Item 16. Form 10-K Summary

None.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Essex Property Trust, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Essex Property Trust, Inc. and subsidiaries (the Company) as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three‑year period ended December 31, 2018, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 21, 2019 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for the derecognition of nonfinancial assets in 2018 due to the adoption of the Financial Accounting Standards Board’s Accounting Standard Update No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20).

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

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

San Francisco, California

February 21, 2019

F- 1

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Essex Property Trust, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Essex Property Trust, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2018, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 21, 2019 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

San Francisco, California

February 21, 2019

F- 2

Report of Independent Registered Public Accounting Firm

To the Unitholders and General Partner

Essex Portfolio, L.P.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Essex Portfolio, L.P. and subsidiaries (the Operating Partnership) as of December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, capital, and cash flows for each of the years in the three‑year period ended December 31, 2018, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Operating Partnership has changed its method of accounting for the derecognition of nonfinancial assets in 2018 due to the adoption of the Financial Accounting Standards Board’s Accounting Standard Update No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20).

Basis for Opinion

These consolidated financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 2013.

San Francisco, California

February 21, 2019

F- 3

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2018 and 2017

(Dollars in thousands, except share amounts)

	2018				2017
ASSETS
Real estate:
Rental properties:
Land and land improvements	$	2,701,356			$	2,719,064
Buildings and improvements	10,664,745				10,643,009
	13,366,101				13,362,073
Less: accumulated depreciation	(3,209,548		)		(2,769,297		)
	10,156,553				10,592,776
Real estate under development	454,629				355,735
Co-investments	1,300,140				1,155,984
	11,911,322				12,104,495
Cash and cash equivalents-unrestricted	134,465				44,620
Cash and cash equivalents-restricted	16,930				16,506
Marketable securities	209,545				190,004
Notes and other receivables (includes related party receivables of $11.1 million and $41.2 million as of December 31, 2018 and December 31, 2017, respectively)	71,895				100,926
Prepaid expenses and other assets	39,439				39,155
Total assets	$	12,383,596			$	12,495,706
LIABILITIES AND EQUITY
Unsecured debt, net	$	3,799,316			$	3,501,709
Mortgage notes payable, net	1,806,626				2,008,417
Lines of credit	—				179,000
Accounts payable and accrued liabilities	127,086				127,501
Construction payable	59,345				51,770
Dividends payable	128,529				121,420
Distributions in excess of investments in co-investments	—				36,726
Other liabilities	33,375				33,132
Total liabilities	5,954,277				6,059,675
Commitments and contingencies
Redeemable noncontrolling interest	35,475				39,206
Equity:
Common stock; $0.0001 par value, 670,000,000 shares authorized; 65,890,322 and 66,054,399 shares issued and outstanding, respectively	7				7
Additional paid-in capital	7,093,079				7,129,571
Distributions in excess of accumulated earnings	(812,796		)		(833,726		)
Accumulated other comprehensive loss, net	(13,217		)		(18,446		)
Total stockholders' equity	6,267,073				6,277,406
Noncontrolling interest	126,771				119,419
Total equity	6,393,844				6,396,825
Total liabilities and equity	$	12,383,596			$	12,495,706

See accompanying notes to consolidated financial statements.

F- 4

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Income

Years ended December 31, 2018, 2017 and 2016

(Dollars in thousands, except per share and share amounts)

	2018				2017				2016
Revenues:
Rental and other property	$	1,390,870			$	1,354,325			$	1,285,723
Management and other fees from affiliates	9,183				9,574				8,278
	1,400,053				1,363,899				1,294,001
Expenses:
Property operating, excluding real estate taxes	233,809				229,076				219,655
Real estate taxes	151,525				146,310				139,162
Corporate-level property management expenses	31,062				30,156				30,110
Depreciation and amortization	479,884				468,881				441,682
General and administrative	53,451				41,385				40,751
Expensed acquisition and investment related costs	194				1,569				1,841
	949,925				917,377				873,201
Earnings from operations	450,128				446,522				420,800
Interest expense	(220,492		)		(222,894		)		(219,654		)
Total return swap income	8,707				10,098				11,716
Interest and other income	23,010				24,604				27,305
Equity income from co-investments	89,132				86,445				48,698
Loss on early retirement of debt	—				(1,796		)		(606		)
Gain on sale of real estate and land	61,861				26,423				154,561
Deferred tax expense on gain on sale of real estate and land	—				—				(4,410		)
Gain on remeasurement of co-investment	1,253				88,641				—
Net income	413,599				458,043				438,410
Net income attributable to noncontrolling interest	(23,446		)		(24,984		)		(23,431		)
Net income attributable to controlling interest	390,153				433,059				414,979
Dividends to preferred stockholders	—				—				(1,314		)
Excess of redemption value of preferred stock over the carrying value	—				—				(2,541		)
Net income available to common stockholders	$	390,153			$	433,059			$	411,124
Per share data:
Basic:
Net income available to common stockholders	$	5.91			$	6.58			$	6.28
Weighted average number of shares outstanding during the year	66,041,058				65,829,155				65,471,540
Diluted:
Net income available to common stockholders	$	5.90			$	6.57			$	6.27
Weighted average number of shares outstanding during the year	66,085,089				65,898,255				65,587,816

See accompanying notes to consolidated financial statements.

F- 5

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Years ended December 31, 2018, 2017 and 2016

(Dollars in thousands)

	2018				2017				2016
Net income	$	413,599			$	458,043			$	438,410
Other comprehensive income (loss):
Change in fair value of derivatives and amortization of swap settlements	7,824				12,744				15,926
Changes in fair value of marketable debt securities, net	(118		)		3,284				(828		)
Reversal of unrealized gains upon the sale of marketable debt securities	13				(1,909		)		(4,848		)
Total other comprehensive income	7,719				14,119				10,250
Comprehensive income	421,318				472,162				448,660
Comprehensive income attributable to noncontrolling interest	(23,702		)		(25,451		)		(23,768		)
Comprehensive income attributable to controlling interest	$	397,616			$	446,711			$	424,892

See accompanying notes to consolidated financial statements.

F- 6

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Equity

Years ended December 31, 2018, 2017 and 2016

(Dollars and shares in thousands)

	Series H Preferred stock							Common stock							Additional paid-in				Distributions in excess of accumulated				Accumulated other comprehensive				Noncontrolling
	Shares			Amount				Shares			Amount				capital				earnings				loss, net				Interest				Total
Balances at December 31, 2015	2,950			$	73,750			65,379			$	6			$	7,003,317			$	(797,329	)		$	(42,011	)		$	99,290			$	6,337,023
Net income	—			—				—			—				—				414,979				—				23,431				438,410
Reversal of unrealized gains upon the sale of marketable securities	—			—				—			—				—				—				(4,689		)		(159		)		(4,848		)
Change in fair value of derivatives and amortization of swap settlements	—			—				—			—				—				—				15,403				523				15,926
Change in fair value of marketable securities, net	—			—				—			—				—				—				(801		)		(27		)		(828		)
Issuance of common stock under:
Stock option and restricted stock plans, net	—			—				140			—				18,949				—				—				—				18,949
Sale of common stock, net	—			—				—			—				(384		)		—				—				—				(384		)
Equity based compensation costs	—			—				—			—				8,246				—				—				2,653				10,899
Redemption of Series H preferred stock	(2,950	)		(73,750		)		—			—				2,541				(2,541		)		—				—				(73,750		)
Retirement of common stock, net	—			—				(5	)		—				(1,045		)		—				—				—				(1,045		)
Changes in the redemption value of redeemable noncontrolling interest	—			—				—			—				172				—				—				596				768
Distributions to noncontrolling interest	—			—				—			—				—				—				—				(25,854		)		(25,854		)
Redemptions of noncontrolling interest	—			—				14			—				(2,117		)		—				—				(394		)		(2,511		)
Preferred stock dividends ($0.45 per share)	—			—				—			—				—				(1,314		)		—				—				(1,314		)
Common stock dividends ($6.40 per share)	—			—				—			—				—				(419,204		)		—				—				(419,204		)
Balances at December 31, 2016	—			$	—			65,528			$	6			$	7,029,679			$	(805,409	)		$	(32,098	)		$	100,059			$	6,292,237
Net income	—			—				—			—				—				433,059				—				24,984				458,043
Reversal of unrealized gains upon the sale of marketable securities	—			—				—			—				—				—				(1,846		)		(63		)		(1,909		)

F- 7

Change in fair value of derivatives and amortization of swap settlements	—			—				—			—				—				—				12,322				422				12,744
Change in fair value of marketable securities, net	—			—				—			—				—				—				3,176				108				3,284
Issuance of common stock under:
Stock option and restricted stock plans, net	—			—				179			—				26,635				—				—				—				26,635
Sale of common stock, net	—			—				345			1				89,054				—				—				—				89,055
Equity based compensation costs	—			—				—			—				9,529				—				—				1,773				11,302
Changes in the redemption value of redeemable noncontrolling interest	—			—				—			—				(136		)		—				—				71				(65		)
Changes in noncontrolling interest from acquisition	—			—				—			—				—				—				—				22,506				22,506
Distributions to noncontrolling interest	—			—				—			—				—				—				—				(27,051		)		(27,051		)
Redemptions of noncontrolling interest	—			—				2			—				(25,190		)		—				—				(3,390		)		(28,580		)
Common stock dividends ($7.00 per share)	—			—				—			—				—				(461,376		)		—				—				(461,376		)
Balances at December 31, 2017	—			$	—			66,054			$	7			$	7,129,571			$	(833,726	)		$	(18,446	)		$	119,419			$	6,396,825
Net income	—			—				—			—				—				390,153				—				23,446				413,599
Reversal of unrealized losses upon the sale of marketable debt securities	—			—				—			—				—				—				13				—				13
Change in fair value of derivatives and amortization of swap settlements	—			—				—			—				—				—				7,564				260				7,824
Change in fair value of marketable debt securities, net	—			—				—			—				—				—				(114		)		(4		)		(118		)
Issuance of common stock under:	—			—				—			—				—				—				—				—				—
Stock option and restricted stock plans, net	—			—				41			—				6,213				—				—				—				6,213
Sale of common stock, net	—			—				—			—				(919		)		—				—				—				(919		)
Equity based compensation costs	—			—				—			—				11,651				—				—				1,200				12,851
Retirement of common stock, net	—			—				(210	)		—				(51,233		)		—				—				—				(51,233		)
Cumulative effect upon adoption of ASU No. 2016-01	—			—				—			—				—				2,234				(2,234		)		—				—
Cumulative effect upon adoption of ASU No. 2017-05	—			—				—			—				—				119,651				—				4,057				123,708

F- 8

Changes in the redemption value of redeemable noncontrolling interest	—			—				—			—				(1,143		)		—				—				(21		)		(1,164		)
Changes in noncontrolling interest from acquisition	—			—				—			—				—				—				—				7,919				7,919
Distributions to noncontrolling interest	—			—				—			—				—				—				—				(29,233		)		(29,233		)
Redemptions of noncontrolling interest	—			—				5			—				(1,061		)		—				—				(272		)		(1,333		)
Common stock dividends ($7.44 per share)	—			—				—			—				—				(491,108		)		—				—				(491,108		)
Balances at December 31, 2018	—			$	—			65,890			$	7			$	7,093,079			$	(812,796	)		$	(13,217	)		$	126,771			$	6,393,844

See accompanying notes to consolidated financial statements.

F- 9

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2018, 2017 and 2016

(Dollars in thousands)

	2018				2017				2016
Cash flows from operating activities:
Net income	$	413,599			$	458,043			$	438,410
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	479,884				468,881				441,682
Amortization of discount on marketable securities	(17,637		)		(15,119		)		(14,211		)
Amortization of (premium) discount and financing costs, net	(2,587		)		(5,948		)		(15,234		)
Gain on sale of marketable securities	(737		)		(1,909		)		(5,719		)
Unrealized gain on equity securities recognized through income	5,159				—				—
Company's share of gain on the sales of co-investments	(10,569		)		(44,837		)		(13,046		)
Earnings from co-investments	(78,563		)		(41,608		)		(35,652		)
Operating distributions from co-investments	99,593				76,764				60,472
Accrued interest from notes and other receivables	(5,436		)		(4,030		)		(302		)
Gain on the sale of real estate and land	(61,861		)		(26,423		)		(154,561		)
Equity-based compensation	7,135				9,286				9,811
Loss on early retirement of debt, net	—				1,796				606
Gain on remeasurement of co-investment	(1,253		)		(88,641		)		—
Changes in operating assets and liabilities:
Prepaid expenses, receivables and other assets	(1,203		)		(3,004		)		2,730
Accounts payable and accrued liabilities	(145		)		(13,474		)		2,302
Other liabilities	1,175				(170		)		(496		)
Net cash provided by operating activities	826,554				769,607				716,792
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures	(15,311		)		(206,194		)		(315,632		)
Redevelopment	(73,000		)		(69,928		)		(83,927		)
Development acquisitions of and additions to real estate under development	(182,772		)		(137,733		)		(75,367		)
Capital expenditures on rental properties	(81,684		)		(72,812		)		(64,769		)
Acquisition of membership interest in co-investments	—				—				—
Investments in notes receivable	—				(106,461		)		(24,070		)
Collections of notes and other receivables	29,500				55,000				4,070
Proceeds from insurance for property losses	1,408				648				5,543
Proceeds from dispositions of real estate	347,587				132,039				239,289
Contributions to co-investments	(162,437		)		(293,363		)		(183,989		)
Changes in refundable deposits	(414		)		837				(2,129		)
Purchases of marketable securities	(37,952		)		(67,893		)		(18,779		)
Sales and maturities of marketable securities	31,521				35,481				30,458
Non-operating distributions from co-investments	83,661				162,439				76,231
Net cash used in investing activities	(59,893		)		(567,940		)		(413,071		)
Cash flows from financing activities:

F- 10

Proceeds from unsecured debt and mortgage notes	298,773				597,981				669,282
Payments on unsecured debt and mortgage notes	(230,398		)		(561,160		)		(532,020		)
Proceeds from lines of credit	742,961				982,246				596,106
Repayments of lines of credit	(921,961		)		(928,246		)		(486,106		)
Repayment of cumulative redeemable preferred stock	—				—				(73,750		)
Retirement of common stock	(51,233		)		—				(1,045		)
Additions to deferred charges	(4,250		)		(4,108		)		(7,926		)
Payments related to debt prepayment penalties	—				(1,630		)		(215		)
Net proceeds from issuance of common stock	(919		)		89,055				(384		)
Net proceeds from stock options exercised	6,213				26,635				18,949
Payments related to tax withholding for share-based compensation	(869		)		(316		)		(386		)
Distributions to noncontrolling interest	(29,050		)		(26,552		)		(25,334		)
Redemption of noncontrolling interest	(1,333		)		(28,580		)		(2,511		)
Redemption of redeemable noncontrolling interest	(144		)		(5,543		)		—
Common and preferred stock dividends paid	(484,182		)		(450,625		)		(411,134		)
Net cash used in financing activities	(676,392		)		(310,843		)		(256,474		)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents	90,269				(109,176		)		47,247
Unrestricted and restricted cash and cash equivalents at beginning of period	61,126				170,302				123,055
Unrestricted and restricted cash and cash equivalents at end of period	$	151,395			$	61,126			$	170,302
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest	$	203,803			$	212,163			$	203,743
Interest capitalized	$	18,708			$	13,860			$	12,486
Supplemental disclosure of noncash investing and financing activities:
Issuance of Operating Partnership units for contributed properties	$	7,919			$	—			$	—
Issuance of DownREIT limited partnership units in connection with acquisition of real estate	$	—			$	22,506			$	—
Transfers between real estate under development to rental properties, net	$	100,415			$	2,413			$	104,159
Transfer from real estate under development to co-investments	$	853			$	5,075			$	9,919
Reclassifications to (from) redeemable noncontrolling interest to or from additional paid in capital and noncontrolling interest	$	1,165			$	65			$	(768	)
Redemption of redeemable noncontrolling interest via reduction of note receivable	$	4,751			$	—			$	—
Debt assumed in connection with acquisition	$	45,804			$	51,882			$	48,832
Debt deconsolidated in connection with BEX II transaction	$	—			$	—			$	20,195
Repayment of mortgage note from new financing proceeds	$	52,000			$	—			$	—

See accompanying notes to consolidated financial statements

F- 11

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2018 and 2017

(Dollars in thousands, except per unit amounts)

	2018				2017
ASSETS
Real estate:
Rental properties:
Land and land improvements	$	2,701,356			$	2,719,064
Buildings and improvements	10,664,745				10,643,009
	13,366,101				13,362,073
Less: accumulated depreciation	(3,209,548		)		(2,769,297		)
	10,156,553				10,592,776
Real estate under development	454,629				355,735
Co-investments	1,300,140				1,155,984
	11,911,322				12,104,495
Cash and cash equivalents-unrestricted	134,465				44,620
Cash and cash equivalents-restricted	16,930				16,506
Marketable securities	209,545				190,004
Notes and other receivables (related party receivables of $11.1 million and $41.2 million as of December 31, 2018 and December 31, 2017, respectively)	71,895				100,926
Prepaid expenses and other assets	39,439				39,155
Total assets	$	12,383,596			$	12,495,706
LIABILITIES AND CAPITAL
Unsecured debt, net	$	3,799,316			$	3,501,709
Mortgage notes payable, net	1,806,626				2,008,417
Lines of credit	—				179,000
Accounts payable and accrued liabilities	127,086				127,501
Construction payable	59,345				51,770
Distributions payable	128,529				121,420
Distributions in excess of investments in co-investments	—				36,726
Other liabilities	33,375				33,132
Total liabilities	5,954,277				6,059,675
Commitments and contingencies
Redeemable noncontrolling interest	35,475				39,206
Capital:
General Partner:
Common equity (65,890,322 and 66,054,399 units issued and outstanding, respectively)	6,280,290				6,295,852
	6,280,290				6,295,852
Limited Partners:
Common equity (2,305,389 and 2,268,114 units issued and outstanding, respectively)	59,061				49,792
Accumulated other comprehensive loss	(9,738		)		(15,229		)
Total partners' capital	6,329,613				6,330,415
Noncontrolling interest	64,231				66,410
Total capital	6,393,844				6,396,825
Total liabilities and capital	$	12,383,596			$	12,495,706

See accompanying notes to consolidated financial statements

F- 12

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Statements of Income

Years ended December 31, 2018, 2017, and 2016

(Dollars in thousands, except per unit and unit amounts)

	2018				2017				2016
Revenues:
Rental and other property	$	1,390,870			$	1,354,325			$	1,285,723
Management and other fees from affiliates	9,183				9,574				8,278
	1,400,053				1,363,899				1,294,001
Expenses:
Property operating, excluding real estate taxes	233,809				229,076				219,655
Real estate taxes	151,525				146,310				139,162
Corporate-level property management expenses	31,062				30,156				30,110
Depreciation and amortization	479,884				468,881				441,682
General and administrative	53,451				41,385				40,751
Expensed acquisition and investment related costs	194				1,569				1,841
	949,925				917,377				873,201
Earnings from operations	450,128				446,522				420,800
Interest expense	(220,492		)		(222,894		)		(219,654		)
Total return swap income	8,707				10,098				11,716
Interest and other income	23,010				24,604				27,305
Equity income from co-investments	89,132				86,445				48,698
Loss on early retirement of debt	—				(1,796		)		(606		)
Gain on sale of real estate and land	61,861				26,423				154,561
Deferred tax expense on gain on sale of real estate and land	—				—				(4,410		)
Gain on remeasurement of co-investment	1,253				88,641				—
Net income	413,599				458,043				438,410
Net income attributable to noncontrolling interest	(9,994		)		(10,159		)		(9,342		)
Net income attributable to controlling interest	403,605				447,884				429,068
Preferred interest distributions	—				—				(1,314		)
Excess of redemption value of preferred units over the carrying value	—				—				(2,541		)
Net income available to common unitholders	$	403,605			$	447,884			$	425,213
Per unit data:
Basic:
Net income available to common unitholders	$	5.91			$	6.58			$	6.28
Weighted average number of common units outstanding during the year	68,315,999				68,081,730				67,695,640
Diluted:
Net income available to common unitholders	$	5.90			$	6.57			$	6.27
Weighted average number of common units outstanding during the year	68,360,030				68,150,830				67,811,916

See accompanying notes to consolidated financial statements

F- 13

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2018, 2017, and 2016

(Dollars in thousands)

	2018				2017				2016
Net income	$	413,599			$	458,043			$	438,410
Other comprehensive income (loss):
Change in fair value of derivatives and amortization of swap settlements	7,824				12,744				15,926
Changes in fair value of marketable debt securities, net	(118		)		3,284				(828		)
Reversal of unrealized gains upon the sale of marketable debt securities	13				(1,909		)		(4,848		)
Total other comprehensive income	7,719				14,119				10,250
Comprehensive income	421,318				472,162				448,660
Comprehensive income attributable to noncontrolling interest	(9,994		)		(10,159		)		(9,342		)
Comprehensive income attributable to controlling interest	$	411,324			$	462,003			$	439,318

See accompanying notes to consolidated financial statements.

