**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

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**FORM        10-Q**

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

**For      the quarterly period ended June 30, 2006**

**OR      **

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

**For      the transition period from ________to _________ **

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

**ESSEX      PORTFOLIO, L.P.**
** **

| **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 **

**(650)      494-3700 **

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**ESSEX      PORTFOLIO, L.P.**

**FORM      10-Q**

**INDEX      **

|                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | **Page                No.** |
|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
| **PART                I. FINANCIAL INFORMATION**                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
| Item                1.                                                                                                               | Financial                Statements (Unaudited):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 3                           |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
|                                                                                                                                 | Consolidated                Balance Sheets as of June 30, 2006 and December 31, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 4                           |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
|                                                                                                                                 | Consolidated                Statements of Operations for the three and six months ended June                30, 2006                and 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 5                           |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
|                                                                                                                                 | Consolidated                Statements of Partners' Capital and Comprehensive Income for the                six                months ended June 30, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 6                           |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
|                                                                                                                                 | Condensed                Consolidated Statements of Cash Flows for the six months ended June                30,                2006 and 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 7                           |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
|                                                                                                                                 | Notes                to Consolidated Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 8                           |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
| Item                2.                                                                                                               | Management's                Discussion and Analysis of Financial Condition and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | 19                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
| Item                3.                                                                                                               | Quantitative                and Qualitative Disclosures About Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 26                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
| Item                4.                                                                                                               | Controls                and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 27                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
| **PART                II. OTHER INFORMATION**                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
| Item                1.                                                                                                               | Legal                Proceedings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 27                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
| Item                1A.                                                                                                              | Risk                Factors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 27                          |
|                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                        |
| Item                6.                                                                                                               | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 28                          |
|                                                                                                                                 |                                                                                                                                                   |                        |
| **Signatures**                                                                                                                       | 29                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

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**Part      I -- Financial Information**

**Item      1: Financial Statements (Unaudited)**

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

|                                                              |   |  **June                  30,** |      |  **December                  31,** |   |
|-------------------------------------------------------------------|--------|-------------------------------------|-----------|-----------------------------------------|--------|
| **Assets**                                                        |   |  **2006**                      |      |  **2005**                          |   |
| Real                  estate:                                     |   |                           |      |                               |   |
| Rental                  properties:                               |   |                           |      |                               |   |
| Land                  and land improvements                       |   | $                                   | 561,560   |                                    | $      | 551,132 |   |
| Buildings                  and improvements                       |   |                                | 1,994,741 |                                    |   | 1,932,113 |   |
|                                                              |   |                                | 2,556,301 |                                    |   | 2,483,245 |   |
| Less                  accumulated depreciation                    |   |                                | (437,154  | )                                       |   | (398,476 | ) |
|                                                              |   |                                | 2,119,147 |                                    |   | 2,084,769 |   |
| Real                  estate under development                    |   |                                | 75,429    |                                    |   | 54,416 |   |
| Investments                                                       |   |                                | 36,498    |                                    |   | 27,228 |   |
|                                                              |   |                                | 2,231,074 |                                    |   | 2,166,413 |   |
| Cash                  and cash equivalents-unrestricted           |   |                                | 9,022     |                                    |   | 14,337 |   |
| Cash                  and cash equivalents-restricted             |   |                                | 14,035    |                                    |   | 13,937 |   |
| Notes                  and other receivables from related parties |   |                                | 2,258     |                                    |   | 1,173 |   |
| Notes                  and other receivables                      |   |                                | 29,845    |                                    |   | 5,237 |   |
| Prepaid                  expenses and other assets                |   |                                | 27,632    |                                    |   | 23,078 |   |
| Deferred                  charges, net                            |   |                                | 14,378    |                                    |   | 15,115 |   |
|                     Total assets                        |   | $                                   | 2,328,244 |                                    | $      | 2,239,290 |   |
|                                                              |   |                                |           |                                    |   |  |   |
| **Liabilities                  and Partners' Capital**            |   |                                |      |                                    |   |   |   |
| Mortgage                  notes payable                           |   | $                                   | 1,100,965 |                                    | $      | 1,104,918 |   |
| Exchangeable                  bonds                               |   |                                | 225,000   |                                    |   | 225,000 |   |
| Lines                  of credit                                  |   |                                | 95,030    |                                    |   | 25,000 |   |
| Accounts                  payable and accrued liabilities         |   |                                | 37,567    |                                    |   | 32,982 |   |
| Dividends                  payable                                |   |                                | 23,317    |                                    |   | 22,496 |   |
| Other                  liabilities                                |   |                                | 13,696    |                                    |   | 12,520 |   |
| Deferred                  gain                                    |   |                                | 2,193     |                                    |   | 2,193 |   |
| Total                  liabilities                                |   |                                | 1,497,768 |                                    |   | 1,425,109 |   |
| Minority                  interests                               |   |                                | 43,561    |                                    |   | 47,522 |   |
| Redeemable                  convertible limited partnership units |   |                                | 4,750     |                                    |   | 4,750 |   |
|                                                              |   |                                |      |                                    |   |   |   |
| Partners'                  Capital:                               |   |                                |      |                                    |   |   |   |
| General                  partner:                                 |   |                                |      |                                    |   |   |   |
| Common                  equity                                    |   |                                | 564,666   |                                    |   | 555,895 |   |
| Preferred                  equity (liquidation value of $25,000)  |   |                                | 24,412    |                                    |   | 24,412 |   |
|                                                              |   |                                | 589,078   |                                    |   | 580,307 |   |
| Limited                  partners:                                |   |                                |      |                                    |   |   |   |
| Common                  equity                                    |   |                                | 54,693    |                                    |   | 54,252 |   |
| Preferred                  equity (liquidation value of $185,000) |   |                                | 126,690   |                                    |   | 126,690 |   |
|                                                              |   |                                | 181,383   |                                    |   | 180,942 |   |
| Accumulated                  other comprehensive income           |   |                                | 11,704    |                                    |   | 660 |   |
| Total                  partners' capital                          |   |                                | 782,165   |                                    |   | 761,909 |   |
| Commitments                  and contingencies                    |   |                                |           |                                    |   |  |   |
| Total                  liabilities and partners' capital          |   | $                                   | 2,328,244 |                                    | $      | 2,239,290 |   |

