EX-99.1 2 ef20037625_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

THIRD QUARTER 2024  EARNINGS RELEASE &  SUPPLEMENTAL DATA  Century Towers | San Jose, CA 
 


Third Quarter 2024
Earnings Release and Supplemental Data

 
Table of Contents
 

 
Earnings Press Release
Pages 1 - 9
Consolidated Operating Results
S-1 & S-2
Consolidated Funds from Operations
S-3
Consolidated Balance Sheets
S-4
Debt Summary
S-5
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios
S-6
Portfolio Summary by County
S-7
Operating Income by Quarter
S-8
Same-Property Revenue Results by County, Quarter-to-Date
S-9
Same-Property Revenue Results by County, Year-to-Date
S-9.1
Same-Property Operating Expenses, Quarter and Year-to-Date
S-10
Capital Expenditures
S-11
Co-Investments and Preferred Equity Investments
S-12
Assumptions for 2024 FFO Guidance Range
S-13
Reconciliation of Projected EPS, FFO and Core FFO per diluted share
S-13.1
Market Economic Rent Growth Trending Along the Pre-COVID Average
S-13.2
Summary of Apartment Community Acquisitions and Dispositions Activity
S-14
Same-Property Delinquencies, Operating Statistics, and Revenue Growth on a GAAP basis
S-15
MSA Level Supply Forecast: 2023A - 2025E
S-16
2025E Early Building Blocks to Same-Property Revenue Growth
S-16.1
Reconciliations of Non-GAAP Financial Measures and Other Terms
S-17.1 – S-17.4

1100 Park Place Suite 200 San Mateo California 94403 telephone 650 655 7800 facsimile 650 655 7810
www.essex.com



Essex Announces Third Quarter 2024 Results and
Raises Full-Year 2024 Guidance

San Mateo, California—October 29, 2024—Essex Property Trust, Inc. (NYSE: ESS) (the “Company”) announced today its third quarter 2024 earnings results and related business activities.

Net Income, Funds from Operations (“FFO”), and Core FFO per diluted share for the quarter ended September 30, 2024 are detailed below.

                         
   
Three Months Ended
September 30,
   
%
   
Nine Months Ended
September 30,
   
%
 
   
2024
   
2023
   
Change
   
2024
   
2023
   
Change
 
Per Diluted Share
                                   
Net Income
 

$1.84
   

$1.36
     
35.3%

 

$7.54
   

$5.30
     
42.3%

Total FFO
 

$3.81
   

$3.69
     
3.3%

 
$12.30
   

$11.37
     
8.2%

Core FFO
 

$3.91
   

$3.78
     
3.4%

 

$11.68
   

$11.21
     
4.2%


Third Quarter 2024 Highlights:


Reported Net Income per diluted share for the third quarter of 2024 of $1.84, compared to $1.36 in the third quarter of 2023. The increase is largely attributable to gains on remeasurements of co-investments recognized in the third quarter of 2024.


Grew Core FFO per diluted share by 3.4% compared to the third quarter of 2023, exceeding the midpoint of the Company’s guidance range by $0.04. The outperformance was primarily driven by favorable same-property revenue growth.


Achieved same-property revenue and net operating income (“NOI”) growth of 3.5% and 2.6%, respectively, compared to the third quarter of 2023. On a sequential basis, same-property revenues improved 1.2%.


Issued $200.0 million of 10-year senior unsecured notes due in April 2034 at an effective yield of 5.1%.


Acquired and consolidated two joint venture apartment home communities located in San Jose, CA at a combined valuation of $290.5 million on a gross basis.


Raised full-year 2024 guidance range as detailed in the table below:
 
Full-Year 2024 Revised Guidance
 
Revised
Range
   
Revised
Midpoint
 
Change at
Midpoint
 
Net Income per diluted share
 
$8.66 - $8.78
   
$8.72
 

+$0.37
 
Core FFO per diluted share
 
$15.50 - $15.62
   
$15.56
 

+$0.06
 
Same-Property Revenues
 
3.10% to 3.40%
   
3.25%
   
+0.25%

Same-Property Operating Expenses
 
4.50% to 5.00%
   
4.75%
 
Unchanged
 
Same-Property NOI
 
2.30% to 2.90%
   
2.60%
   
+0.30%


1100 Park Place Suite 200 San Mateo California 94403 telephone 650 655 7800 facsimile 650 655 7810
www.essex.com


Same-Property Operations

Same-property operating results exclude any properties that are not comparable for the periods presented. The table below illustrates the percentage change in same-property gross revenues for the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023, and the sequential percentage change for the quarter ended September 30, 2024 compared to the quarter ended June 30, 2024, by submarket for the Company:

