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In determining the independence of Mr. Marcus, the Board of Directors considered the matters that refer to Mr. Marcus set forth under the caption “Certain Relationships and Related Transactions; Director Independence—Other Transactions” in this prospectus. In determining the independence of Mr. Rabinovitch, the Board considered that his son-in-law is employed by Essex as one of the vice presidents of land acquisitions and development and is not an executive officer. In determining the independence of Mr. Martin, the Board considered that his adult son is employed by Essex at an entry level position and is not an executive officer. The Board also considered the ownership of Essex equity securities by the directors and determined, in accordance with principles of the NYSE listing standards, that such ownership is not inconsistent with a determination of independence.

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DESCRIPTION OF INDEBTEDNESS

As of December 31, 2012, we have approximately $1.57 billion of mortgage notes payable. Of this amount, $1.36 billion consists of fixed rate debt with effective interest rates varying from 4.3% to 6.4%. Maturity dates on this fixed rate debt range from 2013 to 2021 with 12.3% maturing in 2013 through 2016, and 87.7% maturing after 2016. The remainder of the mortgage notes payable balance of $201.9 million, as of December 31, 2012, is tax exempt variable rate debt with a weighted average interest rate of 1.9%, of which $187.8 million of this debt is subject to interest protection agreements.

The remaining debt reported on the consolidated balance sheet as of December 31, 2012 includes:

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$141 million outstanding on the existing $500 million unsecured revolving credit facility. The line has an accordion option to $600 million. The line matures in December 2015 with two one-year extensions, exercisable at our option. The underlying interest rate on the line is based on a tiered rate structure tied to our corporate credit ratings and is currently at LIBOR plus 1.075%. There is no outstanding balance on the existing $25 million unsecured working capital line of credit under similar terms;

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$297 million outstanding on the senior unsecured notes due August 2022 with a coupon rate of 3.625% per annum and are payable on February 15th and August 15th of each year, beginning February 15, 2013 (the “2022 Notes”). The 2022 Notes were offered to investors at a price of 98.99% of par value. The 2022 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc. This prospectus relates to an offer by the Operating Partnership to exchange the 2022 Notes for the exchange notes.

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$350 million outstanding on a 5 year unsecured term loan with capacity of $350 million, and the tiered pricing structure is LIBOR plus 120 basis points. We have entered into rate swap contracts for a term of five years with a notional amount of $300 million effectively converting the outstanding bank term loan to a fixed rate;

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$150 million 4.36% senior unsecured private placement notes which mature March 31, 2016;

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$40 million 4.50% senior unsecured private placement notes which mature September 30, 2017;

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$75 million 4.92% senior unsecured private placement notes which mature December 30, 2019;

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$100 million 4.27% senior unsecured private placement notes which mature April 30, 2021;

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$50 million 4.30% senior unsecured private placement notes which mature June 29, 2021; and

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$50 million 4.37% senior unsecured private placement notes which mature August 30, 2021.

Both the fixed and variable rate secured mortgages are non-recourse (with certain limited exceptions in the event of fraud, etc.) and have no claims to unencumbered or other corporate assets.

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DESCRIPTION OF EXCHANGE NOTES

The following description summarizes certain terms and provisions of the exchange notes (also referred to as the “notes”) and the indenture, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the actual terms and provisions of the notes and the indenture, which are incorporated herein by reference. Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the notes, the indenture or the registration rights agreement, as applicable. As used in this section, the terms "we ", "us ", "our" or "Essex Portfolio, L.P." refer to Essex Portfolio, L.P. and not to any of its subsidiaries, unless stated otherwise and the term "Guarantor" refers to Essex Property Trust, Inc. Unless the context requires otherwise, the term "interest" includes additional interest, as described below and references to dollars mean U.S. dollars.

General

We issued the private notes and will issue the exchange notes pursuant to an indenture, dated as of August 15, 2012, among Essex Portfolio, L.P., Essex Property Trust, Inc., as guarantor, and U.S. Bank National Association, as trustee. You may request copies of the indenture and the form of the notes from us.

The notes will be issued only in fully registered, book-entry form, in denominations of $2,000 and integral multiples of $1,000 in excess thereof, except under the limited circumstances described below under "- Book-Entry System". The registered holder of a note will be treated as its owner for all purposes.

If any interest payment date, stated maturity date or redemption date is not a business day, the payment otherwise required to be made on such date will be made on the next business day without any additional payment as a result of such delay. The term "business day" means, with respect to any note, any day, other than a Saturday, Sunday or any other day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. All payments will be made in U.S. dollars.

The notes will be fully and unconditionally guaranteed by Essex Property Trust, Inc. on a senior unsecured basis. See "- Guarantee" below.

The terms of the notes provide that we are permitted to reduce interest payments and payments upon a redemption of notes otherwise payable to a holder for any amounts we are required to withhold by law. For example, non-United States holders of the notes may, under some circumstances, be subject to U.S. federal withholding tax with respect to payments of interest on the notes. We will set-off any such withholding tax that we are required to pay against payments of interest payable on the notes and payments upon a redemption of notes.

Ranking

The notes will be our senior unsecured obligations and will rank equally with each other and with all of our other senior unsecured indebtedness. However, the notes will be effectively subordinated to our existing and future mortgages and other secured indebtedness (to the extent of the value of the collateral securing such indebtedness) and to all existing and future preferred equity and liabilities, whether secured or unsecured, of our subsidiaries, including guarantees provided by our subsidiaries under our credit facilities. As of December 31, 2012, we had outstanding $1.57 billion of secured indebtedness and $1.11 billion of senior unsecured indebtedness (exclusive of trade payables, distributions payable, accrued expenses and committed letters of credit). Of the $1.57 billion of secured indebtedness we had outstanding as of December 31, 2012, all of that indebtedness was attributable to indebtedness of our subsidiaries, excluding trade payables and accrued expenses.

Except as described under "- Covenants" and "- Merger, Consolidation or Sale", the indenture governing the notes does not prohibit us or any of our subsidiaries from incurring additional indebtedness or issuing preferred equity in the future, nor does the indenture afford holders of the notes protection in the event of (1) a recapitalization transaction or other highly leveraged or similar transaction, (2) a change of control of us or (3) a merger, consolidation, reorganization, restructuring or transfer or lease of substantially all of our assets or similar transaction that may adversely affect the holders of the notes. We may, in the future, enter into certain transactions such as the sale of all or substantially all of our assets or a merger or consolidation that may increase the amount of our indebtedness or substantially change our assets, which may have an adverse effect on our ability to service our indebtedness, including the notes. See “Risk Factors - Risks Related to the Offering - The effective subordination of the notes may limit our ability to satisfy our obligations under the notes".

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Additional Notes

The notes will initially be limited to an aggregate principal amount of $300,000,000. We may, without the consent of holders of the notes, increase the principal amount of the notes by issuing additional notes in the future on the same terms and conditions, except for any difference in the issue price and interest accrued prior to the issue date of the additional notes, and with the same CUSIP number as the notes offered hereby so long as such additional notes are fungible for U.S. federal income tax purposes with the notes offered hereby. The notes offered by this prospectus and any additional notes would rank equally and ratably in right of payment and would be treated as a single series of debt securities for all purposes under the indenture.

Interest

Interest on the notes will accrue at the rate of 3.625% per year from and including August 15, 2012 or the most recent interest payment date to which interest has been paid or provided for, and will be payable semi-annually in arrears on February 15 and August 15 of each year, beginning February 15, 2013. The interest so payable will be paid to each holder in whose name a note is registered at the close of business on the February 1 or August 1 (whether or not a business day) immediately preceding the applicable interest payment date. Interest on the notes will be computed on the basis of a 360- day year consisting of twelve 30-day months. In addition, we may be required to pay additional interest on the notes as provided under "- Exchange Offer; Registration Rights".

If we redeem the notes for cash in accordance with the terms of such note, we will pay accrued and unpaid interest and premium, if any, to the holder that surrenders such note for redemption. However, if a redemption falls after a record date and on or prior to the corresponding interest payment date, we will pay the full amount of accrued and unpaid interest and premium, if any, due on such interest payment date to the holder of record at the close of business on the corresponding record date.

Maturity

The notes will mature on August 15, 2022 and will be paid against presentation and surrender thereof at the corporate trust office of the trustee unless earlier redeemed by us at our option as described under "- Our Redemption Rights" below. The notes will not be entitled to the benefits of, or be subject to, any sinking fund.

Our Redemption Rights

We may redeem the notes at our option and in our sole discretion, for cash, at any time in whole or from time to time in part, at a redemption price equal to the greater of:

100% of the principal amount of the notes being redeemed; or

as determined by the Quotation Agent (as defined below), the sum of the present values of the remaining scheduled payments of principal and interest thereon (not including any portion of such payments of interest accrued as of the redemption date) discounted to the redemption date on a semi-annual basis (assuming a 360- day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined below) plus 35 basis points,

plus, in each case, accrued and unpaid interest thereon to, but excluding, the redemption date.

Notwithstanding the foregoing, if we redeem the notes on or after 90 days prior to the maturity date, the redemption price will be equal to 100% of the principal amount of the notes being redeemed.

As used herein:

"Adjusted Treasury Rate" means, with respect to any redemption date, the rate per year equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date.

"Comparable Treasury Issue" means the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the remaining term of the notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such notes.

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"Comparable Treasury Price" means, with respect to any redemption date, (1) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Quotations.

"Quotation Agent" means the Reference Treasury Dealer appointed by us.

"Reference Treasury Dealer" means each of (1) J.P. Morgan Securities LLC and its successors, (2) Citigroup Global Markets Inc. and its successors, (3) a Primary Treasury Dealer (as defined below) selected by Wells Fargo Securities, LLC and (4) anyone other Primary Treasury Dealer selected by us; provided, however, that if any of the Reference Treasury Dealers ceases to be a primary U.S. Government securities dealer ("Primary Treasury Dealer"), we will substitute therefor another Primary Treasury Dealer.

"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by us, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third business day preceding such redemption date.

Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of the notes to be redeemed. Unless we default in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the notes or portions thereof called for redemption.

If we decide to redeem the notes in part, the trustee will select the notes to be redeemed (in principal amounts of $2,000 and integral multiples of $1,000 in excess thereof) on a pro rata basis or such other method it deems fair and appropriate or is required by the depository for the notes.

In the event of any redemption of notes in part, we will not be required to:

issue or register the transfer or exchange of any note during a period beginning at the opening of business 15 days before any selection of notes for redemption and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all holders of the notes to be so

redeemed; or

register the transfer or exchange of any note so selected for redemption, in whole or in part, except the unredeemed portion of any note being redeemed in part.

If the paying agent holds funds sufficient to pay the redemption price of the notes on the redemption date, then on and after such date:

such notes will cease to be outstanding;

interest on such notes will cease to accrue; and

all rights of holders of such notes will terminate except the right to receive the redemption price.

Such will be the case whether or not book-entry transfer of the notes in book-entry form is made and whether or not notes in certificated form, together with the necessary endorsements, are delivered to the paying agent.

We will not redeem the notes on any date if the principal amount of the notes has been accelerated, and such an acceleration has not been rescinded or cured on or prior to such date.

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Covenants

Limitations on Incurrence of Debt

Limitation on Total Outstanding Debt. The notes will provide that we will not, and will not cause or permit any of our subsidiaries to, incur any Debt (including, without limitation, Acquired Debt) if, immediately after giving effect to the incurrence of such Debt and the application of the proceeds therefrom on a pro forma basis, the aggregate principal amount of all outstanding Debt of us and our subsidiaries (determined on a consolidated basis in accordance with generally accepted accounting principles) is greater than 65% of the sum of (without duplication) (i) Total Assets as of the last day of the then most recently ended fiscal quarter and (ii) the aggregate purchase price of any real estate assets or mortgages receivable acquired, and the aggregate amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Debt), by us or any of our subsidiaries since the end of such fiscal quarter, including the proceeds obtained from the incurrence of such additional Debt, determined on a consolidated basis in accordance with U.S. generally accepted accounting principles.

Secured Debt. In addition to the foregoing limitation on the incurrence of Debt, the notes will provide that we will not, and will not cause or permit any of our subsidiaries to, incur any Debt (including, without limitation, Acquired Debt) secured by any Encumbrance on any property or assets of us or any of our subsidiaries, whether owned on the date of the indenture or thereafter acquired, if, immediately after giving effect to the incurrence of such Debt and the application of the proceeds therefrom on a pro forma basis, the aggregate principal amount (determined on a consolidated basis in accordance with U.S. generally accepted accounting principles) of all outstanding Debt of us and our subsidiaries which is secured by any Encumbrance on any property or assets of us or any of our subsidiaries is greater than 40% of the sum of (without duplication) (i) Total Assets as of the last day of the then most recently ended fiscal quarter and (ii) the aggregate purchase price of any real estate assets or mortgages receivable acquired, and the aggregate amount of any securities offering proceeds received (to the extent such proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Debt), by us or any of our subsidiaries since the end of such fiscal quarter, including the proceeds obtained from the incurrence of such additional Debt, determined on a consolidated basis in accordance with U.S. generally accepted accounting principles.

Ratio of Consolidated Income Available for Debt Service to the Annual Debt Service Charge. Furthermore, the notes will also provide that we will not, and will not cause or permit any of our subsidiaries to, incur any Debt (including, without limitation, Acquired Debt) if the ratio of Consolidated Income Available for Debt Service to the Annual Debt Service Charge for the period consisting of the four consecutive fiscal quarters most recently ended prior to the date on which such additional Debt is to be incurred shall have been less than 1.5: 1.0 on a pro forma basis after giving effect to the incurrence of such Debt and the application of the proceeds therefrom, and calculated on the assumption that (i) such Debt and any other Debt (including, without limitation, Acquired Debt) incurred by us or any of our subsidiaries since the first day of such four-quarter period had been incurred, and the application of the proceeds therefrom (including to repay or retire other Debt) had occurred, on the first day of such period, (ii) the repayment or retirement of any other Debt of us or any of our subsidiaries since the first day of such four-quarter period had occurred on the first day of such period (except that, in making such computation, the amount of Debt under any revolving credit facility, line of credit or similar facility shall be computed based upon the average daily balance of such Debt during such period), and (iii) in the case of any acquisition or disposition by us or any of our subsidiaries of any asset or group of assets, in any such case with a fair market value (determined in good faith by the Guarantor's Board of Directors) in excess of $1,000,000, since the first day of such four-quarter period, whether by merger, stock purchase or sale or asset purchase or sale or otherwise, such acquisition or disposition had occurred as of the first day of such period with the appropriate adjustments with respect to such acquisition or disposition being included in such pro forma calculation. If the Debt giving rise to the need to make the foregoing calculation or any other Debt incurred after the first day of the relevant four-quarter period bears interest at a floating rate then, for purposes of calculating the Annual Debt Service Charge, the interest rate on such Debt shall be computed on a pro forma basis as if the average rate which would have been in effect during the entire such four-quarter period had been the applicable rate for the entire such period.

Maintenance of Unencumbered Total Asset Value. The notes will provide that we, together with our subsidiaries, will have at all times Total Unencumbered Assets of not less than 150% of the aggregate principal amount of all outstanding Unsecured Debt of us and our subsidiaries, determined on a consolidated basis in accordance with U.S. generally accepted accounting principles.

Insurance. The notes will provide that we will, and will cause each of our subsidiaries to, maintain insurance with financially sound and reputable insurance companies against such risks and in such amounts as is customarily maintained by persons engaged in similar businesses or as may be required by applicable law.

As used herein:

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"Acquired Debt" means Debt of a person (i) existing at the time such person becomes a subsidiary of ours or (ii) assumed in connection with the acquisition of assets from such person, in each case, other than Debt incurred in connection with, or in contemplation of, such person becoming such a subsidiary or such acquisition. Acquired Debt shall be deemed to be incurred on the date of the related acquisition of assets from any person or the date the acquired person becomes such a subsidiary.

"Annual Debt Service Charge" for any period means the maximum amount which is payable during such period for interest on, and original issue discount of, Debt of us and our subsidiaries and the amount of any dividends which are payable during such period in respect of any Disqualified Stock.

"Capital Stock" means any capital stock (including preferred stock), shares, interests, participations or other ownership interests (however designated) of us or any of our subsidiaries and any rights (other than debt securities convertible into or exchangeable for corporate stock), warrants or options to purchase any thereof.

"Consolidated Income Available for Debt Service" for any period means Earnings from Operations of us, and our subsidiaries plus amounts which have been deducted, and minus amounts which have been added, for the following (without duplication): (i) interest on Debt of us and our subsidiaries, (ii) provision for taxes of us and our subsidiaries based on income, (iii) amortization of debt discount and other deferred financing costs, (iv) provisions for gains and losses on properties and property depreciation and amortization, (v) the effect of any noncash charge resulting from a change in accounting principles in determining Earnings from Operations for such period and (vi) amortization of deferred charges.

"Debt" means, without duplication, any indebtedness of us and our subsidiaries, whether or not contingent, in respect of (i) borrowed money or evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness for borrowed money secured by any Encumbrance existing on property owned by us or any of our subsidiaries, (iii) the reimbursement obligations, contingent or otherwise, in connection with any letters of credit actually issued (other than letters of credit issued to provide credit enhancement or support with respect to other indebtedness of us or any of our subsidiaries otherwise reflected as Debt hereunder) or amounts representing the balance deferred and unpaid of the purchase price of any property or services, except any such balance that constitutes an accrued expense or trade payable, or all conditional sale obligations or obligations under any title retention agreement, (iv) the principal amount of all obligations of us or any of our subsidiaries with respect to redemption, repayment or other repurchase of any Disqualified Stock, (v) any lease of property by us or any of our subsidiaries as lessee which is reflected on the consolidated balance sheet of us and our subsidiaries as a capitalized lease in accordance with U.S. generally accepted accounting principles, or (vi) interest rate swaps, caps or similar agreements and foreign exchange contracts, currency swaps or similar agreements, to the extent, in the case of items of indebtedness under (i) through (iii) above, that any such items (other than letters of credit) would appear as a liability on the consolidated balance sheet of us and our subsidiaries in accordance with U.S. generally accepted accounting principles, and also includes, to the extent not otherwise included, any obligation by us or any of our subsidiaries to be liable for, or to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary course of business), Debt of another person (other than us or any of our subsidiaries) (it being understood that Debt shall be deemed to be incurred by us or any of our subsidiaries whenever we or any of our subsidiaries shall create, assume, guarantee or otherwise become liable in respect thereof).

"Disqualified Stock" means any Capital Stock of us or any of our subsidiaries which by the terms of such Capital Stock (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable), upon the happening of any event or otherwise (i) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than Capital Stock which is redeemable solely in exchange for common stock), (ii) is convertible into or exchangeable or exercisable for Debt or Disqualified Stock or (iii) is redeemable at the option of the holder thereof, in whole or in part (other than Capital Stock which is redeemable solely in exchange for Capital Stock which is not Disqualified Stock), in each case on or prior to the maturity of the notes.

"Earnings from Operations" for any period means net earnings excluding gains and losses on sales of investments, extraordinary items, and property valuation gains and losses, as reflected in the financial statements of us and our subsidiaries for such period determined on a consolidated basis in accordance with U.S. generally accepted accounting principles.

"Encumbrance" means any mortgage, deed of trust, lien, charge, pledge, security interest, security agreement or other encumbrance of any kind.

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"Total Assets" means the sum of (without duplication) (i) Undepreciated Real Estate Assets and (ii) all other assets (excluding accounts receivable and intangibles) of us and our subsidiaries, all determined on a consolidated basis in accordance with U.S. generally accepted accounting principles.

"Undepreciated Real Estate Assets" means, as of any date, the cost (original cost plus capital improvements) of real estate assets of us and our subsidiaries on such date, before depreciation and amortization, all determined on a consolidated basis in accordance with U.S. generally accepted accounting principles.

"Total Unencumbered Assets" means the sum of (without duplication) (i) those Undepreciated Real Estate Assets which are not subject to an Encumbrance securing Debt and (ii) all other assets (excluding accounts receivable, intangibles and unconsolidated equity interests in funds and joint ventures) of us and our subsidiaries not subject to an Encumbrance securing Debt, all determined on a consolidated basis in accordance with U.S. generally accepted accounting principles.

"Unsecured Debt" means Debt of us or any of our subsidiaries which is not secured by an Encumbrance on any property or assets of us or any of our subsidiaries.

Calculations in Respect of the Notes

Except as explicitly specified otherwise herein, we will be responsible for making all calculations required under the notes. We will make all these calculations in good faith and, absent manifest error, our calculations will be final and binding on holders of the notes. We will provide a schedule of our calculations to the trustee, and the trustee is entitled to rely upon the accuracy of our calculations without independent verification. The trustee will forward our calculations to any holder of notes upon request.

Guarantee

Essex Property Trust, Inc. (the "Guarantor") will fully and unconditionally guarantee our obligations under the notes, including the due and punctual payment of principal of and interest on the notes, whether at stated maturity, by declaration of acceleration, call for redemption or otherwise. The guarantee will be a senior unsecured obligation of the Guarantor and will rank equally in right of payment with other senior unsecured obligations of the Guarantor. The Guarantor has no material assets other than its investment in us.

Merger, Consolidation or Sale

The indenture provides that we or Essex Property Trust, Inc. may consolidate with, or sell, lease or convey all or substantially all of our or its assets to, or merge with or into, any other entity, provided that the following conditions are met:

we or Essex Property Trust, Inc., as the case may be, shall be the continuing entity, or the successor entity (if other than us or Essex Property Trust, Inc., as the case may be) formed by or resulting from any consolidation or merger or which shall have received the transfer of assets shall expressly assume payment of the principal of and interest on all of the notes and the due and punctual performance and observance of all of the covenants and conditions in the indenture;

immediately after giving effect to the transaction, no Event of Default under the indenture, and no event which, after notice or the lapse of time, or both, would become an Event of Default, shall have occurred and be continuing; and

an officer's certificate and legal opinion covering these conditions shall be delivered to the trustee.

In the event of any transaction described in and complying with the conditions listed in the immediately preceding paragraphs in which we are not the continuing entity, the successor person formed or remaining shall succeed, and be substituted for, and may exercise every right and power of ours, and we shall be discharged from our obligations under the notes, the indenture and the registration rights agreement.

Events of Default

The indenture provides that the following events are "Events of Default" with respect to the notes:

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default for 30 days in the payment of any installment of interest under the notes;

default in the payment of the principal amount or redemption price due with respect to the notes, when the same becomes due and payable;

our failure to comply with any of our other agreements in the notes or the indenture upon receipt by us of notice of such default by the trustee or by holders of not less than 25% in aggregate principal amount of the notes then outstanding and our failure to cure (or obtain a waiver of) such default within 60 days after we receive such notice;

failure to pay any indebtedness for money borrowed by us, Essex Property Trust, Inc. or any subsidiary in which we have invested at least $50,000,000 in capital (a "Significant Subsidiary"), in an outstanding principal amount in excess of $50,000,000 at final maturity or upon acceleration after the expiration of any applicable grace period, which indebtedness is not discharged, or such default in payment or acceleration is not cured or rescinded, within 30 days after written notice to us from the trustee (or to us and the trustee from holders of at least 25% in principal amount of the outstanding notes); or

certain events of bankruptcy, insolvency or reorganization, or court appointment of a receiver, liquidator or trustee of us, Essex Property Trust, Inc. or any Significant Subsidiary or any substantial part of their respective property.

If an Event of Default under the indenture with respect to the notes occurs and is continuing (other than an Event of Default specified in the last bullet above, which shall result in an automatic acceleration), then in every case the trustee or the holders of not less than 25% in principal amount of the outstanding notes may declare the principal amount of all of the notes to be due and payable immediately by written notice thereof to us and Essex Property Trust, Inc. (and to the trustee if given by the holders). However, at any time after the declaration of acceleration with respect to the notes has been made, but before a judgment or decree for payment of the money due has been obtained by the trustee, the holders of not less than a majority in principal amount of outstanding notes may rescind and annul the declaration and its consequences if:

we or Essex Property Trust, Inc. shall have deposited with the trustee all required payments of the principal of and interest on the notes, plus certain fees, expenses, disbursements and advances of the trustee; and

all Events of Default, other than the non-payment of accelerated principal of (or specified portion thereof) or interest on the notes have been cured or waived as provided in the indenture.

The indenture also provides that the holders of not less than a majority in principal amount of the outstanding notes may waive any past default with respect to the notes and its consequences, except a default:

in the payment of the principal of or interest on the notes; or

in respect of a covenant or provision contained in the indenture that cannot be modified or amended without the consent of the holder of each outstanding note affected thereby.

The trustee will be required to give notice to the holders of the notes of a default under the indenture unless the default has been cured or waived within 90 days; provided, however, that the trustee may withhold notice to the holders of the notes of any default with respect to the notes (except a default in the payment of the principal of or interest on the notes) if specified responsible officers of the trustee consider the withholding to be in the interest of the holders.

The indenture provides that no holders of the notes may institute any proceedings, judicial or otherwise, with respect to the indenture or for any remedy thereunder, except in the case of failure of the trustee, for 60 days, to act after it has received a written request to institute proceedings in respect of an Event of Default from the holders of not less than 25% in principal amount of the outstanding notes, as well as an offer of reasonable indemnity. This provision will not prevent, however, any holder of the notes from instituting suit for the enforcement of payment of the principal of and interest on the notes at the respective due dates thereof.

Subject to provisions in the indenture relating to its duties in case of default, the trustee is under no obligation to exercise any of its rights or powers under the indenture at the request or direction of any holders of the notes then outstanding under the indenture, unless the holders shall have offered to the trustee reasonable security or indemnity. The holders of not less than a majority in principal amount of the outstanding notes (or of all notes then outstanding under the indenture, as the case may be) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee, or of exercising any trust or power conferred upon the trustee. However, the trustee may refuse to follow any direction which is in conflict with any law or the indenture, or which may be unduly prejudicial to the holders of the notes not joining therein.

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Within 120 days after the close of each fiscal year, we and Essex Property Trust, Inc. must deliver a certificate of an officer certifying to the trustee whether or not the officer has knowledge of any default under the indenture and, if so, specifying each default and the nature and status thereof.

Modification, Waiver and Meetings

Modifications and amendments of the indenture will be permitted to be made only with the consent of the holders of not less than a majority in principal amount of all outstanding notes; provided, however, that no modification or amendment may, without the consent of the holder of each note:

change the stated maturity of the principal of or any installment of interest on the notes issued under such indenture, reduce the principal amount of, or the rate or amount of interest on, or any premium payable on redemption of, the notes, or adversely affect any right of repayment of the holder of the notes, change the place of payment, or the coin or currency, for payment of principal of or interest on any note or impair the right to institute suit for the enforcement of any payment on or with respect to the notes;

reduce the above-stated percentage of outstanding notes necessary to modify or amend the indenture, to waive compliance with certain provisions thereof or certain defaults and consequences thereunder or to reduce the quorum or change voting requirements set forth in the indenture;

modify or affect in any manner adverse to the holders the terms and conditions of our obligations in respect of the payment of principal and interest; or

modify any of the foregoing provisions or any of the provisions relating to the waiver of certain past defaults or certain covenants, except to increase the required percentage to effect the action or to provide that certain other provisions may not be modified or waived without the consent of the holders of the notes.

Notwithstanding the foregoing, modifications and amendments of the indenture will be permitted to be made by us, Essex Property Trust, Inc. and the trustee without the consent of any holder of the notes for any of the following purposes:

to evidence a successor to us as obligor or Essex Property Trust, Inc. as guarantor under the indenture;

to add to our covenants or those of Essex Property Trust, Inc. for the benefit of the holders of the notes or to surrender any right or power conferred upon us or Essex Property Trust, Inc. in the indenture;

to add Events of Default for the benefit of the holders of the notes;

to amend or supplement any provisions of the indenture; provided that no amendment or supplement shall materially adversely affect the interests of the holders of any notes then outstanding;

to secure the notes;

to provide for the acceptance of appointment by a successor trustee or facilitate the administration of the trusts under the indenture by more than one trustee;

to provide for rights of holders of the notes if any consolidation, merger or sale of all or substantially all of our property or assets occurs;

to cure any ambiguity, defect or inconsistency in the indenture; provided that this action shall not adversely affect the interests of holders of the notes in any material respect;

to provide for the issuance of additional notes in accordance with the limitations set forth in the indenture;

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to supplement any of the provisions of the indenture to the extent necessary to permit or facilitate defeasance and discharge of any series of the notes; provided that the action shall not adversely affect the interests of the holders of the notes in any material respect; or

to conform the text of the indenture, any guarantee or the notes to any provision of this Description of Notes.

In addition, without the consent of any holder of the notes, Essex Property Trust, Inc., or a subsidiary thereof, may directly assume the due and punctual payment of the principal of, any premium and interest on all the notes and the performance of every covenant of the indenture on our part to be performed or observed. Upon any assumption, Essex Property Trust, Inc. or the subsidiary shall succeed us, and be substituted for and may exercise every right and power of ours, under the indenture with the same effect as if Essex Property Trust, Inc. or the subsidiary had been the issuer of the notes, and we shall be released from all obligations and covenants with respect to the notes. No assumption shall be permitted unless Essex Property Trust, Inc. has delivered to the trustee (1) an officers' certificate and an opinion of counsel, stating, among other things, that the guarantee and all other covenants of Essex Property Trust, Inc. in the indenture remain in full force and effect and (2) an opinion of independent counsel that the holders of the notes shall have no materially adverse U.S. federal tax consequences as a result of the assumption, and that, if any notes are then listed on the New York Stock Exchange, that the notes shall not be delisted as a result of the assumption.

In determining whether the holders of the requisite principal amount of outstanding notes have given any request, demand, authorization, direction, notice, consent or waiver thereunder or whether a quorum is present at a meeting of holders of the notes, the indenture provides that notes owned by us or any other obligor upon the notes or any of our affiliates or of the other obligor shall be disregarded.

The indenture contains provisions for convening meetings of the holders of the notes. A meeting will be permitted to be called at any time by the trustee, and also, upon request, by us, Essex Property Trust, Inc. or the holders of at least 10% in principal amount of the outstanding notes, in any case upon notice given as provided in the indenture. Except for any consent that must be given by the holder of each note affected by certain modifications and amendments of the indenture, any resolution presented at a meeting or adjourned meeting duly reconvened at which a quorum is present will be permitted to be adopted by the affirmative vote of the holders of a majority in principal amount of the outstanding notes; provided, however, that, except as referred to above, any resolution with respect to any request, demand, authorization, direction, notice, consent, waiver or other action that may be made, given or taken by the holders of a specified percentage, which is less than a majority, in principal amount of the outstanding notes may be adopted at a meeting or adjourned meeting duly reconvened at which a quorum is present by the affirmative vote of the holders of the specified percentage in principal amount of the outstanding notes. Any resolution passed or decision taken at any meeting of holders of the notes duly held in accordance with the indenture will be binding on all holders of the notes. The quorum at any meeting called to adopt a resolution, and at any reconvened meeting, will be holders holding or representing a majority in principal amount of the outstanding notes; provided, however, that if any action is to be taken at the meeting with respect to a consent or waiver which may be given by the holders of not less than a specified percentage in principal amount of the outstanding notes, holders holding or representing the specified percentage in principal amount of the outstanding notes will constitute a quorum.

Notwithstanding the foregoing provisions, any action to be taken at a meeting of holders of the notes with respect to any request, demand, authorization, direction, notice, consent, waiver or other action that the indenture expressly provides may be made, given or taken by the holders of a specified percentage which is less than a majority in principal amount of the outstanding notes may be taken at a meeting at which a quorum is present by the affirmative vote of holders of the specified percentage in principal amount of the outstanding notes.

