ESS 10-K & 10-Q changes, risk factors and insider trading

•changes in the general or local economic climate that could affect demand for housing, including changing demographics or policies governing legal immigration, which could lead to a relative decrease in the renting population, an increase in the use of new technologies and artificial intelligence to replace workers, and other events negatively impacting local employment rates, tenant dispersion, wages and the local economy;

•the appeal and desirability of our communities to tenants relative to other housing alternatives, including thecost, size and amenity offerings, safety and location convenience, and our technology offerings.

Economic environments can negatively impact the Company’s liquidity and results of operations. In the event of a recessionrecession, continued geopolitical uncertainty or other negative economic effects, including slowing job growth in key markets, the Company could incur reductions in rental and occupancy rates, property valuations and increases in costs. 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 materially adversely affect the Company’s liquidity and its ability to vary its portfolio promptly in response to changes to the economy.

Rent control, oreviction futuremoratoria or potential changes in applicable laws, or noncompliance with applicable laws, could materially adversely affect the Company’s stock price, business, financial condition and results of operations, and/or expose us to liability. The Company must own, operate, manage, acquire, develop and redevelop its properties in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations. These laws and regulations may include zoning laws, building codes, rent control or stabilization laws, fee transparency requirements, emergency orders, laws benefiting disabled persons, federal, state and local tax laws, landlord tenant laws, environmental laws, employment laws, immigration laws and other laws regulating housing, revenue management software and practices, or laws that are generally applicable to the Company’s business and operations. Changes in, or noncompliance with, laws and regulations could expose the Company to liability and could require the Company to make significant unanticipated expenditures to address noncompliance.

Existing and future eviction moratoria, rent control or rent stabilization laws and regulations, fee transparency requirements, along with similar laws and regulations that expand tenants’ rights or impose additional costs on landlords, including any such laws or regulations imposed on the housing industry in response to natural disastersdisasters, national and/ global pandemic or mediaother attentionany onother thehealth housingcrisis, industry,or local or national states of emergency, may reduce rental revenues or increase operating costs and thus such laws and regulations may materially adversely affect our stock price, business, financial condition and results of operations. Such laws and regulations limit our ability to charge market rents, increase rents, evict tenantstenants, limit our ability to collect rent, or recover increases in our operating expenses and could reduce the value of our communities or make it more difficult for us to dispose of propertiescommunities in certain circumstances. Following the COVID-19 pandemic, governments have demonstrated a greater interest in eviction moratoria and strict housing controls. We may be legally required to, or otherwise agree to, restructure tenants’ rent obligations on less favorable terms than those currently in place. 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. Expenses associated with our investment in thesecommunities communities,impacted by such laws and regulations, 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. This could lead to lower profitability and market fluctuations that may affect our ability to obtain necessary funds for our business.

Acquisitions of communities involve various risks and uncertainties and may fail to meet expectations. The Company’s acquisition of apartment communities may fail to meet the Company’s expectations due to factors including inaccurate estimates of future income, expenses, and the costs of improvements or redevelopment, which may be exacerbated by the lack of reliable market data due to inconsistent deal flow.data. Further, the value and operational performance of an apartment community may be diminished if neighborhood changes occur before we are able to redevelop or sell the community. Also, in connection with such acquisitions, we may assume unknown or contingent liabilities, which could ultimately lead to material costs for us that we did not expect to incur. In addition, the total amount of costs and expenses that may be incurred with respect to liabilities associated with apartment communities may exceed our expectations, and we may experience other unanticipated adverse effects, all of which may materially adversely affect our business, financial condition and results of operations. The use of equity financing for future developments or acquisitions could dilute the interest of the Company’s existing stockholders. If the Company finances new acquisitions under existing lines of credit,credit or commercial paper, there is a risk that, unless the Company obtains substitute financing,financing or capital sources, 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.

•expenses may be higher than anticipated,anticipated including,due to, without limitation, due to inflationary pressures (including potentially exacerbated by the imposition of tariffs), supply chain issues, costs of litigation over construction contracts,construction, environmental remediation or increased costs for labor (including potentially related to any shrinkage in the labor force or labor shortages related to changing immigration policiespolicies, concerns regarding deportation or otherwise), 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 or delays, 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 opportunitiesopportunities, and/or we may experience challenges with municipalities in completing or approving projects;

The geographic concentration of the Company’s communities and fluctuations in local markets may materially adversely affect the Company’s financial condition and results of operations. The Company’s communities are concentrated on the West Coast in the metropolitan areas of California and the Seattle metropolitan area,Washington, which exposes the Company to greater economic concentration risks. Factors that may materially adversely affect local market and economic conditions include regionally specific acts of nature (e.g., earthquakes, wildfires, floods, etc.), layoffschanges affectingin specific or broad sectors of the economy (such as growth or decline in technology-based companies), and those other factors listed in the risk factor titled “General real estate investment risks may materially adversely affect property income and values” and elsewhere in this Item 1A.

The Company is susceptible to adverse developments in economic and regulatory environments, such as increases in real estate and other taxes, and increased costs of complying with governmental regulations. The State of California is generally regarded as more litigious, highly regulated and taxedsubject to higher taxes than many other states, which may reduce demand for the Company’s communities. Any adverse developments in the economyeconomic or real estate markets in California or Washington, or any decrease in demand for the Company’s communities resulting from the California or Washington regulatory or business environments, could have an adverse effect on the Company’s business and results of operations.

The Company may experience various increased costs, including increased property taxes, to own and maintain its properties. Real property taxes on our properties may increase as our properties are reassessed by taxing authorities or as property tax rates change. Our real estate taxes in Washington and California could increase as a result of property value reassessments or increased property tax rates. A California law commonly referred to as Proposition 13 (“Prop 13”) generally limits annual real estate tax increases on California properties to 2% of assessed value. However, under Prop 13, property tax reassessment generally occurs as a result of a “change in ownership” of a property. Because the property taxing authorities may not determine whether there has been a “change in ownership” or the actual reassessed value of a property for a period of time after a transaction has occurred, we may not know the impact of a potential reassessment for a considerable amount of time following a particular transaction. Therefore, the amount of property taxes we are required to pay could increase substantially from the property taxes we currently pay or have paid in the past, including on a retroactive basis. Various initiatives to repeal or amend Prop 13, to eliminate its application to commercial and residential property, to increase the permitted annual real estate tax increases, and/or to introduce split tax roll legislation could increase the assessed value and/or tax rates applicable to commercialor propertycommunities in California. Further, changes in U.S. federal tax law could cause state and local governments to alter their taxation of real property.

The Company may experience increased costs associated with capital improvements and property maintenance as its properties advance through their life cycles. In some cases, especially with respect to newly acquired properties, we may spend more than budgeted amounts to make necessary improvements or maintenance, which could materially adversely affect the Company’s financial condition and results of operations.

