Maryland (Essex Property Trust, Inc.)
California (Essex Portfolio, L.P.)
|
77-0369576 (Essex Property Trust, Inc.)
77-0369575 (Essex Portfolio, L.P.)
|
(State or Other Jurisdiction of Incorporation)
|
(I.R.S. Employer Identification No.)
|
Essex Property Trust, Inc.
|
Emerging growth company
|
☐
|
Essex Portfolio, L.P
|
Emerging growth company
|
☐
|
99.1
|
Press Release issued by Essex Property Trust, Inc. on July 27, 2017
|
99.2
|
Supplemental Information for the quarter ended June 30, 2017
|
ESSEX PROPERTY TRUST, INC.
|
||
/s/ Angela L. Kleiman
|
||
Name:
|
Angela L. Kleiman
|
|
Title:
|
Executive Vice President & 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 & Chief Financial Officer
|
Exhibit Number
|
|
Description
|
|
||
Press Release issued by Essex Property Trust, Inc. on July 27, 2017
|
||
|
||
Supplemental Information for the quarter ended June 30, 2017
|
Three Months Ended
June 30,
|
%
|
Six Months Ended
June 30,
|
%
|
|||||||||||||||||||||
2017
|
2016
|
Change
|
2017
|
2016
|
Change
|
|||||||||||||||||||
Per Diluted Share
|
||||||||||||||||||||||||
Net Income
|
$
|
1.08
|
$
|
1.10
|
-1.8
|
%
|
$
|
3.80
|
$
|
2.29
|
65.9
|
%
|
||||||||||||
Total FFO
|
$
|
2.97
|
$
|
2.81
|
5.7
|
%
|
$
|
5.93
|
$
|
5.45
|
8.8
|
%
|
||||||||||||
Core FFO
|
$
|
2.97
|
$
|
2.74
|
8.4
|
%
|
$
|
5.91
|
$
|
5.42
|
9.0
|
%
|
·
|
Reported Net Income per diluted share for the second quarter of 2017 of $1.08, compared to $1.10 in the second quarter of 2016. The decrease is primarily due to gain on sale of a co-investment community, which was realized in the second quarter of 2016.
|
·
|
Grew Core FFO per diluted share by 8.4% compared to the second quarter of 2016, exceeding the high-end of the guidance range.
|
·
|
Achieved same-property gross revenue and net operating income (“NOI”) growth of 3.9% and 4.7%, respectively, compared to the second quarter of 2016.
|
·
|
Realized a sequential quarterly increase in same-property revenue growth of 0.8% compared to the first quarter of 2017.
|
·
|
Updated full-year 2017 earnings guidance:
|
o
|
Increased full-year Net Income per diluted share guidance range to $5.75 to $6.00. Provided Net Income guidance range for the third quarter of $0.96 to $1.06 per diluted share.
|
o
|
Increased full-year Total FFO per diluted share guidance range to $11.71 to $11.96. Provided Total FFO guidance range for the third quarter of $2.87 to $2.97 per diluted share.
|
o
|
Increased full-year Core FFO per diluted share guidance by $0.07 per share at the midpoint to a range of $11.70 to $11.96. Provided Core FFO guidance range for the third quarter of $2.88 to $2.98 per diluted share.
|
o
|
Tightened the range of same-property revenue growth for the full-year to 3.2% to 4.0%, resulting in an increase to the midpoint by 10 basis points.
|
o
|
Tightened the range of same-property expense growth to 2.5% to 2.9%, decreasing the midpoint by 30 basis points.
|
o
|
Revised the same-property NOI growth range for the full-year to 3.3% to 4.6%, increasing the midpoint by 30 basis points.
|
Q2 2017 vs.
Q2 2016 |
Q2 2017 vs.
Q1 2017 |
% of Total
|
||||||||||
Gross
Revenues |
Gross
Revenues |
Q2 2017
Revenues |
||||||||||
Southern California
|
||||||||||||
Los Angeles County
|
2.8
|
%
|
0.0
|
%
|
19.8
|
%
|
||||||
Orange County
|
4.8
|
%
|
0.7
|
%
|
11.6
|
%
|
||||||
San Diego County
|
4.4
|
%
|
0.5
|
%
|
9.1
|
%
|
||||||
Ventura County
|
5.1
|
%
|
0.5
|
%
|
4.5
|
%
|
||||||
Other Southern California
|
5.8
|
%
|
3.3
|
%
|
0.5
|
%
|
||||||
Total Southern California
|
3.9
|
%
|
0.4
|
%
|
45.5
|
%
|
||||||
Northern California
|
||||||||||||
Santa Clara County
|
2.5
|
%
|
1.0
|
%
|
15.8
|
%
|
||||||
Alameda County
|
1.7
|
%
|
2.0
|
%
|
7.3
|
%
|
||||||
San Mateo County
|
3.6
|
%
|
0.1
|
%
|
5.2
|
%
|
||||||
Contra Costa County
|
3.1
|
%
|
0.7
|
%
|
5.2
|
%
|
||||||
San Francisco
|
4.4
|
%
|
1.6
|
%
|
2.0
|
%
|
||||||
Other Northern California
|
12.1
|
%
|
1.7
|
%
|
0.3
|
%
|
||||||
Total Northern California
|
2.8
|
%
|
1.1
|
%
|
35.8
|
%
|
||||||
Seattle Metro
|
6.6
|
%
|
1.6
|
%
|
18.7
|
%
|
||||||
Same-Property Portfolio
|
3.9
|
%
|
0.8
|
%
|
100
|
%
|
Year-Over-Year Growth
|
Year-Over-Year Growth
|
|||||||||||||||||||||||
Q2 2017 compared to Q2 2016
|
YTD 2017 compared to YTD 2016
|
|||||||||||||||||||||||
Gross
Revenues
|
Operating
Expenses
|
NOI
|
Gross
Revenues
|
Operating
Expenses
|
NOI
|
|||||||||||||||||||
Southern California
|
3.9
|
%
|
1.9
|
%
|
4.7
|
%
|
4.3
|
%
|
2.1
|
%
|
5.4
|
%
|
||||||||||||
Northern California
|
2.8
|
%
|
-0.9
|
%
|
4.1
|
%
