ESSEX PROPERTY TRUST, INC. [ESS] Filings

10-Q 1 ess-20240630.htm 10-Q ess-20240630

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 June 30, 2024

☐ 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

☒

☐

Essex Portfolio, L.P.

Yes

☒

☐

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

☒

☐

Essex Portfolio, L.P.

Yes

☒

☐

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

☐

☒

Essex Portfolio, L.P.

Yes

☐

☒

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: 64,217,898 shares of Common Stock ($.0001 par value) of Essex Property Trust, Inc. were outstanding as of July 29, 2024.

EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the three and six month periods ended June 30, 2024 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.

iii

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 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, 2023.

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 June 30 , 2024 and December 31, 2023	2

	Condensed Consolidated Statements of Income and Comprehensive Income for the three a nd six months ended June 30 , 2024 and 2023	3

	Condensed Consolidated Statements of Equity for the three and six months ended June 30 , 2024 and 2023	4

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30 , 2024 and 2023	7

	Condensed Consolidated Financial Statements of Essex Portfolio, L.P. (Unaudited)

	Condensed Consolidated Balance Sheets as of June 30 , 2024 and December 31, 2023	9

	Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30 , 2024 and 2023	10

	Condensed Consolidated Statements of Capital for the three and six months ended June 30 , 2024 and 2023	11

	Condensed Consolidated Statements of Cash Flows for the six months ended Ju ne 30 , 2024 and 2023	14

	Notes to Condensed Consolidated Financial Statements	16

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	43

Item 4.	Controls and Procedures	44

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	45

Item 1A.	Risk Factors	45

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 3.	Defaults Upon Senior Securities	46

Item 4.	Mine Safety Disclosures	46

Item 5.	Other Information	46

Item 6.	Exhibits	47

Signatures		48

Table of Contents

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	June 30, 2024		December 31, 2023
Real estate:
Rental properties:
Land and land improvements	$	3,167,721	$	3,036,912
Buildings and improvements	13,701,217		13,098,311
	16,868,938		16,135,223
Less: accumulated depreciation	(5,946,440)		(5,664,931)
	10,922,498		10,470,292
Real estate under development	24,515		23,724
Co-investments	1,041,328		1,061,733

	11,988,341		11,555,749
Cash and cash equivalents-unrestricted	55,223		391,749
Cash and cash equivalents-restricted	8,928		8,585
Marketable securities, net of allowance for credit losses of zero as of both June 30, 2024 and December 31, 2023	84,291		87,795
Notes and other receivables, net of allowance for credit losses of $0.7 million as of both June 30, 2024 and December 31, 2023, respectively (includes related party receivables of $59.2 million and $6.1 million as of June 30, 2024 and December 31, 2023, respectively)	233,776		174,621
Operating lease right-of-use assets	53,373		63,757
Prepaid expenses and other assets	85,528		79,171
Total assets	$	12,509,460	$	12,361,427
LIABILITIES AND EQUITY
Unsecured debt, net	$	5,267,902	$	5,318,531
Mortgage notes payable, net	885,563		887,204
Lines of credit	129,391		—
Accounts payable and accrued liabilities	183,764		176,401
Construction payable	17,060		20,659
Dividends payable	165,232		155,695
Distributions in excess of investments in co-investments	68,295		65,488

Operating lease liabilities	54,513		65,091
Other liabilities	49,351		46,175
Total liabilities	6,821,071		6,735,244
Commitments and contingencies
Redeemable noncontrolling interest	33,889		32,205
Equity:
Common stock; $0.0001 par value, 670,000,000 shares authorized; 64,210,493 and 64,203,497 shares issued and outstanding, respectively	6		6
Additional paid-in capital	6,659,313		6,656,720
Distributions in excess of accumulated earnings	(1,216,557)		(1,267,536)
Accumulated other comprehensive income, net	38,877		33,556
Total stockholders' equity	5,481,639		5,422,746
Noncontrolling interest	172,861		171,232
Total equity	5,654,500		5,593,978
Total liabilities and equity	$	12,509,460	$	12,361,427

