10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2018

OR

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

For the transition period from ________to _________

Commission file number 001-13106 (Essex Property Trust, Inc.)

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

ESSEX PROPERTY TRUST, INC.

ESSEX PORTFOLIO, L.P.

(Exact name of Registrant as Specified in its Charter)

Maryland (Essex Property Trust, Inc.) California (Essex Portfolio, L.P.)	77-0369576 (Essex Property Trust, Inc.) 77-0369575 (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)

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 reports), and (2) has been subject to such filing requirements for the past 90 days.

Essex Property Trust, Inc.    Yes x   No o Essex Portfolio, L.P.     Yes x   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Essex Property Trust, Inc.    Yes x   No o Essex Portfolio, L.P.     Yes x   No o

i

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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Essex Property Trust, Inc.:

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o   (Do not check if a smaller reporting company)	Smaller reporting company o
			Emerging growth company o

Essex Portfolio, L.P.:

Large accelerated filer o	Accelerated filer o	Non-accelerated filer x   (Do not check if a smaller reporting company)	Smaller reporting company o
			Emerging growth company o
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.    o Essex Portfolio, L.P.     o

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 o   No x Essex Portfolio, L.P.     Yes o   No x

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:66,046,207 shares of Common Stock ($0.0001 par value) of Essex Property Trust, Inc. were outstanding as of April 30, 2018.

ii

EXPLANATORY NOTE

This report combines the reports on Form 10-Q for the three month period ended March 31, 2018 of Essex Property Trust, Inc. and Essex Portfolio, L.P. Unless stated otherwise or the context otherwise requires, references to “Essex” mean Essex Property Trust, Inc., a Maryland corporation that operates as a self-administered and self-managed real estate investment trust (“REIT”), and references to “EPLP” mean Essex Portfolio, L.P. References to the “Company,” “we,” “us” or “our” mean collectively Essex, EPLP and those entities/subsidiaries owned or controlled by Essex and/or EPLP.  References to the “Operating Partnership” mean collectively EPLP and those entities/subsidiaries owned or controlled by EPLP.

Essex is the general partner of EPLP and as the sole general partner of EPLP, Essex has exclusive control of EPLP'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”) equal to the number of shares of common stock it has issued in the equity offering. 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 EPLP'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 EPLP 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 EPLP.

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 EPLP. Essex's primary function is acting as the general partner of EPLP. 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 EPLP, 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 joint ventures. 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 joint ventures.

The Company believes it is important to understand the few differences between Essex and EPLP in the context of how Essex and EPLP 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 consolidated financial statements include the interest of unaffiliated partners in various condensed consolidated partnerships and joint venture partners. The noncontrolling interest in Essex's consolidated financial statements include (i) the same noncontrolling interest as presented in the Operating Partnership’s consolidated financial statements and (ii) OP Unit holders. 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 consolidated financial statements for Essex and the Operating Partnership; a single set of consolidated notes

iii

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 joint ventures 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, 2017.

iv

ESSEX PROPERTY TRUST, INC.

ESSEX PORTFOLIO, L.P.

FORM 10-Q

INDEX

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, 2018 and December 31, 2017	2
	Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended March 31, 2018 and 2017	3
	Condensed Consolidated Statement of Equity for the three months ended March 31, 2018	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017	5
	Condensed Consolidated Financial Statements of Essex Portfolio, L.P. (Unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017	7
	Condensed Consolidated Statements of Income and Comprehensive Income for the three ended March 31, 2018 and 2017	8
	Condensed Consolidated Statement of Capital for the three months ended March 31, 2018	9
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017	10
	Notes to Condensed Consolidated Financial Statements	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risks	35
Item 4.	Controls and Procedures	36
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
Signatures		41

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, 2018			December 31, 2017
Real estate:
Rental properties:
Land and land improvements	$	2,719,064		$	2,719,064
Buildings and improvements	10,657,671			10,629,767
	13,376,735			13,348,831
Less: accumulated depreciation	(2,888,130		)	(2,769,297		)
	10,488,605			10,579,534
Real estate under development	395,710			355,735
Co-investments	1,290,957			1,155,984
	12,175,272			12,091,253
Cash and cash equivalents-unrestricted	121,954			44,620
Cash and cash equivalents-restricted	17,124			16,506
Marketable securities	197,745			190,004
Notes and other receivables (includes related party receivables of $9.9 million and $41.2 million as of March 31, 2018 and December 31, 2017, respectively)	70,525			100,926
Prepaid expenses and other assets	60,047			52,397
Total assets	$	12,642,667		$	12,495,706
LIABILITIES AND EQUITY
Unsecured debt, net	$	3,797,923		$	3,501,709
Mortgage notes payable, net	1,921,047			2,008,417
Lines of credit	—			179,000
Accounts payable and accrued liabilities	179,641			127,501
Construction payable	48,223			51,770
Dividends payable	129,038			121,420
Distributions in excess of investments in co-investments	—			36,726
Other liabilities	33,477			33,132
Total liabilities	6,109,349			6,059,675
Commitments and contingencies
Redeemable noncontrolling interest	41,159			39,206
Equity:
Common stock; $0.0001 par value, 670,000,000 shares authorized; 66,044,441 and 66,054,399 shares issued and outstanding, respectively	7			7
Additional paid-in capital	7,127,248			7,129,571
Distributions in excess of accumulated earnings	(743,773		)	(833,726		)
Accumulated other comprehensive loss, net	(14,709		)	(18,446		)
Total stockholders' equity	6,368,773			6,277,406
Noncontrolling interest	123,386			119,419
Total equity	6,492,159			6,396,825
Total liabilities and equity	$	12,642,667		$	12,495,706

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,
	2018			2017
Revenues:
Rental and other property	$	344,947		$	333,168
Management and other fees from affiliates	2,308			2,236
	347,255			335,404
Expenses:
Property operating, excluding real estate taxes	57,250			56,136
Real estate taxes	37,713			35,868
Corporate-level property management expenses	7,770			7,509
Depreciation and amortization	119,105			115,503
General and administrative	14,813			10,601
Expensed acquisition and investment related costs	57			556
	236,708			226,173
Earnings from operations	110,547			109,231
Interest expense	(54,861		)	(54,583		)
Total return swap income	2,270			2,584
Interest and other income	5,909			6,764
Equity income from co-investments	32,774			10,899
Gain on sale of real estate and land	—			26,174
Gain on remeasurement of co-investment	—			86,482
Net income	96,639			187,551
Net income attributable to noncontrolling interest	(5,721		)	(8,587		)
Net income available to common stockholders	$	90,918		$	178,964
Comprehensive income	$	102,815		$	189,764
Comprehensive income attributable to noncontrolling interest	(5,926		)	(8,661		)
Comprehensive income attributable to controlling interest	$	96,889		$	181,103
Per share data:
Basic:
Net income available to common stockholders	$	1.38		$	2.73
Weighted average number of shares outstanding during the period	66,044,022			65,549,484
Diluted:
Net income available to common stockholders	$	1.38		$	2.72
Weighted average number of shares outstanding during the period	66,082,517			65,859,490
Dividend per common share	$	1.86		$	1.75

See accompanying notes to the unaudited condensed consolidated financial statements.

3

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Equity for the three months ended March 31, 2018

(Unaudited)

(In thousands)

	Common stock				Additional paid-in capital			Distributions in excess of accumulated earnings			Accumulated other comprehensive loss, net			Noncontrolling Interest
	Shares		Amount														Total
Balances at December 31, 2017	66,054		$	7	$	7,129,571		$	(833,726	)	$	(18,446	)	$	119,419		$	6,396,825
Net income	—		—		—			90,918			—			5,721			96,639
Reversal of unrealized gains upon the sale of marketable debt securities	—		—		—			—			(1		)	—			(1		)
Change in fair value of derivatives and amortization of swap settlements	—		—		—			—			6,046			208			6,254
Change in fair value of marketable debt securities, net	—		—		—			—			(74		)	(3		)	(77		)
Issuance of common stock under:
Stock option and restricted stock plans, net	7		—		1,222			—			—			—			1,222
Sale of common stock, net	—		—		(67		)	—			—			—			(67		)
Equity based compensation costs	—		—		2,253			—			—			277			2,530
Retirement of common stock, net	(17	)	—		(3,774		)	—			—			—			(3,774		)
Cumulative effect upon adoption of ASU 2016-01	—		—		—			2,234			(2,234		)	—			—
Cumulative effect upon adoption of ASU 2017-05	—		—		—			119,651			—			4,057			123,708
Changes in the redemption value of redeemable noncontrolling interest	—		—		(1,957		)	—			—			4			(1,953		)
Distributions to noncontrolling interest	—		—		—			—			—			(6,297		)	(6,297		)
Common stock dividends	—		—		—			(122,850		)	—			—			(122,850		)
Balances at March 31, 2018	66,044		$	7	$	7,127,248		$	(743,773	)	$	(14,709	)	$	123,386		$	6,492,159

See accompanying notes to the unaudited condensed consolidated financial statements.

4

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands) 

	Three Months Ended March 31,
	2018			2017
Cash flows from operating activities:
Net income	$	96,639		$	187,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	119,105			115,503
Amortization of discount on marketable securities	(4,157		)	(3,573		)
Amortization of (premium) discount and debt financing costs, net	(664		)	(3,309		)
Gain on sale of marketable securities and other investments	(680		)	(1,605		)
Unrealized loss on equity securities recognized through income	876			—
Earnings from co-investments	(32,774		)	(10,899		)
Operating distributions from co-investments	40,437			12,358
Accrued interest from notes and other receivables	(1,294		)	(647		)
Gain on the sale of real estate and land	—			(26,174		)
Equity-based compensation	2,090			1,253
Gain on remeasurement of co-investment	—			(86,482		)
Changes in operating assets and liabilities:
Prepaid expenses, receivables and other assets	(3,716		)	(3,889		)
Accounts payable and accrued liabilities	52,151			42,482
Other liabilities	345			737
Net cash provided by operating activities	268,358			223,306
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures	(2,873		)	(187,917		)
Redevelopment	(15,893		)	(12,240		)
Development acquisitions of and additions to real estate under development	(38,203		)	(30,457		)
Capital expenditures on rental properties	(14,947		)	(10,885		)
Investments in notes receivable	—			(8,750		)
Collections of notes receivable	29,500			—
Proceeds from insurance for property losses	565			435
Proceeds from dispositions of real estate	—			131,230
Contributions to co-investments	(56,020		)	(120,816		)
Changes in refundable deposits	410			512
Purchases of marketable securities	(13,437		)	(20,939		)
Sales and maturities of marketable securities	9,579			24,903
Non-operating distributions from co-investments	2,330			55,025
Net cash used in investing activities	(98,989		)	(179,899		)
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes	298,773			250,000
Payments on unsecured debt and mortgage notes	(83,748		)	(308,020		)
Proceeds from lines of credit	256,832			404,562
Repayments of lines of credit	(435,832		)	(353,329		)
Retirement of common stock	(3,774		)	—
Additions to deferred charges	(3,283		)	(1,014		)
Net proceeds from issuance of common stock	(67		)	(65		)
Net proceeds from stock options exercised	1,222			5,794
Payments related to tax withholding for share-based compensation	(11		)	(33		)
Distributions to noncontrolling interest	(5,926		)	(5,425		)
Redemption of noncontrolling interest	—			(1,070		)

5

	Three Months Ended March 31,
	2018			2017
Common and preferred stock dividends paid	(115,603		)	(104,857		)
Net cash used in financing activities	(91,417		)	(113,457		)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents	77,952			(70,050		)
Unrestricted and restricted cash and cash equivalents at beginning of period	61,126			170,302
Unrestricted and restricted cash and cash equivalents at end of period	$	139,078		$	100,252
Supplemental disclosure of cash flow information:
Cash paid for interest, net of $4.2 million and $3.3 million capitalized in 2018 and 2017, respectively	$	40,306		$	48,397
Supplemental disclosure of noncash investing and financing activities:
Issuance of DownREIT units in connection with acquisition of real estate	$	—		$	22,506
Transfers between real estate under development to rental properties, net	$	1		$	747
Transfer from real estate under development to co-investments	$	365		$	2,080
Reclassifications to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest	$	1,953		$	731
Debt assumed in connection with acquisition	$	—		$	51,882

See accompanying notes to the unaudited condensed consolidated financial statements.

6

ESSEX PORTFOLIO, L.P.  AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except parenthetical and unit amounts)

	March 31, 2018			December 31, 2017
ASSETS
Real estate:
Rental properties:
Land and land improvements	$	2,719,064		$	2,719,064
Buildings and improvements	10,657,671			10,629,767
	13,376,735			13,348,831
Less: accumulated depreciation	(2,888,130		)	(2,769,297		)
	10,488,605			10,579,534
Real estate under development	395,710			355,735
Co-investments	1,290,957			1,155,984
	12,175,272			12,091,253
Cash and cash equivalents-unrestricted	121,954			44,620
Cash and cash equivalents-restricted	17,124			16,506
Marketable securities	197,745			190,004
Notes and other receivables (includes related party receivables of $9.9 million and $41.2 million as of March 31, 2018 and December 31, 2017, respectively)	70,525			100,926
Prepaid expenses and other assets	60,047			52,397
Total assets	$	12,642,667		$	12,495,706
LIABILITIES AND CAPITAL
Unsecured debt, net	$	3,797,923		$	3,501,709
Mortgage notes payable, net	1,921,047			2,008,417
Lines of credit	—			179,000
Accounts payable and accrued liabilities	179,641			127,501
Construction payable	48,223			51,770
Distributions payable	129,038			121,420
Distributions in excess of investments in co-investments	—			36,726
Other liabilities	33,477			33,132
Total liabilities	6,109,349			6,059,675
Commitments and contingencies
Redeemable noncontrolling interest	41,159			39,206
Capital:
General Partner:
Common equity (66,044,441 and 66,054,399 units issued and outstanding, respectively)	6,383,482			6,295,852
	6,383,482			6,295,852
Limited Partners:
Common equity (2,273,413 and 2,268,114 units issued and outstanding, respectively)	53,003			49,792
Accumulated other comprehensive loss	(11,281		)	(15,229		)
Total partners' capital	6,425,204			6,330,415
Noncontrolling interest	66,955			66,410
Total capital	6,492,159			6,396,825
Total liabilities and capital	$	12,642,667		$	12,495,706

See accompanying notes to the unaudited condensed consolidated financial statements.

7

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,
	2018			2017
Revenues:
Rental and other property	$	344,947		$	333,168
Management and other fees from affiliates	2,308			2,236
	347,255			335,404
Expenses:
Property operating, excluding real estate taxes	57,250			56,136
Real estate taxes	37,713			35,868
Corporate-level property management expenses	7,770			7,509
Depreciation and amortization	119,105			115,503
General and administrative	14,813			10,601
Expensed acquisition and investment related costs	57			556
	236,708			226,173
Earnings from operations	110,547			109,231
Interest expense	(54,861		)	(54,583		)
Total return swap income	2,270			2,584
Interest and other income	5,909			6,764
Equity income from co-investments	32,774			10,899
Gain on sale of real estate and land	—			26,174
Gain on remeasurement of co-investment	—			86,482
Net income	96,639			187,551
Net income attributable to noncontrolling interest	(2,589		)	(2,441		)
Net income available to common unitholders	$	94,050		$	185,110
Comprehensive income	$	102,815		$	189,764
Comprehensive income attributable to noncontrolling interest	(2,589		)	(2,441		)
Comprehensive income attributable to controlling interest	$	100,226		$	187,323
Per unit data:
Basic:
Net income available to common unitholders	$	1.38		$	2.73
Weighted average number of common units outstanding during the period	68,317,435			67,801,718
Diluted:
Net income available to common unitholders	$	1.38		$	2.72
Weighted average number of common units outstanding during the period	68,355,930			68,111,724
Distribution per common unit	$	1.86		$	1.75

See accompanying notes to the unaudited condensed consolidated financial statements.

8

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Statement of Capital for the three months ended March 31, 2018

(In thousands)

(Unaudited)

	General Partner					Limited Partners				Accumulated other comprehensive loss
	Common Equity					Common Equity							Noncontrolling Interest
	Units		Amount			Units	Amount									Total
Balances at December 31, 2017	66,054		$	6,295,852		2,268	$	49,792		$	(15,229	)	$	66,410		$	6,396,825
Net income	—		90,918			—	3,132			—			2,589			96,639
Reversal of unrealized gains upon the sale of marketable debt securities	—		—			—	—			(1		)	—			(1		)
Change in fair value of derivatives and amortization of swap settlements	—		—			—	—			6,254			—			6,254
Change in fair value of marketable debt securities, net	—		—			—	—			(77		)	—			(77		)
Issuance of common units under:
General partner's stock based compensation, net	7		1,222			—	—			—			—			1,222
Sale of common stock by general partner, net	—		(67		)	—	—			—			—			(67		)
Equity based compensation costs	—		2,253			5	277			—			—			2,530
Retirement of common units, net	(17	)	(3,774		)	—	—			—			—			(3,774		)
Cumulative effect upon adoption of ASU 2016-01	—		2,234			—	(6		)	(2,228		)	—			—
Cumulative effect upon adoption of ASU 2017-05	—		119,651			—	4,057			—			—			123,708
Changes in redemption value of redeemable noncontrolling interest	—		(1,957		)	—	4			—			—			(1,953		)
Distributions to noncontrolling interest	—		—			—	—			—			(2,044		)	(2,044		)
Distributions declared	—		(122,850		)	—	(4,253		)	—			—			(127,103		)
Balances at March 31, 2018	66,044		$	6,383,482		2,273	$	53,003		$	(11,281	)	$	66,955		$	6,492,159

See accompanying notes to the unaudited condensed consolidated financial statements.

9

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2018			2017
Cash flows from operating activities:
Net income	$	96,639		$	187,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	119,105			115,503
Amortization of discount on marketable securities	(4,157		)	(3,573		)
Amortization of (premium) discount and debt financing costs, net	(664		)	(3,309		)
Gain on sale of marketable securities and other investments	(680		)	(1,605		)
Unrealized loss on equity securities recognized through income	876			—
Earnings from co-investments	(32,774		)	(10,899		)
Operating distributions from co-investments	40,437			12,358
Accrued interest from notes and other receivables	(1,294		)	(647		)
Gain on the sale of real estate and land	—			(26,174		)
Equity-based compensation	2,090			1,253
Gain on remeasurement of co-investment	—			(86,482		)
Changes in operating assets and liabilities:
Prepaid expense, receivables and other assets	(3,716		)	(3,889		)
Accounts payable and accrued liabilities	52,151			42,482
Other liabilities	345			737
Net cash provided by operating activities	268,358			223,306
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures	(2,873		)	(187,917		)
Redevelopment	(15,893		)	(12,240		)
Development acquisitions of and additions to real estate under development	(38,203		)	(30,457		)
Capital expenditures on rental properties	(14,947		)	(10,885		)
Investments in notes receivable	—			(8,750		)
Collections of notes receivable	29,500			—
Proceeds from insurance for property losses	565			435
Proceeds from dispositions of real estate	—			131,230
Contributions to co-investments	(56,020		)	(120,816		)
Changes in refundable deposits	410			512
Purchases of marketable securities	(13,437		)	(20,939		)
Sales and maturities of marketable securities	9,579			24,903
Non-operating distributions from co-investments	2,330			55,025
Net cash used in investing activities	(98,989		)	(179,899		)
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes	298,773			250,000
Payments on unsecured debt and mortgage notes	(83,748		)	(308,020		)
Proceeds from lines of credit	256,832			404,562
Repayments of lines of credit	(435,832		)	(353,329		)
Retirement of common units	(3,774		)	—
Additions to deferred charges	(3,283		)	(1,014		)
Net proceeds from issuance of common units	(67		)	(65		)
Net proceeds from stock options exercised	1,222			5,794
Payments related to tax withholding for share-based compensation	(11		)	(33		)
Distributions to noncontrolling interest	(2,267		)	(5,425		)
Redemption of noncontrolling interest	—			(1,070		)

10

	Three Months Ended March 31,
	2018			2017
Common and preferred units and preferred interest distributions paid	(119,262		)	(104,857		)
Net cash used in financing activities	(91,417		)	(113,457		)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents	77,952			(70,050		)
Unrestricted and restricted cash and cash equivalents at beginning of period	61,126			170,302
Unrestricted and restricted cash and cash equivalents at end of period	$	139,078		$	100,252
Supplemental disclosure of cash flow information:
Cash paid for interest, net of $4.2 million and $3.3 million capitalized in 2018 and 2017, respectively	$	40,306		$	48,397
Supplemental disclosure of noncash investing and financing activities:
Issuance of DownREIT units in connection with acquisition of real estate	$	—		$	22,506
Transfers between real estate under development to rental properties, net	$	1		$	747
Transfer from real estate under development to co-investments	$	365		$	2,080
Reclassifications to redeemable noncontrolling interest from general partner capital and noncontrolling interest	$	1,953		$	731
Debt assumed in connection with acquisition	$	—		$	51,882

See accompanying notes to the unaudited condensed consolidated financial statements.

11

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

(1) Organization and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements present the accounts of Essex Property Trust, Inc. (“Essex” or the “Company”), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the “Operating Partnership,” which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included and are normal and recurring in nature. 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, 2017.

All significant intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements. Certain reclassifications have been made to conform to the current year’s presentation, including the reclassification of corporate-level property management expenses out of property operating, excluding real estate taxes to its own line item on the Company's condensed consolidated statements of income and comprehensive income.

The unaudited condensed consolidated financial statements for the three months ended March 31, 2018 and 2017 include the accounts of the Company and the Operating Partnership. Essex is the sole general partner of the Operating Partnership, with a 96.7% general partnership interest as of both March 31, 2018 and December 31, 2017. Total Operating Partnership limited partnership units (“OP Units”) outstanding were 2,273,413 and 2,268,114 as of March 31, 2018 and December 31, 2017, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $547.2 million and $547.5 million as of March 31, 2018 and December 31, 2017, respectively.

As of March 31, 2018, the Company owned or had ownership interests in 247 operating apartment communities, aggregating 60,240 apartment homes, excluding the Company’s ownership in preferred interest co-investments (collectively, the “Communities,” and individually, a “Community”), one operating commercial building and seven active developments (collectively, the “Portfolio”). The Communities are located in Southern California (Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas.

Accounting Pronouncements Adopted in the Current Year

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers.” The new standard provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries. The new standard requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. The new standard is effective for interim and annual periods beginning after December 15, 2017. The new standard may be applied using either a full retrospective or a modified approach upon adoption. The Company adopted ASU No. 2014-09 as of January 1, 2018 using the modified retrospective approach. See Note 3, Revenues, for further details.

In January 2016, the FASB issued ASU No. 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities,” which requires changes to the classification and measurement of investments in certain equity securities and to the presentation of certain fair value changes for financial liabilities measured at fair value. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-01 as of January 1, 2018 using the modified retrospective method by applying a cumulative effect adjustment to retained earnings and partners' capital of $2.2 million, representing accumulated net unrealized gains of certain equity securities held by the Company. Furthermore, as a result of the adoption of this standard, the Company will recognize changes in the fair value of equity investments with readily determinable fair values through net income as opposed to comprehensive income.

In August 2016, the FASB issued ASU No. 2016-15 “Classification of Certain Cash Receipts and Cash Payments,” which requires entities to adhere to a uniform classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update provide guidance on eight specific cash flow issues. The new standard

12

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-15 as of January 1, 2018 using the retrospective transition method. This amendment did not have a material impact on the Company's consolidated results of operations or financial position.

In November 2016, the FASB issued ASU No. 2016-18 “Statement of Cash Flows,” which requires entities to include restricted cash and restricted cash equivalents in the reconciliation of beginning-of-period to the end-of-period of cash and cash equivalents in the statement of cash flows. This new standard seeks to eliminate the current diversity in practice in how changes in restricted cash and restricted cash equivalents is presented in the statement of cash flows. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-18 as of January 1, 2018 using the retrospective transition method. This amendment did not have a material impact on the Company's consolidated results of operations or financial position.

In January 2017, the FASB issued ASU No. 2017-01 “Business Combinations: Clarifying the Definition of a Business,” (“ASU No. 2017-01”) which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Previously, U.S. GAAP did not specify the minimum inputs and processes required for an integrated set of assets and activities to meet the definition of a business, causing a broad interpretation of the definition of a business. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2017-01 as of January 1, 2018 prospectively. The Company expects that substantially all of its acquisitions of communities will qualify as asset acquisitions and transaction costs related to these acquisitions will be capitalized upon adoption.

