What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-02-21 compared with 2024-02-23 · 77 added, 78 removed, 109 unchanged (59% of the section changed)

4 unchanged sentences

Essex is the sole general partner of the Operating Partnership and as of December 31, 2024, had an approximately 96.5% general partner interest in the Operating Partnership.

In this report, the terms the "Company," "we," "us," and "our" also refer to Essex Property Trust, Inc., the Operating Partnership and those entities/subsidiaries owned or controlled by Essex and/or the Operating Partnership.

In this report, the terms “Company,” “we,” “us,” and “our” also refer to Essex Property Trust, Inc., the Operating Partnership and those entities/subsidiaries owned or controlled by Essex and/or the Operating Partnership.

Essex has elected to be treated as a REIT for federal income tax purposes commencing with the year ended December 31, 1994.

1 unchanged sentence

In order to maintain compliance with REIT tax rules, the Company utilizes taxable REIT subsidiaries for various revenue generating or investment activities.

A domestic taxable REIT subsidiary is subject to federal income tax as a regular C Corporation.

All taxable REIT subsidiaries are consolidated by the Company for financial reporting purposes.

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

As of December 31, 2023, the Company owned or had ownership interests in 252 operating apartment communities, aggregating 61,997 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, three operating commercial buildings, and a development pipeline comprised of one unconsolidated joint venture project and various predevelopment projects aggregating 264 apartment homes (collectively, the "Portfolio").

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

As of December 31, 2024, the Company owned or had ownership interests in 255 operating apartment communities, aggregating 62,157 apartment homes, excluding the Company’s ownership in preferred equity co-investments, loan investments, two operating commercial buildings, and a development pipeline comprised of various predevelopment projects (collectively, the “Portfolio”).

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

The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, and the Proxy Statement for its Annual Meeting of Stockholders are available, free of charge, on its website as soon as practicable after the Company files the reports with the U.S.

21 unchanged sentences

• Business Planning and Control – Comprehensive business plans are implemented in conjunction with significant investment decisions.

These plans include benchmarks for future financial performance based on collaborative discussions between on-site managers, the operations leadership team, and senior management.

These plans include benchmarks for future financial performance based on collaborative discussions between property operations teams and the senior leadership team.

• Development and Redevelopment – The Company focuses on acquiring and developing apartment communities in supply constrained markets, and redeveloping its existing communities to improve the financial and physical aspects of the Company’s communities.

2 unchanged sentences

The table below summarizes acquisition activity for the year ended December 31, 2024 ($ in millions):

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

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

Total 2023 73 $ 23.1

Dispositions of Real Estate

Property Name Location Apartment Homes Essex Ownership Percentage Contract Price at Pro Rata Share

BEXAEW Portfolio CA and WA 1,480 100% $ 252.0 (1)

Maxwell Sunnyvale CA 75 100% 46.6 (2)

ARLO Mountain View CA 164 100% 101.1

Patina at Midtown CA 269 100% 58.4 (3)

Century Towers CA 376 100% 86.8 (4)

BEX II Portfolio CA 871 100% 168.4 (5)

Beaumont WA 344 100% 136.1

Total acquisitions 3,579 $ 849.4

(1) In March 2024, the Company acquired its joint venture partner's 49.9% interest in the BEXAEW LLC’s (“BEXAEW”) portfolio comprised of four communities for a total purchase price of $505.0 million on a gross basis.

(2) In April 2024, the Company accepted the third-party sponsor’s common equity interest affiliated with its $14.7 million preferred equity investment.

The community was consolidated on the Company’s financial statements at a $46.6 million valuation.

(3) In July 2024, the Company acquired its joint venture partner's 49.9% common equity interest in Patina at Midtown for a total purchase price of $117.0 million on a gross basis.

(4) In September 2024, the Company acquired its joint venture partner's 50% common equity interest in Century Towers for a total purchase price of $173.5 million on a gross basis.

(5) In October 2024, the Company acquired its joint venture partner’s 49.9% interest in the BEX II, LLC (“BEX II”) portfolio, comprised of four communities for a total contract price of $337.5 million on a gross basis.

Dispositions of Real Estate Interests

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

3 unchanged sentences

The table below summarizes disposition activity for the year ended December 31, 2024 ($ 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.

Property Name Location Apartment Homes Sale Price at Pro Rata Share

Hillsdale Garden CA 697 $ 205.7 (1)

Total dispositions

(1) In October 2024, the Company sold its 81.5% interest in a consolidated co-investment, Hillsdale Garden, a 697-unit apartment home community, for a contract price of $252.4 million on a gross basis ($205.7 million at pro rata).

