**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**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 March 31, 2006**


**OR**


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





**For
      the transition period from ________to _________**





**Commission
      file number 333-44467-01** ****





**ESSEX
      PORTFOLIO, L.P.**


(Exact
      name of Registrant as Specified in its Charter)





**California**
            
            **77-0369575**(State
                or Other Jurisdiction of Incorporation or Organization)
            
            (I.R.S.
                Employer Identification Number)





**925
      East Meadow Drive**


**Palo
      Alto, California 94303**


(Address
      of Principal Executive Offices including Zip Code)





**(650)
      494-3700**


(Registrant's
      Telephone Number, Including Area Code)





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 (or for such shorter period that the registrant was required
      to file reports), and (2) has been subject to such filing requirements for
      the
      past 90 days. YES x NO o





Indicate
      by check mark whether the registrant is a large accelerated filer an accelerated
      file, or a non-accelerated filer. See definition of “accelerated filer and large
      accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):


Large
      accelerated filer x     Accelerated
      filer o    Non-accelerated
      filer o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act. Yes o No x













**ESSEX
      PORTFOLIO, L.P.**


**FORM
      10-Q**


**INDEX**





**Page
                No.****PART
                I. FINANCIAL INFORMATION**Item
                1.
            Financial
                Statements (Unaudited):
            3Consolidated
                Balance Sheets as of March 31, 2006 and December 31, 2005
            4Consolidated
                Statements of Operations for the three months ended March 31, 2006
                and
                2005
            5Consolidated
                Statements of Partners’ Capital and Comprehensive Income for the three
                months ended March 31, 2006
            6Condensed
                Consolidated Statements of Cash Flows for the three months ended
                March 31,
                2006 and 2005
            7Notes
                to Consolidated Financial Statements
            8Item
                2.
            Management's
                Discussion and Analysis of Financial Condition and Results of Operations
            18Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            23Item
                4.
            Controls
                and Procedures
            24**PART
                II. OTHER INFORMATION**Item
                1.
            Legal
                Proceedings
            24Item
                1A.
            Risk
                Factors
            25Item
                6.
            Exhibits
            25**Signatures**
            26


2




**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 comprehensive income 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
      consolidated financial statements for the interim periods.





The
      accompanying unaudited consolidated financial statements should be read in
      conjunction with the notes to such consolidated financial statements and
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations herein. Additionally, 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, 2005.






















3


**ESSEX
      PORTFOLIO, L.P. AND SUBSIDIARIES**


Consolidated
      Balance Sheets


(Unaudited)


(Dollars
      in thousands, except per unit amounts)


**March
                  31,**
              
              **December
                  31,****Assets**
              
              **2006**
              
              **2005**Real
                  estate:Rental
                  properties:Land
                  and land improvements
              
              $
              564,934
              
              $
              554,449Buildings
                  and improvements
              
              
              1,996,667
              
              
              1,945,4802,561,601
              
              
              2,499,929Less
                  accumulated depreciation
              
              
              (418,858
              )
              
              (399,854
              )2,142,743
              
              
              2,100,075Investments
              
              
              28,995
              
              
              27,228Real
                  estate under development
              
              
              46,985
              
              
              39,1102,218,723
              
              
              2,166,413Cash
                  and cash equivalents-unrestricted
              
              
              9,409
              
              
              14,337Cash
                  and cash equivalents-restricted
              
              
              14,095
              
              
              13,937Notes
                  and other receivables from related parties
              
              
              1,704
              
              
              1,173Notes
                  and other receivables
              
              
              14,833
              
              
              5,237Prepaid
                  expenses and other assets
              
              
              22,680
              
              
              23,078Deferred
                  charges, net
              
              
              15,326
              
              
              15,115Total
                  assets
              
              $
              2,296,770
              
              $
              2,239,290**Liabilities
                  and Stockholders' Equity**Mortgage
                  notes payable
              
              $
              1,104,594
              
              $
              1,104,918Exchangeable
                  bonds
              
              
              225,000
              
              
              225,000Lines
                  of credit
              
              
              78,000
              
              
              25,000Accounts
                  payable and accrued liabilities
              
              
              42,295
              
              
              32,982Dividends
                  payable
              
              
              23,275
              
              
              22,496Other
                  liabilities
              
              
              13,113
              
              
              12,520Deferred
                  gain
              
              
              2,193
              
              
              2,193Total
                  liabilities
              
              
              1,488,470
              
              
              1,425,109Minority
                  interests
              
              
              44,596
              
              
              47,522Redeemable
                  convertible limited partnership units
              
              
              4,750
              
              
              4,750Partners'
                  capital:General
                  partner:Common equity
              
              
              545,832
              
              
              555,895Preferred equity (liquidation value of $25,000)
              
              
              24,412
              
              
              24,412570,244
              
              
              580,307Limited
                  partners:Common equity
              
              
              54,964
              
              
              54,252Preferred equity (liquidation value of $185,000)
              
              
              126,690
              
              
              126,690181,654
              
              
              180,942Accumulated
                  other comprehensive income
              
              
              7,056
              
              
              660Total
                  partners' capital
              
              
              758,954
              
              
              761,909Commitments
                  and contingenciesTotal liabilities and partners' capital
              
              $
              2,296,770
              
              $
              2,239,290
 See
        accompanying notes to the unaudited consolidated financial
        statements.


4


**ESSEX
      PORTFOLIO, L.P. AND SUBSIDIARES**


Consolidated
      Statements of Operations


(Unaudited)


(Dollars
      in thousands, except per unit amounts)


**Three
                  Months Ended****March
                  31,**Revenues:
              
              **2006**
              
              **2005**Rental
                  and other property
              
              $
              85,263
              
              $
              78,277Management
                  and other fees from affiliates
              
              
              824
              
              
              6,57686,087
              
              
              84,853Expenses:Property
                  operating, excluding real estate taxes
              
              
              22,615
              
              
              20,228Real
                  estate taxes
              
              
              7,396
              
              
              6,841Depreciation
                  and amortization
              
              
              20,091
              
              
              19,579Interest
              
              
              18,990
              
              
              18,147Amortization
                  of deferred financing costs
              
              
              696
              
              
              476General
                  and administrative
              
              
              4,899
              
              
              4,441Other
                  expenses
              
              
              970
              
              
              -75,657
              
              
              69,712Gain
                  on sale of real estate
              
              
              -
              
              
              1,115Interest
                  and other income
              
              
              2,394
              
              
              523Equity
                  income in co-investments
              
              
              (323
              )
              
              14,711Minority
                  interests
              
              
              (1,467
              )
              
              (1,290
              )Income
                  from continuing operations before incometax provision
              
              
              11,034
              
              
              30,200Income
                  tax provision
              
              
              (37
              )
              
              (101
              )Income
                  from continuing operations
              
              
              10,997
              
              
              30,099Discontinued
                  operations
              
              
              3,062
              
              
              2,136Net
                  income
              
              
              14,059
              
              
              32,235Distributions
                  to preferred units - Series F
              
              
              (488
              )
              
              (488
              )Distributions
                  to preferred units - limited partners
              
              
              (2,559
              )
              
              (2,559
              )Net
                  income available to common units
              
              $
              11,012
              
              $
              29,188Per
                  common unit data:Basic:Income
                  from continuing operations available tocommon
                  units
              
              $
              0.32
              
              $
              1.07Income
                  from discontinued operations
              
              
              0.12
              
              
              0.08Net
                  income available to common units
              
              $
              0.44
              
              $
              1.15Weighted
                  average number of common unitsoutstanding
                  during the period
              
              
              25,165,778
              
              
              25,369,288Diluted:Income
                  from continuing operations available tocommon
                  units
              
              $
              0.31
              
              $
              1.06Income
                  from discontinued operations
              
              
              0.12
              
              
              0.08Net
                  income available to common units
              
              $
              0.43
              
              $
              1.14Weighted
                  average number of common unitsoutstanding
                  during the period
              
              
              25,389,471
              
              
              25,655,571Distribution
                  per Operating Partnership common unit
              
              $
              0.84
              
              $
              0.81


See
      accompanying notes to the unaudited consolidated financial
      statements.


