UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to _________

001-13106 (Essex Property Trust, Inc.)

333-44467-01 (Essex Portfolio, L.P.)

(Commission File Number)

ESSEX PROPERTY TRUST, INC.

ESSEX PORTFOLIO, L.P.

(Exact name of Registrant as Specified in its Charter)

Maryland	77-0369576
(Essex Property Trust, Inc.)	(Essex Property Trust, Inc.)
California	77-0369575
(Essex Portfolio, L.P.)	(Essex Portfolio, L.P.)
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

1100 Park Place, Suite 200

San Mateo, California 94403

(Address of Principal Executive Offices, Including Zip Code)

(650) 655-7800

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.0001 par value (Essex Property Trust, Inc.)	ESS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Essex Property Trust, Inc. Yes ☒ No ☐ Essex Portfolio, L.P. Yes ☒ No ☐

i

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Essex Property Trust, Inc. Yes ☒ No ☐ Essex Portfolio, L.P. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. 

Essex Property Trust, Inc.:

Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐
						Emerging growth company	☐

Essex Portfolio, L.P.:

Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒	Smaller reporting company	☐
						Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Essex Property Trust, Inc. ☐ Essex Portfolio, L.P. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Essex Property Trust, Inc. Yes ☐ No ☒ Essex Portfolio, L.P. Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 64,181,614 shares of Common Stock ($.0001 par value) of Essex Property Trust, Inc. were outstanding as of April 26, 2023.

ii

EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the three month period ended March 31, 2023 of Essex Property Trust, Inc., a Maryland corporation, and Essex Portfolio, L.P., a Delaware limited partnership of which Essex Property Trust, Inc. is the sole general partner.

Unless stated otherwise or the context otherwise requires, references to the "Company," "we," "us" or "our" mean collectively Essex Property Trust, Inc. and those entities/subsidiaries owned or controlled by Essex Property Trust, Inc., including Essex Portfolio, L.P., and references to the "Operating Partnership" mean Essex Portfolio, L.P. and those entities/subsidiaries owned or controlled by Essex Portfolio, L.P. Unless stated otherwise or the context otherwise requires, references to "Essex" mean Essex Property Trust, Inc., not including any of its subsidiaries.

Essex operates as a self-administered and self-managed real estate investment trust ("REIT"), and is the sole general partner of the Operating Partnership. As the sole general partner of the Operating Partnership, Essex has exclusive control of the Operating Partnership's day-to-day management.

The Company is structured as an umbrella partnership REIT ("UPREIT") and Essex contributes all net proceeds from its various equity offerings to the Operating Partnership. In return for those contributions, Essex receives a number of Operating Partnership limited partnership units ("OP Units," and the holders of such OP Units, "Unitholders") equal to the number of shares of common stock it has issued in the equity offerings. Contributions of properties to the Company can be structured as tax-deferred transactions through the issuance of OP Units, which is one of the reasons why the Company is structured in the manner outlined above. Based on the terms of the Operating Partnership's partnership agreement, OP Units can be exchanged into Essex common stock on a one-for-one basis. The Company maintains a one-for-one relationship between the OP Units issued to Essex and shares of common stock.

The Company believes that combining the reports on Form 10-Q of Essex and the Operating Partnership into this single report provides the following benefits:

•enhances investors' understanding of Essex and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business;

•eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both Essex and the Operating Partnership; and

•creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

Management operates Essex and the Operating Partnership as one business. The management of Essex consists of the same members as the management of the Operating Partnership.

All of the Company's property ownership, development, and related business operations are conducted through the Operating Partnership and Essex has no material assets, other than its investment in the Operating Partnership. Essex's primary function is acting as the general partner of the Operating Partnership. As general partner with control of the Operating Partnership, Essex consolidates the Operating Partnership for financial reporting purposes. Therefore, the assets and liabilities of Essex and the Operating Partnership are the same on their respective financial statements. Essex also issues equity from time to time and guarantees certain debt of the Operating Partnership, as disclosed in this report. The Operating Partnership holds substantially all of the assets of the Company, including the Company's ownership interests in its co-investments. The Operating Partnership conducts the operations of the business and is structured as a partnership with no publicly traded equity. Except for the net proceeds from equity offerings by the Company, which are contributed to the capital of the Operating Partnership in exchange for OP Units (on a one-for-one share of common stock per OP Unit basis), the Operating Partnership generates all remaining capital required by the Company's business. These sources of capital include the Operating Partnership's working capital, net cash provided by operating activities, borrowings under its revolving credit facilities, the issuance of secured and unsecured debt and equity securities and proceeds received from disposition of certain properties and co-investments.

