ESSEX PORTFOLIO LP

(1)Organization and Basis of Presentation

The accompanying unaudited condensed consolidated financial statements present the accounts of Essex Property Trust, Inc. (“Essex” or the “Company”), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the “Operating Partnership,” which holds the operating assets of the Company), prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented have been included and are normal and recurring in nature. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2024. Unless otherwise indicated, the notes to condensed consolidated financial statements apply to both the Company and the Operating Partnership.

All significant intercompany accounts and transactions have been eliminated in the unaudited condensed consolidated financial statements. Certain reclassifications have been made to conform to the current year's presentation.

The unaudited condensed consolidated financial statements for the three and six months ended June 30, 2025 and 2024 include the accounts of the Company and the Operating Partnership. Essex is the sole general partner of the Operating Partnership, with a 96.6% and 96.5% general partnership interest as of June 30, 2025 and December 31, 2024, respectively. Total Operating Partnership limited partnership units (“OP Units,” and the holders of such OP Units, “Unitholders”) outstanding were 2,256,414 and 2,331,251 as of June 30, 2025 and December 31, 2024, respectively, and the redemption value of the units, based on the closing price of the Company’s common stock totaled approximately $639.5 million and $665.4 million as of June 30, 2025 and December 31, 2024, respectively. The Company has reserved shares of common stock for such conversions.

As of June 30, 2025, the Company owned or had ownership interests in 259 operating apartment communities, comprising 62,842 apartment homes, excluding the Company’s ownership interests in preferred equity co-investments, loan investments, two operating commercial buildings, and a development pipeline consisting ofone consolidated project. The operating apartment communities are located in Southern California (primarily Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan area.

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2024-03 “Income Statement —Reporting Comprehensive Income —Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, and in January 2025, the FASB issued ASU No. 2025-01 “Income Statement —Reporting Comprehensive Income —Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date”. ASU 2024-03 requires disaggregated information for specified categories of expenses to be presented in the notes to the financial statements. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028. Early adoption is permitted. The new standards may be applied either prospectively, to financial statements issued after the effective date, or retrospectively, to all prior periods presented. The Company is currently evaluating the impact of these standards on its consolidated results of operations and financial position.

Accounting Pronouncements Adopted in the Current Year

In August 2023, the FASB issued ASU No. 2023-05 “Business Combinations—Joint Venture Formations (Subtopic 805-60)” under which an entity that qualifies as a joint venture is required to apply a new basis of accounting upon the formation of the joint venture. The amendments in ASU 2023-05 require that a joint venture must initially measure its assets and liabilities at fair value on the formation date. ASU 2023-05 is effective for all joint ventures that are formed on or after January 1, 2025 and early adoption is permitted. The Company adopted ASU No. 2023-05 as of January 1, 2025. This adoption did not have a material impact on the Company’s consolidated results of operations or financial position.

Revenues and Gains on Sale of Real Estate and Land

Revenues from tenants renting or leasing apartment homes are recorded when due from tenants and are recognized monthly as they are earned which generally approximates a straight-line basis, else, adjustments are made to conform to a straight-line basis. Apartment homes are rented under short-term leases (generally, lease terms of 9 to 12 months). Revenues from tenants leasing commercial space are recorded on a straight-line basis over the life of the respective lease. See Note 3, Revenues, for additional information regarding such revenues.

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

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

The Company recognizes any gains on sales of real estate when it transfers control of a property and when it is probable that the Company will collect substantially all of the related consideration.

Marketable Securities

The Company reports its equity securities and available-for-sale debt securities at fair value, based on quoted market prices (Level 1 for the equity securities and Level 2 for the available for sale debt securities, as defined by the FASB standard for fair value measurements). As of both June 30, 2025 and December 31, 2024, less than $0.1 million of equity securities presented within common stock, preferred stock, and stock funds in the tables below represented investments measured at fair value, using net asset value as a practical expedient, and were not categorized in the fair value hierarchy.

