What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-25 compared with 2021-02-19 · 365 added, 415 removed, 2053 unchanged (28% of the section changed)

20 unchanged sentences

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Directors, Executive Officers and Corporate Governance

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(1) Consolidated Financial Statements of Essex Property Trust, Inc.

Reports of Independent Registered Public Accounting Firm F- 1

Reports of Independent Registered Public Accounting Firm (PCAOB ID:

Consolidated Balance Sheets:

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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, 2021, 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 25, 2022 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

9 unchanged sentences

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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates 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 a critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of events or changes in circumstances that indicate rental properties may be impaired

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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.

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.

We have served as the Company’s auditor since 1994.

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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

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Critical Audit Matter

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Evaluation of events or changes in circumstances that indicate rental properties may be impaired

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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.

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.

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.

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.

We have served as the Operating Partnership's auditor since 2013.

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191,829 147,768

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)

Notes and other receivables, net of allowance for credit losses of $ 0.8 million as of both December 31, 2021 and December 31, 2020 (includes related party receivables of $ 176.9 million and $ 4.7 million as of December 31, 2021 and December 31, 2020, respectively)

341,033 195,104

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Liabilities associated with real estate held for sale — 29,845

Distributions in excess of investments in co-investments 35,545 —

Other liabilities 39,969 39,140

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Change in fair value of marketable debt securities, net 329 ( 61 ) 281

Reversal of unrealized (gains) losses upon the sale of marketable debt securities — ( 32 ) 13

Total other comprehensive (loss) income ( 871 ) ( 875 ) 7,719

Reversal of unrealized gains upon the sale of marketable debt securities — — ( 32 )

Total other comprehensive income (loss) 9,499 ( 871 ) ( 875 )

Comprehensive income 525,190 598,461 463,573

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Net income — — — 439,286 — 25,162 464,448

Reversal of unrealized losses upon the sale of marketable securities — — — — 13 — 13

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 )

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2017-12 — — — — 175 6 181

Cumulative effect upon adoption of ASU No.

2017-05 — — — 119,651 — 4,057 123,708

Changes in the redemption value of redeemable noncontrolling interest — — ( 3,427 ) — — 1,419 ( 2,008 )

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Net income — — — 568,870 — 30,462 599,332

Reversal of unrealized gains upon the sale of marketable debt securities — — — — ( 31 ) ( 1 ) ( 32 )

Cash flow hedge losses reclassified to earnings — — — — 3,225 113 3,338

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Net income 488,554 27,137 515,691

Cash flow hedge losses reclassified to earnings — — — — 3,225 113 3,338

Change in fair value of derivatives and amortization of swap settlements — — — — 8,859 311 9,170

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Retirement of common stock, net ( 40 ) — ( 9,172 ) — — — ( 9,172 )

Cumulative effect upon adoption of ASU No.

2016-13 — — — ( 190 ) — — ( 190 )

Changes in the redemption value of redeemable noncontrolling interest — — ( 7,489 ) — — 599 ( 6,890 )

Changes in noncontrolling interest from acquisition — — — — — 1,349 1,349

Contributions from noncontrolling interest — — — — — 1,900 1,900

Distributions to noncontrolling interest — — — — — ( 29,341 ) ( 29,341 )

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Amortization of discount on marketable securities — ( 19,075 ) ( 28,491 )

Amortization of (premium) discount and debt financing costs, net 6,674 5,689 ( 2,587 )

Amortization of discount and debt financing costs, net 9,538 6,674 5,689

Gain on sale of marketable securities ( 3,400 ) ( 2,131 ) ( 1,271 )

Income from early redemption of notes receivable ( 4,939 ) — —

Provision for credit losses 141 687 —

Unrealized (gains) losses on equity securities recognized through income ( 12,515 ) ( 5,710 ) 5,159

Unrealized gains on equity securities recognized through income ( 33,104 ) ( 12,515 ) ( 5,710 )

Company's share of gain on the sales of co-investments — ( 2,225 ) ( 51,097 )

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Payments related to tax withholding for share-based compensation ( 5,445 ) ( 5,664 ) ( 3,688 )

Contributions from noncontrolling interest 1,900 — —

Distributions to noncontrolling interest ( 29,379 ) ( 30,990 ) ( 27,993 )

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Net cash used in financing activities ( 533,265 ) ( 383,261 ) ( 461,689 )

Net increase (decrease) in unrestricted and restricted cash and cash equivalents 2,947 ( 70,301 ) 90,269

Net (decrease) increase in unrestricted and restricted cash and cash equivalents ( 25,403 ) 2,947 ( 70,301 )

Unrestricted and restricted cash and cash equivalents at beginning of period 84,041 81,094 151,395

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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

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Transfer from real estate under development to co-investments $ 3,068 $ 1,739 $ 671

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

Reclassifications to (from) redeemable noncontrolling interest from additional paid in capital and noncontrolling interest $ 6,890 $ ( 4,299 ) $ 2,008

Initial recognition of operating lease right-of-use assets $ — $ — $ 77,645

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Debt assumed in connection with acquisition $ — $ — $ 143,006

Repayment of mortgage note from new financing proceeds $ — $ — $ 52,000

See accompanying notes to consolidated financial statements

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191,829 147,768

341,033 195,104

11 unchanged sentences

Liabilities associated with real estate held for sale — 29,845

Distributions in excess of investments in co-investments 35,545 —

Other liabilities 39,969 39,140

61 unchanged sentences

Change in fair value of marketable debt securities, net 329 ( 61 ) 281

Reversal of unrealized (gains) losses upon the sale of marketable debt securities — ( 32 ) 13

Total other comprehensive (loss) income ( 871 ) ( 875 ) 7,719

Reversal of unrealized gains upon the sale of marketable debt securities — — ( 32 )

Total other comprehensive income (loss) 9,499 ( 871 ) ( 875 )

Comprehensive income 525,190 598,461 463,573

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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 )

7 unchanged sentences

2017-12 — — — — 181 — 181

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 the redemption value of redeemable noncontrolling interest — ( 3,427 ) — 109 — 1,310 ( 2,008 )

Changes in noncontrolling interest from acquisition — — — — — 65,472 65,472

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Net income — 568,870 — 19,912 — 10,550 599,332

Reversal of unrealized gains upon the sale of marketable debt securities — — — — ( 32 ) — ( 32 )

Cash flow hedge losses reclassified to earnings — — — — 3,338 — 3,338

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Net income — 488,554 — 17,191 $ — 9,946 515,691

Cash flow hedge losses reclassified to earnings — — — — 3,338 — 3,338

Change in fair value of derivatives and amortization of swap settlements — — — — 9,170 — 9,170

5 unchanged sentences

Retirement of common units, net ( 40 ) ( 9,172 ) — — — — ( 9,172 )

Cumulative effect upon adoption of ASU No.