F- 14

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Statements of Capital

Years ended December 31, 2018, 2017, and 2016

(Dollars and units in thousands)

	General Partner											Limited Partners							Accumulated
								Preferred											other
	Common Equity							Equity				Common Equity							comprehensive				Noncontrolling
	Units			Amount				Amount				Units			Amount				loss, net				Interest				Total
Balances at December 31, 2015	65,379			$	6,208,535			$	71,209			2,215			$	47,235			$	(39,598	)		$	49,642			$	6,337,023
Net income	—			411,124				3,855				—			14,089				—				9,342				438,410
Reversal of unrealized gains upon the sale of marketable securities	—			—				—				—			—				(4,848		)		—				(4,848		)
Change in fair value of derivatives and amortization of swap settlements	—			—				—				—			—				15,926				—				15,926
Change in fair value of marketable securities, net	—			—				—				—			—				(828		)		—				(828		)
Issuance of common stock under:
General partner's stock based compensation, net	140			18,949				—				—			—				—				—				18,949
Sale of common stock by general partner, net	—			(384		)		—				—			—				—				—				(384		)
Equity based compensation costs	—			8,246				—				37			2,653				—				—				10,899
Redemption of Series H preferred units	—			—				(73,750		)		—			—				—				—				(73,750		)
Retirement of common units, net	(5	)		(1,045		)		—				—			—				—				—				(1,045		)
Changes in the redemption value of redeemable noncontrolling interest	—			172				—				—			—				—				596				768
Distributions to noncontrolling interest	—			—				—				—			—				—				(11,296		)		(11,296		)
Redemptions	14			(2,117		)		—				(15	)		17				—				(411		)		(2,511		)
Preferred equity dividends ($0.45 per unit)	—			—				(1,314		)		—			—				—				—				(1,314		)
Distributions declared ($6.40 per unit)	—			(419,204		)		—				—			(14,558		)		—				—				(433,762		)
Balances at December 31, 2016	65,528			$	6,224,276			$	—			2,237			$	49,436			$	(29,348	)		$	47,873			$	6,292,237
Net income	—			433,059				—				—			14,825				—				10,159				458,043
Reversal of unrealized gains upon the sale of marketable securities	—			—				—				—			—				(1,909		)		—				(1,909		)
Change in fair value of derivatives and amortization of swap settlements	—			—				—				—			—				12,744				—				12,744

F- 15

Change in fair value of marketable securities, net	—			—				—				—			—				3,284				—				3,284
Issuance of common stock under:
General partner's stock based compensation, net	179			26,635				—				—			—				—				—				26,635
Sale of common stock by general partner, net	345			89,055				—				—			—				—				—				89,055
Equity based compensation costs	—			9,529				—				33			1,773				—				—				11,302
Changes in the redemption value of redeemable noncontrolling interest	—			(136		)		—				—			136				—				(65		)		(65		)
Changes in noncontrolling interest from acquisition	—			—				—				—			—				—				22,506				22,506
Distributions to noncontrolling interest	—			—				—				—			—				—				(11,078		)		(11,078		)
Redemptions	2			(25,190		)		—				(2	)		(405		)		—				(2,985		)		(28,580		)
Distributions declared ($7.00 per unit)	—			(461,376		)		—				—			(15,973		)		—				—				(477,349		)
Balances at December 31, 2017	66,054			$	6,295,852			$	—			2,268			$	49,792			$	(15,229	)		$	66,410			$	6,396,825
Net income	—			390,153				—				—			13,452				—				9,994				413,599
Reversal of unrealized gains upon the sale of marketable debt securities	—			—				—				—			—				13				—				13
Change in fair value of derivatives and amortization of swap settlements	—			—				—				—			—				7,824				—				7,824
Change in fair value of marketable debt securities, net	—			—				—				—			—				(118		)		—				(118		)
Issuance of common stock under:
General partner's stock based compensation, net	41			6,213				—				—			—				—				—				6,213
Sale of common stock by general partner, net	—			(919		)		—				—			—				—				—				(919		)
Equity based compensation costs	—			11,651				—				11			1,200				—				—				12,851
Retirement of common units, net	(210	)		(51,233		)		—				—			—				—				—				(51,233		)
Cumulative effect upon adoption of ASU No. 2016-01	—			2,234				—				—			(6		)		(2,228		)		—				—
Cumulative effect upon adoption of ASU No. 2017-05	—			119,651				—				—			4,057				—				—				123,708
Changes in redemption value of redeemable noncontrolling interest	—			(1,143		)		—				—			(89		)		—				68				(1,164		)
Changes in noncontrolling interest from acquisition	—			—				—				31			7,919				—				—				7,919

F- 16

Distributions to noncontrolling interest	—			—				—				—			—				—				(12,174		)		(12,174		)
Redemptions	5			(1,061		)		—				(5	)		(205		)		—				(67		)		(1,333		)
Distributions declared ($7.44 per unit)	—			(491,108		)		—				—			(17,059		)		—				—				(508,167		)
Balances at December 31, 2018	65,890			$	6,280,290			$	—			2,305			$	59,061			$	(9,738	)		$	64,231			$	6,393,844

See accompanying notes to consolidated financial statements

F- 17

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2018, 2017, and 2016

(Dollars in thousands)

	2018				2017				2016
Cash flows from operating activities:
Net income	$	413,599			$	458,043			$	438,410
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	479,884				468,881				441,682
Amortization of discount on marketable securities	(17,637		)		(15,119		)		(14,211		)
Amortization of (premium) discount and debt financing costs, net	(2,587		)		(5,948		)		(15,234		)
Gain on sale of marketable securities	(737		)		(1,909		)		(5,719		)
Unrealized gain on equity securities recognized through income	5,159				—				—
Company's share of gain on the sales of co-investments	(10,569		)		(44,837		)		(13,046		)
Earnings from co-investments	(78,563		)		(41,608		)		(35,652		)
Operating distributions from co-investments	99,593				76,764				60,472
Accrued interest from notes and other receivables	(5,436		)		(4,030		)		(302		)
Gain on the sale of real estate and land	(61,861		)		(26,423		)		(154,561		)
Equity-based compensation	7,135				9,286				9,811
Loss on early retirement of debt, net	—				1,796				606
Gain on remeasurement of co-investment	(1,253		)		(88,641		)		—
Changes in operating assets and liabilities:
Prepaid expenses, receivables and other assets	(1,203		)		(3,004		)		2,730
Accounts payable and accrued liabilities	(145		)		(13,474		)		2,302
Other liabilities	1,175				(170		)		(496		)
Net cash provided by operating activities	826,554				769,607				716,792
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures	(15,311		)		(206,194		)		(315,632		)
Redevelopment	(73,000		)		(69,928		)		(83,927		)
Development acquisitions of and additions to real estate under development	(182,772		)		(137,733		)		(75,367		)
Capital expenditures on rental properties	(81,684		)		(72,812		)		(64,769		)
Investments in notes receivable	—				(106,461		)		(24,070		)
Collections of notes and other receivables	29,500				55,000				4,070
Proceeds from insurance for property losses	1,408				648				5,543
Proceeds from dispositions of real estate	347,587				132,039				239,289
Contributions to co-investments	(162,437		)		(293,363		)		(183,989		)
Changes in refundable deposits	(414		)		837				(2,129		)
Purchases of marketable securities	(37,952		)		(67,893		)		(18,779		)
Sales and maturities of marketable securities	31,521				35,481				30,458
Non-operating distributions from co-investments	83,661				162,439				76,231
Net cash used in investing activities	(59,893		)		(567,940		)		(413,071		)
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes	298,773				597,981				669,282

F- 18

Payments on unsecured debt and mortgage notes	(230,398		)		(561,160		)		(532,020		)
Proceeds from lines of credit	742,961				982,246				596,106
Repayments of lines of credit	(921,961		)		(928,246		)		(486,106		)
Repayment of cumulative redeemable preferred stock	—				—				(73,750		)
Retirement of common stock	(51,233		)		—				(1,045		)
Additions to deferred charges	(4,250		)		(4,108		)		(7,926		)
Payments related to debt prepayment penalties	—				(1,630		)		(215		)
Net proceeds from issuance of common units	(919		)		89,055				(384		)
Net proceeds from stock options exercised	6,213				26,635				18,949
Payments related to tax withholding for share-based compensation	(869		)		(316		)		(386		)
Distributions to noncontrolling interest	(8,518		)		(7,752		)		(6,960		)
Redemption of noncontrolling interests	(1,333		)		(28,580		)		(2,511		)
Redemption of redeemable noncontrolling interests	(144		)		(5,543		)		—
Common and preferred units and preferred interests distributions paid	(504,714		)		(469,425		)		(429,508		)
Net cash used in financing activities	(676,392		)		(310,843		)		(256,474		)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents	90,269				(109,176		)		47,247
Unrestricted and restricted cash and cash equivalents at beginning of period	61,126				170,302				123,055
Unrestricted and restricted cash and cash equivalents at end of period	$	151,395			$	61,126			$	170,302
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest	$	203,803			$	212,163			$	203,743
Interest capitalized	$	18,708			$	13,860			$	12,486
Supplemental disclosure of noncash investing and financing activities:
Issuance of Operating Partnership units for contributed properties	$	7,919			$	—			$	—
Issuance of DownREIT limited partnership units in connection with acquisition of real estate	$	—			$	22,506			$	—
Transfers between real estate under development to rental properties, net	$	100,415			$	2,413			$	104,159
Transfer from real estate under development to co-investments	$	853			$	5,075			$	9,919
Reclassifications to (from) redeemable noncontrolling interest to or from additional paid in capital and noncontrolling interest	$	1,165			$	65			$	(768	)
Redemption of redeemable noncontrolling interest via reduction of note receivable	$	4,751			$	—			$	—
Debt assumed in connection with acquisition	$	45,804			$	51,882			$	48,832
Debt deconsolidated in connection with BEX II transaction	$	—			$	—			$	20,195
Repayment of mortgage note from new financing proceeds	$	52,000			$	—			$	—

See accompanying notes to consolidated financial statements

F- 19

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

(1) Organization

The accompanying consolidated financial statements present the accounts of Essex Property Trust, Inc. ("Essex" or the "Company"), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the "Operating Partnership," which holds the operating assets of the Company). Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership.

Essex is the sole general partner in the Operating Partnership with a 96.6% general partner interest and the limited partners owned a 3.4% interest as of December 31, 2018. The limited partners may convert their Operating Partnership units into an equivalent number of shares of Essex common stock. Total Operating Partnership limited partnership units outstanding were 2,305,389 and 2,268,114 as of December 31, 2018 and 2017, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $565.3 million and $547.5 million, as of December 31, 2018 and 2017, respectively. The Company has reserved shares of common stock for such conversions.

As of December 31, 2018, the Company owned or had ownership interests in 245 operating apartment communities, aggregating 59,661 apartment homes, excluding the Company's ownership in preferred interest co-investments, loan investments, one operating commercial building, and six active developments. The Communities are located in Southern California (Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas.

(2) Summary of Critical and Significant Accounting Policies

(a) Principles of Consolidation and Basis of Presentation

The accounts of the Company, its controlled subsidiaries and the variable interest entities ("VIEs") in which it is the primary beneficiary are consolidated in the accompanying financial statements and prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included and are normal and recurring in nature. All significant inter-company accounts and transactions have been eliminated. Certain reclassifications have been made to conform to the current year’s presentation, including the reclassification of corporate-level property management expenses out of property operating, excluding real estate taxes to its own line item on the Company's consolidated statements of income and comprehensive income. $13.2 million has been reclassified out of other assets and into buildings and improvements on the Company's consolidated balance sheets as of December 31, 2017. Such reclassifications had no net effect on previously reported financial results.

Noncontrolling interest includes the 3.4% limited partner interests in the Operating Partnership not held by the Company at both December 31, 2018 and 2017. These percentages include the Operating Partnership’s vested long term incentive plan units (see Note 13).

(b) Accounting Pronouncements Adopted in the Current Year

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09 "Revenue from Contracts with Customers." The new standard provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries. The new standard requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. The Company adopted ASU 2014-09 as of January 1, 2018, using the modified retrospective approach. See Note 4, Revenues, for further details.

In January 2016, the FASB issued ASU No. 2016-01 "Recognition and Measurement of Financial Assets and Financial Liabilities", which requires changes to the classification and measurement of investments in certain equity securities and to the presentation of certain fair value changes for financial liabilities measured at fair value. The Company adopted ASU No. 2016-01 as of January 1, 2018 using the modified retrospective method by applying a cumulative effect adjustment to retained earnings and partners' capital of $2.2 million, representing accumulated net unrealized gains of certain equity securities held by

F- 20

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

the Company. Furthermore, as a result of the adoption of this standard, the Company will recognize changes in the fair value of equity investments with readily determinable fair values through net income as opposed to comprehensive income.

In August 2016, the FASB issued ASU No. 2016-15 "Classification of Certain Cash Receipts and Cash Payments", which requires entities to adhere to a uniform classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update provide guidance on eight specific cash flow issues.The Company adopted ASU No. 2016-15 as of January 1, 2018 using the retrospective transition method. This amendment did not have a material impact on the Company's consolidated results of operations or financial position.

In November 2016, the FASB issued ASU No. 2016-18 "Statement of Cash Flows", which requires entities to include restricted cash and restricted cash equivalents in the reconciliation of beginning-of-period to the end-of-period of cash and cash equivalents in the statement of cash flows. This new standard seeks to eliminate the current diversity in practice in how changes in restricted cash and restricted cash equivalents is presented in the statement of cash flows. The Company adopted ASU No. 2016-18 as of January 1, 2018 using the retrospective transition method. This amendment did not have a material impact on the Company's consolidated results of operations or financial position.

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

In February 2017, the FASB issued ASU No. 2017-05 "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets", which adds guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. This new standard reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. Partial sales of nonfinancial assets are common in the real estate industry and include transactions in which the seller retains an equity interest in the entity that owns the assets or has an equity interest in the buyer. The Company adopted ASU No. 2017-05 concurrently with the adoption of ASU No. 2014-09 "Revenue from Contracts with Customers" as of January 1, 2018 using the modified retrospective method by applying a cumulative effect adjustment to retained earnings and partners' capital of $123.7 million representing the partial sale of its membership interest in BEX II, LLC ("BEX II") during the fourth quarter of 2016.

(c) Recent Accounting Pronouncements

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

The Company expects that its residential and commercial leases, where it is the lessor, will continue to be accounted for as operating leases under the new standard. In July 2018, the FASB issued ASU No. 2018-11 "Leases (Topic 842): Targeted Improvements," which includes a practical expedient that allows lessors to not separate nonlease components from the associated lease component. This provides the Company with the option of not bifurcating certain common area maintenance recoveries as a non-lease component, if certain requirements are met. The Company expects to elect this practical expedient, which would result in minimum rents and expense recoveries being presented as a single rental revenue line item in the consolidated statement of income and comprehensive income.

For leases where the Company is the lessee, which includes various corporate office and ground leases, the Company will be required to recognize a right of use asset and related lease liability on its consolidated balance sheets upon adoption. The

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

Company expects that its corporate office leases, where it is the lessee, will continue to be accounted for as operating leases. The Company also expects to elect a package of practical expedients, under which the Company would not be required to reassess the classification of existing ground leases. The new standards will be effective for the Company beginning January 1, 2019 and early adoption is permitted, including adoption in an interim period. The new standard will be effective for the Company beginning January 1, 2019 and the Company estimates the adoption will result in the recognition of operating lease assets and operating lease liabilities not expected to exceed $85 million.

In June 2016, the FASB issued ASU No. 2016-13 "Measurement of Credit Losses on Financial Instruments", which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities, and other financial instruments. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. The new standard will be effective for the Company beginning on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In August 2017, the FASB issued ASU No. 2017-12 "Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities", which, among other things, requires entities to present the earnings effect of hedging instruments in the same income statement line item in which the earnings effect of the hedged item is reported. The new standard also adds new disclosure requirements. This new standard will be effective for the Company beginning January 1, 2019 and early adoption is permitted. The Company expects to apply the new standard on January 1, 2019 and does not expect that this amendment will have a material effect on its consolidated results of operations or financial position.

In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which eliminates certain disclosure requirements affecting all levels of measurements, and modifies and adds new disclosure requirements for Level 3 measurements. The new standard will be effective for the Company beginning January 1, 2020 and early adoption is permitted. The Company expects to apply the new standard on January 1, 2020 and does not expect the adoption to have a material impact on the Company's consolidated results of operations or financial position.

(d) Real Estate Rental Properties

Significant expenditures, which improve or extend the life of an asset and have a useful life of greater than one year, are capitalized. Operating real estate assets are stated at cost and consist of land, buildings and improvements, furniture, fixtures and equipment, and other costs incurred during their development, redevelopment and acquisition. Expenditures for maintenance and repairs are charged to expense as incurred.

The depreciable life of various categories of fixed assets is as follows:

Computer software and equipment	3 - 5 years
Interior apartment home improvements	5 years
Furniture, fixtures and equipment	5 - 10 years
Land improvements and certain exterior components of real property	10 years
Real estate structures	30 years

The Company capitalizes all costs incurred with the predevelopment, development or redevelopment of real estate assets or are associated with the construction or expansion of real property. Such capitalized costs include land, land improvements, allocated costs of the Company’s project management staff, construction costs, as well as interest and related loan fees, property taxes and insurance. Capitalization begins for predevelopment, development, and redevelopment projects when activity commences. Capitalization ends when the apartment home is completed and the property is available for a new tenant or if the development activities cease.

The Company allocates the purchase price of real estate to land and building including personal property, and identifiable intangible assets, such as the value of above, below and in-place leases. The values of the above and below market leases are

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

amortized and recorded as either a decrease (in the case of above market leases) or an increase (in the case of below market leases) to rental revenue over the remaining term of the associated leases acquired. The value of acquired in-place leases are amortized to expense over the average remaining term of the leases acquired. The net carrying value of acquired in-place leases is $0.1 million and $0.4 million as of December 31, 2018 and 2017, respectively, and are included in prepaid expenses and other assets on the Company's consolidated balance sheets.

The Company performs the following evaluation for communities acquired:

(1)	adjust the purchase price for any fair value adjustments resulting from such things as assumed debt or contingencies;

(2)	estimate the value of the real estate "as if vacant" as of the acquisition date;

(3)	allocate that value among land and buildings including personal property;

(4)	compute the value of the difference between the "as if vacant" value and the adjusted purchase price, which will represent the total intangible assets;

(5)	compute the value of the above and below market leases and determine the associated life of the above market/below market leases;

(6)	compute the value of the in-place leases and customer relationships, if any, and the associated lives of these assets.

Whenever events or changes in circumstances indicate that the carrying amount of a property held for investment or held for sale may not be fully recoverable, the carrying amount will be evaluated for impairment. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount (including intangible assets) of a property held for investment, then the Company will recognize an impairment loss equal to the excess of the carrying amount over the fair value of the property. Fair value of a property is determined using conventional real estate valuation methods, such as discounted cash flow, the property’s unleveraged yield in comparison to the unleveraged yields and sales prices of similar communities that have been recently sold, and other third party information, if available. Communities held for sale are carried at the lower of cost and fair value less estimated costs to sell. As of both December 31, 2018 and 2017, no properties were classified as held for sale. No impairment charges were recorded for the years ended December 31, 2018, 2017 or 2016.