   
Q3 2024 vs.
Q3 2023
   
Q3 2024 vs.
Q2 2024
   
% of
Total
 
   
Revenue
Change
   
Revenue
Change
   
Q3 2024
Revenues
 
Southern California
                 
Los Angeles County
   
2.5%

   
1.0%

   
18.6%

Orange County
   
5.2%

   
1.5%

   
10.7%

San Diego County
   
5.3%

   
1.5%

   
9.1%

Ventura County
   
6.3%

   
1.6%

   
4.2%

Total Southern California
   
4.1%

   
1.3%

   
42.6%

Northern California
                       
Santa Clara County
   
2.4%

   
1.0%

   
19.6%

Alameda County
   
1.8%

   
1.1%

   
7.7%

San Mateo County
   
3.2%

   
1.1%

   
4.5%

Contra Costa County
   
3.3%

   
0.9%

   
5.4%

San Francisco
   
5.0%

   
1.4%

   
2.5%

Total Northern California
   
2.7%

   
1.0%

   
39.7%

Seattle Metro
   
3.8%

   
1.1%

   
17.7%

Same-Property Portfolio
   
3.5%

   
1.2%

   
100.0%


The table below illustrates the components that drove the change in same-property revenue on a year-over-year basis for the three- and nine-month periods ended September 30, 2024 and on a sequential basis for the quarter ended September 30, 2024.

Same-Property Revenue Components
 
Q3 2024
vs. Q3 2023
   
YTD 2024
vs. YTD 2023
   
Q3 2024
vs. Q2 2024
 
Scheduled Rents
   
1.7%

   
1.9%

   
0.9%

Delinquencies
   
1.3%

   
1.1%

   
0.2%

Cash Concessions
   
0.0%

   
0.1%

   
0.0%

Vacancy
   
-0.3%

   
-0.4%

   
0.0%

Other Income
   
0.8%

   
0.8%

   
0.1%

2024 Same-Property Revenue Growth
   
3.5%

   
3.5%

   
1.2%


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Year-Over-Year Change
   
Year-Over-Year Change
 
   
Q3 2024 compared to Q3 2023
   
YTD 2024 compared to YTD 2023
 
   
Revenues
   
Operating
Expenses
   
NOI
   
Revenues
   
Operating
Expenses
   
NOI
 
Southern California
   
4.1%

   
4.3%

   
4.0%

   
4.3%

   
4.1%

   
4.3%

Northern California
   
2.7%

   
6.8%

   
0.9%

   
2.8%

   
5.6%

   
1.6%

Seattle Metro
   
3.8%

   
5.4%

   
3.1%

   
3.2%

   
5.7%

   
2.1%

Same-Property Portfolio
   
3.5%

   
5.5%

   
2.6%

   
3.5%

   
5.0%

   
2.9%


   
Sequential Change
 
   
Q3 2024 compared to Q2 2024
 
   
Revenues
   
Operating
Expenses
   
NOI
 
Southern California
   
1.3%

   
4.7%

   
0.0%

Northern California
   
1.0%

   
7.5%

   
-1.7%

Seattle Metro
   
1.1%

   
3.6%

   
0.0%

Same-Property Portfolio
   
1.2%

   
5.6%

   
-0.7%


   
Financial Occupancies
 
   
Quarter Ended
 
   
9/30/2024
   
6/30/2024
   
9/30/2023
 
Southern California
   
95.9%

   
95.7%

   
96.3%

Northern California
   
96.4%

   
96.3%

   
96.6%

Seattle Metro
   
96.6%

   
97.1%

   
96.3%

Same-Property Portfolio
   
96.2%

   
96.2%

   
96.4%


Investment Activity

Acquisitions

In July, the Company acquired its joint venture partner’s 49.9% common equity interest in Patina at Midtown, a 269-unit apartment home community built in 2021 and located in San Jose, CA, for a total contract price of $117.0 million on a gross basis. This reflects an attractive valuation of $435,000 per unit. Concurrent with the closing, the Company repaid a $95.0 million secured mortgage encumbering the property and was fully redeemed on a preferred equity investment affiliated with the partnership. The Company recorded a gain on remeasurement of co-investments of $2.2 million, which has been excluded from Total and Core FFO.

In September, the Company acquired its joint venture partner’s 50% common equity interest in Century Towers, a 376-unit apartment home community built in 2017 and located in San Jose, CA, for a total contract price of $173.5 million on a gross basis. This reflects an attractive valuation of $458,000 per unit. Concurrent with the closing, the Company repaid a $110.5 million secured mortgage encumbering the property and was fully redeemed on a preferred equity investment affiliated with the partnership. The Company issued approximately $25.0 million of Operating Partnership Units (“OP Units”) to the seller at $305 per unit. The

- 3 -

Company recorded a gain on remeasurement of co-investments of $29.4 million, which has been excluded from Total and Core FFO.

Subsequent to quarter end, the Company acquired its joint venture partner’s 49.9% interest in the BEX II portfolio, comprising of four communities totaling 871 apartment homes, for a total contract price of $337.5 million on a gross basis. Concurrent with the closing, the Company assumed $95.0 million of secured mortgages.

Dispositions

Subsequent to quarter end, the Company sold its 81.5% interest in a 76-year-old apartment home community located in San Mateo, CA for a total contract price of $252.4 million on a gross basis. The 697-unit apartment home community was unencumbered and was classified as held for sale on the balance sheet as of September 30, 2024.

