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, 2024						December 31, 2023
Real estate:
Rental properties:
Land and land improvements			$	3,138,093					$	3,036,912
Buildings and improvements			13,535,431						13,098,311
			16,673,524						16,135,223
Less: accumulated depreciation			(5,803,797)						(5,664,931)
			10,869,727						10,470,292
Real estate under development			24,631						23,724
Co-investments			1,062,575						1,061,733
			11,956,933						11,555,749
Cash and cash equivalents-unrestricted			499,036						391,749
Cash and cash equivalents-restricted			8,834						8,585
Marketable securities, net of allowance for credit losses of zero as of both March 31, 2024 and December 31, 2023			91,295						87,795
Notes and other receivables, net of allowance for credit losses of $0.7 million as of both March 31, 2024 and December 31, 2023, respectively (includes related party receivables of $5.9 million and $6.1 million as of March 31, 2024 and December 31, 2023, respectively)			183,040						174,621
Operating lease right-of-use assets			62,858						63,757
Prepaid expenses and other assets			83,189						79,171
Total assets			$	12,885,185					$	12,361,427
LIABILITIES AND EQUITY
Unsecured debt, net			$	5,666,604					$	5,318,531
Mortgage notes payable, net			886,388						887,204
Accounts payable and accrued liabilities			216,536						176,401
Construction payable			18,280						20,659
Dividends payable			165,208						155,695
Distributions in excess of investments in co-investments			63,806						65,488
Operating lease liabilities			64,097						65,091
Other liabilities			48,321						46,175
Total liabilities			7,129,240						6,735,244
Commitments and contingencies
Redeemable noncontrolling interest			32,192						32,205
Equity:
Common stock; $0.0001 par value, 670,000,000 shares authorized; 64,209,059 and 64,203,497 shares issued and outstanding, respectively			6						6
Additional paid-in capital			6,658,882						6,656,720
Distributions in excess of accumulated earnings			(1,152,136)						(1,267,536)
Accumulated other comprehensive income, net			41,279						33,556
Total stockholders' equity			5,548,031						5,422,746
Noncontrolling interest			175,722						171,232
Total equity			5,723,753						5,593,978
Total liabilities and equity			$	12,885,185					$	12,361,427

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,
			2024						2023
Revenues:
Rental and other property			$	424,215					$	409,656
Management and other fees from affiliates			2,713						2,765
			426,928						412,421
Expenses:
Property operating, excluding real estate taxes			78,946						73,882
Real estate taxes			46,920						46,530
Corporate-level property management expenses			11,731						11,432
Depreciation and amortization			139,733						136,347
General and administrative			17,171						15,311
Expensed acquisition and investment related costs			68						339
Casualty loss			—						433
			294,569						284,274
Gain on sale of real estate and land			—						59,238
Earnings from operations			132,359						187,385
Interest expense			(55,933)						(51,045)
Total return swap income			796						1,033
Interest and other income			57,275						12,450
Equity income from co-investments			12,366						10,871
Tax (expense) benefit on unconsolidated co-investments			(49)						900
Gain on remeasurement of co-investment			138,326						—
Net income			285,140						161,594
Net income attributable to noncontrolling interest			(12,409)						(8,062)
Net income available to common stockholders			$	272,731					$	153,532
Comprehensive income			$	293,135					$	151,300
Comprehensive income attributable to noncontrolling interest			(12,681)						(7,712)
Comprehensive income attributable to controlling interest			$	280,454					$	143,588
Per share data:
Basic:
Net income available to common stockholders			$	4.25					$	2.38
Weighted average number of shares outstanding during the period			64,205,086						64,458,535
Diluted:
Net income available to common stockholders			$	4.25					$	2.38
Weighted average number of shares outstanding during the period			64,212,006						64,459,689

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, 2024 and 2023

(Unaudited)

(In thousands)

									Common stock												Additional paid-in capital						Distributions in excess of accumulated earnings						Accumulated other comprehensive income, net						Noncontrolling interest						Total
Three Months Ended March 31, 2024															Shares						Amount
Balances at December 31, 2023															64,203						$	6					$	6,656,720					$	(1,267,536)					$	33,556					$	171,232					$	5,593,978
Net income															—						—						—						272,731						—						12,409						285,140
Change in fair value of derivatives and amortization of swap settlements															—						—						—						—						7,723						272						7,995
Issuance of common stock under:
Stock option and restricted stock plans, net															6						—						962						—						—						—						962
Sale of common stock, net															—						—						(8)						—						—						—						(8)
Equity based compensation costs															—						—						1,637						—						—						58						1,695
Changes in the redemption value of redeemable noncontrolling interest															—						—						(180)						—						—						193						13
Distributions to noncontrolling interest															—						—						—						—						—						(8,412)						(8,412)
Redemptions of noncontrolling interest															—						—						(249)						—						—						(30)						(279)
Common stock dividends ($2.45 per share)															—						—						—						(157,331)						—						—						(157,331)
Balances at March 31, 2024															64,209						$	6					$	6,658,882					$	(1,152,136)					$	41,279					$	175,722					$	5,723,753

