PALO ALTO, CA--(Marketwire - July 30, 2008) - Essex Property Trust, Inc. (
NYSE:
ESS)
announces its second quarter 2008 earnings results and related business
activities.
Funds from Operations ("FFO") for the quarter ended June 30, 2008, totaled
$40.3 million, or $1.46 per diluted share, compared to $36.5 million, or
$1.32 per diluted share for the quarter ended June 30, 2007.
Net income available to common stockholders for the quarter ended June 30,
2008 totaled $9.7 million, or $0.38 per diluted share, compared to net
income available to common stockholders of $9.9 million, or $0.39 per
diluted share, for the quarter ended June 30, 2007.
The Company's FFO, excluding non-recurring items, increased 11.7% per
diluted share or $4.2 million for the quarter ended June 30, 2008 compared
to the quarter ended June 30, 2007. In the 2007 quarter, the Company
recorded non-recurring items including promote fees and net gains from
condo sales in the amount of $0.5 million, and in the 2008 quarter there
were no non-recurring items recorded. A reconciliation of FFO for
non-recurring items can be found on page S-3 in the Company's Financial
Supplemental Information package.
SAME-PROPERTY OPERATIONS
Same-property operating results exclude properties that do not have
comparable results. The table below illustrates the percentage change in
same-property revenues, operating expenses, and net operating income
("NOI") for the three and six months ended June 30, 2008 compared to June
30, 2007:
Q2 2008 compared YTD 2008 compared
to Q2 2007 to YTD 2007
------------------------ ------------------------
Revenues Expenses NOI Revenues Expenses NOI
-------- ------- ---- -------- -------- ----
Southern California 2.6% 2.8% 2.5% 2.4% 3.2% 2.1%
Northern California 10.0% 4.6% 12.8% 10.9% 5.2% 13.8%
Seattle Metro 7.8% 4.8% 9.4% 8.6% 4.8% 10.7%
-------- -------- ---- -------- -------- ----
Same-property average 5.1% 3.6% 5.9% 5.4% 3.9% 6.1%
======== ======== ==== ======== ======== ====
The table below illustrates the sequential percentage change in
same-property revenues, expenses, and NOI for the quarter ended June 30,
2008 versus the quarter ended March 31, 2008:
Q2 2008 compared
to Q1 2008
-----------------------
Revenues Expenses NOI
-------- -------- ---
Southern California 0.9% 0.9% 0.9%
Northern California 2.3% 6.0% 0.6%
Seattle Metro 1.3% 2.8% 0.6%
-------- -------- ---
Same-property average 1.3% 2.5% 0.7%
======== ======== ===
Same-property financial occupancies for the quarters ended are as follows:
6/30/08 3/31/08 6/30/07
------- ------- -------
Southern California 95.9% 95.2% 95.3%
Northern California 97.6% 97.1% 96.5%
Seattle Metro 96.6% 97.0% 96.5%
------- ------- -------
Same-property average 96.4% 95.9% 95.8%
======= ======= =======
DEVELOPMENT
Currently the Company has one development project in lease-up -- Eastlake
2851, a 127-unit property located on Lake Union in Seattle, Washington.
The project began leasing in late April 2008, and the community is
currently 75% occupied and 92% leased or pre-leased with expected
stabilization in August 2008.
Pre-leasing activities have commenced at Belmont Station, a 275-unit
property located near downtown Los Angeles. The property is currently 25%
pre-leased and the Company is expecting issuance of temporary certificates
of occupancy in the near future for occupancy beginning in August 2008.
Due to delays in completion of the development and projected lease-up time
of the community, total estimated capitalized interest and other costs of
the development have increased by approximately $7 million.
In May 2008, the Company started construction on Joule Broadway (formerly
known as "Broadway Heights"), an urban development featuring 295 apartment
units and 29,100 square feet of retail space in Seattle's Capital Hill
neighborhood. During the second quarter of 2008, the Company's joint
venture partner contributed land in exchange for a 50% interest in the
partnership. The total estimated cost of the development is $104 million
with an estimated completion of construction in September 2010.
During the second quarter of 2008, the Company extended the lease to the
tenant leasing its 2.1 acre television studio located in Hollywood,
California until July 31, 2009. This property was purchased by the Company
in 2006 for potential future apartment community development.
Additional information pertaining to the location of all development
projects, related costs and construction timelines can be found on page S-9
in the Company's Supplemental Financial Information package.
REDEVELOPMENT ACTIVITIES
The Company defines redevelopment communities as existing properties owned
or recently acquired, which have been targeted for additional investment by
the Company with the expectation of increased financial returns through
property improvement. Redevelopment communities typically have apartment
units that are not available for rent and, as a result, may have less than
stabilized operations. As of June 30, 2008, the Company had ownership
interests in 13 redevelopment communities aggregating 3,690 apartment
units with estimated redevelopment costs of $133 million.
During the second quarter of 2008, the Company returned two redevelopment
projects back to stabilized operations -- Mira Monte in Mira Mesa,
California, and Palisades located in Bellevue, Washington. Both communities
underwent exterior renovations as well as unit interior renovations
including upgraded fixtures, appliances, flooring, cabinets and
countertops. The post renovation increase in revenues (net of market rent
increases) for June 2008 generated an annualized return on invested capital
of 13 percent at Palisades and 8 percent at Mira Monte.
A summary of the major redevelopment projects can be found on page S-10 in
the Company's Supplemental Financial Information Package.