In February 2017, the FASB issued ASU No. 2017-05 “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets,” (“ASU No. 2017-05”) which adds guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. This new standard reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. Partial sales of nonfinancial assets are common in the real estate industry and include transactions in which the seller retains an equity interest in the entity that owns the assets or has an equity interest in the buyer. The new standard is effective for interim and annual periods beginning after December 15, 2017. Management performed an evaluation of all of the Company's contracts that may be affected by the new standard. The Company adopted ASU No. 2017-05 concurrently with the adoption of ASU No. 2014-09 “Revenue from Contracts with Customers” as of January 1, 2018 using the modified-retrospective method by applying a cumulative effect adjustment to retained earnings and partners' capital of $123.7 million, representing the partial sale of its membership interest in BEX II, LLC (“BEX II”) during the fourth quarter of 2016.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02 “Leases,” which requires an entity that is a lessee to classify leases as either finance or operating and to recognize a lease liability and a right-of-use asset for all leases that have a duration of greater than 12 months. Leases of 12 months or less will be accounted for similar to existing guidance for operating leases today. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. The new standard will be effective for the Company beginning on January 1, 2019 and early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In June 2016, the FASB issued ASU No. 2016-13 “Measurement of Credit Losses on Financial Instruments,” which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities, and other financial instruments. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. The new standard will be effective for the Company beginning on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

13

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

In August 2017, the FASB issued ASU No. 2017-12 “Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities,” which, among other things, requires entities to present the earnings effect of hedging instruments in the same income statement line item in which the earnings effect of the hedged item is reported. The new standard also adds new disclosure requirements. This new standard will be effective for the Company beginning January 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

Marketable Securities

The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds, Level 2 for the unsecured bonds and Level 3 for investments in mortgage backed securities, as defined by the FASB standard for fair value measurements). Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. Unrealized gains and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income on the condensed consolidated statements of income and comprehensive income.

As of March 31, 2018 and December 31, 2017, equity securities and available for sale debt securities consisted primarily of investment-grade unsecured bonds, common stock, investments in mortgage backed securities, and investment funds that invest in U.S. treasury or agency securities. As of March 31, 2018 and December 31, 2017, the Company classified its investments in mortgage backed securities, which mature in November 2019 and September 2020, as held to maturity, and accordingly, these securities are stated at their amortized cost. The discount on the mortgage backed securities is being amortized to interest income based on an estimated yield and the maturity date of the securities.

As of March 31, 2018 and December 31, 2017, marketable securities consist of the following ($ in thousands):

	March 31, 2018
	Amortized Cost		Gross Unrealized Gain (Loss)			Carrying Value
Equity securities:
Investment funds - debt securities	$	26,946	$	(360	)	$	26,586
Investment funds - U.S. treasuries	11,250		(86		)	11,164
Common stock and stock funds	39,620		2,459			42,079
Debt securities:
Available for sale
Investment-grade unsecured bonds	4,324		(118		)	4,206
Held to maturity
Mortgage backed securities	113,710		—			113,710
Total - Marketable securities	$	195,850	$	1,895		$	197,745

14

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

	December 31, 2017
	Amortized Cost		Gross Unrealized Gain (Loss)			Carrying Value
Equity securities:
Investment funds - debt securities	$	27,914	$	(29	)	$	27,885
Investment funds - U.S. treasuries	10,999		(55		)	10,944
Common stock and stock funds	34,329		2,973			37,302
Debt securities:
Available for sale
Investment-grade unsecured bonds	4,365		(40		)	4,325
Held to maturity
Mortgage backed securities	109,548		—			109,548
Total - Marketable securities	$	187,155	$	2,849		$	190,004

The Company uses the specific identification method to determine the cost basis of a debt security sold and to reclassify amounts from accumulated other comprehensive income for such securities. 

For the three months ended March 31, 2018 and 2017, the proceeds from sales and maturities of marketable securities totaled $9.6 million and $24.9 million, respectively, which resulted in $0.7 million and $1.6 million in realized gains, respectively, for such periods.

For the three months ended March 31, 2018, the portion of equity security unrealized gains and losses that were recognized in income totaled $0.9 million in unrealized losses and is included in interest and other income on the Company's condensed consolidated statements of income and comprehensive income.

Variable Interest Entities

In accordance with accounting standards for consolidation of variable interest entities (“VIEs”), the Company consolidates the Operating Partnership, 16 limited partnerships, comprising eight communities, (the “DownREIT limited partnerships,”) and eight co-investments as of March 31, 2018. The Company consolidates these entities because it is deemed the primary beneficiary. The Company has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the eight consolidated co-investments and 16 DownREIT limited partnerships, net of intercompany eliminations, were approximately $845.7 million and $266.4 million, respectively, as of March 31, 2018 and $837.7 million and $265.5 million, respectively, as of December 31, 2017. Noncontrolling interests in these entities were $67.2 million and $66.7 million as of March 31, 2018 and December 31, 2017, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of March 31, 2018 and December 31, 2017, the Company did not have any other VIEs of which it was deemed to be the primary beneficiary and did not have any VIEs of which it was not deemed to be the primary beneficiary.

Equity-based Compensation

The cost of share- and unit-based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long term incentive plan units (discussed in Note 12, “Equity Based Compensation Plans,” in the Company’s annual report on Form 10-K for the year ended December 31, 2017) are being amortized over the expected service periods.

15

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

Fair Value of Financial Instruments

Management believes that the carrying amounts of the outstanding balances under its lines of credit, and notes and other receivables approximate fair value as of March 31, 2018 and December 31, 2017, because interest rates, yields, and other terms for these instruments are consistent with yields and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s fixed rate debt with a carrying value of $5.1 billion and $4.9 billion, including premiums, discounts and debt financing costs, at March 31, 2018 and December 31, 2017, respectively, was approximately $5.1 billion and $5.0 billion. Management has estimated that the fair value of the Company’s $612.1 million and $792.9 million of variable rate debt, net of debt financing costs, at March 31, 2018 and December 31, 2017, respectively, was approximately $615.6 million and $793.9 million based on the terms of existing mortgage notes payable, unsecured debt, and variable rate demand notes compared to those available in the marketplace. Management believes that the carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, construction payables, other liabilities, and dividends payable approximate fair value as of March 31, 2018 and December 31, 2017 due to the short-term maturity of these instruments. Marketable securities, except mortgage backed securities, and derivatives are carried at fair value as of March 31, 2018 and December 31, 2017.

At March 31, 2018, the Company’s investments in mortgage backed securities had a carrying value of $113.7 million and the Company estimated the fair value to be approximately $122.8 million. At December 31, 2017, the Company’s investments in mortgage backed securities had a carrying value of $109.5 million and the Company estimated the fair value to be approximately $120.7 million. The Company determines the fair value of the mortgage backed securities based on unobservable inputs (level 3 of the fair value hierarchy) considering the assumptions that market participants would make in valuing these securities. Assumptions such as estimated default rates and discount rates are used to determine the expected discounted cash flows to estimate fair value.

Capitalization of Costs

The Company’s capitalized internal costs related to development and redevelopment projects were comprised primarily of employee compensation and totaled $5.0 million and $4.8 million during the three months ended March 31, 2018 and 2017, respectively. The Company capitalizes leasing commissions associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized for leasing commissions are immaterial for all periods presented.

Co-investments

The Company owns investments in joint ventures (“co-investments”) in which it has significant influence, but its ownership interest does not meet the criteria for consolidation in accordance with U.S. GAAP. Therefore, the Company accounts for co-investments using the equity method of accounting. Under the equity method of accounting, the investment is carried at the cost of assets contributed, plus the Company's equity in earnings less distributions received and the Company's share of losses. The significant accounting policies of the Company’s co-investment entities are consistent with those of the Company in all material respects.

Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and the transaction will be accounted for as a business combination if the entity meets the definition of a business pursuant to ASU No. 2017-01, or an asset acquisition if the entity is not determined to be a business. A majority of the co-investments, excluding the preferred equity investments, compensate the Company for its asset management services and some of these investments may provide promote income if certain financial return benchmarks are achieved. Asset management fees are recognized when earned, and promote fees are recognized when the earnings events have occurred and the amount is determinable and collectible. Any promote fees are reflected in equity income from co-investments.

The Company reports investments in co-investments where accumulated distributions have exceeded the Company’s investment as distributions in excess of investments in co-investments in the accompanying condensed consolidated balance sheets. As of December 31, 2017, the net investment of one of the Company’s co-investments was less than zero as a result of financing distributions in excess of the Company's investment in that co-investment. As a result of the Company's adoption of ASU No. 2017-05 on January 1, 2018, the carrying value of this co-investment was greater than zero as of March 31, 2018.

16

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

Changes in Accumulated Other Comprehensive Loss, Net by Component

Essex Property Trust, Inc.

($ in thousands):

	Change in fair value and amortization of swap settlements			Unrealized gains/(losses) on available for sale securities			Total
Balance at December 31, 2017	$	(20,641	)	$	2,195		$	(18,446	)
Cumulative effect upon adoption of ASU 2016-01	—			(2,234		)	(2,234		)
Other comprehensive income before reclassification	8,031			(74		)	7,957
Amounts reclassified from accumulated other comprehensive loss	(1,985		)	(1		)	(1,986		)
Other comprehensive income	6,046			(2,309		)	3,737
Balance at March 31, 2018	$	(14,595	)	$	(114	)	$	(14,709	)

Changes in Accumulated Other Comprehensive Loss, by Component

Essex Portfolio, L.P.

($ in thousands):

	Change in fair value and amortization of swap settlements			Unrealized gains/(losses) on available for sale securities			Total
Balance at December 31, 2017	$	(17,417	)	$	2,188		$	(15,229	)
Cumulative effect upon adoption of ASU 2016-01	—			(2,228		)	(2,228		)
Other comprehensive income before reclassification	8,307			(77		)	8,230
Amounts reclassified from accumulated other comprehensive loss	(2,053		)	(1		)	(2,054		)
Other comprehensive income	6,254			(2,306		)	3,948
Balance at March 31, 2018	$	(11,163	)	$	(118	)	$	(11,281	)

Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense on the condensed consolidated statement of income and comprehensive income. Realized gains and losses on available for sale debt securities are included in interest and other income on the condensed consolidated statement of income and comprehensive income.

Redeemable Noncontrolling Interest

The carrying value of redeemable noncontrolling interest in the accompanying condensed consolidated balance sheets was$41.2 million and $39.2 million as of March 31, 2018 and December 31, 2017, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances.

The changes to the redemption value of redeemable noncontrolling interests for the three months ended March 31, 2018 is as follows ($ in thousands):

Balance at December 31, 2017	$	39,206
Reclassification due to change in redemption value and other	1,953
Redemptions	—
Balance at March 31, 2018	$	41,159

17

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

Cash, Cash Equivalents and Restricted Cash

Highly liquid investments with original maturities of three months or less when purchased are classified as cash equivalents. Restricted cash balances relate primarily to reserve requirements for capital replacement at certain communities in connection with the Company’s mortgage debt.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows ($ in thousands):

	March 31, 2018		December 31, 2017		March 31, 2017		December 31, 2016
Cash and cash equivalents - unrestricted	$	121,954	$	44,620	$	84,344	$	64,921
Cash and cash equivalents - restricted	17,124		16,506		15,908		105,381
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows	$	139,078	$	61,126	$	100,252	$	170,302

Accounting Estimates

The preparation of condensed consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate portfolio, its investments in and advances to joint ventures and affiliates, its notes receivables, and its qualification as a real estate investment trust (“REIT”). The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions.

(2)  Significant Transactions During The Three Months Ended 2018 and Subsequent Events

Significant Transactions

Preferred Equity Investments

In January 2018, the Company received cash of $2.4 million for the full redemption of a preferred equity investment in a co-investment that holds property in Seattle, WA.

Notes Receivable

In January 2018, the Village at Toluca Lake, a property located in Burbank, CA and owned by BEX III, LLC (“BEX III”), a Company co-investment, paid off a $29.5 million bridge loan provided by the Company in November 2017. See Note 6, Related Party Transactions, for additional details related to the related party bridge loan.

Co-Investments

In March 2018, the BEXAEW, LLC (“BEXAEW”) joint venture operating agreement was amended, and the joint venture was extended. Under the amendment, the Company received a cash payment for promote income of $20.5 million, which is included in equity income from co-investments on the condensed consolidated statements of income and comprehensive income.

Senior Unsecured Debt

In March 2018, the Company issued $300.0 million of 30-year 4.500% senior unsecured notes. The interest is paid semi-annually in arrears on March 15 and September 15 of each year commencing on September 15, 2018 until the maturity date of

18

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

March 15, 2048. The Company used the net proceeds of this offering to repay indebtedness under its unsecured lines of credit and for other general corporate and working capital purposes.

Common Stock

In January 2018, the Company repurchased and retired 16,834 shares totaling $3.8 million, including commissions. As of March 31, 2018, the Company had $245.2 million of purchase authority remaining under the stock repurchase plan authorized by the Company's board of directors.

(3)  Revenues

On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers” using a modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported in accordance with the old revenue recognition standard.

Based on a full analysis of applicable contracts, the Company determined that the new standard did not have an impact to reported revenues from prior or current periods.

Revenue Recognition

Revenue from Leasing

The Company generates revenues primarily from leasing apartment homes to tenants. Such leasing revenues are recorded when due from tenants and are recognized monthly as they are earned, which is not materially different than on a straight-line basis. Apartment homes are rented under short-term leases (generally, lease terms of 6 to 12 months). Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease.

The Company also generates other property-related revenue through the leasing of apartment homes, including storage income, pet rent, and other miscellaneous revenue. Similar to rental income, such revenues are recorded when due from tenants and recognized monthly as they are earned.

Revenue from Contracts with Customers

Apart from rental and other property-related revenue, revenues from contracts with customers are recognized as control of the promised services is passed to the customer.

For customer contracts related to management and other fees from affiliates (which includes asset management and property management), the transaction price and amount of revenue to be recognized is determined each quarter based on the management fee calculated and earned for that month or quarter. The contract will contain a description of the service and the fee percentage for management services. Payments from such services are one month or one quarter in arrears of the service performed.

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands):

	Three Months Ended March 31,
	2018		2017
Rental	$	321,661	$	310,122
Other property leasing revenue	23,286		23,046
Management and other fees from affiliates	2,308		2,236
Total revenues	$	347,255	$	335,404

19

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

The following table presents the Company’s rental and other property-related revenues disaggregated by geographic operating segment ($ in thousands):

	Three Months Ended March 31,
	2018		2017
Southern California	$	152,060	$	147,099
Northern California	128,622		123,308
Seattle Metro	58,713		56,192
Other real estate assets (1)	5,552		6,569
Total rental and other property revenues	$	344,947	$	333,168

(1) Other real estate assets consists of revenue generated from retail space, commercial properties, held for sale properties, and disposition properties. Executive management does not evaluate such operating performance geographically.

The following table presents the Company’s rental and other property-related revenues disaggregated by current property category status ($ in thousands):

	Three Months Ended March 31,
	2018		2017
Same-property (1)	$	322,385	$	312,024
Acquisitions (2)	10,383		8,186
Development (3)	19		—
Redevelopment	5,024		4,814
Non-residential/other, net (4)	7,136		8,144
Total rental and other property revenues	$	344,947	$	333,168

(1) Stabilized properties consolidated by the Company for both the quarters ended March 31, 2018 and 2017.

(2) Acquisitions includes properties acquired which did not have comparable stabilized results as of January 1, 2017.

(3) Development includes properties developed which did not have stabilized results as of January 1, 2017.

(4) Non-residential/other, net consists of revenue generated from retail space, commercial properties, held for sale properties, disposition properties and student housing.

Deferred Revenues and Remaining Performance Obligations

When cash payments are received or due in advance of the Company’s performance of contracts with customers, deferred revenue is recorded. The total deferred revenue balance related to such contracts was $8.5 million and $9.3 million as of March 31, 2018 and December 31, 2017, respectively, and was included in accounts payable and accrued liabilities within the accompanying consolidated balance sheets. The amount of revenue recognized in the period that was included in the beginning deferred revenue balance was $0.8 million, which was included in interest and other income within the condensed consolidated statements of income and comprehensive income.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue accounting standard. As of March 31, 2018, the Company had $8.5 million of remaining performance obligations. The Company expects to recognize approximately 28% of these remaining performance obligations in 2018, an additional 36% through 2020, and the remaining balance thereafter.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts within an original expected length of one year or less or when variable consideration is allocated entirely to a wholly unsatisfied performance obligation.

20

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

(4) Co-investments

The Company has joint ventures and preferred equity investments in co-investments which are accounted for under the equity method. The co-investments own, operate, and develop apartment communities. The carrying values of the Company's co-investments as of March 31, 2018 and December 31, 2017 are as follows ($ in thousands, except in parenthetical):

	Weighted Average Essex Ownership Percentage (1)		March 31, 2018		December 31, 2017
Membership interest/Partnership interest in:
CPPIB	54	%	$	496,512	$	500,287
Wesco I, III, IV, and V	53	%	214,650		214,408
BEXAEW, BEX II and BEX III (2)	50	%	135,174		13,827
Other	52	%	50,209		51,810
Total operating and other co-investments, net			896,545		780,332
Total development co-investments, net	50	%	75,092		73,770
Total preferred interest co-investments (includes related party investments of $15.6 million and $15.7 million as of March 31, 2018 and December 31, 2017, respectively)			319,320		265,156
Total co-investments, net			$	1,290,957	$	1,119,258

(1) Weighted average Essex ownership percentages are as of March 31, 2018.

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

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

	March 31, 2018		December 31, 2017
Combined balance sheets: (1)
Rental properties and real estate under development	$	3,794,212	$	3,722,778
Other assets	161,538		110,333
Total assets	$	3,955,750	$	3,833,111
Debt	$	1,744,663	$	1,705,051
Other liabilities	69,782		45,515
Equity	2,141,305		2,082,545
Total liabilities and equity	$	3,955,750	$	3,833,111
Company's share of equity	$	1,290,957	$	1,155,984

21

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Combined statements of income: (1)
Property revenues	$	80,842		$	75,905
Property operating expenses	(27,069		)	(25,408		)
Net operating income	53,773			50,497
Interest expense	(16,735		)	(11,921		)
General and administrative	(1,492		)	(1,778		)
Depreciation and amortization	(31,162		)	(27,904		)
Net income	$	4,384		$	8,894
Company's share of net income (2)	$	32,774		$	10,899

(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 $0.4 million and $0.5 million for the three months ended March 31, 2018 and 2017, respectively.

(5) Notes and Other Receivables

Notes and other receivables consist of the following as of March 31, 2018 and December 31, 2017 ($ in thousands):

	March 31, 2018		December 31, 2017
Notes receivable, bearing interest at 10.00%, due May 2021	$	14,110	$	13,762
Notes receivable, bearing interest at 10.75%, due September 2020	30,107		29,318
Related party note receivable, bearing interest at 9.50%, due October 2019(1)	6,608		6,656
Related party note receivable, bearing interest at 3.50%, due March 2018(1)	—		29,500
Notes and other receivables from affiliates (2)	3,314		5,061
Other receivables	16,386		16,629
Total notes and other receivables	$	70,525	$	100,926

(1) See Note 6, Related Party Transactions, for additional details.

(2) These amounts consist of short-term loans outstanding and due from various joint ventures as of March 31, 2018 and December 31, 2017, respectively. See Note 6, Related Party Transactions, for additional details.

(6) Related Party Transactions

The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates totaled $3.2 million and $3.0 million during the three months ended March 31, 2018 and 2017, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of $0.9 million and $0.8 million against general and administrative expenses for the three months ended March 31, 2018 and 2017, respectively.

In November 2017, the Company provided a $29.5 million related party bridge loan to a property acquired by BEX III. The note receivable accrued interest at 3.5% and was paid off in January 2018. The bridge loan was classified within notes and other receivables in the accompanying condensed consolidated balance sheets and had no amount outstanding as of March 31, 2018.

The Company’s Chairman and founder, Mr. George M. Marcus, is the Chairman of the Marcus & Millichap Company (“MMC”), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr.

22

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

Marcus is also the Co-Chairman of Marcus & Millichap, Inc. (“MMI”), and Mr. Marcus owns a controlling interest in MMI, a national brokerage firm listed on the New York Stock Exchange. 

In March 2017, the Company converted its existing $15.3 million preferred equity investment in Sage at Cupertino, a 230 apartment home community located in San Jose, CA, into a 40.5% common equity ownership interest in the property. The Company issued DownREIT units to the other members, including an MMC affiliate, based on an estimated property valuation of $90.0 million. At the time of the conversion, the property was encumbered by $52.0 million of mortgage debt. As a result of this transaction, the Company consolidates the property, based on a VIE analysis performed by the Company.

In 2015, the Company made preferred equity investments totaling $20.0 million in three entities affiliated with MMC that own apartment communities in California. The Company earns a 9.5% preferred return on each such investment. One $5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2017. The remaining two investments are scheduled to mature in 2022.

As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of March 31, 2018 and December 31, 2017, $3.3 million and $5.1 million, respectively, of short-term loans remained outstanding due from joint venture affiliates and is classified within notes and other receivables in the accompanying condensed consolidated balance sheets. In November 2016, the Company provided a $6.6 million mezzanine loan to a limited liability company in which MMC holds a significant ownership interest through subsidiaries. The mezzanine loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets and had an outstanding balance of $6.6 million and $6.7 million as of March 31, 2018 and December 31, 2017, respectively.

(7) Debt

The Company does not have indebtedness as debt is incurred by the Operating Partnership. The Company guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities for the full term of the facilities.

Debt consists of the following ($ in thousands):

	March 31, 2018			December 31, 2017			Weighted Average Maturity In Years as of March 31, 2018
Unsecured bonds private placement - fixed rate	$	274,476		$	274,427		2.8
Term loan - variable rate	348,525			348,545			3.9
Bonds public offering - fixed rate	3,174,922			2,878,737			8.4
Unsecured debt, net (1)	3,797,923			3,501,709
Lines of credit (2)	—			179,000
Mortgage notes payable, net (3)	1,921,047			2,008,417			5.3
Total debt, net	$	5,718,970		$	5,689,126
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering	3.8		%	3.7		%
Weighted average interest rate on variable rate term loan	2.5		%	2.5		%
Weighted average interest rate on lines of credit	2.5		%	2.3		%
Weighted average interest rate on mortgage notes payable	4.2		%	4.2		%

(1) Includes unamortized discount of $6.6 million and $5.2 million and unamortized debt issuance costs of $20.5 million and $18.1 million, as of March 31, 2018 and December 31, 2017, respectively.

(2) Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.24 billion as of March 31, 2018, excludes unamortized debt issuance costs of $4.9 million and $3.2 million as of March 31, 2018 and December 31, 2017, respectively. These debt issuance costs are included in prepaid expenses and other assets on the condensed consolidated balance sheets. As of March 31, 2018, the Company’s $1.2 billion credit facility had an interest rate of LIBOR plus 0.875%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of December 2021 with one

23

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

18-month extension, exercisable at the Company’s option. As of March 31, 2018, the Company’s $35.0 million working capital unsecured line of credit had an interest rate of LIBOR plus 0.875%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of January 2020.

(3) Includes total unamortized premium of $29.2 million and $33.2 million, reduced by unamortized debt issuance costs of $4.9 million and $5.4 million, as of March 31, 2018 and December 31, 2017, respectively.

The aggregate scheduled principal payments of the Company’s outstanding debt as of March 31, 2018 are as follows (excluding lines of credit) ($ in thousands):

Remaining in 2018	$	126,740
2019	627,016
2020	694,921
2021	544,846
2022	692,466
Thereafter	3,035,808
Total	$	5,721,797

(8) Segment Information

The Company's segment disclosures present the measure used by the chief operating decision makers for purposes of assessing each segment's performance. Essex's chief operating decision makers are comprised of several members of its executive management team who use net operating income (“NOI”) to assess the performance of the business for the Company's reportable operating segments. NOI represents total property revenue less direct property operating expenses.

The executive management team evaluates the Company's operating performance geographically. The Company defines its reportable operating segments as the three geographical regions in which its communities are located: Southern California, Northern California, and Seattle Metro.

Excluded from segment revenues and NOI are management and other fees from affiliates and interest and other income. Non-segment revenues and NOI included in the following schedule also consist of revenue generated from commercial properties and properties that have been sold. Other non-segment assets include items such as real estate under development, co-investments, real estate held for sale, net, cash and cash equivalents, marketable securities, notes and other receivables, and prepaid expenses and other assets.

The revenues and NOI for each of the reportable operating segments are summarized as follows for the three months ended March 31, 2018 and 2017 ($ in thousands):

24

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

	Three Months Ended March 31,
	2018			2017
Revenues:
Southern California	$	152,060		$	147,099
Northern California	128,622			123,308
Seattle Metro	58,713			56,192
Other real estate assets	5,552			6,569
Total property revenues	$	344,947		$	333,168
Net operating income:
Southern California	$	107,932		$	104,501
Northern California	94,717			89,743
Seattle Metro	42,012			40,388
Other real estate assets	5,323			6,532
Total net operating income	249,984			241,164
Management and other fees from affiliates	2,308			2,236
Corporate-level property management expenses	(7,770		)	(7,509		)
Depreciation and amortization	(119,105		)	(115,503		)
General and administrative	(14,813		)	(10,601		)
Expensed acquisition and investment related costs	(57		)	(556		)
Interest expense	(54,861		)	(54,583		)
Total return swap income	2,270			2,584
Interest and other income	5,909			6,764
Equity income from co-investments	32,774			10,899
Gain on sale of real estate and land	—			26,174
Gain on remeasurement of co-investment	—			86,482
Net income	$	96,639		$	187,551

Total assets for each of the reportable operating segments are summarized as follows as of March 31, 2018 and December 31, 2017 ($ in thousands):

	March 31, 2018		December 31, 2017
Assets:
Southern California	$	4,744,730	$	4,788,225
Northern California	4,182,261		4,215,449
Seattle Metro	1,506,405		1,520,372
Other real estate assets	55,209		55,488
Net reportable operating segment - real estate assets	10,488,605		10,579,534
Real estate under development	395,710		355,735
Co-investments	1,290,957		1,155,984
Cash and cash equivalents, including restricted cash	139,078		61,126
Marketable securities	197,745		190,004
Notes and other receivables	70,525		100,926
Prepaid expenses and other assets	60,047		52,397
Total assets	$	12,642,667	$	12,495,706

25

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

(9) Net Income Per Common Share and Net Income Per Common Unit

($ in thousands, except share and unit data):

Essex Property Trust, Inc.

