ESSEX PROPERTY TRUST, INC. - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
EX-99.1 - EXHIBIT 99.1 - ESSEX PROPERTY TRUST, INC.	s001674x1_ex99-1.htm
8-K - FORM 8-K - ESSEX PROPERTY TRUST, INC.	s001674x1_8k.htm

Exhibit 99.2

Q1 2017 Supplemental

Table of Contents

	Page
Consolidated Operating Results	S-1 – S-2
Consolidated Funds From Operations	S-3
Consolidated Balance Sheets	S-4
Debt Summary – March 31, 2017	S-5
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – March 31, 2017	S-6
Portfolio Summary by County – March 31, 2017	S-7
Operating Income by Quarter – March 31, 2017	S-8
Same-Property Results by County – Quarters ended March 31, 2017 and 2016, and December 31, 2016	S-9
Same-Property Operating Expenses	S-10
Development Pipeline – March 31, 2017	S-11
Redevelopment Pipeline – March 31, 2017	S-12
Capital Expenditures – March 31, 2017	S-12.1
Co-Investments – March 31, 2017	S-13
Assumptions for 2017 FFO Guidance Range	S-14
Reconciliation of Projected EPS, FFO and Core FFO per diluted share	S-14.1
Summary of Apartment Community Acquisitions and Dispositions Activity	S-15
2017 MSA Level Forecasts: Supply, Jobs and Apartment Market Conditions	S-16
Reconciliations of Non-GAAP Financial Measures and Other Terms	S-17.1 – S-17.4

E S S E X P R O P E R T Y T R U S T, I N C.

Consolidated Operating Results	Three Months Ended
(Dollars in thousands, except share and per share amounts)	March 31,
	2017			2016

Revenues:
Rental and other property	$	333,168		$	312,178
Management and other fees		2,236			2,024
		335,404			314,202

Expenses:
Property operating		99,513			94,490
Depreciation and amortization		115,503			109,707
General and administrative		10,601			9,182
Acquisition and investment related costs		556			828
		226,173			214,207
Earnings from operations		109,231			99,995

Interest expense, net ⁽¹⁾		(51,999	)		(49,343	)
Interest and other income		6,764			5,208
Equity income from co-investments		10,899			15,068
Gain on sale of real estate and land		26,174			20,258
Deferred tax expense on gain on sale of real estate and land		-			(4,279	)
Gain on remeasurement of co-investment		86,482			-
Net income		187,551			86,907
Net income attributable to noncontrolling interest		(8,587	)		(5,071	)
Net income attributable to controlling interest		178,964			81,836
Dividends to preferred stockholders		-			(1,314	)
Excess of redemption value of preferred stock over the carrying value		-			(2,541	)
Net income available to common stockholders	$	178,964		$	77,981

Net income per share - basic	$	2.73		$	1.19

Shares used in income per share - basic		65,549,484			65,405,654

Net income per share - diluted	$	2.72		$	1.19

Shares used in income per share - diluted		65,859,490			65,557,639

⁽¹⁾	Refer to page S-17.2, the section titled "Interest Expense, Net" for additional information.

See Company's 10-K and 10-Q for additional disclosures

S-1

E S S E X P R O P E R T Y T R U S T, I N C.

Consolidated Operating Results	Three Months Ended
Selected Line Item Detail	March 31,
(Dollars in thousands)	2017		2016

Rental and other property
Rental	$	310,122	$	292,519
Other property		23,046		19,659
Rental and other property	$	333,168	$	312,178

Property operating expenses
Real estate taxes	$	35,868	$	34,419
Administrative and insurance		20,555		19,034
Maintenance and repairs		18,901		18,018
Utilities		16,655		15,466
Property management		7,534		7,553
Property operating expenses	$	99,513	$	94,490


Interest and other income
Marketable securities and other interest income	$	4,880	$	4,468
Gain on sale of marketable securities and other investments		1,605		740
Insurance reimbursements and other		279		-
Interest and other income	$	6,764	$	5,208

Equity income from co-investments
Equity income from co-investments	$	5,253	$	4,952
Income from preferred equity investments		5,646		2,681
Gain on sale of co-investment communities		-		7,435
Equity income from co-investments	$	10,899	$	15,068

Noncontrolling interest
Limited partners of Essex Portfolio, L.P.	$	6,146	$	2,784
DownREIT limited partners' distributions		1,550		1,434
Third-party ownership interest		891		853
Noncontrolling interest	$	8,587	$	5,071

See Company's 10-K and 10-Q for additional disclosures

S-2

E S S E X P R O P E R T Y T R U S T, I N C.

Consolidated Funds From Operations ⁽¹⁾	Three Months Ended
(Dollars in thousands, except share and per share amounts and in footnotes)	March 31,
	2017			2016			% Change

Funds from operations attributable to common stockholders and unitholders (FFO)
Net income available to common stockholders	$	178,964		$	77,981
Adjustments:
Depreciation and amortization		115,503			109,707
Gains not included in FFO		(112,656	)		(27,693	)
Deferred tax expense on gain on sale of real estate and land - Taxable REIT Subsidiary activity		-			4,279
Depreciation add back from unconsolidated co-investments		12,854			12,023
Noncontrolling interest related to Operating Partnership units		6,146			2,784
Depreciation attributable to third party ownership and other ⁽²⁾		(25	)		6
Funds from operations attributable to common stockholders and unitholders	$	200,786		$	179,087
FFO per share-diluted	$	2.95		$	2.64			11.7	%

Components of the change in FFO
Non-core items:
Acquisition and investment related costs	$	556		$	828
Gain on sale of marketable securities and other investments		(1,605	)		(740	)
Interest rate hedge ineffectiveness⁽³⁾		(6	)		-
Excess of redemption value of preferred stock over the carrying value		-			2,541
Insurance reimbursements		(25	)		-
Core funds from operations attributable to common stockholders and unitholders		199,706			181,716
Core FFO per share-diluted	$	2.94		$	2.68			9.7	%

Changes in core items:
Same-property NOI	$	11,217
Non-same property NOI		4,750
Management and other fees, net		212
FFO from co-investments		4,097
Interest and other income		666
Interest expense		(2,650	)
General and administrative		(1,419	)
Other items, net		1,117
	$	17,990

Weighted average number of shares outstanding diluted ⁽⁴⁾		67,974,466			67,866,703

⁽¹⁾	Refer to page S-17.1, the section titled "Funds from Operations ("FFO")" for additional information on the Company's definition and use of FFO and Core FFO.
⁽²⁾	The Company consolidates certain co-investments. Noncontrolling interest's share of net operating income in these investments for the three months ended March 31, 2017 was $1.2 million.
⁽³⁾	Interest rate swaps are generally adjusted to fair value through other comprehensive income (loss). However, because certain of our interest rate swaps do not have a 0% LIBOR floor, while related hedged debt in these cases is subject to a 0% LIBOR floor, the portion of the change in fair value of these interest rate swaps attributable to this mismatch is recorded as noncash interest rate hedge ineffectiveness through interest expense.
⁽⁴⁾	Assumes conversion of all outstanding operating partnership interests in the Operating Partnership and excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the DownREIT limited partnership units for cash and does not consider them to be common stock equivalents.