Competition in the apartment community market and other housing alternatives may materially adversely affect operations and the rental demand for the Company’s communities. There are numerous housing alternatives that compete with the Company’s communities in attracting tenants, including other apartment communities, condominiums and single-family homes. Competitive housing in a particular area and fluctuations in cost of owner-occupied single- and multifamily homes caused by a decrease in housing prices, mortgage interest rates and/or government programs to promote home ownership or create additional rental and/or other types of housing, or an increase in desire for more space due to work-from-home needs or increased time spent at home,housing could materially adversely affect the Company’s ability to retain its tenants, lease apartment homes and increase or maintain rents. If the demand for the Company’s communities is reduced, rental or occupancy rates may drop, which may have a material adverse effect on the Company’s financial condition and results of operations. The Company also faces competition from other businesses and other entities in the acquisition, development and operation of apartment communities. This competition may result in increased costs to acquire or develop apartment communities or impact the Company’s ability to identify suitable acquisition or development transactions.

Investments in mortgages, mezzanine loans, subordinated debt, other real estate, and other marketable securities could materially adversely affect the Company’s cash flow from operations. The Company may purchase or otherwise invest in securities issued by entities which own real estate and/or invest in mortgages or unsecured debt obligations. The Company may make or acquire mezzanine loans, which are generally subordinated loans. In general, investing in mortgages involves risk, including that the value of mortgaged property may be less than the amounts owed, causing realized or unrealized losses; the borrower may not pay indebtedness under the mortgage when due and amounts recovered by the Company in connection with related foreclosures may be less than the amount owed; interest rates payable on the mortgages may be lower than the Company’s cost of funds; in the case of junior mortgages, foreclosure of a senior mortgage could eliminate the junior mortgage; delays in the collection of principal and interest if a borrower claims bankruptcy; possible senior lender default or overconcentration of senior lenders in the portfolio; and unanticipated early prepayments may limit the Company’s expected return on its investment. If any of the above were to occur, it could materially adversely affect the Company’s cash flows from operations.

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 similar 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 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.

From time to time, the Company, through the Operating Partnership, makes certain co-investments in the form of preferred equity or mezzanine investments in third-party entities that have been formed for the purpose of acquiring, developing, financing, or managing real property. The Operating Partnership’s interest in these entities is typically less than a majority of the outstanding voting interests of that entity, which may limit the Operating Partnership’s ability to control the daily operations of such co-investment. The Operating Partnership may not be able to dispose of its interests in such co-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. Additionally, the preferred return negotiated on these co-investments may be lower than the Company’s cost of funds. The Company may also incur losses if any guarantees or indemnifications were made by the Company.

The Company also owns properties indirectly underthrough partnerships commonly referred to as “DownREIT” structures. The Company has entered into, and in the future may enter into, transactions that could require the Company to pay the tax liabilities of partners that contribute assets into DownREITs, joint ventures or the Operating Partnership, in the event that certain taxable events, which are generally within the Company’s control, occur. Although the Company plans to hold the contributed assets or, if such assets consist of real property, defer recognition of gain on sale of such assets pursuant to the like-kind exchange rules under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”), the Company may not be able to do so and if such tax liabilities were incurred they could have a material adverse effect on its financial position.

Also, from time to time, the Company invests in properties (i) which may be subject to certain shared facilities agreements with homeowners’ associations and other similar entities and/or (ii) subject to ground leases where a subtenant may have certain similar rights to that of a party under such a shared facilities agreements or where a master landlord may have certain rights to control the use, operation and/or repair of the property. In these arrangements, we cannot guarantee that the terms of the shared facilities agreements will be enforced or interpreted in favor of the Company, and the Company’s inability to control expenditures, make necessary repairs and/or control certain decisions may materially adversely affect the Company’s financial condition and results of operations, and/or the property’s safety, compliance with applicable laws, marketability or market value.

We may pursue acquisitions of other REITs and real estate companies, which may not yield anticipated results and could materially adversely affect our results of operations. We may make acquisitions ofacquire and/or investmentsinvest in other REITs and real estate companies or enter into strategic alliances or joint ventures, which involves risks and uncertainties and may not be successful. We may not be able to identify suitable acquisition, investment, or joint venture opportunities, consummate any such transactions or relationships on terms and conditions acceptable to us, or realize the expected financial or strategic benefits of any such acquisition. The integration of acquired businesses or other acquisitions may not be successful and could result in disruption to other parts of our business. Pre-acquisition property due diligence may not identify all material issues that might arise with respect to such acquired business and its properties or as to any such other acquisitions. Any future acquisitions we make may also require significant additional debt or equity financing, which, in the case of debt financing, would increase our leverage and potentially affect our credit ratings and, in the case of equity or equity-linked financing, could be dilutive to Essex’s stockholders and the Operating Partnership’s unitholders. Additionally, the value of these investments could decline for a variety of reasons. These and other factors could materially adversely affect our financial condition and results of operations.

Mold growth may occur when excessive moisture accumulates in buildings or on building materials. The Company has adopted policies to address and resolve reports of mold when it is detected, and to minimize any impact mold might have on tenants of the affected property, however, the Company may not identify and respond to all mold occurrences.occurrences and may result in litigation.

The Company may incur general uninsured losses or may experience market conditions that impact the procurement of certain insurance policies. The Company purchases general liabilityliability, employment practices liability, and property, including loss of rent, insurance coverage for each of its communities and cyber risk insurance. The Company may also purchase limited earthquake, terrorism, environmental and flood insurance for some of its communities. However, there are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, wildfires, pollution, environmental matters or extreme weather conditions such as hurricanes and floods that are uninsurable or not economically insurable. Some employment claims such as California private attorney general actions (“PAGA”) or class actions are also not insurable. The Company utilizes a wholly owned insurance subsidiary, Pacific Western Insurance LLC (“PWI”), to self-insure certain earthquake and property losses for some of the communities in its portfolio. A decline in the value of the securities held by PWI may materially adversely affect PWI’s ability to cover all or any portion of the amount of any insured losses. Despite our insurance coverage, the Company may incur material losses due to uninsured risks, deductibles and self-insured retentions, and/or losses in excess of coverage limits.

Although the Company may carry insurance for potential losses associated with its communities, employees, tenants, and compliance with applicable laws, it may still incur material losses due to class actions, uninsured risks, deductibles, copayments or losses in excess of applicable insurance coverage. In the event of a substantial loss, insurance coverage may not be able to cover the full replacement cost of the Company’s lost investment, or the insurance carrier may become insolvent and not be able to cover the full amount of the insured losses.

Changes in building codes and ordinances, environmental considerations and other factors might also affect the Company’s ability to replace or renovate an apartment community after it has been damaged or destroyed. In addition, a recently destabilized insurance market, litigation financing, and certain causalities and/or losses incurred may expose the Company in the future to higher insurance premiums.

Climate change may materially adversely affect our business. As a result of climate change, we may experience extreme weather, an increase in frequency and severity of natural disasters, changes in precipitation, temperature, wildfire and drought exposure, and impacts of sea-levelrising rise,sea-levels, all of which may result in physicaldamage damage,to our communities, 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 propertiescommunities or increased costs associated with water or energy use and maintaining or insuring our communities. Transition risks associated with climate change may result in interruptions in energy access, increased energy costs, or increased regulatory requirements and stakeholder expectations regarding reporting and energy efficiency. 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 materially adversely affected and our financial condition or results of operations may be materially adversely affected. We could experience increased costs related to further developing our communities to mitigate the effects of climate change or repairingrepair damage related to the effects of climate change that may or may not be fully covered by insurance. In addition, changes in federal, state and local legislation and regulation on climate change or natural disaster response could result in temporary rent control, temporary eviction moratoria, increased operating 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.

