ESSEX PROPERTY TRUST, INC. 10-K

Item 9A. Controls and Procedures Essex Property Trust, Inc. As of December 31, 2020, Essex carried out an evaluation, under the supervision and with the participation of management, including Essex's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Essex's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, Essex’s Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2020, Essex’s disclosure controls and procedures were effective to ensure that the information required to be disclosed by Essex in the reports that Essex files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that Essex files or submits under the Exchange Act is accumulated and communicated to Essex’s management, including Essex’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. There were no changes in Essex’s internal control over financial reporting, that occurred during the quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, Essex’s internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting Essex’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Essex’s management assessed the effectiveness of Essex’s internal control over financial reporting as of December 31, 2020. In making this assessment, Essex’s management used the criteria set forth in the report entitled "Internal Control-Integrated Framework (2013)" published by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Essex’s management has concluded that, as of December 31, 2020, its internal control over financial reporting was effective based on these criteria. Essex’s independent registered public accounting firm, KPMG LLP, has issued an attestation report over Essex’s internal control over financial reporting, which is included herein. Essex Portfolio, L.P. As of December 31, 2020, the Operating Partnership carried out an evaluation, under the supervision and with the participation of management, including Essex's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Operating Partnership's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2020, the Operating Partnership’s disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Operating Partnership in the reports that the Operating Partnership files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that the Operating Partnership files or submits under the Exchange Act is accumulated and communicated to the Operating Partnership’s management, including Essex's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. There were no changes in the Operating Partnership’s internal control over financial reporting, that occurred during the quarter ended December 31, 2020, that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting The Operating Partnership’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). The Operating Partnership’s management assessed the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2020. In making this assessment, the Operating Partnership’s management used the criteria set forth in the report entitled "Internal Control-Integrated Framework (2013)" published by COSO. The Operating Partnership’s management has concluded that, as of December 31, 2020, its internal control over financial reporting was effective based on these criteria. 61 Table of Contents Item 9B. Other Information None. 62 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2021 Annual Meeting of Stockholders, under the heading "Board and Corporate Governance Matters," to be filed with the SEC within 120 days of December 31, 2020. Item 11. Executive Compensation The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2021 Annual Meeting of Stockholders, under the headings "Executive Compensation" and "Director Compensation," to be filed with the SEC within 120 days of December 31, 2020. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2021 Annual Meeting of Stockholders, under the heading "Security Ownership of Certain Beneficial Owners and Management," to be filed with the SEC within 120 days of December 31, 2020. Item 13. Certain Relationships and Related Transactions and Director Independence The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2021 Annual Meeting of Stockholders, under the heading "Certain Relationships and Related Persons Transactions," to be filed with the SEC within 120 days of December 31, 2020. Item 14. Principal Accounting Fees and Services The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2021 Annual Meeting of Stockholders, under the headings "Report of the Audit Committee" and "Fees Paid to KPMG LLP," to be filed with the SEC within 120 days of December 31, 2020. 63 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (A) Financial Statements (1) Consolidated Financial Statements of Essex Property Trust, Inc. Page Reports of Independent Registered Public Accounting Firm F- 1 Consolidated Balance Sheets: As of December 31, 2020 and 2019 F- 6 Consolidated Statements of Income: Years ended December 31, 2020, 2019, and 2018 F- 7 Consolidated Statements of Comprehensive Income: Years ended December 31, 2020, 2019, and 2018 F- 8 Consolidated Statements of Equity: Years ended December 31, 2020, 2019, and 2018 F- 9 Consolidated Statements of Cash Flows: Years ended December 31, 2020, 2019, and 2018 F- 11 Notes to Consolidated Financial Statements F- 20 (2) Consolidated Financial Statements of Essex Portfolio, L.P. Report of Independent Registered Public Accounting Firm F - 4 Consolidated Balance Sheets: As of December 31, 2020 and 2019 F- 13 Consolidated Statements of Income: Years ended December 31, 2020, 2019, and 2018 F- 14 Consolidated Statements of Comprehensive Income: Years ended December 31, 2020, 2019, and 2018 F- 15 Consolidated Statements of Capital: Years ended December 31, 2020, 2019, and 2018 F- 16 Consolidated Statements of Cash Flows: Years ended December 31, 2020, 2019, and 2018 F- 18 Notes to Consolidated Financial Statements F- 20 (3) Financial Statement Schedule – Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2020 F- 58 (4) See the Exhibit Index immediately preceding the signature page and certifications for a list of exhibits filed or incorporated by reference as part of this report. (B) Exhibits The Company hereby files, as exhibits to this Form 10-K, those exhibits listed on the Exhibit Index referenced in Item 15(A)(4) above. Item 16. Form 10-K Summary None. 64 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Essex Property Trust, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Essex Property Trust, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three‑year period ended December 31, 2020, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 19, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842) and Accounting Standards Update No. 2018-11, Leases (Topic 842): Targeted Improvements. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Evaluation of events or changes in circumstances that indicate rental properties may be impaired As discussed in Note 2 to the consolidated financial statements, the Company evaluates the carrying amount of rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of a rental property may not be fully recoverable. The Company had $10.9 billion in rental properties as of December 31, 2020. F- 1 Table of Contents We identified the evaluation of events or changes in circumstances that indicate rental properties may be impaired as a critical audit matter. Specifically, a high degree of subjective and complex auditor judgment was required to evaluate the intent regarding the expected period the Company will receive cash flows from the rental property. Changes to shorten the expected period the Company will receive cash flows from the rental property could indicate a potential impairment. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to evaluate events or changes in circumstances that would indicate rental properties may be impaired. This included controls over the process for determining the expected period the Company will receive cash flows from the rental property. We evaluated the Company’s assessment by (1) inquiring with the Company about events or changes in circumstances considered by the Company, (2) considering certain factors related to the current economic environment, and (3) reading board of director’s minutes and external communications with investors and analysts. In addition, we observed the property conditions at certain rental property sites and inquired of property management personnel regarding events or changes in circumstances that indicate the rental properties may be impaired. Evaluation of the value allocated to land and buildings in certain asset acquisitions As discussed in Notes 2 and 3 to the consolidated financial statements, the Company acquired $463.4 million of real estate properties recorded as asset acquisitions for the year ended December 31, 2020. In asset acquisitions, the Company determines the value allocated to land and buildings using their relative estimated fair values. We identified the evaluation of the value allocated to land and buildings in certain asset acquisitions as a critical audit matter. There was a high degree of subjective and complex auditor judgment in evaluating the fair value amounts used in the allocation of the purchase price to land and building, which required the assistance of valuation professionals with specialized skills and knowledge. Specifically, the relevance and reliability of market information including comparable land sales identified and replacement costs used to determine the building value. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s land and building value estimation process in asset acquisitions. This included controls over the identification of publicly available and comparable land sales and the key input used to estimate the replacement cost of the building. For certain asset acquisitions, with the assistance of valuation professionals with specialized skills and knowledge, we (1) compared the Company’s determination of the fair value of land to independently developed ranges of estimates based on publicly available land sales, and (2) compared the key input in the Company’s replacement building cost value to ranges of estimates of market data such as industry guides used for developing replacement building values. /s/ KPMG LLP We have served as the Company’s auditor since 1994. San Francisco, California February 19, 2021 F- 2 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Essex Property Trust, Inc.: Opinion on Internal Control Over Financial Reporting We have audited Essex Property Trust, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 19, 2021 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP San Francisco, California February 19, 2021 F- 3 Table of Contents Report of Independent Registered Public Accounting Firm To the Partners of Essex Portfolio, L.P. and the Board of Directors of Essex Property Trust, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Essex Portfolio, L.P. and subsidiaries (the Operating Partnership) as of December 31, 2020 and 2019, the related consolidated statements of income, comprehensive income, capital, and cash flows for each of the years in the three‑year period ended December 31, 2020, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles. Change in Accounting Principle As discussed in Note 2 to the consolidated financial statements, the Operating Partnership has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update No. 2016-02, Leases (Topic 842) and Accounting Standards Update No. 2018-11, Leases (Topic 842): Targeted Improvement s. Basis for Opinion These consolidated financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Evaluation of events or changes in circumstances that indicate rental properties may be impaired As discussed in Note 2 to the consolidated financial statements, the Operating Partnership evaluates the carrying amount of rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of a rental property may not be fully recoverable. The Operating Partnership had $10.9 billion in rental properties as of December 31, 2020. F- 4 Table of Contents We identified the evaluation of events or changes in circumstances that indicate rental properties may be impaired as a critical audit matter. Specifically, a high degree of subjective and complex auditor judgment was required to evaluate the intent regarding the expected period the Operating Partnership will receive cash flows from the rental property. Changes to shorten the expected period the Operating Partnership will receive cash flows from the rental property could indicate a potential impairment. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Operating Partnership’s process to evaluate events or changes in circumstances that would indicate rental properties may be impaired. This included controls over the process for determining the expected period the Operating Partnership will receive cash flows from the rental property. We evaluated the Operating Partnership’s assessment by (1) inquiring with the Operating Partnership about events or changes in circumstances considered by the Operating Partnership, (2) considering certain factors related to the current economic environment, and (3) reading board of director’s minutes and external communications with investors and analysts. In addition, we observed the property conditions at certain rental property sites and inquired of property management personnel regarding events or changes in circumstances that indicate the rental properties may be impaired. Evaluation of the value allocated to land and buildings in certain asset acquisitions As discussed in Notes 2 and 3 to the consolidated financial statements, the Operating Partnership acquired $463.4 million of real estate properties recorded as asset acquisitions for the year ended December 31, 2020. In asset acquisitions, the Operating Partnership determines the value allocated to land and buildings using their relative estimated fair values. We identified the evaluation of the value allocated to land and buildings in certain asset acquisitions as a critical audit matter. There was a high degree of subjective and complex auditor judgment in evaluating the fair value amounts used in the allocation of the purchase price to land and building, which required the assistance of valuation professionals with specialized skills and knowledge. Specifically, the relevance and reliability of market information including comparable land sales identified and replacement costs used to determine the building value. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Operating Partnership’s land and building value estimation process in asset acquisitions. This included controls over the identification of publicly available and comparable land sales and the key input used to estimate the replacement cost of the building. For certain asset acquisitions, with the assistance of valuation professionals with specialized skills and knowledge, we (1) compared the Operating Partnership’s determination of the fair value of land to independently developed ranges of estimates based on publicly available land sales, and (2) compared the key input in the Operating Partnership’s replacement building cost value to ranges of estimates of market data such as industry guides used for developing replacement building values. /s/ KPMG LLP We have served as the Operating Partnership's auditor since 2013. San Francisco, California February 19, 2021 F- 5 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2020 and 2019 (Dollars in thousands, except share amounts) 2020 2019 ASSETS Real estate: Rental properties: Land and land improvements $ 2,929,009 $ 2,773,805 Buildings and improvements 12,132,736 11,264,337 15,061,745 14,038,142 Less: accumulated depreciation ( 4,133,959 ) ( 3,689,482 ) 10,927,786 10,348,660 Real estate under development 386,047 546,075 Co-investments 1,018,010 1,335,339 Real estate held for sale 57,938 — 12,389,781 12,230,074 Cash and cash equivalents-unrestricted 73,629 70,087 Cash and cash equivalents-restricted 10,412 11,007 Marketable securities, net of allowance for credit losses of zero as of both December 31, 2020 and December 31, 2019 147,768 144,193 Notes and other receivables, net of allowance for credit losses of $ 0.8 million and zero as of December 31, 2020 and December 31, 2019, respectively (includes related party receivables of $ 4.7 million and $ 90.2 million as of December 31, 2020 and December 31, 2019, respectively) 195,104 134,365 Operating lease right-of-use assets 72,143 74,744 Prepaid expenses and other assets 47,340 40,935 Total assets $ 12,936,177 $ 12,705,405 LIABILITIES AND EQUITY Unsecured debt, net $ 5,607,985 $ 4,763,206 Mortgage notes payable, net 643,550 990,667 Lines of credit — 55,000 Accounts payable and accrued liabilities 152,855 158,017 Construction payable 31,417 48,912 Dividends payable 141,917 135,384 Operating lease liabilities 74,037 76,740 Liabilities associated with real estate held for sale 29,845 — Other liabilities 39,140 36,565 Total liabilities 6,720,746 6,264,491 Commitments and contingencies Redeemable noncontrolling interest 32,239 37,410 Equity: Common stock; $ 0.0001 par value, 670,000,000 shares authorized; 64,999,015 and 66,091,954 shares issued and outstanding, respectively 6 7 Additional paid-in capital 6,876,326 7,121,927 Distributions in excess of accumulated earnings ( 861,193 ) ( 887,619 ) Accumulated other comprehensive loss, net ( 14,729 ) ( 13,888 ) Total stockholders' equity 6,000,410 6,220,427 Noncontrolling interest 182,782 183,077 Total equity 6,183,192 6,403,504 Total liabilities and equity $ 12,936,177 $ 12,705,405 See accompanying notes to consolidated financial statements. F- 6 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Income Years ended December 31, 2020, 2019 and 2018 (Dollars in thousands, except per share and share amounts) 2020 2019 2018 Revenues: Rental and other property $ 1,486,150 $ 1,450,628 $ 1,390,870 Management and other fees from affiliates 9,598 9,527 9,183 1,495,748 1,460,155 1,400,053 Expenses: Property operating, excluding real estate taxes 263,389 241,357 232,771 Real estate taxes 177,011 155,170 151,570 Corporate-level property management expenses 34,573 34,067 32,055 Depreciation and amortization 525,497 483,750 479,884 General and administrative 65,388 54,262 53,451 Expensed acquisition and investment related costs 1,591 168 194 Impairment loss 1,825 7,105 — 1,069,274 975,879 949,925 Gain (loss) on sale of real estate and land 64,967 ( 3,164 ) 61,861 Earnings from operations 491,441 481,112 511,989 Interest expense ( 220,633 ) ( 217,339 ) ( 220,492 ) Total return swap income 10,733 8,446 8,707 Interest and other income 40,999 46,298 23,010 Equity income from co-investments 66,512 112,136 89,132 Deferred tax expense on unrealized gain on unconsolidated co-investment ( 1,531 ) ( 1,457 ) — (Loss) gain on early retirement of debt, net ( 22,883 ) 3,717 — Gain on remeasurement of co-investment 234,694 31,535 1,253 Net income 599,332 464,448 413,599 Net income attributable to noncontrolling interest ( 30,462 ) ( 25,162 ) ( 23,446 ) Net income available to common stockholders $ 568,870 $ 439,286 $ 390,153 Per share data: Basic: Net income available to common stockholders $ 8.69 $ 6.67 $ 5.91 Weighted average number of shares outstanding during the year 65,454,057 65,840,422 66,041,058 Diluted: Net income available to common stockholders $ 8.69 $ 6.66 $ 5.90 Weighted average number of shares outstanding during the year 65,564,982 65,939,455 66,085,089 See accompanying notes to consolidated financial statements. F- 7 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income Years ended December 31, 2020, 2019 and 2018 (Dollars in thousands) 2020 2019 2018 Net income $ 599,332 $ 464,448 $ 413,599 Other comprehensive income (loss): Change in fair value of derivatives and amortization of swap settlements ( 4,148 ) ( 2,948 ) 7,824 Cash flow hedge losses reclassified to earnings 3,338 1,824 — Change in fair value of marketable debt securities, net ( 61 ) 281 ( 118 ) Reversal of unrealized (gains) losses upon the sale of marketable debt securities — ( 32 ) 13 Total other comprehensive (loss) income ( 871 ) ( 875 ) 7,719 Comprehensive income 598,461 463,573 421,318 Comprehensive income attributable to noncontrolling interest ( 30,432 ) ( 25,133 ) ( 23,702 ) Comprehensive income attributable to controlling interest $ 568,029 $ 438,440 $ 397,616 See accompanying notes to consolidated financial statements. F- 8 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Equity Years ended December 31, 2020, 2019 and 2018 (Dollars and shares in thousands) Common stock Additional paid-in capital Distributions in excess of accumulated earnings Accumulated other comprehensive loss, net Noncontrolling interest Total Shares Amount Balances at December 31, 2017 66,054 $ 7 $ 7,129,571 $ ( 833,726 ) $ ( 18,446 ) $ 119,419 $ 6,396,825 Net income — — — 390,153 — 23,446 413,599 Reversal of unrealized losses upon the sale of marketable securities — — — — 13 — 13 Change in fair value of derivatives and amortization of swap settlements — — — — 7,564 260 7,824 Change in fair value of marketable debt securities, net — — — — ( 114 ) ( 4 ) ( 118 ) Issuance of common stock under: — Stock option and restricted stock plans, net 41 — 6,213 — — — 6,213 Sale of common stock, net — — ( 919 ) — — — ( 919 ) Equity based compensation costs — — 11,651 — — 1,200 12,851 Retirement of common stock, net ( 210 ) — ( 51,233 ) — — — ( 51,233 ) Cumulative effect upon adoption of ASU No. 2016-01 — — — 2,234 ( 2,234 ) — — Cumulative effect upon adoption of ASU No. 2017-05 — — — 119,651 — 4,057 123,708 Changes in the redemption value of redeemable noncontrolling interest — — ( 1,143 ) — — ( 21 ) ( 1,164 ) Changes in noncontrolling interest from acquisition — — — — — 7,919 7,919 Distributions to noncontrolling interest — — — — — ( 29,233 ) ( 29,233 ) Redemptions of noncontrolling interest 5 — ( 1,061 ) — — ( 272 ) ( 1,333 ) Common stock dividends ($ 7.44 per share) — — — ( 491,108 ) — — ( 491,108 ) Balances at December 31, 2018 65,890 $ 7 $ 7,093,079 $ ( 812,796 ) $ ( 13,217 ) $ 126,771 $ 6,393,844 Net income — — — 439,286 — 25,162 464,448 Reversal of unrealized gains upon the sale of marketable debt securities — — — — ( 31 ) ( 1 ) ( 32 ) Cash flow hedge losses reclassified to earnings — — — — 1,762 62 1,824 Change in fair value of derivatives and amortization of swap settlements — — — — ( 2,849 ) ( 99 ) ( 2,948 ) Change in fair value of marketable debt securities, net — — — — 272 9 281 Issuance of common stock under: — F- 9 Table of Contents Stock option and restricted stock plans, net 195 — 33,779 — — — 33,779 Sale of common stock, net 228 — 72,539 — — — 72,539 Equity based compensation costs — — 11,029 — — 1,254 12,283 Retirement of common stock, net ( 234 ) — ( 56,989 ) — — — ( 56,989 ) Cumulative effect upon adoption of ASU No. 2017-12 — — — — 175 6 181 Changes in the redemption value of redeemable noncontrolling interest — — ( 3,427 ) — — 1,419 ( 2,008 ) Changes in noncontrolling interest from acquisition — — — — — 65,472 65,472 Distributions to noncontrolling interest — — — — — ( 28,493 ) ( 28,493 ) Redemptions of noncontrolling interest 13 — ( 28,083 ) — — ( 8,485 ) ( 36,568 ) Common stock dividends ($ 7.80 per share) — — — ( 514,109 ) — — ( 514,109 ) Balances at December 31, 2019 66,092 $ 7 $ 7,121,927 $ ( 887,619 ) $ ( 13,888 ) $ 183,077 $ 6,403,504 Net income — — — 568,870 — 30,462 599,332 Cash flow hedge losses reclassified to earnings — — — — 3,225 113 3,338 Change in fair value of derivatives and amortization of swap settlements — — — — ( 4,007 ) ( 141 ) ( 4,148 ) Change in fair value of marketable debt securities, net — — — — ( 59 ) ( 2 ) ( 61 ) Issuance of common stock under: — Stock option and restricted stock plans, net 95 — 9,201 — — — 9,201 Sale of common stock, net — — ( 296 ) — — — ( 296 ) Equity based compensation costs — — 12,453 — — 460 12,913 Retirement of common stock, net ( 1,197 ) ( 1 ) ( 269,314 ) — — — ( 269,315 ) Cumulative effect upon adoption of ASU No. 2016-13 — — — ( 190 ) — — ( 190 ) Changes in the redemption value of redeemable noncontrolling interest — — 4,375 — — ( 76 ) 4,299 Changes in noncontrolling interest from acquisition — — — — — 1,349 1,349 Distributions to noncontrolling interest — — — — — ( 31,367 ) ( 31,367 ) Redemptions of noncontrolling