|
|
|
|
|
|
(State or Other Jurisdiction of Incorporation)
|
(I.R.S. Employer Identification No.)
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading
Symbol(s)
|
Name of each exchange on which registered
|
||
Essex Property Trust, Inc.
|
Emerging growth company
|
|
Essex Portfolio, L.P.
|
Emerging growth company
|
|
Item 2.02.
|
Results of Operations and Financial Condition.
|
Item 9.01.
|
Financial Statements and Exhibits.
|
(d)
|
Exhibits.
|
Exhibit No.
|
Description
|
|
Press Release and Supplemental Information for the quarter ended March 31, 2020.
|
||
104
|
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
|
Date: May 6, 2020
|
ESSEX PROPERTY TRUST, INC.
|
|
/s/ Angela L. Kleiman
|
||
Name:
|
Angela L. Kleiman
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
ESSEX PORTFOLIO, L.P.
|
||
By:
|
Essex Property Trust, Inc.
|
|
Its:
|
General Partner
|
|
/s/ Angela L. Kleiman
|
||
Name:
|
Angela L. Kleiman
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Three Months Ended
March 31,
|
%
|
|||||||||||||
2020
|
2019
|
Change
|
||||||||||||
Per Diluted Share
|
||||||||||||||
Net Income
|
|
$4.76
|
|
$1.81
|
163.0%
|
|
||||||||
Total FFO
|
|
$3.44
|
|
$3.34
|
3.0%
|
|
||||||||
Core FFO
|
|
$3.48
|
|
$3.23
|
7.7%
|
|
||||||||
|
• |
Reported Net Income per diluted share for the first quarter of 2020 of $4.76, compared to $1.81 in the first quarter of 2019. The increase is largely attributable to a gain on
remeasurement of co-investments in the first quarter of 2020.
|
• |
Grew Core FFO per diluted share by 7.7% compared to the first quarter of 2019, exceeding the midpoint of the first quarter guidance range by $0.07 per share.
|
• |
Achieved same-property gross revenue and net operating income (“NOI”) growth of 3.2% and 3.9%, respectively, compared to the first quarter of 2019.
|
• |
Increased the dividend by 6.5% to an annual distribution of $8.31 per common share, our 26th consecutive annual increase.
|
• |
Committed $106.4 million in two preferred equity investments and an investment in subordinated loans at a weighted average return of 11.2%.
|
• |
Issued $500.0 million of 12-year senior unsecured notes due in 2032 at an interest rate per annum of 2.65% and an effective yield of 2.69%.
|
• |
Repurchased $176.3 million in common stock at an average price per share of $227.13 under the stock buyback program.
|
• |
As of May 4, 2020, the Company’s immediately available liquidity exceeded $1.0 billion.
|
• |
Acquired its joint venture partner’s 45.0% interest in a land parcel and six communities representing 2,020 apartment homes, together valued at approximately $1.0 billion on a gross
basis. The Company recognized $6.5 million of promote income related to this transaction in the first quarter.
|
Q1 2020 vs.
Q1 2019
|
Q1 2020 vs.
Q4 2019
|
% of Total
|
||||||||||
Gross
Revenues
|
Gross
Revenues
|
Q1 2020
Revenues
|
||||||||||
Southern California
|
||||||||||||
Los Angeles County
|
2.2%
|
|
-0.3%
|
|
19.0%
|
|
||||||
Orange County
|
3.1%
|
|
-0.2%
|
|
11.0%
|
|
||||||
San Diego County
|
3.7%
|
|
0.7%
|
|
8.2%
|
|
||||||
Ventura County
|
2.5%
|
|
0.6%
|
|
4.4%
|
|
||||||
Total Southern California
|
2.7%
|
|
0.0%
|
|
42.6%
|
|
||||||
Northern California
|
||||||||||||
Santa Clara County
|
3.4%
|
|
0.2%
|
|
19.0%
|
|
||||||
Alameda County
|
2.3%
|
|
-0.9%
|
|
6.9%
|
|
||||||
San Mateo County
|
3.3%
|
|
0.1%
|
|
5.1%
|
|
||||||
Contra Costa County
|
2.1%
|
|
-0.5%
|
|
4.8%
|
|
||||||
San Francisco
|
4.1%
|
|
-0.3%
|
|
3.3%
|
|||||||
Total Northern California
|
3.1%
|
|
-0.1%
|
|
39.1%
|
|
||||||
Seattle Metro
|
4.7%
|
|
0.6%
|
|
18.3%
|
|
||||||
Same-Property Portfolio
|
3.2%
|
|
0.1%
|
|
100.0%
|
|
Year-Over-Year Growth
|
||||||||||||
Q1 2020 compared to Q1 2019
|
||||||||||||
Gross
Revenues
|
Operating
Expenses
|
NOI
|
||||||||||
Southern California
|
2.7%
|
|
2.4%
|
|
2.9%
|
|
||||||
Northern California
|
3.1%
|
|
1.8%
|
|
3.5%
|
|
||||||
Seattle Metro
|
4.7%
|
|
-1.8%
|
|
7.6%
|
|
||||||
Same-Property Portfolio
|
3.2%
|
|
1.3%
|
|
3.9%
|
|
Sequential Growth
|
||||||||||||
Q1 2020 compared to Q4 2019
|
||||||||||||
Gross
Revenues
|
Operating
Expenses
|
NOI
|
||||||||||
Southern California
|
0.0%
|
|
2.4%
|
|
-0.9%
|
|
||||||
Northern California
|
-0.1%
|
|
-0.8%
|
|
0.1%
|
|
||||||
Seattle Metro
|
0.6%
|
|
3.3%
|
|
-0.4%
|
|
||||||
Same-Property Portfolio
|
0.1%
|
|
1.4%
|
|
-0.4%
|
|
Financial Occupancies
|
||||||||||||
Quarter Ended
|
||||||||||||
3/31/2020
|
12/31/2019
|
3/31/2019
|
||||||||||
Southern California
|
96.6%
|
|
97.0%
|
|
96.8%
|
|
||||||
Northern California
|
96.9%
|
|
97.2%
|
|
97.1%
|
|
||||||
Seattle Metro
|
96.9%
|
|
97.1%
|
|
96.9%
|
|
||||||
Same-Property Portfolio
|
96.8%
|
|
97.1%
|
|
96.9%
|
|
Project Name
|
Location
|
Total
Apartment
Homes
|
ESS
Ownership
|
% Leased
as of
05/04/20
|
Status
|
||||||||||
500 Folsom
|
San Francisco, CA
|
537
|
50%
|
|
53.3%
|
|
In Lease-Up
|
||||||||
Mylo
|
Santa Clara, CA
|
476
|
100%
|
|
34.7%
|
|
In Lease-Up
|
||||||||
Station Park Green – Phase III
|
San Mateo, CA
|
172
|
100%
|
|
36.6%
|
|
In Lease-Up
|
||||||||
Patina at Midtown
|
San Jose, CA
|
269
|
50%
|
|
0.4%
|
|
Pre-leasing
|
||||||||
Total/Average % Leased
|
1,454
|
35.4%
|
|
Per Diluted
Share
|
||||
Projected midpoint of Core FFO per share for Q1 2020
|
$
|
3.41
|
||
NOI from consolidated communities
|
0.04
|
|||
FFO from Co-Investments
|
0.01
|
|||
G&A and other
|
0.02
|
|||
Core FFO per share for Q1 2020 reported
|
$ |
3.48
|
Three Months Ended
March 31,
|
||||||||
Funds from Operations attributable to common stockholders and unitholders
|
2020
|
2019
|
||||||
Net income available to common stockholders
|
$
|
315,006
|
$
|
118,858
|
||||
Adjustments:
|
||||||||
Depreciation and amortization
|
131,559
|
120,568
|
||||||
Gains not included in FFO
|
(234,694
|
)
|
(31,535
|
)
|
||||
Depreciation and amortization from unconsolidated co-investments
|
12,544
|
15,190
|
||||||
Noncontrolling interest related to Operating Partnership units
|
10,986
|
4,171
|
||||||
Depreciation attributable to third party ownership and other
|
(134
|
)
|
(230
|
)
|
||||
Funds from Operations attributable to common stockholders and unitholders
|
$
|
235,267
|
$
|
227,022
|
||||
FFO per share – diluted
|
$
|
3.44
|
$
|
3.34
|
||||
Expensed acquisition and investment related costs
|
$
|
87
|
$
|
32
|
||||
Loss on sale of marketable securities
|
13
|
58
|
||||||
Unrealized (gains) losses on marketable securities
|
8,696
|
(4,510
|
)
|
|||||
Provision for credit losses
|
(50
|
)
|
-
|
|||||
Equity (income) loss from non-core co-investment(1)
|
110
|
(314
|
)
|
|||||
Interest rate hedge ineffectiveness (2)
|
-
|
181
|
||||||
Gain on early retirement of debt, net
|
(321
|
)
|
(1,336
|
)
|
||||
Co-investment promote income
|
(6,455
|
)
|
(809
|
)
|
||||
Income from early redemption of preferred equity investments
|
(210
|
)
|
(100
|
)
|
||||
General and administrative and other, net
|
820
|
-
|
||||||
Insurance reimbursements, legal settlements, and other, net
|
43
|
(210
|
)
|
|||||
Core Funds from Operations attributable to common stockholders and unitholders
|
$
|
238,000
|
$
|
220,014
|
||||
Core FFO per share – diluted
|
$
|
3.48
|
$
|
3.23
|
||||
Weighted average number of shares outstanding diluted (3)
|
68,359,698
|
68,048,908
|
(1) |
Represents the Company’s share of co-investment income from Real Estate Technology Ventures, L.P.
