ESSEX PROPERTY TRUST, INC. 10-K

Item 9A. Controls and Procedures Essex Property Trust, Inc. As of December 31, 2021, Essex carried out an evaluation, under the supervision and with the participation of management, including Essex's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Essex's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, Essex’s Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2021, Essex’s disclosure controls and procedures were effective to ensure that the information required to be disclosed by Essex in the reports that Essex files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that Essex files or submits under the Exchange Act is accumulated and communicated to Essex’s management, including Essex’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. There were no changes in Essex’s internal control over financial reporting, that occurred during the quarter ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, Essex’s internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting Essex’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Essex’s management assessed the effectiveness of Essex’s internal control over financial reporting as of December 31, 2021. In making this assessment, Essex’s management used the criteria set forth in the report entitled "Internal Control-Integrated Framework (2013)" published by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Essex’s management has concluded that, as of December 31, 2021, its internal control over financial reporting was effective based on these criteria. Essex’s independent registered public accounting firm, KPMG LLP, has issued an attestation report over Essex’s internal control over financial reporting, which is included herein. 56 Table of Contents Essex Portfolio, L.P. As of December 31, 2021, the Operating Partnership carried out an evaluation, under the supervision and with the participation of management, including Essex's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Operating Partnership's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of December 31, 2021, the Operating Partnership’s disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Operating Partnership in the reports that the Operating Partnership files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that the Operating Partnership files or submits under the Exchange Act is accumulated and communicated to the Operating Partnership’s management, including Essex's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. There were no changes in the Operating Partnership’s internal control over financial reporting, that occurred during the quarter ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting The Operating Partnership’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). The Operating Partnership’s management assessed the effectiveness of the Operating Partnership’s internal control over financial reporting as of December 31, 2021. In making this assessment, the Operating Partnership’s management used the criteria set forth in the report entitled "Internal Control-Integrated Framework (2013)" published by COSO. The Operating Partnership’s management has concluded that, as of December 31, 2021, its internal control over financial reporting was effective based on these criteria. Item 9B. Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 57 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2022 Annual Meeting of Stockholders, under the heading "Board and Corporate Governance Matters," to be filed with the SEC within 120 days of December 31, 2021. Item 11. Executive Compensation The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2022 Annual Meeting of Stockholders, under the headings "Executive Compensation" and "Director Compensation," to be filed with the SEC within 120 days of December 31, 2021. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2022 Annual Meeting of Stockholders, under the heading "Security Ownership of Certain Beneficial Owners and Management," to be filed with the SEC within 120 days of December 31, 2021. Item 13. Certain Relationships and Related Transactions and Director Independence The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2022 Annual Meeting of Stockholders, under the heading "Certain Relationships and Related Persons Transactions," to be filed with the SEC within 120 days of December 31, 2021. Item 14. Principal Accounting Fees and Services The information required by this Item is incorporated herein by reference from our Proxy Statement, relating to our 2022 Annual Meeting of Stockholders, under the headings "Report of the Audit Committee" and "Fees Paid to KPMG LLP," to be filed with the SEC within 120 days of December 31, 2021. 58 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (A) Financial Statements (1) Consolidated Financial Statements of Essex Property Trust, Inc. Page Reports of Independent Registered Public Accounting Firm (PCAOB ID: 185) F- 1 Consolidated Balance Sheets: As of December 31, 2021 and 2020 F- 6 Consolidated Statements of Income: Years ended December 31, 2021, 2020, and 2019 F- 7 Consolidated Statements of Comprehensive Income: Years ended December 31, 2021, 2020, and 2019 F- 8 Consolidated Statements of Equity: Years ended December 31, 2021, 2020, and 2019 F- 9 Consolidated Statements of Cash Flows: Years ended December 31, 2021, 2020, and 2019 F- 11 Notes to Consolidated Financial Statements F- 20 (2) Consolidated Financial Statements of Essex Portfolio, L.P. Report of Independent Registered Public Accounting Firm F- 4 Consolidated Balance Sheets: As of December 31, 2021 and 2020 F- 13 Consolidated Statements of Income: Years ended December 31, 2021, 2020, and 2019 F- 14 Consolidated Statements of Comprehensive Income: Years ended December 31, 2021, 2020, and 2019 F- 15 Consolidated Statements of Capital: Years ended December 31, 2021, 2020, and 2019 F- 16 Consolidated Statements of Cash Flows: Years ended December 31, 2021, 2020, and 2019 F- 18 Notes to Consolidated Financial Statements F- 20 (3) Financial Statement Schedule – Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2021 F- 58 (4) See the Exhibit Index immediately preceding the signature page and certifications for a list of exhibits filed or incorporated by reference as part of this report. (B) Exhibits The Company hereby files, as exhibits to this Form 10-K, those exhibits listed on the Exhibit Index referenced in Item 15(A)(4) above. Item 16. Form 10-K Summary None. 59 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Essex Property Trust, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Essex Property Trust, Inc. and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit 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 As discussed in Note 2 to the consolidated financial statements, the Company evaluates the carrying amount of rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of a rental property may not be fully recoverable. The Company had $11.0 billion in rental properties as of December 31, 2021. We identified the evaluation of events or changes in circumstances that indicate rental properties may be impaired as a critical audit matter. Specifically, a high degree of subjective and complex auditor judgment was required to evaluate the intent regarding the expected period the Company will receive cash flows from the rental property. Changes to shorten the expected period the Company will receive cash flows from the rental property could indicate a potential impairment. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process to evaluate events or F- 1 Table of Contents 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. /s/ KPMG LLP We have served as the Company’s auditor since 1994. San Francisco, California February 25, 2022 F- 2 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Essex Property Trust, Inc.: Opinion on Internal Control Over Financial Reporting We have audited Essex Property Trust, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule III (collectively, the consolidated financial statements), and our report dated February 25, 2022 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP San Francisco, California February 25, 2022 F- 3 Table of Contents Report of Independent Registered Public Accounting Firm To the Partners of Essex Portfolio, L.P. and the Board of Directors of Essex Property Trust, Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Essex Portfolio, L.P. and subsidiaries (the Operating Partnership) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, capital, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes and financial statement schedule III (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Operating Partnership as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Operating Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Operating Partnership is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Operating Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit 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 As discussed in Note 2 to the consolidated financial statements, the Operating Partnership evaluates the carrying amount of rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of a rental property may not be fully recoverable. The Operating Partnership had $11.0 billion in rental properties as of December 31, 2021. We identified the evaluation of events or changes in circumstances that indicate rental properties may be impaired as a critical audit matter. Specifically, a high degree of subjective and complex auditor judgment was required to evaluate the intent regarding the expected period the Operating Partnership will receive cash flows from the rental property. Changes to shorten the expected period the Operating Partnership will receive cash flows from the rental property could indicate a potential impairment. The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Operating Partnership’s process to evaluate F- 4 Table of Contents 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. /s/ KPMG LLP We have served as the Operating Partnership's auditor since 2013. San Francisco, California February 25, 2022 F- 5 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2021 and 2020 (Dollars in thousands, except share amounts) 2021 2020 ASSETS Real estate: Rental properties: Land and land improvements $ 3,032,678 $ 2,929,009 Buildings and improvements 12,597,249 12,132,736 15,629,927 15,061,745 Less: accumulated depreciation ( 4,646,854 ) ( 4,133,959 ) 10,983,073 10,927,786 Real estate under development 111,562 386,047 Co-investments 1,177,802 1,018,010 Real estate held for sale — 57,938 12,272,437 12,389,781 Cash and cash equivalents-unrestricted 48,420 73,629 Cash and cash equivalents-restricted 10,218 10,412 Marketable securities, net of allowance for credit losses of zero as of both December 31, 2021 and December 31, 2020 191,829 147,768 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 Operating lease right-of-use assets 68,972 72,143 Prepaid expenses and other assets 64,964 47,340 Total assets $ 12,997,873 $ 12,936,177 LIABILITIES AND EQUITY Unsecured debt, net $ 5,307,196 $ 5,607,985 Mortgage notes payable, net 638,957 643,550 Lines of credit 341,257 — Accounts payable and accrued liabilities 180,751 152,855 Construction payable 29,136 31,417 Dividends payable 143,213 141,917 Operating lease liabilities 70,675 74,037 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 Total liabilities 6,786,699 6,720,746 Commitments and contingencies Redeemable noncontrolling interest 34,666 32,239 Equity: Common stock; $ 0.0001 par value, 670,000,000 shares authorized; 65,248,393 and 64,999,015 shares issued and outstanding, respectively 7 6 Additional paid-in capital 6,915,981 6,876,326 Distributions in excess of accumulated earnings ( 916,833 ) ( 861,193 ) Accumulated other comprehensive loss, net ( 5,552 ) ( 14,729 ) Total stockholders' equity 5,993,603 6,000,410 Noncontrolling interest 182,905 182,782 Total equity 6,176,508 6,183,192 Total liabilities and equity $ 12,997,873 $ 12,936,177 See accompanying notes to consolidated financial statements. F- 6 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Income Years ended December 31, 2021, 2020 and 2019 (Dollars in thousands, except per share and share amounts) 2021 2020 2019 Revenues: Rental and other property $ 1,431,418 $ 1,486,150 $ 1,450,628 Management and other fees from affiliates 9,138 9,598 9,527 1,440,556 1,495,748 1,460,155 Expenses: Property operating, excluding real estate taxes 264,892 263,389 241,357 Real estate taxes 180,367 177,011 155,170 Corporate-level property management expenses 36,188 34,573 34,067 Depreciation and amortization 520,066 525,497 483,750 General and administrative 51,838 65,388 54,262 Expensed acquisition and investment related costs 203 1,591 168 Impairment loss — 1,825 7,105 1,053,554 1,069,274 975,879 Gain (loss) on sale of real estate and land 142,993 64,967 ( 3,164 ) Earnings from operations 529,995 491,441 481,112 Interest expense ( 203,125 ) ( 220,633 ) ( 217,339 ) Total return swap income 10,774 10,733 8,446 Interest and other income 98,744 40,999 46,298 Equity income from co-investments 111,721 66,512 112,136 Deferred tax expense on unrealized gain on unconsolidated co-investment ( 15,668 ) ( 1,531 ) ( 1,457 ) (Loss) gain on early retirement of debt, net ( 19,010 ) ( 22,883 ) 3,717 Gain on remeasurement of co-investment 2,260 234,694 31,535 Net income 515,691 599,332 464,448 Net income attributable to noncontrolling interest ( 27,137 ) ( 30,462 ) ( 25,162 ) Net income available to common stockholders $ 488,554 $ 568,870 $ 439,286 Per share data: Basic: Net income available to common stockholders $ 7.51 $ 8.69 $ 6.67 Weighted average number of shares outstanding during the year 65,051,465 65,454,057 65,840,422 Diluted: Net income available to common stockholders $ 7.51 $ 8.69 $ 6.66 Weighted average number of shares outstanding during the year 65,088,874 65,564,982 65,939,455 See accompanying notes to consolidated financial statements. F- 7 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income Years ended December 31, 2021, 2020 and 2019 (Dollars in thousands) 2021 2020 2019 Net income $ 515,691 $ 599,332 $ 464,448 Other comprehensive income (loss): Change in fair value of derivatives and amortization of swap settlements 9,170 ( 4,148 ) ( 2,948 ) Cash flow hedge losses reclassified to earnings — 3,338 1,824 Change in fair value of marketable debt securities, net 329 ( 61 ) 281 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 Comprehensive income attributable to noncontrolling interest ( 27,459 ) ( 30,432 ) ( 25,133 ) Comprehensive income attributable to controlling interest $ 497,731 $ 568,029 $ 438,440 See accompanying notes to consolidated financial statements. F- 8 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Equity Years ended December 31, 2021, 2020 and 2019 (Dollars and shares in thousands) Common stock Additional paid-in capital Distributions in excess of accumulated earnings Accumulated other comprehensive loss, net Noncontrolling interest Total Shares Amount Balances at December 31, 2018 65,890 $ 7 $ 7,093,079 $ ( 812,796 ) $ ( 13,217 ) $ 126,771 $ 6,393,844 Net income — — — 439,286 — 25,162 464,448 Reversal of unrealized gains upon the sale of marketable debt securities — — — — ( 31 ) ( 1 ) ( 32 ) Cash flow hedge losses reclassified to earnings — — — — 1,762 62 1,824 Change in fair value of derivatives and amortization of swap settlements — — — — ( 2,849 ) ( 99 ) ( 2,948 ) Change in fair value of marketable debt securities, net — — — — 272 9 281 Issuance of common stock under: Stock option and restricted stock plans, net 195 — 33,779 — — — 33,779 Sale of common stock, net 228 — 72,539 — — — 72,539 Equity based compensation costs — — 11,029 — — 1,254 12,283 Retirement of common stock, net ( 234 ) — ( 56,989 ) — — — ( 56,989 ) Cumulative effect upon adoption of ASU No. 2017-12 — — — — 175 6 181 Changes in the redemption value of redeemable noncontrolling interest — — ( 3,427 ) — — 1,419 ( 2,008 ) Changes in noncontrolling interest from acquisition — — — — — 65,472 65,472 Distributions to noncontrolling interest — — — — — ( 28,493 ) ( 28,493 ) Redemptions of noncontrolling interest 13 — ( 28,083 ) — — ( 8,485 ) ( 36,568 ) Common stock dividends ($ 7.80 per share) — — — ( 514,109 ) — — ( 514,109 ) Balances at December 31, 2019 66,092 $ 7 $ 7,121,927 $ ( 887,619 ) $ ( 13,888 ) $ 183,077 $ 6,403,504 Net income — — — 568,870 — 30,462 599,332 Cash flow hedge losses reclassified to earnings — — — — 3,225 113 3,338 Change in fair value of derivatives and amortization of swap settlements — — — — ( 4,007 ) ( 141 ) ( 4,148 ) Change in fair value of marketable debt securities, net — — — — ( 59 ) ( 2 ) ( 61 ) Issuance of common stock under: Stock option and restricted stock plans, net 95 — 9,201 — — — 9,201 Sale of common stock, net — — ( 296 ) — — — ( 296 ) F- 9 Table of Contents Equity based compensation costs — — 12,453 — — 460 12,913 Retirement of common stock, net ( 1,197 ) ( 1 ) ( 269,314 ) — — — ( 269,315 ) Cumulative effect upon adoption of ASU No. 2016-13 — — — ( 190 ) — — ( 190 ) Changes in the redemption value of redeemable noncontrolling interest — — 4,375 — — ( 76 ) 4,299 Changes in noncontrolling interest from acquisition — — — — — 1,349 1,349 Distributions to noncontrolling interest — — — — — ( 31,367 ) ( 31,367 ) Redemptions of noncontrolling interest 9 — ( 2,020 ) — — ( 1,093 ) ( 3,113 ) Common stock dividends ($ 8.31 per share) — — — ( 542,254 ) — — ( 542,254 ) Balances at December 31, 2020 64,999 $ 6 $ 6,876,326 $ ( 861,193 ) $ ( 14,729 ) $ 182,782 $ 6,183,192 Net income 488,554 27,137 515,691 Change in fair value of derivatives and amortization of swap settlements — — — — 8,859 311 9,170 Change in fair value of marketable debt securities, net — — — — 318 11 329 Issuance of common stock under: Stock option and restricted stock plans, net 279 1 53,051 — — — 53,052 Sale of common stock, net — — ( 455 ) — — — ( 455 ) Equity based compensation costs — — 11,286 — — 397 11,683 Retirement of common stock, net ( 40 ) — ( 9,172 ) — — — ( 9,172 ) Changes in the redemption value of redeemable noncontrolling interest — — ( 7,489 ) — — 599 ( 6,890 ) Contributions from noncontrolling interest — — — — — 1,900 1,900 Distributions to noncontrolling interest — — — — — ( 29,341 ) ( 29,341 ) Redemptions of noncontrolling interest 10 — ( 7,566 ) — — ( 891 ) ( 8,457 ) Common stock dividends ($ 8.36 per share) — — — ( 544,194 ) — — ( 544,194 ) Balances at December 31, 2021 65,248 $ 7 $ 6,915,981 $ ( 916,833 ) $ ( 5,552 ) $ 182,905 $ 6,176,508 See accompanying notes to consolidated financial statements. F- 10 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2021, 2020 and 2019 (Dollars in thousands) 2021 2020 2019 Cash flows from operating activities: Net income $ 515,691 $ 