Exhibit 99.2

INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED

FINANCIAL INFORMATION

	Page
Introduction	2
Unaudited Pro Forma Condensed Consolidated Financial Statements of Essex Property Trust, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2013	5
Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 2013	6
Unaudited Pro Forma Condensed Consolidated Financial Statements of Essex Portfolio, L. P.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2013	7
Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended December 31, 2013	8
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements	9

1

ESSEX PROPERTY TRUST, INC.

ESSEX PORTFOLIO, L. P.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Introduction

BEX Portfolio, Inc. (“Merger Sub”), a direct wholly owned subsidiary of Essex Property Trust, Inc. (“Essex”), merged with and into BRE Properties, Inc. (“BRE”), with Merger Sub continuing as the surviving corporation and a wholly owned direct subsidiary of Essex. We refer to this merger as the Merger. The Merger is part of the transactions contemplated by the Agreement and Plan of Merger entered into on December 19, 2013 among Essex, Merger Sub and BRE, which we refer to as the Merger Agreement. The Merger became effective on April 1, 2014. Also on April 1, 2014, following the Merger, Merger Sub merged with and into BEX Portfolio, LLC (“BEX LLC”), a Delaware limited liability company and a directly wholly owned subsidiary of Essex Portfolio, L.P. (“EPLP”), with BEX LLC continuing as the surviving entity and a direct wholly owned subsidiary of EPLP.

On April 1, 2014, Essex completed the Merger which resulted in: (1) BRE merging with and into Merger Sub, and (2) each share of BRE common stock was converted into (i) 0.2971 shares of Essex common stock (the “Stock Consideration”) which totaled approximately 23.1 million shares of Essex common stock, which were valued at $3.8 billion, and (ii) $7.18 in cash,  and cash in lieu of fractional shares (the “Cash Consideration”), which totaled approximately $558.1 million for total consideration of approximately $4.3 billion.  Prior to the Merger, BRE authorized and declared a special distribution to the stockholders of BRE of $5.15 per share of BRE common stock payable to BRE stockholders of record on March 31, 2014 (the “Special Dividend”).  The Special Dividend was payable as a result of the closing of the sale of certain interests in assets of BRE to certain third-party institutional investors designated by Essex, which closed on March 31, 2014, as described below.  Pursuant to the terms of the Merger Agreement, the amounts payable as a Special Dividend reduced the initial Cash Consideration of $12.33 payable by Essex in the Merger to $7.18 per share of BRE common stock.

On February 20, 2014, BRE redeemed all outstanding shares of BRE preferred stock at $25.00 per share plus any accrued and unpaid dividends, in accordance with their terms and as contemplated by the Merger Agreement.

On March 31, 2014, as contemplated by the Merger Agreement, BRE formed three new joint ventures with two separate third-party institutional joint venture partners and contributed 17 BRE properties with an aggregate estimated value of approximately $888.2 million to the joint ventures.  As a result of the contribution of the properties to the joint ventures, BRE deconsolidated these properties and retained a 50% non-controlling interest in each of the joint ventures. Additionally, in connection with the contribution of the properties, the joint ventures placed approximately $475 million in mortgage financings on the properties contributed to the joint ventures. As a result, BRE received proceeds of approximately $681.5 million from the joint ventures representing its share of the proceeds from the mortgage financings and contributions from the joint venture partners in order to bring its ownership interest down to 50%.As a result of the closing of these joint ventures, BRE authorized and paid the Special Dividend described above.

As contemplated by the Merger Agreement, on March 5, 2014, Essex, through EPLP, commenced an offer to exchange (the “Exchange Offer”) $900.0 million aggregate principal amount of BRE’s 5.500% senior notes due 2017, 5.200% senior notes due 2021 and 3.375% senior notes due 2023 (the “BRE Notes”).  Pursuant to the terms of the Exchange Offer, on April 4, 2014, $843.2 million aggregate principal amount of BRE Notes were exchanged for new 5.500% senior notes due 2017, 5.200% senior notes due 2021 and 3.375% senior notes due 2023 issued by EPLP and guaranteed by Essex.  The remaining $56.8 million aggregate principal amount of BRE Notes which were not exchanged pursuant to the Exchange Offer are obligations of BEX Portfolio, LLC.  Also, in connection with the Merger, Essex assumed approximately $711.4 million of secured debt with remaining loan terms ranging from one to seven years and a weighted average interest rate of 5.6%.

2

Under the terms of the Merger Agreement, each option to purchase shares of BRE common stock was assumed by Essex and converted into an option exercisable for a number of shares of Essex common stock calculated based on the exchange ratio set forth in the Merger Agreement, subject to the same economic terms and conditions as were applicable to the corresponding option immediately prior to the Merger. All BRE restricted stock awards outstanding at the effective time of the Merger were assumed by Essex and converted into an award of a number of shares of Essex restricted common stock calculated based on the exchange ratio set forth in the Merger Agreement, subject to the same economic terms and conditions as were applicable to the corresponding award immediately prior to the Merger, but subject to certain adjustments to the vesting terms of performance-based BRE restricted stock awards. 

