10-KPeriod: FY2007

ESSEX PROPERTY TRUST, INC. Annual Report, Year Ended Dec 31, 2007

Filed February 29, 2008For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its 2007 fiscal year results in its 10-K filing. The company is a real estate investment trust focused on owning, operating, and developing apartment communities, primarily along the West Coast of the United States. As of December 31, 2007, ESS owned 134 apartment communities with 27,489 units, alongside other property types like office buildings and RV parks. The company emphasizes a research-driven approach to identify supply-constrained markets for its investments and actively engages in property acquisitions, development, and redevelopment to drive shareholder value. Financially, the company's performance in 2007 showed growth in property revenues, with same-property revenues increasing by 6.5%. However, total expenses also rose, impacting net income. ESS highlighted its strategy to maintain a strong balance sheet and manage interest rate risk through hedging activities. The company also announced a stock repurchase plan and increased its quarterly dividend. Despite the generally positive operational performance, the filing also detailed significant risks, particularly concerning debt financing, interest rate fluctuations, potential market downturns, and the inherent risks of real estate development and operations.

Key Highlights

  • 1Essex Property Trust (ESS) reported a diversified portfolio primarily focused on West Coast apartment communities, comprising 27,489 units across 134 properties as of December 31, 2007.
  • 2The company demonstrated revenue growth, with total property revenues increasing by 14.5% to $383.4 million in 2007, driven by both same-property performance and acquisitions.
  • 3ESS actively pursued growth through acquisitions, adding several apartment communities in California and Seattle throughout 2007, totaling significant investment.
  • 4Development activities are a key growth driver, with 684 units under active development and a larger pipeline of 1,658 units in predevelopment, indicating a focus on future expansion.
  • 5The company managed its financial risk through significant use of interest rate hedging instruments, entering into nine forward-starting swap contracts totaling $450 million notional amount.
  • 6ESS announced a stock repurchase plan authorized for up to $200 million, demonstrating a commitment to returning capital to shareholders.
  • 7The company highlighted its robust balance sheet and existing credit facilities, which have insulated it from some of the tightening credit market conditions prevalent in 2007.

Frequently Asked Questions

Essex Property Trust, Inc. operates as a real estate investment trust (REIT) primarily focused on the ownership, operation, management, acquisition, development, and redevelopment of apartment communities. Its portfolio is concentrated along the West Coast of the United States, specifically in Southern California, the San Francisco Bay Area, and the Seattle metropolitan area.

In 2007, Essex Property Trust reported an increase in total property revenues to $383.4 million, up 14.5% from the previous year. Same-property revenues grew by 6.5%. However, total expenses also increased significantly, driven by property operating expenses, depreciation, and interest expenses. The company continued to invest in acquisitions and development, managing its financial health through a strong balance sheet and active interest rate hedging.

The company identified several key risks, including significant dependence on debt financing and the uncertainty of refinancing maturing debt. Other risks include potential adverse effects from rising interest rates, competition in the real estate market, challenges and cost overruns in development and redevelopment projects, and geographic concentration of its portfolio in California. The company also noted potential environmental liabilities and risks associated with its investment in Fund II.

Essex Property Trust is actively managing its capital. It repurchased shares under a $200 million authorization plan, spending $45.8 million by early 2008. The company also announced a $0.09 per share increase to its quarterly cash dividend, raising it to $1.02 per share. ESS also maintains access to credit facilities and has filed a shelf registration statement to potentially issue additional equity or debt.