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What changed in Essex Property Trust's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Essex Property Trust's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+297 added−309 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-23)

Top changes in Essex Property Trust's 2023 10-K

297 paragraphs added · 309 removed · 251 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAs of December 31, 2022, the Company’s workforce was 41% female, 58% male, and 1% chose not to disclose their gender. 57% of our corporate associates and 36% of our on-site operational associates self-identified as female. The Company had 249 women in positions of manager or higher, representing 60% of managerial positions, a decrease from 65% in 2021.
Biggest changeThe Company’s notable diversity achievements for 2023 include the following data as of December 31, 2023: – The Company’s workforce self-identified as 71% ethnically or culturally diverse. – 53% of the Company’s managerial level employees, including 38% of its senior executives, self-identified as ethnically or culturally diverse. – There were 216 women in positions of manager or higher, equating to 61% of managerial positions in the Company. 5 Table of Contents – The Company’s workforce self-identified as 42% female and 57% male (1% chose not to disclose their gender). – 60% of the Company’s corporate associates self-identified as female.
The Company supports the employee-led affinity groups, Women at Essex and the LGBTQ+ focused Rainbow Alliance, which foster a sense of community and inclusion for a diverse mix of associates at the Company through discussions and activities that are intended to engage, educate, enable, and empower the Company's employees.
The Company supports the employee-led affinity groups, including Women at Essex and the LGBTQ+ focused Rainbow Alliance, which foster a sense of community and inclusion for a diverse mix of associates at the Company through discussions and activities that are intended to engage, educate, enable, and empower the Company's employees.
Essex is the sole general partner of the Operating Partnership and as of December 31, 2022, had an approximately 96.6% general partner interest in the Operating Partnership. In this report, the terms the "Company," "we," "us," and "our" also refer to Essex Property Trust, Inc., the Operating Partnership and those entities/subsidiaries owned or controlled by Essex and/or the Operating Partnership.
Essex is the sole general partner of the Operating Partnership and as of December 31, 2023, had an approximately 96.6% general partner interest in the Operating Partnership. In this report, the terms the "Company," "we," "us," and "our" also refer to Essex Property Trust, Inc., the Operating Partnership and those entities/subsidiaries owned or controlled by Essex and/or the Operating Partnership.
Bank Debt As of December 31, 2022, Moody’s Investor Service and Standard and Poor's ("S&P") credit agencies rated Essex Property Trust, Inc. and Essex Portfolio, L.P. Baa1/Stable and BBB+/Stable, respectively. At December 31, 2022, the Company had two unsecured lines of credit aggregating $1.24 billion.
Bank Debt As of December 31, 2023, Moody’s Investor Service and Standard and Poor's ("S&P") credit agencies rated Essex Property Trust, Inc. and Essex Portfolio, L.P. Baa1/Stable and BBB+/Stable, respectively. At December 31, 2023, the Company had two unsecured lines of credit aggregating $1.24 billion.
The Company intends to achieve this by utilizing the strategies set forth below: • Property Management – Oversee delivery and quality of the housing provided to our tenants and manage the properties financial performance. • Capital Preservation – The Company's asset management services are responsible for the planning, budgeting and completion of major capital improvement projects at the Company’s communities. • Business Planning and Control – Comprehensive business plans are implemented in conjunction with significant investment decisions.
The Company intends to achieve this by utilizing the strategies set forth below: 2 Table of Contents • Property Management – Oversee delivery and quality of the housing provided to our tenants and manage the properties financial performance. • Capital Preservation – The Company's asset management services are responsible for the planning, budgeting and completion of major capital improvement projects at the Company’s communities. • Business Planning and Control – Comprehensive business plans are implemented in conjunction with significant investment decisions.
The Company's $1.2 billion credit facility had an interest rate of Adjusted SOFR plus 0.75% which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of January 2027 with two six-month extensions, exercisable at the Company's option.
The Company's $1.2 billion credit facility had an interest rate of Adjusted Secured Overnight Financing Rate ("Adjusted SOFR") plus 0.75% which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of January 2027 with two six-month extensions, exercisable at the Company's option.
The Company currently intends to continue to invest in apartment communities in such regions. However, the geographical composition of the portfolio is evaluated periodically and may be modified by management. 7 Table of Contents
The Company currently intends to continue to invest in apartment communities in such regions. However, the geographical composition of the portfolio is evaluated periodically and may be modified by management. 9 Table of Contents
In addition, the Company carries other types of insurance coverage related to a variety of risks and exposures. 6 Table of Contents Based on market conditions, the Company may change or potentially eliminate insurance coverages, or increase levels of self-insurance.
In addition, the Company carries other types of insurance coverage related to a variety of risks and exposures. Based on market conditions, the Company may change or potentially eliminate insurance coverages, or increase levels of self-insurance.
Employee Engagement In order to engage and promote communication with our associates and solicit meaningful feedback on our efforts to create a positive work environment, the Company issues engagement surveys to all associates to measure 10 key drivers of employee experience including organizational fit, DEI, freedom of opinion, meaningful work, management support and recognition, among others.
Employee Engagement In order to engage and promote communication with our associates and solicit meaningful feedback on our efforts to create a positive work environment, the Company issues engagement surveys to all associates to measure 10 key drivers of employee engagement including goal setting, organizational fit, DEI, well-being, freedom of opinion, meaningful work, management support and recognition, among others.
WORKING CAPITAL The Company believes that cash flows generated by its operations, existing cash and cash equivalents, marketable securities balances, availability under existing lines of credit, access to capital markets and the ability to generate cash from the disposition of real estate are sufficient to meet all of its reasonably anticipated cash needs during 2023.
WORKING CAPITAL 8 Table of Contents The Company believes that cash flows generated by its operations, existing cash and cash equivalents, marketable securities balances, availability under existing lines of credit, access to capital markets and the ability to generate cash from the disposition of real estate are sufficient to meet all of its reasonably anticipated cash needs during 2024.
As of December 31, 2022, the Company's development pipeline was comprised of one unconsolidated joint venture project under development aggregating 264 apartment homes and various predevelopment projects, with total incurred costs of $102.0 million.
As of December 31, 2023, the Company's development pipeline was comprised of one unconsolidated joint venture project under development aggregating 264 apartment homes and various predevelopment projects, with total incurred costs of $114.0 million.
As of December 31, 2022, the Company owned or had ownership interests in 252 operating apartment communities, aggregating 62,147 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, three operating commercial buildings, and a development pipeline comprised of one unconsolidated joint venture project and various predevelopment projects aggregating 264 apartment homes (collectively, the "Portfolio").
As of December 31, 2023, the Company owned or had ownership interests in 252 operating apartment communities, aggregating 61,997 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, three operating commercial buildings, and a development pipeline comprised of one unconsolidated joint venture project and various predevelopment projects aggregating 264 apartment homes (collectively, the "Portfolio").
The Company earns a preferred rate of return on these investments. HUMAN CAPITAL MANAGEMENT Company Overview and Values The Company is headquartered in San Mateo, CA, and has regional corporate offices in Woodland Hills, CA; Irvine, CA and Bellevue, WA. As of December 31, 2022, the Company had 1,772 employees, 99.9% of whom were full-time employees.
The Company earns a preferred rate of return on these investments. HUMAN CAPITAL MANAGEMENT Company Overview and Values The Company is headquartered in San Mateo, CA, and has regional corporate offices in Woodland Hills, CA; Irvine, CA and Bellevue, WA. As of December 31, 2023, the Company had 1,750 employees, 99.8% of whom were full-time employees.
The Company also purchases limited earthquake, terrorism, environmental and flood insurance. There are certain types of losses which may not be covered or could exceed coverage limits. The insurance programs are subject to deductibles and self-insured retentions in varying amounts. The Company utilizes a wholly owned insurance subsidiary, Pacific Western Insurance LLC ("PWI"), to self-insure certain earthquake and property losses.
There are certain types of losses which may not be covered or could exceed coverage limits. The insurance programs are subject to deductibles and self-insured retentions in varying amounts. The Company utilizes a wholly owned insurance subsidiary, Pacific Western Insurance LLC ("PWI"), to self-insure certain earthquake and property losses.
The estimated remaining project costs are approximately $25.0 million, of which $12.8 million represents the Company's share of estimated remaining costs, for total estimated project costs of $127.0 million. The Company defines predevelopment projects as proposed communities in negotiation or in the entitlement process with an expected high likelihood of becoming entitled development projects.
The estimated remaining project costs are approximately $12.0 million, of which $6.5 million represents the Company's share of estimated remaining costs, for total estimated project costs of $126.0 million. The Company defines predevelopment projects as proposed communities in negotiation or in the entitlement process with an expected high likelihood of becoming entitled development projects.
The Company's culture supports its mission and is guided by its core values: to act with integrity, to care about what matters, to do right with urgency, to lead at every level and to seek fairness. The Company seeks to reinforce those values within its workforce.
The Company's culture supports its mission and is guided by its core values: to act with integrity, to care about what matters, to do right with urgency, to lead at every level and to seek fairness.
As of December 31, 2022, PWI had cash and marketable securities of approximately $107.6 million, and is consolidated in the Company's financial statements. All of the Company's communities are located in areas that are subject to earthquake activity.
As of December 31, 2023, PWI had cash and marketable securities of approximately $125.5 million, and is consolidated in the Company's financial statements. All of the Company's communities are located in areas that are subject to earthquake activity.
As of December 31, 2022, the Company had various consolidated predevelopment projects. The Company may also acquire land for future development purposes or sale.
As of December 31, 2023, the Company had various consolidated predevelopment projects. The Company may also acquire land for future development purposes.
The Company continually assesses markets where the Company operates, as well as markets where the Company considers future investment opportunities by evaluating markets and focusing on the following strategic criteria: • Major metropolitan areas that have regional population in excess of one million; • Constraints on new supply driven by: (i) low availability of developable land sites where competing housing could be economically built; (ii) political growth barriers, such as protected land, urban growth boundaries, and potential lengthy and expensive development permit processes; and (iii) natural limitations to development, such as mountains or waterways; • Rental demand enhanced by affordability of rents relative to costs of for-sale housing; and • Housing demand based on job growth, proximity to jobs, high median incomes and the quality of life including related commuting factors. 1 Table of Contents Recognizing that all real estate markets are cyclical, the Company regularly evaluates the results of its regional economic, and local market research, and adjusts the geographic focus of its portfolio accordingly.
The Company continually assesses markets where the Company operates, as well as markets where the Company considers future investment opportunities by evaluating markets and focusing on the following strategic criteria: • Major metropolitan areas that have regional population in excess of one million; • Constraints on new supply driven by: (i) low availability of developable land sites where competing housing could be economically built; (ii) political growth barriers, such as protected land, urban growth boundaries, and potential lengthy and expensive development permit processes; and (iii) natural limitations to development, such as mountains or waterways; • Rental demand enhanced by affordability of rents relative to costs of for-sale housing; and • Housing demand based on job growth, proximity to jobs, high median incomes and the quality of life including related commuting factors.
A total of 1,327 employees worked on-site at our operating communities and 445 worked in our corporate offices.
A total of 1,321 employees worked on-site at our operating communities and 429 worked in our corporate offices.
The following table sets forth information regarding the Company’s development pipeline ($ in millions): As of 12/31/2022 Essex Estimated Incurred Estimated Development Pipeline Location Ownership% Apartment Homes Project Cost (1) Project Cost (1) Development Projects - Joint Venture LIVIA (fka Scripps Mesa Apartments) (2) San Diego, CA 51% 264 $ 77 $ 102 Total Development Projects - Joint Venture 264 77 102 Predevelopment Projects - Consolidated Other Projects Various 100% — 25 25 Total - Consolidated Predevelopment Projects — 25 25 Grand Total - Development and Predevelopment Pipeline 264 $ 102 $ 127 (1) Includes costs related to the entire project, including both the Company's and joint venture partners' costs.
The following table sets forth information regarding the Company’s development pipeline ($ in millions): As of 12/31/2023 Essex Estimated Incurred Estimated Development Pipeline Location Ownership% Apartment Homes Project Cost (1) Project Cost (1) Development Projects - Joint Venture LIVIA at Scripps Ranch (2) San Diego, CA 51% 264 $ 90 $ 102 Total Development Projects - Joint Venture 264 90 102 Predevelopment Projects - Consolidated Other Projects Various 100% — 24 24 Total - Consolidated Predevelopment Projects — 24 24 Grand Total - Development and Predevelopment Pipeline 264 $ 114 $ 126 (1) Includes costs related to the entire project, including both the Company's and joint venture partners' costs.
The Company has safety policies in place that align with an Injury & Illness Prevention Program, which seeks to proactively prevent workplace accidents and protect the health and safety of the Company's associates through training and analysis of incident reports.
The Company has safety policies in place that align with its health and safety goals and seeks to proactively prevent workplace accidents and protect the health and safety of the Company's associates through training and analysis of incident reports.
All associates are offered training aimed at preventing workplace harassment, including harassment based on age, gender or ethnicity, training covering the foundations of DEI and awareness of unconscious bias in the workplace, and all managers are required to complete anti-harassment training. The Company is committed to pay equity and conducts a pay equity analysis on an annual basis.
All Company associates are offered training aimed at preventing workplace harassment, including harassment based on age, gender or ethnicity, training covering the foundations of DEI and awareness of unconscious bias in the workplace, and all managers are required to complete anti-harassment training.
Development Pipeline The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations.
(2) The Company recognized a $54.5 million gain on sale. 3 Table of Contents Development Pipeline The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations.
The tables below detail the Company’s gender representation by position and the age diversity of its workforce. 4 Table of Contents The Company has a Diversity, Equity, and Inclusion ("DEI") Committee which directs the overarching goal setting, implementation, and follow-up for DEI initiatives and whose chairperson reports directly to the CEO on the Committee’s activities.
The Company has a Diversity, Equity, and Inclusion ("DEI") Committee which directs the overarching goal setting, implementation, and follow-up for DEI initiatives and whose chairperson reports directly to the CEO on the Committee’s activities.
The Company offers competitive compensation and a standard suite of benefits, including health insurance, a retirement plan with a $6,000 annual matching potential benefit, life and disability coverage, paid parental leave, and commuter benefits.
Beyond competitive compensation, the Company offers a suite of benefits, including health insurance, a retirement plan with a $6,000 annual matching potential benefit, life and disability coverage, supplemental paid parental leave, and the robust health and wellness support programs noted above. Additionally, the Company offers an associate housing discount.
Engagement surveys are split into three phases: new hire surveys, Company-wide bi-annual surveys, and exit surveys. 89% of Company employees participated in the surveys in 2022. The Company’s overall score on the surveys was 8.3 out of 10. INSURANCE The Company purchases general liability and property insurance coverage, including loss of rent, for each of its communities.
Engagement surveys are split into three phases: new hire surveys, Company-wide bi-annual surveys, and exit surveys. 85% of Company employees participated in the surveys in 2023. The Company’s overall engagement score on the surveys was 8.0 out of 10.
Property Operations – The Company manages its communities by focusing on activities that may generate above-average rental growth, tenant retention/satisfaction and long-term asset appreciation.
Likewise, the Company also seeks to increase its portfolio allocation in markets that have attractive property valuations and to decrease allocations in markets that have inflated valuations and low relative yields. Property Operations – The Company manages its communities by focusing on activities that may generate above-average rental growth, tenant retention/satisfaction and long-term asset appreciation.
The Company's $35.0 million working capital unsecured line of 3 Table of Contents credit had an interest rate of Adjusted SOFR plus 0.75%, which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of July 2024.
The Company's $35.0 million working capital unsecured line of credit had an interest rate of Adjusted SOFR plus 0.75%, which is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and a scheduled maturity date of July 2024. 4 Table of Contents Equity Transactions During the year ended December 31, 2023, the Company did not issue any shares of common stock through its equity distribution agreement entered into in September 2021 (the "2021 ATM Program").
In general, the Company seeks to offset the dilutive impact on long-term earnings and funds from operations from these dispositions through the positive impact of reinvestment of proceeds. For the year ended December 31, 2022, the Company sold one community consisting of 250 apartment homes for approximately $160.0 million.
In general, the Company seeks to offset the dilutive impact on long-term earnings and funds from operations from these dispositions through the positive impact of reinvestment of proceeds.
The Company engages in an annual compensation study to align compensation with market standards and to ensure the Company is appropriately compensating its top performers. Providing a safe working environment and promoting employee safety is imperative to the Company, and the Company continued to prioritize its associates’ health and safety throughout 2022.
The Company engages in an annual compensation study to align compensation with market standards and to ensure the Company is appropriately compensating its top performers.
Workplace Diversity The Company believes it has one of the most diverse workforces among its peers in the real estate industry in part due to its robust and integrated diversity, equity, and inclusion strategy, which utilizes training programs, employee committees, and executive sponsorships to strengthen and promote diversity, equal opportunity, and fair treatment for all Company associates.
Workplace Diversity The Company believes it has one of the most diverse workforces among its peers in the real estate industry in part due to its robust and integrated diversity, equity, and inclusion strategy, which allows the Company to broaden its perspective and better serve both the communities it operates in and the associates it employs.
To identify, retain and reward top performers, the Company offers a tenure program, which involves a cash gift for every five years of service, as well as excellence awards and a spot bonus recognition program to reward associates for good teamwork, good ideas and good service. The Company encourages internal promotions and hiring for open positions.
To identify, retain and reward top performers, the Company engages in meaningful internal succession planning and offers a tenure program, excellence awards, and a spot bonus recognition program to reward associates for good teamwork, good ideas, and good service.
In September 2022, the Company's Board of Directors approved a new stock repurchase plan to allow the Company to acquire shares of common stock up to an aggregate value of $500.0 million. The plan supersedes the Company's previous common stock repurchase plan announced in December 2015.
As of December 31, 2023, there were no outstanding forward sale agreements, and $900.0 million of shares remain available to be sold under the 2021 ATM Program. In September 2022, the Company's Board of Directors approved a new stock repurchase plan to allow the Company to acquire shares of common stock up to an aggregate value of $500.0 million.
Additionally, the Company offers a housing discount for associates that live at Company communities, and additionally offers retirement support, associate discount programs, mental health support, including a mental health program and refresh days for our operations teams, and health benefit credits for participation in wellness programs.
Additionally, the Company offers retirement support, associate discount programs, a mental health program, which includes counseling and coaching sessions for mental well-being support at no cost, and refresh days for our operations teams, and health benefit credits for participation in wellness programs. Compensation and Benefits The Company offers competitive compensation to secure and retain top talent.
The Company seeks to increase its portfolio allocation in markets projected to have the strongest local economies and to decrease allocations in markets projected to have declining economic conditions. Likewise, the Company also seeks to increase its portfolio allocation in markets that have attractive property valuations and to decrease allocations in markets that have inflated valuations and low relative yields.
Recognizing that all real estate markets are cyclical, the Company regularly evaluates the results of its regional economic, and local market research, and adjusts the geographic focus of its portfolio accordingly. The Company seeks to increase its portfolio allocation in markets projected to have the strongest local economies and to decrease allocations in markets projected to have declining economic conditions.
Long Term Debt During 2022, the Company made regularly scheduled principal payments and loan payoffs of $43.2 million to its secured mortgage notes payable at an average interest rate of 3.6%. In October 2022, the Company obtained a $300.0 million unsecured term loan priced at Adjusted Secured Overnight Financing Rate ("SOFR") plus 0.85%.
Long Term Debt During 2023, the Company made regularly scheduled principal payments of $2.9 million to its secured mortgage notes payable at an average interest rate of 3.7%. In July 2023, the Company closed $298.0 million in 10-year secured loans priced at 5.08% fixed interest rates encumbering four properties located in Northern California.
Dispositions of Real Estate As part of its strategic plan to own quality real estate in supply-constrained markets, the Company continually evaluates all of its communities and sells those communities that no longer meet the Company's strategic criteria.
CURRENT BUSINESS ACTIVITIES Acquisitions of Real Estate Interests The table below summarizes acquisition activity for the year ended December 31, 2023 ($ in millions): Property Name Location Apartment Homes Essex Ownership Percentage Ownership Quarter in 2023 Purchase Price Hacienda at Camarillo Oaks Camarillo, CA 73 100 % EPLP Q2 $ 23.1 Total 2023 73 $ 23.1 Dispositions of Real Estate As part of its strategic plan to own quality real estate in supply-constrained markets, the Company continually evaluates all of its communities and sells those communities that no longer meet the Company's strategic criteria.
These programs include leadership training, communication training, individual learning plans, Community Manager and Maintenance Manager training, investments in learning technology, and mentorship programs. Additionally, the Company provides its associates with outside educational benefits by offering an annual $3,000 tuition reimbursement to further support professional growth.
The Company currently offers training courses to its associates via Workday Learning, and its associates spent 22,373 hours learning in 2023. The Company also provides its associates with an annual $3,000 tuition reimbursement to further support outside professional growth opportunities.
During the year ended December 31, 2022, the Company repurchased and retired 740,053 shares of its common stock totaling $189.7 million, including commissions, of which 420,606 shares of common stock totaling $101.7 million were repurchased under the new plan after its approval.
The plan supersedes the Company's previous common stock repurchase plan announced in December 2015. During the year ended December 31, 2023, the Company repurchased and retired 437,026 shares of its common stock totaling $95.7 million, including commissions. As of December 31, 2023, the Company had $302.7 million of purchase authority remaining under its $500.0 million stock repurchase plan.
Property Name Location Apartment Homes Ownership Quarter in 2022 Sales Price (in millions) Anavia Anaheim, CA 250 EPLP Q4 $ 160.0 (1) Total 2022 250 $ 160.0 2 Table of Contents (1) The Company recognized a $94.4 million gain on sale.
The table below summarizes disposition activity for the year ended December 31, 2023 ($ in millions): Property Name (1) Location Apartment Homes Ownership Quarter in 2023 Sales Price CBC and The Sweeps Goleta, CA 239 EPLP Q1 $ 91.7 (2) Total 2023 239 $ 91.7 (1) In March 2023, the Company sold a land parcel located in Moorpark, CA, that had been held for future development, for $8.7 million and recognized a gain on sale of $4.7 million.
Total Workforce by Age Group December 31, 2022 # % 166 9% 26-35 534 30% 36-45 422 24% 46-55 348 20% 56-65 262 15% > 65 40 2% Training and Development The Company values leadership at every level and demonstrates such value with respect to its associates by providing opportunities for all associates to develop personal and professional skills and by offering programs to encourage employee retention and advancement.
The charts below detail the Company’s diverse representation as of December 31, 2023: Total Workforce Executives & Management Ethnicity 6 Table of Contents Gender Training and Development The Company values leadership at every level and enables the same by providing opportunities for all associates to develop personal and professional skills through programs that encourage associate retention and advancement.
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CURRENT BUSINESS ACTIVITIES Acquisitions of Real Estate Interests Acquisitions are an important component of the Company’s business plan. For the year ended December 31, 2022, the Company purchased or increased its interests in three communities consisting of 590 apartment homes for approximately $215.9 million.
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The DEI Committee’s goals for 2023 included increasing the Company’s training offerings, integrating DEI into talent recruitment processes, strengthening employee resource and affinity groups, making contributions to local DEI organizations, and improving recognition.
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The table below summarizes acquisition activity for the year ended December 31, 2022 ($ in millions): Property Name Location Apartment Homes Essex Ownership Percentage Ownership Quarter in 2022 Purchase Price Vela Woodland Hills, CA 379 50 % Wesco VI Q1 $ 183.0 (1) Regency Palm Court and Windsor Court Los Angeles, CA 211 100 % EPLP Q3 32.9 (2) Total 2022 590 $ 215.9 (1) Represents the contract price for the entire property, not the Company’s share.