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues:
Rental and other property	$	439,782	$	413,265	$	863,997	$	822,921
Management and other fees from affiliates	2,573		2,778		5,286		5,543
	442,355		416,043		869,283		828,464
Expenses:
Property operating, excluding real estate taxes	78,721		73,843		157,667		147,725
Real estate taxes	47,312		45,381		94,232		91,911
Corporate-level property management expenses	12,123		11,451		23,854		22,883
Depreciation and amortization	145,613		136,718		285,346		273,065
General and administrative	21,136		13,813		38,307		29,124
Expensed acquisition and investment related costs	—		5		68		344
Casualty loss	—		—		—		433
	304,905		281,211		599,474		565,485
Gain on sale of real estate and land	—		—		—		59,238
Earnings from operations	137,450		134,832		269,809		322,217
Interest expense	(59,120)		(52,600)		(115,053)		(103,645)
Total return swap income	629		821		1,425		1,854
Interest and other income	9,568		12,199		66,843		24,649
Equity income from co-investments	9,652		12,237		22,018		23,108
Tax benefit (expense) on unconsolidated co-investments	807		(1,733)		758		(833)

Gain on remeasurement of co-investment	—		—		138,326		—
Net income	98,986		105,756		384,126		267,350
Net income attributable to noncontrolling interest	(6,072)		(6,136)		(18,481)		(14,198)
Net income available to common stockholders	$	92,914	$	99,620	$	365,645	$	253,152
Comprehensive income	$	96,499	$	121,142	$	389,634	$	272,442
Comprehensive income attributable to noncontrolling interest	(5,987)		(6,659)		(18,668)		(14,371)
Comprehensive income attributable to controlling interest	$	90,512	$	114,483	$	370,966	$	258,071
Per share data:
Basic:
Net income available to common stockholders	$	1.45	$	1.55	$	5.69	$	3.94
Weighted average number of shares outstanding during the period	64,209,878		64,182,555		64,207,482		64,319,783
Diluted:
Net income available to common stockholders	$	1.45	$	1.55	$	5.69	$	3.94
Weighted average number of shares outstanding during the period	64,227,651		64,183,675		64,218,911		64,320,898

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Equity for the three and six months ended June 30, 2024 and 2023

(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 June 30, 2024		Shares			Amount
Balances at March 31, 2024		64,209	$	6		$	6,658,882	$	(1,152,136)	$	41,279	$	175,722	$	5,723,753
Net income		—	—			—		92,914		—		6,072		98,986

Change in fair value of derivatives and amortization of swap settlements		—	—			—		—		(2,402)		(85)		(2,487)
Issuance of common stock under:
Stock option and restricted stock plans, net		1	—			—		—		—		—		—
Sale of common stock, net		—	—			(105)		—		—		—		(105)
Equity based compensation costs		—	—			1,979		—		—		69		2,048


Changes in the redemption value of redeemable noncontrolling interest		—	—			(1,443)		—		—		(254)		(1,697)

Distributions to noncontrolling interest		—	—			—		—		—		(8,663)		(8,663)

Common stock dividends ($2.45 per share)		—	—			—		(157,335)		—		—		(157,335)
Balances at June 30, 2024		64,210	$	6		$	6,659,313	$	(1,216,557)	$	38,877	$	172,861	$	5,654,500

Table of Contents


	Common stock		Additional paid-in capital			Distributions in excess of accumulated earnings		Accumulated other comprehensive income, net		Noncontrolling Interest		Total
Six Months Ended June 30, 2024		Shares			Amount
Balances at December 31, 2023		64,203	$	6		$	6,656,720	$	(1,267,536)	$	33,556	$	171,232	$	5,593,978
Net income		—	—			—		365,645		—		18,481		384,126


Change in fair value of derivatives and amortization of swap settlements		—	—			—		—		5,321		187		5,508

Issuance of common stock under:
Stock option and restricted stock plans, net		7	—			962		—		—		—		962
Sale of common stock, net		—	—			(113)		—		—		—		(113)
Equity based compensation costs		—	—			3,616		—		—		127		3,743


Changes in the redemption value of redeemable noncontrolling interest		—	—			(1,623)		—		—		(61)		(1,684)

Distributions to noncontrolling interest		—	—			—		—		—		(17,075)		(17,075)
Redemptions of noncontrolling interest		—	—			(249)		—		—		(30)		(279)
Common stock dividends ($4.90 per share)		—	—			—		(314,666)		—		—		(314,666)
Balances at June 30, 2024		64,210	$	6		$	6,659,313	$	(1,216,557)	$	38,877	$	172,861	$	5,654,500


