Essex Reports Third Quarter 2001 Financial Results; FFO Per Share Increases 9%; Earnings Per Share Increases 46%.Business Editors/Real Estate Writers 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)--Oct. 24, 2001 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 third quarter of 2001. During the quarter, 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. ("FFO FFO See: Funds from operations ") of $23.3 million, or $1.11 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 9 percent per share increase from FFO of $21.3 million, or $1.02 per diluted share in the comparable 2000 quarter. Keith Keith may refer to: People with the given name Keith:
Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. outlook for the Company's portfolio remains positive. Despite these circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , the limited supply of new housing in the Company's targeted West Coast markets provides an important buffer buffer, solution that can keep its relative acidity or alkalinity constant, i.e., keep its pH constant, despite the addition of strong acids or strong bases. against slower demand for housing, which typically occurs during periods of economic slowing." Revenues for the third quarter of 2001 were $51.8 million, compared to $47.4 million in the comparable 2000 quarter, a 9 percent increase. Net income for the quarter was $14.9 million, or $0.79 per diluted share, including a gain on sales of real estate of approximately $3.8 million, compared to $10.2 million, or $0.54 per diluted share in the comparable quarter of 2000.
Portfolio Composition
The following table compares Essex's regional concentrations for
its multifamily portfolio (omitting properties in development or
lease-up) including properties that are partially owned by Essex as of
September 30, 2001 and 2000:
September 30, 2001 September 30, 2000
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Number of Number of
Apartment Homes % Apartment Homes %
Southern California 10,451 52 7,882 47
San Francisco Bay Area 4,023 20 4,023 24
Seattle Metro. Area 4,073 21 3,941 24
Portland Metro. Area 1,371 7 875 5
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Total 19,918 100 16,721 100
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Property Operations
During the third quarter of 2001, Essex's same-property
multifamily net operating income (NOI) increased by 2.4 percent,
reflecting lower rental revenue and increased operating expenses.
The following is a breakdown of the change in same-property net
operating income for Essex's multifamily properties between the
quarter ended September 30, 2001 and the comparable quarter of 2000:
Operating Net Operating
Revenues Expenses Income
Southern California 4.6% 5.5% 4.3%
San Francisco Bay Area 4.0% 7.7% 3.0%
Pacific Northwest 1.5% 7.7% (1.1)%
------ ------ ------
Same-Property
Multifamily Average 3.5% 6.9% 2.4%
====== ====== ======
Prior year property level accruals significantly impacted the
increase same-property operating expenses.
The following is a breakdown of the change in same-property
utility expense for Essex's multifamily properties between the quarter
ended September 30, 2001 and the comparable quarter of 2000:
Total Utility Gas and
Expense Electric
Southern California 1.1% 10.7%
San Francisco Bay Area 27.3% 29.9%
Pacific Northwest (14.1)% 4.8%
Same-Property Multifamily Average 4.0% 16.5%
Same-property utility expense decreased in the Pacific Northwest
from the comparable quarter of 2000 due to the implementation of water
and sewer cost reimbursement program in the second half of 2000.
