What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-25 compared with 2021-02-19 · 76 added, 67 removed, 162 unchanged (47% of the section changed)

10 unchanged sentences

The Company is engaged primarily in the ownership, operation, management, acquisition, development and redevelopment of predominantly apartment communities, located along the West Coast of the United States.

As of December 31, 2020, the Company owned or had ownership interests in 246 operating apartment communities, aggregating 60,272 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, one operating commercial building, and a development pipeline comprised of three consolidated projects and three unconsolidated joint venture projects aggregating 1,853 apartment homes (collectively, the "Portfolio").

As of December 31, 2021, the Company owned or had ownership interests in 252 operating apartment communities, aggregating 61,911 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, three operating commercial buildings, and a development pipeline comprised of one consolidated project and one unconsolidated joint venture project aggregating 371 apartment homes (collectively, the "Portfolio").

The Company’s website address is http://www.essex.com.

27 unchanged sentences

Acquisitions are an important component of the Company’s business plan.

The table below summarizes acquisition activity for the year ended December 31, 2020 ($ in millions):

Property Name Location Apartment Homes Essex Ownership Percentage Ownership Quarter in 2020 Purchase Price

CPPIB Portfolio (1)

Various 2,020 100 % EPLP Q1 $ 463.4

The tables below summarize acquisition activity for the year ended December 31, 2021 ($ in millions):

For the year ended December 31, 2021, the Company purchased or increased its interests in six communities consisting of 1,033 apartment homes and two commercial properties for approximately $432.3 million.

Property Name (1)

Location Apartment Homes Essex Ownership Percentage Ownership Quarter in 2021 Purchase Price

The Village at Toluca Lake (2)

Burbank, CA 145 100 % EPLP Q2 $ 31.8

Martha Lake Apartments Lynwood, WA 155 50 % Wesco VI Q3 53.0 (3)

Monterra in Mill Creek Mill Creek, WA 139 50 % Wesco VI Q4 55.0 (3)

The Rexford Fremont, CA 203 50 % Wesco VI Q4 112.5 (3)

San Jose, CA 268 58 % GR Block C Q4 132.4 (3)

Canvas Seattle, WA 123 100 % EPLP Q4 47.6

Total 2021 1,033 $ 432.3

(1) In January 2020, the Company purchased the joint venture partner's 45% membership interest in a land parcel and six communities representing 2,020 apartment homes based on a total valuation of approximately $1.0 billion.

(1) In November 2021, the Company purchased a managing interest in a single asset entity owning a 179-unit apartment home community located in Vista, CA, for a contract price of $44.0 million, at the Company’s pro rata share.

(2) In June 2021, the Company purchased the joint venture partner's 50.0% membership interest in the BEX III, LLC co-investment that owned The Village at Toluca Lake based on a property valuation of $63.5 million.

In conjunction with the acquisition, $29.5 million of mortgage debt that encumbered the property was paid off.

(3) Represents the contact price for the entire property, not the Company’s share.

(4) In November 2021, the Company converted its existing $11.0 million preferred equity investment in Silver into a 58.0% equity ownership interest in the property.

Based on a consolidation analysis, the Company accounts for this investment under the equity method investment.

For the year ended December 31, 2021, the Company purchased two fully-leased commercial properties for approximately $86.0 million.

Property Name Location Ownership Quarter in 2021 Purchase Price

7 South Linden South San Francisco, CA EPLP Q3 $ 33.5

Third & Broad Seattle, WA EPLP Q3 52.5

Total 2021 $ 86.0

Dispositions of Real Estate

As part of its strategic plan to own quality real estate in supply-constrained markets, the Company continually evaluates all of its communities and sells those which no longer meet its strategic criteria.

The Company may use the capital generated from the dispositions to invest in higher-return communities or other real estate investments, or to repay debts.

The Company may use the capital generated from the dispositions to invest in higher-return communities, other real estate investments or to fund other commitments.

The Company believes that the sale of these communities will not have a material impact on its future results of operations or cash flows nor will their sale materially affect its ongoing operations.

In general, the Company seeks to offset the dilutive impact on long-term earnings and funds from operations from these dispositions through the positive impact of reinvestment of proceeds.

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, resulting in a gain of $16.6 million for the Company.

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.

