10-QPeriod: Q3 FY2010

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 9, 2010For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its third-quarter and year-to-date results for 2010, showing a mixed financial performance reflecting the ongoing economic recovery. For the nine months ended September 30, 2010, total property revenues saw a slight decrease of 1.3% year-over-year, primarily driven by a 4.3% decline in same-property revenues due to reduced rental rates. However, the company demonstrated growth in its "non-same property" revenues, which increased by 50.2%, indicating successful integration of recent acquisitions and development projects. Net income attributable to common stockholders decreased to $28.9 million for the nine months, down from $75.4 million in the prior year, largely impacted by a significant gain on debt extinguishment and preferred stock redemptions in the prior year's period. Operationally, Essex acquired several new communities during the third quarter, bolstering its portfolio in key West Coast markets. The company also strengthened its balance sheet through equity issuances and managed its debt effectively. While same-property revenues showed a decline, the overall strategy appears focused on long-term growth through strategic acquisitions and development, with a positive outlook for sequential revenue growth in the upcoming quarters.

Financial Highlights

31 data points
Beta

Revenue

$104.33M

Net Income

$6.92M

6.6% Net Margin

EPS (Diluted)

$0.21

Total Assets

$3.50B

Cash & Equivalents

$14.67M

Free Cash Flow

$58.87M

Financial Statements
Beta
Revenue$104.33M
Operating Expenses$77.03M
Operating Income$27.30M
Interest Expense$21.02M
Net Income$6.92M
EPS (Basic)$0.21
EPS (Diluted)$0.21
Shares Outstanding (Basic)29.69M
Shares Outstanding (Diluted)29.76M

Key Highlights

  • 1Total assets grew to $3.5 billion as of September 30, 2010, up from $3.25 billion at the end of 2009, reflecting strategic acquisitions and development activities.
  • 2Rental and other property revenues for the nine months ended September 30, 2010, were $303.1 million, a slight decrease from $307.1 million in the prior year period, with same-property revenues declining due to lower rental rates.
  • 3The company acquired several apartment communities during the third quarter of 2010, including major acquisitions in San Jose and Los Angeles, indicating continued expansion.
  • 4Net income attributable to common stockholders for the nine months ended September 30, 2010, was $28.9 million, a significant decrease from $75.4 million in the prior year, largely due to one-time gains recognized in 2009.
  • 5Funds From Operations (FFO) for the nine months ended September 30, 2010, were $128.3 million, a decrease from $164.6 million in the comparable 2009 period, reflecting the challenging rental market.
  • 6Total liabilities increased to $2.25 billion as of September 30, 2010, driven primarily by higher mortgage notes payable and lines of credit.
  • 7The company executed significant debt management activities, including settling forward-starting swaps and obtaining new credit facilities, to optimize its borrowing costs and manage interest rate risk.

Frequently Asked Questions

Essex Property Trust is a fully integrated Real Estate Investment Trust (REIT) primarily engaged in the business of acquiring, developing, redeveloping, and managing apartment communities. Its portfolio is concentrated in major West Coast regions, specifically Southern California, Northern California, and the Seattle metropolitan area.

For the nine months ended September 30, 2010, total property revenues were $303.1 million, a slight decrease from $307.1 million in the prior year. Same-property revenues experienced a decline of 4.3% year-over-year, primarily due to a decrease in average rental rates, reflecting broader economic conditions. However, non-same property revenues saw a significant increase of 50.2%, indicating growth from new acquisitions and developments.

Essex Property Trust maintains a strategy focused on managing its debt through a combination of fixed and variable rate borrowings, utilizing credit facilities and engaging in interest rate hedging activities to mitigate interest rate risk. As of September 30, 2010, the company had $14.7 million in unrestricted cash and cash equivalents and access to significant lines of credit. The company believes its liquidity is sufficient to meet its anticipated cash needs, including operations, acquisitions, development, and dividend payments.

The filing indicates that Essex Property Trust actively pursued acquisitions during the third quarter of 2010, acquiring several apartment communities in California and Washington. The company also maintains a development pipeline, with ongoing projects in various stages, funded through a combination of working capital, credit facilities, and potential equity/debt issuances.