period in 2020.

Total return swap income of $5.5 million in the six months ended June 30, 2021 consists of monthly settlements related to the Company's total return swap contracts with an aggregate notional amount of $224.7 million.

Interest and other income increased by $30.6 million or 493.5% to $36.8 million in income for the six months ended June 30, 2021 compared to $6.2 million for the six months ended June 30, 2020, primarily due to increases of $17.8 million in unrealized gains on marketable securities, $5.3 million in marketable securities and other income, $4.7 million in income from early redemption of notes receivable, and $2.5 million gain on salefair value of marketable securities.

Equity income from co-investments decreasedincreased by $3.3$4.2 million or 8.5%24.7% to $35.3$21.2 million for the six months ended June 30, 2021first quarter of 2022 compared to $38.6$17.0 million for the six months ended June 30, 2020,first quarter of 2021, primarily due to decreases of $6.5$17.1 million in co-investment promote income and $6.1income. The increase was offset by decreases of $10.5 million in equity income from co-investments. The decreases were partially offset by increases of $5.5non-core co-investments and $2.3 million in income from preferred equity investments including income from early redemptions and $3.8 million in equity income from non-core co-investments.redemptions.

Deferred tax expense on unrealized gainbenefit (expense) on unconsolidated co-investmentco-investments of $2.4$2.8 million for the six months ended June 30, 2021 resulted from a net unrealized gain on $8.2 million from unconsolidated co-investments.

Loss on early retirement of debt, net of $19.0 million for the six months ended June 30, 2021 was primarily due to the early termination of the Company's five interest rate swap contracts in conjunction with the partial repayment of the Company's unsecured term debt and the early repayment of $300.0 million of senior unsecured notes.

Gain on remeasurement of co-investment of $2.3 million 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 six months ended June 30, 2020 resulted from the Company's purchase of CPPIB's 45.0% co-investment interests during the first quarter of 2020.2022 due to a net unrealized loss of $7.7 million from non-core unconsolidated co-investments.


Liquidity and Capital Resources

The United States and other countries around the world are continuing to experience an unprecedented health pandemic related to COVID-19, which has created considerable instability and disruption in the U.S. and world economies. Governmental authorities in affected regions have taken extraordinary steps in an effort to slow down the spread of the virus and mitigate its impact on affected populations.

As of June 30, 2021,March 31, 2022, the Company had $48.2$98.1 million of unrestricted cash and cash equivalents and $175.8$169.7 million in marketable securities, all of which were equity securities or available for sale debt securities. The Company believes that cash flows generated by its operations, existing cash and cash equivalents, marketable securities balances and availability under existing lines of credit are sufficient to meet all of its anticipated cash needs during the next twelve months. Additionally, the capital markets continue to be available and the Company is able to generate cash from the disposition of real estate assets to finance additional cash flow needs, including continued development and select acquisitions. In the event that conditions become further exacerbated due to the COVID-19 pandemic and related economic disruptions, the Company may further utilize other resources such as its cash reserves, lines of credit, or decreased investment in redevelopment activities to supplement operating cash flows. The Company is carefully monitoring and managing its cash position in light of ongoing conditions and levels of operations. The timing, source and amounts of cash flows provided by financing activities and used in investing
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activities are sensitive to changes in interest rates and other fluctuations in the capital markets environment, which can affect the Company's plans for acquisitions, dispositions, development and redevelopment activities.

As of June 30, 2021,March 31, 2022, Moody’s Investor Service, and Standard and Poor's credit agencies rated the Company and the Operating Partnership, Baa1/Stable, and BBB+/Stable, respectively.

As of June 30, 2021,March 31, 2022, the Company had two unsecured lines of credit aggregating $1.24 billion. As of June 30, 2021,March 31, 2022, there was $85.0$98.0 million outstanding on the Company's $1.2 billion unsecured line of credit. The underlying interest rate is based on a tiered rate structure tied to the Company's credit ratings and sustainability-linked metrics and was LIBOR plus 0.825%0.775% as of June 30, 2021.March 31, 2022. This facility is scheduled to mature in December 2023,September 2025, with one 18-month extension,three 6-month extensions, exercisable at the Company's option. Subsequent to quarter end, the borrowing spread on this facility will be reduced by 2.5 basis points to LIBOR plus 0.75% as a result of achieving the Enhanced Sustainability Metric Target for 2021 as defined by the facility's sustainability-linked pricing component. As of June 30, 2021,March 31, 2022, there was no amount outstanding on the Company's $35.0 million working capital unsecured line of credit. The underlying interest rate on the $35.0 million line is based on a tiered rate structure tied to the Company's credit ratings and sustainability-linked metrics and was LIBOR plus 0.825%0.775% as of June 30, 2021.March 31, 2022. This facility is scheduled to mature in February 2023.