|
3.2
|
%
|
1.7
|
%
|
3.8
|
%
|
||||||||||||
Seattle Metro
|
6.6
|
%
|
7.7
|
%
|
6.0
|
%
|
7.2
|
%
|
6.6
|
%
|
7.5
|
%
|
||||||||||||
Same-Property Portfolio
|
3.9
|
%
|
2.2
|
%
|
4.7
|
%
|
4.4
|
%
|
2.8
|
%
|
5.2
|
%
|
Sequential Growth
|
||||||||||||
Q2 2017 compared to Q1 2017
|
||||||||||||
Gross
Revenues
|
Operating
Expenses
|
NOI
|
||||||||||
Southern California
|
0.4
|
%
|
0.0
|
%
|
0.5
|
%
|
||||||
Northern California
|
1.1
|
%
|
-6.1
|
%
|
3.9
|
%
|
||||||
Seattle Metro
|
1.6
|
%
|
9.9
|
%
|
-2.1
|
%
|
||||||
Same-Property Portfolio
|
0.8
|
%
|
-0.2
|
%
|
1.3
|
%
|
Financial Occupancies
|
||||||||||||
Quarter Ended
|
||||||||||||
6/30/2017
|
3/31/2017
|
6/30/2016
|
||||||||||
Southern California
|
96.2
|
%
|
96.4
|
%
|
95.9
|
%
|
||||||
Northern California
|
96.7
|
%
|
96.6
|
%
|
96.2
|
%
|
||||||
Seattle Metro
|
96.2
|
%
|
96.6
|
%
|
95.9
|
%
|
||||||
Same-Property Portfolio
|
96.4
|
%
|
96.5
|
%
|
96.0
|
%
|
Project Name
|
Location
|
Total
Apartment Homes |
ESS
Ownership |
% Leased
as of 7/24/17 |
Status
|
The Galloway (at Hacienda)
|
Pleasanton, CA
|
251
|
55%
|
78%
|
In Lease-Up
|
Century Towers
|
San Jose, CA
|
376
|
50%
|
69%
|
In Lease-Up
|
Total/Weighted Average % Leased
|
627
|
73%
|
Per Diluted
Share |
||||
Projected midpoint of Core FFO per share for Q2 2017
|
$
|
2.87
|
||
NOI from consolidated communities
|
0.08
|
|||
G&A and other income
|
0.02
|
|||
Core FFO per share for Q2 2017 reported
|
$
|
2.97
|
Previous
Range
|
Previous Midpoint
|
Revised
Range
|
Revised Midpoint
|
||
Per Diluted Share
|
|||||
Net Income
|
$5.60 to $6.00
|
$5.80
|
$5.75 to $6.00
|
$5.88
|
|
Total FFO
|
$11.56 to $11.96
|
$11.76
|
$11.71 to $11.96
|
$11.84
|
|
Core FFO
|
$11.56 to $11.96
|
$11.76
|
$11.70 to $11.96
|
$11.83
|
|
Same-Property Growth
|
|||||
Gross Revenues
|
3.0% to 4.0%
|
3.5%
|
3.2% to 4.0%
|
3.6%
|
|
Operating Expenses
|
2.5% to 3.5%
|
3.0%
|
2.5% to 2.9%
|
2.7%
|
|
NOI
|
2.8% to 4.6%
|
3.7%
|
3.3% to 4.6%
|
4.0%
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
Funds from Operations attributable to common stockholders and unitholders (In thousands)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Net income available to common stockholders
|
$
|
70,759
|
$
|
72,013
|
$
|
249,723
|
$
|
149,994
|
||||||||
Adjustments:
|
||||||||||||||||
Depreciation and amortization
|
117,939
|
109,673
|
233,442
|
219,380
|
||||||||||||
Gains not included in FFO
|
(2,159
|
)
|
(5,611
|
)
|
(114,815
|
)
|
(33,304
|
)
|
||||||||
Deferred tax expense on gain on sale of real estate and land – Taxable REIT Subsidiary activity
|
-
|
-
|
-
|
4,279
|
||||||||||||
Depreciation add back from unconsolidated co-investments
|
13,627
|
12,457
|
26,481
|
24,480
|
||||||||||||
Noncontrolling interest related to Operating Partnership units
|
2,422
|
2,450
|
8,568
|
5,234
|
||||||||||||
Depreciation attributable to third party ownership and other
|
(26
|
)
|
(4
|
)
|
(51
|
)
|
2
|
|||||||||
Funds from Operations attributable to common stockholders and unitholders
|
$
|
202,562
|
$
|
190,978
|
$
|
403,348
|
$
|
370,065
|
||||||||
FFO per share – diluted
|
$
|
2.97
|
$
|
2.81
|
$
|
5.93
|
$
|
5.45
|
||||||||
Acquisition and investment related costs
|
$
|
274
|
$
|
267
|
$
|
830
|
$
|
1,095
|
||||||||
Gain on sale of marketable securities and other investments
|
(13
|
)
|
(1,103
|
)
|
(1,618
|
)
|
(1,843
|
)
|
||||||||
Interest rate hedge ineffectiveness (1)
|
(14
|
)
|
-
|
(20
|
)
|
-
|
||||||||||
Income from early redemption of preferred equity investments
|
(248
|
)
|
-
|
(248
|
)
|
-
|
||||||||||
Excess of redemption value of preferred stock over the carrying value
|
-
|
-
|
-
|
2,541
|
||||||||||||
Insurance reimbursements and legal settlements
|
-
|
(4,010
|
)
|
(25
|
)
|
(4,010
|
)
|
|||||||||
Core Funds from Operations attributable to common stockholders and unitholders
|
$
|
202,561
|
$
|
186,132
|
$
|
402,267
|
$
|
367,848
|
||||||||
Core FFO per share – diluted
|
$
|
2.97
|
$
|
2.74
|
$
|
5.91
|
$
|
5.42
|
||||||||
Weighted average number of shares outstanding diluted (2)
|
68,145,911
|
67,877,202
|
68,058,495
|
67,864,255
|
(1)
|
Interest rate swaps are generally adjusted to fair value through other comprehensive income (loss). However, because certain of our interest rate swaps do not have a 0% LIBOR floor, while related hedged debt in these cases is subject to a 0% LIBOR floor, the portion of the change in fair value of these interest rate swaps attributable to this mismatch is recorded as noncash interest rate hedge ineffectiveness through interest expense.