For the year ended December 31, 2021, the Company sold four communities consisting of 912 apartment homes for approximately $330.0 million.

Property Name Location Apartment Homes Ownership Quarter in 2021 Sales Price (in millions)

Hidden Valley Simi Valley, CA 324 EPLP Q1 $ 105.0 (1)

Park 20 San Mateo, CA 197 EPLP Q1 113.0 (2)

Axis 2300 Irvine, CA 115 EPLP Q1 57.5 (3)

Devonshire Apartments Hemet, CA 276 EPLP Q3 54.5 (4)

Total 2021 912 $ 330.0

(1) The Company recognized a $69.2 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.

In conjunction with the sale, the Company repaid $29.7 million of mortgage debt that encumbered the property.

(2) The Company recognized an immaterial gain on sale.

(3) The Company recognized a $30.8 million gain on sale.

(4) The Company recognized a $42.9 million gain on sale.

Development Pipeline

The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations.

As of December 31, 2020, the Company's development pipeline was comprised of three consolidated projects under development and three unconsolidated joint venture projects under development aggregating 1,853 apartment homes, with total incurred costs of $948.0 million, and estimated remaining project costs of approximately $174.0 million, $118.0 million of which represents the Company's estimated remaining costs, for total estimated project costs of $1.1 billion.

As of December 31, 2021, the Company's development pipeline was comprised of one consolidated project under development and one unconsolidated joint venture project under development aggregating 371 apartment homes, with total incurred costs of $156.0 million, and estimated remaining project costs of approximately $61.0 million, $32.6 million of which represents the Company's share of estimated remaining costs, for total estimated project costs of $217.0 million.

The Company defines predevelopment projects as proposed communities in negotiation or in the entitlement process with an expected high likelihood of becoming entitled development projects.

7 unchanged sentences

Station Park Green - Phase IV San Mateo, CA 100% 107 $ 91 $ 94

Mylo Santa Clara, CA 100% 476 213 226

Wallace on Sunset (2)

Hollywood, CA 100% 200 97 116

Total Development Projects - Consolidated 107 91 94

Development Projects - Joint Venture

Patina at Midtown San Jose, CA 50% 269 135 148

500 Folsom (3)

San Francisco, CA 50% 537 400 415

Scripps Mesa Apartments (2)

8 unchanged sentences

For predevelopment projects, only incurred costs are included in estimated costs.

(2) Incurred and estimated project costs for this development is net of cost incurred on the adjacent theatre at the property.

(3) Estimated project cost for this development is net of a projected value for low-income housing tax credit proceeds and the value of the tax exempt bond structure.

Redevelopment Pipeline

The Company defines redevelopment communities as existing properties owned or recently acquired, which have been targeted for additional investment by the Company with the expectation of increased financial returns through property improvement.

During redevelopment, apartment homes may not be available for rent and, as a result, the related apartment community may have less than stabilized operations.

As of December 31, 2020, the Company had ownership interests in three major redevelopment communities aggregating 1,112 apartment homes with estimated redevelopment costs of $109.1 million, of which approximately $4.5 million remains to be expended.

(2) Incurred project cost and estimated project cost are net of a projected value for low income housing tax credit proceeds and the value of the tax-exempt bond structure.

Long Term Debt

During 2021, the Company made regularly scheduled principal payments and loan payoffs of $3.5 million to its secured mortgage notes payable at an average interest rate of 2.9%.

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.

In March 2021, the Operating Partnership issued $450.0 million of senior unsecured notes due on March 1, 2028 with a coupon rate of 1.700% per annum (the "2028 Notes"), which are payable on March 1 and September 1 of each year, beginning on September 1, 2021.

The 2028 Notes were offered to investors at a price of 99.423% 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 the Canada Pension Plan Investment Board's ("CPPIB" or "CPP") 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.

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 the London Interbank Offered Rate ("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 2028 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.

The Company used the net proceeds of this offering to repay upcoming debt maturities, including all or a portion of certain unsecured term loans, and for general corporate and working capital purposes.

In June 2021, the Operating Partnership issued $300.0 million of senior unsecured notes due on June 15, 2031 with a coupon rate of 2.550% per annum (the "2031 Notes"), which are payable on June 15 and December 15 of each year, beginning on December 15, 2021.

The 2031 Notes were offered to investors at a price of 99.367% of par value.