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

Contents
In March 2021, the Operating Partnership issued $450.0 million of senior unsecured notes due on March 1, 2028 with a coupon rate of 1.700% per annum (the "2028 Notes"), which are payable on March 1 and September 1 of each year, beginning on September 1, 2021. The 2028 Notes were offered to investors at a price of 99.423% of par value. The 2028 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. The Company 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.

In September 2018,2021, the Company entered into ana new equity distribution agreement pursuant to which the Company may offer and sell shares of its common stock having an aggregate gross sales price of up to $900.0 million (the "2018“2021 ATM Program"Program”). In connection with the 20182021 ATM Program, the Company may also enter into related forward sale agreements, whereby, at the Company’s discretion, itand may sell shares of its common stock under the 2018 ATM Program under forward salespursuant to these agreements. The use of a forward sale agreement would allow the Company to lock in a share price on the sale of shares of its common stock at the time the agreement is executed, but defer receivingreceipt of the proceeds from the sale of shares until a later date. date should the Company elect to settle such forward sale agreement, in whole or in part, in shares of common stock.

During the sixthree months ended June 30, 2021,March 31, 2022, the Company did not issuesell any shares of its common stock through the 20182021 ATM Program. As of June 30, 2021,March 31, 2022, there are no outstanding forward purchase agreements, and $826.6$900.0 million of shares remainremains available to be sold under this program.the 2021 ATM Program.

In December 2015, the Company’s Board of Directors authorized a stock repurchase plan to allow the Company to acquire shares in an aggregate of up to $250.0 million. In February 2019, the Board of Directors approved the replenishment of the stock repurchase plan such that, as of such date, the Company had $250.0 million of purchase authority remaining under the stock repurchase plan. In each of May and December 2020, the Board of Directors approved the replenishment of the stock repurchase plan such that, as of such date, the Company had $250.0 million of purchase authority remaining under the replenished plan. During the sixthree months ended June 30, 2021,March 31, 2022, the Company repurchased and retired 40,000 shares of its common stock totaling $9.2 million, including commissions, at an average price of $229.30 per share.did not repurchase any shares. As of June 30, 2021,March 31, 2022, the Company had $214.5 million of purchase authority remaining under the stock repurchase plan.

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

Development and Predevelopment Pipeline

The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations. As of June 30, 2021,March 31, 2022, the Company’s development pipeline was comprised of twoone consolidated projectsproject under development, one unconsolidated joint venture project under development
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and various consolidated predevelopment projects, aggregating 571371 apartment homes, with total incurred costs of $0.2 billion,$162.0 million, and estimated remaining project costs of approximately $96.0$55.0 million, $58.0$29.0 million of which represents the Company's share of estimated remaining costs, for total estimated project costs of $0.3 billion.$217.0 million.

The Company defines predevelopment projects as proposed communities in negotiation or in the entitlement process with an expected high likelihood of becoming entitled development projects. The Company may also acquire land for future development purposes or sale.

The Company expects to fund the development and predevelopment communities by using a combination of some or all of the following sources: its working capital, amounts available on its lines of credit, construction loans, net proceeds from public and private equity and debt issuances, and proceeds from the disposition of assets, if any.

Derivative Activity

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

Alternative Capital Sources

The Company utilizes co-investments as an alternative source of capital for acquisitions of both operating and development communities. As of June 30, 2021,March 31, 2022, the Company had an interest in 264 apartment homes in communitiesa community actively under development with a joint venturesventure for total estimated costs of $0.1 billion.$102.0 million. Total estimated remaining costs are approximately $77.0$53.0 million, of which the Company estimates its remaining investment in these development joint ventures will be
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approximately $39.3$27.0 million. In addition, the Company had an interest in 9,31310,636 apartment homes of operating communities with joint ventures for a total book value of $497.3$601.7 million as of June 30, 2021.March 31, 2022.