The following is a breakdown of the same-property financial
occupancy for Essex's multifamily properties for the quarters ended
September 30, 2001and 2000:
2001 2000
Southern California 95.4% 96.4%
San Francisco Bay Area 94.6% 98.0%
Pacific Northwest 94.4% 96.4%
Same-Property Multifamily Average 94.7% 97.0%
Dispositions On September September: see month. 21, 2001, the Company recognized a gain of approximately $3.8 million in a transaction where two of the Company's affiliates sold three retail centers -- Canby Square, Garrison Square and Powell Powell See Osceola. Villa. The assets were sold for a contract price of approximately $14.5 million to an unrelated third party. Acquisitions On September 28, 2001 and in conjunction with the sale of the three retail centers referenced above, the Company acquired Capri Capri (kä`prē), Lat. Capreae, island (1987 est. pop. 7,750), 4 sq mi (10.4 sq km), Campania, S Italy, in the Bay of Naples off the tip of the Sorrento Peninsula. at Sunny Hills, a 100-unit apartment community located in Fullerton, California Fullerton is a city located in northern Orange County, California, United States. As of the 2000 census, the city had a total population of 126,003. It was founded in 1887 by George and Edward Amerige and named for George H. for a contract price of $16.7 million in a tax deferred exchange transaction. Development Activity As of September 30, 2001, the Company had ownership interests in the following development communities. During the quarter, the Company stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. one property, Tierra Tierra may refer to:
-- Chesapeake -- Essex expects to start construction on this 230-unit community in downtown San Diego, California later this year. -- Kelvin Site -- Essex expects to start construction of this 138-unit community located in Irvine, California in the second quarter of 2002. Redevelopment Activity The Company considers redevelopment of existing properties to be an important element of its real estate strategy -- focusing on its redevelopment activities in West Coast submarkets where new housing construction is limited. Many of these markets have older properties with excellent locations, lower density, and large apartment homes. The Company seeks to improve the financial and physical aspects of these assets through a redevelopment program that projects a 15 percent return on the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. renovation investment. As of September 30, 2001, the Company had ownership interests in several redevelopment communities, aggregating 1,178 units with an estimated investment of $24.3 million of which approximately $10.0 million remains to be expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. . -- Coronado Coronado (kŏr'ənä`dō), city (1990 pop. 26,540), San Diego co., S Calif., on a peninsula on the west side of San Diego Bay; inc. 1890. It is a well-known beach resort. North -- Located in Newport Beach, California Newport Harbor redirects here. For the MTV reality series, see . Newport Beach, incorporated in 1906, is a city in Orange County, California, 10 miles south of downtown Santa Ana. , this 732-unit apartment community is due to be re-stabilized in the fourth quarter of 2001. -- The Pointe pointe n. In ballet, dancing that is performed on the tips of the toes. [From French pointe (des pieds), point (of the feet), tiptoe; see point.] at Cupertino Cu·per·ti·no A city of western California west of San Jose. It has an electronics industry. Population: 50,000. (formerly Westwood Westwood. 1 Residential town (1990 pop. 12,557), Norfolk co., E Mass., in the greater Boston area; settled 1640, inc. 1897. It has several early 18th-century buildings. 2 Residential borough (1990 pop. 10,446), Bergen co., NE N.J. ) -- Located in Cupertino, California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , this 116-unit community has been substantially completed with only 15 interiors remaining to be remodeled. These units will be completed upon natural unit turnover. -- Monterey Monterey (mŏntərā`), city (1990 pop. 31,954), Monterey co., W Calif., a port on Monterey Bay; founded 1770, inc. 1850. It is a popular resort, the home of many artists and writers, and one of California's oldest cities. Villas (formerly The Village) -- Located in Oxnard Oxnard (ŏk`snärd), city (1990 pop. 142,216), Ventura co., S Calif., on the Pacific coast; inc. 1903. Its economy, formerly based on agriculture, mining, and nearby military bases, has expanded as the city has grown. , California, this 122-unit townhome apartment community is nearly 60% complete, including a new recreation room, fitness center, business center and pool area amenity a·men·i·ty n. pl. a·men·i·ties 1. The quality of being pleasant or attractive; agreeableness. 2. Something that contributes to physical or material comfort. 3. . Essex will complete the balance of this project, including a new leasing cottage, by January January: see month. 2002. -- The Lofts at Pinehurst Pinehurst can refer to several different towns in the United States:
n. See scandium oxide. [From scandium.] ) -- Located in Ventura, California Incorporated in 1866, the city of San Buenaventura (usually referred to as Ventura) is the county seat of Ventura County, California. Ventura has a population of 106,744.[1] Ventura is accessible via U.S. , this community consists of 118 units, including 43 very desirable loft floorplans. The redevelopment effort will begin in earnest ear·nest 1 adj. 1. Marked by or showing deep sincerity or seriousness: an earnest gesture of goodwill. 2. Of an important or weighty nature; grave. See Synonyms at serious. during the fourth quarter of 2001 with an expected completion date in the third quarter of 2002. Improvements will include remodeled exteriors and interiors, a new leasing office, fitness center, business center, community room, storage units and garages. Essex Apartment Value Fund, L.P. Earlier this year, the Company organized Essex Apartment Value Fund, L.P. (the "Fund") with the objective to add value through rental growth and appreciation by acquiring, developing and managing multifamily properties located in California, Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. and Washington. On July 11, 2001, the Fund had its initial closing with three institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. . The total equity committed to the Fund by investors, including the Operating Partnership, was $105 million. Subsequent to September 30, 2001, the Fund has obtained an equity commitment from an additional institutional investor bringing total equity commitments to approximately $145 million. Below is a detail of the assets identified as Fund acquisitions followed by the Fund's third quarter acquisition, development and redevelopment activities.