	Three Months Ended March 31, 2018					Three Months Ended March 31, 2017
	Income		Weighted- average Common Shares	Per Common Share Amount		Income		Weighted- average Common Shares	Per Common Share Amount
Basic:
Net income available to common stockholders	$	90,918	66,044,022	$	1.38	$	178,964	65,549,484	$	2.73
Effect of Dilutive Securities:
Stock options	—		38,495			—		96,778
DownREIT units	—		—			373		213,228
Diluted:
Net income available to common stockholders	$	90,918	66,082,517	$	1.38	$	179,337	65,859,490	$	2.72

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of2,273,413 and 2,252,234, which include vested Series Z-1 Incentive Units, 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units for the three months ended March 31, 2018 and 2017, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $3.1 million and $6.1 million for the three months ended March 31, 2018 and 2017, respectively. Additionally, the table excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.

Stock options of 364,068 and 225,895 for the three months ended March 31, 2018 and 2017, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the average unearned compensation were greater than the average market price of the common stock for the periods ended and, therefore, were anti-dilutive.

Essex Portfolio, L.P.

	Three Months Ended March 31, 2018					Three Months Ended March 31, 2017
	Income		Weighted- average Common Units	Per Common Unit Amount		Income		Weighted- average Common Units	Per Common Unit Amount
Basic:
Net income available to common unitholders	$	94,050	68,317,435	$	1.38	$	185,110	67,801,718	$	2.73
Effect of Dilutive Securities:
Stock options	—		38,495			—		96,778
DownREIT units	—		—			373		213,228
Diluted:
Net income available to common unitholders	$	94,050	68,355,930	$	1.38	$	185,483	68,111,724	$	2.72

26

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

March 31, 2018 and 2017

(Unaudited)

Stock options of 364,068 and 225,895 for the three months ended March 31, 2018 and 2017, respectively, were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for the periods ended and, therefore, were anti-dilutive. Additionally, the table excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.

(10) Derivative Instruments and Hedging Activities

As of March 31, 2018, the Company had entered into interest rate swap contracts with an aggregate notional amount of $175.0 million that effectively fixed the interest rate on the $175.0 million unsecured term loan at 2.3%. These derivatives qualify for hedge accounting.

As of March 31, 2018, the Company had interest rate caps, which are not accounted for as hedges, totaling a notional amount of $9.9 million that effectively limit the Company’s exposure to interest rate risk by providing a ceiling on the underlying variable interest rate for $9.9 million of the Company’s tax exempt variable rate debt.

As of March 31, 2018 and December 31, 2017, the aggregate carrying value of the interest rate swap contracts was an asset of $7.7 million and $5.4 million, respectively, and is included in prepaid expenses and other assets on the condensed consolidated balance sheets. The aggregate carrying value of the interest rate caps was zero on the condensed consolidated balance sheets as of both March 31, 2018 and December 31, 2017.

Hedge ineffectiveness related to cash flow hedges, which is included in interest expense on the condensed consolidated statements of income and comprehensive income, was not significant for both the three months ended March 31, 2018 and 2017.

Additionally, the Company has entered into total return swaps that effectively convert $256.5 million of mortgage notes payable to a floating interest rate based on the Securities Industry and Financial Markets Association Municipal Swap Index (“SIFMA”) plus a spread. The total return swaps provide fair market value protection on the mortgage notes payable to the counterparties during the initial period of the total return swap until the Company's option to call the mortgage notes at par can be exercised. The Company can currently call all total return swaps with $256.5 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting and had a carrying and fair value of zero at both March 31, 2018 and December 31, 2017. These total return swaps are scheduled to mature between September 2021 and November 2022. The realized gains of $2.3 million and $2.6 million for the three months ended March 31, 2018 and 2017, respectively, were reported in the condensed consolidated statements of income and comprehensive income as total return swap income.

(11) Commitments and Contingencies

The Company is subject to various lawsuits in the normal course of its business operations. Such lawsuits have not had a material adverse effect on the Company's financial condition, results of operations or cash flows.While no assurances can be given,  the Company does not believe there is any pending or threatened litigation against the Company that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the Company.

The Company is subject to various federal, state, and local environmental laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations on its current portfolio or on other assets that the Company may acquire in the future. To the extent that an environmental matter arises or is identified in the future that has other than a remote risk of having a material impact on the condensed consolidated financial statements, the Company will disclose the estimated range of possible outcomes associated with it, and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, impairment will be recognized.

27

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

The following discussion and analysis should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and accompanying Notes thereto included elsewhere herein and with the Company’s 2017 annual report on Form 10-K for the year ended December 31, 2017. The Company makes statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this Form 10-Q entitled “Forward Looking Statements.”

Essex is a self-administered and self-managed REIT that acquires, develops, redevelops, and manages apartment communities in selected residential areas located on the West Coast of the United States. Essex owns all of its interests in its real estate investments, directly or indirectly, through the Operating Partnership. Essex is the sole general partner of the Operating Partnership and, as of March 31, 2018, had an approximately 96.7% general partner interest in the Operating Partnership.

The Company’s investment strategy has two components: constant monitoring of existing markets, and evaluation of new markets to identify areas with the characteristics that underlie rental growth. The Company’s strong financial condition supports its investment strategy by enhancing its ability to quickly shift acquisition, development, redevelopment, and disposition activities to markets that will optimize the performance of the portfolio.

As of March 31, 2018, the Company had ownership interests in 247 operating apartment communities, comprising 60,240 apartment homes, excluding the Company’s ownership in preferred equity interest co-investments, and the Company also had ownership interests in one operating commercial building with approximately 106,564 square feet and seven active developments. The Company’s apartment communities are predominately located in the following major regions:

Southern California (Los Angeles, Orange, San Diego, and Ventura counties)

Northern California (the San Francisco Bay Area)

SeattleMetro (Seattle metropolitan area)

As of March 31, 2018, the Company’s development pipeline was comprised of five consolidated projects under development, two unconsolidated joint venture projects under development, and various consolidated predevelopment projects aggregating 1,982 apartment homes, with total incurred costs of $0.6 billion, and estimated remaining project costs of $0.7 billion, $0.5 billion of which represents the Company's estimated remaining costs, for total estimated project costs of $1.3 billion.

The Company’s consolidated apartment communities are as follows:

	As of March 31, 2018			As of March 31, 2017
	Apartment Homes	%		Apartment Homes	%
Southern California	23,343	47	%	23,343	47	%
Northern California	15,970	32	%	15,848	32	%
Seattle Metro	10,238	21	%	10,238	21	%
Total	49,551	100	%	49,429	100	%

Co-investments, including Wesco I, LLC (“Wesco I”), Wesco III, LLC (“Wesco III”), Wesco IV, LLC (“Wesco IV”), Wesco V, LLC (“Wesco V”), Canadian Pension Plan Investment Board (“CPPIB”), BEXAEW, BEX II, and BEX III communities, developments under construction, and preferred equity interest co-investment communities are not included in the table presented above for both periods.

Comparison of the Three Months Ended March 31, 2018 to the Three Months Ended March 31, 2017

The Company’s average financial occupancies for the Company’s stabilized apartment communities or "Same-Property" (stabilized properties consolidated by the Company for the quarters ended March 31, 2018 and 2017) was 97.1% and 96.5% for the three months ended March 31, 2018 and 2017, respectively. Financial occupancy is defined as the percentage resulting from dividing actual rental revenue by total potential rental revenue. Actual rental revenue represents contractual rental revenue pursuant to leases without considering delinquency and concessions. Total potential rental revenue represents the value of all apartment homes, with occupied apartment homes valued at contractual rental rates pursuant to leases and vacant apartment homes valued at estimated market rents. The Company believes that financial occupancy is a meaningful measure of occupancy because it considers the value of each vacant apartment home at its estimated market rate.

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Market rates are determined using the recently signed effective rates on new leases at the property and are used as the starting point in the determination of the market rates of vacant apartment homes. The Company may increase or decrease these rates based on a variety of factors, including overall supply and demand for housing, concentration of new apartment deliveries within the same submarket which can cause periodic disruption due to greater rental concessions to increase leasing velocity, and rental affordability. Financial occupancy may not completely reflect short-term trends in physical occupancy and financial occupancy rates, and the Company's calculation of financial occupancy may not be comparable to financial occupancy disclosed by other REITs.

The Company does not take into account delinquency and concessions to calculate actual rent for occupied apartment homes and market rents for vacant apartment homes. The calculation of financial occupancy compares contractual rates for occupied apartment homes to estimated market rents for unoccupied apartment homes, and thus the calculation compares the gross value of all apartment homes excluding delinquency and concessions. For apartment communities that are development properties in lease-up without stabilized occupancy figures, the Company believes the physical occupancy rate is the appropriate performance metric. While an apartment community is in the lease-up phase, the Company’s primary motivation is to stabilize the property which may entail the use of rent concessions and other incentives, and thus financial occupancy, which is based on contractual revenue, is not considered the best metric to quantify occupancy.

The regional breakdown of the Company’s Same-Property portfolio for financial occupancy for the three months ended March 31, 2018 and 2017 is as follows:

	Three Months Ended March 31,
	2018		2017
Southern California	96.9	%	96.4	%
Northern California	97.4	%	96.6	%
Seattle Metro	96.9	%	96.6	%

The following table provides a breakdown of revenue amounts, including revenues attributable to the Same-Properties:

	Number of Apartment	Three Months Ended March 31,				Dollar		Percentage
Property Revenues ($ in thousands)	Homes	2018		2017		Change		Change
Same-Property Revenues:
Southern California	22,648	$	147,418	$	142,660	$	4,758	3.3	%
Northern California	14,356	116,254		113,172		3,082		2.7	%
Seattle Metro	10,238	58,713		56,192		2,521		4.5	%
Total Same-Property Revenues	47,242	322,385		312,024		10,361		3.3	%
Non-Same Property Revenues		22,562		21,144		1,418		6.7	%
Total Property Revenues		$	344,947	$	333,168	$	11,779	3.5	%

Same-Property Revenues increased by $10.4 million or 3.3% to $322.4 million in the first quarter of 2018 from $312.0 million in the first quarter of 2017. The increase was primarily attributable to an increase of 2.4% in average rental rates from $2,154 per apartment home in the first quarter of 2017 to $2,205 per apartment home in the first quarter of 2018. 

Non-Same Property Revenues increased by $1.4 million or 6.7% to $22.6 million in the first quarter of 2018 from $21.1 million in the first quarter of 2017. The increase was primarily due to revenue generated at Sage at Cupertino, which was consolidated in March 2017.

Management and other fees from affiliates remained relatively flat at $2.3 million in the first quarter of 2018 compared to $2.2 million in the first quarter of 2017.

Property operating expenses, excluding real estate taxes increased $1.2 million or 2.1% to $57.3 million for the first quarter of 2018 compared to $56.1 million for the first quarter of 2017 primarily due to an increase of $0.9 million in administrative expense. Same-Property operating expenses, excluding real estate taxes, increased by $0.8 million or 1.5% for the first quarter of 2018 compared to the first quarter of 2017, primarily due to a $0.8 million increase in administrative expense.

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Real estate taxes increased $1.8 million or 5.1% to $37.7 million for the first quarter of 2018 compared to $35.9 million for the first quarter of 2017 primarily due to increases in tax rates and property valuations. Same-Property real estate taxes increased by $1.4 million or 4.2% to $34.8 million in the first quarter of 2018 compared to $33.4 million in the first quarter of 2017, primarily due to increases in tax rates and property valuations.

Corporate-level property management expenses remained relatively flat at $7.8 million in the first quarter of 2018 compared to $7.5 million in the first quarter of 2017.

Depreciation and amortization expense increased by $3.6 million or 3.1% to $119.1 million for the first quarter of 2018 compared to $115.5 million for the first quarter of 2017, primarily due to the consolidation of Sage at Cupertino in March 2017 as well as redevelopment activity between the first quarter of 2017 and the first quarter of 2018.

Interest expense increased $0.3 million or 0.5% to $54.9 million for the first quarter of 2018 compared to $54.6 million for the first quarter of 2017, due to an increase in average outstanding debt primarily as a result of the issuance of $350.0 million senior unsecured notes due May 1, 2027 in April 2017 and $300.0 million senior unsecured notes due March 15, 2048 in March 2018, which resulted in $6.3 million interest expense for the first quarter of 2018. The increase was partially offset by various debt that was paid off or matured and regular principal amortization during and after the first quarter of 2017, which resulted in a decrease in interest expense of $5.2 million for the first quarter of 2018. Additionally, there was a $0.8 million increase in capitalized interest in the first quarter of 2018, which was due to an increase in development costs as compared to the same period in 2017.

Total return swap income of $2.3 million in the first quarter of 2018 consists of monthly settlements related to the Company's total return swap contracts that were entered into during 2015 in connection with issuing $257.3 million of fixed rate tax-exempt mortgage notes payable. The decrease of $0.3 million for the first quarter of 2018 compared to the first quarter of 2017 was due to less favorable interest rates.

Interest and other income decreased by $0.9 million or 13.2% to $5.9 million for the first quarter of 2018 compared to $6.8 million for the first quarter of 2017, primarily due to a decrease in the gain on sale of marketable securities of $0.9 million as well as unrealized losses on marketable securities recognized through income of $0.9 million in the first quarter of 2018, partially offset by an increase in marketable securities and other interest income of $1.0 million.

Equity income from co-investments increased $21.9 million or 200.9% to $32.8 million for the first quarter of 2018 compared to $10.9 million for the first quarter of 2017, primarily due to $20.5 million of promote income from the BEXAEW joint venture recognized during the first quarter of 2018.

Liquidity and Capital Resources

As of March 31, 2018, the Company had $122.0 million of unrestricted cash and cash equivalents and $197.7 million in marketable securities, of which $84.0 million were equity securities or available for sale debt securities. The Company believes that cash flows generated by its operations, existing cash and cash equivalents, marketable securities balances, availability under existing lines of credit, access to capital markets and the ability to generate cash from the disposition of real estate are sufficient to meet all of its reasonably anticipated cash needs during the next twelve months. The timing, source and amounts of cash flows provided by financing activities and used in investing activities are sensitive to changes in interest rates and other fluctuations in the capital markets environment, which can affect the Company's plans for acquisitions, dispositions, development and redevelopment activities.

As of March 31, 2018, Fitch Ratings (“Fitch”), Moody’s Investor Service (“Moody's”), and Standard and Poor's (“S&P”) credit agencies rate the Company and EPLP, BBB+/Stable, Baa1/Stable, and BBB+/Stable, respectively.

As of March 31, 2018, the Company had two unsecured lines of credit aggregating $1.24 billion. In January 2018, the Company’s unsecured credit facility was amended, and the line’s capacity was increased from $1.0 billion to $1.2 billion. As of March 31, 2018, there was no amount outstanding on this unsecured line of credit. The underlying interest rate is based on a tiered rate structure tied to the Company's credit ratings and was LIBOR plus 0.875% as of March 31, 2018. In connection with the January 2018 amendment, the scheduled maturity date of this facility was extended to December 2021, with one 18-month extension, exercisable at the Company's option. In January 2018, the Company’s working capital unsecured line of credit was also amended, and the line’s capacity was increased from $25.0 million to $35.0 million. As of March 31, 2018, there was no amount outstanding on this unsecured line of credit. The underlying interest rate on the $35.0 million line is based on a tiered rate structure tied to the Company's credit ratings and was LIBOR plus 0.875% as of March 31, 2018. In connection with the January 2018 amendment, the scheduled maturity date of this facility was extended to January 2020.

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In March 2018, the Company issued $300.0 million of 30-year 4.500% senior unsecured notes. The interest is paid semi-annually in arrears on March 15 and September 15 of each year commencing on September 15, 2018 until the maturity date of March 15, 2048. The Company used the net proceeds of this offering to repay indebtedness under its unsecured credit facilities and for other general corporate and working capital purposes.

The Company has entered into equity distribution agreements with Cantor Fitzgerald & Co, Barclays Capital Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp., Capital One Securities, Inc., Citigroup Global Markets Inc., Jefferies LLC, J.P. Morgan Securities LLC, Mitsubishi UFJ Securities (USA), Inc., and UBS Securities LLC. During the three months ended March 31, 2018, the Company did not issue any shares pursuant to its equity distribution program. Under this program, the Company may from time to time sell shares of common stock into the existing trading market at current market prices, and the Company anticipates using the net proceeds, which are contributed to the Operating Partnership, to pay down debt, acquire apartment communities, fund the development pipeline and for other general corporate purposes. As of March 31, 2018, the Company may sell an additional 4,654,556 shares under the current equity distribution program.

Essex pays quarterly dividends from cash available for distribution. Until it is distributed, cash available for distribution is invested by the Company primarily in investment grade securities held available for sale or is used by the Company to reduce balances outstanding under its line of credit. 

Development and Predevelopment 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 March 31, 2018, the Company’s development pipeline was comprised of five consolidated projects under development, two unconsolidated joint venture projects under development and various consolidated predevelopment projects, aggregating 1,982 apartment homes, with total incurred costs of $0.6 billion, and estimated remaining project costs of approximately $0.7 billion, $0.5 billion of which represents the Company's estimated remaining costs, for total estimated project costs of $1.3 billion.

The Company expects to fund the development and predevelopment pipeline by using a combination of some or all of the following sources: its working capital, amounts available on its credit facilities, construction loans, net proceeds from public and private equity and debt issuances, and proceeds from the disposition of assets, if any.

Redevelopment Pipeline

The Company defines redevelopment communities as existing properties owned or recently acquired, which have been targeted for additional investment by the Company with the expectation of increased financial returns through property improvement. During redevelopment, apartment homes may not be available for rent and, as a result, may have less than stabilized operations. As of March 31, 2018, the Company had ownership interests in five major redevelopment communities aggregating 1,727 apartment homes with estimated redevelopment costs of $138.8 million, of which approximately $38.0 million remains to be expended. The Company has the ability to cease funding of the redevelopment pipeline as needed.

Derivative Activity

The Company uses interest rate swaps, interest rate caps, and total return swap contracts to manage certain interest rate risks. The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves. The fair values of interest rate swaps and total return swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

Alternative Capital Sources

The Company utilizes co-investments as an alternative source of capital for acquisitions of both operating and development communities. As of March 31, 2018, the Company had an interest in 814 apartment homes in communities actively under development with joint ventures for total estimated costs of $0.6 billion. Total estimated remaining costs total approximately $0.3 billion, of which the Company estimates that its remaining investment in these development joint ventures will be

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approximately $0.2 billion. In addition, the Company had an interest in 10,810 apartment homes of operating communities with joint ventures for a total book value of $0.9 billion as of March 31, 2018.

Off-Balance Sheet Arrangements

The Company has various unconsolidated interests in certain joint ventures. The Company does not believe that these unconsolidated investments have a materially different impact on its liquidity, cash flows, capital resources, credit or market risk than its consolidated operations. See Note 4, Co-investments, in the Notes to Condensed Consolidated Financial Statements for carrying values and combined summarized financial information of these unconsolidated investments.

Critical Accounting Policies and Estimates

The preparation of condensed consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities. The Company defines critical accounting policies as those accounting policies that require the Company’s management to exercise their most difficult, subjective and complex judgments. The Company’s critical accounting policies and estimates relate principally to the following key areas: (i) accounting for business combinations; (ii) consolidation under applicable accounting standards for entities that are not wholly owned; (iii) assessing the carrying values of the Company's real estate properties and investments in and advances to joint ventures and affiliates; and (iv) internal cost capitalization. The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates made by management.

The Company’s critical accounting policies and estimates have not changed materially from the information reported in Note 2, Summary of Critical and Significant Accounting Policies, in the Company’s annual report on Form 10-K for the year ended December 31, 2017.

Forward-Looking Statements

Certain statements in this “Management's Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this quarterly report on Form 10-Q which are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act, including statements regarding the Company's expectations, estimates, assumptions, hopes, intentions, beliefs and strategies regarding the future. Words such as “expects,” “assumes,” “anticipates,” “may,” “will,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, among other things, statements regarding the Company’s intent, beliefs or expectations with respect to the timing of completion of current development and redevelopment projects and the stabilization of such projects, the timing of lease-up and occupancy of its apartment communities, the anticipated operating performance of its apartment communities, the total projected costs of development and redevelopment projects, co-investment activities, qualification as a REIT under the Code, the real estate markets in the geographies in which the Company’s properties are located and in the United States in general, the adequacy of future cash flows to meet anticipated cash needs, its financing activities and the use of proceeds from such activities, the availability of debt and equity financing, general economic conditions including the potential impacts from the economic conditions, trends affecting the Company’s financial condition or results of operations, changes to U.S. tax laws and regulations in general or specifically related to REITs or real estate, changes to laws and regulations in jurisdictions in which communities the Company owns are located, and other information that is not historical information.

While the Company's management believes the assumptions underlying its forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control, which could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect the Company’s current expectations of the approximate outcomes of the matters discussed. Factors that might cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: the Company may fail to achieve its business objectives; the actual completion of development and redevelopment projects may be subject to delays; the stabilization dates of such projects may be delayed; the Company may abandon or defer development projects for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; the total projected costs of current development and

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redevelopment projects may exceed expectations; such development and redevelopment projects may not be completed; development and redevelopment projects and acquisitions may fail to meet expectations; estimates of future income from an acquired property may prove to be inaccurate; occupancy rates and rental demand may be adversely affected by competition and local economic and market conditions; there may be increased interest rates and operating costs; the Company may be unsuccessful in the management of its relationships with its co-investment partners; future cash flows may be inadequate to meet operating requirements and/or may be insufficient to provide for dividend payments in accordance with REIT requirements; there may be a downturn in general economic conditions, the real estate industry, and the markets in which the Company's communities are located; the terms of any refinancing may not be as favorable as the terms of existing indebtedness; and those risks, special considerations, and other factors referred to in this quarterly report on Form 10-Q, in the Company's annual report on Form 10-K for the year ended December 31, 2017, and in the Company's other filings with the Securities and Exchange Commission (the “SEC”). All forward-looking statements are made as of the date hereof, the Company assumes no obligation to update or supplement this information for any reason, and therefore, they may not represent the Company’s estimates and assumptions after the date of this report.

Funds from Operations Attributable to Common Stockholders and Unitholders

Funds from Operations Attributable to Common Stockholders and Unitholders (“FFO”) is a financial measure that is commonly used in the REIT industry.  The Company presents FFO as a supplemental operating performance measure. FFO is not used by the Company as, nor should it be considered to be, an alternative to net earnings computed under U.S. GAAP as an indicator of the Company’s operating performance or as an alternative to cash from operating activities computed under U.S. GAAP as an indicator of the Company’s ability to fund its cash needs.

FFO is not meant to represent a comprehensive system of financial reporting and does not present, nor does it intend to present, a complete picture of the Company's financial condition and operating performance. The Company believes that net earnings computed under U.S. GAAP is the primary measure of performance and that FFO is only meaningful when it is used in conjunction with net earnings. The Company considers FFO and FFO excluding non-recurring items and acquisition costs (referred to as “Core FFO”) to be useful financial performance measurements of an equity REIT because, together with net income and cash flows, FFO and Core FFO provide investors with additional bases to evaluate operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and ability to pay dividends. Further, the Company believes that its consolidated financial statements, prepared in accordance with U.S. GAAP, provide the most meaningful picture of its financial condition and its operating performance.

In calculating FFO, the Company follows the definition for this measure published by the National Association of Real Estate Investment Trusts (“NAREIT”), which is the leading REIT industry association. The Company believes that, under the NAREIT FFO definition, the two most significant adjustments made to net income are (i) the exclusion of historical cost depreciation and (ii) the exclusion of gains and losses from the sale of previously depreciated properties. The Company agrees that these two NAREIT adjustments are useful to investors for the following reasons:

(a) historical cost accounting for real estate assets in accordance with U.S. GAAP assumes, through depreciation charges, that the value of real estate assets diminishes predictably over time. NAREIT stated in its White Paper on Funds from Operations “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.” Consequently, NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time and depreciation charges required by U.S. GAAP do not reflect the underlying economic realities.

(b) REITs were created as a legal form of organization in order to encourage public ownership of real estate as an asset class through investment in firms that were in the business of long-term ownership and management of real estate.  The exclusion, in NAREIT’s definition of FFO, of gains and losses from the sales of previously depreciated operating real estate assets allows investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT’s activity and assists in comparing those operating results between periods.

Management believes that it has consistently applied the NAREIT definition of FFO to all periods presented. However, there is judgment involved and other REITs’ calculation of FFO may vary from the NAREIT definition for this measure, and thus their disclosure of FFO may not be comparable to the Company’s calculation.

