10-QPeriod: Q1 FY2012

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 7, 2012For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported solid financial results for the first quarter ended March 31, 2012. The company demonstrated continued revenue growth, driven by increases in rental income across its key West Coast markets. Same-property revenues saw a notable 7.1% increase, with average rental rates rising across all three regions (Southern California, Northern California, and Seattle Metro), indicating strong demand for its apartment communities. Financially, ESS maintained a healthy balance sheet with total assets growing slightly and liabilities remaining stable. The company actively managed its debt, with plans to use proceeds from new private placement notes to prepay higher-cost secured mortgage debt. Furthermore, ESS continued to invest in its portfolio through acquisitions and development projects, signaling confidence in its long-term growth strategy. The company also reaffirmed its liquidity position, stating that its existing cash, marketable securities, and credit facilities are sufficient to meet its anticipated needs for the next twelve months.

Financial Highlights

31 data points
Beta

Revenue

$127.92M

Net Income

$24.09M

18.8% Net Margin

EPS (Diluted)

$0.67

Total Assets

$4.05B

Cash & Equivalents

$13.74M

Free Cash Flow

$72.16M

Financial Statements
Beta
Revenue$127.92M
Operating Expenses$87.94M
Operating Income$39.98M
Interest Expense$24.66M
Net Income$24.09M
EPS (Basic)$0.67
EPS (Diluted)$0.67
Shares Outstanding (Basic)34.03M
Shares Outstanding (Diluted)34.15M

Key Highlights

  • 1Total property revenues increased by 12.8% to $125.5 million, driven by growth in rental income.
  • 2Same-property revenues grew by 7.1% to $115.8 million, reflecting a 6.4% increase in average rental rates per unit.
  • 3Acquisition of two new apartment communities (Bon Terra and Reed Square) and progress on development projects, indicating strategic expansion.
  • 4Secured $200 million in private placement unsecured notes at a 4.3% all-in rate to refinance higher-cost debt.
  • 5Maintained strong occupancy rates, with a same-property financial occupancy of 96.9%, up from 96.5% in the prior year.
  • 6Net income available to common stockholders increased significantly to $22.7 million, or $0.67 per diluted share, up from $8.4 million, or $0.27 per diluted share, in the prior year.
  • 7Reaffirmed liquidity and capital resources, believing current cash, marketable securities, and credit lines are sufficient for the next twelve months.

Frequently Asked Questions

The primary driver of revenue growth was the increase in rental income from the company's apartment communities. Same-property revenues increased by 7.1% due to a 6.4% rise in average rental rates across its Southern California, Northern California, and Seattle Metro markets, coupled with improved financial occupancy rates.

Essex Property Trust is actively managing its debt by securing new, lower-cost financing and using it to refinance higher-interest debt. The company issued $200 million in private placement unsecured notes at a 4.3% rate, intended to prepay secured mortgage debt coming due at an average rate of 5.5%. The company also continues to invest in acquisitions and development, funded by a combination of operating cash flows, credit facilities, and equity issuances.

The company reported strong and improving occupancy rates, with a same-property financial occupancy of 96.9%. This indicates robust demand for its apartment communities, especially given the increase in average rental rates across its key West Coast markets. The company sees continued rental growth potential in its core markets.

Yes, during the first quarter of 2012, Essex Property Trust acquired two apartment communities: Bon Terra in Redmond, Washington (60 units) for $16.0 million, and Reed Square in Sunnyvale, California (100 units) for $23.0 million. Additionally, the company continued to advance its development pipeline, which included five unconsolidated joint venture projects and three consolidated land parcels.