599,332 $ 464,448 Adjustments to reconcile net income to net cash provided by operating activities: Straight-lined rents 9,672 ( 19,426 ) ( 1,218 ) Depreciation and amortization 520,066 525,497 483,750 Amortization of discount on marketable securities — ( 19,075 ) ( 28,491 ) 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 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 ) Earnings from co-investments ( 111,721 ) ( 64,287 ) ( 61,039 ) Operating distributions from co-investments 104,833 74,419 99,277 Accrued interest from notes and other receivables ( 15,902 ) ( 3,683 ) ( 6,012 ) Impairment loss — 1,825 7,105 (Gain) loss on the sale of real estate and land ( 142,993 ) ( 64,967 ) 3,164 Equity-based compensation 7,308 8,157 7,010 Loss (gain) on early retirement of debt, net 19,010 22,883 ( 3,717 ) Gain on remeasurement of co-investment ( 2,260 ) ( 234,694 ) ( 31,535 ) Changes in operating assets and liabilities: Prepaid expenses, receivables, operating lease right-of-use assets, and other assets 4,878 ( 3,730 ) 6,969 Accounts payable, accrued liabilities, and operating lease liabilities 22,298 ( 10,382 ) 29,551 Other liabilities 6,143 749 2,206 Net cash provided by operating activities 905,259 803,108 919,079 Cash flows from investing activities: Additions to real estate: Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired ( 153,481 ) ( 460,421 ) ( 133,825 ) Redevelopment ( 61,671 ) ( 48,980 ) ( 70,295 ) Development acquisitions of and additions to real estate under development ( 49,784 ) ( 108,781 ) ( 158,234 ) Capital expenditures on rental properties ( 121,195 ) ( 90,085 ) ( 101,689 ) Investments in notes receivable ( 245,144 ) ( 135,343 ) ( 231,400 ) Collections of notes and other receivables 104,405 98,711 168,720 Proceeds from insurance for property losses 879 723 3,734 Proceeds from dispositions of real estate 297,454 339,165 23,214 Contributions to co-investments ( 306,266 ) ( 114,017 ) ( 402,284 ) Changes in refundable deposits ( 9,486 ) 96 5 Purchases of marketable securities ( 23,805 ) ( 83,379 ) ( 46,458 ) Sales and maturities of marketable securities 16,577 113,465 147,531 Non-operating distributions from co-investments 154,120 71,946 273,290 F- 11 Table of Contents Net cash used in investing activities ( 397,397 ) ( 416,900 ) ( 527,691 ) Cash flows from financing activities: Proceeds from unsecured debt and mortgage notes 745,505 1,452,808 1,045,290 Payments on unsecured debt and mortgage notes ( 1,053,501 ) ( 916,209 ) ( 1,026,616 ) Proceeds from lines of credit 1,050,589 1,038,426 1,939,213 Repayments of lines of credit ( 709,332 ) ( 1,093,426 ) ( 1,884,213 ) Retirement of common stock ( 9,172 ) ( 269,315 ) ( 56,989 ) Additions to deferred charges ( 8,350 ) ( 13,772 ) ( 10,898 ) Payments related to debt prepayment penalties ( 18,342 ) ( 19,605 ) ( 1,406 ) Net proceeds from issuance of common stock ( 455 ) ( 296 ) 72,539 Net proceeds from stock options exercised 58,497 14,865 37,467 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 ) Redemption of noncontrolling interest ( 8,457 ) ( 3,113 ) ( 36,568 ) Redemption of redeemable noncontrolling interest ( 4,463 ) ( 872 ) ( 73 ) Common stock dividends paid ( 542,860 ) ( 536,098 ) ( 507,754 ) Net cash used in financing activities ( 533,265 ) ( 383,261 ) ( 461,689 ) 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 Unrestricted and restricted cash and cash equivalents at end of period $ 58,638 $ 84,041 $ 81,094 Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest $ 194,203 $ 211,732 $ 194,418 Interest capitalized $ 6,153 $ 14,615 $ 24,169 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 6,963 $ 6,892 $ 6,811 Supplemental disclosure of noncash investing and financing activities: Issuance of DownREIT units in connection with acquisition of real estate $ — $ — $ 65,472 Transfers between real estate under development and rental properties, net $ 328,393 $ 253,039 $ 19,812 Transfer from real estate under development to co-investments $ 3,068 $ 1,739 $ 671 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 Initial recognition of operating lease liabilities $ — $ — $ 79,693 Debt assumed in connection with acquisition $ — $ — $ 143,006 See accompanying notes to consolidated financial statements F- 12 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2021 and 2020 (Dollars in thousands, except per unit amounts) 2021 2020 ASSETS Real estate: Rental properties: Land and land improvements $ 3,032,678 $ 2,929,009 Buildings and improvements 12,597,249 12,132,736 15,629,927 15,061,745 Less: accumulated depreciation ( 4,646,854 ) ( 4,133,959 ) 10,983,073 10,927,786 Real estate under development 111,562 386,047 Co-investments 1,177,802 1,018,010 Real estate held for sale — 57,938 12,272,437 12,389,781 Cash and cash equivalents-unrestricted 48,420 73,629 Cash and cash equivalents-restricted 10,218 10,412 Marketable securities, net of allowance for credit losses of zero as of both December 31, 2021 and December 31, 2020 191,829 147,768 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 Operating lease right-of-use assets 68,972 72,143 Prepaid expenses and other assets 64,964 47,340 Total assets $ 12,997,873 $ 12,936,177 LIABILITIES AND CAPITAL Unsecured debt, net $ 5,307,196 $ 5,607,985 Mortgage notes payable, net 638,957 643,550 Lines of credit 341,257 — Accounts payable and accrued liabilities 180,751 152,855 Construction payable 29,136 31,417 Distributions payable 143,213 141,917 Operating lease liabilities 70,675 74,037 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 Total liabilities 6,786,699 6,720,746 Commitments and contingencies Redeemable noncontrolling interest 34,666 32,239 Capital: General Partner: Common equity ( 65,248,393 and 64,999,015 units issued and outstanding, respectively) 5,999,155 6,015,139 5,999,155 6,015,139 Limited Partners: Common equity ( 2,282,464 and 2,294,760 units issued and outstanding, respectively) 56,502 58,184 Accumulated other comprehensive loss ( 1,804 ) ( 11,303 ) Total partners' capital 6,053,853 6,062,020 Noncontrolling interest 122,655 121,172 Total capital 6,176,508 6,183,192 Total liabilities and capital $ 12,997,873 $ 12,936,177 See accompanying notes to consolidated financial statements F- 13 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Statements of Income Years ended December 31, 2021, 2020, and 2019 (Dollars in thousands, except per unit and unit amounts) 2021 2020 2019 Revenues: Rental and other property $ 1,431,418 $ 1,486,150 $ 1,450,628 Management and other fees from affiliates 9,138 9,598 9,527 1,440,556 1,495,748 1,460,155 Expenses: Property operating, excluding real estate taxes 264,892 263,389 241,357 Real estate taxes 180,367 177,011 155,170 Corporate-level property management expenses 36,188 34,573 34,067 Depreciation and amortization 520,066 525,497 483,750 General and administrative 51,838 65,388 54,262 Expensed acquisition and investment related costs 203 1,591 168 Impairment loss — 1,825 7,105 1,053,554 1,069,274 975,879 Gain (loss) on sale of real estate and land 142,993 64,967 ( 3,164 ) Earnings from operations 529,995 491,441 481,112 Interest expense ( 203,125 ) ( 220,633 ) ( 217,339 ) Total return swap income 10,774 10,733 8,446 Interest and other income 98,744 40,999 46,298 Equity income from co-investments 111,721 66,512 112,136 Deferred tax expense on unrealized gain on unconsolidated co-investment ( 15,668 ) ( 1,531 ) ( 1,457 ) (Loss) gain on early retirement of debt, net ( 19,010 ) ( 22,883 ) 3,717 Gain on remeasurement of co-investment 2,260 234,694 31,535 Net income 515,691 599,332 464,448 Net income attributable to noncontrolling interest ( 9,946 ) ( 10,550 ) ( 9,819 ) Net income available to common unitholders $ 505,745 $ 588,782 $ 454,629 Per unit data: Basic: Net income available to common unitholders $ 7.51 $ 8.69 $ 6.67 Weighted average number of common units outstanding during the year 67,340,856 67,750,665 68,140,900 Diluted: Net income available to common unitholders $ 7.51 $ 8.69 $ 6.66 Weighted average number of common units outstanding during the year 67,378,265 67,861,590 68,239,933 See accompanying notes to consolidated financial statements F- 14 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income Years Ended December 31, 2021, 2020, and 2019 (Dollars in thousands) 2021 2020 2019 Net income $ 515,691 $ 599,332 $ 464,448 Other comprehensive income (loss): Change in fair value of derivatives and amortization of swap settlements 9,170 ( 4,148 ) ( 2,948 ) Cash flow hedge losses reclassified to earnings — 3,338 1,824 Change in fair value of marketable debt securities, net 329 ( 61 ) 281 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 Comprehensive income attributable to noncontrolling interest ( 9,946 ) ( 10,550 ) ( 9,819 ) Comprehensive income attributable to controlling interest $ 515,244 $ 587,911 $ 453,754 See accompanying notes to consolidated financial statements. F- 15 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Statements of Capital Years ended December 31, 2021, 2020, and 2019 (Dollars and units in thousands) Accumulated other comprehensive loss, net General Partner Limited Partners Noncontrolling interest Total Common Equity Common Equity Units Amount Units Amount Balances at December 31, 2018 65,890 $ 6,280,290 2,305 $ 59,061 $ ( 9,738 ) $ 64,231 $ 6,393,844 Net income — 439,286 — 15,343 — 9,819 464,448 Reversal of unrealized gains upon the sale of marketable debt securities — — — — ( 32 ) — ( 32 ) Cash flow hedge losses reclassified to earnings — — — — 1,824 — 1,824 Change in fair value of derivatives and amortization of swap settlements — — — — ( 2,948 ) — ( 2,948 ) Change in fair value of marketable debt securities, net — — — — 281 — 281 Issuance of common units under: General partner's stock based compensation, net 195 33,779 — — — — 33,779 Sale of common stock by general partner, net 228 72,539 — — — — 72,539 Equity based compensation costs — 11,029 10 1,254 — — 12,283 Retirement of common units, net ( 234 ) ( 56,989 ) — — — — ( 56,989 ) Cumulative effect upon adoption of ASU No. 2017-12 — — — — 181 — 181 Changes in the redemption value of redeemable noncontrolling interest — ( 3,427 ) — 109 — 1,310 ( 2,008 ) Changes in noncontrolling interest from acquisition — — — — — 65,472 65,472 Distributions to noncontrolling interest — — — — — ( 10,521 ) ( 10,521 ) Redemptions 13 ( 28,083 ) ( 13 ) ( 436 ) — ( 8,049 ) ( 36,568 ) Distributions declared ($ 7.80 per unit) — ( 514,109 ) — ( 17,972 ) — — ( 532,081 ) Balances at December 31, 2019 66,092 $ 6,234,315 2,302 $ 57,359 $ ( 10,432 ) $ 122,262 $ 6,403,504 Net income — 568,870 — 19,912 — 10,550 599,332 Cash flow hedge losses reclassified to earnings — — — — 3,338 — 3,338 Change in fair value of derivatives and amortization of swap settlements — — — — ( 4,148 ) — ( 4,148 ) Change in fair value of marketable debt securities, net — — — — ( 61 ) — ( 61 ) Issuance of common units under: General partner's stock based compensation, net 95 9,201 — — — — 9,201 Sale of common stock by general partner, net — ( 296 ) — — — — ( 296 ) F- 16 Table of Contents Equity based compensation costs — 12,453 2 460 — — 12,913 Retirement of common units, net ( 1,197 ) ( 269,315 ) — — — — ( 269,315 ) Cumulative effect upon adoption of ASU No. 2016-13 — ( 190 ) — — — — ( 190 ) Changes in the redemption value of redeemable noncontrolling interest — 4,375 — ( 197 ) — 121 4,299 Changes in noncontrolling interest from acquisition — — — — — 1,349 1,349 Distributions to noncontrolling interest — — — — — ( 12,292 ) ( 12,292 ) Redemptions 9 ( 2,020 ) ( 9 ) ( 275 ) — ( 818 ) ( 3,113 ) Distributions declared ($ 8.31 per unit) — ( 542,254 ) — ( 19,075 ) — — ( 561,329 ) Balances at December 31, 2020 64,999 $ 6,015,139 2,295 $ 58,184 $ ( 11,303 ) $ 121,172 $ 6,183,192 Net income — 488,554 — 17,191 $ — 9,946 515,691 Change in fair value of derivatives and amortization of swap settlements — — — — 9,170 — 9,170 Change in fair value of marketable debt securities, net — — — — 329 — 329 Issuance of common units under: General partner's stock based compensation, net 279 53,052 — — — — 53,052 Sale of common stock by general partner, net — ( 455 ) — — — — ( 455 ) Equity based compensation costs — 11,286 — 397 — — 11,683 Retirement of common units, net ( 40 ) ( 9,172 ) — — — — ( 9,172 ) Changes in the redemption value of redeemable noncontrolling interest — ( 7,489 ) — 152 — 447 ( 6,890 ) Contributions from noncontrolling interest — — — — — 1,900 1,900 Distributions to noncontrolling interest — — — — — ( 10,215 ) ( 10,215 ) Redemptions 10 ( 7,566 ) ( 13 ) ( 296 ) — ( 595 ) ( 8,457 ) Distributions declared ($ 8.36 per unit) — ( 544,194 ) — ( 19,126 ) — — ( 563,320 ) Balances at December 31, 2021 65,248 $ 5,999,155 2,282 $ 56,502 $ ( 1,804 ) $ 122,655 $ 6,176,508 See accompanying notes to consolidated financial statements F- 17 Table of Contents ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2021, 2020, and 2019 (Dollars in thousands) 2021 2020 2019 Cash flows from operating activities: Net income $ 515,691 $ 599,332 $ 464,448 Adjustments to reconcile net income to net cash provided by operating activities: Straight-lined rents 9,672 ( 19,426 ) ( 1,218 ) Depreciation and amortization 520,066 525,497 483,750 Amortization of discount on marketable securities — ( 19,075 ) ( 28,491 ) 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 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 ) Earnings from co-investments ( 111,721 ) ( 64,287 ) ( 61,039 ) Operating distributions from co-investments 104,833 74,419 99,277 Accrued interest from notes and other receivables ( 15,902 ) ( 3,683 ) ( 6,012 ) Impairment loss — 1,825 7,105 (Gain) loss on the sale of real estate and land ( 142,993 ) ( 64,967 ) 3,164 Equity-based compensation 7,308 8,157 7,010 Loss (gain) on early retirement of debt, net 19,010 22,883 ( 3,717 ) Gain on remeasurement of co-investment ( 2,260 ) ( 234,694 ) ( 31,535 ) Changes in operating assets and liabilities: Prepaid expenses, receivables, operating lease right-of-use assets, and other assets 4,878 ( 3,730 ) 6,969 Accounts payable, accrued liabilities, and operating lease liabilities 22,298 ( 10,382 ) 29,551 Other liabilities 6,143 749 2,206 Net cash provided by operating activities 905,259 803,108 919,079 Cash flows from investing activities: Additions to real estate: Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired ( 153,481 ) ( 460,421 ) ( 133,825 ) Redevelopment ( 61,671 ) ( 48,980 ) ( 70,295 ) Development acquisitions of and additions to real estate under development ( 49,784 ) ( 108,781 ) ( 158,234 ) Capital expenditures on rental properties ( 121,195 ) ( 90,085 ) ( 101,689 ) Investments in notes receivable ( 245,144 ) ( 135,343 ) ( 231,400 ) Collections of notes and other receivables 104,405 98,711 168,720 Proceeds from insurance for property losses 879 723 3,734 Proceeds from dispositions of real estate 297,454 339,165 23,214 Contributions to co-investments ( 306,266 ) ( 114,017 ) ( 402,284 ) Changes in refundable deposits ( 9,486 ) 96 5 Purchases of marketable securities ( 23,805 ) ( 83,379 ) ( 46,458 ) Sales and maturities of marketable securities 16,577 113,465 147,531 Non-operating distributions from co-investments 154,120 71,946 273,290 F- 18 Table of Contents Net cash used in investing activities ( 397,397 ) ( 416,900 ) ( 527,691 ) Cash flows from financing activities: Proceeds from unsecured debt and mortgage notes 745,505 1,452,808 1,045,290 Payments on unsecured debt and mortgage notes ( 1,053,501 ) ( 916,209 ) ( 1,026,616 ) Proceeds from lines of credit 1,050,589 1,038,426 1,939,213 Repayments of lines of credit ( 709,332 ) ( 1,093,426 ) ( 1,884,213 ) Retirement of common units ( 9,172 ) ( 269,315 ) ( 56,989 ) Additions to deferred charges ( 8,350 ) ( 13,772 ) ( 10,898 ) Payments related to debt prepayment penalties ( 18,342 ) ( 19,605 ) ( 1,406 ) Net proceeds from issuance of common units ( 455 ) ( 296 ) 72,539 Net proceeds from stock options exercised 58,497 14,865 37,467 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 ) Redemption of noncontrolling interests ( 8,457 ) ( 3,113 ) ( 36,568 ) Redemption of redeemable noncontrolling interests ( 4,463 ) ( 872 ) ( 73 ) Common units distributions paid ( 563,870 ) ( 558,679 ) ( 528,459 ) Net cash used in financing activities ( 533,265 ) ( 383,261 ) ( 461,689 ) 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 Unrestricted and restricted cash and cash equivalents at end of period $ 58,638 $ 84,041 $ 81,094 Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest $ 194,203 $ 211,732 $ 194,418 Interest capitalized $ 6,153 $ 14,615 $ 24,169 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 6,963 $ 6,892 $ 6,811 Supplemental disclosure of noncash investing and financing activities: Issuance of DownREIT units in connection with acquisition of real estate $ — $ — $ 65,472 Transfers between real estate under development and rental properties, net $ 328,393 $ 253,039 $ 19,812 Transfer from real estate under development to co-investments $ 3,068 $ 1,739 $ 671 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 Initial recognition of operating lease liabilities $ — $ — $ 79,693 Debt assumed in connection with acquisition $ — $ — $ 143,006 See accompanying notes to consolidated financial statements F- 19 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (1) Organization The accompanying consolidated financial statements present the accounts of Essex Property Trust, Inc. ("Essex" or the "Company"), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the "Operating Partnership," which holds the operating assets of the Company). Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership. Essex is the sole general partner of the Operating Partnership with a 96.6 % general partner interest and the limited partners owned a 3.4 % interest as of December 31, 2021. 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 ("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, 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. F- 20 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (2) Summary of Critical and Significant Accounting Policies (a) Principles of Consolidation and Basis of Presentation The accounts of the Company, its controlled subsidiaries and the variable interest entities ("VIEs") in which it is the primary beneficiary are consolidated in the accompanying financial statements and prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been included and are normal and recurring in nature. All significant inter-company accounts and transactions have been eliminated. Noncontrolling interest includes the 3.4 % limited partner interests in the Operating Partnership not held by the Company at both December 31, 2021 and 2020. These percentages include the Operating Partnership’s vested long-term incentive plan units (see Note 14). (b) Recently Adopted Accounting Pronouncements In January 2021, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") No. 2021-01 "Reference Rate Reform (Topic 848): Scope." The amendments in ASU No. 2021-01 provide optional expedients to the current guidance on contract modifications and hedge accounting from the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance generally can be applied to applicable contract modifications through December 31, 2022. The Company adopted this new guidance in January 2021 on a prospective basis. This adoption did not have a material impact on the Company's consolidated results of operations or financial position. (c) Recent Accounting Pronouncements 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. ASU No. 