5




**ESSEX
      PORTFOLIO, L.P. AND SUBSIDIARIES**


Consolidated
      Statements of Partners’ Capital and


Comprehensive
      Income for the three months ended March 31, 2006


(Unaudited)


(Dollars
      and units in thousands)




**General
                  Partner**
              
              **Limited
                  Partners**
              
              **Accumulated****Preferred**
              
              
              
              
              
              **Preferred**
              
              **Other****Common
                  Equity**
              
              **Equity**
              
              **Common
                  Equity**
              
              **Equity**
              
              **Comprehensive****Units**
              
              **Amount**
              
              **Amount**
              
              **Units**
              
              **Amount**
              
              **Amount**
              
              **Income**
              
              **Total**Balances
                  at December 31, 2005
              
              
              22,851
              
              $
              555,895
              
              $
              24,412
              
              
              2,437
              
              $
              54,252
              
              $
              126,690
              
              $
              660
              
              $
              761,909Comprehensive
                  income:Net income
              
              
              -
              
              
              9,834
              
              
              488
              
              
              -
              
              
              1,178
              
              
              2,559
              
              
              -
              
              
              14,059Change in fair value of cash flow hedges
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              6,396
              
              
              6,396Comprehensive
                  income
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              20,455Issuance
                  of common units understock-based compensation plan
              
              
              38
              
              
              1,352
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              1,352Redemption
                  of limited partnercommon units
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              (518
              )
              
              -
              
              
              -
              
              
              (518
              )Issuance
                  of series Z and Z-1 incentive units
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              100
              
              
              -
              
              
              -
              
              
              100Reallocation
                  of partners' capital
              
              
              -
              
              
              (2,026
              )
              
              -
              
              
              -
              
              
              2,026
              
              
              -
              
              
              -
              
              
              -Partners'
                  distributions
              
              
              -
              
              
              (19,223
              )
              
              (488
              )
              
              -
              
              
              (2,074
              )
              
              (2,559
              )
              
              -
              
              
              (24,344
              )Balances
                  at March 31, 2006
              
              
              22,889
              
              $
              545,832
              
              $
              24,412
              
              
              2,437
              
              $
              54,964
              
              $
              126,690
              
              $
              7,056
              
              $
              758,954














See
      accompanying notes to the unaudited consolidated financial
      statements.


6




**ESSEX
      PORTFOLIO, L.P. AND SUBSIDIARIES**


Condensed
      Consolidated Statements of Cash Flows


(Unaudited)


(Dollars
      in thousands)


**Three
                  Months Ended****March
                  31,****2006**
              
              **2005**Net
                  cash provided by operating activities
              
              $
              43,322
              
              $
              38,482Cash
                  flows from investing activities:Additions
                  to real estate:Acquisitions
                  and improvements to recent acquisitions
              
              
              (57,275
              )
              
              (27,287
              )Capital
                  expenditures and redevelopment
              
              
              (10,471
              )
              
              (6,087
              )Additions
                  to real estate under development
              
              
              (7,877
              )
              
              (1,240
              )Dispositions
                  of real estate and investments
              
              
              8,349
              
              
              15,020Changes
                  in restricted cash and refundable deposits
              
              
              5,003
              
              
              5,248Additions
                  to notes receivable from related parties and other
                  receivables
              
              
              (10,209
              )
              
              (13
              )Repayment
                  of notes receivable from related parties and other
                  receivables
              
              
              (86
              )
              
              1,413Net
                  (contributions to) distributions from limited partnerships
              
              
              (618
              )
              
              2,294Net
                  cash used in investing activities
              
              
              (73,184
              )
              
              (10,652
              )Cash
                  flows from financing activities:Proceeds
                  from mortgage notes payable and lines of credit
              
              
              116,792
              
              
              41,593Repayment
                  of mortgage notes payable and lines of credit
              
              
              (63,955
              )
              
              (40,361
              )Additions
                  to deferred charges
              
              
              (907
              )
              
              (444
              )Net
                  proceeds from stock options exercised
              
              
              1,209
              
              
              654Distributions
                  to limited partner units and minority interest
              
              
              (5,731
              )
              
              (5,645
              )Redemption
                  of limited partner units and minority interest
              
              
              (3,469
              )
              
              (3,284
              )Distributions
                  to general partner
              
              
              (19,005
              )
              
              (18,470
              )Net
                  cash provided by (used in) financing activities
              
              
              24,934
              
              
              (25,957
              )Net
                  (decrease) increase in cash and cash equivalents
              
              
              (4,928
              )
              
              1,873Cash
                  and cash equivalents at beginning of period
              
              
              14,337
              
              
              10,644Cash
                  and cash equivalents at end of period
              
              $
              9,409
              
              $
              12,517Supplemental
                  disclosure of cash flow information:Cash
                  paid for interest, net of $549 and $57 capitalizedin
                  2006 and 2005, respectively
              
              $
              16,269
              
              $
              17,935
 See
        accompanying notes to the unaudited consolidated financial
        statements.


7


**ESSEX
      PORTFOLIO, L.P. AND SUBSIDIARIES**


**Notes
      to Consolidated Financial Statements**


**March
      31, 2006 and 2005**


**(Unaudited)**


**(Dollars
      in thousands, except for per common unit and unit amounts)**





**(1)
      Organization and Basis of Presentation**





The
      unaudited consolidated financial statements of the Operating Partnership are
      prepared in accordance with U.S. generally accepted accounting principles 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,
      2005.




All
      significant intercompany balances and transactions have been eliminated in
      the
      consolidated financial statements. Certain prior year balances have been
      reclassified to conform to the current year presentation.




The
      unaudited consolidated financial statements for the three months ended March
      31,
      2006 and 2005 include the accounts of Essex Portfolio, L.P. (the "Operating
      Partnership", which holds the operating assets of Essex Property Trust, Inc.,
      the "Company"). See below for a description of entities consolidated by the
      Operating Partnership. The Company is the sole general partner in the Operating
      Partnership, with a 90.2% and 90.4% general partnership interest as of March
      31,
      2006 and December 31, 2005, respectively.




As
      of
      March 31, 2006, the Operating Partnership has ownership interests in 126
      multifamily properties (containing 27,311 units), three office buildings (with
      approximately 166,340 square feet), two recreational vehicle parks (comprising
      338 spaces) and one manufactured housing community (containing 157 sites),
      (collectively, the "Properties"). The Properties are located in Southern
      California (Los Angeles, Ventura, Orange, Riverside and San Diego counties),
      Northern California (the San Francisco Bay Area), the Pacific Northwest (the
      Seattle, Washington and Portland, Oregon metropolitan areas) and other areas
      (Houston, Texas).




***Fund
      Activities***




Essex
      Apartment Value Fund, L.P. ("Fund I" and “Fund II”), are investment funds formed
      by the Operating Partnership to add value through rental growth and asset
      appreciation, utilizing the Operating Partnership's development, redevelopment
      and asset management capabilities. All of the assets in Fund I were sold during
      2004 and 2005, and Fund I is in the process of liquidation and will wind down
      affairs during 2006.




Fund
      II
      has eight institutional investors, including the Operating Partnership, with
      combined partner equity commitments of $265.9 million. Essex has committed
      $75.0
      million to Fund II, which represents a 28.2% interest as general partner and
      limited partner. Fund II expects to utilize leverage equal to approximately
      65%
      of the estimated value of the underlying real estate. Fund II invests in
      multifamily properties in the Operating Partnership’s targeted West Coast
      markets with an emphasis on investment opportunities in Seattle and the San
      Francisco Bay Area. Subject to certain exceptions, Fund II will be Essex’s
      exclusive investment vehicle until October 31, 2006, or when Fund II’s committed
      capital has been invested, whichever occurs first. Consistent with Fund I,
      Essex
      will record revenue for its asset management, property management, development
      and redevelopment services when earned, and promote distributions should Fund
      II
      exceed certain financial return benchmarks.





***Variable
      Interest Entities***





In
      accordance with Financial Accounting Standards Board (FASB) Interpretation
      No.
      46 Revised (FIN 46R), “ *Consolidation
      of Variable Interest Entities, an Interpretation of ARB No. 51* ”,
      the
      Operating Partnership consolidates Essex Management Corporation (EMC), Essex
      Fidelity I Corporation (EFC), 17 Down REIT limited partnerships (comprising
      ten
      properties), an office building that is subject to loans made by the Operating
      Partnership, and the multifamily improvements owned by a third party in which
      the Operating Partnership owns the land underlying these improvements and from
      which the Operating Partnership receives fees, including land lease,
      subordination, property management, and incentive fees. The Operating
      Partnership consolidated these entities because it is deemed the primary
      beneficiary under FIN 46R. The Operating Partnership's total assets and
      liabilities related to these variable interest entities (VIEs), net of
      intercompany eliminations, were approximately $232.4 million and $146.8 million,
      respectively, at March 31, 2006 and $230.9 million and $146.7 **** million,
      respectively, at December 31, 2005.


8




Interest
      holders in VIEs consolidated by the Operating Partnership are allocated net
      income equal to the cash payments made to those interest holders for services
      rendered or distributions from cash flow. The remaining results of operations
      are generally allocated to the Operating Partnership.




As
      of
      March 31, 2006 the Operating Partnership is involved with three VIEs, of which
      it is not deemed to be the primary beneficiary. Total assets and liabilities
      of
      these entities were approximately $92.6 million and $72.7 million, respectively,
      at March 31, 2006 and $92.9 million and $72.5 million, respectively, at December
      31, 2005. The Operating Partnership does not have a significant exposure to
      loss
      resulting from its involvement with these unconsolidated VIEs.