See Company's 10-K and 10-Q for additional disclosures

S-3

E S S E X P R O P E R T Y T R U S T, I N C.

Consolidated Balance Sheets

(Dollars in thousands)

	March 31, 2017			December 31, 2016

Real Estate:
Land and land improvements	$	2,719,064		$	2,559,743
Buildings and improvements		10,492,413			10,116,563
		13,211,477			12,676,306
Less: accumulated depreciation		(2,418,793	)		(2,311,546	)
		10,792,684			10,364,760
Real estate under development		239,685			190,505
Co-investments		1,071,258			1,161,275
Real estate held for sale, net		-			101,957
		12,103,627			11,818,497
Cash and cash equivalents, including restricted		100,252			170,302
Marketable securities		138,977			139,189
Notes and other receivables		50,855			40,970
Prepaid expenses and other assets		53,716			48,450
Total assets	$	12,447,427		$	12,217,408

Unsecured debt, net	$	3,195,129		$	3,246,779
Mortgage notes payable, net		2,231,145			2,191,481
Lines of credit		176,233			125,000
Distributions in excess of investments in co-investments		35,534			-
Other liabilities		374,968			317,227
Total liabilities		6,013,009			5,880,487
Redeemable noncontrolling interest		45,415			44,684
Equity:
Common stock		6			6
Additional paid-in capital		7,035,178			7,029,679
Distributions in excess of accumulated earnings		(741,204	)		(805,409	)
Accumulated other comprehensive loss, net		(29,959	)		(32,098	)
Total stockholders' equity		6,264,021			6,192,178
Noncontrolling interest		124,982			100,059
Total equity		6,389,003			6,292,237
Total liabilities and equity	$	12,447,427		$	12,217,408

See Company's 10-K and 10-Q for additional disclosures

S-4

E S S E X P R O P E R T Y T R U S T, I N C.

Debt Summary - March 31, 2017

(Dollars in thousands, except in footnotes)

										Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:

					Weighted Average
	Balance Outstanding				Interest Rate			Maturity in Years			Unsecured				Secured				Total				Weighted Average Interest Rate			Percentage of Total Debt
Unsecured Debt, net
Bonds private - fixed rate		$	315,000			4.5	%		3.4	2017		$	40,000			$	74,776			$	114,776			4.8	%		2.1	%
Bonds public - fixed rate			2,550,000			3.7	%		6.8	2018			-				301,858				301,858			5.3	%		5.6	%
Term loan ⁽¹⁾			350,000			2.2	%		4.9	2019			75,000				578,114				653,114			4.3	%		12.1	%
Unamortized net discounts and debt issuance costs			(19,871	)		-			-	2020			-				695,070				695,070			4.8	%		12.9	%
			3,195,129			3.6	%		6.3	2021			500,000				52,831				552,831			4.3	%		10.2	%
Mortgage Notes Payable, net										2022			650,000				42,649				692,649			3.0	%		12.8	%
Fixed rate - secured			1,910,519			4.7	%		3.8	2023			600,000				2,188				602,188			3.6	%		11.1	%
Variable rate - secured ⁽²⁾			281,552			1.5	%		19.2	2024			400,000				2,317				402,317			4.0	%		7.4	%
Unamortized premiums and debt issuance costs, net			39,074			-			-	2025			500,000				16,056				516,056			3.5	%		9.6	%
Total mortgage notes payable			2,231,145			4.3	%		5.7	2026			450,000				55,091				505,091			3.4	%		9.3	%
										2027			-				166,250				166,250			2.5	%		3.1	%
Unsecured Lines of Credit										Thereafter			-				204,871				204,871			2.1	%		3.8	%
Line of credit ⁽³⁾			175,000			1.9	%			Subtotal			3,215,000				2,192,071				5,407,071			3.8	%		100.0	%
Line of credit ⁽⁴⁾			1,233			1.9	%			Debt Issuance Costs			(17,278	)			(6,938	)			(24,216	)	NA			NA
Total lines of credit			176,233			1.9	%			Premiums/(Discounts)			(2,593	)			46,012				43,419			NA			NA
										Total		$	3,195,129			$	2,231,145			$	5,426,274			3.8	%		100.0	%
Total debt, net		$	5,602,507			3.8	%

Capitalized interest for the three months ended March 31, 2017 was approximately $3.3 million.

⁽¹⁾	The unsecured term loan has a variable interest rate of LIBOR plus 0.95%. The Company has interest rate swap contracts with an aggregate notional amount of $200 million, which effectively converts the interest rate on $200 million of the term loan to a fixed rate of 2.3%.
⁽²⁾	$281.6 million of variable rate debt is tax exempt to the note holders. $20.7 million is subject to interest rate cap protection agreements.
⁽³⁾	The unsecured line of credit facility aggregates to $1 billion. The line matures in December 2020 with one 18-month extension, exercisable at the Company's option. The underlying interest rate on this line is based on a tiered rate structure tied to the Company's corporate ratings and is currently at LIBOR plus 0.90%.
⁽⁴⁾	The unsecured line of credit facility is $25 million and is scheduled to mature in January 2018. The underlying interest rate on this line is based on a tiered rate structure tied to the Company's corporate ratings and is currently at LIBOR plus 0.90%.

See Company's 10-K and 10-Q for additional disclosures

S-5

E S S E X P R O P E R T Y T R U S T, I N C.

Capitalization Data, Public Bond Covenants, Credit Ratings and Selected Credit Ratios - March 31, 2017

(Dollars and shares in thousands, except per share amounts)

Capitalization Data

Public Bond Covenants ⁽¹⁾

Actual

Requirement

Total debt, net

5,602,507

Adjusted Debt to Adjusted Total Assets:

38 %

< 65%

Common stock and potentially dilutive securities

Common stock outstanding

65,570

Limited partnership units ⁽¹⁾

2,328

Options-treasury method

Secured Debt to Adjusted Total Assets:

15 %

< 40%

Total shares of common stock and potentially dilutive securities

67,983

Common stock price per share as of March 31, 2017

231.53

Interest Coverage:

394 %

> 150%

Total equity capitalization

15,740,104

Total market capitalization

21,342,611

Unsecured Debt Ratio ⁽²⁾:

292 %

> 150%

Ratio of debt to total market capitalization

26.3

Selected Credit Ratios ⁽³⁾

Actual

Credit Ratings

Rating Agency

Rating

Outlook

Net IndebtednessDivided by Adjusted EBITDA, normalized and annualized:

5.7

Fitch

BBB+

Stable

Moody's

Baa1

Stable

Unencumbered NOI to Adjusted Total NOI:

68%

Standard & Poor's

BBB+

Stable

⁽¹⁾

Refer to page S-17.3 for additional information on the Company's Public Bond Covenants.