interest 9 — ( 2,020 ) — — ( 1,093 ) ( 3,113 ) Common stock dividends ($ 8.31 per share) — — — ( 542,254 ) — — ( 542,254 ) Balances at December 31, 2020 64,999 $ 6 $ 6,876,326 $ ( 861,193 ) $ ( 14,729 ) $ 182,782 $ 6,183,192 See accompanying notes to consolidated financial statements. F- 10 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2020, 2019 and 2018 (Dollars in thousands) 2020 2019 2018 Cash flows from operating activities: Net income $ 599,332 $ 464,448 $ 413,599 Adjustments to reconcile net income to net cash provided by operating activities: Straight-lined rents ( 19,426 ) ( 1,218 ) ( 347 ) Depreciation and amortization 525,497 483,750 479,884 Amortization of discount on marketable securities ( 19,075 ) ( 28,491 ) ( 17,637 ) Amortization of (premium) discount and debt financing costs, net 6,674 5,689 ( 2,587 ) Gain on sale of marketable securities ( 2,131 ) ( 1,271 ) ( 737 ) Provision for credit losses 687 — — Unrealized (gains) losses on equity securities recognized through income ( 12,515 ) ( 5,710 ) 5,159 Company's share of gain on the sales of co-investments ( 2,225 ) ( 51,097 ) ( 10,569 ) Earnings from co-investments ( 64,287 ) ( 61,039 ) ( 78,563 ) Operating distributions from co-investments 74,419 99,277 99,593 Accrued interest from notes and other receivables ( 3,683 ) ( 6,012 ) ( 5,436 ) Impairment loss 1,825 7,105 — (Gain) loss on the sale of real estate and land ( 64,967 ) 3,164 ( 61,861 ) Equity-based compensation 8,157 7,010 7,135 Loss (gain) on early retirement of debt, net 22,883 ( 3,717 ) — Gain on remeasurement of co-investment ( 234,694 ) ( 31,535 ) ( 1,253 ) Changes in operating assets and liabilities: Prepaid expenses, receivables, operating lease right-of-use assets, and other assets ( 3,730 ) 6,969 ( 856 ) Accounts payable, accrued liabilities, and operating lease liabilities ( 10,382 ) 29,551 ( 145 ) Other liabilities 749 2,206 1,175 Net cash provided by operating activities 803,108 919,079 826,554 Cash flows from investing activities: Additions to real estate: Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired ( 460,421 ) ( 133,825 ) ( 15,311 ) Redevelopment ( 48,980 ) ( 70,295 ) ( 73,000 ) Development acquisitions of and additions to real estate under development ( 108,781 ) ( 158,234 ) ( 182,772 ) Capital expenditures on rental properties ( 90,085 ) ( 101,689 ) ( 81,684 ) Investments in notes receivable ( 135,343 ) ( 231,400 ) — Collections of notes and other receivables 98,711 168,720 29,500 Proceeds from insurance for property losses 723 3,734 1,408 Proceeds from dispositions of real estate 339,165 23,214 347,587 Contributions to co-investments ( 114,017 ) ( 402,284 ) ( 162,437 ) Changes in refundable deposits 96 5 ( 414 ) Purchases of marketable securities ( 83,379 ) ( 46,458 ) ( 37,952 ) Sales and maturities of marketable securities 113,465 147,531 31,521 Non-operating distributions from co-investments 71,946 273,290 83,661 F- 11 Table of Contents Net cash used in investing activities ( 416,900 ) ( 527,691 ) ( 59,893 ) Cash flows from financing activities: Proceeds from unsecured debt and mortgage notes 1,452,808 1,045,290 298,773 Payments on unsecured debt and mortgage notes ( 916,209 ) ( 1,026,616 ) ( 230,398 ) Proceeds from lines of credit 1,038,426 1,939,213 742,961 Repayments of lines of credit ( 1,093,426 ) ( 1,884,213 ) ( 921,961 ) Retirement of common stock ( 269,315 ) ( 56,989 ) ( 51,233 ) Additions to deferred charges ( 13,772 ) ( 10,898 ) ( 4,250 ) Payments related to debt prepayment penalties ( 19,605 ) ( 1,406 ) — Net proceeds from issuance of common stock ( 296 ) 72,539 ( 919 ) Net proceeds from stock options exercised 14,865 37,467 6,213 Payments related to tax withholding for share-based compensation ( 5,664 ) ( 3,688 ) ( 869 ) Distributions to noncontrolling interest ( 30,990 ) ( 27,993 ) ( 29,050 ) Redemption of noncontrolling interest ( 3,113 ) ( 36,568 ) ( 1,333 ) Redemption of redeemable noncontrolling interest ( 872 ) ( 73 ) ( 144 ) Common stock dividends paid ( 536,098 ) ( 507,754 ) ( 484,182 ) Net cash used in financing activities ( 383,261 ) ( 461,689 ) ( 676,392 ) Net increase (decrease) in unrestricted and restricted cash and cash equivalents 2,947 ( 70,301 ) 90,269 Unrestricted and restricted cash and cash equivalents at beginning of period 81,094 151,395 61,126 Unrestricted and restricted cash and cash equivalents at end of period $ 84,041 $ 81,094 $ 151,395 Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest $ 211,732 $ 194,418 $ 203,803 Interest capitalized $ 14,615 $ 24,169 $ 18,708 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 6,892 $ 6,811 $ — Supplemental disclosure of noncash investing and financing activities: Issuance of Operating Partnership units for contributed properties $ — $ — $ 7,919 Issuance of DownREIT units in connection with acquisition of real estate $ — $ 65,472 $ — Transfers between real estate under development and rental properties, net $ 253,039 $ 19,812 $ 100,415 Transfer from real estate under development to co-investments $ 1,739 $ 671 $ 853 Reclassifications (from) to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest $ ( 4,299 ) $ 2,008 $ 1,165 Redemption of redeemable noncontrolling interest via reduction of note receivable $ — $ — $ 4,751 Initial recognition of operating lease right-of-use assets $ — $ 77,645 $ — Initial recognition of operating lease liabilities $ — $ 79,693 $ — Debt assumed in connection with acquisition $ — $ 143,006 $ 45,804 Repayment of mortgage note from new financing proceeds $ — $ — $ 52,000 See accompanying notes to consolidated financial statements F- 12 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2020 and 2019 (Dollars in thousands, except per unit amounts) 2020 2019 ASSETS Real estate: Rental properties: Land and land improvements $ 2,929,009 $ 2,773,805 Buildings and improvements 12,132,736 11,264,337 15,061,745 14,038,142 Less: accumulated depreciation ( 4,133,959 ) ( 3,689,482 ) 10,927,786 10,348,660 Real estate under development 386,047 546,075 Co-investments 1,018,010 1,335,339 Real estate held for sale 57,938 — 12,389,781 12,230,074 Cash and cash equivalents-unrestricted 73,629 70,087 Cash and cash equivalents-restricted 10,412 11,007 Marketable securities, net of allowance for credit losses of zero as of both December 31, 2020 and December 31, 2019 147,768 144,193 Notes and other receivables, net of allowance for credit losses of $ 0.8 million and zero as of December 31, 2020 and December 31, 2019, respectively (includes related party receivables of $ 4.7 million and $ 90.2 million as of December 31, 2020 and December 31, 2019, respectively) 195,104 134,365 Operating lease right-of-use assets 72,143 74,744 Prepaid expenses and other assets 47,340 40,935 Total assets $ 12,936,177 $ 12,705,405 LIABILITIES AND CAPITAL Unsecured debt, net $ 5,607,985 $ 4,763,206 Mortgage notes payable, net 643,550 990,667 Lines of credit — 55,000 Accounts payable and accrued liabilities 152,855 158,017 Construction payable 31,417 48,912 Distributions payable 141,917 135,384 Operating lease liabilities 74,037 76,740 Liabilities associated with real estate held for sale 29,845 — Other liabilities 39,140 36,565 Total liabilities 6,720,746 6,264,491 Commitments and contingencies Redeemable noncontrolling interest 32,239 37,410 Capital: General Partner: Common equity ( 64,999,015 and 66,091,954 units issued and outstanding, respectively) 6,015,139 6,234,315 6,015,139 6,234,315 Limited Partners: Common equity ( 2,294,760 and 2,301,653 units issued and outstanding, respectively) 58,184 57,359 Accumulated other comprehensive loss ( 11,303 ) ( 10,432 ) Total partners' capital 6,062,020 6,281,242 Noncontrolling interest 121,172 122,262 Total capital 6,183,192 6,403,504 Total liabilities and capital $ 12,936,177 $ 12,705,405 See accompanying notes to consolidated financial statements F- 13 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Statements of Income Years ended December 31, 2020, 2019, and 2018 (Dollars in thousands, except per unit and unit amounts) 2020 2019 2018 Revenues: Rental and other property $ 1,486,150 $ 1,450,628 $ 1,390,870 Management and other fees from affiliates 9,598 9,527 9,183 1,495,748 1,460,155 1,400,053 Expenses: Property operating, excluding real estate taxes 263,389 241,357 232,771 Real estate taxes 177,011 155,170 151,570 Corporate-level property management expenses 34,573 34,067 32,055 Depreciation and amortization 525,497 483,750 479,884 General and administrative 65,388 54,262 53,451 Expensed acquisition and investment related costs 1,591 168 194 Impairment loss 1,825 7,105 — 1,069,274 975,879 949,925 Gain (loss) on sale of real estate and land 64,967 ( 3,164 ) 61,861 Earnings from operations 491,441 481,112 511,989 Interest expense ( 220,633 ) ( 217,339 ) ( 220,492 ) Total return swap income 10,733 8,446 8,707 Interest and other income 40,999 46,298 23,010 Equity income from co-investments 66,512 112,136 89,132 Deferred tax expense on unrealized gain on unconsolidated co-investment ( 1,531 ) ( 1,457 ) — (Loss) gain on early retirement of debt, net ( 22,883 ) 3,717 — Gain on remeasurement of co-investment 234,694 31,535 1,253 Net income 599,332 464,448 413,599 Net income attributable to noncontrolling interest ( 10,550 ) ( 9,819 ) ( 9,994 ) Net income available to common unitholders $ 588,782 $ 454,629 $ 403,605 Per unit data: Basic: Net income available to common unitholders $ 8.69 $ 6.67 $ 5.91 Weighted average number of common units outstanding during the year 67,750,665 68,140,900 68,315,999 Diluted: Net income available to common unitholders $ 8.69 $ 6.66 $ 5.90 Weighted average number of common units outstanding during the year 67,861,590 68,239,933 68,360,030 See accompanying notes to consolidated financial statements F- 14 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income Years Ended December 31, 2020, 2019, and 2018 (Dollars in thousands) 2020 2019 2018 Net income $ 599,332 $ 464,448 $ 413,599 Other comprehensive income (loss): Change in fair value of derivatives and amortization of swap settlements ( 4,148 ) ( 2,948 ) 7,824 Cash flow hedge losses reclassified to earnings 3,338 1,824 — Change in fair value of marketable debt securities, net ( 61 ) 281 ( 118 ) Reversal of unrealized (gains) losses upon the sale of marketable debt securities — ( 32 ) 13 Total other comprehensive (loss) income ( 871 ) ( 875 ) 7,719 Comprehensive income 598,461 463,573 421,318 Comprehensive income attributable to noncontrolling interest ( 10,550 ) ( 9,819 ) ( 9,994 ) Comprehensive income attributable to controlling interest $ 587,911 $ 453,754 $ 411,324 See accompanying notes to consolidated financial statements. F- 15 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Statements of Capital Years ended December 31, 2020, 2019, and 2018 (Dollars and units in thousands) Accumulated other comprehensive loss, net General Partner Limited Partners Noncontrolling interest Total Common Equity Common Equity Units Amount Units Amount Balances at December 31, 2017 66,054 $ 6,295,852 2,268 $ 49,792 $ ( 15,229 ) $ 66,410 $ 6,396,825 Net income — 390,153 — 13,452 — 9,994 413,599 Reversal of unrealized gains upon the sale of marketable debt securities — — — — 13 — 13 Change in fair value of derivatives and amortization of swap settlements — — — — 7,824 — 7,824 Change in fair value of marketable debt securities, net — — — — ( 118 ) — ( 118 ) Issuance of common units under: — General partner's stock based compensation, net 41 6,213 — — — — 6,213 Sale of common stock by general partner, net — ( 919 ) — — — — ( 919 ) Equity based compensation costs — 11,651 11 1,200 — — 12,851 Retirement of common units, net ( 210 ) ( 51,233 ) — — — — ( 51,233 ) Cumulative effect upon adoption of ASU No. 2016-01 — 2,234 — ( 6 ) ( 2,228 ) — — Cumulative effect upon adoption of ASU No. 2017-05 — 119,651 — 4,057 — — 123,708 Changes in redemption value of redeemable noncontrolling interest — ( 1,143 ) — ( 89 ) — 68 ( 1,164 ) Changes in noncontrolling interest from acquisition — — 31 7,919 — — 7,919 Distributions to noncontrolling interest — — — — — ( 12,174 ) ( 12,174 ) Redemptions 5 ( 1,061 ) ( 5 ) ( 205 ) — ( 67 ) ( 1,333 ) Distributions declared ($ 7.44 per unit) — ( 491,108 ) — ( 17,059 ) — — ( 508,167 ) Balances at December 31, 2018 65,890 $ 6,280,290 2,305 $ 59,061 $ ( 9,738 ) $ 64,231 $ 6,393,844 Net income — 439,286 — 15,343 — 9,819 464,448 Reversal of unrealized gains upon the sale of marketable debt securities — — — — ( 32 ) — ( 32 ) Cash flow hedge losses reclassified to earnings — — — — 1,824 — 1,824 Change in fair value of derivatives and amortization of swap settlements — — — — ( 2,948 ) — ( 2,948 ) Change in fair value of marketable debt securities, net — — — — 281 — 281 Issuance of common units under: F- 16 Table of Contents General partner's stock based compensation, net 195 33,779 — — — — 33,779 Sale of common stock by general partner, net 228 72,539 — — — — 72,539 Equity based compensation costs — 11,029 10 1,254 — — 12,283 Retirement of common units, net ( 234 ) ( 56,989 ) — — — — ( 56,989 ) Cumulative effect upon adoption of ASU No. 2017-12 — — — — 181 — 181 Changes in the redemption value of redeemable noncontrolling interest — ( 3,427 ) — 109 — 1,310 ( 2,008 ) Changes in noncontrolling interest from acquisition — — — — — 65,472 65,472 Distributions to noncontrolling interest — — — — — ( 10,521 ) ( 10,521 ) Redemptions 13 ( 28,083 ) ( 13 ) ( 436 ) — ( 8,049 ) ( 36,568 ) Distributions declared ($ 7.80 per unit) — ( 514,109 ) — ( 17,972 ) — — ( 532,081 ) Balances at December 31, 2019 66,092 $ 6,234,315 2,302 $ 57,359 $ ( 10,432 ) $ 122,262 $ 6,403,504 Net income — 568,870 — 19,912 — 10,550 599,332 Cash flow hedge losses reclassified to earnings — — — — 3,338 — 3,338 Change in fair value of derivatives and amortization of swap settlements — — — — ( 4,148 ) — ( 4,148 ) Change in fair value of marketable debt securities, net — — — — ( 61 ) — ( 61 ) Issuance of common units under: — General partner's stock based compensation, net 95 9,201 — — — — 9,201 Sale of common stock by general partner, net — ( 296 ) — — — — ( 296 ) Equity based compensation costs — 12,453 2 460 — — 12,913 Retirement of common units, net ( 1,197 ) ( 269,315 ) — — — — ( 269,315 ) Cumulative effect upon adoption of ASU No. 2016-13 — ( 190 ) — — — — ( 190 ) Changes in the redemption value of redeemable noncontrolling interest — 4,375 — ( 197 ) — 121 4,299 Changes in noncontrolling interest from acquisition — — — — — 1,349 1,349 Distributions to noncontrolling interest — — — — — ( 12,292 ) ( 12,292 ) Redemptions 9 ( 2,020 ) ( 9 ) ( 275 ) — ( 818 ) ( 3,113 ) Distributions declared ($ 8.31 per unit) — ( 542,254 ) — ( 19,075 ) — — ( 561,329 ) Balances at December 31, 2020 64,999 $ 6,015,139 2,295 $ 58,184 $ ( 11,303 ) $ 121,172 $ 6,183,192 See accompanying notes to consolidated financial statements F- 17 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2020, 2019, and 2018 (Dollars in thousands) 2020 2019 2018 Cash flows from operating activities: Net income $ 599,332 $ 464,448 $ 413,599 Adjustments to reconcile net income to net cash provided by operating activities: Straight-lined rents ( 19,426 ) ( 1,218 ) ( 347 ) Depreciation and amortization 525,497 483,750 479,884 Amortization of discount on marketable securities ( 19,075 ) ( 28,491 ) ( 17,637 ) Amortization of (premium) discount and debt financing costs, net 6,674 5,689 ( 2,587 ) Gain on sale of marketable securities ( 2,131 ) ( 1,271 ) ( 737 ) Provision for credit losses 687 — — Unrealized (gains) losses on equity securities recognized through income ( 12,515 ) ( 5,710 ) 5,159 Company's share of gain on the sales of co-investments ( 2,225 ) ( 51,097 ) ( 10,569 ) Earnings from co-investments ( 64,287 ) ( 61,039 ) ( 78,563 ) Operating distributions from co-investments 74,419 99,277 99,593 Accrued interest from notes and other receivables ( 3,683 ) ( 6,012 ) ( 5,436 ) Impairment loss 1,825 7,105 — (Gain) loss on the sale of real estate and land ( 64,967 ) 3,164 ( 61,861 ) Equity-based compensation 8,157 7,010 7,135 Loss (gain) on early retirement of debt, net 22,883 ( 3,717 ) — Gain on remeasurement of co-investment ( 234,694 ) ( 31,535 ) ( 1,253 ) Changes in operating assets and liabilities: Prepaid expenses, receivables, operating lease right-of-use assets, and other assets ( 3,730 ) 6,969 ( 856 ) Accounts payable, accrued liabilities, and operating lease liabilities ( 10,382 ) 29,551 ( 145 ) Other liabilities 749 2,206 1,175 Net cash provided by operating activities 803,108 919,079 826,554 Cash flows from investing activities: Additions to real estate: Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired ( 460,421 ) ( 133,825 ) ( 15,311 ) Redevelopment ( 48,980 ) ( 70,295 ) ( 73,000 ) Development acquisitions of and additions to real estate under development ( 108,781 ) ( 158,234 ) ( 182,772 ) Capital expenditures on rental properties ( 90,085 ) ( 101,689 ) ( 81,684 ) Investments in notes receivable ( 135,343 ) ( 231,400 ) — Collections of notes and other receivables 98,711 168,720 29,500 Proceeds from insurance for property losses 723 3,734 1,408 Proceeds from dispositions of real estate 339,165 23,214 347,587 Contributions to co-investments ( 114,017 ) ( 402,284 ) ( 162,437 ) Changes in refundable deposits 96 5 ( 414 ) Purchases of marketable securities ( 83,379 ) ( 46,458 ) ( 37,952 ) Sales and maturities of marketable securities 113,465 147,531 31,521 Non-operating distributions from co-investments 71,946 273,290 83,661 F- 18 Table of Contents Net cash used in investing activities ( 416,900 ) ( 527,691 ) ( 59,893 ) Cash flows from financing activities: Proceeds from unsecured debt and mortgage notes 1,452,808 1,045,290 298,773 Payments on unsecured debt and mortgage notes ( 916,209 ) ( 1,026,616 ) ( 230,398 ) Proceeds from lines of credit 1,038,426 1,939,213 742,961 Repayments of lines of credit ( 1,093,426 ) ( 1,884,213 ) ( 921,961 ) Retirement of common units ( 269,315 ) ( 56,989 ) ( 51,233 ) Additions to deferred charges ( 13,772 ) ( 10,898 ) ( 4,250 ) Payments related to debt prepayment penalties ( 19,605 ) ( 1,406 ) — Net proceeds from issuance of common units ( 296 ) 72,539 ( 919 ) Net proceeds from stock options exercised 14,865 37,467 6,213 Payments related to tax withholding for share-based compensation ( 5,664 ) ( 3,688 ) ( 869 ) Distributions to noncontrolling interest ( 8,409 ) ( 7,288 ) ( 8,518 ) Redemption of noncontrolling interests ( 3,113 ) ( 36,568 ) ( 1,333 ) Redemption of redeemable noncontrolling interests ( 872 ) ( 73 ) ( 144 ) Common units distributions paid ( 558,679 ) ( 528,459 ) ( 504,714 ) Net cash used in financing activities ( 383,261 ) ( 461,689 ) ( 676,392 ) Net increase (decrease) in unrestricted and restricted cash and cash equivalents 2,947 ( 70,301 ) 90,269 Unrestricted and restricted cash and cash equivalents at beginning of period 81,094 151,395 61,126 Unrestricted and restricted cash and cash equivalents at end of period $ 84,041 $ 81,094 $ 151,395 Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest $ 211,732 $ 194,418 $ 203,803 Interest capitalized $ 14,615 $ 24,169 $ 18,708 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 6,892 $ 6,811 $ — Supplemental disclosure of noncash investing and financing activities: Issuance of Operating Partnership units for contributed properties $ — $ — $ 7,919 Issuance of DownREIT units in connection with acquisition of real estate $ — $ 65,472 $ — Transfers between real estate under development and rental properties, net $ 253,039 $ 19,812 $ 100,415 Transfer from real estate under development to co-investments $ 1,739 $ 671 $ 853 Reclassifications (from) to redeemable noncontrolling interest from general and limited partner capital and noncontrolling interest $ ( 4,299 ) $ 2,008 $ 1,165 Redemption of redeemable noncontrolling interest via reduction of note receivable $ — $ — $ 4,751 Initial recognition of operating lease right-of-use assets $ — $ 77,645 $ — Initial recognition of operating lease liabilities $ — $ 79,693 $ — Debt assumed in connection with acquisition $ — $ 143,006 $ 45,804 Repayment of mortgage note from new financing proceeds $ — $ — $ 52,000 See accompanying notes to consolidated financial statements F- 19 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (1) Organization The accompanying consolidated financial statements present the accounts of Essex Property Trust, Inc. ("Essex" or the "Company"), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the "Operating Partnership," which holds the operating assets of the Company). Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership. Essex is the sole general partner of the Operating Partnership with a 96.6 % general partner interest and the limited partners owned a 3.4 % interest as of December 31, 2020. The limited partners may convert their Operating Partnership units into an equivalent number of shares of Essex common stock. Total Operating Partnership limited partnership units outstanding were 2,294,760 and 2,301,653 as of December 31, 2020 and 2019, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock, totaled approximately $ 544.8 million and $ 692.5 million, as of December 31, 2020 and 2019, respectively. The Company has reserved shares of common stock for such conversions. As of December 31, 2020, the Company owned or had ownership interests in 246 operating apartment communities, comprising 60,272 apartment homes, excluding the Company's ownership interests in preferred interest co-investments, loan investments, one operating commercial building, and a development pipeline comprised of three consolidated projects and three unconsolidated joint venture projects. 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. F- 20 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (2) Summary of Critical and Significant Accounting Policies (a) Principles of Consolidation and Basis of Presentation The accounts of the Company, its controlled subsidiaries and the variable interest entities ("VIEs") in which it is the primary beneficiary are consolidated in the accompanying financial statements and prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included and are normal and recurring in nature. All significant inter-company accounts and transactions have been eliminated. Noncontrolling interest includes the 3.4 % limited partner interests in the Operating Partnership not held by the Company at both December 31, 2020 and 2019. These percentages include the Operating Partnership’s vested long-term incentive plan units (see Note 14). (b) Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02 "Leases (Topic 842)" which requires an entity that is a lessee to classify leases as either finance or operating and to recognize a lease liability and a right-of-use asset for all leases that have a duration of greater than 12 months. Leases of 12 months or less are to be accounted for similar to prior leasing guidance (Topic 840) for operating leases. For lessors, accounting for leases under the new standard is substantially the same as prior leasing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. In July 2018, the FASB issued ASU No. 2018-11 "Leases (Topic 842): Targeted Improvements," which includes a practical expedient that allows lessors to not separate nonlease components from the associated lease component. This provides the Company with the option of not bifurcating certain common area maintenance recoveries as a non-lease component, if certain requirements are met. The Company adopted ASU No. 2016-02 and ASU No. 2018-11 as of January 1, 2019 using the modified retrospective approach and elected a package of practical expedients. There was no adjustment to the opening balance of retained earnings as a result of the adoption. See Note 10, Lease Agreements - Company as Lessor, and Note 11, Lease Agreements - Company as Lessee, for further details. In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13 "Measurement of Credit Losses on Financial Instruments," which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities, and other financial instruments. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Previously, U.S. GAAP required entities to write down credit losses only when losses were probable and loss reversals were not permitted. The FASB additionally issued various updates to clarify and amend the guidance provided in ASU No. 2016-13. In May 2019, the FASB issued ASU No. 2019-04, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments," which, with respect to credit losses, among other things, clarifies and addresses issues related to accrued interest, transfers between classifications of loans or debt securities, recoveries, and variable interest rates. Additionally, in May 2019, the FASB issued ASU No. 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief," which allows entities to irrevocably elect the fair value option on certain financial instruments. The Company adopted ASU No. 2016-13, ASU No. 2019-04, and ASU No. 2019-05 as of January 1, 2020, using the modified retrospective approach by applying a cumulative effect adjustment of $ 0.2 million representing estimated accumulated credit losses to the opening balance of retained earnings. In August 2018, the FASB issued ASU No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement," which eliminates certain disclosure requirements affecting all levels of measurements, and modifies and adds new disclosure requirements for Level 3 measurements. The Company adopted ASU No. 2018-13 as of January 1, 2020. This adoption did not have a material impact on the Company's consolidated results of operations or financial position. In March 2020, the FASB issued ASU No. 2020-04 "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting," which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU No. 2020-04 is optional and may be elected over F- 21 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 time as reference rate reform activities occur. During the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In April 2020, the FASB issued a Staff Question-and-Answer ("Q&A") to clarify whether lease concessions related to the effects of COVID-19 require the application of the lease modification guidance under Accounting Standards Codification ("ASC") Topic 842, Leases. The Q&A allows companies to not apply the lease modification guidance to rent concessions that result in deferred rent where the total cash flows required by the modified lease agreement are materially the same as the cash flows required under the original lease and the changes to the lease do not result in a substantial increase to the rights of the lessor or the obligations of the lessee. The Company adopted the guidance during the three months ended June 30, 2020 for eligible residential lease concessions. The lease concessions that met the criteria of the Q&A are treated as if they were part of the enforceable rights and obligations of the parties under the existing lease contract. The amount of rent concessions subject to the Q&A were not material and this adoption did not have a material impact on the Company's consolidated results of operations or financial position. (c) Recent Accounting Pronouncements In January 2021, the FASB issued ASU No. 2021-01 "Reference Rate Reform (Topic 848): Scope." The amendments in ASU No. 2021-01 provide optional expedients to the current guidance on contract modifications and hedge accounting from the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance generally can be applied to applicable contract modifications through December 31, 2022. The Company adopted this new guidance in January 2021 and will apply the guidance on a prospective basis. The Company is currently evaluating the impact of the transition from LIBOR to alternative reference rates and the application of optional expedients available in this guidance, but does not expect a material impact to its consolidated results of operations or financial position. (d) Real Estate Rental Properties Significant expenditures, which improve or extend the life of an asset and have a useful life of greater than one year , are capitalized. Operating real estate assets are stated at cost and consist of land and land improvements, buildings and improvements, furniture, fixtures and equipment, and other costs incurred during their development, redevelopment and acquisition. Expenditures for maintenance and repairs are charged to expense as incurred. The depreciable life of various categories of fixed assets is as follows: Computer software and equipment 3 - 5 years Interior apartment home improvements 5 years Furniture, fixtures and equipment 5 - 10 years Land improvements and certain exterior components of real property 10 years Real estate structures 30 years The Company capitalizes all costs incurred with the predevelopment, development or redevelopment of real estate assets or are associated with the construction or expansion of real property. Such capitalized costs include land, land improvements, allocated costs of the Company’s project management staff, construction costs, as well as interest and related loan fees, property taxes and insurance. Capitalization begins for predevelopment, development, and redevelopment projects when activity commences. Capitalization ends when the apartment home is completed and the property is available for a new tenant or if the development activities cease. The Company allocates the purchase price of real estate on a fair value basis to land and building including personal property, and identifiable intangible assets, such as the value of above, below and in-place leases. In making estimates of relative fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent land appraisals which consider comparable market transactions, its own analysis of recently acquired or developed comparable F- 22 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 properties in our portfolio for land comparables and building replacement costs, and other publicly available market data. In calculating the fair value of identified intangible assets of an acquired property, the in-place leases are valued based on in-place rent rates and amortized over the average remaining term of all acquired leases. The values of the above and below market leases are amortized and recorded as either a decrease (in the case of above market leases) or an increase (in the case of below market leases) to rental revenue over the remaining term of the associated leases acquired. The value of acquired in-place leases are amortized to expense over the average remaining term of the leases acquired. The net carrying value of acquired in-place leases is $ 4.7 million and $ 1.2 million as of December 31, 2020 and 2019, respectively, and are included in prepaid expenses and other assets on the Company's consolidated balance sheets. The Company periodically assesses the carrying value of its real estate investments for indicators of impairment. The judgments regarding the existence of impairment indicators are based on monitoring investment market conditions and performance compared to budget for operating properties including the net operating income for the most recent 12 month period, monitoring estimated costs for properties under development, the Company's ability to hold and its intent with regard to each asset, and each property's remaining useful life. Whenever events or changes in circumstances indicate that the carrying amount of a property held for investment may not be fully recoverable, the carrying amount is evaluated. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount (including intangible assets) of a property held for investment, then the Company will recognize an impairment loss equal to the excess of the carrying amount over the fair value of the property. Fair value of a property is determined using conventional real estate valuation methods, such as discounted cash flow, the property’s unleveraged yield in comparison to the unleveraged yields and/or sales prices of similar communities that have been recently sold, and other third party information, if available. Communities held for sale are carried at the lower of cost or fair value less estimated costs to sell. As of December 31, 2020, two properties were classified as held for sale. As of December 31, 2019, no properties were classified as held for sale. The Company recorded an impairment charge of $ 1.8 million for the year ended December 31, 2020 related to one of the Company's consolidated properties as a result of a change in the Company's intent to hold the property for its remaining useful life. The Company recorded an impairment charge of $ 7.1 million for the year ended December 31, 2019 on a parcel of land that was part of a consolidated co-investment with Canada Pension Plan Investment Board ("CPPIB" or "CPP"). The impairment charge resulted from the Company's acquisition of CPPIB's 45 % interest in the co-investment. The impairment analysis over the parcel’s fair value was determined using internally developed models based on market assumptions. No impairment charges were recorded for the year ended December 31, 2018. In the normal course of business, the Company will receive purchase offers for its communities, either solicited or unsolicited. For those offers that are accepted, the prospective buyer will usually require a due diligence period before consummation of the transaction. It is not unusual for matters to arise that result in the withdrawal or rejection of the offer during this process. The Company classifies real estate as "held for sale" when all criteria under the accounting standard for the disposals of long-lived assets have been met. (e) Co-investments The Company owns investments in joint ventures in which it has significant influence, but its ownership interest does not meet the criteria for consolidation in accordance with U.S. GAAP. Therefore, the Company accounts for co-investments using the equity method of accounting. Under the equity method of accounting, the investment is carried at the cost of assets contributed, plus the Company’s equity in earnings less distributions received and the Company’s share of losses. The significant accounting policies of the Company’s co-investment entities are consistent with those of the Company in all material respects. Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and a gain or loss is recognized upon the remeasurement of co-investments in the consolidated statement of income equal to the amount by which the fair value of the 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. The Company recorded an other-than-temporary impairment charge of $ 11.5 million for the year ended December 31, 2019 on an unconsolidated co-investment with CPPIB which held Agora, a 49 unit apartment home community located in Walnut F- 23 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 Creek, CA. The other-than-temporary impairment charge resulted from the Company's acquisition of CPPIB's 45 % interest in the co-investment. The impairment analysis over the co-investments fair value was determined using internally developed models based on market assumptions. The impairment is reflected in equity income from co-investments on the consolidated statements of income. No other-than-temporary impairment charges were recorded for the years ended December 31, 2020 or 2018. (f) Revenues and Gains on Sale of Real Estate Revenues from tenants renting or leasing apartment homes are recorded when due from tenants and are recognized monthly as they are earned, which 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 4, Revenues, and Note 10, Lease Agreements - Company as Lessor, 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 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. (g) Cash, Cash Equivalents and Restricted Cash Highly liquid investments with original maturities of three months or less when purchased are classified as cash equivalents. Restricted cash balances relate primarily to reserve requirements for capital replacement at certain communities in connection with the Company’s mortgage debt. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows ($ in thousands): 2020 2019 2018 Cash and cash equivalents - unrestricted $ 73,629 $ 70,087 $ 134,465 Cash and cash equivalents - restricted 10,412 11,007 16,930 Total unrestricted and restricted cash and cash equivalents shown in the consolidated statements of cash flows $ 84,041 $ 81,094 $ 151,395 (h) Marketable Securities The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds, Level 2 for the unsecured debt and Level 3 for investments in mortgage backed securities, as defined by the FASB standard for fair value measurements as discussed later in Note 2). As of December 31, 2020 and 2019, $ 2.5 million and $ 3.6 million, respectively, 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. There were no other than temporary impairment charges for the years ended December 31, 2020, 2019, and 2018. Unrealized gains F- 24 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income on the consolidated statements of income. As of December 31, 2020 and 2019, equity securities and available for sale debt securities consisted primarily of investment-grade unsecured debt, U.S. treasury securities, and common stock and stock funds. As of December 31, 2019, the Company classified its mortgage backed securities as held to maturity, and accordingly, the securities were stated at their amortized cost. One of the investments in mortgage backed securities matured in November 2019 and the other matured in December 2020. As of December 31, 2020 and 2019, marketable securities consist of the following ($ in thousands): December 31, 2020 Amortized Cost Gross Unrealized Gain Carrying Value Allowance for Credit Losses Equity securities: Investment funds - debt securities $ 49,646 $ 985 $ 50,631 $ — Common stock and stock funds 81,074 15,001 96,075 — Debt securities: Available for sale Investment-grade unsecured debt 1,050 12 1,062 — Total - Marketable securities $ 131,770 $ 15,998 $ 147,768 $ — December 31, 2019 Amortized Cost Gross Unrealized Gain Carrying Value Equity securities: Investment funds - debt securities $ 29,588 $ 544 $ 30,132 Common stock and stock funds 34,941 2,927 37,868 Debt securities: Available for sale U.S. Treasury securities 2,421 13 2,434 Investment-grade unsecured debt 1,048 60 1,108 Held to maturity: Mortgage backed securities 72,651 — 72,651 Total - Marketable securities $ 140,649 $ 3,544 $ 144,193 The Company uses the specific identification method to determine the cost basis of a debt security sold and to reclassify amounts from accumulated other comprehensive loss for such securities. During the years ended December 31, 2020 and 2019, the Company received cash proceeds of $ 91.7 million and $ 83.1 million, respectively, from the maturity of two investments in mortgage backed securities. For the years ended December 31, 2020 and 2019, the Company recognized approximately $ 11.8 million and $ 7.0 million, respectively, of accelerated interest income or the reversal of an allowance for credit loss related to these maturities. F- 25 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 For the years ended December 31, 2020, 2019 and 2018, the proceeds from sales and maturities of marketable securities totaled $ 113.5 million, $ 147.5 million and $ 31.5 million, respectively. For the years ended December 31, 2020, 2019 and 2018, these sales resulted in gains of $ 2.1 million, $ 1.3 million, and $ 0.7 million, respectively. For the years ended December 31, 2020 and 2019, the portion of equity security unrealized losses or gains that were recognized in income totaled $ 12.5 million in gains, and $ 5.7 million in gains, respectively, and were included in interest and other income on the Company's consolidated statements of income and comprehensive income. Unrealized losses on investment-grade unsecured debt as of December 31, 2020 have not been recognized into income because the debts of the issuers are of high credit quality, management does not intend to sell the securities, it is likely that the Company will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to other market conditions. The Company monitors the credit quality of its held to maturity mortgage backed security through the review of remittance reports and individual loan watchlists, which are prepared quarterly and provide most recent debt service coverage ratios for each loan within the security, when available. The Company monitors such reports to determine the likelihood that a particular loan within the mortgage backed security may be foreclosed upon. The Company measures the expected credit loss on its held to maturity mortgage backed security based on the present value of expected future cash flows, which takes into account current market conditions and available credit information obtained from the individual loans held within the mortgage backed security. The following table presents the allowance for credit losses rollforward for the mortgage backed security ($ in thousands): Balance at December 31, 2019 $ — Impact of adoption ASC 326 (1) 13,644 Reversal of provision for credit losses ( 13,644 ) Balance at December 31, 2020 $ — (1) As part of the adoption of ASC 326, effective January 1, 2020, the Company recorded a gross up of the mortgage backed security and related allowance for credit losses of $ 13.6 million. The allowance was reversed upon maturity of the mortgage backed security in December 2020. The Company recorded $ 11.8 million of accelerated interest income related to this maturity. (i) Notes Receivable Notes receivable relate to real estate financing arrangements including mezzanine and bridge loans. Interest is recognized over the life of the note as interest income. Each note is analyzed to determine if it is impaired. A note is impaired if it is probable that the Company will not collect all contractually due principal and interest. The Company does not accrue interest when a note is considered impaired and an allowance is recorded for any principal and previously accrued interest that are not believed to be collectible. All cash receipts on impaired notes are applied to reduce the principal amount of such notes until the principal has been recovered and, thereafter, are recognized as interest income. As of December 31, 2020 and 2019, no notes were impaired. In the normal course of business, the Company originates and holds two types of loans: mezzanine loans issued to entities that are pursuing apartment development and short-term bridge loans issued to joint ventures with the Company. The Company categorizes development project mezzanine loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as: current financial information, credit documentation, public information, and previous experience with the borrower. The Company initially analyzes each mezzanine loan individually to classify the credit risk of the loan. On a periodic basis the Company evaluates and performs site visits of the development projects associated with the mezzanine loans to confirm whether they are on budget and whether there are any delays in development that could impact the Company's assessment of credit loss. F- 26 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 All bridge loans that the Company issues are, by their nature, short-term and meant only to provide time for the Company’s joint ventures to obtain long-term funding for newly acquired communities. As the Company is a partner in the joint ventures that are borrowing such funds and has performed a detailed review of each community as part of the acquisition process, there is little to no credit risk associated with such loans. As such, the Company does not review credit quality indicators for bridge loans on an ongoing basis. The Company estimates the allowance for credit losses for each loan type using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made, if necessary, for differences in current loan-specific risk characteristics. For example, in the case of mezzanine loans, adjustments may be made due to differences in track record and experience of the mezzanine loan sponsor as well as the percent of equity that the sponsor has contributed to the project. (j) Capitalization Policy The Company capitalizes all direct and certain indirect costs, including interest, real estate taxes and insurance, incurred during development and redevelopment activities. Interest is capitalized on real estate assets that require a period of time to get them ready for their intended use. The amount of interest capitalized is based upon the average amount of accumulated development expenditures during the reporting period. Included in capitalized costs are management’s estimates of the direct and incremental personnel costs and indirect project costs associated with the Company's development and redevelopment activities. Indirect project costs consist primarily of personnel costs associated with construction administration and development, including accounting, legal fees, and various corporate and community onsite costs that clearly relate to projects under development. Those costs, inclusive of capitalized interest, as well as capitalized development and redevelopment fees totaled $ 31.4 million, $ 42.1 million and $ 37.3 million for the years ended December 31, 2020, 2019 and 2018, respectively, most of which relates to development projects. The Company capitalizes leasing costs associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized are immaterial for all periods presented. (k) Fair Value of Financial Instruments The Company values its financial instruments based on the fair value hierarchy of valuation techniques described in the FASB’s accounting standard for fair value measurements. Level 1 inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. The Company uses Level 1 inputs for the fair values of its cash equivalents and its marketable securities except for unsecured bonds and mortgage backed securities. The Company uses Level 2 inputs for its investments in unsecured debt, notes receivable, notes payable, and derivative assets/liabilities. These inputs include interest rates for similar financial instruments. The Company’s valuation methodology for derivatives is described in Note 9. The Company uses Level 3 inputs to estimate the fair value of its mortgage backed securities. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. Management believes that the carrying amounts of the outstanding balances under its lines of credit, and notes and other receivables approximate fair value as of December 31, 2020 and 2019, 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 fixed rate debt with a carrying value of $ 5.5 billion and $ 5.2 billion at December 31, 2020 and 2019, respectively, to be $ 6.0 billion and $ 5.4 billion at December 31, 2020 and 2019, respectively. Management has estimated the fair value of the Company’s $ 775.1 million and $ 660.4 million of variable rate debt at December 31, 2020 and 2019, respectively, to be $ 770.1 million and $ 655.8 million at December 31, 2020 and 2019, 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 December 31, 2020 and 2019 due to the short-term maturity of these instruments. Marketable securities, except mortgage backed securities, are carried at fair value as of December 31, 2020 and 2019. At December 31, 2020 and 2019, the Company’s investments in mortgage backed securities had a carrying value of zero and $ 72.7 million, respectively. In November 2019, the Company received cash proceeds of $ 83.1 million from the maturity of an F- 27 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 investment in a mortgage backed security. Additionally, during 2020, the Company received cash proceeds of $ 91.7 million from the maturity of the remaining investment in a mortgage backed security. The Company estimated the fair value of its investment in mortgage backed securities at December 31, 2020 and 2019 to be approximately zero and $ 72.7 million, respectively. The Company determines the fair value of the mortgage backed securities based on unobservable inputs (Level 3 of the fair value hierarchy) considering the assumptions that market participants would make in valuing these securities. Assumptions such as estimated default rates and discount rates are used to determine expected, discounted cash flows to estimate the fair value. (l) Interest Rate Protection, Swap, and Forward Contracts The Company uses interest rate swaps, interest rate caps, and total return swap contracts to manage interest rate risks. The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, the Company uses interest rate swaps as part of its cash flow hedging strategy. The Company records all derivatives on its consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For derivatives designated for accounting purposes as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated for accounting purposes as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the initial and ongoing effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated for accounting purposes as cash flow hedges, changes in fair value are recognized in earnings. All of the Company’s interest rate swaps are considered cash flow hedges. (m) Income Taxes Generally in any year in which Essex qualifies as a real estate investment trust ("REIT") under the Internal Revenue Code (the "IRC"), it is not subject to federal income tax on that portion of its income that it distributes to stockholders. No provision for federal income taxes, other than the taxable REIT subsidiaries discussed below, has been made in the accompanying consolidated financial statements for each of the years in the three-year period ended December 31, 2020 as Essex has elected to be and believes it qualifies under the IRC as a REIT and has made distributions during the periods in amounts to preclude Essex from paying federal income tax. In order to maintain compliance with REIT tax rules, the Company utilizes taxable REIT subsidiaries for various revenue generating or investment activities. The taxable REIT subsidiaries are consolidated by the Company. In general, the activities and tax related provisions, assets and liabilities are not material. As a partnership, the Operating Partnership is not subject to federal or state income taxes, except that in order to maintain Essex's compliance with REIT tax rules that are applicable to Essex, the Operating Partnership utilizes taxable REIT subsidiaries for various revenue generating or investment activities. The taxable REIT subsidiaries are consolidated by the Operating Partnership. F- 28 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 The status of cash dividends distributed for the years ended December 31, 2020, 2019, and 2018 related to common stock are classified for tax purposes as follows: 2020 2019 2018 Common Stock Ordinary income 85.23 % 83.81 % 79.72 % Capital gain 10.68 % 13.78 % 15.35 % Unrecaptured section 1250 capital gain 4.09 % 2.41 % 4.93 % 100.00 % 100.00 % 100.00 % (n) Equity-based Compensation The cost of share- and unit-based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long-term incentive plan units (discussed in Note 14) are being amortized over the expected service periods. (o) Changes in Accumulated Other Comprehensive Loss, by Component Changes in Accumulated Other Comprehensive Loss, Net, by Component Essex Property Trust, Inc. ($ in thousands) Change in fair value and amortization of swap settlements Unrealized gain (loss) on available for sale securities Total Balance at December 31, 2019 $ ( 13,989 ) $ 101 $ ( 13,888 ) Other comprehensive income before reclassification 4,274 ( 59 ) 4,215 Amounts reclassified from accumulated other comprehensive loss ( 5,056 ) — ( 5,056 ) Other comprehensive loss ( 782 ) ( 59 ) ( 841 ) Balance at December 31, 2020 $ ( 14,771 ) $ 42 $ ( 14,729 ) Changes in Accumulated Other Comprehensive Loss, by Component Essex Portfolio, L.P. ($ in thousands) Change in fair value and amortization of swap settlements Unrealized gain (loss) on available for sale securities Total Balance at December 31, 2019 $ ( 10,536 ) $ 104 $ ( 10,432 ) Other comprehensive income before reclassification 4,424 ( 61 ) 4,363 Amounts reclassified from accumulated other comprehensive loss ( 5,234 ) — ( 5,234 ) Other comprehensive loss ( 810 ) ( 61 ) ( 871 ) Balance at December 31, 2020 $ ( 11,346 ) $ 43 $ ( 11,303 ) Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense on the consolidated statements of income. Realized gains and losses on available for sale debt securities are included in interest and other income on the consolidated statements of income. F- 29 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (p) Redeemable Noncontrolling Interest The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $ 32.2 million and $ 37.4 million as of December 31, 2020 and 2019, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances. The changes in the redemption value of redeemable noncontrolling interests for the years ended December 31, 2020, 2019, and 2018 are as follows: 2020 2019 2018 Balance at January 1, $ 37,410 $ 35,475 $ 39,206 Reclassifications due to change in redemption value and other ( 4,299 ) 2,008 1,164 Redemptions ( 872 ) ( 73 ) ( 4,895 ) Balance at December 31, $ 32,239 $ 37,410 $ 35,475 (q) Accounting Estimates The preparation of consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate portfolio, its investments in and advances to joint ventures and affiliates, and its notes receivable. The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions. (r) Variable Interest Entities In accordance with accounting standards for consolidation of VIEs, the Company consolidates the Operating Partnership, 17 DownREIT entities (comprising nine communities), and five co-investments as of December 31, 2020. As of December 31, 2019, the Company consolidated the Operating Partnership, 17 DownREIT entities (comprising nine communities), and six co-investments. 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 $ 898.5 million and $ 326.8 million, respectively, as of December 31, 2020, and $ 1.0 billion and $ 364.3 million, respectively, as of December 31, 2019. Noncontrolling interests in these entities were $ 120.8 million and $ 122.5 million as of December 31, 2020 and 2019, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. The DownREIT VIEs collectively own nine apartment communities in which the Company is the general partner or manager of the DownREIT entity, the Operating Partnership is a special limited partner or member, and the other limited partners or members were granted rights of redemption for their interests. Such limited partners or members can request to be redeemed and the Company, subject to certain restrictions, can elect to redeem their rights for cash or by issuing shares of its common stock on a one share per unit basis. Conversion values will be based on the market value of the Company's common stock at the time of redemption multiplied by the number of units stipulated under various arrangements, as noted above. The other limited partners or members receive distributions based on the Company's current dividend rate times the number of units held. Total DownREIT units outstanding were 1,017,460 and 1,033,907 as of December 31, 2020 and 2019, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $ 241.6 million and $ 311.1 million, as of December 31, 2020 and 2019, respectively. The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $ 32.2 million and $ 37.4 million as of December 31, 2020 and 2019, respectively. Of these amounts, $ 11.9 million and $ 13.0 million as of December 31, 2020 and 2019, respectively, represent units of limited partners' or members' interests in DownREIT VIEs as to which it is outside of the Company’s control to redeem the DownREIT units with Company common stock and may potentially be redeemed for cash, and are presented at either their redemption value or historical cost, depending on the limited partner's or members' right to redeem their units as of the balance sheet date. The carrying value of DownREIT units as to which it is within the control of the Company to redeem the units with its common F- 30 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 stock was $ 97.4 million and $ 97.7 million as of December 31, 2020 and 2019, respectively, and is classified within noncontrolling interests in the accompanying consolidated balance sheets. Interest holders in VIEs consolidated by the Company are allocated a priority of net income equal to the cash payments made to those interest holders or distributions from cash flow. The remaining results of operations are generally allocated to the Company. As of December 31, 2020 and 2019, the Company did not have any other VIEs of which it was deemed to be the primary beneficiary and did not have any VIEs of which it was not deemed to be the primary beneficiary. (s) Discontinued Operations The Company determined that the disposals during the years ended December 31, 2020, 2019 and 2018 were not considered discontinued operations in accordance with ASU No. 2014-08. The gains related to these disposals are recorded in gain on sale of real estate and land in the consolidated statements of income. (3) Real Estate Investments (a) Acquisitions of Real Estate The table below summarizes acquisition activity for the year ended December 31, 2020 ($ in millions): Property Name Location Apartment Homes Essex Ownership Percentage Quarter in 2020 Purchase Price CPPIB Portfolio Various 2,020 100 % Q1 $ 463.4 Total 2020 2,020 $ 463.4 In January 2020, the Company purchased CPPIB's 45.0 % interest in each of a land parcel and six communities totaling 2,020 apartment homes, valued at $ 1.0 billion on a gross basis. As a result of this acquisition, the Company realized a gain on remeasurement of co-investment of $ 234.7 million. Furthermore, the Company recognized $ 6.5 million in promote income as a result of the transaction, which is included in equity income from co-investments on the consolidated statements of income. The consolidated fair value of the acquisition listed above was included on the Company's consolidated balance sheet as follows: $ 189.0 million was included in land and land improvements, $ 846.0 million was included in buildings and improvements, $ 10.0 million was included in prepaid expenses and other assets, within the Company's consolidated balance sheets. For the year ended December 31, 2019, the Company purchased four communities consisting of 849 apartment homes for approximately $ 373.3 million. Additionally, in December 2019, the Company purchased the joint venture partner's 25 % ownership interest in Hidden Valley, a consolidated community consisting of 324 apartment homes, for a contract price of $ 24.2 million based on an estimated property valuation of $ 97.0 million and an encumbrance of $ 29.7 million of mortgage debt. The purchase was recorded as a redemption of noncontrolling interest in the consolidated statements of equity. (b) Sales of Real Estate Investments In June 2020, the Company completed a portfolio sale which consisted of two apartment communities with 429 apartment homes, One South Market and Museum Park, both located in San Jose, CA, for a total contract price of $ 232.0 million. The Company recognized a $ 16.6 million gain on sale. In July 2020, the Company sold Delano, a 126 apartment home community located in Redmond, WA, for a total contract price of $ 51.5 million. The Company recognized a $ 22.7 million gain on sale. In October 2020, the Company sold 416 on Broadway, a 115 apartment home community located in Glendale, CA, for a total contract price of $ 60.0 million. The Company recognized a $ 25.7 million gain on sale. F- 31 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 For the year ended December 31, 2019, the Company sold a land parcel adjacent to the Mylo development project located in Santa Clara, CA, for $ 10.8 million and recorded an immaterial gain and sold land located in San Mateo, CA, that had been held for future development for $ 12.5 million and recorded a loss of $ 3.2 million. For the year ended December 31, 2018, the Company sold two communities consisting of 669 apartment homes for $ 352.0 million resulting in gains totaling $ 61.9 million. (c) Real Estate Assets Held for Sale As of December 31, 2020, the Company had two communities totaling 439 apartment homes that are qualified as held for sale. As of December 31, 2019 the Company had no assets classified as held for sale. (d) Co-investments The Company has joint ventures which are accounted for under the equity method. The co-investments’ accounting policies are similar to the Company’s accounting policies. The co-investments own, operate, and develop apartment communities. The carrying values of the Company’s co-investments as of December 31, 2020 and 2019 are as follows ($ in thousands, except in parenthetical): Weighted Average Essex Ownership December 31, Percentage (1) 2020 2019 Ownership interest in: CPPIB (2) — % $ — $ 345,466 Wesco I, Wesco III, Wesco IV, and Wesco V 51 % 178,322 216,756 BEXAEW, BEX II, BEX III, and BEX IV 50 % 152,309 160,888 Other 47 % 27,635 20,351 Total operating and other co-investments, net 358,266 743,461 Total predevelopment and development co-investments 50 % 157,433 146,944 Total preferred interest co-investments (includes related party investments of $ 81.4 million and $ 73.2 million as of December 31, 2020 and December 31, 2019, respectively - Note 6 - Related Party Transactions for further discussion) 502,311 444,934 Total co-investments, net $ 1,018,010 $ 1,335,339 (1) Weighted average Company ownership percentages are as of December 31, 2020. (2) In January 2020, the Company purchased CPPIB's 45.0 % interest in each of a land parcel and six communities totaling 2,020 apartment homes. F- 32 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 The combined summarized financial information of co-investments is as follows ($ in thousands): December 31, 2020 2019 Combined balance sheets: (1) Rental properties and real estate under development $ 4,242,611 $ 4,733,762 Other assets 200,777 139,562 Total assets $ 4,443,388 $ 4,873,324 Debt $ 2,611,365 $ 2,442,213 Other liabilities 189,515 117,160 Equity 1,642,508 2,313,951 Total liabilities and equity $ 4,443,388 $ 4,873,324 Company's share of equity $ 1,018,010 $ 1,335,339 Years ended December 31, 2020 2019 2018 Combined statements of income: (1) Property revenues $ 300,624 $ 336,922 $ 332,164 Property operating expenses ( 108,682 ) ( 115,658 ) ( 107,584 ) Net operating income 191,942 221,264 224,580 Gain on sale of real estate — 112,918 24,218 Interest expense ( 78,962 ) ( 65,665 ) ( 63,913 ) General and administrative ( 17,079 ) ( 9,575 ) ( 6,379 ) Depreciation and amortization ( 117,836 ) ( 121,006 ) ( 126,485 ) Net income $ ( 21,935 ) $ 137,936 $ 52,021 Company's share of net income (2) $ 66,512 $ 112,136 $ 89,132 (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 $ 8.6 million, $ 7.5 million, and $ 2.0 million for the years ended December 31, 2020, 2019, and 2018, respectively. Operating Co-investments As of December 31, 2020 and 2019, the Company, through several joint ventures, owned 8,652 and 10,672 apartment homes, respectively, in operating communities. The Company’s book value of these co-investments was $ 358.3 million and $ 743.5 million at December 31, 2020 and 2019, respectively. Predevelopment and Development Co-investments As of December 31, 2020 and 2019, the Company, through several joint ventures, owned 1,070 and 806 apartment homes in predevelopment and development communities, respectively. The Company’s book value of these co-investments was $ 157.4 million and $ 146.9 million at December 31, 2020 and 2019, respectively. In 2020, the Company entered into a joint venture to develop Scripps Mesa Apartments, a multifamily community comprised of 264 apartment homes located in San Diego, CA. The Company has a 51 % ownership interest in the development which has a projected total cost of $ 102.0 million. Construction began in the third quarter of 2020 and the community is expected to open in F- 33 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 the fourth quarter of 2022. The Company has a $ 5.9 million preferred equity investment in the project, which accrues an annualized preferred return of 10.0 % until it is redeemed. In 2017, the Company entered into a joint venture to develop Patina at Midtown (formerly known as Ohlone), a multifamily community comprised of 269 apartment homes located in San Jose, CA. The Company has a 50 % ownership interest in the development which has a projected total cost of $ 148.0 million. The property began initial occupancy in the third quarter of 2020 and is expected to be fully stabilized by the second quarter of 2021. The Company has a $ 28.9 million preferred equity investment in the project, which accrues an initial annualized preferred return of 10.0 % and matures in 2021. In 2015, the Company entered into a joint venture to develop 500 Folsom, a multifamily community comprised of 537 apartment homes located in San Francisco, CA. The Company has a 50 % ownership interest in the development which has a projected total cost of $ 415.0 million. The property began initial occupancy in the third quarter of 2019 and is expected to be fully stabilized by the first quarter of 2021. Preferred Equity Investments As of December 31, 2020 and 2019, the Company held preferred equity investment interests in several joint ventures which own real estate. The Company’s book value of these preferred equity investments was $ 502.3 million and $ 444.9 million at December 31, 2020 and 2019, respectively, and is included in the co-investments line in the accompanying consolidated balance sheets. During 2020, the Company made commitments to fund $ 191.3 million of preferred equity investment in seven preferred equity investments. The investments have initial preferred returns ranging from 9.0 %- 11.5 %, with maturities ranging from March 2022 to February 2030. As of December 31, 2020, the Company had funded $ 55.1 million of the $ 191.3 million of commitments. The remaining committed amount is expected to be funded in 2021. During 2019, the Company made commitments to fund $ 141.7 million of preferred equity investment in five preferred equity investments, some of which include related party sponsors. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 10.15 %- 11.3 %, with maturities ranging from July 2022 to October 2024. As of December 31, 2020, the Company had fully funded $ 141.7 million of the commitments. During 2018, the Company made commitments to fund $ 45.1 million of preferred equity investment in two preferred equity investments, some of which include related party sponsors. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 10.25 %- 12.0 %, with maturities ranging from May 2023 to April 2024. As of December 31, 2020, the Company had funded $ 42.1 million of the $ 45.1 million of commitments. The remaining committed amount is expected to be funded when requested by the sponsors. In March 2020, the Company received cash of $ 11.3 million, including an early redemption fee of $ 0.2 million, for the partial redemption of a preferred equity investment in a joint venture that holds property located in Southern California. In the fourth quarter of 2020, the Company subsequently received cash of $ 10.7 million for redemption of the remainder of this preferred equity investment. In February and September 2020, the Company received cash of $ 13.4 million for the full redemption of a preferred equity investment in a property located in Southern California. In December 2020, the Company received cash of $ 31.3 million for the full redemption of a preferred equity investment in two properties located in Southern California. (e) Real Estate under Development The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations. As of December 31, 2020, the Company's development pipeline was comprised of three consolidated projects under development, three unconsolidated joint venture projects under development and various predevelopment projects, aggregating 1,853 apartment homes, with total incurred costs of $ 948.0 million. F- 34 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (4) Revenues Disaggregated Revenue The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands): 2020 2019 2018 Rental income (1) $ 1,462,161 $ 1,425,585 $ 1,366,590 Other property (1) 23,989 25,043 24,280 Management and other fees from affiliates 9,598 9,527 9,183 Total revenues $ 1,495,748 $ 1,460,155 $ 1,400,053 (1) On January 1, 2019, the Company adopted ASU No. 2016-02 and ASU No. 2018-11. As a result of this adoption, certain amounts previously classified as other property revenue have been reclassified to rental income. Prior period amounts have been adjusted to conform to the current period's presentation. The following table presents the Company’s rental and other property revenues disaggregated by geographic operating segment ($ in thousands): 2020 2019 2018 Southern California $ 570,673 $ 597,330 $ 579,533 Northern California 610,867 557,139 520,117 Seattle Metro 243,900 243,060 234,138 Other real estate assets (1) 60,710 53,099 57,082 Total rental and other property revenues $ 1,486,150 $ 1,450,628 $ 1,390,870 (1) Other real estate assets consist of revenue 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): 2020 2019 2018 Same-property (1) $ 1,286,686 $ 1,338,690 $ 1,288,771 Acquisitions (2) 78,666 7,704 — Development (3) 20,050 7,675 2,741 Redevelopment 19,054 21,058 20,413 Non-residential/other, net (4) 59,838 75,501 78,945 Straight line rent concession (5) 21,856 — — Total rental and other property revenues $ 1,486,150 $ 1,450,628 $ 1,390,870 (1) Properties that have comparable stabilized results as of January 1, 2019 and are consolidated by the Company for the years ended December 31, 2020, 2019, and 2018. A community is generally considered to have reach 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, 2019. (3) Development includes properties developed which did not have stabilized results as of January 1, 2019. (4) Non-residential/other, net consists of revenue 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 three communities located in the California counties of Riverside, Santa Barbara, and Santa Cruz, which the Company does not consider its core markets. F- 35 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (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 $ 3.1 million and $ 3.9 million as of December 31, 2020 and December 31, 2019, respectively, and was included in accounts payable and accrued liabilities within the accompanying consolidated balance sheets. The amount of revenue recognized for the year ended December 31, 2020 that was included in the December 31, 2019 deferred revenue balance was $ 0.8 million, which was included in interest and other income within the 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 new revenue recognition accounting standard. As of December 31, 2020, the Company had $ 3.1 million of remaining performance obligations. The Company expects to recognize approximately 23 % of these remaining performance obligations in 2021, an additional 45 % through 2023, and the remaining balance thereafter. Practical Expedients The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less or when variable consideration is allocated entirely to a wholly unsatisfied performance obligation. F- 36 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (5) Notes and Other Receivables Notes and other receivables consist of the following as of December 31, 2020 and 2019 ($ in thousands): 2020 2019 Note receivable, secured, bearing interest at 9.00 % due May 2021 (Originated May 2017) (1) $ — $ 16,828 Note receivable, secured, bearing interest at 9.90 %, due November 2021 (Originated November 2018) 14,216 12,838 Related party note receivable, secured, bearing variable rate interest, due February 2020 (Originated November 2019) (2)(3) — 85,713 Notes receivable, secured, bearing interest at 10.50 %, due February 2023 (Originated March 2020) 15,299 — Note receivable, secured, bearing interest at 11.00 %, due October 2023 (Originated April 2020) 25,461 — Note receivable, secured, bearing interest at 9.00 %, due December 2023 (Originated November 2020) 79,827 — Note receivable, secured, bearing interest at 11.50 %, due November 2024 (Originated November 2020) 15,423 — Notes and other receivables from affiliates (4) 4,744 4,442 Straight line rent receivables (5) 25,214 6,083 Other receivables 15,671 8,461 Allowance for credit losses ( 751 ) — Total notes and other receivables $ 195,104 $ 134,365 (1) In January 2020, the Company received cash of $ 16.9 million from the payoff of this note receivable. (2) See Note 6, Related Party Transactions, for additional details. (3) In January 2020, the Company received cash of $ 85.8 million from the payoff of this note receivable. (4) These amounts consist of short-term loans outstanding and due from various joint ventures as of December 31, 2020 and 2019, respectively. See Note 6, Related Party Transactions, for additional details. (5) 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, 2019 $ — $ — $ — Impact of adoption ASC 326 147 43 190 Provision for credit losses 604 ( 43 ) 561 Balance at December 31, 2020 $ 751 $ — $ 751 No loans were placed on nonaccrual status or charged off during the year ended December 31, 2020 or 2019. F- 37 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (6) Related Party Transactions The Company has adopted written related party transaction guidelines that are intended to cover transactions in which the Company (including entities it controls) is a party and in which any "related person" has a direct or indirect interest. A "related person" means any person who is or was (since the beginning of the last fiscal year) a Company director, director nominee, or executive officer, any beneficial owner of more than 5% of the Company’s outstanding common stock, and any immediate family member of any of the foregoing persons. A related person may be considered to have an indirect interest in a transaction if he or she (i) is an owner, director, officer or employee of or otherwise associated with another company that is engaging in a transaction with the Company, or (ii) otherwise, through one or more entities or arrangements, has an indirect financial interest in or personal benefit from the transaction. The related person transaction review and approval process is intended to determine, among any other relevant issues, the dollar amount involved in the transaction; the nature and value of any related person’s direct or indirect interest (if any) in the transaction; and whether or not (i) a related person’s interest is material, (ii) the transaction is fair, reasonable, and serves the best interest of the Company and its shareholders, and (iii) whether the transaction or relationship should be entered into, continued or ended. The Company’s Chairman and founder, Mr. George Marcus, is the Chairman of the Marcus & Millichap Company ("MMC"), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Co-Chairman of Marcus & Millichap, Inc. ("MMI"), and Mr. Marcus owns a controlling interest in MMI, a national brokerage firm listed on the NYSE that underwent its initial public offering in 2013. For the year ended December 31, 2020, the Company paid brokerage commissions of $ 0.2 million to MMC and its affiliates related to real estate transactions. For the years ended December 31, 2019 and 2018, there were no brokerage commissions paid by the Company to MMI or its affiliates. The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates totaled $ 11.3 million, $ 13.8 million, and $ 13.