10-QPeriod: Q3 FY2008

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q3 Ended Sep 30, 2008

Filed November 3, 2008For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its third-quarter 2008 financial results, demonstrating continued revenue growth in its core rental operations despite a challenging economic environment. For the nine months ended September 30, 2008, total property revenues increased by 9.8% to $302.9 million, driven by same-property revenue growth of 4.9% and the impact of recent acquisitions. Net income for the nine months available to common stockholders was $37.8 million, a decrease from $55.2 million in the prior year, largely due to lower gains from discontinued operations. The company maintains a solid liquidity position, with $33.4 million in unrestricted cash and cash equivalents at the end of the quarter. Management believes its operational cash flows, cash reserves, marketable securities, and available credit lines are sufficient to meet anticipated cash needs through 2009. Despite concerns about credit market tightening, ESS has proactively managed its debt, including repurchasing a portion of its exchangeable senior notes and securing commitments for an expanded credit facility, mitigating some of the broader industry risks.

Key Highlights

  • 1Total property revenues increased by 9.8% year-over-year for the nine months ended September 30, 2008, reaching $302.9 million.
  • 2Same-property revenue growth was 4.9% for the first nine months of 2008, indicating strong operational performance in its existing portfolio.
  • 3Net income available to common stockholders for the nine months decreased to $37.8 million from $55.2 million in the prior year, primarily due to significantly lower gains from discontinued operations.
  • 4The company reported $33.4 million in unrestricted cash and cash equivalents as of September 30, 2008, suggesting a healthy liquidity position.
  • 5Essex completed strategic acquisitions of two apartment communities in July and August 2008, totaling approximately $88.4 million.
  • 6During the third quarter, the company repurchased $29.7 million of its exchangeable senior notes at a discount, expecting to recognize a gain.
  • 7The company has a substantial development and predevelopment pipeline, with total estimated project costs of $831.6 million as of September 30, 2008, demonstrating a commitment to future growth.

Frequently Asked Questions

Essex Property Trust reported a solid increase in total property revenues, growing by 9.8% to $302.9 million for the nine months ended September 30, 2008, compared to the same period in 2007. This growth was driven by both a 4.9% increase in same-property revenues and contributions from newly acquired properties.

As of September 30, 2008, Essex had $33.4 million in unrestricted cash and cash equivalents. Management expressed confidence that its operating cash flows, existing cash, marketable securities, and available credit lines are sufficient to meet its anticipated needs through 2009. The company has also taken steps to manage its debt, including repurchasing exchangeable notes and securing a commitment for an expanded credit facility, which helps mitigate the impact of tighter credit conditions.

Net income available to common stockholders for the first nine months of 2008 was $37.8 million, a decrease from $55.2 million in the same period of 2007. The primary reason for this decrease was a significant reduction in gains recognized from discontinued operations, which were substantially lower in 2008 compared to 2007.

Essex continues to execute its strategy of acquiring and developing properties in key West Coast markets. During the third quarter of 2008, the company acquired two apartment communities. Furthermore, as of September 30, 2008, Essex had a substantial development and predevelopment pipeline valued at an estimated $831.6 million, indicating a continued focus on future growth.