Rule 144A Information

If so required by Rule 144A, we and Essex Property Trust, Inc. will promptly furnish to the holders, beneficial owners and prospective purchasers of the notes, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) to facilitate the resale of the notes pursuant to Rule 144A.

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Reports

Whether or not we are subject to Section 13 or 15( d) of the Exchange Act and for so long as any notes are outstanding, within the time periods required by the applicable rules and regulations of the SEC, we will furnish to the trustee (1) all quarterly and annual reports that would be required to be filed with the SEC on Forms 10-Q and 10-K if we were required to file such reports and (2) all current reports that would be required to be filed with the SEC on Form 8-K if we were required to file such reports. Delivery of such reports, information and documents to the trustee is for informational purposes only and the trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including our compliance with any of our covenants relating to the notes (as to which the trustee is entitled to rely exclusively on an officers' certificate). Notwithstanding the foregoing, prior to the consummation of the exchange offer contemplated by the registration rights agreement, and after consummation of such exchange offer if permitted by the SEC, we may satisfy our obligation to furnish the reports described above by furnishing reports for Essex Property Trust, Inc.

The sole remedy for any violation of any obligations we may be deemed to have pursuant to Section 314(a)(l) of the Trust Indenture Act or our covenant to provide certain reports under the indenture as described above shall be the accrual of additional interest on the notes under the registration rights agreement entered into in conjunction with the issuance of the private notes among us and the initial purchasers of the private notes, as if such violation were a "registration default" at a rate of 0.25% per annum, payable semiannually and otherwise as provided in the indenture. In no event shall additional interest accrue at a combined per annum rate in excess of 0.50% per annum pursuant to both the indenture and the registration rights agreement, regardless of the number of events or circumstances giving rise to the requirement to pay such additional interest.

Trustee

U.S. Bank National Association will initially act as the trustee, registrar, exchange agent and paying agent for the notes, subject to replacement at our option.

If an Event of Default occurs and is continuing, the trustee will be required to use the degree of care and skill of a prudent person in the conduct of his or her own affairs. The trustee will become obligated to exercise any of its powers under the indenture at the request of any of the holders of any notes only after those holders have offered the trustee indemnity reasonably satisfactory to it.

If the trustee becomes one of our creditors, it will be subject to limitations on its rights to obtain payment of claims or to realize on some property received for any such claim, as security or otherwise. The trustee is permitted to engage in other transactions with us. If, however, it acquires any conflicting interest, it must eliminate that conflict or resign.

No Conversion or Exchange Rights

The notes will not be convertible into or exchangeable for any capital stock of us or Essex Property Trust, Inc.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator, stockholder or limited partner of us or Essex Property Trust, Inc., as such, will have any liability for any of our obligations or those of Essex Property Trust, Inc. under the notes, the indenture, any guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of notes by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. The waiver may not be effective to waive liabilities under the federal securities laws.

Book-Entry, Delivery and Form

The exchange notes (except those issued as or in exchange for definitive notes in accordance with the provisions of the indenture) initially will be represented by one or more notes in registered, global form without interest coupons (collectively, the " Global Notes").

Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for definitive notes in registered certificated form ("Certificated Notes") except in the limited circumstances described below. See "- Exchange of Global Notes for Certificated Notes". Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of notes in certificated form. In addition, transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants.

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Depository Procedures

The following description of the operations and procedures of DTC, Euroclear and Clearstream are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. We take no responsibility for these operations and procedures, or the description of them below, and urge investors to contact the system or their participants directly to discuss these matters.

DTC has advised us that DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act, DTC holds securities for Participants (as defined below) and facilitates the settlement of securities transactions, such as transfers and pledges, in deposited securities between Participants through electronic computerized book-entry changes in accounts of Participants, thereby eliminating the need for physical movement of certificates. Participants include the initial purchasers, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations ("Participants"). DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to other such banks, securities brokers and dealers and trust companies that clear through or maintain a custodial relationship with a DTC participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the SEC.

DTC has also advised us that, pursuant to procedures established by it:

(1) upon deposit of the Global Notes, DTC will credit the accounts of the Participants holding beneficial interests in exchange notes issued in exchange for private notes tendered and accepted in the exchange offer with portions of the principal amount of the Global Notes; and

(2) ownership of these interests in the Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Notes).

Investors in the Global Notes who are Participants may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through organizations (including Euroclear and Clearstream) which are Participants. Euroclear and Clearstream will hold interests in the Global Notes on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositories. All interests in a Global Note, including those held through Euroclear or Clearstream, may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems. The laws of some states require that certain persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such persons will be limited to that extent. Because DTC can act only on behalf of the Participants, which in turn act on behalf of the Indirect Participants, the ability of a person having beneficial interests in a Global Note to pledge such interests to persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

Except as described below, owners of interests in the Global Notes will not have notes registered in their names, will not receive physical delivery of notes in certificated form and will not be considered the registered owners or "holders" thereof under the indenture governing the notes for any purpose.

Payments in respect of the principal of, and interest and premium, if any, on, a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the indenture governing the notes. Under the terms of the indenture, we, Essex Property Trust, Inc. and the trustee will treat the persons in whose names the notes, including the Global Notes, are registered as the owners of the notes for the purpose of receiving payments and for all other purposes. Consequently, neither we, Essex Property Trust, Inc., the trustee nor any agent of us or the trustee has or will have any responsibility or liability for:

(1) any aspect of DTC's records or any Participant's or Indirect Participant's records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC's records or any Participant's or Indirect Participant's records relating to the beneficial ownership interests in the Global Notes; or

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(2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

DTC has advised us that its current practice, upon receipt of any payment in respect of securities such as the notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe that it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of notes will be governed by standing instructions and customary practices, as in the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the trustee or us. Neither we nor the trustee will be liable for any delay by DTC or any of the Participants or the Indirect Participants in identifying the beneficial owners of the notes, and we and the trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

Transfers between the Participants will be effected in accordance with DTC's procedures, and will be settled in same-day funds, and transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

Cross-market transfers between the Participants, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Clearstream, as the case may be, by their respective depositaries; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositories for Euroclear or Clearstream.

DTC has advised us that it will take any action permitted to be taken by a holder of notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount at maturity of the notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the notes, DTC reserves the right to exchange the Global Notes for legended notes in certificated form, and to distribute such notes to its Participants.

If applicable, redemption notices shall be sent to Cede & Co. If less than all of the Global Notes of either series is being redeemed, DTC's practice is to determine by lot the amount of the interest of each direct participant in such issue to be redeemed.

Neither DTC nor Cede & Co. will consent or vote with respect to the Global Notes. Under its usual procedures, DTC mails an Omnibus Proxy to a company as soon as possible after the applicable record date. The Omnibus Proxy assigns Cede &Co.'s consenting or voting rights to those DTC participants to whose accounts the Global Notes are credited on the applicable record date (identified in a listing attached to the Omnibus Proxy).

Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. None of us, the trustee and any of their respective agents will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Certificated Notes

A Global Note is exchangeable for Certificated Notes if:

(1) DTC (a) notifies us that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, we fail to appoint a successor depositary;

(2) we, at our option, notify the trustee in writing that we elect to cause the issuance of the Certificated

Notes; or

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(3) upon request from DTC if there has occurred and is continuing a default or Event of Default with respect to the notes.

In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the trustee by or on behalf of DTC in accordance with the indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).

Exchange of Certificated Notes for Global Notes

Certificated Notes may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the trustee a written certificate (in the form provided in the indenture governing the notes) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such notes.

Same Day Settlement and Payment

We will make payments in respect of the notes represented by the Global Notes (including principal, premium, if any, and interest) by wire transfer of immediately available funds to the accounts specified by DTC or its nominee. We will make all payments of principal, interest and premium, if any, with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the holders of the Certificated Notes or, if no such account is specified, by mailing a check to each such holder's registered address. The notes represented by the Global Notes are expected to trade in DTC's Same-Day Funds Settlement System, and any permitted secondary market trading activity in such notes will, therefore, be required by DTC to be settled in immediately available funds. We expect that secondary trading in any Certificated Notes will also be settled in immediately available funds.

Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised us that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a Participant will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC's settlement date.

Notices

Except as otherwise provided in the indenture, notices to holders of the notes will be given by mail to the addresses of holders of the notes as they appear in the note register; provided that notices given to holders holding notes in book-entry form may be given through the facilities of DTC or any successor depository.

Governing Law

The indenture, the notes, the guarantee and the registration rights agreement will be governed by, and construed in accordance with, the law of the State of New York.

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DESCRIPTION OF THE PARTNERSHIP AGREEMENT OF ESSEX PORTFOLIO, L.P.

The following is a summary of material provisions in our partnership agreement. For more detail, you should refer to the partnership agreement itself, a copy of which is filed with the SEC and which we incorporate by reference herein. See “Where You Can Find More Information.”

Management

We are a California limited partnership that was formed on March 15, 1994. Essex Property Trust, Inc. is our sole general partner and substantially all of its business is conducted through us. As our sole general partner, Essex Property Trust, Inc. is, subject to limited exceptions for which the limited partners must consent, solely responsible for the management of our day-to-day business and affairs. Essex Property Trust, Inc. can cause us to enter into certain major transactions including acquisitions, dispositions and refinancings, subject to limited exceptions. Our limited partners may not transact business for, or participate in the management activities or decisions of, us, except as provided in the partnership agreement and as required by applicable law. The partnership agreement restricts Essex Property Trust, Inc.'s ability to engage in certain "Major Decisions" - including terminating our partnership agreement, making a general assignment for the benefit of creditors, taking title to property not in our name, instituting bankruptcy procedures on our behalf or dissolving us - without the written consent of the holders of a majority of the limited partnership interests (unless, in the case of such a Major Decision other than taking title to property not in our name, the limited partners collectively own less than five percent of our partnership interests at the time of such Major Decision).

Essex Property Trust, Inc. is not liable under the partnership agreement to us or to any partner for acts or omissions performed or omitted to be performed by it within the scope of authority conferred upon it by the partnership agreement, provided that it acted in good faith and was not guilty of fraud, misconduct, bad faith, or gross negligence.

The partnership agreement provides that substantially all of Essex Property Trust, Inc.'s business activities, including activities pertaining to the acquisition, development and ownership of properties, must be conducted through us, and that Essex Property Trust, Inc. will use its best efforts to cause us to avoid taking any action that would result in Essex Property Trust, Inc. ceasing to satisfy the requirements for being classified as a REIT or would result in the imposition of any federal income or excise tax liability on Essex Property Trust, Inc.

Transferability of Interests

Essex Property Trust, Inc., as general partner, may not voluntarily withdraw from us, or transfer or assign all or any portion of its interest in us, without the consent of the holders of a majority of the limited partnership interests (unless the limited partners collectively own less than five percent of our partnership interests at the time of such withdrawal or transfer).

Subject to certain limitations and conditions set forth in our partnership agreement, each limited partner generally has the right to transfer all or any portion of its partnership interest to any person or entity. Certain classes of our partnership interests, such as our incentive partnership units, contain additional limitations on transfer, as set forth in our partnership agreement.

No transfer of partnership interests is permitted if such transfer would result in (i) such interests being traded on an "established securities market" or a "secondary market (or the substantial equivalent thereof)" within the meaning of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Code”); or (ii) us being unable to qualify for at least one of the "safe harbors" set forth in Treasury Regulations Section 1.7704-1(e), (t), (g), (h) or U) (or such other guidance subsequently published by the IRS setting forth safe harbors under which interests will not be treated as "readily tradable on a secondary market (or the substantial equivalent thereof)" within the meaning of Section 7704 of the Code). Further, no transfer of partnership interests is permitted (i) to any person or entity that lacks the legal right, power or capacity to own such interests; (ii) in violation of any mortgage or trust deed constituting a lien against one of our properties or in violation of any other instrument, document or agreement to which we are a party; (iii) in violation of applicable law, including, without limitation, any applicable state securities "blue sky" law; (iv) of any component portion of such interests; (v) in the event such transfer would cause Essex Property Trust, Inc. to cease to satisfy the requirements for being classified as a REIT; (vi) if such transfer would cause our termination for federal income tax purposes; (vii) if such transfer would, in the opinion of our counsel, cause us to cease to be classified as a partnership for federal income tax purposes; (viii) if such transfer would cause us to become, with respect to any employee benefit plan subject to Title 1 of ERISA, a "party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in Section 4975(c) of the Code); (ix) if such transfer would, in the opinion of our counsel, cause any portion of the our assets to constitute assets of any employee benefit plan pursuant to U.S. Department of Labor Regulations Section 2510.3-10 1; (x) if such transfer may not be effected without registration of such interest under the Securities Act; (xi) if such transfer would violate any provision of Essex Property Trust, Inc.' s articles of incorporation, as such may be amended from time to time; or (xii) to any of our lenders, or any person or entity related to any of our lenders whose loan constitutes a "nonrecourse liability" (within the meaning of Section 1.752-1(a)(2) of the Treasury Regulations) without the consent of Essex Property Trust, Inc., in its sole and absolute discretion, unless our basis for tax purposes would not be reduced as a result of such transfer.

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Capital Contributions

Essex Property Trust, Inc. contributed to us all of the net proceeds of Essex Property Trust, Inc.'s initial public offering as Essex Property Trust, Inc.'s initial capital contribution. After its initial public offering, Essex Property Trust, Inc. has contributed to us, as additional capital contributions, the net proceeds from its subsequent issuances of common stock and preferred stock. As of December 31, 2012, Essex Property Trust, Inc. held 94.5% of our partnership interests, and the limited partners held the remaining 5.5% of our partnership interests.

Certain of our limited partners contributed to us all of their right, title and interest in certain properties, assets and partnership interests in other partnerships as their initial capital contributions.

The partnership agreement provides that Essex Property Trust, Inc., as general partner, subject to certain restrictions, may determine that our best interests require additional funds by issuance of additional partnership interests, which may include preferred limited partnership interests. We are authorized to cause partnership interests to be issued for less than fair market value if Essex Property Trust, Inc. concludes in good faith that such issuance is in our best interest. Essex Property Trust, Inc. may not issue additional partnership interests to itself unless (i) the additional partnership interests are issued in connection with an issuance of shares of Essex Property Trust, Inc. s capital stock and Essex Property Trust, Inc. makes a capital contribution to us in an amount equal to the net proceeds raised in connection with the issuance of such shares; or (ii) the additional partnership interests are issued to all of our partners pro rata in accordance with their respective percentage interest in us.

Our partnership agreement provides that if Essex Property Trust, Inc. issues additional partnership interests, the percentage interests of the partners to whom such partnership interests are not issued will be decreased on a proportionate basis. Limited partners have no obligation to make additional capital contributions, unless such additional capital contributions are unanimously approved by the partners.

Under the partnership agreement, with certain limited exceptions, Essex Property Trust, Inc. is obligated to contribute the proceeds of any offering of its stock as additional capital to us.

In the event that options to purchase stock of Essex Property Trust, Inc. are exercised, or shares of common stock are issued pursuant to any stock purchase plan, then (i) Essex Property Trust, Inc. will, on or about the last business day of the calendar year, contribute to our capital an amount equal to the total exercise price paid upon option exercises or the total purchase price of the common stock issued during such calendar year; (ii) Essex Property Trust, Inc. will be issued additional partnership interests equal to the number of shares of stock delivered to such exercising or purchasing party; (iii) Essex Property Trust, Inc. will be deemed to have made an additional capital contribution to us, in an amount equal to the per share market price of such shares of stock, multiplied by the number of such shares of stock delivered; and (iv) the percentage interests of the other partners will be adjusted accordingly.

Amendments of the Partnership Agreement

Our partnership agreement may generally be amended by (i) the written consent of Essex Property Trust, Inc. as general partner, and (ii) only if the limited partners collectively own at least five percent of the partnership interests then outstanding, the holders of a majority of the limited partnership interests. However, no amendment to our partnership agreement may be made without the consent of all of the affected limited partners if such amendment (i) provides for distributions to any limited partner in any manner other than proportionally with all limited partners based on their respective ownership interests in us; (ii) decreases any limited partner's ownership interests in us without proportionally decreasing all other limited partners' ownership interests; (iii) converts any limited partner's interest in us into a general partner interest; (iv) adversely modifies the limited liability of any limited partner; or (v) adversely modifies the exchange rights set forth in Article XI of our partnership agreement.

Notwithstanding the above, Essex Property Trust, Inc. may amend our partnership agreement without the consent of any limited partner to:

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add to Essex Property Trust, Inc.'s obligations or surrender any right or power granted to Essex Property Trust, Inc. or any of its affiliates for the benefit of the limited partners;

reflect the admission, substitution, termination, or withdrawal of partners in accordance with our partnership agreement;

set forth the rights, powers and duties of the holders of any additional partnership interests issued by us;

reflect any change that does not adversely affect the limited partners in any material respect, cure any ambiguity, correct or supplement any defective provision in our partnership agreement, or make other changes with respect to matters arising under our partnership agreement that are not inconsistent with any other provision of our partnership agreement;

reflect the relative distribution and allocation preferences and priorities among two or more classes of Essex Property Trust, Inc.' s preferred stock; and

satisfy any requirements, conditions, or guidelines of federal or state law.

Exchange Rights

Limited partners who were such on September 30,1997, as well as limited partners who acquired their limited partner interests with the rights specified in Article XI of our partnership agreement, have the right to convert a portion of their limited partner interests into shares of Essex Property Trust, Inc.' s common stock and to sell the remainder (or any part thereof) of their limited partner interests to Essex Property Trust, Inc. (or its designee), at any time prior to the 30th anniversary of June 13, 1994, on the terms and subject to the conditions and restrictions contained in our partnership agreement. Subject to such terms, conditions and restrictions, common units of our partnership are generally exchangeable on a one-for- one basis into shares of Essex Property Trust, Inc. common stock.

So long as any provision of federal law provides for the "step-up" in basis of an asset upon death, upon the death of a limited partner, all of such limited partner's partnership interests shall automatically convert as of the date of such death into shares of Essex Property Trust, Inc. common stock; provided that Essex Property Trust, Inc., in its sole and absolute discretion, shall have the option, instead of issuing the common stock to the estate of the decedent limited partner, of paying to such estate an amount in cash equal to the value of the shares of common stock issuable upon conversion of the decedent limited partner's partnership interests, or any combination of cash and common stock equal to the value of the shares of common stock issuable upon conversion of the decedent limited partner's partnership interests.

Incentive Units

Our partnership agreement permits the issuance of incentive units of limited partnership interests to executive management selected by the compensation committee of Essex Property Trust, Inc., currently in the form of Series Z-1 incentive units. Upon certain triggering events, the Series Z-l incentive units will automatically convert into common units of limited partnership interests in us. The incentive units' conversion ratio varies over time. The Series Z-1 incentive units are entitled to participate in regular quarterly distributions paid out by us. These units receive a percentage, generally based on the current conversion ratio of the units, of such quarterly distributions. Additional information concerning the Series Z-1 incentive units is set forth in the most recent annual proxy statement of Essex Property Trust, Inc.

Our Series Z-1 incentive units automatically convert into common units of us if either (i) the conversion ratio reaches the maximum level of 100%, (ii) none of the participating executives remain employed, (iii) we dissolve or are liquidated, or (iv) generally fifteen years after the date of issue of the specific unit. In certain change of control situations, the participating executives will also be given the option to convert their units at the then-effective conversion ratio. In addition, we have the option to redeem Series Z-1 incentive units held by any executive whose employment has been terminated for any reason and are obliged to redeem any such units upon the death of any holder. In such event, we have the option of redeeming the units for common units of us or shares of the Essex Property Trust, Inc. common stock based on the then-effective conversion ratio. Holders of Z-l incentive units are also allowed to elect an early conversion once a year and such conversion is based on the conversion ratio as of January 1 of the year of election, as more fully set forth in our partnership agreement. Common units, issued upon conversion of incentive units, are in tum exchangeable on a one-for-one basis into shares of Essex Property Trust, Inc. common stock. Such shares are subject to limitations as to when they can be sold or otherwise transferred.

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Tax Matters

Essex Property Trust, Inc. is our tax matters partner. Essex Property Trust, Inc. has authority to make tax elections under the Internal Revenue Code of 1986, as amended, on our behalf.

Allocations or Net Income and Net Losses to Partners

Our net income and net losses generally will be allocated to Essex Property Trust, Inc., as the general partner, and to the limited partners in whatever manner is necessary to cause their respective capital accounts to be equal to the amount they would receive if we sold all our assets for book value and liquidated.

Operations and Distributions

Essex Property Trust, Inc., as general partner, will determine the amount of our net operating cash revenues as well as our net sales proceeds and net financing proceeds for distribution to the partners, which distribution will be made quarterly and will generally be pro rata in accordance with the partners' percentage interests. Distributions we make to Essex Property Trust, Inc. will be in amounts sufficient to enable Essex Property Trust, Inc. to pay dividends to its shareholders in a manner that will enable it to satisfy the requirements for qualifying as a real estate investment trust under the Internal Revenue Code of 1986, as amended and the Treasury Regulations thereunder.

Liquidation/Dissolution

We will dissolve upon the first to occur of: (i) the dissolution, termination, retirement or bankruptcy of Essex Property Trust, Inc., unless the holders of a majority of the limited partnership interests elect to continue our existence; (ii) the election to dissolve us made in writing by Essex Property Trust, Inc. with the consent of the holders of a majority of the limited partnership interests, in accordance with the terms of our partnership agreement; (iii) the sale or other disposition of all or substantially all of our assets unless the partners elect to continue our existence for the purpose of the receipt and the collection of indebtedness or the collection of any other consideration to be received in exchange for our assets in accordance with the terms of our partnership agreement; (iv) our dissolution by operation of law; or (v) December 31, 2054.

Upon our dissolution, our assets will be liquidated and distributed as follows: (i) first, to the payment and discharge of all of our debt and liabilities to creditors; (ii) second, to the establishment of reserves as provided by Essex Property Trust, Inc. to provide for any contingent liabilities (iii) third, to the payment of any debts to our partners and (iv) the balance, if any, to the partners in accordance with the positive balances in their capital accounts, after giving effect to all contributions, distributions and allocations for all periods.

Term

We will continue in full force and effect until December 31, 2054, or until sooner dissolved in accordance with our partnership agreement's terms or as otherwise provided by law.

Indemnification

The partnership agreement requires us to indemnify Essex Property Trust, Inc., as general partner, its affiliates and any other persons acting on its behalf from and against any loss, damage, claim or liability incurred by them by reason of any acts or omissions performed or omitted to be performed by them in connection with our business and affairs, provided that such acts or omission are within the scope of the authority granted to Essex Property Trust, Inc. under our partnership agreement, and provided further, that such acts or omissions were taken in good faith and in the belief that such acts or omissions were in our best interests, and that the persons seeking indemnification were not guilty of fraud, misconduct, bad faith, or gross negligence.

We must pay any costs reasonably incurred by any person entitled to indemnification under our partnership agreement in defending any proceeding against them, but such costs must be repaid to us if a court determines that such person was not entitled to indemnification. Any indemnification payments must be made entirely out of our assets, and no partners will be liable for any portion of any such payments.

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U.S. FEDERAL INCOME TAX CONSEQUENCES

TO COMPLY WITH TREASURY DEPARTMENT CIRCULAR 230, PROSPECTIVE INVESTORS ARE HEREBY NOTIFIED THAT: (1) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES CONTAINED OR REFERRED TO IN THIS PROSPECTUS IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY PROSPECTIVE INVESTORS, FOR THE PURPOSES OF A VOIDING PENAL TIES THAT MAYBE IMPOSED ON THEM UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"); (2) SUCH DISCUSSION IS BEING USED IN CONNECTION WITH THE PROMOTION OR MARKETING BY US OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (3) PROSPECTIVE INVESTORS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

The following discussion is a summary of U.S. federal income tax consequences relevant to the purchase, ownership and disposition of the notes and that are likely to be material to a holder of the notes, but does not purport to be a complete analysis of all potential tax effects. The discussion is based upon the Code; current, temporary and proposed U.S. Treasury Regulations issued thereunder (the "Treasury Regulations"); the legislative history of the Code; Internal Revenue Service ("IRS") rulings, pronouncements, interpretations and practices; and judicial decisions now in effect, all of which are subject to change at any time. Any such change may be applied retroactively in a manner that could adversely affect a holder of the notes. This discussion does not address all of the U.S. federal income tax consequences that may be relevant to a holder in light of such holder's particular circumstances. For example, except to the extent discussed under the heading "Non-U.S. Holders", special rules not discussed here may apply to you if you are:

a broker-dealer or a dealer in securities or currencies;

an S corporation;

a bank, thrift or other financial institution;

a regulated investment company or a real estate investment trust;

an insurance company;

a tax-exempt organization;

subject to the alternative minimum tax provisions of the Code;

holding the notes as part of a hedge, straddle, conversion, integrated or other risk reduction or constructive sale transaction;

holding the notes through a partnership or other pass-through entity;

a U.S. person whose "functional currency" is not the U.S. dollar; or

a U.S. expatriate or former long-term resident.

In addition, this discussion is limited to persons who exchange their private notes for the exchange notes pursuant to the exchange offer described in this prospectus and that hold the notes as "capital assets" within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address the effect of any applicable state, local, non-U.S. or other tax laws, including gift and estate tax laws.

As used herein, "U.S. Holder" means a beneficial owner of the notes that is, for U.S. federal income tax purposes:

an individual who is a citizen or resident of the United States;

a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

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a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more U.S. persons that have the authority to control all substantial decisions of the trust, or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. person.

If any entity treated as a partnership for U.S. federal income tax purposes holds notes, the tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding the notes, you should consult your tax advisor regarding the tax consequences of the exchange, ownership and disposition of the notes.

We have not sought and will not seek any rulings from the IRS with respect to the matters discussed below. There can be no assurance that the IRS will not take a different position concerning the tax consequences of the purchase, ownership or disposition of the notes or that any such position would not be sustained.

THIS SUMMARY OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE APPLICATION OF THE TAX CONSEQUENCES DISCUSSED BELOW TO THEIR PARTICULAR SITUATIONS, POTENTIAL CHANGES IN APPLICABLE TAX LAWS AND THE APPLICATION OF ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS, INCLUDING GIFT AND ESTATE TAX LAWS AND ANY TAX TREATIES.

Exchange Pursuant to the Exchange Offer

We believe that the exchange of the private notes for the exchange notes in the exchange offer will not be treated as an "exchange" for U.S. federal income tax purposes, because we believe that the exchange notes will not be considered to differ materially in kind or extent from the private notes. Accordingly, we believe that the exchange of private notes for exchange notes will not be a taxable event to holders for U.S. federal income tax purposes. Moreover, we believe that the exchange notes will have the same tax attributes as the private notes exchanged therefor and the same tax consequences to holders as the private notes have to holders, including without limitation, the same issue price, adjusted tax basis and holding period.

U.S. Holders

Interest

A U.S. Holder generally will be required to recognize and include in gross income any stated interest as ordinary income at the time it is paid or accrued on the notes in accordance with such holder's method of accounting for U.S. federal income tax purposes.

Original Issue Discount

If the issue price of a note is less than its stated redemption price at maturity, then the note will be treated as being issued with original issue discount ("OID") for U.S. federal income tax purposes unless the difference between the note's issue price and its stated redemption price at maturity is less than a statutory de minimis amount, as defined below. Generally, the "issue price" of a note is the first price at which a substantial amount of the issue is sold to purchasers other than bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. The "stated redemption price at maturity" of a note is the total of all payments to be made under the note other than qualified stated interest (generally, stated interest that is unconditionally payable in cash or property at least annually at a single fixed rate or at certain floating rates that properly take into account the length of the interval between stated interest payments). The stated interest on the notes will qualify as qualified stated interest, and the stated redemption price at maturity will equal the principal amount of the notes.

If the notes are issued with OID, a U.S. Holder generally will be required to include such OID in income as it accrues on a constant yield basis in advance of the receipt of cash payments to which such income is attributable. Under the constant yield method, a U.S. Holder must include in income in each taxable year the sum of the daily portions of OID for each date on which the U.S. holder held the note during the taxable year, regardless of the U.S. Holder's method of accounting for U.S. federal income tax purposes. The constant yield method generally requires U.S. Holders to include in income increasingly greater amounts of OID in successive accrual periods. A U.S. Holder's tax basis in a note is increased by each accrual of OID and decreased by each payment other than a payment of qualified stated interest.

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The amount of OID on the notes is de minimis if it is less than 0.0025 multiplied by the product of the stated redemption price at maturity and the number of complete years to maturity. Rather than being characterized as interest, any payment attributable to such de minimis OID is characterized as if it were gain from the sale of the notes, and a pro rata amount of such de minimis OID must be included in income as principal payments are received on the notes.

Additional Amounts

As described under "Description of Notes - Our Redemption Rights", upon the occurrence of certain events, we may be required to make certain payments in excess of stated interest and the principal amount of the notes in connection with our redemption of the notes. In addition, as described under "Description of Notes - Events of Default" and "Description of Notes - Exchange Offer; Registration Rights", we may be obligated to pay additional interest if, respectively, we violate any obligations we may be deemed to have pursuant to Section 314( a)( 1) of the Trust Indenture Act or our covenant to provide certain reports under the indenture as described under "Description of Notes-Reports" or we do not meet certain obligations under the registration rights agreement ("Additional Interest"). These contingencies may implicate the provisions of Treasury Regulations relating to "contingent payment debt instruments". We intend to take the position that the notes should not be treated as contingent payment debt instruments because of these additional payments. This position is based in part on assumptions regarding the likelihood, as of the date of issuance of the notes, that such additional amounts will have to be paid. Assuming such position is respected, any amounts paid to a holder pursuant to any such redemption would be taxable as described below in "U.S. Holders - Sale or Other Taxable Disposition of the Notes", and any payments of Additional Interest should be taxable as additional ordinary income when received or accrued, in accordance with such holder's method of accounting for U.S. federal income tax purposes. Our position is binding on a holder unless such holder discloses its contrary position in the manner required by applicable Treasury Regulations. The IRS, however, may take a position contrary to our position, which could affect the timing and character of a holder's income and the timing of our deductions with respect to the notes. Holders are urged to consult their tax advisors regarding the potential application to the notes of the contingent payment debt instrument rules and the consequences thereof. The remainder of this discussion assumes that the notes are not treated as contingent payment debt instruments.

Sale or Other Taxable Disposition of the Notes

A U.S. Holder will recognize gain or loss on the sale, exchange (other than for exchange notes pursuant to the exchange offer), redemption (including a partial redemption), retirement or other taxable disposition of a note equal to the difference between the sum of the cash and the fair market value of any property received in exchange therefor (less a portion allocable to any accrued and unpaid stated interest, which generally will be taxable as ordinary income if not previously included in such holder's income) and the U.S. Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax basis in a note (or a portion thereof) generally will be the U.S. Holder's cost therefor decreased by any payment on the note other than a payment of qualified stated interest. This gain or loss will generally constitute capital gain or loss. In the case of certain non-corporate U.S. Holders, including individuals, if the note has been held for more than one year, such capital gain will be subject to tax at a maximum tax rate of 15%; a rate of 20% applies to certain high-income individual taxpayers. The deductibility of capital losses is subject to certain limitations.

Exchange Offer

Any exchange of the notes for exchange notes (see "Description of Notes - Exchange Offer; Registration Rights") will not constitute a taxable exchange for U.S. federal income tax purposes for a U.S. Holder. As a result, (1) a U.S. Holder would not recognize taxable gain or loss as a result of exchanging such holder's notes; (2) the holding period of the exchange notes would include the holding period of the notes exchanged therefor; and (3) the adjusted tax basis of the exchange notes received would be the same as the adjusted tax basis of the notes exchanged therefor immediately before such exchange.

Medicare Tax

The Patient Protection and Affordable Care Act of 2010, which was signed into law by the President on March 23, 2010, generally imposes on certain individuals, trusts and estates a tax of 3.8% on the lesser of (i) “net investment income”, or (ii) the excess of modified adjusted gross income over a threshold amount for taxable years beginning after December 31, 2012. Net investment income generally includes interest income and net gains from the disposition of notes, unless such interest payments or net gains are derived in the ordinary course of the conduct of a trade or business (other than a trade or business that consists of certain passive or trading activities). U.S. Holders are encouraged to consult with their tax advisors regarding the possible implications of the Medicare tax on their ownership and disposition of notes in light of such holders’ individual circumstances.

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Information Reporting and Backup Withholding

A U.S. Holder may be subject to information reporting and backup withholding when such holder receives interest and principal payments on the notes or proceeds upon the sale or other disposition of such notes (including a redemption or retirement of the notes). Certain holders (including, among others, corporations and certain tax-exempt organizations) generally are not subject to information reporting or backup withholding. A U.S. Holder will be subject to backup withholding if such holder is not otherwise exempt and:

such holder fails to furnish its taxpayer identification number, or "TIN", which, for an individual is ordinarily his or her social security number;

the IRS notifies the payor that such holder furnished an incorrect TIN;

in the case of interest payments such holder is notified by the IRS of a failure to properly report payments of interest or dividends;

in the case of interest payments, such holder fails to certify, under penalties of perjury, that such holder has furnished a correct TIN and that the IRS has not notified such holder that it is subject to backup withholding;

such holder does not otherwise establish an exemption from backup withholding.

A U.S. Holder should consult its tax advisor regarding its qualification for an exemption from backup withholding and the procedures for obtaining such an exemption, if applicable. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a U.S. Holder will be allowed as a credit against the holder's U.S. federal income tax liability or may be refunded, provided the required information is furnished in a timely manner to the IRS.

Non-U.S. Holders

For purposes of this discussion, "Non-U.S. Holder" means a beneficial owner of the notes that is not a "U.S. Holder". Special rules may apply to holders that are partnerships or entities treated as partnerships for U.S. federal income tax purposes and to Non-U.S. Holders that are subject to special treatment under the Code, including controlled foreign corporations, passive foreign investment companies, certain U.S. expatriates, and foreign persons eligible for benefits under an applicable income tax treaty with the United States. Such Non-U.S. Holders should consult their tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them.

Interest

Interest paid to a Non-U.S. Holder on its notes will not be subject to U.S. federal withholding tax provided that:

such holder does not directly or indirectly, actually or constructively own a 10% or greater interest in our capital or profits;

such holder is not a controlled foreign corporation with respect to which we are a "related person" within the meaning of Section 864(d)(4) of the Code;

such holder is not a bank that received such interest on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business; and

(1) the Non-U.S. Holder certifies in a statement provided to us or our paying agent, under penalties of perjury, that it is not a U.S. person within the meaning of the Code and provides its name and address, (2) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business and holds the notes on behalf of the Non-U .S. Holder certifies to us or our paying agent under penalties of perjury that it, or the financial institution between it and the Non-U.S. Holder, has received from the Non-U.S. Holder a statement, under penalties of perjury, that such holder is not a U.S. person and provides us or our paying agent with a copy of such statement or (3) the Non-U.S. Holder holds its notes directly through a "qualified intermediary" and certain conditions are satisfied.

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A Non-U.S. Holder generally will also be exempt from withholding tax on interest if such amount is effectively connected with such holder's conduct of a U.S. trade or business (and, if an income tax treaty applies, is attributable to a U.S. "permanent establishment") (as discussed below under "- Non-U.S. Holders - U.S. Trade or Business") and the holder provides us with a properly executed IRS Form W-8ECI (or applicable successor form).

If a Non-U.S. Holder does not satisfy the requirements above, interest paid to such Non-U.S. Holder generally will be subject to a 30% U.S. federal withholding tax. Such rate may be reduced or eliminated under a tax treaty between the United States and the Non-U.S. Holder's country of residence. To claim a reduction or exemption under a tax treaty, a Non-U.S. Holder must generally complete an applicable IRS Form W-8 (i.e., IRS Form W-8BEN) (or applicable successor form) and claim the reduction or exemption on the form.

Additional Amounts

Sale or Other Taxable Disposition of the Notes

A Non-U.S. Holder generally will not be subject to U.S. federal income tax or withholding tax on gain recognized on the sale, exchange, redemption, retirement or other disposition of a note so long as (1) the gain is not effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States (or, if a tax treaty applies, the gain is not attributable to a U.S. permanent establishment maintained by such Non-U.S. Holder) and (2) in the case of a Non-U.S. Holder who is an individual, such Non-U.S. Holder is not present in the United States for 183 days or more in the taxable year of disposition or certain other requirements are not met. A Non-U.S. Holder who is an individual and does not meet this exemption should consult his or her tax advisor regarding the potential liability for U.S. federal income tax on such holder's gain realized on the sale, exchange, redemption, retirement or other disposition of a note.

U.S. Trade or Business

If interest paid on a note or gain from a disposition of a note is effectively connected with a Non-U.S. Holder's conduct of a U.S. trade or business (and, if an income tax treaty applies, the Non-U.S. Holder maintains a U.S. permanent establishment to which such amounts are generally attributable), the Non-U.S. Holder generally will be subject to U.S. federal income tax on the interest or gain on a net basis in the same manner as if it were a U.S. Holder. A Non-U.S. Holder that is a non-U.S. corporation may be subject to an additional "branch profits tax" equal to 30% of its "effectively connected earnings and profits" for the taxable year, subject to certain adjustments, unless it qualifies for a lower rate under an applicable income tax treaty. For this purpose, interest on a note or gain from a disposition of a note will be included in effectively connected earnings and profits if the interest or gain is effectively connected with the conduct by the foreign corporation of a trade or business in the United States.

Exchange Offer

Any exchange of the notes for exchange notes will not constitute a taxable exchange for U.S. federal income tax purposes for a Non-U.S. Holder.

Backup Withholding and Information Reporting

Backup withholding generally will not apply to payments of principal or interest made by us or our paying agents, in their capacities as such, to a Non-U.S. Holder of a note if the holder certifies as to its non-U.S. status in the manner described above under "- Non-U.S. Holders - Interest". However, information reporting generally will still apply with respect to payments of interest.

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Payments of the proceeds from a disposition by a Non-U.S. Holder of a note made to or through a foreign office of a broker will not be subject to information reporting or backup withholding, except that information reporting (but generally not backup withholding) may apply to those payments, if the broker has certain enumerated connections with the U.S., provided, however, that such information reporting will not apply if the broker has documentary evidence in its records that the Non-U.S. Holder is a non-U.S. person and certain other conditions are met, or the Non-U.S. Holder otherwise establishes an exemption from information reporting.

Payment of the proceeds from a disposition by a Non-U.S. Holder of a note made to or through the U.S. office of a broker generally is subject to information reporting and backup withholding unless the holder or beneficial owner certifies as to its non-U.S. status in the manner described above under "-Non-U.S. Holders - Interest" or otherwise establishes an exemption from information reporting and backup withholding.

A Non-U.S. Holder should consult its tax advisor regarding the application of withholding and backup withholding in its particular circumstance and the availability of and procedure for obtaining an exemption from withholding and backup withholding under current Treasury Regulations. In this regard, the current Treasury Regulations provide that a certification may not be relied on if we or our agent (or other party) knows or has reason to know that the certification may be false. Any amounts withheld under the backup withholding rules from a payment to a Non U.S. Holder will be allowed as a credit against the holder's U.S. federal income tax liability or may be refunded, provided the required information is furnished in a timely manner to the IRS.

Foreign Account Tax Compliance Act

On March 18, 2010, the Hiring Incentives to Restore Employment Act (the “HIRE Act”) was enacted in the United States. The HIRE Act includes provisions known as the Foreign Account Tax Compliance Act (“FATCA”). Final regulations under FATCA were issued by the IRS on January 17, 2013. FATCA generally imposes a 30% U.S. withholding tax on “withholdable payments” (which include (i) U.S.–source dividends, interest, rents and other “fixed or determinable annual or periodical income” paid after December 31, 2013 and (ii) certain U.S.–source gross proceeds paid after December 31, 2016) paid to (a) “foreign financial institutions” unless they enter into an agreement with the IRS to collect and disclose to the IRS information regarding their direct and indirect U.S. owners and (b) “non-financial foreign entities” (i.e., foreign entities that are not foreign financial institutions) unless they certify certain information regarding their direct and indirect U.S. owners. The 30% withholding rate generally applies without regard to reduced rates of withholding or exemptions from withholding available under current law under treaties or existing statutory rules. Under some circumstances, a foreign owner may still be eligible to claim the benefit of such reduced withholding rates and exemptions through a claim for refund. FATCA does not replace the existing U.S. withholding tax regime, but the FATCA regulations contain coordination provisions to avoid double withholding on U.S.-source income.

Under a grandfathering rule, FATCA does not apply to any payments made under an obligation that is outstanding on January 1, 2014 (provided such obligation is not materially modified subsequent to such date) and any gross proceeds from the disposition of such obligation. Accordingly, the exchange notes should be grandfathered obligations for FATCA purposes (provided they are not materially modified after January 1, 2014), such that payments on these notes should not be subject to FATCA. Non-U.S. Holders are encouraged to consult with their tax advisors regarding the possible implications of FATCA on an investment in notes in light of such holders’ individual circumstances.

THE PRECEDING DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES IS NOT TAX ADVICE. EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISORS REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF EXCHANGING PRIVATE NOTES FOR EXCHANGE NOTES AND HOLDING AND DISPOSING OF EXCHANGE NOTES, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS, IN LIGHT OF SUCH HOLDER'S INDIVIDUAL CIRCUMSTANCES.

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PLAN OF DISTRIBUTION

Each broker-dealer that receives exchange notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. Broker-dealers may use this prospectus, as it may be amended or supplemented from time to time, in connection with the resale of exchange notes received in exchange for private notes where the broker-dealer acquired the private notes as a result of market-making activities or other trading activities. We have agreed that we will cause this registration statement to remain effective for one year following the consummation of this exchange offer. Until 90 days after the date of delivery of this prospectus, all broker-dealers effecting transactions in the notes may be required to deliver a prospectus.

We will not receive any proceeds from any sale of exchange notes by broker-dealers or any other persons. Broker-dealers may sell exchange notes received by broker-dealers for their own account pursuant to the exchange offer from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the exchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to the prevailing market prices or negotiated prices. Broker-dealers may resell exchange notes directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any broker-dealer and/or the purchasers of the exchange notes. Any broker-dealer that resells exchange notes that were received by it for its own account pursuant to the exchange offer and any broker or dealer that participates in a distribution of the exchange notes may be deemed to be “underwriters” within the meaning of the Securities Act and any profit on any resale of exchange notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

We have agreed to pay all expenses incident to our performance of, or compliance with, the registration rights agreement and will indemnify the holders of the notes (including any broker-dealers) against liabilities under the Securities Act.

By its acceptance of the exchange offer, any broker-dealer that receives exchange notes pursuant to the exchange offer agrees to notify us before using the prospectus in connection with the sale or transfer of exchange notes. The broker-dealer further acknowledges and agrees that, upon receipt of notice from us of the happening of any event which makes any statement in the prospectus untrue in any material respect or which requires the making of any changes in the prospectus to make the statements in the prospectus not misleading, which notice we agree to deliver promptly to the broker-dealer, the broker-dealer will suspend use of the prospectus until we have amended or supplemented this prospectus to correct such misstatement or omission and have furnished (or made available) copies of any amendment or supplement to the prospectus to the broker-dealer.

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LEGAL MATTERS

Certain legal matters with respect to the validity of the notes will be passed upon for us by Baker & McKenzie LLP, San Francisco, California. Venable LLP, Baltimore, Maryland, will issue an opinion to us regarding certain matters of Maryland law.

EXPERTS

The consolidated financial statements and financial statement schedule III of Essex Property Trust, Inc. and subsidiaries as of December 31, 2012 and 2011, and for each of the years in the three-year period ended December 31, 2012, and management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2012 have been incorporated by reference herein and in reliance upon the reports of KPMG LLP, independent registered public accounting firm, whose reports are incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements and financial statement schedule III of Essex Portfolio, L.P. and subsidiaries as of December 31, 2012 and 2011, and for each of the years in the three-year period ended December 31, 2012, have been included herein in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing.

The statements of revenue and certain expenses of PPC Montebello, LLC (Montebello Apartments) for the period April 5, 2010 (inception) through December 31, 2010, and for the year ended December 31, 2011 included herein have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon. Such statements of revenue and certain expenses of Montebello Apartments are included herein in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The statement of revenue and certain expenses of the Murphy Road Apartments – San Jose, a California limited partnership (Willow Lake) for the year ended December 31, 2011 has been included herein in reliance upon the report of KPMG LLP, independent auditors, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. KPMG LLP’s report refers to the fact that the statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the U.S. Securities and Exchange Commission and is not intended to be a complete presentation of revenue and expenses.

WHERE YOU CAN FIND MORE INFORMATION

This prospectus is part of a Registration Statement on Form S-4 that we have filed with the SEC under the Securities Act. This prospectus does not contain all of the information set forth in the Registration Statement. For further information about us and the notes, you should refer to the Registration Statement. This prospectus summarizes material provisions of contracts and other documents to which we refer you. Since this prospectus may not contain all of the information that you may find important, you should review the full text of these documents. We have filed these documents as exhibits to our Registration Statement.

Essex Property Trust, Inc. files and Essex Portfolio, L.P. will file annual, quarterly and current reports and other information with the SEC. You may read and copy any document Essex Property Trust, Inc. files or Essex Portfolio, L.P. will file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-888-SEC-0330 for further information on the Public Reference Room. The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding registrants that file electronically with the SEC at www.sec.gov. In addition, Essex Property Trust, Inc. maintains a website that contains information about it at www.essexpropertytrust.com. The information found on, or otherwise accessible through, Essex Property Trust, Inc.’s website is not part of this prospectus.

If you request, either orally or in writing, we will provide you a copy of any or all of the documents referenced above. Such documents will be provided to you free of charge, but will not contain any exhibits, unless those exhibits are incorporated by reference into the document. A written request should be addressed to Essex Property Trust, Inc., 925 East Meadow Drive, Palo Alto, California 94303, Attention: Investor Relations.

You should rely only upon the information incorporated by reference or provided in this prospectus. If information in incorporated documents conflicts with information in this prospectus, you should rely on the most recent information. We have not authorized anyone to provide you with different information. You should not assume that the information in this prospectus is accurate as of any date other than the date of this prospectus.

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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

This prospectus "incorporates by reference" certain information Essex Property Trust, Inc. files with the SEC. The information incorporated by reference is an important part of this prospectus. The incorporated documents contain significant information about Essex Property Trust, Inc., us, our business and our finances. Any statement contained in a document which is incorporated by reference in this prospectus is automatically updated and superseded if information contained in this prospectus, or information that we later file with the SEC, modifies or replaces this information. We incorporate by reference the following documents filed by Essex Property Trust, Inc. with the SEC:

Annual Report on Form 10-K for the year ended December 31, 2012;

Current Reports on Form 8-K filed with the SEC on March 11, 2013; February 28, 2013; and February 7, 2013;

the description of Essex's common stock included in its Registration Statement on Form 8-A filed with the SEC on May 27, 1994, as amended on September 19, 2003; and

all documents filed by Essex with the SEC pursuant to Sections 13( a), 13( c), 14 or 15( d) of the Exchange Act after the date of this prospectus and before the end of the exchange of the notes made under this prospectus.

To the extent that any information contained in any current report on Form 8-K, or any exhibit thereto, was furnished to, rather than filed with, the SEC, such information or exhibit is specifically not incorporated by reference in this prospectus.

If you request, either orally or in writing, we will provide you with a copy of any or all documents that are incorporated by reference. Such documents will be provided to you free of charge, but will not contain any exhibits, unless those exhibits are incorporated by reference into the document. A written request should be addressed Essex Property Trust, Inc., 925 East Meadow Drive, Palo Alto, California 94303, Attention: Secretary.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

ESSEX PORTFOLIO, L.P.

	Page No.

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2012 and 2011	F-3
Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010	F-4
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010	F-5
Consolidated Statements of Capital for the years ended December 31, 2012, 2011 and 2010	F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010	F-7
Notes to Consolidated Financial Statements	F-9
Financial Statement—Schedule III	F-37



Financial Statements Under Rule 3-14 of Regulation S-X

PPC Montebello, LLC (Referred to as the Montebello Apartments herein)
Report of Independent Auditors	F-41
Statements of Revenue and Certain Expenses for the six months ended June 30, 2012 (unaudited), the year ended December 31, 2011 and the period April 5, 2010 (Inception) through December 31, 2010	F-42
Notes to Statements of Revenue and Certain Expenses for the six months ended June 30, 2012 (unaudited), the year ended December 31, 2011 and the period April 5, 2010 (inception) through December 31, 2010	F-43
Murphy Road Apartments – San Jose, a California Limited Partnership (Referred to as the Willow Lake Apartments herein)
Independent Auditors’ Report	F-45
Statements of Revenue and Certain Expenses for the nine months ended September 30, 2012 (unaudited) and for the year ended December 31, 2011	F-46
Notes to Statements of Revenue and Certain Expenses for the nine months ended September 30, 2012 (unaudited) and for the year ended December 31, 2011	F-47

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The General Partner

Essex Portfolio, L.P.:

We have audited the accompanying consolidated balance sheets of Essex Portfolio, L.P. (the Operating Partnership) and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss), capital, and cash flows for each of the years in the three-year period ended December 31, 2012. In connection with our audits of the consolidated financial statements, we have also audited the accompanying financial statement schedule III. These consolidated financial statements and the accompanying financial statement schedule III are the responsibility of Operating Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements and the accompanying financial statement schedule III based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Essex Portfolio, L.P. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule III, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

	/S/ KPMG LLP

	KPMG LLP

San Francisco, California

March 11, 2013

F-2

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2012 and 2011

(Dollars in thousands, except unit amounts)

	2012			2011
Assets
Real estate:
Rental properties:
Land and land improvements	$	1,003,171		$	860,661
Buildings and improvements		4,030,501			3,452,403

		5,033,672			4,313,064
Less accumulated depreciation		(1,081,517	)		(920,026	)

		3,952,155			3,393,038
Real estate under development		66,851			44,280
Co-investments		571,345			383,412

		4,590,351			3,820,730
Cash and cash equivalents-unrestricted		18,606			12,889
Cash and cash equivalents-restricted		23,520			22,574
Marketable securities		92,713			74,275
Notes and other receivables		66,163			66,369
Prepaid expenses and other assets		35,003			22,682
Deferred charges, net		20,867			17,445

Total assets	$	4,847,223		$	4,036,964

Liabilities and Capital
Mortgage notes payable	$	1,565,599		$	1,745,858
Unsecured debt		1,112,084			465,000
Lines of credit		141,000			150,000
Accounts payable and accrued liabilities		64,858			48,324
Construction payable		5,392			6,505
Distributions payable		45,052			39,611
Derivative liabilities		6,606			3,061
Other liabilities		22,167			20,528

Total liabilities		2,962,758			2,478,887
Commitments and contingencies
Cumulative convertible Series G preferred interest (liquidation value of $4,456 and $4,456, respectively)		4,349			4,349
Capital:
General Partner:
Common equity (36,442,994 and 33,888,082 units issued and outstanding at December 31, 2012 and December 31, 2011, respectively)		1,762,856			1,439,089
Preferred interest (liquidation value of $73,750 and $73,750, respectively)		71,209			71,209
		1,834,065			1,510,298
Limited Partners:
Common equity (2,122,381 and 2,229,230 units issued and outstanding for the year ended December 31, 2012 and 2011, respectively)		45,593			48,578
Accumulated other comprehensive loss		(68,231	)		(71,962	)
Total partners' capital		1,811,427			1,486,914
Noncontrolling interest		68,689			66,814
Total capital		1,880,116			1,553,728

Total liabilities and capital	$	4,847,223		$	4,036,964

See accompanying notes to consolidated financial statements.

F-3

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended December 31, 2012, 2011 and 2010

(Dollars in thousands, except per unit and unit amounts)

	2012			2011			2010
Revenues:
Rental and other property	$	531,936		$	465,713		$	405,728
Management and other fees from affiliates		11,489			6,780			4,551
		543,425			472,493			410,279
Expenses:
Property operating, excluding real estate taxes		125,437			115,528			104,049
Real estate taxes		48,651			43,706			39,115
Depreciation		170,592			151,428			128,221
General and administrative		23,307			20,694			23,255
Cost of management and other fees		6,513			4,610			2,707
Impairment and other charges		-			-			2,302
		374,500			335,966			299,649

Earnings from operations		168,925			136,527			110,630
Interest expense before amortization		(100,244	)		(91,694	)		(82,756	)
Amortization expense		(11,644	)		(11,474	)		(4,828	)
Interest and other income		13,833			17,139			27,841
Equity income (loss) from co-investments		41,745			(467	)		(1,715	)
Gain on remeasurement of co-investment		21,947			-			-
Loss on early retirement of debt		(5,009	)		(1,163	)		(10	)
Income before discontinued operations		129,553			48,868			49,162
Income from discontinued operations		10,037			8,648			1,620
Net income		139,590			57,516			50,782
Net income attributable to noncontrolling interest		(6,347	)		(5,571	)		(5,770	)
Net income attributable to controlling interest		133,243			51,945			45,012
Preferred interest distributions - Series F, G, & H		(5,472	)		(4,753	)		(2,170	)
Preferred interest distributions - limited partners		-			(1,650	)		(6,300	)
Excess of the carrying amount of preferred interest redeemed over the cash paid to redeem preferred interest		-			(1,949	)		-
Net income available to common units		127,771			43,593			36,542

Per unit data:
Basic:
Income before discontinued operations available to common units	$	3.16		$	1.00			1.09
Income from discontinued operations		0.27			0.25			0.05
Net income available to common units	$	3.43		$	1.25			1.14
Weighted average number of common units outstanding during the period		37,251,537			34,773,559			31,960,950

Diluted:
Income before discontinued operations available to common units	$	3.15		$	1.00			1.09
Income from discontinued operations		0.27			0.25			0.05
Net income available to common units	$	3.42		$	1.25			1.14
Weighted average number of common units outstanding during the period		37,343,967			34,860,521			32,028,269

See accompanying notes to consolidated financial statements.

F-4

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

Years ended December 31, 2012, 2011 and 2010

(Dollars in thousands)

	2012			2011			2010

Net income	$	139,590		$	57,516		$	50,782
Other comprehensive income (loss):
Changes in fair value of cash flow hedges and amortization of settlement swaps		3,402			7,707			(50,437	)
Changes in fair value of marketable securities		1,411			1,330			5,357
Reversal of unrealized gains upon the sale of marketable securities		(1,082	)		(4,286	)		(12,027	)
Total other comprehensive income (loss)		3,731			4,751			(57,107	)
Comprehensive income (loss)		143,321			62,267			(6,325	)
Comprehensive income attributable to noncontrolling interest		(6,347	)		(5,571	)		(5,770	)
Comprehensive income (loss) attributable to the Operating Partnership	$	136,974		$	56,696		$	(12,095	)

See accompanying notes to consolidated financial statements.

F-5

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Statement of Capital for the Years ended December 31, 2012, 2011 and 2010

(Dollars and units in thousands)

	General Partner								Limited Partners									Accumulated
						Preferred									Preferred			other
	Common Equity					Equity			Common Equity						Equity			comprehensive			Noncontrolling
	Units		Amount			Amount			Units			Amount			Amount			(loss) income			Interest			Total
Balances at December 31, 2009		28,849	$	1,052,893		$	24,412			2,398		$	62,509		$	80,000		$	(19,606	)	$	73,333		$	1,273,541
Net income		-		33,761			2,170			-			2,781			6,300			-			5,770			50,782
Reversal of unrealized gains upon the sale of marketable securities		-		-			-			-			-			-			(12,027	)		-			(12,027	)
Change in fair value of cash flow hedges and amortization of gain on settlement of swap		-		-			-			-			-			-			(50,437	)		-			(50,437	)
Changes in fair value of marketable securities		-		-			-			-			-			-			5,357			-			5,357
Issuance of common units under:
Stock and unit based compensation plans		122		5,803			-			-			-			-			-			-			5,803
Sale of common stock by the general partner		2,354		251,455			-			-			-			-			-			-			251,455
Stock and unit based compensation costs		-		(260	)		-			(197	)		2,474			-			-			-			2,214
Capital contributions		-		-			-			-			-			-			-			4,038			4,038
Retirement of exchangeable bonds		-		(434	)		-			-			-			-			-			-			(434	)
Redemptions		-		(16,347	)		-			-			(4,357	)		-			-			(3,482	)		(24,186	)
Distribution to noncontrolling interests		-		-			-			-			-			-			-			(9,160	)		(9,160	)
Distribution declared		-		(124,120	)		(2,170	)		-			(9,342	)		(6,300	)		-			-			(141,932	)
Balances at December 31, 2010		31,325		1,202,751			24,412			2,201			54,065			80,000			(76,713	)		70,499			1,355,014
Net income		-		42,317			4,753			-			3,225			1,650			-			5,571			57,516
Reversal of unrealized gains upon the sale of marketable securities		-		-			-			-			-			-			(4,286	)		-			(4,286	)
Change in fair value of cash flow hedges and amortization of gain on settlement of swap		-		-			-			-			-						7,707						7,707
Changes in fair value of marketable securities		-		-			-			-			-			-			1,330			-			1,330
Issuance of common units under:
Stock and unit based compensation plans		103		8,412			-			-			-			-			-			-			8,412
Sale of common stock by the general partner		2,460		323,931			-			-			-			-			-			-			323,931
Stock and unit based compensation costs		-		(725	)		-			28			1,598			-			-			-			873
Issuance of Series H Preferred		-		-			71,209			-			-			-			-			-			71,209
Redemptions of Series F Preferred		-		(588	)		(24,412	)		-			-			-			-			-			(25,000	)
Redemptions of Series B Preferred		-		1,200			-			-			-			(80,000	)		-			-			(78,800	)
Redemptions		-		(1,134	)		-			-			(1,049	)		-			-			(3,204	)		(5,387	)
Distribution to noncontrolling interests		-		-			-			-			-			-			-			(6,052	)		(6,052	)
Distributions declared		-		(137,075	)		(4,753	)		-			(9,261	)		(1,650	)		-			-			(152,739	)
Balances at December 31, 2011		33,888		1,439,089			71,209			2,229			48,578			-			(71,962	)		66,814			1,553,728
Net income		-		119,812			5,472			-			7,959			-			-			6,347			139,590
Reversal of unrealized gains upon the sale of marketable securities		-		-			-			-			-			-			(1,082	)		-			(1,082	)
Change in fair value of cash flow hedges and amortization of gain on settlement of swap		-		-			-			-			-						3,402						3,402
Changes in fair value of marketable securities		-		-			-			-			-			-			1,411			-			1,411
Issuance of common units under:
Stock and unit based compensation plans		151		4,675			-			-			-			-			-			-			4,675
Sale of common stock by the general partner		2,404		357,720			-			-			-			-			-			-			357,720
Stock and unit based compensation costs		-		(430	)		-			(107	)		2,231			-			-			-			1,801
Capital contributions		-		-			-			-			-			-			-			4,232			4,232
Redemptions		-		(1,798	)		-			-			(3,441	)		-			-			(1,747	)		(6,986	)
Distribution to noncontrolling interests		-		-			-			-			-			-			-			(6,957	)		(6,957	)
Distributions declared		-		(156,212	)		(5,472	)		-			(9,734	)		-			-			-			(171,418	)
Balances at December 31, 2012		36,443	$	1,762,856		$	71,209			2,122		$	45,593		$	-		$	(68,231	)	$	68,689		$	1,880,116

See accompanying notes to consolidated financial statements.

F-6

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2012, 2011 and 2010

(Dollars in thousands)

	2012			2011			2010
Cash flows from operating activities:
Net income	$	139,590		$	57,516		$	50,782
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of marketable securities		(819	)		(4,956	)		(12,491	)
Gain on remeasurement of co-investment		(21,947	)		-			-
Company's share of gain on the sales of co-investment		(29,112	)		(919	)		-
Gain on the sales of real estate		(10,870	)		(8,562	)		-
Loss on early retirement of debt		5,009			1,163			10
Co-investments		1,626			7,929			1,715
Amortization expense		11,644			11,474			4,828
Amortization of discount on notes receivables		(1,832	)		(1,757	)		(4,806	)
Amortization of discount on marketable securities		(5,127	)		(4,794	)		(3,714	)
Loss on derivative instruments - ineffectiveness		-			-			2,301
Depreciation		170,686			152,542			129,711
Equity-based compensation		4,141			2,927			3,251
Changes in operating assets and liabilities:
Prepaid expenses and other assets		(9,488	)		(1,172	)		(2,771	)
Accounts payable and accrued liabilities		12,360			3,620			4,302
Other liabilities		1,638			1,560			2,412
Net cash provided by operating activities		267,499			216,571			175,530
Cash flows from investing activities:
Additions to real estate:
Acquisitions of real estate		(393,771	)		(57,478	)		(279,607	)
Improvements to recent acquisitions		(13,704	)		(16,446	)		(6,388	)
Redevelopment		(40,200	)		(45,130	)		(14,096	)
Revenue generating capital expenditures		(7,620	)		(7,616	)		(1,584	)
Non-revenue generating capital expenditures		(30,491	)		(26,090	)		(29,278	)
Acquisition of and additions to real estate under development		(29,196	)		(79,194	)		(155,267	)
Acquisition of membership interest in co-investment		(85,000	)		-			-
Dispositions of real estate		27,800			23,003			-
Changes in restricted cash and refundable deposits		(6,069	)		(1,376	)		(4,414	)
Purchases of marketable securities		(73,735	)		(8,048	)		(49,974	)
Sales and maturities marketable securities		61,703			32,998			102,039
Proceeds from tax investor		-			-			1,223
Purchases of and advances under notes and other receivables		(26,000	)		(12,325	)		(37,627	)
Collections of notes and other receivables		14,525			884			1,855
Contributions to co-investments		(260,153	)		(246,106	)		(79,450	)
Non-operating distributions from co-investments		49,773			17,141			41,700
Net cash used in investing activities		(812,138	)		(425,783	)		(510,868	)
Cash flows from financing activities:
Borrowings under debt agreements		1,745,853			1,514,684			1,214,216
Repayment of debt		(1,371,317	)		(1,435,135	)		(882,646	)
Additions to deferred charges		(6,707	)		(5,533	)		(4,109	)
Payments to settle derivative instruments		-			(2,395	)		(81,282	)
Retirement of exchangeable bonds		-			-			(5,396	)
Net proceeds from issuance of Series H Preferred interests		-			71,209			-
Retirement of Series B preferred interests and Series F Preferred interests		-			(103,800	)		-
Equity related issuance cost		(309	)		(627	)		-
Net proceeds from stock options exercised		2,643			6,986			4,765
Net proceeds from issuance of common stock		357,720			323,931			251,455
Contributions from noncontrolling interest		2,400			-			4,038
Distributions to noncontrolling interest		(6,957	)		(6,052	)		(9,160	)
Redemption of limited partners units and noncontrolling interests		(6,986	)		(5,387	)		(24,186	)
Common units and preferred units and preferred interests distributions paid		(165,984	)		(149,533	)		(139,264	)
Net cash provided by financing activities		550,356			208,348			328,431
Net increase (decrease) in cash and cash equivalents		5,717			(864	)		(6,907	)
Cash and cash equivalents at beginning of year		12,889			13,753			20,660
Cash and cash equivalents at end of year	$	18,606		$	12,889		$	13,753

(Continued)

F-7

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years ended December 31, 2012, 2011 and 2010

(Dollars in thousands)

	2012		2011		2010
Supplemental disclosure of cash flow information:
Cash paid for interest, net of $10,346, $8,240, and $9,486 capitalized in 2012, 2011 and 2010, respectively	$	95,597	$	89,691	$	83,497
Supplemental disclosure of noncash investing and financing activities:
Transfer from real estate under development to rental properties	$	6,632	$	165,214	$	170,940
Transfer from co-investments to rental properties	$	148,053	$	-	$	-
Mortgage notes assumed in connection with purchases of real estate including the loan premiums recorded	$	82,133	$	20,927	$	87,336
Transfer from real estate under development to co-investments	$	-	$	54,472	$	-
Note receivable settled when the company purchased the property securing the note receivable	$	-	$	-	$	25,750
Contribution of note receivable to co-investment	$	12,325	$	-	$	-
Change in accrual of dividends	$	5,441	$	3,206	$	2,655
Change in fair value of derivative liabilities	$	4,461	$	230	$	1,907
Change in fair value of marketable securities	$	459	$	2,836	$	6,670
Change in construction payable	$	1,113	$	2,518	$	1,304

See accompanying notes to consolidated financial statements.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

(1) Organization

The accompanying consolidated financial statements present the accounts of Essex Portfolio, L.P. (the “Operating Partnership”) and its subsidiaries. Essex Property Trust, Inc. (“Essex” or the “Company”) is a Maryland corporation that operates as a self-administered and self-managed real estate investment trust (“REIT”). The Company owns all of its interest in its real estate investments directly or indirectly through the Operating Partnership.

Essex is the sole general partner in the Operating Partnership with a 94.5% general partner interest and the limited partners owned a 5.5% interest as of December 31, 2012. The limited partners may convert their Operating Partnership units into an equivalent number of shares of common stock. Total Operating Partnership units outstanding were 2,122,381 and 2,229,230 as of December 31, 2012 and 2011, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled $311.2 million and $313.2 million, as of December 31, 2012 and 2011, respectively. The Company has reserved shares of common stock for such conversions. These conversion rights may be exercised by the limited partners at any time through 2026.

As of December 31, 2012, the Operating Partnership owned or had ownership interests in 163 apartment communities, (aggregating 33,468 units), five commercial buildings, and nine active development projects (collectively, the “Portfolio”). The communities are located in Southern California (Los Angeles, Orange, Riverside, Santa Barbara, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan area.

(2) Summary of Critical and Significant Accounting Policies

(a) Principles of Consolidation

The accounts of the Operating Partnership, its controlled subsidiaries and the variable interest entities (“VIEs”) in which it is the primary beneficiary are consolidated in the accompanying financial statements. All significant inter-company accounts and transactions have been eliminated.

The Operating Partnership consolidates 19 DownREIT limited partnerships (comprising twelve communities), since the Operating Partnership is the primary beneficiary of these variable interest entities (“VIEs”). The consolidated total assets and liabilities related to these VIEs, net of intercompany eliminations, were approximately $201.1 million and $178.6 million, respectively, as of December 31, 2012, and $199.8 million and $171.5 million, respectively, as of December 31, 2011.

The DownREIT VIEs collectively own twelve apartment communities in which Essex Management Company (“EMC”) is the general partner, the Operating Partnership is a special limited partner, and the other limited partners were granted rights of redemption for their interests. Such limited partners can request to be redeemed and the Operating Partnership can elect to redeem their rights for cash or by having the Company issuing shares of its common stock on a one share per unit basis. Conversion values will be based on the market value of the Company's common stock at the time of redemption multiplied by the number of units stipulated under the above arrangements. The other limited partners receive distributions based on the Operating Partnership’s current distribution rate times the number of units held. Total DownREIT units outstanding were 1,039,431 and 1,063,848 as of December 31, 2012 and 2011 respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled $152.4 million and $149.5 million, as of December 31, 2012 and 2011, respectively. As of December 31, 2012 and 2011, the carrying value of the other limited partners' interests is presented at their historical cost and is classified within noncontrolling interest in the accompanying consolidated balance sheets.

Interest holders in VIEs consolidated by the Operating Partnership are allocated a priority of net income equal to the cash payments made to those interest holders or distributions from cash flow. The remaining results of operations are generally allocated to the Operating Partnership.

As of December 31, 2012 and 2011, the Operating Partnership did not have any VIE’s of which it was not deemed to be the primary beneficiary.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

(b) Real Estate Rental Properties

Significant expenditures, which improve or extend the life of an asset and have a useful life of greater than one year, are capitalized. Operating real estate assets are stated at cost and consist of land, buildings and improvements, furniture, fixtures and equipment, and other costs incurred during their development, redevelopment and acquisition. Expenditures for maintenance and repairs are charged to expense as incurred.

The depreciable life of various categories of fixed assets is as follows:

Computer software and equipment	3 - 5 years
Interior unit improvements	5 years
Land improvements and certain exterior components of real property	10 years
Real estate structures	30 years

The Operating Partnership capitalizes all costs incurred with the predevelopment, development or redevelopment of real estate assets or are associated with the construction or expansion of real property. Such capitalized costs include land, land improvements, allocated costs of the Operating Partnership’s project management staff, construction costs, as well as interest and related loan fees, property taxes and insurance. Capitalization begins for predevelopment, development, and redevelopment projects when activity commences. Capitalization ends when the apartment home is completed and the property is available for a new resident or if the development activities are put on hold. The Operating Partnership ceases to capitalize costs such as property taxes, insurance, and interest expenses once the development activities are put on hold.

The Operating Partnership allocates the purchase price of real estate to land and building, and identifiable intangible assets, such as the value of above, below and in-place leases. The values of the above and below market leases are amortized and recorded as either a decrease (in the case of above market leases) or an increase (in the case of below market leases) to rental revenue over the remaining term of the associated leases acquired, which in the case of below market leases the Operating Partnership assumes lessees will elect to renew their leases. The value of acquired in-place leases are amortized to expense over the term the Operating Partnership expects to retain the acquired tenant, which is generally 20 months.

The Operating Partnership performs the following evaluation for communities acquired:

(1)

Adjust the purchase price for any fair value adjustments resulting from such things as assumed debt or contingencies.

(2)

estimate the value of the real estate “as if vacant” as of the acquisition date;

(3)

allocate that value among land and building;

(4)

compute the value of the difference between the “as if vacant” value and the adjusted purchase price, which will represent the total intangible assets;

(5)

compute the value of the above and below market leases and determine the associated life of the above market/ below market leases;

(6)

compute the value of the in-place leases and customer relationships, if any, and the associated lives of these assets.

Whenever events or changes in circumstances indicate that the carrying amount of a property held for investment or held for sale may not be fully recoverable, the carrying amount will be evaluated for impairment. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount (including intangible assets) of a property held for investment, then the Operating Partnership will recognize an impairment loss equal to the excess of the carrying amount over the fair value of the property. Fair value of a property is determined using conventional real estate valuation methods, such as discounted cash flow, the property’s unleveraged yield in comparison to the unleveraged yields and sales prices of similar communities that have been recently sold, and other third party information, if available. Communities held for sale are carried at the lower of cost and fair value less estimated costs to sell. As of December 31, 2012 and 2011, no communities were classified as held for sale and no impairment charges were recorded in 2012, 2011 or 2010.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

In the normal course of business, the Operating Partnership will receive purchase offers for its communities, either solicited or unsolicited. For those offers that are accepted, the prospective buyer will usually require a due diligence period before consummation of the transaction. It is not unusual for matters to arise that result in the withdrawal or rejection of the offer during this process. The Operating Partnership classifies real estate as "held for sale" when all criteria under the accounting standard for the disposals of long-lived assets have been met. In accordance with the standard, the Operating Partnership presents income and gains/losses on communities sold or held for sale as discontinued operations. The Operating Partnership’s equity in income or loss from real estate investments accounted for under the equity method of accounting remain classified in continuing operations upon disposition. (See Note 6 for a description of the Operating Partnership’s discontinued operations for 2012, 2011, and 2010).

The Operating Partnership 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 the accounting standards. Therefore, the Operating Partnership accounts for these 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 Operating Partnership’s equity in earnings less distributions received and the Operating Partnership’s share of losses. For preferred equity investments the Operating Partnership recognizes its preferred interest as its equity in earnings.

A majority of the co-investments, excluding the preferred equity investments, compensate the Operating Partnership for its asset management services and some of these investments may provide promote distributions 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 distributions are reflected in equity (loss) income in co-investments. In 2012, the Operating Partnership recorded a $2.3 million promote fee in connection with acquisition of our joint venture partner's remaining membership interest in the co-investment Essex Skyline at MacArthur Place for a purchase price of $85 million. The property is now consolidated. There were no promote fees recognized in 2011 and 2010 in the accompanying consolidated statements of operations.

(d) Revenues and Gains on Sale of Real Estate

Revenues from tenants renting or leasing apartment units 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. Units are rented under short-term leases (generally, lease terms of 6 to 12 months) and may provide no rent for one or two months, depending on the market conditions and leasing practices of the Operating Partnership’s competitors in each sub-market at the time the leases are executed. Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease.

The Operating Partnership recognizes gains on sales of real estate when a contract is in place, a closing has taken place, the buyer’s initial and continuing investment is adequate to demonstrate a commitment to pay for the property and the Operating Partnership does not have a substantial continuing involvement in the property.

(e) Cash Equivalents and Restricted Cash

Highly liquid investments with 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 Operating Partnership’s mortgage debt.

(f) Marketable Securities

The Operating Partnership reports its available for sale securities at fair value, based on quoted market prices (Level 2 for the unsecured bonds and Level 1 for the common stock and investment funds, as defined by the Financial Accounting Standards Board (“FASB”) standard for fair value measurements as discussed later in Note 2), and any unrealized gain or loss is recorded as other comprehensive income (loss). There were no other than temporary impairment charges for the years ended December 31, 2012, 2011 and 2010. Realized gains and losses, interest income, and amortization of purchase discounts are included in interest and other income on the consolidated statement of operations.

As of December 31, 2012 and 2011, marketable 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 December 31, 2012 and 2011, the Operating Partnership 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 estimated fair values of the mortgage backed securities (Level 2 securities) are approximately equal to the carrying values.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

As of December 31, 2012 and 2011 marketable securities consist of the following ($ in thousands):

	December 31, 2012
			Gross
	Amortized		Unrealized		Carrying
	Cost		Gain		Value
Available for sale:
Investment-grade unsecured bonds	$	5,143	$	98	$	5,241
Investment funds - US treasuries		14,120		729		14,849
Common stock		18,917		1,704		20,621
Held to maturity:
Mortgage backed securities		52,002		-		52,002
Total	$	90,182	$	2,531	$	92,713

	December 31, 2011
			Gross
	Amortized		Unrealized		Carrying
	Cost		Gain		Value
Available for sale:
Investment-grade unsecured bonds	$	3,615	$	399	$	4,014
Investment funds - US treasuries		11,783		121		11,904
Common stock		10,067		1,552		11,619
Held to maturity:
Mortgage backed securities		46,738		-		46,738
Total	$	72,203	$	2,072	$	74,275

The Operating Partnership uses the specific identification method to determine the cost basis of a security sold and to reclassify amounts from accumulated other comprehensive income for securities sold. For the years ended December 31, 2012, 2011 and 2010, the proceeds from sales of available for sale securities totaled $61.7 million, $33.0 million and $102.0 million, respectively. These sales all resulted in gains, which totaled $0.8 million, $5.0 million and $12.5 million for the years ended December 31, 2012, 2011 and 2010, respectively.

(g) Notes Receivable

Notes receivable relate to real estate financing arrangements including mezzanine and bridge loans and are secured by real estate. Interest is recognized over the life of the note.

Each note is analyzed to determine if it is impaired. A note is impaired if it is probable that the Operating Partnership will not collect all principal and interest contractually due. The Operating Partnership does not accrue interest when a note is considered impaired and a loan allowance is recorded for any principal and previously accrued interest that are not believed to be collectable. All cash receipts on impaired notes are applied to reduce the principal amount of such notes until the principal has been recovered and, thereafter, are recognized as interest income. As of December 31, 2012 and 2011, no notes were impaired.

(h) Capitalization Policy

The Operating Partnership capitalizes all direct and certain indirect costs, including interest and real estate taxes, incurred during development and redevelopment activities. Interest is capitalized on real estate assets that require a period of time to get them ready for their intended use. The amount of interest capitalized is based upon the average amount of accumulated development expenditures during the reporting period. Included in capitalized costs are management’s accounting estimates of the direct and incremental personnel costs and indirect project costs associated with the Operating Partnership’s development and redevelopment activities. Indirect project costs consist primarily of personnel costs associated with construction administration and development, including accounting, legal fees, and various office costs that clearly relate to projects under development. The Operating Partnership’s capitalized internal costs related to development and redevelopment projects totaled $4.4 million, $4.3 million and $4.0 million for the years ended December 31, 2012, 2011 and 2010, respectively, most of which relates to development projects. These totals include capitalized salaries of $2.4 million, $2.2 million and $2.1 million, for the years ended December 31, 2012, 2011 and 2010, respectively.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

(i) Interest and Other Income

Interest income is generated primarily from cash balances and marketable securities as well as notes receivables. Other income primarily consists of gains on sales of marketable securities. Total interest and other income is comprised of the following for the years ended December 31 ($ in thousands):

	2012		2011		2010
Interest income	$	10,715	$	10,501	$	15,350
Co-investment promote fee		2,299		-		-
Gains on sales of marketable securities		819		4,956		12,491
Tax benefit - taxable REIT subsidiary		-		1,682		-
	$	13,833	$	17,139	$	27,841

(j) Fair Value of Financial Instruments

The Operating Partnership values its financial instruments based on the fair value hierarchy of valuation techniques described in the FASB’s accounting standard for fair value measurements. Level 1 inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability. The Operating Partnership uses Level 1 inputs for the fair values of its cash equivalents and its marketable securities except for unsecured bonds and mortgage backed securities. The Operating Partnership uses Level 2 inputs for its investments in unsecured bonds, mortgage backed securities, notes receivable, notes payable, and derivative liabilities. These inputs include interest rates for similar financial instruments. The Operating Partnership’s valuation methodology for derivatives is described in more detail in Note 9. The Operating Partnership's valuation methodology for the swap related to the multifamily revenue refunding bonds for the 101 San Fernando community, which the Operating Partnership terminated in 2012, is described in detail in Note 9. The Operating Partnership does not use Level 3 inputs to estimate fair values of any of its financial instruments. The Operating Partnership’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

Management believes that the carrying amounts of its amounts outstanding under lines of credit, notes receivable and other receivables approximate fair value as of December 31, 2012 and 2011, 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 Operating Partnership’s $2.13 billion and $1.77 billion of fixed rate debt at December 31, 2012 and 2011, respectively, to be $2.24 billion and $1.88 billion. Management has estimated the fair value of the Operating Partnership’s $692.9 million and $593.7 million of variable rate debt at December 31, 2012 and 2011, respectively, is $671.7 million and $572.3 million based on the terms of the Operating Partnership’s existing variable rate debt 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 December 31, 2012 and 2011 due to the short-term maturity of these instruments. The fair values of the Operating Partnership’s investments in mortgage backed securities are approximately equal to the amortized cost carrying value of these securities. Marketable securities and derivative liabilities are carried at fair value as of December 31, 2012.

(k) Interest Rate Protection, Swap, and Forward Contracts

The Operating Partnership uses interest rate swaps, interest rate cap contracts, and forward starting swaps to manage interest rate risks. As of December 31, 2012, there were no outstanding forward starting swaps. The valuation of these derivative 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 forward starting interest rate swaps were 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) were based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Operating Partnership incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. The Operating Partnership records all derivatives on its consolidated balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Operating Partnership assesses the initial and ongoing effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction.

For derivatives not designated as cash flow hedges, changes in fair value are recognized in earnings. All of the Operating Partnership’s interest rate swaps and interest rate caps are considered cash flow hedges except for the swap related to the multifamily revenue refunding bonds for the 101 San Fernando community that was terminated in 2012 as described in detail in Note 9. The Operating Partnership did not have any fair value hedges during the years end December 31, 2012, 2011 and 2010.

The Operating Partnership’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 Operating Partnership primarily used interest rate swaps and interest rate forward-starting swaps as part of its cash flow hedging strategy. The Operating Partnership was hedging its exposure to the variability in future cash flows for a portion of its forecasted transactions.

(l) Deferred Charges

Deferred charges are principally comprised of loan fees and related costs which are amortized over the terms of the related borrowing in a manner which approximates the effective interest method.

(m) Income Taxes

As a partnership, the Operating Partnership is not subject to federal or state income taxes except that in order to maintain compliance with REIT tax rules that are applicable to the Company, the Operating Partnership utilizes taxable REIT subsidiaries for various revenue generating or investment activities. The taxable REIT subsidiaries are consolidated by the Operating Partnership. The activities and tax related provisions, assets and liabilities are not material.

(n) Preferred Interests

The Operating Partnership has issued preferred interests to the Company in connection with issuances of preferred stock by the Company. These preferred interests provide the Company with the right to receive preferential distributions from the Operating Partnership. The Company may also make special distributions to itself on account of such preferred interests for the sole purpose of redeeming shares of preferred stock.

The Company’s Series G Cumulative Convertible Preferred Stock (“ Series G Preferred Stock”) contains fundamental change provisions that allow the holder to redeem the preferred stock for cash if certain events occur. The redemption under these provisions is not solely within the Company’s or Operating Partnership’s control, thus the Operating Partnership has classified its related Series G Preferred Interest as temporary equity in the accompanying consolidated balance sheets.

The Company’s Series H Cumulative Redeemable Preferred Stock (“Series H Preferred Stock”), issued during 2011, contains fundamental change provisions that allow the holder to redeem the preferred stock for cash if certain events occur. The redemption under these provisions is within the Company’s or Operating Partnership’s control, and thus the Operating Partnership has classified its related Series H Preferred Interest as permanent equity in the accompanying consolidated balance sheets as of December 31, 2012 and 2011.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

(o) Equity-based Compensation

The Company provides share-based payments to employees for the purpose of attracting and retaining its employees. For each share of common stock the Company issues pursuant to its equity compensation plans, the Operating Partnership issues a corresponding number of operating partnership common units to the Company. The Operating Partnership accounts for equity based compensation using the fair value method of accounting. The estimated fair value of stock options granted by the Company is being amortized over the vesting period of the stock options. The estimated grant date fair values of the long term incentive plan units (discussed in Note 13) are being amortized over the expected service periods.

(p) Accounting Estimates

The preparation of consolidated financial statements, in accordance with U.S. generally accepted accounting principles (“GAAP”), requires the Operating Partnership 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 Operating Partnership 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 receivable and the Company’s qualification as a REIT. The Operating Partnership 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.

(3) Real Estate Investments

(a) Acquisitions of Real Estate

For the year ended December 31, 2012, the Operating Partnership purchased eleven communities consisting of 2,052 units for $551.1 million.

During the first quarter of 2012, the Operating Partnership acquired Bon Terra, a 60 unit community located adjacent to Delano in Redmond, Washington for $16.0 million. The Operating Partnership also acquired Reed Square, a 100 unit community located in Sunnyvale, California for $23.0 million.

During the second quarter of 2012, the Operating Partnership purchased the joint venture partner’s membership interest in the co-investment Essex Skyline at MacArthur Place, a 349 unit premier high-rise apartment community located in Santa Ana, California, for a total purchase price of $85.0 million. The Operating Partnership recorded promote income of $2.3 million included in interest and other income on the consolidated statements of operations, earned as a result of achieving certain performance hurdles as defined in the joint venture agreement. Upon the acquisition of partner’s membership interest, the property was consolidated and a gain on remeasurement of the Operating Partnership’s co-investment interest of $21.9 million was recorded equal to the amount by which the fair value of the Operating Partnership’s previously owned noncontrolling interest exceeded its carrying value. The secured $80.0 million loan was repaid early as part of this transaction.

Also during the second quarter of 2012, the Operating Partnership purchased Park Catalina, a 90 unit property located in the Koreatown submarket of Los Angeles, California for a total purchase price of $23.7 million. In addition, the Operating Partnership purchased The Huntington, a 276 unit property located in Huntington Beach, California for a purchase price of $48.3 million. The Operating Partnership assumed a $30.3 million loan secured by the property at a fixed rate of 5.7% for seven years. The interest rate on the loan was unfavorable compared to currently available market rates for mortgage loans, and thus in conjunction with the purchase price allocation, the Operating Partnership recorded a $4.3 million loan premium to reflect the debt at fair value. This results in an effective interest rate for this loan of 3.3%.

During the third quarter of 2012, the Operating Partnership purchased Montebello, a 248 unit property located in Kirkland, Washington, for a purchase price of $52.0 million from a related party entity. The Operating Partnership assumed a $26.5 million mortgage loan secured by the property at a fixed rate of 5.6% for eight years. The interest rate on the loan was unfavorable compared to currently available market rates for mortgage loans, and thus in conjunction with the purchase price allocation, the Operating Partnership recorded a $4.1 million loan premium to reflect the debt at fair value. This results in an effective interest rate for this loan of 3.1%.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

Also during the third quarter of 2012, the Operating Partnership acquired Park West, a 126 unit apartment community located in San Francisco, California, for $31.6 million. The Operating Partnership intends to renovate the exterior of the community for $8 million. In addition, the Operating Partnership acquired Domaine, a 92 unit property located in Seattle, Washington for $34.0 million. In connection with the purchase, the Operating Partnership assumed a $14.6 million loan at a fixed rate of 5.7% for an 8 year term. The interest rate on the loan was unfavorable compared to currently available market rates for mortgage loans, and thus in conjunction with the purchase price allocation, the Operating Partnership recorded a $2.4 million loan premium to reflect the debt at fair value. This results in an effective interest rate for this loan of 3.0%.

During the fourth quarter of 2012, the Operating Partnership acquired Ascent, a 90 unit community located in Kirkland, Washington, for $15.9 million and Willow Lake Apartments, a 508 unit property located in San Jose, California for $148.0 million. Also during the fourth quarter of 2012, the Operating Partnership purchased Bennett Lofts (formerly Q Lofts), a 147 unit apartment community located in San Francisco, California, for a total purchase price of $96.0 million. Approximately 75% of the property was acquired in December for $73.8 million, and the remainder was purchased in January 2013 for $22.2 million.

For the year ended December 31, 2011, the Operating Partnership purchased five communities for approximately $103.3 million, consisting of the following communities ($ in thousands):

Communities	Location	Purchase Price		Units
Delano	Redmond, WA	$	14,100		66
Bernard	Seattle, WA		13,800		63
Bellerive	Los Angeles, CA		27,000		63
Santee Village	Los Angeles, CA		17,000		73
1000 Kiely	Santa Clara, CA		31,400		121
Total 2011 purchases		$	103,300		386

(b) Sales of Real Estate investments

For the year ended December 31, 2012, the Operating Partnership sold $28.3 million of real estate which resulted in a gain of $10.9 million.

During the first quarter of 2012, the Operating Partnership sold Tierra Del Sol/Norte, a 156 unit community located in San Diego, California for $17.2 million for a gain of $7.0 million. The Operating Partnership also sold Alpine Country, a 108 unit community located in San Diego metropolitan area, for $11.1 million for a gain of $3.9 million.

During the second quarter of 2011, the Operating Partnership disposed of Woodlawn Colonial, a 159-unit community located in Chula Vista, California for $16.0 million which resulted in a gain of $5.2 million. The property was purchased in 2002 as part of the John M. Sachs, Inc. merger.

During the third quarter of 2011, the Operating Partnership sold the View Pointe land parcel located in Newcastle, Washington for net proceeds of $1.4 million and a gain of $0.2 million.

During the fourth quarter of 2011, the Operating Partnership sold the Clarendon office building in Woodland Hills, California for $7.4 million which resulted in a gain of $3.2 million on the sale.

No communities were held for sale as of December 31, 2012 or 2011.

The Operating Partnership has joint venture investments in co-investments which are accounted for under the equity method. The co-investments’ accounting policies are similar to the Operating Partnership’s accounting policies. The joint ventures own, operate, and develop apartment communities.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

Wesco I, LLC

Wesco, I LLC (“Wesco I”) is a 50/50 programmatic joint venture with an institutional partner for a total equity commitment of $300.0 million. Each partner’s equity commitment is $150.0 million. Wesco I will utilize debt as leverage equal to approximately 50% of the underlying real estate. The Operating Partnership has contributed $150.0 million to Wesco I, and as of December 31, 2012, Wesco I owned nine apartment communities with 2,713 units with an aggregate carrying value of $660.5 million.

During the third quarter of 2012, Wesco I acquired Riley Square (formerly Waterstone Santa Clara) for $38.3 million from a related party entity. The property contains 156 units and is located in Santa Clara, California. Wesco I assumed a $17.5 million mortgage loan secured by the property at a fixed rate of 5.2% for a term of 8 years. The interest rate on the loan was unfavorable compared to currently available market rates for mortgage loans, and thus in conjunction with the purchase price allocation, Wesco I recorded a $2.3 million loan premium to reflect the debt at fair value. This results in an effective interest rate for this loan of 3.1%.

During the fourth quarter of 2012, Wesco I acquired Madrid, a 230 unit community located in Mission Viejo, California for an undisclosed price (per an agreement with the seller). Also during the quarter, Wesco I acquired Pacific Electric Lofts for an undisclosed amount (per an agreement with the seller). The property contains 314 units along with 22,100 square feet of retail.

For the year ended December 31, 2011, the Operating Partnership purchased five communities under the Wesco I joint venture for approximately $429.2 million, consisting of the following communities ($ in thousands):

Communities	Location	Purchase Price		Units
Arbors Parc Rose	Oxnard, CA	$	92,000		373
Redmond Hill	Redmond, WA		151,300		882
Reveal	Woodland Hills, CA		132,900		438
Briarwood	Fremont, CA		27,800		160
The Woods	Fremont, CA		25,200		160
Total 2011 purchases		$	429,200		2,013

Wesco III, LLC

During 2012, the Operating Partnership entered into a 50/50 programmatic joint venture, Wesco III LLC (“Wesco III”), with an institutional partner for a total equity commitment from the parties of $120.0 million. Each partner’s equity commitment is $60.0 million. Wesco III will utilize debt as leverage equal to approximately 50% of the underlying real estate. The Operating Partnership has contributed $10.0 million to Wesco III, and provided a $26.0 million short term bridge loan to Wesco III at a rate of LIBOR + 2.5%.

During the fourth quarter of 2012, Wesco III acquired Haver Hill, a 264 unit community located in Fullerton, California for $45.6 million.

Essex Apartment Value Fund II, L.P.

Essex Apartment Value Fund II, L.P. (“Fund II”), has eight institutional investors with combined partner equity contributions of $265.9 million. The Operating Partnership contributed $75.0 million to Fund II, which represents a 28.2% interest as general partner and limited partner. Fund II utilized debt as leverage equal to approximately 55% upon the initial acquisition of the underlying real estate. Fund II invested in apartment communities in the Operating Partnership’s targeted West Coast markets with an emphasis on investment opportunities in the Seattle metropolitan area and the San Francisco Bay Area. As of October 2006, Fund II was fully invested and closed for any future acquisitions or development. As of December 31, 2012, Fund II owned seven apartment communities.

During the fourth quarter of 2012, Fund II sold seven communities for gross proceeds of $413.0 million, consisting of the following communities ($ in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

Communities	Location	Purchase Price		Units
Parcwood	Corona, CA	$	42,200		312
Regency Tower	Oakland, CA		31,000		178
Studio 40-41	Studio City, CA		56,300		149
Tower @ 801	Seattle, WA		50,100		173
Cielo	Chatsworth, CA		33,100		119
Echo Ridge	Snoqualmie, WA		26,500		120
The Enclave	San Jose, CA		173,750		637
Total 2012 sales		$	412,950		1,688

In conjunction with the sale of the assets, the Operating Partnership incurred a prepayment penalty on debt obligations of $2.3 million during the fourth quarter of 2012 for its pro-rata share of Fund II’s debt. The total gain on the transaction was $106 million, of which the Operating Partnership’s pro rata share was $29.1 million.

Canada Pension Plan Investment Board – Joint Venture Developments

The Operating Partnership has entered into four development joint ventures with the Canada Pension Plan Investment Board (“CPPIB”) to develop four apartment communities. For each joint venture the Operating Partnership holds a 55% non controlling interest in the venture and will earn customary management fees and may earn development, asset, and property management fees. The Operating Partnership may also earn a promote interest. These co-investments are not variable interest entities since they have sufficient equity without additional subordinated support, and the Operating Partnership and CPPIB jointly have the power to direct activities that most significantly impact the co-investments’ economic performance. Each of the co-investments between the Operating Partnership and CPPIB has a single general partner, which is subsidiary consolidated by the Operating Partnership. However, the Operating Partnership, as general partner of the co-investments, does not control the co-investments because the limited partners have substantive participating rights. Therefore, the presumption of control by the Operating Partnership as general partner is overcome by the rights held by CPPIB, and the Operating Partnership records the co-investments with CPPIB on the equity method of accounting.

The following are the CPPIB development joint ventures:

		Ownership					Estimated		Construction
Development Projects - CPPIB Joint Venture	Location	%			Units		Total Cost		Start

Epic - Phase I and II	San Jose, CA		55	%		569	$	191.6	Aug-11
Connolly Station (fka Linc)	Dublin, CA		55	%		309		94.5	Aug-11
Folsom and Fifth	San Francisco, CA		55	%		463		250.0	Jun-12
Elkhorn	San Mateo, CA		55	%		197		76.1	Aug-12
Total - CPPIB Joint Venture Development Projects						1,538	$	612.2

The Huxley and The Dylan (formerly Fountain and Santa Monica at La Brea) – Joint Venture Developments

During the third quarter of 2011, the Operating Partnership entered into a development joint venture with a regional developer for the construction of The Huxley, a 187 unit community with approximately 18,200 square feet of retail located in West Hollywood, California. The regional developer contributed the land and the Operating Partnership contributed approximately $9.0 million in cash for a 50% interest in the venture. The joint venture obtained bond financing for the project in the amount of $54.5 million with a maturity date of October 2046 and entered into an interest rate swap transaction with respect to the bonds that terminates in September 2016 that effectively converts the interest rate to the Securities Industry and Financial Market Association index (“SIFMA”) plus 150 basis points through December 2016.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

In the fourth quarter of 2011, the Operating Partnership entered into another development joint venture with the same regional developer for the construction of The Dylan, a 184 unit apartment community with approximately 12,750 square feet of retail located in West Hollywood, California. The 50/50 joint venture was created with the contribution of $5.8 million by the Operating Partnership and the contribution of entitled land by the regional developer. The joint venture secured bond financing in the amount of $59.9 million, maturing in December 2046. The joint venture entered into a total return swap agreement that effectively converts the interest rate to SIFMA plus 150 basis points through December 2016.

The bond financing for these two development projects have joint and several liability for the joint venture partners. Additionally, if either partner fails to make capital contributions to one of these joint ventures in certain instances, then the ownership interest of the defaulting partner in the other joint venture may be reduced.

Expo (formerly Queen Anne) – Joint Venture Development

During December 2010, the Operating Partnership entered into a development joint venture with a partner who contributed a land parcel during the first quarter of 2011 in return for a 50% interest in the venture and the Operating Partnership contributed cash equal to the value of the land in return for a 50% interest in the joint venture. The 275-unit community is under development in Seattle, Washington. The Expo joint venture obtained a $45.0 million construction loan at a rate of LIBOR plus 195 basis points, due July 2014, with two one-year extension options exercisable at the joint venture’s option.

Preferred Equity Investments

During the second quarter of 2012, the Operating Partnership made a $14 million preferred equity investment in an apartment community located in Cupertino, California to a related party entity. The investment has a preferred return of 9.5% and matures in May 2016. The preferred equity agreement provides for up to $4 million of additional funding for renovation costs.

During the first quarter of 2011, the Operating Partnership invested $9.7 million as preferred equity investments in two apartment communities located in downtown Los Angeles. The investments are for ten years with a preferred return of 9% for five years, increasing to a minimum of 10% and a maximum of 12.5% thereafter.

During the second quarter of 2011, the Operating Partnership completed a $13.0 million preferred equity investment in an entity owning an apartment community located in downtown Los Angeles. The Operating Partnership’s preferred return is 10% and the Operating Partnership’s investment has a five-year term.

During the third quarter of 2011, the Operating Partnership sold its preferred stock investments in MyNewPlace.com, a real estate technology company for net proceeds of $1.6 million and a gain of $0.9 million.

During the fourth quarter of 2011, the Operating Partnership entered into a 50/50 joint venture with an institutional partner, Wesco II, LLC (“Wesco II”), which in turn closed a $175 million preferred equity investment in Park Merced, a 3,221-unit apartment community located in San Francisco, California. The preferred equity investment has a stated term of 7 years and a preferred return of 10.1%. The investment cannot be repaid during the first two years, and there is a prepayment penalty in the third through the fifth year of the investment. The community is encumbered with a $450 million senior mortgage loan with a fixed interest rate of 3.83% due in 2018. The senior loan represents roughly a 60% loan to value, and the projected debt service coverage is approximately 110% including Wesco II’s preferred equity investment (unaudited).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

The carrying values of the Operating Partnership’s co-investments as of December 31, 2012 and 2011 are as follows ($ in thousands):

	2012		2011
Investments in joint ventures accounted for under the equity method of accounting:

Membership interest in Wesco I	$	143,874	$	75,588
Partnership interest in Fund II		53,601		64,294
Membership interest in Wesco III		9,941		-
Membership interest in a limited liability company that owns Essex Skyline at MacArthur Place		-		24,063
Total operating co-investments		207,416		163,945

Membership interests in limited liability companies that own and are developing Epic, Connolly Station, Folsom and Fifth, and Elkhorn		186,362		62,897
Membership interest in a limited liability company that owns and is developing Expo		18,752		17,981
Membership interests in limited liability companies that own and are developing The Huxley and The Dylan		16,552		15,194
Total development co-investments		221,666		96,072

Membership interest in Wesco II that owns a preferred equity interest in Parkmerced with a perferred return of 10.1%		91,843		88,075
Preferred interests in limited liability companies that own apartment communities in downtown Los Angeles with preferred returns of 9% and 10%		22,807		22,792
Preferred interests in related party limited liability company that owns Sage at Cupertino with a preferred return of 9.5%		14,438		-
Preferred interest in a related party limited liability company that owns Madison Park at Anaheim with a preferred return of 13%		13,175		12,528
Total preferred interest investments		142,263		123,395
Total co-investments	$	571,345	$	383,412

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

The combined summarized financial information of co-investments, which are accounted for under the equity method, is as follows ($ in thousands):

	December 31,
	2012			2011
Balance sheets:
Rental properties and real estate under development	$	1,745,147		$	1,659,078
Other assets		168,061			63,847
Total assets	$	1,913,208		$	1,722,925

Debt	$	820,895		$	900,095
Other liabilities		91,922			48,518
Equity		1,000,391			774,312
Total liabilities and partners' equity	$	1,913,208		$	1,722,925

Operating Partnership's share of equity	$	571,345		$	383,412

	Years ended
	December 31,
		2012			2011			2010
Statements of operations:
Property revenues	$	130,128		$	106,386		$	54,699
Property operating expenses		(55,990	)		(43,066	)		(24,098	)
Net operating income		74,138			63,320			30,601

Gain on sale of real estate		106,016			-			-
Interest expense		(34,959	)		(27,843	)		(13,619	)
General and administrative		(3,697	)		(1,748	)		(709	)
Depreciation and amortization		(47,917	)		(44,412	)		(20,850	)
Net income (loss)	$	93,581		$	(10,683	)	$	(4,577	)

Operating Partnership's share of net income (loss)	$	41,745		$	(467	)	$	(1,715	)

(d) Real Estate for Development

The Operating Partnership defines development activities as new properties that are being constructed, or are newly constructed and, in the case of development communities, are in a phase of lease-up and have not yet reached stabilized operations. As of December 31, 2012, the Operating Partnership had two consolidated development projects, and seven unconsolidated joint venture development projects aggregating 2,495 units for an estimated total cost of $928.4 million, of which $463.9 million remains to be expended.

As of December 31, 2012, the Operating Partnership had two consolidated predevelopment projects and one unconsolidated predevelopment joint venture project consisting of 449 units for a total cost of $59.6 million. In addition, the Operating Partnership owned one land parcel held for future development or sale as of December 31, 2012. The Operating Partnership 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 lines of credit, net proceeds from public and private equity and debt issuances, and proceeds from the disposition of properties, if any.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

(4) Notes and Other Receivables

Notes receivables, secured by real estate, and other receivables consist of the following as December 31, 2012 and 2011 ($ in thousands):

	2012		2011

Note receivable, secured, bearing interest at 9.8%, paid in full January 2012	$	-	$	7,331
Note receivable, secured, bearing interest at 5.0%, due November 2012 (1)		-		12,428
Note receivable, secured, bearing interest at LIBOR + 8.0%, paid in full December 2012		-		6,422
Note receivable, secured, bearing interest at 8.8%, due February 2014 (2)		10,800		10,928
Note receivable, secured, bearing interest at 8.0%, due November 2013		971		971
Note receivable, secured, effective interest at 9.6%, due February 2014		18,499		17,646
Note receivable, secured, bearing interest at 4.0%, due December 2014 (3)		3,212		3,221
Notes and other receivables from affiliates (4)		28,896		2,734
Other receivables		3,785		4,688
	$	66,163	$	66,369

(1)

$12.4 million note receivable was contributed to the Elkhorn co-investment during the first quarter of 2012.

(2)

During the fourth quarter of 2012, the Operating Partnership amended the loan to extend the maturity date to February 2014.

(3)

During the first quarter 2012, the Operating Partnership amended the loan secured by Vacationer RV Park to extend the maturity date to December 2014. Beginning January 1, 2012 the note which has a carrying value of $3.2 million, bears interest at a rate of 4%, and the borrower funds an impound account for capital replacement.

(4)

The Operating Partnership provided a $26.0 million short-term bridge loan to Wesco III at a rate of LIBOR + 2.5%.

(5) Related Party Transactions

Management and other fees from affiliates is comprised primarily of asset management, property management, development and redevelopment fees from co-investments. These fees from affiliates total $10.9 million, $6.1 million, and $4.1 million for the years ended December 31, 2012, 2011, and 2010, respectively, and a property acquisition fee of $0.5 million from the limited liability company that owns Skyline at MacArthur Place for the year ended December 31, 2010. All of these fees are net of intercompany amounts eliminated by the Operating Partnership.

The Operating Partnership provided a $26.0 million short-term bridge loan to Wesco III at a rate of LIBOR + 2.5%, to assist with the purchase of Haver Hill.

The Chairman and founder of the Company, which is the Operating Partnership’s parent and general partner, is Mr. George Marcus. Mr. Marcus, is the Chairman of The Marcus & Millichap Company (“TMMC”), which is a holding company for certain real estate brokerage services and other subsidiary companies. For further discussion of the Company’s policies and procedures with respect to related party transactions see the discussion under the caption “Certain Relationships and Related Persons Transactions; Director Independence--Policies and Procedures with respect to Related Persons Transactions” on page 95 of the accompanying prospectus. Fund II paid a brokerage commission totaling $0.4 million to an affiliate of TMMC related to the sale of a property in 2012 and Fund II did not pay any such brokerage commissions during 2011 or 2010, and no brokerage commissions were paid by the Operating Partnership to TMMC or its affiliates during 2012, 2011, and 2010.

In January 2013, the Operating Partnership invested $8.6 million as a preferred equity interest investment in an entity affiliated with TMMC that owns an apartment development in Redwood City, California. The investment has a preferred return of 9.5% and matures in January 2016. Independent members of the Company’s Board of Directors that serve on the Nominating and Corporate Governance and Audit Committees approved the investment in this entity.

During the third quarter of 2012, the Operating Partnership invested $14.0 million as a preferred equity interest investment in an entity affiliated with TMMC that owns an apartment community in Cupertino, California. The investment has a preferred return of 9.5% and matures in May 2016. The Operating Partnership will invest an additional $4.0 million in preferred equity to fund renovation costs. Independent directors (other than Mr. Marcus) on the Company’s Board of Directors approved the investment in this entity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

Also during the third quarter of 2012, the Operating Partnership acquired Montebello, a 248 unit apartment community in Kirkland, Washington for $52.0 million from an entity affiliated with TMMC, and Wesco I acquired Riley Square (formerly Waterstone Santa Clara), a 156 unit apartment community in Santa Clara, California for $38.3 million from an entity affiliated with TMMC. Independent directors (other than Mr. Marcus) on the Company’s Board of Directors approved the acquisitions of Montebello and Riley Square.

During the third quarter of 2010, the Operating Partnership invested $12.0 million as a preferred equity interest investment in a related party entity that owns a 768-unit apartment community in Anaheim, California. The entity that owns the property is an affiliate of TMMC. The Company’s independent directors (other than Mr. Marcus) approved the investment in this entity. The preferred return for this investment during the first five years is 13% per annum, and the preferred return increases to 15% thereafter.

During the second quarter of 2010, the independent directors (other than Mr. Marcus) of the Company approved the partial redemption for cash by the Operating Partnership of common units of the Operating Partnership that were held by Mr. Marcus, at $106.76 per unit representing a 2% discount from the closing price of the Company’s common stock on May 17, 2010. The Operating Partnership purchased 187,334 units from Mr. Marcus. Under the Operating Partnership’s partnership agreement, limited partnership common units are exchangeable on a one-for-one basis into shares of the Company’s common stock.

An Executive Vice President of the Company has invested $4.0 million for a 3% limited partnership interest in a partnership with the Operating Partnership that owns Essex Skyline at MacArthur Place. The Executive Vice President’s investment is equal to a pro-rata share of the contributions to the limited partnership. The Executive Vice President’s investment also receives pro-rata distributions resulting from distributable cash generated by the property if and when distributions are made. The Executive Vice President does not participate in fees paid to the Operating Partnership by the property.

(6) Discontinued Operations

During 2012, the Operating Partnership sold Tierra Del Sol/Norte, a 156 unit community located in the San Diego, California for $17.2 million for a gain of $7.0 million. Also during 2012, the Operating Partnership sold Alpine Country, a 108 unit community located in San Diego metropolitan area, for $11.1 million for a gain of $3.9 million. As of December 31, 2012 and 2011 no communities were held for sale.

During 2011, the Operating Partnership sold one apartment community, Woodlawn Colonial, and one office building, Clarendon, for a total of $23.4 million resulting in gains totaling $8.4 million.

The Operating Partnership has recorded the gains and operations for these various assets sold described above as part of discontinued operations in the accompanying consolidated statements of operations. The components of discontinued operations are outlined below and include the results of operations for the respective periods that the Operating Partnership owned such assets, as described above ($ in thousands):

	2012			2011			2010

Revenues	$	608		$	4,081		$	5,453

Property operating expenses		(260	)		(1,861	)		(2,342	)
Depreciation and amortization		(94	)		(1,115	)		(1,491	)
Expenses		(354	)		(2,976	)		(3,833	)

Operating income from real estate sold		254			1,105			1,620

Gain on sale of real estate		10,870			8,382			-
Internal disposition costs		(1,087	)		(839	)		-
Income from discontinued operations	$	10,037		$	8,648		$	1,620

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

(7) Mortgage Notes Payable

Mortgage notes payable consist of the following as of December 31, 2012 and 2011 ($ in thousands):

	2012			2011

Fixed rate mortgage notes payable	$	1,363,731		$	1,502,208
Variable rate mortgage notes payable(1)		201,868			243,650
	$	1,565,599		$	1,745,858

Number of properties securing mortgage notes		55			68
Remaining terms	1-27 years			1-28 years
Weighted average interest rate		5.4	%		5.4	%

The aggregate scheduled principal payments of mortgage notes payable are as follows ($ in thousands):

2013	$	57,621
2014		47,994
2015		68,926
2016		12,656
2017		185,301
Thereafter		1,193,101

	$	1,565,599

(1)

Variable rate mortgage notes payable consists of multifamily housing mortgage revenue bonds secured by deeds of trust on rental properties and guaranteed by collateral pledge agreements, payable monthly at a variable rate as defined in the Loan Agreement (approximately 1.9% at December 2012 and 2.0% at December 2011) plus credit enhancement and underwriting fees ranging from approximately 1.2% to 1.9%. Among the terms imposed on the properties, which are security for the bonds, is a requirement that 20% of the units are subject to tenant income criteria. Principal balances are due in full at various maturity dates from September 2013 through December 2039. Of these bonds $187.8 million are subject to various interest rate cap agreements which limit the maximum interest rate to such bonds.

For the Operating Partnership’s mortgage notes payable as of December 31, 2012, monthly interest expense and principal amortization, excluding balloon payments, totaled approximately $7.0 million and $2.0 million, respectively. Second deeds of trust accounted for $87.3 million of the $1.6 billion in mortgage notes payable as of December 31, 2012. Repayment of debt before the scheduled maturity date could result in prepayment penalties. The prepayment penalty on the majority of the Operating Partnership’s mortgage notes payable are computed by the greater of (a) 1% of the amount of the principal being prepaid or (b) the present value of the mortgage note payable which is calculated by multiplying the principal being prepaid by the difference between the interest rate of the mortgage note and the stated yield rate on a specified U.S. treasury security as defined in the mortgage note agreement. (See Schedule III for a list of mortgage loans related to each community in the Operating Partnership’s Portfolio.)

(8) Unsecured Debt and Lines of Credit

Unsecured debt and lines of credit consist of the following as of December 31, 2012 and 2011 ($ in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

							Weighted Average
							Maturity
	2012			2011			In Years

Bonds private placement - fixed rate	$	465,000		$	265,000			6.2
Term loan - variable rate		350,000			200,000			4.2
Bonds public offering - fixed rate		297,084			-			9.6
Unsecured debt		1,112,084			465,000
Lines of credit		141,000			150,000			3.0
Total unsecured debt	$	1,253,084		$	615,000

Weighted average interest rate on fixed rate unsecured bonds		4.2	%		4.5	%
Weighted average interest rate on variable rate term loan		2.7	%		2.7	%
Weighted average interest rate on line of credit		2.3	%		2.5	%

The following is a summary of the Operating Partnership’s unsecured private placement bonds as of December 31, 2012 and 2011 ($ in thousands):

						Coupon
	Maturity	2012		2011		Rate

Senior unsecured private placement notes	March 2016	$	150,000	$	150,000		4.36	%
Senior unsecured private placement notes	September 2017		40,000		40,000		4.50	%
Senior unsecured private placement notes	December 2019		75,000		75,000		4.92	%
Senior unsecured private placement notes	April 2021		100,000		-		4.27	%
Senior unsecured private placement notes	June 2021		50,000		-		4.30	%
Senior unsecured private placement notes	August 2021		50,000		-		4.37	%
		$	465,000	$	265,000

The Operating Partnership has two lines of credit aggregating $525.0 million as of December 31, 2012. The Operating Partnership had a $500.0 million unsecured line of credit that was increased to $600.0 million in January 2013. As of December 31, 2012 there was a $141.0 million balance on this unsecured line. The underlying interest rate on the $500.0 million facility is based on a tiered rate structure tied to Fitch and S&P ratings on the credit facility and the rate was LIBOR plus 1.075% as of December 31, 2012. This facility matures in December 2015 with two one-year extensions, exercisable by the Operating Partnership. The Operating Partnership has a working capital unsecured line of credit agreement for $25.0 million. This facility matures in January 2014, with a one year extension option. As of December 31, 2012 there was no balance outstanding on this unsecured line. The underlying interest rate on the $25.0 million line is based on a tiered rate structure tied to Fitch and S&P ratings on the credit facility of LIBOR plus 1.075%.

As of December 31 2012, the Operating Partnership had $465 million of unsecured bonds outstanding at an average effective interest rate of 4.5%. During the second quarter of 2012, the Operating Partnership issued through private placements, $100 million of bonds and $50 million of bonds at 4.27% and 4.30%, respectively, due in 2021, and during the third quarter of 2012, $50 million of bonds at 4.37% due in 2021.

As of December 31, 2012, the Operating Partnership had a $350 million unsecured term loan outstanding at an average interest rate of 2.7%. The term loan has a variable interest rate of LIBOR plus 1.2%. During the fourth quarter of 2012, the Operating Partnership increased the size of the term loan from $200 million to $350 million. The Operating Partnership entered into interest rate swap contracts for a term of five years with a notional amount totaling $300 million, which effectively converted the interest rate on the $300 million of the term loan to a fixed rate.

During the third quarter of 2012, the Operating Partnership issued $300.0 million of senior unsecured notes due August 2022 with a coupon rate of 3.625% per annum and are payable on February 15th and August 15th of each year, beginning February 15, 2013 (the 2022 Notes). The 2022 Notes were offered to investors at a price of 98.99% of par value. The 2022 Notes are general unsecured senior obligations of the Operating Partnership, rank equally in right of payment with all other senior unsecured indebtedness of the Operating Partnership and are fully and unconditionally guaranteed by Essex Property Trust, Inc.

On August 15th, 2012, in connection with the 2022 Notes issuance, the Operating Partnership entered into a registration rights agreement whereby the Operating Partnership agreed to conduct an offer to exchange the 2022 Notes for a new series of publicly registered notes with substantially identical terms. If the Operating Partnership does not fulfill certain of its obligation under the registration rights agreement, it will be required to pay registration default damages to the holders of the 2022 Notes. No separate contingent obligation was recorded as no registration default damages became probable as of December 31, 2012.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

The Operating Partnership’s unsecured line of credit and unsecured debt agreements contain debt covenants related to limitations on indebtedness and liabilities and maintenance of minimum levels of consolidated earnings before depreciation, interest and amortization. The Operating Partnership was in compliance with the debt covenants as of December 31, 2012 and 2011.

(9) Derivative Instruments and Hedging Activities

The Operating Partnership uses interest rate swaps and interest rate cap 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 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 Operating Partnership incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

The Operating Partnership has entered into interest rate swap contracts with an aggregate notional amount of $300 million that effectively fixed the interest rate on $300 million of the $350 million unsecured term loan at 2.7% through November 2016. These derivatives qualify for hedge accounting.

As of December 31, 2012 the Operating Partnership also had twelve interest rate cap contracts totaling a notional amount of $187.8 million that qualify for hedge accounting as they effectively limit the Operating Partnership’s exposure to interest rate risk by providing a ceiling on the underlying variable interest rate for $201.9 million of the Operating Partnership tax exempt variable rate debt.

As of December 31, 2012 and December 31, 2011 the aggregate carrying value of the interest rate swap contracts was a liability of $6.6 million and $1.4 million, respectively. The aggregate carrying value of the interest rate cap contracts was zero on the balance sheet as of December 31, 2012, and was an asset of $0.2 million as of December 31, 2011.

During the third quarter of 2012, the Operating Partnership terminated a swap transaction with respect to the $38.0 million of tax-exempt bonds for the 101 San Fernando apartment community with Citibank because the bonds were repurchased by the Operating Partnership at par.

During 2011, the Operating Partnership settled its remaining $20.0 million forward starting swap contract for $2.3 million which was applied to the $32.0 million mortgage obtained in February 2011, increasing the effective borrowing rate from 5.4% to 6.2%.

During 2010, the Operating Partnership settled $355 million in forward-starting swap contracts for $81.3 million, which was applied to 10-year mortgage loans obtained in 2010. The settlement of the forward-starting swaps increased the average effective interest rate on the 2010 mortgage loans from 4.5% to 6.8%. During 2010, the Operating Partnership incurred $2.3 million in expense related to the ineffectiveness of certain of the settled forward-starting swap hedges, which is included in impairment and other charges in the accompanying consolidated statement of operations for the year ended December 31, 2010. No hedge ineffectiveness on cash flow hedges was incurred during the years ended December 31, 2012 and 2011.

(10) Lease Agreements

As of December 31, 2012 the Operating Partnership is a lessor for four commercial buildings and the commercial portions of 20 mixed use communities. The tenants’ lease terms expire at various times through 2028. The future minimum non-cancelable base rent to be received under these operating leases for each of the years ending after December 31 is summarized as follows ($ in thousands):

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

	Future
	Minimum
	Rent
2013	$	8,592
2014		8,395
2015		6,933
2016		4,512
2017		2,781
Thereafter		14,562
	$	45,775

(11) Capital Transactions

Preferred Securities Offerings and Preferred Interest

The Company had the following cumulative preferred stock outstanding as of December 31, 2012, 2011 and 2010 (dollars in thousands):

		Shares Outstanding						Liquidation
Description	Issue Date	2012		2011		2010		Preference
7.125% Series H	April 2011		2,950,000		2,950,000		-	$	73,750
4.875% Series G	July 2006		178,249		178,249		178,249	$	4,456
7.8125% Series F	September 2003		-		-		1,000,000	$	25,000
7.875% Series B	April 1998		-		-		400,000	$	20,000
7.875% Series B	February 1998		-		-		1,200,000	$	60,000

Distributions on the preferred securities are payable quarterly. The holders of the securities have limited voting rights if the required distributions are in arrears.

During the second quarter of 2011, the Company issued 2,950,000 shares of 7.125% Series H Cumulative Redeemable Preferred Stock (the "Series H Preferred Stock") at a price of $25.00 per share for net proceeds of $71.2 million, net of costs and original issuance discounts. The $71.2 million net proceeds from the sale of the preferred stock was contributed by the Company to the Operating Partnership for a Series H Preferred Interest in the Operating Partnership. This preferred interest provides the Company with the right to receive preferential distributions. The partnership agreement of the Operating Partnership provides that prior to making any distributions with respect to the partners' percentage interests in the Operating Partnership, the Operating Partnership shall make a distribution to the Company regarding the Series H Preferred Interest equal to the total of the accrued but unpaid distributions with respect to the Series H Preferred Stock. The Company may also make a special distribution to itself on account of its Series H Preferred Interest for the sole purpose of the redemption of shares of Series H Preferred Stock by the Company. The Series H Cumulative Redeemable Preferred Stock has no maturity date and generally may not be redeemed by the Company before April 13, 2016. Net proceeds from the Series H Preferred Stock offering were used to redeem all of the 7.875% Series B Cumulative Redeemable Preferred Stock of the Company (“Series B”) with a liquidation value of $80.0 million, which resulted in excess of cash paid of $1.0 million over the carrying value of Series B due to deferred offering costs and original issuance discounts.

Also during the second quarter of 2011, a special distribution was made to the Company that enabled the Company to redeem its 7.8125% Series F Preferred Stock (“Series F Preferred Stock”) at liquidation value for $25.0 million which resulted in excess of cash paid of $0.9 million over the carrying value of Series F Preferred Stock due to deferred offering costs and original issuance discounts.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

During the third quarter of 2006, the Company issued 5,980,000 shares of 4.875% Series G Cumulative Convertible Preferred Stock (“Series G Preferred Stock”) for gross proceeds of $149.5 million. The net proceeds from the sale of this preferred stock was contributed to the Operating Partnership for a Series G Preferred Interest in the Operating Partnership. This preferred interest provides the Company with the right to receive preferential distributions. The partnership agreement of the Operating Partnership provides that prior to making any distributions with respect to the partners' percentage interests in the Operating Partnership, the Operating Partnership shall make a distribution to the Company regarding the Series G Preferred Interest equal to the total of the accrued but unpaid distributions with respect to the Series G Preferred Stock. The Company may also make a special distribution to itself on account of its Series G Preferred Interest for the sole purpose of the redemption of shares of Series G Preferred Stock by the Company. Holders may convert Series G Preferred Stock into shares of the Company’s common stock subject to certain conditions. The conversion rate was initially .1830 shares of common stock per the $25 share liquidation preference, which is equivalent to an initial conversion price of approximately $136.62 per share of common stock (the conversion rate will be subject to adjustment upon the occurrence of specified events). On or after July 31, 2011, the Company may, under certain circumstances, cause some or all of the Series G Preferred Stock to be converted into that number of shares of common stock at the then prevailing conversion rate. As of December 31, 2012 and 2011, shares of Series G Preferred Stock with an aggregate liquidation value of $4.5 million were outstanding.

Common Stock Offerings and Common Units

During 2012, the Company sold 2.4 million shares of common stock for $357.7 million, net of fees and commissions, at an average price of $150.26, and the Company contributed such net proceeds to the Operating Partnership. During the first quarter of 2013, through March 11, 2013, the Company sold 815,319 shares of common stock for $122.6 million, net of fees and commissions at an average price of $151.82, and the Company contributed such net proceeds to the Operating Partnership.

During 2011 and 2010, the Company issued 2.5 million and 2.4 million shares of common stock for $323.9 million and $251.4 million, net of fees and commissions, respectively, and the Company contributed such net proceeds to the Operating Partnership. The Operating Partnership used these net proceeds from such sales to pay down debt, fund the repurchase of the Company’s preferred stock, fund redevelopment and development pipelines, fund acquisitions, and for general corporate purposes.

(12) Net Income Per Common Unit

Basic and diluted income from continuing operations per unit are calculated as follows for the years ended December 31 ($ in thousands, except unit and per unit amounts):

	2012						2011						2010
			Weighted-		Per				Weighted-		Per				Weighted-		Per
			average		Common				average		Common				average		Common
			Common		Unit				Common		Unit				Common		Unit
	Income		Units		Amount		Income		Units		Amount		Income		Units		Amount
Basic:
Income from continuing operations available to common unitholders	$	117,734		37,251,537	$	3.16	$	34,945		34,773,559	$	1.00	$	34,922		31,960,950	$	1.09
Income from discontinued operations		10,037		37,251,537		0.27		8,648		34,773,559		0.25		1,620		31,960,950		0.05
Income available to common unitholders	$	127,771			$	3.43	$	43,593			$	1.25	$	36,542			$	1.14

Effect of Dilutive Securities (1)		-		92,430				-		86,922				-		67,319

Diluted:
Income from continuing operations available to common unitholders (1)	$	117,734		37,343,967	$	3.15	$	34,945		34,860,521	$	1.00	$	34,922		32,028,269	$	1.09
Income from discontinued operations		10,037		37,343,967		0.27		8,648		34,860,521		0.25		1,620		32,028,269		0.05
Income available to common unitholders	$	127,771			$	3.42	$	43,593			$	1.25	$	36,542			$	1.14

(1)

The Operating Partnership has the ability to redeem DownREIT limited partnership units for cash and does not consider them to be potentially dilutive securities.

Stock options of 263,613; 175,500; and 123,164; for the years ended December 31, 2012, 2011, and 2010, respectively, were not included in the diluted earnings per unit calculation because the exercise price of these options were greater than the average market price of the Company’s common stock for the years ended and, therefore, were anti-dilutive.

All of the Series G cumulative convertible preferred interests have been excluded from diluted earnings per unit for the years ended 2012, 2011, and 2010 respectively, as the effect was anti-dilutive.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

(13) Equity Based Compensation Plans

Stock Options and Restricted Stock

The Essex Property Trust, Inc. 2004 Stock Incentive Plan provides incentives to attract and retain officers, directors and key employees. The Stock Incentive Plan provides for the grants of options to purchase a specified number of shares of common stock or grants of restricted shares of common stock. Under the Stock Incentive Plan, the total number of shares available for grant is approximately 1,200,000. The 2004 Stock Incentive Plan is administered by the Compensation Committee of the Board of Directors. The Compensation Committee is comprised of independent directors. The Compensation Committee is authorized to establish the exercise price; however, the exercise price cannot be less than 100% of the fair market value of the common stock on the grant date. The Company’s options have a life of seven to ten years. Option grants for officers and employees fully vest between one year and five years after the grant date.

Stock-based compensation expense for options and restricted stock under the fair value method totaled $2.0 million, $1.5 million, and $1.0 million for years ended December 31, 2012, 2011 and 2010 respectively. Stock-based compensation capitalized for options and restricted stock totaled $0.3 million for the year ended December 31, 2012, and $0.2 million for each of the years ended December 31, 2011 and 2010. The intrinsic value of the options exercised totaled $2.9 million, $3.8 million, and $2.9 million, for the years ended December 31, 2012, 2011, and 2010 respectively. The intrinsic value of the options outstanding and fully vested totaled $9.9 million, $10.6 million, and $7.7 million, for the years ended December 31, 2012, 2011 and 2010, respectively.

Total unrecognized compensation cost related to unvested share-based compensation granted for stock options totaled $3.2 million as of December 31, 2012. The unrecognized compensation cost is expected to be recognized over a period of 1 to 5 years for the stock option plans.

The average fair value of stock options granted for the years ended December 31, 2012, 2011 and 2010 was $12.64, $14.49 and $18.39, respectively. The stock options granted during the fourth quarter of 2012 included a $75 cap on the appreciation of the market price over the exercise price. The stock options granted during 2011 and through the third quarter of 2012 included a $100 cap on the appreciation of the market price over the exercise price. The fair value of stock options was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants:

	2012			2011			2010
Stock price	$	143.95		$	131.87		$	107.21
Risk-free interest rates		1.16	%		2.23	%		3.50	%
Expected lives	5 - 10 years			10 years			10 years
Volatility		20.05	%		19.63	%		22.00	%
Dividend yield		3.26	%		3.29	%		3.85	%

A summary of the status of the Company’s stock option plans as of December 31, 2012, 2011, and 2010 and changes during the years ended on those dates is presented below:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

	2012					2011					2010
				Weighted-					Weighted-					Weighted-
				average					average					average
				exercise					exercise					exercise
	Shares			price		Shares			price		Shares			price
Outstanding at beginning of year		415,020		$	109.71		300,642		$	88.11		378,542		$	82.08
Granted		263,113			143.95		197,500			131.87		18,214			107.21
Exercised		(41,603	)		77.21		(83,122	)		84.24		(78,381	)		63.97
Forfeited and canceled		(13,096	)		128.36		-			0.00		(17,733	)		105.40
Outstanding at end of year		623,434			125.96		415,020			109.71		300,642			88.11

Options exercisable at year end		250,620			107.12		219,820			92.31		265,770			86.28

The following table summarizes information about stock options outstanding as of December 31, 2012:

		Options outstanding					Options exercisable
		Number		Weighted-			Number
		outstanding		average	Weighted-		exercisable		Weighted-
		as of		remaining	average		as of		average
Range of		December 31,		contractual	exercise		December 31,		exercise
exercise prices		2012		life	price		2012		price
$	51.01 - 79.05		34,973	3.0 years	$	69.97		34,973	$	69.97
	79.25 - 125.84		144,498	3.9 years		99.10		130,498		98.69
	126.73 - 155.34		443,963	7.9 years		139.10		85,149		135.31
			623,434	6.7 years		125.96		250,620		107.12

During 2012, 2011, and 2010 the Company issued 1,614, 1,540, and 14,415 shares of restricted stock, respectively. The unrecognized compensation cost granted under the restricted stock program of $1.9 million as of December 31, 2012 will be recognized straight-line over a period of 1 to 7 years.

The following table summarizes information about restricted stock outstanding as of December 31, 2012, 2011 and 2010 and changes during the years ended:

	2012					2011					2010
				Weighted-					Weighted-					Weighted-
				average					average					average
				grant					grant					grant
	Shares			price		Shares			price		Shares			price
Unvested at beginning of year		35,219		$	98.57		44,877		$	102.46		37,727		$	99.43
Granted		1,614			149.68		1,540			134.44		14,415			109.62
Vested		(8,641	)		106.69		(9,532	)		104.91		(6,126	)		102.27
Forfeited and canceled		(3,270	)		102.00		(1,666	)		94.35		(1,139	)		93.92
Unvested at end of year		24,922			104.52		35,219			98.57		44,877			102.46

Long Term Incentive Plan – Z Units

The Operating Partnership has adopted an incentive program involving the issuance of Series Z Incentive Units and Series Z-1 Incentive Units (collectively referred to as “Z Units”) of limited partnership interest in the Operating Partnership. Vesting in the Z Units is based on performance criteria established in the plan. The criteria can be revised at the beginning of the year by the Compensation Committee of the Company’s Board of Directors if the Committee deems that the plan's criterion is unachievable for any given year. The sale of Z Units is contractually prohibited. Z Units are convertible into Operating Partnership units which are exchangeable for shares of the Company’s common stock that may have marketability restrictions. The estimated fair value of a Z Unit is determined on the grant date and considers the Company's current stock price, the distributions that are not paid on unvested units and a marketability discount for the 8 to 15 years of illiquidity. Compensation expense is calculated by multiplying estimated vesting increases for the period by the estimated fair value as of the grant date less its $1.00 per unit purchase price.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

Stock-based compensation expense for Z Units under the fair value method totaled approximately $2.1 million, $1.5 million and $2.3 million for the years ended December 31, 2012, 2011 and 2010, respectively. Stock-based compensation capitalized for Z Units totaled approximately $0.5 million, $0.3 million, and $0.6 million, for the years ended December 31, 2012, 2011, and 2010, respectively. The intrinsic value of the unvested Z Units totaled $20.8 million as of December 31, 2012. Total unrecognized compensation cost related to the unvested Z Units under the Z Units plans totaled $7.3 million as of December 31, 2012. The unamortized cost is recognized up to 14 years subject to the achievement of the stated performance criteria.

The issuance of Z Units is administered by the Compensation Committee which has the authority to select participants and determine the awards to be made up to a maximum of 600,000 Z Units. Effective January 1 of each year for each participating executive who remains employed by the Company if the Company has met a specified “funds from operations” per share target, or such other target as the Compensation Committee deems appropriate, for the prior year, up to a maximum conversion ratchet of 100%. Z units issued in 2011 and 2010 are discussed below.

During 2010, the Operating Partnership issued 108,000 Series Z-1 Incentive Units (the “2010 Z-1 Units”) of limited partner interest to twenty executives of the Company. The conversion ratchet (accounted for as vesting) of the 2010 Z-1 Units into common units, increased to 20 percent effective January 1, 2011 because the Company achieved the FFO minimum target of $4.75 per diluted share in 2010. To the extent that the units are vested, Z-1 Unit holders receive quarterly distributions equal to approximately the dividends paid on common stock. Each year thereafter, vesting of the 2010 Z-1 Units will be consistent with the Company’s annual FFO growth, but is not to be less than zero or greater than 14 percent.

During 2011, the Operating Partnership issued 46,500 Series Z-1 Incentive Units (the “2011 Z-1 Units”) of limited partner interest to fourteen executives of the Company in exchange for cash from eight executive officers of the Company, and a capital commitment from the remaining six executives of $1.00 per 2011 Z-1 Unit. The 2011 Z-1 Units are convertible one-for-one into common units of the Operating Partnership (which, in turn, are convertible into common stock of the Company) upon the earlier to occur of 100 percent vesting of the units or the year 2026. The conversion ratchet (accounted for as vesting) of the 2011 Z-1 Units into common units, increased to 10 percent effective January 1, 2012 because the Company achieved the FFO minimum target of $5.65 per diluted share in 2011. Each year thereafter, vesting of the 2011 Z-1 Units will be consistent with the Company’s annual FFO growth, but is not to be less than zero or greater than 14 percent. To the extent that the units are vested, Z-1 Unit holders receive quarterly distributions equal to approximately the dividends paid on common stock. The 2011 Z-1 Unit holders are entitled to receive approximately the same as dividends distributed to common stockholders on vested units.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

The following table summarizes information about the Z Units outstanding as of December 31, 2012 ($ in thousands):

	Long Term Incentive Plan - Z Units
							Aggregate							Weighted-
							Intrinsic					Weighted-		average
	Total			Total			Value		Total			average		Remaining
	Vested			Unvested			of Unvested		Outstanding			Grant-date		Contractual
	Units			Units			Units		Units			Fair Value		Life
Balance, December 2009		288,651			105,881		$	8,751		394,532		$	39.36	8.2 years
Granted		-			108,000					108,000
Vested		37,629			(37,629	)				-
Cancelled					(4,350	)				(4,350	)
Balance, December 2010		326,280			171,902			19,463		498,182			54.15	11.2 years
Granted		-			46,500					46,500
Vested		44,520			(44,520	)				-
Converted		(191,718	)		-					(191,718	)
Cancelled		-			(3,863	)				(3,863	)
Balance, December 2011		179,082			170,019			23,719		349,101			58.17	12.3 years
Granted		-			-					-
Vested		28,163			(28,163	)				-
Converted		(16,541	)		-					(16,541	)
Cancelled		-			(1,813	)				(1,813	)
Balance, December 2012		190,704			140,043		$	20,800		330,747		$	58.44	11.3 years

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

(14) Segment Information

The Operating Partnership 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 are communities classified in discontinued operations, management and other fees from affiliates, and interest and other income. Non-segment revenues and net operating income included in the following schedule also consist of revenue generated from commercial properties. Other non-segment assets include real estate under development, co-investments, cash and cash equivalents, marketable securities, notes and other receivables, prepaid expenses and other assets and deferred charges.

The revenues and net operating income for each of the reportable operating segments are summarized as follows for the years ended December 31, 2012, 2011, and 2010 ($ in thousands):

	Years Ended December 31,
	2012			2011			2010
Revenues:
Southern California	$	249,524		$	223,304		$	200,541
Northern California		175,325			149,457			127,302
Seattle Metro		94,708			81,967			70,348
Other real estate assets		12,379			10,985			7,537
Total property revenues	$	531,936		$	465,713		$	405,728

Net operating income:
Southern California	$	166,162		$	146,519		$	132,150
Northern California		120,540			99,047			82,288
Seattle Metro		62,076			52,173			43,006
Other real estate assets		9,070			8,740			5,120
Total net operating income		357,848			306,479			262,564

Depreciation		(170,592	)		(151,428	)		(128,221	)
Interest expense before amortization		(100,244	)		(91,694	)		(82,756	)
Amortization expense		(11,644	)		(11,474	)		(4,828	)
Management and other fees from affiliates		11,489			6,780			4,551
General and administrative		(23,307	)		(20,694	)		(23,255	)
Cost of management and other fees		(6,513	)		(4,610	)		(2,707	)
Impairment and other charges		-			-			(2,302	)
Interest and other income		13,833			17,139			27,841
Loss on early retirement of debt		(5,009	)		(1,163	)		(10	)
Equity income (loss) income from co-investments		41,745			(467	)		(1,715	)
Gain on remeasurement of co-investment		21,947			-			-

Income before discontinued operations	$	129,553		$	48,868		$	49,162

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

Total assets for each of the reportable operating segments are summarized as follow as of December 31, 2012 and 2011 ($ in thousands):

	As of December 31,
Assets:	2012		2011
Southern California	$	1,675,265	$	1,478,018
Northern California		1,489,095		1,241,320
Seattle Metro		699,465		579,612
Other real estate assets		88,330		94,088
Net reportable operating segments - real estate assets		3,952,155		3,393,038
Real estate under development		66,851		44,280
Co-investments		571,345		383,412
Cash and cash equivalents, including restricted cash		42,126		35,463
Marketable securities		92,713		74,275
Notes and other receivables		66,163		66,369
Other non-segment assets		55,870		40,127
Total assets	$	4,847,223	$	4,036,964

(15) 401(k) Plan

The Operating Partnership has a 401(k) benefit plan (the “Plan”) for all full-time employees who have completed six months of service. Employee contributions are limited by the maximum allowed under Section 401(k) of the Internal Revenue Code. The Operating Partnership matches the employee contributions for non-highly compensated personnel, up to 50% of their contribution up to a specified maximum. Operating Partnership contributions to the Plan were approximately $0.2 million, $0.3 million, and $0.3 million for the years ended December 31, 2012, 2011, and 2010, respectively.

(16) Commitments and Contingencies

As of December 31, 2012, the Operating Partnership had six non-cancelable land leases for certain apartment communities and buildings that expire between 2027 and 2080. Land lease payments are typically the greater of a stated minimum or a percentage of gross rents generated by these apartment communities. Total minimum lease commitments, under land leases and operating leases, are approximately $1.7 million per year for the next five years.

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 financial statements, the Operating Partnership will disclose the estimated range of possible outcomes, and, if an outcome is probable, accrue an appropriate liability for remediation and other potential liability. The Operating Partnership will consider whether such occurrence results in an impairment of value on the affected property and, if so, impairment will be recognized.

Except with respect to three communities, the Operating Partnership has no indemnification agreements from third parties for potential environmental clean-up costs at its communities. The Operating Partnership has no way of determining at this time the magnitude of any potential liability to which it may be subject arising out of unknown environmental conditions or violations with respect to the communities formerly owned by the Operating Partnership. No assurance can be given that existing environmental studies with respect to any of the communities reveal all environmental liabilities, that any prior owner or operator of a Property did not create any material environmental condition not known to the Operating Partnership, or that a material environmental condition does not otherwise exist as to any one or more of the communities. The Operating Partnership has limited insurance coverage for the types of environmental liabilities described above.

The Operating Partnership has entered into transactions that may require the Operating Partnership to pay the tax liabilities of the partners in the Operating Partnership or in the DownREIT entities. These transactions are within the Operating Partnership’s control. Although the Operating Partnership plans to hold the contributed assets or defer recognition of gain on their sale pursuant to like-kind exchange rules under Section 1031 of the Internal Revenue Code the Operating Partnership can provide no assurance that it will be able to do so and if such tax liabilities were incurred they may to have a material impact on the Operating Partnership’s financial position.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

There have been an increasing number of lawsuits against owners and managers of apartment communities alleging personal injury and property damage caused by the presence of mold in residential real estate. Some of these lawsuits have resulted in substantial monetary judgments or settlements. The Operating Partnership has been sued for mold related matters and has settled some, but not all, of such matters. Insurance carriers have reacted to mold related liability awards by excluding mold related claims from standard policies and pricing mold endorsements at prohibitively high rates. The Operating Partnership has, however, purchased pollution liability insurance, which includes some coverage for mold. The Operating Partnership has adopted policies to promptly address and resolve reports of mold when it is detected, and to minimize any impact mold might have on residents of the property. The Operating Partnership believes its mold policies and proactive response to address any known existence, reduces its risk of loss from these cases. There can be no assurances that the Operating Partnership has identified and responded to all mold occurrences, but the Operating Partnership promptly addresses all known reports of mold. Liabilities resulting from such mold related matters are not expected to have a material adverse effect on the Operating Partnership’s financial condition, results of operations or cash flows. As of December 31, 2012, potential liabilities for mold and other environmental liabilities are not quantifiable and an estimate of possible loss cannot be made.

The Operating Partnership carries comprehensive liability, fire, extended coverage and rental loss insurance for each of the communities. Under comprehensive liability claims, the Operating Partnership has insurance to cover claims in excess of $100,000 per incident. Under property casualty claims, the Operating Partnership reinsures the primary carrier for losses up to $5.0 million deductible per incident. There are, however, certain types of extraordinary losses, such as, for example, losses from terrorism and earthquake, for which the Operating Partnership does not have insurance. Substantially all of the communities are located in areas that are subject to earthquakes.

The Operating Partnership provided a loan and construction completion guarantee to the lender in order to fulfill the lender’s standard financing requirements related to the construction of the Expo community. The outstanding balance for the construction loan is included in the debt line item in the balance sheet of the co-investments included in Note 3. The construction completion guarantee is for the life of the loan, which is scheduled to mature on July 1, 2014, with two, one-year extension options at the Expo joint venture’s option. As of December 31, 2012, the Operating Partnership was in compliance with all terms of the construction loan and the construction of the community is expected to be completed on time and within budget. The maximum exposure of the guarantee as of December 31, 2012 was $70.0 million based on the construction costs that were budgeted to be incurred to complete the construction.

The Operating Partnership provided a payment guarantee to the counterparties in relation to the total return swaps entered into by the joint venture responsible for the development of The Huxley (formerly Fountain at La Brea) and The Dylan (formerly Santa Monica at La Brea) communities. Further the Operating Partnership has guaranteed completion of development and made certain debt service guarantees for The Huxley and The Dylan. The outstanding balance for the loans is included in the debt line item in the balance sheet of the co-investments included in Note 3. The payment guarantee is for the payment of the amounts due to the counterparty related total return swaps which are scheduled to mature in September and December 2016. The maximum exposure of the guarantee as of December 31, 2012 was $55.7 million based on the aggregate outstanding debt amount.

The Operating Partnership is subject to various other lawsuits in the normal course of its business operations. Such lawsuits are not expected to have a material adverse effect on the Operating Partnership’s financial condition, results of operations or cash flows.

(17) Subsequent Events

In January 2013, the Operating Partnership sold the land parcel held for future development located in Palo Alto, California for $9.1 million, resulting in a gain of $1.5 million.

In January 2013, the Operating Partnership acquired Annaliese, a 56 unit community located in Seattle, Washington for $19.0 million. The property was built in 2009 and located in the South Lake Union submarket.

In January 2013, the Operating Partnership sold $20.3 million of a common stock investment for a gain of $1.8 million.

In February 2013, the Operating Partnership acquired Fox Plaza, a 444 unit property located in San Francisco, California for $135.0 million. The 29 story high rise tower was built in 1968, and the Fox Plaza apartments are located on floors 14 through 29. The purchase did not include the 12 floors of commercial office space but did include an adjacent two story building comprised of 37,800 square feet of space leased to retail and office tenants and a two story underground parking garage comprised of 405 stalls.

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2012, 2011, and 2010

(18) Quarterly Results of Operations (Unaudited)

The following is a summary of quarterly results of operations for 2012 and 2011 ($ in thousands, except per unit and distribution amounts):

	Quarter ended		Quarter ended		Quarter ended		Quarter ended
	December 31		September 30		June 30		March 31
2012:
Total property revenues	$	141,628	$	135,070	$	129,764	$	125,474

Income before discontinued operations	$	49,640	$	20,221	$	42,490	$	17,202

Net income	$	49,640	$	20,221	$	42,490	$	27,239
Net income available to common units	$	46,581	$	17,296	$	39,580	$	24,314
Per unit data:
Net income:
Basic	$	1.22	$	0.46	$	1.08	$	0.67

Diluted	$	1.22	$	0.45	$	1.08	$	0.67
Distributions declared	$	1.10	$	1.10	$	1.10	$	1.10

2011:
Total property revenues	$	122,373	$	117,226	$	114,906	$	111,208

Income before discontinued operations	$	14,493	$	11,767	$	10,502	$	12,106

Net income	$	17,868	$	11,085	$	16,052	$	12,511
Net income available to common units	$	14,963	$	8,269	$	11,311	$	9,050
Per share data:
Net income:
Basic	$	0.43	$	0.23	$	0.34	$	0.27

Diluted	$	0.43	$	0.23	$	0.34	$	0.26

Distributions declared	$	1.04	$	1.04	$	1.04	$	1.04

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Financial Statement Schedule III

Real Estate and Accumulated Depreciation

December 31, 2012

(Dollars in thousands)

										Costs
						Initial cost				capitalized		Gross amount carried at close of period
								Buildings and		subsequent to		Land and		Buildings and				Accumulated			Date of		Date		Lives
Property	Units		Location	Encumbrance		Land		improvements		acquisition		improvements		improvements		Total(1)		depreciation			construction		acquired		(years)
Encumbered communities

Anchor Village(The Elliot at Mukilteo)		301	Mukilteo, WA		10,750		2,498		10,595		11,861		2,824		22,130		24,954		(9,585	)		1981		01/97		3-30
Avondale at Warner Center		446	Woodland Hills, CA		46,761		10,536		24,522		14,571		10,601		39,028		49,629		(19,625	)		1970		01/97		3-30
Bridgeport		184	Newark, CA		21,724		1,608		7,582		6,107		1,525		13,772		15,297		(9,783	)		1987		07/87		3-30
Barkley, The(2)		161	Anaheim, CA		16,784		-		8,520		4,533		2,353		10,700		13,053		(4,485	)		1984		04/00		3-30
Bel Air		462	San Ramon, CA		55,835		12,105		18,252		22,959		12,682		40,634		53,316		(18,970	)		1988		01/97		3-30
Belmont Station		275	Los Angeles, CA		30,045		8,100		66,666		2,765		8,267		69,264		77,531		(13,106	)		2008		12/08		3-30
Bella Villagio		231	San Jose, CA		38,088		17,247		40,343		1,515		17,247		41,858		59,105		(3,304	)		2004		09/10		3-30
Brentwood		140	Santa Ana, CA		19,283		2,833		11,303		5,482		3,502		16,116		19,618		(5,786	)		1970		11/01		3-30
Brighton Ridge		264	Renton, WA		14,644		2,623		10,800		2,779		2,656		13,546		16,202		(7,375	)		1986		12/96		3-30
Brookside Oaks		170	Sunnyvale, CA		19,974		7,301		16,310		19,923		10,328		33,206		43,534		(11,170	)		1973		06/00		3-30
Camarillo Oaks		564	Camarillo, CA		47,350		10,953		25,254		2,634		11,075		27,766		38,841		(15,403	)		1985		07/96		3-30
Camino Ruiz Square		160	Camarillo, CA		21,110		6,871		26,119		831		6,931		26,890		33,821		(5,525	)		1990		12/06		3-30
Canyon Oaks		250	San Ramon, CA		28,989		19,088		44,473		1,338		19,088		45,811		64,899		(8,857	)		2005		05/07		3-30
Canyon Pointe		250	Bothell, WA		14,391		4,692		18,288		3,507		4,693		21,794		26,487		(7,095	)		1990		10/03		3-30
Carlyle, The		132	San Jose, CA		18,613		3,954		15,277		9,847		5,801		23,277		29,078		(9,265	)		2000		04/00		3-30
City View		572	Hayward, CA		63,159		9,883		37,670		20,699		10,350		57,902		68,252		(29,059	)		1975		03/98		3-30
Coldwater Canyon		39	Studio City, CA		5,538		1,674		6,640		1,178		1,676		7,816		9,492		(1,972	)		1979		05/07		3-30
Courtyard off Main		109	Bellevue, WA		16,261		7,465		21,405		2,627		7,465		24,032		31,497		(1,806	)		2000		10/10		3-30
Domaine		92	Seattle, WA		16,866		9,059		27,177		167		9,059		27,344		36,403		(266	)		2009		09/12		3-30
Elevation		157	Redmond, WA		11,839		4,758		14,285		4,666		4,757		18,951		23,708		(2,019	)		1986		06/10		3-30
Esplanade		278	San Jose, CA		44,928		18,170		40,086		5,765		18,429		45,592		64,021		(13,226	)		2002		11/04		3-30
Fairhaven(Treehouse)		164	Santa Ana, CA		17,269		2,626		10,485		4,806		2,957		14,960		17,917		(5,128	)		1970		11/01		3-30
Fairwood Pond		194	Renton, WA		13,307		5,296		15,564		2,054		5,297		17,617		22,914		(5,257	)		1997		10/04		3-30
Fountain Park		705	Playa Vista, CA		97,450		25,073		94,980		21,849		25,203		116,699		141,902		(36,486	)		2002		02/04		3-30
Harvest Park		104	Santa Rosa, CA		10,691		6,700		15,479		888		6,690		16,377		23,067		(3,401	)		2004		03/07		3-30
Hampton Place /Hampton Court		215	Glendale, CA		21,296		6,695		16,753		5,266		6,733		21,981		28,714		(9,914	)		1970		06/99		3-30
Hidden Valley		324	Simi Valley, CA		30,603		14,174		34,065		1,404		9,725		39,918		49,643		(11,368	)		2004		12/04		3-30
Highridge		255	Rancho Palos Verdes, CA		44,807		5,419		18,347		23,194		6,073		40,887		46,960		(17,025	)		1972		05/97		3-30
Highlands at Wynhaven		333	Issaquah, WA		33,343		16,271		48,932		4,331		16,271		53,263		69,534		(8,371	)		2000		08/08		3-30
Hillcrest Park		608	Newbury Park, CA		69,555		15,318		40,601		14,623		15,755		54,787		70,542		(25,168	)		1973		03/98		3-30
Hillsborough Park		235	La Habra, CA		37,909		6,291		15,455		1,414		6,272		16,888		23,160		(7,487	)		1999		09/99		3-30
Huntington, The		276	Huntington Beach, CA		34,121		10,374		41,495		646		10,374		42,141		52,515		(757	)		1975		06/12		3-30
Huntington Breakers		342	Huntington Beach, CA		38,734		9,306		22,720		5,399		9,315		28,110		37,425		(13,781	)		1984		10/97		3-30
Inglenook Court		224	Bothell, WA		8,300		3,467		7,881		5,494		3,474		13,368		16,842		(8,091	)		1985		10/94		3-30
Magnolia Square		156	Sunnyvale, CA		18,314		8,190		24,736		5,097		8,191		29,832		38,023		(5,069	)		1969		09/07		3-30
Marbrisa		202	Long Beach, CA		18,959		4,700		18,605		3,082		4,760		21,627		26,387		(7,385	)		1987		09/02		3-30
Mirabella		188	Marina Del Rey, CA		46,338		6,180		26,673		12,934		6,270		39,517		45,787		(14,326	)		2000		05/00		3-30
Mill Creek at Windermere		400	San Ramon, CA		50,027		29,551		69,032		1,594		29,551		70,626		100,177		(12,721	)		2005		09/07		3-30
Montclaire, The		390	Sunnyvale, CA		47,283		4,842		19,776		19,907		4,997		39,528		44,525		(27,380	)		1973		12/88		3-30
Montebello		248	Kirkland, WA		30,158		13,857		41,575		3,810		13,858		45,384		59,242		(684	)		1996		07/12		3-30
Montejo		124	Garden Grove, CA		13,307		1,925		7,685		2,264		2,194		9,680		11,874		(3,760	)		1974		11/01		3-30
Park Hill at Issaquah		245	Issaquah, CA		29,477		7,284		21,937		1,905		7,284		23,842		31,126		(6,882	)		1999		02/99		3-30
Palisades, The		192	Bellevue, WA		21,277		1,560		6,242		10,331		1,565		16,568		18,133		(10,156	)		1977		05/90		3-30
Pathways		296	Long Beach, CA		38,219		4,083		16,757		18,076		6,239		32,677		38,916		(20,789	)		1975		02/91		3-30
Stevenson Place		200	Fremont, CA		22,034		996		5,582		6,974		1,001		12,551		13,552		(8,698	)		1971		04/83		3-30

(Continued)

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ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Financial Statement Schedule III

Real Estate and Accumulated Depreciation

December 31, 2012

(Dollars in thousands)

										Costs
						Initial cost				capitalized		Gross amount carried at close of period
								Buildings and		subsequent to		Land and		Buildings and				Accumulated			Date of		Date		Lives
Property	Units		Location	Encumbrance		Land		improvements		acquisition		improvements		improvements		Total(1)		depreciation			construction		acquired		(years)
Encumbered communities (continued)
Stonehedge Village		196	Bothell, WA		12,657		3,167		12,603		4,531		3,201		17,100		20,301		(8,471	)		1986		10/97		3-30
Summerhill Park		100	Sunnyvale, CA		13,769		2,654		4,918		1,069		2,656		5,985		8,641		(4,530	)		1988		09/88		3-30
The Bernard		63	Seattle, CA		10,064		3,699		11,345		43		3,689		11,398		15,087		(490	)		2008		09/11		3-30
Tierra Vista		404	Oxnard, CA		57,444		13,652		53,336		3,030		13,661		56,357		70,018		(16,376	)		2001		01/01		3-30
Valley Park		160	Fountain Valley, CA		22,592		3,361		13,420		3,210		3,761		16,230		19,991		(6,161	)		1969		11/01		3-30
Villa Angelina		256	Placentia, CA		27,542		4,498		17,962		4,726		4,962		22,224		27,186		(7,778	)		1970		11/01		3-30
Vista Belvedere		76	Tiburon, CA		10,272		5,573		11,901		4,180		5,573		16,081		21,654		(5,201	)		1963		08/04		3-30
Wandering Creek		156	Kent, WA		5,300		1,285		4,980		3,366		1,296		8,335		9,631		(4,945	)		1986		11/95		3-30
Waterford, The		238	San Jose, CA		31,975		11,808		24,500		12,418		15,165		33,561		48,726		(13,735	)		2000		06/00		3-30
Wilshire Promenade		149	Fullerton, CA		18,276		3,118		7,385		6,683		3,797		13,389		17,186		(6,013	)		1992		01/97		3-30
					1,565,599		424,411		1,295,274		366,352		439,119		1,646,917		2,086,036		(541,466	)
Unencumbered communities
Allegro		97	Valley Village, CA				5,869		23,977		949		5,869		24,926		30,795		(2,624	)		2010		10/10		3-30
Alpine Village		301	Alpine, CA				4,967		19,728		3,690		4,982		23,403		28,385		(8,158	)		1971		12/02		3-30
Anavia		250	Anaheim, CA				15,925		63,712		5,469		15,925		69,181		85,106		(4,704	)		2009		12/10		3-30
Ascent		90	Kirkland, CA				3,924		11,862		271		3,924		12,133		16,057		(86	)		1988		10/12		3-30
Axis 2300		115	Irvine, CA				5,405		33,585		518		5,405		34,103		39,508		(3,659	)		2010		08/10		3-30
Bellerive		63	Los Angeles, CA				5,401		21,803		517		5,401		22,320		27,721		(1,347	)		2011		08/11		3-30
Belmont Terrace		71	Belmont, CA				4,446		10,290		2,250		4,473		12,513		16,986		(3,635	)		1974		10/06		3-30
Bennett Lofts		113	San Francisco, CA				21,771		50,800		80		21,771		50,880		72,651		(212	)		2004		12/12		3-30
Bonita Cedars		120	Bonita, CA				2,496		9,913		1,584		2,503		11,490		13,993		(4,124	)		1983		12/02		3-30
Boulevard		172	Fremont, CA				3,520		8,182		10,469		3,580		18,591		22,171		(9,989	)		1978		01/96		3-30
Bridle Trails		108	Kirkland, WA				1,500		5,930		5,304		1,531		11,203		12,734		(5,243	)		1986		10/97		3-30
Bristol Commons		188	Sunnyvale, CA				5,278		11,853		2,033		5,293		13,871		19,164		(7,384	)		1989		01/97		3-30
416 on Broadway		115	Glendale, CA				8,557		34,235		756		8,557		34,991		43,548		(2,448	)		2009		12/10		3-30
Bunker Hill		456	Los Angeles, CA				11,498		27,871		7,472		11,639		35,202		46,841		(15,732	)		1968		03/98		3-30
Cairns, The		100	Seattle, WA				6,937		20,679		364		6,939		21,041		27,980		(3,941	)		2006		06/07		3-30
Cambridge		40	Chula Vista, CA				497		1,973		324		498		2,296		2,794		(831	)		1965		12/02		3-30
Capri at Sunny Hills		100	Fullerton, CA				3,337		13,320		6,230		4,048		18,839		22,887		(6,863	)		1961		09/01		3-30
Castle Creek		216	Newcastle, WA				4,149		16,028		2,097		4,833		17,441		22,274		(9,292	)		1997		12/97		3-30
CBC Apartments		148	Goleta, CA				6,283		24,000		2,418		6,288		26,413		32,701		(6,800	)		1962		01/06		3-30
CentrePointe (The Bluffs II)		224	San Diego, CA				3,405		7,743		14,218		3,442		21,924		25,366		(5,977	)		1974		06/97		3-30
Cedar Terrace		180	Bellevue, WA				5,543		16,442		3,572		5,652		19,905		25,557		(6,150	)		1984		01/05		3-30
Chestnut Street		96	Santa Cruz, CA				6,582		15,689		955		6,582		16,644		23,226		(2,602	)		2002		07/08		3-30
Commons, The		264	Campbell, CA				12,555		29,307		3,566		12,556		32,872		45,428		(3,067	)		1973		07/10		3-30
Corbella at Juanita Bay		169	Kirkland, WA				5,801		17,415		852		5,801		18,267		24,068		(1,373	)		1978		11/10		3-30
Country Villas		180	Oceanside, CA				4,174		16,583		2,443		4,187		19,013		23,200		(6,884	)		1976		12/02		3-30
Delano/Bon Terra		126	Redmond, WA				7,470		22,511		561		7,470		23,072		30,542		(773	)		2005/2011		12/11		3-30
Devonshire		276	Hemet, CA				3,470		13,786		2,282		3,482		16,056		19,538		(5,780	)		1988		12/02		3-30
Emerald Ridge - North		180	Bellevue, WA				3,449		7,801		2,828		3,449		10,629		14,078		(6,697	)		1987		11/94		3-30
Essex Skyline at MacAuthur Place		349	Santa Ana, CA				21,537		146,099		463		21,537		146,562		168,099		(3,536	)		2008		04/12		3-30
Evergreen Heights		200	Kirkland, WA				3,566		13,395		3,346		3,649		16,658		20,307		(8,384	)		1990		06/97		3-30
Fairways(3)		74	Newport Beach, CA				-		7,850		4,218		9		12,059		12,068		(4,634	)		1972		06/99		3-30
Foothill Commons		388	Bellevue, WA				2,435		9,821		30,872		2,440		40,688		43,128		(18,651	)		1978		03/90		3-30
Foothill Gardens/Twin Creeks		176	San Ramon, CA				5,875		13,992		4,360		5,964		18,263		24,227		(9,093	)		1985		02/97		3-30
Forest View		192	Renton, WA				3,731		14,530		1,212		3,731		15,742		19,473		(5,132	)		1998		10/03		3-30

(Continued)

F-38

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Financial Statement Schedule III

Real Estate and Accumulated Depreciation

December 31, 2012

(Dollars in thousands)

										Costs
						Initial cost				capitalized		Gross amount carried at close of period
								Buildings and		subsequent to		Land and		Buildings and				Accumulated			Date of		Date		Lives
Property	Units		Location	Encumbrance		Land		improvements		acquisition		improvements		improvements		Total(1)		depreciation			construction		acquired		(years)
Unencumbered communities (continued)
Fountain Court		320	Seattle, WA				6,702		27,306		4,214		6,985		31,237		38,222		(13,626	)		2000		03/00		3-30
Fourth & U		171	Berkeley, CA				8,879		52,351		1,821		8,879		54,172		63,051		(5,429	)		2010		04/10		3-30
Hillsdale Garden Apartments		697	San Mateo, CA				22,000		94,681		17,407		22,244		111,844		134,088		(23,317	)		1948		09/06		3-30
Hope Ranch Collection		108	Santa Barbara, CA				4,078		16,877		2,291		4,208		19,038		23,246		(3,366	)		1965		03/07		3-30
Joule		295	Seattle, WA				14,558		69,417		2,473		14,558		71,890		86,448		(7,421	)		2010		03/10		3-30
1000 Kiely		121	Santa Clara, CA				9,359		21,845		3,675		9,359		25,520		34,879		(1,590	)		1971		03/11		3-30
Kings Road		196	Los Angeles, CA				4,023		9,527		7,646		4,031		17,165		21,196		(7,801	)		1979		06/97		3-30
Le Parc Luxury Apartments		140	Santa Clara, CA				3,090		7,421		10,766		3,092		18,185		21,277		(9,041	)		1975		02/94		3-30
Linden Square		183	Seattle, WA				4,374		11,588		1,886		4,202		13,646		17,848		(5,673	)		1994		06/00		3-30
Lofts at Pinehurst, The		118	Ventura, CA				1,570		3,912		4,197		1,618		8,061		9,679		(3,461	)		1971		06/97		3-30
Magnolia Lane(4)		32	Sunnyvale, CA				-		5,430		210		-		5,640		5,640		(1,080	)		2001		06/07		3-30
Marina City Club(5)		101	Marina Del Rey, CA				-		28,167		6,696		-		34,863		34,863		(10,453	)		1971		01/04		3-30
Marina Cove(6)		292	Santa Clara, CA				5,320		16,431		8,311		5,324		24,738		30,062		(13,558	)		1974		06/94		3-30
Mariners Place		105	Oxnard, CA				1,555		6,103		1,748		1,562		7,844		9,406		(3,476	)		1987		05/00		3-30
Meadowood		320	Simi Valley, CA				7,852		18,592		5,498		7,898		24,044		31,942		(12,206	)		1986		11/96		3-30
Mesa Village		133	Clairemont, CA				1,888		7,498		1,001		1,894		8,493		10,387		(2,890	)		1963		12/02		3-30
Mira Monte		355	Mira Mesa, CA				7,165		28,459		7,652		7,186		36,090		43,276		(14,088	)		1982		12/02		3-30
Miracle Mile/Marbella		236	Los Angeles, CA				7,791		23,075		10,885		7,886		33,865		41,751		(15,215	)		1988		08/97		3-30
Mission Hills		282	Oceanside, CA				10,099		38,778		3,677		10,167		42,387		52,554		(11,755	)		1984		07/05		3-30
Monterra del Mar/Rey/Sol		292	Pasadena, CA				2,202		4,794		28,101		8,385		26,712		35,097		(12,072	)		1972		04/99		3-30
Monterey Villas		122	Oxnard, CA				2,349		5,579		5,217		2,424		10,721		13,145		(4,670	)		1974		07/97		3-30
Mt. Sutro		99	San Francisco, CA				2,334		8,507		2,988		2,809		11,020		13,829		(4,924	)		1973		06/01		3-30
Muse		152	Hollywood, CA				7,822		33,436		1,136		7,823		34,571		42,394		(3,117	)		2011		02/11		3-30
Park Catalina		90	Los Angeles, CA				4,710		18,839		293		4,710		19,132		23,842		(346	)		2002		06/12		3-30
Park West		126	San Francisco, CA				9,424		21,988		659		9,424		22,647		32,071		(215	)		1958		09/12		3-30
Pinehurst(7)		28	Ventura, CA				355		1,356		377		6		2,082		2,088		(733	)		1973		12/04		3-30
Pointe at Cupertino, The		116	Cupertino, CA				4,505		17,605		8,388		4,505		25,993		30,498		(6,545	)		1963		08/98		3-30
Reed Square		100	Sunnyvale, CA				6,873		16,037		1,897		6,873		17,934		24,807		(550	)		1970		01/12		3-30
Regency at Encino		75	Encino, CA				3,184		12,737		1,348		3,184		14,084		17,268		(1,730	)		1989		12/09		3-30
Salmon Run at Perry Creek		132	Bothell, WA				3,717		11,483		1,119		3,801		12,518		16,319		(5,024	)		2000		10/00		3-30
101 San Fernando		323	San Jose, CA				4,173		58,961		3,678		4,173		62,639		66,812		(5,392	)		2001		07/10		3-30
Sammamish View		153	Bellevue, WA				3,324		7,501		5,677		3,331		13,171		16,502		(8,094	)		1986		11/94		3-30
San Marcos		432	Richmond, CA				15,563		36,204		26,282		22,866		55,183		78,049		(17,358	)		2003		11/03		3-30
Santee Court		165	Los Angeles, CA				6,177		24,716		956		6,177		25,672		31,849		(1,992	)		2004		10/10		3-30
Santee Village		73	Los Angeles, CA				3,404		15,601		1,391		3,404		16,992		20,396		(997	)		2011		07/11		3-30
Shadow Point		172	Spring Valley, CA				2,812		11,170		1,747		2,820		12,909		15,729		(4,606	)		1983		12/02		3-30
Summit Park		300	San Diego, CA				5,959		23,670		3,273		5,977		26,925		32,902		(9,704	)		1972		12/02		3-30
The Laurels at Mill Creek		164	Mill Creek, WA				1,559		6,430		4,945		1,595		11,339		12,934		(5,607	)		1981		12/96		3-30
The Grand		243	Oakland, CA				4,531		89,208		3,969		4,531		93,177		97,708		(13,803	)		2009		01/09		3-30
The Sweep Apartments		91	Goleta, CA				5,558		21,320		1,866		5,618		23,126		28,744		(6,481	)		1967		01/06		3-30
Trabucco Villas		132	Lake Forest, CA				3,638		8,640		2,035		3,890		10,423		14,313		(4,949	)		1985		10/97		3-30
Tuscana		30	Tracy, CA				2,828		6,599		154		2,870		6,711		9,581		(1,260	)		2007		02/07		3-30
Via		284	Sunnyvale, CA				22,000		82,270		169		22,016		82,423		104,439		(4,617	)		2011		07/11		3-30
Vista Capri - North		106	San Diego, CA				1,663		6,609		830		1,668		7,434		9,102		(2,526	)		1975		12/02		3-30
Walnut Heights		163	Walnut, CA				4,858		19,168		2,212		4,887		21,351		26,238		(6,775	)		1964		10/03		3-30
Wharfside Pointe		142	Seattle, WA				2,245		7,020		6,010		2,258		13,017		15,275		(6,954	)		1990		06/94		3-30
Willow Lake		508	San Jose, CA				43,194		101,030		857		43,194		101,887		145,081		(707	)		1989		10/12		3-30
Windsor Ridge		216	Sunnyvale, CA				4,017		10,315		6,281		4,021		16,592		20,613		(11,252	)		1989		03/89		3-30
Woodland Commons		236	Bellevue, WA				2,040		8,727		16,655		2,044		25,378		27,422		(10,043	)		1978		03/90		3-30
Woodside Village		145	Ventura, CA				5,331		21,036		2,828		5,341		23,854		29,195		(6,678	)		1987		12/04		3-30
		29,207			1,565,599		948,416		3,263,992		740,286		980,247		3,972,447		4,952,694		(1,062,438	)

(Continued)

F-39

Table of Contents

ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

Financial Statement Schedule III

Real Estate and Accumulated Depreciation

December 31, 2012

(Dollars in thousands)

										Costs
	Rentable					Initial cost				capitalized		Gross amount carried at close of period
	Square							Buildings and		subsequent to		Land and		Buildings and				Accumulated			Date of		Date		Lives
Property	Footage		Location	Encumbrance		Land		improvements		acquisition		improvements		improvements		Total(1)		depreciation			construction		acquired		(years)
Other real estate assets
Office Buildings
Essex Hollywood		35,000	Los Angeles, CA				10,200		13,800		2,177		10,200		15,977		26,177		(4,243	)		1938		07/06		3-30
Santa Clara Square retail		139,000	Santa Clara, CA				6,472		11,704		2,636		6,472		14,340		20,812		(1,711	)		1970		09/11		3-30
925/935 East Meadow		31,900	Palo Alto, CA				1,401		3,172		7,985		3,147		9,411		12,558		(3,866	)		1988		11/97		3-30
17461 Derian		110,000	Irvine, CA				3,079		12,315		6,037		3,105		18,326		21,431		(9,259	)		1983		07/00		3-30
Consolidated Development Pipeline							31,957		-		34,894		66,851		-		66,851		-

Total apartment communities and other real estate assets					$1,565,599	$	1,001,525	$	3,304,983	$	794,015	$	1,070,022	$	4,030,501	$	5,100,523	$	(1,081,517	)

(1)	The aggregate cost for federal income tax purposes is approximately $4.0 billion (unaudited).

(2)	The land is leased pursuant to a ground lease expiring 2082.

(3)	The land is leased pursuant to a ground lease expiring 2027.

(4)	The land is leased pursuant to a ground lease expiring 2070.

(5)	The land is leased pursuant to a ground lease expiring 2067.

(6)	A portion of land is leased pursuant to a ground lease expiring in 2028.

(7)	The land is leased pursuant to a ground lease expiring in 2028.

A summary of activity for rental properties and accumulated depreciation is as follows:

	2012			2011			2010			2012			2011			2010
Rental properties:									Accumulated depreciation:
Balance at beginning of year	$	4,313,064		$	3,964,561		$	3,310,152	Balance at beginning of year	$	920,026		$	775,553		$	646,686
Improvements		97,947			219,692			51,101	Depreciation expense - Acquisitions		3,744			1,279			2,505
Acquisition of real estate		619,743			103,300			387,300	Depreciation expense - Discontinued operations		2,108			315			700
Development of real estate		25,545			44,280			216,008	Depreciation expense - Rental properties		161,492			148,337			125,662
Disposition of real estate		(22,627	)		(18,769	)		-	Dispositions		(5,853	)		(5,458	)		-
Balance at the end of year	$	5,033,672		$	4,313,064		$	3,964,561	Balance at the end of year	$	1,081,517		$	920,026		$	775,553

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Table of Contents

Report of Independent Auditors

The Board of Directors and Shareholders

Essex Property Trust, Inc.

We have audited the accompanying statements of revenue and certain expenses (the Statements) of PPC Montebello, LLC, a Delaware limited liability company (Montebello Apartments) for the period April 5, 2010 (inception) through December 31, 2010, and for the year ended December 31, 2011. These Statements are the responsibility of the management of Essex Property Trust, Inc. Our responsibility is to express an opinion on these statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statements are free of material misstatement. We were not engaged to perform an audit of Montebello Apartments’ internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Montebello Apartments’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the over Statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The accompanying Statements of Montebello Apartments were prepared for the purpose of complying with the rules and regulations of the U.S. Securities and Exchange Commission, as described in Note 1, and are not intended to be a complete presentation of Montebello Apartments’ revenue and expenses.

In our opinion, the statements of revenue and certain expenses referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 of Montebello Apartments for the period April 5, 2010 (inception) through December 31, 2010 and the year ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP

San Francisco, California
March 11, 2013

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Table of Contents

Montebello Apartments

Statements of Revenue and Certain Expenses

(Dollars in thousands)

	Six Months
	Ended				April 5, 2010
	June 30, 2012		Year Ended		(inception) to
	(Unaudited)		December 31, 2011		December 31, 2010
Revenue:

Rental	$	1,948	$	3,716	$	2,626
Other property		154		297		182
Total revenue		2,102		4,013		2,808

Certain expenses:

Property operating excluding real estate taxes		533		1,074		756
Real estate taxes		188		374		298
Interest expense		757		1,511		1,122
Total certain expenses		1,478		2,959		2,176

Revenue in excess of certain expenses	$	624	$	1,054	$	632

See accompanying notes to statements of revenues and certain expenses.

F-42

Table of Contents

Montebello Apartments

Notes to Statements of Revenue and Certain Expenses

Six months Ended June 30, 2012 (unaudited), for the Period April 5, 2010 (inception) through December 31, 2010 and the Year Ended December 31, 2011

Basis of Presentation

The accompanying statements of revenue and certain expenses of the PPC Montebello LLC, a Delaware limited liability company (“Montebello Apartments”) are comprised of operations of a 248 unit community located in Kirkland, Washington. Montebello Apartments is a garden style property situated in 19 buildings spread out over 19 acres in a residential neighborhood of Kirkland.

Montebello Apartments was acquired by PPC Montebello LLC (“PPC”), a Delaware limited liability company on April 5, 2010. In July 2012, a wholly owned subsidiary of Essex Property Trust, Inc. (“Essex”) acquired Montebello Apartments for $52.0 million plus closing costs. Essex assumed a $26.5 million mortgage loan secured by the property at a fixed rate of 5.6% for eight years. The accompanying statements of revenue and certain expenses include the accounts of Montebello Apartments except as listed below.

Essex’s Chairman and founder, Mr. George Marcus, is the Chairman of The Marcus & Millichap Company, which is a holding company for certain real estate brokerage services and other subsidiary companies including Pacific Urban Residential (“PUR”). PPC is an affiliate of PUR and, accordingly, the sale between PPC and Essex has been recognized as a related party transaction.

The accompanying statements of revenue and certain expenses have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the U.S. Securities and Exchange Commission (“Rule 3-14”) and are not intended to be a complete presentation of the revenue and expenses of Montebello Apartments for the period of April 5, 2010 (inception) through December 31, 2010 and the year ended December 31, 2011. The statements of revenue and certain expenses exclude the following expenses, which are not reflective of the proposed future operations of Montebello Apartments:

•	Depreciation and amortization

•	Income taxes

•	Management fees

Management is not aware of any material factors relating to Montebello Apartments other than those already described above that would cause the reported financial information not to be necessarily indicative of future operating results.

Summary of Significant Accounting Policies and Practices

Revenue Recognition

Revenue from tenants renting or leasing apartment units are recorded on a straight-line basis over the term of the leases.

Property Operating Expense

Property operating expenses represent the direct expenses of operating the underlying property and include maintenance, utilities, repairs, and insurance costs that are expected to continue in the ongoing operations of the property. Expenditures for maintenance and repairs are charged to operations as incurred.

Use of Estimates

Management has made a number of estimates and assumptions relating to the reporting and disclosure of revenue and certain expenses during the reporting periods to prepare the statements of revenue and certain expenses in conformity with U.S. generally accepted accounting principles. Actual results could differ from those estimates.

Interest Expense

Montebello Apartments has a mortgage note payable which bears interest at a rate of 5.6% per annum which is expected to continue in the ongoing operations of the property.

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Table of Contents

Montebello Apartments

Notes to Statements of Revenue and Certain Expenses

Six months Ended June 30, 2012 (unaudited), for the Period April 5, 2010 (inception) through December 31, 2010 and the Year Ended December 31, 2011

Unaudited Interim Statements

The statement of revenue and certain expenses and associated footnote disclosures for the six months ended June 30, 2012 are unaudited. In the opinion of management, the statement and disclosures reflect all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year of the operations of Montebello Apartments.

Subsequent Events

Essex has evaluated subsequent events related to Montebello Apartments for recognition or disclosure through March 11, 2013, which is the date the statements of revenue and certain expenses was available to be issued and determined that there are no other items to disclose.

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Table of Contents

Independent Auditors’ Report

The Board of Directors and Stockholders

Essex Property Trust, Inc.:

We have audited the accompanying statement of revenue and certain expenses of the Murphy Road Apartments – San Jose, a California limited partnership (Willow Lake) for the year ended December 31, 2011. This statement is the responsibility of the management of Essex Property Trust, Inc. Our responsibility is to express an opinion on this statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Willow Lake’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the statement. We believe that our audit provides a reasonable basis for our opinion.

The accompanying statement of revenue and certain expenses was prepared for the purpose of complying with the rules and regulations of the U.S. Securities and Exchange Commission, as described in note 1. The presentation is not intended to be a complete presentation of Willow Lake’s revenue and expenses.

In our opinion, the statement of revenue and certain expenses referred to above presents fairly, in all material respects, the revenue and certain expenses described in note 1 of Willow Lake for the year ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

/S/ KPMG LLP
KPMG LLP

San Francisco, California
December 13, 2012

F-45

Table of Contents

Willow Lake

Statements of Revenue and Certain Expenses

(Dollars in thousands)

	Nine Months
	Ended
	September 30, 2012		Year Ended
	(Unaudited)		December 31, 2011
Revenue:

Rental	$	7,660	$	9,412
Other property		384		467

Total Revenue		8,044		9,879

Certain expenses:

Property operating excluding real estate taxes		1,291		1,625
Real estate taxes		776		1,026

Total certain expenses		2,067		2,651

Revenue in excess of certain expenses	$	5,977	$	7,228

F-46

Table of Contents

Willow Lake

Notes to Statements of Revenue and Certain Expenses

Nine months Ended September 30, 2012 (unaudited) and Year Ended December 31, 2011

Basis of Presentation

The accompanying statements of revenue and certain expenses of the Murphy Road Apartments – San Jose, a California limited partnership (“Willow Lake”) are comprised of operations of a 508 unit community located in San Jose, California. Willow Lake consists of 51 three story residential buildings and four administrative and amenity buildings. Community amenities include two swimming pools, a community clubhouse, a fitness center, a business center and a lake.

Willow Lake was previously owned by Murphy Road Apartments – San Jose, a California limited partnership. In October 2012, a wholly owned subsidiary of Essex Property Trust, Inc. (“Essex”) acquired Willow Lake for $148.0 million plus closing costs. The accompanying statements of revenue and certain expenses include the accounts of Willow Lake except as listed below.

The accompanying statements of revenue and certain expenses have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X of the U.S. Securities and Exchange Commission (“Rule 3-14”) for the acquisition of one or more real estate properties which in aggregate are significant. Willow Lake is considered a property acquisition that, when considered in the aggregate with other acquisitions made by Essex in 2012, is significant in accordance with Rule 3-14. The statements of revenue and certain expenses exclude the following expenses and, as a result, may not be reflective of the proposed future operations of Willow Lake:

•	Depreciation and amortization

•	Income taxes

•	Interest expense

•	Management fees

Management is not aware of any material factors relating to Willow Lake other than those already described above that would cause the reported financial information not to be necessarily indicative of future operating results.

Summary of Significant Accounting Policies and Practices

Revenue Recognition

Revenue from tenants renting or leasing apartment units 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. Units are rented under short-term leases (generally, lease terms of 6 to 12 months) and may provide no rent for one or two months, depending on the market conditions and leasing practices of the Company’s competitors in the sub-market at the time the leases are executed.

Use of Estimates

Unaudited Interim Statements

The statement of revenue and certain expenses and associated footnote disclosures for the nine months ended September 30, 2012 are unaudited. In the opinion of management, the statement and disclosures reflect all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal recurring nature.

Subsequent Events

The Company has evaluated subsequent events related to Willow Lake for recognition or disclosure through December 13, 2012, which is the date the statements of revenue and certain expenses was available to be issued and determined that there are no other items to disclose.

F-47

Table of Contents

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20.

Indemnification of Directors and Officers.

Section 2-418 of the Maryland General Corporation Law permits a corporation to indemnify its directors and officers and certain other parties against judgments, penalties, fines, settlements, and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that (i) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty; (ii) the director or officer actually received an improper personal benefit in money, property or services; or (iii) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. Indemnification may be made against judgments, penalties, fines, settlements and reasonable expenses actually incurred by the director or officer in connection with the proceeding; provided, however, that if the proceeding is one by or in the right of the corporation, indemnification may not be made with respect to any proceeding in which the director or officer has been adjudged to be liable to the corporation. In addition, a director or officer may not be indemnified with respect to any proceeding charging improper personal benefit to the director or officer, whether or not involving action in the director’s or officer’s official capacity, in which the director or officer was adjudged to be liable on the basis that personal benefit was received. The termination of any proceeding by conviction, or upon a plea of nolo contendere or its equivalent, or an entry of any order of probation prior to judgment, creates a rebuttable presumption that the director or officer did not meet the requisite standard of conduct required for indemnification to be permitted.

In addition, Section 2-418 of the Maryland General Corporation Law requires that, unless prohibited by its Charter, a corporation shall indemnify any director or officer who is made a party to any proceeding by reason of service in that capacity against reasonable expenses incurred by the director or officer in connection with the proceeding, in the event that the director or officer is successful, on the merits or otherwise, in the defense of the proceeding.

Essex Property Trust, Inc.’s Charter and bylaws provide in effect for the indemnification by the company of the directors and officers to the fullest extent permitted by applicable law. Essex Property Trust, Inc. has purchased directors’ and officers’ liability insurance for the benefit of its directors and officers.

Essex Property Trust, Inc. has entered into indemnification agreements with each of its executive officers and directors. The indemnification agreements provide, among other provisions, and subject to the definitions, procedures and applicable terms of the agreements, that (i) Essex Property Trust, Inc. will indemnify the indemnitee to the fullest extent permitted by applicable law in the event indemnitee is or is threatened to be made a party to any Proceeding (as defined in the indemnification agreements); (ii) Essex Property Trust, Inc. will advance Expenses (as defined in the indemnification agreements) incurred in connection with any Proceeding by the indemnitee; and (iii) the rights of the indemnitee under the indemnification agreements are in addition to any other rights the indemnitee may have under applicable law, our charter documents or bylaws, or otherwise. The indemnification agreements also set forth the procedures for determining entitlement to indemnification, the requirements relating to notice and defense of claims for which indemnification is sought, the procedures for enforcement of indemnification rights, and the limitations on and exclusions from indemnification.

The amended and restated partnership agreement of the Essex Portfolio, L.P. requires Essex Portfolio, L.P. to indemnify Essex Property Trust, Inc., its affiliates and any individual or entity acting on Essex Property Trust, Inc.’s behalf against any loss or damage, including reasonable legal fees and court costs incurred by the person by reason of anything it may do or refrain from doing for or on behalf of Essex Portfolio, L.P. or in connection with its business or affairs unless it is determined that indemnification is not permitted.

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ITEM 21.

Exhibits and Financial Statement Schedules.

(a)

Exhibits

Exhibit No.		Document

3.1		Articles of Restatement of Essex Property Trust, Inc., attached as Exhibit 3.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed February 16, 2012, and incorporated herein by reference.

3.2		Second Amended and Restated Bylaws of Essex Property Trust, Inc., dated as of September 16, 2008, attached as Exhibit 3.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed September 22, 2008, and incorporated herein by reference.

4.1		Form of 4.875% Series G Cumulative Convertible Preferred Stock Certificate, attached as Exhibit 4.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed July 27, 2006, and incorporated herein by reference.

4.2		Form of 7.125% Series H Cumulative Redeemable Preferred Stock Certificate, attached as Exhibit 4.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed April 13, 2011, and incorporated herein by reference.

4.3		Indenture, dated August 15, 2012, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.625% Senior Notes due 2022 and the guarantee thereof, attached as Exhibit 4.1 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on August 15, 2012, and incorporated herein by reference.

5.1**		Opinion of Baker & McKenzie LLP.

5.2**		Opinion of Venable LLP.

10.1		Essex Property Trust, Inc. 1994 Stock Incentive Plan, (amended and restated), attached as Exhibit 10.1 to the Essex Property Trust, Inc. Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference.*

10.2		Form of Essex Property Trust, Inc. 1994 Non-Employee and Director Stock Incentive Plan, attached as Exhibit 10.3 to the Essex Property Trust, Inc. Registration Statement on Form S-11 (Registration No. 33-76578), which became effective on June 6, 1994, and incorporated herein by reference.*

10.3		Agreement between Essex Property Trust, Inc. and George M. Marcus, dated March 27, 2003, attached as Exhibit 10.32 to the Essex Property Trust, Inc. Form 10-K for the year ended December 31, 2002 and incorporated herein by reference.

10.4		Essex Property Trust, Inc. 2004 Stock Incentive Plan, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference.*

10.5		2005 Deferred Compensation Plan (as amended and restated) of Essex Portfolio, L.P., dated as of December 2, 2008, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed December 8, 2008, and incorporated herein by reference.*

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Exhibit No.		Document

10.6		Executive Severance Plan of Essex Property Trust, Inc., amended and restated effective as of December 31, 2008, attached as Exhibit 10.2 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed December 8, 2008, and incorporated herein by reference.*

10.7		Credit Agreement, dated as of November 17, 2008, by and between Essex CAL-WA, L.P., as Borrower, and Northmarq Capital, Inc., as Lender, attached as Exhibit 10.31 to the Essex Property Trust, Inc. Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.8		Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of May 27, 2009, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed May 27, 2009, and incorporated herein by reference.*

10.9		First Amendment to the Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of December 23, 2009, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed December 30, 2009, and incorporated herein by reference.*

10.10		Form of Indemnification Agreement between Essex Property Trust, Inc. and its directors and officers, attached as Exhibit 99.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed February 25, 2011, and incorporated herein by reference.*

10.11		Note Purchase Agreement, dated as of March 31, 2011, among Essex Portfolio, L.P., Essex Property Trust, Inc. and the purchasers of the notes party thereto (including the form of the 4.36% Senior Guaranteed Notes, due March 31, 2016), attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed April 1, 2011, and incorporated herein by reference.†

10.12		Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of April 13, 2011, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed April 13, 2011, and incorporated herein by reference.

10.13		Note Purchase Agreement, dated as of June 30, 2011, among Essex Portfolio, L.P., Essex Property Trust, Inc. and the purchasers of the notes party thereto (including the forms of the 4.50% Senior Guaranteed Notes, Series A, due September 30, 2017, and the 4.92% Senior Guaranteed Notes, Series B, due December 30, 2019) , attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed July 5, 2011, and incorporated herein by reference.†

10.14		Amended and Restated 2004 Non-Employee Director Equity Award Program, dated May 1, 2011, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, and incorporated herein by reference.*

10.15		Amended and Restated Revolving Credit Agreement, dated as of September 16, 2011, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent, Swing Line Lender and L/C Issuer, and other lenders as specified therein, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, and incorporated herein by reference.

10.16		Equity Distribution Agreement between Essex Property Trust, Inc. and Cantor Fitzgerald & Co. dated March 5, 2012 (relating to common stock), attached as exhibit 10.1 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on March 7, 2012, and incorporated herein by reference.

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Exhibit No.		Document

10.17		Equity Distribution Agreement between Essex Property Trust, Inc. and Cantor Fitzgerald & Co. dated March 5, 2012 (relating to preferred stock), attached as exhibit 10.2 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on March 7, 2012, and incorporated herein by reference.

10.18		Note Purchase Agreement, dated as of March 14, 2012, among Essex Portfolio, L.P., Essex Property Trust, Inc. and the purchasers of the notes party thereto (including the forms of the 4.27% Senior Guaranteed Notes, Series C, due April 30, 2021, the 4.30% Senior Guaranteed Notes, Series D, due June 29, 2021, and the 4.37% Senior Guaranteed Notes, Series E, due August 30, 2021), attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on March 20, 2012, and incorporated herein by reference. †

10.19		First Amendment to Amended and Restated Revolving Credit Agreement, dated May 31, 2012, filed as Exhibit 10.1 to Essex Property Trust, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference.

10.20		Modification Agreement, dated July 30, 2012, filed as Exhibit 10.2 to Essex Property Trust, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference

10.21		Registration Rights Agreement, dated August 15, 2012, among Essex Portfolio, L.P., Essex Property Trust, Inc., and Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC as representatives of the several initial purchasers, attached as Exhibit 10.1 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on August 15, 2012, and incorporated herein by reference.

10.22		Amendment to Agreement, dated as of September 11, 2012, between the Company and George Marcus, attached as Exhibit 10.2 to Essex Property Trust, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, and incorporated herein by reference.

10.23		Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., as amended, dated December 4, 2012, attached as Exhibit 10.1 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on December 10, 2012, and incorporated herein by reference.

12.1***		Schedule of Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.

21.1		List of Subsidiaries of Essex Property Trust, Inc., filed as Exhibit 21.1 to Essex Property Trust, Inc. Annual Report on Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.

23.1		Consent of Baker & McKenzie, LLP (included in Exhibit 5.1).

23.2		Consent of Venable LLP (included in Exhibit 5.2).

23.3***		Consent of KPMG LLP, independent registered public accounting firm.

23.4***		Consent of KPMG LLP, independent registered public accounting firm.

23.5***		Consent of Ernst & Young, LLP, independent auditors.

23.6***		Consent of KPMG LLP, independent auditors.

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Exhibit No.		Document

24.1**		Power of Attorney.

25.1**		Statement of Eligibility on Form T-1 of U.S. Bank National Association, as the Trustee under the Indenture.

99.1**		Form of Letter of Transmittal.

99.2**		Form of Notice of Guaranteed Delivery.

99.3**		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.

99.4**		Form of Instructions from Beneficial Owners to Registered Holders and DTC Participants.

99.5**		Form of Letter to Clients.

99.6**		Form of Exchange Agent Agreement.

*		Management contract or compensatory plan or arrangement.

†		The schedules and certain exhibits to this agreement, as set forth in the agreement, have not been filed herewith. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

**		Previously filed.

***		Filed herewith.

(b)

Financial Statements and Financial Statement Schedules

Financial Statements and Financial Statement Schedules are listed in the Index to Consolidated Financial Statements on page F-1 of this registration statement.

ITEM 22.

Undertakings.

(a)	The undersigned registrants hereby undertake:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

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(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)

That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5)

That, for the purpose of determining liability of the registrants under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrants undertake that in a primary offering of securities of the undersigned registrants pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrants will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrants relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrants or used or referred to by the undersigned registrants;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrants or their securities provided by or on behalf of the undersigned registrants; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrants to the purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of their counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) The undersigned registrants hereby undertake to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

(d) The undersigned registrants hereby undertake to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

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SIGNATURES

Pursuant to the requirements of the Securities Act, the registrants have duly caused this registration statement to be signed on their behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California, on March 11, 2013.

ESSEX PROPERTY TRUST, INC.

By:	/s/ Michael T. Dance
	Michael T. Dance
	Executive Vice President, Chief Executive Officer

ESSEX PORTFOLIO, L.P.

By:	Essex Property Trust, Inc., its general partner

	By:	/s/ Michael T. Dance
		Michael T. Dance
		Executive Vice President, Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Michael J. Schall	Chief Executive Officer and President	March 11, 2013
Michael J. Schall	(principal executive officer) and Director

/s/ Michael T. Dance	Executive Vice President, Chief Financial	March 11, 2013
Michael T. Dance	Officer (principal financial officer)

/s/ Bryan G. Hunt	First Vice President, Chief Accounting	March 11, 2013
Bryan G. Hunt	Officer (principal accounting officer)

/s/ *	Chairman of the Board, Director	March 11, 2013
George M. Marcus

/s/ *	Director	March 11, 2013
Keith R. Guericke

/s/ *	Director	March 11, 2013
David W. Brady

/s/ *	Director	March 11, 2013
Gary P. Martin

/s/ *	Director	March 11, 2013
Issie N. Rabinovitch

/s/ *	Director	March 11, 2013
Thomas E. Randlett

/s/ *	Director	March 11, 2013
Byron A. Scordelis

/s/ *	Director	March 11, 2013
Janice L. Sears

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/s/ *		Director		March 11, 2013
Claude J. Zinngrabe

*By:	/s/ Michael T. Dance
Michael T. Dance, attorney-in-fact (see Exhibit 24.1 hereto)

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EXHIBIT INDEX

Exhibit No.		Document

3.1		Articles of Restatement of Essex Property Trust, Inc., attached as Exhibit 3.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed February 16, 2012, and incorporated herein by reference.

3.2		Second Amended and Restated Bylaws of Essex Property Trust, Inc., dated as of September 16, 2008, attached as Exhibit 3.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed September 22, 2008, and incorporated herein by reference.

4.1		Form of 4.875% Series G Cumulative Convertible Preferred Stock Certificate, attached as Exhibit 4.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed July 27, 2006, and incorporated herein by reference.

4.2		Form of 7.125% Series H Cumulative Redeemable Preferred Stock Certificate, attached as Exhibit 4.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed April 13, 2011, and incorporated herein by reference.

4.3		Indenture, dated August 15, 2012, among Essex Portfolio, L.P., Essex Property Trust, Inc., and U.S. Bank National Association, as trustee, including the form of 3.625% Senior Notes due 2022 and the guarantee thereof, attached as Exhibit 4.1 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on August 15, 2012, and incorporated herein by reference.

5.1**		Opinion of Baker & McKenzie LLP.

5.2**		Opinion of Venable LLP.

10.1		Essex Property Trust, Inc. 1994 Stock Incentive Plan, (amended and restated), attached as Exhibit 10.1 to the Essex Property Trust, Inc. Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference.*

10.2		Form of Essex Property Trust, Inc. 1994 Non-Employee and Director Stock Incentive Plan, attached as Exhibit 10.3 to the Essex Property Trust, Inc. Registration Statement on Form S-11 (Registration No. 33-76578), which became effective on June 6, 1994, and incorporated herein by reference.*

10.3		Agreement between Essex Property Trust, Inc. and George M. Marcus, dated March 27, 2003, attached as Exhibit 10.32 to the Essex Property Trust, Inc. Form 10-K for the year ended December 31, 2002 and incorporated herein by reference.

10.4		Essex Property Trust, Inc. 2004 Stock Incentive Plan, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, and incorporated herein by reference.*

10.5		2005 Deferred Compensation Plan (as amended and restated) of Essex Portfolio, L.P., dated as of December 2, 2008, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed December 8, 2008, and incorporated herein by reference.*

Table of Contents

Exhibit No.		Document

10.6		Executive Severance Plan of Essex Property Trust, Inc., amended and restated effective as of December 31, 2008, attached as Exhibit 10.2 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed December 8, 2008, and incorporated herein by reference.*

10.7		Credit Agreement, dated as of November 17, 2008, by and between Essex CAL-WA, L.P., as Borrower, and Northmarq Capital, Inc., as Lender, attached as Exhibit 10.31 to the Essex Property Trust, Inc. Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference.

10.8		Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of May 27, 2009, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed May 27, 2009, and incorporated herein by reference.*

10.9		First Amendment to the Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of December 23, 2009, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed December 30, 2009, and incorporated herein by reference.*

10.10		Form of Indemnification Agreement between Essex Property Trust, Inc. and its directors and officers, attached as Exhibit 99.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed February 25, 2011, and incorporated herein by reference.*

10.11		Note Purchase Agreement, dated as of March 31, 2011, among Essex Portfolio, L.P., Essex Property Trust, Inc. and the purchasers of the notes party thereto (including the form of the 4.36% Senior Guaranteed Notes, due March 31, 2016), attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed April 1, 2011, and incorporated herein by reference.†

10.12		Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of April 13, 2011, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed April 13, 2011, and incorporated herein by reference.

10.13		Note Purchase Agreement, dated as of June 30, 2011, among Essex Portfolio, L.P., Essex Property Trust, Inc. and the purchasers of the notes party thereto (including the forms of the 4.50% Senior Guaranteed Notes, Series A, due September 30, 2017, and the 4.92% Senior Guaranteed Notes, Series B, due December 30, 2019) , attached as Exhibit 10.1 to the Essex Property Trust, Inc. Current Report on Form 8-K, filed July 5, 2011, and incorporated herein by reference.†

10.14		Amended and Restated 2004 Non-Employee Director Equity Award Program, dated May 1, 2011, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, and incorporated herein by reference.*

10.15		Amended and Restated Revolving Credit Agreement, dated as of September 16, 2011, by and among Essex Portfolio, L.P., PNC Bank, National Association, as Administrative Agent, Swing Line Lender and L/C Issuer, and other lenders as specified therein, attached as Exhibit 10.1 to the Essex Property Trust, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, and incorporated herein by reference.

10.16		Equity Distribution Agreement between Essex Property Trust, Inc. and Cantor Fitzgerald & Co. dated March 5, 2012 (relating to common stock), attached as exhibit 10.1 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on March 7, 2012, and incorporated herein by reference.

10.17		Equity Distribution Agreement between Essex Property Trust, Inc. and Cantor Fitzgerald & Co. dated March 5, 2012 (relating to preferred stock), attached as exhibit 10.2 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on March 7, 2012, and incorporated herein by reference.

Table of Contents

Exhibit No.		Document

10.18		Note Purchase Agreement, dated as of March 14, 2012, among Essex Portfolio, L.P., Essex Property Trust, Inc. and the purchasers of the notes party thereto (including the forms of the 4.27% Senior Guaranteed Notes, Series C, due April 30, 2021, the 4.30% Senior Guaranteed Notes, Series D, due June 29, 2021, and the 4.37% Senior Guaranteed Notes, Series E, due August 30, 2021), attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on March 20, 2012, and incorporated herein by reference. †

10.19		First Amendment to Amended and Restated Revolving Credit Agreement, dated May 31, 2012, filed as Exhibit 10.1 to Essex Property Trust, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference.

10.20		Modification Agreement, dated July 30, 2012, filed as Exhibit 10.2 to Essex Property Trust, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, and incorporated herein by reference

10.21		Registration Rights Agreement, dated August 15, 2012, among Essex Portfolio, L.P., Essex Property Trust, Inc., and Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Wells Fargo Securities, LLC as representatives of the several initial purchasers, attached as Exhibit 10.1 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on August 15, 2012, and incorporated herein by reference.

10.22		Amendment to Agreement, dated as of September 11, 2012, between the Company and George Marcus, attached as Exhibit 10.2 to Essex Property Trust, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, and incorporated herein by reference.

10.23		Third Amendment to the Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., as amended, dated December 4, 2012, attached as Exhibit 10.1 to Essex Property Trust, Inc.’s Current Report on Form 8-K, filed on December 10, 2012, and incorporated herein by reference.

12.1***		Schedule of Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends.

21.1		List of Subsidiaries of Essex Property Trust, Inc., filed as Exhibit 21.1 to Essex Property Trust, Inc. Annual Report on Form 10-K for the year ended December 31, 2012, and incorporated herein by reference.

23.1		Consent of Baker & McKenzie, LLP (included in Exhibit 5.1).

23.2		Consent of Venable LLP (included in Exhibit 5.2).

23.3***		Consent of KPMG LLP, independent registered public accounting firm.

23.4***		Consent of KPMG LLP, independent registered public accounting firm.

23.5***		Consent of Ernst & Young, LLP, independent auditors.

23.6***		Consent of KPMG LLP, independent auditors.

24.1**		Power of Attorney.

25.1**		Statement of Eligibility on Form T-1 of U.S. Bank National Association, as the Trustee under the Indenture.

Table of Contents

Exhibit No.		Document

99.1**		Form of Letter of Transmittal.

99.2**		Form of Notice of Guaranteed Delivery.

99.3**		Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.

99.4**		Form of Instructions from Beneficial Owners to Registered Holders and DTC Participants.

99.5**		Form of Letter to Clients.

99.6**		Form of Exchange Agent Agreement.

*		Management contract or compensatory plan or arrangement.

†		The schedules and certain exhibits to this agreement, as set forth in the agreement, have not been filed herewith. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.

**		Previously filed.

***		Filed herewith.

Maryland		77-0369576
(State or Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification No.)

California		77-0369575
(State or Other Jurisdiction of Incorporation)		(I.R.S. Employer Identification No.)

Essex Property Trust, Inc.:	Large-accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
			(Do not check if a smaller reporting company)

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

	As of December 31,
	2012		2011		2010		2009		2008
($ in thousands)
BALANCE SHEET DATA:
Investment in rental properties (before accumulated depreciation)	$	5,033,672	$	4,313,064	$	3,964,561	$	3,412,930	$	3,279,788
Net investment in rental properties		3,952,155		3,393,038		3,189,008		2,663,466		2,639,762
Real estate under development		66,851		44,280		217,531		274,965		272,273
Total assets		4,847,223		4,036,964		3,732,887		3,254,637		3,164,823
Total secured indebtedness		1,565,599		1,745,858		2,082,745		1,832,549		1,588,931
Total unsecured indebtedness		1,253,084		615,000		176,000		14,893		165,457
Cumulative convertible preferred interests		4,349		4,349		4,349		4,349		145,912
Cumulative redeemable preferred interests		71,209		71,209		104,412		104,412		104,412
Partners' capital		1,880,116		1,486,914		1,284,515		1,200,208		1,001,356

	As of and for the years ended December 31,
		2012		2011			2010		2009		2008
OTHER DATA:
Net income	$	139,590	$	57,516		$	50,782	$	53,739	$	84,395
Interest expense before amortization expense		100,244		91,694			82,756		81,196		78,203
Amortization expense		11,644		11,474			4,828		4,820		6,860
Tax benefit		-		(1,682	)		-		-		-
Depreciation (1)		170,686		152,543			129,712		118,522		113,294
EBITDA(2)	$	422,164	$	311,545		$	268,078	$	258,277	$	282,752

Ratio of earnings to fixed charges(3)		1.98		1.36			1.41		1.34		1.66
Ratio of earnings to combined fixed charges and preferred stock dividends (3)		1.89		1.29			1.30		1.20		1.38

	Page
Prospectus Summary	4
Risk Factors	14
Forward-Looking Statements	26
The Exchange Offer	27
Use of Proceeds	36
Selected Consolidated Financial Data	37
Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Business and Properties	56
Investment Policies and Policies with Respect to Certain Activities	68
Directors and Executive Officers	71
Executive Compensation	75
Certain Relationships and Related Transactions; Director Independence	93
Description of Indebtedness	97
Description of Exchange Notes	98
Description of the Partnership Agreement of Essex Portfolio, L.P.	111
U.S. Federal Income Tax Consequences	115
Plan of Distribution	121
Legal Matters	122
Experts	122
Where You Can Find More Information	122
Incorporation of Certain Documents by Reference	123
Index to Consolidated Financial Statements	F-1

By Hand, Overnight Delivery or Mail		By Facsimile Transmission
(Registered or Certified Mail Recommended):		(for eligible institutions only):
West Side Flats Operations Center 60 Livingston Avenue St. Paul, MN 55107 Attn.: Specialized Finance		(651) 466-7372 Attn: Specialized Finance

	As of December 31, 2012					As of December 31, 2011
	Apartment Units		%			Apartment Units		%
Southern California		13,656		47	%		13,205		48	%
Northern California		8,987		31	%		8,106		30	%
Seattle Metro		6,598		22	%		6,108		22	%
Total		29,241		100	%		27,419		100	%

			Years Ended
	Number of		December 31,				Dollar		Percentage
	Properties		2012		2011		Change		Change
Property Revenues ($ in thousands)
2012/2011 Same-Properties:
Southern California		58	$	227,768	$	218,626	$	9,142		4.2	%
Northern California		33		159,993		146,008		13,985		9.6
Seattle Metro		28		85,373		78,785		6,588		8.4
Total 2012/2011 Same-Property revenues		119		473,134		443,419		29,715		6.7
2012/2011 Non-Same Property Revenues (1)				58,802		22,294		36,508		163.8
Total property revenues			$	531,936	$	465,713	$	66,223		14.2	%

			2014 and		2016 and
	2013		2015		2017		Thereafter		Total
Mortgage notes payable	$	57,621	$	116,920	$	197,957	$	1,193,101	$	1,565,599
Unsecured debt		-		-		540,000		572,084		1,112,084
Lines of credit		-		141,000		-		-		141,000
Interest on indebtedness (1)		119,547		226,264		180,971		225,038		751,820
Development commitments (including co-investments)		198,400		87,700		-		-		286,100
Redevelopment commitments		13,820		6,908		-		-		20,728
	$	389,388	$	578,792	$	918,928	$	1,990,223	$	3,877,331

	For the year
	ended			For the quarter ended
	12/31/12			12/31/12			9/30/12			6/30/12			3/31/12
Net income available to common stockholders	$	119,812		$	43,793		$	16,219		$	37,078		$	22,722
Adjustments:
Depreciation and amortization		170,686			45,017			43,041			41,801			40,827
Gains not included in FFO, net of internal disposition costs		(60,842	)		(29,112	)		-			(21,947	)		(9,783	)
Depreciation add back from unconsolidated co-investments and add back convertible preferred dividend - Series G		14,467			3,365			3,352			3,366			4,384
Noncontrolling interests related to
Operating Partnership units		7,950			2,781			1,077			2,502			1,590
Depreciation attributable to third party of co-investments		(1,223	)		(319	)		(312	)		(303	)		(289	)
Funds from operations	$	250,850		$	65,525		$	63,377		$	62,497		$	59,451

Funds from operations per share - diluted	$	6.71		$	1.72		$	1.67		$	1.69		$	1.63

Non-core items:
Loss on early retirement of debt		5,009			2,348			1,211			1,450			-
Acquisition costs		2,255			1,480			277			312			186
Gain on sales of marketable securities		(819	)		(298	)		-			(521	)		-
Co-investment promote income		(2,299	)		-			-			(2,299	)		-
Funds from operations excluding non-core items	$	254,996		$	69,055		$	64,865		$	61,439		$	59,637


Core funds from operations per share - diluted	$	6.82		$	1.81		$	1.71		$	1.66		$	1.64

Weighted average number of shares outstanding, diluted(1)		37,377,986			38,182,569			37,969,407			36,947,477			36,396,641

					Carrying and			Estimated Carrying Value
	Notional		Maturity		Estimate Fair			+ 50			- 50
($ in thousands)	Amount		Date Range		Value			Basis Points			Basis Points
Cash flow hedges:
Interest rate swaps	$	300,000		2016-2017	$	(6,606	)	$	(474	)	$	(11,619	)
Interest rate caps		187,788		2013-2018		-			102			-
Total cash flow hedges	$	487,788		2013-2018	$	(6,606	)	$	(372	)	$	(11,619	)

	For the Years Ended December 31,
	2013			2014			2015			2016			2017			Thereafter			Total		Fair value

Fixed rate debt	$	38,201		$	47,994		$	68,926		$	162,656		$	225,301		$	1,582,737		$	2,125,815	$	2,237,462
Average interest rate		5.6	%		5.2	%		5.2	%		4.5	%		5.5	%		5.4	%
Variable rate debt	$	19,420		$	-		$	141,000		$	200,000		$	150,000		$	182,448	(1)	$	692,868	$	671,651
Average interest rate		1.5	%		-			2.3	%		2.6	%		2.7	%		1.9	%

				Essex									Assumed		Assumed			Assumed
				Ownership						Purchase			Debt		Debt Stated			Debt Effective
Property Name	Location	Units		Percentage			Ownership	Date		Price			Principal		Rate			Rate
Bon Terra	Redmond, WA		60		100	%	EPLP		Q1 2012	$	16,000		$	-		-			-
Reed Square	Sunnyvale, CA		100		100	%	EPLP		Q1 2012		23,000			-		-			-
Park Catalina	Los Angeles, CA		90		100	%	EPLP		Q2 2012		23,650			-		-			-
Skyline (1)	Santa Ana, CA		349		100	%	EPLP		Q2 2012		85,000			-		-			-
The Huntington	Huntington Beach, CA		276		100	%	EPLP		Q2 2012		48,250			30,300		5.7	%		3.3	%
Domaine	Seattle, WA		92		100	%	EPLP		Q3 2012		34,000			14,600		5.7	%		3.0	%
Montebello	Kirkland, WA		248		100	%	EPLP		Q3 2012		52,000			26,515		5.6	%		3.1	%
Park West	San Francisco, CA		126		100	%	EPLP		Q3 2012		31,600			-		-			-
Riley Square	Santa Clara, CA		156		50	%	Wesco I		Q3 2012		38,250			17,500		5.2	%		3.1	%
Ascent	Kirkland, WA		90		100	%	EPLP		Q4 2012		15,850			-		-			-
Bennett Lofts (2)	San Francisco, CA		113		100	%	EPLP		Q4 2012		73,730			-		-			-
Haver Hill	Fullerton, CA		264		50	%	Wesco III		Q4 2012		45,600			-		-			-
Madrid	Mission Viejo, CA		230		50	%	Wesco I		Q4 2012		(3	)		33,266		5.3	%		2.6	%
Pacific Electric Lofts	Los Angeles, CA		314		50	%	Wesco I		Q4 2012		(3	)		46,939		4.0	%		2.5	%
Willow Lake	San Jose, CA		508		100	%	EPLP		Q4 2012		148,000			-		-			-
	Total 2012		3,016							$	801,930		$	169,120

		Essex					As of 12/31/12 ($ in millions)
		Ownership					Incurred		Estimated		Estimated		Projected
Development Pipeline	Location	%			Units		Project Cost		Remaining Cost		Project Cost(1)		Stabilization
Development Projects - Consolidated
64th & Christie	Emeryville, CA		100	%		190	$	18.1	$	40.1	$	58.2	Feb-15
Valley Village	Valley Village, CA		(2	)		121		1.5		36.1		37.6	Jun-14
Total - Consolidated Development Projects						311		19.6		76.2		95.8

Development Projects - Joint Venture
Expo	Seattle, WA		50	%		275		64.5		5.5		70.0	Apr-13
Epic - Phase I and II	San Jose, CA		55	%		569		128.2		63.4		191.6	Dec-14
Connolly Station (fka Linc)	Dublin, CA		55	%		309		51.6		42.9		94.5	May-14
The Huxley (fka Fountain at La Brea)	West Hollywood, CA		50	%		187		46.2		28.8		75.0	Jul-14
The Dylan (fka Santa Monica at La Brea)	West Hollywood, CA		50	%		184		41.3		34.1		75.4	Oct-14
Folsom and Fifth	San Francisco, CA		55	%		463		88.5		161.5		250.0	Mar-15
Elkhorn	San Mateo, CA		55	%		197		24.6		51.5		76.1	Dec-14
Total - Joint Venture Development Projects						2,184		444.9		387.7		832.6

Predevelopment Projects
City Centre	Moorpark, CA		100	%		200		9.7		-		9.7
Epic - Phase III	San Jose, CA		55	% (3)		200		19.8		-		19.8
Main Street	Walnut Creek, CA		50	%		49		28.5		-		28.5
Other Projects						-		1.6		-		1.6
Total - Predevelopment Projects						449		59.6		-		59.6

Land Held for Future Development or Sale
Park Boulevard	Palo Alto, CA		(4	)		50		7.5		-		7.5

Grand Total - Development Pipeline						2,994	$	531.6	$	463.9	$	995.5

				Rentable
				Square		Year			Year
Communities (1)	Location	Units		Footage		Built			Acquired		Occupancy(2)
Southern California
Alpine Village	Alpine, CA		301		254,400		1971			2002		97	%
Anavia	Anaheim, CA		250		312,343		2009			2010		95	%
Barkley, The(3)(4)	Anaheim, CA		161		139,800		1984			2000		97	%
Bonita Cedars	Bonita, CA		120		120,800		1983			2002		96	%
Camarillo Oaks	Camarillo, CA		564		459,000		1985			1996		96	%
Camino Ruiz Square	Camarillo, CA		160		105,448		1990			2006		97	%
Cambridge	Chula Vista, CA		40		22,100		1965			2002		95	%
Mesa Village	Clairemont, CA		133		43,600		1963			2002		97	%
Regency at Encino	Encino, CA		75		78,487		1989			2009		97	%
Valley Park(4)	Fountain Valley, CA		160		169,700		1969			2001		97	%
Capri at Sunny Hills(4)	Fullerton, CA		100		128,100		1961			2001		95	%
Haver Hill(5)	Fullerton, CA		264		224,130		1973			2012		96	%
Wilshire Promenade	Fullerton, CA		149		128,000		1992			1997		96	%
Montejo(4)	Garden Grove, CA		124		103,200		1974			2001		97	%
CBC Apartments	Goleta, CA		148		91,538		1962			2006		95	%
Sweeps, The (Chimney Sweep Apartments)	Goleta, CA		91		88,370		1967			2006		84	%
416 on Broadway	Glendale, CA		115		126,782		2009			2010		95	%
Hampton Court	Glendale, CA		83		71,500		1974			1999		97	%
Hampton Place	Glendale, CA		132		141,500		1970			1999		97	%
Devonshire	Hemet, CA		276		207,200		1988			2002		92	%
Huntington Breakers	Huntington Beach, CA		342		241,700		1984			1997		95	%
The Huntington	Huntington Beach, CA		276		202,256		1975			2012		97	%
Axis 2300	Irvine, CA		115		170,714		2010	(6)		2010		95	%
Hillsborough Park	La Habra, CA		235		215,500		1999			1999		96	%
Trabuco Villas	Lake Forest, CA		132		131,000		1985			1997		96	%
Madrid Apartments(7)	Mission Viejo, CA		230		228,099		2000			2012		97	%
Marbrisa	Long Beach, CA		202		122,800		1987			2002		97	%
Pathways	Long Beach, CA		296		197,700		1975	(8)		1991		96	%
Belmont Station	Los Angeles, CA		275		225,000		2008			2008		96	%
Bellerive	Los Angeles, CA		63		79,296		2011			2011		98	%
Bunker Hill	Los Angeles, CA		456		346,600		1968			1998		96	%
Cochran Apartments	Los Angeles, CA		58		51,400		1989			1998		96	%
Kings Road	Los Angeles, CA		196		132,100		1979			1997		96	%
Marbella, The	Los Angeles, CA		60		50,108		1991			2005		96	%
Pacific Electric Lofts(7)	Los Angeles, CA		314		277,980		2006			2012		100	%
Park Catalina	Los Angeles, CA		90		72,864		2002			2012		98	%
Park Place	Los Angeles, CA		60		48,000		1988			1997		96	%
Renaissance, The(9)	Los Angeles, CA		169		154,268		1990	(10)		2006		98	%
Santee Court	Los Angeles, CA		165		132,040		2004			2010		97	%
Santee Village	Los Angeles, CA		73		69,817		2011			2010		97	%
Windsor Court	Los Angeles, CA		58		46,600		1988			1997		96	%
Marina City Club(11)	Marina Del Rey, CA		101		127,200		1971			2004		97	%
Mirabella	Marina Del Rey, CA		188		176,800		2000			2000		96	%
Mira Monte	Mira Mesa, CA		355		262,600		1982			2002		97	%
Hillcrest Park	Newbury Park, CA		608		521,900		1973			1998		97	%
Fairways(12)	Newport Beach, CA		74		107,100		1972			1999		95	%
Muse	North Hollywood, CA		152		135,292		2011			2011		96	%
Country Villas	Oceanside, CA		180		179,700		1976			2002		96	%
Mission Hills	Oceanside, CA		282		244,000		1984			2005		97	%
Mariners Place	Oxnard, CA		105		77,200		1987			2000		98	%
Monterey Villas	Oxnard, CA		122		122,100		1974			1997		97	%
Tierra Vista	Oxnard, CA		404		387,100		2001			2001		96	%
Arbors Parc Rose(7)	Oxnard, CA		373		503,196		2001			2011		96	%
Monterra del Mar	Pasadena, CA		123		74,400		1972			1997		97	%
Monterra del Rey	Pasadena, CA		84		73,100		1972			1999		97	%
Monterra del Sol	Pasadena, CA		85		69,200		1972			1999		97	%
Villa Angelina(4)	Placentia, CA		256		217,600		1970			2001		97	%

Name and Position	Age
George M. Marcus	71
Chairman of the Board
Keith R. Guericke	64
Vice Chairman of the Board
Michael J. Schall	55
Director, Chief Executive Officer and President
Michael T. Dance	56
Executive Vice President and Chief Financial Officer
John D. Eudy	58
Executive Vice President-Development
Craig K. Zimmerman	61
Executive Vice President-Acquisitions
John F. Burkart	48
Executive Vice President-Asset Management
Erik J. Alexander	45
Senior Vice President-Property Operations
David W. Brady	72
Director
Gary P. Martin	65
Director
Issie N. Rabinovitch	66
Director
Thomas E. Randlett	69
Director
Byron A. Scordelis	63
Director
Janice L. Sears	52
Director
Claude J. Zinngrabe, Jr.	66
Director

	($ in millions)
Company	Revenues ($)(*)		Market Value($)(*)
AvalonBay Communities, Inc. (AVB)		963		12,409
Apartment Investment and Management Company (AIV)		1,120		2,770
Alexandria Real Estate Equities, Inc. (ARE)		558		4,239
American Campus Communities, Inc. (ACC)		387		2,973
BioMed Realty Trust, Inc. (BMR)		430		2,373
BRE Properties, Inc. (BRE)		376		3,799
Camden Property Trust (CPT)		669		4,621
Douglas Emmett, Inc. (DEI)		576		2,331
Equity Lifestyle Properties, Inc. (ELS)		582		2,617
Home Properties, Inc. (HME)		564		2,779
Mid-America Apartment Communities, Inc. (MAA)		437		2,366
Post Properties, Inc. (PPS)		302		2,268
PS Business Parks, Inc. (PSB)		295		1,337
Realty Income Corporation (O)		400		4,657
United Dominion Realty Trust, Inc. (UDR)		703		5,498
Essex Property Trust, Inc. (ESS)		483		5,169

Compensation element:	Why this element is included:	How the amount of this element is determined:	How this elements fits in the overall program:
Base salary	Customary element necessary to hire and retain executives.	Base salary and any changes in salary are based on views of individual retention or performance factors and market data at peer companies (but without specific benchmarking).	Short-term cash compensation that is fixed and paid during the year.
Annual bonus	Customary element appropriate to motivate executives and tie a significant compensation opportunity to a mix of individual and corporate performance.	Annual bonus is based primarily on discretionary and subjective review of individual and business performance factors based on the achievement of the operating performance budget approved by the Board and the meeting of annual performance goals,	Short-term cash compensation that is contingent on Compensation Committee discretion.
Equity incentive – stock options grants and Essex Operating Partnership Units	Equity compensation for long-term retention of management and alignment of shareholder interest that complements cash compensation and provides performance incentives.	Stock option awards and Series Z and Z-1 Unit awards are determined primarily based on how the award’s grant date value relates to the officer’s total compensation and how the vesting and other aspects of the awards might incentivize performance. Series Z and Z-1 incentive units are generally convertible into Essex Common Stock at the earlier of 15 years after their grant date or upon 100% vesting. Z and Z-1 Units vest only if certain performance conditions are achieved.	Long-term compensation is primarily contingent on performance goals which are expected to be consistent with an increase in the long-term value of our common stock into which the units are ultimately exchangeable. The sale of Series Z and Z-1 incentive units is contractually prohibited. Shares of common stock issued in connection with such units are also restricted from sale until there is 100% vesting of all the units to which such shares relate or such sale is allowed under other provisions of the grant agreement.
Deferred compensation plan	Supplemental element to assist in retaining executives.	Executive officers may defer up to 100% of their base salary and bonus.	A tax planning benefit for executives.
Severance plan	For hiring and retaining executives, this element provides a reasonable level of continued economic benefit if a change of control and related termination was to occur. As stated below under the caption “Severance and Other Benefits Upon Termination of Employment of Change or Control”, these payments provide a reasonable level of incentive for the covered individuals to remain with Essex prior to any proposal or contemplation of, and during any negotiations for, a change of control.	The element provides that in the event of a change of control and related termination within the 12 months thereafter, an executive receives two times his current annual salary and targeted bonus, continued insurance benefits and potential tax gross up payments.	A supplement to the base salary and annual bonus arrangements, which addresses possible change of control situations.
Perquisites	Customary element necessary to hire and retain executives.	Generally based on perquisites being offered by comparable companies.	A supplement to the base salary.

Executive	Salary 2010 ($)		Salary 2011 ($)		Percentage Change
Michael Schall, CEO		295,000		350,000		18.6	%
Michael Dance, CFO		225,000		300,000		33.3	%
Craig Zimmerman, EVP		300,000		300,000		n/a
John Eudy, EVP		300,000		300,000		n/a
John Burkart, EVP		224,000		250,000		11.6	%

Executive	Targeted Discretionary Bonus ($)		Targeted Non- Discretionary Incentive Bonus ($)		Maximum Bonus ($)
Michael Schall, CEO		200,000		200,000		600,000
Michael Dance, CFO		150,000		150,000		450,000
Craig Zimmerman, EVP		150,000		150,000		450,000
John Eudy, EVP		150,000		150,000		450,000
John Burkart, EVP		130,000		130,000		390,000

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)(1)		Option Awards ($)(1)		All Other Compen- sation ($)(2)		Total ($)

Michael J. Schall	2011		350,000		475,000		418,200		269,800		11,260		1,524,260
Director, President and	2010		295,000		400,000		751,000		-		11,207		1,457,207
Chief Executive Officer	2009		295,000		400,000		-		-		10,654		705,654

Michael T. Dance	2011		300,000		375,000		167,280		168,625		13,556		1,024,461
Executive Vice President	2010		225,000		300,000		660,880		-		11,383		1,197,263
and Chief Financial Officer	2009		225,000		350,000		150,000		-		11,299		736,299

John D. Eudy	2011		300,000		375,000		167,280		168,625		14,083		1,024,988
Executive Vice	2010		300,000		300,000		660,880		-		14,130		1,270,010
President-Development	2009		300,000		300,000		-		-		12,997		612,997

Craig K. Zimmerman	2011		300,000		375,000		167,280		168,625		13,600		1,024,505
Executive Vice	2010		300,000		400,000		660,880		-		13,547		1,374,427
President-Acquisitions	2009		300,000		300,000		-		-		12,929		612,929

John F. Burkart	2011		250,000		350,000		585,480		67,450		14,165		1,267,095
Executive Vice	2010		224,000		275,000		450,600		-		14,097		964,697
President-Asset Management	2009		-		-		-		-		-		-

Name	Grant Date	Estimated Future Payouts Under Equity Incentive Plan Awards Maximum (#)(1)		All Other Option Awards: Number of Securities Underlying Options (#)(2)		Exercise or Base Price of Option Awards ($/Sh)		Grant Date Fair Value of Stock and Options Awards ($)
Schall	12/6/2011		5,000		20,000		132.03		688,000
Dance	12/6/2011		2,000		12,500		132.03		335,905
Eudy	12/6/2011		2,000		12,500		132.03		335,905
Zimmerman	12/6/2011		2,000		12,500		132.03		335,905
Burkart	12/6/2011		7,000		5,000		132.03		652,930

	Option Awards							Stock Awards
	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (1)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2)
Schall		2,000		18,000		132.03	12/6/2022		14,883		2,076,327
Dance		1,250		11,250		132.03	12/6/2022		10,650		1,485,782
Eudy		1,250		11,250		132.03	12/6/2022		10,900		1,520,659
Zimmerman		1,250		11,250		132.03	12/6/2022		10,900		1,520,659
Burkart		500		4,500		132.03	12/6/2022		12,989		1,812,095

Name	Executive Contributions in 2011 ($)		Registrant Contributions in 2011 ($)		Aggregate Earnings/ (Losses) in 2011 ($)			Aggregate Withdrawals/ Distributions ($)		Aggregate Balance as of December 31, 2011 ($)
Schall		-		-		(152,778	)		-		2,275,886
Dance		-		-		-			-		-
Eudy		-		-		42,901			-		299,233
Zimmerman		-		-		-			-		-
Burkart		-		-		-			-		-

Name	Payment for 2X Annual Salary/Bonus ($)		24 months of benefits ($)		Assumed Realized Value of Accelerated Options ($)		Assumed Cost of Tax Gross Up (1)		Total (2) ($)
Schall		1,650,000		20,000		146,160		-		1,816,160
Dance		1,350,000		20,000		91,350		-		1,461,350
Eudy		1,350,000		20,000		91,350		-		1,461,350
Zimmerman		1,350,000		20,000		91,350		-		1,461,350
Burkart		1,200,000		20,000		36,540		-		1,256,540