10-QPeriod: Q3 FY2013

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 4, 2013For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported solid financial results for the nine months ended September 30, 2013, demonstrating robust growth in rental revenues and net income. Total revenues increased by 15.4% year-over-year, driven by same-property revenue growth and contributions from newly acquired communities. Net income attributable to common stockholders surged by over 50%, reflecting strong operational performance and strategic acquisitions. The company continued to expand its portfolio, acquiring new properties and developing its pipeline, particularly in key West Coast markets like Southern California, Northern California, and the Seattle Metro area. Management highlighted the increasing average rental rates and effective management of operating expenses, contributing to a healthy increase in Net Operating Income (NOI). Financially, Essex maintained a strong balance sheet with significant real estate assets. While total liabilities increased, primarily due to unsecured debt, the company also grew its equity base. Cash flow from operations remained strong, supporting the company's investment and development activities. The company also provided updates on its co-investment strategies and successful debt management, including the issuance of senior unsecured bonds and management of interest rate risk through derivative instruments. Overall, the report indicates a company in a healthy growth phase, strategically expanding its real estate portfolio and operations.

Financial Highlights

33 data points
Beta

Revenue

$153.95M

Net Income

$70.16M

45.6% Net Margin

EPS (Diluted)

$1.84

Total Assets

$5.09B

Cash & Equivalents

$9.51M

Free Cash Flow

$74.50M

Financial Statements
Beta
Revenue$153.95M
Operating Expenses$105.05M
Operating Income$48.90M
Interest Expense$29.19M
Net Income$70.16M
EPS (Basic)$1.84
EPS (Diluted)$1.84
Shares Outstanding (Basic)37.32M
Shares Outstanding (Diluted)37.44M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2013, increased by 15.4% to $448.3 million compared to $388.6 million in the prior year period.
  • 2Net income available to common stockholders significantly increased to $118.9 million for the nine months ended September 30, 2013, up from $76.0 million in the same period last year.
  • 3Same-property revenues for the nine months ended September 30, 2013, grew by 6.2%, driven by a 6.2% increase in average rental rates across its core markets.
  • 4The company expanded its property portfolio, acquiring thirteen communities since January 1, 2012, and actively managing its development pipeline with 2,501 units under construction or in predevelopment.
  • 5Gross rental properties increased from $3.95 billion at December 31, 2012, to $4.08 billion at September 30, 2013, reflecting continued investment in the portfolio.
  • 6Unsecured debt increased to $1.41 billion from $1.11 billion, while total assets grew to $5.09 billion from $4.85 billion, indicating strategic financing and asset growth.
  • 7The company successfully issued $300 million in senior unsecured bonds in April 2013, strengthening its capital structure and providing funds for acquisitions and general corporate purposes.

Frequently Asked Questions

Essex Property Trust (ESS) is a fully integrated Real Estate Investment Trust (REIT) primarily generating revenue from apartment community operations. Its strategic focus is on the West Coast of the United States, specifically in Southern California (Los Angeles, Orange, Riverside, San Diego, Santa Barbara, and Ventura counties), Northern California (the San Francisco Bay Area), and the Seattle metropolitan area.

For the nine months ended September 30, 2013, ESS reported a significant increase in total property revenues, up 15.4% to $448.3 million, compared to $388.6 million in the same period of 2012. Net income available to common stockholders also saw substantial growth, rising to $118.9 million from $76.0 million in the prior year, representing an increase of over 50%.

Essex Property Trust maintains a dual strategy of actively monitoring its existing markets for rental growth opportunities and evaluating new markets within its current geographical regions. The company actively engages in acquisitions, having added thirteen communities since January 1, 2012. Furthermore, it manages a robust development pipeline, with 2,501 units under construction or in predevelopment, indicating a commitment to portfolio expansion and growth.

ESS is strategically managing its capital structure. During the first nine months of 2013, the company issued $300 million in senior unsecured bonds, which were used to repay existing indebtedness and for general corporate purposes. While unsecured debt increased, the company also focused on unencumbering its communities by primarily issuing unsecured debt and repaying secured debt. The company also utilizes interest rate hedging instruments to manage interest rate risk.