Failure to succeed in new markets or with new community operations formats may limit the Company’s growth.growth, and additionally, the Company’s commercial leases could adversely affect us. The Company may make acquisitionsacquisitions, pursue new business models, explore new capital sources 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. Additionally, we have adjusted our operating model to reduce the number of staff on-site at individual properties and instituted a hub model where specialized staff can service multiple properties from a central location and rely on certain technologies, such as virtual apartment tours,tours and artificially intelligent leasing agents, to further reduce the need for on-site staffing. There mayhas bebeen resistance to such change from our residents, and if we experience difficulty in retaining residents, this could materially adversely affect the Company’s results of operations. Further, there are unknown risks with relying on new technologies and operating models, such as whether there is consumer preference for in-person tours or if we are not able to as rapidly respond to resident demands, and we cannot guarantee that this model will be successful, which could materially adversely affect our results of operations. Furthermore, 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. 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.

Our business and reputation depend on our ability to continue providing high quality housing and consistent operation of our communities, the failure of which could materially adversely affect our business, financial condition and results of operations. WePublic provideutilities, tenantssuch with reliable services, includingas water and electric power,power along with the consistent operation of our communities, including a wide variety of amenities. Public utilities, especially those that provide water and electric power,providers, are fundamental for the consistent operation of our communities. TheAny delayed delivery or any prolonged interruption of these services may cause tenants to terminate their leases or may result in a reduction of rents and/or increase in our costs or other issues. 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. 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. Any such failures could impair our ability to continue providing quality housing and consistent operation of our communities, which could materially adversely affect our financial condition and 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 land may fluctuate significantly. In addition, carrying costs can be significant and can result in losses or reduced profitability. If there are changes in the fair value of our land holdings which we determine is less thatthan 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.

We are subject to laws and regulations relating to the handling of personal information and we rely on information technology to sustain our operations. Any 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, financial condition and results of operations. 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. Our business requires us and some of our vendors to use and store personal and other sensitive information of our tenants and employees, and our collection, use and other processing of personal information is governed by certain federal and state laws and regulations. Privacy and cybersecurity laws continue to evolve, with a number of states passing data privacy laws that govern the processing of information about state residents, and laws may be inconsistent from one jurisdiction to another. The Company endeavors to comply with privacy laws and regulations applicable to it, including the California Consumer Privacy Act and Washington State’s “My Health My Data Act”, which govern the collection, use, retention, disclosure and security of personal information about California and Washington residents, respectively. Compliance with existing and future laws and regulations related to data privacy and protection may increase the Company’s operating costs and adversely impact the Company’s ability to market the Company’s properties and services, and any failure of our systems in place to comply with such laws and regulations could harm our business, reputation and financial condition. Although we have taken steps to abide by applicable privacy and cybersecurity laws, and strive to protect the security of our IT Systems and Confidential Information, the compliance and security measures put in place by the Company and its vendors cannot guarantee perfect compliance or provide absolute security, and the Company and its vendors’ IT Systems may be vulnerable to numerous and evolving cybersecurity threats and risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information, including through social engineering/phishing, malware (including ransomware), distributed denial-of-service attempts, data theft, account takeovers, social engineering/phishing, technological error, employee error, malfeasance by insiders, misconfigurations, “bugs”, or other vulnerabilities in Company, or vendor, IT Systems. These threats may be amplified by emerging artificial intelligence technologiestechnologies, which are expected to pose new or unknown cybersecurity risks and challenges, including as integrated into our or any third party’s operations, products and services, and can also come from diverse threat actors, such as state-sponsored organizations, opportunistic hackers and hacktivists. 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, access to company funds, or other harm. Moreover, 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.

Potential other consequences include potential exposure to litigation, including government enforcement actions, private litigation (including class actions), fines or criminal penalties, negative reputational impacts that cause us to lose existing or future customers, and/or significant incident response, system restoration or remediation and future compliance costs, 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, financial condition and results of operations.

Privacy and cybersecurity risks have generally increased in recent years because of the proliferation of new techniques and tools that circumvent security tools, evade detection and remove forensic evidence, such as artificial intelligence, and the increased sophistication, techniques and activities of threat actorsactors, and the broader adoption of remote and hybrid work arrangements that introduce additional security vulnerabilities due to off-network access; accordingly, the Company may be unable to anticipate these techniques or implement adequate preventative measures. There can also be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information. Furthermore, given the nature of complex IT Systems we rely upon, and the scanning tools that we deploy across our networks and products, we regularly identify and track security vulnerabilities. Additionally, remote and hybrid working arrangements at our company (and at many third-party providers) also increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks. We may be unable to comprehensively apply patches or confirm that measures are in place to mitigate all such vulnerabilities, or that patches will be applied before vulnerabilities are exploited by a threat actor. We maintain cyber risk insuranceinsurance, whichbut this may be an insufficient type or amount to cover us against claims related to a cybersecurity incident, and we cannot be certain that such insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claims.

InFinally, in the future, the Company may expend additional resources to continue to enhance the Company’s cybersecurity measures to investigate and remediate any cybersecurity vulnerabilities and/or to further ensure compliance with privacy and cybersecurity laws. 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. 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 Company could result in a wide range of material adverse effects to our business and results of operations.

Reliance on third party software providers to host systems is critical to our operations and to provide the Company with data, and regulation of those providers and practices may impact operational capabilities. We rely on, or may rely on in the future, certain key software vendorsvendors, including artificial intelligence platforms, to support business practices critical to our operations, including the collection and understanding of rentrent, leads and leasing, and ancillary income, including artificial intelligence platforms, communication with our tenants, interaction and evaluation and/or qualification of our prospective tenants, and to provide us with data. The market is currently experiencing a consolidation of and increased scrutiny on these software vendors and algorithmic platforms,vendors, particularly in the multifamily space,space and algorithmic platforms, which may negatively impact the Company’s choice of vendor and pricing options due to lack of optionality or litigation challenges of the vendor or the vendor’s underlying algorithmic platform. 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. Further, our failure, or our software vendors’ failure, to adopt, anticipate or keep pace with the new technologies, such as artificial intelligence solutions, may harm our ability to compete with our peers, decrease the value of our assets and/or impact our future growth.

We may from time to time be subject to litigation or regulatory investigation, which could have a material adverse effect on our business, financial condition and results of operations. Some of these claimsclaims, which may be funded by litigation financing, may result in defense costs, settlements, fines or judgments against us, some of which are not, or cannot be, covered by insurance, the payment of which could have an adverse impact on our financial position and results of operations. 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 materially adversely affect our reputation and divert the attention of our management, which could materially adversely affect our operations and cash flow. A number of purported anti-trust class actions were filed against RealPage, Inc., a seller of revenue management software, and various lessors of multifamily housing which utilize this software, including the Company. The complaints allege collusion among defendants to artificially increase rents of multifamily residential real estate above competitive levels. The Company intends to vigorously defend against these lawsuits. The Company is unable to predict the outcome or estimate the amount of loss, if any, that may result from such matters. The Company is also subject to various other legal and/or regulatory proceedings arising in the normal course of its business operations, including Californiacertain private attorney generalclass actions (“and PAGA Claims”).Claims. The current political climate in California may continue to encourage plaintiffs’ attorneys to bring PAGA Claims and other class actions.