The following unaudited pro forma condensed consolidated financial statements are based on Essex’s historical consolidated financial statements and BRE’s historical consolidated financial statements and have been adjusted in the statements below to give effect to the Merger and the other transactions contemplated by the Merger Agreement. The unaudited pro forma condensed consolidated statement of income for the year ended December 31, 2013 gives effect to the Merger as if it had occurred on January 1, 2013. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2013 gives effect to the Merger as if it had occurred on December 31, 2013. The historical consolidated financial statements of BRE have been adjusted to reflect certain reclassifications in order to conform to Essex’s financial statement presentation.

The unaudited pro forma condensed consolidated financial statements were prepared using the acquisition method of accounting with Essex considered the accounting acquirer of BRE. Under the acquisition method of accounting, the acquired net tangible and identifiable intangible assets and liabilities assumed of BRE are recorded based on their respective fair values with the excess purchase price, if any, recorded to goodwill.

The pro forma adjustments and the purchase accounting adjustments as presented are based on estimates and certain information that is currently available. For purchase accounting, the value of the Stock Consideration issued by Essex upon the consummation of the Merger was determined based on the closing price of BRE’s common stock on the closing date of the Merger. As a result of Essex being admitted to the S&P 500 on the same date as the closing of the Merger, Essex’s common stock price experienced significantly higher than usual trading volume and the closing price of $174 per share was significantly higher than its volume-weighted average trading price for the days before and after April 1, 2014.  BRE’s common stock did not experience the same proportionate increase in common stock price leading up to April 1, 2014.  As a result, given that a substantial component of the purchase price is an exchange of equity instruments, Essex used the closing price of BRE’s common stock on April 1, 2014 of $61 per share, less the Cash Consideration, as the fair value of the Stock Consideration.   The  assignment of fair values to BRE’s assets acquired and liabilities assumed has not been finalized, is subject to change, could vary materially from the actual amounts at the time the purchase accounting is completed, and may not have identified all adjustments necessary to conform BRE’s accounting policies to Essex’s accounting policies. Essex is currently in the measurement period and performing procedures to accumulate the necessary information to measure the fair value of BRE’s assets and liabilities acquired.  A final determination of the fair value of BRE’s assets and liabilities, including intangible assets, will be based on the actual net tangible and intangible assets and liabilities of BRE that exist as of the closing date of the Merger and, therefore, cannot be made with certainty prior to the completion of the purchase accounting measurement period, which may extend up to one-year from the closing of the Merger.

As a result of the foregoing, the pro forma adjustments are preliminary and are subject to change as additional information becomes available and additional analyses are performed. The preliminary pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma consolidated financial statements presented below. Essex estimated the fair value of BRE’s assets and liabilities based on discussions with BRE’s management, preliminary valuation studies, due diligence and information presented in BRE’s public filings. Any increases or decreases in the fair value of relevant balance sheet amounts upon completion of the final valuations will result in adjustments to the pro forma balance sheet and/or statement of income. The final purchase accounting may be different than that reflected in the pro forma purchase accounting presented herein, and this difference may be material.

3

Assumptions and estimates underlying the unaudited adjustments to the unaudited pro forma condensed consolidated financial statements are described in the accompanying notes. The historical consolidated financial statements have been adjusted in the unaudited pro forma condensed consolidated financial statements to give effect to pro forma events that are: (1) directly attributable to the Merger, (2) factually supportable, and (3) expected to have a continuing impact on the results of income of Essex following the Merger. This information is presented for illustrative purposes only and is not indicative of the consolidated operating results or financial position that would have occurred if such transactions had occurred on the dates described above and in accordance with the assumptions described below, nor is it indicative of future operating results or financial position.

The unaudited pro forma consolidated financial statements, although helpful in illustrating the financial characteristics of Essex following the Merger under one set of assumptions, do not reflect the benefits of expected cost savings (or associated costs to achieve such savings), opportunities to earn additional revenue, or other factors that may result as a consequence of the Merger and do not attempt to predict or suggest future results. Specifically, the unaudited pro forma condensed consolidated statements of income exclude anticipated operating efficiencies and synergies which may be achieved as a result of the Merger. The anticipated operating synergies are expected to substantially offset the expected increase in property taxes primarily due to California’s Proposition 13 reassessments of the acquired properties. The unaudited pro forma consolidated financial statements also exclude the effects of costs associated with any restructuring or integration activities or asset dispositions resulting from the Merger as they are currently not known. To the extent they occur, such items are expected to be non-recurring and have not been incurred at the closing date of the Merger. However, such costs could affect Essex following the merger when such costs are incurred or recorded. Further, the unaudited pro forma condensed consolidated financial statements do not reflect the effect of any regulatory actions that may impact the results of Essex following the Merger.