***Stock-Based
      Compensation***




We
        adopted
        the provisions of SFAS 123 revised effective January 1, 2006 using the modified
        prospective approach. Stock-based compensation expense for stock options
        under
        the fair value method totaled $143 and $218 for the three months ended March
        31,
        2006 and 2005, respectively. The intrinsic value of the stock options exercised
        during the three months ended March 31, 2006 and 2005 totaled $1.8 million
        and
        $0.5 million, respectively. As of March 31, 2006, the intrinsic value of
        the
        stock options outstanding and fully vested totaled $24.6 million and $16.8
        million, respectively. As of March 31, 2006, total unrecognized compensation
        cost related to unvested share-based compensation granted under the stock
        option
        plans totaled $1.7 million. The cost is expected to be recognized over a
        weighted-average period of 3 to 5 years for the stock option plans.
  Stock-based
        compensation expense for Z and Z-1 Units (collectively, "Z Units") under
        the
        fair value method totaled $231 and $84 for the three months ended March 31,
        2006
        and 2005, respectively. Stock-based compensation capitalized for these Plans
        totaled $188 and $53 for the three months ended March 31, 2006 and 2005,
        respectively. As of March 31, 2006 the intrinsic value of the Z Units subject
        to
        conversion totaled $16.6 million. As of March 31, 2006, total unrecognized
        compensation cost related to Z Units subject to conversion in the future
        granted
        under the Z Units totaled $9.3 million. The cost is expected to be recognized
        over a weighted-average period of 5 to 15 years for the Z Units.
  The
        Operating Partnership’s stock-based compensation policies have not changed
        materially from information reported in Note 2(k), "Stock-Based Compensation,"
        and Note 14, "Stock-Based Compensation Plans," in the Operating Partnership’s
        Annual Report on Form 10-K for the year ended December 31, 2005.


***Accounting
      Estimates and Reclassifications***




The
      preparation of consolidated financial statements, in accordance with U.S.
      generally accepted accounting principles, requires the Operating Partnership
      to
      make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses and related disclosures of contingent assets
      and liabilities. On an on-going basis, the Operating Partnership evaluates
      its
      estimates, including those related to acquiring, developing and assessing the
      carrying values of its real estate properties, its investments in and
      advances to joint ventures and affiliates, its notes receivables and the
      Company's qualification as a Real Estate Investment Trust (“REIT”). The
      Operating Partnership bases its estimates on historical experience, current
      market conditions, and on various other assumptions that are believed to be
      reasonable under the circumstances. Actual results may vary from those estimates
      and those estimates could be different under different assumptions or
      conditions.




Certain
      reclassifications have been made to prior year balances in order to conform
      to
      the current year presentation. Such reclassifications have no impact on reported
      earnings, cash flows, total assets, or total liabilities.




***New
      Accounting Pronouncements***




In
      December 2004, the FASB issued SFAS No. 123 revised, “ *Share-Based
      Payment”.* This
      statement is a revision of SFAS No. 123, *“Accounting
      for Stock-Based Compensation”,* and
      supersedes APB No. 25, *“Accounting
      for Stock Issued to Employees”.* The
      Statement requires companies to recognize in the income statement the grant-date
      fair value of stock options and other equity based compensation issued to
      employees. We adopted the provisions of SFAS 123 revised effective January
      1,
      2006 using the modified prospective approach. The adoption of this Statement
      did
      not have a material impact on our financial position, results of operations
      or
      cash flows.




In
      June
      2005, the FASB ratified the EITF’s consensus on Issue No. 04-5 *“Determining
      Whether a General Partner, or the General Partners as a Group, Controls a
      Limited Partnership or Similar Entity When the Limited Partners Have Certain
      Rights.”* This
      consensus establishes the presumption that general partners in a limited
      partnership control that limited partnership regardless of the extent of the
      general partners’ ownership interest in the limited partnership. The consensus
      further establishes that the rights of the limited partners can overcome the
      presumption of control by the general partners, if the limited partners have
      either (a) the substantive ability to dissolve (liquidate) the limited
      partnership or otherwise remove the general partners without cause or (b)
      substantive participating rights. Whether the presumption of control is overcome
      is a matter of judgment based on the facts and circumstances, for which the
      consensus provides additional guidance. This consensus applies to limited
      partnerships or similar entities, such as limited liability companies that
      have
      governing provisions that are the functional equivalent of a limited
      partnership. This consensus was applicable to the Operating Partnership for
      new
      or modified partnerships in 2005, and is otherwise applicable to existing
      partnerships effective January 1, 2006. The adoption of this consensus did
      not
      have a material impact on our consolidated financial position, results of
      operations or cash flows.




In
      April
      2006, the FASB issued FASB Staff Position (FSP) FIN 46R-6, “ *Determining
      the Variability to Be Considered in Applying FASB Interpretation No. 46
      (R).* ”
This
      FSP
      addresses certain implementation issues related to FIN 46R. Specifically, FSP
      FIN 46R-6 addresses how a reporting enterprise should determine the variability
      to be considered in applying FIN 46R. The variability that is considered in
      applying FIN 46R affects the determination of (a) whether an entity is a


9


variable
      interest entity (VIE), (b) which interests are “variable interests” in the
      entity, and (c) which party, if any, is the primary beneficiary of the VIE.
      That
      variability affects any calculation of expected losses and expected residual
      returns, if such a calculation is necessary. The Operating Partnership is
      required to apply the guidance in this FSP prospectively to all entities
      (including newly created entities) and to all entities previously required
      to be
      analyzed under FIN 46R when a “reconsideration event” has occurred, effective
      July 1 ,2006. The Operating Partnership will evaluate the impact of this Staff
      Position at the time any such “reconsideration event” occurs, and for any new
      entities.




**(2)** **Significant
      Transactions for the Quarter Ended March 31, 2006**




***(a)
      Acquisitions***




In
      January
      2006, we acquired two apartment communities - Chimney Sweep and CBC, aggregating
      239 units, located in Isla Vista, California for a combined price of
      approximately $57.1 million.




***(b)
      Dispositions***




As
      part of
      our strategic plan to own quality real estate in supply-constrained markets,
      we
      continually evaluate our Properties and sell those which no longer meet our
      strategic criteria. We may use the capital generated from the dispositions
      to
      invest in higher-return Properties or repay debts. We believe that the sale
      of
      these Properties will not have a material impact on our future results of
      operations or cash flows nor will their sale materially affect our ongoing
      operations. Generally, any impact of earnings dilution resulting from these
      dispositions will be offset by the positive impact of our acquisitions,
      development and redevelopment activities.




In
      January
      2006, the Operating Partnership sold Vista Capri East and Casa Tierra apartment
      communities for approximately $7.0 million and in March 2006, the Operating
      Partnership sold Diamond Valley Recreational Vehicle Park for approximately
      $1.3
      million, for a total combined gain net of minority interest of $2.8 million.
      These assets were part of the John M. Sachs merger in 2002.




***(c)
      Debt***




On
      March
      24, 2006, the Operating Partnership renegotiated its revolving line of credit
      to
      increase the maximum principal amount to $200 million from $185 million.
      Additionally, the maturity date was extended from April 2007 to March 2009,
      with
      an option for a one-year extension, and the underlying rate, based on a tiered
      rate structure tied to our corporate ratings, was reduced to LIBOR plus 0.8%
      from LIBOR plus 1.0%.




On
      January
      3, 2006, the Operating Partnership originated a mortgage loan secured by the
      Fairwood Pond apartment community in the amount of $14.9 million, with a fixed
      interest rate of 5.31%, which matures on February 1, 2015. On March 1, 2006,
      the
      Operating Partnership paid-off a loan secured by the Windsor Ridge apartment
      community in the amount of $11.6 million, with a fixed interest rate of 7.09%.




***(d)
      Equity***




On
      February 23, 2006, the Operating Partnership approved a quarterly distribution
      of $0.48828 per share, which represents an annual distribution of $1.9531 per
      share on its 7.8125% Series F Cumulative Redeemable Preferred Shares.
      Distributions are payable on June 1, 2006 to shareholders of record as of May
      17, 2006.




On
      February 23, 2006, the Operating Partnership approved a $0.12 per common unit
      annual increase to the quarterly cash distribution. Accordingly, the first
      quarter distribution, paid on April 17, 2006 to unitholders of record as of
      March 31, 2006, was $0.84 per common unit.




***(e)
      Interest and Other Income***




In
      March
      2006, the Operating Partnership sold shares it owned in Town & County Trust
      and recognized $1.7 million in investment income related to the sale of those
      shares. The investment income was offset by $970 in pursuit costs that are
      recorded as other expenses in the accompanying consolidated statements of
      operations. The proceeds from the sale, which aggregated $9.5 million, were
      received on April 3, 2006, and were accrued for in notes and other receivables
      in the accompanying consolidated balance sheets as of March 31,
      2006.


10


***(f)
      The Essex Apartment Value Fund II (“Fund II”)***




In
      April
      2006, Fund II acquired the Lake Union development project in Seattle, Washington
      for approximately $5.5 million. This development project is a planned 127-unit
      apartment community plus approximately 9,300 square feet of commercial space
      with an estimated total cost of $29.5 million.




In
      April
      2006, Fund II acquired the Studio City development project in Los Angeles,
      California for approximately $20.5 million. This development is a planned
      149-unit apartment community with an estimated total cost of $53.3
      million.




In
      April
      2006, Fund II acquired Davey Glen, a 69-unit apartment community located in
      Belmont, California for approximately $13.5 million.


