----

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

|                                                                 |   |  **Three                  Months Ended** |       |  **Six                  Months Ended** |   |
|----------------------------------------------------------------------|--------|-----------------------------------------------|------------|---------------------------------------------|--------|
|                                                                 |   |  **June                  30,**           |       |  **June                  30,**         |   |
|                                                                 |   |  **2006**                                |       | **2005**                                    |   |  **2006** |   | **2005** |   |
| Revenues:                                                            |   |                                     |       |                                   |   |    |   |    |   |
| Rental                  and other property                           |   | $                                             | 86,656     |                                        | $      | 79,662 |   | $ | 171,919 |   | $ | 157,938 |   |
| Management                  and other fees from affiliates           |   |                                          | 830        |                                        |   | 931 |   |   | 1,654 |   |   | 7,507 |   |
|                                                                 |   |                                          | 87,486     |                                        |   | 80,593 |   |   | 173,573 |   |   | 165,445 |   |
| Expenses:                                                            |   |                                          |            |                                        |   |  |   |   |  |   |   |  |   |
| Property                  operating, excluding real estate taxes     |   |                                          | 22,095     |                                        |   | 20,685 |   |   | 44,710 |   |   | 40,913 |   |
| Real                  estate taxes                                   |   |                                          | 7,374      |                                        |   | 6,610 |   |   | 14,770 |   |   | 13,451 |   |
| Depreciation                  and amortization                       |   |                                          | 20,675     |                                        |   | 20,043 |   |   | 40,766 |   |   | 39,622 |   |
| Interest                                                             |   |                                          | 19,497     |                                        |   | 18,153 |   |   | 38,487 |   |   | 36,300 |   |
| Amortization                  of deferred financing costs            |   |                                          | 497        |                                        |   | 563 |   |   | 1,193 |   |   | 1,039 |   |
| General                  and administrative                          |   |                                          | 5,002      |                                        |   | 4,573 |   |   | 9,901 |   |   | 9,014 |   |
| Other                  expenses                                      |   |                                          | 800        |                                        |   | 1,500 |   |   | 1,770 |   |   | 1,500 |   |
|                                                                 |   |                                          | 75,940     |                                        |   | 72,127 |   |   | 151,597 |   |   | 141,839 |   |
|                                                                 |   |                                          |       |                                        |   |   |   |   |   |   |   |   |   |
| Gain                  on sale of real estate                         |   |                                          | -          |                                        |   | 5,276 |   |   | - |   |   | 6,391 |   |
| Interest                  and other income                           |   |                                          | 654        |                                        |   | 2,431 |   |   | 3,048 |   |   | 2,954 |   |
| Equity                  income in co-investments                     |   |                                          | (374       | )                                           |   | 2,724 |   |   | (816 | ) |   | 17,316 |   |
| Minority                  interests                                  |   |                                          | (1,378     | )                                           |   | (1,450 | ) |   | (2,845 | ) |   | (2,741 | ) |
| Income                  from continuing operations before income     |   |                                          |            |                                        |   |  |   |   |  |   |   |  |   |
|                    tax provision                                |   |                                          | 10,448     |                                        |   | 17,447 |   |   | 21,363 |   |   | 47,526 |   |
| Income                  tax provision                                |   |                                          | (138       | )                                           |   | (1,100 | ) |   | (175 | ) |   | (1,201 | ) |
| Income                  from continuing operations                   |   |                                          | 10,310     |                                        |   | 16,347 |   |   | 21,188 |   |   | 46,325 |   |
|                                                                 |   |                                          |       |                                        |   |   |   |   |   |   |   |   |   |
| Discontinued                  operations                             |   |                                          | 17,140     |                                        |   | 29,063 |   |   | 20,321 |   |   | 31,319 |   |
| Net                  income                                          |   |                                          | 27,450     |                                        |   | 45,410 |   |   | 41,509 |   |   | 77,644 |   |
| Distributions                  to preferred units                    |   |                                          | (489       | )                                           |   | (488 | ) |   | (977 | ) |   | (977 | ) |
| Distributions                  to preferred units - limited partners |   |                                          | (2,559     | )                                           |   | (2,559 | ) |   | (5,118 | ) |   | (5,118 | ) |
| Net                  income available to common units                |   | $                                             | 24,402     |                                        | $      | 42,363 |   | $ | 35,414 |   | $ | 71,549 |   |
|                                                                 |   |                                          |            |                                        |   |  |   |   |  |   |   |  |   |
| Per                  common unit data:                               |   |                                          |       |                                        |   |   |   |   |   |   |   |   |   |
| Basic:                                                               |   |                                          |       |                                        |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations available to      |   |                                          |       |                                        |   |   |   |   |   |   |   |   |   |
| common                  units                                        |   | $                                             | 0.29       |                                        | $      | 0.52 |   | $ | 0.60 |   | $ | 1.59 |   |
| Income                  from discontinued operations                 |   |                                          | 0.68       |                                        |   | 1.15 |   |   | 0.81 |   |   | 1.23 |   |
| Net                  income available to common units                |   | $                                             | 0.97       |                                        | $      | 1.67 |   | $ | 1.41 |   | $ | 2.82 |   |
| Weighted                  average number of common units             |   |                                          |            |                                        |   |  |   |   |  |   |   |  |   |
| outstanding                  during the period                       |   |                                          | 25,236,463 |                                        |   | 25,368,981 |   |   | 25,201,315 |   |   | 25,369,134 |   |
|                                                                 |   |                                          |            |                                        |   |  |   |   |  |   |   |  |   |
| Diluted:                                                             |   |                                          |       |                                        |   |   |   |   |   |   |   |   |   |
| Income                  from continuing operations available to      |   |                                          |       |                                        |   |   |   |   |   |   |   |   |   |
| common                  units                                        |   | $                                             | 0.28       |                                        | $      | 0.52 |   | $ | 0.59 |   | $ | 1.57 |   |
| Income                  from discontinued operations                 |   |                                          | 0.67       |                                        |   | 1.13 |   |   | 0.79 |   |   | 1.22 |   |
| Net                  income available to common units                |   | $                                             | 0.95       |                                        | $      | 1.65 |   | $ | 1.38 |   | $ | 2.79 |   |
| Weighted                  average number of common units             |   |                                          |            |                                        |   |  |   |   |  |   |   |  |   |
| outstanding                  during the period                       |   |                                          | 25,697,238 |                                        |   | 25,672,235 |   |   | 25,628,728 |   |   | 25,675,973 |   |
|                                                                 |   |                                          |            |                                        |   |  |   |   |  |   |   |  |   |
| Distributions                  per Operating Partnership common unit |   | $                                             | 0.84       |                                        | $      | 0.81 |   | $ | 1.68 |   | $ | 1.62 |   |
|                                                                 |   |                                          |            |                                        |   |  |   |   |  |   |   |  |   |

----

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

|                                                                   |   | **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 |   | $                  761,909 |   |
| Comprehensive                  income:                                 |   |                                 |   |                             |   |                          |   |             |   |    |   |    |   |    |   |    |   |
|                     Net income                               |   |                                 | -      |                                  |   | 31,859                             |   |             | 977    |   |   | - |   |   | 3,555 |   |   | 5,118 |   |   | - |   |   | 41,509 |   |
|                     Change in fair value of cash flow hedges |   |                                 | -      |                                  |   | -                                  |   |             | -      |   |   | - |   |   | - |   |   | - |   |   | 11,044 |   |   | 11,044 |   |
| Comprehensive                  income                                  |   |                                 | -      |                                  |   | -                                  |   |             | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 52,554 |   |
| Issuance                  of common units under                        |   |                                 |   |                                  |   |                               |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     Stock-based compensation plan            |   |                                 | 56     |                                  |   | 2,709                              |   |             | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 2,709 |   |
|                     Sale of common stock                     |   |                                 | 140    |                                  |   | 14,813                             |   |             | -      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 14,813 |   |
| Redemption                  of limited partner                         |   |                                 |   |                                  |   |                               |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                     common units                             |   |                                 | -      |                                  |   | -                                  |   |             | -      |   |   | (8 | ) |   | (1,064 | ) |   | - |   |   | - |   |   | (1,064 | ) |
| Issuance                  of series Z and Z-1 incentive units          |   |                                 | -      |                                  |   | -                                  |   |             | -      |   |   | 41 |   |   | 80 |   |   | - |   |   | - |   |   | 80 |   |
| Reallocation                  of partners' capital                     |   |                                 | -      |                                  |   | (2,026                             | )      |             | -      |   |   | - |   |   | 2,026 |   |   | - |   |   | - |   |   | - |   |
| Partners'                  distributions                               |   |                                 | -      |                                  |   | (38,584                            | )      |             | (977   | ) |   | - |   |   | (4,156 | ) |   | (5,118 | ) |   | - |   |   | (48,835 | ) |
| Balances                  at June 30, 2006                             |   |                                 | 23,047 |                                  | $      | 564,666                            |   | $                | 24,412 |   |   | 2,470 |   | $ | 54,693 |   | $ | 126,690 |   | $ | 11,704 |   | $ | 782,165 |   |
|                                                                   |   |                                 |   |                                  |   |                               |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