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 Significant expenditures, which improve or extend the life of an asset and have a useful life of greater than one year , are capitalized. Operating real estate assets are stated at cost and consist of land and land improvements, buildings and improvements, furniture, fixtures and equipment, and other costs incurred during their development, redevelopment and acquisition. Expenditures for maintenance and repairs are charged to expense as incurred. The depreciable life of various categories of fixed assets is as follows: Computer software and equipment 3 - 5 years Interior apartment home improvements 5 years Furniture, fixtures and equipment 5 - 10 years Land improvements and certain exterior components of real property 10 years Real estate structures 30 years The Company capitalizes all costs incurred with the predevelopment, development or redevelopment of real estate assets or are associated with the construction or expansion of real property. Such capitalized costs include land, land improvements, allocated costs of the Company’s project management staff, construction costs, as well as interest and related loan fees, property taxes and insurance. Capitalization begins for predevelopment, development, and redevelopment projects when activity commences. Capitalization ends when the apartment home is completed and the property is available for a new tenant or if the development activities cease. F- 21 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 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 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. The values of the above and below market leases are amortized and recorded as either a decrease (in the case of above market leases) or an increase (in the case of below market leases) to rental revenue over the remaining term of the associated leases acquired. The value of acquired in-place leases are amortized to expense over the average remaining term of the leases acquired. The net carrying value of acquired in-place leases is $ 8.9 million and $ 4.7 million as of December 31, 2021 and 2020, respectively, and are included in prepaid expenses and other assets on the Company's consolidated balance sheets. The Company periodically assesses the carrying value of its real estate investments for indicators of impairment. The judgments regarding the existence of impairment indicators are based on monitoring investment market conditions and performance compared to budget for operating properties including the net operating income for the most recent 12 month period, monitoring estimated costs for properties under development, the Company's ability to hold and its intent with regard to each asset, and each property's remaining useful life. Whenever events or changes in circumstances indicate that the carrying amount of a property held for investment may not be fully recoverable, the carrying amount is evaluated. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount (including intangible assets) of a property held for investment, then the Company will recognize an impairment loss equal to the excess of the carrying amount over the fair value of the property. Fair value of a property is determined using conventional real estate valuation methods, such as discounted cash flow, the property’s unleveraged yield in comparison to the unleveraged yields and/or sales prices of similar communities that have been recently sold, and other third party information, if available. Communities held for sale are carried at the lower of cost or fair value less estimated costs to sell. As of December 31, 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. The Company recorded an impairment charge of $ 7.1 million for the year ended December 31, 2019 on a parcel of land that was part of a consolidated co-investment with Canada Pension Plan Investment Board ("CPPIB" or "CPP"). The impairment charge resulted from the Company's acquisition of CPPIB's 45 % interest in the co-investment. The impairment analysis over the parcel’s fair value was determined using internally developed models based on market assumptions. In the normal course of business, the Company will receive purchase offers for its communities, either solicited or unsolicited. For those offers that are accepted, the prospective buyer will usually require a due diligence period before consummation of the transaction. It is not unusual for matters to arise that result in the withdrawal or rejection of the offer during this process. The Company classifies real estate as "held for sale" when 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 The Company owns investments in joint ventures in which it has significant influence, but its ownership interest does not meet the criteria for consolidation in accordance with U.S. GAAP. Therefore, the Company accounts for co-investments using the equity method of accounting. Under the equity method of accounting, the investment is carried at the cost of assets contributed, plus the Company’s equity in earnings less distributions received and the Company’s share of losses. The significant accounting policies of the Company’s co-investment entities are consistent with those of the Company in all material respects. Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and a gain or loss is recognized upon the remeasurement of co-investments in the consolidated statement of income equal to the amount by which the fair value of the Company's previously owned co-investment interest exceeds its carrying value. A majority of the co-investments, excluding most preferred equity investments, compensate the Company for its asset management services and some of these investments may provide promote income if certain financial return benchmarks are achieved. Asset management F- 22 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 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 Creek, CA. The other-than-temporary impairment charge resulted from the Company's acquisition of CPPIB's 45 % interest in the co-investment. The impairment analysis over the co-investments fair value was determined using internally developed models based on market assumptions. The impairment is reflected in equity income from co-investments on the consolidated statements of income. No other-than-temporary impairment charges were recorded for the years ended December 31, 2021 or 2020. (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. Apartment homes are rented under short-term leases (generally, lease terms of 9 to 12 months). Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease. See Note 4, Revenues, and Note 10, Lease Agreements - Company as Lessor, for additional information regarding such revenues. The Company also generates other property-related revenue associated with the leasing of apartment homes, including storage income, pet rent, and other miscellaneous revenue. Similar to rental income, such revenues are recorded when due from tenants and recognized monthly as they are earned. Apart from rental and other property-related revenue, revenues from contracts with customers are recognized as control of the promised services is passed to the customer. For customer contracts related to management and other fees from affiliates (which includes asset management and property management), the transaction price and amount of revenue to be recognized is determined each quarter based on the management fee calculated and earned for that month or quarter. The contract will contain a description of the service and the fee percentage for management services. Payments from such services are one month or one quarter in arrears of the service performed. The Company recognizes any gains on sales of real estate when it transfers control of a property and when it is probable that the Company will collect substantially all of the related consideration. (g) Cash, Cash Equivalents and Restricted Cash Highly liquid investments with original maturities of three months or less when purchased are classified as cash equivalents. Restricted cash balances relate primarily to reserve requirements for capital replacement at certain communities in connection with the Company’s mortgage debt. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows ($ in thousands): 2021 2020 2019 Cash and cash equivalents - unrestricted $ 48,420 $ 73,629 $ 70,087 Cash and cash equivalents - restricted 10,218 10,412 11,007 Total unrestricted and restricted cash and cash equivalents shown in the consolidated statements of cash flows $ 58,638 $ 84,041 $ 81,094 (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, 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 F- 23 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 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 Amortized Cost Gross Unrealized (Loss) Gain Carrying Value Equity securities: Investment funds - debt securities $ 62,192 $ ( 502 ) $ 61,690 Common stock and stock funds 79,155 49,592 128,747 Debt securities: Available for sale Investment-grade unsecured debt 1,051 341 1,392 Total - Marketable securities $ 142,398 $ 49,431 $ 191,829 December 31, 2020 Amortized Cost Gross Unrealized Gain Carrying Value Equity securities: Investment funds - debt securities $ 49,646 $ 985 $ 50,631 Common stock and stock funds 81,074 15,001 96,075 Debt securities: Available for sale Investment-grade unsecured debt 1,050 12 1,062 Total - Marketable securities $ 131,770 $ 15,998 $ 147,768 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. F- 24 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (i) Notes Receivable Notes receivable relate to real estate financing arrangements including mezzanine and bridge loans. Interest is recognized over the life of the note as interest income. Each note is analyzed to determine if it is impaired. A note is impaired if it is probable that the Company will not collect all contractually due principal and interest. The Company does not accrue interest when a note is considered impaired and an allowance is recorded for any principal and previously accrued interest that are not believed to be collectible. All cash receipts on impaired notes are applied to reduce the principal amount of such notes until the principal has been recovered and, thereafter, are recognized as interest income. As of December 31, 2021 and 2020, no notes were impaired. In the normal course of business, the Company originates and holds two types of loans: mezzanine loans issued to entities that are pursuing apartment development and short-term bridge loans issued to joint ventures with the Company. The Company categorizes development project mezzanine loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as: current financial information, credit documentation, public information, and previous experience with the borrower. The Company initially analyzes each mezzanine loan individually to classify the credit risk of the loan. On a periodic basis the Company evaluates and performs site visits of the development projects associated with the mezzanine loans to confirm whether they are on budget and whether there are any delays in development that could impact the Company's assessment of credit loss. All bridge loans that the Company issues are, by their nature, short-term and meant only to provide time for the Company’s joint ventures to obtain long-term funding for newly acquired communities. As the Company is a partner in the joint ventures that are borrowing such funds and has performed a detailed review of each community as part of the acquisition process, there is little to no credit risk associated with such loans. As such, the Company does not review credit quality indicators for bridge loans on an ongoing basis. The Company estimates the allowance for credit losses for each loan type using relevant available information from internal and external sources, relating to past events, current conditions, and reasonable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made, if necessary, for differences in current loan-specific risk characteristics. For example, in the case of mezzanine loans, adjustments may be made due to differences in track record and experience of the mezzanine loan sponsor as well as the percent of equity that the sponsor has contributed to the project. (j) Capitalization Policy The Company capitalizes all direct and certain indirect costs, including interest, 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. The amount of interest capitalized is based upon the average amount of accumulated development expenditures during the reporting period. Included in capitalized costs are management’s estimates of the direct and incremental personnel costs and indirect project costs associated with the Company's development and redevelopment activities. Indirect project costs consist primarily of personnel costs associated with construction administration and development, including accounting, legal fees, and various corporate and community onsite costs that clearly relate to projects under development. Those costs, inclusive of capitalized interest, as well as capitalized development and redevelopment fees totaled $ 23.6 million, $ 31.4 million and $ 42.1 million for the years ended December 31, 2021, 2020 and 2019, respectively, most of which relates to development projects. The Company capitalizes leasing costs associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized are immaterial for all periods presented. (k) Fair Value of Financial Instruments The Company values its financial instruments based on the fair value hierarchy of valuation techniques described in the FASB’s accounting standard for fair value measurements. Level 1 inputs are unadjusted, quoted prices in active markets for identical F- 25 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES 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. Level 3 inputs are unobservable inputs for the asset or liability. The Company uses Level 1 inputs for the fair values of its cash equivalents and its marketable securities except for unsecured bonds and mortgage backed securities. The Company uses Level 2 inputs for its investments in unsecured debt, notes receivable, notes payable, and derivative assets/liabilities. These inputs include interest rates for similar financial instruments. The Company’s valuation methodology for derivatives is described in Note 9. The Company’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 $ 5.7 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 are carried at fair value as of December 31, 2021 and 2020. (l) Interest Rate Protection, Swap, and Forward Contracts The Company uses interest rate swaps, interest rate caps, and total return swap contracts to manage interest rate risks. The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, the Company uses interest rate swaps as part of its cash flow hedging strategy. The Company records all derivatives on its consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. For derivatives designated for accounting purposes as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated for accounting purposes as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the initial and ongoing effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated for accounting purposes as cash flow hedges, changes in fair value are recognized in earnings. All of the Company’s interest rate swaps are considered cash flow hedges. (m) Income Taxes Generally in any year in which Essex qualifies as a real estate investment trust ("REIT") under the Internal Revenue Code (the "IRC"), it is not subject to federal income tax on that portion of its income that it distributes to stockholders. No provision for federal income taxes, other than the taxable REIT subsidiaries discussed below, has been made in the accompanying consolidated financial statements for each of the years in the three-year period ended December 31, 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. F- 26 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. 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. 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: 2021 2020 2019 Common Stock Ordinary income 70.92 % 85.23 % 83.81 % Capital gain 22.07 % 10.68 % 13.78 % Unrecaptured section 1250 capital gain 7.01 % 4.09 % 2.41 % 100.00 % 100.00 % 100.00 % (n) Equity-based Compensation The cost of share- and unit-based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long-term incentive plan units (discussed in Note 14) are being amortized over the expected service periods. (o) Changes in Accumulated Other Comprehensive Loss, by Component Changes in Accumulated Other Comprehensive Loss, Net, by Component Essex Property Trust, Inc. ($ in thousands) Change in fair value and amortization of swap settlements Unrealized gain on available for sale securities Total Balance at December 31, 2020 $ ( 14,771 ) $ 42 $ ( 14,729 ) Other comprehensive income before reclassification 8,843 318 9,161 Amounts reclassified from accumulated other comprehensive loss 16 — 16 Other comprehensive income 8,859 318 9,177 Balance at December 31, 2021 $ ( 5,912 ) $ 360 $ ( 5,552 ) F- 27 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 Changes in Accumulated Other Comprehensive Loss, by Component Essex Portfolio, L.P. ($ in thousands) Change in fair value and amortization of swap settlements Unrealized gain on available for sale securities Total Balance at December 31, 2020 $ ( 11,346 ) $ 43 $ ( 11,303 ) Other comprehensive income before reclassification 9,153 329 9,482 Amounts reclassified from accumulated other comprehensive loss 17 — 17 Other comprehensive income 9,170 329 9,499 Balance at December 31, 2021 $ ( 2,176 ) $ 372 $ ( 1,804 ) Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense on the consolidated statements of income. Realized gains and losses on available for sale debt securities are included in interest and other income on the consolidated statements of income. (p) Redeemable Noncontrolling Interest The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $ 34.7 million and $ 32.2 million as of December 31, 2021 and 2020, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances. The changes in the redemption value of redeemable noncontrolling interests for the years ended December 31, 2021, 2020, and 2019 are as follows: 2021 2020 2019 Balance at January 1, $ 32,239 $ 37,410 $ 35,475 Reclassifications due to change in redemption value and other 6,890 ( 4,299 ) 2,008 Redemptions ( 4,463 ) ( 872 ) ( 73 ) Balance at December 31, $ 34,666 $ 32,239 $ 37,410 (q) Accounting Estimates The preparation of consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate portfolio, its investments in and advances to joint ventures and affiliates, and its notes receivable. The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions. (r) Variable Interest Entities In accordance with accounting standards for consolidation of VIEs, the Company 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 $ 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. F- 28 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES 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. Such limited partners or members can request to be redeemed and the Company, subject to certain restrictions, can elect to redeem their rights for cash or by issuing shares of its common stock on a one share per unit basis. Conversion values will be based on the market value of the Company's common stock at the time of redemption multiplied by the number of units stipulated under various arrangements, as noted above. The other limited partners or members receive distributions based on the Company's current dividend rate times the number of units held. Total DownREIT units outstanding were 978,854 and 1,017,460 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 $ 344.8 million and $ 241.6 million, as of December 31, 2021 and 2020, respectively. The carrying value of redeemable noncontrolling interest in the accompanying balance sheets was $ 34.7 million and $ 32.2 million as of December 31, 2021 and 2020, respectively. 