The unaudited pro forma consolidated financial statements have been developed from and should be read in conjunction with:

• the accompanying notes to the unaudited pro forma consolidated financial statements;

• the historical audited consolidated financial statements of Essex and EPLP as of and for the year ended December 31, 2013, as presented in Essex’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2014; and

• the historical audited consolidated financial statements of BRE as of and for the year ended December 31, 2013, as presented in BRE’s Annual Report on Form 10-K, filed with the SEC on February 18, 2014.

4

ESSEX PROPERTY TRUST, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2013

(Dollars in thousands)

	Essex			BRE			Pro Forma				Combined
Assets	Historical			as reclassified (A)			Adjustments				Pro Forma
Real estate:
Rental properties and other		5,443,757			3,908,433			1,281,289		(B)		10,633,479
Less accumulated depreciation	$	(1,254,886	)	$	(884,472	)	$	884,472		(C)	$	(1,254,886	)
		4,188,871			3,023,961			2,165,761				9,378,593
Real estate - held for sale, net		-			23,481			-				23,481
Real estate under development		50,430			501,717			92,793		(B)		644,940
Co-investments		677,133			6,363			199,137		(D)		882,633
		4,916,434			3,555,522			2,457,691				10,929,647
Cash and cash equivalents-unrestricted		18,491			8,432			-		(E)		26,923
Cash and cash equivalents-restricted		35,275			-			-				35,275
Marketable securities		90,084			-			-				90,084
Notes and other receivables		68,255			8,146			-				76,401
Prepaid expenses and other assets		33,781			25,245			70,998		(F)		130,024
Deferred charges, net		24,519			11,501			(5,401	)	(G)		30,619
Total assets	$	5,186,839		$	3,608,846		$	2,523,288			$	11,318,973
Liabilities and  Equity
Mortgage notes payable	$	1,404,080		$	711,428		$	79,541		(H)	$	2,195,049
Unsecured debt		1,410,023			950,000			44,552		(H)		2,404,575
Lines of credit		219,421			98,000			336,173		(I)		653,594
Other liabilities		150,728			92,483			73,000		(J)		316,211
Total liabilities		3,184,252			1,851,911			533,266				5,569,429
Commitments and contingencies
Redeemable noncontrolling interest		-			4,751			-				4,751
Cumulative convertible preferred stock		4,349			-			-				4,349
Equity:
Cumulative redeemable preferred stock		73,750			-			-				73,750
Preferred stock		-			22			(22	)	(I)		-
Common stock		4			772			(770	)	(I)		6
Additional paid-in capital		2,345,763			1,888,028			1,895,176		(I)		6,128,967
Distributions in excess of accumulated earnings		(474,426	)		(136,638	)		95,638		(I)		(515,426	)
Accumulated other comprehensive loss, net		(60,472	)		-			-				(60,472	)
Total stockholders' equity		1,884,619			1,752,184			1,990,022				5,626,825
Noncontrolling interest		113,619			-			-				113,619
Total equity		1,998,238			1,752,184			1,990,022				5,740,444
Total liabilities and equity	$	5,186,839		$	3,608,846		$	2,523,288			$	11,318,973

5

ESSEX PROPERTY TRUST, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2013

(Dollars in thousands, except per share data)

	Essex			BRE			Pro Forma				Combined
	Historical			as reclassified (A)			Adjustments				Pro Forma
Revenues:
Rental and other property	$	602,003		$	404,028		$	(70,810	)	(K)	$	935,221
Management and other fees		11,700			384			2,300		(K)		14,384
		613,703			404,412			(68,510	)			949,605
Expenses:
Property operating, excluding real estate taxes		138,736			88,512			(14,090	)	(K)		213,158
Real estate taxes		57,276			35,792			20,412		(L)		113,480
Depreciation and amortization		192,420			105,371			76,375		(M)		374,166
General and administrative		25,601			23,037			-		(N)		48,638
Cost of management and other fees		6,681			-			-				6,681
Merger expenses		4,284			3,401			(7,685	)	(O)		-
Impairment and other charges		-			585			-				585
		424,998			256,698			75,012				756,708
												-
Earnings from operations		188,705			147,714			(143,522	)			192,897
Interest expense before amortization		(104,600	)		(61,170	)		20,605		(P)		(145,165	)
Amortization expense		(11,924	)		(4,697	)		3,477		(Q)		(13,144	)
Interest and other income		11,633			20,230			-				31,863
Equity income in co-investments		55,865			19,258			(2,777	)	(K)		72,346
Loss on early retirement of debt		(300	)		-			-				(300	)
Gain on sale of land		1,503			-			-				1,503
Income from continuing operations		140,882			121,335			(122,217	)			140,000
Net income attributable to noncontrolling interest		(14,086	)		(190	)		-				(14,276	)
Net income attributable to controlling interest		126,796			121,145			(122,217	)			125,724
Dividends to preferred stockholders		(5,472	)		(3,645	)		3,645		(R)		(5,472	)
Net income from continuing operations available to common stockholders	$	121,324		$	117,500		$	(118,572	)		$	120,252
Per common share data:
Basic:
Income from continuing operations available to common stockholders	$	3.26		$	1.52					(S)	$	1.99
Weighted average number of common shares outstanding during the period		37,249			77,111			23,094		(S)		60,343
Diluted:
Income from continuing operations available to common stockholders	$	3.25		$	1.52					(S)	$	1.99
Weighted average number of common shares outstanding during the period		37,335			77,340			23,094		(S)		60,428