Name Location Units
Rosebeach Apartments LaMirada, California 174
Foxborough Orange, California 90
El Encanto Tustin, California 116
The Crest at Phillips Ranch Pomona, California 501
Andover Park Apartments Beaverton, Oregon 240
Hunt Club Lake Oswego, Oregon 256
Marbrisas Chula Vista, CA 500
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1,877
=======
Acquisitions On August 13, 2001, the Fund purchased Marbrisas Apartments, a 500-unit apartment community located in Chula Vista, California “Chula Vista” redirects here. For the area in Florida, see Chula Vista, Florida. Chula Vista is a city in southern San Diego County, California, United States. for a contract price of $62.0 million. Development -- Chesapeake -- Essex expects to start construction on this 230-unit community in downtown San Diego, California later this year. -- Kelvin Site -- Essex expects to start construction of this 138-unit community located in Irvine, California in the second quarter of 2002. Redevelopment -- Foxborough (formerly Woodland) -- Located in Orange, California, this unique 90-unit community boasts all large single story two bedroom apartments with wood burning fireplaces. Essex expects to complete the redevelopment effort in December of this year. Financial Activity Essex's total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. at September 30, 2001 was approximately $1.9 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 9.2 years and an average interest rate of 6.8 percent. As of September 30, 2001, the Company's debt-to-total-market- capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. ratio was 35.0 percent and interest coverage for the third quarter of 2001 was 3.7 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 . Listed below are the significant transactions during the third quarter of 2001. In the beginning of October 2001, the Operating Partnership acquired 100,700 shares of the Company's outstanding Common Stock. The weighted average exercise price paid for the shares was $47.88. The amount paid for the shares will be reflected as a reduction of the common stock and additional-paid-in-capital in the Company's consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. for the quarter ended December 31, 2001. Other Company Information The Company expressed comfort with FFO per diluted share estimates for the fourth quarter 2001 of $1.12 per share and a range of $4.56 to $4.69 per share for calendar year 2002. These estimates reflect the impact of slowing market and economic conditions currently experienced by the Company. An earnings conference call with management is scheduled for tomorrow, October 25, 2001, at 11:00 a.m. Pacific Time - 2:00 p.m. Eastern Time, which will be broadcast live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.Vcall.com. A replay of the call is also available via the Internet for two weeks following the live call. You can access the rebroadcast via the Internet at www.Vcall.com. Essex Property Trust, Inc., located in Palo Alto, California “Palo Alto” redirects here. For other uses, see Palo Alto (disambiguation). Palo Alto (IPA: /ˌpæloʊˈʔæltoʊ/, from Spanish: palo: "stick" and alto: "high", i.e. 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. Essex currently has ownership interests in 87 multifamily properties (19,918 units), and has 1,274 units in various stages of development. Additional information about Essex can be found on the Company's web site at www.essexpropertytrust.com. Supplemental financial information and requests for future company releases via e-mail, can be forwarded to abernardini@essexpropertytrust.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 Company's long-term outlook for its portfolio, the Company's estimates of its FFO for future periods, 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.