11




**(3)** **Investments**




The
      Operating Partnership has investments in a number of affiliates, which are
      accounted for under the equity method. The affiliates own and operate
      multifamily rental properties. The following table details the Operating
      Partnership's investments (dollars in thousands):




**March
                  31,**
              
              **December
                  31,****2006**
              
              **2005**Investments
                  in joint ventures accounted for under the equitymethod of accounting:Limited partnership interest of 20.4% and general
                  partnerinterest of 1% in Essex Apartment Value Fund, L.P (Fund I)
              
              $
              582
              
              $
              582Limited partnership interest of 27.2% and general partnerinterest of 1% in Essex Apartment Value Fund II, L.P (Fund
                  II)
              
              
              21,107
              
              
              19,340Preferred limited partnership interests in Mountain VistaApartments
                  (A)
              
              
              6,806
              
              
              6,80628,495
              
              
              26,728Investments
                  accounted for under the cost method of accounting:Series A Preferred Stock interest in Multifamily TechnologySolutions, Inc.
              
              
              500
              
              
              500Total
                  investments
              
              $
              28,995
              
              $
              27,228


(A)
            The
                investment is held in an entity that includes an affiliate of The
                Marcus
                & Millichap Company (“TMMC”). TMMC’s Chairman is also the Chairman of
                the Company.


12


The
      combined summarized financial information of investments, which are accounted
      for under the equity method, is as follows (dollars in thousands):




**March
                  31,**
              
              **December
                  31,****2006**
              
              **2005**Balance
                  sheets:Real
                  estate and real estate under development
              
              $
              437,212
              
              $
              431,655Other
                  assets
              
              
              18,871
              
              
              18,655Total
                  assets
              
              $
              456,083
              
              $
              450,310Mortgage
                  notes payable
              
              $
              267,333
              
              $
              268,325Other
                  liabilities
              
              
              83,271
              
              
              83,979Partners'
                  capital
              
              
              105,479
              
              
              98,007Total
                  liabilities and partners' capital
              
              $
              456,083
              
              $
              450,311Operating
                  Partnership's share of capital
              
              $
              28,495
              
              $
              26,728**Three
                  Months Ended****March
                  31,****2006**
              
              
              **2005**Statements
                  of operations:Total
                  property revenues
              
              $
              9,290
              
              $
              7,500Total
                  gain on the sales of real estate
              
              
              -
              
              
              33,036Total
                  expenses
              
              
              (10,968
              )
              
              (7,052
              )Total
                  net (loss) income
              
              $
              (1,678
              )
              $
              33,484Operating
                  Partnership's share of net (loss) income
              
              $
              (323
              )
              $
              14,711
 **(4)
        Notes Receivable and Other Receivables from** **Related
        Parties**




Notes
      receivable and other receivables from related parties consist of the following
      as of March 31, 2006 and December 31, 2005 (dollars in thousands):


**March
                  31,**
              
              **December
                  31,****2006**
              
              **2005**Related
                  party receivables, unsecured:Loans to officers made prior to July 31, 2002, secured,bearing interest at 8%, due beginning April 2007
              
              $
              375
              
              $
              375Other related party receivables, substantially due on
                  demand
              
              
              1,329
              
              
              798Total
                  notes and other receivable from related parties
              
              $
              1,704
              
              $
              1,173
 Other
        related party receivables consist primarily of accrued interest income on
        related party notes receivable from loans to officers, advances, and accrued
        management fees from Fund II.




**(5)
      Notes and Other Receivables**




Notes
      and
      other receivables consist of the following as of March 31, 2006 and December
      31,
      2005 (dollars in thousands):




**March
                  31,**
              
              **December
                  31,****2006**
              
              **2005**Note
                  receivable from Pacifica Companies, LLC, secured,bearing interest at 12%, due June 2008
              
              
              2,193
              
              
              2,193Other
                  receivables
              
              
              12,640
              
              
              3,044Total
                  notes and other receivables
              
              $
              14,833
              
              $
              5,237
 13


Other
      receivables consist primarily of a receivable due from the sale of Town &
Country stock as of March 31, 2006 for $9.5 million, subordination and land
      lease fees from the Vista Pointe joint venture.




**(6)
      Related Party Transactions**




Management
      and other fees from affiliates includes property management, asset management,
      development and redevelopment fees from the Operating Partnership’s investees of
      $824 and $1,703 for the three months ended March 31, 2006 and 2005,
      respectively, and promote income from Fund I of $4,873 for the three months
      ended March 31, 2005. There was no promote income for the three months ended
      March 31, 2006.




**(7)
      Segment Information**




The
      Operating Partnership defines its reportable operating segments as the three
      geographical regions in which its properties are located: Southern California,
      Northern California and the Pacific Northwest. Excluded from segment revenues
      are properties outside of these regions, management and other fees from
      affiliates, and interest and other income. Non-segment revenues and net
      operating income included in the following schedule also consist of revenue
      generated from commercial properties, recreational vehicle parks, and
      manufactured housing communities. Other non-segment assets include investments,
      real estate under development, cash, notes receivable, other assets and deferred
      charges.


14
 The
        revenues, net operating income, and assets for each of the reportable operating
        segments are summarized as follows for the periods presented (dollars in
        thousands):


**Three
                  Months Ended****March
                  31,**Revenues:
              
              **2006**
              
              **2005**Southern
                  California
              
              $
              51,123
              
              $
              46,323Northern
                  California
              
              
              17,484
              
              
              16,534Pacific
                  Northwest
              
              
              15,532
              
              
              14,558Other
                  non-segment areas
              
              
              1,124
              
              
              862Total
                  property revenues
              
              $
              85,263
              
              $
              78,277Net
                  operating income:Southern
                  California
              
              $
              33,962
              
              $
              30,995Northern
                  California
              
              
              11,340
              
              
              11,017Pacific
                  Northwest
              
              
              9,447
              
              
              8,997Other
                  non-segment areas
              
              
              503
              
              
              199Total
                  net operating income
              
              
              55,252
              
              
              51,208Depreciation
                  and amortization:Southern
                  California
              
              
              (11,063
              )
              
              (10,136
              )Northern
                  California
              
              
              (4,075
              )
              
              (3,918
              )Pacific
                  Northwest
              
              
              (3,774
              )
              
              (3,629
              )Other
                  non-segment areas
              
              
              (1,179
              )
              
              (1,896
              )(20,091
              )
              
              (19,579
              )Interest
                  expense:Southern
                  California
              
              
              (7,144
              )
              
              (7,469
              )Northern
                  California
              
              
              (4,443
              )
              
              (3,791
              )Pacific
                  Northwest
              
              
              (1,690
              )
              
              (1,450
              )Other
                  non-segment areas
              
              
              (5,713
              )
              
              (5,437
              )(18,990
              )
              
              (18,147
              )Amortization
                  of deferred financing costs
              
              
              (696
              )
              
              (476
              )General
                  and administrative
              
              
              (4,899
              )
              
              (4,441
              )Other
                  expenses
              
              
              (970
              )
              
              -Management
                  and other fees from affiliates
              
              
              824
              
              
              6,576Gain
                  on sale of real estate
              
              
              -
              
              
              1,115Interest
                  and other income
              
              
              2,394
              
              
              523Equity
                  income in co-investments
              
              
              (323
              )
              
              14,711Minority
                  interests
              
              
              (1,467
              )
              
              (1,290
              )Income
                  tax provision
              
              
              (37
              )
              
              (101
              )Income
                  from continuing operations
              
              $
              10,997
              
              $
              30,099
 **March
                    31,**
                
                **December
                    31,**Assets:
                
                **2006**
                
                **2005**Net
                    real estate assets:Southern California
                
                $
                1,275,758
                
                $
                1,211,372Northern California
                
                
                454,110
                
                
                456,093Pacific Northwest
                
                
                374,065
                
                
                374,958Other
                    non-segment areas
                
                
                38,810
                
                
                57,652Total
                    net real estate assets
                
                
                2,142,743
                
                
                2,100,075Other
                    non-segment assets
                
                
                154,027
                
                
                139,215Total
                    assets
                
                $
                2,296,770
                
                $
                2,239,290


15




**(8)
      Net Income Per Common Unit**


(Amounts
      in thousands, except per unit data)


**Three
                  Months Ended**
              
              **Three
                  Months Ended****March
                  31, 2006**
              
              **March
                  31, 2005****Weighted**
              
              **Per**
              
              
              
              **Weighted**
              
              **Per****Average**
              
              **Common**
              
              
              
              **Average**
              
              **Common****Common**
              
              **Unit**
              
              
              
              **Common**
              
              **Unit****Income**
              
              **Units**
              
              **Amount**
              
              **Income**
              
              **Units**
              
              **Amount**Basic:Income from continuing operations availableto
                  common units
              
              $
              7,950
              
              
              25,166
              
              $
              0.32
              
              $
              27,052
              
              
              25,369
              
              $
              1.07Income from discontinued operations
              
              
              3,062
              
              
              25,166
              
              
              0.12
              
              
              2,136
              
              
              25,369
              
              
              0.0811,012
              
              
              
              
              $
              0.44
              
              
              29,188
              
              
              
              
              $
              1.15Effect
                  of Dilutive Securities (1)
              
              
              -
              
              
              223
              
              
              
              
              
              -
              
              
              286Diluted:Income from continuing operations availableto
                  common units
              
              
              7,950
              
              
              25,389
              
              $
              0.31
              
              
              27,052
              
              
              25,655
              
              $
              1.06Income from discontinued operations
              
              
              3,062
              
              
              25,389
              
              
              0.12
              
              
              2,136
              
              
              25,655
              
              
              0.08$
              11,012
              
              
              
              
              $
              0.43
              
              $
              29,188
              
              
              
              
              $
              1.14


The
      Operating Partnership has the ability and intent to redeem Down REIT Limited
      Partnership units for cash and does not consider them to be common stock
      equivalents.