Off-Balance Sheet Arrangements

The Company has various unconsolidated interests in certain joint ventures. The Company does not believe that these unconsolidated investments have a materially different impact on its liquidity, cash flows, capital resources, credit or market risk than its consolidated operations. See Note 4, Co-investments, in the Notes to Condensed Consolidated Financial Statements, for carrying values and combined summarized financial information of these unconsolidated investments.
 
Critical Accounting Policies and 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. The Company defines critical accounting policiesestimates as those accounting policies that require the Company’s management to exercise their most difficult, subjective and complex judgments. The Company’s critical accounting policies and estimates relate principally to the following key areas: (i) accounting for the acquisition of investments in real estate (specifically, the allocation between land and buildings); and (ii) evaluation of events and changes in circumstances indicating whether the Company’s rental properties may be impaired. The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates made by management.

The Company’s critical accounting policies and estimates have not changed materially from the information reported in Note 2, Summary of Critical and Significant Accounting Policies, in the Company’s annual report on Form 10-K for the year ended December 31, 2020.2021.
  
Forward-Looking Statements
 
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Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this quarterly report on Form 10-Q which are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Exchange Act, including statements regarding the Company's expectations, estimates, assumptions, hopes, intentions, beliefs and strategies regarding the future. Words such as "expects," "assumes," "anticipates," "may," "will," "intends," "plans," "projects," "believes," "seeks," "future," "estimates," and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, among other things, statements regarding the Company’s expectations related to the continued impact of the COVID-19 pandemic and related variants on the Company’s business, financial condition and results of operations and the impact of any additional measures taken to mitigate the impact of the pandemic, the Company's intent, beliefs or expectations with respect to the timing of completion of current development and redevelopment projects and the stabilization of such projects, the timing of lease-up and occupancy of its apartment communities, the anticipated operating performance of its apartment communities, the total projected costs of development and redevelopment projects, co-investment activities, qualification as a REIT under the Internal Revenue Code of 1986, as amended, the real estate markets in the geographies in which the Company’s properties are located and in the United States in general, the adequacy of future cash flows to meet anticipated cash needs, its financing activities and the use of proceeds from such activities, the availability of debt and equity financing, general economic conditions including the potential impacts from such economic conditions, including as a result of the COVID-19 pandemic and governmental measures intended to prevent its spread, trends affecting the Company’s financial condition or results of operations, changes to U.S. tax laws and regulations in general or specifically related to REITs or real estate, changes to laws and regulations in jurisdictions in which communities the Company owns are located, and other information that is not historical information.

While the Company's management believes the assumptions underlying its forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control, which could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect the Company’s current expectations of the approximate outcomes of the matters discussed. Factors that might cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: the continued impact of the COVID-19 pandemic and related variants, which remains inherently uncertain as to duration and severity, and any additional governmental measures taken to limit its spread and other potential future outbreaks of infectious diseases or other health concerns could continue to adversely affect the Company’s business and its tenants, and cause a significant downturn in general economic conditions, the
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real estate industry, and the markets in which the Company's communities are located; the Company may fail to achieve its business objectives; the actual completion of development and redevelopment projects may be subject to delays; the stabilization dates of such projects may be delayed; the Company may abandon or defer development or redevelopment projects for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; the total projected costs of current development and redevelopment projects may exceed expectations; such development and redevelopment projects may not be completed; development and redevelopment projects and acquisitions may fail to meet expectations; estimates of future income from an acquired property may prove to be inaccurate; occupancy rates and rental demand may be adversely affected by competition and local economic and market conditions; there may be increased interest rates and operating costs; the Company may be unsuccessful in the management of its relationships with its co-investment partners; future cash flows may be inadequate to meet operating requirements and/or may be insufficient to provide for dividend payments in accordance with REIT requirements; changes in laws or regulations; the terms of any refinancing may not be as favorable as the terms of existing indebtedness; unexpected difficulties in leasing of development projects; volatility in financial and securities markets; the Company’s failure to successfully operate acquired properties; unforeseen consequences from cyber-intrusion; the Company’s inability to maintain our investment grade credit rating with the rating agencies; government approvals, actions and initiatives, including the need for compliance with environmental requirements; and those further risks, special considerations, and other factors referred to in this quarterly report on Form 10-Q, in the Company's annual report on Form 10-K for the year ended December 31, 2020,2021, and those risk factors and special considerations set forth in the Company's other filings with the Securities and Exchange Commission (the "SEC") which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Additionally, the risks, uncertainties and other factors set forth above or otherwise referred to in the reports that the Company has filed with the SEC may be further amplified by the global impact of the COVID-19 pandemic.pandemic and related variants and uncertainties regarding ongoing hostilities between Russia and the Ukraine and the related impacts on macroeconomic conditions, including, among other things, interest rates. All forward-looking statements are made as of the date hereof, the Company assumes no obligation to update or supplement this information for any reason, and therefore, they may not represent the Company’s estimates and assumptions after the date of this report.