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The following table is a reconciliation of net income available to common stockholders to FFO and Core FFO for the three months ended March 31, 2018 and 2017 (in thousands except share and per share amounts):

Essex Property Trust, Inc.

	Three Months Ended March 31,
	2018			2017
Net income available to common stockholders	$	90,918		$	178,964
Adjustments:
Depreciation and amortization	119,105			115,503
Gains not included in Funds from Operations attributable to common stockholders and unitholders	—			(112,656		)
Depreciation and amortization add back from unconsolidated co-investments	15,859			12,854
Noncontrolling interest related to Operating Partnership units	3,132			6,146
Depreciation attributable to third party ownership and other	(232		)	(25		)
Funds from Operations attributable to common stockholders and unitholders	$	228,782		$	200,786
Funds from Operations attributable to common stockholders and unitholders per share - diluted	$	3.35		$	2.95
Non-core items:
Expensed acquisition and investment related costs	57			556
Gain on sale of marketable securities	(680		)	(1,605		)
Unrealized losses on marketable securities	876			—
Interest rate hedge ineffectiveness (1)	56			(6		)
Co-investment promote income	(20,541		)	—
Income from early redemption of preferred equity investments	(24		)	—
Insurance reimbursements, legal settlements, and other, net	2,433			(25		)
Core Funds from Operations attributable to common stockholders and unitholders	$	210,959		$	199,706
Core Funds from Operations attributable to common stockholders and unitholders per share-diluted	$	3.09		$	2.94
Weighted average number shares outstanding diluted (2)	68,318,012			67,974,466

(1) Interest rate swaps generally are adjusted to fair value through other comprehensive income (loss). However, because certain of the Company's interest rate swaps do not have a 0% LIBOR floor, while related hedged debt in these cases is subject to a 0% LIBOR floor, the portion of the change in fair value of these interest rate swaps attributable to this mismatch, if any, is recorded as a non-cash interest rate hedge ineffectiveness through interest expense.

(2) Assumes conversion of all dilutive outstanding operating partnership interests in the Operating Partnership and excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.

Net Operating Income

Net operating income (“NOI”) and Same-Property NOI are considered by management to be an important supplemental performance measure to earnings from operations included in the Company’s consolidated statements of income. The presentation of Same-Property NOI assists with the presentation of the Company’s operations prior to the allocation of depreciation and any corporate-level or financing-related costs. NOI reflects the operating performance of a community and allows for an easy comparison of the operating performance of individual communities or groups of communities. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impacts to overhead by acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets. The Company defines Same-Property NOI as Same-Property revenue less Same-Property operating expenses, including property taxes. Please see the reconciliation of earnings from operations to Same-Property NOI, which in the table below is the NOI for stabilized properties consolidated by the Company for the periods presented ($ in thousands):

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	Three Months Ended March 31,
	2018			2017
Earnings from operations	$	110,547		$	109,231
Adjustments:
Corporate-level property management expenses	7,770			7,509
Depreciation and amortization	119,105			115,503
Management and other fees from affiliates	(2,308		)	(2,236		)
General and administrative	14,813			10,601
Expensed acquisition and investment related costs	57			556
NOI	249,984			241,164
Less: Non-Same Property NOI	(17,255		)	(16,596		)
Same-Property NOI	$	232,729		$	224,568

Item 3: Quantitative and Qualitative Disclosures About Market Risks

Interest Rate Hedging Activities

The Company’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, the Company uses interest rate swaps as part of its cash flow hedging strategy. As of March 31, 2018, the Company has entered into five interest rate swap contracts to mitigate the risk of changes in the interest-related cash outflows on $175.0 million of the Company's unsecured term debt. As of March 31, 2018,the Company also had $270.1 million of variable rate indebtedness, of which $9.9 million is subject to interest rate cap protection. All of the Company's interest rate swaps are designated as cash flow hedges as of March 31, 2018. The following table summarizes the notional amount, carrying value, and estimated fair value of the Company’s cash flow hedge derivative instruments used to hedge interest rates as of March 31, 2018. The notional amount represents the aggregate amount of a particular security that is currently hedged at one time, but does not represent exposure to credit, interest rates, or market risks. The table also includes a sensitivity analysis to demonstrate the impact on the Company’s derivative instruments from an increase or decrease in 10-year Treasury bill interest rates by 50 basis points, as of March 31, 2018.

				Carrying and		Estimated Carrying Value
	Notional		Maturity	Estimated		50		-50
($ in thousands)	Amount		Date Range	Fair Value		Basis Points		Basis Points
Cash flow hedges:
Interest rate swaps	$	175,000	2022	$	7,652	$	10,771	$	4,566
Interest rate caps	9,924		2019	—		—		—
Total cash flow hedges	$	184,924	2019-2022	$	7,652	$	10,771	$	4,566

Additionally, the Company has entered into total return swap contracts, with an aggregate notional amount of $256.5 million that effectively convert $256.5 million of fixed mortgage notes payable to a floating interest rate based on the SIFMA plus a spread and have a carrying value of zero at March 31, 2018. The Company is exposed to insignificant interest rate risk on these swaps as the related mortgages are callable, at par, by the Company, co-terminus with the termination of any related swap. These derivatives do not qualify for hedge accounting.

Interest Rate Sensitive Liabilities

The Company is exposed to interest rate changes primarily as a result of its lines of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Company's real estate investment portfolio and operations. The Company’s interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives, the Company borrows primarily at fixed rates and may enter into derivative financial instruments such as interest rate swaps, caps, and treasury locks in order to mitigate its interest rate risk

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on a related financial instrument. The Company does not enter into derivative or interest rate transactions for speculative purposes.

The Company’s interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows.

For the Years Ended	2018			2019		2020		2021		2022		Thereafter		Total			Fair value
($ in thousands, except for interest rates)
Fixed rate debt	$	126,329		626,424		694,273		544,138		341,692		2,768,858		$	5,101,714		$	5,104,789
Average interest rate	5.7		%	4.2	%	4.8	%	4.3	%	3.7	%	3.7	%	4.0		%
Variable rate debt (1)	$	411		592		648		708		350,774		266,950		$	620,083		$	615,632
Average interest rate	2.2		%	2.2	%	2.2	%	2.2	%	2.4	%	2.1	%	2.3		%

(1) $175.0 million is subject to interest rate swap agreements, $9.9 million is subject to interest rate caps, and $256.5 million is subject to total return swaps.

The table incorporates only those exposures that exist as of March 31, 2018. It does not consider those exposures or positions that could arise after that date. As a result, the Company's ultimate realized gain or loss, with respect to interest rate fluctuations and hedging strategies would depend on the exposures that arise prior to settlement.

Item 4: Controls and Procedures

Essex Property Trust, Inc.

As of March 31, 2018, Essex carried out an evaluation, under the supervision and with the participation of management, including Essex’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Essex's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, Essex’s Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2018, Essex's disclosure controls and procedures were effective to ensure that the information required to be disclosed by Essex in the reports that Essex files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that Essex files or submits under the Exchange Act is accumulated and communicated to Essex’s management, including Essex’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There were no changes in Essex’s internal control over financial reporting, that occurred during the quarter ended March 31, 2018, that have materially affected, or are reasonably likely to materially affect, Essex’s internal control over financial reporting.

Essex Portfolio, L.P.

As of March 31, 2018, the Operating Partnership carried out an evaluation, under the supervision and with the participation of management, including Essex's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Operating Partnership's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2018, the Operating Partnership's disclosure controls and procedures were effective to ensure that the information required to be disclosed by the Operating Partnership in the reports that the Operating Partnership files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such disclosure controls and procedures were also effective to ensure that information required to be disclosed in the reports that the Operating Partnership files or submits under the Exchange Act is accumulated and communicated to the Operating Partnership’s management, including Essex's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

36

There were no changes in the Operating Partnership’s internal control over financial reporting, that occurred during the quarter ended March 31, 2018, that have materially affected, or are reasonably likely to materially affect, the Operating Partnership’s internal control over financial reporting.

Part II -- Other Information

Item 1: Legal Proceedings

The Company is subject to various lawsuits in the normal course of its business operations. While the resolution of any such matter cannot be predicted with certainty, the Company is not currently a party to any legal proceedings nor is any legal proceeding currently threatened against the Company that the Company believes, individually or in the aggregate, would have a material adverse effect on the Company's financial condition, results of operations or cash flows.

Item 1A: Risk Factors

In addition to the other information set forth in this quarterly report on Form 10-Q, you should carefully consider the factors discussed in “Part I. Item A. Risk Factors” in the Company's annual report on Form 10-K for the year ended December 31, 2017, which could materially affect the Company's financial condition, results of operations or cash flows. There have been no material changes to the Risk Factors disclosed in Item 1A of the Company's annual report on Form 10-K for the year ended December 31, 2017, as filed with the SEC and available at www.sec.gov. The risks described in the Company's annual report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known or that the Company currently deems to be immaterial may also materially adversely affect the Company's financial condition, results of operations or cash flows.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities; Essex Portfolio, L.P.

During the three months ended March 31, 2018, the Operating Partnership issued OP Units in private placements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the consideration set forth below:

During the three months ended March 31, 2018, Essex issued an aggregate of 6,876 shares of its common stock upon the exercise of stock options and vesting of restricted stock awards. Essex contributed the proceeds of $1.2 million from the option exercises during the three months ended March 31, 2018 to the Operating Partnership in exchange for an aggregate of 6,664 OP Units, as required by the Operating Partnership’s partnership agreement. Furthermore, for each share of common stock issued by Essex in connection with vesting of restricted stock awards and the exchange of OP Units by limited partners, the Operating Partnership issued OP Units to Essex, as required by the partnership agreement. During the three months ended March 31, 2018, an aggregate of 212 OP Units were issued to Essex pursuant to this mechanism.

Stock Repurchases

The following table summarizes the Company’s purchases of its common stock during the three months ended March 31, 2018:    

	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program(1)	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program (in Thousands)
January 1, 2018 - January 31, 2018	16,834	$	224.13	16,834	$	245,200
February 1, 2018 - February 28, 2018	—	—		—	—
March 1, 2018 - March 31, 2018	—	—		—	—
Total	16,834	$	224.13	16,834	$	245,200

(1) In December 2015, the Company’s board of directors authorized a stock repurchase plan to allow Essex to acquire shares in an aggregate of up to $250 million. Under this program, as of March 31, 2018, the Company had $245.2 million of purchase authority remaining.

37

Item 3: Defaults Upon Senior Securities

None.

Item 4: Mine Safety Disclosures

Not applicable.

Item 5: Other Information

None.

38

Item 6: Exhibits

A. Exhibits
3.1	Sixth Amended and Restated Bylaws of Essex Property Trust, Inc. (as of February 21, 2017), attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed February 27, 2017, and incorporated herein by reference.
3.2	First Amendment to Sixth Amended and Restated Bylaws of Essex Property Trust, Inc., dated February 20, 2018, attached as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed February 22, 2018, and incorporated herein by reference.
4.1	Indenture, dated March 8, 2018, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 4.500% Senior Notes due 2048 and the guarantee thereof, attached as Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed March 8, 2018, and incorporated herein by reference.
10.1	Second Amended and Restated Revolving Credit Agreement dated as of January 17, 2018 by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent and L/C Issuer and the other lenders party thereto, attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed January 18, 2018, and incorporated herein by reference.
12.1*	Ratio of Earnings to Fixed Charges.
31.1*	Certification of Michael J. Schall, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Angela L. Kleiman, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3*	Certification of Michael J. Schall,  Principal Executive Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.4*	Certification of Angela L. Kleiman, Principal Financial Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Michael J. Schall, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2*	Certification of Angela L. Kleiman, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.3*	Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.4*	Certification of Angela L. Kleiman, Principal Financial Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed or furnished herewith.

** In accordance with Item 601(b)(32) of Regulation S-K, this Exhibit is not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by

39

reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

40

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ESSEX PROPERTY TRUST, INC.

(Registrant)

Date: May 4, 2018

By:  /S/ ANGELA L. KLEIMAN

Angela L. Kleiman

Executive Vice President and Chief Financial Officer

(Authorized Officer, Principal Financial Officer)

Date: May 4, 2018

By:  /S/ JOHN FARIAS

John Farias

Senior Vice President and Chief Accounting Officer

ESSEX PORTFOLIO, L.P.

By Essex Property Trust, Inc., its general partner

(Registrant)

Date: May 4, 2018

By:  /S/ ANGELA L. KLEIMAN

Angela L. Kleiman

Executive Vice President and Chief Financial Officer

(Authorized Officer, Principal Financial Officer)

Date: May 4, 2018

By:  /S/ JOHN FARIAS

John Farias

Senior Vice President and Chief Accounting Officer

41

EX-12.1

Exhibit 12.1

ESSEX PROPERTY TRUST, INC. AND SUBSIDIARIES

Schedule of computation of Ratio and Earnings to Fixed Charges and Preferred Stock Dividends

(Dollars in thousands, except ratios)

	Three Months Ended March 31,			Years Ended December 31,
	2018			2017			2016			2015			2014
Earnings before fixed charges:
Net income	$	96,639		$	458,043		$	438,410		$	248,239		$	134,438
Interest expense	54,861			222,894			219,654			204,827			164,551
Interest portion of rental expense	315			1,330			1,151			559			267
Total earnings before fixed charges	$	151,815		$	682,267		$	659,215		$	453,625		$	299,256
Fixed charges:
Interest expense	$	54,861		$	222,894		$	219,654		$	204,827		$	164,551
Capitalized interest	4,170			13,860			12,486			15,571			22,510
Interest portion of rental expense	315			1,330			1,151			559			267
Total fixed charges	$	59,346		$	238,084		$	233,291		$	220,957		$	187,328
Preferred stock dividends	—			—			1,314			5,255			5,291
Total fixed charges and preferred
stock dividends	$	59,346		$	238,084		$	234,605		$	226,212		$	192,619
Ratio of earnings to fixed charges
(excluding preferred stock dividends)	2.56		X	2.87		X	2.83		X	2.05		X	1.60		X
Ratio of earnings to combined fixed
charges and preferred stock dividends	2.56		X	2.87		X	2.81		X	2.01		X	1.55		X

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Schedule of computation of Ratio and Earnings to Fixed Charges and Preferred Interest Distributions

(Dollars in thousands, except ratios)

	Three Months Ended March 31,			Years Ended December 31,
	2018			2017			2016			2015			2014
Earnings before fixed charges:
Net income	$	96,639		$	458,043		$	438,410		$	248,239		$	134,438
Interest expense	54,861			222,894			219,654			204,827			164,551
Interest portion of rental expense	315			1,330			1,151			559			267
Total earnings before fixed charges	$	151,815		$	682,267		$	659,215		$	453,625		$	299,256
Fixed charges:
Interest expense	$	54,861		$	222,894		$	219,654		$	204,827		$	164,551
Capitalized interest	4,170			13,860			12,486			15,571			22,510
Interest portion of rental expense	315			1,330			1,151			559			267
Total fixed charges	$	59,346		$	238,084		$	233,291		$	220,957		$	187,328
Preferred interest distributions	—			—			1,314			5,255			5,291
Total fixed charges and
preferred interest distributions	$	59,346		$	238,084		$	234,605		$	226,212		$	192,619
Ratio of earnings to fixed charges
(excluding preferred interest
distributions)	2.56		X	2.87		X	2.83		X	2.05		X	1.60		X
Ratio of earnings to combined fixed
charges and preferred interest
distributions	2.56		X	2.87		X	2.81		X	2.01		X	1.55		X

EX-31.1

EXHIBIT 31.1

ESSEX PROPERTY TRUST, INC.

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael J. Schall, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Essex Property Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:May 4, 2018

/s/ Michael J. Schall

Michael J. Schall

Chief Executive Officer and President

Essex Property Trust, Inc.

EX-31.2

EXHIBIT 31.2

ESSEX PROPERTY TRUST, INC.

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Angela L. Kleiman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Essex Property Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:May 4, 2018

/s/ Angela L. Kleiman

Angela L. Kleiman

Executive Vice President and Chief Financial Officer

Essex Property Trust, Inc.

EX-31.3

EXHIBIT 31.3

ESSEX PORTFOLIO, L.P.

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael J. Schall, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Essex Portfolio, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:May 4, 2018

/s/ Michael J. Schall

Michael J. Schall

Chief Executive Officer and President

Essex Property Trust, Inc., general partner of

Essex Portfolio, L.P.

EX-31.4

EXHIBIT 31.4

ESSEX PORTFOLIO, L.P.

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Angela L. Kleiman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Essex Portfolio, L.P.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:May 4, 2018

/s/ Angela L. Kleiman

Angela L. Kleiman

Executive Vice President and Chief Financial Officer

Essex Property Trust, Inc., general partner of

Essex Portfolio, L.P.

EX-32.1

Exhibit 32.1

ESSEX PROPERTY TRUST, INC.

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350 as adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, chapter 63 of title 18, United States Code), I, Michael J. Schall, hereby certify, to the best of my knowledge, that the Quarterly Report on Form 10-Q for the period ended March 31, 2018 (the “Form 10-Q”) of Essex Property Trust, Inc. fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Essex Property Trust, Inc. at the dates of and for the periods presented.

Date: May 4, 2018	/s/ Michael J. Schall
	Michael J. Schall
	Chief Executive Officer and President
	Essex Property Trust, Inc.

EX-32.2

Exhibit 32.2

ESSEX PROPERTY TRUST, INC.

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350 as adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, chapter 63 of title 18, United States Code), I, Angela L. Kleiman, hereby certify, to the best of my knowledge, that the Quarterly Report on Form 10-Q for the period ended March 31, 2018 (the “Form 10-Q”) of Essex Property Trust, Inc. fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Essex Property Trust, Inc. at the dates of and for the periods presented.

Date: May 4, 2018	/s/ Angela L. Kleiman
	Angela L. Kleiman
	Executive Vice President and Chief Financial Officer
	Essex Property Trust, Inc.

EX-32.3

Exhibit 32.3

ESSEX PORTFOLIO, L.P.

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350 as adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, chapter 63 of title 18, United States Code), I, Michael J. Schall, hereby certify, to the best of my knowledge, that the Quarterly Report on Form 10-Q for the period ended March 31, 2018 (the “Form 10-Q”) of Essex Portfolio, L.P. fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Essex Portfolio, L.P. at the dates of and for the periods presented.

Date: May 4, 2018	­­/s/ Michael J. Schall
	Michael J. Schall
	Chief Executive Officer and President
	Essex Property Trust, Inc., general partner of
	Essex Portfolio, L.P.

EX-32.4

Exhibit 32.4

ESSEX PORTFOLIO, L.P.

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350 as adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, chapter 63 of title 18, United States Code), I, Angela L. Kleiman, hereby certify, to the best of my knowledge, that the Quarterly Report on Form 10-Q for the period ended March 31, 2018 (the “Form 10-Q”) of Essex Portfolio, L.P. fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Essex Portfolio, L.P. at the dates of and for the periods presented.

Date: May 4, 2018	­­­­­/s/ Angela L. Kleiman
	Angela L. Kleiman
	Executive Vice President and Chief Financial Officer
	Essex Property Trust, Inc., general partner of
	Essex Portfolio, L.P.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2018	Apr. 30, 2018
Entity Information [Line Items]
Entity Registrant Name	ESSEX PROPERTY TRUST INC
Entity Central Index Key	0000920522
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		66,046,207
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Essex Portfolio, L.P. [Member]
Entity Information [Line Items]
Entity Registrant Name	ESSEX PORTFOLIO LP
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Rental properties:
Land and land improvements	$ 2,719,064	$ 2,719,064
Buildings and improvements	10,657,671	10,629,767
Total rental properties	13,376,735	13,348,831
Less: accumulated depreciation	(2,888,130)	(2,769,297)
Net real estate	10,488,605	10,579,534
Real estate under development	395,710	355,735
Co-investments	1,290,957	1,155,984
Total real estate	12,175,272	12,091,253
Cash and cash equivalents-unrestricted	121,954	44,620
Cash and cash equivalents-restricted	17,124	16,506
Marketable securities	197,745	190,004
Notes and other receivables (includes related party receivables of $9.9 million and $41.2 million as of March 31, 2018 and December 31, 2017, respectively)	70,525	100,926
Prepaid expenses and other assets	60,047	52,397
Total assets	12,642,667	12,495,706
LIABILITIES AND EQUITY/CAPITAL
Unsecured debt, net	3,797,923	3,501,709
Mortgage notes payable, net	1,921,047	2,008,417
Lines of credit	0	179,000
Accounts payable and accrued liabilities	179,641	127,501
Construction payable	48,223	51,770
Dividends/Distributions payable	129,038	121,420
Distributions in excess of investments in co-investments	0	36,726
Other liabilities	33,477	33,132
Total liabilities	6,109,349	6,059,675
Commitments and contingencies
Redeemable noncontrolling interest	41,159	39,206
Equity/Capital:
Common stock; $0.0001 par value, 670,000,000 shares authorized; 66,044,441 and 66,054,399 shares issued and outstanding, respectively	7	7
Additional paid-in capital	7,127,248	7,129,571
Distributions in excess of accumulated earnings	(743,773)	(833,726)
Limited Partners:
Accumulated other comprehensive loss, net	(14,709)	(18,446)
Total stockholders' equity	6,368,773	6,277,406
Noncontrolling interest	123,386	119,419
Total equity	6,492,159	6,396,825
Total liabilities and equity/capital	12,642,667	12,495,706
Essex Portfolio, L.P. [Member]
Rental properties:
Land and land improvements	2,719,064	2,719,064
Buildings and improvements	10,657,671	10,629,767
Total rental properties	13,376,735	13,348,831
Less: accumulated depreciation	(2,888,130)	(2,769,297)
Net real estate	10,488,605	10,579,534
Real estate under development	395,710	355,735
Co-investments	1,290,957	1,155,984
Total real estate	12,175,272	12,091,253
Cash and cash equivalents-unrestricted	121,954	44,620
Cash and cash equivalents-restricted	17,124	16,506
Marketable securities	197,745	190,004
Notes and other receivables (includes related party receivables of $9.9 million and $41.2 million as of March 31, 2018 and December 31, 2017, respectively)	70,525	100,926
Prepaid expenses and other assets	60,047	52,397
Total assets	12,642,667	12,495,706
LIABILITIES AND EQUITY/CAPITAL
Unsecured debt, net	3,797,923	3,501,709
Mortgage notes payable, net	1,921,047	2,008,417
Lines of credit	0	179,000
Accounts payable and accrued liabilities	179,641	127,501
Construction payable	48,223	51,770
Dividends/Distributions payable	129,038	121,420
Distributions in excess of investments in co-investments	0	36,726
Other liabilities	33,477	33,132
Total liabilities	6,109,349	6,059,675
Commitments and contingencies
Redeemable noncontrolling interest	41,159	39,206
Limited Partners:
Common equity (2,273,413 and 2,268,114 units issued and outstanding, respectively)	53,003	49,792
Accumulated other comprehensive loss, net	(11,281)	(15,229)
Total partners' capital	6,425,204	6,330,415
Noncontrolling interest	66,955	66,410
Total capital	6,492,159	6,396,825
Total liabilities and equity/capital	12,642,667	12,495,706
Essex Portfolio, L.P. [Member] | General Partner [Member]
General Partner:
Common equity (66,044,441 and 66,054,399 units issued and outstanding, respectively)	6,383,482	6,295,852
Essex Portfolio, L.P. [Member] | General Partner [Member] | Common Equity [Member]
General Partner:
Common equity (66,044,441 and 66,054,399 units issued and outstanding, respectively)	6,383,482	6,295,852
Limited Partners:
Total capital	$ 6,383,482	$ 6,295,852

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Mar. 31, 2018	Dec. 31, 2017
Related party receivables	$ 9.9	$ 41.2
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	670,000,000	670,000,000
Common stock, shares issued (in shares)	66,044,441	66,054,399
Common stock, shares outstanding (in shares)	66,044,441	66,054,399
Essex Portfolio, L.P. [Member]
Related party receivables	$ 9.9	$ 41.2
Essex Portfolio, L.P. [Member] | General Partner [Member]
Common stock, shares issued (in shares)	66,044,441	66,054,399
Common stock, shares outstanding (in shares)	66,044,441	66,054,399
Essex Portfolio, L.P. [Member] | Limited Partners [Member]
Common stock, shares issued (in shares)	2,273,413	2,268,114
Common stock, shares outstanding (in shares)	2,273,413	2,268,114

