UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-K

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(MARK ONE)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2003

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.



|Maryland                                                       | 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

Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act: None

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K.  [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [X]   No
[    ]

LOCATION OF EXHIBIT INDEX: The index exhibit is contained in Part III, Item
15, on page number 52.

DOCUMENTS INCORPORATED BY REFERENCE:

The following document is incorporated by reference in Part III of the Annual
Report on Form 10-K: Proxy statement for the annual meeting of stockholders of
Essex Property Trust, Inc. to be held May 11, 2004.







Essex Portfolio, L.P.

                        2003 ANNUAL REPORT ON FORM 10-K
                               TABLE OF CONTENTS



|Part I.    |                                                                                       | Page
|---------- | ------------------------------------------------------------------------------------- | ----
|Item 1.    | Description of Business                                                               | 2   
|Item 2.    | Properties                                                                            | 25  
|Item 3.    | Legal Proceedings                                                                     | 33  
|Item 4.    | Submission of Matters to a Vote of Security Holders                                   | 33  
|Part II.   |                                                                                       |     
|Item 5.    | Market for Registrant's Common Stock and Related Stockholder Matters                  | 34  
|Item 6.    | Selected Financial Data                                                               | 35  
|Item 7.    | Management's Discussion and Analysis of Financial Condition and Results of Operations | 37  
|Item 7A.   | Quantitative and Qualitative Disclosures About Market Risks                           | 49  
|Item 8.    | Financial Statements and Supplementary Data                                           | 50  
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  | 50  
|Item 9A.   | Control and Procedures                                                                | 50  
|Part III.  |                                                                                       |     
|Item 10.   | Directors and Executive Officers                                                      | 51  
|Item 11.   | Executive Compensation                                                                | 51  
|Item 12.   | Security Ownership of certain Beneficial Owners and Management                        | 51  
|Item 13.   | Certain Relationships and Related Transactions                                        | 51  
|Item 14.   | Principal Accounting Fees and Services                                                | 51  
|Item 15.   | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       | 52  
|Signatures |                                                                                       | S-1 

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PART I

As used herein, the terms "Company" and "Essex" mean
Essex Property Trust, Inc., a Maryland real estate investment trust, those
entities controlled by Essex Property Trust, Inc. and Predecessors of Essex
Property Trust, Inc., unless the context indicates otherwise and the term
"Operating Partnership" refers to Essex Portfolio, L.P., a California
limited partnership, formed on March 15, 1994 as to which the Company owns an
approximate 90.8% general partnership interest, as of December 31, 2003 (except
with regard to the section entitled "Risk Factors," below, wherein all
reference to the "Company" shall be deemed to be references to the
Company and the Operating Partnership, unless the context indicates
otherwise).

Forward Looking Statements

Certain statements in this Report on Form 10-K which are not historical
facts may be considered forward looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
and Exchange Act of 1934, as amended, including statements regarding the
Operating Partnership's expectations, hopes, intentions, beliefs and strategies
regarding the future. Forward looking statements include statements under the
caption "Business Objectives" in this Part I, statements regarding the
Operating Partnership's expectation as to the performance of future acquisition
properties, expectations of the future multifamily fundamentals and operating
results in various geographic regions and the Operating Partnership's investment focus in
such regions,
expectation as to the timing of completion of current development
projects and the stabilization dates of such projects, expectation as to the
total projected costs and rental rates of current development projects, beliefs
as to the adequacy of future cash flows to meet operating requirements and to
provide for dividend payments in accordance with REIT requirements, expectations
to meet all REIT requirements, expectations as to the amount of capital
expenditures, expectations as to the amount of non-revenue generating capital
expenditures, future acquisitions and developments, the anticipated performance
of the Essex Apartment Value Fund, L.P., the anticipated performance of the
Essex Apartment Value Fund II, L.P.,  the anticipated performance of existing
properties, statements regarding the Operating Partnership's financing
activities and the use of proceeds from such activities.

Such forward-looking statements involve known and unknown risks,
uncertainties and other factors including, but not limited to, that the
Operating Partnership will fail to achieve its business objectives, that
estimates of future income from an acquired property may prove to be inaccurate,
acquisition and development projects will fail to meet expectations, that the
actual completion of development projects will be subject to delays, that the
stabilization dates of such projects will be delayed, that the total projected
costs of current development projects will exceed expectations, that such
development projects will not be completed, that future cash flows will be
inadequate to meet operating requirements and/or will be insufficient to provide
for dividend payments in accordance with REIT requirements, the Operating
Partnership will fail to meet all REIT requirements, that the actual non-revenue
generating capital expenditures will exceed the Operating Partnership's current
expectations, that the Essex Apartment Value Fund will fail to perform as
anticipated, that the Essex Apartment Value Fund II, L.P. will not be formed or
formed on less favorable terms, that the Operating Partnership's partners in the
Funds fail to fund capital commitments as contractually required, that there may
be a downturn in the markets in which the Operating Partnership's properties are
located, that the terms of any refinancing may not be as favorable as the terms
of existing indebtedness, and the Operating Partnership will not be able to
complete property acquisitions, as anticipated, for which the proceeds from
recent equity issuances were intended to be used, as well as those risks,
special considerations, and other factors discussed under the caption "Risk
Factors" in Item 1 of this Report on Form 10-K for the year ended December
31, 2003, and those other risk factors and special considerations set forth in
the Operating Partnership's other filings with the Securities and Exchange
Commission (the "SEC") which may cause the actual results, performance
or achievements of the Operating Partnership to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. All forward-looking statements and reasons why
results may differ included in this Form 10-K are made as of the date hereof,
and we assume no obligation to update any such forward-looking statement or
reason why actual results may differ.

1

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Item 1. Business

Description of Business

Essex Portfolio, L.P. (the "Operating Partnership") was
formed in March 1994 and commenced operations on June 13, 1994, when the
Company, the general partner of the Operating Partnership, completed its initial
public offering (the "Offering") in which it issued 6,275,000 shares
of common stock at $19.50 per share. The Company has elected to be treated as a
real estate investment trust ("REIT") under the Internal Revenue Code
of 1986 ("The Code") as amended.

The Operating Partnership is engaged in the ownership, acquisition,
development and management of multifamily apartment communities. The Operating
Partnership's multifamily portfolio as of December 31, 2003 consists of
ownership interests in 121 properties (comprising 26,012 apartment units), of
which 14,943 units are located in Southern California (Los Angeles, Ventura,
Orange and San Diego counties), 4,605 units are located in Northern California
(the San Francisco Bay Area), 5,886 of which are located in the Pacific
Northwest (4,515 units in the Seattle metropolitan area and 1,371 units in the
Portland, Oregon metropolitan area), and 578 are located in other areas (302
units in Houston, Texas and 276 units in Hemet, California). In addition, the
Operating Partnership has an ownership interest in other real estate assets
consisting of five recreational vehicle parks (comprising 1,717 spaces), four
office buildings (totaling approximately 63,540 square feet) and two
manufactured housing communities (containing 607 sites), (collectively, together
with the Operating Partnership's multifamily residential properties, the
"Properties").  One of the office buildings located in Northern
California (Palo Alto) has approximately 17,400 square feet and houses the
Operating Partnership's headquarters and another office building located in
Southern California (Woodland Hills) has approximately 38,940 square feet, of
which the Operating Partnership currently occupies approximately 8,600 square
feet. The Woodland Hills office building has nine third-party tenants occupying
approximately 27,300 feet. The Operating Partnership along with its affiliated
entities and joint ventures also have entered into commitments for the
development of 1,056 units in five multifamily communities; two of which are in
Northern California and three are in Southern California.

The Company conducts substantially all of its activities through Essex
Portfolio, L.P. (the "Operating Partnership"). The Company currently
owns an approximate 90.8% general partnership interest and members of the
Company's Board of Directors, senior management and certain third-party
investors own limited partnership interests of approximately 9.2% in the
Operating Partnership. As the sole general partner of the Operating Partnership,
the Company has control over the management of the Operating Partnership. The
Operating Partnership either controls or has significant influence over the
Properties.

The Company's website address is http://www.essexpropertytrust.com. The
Operating Partnership's annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and all amendments to those reports, and the
Proxy Statement for its Annual Meeting of Stockholders are all available, free
of charge, on our website as soon as practicable after we file the reports with
the Securities and Exchange Commission ("SEC").

References in this Form 10-K to "us," "we," or
"our" refer to Essex unless indicated otherwise.

Business Objectives

The Operating Partnership's primary business objective is to maximize
funds from operations and total returns to stockholders through active property
and portfolio management, including the redevelopment of existing properties.
The Operating Partnership's strategies include:

- Active Property Marketing and Management. Maximize, on a per share basis,
cash available for distribution and the capital appreciation of its property
portfolio through active property marketing and management and, if applicable,
redevelopment.
- Selected Expansion of Property Portfolio. Increase, on a per share basis,
cash available for distribution through the acquisition and development of
multifamily residential properties in selected major metropolitan areas located
primarily in the west coast region of the United States.
- Optimal Portfolio Asset Allocations. Produce predictable financial
performance through a portfolio asset allocation program that seeks to increase
or decrease the investments in each market based on changes in regional economic
and local market conditions.
- Management of Capital and Financial Risk. Optimize the Operating
Partnership's capital and financial risk positions by maintaining a conservative
leverage ratio and minimizing the Operating Partnership's cost of capital.

2

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Business Principles

The Operating Partnership was founded on, has followed, and intends
to continue to follow the business principles set forth below:

Property Management.  Through its long-standing philosophy of active
property management and a customer satisfaction approach, coupled with a
discipline of internal cost control, the Operating Partnership seeks to retain
tenants, maximize cash flow, enhance property values and compete effectively for
new tenants in the marketplace. The Operating Partnership's Senior Vice
President of Operations, regional portfolio managers, and their staff are
accountable for overall property operations and performance. They supervise on-
site managers, provide training for the on-site staff, monitor fiscal
performance against budgeted expectations, monitor property performance against
competing properties in the area, prepare operating and capital budgets for
executive approval, and implement new strategies focused on enhancing tenant
satisfaction, increasing revenue, controlling expenses, and creating a more
efficient operating environment.

Business Planning and Control.  Real estate investment decisions are
accompanied by a multiple year plan, to which executives and other managers
responsible for obtaining future financial performance must agree. Performance
versus plan serves as a significant factor in determining compensation.

Property Type Focus.  The Operating Partnership focuses on acquisition
and development of multifamily residential communities, containing between 75
and 750 units. These types of properties offer attractive opportunities because
such properties provide opportunities for value enhancement since many of these
properties have been owned by parties that are either inadequately capitalized
or lack the professional property management and redevelopment expertise of the
Operating Partnership.

Geographic Focus.  The Operating Partnership focuses its property
investments in markets that meet the following criteria:

- Major Metropolitan Areas.
- Supply Constraints.
- Rental Demand Created by High Cost of Housing
- Job Proximity

Following the above criteria, the Operating Partnership is currently pursuing
investment opportunities in selected markets of Northern and Southern California
and the Pacific Northwest.

3

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Active Portfolio Management Through Regional Economic Research and Local
Market Knowledge.  The Operating Partnership was founded on the belief that
the key elements of successful real estate investment and portfolio growth
include extensive regional economic research and local market knowledge. The
Operating Partnership utilizes its economic research and local market knowledge
to make appropriate portfolio allocation decisions that it believes will result
in better overall operating performance and lower portfolio risk. The Operating
Partnership maintains and evaluates:

- Regional Economic Data.
- Local Market Conditions.

Recognizing that all real estate markets are cyclical, the Operating
Partnership regularly evaluates the results of regional economic and local
market research and proceeds to adjust its portfolio allocations accordingly.
The Operating Partnership actively manages the allocation of assets within its
portfolio. The Operating Partnership seeks to increase its portfolio allocation
in markets projected to have economic growth and to decrease such allocations in
markets projected to have declining economic conditions. Likewise, the Operating
Partnership also seeks to increase its portfolio allocation in markets that have
attractive property valuations and to decrease such allocations in markets that
have inflated valuations and low relative yields. Although the Operating
Partnership is generally a long-term investor, it does not establish defined or
preferred holding periods for its Properties.

Current Business Activities

Essex Portfolio, L.P. (the "Operating Partnership") was
formed in March 1994 and commenced operations on June 13, 1994, when the
Company, the general partner of the Operating Partnership, completed its initial
public offering (the "Offering") in which it issued 6,275,000 shares
of common stock at $19.50 per share.  The Company has elected to be treated as a
real estate investment trust ("REIT") under the Internal Revenue Code
of 1986 ("The Code") as amended.

The Company conducts substantially all of its activities through the
Operating Partnership, of which it owns an approximate 90.8% general partnership
interest. The approximate 9.2% limited partnership interests in the Operating
Partnership are owned by directors, officers and employees of the Company and
certain third-party investors. As the sole general partner of the Operating
Partnership, the Company has operating control over the management of the
Operating Partnership. The Operating Partnership either controls or has
significant influence over the Properties.

Acquisitions

On October 9, 2003, the Operating Partnership acquired two
multifamily communities comprising 442 apartment homes in the Seattle,
Washington metropolitan area for an aggregate purchase price of $41.7 million.
The properties acquired were: Canyon Pointe, a 250-unit multifamily property
located in Bothell, Washington; and Forest View, a 192-unit multifamily property
located in Renton, Washington.  These newly acquired assets are not encumbered
by any mortgage.

On October 23, 2003, the Operating Partnership acquired Walnut Heights
Apartments, a 163-unit multifamily community located in the City of Walnut,
California, for a contract price of approximately $24.3 million.  This newly
acquired asset was not encumbered by any mortgage.

4

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Subsequent Events - Acquisitions

On January 21, 2004, the Operating Partnership acquired the
improvements of Marina City Club, located in Marina del Rey, California, which
include a 101-unit promenade apartment community, an adjacent marina with
approximately 340 boat slips and assorted retail space. The total contract price
was approximately $27.7 million. The improvements are subject to a non-
cancellable long-term ground lease with the County of Los Angeles that expires
in 2067. This newly acquired asset was not encumbered by any mortgage.

On January 28, 2004, the Operating Partnership acquired Mountain View
Apartments, a 106-unit multifamily community located in Camarillo, California,
for a contract price of approximately $14.3 million.  This newly acquired asset
was not encumbered by any mortgage.

On February 27, 2004, the Operating Partnership acquired Fountain Park
Apartments, a 705-unit multifamily community located in Playa Vista, California,
for a contract price of approximately $124.5 million.  In connection with the
transaction the Operating Partnership assumed tax-exempt variable rate bond
obligations totaling $83.2 million that mature in 2033. Financing and other
agreements require 53% of the apartment homes in Fountain Park to be subject to
various rent restrictions based on resident income criteria.

Development

Development communities are defined by the Operating Partnership as
new apartment properties that are being constructed or are newly constructed and
in a phase of lease-up and have not yet reached stabilized operations (defined
as 95% physical occupancy). As of December 31, 2003, the Operating Partnership
had direct ownership interests in two development communities, with an aggregate
of 444 multifamily units. During 2003, the Operating Partnership achieved
stabilized operations at two development communities. The Essex on Lake Merritt,
a 270-unit high-rise luxury apartment community located in Oakland, California
achieved stabilized operations during the first quarter of 2003 and The San
Marcos (phase I), a 312-unit apartment community located in Richmond, California
achieved stabilized operations during the fourth quarter of 2003.

Construction began at Phase II of The San Marcos project, which is located
directly adjacent to the first phase. It is anticipated that construction of
these additional units will be completed in the second quarter of 2004 and is
expected to reach stabilized operations in the fourth quarter of 2004.

During 2003 the Operating Partnership began leasing activities at Hidden
Valley, a 324-unit apartment community located in Simi Valley, California. The
Operating Partnership expects to reach stabilized operations at Hidden Valley in
the fourth quarter of 2004.  The Operating Partnership consolidates this
property since its 75% ownership interest in this development project gives the
Operating Partnership control.

In connection with the properties currently under development, the Operating
Partnership has directly, or in some cases through affiliated joint venture
entities, entered into contractual construction-related commitments with
unrelated third parties. As of December 31, 2003, the Operating Partnership and
its partners are committed to fund approximately $17.9 million in estimated
development expenditures to complete these projects.

The following table sets forth information regarding the Operating
Partnership's development communities at December 31, 2003.

`Estimated Project Incurred Project
                                                                         Cost as of        Cost as of
                                                                        12/31/03(1)       12/31/03(1)       Projected
        Development Communities              Location        Units    ($ in millions)   ($ in millions)   Stabilization
---------------------------------------- ----------------- ---------  ----------------  ----------------  -------------
Hidden Valley - Parker Ranch(2)          Simi Valley, CA        324  $           46.4  $           41.2      Oct. 2004
The San Marcos Phase II(3)               Richmond, CA           120              23.9              11.2      Oct. 2004
                                                           ---------  ----------------  ----------------
Total Development Communities                                   444  $           70.3  $           52.4
                                                           =========  ================  ================`

(1) Estimated project cost as of December 31, 2003 includes incurred
costs and estimated costs to complete the development projects. 
(2) The Operating Partnership has a 75% controlling interest in this development
project. 
(3) The Operating Partnership is the sole owner of this development project.

5

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The Operating Partnership is entitled to receive development fee income on
the joint venture development communities. The portion of the fees associated
with our ownership percentage is eliminated in consolidation.

Although the Operating Partnership will continue to evaluate the development
of multifamily properties as deemed appropriate given market conditions, it does
not expect to start any new development projects in 2004.

Redevelopment

Redevelopment communities are defined by the Operating Partnership as
existing properties owned or recently acquired which have been targeted for
additional investment by the Operating Partnership with the expectation of
increased financial returns. Redevelopment communities typically have apartment
units that are under construction and, as a result, may have less than
stabilized operations. As of December 31, 2003, the Operating Partnership has
direct ownership interests in one redevelopment community which contain 608
units. The estimated cost specifically related to the redevelopment of this
community is $3.4 million of which approximately $1.9 million remains to be
expended.

Debt Transactions

On January 15, 2003, the Operating Partnership repaid a non-recourse
mortgage with an interest rate of 7.6% that matured in the amount of $18.8
million.

During the third quarter of 2003 the Operating Partnership expanded its
existing $165.0 million unsecured revolving credit facility to $185.0 million.
No other material terms of this facility were revised.

On October 15, 2003, the Operating Partnership obtained four mortgage loans
aggregating $42.4 million with a variable interest rate priced at Freddie Mac's
Reference Rate plus 1.3%.  On January 31, 2004, the interest rates on these
loans was converted from a variable rate to a 5.65% fixed rate through February
2012.  The loans mature in February 2013.

On December 18, 2003, the Operating Partnership obtained a 5-year, $90.0
million credit facility from Freddie Mac, secured by four of Essex's multifamily
communities.  The aggregate maximum principal amount of the facility is $90.0
million, increasing to $100.0 million on July 1, 2004.  The Operating
Partnership borrowed $80.6 million under this facility, comprised of two
tranches as follows: $41 million, locked for 60 days at a base rate of 1.586%
(55 basis points over Freddie Mac's Reference Rate) and $39.6 million locked for
180 days at a base rate of 1.695% (59 basis points over Freddie Mac's Reference
Rate).  This credit facility has a lower cost of borrowing as compared to the
Operating Partnership's unsecured credit facility.

Equity Transactions

On June 14, 2000 the Operating Partnership purchased Waterford Place,
a 238-unit apartment community located in San Jose, California for a contract
price of $35.0 million, which excluded a contingent payment to be paid by the
Operating Partnership pursuant to the terms of the agreement.  The amount of the
contingent payment was disputed, and submitted to binding arbitration.  On March
19, 2003, in connection with that arbitration, the Operating Partnership was
directed to issue an additional 109,875 units to the seller.  As a result, the
Operating Partnership has increased its capitalized acquisition cost of this
asset by approximately $7.2 million with an offset to other liabilities.
The arbitration award is finalized, however no Operating
Partnership units have been issued as of December 31, 2003. The Operating
Partnership expects to issue the units during the first quarter of 2004.

On July 30, 2003, in connection with the Operating Partnership's acquisition,
by merger, of John M. Sachs, Inc. ("Sachs") on December 17, 2002, and
under terms of the merger agreement, a final analysis was prepared, which
indicated that the actual net liabilities of Sachs were less than the net
liabilities of Sachs estimated to be outstanding as of the merger date.  Based
on this final analysis and as a post-closing adjustment payment pursuant to the
merger agreement, the Operating Partnership made a final payment of $1.8 million
in cash and issued an additional 35,860 shares of the Company's common stock to
certain of the pre-merger shareholders of Sachs.

6

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On September 23, 2003, the Company issued 1,000,000 shares of its Series F
Cumulative Redeemable Preferred Stock at a fixed price of $24.664 per share, a
discount from the $25.00 per share liquidation value of the shares.  The shares
did not begin to accrue a dividend until November 25, 2003 and following that
date, pay quarterly distributions at an annualized rate of 7.8125% per year of
the liquidation value and will be redeemable at the Company's option on or after
September 23, 2008. The shares were issued pursuant to the Company's existing
shelf registration statement. Essex contributed the net proceeds from the
Series F Preferred Stock offering to the Operating Partnership and it is to
receive a preferred distribution from the Operating Partnership equal to the
quarterly dividends on the Series F Preferred Stock ("Series F Preferred
Distribution"). The Operating Partnership amortized the original discount
in connection with the contribution from Essex in the fourth quarter of 2003,
resulting in a charge of approximately $336,000. On November 24, 2003, the
Operating Partnership used the net proceeds from the contribution from Essex to
redeem all of the 9.125% Series C Cumulative Redeemable Preferred Units (the
"Series C Preferred Units"). In connection with this redemption,
the Operating Partnership incurred a non-cash charge of $625,000 related to
the write-off of the issuance costs.

On October 6, 2003, the Company sold 1.6 million newly issued shares of
common stock and received offering proceeds (before expenses) of
$60.67 per share, representing a 3.25% discount to the common stock's
closing price on September 30, 2003, the date of the underwriting agreement between the
Company and the underwriter, pursuant to which the shares were sold.
The shares were issued pursuant to the Company's
existing shelf registration statement. The proceeds of the offering were approximately
$97,072,000, which were contributed to the Operating Partnership.
Subsequent to the offering, the net proceeds
generated from the offering were used to acquire multifamily communities located
in the Operating Partnership's targeted West Coast markets and for general corporate purposes,
including the repayment of debt and the funding of development activities.

Subsequent Event - Equity

In January 2004, the Operating Partnership restructured its
previously issued $50 million, 9.30% Series D Cumulative Redeemable Preferred
Units ("Series D Units"), and its previously issued $80 million,
7.875% Series B Cumulative Redeemable Preferred Units ("Series B
Units").  The existing distribution rate of 9.30% of the Series D Units
will continue until July 27, 2004 - the end of the current non-call period.  On
July 28, 2004, the distribution rate on the Series D Units will be reduced to
7.875%.  The date that the Series D Units can first be redeemed at the Operating
Partnership's option will be extended by six years to July 28, 2010.  The dates
that the Series B Units can first be redeemed at the Operating Partnership's
option will be extended from February 6, 2003 to December 31, 2009.

Notes and Other Receivables

In July 2000 the Operating Partnership acquired a development land
parcel in Irvine, California. As a condition to the acquisition, an affiliate of
the Operating Partnership acquired a vacant 110,000 square foot office building
located adjacent to the development site for $14.6 million. In August 2000 the
affiliate sold the office building to a third party for $15.0 million. The
Operating Partnership loaned the buyer $15.0 million as a secured first mortgage
on the property. In addition, after the buyer expended $500,000 for such items
as tenant improvements, leasing commissions, and carrying costs, the Operating
Partnership agreed to lend an additional $4.5 million to the buyer for these
related items, under a mezzanine loan, which is secured by a second deed of
trust on the property (the "Mezzanine Loan"). The recorded balance of
the Mezzanine Loan is approximately $4.5 million, of which the principal
shareholder of the buyer personally guarantees $1.7 million. The Operating
Partnership evaluated the realization potential of the first and mezzanine loans
and, effective June 2002, ceased accruing interest income on these notes until
the timing of the borrower's cash flow from the office building is more
predictable. The loan matured in March 2003 and is in default. As of December
31, 2003, the owner leased 62.7% of the rentable square footage for amounts
acceptable to the Operating Partnership. The Operating Partnership has
determined that the current recorded balances due under these loans are properly
valued.

7

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Other

During the fourth quarter of 2003, the Operating Partnership entered
into lease and purchase option agreements with unrelated third parties related
to its five recreational vehicle parks that are comprised of 1,717 spaces, and
two manufactured housing communities that contain 607 sites.  Based on the
agreements, the unrelated third parties have an option to purchase the assets in
approximately four years for approximately $41.7 million - a 5% premium to the
gross book value of the assets.  The Operating Partnership received $474,000 as
consideration for entering into the option agreement. The option premium of
approximately $4.0 million has been recorded as deferred revenue and has been
classified with accounts payable and accrued liabilities in the Operating
Partnership's consolidated balance sheets. Under the lease agreements Essex is
to receive a fixed monthly lease payment in addition to a non-refundable upfront
payment that will be amortized over approximately five years (the life of the
lease).  These operating leases also provide for the Operating Partnership to
pass through all executory costs such as property taxes.

Essex Apartment Value Fund I ("Fund I")

Essex Apartment Value Fund, L.P. ("Fund I"), is an
investment fund organized by the Operating Partnership in 2001 to add value
through rental growth and asset appreciation, utilizing the Operating
Partnership's acquisition, development, redevelopment and asset management
capabilities. Currently Fund I is considered fully invested based on its
acquisitions to date and anticipated development and redevelopment expenditures.
An affiliate of the Operating Partnership, Essex VFGP, L.P. ("VFGP"),
is a 1% general partner and is a 20.4% limited partner. The Operating
Partnership owns a 99% limited partnership interest in VFGP. Fund I now expects
to utilize leverage of approximately 61% of the value of the underlying real
estate portfolio.  The Operating Partnership is committed to invest 21.4% of the
aggregate capital committed to Fund I.  As of December 31, 2003, the Operating
Partnership's share of such capital commitment which may be called by Fund I is
$9.6 million. In addition, Essex will be compensated by Fund I for its asset
management, property management, development and redevelopment services and may
receive incentive payments if the Fund exceeds certain financial return
benchmarks.

The Operating Partnership is in the process of forming a second Essex
Apartment Value Fund ("Fund II"), which is expected to be similar to
Fund I in size and structure.  Essex anticipates an initial closing of Fund II
during the second quarter of 2004, which would result in a final $50 million
capital commitment by a subsidiary of the Operating Partnership.

Since its formation, Fund I has acquired ownership interests in 17
multifamily residential properties, representing 4,926 apartment units with an
aggregate purchase price of approximately $500 million, excluding redevelopment
expenses, and disposed of two multifamily residential property, consisting of
530 apartment units at a gross sales price of approximately $73.2 million
resulting in a net realized gain of approximately $5.7 million. In addition, two
development land parcels, where approximately 480 apartment units are planned
for construction, have been purchased by Fund I with total estimated costs
related to the development of such projects of approximately $101.7 million. As
of December 31, 2003, the estimated remaining commitments to complete these
development projects is approximately $37.4 million of which approximately $8.0
million is the Operating Partnership's commitment.

8

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The current portfolio of stabilized properties in which Fund I has an
ownership interest as of December 31, 2003 is set forth below:

`Loan         Fixed     Loan
                                                                      Amount      Interest  Maturity
           Property Name                 Location        Units    ($ in millions)   Rate      Date
----------------------------------- ------------------- --------  --------------- --------- ---------
Villas at Carlsbad                  Carlsbad, CA            102  $           9.6      5.03%   Aug-11
Villa Venetia                       Costa Mesa, CA          468             53.6      4.58%   Jun-13
Huntington Villas                   Huntington Beach, CA    400             38.1      4.64%   May-10
Rosebeach Apartments                La Mirada, CA           174              8.3      7.09%   Feb-11
The Arboretum at Lake Forest        Lake Forest, CA         225             23.0      5.16%   Feb-10
Newport Beach North (49.9%)(1)      Newport Beach, CA       732             28.0      5.30%   Dec-12
Newport Beach South (49.9%)(1)      Newport Beach, CA       715             24.6      5.30%   Dec-12
Foxborough Homes                    Orange, CA               90              4.8      7.84%   Jul-09
Ocean Villa                         Oxnard, CA              119              9.9      5.42%   May-13
The Crest at Phillips Ranch         Pomona, CA              501             35.4      7.99%   Jul-05
Villas at Bonita                    San Dimas, CA           102              8.3      4.67%   May-10
Villas at San Dimas                 San Dimas, CA           156             13.0      4.67%   May-10
Vista del Rey                       Tustin, CA              116              7.9      6.95%   Feb-11
Andover Park Apartments             Beaverton, OR           240             12.2      6.66%   Oct-11
Hunt Club                           Lake Oswego, OR         256             11.5      7.05%   Feb-11
                                                        --------  ---------------
   Total                                                  4,396  $         288.2
                                                        ========  ===============`

(1) 	Fund I acquired a 49.9% equity investment in this property and
accounts for its investment under the equity method of accounting.

In addition to distributions with respect to its pro-rata
share of Fund I's limited partnership interest, VFGP (1) is to receive special
priority distributions from Fund I in the annual amount of 1% of Fund I's
unreturned third party capital, payable quarterly for managing Fund I's
operations, and (2) may receive over the life of Fund I incentive
distributions of up to 20% of the cumulative net profits on Fund I's
investments, if Fund I exceeds certain financial return benchmarks, including
a minimum 10% compounded annual return on the limited partners' total capital
contributions. VFGP is to also be paid fees consistent with industry standards
for its property management, development and redevelopment services with respect
to the Fund's investments. VFGP will not receive transaction fees, such as
acquisition, disposition, and financing or similar fees, in connection with the
operation of Fund I.

Acquisition Activities

During 2003, Fund I acquired ownership interests in seven multifamily
properties consisting of 2,603 units with an aggregate purchase price of
approximately $202.5 million. These investments were primarily funded by the
contribution of equity from joint venture partners, cash generated from
operations, proceeds from the dispositions of properties or proceeds from
Fund I's line of credit. All of these properties are located in Southern
California.

9

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Ownership interests in multifamily properties acquired in 2003 are as
follows:

`Contract
                                                                     Purchase
                                                                       Price
           Property Name                 Location        Units    ($ in millions)
----------------------------------- ------------------- --------  ---------------
  Huntington Villas                 Huntington Beach, CA    400  $          58.2
  Newport Beach North (49.9%)(1)    Newport Beach, CA       732             18.4
  Newport Beach South (49.9%)(1)    Newport Beach, CA       715             15.3
  The Villas                        San Dimas, CA            30              3.9
  Villa Venetia                     Costa Mesa, CA          468             74.0
  Villas at Bonita                  San Dimas, CA           102             12.7
  Villas at San Dimas               San Dimas, CA           156             20.0
                                                        --------  ---------------
Total                                                     2,603  $         202.5
                                                        ========  ===============`

(1) 	Fund I acquired a 49.9% equity investment in this property and
accounts for its investment under the equity method of accounting.

Disposition Activities

On July 24, 2003, Fund I sold a 30 unit apartment community, which was
acquired on May 1, 2003 in conjunction with the purchase of three multifamily
properties comprised of 288 apartment homes all located in San Dimas,
California, for $4.2 million in cash to an unrelated third party. This property
was not encumbered by a mortgage.

Debt Transactions

On January 30, 2003, Fund I obtained a non-recourse mortgage on a
previously unencumbered property in the amount of $23.2 million, with a 5.16%
fixed interest rate, which matures in February 2010.

On April 11, 2003, Fund I obtained a non-recourse mortgage on a previously
unencumbered property in the amount of $10.0 million, with a 5.42% fixed
interest rate for a 9-year term, which matures in May 2013, with an option to
extend the maturity for one year thereafter at a floating rate of 2.5% over
Freddie Mac's Reference Bill. During the extension period, the loan may be paid
in full with no prepayment penalty.

On April 29, 2003, Fund I obtained a non-recourse mortgage on a previously
unencumbered property in the amount of $38.5 million, with a 4.64% fixed
interest rate, which matures in May 2010.

On May 29, 2003, Fund I obtained a non-recourse mortgage on a previously
unencumbered property in the amount of $54.0 million, with a 4.58% fixed
interest rate for a 9-year term, which matures in June 2013, with an option to
extend the maturity for one year thereafter at a floating rate of 2.5% over
Freddie Mac's Reference Bill. During the extension period, the loan may be paid
in full with no prepayment penalty.

On July 28, 2003, Fund I obtained a non-recourse mortgage on a previously
unencumbered property in the amount of $9.6 million, with a 5.03% fixed interest
rate for an 8-year term, which matures in August 2011, with an option to extend
the maturity for one year thereafter at a floating rate of 2.5% over Freddie
Mac's Reference Bill. During the extension period, the loan may be paid in full
with no prepayment penalty.

During 2003, Fund I reduced its existing credit facility from $125.0 million
to $30.0 million.  All other material terms remain the same for this facility.
As of December 31, 2003, outstanding balance on this credit facility was
zero.

On December 15, 2003, Fund I obtained construction loans for the development
of two of its communities in the committed principal amount of $66.0 million,
with a variable interest rate of LIBOR plus 2%.  These loans mature in January
2007, with options to extend the maturity for up to two years thereafter. The
principal balance of these construction loans was $28.1 million on December 31,
2003.

10

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Development Communities

At December 31, 2003 Fund I owned two development communities with an
aggregate of 480 multifamily units and an estimated total cost of $101.7
million, of which $37.4 million remains to be expended and approximately $8.0
million is expected to be funded by the Operating Partnership through its
capital commitments.

The following table sets forth information regarding Fund I's development
communities at December 31, 2003.

`Estimated Project Incurred Project
                                                                         Cost as of        Cost as of
                                                                        12/31/03(1)       12/31/03(1)       Projected
        Development Communities              Location        Units    ($ in millions)   ($ in millions)   Stabilization
---------------------------------------- ----------------- ---------  ----------------  ----------------  -------------
Fund I(2)
  River Terrace                          Santa Clara, CA        250  $           56.8  $           32.3      Jun. 2005
  Chesapeake                             San Diego, CA          230              44.9              32.0      Dec. 2004
  Pre-development - Kelvin Avenue        Irvine, CA             132               5.9               5.9         --
                                                           ---------  ----------------  ----------------
Total Fund I Development Communities                            612  $          107.6  $           70.2
                                                           =========  ================  ================`

(1) 	Estimated project cost as of December 31, 2003 includes
incurred costs and estimated costs to complete the development projects. 
(2) 	The Operating Partnership has a 21.4% interest in Fund I, which owns these properties.

Redevelopment Communities

At December 31, 2003 Fund I had one redevelopment community, a 174 unit
apartment community with an estimated cost specifically related to the
redevelopment project of  $3.5 million, of which $1.6 million remains to be
expended and approximately $340,000 is the Operating Partnership's
commitment.

Offices and Employees

The Operating Partnership is headquartered in Palo Alto, California,
and has regional offices in Woodland Hills, California; Newport Beach,
California; Tustin, California; San Diego, California; Seattle, Washington; and
Portland, Oregon. As of December 31, 2003, the Operating Partnership had
approximately 800 employees.

Environmental Matters

Under various federal, state and local laws, ordinances and
regulations, an owner or operator of real estate is liable for the costs of
removal or remediation of certain hazardous or toxic substances on, in or
migrating from such property. Such laws often impose liability without regard as
to whether the owner or operator knew of, or was responsible for, the presence
of such hazardous or toxic substances. The presence of such substances, or the
failure to properly remediate such substances, may adversely affect the owner's
or operator's ability to sell or rent such property or to borrow using such
property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances or wastes also may be liable for the costs of
removal or remediation of such substances at the disposal or treatment facility
to which such substances or wastes were sent, whether or not such facility is
owned or operated by such person. In addition, certain environmental laws impose
liability for release of asbestos-containing materials ("ACMs") into
the air, and third parties may seek recovery from owners or operators of real
properties for personal injury associated with ACMs. In connection with the
ownership (direct or indirect), operation, management and development of real
properties, the Operating Partnership could be considered an owner or operator
of such properties or as having arranged for the disposal or treatment of
hazardous or toxic substances and, therefore, may be potentially liable for
removal or remediation costs, as well as certain other costs, including
governmental fines and costs related to injuries of persons and property.