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

|                                                                                                        |   |  **Six                  Months Ended** |     |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|----------|
|                                                                                                        |   |  **June                  30,**         |     |
|                                                                                                        |   |  **2006**                              |     | **2005** |   |
| Net                  cash provided by operating activities                                                  |   | $                                           | 69,253   |   | $ | 66,629 |   |
|                                                                                                        |   |                                        |          |   |   |  |   |
| Cash                  flows (used in) provided by investing activities:                                     |   |                                        |     |   |   |   |   |
| Additions                  to real estate:                                                                  |   |                                        |     |   |   |   |   |
| Acquisitions                  and improvements to recent acquisitions                                       |   |                                        | (60,115  | ) |   | (16,090 | ) |
| Redevelopment                                                                                               |   |                                        | (11,455  | ) |   | (7,711 | ) |
| Revenue                  generating capital expenditures                                                    |   |                                        | (1,092   | ) |   | (115 | ) |
| Other                  capital expenditures                                                                 |   |                                        | (7,485   | ) |   | (6,116 | ) |
| Additions                  to real estate under development                                                 |   |                                        | (20,346  | ) |   | (15,031 | ) |
| Dispositions                  of real estate and investments                                                |   |                                        | 8,349    |   |   | 6,585 |   |
| Changes                  in restricted cash and refundable deposits                                         |   |                                        | 6,271    |   |   | 7,646 |   |
| Additions                  to notes receivable from related parties and other                  receivables  |   |                                        | (8,284   | ) |   | (3,643 | ) |
| Repayments                  of notes receivable from related parties and other                  receivables |   |                                        | 456      |   |   | 5,005 |   |
| Net                  (contributions to) distributions from limited partnerships                             |   |                                        | (8,261   | ) |   | 41,336 |   |
| Net                  cash (used in) provided by investing activities                                        |   |                                        | (101,962 | ) |   | 11,866 |   |
|                                                                                                        |   |                                        |          |   |   |  |   |
| Cash                  flows from financing activities:                                                      |   |                                        |     |   |   |   |   |
| Proceeds                  from mortgage notes payable and lines of credit                                   |   |                                        | 159,429  |   |   | 96,629 |   |
| Repayment                  of mortgage notes payable and lines of credit                                    |   |                                        | (93,030  | ) |   | (99,840 | ) |
| Additions                  to deferred charges                                                              |   |                                        | (456     | ) |   | (885 | ) |
| Net                  proceeds from stock options exercised                                                  |   |                                        | 2,113    |   |   | 1,881 |   |
| Net                  sale of common stock                                                                   |   |                                        | 14,813   |   |   | - |   |
| Distributions                  to limited partner units and minority interest                               |   |                                        | (11,679  | ) |   | (11,545 | ) |
| Redemption                  of limited partner units and minority interest                                  |   |                                        | (5,073   | ) |   | (4,466 | ) |
| Distributions                  to general partner                                                           |   |                                        | (38,723  | ) |   | (37,837 | ) |
| Net                  cash provided by (used in) financing activities                                        |   |                                        | 27,394   |   |   | (56,063 | ) |
|                                                                                                        |   |                                        |          |   |   |  |   |
| Net                  (decrease) increase in cash and cash equivalents                                       |   |                                        | (5,315   | ) |   | 22,432 |   |
| Cash                  and cash equivalents at beginning of period                                           |   |                                        | 14,337   |   |   | 10,644 |   |
| Cash                  and cash equivalents at end of period                                                 |   | $                                           | 9,022    |   | $ | 33,076 |   |
|                                                                                                        |   |                                        |          |   |   |  |   |
| Supplemental                  disclosure of cash flow information:                                          |   |                                        |     |   |   |   |   |
| Cash                  paid for interest, net of $1,260 and $511 capitalized                                 |   |                                        |     |   |   |   |   |
| in                  2006 and 2005, respectively                                                             |   | $                                           | 36,858   |   | $ | 35,600 |   |
|                                                                                                        |   |                                        |     |   |   |   |   |

----

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

**Notes      to Consolidated Financial Statements**

**June      30, 2006 and 2005**

**(Unaudited)**

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

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

***Fund      Activities***

***Variable      Interest Entities***

*Consolidation      of Variable Interest Entities, an Interpretation of ARB No. 51*
** **

----

***Stock-Based      Compensation***

***Accounting      Estimates and Reclassifications***

***New      Accounting Pronouncements***

*Share-Based      Payment”. *
*“Accounting      for Stock-Based Compensation”, *
*“Accounting      for Stock Issued to Employees”. *

*“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.” *

----

*Determining      the Variability to Be Considered in Applying FASB Interpretation No. 46      (R).*

*Accounting      for Uncertainty in Income Taxes-an Interpretation of FASB Statement      109.*