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The Company encourages internal promotions and hiring for open positions, and the executive team actively mentors the Company’s top talent to ensure strong leadership at the Company for the future. 37% of the Company’s associates have approached or surpassed the Company’s average tenure of 6.35 years, with 21% reaching beyond 10 years of service.
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(2) In July 2022, the Company acquired its joint venture partner’s 49.8% minority interest in two apartment communities, consisting of 211 apartment homes located in Los Angeles, CA, for a contract price of $32.9 million.
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In 2023, the Company promoted 13% of its employees to higher positions in the Company. Employee Health, Safety and Wellness Providing a safe working environment and promoting employee safety is imperative to the Company, and the Company continued to prioritize its associates’ health and safety throughout 2023.
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The loan has been swapped to an all-in fixed rate of 4.2% and matures in October 2024 with three 12-month extension options, exercisable at the Company's option. The loan includes a six-month delayed draw feature with the proceeds expected to be drawn in April 2023 to repay the Company's $300.0 million unsecured notes due in May 2023.
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Alongside competitive pay, the Company is committed to pay equity and parity, and conducts a pay equity analysis on an annual basis which includes the development and use of a robust, multiple regression analysis model to confirm the Company’s continued achievement of gender pay parity. 7 Table of Contents The Company’s total rewards program further reinforces its commitment to investing in the well-being of its associates while incentivizing its employees to promote fulfillment of the Company’s mission.
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Equity Transactions During the year ended December 31, 2022, the Company did not issue any shares of common stock through its equity distribution agreement entered into in September 2021 (the "2021 ATM Program"). As of December 31, 2022, there were no outstanding forward sale agreements, and $900.0 million of shares remain available to be sold under the 2021 ATM Program.
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Goal setting, meaningful work, management support, DEI, and social well-being were recognized as the top 5 areas of strength for the organization. INSURANCE The Company purchases general liability and property insurance coverage, including loss of rent, for each of its communities. The Company also purchases limited earthquake, terrorism, environmental and flood insurance.
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As of December 31, 2022, the Company had $398.3 million of purchase authority remaining under its $500.0 million stock repurchase plan.
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As of December 31, 2022, the Company's workforce was, based on the voluntary self-identification of our employee base, approximately 45% Hispanic or Latino, 28% White, 12% Asian, 7% Black or African American, 1% Native Hawaiian or other Pacific Islander, 1% American Indian or Alaska Native, and 5% two or more races. 3% of employees chose to not disclose their race. 54% of the Company’s managerial level employees, 22% of its senior executives, and 20% of its named executive officers self-identified as Hispanic or Latino, Asian, Black or African American, Native Hawaiian or other Pacific Islander, American Indian or Alaska Native, or two or more races.
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The slight decrease is primarily attributable to the Company’s new operational structure which resulted in 62 operational associates moving into non-managerial roles. While some oversight duties were realigned, salary and benefits were not impacted, and women continue to hold a majority of the managerial roles at the Company.
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Gender diversity within the Company’s leadership is similar to the overall gender diversity of the Company’s employees and managers, with women composing 60% of the Company’s executive officers and 56% of the Company’s senior executives.
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The Company developed a robust, multiple regression analysis model, which confirmed that we continue to maintain our gender pay parity. Our robust statistical analysis confirmed that gender was not a significant factor in determining pay decisions in 2022.
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The following aligns with the Company’s EE0-1 data for 2022: Gender Representation by Position (1) December 31, 2022 Male # (2) Female # (2) Male % Female % Corporate - Top Executives, VPs, Assistant VPs, Directors, & Managers 74 76 49% 51% Corporate - Below manager position 100 173 37% 63% Field - Regional Directors/Managers, Community Managers 89 173 34% 66% Field - Leasing Specialists, Leasing Managers, Relationship Reps, Bookkeepers 110 216 34% 66% Field - Maintenance Supervisors and Techs 548 11 98% 2% Field - Porter, Landscaper, Painter, Security Guard, Amenities Attendant 109 89 55% 45% (1) Table excludes 4 associates that did not declare gender and does not include board directors and consultants.
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(2) Gender is labeled as how respondents elected to be self-identified.
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In 2022, the Company promoted 12% of its employees to higher positions in the Company, a slight decrease from 2021 when the Company promoted 16% of its employees primarily due to the Company’s focus on ensuring proper fit for its associates entering into new roles in the new operational structure.
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The Company engages in succession planning for its leadership and managerial positions and its executive team identifies and mentors the Company's top talent in order to ensure strong leadership at the Company for the future. 5 Table of Contents Employee Well-Being and Safety The Company's compensation and benefits program and safety practices further reinforce its commitment to investing in the well-being of its associates while incentivizing its employees to promote fulfillment of the Company’s mission.
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The Company provides safety training to Community Managers, Maintenance Supervisors, and Maintenance Technicians on a wide-range of topics, including Industrial Safety and Health, Confined Space Awareness, Electrical Safety and Protection, Active Shooter Event, Fire Extinguishing, Safety Data Sheets, Safe Lifting the E-Way, Ladder Safety, and Heat Stress in the Workplace.
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Additionally, in 2022, the Company continued to provide associates with additional paid time off for COVID-19 related illness and care through its Special Circumstances Leave policy in order to enable associates with adequate time to recover and to help prevent the spread of COVID-19.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changePotential other consequences include that the Company may be exposed to a risk of litigation, including government enforcement actions, private litigation or criminal penalties; and that the Company may be exposed to a risk of loss including loss related to the fact that agreements with such vendors, or such vendors’ financial condition, may not allow the Company to recover all costs related to a cyber-breach for which they alone or they and the Company should be jointly responsible for, which could result in a material adverse effect on the Company’s results of operations and financial condition.
Biggest changeMoreover, if there is a compliance failure, or if a cybersecurity incident affects the Company’s or vendors’ systems, whether through a breach of the Company’s IT Systems or a breach of the IT Systems of third parties, or results in the unauthorized release of Confidential Information, the Company’s reputation and brand could be materially damaged, which could increase our costs in attracting and retaining tenants, and other serious consequences may result. 16 Table of Contents Potential other consequences include potential exposure to litigation, including government enforcement actions, private litigation (including class actions), fines or criminal penalties; and potential exposure to a risk of loss including loss related to the fact that agreements with such vendors, or such vendors’ financial condition, may not allow the Company to recover all costs related to a cybersecurity incident for which they alone or they and the Company should be jointly responsible for, which could result in a material adverse effect on the Company’s business, results of operations and financial condition.
In the event of tenant nonpayment, default or bankruptcy, we may incur costs in protecting our investment, collecting delinquent rents, and re-leasing our property and have limited ability to renew existing leases or sign new leases at levels consistent with market rents.
In the event of tenant nonpayment, default or bankruptcy, we may incur costs in protecting our investment, collecting delinquent rents, and re-leasing our property and we may have limited ability to renew existing leases or sign new leases at levels consistent with market rents.
If the Company finances new acquisitions under existing lines of credit, there is a risk that, unless the Company obtains substitute financing, the Company may not be able to undertake additional borrowing for further acquisitions or developments or such borrowing may be not available on advantageous terms.
If the Company finances new acquisitions under existing lines of credit, there is a risk that, unless the Company obtains substitute financing, the Company may not be able to undertake additional borrowing for further acquisitions or developments or such borrowing may not be available on advantageous terms.
The Company is subject to the risks normally associated with debt financing, including that cash flow may not be sufficient to meet required payments of principal and interest and the REIT distribution requirements of the Code; inability to renew, repay, or refinance maturing indebtedness on encumbered apartment communities on favorable terms or at all, possibly requiring the Company to sell a property or properties on disadvantageous terms; inability to comply with debt covenants could trigger cash management provisions limiting our ability to control cash flows, cause defaults, or an acceleration of maturity dates; paying debt before the scheduled maturity date could result in prepayment penalties; and defaulting on secured indebtedness may result in lenders seeking a foreclosure on communities or pursuing other remedies which would reduce the Company’s income and net asset value, its ability to service other debt, or create taxable income without accompanying cash proceeds, thereby hindering our ability to meet REIT distribution requirements.
The Company is subject to the risks normally associated with debt financing, including that cash flow may not be sufficient to meet required payments of principal and interest and the REIT distribution requirements of the Code; inability to renew, repay, or refinance maturing indebtedness on encumbered apartment communities on favorable terms or at all, possibly requiring the Company to sell a property or properties on disadvantageous terms; inability to comply with debt covenants could trigger cash management provisions limiting our ability to control cash flows, cause defaults, or an acceleration of maturity dates; paying debt before the scheduled maturity date could result in prepayment penalties; and defaulting on secured indebtedness may result in lenders seeking a foreclosure or pursuing other remedies which would reduce the Company’s income and net asset value, its ability to service other debt, or create taxable income without accompanying cash proceeds, thereby hindering our ability to meet REIT distribution requirements.
The Company’s ownership of co-investments, including joint ventures and joint ownership of communities, its ownership of properties with shared facilities with a homeowners' association or other entity, its ownership of properties subject to a ground lease and its preferred equity investments and its other partial interests in entities that own communities, could limit the Company’s ability to control such communities and may restrict our ability to finance, sell or otherwise transfer our interests in these properties and expose us to loss of the properties if such agreements are breached by us or terminated.
The Company’s ownership of co-investments, including joint ventures and joint ownership of communities, its ownership of properties with shared facilities with a homeowners' association or other entity, its ownership of properties subject to a ground lease and its preferred equity investments and its other partial interests in entities that own communities, could limit the Company’s ability to control such communities and may restrict our ability to finance, refinance, sell or otherwise transfer our interests in these properties and expose us to loss of the properties if such agreements are breached by us or terminated.
The Company may make acquisitions or commence development activity outside of its existing market areas if appropriate opportunities arise, which may expose the Company to new risks, including, but not limited to an inability to evaluate accurately local apartment market conditions and local economies; an inability to identify appropriate acquisition opportunities or to obtain land for development; an inability to hire and retain key personnel; and lack of familiarity with local governmental and permitting procedures.
The Company may make acquisitions or commence development activity outside of its existing market areas if appropriate opportunities arise, which may expose the Company to new risks, including, but not limited to an inability to evaluate accurately local apartment market conditions and local economies; an inability to identify appropriate acquisition opportunities or to obtain land for development; an inability to hire and retain key personnel; and a lack of familiarity with local governmental and permitting procedures.
Any such recession or economic downturn may affect consumer confidence and spending and negatively impact the volume and pricing of real estate transactions, which could negatively affect the Company’s liquidity and its ability to vary its portfolio promptly in response to changes to the economy.
Any such recession or economic downturn may also affect consumer confidence and spending and negatively impact the volume and pricing of real estate transactions, which could negatively affect the Company’s liquidity and its ability to vary its portfolio promptly in response to changes to the economy.
Those provisions 18 Table of Contents include, among others, directors may be removed by stockholders, without cause, only upon the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of the directors, and with cause, only upon the affirmative vote of a majority of the votes entitled to be cast generally in the election of the directors; the Board can fix the number of directors and fill vacant directorships upon the vote of a majority of the directors and the Board can classify the board such that the entire board is not up for re-election annually; stockholders must give advance notice to nominate directors or propose business for consideration at a stockholders’ meeting; and for stockholders to call a special meeting, the meeting must be requested by not less than a majority of all the votes entitled to be cast at the meeting.
Those provisions include, among others, directors may be removed by stockholders, without cause, only upon the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of the directors, and with cause, only upon the affirmative vote of a majority of the votes entitled to be cast generally in the election of the directors; the Board can fix the number of directors and fill vacant directorships upon the vote of a majority of the directors and the Board can classify the board such that the entire board is not up for re-election annually; stockholders must give advance notice to nominate directors or propose business for consideration at a stockholders’ meeting; and for stockholders to call a special meeting, the meeting must be requested by not less than a majority of all the votes entitled to be cast at the meeting.
A new pandemic or disease outbreak may cause increased costs, lower profitability and market fluctuations that may affect our ability to obtain necessary funds for our business or negatively impact the ability of the Company’s third-party mezzanine loan borrowers and preferred equity investment sponsors to repay the Company.
A new pandemic or disease outbreak may also cause increased costs, lower profitability and market fluctuations that may affect our ability to obtain necessary funds for our business or may otherwise negatively impact the ability of the Company’s third-party mezzanine loan borrowers and preferred equity investment sponsors to repay the Company.
Rising interest rates may affect the Company’s costs of capital and financing activities and results of operation and otherwise adversely affect the market price of our common stock. Interest rates could increase, which could result in higher interest expense on the Company’s variable rate indebtedness or increase interest rates when refinancing maturing fixed rate debt.
General Risks Rising interest rates may affect the Company’s costs of capital and financing activities and results of operation and otherwise adversely affect the market price of our common stock. Interest rates could increase, which could result in higher interest expense on the Company’s variable rate indebtedness or increase interest rates when refinancing maturing fixed rate debt.
As a result of climate change, we may experience extreme weather, an increased number of natural disasters and changes in precipitation, temperature and wild fire and drought exposure, all of which may result in physical damage, a decrease in demand for our communities located in these areas or affected by these conditions, damage to our properties, disruption of services at our properties or increased costs associated with maintaining or insuring our communities.
As a result of climate change, we may experience extreme weather, an increased number of natural disasters and changes in precipitation, temperature and wild fire and drought exposure, all of which may result in physical damage, a decrease in demand for our communities located in these areas or affected by these conditions, damage to our properties, disruption of services at our properties or increased costs associated with water or energy use and maintaining or insuring our communities.
Although the Company intends that its current organization and method of operation enable it to qualify as a REIT, it cannot assure you that it so qualifies or that it will be able to remain so qualified in the future.
Although the Company believes that its current organization and method of operation enable it to qualify as a REIT, it cannot assure you that it so qualifies or that it will be able to remain so qualified in the future.
Should a joint venture partner become bankrupt, the Company could become liable for such partner’s share of joint venture liabilities. 10 Table of Contents From time to time, the Company, through the Operating Partnership, makes certain co-investments in the form of preferred equity investments in third-party entities that have been formed for the purpose of acquiring, developing, financing, or managing real property.
Should a joint venture partner become bankrupt, the Company could become liable for such partner’s share of joint venture liabilities. From time to time, the Company, through the Operating Partnership, makes certain co-investments in the form of preferred equity investments in third-party entities that have been formed for the purpose of acquiring, developing, financing, or managing real property.
Any covenant breach or significant increase in the Company’s leverage could materially adversely affect the Company’s financial condition and ability to access debt and equity capital markets in the future. 16 Table of Contents If the Company or any of its subsidiaries defaults on an obligation to repay outstanding indebtedness when due, the default could trigger a cross-default or cross-acceleration under other indebtedness.
Any covenant breach or significant increase in the Company’s leverage could materially adversely affect the Company’s financial condition and ability to access debt and equity capital markets in the future. If the Company or any of its subsidiaries defaults on an obligation to repay outstanding indebtedness when due, the default could trigger a cross-default or cross-acceleration under other indebtedness.
There is no assurance that this policy will be adequate for determining whether a particular related party transaction is suitable and fair for the Company. Also, the policy’s procedures may not identify and address all the potential issues and conflicts of interests with a related party transaction. 17 Table of Contents Employee theft or fraud could result in loss.
There is no assurance that this policy will be adequate for determining whether a particular related party transaction is suitable and fair for the Company. Also, the policy’s procedures may not identify and address all the potential issues and conflicts of interests with a related party transaction. Employee theft or fraud could result in loss.
If there are subsequent changes in the fair value of our land holdings which we determine is less that the carrying basis of our land holdings reflected in our financial statements plus estimated costs to sell, we may be required to take future impairment changes which could have a material adverse effect on our financial condition and results of operations.
If there are changes in the fair value of our land holdings which we determine is less that the carrying basis of our land holdings reflected in our financial statements plus estimated costs to sell, we may be required to take impairment charges which could have a material adverse effect on our financial condition and results of operations.
Moreover, if any of these key vendors were to terminate our relationship or access to data, or to fail, we could suffer losses while we sought to replace the services and information provided by the vendors.
Moreover, if any of these key vendors were to terminate our relationship or access to data, or fail, we could suffer losses while we seek to replace the services and information provided by the vendors.
If the Company is unable to promptly renew or re-let in place leases, or if the rental rates upon renewal or reletting are significantly lower than expected rates, then the Company’s results of operations and financial condition will be adversely affected. Economic environments can negatively impact the Company’s liquidity and operating results.
If the Company is unable to promptly renew or re-let existing leases, or if the rental rates upon renewal or reletting are significantly lower than expected rates, then the Company’s results of operations and financial condition will be adversely affected. Economic environments can negatively impact the Company’s liquidity and operating results.
Responding to stockholder activism or engaging in a process or proxy contest may be costly and time-consuming, disrupt our operations and divert the attention of our management team and our employees from executing our business plan, which could adversely affect our business and results of operations. Expanding social media vehicles present new risks .
Responding to stockholder activism or engaging in a proxy contest may be costly and time-consuming, disrupt our operations and divert the attention of our management team and our employees from executing our business plan, which could adversely affect our business and results of operations. Expanding social media vehicles present additional risks .
When leases for our existing commercial space expire, the space may not be relet on a timely basis, or at all, or the terms of reletting, including the cost of allowances and concessions to tenants, may be less favorable than the current lease terms. 11 Table of Contents The Company’s portfolio may have environmental liabilities.
When leases for our existing commercial space expire, the space may not be relet on a timely basis, or at all, or the terms of reletting, including the cost of allowances and concessions to tenants, may be less favorable than the current lease terms. The Company’s portfolio may have environmental liabilities.
Certain state and local authorities may impose additional rental restrictions. These restrictions may limit income from the tax-exempt financed communities if the Company is required to decrease its rental rates.
Certain state and local authorities may impose additional rental restrictions, which may limit income from the tax-exempt financed communities if the Company is required to decrease its rental rates.
In addition, the trading price of Essex's stock would experience downward pressure if a significant number of our stockholders sell shares of Essex's stock in order to pay taxes owed on dividends.
In addition, the trading price of Essex's stock could experience downward pressure if a significant number of our stockholders sell shares of Essex's stock in order to pay taxes owed on dividends.
Our score by proxy advisory firms or other corporate governance consultants advising institutional investors, as well as the increased attention to certain environmental, social and governance matters, could have an adverse effect on our reputation, the perception of our corporate governance, and thereby negatively impact the market price of our common stock.
Our score by proxy advisory firms or other corporate governance consultants advising institutional investors, as well as the increased attention to certain ESG matters, could have an adverse effect on our reputation, the perception of our corporate governance, and thereby negatively impact the market price of our common stock.
General Risks We may from time to time be subject to litigation, which could have a material adverse effect on our business, financial condition and results of operations.
We may from time to time be subject to litigation, which could have a material adverse effect on our business, financial condition and results of operations.
Any such failures could impair our ability to continue providing quality housing and consistent operation of our communities, which could adversely affect our financial condition and results of operations. 13 Table of Contents The Company’s real estate assets may be subject to impairment charges.
Any such failures could impair our ability to continue providing quality housing and consistent operation of our communities, which could adversely affect our financial condition and results of operations. The Company’s real estate assets may be subject to impairment charges.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. Failure of one or more of the Company’s subsidiaries to qualify as a REIT could adversely affect the Company’s ability to qualify as a REIT.
Also, the law relating to the tax treatment of other entities, or an investment in other entities, could change, making an investment in such other entities more attractive relative to an investment in a REIT. 21 Table of Contents Failure of one or more of the Company’s subsidiaries to qualify as a REIT could adversely affect the Company’s ability to qualify as a REIT.
Consequently, their influence could result in decisions that do not reflect the interests of all stockholders. Our related party guidelines may not adequately address all of the issues that may arise with respect to related party transactions.
Consequently, their influence could result in decisions that do not reflect the interests of all stockholders. 19 Table of Contents Our related party guidelines may not adequately address all of the issues that may arise with respect to related party transactions.
Our properties or markets may in the future be the target of actual or threatened terrorist attacks, shootings, or other acts of violence, which could directly or indirectly damage our communities both physically and financially, cause losses that exceed our insurance coverage, adversely affect the value of and our ability to operate our communities, subject us to significant liability claims, or otherwise impair our ability to achieve our expected results.
Our properties or markets may in the future be the target of actual or threatened terrorist attacks, shootings, or other acts of violence, which could directly or indirectly damage our communities both physically and financially, cause uninsured losses, adversely affect the value of and our ability to operate our communities, subject us to significant liability claims, or otherwise impair our ability to achieve our expected results.
Various proxy advisory firms and other corporate governance consultants advising institutional investors provide scores of our governance measures, nominees for election as directors, executive compensation practices, environmental, social and governance (“ESG”) matters, and other matters that may be submitted to stockholders for consideration at our annual meetings.
Various proxy advisory firms and other corporate governance consultants advising institutional investors provide scores of our governance measures, nominees for election as directors, executive compensation practices, ESG matters, and other matters that may be submitted to stockholders for consideration at our annual meetings.
Many of these factors are beyond the 20 Table of Contents Company’s control and may cause the market price of the Company’s common stock to decline, regardless of the Company’s financial condition, results of operations, or business prospects.
Many of these factors are beyond the Company’s control and may cause the market price of the Company’s common stock to decline, regardless of the Company’s financial condition, results of operations, or business prospects.
The Company would also be disqualified from treatment as a REIT for the four taxable years following the year in which the Company failed to qualify, unless we are entitled to relief under statutory provisions.
The Company would also be disqualified from treatment as a REIT for the four taxable years following the year in which the Company failed to qualify, unless it is entitled to relief under statutory provisions.
In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage and expose us to increased risks that would be uninsured. Litigation, including anti-trust litigation, even if resolved in our favor, could adversely impact our reputation, which could negatively impact our operations and cash flow.
In addition, certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage and expose us to increased risks that would be uninsured. Litigation, even if resolved in our favor, could adversely impact our reputation and divert the attention of our management, which could negatively impact our operations and cash flow.
Expenses associated with our investment in these communities, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in rental income from the community. 8 Table of Contents The COVID-19 pandemic and the future outbreak of other contagious diseases could materially affect our business, financial condition, stock price, and results of operations.
Expenses associated with our investment in these communities, such as debt service, real estate taxes, insurance and maintenance costs, are generally not reduced when circumstances cause a reduction in rental income from the community. 10 Table of Contents The future outbreak of contagious diseases could materially affect our business, financial condition, and results of operations.
Additionally, the SEC continues to issue evolving rules relating to climate risk disclosures, human capital management and other ESG matters and other regulatory bodies have issued new laws or regulations relating to board structure.
Additionally, the SEC continues to issue evolving rules relating to climate risk disclosures, human capital management and other ESG matters and other regulatory bodies, such as the State of California, have issued new laws or regulations relating to climate disclosures and board structure.
The use of social media could cause us to suffer brand damage or information leakage. Negative posts or comments about us on any social networking website could damage our reputation. In addition, employees or others might disclose non-public sensitive information relating to our business through external media channels.
The use of social media, such as unauthorized live-streaming at our properties, could cause us to suffer brand damage or information leakage. Negative posts or comments about us on any social networking website could damage our reputation. In addition, employees or others might disclose non-public sensitive information relating to our business through external media channels.
The Company and many of its investors and potential investors are focused on positive ESG business practices and sustainability scores to guide their investment strategies, including the decisions whether to invest in our common stock.
Some investors and potential investors are focused on positive ESG business practices and sustainability scores to guide their investment strategies, including the decisions whether to invest in our common stock.