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									Common stock												Additional paid-in capital						Distributions in excess of accumulated earnings						Accumulated other comprehensive income, net						Noncontrolling Interest						Total
Three Months Ended March 31, 2023															Shares						Amount
Balances at December 31, 2022															64,605						$	6					$	6,750,076					$	(1,080,176)					$	46,466					$	178,744					$	5,895,116
Net income															—						—						—						153,532						—						8,062						161,594
Change in fair value of derivatives and amortization of swap settlements															—						—						—						—						(9,944)						(350)						(10,294)
Issuance of common stock under:
Stock option and restricted stock plans, net															2						—						—						—						—						—						—
Sale of common stock, net															—						—						(72)						—						—						—						(72)
Equity based compensation costs															—						—						5,472						—						—						192						5,664
Retirement of common stock, net															(437)						—						(95,657)						—						—						—						(95,657)
Changes in the redemption value of redeemable noncontrolling interest															—						—						(2,927)						—						—						(131)						(3,058)
Distributions to noncontrolling interest															—						—						—						—						—						(7,977)						(7,977)
Redemptions of noncontrolling interest															12						—						291						—						—						(464)						(173)
Common stock dividends ($2.31 per share)															—						—						—						(148,286)						—						—						(148,286)
Balances at March 31, 2023															64,182						$	6					$	6,657,183					$	(1,074,930)					$	36,522					$	178,076					$	5,796,857

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,
			2024						2023
Cash flows from operating activities:
Net income			$	285,140					$	161,594
Adjustments to reconcile net income to net cash provided by operating activities:
Straight-lined rents			94						(381)
Depreciation and amortization			139,733						136,347
Amortization of discount and debt financing costs, net			2,341						1,282
Realized and unrealized gains on marketable securities, net			(3,351)						(1,280)
Provision for credit losses			47						18
Earnings from co-investments			(12,366)						(10,871)
Operating distributions from co-investments			9,080						6,784
Accrued interest from notes and other receivables			(3,953)						(2,165)
Casualty loss			—						433
Gain on the sale of real estate and land			—						(59,238)
Equity-based compensation			1,592						1,971
Gain on remeasurement of co-investment			(138,326)						—
Changes in operating assets and liabilities:
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets			(1,493)						2,457
Accounts payable, accrued liabilities, and operating lease liabilities			39,141						39,687
Other liabilities			(2,824)						281
Net cash provided by operating activities			314,855						276,919
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired			(355,309)						—
Redevelopment			(11,417)						(21,265)
Development acquisitions of and additions to real estate under development			(1,348)						(3,791)
Capital expenditures on rental properties			(26,388)						(21,084)
Investments in notes receivable			(1,059)						(14,883)
Proceeds from insurance for property losses			301						152
Proceeds from dispositions of real estate			—						99,388
Contributions to co-investments			(2,074)						(7,967)
Changes in refundable deposits			—						9,000
Purchases of marketable securities			(163)						(11,073)
Sales and maturities of marketable securities			14						26,681
Net cash (used in) provided by investing activities			(397,443)						55,158
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes			349,132						—
Payments on unsecured debt and mortgage notes			(761)						(206)
Proceeds from lines of credit			—						327,524
Repayments of lines of credit			—						(379,141)

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			Three Months Ended March 31,
			2024						2023
Retirement of common stock			—						(95,657)
Additions to deferred charges			(2,692)						(166)
Net costs from issuance of common stock			(8)						(72)
Net proceeds from stock options exercised			962						—
Distributions to noncontrolling interest			(7,901)						(7,580)
Redemption of noncontrolling interest			(279)						(173)
Common stock dividends paid			(148,329)						(142,129)
Net cash provided by (used in) financing activities			190,124						(297,600)
Net increase in unrestricted and restricted cash and cash equivalents			107,536						34,477
Unrestricted and restricted cash and cash equivalents at beginning of period			400,334						42,681
Unrestricted and restricted cash and cash equivalents at end of period			$	507,870					$	77,158
Supplemental disclosure of cash flow information:
Cash paid for interest (net of $0.1 million and $0.3 million capitalized in 2024 and 2023, respectively)			$	58,241					$	52,686
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	1,803					$	1,762
Supplemental disclosure of noncash investing and financing activities:
Transfers between real estate under development and rental properties, net			$	97					$	121
Transfers from real estate under development to co-investments			$	481					$	467
Reclassifications (from) to redeemable noncontrolling interest (to) from additional paid in capital and noncontrolling interest			$	(13)					$	3,058