**(2)      **
**Significant      Transactions for the Quarter Ended June 30, 2006**

***(a)      Dispositions***

***(b)      Equity***

----

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

***(d)      Real Estate Rental Properties***

**(3)      Investments**

|                                                                            |   | **June                  30,** |   | **December                  31,** |   |
|---------------------------------------------------------------------------------|--------|-------------------------------|--------|-----------------------------------|--------|
|                                                                            |   | **2006**                      |   | **2005**                          |   |
|                                                                            |   |                          |   |                              |   |
| Investments                  in joint ventures accounted for under the equity   |   |                          |   |                              |   |
|                     method of accounting:                             |   |                          |   |                              |   |
|                                                                            |   |                          |   |                              |   |
| Limited                  partnership interest of 20.4% and general partner      |   |                          |   |                              |   |
| interest                  of 1% in Essex Apartment Value Fund, L.P (Fund I)     |   | $                             | 582    |                              | $      | 582 |   |
| Limited                  partnership interest of 27.2% and general partner      |   |                          |        |                              |   |  |   |
| interest                  of 1% in Essex Apartment Value Fund II, L.P (Fund II) |   |                          | 28,610 |                              |   | 19,340 |   |
| Preferred                  limited partnership interests in Mountain Vista      |   |                          |        |                              |   |  |   |
| Apartments                  (A)                                                 |   |                          | 6,806  |                              |   | 6,806 |   |
|                                                                            |   |                          | 35,998 |                              |   | 26,728 |   |
| Investments                  accounted for under the cost method of accounting: |   |                          |        |                              |   |  |   |
|                                                                            |   |                          |        |                              |   |  |   |
| Series                  A Preferred Stock interest in Multifamily Technology    |   |                          |        |                              |   |  |   |
| Solutions,                  Inc.                                                |   |                          | 500    |                              |   | 500 |   |
|                                                                            |   |                          |   |                              |   |   |   |
| Total                  investments                                              |   | $                             | 36,498 |                              | $      | 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. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                           |   |   |                          |   |   |                              |   |   |   |   |   |   |
|----------------------------------------------------------------|--------|--------|-------------------------------|--------|--------|-----------------------------------|--------|--------|--------|--------|--------|--------|
|                                                           |   |   | **June                  30,** |   |   | **December                  31,** |   |   |   |   |   |   |
|                                                           |   |   | **2006**                      |   |   | **2005**                          |   |   |   |   |   |   |
| Balance                  sheets:                               |   |   |                          |   |   |                              |   |   |   |   |   |   |
| Real                  estate and real estate under development |   | $      | 474,100                       |   | $      | 431,655                           |   |   |   |   |   |   |
| Other                  assets                                  |   |   | 20,509                        |   |   | 18,655                            |   |   |   |   |   |   |
|                                                           |   |   |                          |   |   |                              |   |   |   |   |   |   |
| Total                  assets                                  |   | $      | 494,609                       |   | $      | 450,310                           |   |   |   |   |   |   |
|                                                           |   |   |                          |   |   |                              |   |   |   |   |   |   |
| Mortgage                  notes payable                        |   | $      | 266,380                       |   | $      | 268,325                           |   |   |   |   |   |   |
| Other                  liabilities                             |   |   | 95,538                        |   |   | 83,979                            |   |   |   |   |   |   |
| Partners'                  capital                             |   |   | 132,691                       |   |   | 98,007                            |   |   |   |   |   |   |
|                                                           |   |   |                          |   |   |                              |   |   |   |   |   |   |
| Total                  liabilities and partners' capital       |   | $      | 494,609                       |   | $      | 450,311                           |   |   |   |   |   |   |
|                                                           |   |   |                          |   |   |                              |   |   |   |   |   |   |
| Operating                  Partnership's share of capital      |   | $      | 35,998                        |   | $      | 26,728                            |   |   |   |   |   |   |

|                                                                |   |   | **Three                  Months Ended** |   |   | **Six                  Months Ended** |
|---------------------------------------------------------------------|--------|--------|-----------------------------------------|--------|--------|---------------------------------------|
|                                                                |   |   | **June                  30,**           |   |   | **June                  30,**         |
|                                                                |   |   | **2006**                                |   |   | **2005**                              |   |   | **2006** |   |   | **2005** |
| Statements                  of operations:                          |   |   |                                    |   |   |                                  |   |   |   |   |   |   |
| Total                  property revenues                            |   | $      | 10,231                                  |   | $      | 6,354                                 |   | $ | 19,741 |   | $ | 13,854 |
| Total                  gain on the sales of real estate             |   |   | -                                       |   |   | 4,422                                 |   |   | - |   |   | 33,008 |
| Depreciation                  and amortization                      |   |   | (2,937)                                 |   |   | (1,536)                               |   |   | (5,822) |   |   | (3,240) |
| Interest                  expense                                   |   |   | (4,407)                                 |   |   | (2,712)                               |   |   | (8,562) |   |   | (5,048) |
| Other                  operating expenses                           |   |   | (4,353)                                 |   |   | (3,088)                               |   |   | (8,508) |   |   | (6,100) |
|                                                                |   |   |                                    |   |   |                                  |   |   |   |   |   |   |
| Total                  net (loss) income                            |   | $      | (1,466)                                 |   | $      | 3,440                                 |   | $ | (3,151) |   | $ | 32,474 |
|                                                                |   |   |                                    |   |   |                                  |   |   |   |   |   |   |
| Operating                  Partnership's share of net (loss) income |   | $      | (374)                                   |   | $      | 2,724                                 |   | $ | (816) |   | $ | 17,316 |
|                                                                |   |   |                                    |   |   |                                  |   |   |   |   |   |   |

**(4)        Notes Receivable and Other Receivables from **
**Related        Parties**

|                                                                                                  |   | **June                  30,** |   | **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    |                              | $      | 375 |   |
|                    Other related party receivables, substantially due on                  demand |   |                          | 1,883  |                              |   | 798 |   |
| Total                  notes and other receivable from related parties                                |   | $                             | 2,258  |                              | $      | 1,173 |   |
|                                                                                                  |   |                          |        |                              |   |  |   |

----

**(5)      Notes and Other Receivables**

|                                                                           |   |                                |   |                                    |   |
|--------------------------------------------------------------------------------|--------|-------------------------------------|--------|-----------------------------------------|--------|
|                                                                           |   |  **June                  30,** |   |  **December                  31,** |   |
|                                                                           |   |  **2006**                      |   |  **2005**                          |   |
| Note                  receivable from Pacifica Companies, LLC, secured,        |   |                           |   |                               |   |
|                    bearing interest at 12%, due June 2008                 |   |                                | 2,193  |                                    |   | 2,193 |   |
| Note                  receivable from  Marketplace Mortgage, LLC, secured |   |                                |   |                                    |   |   |   |
|                    bearing interest at LIBOR + 3.69%, due June 2009       |   |                                | 7,293  |                                    |   | - |   |
| Other                  receivables                                             |   |                                | 20,359 |                                    |   | 3,044 |   |
| Total                  notes and other receivables                             |   | $                                   | 29,845 |                                    | $      | 5,237 |   |
|                                                                           |   |                                |   |                                    |   |   |   |

**(6)      Related Party Transactions**

----

**(7)        Segment Information**

|                                                       |   | **Three                  Months Ended** |    |
|------------------------------------------------------------|--------|-----------------------------------------|---------|
|                                                       |   | **June                  30,**           |    |
|                                                       |   | **2006**                                |    | **2005** |   |
| Revenues:                                                  |   |                                    |    |   |   |
| Southern                  California                       |   | $                                       | 51,567  |   | $ | 46,968 |   |
| Northern                  California                       |   |                                    | 18,057  |   |   | 16,796 |   |
| Pacific                  Northwest                         |   |                                    | 15,911  |   |   | 14,849 |   |
| Other                  non-segment areas                   |   |                                    | 1,121   |   |   | 1,049 |   |
| Total                  property revenues                   |   | $                                       | 86,656  |   | $ | 79,662 |   |
|                                                       |   |                                    |         |   |   |  |   |
| Net                  operating income:                     |   |                                    |         |   |   |  |   |
| Southern                  California                       |   | $                                       | 34,975  |   | $ | 31,458 |   |
| Northern                  California                       |   |                                    | 12,235  |   |   | 11,457 |   |
| Pacific                  Northwest                         |   |                                    | 10,030  |   |   | 9,379 |   |
| Other                  non-segment areas                   |   |                                    | (53     | ) |   | 73 |   |
| Total                  net operating income                |   |                                    | 57,187  |   |   | 52,367 |   |
|                                                       |   |                                    |         |   |   |  |   |
| Depreciation                  and amortization:            |   |                                    |         |   |   |  |   |
| Southern                  California                       |   |                                    | (11,506 | ) |   | (10,360 | ) |
| Northern                  California                       |   |                                    | (4,161  | ) |   | (3,998 | ) |
| Pacific                  Northwest                         |   |                                    | (3,915  | ) |   | (3,706 | ) |
| Other                  non-segment areas                   |   |                                    | (1,093  | ) |   | (1,979 | ) |
|                                                       |   |                                    | (20,675 | ) |   | (20,043 | ) |
| Interest                  expense:                         |   |                                    |         |   |   |  |   |
| Southern                  California                       |   |                                    | (7,550  | ) |   | (7,692 | ) |
| Northern                  California                       |   |                                    | (4,338  | ) |   | (3,777 | ) |
| Pacific                  Northwest                         |   |                                    | (1,731  | ) |   | (1,888 | ) |
| Other                  non-segment areas                   |   |                                    | (5,878  | ) |   | (4,796 | ) |
|                                                       |   |                                    | (19,497 | ) |   | (18,153 | ) |
|                                                       |   |                                    |         |   |   |  |   |
| Amortization                  of deferred financing costs  |   |                                    | (497    | ) |   | (563 | ) |
| General                  and administrative                |   |                                    | (5,002  | ) |   | (4,573 | ) |
| Other                  expenses                            |   |                                    | (800    | ) |   | (1,500 | ) |
| Management                  and other fees from affiliates |   |                                    | 830     |   |   | 931 |   |
| Gain                  on sale of real estate               |   |                                    | -       |   |   | 5,276 |   |
| Interest                  and other income                 |   |                                    | 654     |   |   | 2,431 |   |
| Equity                  income in co-investments           |   |                                    | (374    | ) |   | 2,724 |   |
| Minority                  interests                        |   |                                    | (1,378  | ) |   | (1,450 | ) |
| Income                  tax provision                      |   |                                    | (138    | ) |   | (1,100 | ) |
|                                                       |   |                                    |         |   |   |  |   |
| Income                  from continuing operations         |   | $                                       | 10,310  |   | $ | 16,347 |   |
|                                                       |   |                                    |         |   |   |  |   |