The Company believes it is important to understand the few differences between Essex and the Operating Partnership in the context of how Essex and the Operating Partnership operate as a consolidated company. Stockholders' equity, partners' capital and noncontrolling interest are the main areas of difference between the condensed consolidated financial statements of Essex and those of the Operating Partnership. The limited partners of the Operating Partnership are accounted for as partners' capital in the Operating Partnership's condensed consolidated financial statements and as noncontrolling interest in Essex’s condensed consolidated financial statements. The noncontrolling interest in the Operating Partnership's condensed consolidated financial statements include the interest of unaffiliated partners in various consolidated partnerships and co-investment partners. The noncontrolling interest in Essex's condensed consolidated financial statements include (i) the same noncontrolling interest as

iii

presented in the Operating Partnership’s condensed consolidated financial statements and (ii) OP Unitholders. The differences between stockholders' equity and partners' capital result from differences in the equity issued at Essex and Operating Partnership levels.

To help investors understand the significant differences between Essex and the Operating Partnership, this report on Form 10-Q provides separate condensed consolidated financial statements for Essex and the Operating Partnership; a single set of consolidated notes to such financial statements that includes separate discussions of stockholders' equity or partners' capital, and earnings per share/unit, as applicable; and a combined Management's Discussion and Analysis of Financial Condition and Results of Operations.

This report on Form 10-Q also includes separate Part I, Item 4. Controls and Procedures sections and separate Exhibits 31 and 32 certifications for each of Essex and the Operating Partnership in order to establish that the requisite certifications have been made and that Essex and the Operating Partnership are compliant with Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the "Exchange Act") and 18 U.S.C. §1350.

In order to highlight the differences between Essex and the Operating Partnership, the separate sections in this report on Form 10-Q for Essex and the Operating Partnership specifically refer to Essex and the Operating Partnership. In the sections that combine disclosure of Essex and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company. Although the Operating Partnership is generally the entity that directly or indirectly enters into contracts and co-investments and holds assets and debt, reference to the Company is appropriate because the Company is one business and the Company operates that business through the Operating Partnership. The separate discussions of Essex and the Operating Partnership in this report should be read in conjunction with each other to understand the results of the Company on a consolidated basis and how management operates the Company.

The information furnished in the accompanying unaudited condensed consolidated balance sheets, statements of income and comprehensive income, equity, capital, and cash flows of the Company and the Operating Partnership reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the aforementioned condensed consolidated financial statements for the interim periods and are normal and recurring in nature, except as otherwise noted.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the notes to such unaudited condensed consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations herein. Additionally, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company's annual report on Form 10-K for the year ended December 31, 2022.

iv

ESSEX PROPERTY TRUST, INC.

ESSEX PORTFOLIO, L.P.

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		Page No.
Item 1.	Condensed Consolidated Financial Statements of Essex Property Trust, Inc. (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	2
	Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2023 and 2022	3
	Condensed Consolidated Statements of Equity for the three months ended March 31, 2023 and 2022	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	6
	Condensed Consolidated Financial Statements of Essex Portfolio, L.P. (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	8
	Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2023 and 2022	9
	Condensed Consolidated Statements of Capital for the three months ended March 31, 2023 and 2022	10
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	12
	Notes to Condensed Consolidated Financial Statements	14
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	38
Item 4.	Controls and Procedures	39
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		43

1

Part I – Financial Information

Item 1. Condensed Consolidated Financial Statements

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except parenthetical and share amounts)

