<PAGE>

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

                                   ----------

                                    FORM 10-K


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

     For the fiscal year ended December 31, 1999

                                       or

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

                      Commission File Number: 333-44467-01

                              ESSEX PORTFOLIO, L.P.
                              ---------------------
             (Exact name of registrant as specified in its charter)

         Maryland                                         77-0369575
         --------                                         ----------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                        Identification No.)

               925 East Meadow Drive, Palo Alto, California 94303
               --------------------------------------------------
               (Address of principal executive offices) (Zip code)

                                 (650) 494-3700
                                 --------------
              (Registrant's telephone number, including area code)

      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.
                                [ X ] Yes [ ] 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 the Form 10-K. [X]

LOCATION OF EXHIBIT INDEX: The index exhibit is contained in Part IV, Item 14,
on page number 29.

DOCUMENTS INCORPORATED BY REFERENCE:
The following document is incorporated by reference in Part III of the Annual
Report on Form 10K: Proxy statement for the annual meeting of stockholders of
Essex Property Trust, Inc. to be held April 25, 2000.
<PAGE>

                                TABLE OF CONTENTS
                                    FORM 10-K

                                                                        Page No.
                                                                        --------
PART I

     Item 1   Business................................................     3
     Item 2   Properties..............................................    16
     Item 3   Legal Proceedings.......................................    18
     Item 4   Submission of Matters to a Vote of Security Holders.....    19

PART II

     Item 5   Recent Sales of Unregistered Securities.................    19
     Item 6   Summary Financial and Operating Data....................    19
     Item 7   Management's Discussion and Analysis of
               Financial Condition and Results of Operations..........    22
     Item 7A  Quantitiative and Qualitative Disclosures About
               Market Risk............................................    28
     Item 8   Financial Statements and Supplementary Data.............    28
     Item 9   Changes in and Disagreements with Accountants
               on Accounting and Financial Disclosure.................    28

PART III

     Item 10  Directors and Executive Officers of the Registrant......    28
     Item 11  Executive Compensation..................................    28
     Item 12  Security Ownership of Certain Beneficial Owners
               and Management.........................................    28
     Item 13  Certain Relationships and Related Transactions..........    28

PART IV

     Item 14  Exhibits, Financial Statements Schedules and
               Reports on Form 8-K....................................   29

     Signatures.......................................................  S-1
<PAGE>

                                     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 89.7% general partnership interest, as
of December 31, 1999 (except with regard to the section entitled "Other
Matters/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 regarding the
Operating Partnership's expectation as to the timing of completion of current
development 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 and expectations as to the amount of
non-revenue generating capital expenditures for the year ended December 31,
2000, potential acquisitions and developments, the anticipated performance of
existing properties, future acquisitions and developments and statements
regarding the Operating Partnership's financing activities. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
including, but not limited to, that the actual completion of development
projects will be subject to delays, 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, that the actual non-revenue
generating capital expenditures will exceed the Operating Partnership's current
expectations, as well as those risks, special considerations, and other factors
discussed under the caption "Other Matters/Risk Factors" in Item 1 of this
Report on Form 10-K for the year ended December 31, 1999, 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.

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 net proceeds from the Offering of $112.1 million were used by the
Company to acquire a 77.2% interest in the Operating Partnership. The Company
has elected to be treated as a real estate investment trust ("REIT") under the
Internal Revenue Code of 1986 (the "Code") as amended.

The Company conducts substantially all of its activities through the Operating
Partnership. The Company currently owns an approximate 89.7% general partnership
interest and senior member of the Company's management and certain outside
investors own approximately 10.3% limited partnership interest in the Operating
Partnership. As the sole general partner of the Operating Partnership, the
Company has control over the management of the Operating Partnership and over
each of the Properties.

The Operating Partnership is engaged in the ownership, acquisition, development
and management of multifamily apartment communities. The Operating Partnership's
multifamily portfolio consists of ownership interests in 68 properties
(comprising 15,106 apartment units), 30 of which are located in Southern
California (Los Angeles, Ventura, Orange and San Diego counties), 16 of which
are located in Northern California (the San Francisco Bay Area) and 22 of which
are located in the Pacific Northwest (18 in the Seattle metropolitan area and 4
in the Portland, Oregon metropolitan area). The Operating Partnership also has
ownership interests in an office building located in Northern California (Palo
Alto) which houses the Operating Partnership's headquarters, and three retail
shopping centers located in the Pacific Northwest (the "Commercial Properties,"
and together with the Operating Partnership's 68 multifamily residential
properties, the "Properties"). The Operating Partnership and affiliated entities
and joint ventures also have entered into commitments for the development of
1,904 units in nine multifamily communities; five in Northern California, two in
Southern California and two in the Pacific Northwest.

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 redevelopment of 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.
<PAGE>

     .    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 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. The Company evaluates financing alternatives
          including alternative financing sources through joint ventures
          broadening the Operating Partnership's access to capital.

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 regional portfolio
managers 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 the performance of 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
600 units. These types of properties offer attractive opportunities because such
properties (i) are often mispriced by real estate sellers and buyers who lack
the Operating Partnership's ability to obtain and use real-time market
information, (ii) 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 expertise of the
Operating Partnership.

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

     .    Major Metropolitan Areas. The Operating Partnership focuses on
          metropolitan areas having a regional population in excess of one
          million people. Real estate markets in these areas are typically
          characterized by a relatively greater number of buyers and sellers and
          are, therefore, more liquid. Liquidity is an important element for
          implementing the Operating Partnership's strategy of varying its
          portfolio in response to changing market conditions.

     .    Supply Constraints. The Operating Partnership believes that properties
          located in real estate markets with limited development or
          redevelopment opportunities are well suited to produce increased
          rental income. When evaluating supply constraints, The Operating
          Partnership reviews: (i) availability of developable land sites on
          which competing properties could be readily constructed; (ii)
          political barriers to growth resulting from a restrictive local
          political environment regarding development and redevelopment (such an
          environment, in addition to the restrictions on development itself, is
          often associated with a lengthy development process and expensive
          development fees); and (iii) physical barriers to growth, resulting
          from natural limitations to development, such as mountains or
          waterways.

     .    Rental Demand Created by High Cost of Housing. The Operating
          Partnership concentrates on markets in which the cost of renting is
          significantly lower than the cost of owning a home. In such markets,
          rent levels are higher and operating expenses and capital
          expenditures, as a percentage of rent, are lower in comparison with
          markets that have a lower cost of owning a home.

     .    Job Proximity. The Operating Partnership believes that most renters
          select housing based on its proximity to their jobs and on related
          commuting factors. The Operating Partnership obtains local area
          information relating to its residential properties and uses this
          information when making multifamily residential property acquisition
          decisions. The Operating Partnership also reviews the location of
          major employers relative to its portfolio and potential acquisition
          properties.

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

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
<PAGE>

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 result in better overall operating
performance and lower portfolio risk. The Operating Partnership maintains and
evaluates:

     .    Regional Economic Data. The Operating Partnership evaluates and
          reviews regional economic factors for the markets in which it owns
          properties and where it considers expanding its operations. The
          Operating Partnership's research focuses on regional and sub-market
          supply and demand, economic diversity, job growth, market depth and
          the comparison of rental price to single-family housing prices.

     .    Local Market Conditions. Local market knowledge includes (i) local
          factors that influence whether a sub-market is desirable to tenants;
          (ii) the extent to which the area surrounding a property is improving
          or deteriorating; and (iii) local investment market dynamics,
          including the relationship between the value of a property and its
          yield, the prospects for capital appreciation and market depth.

Recognizing that all real estate markets are cyclical, the Operating Partnership
regularly evaluates the results of regional economic and local market research
and adjusts 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

As of December 31, 1999, the 89.7% general partnership interest in the Operating
Partnership is owned by the Company. The approximate 10.3% 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 and each of the Properties. From time to
time, the Operating Partnership may invest in properties through the acquisition
of an interest in another entity, based upon the criteria described above. The
Operating Partnership does not plan to invest in any securities of other
entities not engaged in real estate activities.

The Company, which includes its share of the Operating Partnership's income and
expenses on its tax returns, has elected to be treated as a real estate
investment trust ("REIT") for federal income tax purposes, commencing with the
year ended December 31, 1994. In order to maintain compliance with REIT tax
rules, the Company provides some of its fee-based asset management and
disposition services as well as third-party property management and leasing
services through Essex Management Corporation ("EMC"). The Company owns 100% of
EMC's 19,000 shares of nonvoting preferred stock. Executives of the Company own
100% of EMC's 1,000 shares of common stock.

In July 1999, the Operating Partnership completed the sale of 2,000,000 units of
its 9.30% Series D Cumulative Redeemable Preferred Units to two related
institutional investors in a private placement, at a price of $25.00 per unit.
The net proceeds from this sale were approximately $48,925,000. In September
1999, the Operating Partnership completed the sale of 2,200,000 units of its
9.25% Series E Cumulative Redeemable Preferred Units to an institutional
investor in a private placement, at a price of $25.00 per unit. The net proceeds
from this sale were approximately $53,400,000.

During 1999, WBP I Holding Corp. (formerly known as "Tiger/Westbrook Real Estate
Fund, L.P."), and WBP II Holding Corp. (formerly known as "Tiger/Westbrook Real
Estate Co-Investment Partnership, L.P.") (collectively, "Tiger/Westbrook")
converted 1,415,313 shares of its ownership in the Company's 8.75% Convertible
Preferred Stock, Series 1996A (the "Convertible Preferred Stock") into 1,617,501
shares of Common Stock. At December 31, 1999, Tiger Westbrook owned 184,687
shares of Convertible Preferred Stock.

In March 1999, the Company's Board of Directors authorized the Operating
Partnership to purchase up to 500,000 shares of the Company's Common Stock, or
approximately 3% of the issued and outstanding Common Stock of the Company, at a
total price per share not to exceed $29.00 in the open market or through
negotiated or block transactions. During 1999, the Operating Partnership
purchased 261,900 shares of the Company's outstanding Common Stock. The weighted
average price paid for the shares was $27.17.

In September 1999, the Operating Partnership formed a program in which directors
and management of the Operating Partnership can participate indirectly in an
investment in the Company's common stock. The participants have entered into a
swap agreement with a securities broker whereby the securities broker has
acquired, in open market transactions, 223,475 shares of the Company's common
stock. The agreement terminates in five years at which time the settlement
amount is determined by comparing the original purchase price of the stock plus
interest at a rate of LIBOR plus 1.5% to the termination date market value of
the shares and all dividends received during the investment period. In certain
circumstances the participants may be required to provide collateral to the
securities broker. The Operating Partnership has guaranteed performance of the
participants with respect to any obligations relating to the swap agreement.

Acquisitions

During 1999, the Operating Partnership acquired ownership interests in nine
multifamily properties consisting of 2,450 units with an aggregate purchase
price of approximately $213,700,000. These investments were primarily funded by
sales of preferred units and issuance of common units by the Operating
Partnership, the contribution of equity from joint venture partners, cash
generated from operations, proceeds from the

<PAGE>

dispositions of properties, proceeds from new and assumed loans and the
Operating Partnership's line of credit. Of the nine properties purchased in
1999, eight properties (2,351 units) are located in Southern California and one
(99 units) is located in Northern California.

Multifamily property ownership interests acquired in 1999 are as follows:

                                                                     Purchase
                                                                       Price
Property Name                    Location               Units      (in millions)
--------------------------------------------------------------------------------
Southern California
  Coronado at Newport South (1)  Newport Beach, CA       715        $    64.0
  Coronado at Newport North (1)  Newport Beach, CA       732             62.0
  Avondale at Warner Center      Woodland Hills, CA      446             35.0
  Loraine                        Glendale, CA            132             13.5
  Columbus                       Glendale, CA             83              7.7
  Fairways (2)                   Newport Beach, CA        74              7.5
  Glenbrook                      Pasadena, CA             84              7.0
  Euclid                         Pasadena, CA             85              6.7
Northern California
  Mt. Sutro Terrace (3)          San Francisco, CA        99             10.3
--------------------------------------------------------------------------------

Total Acquisitions                                     2,450        $   213.7
================================================================================

----------
(1)  The Operating Partnership holds an approximate 49.9% ownership interest in
     the joint venture that owns this property.
(2)  The Operating Partnership purchased a leasehold interest in this property
     with a remaining term of 28 years.
(3)  The Operating Partnership holds an approximate 46% ownership interest in
     the joint venture that owns this property.

In October 1999, the Operating Partnership entered into a joint venture and
received an approximate 49.9% equity interest (Coronado at Newport joint
venture). The Operating Partnership contributed its investment of Coronado at
Newport North to the joint venture. At the same time, the partners purchased
Coronado at Newport Beach South. Generally, profit and loss is 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 venture and incentive payments based on the financial
success of the joint venture.

In December 1999, the Operating Partnership entered into a joint venture and
received an approximate 20% equity interest. The Operating Partnership
contributed its investment in Riverfront Apartments, Casa Mango Apartments, and
Westwood Apartments into the joint venture (AEW joint venture). The Operating
Partnership also contributed land and development rights for a development
community located in Oxnard, California. 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 development fees from the joint venture and incentive payments
based on the financial success of the joint venture.

Dispositions

In 1999, the Operating Partnership sold its former headquarters building and one
multifamily property located in Southern California for an aggregate sales price
of $29,500,000. The proceeds were used to fund acquisitions of multifamily
properties, and to repay borrowings under the Operating Partnership's line of
credit.

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. As of
December 31, 1999, the Operating Partnership had nine development communities,
with an aggregate of 1,904 multifamily units. During 1999, the Operating
Partnership announced three new development communities and also reached
stabilized operations at two apartment properties containing 480 units that were
previously reported as development communities. In connection with the
properties currently under development, the Operating Partnership has directly,
or in some cases through its joint
<PAGE>

venture entities, entered into contractual construction related commitments with
unrelated third parties. As of December 31, 1999, the Operating Partnership is
committed to fund approximately $78,700,000. The following table sets forth
information regarding the development communities at December 31, 1999.

<TABLE>
<CAPTION>
                                                           Project
                                                          Estimated     Project Cost
                                                           Cost (1)     Incurred (1)
                                                             As of        As of       Projected/
                                                           12/31/99      12/31/99       Actual
Development Communities      Location            Units   (in millions) (in millions) Stabilization
----------------------------------------------------------------------------------------------------
<S>                          <C>                  <C>    <C>          <C>             <C>
Presale transactions (2)
     The Carlyle             San Jose, CA         132    $    19.0    $     .5        March 2000
     Waterford               San Jose, CA         238         36.0          .8        July 2000

Joint Venture transactions (3)
     Fountain Court          Seattle, WA          320         34.0        34.0        March 2000
     Vintage @ the Rose      Oxnard, CA           404         54.7        18.7        February 2002

Direct Development (4)
     Bel Air (Canyon Point)  San Ramon, CA        114         18.2        18.1        January 2000
     Mirabella (Marina View) Marina del Rey, CA   188         33.7        32.1        March 2000
     Station Park            Pleasant Hill, CA    106         15.3        14.9        January 2000
     Perry Creek             Bothell, WA          132         15.0         8.2        December 2000
     Essex at Lake Merritt   Oakland, CA          270         63.2         8.4        December 2002
---------------------------------------------------------------------------------------------------

Total Development Communities                   1,904    $   289.1    $  135.7
===================================================================================================
</TABLE>
----------
(1)  Project estimated cost and cost incurred as of December 31, 1999 includes
     total estimated and incurred costs for the development projects.
(2)  The Operating Partnership has contracted with independent third parties to
     acquire these projects upon completion based on a formula as defined in the
     presale purchase agreements.
(3)  The Operating Partnership is a 51% and 20% partner in the entities which
     are developing Fountain Court and Vintage @ the Rose, respectively.
(4)  The Operating Partnership is the sole owner of these development projects.

The Operating Partnership intends to continue to pursue the development of
multifamily communities to the extent that the market conditions and the
specific project terms are considered favorable.

Redevelopment

Redevelopment communities are defined by the Operating Partnership as existing
properties owned or recently acquired which have been targeted for 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. The
Operating Partnership is entitled to receive redevelopment fee income on the
joint venture redevelopment communities. As of December 31, 1999, the Operating
Partnership had the following seven redevelopment communities.

<TABLE>
<CAPTION>
                                                             Estimated Renovation Cost (5)
                                                                 At December 31, 1999       Projected
Redevelopment Communities   (1)     Location          Units          (in millions)          Completion
---------------------------------------------------------------------------------------------------------
<S>                             <C>                    <C>                <C>              <C>
  Coronado @ Newport North (2)  Newport Beach, CA      732            $   13.6             December 2001
  Hillcrest Park                Newbury Park, CA       608                 9.6             June 2001
  Westwood (3)                  Cupertino, CA          116                 2.7             December 2000
  Hampton Place (Loraine)       Glendale, CA           132                 2.3             September 2000
  Windsor Terrace               Pasadena, CA           122                 1.9             June 2000
  Hampton Court (Columbus)      Glendale, CA            83                 1.6             September 2000
  Foothill/Twincreeks (4)       San Ramon, CA          176                  .4             June 2000
---------------------------------------------------------------------------------------------------------

Total Redevelopment Communities                      1,969            $   32.1
=========================================================================================================
</TABLE>
----------
(1)  The Operating Partnership owns 100% of each redevelopment community unless
     otherwise noted.
(2)  The Operating Partnership holds an approximate 49.9% interest in the joint
     venture that owns this property.
(3)  The Operating Partnership holds a 20% interest in the joint venture that
     owns this property.
(4)  The redevelopment for this property includes renovation of the leasing
     center only.
(5)  Represents the projected cost of renovation of the apartment community
     excluding the original cost of land and buildings.

Offices and Employees

The Operating Partnership is headquartered in Palo Alto, California, and has
regional offices in Seattle, Washington, Portland, Oregon, Calabasas, California
and Tustin, California. As of December 31, 1999, the Operating Partnership had
approximately 542 employees.
<PAGE>

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, or in 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.

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 few cases, soil sampling or ground water analysis to further evaluate the
environmental conditions of those Properties.

The environmental studies revealed the presence of groundwater contamination on
certain of the Properties. Certain of these Properties had contamination which
was reported to have migrated on-site from adjacent industrial manufacturing
operations, and one Property was previously occupied by an industrial user that
was identified as the source of contamination. The environmental studies noted
that certain of the Properties are located adjacent to and possibly down
gradient from sites with known groundwater contamination, the lateral limits of
which may extend onto such Properties. The environmental studies also noted that
contamination existed at certain Properties because of the former presence of
underground fuel storage tanks that have been removed. There are
asbestos-containing material in a number of the properties, primarily in the
form of ceiling texture, floor tiles and adhesives, which are generally in good
condition. At properties where radon, hydrogen sulfide and methane have been
identified as a potential concern, the Operating Partnership has implemented
remediating measures and/or additional testing. Based on its current knowledge,
the Operating Partnership does not believe that future liabilities associated
with asbestos, radon, hydrogen sulfide or methane will be material. 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 effect 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.

Except with respect to one Property, 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 no 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. All of the Properties are located in areas
that are subject to earthquake activity. The Operating Partnership has obtained
earthquake insurance for all the Properties. This earthquake insurance 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. 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 all
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.
<PAGE>

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 REIT's, 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 its line of credit. The Operating Partnership believes that its
future 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 has credit facilities in
the committed amount of approximately $100,000,000. At December 31, 1999 the
Operating Partnership had an outstanding balance of $10,500,000 under these
facilities.


OTHER MATTERS/RISK FACTORS

Debt Financing

At December 31, 1999, the Company had approximately $384,108,000 of indebtedness
(including $91,820,000 of variable rate indebtedness, of which $58,820,000 is
capped at interest rates ranging from 7.1% to 7.3%).

     Essex is 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;
          and

     .    the terms of any refinancing may not be as favorable as the terms of
          existing indebtedness.