Other Investments

In July, the Company received cash proceeds of $40.1 million from the full redemption of a subordinated loan investment yielding an 11.5% rate of return.

Subsequent to quarter end, the Company received cash proceeds of $55.8 million from the full and partial redemptions of two structured finance investments yielding a 9.6% weighted average rate of return. Year-to-date through October, the Company has received cash proceeds of $106.2 million from redemptions of structured finance investments yielding a 10.4% weighted average rate of return.

Liquidity and Balance Sheet

Common Stock

Year-to-date through October 28, 2024, the Company has not issued any shares of common stock through its equity distribution program or repurchased any shares through its stock repurchase plan.

Balance Sheet

In August, the Company issued $200.0 million of 10-year senior unsecured notes due in April 2034 bearing an interest rate of 5.50% per annum and an effective yield of 5.11%. The notes were issued as additional notes to the previous offering conducted in March 2024.

In September, the Company extended the maturity date of its $1.2 billion unsecured line of credit facility to mature in January 2029 with two additional six-month extension options, exercisable at the Company’s option. The underlying interest rate on the line of credit is unchanged at Adjusted SOFR plus 0.765%, which is based on a tiered rate structure tied to the Company’s corporate ratings and further adjusted by the facility’s Sustainability Metric Adjustment feature.

As of October 28, 2024, the Company had approximately $1.2 billion in liquidity via undrawn capacity on its unsecured credit facilities, cash and cash equivalents, and marketable securities.

- 4 -

Guidance

For the third quarter of 2024, the Company exceeded the midpoint of the guidance range provided in its second quarter 2024 earnings release for Core FFO by $0.04 per diluted share. The outperformance primarily relates to favorable same-property revenue growth.

The following table provides a reconciliation of third quarter 2024 Core FFO per diluted share to the midpoint of the guidance provided in the Company’s second quarter 2024 earnings release.

   
Per Diluted
Share
 
Guidance midpoint of Core FFO per diluted share for Q3 2024
 
$
3.87
 
NOI from Consolidated Communities
   
0.04
 
FFO from Co-Investments
   
0.01
 
G&A and Other
   
(0.01)

Core FFO per diluted share for Q3 2024 reported
 
$
3.91
 

The table below provides key updates to the Company’s 2024 full-year assumptions for Net Income, Total FFO, Core FFO per diluted share, and same-property growth. For additional details regarding the Company’s 2024 Core FFO guidance range, please see page S-13 of the accompanying supplemental financial information.

2024 Full-Year and Fourth Quarter Guidance

   
Previous
Range
   
Previous Midpoint
   
Revised
Range
   
Revised Midpoint
   
Change at the
Midpoint
 
Per Diluted Share
                             
Net Income
 
$8.23 - $8.47
   
$8.35
   
$8.66 - $8.78
   
$8.72
   
+$0.37
 
Total FFO
 
$15.93 - $16.17
   
$16.05
   
$15.86 - $15.98
   
$15.92
   
($0.13)

Core FFO
 
$15.38 - $15.62
   
$15.50
   
$15.50 - $15.62
   
$15.56
   
+$0.06
 
Q4 2024 Core FFO
 
-
   
-
   
$3.82 - $3.94
   
$3.88
   
N/A
 
Same-Property Growth on a Cash-Basis (1)
                         
Revenues
 
2.70% to 3.30%
   
3.00%

 
3.10% to 3.40%
   
3.25%

 
+0.25%

Operating Expenses
 
4.50% to 5.00%
   
4.75%

 
4.50% to 5.00%
   
4.75%

 
Unchanged
 
NOI
 
1.80% to 2.80%
   
2.30%

 
2.30% to 2.90%
   
2.60%

 
+0.30%



(1)
The midpoint of the Company’s same-property revenues and NOI on a GAAP basis are 3.40% and 2.90%, respectively, representing a 0.20% and 0.40% increase to the Company’s previous guidance midpoints.

Conference Call with Management

The Company will host an earnings conference call with management to discuss its quarterly results on Wednesday, October 30, 2024 at 10:00 a.m. PT (1:00 p.m. ET), which will be broadcast live via the Internet at www.essex.com, and accessible via phone by dialing toll-free, (877) 407-0784, or toll/international, (201) 689-8560. No passcode is necessary.

- 5 -

A rebroadcast of the live call will be available online for 30 days and digitally for 7 days. To access the replay online, go to www.essex.com and select the third quarter 2024 earnings link. To access the replay, dial (844) 512-2921 using the replay pin number 13749248. If you are unable to access the information via the Company’s website, please contact the Investor Relations Department at investors@essex.com or calling (650) 655-7800.

Upcoming Events

The Company is scheduled to participate in the National Association of Real Estate Investment Trusts (“NAREIT”) REITWorld Conference held at the Wynn Las Vegas in Las Vegas, NV on November 19, 2024. A copy of any materials provided by the Company at the conference will be made available on the Investors section of the Company’s website at www.essex.com.