Operating Results
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Revenues:
Rental $ 44,838 $ 42,587 $ 134,473 $ 118,489
Other property 1,372 1,131 4,295 3,236
---------- ---------- ---------- ----------
Total property
revenues 46,210 43,718 138,768 121,725
Interest and other 5,553 3,640 14,149 7,581
---------- ---------- ---------- ----------
51,763 47,358 152,917 129,306
---------- ---------- ---------- ----------
Expenses:
Property operating
expenses 12,929 12,003 38,717 34,305
Depreciation and
amortization 9,197 8,689 26,950 22,306
Interest 10,105 8,345 29,166 20,620
Amortization of
deferred financing
costs 143 160 510 479
General and
administrative 1,838 2,215 5,566 4,510
---------- ---------- ---------- ----------
Total expenses 34,212 31,412 100,909 82,220
---------- ---------- ---------- ----------
Income before gain
on the sales of
real estate,
minority interests
and extraordinary
item 17,551 15,946 52,008 47,086
Gain on the sales
of real estate 3,788 0 3,788 4,022
Minority interests (6,440) (5,697) (18,320) (17,836)
---------- ---------- ---------- ----------
Net income 14,899 10,249 37,476 33,272
Preferred stock
dividends 0 0 0 (246)
---------- ---------- ---------- ----------
Net income available
to common
stockholders $ 14,899 $ 10,249 $ 37,476 $ 33,026
========== ========== ========== ==========
Net income
per share - basic $ 0.81 $ 0.56 $ 2.03 $ 1.82
========== ========== ========== ==========
Net income
per share - diluted $ 0.79 $ 0.54 $ 2.00 $ 1.79
========== ========== ========== ==========
ESSEX PROPERTY TRUST, INC.
Funds From Operations
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Funds From Operations
Income before gain on
the sales of real
estate, minority
interests and
extraordinary item $ 17,551 $ 15,946 $ 52,008 $ 47,086
Adjustments:
Depreciation
and amortization 9,197 8,689 26,950 22,306
Unconsolidated
joint venture 1,209 1,232 3,647 3,295
Minority interests (4,608) (4,602) (13,814) (14,105)
---------- ---------- ---------- ----------
Funds from
operations $ 23,349 $ 21,265 $ 68,791 $ 58,582
========== ========== ========== ==========
Components of
the change in FFO
Same property NOI $ 610 $ 5,928
Non same
property NOI 956 6,703
Other - corporate
and unconsolidated
joint venture 1,890 6,920
Interest expense and
amortization of
deferred financing (1,743) (8,577)
General and
administrative 377 (1,056)
Minority interests (6) 291
---------- ----------
Funds from
operations $ 2,084 $ 10,209
========== ==========
Funds from Operations
Per Share
- Diluted $ 1.11 $ 1.02 $ 3.28 $ 2.84
========== ========== ========== ==========
Percentage
Increase 8.8% 15.5%
========== ==========
Weighted average
number of shares
outstanding
diluted(1) 21,093,631 20,891,729 21,003,100 20,658,467
========== ========== ========== ==========
(1) Assumes conversion of all outstanding operating partnership
interests in the Operating Partnership and the Company's
Convertible Preferred Stock into shares of the Company's common
stock.
ESSEX PROPERTY TRUST, INC.
Balance Sheet
(In thousands)
September 30, 2001 December 31, 2000
Real Estate:
Land and land improvements $ 291,754 $ 289,796
Buildings and improvements 878,727 866,612
------------ ------------
1,170,481 1,156,408
Less: accumulated depreciation (146,928) (119,499)
------------ ------------
1,023,553 1,036,909
Investments 92,813 65,703
Real estate under development 79,800 38,231
------------ ------------
1,196,166 1,140,843
Cash and cash equivalents 29,799 25,565
Other assets 142,066 108,797
Deferred charges, net 5,968 6,644
------------ ------------
Total assets $ 1,373,999 $ 1,281,849
============ ============
Mortgage notes payable $ 565,138 $ 502,066
Line of credit 107,767 93,469
Other liabilities 57,018 51,507
Deferred gain -- 5,002
------------ ------------
729,923 652,044
Minority interests 251,028 238,130
Stockholders Equity:
Convertible preferred stock -- --
Common stock 2 2
Cumulative redeemable
preferred stock -- --
Additional paid-in-capital 431,136 428,433
Distributions in excess
of accumulated earnings (38,090) (36,760)
------------ ------------
Total liabilities and
stockholder's equity $ 1,373,999 $ 1,281,849
============ ============
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