11

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California has enacted legislation commonly referred to as "Proposition
65" requiring that "clear and reasonable" warnings be given to
consumers who are exposed to chemicals known to the State of California to cause
cancer or reproductive toxicity, including tobacco smoke. Although we have
sought to comply with Proposition 65 requirements, we cannot assure you that we
will not be adversely affected by litigation relating to Proposition 65.

Methane gas is a naturally-occurring gas that is commonly found below the
surface in several areas of California, particularly in the Southern California
coastal areas.  Methane is a non-toxic gas, but can be ignitable in
confined spaces when exposed to air.  Although naturally-occurring methane
gas is not regulated at the state or federal level, some local governments, such
as the County of Los Angeles, have imposed requirements that new buildings
install detection systems in areas where methane gas is known to be
located.  Methane gas is also associated with certain industrial
activities, such as former municipal waste landfills.

Recently there has been an increasing number of lawsuits against owners and
managers of multifamily properties other than Essex alleging personal injury and
property damage caused by the presence of mold in residential real estate. Some
of these lawsuits have resulted in substantial monetary judgments or
settlements. Essex has been sued for mold related matters and has settled or is
in the process of settling such matters. Insurance carriers have reacted to mold
related liability awards by excluding mold related claims from standard policies
and pricing mold endorsements at prohibitively high rates. We have adopted
programs designed to manage the existence of mold in our properties as well as
guidelines for promptly addressing and resolving reports of mold to minimize any
impact mold might have on residents or the property.

All of the Properties have been subjected to preliminary environmental
assessments, including a review of historical and public data ("Phase I
assessments"), by independent environmental consultants. Phase I
assessments generally consist of an investigation of environmental conditions at
the Property, including a preliminary investigation of the site, an
identification of publicly known conditions occurring at properties in the
vicinity of the site, an investigation as to the presence of polychlorinated
biphenyl's ("PCBs"), ACMs and above-ground and underground storage
tanks presently or formerly at the sites, and preparation and issuance of
written reports. As a result of information collected in the Phase I
assessments, certain of the Properties were subjected to additional
environmental investigations, including, in a some cases, soil sampling or
ground water analysis to further evaluate the environmental conditions of those
Properties.

The environmental studies revealed the presence of soil and groundwater
contamination and the presence of methane and associated gases at certain of the
Properties.  Based on its current knowledge, the Operating Partnership does
not believe the future liabilities associated with the contamination or with the
methane gas is material and is not in receipt of any cleanup order from a
regulatory agency.    Environmental studies also indicate that
one of the Properties is located on a former municipal landfill, which has been
closed for approximately eighty years.  To the Operating Partnership's
knowledge, the property has not been subject to any regulatory requirements
since it was initially closed; however, state regulatory agencies have
discretion to impose various requirements on closed landfills, including
monitoring for methane gas.  Limited sampling has indicated there is
no methane gas above explosive limits at the property.  Based on its
current knowledge, the Operating Partnership does not believe that any
regulatory requirements or other liabilities associated with this property are
material.  The environmental studies have also indicated that several
properties contain ACM, a common building material prior to the 1980s.  The
ACM is found primarily in the ceiling textures, floor tiles, and
adhesives.  To the Operating Partnership's knowledge, the ACM is in good
condition.  The Operating Partnership has implemented an operations and
maintenance plan to inspect and monitor the ACM to ensure that the ACM remains
in good condition and is properly managed.  Based on the information
contained in the environmental studies, the Operating Partnership believes that
the costs, if any, it might bear as a result of environmental contamination or
other conditions at these Properties would not have a material adverse affect on
the Operating Partnership's financial condition, result of operations, or
liquidity. Certain Properties that have been sold by the Operating Partnership were
identified as having potential groundwater contamination. While the Operating
Partnership does not anticipate any losses or costs related to groundwater
contamination on Properties that have been sold, it is possible that such losses
or costs may materialize in the future.

12

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Except with respect to three Properties, the Operating Partnership has no
indemnification agreements from third parties for potential environmental clean-
up costs at its Properties. The Operating Partnership has no way of determining
at this time the magnitude of any potential liability to which it may be subject
arising out of unknown environmental conditions or violations with respect to
the properties formerly owned by the Operating Partnership. No assurance can be
given that existing environmental studies with respect to any of the Properties
reveal all environmental liabilities, that any prior owner or operator of a
Property did not create any material environmental condition not known to the
Operating Partnership, or that a material environmental condition does not
otherwise exist as to any one or more of the Properties. The Operating
Partnership has limited insurance coverage for the types of environmental
liabilities described above.

Insurance

The Operating Partnership carries comprehensive liability, fire,
extended coverage and rental loss insurance for each of the Properties. There
are, however, certain types of extraordinary losses for which the Operating
Partnership does not have insurance. Substantially all of the Properties are
located in areas that are subject to earthquake activity. The Operating
Partnership has obtained earthquake insurance for most the Properties. Most of
the Properties are included in an earthquake insurance program that is subject
to an aggregate limit of $40.0 million payable upon a covered loss in excess of
a $7.5 million self-insured retention amount and a 5% deductible. In the future,
the Operating Partnership may selectively exclude properties from being covered
by earthquake insurance based on management's evaluation of the following
factors: (i) the availability of coverage on terms acceptable to the Operating
Partnership, (ii) the location of the property and the amount of seismic
activity affecting that region, and, (iii) the age of the property and building
codes in effect at the time of construction. Despite earthquake coverage on most
of the Operating Partnership's Properties, should a property sustain damage as a
result of an earthquake, the Operating Partnership may incur losses due to
deductibles, co-payments and losses in excess of applicable insurance, if any.

Although the Operating Partnership carries certain insurance for non-
earthquake damages to its properties and liability insurance, the Operating
Partnership may still incur losses due to uninsured risks, deductibles, co-
payments or losses in excess of applicable insurance coverage.

Competition

The Operating Partnership's Properties compete for tenants with
similar properties primarily on the basis of location, rent charged, services
provided, and the design and condition of the improvements. Competition for
tenants from competing properties affects the amount of rent charged as well as
rental growth rates, vacancy rates, deposit amounts, and the services and
features provided at each property. While economic conditions are generally
stable in the Operating Partnership's target markets, a prolonged economic
downturn could have a material adverse effect on the Operating Partnership's
financial position, results of operations or liquidity.

The Operating Partnership also experiences competition when attempting to
acquire properties that meet its investment criteria. Such competing buyers
include domestic and foreign financial institutions, other REITs, life insurance
companies, pension funds, trust funds, partnerships and individual investors.

Working Capital

The Operating Partnership expects to meet its short-term liquidity
requirements by using its working capital, cash generated from operations, and
its amounts available on lines of credit. The Operating Partnership believes
that its future net cash flows and borrowing capacity will be adequate to meet
operating requirements and to provide for payment of dividends by the Company in
accordance with REIT qualification requirements. The Operating Partnership has
line of credit facilities in the committed amount of approximately $275.0
million. At December 31, 2003 the Operating Partnership had an outstanding
balance of $93.1 million under these line of credit facilities.

13

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Risk Factors

Our operations involve various risks that could have adverse consequences
to us. These risks include, among others, the following:

Debt Financing

At December 31, 2003, we had approximately $832.2 million of
indebtedness (including $168.4 million of variable rate indebtedness, of which
$75.3 million is subject to interest rate protection agreements).

We are subject to the risks normally associated with debt financing,
including the following:

- cash flow may not be sufficient to meet required payments of principal and
interest;
- inability to refinance existing indebtedness on encumbered properties;
- the terms of any refinancing may not be as favorable as the terms of
existing indebtedness;
- inability to comply with debt covenants which could cause an acceleration of
the maturity date; and
- repaying debt before the scheduled maturity date could result in prepayment
penalties.

Uncertainty of Ability to Refinance Balloon Payments

At December 31, 2003, we had an aggregate of approximately $832.2
million of mortgage debt and line of credit borrowings, some of which are
subject to balloon payments of principal. We do not expect to have sufficient
cash flows from operations to make all of such balloon payments when due under
these mortgages and the line of credit borrowings.

At December 31, 2003, these mortgages and lines of credit borrowings had the
following scheduled maturity dates:

2004--$20.7 million (includes lines of credit balance of $12.5 million as of
December 31, 2003);

2005--$41.3 million

2006--$20.7 million;

2007--$63.5 million;

2008--$108.9 million;

2009 and thereafter--$577.1 million (includes lines of credit balance of
$80.6 million as of December 31, 2003).

We may not be able to refinance such mortgage indebtedness or lines of
credit. The properties subject to these mortgages could be foreclosed upon or
otherwise transferred to the mortgagee. This could cause us to lose income and
asset value. Alternatively, we may be required to refinance the debt at higher
interest rates. If we are unable to make such payments when due, a mortgage
lender could foreclose on the property securing the mortgage, which could have a
material adverse effect on our financial condition and results of operations.

Economic Environment and Impact on Operating Results

Both the national economy and the economies of the western states in
which we own, manage and develop properties, some of which are concentrated in
high-tech sectors, have been and may continue to be in an economic downturn. The
impact of such downturn on our operating results can include, and are not
limited to, reduction in rental rates, occupancy levels, property valuations and
increases in operating costs such as advertising, turnover and repair and
maintenance expense.

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

Risk of Rising Interest Rates

At December 31, 2003, we had approximately $75.3 million of long-term
variable rate indebtedness bearing interest at a floating rate tied to the rate
of short-term tax-exempt revenue bonds (which matures at various dates from 2020
through 2032), and $93.1 million of variable rate indebtedness under our lines
of credit of which $12.5 million bearing interest at 1.10% over LIBOR and $80.6
million bearing interest at the Freddie Mac's Reference Rate plus 0.55% to
0.60%. The long-term variable rate indebtedness of approximately $75.3 million
is subject to an interest rate protection agreement, which may reduce the risks
associated with fluctuations in interest rates. The remaining $93.1 million of
long-term variable rate indebtedness is not subject to any interest rate
protection agreement, and consequently, an increase in interest rates may have
an adverse effect on our net income and results of operations.

Current interest rates are at historic lows and potentially could increase
rapidly to levels more in line with recent historic levels. The immediate effect
of significant and rapid interest rate increases would result in higher interest
expense on our variable rate indebtedness. The effect of prolonged interest rate
increases could negatively impact our ability to make acquisitions and develop
properties at economic returns on investment and our ability to refinance
existing borrowings at acceptable rates.

Risk of Inflation /Deflation

Substantial inflationary or deflationary pressures could have a negative
effect on rental rates and property operating expenses. The Operating
Partnership believes it effectively manages its property and other expenses but
understands that substantial annual rates of inflation or deflation could
adversely impact operating results.

Risk of Losses on Interest Rate Hedging Arrangements

We have, from time to time, entered into agreements to reduce the
risks associated with increases in interest rates, and may continue to do so.
Although these agreements may partially protect against rising interest rates,
these agreements also may reduce the benefits to us when interest rates decline.
We cannot assure you that we can refinance any such hedging arrangements or that
we will be able to enter into other hedging arrangements to replace existing
ones if interest rates decline. Furthermore, interest rate movements during the
term of interest rate hedging arrangements may result in a gain or loss on our
investment in the hedging arrangement. In addition, if a hedging arrangement is
not indexed to the same rate as the indebtedness that is hedged, we may be
exposed to losses to the extent that the rate governing the indebtedness and the
rate governing the hedging arrangement change independently of each other.
Finally, nonperformance by the other party to the hedging arrangement may
subject us to increased credit risks. In order to minimize counterparty credit
risk, our policy is to enter into hedging arrangements only with large financial
institutions.

Acquisition Activities: Risks that Acquisitions Will Fail to Meet Expectations

We intend to continue to acquire multifamily residential properties.
There are risks that acquired properties will fail to perform as expected.
Estimates of future income, expenses and the costs of improvements necessary to
allow us to market an acquired property as originally intended may prove to be
inaccurate. In addition, we expect to finance future acquisitions, in whole or
in part, under various forms of secured or unsecured financing or through the
issuance of partnership units by the Operating Partnership or related
partnerships or additional equity by Essex. The use of equity financing, rather
than debt, for future developments or acquisitions could dilute the interest of
Essex's existing stockholders. If we finance new acquisitions under existing
lines of credit, there is a risk that, unless we obtain substitute financing,
Essex may not be able to secure further lines of credit for new development or
such lines of credit may be available only on disadvantageous terms.

15

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Also, we may not be able to refinance our existing lines of credit upon
maturity, or the terms of such refinancing may not be as favorable as the terms
of the existing indebtedness. Further, acquisitions of properties are subject to
the general risks associated with real estate investments. For further
information regarding these risks, please see "Adverse Effect to Property
Income and Value Due to General Real Estate Investment Risks."

On December 17, 2002, we completed the acquisition of John M. Sachs, Inc., a
real estate company pursuant to which we acquired a real estate portfolio,
consisting primarily of apartment communities located in San Diego County,
California. The assets in this transaction were valued at approximately $301
million. This is our largest real estate portfolio acquisition to date. The
integration of these properties into Essex has placed a burden on our management
team and infrastructure. To date these properties have performed as expected. In
addition, as this transaction was structured as a merger, there is the risk that
we assumed unknown liabilities, which might adversely affect our results of
operations.

Risks that Development Activities Will Be Delayed, not Completed,
and/or Fail to Achieve Expected Results

We pursue multifamily residential property development projects from
time to time. Development projects generally require various governmental and
other approvals, which we cannot assure you that we will receive. Our
development activities generally entail certain risks, including the following:

- funds may be expended and management's time devoted to projects that may not
be completed;
- construction costs of a project may exceed original estimates possibly
making the project economically unfeasible;
- development 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 may be higher than anticipated.

These risks may reduce the funds available for distribution to Essex's
stockholders. Further, the development of properties is also subject to the
general risks associated with real estate investments. For further information
regarding these risks, please see "Adverse Effect to Property Income and
Value Due to General Real Estate Investment Risks."

The Geographic Concentration of the Properties and Fluctuations in Local
Markets May Adversely Impact Our Financial Conditions and Results of
Operations

We derived significant amounts of rental revenues for the year ended
December 31, 2003 from properties concentrated in Southern California (Los
Angeles, Ventura, Orange and San Diego counties), Northern California (the San
Francisco Bay Area), and the Pacific Northwest (the Seattle, Washington and
Portland, Oregon metropolitan areas). As of December 31, 2003, of our 121
ownership interests in multifamily residential properties, 90 are located in
California. As a result of this geographic concentration, if a local property
market performs poorly, the income from the properties in that market could
decrease. As a result of such a decrease in income, we may be unable to pay
expected dividends to our stockholders. The performance of the economy in each
of these areas affects occupancy, market rental rates and expenses and,
consequently impacts the income generated from the properties and their
underlying values. The financial results of major local employers also may
impact the cash flow and value of certain of the properties. Economic downturns
in the local markets in which we own properties could have a negative impact on
our financial condition and results of operations.

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Competition in the Multifamily Residential Market May Adversely Affect
Operations and the Rental Demand For Our Properties

There are numerous housing alternatives that compete with the
multifamily properties in attracting residents. These include other multifamily
rental apartments and single-family homes that are available for rent in the
markets in which the properties are located. The properties also compete for
residents with new and existing homes and condominiums that are for sale. If the
demand for our properties is reduced or if competitors develop and/or acquire
competing properties on a more cost-effective basis, rental rates may drop,
which may have a material adverse affect on our financial condition and results
of operations.

We also face competition from other real estate investment trusts, businesses
and other entities in the acquisition, development and operation of properties.
Some of the competitors are larger and have greater financial resources than we
do. This competition may result in increased costs of properties we acquire
and/or develop.

Debt Financing on Properties May Result in Insufficient Cash Flow

Where possible, we intend to continue to use leverage to increase the
rate of return on our investments and to provide for additional investments that
we could not otherwise make. There is a risk that the cash flow from the
properties will be insufficient to meet both debt payment obligations and the
distribution requirements of the real estate investment trust provisions of the
Internal Revenue Code. We may obtain additional debt financing in the future,
through mortgages on some or all of the properties. These mortgages may be
recourse, non-recourse, or cross-collateralized. As of December 31, 2003, Essex
had 55 of its 91 consolidated properties encumbered by debt. Of the 55
properties, 35 are secured by deeds of trust relating solely to those
properties, and with respect to the remaining 20 properties, 5 cross-
collateralized mortgages are secured by 8 properties, 4 properties, 3
properties, 3 properties and 2 properties, respectively. The holders of this
indebtedness will have a claim against these properties and to the extent
indebtedness is cross-collateralized, lenders may seek to foreclose upon
properties, which are not the primary collateral for their loan. This, in turn,
may accelerate other indebtedness secured by properties. Foreclosure of
properties would reduce our income and asset value.

Distribution Requirements as a Result Of Preferred Units and Preferred
Distributions May Lead to a Possible Inability to Sustain Distributions

In 1998 and 1999, the Operating Partnership issued $210 million in
aggregate of Series B Cumulative Redeemable Preferred Units (the "Series B
Preferred Units"), Series C Cumulative Redeemable Preferred Units, (the
"Series C Preferred Units"), Series D Cumulative Redeemable Preferred
Units (the "Series D Preferred Units") and Series E Cumulative
Redeemable Preferred Units (the "Series E Preferred Units"). Essex
issued approximately $25 million of Series F Cumulative Redeemable Preferred Stock
("Series F Preferred Stock"). Essex contributed the net proceeds from the
Series F Preferred Stock offering to the Operating Partnership and will receive
a preferred distribution from the Operating Partnership equal to the
quarterly dividends on the Series F Preferred Stock ("Series F
Preferred Stock Distribution"). The Operating Partnership used this
contribution from Essex to redeem the Series C Preferred Units. The Series B
Preferred Units, the Series D Preferred Units, the Series E Preferred Units and
the Series F Preferred Distribution are collectively referred to as the
"Preferred Equity".

The terms of the Series F Preferred Stock and of the preferred stock into
which each series of Preferred Units are exchangeable provide for certain
cumulative preferential cash dividends per each share of preferred stock.
These terms also provide that while such preferred stock is outstanding, Essex
cannot authorize, declare, or pay any dividends on the Common Stock, unless
all dividends accumulated on all shares of such preferred stock have been
paid in full. The dividends payable on such preferred stock may impair
Essex's ability to pay dividends on its Common Stock. The Series F Preferred
Stock dividend is funded by the Series F Preferred Stock Distribution.

If Essex wishes to issue any Common Stock in the future (including, upon
exercise of stock options), the funds required to continue to pay cash dividends,
an the Operating Partnership's distribution to Essex at current levels
will be increased. The Operating Partnership's ability to pay distributions will
depend largely upon the performance of the properties and other properties that
may be acquired in the future.

Essex's ability to pay dividends on its stock is further limited by the
Maryland General Corporation Law. Under the Maryland General Corporation Law,
Essex may not make a distribution on stock if, after giving effect to such
distribution, either:

- we would not be able to pay its indebtedness as it becomes due in the usual
course of business; or
- our total assets would be less than its total liabilities.

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If Essex cannot pay dividends on its stock, Essex's status as a real estate
investment trust may be jeopardized.



Resale of Shares Pursuant to our Effective Registration Statement
May Have an Adverse Effect on the Market Price of the Shares

Pursuant to the acquisition of John M. Sachs, Inc., a real estate
company, in December 2002, we issued 2,719,875 shares of common stock, as
partial consideration for the acquisition, to the trusts that were the
shareholders of that company.  In connection with the acquisition, Essex entered
into a registration rights agreement with these trusts, pursuant to which in
January 2003 we filed a registration statement on Form S-3 in order to enable
the resale of these shares of common stock. In an amendment to this registration
statement filed in April 2003, we also registered, pursuant to certain
registration rights, 50,000 shares of common stock which are issuable to the
trusts in connection with certain contractual obligations and 2,270,490 shares
of common stock which are issuable upon exchange of limited partnership
interests in the Operating Partnership. These limited partnership interests are
held by senior members of our management, certain members of our Board of
Directors and certain outside investors, or the Operating Partnership holders,
and comprise approximately 9.2% of the limited partnership interests of the
Operating Partnership as of December 31, 2003. In addition, the Operating
Partnership has invested in certain real estate partnerships. In the 2003
registration statement, we also registered, pursuant to certain registration
rights, 1,473,125 shares of common stock, which are issuable upon redemption of
all of the limited partnership interests in such real estate partnerships. In
sum, this 2003 registration statement covers in aggregate 6,513,490 shares of
our common stock. The resale of the shares of common stock
pursuant to the registration statement may have an adverse effect on the market
price of our shares.

Our Chairman is Involved in Other Real Estate Activities and Investments,
Which May Lead to Conflicts of Interest

Our Chairman, George M. Marcus is not an employee of Essex. Mr.
Marcus owns interests in various other real estate-related businesses and
investments. He is the Chairman of The Marcus & Millichap Company, or MM,
which is the holding company for real estate brokerage and services companies.
MM has an interest in Pacific Property Company, a company that invests in West
Coast multifamily residential properties. In 1999 we sold an office building to
MM, which Essex previously occupied.

Mr. Marcus has agreed not to divulge any information that may be received by
him in his capacity as Chairman of Essex to any of his affiliated companies and
that he will absent himself from any and all discussions by the Essex Board of
Directors regarding any proposed acquisition and/or development of a multifamily
property where it appears that there may be a conflict of interest with any of
his affiliated companies.  Notwithstanding this agreement, Mr. Marcus and
his affiliated entities may potentially compete with us in acquiring and/or
developing multifamily properties, which competition may be detrimental to us.
In addition, due to such potential competition for real estate investments, Mr.
Marcus and his affiliated entities may have a conflict of interest with us,
which may be detrimental to the interests of Essex's stockholders.

The Influence of Executive Officers, Directors and Significant Stockholders
May Be Detrimental to Holders of Common Stock

As of December 31, 2003, George M. Marcus, the Chairman of our Board
of Directors, wholly or partially owned 1,746,282 shares of common stock
(including shares issuable upon exchange of limited partnership interests in the
Operating Partnership and certain other partnerships and assuming exercise of
all vested options). This represents approximately 7.7% of the outstanding
shares of common stock. Mr. Marcus currently does not have majority control over
us. However, he currently has, and likely will continue to have, significant
influence with respect to the election of directors and approval or disapproval
of significant corporate actions. Consequently, his influence could result in
decisions that do not reflect the interests of all our stockholders.

Under the partnership agreement of the Operating Partnership, the consent of
the holders of limited partnership interests is generally required for any
amendment of the agreement and for certain extraordinary actions. Through their
ownership of limited partnership interests and their positions with us, our
directors and executive officers, including Mr. Marcus and Mr. William A.
Millichap, a director of Essex, have substantial influence on us. Consequently,
their influence could result in decisions that do not reflect the interests of
all stockholders.

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Further pursuant to our acquisition of John M. Sachs, Inc. in December 2002,
we issued, as partial consideration for the acquisition, 2,719,875 shares of our
common stock and an additional 35,860 shares of common stock in July 2003 to the
trusts that were the shareholders of that company. As a result of this issuance,
these trusts own, as of December 31, 2003, in aggregate, approximately 8% of our
outstanding common stock. Pursuant to their ownership interest in Essex, these
trusts may have significant influence over us. Such influence could result in
decisions that do not reflect the interest of all our stockholders.

The Voting Rights of Preferred Stock May Allow Holders of Preferred Stock to
Impede Actions that Otherwise Benefit Holders of Common Stock

In general, the holders of Series F Preferred stock and of the
preferred stock into which our preferred units are exchangeable do not have any
voting rights. However, if full distributions are not made on any outstanding
preferred stock for six quarterly distributions periods, the holders of
preferred stock who have not received distributions, voting together as a single
class, will have the right to elect two additional directors to serve on Essex's
Board of Directors. These voting rights continue until all distributions in
arrears and distributions for the current quarterly period on the preferred
stock have been paid in full. At that time, the holders of the preferred stock
are divested of these voting rights, and the term and office of the directors so
elected immediately terminates.

In addition, while any shares of Series F Preferred Stock or shares of
preferred stock into which the preferred units are exchangeable are outstanding,
Essex may not without the consent of the holders of two-thirds of the
outstanding shares of each series of preferred stock, each voting separately as
a single class:

1. authorize or create any class of series of stock that ranks senior to such
preferred stock with respect to the payment of dividends, rights upon
liquidation, dissolution or winding-up of our business;
2. amend, alter or repeal the provisions of Essex's Charter or Bylaws, that
would materially and adversely affect the rights of such preferred stock; or
3. in the case of the preferred stock into which our preferred units are
exchangeable, merge or consolidate with another entity or transfer substantially
all of its assets to another entity, except if such preferred stock remains
outstanding with the surviving entity and has the same terms and except in
certain other circumstances.

These voting rights of the preferred stock may allow holders of preferred
stock to impede or veto actions that would otherwise benefit the holders of
Essex's Common Stock.

The Redemption Rights of the Series B Preferred Units, Series D Preferred
Units and Series F Preferred Stock may be Detrimental to Holders of Common
Stock

Upon the occurrence of one of the following events, the terms of the
Operating Partnership's Series B and D Preferred Units require it to redeem all
of such units and the terms of the Company's Series F Preferred Stock provide
the holders of the majority of the outstanding Series F Preferred Stock the
right to require the Company to redeem all of such stock:

1. the Company completes a "going private" transaction
and its common stock is no longer registered under the Securities Exchange Act
of 1934, as amended:
2. the Company completes a consolidation or merger or sale of substantially all
of its assets and the surviving entity's debt securities do not possess an
investment grade rating; or
3. the Company fails to qualify as a REIT

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The aggregate redemption price of the Series B Preferred Units would be $80
million, the aggregate redemption price of the Series D Preferred Units would be
$50 million and the aggregate redemption price of the Series F Preferred Stock
would be $25 million, plus, in each case, any accumulated distributions.

These redemption rights may discourage or impede transactions that might
otherwise be in the interest of holders of common stock. Further, these
redemption rights might trigger in situations where the Operating Partnership
needs to conserve its cash reserves, in which event such redemption might
adversely affect the Operating Partnership and the Company's common stock
holders.

Maryland Business Combination Law May Not Allow Certain Transactions
Between us and Affiliates to Proceed Without Compliance with Such Law

The Maryland General Corporation Law establishes special requirements
for "business combinations" between a Maryland corporation and
"interested stockholders" unless exemptions are applicable. An
interested stockholder is any person who beneficially owns ten percent or more
of the voting power of the then-outstanding voting stock.

The law also requires a supermajority stockholder vote for such transactions.
This means that the transaction must be approved by at least:

- 80% of the votes entitled to be cast by holders of outstanding voting
shares; and
- 66% of the votes entitled to be cast by holders of outstanding voting shares
other than shares held by the interested stockholder with whom the business
combination is to be effected.

However, as permitted by the statute, the Board of Directors of Essex
irrevocably has elected to exempt any business combination by us, George M.
Marcus, William A. Millichap, who are the chairman and a director of Essex,
respectively, and MM or any entity owned or controlled by Messrs. Marcus and
Millichap and MM. Consequently, the super-majority vote requirement described
above will not apply to any business combination between us and Mr. Marcus, Mr.
Millichap, or MM. As a result, we may in the future enter into business
combinations with Messrs. Marcus and Millichap and MM, without compliance with
the super-majority vote requirements and other provisions of the Maryland
General Corporation Law.

Anti-Takeover Provisions Contained in the Operating Partnership Agreement,
Charter, Bylaws, and Certain Provisions of Maryland Law Could Delay, Defer or
Prevent a Change in Control

While Essex is the sole general partner of the Operating Partnership,
and generally has full and exclusive responsibility and discretion in the
management and control of the Operating Partnership, certain provisions of the
Operating Partnership's partnership agreement place limitations on Essex's
ability to act with respect to the Operating Partnership. Such limitations could
delay, defer or prevent a transaction or a change in control that might involve
a premium price for our stock or otherwise be in the best interest of the
stockholders or that could otherwise adversely affect the interest of Essex's
stockholders. The partnership agreement provides that if the limited partners
own at least 5% of the outstanding units of limited partnership interest in the
Operating Partnership, Essex cannot, without first obtaining the consent of a
majority-in-interest of the limited partners in the Operating Partnership,
transfer all or any portion of our general partner interest in the Operating
Partnership to another entity. Such limitations on Essex's ability to act may
result in our being precluded from taking action that the Board of Directors
believes is in the best interests of Essex's stockholders. In addition, as of
December 31, 2003, one individual, George M. Marcus, held or controlled more
than 50% of the outstanding units of limited partnership interest in the
Operating Partnership, allowing such actions to be blocked by a small number of
limited partners.

Essex's Charter authorizes the issuance of additional shares of common stock
or preferred stock and the setting of the preferences, rights and other terms of
such preferred stock without the approval of the holders of the common stock. We
may establish one or more series of preferred stock that could delay, defer or
prevent a transaction or a change in control. Such a transaction might involve a
premium price for our stock or otherwise be in the best interests of the holders
of common stock. Also, such a class of preferred stock could have dividend,
voting or other rights that could adversely affect the interest of holders of
common stock.

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Essex's Charter, as well as Essex's stockholder rights plan, also contains
other provisions that may delay, defer or prevent a transaction or a change in
control that might be in the best interest of Essex's stockholders. Essex's
stockholder rights plan is designed, among other things, to prevent a person or
group from gaining control of us without offering a fair price to all of Essex's
stockholders. Also, the Bylaws may be amended by the Board of Directors to
include provisions that would have a similar effect, although Essex presently
has no such intention. The Charter contains ownership provisions limiting the
transferability and ownership of shares of capital stock, which may have the
effect of delaying, deferring or preventing a transaction or a change in
control. For example, subject to receiving an exemption from the Board of
Directors, potential acquirers may not purchase more than 6% in value of the
stock (other than qualified pension trusts which can acquire 9.9%). This may
discourage tender offers that may be attractive to the holders of common stock
and limit the opportunity for stockholders to receive a premium for their shares
of common stock.

In addition, the Maryland General Corporations Law restricts the voting
rights of shares deemed to be "control shares." Under the Maryland
General Corporations Law, "control shares" are those which, when
aggregated with any other shares held by the acquirer, entitle the acquirer to
exercise voting power within specified ranges. Although the Bylaws exempt Essex
from the control share provisions of the Maryland General Corporations Law, the
Board of Directors may amend or eliminate the provisions of the Bylaws at any
time in the future. Moreover, any such amendment or elimination of such
provision of the Bylaws may result in the application of the control share
provisions of the Maryland General Corporations Law not only to control shares
which may be acquired in the future, but also to control shares previously
acquired. If the provisions of the Bylaws are amended or eliminated, the control
share provisions of the Maryland General Corporations Law could delay, defer or
prevent a transaction or change in control that might involve a premium price
for the stock or otherwise be in the best interests of Essex's stockholders.

Bond Compliance Requirements May Limit Income From Certain Properties

At December 31, 2003, we had approximately $75.3 million of variable
rate tax-exempt financing relating to the Inglenook Court Apartments, Wandering
Creek Apartments, Treetops Apartments, Huntington Breakers Apartments, Camarillo
Oaks Apartments and Parker Ranch Apartments and $15.9 million of fixed rate tax-
exempt financing related to Meadowood Apartments. This tax-exempt financing
subjects these properties to certain deed restrictions and restrictive
covenants. We expect to engage in tax-exempt financings in the future. In
addition, the Internal Revenue Code and rules and regulations thereunder impose
various restrictions, conditions and requirements excluding interest on
qualified bond obligations from gross income for federal income tax purposes.
The Internal Revenue Code also requires that at least 20% of apartment units be
made available to residents with gross incomes that do not exceed 50% of the
median income for the applicable family size as determined by the Housing and
Urban Development Department of the federal government. In addition to federal
requirements, certain state and local authorities may impose additional rental
restrictions. These restrictions may limit income from the tax-exempt financed
properties if we are required to lower rental rates to attract residents who
satisfy the median income test. If Essex does not reserve the required number of
apartment homes for residents satisfying these income requirements, the tax-
exempt status of the bonds may be terminated, the obligations under the bond
documents may be accelerated and we may be subject to additional contractual
liability.

Adverse Effect To Property Income And Value Due To General Real Estate
Investment Risks

Real property investments are subject to a variety of risks. The
yields available from equity investments in real estate depend on the amount of
income generated and expenses incurred. If the properties do not generate
sufficient income to meet operating expenses, including debt service and capital
expenditures, cash flow and the ability to make distributions to stockholders
will be adversely affected. The performance of the economy in each of the areas
in which the properties are located affects occupancy, market rental rates and
expenses.

Consequently, the income from the properties and their underlying values may
be impacted. The financial results of major local employers may have an impact
on the cash flow and value of certain of the properties as well.

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Income from the properties may be further adversely affected by, among other
things, the following factors:

- the general economic climate;
- local economic conditions in which the properties are located, such as
oversupply of housing or a reduction in demand for rental housing;
- the attractiveness of the properties to tenants;
- competition from other available space;
- Essex's ability to provide for adequate maintenance and insurance; and
- increased operating expenses.

Also, as leases on the properties expire, tenants may enter into new leases
on terms that are less favorable to us. Income and real estate values also may
be adversely affected by such factors as applicable laws (e.g., the Americans
With Disabilities Act of 1990 and tax laws), interest rate levels and the
availability and terms of financing. In addition, real estate investments are
relatively illiquid and, therefore, our ability to vary our portfolio promptly
in response to changes in economic or other conditions may be quite limited.

Essex's Joint Ventures and Joint Ownership of Properties and Partial
Interests in Corporations and Limited Partnerships Could Limit Essex's Ability
to Control Such Properties and Partial Interests

Instead of purchasing properties directly, we have invested and may
continue to invest as a co-venturer. Joint venturers often have shared control
over the operation of the joint venture assets. Therefore, it is possible that
the co-venturer in an investment might become bankrupt, or have economic or
business interests or goals that are inconsistent with our business interests or
goals, or be in a position to take action contrary to our instructions or
requests, or our policies or objectives. Consequently, a co-venturer's actions
might subject property owned by the joint venture to additional risk. Although
we seek to maintain sufficient influence of any joint venture to achieve its
objectives, we may be unable to take action without our joint venture partners'
approval, or joint venture partners could take actions binding on the joint
venture without consent. Additionally, should a joint venture partner become
bankrupt, we could become liable for such partner's share of joint venture
liabilities.

From time to time, we, through the Operating Partnership, invest in
corporations, limited partnerships, limited liability companies or other
entities that have been formed for the purpose of acquiring, developing or
managing real property. In certain circumstances, the Operating Partnership's
interest in a particular entity may be less than a majority of the outstanding
voting interests of that entity. Therefore, the Operating Partnership's ability
to control the daily operations of such an entity may be limited. Furthermore,
the Operating Partnership may not have the power to remove a majority of the
board of directors (in the case of a corporation) or the general partner or
partners (in the case of a limited partnership) of such an entity in the event
that its operations conflict with the Operating Partnership's objectives. In
addition, the Operating Partnership may not be able to dispose of its interests
in such an entity. In the event that such an entity becomes insolvent, the
Operating Partnership may lose up to its entire investment in and any advances
to the entity. In addition, we have and in the future may enter into
transactions that could require us to pay the tax liabilities of partners, which
contribute assets into joint ventures or the Operating Partnership, in the event
that certain taxable events, which are within our control, occur. Although we
plan to hold the contributed assets or defer recognition of gain on their sale
pursuant to the like-kind exchange rules under Section 1031 of the Internal
Revenue Code we can provide no assurance that we will be able to do so and if
such tax liabilities were incurred they can expect to have a material impact on
our financial position.