Any unrealized gain or loss in debt securities classified as available for sale is recorded as other comprehensive income. Any realized and unrealized gains and losses in equity securities, realized gains in debt securities, and interest income are included in interest and other income in the condensed consolidated statements of income and comprehensive income. There were no other-than-temporary impairment charges for the three and six months ended June 30, 2025 and 2024.

As of June 30, 2025 and December 31, 2024, equity securities and available for sale debt securities consisted primarily of investment funds-debt securities, common stock, preferred stock and stock funds, U.S. treasury securities, corporate debt securities and municipal debt securities.

As of June 30, 2025 and December 31, 2024, marketable securities consisted of the following ($ in thousands):

Variable Interest Entities

In accordance with accounting standards for consolidation of variable interest entities (“VIEs”), the Company consolidated the Operating Partnership,18 DownREIT entities (comprisingten communities), andfour co-investments as of June 30, 2025. As of December 31, 2024, the Company consolidated the Operating Partnership,18 DownREIT entities (comprising nine communities) andfive co-investments. The Company consolidates these entities because it is the primary beneficiary. The Company has no assets or liabilities other than its investment in the Operating Partnership. The consolidated total assets and liabilities related to the above consolidated co-investments and DownREIT entities, net of intercompany eliminations, were $942.6 million and $243.9 million, respectively, as of June 30, 2025 and $893.0 million and $319.1 million, respectively, as of December 31, 2024. Noncontrolling interests in these entities was $101.4 million and $105.1 million as of June 30, 2025 and December 31, 2024, respectively. The Company’s financial risk in each VIE is limited to its equity investment in the VIE. As of June 30, 2025 and December 31, 2024, the Company did not have any VIEs of which it was not the primary beneficiary.

Equity-based Compensation

The cost of share- and unit-based compensation awards is measured at the grant date based on the estimated fair value of the awards. The estimated fair value of stock options and restricted stock granted by the Company are being amortized over the vesting period. The estimated grant date fair values of the long term incentive plan units (discussed in Note 14, Equity Based Compensation Plans, in the Company’s annual report on Form 10-K for the year ended December 31, 2024) are being amortized over the expected service periods.

Fair Value of Financial Instruments

Management estimates that the carrying amounts of the outstanding balances under its lines of credit, commercial paper and notes and other receivables approximate fair value as of June 30, 2025 and December 31, 2024, because interest rates, yields, and other terms for these instruments are consistent with interest rates, yields, and other terms currently available for similar instruments. Management has estimated that the fair value of the Company’s fixed rate debt with a carrying value of $5.6 billion and $5.8 billion as of June 30, 2025 and December 31, 2024, respectively, was approximately $5.4 billion and $5.5 billion, respectively. Management has estimated that the fair value of the Company’s $1.1 billion and $752.3 million of variable rate debt at June 30, 2025 and December 31, 2024, respectively, was approximately $1.1 billion and $749.4 million, respectively, based on the terms of existing mortgage notes payable, unsecured debt, lines of credit and commercial paper compared to those available in the marketplace. Management estimated 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 June 30, 2025 and December 31, 2024 due to the short-term maturity of these instruments. Marketable securities are carried at fair value as of June 30, 2025 and December 31, 2024.

Capitalization of Costs

The Company’s capitalized costs related to development and redevelopment projects were comprised primarily of interest and employee compensation and totaled $6.1 million and $4.9 million during the three months ended June 30, 2025 and 2024, respectively, and $12.3 million and $10.2 million for the six months ended June 30, 2025 and 2024, respectively. The Company amortizes the capitalized costs over the useful life of the development.