2016-13 — ( 190 ) — — — — ( 190 )

Changes in the redemption value of redeemable noncontrolling interest — ( 7,489 ) — 152 — 447 ( 6,890 )

Changes in noncontrolling interest from acquisition — — — — — 1,349 1,349

Contributions from noncontrolling interest — — — — — 1,900 1,900

Distributions to noncontrolling interest — — — — — ( 10,215 ) ( 10,215 )

16 unchanged sentences

Amortization of discount on marketable securities — ( 19,075 ) ( 28,491 )

Amortization of (premium) discount and debt financing costs, net 6,674 5,689 ( 2,587 )

Amortization of discount and debt financing costs, net 9,538 6,674 5,689

Gain on sale of marketable securities ( 3,400 ) ( 2,131 ) ( 1,271 )

Income from early redemption of notes receivable ( 4,939 ) — —

Provision for credit losses 141 687 —

Unrealized (gains) losses on equity securities recognized through income ( 12,515 ) ( 5,710 ) 5,159

Unrealized gains on equity securities recognized through income ( 33,104 ) ( 12,515 ) ( 5,710 )

Company's share of gain on the sales of co-investments — ( 2,225 ) ( 51,097 )

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Payments related to tax withholding for share-based compensation ( 5,445 ) ( 5,664 ) ( 3,688 )

Contributions from noncontrolling interest 1,900 — —

Distributions to noncontrolling interest ( 8,369 ) ( 8,409 ) ( 7,288 )

3 unchanged sentences

Net cash used in financing activities ( 533,265 ) ( 383,261 ) ( 461,689 )

Net increase (decrease) in unrestricted and restricted cash and cash equivalents 2,947 ( 70,301 ) 90,269

Net (decrease) increase in unrestricted and restricted cash and cash equivalents ( 25,403 ) 2,947 ( 70,301 )

Unrestricted and restricted cash and cash equivalents at beginning of period 84,041 81,094 151,395

6 unchanged sentences

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

1 unchanged sentence

Transfer from real estate under development to co-investments $ 3,068 $ 1,739 $ 671

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

Reclassifications to (from) redeemable noncontrolling interest from general and limited partner capital and noncontrolling interest $ 6,890 $ ( 4,299 ) $ 2,008

Initial recognition of operating lease right-of-use assets $ — $ — $ 77,645

1 unchanged sentence

Debt assumed in connection with acquisition $ — $ — $ 143,006

Repayment of mortgage note from new financing proceeds $ — $ — $ 52,000

See accompanying notes to consolidated financial statements

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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.

Total Operating Partnership limited partnership units ("OP Units," and the holders of such OP Units, "Unitholders") outstanding were 2,282,464 and 2,294,760 as of December 31, 2021 and 2020, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock, totaled approximately $ 804.0 million and $ 544.8 million, as of December 31, 2021 and 2020, 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.

As of December 31, 2021, the Company owned or had ownership interests in 252 operating apartment communities, comprising 61,911 apartment homes, excluding the Company's ownership interests in preferred interest co-investments, loan investments, three operating commercial building, and a development pipeline comprised of one consolidated project and one unconsolidated joint venture project.

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

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(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.

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

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.

In January 2021, the FASB issued ASU No.

In January 2021, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No.

2021-01 "Reference Rate Reform (Topic 848):

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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.

The Company adopted this new guidance in January 2021 on a prospective basis.

This adoption did not have a material impact on the Company's consolidated results of operations or financial position.

In August 2020, the FASB issued ASU No.

2020-06 “Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The amendments in ASU No.

2020-06 modifies the if-converted method of calculating diluted EPS.

For instruments that may be settled in cash or shares, and are not classified as liability, the guidance requires entities to include the effect of potential share settlement in the diluted EPS calculation, if the effect is more dilutive.

2020-06 is effective for the Company on January 1, 2022 and will be applied on a prospective basis.

The Company does not expect this adoption to have a material impact on its consolidated results of operations or financial position.

(d) Real Estate Rental Properties

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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

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

properties in our portfolio for land comparables and building replacement costs, and other publicly available market data.

In making estimates of relative fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent land and building appraisals which consider comparable market transactions, its own analysis of recently acquired or developed comparable 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.

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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, 2021, no properties were classified as held for sale.

As of December 31, 2020, two properties were classified as held for sale.

The Company did no t record an impairment charge for the year ended December 31, 2021.

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.

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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.

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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.

The Company classifies real estate as "held for sale" when the Company has obtained necessary management approvals to sell a property and the sale of the property is expected to be completed within a year.

Evaluating solicited or unsolicited offers generally does not cause properties to be classified as held for sale.

(e) Co-investments

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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

Asset management

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

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 other-than-temporary impairment charge resulted from the Company's acquisition of CPPIB's 45 % interest in the co-investment.

2 unchanged sentences

No other-than-temporary impairment charges were recorded for the years ended December 31, 2021 or 2020.

(f) Revenues and Gains on Sale of Real Estate

(f) Revenues and Gains on Sale of Real Estate and Land

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.

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(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

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, as defined by the FASB standard for fair value measurements as discussed later in Note 2).

As of December 31, 2021 and 2020, $ 0.8 million and $ 2.5 million, respectively, of equity securities presented within common stock and stock funds in the tables below represent

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

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.

