10-QPeriod: Q1 FY2019

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 26, 2019For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its first quarter 2019 financial results, showcasing continued growth in its West Coast multifamily portfolio. Total revenues for the quarter increased by 2.6% year-over-year to $356.2 million, driven by a 3.1% increase in Same-Property revenues, which reached $337.4 million. This growth was primarily attributable to a 3.3% rise in average rental rates across its stabilized properties. The company demonstrated solid operational execution, with Net Operating Income (NOI) for its Same-Property portfolio growing by 2.8% to $242.8 million. Despite increased operating expenses, including utilities and property taxes, the company managed these effectively, contributing to its healthy performance. The balance sheet remains strong, with total assets growing to $12.6 billion. The company also made strategic moves during the quarter, including the acquisition of a joint venture partner's interest in a San Jose multifamily community, leading to a significant gain on remeasurement, and issuing new senior unsecured notes to manage its debt.

Financial Highlights

33 data points
Beta

Revenue

$356.22M

Net Income

$118.86M

33.4% Net Margin

EPS (Diluted)

$1.81

Total Assets

$12.58B

Cash & Equivalents

$107.03M

Free Cash Flow

$255.76M

Financial Statements
Beta
Revenue$356.22M
Operating Expenses$240.53M
Operating Income$115.69M
Interest Expense$53.64M
Net Income$118.86M
EPS (Basic)$1.81
EPS (Diluted)$1.81
Shares Outstanding (Basic)65.70M
Shares Outstanding (Diluted)65.78M

Key Highlights

  • 1Same-Property revenue increased by 3.1% to $337.4 million, driven by a 3.3% increase in average rental rates.
  • 2Net Operating Income (NOI) for the Same-Property portfolio grew by 2.8% to $242.8 million.
  • 3Total assets increased to $12.58 billion as of March 31, 2019, up from $12.38 billion at year-end 2018.
  • 4The company acquired its joint venture partner's interest in a San Jose multifamily community for $80.6 million, resulting in a $31.5 million gain on remeasurement.
  • 5Operating lease right-of-use assets and liabilities were recognized for the first time due to the adoption of new lease accounting standards (ASC 842).
  • 6The company issued $500 million in senior unsecured notes, further strengthening its capital position.
  • 7Diluted Earnings Per Share (EPS) was $1.81 for the quarter, up from $1.38 in the prior year period.

Frequently Asked Questions

The primary driver of revenue growth was the increase in average rental rates across Essex's Same-Property portfolio, which rose by 3.3% year-over-year, contributing to a 3.1% increase in Same-Property revenues.

The adoption of ASC 842 on January 1, 2019, resulted in the recognition of operating lease right-of-use assets and operating lease liabilities on the balance sheet. As of March 31, 2019, these amounted to $77.0 million and $79.0 million, respectively.

Essex Property Trust's operating partnership issued $500 million in senior unsecured notes in February and March 2019, with coupon rates of 4.000% and maturity in 2029. The proceeds were used to repay existing debt and for general corporate purposes.

In addition to issuing new unsecured debt, the company repaid $290 million in secured mortgage notes payable in January 2019, demonstrating active management of its debt portfolio.