The 2031 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 upcoming debt maturities, including to fund the redemption of $300.0 million aggregate principal amount (plus the make-whole amount and accrued and unpaid interest) of its outstanding 3.375% senior unsecured notes due January 2023, and for other general corporate and working capital purposes.

As of December 31, 2021, Moody’s Investor Service and Standard and Poor's ("S&P") credit agencies rated Essex Property Trust, Inc.

2 unchanged sentences

At December 31, 2021, the Company had two unsecured lines of credit aggregating $1.24 billion.

The Company's $1.2 billion credit facility had an interest rate of LIBOR plus 0.825%, with a scheduled maturity date in December 2023 with one 18-month extension, exercisable at the Company's option.

The Company's $1.2 billion credit facility had an interest rate of LIBOR plus 0.775%, with a scheduled maturity date in September 2025 with three 6-month extensions, exercisable at the Company's option.

The Company's $35.0 million working capital unsecured line of credit had an interest rate of LIBOR plus 0.775%, with a scheduled maturity date in February 2023.

Equity Transactions

During the year ended December 31, 2020, the Company did not issue any shares of common stock through its equity distribution program.

As of December 31, 2020, there were no outstanding forward sale agreements, and $826.6 million of shares remain available to be sold under this program.

In September 2021, the Company entered into a new equity distribution agreement pursuant to which the Company may offer and sell shares of its common stock having an aggregate gross sales price of up to $900.0 million (the “2021 ATM Program”).

In connection with the 2021 ATM Program, the Company may also enter into related forward sale agreements, and may sell shares of its common stock pursuant to these agreements.

The use of a forward sale agreement would allow the Company to lock in a share price on the sale of shares of its common stock at the time the agreement is executed, but defer receipt of the proceeds from the sale of shares until a later date should the Company elect to settle such forward sale agreement, in whole or in part, in shares of its common stock.

The 2021 ATM Program replaces the Company’s prior equity distribution agreement entered into in September 2018 (the “2018 ATM Program”), which was terminated upon the establishment of the 2021 ATM Program.

During the year ended December 31, 2021, the Company did not issue any shares of common stock through the 2021 ATM Program or through the 2018 ATM Program.

As of December 31, 2021, there were no outstanding forward sale agreements, and $900.0 million of shares remain available to be sold under the 2021 ATM Program.

During the year ended December 31, 2021, the Company repurchased and retired 40,000 shares totaling $9.2 million, including commissions.

In each of May and December 2020, the board of directors approved the replenishment of the stock repurchase plan such that, as of each of those dates, the Company had $250.0 million of purchase authority remaining under the replenished plan.

As a result, as of December 31, 2020, the Company had $223.6 million of purchase authority remaining under its $250.0 million stock repurchase plan.

As of December 31, 2021, the Company had $214.5 million of purchase authority remaining under its $250.0 million stock repurchase plan.

Co-investments

6 unchanged sentences

The Company is headquartered in San Mateo, CA, and has regional offices in Woodland Hills, CA;

San Diego, CA and Bellevue, WA.

As of December 31, 2020, the Company had 1,799 employees, ninety-eight percent (98%) of which were full-time employees, and of which 1,483 employees worked in operations and 316 were employed in the corporate offices.

Irvine, CA and Bellevue, WA.

As of December 31, 2021, the Company had 1,757 employees, ninety-nine percent (99%) of which were full-time employees, and of which 1,382 employees worked in operations and 375 were employed in the corporate offices.

The Company's mission is to create quality communities in premier locations and it is critical to the Company's mission that it attracts, trains and retains a talented and diverse team by providing a better place to work and significant opportunities for professional growth.

3 unchanged sentences

Workplace Diversity

The Company undertakes a wide spectrum of initiatives to support a diverse workforce particularly in regards to ethnic, gender and age diversity as well as fair treatment of all our associates.

The Company has one of the most diverse workforces among its peers in the real estate industry.

The Company believes it has one of the most diverse workforces among its peers in the real estate industry.

The Company believes that its robust and integrated diversity, equity, and inclusion strategy, which utilizes training programs, employee committees, and executive sponsorships to strengthen and promote diversity, equal opportunity, and fair treatment for all Company associates.