⁽¹⁾

Assumes conversion of all outstanding operating partnership interests in the Operating Partnership into shares of the Company's common stock.

⁽²⁾

Unsecured Debt Ratio is unsecured assets (excluding investments in co-investments) divided by unsecured indebtedness.

⁽³⁾

Refer to pages S-17.1 to S-17.4, the section titled "Reconciliations of Non-GAAP Financial Measures and Other Terms" for additional information on the Company's Selected Credit Ratios.

See Company's 10-K and 10-Q for additional disclosures

S-6

E S S E X P R O P E R T Y T R U S T, I N C.

Portfolio Summary as of March 31, 2017

	Apartment Homes								Average Monthly Rental Rate ⁽¹⁾						Percent of NOI ⁽²⁾
Region - County	Consolidated⁽³⁾		Unconsolidated Co-investments ⁽⁴⁾		Apartment Homes in Development ⁽⁵⁾		Total		Consolidated		Unconsolidated Co-investments⁽⁶⁾		Total ⁽⁷⁾		Consolidated			Unconsolidated Co-investments ⁽⁶⁾			Total ⁽⁷⁾

Southern California
Los Angeles County		9,387		1,418		-		10,805	$	2,342	$	2,015	$	2,319		19.9	%		12.9	%		19.4	%
Orange County		5,553		1,379		-		6,932		2,072		1,811		2,043		10.6	%		11.3	%		10.7	%
San Diego County		5,203		616		-		5,819		1,823		1,667		1,815		8.7	%		4.6	%		8.3	%
Ventura County		2,577		693		-		3,270		1,692		1,988		1,727		4.3	%		6.3	%		4.5	%
Other Southern CA		623		249		-		872		1,566		1,536		1,561		0.9	%		1.6	%		0.9	%
Total Southern California		23,343		4,355		-		27,698		2,070		1,870		2,052		44.4	%		36.7	%		43.8	%

Northern California
Santa Clara County		7,356		2,053		476		9,885		2,637		2,704		2,645		18.2	%		20.5	%		18.4	%
Alameda County		2,954		1,983		-		4,937		2,453		2,344		2,424		6.5	%		17.7	%		7.5	%
San Mateo County		1,830		197		320		2,347		2,797		2,812		2,798		5.0	%		2.6	%		4.8	%
Contra Costa County		2,270		49		-		2,319		2,242		4,429		2,266		4.9	%		0.6	%		4.5	%
San Francisco		1,342		463		545		2,350		3,035		3,311		3,079		3.6	%		7.5	%		3.9	%
Other Northern CA		96		-		-		96		2,738		-		2,738		0.3	%		-			0.3	%
Total Northern California		15,848		4,745		1,341		21,934		2,598		2,638		2,604		38.5	%		48.9	%		39.4	%

Seattle Metro		10,238		1,958		-		12,196		1,734		1,605		1,723		17.1	%		14.4	%		16.8	%

Total		49,429		11,058		1,341		61,828	$	2,167	$	2,165	$	2,167		100.0	%		100.0	%		100.0	%

⁽¹⁾	Average monthly rental rate is defined as the total potential monthly rental revenue (actual rent for occupied apartment homes plus market rent for vacant apartment homes) divided by the number of apartment homes.
⁽²⁾	Actual NOI for the quarter ended March 31, 2017. See the section titled "Net Operating Income ("NOI") and Same-Property NOI Reconciliations" on page S-17.3.
⁽³⁾	Includes all apartment communities with rents.
⁽⁴⁾	Includes two rental income producing development communities in lease-up which consist of 627 apartment homes.
⁽⁵⁾	Includes development communities with no rental income.
⁽⁶⁾	Co-investment amounts weighted for Company's pro rata share.
⁽⁷⁾	At Company's pro rata share.

See Company's 10-K and 10-Q for additional disclosures

S-7

E S S E X P R O P E R T Y T R U S T, I N C.

Operating Income by Quarter ⁽¹⁾

(Dollars in thousands)

	Apartment Homes		Q1 '17			Q4 '16			Q3 '16			Q2 '16			Q1 '16

Rental and other property revenues:
Same-property		46,128	$	302,125		$	300,808		$	300,069		$	293,093		$	287,850
Acquisitions⁽²⁾		2,081		13,751			3,018			2,475			2,354			866
Development ⁽³⁾		360		4,334			4,270			4,303			4,062			3,610
Redevelopment		621		4,814			4,757			4,775			4,703			4,502
Non-residential/other, net⁽⁴⁾		239		8,144			14,052			15,456			15,350			15,350
Total rental and other property revenues		49,429		333,168			326,905			327,078			319,562			312,178

Property operating expenses:
Same-property				90,455			91,522			91,261			88,393			87,397
Acquisitions⁽²⁾				4,552			906			831			850			313
Development ⁽³⁾				1,576			1,528			1,569			1,497			1,339
Redevelopment				1,526			1,558			1,565			1,477			1,497
Non-residential/other, net^{(4) (5)}				1,404			3,483			4,135			3,862			3,944
Total property operating expenses				99,513			98,997			99,361			96,079			94,490

Net operating income (NOI):
Same-property				211,670			209,286			208,808			204,700			200,453
Acquisitions⁽²⁾				9,199			2,112			1,644			1,504			553
Development ⁽³⁾				2,758			2,742			2,734			2,565			2,271
Redevelopment				3,288			3,199			3,210			3,226			3,005
Non-residential/other, net⁽⁴⁾				6,740			10,569			11,321			11,488			11,406
Total NOI			$	233,655		$	227,908		$	227,717		$	223,483		$	217,688

Same-property metrics
Operating margin				70	%		70	%		70	%		70	%		70	%
Annualized turnover ⁽⁶⁾				46	%		47	%		63	%		56	%		45	%
Financial occupancy ⁽⁷⁾				96.5	%		96.6	%		96.5	%		96.0	%		96.0	%

⁽¹⁾	Includes consolidated communities only.
⁽²⁾	Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2016.
⁽³⁾	Development includes properties developed which did not have comparable stabilized results as of January 1, 2016.
⁽⁴⁾	Other real estate assets consists mainly of retail space, commercial properties, boat slips, held for sale properties, and disposition properties.
⁽⁵⁾	Includes other expenses and intercompany eliminations pertaining to self-insurance.
⁽⁶⁾	Annualized turnover is defined as the number of apartment homes turned over during the quarter, annualized, divided by the total number of apartment homes.
⁽⁷⁾	Financial occupancy is defined as the percentage resulting from dividing actual rental revenue by total potential rental revenue (actual rent for occupied apartment homes plus market rent for vacant apartment homes).