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, 2024						December 31, 2023
Real estate:
Rental properties:
Land and land improvements			$	3,138,093					$	3,036,912
Buildings and improvements			13,535,431						13,098,311
			16,673,524						16,135,223
Less: accumulated depreciation			(5,803,797)						(5,664,931)
			10,869,727						10,470,292
Real estate under development			24,631						23,724
Co-investments			1,062,575						1,061,733
			11,956,933						11,555,749
Cash and cash equivalents-unrestricted			499,036						391,749
Cash and cash equivalents-restricted			8,834						8,585
Marketable securities, net of allowance for credit losses of zero as of both March 31, 2024 and December 31, 2023			91,295						87,795
Notes and other receivables, net of allowance for credit losses of $0.7 million as of both March 31, 2024 and December 31, 2023, respectively (includes related party receivables of $5.9 million and $6.1 million as of March 31, 2024 and December 31, 2023, respectively)			183,040						174,621
Operating lease right-of-use assets			62,858						63,757
Prepaid expenses and other assets			83,189						79,171
Total assets			$	12,885,185					$	12,361,427
LIABILITIES AND CAPITAL
Unsecured debt, net			$	5,666,604					$	5,318,531
Mortgage notes payable, net			886,388						887,204
Accounts payable and accrued liabilities			216,536						176,401
Construction payable			18,280						20,659
Distributions payable			165,208						155,695
Distributions in excess of investments in co-investments			63,806						65,488
Operating lease liabilities			64,097						65,091
Other liabilities			48,321						46,175
Total liabilities			7,129,240						6,735,244
Commitments and contingencies
Redeemable noncontrolling interest			32,192						32,205
Capital:
General Partner:
Common equity (64,209,059 and 64,203,497 units issued and outstanding, respectively)			5,506,752						5,389,190
			5,506,752						5,389,190
Limited Partners:
Common equity (2,258,812 and 2,258,812 units issued and outstanding, respectively)			49,276						44,991
Accumulated other comprehensive income, net			46,641						38,646
Total partners' capital			5,602,669						5,472,827
Noncontrolling interest			121,084						121,151
Total capital			5,723,753						5,593,978
Total liabilities and capital			$	12,885,185					$	12,361,427

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,
			2024						2023
Revenues:
Rental and other property			$	424,215					$	409,656
Management and other fees from affiliates			2,713						2,765
			426,928						412,421
Expenses:
Property operating, excluding real estate taxes			78,946						73,882
Real estate taxes			46,920						46,530
Corporate-level property management expenses			11,731						11,432
Depreciation and amortization			139,733						136,347
General and administrative			17,171						15,311
Expensed acquisition and investment related costs			68						339
Casualty loss			—						433
			294,569						284,274
Gain on sale of real estate and land			—						59,238
Earnings from operations			132,359						187,385
Interest expense			(55,933)						(51,045)
Total return swap income			796						1,033
Interest and other income			57,275						12,450
Equity income from co-investments			12,366						10,871
Tax (expense) benefit on unconsolidated co-investments			(49)						900
Gain on remeasurement of co-investment			138,326						—
Net income			285,140						161,594
Net income attributable to noncontrolling interest			(2,810)						(2,658)
Net income available to common unitholders			$	282,330					$	158,936
Comprehensive income			$	293,135					$	151,300
Comprehensive income attributable to noncontrolling interest			(2,810)						(2,658)
Comprehensive income attributable to controlling interest			$	290,325					$	148,642
Per unit data:
Basic:
Net income available to common unitholders			$	4.25					$	2.38
Weighted average number of common units outstanding during the period			66,463,899						66,724,428
Diluted:
Net income available to common unitholders			$	4.25					$	2.38
Weighted average number of common units outstanding during the period			66,470,819						66,725,582

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 months ended March 31, 2024 and 2023

(Unaudited)

(In thousands)

			General Partner																		Limited Partners												Accumulated other comprehensive income, net						Noncontrolling interest						Total
			Common Equity																		Common Equity
Three Months Ended March 31, 2024			Units						Amount									Units						Amount
Balances at December 31, 2023			64,203						$	5,389,190											2,259						$	44,991					$	38,646					$	121,151					$	5,593,978
Net income			—						272,731												—						9,599						—						2,810						285,140
Change in fair value of derivatives and amortization of swap settlements			—						—												—						—						7,995						—						7,995
Issuance of common units under:
General partner's stock based compensation, net			6						962												—						—						—						—						962
Sale of common stock by general partner, net			—						(8)												—						—						—						—						(8)
Equity based compensation costs			—						1,637												—						58						—						—						1,695
Changes in the redemption value of redeemable noncontrolling interest			—						(180)												—						165						—						28						13
Distributions to noncontrolling interest			—						—												—						—						—						(2,875)						(2,875)
Redemptions			—						(249)												—						—						—						(30)						(279)
Distributions declared ($2.45 per unit)			—						(157,331)												—						(5,537)						—						—						(162,868)
Balances at March 31, 2024			64,209						$	5,506,752											2,259						$	49,276					$	46,641					$	121,084					$	5,723,753

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			General Partner																		Limited Partners												Accumulated other comprehensive income, net						Noncontrolling interest						Total
			Common Equity																		Common Equity
Three Months Ended March 31, 2023			Units						Amount									Units						Amount
Balances at December 31, 2022			64,605						$	5,669,906											2,272						$	51,454					$	52,010					$	121,746					$	5,895,116
Net income			—						153,532												—						5,404						—						2,658						161,594
Change in fair value of derivatives and amortization of swap settlements			—						—												—						—						(10,294)						—						(10,294)
Issuance of common units under:
General partner's stock based compensation, net			2						—												—						—						—						—						—
Sale of common stock by general partner, net			—						(72)												—						—						—						—						(72)
Equity based compensation costs			—						5,472												—						192						—						—						5,664
Retirement of common units, net			(437)						(95,657)												—						—						—						—						(95,657)
Changes in the redemption value of redeemable noncontrolling interest			—						(2,927)												—						(106)						—						(25)						(3,058)
Distributions to noncontrolling interest			—						—												—						—						—						(2,755)						(2,755)
Redemptions			12						291												(11)						(337)						—						(127)						(173)
Distributions declared ($2.31 per unit)			—						(148,286)												—						(5,222)						—						—						(153,508)
Balances at March 31, 2023			64,182						$	5,582,259											2,261						$	51,385					$	41,716					$	121,497					$	5,796,857