(1)
            At
                the maturity date of the $225 million exchangeable bonds, bond holders
                will be issued common stock of the Company if the stock price exceeds
                $103.25 per share, subject to certain adjustments. During the quarter,
                the
                Company’s weighted average common stock price did not exceed the $103.25
                strike price and therefore are not included in the diluted unit count
                for
                the three months ended March 31, 2006. In future quarters, if the
                Company’s weighted average stock price exceeds the strike price, the
                treasury method will be used to determine the units to be added to
                the
                denominator to calculate earnings per diluted
                unit.




Stock
                options of 667 and 32,872 for the three months ended March 31, 2006
                and
                2005, respectively, are not included in the diluted earnings per
                unit
                calculation because the exercise price of the options were greater
                than
                the average market price of the Company’s common shares for the quarter
                and, therefore, the stock options were
                anti-dilutive.





**(9)
      Derivative Instruments and Hedging Activities**




To
      hedge
      the cash flows associated with the refinancing of debt that matures in 2007,
      2008, and 2010 the Operating Partnership entered into the following derivative
      transactions:


·
            On
                February 16, 2005, the Operating Partnership entered into a $50.0
                million
                notional forward-starting swap with a commercial bank at a fixed
                rate of
                4.927%, with a settlement date on or before October 1, 2007.


·
            On
                August 18, 2005, the Operating Partnership entered into a $50.0 million
                notional forward-starting swap with a commercial bank at a fixed
                rate of
                4.869% and a settlement date on or before October 1, 2008.


·
            On
                February 22, 2006, the Operating Partnership entered into three
                forward-starting swaps. The first is for a notional amount of $25.0
                million with a commercial bank at a fixed rate of 5.082% and a settlement
                date on or before January 1, 2009. The second and third swaps are
                for a
                notional amount totaling $100.0 million with two commercial banks
                at a
                fixed rate of $5.099% and a settlement date on or before January
                1, 2011.





These
      derivatives will be used to economically hedge the cash flows associated with
      the refinancing of debt that matures in 2007, 2008 and 2010, respectively.
      As of
      March 31, 2006, the Operating Partnership had five forward-starting swaps
      totaling $225 million, that hedge over 50% of the fixed debt maturities through
      2010. The Operating Partnership believes that these transactions will be
      effective in offsetting changes in future cash flows for forecasted transactions
      and qualify for hedge accounting. The increase in the fair value of these
      derivatives during the three months ended March 31, 2006 was approximately
      $6,396 and is reflected in accumulated other comprehensive income in the
      Operating Partnership’s consolidated financial statements. No hedge
      ineffectiveness on cash flow hedges was recognized during the three months
      ended
      March 31, 2006.


16


**(10)**
            **Discontinued
                Operations**




In
      the
      normal course of business, the Operating Partnership will receive offers for
      sale of its properties, either solicited or unsolicited. For those offers that
      are accepted, the prospective buyer will usually require a due diligence period
      before consummation of the transaction. It is not unusual for matters to arise
      that result in the withdrawal or rejection of the offer during this process.
      Essex classifies real estate as "held for sale" when all criteria under SFAS
      No.
      144, " *Accounting
      for the Impairment or Disposal of Long-Lived Assets* "
      (SFAS
      144) have been met.




In
      January
      2005, the Operating Partnership sold four non-core assets that were acquired
      in
      conjunction with the John M. Sachs’ merger in 2002 for $14.9 million. The four
      non-core assets were: The Riviera Recreational Vehicle Park and a Manufactured
      Home Park, located in Las Vegas, Nevada, for which the Operating Partnership
      had
      previously entered into master lease and option agreements with an unrelated
      entity; and two small office buildings, located in San Diego California,
      aggregating 7,200 square feet. The Operating Partnership recorded a gain of
      $668
      on the sale of these assets, net of minority interests.




On
      June
      21, 2005, the Operating Partnership sold Eastridge Apartments, a 188-unit
      apartment community located in San Ramon, California for approximately $47.5
      million. The Operating Partnership acquired Eastridge in 1996 for $19.2 million.
      In conjunction with the sale, the Operating Partnership deferred $2.2 million
      of
      the gain on the sale of Eastridge because the Operating Partnership, through
      its
      wholly owned taxable subsidiary, originated a participating loan to the buyer
      in
      the amount of approximately $2.2 million, which allows the Operating Partnership
      to financially participate in the buyer’s condominium conversion plan. The
      Operating Partnership has recorded the operations for Eastridge Apartments
      as
      part of discontinued operations in the accompanying consolidated statements
      of
      operations.




In
      January
      2006 the Operating Partnership sold Vista Capri East and Casa Tierra apartment
      communities for approximately $7.0 million and in March 2006, the Operating
      Partnership sold Diamond Valley, a Recreational Vehicle Park, for approximately
      $1.3 million. The total combined gain was $3.1 million. The Operating
      Partnership has recorded the gain on sale for the three properties as part
      of
      discontinued operations in the accompanying consolidated statements of
      operations. The Operating Partnership did not reclass the following combined
      revenues, expenses, and net income for the these three properties for $82,
      $32,
      and $50 for the three months ended March 31, 2006, and $183, $102, and $81
      for
      the three months ended March 31, 2005, to discontinued operations due to the
      fact the amounts are immaterial to the consolidated financial statements.




The
      components of discontinued operations are outlined below and include the results
      of operations for the respective periods that the Operating Partnership owned
      such assets, as described above.




**Three
                  Months Ended****March
                  31,****2006**
              
              **2005**Rental
                  revenues
              
              $
              -
              
              $
              654Interest
                  and other
              
              
              -
              
              
              1,134Revenues
              
              
              -
              
              
              1,788Property
                  operating expenses
              
              
              -
              
              
              (388
              )Operating
                  income from real estate sold
              
              
              -
              
              
              1,400Gain
                  on sale of real estate
              
              
              3,062
              
              
              736Income
                  from discontinued operations
              
              $
              3,062
              
              $
              2,136
 **(11)
        Commitments and Contingencies**




In
      April
      2004, an employee lawsuit was filed against the Company in the California
      Superior Court in the County of Alameda. In this lawsuit, two former Operating
      Partnership maintenance employees seek unpaid wages, associated penalties and
      attorneys’ fees on behalf of a putative class of the Operating Partnership’s
      current and former maintenance employees who were required to wear a pager
      while
      they were on call during evening and weekend hours. In June 2005, the Operating
      Partnership recorded $1.5 million for legal settlement costs. There has been
      no
      change to the settlement amount since the second quarter of 2005. However,
      litigation is subject to inherent uncertainties, and such amount represents
      management’s best estimate of the total cost of the litigation at this time.


17


Recently
      there has been an increasing number of lawsuits against owners and managers
      of
      multifamily properties alleging personal injury and property damage caused
      by
      the presence of mold in residential real estate. Some of these lawsuits have
      resulted in substantial monetary judgments or settlements. The Operating
      Partnership has been sued for mold related matters and has settled some, but
      not
      all, of such matters. Insurance carriers have reacted to mold related liability
      awards by excluding mold related claims from standard policies and pricing
      mold
      endorsements at prohibitively high rates. The Operating Partnership has,
      however, purchased pollution liability insurance, which includes coverage for
      mold. The Operating Partnership has adopted programs designed to manage the
      existence of mold in its properties as well as guidelines for promptly
      addressing and resolving reports of mold to minimize any impact mold might
      have
      on residents or the property. Liabilities resulting from such mold related
      matters and the costs of carrying insurance to address potential mold related
      claims may also be substantial.




The
      Operating Partnership is subject to various other lawsuits in the normal course
      of its business operations. Accordingly, such lawsuits, as well as the class
      action lawsuit described above, could result in substantial costs and diversion
      of resources and could have a material adverse effect on the Operating
      Partnership’s financial condition, results of operations or cash
      flows.