Dedicated Investment Activities and Other Factors Specifically Related to
Essex Apartment Value Fund, L.P.

In 2001, we organized an investment fund, Essex Apartment Value Fund,
L.P., or Fund I, which will be, subject to specific exceptions, our exclusive
investment vehicle for new investment until at least 90% of Fund I's committed
capital has been invested or committed for investments, or if earlier, December
31, 2003. Currently Fund I is considered fully invested based on its
acquisitions to date and anticipated development and redevelopment expenditures.
We are committed to invest 21.4% of the aggregate capital committed to Fund I.
The Operating Partnership is in the process of forming a second Essex Apartment
Value Fund ("Fund II"), which is expected to be similar to Fund I in
size and structure.  Essex anticipates an initial closing of Fund II during the
second quarter of 2004, which would result in a final $50 million capital
commitment by a subsidiary of the Operating Partnership. These Funds involves
risks to us such as the following: our partners in the Funds might become
bankrupt (in which event we might become generally liable for the liabilities of
Fund I and/or Fund II), have economic or business interests or goals that are
inconsistent with our business interests or goals, fail to fund capital
commitments as contractually required, or fail to approve decisions regarding
the Funds that are in our best interest. We will, however, generally seek to
maintain sufficient influence over the Funds to permit it to achieve its
business objectives.

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Investments In Mortgages And Other Real Estate Securities

We may invest in securities related to real estate, which could
adversely affect our ability to make distributions to stockholders. We may
purchase securities issued by entities, which own real estate and may also
invest in mortgages or unsecured debt obligations. These mortgages may be first,
second or third mortgages that may or may not be insured or otherwise
guaranteed. In general, investments in mortgages include the following risks:

- that the value of mortgaged property may be less than the amounts owed,
causing realized or unrealized losses;
- the borrower may not pay indebtedness under the mortgage when due, requiring
us to foreclose, and the amount recovered in connection with the foreclosure may
be less than the amount owed;
- that interest rates payable on the mortgages may be lower than our cost of
funds; and
- in the case of junior mortgages, that foreclosure of a senior mortgage would
eliminate the junior mortgage.

If any of the above were to occur, cash flows from operations and our ability
to make expected dividends to stockholders could be adversely affected.

Possible Environmental Liabilities

Investments in real property create a potential for environmental
liabilities on the part of the owner of such real property. We carry certain
limited insurance coverage for this type of environmental risk. We have
conducted environmental studies which revealed the presence of groundwater
contamination at certain properties. Such contamination at certain of these
properties was reported to have migrated on-site from adjacent industrial
manufacturing operations. The former industrial users of the properties were
identified as the source of contamination. The environmental studies noted that
certain properties are located adjacent to any possible down gradient from sites
with known groundwater contamination, the lateral limits of which may extend
onto such properties. The environmental studies also noted that at certain of
these properties, contamination existed because of the presence of underground
fuel storage tanks, which have been removed. In general, in connection with the
ownership, operation, financing, management and development of real properties,
we may be potentially liable for removal or clean-up costs, as well as certain
other costs and environmental liabilities. We may also be subject to
governmental fines and costs related to injuries to persons and property.

Recently there has been an increasing number of lawsuits against owners and
managers of multifamily properties other than Essex alleging personal injury and
property damage caused by the presence of mold in residential real estate. Some
of these lawsuits have resulted in substantial monetary judgments or
settlements. Essex has been sued for mold related matters and has settled or is
in the process of settling such matters. Insurance carriers have reacted to mold
related liability awards by excluding mold related claims from standard policies
and pricing mold endorsements at prohibitively high rates. We have adopted
programs designed to manage the existence of mold in our properties as well as
guidelines for promptly addressing and resolving reports of mold to minimize any
impact mold might have on residents or the property.

California has enacted legislation commonly referred to as "Proposition
65" requiring that "clear and reasonable" warnings be given to
consumers who are exposed to chemicals known to the State of California to cause
cancer or reproductive toxicity, including tobacco smoke. Although we have
sought to comply with Proposition 65 requirements, we cannot assure you that we
will not be adversely affected by litigation relating to Proposition 65.

Except with respect to three Properties, the Operating Partnership has no
indemnification agreements from third parties for potential environmental clean-
up costs at its Properties. The Operating Partnership has no way of determining
at this time the magnitude of any potential liability to which it may be subject
arising out of unknown environmental conditions or violations with respect to
the properties formerly owned by the Operating Partnership. No assurance can be
given that existing environmental studies with respect to any of the Properties
reveal all environmental liabilities, that any prior owner or operator of a
Property did not create any material environmental condition not known to the
Operating Partnership, or that a material environmental condition does not
otherwise exist as to any one or more of the Properties. The Operating
Partnership has limited insurance coverage for the types of environmental
liabilities described above.

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General Uninsured Losses

We carry comprehensive liability, fire, extended coverage and rental
loss insurance for each of the properties. There are, however, certain types of
extraordinary losses for which we may not have sufficient insurance. Certain of
the properties are located in areas that are subject to earthquake activity. We
have obtained certain limited earthquake insurance coverage. We may sustain
losses due to insurance deductibles, co-payments on insured losses or uninsured
losses, or losses in excess of applicable coverage.

Changes In Real Estate Tax And Other Laws

Generally we do not directly pass through costs resulting from
changes in real estate tax laws to residential property tenants. We also do not
generally pass through increases in income, service or other taxes, to tenants
under leases. These costs may adversely affect funds from operations and the
ability to make distributions to stockholders. Similarly, compliance with
changes in (i) laws increasing the potential liability for environmental
conditions existing on properties or the restrictions on discharges or other
conditions or (ii) rent control or rent stabilization laws or other laws
regulating housing may result in significant unanticipated expenditures, which
would adversely affect funds from operations and the ability to make
distributions to stockholders. In addition, recent changes to the U.S. federal
income tax law may adversely affect us and other REITs by reducing the demand
for REIT stocks generally.

Changes In Financing Policy; No Limitation On Debt

We have adopted a policy of maintaining a debt-to-total-market-
capitalization ratio of less than 50%. The calculation of debt-to-total-market-
capitalization is as follows: total property indebtedness divided by the sum of
total property indebtedness plus total equity market capitalization.

As used in the above formula, total equity market capitalization is equal to
the aggregate market value of the outstanding shares of common stock (based on
the greater of current market price or the gross proceeds per share from public
offerings of the outstanding shares plus any undistributed net cash flow),
assuming the conversion of all limited partnership interests in the Operating
Partnership into shares of common stock and the gross proceeds of the preferred
units of the Operating Partnership. Based on this calculation (including the
current market price and excluding undistributed net cash flow), our debt-to-
total-market-capitalization ratio was approximately 31.2% as of December 31, 2003.

Our organizational documents do not limit the amount or percentage of
indebtedness that may be incurred. Accordingly, the Board of Directors of Essex
could change current policies and the policies of the Operating Partnership
regarding indebtedness. If we changed these policies, we could incur more debt,
resulting in an increased risk of default on our obligations and the obligations
of the Operating Partnership, and an increase in debt service requirements that
could adversely affect our financial condition and results of operations. Such
increased debt could exceed the underlying value of the properties.

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Failure To Qualify As A REIT

We have elected to be taxed as a REIT under the Internal Revenue
Code. However, we cannot assure you that we have qualified as a REIT or that we
will continue to so qualify in the future. To qualify as a REIT, we must satisfy
numerous requirements (some on an annual and quarterly basis) established under
highly technical and complex Internal Revenue Code provisions. Only limited
judicial or administrative interpretation exists for these provisions and
involves the determination of various factual matters and circumstances not
entirely within our control. In addition, future legislation, new regulations,
administrative interpretations or court decisions may apply to us, potentially
with retroactive effect, and adversely affect our ability to qualify as a REIT.
We may receive significant non-qualifying income or acquire non-qualifying
assets, which as a result, may cause us to approach the income and assets test
limits imposed by the Internal Revenue Code. There is a risk that we may not
satisfy these tests. If we fail to qualify as a REIT in any taxable year, we
would be subject to federal income tax on our taxable income at corporate rates.
We also may be disqualified from treatment as a REIT for the four taxable years
following the year in which we failed to qualify. This would reduce our net
earnings available for investment or distribution to stockholders because of the
additional tax liability. Even if we continue to qualify as a REIT, we will
continue to be subject to certain federal, state and local taxes on our income
and property.

Other Matters

Certain Policies of the Operating Partnership

The Operating Partnership intends to continue to operate in a manner
that will not subject it to regulation under the Investment Company Act of 1940.
The Company has in the past five years and may in the future (i) issue
securities senior to its Common Stock, (ii) fund acquisition activities with
borrowings under its line of credit and (iii) offer shares of Common Stock
and/or units of limited partnership interest in the Operating Partnership or
affiliated partnerships as partial consideration for property acquisitions. The
Operating Partnership from time to time acquires partnership interests in
partnerships and joint ventures, either directly or indirectly through
subsidiaries of the Operating Partnership, when such entities' underlying assets
are real estate. In general, the Operating Partnership does not (i) underwrite
securities of other issuers or (ii) actively trade in loans or other investments.

The Operating Partnership primarily invests in multifamily properties in
Southern California (Los Angeles, Ventura, Orange and San Diego counties),
Northern California (the San Francisco Bay Area), and the Pacific Northwest (the
Seattle, Washington and Portland, Oregon metropolitan areas). The Operating
Partnership currently intends to continue to invest in multifamily properties in
such regions, but may change such policy without a vote of the stockholders. In
connection with the Sachs' portfolio acquisition in December 2002, the Operating
Partnership has acquired two properties in Nevada and one property in Texas.

The policies discussed above may be reviewed and modified from time to time
by the Board of Directors without the vote of the stockholders.



Item 2. Properties

The Operating Partnership's property portfolio as of December 31, 2003
(including partial ownership interests) consists of ownership interests in 121
multifamily properties (comprising 26,012 apartment units), of which 14,943
units are located in Southern California (Los Angeles, Ventura, Orange and San
Diego counties), 4,605 units are located in Northern California (the San
Francisco Bay Area), 5,886 of which are located in the Pacific Northwest (4,515
units in the Seattle metropolitan area and 1,371 units in the Portland, Oregon
metropolitan area), and 578 are located in other areas (302 units in Houston,
Texas and 276 units in Hemet, California). In addition, the Operating
Partnership owns other real estate assets consisting of five recreational
vehicle parks (comprising 1,717 spaces), four office buildings (totaling
approximately 63,540 square feet) and two manufactured housing communities
(containing 607 sites).  One office building, which is located in Northern
California (Palo Alto), has approximately 17,400 square feet and houses the
Operating Partnership's headquarters. Another office building, located in
Southern California (Woodland Hills), has approximately 38,940 square feet, of
which the Operating Partnership currently occupies approximately 8,600 square
feet. The Woodland Hills office building has nine third party tenants occupying
approximately 27,300 feet. The Operating Partnership along with its affiliated
entities and joint ventures also have entered into commitments for the
development of 1,056 units in five multifamily communities; two of which are in
Northern California and three in Southern California.  See
"Development" in Item 1 of this Annual Report on Form 10-K for a list
of our properties under development.

25

---



The Operating Partnership's multifamily properties accounted for 95% of the
Operating Partnership's property revenues for the year ended December 31, 2003.

Occupancy Rates

The 121 multifamily residential properties had an average
occupancy, based on "financial occupancy," during the year ended
December 31, 2003, of approximately 96%. With respect to stabilized multifamily
properties with sufficient operating history, occupancy figures are based on
financial occupancy, which is defined as the percentage resulting from dividing
actual rental revenue by total possible rental revenue. Actual rental revenue
represents contractual revenue pursuant to leases without considering
delinquency and concessions. Total possible rental revenue represents the value
of all apartment units, with occupied units valued at contractual rental rates
pursuant to leases and vacant units valued at estimated market rents. We believe
that financial occupancy is a meaningful measure of occupancy because it
considers the value of each vacant unit at its estimated market rate. Financial
occupancy may not completely reflect short-term trends in physical occupancy and
financial occupancy rates as disclosed by other REITs may not be comparable to
our calculation of financial occupancy.

As of December 31, 2003, the headquarters building was 100% occupied by the
Operating Partnership and the Southern California office building was 92%
occupied, based on physical occupancy. With respect to office buildings,
occupancy figures are based on "physical occupancy" which refers to
the percentage resulting from dividing leased and occupied square footage by
rentable square footage. With respect to recreational vehicle parks,
manufactured housing communities, or multifamily properties which have not yet
stabilized or have insufficient operating history, occupancy figures are based
on "physical occupancy" which refers to the percentage resulting from
dividing leased and occupied units by rentable units.

For the year ended December 31, 2003, none of the Operating Partnership's
Properties had book values equal to 10% or more of total assets of the Operating
Partnership or gross revenues equal to 10% or more of aggregate gross revenues
of the Operating Partnership.



Multifamily Residential Properties

The Operating Partnership's multifamily Properties are generally
suburban garden apartments and townhomes comprising multiple clusters of two and
three story buildings situated on three to fifteen acres of land. The
multifamily properties have on average 215 units, with a mix of studio, one, two
and some three-bedroom units. A wide variety of amenities are available at each
apartment community, including covered parking, fireplaces, swimming pools,
clubhouses with complete fitness facilities, volleyball and playground areas and
tennis courts.

The Operating Partnership selects, trains and supervises a full team of on-
site service and maintenance personnel. The Operating Partnership believes that
its customer service approach enhances its ability to retain tenants and that
its multifamily Properties were built well and have been maintained well since
acquisition.

Office Buildings

The Operating Partnership's corporate headquarters is located in a
two-story office building with approximately 17,400 square feet located at 925
East Meadow Drive, Palo Alto, California. The Operating Partnership acquired
this property in 1997. The Operating Partnership also owns an office building in
Southern California (Woodland Hills), comprised of approximately 38,940 square
feet building, of which the Operating Partnership currently occupies
approximately 8,600 square feet. The building has nine third party tenants
occupying approximately 28,700 feet. The largest single tenant occupies
approximately 10,900 square feet. The Operating Partnership acquired this
property in 2001. The Operating Partnership also has two small office buildings
comprising approximately 7,200 square feet that are located in San Diego,
California.

26

---



Recreational Vehicle Parks

The Operating Partnership owns five recreational vehicle parks,
acquired in the Operating Partnership's December 2002 acquisition of the Sachs
Corporation, (comprising of 1,717 spaces) located in El Cajon, California;
Hemet, California; and Las Vegas Nevada.

Manufactured Housing Communities

The Operating Partnership owns manufactured housing communities,
acquired in the Operating Partnership's December 2002 acquisition of the Sachs
Corporation,  (containing 607 sites) located in Vista, California and Las Vegas, Nevada.

During the fourth quarter of 2003, the Operating Partnership entered into
lease and purchase option agreements with unrelated third parties related to its
five recreational vehicle parks that are comprised of 1,717 spaces, and two
manufactured housing communities that contain 607 sites.  Based on the
agreements, the unrelated third parties have an option to purchase the assets in
approximately four years for approximately $41.7 million - a 5% premium to the
gross book value of the assets.  Under the lease agreements Essex is to receive
a fixed monthly lease payment in addition to a non-refundable upfront payment
that will be amortized over approximately five years (the life of the lease).

The following tables describe the Operating Partnership's Properties as of
December 31, 2003. The first table describes the Operating Partnership's
multifamily residential properties and the second table describes the Operating
Partnership's other real estate assets.

27

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`Rentable
                                                                           Square       Year       Year
Multifamily Residential Properties (1)         Location          Units     Footage      Built    Acquired  Occupancy(2)
---------------------------------------  --------------------- --------- ----------- ----------- --------- ------------
Southern California
Alpine Country.........................  Alpine, CA                 108      81,900     1986       2002        94%
Alpine Village.........................  Alpine, CA                 306     254,400     1971       2002        95%
Barkley Apartments(3)(4)...............  Anaheim, CA                161     139,800     1984       2000        97%
Vista Pointe(5)........................  Anaheim, CA                286     242,400     1968       1985        95%
Bonita Cedars..........................  Bonita, CA                 120     120,800     1983       2002        97%
Villas at Carlsbad(6)..................  Carlsbad, CA               102      72,900     1985       2002        94%
Camarillo Oaks(7)......................  Camarillo, CA              564     459,000     1985       1996        97%
Cambridge..............................  Chula Vista, CA             40      22,100     1965       2002        96%
Woodlawn Colonial......................  Chula Vista, CA            159     104,500     1974       2002        95%
Mesa Village...........................  Clairemont, CA             133      43,600     1963       2002        95%
Villa Venetia(6).......................  Costa Mesa, CA             468     405,800     1972       2003        94%
Valley Park(8).........................  Fountain Valley, CA        160     169,700     1969       2001        98%
Casa Tierra............................  El Cajon, CA                40      28,700     1972       2002        98%
Coral Gardens..........................  El Cajon, CA               200     182,000     1976       2002        97%
Tierra del Sol/Norte...................  El Cajon, CA               156     117,000     1969       2002        97%
Grand Regency..........................  Escondido, CA               60      42,400     1967       2002        98%
Capri at Sunny Hills(8)................  Fullerton, CA              100     128,100     1961       2001        96%
Wilshire Promenade(9)..................  Fullerton, CA              149     128,000     1992       1997        97%
Montejo(8).............................  Garden Grove, CA           124     103,200     1974       2001        97%
Hampton Court (Columbus)(7)............  Glendale, CA                83      71,500     1974(10)   1999        95%
Hampton Place (Loraine)(7).............  Glendale, CA               132     141,500     1970(11)   1999        92%
Huntington Breakers(7).................  Huntington Beach, CA       342     241,700     1984       1997        95%
Huntington Villas(6)...................  Huntington Beach, CA       400     352,800     1972       2003        94%
Hillsborough Park......................  La Habra, CA               235     215,500     1999       1999        98%
Rosebeach(6)...........................  La Mirada, CA              174     172,200     1970(12)   2000        98%
Arboretum at Lake Forest(6)............  Lake Forest, CA            225     215,300     1970       2002        96%
Trabuco Villas.........................  Lake Forest, CA            132     131,000     1985       1997        97%
Marbrisa...............................  Long Beach, CA             202     122,800     1987       2002        95%
Pathways...............................  Long Beach, CA             296     197,700     1975       1991        96%
Bunker Hill(7).........................  Los Angeles, CA            456     346,600     1968       1998        97%
City Heights(5)........................  Los Angeles, CA            687     424,100     1968       2000        97%
Cochran Apartments.....................  Los Angeles, CA             58      51,400     1989       1998        98%
Kings Road.............................  Los Angeles, CA            196     132,100     1979       1997        97%
Park Place.............................  Los Angeles, CA             60      48,000     1988       1997        98%
Windsor Court..........................  Los Angeles, CA             58      46,600     1988       1997        98%
Mirabella..............................  Marina Del Rey, CA         188     176,800     2000       2000        95%
Mira Woods Villa.......................  Mira Mesa, CA              355     262,600     1962       2002        95%
Hillcrest Park (Mirabella).............  Newbury Park, CA           608     521,900  1973(13)(14)  1998        96%
Coronado at Newport North(15)(16)......  Newport Beach, CA          732     459,600     1968(17)   1999        94%
Coronado at Newport South(15)(16)......  Newport Beach, CA          715     498,700     1968       1999        94%
Fairways(7)(18)........................  Newport Beach, CA           74     107,100     1972       1999        96%
Country Villas.........................  Oceanside, CA              180     179,700     1976       2002        91%
Foxborough (Woodland Apartments)(6)....  Orange, CA                  90     108,000     1969(19)   2000        98%
Mariners Place.........................  Oxnard, CA                 105      77,200     1987       2000        98%
Ocean Villas(6)........................  Oxnard, CA                 119     108,900     1974       2002        97%
Tierra Vista(20).......................  Oxnard, CA                 404     387,100     2001       2001        94%
Monterey Villas (Village Apartments)...  Oxnard, CA                 122     122,100     1974(21)   1997        95%
Monterra del Mar (Windsor Terrace).....  Pasadena, CA               123      74,400     1972(22)   1999        96%
Monterra del Rey (Glenbrook)...........  Pasadena, CA                84      73,100     1972(23)   1999        94%
Monterra del Sol (Euclid)..............  Pasadena, CA                85      69,200     1972(24)   1999        96%
Villa Angelina(8)......................  Placentia, CA              256     217,600     1970       2001        97%
Crest, The(6)..........................  Pomona, CA                 501     498,000     1986       2000        96%
Highridge(8)...........................  Rancho Palos Verdes, CA    255     290,200     1972       1997        97%`

28

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`Rentable
                                                                           Square       Year       Year
Multifamily Residential Properties (1)         Location          Units     Footage      Built    Acquired  Occupancy(2)
---------------------------------------  --------------------- --------- ----------- ----------- --------- ------------
Southern California (continued)
Bluffs II, The(25).....................  San Diego, CA              224     126,700     1974       1997        98%
Emerald Palms..........................  San Diego, CA              152     133,000     1986       2002        97%
Summit Park............................  San Diego, CA              300     229,400     1972       2002        96%
Vista Capri - East.....................  San Diego, CA               26      16,800     1967       2002        93%
Vista Capri - North....................  San Diego, CA              106      51,800     1975       2002        95%
Villas at Bonita(6)....................  San Dimas, CA              102      94,200     1981       2003        95%
Villas at San Dimas(6) ................  San Dimas, CA              156     144,600     1981       2003        97%
Hearthstone(8).........................  Santa Ana, CA              140     154,800     1970       2001        96%
Treehouse(8)...........................  Santa Ana, CA              164     135,700     1970       2001        97%
Carlton Heights........................  Santee, CA                  70      48,400     1979       2002        98%
Meadowood(7)...........................  Simi Valley, CA            320     264,500     1986       1996        96%
Shadow Point...........................  Spring Valley, CA          172     131,200     1983       2002        95%
El Encanto(6)..........................  Tustin, CA                 116      92,700     1969       2000        98%
Lofts at Pinehurst, The (Villa Scandia)  Ventura, CA                118      71,100     1971(26)   1997        97%
Walnut Heights.........................  Walnut, CA                 163     146,700     1964      2003        93%
Avondale at Warner Center..............  Woodland Hills, CA         446     331,000     1970       1999        97%
                                                               --------- -----------                       ------------
                                                                 14,943  12,161,900                            96%



Northern California
Brookside Oaks (8).....................  Cupertino, CA              170     119,900     1973       2000        96%
Point at Cupertino, The (Westwood)(20).  Cupertino, CA              116     135,200     1963(27)   1998        97%
Stevenson Place........................  Fremont, CA                200     146,200     1971(28)   1983        95%
Treetops (7)...........................  Fremont, CA                172     131,200     1978       1996        94%
Wimbledon Woods........................  Hayward, CA                560     462,400     1975       1998        95%
Summerhill Commons.....................  Newark, CA                 184     139,000     1987       1987        94%
Essex at Lake Merritt, The.............  Oakland, CA                270     258,900     2003       2003        94%
San Marcos (Vista del Mar).............  Richmond, CA               312     292,700     2003       2003        99%
Le Parc Luxury Apartments (Plumtree)...  Santa Clara, CA            140     113,200     1975(29)   1994        98%
Marina Cove (30).......................  Santa Clara, CA            292     250,200     1974       1994        97%
Mt. Sutro Terrace (7)..................  San Francisco, CA           99      64,000     1973       1999        94%
The Carlyle (7)........................  San Jose, CA               132     129,200     2000       2000        96%
Waterford Place........................  San Jose, CA               238     219,600     2000       2000        99%
Bel Air (7)............................  San Ramon, CA              462     391,000     1988(31)   1995        94%
Eastridge..............................  San Ramon, CA              188     174,100     1988       1996        94%
Foothill Gardens.......................  San Ramon, CA              132     155,100     1985       1997        96%
Twin Creeks............................  San Ramon, CA               44      51,700     1985       1997        96%
Bristol Commons (7)....................  Sunnyvale, CA              188     142,600     1989       1995        97%
Oak Pointe.............................  Sunnyvale, CA              390     294,100     1973       1988        96%
Summerhill Park........................  Sunnyvale, CA              100      78,500     1988       1988        96%
Windsor Ridge..........................  Sunnyvale, CA              216     161,800     1989       1989        97%
                                                               --------- -----------                       ------------
                                                                  4,605   3,910,600                            96%`

29

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`Rentable
                                                                           Square       Year       Year
Multifamily Residential Properties (1)         Location          Units     Footage      Built    Acquired  Occupancy(2)
---------------------------------------  --------------------- --------- ----------- ----------- --------- ------------

Pacific Northwest
Seattle, Washington Metropolitan Area
Emerald Ridge..........................  Bellevue, WA               180     144,000     1987       1994        95%
Foothill Commons (7)...................  Bellevue, WA               360     288,300     1978       1990        95%
Palisades, The (7).....................  Bellevue, WA               192     159,700     1977       1990        97%
Sammamish View.........................  Bellevue, WA               153     133,500     1986       1994        97%
Woodland Commons (7)...................  Bellevue, WA               236     172,300     1978       1990        95%
Canyon Pointe..........................  Bothell, WA                250     210,400     1990       2003        94%
Inglenook Court........................  Bothell, WA                224     183,600     1985       1994        95%
Salmon Run at Perry Creek..............  Bothell, WA                132     117,100     2000       2000        94%
Stonehedge Village (7).................  Bothell, WA                196     214,800     1986       1997        94%
Park Hill at Issaquah (32).............  Issaquah, WA               245     277,700     1999       1999        90%
Wandering Creek........................  Kent, WA                   156     124,300     1986       1995        95%
Bridle Trails (7)......................  Kirkland, WA                92      73,400     1986       1997        95%
Evergreen Heights......................  Kirkland, WA               200     188,300     1990       1997        94%
Laurels at Mill Creek..................  Mill Creek, WA             164     134,300     1981       1996        95%
Anchor Village (8).....................  Mukilteo, WA               301     245,900     1981       1997        92%
Castle Creek...........................  Newcastle, WA              216     191,900     1997       1997        96%
Brighton Ridge.........................  Renton, WA                 264     201,300     1986       1996        95%
Forest View............................  Renton, WA                 192     182,500     1998       2003        97%
Fountain Court (7).....................  Seattle, WA                320     207,000     2000       2000        97%
Linden Square..........................  Seattle, WA                183     142,200     1994       2000        94%
Maple Leaf (7).........................  Seattle, WA                 48      35,500     1986       1997        96%
Spring Lake (7)........................  Seattle, WA                 69      42,300     1986       1997        96%
Wharfside Pointe.......................  Seattle, WA                142     119,200     1990       1994        98%
Portland, Oregon Metropolitan Area
Andover Park (6).......................  Beaverton, OR              240     227,800     1992       2001        95%
Jackson School Village (7).............  Hillsboro, OR              200     196,800     1996       1996        91%
Landmark...............................  Hillsboro, OR              285     282,900     1990       1996        94%
Hunt Club (6)..........................  Lake Oswego, OR            256     198,000     1985       2000        95%
Meadows at Cascade Park................  Vancouver, WA              198     199,300     1989       1997        94%
Village at Cascade Park................  Vancouver, WA              192     178,100     1989       1997        96%
                                                               --------- -----------                       ------------
                                                                  5,886   5,072,400                            95%
Other areas
Devonshire.............................  Hemet, CA                  276     207,200     1988       2002        96%
St. Cloud..............................  Houston, TX                302     306,800     1968       2002        85%
                                                               --------- -----------                       ------------
                                                                    578     514,000                            90%
                                                               --------- -----------                       ------------
        Total/Weighted Average                                   26,012  21,658,900                            96%
                                                               ========= ===========                       ============`

30

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`Rentable
                                                                  Square     Year      Year
Other real estate assets (1)         Location          Tenants    Footage    Built   Acquired  Occupancy(2)
------------------------------ --------------------- ----------- --------- --------- --------- -------------
Office Buildings
925 East Meadow Drive........  Palo Alto, CA              1        17,400    1988      1997        100%(33)
22110-22120 Clarendon Street.  Woodland Hills, CA        10        38,940    1982      2001         92%(34)
2399 Camino Del Rio South....  San Diego, CA              3         5,200    1978      2002        100%
3205 Moore Street............  San Diego, CA              3         2,000    1957      2002        100%
                                                     ----------- ---------                     -------------
    Total Office Buildings                               17        63,540                           95%
                                                     =========== =========                     =============

Recreational Vehicle Parks
Circle RV....................  El Cajon, CA           179 spaces             1977      2002        (35)
Vacationer...................  El Cajon, CA           159 spaces             1973      2002        (35)
Diamond Valley...............  Hemet, CA              224 spaces             1974      2002        (35)
Golden Village...............  Hemet, CA             1,019 spaces            1972      2002        (35)
Riviera RV...................  Las Vegas, NV          136 spaces             1969      2002        (35)
                                                     -----------
    Total Recreational Vehicle Parks                 1,717 spaces
                                                     ===========

Manufactured Housing Communities
Green Valley.................  Vista, CA              157 sites              1973      2002        (35)
Riviera......................  Las Vegas, NV          450 sites              1969      2002        (35)
                                                     -----------
    Total Manufactured Housing Communities            607 sites
                                                     ===========`

(1)	Unless otherwise specified, the Operating Partnership has a 100% ownership
interest in each Property.

(2)	For multifamily residential properties, occupancy rates
are based on financial occupancy for the year ended December 31, 2003; for the
office buildings, recreational vehicle parks, manufactured housing communities
or properties which have not yet stabilized or have insufficient operating
history, occupancy rates are based on physical occupancy as of December 31,
2003. For an explanation of how financial occupancy and physical occupancy are
calculated, see "Properties-Occupancy Rates" in this Item 2.

(3)	The Operating Partnership has a 30% special limited partnership
interest in this property, which owns this multifamily property. This investment
was made under arrangements whereby EMC became the general partner and the
existing partners were granted the right to require the applicable partnership
to redeem their interest for cash. Subject to certain conditions, the Operating
Partnership may, however, elect to deliver an equivalent number of shares of the
Company's Common Stock in satisfaction of the applicable partnership's cash
redemption obligation. The Operating Partnership accounts for this property
under the equity method of accounting.

(4)	The property is subject to a ground lease, which, unless extended,
will expire in 2082.

(5)	The Operating Partnership owns the land and has entered into a
leasehold interest. The leasehold interest entitles the Operating Partnership to
receive a monthly payment for the 34-year term of the land lease. The Operating
Partnership may be required to sell its interest in the property anytime
following the seventh anniversary of the leasehold date which was created in
2002.

(6)	This property is owned by Fund I. The Operating Partnership has a
21.4% interest in Fund I and is accounted for using the equity method of
accounting.

(7)	This Property is owned by a single asset limited partnership in which
the Operating Partnership has at least a 99.0% limited partnership interest.

(8) 	The Operating Partnership holds a 1% special limited partner
interest in the partnerships which own these multifamily properties. These
investments were made under arrangements whereby EMC became the 1% sole general
partner interest and the other limited partners were granted the right to
require the applicable partnership to redeem their interest for cash. Subject to
certain conditions, the Operating Partnership may, however, elect to deliver an
equivalent number of shares of the Company's Common Stock in satisfaction of the
applicable partnership's cash redemption obligation. The Operating Partnership
accounts for this property under the equity method of accounting.

31

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(9) 	The Operating Partnership purchased an additional 21 units adjacent to this
property in 2002 for $3 million, which was built in 1991.

(10) 	The Operating Partnership completed an approximate $1.6 million
redevelopment on this property in 2000.

(11) 	The Operating Partnership completed an approximate $2.3 million
redevelopment on this property in 2000.

(12) 	Fund I is in the process of performing a $3.5 million redevelopment on this
property.

(13) 	The Operating Partnership completed an $11.0 million redevelopment on this
property in 2001.

(14) 	The Operating Partnership is in the process of performing a $3.4 million
redevelopment on this property.

(15) 	The Operating Partnership has an approximate 49.9% direct ownership interest
in this property. The Operating Partnership accounts for this property under the
equity method of accounting.

(16) 	Fund I has an approximate 49.9% direct ownership in this property. The
Operating Partnership has a 21.4% interest in Fund I and is accounted for using
the equity method of accounting.

(17) 	The Operating Partnership completed a $13.6 million redevelopment on this
property in 2001.

(18) 	This property is subject to a ground lease, which, unless extended, will
expire in 2027.

(19) 	Fund I completed a $1.7 million redevelopment on this property in 2001.

(20) 	The Operating Partnership has a 20.0% ownership this property. The Operating
Partnership accounts for this property under the equity method of
accounting.

(21) 	The Operating Partnership completed an approximate $3.2 million
redevelopment on this property in 2002.

(22) 	The Operating Partnership completed a $1.9 million redevelopment on this
property in 2000.

(23) 	The Operating Partnership completed a $1.9 million redevelopment on this
property in 2001.

(24) 	The Operating Partnership completed a $1.7 million redevelopment on this
property in 2001.

(25) 	The Operating Partnership has an 85.0% controlling limited partnership
interest in this property.

(26) 	The Operating Partnership completed an approximate $3.5 million
redevelopment on this property in 2002.

(27) 	The partnership that owns this property completed a $2.7 million
redevelopment on this property in 2001.

(28) 	The Operating Partnership completed an approximately $4.5 million
redevelopment on this property in 1998.

(29) 	The Operating Partnership completed an approximate $3.4 million
redevelopment on this property in 2002.

(30) 	A portion of this Property on which 84 units are presently located is
subject to a ground lease, which, unless extended, will expire in 2028.

(31) 	The Operating Partnership completed construction of 114 units of the
property's 462 total units in 2000.

(32) 	The Operating Partnership has an approximate 45% preferred limited
partnership interest in this property.

(33) 	The Operating Partnership occupies 100% of this property.

(34) 	The Operating Partnership occupies 22% of this property.

(35) 	The Operating Partnership leased this property in 2003 to an unrelated third
party for approximately 5 years with an option to purchase the property in
approximately 4 years.

32

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Item 3. Legal Proceedings

Neither the Operating Partnership nor any of the Properties is presently
subject to any material litigation nor, to the Operating Partnership's
knowledge, is there any material litigation threatened against the Operating
Partnership or the Properties. The Properties are subject to certain routine
litigation and administrative proceedings arising in the ordinary course of
business, which, taken together, are not expected to have a material adverse
impact on the Operating Partnership's financial position, results of operations
or liquidity.



Item 4. Submission of Matters to a Vote of Security Holders

During the fourth quarter of 2003, no matters were submitted to a vote of
security holders.

33

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Part II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

Unregistered Sales of Securities

During the fourth quarter of 2003, there were no sales of
unregistered securities.

34

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Item 6. Selected Financial Data

The following tables set forth summary financial and operating information
for the Operating Partnership from January 1, 1999 through December 31, 2003.

