Item 2. Properties

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Item 2. Properties

The Company’s Portfolio as of December 31, 2013 (including communities owned by unconsolidated joint ventures, but excluding communities underlying preferred equity investments) was comprised of 164 apartment communities (comprising 34,079 apartment units), of which 15,725 units are located in Southern California, 10,494 units are located in the San Francisco Bay Area, and 7,860 units are located in the Seattle metropolitan area. The Company’s apartment communities accounted for 97.5% of the Company’s revenues for the year ended December 31, 2013.

Occupancy Rates

Financial occupancy is defined as the percentage resulting from dividing actual rental revenue by total possible rental revenue. When calculating actual rents for occupied units and market rents for vacant units, delinquencies and concessions are not taken into account. Total possible rental revenue represents the value of all apartment units, with occupied units valued at contractual rental rates pursuant to leases and vacant units valued at estimated market rents. The Company believes that financial occupancy is a meaningful measure of occupancy because it considers the value of each vacant unit at its estimated market rate. Financial occupancy may not completely reflect short-term trends in physical occupancy and financial occupancy rates as disclosed by other REITs may not be comparable to the Company’s calculation of financial occupancy. Market rates are determined using a variety of factors such as effective rental rates at the property based on recently signed leases and asking rates for comparable properties in the market. The recently signed effective rates at the property are used as the starting point in the determination of the market rates of vacant units. The Company then increases or decreases these rates based on the supply and demand in the apartment community’s market. The Company will check the reasonableness of these rents based on its position within the market and compare the rents against the asking rents by comparable properties in the market.

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

Communities

The Company’s communities are primarily suburban garden-style communities and town homes comprising multiple clusters of two and three-story buildings situated on three to fifteen acres of land. As of December 31, 2013, the Company’s communities include 113 garden-style, 46 mid-rise, and 5 high-rise communities. The communities have an average of approximately 208 units, with a mix of studio, one, two and some three-bedroom units. A wide variety of amenities are available at the Company’s communities, including covered parking, fireplaces, swimming pools, clubhouses with fitness facilities, volleyball and playground areas and tennis courts.

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

	·	located near employment centers;

	·	attractive communities that are well maintained; and

	·	proactive customer service.

Commercial Buildings

The Company’s corporate headquarters is located in two office buildings with approximately 31,900 square feet located at 925/935 East Meadow Drive, Palo Alto, California. The Company owns an office building with approximately 110,000 square feet located in Irvine, California, of which the Company occupies approximately 7,150 square feet at December 31, 2013. The Company owns Essex-Hollywood, a 35,000 square foot commercial building and a 139,000 square foot retail site in Santa Clara, California as future development sites that are currently 100% leased.

The following tables describe the Company’s Portfolio as of December 31, 2013. The first table describes the Company’s communities and the second table describes the Company’s other real estate assets. (See Note 7 of the Company’s consolidated financial statements for more information about the Company’s secured mortgage debt and Schedule III for a list of secured mortgage loans related to the Company’s Portfolio.)