LIQUIDITY AND BALANCE SHEET
During April 2008, Essex obtained a $31.5 million loan secured by Park Hill
at Issaquah, with a fixed interest rate of 5.5%, which matures in April
2018. In conjunction with this transaction, the Company settled a $30.0
million forward-starting swap for a $1.7 million payment to the
counterparty. The amortization of the loss on settlement of the swap
increases the effective interest rate on the mortgage loan to 6.1%. Also
in April 2008, Essex obtained a second mortgage loan in the amount of $17.2
million secured by Kings Road, with a fixed interest rate at 5.6% due in
January 2013.
During May 2008, the Company and a joint venture partner obtained a
construction loan in the amount of $60.0 million secured by the Joule
Broadway development project. The loan is variable based on LIBOR plus 155
basis points and matures in June 2011 with two one-year extension options.
During June 2008, Essex obtained a $22.5 million loan secured by Hampton
Place, with a fixed interest rate of 6.1%, which matures in June 2018. In
conjunction with this transaction, the Company settled a $20.0 million
forward-starting swap for a $0.1 million payment to the counterparty. The
amortization of the loss on settlement of the swap increases the effective
interest rate on the mortgage loan to 6.2%.
The Company has signed a letter of commitment to enter into a new five-year
secured line of credit facility to replace the existing secured line of
credit facility that matures in January 2009. The new secured facility
will expand the existing secured facility from $100 million to $150
million, and the new facility will be expandable to $250 million. The
Company anticipates that the closing date for the new secured facility will
occur during the fourth quarter of 2008.
GUIDANCE
The Company reaffirms its previous full year 2008 FFO Guidance of a range
of $5.90 to $6.15 per diluted share, and full year Earnings per Share
("EPS") guidance of $1.85 to $2.10 per diluted share.
CONFERENCE CALL WITH MANAGEMENT
The Company will host an earnings conference call with management to
discuss its quarterly results on Thursday, July 31, 2008 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 (888)
679-8038 and entering the passcode 50955369.
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 second quarter earnings link. To
access the replay digitally, dial (888) 286-8010 using the passcode,
83227292. 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.
Los Angeles Property Tour
The Company and UDR plan to host a Los Angeles Property Tour on Tuesday,
November 18, 2008 in Los Angeles, California. The event will commence at
8:00 a.m. and will include a breakfast presentation hosted by Essex
management focusing on business plans and performance and will also consist
of local property tours. For additional information about the event,
please contact the Company's Investor Relations department at (650)
849-1649.
Corporate Profile
Essex Property Trust, Inc., located in Palo Alto, California and traded on
the New York Stock Exchange (
NYSE:
ESS), is a fully integrated real estate
investment trust (REIT) that acquires, develops, redevelops, and manages
apartment communities located in highly desirable, supply-constrained
markets. Essex currently has ownership interests in 133 apartment
communities (26,963 units), and has 1,658 units in various stages of active
development.
This press release and accompanying supplemental financial information will
be filed electronically on Form 8-K with the Securities and Exchange
Commission and can be accessed from the Company's Web site at
www.essexpropertytrust.com. If you are unable to obtain the information via
the Web, please contact the Investor Relations Department at (650)
494-3700.
FUNDS FROM OPERATIONS RECONCILIATION
Funds from Operations, as defined by the National Association of Real
Estate Investment Trusts ("NAREIT") is generally considered by industry
analysts as an appropriate measure of performance of an REIT. Generally,
FFO adjusts the net income of REITs for non-cash charges such as
depreciation and amortization of rental properties, gains/losses on sales
of real estate and extraordinary items. Management considers FFO to be a
useful financial performance measurement of a REIT because, together with
net income and cash flows, FFO provides investors with an additional basis
to evaluate the performance and ability of a REIT to incur and service debt
and to fund acquisitions and other capital expenditures and ability to pay
dividends.
FFO 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. FFO does not measure whether cash flow is sufficient to fund all
cash needs including principal amortization, capital improvements and
distributions to shareholders. FFO also does not represent cash flows
generated from operating, investing or financing activities as defined
under GAAP. Management has consistently applied the NAREIT definition of
FFO to all periods presented. However, there is judgment involved and other
REITs' calculation of FFO may vary for this measure, and thus their
disclosures of FFO may not be comparable to Essex's calculation.
The following table sets forth the Company's calculation of FFO for the
three and six months ended June 30, 2008 and 2007.
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
Funds from operations 2008 2007 2008 2007
--------- -------- --------- --------
Net income available to common
stockholders $ 9,688 $ 9,877 $ 25,392 $ 45,180
Adjustments:
Depreciation and amortization 28,683 25,166 56,417 46,884
Gains not included in FFO - (461) - (14,501)
Minority interests and
co-investments 1,892 1,915 4,319 4,321
--------- -------- --------- --------
Funds from operations $ 40,263 $ 36,497 $ 86,128 $ 81,884
========= ======== ========= ========
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
2008 FFO per share and 2008 earnings per share, and statements and
estimates set forth in this press release and also on pages S-9 and S-10 of
the Company's Financial Supplemental Information Package regarding
anticipated timing of the construction start, construction completion,
initial occupancy, stabilization of property developments and
redevelopments and anticipated costs, and statements regarding the closing
date for the Company's new line of credit facility. 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 and
redevelopment projects, unexpected difficulties in leasing of development
and redevelopment projects, total costs of renovation and development
investments exceeding our 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 our most
recent report on Form 10-K for the year ended December 31, 2007.