Q3 2010 compared YTD 2010 compared
to Q3 2009 to YTD 2009
------------------------- -------------------------
Revenues Expenses NOI Revenues Expenses NOI
-------- -------- ----- -------- -------- -----
Southern California -0.9% 2.3% -2.5% -2.6% 1.6% -4.5%
Northern California -2.0% -3.6% -1.1% -4.9% -0.8% -7.0%
Seattle Metro -5.0% -3.3% -6.1% -8.5% -2.9% -11.6%
-------- -------- ----- -------- -------- -----
Same-property average -1.9% -0.6% -2.6% -4.3% 0.0% -6.5%
======== ======== ===== ======== ======== =====
The table below illustrates the sequential percentage change in
same-property revenues, expenses, and NOI for the quarter ended September
30, 2010 versus the quarter ended June 30, 2010:
Q3 2010 compared
to Q2 2010
------------------------
Revenues Expenses NOI
-------- -------- ----
Southern California 0.2% 6.7% -3.0%
Northern California 0.5% 1.3% 0.1%
Seattle Metro 0.2% 6.9% -3.8%
-------- -------- ----
Same-property average 0.3% 5.1% -2.2%
======== ======== ====
Same-property financial occupancies for the quarters ended are as follows:
----------------------------
9/30/10 6/30/10 9/30/09
-------- -------- --------
SOUTHERN CALIFORNIA 96.5% 97.1% 96.7%
NORTHERN CALIFORNIA 97.2% 97.5% 97.6%
SEATTLE METRO 96.7% 97.3% 97.0%
-------- -------- --------
SAME-PROPERTY AVERAGE 96.7% 97.2% 97.0%
======== ======== ========
ACQUISITIONS
Year to date, the Company has purchased ten communities for approximately
$460 million in new acquisitions, exceeding our expected acquisitions goal
at the beginning of the year of $300 million.
As previously announced, in July, the Company acquired 101 San Fernando, a
323-unit community with 9,200 square feet of retail located in downtown San
Jose, California for $64.1 million, and The Commons, a 264-unit community
located in Campbell, California for $42.5 million.
In September, the Company acquired Bella Villagio, a 231-unit community
located in San Jose, California for $54.0 million. This community was
built in 2004 and contains a mix of one, two and three bedroom floor plans.
Each unit features granite countertops, maple cabinetry, a full-sized
washer and dryer, and nine foot ceilings. Property amenities include a
fitness center and yoga room, pool and two spas and a business center. The
community is located nearby major freeways and provides easy access to
commute corridors in San Jose.
Also in late September the Company acquired Muse, a 152-unit community
under development located in the North Hollywood Arts District of Los
Angeles, California for $39.1 million. Unit amenities at the property
include stainless steel appliances, a full-sized washer and dryer and
walk-in closets, and the community also features a rooftop pool and spa as
well as a fitness center and 8,200 square feet of ground-floor retail
space. The property is within walking distance of a variety of shopping,
dining and entertainment in North Hollywood. The Company expects to
complete construction of the leasing office, retail space, and interior and
exterior finishes by the first quarter of 2011 with pre-leasing activities
commencing in November of 2010.
As previously announced in May, the Company purchased a note secured by
Santee Court, a 165-unit adaptive re-use condominium community with 36,700
square feet of retail space located in downtown Los Angeles, California.
The note was purchased for $21.0 million, a $4.7 million discount to the
outstanding principal balance under the note. In late October, the Company
purchased the property for $31.1 million in a multiple bid process. The
property is located within walking distance to a variety of shopping and
entertainment including the Staples Center and L.A. Live. Community
amenities include a rooftop pool and spa, basketball court and barbecue
area. The property was previously an industrial building built in 1911 and
was approved for multi-family housing in 2004. Each unit was renovated to
include polished concrete floors, 14-foot ceilings, granite countertops and
maple cabinetry.
In October, the Company acquired two communities including Courtyard off
Main, a 110-unit community with 7,500 square feet of retail located in
Bellevue, Washington for $30.0 million. The property was built in 2000 and
features spacious units which include a deck and fireplace, and a fitness
center and recreation room. The property is situated within the "Old Main"
region of Bellevue which features a variety of restaurants, shopping and
services all within walking distance.
