Essex Property Trust 10-Q 2022-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022

OR

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

For the transition period from ________to _________

001-13106 (Essex Property Trust, Inc.)

333-44467-01 (Essex Portfolio, L.P.)

(Commission File Number)

ESSEX PROPERTY TRUST, INC.

ESSEX PORTFOLIO, L.P.

(Exact name of Registrant as Specified in its Charter)

Maryland						77-0369576
(Essex Property Trust, Inc.)						(Essex Property Trust, Inc.)
California						77-0369575
(Essex Portfolio, L.P.)						(Essex Portfolio, L.P.)
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

1100 Park Place, Suite 200

San Mateo, California 94403

(Address of Principal Executive Offices, Including Zip Code)

(650) 655-7800

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Common Stock, $.0001 par value (Essex Property Trust, Inc.)						ESS						New York Stock Exchange

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

Essex Property Trust, Inc.			Yes			☒			No			☐			Essex Portfolio, L.P.			Yes			☒			No			☐

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

Essex Property Trust, Inc.			Yes			☒			No			☐			Essex Portfolio, L.P.			Yes			☒			No			☐

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

Essex Property Trust, Inc.:

Large accelerated filer			☒			Accelerated filer			☐			Non-accelerated filer			☐			Smaller reporting company			☐
																		Emerging growth company			☐

Essex Portfolio, L.P.:

Large accelerated filer			☐			Accelerated filer			☐			Non-accelerated filer			☒			Smaller reporting company			☐
																		Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

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

Essex Property Trust, Inc.			Yes			☐			No			☒			Essex Portfolio, L.P.			Yes			☐			No			☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 65,333,024 shares of Common Stock ($.0001 par value) of Essex Property Trust, Inc. were outstanding as of April 25, 2022.

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EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the three month period ended March 31, 2022 of Essex Property Trust, Inc., a Maryland corporation, and Essex Portfolio, L.P., a Delaware limited partnership of which Essex Property Trust, Inc. is the sole general partner.

Unless stated otherwise or the context otherwise requires, references to the "Company," "we," "us" or "our" mean collectively Essex Property Trust, Inc. and those entities/subsidiaries owned or controlled by Essex Property Trust, Inc., including Essex Portfolio, L.P., and references to the "Operating Partnership" mean Essex Portfolio, L.P. and those entities/subsidiaries owned or controlled by Essex Portfolio, L.P. Unless stated otherwise or the context otherwise requires, references to "Essex" mean Essex Property Trust, Inc., not including any of its subsidiaries.

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

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

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

• enhances investors' understanding of Essex and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

• eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both Essex and the Operating Partnership; and

• creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

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

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

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

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

To help investors understand the significant differences between Essex and the Operating Partnership, this report on Form 10-Q provides separate condensed consolidated financial statements for Essex and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of stockholders' equity or partners' capital, and earnings per share/unit, as applicable; and a combined Management's Discussion and Analysis of Financial Condition and Results of Operations.

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

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

The information furnished in the accompanying unaudited condensed consolidated balance sheets, statements of income and comprehensive income, equity, capital, and cash flows of the Company and the Operating Partnership reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the aforementioned condensed consolidated financial statements for the interim periods and are normal and recurring in nature, except as otherwise noted.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to such unaudited condensed consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations herein. Additionally, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2021.

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ESSEX PROPERTY TRUST, INC.

ESSEX PORTFOLIO, L.P.

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION						Page No.
Item 1.			Condensed Consolidated Financial Statements of Essex Property Trust, Inc. (Unaudited)
			Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021			2
			Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2022 and 2021			3
			Condensed Consolidated Statements of Equity for the three months ended March 31, 2022 and 2021			4
			Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021			6
			Condensed Consolidated Financial Statements of Essex Portfolio, L.P. (Unaudited)
			Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021			8
			Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2022 and 2021			9
			Condensed Consolidated Statements of Capital for the three months ended March 31, 2022 and 2021			10
			Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021			12
			Notes to Condensed Consolidated Financial Statements			14
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations			30
Item 3.			Quantitative and Qualitative Disclosures About Market Risks			38
Item 4.			Controls and Procedures			39
PART II. OTHER INFORMATION
Item 1.			Legal Proceedings			40
Item 1A.			Risk Factors			40
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			40
Item 3.			Defaults Upon Senior Securities			40
Item 4.			Mine Safety Disclosures			40
Item 5.			Other Information			40
Item 6.			Exhibits			41
Signatures						42

