Item 1. Condensed Consolidated Financial Statements

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except parenthetical and share amounts)

ASSETS			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 interest			$	93,043					$	172,783
Per share data:
Basic:
Net income available to common stockholders			$	1.12					$	2.59
Weighted average number of shares outstanding during the period			65,275,775						64,989,620
Diluted:
Net income available to common stockholders			$	1.12					$	2.59
Weighted average number of shares outstanding during the period			65,339,378						65,114,933

See accompanying notes to the unaudited condensed consolidated financial statements.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity for the three months ended March 31, 2022 and 2021

(Unaudited)

(In thousands)

									Common stock												Additional paid-in capital						Distributions in excess of accumulated earnings						Accumulated other comprehensive income (loss), net						Noncontrolling interest						Total
Three months ended March 31, 2022															Shares						Amount
Balances at December 31, 2021															65,248						$	7					$	6,915,981					$	(916,833)					$	(5,552)					$	182,905					$	6,176,508
Net income															—						—						—						73,254						—						5,121						78,375
Change in fair value of derivatives and amortization of swap settlements															—						—						—						—						19,404						679						20,083
Change in fair value of marketable debt securities, net															—						—						—						—						385						13						398
Issuance of common stock under:
Stock option and restricted stock plans, net															84						—						16,867						—						—						—						16,867
Sale of common stock, net															—						—						(141)						—						—						—						(141)
Equity based compensation costs															—						—						2,380						—						—						83						2,463
Changes in the redemption value of redeemable noncontrolling interest															—						—						(5,014)						—						—						(58)						(5,072)
Contributions from noncontrolling interest															—						—						—						—						—						125						125
Distributions to noncontrolling interest															—						—						—						—						—						(7,619)						(7,619)
Redemptions of noncontrolling interest															—						—						(1)						—						—						(25)						(26)
Common stock dividends ($2.20 per share)															—						—						—						(143,754)						—						—						(143,754)
Balances at March 31, 2022															65,332						$	7					$	6,930,072					$	(987,333)					$	14,237					$	181,224					$	6,138,207

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									Common stock												Additional paid-in capital						Distributions in excess of accumulated earnings						Accumulated other comprehensive income (loss), net						Noncontrolling Interest						Total
Three months ended March 31, 2021															Shares						Amount
Balances at December 31, 2020															64,999						$	6					$	6,876,326					$	(861,193)					$	(14,729)					$	182,782					$	6,183,192
Net income															—						—						—						168,444						—						8,505						176,949
Change in fair value of derivatives and amortization of swap settlements															—						—						—						—						4,257						150						4,407
Change in fair value of marketable debt securities, net															—						—						—						—						82						3						85
Issuance of common stock under:
Stock option and restricted stock plans, net															39						—						(3,744)						—						—						—						(3,744)
Equity based compensation costs															—						—						5,028						—						—						54						5,082
Retirement of common stock, net															(40)						—						(9,172)						—						—						—						(9,172)
Changes in the redemption value of redeemable noncontrolling interest															—						—						(4,178)						—						—						95						(4,083)
Contributions from noncontrolling interest															—						—						—						—						—						1,900						1,900
Distributions to noncontrolling interest															—						—						—						—						—						(7,554)						(7,554)
Redemptions of noncontrolling interest															1						—						(75)						—						—						(180)						(255)
Common stock dividends ($2.09 per share)															—						—						—						(135,876)						—						—						(135,876)
Balances at March 31, 2021															64,999						$	6					$	6,864,185					$	(828,625)					$	(10,390)					$	185,755					$	6,210,931

See accompanying notes to the unaudited condensed consolidated financial statements.

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ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands, except parenthetical amounts)

			Three Months Ended March 31,
			2022						2021
Cash flows from operating activities:
Net income			78,375						$	176,949
Adjustments to reconcile net income to net cash provided by operating activities:
Straight-lined rents			2,074						3,087
Depreciation and amortization			133,533						128,587
Amortization of discount and debt financing costs, net			1,665						2,132
Gain on sale of marketable securities			(12,171)						(2,611)
Provision for credit losses			62						38
Unrealized losses (gains) on equity securities recognized through income			24,585						(6,276)
Earnings from co-investments			(21,171)						(17,011)
Operating distributions from co-investments			52,281						46,355
Accrued interest from notes and other receivables			(3,447)						(4,201)
Gain on the sale of real estate and land			—						(100,096)
Equity-based compensation			2,296						1,386
Loss on early retirement of debt, net			—						2,517
Changes in operating assets and liabilities:
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets			16,026						(41,060)
Accounts payable, accrued liabilities, and operating lease liabilities			40,300						4,976
Other liabilities			735						494
Net cash provided by operating activities			315,143						195,266
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired			(61)						(1,203)
Redevelopment			(18,004)						(9,274)
Development acquisitions of and additions to real estate under development			(6,882)						(19,629)
Capital expenditures on rental properties			(24,917)						(16,720)
Investments in notes receivable			(134,697)						(69,885)
Collections of notes and other receivables			270,338						—
Proceeds from insurance for property losses			88						102
Proceeds from dispositions of real estate			—						243,365
Contributions to co-investments			(79,284)						(49,974)
Changes in refundable deposits			(6,318)						11
Purchases of marketable securities			(10,826)						(23,296)
Sales and maturities of marketable securities			27,911						14,772
Non-operating distributions from co-investments			88,370						78,600
Net cash provided by investing activities			105,718						146,869
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes			—						447,404
Payments on unsecured debt and mortgage notes			(904)						(600,858)
Proceeds from lines of credit			391,472						204,794
Repayments of lines of credit			(634,729)						(204,794)
Retirement of common stock			—						(9,172)