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 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. The remaining results of operations are generally allocated to the Company. 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. (3) Real Estate Investments (a) Acquisitions of Real Estate 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 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 (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. F- 29 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 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: $ 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. (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. (c) Real Estate Assets 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 The Company has joint ventures which are accounted for under the equity method. The co-investments’ accounting policies are similar to the Company’s accounting policies. The co-investments own, operate, and develop apartment communities. 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 F- 30 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES 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): Weighted Average Essex Ownership December 31, Percentage (1) 2021 2020 Ownership interest in: Wesco I (2) , Wesco III, Wesco IV, Wesco V and Wesco VI 52 % $ 168,198 $ 178,322 BEXAEW, BEX II, BEX III (3) , BEX IV and 500 Folsom (4) 50 % 270,550 152,309 Other (5) 52 % 126,503 27,635 Total operating and other co-investments, net 565,251 358,266 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) 565,930 502,311 Total co-investments, net $ 1,142,257 $ 1,018,010 (1) Weighted average Company ownership percentages are as of December 31, 2021. (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.. F- 31 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 The combined summarized financial information of co-investments is as follows ($ in thousands): December 31, 2021 2020 Combined balance sheets: (1) Rental properties and real estate under development $ 4,603,465 $ 4,242,611 Other assets 278,411 200,777 Total assets $ 4,881,876 $ 4,443,388 Debt $ 3,046,765 $ 2,611,365 Other liabilities 200,129 189,515 Equity 1,634,982 1,642,508 Total liabilities and equity $ 4,881,876 $ 4,443,388 Company's share of equity $ 1,142,257 $ 1,018,010 Years ended December 31, 2021 2020 2019 Combined statements of income: (1) Property revenues $ 289,680 $ 300,624 $ 336,922 Property operating expenses ( 115,023 ) ( 108,682 ) ( 115,658 ) Net operating income 174,657 191,942 221,264 Gain on sale of real estate — — 112,918 Interest expense ( 65,172 ) ( 78,962 ) ( 65,665 ) General and administrative ( 17,885 ) ( 17,079 ) ( 9,575 ) Depreciation and amortization ( 133,787 ) ( 117,836 ) ( 121,006 ) Net income $ ( 42,187 ) $ ( 21,935 ) $ 137,936 Company's share of net income (2) $ 111,721 $ 66,512 $ 112,136 (1) Includes preferred equity investments held by the Company. (2) Includes the Company's share of equity income from joint ventures and preferred equity investments, gain on sales of co-investments, co-investment promote income and income from early redemption of preferred equity investments. Includes related party income of $ 9.1 million, $ 8.6 million, and $ 7.5 million for the years ended December 31, 2021, 2020, and 2019, respectively. Operating Co-investments As of December 31, 2021 and 2020, the Company, through several joint ventures, owned 10,257 and 8,652 apartment homes, respectively, in operating communities. The Company’s book value of these co-investments was $ 565.3 million and $ 358.3 million at December 31, 2021 and 2020, respectively. Predevelopment and Development Co-investments As of December 31, 2021 and 2020, the Company, through several joint ventures, owned 264 and 1,070 apartment homes in predevelopment and development communities, respectively. The Company’s book value of these co-investments was $ 11.1 million and $ 157.4 million at December 31, 2021 and 2020, respectively. In 2020, the Company entered into a joint venture to develop Scripps Mesa Apartments, a multifamily community comprised of 264 apartment homes located in San Diego, CA. The Company has a 51 % ownership interest in the development which has a projected total cost of $ 102.0 million. Construction began in the third quarter of 2020. The property is projected to commence F- 32 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 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. Preferred Equity Investments As of December 31, 2021 and 2020, the Company held preferred equity investment interests in several joint ventures which own real estate. The Company’s book value of these preferred equity investments was $ 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. The investments have initial preferred returns ranging from 9.0 %- 11.5 %, with maturities ranging from March 2022 to February 2030. As of December 31, 2021, the Company had funded $ 182.3 million of the $ 191.3 million of commitments. During 2019, the Company made commitments to fund $ 141.7 million of preferred equity investment in five preferred equity investments, some of which include related party sponsors. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 10.15 %- 11.3 %, with maturities ranging from July 2022 to October 2024. As of December 31, 2021, the Company had fully funded $ 141.7 million of the commitments. During 2018, the Company made commitments to fund $ 45.1 million of preferred equity investment in two preferred equity investments, some of which include related party sponsors. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 10.25 %- 12.0 %, with maturities ranging from May 2023 to April 2024. As of December 31, 2021, the Company had funded $ 42.1 million of the $ 45.1 million of commitments. The remaining committed amount is expected to be funded when requested by the sponsors. In March 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, 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. F- 33 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (4) Revenues Disaggregated Revenue The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands): 2021 2020 2019 Rental income $ 1,410,197 $ 1,462,161 $ 1,425,585 Other property 21,221 23,989 25,043 Management and other fees from affiliates 9,138 9,598 9,527 Total revenues $ 1,440,556 $ 1,495,748 $ 1,460,155 The following table presents the Company’s rental and other property revenues disaggregated by geographic operating segment ($ in thousands): 2021 2020 2019 Southern California $ 588,381 $ 566,553 $ 593,253 Northern California 584,034 604,348 557,139 Seattle Metro 239,839 243,900 243,060 Other real estate assets (1) 19,164 71,349 57,176 Total rental and other property revenues $ 1,431,418 $ 1,486,150 $ 1,450,628 (1) Other real estate assets consist of revenue generated from retail space, commercial properties, held for sale properties, disposition properties and straight-line rent adjustments for concessions. Executive management does not evaluate such operating performance geographically. The following table presents the Company’s rental and other property revenues disaggregated by current property category status ($ in thousands): 2021 2020 2019 Same-property (1) $ 1,288,238 $ 1,304,417 $ 1,346,394 Acquisitions (2) 57,260 54,415 — Development (3) 31,268 20,050 7,675 Redevelopment 17,667 19,054 21,058 Non-residential/other, net (4) 47,796 66,358 75,501 Straight line rent concession (5) ( 10,811 ) 21,856 — Total rental and other property revenues $ 1,431,418 $ 1,486,150 $ 1,450,628 (1) Properties that have comparable stabilized results as of January 1, 2020 and are consolidated by the Company for the years ended December 31, 2021, 2020, and 2019. A community is generally considered to have reach stabilized operations once it achieves an initial occupancy of 90 %. (2) Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2020. (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 two communities located in the California counties of Santa Barbara, and Santa Cruz, which the Company does not consider its core markets. (5) Same-property revenues reflect concessions on a cash basis. Total rental and other property revenues reflect concessions on a straight-line basis in accordance with U.S. GAAP. Deferred Revenues and Remaining Performance Obligations F- 34 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 When cash payments are received or due in advance of the Company’s performance of contracts with customers, deferred revenue is recorded. The total deferred revenue balance related to such contracts was $ 2.4 million and $ 3.1 million as of December 31, 2021 and December 31, 2020, respectively, and was included in accounts payable and accrued liabilities within the accompanying consolidated balance sheets. The amount of revenue recognized for the year ended December 31, 2021 that was included in the December 31, 2020 deferred revenue balance was $ 0.7 million, which was included in interest and other income within the consolidated statements of income and comprehensive income. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue recognition accounting standard. As of December 31, 2021, the Company had $ 2.4 million of remaining performance obligations. The Company expects to recognize approximately 31 % of these remaining performance obligations in 2022, an additional 56 % through 2024, and the remaining balance thereafter. Practical Expedients The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less or when variable consideration is allocated entirely to a wholly unsatisfied performance obligation. F- 35 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (5) Notes and Other Receivables Notes and other receivables consist of the following as of December 31, 2021 and 2020 ($ in thousands): 2021 2020 Note receivable, secured, bearing interest at 9.90 %, due November 2021 (Originated November 2018) (1) $ — $ 14,216 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) — 25,461 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) 29,314 — Related party note receivable, secured, bearing interest at 2.30 %, due April 2022 (Originated October 2021) (3) 30,399 — Related party note receivable, secured, bearing interest at 2.36 %, due February 2022 (Originated November 2021) (3) 62,058 — Related party note receivable, secured, bearing interest at 2.36 %, due February 2022 (Originated November 2021) (3) 48,562 — Notes and other receivables from affiliates (4) 6,556 4,744 Straight line rent receivables (5) 15,523 25,214 Other receivables 15,232 15,671 Allowance for credit losses ( 756 ) ( 751 ) Total notes and other receivables $ 341,033 $ 195,104 (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. (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. (5) These amounts are receivables from lease concessions recorded on a straight-line basis for the Company's operating properties. The following table presents the activity in the allowance for credit losses for notes and other receivables by loan type ($ in thousands): Mezzanine Loans Bridge Loans Total Balance at December 31, 2020 $ 751 $ — $ 751 Provision for credit losses ( 80 ) 85 5 Balance at December 31, 2021 $ 671 $ 85 $ 756 No loans were placed on nonaccrual status or charged off during the year ended December 31, 2021 or 2020. F- 36 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (6) Related Party Transactions The Company has adopted written related party transaction guidelines that are intended to cover transactions in which the Company (including entities it controls) is a party and in which any "related person" has a direct or indirect interest. A "related person" means any person who is or was (since the beginning of the last fiscal year) a Company director, director nominee, or executive officer, any beneficial owner of more than 5% of the Company’s outstanding common stock, and any immediate family member of any of the foregoing persons. A related person may be considered to have an indirect interest in a transaction if he or she (i) is an owner, director, officer or employee of or otherwise associated with another company that is engaging in a transaction with the Company, or (ii) otherwise, through one or more entities or arrangements, has an indirect financial interest in or personal benefit from the transaction. The related person transaction review and approval process is intended to determine, among any other relevant issues, the dollar amount involved in the transaction; the nature and value of any related person’s direct or indirect interest (if any) in the transaction; and whether or not (i) a related person’s interest is material, (ii) the transaction is fair, reasonable, and serves the best interest of the Company and its shareholders, and (iii) whether the transaction or relationship should be entered into, continued or ended. The Company’s Chairman and founder, Mr. George Marcus, is the Chairman of the Marcus & Millichap Company ("MMC"), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Co-Chairman of Marcus & Millichap, Inc. ("MMI"), and Mr. Marcus owns a controlling interest in MMI, a national brokerage firm listed on the NYSE that underwent its initial public offering in 2013. For the year ended December 31, 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. The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates totaled $ 10.3 million, $ 11.3 million, and $ 13.8 million for the years ended December 31, 2021, 2020 and 2019, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of $ 1.1 million, $ 1.7 million, and $ 4.3 million against general and administrative expenses for the years ended December 31, 2021, 2020 and 2019, respectively. As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of December 31, 2021 and 2020, $ 6.6 million and $ 4.7 million, respectively, of short-term loans remained outstanding due from joint venture affiliates and are classified within notes and other receivables in the accompanying consolidated balance sheets. In November 2016, the Company provided a $ 6.6 million mezzanine loan to a limited liability company in which MMC holds a significant ownership interest through subsidiaries. The mezzanine loan was classified within notes and other receivables in the accompanying consolidated balance sheets and was paid off in October 2019. In November 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 F- 37 Table of Contents 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. In August 2019, the Company provided an $ 89.0 million related party bridge loan to Wesco V in connection with the acquisition of The Courtyards at 65th Street. The note receivable accrued interest at LIBOR plus 1.30 % and was paid off in November 2019. In August 2019, the Company provided a $ 44.4 million related party bridge loan to BEX IV in connection with the acquisition of 777 Hamilton. The note receivable accrued interest at 3.25 %. In November 2019, the term of the bridge loan was extended to February 2020, but was paid off in December 2019. In June 2019, the Company acquired Brio, a 300 -unit apartment home community located in Walnut Creek, CA. The Company issued DownREIT units to an affiliate of MMC, based on a contract price of $ 164.9 million. The property was encumbered by $ 98.7 million of mortgage debt which was assumed by the Company at the time of acquisition. As a result of this transaction, the Company consolidated the property, based on a VIE analysis performed by the Company. In February 2019, the Company funded a $ 24.5 million preferred equity investment in an entity whose sponsor is an affiliate of MMC, which owns a multifamily development community located in Mountain View, CA. The investment has an initial preferred return of 11.0 % and is scheduled to mature in February 2024. In October 2018, the Company funded a $ 18.6 million preferred equity investment in an entity whose sponsor is an affiliate of MMC. The entity wholly owns a 268 apartment home community development located in Burlingame, CA. This investment accrues interest based on an initial 12.0 % preferred return. The investment is scheduled to mature in April 2024. In May 2018, the Company made a commitment to fund a $ 26.5 million preferred equity investment in an entity whose sponsors include an affiliate of MMC. The entity wholly owns a 400 apartment home community located in Ventura, CA. This investment 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. In March 2017, the Company converted its existing $ 15.3 million preferred equity investment in Sage at Cupertino, a 230 apartment home community located in San Jose, CA, into a 40.5 % common equity ownership interest in the property. The Company issued DownREIT units to the other members, including an MMC affiliate, based on an estimated property valuation of $ 90.0 million. At the time of the conversion, the property was encumbered by $ 52.0 million of mortgage debt. As a result of this transaction, the Company consolidates the property, based on a consolidation analysis performed by the Company. In 2015, the Company made preferred equity investments totaling $ 20.0 million in three entities affiliated with MMC that own apartment communities in California. The Company earned a 9.5 % preferred return on each such investment. One $ 5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2017. Another $ 5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2018. The remaining investment was fully redeemed in February 2019. F- 38 Table of Contents 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 Essex does not have any indebtedness as all debt is incurred by the Operating Partnership. Essex guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities up to the maximum amounts and for the full term of the facilities. Unsecured debt consists of the following as of December 31, 2021 and 2020 ($ in thousands): 2021 2020 Weighted Average Maturity 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 Unsecured debt, net (1) 5,307,196 5,607,985 Lines of credit (2) 341,257 — N/A Total unsecured debt $ 5,648,453 $ 5,607,985 Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering 3.3 % 3.4 % Weighted average interest rate on variable rate term loan — % 1.7 % Weighted average interest rate on lines of credit 1.0 % 1.0 % (1) Includes unamortized discount, net of premiums, of $ 9.9 million and $ 10.1 million and unamortized debt issuance costs of $ 32.9 million and $ 31.9 million as of December 31, 2021 and 2020, respectively. (2) Lines of credit, related to the Company's two lines of unsecured credit aggregating $ 1.24 billion, excludes unamortized debt issuance costs of $ 4.4 million and $ 3.7 million as of December 31, 2021 and 2020, respectively. These debt issuance costs are included in prepaid expenses and other assets on the consolidated balance sheets. 