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, 2021, 2020, and 2019.

Unrealized gains and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income on the consolidated statements of income.

As of December 31, 2021 and 2020, equity securities and available for sale debt securities consisted primarily of investment-grade unsecured debt, and common stock and stock funds.

As of December 31, 2021 and 2020, marketable securities consist of the following ($ in thousands):

December 31, 2021

Gain Carrying

Value Allowance for Credit Losses

(Loss) Gain Carrying

Equity securities:

12 unchanged sentences

Available for sale

Treasury securities 2,421 13 2,434

Investment-grade unsecured debt 1,050 12 1,062

Held to maturity:

Mortgage backed securities 72,651 — 72,651

Total - Marketable securities $ 131,770 $ 15,998 $ 147,768

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.

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

For the years ended December 31, 2021, 2020 and 2019, the proceeds from sales and maturities of marketable securities totaled $ 16.6 million, $ 113.5 million and $ 147.5 million, respectively.

For the years ended December 31, 2021, 2020 and 2019, these sales resulted in gains of $ 3.4 million, $ 2.1 million, and $ 1.3 million, respectively.

For the years ended December 31, 2021 and 2020, the portion of equity security unrealized gains recognized in income totaled $ 33.1 million and $ 12.5 million in gains, respectively, and were included in interest and other income on the Company's consolidated statements of income and comprehensive income.

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

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)

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

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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.

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AND SUBSIDIARIES

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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.

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(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.

The Company capitalizes all direct and certain indirect costs, including interest, employee compensation costs, 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.

7 unchanged sentences

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 1 inputs are unadjusted, quoted prices in active markets for identical

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021, 2020, and 2019

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.

4 unchanged sentences

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, 2021 and 2020, 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 that the fair value of fixed rate debt with a carrying value of $ 5.7 billion and $ 5.5 billion at December 31, 2021 and 2020, respectively, to be $ 6.0 billion at both December 31, 2021 and 2020.

Management has estimated the fair value of the Company’s $ 564.9 million and $ 775.1 million of variable rate debt at December 31, 2021 and 2020, respectively, to be $ 561.7 million and $ 770.1 million at December 31, 2021 and 2020, 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, 2021 and 2020 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

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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.

Marketable securities are carried at fair value as of December 31, 2021 and 2020.

(l) Interest Rate Protection, Swap, and Forward Contracts

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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, 2021 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.

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December 31, 2021, 2020, and 2019

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.

The taxable REIT subsidiaries are consolidated by the Operating Partnership.

The status of cash dividends distributed for the years ended December 31, 2021, 2020, and 2019 related to common stock are classified for tax purposes as follows:

14 unchanged sentences

of swap settlements Unrealized

gain (loss) on

available for sale

3 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss 16 — 16

Other comprehensive loss ( 782 ) ( 59 ) ( 841 )

Other comprehensive income 8,859 318 9,177

Balance at December 31, 2021 $ ( 5,912 ) $ 360 $ ( 5,552 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021, 2020, and 2019

Changes in Accumulated Other Comprehensive Loss, by Component

3 unchanged sentences

of swap settlements Unrealized

gain (loss) on

available for sale

3 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss 17 — 17

Other comprehensive loss ( 810 ) ( 61 ) ( 871 )

Other comprehensive income 9,170 329 9,499

Balance at December 31, 2021 $ ( 2,176 ) $ 372 $ ( 1,804 )

1 unchanged sentence

Realized gains and losses on available for sale debt securities are included in interest and other income on the consolidated statements of income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2020, 2019, and 2018

(p) Redeemable Noncontrolling Interest

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(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.

In accordance with accounting standards for consolidation of VIEs, the Company consolidated the Operating Partnership, 18 DownREIT entities (comprising nine communities), and six co-investments as of December 31, 2021.

The Company consolidated the Operating Partnership, 17 DownREIT entities (comprising nine communities), and five co-investments as of December 31, 2020.

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.

The consolidated total assets and liabilities related to the above consolidated co-investments and DownREIT entities, net of intercompany eliminations, were approximately $ 909.3 million and $ 320.1 million, respectively, as of December 31, 2021, and $ 898.5 million and $ 326.8 million, respectively, as of December 31, 2020.

Noncontrolling interests in these entities were $ 122.4 million and $ 120.8 million as of December 31, 2021 and 2020, respectively.

The Company's financial risk in each VIE is limited to its equity investment in the VIE.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021, 2020, and 2019

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.

5 unchanged sentences

Of these amounts, $ 7.7 million and $ 11.9 million as of December 31, 2021 and 2020, 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

ESSEX PROPERTY TRUST, INC.

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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.

The carrying value of DownREIT units as to which it is within the control of the Company to redeem the units with its common stock was $ 97.4 million as of both December 31, 2021 and 2020, 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.

1 unchanged sentence

As of December 31, 2021 and 2020, 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.

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

1 unchanged sentence

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

For the year ended December 31, 2021, the Company purchased two communities consisting of 268 apartment homes and two commercial properties for approximately $ 165.4 million.

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

CPPIB Portfolio Various 2,020 100 % Q1 $ 463.4

The Village at Toluca Lake (1)

Burbank, CA 145 100 % Q2 $ 31.8

7 South Linden (2)

South San Francisco, CA — 100 % Q3 33.5

Third & Broad (3)

Seattle, WA — 100 % Q3 52.5

Canvas Seattle, WA 123 100 % Q4 47.6

Total 2021 268 $ 165.4

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.

(1) In June 2021, the Company purchased its 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.

(2) The commercial property is fully-leased to two commercial tenants.

The Company is currently pursuing entitlements to construct an apartment community on the property.

(3) The Company will hold the fully-leased commercial property for future apartment development.

ESSEX PROPERTY TRUST, INC.

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December 31, 2021, 2020, and 2019

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.

