10-QPeriod: Q1 FY2017

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 1, 2017For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its first-quarter 2017 financial results, demonstrating solid operational performance and strategic portfolio management. The company's rental and other property revenues increased by 6.7% year-over-year, driven by a 5.0% rise in Same-Property revenues and a notable 4.1% increase in average rental rates across its stabilized apartment communities. This performance was supported by strong financial occupancies, averaging 96.5% across its core markets of Southern California, Northern California, and Seattle. Strategically, Essex made significant moves, including the acquisition of a joint venture partner's stake in Palm Valley for $183 million, leading to a substantial $86.5 million gain on remeasurement of co-investment. The company also continued to execute its development and acquisition strategy, with a robust development pipeline and recent senior unsecured note issuance of $350 million. These activities, combined with a healthy balance sheet and access to credit facilities, position Essex to navigate the evolving market and continue delivering shareholder value.

Financial Highlights

34 data points
Beta

Revenue

$335.40M

Net Income

$178.96M

53.4% Net Margin

EPS (Diluted)

$2.72

Total Assets

$12.45B

Cash & Equivalents

$84.34M

Free Cash Flow

$223.31M

Financial Statements
Beta
Revenue$335.40M
Operating Expenses$226.17M
Operating Income$109.23M
Interest Expense$54.58M
Net Income$178.96M
EPS (Basic)$2.73
EPS (Diluted)$2.72
Shares Outstanding (Basic)65.55M
Shares Outstanding (Diluted)65.86M

Key Highlights

  • 1Total property revenues increased by 6.7% to $333.2 million for the three months ended March 31, 2017, compared to $312.2 million for the same period in 2016.
  • 2Same-Property revenues grew by 5.0% to $302.1 million, driven by a 4.1% increase in average rental rates.
  • 3Achieved strong financial occupancies averaging 96.5% across its key West Coast markets.
  • 4Completed a significant acquisition of Palm Valley for $183 million, resulting in a $86.5 million gain on remeasurement of co-investment.
  • 5Sold Jefferson at Hollywood for $132.5 million, recognizing a $26.2 million gain.
  • 6Issued $350 million of 10-year senior unsecured notes at a 3.625% interest rate in April 2017 to repay debt and for general corporate purposes.
  • 7Net income available to common stockholders was $179.0 million, or $2.73 per diluted share, a significant increase from $78.0 million, or $1.19 per diluted share, in the prior year period.

Frequently Asked Questions

Essex Property Trust's total property revenues increased by 6.7% to $333.2 million for the three months ended March 31, 2017, compared to $312.2 million for the same period in 2016. This growth was primarily driven by a 5.0% increase in Same-Property revenues, fueled by a 4.1% rise in average rental rates.

Key strategic transactions included the acquisition of a joint venture partner's stake in Palm Valley for $183 million, which resulted in a significant gain on remeasurement of co-investment. Additionally, the company sold Jefferson at Hollywood for $132.5 million and issued $350 million in senior unsecured notes to manage its debt structure and fund operations.

Profitability saw a substantial improvement. Net income available to common stockholders rose to $179.0 million for the first quarter of 2017, from $78.0 million in the first quarter of 2016. Diluted earnings per share increased to $2.73 from $1.19 year-over-year.

Essex maintains a strong financial position with $84.3 million in unrestricted cash and cash equivalents and $139.0 million in marketable securities as of March 31, 2017. The company has access to a $1.03 billion credit facility and a recent successful issuance of $350 million in senior unsecured notes, indicating continued confidence in its ability to access capital markets to fund its operations, development, and dividend payments.