Capital and credit market conditions and volatility, including significant fluctuations in the price of the Company’s stock, may affect the Company’s access to sources of capital and/or the cost of capital, which could materially adversely affect the Company’s business, stock price, results of operations, cash flows and financial condition. Our current balance sheet, the debt capacity available on the commercial paper program and unsecured line of credit with a diversified bank group, access to the public and private placement debt markets and secured debt financing providers provide some insulation from volatile capital markets. We primarily use external financing, including sales of debt and equity securities, to fund acquisitions, developments, and redevelopments and to refinance indebtedness as it matures. 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.

A downgrade in the Company’s investment grade credit rating could materially adversely affect its business and financial condition. The Company plans to manage its operationsintends to maintain its investment grade credit rating with a capital structure consistent with its current profile but there can be no assurance that it will be able to maintain its current credit ratings. Any downgrades in terms of ratings or outlook by any of the rating agencies could have a material adverse effect on the Company’s cost and availability of capital, which could in turn have a material adverse effect on its financial condition, results of operations and liquidity, as well as the Company’s stock price.

Changes in the Company’s financing policy may lead to higher levels of indebtedness. The Company manages its debt to be in compliance with debt covenants under its unsecured bank facilities and senior unsecured bonds. However, the Company may increase the amount of outstanding debt at any time without a concurrent improvement in the Company’s ability to service the additional debt, resulting in an increased risk of default on its debt covenants or on its debt obligations and in an increase in debt service requirements. 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. A default, including a default under mortgage indebtedness, lines of credit, commercial paper program, bank term loan, the indenture for the Company’s outstanding senior notes, or the Company’s interest rate hedging arrangements that is not waived by the applicable required lenders, holders of outstanding notes or counterparties could trigger cross-default or cross-acceleration provisions under one or more agreements governing the Company’s indebtedness, which could cause an immediate default or allow the lenders to declare all funds borrowed thereunder to be due and payable.

The Company depends on its personnel, whose continued service is not guaranteed. The Company’s success depends on its ability to attract, train and retain executive officers, senior officers and company managers. There is substantial competition for qualified personnel in the real estate industry and the departure of any of the Company’s key personnel could have a material adverse effect on the Company. While the Company engages in regular succession planning for key positions, the Company’s plans may be impacted and therefore adjusted due to the departure of any key personnel. The Company must continue to recruit, train and retain qualified operational staff at its properties, which may be difficult in a highly competitive job market. Changes to our Company’s operational structure could result in an increase in issues or departures among our operational staff. Our ability to timely deliver quality customer service or to respond to building repair and maintenance requests may be negatively impacted without adequate operational staff, which may materially adversely affect the results of operations. Additionally, we could be subject to labor union efforts to organize our employees from time to time and, if successful, those organizational efforts may decrease our operational flexibility and increase operational costs.

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 owns interests in various other real estate-related businesses and investments. He is the Chairman of the Marcus & Millichap Company (“MMC”), which is a parent company of a diversified group of real estate service, investment and development firms. While conflict of interest protocols and agreements are in place, Mr. Marcus and his affiliated entities may potentially compete with the Company in acquiring and/or developing apartment communities. Due to potential competition for real estate investments, Mr. Marcus and his affiliated entities may have a conflict of interest with the Company,communities, 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. Under the partnership agreement of the Operating Partnership, the consent of the holders of limited partnership interests is generally required for certain amendments of the agreement and for certain extraordinary actions. Through their ownership of limited partnership interestsinterests, and their positions with the Company, the Company’scertain directors and executive officers, including Mr. Marcus, could have substantial influence on the Company. Consequently, their influence could result in decisions that may not reflect the interests of all stockholders.

Essex may choose to pay dividends in its own stock, which could materially adversely affect its stockholders. If Essex pays a stock dividend that is taxable for U.S. federal income tax purposes, and a U.S. stockholder sells the stock it receives as a dividend in order to pay applicable taxes, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. 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.

The Company’s future issuances of common stock, preferred stock or convertible debt securities could be dilutive to current stockholders and materially adversely affect the market price of the Company’s common stock. In order to finance the Company’s acquisition and development activities, the Company could issue and sell common stock, preferred stock and convertible debt securities, including pursuant to its equity distribution program, issue partnership units in the Operating Partnership, or enter into joint ventures which may dilute stockholder ownership in the Company and could materially adversely affect the market price of the common stock.

Loss of the Company’s REIT status would have a material adverse effect on 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. 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. If the Company fails to qualify as a REIT in any taxable year, the Company would be subject to U.S. federal corporate income tax on the Company’s taxable income, and the Company would not be allowed to deduct dividends paid to its stockholders in computing its taxable income. The Company would also be disqualified from electing 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. The additional tax liability would reduce its net earnings available for investment or distributions, and the Company would no longer be required to make distributions to its stockholders for the purpose of maintaining REIT status. As a result of all these factors, the Company’s failure to qualify as a REIT also could impair its ability to expand its business and raise capital, and could materially adversely affect the value and market price of the Company’s common stock.

Failure of one or more of the Company’s subsidiaries to qualify as a REIT could materially adversely affect the Company’s ability to qualify as a REIT. The Company owns interests in multiple subsidiary REITssubsidiaries that have elected to be taxed as REITs under the Code. These subsidiary REITs are subject to the various REIT qualification requirements and other limitations that are applicable to the Company. If any of the Company’s subsidiary REITs were to fail to qualify as a REIT, then the subsidiary REIT would become subject to U.S. federal corporate income tax. 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 and it is possible that this could cause the Company to also fail to qualify as a REIT.

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. Dividends paid by REITs to U.S. stockholders that are individuals, trusts or estates are generally not eligible for the reduced tax rate applicable to qualified dividends received from non-REIT corporations. U.S. stockholders that are individuals, trusts and estates generally may deduct 20% of ordinary dividends from a REIT for taxable years beginning before January 1, 2026.REIT. Although this deduction reduces the effective tax rate applicable to certain dividends paid by REITs, such tax rate is still higher than the tax rate applicable to regular corporate qualified dividends. This may cause investors to view REIT investments as less attractive than investments in non-REIT corporations, which in turn may materially adversely affect the value of stock in REITs.