	Common stock		Additional paid-in capital			Distributions in excess of accumulated earnings		Accumulated other comprehensive income, net		Noncontrolling Interest		Total
Three Months Ended June 30, 2023		Shares			Amount
Balances at March 31, 2023		64,182	$	6		$	6,657,183	$	(1,074,930)	$	36,522	$	178,076	$	5,796,857
Net income		—	—			—		99,620		—		6,136		105,756
Change in fair value of derivatives and amortization of swap settlements		—	—			—		—		14,863		523		15,386
Issuance of common stock under:
Stock option and restricted stock plans, net		1	—			—		—		—		—		—
Sale of common stock, net		—	—			(53)		—		—		—		(53)
Equity based compensation costs		—	—			1,915		—		—		67		1,982

Changes in the redemption value of redeemable noncontrolling interest		—	—			(1,160)		—		—		13		(1,147)
Distributions to noncontrolling interest		—	—			—		—		—		(8,056)		(8,056)
Redemptions of noncontrolling interest		—	—			(404)		—		—		(32)		(436)
Common stock dividends ($2.31 per share)		—	—			—		(148,284)		—		—		(148,284)
Balances at June 30, 2023		64,183	$	6		$	6,657,481	$	(1,123,594)	$	51,385	$	176,727	$	5,762,005

Table of Contents


	Common stock		Additional paid-in capital			Distributions in excess of accumulated earnings		Accumulated other comprehensive income, net		Noncontrolling Interest		Total
Six Months Ended June 30, 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		—	—			—		253,152		—		14,198		267,350
Change in fair value of derivatives and amortization of swap settlements		—	—			—		—		4,919		173		5,092
Issuance of common stock under:
Stock option and restricted stock plans, net		3	—			—		—		—		—		—
Sale of common stock, net		—	—			(125)		—		—		—		(125)
Equity based compensation costs		—	—			7,387		—		—		259		7,646
Retirement of common stock, net		(437)	—			(95,657)		—		—		—		(95,657)
Changes in the redemption value of redeemable noncontrolling interest		—	—			(4,087)		—		—		(118)		(4,205)
Distributions to noncontrolling interest		—	—			—		—		—		(16,033)		(16,033)
Redemptions of noncontrolling interest		12	—			(113)		—		—		(496)		(609)
Common stock dividends ($4.62 per share)		—	—			—		(296,570)		—		—		(296,570)
Balances at June 30, 2023		64,183	$	6		$	6,657,481	$	(1,123,594)	$	51,385	$	176,727	$	5,762,005

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands, except parenthetical amounts)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net income	$	384,126	$	267,350
Adjustments to reconcile net income to net cash provided by operating activities:
Straight-lined rents	419		170
Depreciation and amortization	285,346		273,065

Amortization of discount and debt financing costs, net	4,190		3,170
Realized and unrealized gains on marketable securities, net	(4,948)		(8,871)

Provision for credit losses	66		34



Earnings from co-investments	(22,018)		(23,108)
Operating distributions from co-investments	21,493		31,168
Accrued interest from notes and other receivables	(7,810)		(4,743)
Casualty loss	—		433
Gain on the sale of real estate and land	—		(59,238)



Equity-based compensation	3,501		3,795

Gain on remeasurement of co-investment	(138,326)		—
Changes in operating assets and liabilities:
Prepaid expenses, receivables, operating lease right-of-use assets, and other assets	4,462		457
Accounts payable, accrued liabilities, and operating lease liabilities	5,365		3,646
Other liabilities	(2,084)		999
Net cash provided by operating activities	533,782		488,327
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures, net of cash acquired	(489,486)		(23,182)
Redevelopment	(24,143)		(41,675)
Development acquisitions of and additions to real estate under development	(2,479)		(5,248)
Capital expenditures on rental properties	(60,982)		(56,025)

Investments in notes receivable	(56,553)		(44,984)

Proceeds from insurance for property losses	1,173		2,851
Proceeds from dispositions of real estate	—		99,388
Contributions to co-investments	(3,804)		(15,571)

Changes in refundable deposits	(1,000)		10,200
Purchases of marketable securities	(335)		(11,302)
Sales and maturities of marketable securities	8,787		39,372
Non-operating distributions from co-investments	6,500		11,655
Net cash used in investing activities	(622,322)		(34,521)
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes	349,132		300,000
Payments on unsecured debt and mortgage notes	(401,533)		(300,937)
Proceeds from lines of credit	546,556		728,709
Repayments of lines of credit	(417,164)		(746,354)
Changes in refundable deposits	—		(6,012)