			Rentable
			Square	Year	Year
Communities (1)	Location	Units	Footage	Built	Acquired	Occupancy(2)
Southern California
Alpine Village	Alpine, CA	301	254,400	1971	2002	97%
Anavia	Anaheim, CA	250	312,343	2009	2010	96%
Barkley, The(3)(4)	Anaheim, CA	161	139,800	1984	2000	97%
Bonita Cedars	Bonita, CA	120	120,800	1983	2002	97%
Camarillo Oaks	Camarillo, CA	564	459,000	1985	1996	96%
Camino Ruiz Square	Camarillo, CA	160	105,448	1990	2006	98%
Mesa Village	Clairemont, CA	133	43,600	1963	2002	97%
Regency at Encino	Encino, CA	75	78,487	1989	2009	97%
Valley Park(4)	Fountain Valley, CA	160	169,700	1969	2001	98%
Capri at Sunny Hills(4)	Fullerton, CA	100	128,100	1961	2001	94%
Haver Hill(5)	Fullerton, CA	264	224,130	1973	2012	94%
Wilshire Promenade	Fullerton, CA	149	128,000	1992	1997	96%
Montejo(4)	Garden Grove, CA	124	103,200	1974	2001	96%
CBC Apartments	Goleta, CA	148	91,538	1962	2006	95%
The Sweeps	Goleta, CA	91	88,370	1967	2006	95%
416 on Broadway	Glendale, CA	115	126,782	2009	2010	97%
Hampton Court	Glendale, CA	83	71,500	1974	1999	97%
Hampton Place	Glendale, CA	132	141,500	1970	1999	97%
Devonshire	Hemet, CA	276	207,200	1988	2002	91%
Huntington Breakers	Huntington Beach, CA	342	241,700	1984	1997	96%
The Huntington	Huntington Beach, CA	276	202,256	1975	2012	96%
Axis 2300	Irvine, CA	115	170,714	2010	2010	96%
Hillsborough Park	La Habra, CA	235	215,500	1999	1999	97%
Trabuco Villas	Lake Forest, CA	132	131,000	1985	1997	97%
Madrid Apartments(6)	Mission Viejo, CA	230	228,099	2000	2012	96%
Marbrisa	Long Beach, CA	202	122,800	1987	2002	96%
Pathways	Long Beach, CA	296	197,700	1975(7)	1991	95%
Belmont Station	Los Angeles, CA	275	225,000	2008	2008	96%
Bellerive	Los Angeles, CA	63	79,296	2011	2011	98%
Bunker Hill	Los Angeles, CA	456	346,600	1968	1998	95%
Cochran Apartments	Los Angeles, CA	58	51,400	1989	1998	97%
Kings Road	Los Angeles, CA	196	132,100	1979	1997	94%
Gas Company Lofts(5)	Los Angeles, CA	251	226,666	2004	2013	94%
Marbella, The	Los Angeles, CA	60	50,108	1991	2005	97%
Pacific Electric Lofts(6)	Los Angeles, CA	314	277,980	2006	2012	96%
Park Catalina	Los Angeles, CA	90	72,864	2002	2012	97%
Park Place	Los Angeles, CA	60	48,000	1988	1997	97%
Santee Court	Los Angeles, CA	165	132,040	2004	2010	95%
Santee Village	Los Angeles, CA	73	69,817	2011	2010	95%
Windsor Court	Los Angeles, CA	58	46,600	1988	1997	97%
Marina City Club(8)	Marina Del Rey, CA	101	127,200	1971	2004	96%
Mirabella	Marina Del Rey, CA	188	176,800	2000	2000	96%
Mira Monte	Mira Mesa, CA	355	262,600	1982	2002	96%
Hillcrest Park	Newbury Park, CA	608	521,900	1973	1998	97%
Fairways(9)	Newport Beach, CA	74	107,100	1972	1999	94%
Muse	North Hollywood, CA	152	135,292	2011	2011	97%
Country Villas	Oceanside, CA	180	179,700	1976	2002	96%
Mission Hills	Oceanside, CA	282	244,000	1984	2005	97%
Mariners Place	Oxnard, CA	105	77,200	1987	2000	98%
Monterey Villas	Oxnard, CA	122	122,100	1974	1997	98%
Tierra Vista	Oxnard, CA	404	387,100	2001	2001	96%
Arbors Parc Rose(6)	Oxnard, CA	373	503,196	2001	2011	95%
Monterra del Mar	Pasadena, CA	123	74,400	1972	1997	96%
Monterra del Rey	Pasadena, CA	84	73,100	1972	1999	96%
Monterra del Sol	Pasadena, CA	85	69,200	1972	1999	96%
Villa Angelina(4)	Placentia, CA	256	217,600	1970	2001	97%
						(continued)