Co-investments

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

Upon the acquisition of a controlling interest of a co-investment, the co-investment entity is consolidated and a gain or loss is recognized upon the remeasurement of co-investments in the condensed consolidated statements of income and comprehensive income equal to the amount by which the fair value of the co-investment interest, using Level 2 inputs, exceeds the Company’s carrying value of the co-investment. A majority of the co-investments, excluding most preferred equity investments, compensate the Company for its asset management services and some of these investments may provide promote income if certain financial return benchmarks are achieved. Asset management fees are recognized when earned, and promote fees are recognized when the earnings events have occurred and the amount is determinable and collectible. Any promote fees are reflected in equity income from co-investments.

The Company evaluates its investments in co-investments for impairment and records a loss if the carrying value is greater than the fair value of the investment and the impairment is other-than-temporary.

Changes in Accumulated Other Comprehensive Income, Net by Component

($ in thousands):

($ in thousands):

Amounts reclassified from accumulated other comprehensive loss in connection with derivatives are recorded in interest expense in the condensed consolidated statements of income and comprehensive income.

Redeemable Noncontrolling Interest

The carrying value of redeemable noncontrolling interests in the accompanying condensed consolidated balance sheets was $32.9 million and $30.8 million as of June 30, 2025 and December 31, 2024, respectively. The limited partners may redeem their noncontrolling interests for cash in certain circumstances.

The changes in the redemption value of redeemable noncontrolling interests for the six months ended June 30, 2025 was as follows ($ in thousands):

Cash, Cash Equivalents and Restricted Cash

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

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

Gain Contingencies

Contingencies, commonly resulting from legal settlements, will periodically arise that may result in a gain. Gain contingencies are typically not recognized in the financial statements until all uncertainties related to the contingency have been resolved. In the case of legal settlements, the Company determines that all uncertainties have been resolved when cash or other consideration has been received by the Company. There were no material gains from legal settlements during the three and six months ended June 30, 2025 and the three months ended June 30, 2024. During the six months ended June 30, 2024, the Company settledtwo lawsuits related to construction defects attwo communities and received cash recoveries of $42.5 million. The Company determined that all uncertainties were resolved upon receipt of cash and recorded a gain within interest and other income on the condensed consolidated statements of income and comprehensive income.

Accounting Estimates

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

(2)Significant Transactions During the Six Months Ended June 30, 2025 and Subsequent Events

Significant Transactions

Acquisition of Real Estate Interests

The table below summarizes acquisition activity for the six months ended June 30, 2025 ($ in millions):

(1)One Hundred Grand and Revere Campbell replaced Highridge, an apartment community owned by DownREIT entities that are consolidated by the Company, within the DownREIT structures of those entities pursuant to the like-kind exchange rules under Section 1031 of the Internal Revenue Code of 1986, as amended (“Section 1031 Exchange”).

Disposition of Real Estate Interests

The table below summarizes disposition activity for the six months ended June 30, 2025 ($ in millions):

(1)Highridge, an apartment community owned by DownREIT entities that are consolidated by the Company, was replaced by One Hundred Grand and Revere Campbell within the DownREIT structures of those entities pursuant to a Section 1031 Exchange. The Company recognized a $111.0 million gain on sale of real estate and land in the condensed consolidated statements of income and comprehensive income. In conjunction with the sale, $69.6 million in debt associated with the property was paid off and the Company recorded a $0.8 million loss on early extinguishment of debt.

(2)The Company recognized a $126.2 million gain on sale in the condensed consolidated statements of income and comprehensive income.

Real Estate Assets Held for Sale

As of June 30, 2025, one community comprising of 243 apartment homes was classified as held for sale.

Preferred Equity Investments

In April 2025, the Company received cash of $14.1 million for the full redemption of a preferred equity investment in a joint venture that holds property located in Washington.

In March 2025, the Company received cash of $9.9 million for the full redemption of a preferred equity investment in a joint venture that holds property located in California.