|
(3) |
Assumes conversion of all outstanding limited partnership units in Essex Portfolio, L.P. (the “Operating Partnership”) into shares of the Company’s common stock and
excludes all DownREIT limited partnership units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.
|
Three Months Ended
March 31,
|
||||||||
2020
|
2019
|
|||||||
Earnings from operations
|
$
|
130,837
|
$ |
115,695
|
||||
Adjustments:
|
||||||||
Corporate-level property management expenses
|
8,759
|
8,429
|
||||||
Depreciation and amortization
|
131,559
|
120,568
|
||||||
Management and other fees from affiliates
|
(2,617
|
)
|
(2,335
|
)
|
||||
General and administrative
|
13,982
|
13,459
|
||||||
Expensed acquisition and investment related costs
|
87
|
32
|
||||||
NOI
|
282,607
|
255,848
|
||||||
Less: Non-same property NOI
|
(30,842
|
)
|
(13,638
|
)
|
||||
Same-Property NOI
|
$
|
251,765
|
$ |
242,210
|
Page(s)
|
|
Consolidated Operating Results
|
S-1 – S-2
|
Consolidated Funds From Operations
|
S-3
|
Consolidated Balance Sheets
|
S-4
|
Debt Summary – March 31, 2020
|
S-5
|
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – March 31, 2020
|
S-6
|
Portfolio Summary by County – March 31, 2020
|
S-7
|
Operating Income by Quarter – March 31, 2020
|
S-8
|
Same-Property Revenue Results by County – Quarters ended March 31, 2020 and 2019, and December 31, 2019
|
S-9
|
Same-Property Operating Expenses – Quarter ended as of March 31, 2020 and 2019
|
S-10
|
Development Pipeline – March 31, 2020
|
S-11
|
Redevelopment Pipeline – March 31, 2020
|
S-12
|
Capital Expenditures – March 31, 2020
|
S-12.1
|
Co-investments and Preferred Equity Investments – March 31, 2020
|
S-13
|
Summary of Apartment Community Acquisitions and Dispositions Activity
|
S-14
|
April 2020 Collections, Operating Statistics, Liquidity, and Near-Term Funding Obligations |
S-15
|
2020 MSA Level Forecast: Supply, Jobs, and Apartment Market Conditions
|
S-16
|
Federal Stimulus is Mitigating the Income Impact of Unemployment in Essex Markets
|
S-16.1
|
Reconciliations of Non-GAAP Financial Measures and Other Terms
|
S-17.1 – S-17.4
|
Consolidated Operating Results
(Dollars in thousands, except share and per share amounts)
|
Three Months Ended
March 31,
|
|||||||
2020
|
2019
|
|||||||
Revenues:
|
||||||||
Rental and other property
|
$
|
389,750
|
$
|
353,888
|
||||
Management and other fees from affiliates
|
2,617
|
2,335
|
||||||
392,367
|
356,223
|
|||||||
Expenses:
|
||||||||
Property operating
|
107,143
|
98,040
|
||||||
Corporate-level property management expenses
|
8,759
|
8,429
|
||||||
Depreciation and amortization
|
131,559
|
120,568
|
||||||
General and administrative
|
13,982
|
13,459
|
||||||
Expensed acquisition and investment related costs
|
87
|
32
|
||||||
261,530
|
240,528
|
|||||||
Earnings from operations
|
130,837
|
115,695
|
||||||
Interest expense, net (1)
|
(53,163
|
)
|
(51,598
|
)
|
||||
Interest and other income (loss)
|
(5,221
|
)
|
12,261
|
|||||
Equity income from co-investments
|
21,297
|
16,276
|
||||||
Gain on early retirement of debt, net
|
321
|
1,336
|
||||||
Gain on remeasurement of co-investment
|
234,694
|
31,535
|
||||||
Net income
|
328,765
|
125,505
|
||||||
Net income attributable to noncontrolling interest
|
(13,759
|
)
|
(6,647
|
)
|
||||
Net income available to common stockholders
|
$
|
315,006
|
$
|
118,858
|
||||
Net income per share - basic
|
$
|
4.77
|
$
|
1.81
|
||||
Shares used in income per share - basic
|
66,043,831
|
65,702,788
|
||||||
Net income per share - diluted
|
$
|
4.76
|
$
|
1.81
|
||||
Shares used in income per share - diluted
|
66,195,415
|
65,783,869
|
(1)
|
Refer to page S-17.2, the section titled “Interest Expense, Net” for additional information.
|
Consolidated Operating Results
Selected Line Item Detail
|
Three Months Ended
March 31,
|
|||||||
(Dollars in thousands)
|
2020
|
2019
|
||||||
Rental and other property
|
||||||||
Rental income
|
$
|
383,498
|
$
|
347,805
|
||||
Other property
|
6,252
|
6,083
|
||||||
Rental and other property
|
$
|
389,750
|
$
|
353,888
|
||||
Property operating expenses
|
||||||||
Real estate taxes
|
$
|
43,012
|
$
|
39,418
|
||||
Administrative
|
22,757
|
21,110
|
||||||
Maintenance and repairs
|
21,871
|
19,666
|
||||||
Utilities
|
19,503
|
17,846
|
||||||
Property operating expenses
|
$
|
107,143
|
$
|
98,040
|
||||
Interest and other income
|
||||||||
Marketable securities and other income
|
$
|
3,481
|
$
|
7,599
|
||||
Loss on sale of marketable securities
|
(13
|
)
|
(58
|
)
|
||||
Provision for credit losses
|
50
|
-
|
||||||
Unrealized gains (losses) on marketable securities
|
(8,696
|
)
|
4,510
|
|||||
Insurance reimbursements, legal settlements, and other, net
|
(43
|
)
|
210
|
|||||
Interest and other income (loss)
|
$
|
(5,221
|
)
|
$
|
12,261
|
|||
Equity income from co-investments
|
||||||||
Equity income from co-investments
|
$
|
3,063
|
$
|
4,985
|
||||
Income from preferred equity investments
|
11,679
|
10,068
|
||||||
Equity income (loss) from non-core co-investment
|
(110
|
)
|
314
|
|||||
Co-investment promote income
|
6,455
|
809
|
||||||
Income from early redemption of preferred equity investments
|
210
|
100
|
||||||
Equity income from co-investments
|
$
|
21,297
|
$
|
16,276
|
||||
Noncontrolling interest
|
||||||||
Limited partners of Essex Portfolio, L.P.