|
(2)
|
Assumes conversion of all outstanding limited partnership units in the Operating Partnership and excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the DownREIT limited partnership units for cash and does not consider them to be common stock equivalents.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Earnings from operations
|
$
|
112,247
|
$
|
105,873
|
$
|
221,478
|
$
|
205,868
|
||||||||
Adjustments:
|
||||||||||||||||
Depreciation and amortization
|
117,939
|
109,673
|
233,442
|
219,380
|
||||||||||||
Management and other fees
|
(2,296
|
)
|
(2,028
|
)
|
(4,532
|
)
|
(4,052
|
)
|
||||||||
General and administrative
|
10,337
|
9,698
|
20,938
|
18,880
|
||||||||||||
Acquisition and investment related costs
|
274
|
267
|
830
|
1,095
|
||||||||||||
NOI
|
238,501
|
223,483
|
472,156
|
441,171
|
||||||||||||
Less: Non-same property NOI
|
(24,147
|
)
|
(18,783
|
)
|
(46,132
|
)
|
(36,018
|
)
|
||||||||
Same-Property NOI
|
$
|
214,354
|
$
|
204,700
|
$
|
426,024
|
$
|
405,153
|
Page(s)
|
|
Consolidated Operating Results
|
S-1 – S-2
|
Consolidated Funds From Operations
|
S-3
|
Consolidated Balance Sheets
|
S-4
|
Debt Summary - June 30, 2017
|
S-5
|
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios - June 30, 2017
|
S-6
|
Portfolio Summary by County - June 30, 2017
|
S-7
|
Operating Income by Quarter - June 30, 2017
|
S-8
|
Same-Property Revenue Results by County - Quarters ended June 30, 2017 and 2016, and March 31, 2017
|
S-9
|
Same-Property Revenue Results by County - Six months ended June 30, 2017 and 2016
|
S-9.1
|
Same-Property Operating Expenses
|
S-10
|
Development Pipeline - June 30, 2017
|
S-11
|
Redevelopment Pipeline - June 30, 2017
|
S-12
|
Capital Expenditures - June 30, 2017
|
S-12.1
|
Co-Investments - June 30, 2017
|
S-13
|
Assumptions for 2017 FFO Guidance Range
|
S-14
|
Reconciliation of Projected EPS, FFO and Core FFO per diluted share
|
S-14.1
|
Summary of Apartment Community Acquisitions and Dispositions Activity
|
S-15
|
2017 MSA Level Forecast: Supply, Jobs and Apartment Market Conditions
|
S-16
|
Reconciliations of Non-GAAP Financial Measures and Other Terms
|
S-17.1 – S-17.4
|
Consolidated Operating Results
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
(Dollars in thousands, except share and per share amounts)
|
June 30,
|
June 30,
|
||||||||||||||
2017
|
2016
|
2017
|
2016
|
|||||||||||||
Revenues:
|
||||||||||||||||
Rental and other property
|
$
|
336,766
|
$
|
319,562
|
$
|
669,934
|
$
|
631,740
|
||||||||
Management and other fees from affiliates
|
2,296
|
2,028
|
4,532
|
4,052
|
||||||||||||
339,062
|
321,590
|
674,466
|
635,792
|
|||||||||||||
Expenses:
|
||||||||||||||||
Property operating
|
98,265
|
96,079
|
197,778
|
190,569
|
||||||||||||
Depreciation and amortization
|
117,939
|
109,673
|
233,442
|
219,380
|
||||||||||||
General and administrative
|
10,337
|
9,698
|
20,938
|
18,880
|
||||||||||||
Acquisition and investment related costs
|
274
|
267
|
830
|
1,095
|
||||||||||||
226,815
|
215,717
|
452,988
|
429,924
|
|||||||||||||
Earnings from operations
|
112,247
|
105,873
|
221,478
|
205,868
|
||||||||||||
Interest expense, net (1)
|
(54,281
|
)
|
(52,754
|
)
|
(106,280
|
)
|
(102,097
|
)
|
||||||||
Interest and other income
|
5,362
|
9,409
|
12,126
|
14,617
|
||||||||||||
Equity income from co-investments
|
10,308
|
14,296
|
21,207
|
29,364
|
||||||||||||
Gain on sale of real estate and land
|
-
|
-
|
26,174
|
20,258
|
||||||||||||
Deferred tax expense on gain on sale of real estate and land
|
-
|
-
|
-
|
(4,279
|
)
|
|||||||||||
Gain on remeasurement of co-investment
|
2,159
|
-
|
88,641
|
-
|
||||||||||||
Net income
|
75,795
|
76,824
|
263,346
|
163,731
|
||||||||||||
Net income attributable to noncontrolling interest
|
(5,036
|
)
|
(4,811
|
)
|
(13,623
|
)
|
(9,882
|
)
|
||||||||
Net income attributable to controlling interest
|
70,759
|
72,013
|
249,723
|
153,849
|
||||||||||||
Dividends to preferred stockholders
|
-
|
-
|
-
|
(1,314
|
)
|
|||||||||||
Excess of redemption value of preferred stock over the carrying value
|
-
|
-
|
-
|
(2,541
|
)
|
|||||||||||
Net income available to common stockholders
|
$
|
70,759
|
$
|
72,013
|
$
|
249,723
|
$
|
149,994
|
||||||||
Net income per share - basic
|
$
|
1.08
|
$
|
1.10
|
$
|
3.80
|
$
|
2.29
|
||||||||
Shares used in income per share - basic
|
65,729,074
|
65,451,110
|
65,639,775
|
65,428,382
|
||||||||||||
Net income per share - diluted
|
$
|
1.08
|
$
|
1.10
|
$
|
3.80
|
$
|
2.29
|
||||||||
Shares used in income per share - diluted
