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SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





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FORM 10-Q





|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------




For the quarterly period ended June 30, 2002





OR





| ̈ |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------




For the transition period
from  to





Commission File No. 333-44467-01





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ESSEX PORTFOLIO, L.P.


(Exact name of Registrant as specified in its Charter)





Maryland

77-0369575(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification
No.)





925 East Meadow Drive, Palo Alto, California 94303


(Address of principal executive offices)


(Zip code)





(650) 494-3700


(Registrants
telephone number, including area code)





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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months for such shorter period that the Registrant was
required to file such report, and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ̈





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TABLE OF CONTENTS





FORM 10-Q





Page No.Part IItem 1

Financial Statements (Unaudited)

3Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001

4Consolidated Statements of Operations for the three months ended June 30, 2002 and 2001

5Consolidated Statements of Operations for the six months ended June 30, 2002 and 2001

6Consolidated Statements of Partners Capital for the six months ended June 30, 2002 and the year ended December 31, 2001

7Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001

8Notes to Consolidated Financial Statements

9Item 2

Managements Discussion and Analysis of Financial Condition and Results of Operations

20Item 3

Quantitative and Qualitative Disclosure About Market Risk

30Part IIItem 6

Exhibits and Reports on Form 8-K

31Signatures

32




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##### Table of Contents

PART I    FINANCIAL INFORMATION





Item 1:Financial Statements (Unaudited)





Essex Portfolio, L.P., a California limited
partnership, (the Operating Partnership) effectively holds the assets and liabilities and conducts the operating activities of Essex Property Trust, Inc. (Essex or the Company). Essex Property Trust, Inc., a real
estate investment trust incorporated in the State of Maryland, is the sole general partner of the Operating Partnership.





The information furnished in the accompanying consolidated unaudited balance sheets, statements of operations, partners capital and cash flows of the Operating Partnership reflects all adjustments which are, in the opinion of
management, necessary for a fair presentation of the aforementioned financial statements for the interim periods.





The accompanying unaudited consolidated financial statements should be read in conjunction with the notes to such financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations.




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##### Table of Contents




ESSEX PORTFOLIO, L.P.





CONSOLIDATED BALANCE SHEETS


(Unaudited)


(Dollars in thousands)





June 30, 2002


December 31, 2001ASSETSReal estate:Rental properties:Land and land improvements

$
289,216


$
291,913Buildings and improvements


884,136



883,2871,173,352



1,175,200Less accumulated depreciation


(172,883
)


(156,269
)1,000,469



1,018,931Investments


90,782



95,460Real estate under development


123,280



93,2561,214,531



1,207,647Cash and cash equivalents-unrestricted


8,664



6,440Cash and cash equivalents-restricted


17,875



17,163Notes receivable from investees and other related parties


61,565



56,014Notes and other receivables


28,250



29,771Prepaid expenses and other assets


29,241



6,699Deferred charges, net


6,207



5,724$
1,366,333


$
1,329,458LIABILITIES AND PARTNERS CAPITALMortgage notes payable

$
561,220


$
564,201Lines of credit


106,459



74,459Accounts payable and accrued liabilities


29,873



29,577Distributions payable


18,156



16,559Other liabilities


6,651



6,583Total liabilities


722,359



691,379Minority interests


5,706



6,352Partners capital:General Partner:Common equity


392,305



386,599Preferred equity






392,305



386,599Limited Partners:Common equity


41,473



40,638Preferred equity


204,490



204,490245,963



245,128Total partners capital


638,268



631,727Total liabilities and partners capital

$
1,366,333


$
1,329,458





See accompanying notes to the consolidated unaudited fiancial statements.




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ESSEX PORTFOLIO, L.P.





CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


(Dollars in thousands, except per unit amounts)





Three months endedJune 30, 2002


June 30, 2001Revenues:Rental

$
41,769


$
44,530Other property


1,396



1,453Total property


43,165



45,983Interest and other


7,818



4,536Total revenues


50,983



50,519Expenses:Property operating expensesMaintenance and repairs


2,356



2,875Real estate taxes


3,119



2,929Utilities


2,253



2,435Administrative


3,045



3,606Advertising


732



641Insurance


490



230Depreciation and amortization


9,114



8,83321,109



21,549Interest


8,652



9,547Amortization of deferred financing costs


147



207General and administrative


1,565



1,854Total expenses


31,473



33,157Income from continuing operations before minority interests and discontinued operations


19,510



17,362Minority interests


(46
)


(22
)Income from continuing operations


19,464



17,340Discontinued operations:Income from real estate sold


77



175Gain on sale of real estate


9,051



Income from discontinued operations


9,128



175Net income


28,592



17,515Dividends on preferred units-general partner






Dividends on preferred units-limited partner


(4,580
)


(4,580
)Net income available to common units

$
24,012


$
12,935Per operating partnership unit data:Basic:Income from continuing operations

$
0.71


$
0.61Income from discontinued operations


0.44



0.01Net income

$
1.15


$
0.62Weighted average number of partnership units outstanding during the period


20,924,671



20,718,968Diluted:Income from continuing operations

$
0.71


$
0.61Income from discontinued operations


0.43



0.01Net income

$
1.14


$
0.62Weighted average number of partnership units outstanding during the period


21,115,264



21,034,367Distributions per Operating Partnership common unit

$
0.77


$
0.70





See accompanying notes to the consolidated unaudited financial statements.




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ESSEX PORTFOLIO, L.P.





CONSOLIDATED STATEMENTS OF OPERATIONS


(Unaudited)


(Dollars in thousands, except per unit amounts)





Six months endedJune 30, 2002


June 30, 2001Revenues:Rental

$
83,888


$
88,617Other property


2,712



2,904Total property


86,600



91,521Interest and other


13,795



8,596Total revenues


100,395



100,117Expenses:Property operating expensesMaintenance and repairs


5,165



5,589Real estate taxes


6,269



5,977Utilities


4,284



4,875Administrative


6,671



7,187Advertising


1,354



1,343Insurance


833



489Depreciation and amortization


18,100



17,56342,676



43,023Interest


17,441



18,881Amortization of deferred financing costs


295



367General and administrative


3,265



3,729Total expenses


63,677



66,000Income from continuing operations before minority interests and discontinued operations


36,718



34,117Minority interests


(78
)


(47
)Income from continuing operations


36,640



34,070Discontinued operations:Income from real estate sold


253



338Gain on sale of real estate


9,051



Income from discontinued operations


9,304



338Net income


45,944



34,408Dividends on preferred units-general partner






Dividends on preferred units-limited partner


(9,159
)


(9,159
)Net income available to common units

$
36,785


$
25,249Per operating partnership unit data:Basic:Income from continuing operations

$
1.31


$
1.20Income from discontinued operations


0.45



0.02Net income

$
1.76


$
1.22Weighted average number of partnership units outstanding during the period


20,873,660



20,630,149Diluted:Income from continuing operations

$
1.31


$
1.18Income from discontinued operations


0.44



0.02Net income

$
1.75


$
1.20Weighted average number of partnership units outstanding during the period


21,046,919



20,970,137Distributions per Operating Partnership common unit

$
1.54


$
1.40





See accompanying notes to the consolidated unaudited financial statements.




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##### Table of Contents

ESSEX PORTFOLIO, L.P.





CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL


For the six months ended June 30, 2002 and the


year ended December 31, 2001


(Unaudited)


(Dollars and units in thousands)





General Partner

Limited PartnersCommon Equity


Preferred Equity
Amount

Common Equity


Preferred Equity
AmountUnits


Amount



Units


Amount



TotalBalances at December 31, 2000

18,417


$
391,675


$


2,129


$
33,276


$
204,490


$
629,441Contribution-net proceeds from options exercised

112



2,906

















2,906Common units purchased by Operating Partnership

(101
)


(4,822
)
















(4,822
)Redemption of limited partner common units











(52
)


(2,652
)






(2,652
)Issuance of limited partner common units











209



10,381







10,381Net income





48,545









5,884



18,319



72,748Partners distributions





(51,705
)








(6,251
)


(18,319
)


(76,275
)Balances at December 31, 2001

18,428



386,599





2,286



40,638



204,490



631,727Contribution-net proceeds from options exercised

207



2,196

















2,196Common units purchased by Operating Partnership

(11
)


(499
)
















(499
)Redemption of limited partner common units











(6
)


(309
)






(309
)Vested series Z incentive units











40



647







647Net income





32,655









4,130



9,159



45,944Partners distributions





(28,646
)








(3,633
)


(9,159
)


(41,438
)Balances at June 30, 2002

18,624


$
392,305


$


2,320


$
41,473


$
204,490


$
638,268








See accompanying notes to the
consolidated unaudited financial statements.




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##### Table of Contents

ESSEX PORTFOLIO, L.P.





CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)


(Dollars in thousands)





Six months endedJune 30, 2002


June 30, 2001Net cash provided by operating activities:

$
45,359


$
50,305Cash flows from investing activities:Additions to real estate:Acquisitions






(6,082
)Improvements to recent acquisitions


(1,688
)


(2,810
)Redevelopment


(4,810
)


(2,333
)Revenue generating capital expenditures


(430
)


(3
)Non-revenue generating capital expenditures


(2,837
)


(2,430
)Proceeds received from contribution of real estate to corporate investee






15,987Decrease/ (increase) in restricted cash


(712
)


2,435Additions to notes receivable from investees, other related parties and other receivables


(9,151
)


(61,846
)Repayment of notes receivable from investees, other related parties and other receivables


4,440



13,818Additions to real estate under development


(30,202
)


(17,519
)Net distribution from (contribution to) investments in corporations and limited partnerships


12,623



(11,762
)Net cash used in investing activities


(32,767
)


(72,545
)Cash flows from financing activities:Proceeds from mortgage and other notes payable and lines of credit


39,000



169,294Repayment of mortgage and other notes payable and lines of credit


(9,981
)


(109,791
)Additions to deferred charges


(1,041
)


(140
)Net proceeds from stock options exercised and shares issued through dividend reinvestment plan


2,196



1,527Contributions from limited partners


(14
)


6,000Distributions to limited partners


(12,514
)


(11,928
)Shares purchased by Operating Partnership


(499
)


Redemption of Operating Partnership unitslimited partner


(309
)


(2,555
)Distributions to general partner


(27,206
)


(24,101
)Net cash (used in) provided by financing activities


(10,368
)


28,306Net increase in cash and cash equivalents


2,224



6,066Cash and cash equivalents at beginning of period


6,440



6,600Cash and cash equivalents at end of period

$
8,664


$
12,666Supplemental disclosure of cash flow informationcash paid for interest, net of $3,244 and $1,303
capitalized

$
14,706


$
18,213Supplemental disclosure of non-cash investing and financing activities:Proceeds from disposition of real estate held by exchange facilitator and classified as other asset

$
19,477


$
Additional investment in limited partnership:Investments

$
3,681


$
Accounts payable


(3,681
)

$
$



$
Issuance of Operating Partnership Units in connection with the purchase of real estate

$



$
10,381Exchange of related party notes receivable for investments

$



$
8,347Contribution of real estate in exchange for notes receivable

$



$
22,463Consolidation of previously unconsolidated investment

$



$
8,087Mortgage note payable assumed in connection with purchase of real estate

$



$
6,144Exchange of investment for note receivable from investee

$



$
1,501





See accompanying notes to the consolidated unaudited financial statements.




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




(1)    Organization and Basis of Presentation





Essex Portfolio, L.P. (the Operating Partnership) was formed in March 1994 and commenced operations on June 13, 1994, when Essex Property Trust, Inc. (the
Company), the general partner of the Operating Partnership, completed its initial public offering (the Offering) in which it issued 6,275,000 shares of common stock at $19.50 per share. The net proceeds from the Offering of
$112,071 were used by the Company to acquire a 77.2% interest in the Operating Partnership. The Company has elected to be treated as a real estate investment trust (REIT) under the Internal Revenue Code of 1986 (the Code), as
amended.





The unaudited consolidated financial statements of the Operating Partnership are prepared in accordance
with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q. In the opinion of management, all adjustments necessary for a fair presentation of
the financial position, results of operations and cash flows for the periods presented have been included and are normal and recurring in nature. These unaudited consolidated financial statements should be read in conjunction with the audited
consolidated financial statements included in the Operating Partnerships annual report on Form 10-K for the year ended December 31, 2001.





The Company is the sole general partner in the Operating Partnership, owning an 88.9%, 89.0% and 89.0% general partnership interest as of June 30, 2002, December 31, 2001 and June 30, 2001,
respectively.





As of June 30, 2002, the Operating Partnership operates and has ownership interests in 88
multifamily properties (containing 19,769 units) and two office buildings (with approximately 56,300 square feet) (collectively, the Properties). The Properties are located in Northern California (the San Francisco Bay Area), Southern
California (Los Angeles, Ventura, Orange and San Diego counties), and the Pacific Northwest (the Seattle, Washington and Portland, Oregon metropolitan areas).





The Operating Partnership invests in joint ventures and accounts for these investments under the equity or consolidation methods of accounting based on the voting control it exercises through its
ownership interests in these affiliates. Under the equity method of accounting, the investment is carried at cost of acquisition and includes costs incurred by the Operating Partnership and not reimbursed by the joint venture, plus the Operating
Partnerships share in undistributed earnings or losses since acquisition. The individual assets, liabilities, revenues and expenses of the joint ventures accounted for under the equity method are not recorded in the Operating
Partnerships consolidated financial statements.





Included in the Operating Partnerships investments
accounted for under the equity method investments are limited partnership interests in 17 partnerships (Down REIT entities), which collectively own ten multifamily properties, comprised of 1,831 units. These investments were made under arrangements
whereby Essex Management Corporation (EMC) became the general partner, the Operating Partnership became a special minority interest limited partner, and the other limited partners were granted rights of redemption for their interests. Such partners
can request to be redeemed and the Operating Partnership can elect to redeem their rights for cash or by issuing shares of the Companys common stock on a one share per unit basis. Conversion values will be based on the market value of the
Companys common stock at the time of redemption multiplied by the number of units stipulated under the above arrangements. The other limited partners receive distributions based on the Companys current dividend rate times the number of
redemption shares. At June 30, 2002, the maximum number of shares that could be required to meet redemption of these Down REIT entities is 1,510,034. The net income reported by the Operating Partnership under




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




the equity method of accounting by these down REIT entities is the net income of these down REIT entities as reduced by the income
allocated to the other limited partners which is equal to the distributions they received.





All significant
intercompany balances and transactions have been eliminated in the consolidated financial statements.








(2)    Significant Transactions for the quarter ended June 30, 2002





(A)  Disposition Activities





On April 17, 2002, the AEW co-investment in which
the Operating Partnership is a 20 percent partner, sold two of its four assets. Riverfront Apartments, a 229-unit apartment community in San Diego, California and Casa Mango Apartments, a 96-unit apartment community in Del Mar, California were sold
to an unrelated third party. The combined sales price was approximately $52,000. The buyer of these two properties assumed two non-recourse mortgages in the cumulative amount of approximately $26,500, with a 6.5% fixed interest rate, which matures
in February 2009. The Operating Partnerships equity in income from the gain on the sale of real estate is $2,000 and is presented as interest and other income in the accompanying consolidated statement of operations. The Operating Partnership
contributed the assets to the joint venture in December 1999 at a value of approximately $41,000. In addition, the Operating Partnership earned a fee in conjunction with the sale of these assets in the amount of $1,110 and this fee is presented as
interest and other income in the accompanying consolidated statement of operations. The Operating Partnership may receive an additional incentive fee related specifically to these two asset sales, which is subject to certain limitations and
conditions.





On June 18, 2002, the Operating Partnership sold Tara Village, a 168-unit apartment community located
in Tarzana, California to an unrelated third party for a contract price of $20,000. The Operating Partnership acquired the property in January 1997 for $10,300. The Operating Partnership realized a gain on the sale of real estate of $9,051. This
property was not encumbered by any mortgage. The Operating Partnership expects to utilize Internal Revenue Code Section 1031 to defer the taxable gain on the sale of this property. As of June 30, 2002, the net proceeds of this sale of $19,477 are
held as a deposit by an exchange facilitator in connection with the 1031 exchange and is presented as prepaid expenses and other assets in the Companys accompanying balance sheet.





(B)  DispositionSubsequent Event





On July 2, 2002, the Operating Partnership through its taxable REIT subsidiary Essex Fidelity I Corporation (EFC), sold Moanalua Hillside Apartments, a 700-unit apartment community in Honolulu, Hawaii to an unrelated third
party for a contract price of $44,100. In conjunction with this sale, the Operating Partnership originated a $40,000 non-recourse mortgage on the property with a fixed interest rate of 8.75%, maturing on July 2004. The Operating Partnership received
a $600 loan fee, a $450 consulting fee, and $1,600 in prepaid interest in connection with the transaction.Upon early prepayment prior to its scheduled maturity, the Operating Partnership will retain any unamortized prepaid interest. EFC purchased
the asset on June 29, 2001 for a contract price of $42,200.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




(C)  Debt Transactions





On May 15, 2002, the Operating Partnership renewed and expanded its existing $120,000 unsecured revolving credit facility. The renewed facility was increased to $165,000
and carries an interest rate, based on a tiered rate structure, which currently is equal to LIBOR plus 1.10%, representing a 0.05% reduction from the previous facility. The credit line has a two-year term with a one-year extension option.





On June 5, 2002, the Operating Partnership refinanced the construction loan that was in place on Tierra Vista, a
404-unit apartment community, located in Oxnard, California. The construction loan amount at the time of payoff was approximately $35,800 and had a variable interest rate at LIBOR plus 1.795%. The new loan is a non-recourse mortgage in the amount of
$38,000, with a 5.93% fixed interest rate, which matures in June 2007. This asset and mortgage are owned by the AEW co-investment in which the Operating Partnership is a 20 percent partner.