Also in October, the Company acquired Magnolia Nest, a 97-unit condominium
development located in the Valley Village district of Los Angeles,
California for $29.9 million that will be operated as an apartment
community. The majority of the construction of the community is complete
and pre-leasing initiatives will commence in early November 2010, and
initial occupancy is expected by the first quarter of 2011. The property
features a fitness center, spa, barbecue area and putting green. Each unit
features upgraded finishes, new appliances, a fireplace as well as a
private patio or balcony. The property is located in close proximity to
Studio City and Burbank and provides easy access to multiple freeways.
In early November, the Company acquired Corbella at Juanita Bay, a 169-unit
community located in Kirkland, Washington and bordered by the Juanita Beach
Park at Lake Washington for $23.4 million. The property was built in 1978,
and the units were renovated in 2006 to include new cabinets, appliances,
lighting, a full-sized washer and dryer, and a deck or patio. Community
amenities include a pool area and cabana, and a new leasing center.
Co-investment
During the quarter, the Company invested $12.0 million as a preferred
equity interest investment in a related party entity that owns a 768-unit
apartment community in Anaheim, California. The preferred return for this
investment during the first five years is 13% per annum and the preferred
return increases to 15% thereafter.
DEVELOPMENT
During the quarter, two communities reached stabilized occupancy -- Fourth
& U, a 171-unit property located in Berkeley, California and Joule, a
295-unit community located in Bellevue, Washington.
Essex Skyline at MacArthur Place, located in Santa Ana, California is
currently 56% leased and 50% occupied. During the quarter, the Company
completed construction of an on-site leasing office and initial occupancy
in the south tower commenced in October.
Also during the quarter, construction was completed and initial occupancy
commenced at Axis 2300, a 115-unit community located in Irvine, California.
The community is currently 75% leased and 65% occupied.
LIQUIDITY AND BALANCE SHEET
Common Stock
During the quarter, the Company issued 495,900 shares of common stock at an
average price of $109.81, for $53.6 million, net of fees and commissions,
and in October the Company issued 491,100 shares of common stock at an
average price of $112.89, for $54.6 million net of fees and commissions.
Year to date through October, the Company has issued 1,629,200 shares of
common stock at an average price of $106.71, for $171.3 million, net of
fees and commissions.
Marketable Securities
In October, the Company sold $34.9 million of marketable securities for a
gain of $3.4 million.
Mortgage Notes Payable
In July, as previously announced, the Company paid-off two maturing loans
that were cross collateralized by five communities totaling $129.5 million,
including a $73.6 million loan at a fixed rate of 8.2% and a $55.9 million
loan at a fixed rate of 7.7%. The Company obtained fixed rate mortgage
loans totaling $130.1 million for two of the communities that were part of
the cross collateralized loan pool paid-off in July. The fixed rate
mortgage loans are secured by Hillcrest Park and Bel Air for $72.2 million
and $57.9 million, respectively, and mature in July 2020, at a fixed rate
of 4.6%. The Company settled $100.0 million in forward-starting swap
contracts in July for $16.7 million in payments to the counterparties. The
settlement of the forward-starting swaps increased the effective interest
rate on the Hillcrest Park and Bel Air mortgage loans to 6.0%, and during
the quarter, the Company incurred $1.6 million in expense related to the
ineffectiveness of certain forward-starting swap hedges.
In conjunction with acquisition of Bella Villagio, the Company assumed a
$35.6 million mortgage loan at a fixed rate of 6.1% which matures in
October 2016. The interest rate was unfavorable compared to currently
available market rates for mortgage loans, and thus the Company recorded a
$4.0 million loan premium to reflect the debt at fair value with a
corresponding increase to the carrying value of the property. This results
in an effective interest rate for this loan of 3.8%.