In the fourth quarter of 2024, the Company repaid a $72.0 million senior mortgage associated with a $22.7 million preferred equity investment in Artizan, a 241-unit stabilized apartment home community located in Oakland, CA, and subsequently issued a default notice to the third-party sponsor in January 2025, assumed full managerial control and consolidated the property based on a valuation of $95.0 million. The Company recorded $0.3 million as a gain on remeasurement of co-investment in the condensed consolidated statements of income and comprehensive income.

Senior Unsecured Debt

In May 2025, the Operating Partnership obtained a $300.0 million unsecured term loan priced at Secured Overnight Financing Rate (“SOFR”) plus 0.850%. The loan is scheduled to mature in May 2028, withtwo one-year extension options, exercisable at the option of the Company. The loan includes a twelve-month delayed draw feature. The Company may elect to increase this facility by up to an additional $300.0 million, to an aggregate size of $600.0 million, if the lenders permit. As of June 30, 2025, the Company had borrowed $150.0 million under the term loan facility. The Company has entered into floating-to-fixed interest rate swaps to fix the interest rate for $150.0 million of the term loan facility to an all-in rate of 4.1% through April 2030.

In May 2025, the Operating Partnership entered into a closing agreement to increase its $1.2 billion unsecured line of credit (“Prior Revolving Credit Facility”) to $1.5 billion (“New Credit Facility”). The replacement of the Prior Revolving Credit Facility was completed and became effective in July 2025. The underlying interest rate will be SOFR plus 0.775% which is based on a tiered rate structure tied to the Company’s credit ratings. The New Credit Facility is scheduled to mature in January 2030, withtwo six-month extensions exercisable at the option of the Company. The Company may also elect to increase the facility by up to an additional $1.0 billion, to an aggregate size of $2.5 billion, if the lenders permit.

In May 2025, the Company established a commercial paper program (the “Commercial Paper Program”) to issue unsecured commercial paper notes with varying maturities up to 397 days from the date of issue (the “Notes”). Amounts available under the Commercial Paper Program may be borrowed, repaid and re-borrowed from time to time, with the maximum aggregate face or principal amount outstanding at any one time not exceeding $750.0 million. The Company’s unsecured line of credit facilities serve as a liquidity backstop and any issuances under the Commercial Paper Program reduce the available borrowing capacity. The Notes rank equally in right of payment with all other senior unsecured senior obligations of the Operating Partnership and are unconditionally guaranteed by the Company.

In February 2025, the Operating Partnership issued $400.0 million of senior unsecured notes due on April 1, 2035 with a coupon rate of 5.375% per annum (the “2035 Notes”), which are payable on April 1 and October 1 of each year, beginning on October 1, 2025. The 2035 Notes were offered to investors at a price of 99.604% of the principal amount. The 2035 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 unconditionally guaranteed by Essex. In April 2025, the Company repaid its $500.0 million unsecured notes at maturity.

Subsequent events

Subsequent to quarter end, the Company formed a new joint venture, Wesco VII, LLC (“Wesco VII”), with the State of Wisconsin Investment Board with a total commitment from each partner of $50.0 million to fund new structured finance investments. Essex has a 50.0% ownership interest in the venture. In July 2025, Wesco VII originated a $42.6 million preferred equity investment for the development of a 480-unit apartment home community located in California. The investment has an initial preferred return of 13.5% and is expected to be fully funded by the fourth quarter of 2025.

Subsequent to quarter end, the Company sold the held for sale property noted above for a contract price of $97.5 million.

(3)Revenues

Disaggregated Revenue

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

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

(1)Other real estate assets consist of revenues generated from retail space, commercial properties, held for sale properties, disposition properties and straight-line rent adjustments for concessions. Executive management does not evaluate such operating performance geographically.

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

(1)Same-property includes properties that have comparable stabilized results as of January 1, 2024 and are consolidated by the Company for the six months ended June 30, 2025 and 2024. A community is considered to have reached stabilized operations once it achieves an initial occupancy of 90%.

(2)Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2024.