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Part I – Financial Information

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except parenthetical and share amounts)

ASSETS			March 31, 2022						December 31, 2021
Real estate:
Rental properties:
Land and land improvements			$	3,032,678					$	3,032,678
Buildings and improvements			12,651,423						12,597,249
			15,684,101						15,629,927
Less: accumulated depreciation			(4,779,581)						(4,646,854)
			10,904,520						10,983,073
Real estate under development			112,815						111,562
Co-investments			1,144,542						1,177,802
			12,161,877						12,272,437
Cash and cash equivalents-unrestricted			98,107						48,420
Cash and cash equivalents-restricted			10,446						10,218
Marketable securities, net of allowance for credit losses of zero as of both March 31, 2022 and December 31, 2021			169,702						191,829
Notes and other receivables, net of allowance for credit losses of $0.7 million and $0.8 million as of March 31, 2022 and December 31, 2021, respectively (includes related party receivables of $39.9 million and $176.9 million as of March 31, 2022 and December 31, 2021, respectively)			205,420						341,033
Operating lease right-of-use assets			68,158						68,972
Prepaid expenses and other assets			56,591						64,964
Total assets			$	12,770,301					$	12,997,873
LIABILITIES AND EQUITY
Unsecured debt, net			$	5,308,841					$	5,307,196
Mortgage notes payable, net			637,778						638,957
Lines of credit			98,000						341,257
Accounts payable and accrued liabilities			221,925						180,751
Construction payable			35,484						29,136
Dividends payable			150,976						143,213
Distributions in excess of investments in co-investments			28,846						35,545
Operating lease liabilities			69,801						70,675
Other liabilities			40,705						39,969
Total liabilities			6,592,356						6,786,699
Commitments and contingencies
Redeemable noncontrolling interest			39,738						34,666
Equity:
Common stock; 0.0001 par value, 670,000,000 shares authorized; 65,332,274 and 65,248,393 shares issued and outstanding, respectively			7						7
Additional paid-in capital			6,930,072						6,915,981
Distributions in excess of accumulated earnings			(987,333)						(916,833)
Accumulated other comprehensive income (loss), net			14,237						(5,552)
Total stockholders' equity			5,956,983						5,993,603
Noncontrolling interest			181,224						182,905
Total equity			6,138,207						6,176,508
Total liabilities and equity			$	12,770,301					$	12,997,873

See accompanying notes to the unaudited condensed consolidated financial statements.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except share and per share amounts)

			Three Months Ended March 31,
			2022						2021
Revenues:
Rental and other property			$	379,216					$	352,876
Management and other fees from affiliates			2,689						2,249
			381,905						355,125
Expenses:
Property operating, excluding real estate taxes			68,858						65,085
Real estate taxes			47,242						45,328
Corporate-level property management expenses			10,172						9,013
Depreciation and amortization			133,533						128,587
General and administrative			12,242						9,812
Expensed acquisition and investment related costs			8						15
			272,055						257,840
Gain on sale of real estate and land			—						100,096
Earnings from operations			109,850						197,381
Interest expense			(50,377)						(51,649)
Total return swap income			2,544						2,844
Interest and other (loss) income			(7,567)						14,387
Equity income from co-investments			21,171						17,011
Deferred tax benefit (expense) on unconsolidated co-investments			2,754						(508)
Loss on early retirement of debt, net			—						(2,517)
Net income			78,375						176,949
Net income attributable to noncontrolling interest			(5,121)						(8,505)
Net income available to common stockholders			$	73,254					$	168,444
Comprehensive income			$	98,856					$	181,441
Comprehensive income attributable to noncontrolling interest			(5,813)						(8,658)
Comprehensive income attributable to controlling i

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The following discussion and analysis should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and accompanying Notes thereto included elsewhere herein and with the Company’s 2021 annual report on Form 10-K for the year ended December 31, 2021. Capitalized terms not defined in this section have the meaning ascribed to them elsewhere in this Quarterly Report on Form 10-Q. The Company makes statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Form 10-Q entitled "Forward-Looking Statements."