The consolidated fair value of the acquisitions listed above was included on the Company's consolidated balance sheet were as follows:

$ 103.3 million was included in land and land improvements, $ 90.2 million was included in buildings and improvements, $ 5.4 million was included in prepaid expenses and other assets, within the Company's consolidated balance sheets.

For the year ended December 31, 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, for approximately $ 463.4 million.

As a result of this acquisition, the Company realized a gain on remeasurement of its existing 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 this acquisition was included on the Company's consolidated balance sheet as follows:

(b) Sales of Real Estate Investments

The table below summarizes the disposition activity for the year ended December 31, 2021 ($ in millions):

Property Name Location Apartment Homes Ownership Quarter in 2021 Sales Price

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 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.

For the year ended December 31, 2020, the Company sold four apartment communities consisting of 670 apartment homes for $ 343.5 million, resulting in gains of $ 65.0 million.

For the year ended December 31, 2019, the Company sold two land parcels for $ 23.3 million and recorded an immaterial gain on the sale of one land parcel and a loss of $ 3.2 million on the other land parcel.

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, 2021, the Company had no assets classified as held for sale.

As of December 31, 2020, the Company had two communities totaling 439 apartment homes that were classified as held for sale.

(d) Co-investments

2 unchanged sentences

The co-investments own, operate, and develop apartment communities.

In September 2021, the Company formed a new joint venture entity, Wesco VI, LLC ("Wesco VI") with an institutional partner.

Each partner has a 50.0 % ownership interest in the joint venture and an initial equity commitment of $ 150.0 million.

The joint venture is unconsolidated for financial reporting purposes.

Also, in September 2021, Wesco VI acquired Martha Lake Apartments, a 155 -unit apartment home community located in Lynwood, WA, for a total contract price of $ 53.0 million.

The property is encumbered by a $ 29.2 million related party bridge loan from the Company, with an interest rate of 2.15 % and was

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021, 2020, and 2019

scheduled to mature in December 2021.

In December 2021, the scheduled maturity date for the related party bridge loan was extended to March 2022.

See Note 6, Related Party Transactions, for additional details.

In October 2021, Wesco VI acquired Monterra in Mill Creek, a 139 -unit apartment home community located in Mill Creek, WA, for a total contract price of $ 55.0 million.

The property was encumbered by a $ 30.3 million related party bridge loan from the Company, with an interest rate of 2.30 % and a maturity date of January 2022.

In December 2021, the maturity date of the related party bridge loan was extended to April 2022.

See Note 6, Related Party Transactions, for additional details.

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 total contract price of $ 44.0 million, at the Company's pro rata share.

The property was encumbered by a $ 48.4 million related party bridge loan from the Company, with an interest rate of 2.36 % and a maturity date of February 2022.

See Note 6, Related Party Transactions, for additional details.

In November 2021, Wesco VI acquired The Rexford, a 203 -unit apartment home community located in Fremont, CA, for a total contract price of $ 112.5 million.

The property was encumbered by a $ 61.9 million related party bridge loan from the Company, with an interest rate of 2.36 % and a maturity date of February 2022.

See Note 6, Related Party Transactions, for additional details.

In November 2021, the Company converted $ 11.0 million of its existing preferred equity investment in Silver, a 268 -unit apartment home community located in San Jose, CA into a 58.0 % equity ownership interest in the property.

The Company will retain its remaining $ 13.5 million preferred equity investment in the property at a preferred return of 8.0 %.

The property is encumbered by $ 100.0 million of mortgage debt at a rate of 3.15 %.

Based on a consolidation analysis, the Company continues to account for its investment in this limited liability company under the equity method.

The carrying values of the Company’s co-investments as of December 31, 2021 and 2020 are as follows ($ in thousands, except in parenthetical):

2 unchanged sentences

Ownership interest in:

Wesco I (2) , Wesco III, Wesco IV, Wesco V and Wesco VI

52 % $ 168,198 $ 178,322

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

BEXAEW, BEX II, BEX III (3) , BEX IV and 500 Folsom (4)

50 % 270,550 152,309

52 % 126,503 27,635

Total operating and other co-investments, net 565,251 358,266

Total predevelopment and development co-investments 50 % 157,433 146,944

Total development co-investments 50 % 11,076 157,433

Total preferred interest co-investments (includes related party investments of $ 71.1 million and $ 81.4 million as of December 31, 2021 and December 31, 2020, respectively - Note 6 - Related Party Transactions for further discussion)

2 unchanged sentences

(1) Weighted average Company ownership percentages are as of December 31, 2021.

(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.

(2) As of December 31, 2021, the Company's investment in Wesco I was classified as a liability of $ 35.3 million due to distributions received in excess of the Company's investment.

(3) In June 2021, the Company purchased the additional 50 % interest in BEX III.

(4) 500 Folsom had not stabilized as of December 31, 2020.

Its carrying value was included in the development co-investments balance as of December 31, 2020.

(5) As of December 31, 2021, the Company's investment in Expo was classified as a liability of $ 0.2 million due to distributions received in excess of the Company's investment.

The weighted average Essex ownership percentage excludes our investments in non-core technology co-investments which are carried at fair value..

ESSEX PROPERTY TRUST, INC.

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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

Construction began in the third quarter of 2020.

The property is projected to commence

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

the fourth quarter of 2022.

initial occupancy in the fourth quarter of 2022 and is projected to be fully stabilized in the third quarter of 2023.

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

1 unchanged sentence

The Company’s book value of these preferred equity investments was $ 565.9 million and $ 502.3 million at December 31, 2021 and 2020, respectively, and is included in the co-investments line in the accompanying consolidated balance sheets.

During 2021, the Company made commitments to fund $ 67.2 million of preferred equity investment in four real estate ventures.

The investments have initial preferred returns ranging from 10.0 % - 12.5 %, with maturities ranging from January 2026 to December 2026.

As of December 31, 2021, the Company had funded $ 51.3 million of the $ 67.2 million commitments.

During 2020, the Company made commitments to fund $ 191.3 million of preferred equity investment in seven preferred equity investments.

1 unchanged sentence

As of December 31, 2021, the Company had funded $ 182.3 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.