Corporate responsibility, specifically related to sustainability factors, may impose additional costs and expose us to new risks or litigation. Some investors and potential investors are focused on positive corporate responsibility and sustainability scores and business practices to guide their investment strategies, including whether to invest in our common stock. Additionally, rules and regulationsexpectations continue to evolve relating to climate risk disclosures, human capital management and otherlawmakers and corporate responsibility matters, and other regulatory bodies, such as the State ofin California, have issued lawsrules or regulations relating toregarding climate disclosures, despite a lack of emerging support and, in some cases, open opposition, from investors and potential investors for such rules and regulations.disclosures. Additional local, state and federal laws and rules with respect to corporate responsibility and sustainability matters may be enacted in the future and the extent and scope of their requirements and impact on our business are unknown. If the criteria by which companies are scored changes, the Company may perform differently or worse than it has in the past, or it may become more expensive for the Company to access capital. The Company may face reputational damage in the event its corporate responsibility procedures, its board structure, or the reputations of its individual board members do not meet the standards set by various constituencies. Further, if we fail to comply with new laws, regulations, expectationsregulations or reporting requirementsexpectations related to sustainability, or if we are perceived as failing, our reputation and business could be materially adversely affected. In addition, both advocates and opponents to such matters aremay increasingly resortingresort to a range of activism forms,activism, including media campaigns, shareholder activism, and litigation, to advance their perspectives, and certain jurisdictions are adopting or considering adopting laws seeking to limit the use of corporate responsibility and sustainability initiatives in certain contexts. Anti-ESG advocates, including certain state attorneys general outside of the Company’s current geographic locations, have also brought legal challenges regarding corporate climate initiatives and commitments. To the extent we are subject to any such activism or fragmented regulation with respect to corporate responsibility or sustainability considerations,challenges, it may require us to incur costs to implement compliant initiatives or otherwise materially adversely affect our business. Finally, if the criteria by which companies are scored on corporate responsibility may change, and the Company may perform differently or worse than it has in the past, and it may become more expensive for the Company to access capital. The Company may face reputational damage if its corporate responsibility procedures, board structure, or individual board members’ reputations do not meet the standards set by various constituencies. The occurrence of any of the foregoing could have a material adverse effect on the price of the Company’s stock and the Company’s financial condition and results of operations.

Essex is a self-administered and self-managed REIT that acquires, develops, redevelops, and manages apartment home communities in selected residential areas located on the West Coast of the United States. Essex owns all of its interests in its real estate investments, directly or indirectly, through the Operating Partnership. Essex is the sole general partner of the Operating Partnership and, as of December 31, 2024,2025, had an approximately 96.5%96.6% general partner interest in the Operating Partnership.

As of December 31, 2024,2025, the Company owned or had ownership interests in 255259 operating apartment communities, comprising 62,15763,077 apartment homes, excluding the Company’s ownership in preferred equity co-investments, loan investments, and two operating commercial buildings.buildings and a development pipeline comprised of one consolidated project and various predevelopment projects.

The Company’s apartment home communities are predominately located in the following major regions:

In each of these regions, projected 20252026 growth in new residential supply of apartment homes and single family homes is expected to be less than 1% or less of the total housing stock.

Co-investments, including Wesco I, Wesco III, Wesco IV, Wesco V, Wesco VI, BEX IV, and other co-investments, developments under construction, and preferred equity interest co-investment communities are not included in the table presented above for both periods. The communities previously held in the BEXAEW, BEX II, Patina at Midtown, and Century Towers co-investments, which were consolidated in 2024, are excluded from the table as December 31, 2023 but included in the table as of December 31, 2024.

The foregoing macroeconomic conditions have not negatively impacted the Company’s ability to access traditional funding sources onwhich thehave samebeen or reasonably similar terms as werehistorically available in recent periods prior to the pandemic, as demonstrated by the Company’s financing activity during the year ended December 31, 2024 discussed in the “Liquidity and Capital Resources” section below.it. The Company is not at material risk of notfailing meetingto meet the covenants in its credit agreements and is able to timely service its debt and other obligations.

The average financial occupancy for the Company’s 20242025 Same-Property portfolio (stabilized properties consolidated by the Company for the years ended December 31, 20242025 and 20232024) was 96.1% and 96.5%96.2% for each of the years ended December 31, 20242025 and 2023, respectively.2024. Financial occupancy is defined as the percentage resulting from dividing actual rental income by total scheduled rental income. Actual rental income represents contractual rental income pursuant to leases without considering delinquency and concessions. 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.

The following table provides a breakdown of rental and other property revenue amounts,revenues, including the revenues attributable to 20242025 Same-Properties ($ in thousands):

20242025 Same-Property Revenues increased by $51.5$52.6 million or 3.3%. The increase was primarily attributable to increasesan increase of 1.9%2.3% in average rental rates from $2,605$2,638 for 20232024 to $2,655$2,699 for 2024, 0.8% in other property income,2025 and 0.9%0.5% from a decrease in delinquencies, partially offset by a decrease of 0.4% in occupancy.delinquencies.

20242025 Non-Same Property Revenues increased by $54.4$61.2 million or 74.3%35.2% to $127.7$235.0 million in 20242025 compared to $73.3$173.8 million in 2023.2024. The increase was primarily due to the acquisitions of HaciendaThe Plaza, One Hundred Grand, ROEN Menlo Park, Revere Campbell, The Parc at CamarilloPruneyard, OaksViO, 1250 Lakeside, and the consolidation of Artizan and TENTEN Downtown in 2023,2025, as well as the acquisitions of ARLO Mountain View, Maxwell Sunnyvale, and Beaumont, andalong with the Company’s acquisition of the Company’sits joint venture partner’s interests in the BEXAEW and BEX II portfolios, Patina at Midtown, and Century Towers in 2024. The increases were partially offset by the sale of Highridge, Essex Skyline, The Grand, and Fourth & U in 2025 and Hillsdale Garden in 2024.

Property operating expenses, excluding real estate taxes increased by $26.4$25.3 million or 8.8%7.7% to $326.1$353.4 million in 20242025 compared to $299.7$328.1 million in 2023,2024, primarily due to increasesacquisitions in 2024 and 2025 identified in the Non-Same Property revenues section above and the increase of $10.6Same-Property millionoperating expenses discussed below, partially offset by dispositions in utilities expenses, $7.8 million in administrative expenses, $7.3 million in personnel costs,2024 and $0.72025. million in maintenance and repairs expenses. 20242025 Same-Property operating expenses, excluding real estate taxes, increased by $19.5$16.4 million or 6.7%5.5% to $308.8$316.5 million in 20242025 compared to $289.3$300.1 million in 2023,2024, primarily due to increases of $7.5$8.1 million in utilities expenses,expenses $6.9resulting millionfrom increases in insurancetrash removal, water and othersewer expenses,costs, $4.5$3.7 million in personnel costs,costs due to wage inflation, and $1.3 million in administrative expenses, offset by a decrease of $0.7$2.6 million in maintenance and repairs expenses.expenses due to increases in water damage remediation costs.

Depreciation and amortization expense increased by $31.8$27.3 million or 5.8%4.7% to $607.5 million in 2025 compared to $580.2 million in 2024 compared to $548.4 million in 2023,2024, primarily due to acquisitions in 20232024 and 2024.2025 Theseidentified increasesin werethe Non-Same Property revenues section above. The increase was partially offset by thedispositions salein of CBC2024 and The Sweeps in 2023 and Hillsdale Garden in 2024.2025.

InterestGeneral and otheradministrative incomeexpense increaseddecreased by $34.7$27.0 million or 74.9%27.3% to $81.0$71.9 million in 20242025 compared to $46.3$98.9 million in 2023,2024, primarily due to increases of $34.8 million in legal settlements and $1.3 million in interest income, offset by a decrease of $1.7$31.3 million in realizedpolitical andadvocacy unrealizedcosts, gainspartially onoffset marketableby securities.an increase of $5.8 million in personnel costs due to wage inflation.

Gain on remeasurement of co-investmentsco-investment of $0.3 million in 2025 resulted from the Company’s consolidation of its investment in Artizan. Gain on remeasurement of $210.6 million in 2024 resulted from the Company'sCompany’s acquisition of its joint venture partner'spartner’s interests in the BEXAEW and BEX II portfolios, Patina at Midtown and Century Towers.