However, he has, and likely will continue to have, significant influence with respect to the election of directors and approval or disapproval of significant corporate actions. Consequently, his influence could result in decisions that do not reflect the interests of all the Company’s stockholders.
Marcus currently does not have majority control over the Company. However, he has, and likely will continue to have, significant influence with respect to the election of directors and approval or disapproval of significant corporate actions. Consequently, his influence could result in decisions that do not reflect the interests of all the Company’s stockholders.
The Company pursues development and redevelopment projects, and those activities generally entail certain risks, including: • funds may be expended and management's time devoted to projects that may not be completed on time or at all; • construction costs may exceed original estimates possibly making some projects economically unfeasible; • projects may be delayed or abandoned due to, without limitation, weather conditions, labor or material shortages, municipal office closures and staff shortages, government recommended or mandated work stoppages, or environmental remediation; • occupancy rates and rents at a completed project may be less than anticipated; • expenses may be higher than anticipated, including, without limitation, due to inflationary pressures, supply chain issues, costs of litigation over construction contracts, environmental remediation or increased costs for labor, materials and leasing; • we may be unable to obtain, or experience a delay in obtaining, necessary governmental approvals or third party permits and authorizations, which could result in increased costs or delay or abandonment of opportunities; • we may be unable to obtain financing with favorable terms, or at all, for the proposed development or redevelopment of a community, which may cause us to delay or abandon an opportunity; and • we may incur liabilities to third parties during the development process.
The Company pursues development and redevelopment projects, including densification projects and those activities generally entail certain risks, including: • funds may be expended and management's time devoted to projects that may not be completed on time or at all; • construction costs may exceed original estimates possibly making some projects economically unfeasible; • projects may be delayed or abandoned due to, without limitation, weather conditions, labor or material shortages, municipal office closures and staff shortages, government recommended or mandated work stoppages, or environmental remediation; • occupancy rates and rents at a completed project may be less than anticipated; • expenses may be higher than anticipated, including, without limitation, due to inflationary pressures, supply chain issues, costs of litigation over construction contracts, environmental remediation or increased costs for labor, materials and leasing; • we are reliant on third party contractors’ and vendors’ ability to deliver services and products as planned, and if the timeframe, quality or scope of such services and products are different than we expected, our projects may be subject to increased costs and our future income may be lower than expected; • we may be unable to obtain, or experience a delay in obtaining, necessary governmental approvals or third party permits and authorizations, which could result in increased costs or delay or abandonment of opportunities; • we may be unable to obtain financing with favorable terms, or at all, for the proposed development or redevelopment of a community, which may cause us to delay or abandon an opportunity; and • we may incur liabilities to third parties during the development process.
Any such incident could compromise the Company’s or such vendors’ networks (or the networks or systems of third parties that facilitate the Company’s or such vendors’ business activities), and the information stored by the Company or such vendors could be accessed, misused, publicly disclosed, corrupted, lost, or stolen, resulting in fraud, including wire fraud related to Company assets, or other harm.
Any incident could compromise the Company’s or our vendors’ IT Systems (or the IT Systems of third parties that facilitate the Company’s or such vendors’ business activities), and the Confidential Information stored by or on behalf of the Company or such vendors could be accessed, misused, publicly disclosed, corrupted, lost, or stolen, resulting in fraud, including wire fraud related to Company assets or tenant payments, or other harm.
However, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, pollution, environmental matters or extreme weather conditions such as hurricanes, fires and floods that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles.
However, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, pollution, environmental matters or extreme weather conditions such as hurricanes, fires and floods that are uninsurable or not economically insurable.
While we believe Fannie Mae and Freddie Mac will continue to provide liquidity to our sector, should they discontinue doing so, have their mandates changed or reduced or be disbanded or reorganized by the government or if there is reduced government support for multifamily housing more generally, it may adversely affect interest rates, capital availability, development of multifamily communities and the value of multifamily residential real estate and, as a result, may adversely affect the Company and its growth and operations.
While we believe Fannie Mae and Freddie Mac will continue to provide liquidity to our sector, should they discontinue doing so, have their mandates changed or reduced, become more resistant to allowing preferred equity or mezzanine financing on assets where they have purchased the senior loan, or be disbanded or reorganized by the government or if there is reduced government support for multifamily housing more generally, it may adversely affect interest rates, capital availability, development of multifamily communities and the value of multifamily residential real estate and, as a result, may adversely affect the Company and its growth and operations.
In addition, if our ability to obtain financing is adversely affected, the Company’s stock price may be adversely affected, and we may be unable to satisfy scheduled maturities on existing financing through other sources of our liquidity, which, in the case of secured financings, could result in lender foreclosure on the apartment communities securing such debt.
In addition, if our ability to obtain financing is adversely affected, the Company’s stock price may be adversely affected, and we may be unable to satisfy scheduled maturities on existing financing through other sources of our liquidity, which, in the case of secured financings, could result in foreclosure. Debt financing has inherent risks.
Should the impact of climate change be material in nature or occur for lengthy periods of time, the types and pricing of insurance the Company is able to procure may be negatively impacted and our financial condition or results of operations may be adversely affected.
Should the impact of climate change be material in nature or occur for lengthy periods of time, even if not directly impacting the Company’s current markets, the types and pricing of insurance the Company is able to procure may be negatively impacted and our financial condition or results of operations may be adversely affected.
In the event that such co-investment or the partners in such co-investment become insolvent or bankrupt or fail to develop or operate the property in the manner anticipated, the Operating Partnership may not receive the expected return in its expected timeframe or at all and may lose up to its entire investment.
In the event that such co-investment or the partners in such co-investment become insolvent or bankrupt or fail to develop or operate the property in the manner anticipated, or are unable to refinance or sell their interest as planned, the Operating Partnership may not receive the expected return in its expected timeframe or at all and may lose up to its entire investment.
In addition, changes in federal, state and local legislation and regulation on climate change could result in increased operating costs (for example, increased utility costs) and/or increased capital expenditures to improve the energy efficiency of our existing communities (for example, increased costs associated with meeting electric vehicle charging mandates) and could also require us to spend more on our new development communities without a corresponding increase in revenue and could increase our exposure to new physical risks and liabilities (for example, we may see an increase in fires caused by electric vehicle chargers).
In addition, changes in federal, state and local legislation and regulation on climate change could result in increased operating costs (for example, increased utility costs) and/or increased capital expenditures to improve the energy efficiency of our existing communities (for example, increased costs associated with meeting electric vehicle charging mandates) and could also require us to spend more on our new development communities without a corresponding increase in revenue.
If there is a future outbreak of COVID-19 or other contagious diseases, the Company may again be subject to eviction moratoria, limits on rent increases and collection efforts, or may be legally required to or otherwise agree to restructure tenants’ rent obligations and may not be able to do so on terms as favorable to us as those currently in place.
If there is a future outbreak of contagious diseases, such as COVID-19, the Company may be subject to eviction moratoria or limits on rent increases and collection efforts, or may be legally required to or otherwise agree to restructure tenants’ rent obligations on less favorable terms than those currently in place.
Although the Company makes ESG disclosures and undertakes sustainability and diversity initiatives, the Company may not score highly on ESG matters in the future and may face increased costs in order to make such disclosures.
Although the Company makes ESG disclosures and undertakes sustainability and diversity initiatives, the Company may not score highly on ESG matters in the future and may face increased costs, such as increased capital expenditures or new expenses, in order to undertake such initiatives or to make such disclosures.
Any downgrades in terms of ratings or outlook by any of the rating agencies could have a material adverse impact on the Company’s cost and availability of capital, which could in turn have a material adverse impact on its financial condition, results of operations and liquidity, as well as the Company's stock price.
Any downgrades in terms of ratings or outlook by any of the rating agencies could have a material adverse impact on the Company’s cost and availability of capital, which could in turn have a material adverse impact on its financial condition, results of operations and liquidity, as well as the Company's stock price. 18 Table of Contents Changes in the Company’s financing policy may lead to higher levels of indebtedness.
Any future impairment charges could have a material adverse effect on the Company’s results of operations. We face risks associated with land holdings for future developments and related activities. Real estate markets are highly uncertain and the value of undeveloped may fluctuate significantly. In addition, carrying costs can be significant and can result in losses or reduced profitability.
We face risks associated with land holdings for future developments and related activities. Real estate markets are highly uncertain and the value of undeveloped land may fluctuate significantly. In addition, carrying costs can be significant and can result in losses or reduced profitability.
Despite these steps, the Company may suffer a significant data security incident in the future, unauthorized parties may gain access to sensitive data stored on the Company’s systems, and any such incident may not be discovered in a timely manner.
Despite these steps, the Company may suffer a significant cybersecurity incident in the future, unauthorized parties may gain access to Confidential Information stored on the Company’s or its vendors’ IT Systems, and any such incident may not be discovered in a timely manner.
Income and growth from the communities may be further adversely affected by, among other things, the following factors, in addition to the other risk factors listed in this Item 1A: • changes in the general or local economic climate and demand for housing, including layoffs, industry slowdowns, relocations of employees from local employers, changing demographics, increased worker locational flexibility, and other events negatively impacting local employment rates, wages and the local economy; • changes in supply and cost of housing; • changing economic conditions, such as high inflationary periods in which our operating and financing costs may increase at a rate greater than our ability to increase rents, or deflationary periods where rents may decline more quickly relative to operating and financing costs; and • the appeal and desirability of our communities to tenants relative to other housing alternatives, including the size and amenity offerings, safety and location convenience, and our technology offerings.
Income and growth from the communities may be further adversely affected by, among other things, the following factors, in addition to the other risk factors listed in this Item 1A: • changes in the general or local economic climate that could affect demand for housing, including layoffs, due to an increase in the use of new technologies to replace workers, slowing job growth, and other events negatively impacting local employment rates, wages and the local economy; • changes in demand for rental housing due to a variety of factors, including relocations of employees from local employers, increased worker locational flexibility and changing demographics, which could lead to a relative decrease in the renting population as the domestic population skews older due to the aging of baby boomers and older people may be more likely to purchase, rather than rent, homes, • changes in supply and cost of housing; • changes in economic conditions, such as high inflationary periods in which our operating and financing costs may increase at a rate greater than our ability to increase rents, or deflationary periods where rents may decline more quickly relative to operating and financing costs; and • the appeal and desirability of our communities to tenants relative to other housing alternatives, including the size and amenity offerings, safety and location convenience, and our technology offerings.
The continuing evolution of social media will present us with new challenges and risks. Any material weaknesses identified in the Company's internal control over financial reporting could have an adverse effect on the Company’s stock price. Section 404 of the Sarbanes-Oxley Act of 2002 requires the Company to evaluate and report on its internal control over financial reporting.
The continuing evolution of social media will present us with new challenges and risks. Any material weaknesses identified in the Company's internal control over financial reporting could have an adverse effect on the Company’s stock price.
If the Company identifies one or more material weaknesses in its internal control over financial reporting, the Company could lose investor confidence in the accuracy and completeness of its financial reports, which in turn could have an adverse effect on the Company’s stock price.
Section 404 of the Sarbanes-Oxley Act of 2002 requires the Company to evaluate and report on its internal control over financial reporting. 23 Table of Contents If the Company identifies one or more material weaknesses in its internal control over financial reporting, the Company could lose investor confidence in the accuracy and completeness of its financial reports, which in turn could have an adverse effect on the Company’s stock price.
The Company’s Chairman is involved in other real estate activities and investments, which may lead to conflicts of interest. The Company’s Chairman, George M. Marcus, is not an employee of the Company, and is involved in other real estate activities and investments, which may lead to conflicts of interest. Mr.
Marcus, is not an employee of the Company, and is involved in other real estate activities and investments, which may lead to conflicts of interest. Mr. Marcus owns interests in various other real estate-related businesses and investments.
Marcus and his affiliated entities may have a conflict of interest with the Company, which may be detrimental to the interests of Essex's stockholders and the Operating Partnership's unitholders. The influence of executive officers, directors, and significant stockholders may be detrimental to holders of common stock. Mr. Marcus currently does not have majority control over the Company.
Due to potential competition for real estate investments, Mr. Marcus and his affiliated entities may have a conflict of interest with the Company, which may be detrimental to the interests of Essex's stockholders and the Operating Partnership's unitholders. The influence of executive officers, directors, and significant stockholders may be detrimental to holders of common stock. Mr.
There is a risk that we may not be able to refinance existing indebtedness or that a refinancing will not be done on as favorable terms, which in either case could have an adverse effect on our financial condition, results of operations and cash flows. 15 Table of Contents Compliance requirements of tax-exempt financing and below market rent requirements may limit income from certain communities.
There is a risk that we may not be able to refinance existing indebtedness or that a refinancing will not be done on as favorable terms, which in either case could have an adverse effect on our financial condition, results of operations and cash flows.
The market price per share of the Company’s common stock may fluctuate significantly in response to many factors, including the factors discussed in this Item 1A, and actual or anticipated variations in the Company’s quarterly operating results, earnings estimates, or dividends, the resale of substantial amounts of the Company's stock, or the anticipation of such resale, general stock and bond market conditions, the general reputation of REITs and the Company, shifts in our investor base, natural disasters, armed conflict or geopolitical impacts, including, the ongoing conflict in Ukraine, or an active shooter incident.
The market price per share of the Company’s common stock may fluctuate significantly in response to many factors, including the factors discussed in this Item 1A, and actual or anticipated variations in the Company’s quarterly operating results, earnings estimates, or dividends, the resale of substantial amounts of the Company's stock, or the anticipation of such resale, general stock and bond market conditions, actual or anticipated actions taken by the Federal Reserve Bank, the general reputation of REITs and the Company, shifts in our investor base, the inability of the United States Congress to pass bills that continue to timely fund the federal government and its obligations, including due to the current political climate or partisanship, natural disasters, armed conflict or geopolitical impacts, or an active shooter incident.
Failure to succeed in new markets may limit the Company’s growth.
Failure to succeed in new markets or with new community operations formats may limit the Company’s growth.
Any failure in or breach of the Company’s information security systems, those of third party service providers, or a breach of other third party systems that ultimately impacts the operational or information security systems of the Company as a result of cyber-attacks or information security breaches could result in a wide range of potentially serious harm to our business and results of operations.
Any cybersecurity incident or failure in the implementation, compliance with or effectiveness of the Company’s IT Systems or cybersecurity program or those of third party service providers, or a breach of other third party systems that ultimately impacts the operational or IT Systems of the could result in a wide range of potentially serious harm to our business and results of operations.
Reliance on third party software providers to host systems critical to our operations and to provide the Company with data. We rely on certain key software vendors to support business practices critical to our operations, including the collection of rent and ancillary income and communication with our tenants, and to provide us with data.
We rely on certain key software vendors to support business practices critical to our operations, including the collection of rent and ancillary income and communication with our tenants, and to provide us with data, such as environmental, social and governance (“ESG”) data.
The Company has entered into, and may continue in the future to enter into, certain co-investments, including joint ventures or partnerships through which it owns an indirect economic interest in less than 100% of the community or land or other investments owned directly by the joint venture or partnership.
The Company has entered into, and may continue in the future to enter into, certain co-investments, including joint ventures or partnerships through which it owns an indirect economic interest in less than 100% of the community or land or other investments owned directly by the joint venture or partnership. 12 Table of Contents Joint venture partners often have shared control over the development and operation of the joint venture assets, which may prevent the Company from taking action without the partners’ approval.
We rely on information technology in our operations, and any material failure, inadequacy, interruption or breach of the Company’s privacy or information security systems, or those of our vendors or other third parties, could materially adversely affect the Company’s business and financial condition.
Any failure by us to comply with applicable requirements or material failure, inadequacy, interruption or breach of the Company’s privacy or information systems, or those of our vendors or other third parties, could materially adversely affect the Company’s business, results of operations and financial condition.
Loss of the Company's REIT status would have significant adverse consequences to the Company and the value of the Company's common stock . The Company has elected to be taxed as a REIT, which requires it to satisfy various annual and quarterly requirements, including income, asset and distribution tests.
The Company has elected to be taxed as a REIT, which requires it to satisfy various annual and quarterly requirements, including income, asset and distribution tests.
We also may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution.
If we do not acquire new assets, we may not have sufficient depreciation expense to offset income and may have to make special distributions to stockholders. We also may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution.
The Company from time to time uses interest rate swaps and interest rate caps to manage certain interest rate risks. Although these agreements may partially protect against rising interest rates, they also may reduce the benefits to the Company if interest rates decline.
Although these agreements may partially protect against rising interest rates, they also may reduce the benefits to the Company if interest rates decline.
Our business requires us and some of our vendors to use and store PII and other sensitive information of our tenants and employees. The collection and use of PII is governed by federal and state laws and regulations. Privacy and information security laws continue to evolve and may be inconsistent from one jurisdiction to another.
Our business requires us and some of our vendors to use and store personal and other sensitive information of our tenants and employees. The collection, use and other processing of personal information is governed by federal and state laws and regulations.
In addition, pursuant to the MGCL, all matters other than the election or removal of a director must be declared advisable by the Board prior to a stockholder vote.
In addition, pursuant to the MGCL, all matters other than the election or removal of a director must be declared advisable by the Board prior to a stockholder vote. Loss of the Company's REIT status would have significant adverse consequences to the Company and the value of the Company's common stock .
In addition, investments to attain an ESG outcome may not perform as expected, resulting in losses. We could face adverse consequences as a result of actions of activist investors.
The occurrence of any of the foregoing could have an adverse effect on the price of the Company’s stock and the Company’s financial condition and results of operations. In addition, investments to attain an ESG outcome may not perform as expected, resulting in losses. We could face adverse consequences as a result of actions of activist investors.
Our insurance coverage may not cover all losses associated with such events, and we may experience difficulty marketing communities where any such events have occurred, which could have a material adverse effect on our business and results of operations. Adverse changes in laws may adversely affect the Company's liabilities and/or operating costs relating to its properties and its operations.
Our insurance coverage may not cover all losses associated with such events, and we may experience difficulty marketing communities where any such events have occurred, which could have a material adverse effect on our business and results of operations. Further, we may not have the ability to respond immediately to a major event, which may cause increased losses.
Further, if we fail to comply with new ESG-related laws, regulations, expectations or reporting requirements, or if we are perceived as failing, our reputation and business could be adversely impacted. The occurrence of any of the foregoing could have an adverse effect on the price of the Company’s stock and the Company’s financial condition and results of operations.
Further, if we fail to comply with new ESG-related laws, regulations, expectations or reporting requirements, or if we are perceived as failing, our reputation and business could be adversely impacted.
If any of the Company’s subsidiary REITs were to fail to qualify as a REIT, then the subsidiary REIT would become subject to federal income tax and the Company’s ownership of shares in such subsidiary REIT would cease to be a qualifying asset for purposes of the asset tests applicable to REITs.
If any of the Company’s subsidiary REITs were to fail to qualify as a REIT, then the subsidiary REIT would become subject to federal income tax.
The Company may establish one or more classes or series of stock that could delay, defer or prevent a transaction or a change in control, or otherwise create rights that could. adversely affect the interests of holders of common stock.
The Company’s Charter authorizes the issuance of additional shares of common stock or preferred stock and the setting of the preferences, rights and other terms of such stock without the approval of the holders of the common stock. 20 Table of Contents The Company may establish one or more classes or series of stock that could delay, defer or prevent a transaction or a change in control, or otherwise create rights that could adversely affect the interests of holders of common stock.
However, if the Internal Revenue Service successfully contends that certain transfers or disposals of properties by the Company are prohibited transactions, then the Company would be required to pay a 100% penalty tax on any gain allocable to it from the prohibited transaction, and the Company’s ability to retain proceeds from real property sales may be jeopardized. 19 Table of Contents Dividends payable by REITs may be taxed at higher rates than dividends of non-REIT corporations, which could reduce the net cash received by stockholders and may be detrimental to the Company’s ability to raise additional funds through any future sale of its stock.
However, if the Internal Revenue Service successfully contends that certain transfers or disposals of properties by the Company are prohibited transactions, then the Company would be required to pay a 100% penalty tax on any gain allocable to it from the prohibited transaction, and the Company’s ability to retain proceeds from real property sales may be jeopardized.
If any of the Company’s subsidiary REITs were to fail to qualify as REITs, it is possible that the Company could also fail to qualify as a REIT. The tax imposed on REITs engaging in "prohibited transactions" may limit the Company’s ability to engage in transactions which would be treated as sales for federal income tax purposes.
The tax imposed on REITs engaging in "prohibited transactions" may limit the Company’s ability to engage in transactions which would be treated as sales for federal income tax purposes.
In addition, we may fail to provide quality housing and continuous access to amenities as a result of other factors, including government mandated closures, mechanical failure, power outage, human error, vandalism, physical or electronic security breaches, war, terrorism or similar events.
In addition, we may fail to provide quality housing and continuous access to amenities as a result of other factors, including government mandated closures, mechanical failure, power outage, human error, vandalism, physical or electronic security breaches, war, terrorism or similar events. 15 Table of Contents Such events may also expose us to additional liability claims and damage our reputation and brand and could cause tenants to terminate or not renew their leases, or prospective tenants to seek housing elsewhere.
We rely on information technology networks and systems to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personally identifiable information (“PII”), and tenant and lease data.
We rely on information technology hardware, software, networks and systems (collectively, “IT Systems”), some of which are provided by vendors, to process, transmit and store personal information, tenant and lease data, and other electronic information (collectively, “Confidential Information”), and to manage or support a variety of business processes, including financial transactions and records.
If the financial institution defaults in its guarantee obligations, or if we are unable to renew the applicable guarantee or otherwise post satisfactory collateral, a default will occur under the applicable tax-exempt bonds and the community could be foreclosed upon if we do not redeem the bonds. The price per share of the Company’s stock may fluctuate significantly.
Additionally, certain of our tax-exempt bond financing documents require us to obtain a guarantee from a financial institution of payment of the principal and interest on the bonds. 22 Table of Contents If the financial institution defaults in its guarantee obligations, or if we are unable to renew the applicable guarantee or otherwise post satisfactory collateral, a default will occur under the applicable tax-exempt bonds and the community could be foreclosed upon if we do not redeem the bonds.
Real estate investments are illiquid and, in our markets, can at times be difficult to sell at prices we find acceptable, which may limit our ability to promptly reduce our portfolio in response to changes in economic or other conditions and otherwise may adversely affect our financial condition and results of operations.
Real estate investments are illiquid and, in our markets, can at times be difficult to sell at prices we find acceptable, which may limit our ability to promptly reduce our portfolio in response to changes in economic or other conditions and otherwise may adversely affect our financial condition and results of operations. 13 Table of Contents The Company may not be able to lease its commercial space consistent with its projections or at market rates and the longer-term leases for existing space could result in below market rents over time.
In general, to the extent that the Company’s access to capital and credit is at a higher cost than the Company has experienced in recent years (reflected in higher interest rates for debt financing or a lower stock price for equity financing without a corresponding change to investment cap rates) the Company’s ability to make acquisitions, develop or redevelop communities, obtain new financing, and refinance existing borrowing at competitive rates could be adversely affected, which would impact the Company's financial standing and related credit rating.
If sufficient sources of external financing are not available to us on cost effective terms, we could be forced to limit our acquisition, development and redevelopment activity and/or take other actions to fund our business activities and repayment of debt, such as selling assets, reducing our cash dividend or distributing less than 100% of our REIT taxable income. 17 Table of Contents In general, to the extent that the Company’s access to capital and credit is at a higher cost than the Company has experienced in recent years (reflected in higher interest rates for debt financing or a lower stock price for equity financing without a corresponding change to investment cap rates) the Company’s ability to make acquisitions, develop or redevelop communities, obtain new financing, and refinance existing borrowing at competitive rates could be adversely affected, which would impact the Company's financial standing and related credit rating.