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

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

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

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

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

The following table is a reconciliation of net income available to common stockholders to FFO and Core FFO for the three and six months ended June 30,March 31, 2022 and 2021 and 2020 (in thousands, except share and per share amounts):

Essex Property Trust, Inc.
Three Months Ended March 31,
20222021
Net income available to common stockholders$73,254 $168,444 
Adjustments:  
Depreciation and amortization133,533 128,587 
Gains not included in FFO— (100,096)
Depreciation and amortization from unconsolidated co-investments18,115 14,729 
Noncontrolling interest related to Operating Partnership units2,563 5,947 
Depreciation attributable to third party ownership and other (1)
(353)(129)
Funds from operations attributable to common stockholders and unitholders$227,112 $217,482 
Funds from operations attributable to common stockholders and unitholders per share - diluted$3.36 $3.23 
Non-core items:  
Expensed acquisition and investment related costs$$15 
Deferred tax (benefit) expense on unconsolidated co-investments (2)
(2,754)508 
Gain on sale of marketable securities(12,171)(2,611)
Change in unrealized losses (gains) on marketable securities, net24,585 (6,276)
Provision for credit losses(62)38 
Equity loss (income) from non-core co-investments (3)
8,844 (1,627)
Loss on early retirement of debt, net— 2,517 
Loss on early retirement of debt from unconsolidated co-investments86 
Co-investment promote income(17,076)— 
Income from early redemption of preferred equity investments and notes receivable(858)(3,513)
General and administrative and other, net448 257 
Insurance reimbursements, legal settlements, and other, net— (182)
Core Funds from Operations attributable to common stockholders and unitholders$228,162 $206,611 
Core Funds from Operations attributable to common stockholders and unitholders per share-diluted$3.37 $3.07 
Weighted average number shares outstanding, diluted (4)
67,621,842 67,272,839 

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Essex Property Trust, Inc.
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Net income available to common stockholders$64,846 $84,458 $233,290 $399,464 
Adjustments:    
Depreciation and amortization128,736 133,609 257,323 265,168 
Gains not included in FFO attributable to common stockholders and unitholders(2,260)(16,597)(102,356)(251,291)
Depreciation and amortization from unconsolidated co-investments14,819 12,764 29,548 25,308 
Noncontrolling interest related to Operating Partnership units2,288 2,964 8,235 13,950 
Depreciation attributable to third party ownership and other(138)(139)(267)(273)
Funds from operations attributable to common stockholders and unitholders$208,291 $217,059 $425,773 $452,326 
Funds from operations attributable to common stockholders and unitholders per share - diluted$3.09 $3.21 $6.33 $6.65 
Non-core items:    
Expensed acquisition and investment related costs41 15 56 102 
Deferred tax expense on unrealized gain on unconsolidated co-investment (1)
1,842 1,636 2,350 1,636 
Loss (gain) on sale of marketable securities112 (46)(2,499)(33)
Unrealized (gains) losses on marketable securities(10,405)(7,623)(16,681)1,073 
Provision for credit losses(145)147 (107)97 
Equity income from non-core co-investments (2)
(6,771)(4,696)(8,398)(4,586)
Loss on early retirement of debt, net16,465 5,027 18,982 4,706 
(Gain) loss on early retirement of debt from unconsolidated co-investment— (38)(38)
Co-investment promote income— — — (6,455)
Income from early redemption of preferred equity investments and notes receivable(4,747)— (8,260)(210)
General and administrative and other, net256 2,312 513 3,132 
Insurance reimbursements, legal settlements, and other, net(4)(106)(186)(63)
Core Funds from Operations attributable to common stockholders and unitholders$204,935 $213,687 $411,546 $451,687 
Core Funds from Operations attributable to common stockholders and unitholders per share-diluted$3.04 $3.16 $6.12 $6.64 
Weighted average number shares outstanding, diluted (3)
67,331,877 67,682,034 67,299,655 68,017,414 

(1)
The Company consolidates certain co-investments. The noncontrolling interest's share of net operating income in these investments for the three months ended March 31, 2022 was $0.7 million.
(1)(2) Represents deferred tax (benefit) expense related to net unrealized gains or losses on technology co-investments.
(2)(3) Represents the Company's share of co-investment incomeloss (income) from technology co-investments.
(3)(4) Assumes conversion of all outstanding Operating Partnership limited partnership units ("OP Units")in the Operating Partnership into shares of the Company's common stock and excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.limited partnership units.