----

|                                                       |   | **Six                  Months Ended** |                                                                                                                                                                                 |
|------------------------------------------------------------|--------|---------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                       |   | **June                  30,**         |                                                                                                                                                                                 |
|                                                       |   | **2006**                              |                                                                                                                                                                                 | **2005** |   |
| Revenues:                                                  |   |                                  |                                                                                                                                                                                 |   |   |
| Southern                  California                       |   | $                                     | 102,686                                                                                                                                                                              |   | $ | 93,260 |   |
| Northern                  California                       |   |                                  | 35,501                                                                                                                                                                               |   |   | 33,293 |   |
| Pacific                  Northwest                         |   |                                  | 31,443                                                                                                                                                                               |   |   | 29,407 |   |
| Other                  non-segment areas                   |   |                                  | 2,289                                                                                                                                                                                |   |   | 1,978 |   |
| Total                  property revenues                   |   | $                                     | 171,919                                                                                                                                                                              |   | $ | 157,938 |   |
|                                                       |   |                                  |                                                                                                                                                                                      |   |   |  |   |
| Net                  operating income:                     |   |                                  |                                                                                                                                                                                      |   |   |  |   |
| Southern                  California                       |   | $                                     | 69,475                                                                                                                                                                               |   | $ | 62,642 |   |
| Northern                  California                       |   |                                  | 23,761                                                                                                                                                                               |   |   | 22,541 |   |
| Pacific                  Northwest                         |   |                                  | 19,652                                                                                                                                                                               |   |   | 18,429 |   |
| Other                  non-segment areas                   |   |                                  | (449                                                                                                                                                                                 | ) |   | (38 | ) |
| Total                  net operating income                |   |                                  | 112,439                                                                                                                                                                              |   |   | 103,574 |   |
|                                                       |   |                                  |                                                                                                                                                                                      |   |   |  |   |
| Depreciation                  and amortization:            |   |                                  |                                                                                                                                                                                      |   |   |  |   |
| Southern                  California                       |   |                                  | (22,568                                                                                                                                                                              | ) |   | (20,496 | ) |
| Northern                  California                       |   |                                  | (8,236                                                                                                                                                                               | ) |   | (7,915 | ) |
| Pacific                  Northwest                         |   |                                  | (7,690                                                                                                                                                                               | ) |   | (7,334 | ) |
| Other                  non-segment areas                   |   |                                  | (2,272                                                                                                                                                                               | ) |   | (3,877 | ) |
|                                                       |   |                                  | (40,766                                                                                                                                                                              | ) |   | (39,622 | ) |
| Interest                  expense:                         |   |                                  |                                                                                                                                                                                      |   |   |  |   |
| Southern                  California                       |   |                                  | (14,694                                                                                                                                                                              | ) |   | (15,161 | ) |
| Northern                  California                       |   |                                  | (8,781                                                                                                                                                                               | ) |   | (7,568 | ) |
| Pacific                  Northwest                         |   |                                  | (3,421                                                                                                                                                                               | ) |   | (3,338 | ) |
| Other                  non-segment areas                   |   |                                  | (11,591                                                                                                                                                                              | ) |   | (10,233 | ) |
|                                                       |   |                                  | (38,487                                                                                                                                                                              | ) |   | (36,300 | ) |
|                                                       |   |                                  |                                                                                                                                                                                 |   |   |  |   |
| Amortization                  of deferred financing costs  |   |                                  | (1,193                                                                                                                                                                               | ) |   | (1,039 | ) |
| General                  and administrative                |   |                                  | (9,901                                                                                                                                                                               | ) |   | (9,014 | ) |
| Other                  expenses                            |   |                                  | (1,770                                                                                                                                                                               | ) |   | (1,500 | ) |
| Management                  and other fees from affiliates |   |                                  | 1,654                                                                                                                                                                                |   |   | 7,507 |   |
| Gain                  on sale of real estate               |   |                                  | -                                                                                                                                                                                    |   |   | 6,391 |   |
| Interest                  and other income                 |   |                                  | 3,048                                                                                                                                                                                |   |   | 2,954 |   |
| Equity                  income in co-investments           |   |                                  | (816                                                                                                                                                                                 | ) |   | 17,316 |   |
| Minority                  interests                        |   |                                  | (2,845                                                                                                                                                                               | ) |   | (2,741 | ) |
| Income                  tax provision                      |   |                                  | (175                                                                                                                                                                                 | ) |   | (1,201 | ) |
| Income                  from continuing operations         |   | $                                     | 21,188                                                                                                                                                                               |   | $ | 46,325 |   |
|                                                       |   |                                  |                                               |   |   |                                                                                       |   |

|                                          |   | **June                  30,** |                                                                                                                                                                                                                                                                                                                                                                           | **December                  31,** |   |
|-----------------------------------------------|--------|-------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------|--------|
| Assets:                                       |   | **2006**                      |                                                                                                                                                                                                                                                                                                                                                                           | **2005**                          |   |
| Net                  real estate assets:      |   |                          |                                                                                                                                                                                                                                                                                                                                                                           |                              |   |
| Southern                  California          |   | $                             | 1,270,774                                                                                                                                                                                                                                                                                                                                                                      |                              | $      | 1,211,373 |   |
| Northern                  California          |   |                          | 451,850                                                                                                                                                                                                                                                                                                                                                                        |                              |   | 456,093 |   |
| Pacific                  Northwest            |   |                          | 358,892                                                                                                                                                                                                                                                                                                                                                                        |                              |   | 359,432 |   |
| Other                  non-segment areas      |   |                          | 37,631                                                                                                                                                                                                                                                                                                                                                                         |                              |   | 57,871 |   |
| Total                  net real estate assets |   |                          | 2,119,147                                                                                                                                                                                                                                                                                                                                                                      |                              |   | 2,084,769 |   |
| Other                  non-segment assets     |   |                          | 209,097                                                                                                                                                                                                                                                                                                                                                                        |                              |   | 154,521 |   |
| Total                  assets                 |   | $                             | 2,328,244                                                                                                                                                                                                                                                                                                                                                                      |                              | $      | 2,239,290 |   |
|                                          |   |                          |                                                                                             |                              |   |                                                    |   |