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




*The
      following discussion should be read in conjunction with our Consolidated
      Condensed Financial Statements and accompanying Notes thereto included elsewhere
      herein and with our 2005 Annual Report on Form 10-K for the year ended
      December 31, 2005 and our Current Report on Form 10-Q for the three months
      ended March 31, 2006. (Unless otherwise noted, all dollar amounts are in
      thousands.)*




Essex
      is a
      fully integrated Real Estate Investment Trust (REIT), and its property revenues
      are generated primarily from multifamily property operations, which are located
      in three major West Coast regions:




**Southern
      California** (Los
      Angeles, Ventura, Orange, Riverside and San Diego counties)


**Northern
      California** (the San
      Francisco Bay Area)


**Pacific
      Northwest** (Seattle,
      Washington and Portland, Oregon metropolitan areas)





The
      Operating Partnership’s consolidated multifamily properties are as
      follows:




As
                  of March 31, 2006
              
              As
                  of March 31, 2005Number
                  of Apartment Homes
              %
              Number
                  of Apartment Homes
              *%*Southern
                  California
              12,957
              55%
              12,442
              54%Northern
                  California
              4,621
              19%
              4,559
              20%Pacific
                  Northwest
              5,831
              25%
              5,831
              25%Other
              302
              1%
              302
              1%**Total**
              23,711
              100%
              23,134
              100%


**Occupancy
      Rates**





With
      respect to stabilized multifamily properties with sufficient operating history,
      occupancy rates are based on financial occupancy, which is defined as the
      percentage resulting from dividing actual rental revenue by total possible
      rental revenue. Actual rental revenue represents contractual rental revenue
      pursuant to leases without considering delinquency and concessions. Total
      possible rental revenue represents the value of all apartment units, with
      occupied units valued at contractual rental rates pursuant to leases and vacant
      units valued at estimated market rents. We believe that financial occupancy
      is a
      meaningful measure of occupancy because it considers the value of each vacant
      unit at its estimated market rate. Financial occupancy may not completely
      reflect short-term trends in physical occupancy and financial occupancy rates
      as
      disclosed by other REITs may not be comparable to our calculation of financial
      occupancy .




**Comparison
      of the Three Months Ended March 31, 2006 to the Three Months Ended March 31,
      2005**





Our
      average financial occupancies for the Operating Partnership’s multifamily
      stabilized properties or “Same Properties” (properties consolidated by the
      Operating


18


Partnership
      for each of the three months ended March 31, 2006 and 2005) decreased 0.1%
      to
      96.3% as of March 31, 2006 from 96.4% as of March 31, 2005 for the multifamily
      Same-Properties. The regional breakdown of the Operating Partnership’s
      Same-Property portfolio for financial occupancy for the three months ended
      March
      31, 2006 and 2005 is as follows:




**Three
                  months ended****March
                  31,****2006**
              
              **2005**Southern
                  California
              
              
              96.1%
              
              96.2%Northern
                  California
              
              
              96.4%
              
              96.9%Pacific
                  Northwest
              
              
              96.7%
              
              96.7%
 *Total
        Property Revenues* increased
        8.9% to $85.3 million in the first quarter of 2006 from $78.3 million in
        the
        first quarter of 2005. The following table illustrates a breakdown of these
        revenue amounts, including revenues attributable to the
        Same-Properties.


**Three
                  Months Ended****Number
                  of**
              
              **March
                  31,**
              
              **Dollar**
              
              **Percentage****Properties**
              
              **2006**
              
              **2005**
              
              **Change**
              
              **Change**Revenues:
              
              
              
              **(dollars
                  in thousands)**Property revenuesSame-Properties:Southern
                  California
              
              
              54
              
              $
              42,583
              
              $
              40,370
              
              $
              2,213
              
              
              5.5
              %Northern
                  California
              
              
              19
              
              
              15,705
              
              
              14,928
              
              
              777
              
              
              5.2Pacific
                  Northwest
              
              
              27
              
              
              14,331
              
              
              13,576
              
              
              755
              
              
              5.6Total
                  property revenuesSame-Properties
              
              
              100
              
              
              72,619
              
              
              68,874
              
              
              3,745
              
              
              5.4Property
                  revenues - properties acquiredsubsequent to December 31, 2004 (1)
              
              
              
              
              
              12,644
              
              
              9,403
              
              
              3,241
              
              
              34.5Total
                  property revenues
              
              
              
              
              $
              85,263
              
              $
              78,277
              
              $
              6,986
              
              
              8.9
              %
 (1)
        Also
        includes three office buildings, one multifamily property located in Houston,
        Texas, two recreational vehicle parks, one manufactured housing community,
        and
        redevelopment communities and development communities.




*Same-Property
      Revenues* increased
      by $3.7 million or 5.4% to $72.6 million in the first quarter of 2006 from
      $68.9
      million in the first quarter of 2005. Same-Properties include those stabilized
      properties owned by the Operating Partnership during each of the three months
      ended March 31, 2006 and 2005. The increase in first quarter of 2006 was
      primarily attributable to an increase in rental rates of $3.2 million or 4.7%
      and a decrease in rent concessions of $429 compared to the first quarter of
      2005. Occupancy and delinquency rates were consistent for the two quarters.




*Non-Same
      Property Revenues* increased
      by $3.2 million or 34.5% to $12.6 million in the first quarter of 2006 from
      $9.4
      million in the first quarter of 2005. Non-Same Properties include properties
      acquired subsequent to January 1, 2005, three office buildings, one multifamily
      property located in Houston, Texas, one manufactured housing community, two
      recreational vehicle parks, and development and redevelopment communities.
      The
      increase was primarily due to seven properties acquired since March 31, 2005.




*Management
      and other fees from affiliates* decreased
      by approximately $5.8 million or 87% in the first quarter of 2006 due primarily
      to $4.9 million in promote distributions received in the three months ended
      March 31, 2005 related to the sale of Fund I assets. Additionally, for the
      three
      months ended March 31, 2005 the Operating Partnership recorded $1.3 million
      in
      management fee income which included fee income deferred from 2004. For the
      three months ended March 31, 2006, the Operating Partnership recorded $824
      in
      management fee income and received no promote distributions.




*Total
      Expenses* increased
      $5.9 million or 8.5% to $75.6 million in the first quarter of 2006 from $69.7
      million in the first quarter of 2005. The increase was primarily due to
      utilities, salaries, interest and other expenses. Utilities increased due mainly
      to higher natural gas and electric rates. Beginning in the first quarter of
      2006, the Operating Partnership has reclassified reimbursements of the ratio
      utility billing system (“RUBS”) to revenue from net of utility expense for both
      periods presented. Property salaries increased $773 or 11% due to an increase
      in
      payroll salaries over the prior year period as well as higher property
      administration needs due to the acquisition of properties in 2005.


19


*Interest
      expense* increased
      by $843 or 5% in the first quarter of 2006 to $19.0 million, net of $549 in
      capitalized interest, compared to $18.1 million, net of $57 in capitalized
      interest for the first quarter of 2005. The increase was mainly due to an
      increase in total outstanding debt of $90 million between the two
      quarters.




*Other
      expenses* increased
      $970 for the first quarter of 2006 as a result of pursuit costs related to
      the
      Operating Partnership’s attempt to acquire the Town & Country REIT.




*Gain
      on sale of real estate* was
      $0 for
      the first quarter of 2006 compared to a gain of $1.1 million recorded in first
      quarter of 2005 related to the sale of The Essex at Lake Merritt property in
      2004.




*Interest
      and other income* increased
      $1.9 million in the first quarter of 2006 to $2.4 million compared to $523
      in
      the first quarter of 2005. The increase is due primarily to the gain on the
      sale
      of Town & Country stock for $1.7 million.




*Equity
      income in co-investments* decreased
      $15.0 million in the first quarter of 2006 due to the fact the Operating
      Partnership recorded $14.4 million in equity income and $216 in operating income
      related to Fund I properties sold during the first quarter of 2005. For the
      first quarter of 2006 the Operating Partnership recorded a net loss on
      investment in Fund II.




*Discontinued
      operations* increased
      by $844 due to $2.8 million recorded during the first quarter of 2006 related
      to
      the sale of the Vista Capri East, Casa Tierra and Diamond Valley properties.
      During the first quarter of 2005, the Operating Partnership recorded $1.9
      million in discontinued operations related to the sale of the Eastridge
      Apartments and Riviera properties in 2005.




**Liquidity
      and Capital Resources**




Standard
      and Poor's and Fitch ratings have existing issuer credit ratings of BBB/Stable
      for Essex Portfolio L.P.




We
      believe
      that cash flows generated by our operations, existing cash balances,
      availability under existing lines of credit, access to capital markets and
      the
      ability to generate cash gains from the disposition of real estate are
      sufficient to meet all of our reasonably anticipated cash needs during 2006.
      The
      timing, source and amounts of cash flows provided by financing activities and
      used in investing activities are sensitive to changes in interest rates and
      other fluctuations in the capital markets environment, which can affect our
      plans for acquisitions, dispositions, development and redevelopment
      activities.




The
      Operating Partnership had a $200 million unsecured line of credit and, as of
      March 31, 2006, $18.5 million was outstanding on the line. This facility matures
      in March 2009, with an option for a one-year extension. The underlying interest
      rate on this line is based on a tiered rate structure tied to our corporate
      ratings and is currently LIBOR plus 0.8% which yields an average interest rate
      of 5.4%. We also have a $100 million credit facility from Freddie Mac, which
      is
      secured by six of the Operating Partnership's multifamily communities.
      As of March 31, 2006, we had $59.5 million outstanding under this line of
      credit, which bears an average interest rate of 5.2% and matures in January
      2009. The underlying interest rate on this line is between 55 and 59 basis
      points over the Freddie Mac Reference Rate. Fund II has a credit facility
      aggregating $115 million. This line bears interest at LIBOR plus 0.875%, and
      matures on June 30, 2007. At
      the end
      of the first quarter, the Operating Partnership had the capacity to issue up
      to
      $219.4 million in equity securities, and the Operating Partnership had the
      capacity to issue up to $250 million of debt securities under our existing
      shelf
      registration statements.