Uncertainty of Ability to Refinance Balloon Payments

At December 31, 1999, the Company had an aggregate of approximately $384,108,000
of mortgage debt and line of credit borrowings, some of which are subject to
balloon payments of principal. The Company does 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, 1999, these
mortgages and the line of credit borrowings had the following scheduled maturity
dates: 2000 - $53.7 million; 2001 - $2.8 million; 2002 - $24.8 million; 2003 -
$30.5 million, 2004 - $2.7 million, 2005 and thereafter - $269.6 million. The
Company may not be able to refinance such mortgage indebtedness. The Properties
subject to these mortgages could be foreclosed upon or otherwise transferred to
the mortgagee. This could mean a loss to the Company of income and asset value.
Alternatively, the Company may be required to re-finance the debt at higher
interest rates. If the Company is 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 the financial condition and results of
operations of the Company.

Risk Of Rising Interest Payments

At December 31, 1999, the Company had approximately $58,820,000 of long-term
variable rate indebtedness bearing interest at a floating rate tied to the rate
of short-term tax exempt securities (which matures at various dates from 2014
through 2026) and $10,500,000 of variable rate indebtedness under its line of
credit bearing interest at 1.15% over LIBOR and $22,500,000 of variable rate
indebtedness under a construction loan bearing interest at 2.00% over LIBOR
(both of which mature in 2000). Although the $58,820,000 of long-term variable
rate indebtedness is subject to an interest rate protection agreement, which may
reduce the risks associated with fluctuations in interest rates, an increase in
interest rates may have an adverse effect on net income and results of
operations of the Company.

Risk That Interest Rate Hedging Arrangements Cannot Be Refinanced Or Replaced

The Company has, 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 the Company when interest rates
decline. There can be no assurance that any such hedging arrangements can be
refinanced or that the Company 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 the Company's investment in the hedging
arrangement. In addition, if a hedging arrangement is not indexed to the same
rate as the indebtedness that is hedged, the
<PAGE>

Company 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 the Company to increased credit risks. In order to
minimize counterparty credit risk, the Company's policy is to enter into hedging
arrangements only with large financial institutions that maintain an investment
grade credit rating.

Acquisition Activities: Risks That Acquisitions Will Fail To Meet Expectations

The Company intends 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 the Company to market an acquired property as originally intended may
prove to be inaccurate. In addition, the Company expects 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 Company or
additional equity by the Company. The use of equity financing, rather than debt,
for future developments or acquisitions could dilute the interest of the
Company's existing stockholders. If new acquisitions are financed under existing
lines of credit, there is a risk that, unless substitute financing is obtained,
further availability under the lines of credit for new development may not be
available or may be available only on disadvantageous terms. Also, the Company
may not be able to refinance its 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. See "Adverse Effect to Property
Income and Value Due to General Real Estate Investment Risks."

Risks That Development Activities Will Be Delayed Or Not Completed

The Company pursues multifamily residential property development projects from
time to time. Development projects generally require various governmental and
other approvals, the receipt of which cannot be assured. The Company's
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 the Company's
stockholders. Further, the development of properties is also subject to the
general risks associated with real estate investments. 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 Income

Significant amounts of rental revenues for the year ended December 31, 1999,
were derived from Properties concentrated in Northern California (the San
Francisco Bay Area), Southern California (Los Angeles, Ventura, Orange and San
Diego counties), and the Pacific Northwest (the Seattle, Washington and
Portland, Oregon metropolitan areas). 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, the Company may be unable to pay expected dividends to the Company's
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 may also impact the cash flow and value of certain of
the Properties. Economic downturns in the local markets in which the Company
owns properties could have a negative impact on the financial condition and
results from operations of the Company.

Competition In The Multifamily Residential Market May Adversely Affect
Operations And The Rental Demand For the Company's 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 the
Company's 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 the financial condition and results
of operations of the Company.

The Company also faces 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 the Company. This competition may result in increased costs of
properties the Company acquires and/or develops.
<PAGE>

Debt Financing On Properties May Result In Insufficient Cash Flow

Where possible, the Company intends to continue to use leverage to increase the
rate of return on its investments and to provide for additional investments that
the Company 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 of 1986, as amended. The Company 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, 1999, the Company had 34 properties
encumbered by debt. Of the 34 properties, 20 are secured by deeds of trust
relating solely to those properties, and with respect to the remaining 14
properties, three cross-collateralized mortgages are secured by eight
properties, three properties, and three 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 may, in
turn, accelerate other indebtedness secured by Properties. Foreclosure of
Properties would cause a loss to the Company of income and asset value.

Increase In Dividend Requirements As A Result Of Preferred Stock May Lead To A
Possible Inability To Sustain Dividends

In 1996, the Company sold its 8.75% convertible preferred stock, Series 1996A
(the "Convertible Preferred Stock") to Westbrook Real Estate Fund I, L.P.
(formerly known as Tiger/Westbrook Real Estate Fund, L.P.) and Westbrook Real
Estate Co-Investment Partnership I, L.P. (formerly know as Tiger/Westbrook Real
Estate Company Investment Partnership L.P.). Westbrook Real Estate Fund, L.P.
and Westbrook Real Estate Co-Investment Partnership I, L.P. are collectively
referred to herein as "Westbrook". 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"). The Series B
Preferred Units, the Series C Preferred Units, the Series D Preferred Units and
the Series E Preferred Units are collectively referred to herein as the
"Preferred Units".

The terms of the Convertible Preferred Stock provides that dividends may be paid
on shares of Common Stock only if full, cumulative cash dividends have been paid
on all shares of Convertible Preferred Stock in an annual amount equal to the
greater of (i) $2.1875 per share (8.75% of the $25.00 per share price), or (ii)
the dividends (on an as-converted basis) paid with the respect to the Common
Stock plus, in both cases, any accumulated but unpaid dividends on the
Convertible Preferred Stock.

The terms of the preferred stock into which each series of Preferred Units are
exchangeable provide for certain cumulative preferential cash distributions per
each share of preferred stock. These terms also provide that while such
preferred stock is outstanding, no distributions may be authorized, declared or
paid on the Common Stock unless all distributions accumulated on all shares of
such preferred stock have been paid in full. The distributions payable on such
preferred stock and on the Convertible Preferred Stock may impair the Company's
ability to pay dividends on its Common Stock.

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

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

 .    the Company would not be able to pay its indebtedness as it becomes due in
     the usual course of business; or

 .    the Company's total assets would be less than its total liabilities.

If the Company cannot pay dividends on its stock, its status as a real estate
investment trust may be jeopardized.

Existing Registration Rights And Preemptive Rights May Have An Adverse Effect On
The Market Price Of The Shares

Registration rights are held by the senior members of the Company's management
and certain outside investors (collectively, the "Founders") who as of December
31, 1999 owned approximately 10.3% limited partnership interests in the
Operating Partnership. These rights include certain "demand" and "piggyback"
registration rights with respect to shares of Common Stock issuable in
connection with the exchange of their limited partnership interests in the
Operating Partnership. The aggregate 10.3% limited partnership interests held by
the Founders in the Operating Partnership is exchangeable for an aggregate of
2,082,381 shares of Common Stock. In addition, the Company has invested in
certain real estate partnerships. Certain partners in such limited partnerships
have the right to have their limited partnership interests in such partnerships
redeemed for cash or, at the Company's option, for 757,113 shares of Common
Stock. These partners also have certain "demand" and "piggyback" registration
rights with respect to the shares of Common Stock that may be issued in exchange
for such limited partnership interests. All of the registration rights discussed
above could materially adversely affect the market price for the shares of
Common Stock. In addition, the holders of the Convertible Preferred Stock have
preemptive rights to purchase a pro rata share of shares of Common Stock that
may be offered in the future. These preemptive rights could have a material
adverse effect on the market price for the shares of Common Stock.
<PAGE>

The Influence of Executive Officers, Directors and Significant Stockholders and
the Consent Requirements Of The Holders Of the Convertible Preferred Stock May
Be Detrimental To Holders of Common Stock

As of December 31, 1999, George M. Marcus, the Chairman of the Company's Board
of Directors, beneficially owned 1,981,655 shares of Common Stock (including
shares issuable upon exchange of limited partnership interests in the Operating
Partnership and assuming exercise of all vested options). This represents
approximately 11.0% of the outstanding shares of Common Stock. Mr. Marcus
currently does not have majority control over the Company. 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 stockholders of the Company.

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 in the Company, the
Company's directors and executive officers, including Messrs. Marcus and
Millichap, have substantial influence on the Company. Consequently, their
influence could result in decisions that do not reflect the interests of all
stockholders of the Company.

The holders of the Convertible Preferred Stock have certain consent rights to
actions the Company may take. The Company may not, among other things, make
certain revisions to its corporate structure and operations, without the
approval of holders of two-thirds of the outstanding shares of Convertible
Preferred Stock, voting as a separate class. This includes (i) revisions that
would affect the rights, priority and preferences of the Convertible Preferred
Stock, (ii) the merger or consolidation of the Company or the Operating
Partnership with another entity, (iii) the sale of all or substantially all of
the Company's assets, (iv) changing the geographic concentration of the
portfolio of Properties, and (v) undergoing a change in control of either the
Company or the Operating Partnership.

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 the preferred stock into which the Operating
Partnership's 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 the Company'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, the Company may not authorized or create any class of series of
stock that ranks senior to this preferred stock with respect to (1) the payment
of dividends, (2) rights upon liquidation, dissolution or winding-up of the
Company, or (3) amend, alter or repeal the provisions of the Company's Charter
or Bylaws, that would materially and adversely affect these rights without the
consent of the holders of two-thirds of the outstanding shares of each series of
preferred stock (as applicable), each voting separately as a single class. Also,
while any shares of preferred stock are outstanding, the Company may not (1)
merge or consolidate with another entity, or (2) transfer substantially all of
its assets to any corporation or other entity, without the affirmative vote of
the holders of at least two-thirds of each series of preferred stock, each
voting separately as a class, unless the transaction meets certain criteria.
These voting rights of the preferred stock may allow holders of preferred stock
to impede or veto actions by the Company that would otherwise benefit the
holders of the Company's Common Stock.

Exemption Of Westbrook and George Marcus From The Maryland Business Combination
Law May Allow Certain Transactions Between The Company And Westbrook And/Or
George Marcus 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. Among other things, the law prohibits for a
period of five years a merger and other similar transactions between the Company
and an interested stockholder unless the Board of Directors approved the
transaction prior to the party becoming an interested stockholder. The five year
period runs from the most recent date on which the interested stockholder became
an interested stockholder. The law also requires a supermajority stockholder
vote for such transactions after the end of the five year period. 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 irrevocably has
elected to exempt any business combination by the Company with Westbrook and its
affiliates from the "business combination" provision of the Maryland General
Corporation Law. In addition, the Board of Directors similarly exempted George
M. Marcus, William A. Millichap, who are the chairman and a director of the
Company, respectively, and The Marcus & Millichap Company ("M&M") or any entity
owned or controlled by Messrs Marcus and Millichap and M&M. Consequently, the
five-year prohibition and the super-majority vote requirement described above
will not apply to any business combination between the Company and either
Westbrook (or its affiliates), Mr. Marcus, Mr. Millichap, or M&M. As a result,
the
<PAGE>

Company may in the future enter into business combinations with Westbrook
(or its affiliates) or Messrs Marcus and Millichap and M&M, 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, The Convertible Preferred Stock And Certain Provisions Of
Maryland Law Could Delay, Defer Or Prevent A Change In Control Of the Company

While the Company 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 the Company's ability
to act with respect to the Operating Partnership. Such limitations could delay,
defer or prevent a transaction or a change in control of the Company that might
involve a premium price for the stock or otherwise be in the best interest of
the stockholders or that could otherwise adversely affect the interest of the
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, the Company 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 the Company's general partner interest in the
Operating Partnership to another entity. Such limitations on the Company's
ability to act may result in the Company being precluded from taking action that
the Board of Directors believes is in the best interests of the Company's
stockholders. In addition, as of December 31, 1999, two individuals together
held 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.

The Company'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. The Company must obtain the approval of the holders of two-thirds of the
outstanding shares of Convertible Preferred Stock in order to authorize, create
or issue any class or series of stock that ranks equal or senior to the
Convertible Preferred Stock. Although the Company has no intention to issue any
additional shares of Convertible Preferred Stock or other preferred stock at the
present time, the Company may, subject to the consent of the holders of
Convertible Preferred Stock, establish one or more series of preferred stock
that could delay, defer or prevent a transaction or a change in control of the
Company. Such a transaction might involve a premium price for the Company's
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.

The Company's charter, as well as its stockholder rights plan, also contains
other provisions that may delay, defer or prevent a transaction or a change in
control of the Company that might be in the best interest of the Company's
stockholders. The Company's stockholder rights plan is designed, among other
things, to prevent a person or group from gaining control of the Company without
offering a fair price to all of the Company's stockholders. Also, the Bylaws may
be amended by the Board of Directors (subject to the consent of the holders of
the Convertible Preferred Stock in certain circumstances) to include provisions
that would have a similar effect, although the Company presently has no such
intention. The Charter provides that the Company must obtain the approval of the
holders of the Convertible Preferred Stock holding two-thirds of the outstanding
shares of Convertible Preferred Stock before the Company or the Operating
Partnership may merge or consolidate with any other entity or sell all or
substantially all of the assets. Also, the terms of the Convertible Preferred
Stock require that the Company must obtain the approval of the holders of more
than 50% of the outstanding shares of Convertible Preferred Stock before
undergoing a change in control (as defined in the Charter). Additionally, 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 of the Company. For example,
subject to receiving an exemption from the Board of Directors, potential
acquirers may not purchase more than 6% percent 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 the Company from the control share
provisions of the Maryland General Corporations Law, the provisions of the
Bylaws may be amended or eliminated by the Board of Directors at any time in the
future, provided that it obtains the approval of the holders of two-thirds of
the outstanding shares of the Convertible Preferred Stock. 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 of the
Company that might involve a premium price for the stock or otherwise be in the
best interests of its stockholders.

The Company's Guarantee of the Director and Executive Stock Purchase Program May
Lead to Liability For the Company.

In September 1999, the Company formed a program in which directors and managment
of the Company can participate indirectly in an investment in the Company's
Common Stock. The participants have entered into a swap agreement with a
securities broker whereby the securities broker has acquired, in open market
transactions, 223,475 shares of the Company's Common Stock. The agreement
terminates in five years, or earlier under certain circumstances, at which time
the settlement amount is determined by comparing the original purchase price of
the stock plus interest at a rate of LIBOR plus 1.5% to the termination date
market value of the shares and all dividends received during the investment
period. In certain circumstances the participants may be required to provide
collateral to the securities broker. The Company has guaranteed performance of
the participants with respect to any obligations relating to the swap agreement.
Due to this guarantee, if the swap agreement, upon its termination, results in a
net loss to participants, the Company could be liable for paying the loss.
Further, if collateral is required to be advanced to the securities broker, the
Company could be obligated to make such advances, which in turn could be costly
to the Company.

Bond Compliance Requirements May Limit Income From Certain Properties

At December 31, 1999, the Company had approximately $58.8 million of tax-exempt
financing relating to the Inglenook Court Apartments, Wandering Creek
Apartments, Treetops Apartments, Meadowood Apartments and Camarillo Oaks
Apartments. This tax-exempt financing subjects these Properties to certain deed
restrictions and restrictive covenants. The Company expects to engage in
tax-exempt financings in the future. In addition, the Internal Revenue Code of
1986, as amended, (the "Code") and its related regulations impose various
restrictions, conditions and requirements excluding interest on qualified bond
obligations from gross income for federal income tax purposes. The 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.
<PAGE>

These restrictions may limit income from the tax-exempt financed properties if
the Company is required to lower rental rates to attract residents who satisfy
the median income test. If the Company 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 the Company 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 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.

   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 space or a reduction in demand for rental space;

 .    the attractiveness of the Properties to tenants;

 .    competition from other available space;

 .    the Company'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 the Company. Income and real estate values may
also 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, the Company's ability to vary its
portfolio promptly in response to changes in economic or other conditions may be
adversely affected.

The Company's Joint Ventures And Joint Ownership Of Properties And Partial
Interests In Corporations And Limited Partnerships Could Limit the Company's
Ability To Control Such Properties And Partial Interests

Instead of purchasing properties directly, the Company has 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 the Company's business
interests or goals, or be in a position to take action contrary to the Company's
instructions or requests, or to Company policies or objectives. Consequently, a
co-venturer's actions might subject property owned by the joint venture to
additional risk. Although the Company seeks to maintain sufficient control of
any joint venture to achieve its objectives, the Company may be unable to take
action without the Company's 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, the Company could
become liable for such partner's share of joint venture liabilities.

From time to time the Company, invests in corporations, limited partnerships or
other entities that have been formed for the purpose of acquiring, developing or
managing real property. In certain circumstances, the Company's interest in a
particular entity may be less than a majority of the outstanding voting
interests of that entity. Therefore, the Company's ability to control the daily
operations of such an entity may be limited. Furthermore, the Company 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 Company's objectives. In addition, the Company may not be able to dispose of
its interests in such an entity. In the event that such an entity becomes
insolvent, the Company may lose up to its entire investment in and any advances
to the entity.

Investments In Mortgages And Other Real Estate Securities

The Company may invest in securities related to real estate which could
adversely affect its ability to make distributions to stockholders. The Company
may purchase securities issued by entities which own real estate and may also
invest in mortgages. These mortgages may be first, second or third mortgages
that may or may not be insured or otherwise guaranteed. The Company anticipates
that such investment in mortgage receivables will not in the aggregate be
significant. In general, investments in mortgages include the following risks:

 .    that the value of mortgaged property may be less than the amounts owed;

 .    that interest rates payable on the mortgages may be lower than the
     Company's cost of funds; and

 .    in the case of junior mortgages, that foreclosure of a senior mortgage
     would eliminate the junior
<PAGE>

     mortgage.

If any of the above were to occur, cash flows from operations and the Company's
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. The Company carries certain
insurance coverage for this type of environmental risk. The Company has
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,
the Company may be potentially liable for removal or clean-up costs, as well as
certain other costs and environmental liabilities. The Company may also be
subject to governmental fines and costs related to injuries to persons and
property.

General Uninsured Losses

The Company 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 Company does not have insurance. Certain of
the Properties are located in areas that are subject to earthquake activity. The
Company has obtained certain limited earthquake insurance coverage. The Company
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 the Company does not directly pass through costs resulting from
changes in real estate tax laws to residential property tenants. The Company
also does 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.

Changes In Financing Policy; No Limitation On Debt

The Company has 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
  -------------------------------------- = debt-to-total-market-capitalization
  total property indebtedness + total
  equity market capitalization

As used in the above formula, total 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 conversion of all shares of
Convertible Preferred Stock 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),
the Company's debt-to-total-market-capitalization ratio was approximately 29.7%
as of December 31, 1999.

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

Failure To Qualify As A Real Estate Investment Trust

The Company has operated as a qualified real estate investment trust under the
Internal Revenue Code of 1986, as amended, commencing with the taxable year
ended December 31, 1994. Although the Company believes that it has operated in a
manner which satisfies the real estate investment trust qualification
requirements, no assurance can be given that the Company will continue to do so.
A real estate investment trust is generally not taxed on its net income
distributed to its stockholders. It is required to distribute at least 95% of
its taxable income to maintain qualification as a real estate investment trust.
Qualification as a real estate investment trust involves the
<PAGE>

satisfaction of numerous requirements (some on an annual or quarterly basis)
established under the highly technical and complex Internal Revenue Code of
1986, as amended, provisions for which there are only limited judicial or
administrative interpretations and involves the determination of various factual
matters and circumstances not entirely within the Company's control.

If the Company fails to qualify as a real estate investment trust in any taxable
year, it would generally be subject to federal and state income tax (including
any applicable alternative minimum tax) at corporate rates on its taxable income
for such year. Moreover, unless entitled to relief under certain statutory
provisions, the Company would also be disqualified from treatment as a real
estate investment trust for the four taxable years following the year of
disqualification. This treatment would reduce net earnings available for
investment or distribution to stockholders because of the additional tax
liability for the years involved. In addition, distributions would no longer be
required to be made.

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 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 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
Northern California (the San Francisco Bay Area), Southern California (Los
Angeles, Ventura, Orange and San Diego counties), and the Pacific Northwest
(the Seattle, Washington and Portland, Oregon metropolitan areas). The Operating
Partnership currently intends to continue to invest in multifamily properties in
such regions, but may change such policy without a vote of the stockholders.