(D)  Development Communities





The Operating Partnership defines development communities as new apartment properties that are being constructed or are newly constructed and in a phase of lease-up and have not yet reached stabilized operations. At June 30, 2002,
the Operating Partnership (including the Funds development communities) has ownership interests in six development communities, with an aggregate of 1,521 multifamily units and an estimated total cost of $284,000 of which approximately
$129,800 remains to be expended of which approximately $58,000 is the Operating Partnerships commitment.





During the second quarter, the Operating Partnership began lease-up at two development communities, The Essex on Lake Merritt, a 270-unit high-rise luxury apartment community located in Oakland, California and The San Marcos, a
312-unit apartment community located in Richmond, California. The Operating Partnership projects The Essex on Lake Merritt will reach stabilized operations during the fourth quarter of 2002 and The San Marcos will reach stabilized operations during
the third quarter of 2003.





(E)  Redevelopment Communities





The Operating Partnership defines redevelopment communities as existing properties owned or recently acquired which have been targeted for
investment by the Operating Partnership with the expectation of increased financial returns through property improvement. Redevelopment communities typically have apartment units that are not available for rent and, as a result, may have less than
stabilized operations. At June 30, 2002, the Operating Partnership has ownership interests in two redevelopment communities, which contain an aggregate of 258 units with total originally projected redevelopment investment of $6,532 of which
approximately $2,434 remains to be expended.





(F)  Equity Transactions





In May 2001, the Companys Board of Directors authorized the Operating Partnership to purchase from time to time shares of the
Companys Common Stock, in an amount up to $50,000, at a price not to exceed $48.00 per share in the open market or through negotiated or block transactions. The timing of any repurchase will depend on the market price and other market
conditions and factors. Essex expects to use working capital or proceeds from the sale of properties to provide funds for this program. The purpose of the program is to acquire stock related to real estate transactions involving the issuance of
partnership units in the Operating Partnership and similar interests. This




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




program supersedes its common stock repurchase plan as announced on March 25, 1999. In October 2001, the Operating Partnership
acquired 100,700 shares of the Companys outstanding Common Stock. The weighted average exercise price paid for the shares was $47.88. In March 2002, the Operating Partnership acquired 10,500 shares of the Companys outstanding Common
Stock. The weighted average exercise price paid for the shares was $47.50.





In order to facilitate the purchase of
Common Stock, on May 31, 2002, the Operating Partnership entered into a Stock Repurchase Plan and Agreement with Bear, Stearns and Co., Inc. that complies with the requirements of Rule 10b5-1(c)(1) under the Securities Exchange Act of 1934, as
amended. Under this plan, shares can be repurchased in the open market during those periods each quarter when trading in the Companys stock by insiders is restricted under the Companys insider trading policy. The Plan provides for the
repurchase of up to 400,000 shares at a price not to exceed $48.00.





Subsequent to the quarter ended June 30,
2002, under the terms of the Stock Repurchase Plan and Agreement, the Operating Partnership purchased 400,000 shares at $48.00 per share.





The amount paid for the shares are reflected as a reduction of the general partners capital in the Operating Partnerships consolidated balance sheet.





(G)  Other





In April
2000, the Operating Partnership invested $1,500 in a real estate focused technology fund sponsored by Cohen and Steers. The Operating Partnership is on the funds advisory board and viewed this investment as an opportunity to keep abreast of
current trends in the area of technology as applied to the real estate industry. The fund has various investments in real estate technology companies. Through June 30, 2002, the Operating Partnership reduced the book value of its investment by $700
in light of current valuations provided by the funds general partner. The Operating Partnership recorded the valuation reduction as a reduction to its equity in income from its investment in the technology fund.





The Operating Partnership carries comprehensive liability, fire, extended coverage and rental loss insurance for each of the Properties.
Conditions in the insurance industry have resulted in greater costs, increasing more than 50% from the prior year, along with increased deductibles and reduced coverages. In some cases, the Operating Partnership is not in technical compliance with
the insurance requirements of loan agreements, and is discussing this issue with applicable lenders. The Operating Partnership does not believe that this non-compliance will have a material impact on its operations or future financing efforts.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




(H)  Private Equity Fund





Essex Apartment Value Fund, L.P. (the Fund), is an investment fund managed by the Operating Partnership and will be, subject to specific exceptions, the
Operating Partnerships exclusive investment vehicle for new investments until the Funds committed capital has been invested or committed for investments, or if earlier, December 31, 2003. The Fund has total capital commitments of $250
million and is expected to utilize leverage of approximately 65% of the value of the underlying real estate portfolio. The Operating Partnership is committed to invest 21.4% of the aggregate capital committed to the Fund. In addition, the Operating
Partnership will be compensated by the Fund for its asset management, property management, development and redevelopment services and may receive incentive payments if the Fund exceeds certain financial return benchmarks.





Disposition Activities of the Fund





On May 9, 2002, the Fund sold Marbrisas Apartments, a 500-unit apartment community located in Chula Vista, California, to an unrelated third party for an approximate contract price of $69,000. In
connection with this transaction, the buyer assumed a non-recourse secured mortgage of approximately $40,000 with a 7.988% fixed interest rate, which matures in July 2005. The Fund purchased the property in August 2001 for $62,000 and the net
proceeds from the sale will be distributed to the Fund investors. The Operating Partnerships equity in income from the gain on the sale of the real estate is $1,100 and is presented as interest and other income in the accompanying consolidated
statement of operations. In addition, at the inception of the Fund the Operating Partnership incurred approximately $7,200 in placement fees and professional fees related to the syndication of the Fund. The Operating Partnership will write off a
portion of these costs upon the sale of Fund assets as a reduction to its equity in income from the Funds gain on the sale of real estate. On this asset sale the Operating Partnership wrote off approximately $900 of these costs. The Operating
Partnership is eligible to receive incentive payments to the extent the Fund exceeds certain financial return benchmarks, including a 10% compounded annual return on the limited partners total capital contributions. The Operating Partnership
has not received any incentive payments to date.





Debt Transactions of the Fund





In June 2002, the Fund amended and restated its existing $75,000 secured revolving subscription facility. The renewed facility was
increased to $125,000 and bears interest at LIBOR plus 0.875%. As of June 30, 2002, the line had an outstanding balance of $23,370, with an interest rate of approximately 2.715%. The credit line matures in December 2003.





Development Communities of the Fund





At June 30, 2002 the Fund has three development communities with an aggregate of 615 multifamily units and an estimated total cost of $122,300 of which $91,400 remains to be expended and approximately
$19,600 is the Operating Partnerships commitment.




13




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




(3)  Related Party Transactions





All general and administrative expenses of the Company, Operating Partnership and Essex Management Corporation, an unconsolidated preferred stock subsidiary of the Company
(EMC), are initially borne by the Operating Partnership, with a portion subsequently allocated to EMC. Expenses allocated to EMC for the three months ended June 30, 2002 and 2001 totaled $708 and $488, respectively, and $1,478 and $918
for the six months ended June 30,2002 and 2001, respectively. The allocation is reflected as a reduction in general and administrative expenses in the accompanying consolidated statements of operations.





Interest and other income includes interest income of $1,097 and $1,319 for the three months ended June 30, 2002 and 2001, respectively,
and $2,158 and $2,219 for the six months ended June 30, 2002 and 2001, respectively. The majority of interest income was earned on the notes receivable from investees. Other income also includes management fee income and investment income from the
Operating Partnerships investees of $3,010 and $423 for the three months ended June 30, 2002 and 2001, respectively, and $5,589 and $770 for the six months ended June 30, 2002 and 2001, respectively. A component of other income is a $1,110 fee
earned by the Operating Partnership in connection with the sale of two co-investments assets for the quarter ended June 30, 2002.





Notes receivable from investees and other related parties as of June 30, 2002 and December 31, 2001 consist of the following:





June 30, 2002

December 31, 2001Notes receivable from joint ventures investees:Notes receivable from Essex Fidelity I Corp (EFC), secured, bearing interest from 7% to LIBOR + 2.5%, due
2002-2004

$
48,773

$
47,305Note receivable from EFC, unsecured, bearing interest at 7.5%, due 2011


1,150


1,150Note receivable from Highridge Apartments, secured, bearing interest at 10%, due on demand


2,950


2,950Receivable from Newport Beach North LLC and Newport Beach South LLC, unsecured, non interest bearing, due on
demand


1,400


974Other related party receivables:Loans to officers, secured, bearing interest at 8%, due April 2006


633


633Other related party receivables, substantially due on demand


6,659


3,002$
61,565

$
56,014





Other related party receivables consist primarily of accrued
interest income on notes receivable from joint venture investees and loans to officers, advances and accrued management fees from joint venture investees and unreimbursed expenses due from EMC.