`Years Ended December 31,
                                                                    ----------------------------------------------------------
                                                                       2003        2002        2001        2000        1999
                                                                    ----------  ----------  ----------  ----------  ----------
                                                                     (Dollars in thousands, except unit and per unit amounts)
OPERATING DATA:
Revenues
   Rental......................................................... $  215,699  $  171,909  $  175,894  $  161,097  $  135,476
   Other property income..........................................      7,169       5,356       5,493       4,790       3,136
   Interest and other income......................................     11,582      22,857      22,152      10,969       5,618
                                                                    ----------  ----------  ----------  ----------  ----------
       Total revenues.............................................    234,450     200,122     203,539     176,856     144,230
                                                                    ----------  ----------  ----------  ----------  ----------
EXPENSES
   Property operating expenses, excluding depreciation and
     amortization.................................................     74,037      52,454      52,277      46,091      41,119
   Depreciation and amortization..................................     49,409      37,042      35,915      30,442      25,862
   Amortization of deferred financing costs.......................      1,008         605         657         639         566
   General and administrative.....................................      7,106       6,291       7,498       6,062       4,263
   Interest(1)....................................................     42,751      35,012      38,746      30,163      21,184
                                                                    ----------  ----------  ----------  ----------  ----------
       Total expenses.............................................    174,311     131,404     135,093     113,397      92,994
                                                                    ----------  ----------  ----------  ----------  ----------
   Income from continuing operations before gain on sale
     of real estate, minority interest, and discontinued
     operations...................................................     60,139      68,718      68,446      63,459      51,236
   Gain on sales of real estate...................................         --          --       3,788       4,022       9,524
   Minority interests.............................................       (122)       (135)       (196)       (372)       (549)
                                                                    ----------  ----------  ----------  ----------  ----------
   Income from continuing operations..............................     60,017      68,583      72,038      67,109      60,211
   Discontinued operations:
     Operating income from real estate sold.......................         --         253         710         622         642
     Gain on sale of real estate..................................         --       9,051          --          --          --
                                                                    ----------  ----------  ----------  ----------  ----------
Net income........................................................     60,017      77,887      72,748      67,731      60,853
                                                                    ----------  ----------  ----------  ----------  ----------
Write off of Series C preferred units offering costs..............       (625)         --          --          --          --
Amortization of discount on general partner preferred equity......       (336)         --          --          --          --
Preferred return to general partner - Series F....................       (195)         --          --          --          --
Dividends on preferred units - general partner....................         --          --          --        (245)     (1,333)
Dividends on preferred units - limited partners...................    (17,996)    (18,319)    (18,319)    (18,319)    (12,238)
                                                                    ----------  ----------  ----------  ----------  ----------
Net income available to common units ............................. $   40,865  $   59,568  $   54,429  $   49,167  $   47,282
                                                                    ==========  ==========  ==========  ==========  ==========
Net income from continuing operations available to
  common units per unit-diluted................................... $     1.71  $     2.39  $     2.56  $     2.35  $     2.35
                                                                    ==========  ==========  ==========  ==========  ==========
Net income available to common units per unit-diluted............. $     1.71  $     2.84  $     2.59  $     2.37  $     2.37
                                                                    =========== ==========  ==========  ==========  ==========
   Weighted average common units outstanding-
     diluted (in thousands).......................................     23,948      21,008      21,005      20,731      20,513
                                                                    ==========  ==========  ==========  ==========  ==========
Distribution per common unit...................................... $     3.12  $     3.08  $     2.80  $     2.38  $     2.15
                                                                    ==========  ==========  ==========  ==========  ==========

                                                                                         As of December 31,
                                                                    ----------------------------------------------------------
                                                                       2003        2002        2001        2000        1999
                                                                    ----------  ----------  ----------  ----------  ----------
BALANCE SHEET DATA:
   Investment in real estate (before accumulated
     depreciation)................................................ $1,732,920  $1,515,956  $1,175,200  $1,156,408  $  929,076
   Net investment in real estate..................................  1,491,685   1,324,135   1,018,931   1,036,909     832,471
   Real estate under development..................................     52,439     143,756      93,256      38,231     120,414
   Total assets...................................................  1,728,564   1,619,734   1,329,458   1,281,849   1,062,313
   Total property indebtedness....................................    832,229     804,063     638,660     595,535     384,108
   Partners' capital..............................................    820,642     748,117     631,727     629,441     623,603`

(1) 	Extraordinary item - loss on early extinguishment of debt of $119 and $214
for the years ended December 31, 2000 and 1999, respectively, have been reclassified as
interest expense in accordance with the adoption of SFAS No. 145 on January 1, 2003.

35

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`As of December 31,
                                                                  ----------------------------------------------------------
                                                                     2003        2002        2001        2000        1999
                                                                  ----------  ----------  ----------  ----------  ----------
OTHER DATA:
Interest coverage ratio(1)......................................         3.6x        4.0x        3.7x        4.1x        4.7x
Gross operating margin(2).......................................         67%         70%         71%         72%         70%
Average same property monthly rental rate per
  apartment unit(3)(4).......................................... $    1,088  $    1,108  $    1,153  $    1,039  $      950
Average same property monthly operating expenses
  per apartment unit(3)(5)...................................... $      325  $      310  $      293  $      271  $      259
Total multifamily units (at end of period)......................     26,012      23,699      20,762      18,673      15,106
Same property occupancy rate(6).................................         96%         95%         95%         97%         96%
Total Properties (at end of period).............................        132         123          94          87          72`

(1) 	Interest coverage ratio represents earnings before minority interest,
gain on sales of real estate, interest expense, taxes, depreciation and
amortization ("EBITDA") divided by interest expense. The Operating
Partnership believes that in addition to net income, Funds from Operations and
cash flows, the interest coverage ratio is a useful financial performance
measurement of an equity REIT because, together with net income, Funds from
Operations and cash flows, the interest coverage ratio provides investors with
an additional measure to evaluate a REIT's ability to incur and service debt and
to fund acquisitions and other capital expenditures. To evaluate EBITDA and the
trends it depicts, the components of EBITDA, such as rental revenues, rental
expenses, real estate taxes and general and administrative expenses, should be
considered. Excluded from EBITDA are financing costs such as interest as well as
depreciation and amortization, each of which can significantly affect a REIT's
results of operations and liquidity and should be considered in evaluating a
REIT's operating performance. Further, EBITDA does not represent net income or
cash flows from operating, financing and investing activities as defined by
generally accepted accounting principles and does not necessarily indicate that
cash flows will be sufficient to fund all of our cash needs. It should not be
considered as an alternative to net income as an indicator of our operating
performance or as an alternative to cash flows as a measure of liquidity.
Further, EBITDA as disclosed by other REITs may not be comparable to our
calculation of EBITDA.

The following table reconciles net income from continuing operations before
gain on sale of real estate, minority interest, and discontinued operations to
EBITDA for the periods presented:

`Years Ended December 31,
                                                                  ----------------------------------------------------------
                                                                     2003        2002        2001        2000        1999
                                                                  ----------  ----------  ----------  ----------  ----------
                                                                                   (Dollars in thousands)
Income from continuing operations before gain on sale
   of real estate, minority interest, and discontinued
   operations................................................... $   60,139  $   68,718  $   68,446  $   63,459  $   51,236
Interest expense.................................................    42,751      35,012      38,746      30,163      21,184
Depreciation and amortization....................................    49,409      37,042      35,915      30,442      25,862
Amortization of deferred financing costs.........................     1,008         605         657         639         566
                                                                  ----------  ----------  ----------  ----------  ----------
EBITDA..........................................................    153,307     141,377     143,764     124,703      98,848
Interest expense................................................     42,751      35,012      38,746      30,163      21,184
Interest coverage ratio.........................................        3.6 x       4.0 x       3.7 x       4.1 x       4.7 x`

(2) 	Gross operating margin represents rental revenues and other property
income less property operating expenses, exclusive of depreciation and
amortization, divided by rental revenues and other property income.

(3) 	Same property apartment units are those units in properties that the
Operating Partnership has consolidated for the entire two years ended as of the
end of the period set forth. The number of same property apartment units in such
properties may vary at each year-end. Percentage changes in averages per unit do
not correspond to total same property revenues and expense percent changes which
are discussed in Item 7-Management's Discussion and Analysis of Financial
Condition and Results of Operations.

36

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(4) 	Average same property monthly rental rate per apartment unit
represents total scheduled rent for the same property apartment units for the
period (actual rental rates on occupied apartment units plus market rental rates
on vacant apartment units) divided by the number of such apartment units and
further divided by the number of months in the period.

(5)	Average same property monthly expenses per apartment unit represents
total monthly operating expenses, exclusive of depreciation and amortization,
for the same property apartment units for the period divided by the total number
of such apartment units and further divided by the number of months in the
period.

(6)	Occupancy rates are based on financial occupancy. For an explanation
of how financial occupancy is calculated, see "Properties-Occupancy
Rates" in Item 2 of Part I of this Form 10-K.

Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations

The following discussion is based on the consolidated financial
statements of the Operating Partnership as of and for the years ended December
31, 2003, 2002 and 2001. This information should be read in conjunction with the
accompanying consolidated financial statements and notes thereto.

Overview

The Operating Partnership believes that its operating results have
largely been a result of its business strategy of investing in submarkets that
provide the greatest potential for rental growth at the lowest relative risk.
Essex believes that its market research process, which includes an analysis of
both metropolitan statistical areas (MSA's) and submarkets, provides it with a
distinct competitive advantage.  Essex researches markets by reviewing data from
private and government sources as well as information developed or verified by
its field personnel.  Essex then utilizes its proprietary research model to
project market rent trends, allowing the Operating Partnership to allocate
capital to the markets with the best risk-adjusted return potential.

Essex's research process begins with a macro-economic analysis of various
MSA's, followed by an evaluation of the submarkets within that MSA.  The
objective of the economic research department is to estimate the amount of new
demand for housing, comparing it to the number of single family and multifamily
homes being constructed within a submarket.  Historically, markets with demand
for multifamily housing that is greater than supply generate increasing
occupancy levels and growth in rents.

Key components of Essex's analysis are as follows:

Job Growth:  The Operating Partnership believes that quality job growth
will lead to demand for multifamily and for-sale housing.  Based on a variety of
considerations, the Operating Partnership estimates how the total demand for
housing will be allocated between rental and for-sale housing.

Housing Supply:  Limited housing supply, both rental and for-sale, is a
very important factor in maintaining high occupancy levels, particularly in
periods of recession or slow economic growth.  The Operating Partnership seeks
to identify markets in which there is a low level of housing construction,
measured as a percentage of existing housing stock.

Cost of for-sale housing:  The Operating Partnership prefers areas with
relatively expensive for-sale housing, which is usually caused by an
insufficient amount of single-family housing construction.  The Operating
Partnership seeks to identify areas where the cost of rent is low relative to
both median income levels and the cost of homeownership.

Demographic trends:  The Operating Partnership evaluates areas with long-
term positive immigration and demographic trends, and areas that provide an
attractive quality of life.

Based on its evaluation of multifamily housing supply and demand factors, the
Operating Partnership forecasts the occupancy and rent trends for its targeted
submarkets, and actively seeks to expand its multifamily portfolio in the
submarkets with the greatest risk-adjusted return.

37

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By region, the Operating Partnership's operating results and investment
strategy are as follows:

Southern California Region:  At the time of the Company's 1994 initial public
offering (IPO), the Operating Partnership had ownership interests representing
17% of its multifamily units in this region. Following the IPO, the Operating
Partnership, using its research process, determined that various markets in the
Southern California region were attractive for multifamily property investment
and, the Operating Partnership, accordingly increased its ownership in such
markets. As of December 31, 2003, we have ownership interests representing 58%
of our multifamily units in this region.  During 2003, the region continued to
perform well, with same store property revenues increasing 4.8% versus 2002.
The Operating Partnership expects this region to continue generating positive
operating results in the near term.

Northern California Region:  As of December 31, 2003, the Operating
Partnership has ownership interests representing 18% of its multifamily units in
this region.  Several years of job losses have resulted in declining rents.  In
2003, same store property revenues decreased 9.4% versus 2002.  The Operating
Partnership expects market rents to remain flat in 2004, which would result in
same store property revenues to decline. The Operating Partnership expects positive
multifamily fundamentals in this region after 2004.  As a result, the Operating
Partnership will begin to increase its investment focus in this region.

Pacific Northwest Region: As of December 31, 2003, the Operating Partnership
has ownership interests representing 23% of its multifamily units in the region.
This region also lost jobs in 2003, but at a lower rate as compared to the
Operating Partnership's Northern California region.  In 2003, same store
property revenues decreased 3.0% versus 2002.  The Operating Partnership expects
job growth in this region in 2004, and believes this region will generate a
slight increase in same property revenue versus 2003.  The Operating
Partnership expects positive multifamily fundamentals in this region after 2004,
and the Operating Partnership will begin to increase it investment focus in this
region.

Forward Looking Statements

Certain statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations," and elsewhere
in this Annual Report which are not historical facts may be considered forward
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as
amended, including statements regarding the Operating Partnership's
expectations, hopes, intentions, beliefs and strategies regarding the future.
Forward looking statements include statements under the caption "Business
Objectives" in this Part I, statements regarding the Operating
Partnership's expectation as to performance of future acquisitions properties,
expectations of the future multifamily fundamentals and operating
results in various geographic regions and the Operating Partnership's investment focus in
such regions,
expectation as to the timing of completion of current development projects and
the stabilization dates of such projects, expectation as to the total projected
costs and rental rates of current development projects, beliefs as to the
adequacy of future cash flows to meet operating requirements and to provide for
dividend payments in accordance with REIT requirements, expectations to meet all
REIT requirements, expectations as to the amount of capital expenditures,
expectations as to the amount of non-revenue generating capital expenditures,
future acquisitions and developments, the anticipated performance of the Essex
Apartment Value Fund, L.P., the anticipated performance of the Essex Apartment
Value Fund II, L.P., the anticipated performance of existing properties, and
statements regarding the Operating Partnership's financing activities and the
use of proceeds from such activities.

38

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Critical Accounting Policies and Estimates

The preparation of consolidated financial statements, in accordance
with accounting principles generally accepted in the United States of America,
requires the Operating Partnership to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses and related
disclosures of contingent assets and liabilities. On an on-going basis, the
Operating Partnership evaluates its estimates, including those related to
acquiring, developing and assessing the carrying values of its real estate
properties, its investments in and advances to joint ventures and affiliates,
and its notes receivables. The
Operating Partnership bases its estimates on historical experience, current
market conditions, and on various other assumptions that are believed to be
reasonable under the circumstances. Actual results may differ from those
estimates made by management.

Rental properties are recorded at cost less accumulated depreciation.
Depreciation on rental properties has been provided over estimated useful lives
ranging from 3 to 30 years using the straight-line method. Development costs
include acquisition, direct and indirect construction costs, interest and real
estate taxes incurred during the construction and property stabilizations
periods. Maintenance and repair expenses that do not add to the value or prolong
the useful life of the property are expensed as incurred. Asset replacements and
improvements are capitalized and depreciated over their estimated useful lives.

The Operating Partnership assesses the carrying value of its real estate
investments by monitoring investment market conditions and performance compared
to budget for operating properties and joint ventures, and by monitoring
estimated costs for properties under development. Local market knowledge and
data is used to assess carrying values of properties and the market value of
acquisition opportunities. Whenever events or changes in circumstances indicate
that the carrying amount of a property held for investment may not be fully
recoverable, the carrying amount is evaluated. If the sum of the property's
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount of the property, then the Operating Partnership will
recognize an impairment loss equal to the excess of the carrying amount over the
fair value of the property. Adverse changes in market conditions or poor
operating results of real estate investments could result in impairment charges.
When the Operating Partnership determines that a property is held for sale, it
discontinues the periodic depreciation of that property. The criteria for
determining when a property is held for sale requires judgment and has potential
financial statement impact as depreciation would cease and an impairment loss
could occur upon determination of held for sale status. Assets held for sale are
reported at the lower of the carrying amount or estimated fair value less costs to sell.

With respect to investments in and advances to joint ventures and affiliates,
the Operating Partnership looks to the underlying properties to assess
performance and the recoverability of carrying amounts for those investments in
a manner similar to direct investments in real estate properties. An impairment
charge or investment valuation charge is recorded if the carrying value of the
investment exceeds its fair value.

The Operating Partnership assesses the carrying value of its notes receivables pursuant to
FASB's SFAS No. 114, Accounting by Creditors for Impairment of a
Loan. Pursuant to SFAS No. 114, a note is impaired if it is probable
that the Operating Partnership will not collect all principal and interest
contractually due. The impairment is measured based on the present value of
expected future cash flows discounted at the note's effective interest rate. The
Operating Partnership does not accrue interest when a note is considered
impaired. When ultimate collectibility of the principal balance of the impaired
note is in doubt, all cash receipts on impaired notes are applied to reduce the
principal amount of such notes until the principal has been recovered and are
recognized as interest income, thereafter.

The Operating Partnership bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances. Actual results may vary from those estimates and those estimates
could be different under different assumptions or conditions.

39

---



General Background

The Operating Partnership's property revenues are generated primarily
from multifamily property operations, which accounted for greater than 95% of
its property revenues for the years ended December 31, 2003, 2002, and 2001. The
Operating Partnership's properties ("the Properties") are located in
Southern California (Los Angeles, Ventura, Orange and San Diego counties),
Northern California (the San Francisco Bay Area), the Pacific Northwest (The
Seattle, Washington and Portland, Oregon metropolitan areas), and other areas
(Hemet, California, Las Vegas, Nevada, and Houston, Texas). The average
occupancy level of the Operating Partnership's portfolio has equaled or exceeded
95% for the last five years.

Essex Apartment Value Fund, L.P. ("Fund I"), is an investment fund
organized by the Operating Partnership in 2001 to add value through rental
growth and asset appreciation, utilizing the Operating Partnership's
development, redevelopment and asset management capabilities. Currently Fund I
is considered fully invested based on its acquisitions to date and anticipated
development and redevelopment expenditures. An affiliate of the Operating
Partnership, Essex VFGP, L.P. ("VFGP"), is a 1% general partner and is
a 20.4% limited partner. The Operating Partnership owns a 99% limited
partnership interest in VFGP. Fund I now expects to utilize leverage of
approximately 61% of the value of the underlying real estate portfolio.  The
Operating Partnership is committed to invest 21.4% of the aggregate capital
committed to the Fund.  In addition, Essex will be compensated by Fund I for its
asset management, property management, development and redevelopment services
and may receive incentive payments if Fund I exceeds certain financial return
benchmarks.

The Operating Partnership is in the process of forming a second Essex
Apartment Value Fund ("Fund II"), which is expected to be similar to
Fund I in size and structure.  Essex anticipates an initial closing of Fund II
during the second quarter of 2004, which would result in a final $50 million
capital commitment by a subsidiary of the Operating Partnership.

Since its formation, Fund I has acquired ownership interest in 17 multifamily
residential properties, representing 4,926 apartment units with an aggregate
purchase price of approximately $500 million, excluding redevelopment expenses,
and disposed of two multifamily residential properties, consisting of 530
apartment units at a gross sales price of approximately $73.2 million resulting
in a net realized gain of approximately $5.7 million. In addition, two
development land parcels, where approximately 480 apartment units are planned
for construction, have been purchased by Fund I with a total estimated cost for
the projects of approximately $101.7 million. As of December 31, 2003, the
remaining commitments to fund these development projects is approximately $37.4
million of which approximately $8.0 million is the Operating Partnership's
commitment.

The Operating Partnership (excluding Fund I's development communities) has
ownership interests in and is developing two multifamily residential
communities, with an aggregate of 444 multifamily units. In connection with
these development projects, the Operating Partnership has directly, or in some
cases through its joint venture partners, entered into contractual construction
related commitments with unrelated third parties and the total projected
estimated cost for these projects is approximately $70.3 million. As of December
31, 2003, the remaining commitment to fund these projects is approximately $17.9
million.

Results of Operations

Comparison of Year Ended December 31, 2003 to Year Ended December 31, 2002

Average financial occupancy rates of the Operating Partnership's
multifamily "Same Store Properties" (properties consolidated by the
Operating Partnership for each of the years ended December 31, 2003 and 2002)
increased to 95.8% for the year ended December 31, 2003 from 94.7% for the year
ended December 31, 2002. Financial occupancy is defined as the percentage
resulting from dividing actual rental revenue by total possible rental revenue.
Actual rental revenue represents contractual rental revenue pursuant to leases
without considering delinquency and concessions. Total possible rental revenue
represents the value of all apartment units, with occupied units valued at
contractual rental rates pursuant to leases and vacant units valued at estimated
market rents. We believe that financial occupancy is a meaningful measure of
occupancy because it considers the value of each vacant unit at its estimated
market rate. Financial occupancy may not completely reflect short-term trends in
physical occupancy and financial occupancy rates as disclosed by other REITs may
not be comparable to our calculation of financial occupancy.

40

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The regional breakdown of financial occupancy for the Same Store Properties
for the years ended December 31, 2003 and 2002 are as follows:

`Years ended
                                            December 31,
                                    -------------------------
                                        2003         2002
                                    ------------ ------------
Southern California................        96.3%        94.7%
Northern California................        95.8%        95.9%
Pacific Northwest..................        95.1%        93.1%`

Total Revenues increased by $34,328,000 or by 17.2% to $234,450,000 in 2003
from $200,122,000 in 2002. The following table sets forth a breakdown of these
revenue amounts, including the revenues attributable to the Same Store
Properties.

`Years Ended
                                                                                  December 31,
                                                                  Number of   --------------------   Dollar   Percentage
                                                                  Properties    2003       2002      Change    Change
                                                                  ----------  ---------  ---------  --------- ---------
                                                                              (dollars in thousands)
Revenues
   Property revenues -
   Same Store Properties:
       Southern California.......................................        22  $  71,192  $  67,905  $   3,287       4.8 %
       Northern California.......................................        16     50,346     55,557     (5,211)     (9.4)
       Pacific Northwest.........................................        23     40,726     41,989     (1,263)     (3.0)
                                                                  ----------  ---------  ---------  ---------
          Total property revenues
            Same Store Properties................................        61    162,264    165,451     (3,187)     (1.9)
                                                                  ==========
   Property revenues - properties acquired subsequent
     to January 1, 2002 (1)......................................               60,604     11,814     48,790     413.0
                                                                              ---------  ---------  ---------
          Total property revenues................................              222,868    177,265     45,603      25.7
Interest and other income........................................               11,582     22,857    (11,275)    (49.3)
                                                                              ---------  ---------  ---------
          Total revenues.........................................            $ 234,450  $ 200,122  $  34,328      17.2 %
                                                                              =========  =========  ========= =========`

(1) 	Also includes four office buildings, five
recreational vehicle parks, two manufactured housing communities, redevelopment
communities and development communities.

As set forth in the above table, the $34,328,000 net
increase in total revenues was mainly attributable to an increase of $48,790,000
attributable to multifamily properties acquired subsequent to January 1, 2002,
four office buildings, five recreational vehicle parks, two manufactured housing
communities, redevelopment communities and development communities, which was
offset in part by a decrease in interest and other income of $11,275,000 and a
decrease in revenue from the Same Store Properties of $3,187,000. Subsequent to
January 1, 2002, the Operating Partnership acquired 25 multifamily properties,
two office buildings, five recreational vehicle parks, two manufactured housing
communities, had three communities in redevelopment and achieved stabilized
operations at two development communities (the "Acquisitions
Properties").

Interest and other income decreased by $11,275,000 or 49.3% to $11,582,000 in
2003 from $22,857,000 in 2002. The decrease primarily relates to the sale of
certain co-investment assets resulting in the decrease in income earned on the
Operating Partnership's co-investments and the repayment or conversion to non-
accrual of notes receivable which resulted in a decrease in interest income on
notes receivables.

Property revenues from the Same Store Properties decreased by $3,187,000 or
1.9% to $162,264,000 in 2003 from $165,451,000 in 2002. The majority of this
decrease was attributable to the 16 Same Store Properties located in Northern
California and the 23 Same Store Properties located in the Pacific Northwest.
The property revenues of the Same Store Properties in Northern California
decreased by $5,211,000 or 9.4% to $50,346,000 in 2003 from $55,557,000 in 2002.
The decrease in Northern California is primarily attributable to rental rate
decreases and a slight decrease in financial occupancy to 95.8% in 2003 from
95.9% in 2002. The property revenues of the Same Store Properties in the Pacific
Northwest decreased by $1,263,000 or 3.0% to $40,726,000 in 2003 from
$41,989,000 in 2002. The $1,263,000 decrease in the Pacific Northwest is
primarily attributable to rental rate decreases offset by an increase in
financial occupancy to 95.1% in 2003 from 93.1% in 2002. The 22 multifamily
residential properties located in Southern California offset the net decrease in
total property revenues from the other Same Store Properties. The property
revenues for these properties increased by $3,287,000 or 4.8% to $71,192,000 in
2003 from $67,905,000 in 2002. The $3,287,000 increase is primarily attributable
to rental rate increases and an increase in financial occupancy to 96.3% in 2003
from 94.7% in 2002.

41

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Total Expenses increased by $42,907,000 or approximately 32.7% to
$174,311,000 in 2003 from $131,404,000 in 2002. This increase was mainly due to
an increase in property operating expenses of $33,950,000 or 37.9% to
$123,446,000 in 2003 from $89,496,000 in 2002. Of such operating expense
increase $32,154,000 was attributable to the Acquisition Properties. Interest
expense increased by $7,739,000 or 22.1% to $42,751,000 in 2003 from $35,012,000
in 2002. The increase in interest expense is mainly due to increases in the
mortgage notes payable balance.

Discontinued operations decreased by $9,304,000 to $0 in 2003 from
$9,304,000 in 2002. This decrease is due to the reduction of gain on sale of
real estate and operating income from Tara Village, a 168-unit apartment
community located in Tarzana, California, which was sold on June 18, 2002.

Net income decreased by $17,870,000 or 22.9% to $60,017,000 in 2003
from $77,887,000 in 2002. The decrease in net income is mainly attributable to
the factors noted above.

Comparison of Year Ended December 31, 2002 to Year Ended December 31, 2001

Average financial occupancy rates of the Operating Partnership's
multifamily "2002/2001 Same Store Properties" (properties consolidated
by the Operating Partnership for each of the years ended December 31, 2002 and
2001) decreased to 94.5% for the year ended December 31, 2002 from 94.7% for the
year ended December 31, 2001. Financial occupancy is defined as the percentage
resulting from dividing actual rental revenue by total possible rental revenue.
Actual rental revenue represents contractual rental revenue pursuant to leases
without considering delinquency and concessions. Total possible rental revenue
represents the value of all apartment units, with occupied units valued at
contractual rental rates pursuant to leases and vacant units valued at estimated
market rents. We believe that financial occupancy is a meaningful measure of
occupancy because it considers the value of each vacant unit at its estimated
market rate. Financial occupancy may not completely reflect short-term trends in
physical occupancy and financial occupancy rates as disclosed by other REITs may
not be comparable to our calculation of financial occupancy.

The regional breakdown of financial occupancy for the 2002/2001 Same Store
Properties for the years ended December 31, 2002 and 2001 are as follows:

`Years ended
                                            December 31,
                                    -------------------------
                                        2002         2001
                                    ------------ ------------
Southern California................        94.7%        94.8%
Northern California................        95.6%        95.4%
Pacific Northwest..................        93.1%        93.9%`

42

---



Total Revenues decreased by $3,417,000 or 1.7% to $200,122,000 in 2002 from
$203,539,000 in 2001. The following table sets forth a breakdown of these
revenue amounts, including the revenues attributable to the 2002/2001 Same Store
Properties.

`Years Ended
                                                                                  December 31,
                                                                  Number of   --------------------   Dollar   Percentage
                                                                  Properties    2002       2001      Change    Change
                                                                  ----------  ---------  ---------  --------- ---------
                                                                              (dollars in thousands)
Revenues
   Property revenues -
   Same Store Properties:
       Southern California.......................................        19  $  56,244  $  54,305  $   1,939       3.6 %
       Northern California.......................................        14     49,829     56,943     (7,114)    (12.5)
       Pacific Northwest.........................................        23     41,989     45,109     (3,120)     (6.9)
                                                                  ----------  ---------  ---------  ---------
          Total property revenues
            Same Store Properties................................        56    148,062    156,357     (8,295)     (5.3)
                                                                  ==========
   Property revenues - properties acquired subsequent
     to January 1, 2001 and disposed of in 2001 (1)..............               29,203     25,030      4,173      16.7
                                                                              ---------  ---------  ---------
          Total property revenues................................              177,265    181,387     (4,122)     (2.3)
Interest and other income........................................               22,857     22,152        705       3.2
                                                                              ---------  ---------  ---------
          Total revenues.........................................            $ 200,122  $ 203,539  $  (3,417)     (1.7)%
                                                                              =========  =========  ========= =========`

(1) 	Also includes four office buildings, five recreational
vehicle parks, two manufactured housing communities, redevelopment communities
and development communities.

As set forth in the above table, the $3,417,000 net
decrease in total revenues was the result of a decrease in property revenues
from 2002/2001 Same Store Properties, which was offset in part by $4,173,000
attributable to properties acquired subsequent to January 1, 2001 and disposed
of in 2001, four office buildings, five recreational vehicle parks, two
manufactured housing communities, redevelopment communities and development
communities. Subsequent to January 1, 2001, the Operating Partnership acquired
22 multifamily properties, two office buildings, five recreational vehicle
parks, two manufactured housing communities, had six communities in
redevelopment and two development communities in the lease up stage (the
"Acquisitions Properties").

Of the net decrease in total revenues, $8,295,000 was mainly attributable to
a decrease in property revenues from the 2002/2001 Same Store Properties.
Property revenues from the 2002/2001 Same Store Properties decreased by 5.3% to
$148,062,000 in 2002 from $156,357,000 in 2001. The majority of this decrease
was attributable to the 14 2002/2001 Same Store Properties located in Northern
California and the 23 2002/2001 Same Store Properties located in the Pacific
Northwest. The property revenues of the 2002/2001 Same Store Properties in
Northern California decreased by $7,114,000 or 12.5% to $49,829,000 in 2002 from
$56,943,000 in 2001. The decrease in Northern California is primarily
attributable to rental rate decreases offset by an increase in average financial
occupancy to 95.6% in 2002 from 95.4% in 2001. The property revenues of the
2002/2001 Same Store Properties in the Pacific Northwest decreased by $3,120,000
or 6.9% to $41,989,000 in 2002 from $45,109,000 in 2001. The $3,120,000 decrease
in the Pacific Northwest is primarily attributable to rental rate decreases and
a decrease in average financial occupancy to 93.1% in 2002 from 93.9% in 2001.
The 19 multifamily residential properties located in Southern California
partially offset the net decrease in total revenues. The property revenues of
these properties increased by $1,939,000 or 3.6% to $56,244,000 in 2002 from
$54,305,000 in 2001. The $1,939,000 increase is primarily attributable to rental
rate increases, which were partially offset by a slight decrease in average
financial occupancy to 94.7% in 2002 from 94.8% in 2001.

Interest and other income increased by $705,000 or 3.2% to $22,857,000 in
2002 from $22,152,000 in 2001. The increase of $705,000 primarily relates to the
equity in income from the gain on sale of co-investment assets and additional
fee income earned in connection with the sale of co-investment assets.

Total Expenses decreased by $3,689,000 or approximately 2.7% to
$131,404,000 in 2002 from $135,093,000 in 2001. This decrease was attributable
to a decrease in interest expense, which decreased by $3,734,000 or 9.6% to
$35,012,000 in 2002 from $38,746,000 in 2001 The interest expense decrease was
primarily due to declining interest rates. General and administrative expenses
represent the costs of the Operating Partnership's various acquisition and
administrative departments as well as partnership administration and non-
operating expenses. Such expenses decreased by $1,207,000 or 16.1% to $6,291,000
in 2002 from $7,498,000 in 2001. This decrease is largely due to a reduction in
incentive compensation expense as compared to 2001.

43

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Discontinued Operations increased by $8,594,000 to $9,304,000 in 2002
from $710,000 in 2001. This is due to the gain on sale of Tara Village in 2002
of $9,051,000, partially offset by a reduction in operating income from such
property due to its sale in 2002.

Net income increased by $5,139,000 or 7.1% to $77,887,000 in 2002 from
$72,748,000 in 2001. The increase in net income is mainly attributable to the
factors noted above and to the gain on sale of real estate of $9,051,000
recognized in 2002 as compared to the gain on sale of real estate of $3,788,000
recognized in 2001.

Liquidity and Capital Resources Including Non-consolidated Investments

At December 31, 2003, the Operating Partnership had $9,146,000 of
unrestricted cash and cash equivalents. The Operating Partnership expects to
meet its short-term liquidity requirements by using its working capital, cash
generated from operations, and amounts available under lines of credit or other
financings. The Operating Partnership believes that its current net cash flows
will be adequate to meet operating requirements and to provide for payment of
dividends by the Company in accordance with REIT qualification requirements. The
Operating Partnership expects to meet its long-term liquidity requirements
relating to property acquisitions and development (beyond the next 12 months)
and balloon debt maturities by using a combination of some or all of the
following sources: working capital, amounts available on lines of credit, net
proceeds from public and private debt and equity issuances, and proceeds from
the disposition of properties that may be sold from time to time. There can,
however, be no assurance that the Operating Partnership will have access to the
debt and equity markets in a timely fashion to meet such future funding
requirements or that future working capital and borrowings under the lines of
credit will be available, or if available, will be sufficient to meet the
Operating Partnership's requirements or that the Operating Partnership will be
able to dispose of properties in a timely manner and under terms and conditions
that the Operating Partnership deems acceptable.

Non-revenue generating capital expenditures are improvements and upgrades
that extend the useful life of the property. For the year ended December 31,
2003, non-revenue generating capital expenditures totaled approximately $385 per
weighted average occupancy unit. The Operating Partnership expects to incur
approximately $390 per weighted average occupancy unit in non-revenue generating
capital expenditures for the year ended December 31, 2004. These expenditures do
not include the improvements required in connection with the origination of
mortgage loans, expenditures for unidentified deferred maintenance renovations
on acquisition properties, expenditures for property renovations and
improvements which are expected to reposition a property and generate additional
revenue, and renovation expenditures required pursuant to tax-exempt bond
financings. The Operating Partnership expects that cash from operations and/or
its lines of credit will fund such expenditures. However, there can be no
assurance that the actual expenditures incurred during 2004 and/or the funding
thereof will not be significantly different than the Operating Partnership's
current expectations.

The Operating Partnership is currently developing two multifamily residential
projects, with an aggregate of 444 units. Such projects involve certain risks
inherent in real estate development. See "Risk Factors--Risks that
Development Activities Will be Delayed or Not Completed and/or Fail to Achieve
Expected Results" in Item 1 of this Annual Report on Form 10-K for the year
ended December 31, 2003. In connection with these development projects, the
Operating Partnership has directly, or in some cases through its joint venture
partners entered into contractual construction related commitments with
unrelated third parties and the total projected estimated cost for these
projects is approximately $70,300,000. As of December 31, 2003, the remaining
commitment to fund these development projects is approximately $17,900,000. The
Operating Partnership expects to fund such commitments by using a combination of
some or all of the following sources: its working capital, amounts available on
its lines of credit, net proceeds from public and private equity and debt
issuances, and proceeds from the disposition of properties, if any.

44

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Essex Apartment Value Fund, L.P. (the "Fund I"), is an investment
fund organized by the Operating Partnership in 2001 to add value through rental
growth and asset appreciation, utilizing the Operating Partnership's
development, redevelopment and asset management capabilities. Currently Fund I
is considered fully invested based on its acquisitions to date and anticipated
development and redevelopment expenditures.  Fund I now expects to utilize
leverage of approximately 61% of the value of the underlying real estate
portfolio. The Operating Partnership is committed to invest 21.4% of the
aggregate capital committed to the Fund. In addition, the Operating Partnership
will be compensated by Fund I for its asset management, property management,
development and redevelopment services and may receive incentive payments if
Fund I exceeds certain financial return benchmarks.  The Operating Partnership's
remaining unfunded capital commitment as of December 31, 2003 is approximately
$9.6 million.

The Operating Partnership is in the process of forming a second Essex
Apartment Value Fund ("Fund II"), which is expected to be similar to
Fund I in size and structure.  Essex anticipates an initial closing of Fund II
during the second quarter of 2004, which would result in a final $50 million
capital commitment by a subsidiary of the Operating Partnership.