|
$
|
10,986
|
$
|
4,171
|
||||
DownREIT limited partners’ distributions
|
2,136
|
1,564
|
||||||
Third-party ownership interest
|
637
|
912
|
||||||
Noncontrolling interest
|
$
|
13,759
|
$
|
6,647
|
Consolidated Funds From Operations (1)
(Dollars in thousands, except share and per share amounts and in footnotes)
|
Three Months Ended
March 31,
|
|||||||||||
2020
|
2019
|
% Change
|
||||||||||
Funds from operations attributable to common stockholders and unitholders (FFO)
|
||||||||||||
Net income available to common stockholders
|
$
|
315,006
|
$
|
118,858
|
||||||||
Adjustments:
|
||||||||||||
Depreciation and amortization
|
131,559
|
120,568
|
||||||||||
Gains not included in FFO
|
(234,694
|
)
|
(31,535
|
)
|
||||||||
Depreciation and amortization from unconsolidated co-investments
|
12,544
|
15,190
|
||||||||||
Noncontrolling interest related to Operating Partnership units
|
10,986
|
4,171
|
||||||||||
Depreciation attributable to third party ownership and other (2)
|
(134
|
)
|
(230
|
)
|
||||||||
Funds from operations attributable to common stockholders and unitholders
|
$
|
235,267
|
$
|
227,022
|
||||||||
FFO per share-diluted
|
$
|
3.44
|
$
|
3.34
|
3.0
|
%
|
||||||
Components of the change in FFO
|
||||||||||||
Non-core items:
|
||||||||||||
Expensed acquisition and investment related costs
|
$
|
87
|
$
|
32
|
||||||||
Loss on sale of marketable securities
|
13
|
58
|
||||||||||
Unrealized (gains) losses on marketable securities
|
8,696
|
(4,510
|
)
|
|||||||||
Provision for credit losses
|
(50
|
)
|
-
|
|||||||||
Equity (income) loss from non-core co-investment
(3)
|
110
|
(314
|
)
|
|||||||||
Interest rate hedge ineffectiveness (4)
|
-
|
181
|
||||||||||
Gain on early retirement of debt, net
|
(321
|
)
|
(1,336
|
)
|
||||||||
Co-investment promote income
|
(6,455
|
)
|
(809
|
)
|
||||||||
Income from early redemption of preferred equity investments
|
(210
|
)
|
(100
|
)
|
||||||||
General and administrative and other, net
|
820
|
-
|
||||||||||
Insurance reimbursements, legal settlements, and other, net
|
43
|
(210
|
)
|
|||||||||
Core funds from operations attributable to common stockholders and unitholders
|
$
|
238,000
|
$
|
220,014
|
||||||||
Core FFO per share-diluted
|
$
|
3.48
|
$
|
3.23
|
7.7
|
%
|
||||||
Changes in core items:
|
||||||||||||
Same-property NOI
|
$
|
9,555
|
||||||||||
Non-same property NOI
|
17,204
|
|||||||||||
Management and other fees, net
|
282
|
|||||||||||
FFO from co-investments
|
(2,957
|
)
|
||||||||||
Interest and other income
|
(4,118
|
)
|
||||||||||
Interest expense
|
(1,746
|
)
|
||||||||||
General and administrative
|
297
|
|||||||||||
Corporate-level property management expenses
|
(330
|
)
|
||||||||||
Other items, net
|
(201
|
)
|
||||||||||
$
|
17,986
|
|||||||||||
Weighted average number of shares outstanding diluted (5)
|
68,359,698
|
68,048,908
|
(1) |
Refer to page S-17.2, the section titled “Funds from Operations (“FFO”) and Core FFO” for additional information on the Company’s definition and use of FFO and Core FFO.
|
(2) |
The Company consolidates certain co-investments. The noncontrolling interest’s share of net operating income in these investments for the three months ended March 31, 2020 was $1.4
million.
|
(3) |
Represents the Company’s share of co-investment income from Real Estate Technology Ventures, L.P.
|
(4) |
On January 1, 2019, the Company adopted ASU No. 2017-12 “Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities,” which resulted in a cumulative
effect adjustment of approximately $181,000 from interest expense to accumulated other comprehensive income. As a result of the adoption of this standard, the Company recognizes qualifying hedge ineffectiveness through accumulated other
comprehensive income as opposed to current earnings.
|
(5) |
Assumes conversion of all outstanding limited partnership units in the Operating Partnership into shares of the Company’s common stock and excludes all DownREIT limited partnership
units for which the Operating Partnership has the ability and intention to redeem the units for cash and does not consider them to be common stock equivalents.
|
Consolidated Balance Sheets
(Dollars in thousands)
|
||||||||
March 31, 2020
|
December 31, 2019
|
|||||||
Real Estate:
|
||||||||
Land and land improvements
|
$
|
2,983,314
|
$
|
2,773,805
|
||||
Buildings and improvements
|
12,263,293
|
11,264,337
|
||||||
|
15,246,607
|
14,038,142
|
||||||
Less: accumulated depreciation
|
(3,818,489
|
)
|
(3,689,482
|
)
|
||||
11,428,118
|
10,348,660
|
|||||||
Real estate under development
|
435,865
|
546,075
|
||||||
Co-investments
|
997,137
|
1,335,339
|
||||||
12,861,120
|
12,230,074
|
|||||||
Cash and cash equivalents, including restricted cash
|
282,347
|
81,094
|
||||||
Marketable securities
|
148,139
|
144,193
|
||||||
Notes and other receivables
|
34,867
|
134,365
|
||||||
Operating lease right-of-use assets
|
74,428
|
74,744
|
||||||
Prepaid expenses and other assets
|
49,940
|
40,935
|
||||||
Total assets
|
$
|
13,450,841
|
$
|
12,705,405
|
||||
Unsecured debt, net
|
$
|
5,258,263
|
$
|
4,763,206
|
||||
Mortgage notes payable, net
|
887,389
|
990,667
|
||||||
Lines of credit
|
350,000
|
55,000
|
||||||
Operating lease liabilities
|
76,405
|
76,740
|
||||||
Other liabilities
|
428,192
|
378,878
|
||||||
Total liabilities
|
7,000,249
|
6,264,491
|
||||||
Redeemable noncontrolling interest
|
32,643
|
37,410
|
||||||
Equity:
|
||||||||
Common stock
|
7
|
7
|
||||||
Additional paid-in capital
|
6,959,523
|
7,121,927
|
||||||
Distributions in excess of accumulated earnings
|
(708,697
|
)
|
(887,619
|
)
|
||||
Accumulated other comprehensive loss, net
|
(22,668
|
)
|
(13,888
|
)
|
||||
Total stockholders’ equity
|
6,228,165
|
6,220,427
|
||||||
Noncontrolling interest
|
189,784
|
183,077
|
||||||
Total equity
|
6,417,949
|
6,403,504
|
||||||
Total liabilities and equity
|
$
|
13,450,841
|
$
|
12,705,405
|
Debt Summary - March 31, 2020
|
|||||||||||||||||||||||||||||||||||
(Dollars in thousands, except in footnotes)
|
|||||||||||||||||||||||||||||||||||
Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:
|
|||||||||||||||||||||||||||||||||||
Weighted
Average
Interest Rate
|
Percentage
of Total Debt
|
||||||||||||||||||||||||||||||||||
Weighted Average
|
|||||||||||||||||||||||||||||||||||
Balance
Outstanding
|
Interest
Rate
|
Maturity
in Years
|
Unsecured
|
Secured
|
Total
|
||||||||||||||||||||||||||||||
Unsecured Debt, net
|
|||||||||||||||||||||||||||||||||||
Bonds private - fixed rate
|
$
|
200,000
|
4.4
|
%
|
1.2
|
2020
|
$
|
-
|
$
|
185,493
|
$
|
185,493
|
6.8
|
%
|
3.0
|
%
|
|||||||||||||||||||
Bonds public - fixed rate
|
4,750,000
|
3.7
|
%
|
7.7
|
2021
|
500,000
|
31,653
|
531,653
|
4.3
|
%
|
8.6
|
%
|
|||||||||||||||||||||||
Term loan (1)
|
350,000
|
2.7
|
%
|
1.9
|
2022
|
650,000
|
43,188
|
693,188
|
3.1
|
%
|
11.2
|
%
|
|||||||||||||||||||||||
Unamortized net discounts and debt issuance costs
|
(41,737
|
)
|
-
|
-
|
2023
|
600,000
|
2,945
|
602,945
|
3.7
|
%
|
9.8
|
%
|
|||||||||||||||||||||||
5,258,263
|
3.6
|
%
|
7.1
|
2024
|
400,000
|
3,109
|
403,109
|
4.0
|
%
|
6.5
|
%
|
||||||||||||||||||||||||
Mortgage Notes Payable, net
|
2025
|
500,000
|
133,054
|
633,054
|
3.5
|
%
|
10.2
|
%
|
|||||||||||||||||||||||||||
Fixed rate - secured
|
629,501
|
4.7
|
%
|
4.3
|
2026
|
450,000
|
99,405
|
549,405
|
3.5
|
%
|
8.9
|
%
|
|||||||||||||||||||||||
Variable rate - secured (2)
|
255,270
|
2.6
|
%
|
17.0
|
2027
|
350,000
|
153,955
|
503,955
|
3.6
|
%
|
8.1
|
%
|
|||||||||||||||||||||||
Unamortized premiums and debt issuance costs, net
|
2,618
|
-
|
-
|
2028
|
-
|
68,332
|
68,332
|
4.1
|
%
|
1.1
|
%
|
||||||||||||||||||||||||
Total mortgage notes payable
|
887,389
|
4.1
|
%
|
7.9
|
2029
|
500,000
|
31,156
|
531,156
|
4.0
|
%
|
8.6
|
%
|
|||||||||||||||||||||||
2030
|
550,000
|
1,592
|
551,592
|
3.1
|
%
|
8.9
|
%
|
||||||||||||||||||||||||||||
Unsecured Lines of Credit
|
Thereafter
|
800,000
|
130,889
|
930,889
|
3.3
|
%
|
15.1
|
%
|
|||||||||||||||||||||||||||
Line of credit (3)
|
350,000
|
2.4
|
%
|
Subtotal
|
5,300,000
|
884,771
|
6,184,771
|
3.6
|
%
|
100.0
|
%
|
||||||||||||||||||||||||
Line of credit (4)
|
-
|
2.4
|
%
|
Debt Issuance Costs
|
(27,589
|
)
|
(2,425
|
)
|
(30,014
|
)
|
NA
|
NA
|
|||||||||||||||||||||||
Total lines of credit
|
350,000
|
2.4
|
%
|
(Discounts)/Premiums
|
(14,148
|
)
|
5,043
|
(9,105
|
)
|
NA
|
NA
|
||||||||||||||||||||||||
Total
|
$
|
5,258,263
|
$
|
887,389
|
$
|
6,145,652
|
3.6
|
%
|
100.0
|
%
|
|||||||||||||||||||||||||
Total debt, net
|
$
|
6,495,652
|
3.6
|
% |
(1)
|
The unsecured term loan has a variable interest rate of LIBOR plus 0.95%. The Company has interest rate swap contracts with an aggregate notional amount of $175 million, which
effectively converts the interest rate on $175 million of the term loan to a fixed rate of 2.3%.