(3)Non-residential/other, net consists of revenues generated from retail space, commercial properties, held for sale properties, disposition properties, student housing, properties undergoing significant construction activities that do not meet our redevelopment criteria, andtwo communities located in the California counties of Santa Barbara and Santa Cruz, which the Company does not consider its core markets.

(4)Represents straight-line concessions for residential operating communities. Same-property revenues reflect concessions on a cash basis. Total rental and other property revenues reflect concessions on a straight-line basis in accordance with U.S. GAAP.

Deferred Revenues and Remaining Performance Obligations

When cash payments are received or due in advance of the Company’s performance of contracts with customers, deferred revenue is recorded. The total deferred revenue balance related to such contracts was $0.3 million as of both June 30, 2025 and December 31, 2024, and was included in accounts payable and accrued liabilities within the accompanying condensed consolidated balance sheets. The amount of revenue recognized for the six months ended June 30, 2025 that was included in the December 31, 2024 deferred revenue balance was less than $0.1 million, which was included in rental and other property revenue within the condensed consolidated statements of income and comprehensive income.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in the revenue recognition accounting standard. As of June 30, 2025, the Company had $0.3 million of remaining performance obligations. The Company expects to recognize approximately 22% of these remaining performance obligations in 2025 and the remaining 78% through 2027.

(4)Co-investments

The Company has joint ventures which are accounted for under the equity method. The co-investments’ accounting policies are similar to the Company’s accounting policies. The co-investments typically own, operate, and develop apartment communities. Additionally, the Company has invested infive unconsolidated technology co-investments and, as of June 30, 2025, the co-investment balance of these investments was $67.1 million, and the aggregate commitment was $86.0 million. As of December 31, 2024, the Company hadfive unconsolidated technology co-investments and the co-investment balance of these investments was $57.3 million and the aggregate commitment was $86.0 million.

The carrying values of the Company’s co-investments as of June 30, 2025 and December 31, 2024 were as follows ($ in thousands, except in parenthetical):

(1)Weighted average company ownership percentages are as of June 30, 2025.

(2)As of June 30, 2025 and December 31, 2024, the Company’s investments in Wesco I, Wesco III, and Wesco IV were classified as a liability of $86.9 million and $77.2 million, respectively, due to distributions received in excess of the Company’s investment.

(3)As of June 30, 2025 and December 31, 2024, the Company’s investment in Expo was classified as a liability of $2.5 million and $2.0 million, respectively, due to distributions received in excess of the Company’s investment. The weighted average company ownership percentage excludes the Company’s investments in unconsolidated technology co-investments.

The combined summarized financial information of co-investments was as follows ($ in thousands):

(1)Includes preferred equity investments held by the Company and excludes investments in unconsolidated technology co-investments.

(2)Includes the Company’s share of equity income from joint ventures and preferred equity investments, gain on sales of co-investments, co-investment promote income, and income from early redemption of preferred equity investments. Includes related party income of $1.3 million and $1.1 million for the three months ended June 30, 2025 and 2024, respectively, and $2.5 million and $2.2 million for the six months ended June 30, 2025 and 2024, respectively.

(5)Notes and Other Receivables

Notes and other receivables consisted of the following as of June 30, 2025 and December 31, 2024 ($ in thousands):

(1)In the fourth quarter of 2024, the Company repaid a $72.0 million senior mortgage associated with a preferred equity investment in Artizan, a 241-unit stabilized apartment home community located in Oakland, CA, and subsequently issued a default notice to the third-party sponsor in January 2025, assumed full managerial control and consolidated the property. Refer to Note 2, Significant Transactions During the six months ended June 30, 2025, for additional details.

(2)These amounts are receivables from lease concessions recorded on a straight-line basis for the Company’s operating properties.