XML

Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Revenues:
Rental and other property	$ 344,947	$ 333,168
Management and other fees from affiliates	2,308	2,236
Revenues	347,255	335,404
Expenses:
Property operating, excluding real estate taxes	57,250	56,136
Real estate taxes	37,713	35,868
Corporate-level property management expenses	7,770	7,509
Depreciation and amortization	119,105	115,503
General and administrative	14,813	10,601
Expensed acquisition and investment related costs	57	556
Total expenses	236,708	226,173
Earnings from operations	110,547	109,231
Interest expense	(54,861)	(54,583)
Total return swap income	2,270	2,584
Interest and other income	5,909	6,764
Equity income from co-investments	32,774	10,899
Gain on sale of real estate and land	0	26,174
Gain on remeasurement of co-investment	0	86,482
Net income	96,639	187,551
Net income attributable to noncontrolling interest	(5,721)	(8,587)
Net income available to common stockholders	90,918	178,964
Comprehensive income	102,815	189,764
Comprehensive income attributable to noncontrolling interest	(5,926)	(8,661)
Comprehensive income attributable to controlling interest	$ 96,889	$ 181,103
Basic:
Net income available to common stockholders/unitholders (in dollars per share)	$ 1.38	$ 2.73
Weighted average number of shares/common units outstanding during the period (in shares)	66,044,022	65,549,484
Diluted:
Net income available to common stockholders/unitholders (in dollars per share)	$ 1.38	$ 2.72
Weighted average number of shares/common units outstanding during the period (in shares)	66,082,517	65,859,490
Dividends/Distributions per common share/unit (in dollars per share)	$ 1.86	$ 1.75
Essex Portfolio, L.P. [Member]
Revenues:
Rental and other property	$ 344,947	$ 333,168
Management and other fees from affiliates	2,308	2,236
Revenues	347,255	335,404
Expenses:
Property operating, excluding real estate taxes	57,250	56,136
Real estate taxes	37,713	35,868
Corporate-level property management expenses	7,770	7,509
Depreciation and amortization	119,105	115,503
General and administrative	14,813	10,601
Expensed acquisition and investment related costs	57	556
Total expenses	236,708	226,173
Earnings from operations	110,547	109,231
Interest expense	(54,861)	(54,583)
Total return swap income	2,270	2,584
Interest and other income	5,909	6,764
Equity income from co-investments	32,774	10,899
Gain on sale of real estate and land	0	26,174
Gain on remeasurement of co-investment	0	86,482
Net income	96,639	187,551
Net income attributable to noncontrolling interest	(2,589)	(2,441)
Net income available to common stockholders	94,050	185,110
Comprehensive income	102,815	189,764
Comprehensive income attributable to noncontrolling interest	(2,589)	(2,441)
Comprehensive income attributable to controlling interest	$ 100,226	$ 187,323
Basic:
Net income available to common stockholders/unitholders (in dollars per share)	$ 1.38	$ 2.73
Weighted average number of shares/common units outstanding during the period (in shares)	68,317,435	67,801,718
Diluted:
Net income available to common stockholders/unitholders (in dollars per share)	$ 1.38	$ 2.72
Weighted average number of shares/common units outstanding during the period (in shares)	68,355,930	68,111,724
Dividends/Distributions per common share/unit (in dollars per share)	$ 1.86	$ 1.75

XML

Condensed Consolidated Statement of Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Distributions in Excess of Accumulated Earnings [Member]	Accumulated Other Comprehensive Loss, Net [Member]	Noncontrolling Interest [Member]
Issuance of common stock under:
Cumulative effect upon adoption					$ (2,234)
Cumulative effect upon adoption | ASU 2016-01 [Member]	$ 0			$ 2,234	(2,234)
Cumulative effect upon adoption | ASU 2017-05 [Member]	123,708			119,651		$ 4,057
Balance at period beginning at Dec. 31, 2017	6,396,825	$ 7	$ 7,129,571	(833,726)	(18,446)	119,419
Balances (in shares) at Dec. 31, 2017		66,054
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	96,639			90,918		5,721
Reversal of unrealized gains upon the sale of marketable debt securities	(1)				(1)	0
Change in fair value of derivatives and amortization of swap settlements	6,254				6,046	208
Change in fair value of marketable debt securities, net	(77)				(74)	(3)
Issuance of common stock under:
Stock option and restricted stock plans, net	1,222		1,222
Stock option and restricted stock plans, net (in shares)		7
Sale of common stock, net	(67)		(67)
Sale of common stock, net (in shares)		0
Equity based compensation costs	2,530		2,253			277
Retirement of common stock, net	(3,774)	$ 0	(3,774)
Retirement of common stock, net (in shares)		(17)
Changes in the redemption value of redeemable noncontrolling interest	(1,953)		(1,957)			4
Distributions to noncontrolling interest	(6,297)					(6,297)
Common stock dividends	(122,850)			(122,850)
Balance at period end at Mar. 31, 2018	$ 6,492,159	$ 7	$ 7,127,248	$ (743,773)	$ (14,709)	$ 123,386
Balances (in shares) at Mar. 31, 2018		66,044

XML

Condensed Consolidated Statement of Capital - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Increase (Decrease) in Partners' Capital [Roll Forward]
Net income	$ 96,639
Reversal of unrealized gains upon the sale of marketable debt securities	(1)
Change in fair value of derivatives and amortization of swap settlements	6,254
Change in fair value of marketable debt securities, net	(77)
Issuance of common stock under:
Sale of common stock by general partner, net	(67)
Retirement of common units, net	(3,774)
Changes in the redemption value of redeemable noncontrolling interest	(1,953)
Distributions to noncontrolling interest	(6,297)
ASU 2016-01 [Member]
Issuance of common stock under:
Cumulative effect upon adoption		$ 0
ASU 2017-05 [Member]
Issuance of common stock under:
Cumulative effect upon adoption		123,708
Essex Portfolio, L.P. [Member]
Increase (Decrease) in Partners' Capital [Roll Forward]
Balance at period beginning	6,396,825
Net income	96,639
Reversal of unrealized gains upon the sale of marketable debt securities	(1)
Change in fair value of derivatives and amortization of swap settlements	6,254
Change in fair value of marketable debt securities, net	(77)
Issuance of common stock under:
General partner's stock based compensation, net	1,222
Sale of common stock by general partner, net	(67)
Equity based compensation costs	2,530
Retirement of common units, net	(3,774)
Changes in the redemption value of redeemable noncontrolling interest	(1,953)
Distributions to noncontrolling interest	(2,044)
Distributions declared	(127,103)
Balance at period end	6,492,159
Essex Portfolio, L.P. [Member] | ASU 2016-01 [Member]
Issuance of common stock under:
Cumulative effect upon adoption		0
Essex Portfolio, L.P. [Member] | ASU 2017-05 [Member]
Issuance of common stock under:
Cumulative effect upon adoption		123,708
Essex Portfolio, L.P. [Member] | Common Equity [Member] | General Partner [Member]
Increase (Decrease) in Partners' Capital [Roll Forward]
Balance at period beginning	$ 6,295,852
Balance at period beginning (in units)	66,054
Net income	$ 90,918
Issuance of common stock under:
General partner's stock based compensation, net	$ 1,222
General partner's stock based compensation, net (in units)	7
Sale of common stock by general partner, net	$ (67)
Sale of common stock by general partner, net (in units)	0
Equity based compensation costs	$ 2,253
Retirement of common units, net	$ (3,774)
Retirement of common units, net (in shares)	(17)
Changes in the redemption value of redeemable noncontrolling interest	$ (1,957)
Distributions declared	(122,850)
Balance at period end	$ 6,383,482
Balance at period end (in units)	66,044
Essex Portfolio, L.P. [Member] | Common Equity [Member] | General Partner [Member] | ASU 2016-01 [Member]
Issuance of common stock under:
Cumulative effect upon adoption		2,234
Essex Portfolio, L.P. [Member] | Common Equity [Member] | General Partner [Member] | ASU 2017-05 [Member]
Issuance of common stock under:
Cumulative effect upon adoption		119,651
Essex Portfolio, L.P. [Member] | Common Equity [Member] | Limited Partner [Member]
Increase (Decrease) in Partners' Capital [Roll Forward]
Balance at period beginning	$ 49,792
Balance at period beginning (in units)	2,268
Net income	$ 3,132
Issuance of common stock under:
Equity based compensation costs	$ 277
Equity based compensation costs (in units)	5
Changes in the redemption value of redeemable noncontrolling interest	$ 4
Distributions declared	(4,253)
Balance at period end	$ 53,003
Balance at period end (in units)	2,273
Essex Portfolio, L.P. [Member] | Common Equity [Member] | Limited Partner [Member] | ASU 2016-01 [Member]
Issuance of common stock under:
Cumulative effect upon adoption		(6)
Essex Portfolio, L.P. [Member] | Common Equity [Member] | Limited Partner [Member] | ASU 2017-05 [Member]
Issuance of common stock under:
Cumulative effect upon adoption		4,057
Essex Portfolio, L.P. [Member] | Accumulated Other Comprehensive Loss [Member]
Increase (Decrease) in Partners' Capital [Roll Forward]
Balance at period beginning	$ (15,229)
Reversal of unrealized gains upon the sale of marketable debt securities	(1)
Change in fair value of derivatives and amortization of swap settlements	6,254
Change in fair value of marketable debt securities, net	(77)
Issuance of common stock under:
Cumulative effect upon adoption		(2,228)
Balance at period end	(11,281)
Essex Portfolio, L.P. [Member] | Accumulated Other Comprehensive Loss [Member] | ASU 2016-01 [Member]
Issuance of common stock under:
Cumulative effect upon adoption		$ (2,228)
Essex Portfolio, L.P. [Member] | Noncontrolling Interest [Member]
Increase (Decrease) in Partners' Capital [Roll Forward]
Balance at period beginning	66,410
Net income	2,589
Issuance of common stock under:
Changes in the redemption value of redeemable noncontrolling interest	0
Distributions to noncontrolling interest	(2,044)
Balance at period end	$ 66,955

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income	$ 96,639	$ 187,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	119,105	115,503
Amortization of discount on marketable securities	(4,157)	(3,573)
Amortization of (premium) discount and debt financing costs, net	(664)	(3,309)
Gain on sale of marketable securities and other investments	(680)	(1,605)
Unrealized loss on equity securities recognized through income	876	0
Earnings from co-investments	(32,774)	(10,899)
Operating distributions from co-investments	40,437	12,358
Accrued interest from notes and other receivables	(1,294)	(647)
Gain on the sale of real estate and land	0	(26,174)
Equity-based compensation	2,090	1,253
Gain on remeasurement of co-investment	0	(86,482)
Changes in operating assets and liabilities:
Prepaid expenses, receivables and other assets	(3,716)	(3,889)
Accounts payable and accrued liabilities	52,151	42,482
Other liabilities	345	737
Net cash provided by operating activities	268,358	223,306
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures	(2,873)	(187,917)
Redevelopment	(15,893)	(12,240)
Development acquisitions of and additions to real estate under development	(38,203)	(30,457)
Capital expenditures on rental properties	(14,947)	(10,885)
Investments in notes receivable	0	(8,750)
Collections of notes receivable	29,500	0
Proceeds from insurance for property losses	565	435
Proceeds from dispositions of real estate	0	131,230
Contributions to co-investments	(56,020)	(120,816)
Changes in refundable deposits	410	512
Purchases of marketable securities	(13,437)	(20,939)
Sales and maturities of marketable securities	9,579	24,903
Non-operating distributions from co-investments	2,330	55,025
Net cash used in investing activities	(98,989)	(179,899)
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes	298,773	250,000
Payments on unsecured debt and mortgage notes	(83,748)	(308,020)
Proceeds from lines of credit	256,832	404,562
Repayments of lines of credit	(435,832)	(353,329)
Retirement of common stock	(3,774)	0
Additions to deferred charges	(3,283)	(1,014)
Net proceeds from issuance of common stock	(67)	(65)
Net proceeds from stock options exercised	1,222	5,794
Payments related to tax withholding for share-based compensation	(11)	(33)
Distributions to noncontrolling interest	(5,926)	(5,425)
Redemption of noncontrolling interest	0	(1,070)
Common and preferred stock dividends paid	(115,603)	(104,857)
Net cash used in financing activities	(91,417)	(113,457)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents	77,952	(70,050)
Unrestricted and restricted cash and cash equivalents at beginning of period	61,126	170,302
Unrestricted and restricted cash and cash equivalents at end of period	139,078	100,252
Supplemental disclosure of cash flow information:
Cash paid for interest, net of $4.2 million and $3.3 million capitalized in 2018 and 2017, respectively	40,306	48,397
Supplemental disclosure of noncash investing and financing activities:
Issuance of DownREIT units in connection with acquisition of real estate	0	22,506
Transfers between real estate under development to rental properties, net	1	747
Transfer from real estate under development to co-investments	365	2,080
Reclassifications to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest	1,953	731
Debt assumed in connection with acquisition	0	51,882
Essex Portfolio, L.P. [Member]
Cash flows from operating activities:
Net income	96,639	187,551
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	119,105	115,503
Amortization of discount on marketable securities	(4,157)	(3,573)
Amortization of (premium) discount and debt financing costs, net	(664)	(3,309)
Gain on sale of marketable securities and other investments	(680)	(1,605)
Unrealized loss on equity securities recognized through income	876	0
Earnings from co-investments	(32,774)	(10,899)
Operating distributions from co-investments	40,437	12,358
Accrued interest from notes and other receivables	(1,294)	(647)
Gain on the sale of real estate and land	0	(26,174)
Equity-based compensation	2,090	1,253
Gain on remeasurement of co-investment	0	(86,482)
Changes in operating assets and liabilities:
Prepaid expenses, receivables and other assets	(3,716)	(3,889)
Accounts payable and accrued liabilities	52,151	42,482
Other liabilities	345	737
Net cash provided by operating activities	268,358	223,306
Additions to real estate:
Acquisitions of real estate and acquisition related capital expenditures	(2,873)	(187,917)
Redevelopment	(15,893)	(12,240)
Development acquisitions of and additions to real estate under development	(38,203)	(30,457)
Capital expenditures on rental properties	(14,947)	(10,885)
Investments in notes receivable	0	(8,750)
Collections of notes receivable	29,500	0
Proceeds from insurance for property losses	565	435
Proceeds from dispositions of real estate	0	131,230
Contributions to co-investments	(56,020)	(120,816)
Changes in refundable deposits	410	512
Purchases of marketable securities	(13,437)	(20,939)
Sales and maturities of marketable securities	9,579	24,903
Non-operating distributions from co-investments	2,330	55,025
Net cash used in investing activities	(98,989)	(179,899)
Cash flows from financing activities:
Proceeds from unsecured debt and mortgage notes	298,773	250,000
Payments on unsecured debt and mortgage notes	(83,748)	(308,020)
Proceeds from lines of credit	256,832	404,562
Repayments of lines of credit	(435,832)	(353,329)
Retirement of common stock	(3,774)	0
Additions to deferred charges	(3,283)	(1,014)
Net proceeds from issuance of common stock	(67)	(65)
Net proceeds from stock options exercised	1,222	5,794
Payments related to tax withholding for share-based compensation	(11)	(33)
Distributions to noncontrolling interest	(2,267)	(5,425)
Redemption of noncontrolling interest	0	(1,070)
Common and preferred stock dividends paid	(119,262)	(104,857)
Net cash used in financing activities	(91,417)	(113,457)
Net increase (decrease) in unrestricted and restricted cash and cash equivalents	77,952	(70,050)
Unrestricted and restricted cash and cash equivalents at beginning of period	61,126	170,302
Unrestricted and restricted cash and cash equivalents at end of period	139,078	100,252
Supplemental disclosure of cash flow information:
Cash paid for interest, net of $4.2 million and $3.3 million capitalized in 2018 and 2017, respectively	40,306	48,397
Supplemental disclosure of noncash investing and financing activities:
Issuance of DownREIT units in connection with acquisition of real estate	0	22,506
Transfers between real estate under development to rental properties, net	1	747
Transfer from real estate under development to co-investments	365	2,080
Reclassifications to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest	1,953	731
Debt assumed in connection with acquisition	$ 0	$ 51,882

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Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash paid for interest, capitalized	$ 4.2	$ 3.3
Essex Portfolio, L.P. [Member]
Cash paid for interest, capitalized	$ 4.2	$ 3.3

XML

Organization and Basis of Presentation

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements present the accounts of Essex Property Trust, Inc. (“Essex” or the “Company”), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the “Operating Partnership,” which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included and are normal and recurring in nature. 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, 2017.

All significant intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements. Certain reclassifications have been made to conform to the current year’s presentation, including the reclassification of corporate-level property management expenses out of property operating, excluding real estate taxes to its own line item on the Company's condensed consolidated statements of income and comprehensive income.

The unaudited condensed consolidated financial statements for the three months ended March 31, 2018 and 2017 include the accounts of the Company and the Operating Partnership. Essex is the sole general partner of the Operating Partnership, with a 96.7% general partnership interest as of both March 31, 2018 and December 31, 2017. Total Operating Partnership limited partnership units (“OP Units”) outstanding were 2,273,413 and 2,268,114 as of March 31, 2018 and December 31, 2017, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $547.2 million and $547.5 million as of March 31, 2018 and December 31, 2017, respectively.

As of March 31, 2018, the Company owned or had ownership interests in 247 operating apartment communities, aggregating 60,240 apartment homes, excluding the Company’s ownership in preferred interest co-investments (collectively, the “Communities,” and individually, a “Community”), one operating commercial building and seven active developments (collectively, the “Portfolio”). The Communities are located in Southern California (Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas.

Accounting Pronouncements Adopted in the Current Year

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers.” The new standard provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries. The new standard requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. The new standard is effective for interim and annual periods beginning after December 15, 2017. The new standard may be applied using either a full retrospective or a modified approach upon adoption. The Company adopted ASU No. 2014-09 as of January 1, 2018 using the modified retrospective approach. See Note 3, Revenues, for further details.

In January 2016, the FASB issued ASU No. 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities,” which requires changes to the classification and measurement of investments in certain equity securities and to the presentation of certain fair value changes for financial liabilities measured at fair value. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-01 as of January 1, 2018 using the modified retrospective method by applying a cumulative effect adjustment to retained earnings and partners' capital of $2.2 million, representing accumulated net unrealized gains of certain equity securities held by the Company. Furthermore, as a result of the adoption of this standard, the Company will recognize changes in the fair value of equity investments with readily determinable fair values through net income as opposed to comprehensive income.

In August 2016, the FASB issued ASU No. 2016-15 “Classification of Certain Cash Receipts and Cash Payments,” which requires entities to adhere to a uniform classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update provide guidance on eight specific cash flow issues. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-15 as of January 1, 2018 using the retrospective transition method. This amendment did not have a material impact on the Company's consolidated results of operations or financial position.

In November 2016, the FASB issued ASU No. 2016-18 “Statement of Cash Flows,” which requires entities to include restricted cash and restricted cash equivalents in the reconciliation of beginning-of-period to the end-of-period of cash and cash equivalents in the statement of cash flows. This new standard seeks to eliminate the current diversity in practice in how changes in restricted cash and restricted cash equivalents is presented in the statement of cash flows. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-18 as of January 1, 2018 using the retrospective transition method. This amendment did not have a material impact on the Company's consolidated results of operations or financial position.

In January 2017, the FASB issued ASU No. 2017-01 “Business Combinations: Clarifying the Definition of a Business,” (“ASU No. 2017-01”) which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Previously, U.S. GAAP did not specify the minimum inputs and processes required for an integrated set of assets and activities to meet the definition of a business, causing a broad interpretation of the definition of a business. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2017-01 as of January 1, 2018 prospectively. The Company expects that substantially all of its acquisitions of communities will qualify as asset acquisitions and transaction costs related to these acquisitions will be capitalized upon adoption.

In February 2017, the FASB issued ASU No. 2017-05 “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets,” (“ASU No. 2017-05”) which adds guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. This new standard reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. Partial sales of nonfinancial assets are common in the real estate industry and include transactions in which the seller retains an equity interest in the entity that owns the assets or has an equity interest in the buyer. The new standard is effective for interim and annual periods beginning after December 15, 2017. Management performed an evaluation of all of the Company's contracts that may be affected by the new standard. The Company adopted ASU No. 2017-05 concurrently with the adoption of ASU No. 2014-09 “Revenue from Contracts with Customers” as of January 1, 2018 using the modified-retrospective method by applying a cumulative effect adjustment to retained earnings and partners' capital of $123.7 million, representing the partial sale of its membership interest in BEX II, LLC (“BEX II”) during the fourth quarter of 2016.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02 “Leases,” which requires an entity that is a lessee to classify leases as either finance or operating and to recognize a lease liability and a right-of-use asset for all leases that have a duration of greater than 12 months. Leases of 12 months or less will be accounted for similar to existing guidance for operating leases today. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. The new standard will be effective for the Company beginning on January 1, 2019 and early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In June 2016, the FASB issued ASU No. 2016-13 “Measurement of Credit Losses on Financial Instruments,” which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities, and other financial instruments. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. The new standard will be effective for the Company beginning on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In August 2017, the FASB issued ASU No. 2017-12 “Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities,” which, among other things, requires entities to present the earnings effect of hedging instruments in the same income statement line item in which the earnings effect of the hedged item is reported. The new standard also adds new disclosure requirements. This new standard will be effective for the Company beginning January 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

Marketable Securities

The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds, Level 2 for the unsecured bonds and Level 3 for investments in mortgage backed securities, as defined by the FASB standard for fair value measurements). Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. Unrealized gains and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income on the condensed consolidated statements of income and comprehensive income.

As of March 31, 2018 and December 31, 2017, equity securities and available for sale debt securities consisted primarily of investment-grade unsecured bonds, common stock, investments in mortgage backed securities, and investment funds that invest in U.S. treasury or agency securities. As of March 31, 2018 and December 31, 2017, the Company classified its investments in mortgage backed securities, which mature in November 2019 and September 2020, as held to maturity, and accordingly, these securities are stated at their amortized cost. The discount on the mortgage backed securities is being amortized to interest income based on an estimated yield and the maturity date of the securities.

As of March 31, 2018 and December 31, 2017, marketable securities consist of the following ($ in thousands):

	March 31, 2018
	Amortized Cost		Gross Unrealized Gain (Loss)			Carrying Value
Equity securities:
Investment funds - debt securities	$	26,946	$	(360	)	$	26,586
Investment funds - U.S. treasuries	11,250		(86		)	11,164
Common stock and stock funds	39,620		2,459			42,079
Debt securities:
Available for sale
Investment-grade unsecured bonds	4,324		(118		)	4,206
Held to maturity
Mortgage backed securities	113,710		—			113,710
Total - Marketable securities	$	195,850	$	1,895		$	197,745

	December 31, 2017
	Amortized Cost		Gross Unrealized Gain (Loss)			Carrying Value
Equity securities:
Investment funds - debt securities	$	27,914	$	(29	)	$	27,885
Investment funds - U.S. treasuries	10,999		(55		)	10,944
Common stock and stock funds	34,329		2,973			37,302
Debt securities:
Available for sale
Investment-grade unsecured bonds	4,365		(40		)	4,325
Held to maturity
Mortgage backed securities	109,548		—			109,548
Total - Marketable securities	$	187,155	$	2,849		$	190,004

The Company uses the specific identification method to determine the cost basis of a debt security sold and to reclassify amounts from accumulated other comprehensive income for such securities. 

For the three months ended March 31, 2018 and 2017, the proceeds from sales and maturities of marketable securities totaled $9.6 million and $24.9 million, respectively, which resulted in $0.7 million and $1.6 million in realized gains, respectively, for such periods.

For the three months ended March 31, 2018, the portion of equity security unrealized gains and losses that were recognized in income totaled $0.9 million in unrealized losses and is included in interest and other income on the Company's condensed consolidated statements of income and comprehensive income.

Variable Interest Entities

In accordance with accounting standards for consolidation of variable interest entities (“VIEs”), the Company consolidates the Operating Partnership, 16 limited partnerships, comprising eight communities, (the “DownREIT limited partnerships,”) and eight co-investments as of March 31, 2018. The Company consolidates these entities because it is deemed the primary beneficiary. The Company has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the eight consolidated co-investments and 16 DownREIT limited partnerships, net of intercompany eliminations, were approximately $845.7 million and $266.4 million, respectively, as of March 31, 2018 and $837.7 million and $265.5 million, respectively, as of December 31, 2017. Noncontrolling interests in these entities were $67.2 million and $66.7 million as of March 31, 2018 and December 31, 2017, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of March 31, 2018 and December 31, 2017, the Company did not have any other VIEs of which it was deemed to be the primary beneficiary and did not have any VIEs of which it was not deemed to be the primary beneficiary.

Equity-based Compensation

The cost of share- and unit-based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long term incentive plan units (discussed in Note 12, “Equity Based Compensation Plans,” in the Company’s annual report on Form 10-K for the year ended December 31, 2017) are being amortized over the expected service periods.

Fair Value of Financial Instruments

Management believes that the carrying amounts of the outstanding balances under its lines of credit, and notes and other receivables approximate fair value as of March 31, 2018 and December 31, 2017, because interest rates, yields, and other terms for these instruments are consistent with yields and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s fixed rate debt with a carrying value of $5.1 billion and $4.9 billion, including premiums, discounts and debt financing costs, at March 31, 2018 and December 31, 2017, respectively, was approximately $5.1 billion and $5.0 billion. Management has estimated that the fair value of the Company’s $612.1 million and $792.9 million of variable rate debt, net of debt financing costs, at March 31, 2018 and December 31, 2017, respectively, was approximately $615.6 million and $793.9 million based on the terms of existing mortgage notes payable, unsecured debt, and variable rate demand notes compared to those available in the marketplace. Management believes that the carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, construction payables, other liabilities, and dividends payable approximate fair value as of March 31, 2018 and December 31, 2017 due to the short-term maturity of these instruments. Marketable securities, except mortgage backed securities, and derivatives are carried at fair value as of March 31, 2018 and December 31, 2017.