See Company's 10-K and 10-Q for additional disclosures

S-8

E S S E X P R O P E R T Y T R U S T, I N C.

Same-Property Results by County - First Quarter 2017 vs. First Quarter 2016 and Fourth Quarter 2016

(Dollars in thousands, except average monthly rental rates)

						Average Monthly Rental Rate							Financial Occupancy									Gross Revenues							Sequential Gross Revenues
Region - County	Apartment Homes		Q1 '17 % of Actual NOI			Q1 '17		Q1 '16		% Change			Q1 '17			Q1 '16			% Change			Q1 '17		Q1 '16		% Change			Q4 '16		% Change

Southern California
Los Angeles County		8,523		19.6	%	$	2,342	$	2,270		3.2	%		96.2	%		96.0	%		0.2	%	$	60,392		58,305		3.6	%	$	60,420		0.0	%
Orange County		5,553		11.4	%		2,072		1,972		5.1	%		96.5	%		96.1	%		0.4	%		34,962		33,105		5.6	%		34,630		1.0	%
San Diego County		4,961		8.9	%		1,809		1,727		4.7	%		96.4	%		95.7	%		0.7	%		27,549		25,982		6.0	%		27,418		0.5	%
Ventura County		2,577		4.7	%		1,692		1,615		4.8	%		97.2	%		96.2	%		1.0	%		13,593		12,814		6.1	%		13,482		0.8	%
Other Southern CA		384		0.4	%		1,226		1,177		4.2	%		95.9	%		96.8	%		-0.9	%		1,475		1,405		5.0	%		1,467		0.5	%
Total Southern California		21,998		45.0	%		2,058		1,977		4.1	%		96.4	%		96.0	%		0.4	%		137,971		131,611		4.8	%		137,417		0.4	%

Northern California
Santa Clara County		5,925		16.7	%		2,649		2,598		2.0	%		97.1	%		96.4	%		0.7	%		48,004		46,392		3.5	%		47,614		0.8	%
Alameda County		2,954		7.0	%		2,453		2,381		3.0	%		94.8	%		95.6	%		-0.8	%		21,667		21,221		2.1	%		21,464		0.9	%
San Mateo County		1,830		5.4	%		2,797		2,714		3.1	%		97.7	%		96.0	%		1.8	%		15,861		15,121		4.9	%		15,826		0.2	%
Contra Costa County		2,270		5.3	%		2,242		2,163		3.7	%		97.2	%		96.6	%		0.6	%		15,635		14,970		4.4	%		15,577		0.4	%
San Francisco		817		1.9	%		2,472		2,405		2.8	%		95.1	%		93.4	%		1.8	%		5,994		5,753		4.2	%		6,038		-0.7	%
Other Northern CA		96		0.3	%		2,738		2,459		11.3	%		97.5	%		98.4	%		-0.9	%		801		709		12.9	%		806		-0.7	%
Total Northern California		13,892		36.6	%		2,550		2,484		2.7	%		96.6	%		96.0	%		0.6	%		107,962		104,166		3.6	%		107,325		0.6	%

Seattle Metro		10,238		18.4	%		1,734		1,619		7.1	%		96.6	%		95.8	%		0.8	%		56,192		52,073		7.9	%		56,066		0.2	%

Total Same-Property		46,128		100.0	%	$	2,134	$	2,050		4.1	%		96.5	%		96.0	%		0.5	%	$	302,125	$	287,850		5.0	%	$	300,808		0.4	%

See Company's 10-K and 10-Q for additional disclosures

S-9

E S S E X P R O P E R T Y T R U S T, I N C.

Same-Property Operating Expenses - Quarter to Date as of March 31, 2017 and 2016

(Dollars in thousands)

	Based on 46,128 apartment homes

	Q1 '17			Q1 '16			% Change			% of Op. Ex.
Same-property operating expenses:
Real estate taxes		$	31,596		$	31,375		0.7	%		34.9	%
Maintenance and repairs			17,398			16,614		4.7	%		19.2	%
Administrative			15,969			15,542		2.7	%		17.7	%
Utilities			15,007			13,988		7.3	%		16.6	%
Management fees			6,929			6,937		-0.1	%		7.7	%
Insurance			3,556			2,941		20.9	%		3.9	%
Total same-property operating expenses		$	90,455		$	87,397		3.5	%		100.0	%

See Company's 10-K and 10-Q for additional disclosures

S-10

E S S E X P R O P E R T Y T R U S T, I N C.

Development Pipeline - March 31, 2017

(Dollars in millions, except per apartment home amounts in thousands and except in footnotes)

Project Name	Location	Ownership %			Estimated Apartment Homes		Estimated Commercial sq. feet		Incurred to Date		Remaining Costs		Estimated Total Cost		Essex Est. Total Cost ⁽¹⁾			Cost per Apartment Home ⁽²⁾		Average % Occupied ⁽³⁾			% Leased ⁽³⁾			Construction Start	Initial Occupancy	Stabilized Operations

Development Projects - Consolidated ⁽⁴⁾
Station Park Green ⁽⁵⁾	San Mateo, CA		100	%		320		35,000	$	93	$	146	$	239	$	239		$	693		0.0	%		0.0	%	Q3 2015	Q1 2018	Q4 2018
Gateway Village ⁽⁶⁾	Santa Clara, CA		100	%		476		-		48		178		226		226			475		0.0	%		0.0	%	Q3 2016	Q2 2018	Q3 2019
Total Development Projects - Consolidated						796		35,000		141		324		465		465			584

Land Held for Future Development - Consolidated
Other Projects ⁽⁵⁾⁽⁷⁾	Various		100	%						110		-		110		110
Total Development Pipeline - Consolidated						796		35,000		251		324		575		575

Development Projects - Joint Venture ⁽⁴⁾
The Galloway (at Hacienda)	Pleasanton, CA		55	%		251		-		79		7		86		47			343		4.8	%		20.0	%	Q1 2015	Q1 2017	Q1 2018
Century Towers	San Jose, CA		50	%		376		2,006		152		20		172		86			456		15.4	%		21.0	%	Q3 2014	Q1 2017	Q1 2018
500 Folsom ⁽⁸⁾	San Francisco, CA		50	%		545		6,000		121		294		415		208			751		0.0	%		0.0	%	Q4 2015	Q4 2018	Q2 2020
Total Development Projects - Joint Venture						1,172		8,006		352		321		673		341		$	569