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of $ 1.7 million, $ 4.3 million, and $ 4.8 million against general and administrative expenses for the years ended December 31, 2020, 2019 and 2018, respectively. As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of December 31, 2020 and 2019, $ 4.7 million and $ 4.4 million, respectively, of short-term loans remained outstanding due from joint venture affiliates and are classified within notes and other receivables in the accompanying consolidated balance sheets. In November 2016, the Company provided a $ 6.6 million mezzanine loan to a limited liability company in which MMC holds a significant ownership interest through subsidiaries. The mezzanine loan was classified within notes and other receivables in the accompanying consolidated balance sheets and was paid off in October 2019. In November 2019, the Company provided an $ 85.5 million related party bridge loan to Wesco V as part of the acquisition of Velo and Ray. The note receivable accrued interest at LIBOR plus 1.30 % and was scheduled to mature in February 2020, but was paid off in January 2020. The bridge loan was classified within notes and other receivables in the accompanying consolidated balance sheets. In August 2019, the Company provided an $ 89.0 million related party bridge loan to Wesco V in connection with the acquisition of The Courtyards at 65th Street. The note receivable accrued interest at LIBOR plus 1.30 % and was paid off in November 2019. In August 2019, the Company provided a $ 44.4 million related party bridge loan to BEX IV in connection with the acquisition of 777 Hamilton. The note receivable accrued interest at 3.25 %. In November 2019, the term of the bridge loan was extended to February 2020, but was paid off in December 2019. 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. F- 38 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 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 apartment home community development located in Burlingame, CA. This investment accrues interest based on an initial 12.0 % preferred return. The investment is scheduled to mature in April 2024. In May 2018, the Company made a commitment to fund a $ 26.5 million preferred equity investment in an entity whose sponsors include an affiliate of MMC. The entity wholly owns a 400 apartment home community located in Ventura, CA. This investment accrues interest based on a 10.25 % preferred return. The investment is scheduled to mature in May 2023. As of December 31, 2020, the Company had funded $ 23.4 million of the commitment. 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 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. In 2015, the Company made preferred equity investments totaling $ 20.0 million in three entities affiliated with MMC that own apartment communities in California. The Company earned a 9.5 % preferred return on each such investment. One $ 5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2017. Another $ 5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2018. The remaining investment was fully redeemed in February 2019. (7) Unsecured Debt Essex does not have any indebtedness as all debt is incurred by the Operating Partnership. Essex guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities up to the maximum amounts and for the full term of the facilities. Unsecured debt consists of the following as of December 31, 2020 and 2019 ($ in thousands): 2020 2019 Weighted Average Maturity In Years Unsecured bonds private placement - fixed rate $ 199,950 $ 199,820 0.5 Term loan - variable rate 549,380 349,189 1.5 Bonds public offering - fixed rate 4,858,655 4,214,197 9.4 Unsecured debt, net (1) 5,607,985 4,763,206 Lines of credit (2) — 55,000 Total unsecured debt $ 5,607,985 $ 4,818,206 Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering 3.4 % 3.8 % Weighted average interest rate on variable rate term loan 1.7 % 2.7 % Weighted average interest rate on lines of credit 1.0 % 2.5 % (1) Includes unamortized discount, net of premiums, of $ 10.1 million and $ 12.2 million and unamortized debt issuance costs of $ 31.9 million and $ 24.5 million as of December 31, 2020 and 2019, respectively. (2) Lines of credit, related to the Company's two lines of unsecured credit aggregating $ 1.24 billion, excludes unamortized debt issuance costs of $ 3.7 million and $ 3.8 million as of December 31, 2020 and 2019, respectively. These debt issuance costs are included in prepaid expenses and other assets on the consolidated balance sheets. F- 39 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 As of both December 31, 2020 and 2019, the Company had $ 200.0 million of private placement unsecured bonds outstanding at an average effective interest rate of 4.4 %. The following is a summary of the Company’s unsecured private placement bonds as of December 31, 2020 and 2019 ($ in thousands): Maturity 2020 2019 Coupon Rate Senior unsecured private placement notes April 2021 100,000 100,000 4.27 % Senior unsecured private placement notes June 2021 50,000 50,000 4.30 % Senior unsecured private placement notes August 2021 50,000 50,000 4.37 % $ 200,000 $ 200,000 As of December 31, 2020 and 2019, the Company had unsecured term loans outstanding of $ 550.0 million and $ 350.0 million, respectively, at an average interest rate of 1.7 % and 2.7 %, respectively. These loans are included in the line "Term loan - variable rate" in the table above, and as of December 31, 2020 and 2019, the carrying value, net of debt issuance costs, was $ 549.4 million and $ 349.2 million, respectively. $ 350.0 million of the term loan matures in February 2022 and $ 200.0 million of the term loan matures in April 2021 with two 12 -month extension options, exercisable at the Company’s option. The Company had entered into five interest rate swap contracts, for a term of five years with a notional amount totaling $ 175.0 million, which will effectively convert the interest rate on $ 175.0 million of the term loan to a fixed rate of 2.3 %. These interest rate swaps are accounted for as cash flow hedges. In February 2020, the Operating Partnership issued $ 500.0 million of senior unsecured notes due on March 15, 2032, with a coupon rate of 2.650 % (the "2032 Notes"), which are payable on March 15 and September 15 of each year, beginning on September 15, 2020. The 2032 Notes were offered to investors at a price of 99.628 % of par value. The 2032 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. The Company used the net proceeds of this offering to repay indebtedness under its unsecured lines of credit, which had been used to fund the buyout of CPPIB's 45.0 % joint venture interests, as well as repay $ 100.3 million of secured debt during the quarter that ended March 31, 2020. In June 2020, the Operating Partnership issued an additional $ 150.0 million of the 2032 Notes at a price of 105.660 % of par value, plus accrued interest from February 2020 up to, but not including, the date of delivery of the additional notes, with an effective yield of 2.093 %. These additional notes have substantially identical terms as the 2032 Notes issued in February 2020. The proceeds were used to repay indebtedness under the Company's unsecured credit facilities and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020, the carrying value of the 2032 Notes, net of premiums and debt issuance costs, was $ 650.7 million. In April 2020, the Company obtained a $ 200.0 million unsecured term loan with a one-year maturity and two 12 -month extension options, exercisable at the Company’s option. The unsecured term loan bears a variable interest rate of LIBOR plus 1.20 % and the proceeds were used to repay all remaining consolidated debt maturing in 2020. In August 2020, the Operating Partnership issued $ 600.0 million of senior unsecured notes, consisting of $ 300.0 million aggregate principal amount due on January 15, 2031 with a coupon rate of 1.650 % (the “2031 Notes”) and $ 300.0 million aggregate principal amount due on September 1, 2050 with a coupon rate of 2.650 % (the “2050 Notes” and together with the 2031 Notes, the “Notes”). The 2031 Notes were offered to investors at a price of 99.035 % of par value and the 2050 Notes at 99.691 % of par value. Interest is payable on the 2031 Notes semiannually on January 15 and July 15 of each year, beginning on January 15, 2021. Interest is payable on the 2050 Notes semiannually on March 1 and September 1 of each year, beginning on March 1, 2021. The 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. The Company used the net proceeds of this offering to repay debt maturities, including certain unsecured private placement notes, secured mortgage notes, and to fund the redemption of $ 300.0 million aggregate principal amount of its outstanding 3.625 % senior unsecured notes due August 2022, and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020, the carrying value of the 2031 Notes and 2050 Notes, net of discount and debt issuance costs was $ 294.5 million and $ 295.7 million, respectively. F- 40 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 In August 2019, the Operating Partnership issued $ 400.0 million of senior unsecured notes due on January 15, 2030, with a coupon rate of 3.000 % per annum (the "2030 Notes"), which are payable on January 15 and July 15 of each year, beginning on January 15, 2020. The 2030 Notes were offered to investors at a price of 98.632 % of the principal amount thereof. The 2030 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex Property Trust, Inc. In October 2019, the Operating Partnership issued an additional $ 150.0 million of the 2030 notes at a price of 101.685 % of the principal amount thereof. These additional notes have substantially identical terms as the 2030 Notes issued in August 2019. The Company used the net proceeds of these offerings to prepay, with no prepayment penalties, certain secured indebtedness under outstanding mortgage notes, to repay indebtedness under its unsecured lines of credit and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020, and 2019, the carrying value of the 2030 Notes, net of discount and debt issuance costs, was $ 543.1 million and $ 542.3 million, respectively. In February 2019, the Operating Partnership issued $ 350.0 million of senior unsecured notes due on March 1, 2029, with a coupon rate of 4.000 % per annum (the "2029 Notes"), which are payable on March 1 and September 1 of each year, beginning on September 1, 2019. The 2029 Notes were offered to investors at a price of 99.188 % of the principal amount thereof. The 2029 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex Property Trust, Inc. In March 2019, the Operating Partnership issued an additional $ 150.0 million of the 2029 Notes at a price of 100.717 % of the principal amount thereof. These additional notes have substantially identical terms as the 2029 Notes issued in February 2019. The Company used the net proceeds of these offerings to repay indebtedness under its unsecured lines of credit and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020, and 2019, the carrying value of the 2029 Notes, net of discount and debt issuance costs was $ 494.8 million and $ 494.1 million, respectively. In March 2018, the Operating Partnership issued $ 300.0 million of senior unsecured notes due on March 15, 2048 with a coupon rate of 4.500 % per annum and are payable on March 15 and September 15 of each year, beginning on September 15, 2018 (the "2048 Notes"). The 2048 Notes were offered to investors at a price of 99.591 % of par value. The 2048 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020 and 2019, the carrying value of the 2048 Notes, net of discount and debt issuance costs was $ 295.8 million and $ 295.6 million, respectively. In April 2017, the Operating Partnership issued $ 350.0 million of senior unsecured notes due on May 1, 2027 with a coupon rate of 3.625 % per annum and are payable on May 1 and November 1 of each year, beginning on November 1, 2017 (the "2027 Notes"). The 2027 Notes were offered to investors at a price of 99.423 % of par value. The 2027 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020 and 2019, the carrying value of the 2027 Notes, net of discount and debt issuance costs was $ 346.8 million and $ 346.3 million, respectively. In April 2016, the Operating Partnership issued $ 450.0 million of senior unsecured notes due on April 15, 2026 with a coupon rate of 3.375 % per annum and are payable on April 15 th and October 15 th of each year, beginning October 15, 2016 (the "2026 Notes"). The 2026 Notes were offered to investors at a price of 99.386 % of par value. The 2026 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020 and 2019, the carrying value of the 2026 Notes, net of discount and debt issuance costs was $ 446.4 million and $ 445.7 million, respectively. In March 2015, the Operating Partnership issued $ 500.0 million of senior unsecured notes due on April 1, 2025 with a coupon rate of 3.5 % per annum and are payable on April 1 st and October 1 st of each year, beginning October 1, 2015 (the "2025 Notes"). The 2025 Notes were offered to investors at a price of 99.747 % of par value. The 2025 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included F- 41 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020 and 2019, the carrying value of the 2025 Notes, net of discount and debt issuance costs was $ 497.6 million and $ 497.1 million, respectively. In April 2014, the Company assumed $ 900.0 million aggregate principal amount of BRE Property Inc.’s 5.500 % senior notes due 2017; 5.200 % senior notes due 2021; and 3.375 % senior notes due 2023 (together the "BRE Notes"). These notes are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020 and 2019, the carrying value of the BRE Notes, plus unamortized premium was $ 296.8 million and $ 599.4 million, respectively. In December 2020, the Company paid off $ 300.0 million of 5.200 % senior notes. In March 2017, the Company paid off $ 300.0 million of 5.500 % senior notes, at maturity. In April 2014, the Operating Partnership issued $ 400.0 million of senior unsecured notes due on May 1, 2024 with a coupon rate of 3.875 % per annum and are payable on May 1 st and November 1 st of each year, beginning November 1, 2014 (the "2024 Notes"). The 2024 Notes were offered to investors at a price of 99.234 % of par value. The 2024 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020 and 2019, the carrying value of the 2024 Notes, net of discount and debt issuance costs was $ 397.8 million and $ 397.1 million, respectively. In April 2013, the Operating Partnership issued $ 300.0 million of senior unsecured notes due on May 1, 2023 with a coupon rate of 3.25 % per annum and are payable on May 1 st and November 1 st of each year, beginning November 1, 2013 (the "2023 Notes"). The 2023 Notes were offered to investors at a price of 99.152 % of par value. The 2023 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2020 and 2019, the carrying value of the 2023 Notes, net of discount and debt issuance costs was $ 298.7 million and $ 298.2 million, respectively. The following is a summary of the Company’s senior unsecured notes as of December 31, 2020 and 2019 ($ in thousands): Maturity 2020 2019 Coupon Rate Senior notes March 2021 $ — $ 300,000 5.200 % Senior notes August 2022 — 300,000 3.625 % Senior notes January 2023 300,000 300,000 3.375 % Senior notes May 2023 300,000 300,000 3.250 % Senior notes May 2024 400,000 400,000 3.875 % Senior notes April 2025 500,000 500,000 3.500 % Senior notes April 2026 450,000 450,000 3.375 % Senior notes May 2027 350,000 350,000 3.625 % Senior notes March 2029 500,000 500,000 4.000 % Senior notes January 2030 550,000 550,000 3.000 % Senior notes January 2031 300,000 — 1.650 % Senior notes March 2032 650,000 — 2.650 % Senior notes March 2048 300,000 300,000 4.500 % Senior notes September 2050 300,000 — 2.650 % $ 4,900,000 $ 4,250,000 The aggregate scheduled principal payments of unsecured debt payable, excluding lines of credit, at December 31, 2020 are as follows ($ in thousands): F- 42 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 2021 $ — 2022 — 2023 600,000 2024 400,000 2025 500,000 Thereafter 3,400,000 $ 4,900,000 As of December 31, 2020, the Company had two unsecured lines of credit aggregating $ 1.24 billion, including a $ 1.2 billion unsecured line of credit and a $ 35.0 million working capital unsecured line of credit. As of December 31, 2020, there was no amount outstanding on the $ 1.2 billion unsecured line of credit. As of December 31, 2019, there was $ 55.0 million outstanding on this line. The interest rate is based on a tiered rate structure tied to the Company's credit ratings and was LIBOR plus 0.825 % as of December 31, 2020. The $ 1.2 billion unsecured line of credit has a scheduled maturity date in December 2023 with one 18-month extension, exercisable at the Company's option. As of both December 31, 2020 and 2019, there was no amount outstanding on the Company's $ 35.0 million working capital unsecured line of credit. The interest rate on the amended line is based on a tiered rate structure tied to the Company's credit ratings and is currently at LIBOR plus 0.825 %. The Company’s unsecured lines of credit and unsecured debt agreements contain debt covenants related to limitations on indebtedness and liabilities, and maintenance of minimum levels of consolidated earnings before depreciation, interest and amortization. The Company was in compliance with the debt covenants as of December 31, 2020 and 2019. (8) Mortgage Notes Payable Essex does not have any indebtedness as all debt is incurred by the Operating Partnership. Mortgage notes payable consist of the following as of December 31, 2020 and 2019 ($ in thousands): 2020 2019 Fixed rate mortgage notes payable $ 419,323 $ 736,490 Variable rate mortgage notes payable (1) 224,227 254,177 Total mortgage notes payable (2) $ 643,550 $ 990,667 Number of properties securing mortgage notes 12 24 Remaining terms 1 - 26 years 1 - 27 years Weighted average interest rate 2.7 % 4.1 % The aggregate scheduled principal payments of mortgage notes payable at December 31, 2020 are as follows ($ in thousands): 2021 $ 3,501 2022 43,188 2023 2,945 2024 3,109 2025 133,054 Thereafter 455,629 $ 641,426 (1) Variable rate mortgage notes payable, including $ 225.1 million in bonds that have been converted to variable rate through total return swap contracts, consists of multifamily housing mortgage revenue bonds secured by deeds of trust on rental properties and guaranteed by collateral pledge agreements, payable monthly at a variable rate as defined in the Loan Agreement (approximately 1.2 % at December 2020 and 2.3 % at December 2019) including credit enhancement and underwriting fees. Among the terms imposed on the properties, which are security for the bonds, is a requirement that 20 % of the apartment homes are subject to tenant income criteria. Once the bonds have been repaid, the properties may no F- 43 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 longer be obligated to comply with such tenant income criteria. Principal balances are due in full at various maturity dates from December 2027 through December 2046. The Company had no interest rate cap agreements as of December 31, 2020 and 2019, respectively. (2) Includes total unamortized premium, net of discounts, of $ 3.9 million and $ 5.9 million and reduced by unamortized debt issuance costs of $ 1.8 million and $ 2.6 million as of December 31, 2020 and 2019, respectively. For the Company’s mortgage notes payable as of December 31, 2020, monthly interest expense and principal amortization, excluding balloon payments, totaled approximately $ 3.0 million and $ 0.5 million, respectively. Second deeds of trust accounted for none of the mortgage notes payable balance as of both December 31, 2020 and 2019. Repayment of debt before the scheduled maturity date could result in prepayment penalties. The prepayment penalty on the majority of the Company’s mortgage notes payable are computed by the greater of (a) 1% of the amount of the principal being prepaid or (b) the present value of the principal being prepaid multiplied by the difference between the interest rate of the mortgage note and the stated yield rate on a U.S. treasury security which generally has an equivalent remaining term as the mortgage note. (9) Derivative Instruments and Hedging Activities The Company uses interest rate swaps, interest rate caps, and total return swap contracts to manage certain interest rate risks. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps and total return swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In November 2016, the Company replaced its $ 225.0 million term loan with a $ 350.0 million five -year term loan with a delayed draw feature that carries a variable interest rate of LIBOR plus 95 basis points. In 2016, the Company entered into four forward starting interest rate swaps (settlement payments commenced in March 2017) and in 2017, the Company entered into one forward starting interest rate swap (settlement payments commenced in March 2017) all related to the $ 350.0 million term loan. These five swaps, with a total notional amount of $ 175.0 million bear an average fixed interest rate of 2.3 % and are scheduled to mature in February 2022. These derivatives qualify for hedge accounting. As of December 31, 2020 and 2019, the Company had no interest rate caps. As of December 31, 2020 and 2019, the aggregate carrying value of the interest rate swap contracts were a liability of $ 2.4 million and an asset of $ 0.8 million, respectively. As of December 31, 2020 and 2019, the swap contracts were presented in the consolidated balance sheets as an asset of zero and $ 1.0 million, respectively, and were in prepaid expenses and other assets on the consolidated balance sheets, and a liability of $ 2.4 million and $ 0.2 million, respectively, and were included in other liabilities on the consolidated balance sheets. The Company had no interest rate caps on the balance sheets as of December 31, 2020 and 2019. Hedge ineffectiveness related to cash flow hedges, which is included in interest expense on the consolidated statements of income, was zero , a loss of $ 0.2 million, and a loss of $ 0.1 million for the years ended December 31, 2020, 2019, and 2018 respectively. The Company has four total return swap contracts, with an aggregate notional amount of $ 254.8 million, that effectively convert $ 225.1 million of mortgage notes payable and $ 29.7 million of mortgage notes payable related to real estate held for sale that is included in liabilities associated with real estate held for sale on the consolidated balance sheet 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 our counterparties during the initial period of the total return swap until the Company's option to call the mortgage notes at par can be exercised. The Company can currently call all four of the total return swaps with $ 254.8 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting and had a carrying and fair value of zero at both December 31, 2020 and 2019, respectively. These total return swaps are scheduled to mature between November 2022 and December 2024. The realized gains of $ 10.7 million, F- 44 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 $ 8.4 million, and $ 8.7 million as of December 31, 2020, 2019, and 2018, respectively, were reported on the consolidated statements of income as total return swap income. (10) Lease Agreements - Company as Lessor As of December 31, 2020, the Company is a lessor of apartment homes at all of its consolidated operating and lease-up communities, one commercial building, and commercial portions of mixed use communities. The apartment homes are rented under short-term leases (generally, lease terms of 9 to 12 months) while commercial lease terms typically range from 5 to 20 years. All such leases are classified as operating leases. Although the majority of the Company’s apartment home and commercial leasing income is derived from fixed lease payments, some lease agreements also allow for variable payments. The primary driver of variable leasing income comes from utility reimbursements from apartment home leases and common area maintenance reimbursements from commercial leases. A small number of commercial leases contain provisions for lease payments based on a percentage of gross retail sales over set hurdles. At the end of the term of apartment home leases, unless the lessee decides to renew the lease with the Company at the market rate or gives notice not to renew, the lease will be automatically renewed on a month-to-month term. Apartment home leases include an option to terminate the lease, however the lessee must pay the Company for expected or actual downtime to find a new tenant to lease the space or a lease-break fee specified in the lease agreement. Most commercial leases include options to renew, with the renewal periods extending the term of the lease for no greater than the same period of time as the original lease term. The initial option to renew for commercial leases will typically be based on a fixed price while any subsequent renewal options will generally be based on the current market rate at the time of the renewal. Certain commercial leases contain lease termination options that would require the lessee to pay termination fees based on the expected amount of time it would take the Company to re-lease the space. The Company’s apartment home and commercial lease agreements do not contain residual value guarantees. As the Company is the lessor of real estate assets which tend to either hold their value or appreciate, residual value risk is not deemed to be substantial. Furthermore, the Company carries comprehensive liability, fire, extended coverage, and rental loss insurance for each of its communities as well as limited insurance coverage for certain types of extraordinary losses, such as, for example, losses from terrorism or earthquakes. A maturity analysis of undiscounted future minimum non-cancelable base rent to be received under the above operating leases as of December 31, 2020 is summarized as follows ($ in thousands): Future Minimum Rent 2021 $ 720,570 2022 34,240 2023 14,971 2024 13,619 2025 11,265 Thereafter 24,855 $ 819,520 Practical Expedients The Company has elected to account for operating lease (e.g., fixed payments including rent) and non-lease components (e.g., utility reimbursements and common-area maintenance costs) as a single combined lease component under ASC 842 "Leases" as the lease components are the predominant elements of the combined components. As part of the transition to ASC Topic 842, the Company has elected to use the modified retrospective transition method with the new standard being applied as of the January 1, 2019 adoption date. Additionally, the Company has elected, as of the F- 45 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 adoption date, not to reassess whether expired or existing contracts contain leases under the new definition of a lease, not to reassess the lease classification for expired or existing leases, not to reassess whether previously capitalized initial direct costs would qualify for capitalization under ASC Topic 842, and not to reassess whether existing or expired land easements meet the definition of a lease. (11) Lease Agreements - Company as Lessee As of December 31, 2020, the Company is a lessee of corporate office space, ground leases and a parking lease associated with various consolidated properties, and equipment. Lease terms for the Company's office leases, in general, range between 5 to 10 years while ground leases and the parking lease have terms typically ranging from 20 to 85 years. The corporate office leases occasionally contain renewal options of approximately five years while certain ground leases contain renewal options that can extend the lease term from approximately 10 to 39 years. A majority of the Company’s ground leases and the parking lease are subject to changes in the Consumer Price Index ("CPI"). Furthermore, certain of the Company’s ground leases include rental payments based on a percentage of gross or net income. While lease liabilities are not remeasured as a result of changes in the CPI or percentage of gross or net income, such changes are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. As of December 31, 2020 and 2019, the Company had no material finance leases. Supplemental consolidated balance sheet information related to leases as of December 31, 2020 and 2019 is as follows ($ in thousands): Classification December 31, 2020 December 31, 2019 Assets Operating lease right-of-use assets Operating lease right-of-use assets $ 72,143 $ 74,744 Total leased assets $ 72,143 $ 74,744 Liabilities Operating lease liabilities Operating lease liabilities 74,037 76,740 Total lease liabilities $ 74,037 $ 76,740 The components of lease expense for the years ended December 31, 2020 and 2019 were as follows ($ in thousands): December 31, 2020 December 31, 2019 Operating lease cost $ 6,749 $ 6,745 Variable lease cost 1,436 783 Short-term lease cost 432 610 Sublease income ( 438 ) ( 436 ) Total lease cost $ 8,179 $ 7,702 A maturity analysis of lease liabilities as of December 31, 2020 is as follows ($ in thousands): F- 46 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 Operating Leases 2021 $ 6,963 2022 6,987 2023 6,962 2024 6,690 2025 6,310 Thereafter 140,417 Total lease payments $ 174,329 Less: Imputed interest ( 100,292 ) Present value of lease liabilities $ 74,037 Lease term and discount rate information for leases at December 31, 2020 and 2019 are as follows: December 31, 2020 December 31, 2019 Weighted-average of remaining lease terms (years) Operating Leases 39 39 Weighted-average of discount rates Operating Leases 5.00 % 4.99 % Practical Expedients As part of the transition to ASC Topic 842, the Company elected to use the modified retrospective transition method with the new standard being applied as of the January 1, 2019 adoption date. Additionally, the Company has elected, as of the adoption date, not to reassess whether expired or existing contracts contain leases under the new definition of a lease, not to reassess the lease classification for expired or existing leases, not to reassess whether previously capitalized initial direct costs would qualify for capitalization under ASC Topic 842, and not to reassess whether existing or expired land easements meet the definition of a lease. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes the lease expense for such leases on a straight-line basis over the lease term. The Company has elected to account for lease components (e.g., fixed payments including rent) and non-lease components (e.g., common-area maintenance costs) as a single combined lease component as the lease components are the predominant elements of the combined components. (12) Equity Transactions Common Stock Offerings In September 2018, the Company entered into an equity distribution agreement pursuant to which the Company may offer and sell shares of its common stock having an aggregate gross sales price of up to $ 900.0 million (the "2018 ATM Program"). Upon entering into the 2018 ATM Program, the Company simultaneously terminated its existing equity distribution agreements, which were entered into in March 2016 in connection with its prior at-the-market equity offering program (the "2016 ATM Program"). In connection with the 2018 ATM Program, the Company may also enter into related forward sale agreements whereby, at the Company’s discretion, it may sell shares of its common stock under the 2018 ATM Program under forward sale agreements. The use of a forward sale agreement would allow the Company to lock in a share price on the sale of shares of its common stock at the time the agreement is executed, but defer receiving the proceeds from the sale of shares until a later date. The Company anticipates using the net proceeds, which are contributed to the Operating Partnership, to acquire, develop, or F- 47 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 redevelop properties, which primarily will be apartment communities, to make other investments and for working capital or general corporate purposes, which may include the repayment of indebtedness. For the year ended December 31, 2020, the Company did not issue any shares of common stock through the 2018 ATM Program. For the year ended December 31, 2019, the Company issued 228,271 shares of common stock through the 2018 ATM Program at an average price of $ 321.56 per share for proceeds of $ 73.4 million. For the year ended December 31, 2018, the Company did not sell any shares of its common stock through the 2018 ATM Program or through the 2016 ATM Program. As of December 31, 2020, there were no outstanding forward sale agreements, and $ 826.6 million of shares remained available to be sold under this program. Operating Partnership Units and Long-Term Incentive Plan ("LTIP") Units As of December 31, 2020 and 2019, the Operating Partnership had outstanding 2,188,623 and 2,158,396 operating partnership units and 106,137 and 143,257 vested LTIP units, respectively. The Operating Partnership’s general partner, Essex, owned 96.6 % of the partnership interests in the Operating Partnership as of both December 31, 2020 and 2019, and Essex is responsible for the management of the Operating Partnership’s business. As the general partner of the Operating Partnership, Essex effectively controls the ability to issue common stock of Essex upon a limited partner’s notice of redemption. Essex has generally acquired Operating Partnership limited partnership units ("OP Units") upon a limited partner’s notice of redemption in exchange for shares of its common stock. The redemption provisions of OP Units owned by limited partners that permit Essex to settle in either cash or common stock at the option of Essex were further evaluated in accordance with applicable accounting guidance to determine whether temporary or permanent equity classification on the balance sheet is appropriate. The Operating Partnership evaluated this guidance, including the requirement to settle in unregistered shares, and determined that, with few exceptions, these OP Units meet the requirements to qualify for presentation as permanent equity. LTIP units represent an interest in the Operating Partnership for services rendered or to be rendered by the LTIP unitholder in its capacity as a partner, or in anticipation of becoming a partner, in the Operating Partnership. Upon the occurrence of specified events, LTIP units may over time achieve full parity with common units of the Operating Partnership for all purposes. Upon achieving full parity, LTIP units will be exchanged for an equal number of the OP Units. The collective redemption value of OP Units and LTIP units owned by the limited partners, not including Essex, was approximately $ 544.8 million and $ 692.5 million based on the closing price of Essex's common stock as of December 31, 2020 and 2019, respectively. F- 48 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (13) Net Income Per Common Share and Net Income Per Common Unit Essex Property Trust, Inc. Basic and diluted income per share is calculated as follows for the years ended December 31 ($ in thousands, except share and per share amounts): 2020 2019 2018 Income Weighted- average Common Shares Per Common Share Amount Income Weighted- average Common Shares Per Common Share Amount Income Weighted- average Common Shares Per Common Share Amount Basic: Net income available to common stockholders $ 568,870 65,454,057 $ 8.69 $ 439,286 65,840,422 $ 6.67 $ 390,153 66,041,058 $ 5.91 Effect of Dilutive Securities Stock options — 16,678 — 99,033 — 44,031 DownREIT units 783 94,247 — — — — Diluted: Net income available to common stockholders $ 569,653 65,564,982 $ 8.69 $ 439,286 65,939,455 $ 6.66 $ 390,153 66,085,089 $ 5.90 The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,296,608 , 2,300,478 , and 2,274,941 , which include vested Series Z-1 Incentive Units, 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units, for the years ended December 31, 2020, 2019 and 2018, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $ 20.0 million, $ 15.3 million, and $ 13.5 million for the years ended December 31, 2020, 2019 and 2018, respectively. Additionally, the table excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents. Stock options of 403,458 , 115,066 , and 160,039 , for the years ended December 31, 2020, 2019, and 2018, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the average unearned compensation were greater than the average market price of the common stock for the years ended and, therefore, were anti-dilutive. Essex Portfolio, L.P. Basic and diluted income per unit is calculated as follows for the years ended December 31 ($ in thousands, except unit and per unit amounts): 2020 2019 2018 Income Weighted- average Common Units Per Common Unit Amount Income Weighted- average Common Units Per Common Unit Amount Income Weighted- average Common Units Per Common Unit Amount Basic: Net income available to common unitholders $ 588,782 67,750,665 $ 8.69 $ 454,629 68,140,900 $ 6.67 $ 403,605 68,315,999 $ 5.91 Effect of Dilutive Securities Stock options — 16,678 — 99,033 — 44,031 DownREIT units 783 94,247 — — — — Diluted: Net income available to common unitholders $ 589,565 67,861,590 $ 8.69 $ 454,629 68,239,933 $ 6.66 $ 403,605 68,360,030 $ 5.90 F- 49 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 Stock options of 403,458 , 115,066 , and 160,039 , for the years ended December 31, 2020, 2019, and 2018, respectively, were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for the years ended and, therefore, were anti-dilutive. Additionally, the table excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents. F- 50 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (14) Equity Based Compensation Plans Stock Options and Restricted Stock In May 2018, stockholders approved the Company’s 2018 Stock Award and Incentive Compensation Plan ("2018 Plan"). The 2018 Plan serves as the successor to the Company’s 2013 Stock Incentive Plan (the "2013 Plan"). The Company’s 2018 Plan provides incentives to attract and retain officers, directors and key employees. The 2018 Plan provides for the grant of stock-based awards to employees, directors and consultants of the Company and its affiliates. The aggregate number of shares of the Company’s common stock available for issuance pursuant to awards granted under the 2018 Plan is 2,000,000 shares, plus the number of shares authorized for grants and available for issuance under the 2013 Plan as of the effective date of the 2018 Plan and the number of shares subject to outstanding awards under the 2013 Plan that are forfeited or otherwise not issued under such awards. No further awards will be granted under the 2013 Plan and the shares that remained available for future issuance under the 2013 Plan as of the effective date of the 2018 Plan will be available for issuance under the 2018 Plan. In connection with the adoption of the 2018 Plan, the Board delegated to the Compensation Committee of the Board the authority to administer the 2018 Plan. Equity-based compensation costs for options and restricted stock under the fair value method totaled $ 12.9 million, $ 11.4 million, and $ 12.1 million for years ended December 31, 2020, 2019 and 2018, respectively. For each of the years ended December 31, 2020, 2019 and 2018 equity-based compensation costs included $ 3.5 million related to restricted stock for bonuses awarded based on asset dispositions, which is recorded as a cost of real estate and land sold, respectively. Stock-based compensation for options and restricted stock related to recipients who are direct and incremental to projects under development were capitalized and totaled $ 1.3 million, $ 1.6 million, and $ 2.0 million for the years ended December 31, 2020, 2019 and 2018, respectively. The intrinsic value of the options exercised totaled $ 7.4 million, $ 18.7 million, and $ 3.1 million, for the years ended December 31, 2020, 2019, and 2018 respectively. The intrinsic value of the options exercisable totaled $ 3.4 million and $ 23.5 million as of December 31, 2020 and 2019, respectively. Total unrecognized compensation cost related to unvested stock options totaled $ 4.4 million as of December 31, 2020 and the unrecognized compensation cost is expected to be recognized over a period of 2.2 years. The average fair value of stock options granted for the years ended December 31, 2020, 2019 and 2018 was $ 20.69 , $ 24.02 and $ 26.13 , respectively. Certain stock options granted in 2020, 2019, and 2018 included a $ 100 cap, $ 125 cap, or no cap on the appreciation of the market price over the exercise price. The fair value of stock options was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants: 2020 2019 2018 Stock price $ 244.74 $ 304.85 $ 262.09 Risk-free interest rates 0.83 % 2.01 % 2.76 % Expected lives 6 years 6 years 6 years Volatility 25.72 % 19.56 % 24.89 % Dividend yield 2.93 % 2.72 % 2.81 % A summary of the status of the Company’s stock option plans as of December 31, 2020, 2019, and 2018 and changes during the years ended on those dates is presented below: F- 51 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 2020 2019 2018 Shares Weighted- average exercise price Shares Weighted- average exercise price Shares Weighted- average exercise price Outstanding at beginning of year 572,971 $ 251.10 612,954 $ 224.57 536,208 $ 211.41 Granted 149,020 244.74 148,147 304.85 119,361 262.09 Exercised ( 70,802 ) 208.57 ( 182,817 ) 205.25 ( 39,175 ) 159.05 Forfeited and canceled ( 38,080 ) 228.64 ( 5,313 ) 257.87 ( 3,440 ) 221.80 Outstanding at end of year 613,109 255.86 572,971 251.10 612,954 224.57 Options exercisable at year end 361,985 245.83 305,379 223.90 322,837 206.63 The following table summarizes information about restricted stock outstanding as of December 31, 2020, 2019 and 2018 and changes during the years ended: 2020 2019 2018 Shares Weighted- average grant price Shares Weighted- average grant price Shares Weighted- average grant price Unvested at beginning of year 114,877 $ 197.62 91,058 $ 180.99 90,823 $ 163.49 Granted 45,196 248.16 41,643 235.93 51,945 194.70 Vested ( 15,116 ) 170.61 ( 13,222 ) 143.56 ( 48,212 ) 150.76 Forfeited and canceled ( 12,354 ) 184.11 ( 4,602 ) 158.06 ( 3,498 ) 158.71 Unvested at end of year 132,603 214.34 114,877 197.62 91,058 180.99 The unrecognized compensation cost related to unvested restricted stock totaled $ 13.8 million as of December 31, 2020 and is expected to be recognized over a period of 2.3 years. Long-Term Incentive Plans – LTIP Units On December 9, 2014, the Operating Partnership issued 44,750 LTIP units under the 2015 Long-Term Incentive Plan Award agreements to executives of the Company. The 2015 Long-Term Incentive Plan Units (the "2015 LTIP Units") are subject to forfeiture based on performance-based and service based conditions. An additional 24,000 LTIP units were granted subject only to performance-based criteria and were fully vested on the date granted. The 2015 LTIP Units, that are subject to vesting, vested at 20 % per year on each of the first five anniversaries of the initial grant date. The 2015 LTIP Units performance conditions measurement ended on December 9, 2015 and 95.75 % of the units awarded were earned by the recipients. 