As of December 31, 2021, the Company's workforce was approximately 43% Hispanic or Latino, 29% White, 12% Asian, 8% Black or African American, 1% Native Hawaiian or other Pacific Islander, 1% American Indian or Alaska Native, and 5% two or more races.

1% of employees chose to not disclose their race.

As of December 31, 2021, the Company's workforce was 42% female and 58% male, of which corporate associates were 56% female and on-site operational associates were 38% female.

The Company had 308 females in positions of manager or higher, representing 65% of managerial positions.

The tables below detail the gender representation by position in the Company and the age diversity of its workforce.

The Company recently implemented additional training programs as well as employee committees to strengthen and further promote diversity, equal opportunity, and fair treatment for all Company associates.

In 2019, the Company formed the Diversity and Inclusion Committee, whose chairperson reports directly to the CEO on the Committee’s activities, and further expanded the initiatives and members in 2020.

In 2020 the Company formed Women at Essex, an employee-led affinity group, fostering a sense of community and inclusion for a diverse mix of women and men at the Company through discussions and activities that are intended to engage, educate, enable, and empower the Company's employees.

All associates are offered training aimed at preventing workplace harassment, including harassment based on age, gender or ethnicity.

In 2020, the Company provided 2,850 hours of training covering the foundations of Diversity, Equity & Inclusion and awareness of unconscious bias in the workplace.

Additionally, the Company implemented Diversity, Equity & Inclusion listening sessions where associates were invited to engage with one another through sharing personal and professional experiences involving diversity, equity, and inclusion, fostering a more positive and inclusive environment throughout the Company.

Additionally, 50% of the Company’s executive officers are female and 56% of the Company’s senior executives are female.

The tables below detail the Company's gender representation by position and the age diversity of its workforce.

The Company has a Diversity, Equity, and Inclusion ("DEI") Committee which directs the overarching goal setting, implementation, and follow-up for DEI initiatives and whose chairperson reports directly to the CEO on the Committee’s

The Company supports the employee-led affinity groups, Women at Essex and the LGBTQ+ focused Rainbow Alliance, which foster a sense of community and inclusion for a diverse mix of associates at the Company through discussions and activities that are intended to engage, educate, enable, and empower the Company's employees.

All associates are offered training aimed at preventing workplace harassment, including harassment based on age, gender or ethnicity, and all managers are required to complete harassment training.

In 2021, the Company provided 2,878 hours of training for all its employees covering the foundations of DEI and awareness of unconscious bias in the workplace.

The Company is committed to pay equity and conducts a pay equity analysis on an annual basis.

The Company's pay equity analysis for 2021 indicated a zero percent (0%) pay gap between men and women.

The Company was awarded the National Association of Real Estate Investment Trusts’ (“NAREIT"), which is the leading REIT industry association, Diversity and Inclusion Corporate Recognition Award for 2020.

This annual recognition is designed to recognize strong commitments and outstanding contributions to the advancement of diversity and inclusion within our Company, our professional network, and in the REIT community

Gender Representation by Position (1)

Male # Female # Male % Female %

December 31, 2021

Male % Female %

Corporate - Top Executives, VPs, Assistant VPs, Directors, & Managers 70 (3)

4 unchanged sentences

Field - Porter, Landscaper, Painter, Security Guard, Amenities Attendant 103 82 56% 44%

(1) Table excludes two employees that did not declare gender.

(2) Gender is labeled as how respondents elected to be self-identified.

(3) Includes one Field - VP Property Management position that oversees Operations.

Total Workforce by

December 31, 2021

Training and Development

2 unchanged sentences

These programs include:

leadership training, communication training, individual learning plans, Community Manager and Maintenance Manager training, The Berkeley Executive Leadership Program, and mentorship programs.

Since its introduction in 2018, over 1,500 on-site associates have participated in our Steps to Success career development program, a learning program that supports associates with their career growth by providing the fundamental knowledge required for success in a particular specialty.

leadership training, communication training, individual learning plans, Community Manager and Maintenance Manager training, and mentorship programs.

Additionally, the Company provides its associates with outside educational benefits by offering an annual $3,000 tuition reimbursement to further support professional growth.

5 unchanged sentences

The Company's compensation and benefits program and safety practices further reinforce its commitment to investing in the well-being of its associates while ensuring that its employees are fairly incentivized to ensure fulfillment of the Company’s mission.

