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Real Estate Investments | 12 Months Ended
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Dec. 31, 2020
Real Estate Investments, Net [Abstract] |
Real Estate Investments | Real Estate Investments (a) Acquisitions of Real Estate The table below summarizes acquisition activity for the year ended December 31, 2020 ($ in millions):
Property Name | Location | Apartment Homes | Essex Ownership Percentage | Quarter in 2020 |  |  |  | Purchase Price
CPPIB Portfolio | Various | 2,020 |  | 100 | % | Q1 |  |  |  | $ | 463.4 |
Total 2020 | 2,020 |  |  |  |  |  |  | $ | 463.4 |
In January 2020, the Company purchased CPPIB's 45.0% interest in each of a land parcel and six communities totaling 2,020 apartment homes, valued at $1.0 billion on a gross basis. As a result of this acquisition, the Company realized a gain on remeasurement of co-investment of $234.7 million. Furthermore, the Company recognized $6.5 million in promote income as a result of the transaction, which is included in equity income from co-investments on the consolidated statements of income. The consolidated fair value of the acquisition listed above was included on the Company's consolidated balance sheet as follows: $189.0 million was included in land and land improvements, $846.0 million was included in buildings and improvements, $10.0 million was included in prepaid expenses and other assets, within the Company's consolidated balance sheets. For the year ended December 31, 2019, the Company purchased four communities consisting of 849 apartment homes for approximately $373.3 million. Additionally, in December 2019, the Company purchased the joint venture partner's 25% ownership interest in Hidden Valley, a consolidated community consisting of 324 apartment homes, for a contract price of $24.2 million based on an estimated property valuation of $97.0 million and an encumbrance of $29.7 million of mortgage debt. The purchase was recorded as a redemption of noncontrolling interest in the consolidated statements of equity. (b) Sales of Real Estate Investments In June 2020, the Company completed a portfolio sale which consisted of two apartment communities with 429 apartment homes, One South Market and Museum Park, both located in San Jose, CA, for a total contract price of $232.0 million. The Company recognized a $16.6 million gain on sale. In July 2020, the Company sold Delano, a 126 apartment home community located in Redmond, WA, for a total contract price of $51.5 million. The Company recognized a $22.7 million gain on sale. In October 2020, the Company sold 416 on Broadway, a 115 apartment home community located in Glendale, CA, for a total contract price of $60.0 million. The Company recognized a $25.7 million gain on sale. For the year ended December 31, 2019, the Company sold a land parcel adjacent to the Mylo development project located in Santa Clara, CA, for $10.8 million and recorded an immaterial gain and sold land located in San Mateo, CA, that had been held for future development for $12.5 million and recorded a loss of $3.2 million. For the year ended December 31, 2018, the Company sold two communities consisting of 669 apartment homes for $352.0 million resulting in gains totaling $61.9 million. (c) Real Estate Assets Held for Sale As of December 31, 2020, the Company had two communities totaling 439 apartment homes that are qualified as held for sale. As of December 31, 2019 the Company had no assets classified as held for sale. (d) Co-investments The Company has joint ventures which are accounted for under the equity method. The co-investments’ accounting policies are similar to the Company’s accounting policies. The co-investments own, operate, and develop apartment communities. The carrying values of the Company’s co-investments as of December 31, 2020 and 2019 are as follows ($ in thousands, except in parenthetical):
| Weighted Average Essex Ownership |  | December 31,
| Percentage (1) |  | 2020 |  | 2019
Ownership interest in: |  |  |  |  |
CPPIB (2) | — | % |  | $ | — |  |  | $ | 345,466 |
Wesco I, Wesco III, Wesco IV, and Wesco V | 51 | % |  | 178,322 |  |  | 216,756 |
BEXAEW, BEX II, BEX III, and BEX IV | 50 | % |  | 152,309 |  |  | 160,888 |
Other | 47 | % |  | 27,635 |  |  | 20,351 |
Total operating and other co-investments, net |  |  | 358,266 |  |  | 743,461 |
Total predevelopment and development co-investments | 50 | % |  | 157,433 |  |  | 146,944 |
Total preferred interest co-investments (includes related party investments of $81.4 million and $73.2 million as of December 31, 2020 and December 31, 2019, respectively - Note 6 - Related Party Transactions for further discussion) |  |  | 502,311 |  |  | 444,934 |
Total co-investments, net |  |  | $ | 1,018,010 |  |  | $ | 1,335,339 |
(1)Weighted average Company ownership percentages are as of December 31, 2020. (2)In January 2020, the Company purchased CPPIB's 45.0% interest in each of a land parcel and six communities totaling 2,020 apartment homes. The combined summarized financial information of co-investments is as follows ($ in thousands):
| December 31,
| 2020 |  | 2019
Combined balance sheets: (1) |  |  |
Rental properties and real estate under development | $ | 4,242,611 |  |  | $ | 4,733,762 |
Other assets | 200,777 |  |  | 139,562 |
Total assets | $ | 4,443,388 |  |  | $ | 4,873,324 |
Debt | $ | 2,611,365 |  |  | $ | 2,442,213 |
Other liabilities | 189,515 |  |  | 117,160 |
Equity | 1,642,508 |  |  | 2,313,951 |
Total liabilities and equity | $ | 4,443,388 |  |  | $ | 4,873,324 |
Company's share of equity | $ | 1,018,010 |  |  | $ | 1,335,339 |
| Years ended December 31,
| 2020 |  | 2019 |  | 2018
Combined statements of income: (1) |  |  |  |  |
Property revenues | $ | 300,624 |  |  | $ | 336,922 |  |  | $ | 332,164 |
Property operating expenses | (108,682) |  |  | (115,658) |  |  | (107,584) |
Net operating income | 191,942 |  |  | 221,264 |  |  | 224,580 |
Gain on sale of real estate | — |  |  | 112,918 |  |  | 24,218 |
Interest expense | (78,962) |  |  | (65,665) |  |  | (63,913) |
General and administrative | (17,079) |  |  | (9,575) |  |  | (6,379) |
Depreciation and amortization | (117,836) |  |  | (121,006) |  |  | (126,485) |
Net income | $ | (21,935) |  |  | $ | 137,936 |  |  | $ | 52,021 |