The policies discussed above may be reviewed and modified from time to time by
the Board of Directors of the Company.

ITEM 2. PROPERTIES

The Operating Partnership's property portfolio (including partial ownership
interests) consists of the following 72 Properties: 68 multifamily residential
Properties containing 15,106 apartment units, one office building, which houses
the Operating Partnership's headquarters, with approximately 17,400 square feet
and three retail properties with approximately 236,000 square feet. The
Properties are located in Northern California (the San Francisco Bay Area),
Southern California ( Los Angeles, Ventura, Orange and San Diego counties), and
the Pacific Northwest (the Seattle, Washington and Portland, Oregon metropolitan
areas). The Operating Partnership's multifamily Properties accounted for
approximately 97% of the Operating Partnership's revenues for the year ended
December 31, 1999. The 68 multifamily residential Properties had an average
occupancy rate (based on "Financial Occupancy", which refers to the percentage
resulting from dividing actual rents by total possible rents as determined by
valuing occupied units at contractual rates and vacant units at market rents)
during the year ended December 31, 1999 of approximately 96%. As of December 31,
1999, the headquarters building was 100% occupied by the Operating Partnership
and the three retail centers had an occupancy rate of 99%. With respect to
stabilized multifamily properties with sufficient operating history, occupancy
figures are based on Financial Occupancy. With respect to commercial properties
or 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 square footage by
rentable square footage.

For the year ended December 31, 1999, 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 222 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, wood-burning fireplaces, swimming pools, clubhouses
with complete fitness facilities, volleyball and playground areas and tennis
courts.

Most of the multifamily Properties are designed for and marketed to people in
white-collar or technical professions. 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 are 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.
<PAGE>

The following tables describe the Operating Partnership's Properties as of
December 31, 1999. The first table describes the Operating Partnership's
multifamily residential properties and the second table describes the Operating
Partnership's commercial properties.

<TABLE>
<CAPTION>
                                                                         RENTABLE
                                                                          SQUARE       YEAR     YEAR
MULTIFAMILY RESIDENTIAL PROPERTIES (1)    LOCATION             UNITS      FOOTAGE     BUILT  ACQUIRED   OCCUPANCY(2)
----------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                     <C>          <C>     <C>      <C>          <C>

NORTHERN CALIFORNIA
Bristol Commons (3)                       Sunnyvale, CA           188         142,668  1989     1995         98%
Eastridge                                 San Ramon, CA           188         174,104  1988     1996         96%
Foothill Gardens                          San Ramon, CA           132         155,100  1985     1997         94%
Marina Cove (4)                           Santa Clara, CA         292         250,294  1974     1994         98%
Mt. Sutro Terrace (5)                     San Francisco, CA        99          64,095  1973     1999         98%
Oak Pointe                                Sunnyvale, CA           390         294,180  1973     1988         98%
Plumtree                                  Santa Clara, CA         140         113,260  1975     1994         97%
The Shores (3)                            San Ramon, CA           348         275,888  1988     1995         96%
Stevenson Place                           Fremont, CA             200         146,296  1971     1982         98%
Summerhill Commons                        Newark, CA              184         139,012  1987     1987         98%
Summerhill Park                           Sunnyvale, CA           100          78,584  1988     1988         96%
Treetops (3)                              Fremont, CA             172         131,270  1978     1996         97%
Twin Creeks                               San Ramon, CA            44          51,700  1985     1997         94%
Westwood (6)                              Cupertino, CA           116         135,288  1963     1998       96%(7)
Wimbledon Woods                           Hayward, CA             560         462,400  1975     1998         94%
Windsor Ridge                             Sunnyvale, CA           216         161,892  1989     1989         97%
                                                                  ---         -------                        ---
                                                                3,369       2,776,031                        97%
PACIFIC NORTHWEST
SEATTLE, WASHINGTON METROPOLITAN AREA
Anchor Village (8)                        Mukilteo, WA            301         245,928  1981     1997         90%
Bridle Trails (3)                         Kirkland, WA             92          73,448  1986     1997         97%
Brighton Ridge                            Renton, WA              264         201,300  1986     1996         95%
Castle Creek                              Newcastle, WA           216         191,935  1997     1997         93%
Emerald Ridge                             Bellevue, WA            180         144,036  1987     1994         96%
Evergreen Heights                         Kirkland, WA            200         188,340  1990     1997         94%
Foothill Commons (3)                      Bellevue, WA            360         288,317  1978     1990         94%
Inglenook Court                           Bothell, WA             224         183,624  1985     1994         96%
Laurels at Mill Creek                     Mill Creek, WA          164         134,360  1981     1996         96%
Maple Leaf (3)                            Seattle, WA              48          35,584  1986     1997         94%
The Palisades (3)                         Bellevue, WA            192         159,792  1977     1990         98%
Park Hill @ Issaquah (9)                  Issaquah, WA            245         277,778  1999     1999       85%(10)
Sammamish View                            Bellevue, WA            153         133,590  1986     1994         96%
Spring Lake (3)                           Seattle, WA              69          42,325  1986     1997         95%
Stonehedge Village (3)                    Bothell, WA             196         214,872  1986     1997         94%
Wandering Creek                           Kent, WA                156         124,366  1986     1995         95%
Wharfside Pointe                          Seattle, WA             142         119,290  1990     1994         94%
Woodland Commons (3)                      Bellevue, WA            236         172,316  1978     1990         95%
PORTLAND, OREGON METROPOLITAN AREA
Jackson School Village (11)               Hillsboro, OR           200         196,896  1996     1996         84%
Landmark                                  Hillsboro, OR           285         282,934  1990     1996         94%
Meadows at Cascade Park                   Vancouver, WA           198         199,377  1989     1997         93%
Village at Cascade Park                   Vancouver, WA           192         178,144  1989     1997         93%
                                                                  ---         -------                        ---
                                                                4,313       3,788,552                        95%
SOUTHERN CALIFORNIA
Avondale @ Warner Center                  Woodland Hills, CA      446        331,072  1970      1999        90%
The Bluffs II (12)                        San Diego, CA           224         126,744  1974     1997         97%
Bunker Hill (3)                           Los Angeles, CA         456         346,672  1968     1998         95%
Camarillo Oaks (3)                        Camarillo, CA           564         459,072  1985     1996         97%
Casa Mango (6)                            Del Mar, CA              96          88,112  1981     1997         97%
Cochran Apartments                        Los Angeles, CA          58          51,468  1989     1998         96%
Hampton Court (Columbus) (3)              Glendale, CA             83          71,573  1974     1999       88%(7)
Coronado @ Newport North (11)             Newport Beach, CA       732         459,677  1968     1999       83%(7)
Coronado @ Newport South (11)             Newport Beach, CA       715         498,716  1968     1999       92%(7)
Euclid                                    Pasadena, CA             85          69,295  1972     1999         96%
Fairways (3)(13)                          Newport Beach, CA        74         107,160  1972     1999         95%
Glenbrook                                 Pasadena, CA             84          73,101  1972     1999         95%
Highridge (8)                             Rancho Palos, CA        255         290,250  1972     1997         95%
Hillsborough Park                         La Habra, CA            235         215,510  1999     1999       99%(10)
Hillcrest Park (Mirabella)                Newbury Park, CA        608         521,968  1973     1998       97%(7)
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
<S>                                       <C>                     <C>          <C>     <C>      <C>          <C>
Huntington Breakers (3)                   HuntingtonBeach,CA      342         241,763  1984     1997         97%
Kings Road                                Los Angeles, CA         196         132,112  1979     1997         96%
Hampton Place (Loraine) (3)               Glendale, CA            132         141,591  1999     1970       88%(7)
Meadowood (3)                             Simi Valley, CA         320         264,568  1986     1996         98%
Monterra Del Mar (Windsor Terrace)        Pasadena, CA            122          74,475  1972     1997       88%(7)
Park Place                                Los Angeles, CA          60          48,000  1988     1997         96%
Pathways                                  Long Beach, CA          296         197,720  1975     1991         96%
Riverfront (6)                            San Diego, CA           229         231,006  1990     1997         98%
Tara Village                              Tarzana, CA             168         173,600  1972     1997         98%
Trabuco Villas                            Lake Forest, CA         132         131,032  1985     1997         97%
Villa Rio Vista                           Anaheim, CA             286         242,410  1968     1985         96%
Villa Scandia                             Ventura, CA             118          71,160  1971     1997         99%
Village Apartments                        Oxnard, CA              122         122,120  1974     1997         98%
Wilshire Promenade                        Fullerton, CA           128         108,470  1992     1997         97%
Windsor Court                             Los Angeles, CA          58          46,600  1988     1997         96%
                                                                   --          ------                        ---
                                                                7,424       5,937,017                        96%
                                                                -----       ---------

 TOTAL/WEIGHTED AVERAGE                                        15,106      12,501,600                        96%
                                                               ======      ==========                        ---
</TABLE>
<TABLE>
<CAPTION>

                                                               NUMBER     RENTABLE     YEAR     YEAR
PROPERTY NAME(1)                                LOCATION       OF          SQUARE     BUILT   ACQUIRED  OCCUPANCY(2)
                                                               TENANTS    FOOTAGE
-----------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                     <C>     <C>       <C>      <C>          <C>

OFFICE BUILDINGS
925 East Meadow Drive                        Palo Alto, CA            1        17,404  1988     1997         100%
                                                                                                             ----

SHOPPING CENTERS
Canby Square (8)                               Canby, OR             18       102,403  1976     1990         95%
Powell Villa Center (8)                       Portland, OR            8        63,645  1959     1990         100%
Garrison Square (8)                          Vancouver, WA           15        69,790  1962     1990         100%
                                                                     --        ------                        ----

Total Shopping Centers                                               41       235,838
                                                                     --       -------

Total Commercial Properties                                          42       253,242                        99%
                                                                     ==       =======                        ---
</TABLE>
----------
(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, 1999; for the
     Commercial Properties, occupancy rates are based on Physical Occupancy as
     of December 31, 1999.
(3)  This Property is owned by a single asset limited partnership in which the
     Operating Partnership has a minimum 99.0% limited partnership interest.
(4)  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.
(5)  The Operating Partnership has an approximate 46% limited partnership
     interest in this property.
(6)  The Operating Partnership has a 20.0% ownership interest in this property
(7)  Financial occupancy does not include the impact of units that were offline
     and not occupied due to redevelopment activity at this property.
(8)  The Operating Partnership has a 1.0% limited partnership interest in this
     property.
(9)  The Operating Partnership has as approximate 45% limited partnership
     interest in this property.
(10) Financial occupancy on development properties that have reached
     stabilization is computed from the date of stabilization through December
     31, 1999
(11) The Operating Partnership has an approximate 49.9% ownership interest in
     this property.
(12) The Operating Partnership has an 84.0% limited partnership interest in this
     property.
(13) This property is subject to a ground lease, which, unless extended, will
     expire in 2027.

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.
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of 1999, no matters were submitted to a vote of
security holders.

                                    PART II

ITEM 5.  RECENT SALES OF UNREGISTERED SECURITIES

In July 1999, the Operating Partnership sold 2,000,000 of its 9.30% Series D
Cumulative Redeemable Preferred Units (the "Series D Preferred Units"), to two
related institutional investor in return for a total contribution to the
Operating Partnership of $50 million. The Series D Preferred Units will become
exchangeable, on a one for one basis, in whole or in part at any time ten year
after the issue date (or earlier under certain circumstances) for shares of the
Company's 9.30% Series D Cumulative Redeemable Preferred Stock, par value $.0001
per share (the "Series D Preferred Stock"). Pursuant to the terms of a
registration rights agreement, entered into in connection with this private
placement, the holders of Series D Preferred Stock will have certain rights to
cause the Company to register such shares of Series D Preferred Stock.

In September 1999, the Operating Partnership sold 2,200,000 of its 9.25% Series
E Cumulative Redeemable Preferred Units (the "Series E Preferred Units") to an
institutional investor in a private placement, in return for a total
contribution of $55 million.  The Series E Preferred Units will become
exchangeable, on a one for one basis, in whole or in part at any time ten years
after the issue date (or earlier under certain circumstances) for shares of the
Company's 9.25% Series E Cumulative Redeemable Preferred Stock, par value $.0001
per share (the "Series E Preferred Stock").  Pursuant to the terms of a
registration rights agreement, entered into in connection with this private
placement, the holders of Series E Preferred Stock will have certain rights to
cause the Company to register such shares of Series E Preferred Stock.

The Series D Preferred Units and the Series E Preferred Units were issued by the
Operating Partnership in privately negotiated transactions to accredited
institutional investors in reliance on the exemption provided by Section 4(2) of
the Securities Act.

ITEM 6.  SUMMARY FINANCIAL AND OPERATING DATA

The following tables set forth summary financial and operating information for
the Operating Partnership from January 1, 1995 through December 31, 1999.
<PAGE>

<TABLE>
<CAPTION>

                                                                              As of December 31,
                                           ---------------------------------------------------------------------------------------
                                              1999               1998                1997               1996                1995
                                           ---------          ---------            --------           --------            --------
                                                               (Dollars in thousands, except per unit amounts)
<S>                                        <C>                <C>                 <C>                <C>                 <C>
OPERATING DATA:
Revenues
   Rental................................  $ 137,262          $ 119,397            $ 79,936           $ 47,780            $ 41,640
   Other property income.................      3,165              2,645               1,464                756                 702
   Interest and other income.............      5,618              3,217               3,169              2,157               1,598
                                           ---------          ---------            --------           --------            --------
        Total revenues...................    146,045            125,259              84,569             50,693              43,940
                                           ---------          ---------            --------           --------            --------
EXPENSES
   Property operating expenses...........     41,706             37,933              25,826             15,505              13,604
   Depreciation and amortization.........     26,150             21,948              13,992              8,855               8,007
   Amortization of deferred
     financing costs.....................        566                718                 509                639               1,355
   General and administrative............      4,263              3,765               2,413              1,717               1,527
   Other expenses........................          -                930                 138                 42                 288
   Interest..............................     21,268             19,374              12,659             11,442              10,928
                                           ---------          ---------            --------           --------            --------
       Total expenses....................     93,953             84,668              55,537             38,200              35,709
                                           ---------          ---------            --------           --------            --------
   Income before gain on sales, minority.     52,092             40,591              29,032             12,493               8,231
     interests and extraordinary item
   Gain on sales of real estate..........      9,524                  9               5,114              2,477               6,013
   Minority interests....................       (549)              (462)               (463)              (386)               (352)
   Extraordinary item-loss on early
      extinguishment of debt.............       (214)            (4,718)               (361)            (3,441)               (154)
                                           ---------          ---------            --------           --------            --------
Net income...............................     60,853             35,420              33,322             11,143              13,738
                                           =========          =========            ========           ========            ========
Net income per unit - diluted............  $    2.37          $    1.41            $   1.94           $   1.15            $   1.69
                                           =========          =========            ========           ========            ========
   Weighted average common units
      outstanding -diluted (in thousands)     20,513             18,682              17,149              9,203               8,130

</TABLE>

<TABLE>
<CAPTION>
                                                                             As of December 31,
                                           ---------------------------------------------------------------------------------------
                                             1999               1998                 1997               1996               1995
                                           ---------          ---------            --------           --------            --------
<S>                                        <C>                 <C>                 <C>                <C>                 <C>
BALANCE SHEET DATA:
   Investment in real estate (before
     accumulated depreciation)............   929,076            889,964             730,987            393,809             284,358
   Net investment in real estate..........   832,471            812,175             702,716            354,715             244,077
   Real estate under development..........   120,414             53,213              20,234                  -                   -
   Total assets........................... 1,062,313            931,796             738,835            417,174             273,660
   Total property indebtedness............   384,108            361,515             276,597            153,205             154,524
   Partners' capital......................   623,603            517,281             424,402            247,046             109,941

</TABLE>

<TABLE>
<CAPTION>
                                                                            As of December 31,
                                           ---------------------------------------------------------------------------------------
                                             1999               1998                 1997               1996                1995
                                           ---------          ---------            --------           --------            --------
<S>                                        <C>                <C>                 <C>                <C>                 <C>
OTHER DATA:
   Debt service coverage ratio (1).......      4.7x               4.3x                4.4x               2.9x                2.6x
   Gross operating margin (2)............       70%                68%                 68%                68%                 67%
   Average same property monthly
     rental rate per apartment
     unit (3) (4)........................  $   950            $   944             $   852            $   798             $   749
   Average same property monthly
     operating expenses per
     apartment unit (3) (5)..............  $   259            $   256             $   257            $   248             $   241
   Total multifamily units
     (at end of period)..................   15,106             12,267              10,700              6,624               4,868
   Multifamily residential property
     occupancy rate(6)...................       96%                96%                 96%                97%                 97%
   Total properties (at end of period)...       72                 63                  59                 36                  30

</TABLE>

<PAGE>

(1) Debt service coverage ratio represents earnings before interest expense,
    taxes, depreciation and amortization ("EBITDA") divided by interest expense.

(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 that the Operating Partnership
    has consolidated for the entire two years ended as of the end of the period
    set forth.  Same property apartment units vary at each year end.  Percent
    changes in averages per unit do not correspond to total same property
    revenues and expense percent changes as discussed in Item 7 - Management's
    Discussion and Analysis.

(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 which refers to the
    percentage resulting from dividing actual rents by total possible rents as
    determined by valuing occupied units at contractual rates and vacant units
    at market rates.
<PAGE>

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, 1999, 1998
and 1997.  This information should be read in conjunction with the accompanying
consolidated financial statements and notes thereto.

The Operating Partnership holds, directly or indirectly, substantially all of
the Company's assets and conducts substantially all of the Company's operations.
The Company is the sole general partner of the Operating Partnership and as of
December 31, 1999, 1998 and 1997 owned an 89.7%, 89.9% and 89.9% general
partnership interest in the Operating Partnership, respectively.

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 regarding the Operating Partnership's expectation as to the timing of
completion of current development projects, expectation as to the total
projected costs 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 and expectations as to the amount
of non-revenue generating capital expenditures for the year ended December 31,
2000, potential acquisitions and developments, the anticipated performance of
existing properties, future acquisitions and developments and statements
regarding the Operating Partnership's financing activities.  Such forward-
looking statements involve known and unknown risks, uncertainties and other
factors including, but not limited to, that the actual completion of development
projects will be subject to delays, 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, that the actual non-revenue
generating capital expenditures will exceed the Operating Partnership's current
expectations, as well as those risks, special considerations, and other factors
discussed under the caption "Other Matters/Risk Factors" in Item 1 of this
Annual Report on Form 10-K for the year ended December 31, 1999, 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.

GENERAL BACKGROUND

The Operating Partnership's property revenues are generated primarily from
multifamily property operations, which accounted for greater than 96% of its
property revenues for the years ended December 31, 1999, 1998, and 1997.  The
Operating Partnership's properties ("the Properties") are located in Northern
California  (the San Francisco Bay Area), Southern California (Los Angeles,
Ventura, Orange and San Diego counties) and the Pacific Northwest (The Seattle,
Washington and Portland, Oregon metropolitan areas).  The average occupancy
level of the Operating Partnership's portfolio has exceeded 95% for the last
five years.

Since the Operating Partnership began operations in 1994, the Operating
Partnership has acquired ownership interests in 58 multifamily residential
properties and its headquarters building, of which 12 are located in Northern
California, 29 are located in Southern California, 14 are located in the Seattle
Metropolitan Area and 3 are located in the Portland Metropolitan Area.  In
total, these acquisitions consist of 11,954 units with total capitalized
acquisition costs of approximately $950.7 million.  Additionally, since it began
operations in 1994, the Operating Partnership has acquired ownership interests
in three multifamily development properties that have reached stabilized
operations.  These development properties consist of 680 units with total
capitalized development costs of $63.5 million.  As part of its active portfolio
management strategy, the Operating Partnership has disposed of, since it began
operations in 1994, seven multifamily residential properties (five in Northern
California, one in Southern California and one in the Pacific Northwest)
consisting of a total of 915 units, six retail shopping centers in the Portland,
Oregon metropolitan area and its former headquarters building located in
Northern California at an aggregate gross sales price of approximately $100.6
million resulting in a net realized gain of approximately $21.6 million and a
deferred gain of $5.0 million.