At March 31, 2018, the Company’s investments in mortgage backed securities had a carrying value of $113.7 million and the Company estimated the fair value to be approximately $122.8 million. At December 31, 2017, the Company’s investments in mortgage backed securities had a carrying value of $109.5 million and the Company estimated the fair value to be approximately $120.7 million. The Company determines the fair value of the mortgage backed securities based on unobservable inputs (level 3 of the fair value hierarchy) considering the assumptions that market participants would make in valuing these securities. Assumptions such as estimated default rates and discount rates are used to determine the expected discounted cash flows to estimate fair value.

Capitalization of Costs

The Company’s capitalized internal costs related to development and redevelopment projects were comprised primarily of employee compensation and totaled $5.0 million and $4.8 million during the three months ended March 31, 2018 and 2017, respectively. The Company capitalizes leasing commissions associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized for leasing commissions are immaterial for all periods presented.

Co-investments

The Company owns investments in joint ventures (“co-investments”) in which it has significant influence, but its ownership interest does not meet the criteria for consolidation in accordance with U.S. GAAP. Therefore, the Company accounts for co-investments using the equity method of accounting. Under the equity method of accounting, the investment is carried at the cost of assets contributed, plus the Company's equity in earnings less distributions received and the Company's share of losses. The significant accounting policies of the Company’s co-investment entities are consistent with those of the Company in all material respects.

Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and the transaction will be accounted for as a business combination if the entity meets the definition of a business pursuant to ASU No. 2017-01, or an asset acquisition if the entity is not determined to be a business. A majority of the co-investments, excluding the preferred equity investments, compensate the Company for its asset management services and some of these investments may provide promote income if certain financial return benchmarks are achieved. Asset management fees are recognized when earned, and promote fees are recognized when the earnings events have occurred and the amount is determinable and collectible. Any promote fees are reflected in equity income from co-investments.

The Company reports investments in co-investments where accumulated distributions have exceeded the Company’s investment as distributions in excess of investments in co-investments in the accompanying condensed consolidated balance sheets. As of December 31, 2017, the net investment of one of the Company’s co-investments was less than zero as a result of financing distributions in excess of the Company's investment in that co-investment. As a result of the Company's adoption of ASU No. 2017-05 on January 1, 2018, the carrying value of this co-investment was greater than zero as of March 31, 2018.

Changes in Accumulated Other Comprehensive Loss, Net by Component

Essex Property Trust, Inc.

($ in thousands):

	Change in fair value and amortization of swap settlements			Unrealized gains/(losses) on available for sale securities			Total
Balance at December 31, 2017	$	(20,641	)	$	2,195		$	(18,446	)
Cumulative effect upon adoption of ASU 2016-01	—			(2,234		)	(2,234		)
Other comprehensive income before reclassification	8,031			(74		)	7,957
Amounts reclassified from accumulated other comprehensive loss	(1,985		)	(1		)	(1,986		)
Other comprehensive income	6,046			(2,309		)	3,737
Balance at March 31, 2018	$	(14,595	)	$	(114	)	$	(14,709	)

Changes in Accumulated Other Comprehensive Loss, by Component

Essex Portfolio, L.P.

($ in thousands):

	Change in fair value and amortization of swap settlements			Unrealized gains/(losses) on available for sale securities			Total
Balance at December 31, 2017	$	(17,417	)	$	2,188		$	(15,229	)
Cumulative effect upon adoption of ASU 2016-01	—			(2,228		)	(2,228		)
Other comprehensive income before reclassification	8,307			(77		)	8,230
Amounts reclassified from accumulated other comprehensive loss	(2,053		)	(1		)	(2,054		)
Other comprehensive income	6,254			(2,306		)	3,948
Balance at March 31, 2018	$	(11,163	)	$	(118	)	$	(11,281	)

Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense on the condensed consolidated statement of income and comprehensive income. Realized gains and losses on available for sale debt securities are included in interest and other income on the condensed consolidated statement of income and comprehensive income.

Redeemable Noncontrolling Interest

The carrying value of redeemable noncontrolling interest in the accompanying condensed consolidated balance sheets was$41.2 million and $39.2 million as of March 31, 2018 and December 31, 2017, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances.

The changes to the redemption value of redeemable noncontrolling interests for the three months ended March 31, 2018 is as follows ($ in thousands):

Balance at December 31, 2017	$	39,206
Reclassification due to change in redemption value and other	1,953
Redemptions	—
Balance at March 31, 2018	$	41,159

Cash, Cash Equivalents and Restricted Cash

Highly liquid investments with original maturities of three months or less when purchased are classified as cash equivalents. Restricted cash balances relate primarily to reserve requirements for capital replacement at certain communities in connection with the Company’s mortgage debt.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows ($ in thousands):

	March 31, 2018		December 31, 2017		March 31, 2017		December 31, 2016
Cash and cash equivalents - unrestricted	$	121,954	$	44,620	$	84,344	$	64,921
Cash and cash equivalents - restricted	17,124		16,506		15,908		105,381
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows	$	139,078	$	61,126	$	100,252	$	170,302

Accounting Estimates

The preparation of condensed consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate portfolio, its investments in and advances to joint ventures and affiliates, its notes receivables, and its qualification as a real estate investment trust (“REIT”). The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions.

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Significant Transactions During the Three Months Ended 2018 and Subsequent Events

3 Months Ended

Mar. 31, 2018

Business Combinations [Abstract]

Significant Transactions During the Three Months Ended 2018 and Subsequent Events

Significant Transactions During The Three Months Ended 2018 and Subsequent Events

Significant Transactions

Preferred Equity Investments

In January 2018, the Company received cash of $2.4 million for the full redemption of a preferred equity investment in a co-investment that holds property in Seattle, WA.

Notes Receivable

In January 2018, the Village at Toluca Lake, a property located in Burbank, CA and owned by BEX III, LLC (“BEX III”), a Company co-investment, paid off a $29.5 million bridge loan provided by the Company in November 2017. See Note 6, Related Party Transactions, for additional details related to the related party bridge loan.

Co-Investments

In March 2018, the BEXAEW, LLC (“BEXAEW”) joint venture operating agreement was amended, and the joint venture was extended. Under the amendment, the Company received a cash payment for promote income of $20.5 million, which is included in equity income from co-investments on the condensed consolidated statements of income and comprehensive income.

Senior Unsecured Debt

In March 2018, the Company issued $300.0 million of 30-year 4.500% senior unsecured notes. The interest is paid semi-annually in arrears on March 15 and September 15 of each year commencing on September 15, 2018 until the maturity date of March 15, 2048. The Company used the net proceeds of this offering to repay indebtedness under its unsecured lines of credit and for other general corporate and working capital purposes.

Common Stock

In January 2018, the Company repurchased and retired 16,834 shares totaling $3.8 million, including commissions. As of March 31, 2018, the Company had $245.2 million of purchase authority remaining under the stock repurchase plan authorized by the Company's board of directors.

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Revenue

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenues

Revenues

On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers” using a modified retrospective transition method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods after January 1, 2018 are presented under the new standard, while prior period amounts are not adjusted and continue to be reported in accordance with the old revenue recognition standard.

Based on a full analysis of applicable contracts, the Company determined that the new standard did not have an impact to reported revenues from prior or current periods.

Revenue Recognition

Revenue from Leasing

The Company generates revenues primarily from leasing apartment homes to tenants. Such leasing revenues are recorded when due from tenants and are recognized monthly as they are earned, which is not materially different than on a straight-line basis. Apartment homes are rented under short-term leases (generally, lease terms of 6 to 12 months). Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease.

The Company also generates other property-related revenue through the leasing of apartment homes, including storage income, pet rent, and other miscellaneous revenue. Similar to rental income, such revenues are recorded when due from tenants and recognized monthly as they are earned.

Revenue from Contracts with Customers

Apart from rental and other property-related revenue, revenues from contracts with customers are recognized as control of the promised services is passed to the customer.

For customer contracts related to management and other fees from affiliates (which includes asset management and property management), the transaction price and amount of revenue to be recognized is determined each quarter based on the management fee calculated and earned for that month or quarter. The contract will contain a description of the service and the fee percentage for management services. Payments from such services are one month or one quarter in arrears of the service performed.

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands):

	Three Months Ended March 31,
	2018		2017
Rental	$	321,661	$	310,122
Other property leasing revenue	23,286		23,046
Management and other fees from affiliates	2,308		2,236
Total revenues	$	347,255	$	335,404

The following table presents the Company’s rental and other property-related revenues disaggregated by geographic operating segment ($ in thousands):

	Three Months Ended March 31,
	2018		2017
Southern California	$	152,060	$	147,099
Northern California	128,622		123,308
Seattle Metro	58,713		56,192
Other real estate assets (1)	5,552		6,569
Total rental and other property revenues	$	344,947	$	333,168

(1) Other real estate assets consists of revenue generated from retail space, commercial properties, held for sale properties, and disposition properties. Executive management does not evaluate such operating performance geographically.

The following table presents the Company’s rental and other property-related revenues disaggregated by current property category status ($ in thousands):

	Three Months Ended March 31,
	2018		2017
Same-property (1)	$	322,385	$	312,024
Acquisitions (2)	10,383		8,186
Development (3)	19		—
Redevelopment	5,024		4,814
Non-residential/other, net (4)	7,136		8,144
Total rental and other property revenues	$	344,947	$	333,168

(1) Stabilized properties consolidated by the Company for both the quarters ended March 31, 2018 and 2017.

(2) Acquisitions includes properties acquired which did not have comparable stabilized results as of January 1, 2017.

(3) Development includes properties developed which did not have stabilized results as of January 1, 2017.

(4) Non-residential/other, net consists of revenue generated from retail space, commercial properties, held for sale properties, disposition properties and student housing.

Deferred Revenues and Remaining Performance Obligations

When cash payments are received or due in advance of the Company’s performance of contracts with customers, deferred revenue is recorded. The total deferred revenue balance related to such contracts was $8.5 million and $9.3 million as of March 31, 2018 and December 31, 2017, respectively, and was included in accounts payable and accrued liabilities within the accompanying consolidated balance sheets. The amount of revenue recognized in the period that was included in the beginning deferred revenue balance was $0.8 million, which was included in interest and other income within the condensed consolidated statements of income and comprehensive income.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the new revenue accounting standard. As of March 31, 2018, the Company had $8.5 million of remaining performance obligations. The Company expects to recognize approximately 28% of these remaining performance obligations in 2018, an additional 36% through 2020, and the remaining balance thereafter.

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for contracts within an original expected length of one year or less or when variable consideration is allocated entirely to a wholly unsatisfied performance obligation.

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Co-investments

3 Months Ended

Mar. 31, 2018

Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures [Abstract]

Co-investments

Co-investments

The Company has joint ventures and preferred equity investments in co-investments which are accounted for under the equity method. The co-investments own, operate, and develop apartment communities. The carrying values of the Company's co-investments as of March 31, 2018 and December 31, 2017 are as follows ($ in thousands, except in parenthetical):

	Weighted Average Essex Ownership Percentage (1)		March 31, 2018		December 31, 2017
Membership interest/Partnership interest in:
CPPIB	54	%	$	496,512	$	500,287
Wesco I, III, IV, and V	53	%	214,650		214,408
BEXAEW, BEX II and BEX III (2)	50	%	135,174		13,827
Other	52	%	50,209		51,810
Total operating and other co-investments, net			896,545		780,332
Total development co-investments, net	50	%	75,092		73,770
Total preferred interest co-investments (includes related party investments of $15.6 million and $15.7 million as of March 31, 2018 and December 31, 2017, respectively)			319,320		265,156
Total co-investments, net			$	1,290,957	$	1,119,258

(1) Weighted average Essex ownership percentages are as of March 31, 2018.

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

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

	March 31, 2018		December 31, 2017
Combined balance sheets: (1)
Rental properties and real estate under development	$	3,794,212	$	3,722,778
Other assets	161,538		110,333
Total assets	$	3,955,750	$	3,833,111
Debt	$	1,744,663	$	1,705,051
Other liabilities	69,782		45,515
Equity	2,141,305		2,082,545
Total liabilities and equity	$	3,955,750	$	3,833,111
Company's share of equity	$	1,290,957	$	1,155,984

	Three Months Ended March 31,
	2018			2017
Combined statements of income: (1)
Property revenues	$	80,842		$	75,905
Property operating expenses	(27,069		)	(25,408		)
Net operating income	53,773			50,497
Interest expense	(16,735		)	(11,921		)
General and administrative	(1,492		)	(1,778		)
Depreciation and amortization	(31,162		)	(27,904		)
Net income	$	4,384		$	8,894
Company's share of net income (2)	$	32,774		$	10,899

(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 $0.4 million and $0.5 million for the three months ended March 31, 2018 and 2017, respectively.

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Notes and Other Receivables

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Notes and Other Receivables

Notes and Other Receivables

Notes and other receivables consist of the following as of March 31, 2018 and December 31, 2017 ($ in thousands):

	March 31, 2018		December 31, 2017
Notes receivable, bearing interest at 10.00%, due May 2021	$	14,110	$	13,762
Notes receivable, bearing interest at 10.75%, due September 2020	30,107		29,318
Related party note receivable, bearing interest at 9.50%, due October 2019(1)	6,608		6,656
Related party note receivable, bearing interest at 3.50%, due March 2018(1)	—		29,500
Notes and other receivables from affiliates (2)	3,314		5,061
Other receivables	16,386		16,629
Total notes and other receivables	$	70,525	$	100,926

(1) See Note 6, Related Party Transactions, for additional details.

(2) These amounts consist of short-term loans outstanding and due from various joint ventures as of March 31, 2018 and December 31, 2017, respectively. See Note 6, Related Party Transactions, for additional details.

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Related Party Transactions

3 Months Ended

Mar. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates totaled $3.2 million and $3.0 million during the three months ended March 31, 2018 and 2017, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of $0.9 million and $0.8 million against general and administrative expenses for the three months ended March 31, 2018 and 2017, respectively.

In November 2017, the Company provided a $29.5 million related party bridge loan to a property acquired by BEX III. The note receivable accrued interest at 3.5% and was paid off in January 2018. The bridge loan was classified within notes and other receivables in the accompanying condensed consolidated balance sheets and had no amount outstanding as of March 31, 2018.

The Company’s Chairman and founder, Mr. George M. Marcus, is the Chairman of the Marcus & Millichap Company (“MMC”), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Co-Chairman of Marcus & Millichap, Inc. (“MMI”), and Mr. Marcus owns a controlling interest in MMI, a national brokerage firm listed on the New York Stock Exchange. 

In March 2017, the Company converted its existing $15.3 million preferred equity investment in Sage at Cupertino, a 230 apartment home community located in San Jose, CA, into a 40.5% common equity ownership interest in the property. The Company issued DownREIT units to the other members, including an MMC affiliate, based on an estimated property valuation of $90.0 million. At the time of the conversion, the property was encumbered by $52.0 million of mortgage debt. As a result of this transaction, the Company consolidates the property, based on a VIE analysis performed by the Company.

In 2015, the Company made preferred equity investments totaling $20.0 million in three entities affiliated with MMC that own apartment communities in California. The Company earns a 9.5% preferred return on each such investment. One $5.0 million investment, which was scheduled to mature in 2022, was fully redeemed in 2017. The remaining two investments are scheduled to mature in 2022.

As described in Note 5, Notes and Other Receivables, the Company has provided short-term loans to affiliates. As of March 31, 2018 and December 31, 2017, $3.3 million and $5.1 million, respectively, of short-term loans remained outstanding due from joint venture affiliates and is classified within notes and other receivables in the accompanying condensed consolidated balance sheets. In November 2016, the Company provided a $6.6 million mezzanine loan to a limited liability company in which MMC holds a significant ownership interest through subsidiaries. The mezzanine loan is classified within notes and other receivables in the accompanying condensed consolidated balance sheets and had an outstanding balance of $6.6 million and $6.7 million as of March 31, 2018 and December 31, 2017, respectively.

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Debt

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Debt

Debt

The Company does not have indebtedness as debt is incurred by the Operating Partnership. The Company guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities for the full term of the facilities.

Debt consists of the following ($ in thousands):

	March 31, 2018			December 31, 2017			Weighted Average Maturity In Years as of March 31, 2018
Unsecured bonds private placement - fixed rate	$	274,476		$	274,427		2.8
Term loan - variable rate	348,525			348,545			3.9
Bonds public offering - fixed rate	3,174,922			2,878,737			8.4
Unsecured debt, net (1)	3,797,923			3,501,709
Lines of credit (2)	—			179,000
Mortgage notes payable, net (3)	1,921,047			2,008,417			5.3
Total debt, net	$	5,718,970		$	5,689,126
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering	3.8		%	3.7		%
Weighted average interest rate on variable rate term loan	2.5		%	2.5		%
Weighted average interest rate on lines of credit	2.5		%	2.3		%
Weighted average interest rate on mortgage notes payable	4.2		%	4.2		%

(1) Includes unamortized discount of $6.6 million and $5.2 million and unamortized debt issuance costs of $20.5 million and $18.1 million, as of March 31, 2018 and December 31, 2017, respectively.

(2) Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.24 billion as of March 31, 2018, excludes unamortized debt issuance costs of $4.9 million and $3.2 million as of March 31, 2018 and December 31, 2017, respectively. These debt issuance costs are included in prepaid expenses and other assets on the condensed consolidated balance sheets. As of March 31, 2018, the Company’s $1.2 billion credit facility had an interest rate of LIBOR plus 0.875%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of December 2021 with one18-month extension, exercisable at the Company’s option. As of March 31, 2018, the Company’s $35.0 million working capital unsecured line of credit had an interest rate of LIBOR plus 0.875%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of January 2020.

(3) Includes total unamortized premium of $29.2 million and $33.2 million, reduced by unamortized debt issuance costs of $4.9 million and $5.4 million, as of March 31, 2018 and December 31, 2017, respectively.

The aggregate scheduled principal payments of the Company’s outstanding debt as of March 31, 2018 are as follows (excluding lines of credit) ($ in thousands):

Remaining in 2018	$	126,740
2019	627,016
2020	694,921
2021	544,846
2022	692,466
Thereafter	3,035,808
Total	$	5,721,797

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Segment Information

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company's segment disclosures present the measure used by the chief operating decision makers for purposes of assessing each segment's performance. Essex's chief operating decision makers are comprised of several members of its executive management team who use net operating income (“NOI”) to assess the performance of the business for the Company's reportable operating segments. NOI represents total property revenue less direct property operating expenses.

The executive management team evaluates the Company's operating performance geographically. The Company defines its reportable operating segments as the three geographical regions in which its communities are located: Southern California, Northern California, and Seattle Metro.

Excluded from segment revenues and NOI are management and other fees from affiliates and interest and other income. Non-segment revenues and NOI included in the following schedule also consist of revenue generated from commercial properties and properties that have been sold. Other non-segment assets include items such as real estate under development, co-investments, real estate held for sale, net, cash and cash equivalents, marketable securities, notes and other receivables, and prepaid expenses and other assets.

The revenues and NOI for each of the reportable operating segments are summarized as follows for the three months ended March 31, 2018 and 2017 ($ in thousands):

	Three Months Ended March 31,
	2018			2017
Revenues:
Southern California	$	152,060		$	147,099
Northern California	128,622			123,308
Seattle Metro	58,713			56,192
Other real estate assets	5,552			6,569
Total property revenues	$	344,947		$	333,168
Net operating income:
Southern California	$	107,932		$	104,501
Northern California	94,717			89,743
Seattle Metro	42,012			40,388
Other real estate assets	5,323			6,532
Total net operating income	249,984			241,164
Management and other fees from affiliates	2,308			2,236
Corporate-level property management expenses	(7,770		)	(7,509		)
Depreciation and amortization	(119,105		)	(115,503		)
General and administrative	(14,813		)	(10,601		)
Expensed acquisition and investment related costs	(57		)	(556		)
Interest expense	(54,861		)	(54,583		)
Total return swap income	2,270			2,584
Interest and other income	5,909			6,764
Equity income from co-investments	32,774			10,899
Gain on sale of real estate and land	—			26,174
Gain on remeasurement of co-investment	—			86,482
Net income	$	96,639		$	187,551

Total assets for each of the reportable operating segments are summarized as follows as of March 31, 2018 and December 31, 2017 ($ in thousands):

	March 31, 2018		December 31, 2017
Assets:
Southern California	$	4,744,730	$	4,788,225
Northern California	4,182,261		4,215,449
Seattle Metro	1,506,405		1,520,372
Other real estate assets	55,209		55,488
Net reportable operating segment - real estate assets	10,488,605		10,579,534
Real estate under development	395,710		355,735
Co-investments	1,290,957		1,155,984
Cash and cash equivalents, including restricted cash	139,078		61,126
Marketable securities	197,745		190,004
Notes and other receivables	70,525		100,926
Prepaid expenses and other assets	60,047		52,397
Total assets	$	12,642,667	$	12,495,706

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Net Income Per Common Share and Net Income Per Common Unit

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Net Income Per Common Share and Net Income Per Common Unit

Net Income Per Common Share and Net Income Per Common Unit

($ in thousands, except share and unit data):

Essex Property Trust, Inc.

	Three Months Ended March 31, 2018					Three Months Ended March 31, 2017
	Income		Weighted- average Common Shares	Per Common Share Amount		Income		Weighted- average Common Shares	Per Common Share Amount
Basic:
Net income available to common stockholders	$	90,918	66,044,022	$	1.38	$	178,964	65,549,484	$	2.73
Effect of Dilutive Securities:
Stock options	—		38,495			—		96,778
DownREIT units	—		—			373		213,228
Diluted:
Net income available to common stockholders	$	90,918	66,082,517	$	1.38	$	179,337	65,859,490	$	2.72

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of2,273,413 and 2,252,234, which include vested Series Z-1 Incentive Units, 2014 Long-Term Incentive Plan Units, and 2015 Long-Term Incentive Plan Units for the three months ended March 31, 2018 and 2017, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $3.1 million and $6.1 million for the three months ended March 31, 2018 and 2017, respectively. Additionally, the table excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.

Stock options of 364,068 and 225,895 for the three months ended March 31, 2018 and 2017, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the average unearned compensation were greater than the average market price of the common stock for the periods ended and, therefore, were anti-dilutive.

Essex Portfolio, L.P.

	Three Months Ended March 31, 2018					Three Months Ended March 31, 2017
	Income		Weighted- average Common Units	Per Common Unit Amount		Income		Weighted- average Common Units	Per Common Unit Amount
Basic:
Net income available to common unitholders	$	94,050	68,317,435	$	1.38	$	185,110	67,801,718	$	2.73
Effect of Dilutive Securities:
Stock options	—		38,495			—		96,778
DownREIT units	—		—			373		213,228
Diluted:
Net income available to common unitholders	$	94,050	68,355,930	$	1.38	$	185,483	68,111,724	$	2.72

Stock options of 364,068 and 225,895 for the three months ended March 31, 2018 and 2017, respectively, were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for the periods ended and, therefore, were anti-dilutive. Additionally, the table excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.

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Derivative Instruments and Hedging Activities

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

As of March 31, 2018, the Company had entered into interest rate swap contracts with an aggregate notional amount of $175.0 million that effectively fixed the interest rate on the $175.0 million unsecured term loan at 2.3%. These derivatives qualify for hedge accounting.

As of March 31, 2018, the Company had interest rate caps, which are not accounted for as hedges, totaling a notional amount of $9.9 million that effectively limit the Company’s exposure to interest rate risk by providing a ceiling on the underlying variable interest rate for $9.9 million of the Company’s tax exempt variable rate debt.

As of March 31, 2018 and December 31, 2017, the aggregate carrying value of the interest rate swap contracts was an asset of $7.7 million and $5.4 million, respectively, and is included in prepaid expenses and other assets on the condensed consolidated balance sheets. The aggregate carrying value of the interest rate caps was zero on the condensed consolidated balance sheets as of both March 31, 2018 and December 31, 2017.

Hedge ineffectiveness related to cash flow hedges, which is included in interest expense on the condensed consolidated statements of income and comprehensive income, was not significant for both the three months ended March 31, 2018 and 2017.

Additionally, the Company has entered into total return swaps that effectively convert $256.5 million of mortgage notes payable to a floating interest rate based on the Securities Industry and Financial Markets Association Municipal Swap Index (“SIFMA”) plus a spread. The total return swaps provide fair market value protection on the mortgage notes payable to the counterparties during the initial period of the total return swap until the Company's option to call the mortgage notes at par can be exercised. The Company can currently call all total return swaps with $256.5 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting and had a carrying and fair value of zero at both March 31, 2018 and December 31, 2017. These total return swaps are scheduled to mature between September 2021 and November 2022. The realized gains of $2.3 million and $2.6 million for the three months ended March 31, 2018 and 2017, respectively, were reported in the condensed consolidated statements of income and comprehensive income as total return swap income.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company is subject to various lawsuits in the normal course of its business operations. Such lawsuits have not had a material adverse effect on the Company's financial condition, results of operations or cash flows.While no assurances can be given,  the Company does not believe there is any pending or threatened litigation against the Company that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the Company.

The Company is subject to various federal, state, and local environmental laws. Compliance by the Company with existing laws has not had a material adverse effect on the Company. However, the Company cannot predict the impact of new or changed laws or regulations on its current portfolio or on other assets that the Company may acquire in the future. To the extent that an environmental matter arises or is identified in the future that has other than a remote risk of having a material impact on the condensed consolidated financial statements, the Company will disclose the estimated range of possible outcomes associated with it, and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, impairment will be recognized.