Land Held for Future Development - Joint Venture			50	%						13		1		14		7
Total Development Pipeline - Joint Venture						1,172		8,006		365		322		687		348

Grand Total - Development Pipeline						1,968		43,006	$	616	$	646	$	1,262		923
Essex Cost Incurred to Date - Pro Rata																(437	)
Essex Remaining Commitment															$	486

⁽¹⁾	The Company's share of the estimated total costs of the project.
⁽²⁾	Net of the estimated allocation to the retail component of the project.
⁽³⁾	Calculations are based on multifamily operations only and are as of March 31, 2017. As of April 24, 2017, The Galloway (at Hacienda) was 35% leased and Century Towers was 35% leased.
⁽⁴⁾	For the first quarter of 2017, the Company's cost includes $3.2 million of capitalized interest, $2.4 million of capitalized overhead and $0.6 million of development fees (such development fees reduced G&A expenses).
⁽⁵⁾	Reflects development of phases one and two. Costs incurred for phases three and four, which consist of 279 apartment homes, are included in Land Held for Future Development.
⁽⁶⁾	Cost incurred to date does not include a deduction of $4.7 million for accumulated depreciation recorded during the period when the property was held as a retail operating asset.
⁽⁷⁾	Cost incurred to date does not include a deduction of $6.3 million for accumulated depreciation recorded during the period when one property was held as a retail operating asset.
⁽⁸⁾	Estimated total cost is net of a projected value for low income housing tax credit proceeds and tax exempt bonds.

See Company's 10-K and 10-Q for additional disclosures

S-11

E S S E X P R O P E R T Y T R U S T, I N C.

Redevelopment Pipeline - March 31, 2017

(Dollars in thousands)

	Apartment Homes		Total Incurred To Date			Estimated Remaining Cost			Estimated Total Cost			Project Start Date	NOI For the three months ended
													NOI For the three months ended
Region/Project Name													2017			2016

Same-Property - Redevelopment Projects ⁽¹⁾
Southern California
Hamptons		215		$	14,000		$	9,600		$	23,600	Q1 2014
The Hallie (formerly Monterras)		292			23,000			3,400			26,400	Q1 2014
Kings Road		196			1,300			10,900			12,200	Q4 2016
The Palms at Laguna Niguel		460			1,000			7,200			8,200	Q4 2016
Northern California
Crow Canyon		400			900			5,900			6,800	Q1 2017
Seattle Metro
Park Highland		250			10,300			2,200			12,500	Q4 2014
Total Same-Property - Redevelopment Projects		1,813		$	50,500		$	39,200		$	89,700			$	7,989		$	7,329

Non-Same Property - Redevelopment Projects
Southern California
Bunker Hill Towers		456		$	59,800		$	27,600		$	87,400	Q3 2013
Total Non-Same Property - Redevelopment Projects		456		$	59,800		$	27,600		$	87,400			$	1,923		$	1,656

⁽¹⁾	Redevelopment activities are ongoing at these communities, but the communities have stabilized operations, therefore results are classified in same-property results.

See Company's 10-K and 10-Q for additional disclosures

S-12

E S S E X P R O P E R T Y T R U S T, I N C.

Capital Expenditures - March 31, 2017

(Dollars in thousands, except in footnotes and per apartment home amounts)

Revenue Generating Capital Expenditures^{(1) (2)}		Q1 2017		Q4 2016		Q3 2016		Q2 2016	Trailing 4 Quarters
Same-property portfolio	$	9,345	$	14,910	$	13,534	$	12,861	$	50,650
Non-same property portfolio		2,310		5,114		6,691		6,476		20,591
Total revenue generating capital expenditures	$	11,655	$	20,024	$	20,225	$	19,337	$	71,241

Number of same-property interior renovations completed		589		511		731		841		2,672
Number of total consolidated interior renovations completed		594		581		855		939		2,969

Non-Revenue Generating Capital Expenditures ⁽³⁾		Q1 2017		Q4 2016		Q3 2016		Q2 2016	Trailing 4 Quarters

Non-revenue generating capital expenditures	$	9,381	$	19,224	$	18,520	$	16,595	$	63,720
Average apartment homes in quarter		48,900		48,712		49,053		49,053		48,930
Capital expenditures per apartment homes in the quarter	$	192	$	395	$	378	$	338	$	1,302

⁽¹⁾	The Company incurred $0.1 million of capitalized interest, $2.0 million of capitalized overhead and $0.2 million of co-investment fees related to redevelopment in Q1 2017.
⁽²⁾	Represents revenue generating or expense saving expenditures such as full-scale redevelopments shown on page S-12, interior unit turn renovations, enhanced amenities and certain resource management initiatives.
⁽³⁾	Represents roof replacements, paving, building and mechanical systems, exterior painting, siding, etc.

See Company's 10-K and 10-Q for additional disclosures

S-12.1

E S S E X P R O P E R T Y T R U S T, I N C.

Co-investments - March 31, 2017

(Dollars in thousands)

	Essex Ownership Percentage			Apartment Homes		Total Undepreciated Book Value		Debt Amount		Essex Book Value			Weighted Average Borrowing Rate			Remaining Term of Debt (in Years)		For the Three Months Ended March 31, 2017

Operating Non-Consolidated Joint Ventures																		NOI

Wesco I, LLC		50.0	%		2,275	$	569,965	$	304,101	$	93,227			3.8	%		8.2	$	9,568
Wesco III, LLC		50.0	%		993		249,074		133,139		47,345			3.4	%		3.5		3,898
Wesco IV, LLC		50.0	%		1,116		303,688		198,000		40,615			3.7	%		3.9		4,883
BEXAEW, LLC		50.0	%		2,191		405,731		280,000		47,321			3.5	%		3.9		6,972
BEX II, LLC⁽³⁾		50.1	%		871		306,743		130,635		(35,534	)		3.1	%		4.6		3,995
CPPIB		50.0% - 55.0	%		2,232		862,449		-		463,899			-			-		11,904
Other		50.0% - 55.0	%		753		273,057		186,086		42,384			3.1	%		3.5		3,822
Total Operating Non-Consolidated Joint Ventures					10,431	$	2,970,707	$	1,231,961	$	699,257			3.3	%		4.9	$	45,042
Development Non-Consolidated Joint Ventures ⁽¹⁾		50.0% - 55.0	%		1,172		365,231		83,344		123,408			3.3	%		4.8		56
Total Non-Consolidated Joint Ventures					11,603	$	3,335,938	$	1,315,305	$	822,665							$	45,098

																		Essex Portion of NOI and Expenses
NOI																		$	23,175
Depreciation																			(12,854	)
Interest expense and other																			(5,068	)
Net income from operating co-investments																		$	5,253


													Weighted Average Preferred Return			Weighted Average Expected Term		Income from Preferred Equity Investments
Income from preferred equity investments																		$	5,646
Preferred Equity Investments⁽²⁾										$	213,059			10.6	%		2.9	$	5,646

Total Co-investments										$	1,035,724							$	10,899

⁽¹⁾	The Company has interests in four development co-investments, which are detailed on S-11.
⁽²⁾	As of March 31, 2017 the Company has invested in thirteen preferred equity investments.
⁽³⁾	This co-investment was classified as a liability as of March 31, 2017.