			Rentable
			Square	Year	Year
Communities (1)	Location	Units	Footage	Built	Acquired	Occupancy(2)
Southern California (continued)
Fountain Park	Playa Vista, CA	705	608,900	2002	2004	97%
Highridge(4)	Rancho Palos Verdes, CA	255	290,200	1972(10)	1997	94%
CentrePointe	San Diego, CA	224	126,700	1974(11)	1997	90%
Summit Park	San Diego, CA	300	229,400	1972	2002	97%
Domain	San Diego, CA	379	345,044	2013	2013	82%
Vista Capri - North	San Diego, CA	106	51,800	1975	2002	97%
Essex Skyline at MacArthur Place (12)	Santa Ana, CA	349	512,791	2008	2012	95%
Fairhaven(4)	Santa Ana, CA	164	135,700	1970	2001	97%
Hope Ranch Collection	Santa Barbara, CA	108	126,700	1965&73	2007	97%
Hidden Valley(13)	Simi Valley, CA	324	310,900	2004	2004	96%
Meadowood	Simi Valley, CA	320	264,500	1986	1996	97%
Shadow Point	Spring Valley, CA	172	131,200	1983	2002	95%
Coldwater Canyon	Studio City, CA	39	34,125	1979	2007	97%
Allegro	Valley Village, CA	97	127,812	2010	2010	98%
Lofts at Pinehurst, The	Ventura, CA	118	71,100	1971	1997	97%
Pinehurst(14)	Ventura, CA	28	21,200	1973	2004	97%
Woodside Village	Ventura, CA	145	136,500	1987	2004	97%
Walnut Heights	Walnut, CA	163	146,700	1964	2003	96%
Reveal(6)	Woodland Hills, CA	438	414,892	2010	2011	95%
Avondale at Warner Center	Woodland Hills, CA	446	331,000	1970(15)	1997	97%
		15,725	13,957,790			96%
Northern California
Belmont Terrace	Belmont, CA	71	72,951	1974	2006	97%
Davey Glen(16)	Belmont, CA	69	65,974	1962	2006	96%
Fourth and U	Berkeley, CA	171	146,255	2010	2010	96%
Commons, The	Campbell, CA	264	153,168	1973	2010	98%
Pointe at Cupertino, The	Cupertino, CA	116	135,200	1963(17)	1998	93%
Stevenson Place	Fremont, CA	200	146,200	1971	1983	96%
Boulevard	Fremont, CA	172	131,200	1978(18)	1996	97%
Briarwood(6)	Fremont, CA	160	111,160	1975	2011	98%
The Woods(6)	Fremont, CA	160	105,280	1978	2011	98%
City View	Hayward, CA	572	462,400	1975(19)	1998	97%
Alderwood Park(16)	Newark, CA	96	74,624	1987	2006	97%
Bridgeport	Newark, CA	184	139,000	1987(20)	1987	96%
Regency at Mountain View(5)	Mountain View, CA	142	127,600	1970	2013	93%
The Grand	Oakland, CA	243	205,026	2009	2009	97%
San Marcos	Richmond, CA	432	407,600	2003	2003	97%
Mt. Sutro	San Francisco, CA	99	64,000	1973	2001	93%
Park West	San Francisco, CA	126	90,060	1958	2012	92%
Fox Plaza	San Francisco, CA	444	230,017	1968	2013	94%
Bennett Lofts	San Francisco, CA	147	184,607	2004	2012	81%
Epic, Phase I(21)	San Jose, CA	280	249,080	2013	2013	49%
101 San Fernando	San Jose, CA	323	296,078	2001	2010	96%
Willow Lake	San Jose, CA	508	471,744	1989	2012	95%
Bella Villagio	San Jose, CA	231	227,511	2004	2010	97%
Carlyle, The	San Jose, CA	132	129,200	2000	2000	98%
Esplanade	San Jose, CA	278	279,000	2002	2004	97%
Waterford, The	San Jose, CA	238	219,600	2000	2000	97%
Hillsdale Garden	San Mateo, CA	697	611,505	1948	2006	97%
Bel Air	San Ramon, CA	462	391,000	1988/2000	1997	95%
Canyon Oaks	San Ramon, CA	250	237,894	2005	2007	97%
Foothill Gardens	San Ramon, CA	132	155,100	1985	1997	95%
Mill Creek at Windermere	San Ramon, CA	400	381,060	2005	2007	97%
Twin Creeks	San Ramon, CA	44	51,700	1985	1997	95%
1000 Kiely	Santa Clara, CA	121	128,486	1971	2011	93%
Le Parc Luxury Apartments	Santa Clara, CA	140	113,200	1975	1994	97%
Marina Cove(22)	Santa Clara, CA	292	250,200	1974(23)	1994	94%
Riley Square(6)	Santa Clara, CA	156	126,900	1972	2012	96%
Chestnut Street	Santa Cruz, CA	96	87,640	2002	2008	94%
Harvest Park	Santa Rosa, CA	104	116,628	2004	2007	96%
Bristol Commons	Sunnyvale, CA	188	142,600	1989	1997	97%
						(continued)