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Organization and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Consolidation Policy

The accompanying unaudited condensed consolidated financial statements present the accounts of Essex Property Trust, Inc. (“Essex” or the “Company”), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the “Operating Partnership,” which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included and are normal and recurring in nature. 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, 2017.

All significant intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements. Certain reclassifications have been made to conform to the current year’s presentation, including the reclassification of corporate-level property management expenses out of property operating, excluding real estate taxes to its own line item on the Company's condensed consolidated statements of income and comprehensive income.

Accounting Pronouncement Adopted in the Current Year and Recent Accounting Pronouncements

Accounting Pronouncements Adopted in the Current Year

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 “Revenue from Contracts with Customers.” The new standard provides a single comprehensive revenue recognition model for contracts with customers (excluding certain contracts, such as lease contracts) to improve comparability within industries. The new standard requires an entity to recognize revenue to reflect the transfer of goods or services to customers at an amount the entity expects to be paid in exchange for those goods and services and provide enhanced disclosures, all to provide more comprehensive guidance for transactions such as service revenue and contract modifications. The new standard is effective for interim and annual periods beginning after December 15, 2017. The new standard may be applied using either a full retrospective or a modified approach upon adoption. The Company adopted ASU No. 2014-09 as of January 1, 2018 using the modified retrospective approach. See Note 3, Revenues, for further details.

In January 2016, the FASB issued ASU No. 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities,” which requires changes to the classification and measurement of investments in certain equity securities and to the presentation of certain fair value changes for financial liabilities measured at fair value. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-01 as of January 1, 2018 using the modified retrospective method by applying a cumulative effect adjustment to retained earnings and partners' capital of $2.2 million, representing accumulated net unrealized gains of certain equity securities held by the Company. Furthermore, as a result of the adoption of this standard, the Company will recognize changes in the fair value of equity investments with readily determinable fair values through net income as opposed to comprehensive income.

In August 2016, the FASB issued ASU No. 2016-15 “Classification of Certain Cash Receipts and Cash Payments,” which requires entities to adhere to a uniform classification and presentation of certain cash receipts and cash payments in the statement of cash flows. The amendments in this update provide guidance on eight specific cash flow issues. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-15 as of January 1, 2018 using the retrospective transition method. This amendment did not have a material impact on the Company's consolidated results of operations or financial position.

In November 2016, the FASB issued ASU No. 2016-18 “Statement of Cash Flows,” which requires entities to include restricted cash and restricted cash equivalents in the reconciliation of beginning-of-period to the end-of-period of cash and cash equivalents in the statement of cash flows. This new standard seeks to eliminate the current diversity in practice in how changes in restricted cash and restricted cash equivalents is presented in the statement of cash flows. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2016-18 as of January 1, 2018 using the retrospective transition method. This amendment did not have a material impact on the Company's consolidated results of operations or financial position.

In January 2017, the FASB issued ASU No. 2017-01 “Business Combinations: Clarifying the Definition of a Business,” (“ASU No. 2017-01”) which provides a new framework for determining whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Previously, U.S. GAAP did not specify the minimum inputs and processes required for an integrated set of assets and activities to meet the definition of a business, causing a broad interpretation of the definition of a business. The new standard is effective for interim and annual periods beginning after December 15, 2017. The Company adopted ASU No. 2017-01 as of January 1, 2018 prospectively. The Company expects that substantially all of its acquisitions of communities will qualify as asset acquisitions and transaction costs related to these acquisitions will be capitalized upon adoption.

In February 2017, the FASB issued ASU No. 2017-05 “Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets,” (“ASU No. 2017-05”) which adds guidance for partial sales of nonfinancial assets, including partial sales of real estate. Historically, U.S. GAAP contained several different accounting models to evaluate whether the transfer of certain assets qualified for sale treatment. This new standard reduces the number of potential accounting models that might apply and clarifies which model does apply in various circumstances. Partial sales of nonfinancial assets are common in the real estate industry and include transactions in which the seller retains an equity interest in the entity that owns the assets or has an equity interest in the buyer. The new standard is effective for interim and annual periods beginning after December 15, 2017. Management performed an evaluation of all of the Company's contracts that may be affected by the new standard. The Company adopted ASU No. 2017-05 concurrently with the adoption of ASU No. 2014-09 “Revenue from Contracts with Customers” as of January 1, 2018 using the modified-retrospective method by applying a cumulative effect adjustment to retained earnings and partners' capital of $123.7 million, representing the partial sale of its membership interest in BEX II, LLC (“BEX II”) during the fourth quarter of 2016.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02 “Leases,” which requires an entity that is a lessee to classify leases as either finance or operating and to recognize a lease liability and a right-of-use asset for all leases that have a duration of greater than 12 months. Leases of 12 months or less will be accounted for similar to existing guidance for operating leases today. For lessors, accounting for leases under the new standard will be substantially the same as existing guidance for sales-type leases, direct financing leases, and operating leases, but eliminates current real estate specific provisions and changes the treatment of initial direct costs. The new standard will be effective for the Company beginning on January 1, 2019 and early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In June 2016, the FASB issued ASU No. 2016-13 “Measurement of Credit Losses on Financial Instruments,” which amends the current approach to estimate credit losses on certain financial assets, including trade and other receivables, available-for-sale securities, and other financial instruments. Generally, this amendment requires entities to establish a valuation allowance for the expected lifetime losses of these certain financial assets. Subsequent changes in the valuation allowance are recorded in current earnings and reversal of previous losses are permitted. Currently, U.S. GAAP requires entities to write down credit losses only when losses are probable and loss reversals are not permitted. The new standard will be effective for the Company beginning on January 1, 2020 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

In August 2017, the FASB issued ASU No. 2017-12 “Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities,” which, among other things, requires entities to present the earnings effect of hedging instruments in the same income statement line item in which the earnings effect of the hedged item is reported. The new standard also adds new disclosure requirements. This new standard will be effective for the Company beginning January 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact of this amendment on its consolidated results of operations and financial position.

Marketable Securities

Marketable Securities

The Company reports its equity securities and available for sale debt securities at fair value, based on quoted market prices (Level 1 for the common stock and investment funds, Level 2 for the unsecured bonds and Level 3 for investments in mortgage backed securities, as defined by the FASB standard for fair value measurements). Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. Unrealized gains and losses in equity securities, realized gains and losses in debt securities, interest income, and amortization of purchase discounts are included in interest and other income on the condensed consolidated statements of income and comprehensive income.

As of March 31, 2018 and December 31, 2017, equity securities and available for sale debt securities consisted primarily of investment-grade unsecured bonds, common stock, investments in mortgage backed securities, and investment funds that invest in U.S. treasury or agency securities. As of March 31, 2018 and December 31, 2017, the Company classified its investments in mortgage backed securities, which mature in November 2019 and September 2020, as held to maturity, and accordingly, these securities are stated at their amortized cost. The discount on the mortgage backed securities is being amortized to interest income based on an estimated yield and the maturity date of the securities.

Variable Interest Entities

Variable Interest Entities

In accordance with accounting standards for consolidation of variable interest entities (“VIEs”), the Company consolidates the Operating Partnership, 16 limited partnerships, comprising eight communities, (the “DownREIT limited partnerships,”) and eight co-investments as of March 31, 2018. The Company consolidates these entities because it is deemed the primary beneficiary. The Company has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the eight consolidated co-investments and 16 DownREIT limited partnerships, net of intercompany eliminations, were approximately $845.7 million and $266.4 million, respectively, as of March 31, 2018 and $837.7 million and $265.5 million, respectively, as of December 31, 2017. Noncontrolling interests in these entities were $67.2 million and $66.7 million as of March 31, 2018 and December 31, 2017, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of March 31, 2018 and December 31, 2017, the Company did not have any other VIEs of which it was deemed to be the primary beneficiary and did not have any VIEs of which it was not deemed to be the primary beneficiary.

Equity-based Compensation

Equity-based Compensation

The cost of share- and unit-based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long term incentive plan units (discussed in Note 12, “Equity Based Compensation Plans,” in the Company’s annual report on Form 10-K for the year ended December 31, 2017) are being amortized over the expected service periods.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Management believes that the carrying amounts of the outstanding balances under its lines of credit, and notes and other receivables approximate fair value as of March 31, 2018 and December 31, 2017, because interest rates, yields, and other terms for these instruments are consistent with yields and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s fixed rate debt with a carrying value of $5.1 billion and $4.9 billion, including premiums, discounts and debt financing costs, at March 31, 2018 and December 31, 2017, respectively, was approximately $5.1 billion and $5.0 billion. Management has estimated that the fair value of the Company’s $612.1 million and $792.9 million of variable rate debt, net of debt financing costs, at March 31, 2018 and December 31, 2017, respectively, was approximately $615.6 million and $793.9 million based on the terms of existing mortgage notes payable, unsecured debt, and variable rate demand notes compared to those available in the marketplace. Management believes that the carrying amounts of cash and cash equivalents, restricted cash, accounts payable and accrued liabilities, construction payables, other liabilities, and dividends payable approximate fair value as of March 31, 2018 and December 31, 2017 due to the short-term maturity of these instruments. Marketable securities, except mortgage backed securities, and derivatives are carried at fair value as of March 31, 2018 and December 31, 2017.

At March 31, 2018, the Company’s investments in mortgage backed securities had a carrying value of $113.7 million and the Company estimated the fair value to be approximately $122.8 million. At December 31, 2017, the Company’s investments in mortgage backed securities had a carrying value of $109.5 million and the Company estimated the fair value to be approximately $120.7 million. The Company determines the fair value of the mortgage backed securities based on unobservable inputs (level 3 of the fair value hierarchy) considering the assumptions that market participants would make in valuing these securities. Assumptions such as estimated default rates and discount rates are used to determine the expected discounted cash flows to estimate fair value.

Capitalization of Costs

The Company’s capitalized internal costs related to development and redevelopment projects were comprised primarily of employee compensation and totaled $5.0 million and $4.8 million during the three months ended March 31, 2018 and 2017, respectively. The Company capitalizes leasing commissions associated with the lease-up of development communities and amortizes the costs over the life of the leases. The amounts capitalized for leasing commissions are immaterial for all periods presented.

Co-investments

The Company owns investments in joint ventures (“co-investments”) in which it has significant influence, but its ownership interest does not meet the criteria for consolidation in accordance with U.S. GAAP. Therefore, the Company accounts for co-investments using the equity method of accounting. Under the equity method of accounting, the investment is carried at the cost of assets contributed, plus the Company's equity in earnings less distributions received and the Company's share of losses. The significant accounting policies of the Company’s co-investment entities are consistent with those of the Company in all material respects.

Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and the transaction will be accounted for as a business combination if the entity meets the definition of a business pursuant to ASU No. 2017-01, or an asset acquisition if the entity is not determined to be a business. A majority of the co-investments, excluding the preferred equity investments, compensate the Company for its asset management services and some of these investments may provide promote income if certain financial return benchmarks are achieved. Asset management fees are recognized when earned, and promote fees are recognized when the earnings events have occurred and the amount is determinable and collectible. Any promote fees are reflected in equity income from co-investments.

The Company reports investments in co-investments where accumulated distributions have exceeded the Company’s investment as distributions in excess of investments in co-investments in the accompanying condensed consolidated balance sheets. As of December 31, 2017, the net investment of one of the Company’s co-investments was less than zero as a result of financing distributions in excess of the Company's investment in that co-investment. As a result of the Company's adoption of ASU No. 2017-05 on January 1, 2018, the carrying value of this co-investment was greater than zero as of March 31, 2018.

Changes in Accumulated Other Comprehensive Loss

Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense on the condensed consolidated statement of income and comprehensive income. Realized gains and losses on available for sale debt securities are included in interest and other income on the condensed consolidated statement of income and comprehensive income.

Cash, Cash Equivalents and Restricted Cash

Highly liquid investments with original maturities of three months or less when purchased are classified as cash equivalents. Restricted cash balances relate primarily to reserve requirements for capital replacement at certain communities in connection with the Company’s mortgage debt.

Accounting Estimates

Accounting Estimates

The preparation of condensed consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to acquiring, developing and assessing the carrying values of its real estate portfolio, its investments in and advances to joint ventures and affiliates, its notes receivables, and its qualification as a real estate investment trust (“REIT”). The Company bases its estimates on historical experience, current market conditions, and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may vary from those estimates and those estimates could be different under different assumptions or conditions.

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Organization and Basis of Presentation (Tables)

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Components of marketable securities

As of March 31, 2018 and December 31, 2017, marketable securities consist of the following ($ in thousands):

	March 31, 2018
	Amortized Cost		Gross Unrealized Gain (Loss)			Carrying Value
Equity securities:
Investment funds - debt securities	$	26,946	$	(360	)	$	26,586
Investment funds - U.S. treasuries	11,250		(86		)	11,164
Common stock and stock funds	39,620		2,459			42,079
Debt securities:
Available for sale
Investment-grade unsecured bonds	4,324		(118		)	4,206
Held to maturity
Mortgage backed securities	113,710		—			113,710
Total - Marketable securities	$	195,850	$	1,895		$	197,745

	December 31, 2017
	Amortized Cost		Gross Unrealized Gain (Loss)			Carrying Value
Equity securities:
Investment funds - debt securities	$	27,914	$	(29	)	$	27,885
Investment funds - U.S. treasuries	10,999		(55		)	10,944
Common stock and stock funds	34,329		2,973			37,302
Debt securities:
Available for sale
Investment-grade unsecured bonds	4,365		(40		)	4,325
Held to maturity
Mortgage backed securities	109,548		—			109,548
Total - Marketable securities	$	187,155	$	2,849		$	190,004

Changes in accumulated other comprehensive income (loss)

Changes in Accumulated Other Comprehensive Loss, Net by Component

Essex Property Trust, Inc.

($ in thousands):

	Change in fair value and amortization of swap settlements			Unrealized gains/(losses) on available for sale securities			Total
Balance at December 31, 2017	$	(20,641	)	$	2,195		$	(18,446	)
Cumulative effect upon adoption of ASU 2016-01	—			(2,234		)	(2,234		)
Other comprehensive income before reclassification	8,031			(74		)	7,957
Amounts reclassified from accumulated other comprehensive loss	(1,985		)	(1		)	(1,986		)
Other comprehensive income	6,046			(2,309		)	3,737
Balance at March 31, 2018	$	(14,595	)	$	(114	)	$	(14,709	)

Changes in Accumulated Other Comprehensive Loss, by Component

Essex Portfolio, L.P.

($ in thousands):

	Change in fair value and amortization of swap settlements			Unrealized gains/(losses) on available for sale securities			Total
Balance at December 31, 2017	$	(17,417	)	$	2,188		$	(15,229	)
Cumulative effect upon adoption of ASU 2016-01	—			(2,228		)	(2,228		)
Other comprehensive income before reclassification	8,307			(77		)	8,230
Amounts reclassified from accumulated other comprehensive loss	(2,053		)	(1		)	(2,054		)
Other comprehensive income	6,254			(2,306		)	3,948
Balance at March 31, 2018	$	(11,163	)	$	(118	)	$	(11,281	)

Schedule of changes to the redemption value of noncontrolling interests

The changes to the redemption value of redeemable noncontrolling interests for the three months ended March 31, 2018 is as follows ($ in thousands):

Balance at December 31, 2017	$	39,206
Reclassification due to change in redemption value and other	1,953
Redemptions	—
Balance at March 31, 2018	$	41,159

Schedule of cash and cash equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows ($ in thousands):

	March 31, 2018		December 31, 2017		March 31, 2017		December 31, 2016
Cash and cash equivalents - unrestricted	$	121,954	$	44,620	$	84,344	$	64,921
Cash and cash equivalents - restricted	17,124		16,506		15,908		105,381
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows	$	139,078	$	61,126	$	100,252	$	170,302

Schedule of restricted cash and cash equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows ($ in thousands):

	March 31, 2018		December 31, 2017		March 31, 2017		December 31, 2016
Cash and cash equivalents - unrestricted	$	121,954	$	44,620	$	84,344	$	64,921
Cash and cash equivalents - restricted	17,124		16,506		15,908		105,381
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows	$	139,078	$	61,126	$	100,252	$	170,302

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Revenue (Tables)

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents the Company’s revenues disaggregated by revenue source ($ in thousands):

	Three Months Ended March 31,
	2018		2017
Rental	$	321,661	$	310,122
Other property leasing revenue	23,286		23,046
Management and other fees from affiliates	2,308		2,236
Total revenues	$	347,255	$	335,404

The following table presents the Company’s rental and other property-related revenues disaggregated by geographic operating segment ($ in thousands):

	Three Months Ended March 31,
	2018		2017
Southern California	$	152,060	$	147,099
Northern California	128,622		123,308
Seattle Metro	58,713		56,192
Other real estate assets (1)	5,552		6,569
Total rental and other property revenues	$	344,947	$	333,168

(1) Other real estate assets consists of revenue generated from retail space, commercial properties, held for sale properties, and disposition properties. Executive management does not evaluate such operating performance geographically.

The following table presents the Company’s rental and other property-related revenues disaggregated by current property category status ($ in thousands):

	Three Months Ended March 31,
	2018		2017
Same-property (1)	$	322,385	$	312,024
Acquisitions (2)	10,383		8,186
Development (3)	19		—
Redevelopment	5,024		4,814
Non-residential/other, net (4)	7,136		8,144
Total rental and other property revenues	$	344,947	$	333,168

(1) Stabilized properties consolidated by the Company for both the quarters ended March 31, 2018 and 2017.

(2) Acquisitions includes properties acquired which did not have comparable stabilized results as of January 1, 2017.

(3) Development includes properties developed which did not have stabilized results as of January 1, 2017.

(4) Non-residential/other, net consists of revenue generated from retail space, commercial properties, held for sale properties, disposition properties and student housing.

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Co-investments (Tables)

3 Months Ended

Mar. 31, 2018

Investments in and Advance to Affiliates, Subsidiaries, Associates, and Joint Ventures [Abstract]

Summary of co-investments

The carrying values of the Company's co-investments as of March 31, 2018 and December 31, 2017 are as follows ($ in thousands, except in parenthetical):

	Weighted Average Essex Ownership Percentage (1)		March 31, 2018		December 31, 2017
Membership interest/Partnership interest in:
CPPIB	54	%	$	496,512	$	500,287
Wesco I, III, IV, and V	53	%	214,650		214,408
BEXAEW, BEX II and BEX III (2)	50	%	135,174		13,827
Other	52	%	50,209		51,810
Total operating and other co-investments, net			896,545		780,332
Total development co-investments, net	50	%	75,092		73,770
Total preferred interest co-investments (includes related party investments of $15.6 million and $15.7 million as of March 31, 2018 and December 31, 2017, respectively)			319,320		265,156
Total co-investments, net			$	1,290,957	$	1,119,258

(1) Weighted average Essex ownership percentages are as of March 31, 2018.

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

Summarized financial information for co-investments accounted for under the equity method

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

	March 31, 2018		December 31, 2017
Combined balance sheets: (1)
Rental properties and real estate under development	$	3,794,212	$	3,722,778
Other assets	161,538		110,333
Total assets	$	3,955,750	$	3,833,111
Debt	$	1,744,663	$	1,705,051
Other liabilities	69,782		45,515
Equity	2,141,305		2,082,545
Total liabilities and equity	$	3,955,750	$	3,833,111
Company's share of equity	$	1,290,957	$	1,155,984

	Three Months Ended March 31,
	2018			2017
Combined statements of income: (1)
Property revenues	$	80,842		$	75,905
Property operating expenses	(27,069		)	(25,408		)
Net operating income	53,773			50,497
Interest expense	(16,735		)	(11,921		)
General and administrative	(1,492		)	(1,778		)
Depreciation and amortization	(31,162		)	(27,904		)
Net income	$	4,384		$	8,894
Company's share of net income (2)	$	32,774		$	10,899

(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 $0.4 million and $0.5 million for the three months ended March 31, 2018 and 2017, respectively.

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Notes and Other Receivables (Tables)

3 Months Ended

Mar. 31, 2018

Receivables [Abstract]

Notes and other receivables

Notes and other receivables consist of the following as of March 31, 2018 and December 31, 2017 ($ in thousands):

	March 31, 2018		December 31, 2017
Notes receivable, bearing interest at 10.00%, due May 2021	$	14,110	$	13,762
Notes receivable, bearing interest at 10.75%, due September 2020	30,107		29,318
Related party note receivable, bearing interest at 9.50%, due October 2019(1)	6,608		6,656
Related party note receivable, bearing interest at 3.50%, due March 2018(1)	—		29,500
Notes and other receivables from affiliates (2)	3,314		5,061
Other receivables	16,386		16,629
Total notes and other receivables	$	70,525	$	100,926

(1) See Note 6, Related Party Transactions, for additional details.

(2) These amounts consist of short-term loans outstanding and due from various joint ventures as of March 31, 2018 and December 31, 2017, respectively. See Note 6, Related Party Transactions, for additional details.

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Debt (Tables)

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Schedule of debt and lines of credit

Debt consists of the following ($ in thousands):

	March 31, 2018			December 31, 2017			Weighted Average Maturity In Years as of March 31, 2018
Unsecured bonds private placement - fixed rate	$	274,476		$	274,427		2.8
Term loan - variable rate	348,525			348,545			3.9
Bonds public offering - fixed rate	3,174,922			2,878,737			8.4
Unsecured debt, net (1)	3,797,923			3,501,709
Lines of credit (2)	—			179,000
Mortgage notes payable, net (3)	1,921,047			2,008,417			5.3
Total debt, net	$	5,718,970		$	5,689,126
Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering	3.8		%	3.7		%
Weighted average interest rate on variable rate term loan	2.5		%	2.5		%
Weighted average interest rate on lines of credit	2.5		%	2.3		%
Weighted average interest rate on mortgage notes payable	4.2		%	4.2		%

(1) Includes unamortized discount of $6.6 million and $5.2 million and unamortized debt issuance costs of $20.5 million and $18.1 million, as of March 31, 2018 and December 31, 2017, respectively.

(2) Lines of credit, related to the Company's two lines of unsecured credit aggregating $1.24 billion as of March 31, 2018, excludes unamortized debt issuance costs of $4.9 million and $3.2 million as of March 31, 2018 and December 31, 2017, respectively. These debt issuance costs are included in prepaid expenses and other assets on the condensed consolidated balance sheets. As of March 31, 2018, the Company’s $1.2 billion credit facility had an interest rate of LIBOR plus 0.875%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of December 2021 with one18-month extension, exercisable at the Company’s option. As of March 31, 2018, the Company’s $35.0 million working capital unsecured line of credit had an interest rate of LIBOR plus 0.875%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of January 2020.

(3) Includes total unamortized premium of $29.2 million and $33.2 million, reduced by unamortized debt issuance costs of $4.9 million and $5.4 million, as of March 31, 2018 and December 31, 2017, respectively.

Summary of aggregate scheduled principal payments

The aggregate scheduled principal payments of the Company’s outstanding debt as of March 31, 2018 are as follows (excluding lines of credit) ($ in thousands):

Remaining in 2018	$	126,740
2019	627,016
2020	694,921
2021	544,846
2022	692,466
Thereafter	3,035,808
Total	$	5,721,797

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Reconciliation of revenues and operating profit (loss) from segments to consolidated

The revenues and NOI for each of the reportable operating segments are summarized as follows for the three months ended March 31, 2018 and 2017 ($ in thousands):

	Three Months Ended March 31,
	2018			2017
Revenues:
Southern California	$	152,060		$	147,099
Northern California	128,622			123,308
Seattle Metro	58,713			56,192
Other real estate assets	5,552			6,569
Total property revenues	$	344,947		$	333,168
Net operating income:
Southern California	$	107,932		$	104,501
Northern California	94,717			89,743
Seattle Metro	42,012			40,388
Other real estate assets	5,323			6,532
Total net operating income	249,984			241,164
Management and other fees from affiliates	2,308			2,236
Corporate-level property management expenses	(7,770		)	(7,509		)
Depreciation and amortization	(119,105		)	(115,503		)
General and administrative	(14,813		)	(10,601		)
Expensed acquisition and investment related costs	(57		)	(556		)
Interest expense	(54,861		)	(54,583		)
Total return swap income	2,270			2,584
Interest and other income	5,909			6,764
Equity income from co-investments	32,774			10,899
Gain on sale of real estate and land	—			26,174
Gain on remeasurement of co-investment	—			86,482
Net income	$	96,639		$	187,551

Reconciliation of assets from segment to consolidated

Total assets for each of the reportable operating segments are summarized as follows as of March 31, 2018 and December 31, 2017 ($ in thousands):

	March 31, 2018		December 31, 2017
Assets:
Southern California	$	4,744,730	$	4,788,225
Northern California	4,182,261		4,215,449
Seattle Metro	1,506,405		1,520,372
Other real estate assets	55,209		55,488
Net reportable operating segment - real estate assets	10,488,605		10,579,534
Real estate under development	395,710		355,735
Co-investments	1,290,957		1,155,984
Cash and cash equivalents, including restricted cash	139,078		61,126
Marketable securities	197,745		190,004
Notes and other receivables	70,525		100,926
Prepaid expenses and other assets	60,047		52,397
Total assets	$	12,642,667	$	12,495,706

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Net Income Per Common Share and Net Income Per Common Unit (Tables)

3 Months Ended

Mar. 31, 2018

Net Income Per Share and Net Income Per Unit [Line Items]

Schedule of net income per common share

Essex Property Trust, Inc.