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			Three Months Ended March 31,
			2022						2021
Additions to deferred charges			—						(3,434)
Payments related to debt prepayment penalties			—						(2,132)
Net proceeds from issuance of common stock			(141)						—
Net proceeds from stock options exercised			19,083						1,701
Payments related to tax withholding for share-based compensation			(2,216)						(5,445)
Contributions from noncontrolling interest			125						1,900
Distributions to noncontrolling interest			(7,218)						(7,461)
Redemption of noncontrolling interest			(26)						(255)
Common stock dividends paid			(136,392)						(135,064)
Net cash used in financing activities			(370,946)						(312,816)
Net increase in unrestricted and restricted cash and cash equivalents			49,915						29,319
Unrestricted and restricted cash and cash equivalents at beginning of period			58,638						84,041
Unrestricted and restricted cash and cash equivalents at end of period			$	108,553					$	113,360
Supplemental disclosure of cash flow information:
Cash paid for interest (net of $0.9 million and $2.1 million capitalized in 2022 and 2021, respectively)			$	51,168					$	55,213
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	1,738					$	1,738
Supplemental disclosure of noncash investing and financing activities:
Transfers between real estate under development and rental properties, net			$	4,346					$	267
Transfer from real estate under development to co-investments			$	858					$	747
Reclassifications to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest			$	5,073					$	4,083

See accompanying notes to the unaudited condensed consolidated financial statements.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except parenthetical and unit 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
Real estate held for sale, net			—						—
			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 CAPITAL
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
Distributions payable			150,976						143,213
Operating lease liabilities			69,801						70,675
Distributions in excess of investments in co-investments			28,846						35,545
Other liabilities			40,705						39,969
Total liabilities			6,592,356						6,786,699
Commitments and contingencies
Redeemable noncontrolling interest			39,738						34,666
Capital:
General Partner:
Common equity (65,332,274 and 65,248,393 units issued and outstanding, respectively)			5,942,746						5,999,155
			5,942,746						5,999,155
Limited Partners:
Common equity (2,282,464 and 2,282,464 units issued and outstanding, respectively)			54,112						56,502
Accumulated other comprehensive loss			18,677						(1,804)
Total partners' capital			6,015,535						6,053,853
Noncontrolling interest			122,672						122,655
Total capital			6,138,207						6,176,508
Total liabilities and capital			$	12,770,301					$	12,997,873

See accompanying notes to the unaudited condensed consolidated financial statements.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except unit and per unit 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			(2,558)						(2,558)
Net income available to common unitholders			$	75,817					$	174,391
Comprehensive income			$	98,856					$	181,441
Comprehensive income attributable to noncontrolling interest			(2,558)						(2,558)
Comprehensive income attributable to controlling interest			$	96,298					$	178,883
Per unit data:
Basic:
Net income available to common unitholders			$	1.12					$	2.59
Weighted average number of common units outstanding during the period			67,558,239						67,283,424
Diluted:
Net income available to common unitholders			$	1.12					$	2.59
Weighted average number of common units outstanding during the period			67,621,842						67,408,737

See accompanying notes to the unaudited condensed consolidated financial statements.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Capital for the three and three months ended March 31, 2022 and 2021

(Unaudited)

(In thousands)

			General Partner																		Limited Partners												Accumulated other comprehensive income (loss), net						Noncontrolling interest						Total
			Common Equity																		Common Equity
Three months ended March 31, 2022			Units						Amount									Units						Amount
Balances at December 31, 2021			65,248						$	5,999,155											2,282						$	56,502					$	(1,804)					$	122,655					$	6,176,508
Net income			—						73,254												—						2,563						—						2,558						78,375
Change in fair value of derivatives and amortization of swap settlements			—						—												—						—						20,083						—						20,083
Change in fair value of marketable debt securities, net			—						—												—						—						398						—						398
Issuance of common units under:
General partner's stock based compensation, net			84						16,867												—						—						—						—						16,867
Sale of common stock by general partner, net			—						(141)												—						—						—						—						(141)
Equity based compensation costs			—						2,380												—						83						—						—						2,463
Changes in the redemption value of redeemable noncontrolling interest			—						(5,014)												—						(14)						—						(44)						(5,072)
Contributions from noncontrolling interest			—						—												—						—						—						125						125
Distributions to noncontrolling interest			—						—												—						—						—						(2,597)						(2,597)
Redemptions			—						(1)												—						—						—						(25)						(26)
Distributions declared ($2.20 per unit)			—						(143,754)												—						(5,022)						—						—						(148,776)
Balances at March 31, 2022			65,332						$	5,942,746											2,282						$	54,112					$	18,677					$	122,672					$	6,138,207