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,
			2024						2023
Cash flows from operating activities:
Net income			$	285,140					$	161,594
Adjustments to reconcile net income to net cash provided by operating activities:
Straight-lined rents			94						(381)
Depreciation and amortization			139,733						136,347
Amortization of discount and debt financing costs, net			2,341						1,282
Realized and unrealized gains on marketable securities, net			(3,351)						(1,280)
Provision for credit losses			47						18
Earnings from co-investments			(12,366)						(10,871)
Operating distributions from co-investments			9,080						6,784
Accrued interest from notes and other receivables			(3,953)						(2,165)
Casualty loss			—						433
Gain on the sale of real estate and land			—						(59,238)
Equity-based compensation			1,592						1,971
Gain on remeasurement of co-investment			(138,326)						—
Changes in operating assets and liabilities:
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets			(1,493)						2,457
Accounts payable, accrued liabilities, and operating lease liabilities			39,141						39,687
Other liabilities			(2,824)						281
Net cash provided by operating activities			314,855						276,919
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired			(355,309)						—
Redevelopment			(11,417)						(21,265)
Development acquisitions of and additions to real estate under development			(1,348)						(3,791)
Capital expenditures on rental properties			(26,388)						(21,084)
Investments in notes receivable			(1,059)						(14,883)
Proceeds from insurance for property losses			301						152
Proceeds from dispositions of real estate			—						99,388
Contributions to co-investments			(2,074)						(7,967)
Changes in refundable deposits			—						9,000
Purchases of marketable securities			(163)						(11,073)
Sales and maturities of marketable securities			14						26,681
Net cash (used in) provided by investing activities			(397,443)						55,158
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes			349,132						—
Payments on unsecured debt and mortgage notes			(761)						(206)
Proceeds from lines of credit			—						327,524
Repayments of lines of credit			—						(379,141)

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			Three Months Ended March 31,
			2024						2023
Retirement of common units			—						(95,657)
Additions to deferred charges			(2,692)						(166)
Net costs from issuance of common units			(8)						(72)
Net proceeds from stock options exercised			962						—
Distributions to noncontrolling interest			(2,163)						(2,065)
Redemption of noncontrolling interests			(279)						(173)
Common units distributions paid			(154,067)						(147,644)
Net cash provided by (used in) financing activities			190,124						(297,600)
Net increase in unrestricted and restricted cash and cash equivalents			107,536						34,477
Unrestricted and restricted cash and cash equivalents at beginning of period			400,334						42,681
Unrestricted and restricted cash and cash equivalents at end of period			$	507,870					$	77,158
Supplemental disclosure of cash flow information:
Cash paid for interest (net of $0.1 million and $0.3 million capitalized in 2024 and 2023, respectively)			$	58,241					$	52,686
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases			$	1,803					$	1,762
Supplemental disclosure of noncash investing and financing activities:
Transfers between real estate under development and rental properties, net			$	97					$	121
Transfers from real estate under development to co-investments			$	481					$	467
Reclassifications (from) to redeemable noncontrolling interest (to) from general and limited partner capital and noncontrolling interest			$	(13)					$	3,058

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, 2024 and 2023

(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, 2023.

All significant intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements.

The unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 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, 2024 and December 31, 2023. Total Operating Partnership limited partnership units ("OP Units," and the holders of such OP Units, "Unitholders") outstanding was 2,258,812 as of both March 31, 2024 and December 31, 2023, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $553.0 million and $560.0 million as of March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024, the Company owned or had ownership interests in 253 operating apartment communities, comprising 62,271 apartment homes, excluding the Company’s ownership interest in preferred equity co-investments, loan investments, and three operating commercial buildings. 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.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures." Among other new disclosure requirements, ASU 2023-07 requires companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker. ASU 2023-07 will be effective for the Company's 2024 annual reporting. ASU 2023-07 must be applied retrospectively to all prior periods presented in the financial statements. The Company does not expect the adoption to have a material impact on its consolidated results of operations and financial position.

In August 2023, the FASB issued ASU No. 2023-05 "Business Combinations—Joint Venture Formations (Subtopic 805-60)" under which an entity that qualifies as a joint venture is required to apply a new basis of accounting upon the formation of the joint venture. The amendments in ASU 2023-05 require that a joint venture must initially measure its assets and liabilities at fair value on the formation date. ASU 2023-05 is effective for all joint ventures that are formed on or after January 1, 2025 and early adoption is permitted. The Company does not expect the adoption to have a material impact on its consolidated results of operations and 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.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

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 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 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, 2024 and December 31, 2023, $0.1 million of equity securities presented within common stock, preferred 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 realized and unrealized gains and losses in equity securities and interest income are included in interest and other income on the condensed consolidated statements of income and comprehensive income.

As of March 31, 2024 and December 31, 2023, equity securities consisted primarily of investment funds-debt securities, common stock, preferred stock and stock funds.