----

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

|                                                                |   | **Three                  Months Ended** |   | **Three                  Months Ended** |   |
|---------------------------------------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------|--------|
|                                                                |   | **June                  30, 2006**      |   | **June                  30, 2005**      |   |
|                                                                |   |                                    |   | **Weighted**                            |   | **Per** |   |   |   | **Weighted** |   | **Per** |   |
|                                                                |   |                                    |   | **Average**                             |   | **Common** |   |   |   | **Average** |   | **Common** |   |
|                                                                |   |                                    |   | **Common**                              |   | **Unit** |   |   |   | **Common** |   | **Unit** |   |
|                                                                |   | **Income**                              |   | **Units**                               |   | **Amount** |   | **Income** |   | **Units** |   | **Amount** |   |
| Basic:                                                              |   |                                    |   |                                    |   |   |   |   |   |   |   |   |   |
|                    Income from continuing operations available |   |                                    |   |                                    |   |   |   |   |   |   |   |   |   |
| to                  common units                                    |   | $                                       | 7,262  |                                    |   | 25,236 |   | $ | 0.29 |   | $ | 13,300 |   |   | 25,369 |   | $ | 0.52 |   |
|                    Income from discontinued operations         |   |                                    | 17,140 |                                    |   | 25,236 |   |   | 0.68 |   |   | 29,063 |   |   | 25,369 |   |   | 1.15 |   |
|                                                                |   |                                    | 24,402 |                                    |   |  |   | $ | 0.97 |   |   | 42,363 |   |   |  |   | $ | 1.67 |   |
|                                                                |   |                                    |        |                                    |   |  |   |   |   |   |   |  |   |   |  |   |   |  |   |
| Effect                  of Dilutive Securities (1)                  |   |                                    | -      |                                    |   | 461  |   |   |  |   |   | - |   |   | 303 |   |   |  |   |
|                                                                |   |                                    |        |                                    |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Diluted:                                                            |   |                                    |        |                                    |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|                    Income from continuing operations available |   |                                    |        |                                    |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| to                  common units                                    |   |                                    | 7,262  |                                    |   | 25,697 |   | $ | 0.28 |   |   | 13,300 |   |   | 25,672 |   | $ | 0.52 |   |
|                    Income from discontinued operations         |   |                                    | 17,140 |                                    |   | 25,697 |   |   | 0.67 |   |   | 29,063 |   |   | 25,672 |   |   | 1.13 |   |
|                                                                |   | $                                       | 24,402 |                                    |   |  |   | $ | 0.95 |   | $ | 42,363 |   |   |  |   | $ | 1.65 |   |

|                                                                |   | **Six                  Months Ended** |   | **Six                  Months Ended** |   |
|---------------------------------------------------------------------|--------|---------------------------------------|--------|---------------------------------------|--------|
|                                                                |   | **June                  30, 2006**    |   | **June                  30, 2005**    |   |
|                                                                |   |                                  |   | **Weighted**                          |   | **Per** |   |   |   | **Weighted** |   | **Per** |   |
|                                                                |   |                                  |   | **Average**                           |   | **Common** |   |   |   | **Average** |   | **Common** |   |
|                                                                |   |                                  |   | **Common**                            |   | **Unit** |   |   |   | **Common** |   | **Unit** |   |
|                                                                |   | **Income**                            |   | **Units**                             |   | **Amount** |   | **Income** |   |  **Units** |   | **Amount** |   |
| Basic:                                                              |   |                                  |   |                                  |   |   |   |   |   |   |   |   |   |
|                    Income from continuing operations available |   |                                  |   |                                  |   |   |   |   |   |   |   |   |   |
| to                  common units                                    |   | $                                     | 15,093 |                                  |   | 25,201 |   | $ | 0.60 |   | $ | 40,230 |   |   | 25,369 |   | $ | 1.59 |   |
|                    Income from discontinued operations         |   |                                  | 20,321 |                                  |   | 25,201 |   |   | 0.81 |   |   | 31,319 |   |   | 25,369 |   |   | 1.23 |   |
|                                                                |   |                                  | 35,414 |                                  |   |  |   | $ | 1.41 |   |   | 71,549 |   |   |  |   | $ | 2.82 |   |
|                                                                |   |                                  |        |                                  |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Effect                  of Dilutive Securities (1)                  |   |                                  | -      |                                  |   | 428  |   |   |  |   |   | - |   |   | 307 |   |   |  |   |
|                                                                |   |                                  |        |                                  |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Diluted:                                                            |   |                                  |        |                                  |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
|                    Income from continuing operations available |   |                                  |        |                                  |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| to                  common units                                    |   |                                  | 15,093 |                                  |   | 25,629 |   | $ | 0.59 |   |   | 40,230 |   |   | 25,676 |   | $ | 1.57 |   |
|                    Income from discontinued operations         |   |                                  | 20,321 |                                  |   | 25,629 |   |   | 0.79 |   |   | 31,319 |   |   | 25,676 |   |   | 1.22 |   |
|                                                                |   | $                                     | 35,414 |                                  |   |  |   | $ | 1.38 |   | $ | 71,549 |   |   |  |   | $ | 2.79 |   |
| .                                                                   |   |                                  |        |                                  |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |

| (1)   | On                or after November 1, 2020, the holders of the $225 million exchangeable                notes may exchange, at the then applicable exchange rate, the notes                for                cash and, at Essex’s option, a portion of the notes may be exchanged for                Essex common stock; the current exchange rate is $103.25 per share                of                Essex common stock. The exchangeable notes will also be exchangeable                prior                to November 1, 2020, but only upon the occurrence of certain specified                events. During the three and six months ended June 30, 2006, the                weighted                average common stock price exceeded the $103.25 strike price and therefore                common stock issuable upon exchange of the exchangeable notes was                included                in the diluted share count. The treasury method was used to determine                the                shares to be added to the denominator for the calculation of earnings                per                diluted share. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

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

| **(10)  ** | **Discontinued                Operations** |
|----------------------|--------------------------------------------|