In some instances, the Company and the joint venture partner may each have the right to trigger a buy-sell arrangement, which could cause the Company to sell its interest, or acquire a partner’s interest, at a time when the Company otherwise would not have initiated such a transaction.
In some instances, the Company and the joint venture partner may each have the right to exercise a buy-sell arrangement, which could cause the Company to sell its interest, or acquire a partner’s interest, at a time when the Company otherwise would not have initiated such a transaction, and may result in the valuation of our interest or our partner’s interest at levels which may not be representative of the valuation that would result from an arm’s length marketing process and could cause us to recognize unanticipated capital gains or losses or the loss of fee income.

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Item 2. Properties

Properties — owned and leased real estate

13 edited+0 added−0 removed11 unchanged
Biggest change(See Note 8, "Mortgage Notes Payable" to the Company’s consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more 22 Table of Contents information about the Company’s secured mortgage debt and Schedule III thereto for a list of secured mortgage loans related to the Company’s portfolio.) Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Southern California Alpine Village Alpine, CA Garden 301 1971 2002 96% Barkley, The (3)(4) Anaheim, CA Garden 161 1984 2000 97% Park Viridian Anaheim, CA Mid-rise 320 2008 2014 96% Bonita Cedars Bonita, CA Garden 120 1983 2002 97% The Village at Toluca Lake Burbank, CA Mid-rise 145 1974 2017 97% Camarillo Oaks Camarillo, CA Garden 564 1985 1996 96% Camino Ruiz Square Camarillo, CA Garden 159 1990 2006 98% Pinnacle at Otay Ranch I & II Chula Vista, CA Mid-rise 364 2001 2014 97% Mesa Village Clairemont, CA Garden 133 1963 2002 96% Villa Siena Costa Mesa, CA Garden 272 1974 2014 96% Emerald Pointe Diamond Bar, CA Garden 160 1989 2014 97% Regency at Encino Encino, CA Mid-rise 75 1989 2009 98% The Havens (5) Fountain Valley, CA Garden 440 1969 2014 96% Valley Park Fountain Valley, CA Garden 160 1969 2001 97% Capri at Sunny Hills (4) Fullerton, CA Garden 102 1961 2001 95% Haver Hill (6) Fullerton, CA Garden 264 1973 2012 96% Pinnacle at Fullerton Fullerton, CA Mid-rise 192 2004 2014 97% Wilshire Promenade Fullerton, CA Mid-rise 149 1992 1997 97% Montejo Apartments Garden Grove, CA Garden 124 1974 2001 97% The Henley I Glendale, CA Mid-rise 83 1974 1999 96% The Henley II Glendale, CA Mid-rise 132 1970 1999 96% CBC and The Sweeps Goleta, CA Garden 239 1962 2006 99% Huntington Breakers Huntington Beach, CA Mid-rise 342 1984 1997 97% The Huntington Huntington Beach, CA Garden 276 1975 2012 97% Hillsborough Park (7) La Habra, CA Garden 235 1999 1999 97% Village Green La Habra, CA Garden 272 1971 2014 96% The Palms at Laguna Niguel Laguna Niguel, CA Garden 460 1988 2014 96% Trabuco Villas Lake Forest, CA Mid-rise 132 1985 1997 98% Marbrisa Long Beach, CA Mid-rise 202 1987 2002 96% Pathways at Bixby Village Long Beach, CA Garden 296 1975 1991 96% 5600 Wilshire Los Angeles, CA Mid-rise 284 2008 2014 97% Alessio Los Angeles, CA Mid-rise 624 2001 2014 96% Ashton Sherman Village Los Angeles, CA Mid-rise 264 2014 2016 97% Avant Los Angeles, CA Mid-rise 440 2014 2015 95% The Avery Los Angeles, CA Mid-rise 121 2014 2014 96% Bellerive Los Angeles, CA Mid-rise 63 2011 2011 97% Belmont Station Los Angeles, CA Mid-rise 275 2009 2009 96% Bunker Hill Los Angeles, CA High-rise 456 1968 1998 95% Catalina Gardens Los Angeles, CA Mid-rise 128 1987 2014 95% Cochran Apartments Los Angeles, CA Mid-rise 58 1989 1998 96% Emerson Valley Village Los Angeles, CA Mid-rise 144 2012 2016 97% Gas Company Lofts (6) Los Angeles, CA High-rise 251 2004 2013 96% The Blake LA Los Angeles, CA Mid-rise 196 1979 1997 97% Marbella Los Angeles, CA Mid-rise 60 1991 2005 96% 23 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Pacific Electric Lofts (8) Los Angeles, CA High-rise 314 2006 2012 95% Park Catalina Los Angeles, CA Mid-rise 90 2002 2012 96% Park Place Los Angeles, CA Mid-rise 60 1988 1997 96% Regency Palm Court Los Angeles, CA Mid-rise 116 1987 2014 89% Santee Court Los Angeles, CA High-rise 165 2004 2010 95% Santee Village Los Angeles, CA High-rise 73 2011 2011 95% Tiffany Court Los Angeles, CA Mid-rise 101 1987 2014 97% Wallace on Sunset Los Angeles, CA Mid-rise 200 2021 2021 95% Wilshire La Brea Los Angeles, CA Mid-rise 478 2014 2014 96% Windsor Court Los Angeles, CA Mid-rise 95 1987 2014 93% Windsor Court Los Angeles, CA Mid-rise 58 1988 1997 96% Aqua at Marina Del Rey Marina Del Rey, CA Mid-rise 500 2001 2014 97% Marina City Club (9) Marina Del Rey, CA Mid-rise 101 1971 2004 99% Mirabella Marina Del Rey, CA Mid-rise 188 2000 2000 96% Mira Monte Mira Mesa, CA Garden 354 1982 2002 97% Hillcrest Park Newbury Park, CA Garden 608 1973 1998 95% Fairway Apartments at Big Canyon (10) Newport Beach, CA Mid-rise 74 1972 1999 93% Muse North Hollywood, CA Mid-rise 152 2011 2011 96% Country Villas Oceanside, CA Garden 180 1976 2002 97% Mission Hills Oceanside, CA Garden 282 1984 2005 96% Renaissance at Uptown Orange Orange, CA Mid-rise 460 2007 2014 96% Mariner's Place Oxnard, CA Garden 105 1987 2000 97% Monterey Villas Oxnard, CA Garden 122 1974 1997 95% Tierra Vista Oxnard, CA Mid-rise 404 2001 2001 96% Arbors at Parc Rose (8) Oxnard, CA Mid-rise 373 2001 2011 96% The Hallie Pasadena, CA Mid-rise 292 1972 1997 97% The Stuart Pasadena, CA Mid-rise 188 2007 2014 97% Villa Angelina Placentia, CA Garden 256 1970 2001 97% Fountain Park Playa Vista, CA Mid-rise 705 2002 2004 96% Highridge (4) Rancho Palos Verdes, CA Mid-rise 255 1972 1997 96% Cortesia Rancho Santa Margarita, CA Garden 308 1999 2014 96% Pinnacle at Talega San Clemente, CA Mid-rise 362 2002 2014 96% Allure at Scripps Ranch San Diego, CA Mid-rise 194 2002 2014 97% Bernardo Crest San Diego, CA Garden 216 1988 2014 97% Cambridge Park San Diego, CA Mid-rise 320 1998 2014 96% Carmel Creek San Diego, CA Garden 348 2000 2014 96% Carmel Landing San Diego, CA Garden 356 1989 2014 95% Carmel Summit San Diego, CA Mid-rise 246 1989 2014 97% CentrePointe San Diego, CA Garden 224 1974 1997 95% Esplanade (5) San Diego, CA Garden 616 1986 2014 96% Form 15 San Diego, CA Mid-rise 242 2014 2016 97% Montanosa San Diego, CA Garden 472 1990 2014 97% Summit Park San Diego, CA Garden 300 1972 2002 97% Essex Skyline (11) Santa Ana, CA High-rise 350 2008 2010 94% Fairhaven Apartments (4) Santa Ana, CA Garden 164 1970 2001 97% Parkside Court (5) Santa Ana, CA Mid-rise 210 1986 2014 97% 24 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Pinnacle at MacArthur Place Santa Ana, CA Mid-rise 253 2002 2014 96% Hope Ranch Santa Barbara, CA Garden 108 1965 2007 97% Bridgeport Coast (12) Santa Clarita, CA Mid-rise 188 2006 2014 96% Meadowood (7) Simi Valley, CA Garden 320 1986 1996 95% Shadow Point Spring Valley, CA Garden 172 1983 2002 96% The Fairways at Westridge (12) Valencia, CA Mid-rise 234 2004 2014 97% The Vistas of West Hills (12) Valencia, CA Mid-rise 220 2009 2014 97% Allegro Valley Village, CA Mid-rise 97 2010 2010 97% Lofts at Pinehurst, The Ventura, CA Garden 118 1971 1997 96% Pinehurst (13) Ventura, CA Garden 28 1973 2004 99% Woodside Village Ventura, CA Garden 145 1987 2004 97% Passage Buena Vista (14) Vista, CA Garden 179 2020 2021 96% Walnut Heights Walnut, CA Garden 163 1964 2003 97% The Dylan West Hollywood, CA Mid-rise 184 2014 2014 95% The Huxley West Hollywood, CA Mid-rise 187 2014 2014 96% Reveal Woodland Hills, CA Mid-rise 438 2010 2011 96% Avondale at Warner Center Woodland Hills, CA Mid-rise 446 1970 1999 96% Vela (16) Woodland Hills, CA Mid-rise 379 2018 2022 95% 26,374 96% Northern California Belmont Terrace Belmont, CA Mid-rise 71 1974 2006 96% Fourth & U Berkeley, CA Mid-rise 171 2010 2010 94% The Commons Campbell, CA Garden 264 1973 2010 97% Pointe at Cupertino Cupertino, CA Garden 116 1963 1998 97% Connolly Station Dublin, CA Mid-rise 309 2014 2014 96% Avenue 64 Emeryville, CA Mid-rise 224 2007 2014 95% The Courtyards at 65th Street (15) Emeryville, CA Mid-rise 331 2004 2019 94% Emme Emeryville, CA Mid-rise 190 2015 2015 94% Foster's Landing Foster City, CA Garden 490 1987 2014 96% Stevenson Place Fremont, CA Garden 200 1975 2000 95% Mission Peaks Fremont, CA Mid-rise 453 1995 2014 96% Mission Peaks II Fremont, CA Garden 336 1989 2014 97% Paragon Apartments Fremont, CA Mid-rise 301 2013 2014 96% Boulevard Fremont, CA Garden 172 1978 1996 97% Briarwood (8) Fremont, CA Garden 160 1978 2011 97% The Woods (8) Fremont, CA Garden 160 1978 2011 96% The Rexford (16) Fremont, CA Garden 203 1973 2021 96% City Centre (12) Hayward, CA Mid-rise 192 2000 2014 97% City View Hayward, CA Garden 572 1975 1998 97% Lafayette Highlands Lafayette, CA Garden 150 1973 2014 95% 777 Hamilton (17) Menlo Park, CA Mid-rise 195 2017 2019 95% Apex Milpitas, CA Mid-rise 367 2014 2014 96% Regency at Mountain View (6) Mountain View, CA Mid-rise 142 1970 2013 96% Bridgeport (7) Newark, CA Garden 184 1987 1987 97% The Landing at Jack London Square Oakland, CA Mid-rise 282 2001 2014 96% The Grand Oakland, CA High-rise 243 2009 2009 95% The Galloway Pleasanton, CA Mid-rise 506 2016 2016 96% 25 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Radius Redwood City, CA Mid-rise 264 2015 2015 95% Township Redwood City, CA Mid-rise 132 2014 2019 95% San Marcos Richmond, CA Mid-rise 432 2003 2003 96% 500 Folsom (14) San Francisco, CA High-rise 537 2021 2021 95% Bennett Lofts San Francisco, CA Mid-rise 164 2004 2012 82% Fox Plaza San Francisco, CA High-rise 445 1968 2013 96% MB 360 San Francisco, CA Mid-rise 360 2014 2014 96% Park West San Francisco, CA Mid-rise 126 1958 2012 95% 101 San Fernando San Jose, CA Mid-rise 323 2001 2010 96% 360 Residences (15) San Jose, CA Mid-rise 213 2010 2017 94% Bella Villagio San Jose, CA Mid-rise 231 2004 2010 96% Century Towers (14) San Jose, CA High-rise 376 2017 2017 96% Enso San Jose, CA Mid-rise 183 2014 2015 97% Epic San Jose, CA Mid-rise 769 2013 2013 96% Esplanade San Jose, CA Mid-rise 278 2002 2004 97% Fountains at River Oaks San Jose, CA Mid-rise 226 1990 2014 97% Marquis San Jose, CA Mid-rise 166 2015 2016 96% Meridian at Midtown (15) San Jose, CA Mid-rise 218 2015 2018 95% Mio San Jose, CA Mid-rise 103 2015 2016 97% Palm Valley San Jose, CA Mid-rise 1,100 2008 2014 96% Patina at Midtown (14) San Jose, CA Mid-rise 269 2021 2021 95% Sage at Cupertino (4) San Jose, CA Garden 230 1971 2017 95% Silver (14) San Jose, CA Mid-rise 268 2019 2021 94% The Carlyle (7) San Jose, CA Garden 132 2000 2000 96% The Waterford San Jose, CA Mid-rise 238 2000 2000 96% Willow Lake San Jose, CA Mid-rise 508 1989 2012 97% Lakeshore Landing San Mateo, CA Mid-rise 308 1988 2014 96% Hillsdale Garden (14) San Mateo, CA Garden 697 1948 2006 96% Station Park Green San Mateo, CA Mid-rise 599 2018 2018 95% Deer Valley San Rafael, CA Garden 171 1996 2014 97% Bel Air San Ramon, CA Garden 462 1988 1995 96% Canyon Oaks San Ramon, CA Mid-rise 250 2005 2007 96% Crow Canyon San Ramon, CA Mid-rise 400 1992 2014 97% Foothill Gardens San Ramon, CA Garden 132 1985 1997 96% Mill Creek at Windermere San Ramon, CA Mid-rise 400 2005 2007 96% Twin Creeks San Ramon, CA Garden 44 1985 1997 96% 1000 Kiely Santa Clara, CA Garden 121 1971 2011 97% Le Parc Santa Clara, CA Garden 140 1975 1994 97% Marina Cove (18) Santa Clara, CA Garden 292 1974 1994 96% Mylo Santa Clara, CA Mid-rise 476 2021 2021 95% Riley Square (8) Santa Clara, CA Garden 156 1972 2012 97% Villa Granada Santa Clara, CA Mid-rise 270 2010 2014 96% Chestnut Street Apartments Santa Cruz, CA Garden 96 2002 2008 98% Bristol Commons Sunnyvale, CA Garden 188 1989 1995 96% Brookside Oaks (4) Sunnyvale, CA Garden 170 1973 2000 98% Lawrence Station Sunnyvale, CA Mid-rise 336 2012 2014 96% Magnolia Lane (19) Sunnyvale, CA Garden 32 2001 2007 96% 26 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Magnolia Square (4) Sunnyvale, CA Garden 156 1963 2007 96% Montclaire Sunnyvale, CA Mid-rise 390 1973 1988 97% Reed Square Sunnyvale, CA Garden 100 1970 2011 97% Solstice Sunnyvale, CA Mid-rise 280 2014 2014 96% Summerhill Park Sunnyvale, CA Garden 100 1988 1988 98% Via Sunnyvale, CA Mid-rise 284 2011 2011 96% Windsor Ridge Sunnyvale, CA Mid-rise 216 1989 1989 97% Vista Belvedere Tiburon, CA Mid-rise 76 1963 2004 96% Verandas (12) Union City, CA Mid-rise 282 1989 2014 97% Agora Walnut Creek, CA Mid-rise 49 2016 2016 97% Brio (4) Walnut Creek, CA Mid-rise 300 2015 2019 96% 23,248 96% Seattle, Washington Metropolitan Area Belcarra Bellevue, WA Mid-rise 296 2009 2014 96% BellCentre Bellevue, WA Mid-rise 249 2001 2014 96% Cedar Terrace Bellevue, WA Garden 180 1984 2005 96% Courtyard off Main Bellevue, WA Mid-rise 110 2000 2010 95% Ellington Bellevue, WA Mid-rise 220 1994 2014 94% Emerald Ridge Bellevue, WA Garden 180 1987 1994 97% Foothill Commons Bellevue, WA Mid-rise 394 1978 1990 96% Palisades, The Bellevue, WA Garden 192 1977 1990 97% Park Highland Bellevue, WA Mid-rise 250 1993 2014 96% Piedmont Bellevue, WA Garden 396 1969 2014 96% Sammamish View Bellevue, WA Garden 153 1986 1994 97% Woodland Commons Bellevue, WA Garden 302 1978 1990 96% Bothell Ridge (5) Bothell, WA Garden 214 1988 2014 96% Canyon Pointe Bothell, WA Garden 250 1990 2003 97% Inglenook Court Bothell, WA Garden 224 1985 1994 96% Pinnacle Sonata Bothell, WA Mid-rise 268 2000 2014 96% Salmon Run at Perry Creek Bothell, WA Garden 132 2000 2000 97% Stonehedge Village Bothell, WA Garden 196 1986 1997 98% Highlands at Wynhaven Issaquah, WA Mid-rise 333 2000 2008 96% Park Hill at Issaquah Issaquah, WA Garden 245 1999 1999 97% Wandering Creek Kent, WA Garden 156 1986 1995 97% Ascent Kirkland, WA Garden 90 1988 2012 96% Bridle Trails Kirkland, WA Garden 108 1986 1997 97% Corbella at Juanita Bay Kirkland, WA Garden 169 1978 2010 97% Evergreen Heights Kirkland, WA Garden 200 1990 1997 97% Slater 116 Kirkland, WA Mid-rise 108 2013 2013 96% Montebello Kirkland, WA Garden 248 1996 2012 97% Martha Lake Apartments (16) Lynwood, WA Mid-rise 155 1991 2021 97% Aviara (19) Mercer Island, WA Mid-rise 166 2013 2014 96% Laurels at Mill Creek Mill Creek, WA Garden 164 1981 1996 98% Monterra in Mill Creek (16) Mill Creek, WA Garden 139 2003 2021 97% Parkwood at Mill Creek Mill Creek, WA Garden 240 1989 2014 97% The Elliot at Mukilteo (4) Mukilteo, WA Garden 301 1981 1997 96% Castle Creek Newcastle, WA Garden 216 1998 1998 98% 27 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Elevation Redmond, WA Garden 158 1986 2010 96% Pure Redmond Redmond, WA Mid-rise 105 2016 2019 96% Redmond Hill (8) Redmond, WA Garden 442 1985 2011 96% Shadowbrook Redmond, WA Garden 418 1986 2014 95% The Trails of Redmond Redmond, WA Garden 423 1985 2014 95% Vesta (8) Redmond, WA Garden 440 1998 2011 96% Brighton Ridge Renton, WA Garden 264 1986 1996 96% Fairwood Pond Renton, WA Garden 194 1997 2004 98% Forest View Renton, WA Garden 192 1998 2003 97% Pinnacle on Lake Washington Renton, WA Mid-rise 180 2001 2014 97% 8th & Republican (15) Seattle, WA Mid-rise 211 2016 2017 96% Annaliese Seattle, WA Mid-rise 56 2009 2013 97% The Audrey at Belltown Seattle, WA Mid-rise 137 1992 2014 96% The Bernard Seattle, WA Mid-rise 63 2008 2011 96% Cairns, The Seattle, WA Mid-rise 99 2006 2007 95% Collins on Pine Seattle, WA Mid-rise 76 2013 2014 96% Canvas Seattle, WA Mid-rise 123 2014 2021 100% Domaine Seattle, WA Mid-rise 92 2009 2012 97% Expo (14) Seattle, WA Mid-rise 275 2012 2012 93% Fountain Court Seattle, WA Mid-rise 320 2000 2000 95% Patent 523 Seattle, WA Mid-rise 295 2010 2010 96% Taylor 28 Seattle, WA Mid-rise 197 2008 2014 96% Velo and Ray (15) Seattle, WA Mid-rise 308 2014 2019 96% Vox Apartments Seattle, WA Mid-rise 58 2013 2013 95% Wharfside Pointe Seattle, WA Mid-rise 155 1990 1994 97% 12,525 96% Total/Weighted Average 62,147 96% Footnotes to the Company’s Portfolio Listing as of December 31, 2022 (1) Unless otherwise specified, the Company consolidates each community in accordance with U.S.
