ESSEX PROPERTY TRUST, INC.ESS

ESSEX PROPERTY TRUST, INC. Earnings Per Share Disclosure

10-KFiled Feb 20, 20262 min read
Net Income Per Common Share and Net Income Per Common Unit
Essex Property Trust, Inc.

Basic and diluted income per share was calculated as follows ($ in thousands, except per share amounts):
Year Ended December 31,
 202520242023
IncomeWeighted-
average
Common
Shares		Per
Common
Share
Amount		IncomeWeighted-
average
Common
Shares		Per
Common
Share
Amount		IncomeWeighted-
average
Common
Shares		Per
Common
Share
Amount
Basic:
Net income available to common stockholders$669,666 64,379,418 $10.40 $741,522 64,228,356 $11.55 $405,825 64,252,232 $6.32 
Effect of dilutive securities
Stock options— 20,041 — 22,878 — 1,153 
Diluted:         
Net income available to common stockholders$669,666 64,399,459 $10.40 $741,522 64,251,234 $11.54 $405,825 64,253,385 $6.32 

The table above excludes from the calculations of diluted earnings per share weighted average convertible OP Units of 2,270,190, 2,282,675 and 2,261,071, which include vested 2014 Long-Term Incentive Plan Units and 2015 Long-Term Incentive Plan Units, for the years ended December 31, 2025, 2024 and 2023, respectively, because they were anti-dilutive. The related income allocated to these convertible OP Units aggregated $23.6 million, $26.4 million and $14.3 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Stock options of 253,048, 265,378, and 508,276 for the years ended December 31, 2025, 2024 and 2023, respectively, were excluded from the calculation of diluted earnings per share because the assumed proceeds per share of such options plus the average unearned compensation were greater than the average market price of the common stock for those years ended and, therefore, were anti-dilutive.

Essex Portfolio, L.P.

Basic and diluted income per unit was calculated as follows ($ in thousands, except per unit amounts):
Year Ended December 31,
 202520242023
IncomeWeighted-
average
Common
Units		Per
Common
Unit
Amount		IncomeWeighted-
average
Common
Units		Per
Common
Unit
Amount		IncomeWeighted-
average
Common
Units		Per
Common
Unit
Amount
Basic:
Net income available to common unitholders$693,315 66,649,608 $10.40 $767,936 66,511,030 $11.55 $420,109 66,513,303 $6.32 
Effect of dilutive securities 
Stock options— 20,041  — 22,878  — 1,153  
Diluted:         
Net income available to common unitholders$693,315 66,669,649 $10.40 $767,936 66,533,908 $11.54 $420,109 66,514,456 $6.32 
Stock options of 253,048, 265,378, and 508,276, for the years ended December 31, 2025, 2024 and 2023, respectively, were excluded from the calculation of diluted earnings per unit because the assumed proceeds per unit of these options plus the average unearned compensation were greater than the average market price of the common unit for those years ended and, therefore, were anti-dilutive.

About Earnings Per Share Disclosures

The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.

Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.

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