As of March 31, 2024 and December 31, 2023, marketable securities consisted of the following ($ in thousands):

			March 31, 2024
			Cost						Gross Unrealized Gain (Loss)						Carrying Value
Equity securities:
Investment funds - debt securities			$	26,590					$	(1,636)					$	24,954
Common stock, preferred stock, and stock funds			51,341						15,000						66,341
Total - Marketable securities			$	77,931					$	13,364					$	91,295

			December 31, 2023
			Cost						Gross Unrealized Gain (loss)						Carrying Value
Equity securities:
Investment funds - debt securities			$	26,460					$	(1,584)					$	24,876
Common stock, preferred stock, and stock funds			51,328						11,591						62,919
Total - Marketable securities			$	77,788					$	10,007					$	87,795

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

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, 2024 and December 31, 2023. The Company consolidates these entities because it is 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 $963.5 million and $326.1 million, respectively, as of March 31, 2024 and $956.7 million and $324.5 million, respectively, as of December 31, 2023. Noncontrolling interests in these entities was $121.0 million and $121.1 million as of March 31, 2024 and December 31, 2023, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of March 31, 2024 and December 31, 2023, the Company did not have any VIEs of which it was not 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, 2023) are being amortized over the expected service periods.

Fair Value of Financial Instruments

Management estimates 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, 2024 and December 31, 2023, 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 $6.0 billion and $5.7 billion as of March 31, 2024 and December 31, 2023, respectively, was approximately $5.6 billion and $5.3 billion, respectively. Management has estimated that the fair value of the Company’s $520.0 million of variable rate debt at both March 31, 2024 and December 31, 2023, was approximately $518.8 million and $519.0 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 estimates 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, 2024 and December 31, 2023 due to the short-term maturity of these instruments. Marketable securities are carried at fair value as of March 31, 2024 and December 31, 2023.

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 $5.3 million and $4.8 million during the three months ended March 31, 2024 and 2023, 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.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

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, Net by Component

Essex Property Trust, Inc.

($ in thousands):

			Change in fair value and amortization of swap settlements
Balance at December 31, 2023			$	33,556
Other comprehensive income before reclassification			7,715
Amounts reclassified from accumulated other comprehensive income			8
Other comprehensive income			7,723
Balance at March 31, 2024			$	41,279

Essex Portfolio, L.P.

($ in thousands):

			Change in fair value and amortization of swap settlements
Balance at December 31, 2023			$	38,646
Other comprehensive income before reclassification			7,986
Amounts reclassified from accumulated other comprehensive income			9
Other comprehensive income			7,995
Balance at March 31, 2024			$	46,641

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.

Redeemable Noncontrolling Interest

The carrying value of redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets was $32.2 million as of both March 31, 2024 and December 31, 2023, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances.

The changes in the redemption value of redeemable noncontrolling interests for the three months ended March 31, 2024 is as follows ($ in thousands):

Balance at December 31, 2023			$	32,205
Reclassification due to change in redemption value and other			(13)
Balance at March 31, 2024			$	32,192

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

Cash, Cash Equivalents and Restricted Cash

Highly liquid investments generally 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, 2024						December 31, 2023						March 31, 2023						December 31, 2022
Cash and cash equivalents - unrestricted			$	499,036					$	391,749					$	67,712					$	33,295
Cash and cash equivalents - restricted			8,834						8,585						9,446						9,386
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows			$	507,870					$	400,334					$	77,158					$	42,681

Gain Contingencies

Contingencies, commonly resulting from legal settlements, will periodically arise that may result in a gain. Gain contingencies are typically not recognized in the financial statements until all uncertainties related to the contingency have been resolved. In the case of legal settlements, the Company determines that all uncertainties have been resolved when cash or other consideration has been received by the Company. Gain contingencies resulting from legal settlements of $42.5 million and $7.7 million were recognized during the three months ended March 31, 2024 and 2023, respectively, and are included in interest and other income on the condensed consolidated statements of income and comprehensive income.

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, 2024 and Subsequent Events

Significant Transactions

Acquisitions

In March 2024, the Company acquired its joint venture partner, BEXAEW LLC's ("BEXAEW") 49.9% interest in four apartment communities, consisting of 1,480 apartment homes, valued at $505.0 million on a gross basis. Concurrent with the acquisition, the Company repaid $219.9 million of debt encumbering the properties and consolidated the communities. As a result of this acquisition, the Company realized a gain on remeasurement of co-investment of $138.3 million. Additionally, the Company recognized $1.5 million in promote income as a result of the transaction, which is included in equity income from co-investments on the condensed consolidated statements of income and comprehensive income.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

Notes Receivable

In March 2024, the Company committed to fund a $53.6 million related party bridge loan to BEX II, LLC ("BEX II"), a co-investment, in connection with the payoff of a mortgage related to one of BEX II's properties located in Southern California. The note receivable will accrue interest at the Secured Overnight Financing Rate ("SOFR") plus 1.50% and is scheduled to mature in September 2024. As of March 31, 2024, the commitment was yet to be funded and was fully funded subsequent to quarter end, in April 2024. See Note 6, Related Party Transactions, for additional details.

Senior Unsecured Debt

In March 2024, the Operating Partnership issued $350.0 million of senior unsecured notes due on April 1, 2034 with a coupon rate of 5.500% per annum (the "2034 Notes"), which are payable on April 1 and October 1 of each year, beginning on October 1, 2024. The 2034 Notes were offered to investors at a price of 99.752% of par value. The 2034 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex.