Biggest change(See Note 8, "Mortgage Notes Payable" to the Company’s consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for more information about the Company’s secured mortgage debt and Schedule III thereto for a list of secured mortgage loans related to the Company’s portfolio.) Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Southern California Alpine Village Alpine, CA Garden 301 1971 2002 96% Barkley, The (3)(4) Anaheim, CA Garden 161 1984 2000 96% Park Viridian Anaheim, CA Mid-rise 320 2008 2014 97% Bonita Cedars Bonita, CA Garden 120 1983 2002 96% The Village at Toluca Lake Burbank, CA Mid-rise 145 1974 2017 97% Camarillo Oaks Camarillo, CA Garden 564 1985 1996 97% Camino Ruiz Square Camarillo, CA Garden 160 1990 2006 97% Hacienda at Camarillo Oaks Camarillo, CA Garden 73 1984 2023 86% Pinnacle at Otay Ranch I & II Chula Vista, CA Mid-rise 364 2001 2014 97% Mesa Village Clairemont, CA Garden 133 1963 2002 97% Villa Siena Costa Mesa, CA Garden 272 1974 2014 95% Emerald Pointe Diamond Bar, CA Garden 160 1989 2014 97% Regency at Encino Encino, CA Mid-rise 75 1989 2009 97% The Havens (5) Fountain Valley, CA Garden 440 1969 2014 97% Valley Park Fountain Valley, CA Garden 160 1969 2001 96% Capri at Sunny Hills (4) Fullerton, CA Garden 102 1961 2001 96% Haver Hill (6) Fullerton, CA Garden 264 1973 2012 96% Pinnacle at Fullerton Fullerton, CA Mid-rise 192 2004 2014 97% Wilshire Promenade Fullerton, CA Mid-rise 149 1992 1997 97% Montejo Apartments Garden Grove, CA Garden 124 1974 2001 97% The Henley I Glendale, CA Mid-rise 83 1974 1999 97% The Henley II Glendale, CA Mid-rise 132 1970 1999 97% Huntington Breakers Huntington Beach, CA Mid-rise 342 1984 1997 97% The Huntington Huntington Beach, CA Garden 276 1975 2012 96% Hillsborough Park (7) La Habra, CA Garden 235 1999 1999 97% Village Green La Habra, CA Garden 272 1971 2014 97% The Palms at Laguna Niguel Laguna Niguel, CA Garden 460 1988 2014 97% Trabuco Villas Lake Forest, CA Mid-rise 132 1985 1997 96% Marbrisa Long Beach, CA Mid-rise 202 1987 2002 97% Pathways at Bixby Village Long Beach, CA Garden 296 1975 1991 98% 5600 Wilshire Los Angeles, CA Mid-rise 284 2008 2014 97% Alessio Los Angeles, CA Mid-rise 624 2001 2014 96% Ashton Sherman Village Los Angeles, CA Mid-rise 264 2014 2016 98% Avant Los Angeles, CA Mid-rise 440 2014 2015 93% The Avery Los Angeles, CA Mid-rise 121 2014 2014 98% Bellerive Los Angeles, CA Mid-rise 63 2011 2011 96% Belmont Station Los Angeles, CA Mid-rise 275 2009 2009 95% Bunker Hill Los Angeles, CA High-rise 456 1968 1998 96% Catalina Gardens Los Angeles, CA Mid-rise 128 1987 2014 93% Cochran Apartments Los Angeles, CA Mid-rise 58 1989 1998 97% Emerson Valley Village Los Angeles, CA Mid-rise 144 2012 2016 97% 26 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Gas Company Lofts (6) Los Angeles, CA High-rise 251 2004 2013 95% The Blake LA Los Angeles, CA Mid-rise 196 1979 1997 98% Marbella Los Angeles, CA Mid-rise 60 1991 2005 97% Pacific Electric Lofts (8) Los Angeles, CA High-rise 314 2006 2012 94% Park Catalina Los Angeles, CA Mid-rise 90 2002 2012 93% Park Place Los Angeles, CA Mid-rise 60 1988 1997 97% Regency Palm Court Los Angeles, CA Mid-rise 116 1987 2014 94% Santee Court Los Angeles, CA High-rise 165 2004 2010 92% Santee Village Los Angeles, CA High-rise 73 2011 2011 92% Tiffany Court Los Angeles, CA Mid-rise 101 1987 2014 95% Wallace on Sunset Los Angeles, CA Mid-rise 200 2021 2021 95% Wilshire La Brea Los Angeles, CA Mid-rise 478 2014 2014 96% Windsor Court Los Angeles, CA Mid-rise 95 1987 2014 94% Windsor Court Los Angeles, CA Mid-rise 58 1988 1997 97% Aqua at Marina Del Rey Marina Del Rey, CA Mid-rise 500 2001 2014 97% Marina City Club (9) Marina Del Rey, CA Mid-rise 101 1971 2004 97% Mirabella Marina Del Rey, CA Mid-rise 188 2000 2000 96% Mira Monte Mira Mesa, CA Garden 354 1982 2002 96% Hillcrest Park Newbury Park, CA Garden 608 1973 1998 97% Fairway Apartments at Big Canyon (10) Newport Beach, CA Mid-rise 74 1972 1999 98% Muse North Hollywood, CA Mid-rise 152 2011 2011 97% Country Villas Oceanside, CA Garden 180 1976 2002 96% Mission Hills Oceanside, CA Garden 282 1984 2005 97% Renaissance at Uptown Orange Orange, CA Mid-rise 460 2007 2014 97% Mariner's Place Oxnard, CA Garden 105 1987 2000 96% Monterey Villas Oxnard, CA Garden 122 1974 1997 96% Tierra Vista Oxnard, CA Mid-rise 404 2001 2001 97% Arbors at Parc Rose (8) Oxnard, CA Mid-rise 373 2001 2011 97% The Hallie Pasadena, CA Mid-rise 292 1972 1997 97% The Stuart Pasadena, CA Mid-rise 188 2007 2014 98% Villa Angelina Placentia, CA Garden 256 1970 2001 95% Fountain Park Playa Vista, CA Mid-rise 705 2002 2004 95% Highridge (4) Rancho Palos Verdes, CA Mid-rise 255 1972 1997 97% Cortesia Rancho Santa Margarita, CA Garden 308 1999 2014 97% Pinnacle at Talega San Clemente, CA Mid-rise 362 2002 2014 97% Allure at Scripps Ranch San Diego, CA Mid-rise 194 2002 2014 98% Bernardo Crest San Diego, CA Garden 216 1988 2014 98% Cambridge Park San Diego, CA Mid-rise 320 1998 2014 97% Carmel Creek San Diego, CA Garden 348 2000 2014 97% Carmel Landing San Diego, CA Garden 356 1989 2014 97% Carmel Summit San Diego, CA Mid-rise 246 1989 2014 96% CentrePointe San Diego, CA Garden 224 1974 1997 95% Esplanade (5) San Diego, CA Garden 616 1986 2014 96% Form 15 San Diego, CA Mid-rise 242 2014 2016 97% Montanosa San Diego, CA Garden 472 1990 2014 97% Summit Park San Diego, CA Garden 300 1972 2002 97% 27 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Essex Skyline (11) Santa Ana, CA High-rise 350 2008 2010 93% Fairhaven Apartments (4) Santa Ana, CA Garden 164 1970 2001 96% Parkside Court (5) Santa Ana, CA Mid-rise 210 1986 2014 96% Pinnacle at MacArthur Place Santa Ana, CA Mid-rise 253 2002 2014 97% Hope Ranch Santa Barbara, CA Garden 108 1965 2007 98% Bridgeport Coast (12) Santa Clarita, CA Mid-rise 188 2006 2014 98% Meadowood (7) Simi Valley, CA Garden 320 1986 1996 97% Shadow Point Spring Valley, CA Garden 172 1983 2002 95% The Fairways at Westridge (12) Valencia, CA Mid-rise 234 2004 2014 98% The Vistas of West Hills (12) Valencia, CA Mid-rise 220 2009 2014 98% Allegro Valley Village, CA Mid-rise 97 2010 2010 98% Lofts at Pinehurst, The Ventura, CA Garden 118 1971 1997 97% Pinehurst (13) Ventura, CA Garden 28 1973 2004 97% Woodside Village Ventura, CA Garden 145 1987 2004 97% Passage Buena Vista (14) Vista, CA Garden 179 2020 2021 97% Walnut Heights Walnut, CA Garden 163 1964 2003 96% The Dylan West Hollywood, CA Mid-rise 184 2014 2014 95% The Huxley West Hollywood, CA Mid-rise 187 2014 2014 95% Reveal Woodland Hills, CA Mid-rise 438 2010 2011 96% Avondale at Warner Center Woodland Hills, CA Mid-rise 446 1970 1999 97% Vela (16) Woodland Hills, CA Mid-rise 379 2018 2022 96% 26,209 96% Northern California Belmont Terrace Belmont, CA Mid-rise 71 1974 2006 96% Fourth & U Berkeley, CA Mid-rise 171 2010 2010 96% The Commons Campbell, CA Garden 264 1973 2010 97% Pointe at Cupertino Cupertino, CA Garden 116 1963 1998 97% Connolly Station Dublin, CA Mid-rise 309 2014 2014 97% Avenue 64 Emeryville, CA Mid-rise 224 2007 2014 95% The Courtyards at 65th Street (15) Emeryville, CA Mid-rise 331 2004 2019 94% Emme Emeryville, CA Mid-rise 190 2015 2015 97% Foster's Landing Foster City, CA Garden 490 1987 2014 97% Stevenson Place Fremont, CA Garden 200 1975 2000 97% Mission Peaks Fremont, CA Mid-rise 453 1995 2014 97% Mission Peaks II Fremont, CA Garden 336 1989 2014 97% Paragon Apartments Fremont, CA Mid-rise 301 2013 2014 97% Boulevard Fremont, CA Garden 172 1978 1996 97% Briarwood (8) Fremont, CA Garden 160 1978 2011 96% The Woods (8) Fremont, CA Garden 160 1978 2011 97% The Rexford (16) Fremont, CA Garden 203 1973 2021 97% City Centre (12) Hayward, CA Mid-rise 192 2000 2014 96% City View Hayward, CA Garden 572 1975 1998 95% Lafayette Highlands Lafayette, CA Garden 150 1973 2014 97% 777 Hamilton (17) Menlo Park, CA Mid-rise 195 2017 2019 95% Apex Milpitas, CA Mid-rise 367 2014 2014 97% Regency at Mountain View (6) Mountain View, CA Mid-rise 142 1970 2013 96% Bridgeport (7) Newark, CA Garden 184 1987 1987 98% 28 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) The Landing at Jack London Square Oakland, CA Mid-rise 282 2001 2014 95% The Grand Oakland, CA High-rise 243 2009 2009 95% The Galloway Pleasanton, CA Mid-rise 506 2016 2016 97% Radius Redwood City, CA Mid-rise 264 2015 2015 97% Township Redwood City, CA Mid-rise 132 2014 2019 95% San Marcos Richmond, CA Mid-rise 432 2003 2003 96% 500 Folsom (14) San Francisco, CA High-rise 537 2021 2021 94% Bennett Lofts San Francisco, CA Mid-rise 179 2004 2012 91% Fox Plaza San Francisco, CA High-rise 445 1968 2013 95% MB 360 San Francisco, CA Mid-rise 360 2014 2014 95% Park West San Francisco, CA Mid-rise 126 1958 2012 96% 101 San Fernando San Jose, CA Mid-rise 323 2001 2010 96% 360 Residences (15) San Jose, CA Mid-rise 213 2010 2017 94% Bella Villagio San Jose, CA Mid-rise 231 2004 2010 95% Century Towers (14) San Jose, CA High-rise 376 2017 2017 96% Enso San Jose, CA Mid-rise 183 2014 2015 97% Epic San Jose, CA Mid-rise 769 2013 2013 97% Esplanade San Jose, CA Mid-rise 278 2002 2004 97% Fountains at River Oaks San Jose, CA Mid-rise 226 1990 2014 97% Marquis San Jose, CA Mid-rise 166 2015 2016 97% Meridian at Midtown (15) San Jose, CA Mid-rise 218 2015 2018 96% Mio San Jose, CA Mid-rise 103 2015 2016 97% Palm Valley San Jose, CA Mid-rise 1,100 2008 2014 96% Patina at Midtown (14) San Jose, CA Mid-rise 269 2021 2021 96% Sage at Cupertino (4) San Jose, CA Garden 230 1971 2017 97% Silver (14) San Jose, CA Mid-rise 268 2019 2021 95% The Carlyle (7) San Jose, CA Garden 132 2000 2000 96% The Waterford San Jose, CA Mid-rise 238 2000 2000 97% Willow Lake San Jose, CA Mid-rise 508 1989 2012 97% Lakeshore Landing San Mateo, CA Mid-rise 308 1988 2014 97% Hillsdale Garden (14) San Mateo, CA Garden 697 1948 2006 95% Station Park Green San Mateo, CA Mid-rise 599 2018 2018 97% Deer Valley San Rafael, CA Garden 171 1996 2014 96% Bel Air San Ramon, CA Garden 462 1988 1995 97% Canyon Oaks San Ramon, CA Mid-rise 250 2005 2007 97% Crow Canyon San Ramon, CA Mid-rise 400 1992 2014 97% Foothill Gardens San Ramon, CA Garden 132 1985 1997 97% Mill Creek at Windermere San Ramon, CA Mid-rise 400 2005 2007 96% Twin Creeks San Ramon, CA Garden 44 1985 1997 97% 1000 Kiely Santa Clara, CA Garden 121 1971 2011 97% Le Parc Santa Clara, CA Garden 140 1975 1994 97% Marina Cove (18) Santa Clara, CA Garden 292 1974 1994 97% Mylo Santa Clara, CA Mid-rise 476 2021 2021 96% Riley Square (8) Santa Clara, CA Garden 156 1972 2012 96% Villa Granada Santa Clara, CA Mid-rise 270 2010 2014 97% Chestnut Street Apartments Santa Cruz, CA Garden 96 2002 2008 91% Bristol Commons Sunnyvale, CA Garden 188 1989 1995 97% 29 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Brookside Oaks (4) Sunnyvale, CA Garden 170 1973 2000 97% Lawrence Station Sunnyvale, CA Mid-rise 336 2012 2014 97% Magnolia Lane (19) Sunnyvale, CA Garden 32 2001 2007 97% Magnolia Square (4) Sunnyvale, CA Garden 156 1963 2007 97% Montclaire Sunnyvale, CA Mid-rise 390 1973 1988 97% Reed Square Sunnyvale, CA Garden 100 1970 2011 97% Solstice Sunnyvale, CA Mid-rise 280 2014 2014 96% Summerhill Park Sunnyvale, CA Garden 100 1988 1988 97% Via Sunnyvale, CA Mid-rise 284 2011 2011 97% Windsor Ridge Sunnyvale, CA Mid-rise 216 1989 1989 97% Vista Belvedere Tiburon, CA Mid-rise 76 1963 2004 95% Verandas (12) Union City, CA Mid-rise 282 1989 2014 97% Agora Walnut Creek, CA Mid-rise 49 2016 2016 96% Brio (4) Walnut Creek, CA Mid-rise 300 2015 2019 97% 23,263 96% Seattle, Washington Metropolitan Area Belcarra Bellevue, WA Mid-rise 296 2009 2014 97% BellCentre Bellevue, WA Mid-rise 249 2001 2014 97% Cedar Terrace Bellevue, WA Garden 180 1984 2005 96% Courtyard off Main Bellevue, WA Mid-rise 110 2000 2010 96% Ellington Bellevue, WA Mid-rise 220 1994 2014 97% Emerald Ridge Bellevue, WA Garden 180 1987 1994 96% Foothill Commons Bellevue, WA Mid-rise 394 1978 1990 97% Palisades, The Bellevue, WA Garden 192 1977 1990 96% Park Highland Bellevue, WA Mid-rise 250 1993 2014 97% Piedmont Bellevue, WA Garden 396 1969 2014 96% Sammamish View Bellevue, WA Garden 153 1986 1994 97% Woodland Commons Bellevue, WA Garden 302 1978 1990 96% Bothell Ridge (5) Bothell, WA Garden 214 1988 2014 96% Canyon Pointe Bothell, WA Garden 250 1990 2003 96% Inglenook Court Bothell, WA Garden 224 1985 1994 97% Pinnacle Sonata Bothell, WA Mid-rise 268 2000 2014 97% Salmon Run at Perry Creek Bothell, WA Garden 132 2000 2000 97% Stonehedge Village Bothell, WA Garden 196 1986 1997 96% Highlands at Wynhaven Issaquah, WA Mid-rise 333 2000 2008 98% Park Hill at Issaquah Issaquah, WA Garden 245 1999 1999 96% Wandering Creek Kent, WA Garden 156 1986 1995 97% Ascent Kirkland, WA Garden 90 1988 2012 97% Bridle Trails Kirkland, WA Garden 108 1986 1997 96% Corbella at Juanita Bay Kirkland, WA Garden 169 1978 2010 96% Evergreen Heights Kirkland, WA Garden 200 1990 1997 97% Slater 116 Kirkland, WA Mid-rise 108 2013 2013 97% Montebello Kirkland, WA Garden 248 1996 2012 97% Martha Lake Apartments (16) Lynwood, WA Mid-rise 155 1991 2021 96% Aviara (19) Mercer Island, WA Mid-rise 166 2013 2014 97% Laurels at Mill Creek Mill Creek, WA Garden 164 1981 1996 97% Monterra in Mill Creek (16) Mill Creek, WA Garden 139 2003 2021 96% 30 Table of Contents Apartment Year Year Communities (1) Location Type Homes Built Acquired (20) Occupancy (2) Parkwood at Mill Creek Mill Creek, WA Garden 240 1989 2014 97% The Elliot at Mukilteo (4) Mukilteo, WA Garden 301 1981 1997 97% Castle Creek Newcastle, WA Garden 216 1998 1998 97% Elevation Redmond, WA Garden 158 1986 2010 97% Pure Redmond Redmond, WA Mid-rise 105 2016 2019 97% Redmond Hill (8) Redmond, WA Garden 442 1985 2011 97% Shadowbrook Redmond, WA Garden 418 1986 2014 95% The Trails of Redmond Redmond, WA Garden 423 1985 2014 96% Vesta (8) Redmond, WA Garden 440 1998 2011 97% Brighton Ridge Renton, WA Garden 264 1986 1996 96% Fairwood Pond Renton, WA Garden 194 1997 2004 97% Forest View Renton, WA Garden 192 1998 2003 97% Pinnacle on Lake Washington Renton, WA Mid-rise 180 2001 2014 97% 8th & Republican (15) Seattle, WA Mid-rise 211 2016 2017 96% Annaliese Seattle, WA Mid-rise 56 2009 2013 97% The Audrey at Belltown Seattle, WA Mid-rise 137 1992 2014 96% The Bernard Seattle, WA Mid-rise 63 2008 2011 96% Cairns, The Seattle, WA Mid-rise 99 2006 2007 96% Collins on Pine Seattle, WA Mid-rise 76 2013 2014 98% Canvas Seattle, WA Mid-rise 123 2014 2021 96% Domaine Seattle, WA Mid-rise 92 2009 2012 96% Expo (14) Seattle, WA Mid-rise 275 2012 2012 96% Fountain Court Seattle, WA Mid-rise 320 2000 2000 97% Patent 523 Seattle, WA Mid-rise 295 2010 2010 96% Taylor 28 Seattle, WA Mid-rise 197 2008 2014 96% Velo and Ray (15) Seattle, WA Mid-rise 308 2014 2019 96% Vox Apartments Seattle, WA Mid-rise 58 2013 2013 97% Wharfside Pointe Seattle, WA Mid-rise 155 1990 1994 96% 12,525 97% Total/Weighted Average 61,997 96% Footnotes to the Company’s Portfolio Listing as of December 31, 2023 (1) Unless otherwise specified, the Company consolidates each community in accordance with U.S.
Communities The Company’s communities are primarily urban and suburban high density wood frame communities comprising of three to seven stories above grade construction with structured parking situated on 1-10 acres of land with densities averaging between 30-80+ units per acre. As of December 31, 2022, the Company’s communities include 104 garden-style, 138 mid-rise, and 10 high-rise communities.
Communities The Company’s communities are primarily urban and suburban high density wood frame communities comprising of three to seven stories above grade construction with structured parking situated on 1-10 acres of land with densities averaging between 30-80+ units per acre. As of December 31, 2023, the Company’s communities include 104 garden-style, 138 mid-rise, and 10 high-rise communities.
The communities have an average of approximately 247 apartment homes, with a mix of studio, one-, two- and some three-bedroom apartment homes. A wide variety of amenities are available at the Company’s communities, including covered parking, fireplaces, swimming pools, clubhouses with fitness facilities, playground areas and dog parks. The Company hires, trains and supervises on-site service and maintenance personnel.
The communities have an average of approximately 246 apartment homes, with a mix of studio, one-, two- and some three-bedroom apartment homes. A wide variety of amenities are available at the Company’s communities, including covered parking, fireplaces, swimming pools, clubhouses with fitness facilities, playground areas and dog parks. The Company hires, trains and supervises on-site service and maintenance personnel.
GAAP. (2) For communities, occupancy rates are based on financial occupancy for the year ended December 31, 2022, except for communities that were stabilized during the year, in which case occupancy as of December 31, 2022 was used. For an explanation of how financial occupancy is calculated, see "Occupancy Rates" in this Item 2.
GAAP. (2) For communities, occupancy rates are based on financial occupancy for the year ended December 31, 2023, except for communities that were stabilized during the year, in which case physical occupancy as of December 31, 2023 was used. For an explanation of how financial occupancy is calculated, see "Occupancy Rates" in this Item 2.
(13) This community is subject to a ground lease, which, unless extended, will expire in 2028. (14) The Company has an interest in a single asset entity owning this community. (15) This community is owned by Wesco V, LLC ("Wesco V"). The Company has a 50% interest in Wesco V, which is accounted for using the equity method of accounting.
(12) This community is owned by Wesco IV, LLC ("Wesco IV") The Company has a 65.1% interest in Wesco IV, which is accounted for using the equity method of accounting. (13) This community is subject to a ground lease, which, unless extended, will expire in 2028. (14) The Company has an interest in a single asset entity owning this community.
The Company’s apartment communities accounted for 99.0% of the Company’s revenues for the year ended December 31, 2022. Occupancy Rates Financial occupancy is defined as the percentage resulting from dividing actual rental income by total scheduled rental income.
The Company’s apartment communities accounted for 98.9% of the Company’s revenues for the year ended December 31, 2023. Occupancy Rates Financial occupancy is defined as the percentage resulting from dividing actual rental income by total scheduled rental income.
Properties The Company’s portfolio as of December 31, 2022 (including communities owned by unconsolidated joint ventures, but excluding communities underlying preferred equity investments) was comprised of 252 stabilized operating apartment communities (comprising 62,147 apartment homes), of which 26,374 apartment homes are located in Southern California, 23,248 apartment homes are located in Northern California, and 12,525 apartment homes are located in the Seattle metropolitan area.
Properties The Company’s portfolio as of December 31, 2023 (including communities owned by unconsolidated joint ventures, but excluding communities underlying preferred equity investments) was comprised of 252 stabilized operating apartment communities (comprising 61,997 apartment homes), of which 26,209 apartment homes are located in Southern California, 23,263 apartment homes are located in Northern California, and 12,525 apartment homes are located in the Seattle metropolitan area.
(16) This community is owned by Wesco VI, LLC ("Wesco VI"). The Company has a 50% interest in Wesco VI, which is accounted for using the equity method of accounting. (17) This community is owned by BEX IV, LLC ("BEX IV"). The Company has a 50.1% interest in BEX IV, which is accounted for using the equity method of accounting.
(15) This community is owned by Wesco V, LLC ("Wesco V"). The Company has a 50% interest in Wesco V, which is accounted for using the equity method of accounting. (16) This community is owned by Wesco VI, LLC ("Wesco VI"). The Company has a 50% interest in Wesco VI, which is accounted for using the equity method of accounting.
(18) A portion of this community on which 84 apartment homes are presently located is subject to a ground lease, which, unless extended, will expire in 2028. (19) The community is subject to a ground lease, which, unless extended, will expire in 2070. (20) Represents the initial year the joint venture or consolidated community was acquired.
(19) The community is subject to a ground lease, which, unless extended, will expire in 2070. (20) Represents the initial year the joint venture or consolidated community was acquired.
Commercial Buildings The Company owns three commercial buildings with approximately 283,000 square feet located in California and Washington, of which the Company occupied approximately 13,000 square feet as of December 31, 2022. Furthermore, as of December 31, 2022, the commercial buildings' physical occupancy rate was 83% consisting of 7 tenants, including the Company.
Commercial Buildings The Company owns three commercial buildings (totaling approximately 283,000 square feet) located in California and Washington, of which the Company occupied an aggregate of approximately 35,000 square feet as of December 31, 2023.
(9) This community is subject to a ground lease, which, unless extended, will expire in 2067. (10) This community is subject to a ground lease, which, unless extended, will expire in 2027.
(9) This community is subject to a ground lease, which, unless extended, will expire in 2067. 31 Table of Contents (10) This community is subject to a ground lease, which, unless extended, will expire in 2027. (11) The Company has a 97% interest and a former Executive Vice President of the Company has a 3% interest in this community.
Operating Portfolio The table below describes the Company’s operating portfolio as of December 31, 2022.
Furthermore, as of December 31, 2023, the commercial buildings' physical occupancy rate was 90% consisting of 7 tenants, including the Company. 25 Table of Contents Operating Portfolio The table below describes the Company’s operating portfolio as of December 31, 2023.
(11) The Company has a 97% interest and a former Executive Vice President of the Company has a 3% interest in this community. 28 Table of Contents (12) This community is owned by Wesco IV, LLC ("Wesco IV") The Company has a 65.1% interest in Wesco IV, which is accounted for using the equity method of accounting.