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			General Partner																		Limited Partners												Accumulated other comprehensive income (loss), net						Noncontrolling interest						Total
			Common Equity																		Common Equity
Three months ended March 31, 2021			Units						Amount									Units						Amount
Balances at December 31, 2020			64,999						$	6,015,139											2,295						$	58,184					$	(11,303)					$	121,172					$	6,183,192
Net income			—						168,444												—						5,947						—						2,558						176,949
Change in fair value of derivatives and amortization of swap settlements			—						—												—						—						4,407						—						4,407
Change in fair value of marketable debt securities, net			—						—												—						—						85						—						85
Issuance of common units under:
General partner's stock based compensation, net			39						(3,744)												—						—						—						—						(3,744)
Equity based compensation costs			—						5,028												—						54						—						—						5,082
Retirement of common units, net			(40)						(9,172)												—						—						—						—						(9,172)
Changes in redemption value of redeemable noncontrolling interest			—						(4,178)												—						73						—						22						(4,083)
Contributions from noncontrolling interest			—						—												—						—						—						1,900						1,900
Distributions to noncontrolling interest			—						—												—						—						—						(2,760)						(2,760)
Redemptions			1						(75)												(1)						(136)						—						(44)						(255)
Distributions declared ($2.09 per unit)			—						(135,876)												—						(4,794)						—						—						(140,670)
Balances at March 31, 2021			64,999						$	6,035,566											2,294						$	59,328					$	(6,811)					$	122,848					$	6,210,931

See accompanying notes to the unaudited condensed consolidated financial statements.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands, except parenthetical amounts)

			Three Months Ended March 31,
			2022						2021
Cash flows from operating activities:
Net income			$	78,375					$	176,949
Adjustments to reconcile net income to net cash provided by operating activities:
Straight-lined rents			2,074						3,087
Depreciation and amortization			133,533						128,587
Amortization of discount and debt financing costs, net			1,665						2,132
Gain on sale of marketable securities			(12,171)						(2,611)
Provision for credit losses			62						38
Unrealized losses (gains) on equity securities recognized through income			24,585						(6,276)
Earnings from co-investments			(21,171)						(17,011)
Operating distributions from co-investments			52,281						46,355
Accrued interest from notes and other receivables			(3,447)						(4,201)
Gain on the sale of real estate and land			—						(100,096)
Equity-based compensation			2,296						1,386
Loss on early retirement of debt, net			—						2,517
Changes in operating assets and liabilities:
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets			16,026						(41,060)
Accounts payable, accrued liabilities, and operating lease liabilities			40,300						4,976
Other liabilities			735						494
Net cash provided by operating activities			315,143						195,266
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired			(61)						(1,203)
Redevelopment			(18,004)						(9,274)
Development acquisitions of and additions to real estate under development			(6,882)						(19,629)
Capital expenditures on rental properties			(24,917)						(16,720)
Investments in notes receivable			(134,697)						(69,885)
Collections of notes and other receivables			270,338						—
Proceeds from insurance for property losses			88						102
Proceeds from dispositions of real estate			—						243,365
Contributions to co-investments			(79,284)						(49,974)
Changes in refundable deposits			(6,318)						11
Purchases of marketable securities			(10,826)						(23,296)
Sales and maturities of marketable securities			27,911						14,772
Non-operating distributions from co-investments			88,370						78,600
Net cash provided by investing activities			105,718						146,869
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes			—						447,404
Payments on unsecured debt and mortgage notes			(904)						(600,858)
Proceeds from lines of credit			391,472						204,794
Repayments of lines of credit			(634,729)						(204,794)
Retirement of common units			—						(9,172)

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			Three Months Ended March 31,
			2022						2021
Additions to deferred charges			—						(3,434)
Payments related to debt prepayment penalties			—						(2,132)
Net proceeds from issuance of common units			(141)						—
Net proceeds from stock options exercised			19,083						1,701
Payments related to tax withholding for share-based compensation			(2,216)						(5,445)
Contributions from noncontrolling interest			125						1,900
Distributions to noncontrolling interest			(2,046)						(2,114)
Redemption of noncontrolling interests			(26)						(255)
Common units distributions paid			(141,564)						(140,411)
Net cash used in financing activities			(370,946)						(312,816)
Net increase in unrestricted and restricted cash and cash equivalents			49,915						29,319
Unrestricted and restricted cash and cash equivalents at beginning of period			58,638						84,041
Unrestricted and restricted cash and cash equivalents at end of period			$	108,553					$	113,360
Supplemental disclosure of cash flow information:
Cash paid for interest (net of $0.9 million and $2.1 million capitalized in 2022 and 2021, respectively)			$	51,168					$	55,213
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	1,738					$	1,738
Supplemental disclosure of noncash investing and financing activities:
Transfers between real estate under development and rental properties, net			$	4,346					$	267
Transfer from real estate under development to co-investments			$	858					$	747
Reclassifications to redeemable noncontrolling interest from general and limited partner capital and noncontrolling interest			$	5,073					$	4,083

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

(1) Organization and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements present the accounts of Essex Property Trust, Inc. ("Essex" or the "Company"), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the "Operating Partnership," which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included and are normal and recurring in nature. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2021.