ASSETS	March 31, 2023		December 31, 2022
Real estate:
Rental properties:
Land and land improvements	$	3,031,415	$	3,043,321
Buildings and improvements	12,910,492		12,922,906
	15,941,907		15,966,227
Less: accumulated depreciation	(5,254,874)		(5,152,133)
	10,687,033		10,814,094
Real estate under development	21,909		24,857
Co-investments	1,131,183		1,127,491
	11,840,125		11,966,442
Cash and cash equivalents-unrestricted	67,712		33,295
Cash and cash equivalents-restricted	9,446		9,386
Marketable securities, net of allowance for credit losses of zero as of both March 31, 2023 and December 31, 2022	107,002		112,743
Notes and other receivables, net of allowance for credit losses of $0.4 million and $0.3 million as of March 31, 2023 and December 31, 2022, respectively (includes related party receivables of $6.9 million and $7.0 million as of March 31, 2023 and December 31, 2022, respectively)	120,586		103,045
Operating lease right-of-use assets	66,373		67,239
Prepaid expenses and other assets	68,530		80,755
Total assets	$	12,279,774	$	12,372,905
LIABILITIES AND EQUITY
Unsecured debt, net	$	5,313,701	$	5,312,168
Mortgage notes payable, net	593,147		593,943
Lines of credit	457		52,073
Accounts payable and accrued liabilities	208,072		165,461
Construction payable	19,810		23,159
Dividends payable	155,720		149,166
Distributions in excess of investments in co-investments	50,309		42,532
Operating lease liabilities	67,772		68,696
Other liabilities	43,721		43,441
Total liabilities	6,452,709		6,450,639
Commitments and contingencies
Redeemable noncontrolling interest	30,208		27,150
Equity:
Common stock; $0.0001 par value, 670,000,000 shares authorized; 64,181,614 and 64,604,603 shares issued and outstanding, respectively	6		6
Additional paid-in capital	6,657,183		6,750,076
Distributions in excess of accumulated earnings	(1,074,930)		(1,080,176)
Accumulated other comprehensive income, net	36,522		46,466
Total stockholders' equity	5,618,781		5,716,372
Noncontrolling interest	178,076		178,744
Total equity	5,796,857		5,895,116
Total liabilities and equity	$	12,279,774	$	12,372,905

See accompanying notes to the unaudited condensed consolidated financial statements.

2

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended March 31,
	2023		2022
Revenues:
Rental and other property	$	409,656	$	379,216
Management and other fees from affiliates	2,765		2,689
	412,421		381,905
Expenses:
Property operating, excluding real estate taxes	73,882		68,858
Real estate taxes	46,530		47,242
Corporate-level property management expenses	11,432		10,172
Depreciation and amortization	136,347		133,533
General and administrative	15,311		12,242
Expensed acquisition and investment related costs	339		8
Casualty loss	433		—
	284,274		272,055
Gain on sale of real estate and land	59,238		—
Earnings from operations	187,385		109,850
Interest expense	(51,045)		(50,377)
Total return swap income	1,033		2,544
Interest and other income (loss)	12,450		(7,567)
Equity income from co-investments	10,871		21,171
Deferred tax benefit on unconsolidated co-investments	900		2,754
Net income	161,594		78,375
Net income attributable to noncontrolling interest	(8,062)		(5,121)
Net income available to common stockholders	$	153,532	$	73,254
Comprehensive income	$	151,300	$	98,856
Comprehensive income attributable to noncontrolling interest	(7,712)		(5,813)
Comprehensive income attributable to controlling interest	$	143,588	$	93,043
Per share data:
Basic:
Net income available to common stockholders	$	2.38	$	1.12
Weighted average number of shares outstanding during the period	64,458,535		65,275,775
Diluted:
Net income available to common stockholders	$	2.38	$	1.12
Weighted average number of shares outstanding during the period	64,459,689		65,339,378

See accompanying notes to the unaudited condensed consolidated financial statements.