14




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




(4)  New Accounting Pronouncements





The Operating Partnership adopted Financial Accounting Standards Boards (FASB) Statement of Financial Accounting Standard (FAS) 144, Accounting for
the Impairment or Disposal of Long-Lived Assets on January 1, 2002. FAS 144 supersedes FAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The primary objectives of FAS 144 are
to develop one accounting model based on the framework established in FAS 121 for long-lived assets to be disposed of by sale, and to address significant implementation issues regarding impairment of long-lived assets held for use. FAS 144 requires
discontinued operations presentation for an operating property considered held for sale beginning on January 1, 2002. In accordance with FAS 144, the Operating Partnership classifies real estate assets as held for sale in the period in which all of
the following criteria are met: (a) management, having the authority to approve the action, commits to a plan to sell the asset; (b) the asset is available for immediate sale in its present condition subject only to terms that are usual and
customary for sales of such assets; (c) an active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated; (d) the sale of the asset is probable and the transfer of the asset is expected to
qualify for recognition as a completed sale within one year; (e) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and (f) actions required to complete the plan indicate that it is
unlikely that significant changes to the plan will be made or that the plan will be withdrawn.





The Operating
Partnerships adoption of FAS 144 resulted in: (i) the presentation of the net operating results of properties sold during the three and six months ended June 30, 2002, less allocated interest expense, as income from discontinued operations for
all periods presented and (ii) the presentation of the gain on sale of operating properties sold, net of sale costs, as income from discontinued operations for the three and six months ended June 30, 2002. The Operating Partnership allocated
interest expense based on the percentage of the cost basis of properties sold to the total cost basis of real estate assets as of June 30, 2002, and pro-rated the allocated interest for the number of days prior to sale. Implementation of FAS 144
only impacted the income statement classification but had no effect on results of operations.





The Operating
Partnership presents income and gains/losses on properties sold as discontinued operations. Real estate investments accounted for under the equity method of accounting remain classified in continuing operations upon disposition.





In June 2001, the FASB issued FAS 143, Accounting for Asset Retirement Obligations. Under FAS 143, the fair value
of a liability for an asset retirement obligation must be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of
the long-lived asset. FAS 143 is effective for fiscal years beginning after June 15, 2002. The Operating Partnership does not believe that FAS 143 will have a material impact on the Operating Partnerships financial position or results of
operations.




15




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




In April 2002, the FASB issued FAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FAS Statement No. 13, and Technical Correction. FAS 145 eliminates extraordinary accounting treatment for reporting or loss on debt extinguishments, and amends other existing authoritative pronouncements to make various technical corrections,
clarifies meanings, or describes their applicability under changed conditions. The provisions of FAS 145 are effective for the Operating Partnership with the beginning of fiscal year 2003; however, early application of FAS 145 is encouraged. Debt
extinguishments reported as extraordinary items prior to scheduled or early adoption of FAS 145 would be reclassified in most cases following adoption. The Operating Partnership does not anticipate a significant impact on their results of operations
from adopting FAS 145.





In July 2002, the FASB issued FAS 146, Accounting For Costs Associated
With Exit Or Disposal Activities. FAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities. Under FAS 146, a commitment to an exit or disposal plan no longer will be a sufficient basis for
recording a liability for those activities. The Operating Partnership does not anticipate a significant impact on their results of operations from adopting FAS 146.




16




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




(5)    Segment Information





The Operating Partnership defines its reportable operating segments as the three geographical regions in which its properties are located: Northern California, Southern
California and the Pacific Northwest. Excluded from segment revenues are interest and other corporate income. Other non-segment assets include investments, real estate under development, cash, receivables and other assets. The revenues, net
operating income, and assets for each of the reportable operating segments are summarized as follows for the periods presented.





Three months endedJune 30, 2002


June 30, 2001RevenuesNorthern California

$
14,443


$
16,876Southern California


18,155



17,716Pacific Northwest


10,567



11,391Total segment revenues


43,165



45,983Interest and other income


7,818



4,536Total revenues

$
50,983


$
50,519Net operating income:Northern California

$
11,004


$
12,942Southern California


13,073



12,320Pacific Northwest


7,093



8,005Total segment net operating income


31,170



33,267Interest and other income


7,818



4,536Depreciation and amortizationNorthern California


(2,803
)


(2,714
)Southern California


(3,521
)


(3,355
)Pacific Northwest


(2,790
)


(2,764
)Total segment depreciation and amortization


(9,114
)


(8,833
)Interest


(8,652
)


(9,547
)Amortization of deferred financing costs


(147
)


(207
)General and administrative


(1,565
)


(1,854
)Income from continuing operations before minority interests and discontinued operations

$
19,510


$
17,362




17




---

##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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




(5)    Segment Information (continued)





Six months endedJune 30, 2002


June 30, 2001RevenuesNorthern California

$
29,675


$
33,611Southern California


35,713



35,132Pacific Northwest


21,212



22,778Total segment revenues


86,600



91,521Interest and other income


13,795



8,596Total revenues

$
100,395


$
100,117Net operating income:Northern California

$
22,445


$
26,046Southern California


25,148



24,323Pacific Northwest


14,431



15,692Total segment net operating income


62,024



66,061Interest and other income


13,795



8,596Depreciation and amortizationNorthern California


(5,599
)


(5,397
)Southern California


(6,913
)


(6,593
)Pacific Northwest


(5,588
)


(5,573
)Total segment depreciation and amortization


(18,100
)


(17,563
)Interest


(17,441
)


(18,881
)Amortization of deferred financing costs


(295
)


(367
)General and administrative


(3,265
)


(3,729
)Income from continuing operations before minority interests and discontinued operations

$
36,718


$
34,117June 30, 2002


December 31, 2001Assets:Northern California

$
300,596


$
302,408Southern California


444,386



456,639Pacific Northwest


255,487



259,884Total segment net real estate assets


1,000,469



1,018,931Non-segment assets


365,864



310,527Total assets

$
1,366,333


$
1,329,458




18




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


June 30, 2002 and 2001


(Unaudited)


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







(6)    Net Income Per Unit





Three months ended June 30, 2002

Three months ended June 30, 2001Income


Weighted Average Units

Per Unit Amount

Income


Weighted Average Units

Per Unit AmountNet Income

$
28,592







$
17,515Less:  dividends on limited partner preferred equity


(4,580
)







(4,580
)Basic:Income available to common units


24,012


20,925

$
1.15


12,935


20,719

$
0.62Effect of Dilutive Securities:Convertible preferred stock














Stock options





191








315Diluted:Income available to common units plus assumed conversions

$
24,012


21,116

$
1.14

$
12,935


21,034

$
0.62








Six months ended June 30, 2002

Six months ended June 30, 2001Income


Weighted Average Units

Per Unit Amount

Income


Weighted Average Units

Per Unit AmountNet Income

$
45,944







$
34,408Less:  dividends on limited partner preferred equity


(9,159
)







(9,159
)Basic:Income available to common units


36,785


20,874

$
1.76


25,249


20,630

$
1.22Effect of Dilutive Securities:Convertible preferred stock














Stock options





174








340Diluted:Income available to common units plus assumed conversions

$
36,785


21,048

$
1.75

$
25,249


20,970

$
1.20




19




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##### Table of Contents

Item 2:Managements Discussion and Analysis of Financial Condition and Results of Operations





The following discussion is based primarily on the consolidated unaudited financial statements of Essex Portfolio, L.P. (the Operating Partnership) for the three and six months ended June 30, 2002 and 2001. This
information should be read in conjunction with the accompanying consolidated unaudited financial statements and notes thereto. These consolidated financial statements include all adjustments which are, in the opinion of management, necessary to
reflect a fair statement of the results and all such adjustments are of a normal recurring nature.





The Operating
Partnership holds, directly or indirectly, all of the Companys interests in the Operating Partnerships properties and all of the Companys operations relating to the Companys properties are conducted through the Operating
Partnership. The Company is the sole general partner of the Operating Partnership and, as of June 30, 2002, December 31, 2001 and June 30, 2001, owed an 88.9%, 89.0% and 89.0% general partnership interest in the Operating Partnership, respectively.





General Background





The Operating Partnerships property revenues are generated primarily from multifamily property operations, which accounted for greater than 99% of its property revenues for the three and six months ended June 30, 2002
and 2001. The Operating Partnerships multifamily properties (the Properties) are located in Northern California (the San Francisco Bay Area), Southern California (Los Angeles, Ventura, Orange and San Diego counties) and the Pacific
Northwest (the Seattle, Washington and Portland, Oregon metropolitan areas).