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

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

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 operating apartment communities are located in Southern California (primarily Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas.

Accounting Pronouncements Adopted in the Current Year

In January 2021, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2020-06 "Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity." The amendments in ASU 2020-06 modifies the if-converted method of calculating diluted earnings per share ("EPS"). For instruments that may be settled in cash or shares, and are not classified as a liability, the guidance requires entities to include the effect of potential share settlement in the diluted EPS calculation, if the effect is more dilutive. The Company adopted this guidance on January 1, 2022 on a prospective basis. This adoption did not have a material impact on the Company's consolidated results of operations or financial position.

Revenues and Gains on Sale of Real Estate

Revenues from tenants renting or leasing apartment homes are recorded when due from tenants and are recognized monthly as they are earned which generally approximates a straight-line basis, else, adjustments are made to conform to a straight-line basis. Apartment homes are rented under short-term leases (generally, lease terms of 9 to 12 months). Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease. See Note 3, Revenues, for additional information regarding such revenues.

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

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

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

includes asset management and property management), the transaction price and amount of revenue to be recognized is determined each quarter based on the management fee calculated and earned for that month or quarter. The contract will contain a description of the service and the fee percentage for management services. Payments from such services are one month or one quarter in arrears of the service performed.

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

Marketable Securities

The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds and Level 2 for the unsecured debt, as defined by the FASB standard for fair value measurements). As of both March 31, 2022 and December 31, 2021, $0.8 million of equity securities presented within common stock and stock funds in the tables below represent investments measured at fair value, using net asset value as a practical expedient, and are not categorized in the fair value hierarchy.

Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. Unrealized gains and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income on the condensed consolidated statements of income and comprehensive income.

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

As of March 31, 2022 and December 31, 2021, marketable securities consisted of the following ($ in thousands):

			March 31, 2022
			Cost						Gross Unrealized Gain (Loss)						Carrying Value
Equity securities:
Investment funds - debt securities			$	62,382					$	(4,638)					$	57,744
Common stock and stock funds			81,026						29,143						110,169
Debt securities:
Available for sale
Investment-grade unsecured debt			1,050						739						1,789
Total - Marketable securities			$	144,458					$	25,244					$	169,702

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

			December 31, 2021
			Cost						Gross Unrealized (Loss) Gain						Carrying Value
Equity securities:
Investment funds - debt securities			$	62,192					$	(502)					$	61,690
Common stock and stock funds			79,155						49,592						128,747
Debt securities:
Available for sale
Investment-grade unsecured debt			1,051						341						1,392
Total - Marketable securities			$	142,398					$	49,431					$	191,829

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

For the three months ended March 31, 2022 and 2021, the proceeds from sales and maturities of marketable securities totaled $27.9 million and $14.8 million, respectively, which resulted in $12.2 million and $2.6 million in realized gains, respectively, for such periods.

For the three months ended March 31, 2022, and 2021 the portion of equity security unrealized gains and losses that were recognized in income totaled $24.6 million in losses and $6.3 million in gains, respectively, and were included in interest and other (loss) income on the Company's condensed consolidated statements of income and comprehensive income.

Variable Interest Entities

In accordance with accounting standards for consolidation of variable interest entities ("VIEs"), the Company consolidated the Operating Partnership, 18 DownREIT entities (comprising nine communities), and six co-investments as of March 31, 2022 and December 31, 2021. The Company consolidates these entities because it is deemed the primary beneficiary. The Company has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the above consolidated co-investments and DownREIT entities, net of intercompany eliminations, were approximately $900.6 million and $323.7 million, respectively, as of March 31, 2022 and $909.3 million and $320.1 million, respectively, as of December 31, 2021. Noncontrolling interests in these entities were $122.5 million and $122.4 million as of March 31, 2022 and December 31, 2021, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of March 31, 2022 and December 31, 2021, the Company did not have any VIEs of which it was not deemed to be the primary beneficiary.

Equity-based Compensation

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

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

Fair Value of Financial Instruments

Management believes that the carrying amounts of the outstanding balances under its lines of credit, and notes and other receivables approximate fair value as of March 31, 2022 and December 31, 2021, because interest rates, yields, and other terms for these instruments are consistent with interest rates, yields, and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s fixed rate debt with a carrying value of $5.7 billion as of both March 31, 2022 and December 31, 2021, was approximately $5.6 billion and $6.0 billion, respectively. Management has estimated that the fair value of the Company’s $321.4 million and $564.9 million of variable rate debt at March 31, 2022 and December 31, 2021, respectively, was approximately $319.4 million and $561.7 million, respectively, based on the terms of existing mortgage notes payable, unsecured debt, and variable rate demand notes compared to those available in the marketplace. Management believes that the carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, construction payables, other liabilities, and dividends payable approximate fair value as of March 31, 2022 and December 31, 2021 due to the short-term maturity of these instruments. Marketable securities are carried at fair value as of March 31, 2022 and December 31, 2021.