(17) This community is owned by BEX IV, LLC ("BEX IV"). The Company has a 50.1% interest in BEX IV, which is accounted for using the equity method of accounting. (18) A portion of this community on which 84 apartment homes are presently located is subject to a ground lease, which, unless extended, will expire in 2028.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

17 edited+1 added−7 removed6 unchanged
Biggest changeThe FTSE NAREIT Equity Apartments index was added in the current year as it more closely aligns with executive compensation and performance of the Company against its more directly comparable peers. 31 Table of Contents Period Ending Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Essex Property Trust, Inc. $ 100.00 $ 104.83 $ 132.00 $ 108.12 $ 164.77 $ 102.55 FTSE NAREIT Equity Apartments Index $ 100.00 $ 103.70 $ 130.99 $ 110.89 $ 181.43 $ 123.46 FTSE NAREIT All Equity REITs Index $ 100.00 $ 95.96 $ 123.46 $ 117.14 $ 165.51 $ 124.22 S&P 500 Index $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 (1) Common stock performance data is provided by S&P Global Market Intelligence.
Biggest changeThis comparison assumes that the value of the investment in the common stock and each index was $100 on December 31, 2018 and that all dividends were reinvested. 34 Table of Contents Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Essex Property Trust, Inc. $ 100.00 $ 125.92 $ 103.14 $ 157.18 $ 97.83 $ 119.33 FTSE NAREIT Equity Apartments Index $ 100.00 $ 126.32 $ 106.94 $ 174.97 $ 119.06 $ 126.05 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 (1) Common stock performance data is provided by S&P Global Market Intelligence.
The graph and other information furnished under the above caption "Performance Graph" in this Part II Item 5 of this Form 10-K shall not deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C, or to the liabilities of the Exchange Act.
The graph and other information furnished under the above caption "Performance Graph" in this Part II Item 5 of this Form 10-K shall not be deemed to be "soliciting material" or to be "filed" with the SEC or subject to Regulation 14A or 14C, or to the liabilities of the Exchange Act.
Issuance of Registered Equity Securities During the year ended December 31, 2022, the Company did not issue any shares of common stock under the 2021 ATM Program. As of December 31, 2022, there were no outstanding forward sale agreements, and $900.0 million of shares remain available to be sold under the 2021 ATM Program.
Issuance of Registered Equity Securities During the year ended December 31, 2023, the Company did not issue any shares of common stock under the 2021 ATM Program. As of December 31, 2023, there were no outstanding forward sale agreements, and $900.0 million of shares remain available to be sold under the 2021 ATM Program.
Performance Graph The line graph below compares the cumulative total stockholder return on Essex's common stock for the last five years with the cumulative total return on the S&P 500, the FTSE NAREIT All Equity REIT index and the FTSE NAREIT Equity Apartments index over the same period.
Performance Graph The line graph below compares the cumulative total stockholder return on Essex's common stock for the last five years with the cumulative total return on the S&P 500 and the FTSE NAREIT Equity Apartments index over the same period.
For a copy of the plan, contact Computershare, LLC at (312) 360-5354. 30 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The information required by this section is incorporated herein by reference from our Proxy Statement, relating to our 2023 Annual Meeting of Shareholders, under the headings "Equity Compensation Plan Information," to be filed with the SEC within 120 days of December 31, 2022.
For a copy of the plan, contact Computershare, LLC at (312) 360-5354. 33 Table of Contents Securities Authorized for Issuance under Equity Compensation Plans The information required by this section is incorporated herein by reference from our Proxy Statement, relating to our 2024 Annual Meeting of Shareholders, under the headings "Equity Compensation Plans," to be filed with the SEC within 120 days of December 31, 2023.
Unregistered Sales of Equity Securities During the years ended December 31, 2022 and 2021, the Operating Partnership issued OP Units in private placements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the consideration set forth below: During the years ended December 31, 2022 and 2021, Essex issued an aggregate of 76,246 and 248,725 shares of its common stock upon the exercise of stock options, respectively.
Unregistered Sales of Equity Securities During the years ended December 31, 2023 and 2022, the Operating Partnership issued OP Units in private placements in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act, in the amounts and for the consideration set forth below: During the years ended December 31, 2023 and 2022, Essex issued an aggregate of zero and 76,246 shares of its common stock upon the exercise of stock options, respectively.
As of February 21, 2023, there were 64 holders of record of OP Units, including Essex. Return of Capital Under provisions of the Code, the portion of the cash dividend, if any, that exceeds earnings and profits is considered a return of capital.
As of February 21, 2024, there were 62 holders of record of OP Units, including Essex. Return of Capital Under provisions of the Code, the portion of the cash dividend, if any, that exceeds earnings and profits is considered a return of capital.
Holders The approximate number of holders of record of the shares of Essex's common stock was 987 as of February 21, 2023. This number does not include stockholders whose shares are held in investment accounts by other entities. Essex believes the actual number of stockholders is greater than the number of holders of record.
Holders The approximate number of holders of record of the shares of Essex's common stock was 1,043 as of February 21, 2024. This number does not include stockholders whose shares are held in investment accounts by other entities. Essex believes the actual number of stockholders is greater than the number of holders of record.
The status of the cash dividends distributed for the years ended December 31, 2022, 2021, and 2020 related to common stock are as follows: 2022 2021 2020 Common Stock Ordinary income 80.17 % 70.92 % 85.23 % Capital gain 16.78 % 22.07 % 10.68 % Unrecaptured section 1250 capital gain 3.05 % 7.01 % 4.09 % 100.00 % 100.00 % 100.00 % Dividends and Distributions Future dividends/distributions by Essex and the Operating Partnership will be at the discretion of the Board of Directors of Essex and will depend on the actual cash flows from operations of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code, applicable legal restrictions and such other factors as the Board of Directors deems relevant.
The status of the cash dividends distributed for the years ended December 31, 2023, 2022, and 2021 related to common stock are as follows: 2023 2022 2021 Common Stock Ordinary income 88.46 % 80.17 % 70.92 % Capital gain 8.32 % 16.78 % 22.07 % Unrecaptured section 1250 capital gain 3.22 % 3.05 % 7.01 % 100.00 % 100.00 % 100.00 % Dividends and Distributions Future dividends/distributions by Essex and the Operating Partnership will be at the discretion of the Board of Directors of Essex and will depend on the actual cash flows from operations of the Company, its financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code, applicable legal restrictions and such other factors as the Board of Directors deems relevant.
For each share of common stock issued by Essex in connection with such awards, the Operating Partnership issued OP Units to Essex as required by the Operating Partnership's partnership agreement, for an aggregate of 11,707 and 30,360 OP Units during the years ended December 31, 2022 and 2021, respectively.
For each share of common stock issued by Essex in connection with such awards, the Operating Partnership issued OP Units to Essex as required by the Operating Partnership's partnership agreement, for an aggregate of 22,236 and 11,707 OP Units during the years ended December 31, 2023 and 2022, respectively.
During the year ended December 31, 2022 and 2021, the Company did not issue or sell any shares of common stock pursuant to the 2021 ATM Program. As of December 31, 2022, there were no outstanding forward sale agreements.
During the years ended December 31, 2023 and 2022, the Company did not issue or sell any shares of common stock pursuant to the 2021 ATM Program. As of December 31, 2023, there were no outstanding forward sale agreements. 35 Table of Contents
During the years ended December 31, 2022 and 2021, Essex issued an aggregate of 8,310 and 10,293 shares of its common stock in connection with the exchange of OP Units by limited partners into shares of common stock.
During the years ended December 31, 2023 and 2022, Essex issued an aggregate of 13,684 and 8,310 shares of its common stock in connection with the exchange of OP Units by limited partners into shares of common stock.
For each share of common stock issued by Essex in connection with such exchange, the Operating Partnership issued OP Units to Essex as required by the Operating Partnership's partnership agreement, for an aggregate of 8,310 and 10,293 OP Units during the year ended December 31, 2022 and 2021, respectively.
For each share of common stock issued by Essex in connection with such exchange, the Operating Partnership issued OP Units to Essex as required by the Operating Partnership's partnership agreement, for an aggregate of 13,684 and 8,310 OP Units during the years ended December 31, 2023 and 2022, respectively.
The Board of Directors declared a dividend/distribution for the fourth quarter of 2022 of $2.20 per share. The dividend/distribution was paid on January 13, 2023 to stockholders/unitholders of record as of January 3, 2023.
The Board of Directors declared a dividend/distribution for the fourth quarter of 2023 of $2.31 per share. The dividend/distribution was paid on January 12, 2024 to stockholders/unitholders of record as of January 2, 2024.
Issuer Purchases of Equity Securities In December 2015, Essex's Board of Directors authorized a stock repurchase plan to allow Essex to acquire shares of common stock up to an aggregate value of $250.0 million.
Issuer Purchases of Equity Securities In September 2022, the Company's Board of Directors approved a new stock repurchase plan to allow the Company to acquire shares of common stock up to an aggregate value of $500.0 million. The plan supersedes the Company's previous common stock repurchase plan announced in December 2015.
Essex contributed the proceeds from the option exercises of $19.5 million and $58.5 million to the Operating Partnership in exchange for an aggregate of 76,246 and 248,725 OP Units, as required by the Operating Partnership’s partnership agreement, during the years ended December 31, 2022 and 2021, respectively. 32 Table of Contents During the years ended December 31, 2022 and 2021, Essex issued an aggregate of 11,707 and 30,360 shares of its common stock in connection with restricted stock awards for no cash consideration, respectively.
Essex contributed the proceeds from the option exercises of no amount and $19.5 million to the Operating Partnership in exchange for an aggregate of zero and 76,246 OP Units, as required by the Operating Partnership’s partnership agreement, during the years ended December 31, 2023 and 2022, respectively.
The plan supersedes the previous common stock repurchase plan announced in December 2015. During the year ended December 31, 2022, the Company repurchased and retired 740,053 shares of its common stock totaling $189.7 million, including commissions, at an average price of $256.37 per share.
During the year ended December 31, 2023, the Company repurchased and retired 437,026 shares of its common stock totaling $95.7 million, including commissions, at an average price of $218.88 per share. As of December 31, 2023, the Company had $302.7 million of purchase authority remaining under the stock repurchase plan.
Removed
In February 2019, the Board of Directors approved the replenishment of the stock repurchase plan such that, as of such date, the Company had $250.0 million of purchase authority remaining under the stock repurchase plan.
Added
During the years ended December 31, 2023 and 2022, Essex issued an aggregate of 22,236 and 11,707 shares of its common stock in connection with restricted stock awards for no cash consideration, respectively.
Removed
In each of May and December 2020, the Board of Directors approved the replenishment of the stock repurchase plan such that, as of each such date, Essex had $250.0 million of purchase authority remaining under the replenished plan.
Removed
In September 2022, the Board of Directors approved a new stock repurchase plan to allow Essex to acquire shares of common stock up to an aggregate value of $500.0 million and as of December 31, 2022, the Company had repurchased 420,606 shares of common stock under this plan, totaling $101.7 million.
Removed
As of December 31, 2022, the Company had $398.3 million of purchase authority remaining under the stock repurchase plan.
Removed
This comparison assumes that the value of the investment in the common stock and each index was $100 on December 31, 2017 and that all dividends were reinvested.
Removed
Stock Repurchases The following table summarizes the Company's purchase of shares of its common stock during the three months ended December 31, 2022: Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of a Publicly Announced Program (1) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Program (in millions) (1) November 1, 2022 - November 30, 2022 28,200 $ 210.82 28,200 $ 424.2 December 1, 2022 - December 31, 2022 121,009 $ 213.45 121,009 $ 398.3 Total 149,209 $ 212.95 149,209 $ 398.3 (1) In September 2022, the Board of Directors approved a new stock repurchase plan to allow the Company to acquire shares of common stock up to an aggregate of $500.0 million.
Removed
The plan supersedes the Company's previous common stock repurchase plan announced in December 2015. Following the approval of the new plan, 420,606 shares of common stock totaling $101.7 million were repurchased under the new plan. 33 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+11 added−17 removed52 unchanged
Biggest changeThe table below is a reconciliation of net income available to common stockholders to FFO and Core FFO for the years ended December 31, 2022, 2021, and 2020. 44 Table of Contents As of and for the years ended December 31, 2022 2021 2020 ($ in thousands, except per share amounts) OTHER DATA: Funds from operations attributable to common stockholders and unitholders: Net income available to common stockholders $ 408,315 $ 488,554 $ 568,870 Adjustments: Depreciation and amortization 539,319 520,066 525,497 Gains not included in FFO attributable to common stockholders and unitholders (111,839) (145,253) (301,886) Impairment loss from unconsolidated co-investments 2,105 — 1,825 Depreciation and amortization from unconsolidated co-investments 72,585 61,059 51,594 Noncontrolling interest related to Operating Partnership units 14,297 17,191 19,912 Depreciation attributable to third party ownership and other (1) (1,421) (571) (539) Funds from operations attributable to common stockholders and unitholders $ 923,361 $ 941,046 $ 865,273 Non-core items: Expensed acquisition and investment related costs 2,132 203 1,591 Deferred tax (benefit) expense on unconsolidated co-investments (2) (10,236) 15,668 1,531 Gain on sale of marketable securities (12,436) (3,400) (2,131) Change in unrealized losses (gains) on marketable securities, net 57,983 (33,104) (12,515) Provision for credit losses (381) 141 687 Equity loss (income) from non-core co-investments (3) 38,045 (55,602) (5,289) Loss on early retirement of debt, net 2 19,010 22,883 Loss (gain) on early retirement of debt from unconsolidated co-investment 988 25 (38) Co-investment promote income (17,076) — (6,455) Income from early redemption of preferred equity investments and notes receivable (1,669) (8,469) (210) Accelerated interest income from maturity of investment in mortgage backed security — — (11,753) General and administrative and other, net 2,536 1,026 14,958 Insurance reimbursements, legal settlements, and other, net (5,392) (35,234) (81) Core funds from operations attributable to common stockholders and unitholders $ 977,857 $ 841,310 $ 868,451 Weighted average number of shares outstanding, diluted (FFO) (4) 67,375 67,335 67,726 Funds from operations attributable to common stockholders and unitholders per share - diluted $ 13.70 $ 13.98 $ 12.78 Core funds from operations attributable to common stockholders and unitholders per share - diluted $ 14.51 $ 12.49 $ 12.82 (1) The Company consolidates certain co-investments.
Biggest changeAs of and for the years ended December 31, 2023 2022 2021 ($ in thousands, except per share amounts) OTHER DATA: Funds from operations attributable to common stockholders and unitholders: Net income available to common stockholders $ 405,825 $ 408,315 $ 488,554 Adjustments: Depreciation and amortization 548,438 539,319 520,066 Gains not included in FFO (59,238) (111,839) (145,253) Casualty loss 433 — — Impairment loss from unconsolidated co-investments 33,700 2,105 — Depreciation and amortization from unconsolidated co-investments 71,745 72,585 61,059 Noncontrolling interest related to Operating Partnership units 14,284 14,297 17,191 Depreciation attributable to third party ownership and other (1) (1,474) (1,421) (571) Funds from operations attributable to common stockholders and unitholders $ 1,013,713 $ 923,361 $ 941,046 Non-core items: Expensed acquisition and investment related costs 595 2,132 203 Tax expense (benefit) on unconsolidated co-investments (2) 697 (10,236) 15,668 Realized and unrealized (gains) losses on marketable securities, net (10,006) 45,547 (36,504) Provision for credit losses 70 (381) 141 Equity (income) loss from non-core co-investments (3) (1,685) 38,045 (55,602) Loss on early retirement of debt, net — 2 19,010 Loss on early retirement of debt from unconsolidated co-investment — 988 25 Co-investment promote income — (17,076) — Income from early redemption of preferred equity investments and notes receivable (285) (1,669) (8,469) General and administrative and other, net 6,629 2,536 1,026 Insurance reimbursements, legal settlements, and other, net (9,821) (5,392) (35,234) Core funds from operations attributable to common stockholders and unitholders $ 999,907 $ 977,857 $ 841,310 Weighted average number of shares outstanding, diluted (FFO) (4) 66,514 67,375 67,335 Funds from operations attributable to common stockholders and unitholders per share - diluted $ 15.24 $ 13.70 $ 13.98 Core funds from operations attributable to common stockholders and unitholders per share - diluted $ 15.03 $ 14.51 $ 12.49 (1) The Company consolidates certain co-investments.
The Company defines critical accounting estimates as those estimates that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company.
The Company defines critical accounting estimates as those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the Company.
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 differ from those estimates made by management.
The Company bases its estimates on historical experience, current market conditions, and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates made by management.
(4) Assumes conversion of all outstanding OP Units into shares of the Company's common stock and excludes DownREIT limited partnership units. 45 Table of Contents Net Operating Income Net operating income ("NOI") and Same-Property NOI are considered by management to be important supplemental performance measures to earnings from operations included in the Company’s consolidated statements of income.
(4) Assumes conversion of all outstanding OP Units into shares of the Company's common stock and excludes DownREIT limited partnership units. 46 Table of Contents Net Operating Income Net operating income ("NOI") and Same-Property NOI are considered by management to be important supplemental performance measures to earnings from operations included in the Company’s consolidated statements of income.
These expenditures do not include expenditures for deferred maintenance on acquisition properties, expenditures for property renovations and improvements which are expected to generate additional revenue or cost savings, and do not include expenditures incurred due to changes in government regulations that the Company would not have incurred otherwise, retail, furniture and fixtures, or expenditures for which the Company expects to be reimbursed.
These expenditures do not include expenditures for deferred maintenance on acquisition properties, expenditures for property renovations and improvements which are expected to generate additional revenue or cost savings, and do not include expenditures incurred due to changes in government regulations that the Company would not have incurred otherwise, retail, furniture and fixtures, or expenditures for which the Company has been reimbursed or expects to be reimbursed.
NAREIT stated in its White Paper on Funds from Operations “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves." Consequently, NAREIT’s definition of FFO reflects the fact that real 43 Table of Contents estate, as an asset class, generally appreciates over time and depreciation charges required by U.S.
NAREIT stated in its White Paper on Funds from Operations “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves." Consequently, NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time and depreciation charges required by U.S.
Essex is the sole general partner of the Operating Partnership and, as of December 31, 2022, had an approximately 96.6% general partner interest in the Operating Partnership. The Company’s investment strategy has two components: constant monitoring of existing markets, and evaluation of new markets to identify areas with the characteristics that underlie rental growth.
Essex is the sole general partner of the Operating Partnership and, as of December 31, 2023, had an approximately 96.6% general partner interest in the Operating Partnership. The Company’s investment strategy has two components: constant monitoring of existing markets, and evaluation of new markets to identify areas with the characteristics that underlie rental growth.
The underlying interest rate is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and was at Adjusted SOFR plus 0.75% as of December 31, 2022. This facility is scheduled to mature in July 2024.
The underlying interest rate is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and was at Adjusted SOFR plus 0.75% as of December 31, 2023. This facility is scheduled to mature in July 2024.
Alternative Capital Sources The Company utilizes co-investments as an alternative source of capital for acquisitions of both operating and development communities. As of December 31, 2022, the Company had an interest in 264 apartment homes in communities actively under development with joint ventures for total estimated costs of $102.0 million.
Alternative Capital Sources The Company utilizes co-investments as an alternative source of capital for acquisitions of both operating and development communities. As of December 31, 2023, the Company had an interest in 264 apartment homes in communities actively under development with joint ventures for total estimated costs of $102.0 million.
Variable Interest Entities In accordance with accounting standards for consolidation of variable interest entities ("VIEs"), the Company consolidated the Operating Partnership, 18 DownREIT entities (comprising nine communities) and six co-investments as of December 31, 2022 and 2021. The Company consolidates these entities because it is deemed the primary beneficiary.
Variable Interest Entities In accordance with accounting standards for consolidation of variable interest entities ("VIEs"), the Company consolidated the Operating Partnership, 18 DownREIT entities (comprising nine communities) and six co-investments as of December 31, 2023 and 2022. The Company consolidates these entities because it is deemed the primary beneficiary.
By region, the Company's operating results for 2022 and 2021 and projection for 2023 new housing supply (defined as new multifamily apartment homes and single family homes, excluding developments with fewer than 50 apartment homes as well as student, senior and 100% affordable housing), projection for 2023 job growth, and 2023 estimated Same-Property revenue growth are as follows: Southern California Region : As of December 31, 2022, this region represented 43% of the Company’s consolidated operating apartment homes.
By region, the Company's operating results for 2023 and 2022 and projection for 2024 new housing supply (defined as new multifamily apartment homes and single family homes, excluding developments with fewer than 50 apartment homes as well as student, senior and 100% affordable housing) and 2024 estimated Same-Property revenue growth are as follows: Southern California Region : As of December 31, 2023, this region represented 43% of the Company’s consolidated operating apartment homes.
The Company’s apartment communities are predominately located in the following major regions: Southern California (primarily Los Angeles, Orange, San Diego, and Ventura counties) Northern California (the San Francisco Bay Area) Seattle Metro (Seattle metropolitan area) As of December 31, 2022, the Company’s development pipeline was comprised of one unconsolidated joint venture project under development aggregating 264 apartment homes and various predevelopment projects, with total incurred costs of $102.0 million.
The Company’s apartment communities are predominately located in the following major regions: Southern California (primarily Los Angeles, Orange, San Diego, and Ventura counties) Northern California (the San Francisco Bay Area) Seattle Metro (Seattle metropolitan area) As of December 31, 2023, the Company’s development pipeline was comprised of one unconsolidated joint venture project under development aggregating 264 apartment homes and various predevelopment projects, with total incurred costs of $114.0 million.
The use of a forward sale agreement would allow the Company to 40 Table of Contents lock in a share price on the sale of shares of its common stock at the time the agreement is executed, but defer receipt of the proceeds from the sale of shares until a later date should the Company elect to settle such forward sale agreement, in whole or in part, in shares of common stock.
The use of a forward sale agreement would allow the Company to lock in a share price on the sale of shares of its common stock at the time the agreement is executed, but defer receipt of the proceeds from the sale of shares until a later date should the Company elect to settle such forward sale agreement, in whole or in part, in shares of common stock.
The Company expects that cash from operations and/or its lines of credit will fund such expenditures. Development and Predevelopment Pipeline The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations.
The Company expects that cash from operations and/or its lines of credit will fund such expenditures. 42 Table of Contents Development and Predevelopment Pipeline The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations.
The Company has four total return swap contracts, with an aggregate notional amount of $223.6 million, that effectively converts $223.6 million of fixed mortgage notes payable to a floating interest rate based on the Securities Industry and Financial Markets Association Municipal Swap Index ("SIFMA") plus a spread.
The Company has four total return swap contracts, with an aggregate notional amount of $222.7 million, that effectively converts $222.7 million of fixed mortgage notes payable to a floating interest rate based on the Securities Industry and Financial Markets Association Municipal Swap Index ("SIFMA") plus a spread.
The 2021 ATM Program replaced the prior equity distribution agreement entered into in September 2018 (the "2018 ATM Program"), which was terminated upon the establishment of the 2021 ATM Program. For the year ended December 31, 2022, the Company did not sell any shares of its common stock through the 2021 ATM Program.
The 2021 ATM Program replaced the prior equity distribution agreement entered into in September 2018 (the "2018 ATM Program"), which was terminated upon the establishment of the 2021 ATM Program. For the years ended December 31, 2023 and 2022, the Company did not sell any shares of its common stock through the 2021 ATM Program.
As of December 31, 2022, the delinquencies have not had a material adverse impact to the Company's liquidity position. The Company's average financial occupancy for the Company's Same-Property portfolio decreased slightly from 96.4% for the year ended December 31, 2021 to 96.1% for the year ended December 31, 2022.
As of December 31, 2023, the delinquencies have not had a material adverse impact to the Company's liquidity position. The Company's average financial occupancy for the Company's Same-Property portfolio increased slightly from 96.1% for the year ended December 31, 2022 to 96.4% for the year ended December 31, 2023.