|
(2) |
$255.3 million of variable rate debt is tax exempt to the note holders.
|
(3) |
This unsecured line of credit facility has a capacity of $1.2 billion, with a scheduled maturity date in December 2023 with one 18-month extension, exercisable at the Company’s
option. The underlying interest rate on this line is based on a tiered rate structure tied to the Company’s corporate ratings and is currently at LIBOR plus 0.825%.
|
(4) |
This unsecured line of credit facility has a capacity $35.0 million, with a scheduled maturity date in February 2021. The underlying interest rate on this line is based on a tiered
rate structure tied to the Company’s corporate ratings and is currently at LIBOR plus 0.825%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Capitalization Data
|
|
|
|
|
|
Public Bond Covenants (1)
|
|
Actual
|
|
Requirement
|
|||||
Total debt, net
|
|
|
$
|
6,495,652
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
Debt to Total Assets:
|
|
38%
|
< 65%
|
|||||
Common stock and potentially dilutive securities
|
|
|
|
|
|
||||||||||
Common stock outstanding
|
|
65,412
|
|
|
|
|
|||||||||
Limited partnership units (1)
|
|
2,254
|
|
|
|
|
|||||||||
Options-treasury method
|
|
12
|
|
|
Secured Debt to Total Assets:
|
|
5%
|
< 40%
|
|||||||
Total shares of common stock and potentially dilutive securities
|
|
67,678
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
||||||
Common stock price per share as of March 31, 2020
|
$
|
220.24
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
Interest Coverage:
|
|
484%
|
> 150%
|
||||
Total equity capitalization
|
$
|
14,905,403
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|||||||
Total market capitalization
|
$
|
21,401,055
|
|
|
Unsecured Debt Ratio (2):
|
|
264%
|
> 150%
|
|||||||
|
|
|
|
|
|
|
|
|
|
||||||
Ratio of debt to total market capitalization
|
|
|
30.4%
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
Selected Credit Ratios (3)
|
|
Actual
|
||||||
Credit Ratings
|
|
|
|
|
|
|
|
||||||||
Rating Agency
|
|
Rating
|
Outlook
|
|
|
|
|
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized:
|
|
5.9
|
|||||
Fitch
|
BBB+
|
Stable
|
|
|
|
|
|
|
|||||||
Moody’s
|
Baa1
|
Stable
|
|
|
|
|
Unencumbered NOI to Adjusted Total NOI:
|
|
90%
|
||||||
Standard & Poor’s
|
BBB+
|
Stable
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
(1) Refer to page S-17.4 for
additional information on the Company’s Public Bond Covenants.
|
|||||||||
(1) Assumes conversion of all
outstanding limited partnership units in the OperatingPartnership into shares of the Company’s common stock.
|
(2) Unsecured Debt Ratio is
unsecured assets (excluding investments in co-investments) divided by unsecured indebtedness.
|
||||||||||||||
(3) Refer to pages S-17.1 to
S-17.4, the section titled “Reconciliations of Non-GAAP Financial Measures and Other Terms” for additional information on the Company’s Selected Credit Ratios.
|
Apartment Homes
|
Average Monthly Rental Rate (1)
|
Percent of NOI (2)
|
||||||||||||||||||||||||||||||||||||||
Region - County
|
Consolidated (3)
|
Unconsolidated
Co-investments (4)
|
Apartment
Homes in
Development (5)
|
Total
|
Consolidated
|
Unconsolidated
Co-investments (6)
|
Total (7)
|
Consolidated
|
Unconsolidated
Co-investments (6)
|
Total (7)
|
||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
9,097
|
1,563
|
200
|
10,860
|
$
|
2,484
|
$
|
2,190
|
$
|
2,460
|
17.6
|
%
|
15.7
|
%
|
17.4
|
%
|
||||||||||||||||||||||||
Orange County
|
5,554
|
1,149
|
-
|
6,703
|
2,248
|
1,972
|
2,222
|
9.8
|
%
|
10.8
|
%
|
9.9
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
4,824
|
616
|
-
|
5,440
|
1,995
|
1,879
|
1,988
|
7.8
|
%
|
5.6
|
%
|
7.6
|
%
|
|||||||||||||||||||||||||||
Ventura County and Other
|
3,200
|
693
|
-
|
3,893
|
1,845
|
2,222
|
1,885
|
4.9
|
%
|
8.1
|
%
|
5.2
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
22,675
|
4,021
|
200
|
26,896
|
2,232
|
2,088
|
2,220
|
40.1
|
%
|
40.2
|
%
|
40.1
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||
Santa Clara County (8)
|
9,176
|
1,237
|
269
|
10,682
|
2,898
|
2,965
|
2,902
|
20.9
|
%
|
16.4
|
%
|
20.6
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
3,959
|
1,309
|
-
|
5,268
|
2,577
|
2,497
|
2,566
|
7.9
|
%
|
16.4
|
%
|
8.5
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
2,651
|
195
|
107
|
2,953
|
3,195
|
3,881
|
3,220
|
6.2
|
%
|
3.7
|
%
|
6.0
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
-
|
-
|
2,619
|
2,493
|
-
|
2,493
|
5.3
|
%
|
0.0
|
%
|
4.9
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
1,343
|
537
|
-
|
1,880
|
3,274
|
4,008
|
3,397
|
3.4
|
%
|
4.1
|
%
|
3.4
|
%
|
|||||||||||||||||||||||||||
Total Northern California
|
19,748
|
3,278
|
376
|
23,402
|
2,845
|
2,996
|
2,857
|
43.7
|
%
|
40.6
|
%
|
43.4
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,343
|
1,890
|
-
|
12,233
|
1,933
|
1,931
|
1,933
|
16.2
|
%
|
19.2
|
%
|
16.5
|
%
|
|||||||||||||||||||||||||||
Total
|
52,766
|
9,189
|
576
|
62,531
|
$
|
2,403
|
$
|
2,375
|
$
|
2,401
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
(1) |
Average monthly rental rate is defined as the total scheduled monthly rental income (actual rent for occupied apartment homes plus market rent for vacant apartment homes) divided
by the number of apartment homes.
|
(2) |
Represents the percentage of actual NOI for the quarter ended March 31, 2020. See the section titled “Net Operating Income (“NOI”) and Same-Property NOI Reconciliations” on page
S-17.3.
|
(3) |
Includes two communities consisting of 648 apartment homes that are producing partial income due to lease-up.
|
(4) |
Includes one community consisting of 537 apartment homes that is producing partial income due to lease-up.
|
(5) |
Includes development communities with no rental income.
|
(6) |
Co-investment amounts weighted for Company’s pro rata share.
|
(7) |
At Company’s pro rata share.
|
(8) |
Includes all communities in Santa Clara County and one community in Santa Cruz County.
|
Apartment
Homes
|
Q1 ‘20
|
Q4 ‘19
|
Q3 ‘19
|
Q2 ‘19
|
Q1 ‘19
|
|||||||||||||||||||
Rental and other property revenues:
|
||||||||||||||||||||||||
Same-property
|
47,347
|
$
|
346,456
|
$
|
346,224
|
$
|
340,383
|
$
|
338,275
|
$
|
335,658
|
|||||||||||||
Acquisitions (2)
|
2,869
|
21,924
|
7,201
|
6,019
|
3,538
|
987
|
||||||||||||||||||
Development (3)
|
968
|
4,075
|
3,417
|
1,883
|
1,217
|
1,158
|
||||||||||||||||||
Redevelopment
|
621
|
5,401
|
5,317
|
5,272
|
5,240
|
5,229
|
||||||||||||||||||
Non-residential/other, net (4)
|
961
|
11,894
|
10,702
|
10,947
|
11,105
|
10,856
|
||||||||||||||||||
Total rental and other property revenues
|
52,766
|
389,750
|
372,861
|
364,504
|
359,375
|
353,888
|
||||||||||||||||||
Property operating expenses:
|
||||||||||||||||||||||||
Same-property
|
94,691
|
93,412
|
95,421
|
91,043
|
93,448
|
|||||||||||||||||||
Acquisitions (2)
|
6,830
|
2,181
|
2,020
|
945
|
332
|
|||||||||||||||||||
Development (3)
|
1,447
|
1,208
|
706
|
506
|
524
|
|||||||||||||||||||
Redevelopment
|
1,663
|
1,725
|
1,734
|
1,586
|
1,650
|
|||||||||||||||||||
Non-residential/other, net (4) (5)
|
2,512
|
2,598
|
2,292
|
1,110
|
2,086
|
|||||||||||||||||||
Total property operating expenses
|
107,143
|
101,124
|
102,173
|
95,190
|
98,040
|
|||||||||||||||||||
Net operating income (NOI):
|
||||||||||||||||||||||||
Same-property
|
251,765
|
252,812
|
244,962
|
247,232
|
242,210
|
|||||||||||||||||||
Acquisitions (2)
|
15,094
|
5,020
|
3,999
|
2,593
|
655
|
|||||||||||||||||||
Development (3)
|
2,628
|
2,209
|
1,177
|
711
|
634
|
|||||||||||||||||||
Redevelopment
|
3,738
|
3,592
|
3,538
|
3,654
|
3,579
|
|||||||||||||||||||
Non-residential/other, net (4)
|
9,382
|
8,104
|
8,655
|
9,995
|
8,770
|
|||||||||||||||||||
Total NOI
|
$
|
282,607
|
$
|
271,737
|
$
|
262,331
|
$
|
264,185
|
$
|
255,848
|
||||||||||||||
Same-property metrics
|
||||||||||||||||||||||||
Operating margin
|
73
|
%
|
73
|
%
|
72
|
%
|
73
|
%
|
72
|
%
|
||||||||||||||
Annualized turnover (6)
|
39
|
%
|
41
|
%
|
56
|
%
|
48
|
%
|
40
|
%
|
||||||||||||||
Financial occupancy (7)
|
96.8
|
%
|
97.1
|
%
|
96.0
|
%
|
96.6
|
%
|
96.9
|
%
|
(1) |
Includes consolidated communities only.
|
(2) |
Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2019.
|
(3) |
Development includes properties developed which did not have comparable stabilized results as of January 1, 2019.
|
(4) |
Non-residential/other, net consists of revenues generated from retail space, commercial properties, held for sale properties, disposition properties, student housing, properties
undergoing significant construction activities that do not meet our redevelopment criteria, and three communities located in the California counties of Riverside, Santa Barbara, and Santa Cruz, which the Company does not consider its core
markets.
|
(5) |
Includes other expenses and intercompany eliminations pertaining to self-insurance.
|
(6) |
Annualized turnover is defined as the number of apartment homes turned over during the quarter, annualized, divided by the total number of apartment homes.
|
(7) |
Financial occupancy is defined as the percentage resulting from dividing actual rental income by total scheduled rental income (actual rent for occupied apartment homes plus market
rent for vacant apartment homes).
|
Average Monthly Rental Rate
|
Financial Occupancy
|
Gross Revenues
|
Sequential Gross
Revenues
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Region - County
|
Apartment
Homes
|
Q1 ‘20 %
of Actual
NOI
|
Q1 ‘20
|
Q1 ‘19
|
% Change
|
Q1 ‘20
|
Q1 ‘19
|
% Change
|
Q1 ‘20
|
Q1 ‘19
|
% Change
|
Q4 ‘19
|
% Change
|
|||||||||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
8,641
|
18.4
|
%
|
$
|
2,492
|
$
|
2,433
|
2.4
|
%
|
96.4
|
%
|
96.7
|
%
|
-0.3
|
%
|
$
|
65,959
|
$
|
64,563
|
2.2
|
%
|
$
|
66,134
|
-0.3
|
%
|
|||||||||||||||||||||||||||
Orange County
|
5,554
|
10.8
|
%
|
2,248
|
2,189
|
2.7
|
%
|
96.4
|
%
|
96.7
|
%
|
-0.3
|
%
|
38,050
|
36,904
|
3.1
|
%
|
38,110
|
-0.2
|
%
|
||||||||||||||||||||||||||||||||
San Diego County
|
4,582
|
8.3
|
%
|
1,988
|
1,933
|
2.8
|
%
|
97.2
|
%
|
96.6
|
%
|
0.6
|
%
|
28,381
|
27,359
|
3.7
|
%
|
28,197
|
0.7
|
%
|
||||||||||||||||||||||||||||||||
Ventura County
|
2,577
|
4.5
|
%
|
1,873
|
1,827
|
2.5
|
%
|
97.2
|
%
|
97.2
|
%
|
0.0
|
%
|
15,131
|
14,758
|
2.5
|
%
|
15,046
|
0.6
|
%
|
||||||||||||||||||||||||||||||||
Total Southern California
|
21,354
|
42.0
|
%
|
2,246
|
2,189
|
2.6
|
%
|
96.6
|
%
|
96.8
|
%
|
-0.2
|
%
|
147,521
|
143,584
|
2.7
|
%
|
147,487
|
0.0
|
%
|
||||||||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
7,523
|
20.0
|
%
|
2,858
|
2,768
|
3.3
|
%
|
97.2
|
%
|
97.3
|
%
|
-0.1
|
%
|
66,164
|
64,009
|
3.4
|
%
|
66,043
|
0.2
|
%
|
||||||||||||||||||||||||||||||||
Alameda County
|
2,954
|
6.9
|
%
|
2,612
|
2,558
|
2.1
|
%
|
96.3
|
%
|
96.7
|
%
|
-0.4
|
%
|
23,818
|
23,293
|
2.3
|
%
|
24,045
|
-0.9
|
%
|
||||||||||||||||||||||||||||||||
San Mateo County
|
1,830
|
5.3
|
%
|
3,088
|
2,967
|
4.1
|
%
|
96.8
|
%
|
97.6
|
%
|
-0.8
|
%
|
17,525
|
16,960
|
3.3
|
%
|
17,511
|
0.1
|
%
|
||||||||||||||||||||||||||||||||
Contra Costa County
|
2,270
|
4.9
|
%
|
2,385
|
2,327
|
2.5
|
%
|
97.0
|
%
|
97.3
|
%
|
-0.3
|
%
|
16,730
|
16,384
|
2.1
|
%
|
16,812
|
-0.5
|
%
|
||||||||||||||||||||||||||||||||
San Francisco
|
1,178
|
3.1
|
%
|
3,159
|
3,048
|
3.6
|
%
|
96.4
|
%
|
96.1
|
%
|
0.3
|
%
|
11,467
|
11,015
|
4.1
|
%
|
11,496
|
-0.3
|
%
|
||||||||||||||||||||||||||||||||
Total Northern California
|
15,755
|
40.2
|
%
|
2,793
|
2,709
|
3.1
|
%
|
96.9
|
%
|
97.1
|
%
|
-0.2
|
%
|
135,704
|
131,661
|
3.1
|
%
|
135,907
|
-0.1
|
%
|
||||||||||||||||||||||||||||||||
Seattle Metro
|
10,238
|
17.8
|
%
|
1,933
|
1,847
|
4.7
|
%
|
96.9
|
%
|
96.9
|
%
|
0.0
|
%
|
63,231
|
60,413
|
4.7
|
%
|
62,830
|
0.6
|
%
|
||||||||||||||||||||||||||||||||
Total Same-Property
|
47,347
|
100.0
|
%
|
$
|
2,360
|
$
|
2,288
|
3.1
|
%
|
96.8
|
%
|
96.9
|
%
|
-0.1
|
%
|
$
|
346,456
|
$
|
335,658
|
3.2
|
%
|
$
|
346,224
|
0.1
|
%
|
Same-Property Operating Expenses - Quarter to Date as of March 31, 2020 and 2019
|
||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Based on 47,347 apartment homes
|
||||||||||||||||
Q1 ‘20
|
Q1 ‘19
|
% Change
|
% of Op. Ex.
|
|||||||||||||
Same-property operating expenses:
|
||||||||||||||||
Real estate taxes
|
$
|
36,957
|
$
|
37,065
|
-0.3
|
%
|
39.0
|
%
|
||||||||
Maintenance and repairs
|
19,313
|
18,581
|
3.9
|
%
|
20.4
|
%
|
||||||||||
Administrative
|
16,630
|
16,496
|
0.8
|
%
|
17.6
|
%
|
||||||||||
Utilities
|
17,163
|
16,895
|
1.6
|
%
|
18.1
|
%
|
||||||||||
Insurance and other
|
4,628
|
4,411
|
4.9
|
%
|
4.9
|
%
|
||||||||||
Total same-property operating expenses
|
$
|
94,691
|
$
|
93,448
|
1.3
|
%
|
100.0
|
%
|
Development Pipeline - March 31, 2020
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per apartment home amounts in thousands and except in footnotes)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Project Name
|
Location
|
Ownership
%
|
Estimated
Apartment
Homes
|
Estimated
Commercial
sq. feet
|
Incurred to
Date
|
Remaining
Costs
|
Estimated
Total Cost |
Essex Est.
Total Cost (1)
|
Cost per
Apartment
Home (2)
|
Average
%
Occupied
|
%
Leased
(3)
|
Construction
Start
|
Initial
Occupancy
|
Stabilized
Operations
|
||||||||||||||||||||||||||||||||||||||||
Development Projects - Consolidated (4)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Station Park Green - Phase III
|
San Mateo, CA
|
100
|
%
|
172
|
-
|
124
|
10
|
134
|
134
|
779
|
25
|
%
|
30
|
%
|
Q3 2017
|
Q1 2020
|
Q3 2020
|
|||||||||||||||||||||||||||||||||||||
Station Park Green - Phase IV
|
San Mateo, CA
|
100
|
%
|
107
|
-
|
21
|
73
|
94
|
94
|
879
|
0
|
%
|
0
|
%
|
Q3 2019
|
Q4 2021
|
Q2 2022
|
|||||||||||||||||||||||||||||||||||||
Mylo (5)
|
Santa Clara, CA
|
100
|
%
|
476
|
-
|
203
|
23
|
226
|
226
|
475
|
23
|
%
|
35
|
%
|
Q3 2016
|
Q3 2019
|
Q2 2021
|
|||||||||||||||||||||||||||||||||||||
Wallace on Sunset (6)
|
Hollywood, CA
|
100
|
%
|
200
|
4,700
|
78
|
27
|
105
|
105
|
500
|
0
|
%
|
0
|
%
|
Q4 2017
|
Q3 2020
|
Q2 2021
|
|||||||||||||||||||||||||||||||||||||
Total Development Projects - Consolidated
|
|
955 |
|
4,700
|
|
426
|
|
133
|
|
559
|
|
559
|
|
580
|
||||||||||||||||||||||||||||||||||||||||
Land Held for Future Development - Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Projects
|
Various
|
100
|
%
|
21
|
-
|
21
|
21
|
|||||||||||||||||||||||||||||||||||||||||||||||
Total Development Pipeline - Consolidated
|
|
955
|
|
4,700
|
|
447
|
|
133
|
|
580
|
|
580 | ||||||||||||||||||||||||||||||||||||||||||
Development Projects - Joint Venture (4)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
Patina at Midtown
|
San Jose, CA
|
50
|
%
|
269
|
-
|
126
|
10
|
136
|
68
|
506
|
0
|
%
|
0
|
%
|
Q3 2017
|
Q2 2020
|
Q2 2021
|
|||||||||||||||||||||||||||||||||||||
500 Folsom (7)
|
San Francisco, CA
|
50
|
%
|
537
|
6,000
|
390
|
25
|
415
|
208
|
763
|
43
|
%
|
47
|
%
|
Q4 2015
|
Q3 2019
|
Q4 2020
|
|||||||||||||||||||||||||||||||||||||
Total Development Projects - Joint Venture
|
|
806 |
|
6,000
|
|
516 |
|
35
|
|
551
|
|
276
|
$
|
677
|
||||||||||||||||||||||||||||||||||||||||
Grand Total - Development Pipeline
|
1,761
|
10,700
|
$
|
963
|
$
|
168
|
$
|
1,131
|
856
|
|||||||||||||||||||||||||||||||||||||||||||||
Essex Cost Incurred to Date - Pro Rata
|
(705
|
)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Essex Remaining Commitment
|
$
|
151
|
(1) |
The Company’s share of the estimated total cost of the project.
|
(2) |
Net of the estimated allocation to the retail component of the project.
|
(3) |
Calculations are based on multifamily operations only and are as of March 31, 2020.
|
(4) |
For the first quarter of 2020, the Company’s cost includes $4.7 million of capitalized interest, $1.6 million of capitalized overhead and $0.3 million of development fees (such development fees
reduced G&A expenses).
|
(5) |
Cost incurred to date does not include a deduction of $4.7 million for accumulated depreciation recorded during the period when the property was held as a retail operating asset.
|
(6) |
Cost incurred to date does not include a deduction of $6.3 million for accumulated depreciation recorded during the period when the property was held as a retail operating asset.
|
(7) |
Estimated cost incurred to date and total cost are net of a projected value for low income housing tax credit proceeds and the value of the tax exempt bond structure.
|
Redevelopment Pipeline - March 31, 2020
|
|||||||||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||||||
Total
|
Estimated
|
Estimated
|
NOI
|
||||||||||||||||||||||||||
Apartment
|
Incurred
|
Remaining
|
Total
|
Project
|
Three Months Ended
|
||||||||||||||||||||||||
Region/Project Name
|
Homes
|
To Date
|
Cost
|
Cost
|
Start Date
|
2020
|
2019
|
||||||||||||||||||||||
Consolidated - Redevelopment Projects
|
|||||||||||||||||||||||||||||
Same-Property (1)
|
|||||||||||||||||||||||||||||
Southern California
|
|||||||||||||||||||||||||||||
The Henley
|
215
|
$
|
21,000
|
$
|
2,600
|
$
|
23,600
|
Q1 2014
|
|||||||||||||||||||||
The Blake LA
|
196
|
10,400
|
1,800
|
12,200
|
Q4 2016
|
||||||||||||||||||||||||
The Palms at Laguna Niguel
|
460
|
6,400
|
3,100
|
9,500
|
Q4 2016
|
||||||||||||||||||||||||
Total Same-Property - Redevelopment Projects
|
871
|
$
|
37,800
|
$
|
7,500
|
$
|
45,300
|
$
|
4,281
|
$
|
4,219
|
||||||||||||||||||
Non-Same Property
|
|||||||||||||||||||||||||||||
Southern California
|
|||||||||||||||||||||||||||||
Bunker Hill Towers
|
456
|
$
|
83,100
|
$
|
4,300
|
$
|
87,400
|
Q3 2013
|
|||||||||||||||||||||
Total Non-Same Property - Redevelopment Projects
|
456
|
$
|
83,100
|
$
|
4,300
|
$
|
87,400
|
$
|
2,250
|
$
|
2,129
|
(1) |
Redevelopment activities are ongoing at these communities, but the communities have stabilized operations, therefore results are classified in same-property results.