Capitalization of Costs

The Company’s capitalized internal costs related to development and redevelopment projects were comprised primarily of interest and employee compensation and totaled $5.4 million and $6.4 million during the three months ended March 31, 2022 and 2021, respectively. The Company capitalizes leasing commissions associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized for leasing commissions are immaterial for all periods presented.

Co-investments

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

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

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

Essex Property Trust, Inc.

($ in thousands):

			Change in fair value and amortization of swap settlements						Unrealized gain on available for sale securities						Total
Balance at December 31, 2021			$	(5,912)					$	360					$	(5,552)
Other comprehensive income before reclassification			19,399						385						19,784
Amounts reclassified from accumulated other comprehensive loss			5						—						5
Other comprehensive income			19,404						385						19,789
Balance at March 31, 2022			$	13,492					$	745					$	14,237

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

Essex Portfolio, L.P.

($ in thousands):

			Change in fair value and amortization of swap settlements						Unrealized gain on available for sale securities						Total
Balance at December 31, 2021			$	(2,176)					$	372					$	(1,804)
Other comprehensive income before reclassification			20,078						398						20,476
Amounts reclassified from accumulated other comprehensive loss			5						—						5
Other comprehensive income			20,083						398						20,481
Balance at March 31, 2022			$	17,907					$	770					$	18,677

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

Redeemable Noncontrolling Interest

The carrying value of redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets was $39.7 million and $34.7 million as of March 31, 2022 and December 31, 2021, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances.

The changes to the redemption value of redeemable noncontrolling interests for the three months ended March 31, 2022 is as follows ($ in thousands):

Balance at December 31, 2021			$	34,666
Reclassification due to change in redemption value and other			5,072
Balance at March 31, 2022			$	39,738

Cash, Cash Equivalents and Restricted Cash

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

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

			March 31, 2022						December 31, 2021						March 31, 2021						December 31, 2020
Cash and cash equivalents - unrestricted			$	98,107					$	48,420					$	103,442					$	73,629
Cash and cash equivalents - restricted			10,446						10,218						9,918						10,412
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows			$	108,553					$	58,638					$	113,360					$	84,041

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

Accounting Estimates

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

(2) Significant Transactions During the Three Months Ended March 31, 2022 and Subsequent Events

Significant Transactions

Acquisitions

In January 2022, Wesco VI, LLC ("Wesco VI"), one of the Company's joint ventures with an institutional partner, acquired Vela, a 379-unit apartment home community located in Woodland Hills, CA, for a total contract price of $183.0 million. The property was encumbered by a $100.7 million bridge loan from the Company, with an interest rate of 2.64% that was paid off in January 2022 and replaced by permanent secured debt with an institutional lender.

Co-Investments

Preferred Equity Investments

In the first quarter of 2022, the Company originated three preferred equity investments totaling $29.5 million in multifamily communities located in Southern California and Washington. The preferred equity investments have a weighted average return of 10.0% and are scheduled to mature in March 2027.

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

Notes Receivable

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

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

In February 2022, the Company provided a $32.8 million related party bridge loan to BEX II in connection with the payoff of a debt related to one of its properties located in Southern California. The note receivable accrues interest at 1.35% and was scheduled to mature in March 2022, but was subsequently paid off in April 2022. The bridge loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets. See Note 6, Related Party Transactions, for additional details.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

(3) Revenues

Disaggregated Revenue

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

			Three Months Ended March 31,
			2022						2021
Rental income			$	373,425					$	347,305
Other property			5,791						5,571
Management and other fees from affiliates			2,689						2,249
Total revenues			$	381,905					$	355,125

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

			Three Months Ended March 31,
			2022						2021
Southern California			$	156,969					$	141,969
Northern California			152,590						146,690
Seattle Metro			64,203						58,633
Other real estate assets (1)			5,454						5,584
Total rental and other property revenues			$	379,216					$	352,876

(1) Other real estate assets consist of revenues generated from retail space, commercial properties, held for sale properties, disposition properties and straight-line rent adjustments for concessions. Executive management does not evaluate such operating performance geographically.

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

			Three Months Ended March 31,
			2022						2021
Same-property (1)			$	356,273					$	334,437
Acquisitions (2)			1,747						—
Development (3)			9,427						6,930
Redevelopment			1,435						1,632
Non-residential/other, net (4)			12,918						13,246
Straight line rent concession (5)			(2,584)						(3,369)
Total rental and other property revenues			$	379,216					$	352,876

(1) Properties that have comparable stabilized results as of January 1, 2021 and are consolidated by the Company for the three months ended March 31, 2022 and 2021. A community is generally considered to have reached stabilized operations once it achieves an initial occupancy of 90%.

(2) Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2021.

(3) Development includes properties developed which did not have stabilized results as of January 1, 2021.