Subsequent events

Subsequent to quarter end, the Company accepted the third party sponsor’s common equity interest affiliated with its $14.7 million preferred equity investment in a stabilized community comprising 75 apartment homes located in Sunnyvale, CA. Concurrent with the closing, the Company unencumbered the property and consolidated the community on the Company’s financial statements at a $46.6 million valuation. The Company placed the preferred equity investment on non-accrual in the fourth quarter of 2023 and recorded a $3.7 million non-cash impairment related to the investment in the first quarter of 2024.

(3) Revenues

Disaggregated Revenue

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

			Three Months Ended March 31,
			2024						2023
Rental income			$	417,236					$	404,635
Other property			6,979						5,021
Management and other fees from affiliates			2,713						2,765
Total revenues			$	426,928					$	412,421

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

			Three Months Ended March 31,
			2024						2023
Southern California			$	176,002					$	166,877
Northern California			168,839						163,728
Seattle Metro			71,913						70,038
Other real estate assets (1)			7,461						9,013
Total rental and other property revenues			$	424,215					$	409,656

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

(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,
			2024						2023
Same-property (1)			$	409,819					$	395,520
Acquisitions (2)			1,598						—
Redevelopment			1,541						1,537
Non-residential/other, net (3)			11,320						12,023
Straight line rent concession (4)			(63)						576
Total rental and other property revenues			$	424,215					$	409,656

(1) Same-property includes properties that have comparable stabilized results as of January 1, 2023 and are consolidated by the Company for the three months ended March 31, 2024 and 2023. A community is 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, 2023.

(3) 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 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.

(4) Represents straight-line concessions for residential operating communities. 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 $0.8 million and $1.0 million as of March 31, 2024 and December 31, 2023, 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, 2024 that was included in the December 31, 2023 deferred revenue balance was $0.2 million, which was included in rental and other property revenue 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, 2024, the Company had $0.8 million of remaining performance obligations. The Company expects to recognize approximately 61% of these remaining performance obligations in 2024, an additional 32% through 2026, and the remaining balance thereafter.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

(4) Co-investments

The Company has joint ventures and preferred equity investments in co-investments which own, operate, and develop apartment communities and are accounted for under the equity method. As of March 31, 2024, the Company had invested in five technology co-investments and the co-investment balance of these investments was $50.5 million, and the aggregate commitment was $86.0 million. As of December 31, 2023, the Company had five technology co-investments and the co-investment balance of these investments was $44.2 million and the aggregate commitment was $86.0 million.

The carrying values of the Company's co-investments as of March 31, 2024 and December 31, 2023 are as follows ($ in thousands, except parenthetical amounts):

			Weighted Average Company Ownership Percentage (1)						March 31, 2024						December 31, 2023
Ownership interest in:
Wesco I, Wesco III, Wesco IV, Wesco V, and Wesco VI (2)			54		%				$	145,918					$	144,766
BEXAEW (3), BEX II, BEX IV, and 500 Folsom			50		%				213,998						224,119
Other (4)			52		%				86,542						68,493
Total operating and other co-investments, net									446,458						437,378
Total development co-investments			—		%				—						14,605
Total preferred interest co-investments (includes related party investments of $44.8 million and $42.7 million as of March 31, 2024 and December 31, 2023, respectively. See Note 6 - Related Party Transactions for further discussion)									552,311						544,262
Total co-investments, net									$	998,769					$	996,245

(1) Weighted average Company ownership percentages are as of March 31, 2024.

(2) As of March 31, 2024 and December 31, 2023, the Company's investments in Wesco I, Wesco III, and Wesco IV were classified as a liability of $59.6 million and $61.8 million, respectively, due to distributions in excess of the Company's investment.

(3) In March 2024, the Company acquired BEXAEW's 49.9% interest in four apartment communities consisting of 1,480 apartment homes.

(4) As of March 31, 2024 and December 31, 2023, the Company's investments in Expo and Century Towers were classified as a liability of $4.2 million and $3.7 million, respectively, due to distributions received in excess of the Company's investment. The weighted average Company ownership percentage excludes the Company's investments in non-core technology co-investments which are carried at fair value.

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

			March 31, 2024						December 31, 2023
Combined balance sheets: (1)
Rental properties and real estate under development			$	4,739,567					$	5,123,164
Other assets			295,557						279,237
Total assets			$	5,035,124					$	5,402,401
Debt			$	3,312,158					$	3,622,609
Other liabilities			312,091						317,208
Equity			1,410,875						1,462,584
Total liabilities and equity			$	5,035,124					$	5,402,401
Company's share of equity			$	998,769					$	996,245

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

			Three Months Ended March 31,
			2024						2023
Combined statements of income: (1)
Property revenues			$	106,293					$	100,593
Property operating expenses			(42,314)						(42,078)
Net operating income			63,979						58,515
Interest expense			(40,943)						(32,684)
General and administrative			(7,563)						(2,980)
Depreciation and amortization			(45,793)						(41,388)
Net loss			$	(30,320)					$	(18,537)
Company's share of net income (2)			$	12,366					$	10,871

(1) Includes preferred equity investments held by the Company and excludes investments in technology co-investments.

(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 $1.1 million and $2.0 million for the three months ended March 31, 2024 and 2023, respectively.

