10-QPeriod: Q3 FY2005

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q3 Ended Sep 30, 2005

Filed November 8, 2005For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported solid performance for the nine months ended September 30, 2005, demonstrating continued growth in its core multifamily property operations. Total property revenues increased by 13.5% year-over-year, driven by a combination of increased rents and higher occupancy rates across its key West Coast markets. The company also reported a significant increase in income from continuing operations, largely due to strong performance in its Same Store Properties and contributions from newly acquired and redeveloped assets. Financially, Essex maintained a strong balance sheet with total assets growing to $2.25 billion. While debt levels increased, the company also saw a rise in its total stockholders' equity, indicating positive net worth growth. The company's liquidity appears sound, supported by operating cash flows, existing credit lines, and strategic debt offerings. The company also highlighted its proactive approach to managing interest rate risk through hedging activities and its diversified portfolio across Southern California, Northern California, and the Pacific Northwest.

Key Highlights

  • 1Total property revenues increased by 13.5% to $234.9 million for the nine months ended September 30, 2005, compared to the same period in 2004.
  • 2Same Store Property Revenues grew by 3.6% to $169.3 million for the nine months, reflecting strong rental increases and occupancy.
  • 3Net income available to common stockholders was $73.0 million for the nine months ended September 30, 2005, a significant increase from $45.7 million in the prior year.
  • 4Total assets grew to $2.25 billion as of September 30, 2005, from $2.22 billion as of December 31, 2004.
  • 5The company strengthened its liquidity by completing a $190 million exchangeable senior note offering and utilizing the proceeds to repay debt and repurchase common stock.
  • 6Essex expanded its portfolio through the acquisition of Marbella Apartments and Fund II acquiring Echo Ridge Apartments and Morning Run Apartments.
  • 7The company reported $1.5 million for legal settlement costs related to an employee lawsuit concerning unpaid wages, with no change to the settlement amount in the current quarter.

Frequently Asked Questions

Essex Property Trust, Inc. is a fully integrated Real Estate Investment Trust (REIT) that primarily generates property revenues from its multifamily operations. Its geographical focus is concentrated on three major West Coast regions: Southern California, Northern California, and the Pacific Northwest.

For the nine months ended September 30, 2005, total property revenues increased by 13.5% to $234.9 million compared to $207.0 million for the same period in 2004. This growth was driven by both Same Store Properties (up 3.6%) and a significant increase in Non-Same Store Property Revenues (up 50.3%) due to acquisitions and development.

As of September 30, 2005, Essex had $1.16 billion in mortgage notes payable and $150 million in lines of credit. The company actively manages its interest rate risk through hedging strategies, including forward-starting interest rate swaps, and aims to balance fixed and variable rate debt. Following the quarter, the company raised $190 million through an exchangeable senior note offering which was used to repay existing debt and repurchase stock.

The company has recorded $1.5 million for a legal settlement related to an employee lawsuit concerning on-call wages. Additionally, there is an increasing trend of mold-related lawsuits against multifamily property owners, and while Essex has insurance and mitigation programs, potential liabilities in this area could be substantial.