6

ESSEX PORTFOLIO, L. P.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2013

(Dollars in thousands)

	EPLP			BRE			Pro Forma				Combined
Assets	Historical			as reclassified (A)			Adjustments				Pro Forma
Real estate:
Rental properties and other		5,443,757			3,908,433			1,281,289		(B)		10,633,479
Less accumulated depreciation	$	(1,254,886	)	$	(884,472	)	$	884,472		(C)	$	(1,254,886	)
		4,188,871			3,023,961			2,165,761				9,378,593
Real estate - held for sale, net		-			23,481			-				23,481
Real estate under development		50,430			501,717			92,793		(B)		644,940
Co-investments		677,133			6,363			199,137		(D)		882,633
		4,916,434			3,555,522			2,457,691				10,929,647
Cash and cash equivalents-unrestricted		18,491			8,432			-		(E)		26,923
Cash and cash equivalents-restricted		35,275			-			-				35,275
Marketable securities		90,084			-			-				90,084
Notes and other receivables		68,255			8,146			-				76,401
Prepaid expenses and other assets		33,781			25,245			70,998		(F)		130,024
Deferred charges, net		24,519			11,501			(5,401	)	(G)		30,619
Total assets	$	5,186,839		$	3,608,846		$	2,523,288			$	11,318,973
Liabilities and  Capital
Mortgage notes payable	$	1,404,080		$	711,428		$	79,541		(H)	$	2,195,049
Unsecured debt		1,410,023			950,000			44,552		(H)		2,404,575
Lines of credit		219,421			98,000			336,173		(I)		653,594
Other liabilities		150,728			92,483			73,000		(J)		316,211
Total liabilities		3,184,252			1,851,911			533,266				5,569,429
Commitments and contingencies
Redeemable noncontrolling interest		-			4,751			-				4,751
Cumulative convertible preferred interest		4,349			-			-				4,349
Capital:
General Partner:
Common equity		1,873,882			1,700,059			2,042,147		(I)		5,616,088
Preferred interest		71,209			52,125			(52,125	)	(I)		71,209
		1,945,091			1,752,184			1,990,022				5,687,297
Limited Partners - Common equity		45,957			-			-				45,957
Accumulated other comprehensive loss, net		(58,940	)		-			-				(58,940	)
Total partners capital		1,932,108			1,752,184			1,990,022				5,674,314
Noncontrolling interest		66,130			-			-				66,130
Total capital		1,998,238			1,752,184			1,990,022				5,740,444
Total liabilities and capital	$	5,186,839		$	3,608,846		$	2,523,288			$	11,318,973

7

ESSEX PORTFOLIO, L. P.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2013

(Dollars in thousands, except per unit data)

	EPLP			BRE			Pro Forma				Combined
	Historical			as reclassified (A)			Adjustments				Pro Forma
Revenues:
Rental and other property	$	602,003		$	404,028		$	(70,810	)	(K)	$	935,221
Management and other fees		11,700			384			2,300		(K)		14,384
		613,703			404,412			(68,510	)			949,605
Expenses:
Property operating, excluding real estate taxes		138,736			88,512			(14,090	)	(K)		213,158
Real estate taxes		57,276			35,792			20,412		(L)		113,480
Depreciation and amortization		192,420			105,371			76,375		(M)		374,166
General and administrative		25,601			23,037			-		(N)		48,638
Cost of management and other fees		6,681			-			-				6,681
Merger expenses		4,284			3,401			(7,685	)	(O)		-
Impairment and other charges		-			585			-				585
		424,998			256,698			75,012				756,708
												-
Earnings from operations		188,705			147,714			(143,522	)			192,897
Gain on sale of real estate												-
Interest expense before amortization		(104,600	)		(61,170	)		20,605		(P)		(145,165	)
Amortization expense		(11,924	)		(4,697	)		3,477		(Q)		(13,144	)
Interest and other income		11,633			20,230			-				31,863
Equity income in co-investments		55,865			19,258			(2,777	)	(K)		72,346
Loss on early retirement of debt		(300	)		-			-				(300	)
Gain on sale of land		1,503			-			-				1,503
Income from continuing operations		140,882			121,335			(122,217	)			140,000
Net income attributable to noncontrolling interest		(6,834	)		(190	)		-				(7,024	)
Net income attributable to controlling interest		134,048			121,145			(122,217	)			132,976
Distributions to preferred interests		(5,472	)		(3,645	)		3,645		(R)		(5,472	)
Net income from continuing operations available to common unitholders	$	128,576		$	117,500		$	(118,572	)		$	127,504
Per common share data:
Basic:
Income from continuing operations available to common unitholders	$	3.27		$	1.52					(S)	$	2.04
Weighted average number of common units outstanding during the period		39,380			77,111			23,094		(S)		62,474
Diluted:
Income from continuing operations available to common unitholders	$	3.26		$	1.52					(S)	$	2.04
Weighted average number of common units outstanding during the period		39,467			77,340			23,094		(S)		62,560