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Net Operating Income

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

Three Months Ended June 30,Six Months Ended June 30, Three Months Ended March 31,
2021202020212020 20222021
Earnings from operationsEarnings from operations$93,381 $119,736 $290,762 $250,573 Earnings from operations$109,850 $197,381 
Adjustments:Adjustments:    Adjustments:  
Corporate-level property management expensesCorporate-level property management expenses9,105 8,646 18,052 17,405 Corporate-level property management expenses10,172 9,013 
Depreciation and amortizationDepreciation and amortization128,736 133,609 257,323 265,168 Depreciation and amortization133,533 128,587 
Management and other fees from affiliatesManagement and other fees from affiliates(2,221)(2,348)(4,470)(4,965)Management and other fees from affiliates(2,689)(2,249)
General and administrativeGeneral and administrative12,222 14,952 22,034 28,934 General and administrative12,242 9,812 
Expensed acquisition and investment related costsExpensed acquisition and investment related costs41 15 56 102 Expensed acquisition and investment related costs15 
Gain on sale of real estate and landGain on sale of real estate and land— (16,597)(100,096)(16,597)Gain on sale of real estate and land— (100,096)
NOINOI241,264 258,013 483,661 540,620 NOI263,116 242,463 
Less: Non-Same Property NOILess: Non-Same Property NOI(22,621)(29,815)(45,037)(61,649)Less: Non-Same Property NOI(15,355)(11,580)
Same-Property NOISame-Property NOI$218,643 $228,198 $438,624 $478,971 Same-Property NOI$247,761 $230,883 

Item 3: Quantitative and Qualitative Disclosures About Market Risks

Interest Rate Hedging Activities

The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, the Company uses interest rate swaps as part of its cash flow hedging strategy. The Company previously had five interest rate swaps that were designated as cash flow hedges of interest rate risk and were terminated as of March 31, 2021 in conjunction with the partial repayment of the Company's unsecured term debt. As of June 30, 2021, the Company also had $224.7 million of secured variable rate indebtedness.

Additionally, the Company has entered into four total return swap contracts, with an aggregate notional amount of $224.7$224.2 million that effectively convert $224.7$224.2 million of fixed mortgage notes payable to a floating interest rate based on the SIFMA plus a spread and have a carrying value of zero at June 30, 2021.March 31, 2022. The Company is exposed to insignificant interest rate risk on these swaps as the related mortgages are callable, at par, by the Company, co-terminus with the termination of any related swap. These derivatives do not qualify for hedge accounting.

Interest Rate Sensitive Liabilities

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

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The Company’s interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows.
 
For the Years EndedFor the Years Ended20212022202320242025ThereafterTotalFair valueFor the Years Ended20222023202420252026ThereafterTotalFair value
($ in thousands, except for interest rates)($ in thousands, except for interest rates)($ in thousands, except for interest rates)
Fixed rate debtFixed rate debt$1,409 42,408 302,093 402,177 632,035 4,384,849 $5,764,971 $6,087,382 Fixed rate debt$41,693 302,092 402,177 632,035 548,291 3,836,558 $5,762,846 $5,622,398 
Average interest rateAverage interest rate3.4 %3.7 %3.4 %4.0 %3.5 %3.1 %3.2 % Average interest rate3.6 %3.4 %4.0 %3.5 %3.5 %3.2 %3.2 % 
Variable rate debt (1)
Variable rate debt (1)
$365 100,780 85,852 932 1,019 220,780 $409,728 $406,555 
Variable rate debt (1)
$591 853 932 1,019 1,114 317,666 $322,175 $319,443 
Average interest rateAverage interest rate1.0 %1.1 %1.0 %1.0 %1.0 %0.9 %1.0 % Average interest rate1.2 %1.2 %1.2 %1.2 %1.2 %1.1 %1.1 % 
 
(1) $224.7$224.2 million is subject to total return swaps.

The table incorporates only those exposures that exist as of June 30, 2021.March 31, 2022. It does not consider those exposures or positions that could arise after that date. As a result, the Company's ultimate realized gain or loss, with respect to interest rate fluctuations and hedging strategies would depend on the exposures that arise prior to settlement.