*Accounting      for the Impairment or Disposal of Long-Lived Assets*

----

|                                                                             |   | **Three                  Months Ended** |   | **Six                  Months Ended** |   |
|----------------------------------------------------------------------------------|--------|-----------------------------------------|--------|---------------------------------------|--------|
|                                                                             |   | **June                  30,**           |   | **June                  30,**         |   |
|                                                                             |   | **2006**                                |   | **2005**                              |   | **2006** |   | **2005** |   |
|                                                                             |   |                                    |   |                                  |   |   |   |   |   |
| Rental                  revenues                                                 |   | $                                       | -      |                                  | $      | 574 |   | $ | - |   | $ | 1,233 |   |
| Interest                  and other                                              |   |                                    | 119    |                                  |   | 119 |   |   | 238 |   |   | 1,373 |   |
|                       Revenues                               |   |                                    | 119    |                                  |   | 693 |   |   | 238 |   |   | 2,606 |   |
|                                                                             |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Property                  operating expenses                                     |   |                                    | -      |                                  |   | (114 | ) |   | - |   |   | (506 | ) |
|                       Operating income from real estate sold |   |                                    | 119    |                                  |   | 579 |   |   | 238 |   |   | 2,100 |   |
|                                                                             |   |                                    |        |                                  |   |   |   |   |  |   |   |   |   |
| Gain                  on sale of real estate                                     |   |                                    | 8,800  |                                  |   | 28,484 |   |   | 11,862 |   |   | 29,219 |   |
| Promote                  interest and fees                                       |   |                                    | 8,221  |                                  |   | - |   |   | 8,221 |   |   | - |   |
|                       Net gain on sale of real estate        |   |                                    | 17,021 |                                  |   | 28,484 |   |   | 20,083 |   |   | 29,219 |   |
|                                                                             |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |
| Income                  from discontinued operations                             |   | $                                       | 17,140 |                                  | $      | 29,063 |   | $ | 20,321 |   | $ | 31,319 |   |
|                                                                             |   |                                    |   |                                  |   |   |   |   |   |   |   |   |   |

**(11)      Commitments and Contingencies **

----

**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 and six      months ended June 30, 2006. (Unless otherwise noted, all dollar amounts are      in      thousands.)*

**Southern      California**

**Northern      California**

**Pacific      Northwest**

|                                 | As                  of June 30, 2006       |   | As                  of June 30, 2005       |   |
|--------------------------------------|--------------------------------------------|--------|--------------------------------------------|--------|
|                                 | Number                  of Apartment Homes | %      | Number                  of Apartment Homes | *%*    |
| Southern                  California | 12,957                                     | 55%    | 12,724                                     | 54%    |
| Northern                  California | 4,621                                      | 19%    | 4,621                                      | 20%    |
| Pacific                  Northwest   | 5,847                                      | 25%    | 5,831                                      | 25%    |
| Other                                | 302                                        | 1%     | 302                                        | 1%     |
| **Total**                            | 23,727                                     | 100%   | 23,478                                     | 100%   |
|                                 |                                       |   |                                       |   |

**Occupancy      Rates**

**Comparison      of the Three Months Ended June 30, 2006 to the Three Months Ended June 30,      2005**

|                                   |   |   | **Three                    months ended** |
|----------------------------------------|--------|--------|-------------------------------------------|
|                                   |   |   | **June                    30,**           |
|                                   |   |   | **2006**                                  |   | **2005** |
| Southern                    California |   |   | 95.9%                                     |   | 96.5% |
| Northern                    California |   |   | 97.8%                                     |   | 97.2% |
| Pacific                    Northwest   |   |   | 97.5%                                     |   | 96.8% |

----

*Total          Property Revenues*

|                                                                      |                           |   |   |                                        |   |   |       |   |           |       |   |       |   |
|---------------------------------------------------------------------------|--------------------------------|--------|--------|---------------------------------------------|--------|--------|------------|--------|----------------|------------|--------|------------|--------|
|                                                                      |                           |   |   | **Three                  Months Ended**     |   |   |       |   |           |       |
|                                                                      | **Number                  of** |   |   | **June                  30,**               |   |   | **Dollar** |   | **Percentage** |       |
|                                                                      | **Properties**                 |   |   | **2006**                                    |   |   | **2005**   |   |           | **Change** |   | **Change** |   |
| Revenues:                                                                 |                           |   |   | **(dollars                  in thousands)** |   |   |       |   |           |       |
|                    Property revenues                                 |                           |   |   |                                        |   |   |       |   |           |       |   |       |   |
|                    Quarterly Same-Properties:                        |                           |   |   |                                        |   |   |       |   |           |       |   |       |   |
| Southern                  California                                      | 56                             |   | $      | 46,314                                      |   | $      | 43,954     |   | $              | 2,360      |   | 5.4        | %      |
| Northern                  California                                      | 20                             |   |   | 18,057                                      |   |   | 16,796     |   |           | 1,261      |   | 7.5        |   |
| Pacific                  Northwest                                        | 25                             |   |   | 13,926                                      |   |   | 12,879     |   |           | 1,047      |   | 8.1        |   |
| Total                  property revenues                                  |                           |   |   |                                        |   |   |       |   |           |       |   |       |   |
|                      Quarterly Same-Properties             | 101                            |   |   | 78,297                                      |   |   | 73,629     |   |           | 4,668      |   | 6.3        |   |
| Property                  revenues - properties acquired                  |                           |   |   |                                        |   |   |       |   |           |       |   |       |   |
|     subsequent                  to March 31, 2005 (1) |                           |   |   | 8,359                                       |   |   | 6,033      |   |           | 2,326      |   | 38.6       |   |
| Total                  property revenues                                  |                           |   | $      | 86,656                                      |   | $      | 79,662     |   | $              | 6,994      |   | 8.8        | %      |
|                                                                      |                           |   |   |                                        |   |   |       |   |           |       |   |       |   |

*Quarterly      Same-Property Revenues*

*Quarterly      Non-Same Property Revenues*

*Total      Expenses*

*Interest      expense *

*Other      expenses *

*Gain      on sale of real estate *

*Interest      and other income *

*Equity      income in co-investments*

----

*Discontinued      operations*

**Comparison      of the Six Months Ended June 30, 2006 to the Six Months Ended June 30,      2005**

|                                 |   |   | **Six                  Months Ended** |   |
|--------------------------------------|--------|--------|---------------------------------------|--------|
|                                 |   |   | **June                  30,**         |   |
|                                 |   |   | **2006**                              |   |   | **2005** |   |
| Southern                  California |   |   | 96.1%                                 |   |   | 96.3% |   |
| Northern                  California |   |   | 97.1%                                 |   |   | 97.0% |   |
| Pacific                  Northwest   |   |   | 97.1%                                 |   |   | 96.7% |   |

*Total      Property Revenues*

|                                                                    |   |                           |   | **Six                  Months Ended**       |   |       |   |           |    |
|-------------------------------------------------------------------------|--------|--------------------------------|--------|---------------------------------------------|--------|------------|--------|----------------|---------|
|                                                                    |   | **Number                  of** |   | **June                  30,**               |   | **Dollar** |   | **Percentage** |    |
|                                                                    |   | **Properties**                 |   | **2006**                                    |   | **2005**   |   | **Change**     |    | **Change** |   |
| Revenues:                                                               |   |                           |   | **(dollars                  in thousands)** |   |       |   |           |    |
|                    Property revenues                               |   |                           |   |                                        |   |       |   |           |    |   |   |
|                    Same-Properties:                                |   |                           |   |                                        |   |       |   |           |    |   |   |
| Southern                  California                                    |   |                           | 55     |                                        | $      | 90,648     |   | $              | 85,934  |   | $ | 4,714 |   |   | 5.5 | % |
| Northern                  California                                    |   |                           | 20     |                                        |   | 35,501     |   |           | 33,292  |   |   | 2,209 |   |   | 6.6 |   |
| Pacific                  Northwest                                      |   |                           | 24     |                                        |   | 26,368     |   |           | 24,699  |   |   | 1,669 |   |   | 6.8 |   |
| Total                  property revenues                                |   |                           |        |                                        |   |            |   |           |         |   |   |  |   |   |  |   |
|                     Same-Properties                           |   |                           | 99     |                                        |   | 152,517    |   |           | 143,925 |   |   | 8,592 |   |   | 6.0 |   |
| Property                  revenues - properties acquired                |   |                           |        |                                        |   |            |   |           |         |   |   |  |   |   |  |   |
|                      subsequent to December 31, 2004 (1) |   |                           |        |                                        |   | 19,402     |   |           | 14,013  |   |   | 5,389 |   |   | 38.5 |   |
| Total                  property revenues                                |   |                           |        |                                        | $      | 171,919    |   | $              | 157,938 |   | $ | 13,981 |   |   | 8.9 | % |
|                                                                    |   |                           |        |                                        |   |            |   |           |         |   |   |  |   |   |  |   |