The Operating Partnership is developing nine multifamily residential
communities, with an aggregate of 1,904 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 for approximately $234,500,000.
As of December 31, 1999, the Operating Partnership's remaining development
commitment is approximately $78,700,000.
<PAGE>

RESULTS OF OPERATIONS

Comparison of Year Ended December 31, 1999 to Year Ended December 31, 1998.
---------------------------------------------------------------------------

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, 1999 and 1998) increased to 96.4% for the
year ended December 31, 1999 from 96.0% for the year ended December 31, 1998.
Financial occupancy is defined as the percentage resulting from dividing actual
rental income by total possible rental income.  Total possible rental income is
determined by valuing occupied units at contractual rates and vacant units at
market rents.  The regional breakdown of financial occupancy for the Same Store
Properties for the years ended December 31, 1999 and 1998 are as follows:

<TABLE>
<CAPTION>

                                 December 31,    December 31,
                                    1999            1998
                                 ------------    ------------
<S>                              <C>             <C>

       Northern California              97.2%           96.9%
       Southern California              97.1%           96.5%
       Pacific Northwest                94.9%           94.5%
</TABLE>

Total Revenues increased by $20,786,000 or 16.6% to $146,045,000 in 1999 from
$125,259,000 in 1998.  The following table sets forth a breakdown of these
revenue amounts, including the revenues attributable to the Same Store
Properties.

<TABLE>
<CAPTION>

                                                                  Years Ended
                                            Number of       December 31,       Dollar    Percentage
                                                         -------------------
                                            Properties     1999       1998     Change      Change
                                            ----------   --------   --------   -------   -----------
                                                             (dollars in thousands)
<S>                                         <C>          <C>        <C>        <C>       <C>

Revenues
   Property revenues
    Same Store Properties
      Northern California                           12   $ 37,506   $ 35,943   $ 1,563          4.3%
      Pacific Northwest                             18     30,946     29,611     1,335          4.5
      Southern California                           12     30,042     27,942     2,100          7.5
                                                    --   --------   --------   -------   ----------
         Total property revenues
          Same Store Properties                     42     98,494     93,496     4,998          5.4
                                                    ==
   Property revenues properties
     acquired/disposed of
     subsequent to January 1, 1998 (1)                     41,933     28,546    13,387         46.9
                                                         --------   --------   -------   ----------
         Total property revenues                          140,427    122,042    18,385         15.1
                                                         --------   --------   -------   ----------

Interest and other income                                   5,618      3,217     2,401         74.6
                                                         --------   --------   -------   ----------
         Total revenues                                  $146,045   $125,259   $20,786         16.6%
                                                         ========   ========   =======   ==========
</TABLE>

(1)  Also includes one commercial property, redevelopment communities and
development communities.

As set forth in the above table, $13,387,000 of the $20,786,000 net increase in
total revenues is attributable to properties acquired or disposed of subsequent
to January 1, 1998, the commercial property, redevelopment communities and
development communities.  During this period, the Operating Partnership acquired
interests in 11 properties and achieved stabilized operations at one development
community, (the "Acquisition Properties"), and disposed of two multifamily
properties, three retail shopping centers and one commercial property (the
"Disposition Properties").

Of the increase in total revenues, $4,998,000 is attributable to increases in
property revenues from the Same Store Properties. Property revenues from the
Same Store Properties increased by approximately 5.4% to $98,494,000 in 1999
from $93,496,000 in 1998.  A significant portion of this increase was
attributable to the 12 multifamily Same Store Properties located in Southern
California, the property revenues of which increased by $2,100,000 or 7.5 % to
$30,042,000 in 1999 from $27,942,000 in 1998. This $2,100,000 increase is
primarily attributable to rental rate increases and an increase in average
financial occupancy to 97.1% in 1999 from 96.5% in 1998.  The 12 multifamily
Same Store Properties located in Northern California accounted for the next
largest contribution to the Same Store Properties revenues increase.  The
property revenues of these properties increased by $1,563,000 or 4.3% to
$37,506,000 in 1999 from $35,943,000 in 1998.  This $1,563,000 increase is
primarily attributable to rental rate increases, and an increase in average
financial occupancy to 97.2% in 1999 from 96.9% in 1998.  The 18 multifamily
Same Store Properties located in the Pacific Northwest accounted for the next
largest contribution to the Same Store Properties revenues increase.  The
property revenues of these properties increased by $1,335,000 or 4.5% to
$30,946,000 in 1999 from $29,611,000 in 1998.  This $1,335,000 increase is
attributable to rental rate increases, and an increase in financial occupancy to
94.9% in 1999 from 94.5% in 1998.
<PAGE>

The increase in total revenue also reflected an increase of $2,401,000
attributable to interest and other income, which primarily relates to income and
fees earned on the Operating Partnership's investments in joint ventures and
interest income earned on outstanding notes receivable and cash balances.

Total Expenses increased by $9,285,000 or approximately 11.0% to $93,953,000 in
1999 from $84,668,000 in 1998. The most significant factor contributing to this
increase was the growth in the Operating Partnership's multifamily portfolio
from 54 properties (10,700 units) at January 1, 1998 to 68 properties (15,106
units) at December 31, 1999.  Interest expense increased by $1,894,000 or 9.8%
to $21,268,000 in 1999 from $19,374,000 in 1998.  Such interest expense increase
was primarily due to the net addition of mortgage debt in connection with
property acquisitions and investments, which was offset by an increase in the
capitalization of interest charges on the Operating Partnership's development
and redevelopment communities of $1,678,000 or approximately 48.0% to $5,172,000
from $3,494,000 in 1998.  Property operating expenses, exclusive of depreciation
and amortization, increased by $3,773,000 or 9.9% to $41,706,000 in 1999 from
$37,933,000 in 1998.  Of such increase, $4,093,000 is attributable to properties
acquired or disposed of subsequent to January 1, 1998, which was offset by a
decrease in operating expenses for the Same Store Properties.  Property
operating expenses, exclusive of depreciation and amortization, as a percentage
of property revenues were 29.7% for 1999 and 31.1% for 1998.  General and
administrative expenses represent the costs of the Operating Partnership's
various acquisition and administrative departments as well as corporate and
partnership administration and non-operating expenses.  Such expenses increased
by $498,000 in 1999 from the amount incurred in 1998.  This increase is largely
due to additional staffing requirements resulting from the growth of the
Operating Partnership.  General and administrative expenses as a percentage of
total revenues were 2.9 % for 1999 and 3.0% for 1998.

Net income increased by $17,236,000 to $ 43,564,000 in 1999 from $26,328,000 in
1998.  Net income included an extraordinary loss on early extinguishment of debt
of  $214,000 in 1999 compared to $4,718,000 in 1998.  Net income for 1999 also
included a gain on sales of real estate of  $9,524,000 as compared with $9,000
in 1998.  Net operating income of the Acquisition Properties and the increase in
net operating income from the Same Store Properties also contributed to the
increase in net income.

Comparison of Year Ended December 31, 1998 to Year Ended December 31, 1997.
---------------------------------------------------------------------------

Average financial occupancy rates of the Operating Partnership's multifamily
1998/1997 Same Store Properties (properties consolidated by the Operating
Partnership for each of the years ended December 31, 1998 and 1997) decreased to
96.2% for the year ended December 31, 1998 from 96.6% for the year ended
December 31, 1997. The regional breakdown of financial occupancy for the
1998/1997 Same Store Properties for the years ended December 31, 1998 and 1997
are as follows:

<TABLE>
<CAPTION>

                                 December 31,    December 31,
                                     1998            1997
                                 ------------   ------------
<S>                              <C>            <C>

       Northern California              96.9%           97.1%
       Southern California              95.8%           95.2%
       Pacific Northwest                95.2%           96.4%
</TABLE>

Total Revenues increased by $40,690,000 or 48.1% to $125,259,000 in 1998 from
$84,569,000 in 1997.  The following table sets forth a breakdown of these
revenue amounts, including the revenues attributable to the 1998/1997 Same Store
Properties.

<TABLE>
<CAPTION>

                                                             Years  Ended
                                        Number of       December 31,      Dollar    Percentage
                                                     ------------------
                                        Properties     1998      1997     Change      Change
                                        ----------   --------  --------   -------   -----------
                                                        (dollars in thousands)
<S>                                     <C>          <C>        <C>       <C>       <C>

Revenues
   Property revenues 1998/1997
     Same Store Properties
      Northern California                       11   $ 33,397   $30,627   $ 2,770          9.0%
      Pacific Northwest                         11     21,035    19,510     1,525          7.8
      Southern California                        3      8,509     8,085       424          5.2
                                                --   --------   -------   -------   ----------
         Total property revenues
          1998/1997 Same Store
              Properties                        25     62,941    58,222     4,719          8.1
                                                ==
   Property revenues properties
     acquired/disposed of
     subsequent to January 1, 1997                     59,101    23,178    35,923        155.0
                                                     --------   -------   -------   ----------
         Total property revenues                      122,042    81,400    40,642         49.9
                                                     --------   -------   -------   ----------

Interest and other income                               3,217     3,169        48          1.5
                                                     --------   -------   -------   ----------
         Total revenues                              $125,259   $84,569   $40,690         48.1%
                                                     ========   =======   =======   ==========

</TABLE>

As set forth in the above table, $35,923,000 of the $40,690,000 net increase in
total revenues is attributable to properties acquired or disposed of subsequent
to January 1, 1997.  During this period, the Operating Partnership acquired 35
properties, (the "1998/1997
<PAGE>

Acquisition Properties"), and disposed of two multifamily properties and six
retail shopping centers, (the "1998/1997 Disposition Properties").

Of the increase in total revenues, $4,719,000 is attributable to increases in
property revenues from the 1998/1997 Same Store Properties. Property revenues
from the 1998/1997 Same Store Properties increased by approximately 8.1% to
$62,941,000 in 1998 from $58,222,000 in 1997.  The majority of this increase was
attributable to the 11 multifamily 1998/1997 Same Store Properties located in
Northern California, the property revenues of which increased by $2,770,000 or
9.0% to $33,397,000 in 1998 from $30,627,000 in 1997. This $2,770,000 increase
is primarily attributable to rental rate increases, which were offset in part by
a decrease in average financial occupancy to 96.9% in 1998 from 97.1% in 1997.
The 11 multifamily 1998/1997 Same Store Properties located in the Pacific
Northwest accounted for the next largest contribution to this 1998/1997 Same
Store Property revenues increase.  The property revenues of these properties
increased by $1,525,000 or 7.8% to $21,035,000 in 1998 from $19,510,000 in 1997.
This $1,525,000 increase is primarily attributable to rental rate increases,
which were offset in part by a decrease in average financial occupancy to 95.2%
in 1998 from 96.4% in 1997.  The three multifamily 1998/1997 Same Store
Properties located in Southern California accounted for the next largest
contribution to this 1998/1997 Same Store Property revenues increase.  The
property revenues of these properties increased by $424,000 or 5.2% to
$8,509,000 in 1998 from $8,085,000 in 1997.  This $424,000 increase is
attributable to rental rate increases, and an increase in financial occupancy to
95.8% in 1998 from 95.2% in 1997.  The increase in total revenue also reflected
an increase of $48,000 attributable to interest and other income.

Total Expenses increased by $29,131,000 or approximately 52.5% to $84,668,000 in
1998 from $55,537,000 in 1997. The most significant factor contributing to this
increase was the growth in the Operating Partnership's multifamily portfolio
from 29 properties (6,624 units) at January 1, 1997 to 58 properties (12,267
units) at December 31, 1998.  Interest expense increased by $6,715,000 or 53.0%
to $19,374,000 in 1998 from $12,659,000 in 1997.  Such interest expense increase
was primarily due to the net addition of mortgage debt in connection with
property and investment acquisitions.  Property operating expenses, exclusive of
depreciation and amortization, increased by $12,107,000 or 46.9% to $37,933,000
in 1998 from $25,826,000 in 1997.  Of such increase, $12,356,000 is attributable
to properties acquired or disposed of subsequent to January 1, 1997, which was
offset by a decrease in operating expenses for the Same Store Properties.
Property operating expenses, exclusive of depreciation and amortization, as a
percentage of property revenues were 31.1% for 1998 and 31.7% for 1997.  General
and administrative expenses represent the costs of the Operating Partnership's
various acquisition and administrative departments as well as corporate and
partnership administration and non-operating expenses.  Such expenses increased
by $1,352,000 in 1998 from the 1997 amount.  This increase is largely due to
additional staffing requirements resulting from the growth of the Operating
Partnership.  General and administrative expenses as a percentage of total
revenues were 3.0% for 1998 and 2.9% for 1997.

Net income decreased by $2,988,000 to $26,328,000 in 1998 from $29,316,000 in
1997.  Net income included an extraordinary loss on early extinguishment of debt
of $4,718,000 in 1998 compared to $361,000 in 1997.  Net income for 1998 also
included a gain on sales of real estate of $9,000 compared with $5,114,000 in
1997.  The net effect of these items were offset by the net contribution of the
1998/1997 Acquisition Properties and an increase in net operating income from
the Same Store Properties, as offset by a decrease in net operating income
attributable to the 1998/1997 Disposition Properties.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1999, the Operating Partnership had $12,348,000 of unrestricted
cash and cash equivalents.  The Operating Partnership expects to meet its short-
term liquidity requirements by using its working capital, cash generated from
operations, and amounts available under lines of credit.  The Operating
Partnership believes that its current net cash flows will be adequate to meet
operating requirements and to provide for payment of dividends by the Company in
accordance with REIT qualification requirements.  The Operating Partnership
expects to meet its long-term liquidity requirements relating to property
acquisitions and development (beyond the next 12 months) 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.

The Operating Partnership has a $100,000,000 unsecured line of credit.
Outstanding balances under the line of credit bear interest at the bank's
reference rate or at the Operating Partnership's option, 1.15% over the LIBOR
rate.  The line of credit matures in June 2000.  At December 31, 1999 the
Operating Partnership had $10,500,000 outstanding on its line of credit, with
interest rates during 1999 ranging from 6.0% to 8.1%.  The Operating Partnership
intends to replace or renew this facility prior to its expiration.

In addition to the unsecured line of credit, the Operating Partnership had
$373,608,000 of secured indebtedness at December 31, 1999.  Such indebtedness
consisted of $314,788,000 in fixed rate debt with interest rates varying from
6.4% to 8.8% and maturity dates ranging from 2000 to 2026.  The indebtedness
also includes $58,820,000 of tax exempt variable rate demand bonds with interest
rates paid during 1999 ranging from approximately 4.7% to 5.4% and maturity
dates ranging from 2020 to 2026.  The tax exempt variable rate demand bonds are
capped at interest rates ranging from 7.1% to 7.3%.

The Operating Partnership's unrestricted cash balance increased $9,800,000 from
$2,548,000 as of December 31, 1998 to $12,348,000 as of December 31, 1999.  The
Operating Partnership generated $83,566,000 in cash from operating activities,
used $120,781,000 of cash in investing activities and obtained $47,015,000 of
cash from financing activities.  Of the $120,781,000 net cash used in investing
activities, $88,305,000 was used to purchase and upgrade rental properties and
$74,608,000 was used to fund real estate under development; these
<PAGE>

expenditures were offset by $63,421,000 of proceeds received from the
disposition of rental properties. The $47,015,000 net cash provided by financing
activities was primarily a result of $241,150,000 of proceeds from mortgages and
other notes payable and lines of credit, $102,340,000 net proceeds from
preferred units sales, as offset by $229,771,000 of repayments of mortgages and
other notes payable and lines of credit, and $57,069,000 of
dividends/distributions paid.

Non-revenue generating capital expenditures are improvements and upgrades that
extend the useful life of the property and are not related to preparing a
multifamily property unit to be rented to a tenant.  For the year ended December
31, 1999, non-revenue generating capital expenditures totaled approximately
$3,793,000 or $315 per weighted average occupancy unit.  The Operating
Partnership expects to incur approximately $320 per weighted average occupancy
unit in non-revenue generating capital expenditures for the year ended December
31, 2000.  These expenditures do not include the improvements required in
connection with the origination of mortgage loans, expenditures for acquisition
properties' renovations and improvements which are expected to generate
additional revenue, and renovation expenditures required pursuant to tax-exempt
bond financings.  The Operating Partnership expects that cash from operations
and/or its lines of credit will fund such expenditures.  However, there can be
no assurance that the actual expenditures incurred during 2000 and/or the
funding thereof will not be significantly different than the Operating
Partnership's current expectations.

The Operating Partnership is currently developing nine multifamily residential
projects, with an aggregate of 1,904 multifamily units. Such projects involve
certain risks inherent in real estate development.  See "Other Matters/ Risk
Factors--Risk that Development Activities Will be Delayed or Not Completed" in
Item 1 of this Annual Report on Form 10-K for the year ended December 31, 1999.
In connection with these development projects, the Operating Partnership has
directly, or in some cases through its joint venture partners entered into
contractual construction related commitments with unrelated third parties for
approximately $234,500,000. As of December 31, 1999, the Operating Partnership's
remaining commitment to fund the estimated cost to complete is approximately
$78,700,000.  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.

On July 28, 1999, the Operating Partnership completed the sale of 2,000,000
units of its 9.30% Series D Cumulative Redeemable Preferred Units to two
institutional investors at a price of $25.00 per unit. The net proceeds from
this sale were approximately $48,925,000. On September 3, 1999, the Operating
Partnership completed the sale of 2,200,000 units of its 9.25% Series E
Cumulative Redeemable Preferred Units to two institutional investors at a
price of $25.00 per unit. The net proceeds from this sale were approximately
$53,400,000. The net proceeds from these sales were used primarily to reduce
outstanding balances under the Operating Partnership's line of credit.

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

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

YEAR 2000 COMPLIANCE

The date is now past January 1, 2000 and the Operating Partnership has not
experienced any immediate adverse impact from the transition to the year 2000.
However, the Operating Partnership cannot provide assurance that its vendors
have not or will not be affected in a manner that is not yet apparent.  The
Operating Partnership uses software, computer technology and other services
provided by third party vendors that may fail due to year 2000 issues.  This
failure may involve significant time and expense, and uncorrected problems could
potentially harm the Operating Partnership's operations.  Therefore, the
Operating Partnership will continue to monitor its year 2000 compliance and the
year 2000 compliance of its vendors.