The COVID-19 pandemic and the resulting macroeconomic conditions have not negatively impacted the Company's ability to access traditional funding sources on the same or reasonably similar terms as were available in recent periods prior to the pandemic, as demonstrated by the Company's financing activity during the year ended December 31, 2022 discussed in the “Liquidity and Capital Resources" section below.
The foregoing macroeconomic conditions have not negatively impacted the Company's ability to access traditional funding sources on the same or reasonably similar terms as were available in recent periods prior to the pandemic, as demonstrated by the Company's financing activity during the year ended December 31, 2023 discussed in the “Liquidity and Capital Resources" section below.
The tax-exempt variable rate demand notes have maturity dates ranging from 2027 to 2046. $223.6 million is subject to total return swaps. As of December 31, 2022, the Company had two unsecured lines of credit aggregating $1.24 billion, including a $1.2 billion unsecured line of credit and a $35.0 million working capital unsecured line of credit.
The tax-exempt variable rate demand notes have maturity dates ranging from 2027 to 2046. $222.7 million is subject to total return swaps. As of December 31, 2023, the Company had two unsecured lines of credit aggregating $1.24 billion, including a $1.2 billion unsecured line of credit and a $35.0 million working capital unsecured line of credit.
The noncontrolling interest's share of net operating income in these investments for the twelve months ended December 31, 2022 was $3.3 million. (2) Represents deferred tax (benefit) expense related to net unrealized gains or losses on technology co-investments. (3) Represents the Company's share of co-investment loss (income) from technology co-investments.
The noncontrolling interest's share of net operating income in these investments for the twelve months ended December 31, 2023 was $3.3 million. (2) Represents tax related to net unrealized gains or losses on technology co-investments. (3) Represents the Company's share of co-investment or loss from technology co-investments.
Factors that might 46 Table of Contents cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: potential future outbreaks of infectious diseases or other health concerns, which could adversely affect the Company's business and its tenants, and cause a significant downturn in general economic conditions, the real estate industry, and the markets in which the Company's communities are located; the Company may fail to achieve its business objectives; the actual completion of development and redevelopment projects may be subject to delays; the stabilization dates of such projects may be delayed; the Company may abandon or defer development or redevelopment projects for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; the total projected costs of current development and redevelopment projects may exceed expectations; such development and redevelopment projects may not be completed; development and redevelopment projects and acquisitions may fail to meet expectations; estimates of future income from an acquired property may prove to be inaccurate; occupancy rates and rental demand may be adversely affected by competition and local economic and market conditions; uncertainties regarding ongoing hostilities between Russia and Ukraine and the related impacts on macroeconomic conditions, including, among other things, interest rates and inflation; the Company may be unsuccessful in the management of its relationships with its co-investment partners; future cash flows may be inadequate to meet operating requirements and/or may be insufficient to provide for dividend payments in accordance with REIT requirements; changes in laws or regulations; the terms of any refinancing may not be as favorable as the terms of existing indebtedness; unexpected difficulties in leasing of development projects; volatility in financial and securities markets; the Company’s failure to successfully operate acquired properties; unforeseen consequences from cyber-intrusion; the Company’s inability to maintain our investment grade credit rating with the rating agencies; government approvals, actions and initiatives, including the need for compliance with environmental requirements; and those further risks, special considerations, and other factors discussed in Item 1A, Risk Factors, of this Form 10-K, and those risk factors and special considerations set forth in the Company’s other filings with the SEC which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
The Company cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect the Company’s current expectations of the approximate outcomes of the matters discussed. 47 Table of Contents Factors that might cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: potential future outbreaks of infectious diseases or other health concerns, which could adversely affect the Company's business and its tenants, and cause a significant downturn in general economic conditions, the real estate industry, and the markets in which the Company's communities are located; the Company may fail to achieve its business objectives; the actual completion of development and redevelopment projects may be subject to delays; the stabilization dates of such projects may be delayed; the Company may abandon or defer development or redevelopment projects for a number of reasons, including changes in local market conditions which make development less desirable, increases in costs of development, increases in the cost of capital or lack of capital availability, resulting in losses; the total projected costs of current development and redevelopment projects may exceed expectations; such development and redevelopment projects may not be completed; development and redevelopment projects and acquisitions may fail to meet expectations; estimates of future income from an acquired property may prove to be inaccurate; occupancy rates and rental demand may be adversely affected by competition and local economic and market conditions; there may be increased interest rates, inflation, escalated operating costs and possible recessionary impacts; geopolitical tensions and regional conflicts, and the related impacts on macroeconomic conditions, including, among other things, interest rates and inflation; the Company may be unsuccessful in the management of its relationships with its co-investment partners; future cash flows may be inadequate to meet operating requirements and/or may be insufficient to provide for dividend payments in accordance with REIT requirements; changes in laws or regulations; the terms of any refinancing may not be as favorable as the terms of existing indebtedness; unexpected difficulties in leasing of development projects; volatility in financial and securities markets; the Company’s failure to successfully operate acquired properties; unforeseen consequences from cyber-intrusion; the Company’s inability to maintain our investment grade credit rating with the rating agencies; government approvals, actions and initiatives, including the need for compliance with environmental requirements; and those further risks, special considerations, and other factors discussed in Item 1A, Risk Factors, of this Form 10-K, and those risk factors and special considerations set forth in the Company’s other filings with the SEC which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
The regional breakdown of the Company’s 2022 Same-Property portfolio for financial occupancy for the years ended December 31, 2022 and 2021 is as follows: Years ended December 31, 2022 2021 Southern California 96.2 % 96.7 % Northern California 96.1 % 96.2 % Seattle Metro 95.8 % 96.2 % The following table provides a breakdown of revenue amounts, including the revenues attributable to 2022 Same-Properties.
The regional breakdown of the Company’s 2023 Same-Property portfolio for financial occupancy for the years ended December 31, 2023 and 2022 is as follows: Years ended December 31, 2023 2022 Southern California 96.3 % 96.2 % Northern California 96.5 % 96.1 % Seattle Metro 96.6 % 95.8 % The following table provides a breakdown of revenue amounts, including the revenues attributable to 2023 Same-Properties.
As of December 31, 2022, the Company owned or had ownership interests in 252 operating apartment communities, comprising 62,147 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, three operating commercial buildings, and a development pipeline comprised of one unconsolidated joint venture project.
As of December 31, 2023, the Company owned or had ownership interests in 252 operating apartment communities, comprising 61,997 apartment homes, excluding the Company's ownership in preferred equity co-investments, loan investments, three operating commercial buildings, and a development pipeline comprised of one unconsolidated joint venture project.
As of December 31, 2022, there was $40.0 million outstanding on the $1.2 billion unsecured line of credit. The underlying interest rate is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and was at Adjusted SOFR plus 0.75% as of December 31, 2022.
As of December 31, 2023, there was no amount outstanding on the $1.2 billion unsecured line of credit. The underlying interest rate is based on a tiered rate structure tied to the Company's credit ratings, adjusted for the Company's sustainability metric grid, and was at Adjusted SOFR plus 0.75% as of December 31, 2023.
Total estimated remaining costs total approximately $25.0 million, of which the Company estimates that its remaining investment in these development joint ventures will be approximately $12.8 million. In addition, the Company had an interest in 10,425 apartment homes in operating communities with joint ventures and other investments for a total book value of $491.8 million.
Total estimated remaining costs total approximately $12.0 million, of which the Company estimates that its remaining investment in these development joint ventures will be approximately $6.5 million. In addition, the Company had an interest in 10,425 apartment homes in operating communities with joint ventures and other investments for a total book value of $437.4 million.
This facility is scheduled to mature in January 2027, with two six-month extensions, exercisable at the Company's option. As of December 31, 2022, there was $12.1 million outstanding on the Company's $35.0 million working capital unsecured line of credit.
This facility is scheduled to mature in January 2027, with two six-month extensions, exercisable at the Company's option. As of December 31, 2023, there was no amount outstanding on the Company's $35.0 million working capital unsecured line of credit.
At December 31, 2022, the Company had operating lease commitments of $162.1 million for ground, building and garage leases with maturity dates ranging from 2025 to 2083. $7.0 million of this commitment is due within the next twelve months.
At December 31, 2023, the Company had operating lease commitments of $155.1 million for ground, building and garage leases with maturity dates ranging from 2025 to 2083. $7.3 million of this commitment is due within the next twelve months.
The Company can currently call all four of the total return swaps, with $223.6 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting. As of December 31, 2022 and 2021, the aggregate carrying value of the interest rate swap contracts were an asset of $5.6 million and zero, respectively.
The Company can currently call all four of the total return swaps, with $222.7 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting. As of December 31, 2023 and 2022, the aggregate carrying value of the interest rate swap contracts were an asset of $4.3 million and $5.6 million, respectively.
RESULTS OF OPERATIONS Comparison of Year Ended December 31, 2022 to the Year Ended December 31, 2021 The Company’s average financial occupancy for the Company’s stabilized apartment communities or "2022 Same-Property" (stabilized properties consolidated by the Company for the years ended December 31, 2022 and 2021) decreased 30 36 Table of Contents basis points to 96.1% in 2022 from 96.4% in 2021.
RESULTS OF OPERATIONS Comparison of Year Ended December 31, 2023 to the Year Ended December 31, 2022 The Company’s average financial occupancy for the Company’s stabilized apartment communities or "2023 Same-Property" (stabilized properties consolidated by the Company for the years ended December 31, 2023 and 2022) increased 30 basis points to 96.4% in 2023 from 96.1% in 2022.
Northern California Region : As of December 31, 2022, this region represented 37% of the Company’s consolidated operating apartment homes. Same-Property revenues increased 8.4% in 2022 as compared to 2021. In 2023, the Company projects new residential supply of 12,750 apartment homes and single family homes, which represents 0.5% of the total housing stock.
Northern California Region : As of December 31, 2023, this region represented 37% of the Company’s consolidated operating apartment homes. Same-Property revenues increased 4.0% in 2023 as compared to 2022. In 2024, the Company projects new residential supply of 10,500 apartment homes and single family homes, which represents 0.4% of the total housing stock.
Essex 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 approximately $939.4 million and $324.3 million, respectively, as of December 31, 2022, and $909.3 million and $320.1 million, respectively, as of December 31, 2021.
Essex 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 approximately $956.7 million and $324.5 million, respectively, as of December 31, 2023, and $939.4 million and $324.3 million, respectively, as of December 31, 2022.
At December 31, 2022, the Company had $33.3 million of unrestricted cash and cash equivalents and $112.7 million in marketable securities. The Company believes that cash flows generated by its operations, existing cash and cash equivalents, marketable securities balances and availability under existing lines of credit are sufficient to meet all of its anticipated cash needs during 2023.
At December 31, 2023, the Company had $391.7 million of unrestricted cash and cash equivalents and $87.8 million in marketable securities. The Company believes that cash flows generated by its operations, existing cash and cash equivalents, marketable securities balances and availability under existing lines of credit are sufficient to meet all of its anticipated cash needs during 2024.
Same-Property operating expenses are projected to increase in 2023 by 4.50% to 5.50%. 35 Table of Contents The Company’s consolidated operating communities are as follows: As of As of December 31, 2022 December 31, 2021 Apartment Homes % Apartment Homes % Southern California 22,151 43 % 22,190 43 % Northern California 19,230 37 % 19,123 37 % Seattle Metro 10,341 20 % 10,341 20 % Total 51,722 100 % 51,654 100 % Co-investments, developments under construction, and preferred equity interest co-investment communities are not included in the table presented above for both periods.
Same-Property operating expenses are projected to increase in 2024 by 3.5% to 5.0%. 37 Table of Contents The Company’s consolidated operating communities are as follows: As of As of December 31, 2023 December 31, 2022 Apartment Homes % Apartment Homes % Southern California 21,986 43 % 22,151 43 % Northern California 19,245 37 % 19,230 37 % Seattle Metro 10,341 20 % 10,341 20 % Total 51,572 100 % 51,722 100 % Co-investments, developments under construction, and preferred equity interest co-investment communities are not included in the table presented above for both periods.
Such forward-looking statements include, among other things, statements regarding the Company's expectations related to the continued evolution of the work-from-home trend in light of the COVID-19 pandemic, the Company's intent, beliefs or expectations with respect to the timing of completion of current development and redevelopment projects and the stabilization of such projects, the timing of lease-up and occupancy of its apartment communities, the anticipated operating performance of its apartment communities, the total projected costs of development and redevelopment projects, co-investment activities, qualification as a REIT under the Internal Revenue Code of 1986, as amended, 2022 Same-Property revenue and operating expenses generally and in specific regions, the real estate markets in the geographies in which the Company's properties are located and in the United States in general, the adequacy of future cash flows to meet anticipated cash needs, its financing activities and the use of proceeds from such activities, the availability of debt and equity financing, general economic conditions including the potential impacts from such economic conditions, inflation, the labor market, supply chain impacts and ongoing hostilities between Russia and Ukraine, trends affecting the Company's financial condition or results of operations, changes to U.S. tax laws and regulations in general or specifically related to REITs or real estate, changes to laws and regulations in jurisdictions in which communities the Company owns are located, and other information that is not historical information.
Such forward-looking statements include, among other things, statements regarding the Company's expectations related to the continued evolution of the work-from-home trend, the Company's intent, beliefs or expectations with respect to the timing of completion of current development and redevelopment projects and the stabilization of such projects, the timing of lease-up and occupancy of its apartment communities, the anticipated operating performance of its apartment communities, the total projected costs of development and redevelopment projects, co-investment activities, qualification as a REIT under the Internal Revenue Code of 1986, as amended, the Company’s first quarter and full-year 2024 guidance (including net income, Total FFO and Core FFO and related assumptions, including with respect to GDP growth, job growth and market rent growth), 2024 same-property revenue, new housing growth, operating expenses and net operating income generally and in specific regions, the real estate markets in the geographies in which the Company's properties are located and in the United States in general, the adequacy of future cash flows to meet anticipated cash needs, its financing activities and the use of proceeds from such activities, the availability of debt and equity financing, general economic conditions including the potential impacts from such economic conditions, inflation, the labor market, supply chain impacts, geopolitical tensions and regional conflicts, trends affecting the Company's financial condition or results of operations, changes to U.S. tax laws and regulations in general or specifically related to REITs or real estate, changes to laws and regulations in jurisdictions in which communities the Company owns are located, and other information that is not historical information.
The estimated remaining project costs are approximately $25.0 million, $12.8 million of which represents the Company's estimated remaining costs, for total estimated project costs of $127.0 million. As of December 31, 2022, the Company also had an ownership interest in three operating commercial buildings (totaling approximately 283,000 square feet).
The estimated remaining project costs are approximately $12.0 million, $6.5 million of which represents the Company's share of the estimated remaining costs, for total estimated project costs of $126.0 million. As of December 31, 2023, the Company also had an ownership interest in three operating commercial buildings (totaling approximately 283,000 square feet).
The reasonable likelihood that the estimate could have a material impact on the financial condition of the Company is based on the total consideration exchanged for real estate during any given year.
The reasonable likelihood that the estimate could have a material impact on the financial condition of the Company is based on the total consideration exchanged for real estate during any given year. The Company periodically assesses the carrying value of its real estate investments for indicators of impairment.
By excluding gains or losses related to sales of depreciated operating properties and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a real estate company between periods or as compared to different companies.
By excluding gains or losses related to sales of depreciated operating properties and land, excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates) and excluding impairment write-downs from operating real estate and unconsolidated co-investments driven by a measurable decrease in the fair value of real estate held by the co-investment, FFO can help investors compare the operating performance of a real estate company between periods or as compared to different companies.
Additionally, there was a $3.9 million decrease in capitalized interest in 2022, due to a decrease in development activity as compared to the same period in 2021.
Additionally, there was a $1.4 million decrease in capitalized interest in 2023, due to a decrease in development activity as compared to the same period in 2022.
The Company’s critical accounting estimates relate principally to the following key areas: (i) accounting for the acquisition of investments in real estate (specifically, the allocation between land and buildings during the year ended December 31, 2020); and (ii) evaluation of events and changes in circumstances indicating whether the Company’s rental properties may be impaired.
The Company’s critical accounting estimates relate principally to the following key areas: (i) accounting for the acquisition of investments in real estate; and (ii) evaluation of events and changes in circumstances indicating whether the Company’s rental properties may be impaired.
Primarily as a result of the impact of the COVID-19 pandemic, the Company's cash delinquencies as a percentage of scheduled rental income for the Company’s stabilized apartment communities or "Same-Property" (stabilized properties consolidated by the Company for the years ended December 31, 2022 and 2021) have generally remained higher than the pre-pandemic period due to on-going eviction moratoria related to the COVID-19 pandemic, and above the typical historical range of 0.3% to 0.4% since the second quarter of 2020.
Primarily as a result of the impact of the COVID-19 pandemic, the Company's cash delinquencies as a percentage of scheduled rental income for the Company’s stabilized apartment communities or "Same-Property" (stabilized properties consolidated by the Company for the years ended December 31, 2023 and 2022) have generally remained higher than the pre-pandemic historical average of 0.35% since the second quarter of 2020.
The Company considers FFO and Core FFO to be useful financial performance measurements of an equity REIT because, together with net income and cash flows, FFO and Core FFO provide investors with additional bases to evaluate operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and to pay dividends.
GAAP is the primary measure of performance and that FFO and Core FFO are only meaningful when they are used in conjunction with net income. 44 Table of Contents The Company considers FFO and Core FFO to be useful financial performance measurements of an equity REIT because, together with net income and cash flows, FFO and Core FFO provide investors with additional bases to evaluate operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and to pay dividends.
Essex issues public equity from time to time, but does not otherwise generate any capital itself or conduct any business itself, other than incurring certain expenses from operating as a public company which are fully reimbursed by the Operating Partnership.
Essex issues public equity from time to time, but does not otherwise generate any capital itself or conduct any business itself, other than incurring certain expenses from operating as a public company which are fully reimbursed by the Operating Partnership. 40 Table of Contents Essex itself does not hold any indebtedness, and its only material asset is its ownership of partnership interests of the Operating Partnership.
Please see the reconciliation of earnings from operations to NOI and Same-Property NOI, which in the table below is the NOI for stabilized properties consolidated by the Company for the periods presented ($ in thousands): 2022 2021 2020 Earnings from operations $ 595,229 $ 529,995 $ 491,441 Adjustments: Corporate-level property management expenses 40,704 36,211 34,361 Depreciation and amortization 539,319 520,066 525,497 Management and other fees from affiliates (11,139) (9,138) (9,598) General and administrative 56,577 51,838 65,388 Expensed acquisition and investment related costs 2,132 203 1,591 Impairment loss — — 1,825 Gain on sale of real estate and land (94,416) (142,993) (64,967) NOI 1,128,406 986,182 1,045,538 Less: Non Same-Property NOI (76,027) (56,267) (89,865) Same-Property NOI $ 1,052,379 $ 929,915 $ 955,673 Forward-Looking Statements Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Annual Report on Form 10-K which are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act") and Section 21E of the Exchange Act, including statements regarding the Company's expectations, estimates, assumptions, hopes, intentions, beliefs and strategies regarding the future.
Please see the reconciliation of earnings from operations to NOI and Same-Property NOI, which in the table below is the NOI for stabilized properties consolidated by the Company for the periods presented ($ in thousands): 2023 2022 2021 Earnings from operations $ 584,342 $ 595,229 $ 529,995 Adjustments: Corporate-level property management expenses 45,872 40,704 36,211 Depreciation and amortization 548,438 539,319 520,066 Management and other fees from affiliates (11,131) (11,139) (9,138) General and administrative 63,474 56,577 51,838 Expensed acquisition and investment related costs 595 2,132 203 Casualty Loss 433 — — Gain on sale of real estate and land (59,238) (94,416) (142,993) NOI 1,172,785 1,128,406 986,182 Less: Non Same-Property NOI (54,179) (56,058) (45,149) Same-Property NOI $ 1,118,606 $ 1,072,348 $ 941,033 Forward-Looking Statements Certain statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Annual Report on Form 10-K which are not historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the Company's expectations, estimates, assumptions, hopes, intentions, beliefs and strategies regarding the future.
Hedge ineffectiveness related to cash flow hedges, which is reported in current year income as interest expense, net was zero for the years ended December 31, 2022, 2021, and 2020.
The aggregate carrying and fair value of the total return swaps was zero at both December 31, 2023 and 2022. Hedge ineffectiveness related to cash flow hedges, which is reported in current year income as interest expense, net was zero for the years ended December 31, 2023, 2022, and 2021.
Property operating expenses, excluding real estate taxes increased by $18.5 million or 7.0% to $283.4 million in 2022 compared to $264.9 million in 2021, primarily due to increases of $9.2 million in utilities expenses, $7.4 million in maintenance and repairs expenses, and $1.9 million in administrative expenses. 2022 Same-Property operating expenses, excluding real estate taxes, increased by $15.5 million or 6.1% to $268.6 million in 2022 compared to $253.1 million in 2021, primarily due to increases of $8.0 million in utilities expenses, $6.2 million in maintenance and repairs expenses, $0.8 million in insurance and other expenses, and $0.5 million in administrative expenses.
Property operating expenses, excluding real estate taxes increased by $16.3 million or 5.8% to $299.7 million in 2023 compared to $283.4 million in 2022, primarily due to increases of $5.1 million in utilities expenses, $4.7 million in maintenance and repairs expenses, $4.1 million in administrative expenses, and $2.4 million in personnel costs. 2023 Same-Property operating expenses, excluding real estate taxes, increased by $18.0 million or 6.6% to $292.0 million in 2023 compared to $274.0 million in 2022, primarily due to increases of $5.7 million in utilities expenses, $5.1 million in maintenance 39 Table of Contents and repairs expenses, $4.1 million in insurance and other expenses, $2.7 million in personnel costs, and $0.5 million in administrative expenses.
Gain on remeasurement of $2.3 million in 2021 resulted from the Company's purchase of BEX III's 50.0% interest in The Village at Toluca Lake community in the second quarter of 2021. 38 Table of Contents Comparison of Year Ended December 31, 2021 to the Year Ended December 31, 2020 For the comparison of the years ended December 31, 2021 and December 31, 2020, refer to Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations" on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 25, 2022 under the subheading "Comparison of Year Ended December 31, 2021 to the Year Ended December 31, 2020." Liquidity and Capital Resources The following table sets forth the Company’s cash flows for 2022, 2021 and 2020 ($ in thousands): For the year ended December 31, 2022 2021 2020 Cash flow provided by (used in): Operating activities $ 975,649 $ 905,259 $ 803,108 Investing activities $ 145,958 $ (397,397) $ (416,900) Financing activities $ (1,137,564) $ (533,265) $ (383,261) Essex’s business is operated primarily through the Operating Partnership.
Comparison of Year Ended December 31, 2022 to the Year Ended December 31, 2021 For the comparison of the years ended December 31, 2022 and December 31, 2021, refer to Part II, Item 7 “Management's Discussion and Analysis of Financial Condition and Results of Operations" on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 23, 2023 under the subheading "Comparison of Year Ended December 31, 2022 to the Year Ended December 31, 2021." Liquidity and Capital Resources The following table sets forth the Company’s cash flows for 2023, 2022 and 2021 ($ in thousands): For the year ended December 31, 2023 2022 2021 Cash flow provided by (used in): Operating activities $ 980,064 $ 975,649 $ 905,259 Investing activities $ (145,140) $ 145,958 $ (397,397) Financing activities $ (477,271) $ (1,137,564) $ (533,265) Essex’s business is operated primarily through the Operating Partnership.