In the normal course of business, the Company will receive purchase offers for its communities, either solicited or unsolicited. For those offers that are accepted, the prospective buyer will usually require a due diligence period before consummation of the transaction. It is not unusual for matters to arise that result in the withdrawal or rejection of the offer during this process. The Company classifies real estate as "held for sale" when all criteria under the accounting standard for the disposals of long-lived assets have been met.

(e) Co-investments

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

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

The Company reports investments in co-investments where accumulated distributions have exceeded the Company’s investment as distributions in excess of investments in co-investments in the accompanying consolidated balance sheets. As of December 31, 2017, the net investment of one of the Company’s co-investments was less than zero as a result of financing distributions in excess of the Company's investment in that co-investment. As a result of the Company's adoption of ASU No. 2017-05 on January 1, 2018, the carrying value of this co-investment was greater than zero as of December 31, 2018.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

(f) 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 is not materially different than on a straight-line basis. Apartment homes are rented under short-term leases (generally, lease terms of 6 to 12 months). Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease.

Subsequent to the adoption of ASU 610-20 on January 1, 2018, the Company recognizes any gains on sales of real estate when we transfer control of a property and when it is probable that we will collect substantially all of the related consideration.

(g) Cash, Cash Equivalents and Restricted Cash

Highly liquid investments with original maturities of three months or less when purchased are classified as cash equivalents. Restricted cash balances relate primarily to reserve requirements for capital replacement at certain communities in connection with the Company’s mortgage debt.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows ($ in thousands):

	2018				2017				2016
Cash and cash equivalents - unrestricted	$	134,465			$	44,620			$	64,921
Cash and cash equivalents - restricted	16,930				16,506				105,381
Total unrestricted and restricted cash and cash equivalents shown in the consolidated statements of cash flows	$	151,395			$	61,126			$	170,302

(h) Marketable Securities

The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds, Level 2 for the unsecured bonds and Level 3 for investments in mortgage backed securities, as defined by the FASB standard for fair value measurements as discussed later in Note 2). Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. There were no other than temporary impairment charges for the years ended December 31, 2018, 2017, and 2016. Unrealized gains and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income on the consolidated statements of income and comprehensive income.

As of December 31, 2018 and 2017, equity securities and available for sale debt securities consisted primarily of investment-grade unsecured bonds, common stock and stock funds, investments in mortgage backed securities, and investment funds that invest in U.S. treasury or agency securities. As of December 31, 2018 and 2017, the Company classified its investments in mortgage backed securities, which mature in November 2019 and September 2020, as held to maturity, and accordingly, these securities are stated at their amortized cost. The discount on the mortgage backed securities is being amortized to interest income based on an estimated yield and the maturity date of the securities.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

As of December 31, 2018 and 2017 marketable securities consist of the following ($ in thousands):

	December 31, 2018
	Amortized Cost				Gross Unrealized Loss				Carrying Value
Equity securities:
Investment funds - debt securities	$	31,934			$	(568	)		$	31,366
Investment funds - U.S. treasuries	8,983				(31		)		8,952
Common stock and stock funds	39,731				(1,671		)		38,060
Debt securities:
Available for sale
Investment-grade unsecured bonds	4,125				(145		)		3,980
Held to maturity:
Mortgage backed securities	127,187				—				127,187
Total - Marketable securities	$	211,960			$	(2,415	)		$	209,545

	December 31, 2017
	Amortized Cost				Gross Unrealized Gain (Loss)				Carrying Value
Equity securities:
Investment funds - debt securities	$	27,914			$	(29	)		$	27,885
Investment funds - U.S. treasuries	10,999				(55		)		10,944
Common stock and stock funds	34,329				2,973				37,302
Debt securities:
Available for sale
Investment-grade unsecured bonds	4,365				(40		)		4,325
Held to maturity:
Mortgage backed securities	109,548				—				109,548
Total - Marketable securities	$	187,155			$	2,849			$	190,004

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 loss for such securities.

For the years ended December 31, 2018, 2017 and 2016, the proceeds from sales and maturities of marketable securities totaled $31.5 million, $35.5 million and $30.5 million, respectively. For the years ended December 31, 2018, 2017 and 2016 these sales resulted in gains of $0.7 million, $1.9 million, and $5.7 million, respectively.

For the year ended December 31, 2018, the portion of equity security unrealized loss that was recognized in income totaled $5.2 million, and was included in interest and other income on the Company's consolidated statements of income and comprehensive income.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

(i) Notes Receivable

Notes receivable relate to real estate financing arrangements including mezzanine and bridge loans and are secured by real estate. Interest is recognized over the life of the note as interest income.

Each note is analyzed to determine if it is impaired. A note is impaired if it is probable that the Company will not collect all contractually due principal and interest. The Company does not accrue interest when a note is considered impaired and an allowance is recorded for any principal and previously accrued interest that are not believed to be collectible. All cash receipts on impaired notes are applied to reduce the principal amount of such notes until the principal has been recovered and, thereafter, are recognized as interest income. As of December 31, 2018 and 2017, no notes were impaired.

(j) Capitalization Policy

The Company capitalizes all direct and certain indirect costs, including interest, real estate taxes and insurance, incurred during development and redevelopment activities. Interest is capitalized on real estate assets that require a period of time to get them ready for their intended use. The amount of interest capitalized is based upon the average amount of accumulated development expenditures during the reporting period. Included in capitalized costs are management’s estimates of the direct and incremental personnel costs and indirect project costs associated with the Company's development and redevelopment activities. Indirect project costs consist primarily of personnel costs associated with construction administration and development, including accounting, legal fees, and various corporate and community onsite costs that clearly relate to projects under development. Those costs as well as capitalized development and redevelopment fees totaled $18.6 million, $18.8 million and $16.4 million for the years ended December 31, 2018, 2017 and 2016, respectively, most of which relates to development projects. The Company capitalizes leasing costs associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized are immaterial for all periods presented.

(k) Fair Value of Financial Instruments

The Company values its financial instruments based on the fair value hierarchy of valuation techniques described in the FASB’s accounting standard for fair value measurements. Level 1 inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. The Company uses Level 1 inputs for the fair values of its cash equivalents and its marketable securities except for unsecured bonds and mortgage backed securities. The Company uses Level 2 inputs for its investments in unsecured bonds, notes receivable, notes payable, and derivative assets/liabilities. These inputs include interest rates for similar financial instruments. The Company’s valuation methodology for derivatives is described in Note 9. The Company uses Level 3 inputs to estimate the fair value of its mortgage backed securities. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Management believes that the carrying amounts of the outstanding balances under its lines of credit, and notes and other receivables approximate fair value as of December 31, 2018 and 2017, because interest rates, yields and other terms for these instruments are consistent with yields and other terms currently available for similar instruments. Management has estimated that the fair value of fixed rate debt with a carrying value of $5.0 billion and $4.9 billion at December 31, 2018 and 2017, respectively, to be $5.0 billion at both December 31, 2018 and 2017. Management has estimated the fair value of the Company’s $619.6 million and $799.2 million of variable rate debt at December 31, 2018 and 2017, respectively, to be $615.2 million and $793.9 million based on the terms of existing mortgage notes payable, unsecured debt, and variable rate demand notes compared to those available in the marketplace. Management believes that the carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, construction payables, other liabilities and dividends payable approximate fair value as of December 31, 2018 and 2017 due to the short-term maturity of these instruments. Marketable securities, except mortgage backed securities, and derivatives are carried at fair value as of December 31, 2018 and 2017.

At December 31, 2018 and 2017, the Company’s investments in mortgage backed securities had a carrying value of $127.2 million and $109.5 million, respectively. The Company estimated the fair value of investment in mortgage backed securities at December 31, 2018 and 2017 to be approximately $129.5 million and $120.7 million, respectively. The Company determines the fair value of the mortgage backed securities based on unobservable inputs (Level 3 of the fair value hierarchy) considering

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

the assumptions that market participants would make in valuing these securities. Assumptions such as estimated default rates and discount rates are used to determine expected, discounted cash flows to estimate the fair value.

(l) Interest Rate Protection, Swap, and Forward Contracts

The Company uses interest rate swaps, interest rate caps, and total return swap contracts to manage interest rate risks. The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, the Company primarily uses interest rate swaps and interest rate caps as part of its cash flow hedging strategy.

The Company records all derivatives on its consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

For derivatives designated for accounting purposes as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated for accounting purposes as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the initial and ongoing effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction.

For derivatives not designated for accounting purposes as cash flow hedges, changes in fair value are recognized in earnings. All of the Company’s interest rate swaps are considered cash flow hedges.

(m) Income Taxes

Generally in any year in which Essex qualifies as a real estate investment trust ("REIT") under the Internal Revenue Code (the "IRC"), it is not subject to federal income tax on that portion of its income that it distributes to stockholders. No provision for federal income taxes, other than the taxable REIT subsidiaries discussed below, has been made in the accompanying consolidated financial statements for each of the years in the three-year period ended December 31, 2018 as Essex has elected to be and believes it qualifies under the IRC as a REIT and has made distributions during the periods in amounts to preclude Essex from paying federal income tax.

In order to maintain compliance with REIT tax rules, the Company utilizes taxable REIT subsidiaries for various revenue generating or investment activities. The taxable REIT subsidiaries are consolidated by the Company. In general, the activities and tax related provisions, assets and liabilities are not material. In 2016, a taxable REIT subsidiary sold two properties that it had acquired in 2007, resulting in the Company's recognition of a deferred income tax expense of approximately $4.4 million. On December 22, 2017 the Tax Cuts and Jobs Act ("Tax Act") was signed into law, which reduced the federal income tax rate from 35% to 21% effective January 1, 2018. As a result of the Tax Act, the Company remeasured its net deferred tax liabilities at December 31, 2017, accordingly a net tax benefit of $1.5 million was recorded.

As a partnership, the Operating Partnership is not subject to federal or state income taxes, except that in order to maintain Essex's compliance with REIT tax rules that are applicable to Essex, the Operating Partnership utilizes taxable REIT subsidiaries for various revenue generating or investment activities. The taxable REIT subsidiaries are consolidated by the Operating Partnership.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

The status of cash dividends distributed for the years ended December 31, 2018, 2017, and 2016 related to common stock and Series H preferred stock are classified for tax purposes as follows:

	2018			2017			2016
Common Stock
Ordinary income	79.72	%		84.04	%		86.68	%
Capital gain	15.35	%		13.20	%		7.11	%
Unrecaptured section 1250 capital gain	4.93	%		2.76	%		6.21	%
	100.00	%		100.00	%		100.00	%

	2018			2017			2016
Series H Preferred stock
Ordinary income	—	%		—	%		86.68	%
Capital gains	—	%		—	%		7.11	%
Unrecaptured section 1250 capital gain	—	%		—	%		6.21	%
	—	%		—	%		100.00	%

(n) Equity-based Compensation

The cost of share and unit based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long term incentive plan units (discussed in Note 13) are being amortized over the expected service periods.

(o) Changes in Accumulated Other Comprehensive Loss, by Component

Changes in Accumulated Other Comprehensive Loss, Net, by Component

Essex Property Trust, Inc. ($ in thousands)

	Change in fair value and amortization of swap settlements				Unrealized gain (loss) on available for sale securities				Total
Balance at December 31, 2017	$	(20,641	)		$	2,195			$	(18,446	)
Cumulative effect upon adoption of ASU No. 2016-01	—				(2,234		)		(2,234		)
Other comprehensive income (loss) before reclassification	15,343				(114		)		15,229
Amounts reclassified from accumulated other comprehensive loss	(7,779		)		13				(7,766		)
Other comprehensive income	7,564				(2,335		)		5,229
Balance at December 31, 2018	$	(13,077	)		$	(140	)		$	(13,217	)

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

Changes in Accumulated Other Comprehensive Loss, by Component

Essex Portfolio, L.P. ($ in thousands)

	Change in fair value and amortization of swap settlements				Unrealized gain (loss) on available for sale securities				Total
Balance at December 31, 2017	$	(17,417	)		$	2,188			$	(15,229	)
Cumulative effect upon adoption of ASU No. 2016-01	—				(2,228		)		(2,228		)
Other comprehensive income (loss) before reclassification	15,871				(118		)		15,753
Amounts reclassified from accumulated other comprehensive loss	(8,047		)		13				(8,034		)
Other comprehensive income	7,824				(2,333		)		5,491
Balance at December 31, 2018	$	(9,593	)		$	(145	)		$	(9,738	)

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

(p) Redeemable Noncontrolling Interest

The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $35.5 million and $39.2 million as of December 31, 2018 and 2017, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances.

The changes in the redemption value of redeemable noncontrolling interests for the years ended December 31, 2018, 2017, and 2016 is as follows:

	2018				2017				2016
Balance at January 1,	$	39,206			$	44,684			$	45,452
Reclassifications due to change in redemption value and other	1,164				65				(768		)
Redemptions	(4,895		)		(5,543		)		—
Balance at December 31,	$	35,475			$	39,206			$	44,684

(q) Accounting Estimates

The preparation of consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an 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, and its notes receivable. The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions.

(r) Variable Interest Entities

In accordance with accounting standards for consolidation of VIEs, the Company consolidates the Operating Partnership and 16 DownREIT limited partnerships (comprising eight communities), and eight co-investments as of December 31, 2018. The Company consolidates these entities because it is deemed the primary beneficiary. The Company has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the eight consolidated co-investments and 16 DownREIT limited partnerships, net of intercompany eliminations, were approximately $849.8 million and $261.7 million, respectively, as of December 31, 2018, and $837.7 million and $265.5 million, respectively,

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

as of December 31, 2017. Noncontrolling interests in these entities were $64.5 million and $66.7 million as of December 31, 2018 and 2017, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE.

The DownREIT VIEs collectively own eight apartment communities in which Essex Management Company ("EMC") is the general partner, the Operating Partnership is a special limited partner, and the other limited partners were granted rights of redemption for their interests. Such limited partners can request to be redeemed and the Company, subject to certain restrictions, can elect to redeem their rights for cash or by issuing shares of its common stock on a one share per unit basis. Conversion values will be based on the market value of the Company's common stock at the time of redemption multiplied by the number of units stipulated under various arrangements, as noted above. The other limited partners receive distributions based on the Company's current dividend rate times the number of units held. Total DownREIT limited partnership units outstanding were 912,269 and 917,593 as of December 31, 2018 and 2017 respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $223.7 million and $221.5 million, as of December 31, 2018 and 2017, respectively. The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $35.5 million and $39.2 million as of December 31, 2018 and 2017, respectively. Of these amounts, $14.5 million and $13.6 million as of December 31, 2018 and 2017, respectively, represent units of limited partners' interests in DownREIT VIEs as to which it is outside of the Company’s control to redeem the DownREIT limited partnership units with Company common stock and may potentially be redeemed for cash, and are presented at either their redemption value or historical cost, depending on the limited partner's right to redeem their units as of the balance sheet date. The carrying value of DownREIT limited partnership units as to which it is within the control of the Company to redeem the units with its common stock was $32.4 million as of both December 31, 2018 and 2017, and is classified within noncontrolling interests in the accompanying consolidated balance sheets.

Interest holders in VIEs consolidated by the Company are allocated a priority of net income equal to the cash payments made to those interest holders or distributions from cash flow. The remaining results of operations are generally allocated to the Company.

As of December 31, 2018 and 2017, the Company did not have any other VIEs of which it was deemed to be the primary beneficiary and did not have any VIEs of which it was not deemed to be the primary beneficiary.

(s) Discontinued Operations

The Company determined that the disposals during the years ended December 31, 2018, 2017 and 2016 were not considered discontinued operations in accordance with ASU 2014-08. The gains related to these disposals are recorded in gain on sale of real estate and land in the consolidated statements of income.

(3) Real Estate Investments

(a) Acquisitions of Real Estate

For the year ended December 31, 2018, the Company purchased a partial interest in one community consisting of 166 apartment homes for $35.4 million. The table below summarizes acquisition activity for the year ended December 31, 2018 ($ in millions):

Property Name	Location	Apartment Homes		Essex Ownership Percentage		Quarter in 2018	Purchase Price
Marquis(1)	San Jose, CA	166		100	%	Q4	$	35.4
Total 2018		166					$	35.4

(1)	In December 2018, the Company purchased the joint venture partner's 49.9% membership interest in the Marquis co-investment. As part of the acquisition, the Company paid $4.7 million in cash and issued Operating Partnership units valued at $7.9 million, based on an estimated property valuation of $71.0 million and an encumbrance of $45.8 million of mortgage debt.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

The consolidated fair value of the acquisition listed above was included on the Company's consolidated balance sheet as follows: $20.5 million was included in land and land improvements, $47.8 million was included in buildings and improvements, and $2.7 million was included in prepaid expenses and other assets and liabilities, within the Company's consolidated balance sheets.

For the year ended December 31, 2017, the Company purchased two communities consisting of 1,328 apartment homes for $273.0 million.

(b) Sales of Real Estate Investments

For the year ended December 31, 2018, the Company sold two communities consisting of 669 apartment homes for $352.0 million resulting in gains totaling $61.9 million. The table below summarizes disposition activity of operating communities for the year ended December 31, 2018 ($ in millions):

Property Name	Location	Apartment Homes		Essex Ownership Percentage		Ownership	Quarter in 2018	Sales Price			Gains
Domain	San Diego, CA	379		100	%	EPLP	Q2	$	132.0		$	22.3
8th & Hope	Los Angeles, CA	290		100	%	EPLP	Q4	220.0			39.6
Total 2018		669						$	352.0		$	61.9

During 2017, the Company sold one community consisting of 270 apartment homes for $132.5 million resulting in a gain of $26.2 million, which is included in the line item gain on sale of real estate and land in the Company's consolidated statement of income.

During 2016, the Company sold three communities, consisting of 323 apartment homes, for $80.8 million resulting in gains totaling $14.0 million, net of $4.4 million deferred tax on gain on sale of real estate.

In January 2016, the Company sold its former headquarters office building, located in Palo Alto, CA, for gross proceeds of $18.0 million, resulting in a gain of $9.6 million, which is included in the line item gain on sale of real estate and land in the Company's consolidated statement of income.

(c) Real Estate Assets Held for Sale, net

As of December 31, 2018 and 2017, the Company had no assets classified as held for sale.

(d) Co-investments

The Company has joint ventures which are accounted for under the equity method. The co-investments’ accounting policies are similar to the Company’s accounting policies. The co-investments own, operate, and develop apartment communities.

In March 2018, the BEXAEW joint venture operating agreement was amended, and the joint venture was extended. Under the amendment, the Company received a cash payment for co-investment promote income of $20.5 million, which is included in equity income from co-investments on the consolidated statements of income and comprehensive income.

In October 2018, Wesco V acquired Meridian at Midtown, a 218 apartment home community located in San Jose, CA, for a total contract price of $104.0 million. In connection with this acquisition, Wesco V assumed $69.9 million of mortgage debt, with an effective interest rate of 4.50% and a maturity date of March 2026. The Company previously had a preferred equity investment in this apartment home community, which was fully redeemed in August 2015.

In November 2018, BEXAEW sold Enclave at Town Square, a 124 apartment home community located in Chino Hills, CA, for $30.5 million, which resulted in a gain of $5.4 million for the Company, recorded in the consolidated statement of income as equity income from co-investments. BEXAEW used $16.1 million of the proceeds to repay the loan on the property.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

In November 2018, Wesco III sold The Summit, a 125 apartment home community located in Chino Hills, CA, for $34.8 million, which resulted in a gain of $5.2 million for the Company, recorded in the consolidated statement of income as equity income from co-investments. Wesco III used $15.6 million of the proceeds to repay the loan on the property.

In December 2018, the Company purchased its joint venture partner's 49.9% interest in the Marquis co-investment, for a contract price of $35.4 million. Prior to the purchase, an approximately $45.8 million mortgage encumbered the property. Marquis has 166 apartment homes and is located in San Jose, CA. As a result of this acquisition, the Company realized a gain on remeasurement of co-investment of $1.3 million upon consolidation.