FUNDS FROM OPERATIONS

Industry analysts generally consider Funds from Operations ("Funds from
Operations") an appropriate measure of performance of an equity REIT.  The
company, the sole general partner in the Operating Partnership, has elected to
be treated as a REIT under the code.  Generally, Funds from Operations adjusts
the net income of equity REITS for non-cash charges such as depreciation and
amortization of rental properties and non-recurring gains or losses.  Management
considers Funds from Operations to be a useful financial performance measurement
of an equity REIT because, together with net income and cash flows, Funds from
Operations provides investors with an additional basis to evaluate the
performance of a REIT to incur and service debt and to fund acquisitions and
other capital expenditures.  Funds from Operations does not represent net income
or cash flows from operations as defined by generally accepted accounting
principles  (GAAP) and is not intended to indicate whether cash flows will be
sufficient to fund cash needs.  It should not be considered as an alternative to
net income as an indicator of the REIT's operating performance or to cash flows
as a measure of liquidity.  Funds from Operations does not measure whether cash
flow is sufficient to fund all cash needs including principal amortization,
capital improvements and distributions to shareholders.  Funds from Operations
also does not represent cash flows generated from operating, investing or
financing activities as defined under GAAP.  Further, Funds from Operations as
disclosed by other REITs may not be comparable to the Operating Partnership's
calculation of Funds from Operations.  The following table sets forth the
Operating Partnership's calculation of Funds from Operations for 1999, 1998 and
1997.
<PAGE>

<TABLE>
<CAPTION>

                                                                                         For the quarter ended
                                                   For the year      ------------------------------------------------------------
                                                      ended
                                                     12/31/99         12/31/99          9/30/99          6/30/99       3/31/99
                                                   -------------     -----------      -----------      -----------    -----------
<S>                                                <C>               <C>              <C>              <C>            <C>
Income before gain on sale of real estate,
   minority interests and extraordinary item...... $ 52,092,000      $14,641,000      $13,426,000      $12,335,000    $11,690,000
Adjustments:
  Depreciation and amortization...................   26,150,000        6,774,000        7,084,000        6,247,000      6,045,000
  Adjustments for unconsolidated
    joint ventures................................    1,790,000          691,000          366,000          366,000        367,000
Minority interests (1)............................  (13,061,000)      (4,685,000)      (3,616,000)      (2,397,000)    (2,363,000)
                                                   ------------      -----------      -----------      -----------    -----------
Funds from Operations............................. $ 66,971,000      $17,421,000      $17,260,000      $16,551,000    $15,739,000
                                                   ============      ===========      ===========      ===========    ===========
Weighted average number
shares outstanding diluted (1)....................   20,513,398       20,554,096       20,573,866       20,476,092     20,496,718

</TABLE>


<TABLE>
<CAPTION>
                                                                                       For the quarter ended
                                                                     ------------------------------------------------------------
                                                   For the year
                                                      ended
                                                     12/31/98         12/31/98         9/30/98          6/30/98         3/31/98
                                                   -------------     -----------      -----------      -----------    -----------
<S>                                                <C>               <C>              <C>              <C>            <C>
Income before gain on sale of real estate,
   minority interests and extraordinary item...... $ 40,591,000      $10,933,000      $ 9,998,000      $10,005,000    $ 9,655,000
Adjustments:
  Depreciation and amortization...................   21,948,000        6,072,000        5,575,000        5,632,000      4,669,000
  Adjustments for unconsolidated
    joint ventures................................    1,393,000          366,000          365,000          366,000        296,000
  Non-recurring items:
    Provision for litigation loss.................      930,000                -          930,000                -              -
Minority interests (1)............................   (6,367,000)      (2,014,000)      (1,754,000)      (1,692,000)      (907,000)
                                                   ------------      -----------      -----------      -----------    -----------

Funds from Operations............................. $ 58,495,000      $15,357,000      $15,114,000      $14,311,000    $13,713,000
                                                   ============      ===========      ===========      ===========    ===========

Weighted average number
shares outstanding diluted (1)....................   20,510,988       20,522,910       20,523,466       20,549,875     20,550,845

</TABLE>

<TABLE>
<CAPTION>

                                                                                        For the quarter ended
                                                                     ------------------------------------------------------------
                                                    For the year
                                                       ended
                                                      12/31/97        12/31/97         9/30/97           6/30/97       3/31/97
                                                    ------------     -----------      -----------      -----------    -----------
<S>                                                 <C>              <C>              <C>              <C>            <C>
Income before gain on sale of real estate,
   minority interests and extraordinary item.....   $ 29,032,000     $ 8,483,000      $ 7,899,000      $ 6,907,000    $ 5,743,000

Adjustments:
  Depreciation and amortization..................     13,992,000       4,129,000        3,555,000        3,220,000      3,088,000
  Adjustments for unconsolidated
    joint ventures...............................        941,000         251,000          242,000          448,000              -
  Non-recurring items:
    Loss from hedge termination..................        138,000         138,000                -                -              -
  Minority interests (1).........................       (603,000)       (162,000)        (161,000)        (142,000)      (138,000)
                                                    ------------     -----------      -----------      -----------    -----------

Funds from operations............................   $ 43,500,000     $12,839,000      $11,535,000      $10,433,000    $ 8,693,000
                                                    ============     ===========      ===========      ===========    ===========

Weighted average number
shares outstanding diluted (1)...................     17,152,990      19,435,950       17,860,753       16,624,396     14,557,019

</TABLE>

(1) Assumes conversion of all outstanding operating partnership interests in the
Operating Partnership and Convertible Preferred Stock, Series 1996A, into shares
of the Company's Common Stock. Minority interests have been adjusted to reflect
such conversion.



<PAGE>

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
and sensitivity to interest rate changes. The Operating Partnership believes
that the principal amounts of the Operating Partnership's mortgage notes payable
and line of credit approximate fair value as of December 31, 1999 as interest
rates are consistent with yields currently available to the Operating
Partnership for similar instruments.

<TABLE>
<CAPTION>

                                      For the Year Ended December 31
                               ---------------------------------------------
<S>                            <C>        <C>      <C>       <C>       <C>      <C>             <C>
 (In thousands)                 2000      2001      2002      2003     2004    Thereafter          Total
                               -------    -----    ------    ------    -----    ----------       --------

Fixed rate debt............... $43,196    2,763    24,832    30,482    2,697       210,818       $314,788
Average interest rate.........    7.10%    7.09%     7.09%     7.03%    7.00%         6.99%

Variable rate LIBOR debt...... $10,500        -         -         -        -        58,820(1)    $ 69,320
Average interest rate.........    6.59%                 -         -        -             -           5.50%

</TABLE>

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


At December 31, 1999 the Operating Partnership had four forward treasury
contracts for an aggregate notional amount of $60,000,000, fixing the 10 year
treasury rate at between 6.15%-6.26% which limits interest rate exposure on
certain future debt financing and will be settled in 2000.  Subsequent to
December 31, 1999, three of the four contracts were sold, resulting in a net
realized gain of approximately $920,000.  The value of the unsold contract as of
December 31, 1999 was $403,000.

The four forward treasury contracts represent the derivative exposures that
exist as of December 31, 1999. The Operating Partnership's ultimate realized
gain or loss with respect to interest rate fluctuations will depend on the
exposures that arise during the period, the Operating Partnership's hedging
strategies at that time and interest rates.

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 14.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

None.
                                    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 April 25, 2000.

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 April 25, 2000.


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 April 25, 2000.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
<PAGE>

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 April 25, 2000.


                                    PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

(A)   Financial Statements and Report of KPMG LLP, independent auditors                     Page
                                                                                            ----
<S>   <C>  <C>                                                                              <C>
      (1)  Consolidated Financial Statements

           Independent Auditors' Report                                                      F-2

           Balance Sheets:
             Essex Portfolio, L.P., as of December 31, 1999 and December 31, 1998            F-3

           Statements of Operations:
             Essex Portfolio, L.P., for the years ended December 31, 1999, 1998 and 1997     F-4

           Statements of Partners' Capital:
             Essex Portfolio, L.P., for the years ended December 31, 1999, 1998 and 1997     F-5

           Statements of Cash Flows:
             Essex Portfolio, L.P., for the years ended December 31, 1999, 1998 and 1997.    F-6

           Notes to Consolidated Financial Statements                                        F-7

      (2)  Financial Statement Schedule:  Real Estate and Accumulated Depreciation
             Essex Portfolio, L.P. for the year ended December 31, 1999                      F-26

</TABLE>

(B)   Reports on Form 8-K

      No reports on Form 8-K were filed during the quarter ended December 31,
      1999.

(C)   Exhibits
<PAGE>

                          INDEPENDENT AUDITORS' REPORT



The Board of Directors
Essex Portfolio, L.P.:


We have audited the accompanying consolidated balance sheets of Essex Portfolio,
L.P. and subsidiaries as of December 31, 1999 and 1998, 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, 1999. 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 as of December 31, 1999. 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 generally accepted auditing
standards. 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1999, in conformity with generally accepted accounting
principles. 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.








San Francisco, California
February 4, 2000

                                      F-2
<PAGE>


                              ESSEX PORTFOLIO, L.P

                          Consolidated Balance Sheets

                           December 31, 1999 and 1998

                             (Dollars in thousands)


<TABLE>
<CAPTION>
                                   ASSETS                           1999           1998
                                                                 ----------      ----------
<S>                                                              <C>             <C>
Real estate:
   Rental properties:
       Land and land improvements.............................   $  234,497     $  219,115
       Buildings and improvements.............................      694,579        670,849
                                                                 ----------     ----------
                                                                    929,076        889,964
   Less accumulated depreciation..............................      (96,605)       (77,789)
                                                                 ----------     ----------
                                                                    832,471        812,175

   Investments ...............................................       47,992         10,590
   Real estate under development..............................      120,414         53,213
                                                                 ----------     ----------
                                                                  1,000,877        875,978

Cash and cash equivalents - unrestricted .....................       12,348          2,548
Cash and cash equivalents - restricted .......................       17,216         15,532
Notes and other related party receivables ....................       13,654         10,450
Notes and other receivables ..................................        9,001         18,809
Prepaid expenses and other assets ............................        3,495          3,444
Deferred charges, net ........................................        5,722          5,035
                                                                 ----------     ----------
                                                                 $1,062,313     $  931,796
                                                                 ==========     ==========

                      LIABILITIES AND PARTNERS' CAPITAL

Mortgage notes payable .......................................   $  373,608     $  325,822
Lines of credit ..............................................       10,500         35,693
Accounts payable and accrued liabilities .....................       28,379         28,601
Distributions payable ........................................       13,248         11,145
Other liabilities ............................................        5,594          5,301
Deferred gain ................................................        5,002          5,002
                                                                 ----------     ----------
           Total liabilities .................................      436,331        411,564

Minority interests ...........................................        2,379          2,951
Partners' capital:
   General partner:
       Common equity..........................................      383,379        352,295
       Preferred equity.......................................        4,314         37,505
                                                                 ----------     ----------
                                                                    387,693        389,800
                                                                 ----------     ----------
   Limited partners:
       Common equity..........................................       31,420         25,331
       Preferred equity.......................................      204,490        102,150
                                                                 ----------     ----------
                                                                    235,910        127,481
                                                                 ----------     ----------
    Total partners' capital...................................      623,603        517,281
                                                                 ----------     ----------
Commitments and contingencies
                                                                 $1,062,313       $931,796
 </TABLE>

          See accompanying notes to consolidated financial statements

                                      F-3
<PAGE>

                             ESSEX PORTFOLIO, L.P.

                     Consolidated Statements of Operations

                 Years ended December 31, 1999, 1998 and 1997

                (Dollars in thousands, except per unit amounts)

<TABLE>
<CAPTION>
                                                                            1999              1998              1997
                                                                       ------------       -----------       -----------
<S>                                                                    <C>                <C>               <C>
Revenues:
     Rental........................................................    $    137,262       $   119,397       $    79,936
     Other property income.........................................           3,165             2,645             1,464
                                                                       ------------       -----------       -----------
                     Total property revenues.......................         140,427           122,042            81,400
     Interest and other income.....................................           5,618             3,217             3,169
                                                                       ------------       -----------       -----------
                     Total revenues................................         146,045           125,259            84,569
                                                                       ------------       -----------       -----------
Expenses:
     Property operating expenses:
         Maintenance and repairs...................................           9,222             8,972             6,814
         Real estate taxes.........................................          10,271             9,109             6,340
         Utilities.................................................           8,532             7,809             5,074
         Administrative............................................          10,582             9,228             5,514
         Advertising...............................................           2,187             1,742             1,225
         Insurance.................................................             912             1,073               859
         Depreciation and amortization.............................          26,150            21,948            13,992
                                                                       ------------       -----------       -----------
                                                                             67,856            59,881            39,818
     Interest......................................................          21,268            19,374            12,659
     Amortization of deferred financing costs......................             566               718               509
     General and administrative....................................           4,263             3,765             2,413
     Loss from hedge termination...................................              --                --               138
     Provision for litigation loss.................................              --               930                --
                                                                       ------------       -----------       -----------
                     Total expenses................................          93,953            84,668            55,537
                                                                       ------------       -----------       -----------
                     Income before gain on sales of real estate,
                         minority interests and extraordinary item.          52,092            40,591            29,032

Gain on sales of real estate.......................................           9,524                 9             5,114

Minority interests.................................................            (549)             (462)             (463)
                                                                       ------------       -----------       -----------
                     Income before extraordinary item..............          61,067            40,138            33,683

Extraordinary loss on early extinguishment of debt.................            (214)           (4,718)             (361)
                                                                       ------------       -----------       -----------
                     Net income....................................          60,853            35,420            33,322

Dividends on preferred units - general partner.....................          (1,333)           (3,500)           (2,681)
Dividends on preferred units - limited partner.....................         (12,238)           (5,595)               --
                                                                       ------------       -----------       -----------
                     Net income available to common units..........    $     47,282       $    26,325       $    30,641
                                                                       ============       ===========       ===========
Per Operating Partnership Common Unit data:
     Basic:
         Income before extraordinary item available to
              common units.........................................    $       2.43       $      1.68       $      2.00
         Extraordinary item - debt extinguishment..................           (0.01)            (0.25)            (0.02)
                                                                       ------------       -----------       -----------
                     Net income....................................    $       2.42       $      1.43       $      1.98
                                                                       ============       ===========       ===========
         Weighted-average number of partnership units
              outstanding during the period........................      19,543,341        18,504,427        15,509,218
                                                                       ============       ===========       ===========
     Diluted:
         Income before extraordinary item available to
              common units.........................................    $       2.38       $      1.66       $      1.96
         Extraordinary item - debt extinguishment..................           (0.01)            (0.25)            (0.02)
                                                                       ------------       -----------       -----------
                     Net income....................................    $       2.37       $      1.41       $      1.94
                                                                       ============       ===========       ===========
         Weighted-average number of partnership units
              outstanding during the period........................      20,513,398        18,682,416        17,149,600
                                                                       ============       ===========       ===========
Distributions per Operating Partnership common unit................    $       2.15       $      1.95       $      1.77
                                                                       ============       ===========       ===========
</TABLE>
         See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>

                             ESSEX PORTFOLIO, L.P.

                 Consolidated Statements of Partners' Capital

                 Years ended December 31, 1999, 1998 and 1997

                       (Dollars and units in thousands)


<TABLE>
<CAPTION>
                                             GENERAL PARTNER                             LIMITED PARTNER
                                 --------------------------------------       -------------------------------------
                                                              PREFERRED                                   PREFERRED
                                     COMMON EQUITY             EQUITY            COMMON EQUITY             EQUITY
                                 ---------------------        ---------       --------------------        ---------
                                 UNITS         AMOUNTS         AMOUNT         UNITS        AMOUNTS         AMOUNT           TOTAL
                                 -------       -------        ---------       ------       -------         --------         ------
<S>                              <C>           <C>           <C>              <C>          <C>             <C>              <C>
Balances at December 31,
     1996....................... 11,592    $   205,302       $   17,505       1,855     $   24,239       $       --     $  247,046
Contribution - net proceeds
     from preferred stock.......     --             --           20,000          --             --               --         20,000
Contribution - net proceeds
     from common stock..........  4,995        154,012               --          --             --               --        154,012
Contribution - net proceeds
     from options exercised.....     28            686               --          --             --               --            686
Contributions - net proceeds
     from partners..............     --             --               --          18            543               --            543
Net income......................     --         26,636            2,681          --          4,005               --         33,322
Partners' distributions.........     --        (25,226)          (2,681)         --         (3,300)              --        (31,207)
                                 -------       -------        ---------       ------       -------         --------         ------
Balances at December 31,
     1997....................... 16,615        361,410           37,505       1,873         25,487               --        424,402
Contribution - net proceeds
     from preferred units.......     --             --               --          --             --          102,150        102,150
Contribution - net proceeds
     from options exercised.....     24            464               --          --             --               --            464
Contribution - net proceeds
     from dividend
     reinvestment plan..........      2             10               --          --             --               --             10
Contributions - net proceeds
     from partners..............     --             --               --          --             --               --             --
Net income......................     --         22,829            3,500          --          3,496            5,595         35,420
Partners' distributions.........     --        (32,418)          (3,500)         --         (3,652)          (5,595)       (45,165)
                                 -------       -------        ---------       ------       -------         --------         ------
Balances at December 31,
     1998....................... 16,641        352,295           37,505       1,873         25,331          102,150        517,281
Contribution - net proceeds
     from preferred units.......     --             --               --          --             --          102,340        102,340
Contribution - net proceeds
     from options exercised.....     53            930               --          --             --               --            930
Shares issued from conversion
     of Convertible Preferred
     Stock......................  1,618         33,191          (33,191)         --             --               --             --
Redemption of limited partner
     common units...............     --             --               --         (65)        (2,101)              --         (2,101)
Issuance of limited partner
     common units...............     --             --               --         274          7,469               --          7,469
Common units purchased
     by Operating Partnership...   (262)        (7,119)              --          --             --               --         (7,119)
Net income......................     --         42,231            1,333          --          5,051           12,238         60,853
Partners' distributions.........     --        (38,149)          (1,333)         --         (4,330)         (12,238)       (56,050)
                                 -------       -------        ---------       ------       -------         --------         ------
Balances at December 31,
     1999....................... 18,050    $   383,379    $       4,314       2,082    $    31,420    $     204,490    $   623,603
                                 ======        =======        =========       ======       =======         ========        =======
         See accompanying notes to consolidated financial statements.
</TABLE>
                                      F-5
<PAGE>

                             ESSEX PORTFOLIO, L.P.

                     Consolidated Statements of Cash Flows

                 Years ended December 31, 1999, 1998 and 1997

                            (Dollars in thousands)
<TABLE>
<CAPTION>
                                                                                1999              1998               1997
                                                                            ------------      -----------        -----------
<S>                                                                         <C>               <C>                <C>
Cash flows from operating activities:
     Net income..........................................................   $     60,853      $    35,420        $    33,322
     Minority interests..................................................            549              462                463
     Adjustments to reconcile net income to net cash provided
          by operating activities:
               Gain on sales of real estate..............................         (9,524)              (9)            (5,114)
               Equity in (income) loss of limited partnerships...........         (1,389)            (276)               209
               Loss on early extinguishment of debt......................            214            4,718                361
               Loss from hedge termination...............................             --               --                138
               Depreciation and amortization.............................         26,150           21,948             13,992
               Amortization of deferred financing costs..................            566              718                509
               Changes in operating assets and liabilities:
                    Other receivables....................................            621          (10,207)            (1,377)
                    Prepaid expenses and other assets....................           (393)             336               (158)
                    Accounts payable and accrued liabilities.............          5,626            4,831              2,738
                    Other liabilities....................................            293            1,093              1,815
                                                                            ------------      -----------        -----------
                         Net cash provided by operating activities.......         83,566           59,034             46,898
                                                                            ------------      -----------        -----------
Cash flows from investing activities:
     Additions to rental properties......................................        (88,305)        (163,019)          (247,886)
     Dispositions of rental properties...................................         63,421           26,354             15,470
     Increase in restricted cash.........................................         (1,684)         (10,049)            (3,831)
     Additions to related party notes and other receivables..............         (6,084)          (5,616)           (28,761)
     Repayments of related party notes and other receivables.............         16,504            4,430             21,859
     Net (contributions to) distributions from investments in
          corporations and limited partnerships..........................        (30,025)           1,255                620
     Additions to real estate under development..........................        (74,608)         (33,256)           (27,422)
                                                                            ------------      -----------        -----------
                         Net cash used in investing activities...........       (120,781)        (179,901)          (269,951)
                                                                            ------------      -----------        -----------
Cash flows from financing activities:
     Proceeds from mortgage and other notes payable and lines of credit..        241,150          349,540            204,931
     Repayment of mortgage and other notes payable and lines of credit...       (229,771)        (283,065)          (164,580)
     Additions to deferred charges.......................................         (1,253)          (2,345)              (752)
     Net proceeds from preferred unit sales..............................        102,340          102,150                 --
     Contributions from stock offerings - general partner................             --               --            174,012
     Payment of offering related costs...................................            (93)            (323)              (711)
     Contributions from stock options exercised and shares issued
          through dividend reinvestment plan - general partner...........            930              474                686
     General partner shares purchased by limited partner.................         (7,119)              --
     Redemption of limited partner units.................................         (2,100)              --                 --
     Net payments made in connection with costs related to the
          early extinguishment of debt...................................             --           (4,086)                --
     Distributions to limited partners and minority interest.............        (18,435)          (8,138)            (3,910)
     Distributions to general partner....................................        (38,634)         (35,074)           (25,046)
                                                                            ------------      -----------        -----------
                         Net cash provided by financing activities.......         47,015          119,133            184,630
                                                                            ------------      -----------        -----------
Net (decrease) increase in cash and cash equivalents.....................          9,800           (1,734)           (38,423)
Cash and cash equivalents at beginning of period.........................          2,548            4,282             42,705
                                                                            ------------      -----------        -----------
Cash and cash equivalents at end of period...............................   $     12,348      $     2,548        $     4,282
                                                                            ============      ===========        ===========
Supplemental disclosure of cash flow information:
     Cash paid for interest, net of $5,172, $3,494 and $1,276
          capitalized....................................................   $     15,860      $    18,947         $   12,384
                                                                            ============      ===========        ===========
Supplemental disclosure of noncash investing and financing activities:
     Real estate under development transferred to rental properties......   $     21,700               --                 --
                                                                            ============      ===========        ===========
     Mortgage note payable assumed in connection with the purchase
          of real estate.................................................   $     15,800      $    18,443         $   83,041
                                                                            ============      ===========        ===========
     Issuance of limited partner common units in connection with the
          purchase of real estate........................................   $      7,469      $        --         $       --
                                                                            ============      ===========        ===========
     Consolidation of Fountain Court Apartment Associates, L.P.:
          Real estate under development..................................   $     32,452      $        --         $       --
                                                                            ============      ===========        ===========
          Notes payable and other liabilities............................   $     27,000      $        --         $       --
                                                                            ============      ===========        ===========
     During 1999, the Operating Partnership contributed $43,077 of real estate and real estate under development subject to $27,300
     of notes payable in exchange for a $4,437 note receivable and a $11,340 investment in the AEW joint venture.