Essex is a self-administered and self-managed REIT that acquires, develops, redevelops, and manages apartment communities in selected residential areas located on the West Coast of the United States. Essex owns all of its interests in its real estate investments, directly or indirectly through the Operating Partnership. Essex is the sole general partner of the Operating Partnership and, as of March 31, 2022, had an approximately 96.6% general partnership interest in the Operating Partnership.

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

As of March 31, 2022, the Company owned or had ownership interests in 253 operating apartment communities, comprising 62,290 apartment homes, excluding the Company’s ownership interest in preferred equity co-investments, loan investments, three operating commercial buildings, and a development pipeline comprised of one consolidated project and one unconsolidated joint venture project.

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

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

Northern California (the San Francisco Bay Area)

Seattle Metro (Seattle metropolitan area)

As of March 31, 2022, the Company’s development pipeline was comprised of one consolidated project under development, one unconsolidated joint venture project under development, and various predevelopment projects aggregating 371 apartment homes, with total incurred costs of $162.0 million, and estimated remaining project costs of approximately $55.0 million, $29.0 million of which represents the Company's share of estimated remaining costs, for total estimated project costs of $217.0 million.

The Company’s consolidated apartment communities are as follows:

			As of March 31, 2022												As of March 31, 2021
			Apartment Homes						%						Apartment Homes						%
Southern California			22,190						43		%				22,121						43		%
Northern California			19,230						37		%				19,123						37		%
Seattle Metro			10,341						20		%				10,218						20		%
Total			51,761						100		%				51,462						100		%

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

The COVID-19 Pandemic

The COVID-19 pandemic and its related variants continues to create considerable instability, disruption, and uncertainty. In an effort to slow down the spread of the viruses and mitigate its impact on affected populations, federal, state and local jurisdictions have implemented varying forms of requirements which may continue to negatively affect profitability. While the California eviction moratorium sunsetted during the third quarter of 2021, other state and local eviction moratoriums and laws that limit rent increases during times of emergency and impair the ability to collect unpaid rent during certain timeframes

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continue to be in effect in various formats at various regions in which Essex's communities are located, impacting Essex and its properties. The Company continues to work to comply with the stated intent of local, county, state and federal laws.

The long-term impact of the COVID-19 pandemic on the U.S. and world economies generally, and on the Company's results in particular will largely depend on uncertain future developments, including new information which may emerge concerning the severity of COVID-19 and related variants, future laws that may be enacted, the impact on job growth and the broader economy, and reactions by consumers, companies, governmental entities and capital markets.

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

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

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

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

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

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

The regional breakdown of the Company’s Same-Property portfolio for financial occupancy for the three months ended March 31, 2022 and 2021 is as follows:

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			Three Months Ended March 31,
			2022						2021
Southern California			96.3		%				96.7		%
Northern California			96.5		%				96.7		%
Seattle Metro			95.9		%				96.6		%

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

						Number of Apartment						Three Months Ended March 31,												Dollar						Percentage
Property Revenues ($ in thousands)						Homes						2022						2021						Change						Change
Same-Property Revenues:
Southern California						21,256						$	150,653					$	138,418					$	12,235					8.8		%
Northern California						17,895						142,002						137,386						4,616						3.4		%
Seattle Metro						10,218						63,618						58,633						4,985						8.5		%
Total Same-Property Revenues						49,369						356,273						334,437						21,836						6.5		%
Non-Same Property Revenues												22,943						18,439						4,504						24.4		%
Total Property Revenues												$	379,216					$	352,876					$	26,340					7.5		%

Same-Property Revenues increased by $21.8 million or 6.5% to $356.3 million in the first quarter of 2022 from $334.4 million in the first quarter of 2021. The increase was primarily attributable to an increase of 4.5% in average rental rates from $2,299 in the first quarter of 2021 to $2,402 in the first quarter of 2022 and decreased cash concessions in the first quarter of 2022 compared to the first quarter of 2021.