Development Pipeline

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

As of December 31, 2023, the Company's development pipeline was comprised of one unconsolidated joint venture project under development aggregating 264 apartment homes and various predevelopment projects, with total incurred costs of $114.0 million.

The estimated remaining project costs are approximately $12.0 million, of which $6.5 million represents the Company's share of estimated remaining costs, for total estimated project costs of $126.0 million.

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

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

The Company may also acquire land for future development purposes.

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

Essex Estimated Incurred Estimated

Development Pipeline Location Ownership% Apartment Homes Project Cost (1)

Project Cost (1)

Development Projects - Joint Venture

LIVIA at Scripps Ranch (2)

San Diego, CA 51% 264 $ 90 $ 102

Total Development Projects - Joint Venture 264 90 102

Predevelopment Projects - Consolidated

Other Projects Various 100% — 24 24

Total - Consolidated Predevelopment Projects — 24 24

Grand Total - Development and Predevelopment Pipeline 264 $ 114 $ 126

(1) Includes costs related to the entire project, including both the Company's and joint venture partners' costs.

Includes incurred costs and estimated costs to complete these development projects.

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

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

As of December 31, 2024, the Company’s development pipeline was comprised of various consolidated predevelopment projects with total incurred costs of $52.7 million.

Long Term Debt

During 2024, the Company made regularly scheduled principal payments of $3.1 million to its secured mortgage notes payable at an average interest rate of 3.5%.

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.

In March 2024, the Operating Partnership issued $350.0 million of senior unsecured notes due on April 1, 2034 with a coupon rate of 5.500% per annum (the "2034 Notes"), which are payable on April 1 and October 1 of each year, beginning on October 1, 2024.

The 2034 Notes were offered to investors at a price of 99.752% of the principal amount.

The 2034 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 to fund a portion of the repayment of its outstanding 3.875% senior unsecured notes due May 2024 and for other general corporate and working capital purposes.

In August 2024, the Operating Partnership issued an additional $200.0 million of the 2034 Notes at a price of 102.871% of the principal amount, plus accrued interest from and including March 2024, up to, but excluding, the settlement date of August 21, 2024, with an effective yield of 5.110% per annum.

These additional notes have substantially identical terms of the 2034 Notes issued in March 2024.

As of December 31, 2024, Moody’s Investor Service and Standard and Poor’s (“S&P”) credit agencies rated Essex Property Trust, Inc.

1 unchanged sentence

Baa1/Stable and BBB+/Stable, respectively.

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 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.

As of December 31, 2024, the Company had two unsecured lines of credit aggregating $1.28 billion.

The Company’s $1.2 billion credit facility had an interest rate of Adjusted Secured Overnight Financing Rate (“Adjusted SOFR”) plus 0.765% which is based on a tiered rate structure tied to the Company’s credit ratings, adjusted for the facility’s sustainability metric adjustment feature, and a scheduled maturity date of January 2029 with two six-month extensions, exercisable at the Company’s option.

In September 2024, the scheduled maturity date was extended from January 2027 to January 2029.

The Company’s $75.0 million working capital unsecured line of credit had an interest rate of Adjusted SOFR plus 0.765%, which is based on a tiered rate structure tied to the Company’s credit ratings, adjusted for the facility’s sustainability metric adjustment feature.

Prior to its maturity in July 2024 the line of credit facility was amended such that the line’s capacity was increased from $35.0 million to $75.0 million and the scheduled maturity date was extended to July 2026.

Equity Transactions

During the year ended December 31, 2023, the Company did not issue any shares of common stock through its equity distribution agreement entered into in September 2021 (the "2021 ATM Program").

As of December 31, 2023, there were no outstanding forward sale agreements, and $900.0 million of shares remain available to be sold under the 2021 ATM Program.

In September 2022, the Company's Board of Directors approved a new stock repurchase plan to allow the Company to acquire shares of common stock up to an aggregate value of $500.0 million.

In August 2024, 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 “2024 ATM Program”).

In connection with the 2024 ATM Program, the Company may also enter into related forward sale agreements whereby, at the Company’s discretion, it may sell shares of its common stock under the 2024 ATM Program under forward sale agreements.

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

The 2024 ATM Program replaced the prior equity distribution agreement entered into in September 2021 (the “2021 ATM Program”), which was terminated upon the establishment of the 2024 ATM Program.

During the year ended December 31, 2024, the Company did not issue any shares of common stock under the 2024 ATM Program or the 2021 ATM Program.

As of December 31, 2024, there were no outstanding forward sale agreements, and $900.0 million of shares remained available to be sold under the 2024 ATM Program.

In September 2022, the Company’s Board of Directors approved a stock repurchase plan to allow the Company to acquire shares of common stock up to an aggregate value of $500.0 million.

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

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.