See accompanying notes to consolidated financial statements.
</TABLE>
                                      F-6
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share 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 $112,071 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 10.3% interest in the Operating
       Partnership at December 31, 1999. 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 2,082,381 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. All significant
       intercompany balances and transactions have been eliminated in the
       consolidated financial statements.

       The Operating Partnership operates and has ownership interests in 68
       multifamily properties (containing 15,106 units) and four commercial
       properties (with approximately 290,000 square feet) (collectively, the
       Properties). The Properties are located in Northern California (the San
       Francisco Bay Area), Southern California (Los Angeles, Ventura, Orange
       and San Diego counties), and the Pacific Northwest (Seattle, Washington
       and Portland, Oregon metropolitan areas).

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

(2)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       (a)    REAL ESTATE RENTAL PROPERTIES

              Rental properties are recorded at cost less accumulated
              depreciation. Depreciation on rental properties has been provided
              over estimated useful lives ranging from 3 to 40 years using the
              straight-line method.

              Maintenance and repair expenses are charged to operations as
              incurred. Asset replacements and improvements are capitalized and
              depreciated over their estimated useful lives.

                                                                     (Continued)

                                      F-7
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


              Certain rental properties are pledged as collateral for the
              related mortgage notes payable.

              When the Operating Partnership determines that a property is held
              for sale, it discontinues the periodic depreciation of that
              property in accordance with the provisions of Statement of
              Financial Accounting Standards No. 121 (SFAS 121). Assets held for
              sale are reported at the lower of the carrying amount or estimated
              fair value less costs to sell. In addition, 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 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 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. No impairment has been recorded through December 31,
              1999. No properties are classified as held for sale as of December
              31, 1999.


       (b)    INVESTMENTS

              The Operating Partnership consolidates or accounts for its
              investments in joint ventures and corporations under the equity
              method of accounting based on its ownership interests in those
              entities. Under the equity method of accounting, the investment is
              carried at cost of acquisition, plus the Operating Partnership's
              equity in undistributed earnings or losses since acquisition.


       (c)    REVENUES

              Rental revenue is reported on the accrual basis of accounting.


       (d)    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.


       (e)    INTEREST RATE PROTECTION, SWAP, AND FORWARD CONTRACTS

              The Operating Partnership will from time to time use interest rate
              protection, swap and forward contracts to reduce its interest rate
              exposure on current or identified future debt transactions.
              Amounts paid in connection with such contracts are capitalized and
              amortized over the term of the contract or related debt. If the
              original contract is terminated, the gain or loss on termination
              is deferred and amortized over the remaining term of the contract.
              If the related debt is repaid, the unamortized portion of the
              deferred amount is charged to income or the contract is marked to
              market, as appropriate. The Operating Partnership's policy is to
              manage interest rate risk for existing or anticipated borrowings.

                                                                     (Continued)

                                      F-8
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


       (f)    DEFERRED CHARGES

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


       (g)    INTEREST

              The Operating Partnership capitalized $5,172, $3,494 and $1,276 of
              interest related to the development of real estate during 1999,
              1998 and 1997, respectively.


       (h)    MINORITY INTEREST

              Minority interest for 1999 represents a 15% interest in three San
              Diego multifamily properties and a 49% interest in one Pacific
              Northwest multifamily property, held by outside investors.


       (i)    CASH EQUIVALENTS AND RESTRICTED CASH

              Highly liquid investments with 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 and a
              guarantee the Operating Partnership has made on a first mortgage
              loan held by one of its joint venture partnerships.


       (j)    RECLASSIFICATIONS

              Certain reclassifications have been made to the 1998 and 1997
              balances to conform with the 1999 presentation.


       (k)    USE OF ESTIMATES

              The preparation of financial statements in conformity with
              generally accepted accounting principles requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and liabilities and disclosure of contingent liabilities at
              the date of the financial statements and the reported amounts of
              revenues and expenses during the reporting periods. Actual results
              could differ from those estimates.


       (l)    NEW ACCOUNTING PRONOUNCEMENTS

              In June 1998, the FASB issued Financial Accounting Statement No.
              133 (SFAS 133), Accounting for Derivative Instruments and Hedging
              Activities. The Operating Partnership will adopt SFAS 133 for
              interim periods beginning in 2001, the effective date of SFAS 133,
              as amended. Management believes that the adoption of these
              statements will not have a material impact on the Operating
              Partnership's financial position or results of operations.

                                                                     (Continued)

                                      F-9


<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


(3)    EQUITY TRANSACTIONS

       During 1998 and 1999, the Operating Partnership sold cumulative
       redeemable preferred units to certain institutional investors in private
       placements as follows:
                                                          PRICE
                                                           PER
           DESCRIPTION           DATE          UNITS      UNIT      NET PROCEEDS
        -----------------   --------------  -----------  -------  --------------

        7.875% Series B     February 1998    1,200,000   $50.00     $58,275
        7.875% Series B     April 1998         400,000    50.00      19,500
        9.125% Series C     November 1998      500,000    50.00      24,375
        9.30% Series D      July 1999        2,000,000    25.00      48,925
        9.25% Series E      September 1999   2,200,000    25.00      53,400


       Preferred units issued in connection with the above transactions are
       included in minority interests in the accompanying consolidated balance
       sheet.

       During 1999, Westbrook Real Estate Fund I, L.P. (formerly known as
       Tiger/Westbrook Real Estate Fund, L.P.), and Westbrook Real Estate
       Co-Investment Partnership I, L.P. (formerly known as Tiger/Westbrook Real
       Estate Co-Investment Partnership, L.P.) (collectively, Tiger/Westbrook)
       converted 1,415,313 shares of its ownership in the Company's 8.75%
       convertible preferred stock, Series 1996A (the Convertible Preferred
       Stock) into 1,617,501 shares of the Company's common stock. The Company
       has filed a shelf registration statement covering Tiger/Westbrook's
       resale of all shares of its common stock issuable upon conversion of its
       convertible preferred stock. The shelf registration statement was
       declared effective by the Securities and Exchange Commission in December
       1998. As of December 31, 1999, Tiger/Westbrook owned 184,687 shares of
       Convertible Preferred Stock.

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

                                                                     (Continued)

                                      F-10
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

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


(4)    PER UNIT DATA

       Basic income per unit before extraordinary item and diluted income per
       share before extraordinary item were calculated as follows for the years@
       ended December 31:
<TABLE>
<CAPTION>
                                                  1999                          1998                       1997
                                       --------------------------- ---------------------------- ----------------------------
                                               WEIGHTED    PER-              WEIGHTED   PER-            WEIGHTED    PER-
                                                AVERAGE   SHARE               AVERAGE  SHARE             AVERAGE   SHARE
                                        INCOME   UNITS    AMOUNT     INCOME    UNITS   AMOUNT   INCOME    UNITS    AMOUNT
                                       -------  ------  ---------- ---------  ------- ------- ---------  -------  --------
<S>                                 <C>         <C>     <C>           <C>      <C>      <C>    <C>        <C>      <C>

       Income before extraordinary
           item                     $  61,067                         40,138                     33,683
       Less: dividends on
           preferred units            (13,571)                        (9,095)                    (2,681)
                                      --------                        ------                   --------

       Basic:
           Income before
             extraordinary item
             available to common
             units                     47,496   19,543  $      2.43   31,043   18,504   $ 1.68   31,002   15,509  $  1.98
                                                         ==========                     ======                     =======

       Effect of Dilutive
           Securities:
           Convertible preferred
             units                      1,333      786                    --     --(/1/)          2,681    1,400
           Options (2)                     --      184                    --      178                --      240
                                      -------   ------                ------  -------          --------   ------

       Diluted:
           Income before
             extraordinary item
             available to common
             units plus assumed
             conversions            $  48,829   20,513  $      2.38   31,043   18,682   $ 1.66   33,683   17,149  $  1.96
                                      =======   ======   ==========   ======  =======   ====== ========   ======   =======
</TABLE>
----------
(1)  Securities not included because they were anti-dilutive.

(2)  The following options are not included in the diluted earnings per share
     calculation because the options' exercise price was greater than the
     average market price of the general partner common units for the year and,
     therefore, the effect would be antidilutive:

                                       1999               1998          1997
                                 ----------------   ---------------  ---------

      Number of options                 295               332            --

      Range of exercise prices   $31.875 - 34.750   $30.125 -34.250      --


                                                                     (Continued)

                                      F-11
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


(5)      REAL ESTATE


       (a)    RENTAL PROPERTIES

              Rental properties consist of the following as of December 31,
              1999 and 1998:
               <TABLE>
               <CAPTION>


                                                  LAND AND LAND         BUILDING AND                            ACCUMULATED
                                                   IMPROVEMENTS         IMPROVEMENTS            TOTAL          DEPRECIATION
                                                 -----------------    -----------------    ----------------   ----------------
                 <S>                          <C>                  <C>                  <C>                <C>

                 December 31, 1999:
                     Multifamily properties   $        232,732     $         690,955    $       923,687    $         96,357
                     Commercial properties               1,765                 3,624              5,389                 248
                                                 -----------------    -----------------    ----------------   ----------------

                                              $        234,497     $         694,579    $       929,076    $         96,605
                                                 =================    =================    ================   ================

                 December 31, 1998:
                     Multifamily properties   $        217,337     $         651,818    $       869,155    $         73,638
                     Commercial properties               1,778                19,031             20,809               4,151
                                                 -----------------    -----------------    ----------------   ----------------

                                              $        219,115     $         670,849    $       889,964    $         77,789
                                                 =================    =================    ================   ================
               </TABLE>


              The properties are located in California, Washington and Oregon.
              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.

              During the year ended December 31, 1999, the Operating Partnership
              sold one property to an unrelated third party for $11,100
              resulting in a gain of $3,085. The Operating Partnership also sold
              one property for a gross sales price of $18,400 resulting in a
              gain of $4,708 to an entity controlled by a member of the
              Operating Partnership's Board of Directors, following unanimous
              approval of the independent board members of the Operating
              Partnership's Board of Directors. During the year ended 1999, the
              Operating Partnership sold an 80% interest in three properties and
              land with development rights to a newly formed joint venture. The
              Operating Partnership received a 20% interest in the joint venture
              for contributing its remaining 20% interest in these properties.
              The 80% interest was sold for $58,098, resulting in a gain on the
              sale of $1,731.

              During the year ended December 31, 1998, four properties were sold
              to third parties for $26,354 resulting in a gain of $9 and a
              deferred gain of $5,002. During the year ended December 31, 1997,
              the Operating Partnership sold four properties to third parties
              for $15,470 resulting in a gain of $5,114.

              The Operating Partnership utilized Internal Revenue Code Section
              1031 to defer the majority of the taxable gains resulting from
              these sales.

                                                                     (Continued)

                                      F-12
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


              For the years ended December 31, 1999, 1998 and 1997, depreciation
              expense on real estate was $25,808, $21,890 and $13,913,
              respectively.


       (b)    INVESTMENTS

              In October 1999, the Operating Partnership entered into two
              separate joint venture entities and received an approximate 49.9%
              equity interest. Together with the joint venture partners, the
              Operating Partnership formed two separate private REITs, Newport
              Beach North, Inc. and Newport Beach South, Inc. Newport Beach
              North, Inc. and Newport Beach South, Inc. own an approximate
              99.65% interest in Newport Beach North, LLC and Newport Beach
              South, LLC, respectively. The Operating Partnership contributed
              its investment of Coronado at Newport - North, an acquisition made
              in the third quarter of 1999, to Newport Beach North, LLC. At the
              same time, the partners in Newport Beach South, LLC purchased
              Coronado at Newport - South, a 715-unit apartment community
              located in Newport Beach, California, for a contract price of
              $64,500. The two entities have identical ownership structures, and
              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 venture and
              incentive payments based on the financial success of the joint
              venture.

              In connection with formation of the two joint ventures, the
              entities obtained non-recourse debt financing for $34,100 and
              $37,600 for Newport Beach North, LLC and Newport Beach South, LLC,
              respectively. The loans bear interest at LIBOR plus 2.25% and
              mature in 2002. The joint venture entities plan to invest a total
              of approximately $28,000 additionally into the properties for
              exterior and interior renovation and such investment is intended
              to be funded through additional advances under the loans referred
              to above.

              In December 1999, the Operating Partnership entered into a 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 (AEW joint venture).
              The Operating Partnership also contributed land and development
              rights for a development community located in Oxnard, California.
              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 development fees from the joint venture and
              incentive payments based on the financial success of the joint
              venture.

              In connection with its formation, the AEW joint venture assumed
              two mortgage loans the Operating Partnership previously had
              outstanding on the Casa Mango and Riverfront properties for $7,300
              and $20,000, respectively. The loans bear interest at a fixed rate
              of 7.4% and mature in 2009.

                                                                     (Continued)

                                      F-13
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


              Investments which are accounted for under the equity method
              consist of the following as of December 31, 1999 and 1998:
               <TABLE>
               <CAPTION>

                                                                                          1999               1998
                                                                                     ----------------   ----------------
               <S>                                                                   <C>                <C>
               Investments in joint ventures:
                   Direct and indirect LLC member interests of approximately
                     49.9% in Newport Beach North, LLC and Newport Beach South,
                     LLC......................................................... $        28,435    $            --
                   Limited partnership interest of 20% in AEW joint ventures.....          11,341                 --
                   Class A Member interest of 45% in Park Hill LLC...............           5,516              3,978
                   Limited partnership interest of 49.9% in Jackson School
                     Village, L.P................................................           2,649              2,473
                   Limited partnership interest of 46% in Mt. Sutro Terrace
                     Associates, L.P.............................................           2,223                 --
                   Limited partnership interest of 1% in Portland Shopping
                     Centers (1).................................................            (234)              (183)
                   Limited partnership interest of 1% in Anchor Village
                     Apartments (1)..............................................            (889)              (691)
                   Limited partnership interest of 1% in Highridge Apartments
                     (1).........................................................          (1,570)              (987)
                   Limited partnership interest of 51% in Fountain Court
                     Apartment Associates, L.P...................................              --              5,352
                                                                                     ----------------   ----------------

                                                                                           47,471              9,942
                                                                                     ----------------   ----------------

               Investments in corporations:
                   Essex Management Corporation - 19,000 shares of preferred
                     stock.......................................................             190                190
                   Essex Fidelity I Corporation - 31,800 shares of preferred
                     stock.......................................................             331                331
                                                                                     ----------------   ----------------

                                                                                              521                521
                                                                                     ----------------   ----------------

               Other investments.................................................              --                127
                                                                                     ----------------   ----------------

                                                                                  $        47,992    $        10,590
                                                                                     ================   ================
               </TABLE>

               (1)  The negative balances result from excess distributions and
                    allocations over investment cost basis. The Operating
                    Partnership can receive profits and losses different from
                    its partnership interest.

                                                                     (Continued)

                                      F-14
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)



(6)    NOTES FROM INVESTEES AND OTHER RELATED PARTY RECEIVABLES

       Notes receivable from joint venture investees and other related party
       receivables consist of the following as of December 31, 1999 and 1998:
       <TABLE>
       <CAPTION>

                                                                                          1999               1998
                                                                                     ---------------    ----------------
               <S>                                                                <C>                 <C>

               Notes receivable from joint venture investees:
                   Note receivable from Highridge Apartments, secured, bearing
                     interest at 9%, due March 2008.............................  $         1,047    $         1,047

                   Note receivable from Highridge Apartments, secured, bearing
                     interest at 10%, due on demand.............................            2,950                 --

                   Note receivable from Fidelity I, secured, bearing interest
                     at 8%, due on demand.......................................               --              1,358

                   Notes receivable from Fidelity I and JSV, secured, bearing
                     interest at 9.5 - 10%, due 2015............................              800                800

                   Receivable from Highridge Apartments, non-interest bearing,
                     due on demand..............................................            3,624              2,928

                   Receivable from Las Hadas, non-interest bearing, due on
                     demand.....................................................            1,209              1,209

                   Receivable from Anchor Village, non-interest bearing, due on
                     demand.....................................................            1,282                933

               Other related party receivables:

                   Loans to officers, bearing interest at 8%, due April 2006....              633                500

                   Other related party receivables, substantially all due on
                     demand.....................................................            2,109              1,675
                                                                                     ---------------    ----------------

                                                                                  $        13,654    $        10,450
                                                                                     ===============    ================

       </TABLE>

       The Operating Partnership'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 and loans to officers, advances
       and accrued management fees from joint venture partnerships, and
       unreimbursed expenses due from EMC.

                                                                     (Continued)

                                      F-15
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


(7)    NOTES AND OTHER RECEIVABLES

       Notes and other receivables consist of the following as of December 31,
       1999 and 1998:
       <TABLE>
       <CAPTION>

                                                                                         1999               1998
                                                                                    ---------------    ----------------
              <S>                                                                <C>                <C>
              Receivable from AEW, non-interest bearing, due on demand.......... $         5,529    $            --
              Receivable from Newport Beach North and South LLC.................             429                 --
              Note receivable from the co-tenants in the Pathways property,
                  secured, interest payable monthly at 9%, principal due June
                  2001..........................................................              --              4,452
              Note receivable from R&V Management, secured, bearing interest
                  at 12.04%, principal due March 1999...........................              --              7,879
              Note receivable from R&V Management, secured, bearing interest
                  at 10.0%, principal due June 2000.............................              --              2,814
              Other receivables.................................................           3,043              3,664
                                                                                    ---------------    ----------------
                                                                                 $         9,001    $        18,809
                                                                                    ===============    ================
</TABLE>

(8)    RELATED PARTY TRANSACTIONS

       The Operating Partnership provides some of its fee-based asset management
       and disposition services as well as third-party property management and
       leasing services through Essex Management Corporation (EMC). The Company
       owns 100% of EMC's 19,000 shares of nonvoting preferred stock. Executives
       of the Company own 100% of EMC's 1,000 shares of common stock. All
       general and administrative expenses of the Company, 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, 1999, 1998 and 1997 totaled $545, $545 and $987,
       respectively, and are reflected as a reduction in general and
       administrative expenses in the accompanying consolidated statements of
       operations.

       Included in rental revenue in the accompanying consolidated statements of
       operations are rents earned from space leased to Marcus & Millichap
       Company (M&M) including operating expense reimbursements of $851, $833
       and $709 for the years ended December 31, 1999, 1998 and 1997,
       respectively. The Chairman of M&M is the Chairman of the Company. The
       commercial property which M&M occupied was sold in September 1999 to an
       entity controlled by a member of the Company's Board of Directors,
       following approval of the independent members of the Board of Directors.

                                                                     (Continued)

                                      F-16
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


       During the years ended December 31, 1999, 1998 and 1997, the Operating
       Partnership paid brokerage commissions totaling $105, $0 and $590 to M&M
       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 M&M
       brokerage commissions on certain transactions in which the Operating
       Partnership is a party.

       Interest and other income include interest income of $705, $1,027 and
       $1,286 for the years ended December 31, 1999, 1998 and 1997,
       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
       includes management fee income and investment income earned by the
       Company from its Joint Ventures of $561, $623 and $139 for the years
       ended December 31, 1999, 1998 and 1997, respectively.