7 unchanged sentences

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.

In March 2021, the Company received cash of $ 10.0 million for the full redemption of a preferred equity investment in a joint venture that holds property located in Southern California.

In March 2021, the Company received cash of $ 110.2 million, including an early redemption fee of $ 3.5 million for the full redemption of a preferred equity investment in a joint venture that holds property located in Southern California.

In August 2021, the Company received cash of $ 21.6 million for the partial redemption of a preferred equity investment in a joint venture that holds property located in Northern California.

In November 2021, the Company received $ 18.3 million, for the partial redemption of a preferred equity investment in a joint venture that holds property located in Southern California.

In November 2021, the Company converted $ 11.0 million of its existing preferred equity investment in Silver, a 268 -unit apartment home community located in San Jose, CA, into a 58.0 % common equity interest in the property.

The Company will retain its remaining $ 13.5 million preferred equity investment in the property at a preferred return of 8.0 %.

The property is encumbered by $ 100.0 million of mortgage debt at a rate of 3.15 %.

(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.

As of December 31, 2021, the Company's development pipeline was comprised of one consolidated project under development, one unconsolidated joint venture project under development and various predevelopment projects, aggregating 371 apartment homes, with total incurred costs of $ 156.0 million.

ESSEX PROPERTY TRUST, INC.

8 unchanged sentences

Rental income $ 1,410,197 $ 1,462,161 $ 1,425,585

$ 1,462,161 $ 1,425,585 $ 1,366,590

Other property 21,221 23,989 25,043

23,989 25,043 24,280

Management and other fees from affiliates 9,138 9,598 9,527

Total revenues $ 1,440,556 $ 1,495,748 $ 1,460,155

(1) On January 1, 2019, the Company adopted ASU No.

2016-02 and ASU No.

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):

20 unchanged sentences

Straight line rent concession (5)

( 10,811 ) 21,856 —

Total rental and other property revenues $ 1,431,418 $ 1,486,150 $ 1,450,628

3 unchanged sentences

(3) Development includes properties developed which did not have stabilized results as of January 1, 2020.

(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.

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

(5) Same-property revenues reflect concessions on a cash basis.

Total rental and other property revenues reflect concessions on a straight-line basis in accordance with U.S.

Deferred Revenues and Remaining Performance Obligations

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

(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.

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.

14 unchanged sentences

Notes and other receivables consist of the following as of December 31, 2021 and 2020 ($ in thousands):

Note receivable, secured, bearing interest at 9.00 % due May 2021 (Originated May 2017) (1)

Note receivable, secured, bearing interest at 9.90 %, due November 2021 (Originated November 2018) (1)

14,216 12,838

Related party note receivable, secured, bearing variable rate interest, due February 2020 (Originated November 2019) (2)(3)

Notes receivable, secured, bearing interest at 10.50 %, due February 2023 (Originated March 2020)

17,051 15,299

Note receivable, secured, bearing interest at 11.00 %, due October 2023 (Originated April 2020) (2)

Note receivable, secured, bearing interest at 9.00 %, due December 2023 (Originated November 2020)

87,365 79,827

Note receivable, secured, bearing interest at 11.50 %, due November 2024 (Originated November 2020)

29,729 15,423

Related party note receivable, secured, bearing interest at 2.15 %, due March 2022 (Originated September 2021) (3)

Related party note receivable, secured, bearing interest at 2.30 %, due April 2022 (Originated October 2021) (3)

Related party note receivable, secured, bearing interest at 2.36 %, due February 2022 (Originated November 2021) (3)

Notes and other receivables from affiliates (4)

Straight line rent receivables (5)

15,523 25,214

Other receivables 15,232 15,671

1 unchanged sentence

Total notes and other receivables $ 341,033 $ 195,104

(1) In January 2020, the Company received cash of $ 16.9 million from the payoff of this note receivable.

(1) In November 2021, the Company received cash of $ 15.7 million, including an early redemption fee of $ 0.2 million, from the payoff of this note receivable.

(2) In June 2021, the Company received cash of $ 36.5 million, including an early redemption fee of $ 4.7 million, from the payoff of this note receivable.

(3) 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.

(4) These amounts consist of short-term loans outstanding and due from various joint ventures as of December 31, 2021 and December 31, 2020, respectively.

See Note 6, Related Party Transactions, for additional details.

3 unchanged sentences

Balance at December 31, 2020 $ 751 $ — $ 751

Impact of adoption ASC 326 147 43 190

Provision for credit losses ( 80 ) 85 5

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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, 2021 and 2019, there were no brokerage commission fees paid by the Company to MMC and its affiliates related to real estate transactions.

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.

6 unchanged sentences

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.

In November 2021, the Company provided a $ 48.4 million related party bridge loan in connection with the purchase of an interest in a single asset entity owning an apartment home community in Vista, CA.

The note receivable accrues interest at 2.36 % and is scheduled to mature in February 2022.

The bridge loan is classified within notes and other receivables in the accompanying consolidated balance sheets and had an outstanding balance of $ 48.6 million as of December 31, 2021.

In November 2021, the Company provided a $ 61.9 million related party bridge loan to Wesco VI in connection with the acquisition of The Rexford.

The note receivable accrues interest at 2.36 % and is scheduled to mature in February 2022.

The bridge loan is classified within notes and other receivables in the accompanying consolidated balance sheets and had an outstanding balance of $ 62.1 million as of December 31, 2021.

In October 2021, the Company provided a $ 30.3 million related party bridge to Wesco VI in connection with the acquisition of Monterra in Mill Creek.

The note receivable accrues interest at 2.30 % and is scheduled to mature in April 2022.

The bridge loan is classified within notes and other receivables in the accompanying consolidated balance sheets and had an outstanding balance of $ 30.4 million as of December 31, 2021.

In September 2021, the Company provided a $ 29.2 million related party bridge loan to Wesco VI in connection with the acquisition of Martha Lake Apartments.

The note receivable accrues interest at 2.15 % and was scheduled to mature in

ESSEX PROPERTY TRUST, INC.

AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021, 2020, and 2019

December 2021.

In December 2021, the maturity date of the note receivable was extended to March 2022.

The bridge loan is classified within notes and other receivables in the accompanying consolidated balance sheets and had an outstanding balance of $ 29.3 million as of December 31, 2021.

In March 2021, the Company provided a $ 52.5 million related party bridge loan to Wesco I in connection with the payoff of a debt related to one of its properties located in Southern California.

The note receivable accrued interest at 2.55 % and was paid off in July 2021.

In November 2019, the Company provided an $ 85.5 million related party bridge loan to Wesco V in connection with 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.

7 unchanged sentences

As a result of this transaction, the Company consolidated the property, based on a VIE analysis performed by the Company.

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.

6 unchanged sentences

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.

This investment accrued interest based on a 10.25 % initial preferred return.

The investment was scheduled to mature in May 2023.

In November 2021, the Company received cash of $ 18.3 million, for the partial redemption of this preferred equity investment, and the maturity of the remaining commitment was extended to December 2028.

As of December 31, 2021, the Company had a remaining commitment of $ 13.0 million.

The remaining committed amount is expected to be funded if and when requested by the sponsors.

8 unchanged sentences

The remaining investment was fully redeemed in February 2019.

ESSEX PROPERTY TRUST, INC.

AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021, 2020, and 2019

(7) Unsecured Debt

3 unchanged sentences

2021 2020 Weighted Average

Unsecured bonds private placement - fixed rate $ 199,950 $ 199,820 0.5

Term loan - variable rate 549,380 349,189 1.5

In Years as of December 31, 2021

Unsecured bonds private placement - fixed rate $ — $ 199,950 N/A

Term loan - variable rate — 549,380 N/A

Bonds public offering - fixed rate 5,307,196 4,858,655 8.7

2 unchanged sentences

Lines of credit (2)

341,257 — N/A

Total unsecured debt $ 5,648,453 $ 5,607,985

5 unchanged sentences

These debt issuance costs are included in prepaid expenses and other assets on the consolidated balance sheets.

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 %.

As of December 31, 2021, the Company's $ 1.2 billion credit facility had an interest rate of LIBOR plus 0.775 %, which is based on a tiered rate structure tied to the Company's credit ratings and a scheduled maturity date of September 2025 with three six-month extensions, exercisable at the Company's option.

As of December 31, 2021, the Company's $ 35.0 million working capital unsecured line of credit had an interest rate of LIBOR plus 0.775 %, which is based on a tiered rate structure tied to the Company's credit ratings, and a scheduled maturity date of February 2023.

As of December 31, 2021 the Company had no amount of private placement unsecured bonds outstanding.

As of December 31, 2020, 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, 2021 and 2020 ($ in thousands):

4 unchanged sentences

$ — $ 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.

As of December 31, 2021 and 2020, the Company's unsecured term loans had no amount outstanding and $ 550.0 million, respectively, at an average interest rate of none and 1.7 %, respectively.

These loans are included in the line "Term loan -

ESSEX PROPERTY TRUST, INC.

AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021, 2020, and 2019

variable rate" in the table above, and as of December 31, 2021 and 2020, the carrying value, net of debt issuance costs, was no amount outstanding and $ 549.4 million, respectively.

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 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 upcoming debt maturities, including all or a portion of certain unsecured term loans, and for general corporate and working capital purposes.

These bonds are included in the line "Bonds public offering-fixed rate" in the table above, the carrying value of the 2028 Notes, net of discount and debt issuance costs, was $ 444.4 million.

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.

These bonds are included in the line "Bonds public offering-fixed rate" in the table above, the carrying value of the 2031 Notes, net of discount and debt issuance costs, was $ 295.7 million.

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.

5 unchanged sentences

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.

These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021, and 2020, the carrying value of the 2032 Notes, net of premiums and debt issuance costs, was $ 650.6 million and $ 650.7 million respectively.

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.

7 unchanged sentences

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.

These bonds are included in the line "Bonds public offering-fixed rate" in the table above, the carrying value of the 2031 Notes

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

and 2050 Notes, net of discount and debt issuance costs was $ 295.1 million and $ 295.8 million respectively as of December 31, 2021, and $ 294.5 million and $ 295.7 million respectively as of December 31, 2020.

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.

24 unchanged sentences

These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021 and 2020, the carrying value of the 2026 Notes, net of discount and debt issuance costs was $ 447.1 million and $ 446.4 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

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

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.

The 2025 Notes were offered to investors at a price of 99.747 % of par value.

These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021 and 2020, the carrying value of the 2025 Notes, net of discount and debt issuance costs was $ 498.2 million and $ 497.6 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;

1 unchanged sentence

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.

These notes are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021, the BRE Notes had no amount outstanding.

As of December 31, 2020, the carrying value of the BRE Notes, plus unamortized premium was $ 296.8 million.

In March 2017, the Company paid off $ 300.0 million of 5.500 % senior notes, at maturity.

In December 2020, the Company paid off $ 300.0 million of 5.200 % senior notes.

In June 2021, the Company paid off the remaining $ 300.0 million of 3.375 % senior notes due 2023.

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").

8 unchanged sentences

Maturity 2021 2020 Coupon

Senior notes March 2021 $ — $ 300,000 5.200 %

Senior notes August 2022 — 300,000 3.625 %

Senior notes January 2023 $ — $ 300,000 3.375 %

5 unchanged sentences

Senior notes March 2028 450,000 — 1.700 %

Senior notes March 2029 500,000 500,000 4.000 %

Senior notes January 2030 550,000 550,000 3.000 %

Senior notes January 2031 300,000 300,000 1.650 %

Senior notes June 2031 300,000 — 2.550 %

Senior notes March 2032 650,000 650,000 2.650 %

2 unchanged sentences

$ 5,350,000 $ 4,900,000

The aggregate scheduled principal payments of unsecured debt payable, excluding lines of credit, at December 31, 2020 are as follows ($ in thousands):

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

The aggregate scheduled principal payments of unsecured debt payable, excluding lines of credit, at December 31, 2021 are as follows ($ in thousands):

Thereafter 3,700,000

As of December 31, 2021, 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.

