Essex Property Trust ESS · USD

Segment InformationThe Company’s segment disclosures present the measure used by the chief operating decision maker (“CODM”) for purposes of assessing each segment’s performance. The Company’s CODM is a group comprised of its Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, and Chief Investment Officer, who use net operating income (“NOI”) to assess the performance of the business for the Company’s reportable operating segments. NOI represents total property revenues less direct property operating expenses.The CODM evaluates the Company’s operating performance geographically. The Company defines its reportable operating segments as the three geographical regions in which its communities are located: Southern California, Northern California and Seattle Metro.Excluded from segment revenues and NOI are management and other fees from affiliates and interest and other income (loss). Other real estate assets revenues, property operating expenses, including real estate taxes, and NOI included in the following schedule consist of revenues generated from retail space, commercial properties, held for sale properties, disposition properties and straight-line adjustments for concessions. Executive management does not evaluate such operating performance geographically. Other non-segment assets include items such as real estate under development, co-investments, real estate held for sale, cash and cash equivalents, marketable securities, notes and other receivables, and prepaid expenses and other assets.

RevenuesDisaggregated RevenueThe following table presents the Company’s revenues disaggregated by revenue source for the periods presented ($ in thousands):Year Ended December 31,202520242023Rental income$1,850,551 $1,735,411 $1,636,070 Other property27,413 28,774 22,194 Management and other fees from affiliates9,381 10,265 11,131 Total revenues$1,887,345 $1,774,450 $1,669,395 The following table presents the Company’s rental and other property revenues disaggregated by geographic operating segment for the periods presented ($ in thousands):Year Ended December 31,202520242023Southern California$763,124 $714,975 $654,422 Northern California760,821 663,825 628,880 Seattle Metro313,410 295,002 282,092 Other real estate assets (1)40,609 90,383 92,870 Total rental and other property revenues$1,877,964 $1,764,185 $1,658,264 (1)Other real estate assets consist of revenues generated from retail space, commercial properties, held for sale properties, disposition properties and straight-line rent adjustments for concessions. Executive management does not evaluate such operating performance geographically.The following table presents the Company’s rental and other property revenues disaggregated by current property category status for the periods presented ($ in thousands):Year Ended December 31,202520242023Same-property (1)$1,642,989 $1,590,404 $1,540,045 Acquisitions (2)169,002 58,158 1,037 Non-residential/other, net (3)64,952 115,644 119,725 Straight line rent concessions (4)1,021 (21)(2,543)Total rental and other property revenues$1,877,964 $1,764,185 $1,658,264 (1)Same-property includes properties that have comparable stabilized results as of January 1, 2024 and are consolidated by the Company for the years ended December 31, 2025, 2024 and 2023. A community is considered to have reached stabilized operations once it achieves an initial occupancy of 90%.(2)Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2024.(3)Non-residential/other, net consists of revenues generated from retail space, commercial properties, held for sale properties, disposition properties, student housing, properties undergoing significant construction activities that do not meet our redevelopment criteria, and two communities located in the California counties of Santa Barbara and Santa Cruz, which the Company does not consider its core markets.(4)Represents straight-line concessions for residential operating communities.

Commitments and ContingenciesThe Company’s total minimum lease payment commitments, underground leases, parking leases, and operating leases are disclosed in Note 11, Lease Agreements - Company as Lessee.To the extent that an environmental matter arises or is identified in the future that has other than a remote risk of having a material impact on the financial statements, the Company will disclose the estimated range of possible outcomes associated with it and, if an outcome is probable, accrue an appropriate liability for that matter. The Company will consider whether any such matter results in an impairment of value on the affected property and, if so, the impairment will be recognized.The Company cannot determine the magnitude of any potential liability to which it may be subject arising out of unknown environmental conditions with respect to the communities currently or formerly owned by the Company. No assurance can be given that: existing environmental assessments conducted with respect to any of these communities have revealed all environmental conditions or potential liabilities associated with such conditions; any prior owner or operator of a property did not create any material environmental condition not known to the Company; or a material unknown environmental condition does not otherwise exist as to any one or more of the communities. The Company has limited insurance coverage for some of the types of environmental conditions and associated liabilities described above.The Company has entered into transactions that may require the Company to pay the tax liabilities of the partners or members in the Operating Partnership or in the DownREIT entities. These transactions are within the Company’s control. Although the Company intends to hold the contributed assets or defer recognition of gain on their sale pursuant to like-kind exchange rules under Section 1031 of the IRC, if the Company were to sell the contributed assets, the tax liabilities incurred may have a material impact on the Company’s financial position.There continue to be lawsuits against owners and managers of certain of the Company’s apartment communities alleging personal injury and property damage caused by the presence of mold in the residential units and common areas of those communities. Some of these lawsuits have resulted in substantial monetary judgments or settlements in the past.