3

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity for the three months ended March 31, 2023 and 2022

(Unaudited)

(In thousands)

	Common stock			Additional paid-in capital		Distributions in excess of accumulated earnings		Accumulated other comprehensive income, net		Noncontrolling interest		Total
Three Months Ended March 31, 2023	Shares	Amount
Balances at December 31, 2022	64,605	$	6	$	6,750,076	$	(1,080,176)	$	46,466	$	178,744	$	5,895,116
Net income	—	—		—		153,532		—		8,062		161,594
Change in fair value of derivatives and amortization of swap settlements	—	—		—		—		(9,944)		(350)		(10,294)
Issuance of common stock under:
Stock option and restricted stock plans, net	2	—		—		—		—		—		—
Sale of common stock, net	—	—		(72)		—		—		—		(72)
Equity based compensation costs	—	—		5,472		—		—		192		5,664
Retirement of common stock, net	(437)	—		(95,657)		—		—		—		(95,657)
Changes in the redemption value of redeemable noncontrolling interest	—	—		(2,927)		—		—		(131)		(3,058)
Distributions to noncontrolling interest	—	—		—		—		—		(7,977)		(7,977)
Redemptions of noncontrolling interest	12	—		291		—		—		(464)		(173)
Common stock dividends ($2.31 per share)	—	—		—		(148,286)		—		—		(148,286)
Balances at March 31, 2023	64,182	$	6	$	6,657,183	$	(1,074,930)	$	36,522	$	178,076	$	5,796,857

4

	Common stock			Additional paid-in capital		Distributions in excess of accumulated earnings		Accumulated other comprehensive income (loss), net		Noncontrolling Interest		Total
Three Months Ended March 31, 2022	Shares	Amount
Balances at December 31, 2021	65,248	$	7	$	6,915,981	$	(916,833)	$	(5,552)	$	182,905	$	6,176,508
Net income	—	—		—		73,254		—		5,121		78,375
Change in fair value of derivatives and amortization of swap settlements	—	—		—		—		19,404		679		20,083
Change in fair value of marketable debt securities, net	—	—		—		—		385		13		398
Issuance of common stock under:
Stock option and restricted stock plans, net	84	—		16,867		—		—		—		16,867
Sale of common stock, net	—	—		(141)		—		—		—		(141)
Equity based compensation costs	—	—		2,380		—		—		83		2,463
Changes in the redemption value of redeemable noncontrolling interest	—	—		(5,014)		—		—		(58)		(5,072)
Contributions from noncontrolling interest	—	—		—		—		—		125		125
Distributions to noncontrolling interest	—	—		—		—		—		(7,619)		(7,619)
Redemptions of noncontrolling interest	—	—		(1)		—		—		(25)		(26)
Common stock dividends ($2.20 per share)	—	—		—		(143,754)		—		—		(143,754)
Balances at March 31, 2022	65,332	$	7	$	6,930,072	$	(987,333)	$	14,237	$	181,224	$	6,138,207

See accompanying notes to the unaudited condensed consolidated financial statements.

5

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands, except parenthetical amounts) 

	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net income	$	161,594	$	78,375
Adjustments to reconcile net income to net cash provided by operating activities:
Straight-lined rents	(381)		2,074
Depreciation and amortization	136,347		133,533
Amortization of discount and debt financing costs, net	1,282		1,665
Gain on sale of marketable securities	(912)		(12,171)
Provision for credit losses	18		62
Unrealized (gains) losses on equity securities recognized through income	(368)		24,585
Earnings from co-investments	(10,871)		(21,171)
Operating distributions from co-investments	6,784		52,281
Accrued interest from notes and other receivables	(2,165)		(3,447)
Casualty loss	433		—
Gain on the sale of real estate and land	(59,238)		—
Equity-based compensation	1,971		2,296
Changes in operating assets and liabilities:
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets	2,457		16,026
Accounts payable, accrued liabilities, and operating lease liabilities	39,687		40,300
Other liabilities	281		735
Net cash provided by operating activities	276,919		315,143
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired	—		(61)
Redevelopment	(21,265)		(18,004)
Development acquisitions of and additions to real estate under development	(3,791)		(6,882)
Capital expenditures on rental properties	(21,084)		(24,917)
Investments in notes receivable	(14,883)		(134,697)
Collections of notes and other receivables	—		270,338
Proceeds from insurance for property losses	152		88
Proceeds from dispositions of real estate	99,388		—
Contributions to co-investments	(7,967)		(79,284)
Changes in refundable deposits	9,000		(6,318)
Purchases of marketable securities	(11,073)		(10,826)
Sales and maturities of marketable securities	26,681		27,911
Non-operating distributions from co-investments	—		88,370
Net cash provided by investing activities	55,158		105,718
Cash flows from financing activities:
Payments on unsecured debt and mortgage notes	(206)		(904)
Proceeds from lines of credit	327,524		391,472
Repayments of lines of credit	(379,141)		(634,729)

