What changed in this filing

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Item 1. Business

2024-02-23 compared with 2023-02-23 · 46 added, 68 removed, 141 unchanged (45% of the section changed)

39 unchanged sentences

Acquisitions of Real Estate Interests

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

For the year ended December 31, 2022, the Company purchased or increased its interests in three communities consisting of 590 apartment homes for approximately $215.9 million.

The table below summarizes acquisition activity for the year ended December 31, 2023 ($ in millions):

Property Name Location Apartment Homes Essex Ownership Percentage Ownership Quarter in 2023 Purchase Price

Vela Woodland Hills, CA 379 50 % Wesco VI Q1 $ 183.0 (1)

Regency Palm Court and Windsor Court Los Angeles, CA 211 100 % EPLP Q3 32.9 (2)

Hacienda at Camarillo Oaks Camarillo, CA 73 100 % EPLP Q2 $ 23.1

Total 2023 73 $ 23.1

(1) Represents the contract price for the entire property, not the Company’s share.

(2) In July 2022, the Company acquired its joint venture partner’s 49.8% minority interest in two apartment communities, consisting of 211 apartment homes located in Los Angeles, CA, for a contract price of $32.9 million.

Dispositions of Real Estate

3 unchanged sentences

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

For the year ended December 31, 2022, the Company sold one community consisting of 250 apartment homes for approximately $160.0 million.

Property Name Location Apartment Homes Ownership Quarter in 2022 Sales Price

(in millions)

Anavia Anaheim, CA 250 EPLP Q4 $ 160.0 (1)

The table below summarizes disposition activity for the year ended December 31, 2023 ($ in millions):

Property Name (1)

Location Apartment Homes Ownership Quarter in 2023 Sales Price

CBC and The Sweeps Goleta, CA 239 EPLP Q1 $ 91.7 (2)

Total 2023 239 $ 91.7

(1) In March 2023, the Company sold a land parcel located in Moorpark, CA, that had been held for future development, for $8.7 million and recognized a gain on sale of $4.7 million.

(2) The Company recognized a $54.5 million gain on sale.

5 unchanged sentences

As of December 31, 2023, the Company had various consolidated predevelopment projects.

The Company may also acquire land for future development purposes or sale.

The Company may also acquire land for future development purposes.

The following table sets forth information regarding the Company’s development pipeline ($ in millions):

3 unchanged sentences

Development Projects - Joint Venture

LIVIA (fka Scripps Mesa Apartments) (2)

LIVIA at Scripps Ranch (2)

San Diego, CA 51% 264 $ 90 $ 102

9 unchanged sentences

Long Term Debt

During 2022, the Company made regularly scheduled principal payments and loan payoffs of $43.2 million to its secured mortgage notes payable at an average interest rate of 3.6%.

In October 2022, the Company obtained a $300.0 million unsecured term loan priced at Adjusted Secured Overnight Financing Rate ("SOFR") plus 0.85%.

The loan has been swapped to an all-in fixed rate of 4.2% and matures in October 2024 with three 12-month extension options, exercisable at the Company's option.

The loan includes a six-month delayed draw feature with the proceeds expected to be drawn in April 2023 to repay the Company's $300.0 million unsecured notes due in May 2023.

During 2023, the Company made regularly scheduled principal payments of $2.9 million to its secured mortgage notes payable at an average interest rate of 3.7%.

In July 2023, the Company closed $298.0 million in 10-year secured loans priced at 5.08% fixed interest rates encumbering four properties located in Northern California.

As of December 31, 2023, Moody’s Investor Service and Standard and Poor's ("S&P") credit agencies rated Essex Property Trust, Inc.

2 unchanged sentences

At December 31, 2023, the Company had two unsecured lines of credit aggregating $1.24 billion.

The Company's $1.2 billion credit facility had an interest rate of Adjusted SOFR plus 0.75% which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of January 2027 with two six-month extensions, exercisable at the Company's option.

The Company's $35.0 million working capital unsecured line of

credit had an interest rate of Adjusted SOFR plus 0.75%, which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of July 2024.

The Company's $1.2 billion credit facility had an interest rate of Adjusted Secured Overnight Financing Rate ("Adjusted SOFR") plus 0.75% which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of January 2027 with two six-month extensions, exercisable at the Company's option.

The Company's $35.0 million working capital unsecured line of credit had an interest rate of Adjusted SOFR plus 0.75%, which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of July 2024.

Equity Transactions

3 unchanged sentences

The plan supersedes the Company's previous common stock repurchase plan announced in December 2015.

During the year ended December 31, 2022, the Company repurchased and retired 740,053 shares of its common stock totaling $189.7 million, including commissions, of which 420,606 shares of common stock totaling $101.7 million were repurchased under the new plan after its approval.

During the year ended December 31, 2023, the Company repurchased and retired 437,026 shares of its common stock totaling $95.7 million, including commissions.