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): Maturity 2021 2020 Coupon Rate Senior unsecured private placement notes April 2021 $ — $ 100,000 4.27 % Senior unsecured private placement notes June 2021 — 50,000 4.30 % Senior unsecured private placement notes August 2021 — 50,000 4.37 % $ — $ 200,000 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 - F- 39 Table of Contents 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. The 2032 Notes were offered to investors at a price of 99.628 % of par value. The 2032 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. The Company used the net proceeds of this offering to repay indebtedness under its unsecured lines of credit, which had been used to fund the buyout of CPPIB's 45.0 % joint venture interests, as well as repay $ 100.3 million of secured debt during the quarter that ended March 31, 2020. In June 2020, the Operating Partnership issued an additional $ 150.0 million of the 2032 Notes at a price of 105.660 % of par value, plus accrued interest from February 2020 up to, but not including, the date of delivery of the additional notes, with an effective yield of 2.093 %. These additional notes have substantially identical terms as the 2032 Notes issued in February 2020. The proceeds were used to repay indebtedness under the Company's unsecured credit facilities and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 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. The unsecured term loan bears a variable interest rate of LIBOR plus 1.20 % and the proceeds were used to repay all remaining consolidated debt maturing in 2020. In August 2020, the Operating Partnership issued $ 600.0 million of senior unsecured notes, consisting of $ 300.0 million aggregate principal amount due on January 15, 2031 with a coupon rate of 1.650 % (the “2031 Notes”) and $ 300.0 million aggregate principal amount due on September 1, 2050 with a coupon rate of 2.650 % (the “2050 Notes” and together with the 2031 Notes, the “Notes”). The 2031 Notes were offered to investors at a price of 99.035 % of par value and the 2050 Notes at 99.691 % of par value. Interest is payable on the 2031 Notes semiannually on January 15 and July 15 of each year, beginning on January 15, 2021. Interest is payable on the 2050 Notes semiannually on March 1 and September 1 of each year, beginning on March 1, 2021. The Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex. The Company used the net proceeds of this offering to repay debt maturities, including certain unsecured private placement notes, secured mortgage notes, and to fund the redemption of $ 300.0 million aggregate principal amount of its outstanding 3.625 % senior unsecured notes due August 2022, and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, the carrying value of the 2031 Notes F- 40 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. The 2030 Notes were offered to investors at a price of 98.632 % of the principal amount thereof. The 2030 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex Property Trust, Inc. In October 2019, the Operating Partnership issued an additional $ 150.0 million of the 2030 notes at a price of 101.685 % of the principal amount thereof. These additional notes have substantially identical terms as the 2030 Notes issued in August 2019. The Company used the net proceeds of these offerings to prepay, with no prepayment penalties, certain secured indebtedness under outstanding mortgage notes, to repay indebtedness under its unsecured lines of credit and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021, and 2020, the carrying value of the 2030 Notes, net of discount and debt issuance costs, was $ 543.9 million and $ 543.1 million, respectively. In February 2019, the Operating Partnership issued $ 350.0 million of senior unsecured notes due on March 1, 2029, with a coupon rate of 4.000 % per annum (the "2029 Notes"), which are payable on March 1 and September 1 of each year, beginning on September 1, 2019. The 2029 Notes were offered to investors at a price of 99.188 % of the principal amount thereof. The 2029 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are unconditionally guaranteed by Essex Property Trust, Inc. In March 2019, the Operating Partnership issued an additional $ 150.0 million of the 2029 Notes at a price of 100.717 % of the principal amount thereof. These additional notes have substantially identical terms as the 2029 Notes issued in February 2019. The Company used the net proceeds of these offerings to repay indebtedness under its unsecured lines of credit and for other general corporate and working capital purposes. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021, and 2020, the carrying value of the 2029 Notes, net of discount and debt issuance costs was $ 495.4 million and $ 494.8 million, respectively. In March 2018, the Operating Partnership issued $ 300.0 million of senior unsecured notes due on March 15, 2048 with a coupon rate of 4.500 % per annum and are payable on March 15 and September 15 of each year, beginning on September 15, 2018 (the "2048 Notes"). The 2048 Notes were offered to investors at a price of 99.591 % of par value. The 2048 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021 and 2020, the carrying value of the 2048 Notes, net of discount and debt issuance costs was $ 295.9 million and $ 295.8 million, respectively. In April 2017, the Operating Partnership issued $ 350.0 million of senior unsecured notes due on May 1, 2027 with a coupon rate of 3.625 % per annum and are payable on May 1 and November 1 of each year, beginning on November 1, 2017 (the "2027 Notes"). The 2027 Notes were offered to investors at a price of 99.423 % of par value. The 2027 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021 and 2020, the carrying value of the 2027 Notes, net of discount and debt issuance costs was $ 347.3 million and $ 346.8 million, respectively. In April 2016, the Operating Partnership issued $ 450.0 million of senior unsecured notes due on April 15, 2026 with a coupon rate of 3.375 % per annum and are payable on April 15 th and October 15 th of each year, beginning October 15, 2016 (the "2026 Notes"). The 2026 Notes were offered to investors at a price of 99.386 % of par value. The 2026 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 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 F- 41 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 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 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; 5.200 % senior notes due 2021; and 3.375 % senior notes due 2023 (together the "BRE Notes"). These notes are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 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"). The 2024 Notes were offered to investors at a price of 99.234 % of par value. The 2024 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021 and 2020, the carrying value of the 2024 Notes, net of discount and debt issuance costs was $ 398.5 million and $ 397.8 million, respectively. In April 2013, the Operating Partnership issued $ 300.0 million of senior unsecured notes due on May 1, 2023 with a coupon rate of 3.25 % per annum and are payable on May 1 st and November 1 st of each year, beginning November 1, 2013 (the "2023 Notes"). The 2023 Notes were offered to investors at a price of 99.152 % of par value. The 2023 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. These bonds are included in the line "Bonds public offering-fixed rate" in the table above, and as of December 31, 2021 and 2020, the carrying value of the 2023 Notes, net of discount and debt issuance costs was $ 299.3 million and $ 298.7 million, respectively. The following is a summary of the Company’s senior unsecured notes as of December 31, 2021 and 2020 ($ in thousands): Maturity 2021 2020 Coupon Rate Senior notes January 2023 $ — $ 300,000 3.375 % Senior notes May 2023 300,000 300,000 3.250 % Senior notes May 2024 400,000 400,000 3.875 % Senior notes April 2025 500,000 500,000 3.500 % Senior notes April 2026 450,000 450,000 3.375 % Senior notes May 2027 350,000 350,000 3.625 % Senior notes March 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 % Senior notes March 2048 300,000 300,000 4.500 % Senior notes September 2050 300,000 300,000 2.650 % $ 5,350,000 $ 4,900,000 F- 42 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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): 2022 $ — 2023 300,000 2024 400,000 2025 500,000 2026 450,000 Thereafter 3,700,000 $ 5,350,000 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, 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 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 %. The Company’s unsecured lines of credit and unsecured debt agreements contain debt covenants related to limitations on indebtedness and liabilities, and maintenance of minimum levels of consolidated earnings before depreciation, interest and amortization. The Company was in compliance with the debt covenants as of December 31, 2021 and 2020. (8) Mortgage Notes Payable Essex does not have any indebtedness as all debt is incurred by the Operating Partnership. Mortgage notes payable consist of the following as of December 31, 2021 and 2020 ($ in thousands): 2021 2020 Fixed rate mortgage notes payable $ 415,350 $ 419,323 Variable rate mortgage notes payable (1) 223,609 224,227 Total mortgage notes payable (2) $ 638,959 $ 643,550 Number of properties securing mortgage notes 12 12 Remaining terms 1 - 25 years 1 - 26 years Weighted average interest rate 2.7 % 2.7 % The aggregate scheduled principal payments of mortgage notes payable at December 31, 2021 are as follows ($ in thousands): 2022 $ 43,188 2023 2,945 2024 3,109 2025 133,054 2026 99,405 Thereafter 356,224 $ 637,925 (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 F- 43 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 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. The Company had no interest rate cap agreements as of December 31, 2021 and 2020, respectively. (2) Includes total unamortized premium, net of discounts, of $ 2.5 million and $ 3.9 million and reduced by unamortized debt issuance costs of $ 1.5 million and $ 1.8 million as of December 31, 2021 and 2020, respectively. For the Company’s mortgage notes payable as of December 31, 2021, monthly interest expense and principal amortization, excluding balloon payments, totaled approximately $ 2.3 million and $ 0.3 million, respectively. Second deeds of trust accounted for none of the mortgage notes payable balance as of both December 31, 2021 and 2020. Repayment of debt before the scheduled maturity date could result in prepayment penalties. The prepayment penalty on the majority of the Company’s mortgage notes payable are computed by the greater of (a) 1 % of the amount of the principal being prepaid or (b) the present value of the principal being prepaid multiplied by the difference between the interest rate of the mortgage note and the stated yield rate on a U.S. treasury security which generally has an equivalent remaining term as the mortgage note. (9) Derivative Instruments and Hedging Activities The Company uses interest rate swaps, interest rate caps, and total return swap contracts to manage certain interest rate risks. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps and total return swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In November 2016, the Company replaced its $ 225.0 million term loan with a $ 350.0 million five -year term loan with a delayed draw feature that carries a variable interest rate of LIBOR plus 95 basis points. In 2016, the Company entered into four forward starting interest rate swaps (settlement payments commenced in March 2017) and in 2017, the Company entered into one forward starting interest rate swap (settlement payments commenced in March 2017) all related to the $ 350.0 million term loan. These five swaps, with a total notional amount of $ 175.0 million 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, 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 , 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. The Company can currently call all four of the total return swaps with $ 224.4 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting and had a carrying and fair value of zero at both December 31, 2021 and 2020, respectively. These total return swaps are scheduled to mature between November 2022 and December 2024. 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. F- 44 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (10) Lease Agreements - Company as Lessor 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. All such leases are classified as operating leases. Although the majority of the Company’s apartment home and commercial leasing income is derived from fixed lease payments, some lease agreements also allow for variable payments. The primary driver of variable leasing income comes from utility reimbursements from apartment home leases and common area maintenance reimbursements from commercial leases. A small number of commercial leases contain provisions for lease payments based on a percentage of gross retail sales over set hurdles. At the end of the term of apartment home leases, unless the lessee decides to renew the lease with the Company at the market rate or gives notice not to renew, the lease will be automatically renewed on a month-to-month term. Apartment home leases include an option to terminate the lease, however the lessee must pay the Company for expected or actual downtime to find a new tenant to lease the space or a lease-break fee specified in the lease agreement. Most commercial leases include options to renew, with the renewal periods extending the term of the lease for no greater than the same period of time as the original lease term. The initial option to renew for commercial leases will typically be based on a fixed price while any subsequent renewal options will generally be based on the current market rate at the time of the renewal. Certain commercial leases contain lease termination options that would require the lessee to pay termination fees based on the expected amount of time it would take the Company to re-lease the space. The Company’s apartment home and commercial lease agreements do not contain residual value guarantees. As the Company is the lessor of real estate assets which tend to either hold their value or appreciate, residual value risk is not deemed to be substantial. Furthermore, the Company carries comprehensive liability, fire, extended coverage, and rental loss insurance for each of its communities as well as limited insurance coverage for certain types of extraordinary losses, such as, for example, losses from terrorism or earthquakes. A maturity analysis of undiscounted future minimum non-cancelable base rent to be received under the above operating leases as of December 31, 2021 is summarized as follows ($ in thousands): Future Minimum Rent 2022 $ 681,245 2023 23,932 2024 18,749 2025 16,293 2026 12,934 Thereafter 34,016 $ 787,169 Practical Expedients The Company has elected to account for operating lease (e.g., fixed payments including rent) and non-lease components (e.g., utility reimbursements and common-area maintenance costs) as a single combined lease component under ASC 842 "Leases" as the lease components are the predominant elements of the combined components. (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. F- 45 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 A majority of the Company’s ground leases and the parking lease are subject to changes in the Consumer Price Index ("CPI"). Furthermore, certain of the Company’s ground leases include rental payments based on a percentage of gross or net income. While lease liabilities are not remeasured as a result of changes in the CPI or percentage of gross or net income, such changes are treated as variable lease payments and recognized in the period in which the obligation for those payments was incurred. The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. As of December 31, 2021 and 2020, the Company had no material finance leases. Supplemental consolidated balance sheet information related to leases as of December 31, 2021 and 2020 is as follows ($ in thousands): Classification December 31, 2021 December 31, 2020 Assets Operating lease right-of-use assets Operating lease right-of-use assets $ 68,972 $ 72,143 Total leased assets $ 68,972 $ 72,143 Liabilities Operating lease liabilities Operating lease liabilities $ 70,675 $ 74,037 Total lease liabilities $ 70,675 $ 74,037 The components of lease expense for the years ended December 31, 2021 and 2020 were as follows ($ in thousands): December 31, 2021 December 31, 2020 Operating lease cost $ 6,729 $ 6,749 Variable lease cost 1,639 1,436 Short-term lease cost 287 432 Sublease income ( 438 ) ( 438 ) Total lease cost $ 8,217 $ 8,179 A maturity analysis of lease liabilities as of December 31, 2021 is as follows ($ in thousands): Operating Leases 2022 $ 6,987 2023 6,962 2024 6,690 2025 6,310 2026 4,440 Thereafter 135,977 Total lease payments $ 167,366 Less: Imputed interest ( 96,691 ) Present value of lease liabilities $ 70,675 F- 46 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 Lease term and discount rate information for leases at December 31, 2021 and 2020 are as follows: December 31, 2021 December 31, 2020 Weighted-average of remaining lease terms (years) Operating Leases 40 39 Weighted-average of discount rates Operating Leases 5.01 % 5.00 % Practical Expedients Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes the lease expense for such leases on a straight-line basis over the lease term. The Company has elected to account for lease components (e.g., fixed payments including rent) and non-lease components (e.g., common-area maintenance costs) as a single combined lease component as the lease components are the predominant elements of the combined components. (12) Equity Transactions Common Stock Offerings In September 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. 