6

	Three Months Ended March 31,
	2023		2022
Retirement of common stock	(95,657)		—
Additions to deferred charges	(166)		—
Net (costs) proceeds from issuance of common stock	(72)		(141)
Net proceeds from stock options exercised	—		19,083
Payments related to tax withholding for share-based compensation	—		(2,216)
Contributions from noncontrolling interest	—		125
Distributions to noncontrolling interest	(7,580)		(7,218)
Redemption of noncontrolling interest	(173)		(26)
Common stock dividends paid	(142,129)		(136,392)
Net cash used in financing activities	(297,600)		(370,946)
Net increase in unrestricted and restricted cash and cash equivalents	34,477		49,915
Unrestricted and restricted cash and cash equivalents at beginning of period	42,681		58,638
Unrestricted and restricted cash and cash equivalents at end of period	$	77,158	$	108,553
Supplemental disclosure of cash flow information:
Cash paid for interest (net of $0.3 million and $0.9 million capitalized in 2023 and 2022, respectively)	$	52,686	$	51,168
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,762	$	1,738
Supplemental disclosure of noncash investing and financing activities:
Transfers between real estate under development and rental properties, net	$	121	$	4,346
Transfers from real estate under development to co-investments	$	467	$	858
Reclassifications to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest	$	3,058	$	5,073

See accompanying notes to the unaudited condensed consolidated financial statements.

7

ESSEX PORTFOLIO, L.P.  AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except parenthetical and unit amounts)

ASSETS	March 31, 2023		December 31, 2022
Real estate:
Rental properties:
Land and land improvements	$	3,031,415	$	3,043,321
Buildings and improvements	12,910,492		12,922,906
	15,941,907		15,966,227
Less: accumulated depreciation	(5,254,874)		(5,152,133)
	10,687,033		10,814,094
Real estate under development	21,909		24,857
Co-investments	1,131,183		1,127,491
	11,840,125		11,966,442
Cash and cash equivalents-unrestricted	67,712		33,295
Cash and cash equivalents-restricted	9,446		9,386
Marketable securities, net of allowance for credit losses of zero as of both March 31, 2023 and December 31, 2022	107,002		112,743
Notes and other receivables, net of allowance for credit losses of $0.4 million and $0.3 million as of March 31, 2023 and December 31, 2022, respectively (includes related party receivables of $6.9 million and $7.0 million as of March 31, 2023 and December 31, 2022, respectively)	120,586		103,045
Operating lease right-of-use assets	66,373		67,239
Prepaid expenses and other assets	68,530		80,755
Total assets	$	12,279,774	$	12,372,905
LIABILITIES AND CAPITAL
Unsecured debt, net	$	5,313,701	$	5,312,168
Mortgage notes payable, net	593,147		593,943
Lines of credit	457		52,073
Accounts payable and accrued liabilities	208,072		165,461
Construction payable	19,810		23,159
Distributions payable	155,720		149,166
Distributions in excess of investments in co-investments	50,309		42,532
Operating lease liabilities	67,772		68,696
Other liabilities	43,721		43,441
Total liabilities	6,452,709		6,450,639
Commitments and contingencies
Redeemable noncontrolling interest	30,208		27,150
Capital:
General Partner:
Common equity (64,181,614 and 64,604,603 units issued and outstanding, respectively)	5,582,259		5,669,906
	5,582,259		5,669,906
Limited Partners:
Common equity (2,260,842 and 2,272,496 units issued and outstanding, respectively)	51,385		51,454
Accumulated other comprehensive income	41,716		52,010
Total partners' capital	5,675,360		5,773,370
Noncontrolling interest	121,497		121,746
Total capital	5,796,857		5,895,116
Total liabilities and capital	$	12,279,774	$	12,372,905

See accompanying notes to the unaudited condensed consolidated financial statements.