The
      Operating Partnership has $225 million of outstanding exchangeable
      senior notes (the “Notes”) with a coupon of 3.625% due 2025. The Notes are
      senior unsecured obligations of the Operating Partnership, and are fully and
      unconditionally guaranteed by the Company. On or after November 1, 2020, the
      Notes will be exchangeable at the option of the holder into cash and, in certain
      circumstances at Essex’s option, shares of Company’s common stock at an initial
      exchange price of $103.25 per share subject to certain adjustments. The Notes
      will also be exchangeable prior to November 1, 2020, but only upon the
      occurrence of certain specified events. On or after November 4, 2010, the
      Operating Partnership may redeem all or a portion of the Notes at a redemption
      price equal to the principal amount plus accrued and unpaid interest (including
      additional interest, if any). Note holders may require the Operating Partnership
      to repurchase all or a portion of the Notes at a purchase price equal to the
      principal amount plus accrued and unpaid interest (including additional
      interest, if any) on the Notes on November 1, 2010, November 1, 2015 and
      November 1, 2020.




As
      of
      March 31, 2006, our mortgage notes payable totaled $1.1 billion which consisted
      of $918.0 million in fixed rate debt with interest rates varying from 4.27%
      to
      8.29% and maturity dates ranging from 2007 to 2015 and $186.6 million of
      tax-exempt variable rate demand bonds with a weighted average interest rate
      of
      4.5%. The tax-exempt variable rate demand bonds have maturity dates ranging
      from
      2006 to 2034, and are subject to interest rate caps.


20




The
      Operating Partnership pays quarterly distributions 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 line of credit.




*Derivative
      Activity*




To
      hedge
      the cash flows associated with the refinancing of debt that matures in 2007,
      2008, and 2010 the Operating Partnership entered into the following derivative
      transactions:


·
            On
                February 16, 2005, the Operating Partnership entered into a $50.0
                million
                notional forward-starting swap with a commercial bank at a fixed
                rate of
                4.927%, with a settlement date on or before October 1, 2007.


·
            On
                August 18, 2005, the Operating Partnership entered into a $50.0 million
                notional forward-starting swap with a commercial bank at a fixed
                rate of
                4.869% and a settlement date on or before October 1, 2008.


·
            On
                February 22, 2006, the Operating Partnership entered into three
                forward-starting swaps. The first was for a notional amount of $25.0
                million with a commercial bank at a fixed rate of 5.082% and a settlement
                date on or before January 1, 2009. The second and third swaps are
                for a
                notional amount totaling $100.0 million with two commercial banks
                at a
                fixed rate of $5.099% and a settlement date on or before January
                1, 2011.




There
      can
      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.
      Future working capital and borrowings under the lines of credit may not be
      available, or if available, may not be sufficient to meet the Operating
      Partnership's requirements, and we may not be able to sell properties in a
      timely manner and under terms and conditions that we deem
      acceptable.




*Development
      and Predevelopment Pipeline*




The
      Operating Partnership defines development activities as new properties that
      are
      being constructed, or are newly constructed and, in the case of development
      communities, are in a phase of lease-up and have not yet reached stabilized
      operations; or, in the case of for-sale development projects, have not yet
      been
      sold. As of March 31, 2006, the Operating Partnership had one development
      project comprised of 275 units for an estimated cost of $71.1 million of which
      $53.1 million remains to be expended, (excluding development projects owned
      by
      the Essex Apartment Value Fund II, L.P.). The Operating Partnership has also
      incurred $3.2 million in costs related to a joint ventures development with
      a
      third party of which the Operating Partnership is committed to contribute an
      additional $1 million.




The
      Operating Partnership defines the predevelopment pipeline as new properties
      in
      negotiation with a high likelihood of becoming development activities. As of
      March 31, 2006, the Operating Partnership had negotiations in process on six
      development communities aggregating 1,972 units. The estimated total cost of
      the
      predevelopment pipeline at March 31, 2006 is $522.5 million, of which $508.4
      million remains to be expended.




The
      Operating Partnership had two for-sale development projects that are under
      development aggregating 84 units, and three for-sale development projects that
      are in predevelopment status aggregating 136 units. The estimated total cost
      of
      the for-sale projects at March 31, 2006 is $53.8 million, of which $42.5 million
      remains to be expended.





*Redevelopment*





The
      Operating Partnership defines redevelopment activities as upgrades to 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. The Operating Partnership’s redevelopment strategy
      strives to improve the financial and physical aspects of the Operating
      Partnership’s redevelopment apartment communities and to target a 10 to 12
      percent return on the incremental renovation investment. Many of the Operating
      Partnership’s properties are older and in excellent neighborhoods, providing
      lower density with large floor plans that represent attractive redevelopment
      opportunities. Redevelopment communities typically have some apartment units
      that are not available for rent and, as a result, may have less than stabilized
      operations. As of March 31, 2006, the Operating Partnership had six communities,
      aggregating 1,450 units in various stages of redevelopment. Total redevelopment
      cost of these projects as of March 31, 2006 is approximately $36.9 million,
      of
      which $19.4 million remains to be expended.




**Alternative
      Capital Sources**




Fund
      II, a
      value added discretionary fund, is utilized as the Operating Partnership’s
      investment vehicle (subject to certain exceptions) until October 31, 2006,
      or
      when Fund II’s committed capital has been invested, whichever occurs first. Fund
      II invests in multifamily properties in the Operating Partnership’s targeted
      West


21


Coast
      markets with a focus on investment opportunities in the Seattle Metropolitan
      Area and the San Francisco Bay Area. Fund II announced its final closing on
      partner equity commitments on September 27, 2004. There are eight institutional
      investors including the Operating Partnership with combined partner equity
      commitments of $265.9 million. The Operating Partnership has committed $75.0
      million, which represents a 28.2% interest as general partner and limited
      partner. Fund II expects to utilize leverage equal to approximately 65% of
      the
      estimated value of the underlying real estate. Consistent with Fund I, Essex
      will record revenue for its asset management, property management, development
      and redevelopment services when earned, and promote distributions should Fund
      II
      exceed certain financial return benchmarks.




**Contractual
      Obligations and Commercial Commitments**




The
      following table summarizes the maturation or due dates of our contractual
      obligations and other commitments at March 31, 2006, and the effect these
      obligations could have on our liquidity and cash flow in future
      periods:




**2007
                  and**
              
              **2009
                  and****(In
                  thousands)**
              
              **2006**
              
              **2008**
              
              **2010**
              
              **Thereafter**
              
              **Total**Mortgage
                  notes payable
              
              $
              -
              
              $
              218,657
              
              $
              183,491
              
              $
              702,446
              
              $
              1,104,594Exchangeable
                  bonds
              
              
              -
              
              
              -
              
              
              -
              
              
              225,000
              
              
              225,000Lines
                  of credit
              
              
              -
              
              
              -
              
              
              78,000
              
              
              -
              
              
              78,000Interest
                  on indebtedness
              
              
              58,229
              
              
              121,425
              
              
              88,387
              
              
              201,807
              
              
              469,848Development
                  commitments
              
              
              33,700
              
              
              34,100
              
              
              -
              
              
              -
              
              
              67,800Redevelopment
                  commitments
              
              
              17,072
              
              
              2,341
              
              
              -
              
              
              -
              
              
              19,413Essex
                  Apartment Value Fund II, L.P.capital commitment
              
              
              53,027
              
              
              -
              
              
              -
              
              
              -
              
              
              53,027$
              162,028
              
              $
              376,523
              
              $
              349,878
              
              $
              1,129,253
              
              $
              2,017,682
 **Critical
        Accounting Policies and Estimates**




The
      preparation of consolidated financial statements, in accordance with U.S.
      generally accepted accounting principles requires the Operating Partnership
      to
      make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses and related disclosures of contingent assets
      and liabilities. We define critical accounting policies as those accounting
      policies that require our management to exercise their most difficult,
      subjective and complex judgments. Our critical accounting policies relate
      principally to the following key areas: (i) consolidation under applicable
      accounting standards of various entities; (ii) assessing the carrying values
      of
      our real estate properties and investments in and advances to joint ventures
      and
      affiliates; (iii) internal cost capitalization; and (iv) qualification as a
      REIT. The Operating Partnership bases its estimates on historical experience,
      current market conditions, and on various other assumptions that are believed
      to
      be reasonable under the circumstances. Actual results may differ from those
      estimates made by management.




The
      Operating Partnership’s critical accounting policies and estimates have not
      changed materially from information reported in Note 2, “Summary of Critical and
      Significant Accounting Policies,” in the Operating Partnership’s Annual Report
      on Form 10-K for the year ended December 31, 2005.




**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 regarding the expectation as to the total
      projected costs of acquisition, redevelopment, and development 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, future
      acquisitions, developments, and redevelopment, the anticipated performance
      of
      the second Fund II, and the anticipated performance of existing
      properties.