8

ESSEX PROPERTY TRUST, INC.

ESSEX PORTFOLIO, L. P.

NOTES TO UNAUDITED PRO FORMA

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Overview

The accompanying notes were prepared to support the unaudited pro forma condensed consolidated financial statements for both Essex Property Trust, Inc. (Essex) and Essex Portfolio, L.P. (EPLP).  Unless stated otherwise or the context otherwise requires, references to Essex mean collectively Essex, EPLP and those entities/subsidiaries owned or controlled by Essex and/or EPLP. References to EPLP mean collectively EPLP and those entities/subsidiaries owned or controlled by EPLP.

For purposes of the unaudited pro forma consolidated financial statements, which we refer to as the pro forma financial statements, we have assumed a total preliminary purchase price for the Merger of approximately $4.3 billion, which consists of the Stock Consideration and the Cash Consideration.

The pro forma financial statements have been prepared assuming the Merger is accounted for using the acquisition method of accounting under U.S. GAAP, which we refer to as acquisition accounting, with Essex as the acquiring entity. Accordingly, under acquisition accounting, the acquired net tangible and identifiable intangible assets and liabilities assumed of BRE are recorded based on their respective fair values, as further described below.

To the extent identified, certain reclassifications have been reflected in the pro forma adjustments to conform BRE’s financial statement presentation to that of Essex, as described in footnote (A) below. However, the unaudited pro forma financial statements may not reflect all adjustments necessary to conform BRE’s accounting policies to those of Essex due to limitations on the availability of information as of the date of this Current Report on Form 8-K/A.

The pro forma adjustments represent Essex management’s estimates based on information available as of the date of this Current Report on Form 8-K/A and are subject to change as additional information becomes available and additional analyses are performed. The pro forma financial statements do not reflect the impact of possible revenue or earnings enhancements, cost savings from operating efficiencies or synergies, or asset dispositions not contemplated by the Merger Agreement. Also, the pro forma financial statements do not reflect possible adjustments related to restructuring or integration activities that have yet to be determined, including transaction or other costs following the merger that are not expected to have a continuing impact. Further, one-time transaction-related expenses anticipated to be incurred prior to, or concurrent with, closing the Merger are excluded from the pro forma statement of income.

The pro forma condensed consolidated statement of income for the year ended December 31, 2013 combines the historical consolidated statements of income of Essex and BRE, giving effect to the Merger as if it had been consummated on January 1, 2013, the beginning of the earliest period presented. The pro forma condensed consolidated balance sheet combines the historical consolidated balance sheets of Essex and BRE as of December 31, 2013, giving effect to the Merger as if it had been consummated on December 31, 2013.

Preliminary Estimated Purchase Accounting

The total preliminary estimated purchase price of approximately $4.3 billion was determined based on the total Stock Consideration (based on the number of shares of BRE’s common stock outstanding as of April 1, 2014) and the Cash Consideration. See (I) below for discussion regarding the valuation of the Stock Consideration.   For purposes of the pro forma condensed consolidated financial statements, such shares of BRE common stock are assumed to remain outstanding as of the closing date of the Merger, and no effect has been given to any new shares of BRE common stock that may be issued, granted or retired subsequent to December 31, 2013 through the closing date of the Merger on April 1, 2014.

9

For purposes of these pro forma condensed consolidated financial statements, BRE’s tangible and identifiable intangible assets acquired and liabilities assumed have been recorded based on their estimated fair values assuming the Merger was completed on the pro forma condensed consolidated balance sheet date presented. The final fair values will be based upon valuations and other analyses for which there is currently insufficient information to make a definitive valuation. Accordingly, the purchase price adjustments are preliminary and have been made solely for the purpose of providing pro forma condensed consolidated financial statements. The final purchase accounting adjustments will be determined after completion of a thorough analysis to determine the fair value of BRE’s tangible assets and liabilities, including identifiable intangible assets and liabilities. As a result, the final purchase accounting adjustments, including those resulting from conforming BRE’s accounting policies to those of Essex, could differ materially from the pro forma adjustments presented herein.