The carrying values of the Company’s co-investments as of December 31, 2018 and 2017 are as follows ($ in thousands, except in parenthetical):

	Weighted Average Essex Ownership			December 31,
	Percentage (1)			2018				2017
Ownership interest in:
CPPIB	54	%		$	482,507			$	500,287
Wesco I, Wesco III, Wesco IV, and Wesco V	52	%		194,890				214,408
BEXAEW, BEX II and BEX III (2)	50	%		121,780				13,827
Other	51	%		34,093				51,810
Total operating and other co-investments, net				833,270				780,332
Total pre-development and development co-investments	50	%		94,060				73,770
Total preferred interest co-investments (includes related party investments of $51.8 million and $15.7 million as of December 31, 2018 and December 31, 2017, respectively - FN 6 - Related Party Transactions for further discussion)				372,810				265,156
Total co-investments, net				$	1,300,140			$	1,119,258

(1)	Weighted average Essex ownership percentages are as of December 31, 2018.

(2)	As of December 31, 2017, the Company's investment in BEX II was classified as a liability of $36.7 million.

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

	December 31,
	2018				2017
Combined balance sheets: (1)
Rental properties and real estate under development	$	4,367,987			$	3,722,778
Other assets	104,119				110,333
Total assets	$	4,472,106			$	3,833,111
Debt	$	2,190,764			$	1,705,051
Other liabilities	106,316				45,515
Equity	2,175,026				2,082,545
Total liabilities and equity	$	4,472,106			$	3,833,111
Company's share of equity	$	1,300,140			$	1,155,984

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

	Years ended December 31,
	2018				2017				2016
Combined statements of income: (1)
Property revenues	$	332,164			$	312,841			$	289,011
Property operating expenses	(107,584		)		(110,583		)		(99,637		)
Net operating income	224,580				202,258				189,374
Gain on sale of real estate	24,218				90,663				28,291
Interest expense	(63,913		)		(62,844		)		(46,894		)
General and administrative	(6,379		)		(9,091		)		(7,448		)
Depreciation and amortization	(126,485		)		(118,048		)		(103,986		)
Net income	$	52,021			$	102,938			$	59,337
Company's share of net income (2)	$	89,132			$	86,445			$	48,698

(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 $2.0 million, $1.9 million, and $3.4 million for the years ended December 31, 2018, 2017, and 2016, respectively.

Operating Co-investments

As of December 31, 2018 and 2017, the Company, through several joint ventures, owned 10,613 and 10,810 apartment homes, respectively, in operating communities. The Company’s book value of these co-investments was $833.3 million and $780.3 million at December 31, 2018 and 2017, respectively.

Pre-Development and Development Co-investments

As of both December 31, 2018 and 2017, the Company, through several joint ventures, owned 814 apartment homes in pre-development and development communities. The Company’s book value of these co-investments was $94.1 million and $73.8 million at December 31, 2018 and 2017, respectively.

In 2017, the Company entered into a joint venture to develop Ohlone, a multifamily community comprised of 269 apartment homes located in San Jose, CA. The Company has a 50% ownership interest in the development which has a projected total cost of $136.0 million. Construction began in the third quarter of 2017 and the community is expected to open in the fourth quarter of 2019. The Company has also committed to a $28.9 million preferred equity investment in the project, which accrues an annualized preferred return of 10.0% and matures in 2020.

In 2015, the Company entered into a joint venture to develop 500 Folsom, a multifamily community comprised of 545 apartment homes located in San Francisco, CA. The Company has a 50% ownership interest in the development which has a projected total cost of $415.0 million. Construction began in the fourth quarter of 2015 and the property is projected to open in the third quarter of 2019.

Preferred Equity Investments

As of December 31, 2018 and 2017, the Company held preferred equity investment interests in several joint ventures which own real estate. The Company’s book value of these preferred equity investments was $372.8 million and $265.2 million at December 31, 2018 and 2017, respectively, and is included in the co-investments line in the accompanying consolidated balance sheets.

During 2018, the Company made commitments to fund $45.1 million preferred equity investment in two preferred equity investments, in which the sponsors include a related party. See Note 6, Related Party Transactions, for additional details. The investments have initial returns ranging from 10.25%-12.0%, with maturities ranging from May 2023 to April 2024. As of

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

December 31, 2018, the Company had funded $39.6 million of the $45.1 million commitment. The remaining committed amount will be funded if and when requested by the sponsors.

During 2017, the Company made commitments to fund $153.8 million in eight preferred equity investments. These investments have initial accrued preferred returns ranging from 9.5%-11.3%, with maturities ranging from March 2020 to August 2024. As of December 31, 2018, the Company had funded $151.8 million of the $153.8 million commitment.

In January 2018, the Company received cash of $2.4 million for the full redemption of a preferred equity investment in a co-investment that holds property in Seattle, WA.

In June 2018, the Company received cash of $26.5 million for the full redemption of a preferred equity investment in an entity that holds property in Seattle, WA. The Company recognized a gain of $1.6 million as a result of this early redemption, which is included in equity income from co-investments in the consolidated statements of income and comprehensive income.

In October 2018, the Company received cash of $5.0 million for the full redemption of a related party preferred equity investment in a co-investment that holds property in Los Angeles, CA.

(e) Real Estate under Development

The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations. As of December 31, 2018, the Company's development pipeline was comprised of four consolidated projects under development, two unconsolidated joint venture projects under development and various predevelopment projects, aggregating 1,861 apartment homes, with total incurred costs of $0.8 billion.

(4) Revenues

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

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

Revenue Recognition

Revenue from Leasing

The Company generates revenues primarily from leasing apartment homes to tenants. Such leasing revenues are recorded when due from tenants and are recognized monthly as they are earned, which is not materially different than on a straight-line basis. Apartment homes are rented under short-term leases (generally, lease terms of 6 to 12 months). Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease.

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.

Revenue from Contracts with Customers

Apart from rental and other property-related revenue, revenues from contracts with customers are recognized as control of the promised services is passed to the customer.

For customer contracts related to management and other fees from affiliates (which includes asset management and property management), the transaction price and amount of revenue to be recognized is determined each quarter based on the

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

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.

Disaggregated Revenue

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

	2018				2017				2016
Rental	$	1,296,435			$	1,263,476			$	1,201,995
Other property leasing revenue	94,435				90,849				83,728
Management and other fees from affiliates	9,183				9,574				8,278
Total revenues	$	1,400,053			$	1,363,899			$	1,294,001

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

	2018				2017				2016
Southern California	$	592,281			$	574,552			$	540,000
Northern California	522,561				505,313				453,140
Seattle Metro	236,525				229,871				217,259
Other real estate assets (1)	39,503				44,589				75,324
Total rental and other property leasing revenues	$	1,390,870			$	1,354,325			$	1,285,723

(1) Other real estate assets consists of revenue generated from retail space, commercial properties, held for sale properties, and disposition properties. Executive management does not evaluate such operating performance geographically.

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

	2018				2017				2016
Same-property (1)	$	1,279,640			$	1,244,743			$	1,185,685
Acquisitions (2)	42,481				39,289				—
Development (3)	2,713				—				—
Redevelopment	20,345				19,641				18,737
Non-residential/other, net (4)	45,691				50,652				81,301
Total rental and other property leasing revenues	$	1,390,870			$	1,354,325			$	1,285,723

(1) Stabilized properties consolidated by the Company for the years ended December 31, 2018, 2017 and 2016.

(2) Acquisitions includes properties acquired which did not have comparable stabilized results as of January 1, 2017.

(3) Development includes properties developed which did not have stabilized results as of January 1, 2017.

(4) Non-residential/other, net consists of revenue generated from retail space, commercial properties, held for sale properties, disposition properties and student housing.

Deferred Revenues and Remaining Performance Obligations

When cash payments are received or due in advance of the Company’s performance of contracts with customers, deferred revenue is recorded. The total deferred revenue balance related to such contracts was $6.2 million and $9.3 million as of December 31, 2018 and December 31, 2017, respectively, and was included in accounts payable and accrued liabilities within the accompanying consolidated balance sheets. The amount of revenue recognized for the year ended December 31, 2018 that was included in the December 31, 2017 deferred revenue balance was $3.1 million, which was included in interest and other income within the consolidated statements of income and comprehensive income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue recognition accounting standard. As of December 31, 2018, the Company had $6.2 million of remaining performance obligations. The Company expects to recognize approximately 37% of these remaining performance obligations in 2019, an additional 24% through 2021, and the remaining balance thereafter.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less or when variable consideration is allocated entirely to a wholly unsatisfied performance obligation.

(5) Notes and Other Receivables

Notes and loan investment receivables, secured by real estate, and other receivables consist of the following as of December 31, 2018 and 2017 ($ in thousands):

	2018				2017
Notes receivable, secured, bearing interest at 10.00%, due May 2021	15,226				13,762
Note receivable, secured, bearing interest at 10.75%, due September 2020	32,650				29,318
Related party note receivable, secured, bearing interest at 9.50%, due October 2019 (1)	6,618				6,656
Related party note receivable, secured, bearing interest at 3.50%, due March 2018 (1)	—				29,500
Notes and other receivables from affiliates (2)	4,457				5,061
Other receivables	12,944				16,629
Total notes and receivables	$	71,895			$	100,926

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

(2)	These amounts consist of short-term loans outstanding and due from various joint ventures as of December 31, 2018 and 2017, respectively. See Note 6, Related Party Transactions, for additional details.

In November 2018, the Company made a commitment to fund a $12.5 million mezzanine loan in a multifamily community located in Vista, CA, with a 9.9% interest rate and an initial maturity date of November 2021, with options to extend for up to two years. As of December 31, 2018, the Company had not funded any of this commitment.

(6) Related Party Transactions

The Company has adopted written related party transaction guidelines that are intended to cover transactions in which the Company (including entities it controls) is a party and in which any "related person" has a direct or indirect interest. A "related person" means any person who is or was (since the beginning of the last fiscal year) a Company director, director nominee, or executive officer, any beneficial owner of more than 5% of the Company’s outstanding common stock, and any immediate family member of any of the foregoing persons. A related person may be considered to have an indirect interest in a transaction if he or she (i) is an owner, director, officer or employee of or otherwise associated with another company that is engaging in a transaction with the Company, or (ii) otherwise, through one or more entities or arrangements, has an indirect financial interest in or personal benefit from the transaction.

The related person transaction review and approval process is intended to determine, among any other relevant issues, the dollar amount involved in the transaction; the nature and value of any related person’s direct or indirect interest (if any) in the transaction; and whether or not (i) a related person’s interest is material, (ii) the transaction is fair, reasonable, and serves the best interest of the Company and its shareholders, and (iii) whether the transaction or relationship should be entered into, continued or ended.

The Company’s Chairman and founder, Mr. George Marcus, is the Chairman of the Marcus & Millichap Company ("MMC"), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Co-Chairman of Marcus & Millichap, Inc. ("MMI"), and Mr. Marcus owns a controlling interest in MMI. MMI is a national brokerage firm listed on the NYSE that underwent its initial public offering in 2013. For the year ended December 31, 2016, the

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

Company paid brokerage commissions totaling $1.1 million to affiliates of MMC related to real estate transactions. There were no brokerage commissions paid by the Company to MMI or its affiliates during 2018 and 2017.

The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates total $13.9 million, $12.6 million, and $12.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of $4.8 million, $3.0 million, and $4.2 million against general and administrative expenses for the years ended December 31, 2018, 2017 and 2016, respectively.

As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of December 31, 2018 and 2017, $4.5 million and $5.1 million, respectively, of short-term loans remained outstanding due from joint venture affiliates and are classified within notes and other receivables in the accompanying consolidated balance sheets. In November 2016, the Company provided a $6.6 million mezzanine loan to a limited liability company in which MMC holds a significant ownership interest through subsidiaries. The mezzanine loan had an outstanding balance of $6.6 million and $6.7 million, as of December 31, 2018 and 2017, respectively, and is classified within notes and other receivables in the accompanying consolidated balance sheets.

In October 2018, the Company funded a $18.6 million preferred equity investment in an entity whose sponsor is an affiliate of MMC. The entity wholly owns a 268 apartment home community development located in Burlingame, CA. This investment will accrue interest based on an initial 12.00% preferred return. The investment is scheduled to mature in April 2024.

In May 2018, the Company made a commitment to fund a $26.5 million preferred equity investment in an entity whose sponsors include an affiliate of MMC. The entity wholly owns a 400 apartment home community located in Ventura, CA. This investment will accrue interest based on a 10.25% preferred return. The investment is scheduled to mature in May 2023. As of December 31, 2018, the Company had funded $21.0 million of the commitment. The remaining committed amount will be funded if and when requested by the sponsors.

In November 2017, the Company provided a $29.5 million related party bridge loan to a property acquired by BEX III. The note receivable accrued interest at 3.5% and was paid off in January 2018. The bridge loan was classified within notes and other receivables in the accompanying consolidated balance sheets and had no amount outstanding as of December 31, 2018.

In August 2017, the Company provided a $55.0 million related party bridge loan to a property acquired by Wesco V. The note receivable accrued interest at 3.5% and was paid off in November 2017.

In March 2017, the Company converted its existing $15.3 million preferred equity investment in Sage at Cupertino, a 230 apartment home community located in San Jose, CA, into a 40.5% common equity ownership interest in the property. The Company issued DownREIT limited partnership units to the other members, including an MMC affiliate, based on an estimated property valuation of $90.0 million. At the time of the conversion, the property was encumbered by $52.0 million of mortgage debt. As a result of this transaction, the Company consolidates the property, based on a consolidation analysis performed by the Company.

In 2015, the Company made preferred equity investments totaling $20.0 million in three entities affiliated with MMC that own apartment communities in California. The Company earns a 9.5% preferred return on each such investment. One $5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2017. Another $5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2018. The remaining investment is scheduled to mature in 2022.

(7) Unsecured Debt

Essex does not have any indebtedness as all debt is incurred by the Operating Partnership. Essex guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities up to the maximum amounts and for the full term of the facilities.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

Unsecured debt consists of the following as of December 31, 2018 and 2017 ($ in thousands):

	2018				2017				Weighted Average Maturity In Years
Unsecured bonds private placement - fixed rate	$	274,624			$	274,427			2.1
Term loan - variable rate	348,813				348,545				3.1
Bonds public offering - fixed rate	3,175,879				2,878,737				7.7
Unsecured debt, net (1)	3,799,316				3,501,709
Lines of credit (2)	—				179,000
Total unsecured debt	$	3,799,316			$	3,680,709
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering	3.9		%		3.7		%
Weighted average interest rate on variable rate term loan	3.0		%		2.5		%
Weighted average interest rate on lines of credit	3.2		%		2.3		%

(1)	Includes unamortized discount, net of premiums, of $7.1 million and $5.2 million and unamortized debt issuance costs of $18.5 million and $18.1 million as of December 31, 2018 and 2017, respectively.

(2)	Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.24 billion, excludes unamortized debt issuance costs of $3.9 million and $3.2 million as of December 31, 2018 and 2017, respectively. These debt issuance costs are included in prepaid expenses and other assets on the consolidated balance sheets.

As of both December 31, 2018 and 2017, the Company had $275.0 million of private placement unsecured bonds outstanding at an average effective interest rate of 4.5% for both periods.

The following is a summary of the Company’s unsecured private placement bonds as of December 31, 2018 and 2017 ($ in thousands):

	Maturity		2018				2017				Coupon Rate
Senior unsecured private placement notes	December 2019		75,000				75,000				4.92	%
Senior unsecured private placement notes	April 2021		100,000				100,000				4.27	%
Senior unsecured private placement notes	June 2021		50,000				50,000				4.30	%
Senior unsecured private placement notes	August 2021		50,000				50,000				4.37	%
			$	275,000			$	275,000

As of both December 31, 2018 and 2017, the Company had unsecured term loans outstanding of $350.0 million at an average interest rate of 3.0% and 2.5%, respectively. These loans are included in the line "Term loan - variable rate" in the table above, and as of December 31, 2018 and 2017, the carrying value, net of debt issuance costs, was $348.8 million and $348.5 million, respectively, and the term loan matures in February 2022. The Company had entered into five interest rate swap contracts, for a term of five years with a notional amount totaling $175.0 million, which will effectively convert the interest rate on $175.0 million of the term loan to a fixed rate of 2.3%. These interest rate swaps are accounted for as cash flow hedges.

In March 2018, the Company issued $300.0 million of senior unsecured notes due on March 15, 2048 with a coupon rate of 4.500% per annum and are payable on March 15 and September 15 of each year, beginning on September 15, 2018 (the "2048 Notes"). The 2048 Notes were offered to investors at a price of 99.591% of par value. The 2048 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2018, the carrying value of the 2048 Notes, net of discount and debt issuance costs was $295.4 million.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

In April 2017, the Company issued $350.0 million of senior unsecured notes due on May 1, 2027 with a coupon rate of 3.625% per annum and are payable on May 1 and November 1 of each year, beginning on November 1, 2017 (the "2027 Notes"). The 2027 Notes were offered to investors at a price of 99.423% of par value. The 2027 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2018 and 2017, the carrying value of the 2027 Notes, net of discount and debt issuance costs was $345.8 million and $345.2 million, respectively.

In April 2016, the Company issued $450.0 million of senior unsecured notes due on April 15, 2026 with a coupon rate of 3.375% per annum and are payable on April 15th and October 15th of each year, beginning October 15, 2016 (the "2026 Notes"). The 2026 Notes were offered to investors at a price of 99.386% of par value. The 2026 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2018 and 2017, the carrying value of the 2026 Notes, net of discount and debt issuance costs was $445.0 million and $444.4 million, respectively.

In March 2015, the Company issued $500.0 million of senior unsecured notes due on April 1, 2025 with a coupon rate of 3.5% per annum and are payable on April 1st and October 1st of each year, beginning October 1, 2015 (the "2025 Notes"). The 2025 Notes were offered to investors at a price of 99.747% of par value. The 2025 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2018 and 2017, the carrying value of the 2025 Notes, net of discount and debt issuance costs was $496.5 million and $495.9 million, respectively.

In April 2014, the Company assumed $900.0 million aggregate principal amount of BRE Property Inc.’s 5.500% senior notes due 2017; 5.200% senior notes due 2021; and 3.375% senior notes due 2023 (together the "BRE Notes"). These notes are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2018 and 2017, the carrying value of the BRE Notes, plus unamortized premium was $601.3 million and $603.2 million, respectively. In March 2017, the Company paid off $300.0 million of 5.500% senior notes, at maturity.

In April 2014, the Company issued $400.0 million of senior unsecured notes due on May 1, 2024 with a coupon rate of 3.875% per annum and are payable on May 1st and November 1st of each year, beginning November 1, 2014 (the "2024 Notes"). The 2024 Notes were offered to investors at a price of 99.234% of par value. The 2024 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2018 and 2017, the carrying value of the 2024 Notes, net of discount and debt issuance costs was $396.5 million and $395.8 million, respectively.

In April 2013, the Company issued $300.0 million of senior unsecured notes due on May 1, 2023 with a coupon rate of 3.25% per annum and are payable on May 1st and November 1st of each year, beginning November 1, 2013 (the "2023 Notes"). The 2023 Notes were offered to investors at a price of 99.152% of par value. The 2023 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2018 and 2017, the carrying value of the 2023 Notes, net of discount and debt issuance costs was $297.6 million and $297.0 million, respectively.