As of December 31, 2024,2025, the Company had $66.8$76.2 million of unrestricted cash and cash equivalents and $69.8$98.1 million in marketable securities, all of which were equity securities or available for sale debt 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 2025.2026. Additionally, the capital markets continue to be available and the Company is able to generate cash from the disposition of real estate assets to finance additional cash flow needs, including continued development and select acquisitions. In the event that economic disruptions occur, the Company may further utilize other resources such as its cash reserves, lines of credit, commercial paper or decreased investment in redevelopment activities to supplement operating cash flows. The timing, source and amounts of cash flows provided by or used in financing activities and used in investing activities are sensitive to changes in interest rates and other fluctuations in the capital markets environment, which can affect the Company’s plans for acquisitions, dispositions, development and redevelopment activities.

As of December 31, 2024,2025, Moody’s Investor Service and Standard and Poor’s (“S&P”)P’s credit agencies rated Essex Property Trust, Inc. and Essex Portfolio, L.P. Baa1/Stable and BBB+/Stable, respectively.

As of December 31, 2024,2025, the Company’s mortgage notes payable totaled $989.9$784.3 million, net of unamortized premiums and debt issuance costs, which consisted of $674.1$526.7 million in fixed rate debt at an average interest rate of 4.3%4.7% with maturity dates ranging from 20252026 to 2033 and $315.8$257.7 million of variable rate debt at an average interest rate of 4.2%3.6% with maturity dates ranging from 20262027 to 2046. A total of $220.8$258.8 million of variable rate debt is tax-exempt demand notes which are subject to total return swaps and $95.0 million of variable rate mortgage notes payable has an interest rate swap that effectively converts $47.5 million to an all-in fixed rate of 2.83%.swaps.

As of December 31, 2024,2025, the Company had two unsecured lines of credit aggregating $1.28$1.58 billion, including a $1.2$1.5 billion unsecured line of credit and a $75.0 million working capital unsecured line of credit. As of December 31, 2024,2025, there was $75.0no millionamount outstanding on the $1.2$1.5 billion unsecured line of credit. The underlying interest rate is based on a tiered rate structure tied to the Company’s long-term unsecured credit ratings, adjusted for the Company’s sustainability metric adjustment feature,ratings and was at the Adjusted SOFR plus 0.765%0.775% as of December 31, 2024.2025. This facility is scheduled to mature in January 2029,2030, with two six-month extensions, exercisable at the Company’s option. The Company may elect to increase the facility by up to an additional $1.0 billion, to an aggregate size of $2.5 billion, if the lenders permit. As of December 31, 2024,2025, there was $62.9no millionamount outstanding on the Company’s $75.0 million working capital unsecured line of credit. The underlying interest rate on the $75.0 million line is based on a tiered rate structure tied to the Company’s credit ratings, adjusted for the Company’s sustainability metric adjustment feature,ratings and was at the Adjusted SOFR plus 0.765%0.775% as of December 31, 2024.2025. This facility is scheduled to mature in July 2026.

The CompanyEssex pays quarterly dividends from cash available for distribution. Until it is distributed, cash available for distribution is invested by the Company primarily in investment grade securities held available for sale or is used by the Company to reduce balances outstanding under its lines of credit.credit or commercial paper.

The Company has fourfive total return swap contracts, with an aggregate notional amount of $220.8$258.8 million, that effectively converts $220.8 million of fixedconvert 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 total return swaps provide fair market value protection on the mortgage notes payable to our counterparties during the initial period of the total return swap until the Company’s option to call the mortgage notes at par can be exercised. The Company can currently callsettle all four of thefive total return swaps, with $220.8$258.8 million of the outstanding debt at par. These derivatives do not qualify for hedge accounting. The aggregate carrying and fair value of the total return swaps was zero at both December 31, 20242025 and 2023.2024.

As of December 31, 20242025 and 20232024 the aggregate carrying value of the interest rate swap contracts areis an asset of $5.5$2.0 million and $4.3$5.5 million, respectively, and is included in prepaid expenses and other assets in the consolidated balance sheets.

Development and Predevelopment Pipeline

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. As of December 31, 2024,2025, the Company’s development and predevelopment pipeline was comprised of variousone consolidated development project and various predevelopment projects, with total incurred costs of $52.7$157.1 million, and estimated remaining project costs of approximately $200.9 million, for total estimated project costs of $358.0 million.

The Company expects to fund the development and predevelopment communities by using a combination of some or all of the following sources: its working capital, amounts available on its lines of credit, commercial paper, construction loans, net proceeds from public and private equity and debt issuances, and proceeds from the disposition of assets, if any.

The Company utilizes co-investments as an alternative source of capital for acquisitions of both operating and development communities. As of December 31, 2024, theThe Company had an interest in 7,6947,483 apartment homes in operating communities with joint ventures and technology co-investments for a total book value of $379.5$304.4 million.million as of December 31, 2025.

As of December 31, 2024,2025, the Company had remaining unfunded commitments of $94.8 million for operating co-investments. As of December 31, 2025, the Company had operating lease commitments of $125.1$122.0 million for ground, building and garage leases with maturity dates ranging from 20252026 to 2083. $6.4$6.3 million of these commitments are due withinduring the nextyear twelveended months.December 31, 2026.

In accordance with accounting standards for consolidation of variable interest entities (“VIEs”), the Company consolidated the Operating Partnership, 18 DownREIT entities (comprising nineten communities) and fivefour co-investments as of December 31, 2024.2025. As of December 31, 2023,2024, the Company consolidated the Operating Partnership, 18 DownREIT entities (comprising nine communities) and sixfive co-investments. The Company consolidates these entities because it is deemed the primary beneficiary. 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 $970.6 million and $242.5 million, respectively, as of December 31, 2025, and $893.0 million and $319.1 million, respectively, as of December 31, 2024, and $956.7 million and $324.5 million, respectively, as of December 31, 2023.2024. Noncontrolling interests in these entities were $105.1$101.2 million and $121.1$105.1 million as of December 31, 20242025 and 2023,2024, respectively. The Company’s financial risk in each VIE is limited to its equity investment in the VIE. As of December 31, 2024,2025, the Company did not have any VIEs of which it was not deemed to be the primary beneficiary of any other VIEs.beneficiary.

The table below is a reconciliation of net income available to common stockholders to FFO and Core FFO for the periods presented ($ in thousands, except per share amounts).:

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. Words such as “expects,” “assumes,” “anticipates,” “may,” “will,” “intends,” “plans,” “projects,” “believes,” “seeks,” “future,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, among other things, statements regarding expected operating performance and results (including projected Same-Property revenues and expenses), qualification as a REIT under the Internal Revenue Code of 1986, as amended, property stabilizations, property acquisition and disposition activity, joint venture and co-investment activity, development and redevelopment activity and other capital expenditures, capital raising and financing activity, revenue and expense growth, financial occupancy, interest rate and other economic expectations, includedincluding estimated remaining and total project costs related to the Company’s development pipeline and projected new housing supply.