The following table presents the activity in the allowance for credit losses for notes receivable, secured for the periods presented ($ in thousands):

(6)Related Party Transactions

The Company charges certain fees relating to its co-investments for asset management, property management, development and redevelopment services. These fees from affiliates totaled $2.3 million and $2.8 million during the three months ended June 30, 2025 and 2024, respectively, and $4.8 million and $5.6 million for the six months ended June 30, 2025 and 2024, respectively. All of these fees are net of intercompany amounts eliminated by the Company. The Company netted development and redevelopment fees of less than $0.1 million for the three months ended June 30, 2025 and $0.2 million for three months ended June 30, 2024, and $0.1 million and $0.3 million for the six months ended June 30, 2025 and 2024, respectively, against general and administrative expenses .

The Company’s Chairman and founder, Mr. George M. Marcus, is the Chairman of the Marcus & Millichap Company (“MMC”), which is a parent company of a diversified group of real estate service, investment, and development firms. Mr. Marcus is also the Chairman of and owns a controlling interest in Marcus & Millichap, Inc. (“MMI”), a national brokerage firm listed on the New York Stock Exchange. For the three and six months ended June 30, 2025 and 2024, the Company didnot pay brokerage commissions related to real estate transactions to MMI and its affiliates.

In April 2024, the Company funded a $53.6 million related party bridge loan to BEX II in connection with the payoff of a mortgage associated with one of BEX II’s properties located in Southern California. The note receivable accrued interest at SOFR plus 1.50% and was scheduled to mature in September 2024. In September 2024, the maturity date of the loan was extended to October 2024 and settled following the purchase of the BEX II portfolio in October 2024.

In August 2022, the Company funded an $11.2 million preferred equity investment in an entity whose sponsor includes an affiliate of MMC. The entity owns three multifamily communities located in Azusa, CA. The investment accrues interest based on a 9.5% preferred return and is scheduled to mature in August 2027.

In October 2018, the Company funded an $18.6 million preferred equity investment in an entity whose sponsor is an affiliate of MMC. The entity wholly owns a 268-unit apartment home community development located in Burlingame, CA. The investment initially accrued interest based on a 12.0% preferred return which was reduced to 9.0% upon completion and lease-up of the project. In April 2023, the investment’s maturity date was extended from April 2024 to May 2026 with the investment accruing interest based on an 11.0% preferred return. In April 2023, the Company received cash of $11.2 million for the partial redemption of this preferred equity investment.

In May 2018, the Company made a commitment to fund a $26.5 million preferred equity investment in an entity whose sponsors include an affiliate of MMC. The entity wholly owns a 400-unit apartment home community located in Ventura, CA. The investment accrued interest based on a 10.25% initial preferred return. The investment was scheduled to mature in May 2023. In November 2021, the Company received cash of $18.3 million for the partial redemption of this preferred equity investment resulting in a remaining total commitment of $13.0 million, and the maturity was extended to December 2028. As of June 30, 2025, $11.0 million of this commitment was funded and the Company accrues interest based on a 9.0% preferred return. The remaining unfunded commitment of $2.0 million expired in November 2024.

The Company has provided short-term loans to affiliates. As of June 30, 2025 and December 31, 2024, $5.9 million and $5.6 million, respectively, of short-term loans remained outstanding due from joint venture affiliates and is classified within notes and other receivables in the accompanying condensed consolidated balance sheets.

(7)Debt

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

Debt consisted of the following for the periods presented ($ in thousands):

(1)In May 2025, the Operating Partnership obtained a new $300.0 million unsecured term loan priced at SOFR plus 0.850% which is based on a tiered rate structure tied to the Company’s long-term unsecured credit rating with a one-year delayed draw feature. The Company may elect to increase this facility by up to an additional $300.0 million, to an aggregate size of $600.0 million, if the lenders permit. This term loan is scheduled to mature in May 2028, withtwo one-year extension options, exercisable at the option of the Company. As of June 30, 2025, the Company had drawn $150.0 million on the new term loan facility. In April 2025, the Company has entered into floating-to-fixed interest rate swaps to fix the interest rate for $150.0 million of the new term loan facility to an all-in rate of 4.1% through April 2030.