Such
      forward-looking statements involve known and unknown risks, uncertainties and
      other factors including, but not limited to, that the Operating Partnership
      will
      fail to achieve its business objectives, that the total projected costs of
      current development projects will exceed expectations, that development projects
      and 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


22


payments
      in accordance with REIT requirements, that the Operating Partnership's partners
      in Fund II fail to fund capital commitments as contractually required, that
      there may be a downturn in the markets in which the Operating Partnership's
      properties are located, that the terms of any refinancing may not be as
      favorable as the terms of existing indebtedness, as well as those risks, special
      considerations, and other factors discussed under the caption "Potential Factors
      Affecting Future Operating Results" below and those discussed in Item 1A, “Risk
      Factors,” of the Operating Partnership's Annual Report on Form 10-K for the year
      ended December 31, 2005, and those other risk factors and special considerations
      set forth in the Operating Partnership's other filings with the Securities
      and
      Exchange Commission (the "SEC") which may cause the actual results, performance
      or achievements of the Operating Partnership to be materially different from
      any
      future results, performance or achievements expressed or implied by such
      forward-looking statements. All forward-looking statements and reasons why
      results may differ included in this Form 10-Q are made as of the date hereof,
      and we assume no obligation to update any such forward-looking statement or
      reason why actual results may differ.




**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 set forth under the caption
      “Risk Factors” in Item 1A of the Operating Partnership’s Annual Report on Form
      10-K for the year ended December 31, 2005 and the following:




*Development
      and Redevelopment Activities*




The
      Operating Partnership pursues multifamily residential properties and development
      and redevelopment projects from time to time. These 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 Operating
      Partnership's unitholders. 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. 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.




**Item
      3: Quantitative and Qualitative Disclosures About Market Risk**




The
      Operating Partnership is exposed to interest rate changes primarily as a result
      of its line of credit and long-term debt used to maintain liquidity and to
      fund
      capital expenditures and expansion of the Operating Partnership’s real estate
      investment portfolio and operations. The Operating Partnership’s interest rate
      risk management objectives are 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.
      Management believes that the carrying amounts of its variable LIBOR debt


23


approximates
      fair value as of March 31, 2006 because interest rates, yields and other terms
      for these instruments are consistent with yields and other terms currently
      available to the Operating Partnership for similar instruments.


**For
                  the Years Ended**
              
              **2006**
              
              **2007****(1)**
              
              **2008****(2)**
              
              **2009**
              
              **2010****(3)**
              
              **Thereafter**
              
              **Total**
              
              **Fair
                  value**(In
                  thousands)Fixed
                  rate debt
              
              $
              -
              
              $
              70,376
              
              $
              148,281
              
              $
              25,107
              
              $
              158,384
              
              $
              740,817
              
              
              
              
              $
              1,142,965
              
              $
              1,192,189Average
                  interest rate
              
              
              -
              
              
              6.0
              %
              
              6.8
              %
              
              6.9
              %
              
              8.1
              %
              
              5.7
              %Variable
                  rate LIBOR debt
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              78,000
              
              $
              -
              
              $
              186,629
              
              
              (4
              )
              $
              264,629
              
              $
              264,629Average
                  interest
              
              
              -
              
              
              -
              
              
              -
              
              
              5.2
              %
              
              -
              
              
              4.5
              %


(1)
      $50,000 covered by a forward-starting swap at a fixed rate of 4.927%, with
      a
      settlement date on or before October 1, 2007.




(2)
      $50,000 covered by a forward-starting swap at a fixed rate of 4.869%, with
      a
      settlement date on or before October 1, 2008. Also, $25,000 covered by a
      forward-starting swap at a fixed rate of 5.082%, with a settlement date on
      or
      before January 1, 2009.




(3)
      $100,000 covered by two forward-starting swaps at a fixed rate of 5.099%, with
      a
      settlement date on or before January 1, 2011.




(4)
      $152,749 subject to interest rate caps.




The
      table
      incorporates only those exposures that exist as of March 31, 2006; it does
      not
      consider exposures or positions that could arise after that date. As a result,
      our ultimate realized gain or loss, with respect to interest rate fluctuations,
      would depend on the exposures that arise during the period, our hedging
      strategies at the time, and interest rates.




The
      Operating Partnership’s objective in using derivatives is to add stability to
      interest expense and to manage its exposure to interest rate movements or other
      identified risks.  To accomplish this objective, the Operating Partnership
      primarily uses interest rate swaps as part of its cash flow hedging strategy.
      Interest rate swaps designated as cash flow hedges involve the receipt of
      variable-rate amounts in exchange for fixed-rate payments over the life of
      the
      agreements without exchange of the underlying principal amount.




**Item
      4: Controls and Procedures**




As
      of
      March 31, 2006, we carried out an evaluation, under the supervision and with
      the
      participation of management, including our Chief Executive Officer and Chief
      Financial Officer, of the effectiveness of the design and operation of our
      disclosure controls and procedures pursuant to Rules 13a-15 of the Securities
      Exchange Act of 1934, as amended. Based upon that evaluation, the Chief
      Executive Officer and Chief Financial Officer concluded that our disclosure
      controls and procedures are effective in timely alerting management to material
      information relating to the Operating Partnership that is required to be
      included in our periodic filings with the Securities and Exchange Commission.
      There were no changes in the Operating Partnership’s internal control over
      financial reporting, that occurred during the quarter ended March 31, 2006,
      that
      have materially affected, or are reasonably likely to materially affect, the
      Operating Partnership’s internal control over financial reporting.




**Part
      II -- Other Information**





**Item
      1: Legal Proceedings**




In
      April
      2004, an employee lawsuit was filed against the Company in the California
      Superior Court in the County of Alameda. In this lawsuit, two former Operating
      Partnership maintenance employees seek unpaid wages, associated penalties and
      attorneys’ fees on behalf of a putative class of the Operating Partnership’s
      current and former maintenance employees who were required to wear a pager
      while
      they were on call during evening and weekend hours. In June 2005, the Operating
      Partnership recorded $1.5 million for legal settlement costs. There has been
      no
      change to the settlement amount since the second quarter of 2005. However,
      litigation is subject to inherent uncertainties, and such amount represents
      management’s best estimate of the total cost of the litigation at this time.




Recently
      there has been an increasing number of lawsuits against owners and managers
      of
      multifamily properties alleging personal injury and property damage caused
      by
      the presence of mold in residential real estate. Some of these lawsuits have
      resulted in substantial monetary judgments or settlements. The Operating
      Partnership has been sued for mold related matters and has settled some, but
      not
      all, of such matters. Insurance carriers have reacted to mold related liability
      awards by excluding mold related claims from standard policies and pricing
      mold
      endorsements at prohibitively high rates. The Operating Partnership has,
      however, purchased pollution liability insurance, which includes some coverage
      for mold. The Operating Partnership has adopted programs designed to manage
      the
      existence


24


of
      mold in its properties as well as guidelines for promptly addressing and
      resolving reports of mold to minimize any impact mold might have on residents
      or
      the property. Liabilities resulting from such mold related matters and the
      costs
      of carrying insurance to address potential mold related claims may also be
      substantial.




The
      Operating Partnership is subject to various other lawsuits in the normal course
      of its business operations. Accordingly, such lawsuits, as well as the class
      action lawsuit described above, could result in substantial costs and diversion
      of resources and could have a material adverse effect on the Operating
      Partnership’s financial condition, results of operations or cash
      flows.




**Item
      IA: Risk Factors**




In
      evaluating all forward-looking statements, you should specifically consider
      various factors that may cause actual results to vary from those contained
      in
      the forward-looking statements. The Operating Partnership’s risk factors are
      included in Item IA of Part I of our Annual Report on Form 10-K for the year
      ended December 31, 2005, as filed with the SEC and available at
      www.sec.gov.





**Item
      6: Exhibits**





*A.*
            *Exhibits*





10.1
            Fourth
                Amended and Restated Revolving Credit Agreement dated as of March
                24,
                2006, by and among Essex Portfolio, L.P., and Bank of America, N.A.
                as
                Administrative Agent, Bank of America Securities LLC as Sole Lead
                Arranger
                and Sole Book Manager, PNC Bank, National Association as Documentation
                Agent, Union Bank of California, N.A. as Syndication Agent, Comerica
                Bank
                as Managing Agent, KeyBank National Association as Managing Agent,
                and
                JPMorgan Chase Bank, N.A., as Managing Agent, attached as Exhibit
                10.1 to
                the Company’s current report on Form 8-K, filed March 31, 2006, and
                incorporated herein by reference.





12.1
            Ratio
                of Earnings to Fixed Charges





31.1
            Certification
                of Keith R. Guericke, Chief Executive Officer, pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002.





31.2
            Certification
                of Michael T. Dance, Chief Financial Officer, pursuant to Section
                302 of
                the Sarbanes-Oxley Act of 2002.





32.1
            Certification
                of Keith R. Guericke, Chief Executive Officer, pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.





32.2
            Certification
                of Michael T. Dance, Chief Financial Officer, pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002.


__________




25




**SIGNATURE**


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.*(Registrant)*Date:
                May 9, 2006By: /S/ MICHAEL T. DANCEMichael T. Dance*Executive
                Vice President, Chief Financial Officer*
              *(Authorized Officer, Principal Financial Officer)*By: /S/ BRYAN HUNTBryan Hunt*Vice President, Chief Accounting
                Officer*


26