Net Income Per Common Share and Net Income Per Common Unit

9 Months Ended

Sep. 30, 2020

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 September 30, 2020					Three Months Ended September 30, 2019
	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	$	73,661	65,232,837	$	1.13	$	99,335	65,850,524	$	1.51
Effect of Dilutive Securities:
Stock options	—		8,591			—		122,561

Diluted:
Net income available to common stockholders	$	73,661	65,241,428	$	1.13	$	99,335	65,973,085	$	1.51


	Nine Months Ended September 30, 2020					Nine Months Ended September 30, 2019
	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	$	473,125	65,561,820	$	7.22	$	310,468	65,757,914	$	4.72
Effect of Dilutive Securities:
Stock options	—		20,026			—		99,746
DownREIT units	587		94,247			—		—

Diluted:
Net income available to common stockholders	$	473,712	65,676,093	$	7.21	$	310,468	65,857,660	$	4.71

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,295,510 and 2,298,389, 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 September 30, 2020 and 2019, respectively, and 2,297,141 and 2,300,888 for the nine months ended September 30, 2020 and 2019, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $2.6 million and $3.5 million for the three months ended September 30, 2020 and 2019, respectively, and $16.5 million and $10.9 million for the nine months ended September 30, 2020 and 2019, respectively. Additionally, the table excludes all DownREIT 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 493,567 and zero for the three months ended September 30, 2020 and 2019, and 299,046 and zero for the nine months ended September 30, 2020 and 2019, 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 September 30, 2020					Three Months Ended September 30, 2019
	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	$	76,254	67,528,346	$	1.13	$	102,799	68,148,913	$	1.51
Effect of Dilutive Securities:
Stock options	—		8,591			—		122,561

Diluted:
Net income available to common unitholders	$	76,254	67,536,937	$	1.13	$	102,799	68,271,474	$	1.51


	Nine Months Ended September 30, 2020					Nine Months Ended September 30, 2019
	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	$	489,668	67,858,961	$	7.22	$	321,331	68,058,802	$	4.72
Effect of Dilutive Securities:
Stock options	—		20,026			—		99,746
DownREIT units	587		94,247			—		—
Diluted:
Net income available to common unitholders	$	490,255	67,973,234	$	7.21	$	321,331	68,158,548	$	4.71

Stock options of 493,567 and zero for the three months ended September 30, 2020 and 2019, respectively, and 299,046 and zero for the nine months ended September 30, 2020 and 2019, 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 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.