The Company offers competitive compensation and a standard suite of benefits, including health insurance, a retirement plan with a $6 , 000 annual matching benefit, life and disability coverage, and commuter benefits.

The Company offers competitive compensation and a standard suite of benefits, including health insurance, a retirement plan with a $6 , 000 annual matching potential benefit, life and disability coverage, and commuter benefits.

Additionally, the Company offers a housing discount for associates that live at Company communities, and additionally offers retirement support, associate discount programs, and health benefit credits for participation in wellness programs.

In 2021, the Company revised its wellness program to ensure associates had increased ability to rest and recharge including additional days off and resources to encourage physical, mental, and financial well-being.

The Company engages in an annual compensation study to ensure that its compensation is aligned with market standards and that the Company is appropriately compensating its top performers.

In 2019, the Company accomplished its goal of raising the minimum wage for all associates to $15 per hour.

Providing a safe working environment and ensuring employee safety is imperative to the Company.

2 unchanged sentences

As an essential business operating in 2021, the Company's on-site teams supported its residents by providing administrative, operational and maintenance assistance during the COVID-19 pandemic.

In order to best protect and support the Company's associates working on-site, the Company spent over $4.1 million on new COVID-19 related protocols and other costs.

Since the beginning of the COVID-19 pandemic, in order to best protect and support the Company's associates working on-site, the Company and its affiliates spent over $5.0 million on new COVID-19 related protocols and other costs.

The Company undertook various COVID-19 safety measures, including implementing work from home where possible, purchasing personal protective equipment and establishing physical distancing and other health safety procedures for its on-site employees, providing paid leave to employees affected by COVID-19, increasing cleaning protocols at its sites and offices, prohibiting all non-essential work-related travel, requiring masks to be worn at all offices and when entering resident homes, and providing regular communication about COVID-19 impacts and protocols to its associates.

2 unchanged sentences

The Company believes volunteering can create positive change in the communities where our associates live and work and that the Company's commitment to giving back helps it attract and retain associates.

The Company's Essex Volunteer Program is aimed at supporting and encouraging eligible associates to become actively involved in their communities through the Company's support of charity initiatives and offering paid hours for volunteer time.

Additionally, in 2020 the Company established the Essex Cares program for the purpose of supporting the Company’s residents and communities that are experiencing financial hardships caused by the COVID-19 pandemic

Essex raised over $400,000 through employee and director contributions and the Company committed $3,000,000, raising a total fund in 2020 of $3.4 million and began making donations to our residents in need.

Additionally, in 2020, Essex established an Employee Emergency Relief Program, which is designed to provide contributions to employees and families experiencing hardships such as a death or disability.

The Company's Volunteer Program is aimed at supporting and encouraging eligible associates to become actively involved in their communities through the Company's support of charity initiatives and offering paid hours for volunteer time.

Additionally, in 2020 the Company established the Essex Cares program to provide direct aid to the Company’s residents, associates, and local communities.

The programs created within Essex Cares provide assistance for in-need segments of the community, including those who have experienced financial hardships caused by the COVID-19 pandemic.

Employee Engagement

In order to engage and promote communication with our associates and solicit meaningful feedback on our efforts to create a positive work environment, the Company has issued engagement surveys to all associates annually, and has begun transitioning to a shorter and more frequent pulse survey format in 2020.

In order to engage and promote communication with our associates and solicit meaningful feedback on our efforts to create a positive work environment, the Company issues engagement pulse surveys to all associates annually.

The results of the 2021 survey indicate that 94% of surveyed associates consider that their day-to-day work directly impacts the Company’s mission and vision, 94% believe that their opinions and ideas matter at Essex, and 94% feel that the Company supports diversity, equity and inclusion in the workplace.

22 unchanged sentences

ENVIRONMENTAL CONSIDERATIONS

As a real estate owner and operator, we are subject to various federal, state and local environmental laws, regulations and ordinances and may be subject to liability and the costs of removal or remediation of certain potentially hazardous materials that may be present in our communities.

See the discussion under the caption, "Risks Related to Real Estate Investments and Our Operations - The Company’s Portfolio may have environmental liabilities" in Item 1A, Risk Factors, for information concerning the potential effect of environmental regulations on its operations, which discussion is incorporated by reference into this Item 1.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business