(4) Non-residential/other, net consists of revenues generated from retail space, commercial properties, held for sale properties, disposition properties, student housing, properties undergoing significant construction activities that do not meet our

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

redevelopment criteria, and two communities located in the California counties of Santa Barbara and Santa Cruz, which the Company does not consider its core markets.

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

Deferred Revenues and Remaining Performance Obligations

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

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the revenue recognition accounting standard. As of March 31, 2022, the Company had $2.2 million of remaining performance obligations. The Company expects to recognize approximately 25% of these remaining performance obligations in 2022, an additional 60% through 2024, and the remaining balance thereafter.

(4) Co-investments

The Company has joint ventures and preferred equity investments in co-investments which are accounted for under the equity method. The co-investments, including BEXAEW, LLC ("BEXAEW"), BEX II, LLC ("BEX II"), BEX IV, LLC (""BEX IV"), 500 Folsom, Wesco I, LLC ("Wesco I"), Wesco III, LLC ("Wesco III"), Wesco IV, LLC ("Wesco IV"), Wesco V, LLC ("Wesco V"), and Wesco VI, own, operate, and develop apartment communities. The carrying values of the Company's co-investments as of March 31, 2022 and December 31, 2021 are as follows ($ in thousands, except parenthetical amounts):

			Weighted Average Company Ownership Percentage (1)						March 31, 2022						December 31, 2021
Ownership interest in:
Wesco I (2), Wesco III, Wesco IV, Wesco V, and Wesco VI			52		%				$	221,781					$	168,198
BEXAEW, BEX II, BEX IV, and 500 Folsom			50		%				267,338						270,550
Other (3)			52		%				112,548						126,503
Total operating and other co-investments, net									601,667						565,251
Total development co-investments			50		%				11,836						11,076
Total preferred interest co-investments (includes related party investments of $72.6 million and $71.1 million as of March 31, 2022 and December 31, 2021, respectively)									502,193						565,930
Total co-investments, net									$	1,115,696					$	1,142,257

(1) Weighted average Company ownership percentages are as of March 31, 2022.

(2) As of March 31, 2022, the Company's investment in Wesco I was classified as a liability of $28.7 million due to distributions in excess of the Company's investment.

(3) As of March 31, 2022, the Company's investment in Expo was classified as a liability of $0.2 million due to distributions received in excess of the Company's investment. The weighted average Essex ownership percentage excludes our investments in non-core technology co-investments which are carried at fair value.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

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

			March 31, 2022						December 31, 2021
Combined balance sheets: (1)
Rental properties and real estate under development			$	4,666,950					$	4,603,465
Other assets			342,271						278,411
Total assets			$	5,009,221					$	4,881,876
Debt			$	3,199,607					$	3,046,765
Other liabilities			167,238						200,129
Equity			1,642,376						1,634,982
Total liabilities and equity			$	5,009,221					$	4,881,876
Company's share of equity			$	1,115,696					$	1,142,257

			Three Months Ended March 31,
			2022						2021
Combined statements of income: (1)
Property revenues			$	84,600					$	71,759
Property operating expenses			(35,793)						(27,331)
Net operating income			48,807						44,428
Interest expense			(18,302)						(16,700)
General and administrative			(3,967)						(4,281)
Depreciation and amortization			(38,807)						(32,709)
Net loss			$	(12,269)					$	(9,262)
Company's share of net income (2)			$	21,171					$	17,011

(1) Includes preferred equity investments held by the Company.

(2) Includes the Company's share of equity income from joint ventures and preferred equity investments, gain on sales of co-investments, co-investment promote income and income from early redemption of preferred equity investments. Includes related party income of $1.8 million and $2.3 million for the three months ended March 31, 2022 and 2021, respectively.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

(5) Notes and Other Receivables

Notes and other receivables consist of the following as of March 31, 2022 and December 31, 2021 ($ in thousands):

			March 31, 2022						December 31, 2021
Notes receivable, secured, bearing interest at 10.50%, due February 2023 (Originated March 2020)			$	17,513					$	17,051
Note receivable, secured, bearing interest at 9.00%, due December 2023 (Originated November 2020)			88,746						87,365
Note receivable, secured, bearing interest at 11.50%, due November 2024 (Originated November 2020)			30,614						29,729
Related party note receivable, secured, bearing interest at 2.15%, due March 2022 (Originated September 2021) (1)			—						29,314
Related party note receivable, secured, bearing interest at 2.30%, due April 2022 (Originated October 2021) (2)			—						30,399
Related party note receivable, secured, bearing interest at 2.36%, due February 2022 (Originated November 2021) (3)			—						62,058
Related party note receivable, secured, bearing interest at 2.36%, due February 2022 (Originated November 2021) (4)			—						48,562
Related party note receivable, secured, bearing interest at 1.35%, due March 2022 (Originated February 2022) (5)			32,788						—
Notes and other receivables from affiliates (6)			7,074						6,556
Straight line rent receivables (7)			13,482						15,523
Other receivables			15,904						15,232
Allowance for credit losses			(701)						(756)
Total notes and other receivables			$	205,420					$	341,033

(1) In January 2022, the Company received cash of $29.2 million to payoff the principal of this note receivable.