The Operating Partnership has two outstanding lines of credit for an
aggregate amount of $275,000,000. The first line, in the amount of $185,000,000,
matures in May 2004, with an option to extend it for one year thereafter. The
Operating Partnership is currently negotiating to renew this line. During the
third quarter of 2003 the Operating Partnership expanded this unsecured
revolving credit facility to $185,000,000 from $165,000,000.  No other material
terms of this facility were revised. Outstanding balances under this line of
credit bear interest at a rate, which uses a tiered rate structure tied to the
Company's corporate ratings, if any, and leverage rating, which has been priced
at LIBOR plus 1.10% during 2003 and 2002. As of December 31, 2003 and 2002, the
interest rate was approximately 2.1% and 2.6%, respectively. At December 31,
2003 the Operating Partnership had $12,500,000 outstanding on this line of
credit. On December 18, 2003, the Operating Partnership obtained a 5-year,
$90,000,000 credit facility from Freddie Mac, secured by four of Essex's
multifamily communities.  The aggregate maximum principal amount of the facility
is $90,000,000, increasing to $100,000,000 on July 1, 2004.  The Operating
Partnership borrowed $80,600,000 under this facility, comprised of two tranches
as follows: $41,000,000, locked for 60 days at a base rate of 1.586% (55 basis
points over Freddie Mac's Reference Rate) and $39,600,000 locked for 180 days at
a base rate of 1.695% (59 basis points over Freddie Mac's Reference Rate). This
credit facility has a lower cost of borrowing as compared to the Operating
Partnership's unsecured credit facility. The credit agreements contain debt
covenants related to limitations on indebtedness and liabilities, maintenance of
minimum levels of consolidated earnings before depreciation, interest and
amortization and maintenance of minimum tangible net worth.

In addition, Fund I, the investment fund managed by the Operating
Partnership, has credit facility for an aggregate amount of $30,000,000. During
2003 the Fund reduced this credit facility from $125,000,000 to $30,000,000, and
matures in June 2004. The line bears interest at LIBOR plus 0.875%. As of
December 31 2003, the line had no balance outstanding on this line. The line
provides for debt covenants relating to limitations on mortgage
indebtedness.

In addition to the Operating Partnership's lines of credit, the Operating
Partnership had $739,129,000 of secured indebtedness at December 31, 2003. Such
indebtedness consisted of $663,833,000 in fixed rate debt with interest rates
varying from 5.5% to 8.2% and maturity dates ranging from 2005 to 2026. The
secured indebtedness also includes $75,296,000 of tax-exempt variable rate
demand bonds with interest rates paid during 2003 ranging from approximately
2.9% to 3.2% and maturity dates ranging from 2020 to 2032. The tax-exempt
variable rate demand bonds are subject to interest rates caps.

Pursuant to existing shelf registration statements, the Company has the
capacity to issue up to $219,455,250 of equity securities and the Operating
Partnership has the capacity to issue up to $250,000,000 of debt securities.

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

Financing and equity issuances.  During 2003, the Operating
Partnership undertook the following financing activities and equity issuances.

On July 30, 2003, in connection with the Operating Partnership's acquisition,
by merger, of John M. Sachs, Inc. ("Sachs") that was completed on
December 17, 2002, and under the terms of the merger agreement, a final analysis
was prepared, which indicated that the actual net liabilities of Sachs were less
than the net liabilities of Sachs estimated to be outstanding as of the merger
date.  Based on the final analysis and as a post-closing adjustment payment
pursuant to the merger agreement, the Operating Partnership made a final payment
of approximately $1,766,000 in cash and issued an additional 35,860 shares
of the Company's common stock to certain of the pre-merger shareholders of Sachs.

45

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On September 23, 2003, the Company issued 1,000,000 shares of its Series F
Cumulative Redeemable Preferred Stock at a fixed price of $24.664 per share, a
discount from the $25.00 per share liquidation value of the shares.  The shares
did not begin to accrue a dividend until November 25, 2003 and following that
date, pay quarterly distributions at an annualized rate of 7.8125% per year of
the liquidation value and will be redeemable at the Company's option on or after
September 23, 2008. The shares were issued pursuant to the Company's existing
shelf registration statement. Essex contributed the net proceeds from the
Series F Preferred Stock offering to the Operating Partnership and it is to
receive a preferred distribution from the Operating Partnership equal to the
quarterly dividends on the Series F Preferred Stock ("Series F Preferred
Distribution"). The Operating Partnership amortized the original discount
in connection with the contribution from Essex in the fourth quarter of 2003,
resulting in a charge of approximately $336,000. On November 24, 2003, the
Operating Partnership used the net proceeds from the contribution from Essex to
redeem all of the 9.125% Series C Cumulative Redeemable Preferred Units (the
"Series C Preferred Units"). In connection with this redemption,
the Operating Partnership incurred a non-cash charge of $625,000 related to
the write-off of the issuance costs.

On October 6, 2003, the Company sold 1.6 million newly issued shares of
common stock and received offering proceeds (before expenses) of
$60.67 per share, representing a 3.25% discount to the common stock's
closing price on September 30, 2003, the date of the underwriting agreement between the
Company and the underwriter, pursuant to which the shares were sold.
The shares were issued pursuant to the Company's
existing shelf registration statement. The proceeds of the offering were approximately
$97,072,000, which were contributed to the Operating Partnership.
Subsequent to the offering, the net proceeds
generated from the offering were used to acquire multifamily communities located
in the Company's targeted West Coast markets and for general corporate purposes,
including the repayment of debt and the funding of development activities.

In January 2004, the Operating Partnership restructured its
previously issued $50 million, 9.30% Series D Cumulative Redeemable Preferred
Units ("Series D Units"), and its previously issued $80 million,
7.875% Series B Cumulative Redeemable Preferred Units ("Series B
Units").  The existing distribution rate of 9.30% of the Series D Units
will continue until July 27, 2004 - the end of the current non-call period.  On
July 28, 2004, the distribution rate on the Series D Units will be reduced to
7.875%.  The date that the Series D Units can first be redeemed at the Operating
Partnership's option will be extended by six years to July 28, 2010.  The dates
that the Series B Units can first be redeemed at the Operating Partnership's
option will be extended from February 6, 2003 to December 31, 2009.

Operating Partnership Investments; Off-Balance Sheet Arrangements

The Operating Partnership invests in joint ventures, which generally
involve single multifamily property acquisitions. The Operating Partnership
accounts for these investments under the equity or consolidation methods of
accounting based on the voting control it exercises through its ownership
interests in these affiliates. Under the equity method of accounting, the
investment is carried at the cost of assets contributed or distributed, plus the
Operating Partnership's equity in undistributed earnings or losses since its
initial investment. The individual assets, liabilities, revenues and expenses of
the joint venture are not recorded in the Operating Partnership's consolidated
financial statements.

At December 31, 2003 and 2002, the Operating Partnership did not have any
other relationship with unconsolidated entities or financial partnerships, such
as entities often referred to as structured finance or special purpose entities,
which would have been established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited purposes. As such,
the Operating Partnership is not materially exposed to any financing, liquidity,
market or credit risk that could arise if the Operating Partnership had engaged
in such relationships.

Included in the Operating Partnership's investments accounted for under the
equity method investments are limited partnership interests in 17 partnerships
(Down REIT entities), which collectively own ten multifamily properties,
comprised of 1,831 units. These investments were made under arrangements whereby
Essex Management Corporation (EMC) became the general partner, the Operating
Partnership became a special limited partner, and the other limited partners
were granted rights of redemption for their interests. Such partners can request
to be redeemed and the Operating Partnership can elect, with certain
limitations, to redeem their rights for cash or by issuing shares of its common
stock on a one share per unit basis. Conversion values will be based on the
market value of the Company's common stock at the time of redemption multiplied
by the number of units stipulated under the above arrangements. The other
limited partners receive distributions based on the Company's current dividend
rate times the number of redemption shares. At December 31, 2003, the maximum
number of shares that could be required to meet redemption of these Down REIT
entities is 1,449,138. The equity in income or loss reported by the Operating
Partnership under the equity method of accounting for these down REIT entities
is the residual net income of these down REIT entities after income has been
allocated to the other limited partners equal to the distributions they
received.

46

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Contractual Obligations and Commercial Commitments

The following table summarizes the maturation or due dates of our
contractual obligations and other commitments at December 31, 2003, and the
effect such obligations could have on our liquidity and cash flow in future
periods:

`Less Than       2-3          4-5        Over 5
                                            1 Year        Years        Years        Years        Total
(In thousands)                            -----------  -----------  -----------  -----------  -----------
Mortgage notes payable.................. $     8,223  $    62,003  $   172,395  $   496,508  $   739,129
Lines of credit.........................      12,500           --           --       80,600       93,100
Development commitments(1)..............      17,900           --           --           --       17,900
Redevelopment commitments(2)............       1,930           --           --           --        1,930
Essex Apartment Value Fund, L.P.
   capital commitment...................       9,600           --           --           --        9,600
Mountain Vista, LLC captial commitment..       9,200           --           --           --        9,200
                                          -----------  -----------  -----------  -----------  -----------
                                         $    59,353  $    62,003  $   172,395  $   577,108  $   870,859
                                          ===========  ===========  ===========  ===========  ===========`

(1) 	$17,900 of these commitments relate to hard contracts as of December 31, 2003.
(2) 	$450 of these commitments relate to hard contracts as of
of December 31, 2003.

New Accounting Pronouncements Not Yet Adopted

In January 2003, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51." FIN 46 clarifies the application of Accounting Research
Bulletin (ARB) No. 51, "Consolidated Financial Statements" to variable interest entities
(VIEs) in which equity investors lack an essential characteristic of a controlling financial
interest or do not have sufficient equity investment at risk to permit the entity to finance
its activities without additional subordinated financial support from other parties. In
December 2003, the FASB completed deliberations of proposed modifications to FIN 46
(FIN 46 Revised) resulting in multiple effective dates based on the nature as well as the
creation of the VIE. VIEs created after January 31, 2003, but prior to January 1, 2004
may be accounted for either based on FIN 46 or FIN 46 Revised. However, FIN 46
Revised must be applied no later than the Operating Partnership's first quarter of 2004.
VIEs created after January 1, 2004 must be accounted for under FIN 46 Revised. Special
Purpose Entities (SPEs) created prior to February 1, 2003 may be accounted for under
FIN 46 or FIN 46 Revised but no later than the Operating Partnership's quarter ended
December 31, 2003. Non-SPEs created prior to February 1, 2003 are to be accounted for
under FIN 46 Revised no later than the first quarter of 2004. The Operating Partnership
has not formed nor is a party to any SPEs. Under FIN 46 Revised, the disclosure
requirements are effective for all financial statements initially issued after December 31,
2003. Certain of the entities through which and with which we conduct business, have
been deemed to be VIEs under the provisions of FIN 46 Revised. Based on our analysis
of FIN 46 Revised, we expect to consolidate Essex Management Corporation (EMC) and
Essex Fidelity I Corporation (EFC), effective March 31, 2004, as we are the primary
beneficiary of these VIEs. The total assets and liabilities of EMC and EFC, net of
intercompany eliminations, were approximately $23,300,000 and $9,000,000,
respectively, at December 31, 2003.

It is reasonably possible that certain other entities through which and with which the
Operating Partnership conducts business, including those described in Notes 3(c), 4, 5
and 9 of the consolidated financial statements will be deemed to be VIEs under the
provisions of FIN 46 Revised and that we may be the primary beneficiary. The Operating
Partnership is continuing its evaluation of these other various entities, which currently it
is uncertain if such entities would result in consolidation. If such other entities are
required to be consolidated pursuant to FIN 46 Revised, the total assets and liabilities, net
of intercompany balances would be $214,300,000 and $198,400,000 and an estimated
maximum exposure to loss would be equal to the Operating Partnership's investments
and commitments to invest in these entities of $15,600,000, as of December 31, 2003.The
disclosures provided reflect management's understanding and analysis of FIN 46 Revised
based upon information currently available. The Operating Partnership continues to
evaluate and analyze the complex terms of this FIN 46 Revised and the evaluation of the
impact of FIN 46 Revised on the Operating Partnership's consolidated financial
statements is ongoing and is subject to change in the event additional interpretive
guidance is provided by the FASB or others.

47

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In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."
This statement establishes standards for the classification and measurement of
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 requires that an issuer classify a financial instrument
that is within its scope as a liability (or an asset in some circumstances).
Many of those instruments were previously classified as equity. This statement
is effective for financial instruments entered into or modified after May 31,
2003 and, otherwise, is effective at the beginning of the first interim period
beginning after June 15, 2003. Certain provisions have been deferred
indefinitely by the FASB under FSP 150-3.  This standard did not have a material
impact on our consolidated financial position or results of operations.

Potential Factors Affecting Future Operating Results

Many factors affect the Operating Partnership's actual financial
performance and may cause the Operating Partnership's future results to be
different from past performance or trends. These factors include those set
fourth under the caption "Risk Factors" in Item I of this Annual
Report on Form 10-K and the following:

Economic Environment

Both the national economy and the economies of the western states in
which the Operating Partnership owns, manages and develops properties have been
and continue to be in an economic downturn. This has resulted in increased
concessions and reductions in market rental rates.

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

Interest Rate Fluctuations

The Operating Partnership monitors changes in interest rates and
believes that it is well positioned from both a liquidity and interest rate risk
perspective. However, current interest rates are at historic lows and
potentially could increase rapidly to levels more in line with historic levels.
The immediate effect of significant and rapid interest rate increases would
result in higher interest expense on the Operating Partnership's variable
interest rate debt (see Item 7A and Notes 7 and 8 to consolidated financial
statements). The effect of prolonged interest rate increases could negatively
impact the Operating Partnership's ability to make acquisitions and develop
properties at economic returns on investment and the Operating Partnership's
ability to refinance existing borrowings at acceptable rates.

48

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Inflation

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

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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

The Operating Partnership's interest rate risk is monitored using a variety
of techniques. The table below presents the principal amounts and weighted
average interest rates by year of expected maturity to evaluate the expected
cash flows.
Management believes that the carrying amounts of its LIBOR debt approximates
fair value as of December 31, 2003 because interest rates, yields and other
terms for these instruments are consistent with yields and other terms
currently available to the Operating Partnership for similar instruments.
Management has estimated that the fair value of the Operating Partnership's
$663,833,000 of fixed rate mortgage notes payable at December 31, 2003 is
approximately $632,111,000 based on the terms of existing mortgage notes
payable compared to those available in the marketplace.

`For the Years Ended December 31
                            ----------------------------------------------------------------------------------
                             2004      2005     2006     2007     2008    Thereafter      Total    Fair value
(In thousands)              -------  --------  -------  -------  -------  ---------     ---------  -----------
Fixed rate debt........... $ 8,223  $ 41,300  $20,703  $63,448  $108,947 $ 421,212     $ 663,833  $   632,111
Average interest rate.....     6.8%      6.8%     6.8%     6.7%      6.7%      6.7%
Variable rate LIBOR debt.. $12,500  $     --  $    --  $    --  $    --  $ 155,896 (1) $ 168,396  $   168,396
Average interest rate.....     2.3%       --       --       --       --        2.1%`

(1) 	$75,296 subject to interest rate caps.

The table incorporates only those exposures that exist as of December 31,
2003; it does not consider those exposures or positions that could arise after
that date. As a result, our ultimate realized gain or loss, with respect to
interest rate fluctuations, would depend on the exposures that arise during the
period, our hedging strategies at the time, and interest rates.

49

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Item 8. Financial Statements and Supplemental Data

The response to this item is submitted as a separate section of this Form
10-K. See Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

Item 9A. Controls and Procedures

As of December 31, 2003, we carried out an evaluation, under the
supervision and with the participation of management, including our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures pursuant to Rules
13a-15 of the Securities Exchange Act of 1934, as amended.  Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective in timely alerting
management to material information relating to the Operating Partnership that is
required to be included in our periodic filings with the Securities and Exchange
Commission.  There were no changes in the Operating
Partnership's internal control over financial reporting, that occurred during
the quarter ended December 31, 2003, that have materially affected, or are
reasonably likely to materially affect, the Operating Partnership's internal
control over financial reporting.

50

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PART III



Item 10. Directors and Executive Officers of the Registrant

The information required by Item 10 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on May 11, 2004.

Item 11. Executive Compensation

The information required by Item 11 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on May 11, 2004.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information required by Item 12 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on May 11, 2004.

Item 13. Certain Relationships and Related Transactions

The information required by Item 13 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on May 11, 2004.

Item 14. Principal Accounting Fees and Services

The information required by Item 14 is incorporated by reference from the
Company's definitive proxy statement for its annual stockholders' meeting to be
held on May 11, 2004.

51

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Item 15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K



|(A) | Financial Statements                                                                                                                                                | Page
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|(1) | Consolidated Financial Statements                                                                                                                                   |     
|    | Independent Auditor's Report                                                                                                                                        | F-1 
|    | Balance Sheet:
As of December 31, 2003 and December 31, 2002                                                                                                        | F-2 
|    | Statements of Operations:
Years ended December 31, 2003,2002 and 2001                                                                                               | F-3 
|    | Statements of Stockholders' Equity:
Years ended December 31, 2003,2002 and 2001                                                                                     | F-4 
|    | Statements of Cash Flows:
Years ended December 31, 2003,2002 and 2001                                                                                               | F-5 
|    | Notes to the Consolidated Financial Statements                                                                                                                      | F-7 
|(2) | Financial Statement Schedule - Schedule III - Real Estate
and Accumulated Depreciation as of December 31, 2003                                                      | F-31
|(3) | See the Exhibit Index immediately following the signature page and certifications for a list
of exhibits filed or incorporated by reference as part of this report. |     

(B) Reports on Form 8-K

None

(C) Exhibits

The Operating Partnership hereby files, as exhibits to this Form 10-K, those
exhibits listed on the Exhibit Index referenced in Item 15(A)(3) above.

52

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Independent Auditors' Report

The Partners
Essex Portfolio, L.P.:

We have audited the accompanying consolidated balance sheets of Essex
Portfolio, L.P. and subsidiaries as of December 31, 2003 and 2002, and the
related consolidated statements of operations, partners' capital, and cash flows
for each of the years in the three-year period ended December 31, 2003. In
connection with our audits of the consolidated financial statements, we have
also audited the related financial statement schedule of Real Estate and
Accumulated Depreciation. These consolidated financial statements and the
financial statement schedule are the responsibility of the management of Essex
Portfolio, L.P. Our responsibility is to express an opinion on these
consolidated financial statements and the financial statement schedule based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Essex
Portfolio, L.P. and subsidiaries as of December 31, 2003 and 2002, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2003, in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, the related financial statement schedule when considered in relation to
the consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

/s/ KPMG LLP

KPMG LLP



San Francisco, California
February 4, 2004, except Note 18,
    as to which the date is
    February 27, 2004

F-1

---



ESSEX PORTFOLIO L.P. AND SUBSIDIARIES

                          Consolidated Balance Sheets

                          December 31, 2003 and 2002
                         (Dollars in thousands)



`2003         2002
                                                             -----------  -----------
                          ASSETS
                          ------
Real estate:
   Rental properties:
       Land and land improvements.......................... $   422,549  $   368,712
       Buildings and improvements..........................   1,310,371    1,147,244
                                                             -----------  -----------
                                                              1,732,920    1,515,956
   Less accumulated depreciation...........................    (241,235)    (191,821)
                                                             -----------  -----------
                                                              1,491,685    1,324,135
   Investments.............................................      93,395       61,212
   Real estate under development...........................      52,439      143,756
                                                             -----------  -----------
                                                              1,637,519    1,529,103
Cash and cash equivalents--unrestricted....................       9,146        8,562
Cash and cash equivalents--restricted cash.................       6,168        9,265
Notes receivable from investees and other related parties..      19,007       24,081
Notes and other receivables................................      33,025       31,318
Prepaid expenses and other assets..........................      17,002       11,133
Deferred charges, net......................................       6,697        6,272
                                                             -----------  -----------
          Total assets..................................... $ 1,728,564  $ 1,619,734
                                                             ===========  ===========


             LIABILITIES AND PARTNERS' CAPITAL
           ------------------------------------
Mortgage notes payable..................................... $   739,129  $   677,563
Lines of credit............................................      93,100      126,500
Accounts payable and accrued liabilities...................      32,648       35,791
Distributions payable......................................      21,443       17,879
Other liabilities..........................................      15,886        8,157
                                                             -----------  -----------
          Total liabilities................................     902,206      865,890
Minority interests.........................................       5,716        5,727

Partners' capital:
   General Partner:
     Common equity.........................................     565,289      491,314
     Preferred equity (liquidation value of $25,000 and
          zero, respectively)..............................      24,412           --
                                                             -----------  -----------
                                                                589,701      491,314
                                                             -----------  -----------

   Limited Partners:
     Common equity.........................................      50,826       52,313
     Preferred equity (liquidation value of $185,000 and
          $210,000, respectively)..........................     180,115      204,490
                                                             -----------  -----------
                                                                230,941      256,803
                                                             -----------  -----------
          Total partners' capital..........................     820,642      748,117
                                                             -----------  -----------
Commitments and contingencies

          Total liabilities and partners' capital..........$  1,728,564  $ 1,619,734
                                                             ===========  ===========`

See accompanying notes to consolidated financial statements.

F-2

---



ESSEX PORTFOLIO L.P. AND SUBSIDIARIES

                     Consolidated Statements of Operations

                 Years ended December 31, 2003, 2002 and 2001
               (Dollars in thousands, except per unit and unit amounts)



`2003         2002         2001
                                                                             -----------  -----------  -----------
Revenues:
   Rental.................................................................. $   215,699  $   171,909  $   175,894
   Other property..........................................................       7,169        5,356        5,493
                                                                             -----------  -----------  -----------
      Total property revenues..............................................     222,868      177,265      181,387
   Interest and other......................................................      11,582       22,857       22,152
                                                                             -----------  -----------  -----------
      Total revenues.......................................................     234,450      200,122      203,539
                                                                             -----------  -----------  -----------
Expenses:
   Property operating expenses:
     Maintenance and repairs...............................................      16,830       10,971       12,442
     Real estate taxes.....................................................      17,752       12,707       12,151
     Utilities.............................................................      12,312        8,826        8,620
     Administrative........................................................      19,957       14,963       15,087
     Advertising...........................................................       3,842        2,932        2,841
     Insurance.............................................................       3,344        2,055        1,136
     Depreciation and amortization.........................................      49,409       37,042       35,915
                                                                             -----------  -----------  -----------
      Total property operating expenses....................................     123,446       89,496       88,192
   Interest................................................................      42,751       35,012       38,746
   Amortization of deferred financing costs................................       1,008          605          657
   General and administrative..............................................       7,106        6,291        7,498
                                                                             -----------  -----------  -----------
      Total expenses.......................................................     174,311      131,404      135,093
                                                                             -----------  -----------  -----------
      Income from continuing operations before gain on sale of real
        estate, minority interests, and discontinued operations............      60,139       68,718       68,446
Gain on the sales of real estate...........................................          --           --        3,788
Minority interests.........................................................        (122)        (135)        (196)
                                                                             -----------  -----------  -----------
      Income from continuing operations....................................      60,017       68,583       72,038
                                                                             -----------  -----------  -----------
Discontinued operations:
   Operating income from real estate sold..................................          --          253          710
   Gain on sale of real estate.............................................          --        9,051           --
                                                                             -----------  -----------  -----------
      Income from discontinued operations..................................          --        9,304          710
                                                                             -----------  -----------  -----------
      Net income...........................................................      60,017       77,887       72,748
Write off of Series C preferred units offering costs.......................        (625)          --           --
Amortization of discount on general partner preferred equity...............        (336)          --           --
Preferred return to general partner - Series F.............................        (195)          --           --
Dividends on preferred units - limited partners............................     (17,996)     (18,319)     (18,319)
                                                                             -----------  -----------  -----------
      Net income available to common unitholders........................... $    40,865  $    59,568  $    54,429
                                                                             ===========  ===========  ===========
Per common Operating Partnership unit data:
   Basic:
     Income from continuing operations available to common units........... $      1.72  $      2.41  $      2.60
     Income from discontinued operations...................................          --         0.45         0.03
                                                                             -----------  -----------  -----------
       Net income.......................................................... $      1.72  $      2.86  $      2.63
                                                                             ===========  ===========  ===========
   Weighted average number of common partnership units outstanding
       during the year.....................................................  23,737,077   20,812,272   20,688,246
                                                                             ===========  ===========  ===========
   Diluted:
     Income from continuing operations available to common units........... $      1.71  $      2.39  $      2.56
     Income from discontinued operations...................................          --         0.45         0.03
                                                                             -----------  -----------  -----------
       Net income.......................................................... $      1.71  $      2.84  $      2.59
                                                                             ===========  ===========  ===========
   Weighted average number of common partnership units outstanding
       during the year.....................................................  23,947,930   21,007,501   21,004,707
                                                                             ===========  ===========  ===========`

See accompanying notes to consolidated financial statements.

F-3

---



ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

                 Consolidated Statements of Partners' Capital

                Years ended December 31, 2003, 2002 and 2001

                         (Dollars and units in thousands)

`General Partner                  Limited Partners
                                       -------------------------------  -------------------------------
                                                             Preferred                        Preferred
                                       Common Equity          Equity    Common Equity          Equity
                                       --------------------  ---------  --------------------  ---------
                                         Units     Amount     Amount      Units     Amount     Amount       Total
                                       ---------  ---------  ---------  ---------  ---------  ---------   ---------
Balances at December 31, 2000.........   18,417  $ 391,675  $      --      2,129  $  33,276  $ 204,490   $ 629,441

Issuance of common units under
   stock-based compensation plan......      112      2,906         --         --         --         --       2,906
Shares purchased by
   Operating Partnership..............     (101)    (4,822)        --         --         --         --      (4,822)
Redemption of limited partner
   common units.......................       --         --         --        (52)    (2,652)        --      (2,652)
Issuance of limited partner
   common units.......................       --         --         --        209     10,381         --      10,381
Reallocation of partners' capital.....       --     (4,925)        --         --      4,925         --          --
Net income............................       --     48,545         --         --      5,884     18,319      72,748
Partners' distributions...............       --    (51,705)        --         --     (6,251)   (18,319)    (76,275)
                                       ---------  ---------  ---------  ---------  ---------  ---------   ---------
Balances at December 31, 2001.........   18,428    381,674         --      2,286     45,563    204,490     631,727

Issuance of common units under
   stock-based compensation plan......      246      3,376         --         --         --         --       3,376
Shares purchased by
   Operating Partnership..............     (411)   (19,715)        --         --         --         --     (19,715)
Redemption of limited partner
   common units.......................       --         --         --         (6)      (309)        --        (309)
Vested series Z incentive units.......       --         --         --         40        647         --         647
Issuance of common units..............    2,720    136,809         --         --         --         --     136,809
Reallocation of partners' capital.....       --     (6,937)        --         --      6,937         --          --
Net income............................       --     52,874         --         --      6,694     18,319      77,887
Partners' distributions...............       --    (56,767)        --         --     (7,219)   (18,319)    (82,305)
                                       ---------  ---------  ---------  ---------  ---------  ---------   ---------
Balances at December 31, 2002.........   20,983    491,314         --      2,320     52,313    204,490     748,117

Issuance of common units under
   stock-based compensation plan......      207      7,323         --         --         --         --       7,323
Issuance of general partner
   common units.......................    1,636     99,202         --         --         --         --      99,202
Contribution of general partner
   preferred equity...................       --         --     24,076         --         --         --      24,076
Amortization of discount on general
   partner preferred equity...........       --       (302)       336         --        (34)        --          --
Redemption of limited partner
   common units.......................       --         --         --        (15)      (769)        --        (769)
Redemption of Series C
   preferred units....................       --         --         --         --         --    (25,000)    (25,000)
Write off of Series C preferred units
   offering costs.....................       --       (562)        --         --        (63)       625          --
Vested series Z incentive units.......       --         --         --         16        259         --         259
Reallocation of partners' capital.....       --     (2,203)        --         --      2,203         --          --
Net income............................       --     37,655        195         --      4,171     17,996      60,017
Partners' distributions...............       --    (67,138)      (195)        --     (7,254)   (17,996)    (92,583)
                                       ---------  ---------  ---------  ---------  ---------  ---------   ---------
Balances at December 31, 2003.........   22,826  $ 565,289  $  24,412      2,321  $  50,826  $ 180,115   $ 820,642
                                       =========  =========  =========  =========  =========  =========   =========`

See accompanying notes to consolidated unaudited financial statements.

F-4

---



ESSEX POORTFOLIO, L.P. AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows

                 Years ended December 31, 2003, 2002 and 2001
                            (Dollars in thousands)

`2003       2002       2001
                                                                           ---------  ---------  ---------
Cash flows from operating activities:
   Net income............................................................ $  60,017  $  77,887  $  72,748
   Minority interests....................................................       122        135        196
   Adjustments to reconcile net income to net
    cash provided by operating activities:
     Gain on the sales of real estate....................................        --     (9,051)    (3,788)
     The Operating Partnership's share of gain on the sales of
        co-investment assets.............................................        --     (1,391)         --
     Equity in income of limited partnerships............................    (2,203)    (6,185)    (3,854)
     Depreciation and amortization.......................................    49,409     37,236     36,295
     Amortization of deferred financing costs............................     1,008        605        657
     Changes in operating assets and liabilities, net of effects of
      Sachs merger in 2002:
        Prepaid expenses and other assets................................    (2,769)    (2,381)       955
        Accounts payable and accrued liabilities.........................    (2,763)    (9,946)    (7,386)
        Other liabilities................................................       499     (1,179)        44
                                                                           ---------  ---------  ---------
           Net cash provided by operating activities.....................   103,320     85,730     95,867
                                                                           ---------  ---------  ---------
Cash flows from investing activities:
   Additions to real estate:
        Acquisitions of real estate......................................   (65,607)    (9,323)    (6,665)
        Acquisition of Sachs' Portfolio..................................    (1,766)   (96,637)         --
        Improvements to recent acquisitions..............................   (11,131)    (1,422)    (4,876)
        Redevelopment....................................................    (3,329)    (7,739)    (5,094)
        Revenue generating capital expenditures..........................      (170)    (1,040)       (52)
        Non-revenue generating capital expenditures......................    (7,540)    (6,145)    (5,481)
   Contribution of real estate to corporate investee.....................         --         --    21,005
   Decrease in restricted cash...........................................     3,097      7,898      1,802
   Additions to notes receivable from investees,
      other related parties and other receivables........................   (16,573)    (5,478)   (42,766)
   Repayments of notes from investees, other
      related parties and other receivables..............................    16,290     44,864     56,640
   Net distribution from (contribution) to investments in
      corporations and limited partnerships..............................   (28,645)    41,221    (25,352)
   Additions to real estate under development............................   (27,758)   (51,917)   (49,965)
                                                                           ---------  ---------  ---------
           Net cash used in investing activities.........................  (143,132)   (85,718)   (60,804)
                                                                           ---------  ---------  ---------
Cash flows from financing activities:
   Proceeds from mortgage and other notes payable and lines of credit....   298,158    221,640    252,153
   Repayment of mortgage and other notes payable and lines of credit.....  (269,992)  (120,877)  (215,172)
   Additions to deferred charges.........................................    (1,758)    (1,204)       (43)
   Net proceeds from stock options exercised.............................     6,865      3,376      2,906
   Issuance of common units to general partner...........................    97,072         --         --
   Issuance of preferred equity to general partner.......................    24,664         --         --
   General partner shares purchased by limited partners..................        --    (19,715)    (4,822)
   Redemption of Series C Preferred units................................   (25,000)        --         --
   Redemption of limited partner units...................................      (769)      (309)    (2,650)
   Contributions from minority interest partners.........................        --        (14)     6,660
   Distributions to limited partners and minority interest ..............   (20,467)   (25,184)   (24,268)
   Distributions to general partner......................................   (68,377)   (55,603)   (49,987)
                                                                           ---------  ---------  ---------
           Net cash provided by (used in) financing activities...........    40,396      2,110    (35,223)
                                                                           ---------  ---------  ---------
Net increase (decrease) in cash and cash equivalents.....................       584      2,122       (160)
Cash and cash equivalents at beginning of year...........................     8,562      6,440      6,600
                                                                           ---------  ---------  ---------
Cash and cash equivalents at end of year................................. $   9,146  $   8,562  $   6,440
                                                                           =========  =========  =========`

See accompanying notes to consolidated financial statements.          (continued)

F-5

---



ESSEX POORTFOLIO, L.P. AND SUBSIDIARIES

                     Consolidated Statements of Cash Flows

                 Years ended December 31, 2003, 2002 and 2001
                            (Dollars in thousands)

`Supplemental disclosure of cash flow information:
   Cash paid for interest, net of $4,084, $6,139 and $3,917
    capitalized in 2003, 2002 and 2001, respectively..................... $  38,666  $  29,636  $  34,895
                                                                           =========  =========  =========
Supplemental disclosure of noncash investing and
 financing activities:
   Real estate under development transferred to rental properties........ $ 124,459  $       -- $       --
                                                                           =========  =========  =========
   Mortgage notes payable assumed in connection
     with the purchase of real estate.................................... $       -- $       -- $   6,144
                                                                           =========  =========  =========
   Issuance of Operating Partnership units in
     connection with the purchase of real estate......................... $       -- $       -- $  10,381
                                                                           =========  =========  =========
   Capitalized costs relating to arbitration agreement in
     connection with the purchase of real estate......................... $   7,200  $       -- $       --
                                                                           =========  =========  =========
   Consolidation of previously unconsolidated investment................. $       -- $       -- $   8,087
                                                                           =========  =========  =========
   Common stock issued pursuant to phantom stock plan.................... $     458  $       -- $       --
                                                                           =========  =========  =========
   Exchange of notes receivable for investment........................... $       -- $       -- $   8,347
                                                                           =========  =========  =========
   Exchange of investment for note receivable from investee.............. $       -- $       -- $   1,929
                                                                           =========  =========  =========
   Contribution of real estate in exchange for notes
     receivable and investments.......................................... $       -- $       -- $  22,463
                                                                           =========  =========  =========
   Receipt of note receivable from third party in
    exchange for the following:
      Note receivable from investee...................................... $       -- $  34,000  $       --
      Accrued interest on note receivable from investee..................         --     2,393          --
      Investments........................................................         --     8,990          --
      Other receivables from investee....................................         --       117          --
      Less cash received from investee...................................         --    (5,500)         --
                                                                           ---------  ---------  ---------
                                                                          $       -- $  40,000  $       --
                                                                           =========  =========  =========
    Proceeds from disposition of real estate held by
      exchange facilitator............................................... $       -- $  19,477  $       --
                                                                           =========  =========  =========
    Additional investment in limited partnership:
      Investments........................................................ $       -- $   3,681  $       --
      Accounts payable...................................................         --    (3,681)         --
                                                                           ---------  ---------  ---------
                                                                          $       -- $       -- $       --
                                                                           =========  =========  =========
   Real estate assets acquired due to merger:
      Real estate........................................................ $   3,970  $ 306,708  $       --
      Prepaid expenses...................................................         --     2,053          --
      Deferred charges...................................................         --       490          --
      Notes payable......................................................         --   (64,640)         --
      Accounts payable and accrued liabilities...........................         --    (8,411)         --
      Other liabilities..................................................         --    (2,754)         --
      Additional paid in capital.........................................    (2,170)  (136,809)         --
                                                                           ---------  ---------  ---------
                                                                          $   1,800  $  96,637  $       --
                                                                           =========  =========  =========`

See accompanying notes to consolidated financial statements.

F-6

---



ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003, 2002 and 2001
(Dollars in thousands, except for per share and per unit amounts)

(1) Organization and Basis of Presentation

Essex Portfolio, L.P. (the Operating Partnership) was formed in March
1994 and commenced operations on June 13, 1994, when Essex Property Trust, Inc.
(the Company), the general partner in the Operating Partnership (the General
Partner), completed its initial public offering (the Offering) in which it
issued 6,275,000 shares of common stock at $19.50 per share. The net proceeds of
the Offering of $112,070 were used by the General Partner to acquire a 77.2%
interest in the Operating Partnership. The Operating Partnership holds the
assets and liabilities and conducts the operating activities of the Company. The
Company has elected to be treated as a real estate investment trust (REIT) under
the Internal Revenue Code of 1986 (the Code), as amended.

The limited partners own an aggregate 9.2% interest in the Operating
Partnership as of December 31, 2003. The limited partners may convert their
interests into shares of common stock of the Company or cash (based upon the
trading price of the common stock at the conversion date). The Company has
reserved 2,280,304 shares of common stock for such conversions. These conversion
rights may be exercised by the limited partners at any time through 2024.