|
Capital Expenditures - March 31, 2020 (1)
|
||||||||||||||||||||
(Dollars in thousands, except in footnotes and per apartment home amounts)
|
||||||||||||||||||||
|
||||||||||||||||||||
Revenue Generating Capital Expenditures (2)
|
Q1 ‘20
|
Q4 ‘19
|
Q3 ‘19
|
Q2 ‘19
|
Trailing 4
Quarters
|
|||||||||||||||
Same-property portfolio
|
$
|
18,046
|
$
|
15,128
|
$
|
21,032
|
$
|
14,799
|
$
|
69,005
|
||||||||||
Non-same property portfolio
|
3,599
|
1,147
|
3,158
|
2,104
|
10,008
|
|||||||||||||||
Total revenue generating capital expenditures
|
$
|
21,645
|
$
|
16,275
|
$
|
24,190
|
$
|
16,903
|
$
|
79,013
|
||||||||||
Number of same-property interior renovations
|
777
|
993
|
1,302
|
1,079
|
4,151
|
|||||||||||||||
Number of total consolidated interior renovations
|
917
|
1,154
|
1,396
|
1,093
|
4,560
|
|||||||||||||||
Non-Revenue Generating Capital Expenditures (3)
|
Q1 ‘20
|
Q4 ‘19
|
Q3 ‘19
|
Q2 ‘19
|
Trailing 4
Quarters
|
|||||||||||||||
Non-revenue generating capital expenditures (4)
|
$
|
15,315
|
$
|
26,282
|
$
|
25,273
|
$
|
22,763
|
$
|
89,633
|
||||||||||
Average apartment homes in quarter
|
51,670
|
50,521
|
50,065
|
49,511
|
50,442
|
|||||||||||||||
Capital expenditures per apartment homes in the quarter
|
$
|
296
|
$
|
520
|
$
|
505
|
$
|
460
|
$
|
1,777
|
(1) |
The Company incurred $0.1 million of capitalized interest, $3.3 million of capitalized overhead and $0.1 million of co-investment fees related to redevelopment in Q1 2020.
|
(2) |
Represents revenue generating or expense saving expenditures, such as full-scale redevelopments shown on page S-12, interior unit turn renovations, enhanced amenities and certain resource
management initiatives.
|
(3) |
Represents roof replacements, paving, building and mechanical systems, exterior painting, siding, etc.
|
(4) |
Non-revenue generating capital expenditures does not include expenditures incurred due to changes in governmental regulations that the Company would not have incurred otherwise and retail,
furniture and fixtures, and expenditures in which the Company expects to be reimbursed.
|
Co-investments and Preferred Equity Investments - March 31, 2020
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||
|
Weighted
Average Essex
Ownership
Percentage
|
Apartment
Homes
|
Total
Undepreciated
Book Value
|
Debt
Amount
|
Essex
Book
Value
|
Weighted
Average
Borrowing Rate
|
Remaining
Term of
Debt (in Years)
|
Three Months Ended
March 31, 2020 |
||||||||||||||||||||||||
Operating and Other Non-Consolidated Joint Ventures
|
NOI
|
|||||||||||||||||||||||||||||||
Wesco I, III, IV, and V
|
51
|
%
|
5,310
|
$
|
1,721,632
|
$
|
1,033,444
|
$
|
209,742
|
3.7
|
%
|
4.0
|
$
|
25,847
|
||||||||||||||||||
BEXAEW, BEX II, BEX III, and BEX IV
|
50
|
%
|
2,691
|
824,450
|
423,397
|
156,869
|
3.6
|
%
|
3.7
|
12,191
|
||||||||||||||||||||||
CPPIB (1)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
2,008
|
||||||||||||||||||||||||
Other
|
48
|
%
|
651
|
214,337
|
167,078
|
21,023
|
3.5
|
%
|
3.7
|
3,595
|
||||||||||||||||||||||
Total Operating and Other Non-Consolidated Joint Ventures
|
8,652
|
$
|
2,760,419
|
$
|
1,623,919
|
$
|
387,634
|
3.6
|
%
|
3.9
|
$
|
43,641
|
||||||||||||||||||||
Pre-Development and Development Non-Consolidated Joint Ventures (2)
|
50
|
%
|
806
|
517,367
|
178,235
|
158,145
|
2.7
|
%
|
23.7
|
(3)
|
1,865
|
|||||||||||||||||||||
Total Non-Consolidated Joint Ventures
|
9,458
|
$
|
3,277,786
|
$
|
1,802,154
|
$
|
545,779
|
3.6
|
%
|
5.8
|
$
|
45,506
|
||||||||||||||||||||
Essex Portion of
NOI and Expenses
|
||||||||||||||||||||||||||||||||
NOI
|
$
|
23,685
|
||||||||||||||||||||||||||||||
Depreciation
|
(12,544
|
)
|
||||||||||||||||||||||||||||||
Interest expense and other
|
(8,078
|
)
|
||||||||||||||||||||||||||||||
Equity income (loss) from non-core co-investment
|
(110
|
)
|
||||||||||||||||||||||||||||||
Co-investment promote income
|
6,455
|
|||||||||||||||||||||||||||||||
Net income from operating and other co-investments
|
$
|
9,408
|
||||||||||||||||||||||||||||||
Weighted
Average
Preferred
Return
|
Weighted
Average
Expected
Term
|
Income from
Preferred Equity
Investments
|
||||||||||||||||||||||||||||||
Income from preferred equity investments
|
$
|
11,679
|
||||||||||||||||||||||||||||||
Income from early redemption of preferred equity investments
|
210
|
|||||||||||||||||||||||||||||||
Preferred Equity Investments (4)
|
$
|
451,358
|
10.6
|
%
|
2.0
|
$
|
11,889
|
|||||||||||||||||||||||||
Total Co-investments
|
$
|
997,137
|
$
|
21,297
|
(1) |
In January 2020, the Company purchased CPPIB’s 45% interest in each of a land parcel and six communities totaling 2,020 apartment homes. The NOI included in the three months ended March 31,
2020 represents the Company’s pro-rata share prior to the acquisition.
|
(2) |
The Company has ownership interests in development co-investments, which are detailed on page S-11.
|
(3) |
$132.0 million of the debt related to 500 Folsom, one of the Company’s development co-investments, is financed by tax exempt bonds with a maturity date of January 2052.
|
(4) |
As of March 31, 2020, the Company has invested in 17 preferred equity investments.
|
Summary of Apartment Community Acquisitions and Dispositions Activity
|
||||||||||||||||||||||||||
Year to date as of March 31, 2020
|
||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||
|
|
|
||||||||||||||||||||||||
Acquisitions
|
Essex
|
Total
|
||||||||||||||||||||||||
Property Name
|
Location
|
Apartment
Homes
|
Ownership
Percentage
|
Entity
|
Date
|
Contract
Price
|
Price per
Apartment Home (2)
|
Average
Rent
|
||||||||||||||||||
CPPIB Portfolio (1)
|
Various
|
2,020
|
100
|
%
|
EPLP
|
Jan-20
|
$
|
463,400
|
$
|
497
|
$
|
2,732
|
||||||||||||||
Q1 2020
|
2,020
|
$
|
463,400
|
$
|
497
|
|||||||||||||||||||||
|
|
|
||||||||||||||||||||||||
Dispositions
|
Essex
|
Total
|
||||||||||||||||||||||||
Property Name
|
Location
|
Apartment
Homes
|
Ownership
Percentage |
Entity
|
Date
|
Sales
Price |
Price per
Apartment Home |
(1)
|
In January 2020, the Company purchased the joint venture partner’s 45% membership interest in a land parcel and six communities representing 2,020 apartments homes based on a total
valuation of approximately $1.0 billion.
|
(2)
|
Price per apartment home excludes value allocated to retail space.
|
Collections
|
Liquidity and Near-Term Funding Obligations
|
||||||||||||||
Total Residential Portfolio (61,955 units)
|
April 2020
|
1Q 2020
|
Liquidity Profile
|
April 30, 2020
|
|||||||||||
Cash delinquencies as % of scheduled rent
|
5.0
|
%
|
0.3
|
%
|
Unsecured credit facility - committed
|
$
|
1,235
|
||||||||
|
Balance outstanding
|
350
|
|||||||||||||
% of units requesting assistance
|
7.4
|
%
|
N/A
|
Undrawn portion of line of credit
|
$
|
885
|
|||||||||
Cash, cash equivalents & marketable securities (1)
|
129
|
||||||||||||||
Breakdown of units requesting assistance
|
Total liquidity
|
$
|
1,014
|
||||||||||||
% of units paid full April rent
|
36
|
%
|
N/A
|
||||||||||||
% of units paid partial April rent
|
36
|
%
|
N/A
|
||||||||||||
% of units paid no April rent
|
28
|
%
|
N/A
|
||||||||||||
Near-Term Funding Obligations
|
|||||||||||||||
% of units delinquent in April not requesting assistance (1)
|
2.2
|
%
|
N/A
|
Unfunded development commitments - 2020 & 2021
|
$
|
151
|
|||||||||
2020 Debt maturities (2)
|
-
|
||||||||||||||
2021 Debt maturities
|
532
|
||||||||||||||
Total
|
$ |
683 |
Operating Statistics
|
|||||||||||||||
Same-Property Portfolio (47,347 units)
|
April 2020
|
April 2019
|
|||||||||||||
Cash delinquencies as % of scheduled rent
|
5.0
|
%
|
0.4
|
%
|
|||||||||||
|
Ratio of liquidity to near-term funding obligations
|
1.5
|
|||||||||||||
New lease rates
|
1.5
|
%
|
2.5
|
%
|
|||||||||||
Renewal rates
|
2.4
|
%
|
4.8
|
%
|
|||||||||||
|
|||||||||||||||
Financial occupancy
|
95.4
|
%
|
96.7
|
%
|
|||||||||||
Physical occupancy (April 30, 2020)
|
94.4
|
%
|
96.5
|
%
|
|||||||||||
(1) Represents units that had greater than $250 in delinquency balance in April 2020.