Corporate Profile

Essex Property Trust, Inc., an S&P 500 company, is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets. Essex currently has ownership interests in 254 apartment communities comprising approximately 62,000 apartment homes. Additional information about the Company can be found on the Company’s website at www.essex.com.

This press release and accompanying supplemental financial information has been furnished to the Securities and Exchange Commission electronically on Form 8-K and can be accessed from the Company’s website at www.essex.com. If you are unable to obtain the information via the Web, please contact the Investor Relations Department at (650) 655-7800.

FFO Reconciliation

FFO, 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 an equity REIT. Generally, FFO adjusts the net income of equity REITs for non-cash charges such as depreciation and amortization of rental properties, impairment charges, gains on sales of real estate and extraordinary items. Management considers FFO and FFO which excludes non-core items, which is referred to as “Core FFO,” to be useful supplemental operating performance measures of an equity REIT because, together with net income and cash flows, FFO and Core FFO provide investors with additional bases to evaluate the operating performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures and to pay dividends. By excluding gains or losses related to sales of depreciated operating properties and land and excluding real estate depreciation (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO can help investors compare the operating performance of a real estate company between periods or as compared to different companies. By further adjusting for items that are not considered part of the Company’s core business operations, Core FFO allows investors to compare the core operating performance of the Company to its performance in prior reporting periods and to the operating performance of other real estate companies without the effect of items that by their nature are not comparable from period to period and tend to obscure the Company’s actual operating results. FFO and Core FFO do not represent net income or cash flows from operations as defined by U.S. generally accepted accounting principles (“GAAP”) and are not intended to indicate whether cash flows will be sufficient to fund cash needs. These measures should not be considered as alternatives to net income as an indicator of the REIT’s operating performance or to cash flows as a measure of liquidity. FFO and Core FFO do not measure whether cash flow is sufficient to fund all cash needs including principal amortization, capital improvements and distributions to stockholders. FFO and Core FFO also do not represent cash flows generated from operating, investing or

- 6 -

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 from the NAREIT definition for this measure, and thus their disclosures of FFO may not be comparable to the Company’s calculation.

The following table sets forth the Company’s calculation of diluted FFO and Core FFO for the three and nine months ended September 30, 2024 and 2023 (in thousands, except for share and per share amounts):

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
Funds from Operations attributable to common stockholders and unitholders
 
2024
   
2023
   
2024
   
2023
 
Net income available to common stockholders
 
$
118,424
   
$
87,282
   
$
484,069
   
$
340,434
 
Adjustments:
                               
Depreciation and amortization
   
146,439
     
137,357
     
431,785
     
410,422
 
Gains not included in FFO
   
(31,583
)
   
-
     
(169,909
)
   
(59,238
)
Casualty loss
   
-
     
-
     
-
     
433
 
Impairment loss from unconsolidated co-investments
   
-
     
-
     
3,726
     
-
 
Depreciation and amortization from unconsolidated co-investments
   
16,417
     
18,029
     
52,267
     
53,486
 
Noncontrolling interest related to Operating Partnership units
   
4,206
     
3,072
     
17,075
     
11,982
 
Depreciation attributable to third party ownership and other
   
(370
)
   
(371
)
   
(1,149
)
   
(1,095
)
Funds from Operations attributable to common stockholders and unitholders
 
$
253,533
   
$
245,369
   
$
817,864
   
$
756,424
 
FFO per share – diluted
 
$
3.81
   
$
3.69
   
$
12.30
   
$
11.37
 
Expensed acquisition and investment related costs
 
$
-
   
$
31
   
$
68
   
$
375
 
Tax (benefit) expense on unconsolidated co-investments (1)
   
(441
)
   
404
     
(1,199
)
   
1,237
 
Realized and unrealized (gains) losses on marketable securities, net
   
(5,697
)
   
4,577
     
(10,645
)
   
(4,294
)
Provision for credit losses
   
(182
)
   
17
     
(116
)
   
51
 
Equity income from non-core co-investments (2)
   
(555
)
   
(538
)
   
(6,282
)
   
(1,422
)
Co-investment promote income
   
-
     
-
     
(1,531
)
   
-
 
Income from early redemption of preferred equity investments and notes receivable
   
-
     
-
     
-
     
(285
)
General and administrative and other, net
   
13,956
     
1,743
     
22,403
     
2,570
 
Insurance reimbursements, legal settlements, and other, net (3)
   
(612
)
   
(283
)
   
(43,912
)
   
(9,082
)
Core Funds from Operations attributable to common stockholders and unitholders
 
$
260,002
   
$
251,320
   
$
776,650
   
$
745,574
 
Core FFO per share – diluted
 
$
3.91
   
$
3.78
   
$
11.68
   
$
11.21
 
Weighted average number of shares outstanding diluted (4)
   
66,551,838
     
66,445,256
     
66,500,412
     
66,537,111
 

(1)
Represents tax related to net unrealized gains or losses on technology co-investments.
(2)
Represents the Company’s share of co-investment income or loss from technology co-investments.
(3)
Includes legal settlement gains of $42.5 million and $7.7 million for the nine months ended September 30, 2024 and 2023, respectively.
(4)
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 DownREIT limited partnership units.