Company's share of net income (2) | $ | 66,512 |  |  | $ | 112,136 |  |  | $ | 89,132 |
(1)Includes preferred equity investments held by the Company. (2)Includes the Company's share of equity income from joint ventures and preferred equity investments, gain on sales of co-investments, co-investment promote income and income from early redemption of preferred equity investments. Includes related party income of $8.6 million, $7.5 million, and $2.0 million for the years ended December 31, 2020, 2019, and 2018, respectively. Operating Co-investments As of December 31, 2020 and 2019, the Company, through several joint ventures, owned 8,652 and 10,672 apartment homes, respectively, in operating communities. The Company’s book value of these co-investments was $358.3 million and $743.5 million at December 31, 2020 and 2019, respectively. Predevelopment and Development Co-investments As of December 31, 2020 and 2019, the Company, through several joint ventures, owned 1,070 and 806 apartment homes in predevelopment and development communities, respectively. The Company’s book value of these co-investments was $157.4 million and $146.9 million at December 31, 2020 and 2019, respectively. In 2020, the Company entered into a joint venture to develop Scripps Mesa Apartments, a multifamily community comprised of 264 apartment homes located in San Diego, CA. The Company has a 51% ownership interest in the development which has a projected total cost of $102.0 million. Construction began in the third quarter of 2020 and the community is expected to open in the fourth quarter of 2022. The Company has a $5.9 million preferred equity investment in the project, which accrues an annualized preferred return of 10.0% until it is redeemed. In 2017, the Company entered into a joint venture to develop Patina at Midtown (formerly known as Ohlone), a multifamily community comprised of 269 apartment homes located in San Jose, CA. The Company has a 50% ownership interest in the development which has a projected total cost of $148.0 million. The property began initial occupancy in the third quarter of 2020 and is expected to be fully stabilized by the second quarter of 2021. The Company has a $28.9 million preferred equity investment in the project, which accrues an initial annualized preferred return of 10.0% and matures in 2021. In 2015, the Company entered into a joint venture to develop 500 Folsom, a multifamily community comprised of 537 apartment homes located in San Francisco, CA. The Company has a 50% ownership interest in the development which has a projected total cost of $415.0 million. The property began initial occupancy in the third quarter of 2019 and is expected to be fully stabilized by the first quarter of 2021. Preferred Equity Investments As of December 31, 2020 and 2019, the Company held preferred equity investment interests in several joint ventures which own real estate. The Company’s book value of these preferred equity investments was $502.3 million and $444.9 million at December 31, 2020 and 2019, respectively, and is included in the co-investments line in the accompanying consolidated balance sheets. During 2020, the Company made commitments to fund $191.3 million of preferred equity investment in seven preferred equity investments. The investments have initial preferred returns ranging from 9.0%-11.5%, with maturities ranging from March 2022 to February 2030. As of December 31, 2020, the Company had funded $55.1 million of the $191.3 million of commitments. The remaining committed amount is expected to be funded in 2021. During 2019, the Company made commitments to fund $141.7 million of preferred equity investment in five preferred equity investments, some of which include related party sponsors. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 10.15%-11.3%, with maturities ranging from July 2022 to October 2024. As of December 31, 2020, the Company had fully funded $141.7 million of the commitments. During 2018, the Company made commitments to fund $45.1 million of preferred equity investment in two preferred equity investments, some of which include related party sponsors. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 10.25%-12.0%, with maturities ranging from May 2023 to April 2024. As of December 31, 2020, the Company had funded $42.1 million of the $45.1 million of commitments. The remaining committed amount is expected to be funded when requested by the sponsors. In March 2020, the Company received cash of $11.3 million, including an early redemption fee of $0.2 million, for the partial redemption of a preferred equity investment in a joint venture that holds property located in Southern California. In the fourth quarter of 2020, the Company subsequently received cash of $10.7 million for redemption of the remainder of this preferred equity investment. In February and September 2020, the Company received cash of $13.4 million for the full redemption of a preferred equity investment in a property located in Southern California. In December 2020, the Company received cash of $31.3 million for the full redemption of a preferred equity investment in two properties located in Southern California. (e) Real Estate under Development The Company defines development projects as new communities that are being constructed, or are newly constructed and are in a phase of lease-up and have not yet reached stabilized operations. As of December 31, 2020, the Company's development pipeline was comprised of three consolidated projects under development, three unconsolidated joint venture projects under development and various predevelopment projects, aggregating 1,853 apartment homes, with total incurred costs of $948.0 million.

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -URI http://asc.fasb.org/topic&trid=2156125 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 978 -URI http://asc.fasb.org/topic&trid=2134977 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 976 -URI http://asc.fasb.org/topic&trid=2134846 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 974 -URI http://asc.fasb.org/topic&trid=2156429 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 972 -URI http://asc.fasb.org/topic&trid=2134617 + Details
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