10-QPeriod: Q2 FY2002

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q2 Ended Jun 30, 2002

Filed August 13, 2002For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its financial results for the second quarter and first six months ended June 30, 2002. The company experienced a mixed performance with overall revenue growth driven by a significant increase in interest and other income, largely due to gains from property dispositions and fees earned. However, property revenues from its core same-store portfolio showed a decline, particularly in Northern California and the Pacific Northwest, attributed to rental rate decreases and lower occupancy. Despite the dip in same-store property revenues, the company demonstrated strong operational efficiency with a decrease in total expenses. A substantial gain on the sale of real estate significantly boosted net income for both the quarter and the year-to-date period. Essex also made strategic moves in its capital structure, including expanding its revolving credit facility, and continued its focus on development and redevelopment projects. The company's liquidity appears stable, supported by its cash on hand and available credit lines.

Key Highlights

  • 1Total revenues increased by 0.9% to $50.98 million for Q2 2002 compared to Q2 2001, driven by a 72.4% surge in interest and other income.
  • 2Net income significantly increased by 85.3% to $21.36 million for Q2 2002, largely due to an $8.06 million gain on the sale of real estate (Tara Village).
  • 3Property revenues from 'Same Store Properties' decreased by 6.8% in Q2 2002 compared to Q2 2001, reflecting challenges in Northern California and the Pacific Northwest.
  • 4Total expenses decreased by 5.1% to $31.47 million in Q2 2002 due to lower interest expenses and property operating expenses.
  • 5The company expanded its unsecured revolving credit facility to $165 million, enhancing its liquidity and financial flexibility.
  • 6Development activities continue, with six communities comprising 1,521 units under development, representing a significant future investment.
  • 7Funds From Operations (FFO) saw an increase of 6.9% to $24.67 million for Q2 2002 compared to the prior year.

Frequently Asked Questions

The significant increase in net income for the quarter and six months ended June 30, 2002, was primarily driven by a substantial gain on the sale of real estate, specifically the Tara Village property, which contributed $8.06 million to net income.

Property revenues from 'Same Store Properties' decreased due to rental rate decreases and a decline in financial occupancy, particularly impacting the Northern California and Pacific Northwest regions. This trend is attributed to the broader economic recession affecting these markets.

Essex Property Trust has an $8.66 million unrestricted cash balance at June 30, 2002. They also renewed and expanded their revolving credit facility to $165 million, providing significant borrowing capacity. The company expects these resources, along with operating cash flow, to meet short-term and long-term liquidity needs.

Essex is actively engaged in development and redevelopment, with six multifamily communities under development. They also manage the Essex Apartment Value Fund, L.P., which serves as an exclusive investment vehicle for new investments until its committed capital is deployed or by December 31, 2003. This indicates a continued focus on portfolio growth and asset enhancement.