Essex Reports Fourth Quarter and Annual Results for 1999: Per Share FFO Increased 13% for the Quarter, 14% for the Year.Business Editors PALO ALTO Palo Alto, city, California Palo Alto (păl`ō ăl`tō), city (1990 pop. 55,900), Santa Clara co., W Calif.; inc. 1894. Although primarily residential, Palo Alto has aerospace, electronics, and advanced research industries. , Calif.--(BUSINESS WIRE)--Feb. 2, 2000 Essex Property Trust, Inc. (NYSE NYSE See: New York Stock Exchange :ESS (1) (Electronic Switching System) A large-scale computer from Lucent used to route telephone calls in a telephone company office. The 5ESS is a Class 5 central office switch, and the 4ESS is a Class 4 tandem office switch. ) today reported operating results for the quarter and year ended December December: see month. 31, 1999. For the fourth quarter of 1999, Essex reported Funds From Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. (&uot;FFO&uot;) of $17.4 million, or $.85 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, a 13 percent per share increase from FFO FFO See: Funds from operations of $15.4 million, or $.75 per diluted share in the comparable 1998 quarter. The quarterly results represent the 19th consecutive quarter of double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. FFO growth for the Company. For the year, Essex reported FFO of $67.0 million, or $3.26 per diluted share, an increase of 14 percent on a per share basis from $58.5 million, or $2.85 per diluted share, for 1998. Keith Keith may refer to: People with the given name Keith:
The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. growth, and will add significant value through development and redevelopment.&uot; Revenues for the fourth quarter of 1999 were $39.5 million, compared to $33.1 million in the comparable 1998 quarter, a 19 percent increase. Net income for the quarter was $13.2 million, or $.71 per diluted share, compared to $4.2 million, or $.20 per diluted share in the comparable quarter of 1998. Net income for the fourth quarter of 1999 included a gain on the sale of real estate of $4.8 million. Portfolio Composition The following table compares Essex's regional concentrations for its multifamily portfolio (excluding properties in development or lease-up) including properties that are partially owned by Essex as of December 31, 1999 and 1998:
Dec. 31, 1999 Dec. 31, 1998
Number of Number of
Apartment Apartment
Homes Pct. Homes Pct.
----------------------------------
Southern California 7,424 49 4,929 40
San Francisco Bay Area 3,369 22 3,270 27
Seattle Metro Area 3,438 23 3,193 26
Portland Metro Area 875 6 875 7
Total 15,106 100% 12,267 100%
Property Operations During the quarter, Essex's same-property multifamily net operating income (NOI NOI Net Operating Income NOI Notice of Intent NOI Nation of Islam NOI Notice of Inquiry NOI Neuro Orthopaedic Institute NOI New Organizing Institute NOI Notice of Interest NOI No Offense Intended NOI National Olympiad in Informatics ) increased by 5.7 percent, reflecting strong rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. growth and high occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy levels in the Company's core markets. A breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. of the increase in same-property net operating income for Essex's multifamily properties for the fourth quarter and the year ended 1999 is as follows:
Quarter ended December 31, 1999
Operating Net Operating
Revenues Expenses Income
---------------------------------
Southern California 7.7% 2.3% 10.5%
San Francisco Bay Area 4.8% 3.3% 5.3%
Pacific Northwest 3.6% 9.4% 0.8%
Same-Property
Multifamily Average 5.4% 4.8% 5.7%
Year ended December 31, 1999
Operating Net Operating
Revenues Expenses Income
---------------------------------
Southern California 7.5% (3.9%) 13.0%
San Francisco Bay Area 4.3% (2.1%) 6.4%
Pacific Northwest 4.5% 3.4% 5.1%
Same-Property
Multifamily Average 5.3% (0.7%) 7.9%
The following is a breakdown of the same-property financial
occupancy for Essex's multifamily properties:
For the Quarters
Ended December 31,
1999 1998
Southern California 97.1% 97.3%
San Francisco Bay Area 95.8% 96.1%
Pacific Northwest 94.5% 95.0%
Same-Property Multifamily Average 95.9% 96.2%
Acquisition &Disposition Activity
-- During the fourth quarter, Essex acquired a 49.9% interest in
Coronado at Newport -- South (formerly Oakwood Newport Beach
Apartments -- South) 715-unit apartment community located in
prestigious Newport Beach, California. Essex formed a joint
venture with The Boston Financial Group, L.P. (now Lend Lease)
and its institutional investor to acquire this property.
-- In connection with the Coronado at Newport transaction described
above, Essex transferred its ownership, at cost, in Coronado at
Newport -- North to the newly formed venture. In total, the
venture will renovate and operate these two adjacent properties,
which together contain 1,447 apartment homes.
-- Essex disposed of its 96-unit Casa de Mar property, located in
Pasadena, California for a net sales price of $10.7 million. The
gain on the sale was $3.1 million or 41 percent of Essex's cost
basis following a 28-month holding period.