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, 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 OP Units upon a limited partner’s notice of redemption in exchange for shares of its common stock. The redemption provisions of OP Units owned by limited partners that permit Essex to settle in either cash or common stock at the option of Essex were further evaluated in accordance with applicable accounting guidance to determine whether temporary or permanent equity classification on the balance sheet is appropriate. The Operating Partnership evaluated this guidance, including the requirement to settle in unregistered shares, and determined that, with few exceptions, these OP Units meet the requirements to qualify for presentation as permanent equity. LTIP units represent an interest in the Operating Partnership for services rendered or to be rendered by the LTIP unitholder in its capacity as a partner, or in anticipation of becoming a partner, in the Operating Partnership. Upon the occurrence of specified F- 47 Table of Contents 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. The collective redemption value of OP Units and LTIP units owned by the limited partners, not including Essex, was approximately $ 804.0 million and $ 544.8 million based on the closing price of Essex's common stock as of December 31, 2021 and 2020, respectively. F- 48 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (13) Net Income Per Common Share and Net Income Per Common Unit Essex Property Trust, Inc. Basic and diluted income per share is calculated as follows for the years ended December 31 ($ in thousands, except share and per share amounts): 2021 2020 2019 Income Weighted- average Common Shares Per Common Share Amount Income Weighted- average Common Shares Per Common Share Amount Income Weighted- average Common Shares Per Common Share Amount Basic: Net income available to common stockholders $ 488,554 65,051,465 $ 7.51 $ 568,870 65,454,057 $ 8.69 $ 439,286 65,840,422 $ 6.67 Effect of Dilutive Securities Stock options — 37,409 — 16,678 — 99,033 DownREIT units — — 783 94,247 — — Diluted: Net income available to common stockholders $ 488,554 65,088,874 $ 7.51 $ 569,653 65,564,982 $ 8.69 $ 439,286 65,939,455 $ 6.66 The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,289,391 , 2,296,608 and 2,300,478 , which include vested Series Z-1 Incentive Units, 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units, for the years ended December 31, 2021, 2020 and 2019, respectively, because they were anti-dilutive. 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. 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. Essex Portfolio, L.P. Basic and diluted income per unit is calculated as follows for the years ended December 31 ($ in thousands, except unit and per unit amounts): 2021 2020 2019 Income Weighted- average Common Units Per Common Unit Amount Income Weighted- average Common Units Per Common Unit Amount Income Weighted- average Common Units Per Common Unit Amount Basic: Net income available to common unitholders $ 505,745 67,340,856 $ 7.51 $ 588,782 67,750,665 $ 8.69 $ 454,629 68,140,900 $ 6.67 Effect of Dilutive Securities Stock options — 37,409 — 16,678 — 99,033 DownREIT units — — 783 94,247 — — Diluted: Net income available to common unitholders $ 505,745 67,378,265 $ 7.51 $ 589,565 67,861,590 $ 8.69 $ 454,629 68,239,933 $ 6.66 F- 49 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 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. F- 50 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (14) Equity Based Compensation Plans Stock Options and Restricted Stock In May 2018, stockholders approved the Company’s 2018 Stock Award and Incentive Compensation Plan ("2018 Plan"). The 2018 Plan serves as the successor to the Company’s 2013 Stock Incentive Plan (the "2013 Plan"). The Company’s 2018 Plan provides incentives to attract and retain officers, directors and key employees. The 2018 Plan provides for the grant of stock-based awards to employees, directors and consultants of the Company and its affiliates. The aggregate number of shares of the Company’s common stock available for issuance pursuant to awards granted under the 2018 Plan is 2,000,000 shares, plus the number of shares authorized for grants and available for issuance under the 2013 Plan as of the effective date of the 2018 Plan and the number of shares subject to outstanding awards under the 2013 Plan that are forfeited or otherwise not issued under such awards. No further awards will be granted under the 2013 Plan and the shares that remained available for future issuance under the 2013 Plan as of the effective date of the 2018 Plan will be available for issuance under the 2018 Plan. In connection with the adoption of the 2018 Plan, the Board delegated to the Compensation Committee of the Board the authority to administer the 2018 Plan. Equity-based compensation costs for options and restricted stock under the fair value method totaled $ 11.7 million, $ 12.9 million, and $ 11.4 million for years ended December 31, 2021, 2020 and 2019, respectively. For each of the years ended December 31, 2021, 2020 and 2019 equity-based compensation costs included $ 3.5 million related to restricted stock for bonuses awarded based on asset dispositions, which is recorded as a cost of real estate and land sold, respectively. Stock-based compensation for options and restricted stock related to recipients who are direct and incremental to projects under development were capitalized and totaled $ 0.9 million, $ 1.3 million, and $ 1.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. The intrinsic value of the options exercised totaled $ 25.7 million, $ 7.4 million, and $ 18.7 million, for the years ended December 31, 2021, 2020, and 2019 respectively. The intrinsic value of the options exercisable totaled $ 22.5 million and $ 3.4 million as of December 31, 2021 and 2020, respectively. Total unrecognized compensation cost related to unvested stock options totaled $ 3.9 million as of December 31, 2021 and the unrecognized compensation cost is expected to be recognized over a period of 2.2 years. The average fair value of stock options granted for the years ended December 31, 2021, 2020 and 2019 was $ 24.68 , $ 20.69 and $ 24.02 , respectively. 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: 2021 2020 2019 Stock price $ 329.71 $ 244.74 $ 304.85 Risk-free interest rates 1.22 % 0.83 % 2.01 % Expected lives 6 years 6 years 6 years Volatility 27.00 % 25.72 % 19.56 % Dividend yield 2.90 % 2.93 % 2.72 % A summary of the status of the Company’s stock option plans as of December 31, 2021, 2020, and 2019 and changes during the years ended on those dates is presented below: F- 51 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 2021 2020 2019 Shares Weighted- average exercise price Shares Weighted- average exercise price Shares Weighted- average exercise price Outstanding at beginning of year 613,109 $ 255.86 572,971 $ 251.10 612,954 $ 224.57 Granted 99,479 329.71 149,020 244.74 148,147 304.85 Exercised ( 248,725 ) 231.37 ( 70,802 ) 208.57 ( 182,817 ) 205.25 Forfeited and canceled — — ( 38,080 ) 228.64 ( 5,313 ) 257.87 Outstanding at end of year 463,863 284.82 613,109 255.86 572,971 251.10 Options exercisable at year end 274,244 270.11 361,985 245.83 305,379 223.90 The following table summarizes information about restricted stock outstanding as of December 31, 2021, 2020 and 2019 and changes during the years ended: 2021 2020 2019 Shares Weighted- average grant price Shares Weighted- average grant price Shares Weighted- average grant price Unvested at beginning of year 132,603 $ 214.34 114,877 $ 197.62 91,058 $ 180.99 Granted 50,349 337.52 45,196 248.16 41,643 235.93 Vested ( 22,387 ) 229.90 ( 15,116 ) 170.61 ( 13,222 ) 143.56 Forfeited and canceled ( 1,164 ) 219.30 ( 12,354 ) 184.11 ( 4,602 ) 158.06 Unvested at end of year 159,401 251.03 132,603 214.34 114,877 197.62 The unrecognized compensation cost related to unvested restricted stock totaled $ 14.4 million as of December 31, 2021 and is expected to be recognized over a period of 1.8 years. Long-Term Incentive Plans – LTIP Units On December 9, 2014, the Operating Partnership issued 44,750 LTIP units under the 2015 Long-Term Incentive Plan Award agreements to executives of the Company. The 2015 Long-Term Incentive Plan Units (the "2015 LTIP Units") are subject to forfeiture based on performance-based and service based conditions. An additional 24,000 LTIP units were granted subject only to performance-based criteria and were fully vested on the date granted. The 2015 LTIP Units, that are subject to vesting, vested at 20 % per year on each of the first five anniversaries of the initial grant date. The 2015 LTIP Units performance conditions measurement ended on December 9, 2015 and 95.75 % of the units awarded were earned by the recipients. 2015 LTIP Units not earned based on the performance-based criteria were automatically forfeited by the recipients. The 2015 LTIP Units 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. The 2014 Long-Term Incentive Plan Units (the "2014 LTIP Units") were subject to forfeiture based on performance-based conditions and are currently subject to service based vesting. The 2014 LTIP Units vested 25 % per year on each of the first four anniversaries of the initial grant date. In December 2014, the Company achieved the performance criteria and all of the 2014 LTIP Units awarded were earned by the recipients, subject to satisfaction of service based vesting conditions. The 2014 LTIP Units are convertible one -for-one into OP Units which, in turn, are convertible into common stock of the Company subject to a ten year liquidity restriction. The estimated fair value of the 2015 LTIP Units and 2014 LTIP Units were determined on the grant date using Monte Carlo simulations under a risk-neutral premise and considered Essex’s stock price on the date of grant, the unpaid dividends on unvested units and the discount factor for ten years of illiquidity. F- 52 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 Prior to 2013, the Company issued Series Z Incentive Units and Series Z-1 Incentive Units (collectively referred to as "Z Units") of limited partnership interest in the Operating Partnership. Vesting in the Z Units is based on performance criteria established in the plan. The criteria can be revised by the Compensation Committee of the Board of Directors if the Committee deems that the plan's criterion is unachievable for any given year. The sale of Z Units is contractually prohibited. Z Units are convertible into Operating Partnership units which are exchangeable for shares of the Company’s common stock that have marketability restrictions. The estimated fair value of Z Units were determined on the grant date and considered the Company's stock price on the date of grant, the dividends that are not paid on unvested units and a marketability discount for the 8 to 15 years of illiquidity. Compensation expense is calculated by multiplying estimated vesting increases for the period by the estimated fair value as of the grant date. During 2011 and 2010, the Operating Partnership issued 154,500 Series Z-1 Incentive Units (the "Z-1 Units") of limited partner interest to executives of the Company. The Z-1 Units are convertible one-for-one into common units of the Operating Partnership (which, in turn, are convertible into common stock of the Company) upon the earlier to occur of 100 percent vesting of the units or the year 2026. The conversion ratchet (accounted for as vesting) of the Z-1 Units into common units, is to increase consistent with the Company’s annual FFO growth, but is not to be less than zero or greater than 14 percent. Z-1 Unitholders are entitled to receive distributions, on vested units, that are now equal to dividends distributed to common stockholders. Equity-based compensation costs for LTIP and Z Units under the fair value method totaled approximately zero , 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. Total unrecognized compensation cost related to the unvested LTIP Units under the LTIP Units plans was zero as of December 31, 2021. The following table summarizes information about the LTIP Units outstanding as of December 31, 2021: Long-Term Incentive Plan - LTIP Units Total Vested Units Total Unvested Units Total Outstanding Units Weighted- average Grant-date Fair Value Weighted- average Remaining Contractual Life (years) Balance, December 31, 2018 134,081 11,161 145,242 $ 75.03 6.5 Granted — — — Vested 9,176 ( 9,176 ) — Converted — — — Cancelled — ( 95 ) ( 95 ) Balance, December 31, 2019 143,257 1,890 145,147 $ 75.03 5.2 Granted — — — Vested 1,890 ( 1,890 ) — Converted ( 39,010 ) — ( 39,010 ) Cancelled — — — Balance, December 31, 2020 106,137 — 106,137 $ 84.47 3.6 Granted — — — Vested — — — Converted — — — Cancelled — — — Balance, December 31, 2021 106,137 — 106,137 $ 84.47 2.6 F- 53 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 (15) Segment Information The Company's segment disclosures present the measure used by the chief operating decision makers for purposes of assessing each segment's performance. The Company's chief operating decision makers are comprised of several members of its executive management team who use net operating income ("NOI") to assess the performance of the business for the Company's reportable operating segments. NOI represents total property revenues less direct property operating expenses. The executive management team generally evaluates the Company's operating performance geographically. The Company defines its reportable operating segments as the three geographical regions in which its communities are located: Southern California, Northern California and Seattle Metro. Excluded from segment revenues and NOI are management and other fees from affiliates and interest and other income. Non-segment revenues and NOI included in the following schedule also consist of revenues generated from commercial properties and properties that have been sold. Other non-segment assets include items such as real estate under development, co-investments, real estate held for sale, cash and cash equivalents, marketable securities, notes and other receivables, and prepaid expenses and other assets. F- 54 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 The revenues and NOI for each of the reportable operating segments are summarized as follows for the years ended December 31, 2021, 2020, and 2019 ($ in thousands): Years Ended December 31, 2021 2020 2019 Revenues: Southern California $ 588,381 $ 566,553 $ 593,253 Northern California 584,034 604,348 557,139 Seattle Metro 239,839 243,900 243,060 Other real estate assets 19,164 71,349 57,176 Total property revenues $ 1,431,418 $ 1,486,150 $ 1,450,628 Net operating income: Southern California $ 408,207 $ 391,095 $ 423,177 Northern California 401,862 431,124 412,706 Seattle Metro 160,954 166,847 172,601 Other real estate assets 15,136 56,684 45,617 Total net operating income 986,159 1,045,750 1,054,101 Management and other fees from affiliates 9,138 9,598 9,527 Corporate-level property management expenses ( 36,188 ) ( 34,573 ) ( 34,067 ) Depreciation and amortization ( 520,066 ) ( 525,497 ) ( 483,750 ) General and administrative ( 51,838 ) ( 65,388 ) ( 54,262 ) Expensed acquisition and investment related costs ( 203 ) ( 1,591 ) ( 168 ) Impairment loss — ( 1,825 ) ( 7,105 ) Gain (loss) on sale of real estate and land 142,993 64,967 ( 3,164 ) Interest expense ( 203,125 ) ( 220,633 ) ( 217,339 ) Total return swap income 10,774 10,733 8,446 Interest and other income 98,744 40,999 46,298 Equity income from co-investments 111,721 66,512 112,136 Deferred tax expense on unrealized gain on unconsolidated co-investment ( 15,668 ) ( 1,531 ) ( 1,457 ) (Loss) gain on early retirement of debt, net ( 19,010 ) ( 22,883 ) 3,717 Gain on remeasurement of co-investment 2,260 234,694 31,535 Net income $ 515,691 $ 599,332 $ 464,448 F- 55 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 Total assets for each of the reportable operating segments are summarized as follows as of December 31, 2021 and 2020 ($ in thousands): As of December 31, 2021 2020 Assets: Southern California $ 4,018,839 $ 3,981,650 Northern California 5,460,701 5,405,102 Seattle Metro 1,407,033 1,403,678 Other real estate assets 96,500 137,356 Net reportable operating segments - real estate assets 10,983,073 10,927,786 Real estate under development 111,562 386,047 Co-investments 1,177,802 1,018,010 Real estate held for sale — 57,938 Cash and cash equivalents, including restricted cash 58,638 84,041 Marketable securities 191,829 147,768 Notes and other receivables 341,033 195,104 Operating lease right-of-use assets 68,972 72,143 Prepaid expenses and other assets 64,964 47,340 Total assets $ 12,997,873 $ 12,936,177 (16) 401(k) Plan The Company has a 401(k) benefit plan (the "Plan") for all eligible employees. Employee contributions are limited by the maximum allowed under Section 401(k) of the Internal Revenue Code. The Company matches 50 % of the employee contributions up to a specified maximum. Company contributions to the Plan were approximately $ 3.3 million, $ 2.7 million, and $ 2.4 million for the years ended December 31, 2021, 2020, and 2019, respectively. (17) Commitments and Contingencies 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. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, the impairment will be recognized. The Company has no way of determining the magnitude of any potential liability to which it may be subject arising out of unknown environmental conditions with respect to the communities currently or formerly owned by the Company. No assurance can be given that: existing environmental assessments conducted with respect to any of these communities have revealed all environmental conditions or potential liabilities associated with such conditions; any prior owner or operator of a property did not create any material environmental condition not known to the Company; or a material unknown environmental condition does not otherwise exist as to any one or more of the communities. The Company has limited insurance coverage for some of the types of environmental conditions and associated liabilities described above. The Company has entered into transactions that may require the Company to pay the tax liabilities of the partners or members in the Operating Partnership or in the DownREIT entities. These transactions are within the Company’s control. Although the Company plans to hold the contributed assets or defer recognition of gain on their sale pursuant to like-kind exchange rules under Section 1031 of the Internal Revenue Code, the Company can provide no assurance that it will be able to do so and if such tax liabilities were incurred they may have a material impact on the Company’s financial position. F- 56 Table of Contents ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2021, 2020, and 2019 There continue to be lawsuits against owners and managers of certain of the Company's apartment communities alleging personal injury and property damage caused by the presence of mold in the residential units and common areas of those communities. Some of these lawsuits have resulted in substantial monetary judgments or settlements in the past. The Company has been sued for mold related matters and has settled some, but not all, of such suits. Insurance carriers have reacted to the increase in mold related liability awards by excluding mold related claims from standard general liability policies and pricing mold endorsements at prohibitively high rates. The Company has, however, purchased pollution liability insurance which includes coverage for some mold claims. The Company has also adopted policies intended to promptly address and resolve reports of mold and to minimize any impact mold might have on tenants of its properties. The Company believes its mold policies and proactive response to address reported mold exposures reduces its risk of loss from mold claims. While no assurances can be given that the Company has identified and responded to all mold occurrences, the Company promptly addresses and responds to all known mold reports. Liabilities resulting from such mold related matters are not expected to have a material adverse effect on the Company’s financial condition, results of operations or cash flows. As of December 31, 2021, potential liabilities for mold and other environmental liabilities are not quantifiable and an estimate of possible loss cannot be made. The Company carries comprehensive liability, fire, extended coverage and rental loss insurance for each of the communities. There are, however, certain types of extraordinary losses, such as, for example, losses from terrorism or earthquakes, for which the Company has limited insurance coverage. Substantially all of the communities are located in areas that are subject to earthquake activity. The Company has established a wholly-owned insurance subsidiary, Pacific Western Insurance LLC ("PWI"). Through PWI, the Company is self-insured for earthquake related losses. Additionally, since January 2008, PWI has provided property and casualty insurance coverage for the first $ 5.0 million of the Company’s property level insurance claims per incident. As of December 31, 2021, PWI has cash and marketable securities of approximately $ 198.1 million. These assets are consolidated in the Company’s financial statements. Beginning in 2013, the Company has obtained limited third party seismic insurance on selected assets in the Company's co-investments. The Company is subject to various other legal and/or regulatory proceedings arising in the course of its business operations. The Company believes that, with respect to such matters that it is currently a party to, the ultimate disposition of any such matter will not result in a material adverse effect on the Company’s financial condition, results of operations or cash flows. (18) Subsequent Events In 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. F- 57 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Encumbered communities Belmont Station 275 Los Angeles, CA 29,753 8,100 66,666 8,524 8,267 75,023 83,290 ( 36,537 ) 2009 Mar-09 3-30 Brio 300 Walnut Creek, CA 96,310 16,885 151,741 2,703 16,885 154,444 171,329 ( 14,287 ) 2015 Jun-19 3-30 Form 15 242 San Diego, CA 40,865 24,510 72,221 12,459 25,540 83,650 109,190 ( 17,211 ) 2014 Mar-16 3-30 Fountain Park 705 Playa Vista, CA 82,775 25,073 94,980 38,986 25,203 133,836 159,039 ( 86,456 ) 2002 Feb-04 3-30 Highridge 255 Rancho Palos Verdes, CA 69,380 5,419 18,347 34,262 6,073 51,955 58,028 ( 43,677 ) 1972 May-97 3-30 Magnolia Square/Magnolia Lane (2) 188 Sunnyvale, CA 52,335 8,190 24,736 18,868 8,191 43,603 51,794 ( 28,268 ) 1963 Sep-07 3-30 Marquis 166 San Jose, CA 44,382 20,495 47,823 337 20,495 48,160 68,655 ( 4,939 ) 2015 Dec-18 3-30 Sage at Cupertino 230 San Jose, CA 51,792 35,719 53,449 11,506 35,719 64,955 100,674 ( 12,988 ) 1971 Mar-17 3-30 The Barkley (3) 161 Anaheim, CA 14,890 — 8,520 8,261 2,353 14,428 16,781 ( 10,973 ) 1984 Apr-00 3-30 The Dylan 184 West Hollywood, CA 58,145 19,984 82,286 1,938 19,990 84,218 104,208 ( 21,208 ) 2015 Mar-15 3-30 The Huxley 187 West Hollywood, CA 52,936 19,362 75,641 2,028 19,371 77,660 97,031 ( 19,851 ) 2014 Mar-15 3-30 Township 132 Redwood City, CA 45,394 19,812 70,619 1,456 19,812 72,075 91,887 ( 5,814 ) 2014 Sep-19 3-30 3,025 $ 638,957 $ 203,549 $ 767,029 $ 141,328 $ 207,899 $ 904,007 $ 1,111,906 $ ( 302,209 ) Unencumbered Communities Agora 49 Walnut Creek, CA — 4,932 60,423 296 4,934 60,717 65,651 ( 4,084 ) 2016 Jan-20 3-30 Alessio 624 Los Angeles, CA — 32,136 128,543 15,445 32,136 143,988 176,124 ( 44,124 ) 2001 Apr-14 5-30 Allegro 97 Valley Village, CA — 5,869 23,977 3,227 5,869 27,204 33,073 ( 12,316 ) 2010 Oct-10 3-30 Allure at Scripps Ranch 194 San Diego, CA — 11,923 47,690 2,901 11,923 50,591 62,514 ( 14,257 ) 2002 Apr-14 5-30 Alpine Village 301 Alpine, CA — 4,967 19,728 10,820 4,982 30,533 35,515 ( 19,816 ) 1971 Dec-02 3-30 Anavia 250 Anaheim, CA — 15,925 63,712 10,627 15,925 74,339 90,264 ( 28,240 ) 2009 Dec-10 3-30 Annaliese 56 Seattle, WA — 4,727 14,229 936 4,726 15,166 19,892 ( 4,754 ) 2009 Jan-13 3-30 Apex 367 Milpitas, CA — 44,240 103,251 7,635 44,240 110,886 155,126 ( 27,525 ) 2014 Aug-14 3-30 Aqua Marina Del Rey 500 Marina Del Rey, CA — 58,442 175,326 19,162 58,442 194,488 252,930 ( 60,202 ) 2001 Apr-14 5-30 Ascent 90 Kirkland, WA — 3,924 11,862 2,542 3,924 14,404 18,328 ( 5,432 ) 1988 Oct-12 3-30 Ashton Sherman Village 264 Los Angeles, CA — 23,550 93,811 2,126 23,550 95,937 119,487 ( 17,140 ) 2014 Dec-16 3-30 Avant 440 Los Angeles, CA — 32,379 137,940 4,731 32,379 142,671 175,050 ( 31,839 ) 2014 Jun-15 3-30 Avenue 64 224 Emeryville, CA — 27,235 64,403 16,702 27,235 81,105 108,340 ( 21,921 ) 2007 Apr-14 5-30 Aviara (4) 166 Mercer Island, WA — — 49,813 2,306 — 52,119 52,119 ( 15,548 ) 2013 Apr-14 5-30 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 F- 58 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Belcarra 296 Bellevue, WA — 21,725 92,091 3,756 21,725 95,847 117,572 ( 26,579 ) 2009 Apr-14 5-30 Bella Villagio 231 San Jose, CA — 17,247 40,343 5,204 17,247 45,547 62,794 ( 18,493 ) 2004 Sep-10 3-30 BellCentre 249 Bellevue, WA — 16,197 67,207 6,721 16,197 73,928 90,125 ( 21,787 ) 2001 Apr-14 5-30 Bellerive 63 Los Angeles, CA — 5,401 21,803 1,467 5,401 23,270 28,671 ( 9,362 ) 2011 Aug-11 3-30 Belmont Terrace 71 Belmont, CA — 4,446 10,290 7,531 4,473 17,794 22,267 ( 11,348 ) 1974 Oct-06 3-30 Bennett Lofts 164 San Francisco, CA — 21,771 50,800 32,121 28,371 76,321 104,692 ( 25,807 ) 2004 Dec-12 3-30 Bernardo Crest 216 San Diego, CA — 10,802 43,209 6,290 10,802 49,499 60,301 ( 14,756 ) 1988 Apr-14 5-30 Bonita Cedars 120 Bonita, CA — 2,496 9,913 6,447 2,503 16,353 18,856 ( 10,534 ) 1983 Dec-02 3-30 Boulevard 172 Fremont, CA — 3,520 8,182 14,926 3,580 23,048 26,628 ( 19,910 ) 1978 Jan-96 3-30 Brookside Oaks 170 Sunnyvale, CA — 7,301 16,310 27,812 10,328 41,095 51,423 ( 28,453 ) 1973 Jun-00 3-30 Bridle Trails 108 Kirkland, WA — 1,500 5,930 6,923 1,531 12,822 14,353 ( 9,891 ) 1986 Oct-97 3-30 Brighton Ridge 264 Renton, WA — 2,623 10,800 7,844 2,656 18,611 21,267 ( 14,331 ) 1986 Dec-96 3-30 Bristol Commons 188 Sunnyvale, CA — 5,278 11,853 10,788 5,293 22,626 27,919 ( 18,121 ) 1989 Jan-95 3-30 Bunker Hill 456 Los Angeles, CA — 11,498 27,871 99,814 11,639 127,544 139,183 ( 89,600 ) 1968 Mar-98 3-30 Camarillo Oaks 564 Camarillo, CA — 10,953 25,254 9,169 11,075 34,301 45,376 ( 28,193 ) 1985 Jul-96 3-30 Cambridge Park 320 San Diego, CA — 18,185 72,739 5,616 18,185 78,355 96,540 ( 22,506 ) 1998 Apr-14 5-30 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 Canyon Pointe 250 Bothell, WA — 4,692 18,288 10,200 4,693 28,487 33,180 ( 18,548 ) 1990 Oct-03 3-30 Capri at Sunny Hills 102 Fullerton, CA — 3,337 13,320 10,017 4,048 22,626 26,674 ( 16,217 ) 1961 Sep-01 3-30 Carmel Creek 348 San Diego, CA — 26,842 107,368 9,452 26,842 116,820 143,662 ( 34,832 ) 2000 Apr-14 5-30 Carmel Landing 356 San Diego, CA — 16,725 66,901 11,985 16,725 78,886 95,611 ( 23,860 ) 1989 Apr-14 5-30 Carmel Summit 246 San Diego, CA — 14,968 59,871 5,485 14,968 65,356 80,324 ( 18,885 ) 1989 Apr-14 5-30 Castle Creek 216 Newcastle, WA — 4,149 16,028 6,116 4,833 21,460 26,293 ( 16,945 ) 1998 Dec-98 3-30 Catalina Gardens 128 Los Angeles, CA — 6,714 26,856 2,749 6,714 29,605 36,319 ( 8,556 ) 1987 Apr-14 5-30 CBC Apartments & The Sweeps 239 Goleta, CA — 11,841 45,320 7,309 11,906 52,564 64,470 ( 30,261 ) 1962 Jan-06 3-30 Cedar Terrace 180 Bellevue, WA — 5,543 16,442 9,084 5,652 25,417 31,069 ( 15,207 ) 1984 Jan-05 3-30 CentrePointe 224 San Diego, CA — 3,405 7,743 22,728 3,442 30,434 33,876 ( 24,211 ) 1974 Jun-97 3-30 Chestnut Street Apartments 96 Santa Cruz, CA — 6,582 15,689 2,356 6,582 18,045 24,627 ( 8,572 ) 2002 Jul-08 3-30 City View 572 Hayward, CA — 9,883 37,670 34,786 10,350 71,989 82,339 ( 56,516 ) 1975 Mar-98 3-30 Collins on Pine 76 Seattle, WA — 7,276 22,226 879 7,276 23,105 30,381 ( 6,037 ) 2013 May-14 3-30 Connolly Station 309 Dublin, CA — 19,949 123,428 3,187 19,949 126,615 146,564 ( 8,762 ) 2014 Jan-20 3-30 F- 59 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Corbella at Juanita Bay 169 Kirkland, WA — 5,801 17,415 4,364 5,801 21,779 27,580 ( 9,249 ) 1978 Nov-10 3-30 Cortesia 308 Rancho Santa Margarita, CA — 13,912 55,649 4,062 13,912 59,711 73,623 ( 17,177 ) 1999 Apr-14 5-30 Country Villas 180 Oceanside, CA — 4,174 16,583 6,534 4,187 23,104 27,291 ( 14,946 ) 1976 Dec-02 3-30 Courtyard off Main 110 Bellevue, WA — 7,465 21,405 5,208 7,465 26,613 34,078 ( 11,438 ) 2000 Oct-10 3-30 Crow Canyon 400 San Ramon, CA — 37,579 87,685 13,903 37,579 101,588 139,167 ( 31,438 ) 1992 Apr-14 5-30 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 Domaine 92 Seattle, WA — 9,059 27,177 1,676 9,059 28,853 37,912 ( 9,441 ) 2009 Sep-12 3-30 Elevation 158 Redmond, WA — 4,758 14,285 8,183 4,757 22,469 27,226 ( 11,902 ) 1986 Jun-10 3-30 Ellington 220 Bellevue, WA — 15,066 45,249 4,958 15,066 50,207 65,273 ( 13,947 ) 1994 Jul-14 3-30 Emerald Pointe 160 Diamond Bar, CA — 8,458 33,832 2,837 8,458 36,669 45,127 ( 10,712 ) 1989 Apr-14 5-30 Emerald Ridge 180 Bellevue, WA — 3,449 7,801 7,327 3,449 15,128 18,577 ( 12,609 ) 1987 Nov-94 3-30 Emerson Valley Village 144 Los Angeles, CA — 13,378 53,240 1,623 13,378 54,863 68,241 ( 9,894 ) 2012 Dec-16 3-30 Emme 190 Emeryville, CA — 15,039 80,532 862 15,039 81,394 96,433 ( 5,594 ) 2015 Jan-20 3-30 Enso 183 San Jose, CA — 21,397 71,135 2,269 21,397 73,404 94,801 ( 15,853 ) 2014 Dec-15 3-30 Epic 769 San Jose, CA — 89,111 307,769 1,236 89,111 309,005 398,116 ( 21,058 ) 2013 Jan-20 3-30 Esplanade 278 San Jose, CA — 18,170 40,086 16,663 18,429 56,490 74,919 ( 35,389 ) 2002 Apr-04 3-30 Essex Skyline 350 Santa Ana, CA — 21,537 146,099 14,867 21,537 160,966 182,503 ( 54,862 ) 2008 Apr-10 3-30 Evergreen Heights 200 Kirkland, WA — 3,566 13,395 7,687 3,649 20,999 24,648 ( 16,769 ) 1990 Jun-97 3-30 Fairhaven Apartments 164 Santa Ana, CA — 2,626 10,485 10,846 2,957 21,000 23,957 ( 14,951 ) 1970 Nov-01 3-30 Fairway Apartments at Big Canyon (5) 74 Newport Beach, CA — — 7,850 8,838 — 16,688 16,688 ( 13,662 ) 1972 Jun-99 3-28 Fairwood Pond 194 Renton, WA — 5,296 15,564 4,968 5,297 20,531 25,828 ( 12,391 ) 1997 Oct-04 3-30 Foothill Commons 394 Bellevue, WA — 2,435 9,821 42,736 2,440 52,552 54,992 ( 48,909 ) 1978 Mar-90 3-30 Foothill Gardens/Twin Creeks 176 San Ramon, CA — 5,875 13,992 12,942 5,964 26,845 32,809 ( 21,358 ) 1985 Feb-97 3-30 Forest View 192 Renton, WA — 3,731 14,530 4,323 3,731 18,853 22,584 ( 11,443 ) 1998 Oct-03 3-30 Foster's Landing 490 Foster City, CA — 61,714 144,000 13,398 61,714 157,398 219,112 ( 47,256 ) 1987 Apr-14 5-30 Fountain Court 320 Seattle, WA — 6,702 27,306 14,395 6,985 41,418 48,403 ( 31,728 ) 2000 Mar-00 3-30 Fountains at River Oaks 226 San Jose, CA — 26,046 60,773 7,233 26,046 68,006 94,052 ( 20,492 ) 1990 Apr-14 3-30 Fourth & U 171 Berkeley, CA — 8,879 52,351 4,549 8,879 56,900 65,779 ( 23,644 ) 2010 Apr-10 3-30 Fox Plaza 445 San Francisco, CA — 39,731 92,706 40,959 39,731 133,665 173,396 ( 49,126 ) 1968 Feb-13 3-30 The Henley I/The Henley II 215 Glendale, CA — 6,695 16,753 29,753 6,733 46,468 53,201 ( 33,723 ) 1970 Jun-99 3-30 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 F- 60 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) 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 Hope Ranch 108 Santa Barbara, CA — 4,078 16,877 3,291 4,208 20,038 24,246 ( 10,325 ) 1965 Mar-07 3-30 Huntington Breakers 342 Huntington Beach, CA — 9,306 22,720 24,559 9,315 47,270 56,585 ( 37,323 ) 1984 Oct-97 3-30 Inglenook Court 224 Bothell, WA — 3,467 7,881 8,968 3,474 16,842 20,316 ( 14,569 ) 1985 Oct-94 3-30 Lafayette Highlands 150 Lafayette, CA — 17,774 41,473 5,714 17,774 47,187 64,961 ( 13,685 ) 1973 Apr-14 5-30 Lakeshore Landing 308 San Mateo, CA — 38,155 89,028 10,707 38,155 99,735 137,890 ( 30,522 ) 1988 Apr-14 5-30 Laurels at Mill Creek 164 Mill Creek, WA — 1,559 6,430 8,812 1,595 15,206 16,801 ( 12,054 ) 1981 Dec-96 3-30 Lawrence Station 336 Sunnyvale, CA — 45,532 106,735 4,742 45,532 111,477 157,009 ( 34,531 ) 2012 Apr-14 5-30 Le Parc 140 Santa Clara, CA — 3,090 7,421 14,363 3,092 21,782 24,874 ( 18,258 ) 1975 Feb-94 3-30 Marbrisa 202 Long Beach, CA — 4,700 18,605 10,670 4,760 29,215 33,975 ( 20,160 ) 1987 Sep-02 3-30 Marina City Club (6) 101 Marina Del Rey, CA — — 28,167 34,252 — 62,419 62,419 ( 34,917 ) 1971 Jan-04 3-30 Marina Cove (7) 292 Santa Clara, CA — 5,320 16,431 16,681 5,324 33,108 38,432 ( 29,473 ) 1974 Jun-94 3-30 Mariner's Place 105 Oxnard, CA — 1,555 6,103 3,073 1,562 9,169 10,731 ( 6,703 ) 1987 May-00 3-30 MB 360 360 San Francisco, CA — 42,001 212,648 13,804 42,001 226,452 268,453 ( 58,207 ) 2014 Apr-14 3-30 Mesa Village 133 Clairemont, CA — 1,888 7,498 3,068 1,894 10,560 12,454 ( 6,649 ) 1963 Dec-02 3-30 Mill Creek at Windermere 400 San Ramon, CA — 29,551 69,032 9,770 29,551 78,802 108,353 ( 37,918 ) 2005 Sep-07 3-30 Mio 103 San Jose, CA — 11,012 39,982 1,286 11,012 41,268 52,280 ( 8,583 ) 2015 Jan-16 3-30 Mirabella 188 Marina Del Rey, CA — 6,180 26,673 18,074 6,270 44,657 50,927 ( 29,785 ) 2000 May-00 3-30 Mira Monte 354 Mira Mesa, CA — 7,165 28,459 13,643 7,186 42,081 49,267 ( 28,485 ) 1982 Dec-02 3-30 Miracle Mile/Marbella 236 Los Angeles, CA — 7,791 23,075 17,041 7,886 40,021 47,907 ( 30,850 ) 1988 Aug-97 3-30 Mission Hills 282 Oceanside, CA — 10,099 38,778 12,891 10,167 51,601 61,768 ( 29,576 ) 1984 Jul-05 3-30 Mission Peaks 453 Fremont, CA — 46,499 108,498 9,841 46,499 118,339 164,838 ( 34,708 ) 1995 Apr-14 5-30 Mission Peaks II 336 Fremont, CA — 31,429 73,334 9,673 31,429 83,007 114,436 ( 24,914 ) 1989 Apr-14 5-30 Montanosa 472 San Diego, CA — 26,697 106,787 10,525 26,697 117,312 144,009 ( 33,373 ) 1990 Apr-14 5-30 Montclaire 390 Sunnyvale, CA — 4,842 19,776 30,760 4,997 50,381 55,378 ( 44,965 ) 1973 Dec-88 3-30 Montebello 248 Kirkland, WA — 13,857 41,575 9,748 13,858 51,322 65,180 ( 18,121 ) 1996 Jul-12 3-30 Montejo Apartments 124 Garden Grove, CA — 1,925 7,685 5,002 2,194 12,418 14,612 ( 8,161 ) 1974 Nov-01 3-30 Monterey Villas 122 Oxnard, CA — 2,349 5,579 7,515 2,424 13,019 15,443 ( 9,753 ) 1974 Jul-97 3-30 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 Palm Valley 1,100 San Jose, CA — 133,802 312,205 22,714 133,802 334,919 468,721 ( 62,857 ) 2008 Jan-17 3-30 Paragon Apartments 301 Fremont, CA — 32,230 77,320 2,998 32,230 80,318 112,548 ( 20,711 ) 2013 Jul-14 3-30 F- 61 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Park Catalina 90 Los Angeles, CA — 4,710 18,839 3,971 4,710 22,810 27,520 ( 8,980 ) 2002 Jun-12 3-30 Park Highland 250 Bellevue, WA — 9,391 38,224 14,401 9,391 52,625 62,016 ( 19,678 ) 1993 Apr-14 5-30 Park Hill at Issaquah 245 Issaquah, WA — 7,284 21,937 12,573 7,284 34,510 41,794 ( 20,312 ) 1999 Feb-99 3-30 Park Viridian 320 Anaheim, CA — 15,894 63,574 5,414 15,894 68,988 84,882 ( 20,073 ) 2008 Apr-14 5-30 Park West 126 San Francisco, CA — 9,424 21,988 13,419 9,424 35,407 44,831 ( 16,014 ) 1958 Sep-12 3-30 Parkwood at Mill Creek 240 Mill Creek, WA — 10,680 42,722 3,840 10,680 46,562 57,242 ( 13,892 ) 1989 Apr-14 5-30 Patent 523 295 Seattle, WA — 14,558 69,417 6,545 14,558 75,962 90,520 ( 32,488 ) 2010 Mar-10 3-30 Pathways at Bixby Village 296 Long Beach, CA — 4,083 16,757 22,439 6,239 37,040 43,279 ( 33,954 ) 1975 Feb-91 3-30 Piedmont 396 Bellevue, WA — 19,848 59,606 15,648 19,848 75,254 95,102 ( 24,127 ) 1969 May-14 3-30 Pinehurst (8) 28 Ventura, CA — — 1,711 793 — 2,504 2,504 ( 1,772 ) 1973 Dec-04 3-24 Pinnacle at Fullerton 192 Fullerton, CA — 11,019 45,932 5,679 11,019 51,611 62,630 ( 15,335 ) 2004 Apr-14 5-30 Pinnacle on Lake Washington 180 Renton, WA — 7,760 31,041 4,519 7,760 35,560 43,320 ( 10,763 ) 2001 Apr-14 5-30 Pinnacle at MacArthur Place 253 Santa Ana, CA — 15,810 66,401 7,228 15,810 73,629 89,439 ( 21,501 ) 2002 Apr-14 5-30 Pinnacle at Otay Ranch I & II 364 Chula Vista, CA — 17,023 68,093 6,313 17,023 74,406 91,429 ( 21,532 ) 2001 Apr-14 5-30 Pinnacle at Talega 362 San Clemente, CA — 19,292 77,168 4,788 19,292 81,956 101,248 ( 23,314 ) 2002 Apr-14 5-30 Pinnacle Sonata 268 Bothell, WA — 14,647 58,586 7,482 14,647 66,068 80,715 ( 18,985 ) 2000 Apr-14 5-30 Pointe at Cupertino 116 Cupertino, CA — 4,505 17,605 13,270 4,505 30,875 35,380 ( 22,156 ) 1963 Aug-98 3-30 Pure Redmond 105 Redmond, WA — 7,461 31,363 802 7,461 32,165 39,626 ( 2,388 ) 2016 Dec-19 3-30 Radius 264 Redwood City, CA — 11,702 152,336 2,532 11,702 154,868 166,570 ( 44,224 ) 2015 Apr-14 3-30 Reed Square 100 Sunnyvale, CA — 6,873 16,037 8,867 