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Real Estate Investments | 12 Months Ended
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Dec. 31, 2023
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, 2023 ($ in millions):
Property Name |  | Location |  | Apartment Homes |  | Essex Ownership Percentage |  | Quarter in 2023 |  | Purchase Price
Hacienda at Camarillo Oaks |  | Camarillo, CA |  | 73 |  |  | 100 | % |  | Q2 |  | $ | 23.1 |
Total 2023 |  | 73 |  |  |  |  |  |  | $ | 23.1 |
The consolidated fair value of the acquisitions listed above was included on the Company's consolidated balance sheet as follows: $5.5 million was included in land and land improvements, $18.0 million was included in buildings and improvements, and $0.1 million was included in prepaid expenses and other assets. For the year ended December 31, 2022, the Company acquired its joint venture partner's 49.8% minority interest in two apartment communities consisting of 211 apartment homes located in Los Angeles, CA, for a contract price of $32.9 million. As a result of this acquisition, the Company realized a gain on remeasurement of co-investment of $17.4 million upon consolidation. The consolidated fair value of the acquisitions was included on the Company's consolidated balance sheet as follows: $14.1 million was included in land and land improvements, $52.7 million was included in buildings and improvements, and $0.3 million was included in prepaid expenses and other assets. (b) Sales of Real Estate Investments The table below summarizes the disposition activity for the year ended December 31, 2023 ($ in millions):
Property Name (1) |  | Location |  | Apartment Homes |  | Ownership |  | Quarter in 2023 |  | Sales Price |
CBC and The Sweeps |  | Goleta, CA |  | 239 |  |  | EPLP |  | Q1 |  | $ | 91.7 |  | (2)
Total 2023 |  | 239 |  |  |  |  |  |  | $ | 91.7 |  |
(1) In March 2023, the Company sold a land parcel located in Moorpark, CA, that had been held for future development, for $8.7 million and recognized a gain on sale of $4.7 million. (2) The Company recognized a $54.5 million gain on sale. For the year ended December 31, 2022, the Company sold one apartment community consisting of 250 apartment homes for $160.0 million, resulting in gains of $94.4 million. For the year ended December 31, 2021, the Company sold four apartment communities consisting of 912 apartment homes for $330.0 million, resulting in gains of $143.0 million. In conjunction with the sales, the Company repaid $29.7 million of mortgage debt that encumbered one of the properties. (c) 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 typically own, operate, and develop apartment communities. Additionally, the Company has invested in five technology co-investments and as of December 31, 2023, the co-investment balance of these investments was $44.2 million and the aggregate commitment was $86.0 million. As of December 31, 2022, the Company had six technology co-investments and the co-investment balance of these investments was $39.4 million and the aggregate commitment was $87.0 million. The carrying values of the Company’s co-investments as of December 31, 2023 and 2022 are as follows ($ in thousands, except in parenthetical):
| Weighted Average Essex Ownership Percentage (1) |  | December 31,
|  | 2023 |  | 2022
Ownership interest in: |  |  |  |  |
Wesco I, Wesco III, Wesco IV, Wesco V and Wesco VI (2) | 54 | % |  | $ | 144,766 |  |  | $ | 178,552 |
BEXAEW, BEX II, BEX IV and 500 Folsom | 50 | % |  | 224,119 |  |  | 238,537 |
Other (3) | 52 | % |  | 68,493 |  |  | 74,742 |
Total operating and other co-investments, net |  |  | 437,378 |  |  | 491,831 |
Total development co-investments | 51 | % |  | 14,605 |  |  | 12,994 |
Total preferred interest co-investments (includes related party investments of $42.7 million and $87.1 million as of December 31, 2023 and 2022, respectively - Note 6 - Related Party Transactions for further discussion) |  |  | 544,262 |  |  | 580,134 |
Total co-investments, net |  |  | $ | 996,245 |  |  | $ | 1,084,959 |
(1)Weighted average Company ownership percentages are as of December 31, 2023. (2)As of December 31, 2023 and 2022, the Company's investments in Wesco I, Wesco III, and Wesco IV were classified as a liability of $61.8 million and $41.7 million, respectively, due to distributions received in excess of the Company's investment. (3)As of December 31, 2023 and 2022, the Company's investments in Expo and Century Towers were classified as a liability of $3.7 million and $0.8 million, respectively, due to distributions received in excess of the Company's investment. The weighted average Essex ownership percentage excludes our investments in non-core technology co-investments which are carried at fair value. The combined summarized financial information of co-investments is as follows ($ in thousands):
| December 31,
| 2023 |  | 2022
Combined balance sheets: (1) |  |  |
Rental properties and real estate under development | $ | 5,123,164 |  |  | $ | 4,955,051 |
Other assets | 279,237 |  |  | 294,663 |
Total assets | $ | 5,402,401 |  |  | $ | 5,249,714 |
Debt | $ | 3,622,609 |  |  | $ | 3,397,113 |
Other liabilities | 317,208 |  |  | 264,872 |
Equity | 1,462,584 |  |  | 1,587,729 |
Total liabilities and equity | $ | 5,402,401 |  |  | $ | 5,249,714 |
Company's share of equity | $ | 996,245 |  |  | $ | 1,084,959 |
| Years ended December 31,
| 2023 |  | 2022 |  | 2021
Combined statements of income: (1) |  |  |  |  |
Property revenues | $ | 409,910 |  |  | $ | 373,074 |  |  | $ | 289,680 |
Property operating expenses | (158,520) |  |  | (140,175) |  |  | (115,023) |
Net operating income | 251,390 |  |  | 232,899 |  |  | 174,657 |