Non-Same Property Revenues increased by $4.5 million or 24.4% to $22.9 million in the first quarter of 2022 from $18.4 million in the first quarter of 2021. The increase was primarily due to the acquisitions of The Village at Toluca Lake and Canvas in 2021 and an increase in average rental rates.

Management and other fees from affiliates increased by $0.5 million or 22.7% to $2.7 million in the first quarter of 2022 from $2.2 million in the first quarter of 2021. The increase was primarily due to the addition of Martha Lake Apartments, Monterra in Mill Creek, The Rexford, and Silver communities to the Company's joint venture portfolio in 2021 and Vela in 2022, partially offset by the Company's purchase of BEX III's 50.0% interest in The Village at Toluca Lake.

Property operating expenses, excluding real estate taxes increased by $3.8 million or 5.8% to $68.9 million for the first quarter of 2022 compared to $65.1 million for the first quarter of 2021, primarily due to increases of $3.0 million in utilities expense and $1.0 million in maintenance and repairs expenses, offset by a decrease of $0.2 million in administrative expenses. Same-Property operating expenses, excluding real estate taxes, increased by $3.6 million or 5.8% to $65.7 million in the first quarter of 2022 compared to $62.1 million in the first quarter of 2021, primarily due to increases of $2.7 million in utilities expense, and $0.9 million in maintenance and repairs expenses.

Real estate taxes increased by $1.9 million or 4.2% to $47.2 million for the first quarter of 2022 compared to $45.3 million for the first quarter of 2021, primarily due to real estate taxes for development properties Station Park Green (Phase II and III) and Wallace on Sunset, that were completed in 2021 and the acquisition of The Village at Toluca Lake during 2021, as well as an increase in assessed valuation and tax rates. Same-Property real estate taxes increased by $1.3 million or 3.2% to $42.8 million in the first quarter of 2022 compared to $41.4 million in the first quarter of 2021, primarily due to an increase in assessed valuations and tax rates.

Corporate-level property management expenses increased by $1.2 million or 13.3% to $10.2 million for the first quarter of 2022 compared to $9.0 million for the first quarter of 2021 due to costs pertaining to the centralization of certain property level functions.

Depreciation and amortization expense increased by $4.9 million or 3.8% to $133.5 million for the first quarter of 2022 compared to $128.6 million for the first quarter of 2021, primarily due an increase in depreciation expense from the completion of the development properties Mylo, Station Park Green (Phase II and Phase III), and Wallace on Sunset as well as the acquisitions of The Village at Toluca Lake and Canvas during 2021.

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Interest expense decreased by $1.2 million or 2.3% to $50.4 million for the first quarter of 2022 compared to $51.6 million for the first quarter of 2021, primarily due to various debt that was paid off, matured, or regular principal amortization during and after the first quarter of 2021, which resulted in a decrease in interest expense of $5.8 million for the first quarter of 2022. These decreases to interest expense were partially offset by senior unsecured notes issued during and after the first quarter of 2021, which resulted in an increase of $3.5 million interest expense for the first quarter of 2022. Additionally, there was a $1.1 million decrease in capitalized interest in the first quarter of 2022, due to a decrease in development activity as compared to the same period in 2021.

Total return swap income of $2.5 million in the first quarter of 2022 consists of monthly settlements related to the Company's total return swap contracts with an aggregate notional amount of $224.2 million.

Interest and other (loss) income decreased by $22.0 million or 152.8% to $7.6 million loss for the first quarter of 2022 compared to $14.4 million income for the first quarter of 2021, primarily due to a decrease in the fair value of marketable securities.