Unsecured DebtEssex does not have indebtedness as debt is incurred by the Operating Partnership. Essex guarantees the Operating Partnership’s unsecured debt including the revolving credit facilities for the full term of the facilities.Unsecured debt consisted of the following as of December 31, 2025 and 2024 ($ in thousands):Weighted Average MaturityIn Years as of December 31, 2025December 31,20252024Term loan - variable rate, net$596,668$298,5714.7Bonds public offering - fixed rate, net5,419,2535,175,2177.1Unsecured debt, net (1)6,015,9215,473,788 Lines of credit—137,945N/ACommercial paper——N/ATotal unsecured debt$6,015,921$5,611,733 Weighted average interest rate on fixed rate unsecured bonds private placement and bonds public offering3.7 %3.4 % Weighted average interest rate on variable rate term loan4.1 %4.2 % Weighted average interest rate on lines of credit4.8 %5.7 % Weighted average interest rate on commercial paper— %N/A(1)Includes unamortized discounts, net of premiums, of $3.6 million and unamortized premiums, net of discounts, of $0.1 million and unamortized debt issuance costs of $30.4 million and $26.3 million as of December 31, 2025 and 2024, respectively.Term loanIn October 2022, the Operating Partnership obtained a $300.0 million unsecured term loan priced at Adjusted SOFR plus 0.85% with an original maturity date of October 2024 with three 12-month extension options, exercisable at the Company’s option. In September 2024, the Company exercised its first option, extending the maturity date to October 2025. In October 2025, the Company executed an amendment of its existing $300.0 million unsecured term loan to extend the maturity date from October 2027 to January 2031, inclusive of extension options exercisable at the Company’s option. The interest rate was reduced to SOFR plus 0.85% and is swapped to an all-in fixed rate of 4.2% and the swap has a termination date of October 2026.In May 2025, the Operating Partnership obtained a new $300.0 million unsecured term loan priced at SOFR plus 0.85% which is based on a tiered rate structure tied to the Company’s long-term unsecured credit rating with a one-year delayed draw feature. The Company may elect to increase this facility by up to an additional $300.0 million, to an aggregate size of $600.0 million, if the lenders permit. This term loan is scheduled to mature in May 2028, with two one-year extension options, exercisable at the option of the Company.

The Company has developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of its critical systems and information. We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF). Accordingly, we use NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. The Company’s cybersecurity risk management program is integrated into our overall risk management program, and shares common methodologies, reporting channels and governance processes that apply across the risk management program to other legal, compliance, strategic, operational and financial risk areas.The Company’s cybersecurity risk management program employs several different measures, including perimeter monitoring, endpoint monitoring and user management, designed to assess and identify cybersecurity risks. The Company’s technology management team is principally responsible for managing the Company’s cybersecurity risk assessment and management processes. The Company’s technology management team conducts risk assessments designed to help identify material cybersecurity risks to our critical systems and information. The Company’s technology management team and third-party professionals perform penetration tests, vulnerability scans, and patch management to assess and protect the confidentiality, integrity and availability of its critical systems and information. The Company's risk assessment and management processes also address emerging cybersecurity threats, including those that are AI-enabled. The Company provides training to its employees on cybersecurity matters, conducts periodic tabletop incident response exercises, performs recurring awareness testing to facilitate compliance with the Company’s cybersecurity policies, and maintains a method for its employees and consultants to communicate any suspected cybersecurity incident. Furthermore, the Company has adopted internal guidelines designed to address employee use of third-party artificial intelligence tools and protect confidential Company information from unauthorized disclosure to such tools. In addition, the Company evaluates key third-party service providers before the Company grants the service provider access to its information systems and has a process in place to ensure that future access is appropriate.

OrganizationThe accompanying consolidated financial statements present the accounts of Essex Property Trust, Inc. (“Essex” or the “Company”), which include the accounts of the Company and Essex Portfolio, L.P. and its subsidiaries (the “Operating Partnership,” which holds the operating assets of the Company). Unless otherwise indicated, the notes to consolidated financial statements apply to both the Company and the Operating Partnership.Essex is the sole general partner of the Operating Partnership with a 96.6% general partner interest and the limited partners owned a 3.4% interest as of December 31, 2025. The limited partners may convert their Operating Partnership units into an equivalent number of shares of Essex common stock. Total Operating Partnership limited partnership units (“OP Units,” and the holders of such OP Units, “Unitholders”) outstanding were 2,250,339 and 2,331,251 as of December 31, 2025 and 2024, respectively, and the redemption value of the OP Units, based on the closing price of the Company’s common stock, totaled $588.9 million and $665.4 million, as of December 31, 2025 and 2024, respectively. The Company has reserved shares of common stock for such conversions.As of December 31, 2025, the Company owned or had ownership interests in 259 operating apartment communities, comprising 63,077 apartment homes, excluding the Company’s ownership interests in preferred equity co-investments, loan investments, two operating commercial buildings and a development pipeline comprised of one consolidated project and various predevelopment projects. The operating apartment communities are located in Southern California (primarily Los Angeles, Orange, San Diego, and Ventura counties), Northern California (the San Francisco Bay Area) and the Seattle metropolitan areas.