As of December 31, 2021, there was $ 340.0 million outstanding on the $ 1.2 billion unsecured line of credit.

As of December 31, 2020, there was no amount 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 0.775 % as of December 31, 2021.

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 $ 1.2 billion unsecured line of credit has a scheduled maturity date in September 2025 with three 6-month extensions, exercisable at the Company's option.

As of December 31, 2021, there was $ 1.3 million outstanding on the Company's $ 35.0 million working capital unsecured line of credit.

As of December 31, 2020, there was no amount outstanding on this line.

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 0.775 %.

13 unchanged sentences

The aggregate scheduled principal payments of mortgage notes payable at December 31, 2021 are as follows ($ in thousands):

2022 $ 43,188

Thereafter 356,224

(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

(1) Variable rate mortgage notes payable, including $ 224.4 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 1.1 % at December 2021 and 1.2 % at December 2020) including credit enhancement and

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

longer be obligated to comply with such tenant income criteria.

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 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.

15 unchanged sentences

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.

These five swaps, with a total notional amount of $ 175.0 million were terminated during the year-ended December 31, 2021.

As of December 31, 2021 and 2020, 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.

As of December 31, 2021 and 2020, the aggregate carrying value of the interest rate swap contracts were a liability of zero and an asset of $ 2.4 million, respectively.

As of December 31, 2021 and 2020, the swap contracts were presented in the consolidated balance sheets as a liability of zero and $ 2.4 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, 2021 and 2020.

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.

Hedge ineffectiveness related to cash flow hedges, which is included in interest expense on the consolidated statements of income, was zero , zero , and a loss of $ 0.2 million for the years ended December 31, 2021, 2020, and 2019 respectively.

The Company has four total return swap contracts, with an aggregate notional amount of $ 224.4 million, that effectively convert $ 224.4 million of mortgage notes payable to a floating interest rate based on the Securities Industry and Financial Markets Association Municipal Swap Index ("SIFMA") plus a spread.

The total return swaps provide fair market value protection on the mortgage notes payable to 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.

2 unchanged sentences

These total return swaps are scheduled to mature between November 2022 and December 2024.

The realized gains of $ 10.7 million,

The realized gains of $ 10.8 million, $ 10.7 million, and $ 8.4 million as of December 31, 2021, 2020, and 2019, respectively, were reported on the consolidated statements of income as total return swap income.

ESSEX PROPERTY TRUST, INC.

4 unchanged sentences

December 31, 2021, 2020, and 2019

$ 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.

As of December 31, 2021, the Company is a lessor of apartment homes at all of its consolidated operating and lease-up communities, three commercial buildings, 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.

17 unchanged sentences

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

(11) Lease Agreements - Company as Lessee

As of December 31, 2021, 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.

ESSEX PROPERTY TRUST, INC.

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December 31, 2021, 2020, and 2019

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.

A majority of the Company’s ground leases and the parking lease are subject to changes in the Consumer Price Index ("CPI").

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A maturity analysis of lease liabilities as of December 31, 2021 is as follows ($ in thousands):

Operating Leases

Thereafter 135,977

Total lease payments $ 167,366

Imputed interest ( 96,691 )

Present value of lease liabilities $ 70,675

ESSEX PROPERTY TRUST, INC.

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December 31, 2021, 2020, and 2019

Operating Leases

Thereafter 140,417

Total lease payments $ 174,329

Imputed interest ( 100,292 )

Present value of lease liabilities $ 74,037

Lease term and discount rate information for leases at December 31, 2021 and 2020 are as follows:

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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.

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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

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.

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.

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

For the year ended December 31, 2020, the Company did not sell any shares of its 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.

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

As of December 31, 2021 and 2020, the Operating Partnership had outstanding 2,176,327 and 2,188,623 OP Units respectively.

As of both December 31, 2021 and 2020 the Operating Partnership had 106,137 vested LTIP units.

The Operating Partnership’s general partner, Essex, owned 96.6 % of the partnership interests in the Operating Partnership as of both December 31, 2021 and 2020, 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.

Essex has generally acquired 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.

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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 the occurrence of specified

ESSEX PROPERTY TRUST, INC.

AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2021, 2020, and 2019

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.

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The related income allocated to these convertible OP Units aggregated $ 17.2 million, $ 20.0 million and $ 15.3 million for the years ended December 31, 2021, 2020 and 2019, 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 116,380 , 403,458 , and 115,066 for the years ended December 31, 2021, 2020, and 2019, 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.

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Stock options of 116,380 , 403,458 , and 115,066 , for the years ended December 31, 2021, 2020, and 2019, 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.

ESSEX PROPERTY TRUST, INC.

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The average fair value of stock options granted for the years ended December 31, 2021, 2020 and 2019 was $ 24.68 , $ 20.69 and $ 24.02 , 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.

Certain stock options granted in 2021, 2020, and 2019 included a $ 100 cap, $ 100 cap, and, $ 125 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:

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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.

The 2015 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.

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.

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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.

ESSEX PROPERTY TRUST, INC.

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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.

Equity-based compensation costs for LTIP and Z Units under the fair value method totaled approximately zero , zero and $ 0.9 million for the years ended December 31, 2021, 2020 and 2019, 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 , zero , and $ 0.2 million, for the years ended December 31, 2021, 2020, and 2019, respectively.

The intrinsic value of the vested and unvested LTIP Units totaled $ 37.4 million as of December 31, 2021.

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Granted — — —

Vested 1,890 ( 1,890 ) —

Converted — — —

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(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.

The Company's total minimum lease payment commitments, underground 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.

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(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 %.

In January 2022, Wesco VI acquired Vela on Ox, a 379 -unit apartment home community located in Woodland Hills, CA for a total contract price of $ 183.0 million.

The property was encumbered by a $ 100.7 million bridge loan from the Company, with an interest rate of 2.64 % and was paid off in January 2022.