See Company's 10-K and 10-Q for additional disclosures

S-13

E S S E X P R O P E R T Y T R U S T, I N C.

Assumptions for 2017 FFO Guidance Range

Q1 2017 Earnings Results Supplement

The guidance projections below are based on current expectations and are forward-looking. See page S-14.1 for the reconciliations of earnings per share ("EPS") to FFO per share and Core FFO per share. The guidance on this page is given for Net Operating Income and Total and Core FFO. See pages S-17.1 to S-17.4 for the definitions of non-GAAP financial measures and other terms.

($'s in thousands, except share and per share data)⁽¹⁾	2017 YTD			2017 Guidance Range
	Actuals			Low End			High End			Comments About Guidance
Net Operating Income ("NOI")

Total NOI from consolidated communities	$	233,655		$	931,500		$	948,800		Includes same-property NOI growth of 2.8% to 4.6% and investment transactions completed through the end of April.

Accretion from acquisitions, net of dispositions		-			500			1,000

Management Fees		2,236			8,600			9,600

Interest Expense
Interest expense, before capitalized interest		(55,342	)		(230,800	)		(227,200	)	Updated to reflect April unsecured bond offering and loan assumed in conversion of Sage to consolidated entity.
Interest capitalized		3,337			13,700			15,700
Net interest expense		(52,005	)		(217,100	)		(211,500	)

Recurring Income and Expenses
Interest and other income		5,134			20,800			21,800
FFO from co-investments		23,753			94,600			97,600		Reflects first quarter results and investment activity completed through the end of April.
General and administrative expense		(10,601	)		(41,000	)		(43,000	)
Non-controlling interest		(2,466	)		(11,000	)		(10,000	)
Total recurring income and expenses		15,820			63,400			66,400
Non-Core Income and Expenses
Gain on sales of marketable securities and land		1,605			1,605			1,605
Acquisition and investment related costs		(556	)		(1,100	)		(1,700	)
Other non-core adjustments		31			31			31
Total non-core income and expenses		1,080			536			(64	)

Funds from Operations	$	200,786		$	787,436		$	814,236

Funds from Operations per diluted share	$	2.95		$	11.56		$	11.96

% Change - Funds from Operations		11.7	%		4.0	%		7.6	%

Core Funds from Operations (excludes non-core items)	$	199,706		$	786,900		$	814,300

Core Funds from Operations per diluted share	$	2.94		$	11.56		$	11.96

% Change - Core Funds from Operations		9.7	%		4.7	%		8.3	%

EPS - Diluted	$	2.72		$	5.60		$	6.00

Weighted average shares outstanding - FFO calculation		67,974			68,100			68,100

⁽¹⁾	All non-core items are excluded from the YTD actuals and included in the non-core income and expense section of the FFO reconciliation.

See Company's 10-K and 10-Q for additional disclosures

S-14

E S S E X P R O P E R T Y T R U S T, I N C.

Reconciliation of Projected EPS, FFO and Core FFO per diluted share

Projected EPS, FFO and Core FFO per diluted share

With respect to the Company's guidance regarding its projected FFO and Core FFO for the second quarter of 2017 and full-year 2017, which guidance is set forth in the earnings release for the first quarter of 2017 and on page S-14 of this supplement, a reconciliation of projected net income per share to projected FFO per share and projected Core FFO per share, as set forth in such guidance, is presented in the table below.

				2017 Guidance Range⁽¹⁾
				2nd Quarter 2017						Full-Year 2017
	YTD Actual			Low			High			Low			High
EPS - diluted	$	2.72		$	0.90		$	1.00		$	5.60		$	6.00
Conversion from GAAP share count		(0.09	)		(0.03	)		(0.03	)		(0.19	)		(0.19	)
Depreciation & amortization expense		1.89			1.91			1.91			7.62			7.62
Noncontrolling interests related to Operating Partnership units		0.09			0.03			0.03			0.19			0.19
Gain on sale of real estate and remeasurement of co-investment		(1.66	)		-			-			(1.66	)		(1.66	)
FFO per share - diluted		2.95			2.81			2.91			11.56			11.96
Gain on sale of marketable securities		(0.02	)		-			-			(0.02	)		(0.02	)
Acquisition and investment related costs		0.01			0.01			0.01			0.02			0.02
Core FFO per share - diluted	$	2.94		$	2.82		$	2.92		$	11.56		$	11.96

⁽¹⁾	2017 Guidance Range excludes projected gain on sale of real estate and land and projected gain on sale of marketable securities until they are realized within the reporting period presented in this report.

See Company's 10-K and 10-Q for additional disclosures

S-14.1

E S S E X P R O P E R T Y T R U S T, I N C.

Summary of Apartment Community Acquisitions and Dispositions Activity

Year to date as of March 31, 2017

(Dollars in thousands, except average rent amounts and in footnotes)

Acquisitions		Apartment Homes		Essex Ownership Percentage			Entity	Date	Contract Price			Price per Apartment Home			Average Rent

Property Name	Location

Palm Valley⁽¹⁾	San Jose, CA		1,098		100.0	%	EPLP	Jan-17		$	183,000		$	333	$	2,566
Sage⁽²⁾	San Jose, CA		230		40.5	%	EPLP	Mar-17			90,000			391		2,485
	Q1 2017		1,328							$	273,000		$	343

Dispositions
Property Name	Location	Apartment Homes		Essex Ownership Percentage			Entity	Date	Sales Price			Price per Apartment Home

Jefferson at Hollywood	Hollywood, CA		270		100.0	%	EPLP	Jan-17		$	132,500		$	491
	Q1 2017		270							$	132,500		$	491

⁽¹⁾

In January 2017, the Company purchased the joint venture partner's 50.0% membership interest in the Palm Valley co-investment for a purchase price of $183.0 million.