|
65,819,694
|
65,575,378
|
65,942,018
|
65,558,811
|
(1)
|
Refer to page S-17.2, the section titled “Interest Expense, Net” for additional information. |
Consolidated Operating Results
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
Selected Line Item Detail
|
June 30,
|
June 30,
|
||||||||||||||
(Dollars in thousands)
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Rental and other property
|
||||||||||||||||
Rental
|
$
|
314,546
|
$
|
298,942
|
$
|
624,668
|
$
|
591,461
|
||||||||
Other property
|
22,220
|
20,620
|
45,266
|
40,279
|
||||||||||||
Rental and other property
|
$
|
336,766
|
$
|
319,562
|
$
|
669,934
|
$
|
631,740
|
||||||||
Property operating expenses
|
||||||||||||||||
Real estate taxes
|
$
|
34,884
|
$
|
34,541
|
$
|
70,752
|
$
|
68,960
|
||||||||
Administrative and insurance
|
20,690
|
19,927
|
41,245
|
38,961
|
||||||||||||
Maintenance and repairs
|
18,575
|
18,449
|
37,476
|
36,467
|
||||||||||||
Utilities
|
16,566
|
15,559
|
33,221
|
31,025
|
||||||||||||
Property management
|
7,550
|
7,603
|
15,084
|
15,156
|
||||||||||||
Property operating expenses
|
$
|
98,265
|
$
|
96,079
|
$
|
197,778
|
$
|
190,569
|
||||||||
Interest and other income
|
||||||||||||||||
Marketable securities and other interest income
|
$
|
5,044
|
$
|
4,296
|
$
|
9,924
|
$
|
8,764
|
||||||||
Gain on sale of marketable securities and other investments
|
13
|
1,103
|
1,618
|
1,843
|
||||||||||||
Insurance reimbursements and other
|
305
|
4,010
|
584
|
4,010
|
||||||||||||
Interest and other income
|
$
|
5,362
|
$
|
9,409
|
$
|
12,126
|
$
|
14,617
|
||||||||
Equity income from co-investments
|
||||||||||||||||
Equity income from co-investments
|
$
|
4,395
|
$
|
4,804
|
$
|
9,648
|
$
|
9,756
|
||||||||
Income from preferred equity investments
|
5,665
|
3,881
|
11,311
|
6,562
|
||||||||||||
Gain on sale of co-investment communities
|
-
|
5,611
|
-
|
13,046
|
||||||||||||
Income from early redemption of preferred equity investments
|
248
|
-
|
248
|
-
|
||||||||||||
Equity income from co-investments
|
$
|
10,308
|
$
|
14,296
|
$
|
21,207
|
$
|
29,364
|
||||||||
Noncontrolling interest
|
||||||||||||||||
Limited partners of Essex Portfolio, L.P.
|
$
|
2,422
|
$
|
2,450
|
$
|
8,568
|
$
|
5,234
|
||||||||
DownREIT limited partners’ distributions
|
1,695
|
1,425
|
3,245
|
2,859
|
||||||||||||
Third-party ownership interest
|
919
|
936
|
1,810
|
1,789
|
||||||||||||
Noncontrolling interest
|
$
|
5,036
|
$
|
4,811
|
$
|
13,623
|
$
|
9,882
|
Consolidated Funds From Operations (1)
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||||||||||
(Dollars in thousands, except share and per share amounts and in footnotes)
|
June 30,
|
June 30,
|
||||||||||||||||||||||
2017
|
2016
|
% Change
|
2017
|
2016
|
% Change
|
|||||||||||||||||||
Funds from operations attributable to common stockholders and unitholders (FFO)
|
||||||||||||||||||||||||
Net income available to common stockholders
|
$
|
70,759
|
$
|
72,013
|
$
|
249,723
|
$
|
149,994
|
||||||||||||||||
Adjustments:
|
||||||||||||||||||||||||
Depreciation and amortization
|
117,939
|
109,673
|
233,442
|
219,380
|
||||||||||||||||||||
Gains not included in FFO
|
(2,159
|
)
|
(5,611
|
)
|
(114,815
|
)
|
(33,304
|
)
|
||||||||||||||||
Deferred tax expense on gain on sale of real estate and land - Taxable REIT Subsidiary activity
|
-
|
-
|
-
|
4,279
|
||||||||||||||||||||
Depreciation add back from unconsolidated co-investments
|
13,627
|
12,457
|
26,481
|
24,480
|
||||||||||||||||||||
Noncontrolling interest related to Operating Partnership units
|
2,422
|
2,450
|
8,568
|
5,234
|
||||||||||||||||||||
Depreciation attributable to third party ownership and other (2)
|
(26
|
)
|
(4
|
)
|
(51
|
)
|
2
|
|||||||||||||||||
Funds from operations attributable to common stockholders and unitholders
|
$
|
202,562
|
$
|
190,978
|
$
|
403,348
|
$
|
370,065
|
||||||||||||||||
FFO per share-diluted
|
$
|
2.97
|
$
|
2.81
|
5.7
|
%
|
$
|
5.93
|
$
|
5.45
|
8.8
|
%
|
||||||||||||
Components of the change in FFO
|
||||||||||||||||||||||||
Non-core items:
|
||||||||||||||||||||||||
Acquisition and investment related costs
|
$
|
274
|
$
|
267
|
$
|
830
|
$
|
1,095
|
||||||||||||||||
Gain on sale of marketable securities and other investments
|
(13
|
)
|
(1,103
|
)
|
(1,618
|
)
|
(1,843
|
)
|
||||||||||||||||
Interest rate hedge ineffectiveness (3)
|
(14
|
)
|
-
|
(20
|
)
|
-
|
||||||||||||||||||
Income from early redemption of preferred equity investments
|
(248
|
)
|
-
|
(248
|
)
|
-
|
||||||||||||||||||