8

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except unit and per unit amounts)

	Three Months Ended March 31,
	2023		2022
Revenues:
Rental and other property	$	409,656	$	379,216
Management and other fees from affiliates	2,765		2,689
	412,421		381,905
Expenses:
Property operating, excluding real estate taxes	73,882		68,858
Real estate taxes	46,530		47,242
Corporate-level property management expenses	11,432		10,172
Depreciation and amortization	136,347		133,533
General and administrative	15,311		12,242
Expensed acquisition and investment related costs	339		8
Casualty loss	433		—
	284,274		272,055
Gain on sale of real estate and land	59,238		—
Earnings from operations	187,385		109,850
Interest expense	(51,045)		(50,377)
Total return swap income	1,033		2,544
Interest and other income (loss)	12,450		(7,567)
Equity income from co-investments	10,871		21,171
Deferred tax benefit on unconsolidated co-investments	900		2,754
Net income	161,594		78,375
Net income attributable to noncontrolling interest	(2,658)		(2,558)
Net income available to common unitholders	$	158,936	$	75,817
Comprehensive income	$	151,300	$	98,856
Comprehensive income attributable to noncontrolling interest	(2,658)		(2,558)
Comprehensive income attributable to controlling interest	$	148,642	$	96,298
Per unit data:
Basic:
Net income available to common unitholders	$	2.38	$	1.12
Weighted average number of common units outstanding during the period	66,724,428		67,558,239
Diluted:
Net income available to common unitholders	$	2.38	$	1.12
Weighted average number of common units outstanding during the period	66,725,582		67,621,842

See accompanying notes to the unaudited condensed consolidated financial statements.

9

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Capital for the three months ended March 31, 2023 and 2022

(Unaudited)

(In thousands)

	General Partner			Limited Partners			Accumulated other comprehensive income, net		Noncontrolling interest		Total
	Common Equity			Common Equity
Three Months Ended March 31, 2023	Units	Amount		Units	Amount
Balances at December 31, 2022	64,605	$	5,669,906	2,272	$	51,454	$	52,010	$	121,746	$	5,895,116
Net income	—	153,532		—	5,404		—		2,658		161,594
Change in fair value of derivatives and amortization of swap settlements	—	—		—	—		(10,294)		—		(10,294)
Issuance of common units under:
General partner's stock based compensation, net	2	—		—	—		—		—		—
Sale of common stock by general partner, net	—	(72)		—	—		—		—		(72)
Equity based compensation costs	—	5,472		—	192		—		—		5,664
Retirement of common units, net	(437)	(95,657)		—	—		—		—		(95,657)
Changes in the redemption value of redeemable noncontrolling interest	—	(2,927)		—	(106)		—		(25)		(3,058)
Distributions to noncontrolling interest	—	—		—	—		—		(2,755)		(2,755)
Redemptions	12	291		(11)	(337)		—		(127)		(173)
Distributions declared ($2.31 per unit)	—	(148,286)		—	(5,222)		—		—		(153,508)
Balances at March 31, 2023	64,182	$	5,582,259	2,261	$	51,385	$	41,716	$	121,497	$	5,796,857

10

	General Partner			Limited Partners			Accumulated other comprehensive income (loss), net		Noncontrolling interest		Total
	Common Equity			Common Equity
Three Months Ended March 31, 2022	Units	Amount		Units	Amount
Balances at December 31, 2021	65,248	$	5,999,155	2,282	$	56,502	$	(1,804)	$	122,655	$	6,176,508
Net income	—	73,254		—	2,563		—		2,558		78,375
Change in fair value of derivatives and amortization of swap settlements	—	—		—	—		20,083		—		20,083
Change in fair value of marketable debt securities, net	—	—		—	—		398		—		398
Issuance of common units under:
General partner's stock based compensation, net	84	16,867		—	—		—		—		16,867
Sale of common stock by general partner, net	—	(141)		—	—		—		—		(141)
Equity based compensation costs	—	2,380		—	83		—		—		2,463
Changes in redemption value of redeemable noncontrolling interest	—	(5,014)		—	(14)		—		(44)		(5,072)
Contributions from noncontrolling interest	—	—		—	—		—		125		125
Distributions to noncontrolling interest	—	—		—	—		—		(2,597)		(