During the third quarter of 2012, the Company issued $300.0 million of senior unsecured notes due August 2022 with a coupon rate of 3.625% per annum and are payable on February 15th and August 15th of each year, beginning February 15, 2013 (the "2022 Notes"). The 2022 Notes were offered to investors at a price of 98.99% of par value. The 2022 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2018 and 2017, the carrying value of the 2022 Notes, net of unamortized discount and debt issuance costs was $297.8 million and $297.2 million, respectively.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

The following is a summary of the Company’s senior unsecured notes as of December 31, 2018 and 2017 ($ in thousands):

	Maturity		2018				2017				Coupon Rate
Senior notes	March 2021		$	300,000			$	300,000			5.200	%
Senior notes	August 2022		300,000				300,000				3.625	%
Senior notes	January 2023		300,000				300,000				3.375	%
Senior notes	May 2023		300,000				300,000				3.250	%
Senior notes	May 2024		400,000				400,000				3.875	%
Senior notes	April 2025		500,000				500,000				3.500	%
Senior notes	April 2026		450,000				450,000				3.375	%
Senior notes	May 2027		350,000				350,000				3.625	%
Senior notes	March 2048		300,000				—				4.500	%
			$	3,200,000			$	2,900,000

The aggregate scheduled principal payments of unsecured debt payable, excluding lines of credit, at December 31, 2018 are as follows ($ in thousands):

2019	$	75,000
2020	—
2021	500,000
2022	650,000
2023	600,000
Thereafter	2,000,000
	$	3,825,000

As of December 31, 2018, the Company had two unsecured lines of credit aggregating $1.24 billion, including a $1.2 billion unsecured line of credit and a $35.0 million working capital unsecured line of credit. As of December 31, 2018, there was no amount outstanding on the $1.2 billion unsecured line of credit. As of December 31, 2017, there was $179.0 million outstanding on this line. The interest rate is based on a tiered rate structure tied to the Company's credit ratings and was LIBOR plus 0.875% as of December 31, 2018. In January 2019, this line of credit was amended such that the scheduled maturity date of this facility was extended to December 2022, with one 18-month extension, exercisable at the Company's option. The interest rate on the amended line is based on a tiered rate structure tied to the Company's credit ratings and is currently at LIBOR plus 0.825%. As of both December 31, 2018 and 2017, there was no amount outstanding on the Company's $35.0 million working capital unsecured line of credit. The interest rate on the line is based on a tiered rate structure tied to the Company's credit ratings and was LIBOR plus 0.875% as of December 31, 2018.

The Company’s unsecured lines of credit and unsecured debt agreements contain debt covenants related to limitations on indebtedness and liabilities, and maintenance of minimum levels of consolidated earnings before depreciation, interest and amortization. The Company was in compliance with the debt covenants as of December 31, 2018 and 2017.

In February 2019, the Company issued $350.0 million of senior unsecured notes due on March 1, 2029 with a coupon rate of 4.000% per annum (the "2029 Notes"). See Note 17, Subsequent Events, for further details.

(8) Mortgage Notes Payable

Essex does not have any indebtedness as all debt is incurred by the Operating Partnership. Mortgage notes payable consist of the following as of December 31, 2018 and 2017 ($ in thousands):

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

	2018				2017
Fixed rate mortgage notes payable	$	1,538,488			$	1,739,856
Variable rate mortgage notes payable (1)	268,138				268,561
Total mortgage notes payable (2)	$	1,806,626			$	2,008,417
Number of properties securing mortgage notes	50				56
Remaining terms	1-28 years				1-29 years
Weighted average interest rate	4.3		%		4.2		%

The aggregate scheduled principal payments of mortgage notes payable at December 31, 2018 are as follows ($ in thousands):

2019	$	515,658
2020	693,723
2021	43,604
2022	41,178
2023	852
Thereafter	500,880
	$	1,795,895

(1)

Variable rate mortgage notes payable, including $256.0 million in bonds that have been converted to variable rate through total return swap contracts, consists of multifamily housing mortgage revenue bonds secured by deeds of trust on rental properties and guaranteed by collateral pledge agreements, payable monthly at a variable rate as defined in the Loan Agreement (approximately 2.5% at December 2018 and 2.0% at December 2017) including credit enhancement and underwriting fees. Among the terms imposed on the properties, which are security for the bonds, is a requirement that 20% of the apartment homes are subject to tenant income criteria. Principal balances are due in full at various maturity dates from May 2025 through December 2046. Of these bonds, $9.9 million are subject to various interest rate cap agreements that limit the maximum interest rate to such bonds.

(2)	Includes total unamortized premium, net of discounts, of $14.9 million and $33.2 million and reduced by unamortized debt issuance costs of $4.2 million and $5.4 million as of December 31, 2018 and 2017, respectively.

For the Company’s mortgage notes payable as of December 31, 2018, monthly interest expense and principal amortization, excluding balloon payments, totaled approximately $7.6 million and $2.3 million, respectively. Second deeds of trust accounted for none of the mortgage notes payable balance as of both December 31, 2018 and 2017. Repayment of debt before the scheduled maturity date could result in prepayment penalties. The prepayment penalty on the majority of the Company’s mortgage notes payable are computed by the greater of (a) 1% of the amount of the principal being prepaid or (b) the present value of the principal being prepaid multiplied by the difference between the interest rate of the mortgage note and the stated yield rate on a U.S. treasury security which generally has an equivalent remaining term as the mortgage note.

(9) Derivative Instruments and Hedging Activities

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

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

In November 2016, the Company replaced its $225.0 million term loan with a $350.0 million five-year term loan with a delayed draw feature. The term loan carries a variable interest rate of LIBOR plus 95 basis points. In 2016, the Company entered into four forward starting interest rate swaps (settlement payments commenced in March 2017) and in 2017, the Company entered into one forward starting interest rate swap (settlement payments commenced in March 2017) all related to the $350.0 million term loan. These five swaps, with a total notional amount of $175.0 million bear an average fixed interest rate of 2.3% and are scheduled to mature in February 2022. These derivatives qualify for hedge accounting.

As of December 31, 2018 and 2017, the Company had interest rate caps, which were not accounted for as hedges, with an aggregate notional amount of $9.9 million and $20.7 million, respectively, which effectively limits the Company’s exposure to interest rate risk by providing a ceiling on the variable interest rate for a portion of the Company’s tax exempt variable rate debt.

As of December 31, 2018 and 2017, the aggregate carrying value of the interest rate swap contracts was an asset of $5.8 million and $5.4 million, respectively, and is included in prepaid expenses and other assets on the consolidated balance sheets, and a liability of zero as of both December 31, 2018 and 2017. The aggregate carrying value of the interest rate caps was zero on the balance sheet as of December 31, 2018 and 2017.

Hedge ineffectiveness related to cash flow hedges, which is included in interest expense was a loss of $0.1 million, and income of $0.1 million, and $0.3 million for the years ended December 31, 2018, 2017, and 2016 respectively.

The Company has four total return swap contracts, with an aggregate notional amount of $256.0 million, that effectively convert $256.0 million of mortgage notes payable to a floating interest rate based on SIFMA plus a spread. The total return swaps provide fair market value protection on the mortgage notes payable to our counterparties during the initial period of the total return swap until the Company's option to call the mortgage notes at par can be exercised. The Company can currently call all four of the total return swaps with $256.0 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting and had a carrying and fair value of zero at both December 31, 2018 and 2017, respectively. These total return swaps are scheduled to mature between September 2021 and November 2022. The realized gains of $8.7 million, $10.1 million, and $11.7 million as of December 31, 2018, 2017, and 2016, respectively, were reported in current year income as total return swap income.

(10) Lease Agreements

As of December 31, 2018, the Company is a lessor for one commercial building and the commercial portions of 38 mixed use communities. The tenants’ lease terms expire at various times through 2031. The future minimum non-cancelable base rent to be received under these operating leases for each of the years ending after December 31 is summarized as follows ($ in thousands):

	Future
	Minimum
	Rent
2019	$	16,386
2020	15,842
2021	14,412
2022	13,324
2023	12,181
Thereafter	33,034
	$	105,179

(11) Equity Transactions

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

Preferred Securities Offerings

In April 2016, the Company redeemed all of the issued and outstanding 2,950,000 shares of the Company's 7.125% Series H Cumulative Redeemable Preferred Stock ("Series H") for $25.00 per share for $73.8 million in cash. In connection with the Series H redemption, the Operating Partnership redeemed the Series H 7.125% Preferred Interest. The notice of redemption was given in March 2016, which resulted in the Company and the Operating Partnership each recording $2.5 million in excess of redemption value over carrying value charge to 2016 net income attributable to common stockholders and net income related to unitholders, respectively.

Common Stock Offerings

In September 2018, the Company entered into a new equity distribution agreement pursuant to which the Company may offer and sell shares of its common stock having an aggregate gross sales price of up to $900.0 million (the "2018 ATM Program"). In connection with the 2018 ATM Program, the Company may also enter into related forward sale agreements whereby, at the Company’s discretion, it may sell shares of its common stock under the 2018 ATM Program under forward sale 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 receiving the proceeds from the sale of shares until a later date. The Company anticipates using the net proceeds, which are contributed to the Operating Partnership, to acquire, develop, or redevelop properties, which primarily will be apartment communities, to make other investments and for working capital or general corporate purposes, which may include the repayment of indebtedness.

Upon entering into the 2018 ATM Program, the Company simultaneously terminated its existing equity distribution agreements, which were entered into in March 2016 in connection with its prior at-the-market equity offering program (the "2016 ATM Program"). During the year ended December 31, 2018, the Company did not sell any shares of its common stock through the 2018 ATM Program or through the 2016 ATM Program. Since commencement of the 2018 ATM Program, as of December 31, 2018, the Company has not sold any shares of its common stock and there are no outstanding forward sale agreements, and $900.0 million of shares remains available to be sold under this program. During 2017, the Company issued 345,444 shares of common stock, through the 2016 ATM program at an average price of $260.38 per share for total proceeds of $89.1 million, net of fees and commissions. For the year ended December 31, 2016, the Company did not issue any shares of common stock pursuant to the 2016 ATM Program.

Operating Partnership Units and Long Term Incentive Plan ("LTIP") Units

As of December 31, 2018 and 2017, the Operating Partnership had outstanding 2,171,309 and 2,054,814 operating partnership units and 134,080 and 213,300 vested LTIP units, respectively. The Operating Partnership’s general partner, Essex, owned 96.6% and 96.7% of the partnership interests in the Operating Partnership as of December 31, 2018 and 2017, respectively, and Essex is responsible for the management of the Operating Partnership’s business. As the general partner of the Operating Partnership, Essex effectively controls the ability to issue common stock of Essex upon a limited partner’s notice of redemption. Essex has generally acquired Operating Partnership limited partnership units ("OP Units") upon a limited partner’s notice of redemption in exchange for shares of its common stock. The redemption provisions of OP Units owned by limited partners that permit Essex to settle in either cash or common stock at the option of Essex were further evaluated in accordance with applicable accounting guidance to determine whether temporary or permanent equity classification on the balance sheet is appropriate. The Operating Partnership evaluated this guidance, including the requirement to settle in unregistered shares, and determined that, with few exceptions, these OP Units meet the requirements to qualify for presentation as permanent equity.

LTIP units represent an interest in the Operating Partnership for services rendered or to be rendered by the LTIP unit holder in its capacity as a partner, or in anticipation of becoming a partner, in the Operating Partnership. Upon the occurrence of specified events, LTIP units may over time achieve full parity with common units of the Operating Partnership for all purposes. Upon achieving full parity, LTIP units will be exchanged for an equal number of the OP Units.

The collective redemption value of OP Units and LTIP units owned by the limited partners, not including Essex, was approximately $565.3 million and $547.5 million based on the closing price of Essex's common stock as of December 31, 2018 and 2017, respectively.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

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

Essex Property Trust, Inc.

Basic and diluted income per share is calculated as follows for the years ended December 31 ($ in thousands, except share and per share amounts):

	2018										2017										2016
	Income			Weighted- average Common Shares			Per Common Share Amount				Income			Weighted- average Common Shares			Per Common Share Amount				Income			Weighted- average Common Shares			Per Common Share Amount
Basic:
Net income available to common stockholders	390,153			66,041,058			$	5.91			433,059			65,829,155			$	6.58			411,124			65,471,540			$	6.28
Effect of Dilutive Securities
Stock options	—			44,031							—			69,100							—			116,276
Diluted:
Net income available to common stockholders	390,153			66,085,089			$	5.90			433,059			65,898,255			$	6.57			411,124			65,587,816			$	6.27

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,274,941, 2,252,575, and 2,224,100, which include vested Series Z-1 Incentive Units, 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units, for the years ended December 31, 2018, 2017 and 2016, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $13.5 million, $14.8 million, and $14.1 million for the years ended December 31, 2018, 2017 and 2016, respectively. Additionally, the table excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.

Stock options of 160,039, 154,793, and 252,334, for the years ended December 31, 2018, 2017, and 2016, 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 years ended and, therefore, were anti-dilutive.

All shares of cumulative convertible Series H preferred interest have been excluded from diluted earnings per share for the years ended December 31, 2016, as the effect was anti-dilutive.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

Essex Portfolio, L.P.

Basic and diluted income per unit is calculated as follows for the years ended December 31 ($ in thousands, except unit and per unit amounts):

	2018											2017											2016
	Income				Weighted- average Common Units			Per Common Unit Amount				Income				Weighted- average Common Units			Per Common Unit Amount				Income				Weighted- average Common Units			Per Common Unit Amount
Basic:
Net income available to common unitholders	$	403,605			68,315,999			$	5.91			$	447,884			68,081,730			$	6.58			$	425,213			67,695,640			$	6.28
Effect of Dilutive Securities
Stock options	—				44,031							—				69,100							—				116,276
Diluted:
Net income available to common unitholders	$	403,605			68,360,030			$	5.90			$	447,884			68,150,830			$	6.57			$	425,213			67,811,916			$	6.27

Stock options of 160,039, 154,793, and 252,334, for the years ended December 31, 2018, 2017, and 2016, respectively, were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for the years ended and, therefore, were anti-dilutive. Additionally, the table excludes all DownREIT limited partnership 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.

The cumulative convertible Series H preferred interest have been excluded from diluted earnings per unit for the years ended December 31, 2016, as the effect was anti-dilutive.

(13) Equity Based Compensation Plans

Stock Options and Restricted Stock

In May 2018, stockholders approved the Company’s 2018 Stock Award and Incentive Compensation Plan ("2018 Plan"). The 2018 Plan serves as the successor to the Company’s 2013 Stock Incentive Plan (the "2013 Plan"). The Company’s 2018 Plan provides incentives to attract and retain officers, directors and key employees. The 2018 Plan provides for the grant of stock-based awards to employees, directors and consultants of the Company and its affiliates. The aggregate number of shares of the Company’s common stock available for issuance pursuant to awards granted under the 2018 Plan is 2,000,000 shares, plus the number of shares authorized for grants and available for issuance under the 2013 Plan as of the effective date of the 2018 Plan and the number of shares subject to outstanding awards under the 2013 Plan that are forfeited or otherwise not issued under such awards. No further awards will be granted under the 2013 Plan and the shares that remained available for future issuance under the 2013 Plan as of the effective date of the 2018 Plan will be available for issuance under the 2018 Plan. In connection with the adoption of the 2018 Plan, the Board delegated to the Compensation Committee of the Board the authority to administer the 2018 Plan.

Equity-based compensation costs for options and restricted stock under the fair value method totaled $12.1 million, $9.8 million, and $8.5 million for years ended December 31, 2018, 2017 and 2016 respectively. For each of the years ended December 31, 2018, 2017 and 2016 equity-based compensation costs included $3.5 million related to restricted stock for bonuses awarded based on asset dispositions, which is recorded as a cost of real estate and land sold, respectively. Stock-based compensation for options and restricted stock related to recipients who are direct and incremental to projects under development were capitalized and totaled $2.0 million, $1.5 million, and $0.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. The intrinsic value of the options exercised totaled $3.1 million, $16.7 million, and $11.9

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

million, for the years ended December 31, 2018, 2017, and 2016 respectively. The intrinsic value of the options exercisable totaled $12.5 million and $11.3 million as of December 31, 2018 and 2017, respectively.

Total unrecognized compensation cost related to unvested stock options totaled $6.0 million as of December 31, 2018 and the unrecognized compensation cost is expected to be recognized over a period of 2.1 years.

The average fair value of stock options granted for the years ended December 31, 2018, 2017 and 2016 was $26.13, $22.41 and $21.65, respectively. Certain stock options granted in 2018, 2017, and 2016 included a $100 cap, $125 cap, or no cap on the appreciation of the market price over the exercise price. The fair value of stock options was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants:

	2018				2017				2016
Stock price	$	262.09			$	240.56			$	219.60
Risk-free interest rates	2.76		%		2.30		%		2.08		%
Expected lives	6 years				6 years				6 years
Volatility	24.89		%		24.10		%		26.47		%
Dividend yield	2.81		%		2.90		%		2.89		%

A summary of the status of the Company’s stock option plans as of December 31, 2018, 2017, and 2016 and changes during the years ended on those dates is presented below:

	2018							2017							2016
	Shares			Weighted- average exercise price				Shares			Weighted- average exercise price				Shares			Weighted- average exercise price
Outstanding at beginning of year	536,208			$	211.41			557,648			$	181.50			525,094			$	154.98
Granted	119,361			262.09				164,677			240.56				207,429			219.60
Exercised	(39,175	)		159.05				(176,489	)		146.86				(138,054	)		138.79
Forfeited and canceled	(3,440	)		221.80				(9,628	)		160.40				(36,821	)		178.18
Outstanding at end of year	612,954			224.57				536,208			211.41				557,648			181.50
Options exercisable at year end	322,837			206.63				223,796			191.09				290,340			160.90

The following table summarizes information about restricted stock outstanding as of December 31, 2018, 2017 and 2016 and changes during the years ended:

	2018							2017							2016
	Shares			Weighted- average grant price				Shares			Weighted- average grant price				Shares			Weighted- average grant price
Unvested at beginning of year	90,823			$	163.49			58,349			$	149.11			54,676			$	147.10
Granted	51,945			194.70				62,706			177.28				49,183			150.13
Vested	(48,212	)		150.76				(29,675	)		170.17				(38,427	)		147.12
Forfeited and canceled	(3,498	)		158.71				(557	)		119.37				(7,083	)		141.76
Unvested at end of year	91,058			180.99				90,823			163.49				58,349			149.11

The unrecognized compensation cost related to unvested restricted stock totaled $11.4 million as of December 31, 2018 and is expected to be recognized over a period of 2.7 years.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

Long Term Incentive Plans – LTIP Units

On December 9, 2014, the Operating Partnership issued 44,750 LTIP units under the 2015 Long-Term Incentive Plan Award agreements to executives of the Company. The 2015 Long-Term Incentive Plan Units (the "2015 LTIP Units") are subject to forfeiture based on performance-based and service based conditions. An additional 24,000 LTIP units were granted subject only to performance-based criteria and were fully vested on the date granted. The 2015 LTIP Units, that are subject to vesting, will vest at 20% per year on each of the first five anniversaries of the initial grant date. The 2015 LTIP Units performance conditions measurement ended on December 9, 2015 and 95.75% of the units awarded were earned by the recipients. 2015 LTIP Units not earned based on the performance-based criteria were automatically forfeited by the recipients. The 2015 LTIP Units, once earned and vested, are convertible one-for-one into OP Units which, in turn, are convertible into common stock of the Company subject to a ten-year liquidity restriction.

In December 2013, the Operating Partnership issued 50,500 LTIP units under the 2014 Long-Term Incentive Plan Award agreements to executives of the Company. The 2014 Long-Term Incentive Plan Units (the "2014 LTIP Units") were subject to forfeiture based on performance-based conditions and are currently subject to service based vesting. The 2014 LTIP Units vest 25% per year on each of the first four anniversaries of the initial grant date. In December 2014, the Company achieved the performance criteria and all of the 2014 LTIP Units awarded were earned by the recipients, subject to satisfaction of service based vesting conditions. The 2014 LTIP Units are convertible one-for-one into OP Units which, in turn, are convertible into common stock of the Company subject to a ten year liquidity restriction.

The estimated fair value of the 2015 LTIP Units and 2014 LTIP Units were determined on the grant date using Monte Carlo simulations under a risk-neutral premise and considered Essex’s stock price on the date of grant, the unpaid dividends on unvested units and the discount factor for 10 years of illiquidity.

Prior to 2013, the Company issued Series Z Incentive Units and Series Z-1 Incentive Units (collectively referred to as "Z Units") of limited partnership interest in the Operating Partnership. Vesting in the Z Units is based on performance criteria established in the plan. The criteria can be revised by the Compensation Committee of the Board of Directors if the Committee deems that the plan's criterion is unachievable for any given year. The sale of Z Units is contractually prohibited. Z Units are convertible into Operating Partnership units which are exchangeable for shares of the Company’s common stock that have marketability restrictions. The estimated fair value of Z Units were determined on the grant date and considered the Company's stock price on the date of grant, the dividends that are not paid on unvested units and a marketability discount for the 8 to 15 years of illiquidity. Compensation expense is calculated by multiplying estimated vesting increases for the period by the estimated fair value as of the grant date.