			Rentable
			Square	Year	Year
Communities (1)	Location	Units	Footage	Built	Acquired	Occupancy(2)
Northern California (continued)
Brookside Oaks(4)	Sunnyvale, CA	170	119,900	1973	2000	95%
Magnolia Lane(24)	Sunnyvale, CA	32	31,541	2001	2007	94%
Magnolia Square(4)	Sunnyvale, CA	156	110,824	1969	2007	94%
Montclaire, The	Sunnyvale, CA	390	294,100	1973(25)	1988	97%
Reed Square	Sunnyvale, CA	100	95,440	1970	2012	97%
Summerhill Park	Sunnyvale, CA	100	78,500	1988	1988	98%
Windsor Ridge	Sunnyvale, CA	216	161,800	1989	1989	97%
Via	Sunnyvale, CA	284	309,421	2011	2011	97%
Vista Belvedere	Tiburon, CA	76	78,300	1963	2004	93%
Tuscana	Tracy, CA	30	29,088	2007	2007	100%
		10,494	9,027,362			96%
Seattle, Washington Metropolitan Area
Cedar Terrace	Bellevue, WA	180	174,200	1984	2005	97%
Courtyard off Main	Bellevue, WA	109	108,388	2000	2010	96%
Emerald Ridge	Bellevue, WA	180	144,000	1987	1994	97%
Foothill Commons	Bellevue, WA	388	288,300	1978(26)	1990	95%
Palisades, The	Bellevue, WA	192	159,700	1977	1990	97%
Sammamish View	Bellevue, WA	153	133,500	1986	1994	97%
Woodland Commons	Bellevue, WA	302	220,066	1978(27)	1990	96%
Canyon Pointe	Bothell, WA	250	210,400	1990	2003	97%
Inglenook Court	Bothell, WA	224	183,600	1985	1994	96%
Salmon Run at Perry Creek	Bothell, WA	132	117,100	2000	2000	98%
Stonehedge Village	Bothell, WA	196	214,800	1986	1997	97%
Highlands at Wynhaven	Issaquah, WA	333	424,674	2000	2008	95%
Park Hill at Issaquah	Issaquah, WA	245	277,700	1999	1999	97%
Wandering Creek	Kent, WA	156	124,300	1986	1995	97%
Ascent	Kirkland, WA	90	75,840	1988	2012	95%
Bridle Trails	Kirkland, WA	108	99,700	1986(28)	1997	96%
Corbella at Juanita Bay	Kirkland, WA	169	103,339	1978	2010	96%
Evergreen Heights	Kirkland, WA	200	188,300	1990	1997	96%
Slater 116	Kirkland, WA	108	81,415	2013	2013	60%
Montebello	Kirkland, WA	248	272,734	1996	2012	97%
Laurels at Mill Creek	Mill Creek, WA	164	134,300	1981	1996	97%
The Elliot at Mukilteo(4)	Mukilteo, WA	301	245,900	1981	1997	94%
Castle Creek	Newcastle, WA	216	191,900	1997	1997	96%
Delano/Bon Terra	Redmond, WA	126	116,340	2011/2005	2011/2012	97%
Elevation	Redmond, WA	157	138,916	1986	2010	95%
Vesta(6)	Redmond, WA	440	381,675	1998	2011	94%
Redmond Hill West(6)	Redmond, WA	442	350,275	1985	2011	97%
Brighton Ridge	Renton, WA	264	201,300	1986	1996	97%
Fairwood Pond	Renton, WA	194	189,200	1997	2004	97%
Forest View	Renton, WA	192	182,500	1998	2003	97%
The Bernard	Seattle, WA	63	43,151	2008	2011	97%
Annaliese	Seattle, WA	56	48,216	2009	2013	94%
Vox	Seattle, WA	58	42,173	2013	2013	96%
Expo(29)	Seattle, WA	275	190,176	2012	2012	96%
Cairns, The	Seattle, WA	100	70,806	2006	2007	96%
Domaine	Seattle, WA	92	79,421	2009	2012	95%
Fountain Court	Seattle, WA	320	207,000	2000	2000	94%
Joule (30)	Seattle, WA	295	191,109	2010	2010	96%
Wharfside Pointe	Seattle, WA	142	119,200	1990	1994	93%
		7,860	6,725,614			96%
Total/Weighted Average		34,079	29,710,766			96%