- 7 -

Net Operating Income (“NOI”) and Same-Property NOI Reconciliations

NOI and Same-Property NOI are considered by management to be important supplemental performance measures to earnings from operations included in the Company’s consolidated statements of income. The presentation of same-property NOI assists with the presentation of the Company’s operations prior to the allocation of depreciation and any corporate-level or financing-related costs. NOI reflects the operating performance of a community and allows for an easy comparison of the operating performance of individual communities or groups of communities. In addition, because prospective buyers of real estate have different financing and overhead structures, with varying marginal impacts to overhead by acquiring real estate, NOI is considered by many in the real estate industry to be a useful measure for determining the value of a real estate asset or group of assets. The Company defines same-property NOI as same-property revenues less same-property operating expenses, including property taxes. Please see the reconciliation of earnings from operations to NOI and same-property NOI, which in the table below is the NOI for stabilized properties consolidated by the Company for the periods presented (dollars in thousands):

   
Three Months Ended
September 30,
   
Nine Months Ended
September 30,
 
   
2024
   
2023
   
2024
   
2023
 
Earnings from operations
 
$
128,790
   
$
131,784
   
$
398,599
   
$
454,001
 
Adjustments:
                               
Corporate-level property management expenses
   
12,150
     
11,504
     
36,004
     
34,387
 
Depreciation and amortization
   
146,439
     
137,357
     
431,785
     
410,422
 
Management and other fees from affiliates
   
(2,563
)
   
(2,785
)
   
(7,849
)
   
(8,328
)
General and administrative
   
29,067
     
14,611
     
67,374
     
43,735
 
Expensed acquisition and investment related costs
   
-
     
31
     
68
     
375
 
Casualty loss
   
-
     
-
     
-
     
433
 
Gain on sale of real estate and land
   
-
     
-
     
-
     
(59,238
)
NOI
   
313,883
     
292,502
     
925,981
     
875,787
 
Less: Non-same property NOI
   
(26,431
)
   
(12,390
)
   
(66,748
)
   
(40,504
)
Same-Property NOI
 
$
287,452
   
$
280,112
   
$
859,233
   
$
835,283
 

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. Forward-looking statements are statements which are not historical facts, including statements regarding the Company’s expectations, estimates, assumptions, hopes, intentions, beliefs and strategies regarding the future. Words such as “expects,” “assumes,” “anticipates,” “may,” “will,” “intends,” “plans,” “projects,” “believes,” “seeks,” “future,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, among other things, statements regarding the Company’s fourth quarter and full-year 2024 guidance (including net income, Total FFO and Core FFO, same-property growth and related assumptions) and anticipated yield on certain investments. While the Company’s management believes the assumptions underlying its forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the Company’s control, which could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or

- 8 -

achievements expressed or implied by such forward-looking statements. The Company cannot assure the future results or outcome of the matters described in these statements; rather, these statements merely reflect the Company’s current expectations of the approximate outcomes of the matters discussed.

Factors that might cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to, the following: assumptions related to our fourth quarter and full-year 2024 guidance; occupancy rates and rental demand may be adversely affected by competition and local economic and market conditions; there may be increased interest rates, inflation, escalated operating costs and possible recessionary impacts; geopolitical tensions and regional conflicts, and the related impacts on macroeconomic conditions, including, among other things, interest rates and inflation; the terms of any refinancing may not be as favorable as the terms of existing indebtedness; the Company’s inability to maintain our investment grade credit rating with the rating agencies; the Company may be unsuccessful in the management of its relationships with its co-investment partners; the Company may fail to achieve its business objectives; time of actual completion and/or stabilization of development and redevelopment projects; estimates of future income from an acquired property may prove to be inaccurate; future cash flows may be inadequate to meet operating requirements and/or may be insufficient to provide for dividend payments in accordance with REIT requirements; changes in laws or regulations and the anticipated or actual impact of future changes in laws or regulations; unexpected difficulties in leasing of future development projects; volatility in financial and securities markets; the Company’s failure to successfully operate acquired properties; unforeseen consequences from cyber-intrusion; government approvals, actions and initiatives, including the need for compliance with environmental requirements; and those further risks, special considerations, and other factors referred to in the Company’s annual report on Form 10-K for the year ended December 31, 2023, quarterly reports on Form 10-Q, and those risk factors and special considerations set forth in the Company’s other filings with the SEC which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. All forward-looking statements are made as of the date hereof, the Company assumes no obligation to update or supplement this information for any reason, and therefore, they may not represent the Company’s estimates and assumptions after the date of this press release.

Definitions and Reconciliations

Non-GAAP financial measures and certain other capitalized terms, as used in this earnings release, are defined and further explained on pages S-17.1 through S-17.4, “Reconciliations of Non-GAAP Financial Measures and Other Terms,” of the accompanying supplemental financial information. The supplemental financial information is available on the Company’s website at www.essex.com.