During 2011 and 2010, the Operating Partnership issued 154,500 Series Z-1 Incentive Units (the "Z-1 Units") of limited partner interest to executives of the Company. The Z-1 Units are convertible one-for-one into common units of the Operating Partnership (which, in turn, are convertible into common stock of the Company) upon the earlier to occur of 100 percent vesting of the units or the year 2026. The conversion ratchet (accounted for as vesting) of the Z-1 Units into common units, is to increase consistent with the Company’s annual FFO growth, but is not to be less than zero or greater than 14 percent. Z-1 Unit holders are entitled to receive distributions, on vested units, that are now equal to dividends distributed to common stockholders.

Equity-based compensation costs for LTIP and Z Units under the fair value method totaled approximately $0.8 million, $1.5 million and $2.4 million for the years ended December 31, 2018, 2017 and 2016, respectively. Equity-based compensation costs related to LTIP Units attributable to recipients who are direct and incremental to these projects was capitalized to real estate under development and totaled approximately $0.2 million, $0.5 million, and $0.6 million, for the years ended December 31, 2018, 2017, and 2016, respectively. The intrinsic value of the vested and unvested LTIP Units totaled $58.0 million as of December 31, 2018. Total unrecognized compensation cost related to the unvested LTIP Units under the LTIP Units plans totaled $0.9 million as of December 31, 2018. On a weighted average basis, the unamortized cost for the 2015 LTIP Units and the Z Units is expected to be recognized over the next 1.0 years to 6.5 years, depending on certain performance targets.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

The following table summarizes information about the LTIP Units outstanding as of December 31, 2018:

	Long Term Incentive Plan - LTIP Units
	Total Vested Units			Total Unvested Units			Total Outstanding Units			Weighted- average Grant-date Fair Value				Weighted- average Remaining Contractual Life (years)
Balance, December 31, 2015	144,185			106,157			250,342			$	75.41			9.5
Granted	—			—			—
Vested	36,842			(36,842	)		—
Converted	—			—			—
Cancelled	—			(9,288	)		(9,288	)
Balance, December 31, 2016	181,027			60,027			241,054			$	75.11			8.5
Granted	—			—			—
Vested	32,961			(32,961	)		—
Converted	(688	)		—			(688	)
Cancelled	—			(3,854	)		(3,854	)
Balance, December 31, 2017	213,300			23,212			236,512			$	75.03			7.5
Granted	—			—			—
Vested	12,051			(12,051	)		—
Converted	(91,270	)		—			(91,270	)
Cancelled	—			—			—
Balance, December 31, 2018	134,081			11,161			145,242			$	75.03			6.5

(14) 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 revenue less direct property operating expenses.

The executive management team evaluates the Company's operating performance geographically. The Company defines its reportable operating segments as the three geographical regions in which its communities are located: Southern California, Northern California and Seattle Metro.

Excluded from segment revenues and NOI are management and other fees from affiliates and interest and other income. Non-segment revenues and NOI included in the following schedule also consist of revenue generated from commercial properties and properties that have been sold. Other non-segment assets include items such as real estate under development, co-investments, real estate held for sale, net, cash and cash equivalents, marketable securities, notes and other receivables and prepaid expenses and other assets.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

The revenues and NOI for each of the reportable operating segments are summarized as follows for the years ended December 31, 2018, 2017, and 2016 ($ in thousands):

	Years Ended December 31,
	2018				2017				2016
Revenues:
Southern California	$	592,281			$	574,552			$	540,000
Northern California	522,561				505,313				453,140
Seattle Metro	236,525				229,871				217,259
Other real estate assets	39,503				44,589				75,324
Total property revenues	$	1,390,870			$	1,354,325			$	1,285,723
Net operating income:
Southern California	$	421,613			$	408,070			$	381,212
Northern California	386,401				371,795				333,757
Seattle Metro	165,397				162,253				154,147
Other real estate assets	32,125				36,821				57,790
Total net operating income	1,005,536				978,939				926,906
Management and other fees from affiliates	9,183				9,574				8,278
Corporate-level property management expenses	(31,062		)		(30,156		)		(30,110		)
Depreciation and amortization	(479,884		)		(468,881		)		(441,682		)
General and administrative	(53,451		)		(41,385		)		(40,751		)
Expensed acquisition and investment related costs	(194		)		(1,569		)		(1,841		)
Interest expense	(220,492		)		(222,894		)		(219,654		)
Total return swap income	8,707				10,098				11,716
Interest and other income	23,010				24,604				27,305
Equity income from co-investments	89,132				86,445				48,698
Loss on early retirement of debt	—				(1,796		)		(606		)
Gain on sale of real estate and land	61,861				26,423				154,561
Deferred tax expense on gain on sale of real estate and land	—				—				(4,410		)
Gain on remeasurement of co-investment	1,253				88,641				—
Net income	$	413,599			$	458,043			$	438,410

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

Total assets for each of the reportable operating segments are summarized as follows as of December 31, 2018 and 2017 ($ in thousands):

	As of December 31,
	2018				2017
Assets:
Southern California	$	4,350,377			$	4,504,930
Northern California	4,270,238				4,220,551
Seattle Metro	1,472,916				1,522,452
Other real estate assets	63,022				344,843
Net reportable operating segments - real estate assets	10,156,553				10,592,776
Real estate under development	454,629				355,735
Co-investments	1,300,140				1,155,984
Cash and cash equivalents, including restricted cash	151,395				61,126
Marketable securities	209,545				190,004
Notes and other receivables	71,895				100,926
Prepaid expenses and other assets	39,439				39,155
Total assets	$	12,383,596			$	12,495,706

(15) 401(k) Plan

The Company has a 401(k) benefit plan (the "Plan") for all eligible employees. Employee contributions are limited by the maximum allowed under Section 401(k) of the Internal Revenue Code. The Company matches 50% of the employee contributions up to a specified maximum. Company contributions to the Plan were approximately $2.1 million, $1.8 million, and $1.8 million for the years ended December 31, 2018, 2017, and 2016, respectively.

(16) Commitments and Contingencies

As of December 31, 2018, the Company had eight ground leases that expire between 2027 and 2083. Ground lease payments are typically the greater of a stated minimum or a percentage of gross rents generated by these apartment communities, some of which may be subject to future adjustments, which are not contemplated in the disclosed minimum lease commitments. The total minimum lease commitments, under ground leases and operating leases, for each of the years ending December 31 is summarized as follows ($ in thousands):

	Total Minimum
	Lease Commitments
2019	$	6,811
2020	6,855
2021	6,877
2022	6,888
2023	6,860
Thereafter	153,258
	$	187,549

To the extent that an environmental matter arises or is identified in the future that has other than a remote risk of having a material impact on the financial statements, the Company will disclose the estimated range of possible outcomes associated with it and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, the impairment will be recognized.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

The Company has no way of determining the magnitude of any potential liability to which it may be subject arising out of unknown environmental conditions with respect to the communities currently or formerly owned by the Company. No assurance can be given that: existing environmental assessments conducted with respect to any of these communities have revealed all environmental conditions or potential liabilities associated with such conditions; any prior owner or operator of a property did not create any material environmental condition not known to the Company; or a material unknown environmental condition does not otherwise exist as to any one or more of the communities. The Company has limited insurance coverage for some of the types of environmental conditions and associated liabilities described above.

The Company has entered into transactions that may require the Company to pay the tax liabilities of the partners in the Operating Partnership or in the DownREIT entities. These transactions are within the Company’s control. Although the Company plans to hold the contributed assets or defer recognition of gain on their sale pursuant to like-kind exchange rules under Section 1031 of the Internal Revenue Code, the Company can provide no assurance that it will be able to do so and if such tax liabilities were incurred they may have a material impact on the Company’s financial position.

There continue to be lawsuits against owners and managers of certain of the Company's apartment communities alleging personal injury and property damage caused by the presence of mold in the residential units and common areas of those communities. Some of these lawsuits have resulted in substantial monetary judgments or settlements. The Company has been sued for mold related matters and has settled some, but not all, of such suits. Insurance carriers have reacted to the increase in mold related liability awards by excluding mold related claims from standard general liability policies and pricing mold endorsements at prohibitively high rates. The Company has, however, purchased pollution liability insurance which includes coverage for some mold claims. The Company has also adopted policies intended to promptly address and resolve reports of mold and to minimize any impact mold might have on tenants of its properties. The Company believes its mold policies and proactive response to address reported mold exposures reduces its risk of loss from mold claims. While no assurances can be given that the Company has identified and responded to all mold occurrences, the Company promptly addresses and responds to all known mold reports. Liabilities resulting from such mold related matters are not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. As of December 31, 2018, potential liabilities for mold and other environmental liabilities are not quantifiable and an estimate of possible loss cannot be made.

The Company carries comprehensive liability, fire, extended coverage and rental loss insurance for each of the communities. There are, however, certain types of extraordinary losses, such as, for example, losses from terrorism or earthquakes, for which the Company has limited insurance coverage. Substantially all of the communities are located in areas that are subject to earthquake activity. The Company has established a wholly-owned insurance subsidiary, Pacific Western Insurance LLC ("PWI"). Through PWI, the Company is self-insured for earthquake related losses. Additionally, since January 2008, PWI has provided property and casualty insurance coverage for the first $5.0 million of the Company’s property level insurance claims per incident. As of December 31, 2018, PWI has cash and marketable securities of approximately $86.6 million. These assets are consolidated in the Company’s financial statements. Beginning in 2013, the Company has obtained limited third party seismic insurance on selected assets in the Company's co-investments.

The Company is subject to various other legal and/or regulatory proceedings arising in the course of its business operations. We believe that, with respect to such matters that we are currently a party to, the ultimate disposition of any such matter will not result in a material adverse effect on the Company’s financial condition, results of operations or cash flows.

(17) Subsequent Events

In January 2019, the Company repaid $290.0 million in secured mortgage notes payable with a coupon rate of 5.57% and a stated maturity date of May 2019.

In February 2019, the Company issued $350.0 million of the 2029 Notes, with a coupon rate of 4.000%, which are payable on March 1 and September 1 of each year, beginning on September 1, 2019. The 2029 Notes were offered to investors at a price of 99.188% of par value. The 2029 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex Property Trust, Inc. The Company used the net proceeds of this offering to repay indebtedness under its unsecured lines of credit and for other general corporate purposes.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

In February 2019, the Company funded a $24.5 million related party preferred equity investment with an initial accrued preferred return of 11.0% and an initial maturity date of February 2024.

Subsequent to year end through February 15, 2019, the Company repurchased 234,061 shares of common stock totaling $57.0 million, including commissions, at an average price of $243.48 per share. As of December 31, 2018, the Company had $197.7 million of purchase authority remaining under the stock repurchase program. On February 19, 2019, Essex’s 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.

(18) Quarterly Results of Operations (Unaudited)

Essex Property Trust, Inc.

The following is a summary of quarterly results of operations for 2018 and 2017 ($ in thousands, except per share and dividend amounts):

	Quarter ended December 31				Quarter ended September 30				Quarter ended June 30				Quarter ended March 31
2018:
Total property revenues	$	350,787			$	348,610			$	346,526			$	344,947
Net income	$	124,440			$	86,110			$	106,410			$	96,639
Net income available to common stockholders	$	117,820			$	80,975			$	100,440			$	90,918
Per share data:
Net income:
Basic (1)	$	1.78			$	1.23			$	1.52			$	1.38
Diluted (1)	$	1.78			$	1.22			$	1.52			$	1.38
Dividends declared	$	1.86			$	1.86			$	1.86			$	1.86
2017:
Total property revenues	$	342,417			$	341,974			$	336,766			$	333,168
Net income	$	109,662			$	85,035			$	75,795			$	187,551
Net income available to common stockholders	$	103,613			$	79,723			$	70,759			$	178,964
Per share data:
Net income:
Basic (1)	$	1.57			$	1.21			$	1.08			$	2.73
Diluted (1)	$	1.57			$	1.21			$	1.08			$	2.72
Dividends declared	$	1.75			$	1.75			$	1.75			$	1.75

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

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018, 2017, and 2016

Essex Portfolio, L.P.

The following is a summary of quarterly results of operations for 2018 and 2017 ($ in thousands, except per unit and distribution amounts):

	Quarter ended December 31				Quarter ended September 30				Quarter ended June 30				Quarter ended March 31
2018:
Total property revenues	$	350,787			$	348,610			$	346,526			$	344,947
Net income	$	124,440			$	86,110			$	106,410			$	96,639
Net income available to common unitholders	$	121,891			$	83,764			$	103,900			$	94,050
Per unit data:
Net income:
Basic (1)	$	1.78			$	1.23			$	1.52			$	1.38
Diluted (1)	$	1.78			$	1.23			$	1.52			$	1.38
Distributions declared	$	1.86			$	1.86			$	1.86			$	1.86
2017:
Total property revenues	$	342,417			$	341,974			$	336,766			$	333,168
Net income	$	109,662			$	85,035			$	75,795			$	187,551
Net income available to common unitholders	$	107,149			$	82,444			$	73,181			$	185,110
Per unit data:
Net income:
Basic (1)	$	1.57			$	1.21			$	1.08			$	2.73
Diluted (1)	$	1.57			$	1.21			$	1.08			$	2.72
Distributions declared	$	1.75			$	1.75			$	1.75			$	1.75

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

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(Dollars in thousands)

													Costs
							Initial cost						capitalized			Gross amount carried at close of period
	Apartment									Buildings and			subsequent to			Land and			Buildings and						Accumulated			Date of	Date	Lives
Property	Homes		Location	Encumbrance			Land			improvements			acquisition			improvements			improvements			Total (1)			depreciation			construction	acquired	(years)
Encumbered communities
Avondale at Warner Center	446		Woodland Hills, CA	$	41,945		$	10,536		$	24,522		$	22,604		$	10,601		$	47,061		$	57,662		$	(32,368	)	1970	Jan-99	3-30
Bel Air	462		San Ramon, CA	49,185			12,105			18,252			37,550			12,682			55,225			67,907			(37,019		)	1988	Jan-95	3-30
Belcarra	296		Bellevue, WA	48,602			21,725			92,091			1,985			21,725			94,076			115,801			(16,327		)	2009	Apr-14	5-30
BellCentre	248		Bellevue, WA	36,617			16,197			67,207			3,843			16,197			71,050			87,247			(13,018		)	2001	Apr-14	5-30
Belmont Station	275		Los Angeles, CA	29,678			8,100			66,666			6,379			8,267			72,878			81,145			(28,705		)	2009	Mar-09	3-30
Brookside Oaks	170		Sunnyvale, CA	17,746			7,301			16,310			26,653			10,328			39,936			50,264			(22,529		)	1973	Jun-00	3-30
Carmel Creek	348		San Diego, CA	58,875			26,842			107,368			6,069			26,842			113,437			140,279			(21,010		)	2000	Apr-14	5-30
City View	572		Hayward, CA	62,544			9,883			37,670			29,252			10,350			66,455			76,805			(47,198		)	1975	Mar-98	3-30
Courtyard off Main	110		Bellevue, WA	14,542			7,465			21,405			3,999			7,465			25,404			32,869			(7,768		)	2000	Oct-10	3-30
Domaine	92		Seattle, WA	13,446			9,059			27,177			1,173			9,059			28,350			37,409			(6,238		)	2009	Sep-12	3-30
Elevation	158		Redmond, WA	10,103			4,758			14,285			6,968			4,757			21,254			26,011			(8,650		)	1986	Jun-10	3-30
Fairhaven Apartments	164		Santa Ana, CA	18,078			2,626			10,485			8,847			2,957			19,001			21,958			(10,794		)	1970	Nov-01	3-30
Form 15	242		San Diego, CA	44,922			24,510			72,221			5,236			25,540			76,427			101,967			(7,633		)	2014	Mar-16	3-30
Foster's Landing	490		Foster City, CA	90,117			61,714			144,000			9,004			61,714			153,004			214,718			(28,842		)	1987	Apr-14	5-30
Fountains at River Oaks	226		San Jose, CA	29,974			26,046			60,773			4,234			26,046			65,007			91,053			(11,960		)	1990	Apr-14	3-30
Fountain Park	705		Playa Vista, CA	82,571			25,073			94,980			33,057			25,203			127,907			153,110			(70,823		)	2002	Feb-04	3-30
Hidden Valley	324		Simi Valley, CA	29,360			14,174			34,065			6,184			9,674			44,749			54,423			(21,000		)	2004	Dec-04	3-30
Highlands at Wynhaven	333		Issaquah, WA	29,540			16,271			48,932			13,850			16,271			62,782			79,053			(24,572		)	2000	Aug-08	3-30
Highridge	255		Rancho Palos Verdes, CA	69,273			5,419			18,347			31,535			6,073			49,228			55,301			(36,693		)	1972	May-97	3-30
Hillcrest Park	608		Newbury Park, CA	61,279			15,318			40,601			20,434			15,755			60,598			76,353			(39,954		)	1973	Mar-98	3-30
Huntington Breakers	342		Huntington Beach, CA	34,397			9,306			22,720			20,818			9,315			43,529			52,844			(29,374		)	1984	Oct-97	3-30
Inglenook Court	224		Bothell, WA	8,238			3,467			7,881			7,771			3,474			15,645			19,119			(12,667		)	1985	Oct-94	3-30
1000 Kiely	121		Santa Clara, CA	34,040			9,359			21,845			7,956			9,359			29,801			39,160			(10,654		)	1971	Mar-11	3-30
Magnolia Square/Magnolia Lane (2)	188		Sunnyvale, CA	52,237			8,190			24,736			17,531			8,191			42,266			50,457			(20,951		)	1963	Sep-07	3-30
Marquis	166		San Jose, CA	43,467			20,495			47,823			117			20,495			47,940			68,435			(151		)	2015	Dec-18	3-30
Montanosa	472		San Diego, CA	60,473			26,697			106,787			5,447			26,697			112,234			138,931			(20,206		)	1990	Apr-14	5-30
Montebello	248		Kirkland, WA	24,639			13,857			41,575			4,955			13,858			46,529			60,387			(11,718		)	1996	Jul-12	3-30
Montejo Apartments	124		Garden Grove, CA	12,873			1,925			7,685			3,972			2,194			11,388			13,582			(6,436		)	1974	Nov-01	3-30
Park Highland	250		Bellevue, WA	25,127			9,391			38,224			12,255			9,391			50,479			59,870			(10,986		)	1993	Apr-14	5-30
Pinnacle at Fullerton	192		Fullerton, CA	25,320			11,019			45,932			3,377			11,019			49,309			60,328			(9,000		)	2004	Apr-14	5-30

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(Dollars in thousands)