During the year ended December 31, 2024, the Company did not repurchase any shares.

As of December 31, 2024, the Company had $302.7 million of purchase authority remaining under the stock repurchase plan.

Co-investments

1 unchanged sentence

For each joint venture the Company holds a non-controlling interest in the venture and, in most cases, may earn customary management fees, development fees, asset property management fees, and a promote interest.

The Company has also made, and may continue in the future to make, preferred equity investments in various multifamily development projects.

The Company has also made, and may continue in the future to make, preferred equity investments in various multifamily stabilized communities or development projects.

The Company earns a preferred rate of return on these investments.

1 unchanged sentence

Company Overview and Values

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

The Company’s culture supports its mission and is guided by its core values:

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

2 unchanged sentences

A total of 1,293 employees worked on-site at our operating communities and 422 worked in our corporate offices.

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

The Company's culture supports its mission and is guided by its core values:

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

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 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.

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.

The Company’s employee statistics for 2024 include the following data as of December 31, 2024:

the Company’s workforce was comprised of 6 self-identified ethnically diverse groups, making up 71% of our population, 52% of the Company’s managerial employees, and included 29% of its senior executives;

there were 204 women in positions of manager or higher, equating to 59% of managerial positions in the Company;

the Company’s workforce self-identified as 41% female and 58% 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

and, 55% of the Company’s corporate associates self-identified as female.

Workplace Culture

The Company believes it has a broad perspective that better serves both the communities it operates in and the associates it employs due to fostering one of the most talented and diverse workforces among its peers in the real estate industry.

The Company also supports employee-led resource groups which are open to all employees and intended to foster a sense of community and inclusion for associates at the Company that are intended to engage, educate, enable, and empower the Company’s employees.

Training and Development

2 unchanged sentences

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.

To identify, retain and reward top performers, the Company engages in meaningful internal succession planning and offers a tenure program, excellence awards, and a 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.

38% of the Company’s associates have approached or surpassed the Company’s average tenure of 6.57 years, with 22% 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 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.

Employee Safety, Health, and Wellness

Safety is a top priority.

The Company deeply cares about the wellbeing of its associates and residents.

The Essex Safety Committee, comprised of key stakeholders across departments, meets quarterly and reviews the overall safety of the company in both our corporate offices and our communities.

To maximize real-time responses, the Company has also established a working safety subcommittee that meets bi-weekly.

The Company has implemented enhanced safety programs, which include a new Workplace Violence Prevention Program enacted companywide in 2024, regular safety inspections, emergency preparedness processes, hazard identification and control protocols, and related associate training.

The Company’s safety policies align with its health and wellness goals and seeks to proactively prevent workplace accidents and protect the health, wellness 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), 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.

Alongside competitive pay, the Company is committed to pay parity, and conducts a pay 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.

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

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

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

Additionally, the Company’s “Essex Cares” program provides direct aid to the Company’s residents, associates, and local communities, including those who have experienced financial hardships.

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 engagement including goal setting, organizational fit, DEI, well-being, 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, well-being, freedom of opinion, meaningful work, management support and recognition, among others.

Engagement surveys are split into three phases:

new hire surveys, Company-wide bi-annual surveys, and exit surveys.

new hire surveys, Company-wide annual surveys, and exit surveys.

90% of Company employees participated in the surveys in 2024.

The Company’s overall engagement score on the surveys was 8 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.

Goal setting, Performance, and Alignment were recognized as the top three areas of strength for the organization.

Community and Social Impact

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

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

Additionally, the Company’s “Essex Cares” program provides direct aid to the Company’s residents, associates, and local communities.

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

3 unchanged sentences

The Company utilizes a wholly owned insurance subsidiary, Pacific Western Insurance LLC (“PWI”), to self-insure certain earthquake and property losses.

As of December 31, 2023, PWI had cash and marketable securities of approximately $125.5 million, and is consolidated in the Company's financial statements.

As of December 31, 2024, PWI had cash and marketable securities of $98.9 million, and is consolidated in the Company’s financial statements.

All of the Company’s communities are located in areas that are subject to earthquake activity.

9 unchanged sentences

The Company faces competition from other REITs, businesses and other entities in the acquisition, development and operation of apartment communities.

Some competitors are larger and have greater financial resources than the Company.

Some competitors are larger and have greater resources than the Company.

This competition may result in increased costs of apartment communities the Company acquires and/or develops.

4 unchanged sentences

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

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

See the discussion under the caption, “Risks Related to Our Real Estate Investments and Operations - The Company’s portfolio may have environmental liabilities.

” in Item 1A, Risk Factors, for information concerning the potential effect of environmental regulations on its operations, which discussion is incorporated by reference into this Item 1.

OTHER MATTERS

7 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