⁽²⁾

In March 2017, the Company converted its existing $15.3 million preferred equity investment in Sage at Cupertino into a 40.5% equity ownership interest in the property. The Company issued DownREIT units to the seller for the remaining equity based on an estimated property valuation of $90.0 million and an encumbrance of $52.0 million of mortgage debt. As of March 31, 2017, the Company consolidates the property, based on a VIE analysis performed by the Company.

See Company's 10-K and 10-Q for additional disclosures

S-15

E S S E X P R O P E R T Y T R U S T, I N C.

2017 MSA Level Forecast: Supply, Jobs, and Apartment Market Conditions


	Residential Supply ⁽¹⁾												Job Forecast ⁽²⁾					Market Forecast ⁽³⁾
Market	New MF Supply		New SF Supply		Total Supply		% of MF Supply to MF Stock			% of Total Supply to Total Stock			Est. New Jobs		% Growth			Economic Rent Growth

Los Angeles		10,750		6,550		17,300		0.7	%		0.5	%		69,800		1.6	%		3.7	%
Orange		6,550		4,650		11,200		1.6	%		1.0	%		36,400		2.3	%		4.2	%
San Diego		3,200		3,900		7,100		0.7	%		0.6	%		34,150		2.4	%		5.2	%
Ventura		450		375		825		0.7	%		0.3	%		5,100		1.7	%		3.9	%
So. Cal.		20,950		15,475		36,425		1.0	%		0.6	%		145,450		2.0	%		4.2	%

San Francisco		4,750		700		5,450		1.3	%		0.8	%		22,500		2.1	%		2.2	%
Oakland		2,850		5,250		8,100		0.9	%		0.8	%		19,000		1.7	%		2.4	%
San Jose		3,250		2,350		5,600		1.4	%		0.8	%		26,850		2.5	%		2.6	%
No. Cal.		10,850		8,300		19,150		1.2	%		0.8	%		68,350		2.2	%		2.5	%

Seattle		10,950		8,650		19,600		2.3	%		1.6	%		44,600		2.7	%		4.6	%

Weighted Average ⁽⁴⁾		42,750		32,425		75,175		1.3	%		0.9	%		258,400		2.2	%		3.6	%

All data are based on Essex Property Trust, Inc. forecasts.

U.S. Economic Assumptions: 2017 G.D.P. Growth: 2.2%, 2017 Job Growth: 1.6%

⁽¹⁾Residential Supply: total supply includes the Company's estimate of actual multifamily deliveries including properties with 50+ units and excludes student, senior and 100% affordable housing communities. Single

family estimates based on an average trailing 12 month single family permit. Previous presentations had included multifamily deliveries of 100+ units and excluded student, senior and 100% affordable housing.

⁽²⁾ Job Forecast: refers to the difference between total non-farm industry employment (not seasonally adjusted) projected 4Q over 4Q, expressed as total new jobs and growth rates.

⁽³⁾ Market Forecast: the estimated rent growth represents the forecasted change in effective market rents for full year 2017 vs 2016 (excludes submarkets not targeted by Essex).

⁽⁴⁾Weighted Average: markets weighted by scheduled rent in the Company's Portfolio.

See Company's 10-K and 10-Q for additional disclosures

S-16

E S S E X P R O P E R T Y T R U S T, I N C.

Reconciliations of Non-GAAP Financial Measures and Other Terms


Adjusted EBITDA Reconciliation

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) is a component of the credit ratio, "Net Indebtedness Divided by Adjusted EBITDA", presented on page S-6, in the section titled "Selected Credit Ratios", and it is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as income tax payments, debt service requirements, capital expenditures and other fixed charges. Adjusted EBITDA is not a recognized measurement under U.S. GAAP. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

The reconciliation of Adjusted EBITDA to Net Income available to common stockholders is presented in the table below (Dollars in thousands):

	Three Months Ended
	March 31,
	2017
Net income available to common stockholders	$	178,964
Add: Net income attributable to noncontrolling interest		8,587
Net Income		187,551
Adjustments:
Acquisition and investment related costs		556
Depreciation and amortization		115,503
Equity income from co-investments		(5,253	)
Gain on sale of marketable securities		(1,605	)
Gain on remeasurement of co-investment		(86,482	)
Gain on sale of real estate and land		(26,174	)
Insurance reimbursements		(25	)
Interest expense, net ⁽¹⁾		51,999
Adjusted EBITDA	$	236,070

⁽¹⁾Interest expense, net includes items such as gains on derivatives and the amortization of deferred charges.

Encumbered

Encumbrance means any mortgage, deed of trust, lien, charge, pledge, security interest, security agreement or other encumbrance of any kind.

Funds From Operations ("FFO")

FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), is generally considered by industry analysts as an appropriate measure of performance of an equity REIT. Generally, FFO adjusts the net income of equity REITs for non-cash charges such as depreciation and amortization of rental properties, impairment charges, gains on sales of real estate and extraordinary items. Management considers FFO and FFO which excludes merger, integration and acquisition costs and items that are not routine or not related to the Company’s core business activities, which is referred to as “Core FFO”, to be useful financial performance measurements of an equity REIT because, together with net income and cash flows, FFO and Core FFO provide investors with additional bases to evaluate the operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and the ability to pay dividends.

See Company's 10-K and 10-Q for additional disclosures

S-17.1

E S S E X P R O P E R T Y T R U S T, I N C.

Reconciliations of Non-GAAP Financial Measures and Other Terms


Funds From Operations ("FFO") - continued

FFO and Core FFO do not represent net income or cash flows from operations as defined by U.S. generally accepted accounting principles (“GAAP”) and are not intended to indicate whether cash flows will be sufficient to fund cash needs. These measures should not be considered as an alternative to net income as an indicator of the REIT's operating performance or to cash flows as a measure of liquidity. FFO and Core FFO do not measure whether cash flow is sufficient to fund all cash needs including principal amortization, capital improvements and distributions to shareholders. FFO and Core FFO do not represent cash flows generated from operating, investing or financing activities as defined under U.S. GAAP. Management has consistently applied the NAREIT definition of FFO to all periods presented. However, there is judgment involved and other REITs’ calculation of FFO may vary from the NAREIT definition for this measure, and thus their disclosures of FFO may not be comparable to the Company’s calculation.

The reconciliations of diluted FFO and Core FFO are detailed on page S-3 in the section titled "Consolidated Funds From Operations".