6,873 24,904 31,777 ( 12,639 ) 1970 Jan-12 3-30 Regency at Encino 75 Encino, CA — 3,184 12,737 4,453 3,184 17,190 20,374 ( 8,439 ) 1989 Dec-09 3-30 Renaissance at Uptown Orange 460 Orange, CA — 27,870 111,482 8,293 27,870 119,775 147,645 ( 34,600 ) 2007 Apr-14 5-30 Reveal 438 Woodland Hills, CA — 25,073 121,314 4,512 25,073 125,826 150,899 ( 32,292 ) 2010 Apr-15 3-30 Salmon Run at Perry Creek 132 Bothell, WA — 3,717 11,483 3,175 3,801 14,574 18,375 ( 10,175 ) 2000 Oct-00 3-30 Sammamish View 153 Bellevue, WA — 3,324 7,501 7,819 3,331 15,313 18,644 ( 13,561 ) 1986 Nov-94 3-30 101 San Fernando 323 San Jose, CA — 4,173 58,961 15,936 4,173 74,897 79,070 ( 33,391 ) 2001 Jul-10 3-30 San Marcos 432 Richmond, CA — 15,563 36,204 35,460 22,866 64,361 87,227 ( 39,572 ) 2003 Nov-03 3-30 Santee Court/Santee Village 238 Los Angeles, CA — 9,581 40,317 15,514 9,582 55,830 65,412 ( 22,674 ) 2004 Oct-10 3-30 Shadow Point 172 Spring Valley, CA — 2,812 11,170 5,400 2,820 16,562 19,382 ( 10,422 ) 1983 Dec-02 3-30 Shadowbrook 418 Redmond, WA — 19,292 77,168 6,721 19,292 83,889 103,181 ( 24,714 ) 1986 Apr-14 5-30 Slater 116 108 Kirkland, WA — 7,379 22,138 1,632 7,379 23,770 31,149 ( 6,962 ) 2013 Sep-13 3-30 Solstice 280 Sunnyvale, CA — 34,444 147,262 7,311 34,444 154,573 189,017 ( 47,229 ) 2014 Apr-14 5-30 F- 62 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) Station Park Green - Phases I, II, and III 492 San Mateo, CA — 54,782 314,694 11,710 54,782 326,404 381,186 ( 38,705 ) 2018 Mar-18 3-30 Stevenson Place 200 Fremont, CA — 996 5,582 14,597 1,001 20,174 21,175 ( 16,780 ) 1975 Apr-00 3-30 Stonehedge Village 196 Bothell, WA — 3,167 12,603 10,006 3,201 22,575 25,776 ( 17,191 ) 1986 Oct-97 3-30 Summerhill Park 100 Sunnyvale, CA — 2,654 4,918 11,319 2,656 16,235 18,891 ( 13,756 ) 1988 Sep-88 3-30 Summit Park 300 San Diego, CA — 5,959 23,670 9,528 5,977 33,180 39,157 ( 21,395 ) 1972 Dec-02 3-30 Taylor 28 197 Seattle, WA — 13,915 57,700 4,287 13,915 61,987 75,902 ( 17,851 ) 2008 Apr-14 5-30 The Audrey at Belltown 137 Seattle, WA — 9,228 36,911 2,517 9,228 39,428 48,656 ( 10,962 ) 1992 Apr-14 5-30 The Avery 121 Los Angeles, CA — 6,964 29,922 1,114 6,964 31,036 38,000 ( 8,214 ) 2014 Mar-14 3-30 The Bernard 63 Seattle, WA — 3,699 11,345 954 3,689 12,309 15,998 ( 4,577 ) 2008 Sep-11 3-30 The Blake LA 196 Los Angeles, CA — 4,023 9,527 25,098 4,031 34,617 38,648 ( 23,033 ) 1979 Jun-97 3-30 The Cairns 99 Seattle, WA — 6,937 20,679 2,683 6,939 23,360 30,299 ( 11,846 ) 2006 Jun-07 3-30 The Commons 264 Campbell, CA — 12,555 29,307 10,799 12,556 40,105 52,661 ( 18,984 ) 1973 Jul-10 3-30 The Elliot at Mukilteo 301 Mukilteo, WA — 2,498 10,595 19,215 2,824 29,484 32,308 ( 24,239 ) 1981 Jan-97 3-30 The Galloway 506 Pleasanton, CA — 32,966 184,499 3,632 32,966 188,131 221,097 ( 12,985 ) 2016 Jan-20 3-30 The Grand 243 Oakland, CA — 4,531 89,208 8,096 4,531 97,304 101,835 ( 44,341 ) 2009 Jan-09 3-30 The Hallie 292 Pasadena, CA — 2,202 4,794 55,901 8,385 54,512 62,897 ( 42,729 ) 1972 Apr-97 3-30 The Huntington 276 Huntington Beach, CA — 10,374 41,495 7,703 10,374 49,198 59,572 ( 17,940 ) 1975 Jun-12 3-30 The Landing at Jack London Square 282 Oakland, CA — 33,554 78,292 8,633 33,554 86,925 120,479 ( 26,682 ) 2001 Apr-14 5-30 The Lofts at Pinehurst 118 Ventura, CA — 1,570 3,912 5,833 1,618 9,697 11,315 ( 7,072 ) 1971 Jun-97 3-30 The Palisades 192 Bellevue, WA — 1,560 6,242 14,942 1,565 21,179 22,744 ( 18,824 ) 1977 May-90 3-30 The Palms at Laguna Niguel 460 Laguna Niguel, CA — 23,584 94,334 13,829 23,584 108,163 131,747 ( 32,672 ) 1988 Apr-14 5-30 The Stuart 188 Pasadena, CA — 13,574 54,298 3,987 13,574 58,285 71,859 ( 16,886 ) 2007 Apr-14 5-30 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 Tierra Vista 404 Oxnard, CA — 13,652 53,336 8,926 13,661 62,253 75,914 ( 36,922 ) 2001 Jan-01 3-30 Tiffany Court 101 Los Angeles, CA — 6,949 27,796 2,628 6,949 30,424 37,373 ( 8,740 ) 1987 Apr-14 5-30 Trabuco Villas 132 Lake Forest, CA — 3,638 8,640 4,792 3,890 13,180 17,070 ( 9,981 ) 1985 Oct-97 3-30 Valley Park 160 Fountain Valley, CA — 3,361 13,420 6,898 3,761 19,918 23,679 ( 13,354 ) 1969 Nov-01 3-30 Via 284 Sunnyvale, CA — 22,000 82,270 5,344 22,016 87,598 109,614 ( 33,896 ) 2011 Jul-11 3-30 Villa Angelina 256 Placentia, CA — 4,498 17,962 9,009 4,962 26,507 31,469 ( 18,042 ) 1970 Nov-01 3-30 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 F- 63 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (Dollars in thousands) Costs Initial cost capitalized Gross amount carried at close of period Apartment Buildings and subsequent to Land and Buildings and Accumulated Date of Date Lives Property Homes Location Encumbrance Land improvements acquisition improvements improvements Total (1) depreciation construction acquired (years) 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 Vista Belvedere 76 Tiburon, CA — 5,573 11,901 9,240 5,573 21,141 26,714 ( 14,041 ) 1963 Aug-04 3-30 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 Wandering Creek 156 Kent, WA — 1,285 4,980 5,580 1,296 10,549 11,845 ( 8,845 ) 1986 Nov-95 3-30 Wharfside Pointe 155 Seattle, WA — 2,245 7,020 13,713 2,258 20,720 22,978 ( 16,922 ) 1990 Jun-94 3-30 Willow Lake 508 San Jose, CA — 43,194 101,030 17,866 43,194 118,896 162,090 ( 43,068 ) 1989 Oct-12 3-30 5600 Wilshire 284 Los Angeles, CA — 30,535 91,604 6,477 30,535 98,081 128,616 ( 27,411 ) 2008 Apr-14 5-30 Wilshire La Brea 478 Los Angeles, CA — 56,932 211,998 14,717 56,932 226,715 283,647 ( 67,716 ) 2014 Apr-14 5-30 Wilshire Promenade 149 Fullerton, CA — 3,118 7,385 13,435 3,797 20,141 23,938 ( 14,239 ) 1992 Jan-97 3-30 Windsor Ridge 216 Sunnyvale, CA — 4,017 10,315 17,174 4,021 27,485 31,506 ( 25,104 ) 1989 Mar-89 3-30 Woodland Commons 302 Bellevue, WA — 2,040 8,727 25,794 2,044 34,517 36,561 ( 25,895 ) 1978 Mar-90 3-30 Woodside Village 145 Ventura, CA — 5,331 21,036 6,295 5,341 27,321 32,662 ( 16,023 ) 1987 Dec-04 3-30 48,629 $ — $ 2,705,854 $ 9,644,002 $ 2,054,750 $ 2,742,712 $ 11,661,894 $ 14,404,606 $ ( 4,327,622 ) Costs Initial cost capitalized Gross amount carried at close of period Buildings and subsequent Land and Buildings and Accumulated Property Encumbrance Land improvements to acquisition improvements improvements Total (1) depreciation Other real estate assets — 80,706 16,587 16,122 82,067 31,348 113,415 ( 17,023 ) $ — $ 80,706 $ 16,587 $ 16,122 $ 82,067 $ 31,348 $ 113,415 $ ( 17,023 ) Total $ 638,957 $ 2,990,109 $ 10,427,618 $ 2,212,200 $ 3,032,678 $ 12,597,249 $ 15,629,927 $ ( 4,646,854 ) (1) The aggregate cost for federal income tax purposes is approximately $ 12.2 billion (unaudited). (2) A portion of land is leased pursuant to a ground lease expiring 2070. (3) The land is leased pursuant to a ground lease expiring 2083. (4) The land is leased pursuant to a ground lease expiring 2070. (5) The land is leased pursuant to a ground lease expiring 2027. (6) The land is leased pursuant to a ground lease expiring 2067. (7) A portion of land is leased pursuant to a ground lease expiring in 2028. (8) The land is leased pursuant to a ground lease expiring in 2028. F- 64 ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES FINANCIAL STATEMENT SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2021 (Dollars in thousands) A summary of activity for rental properties and accumulated depreciation is as follows: 2021 2020 2019 2021 2020 2019 Rental properties: Accumulated depreciation: Balance at beginning of year $ 15,061,745 $ 14,038,142 $ 13,366,101 Balance at beginning of year $ 4,133,959 $ 3,689,482 $ 3,209,548 Acquisition, development, and improvement of real estate 707,267 1,426,505 672,041 Depreciation expense 528,613 518,629 479,934 Disposition of real estate and other ( 139,085 ) ( 402,902 ) — Depreciation expense - Disposals and other ( 15,718 ) ( 74,152 ) — Balance at the end of year $ 15,629,927 $ 15,061,745 $ 14,038,142 Balance at the end of year $ 4,646,854 $ 4,133,959 $ 3,689,482 F- 65 Table of Contents EXHIBIT INDEX Exhibit No. Document 3.1 Articles of Amendment and Restatement of Essex Property Trust, Inc., attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed May 23, 2016, and incorporated herein by reference. 3.2 Sixth Amended and Restated Bylaws of Essex Property Trust, Inc. (as of February 21, 2017), attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed February 27, 2017, and incorporated herein by reference. 3.3 First Amendment to Sixth Amended and Restated Bylaws of Essex Property Trust, Inc., dated February 20, 2018, attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed February 21, 2018, and incorporated herein by reference. 3.4 Certificate of Limited Partnership of Essex Portfolio, L.P. and amendments thereto. 4.1 Indenture, dated April 15, 2013, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.25% Senior Notes due 2023 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 15, 2013, and incorporated herein by reference. 4.2 Form of Common Stock Certificate of Essex Property Trust, Inc., filed as Exhibit 4.5 to the Company's Form S-4 Registration Statement, filed January 29, 2014, and incorporated herein by reference. 4. 3 Indenture, dated April 15, 2014, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.875% Senior Notes due 2024 and the guarantee thereof, attached as Exhibit 4.1 to Essex Property Trust, Inc.'s Current Report on Form 8-K, filed April 16, 2014, and incorporated herein by reference. 4.4 Indenture, dated March 17, 2015, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.500% Senior Notes due 2025 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed March 17, 2015, and incorporated herein by reference. 4.5 Indenture, dated April 11, 2016, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of the 3.375% Senior Notes due 2026 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 11, 2016, and incorporated herein by reference. 4. 6 Indenture, dated April 10, 2017, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of the 3.625% Senior Notes due 2027 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed April 10, 2017, and incorporated herein by reference. 4. 7 Indenture, dated March 8, 2018, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of the 4.500% Senior Notes due 2048 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed March 8, 2018, and incorporated herein by reference. 4.8 Indenture, dated February 11, 2019, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 4.000% Senior Notes due 2029 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed February 11, 2019, and incorporated herein by reference. 4. 9 Indenture, dated August 7, 2019, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.000% Senior Notes due 2030 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed August 7, 2019, and incorporated herein by reference. 4.10 Indenture, dated February 11, 2020, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 2.650% Senior Notes due 2032 and the guarantee thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed February 11, 2020, and incorporated herein by reference. 4.11 Indenture, dated August 24, 2020, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 1.650% Senior Notes due 2031, the form of 2.650% Senior Notes due 2050 and the guarantees thereof, attached as Exhibit 4.1 to the Company's Current Report on Form 8-K, filed August 24, 2020, and incorporated herein by reference. Table of Contents 4.12 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. 4.13 Indenture, dated June 1, 2021, among Essex Portfolio, L.P., Essex portfolio Trust, Inc. and U.S. 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. 4.14 Description of Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, attached as Exhibit 4.14 to the Company’s Annual Report on Form 10-K, filed February 20, 2020, and incorporated herein by reference. 10.1 Agreement between Essex Property Trust, Inc. and George M. Marcus, dated March 27, 2003 attached as Exhibit 10.32 to the Company's Form 10-K for the year ended December 31, 2002, and incorporated herein by reference. 10. 2 Essex Property Trust, Inc. Deferred Compensation Plan, As Amended and Restated As of January 1, 2021. 10. 3 Form of Indemnification Agreement between Essex Property Trust, Inc. and its directors and officers, attached as Exhibit 10.4 to the Company's Annual Report on Form 10-K, filed February 21, 2019, and incorporated herein by reference.* 10.4 Modification Agreement, dated July 30, 2012, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference. 10.5 Amendment to Agreement, dated as of September 11, 2012, between the Company and George Marcus, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, and incorporated herein by reference. 10.6 Essex Property Trust, Inc. Executive Severance Plan (as Amended and Restated effective March 12, 2013), attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed March 18, 2013, and incorporated herein by reference.* . 10.7 Essex Property Trust, Inc. 2013 Stock Award and Incentive Compensation Plan, attached as Appendix B to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 14, 2013, filed April 1, 2013, and incorporated herein by reference.* 10.8 Essex Property Trust, Inc. 2013 Employee Stock Purchase Plan, attached as Appendix C to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 14, 2013, filed April 1, 2013, and incorporated herein by reference.* 10.9 Forms of equity award agreements for officers under the 2013 Stock Award and Incentive Compensation Plan, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and incorporated herein by reference.* 10.10 Amended and Restated Non-Employee Director Equity Award Program, dated May 17, 2016, attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed May 23, 2016, and incorporated herein by reference.* 10.11 Fourth Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of December 20, 2018, attached as Exhibit 10.14 to the Company's Annual Report on Form 10-K, filed February 21, 2019, and incorporated herein by reference. 10.12 Third Modification Agreement, dated as of January 29, 2014 by and among Essex Portfolio, L.P., U.S. Bank National Association, as Administrative Agent and Lender and the other lenders party thereto, attached as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed January 31, 2014, and incorporated herein by reference. 10.13 Forms of Essex Property Trust, Inc., Essex Portfolio L.P., Long-Term Incentive Plan Award Agreements, attached as Exhibit 10.28 to the Company's Annual Report on Form 10-K, filed March 2, 2015, and incorporated herein by reference.* 10.14 Terms Agreement dated as of May 20, 2015, among Essex Property Trust, Inc. and Citigroup Global Markets Inc., attached as Exhibit 1.1 to the Company's Current Report on Form 8-K, filed May 26, 2015, and incorporated herein by reference. 10.15 Essex Property Trust, Inc. 2018 Stock Award and Incentive Compensation Plan, attached as Appendix A to the Company's Definitive Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders held May 15, 2018, filed March 23, 2018, and incorporated herein by reference.* Table of Contents 10.16 Form of Non-Employee Director Restricted Stock Award Agreement, attached as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed August 3, 2018, and incorporated herein by reference.* 10.17 Form of Non-Employee Director Stock Option Award Agreement, attached as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed August 3, 2018, and incorporated herein by reference.* 10.18 Forms of Essex Property Trust, Inc. Long-Term Incentive Award Agreements pursuant to the 2018 Stock Award and Incentive Compensation Plan.* 10.19 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. † 10.20 Deferred Compensation Plan for Non-Employee Directors, attached as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed May 7, 2020 and incorporated herein by reference.* 10.21 Executive Transition Services Agreement, dated as of December 22, 2020, by and between Essex Property Trust, Inc. and John Burkart, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 29, 2020 and incorporated herein by reference.* 21.1 List of Subsidiaries of Essex Property Trust, Inc. and Essex Portfolio, L.P. 23.1 Consent of KPMG LLP, Independent Registered Public Accounting Firm. 23.2 Consent of KPMG LLP, Independent Registered Public Accounting Firm. 24.1 Power of Attorney (see signature page) 31.1 Certification of Michael J. Schall, Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Barbara Pak, Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.3 Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.4 Certification of Barbara Pak, Principal Financial Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Michael J. Schall, Principal Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Barbara Pak, Principal Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.3 Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.4 Certification of Barbara Pak, Principal Financial Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.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). * Management contract or compensatory plan or arrangement. Table of Contents † The schedules and certain exhibits to this agreement, as set forth in the agreement, have not been filed herewith. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, each Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Mateo, State of California, on February 25, 2022. ESSEX PROPERTY TRUST, INC . By: /s/ BARBARA PAK Barbara Pak Executive Vice President, Chief Financial Officer (Authorized Officer, Principal Financial Officer) By: /s/ JOHN FARIAS John Farias Senior Vice President, Chief Accounting Officer ESSEX PORTFOLIO, L.P. By: Essex Property Trust, Inc., its general partner By: /s/ BARBARA PAK Barbara Pak Executive Vice President, Chief Financial Officer (Authorized Officer, Principal Financial Officer) By: /s/ JOHN FARIAS John Farias Senior Vice President, Chief Accounting Officer S-1 Table of Contents KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Michael J. Schall and Barbara Pak, and each of them, his or her attorney-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorney-in-fact, or his or her or substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ GEORGE M. MARCUS George M. Marcus Director and Chairman of the Board February 25, 2022 /s/ KEITH R. GUERICKE Keith R. Guericke Director, and Vice Chairman of the Board February 25, 2022 /s/ IRVING F. LYONS, III Irving F. Lyons, III Lead Director February 25, 2022 /s/ MARIA R. HAWTHORNE Maria R. Hawthorne Director February 25, 2022 /s/ AMAL M. JOHNSON Amal M. Johnson Director February 25, 2022 /s/ MARY KASARIS Mary Kasaris Director February 25, 2022 /s/ THOMAS E. ROBINSON Thomas E. Robinson Director February 25, 2022 /s/ MICHAEL J. SCHALL Michael J. Schall Chief Executive Officer and President, and Director (Principal Executive Officer) February 25, 2022 /s/ BYRON A. SCORDELIS Byron A. Scordelis Director February 25, 2022 S-2