(3) Co-investments

The Company has co-investments, which are accounted for under the equity method. The co-investments own, operate and develop apartment communities. The following table details the Company's co-investments (in thousands):

	September 30, 2014		December 31, 2013
Membership interest/Partnership interest in:

Wesco I	$	135,875	$	142,025
Wesco III		53,411		39,073
Fund II		2,578		4,166
Expo		8,305		12,041
The Huxley		11,784		11,224
Connolly Station		47,661		45,242
Wesco IV		95,338		-
BEXAEW		89,504		-
Total operating co-investments		444,456		253,771

Membership interest in:

Limited liability companies with CPPIB that own and are developing Epic, Mosso I and II, Park 20, The Emme, and The Owens & Hacienda (1)		364,779		256,296
One South Market		30,498		17,115
The Dylan		8,396		7,321
Century Towers		13,491		-
Total development co-investments		417,164		280,732

Membership interest in Wesco II that owns a preferred equity interest in Parkmerced with a preferred return of 10.1%		95,934		94,711
Preferred interest in related party limited liability company that owns Sage at Cupertino with a preferred return of 9.5%		16,471		15,775
Preferred interest in a related party limited liability company that owns Madison Park at Anaheim with a preferred return of 9%		13,824		13,824
Preferred interest in related party limited liability company that owns an apartment development in Redwood City with a preferred return of 12%		10,148		9,455
Preferred interest in a limited liability company that owns an apartment development in San Jose with a preferred return of 12%		9,710		8,865
Preferred interest in a limited liability company that owns 8th & Thomas with a preferred return of 10.0%		12,816		-
Preferred interest in a limited liability company that owns Newbury Park with a preferred return of 12.0%		12,754		-
Preferred interest in a limited liability company that owns Century Towers with a preferred return of 10.0%		10,000		-
Total preferred interest co-investments		181,657		142,630

Total co-investments	$	1,043,277	$	677,133

(1)	Epic Phase I and II are currently in operations. The co-investment will be moved to operating co-investment with the completion of Phase III.

The combined summarized balance sheet and statements of operations for co-investments are as follows (in thousands).

	September 30, 2014		December 31, 2013
Balance sheets:
Rental properties and real estate under development	$	3,084,852	$	1,953,328
Other assets		110,752		61,578

Total assets	$	3,195,604	$	2,014,906

Debt	$	1,285,954	$	667,641
Other liabilities		83,344		125,479
Equity		1,826,306		1,221,786

Total liabilities and equity	$	3,195,604	$	2,014,906

Company's share of equity	$	1,043,277	$	677,133

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Statements of operations:
Property revenues	$	51,725		$	24,796		$	128,469		$	78,913
Property operating expenses		(18,759	)		(10,170	)		(48,875	)		(29,872	)
Net property operating income		32,966			14,626			79,594			49,041

Gain on sale of real estate		-			137,845			11,369			146,663
Interest expense		(9,838	)		(6,052	)		(25,283	)		(18,924	)
General and administrative		(1,840	)		(1,419	)		(5,039	)		(4,472	)
Equity income from co-investments		4,808			-			14,351			-
Depreciation and amortization		(21,357	)		(8,718	)		(49,935	)		(29,314	)

Net income	$	4,739		$	136,282		$	25,057		$	142,994

Company's share of net income	$	4,910		$	40,802		$	21,065		$	52,295

Wesco IV and BEXAEW

On April 1, 2014, in connection with the merger, the Company acquired a 50% interest in Wesco IV LLC (“Wesco IV”) and a 50% interest in BEXAEW LLC (“BEXAEW”). Wesco IV and BEXAEW’s remaining 50% interest is owned by an institutional partner. Wesco IV and BEXAEW expect to utilize debt targeted at approximately 50% and 60%, respectively, of the cost to acquire and improve real estate. Under the terms of Wesco IV’s and BEXAEW’s operating agreements, Essex is entitled to asset management, property management, development and redevelopment service fees. In addition, Essex is entitled to its 50% pro rata share of the income or loss generated by these entities and upon the achievement of certain performance measures, is entitled to promote income. As of September 30, 2014, Wesco IV owned five apartment communities with 1,116 units with an aggregate carrying value of approximately $297.8 million. As of September 30, 2014, BEXAEW owned nine apartment communities with 2,723 units with an aggregate carrying value of approximately $516.7 million.