As previously announced, the joint venture that owns Essex Skyline at
MacArthur Place obtained an $80.0 million secured loan in July, for a four
year term plus a one year extension, at an interest rate of LIBOR plus 285
basis points. Also in July, the Company financed the acquisition of 101
San Fernando with $35.2 million of tax exempt bonds and the Company entered
into a three year total return swap ("TRS") related to the bonds with a
commercial bank. Under the terms of the TRS the company pays a variable
amount equal to the SIFMA Index (Securities and Industry and Financial
Markets Association) plus 150 basis points on a notional amount equal to
the accreted value of the bonds, as defined in the TRS agreement. Upon
termination of the TRS, the Company will receive or pay a settlement amount
based on a formula stated in the TRS agreement.
Unsecured Line of Credit Facility
In late October, the Company entered into an agreement to increase the
capacity on its unsecured line of credit facility from $200.0 million to
$275.0 million with an accordion feature to $350.0 million. The spread
decreased to 240 basis points from 300 basis points over LIBOR based on the
Company's current credit rating, and the line matures in December 2011 with
two one-year extension options.
GUIDANCE
The Company has increased its full year 2010 FFO guidance from a range of
$5.14 to $5.30 per diluted share to $5.35 to $5.45 per diluted share. The
midpoint of the full year 2010 FFO Guidance increased $0.18 to $5.40
primarily as a result of the October 2010 gain on sale of marketable
securities and the additional accretion of interest income due to a change
in estimate for the Santee Court note receivable.
CONFERENCE CALL WITH MANAGEMENT
The Company will host an earnings conference call with management to
discuss its quarterly results on Thursday, November 4, at 9:00 a.m. PDT
(12:00 p.m. EDT), which will be broadcast live via the Internet at
www.essexpropertytrust.com, and accessible via phone by dialing
(877) 407-4018, no passcode is necessary.
A rebroadcast of the live call will be available online for 90 days and
digitally for 7 days. To access the replay online, go to
www.essexpropertytrust.com and select the third quarter earnings link. To
access the replay digitally, dial (877) 870-5176 using the Conference ID -
358486. If you are unable to access the information via the Company's Web
site, please contact the Investor Relations department at
investors@essexpropertytrust.com or by calling (650) 494-3700.
CORPORATE PROFILE
Essex Property Trust, Inc., located in Palo Alto, California and traded on
the New York Stock Exchange (
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------- ---------------
Funds from Operations (In thousands) 2010 2009 2010 2009
------ ------- ------- -------
Net income available to common
stockholders $6,377 $21,739 $28,986 $75,418
Adjustments:
Depreciation and amortization 31,638 29,895 93,385 88,173
Gains not included in FFO, net of
disposition costs - (2,237) - (5,091)
Noncontrolling interest and co-investments 1,914 1,394 5,954 6,097
------ ------- ------- -------
Funds from Operations 39,929 50,791 128,325 164,597
====== ======= ======= =======
SAFE HARBOR STATEMENT UNDER THE PRIVATE LITIGATION REFORM ACT OF 1995:
This press release includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include statements under the caption "Guidance" with respect to
2010 FFO per diluted share, and statements and estimates set forth under
the caption "Acquisitions" on page 2 of this press release regarding
construction completion and initial occupancy dates and statements and
estimates set forth under the captions "Development Pipeline" and
"Redevelopment Pipeline" on pages S-9 and S-10 of the Company's
Supplemental Financial Information Package, which accompanies this press
release, regarding estimated costs of property development and
redevelopment and regarding the anticipated timing of redevelopments and of
the construction start, construction completion, initial occupancy and
stabilization of property development. The Company's actual results may
differ materially from those projected in such forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
changes in market demand for rental units and the impact of competition and
competitive pricing, changes in economic conditions, unexpected delays in
the development and stabilization of development projects, unexpected
difficulties in leasing of development projects, total costs of development
investments exceeding the Company's projections and other risks detailed in
the Company's filings with the Securities and Exchange Commission (SEC).
All forward-looking statements are made as of today, and the Company
assumes no obligation to update this information. For more details
relating to risk and uncertainties that could cause actual results to
differ materially from those anticipated in our forward-looking statements,
and risks to our business in general, please refer to our SEC filings,
including the Company's most recent Report on Form 10-K for the year ended
December 31, 2009.
Contact Information: NICOLE CULBERTSON (650) 849-1649