The consolidated financial statements include the financial statements of
Essex Portfolio, L.P. and the financial statements of certain limited
partnerships which own multifamily properties in which the Operating Partnership
has a controlling financial interest. Such limited partnerships are managed by
the Operating Partnership and are controlled by the Operating Partnership as the
majority limited partner pursuant to the terms of the respective partnership
agreement.

On December 17, 2002, the Operating Partnership acquired, by merger, John M.
Sachs, Inc. ("Sachs Portfolio") resulting in the acquisition of its
real estate portfolio, which consists of 20 multifamily properties, five
recreational vehicle parks, two manufactured housing communities and two small
office buildings. The cost of the transaction was $306,700 and was structured as
a tax-free reorganization whereby the Operating Partnership: (i) issued
2,719,875 units of the Operating Partnership's common units valued at $136,800,
(ii) assumed mortgages on four of the newly acquired properties for
approximately $64,600 with a fixed interest rate of 5.51%, maturing in January
2013, (iii) assumed and repaid unsecured liabilities in the amount of
approximately $33,000, and (iv) paid the balance in cash of $72,200. The cash
portion was funded through four new non-recourse mortgages on four previously
unencumbered properties, with a weighted average interest rate of 5.64%,
maturing in January 2013 and draws upon new and existing lines of credit. The
Operating Partnership accounted for this transaction using the purchase method
of accounting; which resulted in the allocation of the purchase price to the
assets and liabilities acquired based on their fair values.  The fair value of
assets and liabilities were based on management's estimates.  No goodwill was
recognized in connection with this purchase.  The Operating Partnership's
results of operations for the period December 17, 2002 through December 31, 2002
include the Sachs Portfolio. On July 30, 2003, and under terms of the merger
agreement, a final analysis was prepared, which indicated that the actual net
liabilities of Sachs were less than the net liabilities of Sachs estimated to be
outstanding as of the merger date.  Based on this final analysis and as a post-
closing adjustment payment pursuant to the merger agreement, the Operating
Partnership made a final payment of $1,800 in cash and issued an additional
35,860 shares of the Company's common stock valued at $2,170 to certain of the
pre-merger shareholders of Sachs.

F-7

---



Unaudited pro forma information reflecting the acquisition of the Sachs
Portfolio is presented in the following table. The amounts included therein
assume that the acquisition had taken place at the beginning of the year.

`For the years ended December
                                   --------------------------
                                       2002          2001
                                   ------------  ------------
Total revenues................... $    239,394  $    239,722
Total expenses...................      165,489       167,812
Gain the on sales of real estate.           --         3,788
Minority interests...............         (135)         (196)
Dividends on preferred units.....      (18,319)      (18,319)
Income from continuing operations
  available to common units......       55,451        57,183
Basic earnings per unit..........         2.37          2.44
Diluted earnings per unit........         2.35          2.41

Weighted average number of proforma
  units outstanding:
    Basic.........................  23,427,873    23,408,121
    Diluted.......................  23,623,102    23,724,582`

As of December 31, 2003, the Operating Partnership operates and has ownership
interests in 121 multifamily properties (containing 26,012 units), five
recreational vehicle parks (containing 1,717 spaces), four office buildings
(totaling approximately 63,540 square feet), and two manufactured housing
communities (containing 607 sites) (collectively, the Properties). The
Properties are located in Southern California (Los Angeles, Ventura, Orange, and
San Diego counties), Northern California (the San Francisco Bay Area), the
Pacific Northwest (Seattle, Washington, and Portland, Oregon metropolitan areas)
and other areas (Hemet, California, Las Vegas, Nevada and Houston, Texas).

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

(2) Summary of Significant Accounting Policies

(a) Critical Accounting Policies and Estimates

The preparation of consolidated financial statements, in accordance
with accounting principles generally accepted in the United States of America,
requires the Operating Partnership to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses and related
disclosures of contingent assets and liabilities. On an on-going basis, the
Operating Partnership evaluates its estimates, including those related to
acquiring, developing and assessing the carrying values of its real estate
properties, its investments in and advances to joint ventures and affiliates,
and its notes receivable.
The Operating Partnership bases its estimates on historical
experience, current market conditions, and on various other assumptions that are
believed to be reasonable under the circumstances. Actual results may vary from
those estimates and those estimates could be different under different
assumptions or conditions.

(b) Real Estate Rental Properties and Discontinued Operations

Rental properties are recorded at cost less accumulated depreciation.
Depreciation on rental properties has been provided over estimated useful lives
ranging from 3 to 30 years using the straight-line method. Development costs
include acquisition, direct and indirect construction costs, interest and real
estate taxes incurred during the construction and property stabilization
periods.

Maintenance and repair expenses that do not add to the value or prolong the
useful life of the property are expensed as incurred. Asset replacements and
improvements are capitalized and depreciated over their estimated useful lives.

F-8

---



Certain rental properties are pledged as collateral for the related mortgage
notes payable and secured line of credit.

In accordance with Financial Accounting Standards Board's (FASB) Statement of
Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," the Operating Partnership allocates the purchase price of
real estate to land and building, and identifiable intangible assets, such as
the value of above, below and at-market in-place leases. The values of the above
and below market leases are amortized and recorded as either a decrease (in the
case of above market leases) or an increase (in the case of below market leases)
to rental revenue over the remaining term of the associated leases acquired.
Acquired at-market leases are amortized to amortization expense over the term
the Operating Partnership expects to retain the acquired tenant, which is
generally 20 months.

In accordance with SFAS 141 and its applicability to acquired in-place leases,
we perform the following procedures for properties we acquire:

1. estimate the value of the real estate "as if vacant" as of the
acquisition date;

As of December 31, 2003 the carrying value of acquired at-market in-place leases, net
of accumulated amortization of $1,413 was $1,687. Amortization expense of
acquired at-market in-place leases was $1,413 for the year ended December 31,
2003. The majority of the remaining unamortized at-market in-place leases as of
December 31, 2003 will be amortized to expense in 2004.

Whenever events or changes in circumstances indicate that the carrying amount
of a property held for investment or held for sale may not be fully recoverable,
the carrying amount will be evaluated. If the sum of the property's expected
future cash flows (undiscounted and without interest charges) is less than the
carrying amount (including intangible assets) of the property, then the
Operating Partnership will recognize an impairment loss equal to the excess of
the carrying amount over the fair value of the property.

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

(c) Investments and Joint Ventures

The Operating Partnership owns investments in joint ventures and
affiliates and has significant influence but does not have voting control.
Therefore, we account for our interest using the equity method of accounting.
Under the equity method of accounting, the investment is carried at the cost of
assets contributed or distributed, plus the Operating Partnership's equity in
undistributed earnings or losses since its initial investment. The Operating
Partnership's share of equity in income and gains on sales of real estate are
included in other income in the accompanying consolidated statement of
operations.

(d) Revenues and Gains on Sale of Real Estate

Rental revenue is reported on the accrual basis of accounting.

Revenue from tenants renting or leasing apartment units is recorded when due
from tenants and is recognized monthly as it is earned, which is not materially
different than on a straight-line basis. Apartment units are rented under short-
term leases (generally, lease terms of 6 to 12 months) and may provide for no
rent for the first month, depending on the market conditions and leasing
practices of our competitors in each sub-market at the time the leases are
executed.

The Operating Partnership recognizes gains on sales of real estate when a
contract is in place, a closing has taken place, the buyer's initial and
continuing investment is adequate to demonstrate a commitment to pay for the
property and the Operating Partnership does not have a substantial continuing
involvement in the property.

F-9

---



(e) Income Taxes

No provision for income taxes has been made as the Operating
Partnership's taxable income or loss is reportable on the tax returns of the
individual partners based on their proportionate interest in the Operating
Partnership.

(f) Notes Receivable and Interest Income

Notes receivable relate to real estate financing arrangements that
exceed one year. They bear interest at a market rate based on the borrower's
credit quality and are recorded at face value. Interest is recognized over the
life of the note. The Operating Partnership requires collateral for the notes.

A note is considered impaired pursuant to FASB's SFAS No. 114,
Accounting by Creditors for Impairment of a Loan. Pursuant to SFAS No. 114,
a note is impaired if it is probable that the Operating Partnership will not
collect all principal and interest contractually due. The impairment is measured
based on the present value of expected future cash flows discounted at the
note's effective interest rate. The Operating Partnership does not accrue
interest when a note is considered impaired. When ultimate collectibility of the
principal balance of the impaired note is in doubt, all cash receipts on
impaired notes are applied to reduce the principal amount of such notes until
the principal has been recovered and are recognized as interest income,
thereafter. See note 5 for note receivable in which the Operating Partnership
has ceased accrual of interest income.

(g) Interest Rate Protection, Swap, and Forward Contracts

The Operating Partnership has from time to time used interest rate
protection, swap and forward contracts to manage its interest rate exposure on
current or identified future debt transactions. The Operating Partnership
accounts for such derivative contracts using SFAS No. 133. Under SFAS No. 133
derivative instruments are required to be included in the balance sheet at fair
value. The changes in the fair value of the derivatives are accounted for
depending on the use of the derivative and whether it has been designated and
qualifies as a part of a hedging relationship. If the hedged exposure is a cash
flow exposure, changes in fair value of the effective portion of the gain or
loss on the derivative instrument are reported initially as a component of other
comprehensive income and subsequently reclassified into earnings when the
forecasted transaction affects earnings. Changes in the ineffective portion of
the gain or loss are reported in earnings immediately.

(h) Deferred Charges

Deferred charges are principally comprised of loan fees and related
costs which are amortized over the terms of the related borrowing in a manner
which approximates the effective interest method.

(i) Interest

The Operating Partnership capitalized $4,084, $6,139, and $3,917 of
interest related to the development of real estate during 2003, 2002, and 2001,
respectively.

(j) Cash Equivalents and Restricted Cash

Highly liquid investments with original maturities of three months or
less when purchased are classified as cash equivalents. Restricted cash relates
to reserve requirements in connection with the Operating Partnership's tax-
exempt variable rate bond financings.

F-10

---



(k) Stock-based Compensation

The Company applies APB Opinion No. 25 (APB 25) and related
interpretations in accounting for its stock-based compensation plans granted to
employees and directors of the Operating Partnership. Under APB 25, no
compensation cost has been recognized for stock options granted to employees and
directors since all such stock options were granted with an exercise price equal
to the fair market value of the underlying common stock. For the Operating
Partnership's Series Z Incentive Plan and Phantom Stock Plan (See note 12),
compensation expense recognized during the years ended December 31, 2003, 2002,
and 2001 was $407, $911, and $327, respectively. Had compensation cost for these
stock options and the Operating Partnership's other plans been determined based
on the fair value at the grant dates consistent with the fair value method
pursuant to SFAS 123, the Operating Partnership's net income applicable to
common units for the years ended December 31, 2003, 2002, and 2001 would have
been reduced to the pro forma amounts indicated below:

`2003         2002        2001
                                             ------------  ----------  ----------
Net income available to common units:
    As reported............................ $     40,865  $   59,568  $   54,429
    Compensation expense under APB 25......          407         911         327
    Compensation expense under SFAS 123....         (924)     (1,416)       (848)
                                             ------------  ----------  ----------
    Pro forma..............................       40,348      59,063      53,908

Basic earnings per common share:
    As reported............................ $       1.72  $     2.86  $     2.63
    Pro forma..............................         1.70        2.83        2.60

Diluted earnings per common share:
    As reported............................ $       1.71  $     2.84  $     2.59
    Pro forma..............................         1.68        2.80        2.56

Weighted-average fair value of stock
  options granted during the year.......... $       4.18  $     4.69  $     5.82

Fair value of junior stock
  (Series Z units) granted................. $         --  $       --  $    16.16`

The fair value of stock options granted each period was
estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted average assumptions used for grants:

`2003         2002        2001
                                         ------------  ----------  ----------
Risk-free interest rates...............  2.58%-3.21%   3.08%-4.62% 3.54%-4.96%
Expected lives.........................   5-6 years     6 years     6 years
Volatility.............................  17.89%-19.18%   18.92%      18.93%
Dividend yield.........................  5.66%-6.12%     6.30%       5.70%`

(l) New Accounting Pronouncements Adopted

In December 2002, the FASB issued SFAS 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an amendment of SFAS
123."  SFAS 148 amends SFAS 123, "Accounting for Stock-Based
Compensation," to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation.  In addition, SFAS 148 amends the disclosure requirements of SFAS
123 to require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results.  The disclosure
requirements are effective for interim and annual financial statements ending
after December 15, 2002.  The other provisions of SFAS 148 are effective for the
Operating Partnership with the beginning of fiscal year 2003.  Beginning January
1, 2004, the Operating Partnership will adopt the fair value based method of
accounting to account for its stock-based compensation plans granted to
employees and directors using the retroactive restatement method as provided by
SFAS 123. The adoption of the fair value method will increase compensation
expense in the amount of $517, $505 and $521 for the years ended December 31,
2003, 2002 and 2001 on the Operating Partnership's consolidated income
statements.

F-11

---



In January 2003, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51." FIN 46 clarifies the application of Accounting Research
Bulletin (ARB) No. 51, "Consolidated Financial Statements" to variable interest entities
(VIEs) in which equity investors lack an essential characteristic of a controlling financial
interest or do not have sufficient equity investment at risk to permit the entity to finance
its activities without additional subordinated financial support from other parties. In
December 2003, the FASB completed deliberations of proposed modifications to FIN 46
(FIN 46 Revised) resulting in multiple effective dates based on the nature as well as the
creation of the VIE. VIEs created after January 31, 2003, but prior to January 1, 2004
may be accounted for either based on FIN 46 or FIN 46 Revised. However, FIN 46
Revised must be applied no later than the Operating Partnership's first quarter of 2004.
VIEs created after January 1, 2004 must be accounted for under FIN 46 Revised. Special
Purpose Entities (SPEs) created prior to February 1, 2003 may be accounted for under
FIN 46 or FIN 46 Revised but no later than the Operating Partnership's quarter ended
December 31, 2003. Non-SPEs created prior to February 1, 2003 are to be accounted for
under FIN 46 Revised no later than the first quarter of 2004. The Operating Partnership
has not formed nor is a party to any SPEs. Under FIN 46 Revised, the disclosure
requirements are effective for all financial statements initially issued after December 31,
2003. Certain of the entities through which and with which we conduct business, have
been deemed to be VIEs under the provisions of FIN 46 Revised. Based on our analysis
of FIN 46 Revised, we expect to consolidate Essex Management Corporation (EMC) and
Essex Fidelity I Corporation (EFC), effective March 31, 2004, as we are the primary
beneficiary of these VIEs. The total assets and liabilities of EMC and EFC, net of
intercompany eliminations, were approximately $23,300 and $9,000,
respectively, at December 31, 2003.

It is reasonably possible that certain other entities through which and with which the
Operating Partnership conducts business, including those described in Notes 3(c), 4, 5
and 9 of the consolidated financial statements will be deemed to be VIEs under the
provisions of FIN 46 Revised and that we may be the primary beneficiary. The Operating
Partnership is continuing its evaluation of these other various entities, which currently it
is uncertain if such entities would result in consolidation. If such other entities are
required to be consolidated pursuant to FIN 46 Revised, the total assets and liabilities, net
of intercompany balances would be $214,300 and $198,400 and an estimated
maximum exposure to loss would be equal to the Operating Partnership's investments
and commitments to invest in these entities of $15,600, as of December 31, 2003.The
disclosures provided reflect management's understanding and analysis of FIN 46 Revised
based upon information currently available. The Operating Partnership continues to
evaluate and analyze the complex terms of this FIN 46 Revised and the evaluation of the
impact of FIN 46 Revised on the Operating Partnership's consolidated financial
statements is ongoing and is subject to change in the event additional interpretive
guidance is provided by the FASB or others.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."
This statement establishes standards for the classification and measurement of
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 requires that an issuer classify a financial instrument
that is within its scope as a liability (or an asset in some circumstances).
Many of those instruments were previously classified as equity. This statement
is effective for financial instruments entered into or modified after May 31,
2003 and, otherwise, is effective at the beginning of the first interim period
beginning after June 15, 2003. Certain provisions have been deferred
indefinitely by the FASB under FSP 150-3.  This standard did not have a material
impact on our consolidated financial position or results of operations.

(m) Reclassifications

Certain prior year balances have been reclassified to conform to the
current year presentation.

(3) Real Estate

(a) Rental Properties

Rental properties consist of multifamily properties with a net book
value of $1,445,008 and other rental properties (office buildings, recreational
vehicle parks, and manufactured housing communities) with a net book value of $46,677.

The properties are located in California, Washington, Oregon, Nevada and
Texas. The operations of the properties could be adversely affected by a
recession, general economic downturn or a natural disaster in the areas where
the properties are located.

For the years ended December 31, 2003, 2002, and 2001, gain on the sales of
real estate was $0, $9,051 and $3,788, respectively.
The Operating Partnership utilized Internal Revenue Code section 1031 to defer
the majority of the taxable gains resulting from these sales.

For the years ended December 31, 2003, 2002, and 2001, depreciation expense
on real estate within continuing operations was $49,409, $37,042, and $35,915,
respectively.  For the years ended December 31, 2003, 2002, and 2001,
depreciation expense on real estate within discontinued operations was $0, $191,
and $380, respectively.

F-12

---



(b) Sales of Real Estate

The Operating Partnership recognizes sale of real estate when a
contract has been executed, a closing has occurred, the buyer's initial and
continuing investment is adequate to demonstrate a commitment to pay for the
property and the Operating Partnership does not have a substantial continuing
involvement in the property. Each property is considered a separately
identifiable component of the Operating Partnership and is reported in
discontinued operations when the operations and cash flows of the property have
been (or will be) eliminated from the ongoing operations of the Operating
Partnership as a result of a disposal transaction. Interest expense associated
with a mortgage loan is classified as a component of discontinued operations if
that loan is directly secured by a property classified as a discontinued
operation.

(c) Investments

The Operating Partnership has investments in a number of affiliates,
which are accounted for under the equity method. The affiliates own and operate
multifamily rental properties.

Essex Apartment Value Fund, L.P. ("Fund I"), is an investment fund
organized by the Operating Partnership in 2001 to add value through rental
growth and asset appreciation, utilizing the Operating Partnership's
development, redevelopment and asset management capabilities. Currently Fund I
is considered fully invested based on its acquisitions to date and anticipated
development and redevelopment expenditures. An affiliate of the Operating
Partnership, Essex VFGP, L.P. ("VFGP"), is a 1% general partner and is
a 20.4% limited partner. The Operating Partnership owns a 99% limited
partnership interest in VFGP. Fund I now expects to utilize leverage of
approximately 61% of the value of the underlying real estate portfolio.  The
Operating Partnership is committed to invest 21.4% of the aggregate capital
committed to Fund I.  As of December 31, 2003, the Operating Partnership's share
of such capital commitment which may be called by Fund I is $9,600. In addition,
Essex will be compensated by Fund I for its asset management, property
management, development and redevelopment services and may receive incentive
payments if Fund I exceeds certain financial return benchmarks.

F-13

---



The current portfolio of stabilized properties of Fund I as of December 31,
2003 is set forth below:

`Loan         Fixed     Loan
                                                                      Amount      Interest  Maturity
           Property Name                 Location        Units    ($ in millions)   Rate      Date
----------------------------------- ------------------- --------  --------------- --------- ---------
Villas at Carlsbad                  Carlsbad, CA            102  $           9.6      5.03%   Aug-11
Villa Venetia                       Costa Mesa, CA          468             53.6      4.58%   Jun-13
Huntington Villas                   Huntington Beach, CA    400             38.1      4.64%   May-10
Rosebeach Apartments                La Mirada, CA           174              8.3      7.09%   Feb-11
The Arboretum at Lake Forest        Lake Forest, CA         225             23.0      5.16%   Feb-10
Newport Beach North (49.9%)(1)      Newport Beach, CA       732             28.0      5.30%   Dec-12
Newport Beach South (49.9%)(1)      Newport Beach, CA       715             24.6      5.30%   Dec-12
Foxborough Homes                    Orange, CA               90              4.8      7.84%   Jul-09
Ocean Villa                         Oxnard, CA              119              9.9      5.42%   May-13
The Crest at Phillips Ranch         Pomona, CA              501             35.4      7.99%   Jul-05
Villas at Bonita                    San Dimas, CA           102              8.3      4.67%   May-10
Villas at San Dimas                 San Dimas, CA           156             13.0      4.67%   May-10
Vista del Rey                       Tustin, CA              116              7.9      6.95%   Feb-11
Andover Park Apartments             Beaverton, OR           240             12.2      6.66%   Oct-11
Hunt Club                           Lake Oswego, OR         256             11.5      7.05%   Feb-11
                                                        --------  ---------------
   Total                                                  4,396  $         288.2
                                                        ========  ===============`

(1) 	Fund I acquired a 49.9% equity investment in this property and accounts for
its investment under the equity method of accounting.

On December 15, 2003, Fund I obtained construction loans for the development
of two of its communities in the committed principal amount of $66,000, with a
variable interest rate of LIBOR plus 2%.  These loans mature in January 2007,
with options to extend the maturity for up to two years thereafter. The
principal balance of these construction loans was $28,100 on December 31, 2003.

During 2003, Fund I reduced its credit facility to $30,000 from $125,000. The
line bears interest at LIBOR plus 0.875% and matures in June 2004. As of
December 31 2003, the outstanding balance on this line was zero. The line
provides for debt covenants relating to limitations on mortgage indebtedness.
The facility agreement contains debt covenants related to limitations on
mortgage indebtedness.

In addition to distributions with respect to its pro-rata share
of Fund I's limited partnership interest, VFGP (1) is to receive special
priority distributions from Fund I in the annual amount of 1% of Fund I's
unreturned third party capital, payable quarterly for managing Fund I's
operations, and (2) may receive over the life of Fund I incentive distributions
up to 20% of the cumulative net profits on Fund I's investments, if Fund I
exceeds certain financial return benchmarks, including a minimum 10% compounded
annual return on the Limited Partner's total capital contributions. VFGP is to
also be paid fees consistent with industry standards for its property
management, development and redevelopment services with respect to Fund I's
investments. VFGP will not receive transaction fees, such as acquisition,
disposition, and financing or similar fees, in connection with the operation of
the Fund.

In October 1999, the Operating Partnership entered into two
separate joint venture arrangements and through two separate private REITs,
Newport Beach North, Inc. and Newport Beach South, Inc., received an approximate
49.9% equity interest in each. Generally, profit and loss are allocated to the
partners in accordance with their ownership interests. In addition to its equity
earnings, the Operating Partnership is entitled to management and redevelopment
fees from the joint ventures.  On July 11, 2003 Fund I acquired a 49.9%
ownership interest in these joint ventures from an unrelated co-investment
partner.

F-14

---



In December 1999, the Operating Partnership entered into a joint venture
arrangement (AEW joint venture) and received an approximate 20% equity interest
in the joint venture. The Operating Partnership contributed its investment in
Riverfront Apartments, Casa Mango Apartments, and Westwood Apartments into the
joint venture. The Operating Partnership also contributed land and development
rights for a development community, Tierra Vista, located in Oxnard, California.
The AEW joint venture completed construction and reached stabilized operations
of Tierra Vista in 2001. On April 17, 2002, Riverfront Apartments and Casa Mango
Apartments were sold to an unrelated third party.  The combined sales price was
approximately $52,000.  The buyer of these two properties assumed two non-
recourse mortgages in the cumulative amount of approximately $26,500, with a
6.5% fixed interest rate, which matures in February 2009.  The Operating
Partnership's equity in income from the gain on the sale of real estate was
$2,000 and is presented as interest and other income in the accompanying
consolidated statement of operations.  The Operating Partnership contributed the
assets to the joint venture in December 1999 at costs of approximately $41,000.
In addition, the Operating Partnership earned a fee in conjunction with the sale
of these assets in the amount of $1,110 and this fee is presented as interest
and other income in the accompanying consolidated statement of operations. In
the third quarter of 2002, the Operating Partnership recognized an incentive fee
it earned related specifically to these two asset sales in the amount of $475.
Generally, profit and loss are allocated to the partners in accordance with
their ownership interests. In addition to its equity earnings, the Operating
Partnership is entitled to management, redevelopment and development fees from
the joint venture and incentive payments based on the financial success of the
joint venture.

The Operating Partnership holds limited partnership interests in 17
partnerships which collectively own ten multifamily properties, comprised of
1,831 units (Down REIT entities). These investments were made under arrangements
whereby Essex Management Corporation (EMC) became the general partner, the
Operating Partnership became a special limited partner, and the other limited
partners were granted rights of redemption for their interests. Such partners
can request to be redeemed and the Operating Partnership can elect to redeem
their rights for cash or by issuing shares of its common stock on a one unit per
share basis. Redemption values will be based on the market value of the
Company's common stock at the time of redemption multiplied by the number of
units stipulated under the above arrangements. The other limited partners
receive distributions based on the Company's current dividend rate times the
number of redemption shares. The equity in income or loss reported by the
Operating Partnership under the equity method of accounting by these down REIT
entities is the residual net income of these down REIT entities after income has
been allocated to the other limited partners equal to the distributions they
received.

In November 2001, the Operating Partnership received a loan for approximately
$6,800 from Mountain Vista, LLC ("Mountain Vista"), which is due on
December 1, 2011. The Operating Partnership recorded the loan as a reduction to
the balance of the Operating Partnership's investment in Mountain Vista since
the substance of the transaction was a distribution from an equity method
investee.

F-15

---



The Operating Partnership has investments in two taxable REIT subsidiaries,
EMC and Essex Fidelity I Corporation (EFC). The Operating Partnership has a 99%
economic interest in these entities through its ownership 100% of the nonvoting
preferred stock. Executives of the Operating Partnership have a 1% economic
interest through ownership of 100% of the common stock and for the years ended
December 31, 2003, 2002 and 2001 have not received any form of compensation from
this ownership interest. These entities were formed for the purpose of
acquiring, developing and managing real property and are accounted for on the
equity method of accounting. As of December 31, 2003, the majority of the assets
owned by EFC are a 67-unit townhome community and a 9.8 acre land parcel and the
majority of the assets owned by EMC are 0.5% to 1% general partnership interests
in Down REIT entities and other single asset entities in which the Operating
Partnership is the limited partner. EFC and EMC made these investments by using
proceeds from loans from the Operating Partnership.

`2003       2002
                                                                                  ---------  ---------
Investments in joint ventures:
   Direct and indirect LLC member interests of approximately
     49.9% in Newport Beach North, LLC and Newport Beach South,
     LLC........................................................................ $  13,020  $  13,234
   Limited partnership interest of 20.4% and general partner
     interest of 1% in Essex Apartment Value Fund, L.P..........................    51,110     17,832
   Limited partnership interest of 20% in AEW joint venture.....................     4,406      7,352
   Class A member interest of 45% in Park Hill LLC..............................     5,731      5,652
   Preferred limited partnership interests in Mountain Vista
     Apartments.................................................................     5,276      5,276
   Minority limited partnership interests in Down REIT
     entities...................................................................    13,367     11,346
                                                                                  ---------  ---------
       Total equity method investments..........................................    92,910     60,692

   Other investments, primarily through EFC and EMC.............................       485        520
                                                                                  ---------  ---------
       Total investments........................................................ $  93,395  $  61,212
                                                                                  =========  =========


Distributions in excess of earnings in joint ventures:
   Minority limited partnership interests in Down REIT
     entities................................................................... $  (7,669) $  (7,810)
                                                                                  =========  =========`

Distributions in excess of earnings in joint ventures has been classified
within accounts payable and accrued liabilities in the accompanying consolidated
balance sheets.

F-16

---



The combined summarized financial information of investments, which are
accounted for under the equity method, are as follows:

`December 31,
                                                                                  --------------------
                                                                                    2003       2002
 Balance sheets:                                                                  ---------  ---------
    Real estate and real estate under development............................... $ 830,054  $ 612,349
    Other assets................................................................    39,694     36,014
                                                                                  ---------  ---------
        Total assets............................................................ $ 869,748  $ 648,363
                                                                                  =========  =========

    Mortgage notes payable...................................................... $ 574,906  $ 378,408
    Other liabilities...........................................................    65,851    135,192
    Partners' equity............................................................   228,991    134,763
                                                                                  ---------  ---------
        Total liabilities and partners' equity.................................. $ 869,748  $ 648,363
                                                                                  =========  =========

 Operating Partnership's share of equity........................................ $  85,726  $  53,402
                                                                                  =========  =========

                                                                                           Years ended
                                                                                           December 31,
                                                                                  --------------------------------
                                                                                    2003       2002        2001
                                                                                  ---------  ---------   ---------
  Statements of operations:
     Total revenue.............................................................. $  89,390  $  97,950  $   70,414
     Total expenses.............................................................    75,354     63,798      60,289
                                                                                  ---------  ---------   ---------
         Total net income....................................................... $  14,036  $  34,152  $   10,125
                                                                                  =========  =========   =========

  Operating Partnership's share of net income................................... $   3,180  $   7,576  $    3,854
                                                                                  =========  =========   =========`

(c) Real Estate Under Development

The Operating Partnership is developing two multifamily residential
communities, with an aggregate of 444 units. In connection with these
development projects, the Operating Partnership has directly, or in some cases
through its joint venture partners, entered into contractual construction
related commitments with unrelated third parties and the total estimated cost
for this projects are approximately $70,300. As of December 31, 2003, the
remaining development commitment, including those held in joint ventures, is
approximately $17,900.

F-17

---



(4) Notes Receivable from Investees and Other Related Parties

Notes receivable from joint venture investees and other related party
receivables consist of the following as of December 31, 2003 and 2002:

`2003       2002
                                                                                  ---------  ---------
Notes receivable from joint venture investees:
   Note receivable from Highridge Apartments, secured, bearing
     interest at 10%, due on demand............................................. $   2,950  $   2,950
   Notes receivable from EFC, secured, bearing interest at LIBOR
     + 2.5%, due 2004...........................................................        --      9,700
   Notes receivable from EFC, secured, bearing interest at
     10.0%, due 2009............................................................     7,065      5,279
   Notes receivable from EFC, unsecured, bearing interest at
     7.5%, due 2011.............................................................       390        726
   Receivable from Newport Beach North LLC and Newport Beach
     South LLC, due on demand...................................................       200        376
Other related party receivables, unsecured:
   Loans to officers prior to July 31, 2002, bearing interest at 8%,
    due April 2006..............................................................       633        633
   Other related party receivables, substantially all due on
     demand.....................................................................     7,769      4,417
                                                                                  ---------  ---------
                                                                                 $  19,007  $  24,081
                                                                                  =========  =========`

The Company's officers and directors do not have a substantial economic
interest in these joint venture investees.

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

(5) Notes and Other Receivables

Notes and other receivables consist of the following as of December 31,
2003 and 2002:

`2003       2002
                                                                                  ---------  ---------
Note receivable from Derian Ave., LLC, secured, bearing interest
  at 9.3%, due on demand........................................................ $  15,000  $  15,000
Note receivable from DOIT City Heights Los Angeles L.P.,
  secured, interest payable monthly at 9%, principal due
  December 2007.................................................................     2,434      2,434
Note receivable from Derian Ave., LLC, secured, bearing interest
  at 15.0%, due on demand.......................................................     4,459      3,848
Other receivables...............................................................    11,132     10,036
                                                                                  ---------  ---------
                                                                                 $  33,025  $  31,318
                                                                                  =========  =========`

Other receivables consist primarily of accrued interest income on
receivables and other advances including subordination fees and land lease fees.

In July 2000 the Operating Partnership acquired a development land parcel in
Irvine, California. As a condition to the acquisition, an affiliate of the
Operating Partnership acquired a vacant 110,000 square foot office building
located adjacent to the development site for $14,600. In August 2000 the
affiliate sold the office building to a third party for $15,000. The Operating
Partnership loaned Derian Ave., LLC $15,000 as a secured first mortgage on the
property as noted above. In addition, after the buyer expended $500 for such
items as tenant improvements, leasing commissions, and carrying costs, the
Operating Partnership agreed to lend an additional $4,500 to the buyer for these
related items, under a mezzanine loan, which is secured by a second deed of
trust on the property (the "Mezzanine Loan"). The recorded balance of
the Mezzanine Loan is approximately $4,459, of which the principal shareholder
of the buyer personally guarantees $1,700. The Operating Partnership has
evaluated the realization potential of the first and mezzanine loans and,
effective June 2002, has ceased accruing interest income on these notes until
the timing of the borrower's cash flow from the office building is more
predictable. The loan matured in March 2003 and is in default.  As of December
31, 2003, the owner leased 62.7% of the rentable square footage for amounts
acceptable to the Operating Partnership. The Operating Partnership has
determined that the current recorded balances due under these loans are properly
valued.

F-18

---



(6) Related Party Transactions

The Operating Partnership provides some of its fee-based property
management services through EMC. All general and administrative expenses of the
Operating Partnership and EMC are initially borne by the Operating Partnership,
with a portion subsequently allocated to EMC based on a business unit allocation
methodology, formalized and approved by management and the Board of Directors.
Expenses allocated to EMC for the years ended December 31, 2003, 2002, and 2001
totaled $2,553, $2,717, and $2,635, respectively, and are reflected as a
reduction in general and administrative expenses in the accompanying
consolidated statements of operations.

The Company's Chairman, George Marcus, is also the Chairman of the Marcus
& Millichap Company (MM), which is a real estate brokerage firm. During the
years ended December 31, 2003, 2002, and 2001, the Operating Partnership paid
brokerage commissions totaling $854, $0, and $0 to MM on the purchase and sales
of real estate. The commissions are either capitalized as a cost of acquisition
or are reflected as a reduction of the gain on sales of real estate in the
accompanying consolidated statements of operations. EMC is entitled to receive a
percentage of MM brokerage commissions on certain transactions in which the
Operating Partnership is a party.

Interest and other income includes interest income of $315, $1,639, and
$1,236 for the years ended December 31, 2003, 2002, and 2001, respectively,
which was earned principally on the notes receivable from related party
partnerships in which the Operating Partnership owns an ownership interest
(Joint Ventures). Interest and other income also include management fee income
and investment income earned by the Operating Partnership from its Joint
Ventures in which it has an ownership interest of $9,491, $15,463, and $11,567
for the years ended December 31, 2003, 2002, and 2001, respectively.