(2)In February 2025, the Operating Partnership issued $400.0 million of senior unsecured notes due on April 1, 2035 with a coupon rate of 5.375% per annum, which are payable on April 1 and October 1 of each year, beginning on October 1, 2025. The 2035 Notes were offered to investors at a price of 99.604% of the principal amount. In April 2025, the Company used these proceeds to repay its $500.0 million senior unsecured notes at maturity.

(3)Unsecured debt, net, consists of fixed rate public bond offerings and a variable rate term loan which includes unamortized discounts, net of premiums of $1.0 million and unamortized premiums, net of discounts of $0.1 million, and unamortized debt issuance costs of $29.1 million and $26.3 million, as of June 30, 2025 and December 31, 2024, respectively.

(4)Lines of credit, related to the Company’stwo lines of unsecured credit aggregating $1.28 billion as of both June 30, 2025, and December 31, 2024, excludes unamortized debt issuance costs of $5.3 million and $6.2 million as of June 30, 2025 and December 31, 2024, respectively. These debt issuance costs are included in prepaid expenses and other assets in the condensed consolidated balance sheets. As of June 30, 2025, the Company’s $1.2 billion credit facility had an interest rate at the Adjusted Secured Overnight Financing Rate (“Adjusted SOFR”) plus 0.765%, which is based on a tiered rate structure tied to the Company’s credit ratings, adjusted for the facility’s sustainability metric adjustment feature, and a scheduled maturity date of January 2029 withtwo six-month extensions, exercisable at the Company’s option. In July 2025, the Company amended this revolving credit facility increasing the borrowing capacity to $1.5 billion and extended its maturity to January 2030 with two 6-month extension options, exercisable at the Company's option. The Company may elect to increase the facility by up to an additional $1.0 billion, to an aggregate size of $2.5 billion, if the lenders permit. The underlying interest rate on this new line of credit facility is SOFR plus 0.775% which is based on a tiered rate structure tied to the Company's long-term unsecured credit ratings. As of June 30, 2025, the Company’s $75.0 million working capital unsecured line of credit had an interest rate of the Adjusted SOFR plus 0.765%, which is based on a tiered rate structure tied to the Company’s credit ratings and a scheduled maturity date of July 2026.

(5)In May 2025, the Company entered into a commercial paper program under which it can issue unsecured short-term notes, which are backstopped by, and reduce the borrowing capacity of, the Company’s unsecured line of credit facilities. The Company can issue up to $750.0 million of commercial paper for up to 397 days from the date of issue. The commercial paper balance excludes unamortized debt issuance of $0.1 million as of June 30, 2025, and are included in prepaid expenses and other assets in the condensed consolidated balance sheets.

(6)Includes total unamortized discounts, net of premiums of approximately $0.4 million and $0.2 million, reduced by unamortized debt issuance costs of $2.3 million and $2.6 million, as of June 30, 2025 and December 31, 2024, respectively.

The aggregate scheduled principal payments of the Company’s outstanding debt, excluding lines of credit and commercial paper, as of June 30, 2025 were as follows ($ in thousands):

(8)Segment Information

The Company’s segment disclosures present the measure used by the chief operating decision maker (“CODM”) for purposes of assessing each segment’s performance. The Company’s CODM is a group comprised of its Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, and Chief Investment Officer, who use net operating income (“NOI”) to assess the performance of the business for the Company’s reportable operating segments. NOI represents total property revenues less direct property operating expenses.

The CODM evaluates the Company’s operating performance geographically. The Company defines its reportable operating segments as thethree geographical regions in which its communities are located: Southern California, Northern California and Seattle Metro.