Contact Information
Loren Rainey
Director, Investor Relations
(650) 655-7800
lrainey@essex.com

- 9 -

E S S E X  P R O P E R T Y  T R U S T, I N C.

Consolidated Operating Results
(Dollars in thousands, except share and per share amounts)


     
Three Months Ended
September 30,
     
Nine Months Ended
September 30,
  
   
2024
   
2023
   
2024
   
2023
 
                         
Revenues:
                       
Rental and other property
 
$
448,135
   
$
416,398
   
$
1,312,132
   
$
1,239,319
 
Management and other fees from affiliates
   
2,563
     
2,785
     
7,849
     
8,328
 
     
450,698
     
419,183
     
1,319,981
     
1,247,647
 
                                 
Expenses:
                               
Property operating
   
134,252
     
123,896
     
386,151
     
363,532
 
Corporate-level property management expenses
   
12,150
     
11,504
     
36,004
     
34,387
 
Depreciation and amortization
   
146,439
     
137,357
     
431,785
     
410,422
 
General and administrative
   
29,067
     
14,611
     
67,374
     
43,735
 
Expensed acquisition and investment related costs
   
-
     
31
     
68
     
375
 
Casualty loss
   
-
     
-
     
-
     
433
 
 
   
321,908
     
287,399
     
921,382
     
852,884
 
Gain on sale of real estate and land
   
-
     
-
     
-
     
59,238
 
Earnings from operations
   
128,790
     
131,784
     
398,599
     
454,001
 
Interest expense, net (1)
   
(58,425
)
   
(53,471
)
   
(172,053
)
   
(155,262
)
Interest and other income
   
11,449
     
4,406
     
78,292
     
29,055
 
Equity income from co-investments
   
11,649
     
10,694
     
33,667
     
33,802
 
Tax benefit (expense) on unconsolidated co-investments
   
441
     
(404
)
   
1,199
     
(1,237
)
Gain on remeasurement of co-investment
   
31,583
     
-
     
169,909
     
-
 
Net income
   
125,487
     
93,009
     
509,613
     
360,359
 
Net income attributable to noncontrolling interest
   
(7,063
)
   
(5,727
)
   
(25,544
)
   
(19,925
)
Net income available to common stockholders
 
$
118,424
   
$
87,282
   
$
484,069
   
$
340,434
 
                                 
Net income per share - basic
 
$
1.84
   
$
1.36
   
$
7.54
   
$
5.30
 
                                 
Shares used in income per share - basic
   
64,227,662
     
64,184,180
     
64,214,258
     
64,274,085
 
                                 
Net income per share - diluted
 
$
1.84
   
$
1.36
   
$
7.54
   
$
5.30
 
                                 
Shares used in income per share - diluted
   
64,271,459
     
64,186,020
     
64,234,358
     
64,275,279
 

(1)
Refer to page S-17.2, the section titled “Interest Expense, Net” for additional information.

See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information

S-1

E S S E X  P R O P E R T Y  T R U S T, I N C.

Consolidated Operating Results - Selected Line Item Detail
(Dollars in thousands)


   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2024
   
2023
   
2024
   
2023
 
                         
Rental and other property
                       
Rental income
 
$
440,649
   
$
410,438
   
$
1,290,026
   
$
1,222,859
 
Other property
   
7,486
     
5,960
     
22,106
     
16,460
 
Rental and other property
 
$
448,135
   
$
416,398
   
$
1,312,132
   
$
1,239,319
 
                                 
Property operating expenses
                               
Real estate taxes
 
$
48,956
   
$
46,876
   
$
143,188
   
$
138,787
 
Administrative
   
13,782
     
12,370
     
42,881
     
37,254
 
Maintenance and repairs
   
16,197
     
15,361
     
44,987
     
44,629
 
Personnel costs
   
24,756
     
22,756
     
72,583
     
68,609
 
Utilities
   
30,561
     
26,533
     
82,512
     
74,253
 
Property operating expenses
 
$
134,252
   
$
123,896
   
$
386,151
   
$
363,532
 
                                 
Interest and other income
                               
Marketable securities and other income
 
$
5,044
   
$
8,830
   
$
23,729
   
$
16,581
 
Realized and unrealized gains (losses) on marketable securities, net
   
5,697
     
(4,577
)
   
10,645
     
4,294
 
Provision for credit losses
   
182
     
(17
)
   
116
     
(51
)
Insurance reimbursements, legal settlements, and other, net
   
526
     
170
     
43,802
     
8,231
 
Interest and other income
 
$
11,449
   
$
4,406
   
$
78,292
   
$
29,055
 
                                 
Equity income from co-investments
                               
Equity loss from co-investments
 
$
(862
)
 
$
(3,267
)
 
$
(6,736
)
 
$
(9,115
)
Income from preferred equity investments
   
11,870
     
13,310
     
36,206
     
40,359
 
Equity income from non-core co-investments
   
555
     
538
     
6,282
     
1,422
 
Insurance reimbursements, legal settlements, and other, net
   
86
     
113
     
110
     
851
 
Impairment loss from unconsolidated co-investment
   
-
     
-
     
(3,726
)
   
-
 
Co-investment promote income
   
-
     
-
     
1,531
     
-
 
Income from early redemption of preferred equity investments
   
-
     
-
     
-
     
285
 
Equity income from co-investments
 
$
11,649
   
$
10,694
   
$
33,667
   
$
33,802
 
                                 
Noncontrolling interest
                               
Limited partners of Essex Portfolio, L.P.
 