Essex Apartment Value Fund, L.P.
(the Fund), is an investment fund managed by the Operating Partnership and will be, subject to specific exceptions, the Operating Partnerships exclusive investment vehicle for new investments until the Funds committed capital
has been invested or committed for investments, or if earlier, December 31, 2003. The Fund has total capital commitments of $250 million and is expected to utilize leverage of approximately 65% of the value of the underlying real estate portfolio.
The Operating Partnership is committed to invest 21.4% of the aggregate capital committed to the Fund. In addition, the Operating Partnership will be compensated by the Fund for its asset management, property management, development and
redevelopment services and may receive incentive payments if the Fund exceeds certain financial return benchmarks. Since its formation, the Fund has acquired seven multifamily residential properties, representing 1,877 apartment units with an
aggregate purchase price of approximately $190 million, excluding redevelopment expenses, and disposed of one multifamily residential property, consisting of 500 apartment units at a gross sales price of approximately $69.0 million resulting in a
net realized gain of approximately $5.7 million. In addition, three development land parcels, where approximately 615 apartment units are planned for construction, have been purchased by the Fund with a total estimated cost for the projects of
approximately $122.3 million. As of June 30, 2002, the remaining commitments to fund these projects is approximately $91.4 million of which approximately $19.6 million is the Operating Partnerships commitment.





Since the Operating Partnership began operations in June 1994, the Operating Partnership has acquired ownership interests in 76
multifamily residential properties, its headquarters building and its Southern California office building. Of the multifamily properties acquired since the Operating Partnership began operations, 14 are located in Northern California, 42 are located
in Southern California, 15 are located in the Seattle, Washington metropolitan area and 5 are located in the Portland, Oregon metropolitan area. In total, these acquisitions consist of 16,451 multifamily units with total capitalized acquisition
costs of approximately $1,385.5 million. Additionally since it began operations, the Operating Partnership has developed and has ownership interests in nine multifamily development properties that have reached stabilized operations. These
development properties consist of 1,944 units with total capitalized development costs of $236.8 million. As part of its active portfolio management strategy, the Operating Partnership has disposed of, since it began operations, twelve multifamily
residential properties (six in Northern California, five in Southern California and one in the Pacific Northwest) consisting of a total of




20




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##### Table of Contents

2,014 units, six retail shopping centers in the Portland, Oregon metropolitan area and its former headquarters building located in Northern
California at an aggregate gross sales price of approximately $259.5 million resulting in total net realized gains of approximately $51.6 million.





The Operating Partnership (including the Funds development communities) has an ownership interest in and is developing six multifamily residential communities, with an aggregate of 1,521
multifamily units. In connection with these development projects, the Operating Partnership has directly, or in some cases through its joint venture partners, entered into contractual construction related commitments with unrelated third parties and
the total projected estimated cost for these projects is approximately $284.0 million. As of June 30, 2002, the remaining commitment to fund these projects is approximately $129.8 million of which approximately $58.0 million is the Operating
Partnerships commitment.





Results of Operations





Comparison of the Three Months Ended June 30, 2002 to the Three Months Ended June 30, 2001





Average financial occupancy rates of the Operating Partnerships multifamily Quarterly Same Store Properties (properties consolidated by the Operating Partnership for
each of the three months ended June 30, 2002 and 2001) was 94.0% and 95.4%, for the three months ended June 30, 2002 and 2001, respectively. Financial occupancy is defined as the percentage resulting from dividing actual rental income by
total possible rental income. Total possible rental income is determined by valuing occupied units at contractual rents and vacant units at market rents. The regional breakdown of average financial occupancy for the multifamily Quarterly Same Store
Properties for the three months ended June 30, 2002 and 2001 are as follows:





June 30, 2002


June 30, 2001Southern California

94.0
%

95.7
%Northern California

94.7
%

95.6
%Pacific Northwest

93.0
%

94.8
%





Total Revenues increased by $464,000 or 0.9% to $50,983,000
in the second quarter of 2002 from $50,519,000 in the second quarter of 2001. The following table sets forth a breakdown of these revenue amounts, including the revenues attributable to the Quarterly Same Store Properties.





Number of Properties

Three Months Ended June
30,

Dollar Change


Percentage Change2002

2001(Dollars in thousands)RevenuesProperty revenues QuarterlySame Store PropertiesSouthern California

20

$
14,394

$
14,089

$
305


2.2
%Northern California

14


12,488


14,681


(2,193
)

-14.9Pacific Northwest

23


10,567


11,391


(824
)

-7.2Properties

57


37,449


40,161


(2,712
)

-6.8Property revenues of properties acquired subsequent March 31, 2001(1)




5,716


5,822


(106
)

-1.8Total property revenues




43,165


45,983


(2,818
)

-6.1Interest and other income




7,818


4,536


3,282


72.4Total revenues



$
50,983

$
50,519

$
464


0.9
%


---

|(1) |  | Also includes two office buildings, redevelopment communities, and development communities.
|--- |  | -------------------------------------------------------------------------------------------




As set forth in the above table, the $464,000 net increase in total revenues was attributable to an increase in
interest and other income. Interest and other income increased by $3,282,000 or 72.4% to $7,818,000 in the second quarter of 2002 from $4,536,000 in the second quarter of 2001. The increase of $3,282,000 primarily relates to $2,089,000 of equity in
income from the gain on sale of co-investment assets, a $1,110,000 fee earned in conjunction with the sale of two co-investment assets, and interest income on notes receivables and income earned on the Operating Partnerships co-investments,
offset by a $700,000 reduction of the Operating Partnerships book value in a real estate technology fund investment accounted




21




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##### Table of Contents

for under the equity method based on the funds general partners valuation of real estate technology fund assets.





The increase in total revenues was offset by a net decrease of $2,712,000 attributable to property revenues from the Quarterly
Same Store Properties. Property revenues from the Quarterly Same Store Properties decreased by approximately 6.8% to $37,449,000 in the second quarter of 2002 from $40,161,000 in the second quarter of 2001. The majority of this decrease was
attributable to the 14 Quarterly Same Store Properties located in Northern California and the 23 Quarterly Same Store Properties located in the Pacific Northwest. The property revenues of the Quarterly Same Store Properties in Northern California
decreased by $2,193,000 or 14.9% to $12,488,000 in the second quarter of 2002 from $14,681,000 in the second quarter of 2001. The $2,193,000 decrease in Northern California is primarily attributable to rental rate decreases and a decrease in
financial occupancy to 94.7% in the second quarter of 2002 from 95.6% in the second quarter of 2001. The property revenues of the Quarterly Same Store Properties in the Pacific Northwest decreased by $824,000 or 7.2% to $10,567,000 in the second
quarter of 2002 from $11,391,000 in the second quarter of 2001. The $824,000 decrease in the Pacific Northwest is primarily attributable to rental rate decreases and a decrease in financial occupancy to 93.0% in the second quarter of 2002 from 94.8%
in the second quarter of 2001. The 20 multifamily residential properties located in Southern California offset the previously discussed Quarterly Same Store Properties property revenues decrease. The property revenues of these properties increased
by $305,000 or 2.2% to $14,394,000 in the second quarter of 2002 from $14,089,000 in the second quarter of 2001. The $305,000 increase is primarily attributable to rental rate increases as offset by a decrease in financial occupancy to 94.0% in the
second quarter of 2002 from 95.7% in the second quarter of 2001.





An additional component of the net decrease in
property revenues was a $106,000 decrease attributable to properties acquired subsequent to March 31, 2001, redevelopment communities, development communities and two office buildings. Subsequent to March 31, 2001, the Company acquired interests in
two multifamily properties, and had six communities under redevelopment (the Quarterly Acquisition Properties).





Total Expenses decreased by $1,684,000 or approximately 5.1% to $31,473,000 in the second quarter of 2002 from $33,157,000 in the second quarter of 2001. This decrease was mainly due to a decrease in interest expense, which
decreased by $895,000 or 9.4% to $8,652,000 in the second quarter of 2002 from $9,547,000 in the second quarter of 2001. The interest expense decrease was primarily due to declining interest rates and the capitalization of interest costs relating to
the Operating Partnerships development and redevelopment communities. Property operating expenses, exclusive of depreciation and amortization, decreased by $721,000 or 5.7% to $11,995,000 in the second quarter of 2002 from $12,716,000 in the
second quarter of 2001. Of such property operating expense decrease, $965,000 was attributable to the Quarterly Acquisition Properties offset by an increase in insurance expense which increased by $260,000 or approximately 113.0% to $490,000 in the
second quarter of 2002 from $230,000 in the second quarter of 2001. This increase is due to the current conditions in the insurance industry resulting in greater costs. Depreciation and amortization increased by $281,000 or approximately 3.2% to
$9,114,000 in the second quarter of 2002 from $8,833,000 in the second quarter of 2001, primarily due to the acquisition of assets.





General and administrative expenses represent the costs of the Operating Partnerships various acquisition and administrative departments as well as partnership administration and non-operating expenses. Such expenses
decreased by $289,000 or 15.6% to $1,565,000 in the second quarter of 2002 from $1,854,000 in the second quarter of 2001. This decrease is largely due to an increase in the allocation of general and administrative expenses to EMC due to the increase
in fee income earned by EMC.





Income from discontinued operations increased by $8,953,000 or 5,116.0% to
$9,128,000 in the second quarter of 2002 from $175,000 in the second quarter of 2001 due to gain on sale of real estate.