While the Company’s management believes the assumptions underlying its forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control, which could 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. 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: the short and long-term impact of the January 2025 California wildfires, including in relation to regulation, insurance, tenant demand and other factors; 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; including from tariffs imposed by the current presidential administration and the threat of such tariffs; geopolitical tensions and regional conflicts, and the related impacts on macroeconomic conditions, including, among other things, interest rates and inflation; the terms of any refinancing may not be as favorable as the terms of existing indebtedness; the Company’s inability to maintain its investment grade credit rating with the rating agencies; the Company may be unsuccessful in the management of its relationships with its co-investment partners; the Company may fail to achieve its business objectives; time of actual completion and/or stabilization of development and redevelopment projects; including potential delays due to supply shortages related to tariffs and/or labor shortages related to deportations or threat of deportations; estimates of future income from an acquired property may prove to be inaccurate; 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 and the anticipated or actual impact of future changes in laws or regulations; including eviction moratoria; unexpected difficulties in leasing of future development projects; volatility in financial and securities markets; the Company’s failure to successfully operate acquired properties; unforeseen consequences from cyber-intrusion; 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. All forward-looking statements are made as of the date hereof, the Company assumes no obligation to update or supplement this information for any reason, and therefore, they may not represent the Company’s estimates and assumptions after the date of this report.

Essex is a self-administered and self-managed REIT that acquires, develops, redevelops, and manages apartment home communities in selected residential areas located on the West Coast of the United States. Essex owns all of its interests in its real estate investments, directly or indirectly through the Operating Partnership. Essex is the sole general partner of the Operating Partnership and, as of MarchJune 31,30, 2026, had an approximately 96.7% general partner interest in the Operating Partnership.

As of MarchJune 31,30, 2026, the Company owned or had ownership interests in 259258 operating apartment communities, comprising 63,09962,881 apartment homes, excluding the Company’s ownership in preferred equity co-investments, loan investments, two operating commercial buildings, and a development pipeline comprised of one consolidated project and various predevelopment projects.

Southern California (primarily Los Angeles, Orange, San Diego, and Ventura counties) Northern California (the San Francisco Bay Area) Seattle Metro (the Seattle metropolitan area) The Company’s consolidated operating communities as of March 31, 2026 and 2025 were as follows:

Comparison of the Three Months Ended MarchJune 31,30, 2026 to the Three Months Ended MarchJune 31,30, 2025

The average financial occupancy for the Company’s 2026 Same-Property portfolio (stabilized properties consolidated by the Company for the quarters ended MarchJune 31,30, 2026 and 2025) was 96.5%96.3% and 96.3%96.2% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Financial occupancy is defined as the percentage resulting from dividing actual rental income by total scheduled rental income. Actual rental income represents contractual rental income pursuant to leases without considering delinquency and concessions. 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.

The regional breakdown of the Company’s 2026 Same-Property portfolio for financial occupancy for the three months ended MarchJune 31,30, 2026 and 2025 was as follows:

2026 Same-Property Revenues increased by $12.6$11.7 million or 2.9%2.7% to $442.6$446.0 million for the firstsecond quarter of 2026 from $430.0$434.4 million for the firstsecond quarter of 2025. The increase was primarily attributable to an increase of 2.2% in average rental rates from $2,660$2,683 per apartment home for the firstsecond quarter of 2025 to $2,719$2,743 per apartment home for the firstsecond quarter of 2026.

2026 Non-Same Property Revenues increased by $7.8$7.5 million or 24.3%22.4% to $39.9$40.7 million in the firstsecond quarter of 2026 from $32.1$33.2 million in the firstsecond quarter of 2025. The increase was primarily due to the acquisitions of The Plaza, One Hundred Grand, ROEN Menlo Park, Revere Campbell, The Parc at Pruneyard, ViO, 1250 Lakeside, and the consolidation of Artizan and Skylux on Wilshire (fka TENTEN Downtown) in 2025. The increases were partially offset by the sale of Highridge, Essex Skyline, The Grand, and Fourth & U in 2025.

Property operating expenses, excluding real estate taxes increased by $3.1$3.2 million or 3.6%3.7% to $89.1$89.6 million for the firstsecond quarter of 2026 compared to $86.0$86.4 million for the firstsecond quarter of 2025, primarily due to acquisitions in 2025 identified in the Non-Same Property revenuesRevenues section above and the increase of Same-Property operating expenses discussed below, partially offset by dispositions in 2025. Same-Property operating expenses, excluding real estate taxes, increased by $1.6$2.1 million or 2.0%2.6% to $82.3$83.2 million in the firstsecond quarter of 2026 compared to $80.7$81.1 million in the firstsecond quarter of 2025, primarily due to increasesan increase of $2.2 million in utilities expenses resulting from increases in trash removal, gas, water and sewer costs.

Real estate taxes decreasedincreased by $0.5$2.4 million or 1.0%4.9% to $52.1$51.4 million for the firstsecond quarter of 2026 compared to $52.6$49.0 million for the firstsecond quarter of 2025, primarily due to propertythe taxacquisitions refunds.in 2025 identified in the Non-Same Property Revenues section above and increases in assessed values. Same-Property real estate taxes decreasedincreased by $1.3$1.4 million or 3.3% to $47.2$46.0 million for the firstsecond quarter of 2026 compared to $48.5$44.6 million for the firstsecond quarter of 20252025, primarily due to propertyan taxincrease refunds.in assessed values.

Depreciation and amortization expense increased by $3.6$2.6 million or 2.4%1.7% to $154.9$154.1 million for the firstsecond quarter of 2026 compared to $151.3$151.5 million for the firstsecond quarter of 2025, primarily due to acquisitions in 2025 identified in the Non-Same Property revenuesRevenues section above, partially offset by dispositions in 2025.

General and administrative expense increased by $3.7$55.9 million or 22.7%325.0% to $20.0$73.1 million for the firstsecond quarter of 2026 compared to $16.3$17.2 million for the firstsecond quarter of 2025, primarily due to increaseslegal settlement costs of $1.5$36.5 million into politicalfully advocacyresolve costsits and $1.8 million in legal costscase related to ongoingRealPage litigations.and $19.3 million related to another litigation matter.

Interest expense increased by $2.9$1.5 million or 4.6%2.3% to $65.6$66.8 million for the firstsecond quarter of 2026 compared to $62.7$65.3 million for the firstsecond quarter of 2025, primarily due to the issuance in February 2025 of $400.0 million senior unsecured notes due April 2035, the issuance in December 2025 of $350.0 million senior unsecured notes due February 2036,2036 and borrowing on the new $300.0 million unsecured term loan in 2025 which resulted in an increase in interest expense of $9.8$7.5 million for the firstsecond quarter of 2026. These increases to interest expense were partially offset by various debt that was paid off, matured, or regular principal amortization during and after the firstsecond quarter of 2025, but primarily due to the payoff of $500.0$450.0 million of senior unsecured notes due April 1, 2025,2026, which resulted in a decrease in interest expense of $6.3$5.2 million for the firstsecond quarter of 2026. Additionally, there was an increase in capitalized interest of $0.6$0.8 million in the firstsecond quarter of 2026, due to an increase in development activity as compared to the same period in 2025.