*Same-Property      Revenues*

*Non-Same      Property Revenues*

----

*Management      and other fees from affiliates *

*Total      Expenses*

*Interest      expense *

*Other      expenses *

*Gain      on sale of real estate *

*Interest      and other income *

*Equity      income in co-investments*

*Discontinued      operations*

**Liquidity      and Capital Resources**

----

*Derivative      Activity*

*Development      and Predevelopment Pipeline*

----

*Redevelopment*

**Alternative      Capital Sources**

**Contractual      Obligations and Commercial Commitments**

|                                                 |   |     |    | **2007                  and** |   | **2009                  and** |   |           |    |      |   |
|------------------------------------------------------|--------|----------|---------|-------------------------------|--------|-------------------------------|--------|----------------|---------|-----------|--------|
| **(In                  thousands)**                  |   | **2006** |    | **2008**                      |   | **2010**                      |   | **Thereafter** |    | **Total** |   |
| Mortgage                  notes payable              |   | $        | -       |                          | $      | 217,705                       |   | $              | 182,828 |      | $      | 700,432 |   | $ | 1,100,965 |   |
| Exchangeable                  bonds                  |   |     | -       |                          |   | -                             |   |           | -       |      |   | 225,000 |   |   | 225,000 |   |
| Lines                  of credit                     |   |     | -       |                          |   | -                             |   |           | 95,030  |      |   | - |   |   | 95,030 |   |
| Interest                  on indebtedness            |   |     | 36,705  |                          |   | 110,918                       |   |           | 66,134  |      |   | 262,774 |   |   | 476,531 |   |
| Development                  commitments             |   |     | 98,100  |                          |   | 34,100                        |   |           | -       |      |   | - |   |   | 132,200 |   |
| Redevelopment                  commitments           |   |     | 13,120  |                          |   | 2,341                         |   |           | -       |      |   | - |   |   | 15,461 |   |
| Essex                  Apartment Value Fund II, L.P. |   |     |         |                          |   |                               |   |           |         |      |   |  |   |   |  |   |
|                     capital commitment     |   |     | 45,412  |                          |   | -                             |   |           | -       |      |   | - |   |   | 45,412 |   |
|                                                 |   | $        | 193,337 |                          | $      | 365,064                       |   | $              | 343,992 |      | $      | 1,188,206 |   | $ | 2,090,599 |   |
|                                                 |   |     |         |                          |   |                               |   |           |         |      |   |  |   |   |  |   |

**Critical        Accounting Policies and Estimates**

----

**Forward      Looking Statements **

**Potential      Factors Affecting Future Operating Results **

*Development      and Redevelopment Activities*

|   | ·  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.                       |

*Interest      Rate Fluctuations *

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

|                                      |   |     |   |            |   |            |   |     |    |            |   |           |   |      |    |                            |   |    |   |
|-------------------------------------------|--------|----------|--------|-----------------|--------|-----------------|--------|----------|---------|-----------------|--------|----------------|--------|-----------|---------|---------------------------------|--------|---------|--------|
| **For                  the Years Ended**  |   | **2006** |   | **2007****(1)** |   | **2008****(2)** |   | **2009** |    | **2010****(3)** |   | **Thereafter** |   | **Total** |    | **Fair                  value** |   |
|                                      |   |     |   |            |   |            |   |     |    |            |   |           |   |      |    |                            |   |    |   |
| (In                  thousands)           |   |     |   |            |   |            |   |     |    |            |   |           |   |      |    |                            |   |    |   |
| Fixed                  rate debt          |   | $        | -      |            |   | 69,960          |   |     | 147,745 |            |   | 24,937         |   |      | 157,891 |                            |   | 738,900 |   |   | **(4** | **)** | $ | 1,139,433 |   | $ | 1,176,570 |   |
| Average                  interest rate    |   |     | -      |            |   | 6.0             | %      |     | 6.8     | %               |   | 6.9            | %      |      | 8.0     | %                               |   | 5.7     | %      |   |  |   |   |  |   |   |  |   |
| Variable                  rate LIBOR debt |   | $        | -      |            |   | -               |   |     | -       |            |   | 95,030         |   |      | -       |                            |   | 186,532 |   |   | **(5** | **)** | $ | 281,562 |   | $ | 281,562 |   |
| Average                  interest         |   |     | -      |            |   | -               |   |     | -       |            |   | 5.8            | %      |      | -       |                            |   | 4.7     | %      |   |  |   |   |  |   |   |  |   |
|                                      |   |     |        |            |   |                 |   |     |         |            |   |                |   |      |         |                            |   |         |   |   |  |   |   |  |   |   |  |   |

----

**Item      4: Controls and Procedures **

**Part      II -- Other Information**

**Item      1: Legal Proceedings**

**Item      IA: Risk Factors**

----

**Item      6: Exhibits **

|   | *A.* | *Exhibits* |
|--------|------|------------|

|   | 3.1 | Articles                Supplementary designating the 4.875% Series G Cumulative Convertible                Preferred Stock, filed as Exhibit 3.1 to the Company’s Form 8-K, filed on                August 1, 2006, and incorporated herein by                reference. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1 | Form                of 4.875% Series G Cumulative Convertible Preferred Stock Certificate,                filed as Exhibit 4.1 to the Company’s 8-K, filed on July 27, 2006, and                incorporated herein by reference. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 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. |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 10.2 | Twelfth                Amendment to the First Amended and Restated Agreement of Limited                Partnership of Essex Portfolio, L.P., dated as of July 26, 2006,                filed as                Exhibit 10.1 to the Company’s Form 8-K, filed on July 27, 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. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**SIGNATURE**

|   | ESSEX                PORTFOLIO, L.P.                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|   | *(Registrant)*                                                                                                                       |
|   |                                                                                                                                 |
|   |                                                                                                                                 |
|   | Date:                August 7, 2006                                                                                                  |
|   |                                                                                                                                 |
|   |                                                                                                                                      | By:                /S/ MICHAEL T. DANCE |
|   | Michael                T. Dance                                                                                                      |
|   | *Executive                Vice President, Chief Financial Officer**(Authorized                Officer, Principal Financial Officer)* |
|   |                                                                                                                                 |
|   |                                                                                                                                 |
|   | By:                /S/ BRYAN HUNT                                                                                                    |
|   | Bryan                Hunt                                                                                                            |
|   | *Vice                President, Chief Accounting                Officer*                                                             |