Net incomeincreased by $11,077,000 or 85.6% to $24,012,000 in the second quarter of 2002 from $12,935,000 in the second quarter of 2001. The increase is attributable to the gain on sale of real estate and the increase in
interest and other income, offset by the decrease in net operating income from the Quarterly Same Store Properties.




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##### Table of Contents

Comparison of the Six Months Ended June 30, 2002 to the Six Months Ended June 30,2001





Average financial occupancy rates of the Operating Partnerships multifamily Same Store Properties (properties consolidated by the
Operating Partnership for each of the six months ended June 30, 2002 and 2001) was 93.3% and 95.5%, for the six months ended June 30, 2002 and 2001, respectively. Financial occupancy is defined as the percentage resulting from dividing
actual rental income by total possible rental income. Total possible rental income is determined by valuing occupied units at contractual rents and vacant units at market rents. The regional breakdown of average financial occupancy for the
multifamily Same Store Properties for the six months ended June 30, 2002 and 2001 are as follows:





June 30, 2002


June 30, 2001Southern California

93.0
%

95.5
%Northern California

94.8
%

96.2
%Pacific Northwest

91.9
%

94.7
%





Total Revenues increased by $278,000 or 0.3% to $100,395,000
in the six months ended June 30, 2002 from $100,117,000 in the six months ended June 30, 2001. The following table sets forth a breakdown of these revenue amounts, including the revenues attributable to the Same Store Properties.





Number of Properties

Six Months Ended June
30,

Dollar Change


Percentage Change2002

2001(Dollars in thousands)RevenuesProperty revenuesSame Store PropertiesSouthern California

20

$
28,349

$
27,972

$
377


1.3
%Northern California

14


25,582


29,260


(3,678
)

-12.6Pacific Northwest

23


21,212


22,778


(1,566
)

-6.9Properties

57


75,143


80,010


(4,867
)

-6.1Property revenues of properties acquired subsequent December 31, 2000(1)




11,457


11,511


(54
)

-0.5Total property revenues




86,600


91,521


(4,921
)

-5.4Interest and other income




13,795


8,596


5,199


60.5Total revenues



$
100,395

$
100,117

$
278


0.3
%


---

|(1) |  | Also includes two office buildings, redevelopment communities, and development communities.
|--- |  | -------------------------------------------------------------------------------------------




As set forth in the above table, the $278,000 net increase in total revenues was attributable to an increase in interest and other income.
Interest and other income increased by $5,199,000 or 60.5% to $13,795,000 in the six months ended June 30, 2002 from $8,596,000 in the six months ended June 30, 2001. The increase of $5,199,000 primarily relates to $2,089,000 of equity in income
from the gain on sale of co-investment assets, a $1,110,000 fee earned in conjunction with the sale of two co-investment assets, and interest income on notes receivables and income earned on the Operating Partnerships co-investments, offset by
a $700,000 reduction of the Operating Partnerships book value in a real estate technology fund investment accounted for under the equity method based on the funds general partners valuation of real estate technology fund assets.





The increase in total revenues was offset by a net decrease of $4,867,000 attributable to property revenues from
the Same Store Properties. Property revenues from the Same Store Properties decreased by approximately 6.1% to $75,143,000 in the six months ended June 30, 2002 from $80,010,000 in the six months ended June 30, 2001. The majority of this decrease
was attributable to the 14 Same Store Properties located in Northern California and the 23 Same Store Properties located in the Pacific Northwest. The property revenues of the Same Store Properties in Northern California decreased by $3,678,000 or
12.6% to $25,582,000 in the six months ended June 30, 2002 from $29,260,000 in the six months ended June 30, 2001. The $3,678,000 decrease in Northern California is primarily attributable to rental rate decreases and a decrease in financial
occupancy to 94.8% in the six months ended June 30, 2002 from 96.2% in the six months ended June 30, 2001. The Company estimates that in general, market rents




23




---

##### Table of Contents

for its multifamily properties in Northern California have decreased on average by approximately 4% from December 31, 2001 through March 31,
2002 and on average by approximately 1% from March 31, 2002 through June 30, 2002. The property revenues of the Same Store Properties in the Pacific Northwest decreased by $1,566,000 or 6.9% to $21,212,000 in the six months ended June 30, 2002 from
$22,778,000 in the six months ended June 30, 2001. The $1,566,000 decrease in the Pacific Northwest is primarily attributable to rental rate decreases and a decrease in financial occupancy to 91.9% in the six months ended June 30, 2002 from 94.7% in
the six months ended June 30, 2001. The Company estimates that in general, market rents for its multifamily properties in Pacific Northwest have decreased on average by approximately 8% from December 31, 2001 through March 31, 2002 and on average by
approximately 4% from March 31, 2002 through June 30, 2002. The 20 multifamily residential properties located in Southern California offset the previously discussed Same Store Properties property revenues decrease. The property revenues of these
properties increased by $377,000 or 1.3% to $28,349,000 in the six months ended June 30, 2002 from $27,972,000 in the six months ended June 30, 2001. The $377,000 increase is primarily attributable to rental rate increases as offset by a decrease in
financial occupancy to 93.0% in the six months ended June 30, 2002 from 95.5% in the six months ended June 30, 2001. The Company estimates that in general, market rents for its multifamily properties in Southern California have increased on average
by approximately 4% from December 31, 2001 through March 31, 2002 and decreased on average by approximately 1% from March 31, 2002 through June 30, 2002.





An additional component of the net decrease in property revenues was a $54,000 net decrease attributable to properties acquired subsequent to March 31, 2001, redevelopment communities, development
communities and two office buildings. Subsequent to December 31, 2000, the Operating Partnership acquired interests in two multifamily properties, and had six communities under redevelopment (the Post 2000 Acquisition Properties).





Total Expenses decreased by $2,323,000 or approximately 3.5% to $63,677,000 in the six months ended June
30, 2002 from $66,000,000 in the six months ended June 30, 2001. This decrease was mainly due to a decrease in interest expense, which decreased by $1,440,000 or 7.6% to $17,441,000 in the six months ended June 30, 2002 from $18,881,000 in the six
months ended June 30, 2001. The interest expense decrease was primarily due to declining interest rates and the capitalization of interest costs relating to the Operating Partnerships development and redevelopment communities. Property
operating expenses, exclusive of depreciation and amortization, decreased by $884,000 or 3.5% to $24,576,000 in the six months ended June 30, 2002 from $25,460,000 in the six months ended June 30, 2001. Of such property operating expense decrease,
$790,000 was attributable to the Post 2000 Acquisition Properties offset by an increase in insurance expense which increased by $344,000 or approximately 70.3% to $833,000 in the six months ended June 30, 2002 from $489,000 in the six months ended
June 30, 2001. This increase is due to the current conditions in the insurance industry resulting in greater costs. Depreciation and amortization increased by $537,000 or approximately 3.1% to $18,100,000 in six months ended June 30, 2002 from
$17,563,000 in the six months ended June 30, 2001, primarily due to the acquisition of assets.





General and
administrative expenses represent the costs of the Operating Partnerships various acquisition and administrative departments as well as partnership administration and non-operating expenses. Such expenses decreased by $464,000 or 12.4% to
$3,265,000 in the six months ended June 30, 2002 from $3,729,000 in the six months ended June 30, 2001. This decrease is largely due to an increase in the allocation of general and administrative expenses to EMC due to the increase in fee income
earned by EMC.





Income from discontinued operations increased by $8,966,000 or 2,652.7% to $9,304,000 in
the six months ended June 30, 2002 from $338,000 in the six months ended June 30, 2001 due to gain on sale of real estate.





Net incomeincreased by $11,536,000 or 45.7% to $36,785,000 in the six months ended June 30, 2002 from $25,249,000 in the six months ended June 30, 2001. The increase is attributable to the gain on sale of real estate and the
increase in interest and other income, offset by the decrease in net operating income from the Same Store Properties.




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##### Table of Contents

Liquidity and Capital Resources





At June 30, 2002 the Operating Partnership had $8,664,000 of unrestricted cash and cash equivalents. The Operating Partnership expects to meet its short-term liquidity requirements by using its working
capital, cash generated from operations and amounts available under lines of credit. The Operating Partnership believes that its current net cash flows will be adequate to meet operating requirements and to provide for payment of dividends by the
Company in accordance with REIT qualification requirements. The Operating Partnership expects to meet its long-term liquidity requirements relating to property acquisition and development (beyond the next 12 months) by using a combination of some or
all of the following: working capital, amounts available from its lines of credit, net proceeds from public and private debt and equity issuances, and proceeds from the disposition of properties that may be sold from time to time. There can,
however, be no assurance that the Operating Partnership will have access to the debt and equity markets in a timely fashion to meet such future funding requirements or that future working capital and borrowings under its lines of credit will be
available, or if available, will be sufficient to meet the Operating Partnerships requirements or that the Operating Partnership will be able to dispose of properties in a timely manner and under terms and conditions that the Operating
Partnership deems acceptable.