Table of Contents


	Six Months Ended June 30,
	2024		2023
Retirement of common stock	—		(95,657)
Additions to deferred charges	(3,000)		(358)

Net costs from issuance of common stock	(113)		(125)

Net proceeds from stock options exercised	962		—


Distributions to noncontrolling interest	(16,544)		(15,622)
Redemption of noncontrolling interest	(279)		(609)

Common stock dividends paid	(305,660)		(290,408)
Net cash used in financing activities	(247,643)		(427,373)

Net (decrease) increase in unrestricted and restricted cash and cash equivalents	(336,183)		26,433

Unrestricted and restricted cash and cash equivalents at beginning of period	400,334		42,681
Unrestricted and restricted cash and cash equivalents at end of period	$	64,151	$	69,114

Supplemental disclosure of cash flow information:
Cash paid for interest (net of $0.1 million and $0.5 million capitalized in 2024 and 2023, respectively)	$	108,246	$	101,784
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,530	$	3,528
Supplemental disclosure of noncash investing and financing activities:


Transfers between real estate under development and rental properties, net	$	405	$	365
Transfers from real estate under development to co-investments	$	660	$	961







Reclassifications to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest	$	1,684	$	4,205

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except parenthetical and unit amounts)


ASSETS	June 30, 2024		December 31, 2023
Real estate:
Rental properties:
Land and land improvements	$	3,167,721	$	3,036,912
Buildings and improvements	13,701,217		13,098,311
	16,868,938		16,135,223
Less: accumulated depreciation	(5,946,440)		(5,664,931)
	10,922,498		10,470,292
Real estate under development	24,515		23,724
Co-investments	1,041,328		1,061,733

	11,988,341		11,555,749
Cash and cash equivalents-unrestricted	55,223		391,749
Cash and cash equivalents-restricted	8,928		8,585
Marketable securities, net of allowance for credit losses of zero as of both June 30, 2024 and December 31, 2023	84,291		87,795
Notes and other receivables, net of allowance for credit losses of $0.7 million as of both June 30, 2024 and December 31, 2023, respectively (includes related party receivables of $59.2 million and $6.1 million as of June 30, 2024 and December 31, 2023, respectively)	233,776		174,621
Operating lease right-of-use assets	53,373		63,757
Prepaid expenses and other assets	85,528		79,171
Total assets	$	12,509,460	$	12,361,427
LIABILITIES AND CAPITAL
Unsecured debt, net	$	5,267,902	$	5,318,531
Mortgage notes payable, net	885,563		887,204
Lines of credit	129,391		—
Accounts payable and accrued liabilities	183,764		176,401
Construction payable	17,060		20,659
Distributions payable	165,232		155,695
Distributions in excess of investments in co-investments	68,295		65,488
Operating lease liabilities	54,513		65,091

Other liabilities	49,351		46,175
Total liabilities	6,821,071		6,735,244
Commitments and contingencies
Redeemable noncontrolling interest	33,889		32,205

Capital:
General Partner:
Common equity (64,210,493 and 64,203,497 units issued and outstanding, respectively)	5,442,762		5,389,190
	5,442,762		5,389,190
Limited Partners:
Common equity (2,258,812 and 2,258,812 units issued and outstanding, respectively)	46,819		44,991
Accumulated other comprehensive income, net	44,154		38,646
Total partners' capital	5,533,735		5,472,827
Noncontrolling interest	120,765		121,151
Total capital	5,654,500		5,593,978
Total liabilities and capital	$	12,509,460	$	12,361,427

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

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 June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues:
Rental and other property	$	439,782	$	413,265	$	863,997	$	822,921
Management and other fees from affiliates	2,573		2,778		5,286		5,543
	442,355		416,043		869,283		828,464
Expenses:
Property operating, excluding real estate taxes	78,721		73,843		157,667		147,725
Real estate taxes	47,312		45,381		94,232		91,911
Corporate-level property management expenses	12,123		11,451		23,854		22,883
Depreciation and amortization	145,613		136,718		285,346		273,065
General and administrative	21,136		13,813		38,307		29,124

Expensed acquisition and investment related costs	—		5		68		344
Casualty loss	—		—		—		433
	304,905		281,211		599,474		565,485
Gain on sale of real estate and land	—		—		—		59,238
Earnings from operations	137,450		134,832		269,809		322,217
Interest expense	(59,120)		(52,600)		(115,053)		(103,645)
Total return swap income	629		821		1,425		1,854
Interest and other income	9,568		12,199		66,843		24,649
Equity income from co-investments	9,652		12,237		22,018		23,108
Tax benefit (expense) on unconsolidated co-investments	807		(1,733)		758		(833)