Excluded from segment revenues and NOI are management and other fees from affiliates and interest and other income (loss). Other real estate assets revenues, property operating expenses, including real estate taxes, and NOI included in the following schedule also consist of revenues generated from retail space, commercial properties, held for sale properties, disposition properties and straight-line adjustments for concessions. Executive management does not evaluate such operating performance geographically. Other non-segment assets include items such as real estate under development, co-investments, real estate held for sale, cash and cash equivalents, marketable securities, notes and other receivables, and prepaid expenses and other assets.

The revenues and NOI for each of the reportable operating segments are summarized as follows for the three and six months ended June 30, 2025 and 2024 ($ in thousands):

Total assets for each of the reportable operating segments are summarized as follows as of June 30, 2025 and December 31, 2024 ($ in thousands):

(1)Includes retail space, commercial properties, held for sale properties, and disposition properties.

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

Basic and diluted income per share was calculated as follows for the periods presented ($ in thousands, except per share amounts):

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,263,171 and 2,258,812, which include vested 2014 Long-Term Incentive Plan Units and 2015 Long-Term Incentive Plan Units, for the three months ended June 30, 2025 and 2024, respectively, and 2,284,941 and 2,258,812 for the six months ended June 30, 2025 and 2024, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $7.8 million and $3.3 million for the three months ended June 30, 2025 and 2024, respectively, and $15.1 million and $12.9 million for the six months ended June 30, 2025 and 2024, respectively.

Stock options of 250,512 and 326,199 for the three months ended June 30, 2025 and 2024, respectively, and 234,727 and 396,519 for the six months ended June 30, 2025 and 2024, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the average unearned compensation were greater than the average market price of the common stock for the periods ended and, therefore, were anti-dilutive.

Basic and diluted income per unit was calculated as follows for the periods presented ($ in thousands, except per unit amounts):

Stock options of 250,512 and 326,199 for the three months ended June 30, 2025 and 2024, respectively, and 234,727 and 396,519 for the six months ended June 30, 2025 and 2024, respectively, were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for the periods ended and, therefore, were anti-dilutive.

(10)Derivative Instruments and Hedging Activities

As of June 30, 2025, the Company hadfive interest rate swap contracts and one forward starting interest rate swap contract with an aggregate notional amount of $547.5 million. The Company has $450.0 million in notional amount that effectively fixed the interest rate on the Company’s $450.0 million unsecured term loan at 4.2%. In June 2025, the Company entered into a $50.0 million forward starting interest rate swap that effectively fixes $50.0 million of the term loan at an all-in rate of 4.1% to be drawn at a future date. The remaining $47.5 million in notional amount effectively converts $47.5 million of variable rate mortgage notes payable to an all-in fixed rate of 2.83%. These derivatives qualify for hedge accounting.

As of June 30, 2025 and December 31, 2024, the aggregate carrying value of the interest rate swap contracts was an asset of $3.1 million and $5.5 million, respectively, within prepaid expenses and other assets in the condensed consolidated balance sheets.

As of June 30, 2025, the aggregate carrying value of the forward starting interest rate swap contract was a liability of less than $0.1 million within other liabilities in the condensed consolidated balance sheets.

(11)Commitments and Contingencies

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

A number of purported class actions were filed against RealPage, Inc., a seller of revenue management software, and various lessors of multifamily housing which utilize this software, including the Company. The complaints allege collusion among defendants to artificially increase rents of multifamily residential real estate above competitive levels. The Company is vigorously defending against these lawsuits. The Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from such matters. The Company is also subject to various other legal and/or regulatory proceedings arising in the normal course of its business operations. The Company believes that, with respect to such matters that it is currently a party to, the ultimate disposition of any such matter will not result in a material adverse effect on the Company’s financial condition, results of operations or cash flows. To the extent that such a matter arises or is identified in the future and the Company believes it will have a material impact on the condensed consolidated financial statements, the Company will disclose the estimated range of possible outcomes associated with it, and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, impairment will be recognized.