PALO ALTO, CA--(Marketwire - April 29, 2009) - Essex Property Trust, Inc. (
NYSE:
ESS)
announces its first quarter 2009 earnings results and related business
activities.
Fund from Operations ("FFO") for the quarter ended March 31, 2009, totaled
$71.8 million, or $2.50 per diluted share compared to $44.8 million, or
$1.64 per diluted share for the quarter ended March 31, 2008. Interest
expense and gains from the redemption of exchangeable bonds have been
adjusted for both quarters for the retrospective adoption of FSP No. APB
14-1 "Accounting for Convertible Debt Instruments That May be Settled In
Cash upon Conversion (Including Partial Cash Settlement)" as of January 1,
2009.
The Company's FFO, excluding non-recurring items, increased 9.4% per
diluted share or $5.6 million for the quarter ended March 31, 2009 compared
to the quarter ended March 31, 2008.
A reconciliation of FFO for non-recurring items can be found on page S-3 in
the Company's Supplemental Financial Information package. The following
non-recurring items impacted the Company's first quarter results for 2009
and 2008:
-- In 2009, the Company repurchased $58.2 million of its $149.5 million
Series G Cumulative Convertible Preferred Stock at a discount to its
carrying value, and the excess of the carrying value over the cash paid to
redeem the Series G stock totaled $25.7 million.
-- In 2009, the Company recognized a gain of $6.1 million from the early
retirement of $71.3 million of the 3.625% exchangeable bonds.
-- In 2009, the Company wrote-off an investment in a joint venture
development project for $5.8 million.
-- In 2009, the Company realized a gain of $1.0 million from the sale of
marketable securities.
-- In 2009, the Company recorded income generated from TRS activities
totaling $0.6 million.
-- In 2008, the Company recorded preferred income from its interest in a
joint venture of $6.3 million.
Net income available to common stockholders for the quarter ended March 31,
2009 totaled $42.3 million, or $1.53 per diluted share, compared to net
income available to common stockholders of $14.8 million, or $0.59 per
diluted share, for the quarter ended March 31, 2008.
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 quarter ended March 31, 2009, compared to the quarter ended
March 31, 2008:
Q1 2009 compared to Q1 2008
-------------------------------
Revenues Expenses NOI
--------- --------- ---------
Southern California -0.2% 0.1% -0.4%
Northern California 5.0% -1.7% 8.4%
Seattle Metro 4.0% 5.5% 3.3%
--------- --------- ---------
Same-property average 2.0% 0.5% 2.7%
========= ========= =========
The table below illustrates the sequential percentage change in
same-property revenues, expenses, and NOI for the quarter ended March 31,
2009 versus the quarter ended December 31, 2008:
Q1 2009 compared to Q4 2008
-------------------------------
Revenues Expenses NOI
--------- --------- ---------
Southern California -0.7% -2.5% 0.2%
Northern California -0.9% -7.2% 2.2%
Seattle Metro -1.1% -2.9% -0.2%
--------- --------- ---------
Same-property average -0.8% -4.0% 0.7%
========= ========= =========
Same-property financial occupancies for the quarters ended are as follows:
--------- --------- ---------
3/31/09 12/31/08 3/31/08
--------- --------- ---------
Southern California 96.5% 95.8% 95.1%
Northern California 97.6% 97.6% 96.7%
Seattle Metro 97.3% 97.2% 96.8%
--------- --------- ---------
Same-property average 97.0% 96.6% 95.9%
========= ========= =========
DISPOSITIONS
During the first quarter, the Company sold Carlton Heights Villas, a
70-unit community located in Santee, California for $6.9 million, and Grand
Regency, a 60-unit community located in Escondido, California for $5.0
million. Both communities were acquired in 2002 as part of the John M.
Sachs merger.
DEVELOPMENT
During mid-February, initial occupancy began at The Grand located in
downtown Oakland, California. Currently the community is approximately 60
percent leased. The lease-up of the community is expected to reach
stabilization in 2009.
The Company received temporary certificate of occupancy in April for the
first of two phases of the development at Studio 40-41, a 149-unit
development located in Studio City, California and owned by the Essex
Apartment Value Fund II, L.P. ("Fund II"). Currently, the community is
approximately 15 percent leased. The community consists of two 4-story
buildings and features a fitness center, game room and conference room for
residents.