Interest expense | (154,038) |  |  | (100,913) |  |  | (65,172) |
General and administrative | (20,594) |  |  | (20,579) |  |  | (17,885) |
Depreciation and amortization | (174,028) |  |  | (164,186) |  |  | (133,787) |
Net income | $ | (97,270) |  |  | $ | (52,779) |  |  | $ | (42,187) |
Company's share of net income (2) | $ | 10,561 |  |  | $ | 26,030 |  |  | $ | 111,721 |
(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 $7.6 million, $7.4 million, and $9.1 million for the years ended December 31, 2023, 2022, and 2021, respectively. Operating Co-investments As of both December 31, 2023 and 2022, the Company, through several joint ventures, owned 10,425 apartment homes, in operating communities. The Company’s book value of these co-investments was $437.4 million and $491.8 million at December 31, 2023 and 2022, respectively. Predevelopment and Development Co-investments As of both December 31, 2023 and 2022, the Company, through several joint ventures, owned 264 apartment homes in predevelopment and development communities. The Company’s book value of these co-investments was $14.6 million and $13.0 million at December 31, 2023 and 2022, respectively. In 2020, the Company entered into a joint venture to develop LIVIA at Scripps Ranch, 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. The property commenced initial occupancy in the third quarter of 2023 and is projected to be fully stabilized in the first quarter of 2024. As of December 31, 2023, the Company had a $2.3 million preferred equity investment in the project, which accrues an annualized preferred return of 10.0% until it is redeemed. Preferred Equity Investments As of December 31, 2023 and 2022, 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 $544.3 million and $580.1 million at December 31, 2023 and 2022, respectively, and is included in the co-investments line in the accompanying consolidated balance sheets. The Company recorded a $33.7 million and a $2.1 million impairment loss from unconsolidated co-investments for the years ended December 31, 2023 and 2022, respectively, as a result of an other-than-temporary decrease in the fair value of the underlying real estate investment and is included in the equity income from co-investments line in the accompanying consolidated statements of income. The valuation for the underlying real estate investment was estimated using an income approach valuation technique. During 2023, the Company made commitments to fund $18.8 million of preferred equity investment in two real estate ventures. The investments have initial preferred returns ranging from 11.0% - 13.5% with maturities ranging from October 2025 to September 2028. As of December 31, 2023, the Company had fully funded $18.8 million of the commitments. During 2023, the Company received cash proceeds of $72.3 million, including an early redemption fee of $0.3 million, for the full redemption of two preferred equity investments and partial redemption of two preferred equity investments in joint ventures that hold properties located in California. During 2022, the Company made commitments to fund $84.9 million of preferred equity investment in seven real estate ventures, including one with a related party. See Note 6, Related Party Transactions, for additional details. The investments have initial preferred returns ranging from 8.8% - 10.8%, with maturities ranging from January 2026 to September 2032. As of December 31, 2023, the Company had fully funded $84.9 million of the commitments. During 2021, the Company made commitments to fund $67.2 million of preferred equity investment in four real estate ventures. The investments have initial preferred returns ranging from 10.0% - 12.5%, with maturities ranging from January 2026 to December 2026. As of December 31, 2023, the Company had fully funded $67.2 million of the commitments. 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, 2023, the Company had funded $182.3 million of the $191.3 million of commitments. 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, 2023, 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, 2023, 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 November 2021, the Company converted $11.0 million of its existing preferred equity investment in Silver, a 268-unit apartment home community located in San Jose, CA, into a 58.0% common equity interest in the property. The Company will retain its remaining $13.5 million preferred equity investment in the property at a preferred return of 8.0%. The property is encumbered by $100.0 million of mortgage debt at a fixed rate of 3.15% through December 2026. (d) 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, 2023, the Company's development pipeline was comprised of one unconsolidated joint venture project under development aggregating 264 apartment homes and various predevelopment projects, with total incurred costs of $114.0 million.

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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 -Topic 976 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//976/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 978 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//978/tableOfContent Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 970 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//970/tableOfContent Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 972 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//972/tableOfContent Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 974 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//974/tableOfContent + Details
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