Excess of redemption value of preferred stock over the carrying value
|
-
|
-
|
-
|
2,541
|
||||||||||||||||||||
Insurance reimbursements and legal settlements
|
-
|
(4,010
|
)
|
(25
|
)
|
(4,010
|
)
|
|||||||||||||||||
Core funds from operations attributable to common stockholders and unitholders
|
202,561
|
186,132
|
402,267
|
367,848
|
||||||||||||||||||||
Core FFO per share-diluted
|
$
|
2.97
|
$
|
2.74
|
8.4
|
%
|
$
|
5.91
|
$
|
5.42
|
9.0
|
%
|
||||||||||||
Changes in core items:
|
||||||||||||||||||||||||
Same-property NOI
|
$
|
9,654
|
$
|
20,871
|
||||||||||||||||||||
Non-same property NOI
|
5,364
|
10,114
|
||||||||||||||||||||||
Management and other fees, net
|
268
|
480
|
||||||||||||||||||||||
FFO from co-investments
|
2,545
|
6,642
|
||||||||||||||||||||||
Interest and other income
|
1,053
|
1,719
|
||||||||||||||||||||||
Interest expense
|
(1,513
|
)
|
(4,163
|
)
|
||||||||||||||||||||
General and administrative
|
(639
|
)
|
(2,058
|
)
|
||||||||||||||||||||
Other items, net
|
(303
|
)
|
814
|
|||||||||||||||||||||
$
|
16,429
|
$
|
34,419
|
|||||||||||||||||||||
Weighted average number of shares outstanding diluted (4)
|
68,145,911
|
67,877,202
|
68,058,495
|
67,864,255
|
(1)
|
Refer to page S-17.1, the section titled “Funds from Operations (“FFO”)” for additional information on the Company’s definition and use of FFO and Core FFO.
|
(2)
|
The Company consolidates certain co-investments. Noncontrolling interest’s share of net operating income in these investments for the three and six months ended June 30, 2017 was $1.2 million and $2.4 million, respectively.
|
(3)
|
Interest rate swaps are generally adjusted to fair value through other comprehensive income (loss). However, because certain of our interest rate swaps do not have a 0% LIBOR floor, while related hedged debt in these cases is subject to a 0% LIBOR floor, the portion of the change in fair value of these interest rate swaps attributable to this mismatch is recorded as noncash interest rate hedge ineffectiveness through interest expense.
|
(4)
|
Assumes conversion of all outstanding limited partnership units in the Operating Partnership and excludes all DownREIT units for which the Operating Partnership has the ability and intention to redeem the DownREIT limited partnership units for cash and does not consider them to be common stock equivalents.
|
Consolidated Balance Sheets
|
||||||||
(Dollars in thousands)
|
||||||||
June 30, 2017
|
December 31, 2016
|
|||||||
Real Estate:
|
||||||||
Land and land improvements
|
$
|
2,719,064
|
$
|
2,559,743
|
||||
Buildings and improvements
|
10,536,639
|
10,116,563
|
||||||
13,255,703
|
12,676,306
|
|||||||
Less: accumulated depreciation
|
(2,534,646
|
)
|
(2,311,546
|
)
|
||||
10,721,057
|
10,364,760
|
|||||||
Real estate under development
|
263,284
|
190,505
|
||||||
Co-investments
|
1,081,084
|
1,161,275
|
||||||
Real estate held for sale, net
|
3,015
|
101,957
|
||||||
12,068,440
|
11,818,497
|
|||||||
Cash and cash equivalents, including restricted
|
199,876
|
170,302
|
||||||
Marketable securities
|
151,995
|
139,189
|
||||||
Notes and other receivables
|
54,660
|
40,970
|
||||||
Prepaid expenses and other assets
|
49,980
|
48,450
|
||||||
Total assets
|
$
|
12,524,951
|
$
|
12,217,408
|
||||
Unsecured debt, net
|
$
|
3,540,802
|
$
|
3,246,779
|
||||
Mortgage notes payable, net
|
2,122,593
|
2,191,481
|
||||||
Lines of credit
|
-
|
125,000
|
||||||
Distributions in excess of investments in co-investments
|
36,025
|
-
|
||||||
Other liabilities
|
342,423
|
317,227
|
||||||
Total liabilities
|
6,041,843
|
5,880,487
|
||||||
Redeemable noncontrolling interest
|
45,081
|
44,684
|
||||||
Equity:
|
||||||||
Common stock
|
6
|
6
|
||||||
Additional paid-in capital
|
7,131,047
|
7,029,679
|
||||||
Distributions in excess of accumulated earnings
|
(785,939
|
)
|
(805,409
|
)
|
||||
Accumulated other comprehensive loss, net
|
(28,341
|
)
|
(32,098
|
)
|
||||
Total stockholders’ equity
|
6,316,773
|
6,192,178
|
||||||
Noncontrolling interest
|
121,254
|
100,059
|
||||||
Total equity
|
6,438,027
|
6,292,237
|
||||||
Total liabilities and equity
|
$
|
12,524,951
|
$
|
12,217,408
|
Debt Summary - June 30, 2017
|
||||||||||||||||||||||||||||||||||||
(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
|
||||||||||||||||||||||||||||||||||||
Balance
Outstanding |
Interest
Rate |
Maturity
in Years |
Unsecured
|
Secured
|
Total
|
Weighted
Average Interest Rate |
Percentage
of Total Debt |
|||||||||||||||||||||||||||||
Unsecured Debt, net
|
||||||||||||||||||||||||||||||||||||
