10-QPeriod: Q3 FY2011

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 7, 2011For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its third-quarter and year-to-date results for the period ending September 30, 2011. The company demonstrated solid revenue growth, driven by an increase in rental rates and expansion in its portfolio through acquisitions and development projects across Southern California, Northern California, and the Seattle metropolitan area. Despite a slight decrease in average financial occupancy, the overall financial performance indicates a healthy operational quarter. Financially, ESS has strengthened its balance sheet by issuing new unsecured bonds and common stock, while actively managing its debt. The company also executed strategic real estate transactions, including acquisitions and dispositions, to optimize its portfolio. The outlook suggests continued focus on growth, supported by a robust development pipeline and a conservative approach to managing capital and risk, positioning the company for resilience in the prevailing market conditions.

Financial Highlights

31 data points
Beta

Revenue

$119.17M

Net Income

$9.05M

7.6% Net Margin

EPS (Diluted)

$0.23

Total Assets

$3.91B

Cash & Equivalents

$9.02M

Free Cash Flow

$66.34M

Financial Statements
Beta
Revenue$119.17M
Operating Expenses$84.86M
Operating Income$34.30M
Interest Expense$22.10M
Net Income$9.05M
EPS (Basic)$0.23
EPS (Diluted)$0.23
Shares Outstanding (Basic)33.12M
Shares Outstanding (Diluted)33.21M

Key Highlights

  • 1Total property revenues increased by 14.3% year-over-year for the third quarter, reaching $118.1 million, driven by a 4.1% increase in same-property revenues and significant contributions from new acquisitions and development projects.
  • 2Same-property revenues grew by 4.1% in Q3 2011 compared to Q3 2010, primarily due to a 5.3% increase in average rental rates, which offset a slight decrease in financial occupancy.
  • 3The company acquired the Bernard, a 63-unit community in Seattle, for $13.8 million in Q3 2011, and also entered into new development joint ventures, including one for Fountain at La Brea in West Hollywood.
  • 4Essex Property Trust raised substantial capital during the nine months ended September 30, 2011, through the issuance of $265.0 million in unsecured bonds and $256.8 million in common stock, intended for debt repayment, acquisitions, and funding its development pipeline.
  • 5The company's financial occupancy for stabilized apartment communities slightly decreased to 95.4% in Q3 2011 from 96.7% in Q3 2010, indicating a challenging but still strong occupancy level.
  • 6Interest expense increased by 5.1% in Q3 2011 compared to Q3 2010, reflecting higher average outstanding debt, partly offset by increased capitalized interest.
  • 7The company successfully amended its unsecured line of credit, increasing its capacity to $425 million (with an accordion feature to $500 million), providing enhanced financial flexibility.

Frequently Asked Questions

For the nine months ended September 30, 2011, Essex Property Trust reported total property revenues of $345.98 million, an increase from $301.80 million in the same period of 2010. Net income available to common stockholders was $26.43 million, a decrease from $28.99 million in the prior year. Funds from Operations (FFO) on a diluted basis were $4.19 per share, up from $4.05 per share in the prior year, indicating a strong operational performance despite a decline in net income.

Essex Property Trust is actively managing its capital structure by issuing new unsecured bonds totaling $265 million and common stock for $256.8 million during the first nine months of 2011. The company also amended its unsecured line of credit to increase capacity to $425 million. These actions aim to provide liquidity, fund growth, and manage debt levels, indicating a proactive approach to capital management in potentially challenging credit market conditions.

Rental revenue has seen positive growth, with same-property revenues increasing by 3.0% for the nine months ended September 30, 2011, driven by a 3.5% increase in average rental rates. However, financial occupancy for stabilized properties slightly decreased to 96.4% from 97.1% over the same period. This trend suggests that while rental rates are improving, maintaining occupancy levels remains a focus.

Essex Property Trust continues to expand its portfolio through strategic acquisitions and development. In the third quarter of 2011, they acquired a community in Seattle and entered into new development joint ventures. The company has a development pipeline consisting of consolidated and unconsolidated projects, with significant capital allocated for future development and predevelopment activities, indicating a commitment to portfolio growth.