F-19

---



(7) Mortgage Notes Payable

Mortgage notes payable consist of the following as of December 31, 2003 and 2002:

`2003       2002
                                                                                  ---------  ---------
Mortgage notes payable to a pension fund, secured by deeds of trust, bearing
  interest at rates ranging from 6.62% to 8.18%, interest only payments due
  monthly for periods ranging from October 2001 through November 2004,
  principal and interest payments due monthly thereafter, and maturity
  dates ranging from October 2008 through October 2010. Under certain
  conditions a portion of these loans can be converted to an unsecured
  note payable. Three loans are cross-collateralized by eight, three and
  two properties................................................................ $ 237,018  $ 238,501
Mortgage notes payable, secured by deeds of trust, bearing interest at
  rates ranging from 5.490% to 8.055%, principal and interest payments
  due monthly, and maturity dates ranging from February 2006 through
  January 2014. At December 31, 2003, four mortgage notes payable totaling
  $42,410 had a variable interest rate priced at Freddie Mac's Reference
  Rate plus 1.3%. On January 31, 2004, these notes converted to a
  fixed interest rate of 5.65%..................................................   377,860    322,015
Multifamily housing mortgage revenue bonds secured by deeds of trust on
  rental properties and guaranteed by collateral pledge agreements,
  payable monthly at a variable rate as defined in the Loan Agreement
  (approximately 2.9% at December 2003 and 2.6% at December 2002), plus credit
  enhancement and underwriting fees ranging from approximately 1.2% to 1.9%.
  The bonds are convertible to a fixed rate at the Company's option. Among
  the terms imposed on the properties, which are security for the bonds,
  is that 20% of the units are subject to tenant income qualifications
  criteria. Principal balances are due in full at various maturity dates
  from July 2020 through December 2032. These bonds are subject to various
  interest rate cap agreements which limit the maximum interest rate
  with respect to such bonds....................................................    75,296     59,420
Mortgage notes payable, secured by deeds of trust, bearing interest at rates
  ranging from 7.00% to 7.08%, principal and interest payments due monthly,
  and maturity dates ranging from January 2005 through April 2005. Under
  certain conditions these loans can be converted to unsecured notes payable.
  One loan is cross-collateralized by three proprties...........................    33,072     33,664
Multifamily housing mortgage revenue bonds secured by deed of trust on a
  rental property and guaranteed by a collateral pledge agreement, bearing
  interest at 6.455%, principal and interest payments due monthly through
  January 2026. Among the terms imposed on the property, which
  is security for the bonds, is a requirement that 20% of the
  units are subject to tenant income qualification criteria.
  The interest rate will be repriced in February 2008 at the then
  current tax-exempt bond rate..................................................    15,883     16,198
Multifamily housing mortgage revenue bonds secured by deed of trust on
  rental property, bearing interest at 7.69%, principal and interest
  installments due monthly through June 2018. Among the terms imposed on
  the property, which is security for the bonds, is a requirement that
  20% of the units are subject to tenant income qualifications criteria.
  This bond was repaid in 2003 from proceeds of a new mortgage note
  payable on the property which served as security for this financing...........        --      7,765
                                                                                  ---------  ---------
                                                                                 $ 739,129  $ 677,563
                                                                                  =========  =========`

F-20

---



The aggregate scheduled maturities of mortgage notes payable are as follows:

`2004......................................................................... $   8,223
   2005.........................................................................    41,300
   2006.........................................................................    20,703
   2007.........................................................................    63,448
   2008.........................................................................   108,947
   Thereafter...................................................................   496,508
                                                                                  ---------
                                                                                 $ 739,129
                                                                                  =========`

Repayment of debt before the scheduled maturity date could
result in prepayment penalties.

The Operating Partnership has interest rate cap contracts in order to reduce
the risks associated with increases in interest rates on its tax exempt variable
rate demand bonds. The Operating Partnership has the right to receive cash if
interest rates increase above a specified level. The purpose of the caps is to
hedge the exposure to variability in expected future interest cash flows above a
fixed interest rate, and, accordingly, they are accounted for as cash flow
hedges under SFAS 133. The Operating Partnership determines the fair value of
the caps and assesses the ineffectiveness of the hedge based on changes in the
time value of the caps. As of December 31, 2003 and 2002, the Operating
Partnership's tax-exempt debt subject to cap agreements totaled $75,296 and
$59,420 at a weighted average interest rate of 2.9% and 2.6%, respectively.
These cap agreements have maturity dates ranging from 2004 to 2009. The cap
agreements are accounted for in accordance with SFAS No. 133, which as
amended, was adopted by the Operating Partnership on January 1, 2001. At
December 31, 2003 and 2002, the Operating Partnership was not a party to any
other interest rate protection agreements.

(8) Lines of Credit

The Operating Partnership has two outstanding lines of credit for an
aggregate amount of $275,000. The first line, in the amount of $185,000, matures
in May 2004, with an option to extend it for one year thereafter. During the
third quarter of 2003 the Operating Partnership expanded this unsecured
revolving credit facility to $185,000 from $165,000.  No other material terms of
this facility were revised. Outstanding balances under this line of credit bear
interest at a rate, which uses a tiered rate structure tied to the Company's
corporate ratings, if any, and leverage rating, which has been priced at LIBOR
plus 1.10% during 2003 and 2002. As of December 31, 2003 and 2002, the interest
rate was approximately 2.1% and 2.6%, respectively. At December 31, 2003 the
Operating Partnership had $12,500 outstanding on this line of credit. On
December 18, 2003, the Operating Partnership obtained a 5-year, $90,000 credit
facility from Freddie Mac, secured by four of Essex's multifamily communities.
The aggregate maximum principal amount of the facility is $90,000, increasing to
$100,000 on July 1, 2004.  The Operating Partnership borrowed $80,600 under this
facility, comprised of two tranches as follows: $41,000 locked for 60 days at a
base rate of 1.586% (55 basis points over Freddie Mac's Reference Rate) and
$39,600 locked for 180 days at a base rate of 1.695% (59 basis points over
Freddie Mac's Reference Rate). This credit facility has a lower cost of
borrowing as compared to the Operating Partnership's unsecured credit facility.
The credit agreements contain debt covenants related to limitations on
indebtedness and liabilities, maintenance of minimum levels of consolidated
earnings before depreciation, interest and amortization and maintenance of
minimum tangible net worth.

F-21

---



(9) Lease Agreements

During the fourth quarter of 2003, the Operating Partnership
entered into lease and purchase option agreements with unrelated third parties
related to its five recreational vehicle parks that are comprised of 1,717
spaces, and two manufactured housing communities that contain 607 sites.  Based
on the agreements, the unrelated third parties have an option to purchase the
assets in approximately four years for approximately $41,700 - a 5% premium to
the gross book value of the assets. The Operating Partnership received $474 as
consideration for entering into the option agreement. The option premium of
$4,030 has been recorded as deferred revenue and has been classified with
accounts payable and accrued liabilities in the accompanying consolidated
balance sheets. Under the lease agreements Essex is to receive a fixed monthly
lease payment in addition to a non-refundable upfront payment that will be
amortized using the straight-line method over approximately five years (the life
of the lease).  These operating leases also provide for the Operating
Partnership to pass through all executory costs such as property taxes.

The Operating Partnership is a lessor under a land lease associated with two
properties located in Southern California. The land leases entitle the Operating
Partnership to receive fixed annual land lease payments totaling a minimum of
$1,569 over a thirty-four year term ended 2034. The Operating Partnership has
the option to purchase the properties in 2006 or can be required to sell the
land in 2006 as specified in the buyout provisions of the agreement.

The future minimum non-cancelable base rent to be received under these
operating leases for each of the years ending after December 31, 2003 are
summarized as follows:

`Future
                                     Minimum
                                      Rent
                                   -----------
2004............................. $     4,533
2005.............................       4,533
2006.............................       4,533
2007.............................       4,533
2008.............................       4,130
2009 and thereafter..............      40,652
                                   -----------
                                  $    62,914
                                   ===========`

The carrying value of the rental properties as of December 31,
2003 is $50,298.

(10) Equity Transactions

As of December 31, 2003,
Operating Partnership has the following cumulative redeemable preferred limited
partnership units securities outstanding.

`Liquidation
    Description          Issue Date                           Preference
------------------ -----------------------                    ----------
Cumulative redeemable preferred limited partner units:
  7.875% Series B        February 1998     1,200,000 units   $   60,000
  7.875% Series B         April 1998         400,000 units       20,000
  9.125% Series C        November 1998            --                 --
  9.300% Series D          July 1999       2,000,000 units       50,000
  9.250% Series E       September 1999     2,200,000 units       55,000
                                                              ----------
                                                             $  185,000
                                                              ==========

Cumulative redeemable preferred general partner interest:
  7.8125% Series F      September 2003                       $   25,000
                                                              ==========`

Distributions on the securities are payable quarterly. The holders
of the securities do not have any voting rights. The Operating Partnership has
the right to redeem the units on the fifth anniversary after the issue date.

On June 14, 2000 the Operating Partnership purchased Waterford Place,
a 238-unit apartment community located in San Jose, California for a contract
price of $35,000, which excluded a contingent payment to be paid by the
Operating Partnership pursuant to the terms of the agreement. The amount of the
contingent payment was disputed, and submitted to binding arbitration. On March
19, 2003, in connection with that arbitration, the Operating Partnership was
directed to issue an additional 109,875 units to the seller.  As a result, the
Operating Partnership has increased its capitalized acquisition cost of this
asset by approximately $7,200 with an offset to other liabilities.
The arbitration award is finalized, however no Operating
Partnership units have been issued as of December 31, 2003. The Operating
Partnership expects to issue the units during the first quarter of 2004.

F-22

---



On July 30, 2003, in connection with the Operating Partnership's
acquisition, by merger, of John M. Sachs, Inc. ("Sachs") that was
completed on December 17, 2002, and under the terms of the merger agreement, a
final analysis was prepared, which indicated that the actual net liabilities of
Sachs were less than the net liabilities of Sachs estimated to be outstanding as
of the merger date.  Based on the final analysis and as a post-closing
adjustment payment pursuant to the merger agreement, the Operating Partnership
made a final payment of approximately $1,766 in cash and issued an
additional 35,860 shares of the Company's common stock valued at $2,170 to
certain of the pre-merger shareholders of Sachs.

On September 23, 2003, the Company issued 1,000,000 shares of its Series F
Cumulative Redeemable Preferred Stock at a fixed price of $24.664 per share, a
discount from the $25.00 per share liquidation value of the shares.  The shares
did not begin to accrue a dividend until November 25, 2003 and following that
date, pay quarterly distributions at an annualized rate of 7.8125% per year of
the liquidation value and will be redeemable at the Company's option on or after
September 23, 2008. The shares were issued pursuant to the Company's existing
shelf registration statement. Essex contributed the net proceeds from the
Series F Preferred Stock offering to the Operating Partnership and it is to
receive a preferred distribution from the Operating Partnership equal to the
quarterly dividends on the Series F Preferred Stock ("Series F Preferred
Distribution"). The Operating Partnership amortized the original discount
in connection with the contribution from Essex in the fourth quarter of 2003,
resulting in a charge of approximately $336. On November 24, 2003, the
Operating Partnership used the net proceeds from the contribution from Essex to
redeem all of the 9.125% Series C Cumulative Redeemable Preferred Units (the
"Series C Preferred Units"). In connection with this redemption,
the Operating Partnership incurred a non-cash charge of $625 related to
the write-off of the issuance costs.

On October 6, 2003, the Company sold 1.6 million newly issued shares of
common stock and received offering proceeds (before expenses) of
$60.67 per share, representing a 3.25% discount to the common stock's
closing price on September 30, 2003, the date of the underwriting agreement between the
Company and the underwriter, pursuant to which the shares were sold.
The shares were issued pursuant to the Company's
existing shelf registration statement. The proceeds of the offering were approximately
$97,072, which were contributed to the Operating Partnership.
Subsequent to the offering, the net proceeds
generated from the offering were used to acquire multifamily communities located
in the Company's targeted West Coast markets and for general corporate purposes,
including the repayment of debt and the funding of development activities.

In January 2004, the Operating Partnership restructured its previously issued
$50,000, 9.30% Series D Cumulative Redeemable Preferred Units ("Series D
Units"), and its previously issued $80,000, 7.875% Series B Cumulative
Redeemable Preferred Units ("Series B Units").  The existing
distribution rate of 9.30% of the Series D Units will continue until July 27,
2004 - the end of the current non-call period.  On July 28, 2004, the
distribution rate on the Series D Units will be reduced to 7.875%.  The date
that the Series D Units can first be redeemed at the Operating Partnership's
option will be extended by six years to July 28, 2010.  The dates that the
Series B Units can first be redeemed at the Operating Partnership's option will
be extended from February 6, 2003 to December 31, 2009.

F-23

---



(11) Per Unit Data

Basic and diluted income from continuing operations per unit are
calculated as follows for the years ended December 31:

`2003                            2002                            2001
                                           ------------------------------  ------------------------------  ------------------------------
                                                    Weighted-       Per             Weighted-       Per             Weighted-       Per
                                                     average      Common             average      Common             average      Common
                                                     Common        Units             Common        Units             Common        Units
                                           Income     Units       Amount   Income     Units       Amount   Income     Units       Amount
                                           ------- -----------    -------  ------- -----------    -------  ------- -----------    -------
Basic:
  Income from continuing operations
    available to common units............ $40,865  23,737,077    $  1.72  $50,264  20,812,272    $  2.41  $53,719  20,688,246    $  2.60
  Income from discontinued operations....      --  23,737,077         --    9,304  20,812,272       0.45      710  20,688,246       0.03
                                           -------                -------  -------                -------  -------                -------
                                           40,865                $  1.72   59,568                $  2.86   54,429                $  2.63
                                                                  =======                         =======                         =======

  Effect of Dilutive Securities:
    Stock options (1)....................      --     154,941                  --     155,229                  --     316,461
    Vested series Z incentive units......      --      55,912                  --      40,000                  --          --
                                           ------- -----------             ------- -----------             ------- -----------
                                               --     210,853                  --     195,229                  --     316,461
                                           ------- -----------             ------- -----------             ------- -----------
 Diluted:
  Income from continuing operations
    available to common units............  40,865  23,947,930    $  1.71   50,264  21,007,501    $  2.39   53,719  21,004,707    $  2.56
  Income from discontinued operations....      --  23,947,930         --    9,304  21,007,501       0.45      710  21,004,707       0.03
                                           -------                -------  -------                -------  -------                -------
                                          $40,865                $  1.71  $59,568                $  2.84  $54,429                $  2.59
                                           =======                =======  =======                =======  =======                =======`

(1)	The following stock options are not included in the diluted earnings
per share calculation because the exercise price of the option was greater than
the average market price of the common shares for the year and, therefore, the
effect would be anti-dilutive:

`2003            2002            2001
                              --------------  --------------  --------------
Number of options...........         --              76             145
Range of exercise prices....        n/a       $50.480-54.250  $49.250-54.250`

(12) Stock Based Compensation Plans

The Essex Property Trust, Inc. 1994 Stock Incentive Plan provides
incentives to attract and retain officers, directors and key employees of the
Operating Partnership. The Stock Incentive Plan provides for the grants of
options to purchase a specified number of shares of common stock or grants of
restricted shares of common stock. Under the Stock Incentive Plan, the total
number of shares available for grant is approximately 1,375,400. The Board of
Directors (the Board) may adjust the aggregate number and type of shares
reserved for issuance. Participants in the Stock Incentive Plans are selected by
the Stock Incentive Plan Committee of the Board, which is comprised of
independent directors. The Compensation Committee is authorized to establish the
exercise price; however, the exercise price cannot be less than 100% of the fair
market value of the common stock on the grant date. The Operating Partnership's
options have a life of ten years. Option grants fully vest between one year and
five years after the grant date.

In connection with the Company's 1994 initial public offering, the Company
provided a one-time grant of options to Marcus & Millichap ("MM")
to purchase 220,000 shares of common stock at the initial public offering price
of $19.50 per share pursuant to an agreement whereby Marcus & Millichap Real
Estate Investment Brokerage Company, a subsidiary of MM, will provide real
estate transaction, trend and other information to the Operating Partnership for
a period of ten years. In February 2002, MM exercised and sold the shares
underlying this one-time grant. This option was exercised in a
"cashless" transaction pursuant to FAS 123, whereby MM was issued
129,302 shares of Company common stock based on the current market price of the
Company's common stock of $47.30 at the time of exercise.

The Company has also reserved 406,500 shares of common stock in connection
with the Essex Property Trust, Inc. 1994 Employee Stock Purchase Plan. There was
no activity in this plan during 2003, 2002, and 2001.

F-24

---



Issuance of the Company's common stock to Operating Partnership employees and
directors results in an issuance of an equal amount of common units to the
general partner. Therefore, all references to "shares" results in an
equivalent movement in the Operating Partnership's common units.

A summary of the status of the Company's stock option plans as of December
31, 2003, 2002, and 2001 and changes during the years ended on those dates is
presented below:

`2003                2002                2001
                                       ------------------- ------------------- -------------------
                                                  Weighted-           Weighted-           Weighted-
                                                  average             average             average
                                                  exercise            exercise            exercise
                                        Shares     price    Shares     price    Shares     price
                                       ---------  -------- ---------  -------- ---------  --------
Outstanding at beginning of year......  743,692  $  39.81   918,676  $  32.15   885,958  $  28.48
Granted...............................   73,500     55.09   162,750     49.15   162,500     49.88
Exercised............................. (197,741)    34.72  (322,944)    22.57  (111,982)    27.57
Forfeited and canceled................  (29,220)    49.52   (14,790)    43.65   (17,800)    43.42
                                       ---------           ---------           ---------
Outstanding at end of year............  590,231     42.93   743,692     39.81   918,676     32.14
                                       =========           =========           =========

Options exercisable at year end.......  301,851     37.70   383,442     34.25   567,632     26.51`

The following table summarizes information about stock options outstanding as
of December 31, 2003:

`Options outstanding           Options exercisable
                  ----------------------------------- -----------------------
                     Number     Weighted-                Number
                  outstanding    average    Weighted- exercisable   Weighted-
                     as of      remaining    average     as of       average
    Range of      December 31, contractual  exercise  December 31,  exercise
 exercise prices      2003        life        price       2003        price
----------------- ------------ -----------  --------- ------------  ---------
 $13.10-19.64           4,050   0.8 years  $   18.57        4,050  $   18.57
  19.64-26.20          19,885   5.2 years      26.13        7,885      26.13
  26.20-32.75          84,685   4.5 years      30.11       74,405      29.97
  32.75-39.29         119,432   4.3 years      34.96      116,532      34.91
  39.29-45.84          33,429   6.0 years      40.57       11,229      40.26
  45.84-52.39         277,550   7.5 years      49.60       86,750      49.48
  52.39-58.94          42,000   8.6 years      55.64        1,000      54.02
  58.94-65.49           9,200   7.2 years      60.96           --         --
                  ------------                        ------------
                      590,231   6.3 years      42.93      301,851      37.70
                  ============                        ============`

On June 28, 2001, the Operating Partnership issued 200,000
Series Z Incentive Units of limited partner interest (the "Series Z
Incentive Units") to eleven senior executives of the Operating Partnership
in exchange for a capital commitment of $1.00 per Series Z Incentive Unit, for
an aggregate offering price of $200. Upon certain triggering events, the Series
Z Incentive Units will automatically convert into common Operating Partnership
units based on a conversion ratio that may increase over time upon satisfaction
of specific conditions. The conversion ratio, initially set at zero, will
increase by 10% (20% in 2002) on January 1 of each year for each participating
executive who remains employed by the Operating Partnership if the Operating
Partnership has met a specified "funds from operations" per share
target for the prior year, up to a maximum conversion ratio of 1.0. The
conversion ratio as of January 1, 2002 was 20%, which resulted in 40,000 Series
Z Incentive Units being convertible into up to an equal amount of common
Operating Partnership Units. On January 1, 2003, the conversion ratio increased
by 8%, to 28% based on the approval of the Board of Directors. In certain change
of control situations, the participating executives will also be given the
option to convert their units at the then-effective conversion ratio. In
addition, the Operating Partnership has the option to redeem Series Z Incentive
Units held by any executive whose employment has been terminated for any reason
and the obligation to redeem any such units following the death of the holder.
In such event, the Operating Partnership will redeem the units for, at its
option, either common Operating Partnership units or shares of the Company's
common stock based on the then-effective conversion ratio.

F-25

---



Through December 31, 2003, the Operating Partnership has granted 42,586 stock
units under the Operating Partnership's Phantom Stock Unit Agreement to two of
the Operating Partnership's executives. The units vest in installments in
accordance with the vesting schedule set forth in the Phantom Stock Unit
Agreement such that the units will be fully vested five years from the date of
issuance. At that time, the Operating Partnership expects to issue to the
executives the number of shares of common units equal to the number of units
vested, or at the Operating Partnership's option, an equivalent amount in cash.
The Operating Partnership has historically chosen the cash payment option at the
end of each year since inception of the agreement. Distributions are paid by the
Operating Partnership on the vested and unvested portion of shares and are
recorded as a component of general and administrative expense.

(13) Segment Information

In accordance with FASB No. 131, Disclosures about Segments of an
Enterprise and Related Information,the Operating Partnership defines its
reportable operating segments as the three geographical regions in which its
multifamily residential properties are located: Northern California, Southern
California, and the Pacific Northwest.

Nonsegment revenues and net operating income included in the following
schedule consist of revenue generated from the commercial properties,
recreational vehicle parks, and manufactured housing communities. Also excluded
from segment revenues are interest and other corporate income. Other nonsegment
assets include investments, real estate under development, cash, notes
receivables, other assets and deferred charges.

The accounting policies of the segments are the same as those described in
note 2. The Operating Partnership evaluates performance based upon net operating
income from the combined properties in each segment.

F-26

---



The revenues, net operating income, and assets for each of the reportable
operating segments are summarized as follows for the years ended and as of
December 31, 2003, 2002, and 2001:

`Years Ended December 31,
                                                                  ----------------------------------
                                                                     2003        2002        2001
                                                                  ----------  ----------  ----------
Revenues:
   Southern California.......................................... $  108,384  $   74,537  $   69,996
   Northern California..........................................     61,486      59,750      65,812
   Pacific Northwest............................................     41,720      41,989      45,109
   Other areas..................................................     11,278         989         470
                                                                  ----------  ----------  ----------
       Total segment revenues...................................    222,868     177,265     181,387
Interest and other income.......................................     11,582      22,857      22,152
                                                                  ----------  ----------  ----------
       Total revenues........................................... $  234,450  $  200,122  $  203,539
                                                                  ==========  ==========  ==========
Net operating income:
   Southern California.......................................... $   74,808  $   52,427  $   47,979
   Northern California..........................................     41,872      43,840      50,178
   Pacific Northwest............................................     27,154      28,235      30,884
   Other areas..................................................      4,997         309          69
                                                                  ----------  ----------  ----------
       Total segment net operating income.......................    148,831     124,811     129,110
Interest and other income.......................................     11,582      22,857      22,152
Depreciation and amortization:
   Southern California..........................................    (22,158)    (14,464)    (13,658)
   Northern California..........................................    (13,013)    (11,081)    (10,813)
   Pacific Northwest............................................    (10,835)    (11,169)    (11,168)
   Other areas..................................................     (3,403)       (328)       (276)
                                                                  ----------  ----------  ----------
                                                                    (49,409)    (37,042)    (35,915)
Interest:
   Southern California..........................................    (14,002)     (7,659)     (7,959)
   Northern California..........................................    (10,864)    (11,317)    (10,126)
   Pacific Northwest............................................     (4,429)     (6,068)     (6,456)
   Nonsegment...................................................    (13,456)     (9,968)    (14,205)
                                                                  ----------  ----------  ----------
                                                                    (42,751)    (35,012)    (38,746)
Amortization of deferred financing costs........................     (1,008)       (605)       (657)
General and administrative......................................     (7,106)     (6,291)     (7,498)
                                                                  ----------  ----------  ----------
       Income from continuing operations before gain on the sales
         of real estate, minority interests,and discontinued
         operations............................................. $   60,139  $   68,718  $   68,446
                                                                  ==========  ==========  ==========


Assets:
   Southern California.......................................... $  713,891  $  700,877  $  452,160
   Northern California..........................................    417,120     293,541     297,512
   Pacific Northwest............................................    285,658     251,252     259,884
   Other areas..................................................     75,016      78,465       9,375
                                                                  ----------  ----------  ----------
       Net real estate assets...................................  1,491,685   1,324,135   1,018,931
Nonsegment assets...............................................    236,879     295,599     310,527
                                                                  ----------  ----------  ----------
       Total assets............................................. $1,728,564  $1,619,734  $1,329,458
                                                                  ==========  ==========  ==========`

F-27

---



(14) 401(k) Plan

The Operating Partnership has a 401(k) benefit plan (the Plan) for all
full-time employees who have completed six months of service. Employees may
contribute up to 23% of their compensation, limited by the maximum allowed under
Section 401(k) of the Internal Revenue Code. The Operating Partnership matches
the employee contributions for nonhighly compensated personnel, up to 50% of
their contribution to a maximum of $.5 (per individual) per year. Operating
Partnership contributions to the Plan were approximately $93, $107, and $116 for
the years ended December 31, 2003, 2002, and 2001.

(15) Fair Value of Financial Instruments

Management believes that the carrying amounts of its variable rate
mortgage notes payable, lines of credit, notes receivable from investees and
other related parties and notes and other receivables approximate fair value as
of December 31, 2003 and 2002, because interest rates, yields and other terms
for these instruments are consistent with yields and other terms currently
available to the Operating Partnership for similar instruments. Management has
estimated that the fair value of the Operating Partnership's $663,833 of fixed
rate mortgage notes payable at December 31, 2003 is approximately $632,111 based
on the terms of existing mortgage notes payable compared to those available in
the marketplace.  At December 31, 2002, the Operating Partnership's fixed rate
mortgage notes payable of $618,143 had an approximate market value of $576,894.
Management believes that the carrying amounts of cash and cash equivalents,
restricted cash, accounts payable and accrued liabilities, other liabilities and
dividends payable approximate fair value as of December 31, 2003 and 2002 due to
the short-term maturity of these instruments.

(16) Commitments and Contingencies

The Operating Partnership had no outstanding material letters of credit
relating to financing and development transactions as of December 31, 2003.

The Operating Partnership was in compliance with its line of credit covenant
as of December 31, 2003.

The Operating Partnership is involved in various lawsuits arising out of the
ordinary course of business and certain other legal matters. In the opinion of
management, the resolution of these matters will not have a material adverse
effect on the Operating Partnership's financial position, results of operations
or liquidity.

Except with respect to three Properties, the Operating Partnership has no
indemnification agreements from third parties for potential environmental clean-
up costs at its Properties. The Operating Partnership has no way of determining
at this time the magnitude of any potential liability to which it may be subject
arising out of unknown environmental conditions or violations with respect to
the properties formerly owned by the Operating Partnership. No assurance can be
given that existing environmental studies with respect to any of the Properties
reveal all environmental liabilities, that any prior owner or operator of a
Property did not create any material environmental condition not known to the
Operating Partnership, or that a material environmental condition does not
otherwise exist as to any one or more of the Properties. The Operating
Partnership has limited insurance coverage for the types of environmental
liabilities described above.

The Operating Partnership may enter into transactions that could require us
to pay the tax liabilities of the partners in the Down REIT entities, which are
within our control. Although the Operating Partnership plans to hold the
contributed assets to defer recognition of gain on their sale pursuant to like-
kind exchange rules under Section 1031 of the Internal Revenue Code we can
provide no assurance that we will be able to do so and if such tax liabilities
were incurred they can expect to have a material impact on our financial position.

F-28

---



(17) Quarterly Results of Operations (Unaudited)

The following is a summary of quarterly results of
operations for 2003 and 2002:

`Quarter ended  Quarter ended  Quarter ended  Quarter ended
                                                December 31   September 30      June 30       March 31
                                               -------------  -------------  -------------  -------------
2003:
Total revenues before gain on
  the sales of real estate................... $      58,771  $      58,237  $      58,447  $      58,995
                                               =============  =============  =============  =============

Income from continuing operations
  before minority interests.................. $      12,751  $      14,864  $      16,396  $      16,128
                                               =============  =============  =============  =============

       Net income............................ $      12,719  $      14,832  $      16,369  $      16,097
                                               =============  =============  =============  =============
       Net income available to common
       unitholders........................... $       7,307  $      10,252  $      11,789  $      11,517
                                               =============  =============  =============  =============
Per share data:
 Net income:
   Basic..................................... $        0.29  $        0.44  $        0.51  $        0.49
                                               =============  =============  =============  =============

   Diluted................................... $        0.29  $        0.43  $        0.50  $        0.49
                                               =============  =============  =============  =============

Distribution per common unit................. $        0.78  $        0.78  $        0.78  $        0.78
                                               =============  =============  =============  =============



2002:
Total revenues before gain on
  the sales of real estate................... $      50,934  $      48,795  $      50,983  $      49,410
                                               =============  =============  =============  =============

Income from continuing operations
  before minority interests,
  and discontinued operations................ $      15,422  $      16,578  $      19,510  $      17,208
                                               =============  =============  =============  =============

Discontinued operations...................... $          --  $          --  $       9,128  $         176
                                               =============  =============  =============  =============

       Net income............................ $      15,392  $      16,551  $      28,592  $      17,352
                                               =============  =============  =============  =============
       Net income available to common         $      10,812  $      11,971  $      24,012  $      12,773
       unitholders...........................  =============  =============  =============  =============

Per share data:
 Net income:
   Basic..................................... $        0.52  $        0.58  $        1.15  $        0.61
                                               =============  =============  =============  =============

   Diluted................................... $        0.52  $        0.58  $        1.14  $        0.61
                                               =============  =============  =============  =============

Distribution per common unit................. $        0.77  $        0.77  $        0.77  $        0.77
                                               =============  =============  =============  =============`

F-29

---



(18) Subsequent Event - Acquisitions

On January 21, 2004, the Operating Partnership acquired the improvements
of Marina City Club, located in Marina del Rey, California, which include a 101-
unit promenade apartment community, an adjacent marina with approximately 340
boat slips and assorted retail space. The total contract price was approximately
$27,700. The improvements are subject to a non-cancellable long-term ground
lease with the County of Los Angeles that expires in 2067. This newly acquired
asset was not encumbered by any mortgage.

On January 28, 2004, the Operating Partnership acquired Mountain View
Apartments, a 106-unit multifamily community located in Camarillo, California,
for a contract price of approximately $14,300.  This newly acquired asset was
not encumbered by any mortgage.

On February 27, 2004, the Operating Partnership acquired Fountain Park
Apartments, a 705-unit multifamily community located in Playa Vista, California,
for a contract price of approximately $124,500.  In connection with the
transaction the Operating Partnership assumed tax-exempt variable rate bond
obligations totaling $83,200 that mature in 2033. Financing and other agreements
require 53% of the apartment homes in Fountain Park to be subject to various
rent restrictions based on resident income criteria.

F-30

---



ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

                   Real Estate and Accumulated Depreciation
                               December 31, 2003
                            (Dollars in thousands)

`Initial cost
                                                                                         ---------------------------        Costs
                                                                                                         Buildings       capitalized
                                                                                                            and          subsequent to
             Property                    Units            Location         Encumbrance       Land       improvements     acquisition
-----------------------------------   ------------   -------------------   -----------   ------------   ------------     ------------
Encumbered multifamily properties
 Summerhill Park                              100    Sunnyvale, CA       $             $       2,654  $       4,918    $         782
 Oak Pointe                                   390    Sunnyvale, CA                             4,842         19,776            6,953
 Summerhill Commons                           184    Newark, CA                                1,608          7,582            1,451
 Pathways                                     296    Long Beach, CA                            4,083         16,757            8,818
 Stevenson Place (The Apple)                  200    Fremont, CA                                 996          5,582            6,467
 Foothill Commons                             360    Bellevue, WA                              2,435          9,821            3,566
 Woodland Commons                             236    Bellevue, WA                              2,040          8,727            2,077
 Palisades                                    192    Bellevue, WA                              1,560          6,242            2,254
                                                                           -----------   ------------   ------------     ------------
                                                                               97,018         20,218         79,405           32,368
                                                                           -----------   ------------   ------------     ------------
 Brighton Ridge                               264    Renton, WA                                2,623         10,800            1,536
 Landmark                                     285    Hillsboro, OR                             3,655         14,200            1,422
 Eastridge                                    188    San Ramon, CA                             6,068         13,628              724
                                                                           -----------   ------------   ------------     ------------
                                                                               26,015         12,346         38,628            3,682
                                                                           -----------   ------------   ------------     ------------
 Fountain Court                               320    Bellevue, WA                              6,702         27,306              512
 Hillcrest Park (Mirabella)                   608    Newbury Park, CA                         15,318         40,601            8,869
 Hillsborough Park                            235    La Habra, CA                              6,291         15,455              283
                                                                           -----------   ------------   ------------     ------------
                                                                               80,000         28,311         83,362            9,664
                                                                           -----------   ------------   ------------     ------------
 The Shores                                   462    San Ramon, CA                            12,105         18,252           15,738
 Waterford                                    238    San Jose, CA                             11,808         24,500            9,771
                                                                           -----------   ------------   ------------     ------------
                                                                               60,000         23,913         42,752           25,509
                                                                           -----------   ------------   ------------     ------------
 Alpine Village                               306    Alpine, CA                18,076          4,967         19,868              110
 Bridle Trails                                 92    Kirkland, WA               3,989          1,500          5,930              353
 Bunker Hill Towers                           456    Los Angeles, CA           17,211         11,498         27,871            1,405
 Camarillo Oaks                               564    Camarillo, CA             54,993         10,953         25,254            4,509
 Coral Gardens                                200    El Cajon, CA              11,625          3,638         14,552              124
 Devonshire                                   276    Hemet, CA                 11,769          3,470         13,882              351
 Emerald Ridge                                180    Bellevue, WA              11,300          3,449          7,801            1,200
 Evergreen Heights                            200    Kirkland, WA              11,885          3,566         13,395            1,000
 Hampton Park (Columbus)                       83    Glendale, CA               4,345          2,407          5,672            1,394
 Hampton Place (Lorraine)                     132    Glendale, CA               8,085          4,288         11,081            1,403
 Huntington Breakers                          342    Huntington Beach, CA      22,371          9,306         22,720            2,291
 Inglenook Court                              224    Bothell, WA                8,300          3,467          7,881            1,935
 Jackson School Village                       200    Hillsboro, OR              8,773          2,588         10,452              729
 Kings Road                                   196    Los Angeles, CA           15,494          4,023          9,527              835
 Le Pac Luxury Apartments (Plumtree)          140    Santa Clara, CA           14,535          3,090          7,421            4,283
 Maple Leaf                                    48    Seattle, WA                1,949            805          3,283              147
 Mariners Place                               105    Oxnard, CA                 4,135          1,555          6,103              520
 Meadowood                                    320    Simi Valley, CA           15,883          7,852         18,592            1,801
 Monterey Villas (The Village)                122    Oxnard, CA                12,656          2,349          5,579            3,896
 Monterra del Rey (Glenbrook)                  84    Pasadena, CA               4,261          2,312          4,923            2,153
 Monterra del Sol (Euclid)                     85    Pasadena, CA               2,740          2,202          4,794            1,962
 Mt. Sutro                                     99    San Francisco, CA          6,008          2,334          8,507              502
 Park Place/Windsor Court/Cochran             176    Los Angeles, CA           18,649          4,965         11,806            1,042
 Sammamish View                               153    Bellevue, WA              10,700          3,324          7,501            1,042
 Spring Lake                                   69    Seattle, WA                2,135            838          3,399              175
 Stonehedge Village                           196    Bothell, WA                8,618          3,167         12,603            1,082
 Summit Park                                  300    San Diego, CA             22,415          5,959         23,836              666
 The Bluffs                                   224    San Diego, CA             12,942          3,405          7,743              614
 The Carlyle                                  132    San Jose, CA              16,219          3,954         15,277            8,693
 Treetops                                     172    Fremont, CA                9,800          3,520          8,182            1,400
 Wandering Creek                              156    Kent, WA                   5,300          1,285          4,980            1,332
 Wharfside Pointe                             142    Seattle, WA                8,525          2,245          7,020            1,268
 Wilshire Promenade                           149    Fullerton, CA              7,057          3,118          7,385            4,478
 Wimbledon Woods                              560    Hayward, CA               54,477          9,883         37,670            3,225
 Windsor Ridge                                216    Sunnyvale, CA             12,400          4,017         10,315            1,576
                                                                           -----------   ------------   ------------     ------------
                                                                              722,653        226,087        656,952          130,719
                                                                           -----------   ------------   ------------     ------------`

F-31

---



ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

                   Real Estate and Accumulated Depreciation
                               December 31, 2003
                            (Dollars in thousands)