													Costs
							Initial cost						capitalized			Gross amount carried at close of period
	Apartment									Buildings and			subsequent to			Land and			Buildings and						Accumulated			Date of	Date	Lives
Property	Homes		Location	Encumbrance			Land			improvements			acquisition			improvements			improvements			Total (1)			depreciation			construction	acquired	(years)
Pinnacle on Lake Washington	180		Renton, WA	17,499			7,760			31,041			2,893			7,760			33,934			41,694			(5,993		)	2001	Apr-14	5-30
Pinnacle at MacArthur Place	253		Santa Ana, CA	36,478			15,810			66,401			4,703			15,810			71,104			86,914			(12,752		)	2002	Apr-14	5-30
Pinnacle at Otay Ranch I & II	364		Chula Vista, CA	37,272			17,023			68,093			3,691			17,023			71,784			88,807			(13,000		)	2001	Apr-14	5-30
Pinnacle at Talega	362		San Clemente, CA	41,647			19,292			77,168			2,771			19,292			79,939			99,231			(14,268		)	2002	Apr-14	5-30
Sage at Cupertino	230		San Jose, CA	51,690			35,719			53,449			3,467			35,719			56,916			92,635			(3,689		)	1971	Mar-17	3-30
Stevenson Place	200		Fremont, CA	19,840			996			5,582			12,827			1,001			18,404			19,405			(13,221		)	1975	Apr-00	3-30
Summerhill Park	100		Sunnyvale, CA	12,269			2,654			4,918			11,132			2,656			16,048			18,704			(10,309		)	1988	Sep-88	3-30
The Audrey at Belltown	137		Seattle, WA	19,767			9,228			36,911			958			9,228			37,869			47,097			(6,618		)	1992	Apr-14	5-30
The Barkley (3)	161		Anaheim, CA	14,843			—			8,520			7,001			2,353			13,168			15,521			(8,354		)	1984	Apr-00	3-30
The Dylan	184		West Hollywood, CA	59,163			19,984			82,286			834			19,990			83,114			103,104			(12,396		)	2015	Mar-15	3-30
The Huntington	276		Huntington Beach, CA	27,707			10,374			41,495			5,028			10,374			46,523			56,897			(11,692		)	1975	Jun-12	3-30
The Huxley	187		West Hollywood, CA	53,874			19,362			75,641			1,321			19,371			76,953			96,324			(11,748		)	2014	Mar-15	3-30
The Landing at Jack London Square	282		Oakland, CA	49,421			33,554			78,292			5,908			33,554			84,200			117,754			(16,132		)	2001	Apr-14	5-30
The Palms at Laguna Niguel	460		Laguna Niguel, CA	52,887			23,584			94,334			8,094			23,584			102,428			126,012			(18,599		)	1988	Apr-14	5-30
The Waterford	238		San Jose, CA	29,252			11,808			24,500			15,956			15,165			37,099			52,264			(21,980		)	2000	Jun-00	3-30
Valley Park	160		Fountain Valley, CA	20,875			3,361			13,420			5,949			3,761			18,969			22,730			(10,761		)	1969	Nov-01	3-30
Villa Angelina	256		Placentia, CA	27,184			4,498			17,962			7,398			4,962			24,896			29,858			(14,497		)	1970	Nov-01	3-30
Villa Granada	270		Santa Clara, CA	54,307			38,299			89,365			1,732			38,299			91,097			129,396			(16,216		)	2010	Apr-14	5-30
Wandering Creek	156		Kent, WA	5,254			1,285			4,980			4,833			1,296			9,802			11,098			(7,521		)	1986	Nov-95	3-30
Wilshire Promenade	149		Fullerton, CA	16,189			3,118			7,385			9,124			3,797			15,830			19,627			(10,725		)	1992	Jan-97	3-30
	13,456			$	1,806,626		$	716,537		$	2,264,308		$	478,675		$	726,494		$	2,733,026		$	3,459,520		$	(865,715	)
Unencumbered Communities
Alessio	624		Los Angeles, CA	—			32,136			128,543			9,979			32,136			138,522			170,658			(25,383		)	2001	Apr-14	5-30
Allegro	97		Valley Village, CA	—			5,869			23,977			2,304			5,869			26,281			32,150			(9,394		)	2010	Oct-10	3-30
Allure at Scripps Ranch	194		San Diego, CA	—			11,923			47,690			1,394			11,923			49,084			61,007			(8,699		)	2002	Apr-14	5-30
Alpine Village	301		Alpine, CA	—			4,967			19,728			8,602			4,982			28,315			33,297			(15,526		)	1971	Dec-02	3-30
Anavia	250		Anaheim, CA	—			15,925			63,712			7,985			15,925			71,697			87,622			(19,857		)	2009	Dec-10	3-30
Annaliese	56		Seattle, WA	—			4,727			14,229			613			4,726			14,843			19,569			(3,047		)	2009	Jan-13	3-30
Apex	366		Milpitas, CA	—			44,240			103,251			3,321			44,240			106,572			150,812			(15,479		)	2014	Aug-14	3-30
Aqua Marina Del Rey	500		Marina Del Rey, CA	—			58,442			175,326			13,232			58,442			188,558			247,000			(35,960		)	2001	Apr-14	5-30
Ascent	90		Kirkland, WA	—			3,924			11,862			2,014			3,924			13,876			17,800			(3,547		)	1988	Oct-12	3-30

F- 55

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(Dollars in thousands)

													Costs
							Initial cost						capitalized			Gross amount carried at close of period
	Apartment									Buildings and			subsequent to			Land and			Buildings and						Accumulated			Date of	Date	Lives
Property	Homes		Location	Encumbrance			Land			improvements			acquisition			improvements			improvements			Total (1)			depreciation			construction	acquired	(years)
Ashton Sherman Village	264		Los Angeles, CA	—			23,550			93,811			489			23,550			94,300			117,850			(6,777		)	2014	Dec-16	3-30
Avant	440		Los Angeles, CA	—			32,379			137,940			1,949			32,379			139,889			172,268			(16,452		)	2014	Jun-15	3-30
Avenue 64	224		Emeryville, CA	—			27,235			64,403			14,377			27,235			78,780			106,015			(13,015		)	2007	Apr-14	5-30
Aviara (4)	166		Mercer Island, WA	—			—			49,813			1,063			—			50,876			50,876			(9,998		)	2013	Apr-14	5-30
Axis 2300	115		Irvine, CA	—			5,405			33,585			1,674			5,405			35,259			40,664			(12,341		)	2010	Aug-10	3-30
Bella Villagio	231		San Jose, CA	—			17,247			40,343			3,540			17,247			43,883			61,130			(13,122		)	2004	Sep-10	3-30
Bellerive	63		Los Angeles, CA	—			5,401			21,803			1,189			5,401			22,992			28,393			(6,962		)	2011	Aug-11	3-30
Belmont Terrace	71		Belmont, CA	—			4,446			10,290			6,946			4,473			17,209			21,682			(8,257		)	1974	Oct-06	3-30
Bennett Lofts	165		San Francisco, CA	—			21,771			50,800			29,672			28,371			73,872			102,243			(16,319		)	2004	Dec-12	3-30
Bernardo Crest	216		San Diego, CA	—			10,802			43,209			3,665			10,802			46,874			57,676			(8,539		)	1988	Apr-14	5-30
Bonita Cedars	120		Bonita, CA	—			2,496			9,913			5,160			2,503			15,066			17,569			(7,598		)	1983	Dec-02	3-30
Boulevard	172		Fremont, CA	—			3,520			8,182			13,860			3,580			21,982			25,562			(17,002		)	1978	Jan-96	3-30
Bridle Trails	108		Kirkland, WA	—			1,500			5,930			6,154			1,531			12,053			13,584			(8,499		)	1986	Oct-97	3-30
Brighton Ridge	264		Renton, WA	—			2,623			10,800			5,486			2,656			16,253			18,909			(11,818		)	1986	Dec-96	3-30
Bristol Commons	188		Sunnyvale, CA	—			5,278			11,853			9,272			5,293			21,110			26,403			(14,211		)	1989	Jan-95	3-30
416 on Broadway	115		Glendale, CA	—			8,557			34,235			2,973			8,557			37,208			45,765			(10,982		)	2009	Dec-10	3-30
Bunker Hill	456		Los Angeles, CA	—			11,498			27,871			83,972			11,639			111,702			123,341			(54,527		)	1968	Mar-98	3-30
Camarillo Oaks	564		Camarillo, CA	—			10,953			25,254			7,791			11,075			32,923			43,998			(23,428		)	1985	Jul-96	3-30
Cambridge Park	320		San Diego, CA	—			18,185			72,739			2,974			18,185			75,713			93,898			(13,776		)	1998	Apr-14	5-30
Camino Ruiz Square	159		Camarillo, CA	—			6,871			26,119			1,965			6,931			28,024			34,955			(11,628		)	1990	Dec-06	3-30
Canyon Oaks	250		San Ramon, CA	—			19,088			44,473			4,232			19,088			48,705			67,793			(19,542		)	2005	May-07	3-30
Canyon Pointe	250		Bothell, WA	—			4,692			18,288			8,142			4,693			26,429			31,122			(14,475		)	1990	Oct-03	3-30
Capri at Sunny Hills	102		Fullerton, CA	—			3,337			13,320			9,319			4,048			21,928			25,976			(13,479		)	1961	Sep-01	3-30
Carmel Landing	356		San Diego, CA	—			16,725			66,901			7,589			16,725			74,490			91,215			(13,639		)	1989	Apr-14	5-30
Carmel Summit	246		San Diego, CA	—			14,968			59,871			3,514			14,968			63,385			78,353			(11,342		)	1989	Apr-14	5-30
Castle Creek	216		Newcastle, WA	—			4,149			16,028			4,500			4,833			19,844			24,677			(13,953		)	1998	Dec-98	3-30
Catalina Gardens	128		Los Angeles, CA	—			6,714			26,856			1,485			6,714			28,341			35,055			(5,018		)	1987	Apr-14	5-30
CBC Apartments & The Sweeps	239		Goleta, CA	—			11,841			45,320			6,556			11,906			51,811			63,717			(24,758		)	1962	Jan-06	3-30
Cedar Terrace	180		Bellevue, WA	—			5,543			16,442			7,214			5,652			23,547			29,199			(11,598		)	1984	Jan-05	3-30
CentrePointe	224		San Diego, CA	—			3,405			7,743			21,354			3,442			29,060			32,502			(18,300		)	1974	Jun-97	3-30
Chestnut Street Apartments	96		Santa Cruz, CA	—			6,582			15,689			1,995			6,582			17,684			24,266			(6,512		)	2002	Jul-08	3-30
Collins on Pine	76		Seattle, WA	—			7,276			22,226			328			7,276			22,554			29,830			(3,520		)	2013	May-14	3-30

F- 56

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(Dollars in thousands)

													Costs
							Initial cost						capitalized			Gross amount carried at close of period
	Apartment									Buildings and			subsequent to			Land and			Buildings and						Accumulated			Date of	Date	Lives
Property	Homes		Location	Encumbrance			Land			improvements			acquisition			improvements			improvements			Total (1)			depreciation			construction	acquired	(years)
Corbella at Juanita Bay	169		Kirkland, WA	—			5,801			17,415			3,165			5,801			20,580			26,381			(6,279		)	1978	Nov-10	3-30
Cortesia	308		Rancho Santa Margarita, CA	—			13,912			55,649			2,492			13,912			58,141			72,053			(10,430		)	1999	Apr-14	5-30
Country Villas	180		Oceanside, CA	—			4,174			16,583			5,074			4,187			21,644			25,831			(11,954		)	1976	Dec-02	3-30
Crow Canyon	400		San Ramon, CA	—			37,579			87,685			9,894			37,579			97,579			135,158			(17,605		)	1992	Apr-14	5-30
Deer Valley	171		San Rafael, CA	—			21,478			50,116			2,481			21,478			52,597			74,075			(9,580		)	1996	Apr-14	5-30
Delano	126		Redmond, WA	—			7,470			22,511			1,330			7,470			23,841			31,311			(5,852		)	2005	Dec-11	3-30
Devonshire	276		Hemet, CA	—			3,470			13,786			4,993			3,482			18,767			22,249			(10,271		)	1988	Dec-02	3-30
Ellington	220		Bellevue, WA	—			15,066			45,249			3,535			15,066			48,784			63,850			(7,810		)	1994	Jul-14	3-30
Emerald Pointe	160		Diamond Bar, CA	—			8,458			33,832			1,869			8,458			35,701			44,159			(6,477		)	1989	Apr-14	5-30
Emerald Ridge	180		Bellevue, WA	—			3,449			7,801			5,871			3,449			13,672			17,121			(10,213		)	1987	Nov-94	3-30
Emerson Valley Village	144		Los Angeles, CA	—			13,378			53,240			408			13,378			53,648			67,026			(3,861		)	2012	Dec-16	3-30
Enso	183		San Jose, CA	—			21,397			71,135			1,490			21,397			72,625			94,022			(7,869		)	2014	Dec-15	3-30
Esplanade	278		San Jose, CA	—			18,170			40,086			13,540			18,429			53,367			71,796			(26,905		)	2002	Apr-04	3-30
Essex Skyline	349		Santa Ana, CA	—			21,537			146,099			7,313			21,537			153,412			174,949			(35,662		)	2008	Apr-10	3-30
Evergreen Heights	200		Kirkland, WA	—			3,566			13,395			6,026			3,649			19,338			22,987			(13,793		)	1990	Jun-97	3-30
Fairway Apartments at Big Canyon (5)	74		Newport Beach, CA	—			—			7,850			7,923			—			15,773			15,773			(10,717		)	1972	Jun-99	3-28
Fairwood Pond	194		Renton, WA	—			5,296			15,564			3,800			5,297			19,363			24,660			(9,745		)	1997	Oct-04	3-30
Foothill Commons	394		Bellevue, WA	—			2,435			9,821			39,812			2,440			49,628			52,068			(42,805		)	1978	Mar-90	3-30
Foothill Gardens/Twin Creeks	176		San Ramon, CA	—			5,875			13,992			10,803			5,964			24,706			30,670			(16,790		)	1985	Feb-97	3-30
Forest View	192		Renton, WA	—			3,731			14,530			2,843			3,731			17,373			21,104			(9,071		)	1998	Oct-03	3-30
Fountain Court	320		Seattle, WA	—			6,702			27,306			12,238			6,585			39,661			46,246			(25,952		)	2000	Mar-00	3-30
Fourth & U	171		Berkeley, CA	—			8,879			52,351			3,228			8,879			55,579			64,458			(17,580		)	2010	Apr-10	3-30
Fox Plaza	445		San Francisco, CA	—			39,731			92,706			28,996			39,731			121,702			161,433			(27,308		)	1968	Feb-13	3-30
The Henley I/The Henley II	215		Glendale, CA	—			6,695			16,753			26,648			6,733			43,363			50,096			(22,504		)	1970	Jun-99	3-30
Hillsdale Garden	697		San Mateo, CA	—			22,000			94,681			23,237			22,000			117,918			139,918			(53,970		)	1948	Sep-06	3-30
Hope Ranch	108		Santa Barbara, CA	—			4,078			16,877			2,915			4,208			19,662			23,870			(7,931		)	1965	Mar-07	3-30
Joule	295		Seattle, WA	—			14,558			69,417			4,872			14,558			74,289			88,847			(24,020		)	2010	Mar-10	3-30
Kings Road	196		Los Angeles, CA	—			4,023			9,527			19,171			4,031			28,690			32,721			(15,924		)	1979	Jun-97	3-30
Lafayette Highlands	150		Lafayette, CA	—			17,774			41,473			2,773			17,774			44,246			62,020			(7,883		)	1973	Apr-14	5-30
Lakeshore Landing	308		San Mateo, CA	—			38,155			89,028			7,166			38,155			96,194			134,349			(18,412		)	1988	Apr-14	5-30
Laurels at Mill Creek	164		Mill Creek, WA	—			1,559			6,430			7,228			1,595			13,622			15,217			(9,827		)	1981	Dec-96	3-30

F- 57

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(Dollars in thousands)

													Costs
							Initial cost						capitalized			Gross amount carried at close of period
	Apartment									Buildings and			subsequent to			Land and			Buildings and						Accumulated			Date of	Date	Lives
Property	Homes		Location	Encumbrance			Land			improvements			acquisition			improvements			improvements			Total (1)			depreciation			construction	acquired	(years)
Lawrence Station	336		Sunnyvale, CA	—			45,532			106,735			1,530			45,532			108,265			153,797			(23,222		)	2012	Apr-14	5-30
Le Parc	140		Santa Clara, CA	—			3,090			7,421			12,694			3,092			20,113			23,205			(15,581		)	1975	Feb-94	3-30
Marbrisa	202		Long Beach, CA	—			4,700			18,605			9,216			4,760			27,761			32,521			(15,568		)	1987	Sep-02	3-30
Marina City Club (6)	101		Marina Del Rey, CA	—			—			28,167			29,030			—			57,197			57,197			(26,137		)	1971	Jan-04	3-30
Marina Cove (7)	292		Santa Clara, CA	—			5,320			16,431			15,312			5,324			31,739			37,063			(24,319		)	1974	Jun-94	3-30
Mariner's Place	105		Oxnard, CA	—			1,555			6,103			2,464			1,562			8,560			10,122			(5,668		)	1987	May-00	3-30
MB 360	360		San Francisco, CA	—			21,421			114,376			129,017			42,001			222,813			264,814			(31,219		)	2014	Apr-14	3-30
Mesa Village	133		Clairemont, CA	—			1,888			7,498			2,336			1,894			9,828			11,722			(5,120		)	1963	Dec-02	3-30
Mill Creek at Windermere	400		San Ramon, CA	—			29,551			69,032			5,452			29,551			74,484			104,035			(29,077		)	2005	Sep-07	3-30
Mio	103		San Jose, CA	—			11,012			39,982			438			11,012			40,420			51,432			(4,232		)	2015	Jan-16	3-30
Mirabella	188		Marina Del Rey, CA	—			6,180			26,673			16,128			6,270			42,711			48,981			(24,505		)	2000	May-00	3-30
Mira Monte	354		Mira Mesa, CA	—			7,165			28,459			11,509			7,186			39,947			47,133			(23,737		)	1982	Dec-02	3-30
Miracle Mile/Marbella	236		Los Angeles, CA	—			7,791			23,075			14,830			7,886			37,810			45,696			(26,268		)	1988	Aug-97	3-30
Mission Hills	282		Oceanside, CA	—			10,099			38,778			7,820			10,167			46,530			56,697			(22,211		)	1984	Jul-05	3-30
Mission Peaks	453		Fremont, CA	—			46,499			108,498			6,275			46,499			114,773			161,272			(20,332		)	1995	Apr-14	5-30
Mission Peaks II	336		Fremont, CA	—			31,429			73,334			5,549			31,429			78,883			110,312			(14,566		)	1989	Apr-14	5-30
Montclaire	390		Sunnyvale, CA	—			4,842			19,776			26,772			4,997			46,393			51,390			(40,215		)	1973	Dec-88	3-30
Monterey Villas	122		Oxnard, CA	—			2,349			5,579			6,723			2,424			12,227			14,651			(7,958		)	1974	Jul-97	3-30
Muse	152		North Hollywood, CA	—			7,822			33,436			3,201			7,823			36,636			44,459			(12,606		)	2011	Feb-11	3-30
Museum Park	117		San Jose, CA	—			13,864			32,348			1,642			13,864			33,990			47,854			(6,180		)	2002	Apr-14	5-30
Palm Valley	1,098		San Jose, CA	—			133,802			312,205			8,537			133,802			320,742			454,544			(22,477		)	2008	Jan-17	3-30
Paragon Apartments	301		Fremont, CA	—			32,230			77,320			1,553			32,230			78,873			111,103			(11,935		)	2013	Jul-14	3-30
Park Catalina	90		Los Angeles, CA	—			4,710			18,839			3,224			4,710			22,063			26,773			(5,926		)	2002	Jun-12	3-30
Park Hill at Issaquah	245		Issaquah, WA	—			7,284			21,937			8,668			7,284			30,605			37,889			(14,860		)	1999	Feb-99	3-30
Park Viridian	320		Anaheim, CA	—			15,894			63,574			3,302			15,894			66,876			82,770			(12,099		)	2008	Apr-14	5-30
Park West	126		San Francisco, CA	—			9,424			21,988			12,288			9,424			34,276			43,700			(9,855		)	1958	Sep-12	3-30
Parkwood at Mill Creek	240		Mill Creek, WA	—			10,680			42,722			2,808			10,680			45,530			56,210			(8,402		)	1989	Apr-14	5-30
Pathways at Bixby Village	296		Long Beach, CA	—			4,083			16,757			20,936			6,239			35,537			41,776			(30,520		)	1975	Feb-91	3-30
Piedmont	396		Bellevue, WA	—			19,848			59,606			11,970			19,848			71,576			91,424			(13,138		)	1969	May-14	3-30
Pinehurst (8)	28		Ventura, CA	—			—			1,711			648			—			2,359			2,359			(1,359		)	1973	Dec-04	3-24
Pinnacle Sonata	268		Bothell, WA	—			14,647			58,586			3,398			14,647			61,984			76,631			(11,047		)	2000	Apr-14	5-30
Pointe at Cupertino	116		Cupertino, CA	—			4,505			17,605			12,182			4,505			29,787			34,292			(17,583		)	1963	Aug-98	3-30

F- 58

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(Dollars in thousands)