                                                                     (Continued)

                                      F-17
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


(9)    MORTGAGE NOTES PAYABLE

       Mortgage notes payable consist of the following as of December 31, 1999
       and 1998:
       <TABLE>
       <CAPTION>

                                                                                       1999           1998
                                                                                   ------------  ------------

       <S>                                                                        <C>            <C>
       Mortgage note payable to a pension fund, secured by deeds of trust,
           bearing interest at 6.62%, interest only payments due monthly through
           October 2001, principal and interest payments due monthly thereafter,
           final principal payment of $90,596 due in October 2008. Under certain
           conditions this loan can be converted to an unsecured
           note payable.......................................................... $    100,000   $    100,000

       Mortgage notes payable, secured by deeds of trust, bearing interest at
           rates ranging from 6.885% to 8.055%, principal and interest payments
           due monthly, and maturity dates ranging from December 2000 through
           March 2008............................................................      145,106         96,214

       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 3.5% for December 1999 and 1998), plus credit
           enhancement and underwriting fees ranging from approximately 1.2 to
           1.9%. The bonds are convertible to a fixed rate at the Operating
           Partnership's option. Among the terms imposed on the properties,
           which are security for the bonds, is that twenty percent of the units
           are subject to tenant income qualification criteria. Principal
           balances are due in full at various maturity dates from July 2014
           through October 2026. These bonds are subject to interest rate
           protection agreements through August 2003, limiting the interest rate
           with respect to such bonds to a maximum interest rate of 7.1% to 7.3%.       58,820         58,820

       Mortgage notes payable, secured by deeds of trust, bearing interest at
           rates ranging from 7.0% to 8.78%, principal and interest payments due
           monthly, and maturity dates ranging from December 2002 through April
           2005. Under certain conditions this loan can be converted to an
           unsecured note payable................................................       44,158         44,788

       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, final principal payment of $14,800 due January 2026. Among
           the terms imposed on the property, which is security for the bonds,
           is that twenty percent 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................       17,030         17,273

       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 that twenty
           percent of the units are subject to tenant income
           qualifications criteria...............................................        8,494          8,727
                                                                                     ------------   -----------

                                                                                  $    373,608   $    325,822
                                                                                     ============   ===========

        </TABLE>

                                                                     (Continued)

                                      F-18
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


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

                  2000............................... $            43,196
                  2001...............................               2,763
                  2002...............................              24,832
                  2003...............................              30,482
                  2004...............................               2,697
                  Thereafter.........................             269,638
                                                         --------------------

                                                      $           373,608
                                                         ====================


       In October 1997, the Operating Partnership entered into four forward
       treasury contracts for an aggregate notional amount of $60,000, locking
       the 10-year treasury rate at between 6.15%-6.26%. These contracts are to
       limit the interest rate exposure on identified future debt financing
       requirements relating to real estate under development and the
       refinancing of a $18,101 fixed rate loan. These contracts will be settled
       no later than June 2000. Subsequent to December 31, 1999, three of the
       four contracts were sold, resulting in a net realized gain of
       approximately $920. The value of the unsold contract as of December 31,
       1999 was $403.

       In addition, the Operating Partnership has entered into various other
       contracts to limit its interest rate exposure on debt related
       transactions. During 1999, 1998 and 1997, the Operating Partnership
       charged to expense $0, $0 and $138, respectively, of costs relating to
       the termination of such contracts.

       During the years ended December 31, 1999, 1998 and 1997, the Operating
       Partnership refinanced various mortgages and incurred a loss on the early
       extinguishment of debt of $214, $4,718 and $361 related to the write off
       of the unamortized mortgage loan fees and prepayment penalties.


(10)   LINE OF CREDIT

       The Operating Partnership has an unsecured $100,000 line of credit with a
       commercial bank with interest payable monthly at the bank's reference
       rate or at the Operating Partnership's option, 1.15% over the LIBOR rate,
       which expires June 2000. As of December 31, 1999 and 1998, the Operating
       Partnership had $10,500 and $35,693 outstanding under its line of credit.
       The amount available under the line of credit is reduced by $684, the
       amount outstanding under letters of credit obtained by the Operating
       Partnership.

       As of December 31, 1999, the thirty-day LIBOR rate was approximately
       5.8%, and the prime rate was 8.5%.


(11)   LEASING ACTIVITY

       Rental revenues of the Operating Partnership include revenues received
       from its majority-owned apartment properties, which are rented under
       short-term leases (generally, lease terms of three to twelve months). Due
       to the short-term nature of the leases, future minimum rental activity is
       not disclosed by the Operating Partnership.

                                                                     (Continued)

                                      F-19
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


(12)   FAIR VALUE OF FINANCIAL INSTRUMENTS

       Management believes that the carrying amounts of mortgage notes payable,
       lines of credit, notes and other related party receivables approximate
       fair value as of December 31, 1999 and 1998, because interest rates and
       yields for these instruments are consistent with yields currently
       available to the Operating Partnership for similar instruments.
       Management believes that the carrying amounts of cash and cash
       equivalents, restricted cash, accounts payable, other liabilities and
       dividends payable approximate fair value as of December 31, 1999 and 1998
       due to the short-term maturity of these instruments. See note 9 for fair
       value disclosure of interest rate risk management contracts.


(13)   SEGMENT INFORMATION

       In accordance with Financial Accounting Standards Board No. 131,
       Disclosures about Segments of an Enterprise and Related Information (FAS
       131), 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.

       Non-segment revenues and net operating income included in the following
       schedule consists of revenue generated from the two commercial
       properties. Also excluded from segment revenues is interest and other
       corporate income. Other non-segment assets include investments, real
       estate under development, cash, receivables and other assets.

       The accounting policies of the segments are the same as those described
       in note 1. The Operating Partnership evaluates performance based upon net
       operating income from the combined properties in each segment.

                                                                     (Continued)

                                      F-20
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


       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, 1999, 1998 and 1997:
       <TABLE>
       <CAPTION>

                                                                         YEAR ENDED
                                                          ---------------------------------------
                                                              1999           1998        1997
                                                          ------------   -----------  -----------
          <S>                                           <C>              <C>            <C>
          Revenues:
              Northern California.....................  $   46,960    $    42,078    $  33,481
              Southern California.....................      58,371         45,252       20,026
              Pacific Northwest.......................      33,316         32,137       23,356
                                                          ------------   -----------  -----------

                   Total segment revenues.............     138,647        119,467       76,863

          Non-segment property revenues...............       1,780          2,575        4,537
          Interest and other income...................       5,618          3,217        3,169
                                                          ------------   -----------  -----------

                   Total revenues.....................  $  146,045    $   125,259    $  84,569
                                                          ============   ===========  ===========

          Net operating income:
              Northern California.....................  $   35,962    $    31,681    $  24,664
              Southern California.....................      40,122         29,758       12,955
              Pacific Northwest.......................      22,284         21,138       14,916
                                                          ------------   -----------  -----------

                   Total segment net operating income.      98,368         82,577       52,535

          Non-segment net operating income............         353          1,532        3,039
          Interest and other income...................       5,618          3,217        3,169
          Depreciation and amortization...............     (26,150)       (21,948)     (13,992)
          Interest....................................     (21,268)       (19,374)     (12,659)
          Amortization of deferred financing costs....        (566)          (718)        (509)
          General and administrative..................      (4,263)        (3,765)      (2,413)
          Loss from hedge termination.................          --             --         (138)
          Provision for litigation loss...............          --           (930)          --
                                                         ------------   -----------  -----------

                   Income before gain on the sales of
                      real estate, minority interests,
                      and extraordinary item..........  $   52,092    $    40,591    $  29,032
                                                         ============   ===========  ===========

          Assets:
              Northern California.....................  $  216,946    $   241,676    $ 175,116
              Southern California.....................     415,374        355,077      257,714
              Pacific Northwest.......................     195,011        198,761      213,125
                                                         ------------   -----------  -----------

                   Total segment net real estate assets    827,331        795,514      645,955

          Non-segment net real estate assets..........       5,140         16,661       26,992
                                                         ------------   -----------  -----------

                   Net real estate assets.............     832,471        812,175      672,947

          Non-segment assets..........................     229,842        119,621       65,888
                                                         ------------   -----------  -----------

                   Total assets.......................  $1,062,313     $  931,796    $ 738,835
                                                         ============   ===========  ===========

</TABLE>

                                                                     (Continued)

                                      F-21
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


(14)   QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

       The following is a summary of quarterly results of operations for 1999
       and 1998:
       <TABLE>
       <CAPTION>


                                                   QUARTER ENDED      QUARTER ENDED      QUARTER ENDED      QUARTER ENDED
                                                    DECEMBER 31       SEPTEMBER 30          JUNE 30            MARCH 31
                                                  ----------------   ----------------   ----------------    ---------------
              <S>                              <C>                   <C>                <C>                 <C>
              1999:
                  Total revenues before gain
                    on the sales of real
                    estate...................  $        39,512             37,745             34,898              33,890
                                                  ================   ================   ================    ===============

                  Gain on the sales of real
                    estate...................  $         4,816              4,708                 --                  --
                                                  ================   ================   ================    ===============

                         Extraordinary item..  $          (124)                --                (90)                 --
                                                  ================   ================   ================    ===============

                         Net income..........  $        19,271             17,962             12,076              11,544
                                                  ================   ================   ================    ===============

                  Per unit data:
                    Net income:
                      Basic..................  $          0.73              0.72               0.51                0.46
                                                  ================   ================   ================    ===============

                      Diluted................  $          0.70              0.71               0.50                0.46
                                                  ================   ================   ================    ===============

              1998:
                  Total revenues before gain
                    on the sales of real
                    estate...................  $        33,088             32,651           31,684              27,836
                                                  ================   ================   ================    ===============

                  Gain on the sales of real
                    estate...................  $            --                  9              --                    --
                                                  ================   ================   ================    ===============

                         Extraordinary item..  $        (3,912)              (806)             --                  --
                                                  ================   ================   ================    ===============

                         Net income..........  $         6,894              9,096            9,884              9,546
                                                  ================   ================   ================    ===============

                  Per unit data:
                    Net income:
                      Basic..................  $          0.23              0.36             0.41                0.43
                                                  ================   ================   ================    ===============

                      Diluted................  $          0.23              0.36             0.40                0.42
                                                  ================   ================   ================    ===============

</TABLE>


 (15)  401(K) PLAN

       The Operating Partnership has a 401(k) pension plan (the Plan) for all
       full time employees who have completed one year 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 non-highly compensated
       personnel, up to 50% of their compensation to a maximum of five hundred
       dollars (per individual) per year. Operating Partnership contributions to
       the Plan were approximately $58, $46 and $41 for the years ended December
       31, 1999, 1998 and 1997.

                                                                     (Continued)

                                      F-22
<PAGE>

                              ESSEX PORTFOLIO, L.P.

                   Notes to Consolidated Financial Statements

                        December 31, 1999, 1998 and 1997

              (Dollars in thousands, except for per share amounts)


(16)   COMMITMENTS AND CONTINGENCIES

       A commercial bank has issued on behalf of the Operating Partnership
       various letters of credit relating to financing and development
       transactions for an aggregate amount of $684 which expired January 2000.

       The Operating Partnership is developing nine multifamily residential
       projects, which are anticipated to have an aggregate of approximately
       1,904 multifamily units. The Operating Partnership expects that such
       projects will be completed during the next two years. In connection with
       these 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. As of December 31,
       1999, the Operating Partnership is committed to fund approximately
       $78,700 relating to these projects.

       Investments in real property create a potential for environmental
       liabilities on the part of the owner of such real property. The Operating
       Partnership carries no express insurance coverage for this type of
       environmental risk. The Operating Partnership has 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 and possibly 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. 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 effect on the Operating
       Partnership's financial position, results of operations, or liquidity.

       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.

       In September 1999, the Operating Partnership formed a program in which
       directors and management of the Operating Partnership can participate
       indirectly in an investment in the Company's common stock. The
       participants have entered into a swap agreement with a securities
       broker whereby the securities broker has acquired, in open market
       transactions, 223,475 shares of the Company's common stock. The
       agreement terminates in five years at which time the settlement amount
       is determined by comparing the original purchase price of the stock
       plus interest at a rate of LIBOR plus 1.5% to the termination date
       market value of the shares and all dividends received during the
       investment period. In certain circumstances, the participants may be
       required to provide collateral to the securities broker. The Operating
       Partnership has guaranteed performance of the participants with respect
       to any obligations relating to the swap agreement.


       In September 1999, the Operating Partnership formed a program in which
       directors and management of the Operating Partnership can participate
       indirectly in an investment in the general partner common stock. The
       participants have entered into a swap agreement with a securities broker
       whereby the securities broker has acquired, in open market transactions,
       223,475 shares of the general partner common stock. The agreement
       terminates in five years at which time the settlement amount is
       determined by comparing the original purchase price of the stock plus
       interest at a rate of LIBOR plus 1.5% to the termination date market
       value of the shares and all dividends received during the investment
       period. In certain circumstances, the participants may be required to
       provide collateral to the securities broker. The Operating Partnership
       has guaranteed performance of the participants with respect to any
       obligations relating to the swap agreement.



                                      F-23
<PAGE>


                             ESSEX PORTFOLIO, L.P.

                    Real Estate and Accumulated Depreciation

                               December 31, 1999
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                                        INITIAL COST            COSTS
                                                                                --------------------------    CAPITALIZED
                                                                                               BUILDINGS      SUBSEQUENT
                                                                                                  AND             TO
PROPERTY                           UNITS       LOCATION        ENCUMBRANCE         LAND       IMPROVEMENTS    ACQUISITION
-----------------------------      -----  -----------------    -----------      --------      ------------    -----------

<S>                            <C>        <C>                  <C>              <C>           <C>             <C>
Encumbered multifamily
 properties

        Summerhill Park .....       100   Sunnyvale, CA        $                $  2,654      $      4,918    $       433
        Oak Pointe ..........       390   Sunnyvale, CA                            4,842            19,776          4,589
        Summerhill Commons ..       184   Newark, CA                               1,608             7,582            792
        Pathways ............       296   Long Beach, CA                           4,083            16,757          7,758
        Villa Rio Vista .....       286   Anaheim, CA                              3,013            12,661          2,101
        Foothill Commons ....       360   Bellevue, WA                             2,435             9,821          2,510
        Woodland Commons ....       236   Bellevue, WA                             2,040             8,727          1,353
        Palisades ...........       192   Bellevue, WA                             1,560             6,242          1,522
                                                               -----------      --------      ------------    -----------
                                                                   100,000        22,235            86,484         21,058
        Wharfside Pointe ....       142   Seattle, WA                              2,245             7,020            726
        Emerald Ridge .......       180   Bellevue, WA                             3,449             7,801            653
        Sammamish View ......       153   Bellevue, WA                             3,324             7,501            515
                                                               -----------      --------      ------------    -----------
                                                                    19,201         9,018            22,322          1,894
                                                               -----------      --------      ------------    -----------
        Brighton Ridge ......       264   Renton, WA                               2,623            10,800            595
        Landmark ............       285   Hillsboro, OR                            3,655            14,200            686
        Eastridge ...........       188   San Ramon,CA                             6,068            13,628            303
                                                               -----------      --------      ------------    -----------
                                                                    27,418        12,346            38,628          1,584
                                                               -----------      --------      ------------    -----------
        Bridle Trails .......        92   Kirkland, WA               4,191         1,500             5,930            100
        Bunker Hill Towers ..       456   Los Angeles, CA           18,122        11,498            27,871            445
        Camarillo Oaks ......       564   Camarillo, CA             27,915        10,953            25,254          3,234
        Columbus ............        83   Glendale, CA               4,540         2,407             5,672            181
        Evergreen Heights ...       200   Kirkland, WA               8,949         3,566            13,395            332
        Euclid ..............        85   Pasadena, CA               2,884         2,202             4,794            189
        Glenbrook ...........        84   Pasadena, CA               4,474         2,312             4,923            140
        Huntington Breakers .       342   Huntington Beach, CA      23,409         9,306            22,720            398
        Inglenook Court .....       224   Bothell, WA                8,300         3,467             7,881          1,330
        Lorraine ............       132   Glendale, CA               8,378         4,288            11,081             --
        Maple Leaf ..........        48   Seattle, WA                2,048           805             3,283             54
        Meadowood ...........       320   Simi Valley, CA           17,030         7,852            18,592            622
        Spring Lake .........        69   Seattle, WA                2,243           838             3,399             65
        Stonehedge Village ..       196   Bothell, WA                9,065         3,167            12,603            433
        The Bluffs ..........       224   San Diego, CA              8,357         3,405             7,743            176
        The Shores (5) ......       348   San Ramon, CA             18,101         8,789            18,252           (450)
        Treetops ............       172   Fremont, CA                9,800         3,520             8,182            875
        Wandering Creek .....       156   Kent, WA                   5,300         1,285             4,980            870
        Wilshire Promenade ..       128   Fullerton, CA              7,764         3,118             7,385            230
        Windsor Ridge .......       216   Sunnyvale, CA             13,619         4,017            10,315            563
                                                               -----------      --------      ------------    -----------
                                                                   351,108       131,894           371,689         34,323
                                                               -----------      --------      ------------    -----------
Unencumbered multifamily
 properties
        Avondale at Warner
        Center ..............       446   Woodland Hills, CA                      10,536            24,522             72
        Bristol Commons .....       188   Sunnyvale, CA                            5,278            11,853            792
        Castle Creek ........       216   Newcastle, WA                            4,149            16,028            736
        Fairway (3) .........        74   Newport Beach, CA                        2,374             5,476             96
        Foothill/Twincreeks .       176   San Ramon, CA                            5,875            13,992            887
        Hillsborough Park ...       235   La Habra, CA                             6,291            15,455             23
        Kings Road ..........       196   Los Angeles, CA                          4,023             9,527            182
        Marina Cove (4) .....       292   Santa Clara, CA                          5,320            16,431          1,333
        Meadows @ Cascade ...       198   Vancouver, WA                            2,261             9,070            378
        Hillcrest Park ......       608   Newbury Park, CA                        15,318            40,601            712
        Park Place/
        Windsor Court/Cochran       176   Los Angeles, CA                          4,965            11,806            231
        Plumtree ............       140   Santa Clara, CA                          3,090             7,421            523
        Stevenson Place .....       200   Fremont, CA                                996             5,582          5,789
        Tara Village ........       168   Tarzana, CA                              3,178             7,535            393
        The Laurels .........       164   Mill Creek, WA                           1,559             6,430            291
        The Village .........       122   Oxnard, CA                               2,349             5,579            156
        Trabucco Villas .....       132   Lake Forest, CA                          3,638             8,640            388
        Villa Scandia .......       118   Ventura, CA                              1,570             3,912            152
        Village @ Cascade ...       192   Vancouver, WA                            2,103             8,753            118
        Wimbledon Woods .....       560   Hayward, CA                              9,883            37,670            619
        Monterra del Mar ....       122   Pasadena, CA                             2,188             5,263          3,420
                                 ------                        -----------      --------      ------------    -----------
                                 12,118                            351,108       228,838           643,235         51,614
                                 ======                        -----------      --------      ------------    -----------
</TABLE>



<TABLE>
<CAPTION>

                                                                            GROSS AMOUNT
                                                                        CARRIED AT CLOSE OF PERIOD
                                                                  --------------------------------------
                                                                      LAND        BUILDINGS
                                                                      AND            AND
PROPERTY                           UNITS       LOCATION           IMPROVEMENTS   IMPROVEMENTS   TOTAL(1)
-----------------------------      -----  -----------------       ------------   ------------   --------

<S>                            <C>        <C>                     <C>            <C>            <C>
Encumbered multifamily
 properties

        Summerhill Park .....       100   Sunnyvale, CA           $      2,655   $      5,350   $  8,005
        Oak Pointe ..........       390   Sunnyvale, CA                  4,845         24,362     29,207
        Summerhill Commons ..       184   Newark, CA                     1,518          8,464      9,982
        Pathways ............       296   Long Beach, CA                 6,163         22,435     28,598
        Villa Rio Vista .....       286   Anaheim, CA                    2,986         14,789     17,775
        Foothill Commons ....       360   Bellevue, WA                   2,438         12,328     14,766
        Woodland Commons ....       236   Bellevue, WA                   2,042         10,078     12,120
        Palisades ...........       192   Bellevue, WA                   1,562          7,762      9,324
                                                                  ------------   ------------   --------
                                                                        24,209        105,568    129,777
        Wharfside Pointe ....       142   Seattle, WA                    2,253          7,738      9,991
        Emerald Ridge .......       180   Bellevue, WA                   3,447          8,456     11,903
        Sammamish View ......       153   Bellevue, WA                   3,329          8,011     11,340
                                                                  ------------   ------------   --------
                                                                         9,029         24,205     33,234
                                                                  ------------   ------------   --------
        Brighton Ridge ......       264   Renton, WA                     2,654         11,364     14,018
        Landmark ............       285   Hillsboro, OR                  3,697         14,844     18,541
        Eastridge ...........       188   San Ramon,CA                   6,089         13,910     19,999
                                                                  ------------   ------------   --------
                                                                        12,440         40,118     52,558
                                                                  ------------   ------------   --------
        Bridle Trails .......        92   Kirkland, WA                   1,529          6,001      7,530
        Bunker Hill Towers ..       456   Los Angeles, CA               11,628         28,186     39,814
        Camarillo Oaks ......       564   Camarillo, CA                 11,017         28,424     39,441
        Columbus ............        83   Glendale, CA                   2,408          5,852      8,260
        Evergreen Heights ...       200   Kirkland, WA                   3,645         13,648     17,293
        Euclid ..............        85   Pasadena, CA                   2,375          4,810      7,185
        Glenbrook ...........        84   Pasadena, CA                   2,430          4,945      7,375
        Huntington Breakers .       342   Huntington Beach, CA           9,312         23,112     32,424
        Inglenook Court .....       224   Bothell, WA                    3,474          9,204     12,678
        Lorraine ............       132   Glendale, CA                   4,288         11,081     15,369
        Maple Leaf ..........        48   Seattle, WA                      825          3,317      4,142
        Meadowood ...........       320   Simi Valley, CA                7,895         19,171     27,066
        Spring Lake .........        69   Seattle, WA                      857          3,445      4,302
        Stonehedge Village ..       196   Bothell, WA                    3,196         13,007     16,203
        The Bluffs ..........       224   San Diego, CA                  3,439          7,885     11,324
        The Shores (5) ......       348   San Ramon, CA                  7,099         19,492     26,591
        Treetops ............       172   Fremont, CA                    3,576          9,001     12,577
        Wandering Creek .....       156   Kent, WA                       1,296          5,839      7,135
        Wilshire Promenade ..       128   Fullerton, CA                  3,137          7,596     10,733
        Windsor Ridge .......       216   Sunnyvale, CA                  4,019         10,876     14,895
                                                                  ------------   ------------   --------
                                                                       133,123        404,783    537,906
                                                                  ------------   ------------   --------
Unencumbered multifamily
 properties
        Avondale at Warner
        Center ..............       446   Woodland Hills, CA            10,556         24,574     35,130
        Bristol Commons .....       188   Sunnyvale, CA                  5,283         12,640     17,923
        Castle Creek ........       216   Newcastle, WA                  4,818         16,095     20,913
        Fairway (3) .........        74   Newport Beach, CA              2,402          5,544      7,946
        Foothill/Twincreeks .       176   San Ramon, CA                  5,940         14,814     20,754
        Hillsborough Park ...       235   La Habra, CA                   6,290         15,479     21,769
        Kings Road ..........       196   Los Angeles, CA                4,030          9,702     13,732
        Marina Cove (4) .....       292   Santa Clara, CA                5,322         17,762     23,084
        Meadows @ Cascade ...       198   Vancouver, WA                  2,334          9,375     11,709
        Hillcrest Park ......       608   Newbury Park, CA              15,746         40,885     56,631
        Park Place/
        Windsor Court/Cochran       176   Los Angeles, CA                5,014         11,988     17,002
        Plumtree ............       140   Santa Clara, CA                3,091          7,943     11,034
        Stevenson Place .....       200   Fremont, CA                      998         11,369     12,367
        Tara Village ........       168   Tarzana, CA                    3,210          7,896     11,106
        The Laurels .........       164   Mill Creek, WA                 1,595          6,685      8,280
        The Village .........       122   Oxnard, CA                     2,393          5,691      8,084
        Trabucco Villas .....       132   Lake Forest, CA                3,841          8,825     12,666
        Villa Scandia .......       118   Ventura, CA                    1,592          4,042      5,634
        Village @ Cascade ...       192   Vancouver, WA                  2,151          8,823     10,974
        Wimbledon Woods .....       560   Hayward, CA                   10,346         37,826     48,172
        Monterra del Mar ....       122   Pasadena, CA                   2,657          8,214     10,871
                                 ------                           ------------   ------------   --------
                                 12,118                                232,732        690,955    923,687
                                 ======                           ------------   ------------   --------

</TABLE>


<TABLE>
<CAPTION>


                                                                                                            DEPRECIABLE
                                                                 ACCUMULATED         DATE OF        DATE       LIVES
PROPERTY                           UNITS       LOCATION          DEPRECIATION      CONSTRUCTION   ACQUIRED    (YEARS)
-----------------------------      -----  -----------------      ------------      ------------   --------  -----------

<S>                            <C>        <C>                    <C>               <C>             <C>          <C>
Encumbered multifamily
 properties

        Summerhill Park .....       100   Sunnyvale, CA          $      1,814         1988         09/88        3-40
        Oak Pointe ..........       390   Sunnyvale, CA                10,359         1973         12/88        3-30
        Summerhill Commons ..       184   Newark, CA                    2,861         1987         07/87        3-40
        Pathways ............       296   Long Beach, CA                5,519         1975         02/91        3-30
        Villa Rio Vista .....       286   Anaheim, CA                   7,742         1968         07/85        3-30
        Foothill Commons ....       360   Bellevue, WA                  4,847         1978         03/90        3-30
        Woodland Commons ....       236   Bellevue, WA                  3,854         1978         03/90        3-30
        Palisades ...........       192   Bellevue, WA                  3,310      1969/1977(2)    05/90        3-30
                                                                 ------------
                                                                       40,306
        Wharfside Pointe ....       142   Seattle, WA                   1,592         1990         06/94        3-30
        Emerald Ridge .......       180   Bellevue, WA                  1,646         1987         11/94        3-30
        Sammamish View ......       153   Bellevue, WA                  1,468         1986         11/94        3-30
                                                                 ------------
                                                                        4,706
                                                                 ------------
        Brighton Ridge ......       264   Renton, WA                    1,066         1986         12/96        3-30
        Landmark ............       285   Hillsboro, OR                 1,679         1990         08/96        3-30
        Eastridge ...........       188   San Ramon,CA                  1,564         1988         08/96        3-30
                                                                 ------------
                                                                        4,309
                                                                 ------------
        Bridle Trails .......        92   Kirkland, WA                    452         1986         10/97        3-30
        Bunker Hill Towers ..       456   Los Angeles, CA               1,627         1968         03/98        3-30
        Camarillo Oaks ......       564   Camarillo, CA                 2,555         1985         07/96        3-30
        Columbus ............        83   Glendale, CA                    116         1974         06/99        3-30
        Evergreen Heights ...       200   Kirkland, WA                  1,157         1990         06/97        3-30
        Euclid ..............        85   Pasadena, CA                    112         1972         04/99        3-30
        Glenbrook ...........        84   Pasadena, CA                    115         1972         04/99        3-30
        Huntington Breakers .       342   Huntington Beach, CA          1,700         1984         10/97        3-30
        Inglenook Court .....       224   Bothell, WA                   2,428         1985         10/94        3-30
        Lorraine ............       132   Glendale, CA                    207         1970         06/99        3-30
        Maple Leaf ..........        48   Seattle, WA                     240         1986         10/97        3-30
        Meadowood ...........       320   Simi Valley, CA               2,105         1986         11/96        3-30
        Spring Lake .........        69   Seattle, WA                     241         1986         10/97        3-30
        Stonehedge Village ..       196   Bothell, WA                     604         1986         10/97        3-30
        The Bluffs ..........       224   San Diego, CA                   666         1974         06/97        3-30
        The Shores (5) ......       348   San Ramon, CA                 1,879         1988         01/97        3-30
        Treetops ............       172   Fremont, CA                   1,219         1978         01/96        3-30
        Wandering Creek .....       156   Kent, WA                        939         1986         11/95        3-30
        Wilshire Promenade ..       128   Fullerton, CA                   762         1992         01/97        3-30
        Windsor Ridge .......       216   Sunnyvale, CA                 3,118         1989         03/89        3-40
                                                                 ------------
                                                                       71,563
                                                                 ------------
Unencumbered multifamily
 properties
        Avondale at Warner
        Center ..............       446   Woodland Hills, CA              229         1989         01/97        3-30
        Bristol Commons .....       188   Sunnyvale, CA                 1,220         1989         01/97        3-30
        Castle Creek ........       216   Newcastle, WA                   673         1997         12/97        3-30
        Fairway (3) .........        74   Newport Beach, CA               103         1972         06/99        3-30
        Foothill/Twincreeks .       176   San Ramon, CA                 1,379         1985         02/97        3-30
        Hillsborough Park ...       235   La Habra, CA                    182         1999         09/99        3-30
        Kings Road ..........       196   Los Angeles, CA                 799         1979         06/97        3-30
        Marina Cove (4) .....       292   Santa Clara, CA               3,694         1974         06/94        3-30
        Meadows @ Cascade ...       198   Vancouver, WA                   685         1988         11/97        3-30
        Hillcrest Park ......       608   Newbury Park, CA              2,613         1973         03/98        3-30
        Park Place/
        Windsor Court/Cochran       176   Los Angeles, CA                 736         1988         08/97        3-30
        Plumtree ............       140   Santa Clara, CA               1,668         1975         02/94        3-30
        Stevenson Place .....       200   Fremont, CA                   4,631         1971         04/82        3-30
        Tara Village ........       168   Tarzana, CA                     777         1972         01/97        3-30
        The Laurels .........       164   Mill Creek, WA                  657         1981         12/96        3-30
        The Village .........       122   Oxnard, CA                      473         1974         07/97        3-30
        Trabucco Villas .....       132   Lake Forest, CA                 660         1985         10/97        3-30
        Villa Scandia .......       118   Ventura, CA                     349         1971         06/97        3-30
        Village @ Cascade ...       192   Vancouver, WA                   598         1995         12/97        3-30
        Wimbledon Woods .....       560   Hayward, CA                   2,234         1975         03/98        3-30
        Monterra del Mar ....       122   Pasadena, CA                    433         1972         09/97        3-30
                                 ------                          ------------
                                 12,118                                96,356
                                 ======                          ------------

</TABLE>




<PAGE>



                            ESSEX PORTFOLIO, L.P.
                    Real Estate and Accumulated Depreciation
                               December 31, 1999
                             (Dollars in thousands)
<TABLE>
<CAPTION>                                                                                             GROSS AMOUNT
                         TOTAL                                 INITIAL COST         COSTS       CARRIED AT CLOSE OF PERIOD
                        RENTABLE                           --------------------  CAPITALIZED   ----------------------------
                         SQUARE                                   BUILDINGS AND  SUBSEQUENT TO   LAND AND     BUILDINGS AND
        PROPERTY        FOOTAGE   LOCATION   ENCUMBRANCE   LAND   IMPROVEMENTS   ACQUISITION    IMPROVEMENTS  IMPROVEMENTS  TOTAL(1)
        --------        --------  --------   ----------- -------- ------------- -------------  ------------- ------------- --------
<S>                     <C>       <C>        <C>           <C>    <C>           <C>            <C>           <C>          <C>
Commercial properties
      925 East Meadow..   17,404  Palo Alto,         --     1,401         3,172           816          1,765         3,624    5,389
                        --------    CA       ----------- -------- ------------- -------------  ------------- ------------- --------
                          17,404                     --     1,401         3,172           816          1,765         3,624    5,389
                        ========             ----------- -------- ------------- -------------  ------------- ------------- --------

Total multifamily and
  commercial properties                         $351,108 $230,239      $646,407       $52,430       $214,497      $694,579 $929,076
  (6)                                        ----------- -------- ------------- -------------  ------------- ------------- --------

</TABLE>

<TABLE>
<CAPTION>
                                                                              DEPRECIABLE
                               ACCUMULATED        DATE OF           DATE         LIVES
         PROPERTY              DEPRECIATION     CONSTRUCTION      ACQUIRED      (YEARS)
         --------              ------------     ------------      --------    ------------
<S>                            <C>              <C>               <C>         <C>
Commercial properties
      925 East Meadow ......       249             1984            11/97         3-30
                                 --------
                                   249
                                 --------
                                 $ 96,605
                                 ========

</TABLE>


(1)   The aggregate cost for federal income tax purposes is $764,618.
(2)   Phase I was built in 1969 and Phase II was built in 1977.
(3)   The land is leased pursuant to a ground lease expiring 2027.
(4)   A portion of land is leased pursuant to a ground lease expiring in
      2028.
(5)   A portion of The Shores land value was allocated to real estate under
      development for the Bel Air (formerly Canyon Point) development project in
      the amount of $1,757.
(6)   Not included on above schedule is the construction loan for the Fountain
      Court development project in the amount of $22,500.




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

<TABLE>
<CAPTION>

                                      1999         1998         1997
                                    ---------    ---------    ---------
<S>                                 <C>          <C>          <C>
Real estate:
     Balance at beginning of year   $ 889,964    $ 730,987    $ 393,809
     Improvements ...............       5,554       12,200        4,533
     Acquisition of real estate .     193,634      169,934      345,750
     Disposition of real estate .    (160,076)     (23,157)     (13,105)
                                    ---------    ---------    ---------

     Balance at end of year .....   $ 929,076    $ 889,964    $ 730,987
                                    =========    =========    =========

</TABLE>


<TABLE>
<CAPTION>

                                           1999        1998        1997
                                         --------    --------    --------
<S>                                      <C>         <C>         <C>
 Accumulated depreciation:
   Balance at beginning of year ......   $ 77,789    $ 58,040    $ 47,631
   Dispositions ......................     (7,334)     (2,183)     (3,504)
   Depreciation expense - Acquisitions      1,377       2,888       2,086
   Depreciation expense ..............     24,773      19,044      11,827
                                         --------    --------    --------

   Balance at end of year ............   $ 96,605    $ 77,789    $ 58,040
                                         ========    ========    ========

</TABLE>




<PAGE>

                                    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.

                                             Essex Portfolio, L.P.
                                             (Registrant)

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


Dated:     March 30, 2000
                                      By: /s/ Michael J. Schall
                                         ---------------------------------------
                                         Michael J. Schall
                                         Executive Vice President and
                                         Chief Financial Officer and Director
                                         (Principal Financial Officer)


                                   SIGNATURES
                                   ----------

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.


Dated            March 30, 2000          /s/ George M. Marcus
                                         ---------------------------------------
                                         George M. Marcus
                                         Chairman of the Board



Dated            March 30, 2000          /s/ Keith R. Guericke
                                         ---------------------------------------
                                         Keith R. Guericke
                                         President and Chief Executive Officer
                                         and Vice Chairman



Dated            March 30, 2000          /s/ Michael J. Schall
                                         ---------------------------------------
                                         Michael J. Schall
                                         Chief Financial Officer Executive,
                                         Vice President and Director



Dated            March 30, 2000          /s/ Mark J. Mikl
                                         ---------------------------------------
                                         Mark J. Mikl
                                         Vice President and Controller
                                         (Principal Accounting Officer)



Dated            March 30, 2000          /s/ William A. Millichap
                                         ---------------------------------------
                                         William A. Millichap
                                         Director



Dated            March 30, 2000          /s/ Gary P. Martin
                                         ---------------------------------------
                                         Gary P. Martin
                                         Director



Dated            March 30, 2000          /s/ Robert E. Larson
                                         ---------------------------------------
                                         Robert E. Larson
                                         Director
<PAGE>

Dated            March 30, 2000          /s/ Thomas E. Randlett
                                         ---------------------------------------
                                         Thomas E. Randlett
                                         Director


Dated            March 30, 2000          /s/ Anthony Downs
                                         ---------------------------------------
                                         Anthony Downs
                                         Director


Dated            March 30, 2000          /s/ David Brady
                                         ---------------------------------------
                                         David Brady
                                         Director


Dated            March 30, 2000          /s/ Issie N. Rabinovitch
                                         ---------------------------------------
                                         Issie N. Rabinovitch
                                         Director


Dated            March 30, 2000          /s/ Willard H. Smith
                                         ---------------------------------------
                                         Willard H. Smith
                                         Director



                                      II-2
<PAGE>

Exhibit No.    Document                                                     Page
-----------    --------                                                     ----
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 as of 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 as of 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 as of September 30,
               1999 and incorporated herein by reference.                    --


4.0            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.                         --

10.1           Essex Property Trust, Inc. 1994 Stock Incentive Plan
               (amended and restated as of April 3, 1997 and previously
               known as the 1994 Employee Stock Incentive Plan), attached
               as Exhibit 10.7 to the Company's Quarterly Report on Form
               10-Q for the quarter ended June 30, 1997, 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,
<PAGE>

               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 as of 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 as of 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
               Incentive Plan, attached as Exhibit 10.2 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 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.*                            --

10.11          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.*                                                   --

10.12          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.                                          --

10.13          Contribution Agreement by and among Essex, the Operating
               Partnership and the Limited Partners in the Operating
               Partnership, attached as Exhibit 10.6 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.                             --

10.14          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.                         --

10.15          Stock Purchase Agreement dated as of June 20, 1996 by and
               between Essex Property Trust, Inc. and Tiger/Westbrook
               Real Estate Fund L.P. and Tiger/Westbrook Real Estate
               Co-Investment Partnership, L.P., attached as Exhibit 10.1
               to the Company's Current Report on Form 8-K, filed August
               13, 1996, and incorporated herein by reference.               --

10.16          Amendment No. 1 to Stock Purchase Agreement dated as of
               July 1, 1996 by and between Essex Property Trust, Inc.
               and Tiger/Westbrook Real Estate Fund, L.P. and Tiger/
               Westbrook Real Estate Co-Investment Partnership, L.P.,
               attached as Exhibit 10.2 to the Company's Current Report
               on Form 8-K, filed August 13, 1996, and incorporated
               herein by reference.                                          --

10.17          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.               --

10.18          Agreement by and among M&M, M&M REIBC and the Operating
               Partnership and Essex regarding Stock Options attached
               as Exhibit 10.14 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.                                                    --

10.19          Co-Brokerage Agreement by and among Essex, the Operating
               Partnership, M&M 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.                                                 --

10.20          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.                             --
<PAGE>

10.21          Form of Management Agreement between the Operating
               Partnership and Essex Management Corporation regarding
               the retail Properties attached as Exhibit 10.18 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.           --

10.22          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.                                          --

10.23          Registration Rights Agreement, dated as of June 20, 1996,
               attached as Exhibit 10.8 to Essex's Current Report on
               Form 8-K, filed August 13, 1996, and incorporated herein
               by reference.                                                 --

10.24          Letter Agreement, dated July 1, 1996, among Essex
               Property Trust, Inc., Essex Portfolio, L.P., Tiger/
               Westbrook Real Estate Fund, L.P. and Tiger/Westbrook
               Real Estate Co-Investment Partnership, L.P., attached
               as Exhibit 10.9 to the Company's Current Report on Form
               8-K, filed August 13, 1996, and incorporated herein by
               reference.                                                    --

10.25          Letter Agreement with Tiger/Westbrook entities re:
               Limitations on Ownership of Stock of the Company,
               attached as Exhibit 10.1 to the Company's 10-Q as of
               September 30, 1996, and incorporated herein by
               reference.                                                    --

10.26          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.*                        --

10.27          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.*                            --

10.28          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.                                          --

10.29          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.                                                 --

10.30          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.                                                 --

10.31          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.                                                 --

10.32          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.    --

10.33          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.                         --

10.34          $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.                             --
<PAGE>

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 Independent Public Accountants.                    --

27.1           Article 5 Financial Data Schedule (Edgar Filing Only)         --

(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.

* Management contract or compensatory plan or agreement.