(5) Notes and Other Receivables

Notes and other receivables consist of the following as of March 31, 2024 and December 31, 2023 ($ in thousands):

			March 31, 2024						December 31, 2023
Note receivable, secured, bearing interest at 11.50%, due November 2024 (Originated November 2020)			$	38,801					$	37,582
Note receivable, secured, bearing interest at 9.00%, due October 2025 (Originated October 2021)			52,550						50,146
Note receivable, secured, bearing interest at 12.00%, due August 2024 (Originated August 2022)			12,116						11,743
Note receivable, secured, bearing interest at 11.25%, due October 2027 (Originated October 2022)			35,944						34,929
Notes and other receivables from affiliates (1)			5,945						6,111
Straight line rent receivables (2)			9,246						9,353
Other receivables			29,150						25,444
Allowance for credit losses			(712)						(687)
Total notes and other receivables			$	183,040					$	174,621

(1) These amounts consist of short-term loans outstanding and due from various joint ventures as of March 31, 2024 and December 31, 2023, respectively. See Note 6, Related Party Transactions, for additional details.

(2) 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 receivable, secured ($ in thousands):

			Notes Receivable, Secured
Balance at December 31, 2023			$	687
Provision for credit losses			25
Balance at March 31, 2024			$	712

No loans were placed on nonaccrual status or charged off during the three months ended March 31, 2024 or 2023.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

(6) Related Party Transactions

The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates totaled $2.8 million and $3.3 million during the three months ended March 31, 2024 and 2023, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of approximately $0.1 million and $0.5 million against general and administrative expenses for the three months ended March 31, 2024 and 2023, 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 and owns a controlling interest in Marcus & Millichap, Inc. ("MMI"), a national brokerage firm listed on the New York Stock Exchange. For the three months ended March 31, 2024 and 2023, the Company did not pay brokerage commissions related to real estate transactions to MMC and its affiliates.

In March 2024, the Company committed to fund a $53.6 million related party bridge loan to BEX II in connection with the payoff of a mortgage related to one of BEX II's properties located in Southern California. The note receivable will accrue interest at the SOFR plus 1.50% and is scheduled to mature in September 2024. As of March 31, 2024, the commitment was yet to be funded. It was fully funded subsequent to quarter end, in April 2024.

In August 2022, the Company funded an $11.2 million preferred equity investment in an entity whose sponsor includes an affiliate of MMC. The entity owns three multifamily communities located in Azusa, CA. The investment initially accrues interest based on a 9.5% preferred return and is scheduled to mature in August 2027.

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 initially accrued interest based on an 11.0% preferred return which was reduced to 9.0% upon completion and lease-up of the project. The investment was scheduled to mature in February 2024, but was paid off in December 2023.

In October 2018, the Company funded an $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 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. In April 2023, the investment's maturity date was extended from April 2024 to May 2026 with the investment accruing interest based on a 11.0% preferred return. In April 2023, the Company received cash of $11.2 million for the partial redemption of this preferred equity investment.

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% initial 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 resulting in a remaining total commitment of $13.0 million, and the maturity was extended to December 2028. As of March 31, 2024, $11.0 million of this commitment has been funded and the Company continues to accrue interest on a 9.0% preferred return. The remaining committed amount is expected to be funded if and when requested by the sponsors.

As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of March 31, 2024 and December 31, 2023, $5.9 million and $6.1 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.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

(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, 2024						December 31, 2023						Weighted Average Maturity In Years as of March 31, 2024
Term loan - variable rate, net			$	298,649					$	298,552					3.6
Bonds public offering - fixed rate, net (1)			5,367,955						5,019,979						7.1
Unsecured debt, net (2)			5,666,604						5,318,531
Lines of credit (3)			—						—
Mortgage notes payable, net (4)			886,388						887,204						7.6
Total debt, net			$	6,552,992					$	6,205,735
Weighted average interest rate on fixed rate unsecured bonds public offering			3.4		%				3.3		%
Weighted average interest rate on variable rate term loan			4.2		%				4.2		%
Weighted average interest rate on lines of credit			6.3		%				6.3		%
Weighted average interest rate on mortgage notes payable			4.3		%				4.3		%

(1) In March 2024, the Operating Partnership issued $350.0 million of senior unsecured notes due on April 1, 2034 with a coupon rate of 5.500% per annum, which are payable on April 1 and October 1 of each year, beginning on October 1, 2024. The 2034 Notes were offered to investors at a price of 99.752% of par value.

(2) Unsecured debt, net, consists of fixed rate public bond offerings and variable rate term loan which includes unamortized discount, net of premiums, of $6.6 million and $6.1 million and unamortized debt issuance costs of $26.8 million and $25.3 million, as of March 31, 2024 and December 31, 2023, respectively.

(3) Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.24 billion as of March 31, 2024, excludes unamortized debt issuance costs of $3.5 million and $3.8 million as of March 31, 2024 and December 31, 2023, respectively. These debt issuance costs are included in prepaid expenses and other assets on the condensed consolidated balance sheets. As of March 31, 2024, the Company’s $1.2 billion credit facility had an interest rate at the Adjusted Secured Overnight Financing Rate ("Adjusted SOFR") plus 0.75%, which is based on a tiered rate structure tied to the Company’s credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of January 2027 with two six-month extensions, exercisable at the Company’s option. As of March 31, 2024, the Company’s $35.0 million working capital unsecured line of credit had an interest rate of Adjusted SOFR plus 0.75%, which is based on a tiered rate structure tied to the Company’s credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of July 2024.