The Operating Partnership has two outstanding unsecured lines of credit for an
aggregate amount of $195,000,000. In May 2002, the Operating Partnership renewed and expanded its existing $120,000,000 unsecured revolving credit facility. The renewed facility was increased to $165,000,000 and carries an interest rate, based on a
tiered rate structure, which currently is equal to LIBOR plus 1.10%, representing a 0.05% reduction from the previous facility. The credit line matures in May 2004, with an option to extend it for one year thereafter. At June 30, 2002 the Operating
Partnership had $76,459,000 outstanding on this line of credit, with an interest rate of approximately 3.0%.





A
second line of credit in the amount of $30,000,000 matures in August 2002, with an option to extend for one year thereafter. The Operating Partnership does not expect to renew this line of credit at this time. Outstanding balances on this second
line bears interest based on a tiered rate structure currently at LIBOR plus 1.175%. At June 30, 2002 the Operating Partnership had $30,000,000 outstanding on this line of credit, with an interest rate of approximately 3.0%.





In June 2002, the Fund amended and restated its existing $75,000 secured revolving subscription facility. The renewed facility was
increased to $125,000,000 and bears interest at LIBOR plus 0.875%. As of June 30, 2002, the line had an outstanding balance of $23,370,000, with an interest rate of approximately 2.715%. The credit line matures in December 2003.





In addition to the unsecured lines of credit, the Operating Partnership had $561,220,000 of secured indebtedness at June 30,
2002. Such indebtedness consisted of $502,400,000 in fixed rate debt with interest rates varying from 6.5% to 8.8% and maturity dates ranging from 2002 to 2026. The indebtedness also included $58,820,000 of debt represented by tax exempt variable
rate demand bonds with interest rates paid during the six months ended June 30, 2002 ranging from 4.5% to 5.5% and maturity dates ranging from 2020 to 2026. The tax-exempt variable rate demand bonds are capped at interest rates ranging from 7.1% to
7.3%.





The Operating Partnerships unrestricted cash balance increased by $2,224,000 or 34.5% to $8,664,000
as of June 30, 2002 from $6,440,000 as of December 31, 2001. This increase was primarily a result of $45,359,000 net cash provided by operating activities which was offset by $32,767,000 of net cash used in investing activities and $10,368,000 of
net cash used in financing activities. The $32,767,000 of net cash used in investing activities was primarily a result of $30,202,000 used to fund real estate under development, $9,151,000 in additions to notes receivable and investments made to
finance real estate property acquisitions by the Operating Partnerships investees, related party notes and other receivables, and $9,765,000 in additions to real estate which was offset in part by $12,623,000 in proceeds received from
investments in corporations and limited partnerships. The $10,368,000 of net cash used in financing activities was primarily a result of $27,206,000 used to pay distributions to the general partner, $12,514,000 used to pay distributions to limited
partners, and $9,981,000 in repayments of mortgage and




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##### Table of Contents

other notes payable and lines of credit, which was offset in part by $39,000,000 received in proceeds from mortgage and other notes payable and
lines of credit.





Non-revenue generating capital expenditures are improvements and upgrades that extend the useful
life of the property and are not related to preparing a multifamily property unit to be rented to a tenant. The Operating Partnership expects to incur approximately $350 per weighted average occupancy unit in non-revenue generating capital
expenditures for the year ended December 31, 2002. These expenditures do not include the improvements required in connection with the origination of mortgage loans, expenditures for renovations and improvements on recently acquired properties which
are expected to generate additional revenue, and renovation expenditures required pursuant to tax-exempt bond financings. The Operating Partnership expects that cash from operations and/or its lines of credit will fund such expenditures. However,
there can be no assurance that the actual expenditures incurred during 2002 and/or the funding thereof will not be significantly different than the Operating Partnerships current expectations.





The Operating Partnership (including the Funds development communities) has an ownership in interest and is developing six
multifamily residential communities, with an aggregate of 1,521 multifamily units. Such projects involve certain risks inherent in real estate development. See Potential Factors Affecting Future Operating ResultsDevelopment and
Redevelopment Activities below. In connection with these development projects, the Operating Partnership has directly, or in some cases through its joint venture partners, entered into contractual construction related commitments with
unrelated third parties for a total amount of approximately $284,000,000. As of June 30, 2002, the remaining commitment to fund the estimated cost to complete is approximately $129,800,000 of which approximately $58,000,000 is the Operating
Partnerships commitment. The Operating Partnership expects to fund such commitments by using a combination of some or all of the following sources: its working capital, operating cash flows, amounts available on its lines of credit, net
proceeds from public and private equity and debt issuances, and proceeds from the disposition of properties, which may be sold from time to time.





The Operating Partnership carries comprehensive liability, fire, extended coverage and rental loss insurance for each of the Properties. Conditions in the insurance industry have resulted in greater
costs, increasing more than 50% from the prior year, along with increased deductibles and reduced coverages. In some cases, the Operating Partnership is not in technical compliance with the insurance requirements of loan agreements, and is
discussing this issue with applicable lenders. The Operating Partnership does not believe that this non-compliance will have a material impact on its operations or future financing efforts. As further described in the Companys Annual Report on
Form 10-K for the year ended December 31, 2001, the Operating Partnership may incur losses due to deductibles, self-insured retentions, co-payments and losses in excess of appropriate coverages. See Insurance in Item 1 of the
Companys Annual Report on Form 10-K for the year ended December 31, 2001.





Pursuant to existing shelf
registration statements, the Company has the capacity to issue up to $342,000,000 of equity securities and the Operating Partnership has the capacity to issue up to $250,000,000 of debt securities.





The Company pays quarterly dividends from cash available for distribution. Until it is distributed, cash available for distribution is
invested by the Operating Partnership primarily in short-term investment grade securities or is used by the Operating Partnership to reduce balances outstanding under its lines of credit.





Essex Apartment Value Fund, L.P. (the Fund), is an investment fund managed by the Operating Partnership and will be, subject to specific exceptions, the
Operating Partnerships exclusive investment vehicle for new investments until the Funds committed capital has been invested or committed for investment, or if earlier, December 31, 2003. The Fund has total capital commitments of $250
million and is expected to utilize leverage of approximately 65% of the value of the underlying real estate portfolio. The Operating Partnership is committed to invest 21.4% of the aggregate capital committed to the Fund. In addition, Essex will be
compensated by the Fund for its asset management, property management, development and redevelopment services and may receive incentive payments if the Fund exceeds certain financial return benchmarks.




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##### Table of Contents

The Companys Board of Directors has authorized the Operating Partnership to purchase from time to time shares of
the Companys Common Stock, in an amount up to $50 million, at a price not to exceed $48.00 per share in the open market or through negotiated or block transactions. The timing of any repurchase will depend on the market price and other market
conditions and factors. Essex will use working capital or proceeds from the sale of properties to provide funds for this program. The purpose of the program is to acquire stock for the issuance of partnership units in the Operating Partnership
related to real estate transactions and similar interests. This program supersedes its common stock repurchase plan as announced on March 25, 1999. In October 2001, the Operating Partnership acquired 100,700 shares of the Companys outstanding
Common Stock. The weighted average exercise price paid for the shares was $47.88. In March 2002, the Operating Partnership acquired 10,500 shares of the Companys outstanding Common Stock. The weighted average exercise price paid for the shares
was $47.50.





In order to facilitate the purchase of Common Stock, on May 31, 2002, the Operating Partnership
entered into a Stock Repurchase Plan and Agreement with Bear, Stearns and Co., Inc. that complies with the requirements of Rule 10b5-1(c)(1) under the Securities Exchange Act of 1934, as amended. Under this plan, shares can be repurchased in the
open market during those periods each quarter when trading in the Companys stock by insiders is restricted under the Companys insider trading policy. The Plan provides for the repurchase of up to 400,000 shares at a price not to exceed
$48.00.





Subsequent to the quarter ended June 30, 2002, under the terms of the Stock Repurchase Plan and
Agreement, the Operating Partnership purchased 400,000 shares at $48.00 per share.





The amount paid for the shares
are reflected as a reduction of the general partners capital in the Operating Partnerships consolidated balance sheet.