$
4,206
   
$
3,072
   
$
17,075
   
$
11,982
 
DownREIT limited partners’ distributions
   
2,284
     
2,162
     
6,867
     
6,493
 
Third-party ownership interest
   
573
     
493
     
1,602
     
1,450
 
Noncontrolling interest
 
$
7,063
   
$
5,727
   
$
25,544
   
$
19,925
 

See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information

S-2

E S S E X  P R O P E R T Y  T R U S T, I N C.

Consolidated Funds from Operations (1)
(Dollars in thousands, except share and per share amounts and in footnotes)

     
Three Months Ended
September 30,
              
Nine Months Ended
September 30,
           
   
2024
   
2023
   
% Change
   
2024
   
2023
   
%
Change
 
                                     
Funds from operations attributable to common stockholders and unitholders (FFO)
                                   
Net income available to common stockholders
 
$
118,424
   
$
87,282
         
$
484,069
   
$
340,434
       
Adjustments:
                                           
Depreciation and amortization
   
146,439
     
137,357
           
431,785
     
410,422
       
Gains not included in FFO
   
(31,583
)
   
-
           
(169,909
)
   
(59,238
)
     
Casualty loss
   
-
     
-
           
-
     
433
       
Impairment loss from unconsolidated co-investments
   
-
     
-
           
3,726
     
-
       
Depreciation and amortization from unconsolidated co-investments
   
16,417
     
18,029
           
52,267
     
53,486
       
Noncontrolling interest related to Operating Partnership units
   
4,206
     
3,072
           
17,075
     
11,982
       
Depreciation attributable to third party ownership and other (2)
   
(370
)
   
(371
)
         
(1,149
)
   
(1,095
)
     
Funds from operations attributable to common stockholders and unitholders
 
$
253,533
   
$
245,369
         
$
817,864
   
$
756,424
       
FFO per share-diluted
 
$
3.81
   
$
3.69
     
3.3%

 
$
12.30
   
$
11.37
     
8.2%

                                                 
Components of the change in FFO
                                               
Non-core items:
                                               
Expensed acquisition and investment related costs
 
$
-
   
$
31
           
$
68
   
$
375
         
Tax (benefit) expense on unconsolidated co-investments (3)
   
(441
)
   
404
             
(1,199
)
   
1,237
         
Realized and unrealized (gains) losses on marketable securities, net
   
(5,697
)
   
4,577
             
(10,645
)
   
(4,294
)
       
Provision for credit losses
   
(182
)
   
17
             
(116
)
   
51
         
Equity income from non-core co-investments (4)
   
(555
)
   
(538
)
           
(6,282
)
   
(1,422
)
       
Co-investment promote income
   
-
     
-
             
(1,531
)
   
-
         
Income from early redemption of preferred equity investments and notes receivable
   
-
     
-
             
-
     
(285
)
       
General and administrative and other, net
   
13,956
     
1,743
             
22,403
     
2,570
         
Insurance reimbursements, legal settlements, and other, net (5)
   
(612
)
   
(283
)
           
(43,912
)
   
(9,082
)
       
Core funds from operations attributable to common stockholders and unitholders
 
$
260,002
   
$
251,320
           
$
776,650
   
$
745,574
         
Core FFO per share-diluted
 
$
3.91
   
$
3.78
     
3.4%

 
$
11.68
   
$
11.21
     
4.2%

 
                                               
Weighted average number of shares outstanding diluted (6)
   
66,551,838
     
66,445,256
             
66,500,412
     
66,537,111
         

(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 and nine months ended September 30, 2024 was $0.9 million and $2.6 million, respectively.
(3)
Represents tax related to net unrealized gains or losses on technology co-investments.
(4)
Represents the Company’s share of co-investment income or loss from technology co-investments.
(5)
Includes legal settlement gains of $42.5 million and $7.7 million for the nine months ended September 30, 2024 and 2023, respectively.
(6)
Assumes conversion of all outstanding limited partnership units in the Operating Partnership into shares of the Company’s common stock and excludes DownREIT limited partnership units.

See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information

S-3

E S S E X  P R O P E R T Y  T R U S T, I N C.