Gain on remeasurement of co-investment	—		—		138,326		—
Net income	98,986		105,756		384,126		267,350
Net income attributable to noncontrolling interest	(2,802)		(2,630)		(5,612)		(5,288)
Net income available to common unitholders	$	96,184	$	103,126	$	378,514	$	262,062
Comprehensive income	$	96,499	$	121,142	$	389,634	$	272,442
Comprehensive income attributable to noncontrolling interest	(2,802)		(2,630)		(5,612)		(5,288)
Comprehensive income attributable to controlling interest	$	93,697	$	118,512	$	384,022	$	267,154
Per unit data:
Basic:
Net income available to common unitholders	$	1.45	$	1.55	$	5.69	$	3.94
Weighted average number of common units outstanding during the period	66,468,691		66,442,994		66,466,295		66,582,934
Diluted:
Net income available to common unitholders	$	1.45	$	1.55	$	5.69	$	3.94
Weighted average number of common units outstanding during the period	66,486,464		66,444,114		66,477,724		66,584,049

See accompanying notes to the unaudited condensed consolidated financial statements.

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Capital for the three and six months ended June 30, 2024 and 2023

(Unaudited)

(In thousands)


	General Partner				Limited Partners				Accumulated other comprehensive income, net		Noncontrolling interest		Total
	Common Equity				Common Equity
Three Months Ended June 30, 2024	Units	Amount		Units		Amount
Balances at March 31, 2024	64,209	$	5,506,752		2,259		$	49,276	$	46,641	$	121,084	$	5,723,753
Net income	—	92,914			—		3,270		—		2,802		98,986

Change in fair value of derivatives and amortization of swap settlements	—	—			—		—		(2,487)		—		(2,487)
Issuance of common units under:
General partner's stock based compensation, net	1	—			—		—		—		—		—
Sale of common stock by general partner, net	—	(105)			—		—		—		—		(105)
Equity based compensation costs	—	1,979			—		69		—		—		2,048

Changes in the redemption value of redeemable noncontrolling interest	—	(1,443)			—		(263)		—		9		(1,697)

Distributions to noncontrolling interest	—	—			—		—		—		(3,130)		(3,130)

Distributions declared ($2.45 per unit)	—	(157,335)			—		(5,533)		—		—		(162,868)
Balances at June 30, 2024	64,210	$	5,442,762		2,259		$	46,819	$	44,154	$	120,765	$	5,654,500

Table of Contents


	General Partner				Limited Partners				Accumulated other comprehensive income, net		Noncontrolling interest		Total
	Common Equity				Common Equity
Six Months Ended June 30, 2024	Units	Amount		Units		Amount
Balances at December 31, 2023	64,203	$	5,389,190		2,259		$	44,991	$	38,646	$	121,151	$	5,593,978
Net income	—	365,645			—		12,869		—		5,612		384,126


Change in fair value of derivatives and amortization of swap settlements	—	—			—		—		5,508		—		5,508

Issuance of common units under:
General partner's stock based compensation, net	7	962			—		—		—		—		962
Sale of common stock by general partner, net	—	(113)			—		—		—		—		(113)
Equity based compensation costs	—	3,616			—		127		—		—		3,743


Changes in the redemption value of redeemable noncontrolling interest	—	(1,623)			—		(98)		—		37		(1,684)

Distributions to noncontrolling interest	—	—			—		—		—		(6,005)		(6,005)
Redemptions	—	(249)			—		—		—		(30)		(279)
Distributions declared ($4.90 per unit)	—	(314,666)			—		(11,070)		—		—		(325,736)
Balances at June 30, 2024	64,210	$	5,442,762		2,259		$	46,819	$	44,154	$	120,765	$	5,654,500


	General Partner				Limited Partners				Accumulated other comprehensive income, net		Noncontrolling interest		Total
	Common Equity				Common Equity
Three Months Ended June 30, 2023	Units	Amount		Units		Amount
Balances at March 31, 2023	64,182	$	5,582,259		2,261		$	51,385	$	41,716	$	121,497	$	5,796,857
Net income	—	99,620			—		3,506		—		2,630		105,756
Change in fair value of derivatives and amortization of swap settlements	—	—			—		—		15,386		—		15,386