(2) In January 2022, the Company received cash of $30.3 million to payoff the principal of this note receivable.

(3) In January 2022, the Company received cash of $61.9 million to payoff the principal of this note receivable.

(4) In January 2022, the Company received cash of $48.4 million to payoff the principal of this note receivable.

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

(6) These amounts consist of short-term loans outstanding and due from various joint ventures as of March 31, 2022 and December 31, 2021, respectively. See Note 6, Related Party Transactions, for additional details.

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

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

			Mezzanine Loans						Bridge Loans						Total
Balance at December 31, 2021			$	671					$	85					$	756
Provision for credit losses			14						(69)						(55)
Balance at March 31, 2022			$	685					$	16					$	701

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

(6) Related Party Transactions

The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates totaled $3.1 million and $2.2 million during the three months ended March 31, 2022 and 2021, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

netted development and redevelopment fees of approximately $0.4 million and zero against general and administrative expenses for the three months ended March 31, 2022 and 2021, respectively.

The Company’s Chairman and founder, Mr. George M. Marcus, is the Chairman of the Marcus & Millichap Company ("MMC"), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Chairman of Marcus & Millichap, Inc. ("MMI"), and Mr. Marcus owns a controlling interest in MMI, a national brokerage firm listed on the New York Stock Exchange. For the three months ended March 31, 2022 and 2021, the Company did not pay brokerage commissions related to real estate transactions to MMC and its affiliates.

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

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

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

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

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

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

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

In June 2019, the Company acquired Brio, a 300-unit apartment home community located in Walnut Creek, CA. The Company issued DownREIT units to an affiliate of MMC, based on a contract price of $164.9 million. The property was encumbered by $98.7 million of mortgage debt which was assumed by the Company at the time of acquisition. As a result of this transaction, the Company consolidated the property, based on a VIE analysis performed by the Company.

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

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-unit apartment home community development located in Burlingame, CA. The

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

investment initially accrued interest based on a 12.0% preferred return which was reduced to 9.0% upon completion and lease-up of the project. The investment is scheduled to mature in April 2024.

In May 2018, the Company made a commitment to fund a $26.5 million preferred equity investment in an entity whose sponsors include an affiliate of MMC. The entity wholly owns a 400-unit apartment home community located in Ventura, CA. The investment accrued interest based on a 10.25% preferred return. The investment was scheduled to mature in May 2023. In November 2021, the Company received cash of $18.3 million, for the partial redemption of this preferred equity investment, and the maturity of the remaining commitment was extended to December 2028. As of March 31, 2022, the Company had a remaining commitment of $13.0 million and accrues interest on a 9.0% preferred return. The remaining committed amount is expected to be funded if and when requested by the sponsors.

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

As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of March 31, 2022 and December 31, 2021, $7.1 million and $6.6 million, respectively, of short-term loans remained outstanding due from joint venture affiliates and is classified within notes and other receivables in the accompanying condensed consolidated balance sheets.

(7) Debt

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

Debt consists of the following ($ in thousands):

			March 31, 2022						December 31, 2021						Weighted Average Maturity In Years as of March 31, 2022
Unsecured debt, net (1)			5,308,841						5,307,196						8.4
Lines of credit (2)			98,000						341,257
Mortgage notes payable, net (3)			637,778						638,957						8.2
Total debt, net			$	6,044,619					$	6,287,410
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering			3.3		%				3.3		%
Weighted average interest rate on lines of credit			1.1		%				1.0		%
Weighted average interest rate on mortgage notes payable			2.7		%				2.7		%

(1) Unsecured debt, net, consists of fixed rate public bond offerings which includes unamortized discount, net of premiums, of $9.4 million and $9.9 million and unamortized debt issuance costs of $31.8 million and $32.9 million, as of March 31, 2022 and December 31, 2021, respectively.

(2) Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.24 billion as of March 31, 2022, excludes unamortized debt issuance costs of $4.1 million and $4.4 million as of March 31, 2022 and December 31, 2021, respectively. These debt issuance costs are included in prepaid expenses and other assets on the condensed consolidated balance sheets. As of March 31, 2022, the Company’s $1.2 billion credit facility had an interest rate of LIBOR plus 0.775%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of September 2025 with three six-month extensions, exercisable at the Company’s option. Subsequent to quarter end, the borrowing spread on this facility will be reduced by 2.5 basis points to LIBOR plus 0.75% as a result of achieving the Enhanced Sustainability Metric Target for 2021 as defined by the facility's sustainability-linked pricing component. As of March 31, 2022, the Company’s $35.0 million

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

working capital unsecured line of credit had an interest rate of LIBOR plus 0.775%, which is based on a tiered rate structure tied to the Company’s credit ratings, and a scheduled maturity date of February 2023.

(3) Includes total unamortized premium, net of discounts of $2.2 million and $2.5 million, reduced by unamortized debt issuance costs of $1.4 million and $1.5 million, as of March 31, 2022 and December 31, 2021, respectively.