2015 LTIP Units not earned based on the performance-based criteria were automatically forfeited by the recipients. The 2015 LTIP Units, once earned and vested, are convertible one -for-one into OP Units which, in turn, are convertible into common stock of the Company subject to a 10 -year liquidity restriction. In December 2013, the Operating Partnership issued 50,500 LTIP units under the 2014 Long-Term Incentive Plan Award agreements to executives of the Company. The 2014 Long-Term Incentive Plan Units (the "2014 LTIP Units") were subject to forfeiture based on performance-based conditions and are currently subject to service based vesting. The 2014 LTIP Units vested 25 % per year on each of the first four anniversaries of the initial grant date. In December 2014, the Company achieved the performance criteria and all of the 2014 LTIP Units awarded were earned by the recipients, subject to satisfaction of service based vesting conditions. The 2014 LTIP Units are convertible one -for-one into OP Units which, in turn, are convertible into common stock of the Company subject to a ten year liquidity restriction. The estimated fair value of the 2015 LTIP Units and 2014 LTIP Units were determined on the grant date using Monte Carlo simulations under a risk-neutral premise and considered Essex’s stock price on the date of grant, the unpaid dividends on unvested units and the discount factor for 10 years of illiquidity. F- 52 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 Prior to 2013, the Company issued Series Z Incentive Units and Series Z-1 Incentive Units (collectively referred to as "Z Units") of limited partnership interest in the Operating Partnership. Vesting in the Z Units is based on performance criteria established in the plan. The criteria can be revised by the Compensation Committee of the Board of Directors if the Committee deems that the plan's criterion is unachievable for any given year. The sale of Z Units is contractually prohibited. Z Units are convertible into Operating Partnership units which are exchangeable for shares of the Company’s common stock that have marketability restrictions. The estimated fair value of Z Units were determined on the grant date and considered the Company's stock price on the date of grant, the dividends that are not paid on unvested units and a marketability discount for the 8 to 15 years of illiquidity. Compensation expense is calculated by multiplying estimated vesting increases for the period by the estimated fair value as of the grant date. During 2011 and 2010, the Operating Partnership issued 154,500 Series Z-1 Incentive Units (the "Z-1 Units") of limited partner interest to executives of the Company. The Z-1 Units are convertible one-for-one into common units of the Operating Partnership (which, in turn, are convertible into common stock of the Company) upon the earlier to occur of 100 percent vesting of the units or the year 2026. The conversion ratchet (accounted for as vesting) of the Z-1 Units into common units, is to increase consistent with the Company’s annual FFO growth, but is not to be less than zero or greater than 14 percent. Z-1 Unitholders are entitled to receive distributions, on vested units, that are now equal to dividends distributed to common stockholders. Equity-based compensation costs for LTIP and Z Units under the fair value method totaled approximately zero , $ 0.9 million and $ 0.8 million for the years ended December 31, 2020, 2019 and 2018, respectively. Equity-based compensation costs related to LTIP Units attributable to recipients who are direct and incremental to these projects was capitalized to real estate under development and totaled approximately zero , $ 0.2 million, and $ 0.2 million, for the years ended December 31, 2020, 2019, and 2018, respectively. The intrinsic value of the vested and unvested LTIP Units totaled $ 25.2 million as of December 31, 2020. Total unrecognized compensation cost related to the unvested LTIP Units under the LTIP Units plans was zero as of December 31, 2020. The following table summarizes information about the LTIP Units outstanding as of December 31, 2020: Long-Term Incentive Plan - LTIP Units Total Vested Units Total Unvested Units Total Outstanding Units Weighted- average Grant-date Fair Value Weighted- average Remaining Contractual Life (years) Balance, December 31, 2017 213,300 23,212 236,512 $ 75.03 7.5 Granted — — — Vested 12,051 ( 12,051 ) — Converted ( 91,270 ) — ( 91,270 ) Cancelled — — — Balance, December 31, 2018 134,081 11,161 145,242 $ 75.03 6.5 Granted — — — Vested 9,176 ( 9,176 ) — Converted — — — Cancelled — ( 95 ) ( 95 ) Balance, December 31, 2019 143,257 1,890 145,147 $ 75.03 5.2 Granted — — — Vested 1,890 ( 1,890 ) — Converted ( 39,010 ) — ( 39,010 ) Cancelled — — — Balance, December 31, 2020 106,137 — 106,137 $ 84.47 3.6 F- 53 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 (15) 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. F- 54 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 The revenues and NOI for each of the reportable operating segments are summarized as follows for the years ended December 31, 2020, 2019, and 2018 ($ in thousands): Years Ended December 31, 2020 2019 2018 Revenues: Southern California $ 570,673 $ 597,330 $ 579,533 Northern California 610,867 557,139 520,117 Seattle Metro 243,900 243,060 234,138 Other real estate assets 60,710 53,099 57,082 Total property revenues $ 1,486,150 $ 1,450,628 $ 1,390,870 Net operating income: Southern California $ 393,776 $ 425,882 $ 412,517 Northern California 435,403 412,706 384,548 Seattle Metro 166,847 172,601 163,927 Other real estate assets 49,724 42,912 45,537 Total net operating income 1,045,750 1,054,101 1,006,529 Management and other fees from affiliates 9,598 9,527 9,183 Corporate-level property management expenses ( 34,573 ) ( 34,067 ) ( 32,055 ) Depreciation and amortization ( 525,497 ) ( 483,750 ) ( 479,884 ) General and administrative ( 65,388 ) ( 54,262 ) ( 53,451 ) Expensed acquisition and investment related costs ( 1,591 ) ( 168 ) ( 194 ) Impairment loss ( 1,825 ) ( 7,105 ) — Gain (loss) on sale of real estate and land 64,967 ( 3,164 ) 61,861 Interest expense ( 220,633 ) ( 217,339 ) ( 220,492 ) Total return swap income 10,733 8,446 8,707 Interest and other income 40,999 46,298 23,010 Equity income from co-investments 66,512 112,136 89,132 Deferred tax expense on unrealized gain on unconsolidated co-investment ( 1,531 ) ( 1,457 ) — (Loss) Gain on early retirement of debt, net ( 22,883 ) 3,717 — Gain on remeasurement of co-investment 234,694 31,535 1,253 Net income $ 599,332 $ 464,448 $ 413,599 F- 55 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 Total assets for each of the reportable operating segments are summarized as follows as of December 31, 2020 and 2019 ($ in thousands): As of December 31, 2020 2019 Assets: Southern California $ 3,993,275 $ 4,139,104 Northern California 5,520,019 4,408,404 Seattle Metro 1,403,678 1,456,187 Other real estate assets 10,814 344,965 Net reportable operating segments - real estate assets 10,927,786 10,348,660 Real estate under development 386,047 546,075 Co-investments 1,018,010 1,335,339 Real estate held for sale 57,938 — Cash and cash equivalents, including restricted cash 84,041 81,094 Marketable securities 147,768 144,193 Notes and other receivables 195,104 134,365 Operating lease right-of-use assets 72,143 74,744 Prepaid expenses and other assets 47,340 40,935 Total assets $ 12,936,177 $ 12,705,405 (16) 401(k) Plan The Company has a 401(k) benefit plan (the "Plan") for all eligible employees. Employee contributions are limited by the maximum allowed under Section 401(k) of the Internal Revenue Code. The Company matches 50 % of the employee contributions up to a specified maximum. Company contributions to the Plan were approximately $ 2.7 million, $ 2.4 million, and $ 2.1 million for the years ended December 31, 2020, 2019, and 2018, respectively. (17) Commitments and Contingencies The Company's total minimum lease payment commitments, under ground leases, parking leases, and operating leases are disclosed in Note 11, Lease Agreements - Company as Lessee. To the extent that an environmental matter arises or is identified in the future that has other than a remote risk of having a material impact on the financial statements, the Company will disclose the estimated range of possible outcomes associated with it and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, the impairment will be recognized. The Company has no way of determining the magnitude of any potential liability to which it may be subject arising out of unknown environmental conditions with respect to the communities currently or formerly owned by the Company. No assurance can be given that: existing environmental assessments conducted with respect to any of these communities have revealed all environmental conditions or potential liabilities associated with such conditions; any prior owner or operator of a property did not create any material environmental condition not known to the Company; or a material unknown environmental condition does not otherwise exist as to any one or more of the communities. The Company has limited insurance coverage for some of the types of environmental conditions and associated liabilities described above. The Company has entered into transactions that may require the Company to pay the tax liabilities of the partners or members in the Operating Partnership or in the DownREIT entities. These transactions are within the Company’s control. Although the Company plans to hold the contributed assets or defer recognition of gain on their sale pursuant to like-kind exchange rules under Section 1031 of the Internal Revenue Code, the Company can provide no assurance that it will be able to do so and if such tax liabilities were incurred they may have a material impact on the Company’s financial position. F- 56 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2020, 2019, and 2018 There continue to be lawsuits against owners and managers of certain of the Company's apartment communities alleging personal injury and property damage caused by the presence of mold in the residential units and common areas of those communities. Some of these lawsuits have resulted in substantial monetary judgments or settlements in the past. The Company has been sued for mold related matters and has settled some, but not all, of such suits. Insurance carriers have reacted to the increase in mold related liability awards by excluding mold related claims from standard general liability policies and pricing mold endorsements at prohibitively high rates. The Company has, however, purchased pollution liability insurance which includes coverage for some mold claims. The Company has also adopted policies intended to promptly address and resolve reports of mold and to minimize any impact mold might have on tenants of its properties. The Company believes its mold policies and proactive response to address reported mold exposures reduces its risk of loss from mold claims. While no assurances can be given that the Company has identified and responded to all mold occurrences, the Company promptly addresses and responds to all known mold reports. Liabilities resulting from such mold related matters are not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. As of December 31, 2020, potential liabilities for mold and other environmental liabilities are not quantifiable and an estimate of possible loss cannot be made. The Company carries comprehensive liability, fire, extended coverage and rental loss insurance for each of the communities. There are, however, certain types of extraordinary losses, such as, for example, losses from terrorism or earthquakes, for which the Company has limited insurance coverage. Substantially all of the communities are located in areas that are subject to earthquake activity. The Company has established a wholly-owned insurance subsidiary, Pacific Western Insurance LLC ("PWI"). Through PWI, the Company is self-insured for earthquake related losses. Additionally, since January 2008, PWI has provided property and casualty insurance coverage for the first $ 5.0 million of the Company’s property level insurance claims per incident. As of December 31, 2020, PWI has cash and marketable securities of approximately $ 152.8 million. These assets are consolidated in the Company’s financial statements. Beginning in 2013, the Company has obtained limited third party seismic insurance on selected assets in the Company's co-investments. The Company is subject to various other legal and/or regulatory proceedings arising in the course of its business operations. 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. (18) Subsequent Events In February 2021, the Company repaid $ 100.0 million of unsecured debt due to mature in 2021 at an effective rate of 4.3 %. F- 57 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Encumbered communities Belmont Station 275 Los Angeles, CA 29,728 8,100 66,666 7,386 8,267 73,885 82,152 ( 33,891 ) 2009 Mar-09 3-30 Brio 300 Walnut Creek, CA 98,956 16,885 151,741 1,263 16,885 153,004 169,889 ( 8,559 ) 2015 Jun-19 3-30 Form 15 242 San Diego, CA 42,271 24,510 72,221 11,835 25,540 83,026 108,566 ( 13,807 ) 2014 Mar-16 3-30 Fountain Park 705 Playa Vista, CA 82,707 25,073 94,980 36,019 25,203 130,869 156,072 ( 80,772 ) 2002 Feb-04 3-30 Highridge 255 Rancho Palos Verdes, CA 69,345 5,419 18,347 33,311 6,073 51,004 57,077 ( 41,762 ) 1972 May-97 3-30 Magnolia Square/Magnolia Lane (2) 188 Sunnyvale, CA 52,303 8,190 24,736 18,553 8,191 43,288 51,479 ( 26,038 ) 1963 Sep-07 3-30 Marquis 166 San Jose, CA 44,077 20,495 47,823 178 20,495 48,001 68,496 ( 3,290 ) 2015 Dec-18 3-30 Sage at Cupertino 230 San Jose, CA 51,758 35,719 53,449 9,242 35,719 62,691 98,410 ( 9,454 ) 1971 Mar-17 3-30 The Barkley (3) 161 Anaheim, CA 14,873 — 8,520 7,659 2,353 13,826 16,179 ( 10,114 ) 1984 Apr-00 3-30 The Dylan 184 West Hollywood, CA 58,515 19,984 82,286 1,502 19,990 83,782 103,772 ( 18,368 ) 2015 Mar-15 3-30 The Huxley 187 West Hollywood, CA 53,277 19,362 75,641 1,710 19,371 77,342 96,713 ( 17,213 ) 2014 Mar-15 3-30 Township 132 Redwood City, CA 45,740 19,812 70,619 630 19,812 71,249 91,061 ( 3,199 ) 2014 Sep-19 3-30 3,025 $ 643,550 $ 203,549 $ 767,029 $ 129,288 $ 207,899 $ 891,967 $ 1,099,866 $ ( 266,467 ) Unencumbered Communities Agora 49 Walnut Creek, CA — 4,932 60,423 187 4,934 60,608 65,542 ( 1,987 ) 2016 Jan-20 3-30 Alessio 624 Los Angeles, CA — 32,136 128,543 14,335 32,136 142,878 175,014 ( 37,803 ) 2001 Apr-14 5-30 Allegro 97 Valley Village, CA — 5,869 23,977 2,758 5,869 26,735 32,604 ( 11,343 ) 2010 Oct-10 3-30 Allure at Scripps Ranch 194 San Diego, CA — 11,923 47,690 1,979 11,923 49,669 61,592 ( 12,386 ) 2002 Apr-14 5-30 Alpine Village 301 Alpine, CA — 4,967 19,728 9,687 4,982 29,400 34,382 ( 18,364 ) 1971 Dec-02 3-30 Anavia 250 Anaheim, CA — 15,925 63,712 9,732 15,925 73,444 89,369 ( 25,398 ) 2009 Dec-10 3-30 Annaliese 56 Seattle, WA — 4,727 14,229 808 4,726 15,038 19,764 ( 4,182 ) 2009 Jan-13 3-30 Apex 366 Milpitas, CA — 44,240 103,251 6,095 44,240 109,346 153,586 ( 23,316 ) 2014 Aug-14 3-30 Aqua Marina Del Rey 500 Marina Del Rey, CA — 58,442 175,326 15,117 58,442 190,443 248,885 ( 52,469 ) 2001 Apr-14 5-30 Ascent 90 Kirkland, WA — 3,924 11,862 2,286 3,924 14,148 18,072 ( 4,792 ) 1988 Oct-12 3-30 Ashton Sherman Village 264 Los Angeles, CA — 23,550 93,811 1,536 23,550 95,347 118,897 ( 13,614 ) 2014 Dec-16 3-30 Avant 440 Los Angeles, CA — 32,379 137,940 3,722 32,379 141,662 174,041 ( 26,788 ) 2014 Jun-15 3-30 Avenue 64 224 Emeryville, CA — 27,235 64,403 16,322 27,235 80,725 107,960 ( 18,800 ) 2007 Apr-14 5-30 Aviara (4) 166 Mercer Island, WA — — 49,813 1,874 — 51,687 51,687 ( 13,707 ) 2013 Apr-14 5-30 Avondale at Warner Center 446 Woodland Hills, CA — 10,536 24,522 25,418 10,601 49,875 60,476 ( 36,728 ) 1970 Jan-99 3-30 F- 58 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Bel Air 462 San Ramon, CA — 12,105 18,252 43,348 12,682 61,023 73,705 ( 43,768 ) 1988 Jan-95 3-30 Belcarra 296 Bellevue, WA — 21,725 92,091 2,613 21,725 94,704 116,429 ( 23,150 ) 2009 Apr-14 5-30 Bella Villagio 231 San Jose, CA — 17,247 40,343 4,651 17,247 44,994 62,241 ( 16,688 ) 2004 Sep-10 3-30 BellCentre 248 Bellevue, WA — 16,197 67,207 5,644 16,197 72,851 89,048 ( 18,845 ) 2001 Apr-14 5-30 Bellerive 63 Los Angeles, CA — 5,401 21,803 1,390 5,401 23,193 28,594 ( 8,573 ) 2011 Aug-11 3-30 Belmont Terrace 71 Belmont, CA — 4,446 10,290 7,387 4,473 17,650 22,123 ( 10,455 ) 1974 Oct-06 3-30 Bennett Lofts 165 San Francisco, CA — 21,771 50,800 30,939 28,371 75,139 103,510 ( 22,577 ) 2004 Dec-12 3-30 Bernardo Crest 216 San Diego, CA — 10,802 43,209 5,214 10,802 48,423 59,225 ( 12,642 ) 1988 Apr-14 5-30 Bonita Cedars 120 Bonita, CA — 2,496 9,913 5,834 2,503 15,740 18,243 ( 9,541 ) 1983 Dec-02 3-30 Boulevard 172 Fremont, CA — 3,520 8,182 14,651 3,580 22,773 26,353 ( 18,916 ) 1978 Jan-96 3-30 Brookside Oaks 170 Sunnyvale, CA — 7,301 16,310 27,349 10,328 40,632 50,960 ( 26,656 ) 1973 Jun-00 3-30 Bridle Trails 108 Kirkland, WA — 1,500 5,930 6,690 1,531 12,589 14,120 ( 9,424 ) 1986 Oct-97 3-30 Brighton Ridge 264 Renton, WA — 2,623 10,800 7,010 2,656 17,777 20,433 ( 13,419 ) 1986 Dec-96 3-30 Bristol Commons 188 Sunnyvale, CA — 5,278 11,853 10,433 5,293 22,271 27,564 ( 16,949 ) 1989 Jan-95 3-30 Bunker Hill 456 Los Angeles, CA — 11,498 27,871 96,132 11,639 123,862 135,501 ( 79,005 ) 1968 Mar-98 3-30 Camarillo Oaks 564 Camarillo, CA — 10,953 25,254 8,869 11,075 34,001 45,076 ( 26,629 ) 1985 Jul-96 3-30 Cambridge Park 320 San Diego, CA — 18,185 72,739 4,120 18,185 76,859 95,044 ( 19,617 ) 1998 Apr-14 5-30 Camino Ruiz Square 159 Camarillo, CA — 6,871 26,119 2,543 6,931 28,602 35,533 ( 13,801 ) 1990 Dec-06 3-30 Canyon Oaks 250 San Ramon, CA — 19,088 44,473 7,051 19,088 51,524 70,612 ( 23,554 ) 2005 May-07 3-30 Canyon Pointe 250 Bothell, WA — 4,692 18,288 9,479 4,693 27,766 32,459 ( 17,295 ) 1990 Oct-03 3-30 Capri at Sunny Hills 102 Fullerton, CA — 3,337 13,320 9,690 4,048 22,299 26,347 ( 15,327 ) 1961 Sep-01 3-30 Carmel Creek 348 San Diego, CA — 26,842 107,368 8,308 26,842 115,676 142,518 ( 30,274 ) 2000 Apr-14 5-30 Carmel Landing 356 San Diego, CA — 16,725 66,901 10,506 16,725 77,407 94,132 ( 20,335 ) 1989 Apr-14 5-30 Carmel Summit 246 San Diego, CA — 14,968 59,871 4,545 14,968 64,416 79,384 ( 16,376 ) 1989 Apr-14 5-30 Castle Creek 216 Newcastle, WA — 4,149 16,028 5,677 4,833 21,021 25,854 ( 15,908 ) 1998 Dec-98 3-30 Catalina Gardens 128 Los Angeles, CA — 6,714 26,856 2,490 6,714 29,346 36,060 ( 7,343 ) 1987 Apr-14 5-30 CBC Apartments & The Sweeps 239 Goleta, CA — 11,841 45,320 6,922 11,906 52,177 64,083 ( 28,445 ) 1962 Jan-06 3-30 Cedar Terrace 180 Bellevue, WA — 5,543 16,442 8,601 5,652 24,934 30,586 ( 13,973 ) 1984 Jan-05 3-30 CentrePointe 224 San Diego, CA — 3,405 7,743 22,335 3,442 30,041 33,483 ( 22,318 ) 1974 Jun-97 3-30 Chestnut Street Apartments 96 Santa Cruz, CA — 6,582 15,689 2,277 6,582 17,966 24,548 ( 7,884 ) 2002 Jul-08 3-30 City View 572 Hayward, CA — 9,883 37,670 32,941 10,350 70,144 80,494 ( 53,374 ) 1975 Mar-98 3-30 Collins on Pine 76 Seattle, WA — 7,276 22,226 688 7,276 22,914 30,190 ( 5,180 ) 2013 May-14 3-30 Connolly Station 309 Dublin, CA — 19,949 123,428 1,545 19,949 124,973 144,922 ( 4,139 ) 2014 Jan-20 3-30 F- 59 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Corbella at Juanita Bay 169 Kirkland, WA — 5,801 17,415 3,961 5,801 21,376 27,177 ( 8,273 ) 1978 Nov-10 3-30 Cortesia 308 Rancho Santa Margarita, CA — 13,912 55,649 3,302 13,912 58,951 72,863 ( 14,944 ) 1999 Apr-14 5-30 Country Villas 180 Oceanside, CA — 4,174 16,583 5,547 4,187 22,117 26,304 ( 13,934 ) 1976 Dec-02 3-30 Courtyard off Main 110 Bellevue, WA — 7,465 21,405 5,047 7,465 26,452 33,917 ( 10,190 ) 2000 Oct-10 3-30 Crow Canyon 400 San Ramon, CA — 37,579 87,685 12,923 37,579 100,608 138,187 ( 26,738 ) 1992 Apr-14 5-30 Deer Valley 171 San Rafael, CA — 21,478 50,116 3,644 21,478 53,760 75,238 ( 13,744 ) 1996 Apr-14 5-30 Devonshire 276 Hemet, CA — 3,470 13,786 6,533 3,482 20,307 23,789 ( 12,163 ) 1988 Dec-02 3-30 Domaine 92 Seattle, WA — 9,059 27,177 1,545 9,059 28,722 37,781 ( 8,376 ) 2009 Sep-12 3-30 Elevation 158 Redmond, WA — 4,758 14,285 7,372 4,757 21,658 26,415 ( 10,931 ) 1986 Jun-10 3-30 Ellington 220 Bellevue, WA — 15,066 45,249 4,089 15,066 49,338 64,404 ( 11,978 ) 1994 Jul-14 3-30 Emerald Pointe 160 Diamond Bar, CA — 8,458 33,832 2,404 8,458 36,236 44,694 ( 9,304 ) 1989 Apr-14 5-30 Emerald Ridge 180 Bellevue, WA — 3,449 7,801 6,915 3,449 14,716 18,165 ( 11,762 ) 1987 Nov-94 3-30 Emerson Valley Village 144 Los Angeles, CA — 13,378 53,240 1,349 13,378 54,589 67,967 ( 7,825 ) 2012 Dec-16 3-30 Emme 190 Emeryville, CA — 15,039 80,532 357 15,039 80,889 95,928 ( 2,709 ) 2015 Jan-20 3-30 Enso 183 San Jose, CA — 21,397 71,135 1,907 21,397 73,042 94,439 ( 13,258 ) 2014 Dec-15 3-30 Epic 769 San Jose, CA — 89,111 307,769 509 89,111 308,278 397,389 ( 10,261 ) 2013 Jan-20 3-30 Esplanade 278 San Jose, CA — 18,170 40,086 16,209 18,429 56,036 74,465 ( 32,656 ) 2002 Apr-04 3-30 Essex Skyline 350 Santa Ana, CA — 21,537 146,099 12,601 21,537 158,700 180,237 ( 48,170 ) 2008 Apr-10 3-30 Evergreen Heights 200 Kirkland, WA — 3,566 13,395 7,339 3,649 20,651 24,300 ( 15,822 ) 1990 Jun-97 3-30 Fairhaven Apartments 164 Santa Ana, CA — 2,626 10,485 10,243 2,957 20,397 23,354 ( 13,581 ) 1970 Nov-01 3-30 Fairway Apartments at Big Canyon (5) 74 Newport Beach, CA — — 7,850 8,513 — 16,363 16,363 ( 12,710 ) 1972 Jun-99 3-28 Fairwood Pond 194 Renton, WA — 5,296 15,564 4,599 5,297 20,162 25,459 ( 11,530 ) 1997 Oct-04 3-30 Foothill Commons 394 Bellevue, WA — 2,435 9,821 41,978 2,440 51,794 54,234 ( 47,403 ) 1978 Mar-90 3-30 Foothill Gardens/Twin Creeks 176 San Ramon, CA — 5,875 13,992 12,289 5,964 26,192 32,156 ( 19,884 ) 1985 Feb-97 3-30 Forest View 192 Renton, WA — 3,731 14,530 3,713 3,731 18,243 21,974 ( 10,629 ) 1998 Oct-03 3-30 Foster's Landing 490 Foster City, CA — 61,714 144,000 11,178 61,714 155,178 216,892 ( 41,241 ) 1987 Apr-14 5-30 Fountain Court 320 Seattle, WA — 6,702 27,306 13,573 6,985 40,596 47,581 ( 29,905 ) 2000 Mar-00 3-30 Fountains at River Oaks 226 San Jose, CA — 26,046 60,773 5,897 26,046 66,670 92,716 ( 17,559 ) 1990 Apr-14 3-30 Fourth & U 171 Berkeley, CA — 8,879 52,351 4,337 8,879 56,688 65,567 ( 21,596 ) 2010 Apr-10 3-30 Fox Plaza 445 San Francisco, CA — 39,731 92,706 39,712 39,731 132,418 172,149 ( 41,715 ) 1968 Feb-13 3-30 The Henley I/The Henley II 215 Glendale, CA — 6,695 16,753 28,607 6,733 45,322 52,055 ( 30,235 ) 1970 Jun-99 3-30 Highlands at Wynhaven 333 Issaquah, WA — 16,271 48,932 15,477 16,271 64,409 80,680 ( 30,874 ) 2000 Aug-08 3-30 F- 60 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Hillcrest Park 608 Newbury Park, CA — 15,318 40,601 22,105 15,755 62,269 78,024 ( 45,189 ) 1973 Mar-98 3-30 Hillsdale Garden 697 San Mateo, CA — 22,000 94,681 29,391 22,000 124,072 146,072 ( 64,193 ) 1948 Sep-06 3-30 Hope Ranch 108 Santa Barbara, CA — 4,078 16,877 3,144 4,208 19,891 24,099 ( 9,564 ) 1965 Mar-07 3-30 Huntington Breakers 342 Huntington Beach, CA — 9,306 22,720 22,039 9,315 44,750 54,065 ( 35,095 ) 1984 Oct-97 3-30 Inglenook Court 224 Bothell, WA — 3,467 7,881 8,603 3,474 16,477 19,951 ( 13,915 ) 1985 Oct-94 3-30 Lafayette Highlands 150 Lafayette, CA — 17,774 41,473 4,292 17,774 45,765 63,539 ( 11,649 ) 1973 Apr-14 5-30 Lakeshore Landing 308 San Mateo, CA — 38,155 89,028 9,182 38,155 98,210 136,365 ( 26,612 ) 1988 Apr-14 5-30 Laurels at Mill Creek 164 Mill Creek, WA — 1,559 6,430 8,586 1,595 14,980 16,575 ( 11,277 ) 1981 Dec-96 3-30 Lawrence Station 336 Sunnyvale, CA — 45,532 106,735 2,494 45,532 109,229 154,761 ( 30,819 ) 2012 Apr-14 5-30 Le Parc 140 Santa Clara, CA — 3,090 7,421 14,181 3,092 21,600 24,692 ( 17,358 ) 1975 Feb-94 3-30 Marbrisa 202 Long Beach, CA — 4,700 18,605 10,150 4,760 28,695 33,455 ( 18,760 ) 1987 Sep-02 3-30 Marina City Club (6) 101 Marina Del Rey, CA — — 28,167 34,572 — 62,739 62,739 ( 31,601 ) 1971 Jan-04 3-30 Marina Cove (7) 292 Santa Clara, CA — 5,320 16,431 16,263 5,324 32,690 38,014 ( 27,925 ) 1974 Jun-94 3-30 Mariner's Place 105 Oxnard, CA — 1,555 6,103 2,679 1,562 8,775 10,337 ( 6,362 ) 1987 May-00 3-30 MB 360 360 San Francisco, CA — 42,001 212,648 12,308 42,001 224,956 266,957 ( 50,304 ) 2014 Apr-14 3-30 Mesa Village 133 Clairemont, CA — 1,888 7,498 2,734 1,894 10,226 12,120 ( 6,127 ) 1963 Dec-02 3-30 Mill Creek at Windermere 400 San Ramon, CA — 29,551 69,032 7,370 29,551 76,402 105,953 ( 34,899 ) 2005 Sep-07 3-30 Mio 103 San Jose, CA — 11,012 39,982 675 11,012 40,657 51,669 ( 7,166 ) 2015 Jan-16 3-30 Mirabella 188 Marina Del Rey, CA — 6,180 26,673 17,242 6,270 43,825 50,095 ( 28,017 ) 2000 May-00 3-30 Mira Monte 354 Mira Mesa, CA — 7,165 28,459 12,402 7,186 40,840 48,026 ( 26,833 ) 1982 Dec-02 3-30 Miracle Mile/Marbella 236 Los Angeles, CA — 7,791 23,075 15,609 7,886 38,589 46,475 ( 29,348 ) 1988 Aug-97 3-30 Mission Hills 282 Oceanside, CA — 10,099 38,778 11,525 10,167 50,235 60,402 ( 26,979 ) 1984 Jul-05 3-30 Mission Peaks 453 Fremont, CA — 46,499 108,498 8,474 46,499 116,972 163,471 ( 29,818 ) 1995 Apr-14 5-30 Mission Peaks II 336 Fremont, CA — 31,429 73,334 8,388 31,429 81,722 113,151 ( 21,416 ) 1989 Apr-14 5-30 Montanosa 472 San Diego, CA — 26,697 106,787 7,521 26,697 114,308 141,005 ( 28,912 ) 1990 Apr-14 5-30 Montclaire 390 Sunnyvale, CA — 4,842 19,776 28,355 4,997 47,976 52,973 ( 43,336 ) 1973 Dec-88 3-30 Montebello 248 Kirkland, WA — 13,857 41,575 7,496 13,858 49,070 62,928 ( 15,854 ) 1996 Jul-12 3-30 Montejo Apartments 124 Garden Grove, CA — 1,925 7,685 4,490 2,194 11,906 14,100 ( 7,588 ) 1974 Nov-01 3-30 Monterey Villas 122 Oxnard, CA — 2,349 5,579 7,169 2,424 12,673 15,097 ( 9,150 ) 1974 Jul-97 3-30 Muse 152 North Hollywood, CA — 7,822 33,436 3,659 7,823 37,094 44,917 ( 15,284 ) 2011 Feb-11 3-30 1000 Kiely 121 Santa Clara, CA — 9,359 21,845 8,669 9,359 30,514 39,873 ( 13,890 ) 1971 Mar-11 3-30 Palm Valley 1,099 San Jose, CA — 133,802 312,205 18,156 133,802 330,361 464,163 ( 48,807 ) 2008 Jan-17 3-30 Paragon Apartments 301 Fremont, CA — 32,230 77,320 2,583 32,230 79,903 112,133 ( 17,735 ) 2013 Jul-14 3-30 F- 61 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Park 20 197 San Mateo, CA — 27,041 89,281 ( 1,340 ) 26,607 88,375 114,982 ( 2,983 ) 2015 Jan-20 3-30 Park Catalina 90 Los Angeles, CA — 4,710 18,839 3,628 4,710 22,467 27,177 ( 8,035 ) 2002 Jun-12 3-30 Park Highland 250 Bellevue, WA — 9,391 38,224 13,735 9,391 51,959 61,350 ( 16,898 ) 1993 Apr-14 5-30 Park Hill at Issaquah 245 Issaquah, WA — 7,284 21,937 11,471 7,284 33,408 40,692 ( 18,428 ) 1999 Feb-99 3-30 Park Viridian 320 Anaheim, CA — 15,894 63,574 4,541 15,894 68,115 84,009 ( 17,410 ) 2008 Apr-14 5-30 Park West 126 San Francisco, CA — 9,424 21,988 12,712 9,424 34,700 44,124 ( 14,022 ) 1958 Sep-12 3-30 Parkwood at Mill Creek 240 Mill Creek, WA — 10,680 42,722 3,545 10,680 46,267 56,947 ( 12,081 ) 1989 Apr-14 5-30 Patent 523 295 Seattle, WA — 14,558 69,417 6,137 14,558 75,554 90,112 ( 29,643 ) 2010 Mar-10 3-30 Pathways at Bixby Village 296 Long Beach, CA — 4,083 16,757 22,199 6,239 36,800 43,039 ( 33,133 ) 1975 Feb-91 3-30 Piedmont 396 Bellevue, WA — 19,848 59,606 13,932 19,848 73,538 93,386 ( 20,426 ) 1969 May-14 3-30 Pinehurst (8) 28 Ventura, CA — — 1,711 756 — 2,467 2,467 ( 1,643 ) 1973 Dec-04 3-24 Pinnacle at Fullerton 192 Fullerton, CA — 11,019 45,932 4,475 11,019 50,407 61,426 ( 13,250 ) 2004 Apr-14 5-30 Pinnacle on Lake Washington 180 Renton, WA — 7,760 31,041 3,915 7,760 34,956 42,716 ( 9,138 ) 2001 Apr-14 5-30 Pinnacle at MacArthur Place 253 Santa Ana, CA — 15,810 66,401 6,056 15,810 72,457 88,267 ( 18,585 ) 2002 Apr-14 5-30 Pinnacle at Otay Ranch I & II 364 Chula Vista, CA — 17,023 68,093 4,828 17,023 72,921 89,944 ( 18,684 ) 2001 Apr-14 5-30 Pinnacle at Talega 362 San Clemente, CA — 19,292 77,168 3,631 19,292 80,799 100,091 ( 20,288 ) 2002 Apr-14 5-30 Pinnacle Sonata 268 Bothell, WA — 14,647 58,586 5,554 14,647 64,140 78,787 ( 16,211 ) 2000 Apr-14 5-30 Pointe at Cupertino 116 Cupertino, CA — 4,505 17,605 12,918 4,505 30,523 35,028 ( 20,740 ) 1963 Aug-98 3-30 Pure Redmond 105 Redmond, WA — 7,461 31,363 411 7,461 31,774 39,235 ( 1,195 ) 2016 Dec-19 3-30 Radius 264 Redwood City, CA — 11,702 152,336 1,190 11,702 153,526 165,228 ( 39,220 ) 2015 Apr-14 3-30 Reed Square 100 Sunnyvale, CA — 6,873 16,037 8,746 6,873 24,783 31,656 ( 11,387 ) 1970 Jan-12 3-30 Regency at Encino 75 Encino, CA — 3,184 12,737 4,212 3,184 16,949 20,133 ( 7,710 ) 1989 Dec-09 3-30 Renaissance at Uptown Orange 460 Orange, CA — 27,870 111,482 7,258 27,870 118,740 146,610 ( 29,992 ) 2007 Apr-14 5-30 Reveal 438 Woodland Hills, CA — 25,073 121,314 3,656 25,073 124,970 150,043 ( 27,492 ) 2010 Apr-15 3-30 Salmon Run at Perry Creek 132 Bothell, WA — 3,717 11,483 3,054 3,801 14,453 18,254 ( 9,519 ) 2000 Oct-00 3-30 Sammamish View 153 Bellevue, WA — 3,324 7,501 7,530 3,331 15,024 18,355 ( 13,067 ) 1986 Nov-94 3-30 101 San Fernando 323 San Jose, CA — 4,173 58,961 13,856 4,173 72,817 76,990 ( 30,215 ) 2001 Jul-10 3-30 San Marcos 432 Richmond, CA — 15,563 36,204 33,980 22,866 62,881 85,747 ( 36,750 ) 2003 Nov-03 3-30 Santee Court/Santee Village 238 Los Angeles, CA — 9,581 40,317 13,433 9,582 53,749 63,331 ( 19,802 ) 2004 Oct-10 3-30 Shadow Point 172 Spring Valley, CA — 2,812 11,170 4,576 2,820 15,738 18,558 ( 9,638 ) 1983 Dec-02 3-30 Shadowbrook 418 Redmond, WA — 19,292 77,168 6,131 19,292 83,299 102,591 ( 21,393 ) 1986 Apr-14 5-30 Slater 116 108 Kirkland, WA — 7,379 22,138 1,323 7,379 23,461 30,840 ( 6,063 ) 2013 Sep-13 3-30 Solstice 280 Sunnyvale, CA — 34,444 147,262 6,856 34,444 154,118 188,562 ( 42,130 ) 2014 Apr-14 5-30 F- 62 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Station Park Green - Phases I, II, and III 492 San Mateo, CA — 54,782 314,694 282 54,782 314,976 369,758 ( 21,497 ) 2018 Mar-18 3-30 Stevenson Place 200 Fremont, CA — 996 5,582 14,268 1,001 19,845 20,846 ( 15,706 ) 1975 Apr-00 3-30 Stonehedge Village 196 Bothell, WA — 3,167 12,603 9,180 3,201 21,749 24,950 ( 15,989 ) 1986 Oct-97 3-30 Summerhill Park 100 Sunnyvale, CA — 2,654 4,918 11,257 2,656 16,173 18,829 ( 12,935 ) 1988 Sep-88 3-30 Summit Park 300 San Diego, CA — 5,959 23,670 8,912 5,977 32,564 38,541 ( 19,893 ) 1972 Dec-02 3-30 Taylor 28 197 Seattle, WA — 13,915 57,700 3,693 13,915 61,393 75,308 ( 15,413 ) 2008 Apr-14 5-30 The Audrey at Belltown 137 Seattle, WA — 9,228 36,911 2,050 9,228 38,961 48,189 ( 9,456 ) 1992 Apr-14 5-30 The Avery 121 Los Angeles, CA — 6,964 29,922 889 6,964 30,811 37,775 ( 7,071 ) 2014 Mar-14 3-30 The Bernard 63 Seattle, WA — 3,699 11,345 884 3,689 12,239 15,928 ( 4,075 ) 2008 Sep-11 3-30 The Blake LA 196 Los Angeles, CA — 4,023 9,527 24,135 4,031 33,654 37,685 ( 20,615 ) 1979 Jun-97 3-30 The Cairns 99 Seattle, WA — 6,937 20,679 2,586 6,939 23,263 30,202 ( 10,874 ) 2006 Jun-07 3-30 The Commons 264 Campbell, CA — 12,555 29,307 9,940 12,556 39,246 51,802 ( 16,958 ) 1973 Jul-10 3-30 The Elliot at Mukilteo 301 Mukilteo, WA — 2,498 10,595 18,928 2,824 29,197 32,021 ( 22,866 ) 1981 Jan-97 3-30 The Galloway 506 Pleasanton, CA — 32,966 184,499 488 32,966 184,987 217,953 ( 6,214 ) 2016 Jan-20 3-30 The Grand 243 Oakland, CA — 4,531 89,208 7,518 4,531 96,726 101,257 ( 40,981 ) 2009 Jan-09 3-30 The Hallie 292 Pasadena, CA — 2,202 4,794 55,653 8,385 54,264 62,649 ( 39,551 ) 1972 Apr-97 3-30 The Huntington 276 Huntington Beach, CA — 10,374 41,495 7,036 10,374 48,531 58,905 ( 15,784 ) 1975 Jun-12 3-30 The Landing at Jack London Square 282 Oakland, CA — 33,554 78,292 7,860 33,554 86,152 119,706 ( 23,251 ) 2001 Apr-14 5-30 The Lofts at Pinehurst 118 Ventura, CA — 1,570 3,912 5,699 1,618 9,563 11,181 ( 6,616 ) 1971 Jun-97 3-30 The Palisades 192 Bellevue, WA — 1,560 6,242 13,990 1,565 20,227 21,792 ( 18,275 ) 1977 May-90 3-30 The Palms at Laguna Niguel 460 Laguna Niguel, CA — 23,584 94,334 12,080 23,584 106,414 129,998 ( 27,812 ) 1988 Apr-14 5-30 The Stuart 188 Pasadena, CA — 13,574 54,298 3,098 13,574 57,396 70,970 ( 14,822 ) 2007 Apr-14 5-30 The Trails of Redmond 423 Redmond, WA — 21,930 87,720 6,031 21,930 93,751 115,681 ( 23,961 ) 1985 Apr-14 5-30 The Waterford 238 San Jose, CA — 11,808 24,500 17,968 15,165 39,111 54,276 ( 25,616 ) 2000 Jun-00 3-30 Tierra Vista 404 Oxnard, CA — 13,652 53,336 7,831 13,661 61,158 74,819 ( 34,469 ) 2001 Jan-01 3-30 Tiffany Court 101 Los Angeles, CA — 6,949 27,796 2,042 6,949 29,838 36,787 ( 7,574 ) 1987 Apr-14 5-30 Trabuco Villas 132 Lake Forest, CA — 3,638 8,640 4,292 3,890 12,680 16,570 ( 9,358 ) 1985 Oct-97 3-30 Valley Park 160 Fountain Valley, CA — 3,361 13,420 6,653 3,761 19,673 23,434 ( 12,488 ) 1969 Nov-01 3-30 Via 284 Sunnyvale, CA — 22,000 82,270 3,630 22,016 85,884 107,900 ( 30,810 ) 2011 Jul-11 3-30 Villa Angelina 256 Placentia, CA — 4,498 17,962 8,173 4,962 25,671 30,633 ( 16,856 ) 1970 Nov-01 3-30 Villa Granada 270 Santa Clara, CA — 38,299 89,365 1,974 38,299 91,339 129,638 ( 22,819 ) 2010 Apr-14 5-30 Villa Siena 272 Costa Mesa, CA — 13,842 55,367 9,356 13,842 64,723 78,565 ( 17,830 ) 1974 Apr-14 5-30 F- 63 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Village Green 272 La Habra, CA — 6,488 36,768 4,309 6,488 41,077 47,565 ( 11,151 ) 1971 Apr-14 5-30 Vista Belvedere 76 Tiburon, CA — 5,573 11,901 9,031 5,573 20,932 26,505 ( 13,068 ) 1963 Aug-04 3-30 Vox Apartments 58 Seattle, WA — 5,545 16,635 435 5,545 17,070 22,615 ( 4,158 ) 2013 Oct-13 3-30 Walnut Heights 163 Walnut, CA — 4,858 19,168 5,868 4,887 25,007 29,894 ( 14,831 ) 1964 Oct-03 3-30 Wandering Creek 156 Kent, WA — 1,285 4,980 5,345 1,296 10,314 11,610 ( 8,403 ) 1986 Nov-95 3-30 Wharfside Pointe 155 Seattle, WA — 2,245 7,020 13,442 2,258 20,449 22,707 ( 15,891 ) 1990 Jun-94 3-30 Willow Lake 508 San Jose, CA — 43,194 101,030 17,140 43,194 118,170 161,364 ( 37,680 ) 1989 Oct-12 3-30 5600 Wilshire 284 Los Angeles, CA — 30,535 91,604 5,049 30,535 96,653 127,188 ( 23,763 ) 2008 Apr-14 5-30 Wilshire La Brea 478 Los Angeles, CA — 56,932 211,998 11,972 56,932 223,970 280,902 ( 60,187 ) 2014 Apr-14 5-30 Wilshire Promenade 149 Fullerton, CA — 3,118 7,385 12,572 3,797 19,278 23,075 ( 12,881 ) 1992 Jan-97 3-30 Windsor Ridge 216 Sunnyvale, CA — 4,017 10,315 17,003 4,021 27,314 31,335 ( 23,963 ) 1989 Mar-89 3-30 Woodland Commons 302 Bellevue, WA — 2,040 8,727 24,952 2,044 33,675 35,719 ( 24,474 ) 1978 Mar-90 3-30 Woodside Village 145 Ventura, CA — 5,331 21,036 5,855 5,341 26,881 32,222 ( 14,838 ) 1987 Dec-04 3-30 48,156 $ — $ 2,680,765 $ 9,375,284 $ 1,876,157 $ 2,717,201 $ 11,215,005 $ 13,932,206 $ ( 3,848,633 ) Costs Initial cost capitalized Gross amount carried at close of period Buildings and subsequent Land and Buildings and Accumulated Property Encumbrance Land improvements to acquisition improvements improvements Total (1) depreciation Other real estate assets — 3,079 12,315 14,279 3,909 25,764 29,673 ( 18,859 ) $ — $ 3,079 $ 12,315 $ 14,279 $ 3,909 $ 25,764 $ 29,673 $ ( 18,859 ) Total $ 643,550 $ 2,887,393 $ 10,154,628 $ 2,019,724 $ 2,929,009 $ 12,132,736 $ 15,061,745 $ ( 4,133,959 ) (1) The aggregate cost for federal income tax purposes is approximately $ 11.6 billion (unaudited). (2) A portion of land is leased pursuant to a ground lease expiring 2070. (3) The land is leased pursuant to a ground lease expiring 2082. (4) The land is leased pursuant to a ground lease expiring 2070. (5) The land is leased pursuant to a ground lease expiring 2027. (6) The land is leased pursuant to a ground lease expiring 2067. (7) A portion of land is leased pursuant to a ground lease expiring in 2028. (8) The land is leased pursuant to a ground lease expiring in 2028. F- 64 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2020 (Dollars in thousands) A summary of activity for rental properties and accumulated depreciation is as follows: 2020 2019 2018 2020 2019 2018 Rental properties: Accumulated depreciation: Balance at beginning of year $ 14,038,142 $ 13,366,101 $ 13,362,073 Balance at beginning of year $ 3,689,482 $ 3,209,548 $ 2,769,297 Acquisition, development, and improvement of real estate 1,426,505 672,041 325,986 Depreciation expense 518,629 479,934 478,721 Disposition of real estate and other ( 402,902 ) — ( 321,958 ) Depreciation expense - Disposals and other ( 74,152 ) — ( 38,470 ) Balance at the end of year $ 15,061,745 $ 14,038,142 $ 13,366,101 Balance at the end of year $ 4,133,959 $ 3,689,482 $ 3,209,548 F- 65 Table of Contents EXHIBIT INDEX Exhibit No. Document 3.1 Articles of Amendment and Restatement of Essex Property Trust, Inc., attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed May 23, 2016, and incorporated herein by reference. 3.2 Sixth Amended and Restated Bylaws of Essex Property Trust, Inc. (as of February 21, 2017), attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed February 27, 2017, and incorporated herein by reference. 3.3 First Amendment to Sixth Amended and Restated Bylaws of Essex Property Trust, Inc., dated February 20, 2018, attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed February 21, 2018, and incorporated herein by reference. 3.4 Certificate of Limited Partnership of Essex Portfolio, L.P. and amendments thereto, attached as Exhibit 3.4 to the Company’s Annual Report on Form 10-K, filed February 21, 2019, and incorporated herein by reference. 4.1 Indenture, dated April 15, 2013, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.25% Senior Notes due 2023 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 15, 2013, and incorporated herein by reference. 4.2 Form of Common Stock Certificate of Essex Property Trust, Inc., filed as Exhibit 4.5 to the Company's Form S-4 Registration Statement, filed January 29, 2014, and incorporated herein by reference. 4.3 Indenture governing 3.375% Senior Notes due 2023, dated April 4, 2014, by and among Essex Portfolio, L.P., Essex Property Trust, Inc. and U.S. Bank National Association, as trustee, including the form of 3.375% Senior Notes due 2023, attached as Exhibit 4.3 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 10, 2014, and incorporated herein by reference. 4.4 Indenture, dated April 15, 2014, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.875% Senior Notes due 2024 and the guarantee thereof, attached as Exhibit 4.1 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 16, 2014, and incorporated herein by reference. 4.5 Indenture, dated March 17, 2015, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.500% Senior Notes due 2025 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed March 17, 2015, and incorporated herein by reference. 4.6 Indenture, dated April 11, 2016, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of the 3.375% Senior Notes due 2026 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 11, 2016, and incorporated herein by reference. 4.7 Indenture, dated April 10, 2017, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of the 3.625% Senior Notes due 2027 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 10, 2017, and incorporated herein by reference. 4.8 Indenture, dated March 8, 2018, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of the 4.500% Senior Notes due 2048 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed March 8, 2018, and incorporated herein by reference. 4.9 Indenture, dated February 11, 2019, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 4.000% Senior Notes due 2029 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed February 11, 2019, and incorporated herein by reference. 4.10 Indenture, dated August 7, 2019, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.000% Senior Notes due 2030 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed August 7, 2019, and incorporated herein by reference. 4.11 Indenture, dated February 11, 2020, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 2.650% Senior Notes due 2032 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed February 11, 2020, and incorporated herein by reference. Table of Contents 4.12 Indenture, dated August 24, 2020, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 1.650% Senior Notes due 2031, the form of 2.650% Senior Notes due 2050 and the guarantees thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed August 24, 2020, and incorporated herein by reference. 4.13 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, attached as Exhibit 4.14 to the Company’s Annual Report on Form 10-K, filed February 20, 2020, and incorporated herein by reference. 10.1 Agreement between Essex Property Trust, Inc. and George M. Marcus, dated March 27, 2003 attached as Exhibit 10.32 to the Company's Form 10-K for the year ended December 31, 2002, and incorporated herein by reference. 10.2 Essex Property Trust, Inc. 2004 Stock Incentive Plan, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference.* 10.3 BRE Properties, Inc. 2005 Amended and Restated Deferred Compensation Plan (assumed by Essex Property Trust, Inc.), as amended on each of May 18, 2010, November 17, 2014 and December 9, 2016, attached as Exhibit 10.3 to the Company's BRE Properties, Inc. 2005 Amended and Restated Deferred Compensation Plan (assumed by Essex Property Trust, Inc.), as amended on each of May 18, 2010, November 17, 2014 and December 9, 2016, attached as Exhibit 10.3 to the Company's Annual Report on Form 10-K, filed February 21, 2019, and incorporated herein by reference.* Report on Form 10-K, filed February 21, 2019, and incorporated herein by reference.* 10.4 Form of Indemnification Agreement between Essex Property Trust, Inc. and its directors and officers, attached as Exhibit 10.4 to the Company's Annual Report on Form 10-K, filed February 21, 2019, and incorporated herein by reference.* 10.5 Note Purchase Agreement, dated as of June 30, 2011, among Essex Portfolio, L.P., Essex Property Trust, Inc. and the purchasers of the notes party thereto (including the forms of the 4.50% Senior Guaranteed Notes, Series A, due September 30, 2017, and the 4.92% Senior Guaranteed Notes, Series B, due December 30, 2019), attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed July 5, 2011, and incorporated herein by reference. † 10.6 Note Purchase Agreement, dated as of March 14, 2012, among Essex Portfolio, L.P., the Company and the purchasers of the notes party thereto (including the forms of the 4.27% Senior Guaranteed Notes, Series C, due April 30, 2021, the 4.30% Senior Guaranteed Notes, Series D, due June 29, 2021, and the 4.37% Senior Guaranteed Notes, Series E, due August 30, 2021), attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on March 20, 2012, and incorporated herein by reference. † 10.7 Modification Agreement, dated July 30, 2012, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference. 10.8 Amendment to Agreement, dated as of September 11, 2012, between the Company and George Marcus, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, and incorporated herein by reference. 10.9 Essex Property Trust, Inc. Executive Severance Plan (as Amended and Restated effective March 12, 2013), attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed March 18, 2013, and incorporated herein Essex Property Trust, Inc. Executive Severance Plan (as Amended and Restated effective March 12, 2013), attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed March 18, 2013, and incorporated herein by reference.* 10.10 Essex Property Trust, Inc. 2013 Stock Award and Incentive Compensation Plan, attached as Appendix B to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 14, 2013, filed April 1, 2013, and incorporated herein by reference.* 10.11 Essex Property Trust, Inc. 2013 Employee Stock Purchase Plan, attached as Appendix C to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 14, 2013, filed April 1, 2013, and incorporated herein by reference.* 10.12 Forms of equity award agreements for officers under the 2013 Stock Award and Incentive Compensation Plan, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and incorporated herein by reference.* 10.13 Amended and Restated Non-Employee Director Equity Award Program, dated May 17, 2016, attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed May 23, 2016, and incorporated herein by reference.* Table of Contents 10.14 Fourth Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of December 20, 2018, attached as Exhibit 10.14 to the Company's Annual Report on Form 10-K, filed February 21, 2019, and incorporated herein by reference. 10.15 Third Modification Agreement, dated as of January 29, 2014 by and among Essex Portfolio, L.P., U.S. Bank National Association, as Administrative Agent and Lender and the other lenders party thereto, attached as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed January 31, 2014, and incorporated herein by reference. 10.16 Forms of Essex Property Trust, Inc., Essex Portfolio L.P., Long-Term Incentive Plan Award Agreements, attached as Exhibit 10.28 to the Company's Annual Report on Form 10-K, filed March 2, 2015, and incorporated herein by reference.* 10.17 Terms Agreement dated as of May 20, 2015, among Essex Property Trust, Inc. and Citigroup Global Markets Inc., attached as Exhibit 1.1 to the Company's Current Report on Form 8-K, filed May 26, 2015, and incorporated herein by reference. 10.18 Second Amended and Restated Revolving Credit Agreement, dated as of January 17, 2018, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto, attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed January 18, 2018, and incorporated herein by reference. 10.19 First Amendment to Second Amended and Restated Revolving Credit Agreement, dated as of January 11, 2019, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto, attached as Exhibit 10.21 to the Company's Annual Report on Form 10-K, filed February 21, 2019, and incorporated herein by reference. 10.20 Essex Property Trust, Inc. 2018 Stock Award and Incentive Compensation Plan, attached as Appendix A to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 15, 2018, filed March 23, 2018, and incorporated herein by reference.* 10.21 Form of Non-Employee Director Restricted Stock Award Agreement, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed August 3, 2018, and incorporated herein by reference.* 10.22 Form of Non-Employee Director Stock Option Award Agreement, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed August 3, 2018, and incorporated herein by reference.* 10.23 Forms of Essex Property Trust, Inc. Long-Term Incentive Award Agreements pursuant to the 2018 Stock Award and Incentive Compensation Plan.* 10.24 Executive Transition Services Agreement, dated December 19, 2018, by and between Essex Property Trust, Inc. and John D. Eudy, attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed December 19, 2018, and incorporated herein by reference.* 10.25 Executive Transition Services Agreement, effective as of September 5, 2019, by and between Essex Property Trust, Inc. and Craig K. Zimmerman, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed September 6, 2019, and incorporated herein by reference.* 10.26 Second Amendment to Second Amended and Restated Revolving Credit Agreement, dated as of January 9, 2020, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto. 10.27 Deferred Compensation Plan for Non-Employee Directors, attached as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed May 7, 2020 and incorporated herein by reference.* 10.28 Executive Transition Services Agreement, dated as of December 22, 2020, by and between Essex Property Trust, Inc. and John Burkart, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 2 9 , 2020 and incorporated herein by reference.* 21.1 List of Subsidiaries of Essex Property Trust, Inc. and Essex Portfolio, L.P. 23.1 Consent of KPMG LLP, Independent Registered Public Accounting Firm. 23.2 Consent of KPMG LLP, Independent Registered Public Accounting Firm. 24.1 Power of Attorney (see signature page) 31.1 Certification of Michael J. Schall, Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Barbara Pak, Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Table of Contents 31.3 Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.4 Certification of Barbara Pak, Principal Financial Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Michael J. Schall, Principal Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Barbara Pak, Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.3 Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.4 Certification of Barbara Pak, Principal Financial Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101 The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Balance Sheets of Essex Property Trust, Inc., (ii) Consolidated Statements of Income of Essex Property Trust, Inc., (iii) Consolidated Statements of Comprehensive Income of Essex Property Trust, Inc., (iv) Consolidated Statements of Equity of Essex Property Trust, Inc., (v) Consolidated Statements of Cash Flows of Essex Property Trust, Inc., (vi) Notes to Consolidated Financial Statements of Essex Property Trust, Inc., (vii) Consolidated Balance Sheets of Essex Portfolio, L.P., (viii) Consolidated Statements of Income of Essex Portfolio, L.P., (ix) Consolidated Statements of Comprehensive Income of Essex Portfolio, L.P., (x) Consolidated Statements of Capital of Essex Portfolio, L.P., (xi) Consolidated Statements of Cash Flows of Essex Portfolio, L.P. and (xii) Notes to Consolidated Financial Statements of Essex Portfolio, L.P., tagged as blocks of text and including detailed tags. 104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). * Management contract or compensatory plan or arrangement. † The schedules and certain exhibits to this agreement, as set forth in the agreement, have not been filed herewith. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Mateo, State of California, on February 19, 2021. ESSEX PROPERTY TRUST, INC . By: /s/ BARBARA PAK Barbara Pak Executive Vice President, Chief Financial Officer (Authorized Officer, Principal Financial Officer) By: /s/ JOHN FARIAS John Farias Senior Vice President, Chief Accounting Officer ESSEX PORTFOLIO, L.P. By: Essex Property Trust, Inc., its general partner By: /s/ BARBARA PAK Barbara Pak Executive Vice President, Chief Financial Officer (Authorized Officer, Principal Financial Officer) By: /s/ JOHN FARIAS John Farias Senior Vice President, Chief Accounting Officer S-1 Table of Contents KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael J. Schall and Barbara Pak, and each of them, his or her attorney-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorney-in-fact, or his or her or substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ GEORGE M. MARCUS George M. Marcus Director and Chairman of the Board February 19, 2021 /s/ KEITH R. GUERICKE Keith R. Guericke Director, and Vice Chairman of the Board February 19, 2021 /s/ IRVING F. LYONS, III Irving F. Lyons, III Lead Director February 19, 2021 /s/ MARIA R. HAWTHORNE Maria R. Hawthorne Director February 19, 2021 /s/ AMAL M. JOHNSON Amal M. Johnson Director February 19, 2021 /s/ MARY KASARIS Mary Kasaris Director February 19, 2021 /s/ THOMAS E. ROBINSON Thomas E. Robinson Director February 19, 2021 /s/ MICHAEL J. SCHALL Michael J. Schall Chief Executive Officer and President, and Director (Principal Executive Officer) February 19, 2021 /s/ BYRON A. SCORDELIS Byron A. Scordelis Director February 19, 2021 S-2