`Gross amount carried at close of period
                                      ------------------------------------------------                                                Depreciable
                                        Land and        Buildings and                    Accumulated      Date of            Date        lives
             Property                 improvements      improvements        Total(1)     depreciation   construction       acquired     (years)
-----------------------------------   ------------   -------------------   -----------   ------------   ------------     ------------ -----------
Encumbered multifamily properties
 Summerhill Park                    $       2,656  $              5,698  $      8,354  $       2,891           1988       09/88          3-30
 Oak Pointe                                 4,847                26,724        31,571         15,616           1973       12/88          3-30
 Summerhill Commons                         1,525                 9,116        10,641          4,670           1987       07/87          3-30
 Pathways                                   6,238                23,420        29,658          9,273           1975       02/91          3-30
 Stevenson Place (The Apple)                1,001                12,044        13,045          6,069           1971       04/82          3-30
 Foothill Commons                           2,440                13,382        15,822          8,044           1978       03/90          3-30
 Woodland Commons                           2,044                10,800        12,844          6,285           1978       03/90          3-30
 Palisades                                  1,565                 8,491        10,056          5,246       1969/1977 (2)  05/90          3-30
                                      ------------   -------------------   -----------   ------------
                                           22,316               109,675       131,991         58,094
                                      ------------   -------------------   -----------   ------------
 Brighton Ridge                             2,656                12,303        14,959          3,134           1986       12/96          3-30
 Landmark                                   3,700                15,577        19,277          4,241           1990       08/96          3-30
 Eastridge                                  6,092                14,328        20,420          3,624           1988       08/96          3-30
                                      ------------   -------------------   -----------   ------------
                                           12,448                42,208        54,656         10,999
                                      ------------   -------------------   -----------   ------------
 Fountain Court                             6,985                27,535        34,520          3,521           2000       03/00          3-30
 Hillcrest Park (Mirabella)                15,755                49,033        64,788          9,152           1973       03/98          3-30
 Hillsborough Park                          6,272                15,757        22,029          2,975           1999       09/99          3-30
                                      ------------   -------------------   -----------   ------------
                                           29,012                92,325       121,337         15,648
                                      ------------   -------------------   -----------   ------------
 The Shores                                12,682                33,413        46,095          6,147           1988       01/97          3-30
 Waterford                                 15,086                30,993        46,079          2,838           2000       06/00          3-30
                                      ------------   -------------------   -----------   ------------
                                           27,768                64,406        92,174          8,985
                                      ------------   -------------------   -----------   ------------
 Alpine Village                             4,977                19,968        24,945            791           1971       12/02          3-30
 Bridle Trails                              1,531                 6,252         7,783          1,457           1986       10/97          3-30
 Bunker Hill Towers                        11,639                29,135        40,774          5,991           1968       03/98          3-30
 Camarillo Oaks                            11,071                29,645        40,716          7,465           1985       07/96          3-30
 Coral Gardens                              3,646                14,668        18,314            570           1976       12/02          3-30
 Devonshire                                 3,478                14,225        17,703            560           1988       12/02          3-30
 Emerald Ridge                              3,449                 9,001        12,450          3,753           1987       11/94          3-30
 Evergreen Heights                          3,649                14,312        17,961          3,472           1990       06/97          3-30
 Hampton Park (Columbus)                    2,426                 7,047         9,473          1,086           1974       06/99          3-30
 Hampton Place (Lorraine)                   4,307                12,465        16,772          1,936           1970       06/99          3-30
 Huntington Breakers                        9,315                25,002        34,317          5,484           1984       10/97          3-30
 Inglenook Court                            3,474                 9,809        13,283          4,832           1985       10/94          3-30
 Jackson School Village                     2,698                11,071        13,769          1,223           1996       09/00          3-30
 Kings Road                                 4,031                10,354        14,385          2,580           1979       06/97          3-30
 Le Parc Luxury Apartments (Plumtree)       3,092                11,702        14,794          3,424           1975       02/94          3-30
 Maple Leaf                                   828                 3,407         4,235            757           1986       10/97          3-30
 Mariners Place                             1,561                 6,617         8,178            711           1987       05/00          3-30
 Meadowood                                  7,898                20,347        28,245          5,509           1986       11/96          3-30
 Monterey Villas (The Village)              2,424                 9,400        11,824          1,657           1974       07/97          3-30
 Monterra del Rey (Glenbrook)               2,435                 6,953         9,388          1,072           1972       04/99          3-30
 Monterra del Sol (Euclid)                  2,386                 6,572         8,958          1,083           1972       04/99          3-30
 Mt. Sutro                                  2,725                 8,618        11,343          1,286           1973       06/01          3-30
 Park Place/Windsor Court/Cochran           5,015                12,798        17,813          2,460           1988       08/97          3-30
 Sammamish View                             3,331                 8,536        11,867          3,222           1986       11/94          3-30
 Spring Lake                                  859                 3,553         4,412            785           1986       10/97          3-30
 Stonehedge Village                         3,201                13,651        16,852          2,308           1986       10/97          3-30
 Summit Park                                5,971                24,490        30,461            972           1972       12/02          3-30
 The Bluffs                                 3,440                 8,322        11,762          1,925           1974       06/97          3-30
 The Carlyle                                5,791                22,133        27,924          1,896           2000       04/00          3-30
 Treetops                                   3,580                 9,522        13,102          2,991           1978       01/96          3-30
 Wandering Creek                            1,296                 6,301         7,597          2,326           1986       11/95          3-30
 Wharfside Pointe                           2,256                 8,277        10,533          3,336           1990       06/94          3-30
 Wilshire Promenade                         3,797                11,184        14,981          2,485           1992       01/97          3-30
 Wimbledon Woods                           10,350                40,428        50,778          8,159           1975       03/98          3-30
 Windsor Ridge                              4,021                11,887        15,908          5,265           1989       03/89          3-30
                                      ------------   -------------------   -----------   ------------
                                          237,492               776,266     1,013,758        188,555
                                      ------------   -------------------   -----------   ------------`

F-32

---



ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

                   Real Estate and Accumulated Depreciation
                               December 31, 2003
                            (Dollars in thousands)

`Initial cost
                                                                                         ---------------------------        Costs
                                                                                                         Buildings       capitalized
                                                                                                            and          subsequent to
             Property                    Units            Location         Encumbrance       Land       improvements     acquisition
-----------------------------------   ------------   -------------------   -----------   ------------   ------------     ------------
Unencumbered multifamily properties
 Alpine Country                               108    Alpine, CA                                1,741          6,964               75
 Avondale at Warner Center                    446    Woodland Hills, CA                       10,536         24,522            3,329
 Bonita Cedars                                120    Bonita, CA                                2,496          9,983              330
 Bristol Commons                              188    Sunnyvale, CA                             5,278         11,853            1,367
 Cambridge                                     40    Chula Vista, CA                             497          1,986               13
 Canyon Ponte                                 250    Bothell, WA                               4,692         18,600             (294)
 Carlton Heights                               70    Santee, CA                                1,099          4,397               27
 Casa Tierra                                   40    El Cajon, CA                                522          2,088               29
 Castle Creek                                 216    Newcastle, WA                             4,149         16,028            1,031
 City Heights (3)                              --    Los Angeles, CA                           9,655             --              190
 Country Villas                               180    Oceanside, CA                             4,174         16,698              449
 Emerald Palms                                152    San Diego, CA                             2,909         11,637              124
 Fairway (4)                                   74    Newport Beach, CA                            --          7,850            1,430
 Foothill/Twincreeks                          176    San Ramon, CA                             5,875         13,992            1,380
 Forest View                                  192    Renton, WA                                3,731         14,760             (226)
 Grand Regency                                 60    Escondido, CA                               881          3,522               33
 Linden Square                                183    Seattle, WA                               4,374         11,588              390
 Lofts at Pinehurst (Villa Scandia)           118    Ventura, CA                               1,570          3,912            3,684
 Marbrisa                                     202    Long Beach, CA                            4,700         18,800              328
 Marina Cove (5)                              292    Santa Clara, CA                           5,320         16,431            2,573
 Meadows @ Cascade                            198    Vancouver, WA                             2,261          9,070            1,469
 Mesa Village                                 133    Clairemont, CA                            1,888          7,552               24
 Mira Woods                                   355    Mira Mesa, CA                             7,165         28,660              141
 Mirabella                                    188    Marina Del Rey, CA                        6,180         26,673              342
 Monterra del Mar (Windsor Terrace)           123    Pasadena, CA                              2,188          5,263            3,650
 Salmon Run                                   132    Bothell, WA                               3,717         11,483              249
 Shadow Point                                 172    Spring Valley, CA                         2,812         11,248              340
 St. Cloud                                    302    Houston, TX                               2,140          8,560              614
 Tierra del Sol/Norte                         156    El Cajon, CA                              2,455          9,822               92
 The Essex at Lake Merritt                    270    Oakland, CA                              21,814         50,897              480
 The Laurels                                  164    Mill Creek, WA                            1,559          6,430              647
 The San Marcos (Vista del Mar)               312    Richmond, CA                             15,639         36,204              (58)
 Trabucco Villas                              132    Lake Forest, CA                           3,638          8,640            1,007
 Village @ Cascade                            192    Vancouver, WA                             2,103          8,753              482
 Vista Capri - East                            26    San Diego, CA                               262          1,047               --
 Vista Capri - North                          106    San Diego, CA                             1,663          6,653               10
 Vista Point (3)(6)                            --    Anaheim, CA                                  --             --               73
 Walnut Heights                               163    Walnut, CA                                4,858         19,400             (193)
 Woodlawn Colonial                            159    Chula Vista, CA                           2,344          9,374              163
                                      ------------                         -----------   ------------   ------------     ------------
                                           18,047                             722,653        384,972      1,138,292          156,513
                                      ------------                         -----------   ------------   ------------     ------------
Other real estate assets
Office Buildings
 925 East Meadow (7)                                 Palo Alto, CA                 --          1,401          3,172              980
 22120 Clarendon (8)                                 Woodland Hills, CA            --            903          3,600              920
 2399 Camino Del Rio South                           San Diego, CA                 --            200            800               (3)
 3205 Moore Street                                   San Diego, CA                 --             60            240               (2)

Recreational vehicle parks
 Circle RV                                           El Cajon, CA                  --          2,375          2,375              113
 Diamond Valley                                      Hemet, CA                     --            650            650               34
 Golden Village                                      Hemet, CA                     --          4,000          4,000               80
 Riviera RV                                          Las Vegas, NV                 --            750            750               34
 Vacationer                                          El Cajon, CA                  --          1,975          1,975              115

Manufactured housing communities
 Green Valley                                        Vista, CA                     --          3,750          3,750              187
 Riviera                                             Las Vegas, NV                 --          6,500          6,500              309
                                                                           -----------   ------------   ------------     ------------
Total multifamily and other real estate
 assets                                                                  $    722,653  $     407,536  $   1,166,104    $     159,280
                                                                           ===========   ============   ============     ============



Development communities (9)
 The San Marcos (phase II)                    120    Richmond, CA                  --          3,991             --           11,243
 Hidden Valley - Parker Ranch                 324    Simi Valley, CA           16,476          6,000             --           41,196
                                                                           -----------   ------------   ------------     ------------
                                                                         $     16,476  $       9,991  $          --    $      52,439
                                                                           ===========   ============   ============     ============`

F-33

---



ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

                   Real Estate and Accumulated Depreciation
                               December 31, 2003
                            (Dollars in thousands)

`Gross amount carried at close of period
                                      ------------------------------------------------                                                Depreciable
                                        Land and        Buildings and                    Accumulated      Date of            Date        lives
             Property                 improvements      improvements        Total(1)     depreciation   construction       acquired     (years)
-----------------------------------   ------------   -------------------   -----------   ------------   ------------     ------------ -----------
Unencumbered multifamily properties
 Alpine Country                     $       1,745  $              7,035  $      8,780            279           1986       12/02          3-30
 Avondale at Warner Center                 10,601                27,786        38,387          4,473           1989       01/97          3-30
 Bonita Cedars                              2,501                10,308        12,809            399           1983       12/02          3-30
 Bristol Commons                            5,293                13,205        18,498          3,263           1989       01/97          3-30
 Cambridge                                    498                 1,998         2,496             79           1965       12/02          3-30
 Canyon Pointe                              4,692                18,306        22,998            134           1990       10/03          3-30
 Carlton Heights                            1,102                 4,421         5,523            176           1979       12/02          3-30
 Casa Tierra                                  523                 2,116         2,639             83           1972       12/02          3-30
 Castle Creek                               4,834                16,374        21,208          3,122           1997       12/97          3-30
 City Heights (3)                           9,845                    --         9,845             --           1968       12/00            --
 Country Villas                             4,183                17,138        21,321            664           1976       12/02          3-30
 Emerald Palms                              2,915                11,755        14,670            463           1986       12/02          3-30
 Fairway (4)                                    9                 9,271         9,280          1,451           1972       06/99          3-30
 Foothill/Twincreeks                        5,964                15,283        21,247          3,812           1985       02/97          3-30
 Forest View                                3,731                14,534        18,265            146           1998       10/03          3-30
 Grand Regency                                882                 3,554         4,436            142           1967       12/02          3-30
 Linden Square                              4,202                12,150        16,352          1,375           1994       06/00          3-30
 Lofts at Pinehurst (Villa Scandia)         1,618                 7,548         9,166          1,590           1971       06/97          3-30
 Marbrisa                                   4,753                19,075        23,828            931           1987       09/02          3-30
 Marina Cove (5)                            5,324                19,000        24,324          7,684           1974       06/94          3-30
 Meadows @ Cascade                          2,337                10,463        12,800          2,427           1988       11/97          3-30
 Mesa Village                               1,892                 7,572         9,464            297           1963       12/02          3-30
 Mira Woods                                 7,180                28,786        35,966          1,140           1982       12/02          3-30
 Mirabella                                  6,190                27,005        33,195          3,341           2000       05/00          3-30
 Monterra del Mar (Windsor Terrace)         2,736                 8,365        11,101          1,512           1972       09/97          3-30
 Salmon Run                                 3,801                11,648        15,449          1,245           2000       10/00          3-30
 Shadow Point                               2,818                11,582        14,400            451           1983       12/02          3-30
 St. Cloud                                  2,144                 9,170        11,314            360           1968       12/02          3-30
 Tierra del Sol/Norte                       2,461                 9,908        12,369            390           1969       12/02          3-30
 The Essex at Lake Merritt                 21,916                51,275        73,191          1,707           2003       01/03          3-30
 The Laurels                                1,595                 7,041         8,636          1,814           1981       12/96          3-30
 The San Marocs                            15,563                36,222        51,785            637           2003       10/03          3-30
 Trabucco Villas                            3,843                 9,442        13,285          1,980           1985       10/97          3-30
 Village @ Cascade                          2,154                 9,184        11,338          1,997           1995       12/97          3-30
 Vista Capri - East                           262                 1,047         1,309             41           1967       12/02          3-30
 Vista Capri - North                        1,667                 6,659         8,326            263           1975       12/02          3-30
 Vista Point (3)(6)                            73                    --            73             --           1968       07/85            --
 Walnut Heights                             4,887                19,178        24,065            131           1964       10/03          3-30
 Woodlawn Colonial                          2,348                 9,533        11,881            372           1974       12/02          3-30
                                      ------------   -------------------   -----------   ------------
                                          398,574             1,281,203     1,679,777        238,926
                                      ------------   -------------------   -----------   ------------
Other real estate assets
Office Buildings
 925 East Meadow (7)                        1,765                 3,788         5,553           1024           1984       11/97          3-30
 22120 Clarendon (8)                         1005                 4,418         5,423            409           1982       03/01          3-30
 2399 Camino Del Rio South                    200                   797           997             31           1978       12/02          3-30
 3205 Moore Street                             60                   238           298              9           1957       12/02          3-30

Recreational vehicle parks
 Circle RV                                  2,503                 2,360         4,863             98           1977       12/02          3-30
 Diamond Valley                               686                   648         1,334             28           1974       12/02          3-30
 Golden Village                             4,090                 3,990         8,080            166           1972       12/02          3-30
 Riviera RV                                   787                   747         1,534             31           1969       12/02          3-30
 Vacationer                                 2,098                 1,967         4,065             83           1973       12/02          3-30

Manufactured housing communities
 Green Valley                               3,953                 3,734         7,687            157           1973       12/02          3-30
 Riviera                                    6,828                 6,481        13,309            273           1969       12/02          3-30
                                      ------------   -------------------   -----------   ------------
Total multifamily and other real estate
 assets                             $     422,549  $          1,310,371  $  1,732,920  $     241,235
                                      ============   ===================   ===========   ============



Development communities (9)
 The San Marcos (phase II)                 11,243                    --        11,243             --             --       09/00               --
 Hidden Valley - Parker Ranch              41,196                    --        41,196             --             --       08/00               --
                                      ------------   -------------------   -----------   ------------

Total development communities       $      52,439  $                 --  $     52,439  $          --
                                      ============   ===================   ===========   ============




(1)  The aggregate cost for federal income tax purposes is $1,125,358.
(2)  Phase I was built in 1969 and Phase II was built in 1977.
(3)  The Company has a leasehold interest in this land and receives a land lease payment over a 34-year-term.
(4)  The land is leased pursuant to a ground lease expiring 2027.
(5)  A portion of land is leased pursuant to a ground lease expiring in 2028.
(6)  The Company's interest in the land is subordinate to a loan issued to the purchaser of the buildings and improvements, and therefore the carr
(7)  Total rentable square footage of 17,404.
(8)  Total rentable square footage of 38,940.
(9)  All construction costs are reflected as real estate under development in the Company's consolidated balance sheets until the project reaches`

F-34

---



ESSEX PORTFOLIO, L.P. AND SUBSIDIARIES

                   Real Estate and Accumulated Depreciation
                               December 31, 2003
                            (Dollars in thousands)

`A summary of activity for real estate and accumulated depreciation is as follows:

                                           2003        2002        2001                                                   2003       2002       2001
                                        ----------  ----------  ----------                                              ---------  ---------  ---------
Real estate:                                                                 Accumulated depreciation:
   Balance at beginning of year....... $1,515,956  $1,175,200  $1,156,408      Balance at beginning of year........... $ 191,821  $ 156,269  $ 119,499
   Improvements.......................     36,039      16,346      25,839      Dispositions...........................        --     (1,684)        --
   Acquisition of real estate.........     55,950     335,508      15,904      Depreciation expense--Acquisitions.....       334        157        758
   Development of real estate.........    124,975          --          --      Depreciation expense--Development......     2,344
   Disposition of real estate.........         --     (11,098)    (22,951)     Depreciation expense...................    46,736     37,079     36,012
                                        ----------  ----------  ----------                                              ---------  ---------  ---------
   Balance at end of year............. $1,732,920  $1,515,956  $1,175,200    Balance at end of year................... $ 241,235  $ 191,821  $ 156,269
                                        ==========  ==========  ==========                                              =========  =========  =========`

F-35

---



SIGNATURE

Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



|Date: March 12, 2004 | Essex Portfolio, L.P.
                                               (Registrant)

                                               By: Essex Property Trust, Inc.
                                               Its: General Partner

                                               By:/s/  MICHAEL J. SCHALL

                                                   Michael J. SchallSenior Executive Vice
                                                     President Chief Financial
                                                       Officer and Director
|-------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

S-1

---

POWER OF ATTORNEY

KNOWN ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Keith R. Guericke and Michael J. Schall,
and each of them, his attorney-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any amendments to this Report on Form 10-
K and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorney-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacity and on the date indicated.



|Signature                                            | Title                                                                                                        | Date          
|---------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | --------------
|/s/  GEORGE M. MARCUS
      George M. Marcus         | Chairman of the Board                                                                                        | March 12, 2004
|/s/  KEITH R. GUERICKE
      Keith R. Guericke       | President and Chief Executive
  Officer and Vice
  Chairman (Principal Executive Officer)                    | March 12, 2004
|/s/  MICHAEL J. SCHALL
      Michael J. Schall       | Senior Executive Vice
  President and Chief
  Financial Officer and
  Director (Principal Financial Officer) | March 12, 2004
|/s/  MARK J. MIKL
        Mark J. Mikl               | Vice President and Controller
  (Principal Accounting Officer)                                               | March 12, 2004
|/s/  WILLIAM A. MILLICHAP
    William A. Millichap   | Director                                                                                                     | March 12, 2004
|/s/  GARY P. MARTIN
       Gary P. Martin            | Director                                                                                                     | March 12, 2004
|/s/  ROBERT E. LARSON
      Robert E. Larson         | Director                                                                                                     | March 12, 2004
|/s/  THOMAS E. RANDLETT
     Thomas E. Randlett      | Director                                                                                                     | March 12, 2004
|/s/  DAVID W. BRADY
       David W. Brady            | Director                                                                                                     | March 12, 2004
|/s/  ISSIE N. RABINOVITCH
    Issie N. Rabinovitch   | Director                                                                                                     | March 12, 2004
|/s/  WILLARD H. SMITH, JR.
    Willard H. Smith, Jr. | Director                                                                                                     | March 12, 2004

S-2

---



EXHIBIT INDEX



|Exhibit No. | Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Note
|----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|2.1         | Agreement and Plan of Reorganization by and among Essex, Merger
Sub, Sachs, the Sachs Shareholders and John M. Sachs, dated December 17, 2002.
Certain exhibits and schedules referenced in the Merger Agreement have been
omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any
omitted exhibit or schedule will be furnished supplementally to the Securities
and Exchange Commission upon request. Attached as Exhibit 2.1 to the Company's
Current Report on Form 8-K, filed December 23, 2002, and incorporated herein by
reference. | --  
|3.1         | Articles of Amendment and Restatement of Essex dated June 22,
1995, attached as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                          | --  
|3.2         | Articles Supplementary of Essex Property Trust, Inc. for the
8.75% Convertible Preferred Stock, Series 1996A, attached as Exhibit 3.1 to the
Company's Current Report on Form 8-K, filed August 13, 1996, and incorporated
herein by reference.                                                                                                                                                                                                                                                                                                                | --  
|3.3         | First Amendment to Articles of Amendment and Restatement of
Essex Property Trust, Inc., attached as Exhibit 3.1 to the Company's 10-Q for
the quarter ended September 30, 1996, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                          | --  
|3.4         | Certificate of Correction to Exhibit 3.2 dated December 20, 1996                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | (1) 
|3.5         | Amended and Restated Bylaws of Essex Property Trust, Inc.,
attached as Exhibit 3.2 to the Company's Current Report on Form 8-K, filed
August 13, 1996, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                   | --  
|3.6         | Certificate of Amendment of the Bylaws of Essex Property Trust,
Inc., dated December 17, 1996.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (1) 
|3.7         | Articles Supplementary reclassifying 2,000,000 shares of Common
Stock as 2,000,000 shares of 7.875% Series B Cumulative Redeemable Preferred
Stock, filed with the State of Maryland on February 10, 1998, attached as
Exhibit 3.1 to the Company's Current Report on Form 8-K, filed March 3, 1998,
and incorporated herein by reference.                                                                                                                                                                                                                     | --  
|3.8         | Articles Supplementary reclassifying 500,000 shares of Common
Stock as 500,000 shares of 9 1/8% Series C Cumulative Redeemable Preferred
Stock, filed with the State of Maryland on November 25, 1998.                                                                                                                                                                                                                                                                                                                                                         | (2) 
|3.9         | Certificate of Correction to Exhibit 3.2 dated February 12,
1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | (2) 
|3.10        | Articles Supplementary reclassifying 6,617,822 shares of Common
Stock as 6,617,822 shares of Series A Junior Participating Preferred Stock,
filed with the State of Maryland on November 13, 1998, attached as Exhibit 4.0
to the Company's Annual Report on Form 10-K for the year ended December 31,
1998, and incorporated herein by reference.                                                                                                                                                                                                             | --  
|3.11        | Articles Supplementary reclassifying 2,000,000 shares of Common
Stock as 2,000,000 shares of 9.30% Series D Cumulative Redeemable Preferred
Stock, filed with the State of Maryland on July 30, 1999, attached as Exhibit
3.1 to the Company's 10-Q for the quarter ended June 30, 1999 and incorporated
herein by reference.                                                                                                                                                                                                                                  | --  
|3.12        | Articles Supplementary reclassifying 2,200,000 shares of Common
Stock as 2,200,000 shares of 9.25% Series E Cumulative Redeemable Preferred
Stock, filed with the State of Maryland on September 9, 1999, attached as
Exhibit 3.1 to the Company's 10-Q for the quarter ended September 30, 1999 and
incorporated herein by reference.                                                                                                                                                                                                                         | --  
|3.13        | Certificate of Correction to Articles Supplementary
reclassifying 2,000,000 shares of Common Stock as 2,000,000 shares of 9.30%
Series D Cumulative Redeemable Preferred Stock, attached as Exhibit 3.1 to the
Company's Form 10-Q for the quarter ended March 31, 2000, and incorporated
herein by reference.                                                                                                                                                                                                                                                 | --  
|3.14        | Certificate of Amendment of the Bylaws of Essex Property Trust, Inc. dated
February 14, 2000, attached as Exhibit 3.2 to the Company's Form 10-Q for the
quarter ended March 31, 2000, and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                   | --  
|3.15        | Articles Supplementary relating to the 7.8125%
Series F Cumulative Redeemable Preferred Stock, attached as Exhibit 3.1 to the
Company's Form 8-K, dated September 19, 2003, and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                              | --  
|3.16        | Articles Supplementary reclassifying 2,000,000 shares of 7.875%
Series B Cumulative Redeemable Preferred Stock as 2,000,000 shares of Series B
Cumulative Redeemable Preferred Stock, filed with the State of Maryland on
January 14, 2004                                                                                                                                                                                                                                                                                                                     | --  
|3.17        | Articles Supplementary reclassifying 2,000,000 shares of 9.30%
Series D Cumulative Redeemable Preferred Stock as 2,000,000 shares of Series D
Cumulative Redeemable Preferred Stock, filed with the State of Maryland on
January 14, 2004                                                                                                                                                                                                                                                                                                                      | --  
|4.1         | Rights Agreement, dated as of November 11, 1998, between Essex
Property Trust, Inc., and BankBoston, N.A., as Rights Agent, including all
exhibits thereto, attached as Exhibit 1 to the Company's Registration Statement
filed on Form 8-A dated November 12, 1998, and incorporated herein by reference.                                                                                                                                                                                                                                                     | --  
|4.2         | Amendment to Rights Agreement, dated as of December 13, 2000,
attached as Exhibit 4.1 to the Company's Form 10-Q for the quarter ended March
31, 2001 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                    | --  
|4.3         | Amendment to Rights Agreement, dated as of February 28, 2002
attached as Exhibit 4.3 to the Company's Form 10-K for the year ended December
31, 2001 and incorporated herein by reference.                                                                                                                                                                                                                                                                                                                                                                     | --  
|10.1        | Essex Property Trust, Inc. 1994 Stock Incentive Plan, (amended
and restated), attached as Exhibit 10.1 to the Company's Form 10-Q for the
quarter ended June 30, 2000 and incorporated herein by reference.*                                                                                                                                                                                                                                                                                                                                                   | --  
|10.2        | First Amended and Restated Agreement of Limited Partnership of
Essex Portfolio, L.P. attached as Exhibit 10.1 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1997, and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                   | --  
|10.3        | First Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P. dated February 6, 1998, attached as
Exhibit 10.1 to the Company's Current Report on Form 8-K, filed March 3, 1998,
and incorporated herein by reference.                                                                                                                                                                                                                                                                                           | --  
|10.4        | Second Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P. dated April 20, 1998, attached as
Exhibit 10.1 to the Company's Current Report on Form 8-K, filed April 23, 1998,
and incorporated herein by reference.                                                                                                                                                                                                                                                                                           | --  
|10.5        | Third Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P. dated November 24, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                           | (2) 
|10.6        | Fourth Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P., dated July 28, 1999, attached as
Exhibit 10.1 to the Company's 10-Q for the quarter ended June 30, 1999 and
incorporated herein by reference.                                                                                                                                                                                                                                                                                                    | --  
|10.7        | Fifth Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P., dated September 3, 1999, attached
as Exhibit 10.1 to the Company's 10-Q for the quarter ended September 30, 1999
and incorporated herein by reference.                                                                                                                                                                                                                                                                                            | --  
|10.8        | Form of Essex Property Trust, Inc. 1994 Non-Employee and
Director Stock Incentive Plan, attached as Exhibit 10.3 to the Company's
Registration Statement on Form S-11 (Registration No. 33-76578), which became
effective on June 6, 1994, and incorporated herein by reference.*                                                                                                                                                                                                                                                                              | --  
|10.9        | Form of Essex Property Trust, Inc. 1994 Employee Stock Purchase
Plan, attached as Exhibit 10.4 to the Company's Registration Statement on Form
S-11 (Registration No. 33-76578), which became effective on June 6, 1994, and
incorporated herein by reference.*                                                                                                                                                                                                                                                                                                | --  
|10.10       | Form of Non-Competition Agreement between Essex and each of
Keith R. Guericke and George M. Marcus, attached as Exhibit 10.5 to the
Company's Registration Statement on Form S-11 (Registration No. 33-76578), which
became effective on June 6, 1994, and incorporated herein by reference.                                                                                                                                                                                                                                                                   | --  
|10.11       | Termination of Non-Compete Agreement between Essex Property
Trust, Inc. and George M. Marcus attached as Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1998, and
incorporated herein by reference.                                                                                                                                                                                                                                                                                                                  | --  
|10.12       | Form of Indemnification Agreement between Essex and its
directors and officers, attached as Exhibit 10.7 to the Company's Registration
Statement on Form S-11 (Registration No. 33-76578), which became effective on
June 6, 1994, and incorporated herein by reference.                                                                                                                                                                                                                                                                                       | --  
|10.13       | First Amendment to Investor Rights Agreement dated July 1, 1996
by and between George M. Marcus and The Marcus & Millichap Company, attached
as Exhibit 10.3 to the Company's Current Report on Form 8-K, filed August 13,
1996, and incorporated herein by reference.                                                                                                                                                                                                                                                                                         | --  
|10.14       | Co-Brokerage Agreement by and among Essex, the Operating
Partnership, MM REIBC and Essex Management Corporation attached as Exhibit 10.15
to the Company's Registration Statement on Form S-11 (Registration No. 33-
76578), which became effective on June 6, 1994, and incorporated herein by
reference.                                                                                                                                                                                                                                                     | --  
|10.15       | General Partnership Agreement of Essex Washington Interest
Partners attached as Exhibit 10.16 to the Company's Registration Statement on
Form S-11 (Registration No.33-76578), which became effective on June 6, 1994,
and incorporated herein by reference.                                                                                                                                                                                                                                                                                                   | --  
|10.16       | Form of Investor Rights Agreement between Essex and the Limited
Partner of the Operating Partnership attached as Exhibit 10.26 to the Company's
Registration Statement on Form S-11 (Registration No. 33-76578), which became
effective on June 6, 1994, and incorporated herein by reference.                                                                                                                                                                                                                                                                 | --  
|10.17       | Phantom Stock Unit Agreement for Mr. Guericke, attached as
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997, and incorporated herein by reference. (Same form was used
for subsequent phantom stock agreements.)*                                                                                                                                                                                                                                                                                              | --  
|10.18       | Phantom Stock Unit Agreement for Mr. Schall, attached as Exhibit
10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997, and incorporated herein by reference. (Same form was used for
subsequent phantom stock agreements.)*                                                                                                                                                                                                                                                                                                | --  
|10.19       | Replacement Promissory Note (April 15, 1996) and Pledge
Agreement for Mr. Guericke, attached as Exhibit 10.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997, and incorporated
herein by reference.*                                                                                                                                                                                                                                                                                                                       | --  
|10.20       | Promissory Note (December 31, 1996) and Pledge Agreement for Mr.
Guericke, attached as Exhibit 10.4 to the Company's Quarterly Report on Form 10-
Q for the quarter ended March 31, 1997, and incorporated herein by reference.
(Same form of Promissory Note and Pledge Agreement used for subsequent
loans.)*                                                                                                                                                                                                                                                | --  
|10.21       | Replacement Promissory Note (April 30, 1996) and Pledge
Agreement for Mr. Schall, attached as Exhibit 10.5 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 1997, and incorporated
herein by reference.*                                                                                                                                                                                                                                                                                                                         | --  
|10.22       | Promissory Note (December 31, 1996) and Pledge Agreement for Mr.
Schall, attached as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997, and incorporated herein by reference.
(Same form of Promissory Note and Pledge Agreement used for subsequent loans.)*                                                                                                                                                                                                                                                   | --  
|10.23       | First Amended and Restated Agreement of Limited Partnership of
Western Highridge I Investors, effective as of May 13, 1997, attached as Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1997, and incorporated herein by reference.                                                                                                                                                                                                                                                                                 | --  
|10.24       | Registration Rights Agreement, effective as of May 13, 1997, by
and between the Company and the limited partners of Western-Highridge I
Investors, Irvington Square Associates, Western-Palo Alto II Investors, Western
Riviera Investors, and Western-San Jose III Investors, attached as Exhibit 10.6
to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
1997, and incorporated herein by reference.                                                                                                                              | --  
|10.25       | $100,000,000 Promissory Note between Essex Portfolio, L.P., and
Essex Morgan Funding Corporation, attached as Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1998, and
incorporated herein by reference.                                                                                                                                                                                                                                                                                                      | --  
|10.26       | Sixth Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P. dated as of June 28, 2001, attached
as Exhibit 10.1 to the Company's 10-Q for the quarter ended June 30, 2001 and
incorporated herein by reference.*                                                                                                                                                                                                                                                                                               | --  
|10.27       | Executive Severance Plan attached as Exhibit 10.31 to the
Company's Form 10-K for the year ended December 31, 2001 and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                                                                                       | --  
|10.28       | Second Amended and Restated Revolving Credit Agreement, dated
May 10, 2002, among Essex Portfolio, L.P., Bank of America and other lenders as
specified therein, attached as Exhibit 10.1 to the Company's 10-Q for the
quarter ended June 30, 2002, and incorporated herein by reference.                                                                                                                                                                                                                                                                     | --  
|10.29       | Registration Rights Agreement by and among Essex and the Sachs
shareholders, dated December 17, 2002, attached as Exhibit 10.1 to the Company's
Current Report on Form 8-K, filed December 23, 2002, and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                     | --  
|10.30       | Agreement between Essex Property Trust, Inc. and George M.
Marcus dated March 27, 2003 attached as Exhibit 10.32 to the Company's Form 10-K
for the year ended December 31, 2003 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                         | --  
|10.31       | Seventh Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P. dated as of June 26, 2003, attached
as Exhibit 10.1 to the Company's 10-Q for the quarter ended June 30, 2003 and
incorporated herein by reference.*                                                                                                                                                                                                                                                                                             | --  
|10.32       | Series F Cumulative Redeemable Preferred Stock
Purchase Agreement, dated September 18, 2003, by and between Essex Property
Trust, Inc. and Lend Lease Rosen Real Estate Securities, LLC, attached as
Exhibit 10.1 to the Company's Form 8-K, dated September 19, 2003 and
incorporated herein by reference.                                                                                                                                                                                                                                                    | --  
|10.33       | Eighth Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P. dated as of September 23, 2003,
attached as Exhibit 10.2 to the Company's 10-Q for the quarter ended September
30, 2003 and incorporated herein by reference.                                                                                                                                                                                                                                                                                     | --  
|10.34       | Amended and Restated Revolving Note Agreements
(increasing credit line to $185 million) attached as Exhibit 10.3 to the
Company's 10-Q for the quarter ended September 30, 2003 and incorporated herein
by reference.                                                                                                                                                                                                                                                                                                                                          | --  
|10.35       | Second Amendment to Second Amended and Restated
Revolving Credit Agreement attached as Exhibit 10.4 to the Company's 10-Q for
the quarter ended September 30, 2003 and incorporated herein by
reference.                                                                                                                                                                                                                                                                                                                                                       | --  
|10.36       | Ninth Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P. dated as of January 8, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                       | --  
|10.37       | Tenth Amendment to the First Amended and Restated Agreement of
Limited Partnership of Essex Portfolio, L.P. dated as of January 8, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                       | --  
|12.1        | Schedule of Computation of Ratio of Earnings to Fixed Charges
and Preferred Stock Dividends.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | --  
|21.1        | List of Subsidiaries of Essex Property Trust, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | --  
|23.1        | Consent of KPMG LLP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | --  
|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 J. Schall, 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 J. Schall, Chief Financial Officer,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                        |     

______

* Management contract or compensatory plan or arrangement.

(1) Incorporated by reference to the identically numbered exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.

(2) Incorporated by reference to the identically numbered
exhibit to the Company's Annual Report on Form 10-K for the year ended December
31, 1998.





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