(4) Includes total unamortized premium, net of discounts of $0.3 million and $0.5 million, reduced by unamortized debt issuance costs of $3.0 million and $3.1 million, as of March 31, 2024 and December 31, 2023, respectively.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

The aggregate scheduled principal payments of the Company’s outstanding debt, excluding lines of credit, as of March 31, 2024 are as follows ($ in thousands):

2024			$	402,347
2025			633,054
2026			549,405
2027			803,955
2028			518,332
Thereafter			3,681,937
Total			$	6,589,030

(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.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

The revenues and NOI for each of the reportable operating segments are summarized as follows for the three months ended March 31, 2024 and 2023 ($ in thousands):

			Three Months Ended March 31,
			2024						2023
Revenues:
Southern California			$	176,002					$	166,877
Northern California			168,839						163,728
Seattle Metro			71,913						70,038
Other real estate assets			7,461						9,013
Total property revenues			$	424,215					$	409,656
Net operating income:
Southern California			$	124,333					$	116,942
Northern California			115,679						114,555
Seattle Metro			50,916						49,894
Other real estate assets			7,421						7,853
Total net operating income			298,349						289,244
Management and other fees from affiliates			2,713						2,765
Corporate-level property management expenses			(11,731)						(11,432)
Depreciation and amortization			(139,733)						(136,347)
General and administrative			(17,171)						(15,311)
Expensed acquisition and investment related costs			(68)						(339)
Casualty loss			—						(433)
Gain on sale of real estate and land			—						59,238
Interest expense			(55,933)						(51,045)
Total return swap income			796						1,033
Interest and other income			57,275						12,450
Equity income from co-investments			12,366						10,871
Tax (expense) benefit on unconsolidated co-investments			(49)						900
Gain on remeasurement of co-investment			138,326						—
Net income			$	285,140					$	161,594

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

Total assets for each of the reportable operating segments are summarized as follows as of March 31, 2024 and December 31, 2023 ($ in thousands):

			March 31, 2024						December 31, 2023
Assets:
Southern California			$	4,208,556					$	3,802,648
Northern California			5,192,173						5,242,343
Seattle Metro			1,376,656						1,333,030
Other real estate assets			92,342						92,271
Net reportable operating segment - real estate assets			10,869,727						10,470,292
Real estate under development			24,631						23,724
Co-investments			1,062,575						1,061,733
Cash and cash equivalents, including restricted cash			507,870						400,334
Marketable securities			91,295						87,795
Notes and other receivables			183,040						174,621
Operating lease right-of-use assets			62,858						63,757
Prepaid expenses and other assets			83,189						79,171
Total assets			$	12,885,185					$	12,361,427

(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, 2024																		Three Months Ended March 31, 2023
			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			$	272,731					64,205,086						$	4.25					$	153,532					64,458,535						$	2.38
Effect of Dilutive Securities:
Stock options			—						6,920												—						1,154
Diluted:
Net income available to common stockholders			$	272,731					64,212,006						$	4.25					$	153,532					64,459,689						$	2.38

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,258,812 and 2,265,893, which include vested 2014 Long-Term Incentive Plan Units and 2015 Long-Term Incentive Plan Units, for the three months ended March 31, 2024 and 2023, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $9.6 million and $5.4 million for the three months ended March 31, 2024 and 2023, respectively.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

Stock options of 395,585 and 476,748 for the three months ended March 31, 2024 and 2023, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the average unearned compensation were greater than the average market price of the common stock for the periods ended and, therefore, were anti-dilutive.

Essex Portfolio, L.P.

			Three Months Ended March 31, 2024																		Three Months Ended March 31, 2023
			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			$	282,330					66,463,899						$	4.25					$	158,936					66,724,428						$	2.38
Effect of Dilutive Securities:
Stock options			—						6,920												—						1,154
Diluted:
Net income available to common unitholders			$	282,330					66,470,819						$	4.25					$	158,936					66,725,582						$	2.38

Stock options of 395,585 and 476,748 for the three months ended March 31, 2024 and 2023, respectively, were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for the periods ended and, therefore, were anti-dilutive.

(10) Derivative Instruments and Hedging Activities

As of March 31, 2024, the Company had an interest rate swap contract with an aggregate notional amount of $300.0 million that effectively fixed the interest rate on the $300.0 million unsecured term loan at 4.2%. This derivative qualifies for hedge accounting.

As of March 31, 2024 and December 31, 2023, the swap contracts were presented in the consolidated balance sheets as an asset of $7.8 million and $4.3 million, respectively, and were included in prepaid expenses and other assets on the consolidated balance sheets.

As of March 31, 2024 and December 31, 2023, the Company had no interest rate caps.

(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.

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2024 and 2023

(Unaudited)

In late 2022 and early 2023, a number of purported class actions were filed against RealPage, Inc., a seller of revenue management software, and various lessors of multifamily housing which utilize this software, including the Company. The complaints allege collusion among defendants to artificially increase rents of multifamily residential real estate above competitive levels. The Company intends to vigorously defend against these lawsuits. Given their early stage, the Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from such matters. The Company is also subject to various other legal and/or regulatory proceedings arising in the normal course of its business operations. The Company believes that, with respect to such matters that it is currently a party to, the ultimate disposition of any such matter will not result in a material adverse effect on the Company’s financial condition, results of operations or cash flows. To the extent that such a 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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