Bonds private - fixed rate
|
$
|
315,000
|
4.5
|
%
|
3.1
|
2017 |
$
|
40,000
|
$
|
15,105
|
$
|
55,105
|
4.4
|
%
|
1.0
|
%
|
||||||||||||||||||||
Bonds public - fixed rate
|
2,900,000
|
3.7
|
%
|
7.0
|
2018 |
-
|
257,108
|
257,108
|
5.5
|
%
|
4.5
|
%
|
||||||||||||||||||||||||
Term loan (1)
|
350,000
|
2.3
|
%
|
4.6
|
2019 |
75,000
|
578,114
|
653,114
|
4.3
|
%
|
11.6
|
%
|
||||||||||||||||||||||||
Unamortized net discounts and debt issuance costs
|
(24,198
|
)
|
-
|
-
|
2020 |
-
|
695,070
|
695,070
|
4.8
|
%
|
12.3
|
%
|
||||||||||||||||||||||||
3,540,802
|
3.6
|
%
|
6.4
|
2021 |
500,000
|
52,831
|
552,831
|
4.3
|
%
|
9.8
|
%
|
|||||||||||||||||||||||||
Mortgage Notes Payable, net
|
2022 |
650,000
|
42,649
|
692,649
|
3.0
|
%
|
12.3
|
%
|
||||||||||||||||||||||||||||
Fixed rate - secured
|
1,806,220
|
4.7
|
%
|
3.7
|
2023 |
600,000
|
2,188
|
602,188
|
3.6
|
%
|
10.7
|
%
|
||||||||||||||||||||||||
Variable rate - secured (2)
|
281,217
|
1.6
|
%
|
18.9
|
2024 |
400,000
|
2,317
|
402,317
|
4.0
|
%
|
7.1
|
%
|
||||||||||||||||||||||||
Unamortized premiums and debt issuance costs, net
|
35,156
|
-
|
-
|
2025 |
500,000
|
16,056
|
516,056
|
3.5
|
%
|
9.1
|
%
|
|||||||||||||||||||||||||
Total mortgage notes payable
|
2,122,593
|
4.3
|
%
|
5.7
|
2026 |
450,000
|
55,091
|
505,091
|
3.4
|
%
|
8.9
|
%
|
||||||||||||||||||||||||
2027 |
350,000
|
166,250
|
516,250
|
3.3
|
%
|
9.1
|
%
|
|||||||||||||||||||||||||||||
Unsecured Lines of Credit
|
Thereafter
|
-
|
204,658
|
204,658
|
2.1
|
%
|
3.6
|
%
|
||||||||||||||||||||||||||||
Line of credit (3)
|
-
|
1.9
|
%
|
Subtotal
|
3,565,000
|
2,087,437
|
5,652,437
|
3.9
|
%
|
100.0
|
%
|
|||||||||||||||||||||||||
Line of credit (4)
|
-
|
1.9
|
%
|
Debt Issuance Costs
|
(19,390
|
)
|
(6,452
|
)
|
(25,842
|
)
|
NA
|
NA
|
||||||||||||||||||||||||
Total lines of credit
|
-
|
1.9
|
%
|
Premiums/(Discounts)
|
(4,808
|
)
|
41,608
|
36,800
|
NA
|
NA
|
||||||||||||||||||||||||||
Total
|
$
|
3,540,802
|
$
|
2,122,593
|
$
|
5,663,395
|
3.9
|
%
|
100.0
|
%
|
||||||||||||||||||||||||||
Total debt, net
|
$
|
5,663,395
|
3.9
|
%
|
Capitalized interest for the three and six months ended June 30, 2017 was approximately $3.3 million and $6.6 million, respectively.
|
|
(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 $200 million, which effectively converts the interest rate on $200 million of the term loan to a fixed rate of 2.3%.
|
(2)
|
$281.2 million of variable rate debt is tax exempt to the note holders. $20.7 million is subject to interest rate cap protection agreements.
|
(3)
|
The unsecured line of credit facility aggregates to $1 billion. The line matures in December 2020 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 0.90%.
|
(4)
|
The unsecured line of credit facility is $25 million and is scheduled to mature in January 2018. 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 0.90%.
|
Capitalization Data, Public Bond Covenants, Credit Ratings and Selected Credit Ratios - June 30, 2017
|
|||||||||||||||||
(Dollars and shares in thousands, except per share amounts)
|
|||||||||||||||||
Capitalization Data
|
Public Bond Covenants (1)
|
Actual
|
Requirement
|
||||||||||||||
Total debt, net
|
$
|
5,663,395
|
|||||||||||||||
Adjusted Debt to Adjusted Total Assets:
|
38%
|
< 65%
|
|||||||||||||||
Common stock and potentially dilutive securities
|
|||||||||||||||||
Common stock outstanding
|
65,989
|
||||||||||||||||
Limited partnership units (1)
|
2,325
|
||||||||||||||||
Options-treasury method
|
85
|
Secured Debt to Adjusted Total Assets:
|
14%
|
|
< 40%
|
||||||||||||
Total shares of common stock and potentially dilutive securities
|
68,399
|
||||||||||||||||
Common stock price per share as of June 30, 2017
|
$
|
257.27
|
|||||||||||||||
Interest Coverage:
|
402%
|
|
> 150%
|
||||||||||||||
Total equity capitalization
|
$
|
17,597,011
|
|||||||||||||||
Total market capitalization
|
$
|
23,260,406
|
Unsecured Debt Ratio (2):
|
289%
|
|
> 150%
|
|||||||||||
Ratio of debt to total market capitalization
|
24.3
|
%
|
|||||||||||||||
Selected Credit Ratios (3)
|
Actual
|
||||||||||||||||
Credit Ratings
|
|||||||||||||||||
Rating Agency
|
Rating
|
Outlook
|
Net Indebtedness Divided by Adjusted EBITDA, normalized and annualized:
|
5.6
|
|||||||||||||
Fitch
|
BBB+
|
Stable
|
|||||||||||||||
Moody’s
|
Baa1
|
Stable
|
Unencumbered NOI to Adjusted Total NOI:
|
69%
|
|
||||||||||||
Standard & Poor’s
|
BBB+
|
Stable
|
|||||||||||||||
(1) |
Refer to page S-17.3 for additional information on the Company’s Public Bond Covenants.