The fair value adjustment based on the total preliminary purchase price was as follows (in thousands):

														BRE
														Estimated
	BRE			Pro Forma				BRE			Fair Value			Fair
Asset/Liability	as reclassified			Adjustment				Adjusted			Adjustment			Value
Real estate assets, net, excluding co-investments	$	3,549,159		$	(323,997	)	(iii)	$	3,225,162		$	2,582,551		$	5,807,713
Co-investments		6,363			(75,458	)	(iii)		(69,095	)		274,595			205,500
Cash and cash equivalents		8,432			130,041		(iv)		138,473			-			138,473
Notes and other receivables, prepaid and other assets and deferred charges, net		44,892			-				44,892			59,497			104,389
					(54,027	)	(i)
					152,027		(iv)
Mortgage notes payable, unsecured debt and lines of credit		(1,759,428	)		98,000				(1,661,428	)		(124,093	)		(1,785,521	)
Other liabilities		(92,483	)		(32,000	)	(ii)		(124,483	)		-			(124,483	)
Redeemable noncontrolling interest		(4,751	)		-				(4,751	)		-			(4,751	)
Total Preliminary Purchase Price														$	4,341,320

(i) BRE’s historical book value for lines of credit was increased by $54.0 million related to the financing of the redemption of Series D preferred stock as discussed in (I) below.

(ii) BRE’s historical book value for other liabilities was increased by $32.0 million related to the $22.0 million accrual of BRE’s portion of the Merger transaction costs, and approximately $10.0 million accrual for certain BRE employees in connection with the change in control resulting from the completion of the Merger and their contractual employment agreements.

(iii) BRE’s historical book value for real estate assets, net was decreased by $324.0 million due the contribution of 17 BRE properties to three joint ventures and co-investments decreased by $75.5 million as discussed in (D) (i) and (ii) below.

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(iv) BRE’s historical book value for cash and cash equivalents was increased by $130.0 million as a result of: (a) $681.5 million in net proceeds from the co-investment transaction, (b) the payment of the Special Dividend of $5.15 per share of BRE common stock to BRE common stockholders on March 31, 2014 totaling $399.4 million and (c) use of $152.0 million of cash to pay down BRE’s line of credit.

Balance sheet and statement of income reclassification adjustments:

(A) BRE historical amounts include the reclassifications of certain balances in order to conform to Essex’s presentation as noted below:

The balance sheet reclassifications are as follows:

	BREas previously reported		Reclassifications				BRE as reclassified
Rental properties	$	3,918,341	$	(9,908	)	(i)	$	3,908,433
Real estate under development		483,725		17,992		(ii)		501,717
Notes and other receivables		-		8,146		(ii)		8,146
				(37,639	)	(ii)
				9,908		(i)
Prepaid expenses and other assets		52,976		(27,731	)			25,245

 

(i) Approximately $9.9 million related to in-place lease intangible assets has been reclassified to the line item entitled “Prepaid expenses and other assets.”

(ii) Approximately $37.6 million have been reclassified from prepaid expenses and other assets to the following:

Real estate under development	$	17,992
Notes and other receivables		8,146
Deferred charges, net		11,501

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The statement of income reclassifications for the year ended December 31, 2013 are as follows:

	BREas previously reported		Reclassifications			BRE as reclassified
Rental income	$	388,300	$	15,728		$	404,028
Ancillary income		15,728		(15,728	)		-
Property operating, excluding real estate taxes		124,304		(35,792	)		88,512
Real estate taxes		-		35,792			35,792
Other income		20,614		(384	)		20,230
Management and other fees		-		384			384
Impairment and other charges		-		585			585
Merger expenses		-		3,401			3,401
Other expenses		3,986		(3,986	)		-
Interest		65,867		(4,697	)		61,170
Amortization expense		-		4,697			4,697

Balance Sheet Adjustments:

(B) BRE’s rental properties and other  have been reduced by $441.1 million to reflect the contribution of the 17 BRE properties to the three joint ventures on March 31, 2014 and increased by $1,722.4 million  to adjust to their estimated fair values as of December 31, 2013. Real estate under development was increased by $92.8 million to adjust to their estimated fair values as of December 31, 2013. The estimated fair value was derived by applying a capitalization rate to estimated net operating income, using recent third party appraisals, or other available market data.

(C) Accumulated depreciation was adjusted to eliminate $117.1 million of accumulated depreciation related to the contribution of the 17 BRE properties to the three co-investment entities and to eliminate the remaining BRE’s historical accumulated depreciation.

(D) BRE’s co-investment in the joint ventures has been: (i) increased by approximately $162.0 million related to the contribution of 17 BRE properties to three joint ventures and the retention of a 50% non-controlling interest (ii) decreased by a distribution of $237.5 million for BRE’s share of the mortgage financing placed on the properties contributed, (iii) increased by $267.5 million to adjust its 50% non-controlling interest in the three joint ventures to their estimated fair value and (iv) increased by $7.1 million to adjust the existing historical co-investment to its estimated fair value as of December 31, 2013, using valuation techniques similar to those used to estimate the fair value of wholly-owned assets as discussed in (B) above.