Interest Expense, Net

Interest expense, net is a U.S. GAAP measure and is presented on page S-1 titled "Consolidated Operating Results". Interest expense, net includes items such as gains on derivatives and the amortization of deferred charges and is presented in the table below (Dollars in thousands):

	Three Months Ended
	March 31,
	2017
Interest expense	$	(54,589	)
Adjustments:
Interest rate hedge ineffectiveness		6
Total return swap income		2,584
Interest expense, net	$	(51,999	)


Net Indebtedness Divided by Adjusted EBITDA

This credit ratio is presented on page S-6 in the section titled "Selected Credit Ratios". This credit ratio is calculated by dividing net indebtedness by Adjusted EBITDA, as annualized based on the most recent quarter, and adjusted for estimated net operating income from properties acquired or disposed of during the quarter. This ratio is presented by the Company because it provides rating agencies and investors an additional means of comparing the Company's ability to service debt obligations to that of other companies. Net indebtedness is total debt, net less unamortized premiums, discounts, debt issuance costs, unrestricted cash and cash equivalents, and marketable securities. The reconciliation of Adjusted EBITDA is set forth in "Adjusted EBITDA Reconciliation" above. The calculation of this credit ratio and a reconciliation of net indebtedness to total debt, net is presented in the table below (Dollars in thousands):

Total debt, net	$	5,602,507
Adjustments:
Unamortized premiums, discounts, and debt issuance costs		(19,203	)
Cash and cash equivalents-unrestricted		(84,344	)
Marketable securities		(138,977	)
Net Indebtedness	$	5,359,983

Adjusted EBITDA, annualized ⁽¹⁾	$	944,280
Other EBITDA normalization adjustments, net, annualized ⁽²⁾		3,062
Adjusted EBITDA, normalized and annualized	$	947,342

Net Indebtedness Divided by Adjusted EBITDA, normalized and annualized		5.7

⁽¹⁾	Based on the amount for the most recent quarter, multiplied by four.
⁽²⁾	Adjustments made for properties acquired or disposed of during the quarter, multiplied by four.

See Company's 10-K and 10-Q for additional disclosures

S-17.2

E S S E X P R O P E R T Y T R U S T, I N C.

Reconciliations of Non-GAAP Fianancial Measures and Other Terms


Net Operating Income ("NOI") and Same-Property NOI Reconciliations

Net Operating Income ("NOI") and Same-property NOI are considered by management to be an important supplemental performance measures to earnings from operations included in the Company’s consolidated statements of income. The presentation of same-property NOI assists with the presentation of the Company’s operations prior to the allocation of depreciation and any corporate-level or financing-related costs. NOI reflects the operating performance of a community and allows for an easy comparison of the operating performance of individual communities or groups of communities. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impacts to overhead by acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets. The Company defines same-property NOI as same-property revenue less same-property operating expenses, including property taxes. Please see the reconciliation of earnings from operations to NOI and same-property NOI, which in the table below is the NOI for stabilized properties consolidated by the Company for the periods presented (Dollars in thousands):

	Three Months Ended			Three Months Ended
	March 31,			March 31,
	2017			2016
Earnings from operations	$	109,231		$	99,995
Adjustments:
Depreciation and amortization		115,503			109,707
Management and other fees		(2,236	)		(2,024	)
General and administrative		10,601			9,182
Acquisition and investment related costs		556			828
NOI		233,655			217,688
Less: Non-same property NOI		(21,985	)		(17,235	)
Same-Property NOI	$	211,670		$	200,453

Public Bond Covenants

Public Bond Covenants refers to certain covenants set forth in instruments governing the Company's unsecured indebtedness. These instruments require the Company to meet specified financial covenants, including covenants relating to net worth, fixed charge coverage, debt service coverage, the amounts of total indebtedness and secured indebtedness, leverage and certain investment limitations. These covenants may restrict the Company's ability to expand or fully pursue its business strategies. The Company's ability to comply with these covenants may be affected by changes in the Company's operating and financial performance, changes in general business and economic conditions, adverse regulatory developments or other events adversely impacting it. The breach of any of these covenants could result in a default under the Company's indebtedness, which could cause those and other obligations to become due and payable. If any of the Company's indebtedness is accelerated, it may not be able to repay it. For risks related to failure to comply with these covenants, see "Item 1A: Risk Factors - Risks related to Our Indebtedness and Financing" in the Company's Annual Report on Form 10-K and other reports filed by the Company with the Securities and Exchange Commission ("SEC").

The ratios set forth on page S-6 in the section titled "Public Bond Covenants" are provided only to show the Company's compliance with certain specified covenants that are contained in indentures related to the Company's issuance of Senior Notes, which indentures are filed by the Company with the SEC. See, for example, the Indenture dated April 10, 2017, filed by the company as Exhibit 4.1 to the Company's Form 8-K, filed on April 10, 2017. These ratios should not be used for any other purpose, including without limitation to evaluate the Company's financial condition or results of operations, nor do they indicate the Company's covenant compliance as of any other date or for any other period. The capitalized terms in the disclosure are defined in the Indentures filed by the Company via Form 8-Ks and may differ materially from similar terms used by other companies that present information about their covenant compliance.

Secured Debt

Secured Debt means Debt of the Company or any of its Subsidiaries which is secured by an Encumbrance on any property or assets of the Company or any of its Subsidiaries. The calculation of Secured Debt is set forth on page S-5.

See Company's 10-K and 10-Q for additional disclosures

S-17.3

E S S E X P R O P E R T Y T R U S T, I N C.

Reconciliations of Non-GAAP Financial Measures and Other Tems


Unencumbered NOI to Adjusted Total NOI

This ratio is presented on page S-6 in the section titled "Selected Credit Ratios". Unencumbered NOI means the sum of NOI for those real estate assets which are not subject to an Encumbrance securing Debt. The ratio of Unencumbered NOI to Adjusted Total NOI for the three months ended March 31, 2017, annualized, is calculated by dividing Unencumbered NOI, annualized for the three months ended March 31, 2017 and as further adjusted for pro forma NOI for properties acquired or sold during the recent quarter, by Adjusted Total NOI as annualized. The calculation and reconciliation of NOI is set forth in "Net Operating Income ("NOI") and Same-Property NOI Reconciliation" above. This ratio is presented by the Company because it provides rating agencies and investors an additional means of comparing the Company's ability to service debt obligations to that of other companies. The calculation of this ratio is presented in the table below (Dollars in thousands):

	Annualized
	Q1'17 ⁽¹⁾
NOI	$	934,620
Adjustments:
Other, Net		122
Adjusted Total NOI		934,742
Less: Encumbered NOI		(302,534	)
Unencumbered NOI	$	632,208

Encumbered NOI	$	302,534
Unencumbered NOI		632,208
Adjusted Total NOI	$	934,742

Unencumbered NOI to Adjusted Total NOI		68	%

⁽¹⁾

This table is based on the amounts for the most recent quarter, multiplied by four.

See Company's 10-K and 10-Q for additional disclosures

S-17.4

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