Also nearing completion is Cielo, located in Chatsworth, California, and
owned by Fund II. The 119-unit community consists of one 3-story building
over a level of parking. Cielo is situated within a larger master planned
single family community, and amenities at the property include gated
access, clubhouse, pool, spa and a barbecue area. Pre-leasing activities
are to commence in June 2009 and initial occupancy in July 2009.
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.
JOINT VENTURES
The Company wrote-off its investment in a development joint venture
totaling $5.8 million related to a predevelopment project in Marina del
Rey, California.
LIQUIDITY AND BALANCE SHEET
Common Stock
During the first quarter, the Company repurchased 350,000 shares of common
stock for $20.3 million at an average price of $57.89.
Series G Cumulative Convertible Preferred Stock
During the first quarter, the Company repurchased $58.2 million of its
$149.5 million Series G Cumulative Convertible Preferred Stock, at a 46.6%
discount to its carrying value, and the excess of the carrying value over
the cash paid to redeem the Series G stock totaled $25.7 million.
Exchangeable Bonds
During the first quarter, the Company repurchased $71.3 million of its
3.625% exchangeable bonds at a discount to par value and recognized a gain
of $6.1 million.
Mortgage Notes Payable
The Company, during the first quarter, obtained fixed rate mortgage loans
totaling $81.9 million, including the following:
-- $48.9 million secured by Avondale, at a rate of 6.11%, which matures
in March 2019.
-- $23.0 million secured by Stevenson Place, at a rate of 6.35%, which
matures in March 2019.
-- $10.0 million 2nd deed of trust secured by Esplanade, at a rate of
6.25%, which matures in August 2015.
Additionally, during the first quarter, the Company paid-off $17.0 million
in maturing loans including:
-- Two mortgage loans secured by Monterra del Rey with fixed rates of
7.0% and 5.2%, respectively, maturing in May 2009 for an aggregate amount
of $10.0 million.
-- One mortgage loan secured by Mariner's Place with a fixed rate of 7.3%
maturing in April 2009 for $3.8 million.
-- A construction bridge loan for Belmont Station maturing in June 2009
for $3.2 million.
GUIDANCE
The Company has increased its previous full year 2009 FFO guidance to a
range of $6.10 to $6.40 per diluted share, reflecting the favorable impact
of $25.7 million, or $0.90 per diluted share from the redemption of the
Series G Cumulative Convertible Preferred Stock at a discount to its
carrying value, the favorable impact of $6.1 million, or $0.21 per diluted
share from the early retirement of exchangeable bonds (original guidance
assumed $2.0 million of non-recurring income), and the unfavorable impact
of $5.8 million, or $0.20 per diluted share, related to the write-off of an
investment in a development joint venture. The Company is estimating that
rental and other property revenues will decline approximately 4.0% for 2009
compared to 2008 as compared to the original guidance of an estimated
decline of approximately 2.0%. The reduction in revenues is attributable
to greater job losses, both nationally and for the west coast, than
originally contemplated in its previous guidance. The original guidance
range for full year 2009 FFO was $5.50 to $5.90 per diluted share.
Conference Call with Management
The Company will host an earnings conference call with management to
discuss its quarterly results on Thursday, April 30, at 11:00 a.m. PDT
(2:00 p.m. EDT), which will be broadcast live via the Internet at
www.essexpropertytrust.com, and accessible via phone by dialing (888)
396-2369 and entering the passcode 61853058.
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 first quarter earnings link. To
access the replay digitally, dial (888) 286-8010 using the passcode,
48204512. 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 (
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 132 apartment
communities (26,862 units), and has 972 units in various stages of
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 equity REIT.
Generally, FFO adjusts the net income of equity 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 an equity 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 from the NAREIT definition 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 months ended March 31, 2009 and 2008.
Three Months Ended
March 31,
--------------------
Funds from operations 2009 2008
--------- ----------
Net income available to common stockholders $ 42,265 $ 14,780
Adjustments:
Depreciation and amortization 29,204 27,734
Gains not included in FFO, net of disposition costs (2,225) -
Noncontrolling interest and co-investments 2,563 2,312
--------- ----------
Funds from operations $ 71,807 $ 44,826
========= ==========
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
2009 FFO per diluted share, and statements and estimates set forth under
the caption "Development" and on pages S-9 and S-10 of the Company's
Supplemental Financial Information Package regarding anticipated timing of
the construction start, construction completion, initial occupancy, and
stabilization of property developments and redevelopments. 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, 2008.