|
||||||||||||||||
(1)
|
Assumes conversion of all outstanding limited partnership units in the Operating Partnership 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
|
9,387
|
1,418
|
-
|
10,805
|
$
|
2,365
|
$
|
2,041
|
$
|
2,342
|
19.5
|
%
|
12.4
|
%
|
18.8
|
%
|
||||||||||||||||||||||||
Orange County
|
5,553
|
1,379
|
-
|
6,932
|
2,097
|
1,845
|
2,069
|
10.6
|
%
|
11.2
|
%
|
10.6
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
5,203
|
616
|
-
|
5,819
|
1,847
|
1,691
|
1,839
|
8.5
|
%
|
4.5
|
%
|
8.2
|
%
|
|||||||||||||||||||||||||||
Ventura County
|
2,577
|
693
|
-
|
3,270
|
1,714
|
2,086
|
1,758
|
4.3
|
%
|
6.2
|
%
|
4.5
|
%
|
|||||||||||||||||||||||||||
Other Southern CA
|
623
|
249
|
-
|
872
|
1,577
|
1,559
|
1,574
|
0.9
|
%
|
1.9
|
%
|
1.0
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
23,343
|
4,355
|
-
|
27,698
|
2,093
|
1,909
|
2,077
|
43.8
|
%
|
36.2
|
%
|
43.1
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
7,356
|
2,053
|
476
|
9,885
|
2,655
|
2,718
|
2,663
|
18.9
|
%
|
20.6
|
%
|
19.0
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
2,954
|
1,983
|
-
|
4,937
|
2,468
|
2,367
|
2,441
|
6.8
|
%
|
18.5
|
%
|
7.9
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
1,830
|
197
|
320
|
2,347
|
2,834
|
2,839
|
2,835
|
5.1
|
%
|
2.5
|
%
|
4.9
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,270
|
49
|
-
|
2,319
|
2,267
|
4,456
|
2,291
|
5.0
|
%
|
0.7
|
%
|
4.6
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
1,342
|
463
|
545
|
2,350
|
3,050
|
3,336
|
3,095
|
3.7
|
%
|
7.2
|
%
|
4.0
|
%
|
|||||||||||||||||||||||||||
Other Northern CA
|
96
|
-
|
-
|
96
|
2,738
|
-
|
2,738
|
0.3
|
%
|
-
|
0.3
|
%
|
||||||||||||||||||||||||||||
Total Northern California
|
15,848
|
4,745
|
1,341
|
21,934
|
2,619
|
2,658
|
2,624
|
39.8
|
%
|
49.5
|
%
|
40.7
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,238
|
1,958
|
-
|
12,196
|
1,768
|
1,640
|
1,757
|
16.4
|
%
|
14.3
|
%
|
16.2
|
%
|
|||||||||||||||||||||||||||
Total
|
49,429
|
11,058
|
1,341
|
61,828
|
$
|
2,194
|
$
|
2,195
|
$
|
2,194
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
(1)
|
Average monthly rental rate is defined as the total potential monthly rental revenue (actual rent for occupied apartment homes plus market rent for vacant apartment homes) divided by the number of apartment homes.
|
(2)
|
Actual NOI for the quarter ended June 30, 2017. See the section titled “Net Operating Income (“NOI”) and Same-Property NOI Reconciliations” on page S-17.3.
|
(3)
|
Includes all apartment communities with rents.
|
(4)
|
Includes two rental income producing development communities in lease-up which consist of 627 apartment homes.
|
(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.