EquityInterest and other income from co-investments increased by $10.4$2.3 million or 78.8%33.8% to $23.6$9.1 million for the firstsecond quarter of 2026 compared to $13.2$6.8 million for the firstsecond quarter of 2025, primarily due to ana $3.2 million increase ofin $15.3net millionrealized and unrealized gains on marketable securities from increases in unrealized and realized gains from unconsolidated technology co-investments as a result of change inthe fair value of investmentsmarketable held by the co-investments. The increases weresecurities partially offset by a decrease of $6.2$1.1 million in interest income from preferred equity investments due to repayment of notes receivable, and fewer outstandingshort term investments atduring Marchthe 31,second quarter of 2026 compared to the same period in 2025.

Loss on early retirement of debt of $0.8 million for the firstsix quartermonths ofended June 30, 2025 was due to the payoff of debt in conjunction with the disposition of Highridge in 2025 with no corresponding activity during the firstsix quartermonths ofended June 30, 2026.

Gain on remeasurement of co-investment of $0.3 million for the firstsix quartermonths ofended June 30, 2025 resulted from the Company’s consolidation of its investment in Artizan in 2025 with no corresponding activity during the firstsix quartermonths ofended June 30, 2026.

As of MarchJune 31,30, 2026, the Company had $38.0$58.3 million of unrestricted cash and cash equivalents and $96.5$92.2 million in marketable securities, all of which were equity securities or available for sale debt 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 the next twelve months. Additionally, the capital markets continue to be available and the Company is able to generate cash from the disposition of real estate assets to finance additional cash flow needs, including continued development and select acquisitions. In the event that economic disruptions occur, the Company may further utilize other resources such as its cash reserves, lines of credit, commercial paper or decreased investment in redevelopment activities to supplement operating cash flows. The timing, source and amounts of cash flows provided by or used in financing activities and investing activities are sensitive to changes in interest rates and other fluctuations in the capital markets environment, which can affect the Company’s plans for acquisitions, dispositions, development and redevelopment activities.

As of MarchJune 31,30, 2026, Moody’s Investor Service, and Standard and& Poor’s credit agencies rated Essex Property Trust, Inc. and Essex Portfolio, L.P. Baa1/Stable, and BBB+/Stable, respectively.

As of MarchJune 31,30, 2026, the Company had two unsecured lines of credit aggregating $1.58 billion, including a $1.5 billion unsecured line of credit and a $75.0 million working capital unsecured line of credit. As of MarchJune 31,30, 2026, there was no amount outstanding on the Company’s $1.5 billion unsecured line of credit. The underlying interest rate is based on a tiered rate structure tied to the Company’s long-term unsecured credit ratings and was at Secured Overnight Financing Rate (“SOFR”) plus 0.775% as of MarchJune 31,30, 2026. This facility is scheduled to mature in January 2030, with two six-month extensions, exercisable at the Company’s option. The Company may elect to increase the facility by up to an additional $1.0 billion, to an aggregate size of $2.5 billion, if the lenders permit. As of MarchJune 31,30, 2026, there was $4.7no millionamount outstanding on the Company’s $75.0 million working capital unsecured line of credit. The underlying interest rate on the $75.0 million line is based on a tiered rate structure tied to the Company’s long-term unsecured credit ratings and was at SOFR plus 0.775% as of MarchJune 31,30, 2026. InThis Februaryfacility 2026, the Company extended theis scheduled maturityto tomature July 2028.

As of MarchJune 31,30, 2026, the Company had an unsecured commercial paper program (the “Commercial Paper Program”) to issue unsecured commercial paper notes with varying maturities up to 397 days from the date of issue (the “Notes”). As of MarchJune 31,30, 2026, there werewas no$345.0 Notesmillion outstanding under the Commercial Paper Program. Amounts available under the Commercial Paper Program may be borrowed, repaid and re-borrowed from time to time, with the maximum aggregate face or principal amount outstanding at any one time not exceeding $750.0 million. The Company’s $1.5 billion unsecured line of credit facility serves as a liquidity backstop and any issuances under the Commercial Paper Program reduce the available borrowing capacity. The Notes rank equally in right of payment with all other senior unsecured senior obligations of the Operating Partnership and are unconditionally guaranteed by the Company. The Company has used and expects to continue to use the proceeds from the Notes for general corporate purposes and working capital purposes.

During the threesix months ended MarchJune 31,30, 2026, the Company did not issue any shares of its common stock through the 2024 ATM Program.

As of MarchJune 31,30, 2026, $900.0 million of shares of common stock remained available to be sold under the 2024 ATM Program, pending the settlement of outstanding forward sale agreements.

In SeptemberMay 2022,2026, the Company announced that its Board of Directors approved a new stock repurchase plan, without an expiration date, 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 September 2022. During the threesix months ended MarchJune 31,30, 2026, the Company repurchased and retired 205,740254,001 shares totaling $50.2$61.9 million, including commissions, at an average price per share of $244.06.$243.76 under the previous plan. As of MarchJune 31,30, 2026, the Company had $252.5$500.0 million of purchase authority remaining under the current stock repurchase plan.

As of MarchJune 31,30, 2026, the Company’s development pipeline was comprised of one consolidated development project of 543 apartment homes and various predevelopment projects, with total incurred costs of $159.5$184.1 million, and estimated remaining project costs of approximately $182.4$160.5 million, for total estimated project costs of $341.9$344.6 million.

The Company utilizes co-investments as an alternative source of capital for acquisitions of both operating and development communities. The Company had an interest in 7,4837,265 apartment homes in operating communities with joint ventures and technology co-investments for a total book value of $317.9$311.8 million as of MarchJune 31,30, 2026.

While the Company’s management believes the assumptions underlying its forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control, which could 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. 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: 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,impacts; including from tariffs imposed by the current presidential administration and the threat of such tariffs;tariffs, geopolitical tensions and regional conflicts, and the related impacts on macroeconomic conditions, including, among other things, interest rates and inflation; the terms of any refinancing may not be as favorable as the terms of existing indebtedness; the Company’s inability to maintain its investment grade credit rating with the rating agencies; the Company may be unsuccessful in the management of its relationships with its co-investment partners; the Company may fail to achieve its business objectives; time of actual completion and/or stabilization of development and redevelopment projects, including potential delays due to supply shortages related to tariffs and/or labor shortages related to deportations or threat of deportationsprojects; estimates of future income from an acquired property may prove to be inaccurate; 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 and the anticipated or actual impact of future changes in laws or regulations, including eviction moratoriaregulations; unexpected difficulties in leasing of future development projects; volatility in financial and securities markets; the Company’s failure to successfully operate acquired properties; unforeseen consequences from cyber-intrusion; government approvals, actions and initiatives, including the need for compliance with environmental requirements; and those further risks, special considerations, and other factors referred to in this quarterly report on Form 10-Q, in the Company’s annual report on Form 10-K for the year ended December 31, 2025, 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. All forward-looking statements are made as of the date hereof, the Company assumes no obligation to update or supplement this information for any reason, and therefore, they may not represent the Company’s estimates and assumptions after the date of this report.

In calculating FFO, the Company follows the definition for this measure published by NAREIT,the National Association of Real Estate Investment Trusts (“Nareit”), which is the leading REIT industry association. The Company believes that, under the NAREITNareit FFO definition, the two most significant adjustments made to net income are (i) the exclusion of historical cost depreciation and (ii) the exclusion of gains and losses from the sale of previously depreciated properties. The Company agrees that these two NAREITNareit adjustments are useful to investors for the following reasons: