PALO ALTO, CA--(Marketwire - October 29, 2008) - Essex Property Trust, Inc. (
NYSE:
ESS)
announces its third quarter 2008 earnings results and related business
activities.
Funds from Operations ("FFO") for the third quarter ended 2008, totaled
$40.7 million, or $1.46 per diluted share, compared to $37.3 million, or
$1.33 per diluted share for the third quarter ended 2007.
Net income available to common stockholders for the third quarter ended
2008 totaled $12.4 million, or $0.49 per diluted share, compared to net
income available to common stockholders of $10.0 million, or $0.39 per
diluted share, for the third quarter ended 2007.
The Company's FFO, excluding non-recurring items, increased 10.2% per
diluted share or $3.6 million for the third quarter ended 2008 compared to
the third quarter ended 2007. In the third quarter 2008, the Company
recorded a non-recurring item associated with the write-off of loan costs
related to the sale of Cardiff by the Sea in the amount of $0.2 million,
and in the third quarter of 2007 there were no non-recurring items
recorded.
SAME-PROPERTY OPERATIONS
Same-property operating results exclude properties that do not have
comparable results. The table below illustrates the percentage change in
same-property revenues, operating expenses, and net operating income
("NOI") for the three and nine months ended September 30, 2008 compared to
September 30, 2007:
YTD 2008 compared to YTD
Q3 2008 compared to Q3 2007 2007
---------------------------- ----------------------------
Revenues Expenses NOI Revenues Expenses NOI
-------- -------- -------- -------- -------- --------
Southern
California 1.1% 1.7% 0.9% 1.9% 2.5% 1.6%
Northern
California 8.4% 6.5% 9.3% 10.0% 5.6% 12.2%
Seattle Metro 7.5% 7.1% 7.6% 8.2% 5.6% 9.6%
-------- -------- -------- -------- -------- --------
Same-property
average 4.0% 3.9% 4.0% 4.9% 3.9% 5.4%
======== ======== ======== ======== ======== ========
The table below illustrates the sequential percentage change in
same-property revenues, expenses, and NOI for the third quarter ended 2008
versus the second quarter ended 2008:
Q3 2008 compared to Q2 2008
-------------------------------
Revenues Expenses NOI
--------- --------- ---------
Southern California -0.4% 2.2% -1.5%
Northern California 1.9% 1.6% 2.1%
Seattle Metro 2.6% 7.4% 0.2%
--------- --------- ---------
Same-property average 0.7% 3.1% -0.4%
========= ========= =========
Same-property financial occupancies for the quarters ended are as follows:
--------- --------- ---------
9/30/08 6/30/08 9/30/07
--------- --------- ---------
Southern California 95.4% 95.9% 95.5%
Northern California 97.8% 97.6% 96.8%
Seattle Metro 96.8% 96.6% 95.9%
--------- --------- ---------
Same-property average 96.3% 96.4% 95.9%
========= ========= =========
ACQUISITIONS/DISPOSITIONS
During the third quarter of 2008, the Company acquired two apartment
communities for a total of $88.4 million and sold two apartment communities
and two recreational vehicle parks for a total of $89.9 million.
In July 2008, the Company acquired Chestnut Street Apartments, a 96-unit
apartment community located in Santa Cruz, California, for $22.1 million.
The property was built in 2002 and includes approximately 9,000 square feet
of commercial and retail space. In August, the Company acquired The
Highlands at Wynhaven, a 333-unit apartment community located in Issaquah,
Washington for $66.3 million. The property, which was built in 2000, is
part of "Issaquah Highlands" a renowned master planned community featuring
a variety of housing, commercial and retail space.
During the third quarter of 2008, the Company sold Cardiff by the Sea
Apartments, located in Cardiff, California for $71.0 million; St. Cloud
Apartments, located in Houston, Texas for $8.8 million as well as two
recreational vehicle parks located in El Cajon, California for $10.0
million.
The Company is in contract to sell Coral Gardens, a 200-unit apartment
community located in El Cajon, California in the fourth quarter of 2008 for
$19.8 million. This community is classified as held for sale as of
September 30, 2008.
DEVELOPMENT
During the third quarter of 2008, Essex Apartment Value Fund II, L.P.
("Fund II") had one development project -- Eastlake 2851, a 127-unit
apartment community located in Seattle, Washington, achieved 95% occupancy
for the apartment homes.
The Company has one development project in lease-up -- Belmont Station, a
275-unit apartment community located near downtown Los Angeles. Initial
occupancy at the community began in mid-August 2008 and currently the
community is approximately 50% leased. The Company received a certificate
of occupancy in October for the second half of the project, and
stabilization of the community is expected by June 2009.
Additional information pertaining to the location of all development
projects, related costs and construction timelines can be found on page S-9
in the Company's Supplemental Financial Information package.
LIQUIDITY AND BALANCE SHEET
Common Stock
During the third quarter of 2008, the Company issued 1,130,750 shares of
common stock and during October 2008, the Company issued 78,300 shares at
an average share price of $120.17. Since July 2008, the Company has issued
1,209,050 shares of common stock for $142.8 million, net of fees and
commissions. The proceeds will be used to pay down debt, to fund the
development pipeline and for future investments.
Mortgage Notes Payable
During July 2008, the Company paid off an $89.0 million
cross-collateralized mortgage loan at a fixed rate of 6.62%.
During August 2008, the Company obtained a mortgage loan in the amount of
$53.0 million secured by Mill Creek, with a fixed rate of 5.77%, which
matures in August 2018. In conjunction with the sale of Cardiff by the
Sea, the buyer assumed the mortgage loan for this property totaling $42.2
million at a fixed rate of 5.71%.
During September 2008, the Company obtained mortgage loans in the amount of
$23.0 million at a fixed rate of 5.79% and $22.5 million at a fixed rate of
5.81%, secured by the Palisades and Bridgeport communities, respectively.
Both mortgage loans mature in September 2018.
Secured Line of Credit Facility
The Company has signed a letter of commitment to enter into a new five-year
secured line of credit facility with Freddie Mac to replace the existing
secured line of credit facility that matures in January 2009. The new
secured facility will expand the existing secured facility from $100
million to $150 million, and the new facility will be expandable to $250
million. The Company anticipates that the closing date for the new secured
facility will occur by the end of 2008.
Construction Loans -- Development Pipeline
The Company has approximately $59.5 million undrawn on a construction loan
to fund the Joule Broadway development with approximately $76.5 million in
estimated costs to complete the project. Fund II has construction loans in
place to complete construction of the estimated remaining costs for Studio
40-41 of $16.0 million and the estimated remaining costs for Cielo of $16.7
million.
GUIDANCE
The Company tightens its previous full year 2008 FFO Guidance to a range of
$6.05 to $6.15 per diluted share, and full year Earnings per Share ("EPS")
guidance of $1.95 to $2.05 per diluted share.
CONFERENCE CALL WITH MANAGEMENT
The Company will host an earnings conference call with management to
discuss its quarterly results on Thursday, October 30, at 9:00 a.m. PDT
(12:00 p.m. EDT), which will be broadcast live via the Internet at
www.essexpropertytrust.com, and accessible via phone by dialing (888)
713-4218 and entering the passcode 23792960.
A rebroadcast of the live call will be available online for 90 days and
digitally for 7 days. To access the replay online, go to
www.essexpropertytrust.com and select the third quarter earnings link. To
access the replay digitally, dial (888) 286-8010 using the passcode,
11308027. If you are unable to access the information via the Company's Web
site, please contact the Investor Relations department at
investors@essexpropertytrust.com or by calling (650) 494-3700.
LOS ANGELES PROPERTY TOUR
The Company and UDR plan to host a Los Angeles Property Tour on Tuesday,
November 18, 2008 in Los Angeles. The event will commence at 8:00 a.m. and
will include a breakfast presentation hosted by Essex management focusing
on business plans and performance and will also consist of local property
tours. For additional information about the event, please contact the
Investor Relations department at (650) 849-1649.
