10-QPeriod: Q2 FY2021

ESSEX PROPERTY TRUST, INC. Quarterly Report for Q2 Ended Jun 30, 2021

Filed July 30, 2021For Securities:ESS

Summary

Essex Property Trust, Inc. (ESS) reported its second-quarter 2021 results, showing a continued trend of revenue decline year-over-year, primarily impacting same-property revenues. This decline is attributed to increased cash concessions and a decrease in average rental rates compared to the prior year's second quarter. Despite these challenges, the company demonstrated resilience, with an improvement in same-property financial occupancy from 94.9% in Q2 2020 to 96.6% in Q2 2021. Additionally, cash delinquencies as a percentage of scheduled rental income improved significantly from 4.3% in Q2 2020 to 2.6% in Q2 2021. Financially, Essex strengthened its balance sheet by issuing new senior unsecured notes and utilizing proceeds to repay maturing debt, including redeeming a significant portion of its outstanding 3.375% senior unsecured notes. The company maintained a strong liquidity position, with substantial unrestricted cash and marketable securities, and ample availability under its credit facilities, indicating its capacity to meet short-term obligations and fund future activities. The report also highlighted gains on the sale of certain real estate assets and a gain on the remeasurement of a co-investment, contributing positively to the period's financial performance.

Financial Highlights

33 data points
Beta

Revenue

$350.98M

Net Income

$64.85M

18.5% Net Margin

EPS (Diluted)

$1.00

Total Assets

$12.75B

Cash & Equivalents

$48.16M

Free Cash Flow

$232.81M

Financial Statements
Beta
Revenue$350.98M
Operating Expenses$257.60M
Operating Income$93.38M
Interest Expense$50.97M
Net Income$64.85M
EPS (Basic)$1.00
EPS (Diluted)$1.00
Shares Outstanding (Basic)65.00M
Shares Outstanding (Diluted)65.08M

Key Highlights

  • 1Same-property revenues decreased by 3.0% year-over-year in Q2 2021, driven by increased concessions and lower average rental rates.
  • 2Same-property financial occupancy improved to 96.6% in Q2 2021 from 94.9% in Q2 2020.
  • 3Cash delinquencies decreased to 2.6% of scheduled rental income in Q2 2021, down from 4.3% in Q2 2020.
  • 4Issued $300 million of senior unsecured notes due 2031 and $450 million of senior unsecured notes due 2028.
  • 5Repurchased and retired 40,000 shares of common stock for $9.2 million during the first quarter of 2021.
  • 6Recognized $100.1 million in gains on sale of real estate and land for the six months ended June 30, 2021.
  • 7Total assets stood at $12.75 billion as of June 30, 2021, with total liabilities at $6.58 billion.

Frequently Asked Questions

The decrease in same-property revenues was primarily driven by an increase in cash concessions and a 3.6% decrease in average rental rates year-over-year for the second quarter of 2021 compared to the second quarter of 2020.

Essex proactively managed its debt by issuing new senior unsecured notes totaling $750 million ($300 million due 2031 and $450 million due 2028) and using the proceeds to repay upcoming debt maturities and redeem existing notes. The company also maintained significant availability under its credit facilities, ensuring adequate liquidity.

The company acknowledges the ongoing impact of COVID-19, noting improved occupancy and reduced delinquencies compared to the prior year. While it has implemented measures to support residents and operations, the long-term impact remains uncertain and depends on various factors including future health developments and economic conditions.

Occupancy showed improvement, with financial occupancy for the Same-Property portfolio increasing to 96.6% in Q2 2021. Cash collections also strengthened, with delinquencies falling to 2.6% in Q2 2021 from 4.3% in Q2 2020, indicating a healthier resident payment environment.