Development Activity
Leasing of Apartment Communities
-- Essex leased 42 additional apartment homes at its 106-unit
Station Park community located in Walnut Creek, California. This
completes the initial leasing process for this new community.
-- Essex achieved stabilized operations at its 114-unit expansion of
its Bel Air property located in San Ramon, California. During the
quarter the Company leased an additional 28 apartment homes.
-- As previously reported, Essex has committed to the acquisition,
upon completion, of 238-unit Waterford Apartments and 132-unit
The Carlyle, both located in San Jose, California. Essex
currently expects to acquire The Carlyle in February 2000, and to
acquire The Waterford as part of the formation of the joint
venture with AEW Capital Management and its institutional client.
Both properties are currently being leased.
The following chart summarizes the status of leasing activities
for properties owned by Essex as of December 31, 1999:
Estimated or Actual
Total Units Total Units Date of Initial
Community Leased Occupied Occupancy
Fountain Court-320 units 280 262 April 1999
Bel Air-114 units 107 104 May 1999
Station Park-106 units 106 82 September 1999
Mirabella-188 units 86 66 October 1999
(formerly Marina View)
Perry Creek-132 units - - April 2000
New Development
-- In connection with its newly formed joint venture with AEW
Capital Management and its institutional client, Essex announced
the development of Vintage at the Rose, a 404-unit garden-style
apartment community located in Oxnard, California. The venture
started construction during the quarter, and expects to begin its
initial leasing activities beginning in December 2000.
Redevelopment
-- Essex and its institutional partners commenced a $28 million
renovation and repositioning of its 715-unit Coronado at
Newport-South and 732-unit Coronado at Newport-North. The
renovations will substantially improve the overall aesthetic
appeal and resident quality of life. Enhancement to building
exteriors will include cosmetic and structural elements,
extensive exterior architectural detail, new deck treatments,
four-color paint scheme and landscaping. Common area amenities
will also be substantially improved, including the addition of a
5,000-square-foot, state-of-the-art fitness center, a business
center, and conference center. Apartment interiors will be
restored to a &uot;like-new&uot; condition.
-- Essex continued its extensive $1.9 million renovation of
122-unit Windsor Terrace located in Pasadena, California. Windsor
Terrace represents one of three properties creating a 'campus
concept,' in which the Company acquires properties within
proximity to reduce overhead and maximize return on its
investment. As of December 31, 1999, 95 units have been
renovated. Completion of the remaining units is scheduled for the
first quarter of 2000. Improvements made include substantial
upgrades to the building exterior, upgrades to interiors and
hallways to &uot;like-new&uot; condition, a luxurious leasing office,
state-of-the-art fitness facility, and high-tech business center.
-- Essex continued its extensive $2.3 million renovation of 132-unit
Hampton Place (formerly Loraine Apartments) located in Glendale,
California. Improvements include upgrades to the building
exterior, a new leasing office, resident business center and
interior unit and hallway upgrades to like-new condition. 80
units have been completed as of December 31, 1999.
-- Essex commenced construction on a new leasing center while
continuing its renovation of the building exteriors and deferred
maintenance items at 608-unit Hillcrest Park (formerly Mirabella)
located in Thousand Oaks, California. So far, 153 units have been
renovated. Apartment home interiors are being renovated to
like-new condition upon resident turnover.
Financing Essex's total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. at December 31, 1999 was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $1.3 billion. Essex's long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. had an average maturity of 10 years and an average interest rate of 6.8 percent. The Company's debt-to-total-market-capitalization ratio at December 31, 1999 was 29.7 percent and interest coverage for the fourth quarter of 1999 was 4.9 times EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become . During the quarter Essex announced the completion of two joint ventures, providing the Company with greater financial flexibility as it develops this new source of funding real estate projects. Essex's financial returns are expected to increase in these ventures as a result of additional fee income, a potentially significant incentive distribution, and the use of moderately higher leverage (approximating approximating, adj See approximal. 55 percent of value). The two joint ventures announced during the quarter are as follows:
-- Essex formed a joint venture with The Boston Financial Group L.P.
(now Lend Lease) and its institutional client to acquire,
renovate and operate two adjacent properties, Coronado at Newport
-- North and South aggregating 1,447 apartment homes. Essex has a
49.9 percent ownership interest in and will manage the venture.
The venture paid $126.5 million for the two properties, which
were primarily financed by new loans for $71.7 million.
-- Essex formed a joint venture with AEW Capital Management and its
institutional client and contributed three operating assets:
Riverfront Apartments, Casa Mango Apartments, and Westwood
Apartments. Essex acquired each of these assets within the last
two years. In addition, Essex contributed the land and
development rights for a 404-unit apartment community located in
Oxnard, California, and the right to acquire Waterford Apartments
upon its completion. Essex has a 20 percent ownership interest in
and will manage the venture. The venture expects to leverage its
investment for an amount not to exceed 50 percent of the value of
its portfolio.