Equity TransactionsAt-the-market Equity ProgramIn August 2024, the Company entered into a new equity distribution agreement pursuant to which the Company may, at its discretion, offer and sell shares of its common stock having an aggregate gross sales price of up to $900.0 million (the “2024 ATM Program”). The Company may also enter into forward sales agreements of its common stock, set the price, and defer receipt of proceeds until a later date. The 2024 ATM Program replaced the prior equity distribution agreement entered into in September 2021 (the “2021 ATM Program”), which was terminated upon the establishment of the 2024 ATM Program. For the years ended December 31, 2025 and 2024, the Company did not sell any shares of its common stock through the 2024 ATM Program nor the 2021 ATM Program.During the year ended December 31, 2025, the Company entered into forward sale agreements with certain financial institutions acting as forward purchasers under the 2024 ATM Program with respect to 52,600 shares of common stock at an initial gross weighted average forward price of $314.06 per share, which are to be settled by September 2026. The Company did not enter into any forward sale agreements during the year ended December 31, 2024.As of December 31, 2025, a total of $900.0 million of shares remain available to be sold under the 2024 ATM Program, pending the settlement of outstanding forward sale agreements.Operating Partnership Units and Long-Term Incentive Plan (“LTIP”) UnitsAs of December 31, 2025 and 2024, the Operating Partnership had outstanding 2,195,792 and 2,263,756 OP Units respectively. As of December 31, 2025 and 2024 the Operating Partnership had 54,547 and 67,495 vested LTIP units respectively. The Operating Partnership’s general partner, Essex, owned 96.6% and 96.5% of the partnership interests in the Operating Partnership as of December 31, 2025 and 2024, respectively, and Essex is responsible for the management of the Operating Partnership’s business. As the general partner of the Operating Partnership, Essex effectively controls the ability to issue common stock of Essex upon a limited partner’s notice of redemption. Essex has generally acquired OP Units upon a limited partner’s notice of redemption in exchange for shares of its common stock.

Mortgage Notes PayableEssex does not have any indebtedness as all debt is incurred by the Operating Partnership. Mortgage notes payable consisted of the following as of December 31, 2025 and 2024 ($ in thousands):December 31, 20252024Fixed rate mortgage notes payable $526,662 $674,092 Variable rate mortgage notes payable (1)257,686 315,792 Total mortgage notes payable (2)$784,348 $989,884 Number of properties securing mortgage notes14 19 Remaining terms1-21 years 1-22 yearsWeighted average interest rate4.4 %4.2 %The aggregate scheduled principal payments of mortgage notes payable as of December 31, 2025 were as follows ($ in thousands):2026$99,405 202784,397 202868,332 20291,456 203066,592 Thereafter466,889 Total$787,071 (1)Variable rate mortgage notes payable, including $258.8 million in bonds that have been converted to variable rate through total return swap contracts, consists of multifamily housing mortgage revenue bonds secured by deeds of trust on rental properties and guaranteed by collateral pledge agreements, payable monthly at a variable rate (approximately 3.6% as of December 2025 and 4.2% as of December 2024) including credit enhancement and underwriting fees. Among the terms imposed on the properties, which are security for the bonds, is a requirement that 20% of the apartment homes are subject to tenant income criteria. Once the bonds have been repaid, the properties may no longer be obligated to comply with such tenant income criteria. Principal balances are due in full at various maturity dates from September 2026 through December 2046. In October 2024, the Company assumed $95.0 million of variable rate secured loans as part of its acquisition of its joint venture partner’s interests in the BEX II portfolio. The $95.0 million was paid off in September 2025.(2)Includes total unamortized discount of $0.2 million and reduced by unamortized debt issuance costs of $2.5 million and $2.6 million as of December 31, 2025 and 2024, respectively.For the Company’s mortgage notes payable as of December 31, 2025, monthly interest expense and principal amortization, excluding balloon payments, totaled approximately $3.5 million and $0.2 million, respectively. Repayment of debt before the scheduled maturity date could result in prepayment penalties.