(E) Cash and cash equivalents-unrestricted increased by $130.0 million as discussed in (iv) on page 11 offset by the application of cash assumed from BRE of $130.0 million to Essex’s unsecured line of credit.

(F) The prepaid expenses and other asset adjustment includes $80.9 million for acquisition of acquired in place leases. The estimated fair value of in-place leases was calculated based on the estimated cost to replace such leases, including foregone rents during an assumed lease-up period. These costs were offset by the elimination of BRE’s historical in-place lease intangible assets of $9.9 million.

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(G) Deferred financing costs were adjusted by $5.4 million, net, to eliminate BRE’s historical financing costs, net of $11.5 million partially offset by $6.1 million of loan assumptions fees to be paid in connection with the assumption of BRE debt balances discussed in (H).

(H) BRE’s debt balances have been adjusted by $124.1 million to reflect the estimated fair values at December 31, 2013. Fair value was estimated based on contractual future cash flows discounted using borrowing spreads and market interest rates that would have been available as of April 1, 2014 for debt with similar terms and maturities.

(I) Essex:

Adjustment represents the issuance of approximately 23.1 million shares of Essex common stock with a fair value of $3.78 billion as of April 1, 2014; the elimination of all historical BRE equity balances; the redemption of BRE’s Series D preferred stock (excluding accrued and unpaid dividends related to 2014) as required by the Merger Agreement; the increase to Essex’s unsecured line of credit to finance a portion of the Cash Consideration and debt assumption fees totaling $434.2 million partially offset by BRE cash assumed of approximately $130.0 million in connection with the Merger, and  the payoff of BRE’s line of credit and transaction costs.

For purchase accounting, the value of the common stock issued by Essex upon the consummation of the Merger was determined based on the closing price of BRE’s common stock on the closing date of the Merger. As a result of Essex being admitted to the S&P 500 on the same date as the closing of the Merger, Essex’s common stock price experienced significantly higher than usual trading volume and the closing price of $174 per share was significantly higher than its volume-weighted average trading price for the days before and after April 1, 2014.  BRE’s common stock did not experience the same proportionate increase in common stock price leading up to April 1, 2014.  As a result, given that a substantial component of the purchase price is an exchange of equity instruments, Essex used the closing price of BRE’s common stock on April 1, 2014 of $61 per share, less the Cash Consideration, as the fair value of the equity consideration.

The following table provides detail of adjustments impacting additional paid in capital (APIC), common stock and distributions in excess of accumulated earnings (in thousands):

	Common stock			APIC			Distributions in excess of accumulated earnings
Redemption of BRE's preferred stock	$	-		$	(52,125	)		-
Issuance of Essex common stock		2			3,783,204			-
Removal of BRE's historical balances		(772	)		(1,835,903	)		136,638
Transaction costs of Essex		-			-			(41,000	)
Total adjustment	$	(770	)	$	1,895,176		$	95,638

EPLP:

Adjustment represents the issuance of approximately 23.1 million of EPLP common units with a fair value of $3.78 billion as of April 1, 2014; the elimination of all historical BRE equity balances; the redemption of BRE’s Series D preferred stock (excluding accrued and unpaid dividends related to 2014) as required by the Merger Agreement; the increase to Essex’s unsecured line of credit to finance a portion of the Cash Consideration and debt assumption fees totaling $434.2 million partially offset by BRE cash assumed of approximately $130.0 million in connection with the Merger, and  the payoff of BRE’s line of credit and transaction costs.

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For purchase accounting, the value of the common units issued by EPLP upon the consummation of the Merger was determined based on the closing price of BRE’s common stock on the closing date of the Merger. As a result of Essex being admitted to the S&P 500 on the same date as the closing of the Merger, Essex’s common stock price experienced significantly higher than usual trading volume and the closing price of $174 per share was significantly higher than its volume-weighted average trading price for the days before and after April 1, 2014.  BRE’s common stock did not experience the same proportionate increase in common stock price leading up to April 1, 2014.  As a result, given that a substantial component of the purchase price is an exchange of equity instruments, EPLP used the closing price of BRE’s common stock on April 1, 2014 of $61 per share, less the Cash Consideration, as the fair value of the equity consideration.

The following table provides detail of adjustments impacting general partner common equity and general partner preferred interest (in thousands):

	General Partner Common Equity			General Partner Preferred Interest
Redemption of BRE's preferred stock	$	-		$	(52,125	)
Issuance of EPLP common units		3,783,206			-
Removal of BRE's historical balances		(1,700,059	)		-
Transaction costs of Essex		(41,000	)		-
Total adjustment	$	2,042,147		$	(52,125	)

(J) Adjustment represents estimated transaction costs estimated to have been incurred by Essex and BRE prior to or concurrent with the closing of the Merger of approximately $63.0 million, consisting primarily of fees for investment bankers, legal, accounting, tax, and certain filings to be paid to third parties based on actual expenses incurred to date and each party’s best estimate of its remaining fees as provided to Essex and BRE. Additionally, Essex assumed $10.0 million in liabilities for certain BRE employees in connection with the change in control resulting from the completion of the Merger and their contractual employment agreements.