As of December 31, 2023, the Company had $302.7 million of purchase authority remaining under its $500.0 million stock repurchase plan.

13 unchanged sentences

to act with integrity, to care about what matters, to do right with urgency, to lead at every level and to seek fairness.

The Company seeks to reinforce those values within its workforce.

Workplace Diversity

The Company believes it has one of the most diverse workforces among its peers in the real estate industry in part due to its robust and integrated diversity, equity, and inclusion strategy, which utilizes training programs, employee committees, and executive sponsorships to strengthen and promote diversity, equal opportunity, and fair treatment for all Company associates.

As of December 31, 2022, the Company's workforce was, based on the voluntary self-identification of our employee base, approximately 45% Hispanic or Latino, 28% White, 12% Asian, 7% Black or African American, 1% Native Hawaiian or other Pacific Islander, 1% American Indian or Alaska Native, and 5% two or more races.

3% of employees chose to not disclose their race.

54% of the Company’s managerial level employees, 22% of its senior executives, and 20% of its named executive officers self-identified as Hispanic or Latino, Asian, Black or African American, Native Hawaiian or other Pacific Islander, American Indian or Alaska Native, or two or more races.

As of December 31, 2022, the Company’s workforce was 41% female, 58% male, and 1% chose not to disclose their gender.

57% of our corporate associates and 36% of our on-site operational associates self-identified as female.

The Company had 249 women in positions of manager or higher, representing 60% of managerial positions, a decrease from 65% in 2021.

The slight decrease is primarily attributable to the Company’s new operational structure which resulted in 62 operational associates moving into non-managerial roles.

While some oversight duties were realigned, salary and benefits were not impacted, and women continue to hold a majority of the managerial roles at the Company.

Gender diversity within the Company’s leadership is similar to the overall gender diversity of the Company’s employees and managers, with women composing 60% of the Company’s executive officers and 56% of the Company’s senior executives.

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

The Company believes it has one of the most diverse workforces among its peers in the real estate industry in part due to its robust and integrated diversity, equity, and inclusion strategy, which allows the Company to broaden its perspective and better serve both the communities it operates in and the associates it employs.

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

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

All associates are offered training aimed at preventing workplace harassment, including harassment based on age, gender or ethnicity, training covering the foundations of DEI and awareness of unconscious bias in the workplace, and all managers are required to complete anti-harassment training.

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

The Company developed a robust, multiple regression analysis model, which confirmed that we continue to maintain our gender pay parity.

Our robust statistical analysis confirmed that gender was not a significant factor in determining pay decisions in 2022.

The following aligns with the Company’s EE0-1 data for 2022:

Gender Representation by Position (1)

December 31, 2022

Male % Female %

Corporate - Top Executives, VPs, Assistant VPs, Directors, & Managers 74 76 49% 51%

Corporate - Below manager position 100 173 37% 63%

Field - Regional Directors/Managers, Community Managers 89 173 34% 66%

Field - Leasing Specialists, Leasing Managers, Relationship Reps, Bookkeepers 110 216 34% 66%

Field - Maintenance Supervisors and Techs 548 11 98% 2%

Field - Porter, Landscaper, Painter, Security Guard, Amenities Attendant 109 89 55% 45%

(1) Table excludes 4 associates that did not declare gender and does not include board directors and consultants.

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

Total Workforce by

December 31, 2022

All Company associates are offered training aimed at preventing workplace harassment, including harassment based on age, gender or ethnicity, training covering the foundations of DEI and awareness of unconscious bias in the workplace, and all managers are required to complete anti-harassment training.

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

The DEI Committee’s goals for 2023 included increasing the Company’s training offerings, integrating DEI into talent recruitment processes, strengthening employee resource and affinity groups, making contributions to local DEI organizations, and improving recognition.

The Company’s notable diversity achievements for 2023 include the following data as of December 31, 2023:

– The Company’s workforce self-identified as 71% ethnically or culturally diverse.

– 53% of the Company’s managerial level employees, including 38% of its senior executives, self-identified as ethnically or culturally diverse.

– There were 216 women in positions of manager or higher, equating to 61% of managerial positions in the Company.

– The Company’s workforce self-identified as 42% female and 57% male (1% chose not to disclose their gender).

– 60% of the Company’s corporate associates self-identified as female.

The charts below detail the Company’s diverse representation as of December 31, 2023:

Total Workforce

Executives & Management

Training and Development

The Company values leadership at every level and demonstrates such value with respect to its associates by providing opportunities for all associates to develop personal and professional skills and by offering programs to encourage employee retention and advancement.

These programs include leadership training, communication training, individual learning plans, Community Manager and Maintenance Manager training, investments in learning technology, and mentorship programs.

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

To identify, retain and reward top performers, the Company offers a tenure program, which involves a cash gift for every five years of service, as well as excellence awards and a spot bonus recognition program to reward associates for good teamwork, good ideas and good service.

