Real Estate Investments (Tables)

12 Months Ended

Dec. 31, 2017

Real Estate Investments, Net [Abstract]

Schedule of Real Estate Properties

The table below summarizes acquisition activity for the year ended December 31, 2017 ($ in millions):

Property Name	Location	Apartment Homes	Essex Ownership Percentage		Quarter in 2017	Purchase Price
Palm Valley(1)	San Jose, CA	1,098	100	%	Q1	$	183.0
Sage at Cupertino(2)	San Jose, CA	230	41	%	Q1	90.0
Total 2017		1,328				$	273.0

⁽¹⁾  In January 2017, the Company purchased its joint venture partner's 50.0% membership interest in the Palm Valley co-investment for a purchase price of $183.0 million.

⁽²⁾  In March 2017, the Company converted its existing $15.3 million preferred equity investment in Sage at Cupertino into a 40.5% equity ownership interest in the property. The Company issued DownREIT limited partnership units to the seller for the remaining equity based on an estimated property valuation of $90.0 million and an encumbrance of $52.0 million of mortgage debt. Based on a consolidation analysis performed by the Company, the property was consolidated as the Company controls the entity.

Disposal Groups, Including Discontinued Operations

The table below summarizes disposition activity of operating communities for the year ended December 31, 2017 ($ in millions):

Property Name	Location	Apartment Homes	Essex Ownership Percentage		Ownership	Quarter in 2017	Sales Price		Gains
Jefferson at Hollywood	Hollywood, CA	270	100	%	EPLP	Q1	$	132.5	$	26.2
Total 2017		270					$	132.5	$	26.2

Summary of Co Investment

The carrying values of the Company’s co-investments as of December 31, 2017 and 2016 are as follows ($ in thousands):

	Weighted Average Essex Ownership		December 31,
	Percentage (1)		2017		2016
Membership interest/Partnership interest in:
CPPIB	54	%	$	500,287	$	422,068
Wesco I, III and IV, and V	53	%	214,408		180,687
Palm Valley (2)	50	%	—		68,396
BEXAEW, BEX II and BEX III (3)	50	%	13,827		67,041
Other	52	%	51,810		43,713
Total operating and other co-investments, net			780,332		781,905
Total development co-investments, net	50	%	73,770		157,317
Total preferred interest co-investments (includes related party investments of $15.7 million and $35.9 million as of December 31, 2017 and December 31, 2016, respectively - FN 5 - Related Party Transactions for further discussion)			265,156		222,053
Total co-investments			$	1,119,258	$	1,161,275

⁽¹⁾  Weighted average Essex ownership percentages are as of December 31, 2017.

⁽²⁾  In January 2017, the Company purchased its joint venture partner's 50.0% interest in Palm Valley and as a result of this acquisition, the Company consolidates Palm Valley.

⁽³⁾  As of December 31, 2017, the Company's investment in BEX II was classified as a liability of $36.7 million.

Summarized Financial Statement for Co Investment Accounted for Under the Equity Method

The combined summarized financial information of co-investments is as follows ($ in thousands):

	December 31,
	2017		2016
Combined balance sheets: (1)
Rental properties and real estate under development	$	3,722,778	$	3,807,245
Other assets	110,333		121,505
Total assets	$	3,833,111	$	3,928,750
Debt	$	1,705,051	$	1,617,639
Other liabilities	45,515		74,607
Equity	2,082,545		2,236,504
Total liabilities and equity	$	3,833,111	$	3,928,750
Company's share of equity	$	1,155,984	$	1,161,275

	Years ended December 31,
	2017			2016			2015
Combined statements of income: (1)
Property revenues	$	312,841		$	289,011		$	260,175
Property operating expenses	(110,583		)	(99,637		)	(93,067		)
Net operating income	202,258			189,374			167,108
Gain on sale of real estate	90,663			28,291			14
Interest expense	(62,844		)	(46,894		)	(44,834		)
General and administrative	(9,091		)	(7,448		)	(5,879		)
Depreciation and amortization	(118,048		)	(103,986		)	(103,613		)
Net income	$	102,938		$	59,337		$	12,796
Company's share of net income (2)	$	86,445		$	48,698		$	21,861

⁽¹⁾  Includes preferred equity investments held by the Company.

⁽²⁾  Includes the Company's share of equity income from co-investments and preferred equity investments, gain on sales of co-investments, co-investment promote income and income from early redemption of preferred equity investments.Includes related party income of $1.9 million, $3.4 million, and $3.7 million for the years ended December 31, 2017, 2016, and 2015, respectively.