			Rentable
			Square	Year	Year
Other real estate assets(1)	Location	Tenants	Footage	Built	Acquired	Occupancy(2)
925 / 935 East Meadow Drive(31)	Palo Alto, CA	1	31,900	1988 / 1962	1997 / 2007	100%
6230 Sunset Blvd(32)	Los Angeles, CA	1	35,000	1938	2006	100%
17461 Derian Ave(33)	Irvine, CA	6	110,000	1983	2000	93%
Santa Clara Retail	Santa Clara, CA	3	139,000	1970	2011	100%
		11	315,900			99%

Footnotes to the Company’s Portfolio Listing as of December 31, 2013

	(1)	Unless otherwise specified, the Company has a 100% ownership interest in each community.

	(2)	For communities, occupancy rates are based on financial occupancy for the year ended December 31, 2013; for the commercial buildings or properties which have not yet stabilized, or have insufficient operating history, occupancy rates are based on physical occupancy as of December 31, 2013. For an explanation of how financial occupancy and physical occupancy are calculated, see “Properties-Occupancy Rates” in this Item 2.

	(3)	The community is subject to a ground lease, which, unless extended, will expire in 2082.

	(4)	The Company holds a 1% special limited partner interest in the partnerships which own these apartment communities. These investments were made under arrangements whereby EMC became the 1% sole general partner and the other limited partners were granted the right to require the applicable partnership to redeem their interest for cash. Subject to certain conditions, the Company may, however, elect to deliver an equivalent number of shares of the Company’s common stock in satisfaction of the applicable partnership’s cash redemption obligation.

	(5)	This community is owned by Wesco III. The Company has a 50% interest in Wesco III which is accounted for using the equity method of accounting.

	(6)	This community is owned by Wesco I. The Company has a 50% interest in Wesco I which is accounted for using the equity method of accounting.

	(7)	The Company completed a $10.8 million redevelopment in 2009.

	(8)	This community is subject to a ground lease, which, unless extended, will expire in 2067.

	(9)	This community is subject to a ground lease, which, unless extended, will expire in 2027.

	(10)	The Company completed a $16.6 million redevelopment in 2010.

	(11)	The Company is in the process of performing a $13.0 million redevelopment.

	(12)	The Company has a 97% interest and an executive vice president of the Company has a 3% interest in this community.

	(13)	The Company has a 75% member interest.

	(14)	The community is subject to a ground lease, which, unless extended, will expire in 2028.

	(15)	The Company completed a $12.0 million redevelopment in 2008.

	(16)	This community is owned by Fund II. The Company has a 28.2% interest in Fund II which is accounted for using the equity method of accounting.

	(17)	The Company is in the process of performing a $10.0 million redevelopment.

	(18)	The Company completed an $8.9 million redevelopment in 2008.

	(19)	The Company completed a $9.4 million redevelopment in 2009.

	(20)	The Company completed a $4.6 million redevelopment in 2009.

	(21)	The Company has 55% ownership in this community. The community is being developed in three phases with the remaining two phases currently under development.

	(22)	A portion of this community on which 84 units are presently located is subject to a ground lease, which, unless extended, will expire in 2028.

	(23)	The Company is in the process of performing a $14.1 million redevelopment.

	(24)	The community is subject to a ground lease, which, unless extended, will expire in 2070.

	(25)	The Company completed a $12.5 million redevelopment in 2009.

	(26)	The Company completed a $36.3 million redevelopment in 2012, which included the construction of 28 in-fill units in 2009.

	(27)	The Company completed the construction of 66 additional apartment homes in 2012 and is in the process of performing a redevelopment for a total cost of $15.4 million.

	(28)	The Company completed a $5.1 million redevelopment and completed construction of 16 units of the community’s 108 units in 2006.

	(29)	The Company has 50% ownership in this community.

	(30)	The Company has 99% ownership in this community.

	(31)	The Company occupies 100% of this property.

	(32)	The property is leased through July 2014 to a single tenant.

	(33)	The Company occupies 7% of this property.

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