The Company encourages internal promotions and hiring for open positions.

In 2022, the Company promoted 12% of its employees to higher positions in the Company, a slight decrease from 2021 when the Company promoted 16% of its employees primarily due to the Company’s focus on ensuring proper fit for its associates entering into new roles in the new operational structure.

The Company engages in succession planning for its leadership and managerial positions and its executive team identifies and mentors the Company's top talent in order to ensure strong leadership at the Company for the future.

Employee Well-Being and Safety

The Company's compensation and benefits program and safety practices further reinforce its commitment to investing in the well-being of its associates while incentivizing its employees to promote fulfillment of the Company’s mission.

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

Additionally, the Company offers a housing discount for associates that live at Company communities, and additionally offers retirement support, associate discount programs, mental health support, including a mental health program and refresh days for our operations teams, and health benefit credits for participation in wellness programs.

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

The Company values leadership at every level and enables the same by providing opportunities for all associates to develop personal and professional skills through programs that encourage associate retention and advancement.

The Company currently offers training courses to its associates via Workday Learning, and its associates spent 22,373 hours learning in 2023.

The Company also provides its associates with an annual $3,000 tuition reimbursement to further support outside professional growth opportunities.

To identify, retain and reward top performers, the Company engages in meaningful internal succession planning and offers a tenure program, excellence awards, and a spot bonus recognition program to reward associates for good teamwork, good ideas, and good service.

The Company encourages internal promotions and hiring for open positions, and the executive team actively mentors the Company’s top talent to ensure strong leadership at the Company for the future.

37% of the Company’s associates have approached or surpassed the Company’s average tenure of 6.35 years, with 21% reaching beyond 10 years of service.

In 2023, the Company promoted 13% of its employees to higher positions in the Company.

Employee Health, Safety and Wellness

Providing a safe working environment and promoting employee safety is imperative to the Company, and the Company continued to prioritize its associates’ health and safety throughout 2023.

The Company has safety policies in place that align with an Injury & Illness Prevention Program, which seeks to proactively prevent workplace accidents and protect the health and safety of the Company's associates through training and analysis of incident reports.

The Company provides safety training to Community Managers, Maintenance Supervisors, and Maintenance Technicians on a wide-range of topics, including Industrial Safety and Health, Confined Space Awareness, Electrical Safety and Protection, Active Shooter Event, Fire Extinguishing, Safety Data Sheets, Safe Lifting the E-Way, Ladder Safety, and Heat Stress in the Workplace.

Additionally, in 2022, the Company continued to provide associates with additional paid time off for COVID-19 related illness and care through its Special Circumstances Leave policy in order to enable associates with adequate time to recover and to help prevent the spread of COVID-19.

The Company has safety policies in place that align with its health and safety goals and seeks to proactively prevent workplace accidents and protect the health and safety of the Company's associates through training and analysis of incident reports.

Additionally, the Company offers retirement support, associate discount programs, a mental health program, which includes counseling and coaching sessions for mental well-being support at no cost, and refresh days for our operations teams, and health benefit credits for participation in wellness programs.

Compensation and Benefits

The Company offers competitive compensation to secure and retain top talent.

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

Alongside competitive pay, the Company is committed to pay equity and parity, and conducts a pay equity analysis on an annual basis which includes the development and use of a robust, multiple regression analysis model to confirm the Company’s continued achievement of gender pay parity.

The Company’s total rewards program further reinforces its commitment to investing in the well-being of its associates while incentivizing its employees to promote fulfillment of the Company’s mission.

Beyond competitive compensation, the Company offers a suite of benefits, including health insurance, a retirement plan with a $6,000 annual matching potential benefit, life and disability coverage, supplemental paid parental leave, and the robust health and wellness support programs noted above.

Additionally, the Company offers an associate housing discount.

Community and Social Impact

3 unchanged sentences

Employee Engagement

In order to engage and promote communication with our associates and solicit meaningful feedback on our efforts to create a positive work environment, the Company issues engagement surveys to all associates to measure 10 key drivers of employee experience including organizational fit, DEI, freedom of opinion, meaningful work, management support and recognition, among others.

In order to engage and promote communication with our associates and solicit meaningful feedback on our efforts to create a positive work environment, the Company issues engagement surveys to all associates to measure 10 key drivers of employee engagement including goal setting, organizational fit, DEI, well-being, freedom of opinion, meaningful work, management support and recognition, among others.

Engagement surveys are split into three phases:

1 unchanged sentence

85% of Company employees participated in the surveys in 2023.

The Company’s overall score on the surveys was 8.3 out of 10.

The Company’s overall engagement score on the surveys was 8.0 out of 10.

Goal setting, meaningful work, management support, DEI, and social well-being were recognized as the top 5 areas of strength for the organization.

The Company purchases general liability and property insurance coverage, including loss of rent, for each of its communities.

32 unchanged sentences

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

What changed 10-K

Item 1. Business