Item 4: Controls and Procedures

Essex Property Trust, Inc.

As of June 30, 2021,March 31, 2022, Essex carried out an evaluation, under the supervision and with the participation of management, including Essex’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Essex's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, Essex’s Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2021,March 31, 2022, Essex's disclosure controls and procedures were effective to ensure that the information required to be disclosed by Essex in the reports that Essex files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that Essex files or submits under the Exchange Act is accumulated and communicated to Essex’s management, including Essex’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There were no changes in Essex's internal control over financial reporting, that occurred during the quarter ended June 30, 2021,March 31, 2022, that have materially affected, or are reasonably likely to materially affect, Essex’s internal control over financial reporting.

Essex Portfolio, L.P.

As of June 30, 2021,March 31, 2022, the Operating Partnership carried out an evaluation, under the supervision and with the participation of management, including Essex's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Operating Partnership's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2021,March 31, 2022, the Operating Partnership's disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Operating Partnership in the reports that the Operating Partnership files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that the Operating Partnership files or submits under the Exchange Act is accumulated and communicated to the Operating Partnership’s management, including Essex's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There were no changes in the Operating Partnership's internal control over financial reporting, that occurred during the quarter ended June 30, 2021,March 31, 2022, that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.
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Part II -- Other Information

Item 1: Legal Proceedings
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The Company is subject to various lawsuits in the normal course of its business operations. While the resolution of any such matter cannot be predicted with certainty, the Company is not currently a party to any legal proceedings nor is any legal proceeding currently threatened against the Company that the Company believes, individually or in the aggregate, would have a material adverse effect on the Company's financial condition, results of operations or cash flows.

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 1A. Risk Factors" in the Company's annual report on Form 10-K for the year ended December 31, 2020,2021, which could materially affect 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, 2020,2021, as filed with the SEC and available at www.sec.gov. The risks described in 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 or that the Company currently deems to be immaterial may also materially adversely affect the Company's financial condition, results of operations or cash flows.
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

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

During the three months ended June 30, 2021,March 31, 2022, the Operating Partnership issued OP Units in private placements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the consideration set forth below:

During the three months ended June 30, 2021,March 31, 2022, Essex issued an aggregate of 5,08683,881 shares of its common stock upon the exercise of stock options and 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.awards. Essex contributed the net proceeds of $0.6$19.1 million from the option exercises during the three months ended June 30, 2021March 31, 2022 to the Operating Partnership in exchange for an aggregate of 3,10574,155 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 June 30, 2021, 1,981March 31, 2022, 9,726 OP Units were issued to Essex pursuant to this mechanism.

Stock Repurchases

In December 2020, the Board of Directors approved the replenishment of the Company's stock repurchase plan such that, as of such date, the Company had $250.0 million of purchase authority remaining under the replenished plan. As a result of the replenishment, as of June 30, 2021, the Company had $214.5 million of purchase authority remaining under the stock repurchase plan. The Company did not repurchase any of its common stock during the three months ended June 30,
2021.March 31, 2022. As of March 31, 2022, the Company had $214.5 million of purchase authority remaining under the stock repurchase plan.

Item 3: Defaults Upon Senior Securities

None.

Item 4: Mine Safety Disclosures

Not applicable.

Item 5: Other Information

None.
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Item 6: Exhibits
 
A. Exhibits
101.INSXBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

* 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.
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized.
                    
 ESSEX PROPERTY TRUST, INC.
 (Registrant)
 Date: July 30, 2021April 27, 2022
 
By: /s/ BARBARA PAK
 Barbara Pak
 Executive Vice President and Chief Financial Officer
(Authorized Officer, Principal Financial Officer)

 Date: July 30, 2021April 27, 2022
 
By: /s/ JOHN FARIAS
 John Farias
 Senior Vice President and Chief Accounting Officer

 
ESSEX PORTFOLIO, L.P.
By Essex Property Trust, Inc., its general partner
 (Registrant)
 Date: July 30, 2021April 27, 2022
 
By: /s/ BARBARA PAK
 Barbara Pak
 Executive Vice President and Chief Financial Officer
(Authorized Officer, Principal Financial Officer)

 Date: July 30, 2021April 27, 2022
 
By: /s/ JOHN FARIAS
 John Farias
 Senior Vice President and Chief Accounting Officer

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