|
(1) Excludes an investment in a mortgage backed security.
|
||||||||||||||
(2) The Company entered into a $200.0 million unsecured term loan in April 2020, the proceeds of which were used
to repay all remaining 2020 consolidated debt maturities.
|
|||||||||||||||
2020 MSA Level Forecast: Supply, Jobs, and Apartment Market Conditions
|
||
Forecast Summary:
|
Forecast Assumptions:
|
|
2020 GDP Growth = -5.0% (-25% in 2Q20)
|
Current stay-at-home orders are partially relaxed no later than June 1st
|
|
2020 U.S. Job Growth = -7.0%
|
No extended “2nd wave” stay-at-home orders in California or Washington
|
|
2020 Multifamily supply in ESS markets down 15% vs. prior expectation
|
Many social distancing measures persist through 2020
|
|
2020 Unemployment rate peaks at 14-16%, falling to 6-8% by year-end
|
Federal $600/week UI supplement ends on July 31st (no extension)
|
Residential Supply (1)
|
Job Forecast (2)
|
Rent Forecast (3)
|
||||||||||||||||||||||||||||||
Market
|
New MF
Supply
|
New SF
Supply
|
Total
Supply
|
% of MF
Supply to
MF Stock
|
% of Total
Supply to
Total Stock
|
Est. New
Jobs
|
% Growth
|
Economic Rent
Growth
|
||||||||||||||||||||||||
So. Cal.
|
14,700
|
13,500
|
28,200
|
0.6
|
%
|
0.5
|
%
|
-565,000
|
-6.9
|
%
|
-3.2
|
%
|
||||||||||||||||||||
No. Cal.
|
9,300
|
5,900
|
15,200
|
1.2
|
%
|
0.7
|
%
|
-235,000
|
-6.6
|
%
|
-3.0
|
%
|
||||||||||||||||||||
Seattle
|
5,500
|
5,000
|
10,500
|
1.1
|
%
|
0.8
|
%
|
-100,000
|
-5.6
|
%
|
-1.5
|
%
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total/Weighted Avg. (4)
|
29,500
|
24,400
|
53,900
|
0.9
|
%
|
0.6
|
%
|
-900,000
|
-6.6
|
%
|
-2.8
|
%
|
(1) |
Residential Supply: Total supply
includes the Company’s estimate of multifamily deliveries of properties with 50+ units and excludes student, senior and 100% affordable housing communities. Single-family estimates are based on trailing single-family permits.
Multifamily estimates incorporate a methodological enhancement (“delay-adjusted supply”) to reflect the anticipated impact of continued construction delays in Essex markets.
|
(2) |
Job Forecast: Refers to the difference between total non-farm industry employment (not seasonally adjusted) projected 4Q over 4Q, expressed as total new jobs and growth rates.
|
(3) |
Rent Forecast: The estimated rent growth
represents the forecasted change in effective market rents for full year 2020 vs 2019 (excludes submarkets not targeted by Essex).
|
(4) |
Weighted Average: Growth rates are
weighted by scheduled rent in the Company’s Portfolio.
|
Three Months Ended
March 31,
2020
|
||||
Net income available to common stockholders
|
$
|
315,006
|
||
Adjustments:
|
||||
Net income attributable to noncontrolling interest
|
13,759
|
|||
Interest expense, net (1)
|
53,163
|
|||
Depreciation and amortization
|
131,559
|
|||
Income tax provision
|
65
|
|||
Gain on remeasurement of co-investment communities
|
(234,694
|
)
|
||
Co-investment EBITDAre adjustments
|
20,382
|
|||
EBITDAre
|
299,240
|
|||
Gain on sale of marketable securities
|
13
|
|||
Unrealized gains on marketable securities
|
8,696
|
|||
Provision for credit losses
|
(50
|
)
|
||
Equity loss from non-core co-investment
|
110
|
|||
General and administrative and other, net
|
820
|
|||
Insurance reimbursements and legal settlements, net
|
43
|
|||
Co-investment promote income
|
(6,455
|
)
|
||
Income from early redemption of preferred equity investments
|
(210
|
)
|
||
Expensed acquisition and investment related costs
|
87
|
|||
Gain on early retirement of debt, net
|
(321
|
)
|
||
Adjusted EBITDAre
|
$
|
301,973
|
(1) |
Interest expense, net includes items such as gains on derivatives and the amortization of deferred charges.
|
Three Months Ended
March 31,
2020
|
||||
Interest expense
|
$
|
55,147
|
||
Adjustments:
|
||||
Total return swap income
|
(1,984
|
)
|
||
Interest expense, net
|
$
|
53,163
|
Total consolidated debt, net
|
$
|
6,495,652
|
||
Total debt from co-investments at pro rata share
|
919,971
|
|||
Adjustments:
|
||||
Consolidated unamortized premiums, discounts, and debt issuance costs
|
39,119
|
|||
Pro rata co-investments unamortized premiums, discounts, and debt issuance costs
|
4,210
|
|||
Consolidated cash and cash equivalents-unrestricted
|
(271,877
|
)
|
||
Pro rata co-investment cash and cash equivalents-unrestricted
|
(29,322
|
)
|
||
Marketable securities (1)
|
(73,094
|
)
|
||
Net Indebtedness
|
$
|
7,084,659
|
||
Adjusted EBITDAre, annualized (2)
|
$
|
1,207,892
|
||
Other EBITDAre normalization adjustments, net, annualized (3)
|
2,601
|
|||
Adjusted EBITDAre, normalized and annualized
|
$
|
1,210,493
|
||
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized
|
5.9
|
(1) |
Excludes investment in mortgage backed security
|
(2) |
Based on the amount for the most recent quarter, multiplied by four.
|
(3) |
Adjustments made for properties in lease-up, acquired, or disposed of during the most recent quarter and other partial quarter activity, multiplied by four.
|
Three Months Ended
March 31,
2020
|
Three Months Ended
March 31,
2019
|
|||||||
Earnings from operations
|
$
|
130,837
|
$
|
115,695
|
||||
Adjustments:
|
||||||||
Corporate-level property management expenses
|
8,759
|
8,429
|
||||||
Depreciation and amortization
|
131,559
|
120,568
|
||||||
Management and other fees from affiliates
|
(2,617
|
)
|
(2,335
|
)
|
||||
General and administrative
|
13,982
|
13,459
|
||||||
Expensed acquisition and investment related costs
|
87
|
32
|
||||||
NOI
|
282,607
|
255,848
|
||||||
Less: Non-same property NOI
|
(30,842
|
)
|
(13,638
|
)
|
||||
Same-Property NOI
|
$
|
251,765
|
$
|
242,210
|
Annualized
Q1‘20 (1)
|
||||
NOI
|
$
|
1,130,428
|
||
Adjustments:
|
||||
Other, net (2)
|
(3,033
|
)
|
||
Adjusted Total NOI
|
1,127,395
|
|||
Less: Encumbered NOI
|
(107,901
|
)
|
||
Unencumbered NOI
|
$
|
1,019,494
|
||
Encumbered NOI
|
$
|
107,901
|
||
Unencumbered NOI
|
1,019,494
|
|||
Adjusted Total NOI
|
$
|
1,127,395
|
||
Unencumbered NOI to Adjusted Total NOI
|
90
|
%
|
(1) |
This table is based on the amounts for the most recent quarter, multiplied by four.
|
(2) |
Includes intercompany eliminations pertaining to self-insurance and other expenses.
|
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