Essex Property Trust, Inc., located in Palo Alto and traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. (ESS), is a fully integrated real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast communities. The company currently has ownership interests in 68 multifamily properties (15,106 units), and has 1,904 units in various stages of development. Additional information about Essex can be found on the company's web site at www.essexproperties.com. If you would like to receive future press releases via e-mail -- please send a request to spullar@essexproperties.com The statements which are not historical facts contained in this release such as the Company's beliefs regarding targeted returns on investments, future internal growth and expectations regarding the timing of future leasing activities, future redevelopment projects and future development projects are forward looking statements that involve risks and uncertainties which could cause actual results to be different than such forward looking statements, including, but not limited to, market demand, the effect of economic conditions, the timing of development and renovation projects, the impact of competition and competitive pricing, the result of financing efforts, the effect of the Company's accounting policies and other risks detailed in the Company's Securities and Exchange Commission filings.
Essex Property Trust, Inc. -- Financial Information
Operating Results
In thousands, except per share amounts
Three Months Ended Twelve Months Ended
December 31, December 31,
1999 1998 1999 1998
Revenues:
Rental $ 36,587 $ 31,526 $ 137,262 $ 119,397
Other property 907 734 3,165 2,645
--------- --------- --------- ---------
Total property
revenues 37,494 32,260 140,427 122,042
Interest and other 2,016 828 5,618 3,217
--------- --------- --------- ---------
39,510 33,088 146,045 125,259
--------- --------- --------- ---------
Expenses:
Property operating
expenses 11,378 9,879 41,706 37,933
Depreciation and
amortization 6,774 6,072 26,150 21,948
Interest 5,524 5,115 21,268 19,374
Amortization of
deferred
financing costs 151 165 566 718
General and
administrative 1,045 924 4,263 3,765
Provision for
litigation loss 0 0 0 930
--------- --------- --------- ---------
Total expenses 24,872 22,155 93,953 84,668
Income before gain
on the sale of
real estate,
minority interests
and extraordinary
item 14,638 10,933 52,092 40,591
Gain on sale of
real estate 4,816 0 9,524 9
Minority interests (6,171) (2,844) (17,838) (9,554)
--------- --------- --------- ---------
Income before
extraordinary
item 13,283 8,089 43,778 31,046
Extraordinary item -
loss on early debt
extinguishment (124) (3,912) (214) (4,718)
--------- --------- --------- ---------
Net income $ 13,159 $ 4,177 $ 43,564 $ 26,328
========= ========= ========= =========
Basic:
Income per share
before
extraordinary
item $ 0.73 $ 0.43 $ 2.42 $ 1.65
Extraordinary item -
loss on early debt
extinguishment (0.01) (0.23) (0.01) (0.28)
--------- --------- --------- ---------
Net income
per share $ 0.72 $ 0.20 $ 2.41 $ 1.37
========= ========= ========= =========
Diluted:
Income per share
before
extraordinary
item $ 0.72 $ 0.43 $ 2.37 $ 1.64
Extraordinary
item -
loss on early
debt
extinguishment (0.01) (0.23) (0.01) (0.28)
--------- --------- --------- ---------
Net income
per share $ 0.71 $ 0.20 $ 2.36 $ 1.36
========= ========= ========= =========
Funds from Operations
Income before
gain on the sales
of real estate,
minority interests
and extraordinary
item $ 14,638 $ 10,933 $ 52,092 $ 40,591
Adjustments:
Depreciation and
amortization 6,774 6,072 26,150 21,948
Unconsolidated
joint venture 688 366 1,790 1,393
Provision for
litigation loss 0 0 0 930
Minority interests (4,683) (2,014) (13,061) (6,367)
Funds from
operations $ 17,417 $ 15,357 $ 66,971 $ 58,495
Funds from Operations
Per Share
Basic $ 0.86 $ 0.78 $ 3.36 $ 2.97
Diluted $ 0.85 $ 0.75 $ 3.26 $ 2.85
Weighted average
number of shares
outstanding
Earnings per
share - Basic 18,053,979 16,637,581 17,521,185 16,630,954
Earnings per
share - Diluted 18,471,405 16,820,865 18,491,242 16,808,943
Funds from
operations
- Basic (1) 20,136,670 18,511,054 19,543,341 18,504,427
Funds from
operations
- Diluted(1)(2) 20,554,096 20,522,910 20,513,398 20,510,988
Balance Sheet Data
In thousands, except shares As of Dec. 31, As of Dec. 31,
and apartment units 1999 1998
Real estate owned $ 941,150 $ 889,964
Real estate under development $ 120,414 $ 53,212
Mortgage notes payable $ 373,608 $ 325,822
Lines of credit payable $ 10,500 $ 35,693
Stockholders' equity $ 387,693 $ 389,800
Number of common shares outstanding 18,049,952 16,640,616
Number of apartment units
owned and invested in 15,106 12,267
(1) Assumes conversion of all outstanding operating partnership
interests in the Operating Partnership into shares of Essex's
common stock.
(2) Assumes conversion of the Company's Convertible Preferred Stock
into shares of Essex's common stock. See Company's 10Q and 10K
for additional financial disclosure
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