Equity income from co-investments increased by $4.2 million or 24.7% to $21.2 million for the first quarter of 2022 compared to $17.0 million for the first quarter of 2021, primarily due to $17.1 million in co-investment promote income. The increase was offset by decreases of $10.5 million in equity income from non-core co-investments and $2.3 million in income from preferred equity investments including income from early redemptions.

Deferred tax benefit (expense) on unconsolidated co-investments of $2.8 million for the first quarter of 2022 due to a net unrealized loss of $7.7 million from non-core unconsolidated co-investments.

Liquidity and Capital Resources

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

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

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

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In September 2021, 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 “2021 ATM Program”). In connection with the 2021 ATM Program, the Company may also enter into related forward sale agreements, and may sell shares of its common stock pursuant to these agreements. The use of a forward sale agreement would allow the Company to lock in a share price on the sale of shares of its common stock at the time the agreement is executed, but defer receipt of the proceeds from the sale of shares until a later date should the Company elect to settle such forward sale agreement, in whole or in part, in shares of common stock.

During the three months ended March 31, 2022, the Company did not sell any shares of its common stock through the 2021 ATM Program. As of March 31, 2022, there are no outstanding forward purchase agreements, and $900.0 million of shares remains available to be sold under the 2021 ATM Program.

In December 2015, the Company’s Board of Directors authorized a stock repurchase plan to allow the Company to acquire shares in an aggregate of up to $250.0 million. In February 2019, the Board of Directors approved the replenishment of the stock repurchase plan such that, as of such date, the Company had $250.0 million of purchase authority remaining under the stock repurchase plan. In each of May and December 2020, the Board of Directors approved the replenishment of the stock repurchase plan such that, as of such date, the Company had $250.0 million of purchase authority remaining under the replenished plan. During the three months ended March 31, 2022, the Company did not repurchase any shares. As of March 31, 2022, the Company had $214.5 million of purchase authority remaining under the stock repurchase plan.

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

Development and Predevelopment Pipeline

The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations. As of March 31, 2022, the Company’s development pipeline was comprised of one consolidated project under development, one unconsolidated joint venture project under development and various consolidated predevelopment projects, aggregating 371 apartment homes, with total incurred costs of $162.0 million, and estimated remaining project costs of approximately $55.0 million, $29.0 million of which represents the Company's share of estimated remaining costs, for total estimated project costs of $217.0 million.

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

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

Derivative Activity

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

Alternative Capital Sources

The Company utilizes co-investments as an alternative source of capital for acquisitions of both operating and development communities. As of March 31, 2022, the Company had an interest in 264 apartment homes in a community actively under development with a joint venture for total estimated costs of $102.0 million. Total estimated remaining costs are approximately $53.0 million, of which the Company estimates its remaining investment in these development joint ventures will be

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approximately $27.0 million. In addition, the Company had an interest in 10,636 apartment homes of operating communities with joint ventures for a total book value of $601.7 million as of March 31, 2022.

Off-Balance Sheet Arrangements

The Company has various unconsolidated interests in certain joint ventures. The Company does not believe that these unconsolidated investments have a materially different impact on its liquidity, cash flows, capital resources, credit or market risk than its consolidated operations. See Note 4, Co-investments, in the Notes to Condensed Consolidated Financial Statements, for carrying values and combined summarized financial information of these unconsolidated investments.

Critical Accounting Estimates

The preparation of condensed consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The Company defines critical accounting estimates as those accounting policies that require the Company’s management to exercise their most difficult, subjective and complex judgments. The Company’s critical accounting estimates relate principally to the evaluation of events and changes in circumstances indicating whether the Company’s rental properties may be impaired. The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates made by management.

The Company’s critical accounting policies and estimates have not changed materially from the information reported in Note 2, Summary of Critical and Significant Accounting Policies, in the Company’s annual report on Form 10-K for the year ended December 31, 2021.

