10-QPeriod: Q2 FY2013

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q2 Ended Jun 30, 2013

Filed August 5, 2013For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported solid financial results for the second quarter and first half of 2013, demonstrating continued growth in its core real estate operations. Total property revenues increased by 15.7% year-over-year for the quarter and 16.2% for the six-month period, driven by both same-property revenue growth and contributions from newly acquired communities. Same-property revenues saw a healthy increase of 6.1% for the quarter and 6.0% for the six months, primarily fueled by a significant rise in average rental rates across its key markets in Southern California, Northern California, and Seattle. The company also showed strong operational performance with increased net operating income (NOI). Same-property NOI grew by 7.0% for the quarter and 6.5% for the six months, indicating efficient property management and favorable market conditions. Financially, Essex managed its debt effectively, issuing $300 million in senior unsecured notes and maintaining substantial undrawn capacity on its credit facilities, positioning it well for future investments and operational needs. The company also continued to expand its portfolio through strategic acquisitions, including two significant apartment community purchases in California during the quarter.

Financial Highlights

33 data points
Beta

Revenue

$150.81M

Net Income

$26.31M

17.4% Net Margin

EPS (Diluted)

$0.67

Total Assets

$5.06B

Cash & Equivalents

$20.22M

Free Cash Flow

$64.89M

Financial Statements
Beta
Revenue$150.81M
Operating Expenses$102.73M
Operating Income$48.09M
Interest Expense$29.33M
Net Income$26.31M
EPS (Basic)$0.67
EPS (Diluted)$0.67
Shares Outstanding (Basic)37.29M
Shares Outstanding (Diluted)37.39M

Key Highlights

  • 1Total property revenues increased by 15.7% to $150.2 million for Q2 2013 and by 16.2% to $296.6 million for the first six months of 2013, compared to the prior year periods.
  • 2Same-property revenues grew by 6.1% for Q2 2013 and 6.0% for the first six months of 2013, driven by a 6.2% increase in average rental rates.
  • 3Same-property Net Operating Income (NOI) increased by 7.0% for Q2 2013 and 6.5% for the first six months of 2013, showcasing operational efficiency.
  • 4The company acquired two apartment communities in California during the second quarter for a combined $113.5 million.
  • 5Essex issued $300 million in 3.25% Senior Notes due 2023, further strengthening its capital structure and providing funds for acquisitions and general corporate purposes.
  • 6Unrestricted cash and cash equivalents stood at $20.2 million, and marketable securities at $88.7 million as of June 30, 2013, providing ample liquidity.

Frequently Asked Questions

The primary driver of revenue growth was a combination of increased rental rates on same-property units and revenue from newly acquired communities. Specifically, same-property revenues increased by 6.1% due to a 6.2% rise in average rental rates across its key West Coast markets.

Essex strengthened its capital position by issuing $300 million in 3.25% Senior Notes due 2023. Additionally, the company maintained significant financial flexibility with $20.2 million in unrestricted cash and cash equivalents and substantial undrawn capacity on its credit facilities, totaling $621 million as of June 30, 2013.

Essex's primary geographical markets are Southern California, Northern California, and the Seattle metropolitan area. All three regions showed positive performance, with same-property revenues increasing across the board. Northern California and Seattle Metro saw particularly strong revenue growth percentages, while Southern California also contributed significantly in absolute dollar terms.

Yes, Essex made significant acquisitions, purchasing two apartment communities in California: Regency at Mountain View for $42.5 million and Gas Company Lofts in Los Angeles for $71.0 million. While the filing notes dispositions from joint ventures, the direct impact on Essex's consolidated results from dispositions was less pronounced in this specific quarter compared to acquisitions.