The aggregate scheduled principal payments of the Company’s outstanding debt, excluding lines of credit, as of March 31, 2022 are as follows ($ in thousands):

Remaining in 2022			$	42,284
2023			302,945
2024			403,109
2025			633,054
2026			549,405
Thereafter			4,056,224
Total			$	5,987,021

(8) Segment Information

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

The executive management team generally evaluates the Company's operating performance geographically. The Company defines its reportable operating segments as the 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 revenues generated from commercial properties and properties that have been sold. Other non-segment assets include items such as real estate under development, co-investments, real estate held for sale, cash and cash equivalents, marketable securities, notes and other receivables, and prepaid expenses and other assets.

The revenues and NOI for each of the reportable operating segments are summarized as follows for the three months ended March 31, 2022 and 2021 ($ in thousands):

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

			Three Months Ended March 31,
			2022						2021
Revenues:
Southern California			$	156,969					$	141,969
Northern California			152,590						146,690
Seattle Metro			64,203						58,633
Other real estate assets			5,454						5,584
Total property revenues			$	379,216					$	352,876
Net operating income:
Southern California			$	110,213					$	98,577
Northern California			104,985						101,649
Seattle Metro			43,296						38,792
Other real estate assets			4,622						3,445
Total net operating income			263,116						242,463
Management and other fees from affiliates			2,689						2,249
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)
Gain on sale of real estate and land			—						100,096
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

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

Total assets for each of the reportable operating segments are summarized as follows as of March 31, 2022 and December 31, 2021 ($ in thousands):

			March 31, 2022						December 31, 2021
Assets:
Southern California			$	3,981,059					$	4,018,839
Northern California			5,425,077						5,460,701
Seattle Metro			1,397,195						1,407,033
Other real estate assets			101,189						96,500
Net reportable operating segment - real estate assets			10,904,520						10,983,073
Real estate under development			112,815						111,562
Co-investments			1,144,542						1,177,802
Cash and cash equivalents, including restricted cash			108,553						58,638
Marketable securities			169,702						191,829
Notes and other receivables			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

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

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

Essex Property Trust, Inc.

			Three Months Ended March 31, 2022																		Three Months Ended March 31, 2021
			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			$	73,254					65,275,775						$	1.12					$	168,444					64,989,620						$	2.59
Effect of Dilutive Securities:
Stock options			—						63,603												—						31,066
DownREIT units			—						—												197						94,247
Diluted:
Net income available to common stockholders			$	73,254					65,339,378						$	1.12					$	168,641					65,114,933						$	2.59

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,282,464 and 2,293,804, which include vested 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units for the three months ended March 31, 2022 and 2021. The related income allocated to these convertible OP Units aggregated $2.6 million and $5.9 million for the three months ended March 31, 2022 and 2021.

Stock options of 79,687 and 349,252 for the three months ended March 31, 2022 and 2021 were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the average unearned compensation were greater than the average market price of the common stock for the periods ended and, therefore, were anti-dilutive.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2022 and 2021

(Unaudited)

Essex Portfolio, L.P.

			Three Months Ended March 31, 2022																		Three Months Ended March 31, 2021
			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			$	75,817					67,558,239						$	1.12					$	174,391					67,283,424						$	2.59
Effect of Dilutive Securities:
Stock options			—						63,603												—						31,066
DownREIT units			—						—												197						94,247
Diluted:
Net income available to common unitholders			$	75,817					67,621,842						$	1.12					$	174,588					67,408,737						$	2.59

Stock options of 79,687 and 349,252 for the three months ended March 31, 2022 and 2021 were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for the periods ended and, therefore, were anti-dilutive.

(10) Derivative Instruments and Hedging Activities

As of March 31, 2022 and December 31, 2021, the Company had no interest rate swap contracts.

The Company has four total return swap contracts, with an aggregate notional amount of $224.2 million, that effectively convert $224.2 million of mortgage notes payable to a floating interest rate based on the Securities Industry and Financial Markets Association Municipal Swap Index ("SIFMA") plus a spread. The total return swaps provide fair market value protection on the mortgage notes payable to the counterparties during the initial period of the total return swap until the Company's option to call the mortgage notes at par can be exercised. The Company can currently call all four of its total return swaps, with $224.2 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 March 31, 2022 and December 31, 2021. These total return swaps are scheduled to mature between November 2022 and December 2024. The realized gains of $2.5 million and $2.8 million for the three months ended March 31, 2022 and 2021, respectively were reported in the condensed consolidated statements of income and comprehensive income as total return swap income.

(11) Commitments and Contingencies

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

The Company is subject to various federal, state, and local environmental and other laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new, changed or expired laws or regulations on its current portfolio or on other assets that the Company may acquire in the future, including, without limitation, certain eviction moratoriums and other mandates that have been, or may be, enacted or extended in connection with the COVID-19 pandemic. To the extent that an environmental or other matter arises or is identified in the future that has other than a remote risk of having a material impact on the condensed consolidated financial statements, the Company will disclose the estimated range of possible outcomes associated with it, and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, impairment will be recognized.

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