10-QPeriod: Q1 FY2009

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 7, 2009For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its first quarter 2009 financial results, a period marked by continued economic uncertainty. The company's core rental and other property revenues saw a notable increase of 6.0% year-over-year to $104.7 million, primarily driven by growth in same-property revenues and contributions from newly acquired and developing communities. Despite a challenging market, same-property occupancy improved to 97.0% from 95.9% in the prior year's quarter. Financially, ESS demonstrated proactive debt management by repurchasing $71.3 million of its exchangeable bonds, resulting in a $6.1 million gain. The company also significantly repurchased its Series G Cumulative Convertible Preferred Stock, realizing a $25.7 million gain from the repurchase. While the overall asset base remained relatively stable, the company's liquidity was supported by $65.2 million in unrestricted cash and cash equivalents and $30.1 million in marketable securities, along with available credit lines. Management expressed confidence in meeting its 2009 cash needs.

Key Highlights

  • 1Total property revenues increased by 6.0% to $104.7 million in Q1 2009 compared to Q1 2008, driven by both same-property growth and new additions to the portfolio.
  • 2Quarterly same-property financial occupancy improved to 97.0% from 95.9% year-over-year, indicating resilience in rental demand.
  • 3The company generated a $6.1 million gain on early retirement of debt through the repurchase of $71.3 million of its 3.625% exchangeable bonds.
  • 4Essex repurchased $58.2 million of its Series G Cumulative Convertible Preferred Stock, realizing a significant gain of $25.7 million.
  • 5Unrestricted cash and cash equivalents stood at $65.2 million, supplemented by $30.1 million in marketable securities, indicating a solid liquidity position.
  • 6The company reported a write-off of $5.8 million for its investment in a development joint venture, reflecting challenges in specific development projects.
  • 7Diluted Earnings Per Share (EPS) increased significantly to $1.53 from $0.59 in the prior year, largely due to gains from debt and preferred stock repurchases and improved operating performance.

Frequently Asked Questions

Essex Property Trust's total property revenues increased by 6.0% to $104.7 million in the first quarter of 2009 compared to the same period in 2008. This growth was attributed to a 2.0% increase in same-property revenues and a 42.2% increase in non-same-property revenues, which included contributions from recently acquired and developing communities.

During the first quarter of 2009, Essex actively managed its debt by repurchasing $71.3 million of its 3.625% exchangeable bonds at a discount, resulting in a gain of $6.1 million. Additionally, the company repurchased a substantial amount of its Series G Cumulative Convertible Preferred Stock, realizing a $25.7 million gain.

Essex maintained a strong liquidity position, with $65.2 million in unrestricted cash and cash equivalents and $30.1 million in marketable securities as of March 31, 2009. The company also had access to available credit lines, totaling $185 million outstanding under its unsecured and Freddie Mac credit facilities, and expressed confidence in meeting its 2009 cash needs.

The report notes several risks, including the impact of continued instability and tightening in credit markets on the company's ability to acquire, develop, and refinance properties. It also mentions risks associated with development and redevelopment projects, such as cost overruns and delays. A specific challenge noted was a $5.8 million write-off of an investment in a development joint venture.