CORPORATE PROFILE
Essex Property Trust, Inc., located in Palo Alto, California and traded on
the New York Stock Exchange (
NYSE:
ESS), is a fully integrated real estate
investment trust ("REIT") that acquires, develops, redevelops, and manages
apartment communities located in highly desirable, supply-constrained
markets. Essex currently has ownership interests in 133 apartment
communities (26,790 units), and has 1,658 units in various stages of active
development.
This press release and accompanying supplemental financial information will
be filed electronically on Form 8-K with the Securities and Exchange
Commission and can be accessed from the Company's Web site at
www.essexpropertytrust.com. If you are unable to obtain the information via
the Web, please contact the Investor Relations Department at (650)
494-3700.
FUNDS FROM OPERATIONS RECONCILIATION
Funds from Operations, as defined by the National Association of Real
Estate Investment Trusts ("NAREIT") is generally considered by industry
analysts as an appropriate measure of performance of a REIT. Generally, FFO
adjusts the net income of REITs for non-cash charges such as depreciation
and amortization of rental properties, gains/losses on sales of real estate
and extraordinary items. Management considers FFO to be a useful financial
performance measurement of a REIT because, together with net income and
cash flows, FFO provides investors with an additional basis to evaluate the
performance and ability of a REIT to incur and service debt and to fund
acquisitions and other capital expenditures and the ability to pay
dividends.
FFO does not represent net income or cash flows from operations as defined
by generally accepted accounting principles ("GAAP") and is not intended to
indicate whether cash flows will be sufficient to fund cash needs. It
should not be considered as an alternative to net income as an indicator of
the REIT's operating performance or to cash flows as a measure of
liquidity. FFO does not measure whether cash flow is sufficient to fund all
cash needs including principal amortization, capital improvements and
distributions to shareholders. FFO also does not represent cash flows
generated from operating, investing or financing activities as defined
under GAAP. Management has consistently applied the NAREIT definition of
FFO to all periods presented. However, there is judgment involved and other
REITs' calculation of FFO may vary for this measure, and thus their
disclosures of FFO may not be comparable to Essex's calculation. The
following table sets forth the Company's calculation of FFO for the three
and nine months ended September 30, 2008 and 2007.
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------------- --------------------
Funds from operations 2008 2007 2008 2007
--------- --------- --------- ---------
Net income available to common
stockholders $ 12,376 $ 9,997 $ 37,768 $ 55,177
Adjustments:
Depreciation and amortization 28,581 25,612 84,998 72,496
Gains not included in FFO (2,492) (64) (2,492) (14,565)
Minority interests and
co-investments 2,217 1,777 6,534 6,114
--------- --------- --------- ---------
Funds from operations $ 40,682 $ 37,322 $ 126,808 $ 119,222
========= ========= ========= =========
SAFE HARBOR STATEMENT UNDER THE PRIVATE LITIGATION REFORM ACT OF 1995:
This press release includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include statements regarding the anticipated gain from the
extinguishment of debt, statements under the caption "Guidance" with
respect to 2008 FFO per share and 2008 earnings per share, and statements
and estimates set forth in this press release and also on pages S-9 and
S-10 of the Company's Financial Supplemental Information Package regarding
anticipated timing of the construction start, construction completion,
initial occupancy, stabilization of property developments and
redevelopments and anticipated costs, and statements regarding the closing
date for the Company's new line of credit facility. The Company's actual
results may differ materially from those projected in such forward-looking
statements. Factors that might cause such a difference include, but are
not limited to, changes in market demand for rental units and the impact of
competition and competitive pricing, changes in economic conditions,
unexpected delays in the development and stabilization of development and
redevelopment projects, unexpected difficulties in leasing of development
and redevelopment projects, total costs of renovation and development
investments exceeding our projections and other risks detailed in the
Company's filings with the Securities and Exchange Commission (SEC). All
forward-looking statements are made as of today, and the Company assumes no
obligation to update this information. For more details relating to risk
and uncertainties that could cause actual results to differ materially from
those anticipated in our forward-looking statements, and risks to our
business in general, please refer to our SEC filings, including our most
recent report on Form 10-K for the year ended December 31, 2007.