Consolidated Balance Sheets
(Dollars in thousands)


   
September 30, 2024
   
December 31, 2023
 
Real Estate:
           
Land and land improvements
 
$
3,174,058
   
$
3,036,912
 
Buildings and improvements
   
13,884,518
     
13,098,311
 
     
17,058,576
     
16,135,223
 
Less: accumulated depreciation
   
(6,004,325
)
   
(5,664,931
)
     
11,054,251
     
10,470,292
 
Real estate under development
   
25,087
     
23,724
 
Co-investments
   
1,007,252
     
1,061,733
 
Real estate held for sale
   
74,148
     
-
 
     
12,160,738
     
11,555,749
 
Cash and cash equivalents, including restricted cash
   
80,263
     
400,334
 
Marketable securities
   
75,245
     
87,795
 
Notes and other receivables
   
200,295
     
174,621
 
Operating lease right-of-use assets
   
52,470
     
63,757
 
Prepaid expenses and other assets
   
78,436
     
79,171
 
Total assets
 
$
12,647,447
   
$
12,361,427
 
                 
Unsecured debt, net
 
$
5,473,318
   
$
5,318,531
 
Mortgage notes payable, net
   
884,728
     
887,204
 
Lines of credit
   
7,885
     
-
 
Distributions in excess of investments in co-investments
   
79,985
     
65,488
 
Operating lease liabilities
   
53,510
     
65,091
 
Other liabilities
   
485,684
     
398,930
 
Total liabilities
   
6,985,110
     
6,735,244
 
Redeemable noncontrolling interest
   
33,977
     
32,205
 
Equity:
               
Common stock
   
6
     
6
 
Additional paid-in capital
   
6,671,264
     
6,656,720
 
Distributions in excess of accumulated earnings
   
(1,255,608
)
   
(1,267,536
)
Accumulated other comprehensive income, net
   
18,174
     
33,556
 
Total stockholders’ equity
   
5,433,836
     
5,422,746
 
Noncontrolling interest
   
194,524
     
171,232
 
Total equity
   
5,628,360
     
5,593,978
 
Total liabilities and equity
 
$
12,647,447
   
$
12,361,427
 

See Company’s Form 10-K and Form 10-Qs filed with the SEC for additional information

S-4

E S S E X  P R O P E R T Y  T R U S T, I N C.

Debt Summary - September 30, 2024
(Dollars in thousands, except in footnotes)

     
Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:
 
     

 
Unsecured
   
Secured
   
Total
   
Weighted
Average
Interest
Rate
   
Percentage
of Total
Debt
 
     
Weighted Average
   
   
Balance Outstanding
   
Interest
Rate
   
Maturity
in Years
   
   
Unsecured Debt, net
                                                 
Bonds public - fixed rate
 
$
5,200,000
     
3.4
%
   
7.2
   
2024
   
$
-
   
$
794
   
$
794
     
3.5
%
   
0.0
%
Term loan (1)
   
300,000
     
4.2
%
   
3.0
   
2025
     
500,000
     
133,054
     
633,054
     
3.5
%
   
9.9
%
Unamortized discounts and debt
                         
2026
     
450,000
     
99,405
     
549,405
     
3.5
%
   
8.6
%
issuance costs, net
   
(26,682
)
   
-
     
-
   
   2027(1)

   
650,000
     
153,955
     
803,955
     
4.0
%
   
12.6
%
Total unsecured debt, net
   
5,473,318
     
3.5
%
   
7.0
   
2028
     
450,000
     
68,332
     
518,332
     
2.2
%
   
8.1
%
Mortgage Notes Payable, net
                         
2029
     
500,000
     
1,456
     
501,456
     
4.1
%
   
7.9
%
Fixed rate - secured
   
665,437
     
4.3
%
   
5.1
   
2030
     
550,000
     
1,592
     
551,592
     
3.1
%
   
8.6
%
Variable rate - secured (2)
   
222,040
     
4.1
%
   
13.3
   
2031
     
600,000
     
1,740
     
601,740
     
2.3
%
   
9.4
%
Unamortized premiums and debt
                         
2032
     
650,000
     
1,903
     
651,903
     
2.6
%
   
10.3
%
issuance costs, net
   
(2,749
)
   
-
     
-
   
2033
     
-
     
330,126
     
330,126
     
5.0
%
   
5.2
%
Total mortgage notes payable, net
   
884,728
     
4.2
%
   
7.1
   
2034
     
550,000
     
2,275
     
552,275
     
5.5
%
   
8.6
%
Unsecured Lines of Credit
                         
Thereafter
     
600,000
     
92,845
     
692,845
     
3.7
%
   
10.8
%
Line of credit (3)
   
-
     
6.3
%
   
N/A
   
Subtotal
     
5,500,000
     
887,477
     
6,387,477
     
3.6
%
   
100.0
%
Line of credit (4)
   
7,885
     
6.3
%
   
N/A
   
Debt Issuance Costs
     
(26,583
)
   
(2,717
)
   
(29,300
)
   
-
     
-
 
Total lines of credit
   
7,885
     
6.3
%
   
N/A
   
(Discounts)/Premiums
     
(99
)
   
(32
)
   
(131
)
   
-
     
-
 
Total debt, net
 
$
6,365,931
     
3.6
%
   
7.0
   
Total
   
$
5,473,318
   
$
884,728
   
$
6,358,046
     
3.6
%
   
100.0
%