As of December 31, 2022, there were no outstanding forward purchase agreements, and $900.0 million of shares of common stock remain available to be sold under the 2021 ATM Program.
As of December 31, 2023, there were no outstanding forward purchase agreements, and $900.0 million of shares of common stock remain available to be sold under the 2021 ATM Program. For the year ended December 31, 2021, the Company did not issue any shares of its common stock through the 2021 ATM Program or through the 2018 ATM Program.
As of December 31, 2022, the Company's development pipeline was comprised of one unconsolidated joint venture project under development aggregating 264 apartment homes and various predevelopment projects, with total incurred costs of $102.0 million. Estimated remaining project costs are approximately $25.0 million, $12.8 million of which represents the Company's estimated remaining costs, for total estimated project costs of $127.0 million.
As of December 31, 2023, the Company's development pipeline was comprised of one unconsolidated joint venture project under development aggregating 264 apartment homes and various predevelopment projects, with total incurred costs of $114.0 million.
Critical Accounting Estimates The preparation of consolidated financial statements, in accordance with U.S. GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.
GAAP, requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures of contingent assets and liabilities.
Real Estate and Other Commitments The following table summarizes the Company's unfunded real estate and other future commitments at December 31, 2022 ($ in thousands): 41 Table of Contents Number of Properties Investment Remaining Commitment Joint ventures (1) : Preferred equity investments 2 $ 98,000 $ 38,000 Non-core co-investments — 87,000 50,120 Consolidated: Mezzanine loans 2 82,110 60,932 $ 267,110 $ 149,052 (1) Excludes approximately $12.8 million of the Company's share of estimated project costs for LIVIA (fka Scripps Mesa Apartments) which have been fully funded.
Real Estate and Other Commitments The following table summarizes the Company's unfunded real estate and other future commitments at December 31, 2023 ($ in thousands): Number of Properties Investment Remaining Commitment Joint ventures (1) : Preferred equity investments 2 $ 98,000 $ 38,000 Non-core co-investments — 86,000 37,715 Consolidated: Mezzanine loans 1 50,000 4,305 $ 234,000 $ 80,020 (1) Excludes approximately $6.5 million of the Company's share of estimated project costs for LIVIA at Scripps Ranch which have been fully funded.
As of December 31, 2022, the Company had $5.4 billion of fixed rate public bonds outstanding at an average interest rate of 3.3% with maturity dates ranging from 2023 to 2050. 39 Table of Contents As of December 31, 2022, the Company’s mortgage notes payable totaled $593.9 million, net of unamortized premiums and debt issuance costs, which consisted of $371.8 million in fixed rate debt at an average interest rate of 3.6% and maturity dates ranging from 2025 to 2028 and $222.1 million of tax-exempt variable rate demand notes with a weighted average interest rate of 3.5%.
As of December 31, 2023, the Company’s mortgage notes payable totaled $887.2 million, net of unamortized premiums and debt issuance costs, which consisted of $665.7 million in fixed rate debt at an average interest rate of 4.3% and maturity dates ranging from 2025 to 2033 and $221.5 million of tax-exempt variable rate demand notes with a weighted average interest rate of 4.6%.
As of December 31, 2022 and 2021, the swap contracts were presented in the consolidated balance sheets as an asset of $5.6 million and zero, respectively, and were included in prepaid expenses and other assets on the consolidated balance sheets. The aggregate carrying and fair value of the total return swaps was zero at both December 31, 2022 and 2021.
As of December 31, 2023 and 2022, the swap contracts were presented in the consolidated balance sheets as an asset of $4.3 million and $5.6 million, respectively, and were included in prepaid expenses and other assets on the consolidated balance sheets.
Revenues for "2022 Same-Properties" (as defined below), or "Same-Property revenues," increased 11.3% in 2022 as compared to 2021. In 2023, the Company projects new residential supply of 30,300 apartment homes and single family homes, which represents 0.5% of the total housing stock. The Company projects an increase of 2,000 jobs or 0.3% in the Southern California region.
Revenues for "2023 Same-Properties" (as defined below), or "Same-Property revenues," increased 4.9% in 2023 as compared to 2022. In 2024, the Company projects new residential supply of 27,400 apartment homes and single family homes, which represents 0.4% of the total housing stock.
Total scheduled rental income represents the value of all apartment homes, with occupied apartment homes valued at contractual rental rates pursuant to leases and vacant apartment homes valued at estimated market rents. The Company believes that financial occupancy is a meaningful measure of occupancy because it considers the value of each vacant apartment home at its estimated market rate.
Total scheduled rental income represents the value of all apartment homes, with occupied apartment homes valued at contractual rental rates pursuant to leases and vacant apartment homes valued at estimated market rents.
Noncontrolling interests in these entities were $121.5 million and $122.4 million as of December 31, 2022 and 2021, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE. As of December 31, 2022, the Company did not have any other VIEs of which it was deemed to be the primary beneficiary.
Noncontrolling interests in these entities were $121.1 million and $121.5 million as of December 31, 2023 and 2022, respectively. The Company's financial risk in each VIE is limited to its equity investment in the VIE.
The Company’s unsecured lines of credit and unsecured debt agreements contain debt covenants related to limitations on indebtedness and liabilities and maintenance of minimum levels of consolidated earnings before depreciation, interest and amortization. The Company was in compliance with the debt covenants as of December 31, 2022 and 2021. The Company pays quarterly dividends from cash available for distribution.
The Company’s unsecured lines of credit and unsecured debt agreements contain debt covenants related to limitations on indebtedness and liabilities and maintenance of minimum levels of consolidated earnings before depreciation, interest and amortization.
The long-term impact of these developments will largely depend on new information which may emerge concerning the COVID-19 pandemic, future laws that may be enacted, geopolitical tensions, inflation, the impact on job growth and the broader economy, and reactions by consumers, companies, governmental entities and capital markets.
In response, market interest rates have increased significantly during this time. The long-term impact of these developments will largely depend on future laws that may be enacted, the impact on job growth and the broader economy, and reactions by consumers, companies, governmental entities and capital markets.
These increases in interest expense were partially offset by various debts that were paid off, matured, or regular principal payments during and after 2021 which resulted in a decrease in interest expense of $10.0 million for 2022.
These increases in interest expense were partially offset by regular principal payments and various debts that matured or were paid off, primarily due to the pay down of the $300.0 million of senior unsecured notes due May 1, 2023 and decreased borrowing on the Company's unsecured lines of credit during and after 2022, which resulted in a decrease in interest expense of $9.6 million for 2023.
For the year ended December 31, 2022, non-revenue generating capital expenditures totaled approximately $2,670 per apartment home.
Capital Expenditures Non-revenue generating capital expenditures are improvements and upgrades that extend the useful life of the property. For the year ended December 31, 2023, non-revenue generating capital expenditures totaled approximately $2,531 per apartment home.
Market rates are determined using the recently signed effective rates on new leases at the property and are used as the starting point in the determination of the market rates of vacant apartment homes.
The Company believes that financial occupancy is a meaningful measure of occupancy because it considers the value of each vacant apartment home at its estimated market rate. 38 Table of Contents Market rates are determined using the recently signed effective rates on new leases at the property and are used as the starting point in the determination of the market rates of vacant apartment homes.
As of December 31, 2022, Essex owned a 96.6% general partner interest and the limited partners owned the remaining 3.4% interest in the Operating Partnership. The liquidity of Essex is dependent on the Operating Partnership’s ability to make sufficient distributions to Essex. The primary cash requirement of Essex is its payment of dividends to its stockholders.
Essex’s principal funding requirement is the payment of dividends on its common stock. Essex’s sole source of funding for its dividend payments is distributions it receives from the Operating Partnership. As of December 31, 2023, Essex owned a 96.6% general partner interest and the limited partners owned the remaining 3.4% interest in the Operating Partnership.
The increase was primarily attributable to an increase of 7.2% in average rental rates from $2,320 for 2021 to $2,486 for 2022 and 2.3% of the increase was attributable to a decrease in cash concessions in 2022 compared to 2021. 2022 Non-Same Property Revenues increased by $26.0 million or 30.6% to $110.7 million in 2022 compared to $84.7 million in 2021.
The increase was primarily attributable to an increase of 4.5% in average rental rates from $2,493 for 2022 to $2,604 for 2023. 2023 Non-Same Property Revenues decreased by $3.8 million or 4.7% to $76.4 million in 2023 compared to $80.2 million in 2022.
The Company projects an increase of 4,500 jobs or 0.7% in the Northern California region. Seattle Metro Region : As of December 31, 2022, this region represented 20% of the Company’s consolidated operating apartment homes. Same-Property revenues increased 12.0% in 2022 as compared to 2021.
Seattle Metro Region : As of December 31, 2023, this region represented 20% of the Company’s consolidated operating apartment homes. Same-Property revenues increased 4.0% in 2023 as compared to 2022. In 2024, the Company projects new residential supply of 11,700 apartment homes and single family homes, which represents 0.9% of the total housing stock.
Equity income from co-investments decreased by $85.7 million or 76.7% to $26.0 million in 2022 compared to $111.7 million in 2021, primarily due to decreases of $93.6 million in equity income from non-core co-investments, $5.3 million in income from preferred equity investments including income from early redemptions, and a $2.1 million impairment loss from an unconsolidated co-investment.
Equity income from co-investments decreased by $15.4 million or 59.2% to $10.6 million in 2023 compared to $26.0 million in 2022, primarily due to a decrease of $17.1 million in co-investment promote income, an increase of $31.6 million in impairment losses from unconsolidated co-investments offset by an increase of $39.7 million in equity income from non-core co-investments.
Interest expense increased by $1.7 million or 0.8% to $204.8 million in 2022 compared to $203.1 million in 2021 , primarily due to the issuance of new senior unsecured notes in 2021 which resulted in an increase in interest expense of $4.8 million and increased borrowing on the Company's unsecured lines of credit, and higher average interest rates, which resulted in an increase in interest expense of $3.0 million.
Interest expense increased by $8.1 million or 4.0% to $212.9 million in 2023 compared to $204.8 million in 2022 , primarily due to borrowing on the $300.0 million unsecured term loan in April 2023, the $298.0 million of 10-year secured loans closed in July 2023, and higher average interest rates resulting in an increase in interest expense of $16.3 million.
Management believes that it has consistently applied the NAREIT definition of FFO to all periods presented. However, there is judgment involved and other REITs' calculation of FFO may vary from the NAREIT definition for this measure, and thus their disclosure of FFO may not be comparable to the Company’s calculation.
However, there is judgment involved and other REITs' calculation of FFO may vary from the NAREIT definition for this measure, and thus their disclosure of FFO may not be comparable to the Company’s calculation. 45 Table of Contents The table below is a reconciliation of net income available to common stockholders to FFO and Core FFO for the years ended December 31, 2023, 2022, and 2021.
The Company defines predevelopment projects as proposed communities in negotiation or in the entitlement process with an expected high likelihood of becoming entitled development projects. The Company may also acquire land for future development purposes or sale.
Estimated remaining project costs are approximately $12.0 million, $6.5 million of which represents the Company's share of the estimated remaining costs, for total estimated project costs of $126.0 million. The Company defines predevelopment projects as proposed communities in negotiation or in the entitlement process with an expected high likelihood of becoming entitled development projects.
While the California eviction moratorium sunsetted during the third quarter of 2021, other state and local eviction moratoriums and laws that limit rent increases during times of emergency and impair the ability to collect unpaid rent during certain timeframes continue to be in effect in various formats at various regions in which our communities are located, impacting the Company and its properties.
Market Considerations The Company is emerging from restrictions resulting from the COVID-19 pandemic and continues to comply with the stated intent of local, county, state and federal laws, some of which limit rent increases during times of emergency and impair the ability to collect unpaid rent during certain timeframes and in various regions in which our communities are located, impacting the Company and its properties.
The Company continues to work to comply with the stated intent of local, county, state and federal laws. While COVID-19’s impact begins to dissipate, geopolitical tensions between Russian and Ukraine increased uncertainty during 2022. Inflation has caused an increase in consumer prices, thereby reducing purchasing power and elevating the risks of a recession. Due to increased inflation, the U.S.
Concurrently, geopolitical tensions and regional conflicts have increased uncertainty during 2022 and 2023. Inflation has caused an increase in consumer prices, thereby reducing purchasing power and elevating the risks of a recession. Due to increased inflation, the U.S. Federal Reserve raised the federal funds rate a total of seven times during 2022 and four times in 2023.
Depreciation and amortization expense increased by $19.2 million or 3.7% to $539.3 million in 2022 compared to $520.1 million in 2021, primarily due to an increase in depreciation expense from the completion of development properties Mylo and Wallace on Sunset in 2021, Station Park Green (Phase IV) in 2022, as well as the acquisitions of The Village at Toluca Lake and Canvas in 2021, and Regency Palm Court and Windsor Court in 2022.
Depreciation and amortization expense increased by $9.1 million or 1.7% to $548.4 million in 2023 compared to $539.3 million in 2022, primarily due to an increase in depreciation expense from the completion of Station Park Green (Phase IV) development property in 2022, the acquisition of the Company's joint venture partner's 49.8% interest in Essex JV LLC co-investment that owned Regency Palm Court and Windsor Court, in 2022, and the acquisition of Hacienda at Camarillo Oaks in 2023.
Interest and other (loss) income decreased by $117.7 million or 119.3% to a loss of $19.0 million in 2022 compared to an income of $98.7 million in 2021, primarily due to unrealized losses resulting from a decrease in the fair value of marketable securities.
Interest and other (loss) income increased by $65.3 million or 343.7% to income of $46.3 million in 2023 compared to a loss of $19.0 million in 2022, primarily due to increases of $55.6 million in realized and unrealized gains on marketable securities, $7.3 million in marketable securities and other income, and $3.7 million in insurance reimbursements, legal settlements, and other, driven by a legal settlement claim.
Cash delinquencies remained elevated at 1.9% for 2021 but decreased to 1.2% in 2022, attributable to government payments for Emergency Rental Assistance which was mostly depleted by December 31, 2022. The Company continues to work with residents to collect such cash delinquencies.
Cash delinquencies were elevated at 1.3% for 2022 and further increased to 1.9% in 2023. The lower cash delinquencies in 2022 was due to $34.5 million of Emergency Rental Assistance payments compared to $2.6 million received during 2023, however current tenant delinquencies remained well above pre-pandemic levels. The Company continues to work with residents to collect such cash delinquencies.
The increase was primarily due to the acquisitions of The Village at Toluca Lake and Canvas in 2021, the acquisitions of Regency Palm Court and Windsor Court in 2022, and an increase in average rental rates. 37 Table of Contents Management and other fees from affiliates increased by $2.0 million or 22.0% to $11.1 million in 2022 from $9.1 million in 2021.
The decrease was primarily due to the sales of Anavia in 2022 and of CBC and The Sweeps in 2023, partially offset by the acquisitions of Regency Palm Court and Windsor Court in 2022, the acquisition of Hacienda at Camarillo Oaks in 2023, and an increase in average rental rates.
Removed
In 2023, the Company projects new residential supply of 14,450 apartment homes and single family homes, which represents 1.1% of the total housing stock. The Company projects an increase of 3,000 jobs or 0.4% in the Seattle Metro region. In total, the Company projects an increase in 2023 Same-Property revenues of between 3.25% to 4.75%.
Added
In total, the Company projects an increase in 2024 Same-Property revenues of between 0.7% to 2.7%.
Removed
Market Considerations, including the COVID-19 Pandemic Though diminishing, the COVID-19 pandemic and its related variants continue to impact the U.S. and world economies. In an effort to mitigate its impact on affected populations, federal, state and local jurisdictions implemented varying forms of requirements which may continue to negatively affect profitability.
Added
Number of Apartment Years Ended December 31, Dollar Percentage Property Revenues ($ in thousands) Homes 2023 2022 Change Change 2023 Same-Properties: Southern California 21,352 $ 666,062 $ 634,996 $ 31,066 4.9 % Northern California 18,371 633,736 609,261 24,475 4.0 % Seattle Metro 10,341 282,092 271,248 10,844 4.0 % Total 2023 Same-Property Revenues 50,064 1,581,890 1,515,505 66,385 4.4 % 2023 Non-Same Property Revenues 76,374 80,170 (3,796) (4.7) % Total Property Revenues $ 1,658,264 $ 1,595,675 $ 62,589 3.9 % 2023 Same-Property Revenues increased by $66.4 million or 4.4% to $1.6 billion for 2023 compared to $1.5 billion in 2022.
Removed
Federal Reserve raised the federal funds rate a total of seven times during 2022. In response, market interest rates have increased significantly during this time. At the same time, the labor market remains historically tight and companies continue to look to add employees, pushing unemployment lower.
Added
Management and other fees from affiliates stayed consistent at $11.1 million in 2023 and 2022.
Removed
Number of Apartment Years Ended December 31, Dollar Percentage Property Revenues ($ in thousands) Homes 2022 2021 Change Change 2022 Same-Properties: Southern California 21,006 $ 624,907 $ 561,326 $ 63,581 11.3 % Northern California 17,895 591,556 545,535 46,021 8.4 % Seattle Metro 10,218 268,512 239,819 28,693 12.0 % Total 2022 Same-Property Revenues 49,119 1,484,975 1,346,680 138,295 10.3 % 2022 Non-Same Property Revenues 110,700 84,738 25,962 30.6 % Total Property Revenues $ 1,595,675 $ 1,431,418 $ 164,257 11.5 % 2022 Same-Property Revenues increased by $138.3 million or 10.3% to $1.5 billion for 2022 compared to $1.3 billion in 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe following table represents scheduled principal payments ($ in thousands): For the Years Ended December 31, ($ in thousands, except for interest rates) 2023 2024 2025 2026 2027 Thereafter Total Fair value Fixed rate debt $ 302,093 $ 402,177 $ 632,035 $ 548,291 $ 419,558 $ 3,417,000 $ 5,721,154 $ 5,195,981 Average interest rate 3.4 % 4.0 % 3.5 % 3.5 % 3.8 % 3.0 % Variable rate debt (1) $ 852 $ 13,005 $ 1,019 $ 1,114 $ 84,397 $ 175,269 $ 275,656 $ 273,160 Average interest rate 3.6 % 4.3 % 3.6 % 3.6 % 3.4 % 3.7 % (1) $223.6 million of variable rate debt is tax exempt to the note holders.
Biggest changeThe following table represents scheduled principal payments ($ in thousands): For the Years Ended December 31, ($ in thousands, except for interest rates) 2024 2025 2026 2027 2028 Thereafter Total Fair value Fixed rate debt $ 402,177 $ 632,035 $ 548,291 $ 419,558 $ 517,000 $ 3,198,000 $ 5,717,061 $ 5,299,805 Average interest rate 4.0 % 3.5 % 3.5 % 3.8 % 2.2 % 3.3 % Variable rate debt (1) $ 932 $ 1,019 $ 1,114 $ 384,397 $ 1,332 $ 133,937 $ 522,731 $ 519,003 Average interest rate 4.7 % 4.7 % 4.7 % 4.2 % 4.7 % 4.6 % (1) $222.7 million of variable rate debt is tax exempt to the note holders.
The table incorporates only those exposures that exist as of December 31, 2022; it does not consider those exposures or positions that could arise after that date. As a result, the Company’s ultimate realized gain or loss, with respect to interest rate fluctuations and hedging strategies would depend on the exposures that arise prior to settlement. Item 8.
The table incorporates only those exposures that exist as of December 31, 2023. It does not consider those exposures or positions that could arise after that date. As a result, the Company’s ultimate realized gain or loss, with respect to interest rate fluctuations and hedging strategies would depend on the exposures that arise prior to settlement. Item 8.
The table also includes a sensitivity analysis to demonstrate the impact on the Company’s derivative instruments from an increase or decrease in 10-year Treasury bill interest rates by 50 basis points, as of December 31, 2022.
The table also includes a sensitivity analysis to demonstrate the impact on the Company’s derivative instruments from an increase or decrease in 10-year Treasury bill interest rates by 50 basis points, as of December 31, 2023.
The Company’s interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows. Management has estimated the fair value of the Company’s $5.7 billion of fixed rate debt at December 31, 2022, to be $5.2 billion.
The Company’s interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows. Management has estimated the fair value of the Company’s $5.7 billion of fixed rate debt at December 31, 2023, to be $5.3 billion.
The Company’s interest rate swap is designated as a cash flow hedge as of December 31, 2022. The following table summarizes the notional amount, carrying value, and estimated fair value of the Company’s cash flow hedge derivative instruments used to hedge interest rates as of December 31, 2022.
The Company’s interest rate swap was designated as a cash flow hedge as of December 31, 2023. The following table summarizes the notional amount, carrying value, and estimated fair value of the Company’s cash flow hedge derivative instruments used to hedge interest rates as of December 31, 2023.
Management has estimated the fair value of the Company’s $275.7 million of variable rate debt at December 31, 2022, to be $273.2 million based on the terms of existing mortgage notes payable and variable rate demand notes compared to those available in the marketplace.
Management has estimated the fair value of the Company’s $522.7 million of variable rate debt at December 31, 2023, to be $519.0 million based on the terms of existing mortgage notes payable and variable rate demand notes compared to those available in the marketplace.
Notional Amount Maturity Date Range Carrying and Estimated Fair Value Estimated Carrying Value +50 -50 ($ in thousands) Basis Points Basis Points Cash flow hedges: Interest rate swaps $ 300,000 2026 $ 5,556 $ 10,107 $ 851 Total cash flow hedges $ 300,000 2026 $ 5,556 $ 10,107 $ 851 Additionally, the Company has entered into total return swap contracts, with an aggregate notional amount of $223.6 million that effectively convert $223.6 million of fixed mortgage notes payable to a floating interest rate based on the SIFMA plus a spread and have a carrying value of zero at December 31, 2022.
Notional Amount Maturity Date Range Carrying and Estimated Fair Value Estimated Carrying Value +50 -50 ($ in thousands) Basis Points Basis Points Cash flow hedges: Interest rate swaps $ 300,000 2026 $ 4,274 $ 7,961 $ 502 Total cash flow hedges $ 300,000 2026 $ 4,274 $ 7,961 $ 502 Additionally, the Company has entered into total return swap contracts, with an aggregate notional amount of $222.7 million that effectively convert $222.7 million of fixed mortgage notes payable to a floating interest rate based on the SIFMA plus a spread and have a carrying value of zero at December 31, 2023.
Interest Rate Sensitive Liabilities 47 Table of Contents The Company is exposed to interest rate changes primarily as a result of its lines of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Company’s real estate investment portfolio and operations.
These derivatives do not qualify for hedge accounting. 48 Table of Contents Interest Rate Sensitive Liabilities The Company is exposed to interest rate changes primarily as a result of its lines of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Company’s real estate investment portfolio and operations.
The Company is exposed to insignificant interest rate risk on these swaps as the related mortgages are callable, at par, by the Company, co-terminus with the termination of any related swap. These derivatives do not qualify for hedge accounting.
The Company is exposed to insignificant interest rate risk on these total return swaps as the related mortgages are callable, at par, by the Company, co-terminus with the termination of any related swap.
As of December 31, 2022, the Company had one interest rate swap contract to mitigate the risk of changes in the interest-related cash outflows on $300.0 million of the unsecured term loan that had not been drawn and had a balance of zero. As of December 31, 2022, the Company also had $223.6 million of secured variable rate indebtedness.
As of December 31, 2023, the Company had one interest rate swap contract to mitigate the risk of changes in the interest-related cash outflows on $300.0 million of the unsecured term loan. As of December 31, 2023, the Company also had $222.7 million of secured variable rate indebtedness.

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