Forward Looking Statements





Certain statements in this Managements Discussion
and Analysis of Financial Condition and Results of Operations, and elsewhere in this quarterly report on Form 10-Q which are not historical facts may be considered forward looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding the Operating Partnerships expectations, hopes, intentions, beliefs and strategies regarding the future. Forward
looking statements include statements about decreases and increases in market rent for its multifamily properties and trends of such decreases and increases, statements regarding the expected additional fees from, and the expected tax treatment of,
property dispositions, the Operating Partnerships expectations as to the total projected costs of current development and redevelopment projects and the projected stabilized operation dates for such projects, beliefs as to the adequacy of
future cash flows to meet operating requirements and to provide for dividend payments in accordance with REIT requirements, expectations as to the amount of non-revenue generating capital expenditures for the year ended December 31, 2002, future
acquisitions and developments, the anticipated performance of the Essex Apartment Value Fund, L.P. (the Fund), the anticipated performance of existing properties, and statements regarding the Operating Partnerships financing
activities. The Operating Partnerships actual results may differ materially from those projected in such forward-looking statements. Factors that might cause such a difference include, but are not limited to, that market rental rates may
decrease or increase beyond what is currently expected, that the ultimate return from property dispositions will differ from what is expected, that the total costs of current development and redevelopment projects will exceed expectations, that such
projects will experience unexpected delays in completing development or in leasing, that acquisitions will fail to meet expectations, that future cash flows will be inadequate to meet operating requirements and/or will be insufficient to provide for
dividend payments in accordance with REIT requirements, that the actual non-revenue generating capital expenditures will exceed the Operating Partnerships current expectations, that the Fund will fail to perform as anticipated, the Operating
Partnership will not have access to the debt and equity markets in a timely fashion in order to meet future funding requirements, as well as those risks, special considerations, and other factors discussed under the caption Potential Factors
Affecting Operating Results and those discussed under the caption Other Matters/Risk Factors in Item 1 of the Companys Annual Report on Form 10-K for the year ended December 31, 2001.




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##### Table of Contents

Potential Factors Affecting Future Operating Results





Many factors affect the Operating Partnerships actual financial performance and may cause the Operating Partnerships future results to be different from past
performance or trends. These factors include those factors discussed under the caption Other Matter/Risk Factors in Item 1 of the Operating Partnerships Annual Report on Form 10-K for the year ended December 31, 2001 and the
following:





Economic Environment and Impact on Operating Results





Both the national economy and the economies of the western states in which the Operating Partnership owns, manages and develops properties
have been and continue to be in a recession. The impacts of such recession on operating results can include, and are not limited to, reduction in rental rates, occupancy levels, property valuations and increases in operating costs such as
advertising, turnover and repair and maintenance expense.





The Operating Partnerships property type and
diverse geographic locations provide some degree of risk moderation but are not immune to a prolonged down cycle in the real estate markets in which the Operating Partnership operates. Although the Operating Partnership believes it is well
positioned to meet the challenges ahead, it is possible that further reductions in occupancy and market rental rates will result in reduction of rental revenues, operating income, cash flows, and market value of the Companys shares. Prolonged
recession could also affect the Operating Partnerships ability to obtain financing at acceptable rates of interest and to access funds from the disposition of properties at acceptable prices.





Development and Redevelopment Activities





The Operating Partnership pursues multifamily residential properties and development and redevelopment projects from time to time. Development projects generally require various government and other
approvals, the receipt of which cannot be assured. The Operating Partnerships development and redevelopment activities generally entail certain risks, including the following:





| |  |  | funds may be expended and managements time devoted to projects that may not be completed;
| | - |  | ------------------------------------------------------------------------------------------




| |  |  | construction costs of a project may exceed original estimates possibly making the project economically unfeasible;
| | - |  | ------------------------------------------------------------------------------------------------------------------




| |  |  | projects may be delayed due to, among other things, adverse weather conditions;
| | - |  | -------------------------------------------------------------------------------




| |  |  | occupancy rates and rents at a completed project may be less than anticipated; and
| | - |  | ----------------------------------------------------------------------------------




| |  |  | expenses at a completed development project may be higher than anticipated.
| | - |  | ---------------------------------------------------------------------------




These risks may reduce the funds available for distribution to the Companys stockholders. Further, the development and redevelopment of properties is also subject to
the general risks associated with real estate investments.





Interest Rate Fluctuations





The Operating Partnership monitors changes in interest rates and believes that it is well positioned from both a liquidity and interest
rate risk perspective. However, current interest rates are at historic lows and potentially could increase rapidly to levels more in line with recent levels. The immediate effect of significant and rapid interest rate increases would result in
higher interest expense on the Operating Partnerships variable interest rate debt. The effect of prolonged interest rate increases could negatively impact the Operating Partnerships ability to make acquisitions and develop properties at
economic returns on investment and the Operating Partnerships ability to refinance existing borrowings at acceptable rates.




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##### Table of Contents

Inflation





Inflationary increases would likely have a negative effect on property operating results and such increases may be at greater rates of increases than property rental rates in a period of recession. The Operating Partnership believes
it effectively manages its property and other expenses but understands that a return to higher annual rates of inflation would result in increases to operating expense.





Funds from Operations





Industry analysts generally consider
funds from operations, (Funds From Operations), an appropriate measure of performance of an equity REIT. Generally, Funds From Operations adjusts the net income of equity REITs for non-cash charges such as depreciation and amortization
of rental properties, gains/losses on sales of real estate property and extraordinary items. Management considers Funds From Operations to be a useful financial performance measurement of an equity REIT because, together with net income and cash
flows, Funds From Operations provides investors with an additional basis to evaluate the ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures. Funds From Operations does not represent net income or cash
flows from operations as defined by accounting principles generally accepted in the United States of America (GAAP) and is not intended to indicate whether cash flows will be sufficient to fund cash needs. It 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. Funds From Operations does not measure whether cash flow is sufficient to fund all cash needs including principal
amortization, capital improvements and distributions to shareholders. Funds From Operations also does not represent cash flows generated from operating, investing or financing activities as defined under GAAP. Further, Funds from Operations as
disclosed by other REITs may not be comparable to the Operating Partnerships presentation of Funds From Operations.





The following table sets forth the Operating Partnerships calculation of Funds from Operations for the three and six months ended June 30, 2002 and 2001.





Three months ended


Six months endedJune 30, 2002


June 30, 2001


June 30, 2002


June 30, 2001Income from continuing operations before minority interests and discontinued operations

$
19,510,000


$
17,362,000


$
36,718,000


$
34,117,000Adjustments:Gain on sale of co-investment activities, net(1)


(1,389,000
)






(1,389,000
)


Depreciation and amortization


9,114,000



8,833,000



18,100,000



17,563,000Depr. and amort.unconsolidated co-investments


1,891,000



1,201,000



3,722,000



2,438,000Minority interests


(4,618,000
)


(4,583,000
)


(9,209,000
)


(9,170,000
)Income from discontinued operations


69,000



156,000



225,000



302,000Depreciationdiscontinued operations


95,000



94,000



191,000



190,000Funds From Operations

$
24,672,000


$
23,063,000


$
48,358,000


$
45,440,000Weighted average number shares outstanding diluted(2)


21,115,264



21,034,366



21,046,949



20,970,138


---

|(1) |  | Gain on sale of co-investment activities has been decreased by $700,000 for the quarter ended June 30, 2002 due to reducing the Companys carrying value in
a real estate technology fund investment.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | Includes all outstanding units of the general partner common equity and assumes conversion of all limited partner common equity into shares of the
Companys common stock.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Item 3:Quantitative and Qualitative Disclosures About Market Risk





The Operating
Partnership is exposed to interest rate changes primarily as a result of its lines of credit and long-term debt used to maintain liquidity and fund capital expenditures and expansion of the Operating Partnerships real estate investment
portfolio and operations. The Operating Partnerships interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives the
Operating Partnership borrows primarily at fixed rates and may enter into derivative financial instruments such as interest rate swaps, caps and treasury locks in order to mitigate its interest rate risk on a related financial instrument. The
Operating Partnership does not enter into derivative or interest rate transactions for speculative purposes.





The
Operating Partnerships interest rate risk is monitored using a variety of techniques. The table below presents the principal amounts and weighted average interest rates by year of expected maturity to evaluate the expected cash flows and
sensitivity to interest rate changes. The Operating Partnership believes that the principal amounts of the Operating Partnerships mortgage notes payable and lines of credit approximate fair value as of June 30, 2002 as interest rates and other
terms are consistent with yields currently available to the Operating Partnership for similar instruments.





For Year Ended:2002


2003


2004


2005


2006


Thereafter


TotalFixed rate debt (In thousands)Amount

$
10,933


24,110


6,445


39,309


18,607


402,996


$
502,400Average interest rate


7.3
%

7.3
%

7.3
%

7.3
%

7.3
%

7.3
%Variable rate LIBOR debt (In thousands)Amount

$
106,459














58,820
(1)

$
165,279Average interest


3.0
%













5.1
%


---

|(1) |  | Capped at interest rates ranging from 7.1% to 7.3%.
|--- |  | ---------------------------------------------------




The Operating Partnership does not have any exposures related to forward contracts at June 30, 2002.




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##### Table of Contents

PART II    OTHER INFORMATION





Item 6:Exhibits and Reports on Form 8-K





A.  Exhibits





10.1

Second Amended and Restated Revolving Credit Agreement, dated May 10, 2002, among Essex Portfolio, L.P., Bank of
America, and other lenders as specified herein.





B.  Reports on Form 8-K





None




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##### Table of Contents

SIGNATURES





Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





ESSEX PORTFOLIO, L.P. A California Limited PartnershipBy:

/s/    MARK J. MIKLMark J. Mikl Vice President
and Controller (Authorized Officer and Principal Accounting Officer)





Date  August 13, 2002




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