													Costs
							Initial cost						capitalized			Gross amount carried at close of period
	Apartment									Buildings and			subsequent to			Land and			Buildings and						Accumulated			Date of	Date	Lives
Property	Homes		Location	Encumbrance			Land			improvements			acquisition			improvements			improvements			Total (1)			depreciation			construction	acquired	(years)
Radius	264		Redwood City, CA	—			11,702			152,336			322			11,702			152,658			164,360			(27,287		)	2015	Apr-14	3-30
Reed Square	100		Sunnyvale, CA	—			6,873			16,037			8,274			6,873			24,311			31,184			(8,840		)	1970	Jan-12	3-30
Regency at Encino	75		Encino, CA	—			3,184			12,737			3,615			3,184			16,352			19,536			(6,157		)	1989	Dec-09	3-30
Renaissance at Uptown Orange	460		Orange, CA	—			27,870			111,482			4,959			27,870			116,441			144,311			(20,912		)	2007	Apr-14	5-30
Reveal	438		Woodland Hills, CA	—			25,073			121,314			1,462			25,073			122,776			147,849			(17,821		)	2010	Apr-15	3-30
Salmon Run at Perry Creek	132		Bothell, WA	—			3,717			11,483			2,502			3,801			13,901			17,702			(8,211		)	2000	Oct-00	3-30
Sammamish View	153		Bellevue, WA	—			3,324			7,501			7,056			3,331			14,550			17,881			(12,089		)	1986	Nov-94	3-30
101 San Fernando	323		San Jose, CA	—			4,173			58,961			11,773			4,173			70,734			74,907			(23,484		)	2001	Jul-10	3-30
San Marcos	432		Richmond, CA	—			15,563			36,204			32,572			22,866			61,473			84,339			(31,117		)	2003	Nov-03	3-30
Santee Court/Santee Village	238		Los Angeles, CA	—			9,581			40,317			9,296			9,582			49,612			59,194			(14,575		)	2004	Oct-10	3-30
Shadow Point	172		Spring Valley, CA	—			2,812			11,170			3,802			2,820			14,964			17,784			(8,108		)	1983	Dec-02	3-30
Shadowbrook	418		Redmond, WA	—			19,292			77,168			5,001			19,292			82,169			101,461			(14,797		)	1986	Apr-14	5-30
Slater 116	108		Kirkland, WA	—			7,379			22,138			916			7,379			23,054			30,433			(4,293		)	2013	Sep-13	3-30
Solstice	280		Sunnyvale, CA	—			34,444			147,262			5,603			34,444			152,865			187,309			(31,396		)	2014	Apr-14	5-30
Station Park Green - Phase I	121		San Mateo, CA	—			14,923			82,552			553			14,924			83,104			98,028			(2,896		)	2018	Mar-18	3-30
Stonehedge Village	196		Bothell, WA	—			3,167			12,603			7,125			3,201			19,694			22,895			(13,784		)	1986	Oct-97	3-30
Summit Park	300		San Diego, CA	—			5,959			23,670			7,507			5,977			31,159			37,136			(16,895		)	1972	Dec-02	3-30
Taylor 28	197		Seattle, WA	—			13,915			57,700			2,913			13,915			60,613			74,528			(10,586		)	2008	Apr-14	5-30
The Avery	121		Los Angeles, CA	—			6,964			29,922			459			6,964			30,381			37,345			(4,867		)	2014	Mar-14	3-30
The Bernard	63		Seattle, WA	—			3,699			11,345			715			3,689			12,070			15,759			(3,068		)	2008	Sep-11	3-30
The Cairns	99		Seattle, WA	—			6,937			20,679			1,965			6,939			22,642			29,581			(8,970		)	2006	Jun-07	3-30
The Commons	264		Campbell, CA	—			12,555			29,307			8,468			12,556			37,774			50,330			(12,685		)	1973	Jul-10	3-30
The Elliot at Mukilteo	301		Mukilteo, WA	—			2,498			10,595			16,549			2,824			26,818			29,642			(19,937		)	1981	Jan-97	3-30
The Grand	243		Oakland, CA	—			4,531			89,208			7,131			4,531			96,339			100,870			(34,186		)	2009	Jan-09	3-30
The Hallie	292		Pasadena, CA	—			2,202			4,794			54,029			8,385			52,640			61,025			(30,937		)	1972	Apr-97	3-30
The Lofts at Pinehurst	118		Ventura, CA	—			1,570			3,912			5,102			1,618			8,966			10,584			(5,728		)	1971	Jun-97	3-30
The Palisades	192		Bellevue, WA	—			1,560			6,242			13,055			1,565			19,292			20,857			(16,842		)	1977	May-90	3-30
The Stuart	188		Pasadena, CA	—			13,574			54,298			2,321			13,574			56,619			70,193			(10,547		)	2007	Apr-14	5-30
The Trails of Redmond	423		Redmond, WA	—			21,930			87,720			5,006			21,930			92,726			114,656			(16,701		)	1985	Apr-14	5-30
Tierra Vista	404		Oxnard, CA	—			13,652			53,336			5,415			13,661			58,742			72,403			(29,836		)	2001	Jan-01	3-30
Tiffany Court	101		Los Angeles, CA	—			6,949			27,796			1,687			6,949			29,483			36,432			(5,263		)	1987	Apr-14	5-30
Trabuco Villas	132		Lake Forest, CA	—			3,638			8,640			3,643			3,890			12,031			15,921			(8,134		)	1985	Oct-97	3-30

F- 59

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(Dollars in thousands)

													Costs
							Initial cost						capitalized			Gross amount carried at close of period
	Apartment									Buildings and			subsequent to			Land and			Buildings and						Accumulated			Date of	Date	Lives
Property	Homes		Location	Encumbrance			Land			improvements			acquisition			improvements			improvements			Total (1)			depreciation			construction	acquired	(years)
Via	284		Sunnyvale, CA	—			22,000			82,270			2,908			22,016			85,162			107,178			(24,816		)	2011	Jul-11	3-30
Villa Siena	272		Costa Mesa, CA	—			13,842			55,367			7,249			13,842			62,616			76,458			(11,592		)	1974	Apr-14	5-30
Village Green	272		La Habra, CA	—			6,488			36,768			3,826			6,488			40,594			47,082			(7,652		)	1971	Apr-14	5-30
Vista Belvedere	76		Tiburon, CA	—			5,573			11,901			8,708			5,573			20,609			26,182			(11,033		)	1963	Aug-04	3-30
Vox Apartments	58		Seattle, WA	—			5,545			16,635			271			5,545			16,906			22,451			(2,936		)	2013	Oct-13	3-30
Walnut Heights	163		Walnut, CA	—			4,858			19,168			5,383			4,887			24,522			29,409			(12,592		)	1964	Oct-03	3-30
Wharfside Pointe	155		Seattle, WA	—			2,245			7,020			12,046			2,258			19,053			21,311			(13,796		)	1990	Jun-94	3-30
Willow Lake	508		San Jose, CA	—			43,194			101,030			14,040			43,194			115,070			158,264			(27,006		)	1989	Oct-12	3-30
5600 Wilshire	284		Los Angeles, CA	—			30,535			91,604			2,258			30,535			93,862			124,397			(16,636		)	2008	Apr-14	5-30
Wilshire La Brea	478		Los Angeles, CA	—			56,932			211,998			10,929			56,932			222,927			279,859			(44,801		)	2014	Apr-14	5-30
Windsor Ridge	216		Sunnyvale, CA	—			4,017			10,315			16,659			4,021			26,970			30,991			(21,175		)	1989	Mar-89	3-30
Woodland Commons	302		Bellevue, WA	—			2,040			8,727			23,306			2,044			32,029			34,073			(20,855		)	1978	Mar-90	3-30
Woodside Village	145		Ventura, CA	—			5,331			21,036			4,179			5,341			25,205			30,546			(12,674		)	1987	Dec-04	3-30
	35,592			$	—		$	1,923,612		$	6,604,680		$	1,352,987		$	1,970,554		$	7,910,725		$	9,881,279		$	(2,329,714	)

													Costs
							Initial cost						capitalized			Gross amount carried at close of period
	Square									Buildings and			subsequent			Land and			Buildings and						Accumulated			Date of	Date	Lives
Property	Footage		Location	Encumbrance			Land			improvements			to acquisition			improvements			improvements			Total(1)			depreciation			construction	acquired	(years)
Other real estate assets
Derian Office Building	106,716		Irvine, CA	—			3,079			12,315			9,908			4,308			20,994			25,302			(14,119		)	1983	Jul-00	3-30
	106,716			$	—		$	3,079		$	12,315		$	9,908		$	4,308		$	20,994		$	25,302		$	(14,119	)
Total				$	1,806,626		$	2,643,228		$	8,881,303		$	1,841,570		$	2,701,356		$	10,664,745		$	13,366,101		$	(3,209,548	)

(1) The aggregate cost for federal income tax purposes is approximately $10.3 billion (unaudited).

(2) A portion of land is leased pursuant to a ground lease expiring 2070.

(3) The land is leased pursuant to a ground lease expiring 2082.

(4) The land is leased pursuant to a ground lease expiring 2070.

(5) The land is leased pursuant to a ground lease expiring 2027.

(6) The land is leased pursuant to a ground lease expiring 2067.

(7) A portion of land is leased pursuant to a ground lease expiring in 2028.

(8) The land is leased pursuant to a ground lease expiring in 2028.

F- 60

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

FINANCIAL STATEMENT SCHEDULE III

REAL ESTATE AND ACCUMULATED DEPRECIATION

December 31, 2018

(Dollars in thousands)

A summary of activity for rental properties and accumulated depreciation is as follows:

	2018				2017				2016				2018				2017				2016
Rental properties:												Accumulated depreciation:
Balance at beginning of year	$	13,362,073			$	12,687,722			$	12,338,129		Balance at beginning of year	$	2,769,297			$	2,311,546			$	1,949,892
Acquisition, development, and improvement of real estate	325,986				700,892				609,669			Depreciation expense	478,721				464,043				432,165
Disposition of real estate and other	(321,958		)		(28,367		)		(264,832		)	Depreciation expense - Disposals and other	(38,470		)		(6,292		)		(70,511		)
Reclassification from other assets and into building and improvements, net	—				1,826				4,756			Balance at the end of year	$	3,209,548			$	2,769,297			$	2,311,546
Balance at the end of year	$	13,366,101			$	13,362,073			$	12,687,722

F- 61

EXHIBIT INDEX

Exhibit No.	Document
3.1	Articles of Amendment and Restatement of Essex Property Trust, Inc., attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed May 23, 2016, and incorporated herein by reference.
3.2	Sixth Amended and Restated Bylaws of Essex Property Trust, Inc. (as of February 21, 2017), attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed February 27, 2017, and incorporated herein by reference.
3.3	First Amendment to Sixth Amended and Restated Bylaws of Essex Property Trust, Inc., dated February 20, 2018, attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed February 21, 2018, and incorporated herein by reference.
3.4	Certificate of Limited Partnership of Essex Portfolio, L.P. and amendments thereto.
4.1	Indenture, dated August 15, 2012, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.625% Senior Notes due 2022 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed August 15, 2012, and incorporated herein by reference.
4.2	Indenture, dated April 15, 2013, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.25% Senior Notes due 2023 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 15, 2013, and incorporated herein by reference.
4.3	Form of Common Stock Certificate of Essex Property Trust, Inc., filed as Exhibit 4.5 to the Company's Form S-4 Registration Statement, filed January 29, 2014, and incorporated herein by reference.
4.4	Indenture governing 5.500% Senior Notes due 2017, dated April 4, 2014, by and among Essex Portfolio, L.P., Essex Property Trust, Inc. and U.S. Bank National Association, as trustee, including the form of 5.500% Senior Notes due 2017, attached as Exhibit 4.1 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 10, 2014, and incorporated herein by reference.
4.5	Indenture governing 5.200% Senior Notes due 2021, dated April 4, 2014, by and among Essex Portfolio, L.P., Essex Property Trust, Inc. and U.S. Bank National Association, as trustee, including the form of 5.200% Senior Notes due 2021, attached as Exhibit 4.2 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 10, 2014, and incorporated herein by reference.
4.6	Indenture governing 3.375% Senior Notes due 2023, dated April 4, 2014, by and among Essex Portfolio, L.P., Essex Property Trust, Inc. and U.S. Bank National Association, as trustee, including the form of 3.375% Senior Notes due 2023, attached as Exhibit 4.3 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 10, 2014, and incorporated herein by reference.
4.7	Indenture, dated April 15, 2014, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.875% Senior Notes due 2024 and the guarantee thereof, attached as Exhibit 4.1 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 16, 2014, and incorporated herein by reference.
4.8	Indenture, dated March 17, 2015, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.500% Senior Notes due 2025 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed March 17, 2015, and incorporated herein by reference.
4.9	Indenture, dated April 11, 2016, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of the 3.375% Senior Notes due 2026 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 11, 2016, and incorporated herein by reference.
4.10	Indenture, dated April 10, 2017, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of the 3.625% Senior Notes due 2027 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 10, 2017, and incorporated herein by reference.
4.11	Indenture, dated March 8, 2018, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of the 4.500% Senior Notes due 2048 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed March 8, 2018, and incorporated herein by reference.

4.12	Indenture, dated February 11, 2019, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 4.000% Senior Notes due 2029 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed February 11, 2019, and incorporated herein by reference.
10.1	Agreement between Essex Property Trust, Inc. and George M. Marcus, dated March 27, 2003 attached as Exhibit 10.32 to the Company's Form 10-K for the year ended December 31, 2002, and incorporated herein by reference.
10.2	Essex Property Trust, Inc. 2004 Stock Incentive Plan, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference.*
10.3	BRE Properties, Inc. 2005 Amended and Restated Deferred Compensation Plan (assumed by Essex Property Trust, Inc.), as amended on each of May 18, 2010, November 17, 2014 and December 9, 2016.*
10.4	Form of Indemnification Agreement between Essex Property Trust, Inc. and its directors and officers.*
10.5	Note Purchase Agreement, dated as of June 30, 2011, among Essex Portfolio, L.P., Essex Property Trust, Inc. and the purchasers of the notes party thereto (including the forms of the 4.50% Senior Guaranteed Notes, Series A, due September 30, 2017, and the 4.92% Senior Guaranteed Notes, Series B, due December 30, 2019), attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed July 5, 2011, and incorporated herein by reference. †
10.6	Note Purchase Agreement, dated as of March 14, 2012, among Essex Portfolio, L.P., the Company and the purchasers of the notes party thereto (including the forms of the 4.27% Senior Guaranteed Notes, Series C, due April 30, 2021, the 4.30% Senior Guaranteed Notes, Series D, due June 29, 2021, and the 4.37% Senior Guaranteed Notes, Series E, due August 30, 2021), attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on March 20, 2012, and incorporated herein by reference. †
10.7	Modification Agreement, dated July 30, 2012, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference.
10.8	Amendment to Agreement, dated as of September 11, 2012, between the Company and George Marcus, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, and incorporated herein by reference.
10.9	Essex Property Trust, Inc. Executive Severance Plan (as Amended and Restated effective March 12, 2013), attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed March 18, 2013, and incorporated herein by reference.*
10.10	Essex Property Trust, Inc. 2013 Stock Award and Incentive Compensation Plan, attached as Appendix B to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 14, 2013, filed April 1, 2013, and incorporated herein by reference.*
10.11	Essex Property Trust, Inc. 2013 Employee Stock Purchase Plan, attached as Appendix C to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 14, 2013, filed April 1, 2013, and incorporated herein by reference.*
10.12	Forms of equity award agreements for officers under the 2013 Stock Award and Incentive Compensation Plan, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and incorporated herein by reference.*
10.13	Amended and Restated Non-Employee Director Equity Award Program, dated May 17, 2016, attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed May 23, 2016, and incorporated herein by reference.*
10.14	Fourth Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of December 20, 2018.
10.15	Third Modification Agreement, dated as of January 29, 2014 by and among Essex Portfolio, L.P., U.S. Bank National Association, as Administrative Agent and Lender and the other lenders party thereto, attached as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed January 31, 2014, and incorporated herein by reference.
10.16	BRE Properties, Inc. 1999 Stock Incentive Plan (assumed by Essex Property Trust, Inc.), attached as Exhibit 99.1 to Essex Property Trust, Inc.'s Registration Statement on Form S-8, filed April 1, 2014, and incorporated herein by reference.*
10.17	BRE Properties, Inc. Fifth Amended and Restated Non-Employee Stock Option and Restricted Stock Plan (assumed by Essex Property Trust, Inc.), attached as Exhibit 99.2 to Essex Property Trust, Inc.'s Registration Statement on Form S-8, filed April 1, 2014, and incorporated herein by reference.*

10.18	Forms of Essex Property Trust, Inc., Essex Portfolio L.P., Long-Term Incentive Plan Award Agreements, attached as Exhibit 10.28 to the Company's Annual Report on Form 10-K, filed March 2, 2015, and incorporated herein by reference.*
10.19	Terms Agreement dated as of May 20, 2015, among Essex Property Trust, Inc. and Citigroup Global Markets Inc., attached as Exhibit 1.1 to the Company's Current Report on Form 8-K, filed May 26, 2015, and incorporated herein by reference.
10.20	Second Amended and Restated Revolving Credit Agreement, dated as of January 17, 2018, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto, attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed January 18, 2018, and incorporated herein by reference.
10.21	First Amendment to Second Amended and Restated Revolving Credit Agreement, dated as of January 11, 2019, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto.
10.22	Essex Property Trust, Inc. 2018 Stock Award and Incentive Compensation Plan, attached as Appendix A to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 15, 2018, filed March 23, 2018, and incorporated herein by reference.*
10.23	Form of Non-Employee Director Restricted Stock Award Agreement, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed August 3, 2018, and incorporated herein by reference.*
10.24	Form of Non-Employee Director Stock Option Award Agreement, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed August 3, 2018, and incorporated herein by reference.*
10.25	Forms of Essex Property Trust, Inc. 2018 Long-Term Incentive Award Agreements pursuant to the 2018 Stock Award and Incentive Compensation Plan.*
10.26	Executive Transition Services Agreement, dated December 19, 2018, by and between Essex Property Trust, Inc. and John D. Eudy, attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed December 19, 2018.*
21.1	List of Subsidiaries of Essex Property Trust, Inc. and Essex Portfolio, L.P.
23.1	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
23.2	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
24.1	Power of Attorney (see signature page)
31.1	Certification of Michael J. Schall, Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Angela L. Kleiman, Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3	Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.4	Certification of Angela L. Kleiman, Principal Financial Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Michael J. Schall, Principal Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Angela L. Kleiman, Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3	Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.4	Certification of Angela L. Kleiman, Principal Financial Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

• Management contract or compensatory plan or arrangement.

† The schedules and certain exhibits to this agreement, as set forth in the agreement, have not been filed herewith. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Mateo, State of California, on February 21, 2019.

	ESSEX PROPERTY TRUST, INC.
	By: /S/ ANGELA L. KLEIMAN
	Angela L. Kleiman
	Executive Vice President, Chief Financial Officer (Authorized Officer, Principal Financial Officer)
	By: /S/ JOHN FARIAS
	John Farias
	Senior Vice President, Chief Accounting Officer
	ESSEX PORTFOLIO, L.P. By: Essex Property Trust, Inc., its general partner
	By: /S/ ANGELA L. KLEIMAN
	Angela L. Kleiman
	Executive Vice President, Chief Financial Officer (Authorized Officer, Principal Financial Officer)
	By: /S/ JOHN FARIAS
	John Farias
	Senior Vice President, Chief Accounting Officer

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KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael J. Schall and Angela L. Kleiman, and each of them, his attorney-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorney-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/S/ MICHAEL J. SCHALL Michael J. Schall	Chief Executive Officer and President, and Director (Principal Executive Officer)	February 21, 2019
/S/ KEITH R. GUERICKE Keith R. Guericke	Director, and Vice Chairman of the Board	February 21, 2019
/S/ GEORGE M. MARCUS George M. Marcus	Director and Chairman of the Board	February 21, 2019
/S/ AMAL M. JOHNSON Amal M. Johnson	Director	February 21, 2019
/S/ MARY KASARIS Mary Kasaris	Director	February 21, 2019
/S/ IRVING F. LYONS, III Irving F. Lyons, III	Director	February 21, 2019
/S/ THOMAS E. ROBINSON Thomas E. Robinson	Director	February 21, 2019
/S/ BYRON A. SCORDELIS Byron A. Scordelis	Director	February 21, 2019
/S/ JANICE L. SEARS Janice L. Sears	Director	February 21, 2019

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