Forward-Looking Statements

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

While the Company's management believes the assumptions underlying its forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control, which could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect the Company’s current expectations of the approximate outcomes of the matters discussed. Factors that might cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: the continued impact of the COVID-19 pandemic and related variants, which remains inherently uncertain as to duration and severity, and any additional governmental measures taken to limit its spread and other potential future outbreaks of infectious diseases or other health concerns could continue to adversely affect the Company’s business and its tenants, and cause a significant downturn in general economic conditions, the

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

Funds from Operations Attributable to Common Stockholders and Unitholders

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

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

The Company considers FFO and Core FFO to be useful financial performance measurements of an equity REIT because, together with net income and cash flows, FFO and Core FFO provide investors with additional bases to evaluate operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and to pay dividends. By excluding gains or losses related to sales of depreciated operating properties and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a real estate company between periods or as compared to different companies. By further adjusting for items that are not considered part of the Company’s core business operations, Core FFO allows investors to compare the core operating performance of the Company to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. The Company believes that its condensed consolidated financial statements, prepared in accordance with U.S. GAAP, provide the most meaningful picture of its financial condition and its operating performance.

In calculating FFO, the Company follows the definition for this measure published by the National Association of Real Estate Investment Trusts ("NAREIT"), which is the leading REIT industry association. The Company believes that, under the NAREIT FFO definition, the two most significant adjustments made to net income are (i) the exclusion of historical cost depreciation and (ii) the exclusion of gains and losses from the sale of previously depreciated properties. The Company agrees that these two NAREIT adjustments are useful to investors for the following reasons:

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(a)historical cost accounting for real estate assets in accordance with U.S. GAAP assumes, through depreciation charges, that the value of real estate assets diminishes predictably over time. NAREIT stated in its White Paper on Funds from Operations "since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves." Consequently, NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time and depreciation charges required by U.S. GAAP do not reflect the underlying economic realities.

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

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

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

Essex Property Trust, Inc.

			Three Months Ended March 31,
			2022						2021
Net income available to common stockholders			$	73,254					$	168,444
Adjustments:
Depreciation and amortization			133,533						128,587
Gains not included in FFO			—						(100,096)
Depreciation and amortization from unconsolidated co-investments			18,115						14,729
Noncontrolling interest related to Operating Partnership units			2,563						5,947
Depreciation attributable to third party ownership and other (1)			(353)						(129)
Funds from operations attributable to common stockholders and unitholders			$	227,112					$	217,482
Funds from operations attributable to common stockholders and unitholders per share - diluted			$	3.36					$	3.23
Non-core items:
Expensed acquisition and investment related costs			$	8					$	15
Deferred tax (benefit) expense on unconsolidated co-investments (2)			(2,754)						508
Gain on sale of marketable securities			(12,171)						(2,611)
Change in unrealized losses (gains) on marketable securities, net			24,585						(6,276)
Provision for credit losses			(62)						38
Equity loss (income) from non-core co-investments (3)			8,844						(1,627)
Loss on early retirement of debt, net			—						2,517
Loss on early retirement of debt from unconsolidated co-investments			86						3
Co-investment promote income			(17,076)						—
Income from early redemption of preferred equity investments and notes receivable			(858)						(3,513)
General and administrative and other, net			448						257
Insurance reimbursements, legal settlements, and other, net			—						(182)
Core Funds from Operations attributable to common stockholders and unitholders			$	228,162					$	206,611
Core Funds from Operations attributable to common stockholders and unitholders per share-diluted			$	3.37					$	3.07
Weighted average number shares outstanding, diluted (4)			67,621,842						67,272,839

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(1) The Company consolidates certain co-investments. The noncontrolling interest's share of net operating income in these investments for the three months ended March 31, 2022 was $0.7 million.

(2) Represents deferred tax (benefit) expense related to net unrealized gains or losses on technology co-investments.

(3) Represents the Company's share of co-investment loss (income) from technology co-investments.

(4) Assumes conversion of all outstanding limited partnership units in the Operating Partnership into shares of the Company's common stock and excludes DownREIT limited partnership units.