	Three Months Ended March 31, 2018					Three Months Ended March 31, 2017
	Income		Weighted- average Common Shares	Per Common Share Amount		Income		Weighted- average Common Shares	Per Common Share Amount
Basic:
Net income available to common stockholders	$	90,918	66,044,022	$	1.38	$	178,964	65,549,484	$	2.73
Effect of Dilutive Securities:
Stock options	—		38,495			—		96,778
DownREIT units	—		—			373		213,228
Diluted:
Net income available to common stockholders	$	90,918	66,082,517	$	1.38	$	179,337	65,859,490	$	2.72

Essex Portfolio, L.P. [Member]

Net Income Per Share and Net Income Per Unit [Line Items]

Schedule of net income per common share

Essex Portfolio, L.P.

	Three Months Ended March 31, 2018					Three Months Ended March 31, 2017
	Income		Weighted- average Common Units	Per Common Unit Amount		Income		Weighted- average Common Units	Per Common Unit Amount
Basic:
Net income available to common unitholders	$	94,050	68,317,435	$	1.38	$	185,110	67,801,718	$	2.73
Effect of Dilutive Securities:
Stock options	—		38,495			—		96,778
DownREIT units	—		—			373		213,228
Diluted:
Net income available to common unitholders	$	94,050	68,355,930	$	1.38	$	185,483	68,111,724	$	2.72

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Organization and Basis of Presentation - Narrative (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2018 USD ($) community building investment partnership apartment project shares	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($) shares
Real Estate Properties [Line Items]
Ownership interest in partnership (as a percent)	96.70%		96.70%
Apartment communities owned (in communities) | community	247
Apartment units owned (in units) | apartment	60,240
Ownership interest, number of commercial buildings (in commercial buildings) | building	1
Ownership interest, number of active development projects (in projects) | project	7
Sales and maturities of marketable securities	$ 9,600	$ 24,900
Marketable securities, realized gain (loss)	$ 700	1,600
Downreit limited partnerships consolidated by company (in partnerships) | partnership	16
Communities within Downreit partnerships (in communities) | community	8
Number of previously consolidated co-investments considered VIE (in investments) | investment	8
Assets related to variable interest entities net of intercompany eliminations	$ 845,700		$ 837,700
Liabilities related to variable interest entities net of intercompany eliminations	266,400		265,500
Noncontrolling interest in variable interest entity	67,200		66,700
Fixed rate debt carrying amount	5,100,000		4,900,000
Fixed rate debt fair value	5,100,000		5,000,000
Variable rate debt, carrying amount	612,100		792,900
Variable rate debt fair value	615,600		793,900
Investments in mortgage back securities, fair value	122,800		120,700
Capitalized internal costs related to development and redevelopment projects	$ 5,000	$ 4,800
Number of co-investments with financing distributions in excess of the company's investment (in investments) | investment	1
Interest And Other Income [Member]
Real Estate Properties [Line Items]
Gain (loss) on sale of equity securities	$ (900)
Mortgage Backed Securities [Member]
Real Estate Properties [Line Items]
Carrying Value	$ 113,710		109,548
ASU 2017-05 [Member]
Real Estate Properties [Line Items]
Cumulative effect upon adoption			$ 123,708
Essex Portfolio, L.P. [Member]
Real Estate Properties [Line Items]
Operating Partnership units outstanding (in units) | shares	2,273,413		2,268,114
Redemption value of operating partnership units outstanding	$ 547,200		$ 547,500
Essex Portfolio, L.P. [Member] | ASU 2017-05 [Member]
Real Estate Properties [Line Items]
Cumulative effect upon adoption			$ 123,708

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Organization and Basis of Presentation - Summary of Financial Securities (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Held to maturity
Equity and Debt Securities, Amortized Cost	$ 195,850	$ 187,155
Equity and Debt Securities, Gross Unrealized Gain (Loss)	1,895	2,849
Equity and Debt Securities, Marketable Securities	197,745	190,004
Investment Funds - Debt Securities [Member]
Equity securities:
Amortized Cost	26,946	27,914
Gross Unrealized Gain (Loss)	(360)	(29)
Carrying Value	26,586	27,885
Investment Funds - U.S. Treasuries [Member]
Equity securities:
Amortized Cost	11,250	10,999
Gross Unrealized Gain (Loss)	(86)	(55)
Carrying Value	11,164	10,944
Common Stock and Stock Funds [Member]
Equity securities:
Amortized Cost	39,620	34,329
Gross Unrealized Gain (Loss)	2,459	2,973
Carrying Value	42,079	37,302
Investment-Grade Unsecured Bonds [Member]
Available for sale
Amortized Cost	4,324	4,365
Gross Unrealized Gain (Loss)	(118)	(40)
Carrying Value	4,206	4,325
Mortgage Backed Securities [Member]
Held to maturity
Amortized Cost	113,710	109,548
Gross Unrealized Gain (Loss)	0	0
Carrying Value	$ 113,710	$ 109,548

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Organization and Basis of Presentation - Accumulated Other Comprehensive Loss Summary (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at period beginning	$ 6,396,825
Balance at period end	6,492,159
Accumulated Other Comprehensive Loss, Net [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at period beginning	(18,446)
Cumulative effect upon adoption		$ (2,234)
Other comprehensive income before reclassification	7,957
Amounts reclassified from accumulated other comprehensive loss	(1,986)
Other comprehensive income	3,737
Balance at period end	(14,709)
Change in Fair Value and Amortization of Swap Settlements [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at period beginning	(20,641)
Cumulative effect upon adoption		0
Other comprehensive income before reclassification	8,031
Amounts reclassified from accumulated other comprehensive loss	(1,985)
Other comprehensive income	6,046
Balance at period end	(14,595)
Unrealized Gains/(Loss) on Available for Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at period beginning	2,195
Cumulative effect upon adoption		$ (2,234)
Other comprehensive income before reclassification	(74)
Amounts reclassified from accumulated other comprehensive loss	(1)
Other comprehensive income	(2,309)
Balance at period end	$ (114)

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Organization and Basis of Presentation - Accumulated Other Comprehensive Loss - Partnership (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at period beginning	$ 6,396,825
Balance at period end	6,492,159
Essex Portfolio, L.P. [Member] | Accumulated Other Comprehensive Loss, Net [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at period beginning	(15,229)
Cumulative effect upon adoption		$ (2,228)
Other comprehensive income before reclassification	8,230
Amounts reclassified from accumulated other comprehensive loss	(2,054)
Other comprehensive income	3,948
Balance at period end	(11,281)
Essex Portfolio, L.P. [Member] | Change in Fair Value and Amortization of Swap Settlements [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at period beginning	(17,417)
Cumulative effect upon adoption		0
Other comprehensive income before reclassification	8,307
Amounts reclassified from accumulated other comprehensive loss	(2,053)
Other comprehensive income	6,254
Balance at period end	(11,163)
Essex Portfolio, L.P. [Member] | Unrealized Gains/(Loss) on Available for Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at period beginning	2,188
Cumulative effect upon adoption		$ (2,228)
Other comprehensive income before reclassification	(77)
Amounts reclassified from accumulated other comprehensive loss	(1)
Other comprehensive income	(2,306)
Balance at period end	$ (118)

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Organization and Basis of Presentation - Redeemable Noncontrolling Interest (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($)
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
December 31, 2017	$ 39,206
Reclassification due to change in redemption value and other	1,953
Redemptions	0
March 31, 2018	$ 41,159

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Organization and Basis of Presentation - Cash, Cash Equivalents and Restricted Cash And Cash Equivalents (Details) - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents-unrestricted	$ 121,954	$ 44,620	$ 84,344	$ 64,921
Cash and cash equivalents-restricted	17,124	16,506	15,908	105,381
Total unrestricted and restricted cash and cash equivalents shown in the condensed consolidated statement of cash flows	$ 139,078	$ 61,126	$ 100,252	$ 170,302

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Significant Transactions During the Three Months Ended 2018 and Subsequent Events (Details) - USD ($)	1 Months Ended
	Mar. 31, 2018	Jan. 31, 2018
Other Commitments [Line Items]
Proceeds from full redemption of a preferred equity investment in a joint venture		$ 2,400,000
Promote income	$ 20,500,000
Stock repurchased and retired during the period (in shares)		16,834
Stock repurchased and retired during the period		$ 3,800,000
Purchase authority remaining under stock repurchase plan	245,200,000
Senior Notes [Member] | Senior Unsecured Notes At 4.500% [Member]
Other Commitments [Line Items]
Debt, face amount	$ 300,000,000
Debt, term (in years)	30 years
Debt, stated interest rate	4.50%
BEX III [Member]
Other Commitments [Line Items]
Repayments of related party debt		$ 29,500,000

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Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Disaggregation of Revenue [Line Items]
Total revenues	$ 347,255	$ 335,404
Deferred revenue	8,500		$ 9,300
Deferred revenue, revenue recognized	800
Deferred revenue balance from contracts with remaining performance obligations	8,500
Rental Income [Member]
Disaggregation of Revenue [Line Items]
Total revenues	321,661	310,122
Other Property Leasing Revenue [Member]
Disaggregation of Revenue [Line Items]
Total revenues	23,286	23,046
Management And Other Fees From Affiliates Income [Member]
Disaggregation of Revenue [Line Items]
Total revenues	2,308	2,236
Rental And Other Property Revenues [Member]
Disaggregation of Revenue [Line Items]
Total revenues	344,947	333,168
Rental And Other Property Revenues [Member] | Same Property [Member]
Disaggregation of Revenue [Line Items]
Total revenues	322,385	312,024
Rental And Other Property Revenues [Member] | Acquisitions [Member]
Disaggregation of Revenue [Line Items]
Total revenues	10,383	8,186
Rental And Other Property Revenues [Member] | Development [Member]
Disaggregation of Revenue [Line Items]
Total revenues	19	0
Rental And Other Property Revenues [Member] | Redevelopment [Member]
Disaggregation of Revenue [Line Items]
Total revenues	5,024	4,814
Rental And Other Property Revenues [Member] | Non-Residential/Other, Net [Member]
Disaggregation of Revenue [Line Items]
Total revenues	7,136	8,144
Rental And Other Property Revenues [Member] | Other real estate assets [Member]
Disaggregation of Revenue [Line Items]
Total revenues	5,552	6,569
Rental And Other Property Revenues [Member] | Southern California [Member] | Operating Segments [Member]
Disaggregation of Revenue [Line Items]
Total revenues	152,060	147,099
Rental And Other Property Revenues [Member] | Northern California [Member] | Operating Segments [Member]
Disaggregation of Revenue [Line Items]
Total revenues	128,622	123,308
Rental And Other Property Revenues [Member] | Seattle Metro [Member] | Operating Segments [Member]
Disaggregation of Revenue [Line Items]
Total revenues	$ 58,713	$ 56,192
Minimum [Member]
Disaggregation of Revenue [Line Items]
Lease term	6 months
Maximum [Member]
Disaggregation of Revenue [Line Items]
Lease term	12 months

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Revenue - Deferred Revenues and Remaining Performance Obligations (Details)	3 Months Ended
	Mar. 31, 2018
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-04-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Percentage of remaining performance obligations due per period	28.00%
Expected timing of performance obligation satisfaction, period	9 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Percentage of remaining performance obligations due per period	36.00%
Expected timing of performance obligation satisfaction, period	2 years

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Co-investments - Summary of Investments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Schedule of Equity Method Investments [Line Items]
Co-investments	$ 1,290,957	$ 1,119,258
Total operating and other co-investments, net [Member]
Schedule of Equity Method Investments [Line Items]
Co-investments	$ 896,545	780,332
Membership Interest In CPPIB [Member]
Schedule of Equity Method Investments [Line Items]
Limited partnership interest in partnership investments	54.00%
Co-investments	$ 496,512	500,287
Membership interest in Wesco I, III, IV, and V [Member]
Schedule of Equity Method Investments [Line Items]
Limited partnership interest in partnership investments	53.00%
Co-investments	$ 214,650	214,408
Membership interest in BEXAEW, BEX II And BEX III [Member]
Schedule of Equity Method Investments [Line Items]
Limited partnership interest in partnership investments	50.00%
Co-investments	$ 135,174	13,827
Membership In Other [Member]
Schedule of Equity Method Investments [Line Items]
Limited partnership interest in partnership investments	52.00%
Co-investments	$ 50,209	51,810
Total development co-investments, net [Member]
Schedule of Equity Method Investments [Line Items]
Limited partnership interest in partnership investments	50.00%
Co-investments	$ 75,092	73,770
Total preferred interest co-investments [Member]
Schedule of Equity Method Investments [Line Items]
Co-investments	319,320	265,156
Total preferred interest co-investments [Member] | Investments in Majority-owned Subsidiaries [Member]
Schedule of Equity Method Investments [Line Items]
Co-investments	$ 15,600	15,700
BEX II [Member]
Schedule of Equity Method Investments [Line Items]
Co-investments		$ (36,700)

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Co-investments - Combined Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Equity Method Investment, Summarized Financial Information, Assets [Abstract]
Rental properties and real estate under development	$ 395,710		$ 355,735
Other liabilities	33,477		33,132
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract]
Interest expense	(54,861)	$ (54,583)
General and administrative	(14,813)	(10,601)
Total co investment [Member]
Equity Method Investment, Summarized Financial Information, Assets [Abstract]
Rental properties and real estate under development	3,794,212		3,722,778
Other assets	161,538		110,333
Total assets	3,955,750		3,833,111
Debt	1,744,663		1,705,051
Other liabilities	69,782		45,515
Equity	2,141,305		2,082,545
Total liabilities and equity	3,955,750		3,833,111
Company's share of equity	1,290,957		$ 1,155,984
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract]
Property revenues	80,842	75,905
Property operating expenses	(27,069)	(25,408)
Net operating income	53,773	50,497
Interest expense	(16,735)	(11,921)
General and administrative	(1,492)	(1,778)
Depreciation and amortization	(31,162)	(27,904)
Net income	4,384	8,894
Company's share of net income	32,774	10,899
Total co investment [Member] | Affiliated Entity [Member]
Equity Method Investment, Summarized Financial Information, Income Statement [Abstract]
Company's share of net income	$ 400	$ 500

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Notes and Other Receivables (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$ 70,525	$ 100,926
Secured Note Receivable, 10.00% Interest Rate, Due May 2021 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$ 14,110	13,762
Stated interest rate	10.00%
Secured Note Receivable, 10.75% Interest Rate, Due September 2020 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$ 30,107	29,318
Stated interest rate	10.75%
Secured Note Receivable, 9.5% Interest Rate, Due October 2019 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$ 6,608	6,656
Stated interest rate	9.50%
Secured Note Receivable, 3.5% Interest Rate, Due December 16, 2017 [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$ 0	29,500
Stated interest rate	3.50%
Notes and Other Receivables from Affiliates [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$ 3,314	5,061
Other Receivables [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Notes receivable	$ 16,386	$ 16,629

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Related Party Transactions (Details) $ in Thousands	1 Months Ended		3 Months Ended		12 Months Ended
	Nov. 30, 2017 USD ($)	Mar. 31, 2017 USD ($) unit	Mar. 31, 2018 USD ($) investment	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2015 USD ($) investment	Nov. 30, 2016 USD ($)
Related Party Transaction [Line Items]
Management and other fees from affiliates			$ 3,200	$ 3,000
Development and redevelopment fees			900	800
Co-investments			1,290,957		$ 1,155,984
Payments to acquire preferred equity investments			$ 56,020	120,816
Equity investment, redeemed amount					5,000
Number of equity method investments scheduled to mature | investment			2
Short-term loans outstanding and due from various joint ventures			$ 3,300		5,100
Affiliated Entity [Member] | BEX III [Member] | Secured Note Receivable, 3.5% Interest Rate, Due March 9, 2018 [Member]
Related Party Transaction [Line Items]
Notes receivable	$ 29,500
Note receivable, related party, interest rate	3.50%
Limited Liability Company [Member]
Related Party Transaction [Line Items]
Payments to acquire preferred equity investments						$ 20,000
Number of preferred equity method investments acquired during period (in investments) | investment						3
Preferred stock, stated interest percentage						9.50%
Limited Liability Company [Member] | Marcus and Millichamp Company TMMC Affiliate [Member] | Secured Note Receivable, 9.5% Interest Rate, Due October 2019 [Member]
Related Party Transaction [Line Items]
Notes receivable			$ 6,600		$ 6,700		$ 6,600
Membership Interest In Sage At Cupertino [Member]
Related Party Transaction [Line Items]
Co-investments		$ 15,300		15,300
Number of units acquired | unit		230
Equity method investment, ownership percentage acquired		40.50%
Contract price		$ 90,000
Mortgage encumbrance		$ 52,000		$ 52,000

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Debt - Debt Summary (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
Debt Instrument [Line Items]
Unsecured debt, net	$ 3,797,923	$ 3,501,709
Lines of credit	0	179,000
Mortgage notes payable, net	1,921,047	2,008,417
Total debt	5,718,970	5,689,126
Unsecured bonds private placement - fixed rate [Member]
Debt Instrument [Line Items]
Unsecured debt, net	$ 274,476	274,427
Debt, weighted average maturity (years)	2 years 9 months 26 days
Term loan - variable rate [Member]
Debt Instrument [Line Items]
Unsecured debt, net	$ 348,525	$ 348,545
Debt, weighted average maturity (years)	3 years 10 months 26 days
Weighted average interest rate	2.50%	2.50%
Bonds public offering - fixed rate [Member]
Debt Instrument [Line Items]
Unsecured debt, net	$ 3,174,922	$ 2,878,737
Debt, weighted average maturity (years)	8 years 4 months 26 days
Weighted average interest rate	3.80%	3.70%
Unsecured Line of Credit [Member]
Debt Instrument [Line Items]
Lines of credit	$ 0	$ 179,000
Weighted average interest rate	2.50%	2.30%
Mortgage notes payable, net [Member]
Debt Instrument [Line Items]
Debt, weighted average maturity (years)	5 years 3 months 26 days
Mortgage notes payable, net	$ 1,921,047	$ 2,008,417
Weighted average interest rate	4.20%	4.20%

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Debt - Narrative (Details)	3 Months Ended
	Mar. 31, 2018 USD ($) extension instrument	Dec. 31, 2017 USD ($)
Debt Instrument [Line Items]
Number of lines of unsecured credit (in instruments) | instrument	2
Unsecured Debt [Member]
Debt Instrument [Line Items]
Unamortized discount (premium), net	$ 6,600,000	$ 5,200,000
Unamortized debt issuance expense	20,500,000	18,100,000
Line of Credit [Member]
Debt Instrument [Line Items]
Aggregate borrowing capacity	1,240,000,000
Line of Credit [Member] | Unsecured Line of Credit [Member]
Debt Instrument [Line Items]
Unamortized debt issuance expense	4,900,000	3,200,000
Unsecured Line of Credit [Member] | Line of Credit [Member]
Debt Instrument [Line Items]
Aggregate borrowing capacity	$ 1,200,000,000
Number of extension options (in extensions) | extension	1
Extension period (in months)	18 months
Unsecured Line of Credit [Member] | Line of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	0.875%
Unsecured Line of Credit [Member] | Line of Credit Working Capital [Member]
Debt Instrument [Line Items]
Aggregate borrowing capacity	$ 35,000,000
Unsecured Line of Credit [Member] | Line of Credit Working Capital [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Basis spread on variable rate	0.875%
Mortgage notes payable, net [Member]
Debt Instrument [Line Items]
Unamortized discount (premium), net	$ (29,200,000)	(33,200,000)
Unamortized debt issuance expense	$ 4,900,000	$ 5,400,000

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Debt - Future Principal Payments (Details) $ in Thousands	Mar. 31, 2018 USD ($)
Debt Disclosure [Abstract]
Remaining in 2018	$ 126,740
2019	627,016
2020	694,921
2021	544,846
2022	692,466
Thereafter	3,035,808
Long-term debt	$ 5,721,797

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Segment Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2018 USD ($) segment	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)
Segment Reporting [Abstract]
Number of reportable operating segments defined by geographical regions (in segments) | segment	3
Revenues from External Customers and Long-Lived Assets [Line Items]
Property revenues	$ 344,947	$ 333,168
Net operating income	249,984	241,164
Management and other fees from affiliates	2,308	2,236
Corporate-level property management expenses	(7,770)	(7,509)
Depreciation and amortization	(119,105)	(115,503)
General and administrative	(14,813)	(10,601)
Expensed acquisition and investment related costs	(57)	(556)
Interest expense	(54,861)	(54,583)
Total return swap income	2,270	2,584
Interest and other income	5,909	6,764
Equity income from co-investments	32,774	10,899
Gain on sale of real estate and land	0	26,174
Gain on remeasurement of co-investment	0	86,482
Net income	96,639	187,551
Net reportable operating segment - real estate assets	10,488,605		$ 10,579,534
Real estate under development	395,710		355,735
Co-investments	1,290,957		1,155,984
Cash and cash equivalents, including restricted cash	139,078		61,126
Marketable securities	197,745		190,004
Notes and other receivables (includes related party receivables of $9.9 million and $41.2 million as of March 31, 2018 and December 31, 2017, respectively)	70,525		100,926
Prepaid expenses and other assets	60,047		52,397
Total assets	12,642,667		12,495,706
Operating Segments [Member] | Southern California [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property revenues	152,060	147,099
Net operating income	107,932	104,501
Net reportable operating segment - real estate assets	4,744,730		4,788,225
Operating Segments [Member] | Northern California [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property revenues	128,622	123,308
Net operating income	94,717	89,743
Net reportable operating segment - real estate assets	4,182,261		4,215,449
Operating Segments [Member] | Seattle Metro [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property revenues	58,713	56,192
Net operating income	42,012	40,388
Net reportable operating segment - real estate assets	1,506,405		1,520,372
Other real estate assets [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Property revenues	5,552	6,569
Net operating income	5,323	$ 6,532
Net reportable operating segment - real estate assets	$ 55,209		$ 55,488

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Net Income Per Common Share and Net Income Per Common Unit (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Basic:
Net income available to common stockholders	$ 90,918	$ 178,964
Weighted average number of shares/common units outstanding during the period (in shares)	66,044,022	65,549,484
Net income available to common stockholders/unitholders (in dollars per share)	$ 1.38	$ 2.73
Diluted:
Income from continuing operations available to common stockholders	$ 90,918	$ 179,337
Adjusted income from continuing operations available to common stockholders (in shares)	66,082,517	65,859,490
Net income available to common stockholders/unitholders (in dollars per share)	$ 1.38	$ 2.72
Essex Portfolio, L.P. [Member]
Basic:
Net income available to common stockholders	$ 94,050	$ 185,110
Weighted average number of shares/common units outstanding during the period (in shares)	68,317,435	67,801,718
Net income available to common stockholders/unitholders (in dollars per share)	$ 1.38	$ 2.73
Diluted:
Income from continuing operations available to common stockholders	$ 94,050	$ 185,483
Adjusted income from continuing operations available to common stockholders (in shares)	68,355,930	68,111,724
Net income available to common stockholders/unitholders (in dollars per share)	$ 1.38	$ 2.72
Employee Stock Option [Member]
Basic:
Income effect of Dilutive Securities	$ 0	$ 0
Effect of dilutive securities (in shares)	38,495	96,778
Diluted:
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	364,068	225,895
Employee Stock Option [Member] | Essex Portfolio, L.P. [Member]
Basic:
Income effect of Dilutive Securities	$ 0	$ 0
Effect of dilutive securities (in shares)	38,495	96,778
Diluted:
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	364,068	225,895
Convertible Limited Partnership Units [Member]
Diluted:
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	2,273,413	2,252,234
Antidilutive securities excluded from computation of earnings per share, value	$ 3,100	$ 6,100
DownREIT Units [Member]
Basic:
Income effect of Dilutive Securities	$ 0	$ 373
Effect of dilutive securities (in shares)	0	213,228
DownREIT Units [Member] | Essex Portfolio, L.P. [Member]
Basic:
Income effect of Dilutive Securities	$ 0	$ 373
Effect of dilutive securities (in shares)	0	213,228

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Derivative Instruments and Hedging Activities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Derivative [Line Items]
Total return swap income	$ 2,270,000	$ 2,584,000
Multifamily Housing Mortgage Revenue Bonds [Member]
Derivative [Line Items]
Bond subject to interest rate caps	256,500,000
Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Derivative, notional amount	$ 175,000,000
Interest rate	2.30%
Aggregate carrying value of the interest rate swap contracts, asset	$ 7,700,000		$ 5,400,000
Designated as Hedging Instrument [Member] | Interest Rate Cap [Member]
Derivative [Line Items]
Aggregate carrying value of the interest rate swap contracts, liability	0		0
Not Designated as Hedging Instrument [Member] | Total Return Swap [Member]
Derivative [Line Items]
Derivative, notional amount	9,900,000
Derivative, fair value, net	0		$ 0
Not Designated as Hedging Instrument [Member] | Total Return Swap, Callable [Member]
Derivative [Line Items]
Derivative, notional amount	$ 256,500,000