10-QPeriod: Q3 FY2018

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q3 Ended Sep 30, 2018

Filed October 31, 2018For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its financial results for the third quarter and first nine months of 2018. For the nine months ended September 30, 2018, total revenues reached $1.05 billion, a slight increase from the prior year. Net income available to common stockholders was $272.3 million, down from $329.4 million in the same period last year, primarily due to a significant gain on remeasurement of a co-investment in the prior year. The company maintained strong occupancy rates across its core markets of Southern California, Northern California, and Seattle. Financially, Essex demonstrated stable operational performance with Net Operating Income (NOI) increasing year-over-year for both the quarter and the nine-month period. The company also managed its debt effectively, with a slight decrease in total debt. Looking ahead, Essex has a robust development and redevelopment pipeline and continues to focus on strategic market expansion, supported by ample liquidity and access to capital markets.

Financial Highlights

33 data points
Beta

Revenue

$350.92M

Net Income

$80.97M

23.1% Net Margin

EPS (Diluted)

$1.22

Total Assets

$12.52B

Cash & Equivalents

$157.28M

Free Cash Flow

$257.62M

Financial Statements
Beta
Revenue$350.92M
Operating Expenses$237.02M
Operating Income$113.90M
Interest Expense$55.20M
Net Income$80.97M
EPS (Basic)$1.23
EPS (Diluted)$1.22
Shares Outstanding (Basic)66.05M
Shares Outstanding (Diluted)66.10M

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2018, were $1.047 billion, an increase from $1.019 billion in the prior year.
  • 2Net income available to common stockholders for the nine months ended September 30, 2018, was $272.3 million, a decrease from $329.4 million in the prior year, largely due to a significant gain on remeasurement of a co-investment in 2017.
  • 3Same-Property Revenues increased by 2.2% for the third quarter of 2018 and 2.8% for the nine months ended September 30, 2018, driven by a rise in average rental rates.
  • 4Net Operating Income (NOI) increased to $753.2 million for the nine months ended September 30, 2018, from $732.6 million in the same period last year.
  • 5The company's financial occupancy for stabilized apartment communities remained strong, at 96.7% for the nine months ended September 30, 2018.
  • 6Total debt, net, slightly decreased to $5.63 billion as of September 30, 2018, from $5.69 billion as of December 31, 2017.
  • 7Essex issued $300 million of 30-year senior unsecured notes in March 2018, extending its debt maturity profile.

Frequently Asked Questions

The primary revenue source for Essex Property Trust is rental income from its apartment communities. For the nine months ended September 30, 2018, rental and other property revenues were $1.04 billion, a 2.8% increase compared to the same period in 2017. This growth was driven by a 2.3% increase in average rental rates across its Same-Property portfolio.

Net income available to common stockholders for the nine months ended September 30, 2018, was $272.3 million, a decrease from $329.4 million in the prior year. This decrease is largely attributed to a significant non-recurring gain on the remeasurement of a co-investment that occurred in the nine months ended September 30, 2017, which boosted that period's net income.

Essex maintains strong occupancy rates, with a financial occupancy of 96.7% for its stabilized apartment communities for the nine months ended September 30, 2018. Its primary geographic markets are Southern California, Northern California, and the Seattle metropolitan area, which together constitute the vast majority of its apartment homes.

Essex has managed its debt effectively, with total debt decreasing slightly to $5.63 billion as of September 30, 2018. The company also strategically issued $300 million in long-term, 4.50% senior unsecured notes in March 2018, which helps to extend its debt maturity profile. The company had $157.3 million in unrestricted cash and cash equivalents and access to significant credit facilities, indicating a solid liquidity position.