Net Operating Income

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

			Three Months Ended March 31,
			2022						2021
Earnings from operations			$	109,850					$	197,381
Adjustments:
Corporate-level property management expenses			10,172						9,013
Depreciation and amortization			133,533						128,587
Management and other fees from affiliates			(2,689)						(2,249)
General and administrative			12,242						9,812
Expensed acquisition and investment related costs			8						15
Gain on sale of real estate and land			—						(100,096)
NOI			263,116						242,463
Less: Non-Same Property NOI			(15,355)						(11,580)
Same-Property NOI			$	247,761					$	230,883

Interest Rate Hedging Activities

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

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

Interest Rate Sensitive Liabilities

The Company is exposed to interest rate changes primarily as a result of its lines of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Company's real estate investment portfolio and operations. The Company’s interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives, the Company borrows primarily at fixed rates and may enter

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into derivative financial instruments such as interest rate swaps, caps, and treasury locks in order to mitigate its interest rate risk on a related financial instrument. The Company does not enter into derivative or interest rate transactions for speculative purposes.

The Company’s interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows.

For the Years Ended			2022						2023						2024						2025						2026						Thereafter						Total						Fair value
($ in thousands, except for interest rates)
Fixed rate debt			$	41,693					302,092						402,177						632,035						548,291						3,836,558						$	5,762,846					$	5,622,398
Average interest rate			3.6		%				3.4		%				4.0		%				3.5		%				3.5		%				3.2		%				3.2		%
Variable rate debt (1)			$	591					853						932						1,019						1,114						317,666						$	322,175					$	319,443
Average interest rate			1.2		%				1.2		%				1.2		%				1.2		%				1.2		%				1.1		%				1.1		%

(1) $224.2 million is subject to total return swaps.

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

Essex Property Trust, Inc.

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

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

Essex Portfolio, L.P.

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

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

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Part II -- Other Information

Item 1: Legal Proceedings

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

In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors discussed in "Part I. Item 1A. Risk Factors" in the Company's annual report on Form 10-K for the year ended December 31, 2021, which could materially affect the Company's financial condition, results of operations or cash flows. There have been no material changes to the Risk Factors disclosed in Item 1A of the Company's annual report on Form 10-K for the year ended December 31, 2021, as filed with the SEC and available at www.sec.gov. The risks described in the Company's annual report on Form 10-K and subsequent quarterly reports on Form 10-Q are not the only risks facing the Company. Additional risks and uncertainties not currently known or that the Company currently deems to be immaterial may also materially adversely affect the Company's financial condition, results of operations or cash flows.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

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

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

During the three months ended March 31, 2022, Essex issued an aggregate of 83,881 shares of its common stock upon the exercise of stock options and the vesting of restricted stock awards. Essex contributed the net proceeds of $19.1 million from the option exercises during the three months ended March 31, 2022 to the Operating Partnership in exchange for an aggregate of 74,155 OP Units, as required by the Operating Partnership’s partnership agreement. Furthermore, for each share of common stock issued by Essex in connection with vesting of restricted stock awards, the Operating Partnership issued OP Units to Essex, as required by the partnership agreement. During the three months ended March 31, 2022, 9,726 OP Units were issued to Essex pursuant to this mechanism.

Stock Repurchases

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

Item 3: Defaults Upon Senior Securities

None.

Item 4: Mine Safety Disclosures

Not applicable.

None.

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A. Exhibits
31.1*			Certification of Michael J. Schall, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification of Barbara Pak, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3*			Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.4*			Certification of Barbara Pak, Principal Financial Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Certification of Michael J. Schall, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2*			Certification of Barbara Pak, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.3*			Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.4*			Certification of Barbara Pak, Principal Financial Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS			XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			XBRL Taxonomy Extension Label Linkbase Document
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

• Filed or furnished herewith.

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

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SIGNATURES

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

			ESSEX PROPERTY TRUST, INC.
			(Registrant)
			Date: April 27, 2022
			By: /s/ BARBARA PAK
			Barbara Pak
			Executive Vice President and Chief Financial Officer (Authorized Officer, Principal Financial Officer)

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

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

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