In January 2022, the Company received cash of $ 121.3 million to pay off the outstanding principal balance of related party bridge loans to Wesco VI.

Subsequent to year end, the Company received cash of $ 87.9 million for the full redemption of two preferred equity investments in joint ventures that hold property in Southern California and $ 17.6 million for the partial redemption of a preferred equity investment in a joint venture that holds property in Northern California.

ESSEX PROPERTY TRUST, INC.

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Avondale at Warner Center 446 Woodland Hills, CA — 10,536 24,522 27,959 10,601 52,416 63,017 ( 39,034 ) 1970 Jan-99 3-30

Bel Air 462 San Ramon, CA — 12,105 18,252 45,326 12,682 63,001 75,683 ( 47,118 ) 1988 Jan-95 3-30

ESSEX PROPERTY TRUST, INC.

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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 3,756 21,725 95,847 117,572 ( 26,579 ) 2009 Apr-14 5-30

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Camino Ruiz Square 159 Camarillo, CA — 6,871 26,119 2,975 6,931 29,034 35,965 ( 14,907 ) 1990 Dec-06 3-30

Canvas 123 Seattle, WA — 10,489 36,924 56 10,489 36,980 47,469 ( 46 ) 2014 Dec-21 3-30

Canyon Oaks 250 San Ramon, CA — 19,088 44,473 7,995 19,088 52,468 71,556 ( 25,767 ) 2005 May-07 3-30

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Deer Valley 171 San Rafael, CA — 21,478 50,116 4,996 21,478 55,112 76,590 ( 15,897 ) 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 1,676 9,059 28,853 37,912 ( 9,441 ) 2009 Sep-12 3-30

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Highlands at Wynhaven 333 Issaquah, WA — 16,271 48,932 16,389 16,271 65,321 81,592 ( 33,737 ) 2000 Aug-08 3-30

Hillcrest Park 608 Newbury Park, CA — 15,318 40,601 23,567 15,755 63,731 79,486 ( 47,883 ) 1973 Mar-98 3-30

ESSEX PROPERTY TRUST, INC.

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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 35,010 22,000 129,691 151,691 ( 69,587 ) 1948 Sep-06 3-30

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Muse 152 North Hollywood, CA — 7,822 33,436 6,129 7,823 39,564 47,387 ( 16,657 ) 2011 Feb-11 3-30

Mylo 476 Santa Clara, CA — 6,472 206,098 255 6,472 206,353 212,825 ( 15,746 ) 2021 Jun-21 3-30

1000 Kiely 121 Santa Clara, CA — 9,359 21,845 9,120 9,359 30,965 40,324 ( 15,344 ) 1971 Mar-11 3-30

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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 3,971 4,710 22,810 27,520 ( 8,980 ) 2002 Jun-12 3-30

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The Trails of Redmond 423 Redmond, WA — 21,930 87,720 7,991 21,930 95,711 117,641 ( 27,650 ) 1985 Apr-14 5-30

The Village at Toluca Lake 145 Burbank, CA — 14,634 48,297 1,028 14,634 49,325 63,959 ( 946 ) 1974 Nov-17 3-30

The Waterford 238 San Jose, CA — 11,808 24,500 18,305 15,165 39,448 54,613 ( 27,513 ) 2000 Jun-00 3-30

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Villa Granada 270 Santa Clara, CA — 38,299 89,365 2,095 38,299 91,460 129,759 ( 26,047 ) 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

ESSEX PROPERTY TRUST, INC.

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depreciation construction acquired (years)

Villa Siena 272 Costa Mesa, CA — 13,842 55,367 10,134 13,842 65,501 79,343 ( 21,056 ) 1974 Apr-14 5-30

Village Green 272 La Habra, CA — 6,488 36,768 4,839 6,488 41,607 48,095 ( 12,868 ) 1971 Apr-14 5-30

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Vox Apartments 58 Seattle, WA — 5,545 16,635 458 5,545 17,093 22,638 ( 4,776 ) 2013 Oct-13 3-30

Wallace on Sunset 200 Los Angeles, CA — 24,005 80,466 1,388 24,005 81,854 105,859 ( 7,718 ) 2021 Dec-21 3-30

Walnut Heights 163 Walnut, CA — 4,858 19,168 6,113 4,887 25,252 30,139 ( 15,929 ) 1964 Oct-03 3-30

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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.

and amendments thereto.

Indenture, dated April 15, 2013, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S.

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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.

Indenture governing 3.375% Senior Notes due 2023, dated April 4, 2014, by and among Essex Portfolio, L.P., Essex Property Trust, Inc.

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.

Indenture, dated April 15, 2014, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S.

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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.

Indenture, dated March 1, 2021, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S.

Bank National Association, as trustee, including the form of 1.700% Senior Notes due 2028 and the guarantee thereof, attached as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed March 1, 2021, and incorporated herein by reference.

Indenture, dated June 1, 2021, among Essex Portfolio, L.P., Essex portfolio Trust, Inc.

Bank National Association, as trustee, including the form of 2.550% Senior Notes due 2031 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K filed June 1, 2021, and incorporated herein by reference.

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.

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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.*

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.*

Deferred Compensation Plan, As Amended and Restated As of January 1, 2021.

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.*

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.

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.

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.

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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.

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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.

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.

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.

Essex Property Trust, Inc.

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Long-Term Incentive Award Agreements pursuant to the 2018 Stock Award and Incentive Compensation Plan.*

Executive Transition Services Agreement, dated December 19, 2018, by and between Essex Property Trust, Inc.

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.*

Executive Transition Services Agreement, effective as of September 5, 2019, by and between Essex Property Trust, Inc.

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.*

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.

Third Amended and Restated Revolving Credit Agreement, dated as of September 30, 2021, among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and other lenders party thereto , attached as E xhibit 10.1 to the Compa ny's Quarterly Report on Form 10-Q for the quarter ended Sept ember 30, 2021, and incorporated herein by reference.

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.*

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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.

101.INS XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

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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 9A. Controls and Procedures