10-KPeriod: FY2002

ESSEX PROPERTY TRUST, INC. Annual Report, Year Ended Dec 31, 2002

Filed March 31, 2003For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) operates as a self-administered and self-managed equity real estate investment trust (REIT) primarily focused on the ownership, acquisition, development, and management of multifamily apartment communities. As of December 31, 2002, the Company's portfolio comprised 112 properties with 23,699 apartment units, strategically located in high-growth Western US markets, with significant concentrations in Southern California, Northern California, and the Pacific Northwest. In addition to its multifamily focus, ESS also owns other real estate assets including RV parks, office buildings, and manufactured housing communities. The company's primary business objective is to maximize funds from operations and total returns to stockholders through active property management, strategic portfolio expansion via acquisitions and development, optimal asset allocation, and prudent financial risk management. The company emphasizes a conservative leverage ratio and aims to minimize its cost of capital. Financially, Essex reported total revenues of $200.1 million for the year ended December 31, 2002, with net income of $52.9 million. The company has a history of paying regular quarterly dividends since its IPO in 1994, with dividends per share increasing steadily over the years. The company's debt-to-total-market-capitalization ratio stood at approximately 36.4% as of December 31, 2002, reflecting a conservative financial approach. The company is actively engaged in development projects, with 1,518 units under development as of the reporting date, and has also made strategic acquisitions, most notably the significant merger with John M. Sachs, Inc., which expanded its portfolio considerably.

Key Highlights

  • 1Portfolio Diversification: Essex Property Trust's portfolio consists of 112 multifamily properties (23,699 units) across Southern California, Northern California, and the Pacific Northwest, along with other real estate assets like RV parks and office buildings.
  • 2Strategic Geographic Focus: The company targets major metropolitan areas with populations over one million, supply constraints, high housing costs, and proximity to job centers.
  • 3Active Property and Portfolio Management: Key strategies include maximizing cash flow through active management, seeking value enhancement via redevelopment, and adjusting portfolio allocations based on regional economic and local market conditions.
  • 4Robust Development Pipeline: As of December 31, 2002, Essex had commitments for 1,518 units in six multifamily communities under development.
  • 5Significant Acquisition: The merger with John M. Sachs, Inc. on December 17, 2002, was a major event, adding 2,683 apartment units and other real estate assets valued at approximately $301 million.
  • 6Conservative Financial Position: As of December 31, 2002, the company maintained a debt-to-total-market-capitalization ratio of approximately 36.4% and had $8.6 million in unrestricted cash.
  • 7Consistent Dividend Payouts: Essex has a history of paying regular quarterly dividends since its IPO in 1994, with increasing amounts per share over the years.

Frequently Asked Questions

Essex Property Trust, Inc. (ESS) is an equity real estate investment trust (REIT) focused on owning, acquiring, developing, and managing multifamily apartment communities. Its primary geographic focus is on major metropolitan areas in the Western United States, particularly Southern California, Northern California, and the Pacific Northwest.

For the year ended December 31, 2002, Essex reported total revenues of approximately $200.1 million and a net income of approximately $52.9 million. The company maintained a debt-to-total-market-capitalization ratio of approximately 36.4% and had $8.6 million in unrestricted cash. Total property indebtedness stood at $804.1 million.

A major event in 2002 was the acquisition of John M. Sachs, Inc. through a merger on December 17, 2002. This transaction added a substantial portfolio of 20 apartment communities (2,683 units), five RV parks, two manufactured housing communities, and two office buildings, valued at approximately $301 million. The company also continued its development activities, with 1,518 units under development across six communities.

Key risks identified include the uncertainty of refinancing balloon payments on debt, the impact of economic conditions and potential recessions on operating results, the risk of rising interest rates affecting borrowing costs and investment returns, competition in the multifamily market, and potential environmental liabilities. The company also noted risks associated with its development activities and geographic concentration in California and the Pacific Northwest.