10-QPeriod: Q1 FY2011

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 9, 2011For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its first quarter 2011 results, showcasing a robust increase in total revenues, primarily driven by strategic acquisitions and the development of new properties. The company's core apartment rental operations continue to perform well, with same-property revenues seeing a modest increase due to higher scheduled rents, partially offset by a slight dip in occupancy. ESS has been actively managing its portfolio, evidenced by the acquisition of two new communities and progress on its development pipeline in key West Coast markets. Financially, ESS demonstrated strong liquidity with a significant increase in cash and cash equivalents. The company also successfully issued new unsecured bonds and raised capital through equity offerings, which were utilized to repay debt and fund its development pipeline. While facing some challenges related to rising property operating expenses and depreciation, the company's focus on growth and prudent financial management positions it to navigate the current market conditions and pursue future opportunities.

Financial Highlights

31 data points
Beta

Revenue

$112.43M

Net Income

$8.96M

8.0% Net Margin

EPS (Diluted)

$0.27

Total Assets

$3.87B

Cash & Equivalents

$97.68M

Free Cash Flow

$57.31M

Financial Statements
Beta
Revenue$112.43M
Operating Expenses$81.28M
Operating Income$31.15M
Interest Expense$21.81M
Net Income$8.96M
EPS (Basic)$0.27
EPS (Diluted)$0.27
Shares Outstanding (Basic)31.47M
Shares Outstanding (Diluted)31.55M

Key Highlights

  • 1Total revenues increased by 12.9% to $112.5 million for the first quarter of 2011 compared to $99.7 million in the same period of 2010.
  • 2Same-property revenues grew by 1.6% to $97.3 million, driven by an 1.8% increase in average rental rates.
  • 3The company acquired two new apartment communities, Santee Village (73 units) and Family Tree Apartments (121 units), in the first quarter.
  • 4ESS issued $150 million in unsecured bonds at 4.36% and raised $38.4 million through common stock issuance, using proceeds for debt repayment and pipeline funding.
  • 5Unrestricted cash and cash equivalents increased significantly to $97.7 million as of March 31, 2011, from $13.8 million as of December 31, 2010.
  • 6Interest expense increased by $3.8 million due to higher average debt, though the weighted average interest rate decreased slightly.
  • 7The company's development pipeline includes three consolidated and one unconsolidated joint venture development projects, aggregating 912 units.

Frequently Asked Questions

The primary driver of revenue growth for Essex Property Trust in Q1 2011 was the significant increase in property revenues, up 12.9% year-over-year. This was largely due to revenue generated from recently acquired communities and completed development properties, as well as a 1.6% increase in same-property revenues driven by higher rental rates.

Essex Property Trust is actively managing its debt and capital structure. In the first quarter of 2011, they issued $150 million in unsecured bonds and raised $38.4 million through common stock sales. These funds were primarily used to repay a portion of their unsecured line of credit and a construction loan. The company also has multiple lines of credit and notes payable, with a mix of fixed and variable rates, and employs interest rate cap contracts for hedging.

Essex Property Trust's strategy involves both monitoring existing markets and evaluating new ones for rental growth potential. They are actively acquiring new communities and have a substantial development pipeline, including consolidated and joint venture projects, across key West Coast markets like Southern California, Northern California, and the Seattle metropolitan area. Redevelopment of existing properties is also a focus, aiming for significant returns on investment.

For the 'Quarterly Same-Property' portfolio, average financial occupancy slightly decreased by 70 basis points to 96.8% in Q1 2011 compared to Q1 2010. However, average rental rates increased by 1.8% to $1,329 per unit, contributing to a 1.6% rise in same-property revenues.