Statement of Income Adjustments—for the Year Ended December 31, 2013

(K) Adjustments represent: (i) the removal of the operating results upon the deconsolidation of the 17 BRE properties contributed to the three joint ventures (see removal of real estate taxes and depreciation in (L) and (M)), (ii) the equity loss from co-investments of $2.8 million and (iii) management fee income of $2.3 million to be generated for managing these 17 properties.  The equity loss from co-investments represented 50% of the historical earnings of these 17 properties as adjusted for BRE’s 50% share of: (i) the increased depreciation and amortization expense based on the fair value of the 17 properties contributed, (ii) the increased real estate tax expense resulting from the fair value of the properties exceeding historical property tax basis pursuant to California’s Proposition 13, and (iii) increased interest expense as a result of the $475 million in mortgage financing placed on these contributed properties.

(L) Real estate tax expense was adjusted to: (i) the remove BRE’s historical real estate tax expense of $35.8 million and (ii) recognize $65.7 million of real estate tax expense based on the estimated fair value of BRE’s real estate assets multiplied by the applicable property tax rate partially offset by a reduction of $9.5 million related to the 17 BRE properties contributed to the three co-investments.

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(M) Depreciation and amortization expense was adjusted to: (i) eliminate $105.4 million of BRE’s historical depreciation and amortization expense and (ii) to recognize $156.0 million of depreciation based on the estimated fair value of BRE’s real estate assets and $58.1 million of amortization of the intangible assets recognized at estimated fair value partially offset by a reduction of $22.8 million of depreciation expense and $9.5 million of  amortization expense related to the 17 BRE properties contributed to the three co-investments . This depreciation and amortization adjustment is computed on a straight-line basis over the estimated useful lives of the related assets, which range from 30 years for land improvements and buildings and 20 months amortization for acquired in-place residential leases, all of which are preliminary determinations.

(N) Essex expects the Merger to create general and administrative cost efficiencies but there can be no assurance that such costs will be achieved. The unaudited pro forma consolidated financial statements do not include any estimate of projected cost savings.

(O) Merger expenses are one-time transaction-related expenses and are excluded from the pro forma statement of income.

(P) Interest expense was reduced by $25.4 million as a result of the amortization of the debt premium associated with the pro forma adjustment to record BRE’s debt at fair value and the elimination of interest expense on BRE’s line of credit as a result of the payoff of BRE’s line of credit. The reduction is offset by $4.8 million increase in interest expense in connection Essex’s increased unsecured line of credit to finance a portion of the Cash Consideration in connection with the Merger.

(Q) Amortization expense of deferred financing cost was reduced by $4.7 million to eliminate BRE’s historical amortization, partially offset by $1.2 million of amortization expense of the loan assumption fees discussed in (G), which are amortized over a weighted-average life of five years.

(R) BRE’s dividends/distributions to preferred stockholders/interests were eliminated with the redemption of its Series D preferred stock as required by the Merger Agreement.

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(S) Essex:

The calculation of basic and diluted income from continuing operations per share of common stock was as follows:

Year Ended December 31, 2013
	(Dollars in thousands, except per share data)
	Essex Historical			BRE as reclassified			Essex Pro Forma
Net income from continuing operations available to common stockholders, basic and diluted		$	121,324		$	117,500		$	120,252
Weighted average common shares outstanding, basic			37,249			77,111			60,343
Weighted average common shares outstanding, diluted			37,335			77,340			60,428
Income from continuing operations available to common stockholders per common share, basic		$	3.26		$	1.52		$	1.99
Income from continuing operations available to common stockholders per common share, diluted		$	3.25		$	1.52		$	1.99

Note: The pro forma weighted average shares of common stock assumes that the Essex shares of common stock issued to BRE stockholders in connection with the Merger were issued as of January 1, 2013.

EPLP:

The calculation of basic and diluted income from continuing operations per common unit was as follows:

Year Ended December 31, 2013
	(Dollars in thousands, except per unit data)
	EPLP Historical			BRE as reclassified			EPLP Pro Forma
Net income from continuing operations available to common unitholders, basic and diluted		$	128,576		$	117,500		$	127,504
Weighted average common units outstanding, basic			39,380			77,111			62,474
Weighted average common units outstanding, diluted			39,467			77,340			62,560
Income from continuing operations available to common unitholders per common unit, basic		$	3.27		$	1.52		$	2.04
Income from continuing operations available to common unitholders per common unit, diluted		$	3.26		$	1.52		$	2.04

Note: The pro forma weighted average EPLP common units assumes that the EPLP common units issued to the general partner in connection with the Merger were issued as of January 1, 2013.

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