|
Operating Income by Quarter (1)
|
||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
Apartment
Homes |
Q2 ‘17
|
Q1 ‘17
|
Q4 ‘16
|
Q3 ‘16
|
Q2 ‘16
|
|||||||||||||||||||
Rental and other property revenues:
|
||||||||||||||||||||||||
Same-property
|
46,128
|
$
|
304,662
|
$
|
302,125
|
$
|
300,808
|
$
|
300,069
|
$
|
293,093
|
|||||||||||||
Acquisitions (2)
|
2,081
|
15,859
|
13,751
|
3,018
|
2,475
|
2,354
|
||||||||||||||||||
Development (3)
|
360
|
4,462
|
4,334
|
4,270
|
4,303
|
4,062
|
||||||||||||||||||
Redevelopment
|
621
|
4,909
|
4,814
|
4,757
|
4,775
|
4,703
|
||||||||||||||||||
Non-residential/other, net (4)
|
239
|
6,874
|
8,144
|
14,052
|
15,456
|
15,350
|
||||||||||||||||||
Total rental and other property revenues
|
49,429
|
336,766
|
333,168
|
326,905
|
327,078
|
319,562
|
||||||||||||||||||
Property operating expenses:
|
||||||||||||||||||||||||
Same-property
|
90,308
|
90,455
|
91,522
|
91,261
|
88,393
|
|||||||||||||||||||
Acquisitions (2)
|
5,273
|
4,552
|
906
|
831
|
850
|
|||||||||||||||||||
Development (3)
|
1,448
|
1,576
|
1,528
|
1,569
|
1,497
|
|||||||||||||||||||
Redevelopment
|
1,468
|
1,526
|
1,558
|
1,565
|
1,477
|
|||||||||||||||||||
Non-residential/other, net (4) (5)
|
(232
|
)
|
1,404
|
3,483
|
4,135
|
3,862
|
||||||||||||||||||
Total property operating expenses
|
98,265
|
99,513
|
98,997
|
99,361
|
96,079
|
|||||||||||||||||||
Net operating income (NOI):
|
||||||||||||||||||||||||
Same-property
|
214,354
|
211,670
|
209,286
|
208,808
|
204,700
|
|||||||||||||||||||
Acquisitions (2)
|
10,586
|
9,199
|
2,112
|
1,644
|
1,504
|
|||||||||||||||||||
Development (3)
|
3,014
|
2,758
|
2,742
|
2,734
|
2,565
|
|||||||||||||||||||
Redevelopment
|
3,441
|
3,288
|
3,199
|
3,210
|
3,226
|
|||||||||||||||||||
Non-residential/other, net (4)
|
7,106
|
6,740
|
10,569
|
11,321
|
11,488
|
|||||||||||||||||||
Total NOI
|
$
|
238,501
|
$
|
233,655
|
$
|
227,908
|
$
|
227,717
|
$
|
223,483
|
||||||||||||||
Same-property metrics
|
||||||||||||||||||||||||
Operating margin
|
70
|
%
|
70
|
%
|
70
|
%
|
70
|
%
|
70
|
%
|
||||||||||||||
Annualized turnover (6)
|
54
|
%
|
46
|
%
|
47
|
%
|
63
|
%
|
56
|
%
|
||||||||||||||
Financial occupancy (7)
|
96.4
|
%
|
96.5
|
%
|
96.6
|
%
|
96.5
|
%
|
96.0
|
%
|
(1)
|
Includes consolidated communities only.
|
(2)
|
Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2016.
|
(3)
|
Development includes properties developed which did not have comparable stabilized results as of January 1, 2016.
|
(4)
|
Other real estate assets consists mainly of retail space, commercial properties, boat slips, held for sale properties, and disposition properties.
|
(5)
|
Includes other expenses and intercompany eliminations pertaining to self-insurance. In Q2’17 there were $2.0 million in reductions to operating expenses related to changes in prior period property tax estimates.
|
(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 revenue by total potential rental revenue (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 |
Q2 '17 %
of Actual NOI |
Q2 '17
|
Q2 '16
|
% Change
|
Q2 '17
|
Q2 '16
|
% Change
|
Q2 '17
|
Q2 '16
|
% Change
|
Q1 '17
|
% Change
|
|||||||||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
8,523
|
19.3
|
%
|
$
|
2,364
|
$
|
2,293
|
3.1
|
%
|
95.9
|
%
|
95.7
|
%
|
0.2
|
%
|
$
|
60,389
|
$
|
58,769
|
2.8
|
%
|
$
|
60,392
|
0.0
|
%
|
|||||||||||||||||||||||||||
Orange County
|
5,553
|
11.5
|
%
|
2,097
|
2,001
|
4.8
|
%
|
96.3
|
%
|
96.1
|
%
|
0.2
|
%
|
35,219
|
33,609
|
4.8
|
%
|
34,962
|
0.7
|
%
|
||||||||||||||||||||||||||||||||
San Diego County
|
4,961
|
8.8
|
%
|
1,834
|
1,755
|
4.5
|
%
|
96.1
|
%
|
95.9
|
%
|
0.2
|
%
|
27,685
|
26,530
|
4.4
|
%
|
27,549
|
0.5
|
%
|
||||||||||||||||||||||||||||||||
Ventura County
|
2,577
|
4.6
|
%
|
1,714
|
1,634
|
4.9
|
%
|
96.9
|
%
|
96.3
|
%
|
0.6
|
%
|
13,660
|
12,993
|
5.1
|
%
|
13,593
|
0.5
|
%
|
||||||||||||||||||||||||||||||||
Other Southern CA
|
384
|
0.5
|
%
|
1,251
|
1,209
|
3.5
|
%
|
97.9
|
%
|
97.2
|
%
|
0.7
|
%
|
1,523
|
1,440
|
5.8
|
%
|
1,475
|
3.3
|
%
|
||||||||||||||||||||||||||||||||
Total Southern California
|
21,998
|
44.7
|
%
|
2,081
|
2,002
|
3.9
|
%
|
96.2
|
%
|
95.9
|
%
|
0.3
|
%
|
138,476
|
133,341
|
3.9
|
%
|
137,971
|
0.4
|
%
|
||||||||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
5,925
|
17.0
|
%
|
2,671
|
2,639
|
1.2
|
%
|
97.0
|
%
|
96.4
|
%
|
0.6
|
%
|
48,471
|
47,299
|
2.5
|
%
|
48,004
|
1.0
|
%
|
||||||||||||||||||||||||||||||||
Alameda County
|
2,954
|
7.4
|
%
|
2,468
|
2,422
|
1.9
|
%
|
95.8
|
%
|
95.8
|
%
|
0.0
|
%
|
22,091
|
21,713
|
1.7
|
%
|
21,667
|
2.0
|
%
|
||||||||||||||||||||||||||||||||
San Mateo County
|
1,830
|
5.5
|
%
|
2,834
|
2,753
|
2.9
|
%
|
96.7
|
%
|
96.1
|
%
|
0.6
|
%
|
15,881
|
15,332
|
3.6
|
%
|
15,861
|
0.1
|
%
|
||||||||||||||||||||||||||||||||
Contra Costa County
|
2,270
|
5.4
|
%
|
2,267
|
2,208
|
2.7
|
%
|
97.3
|
%
|
96.6
|
%
|
0.7
|
%
|
15,751
|
15,274
|
3.1
|
%
|
15,635
|
0.7
|
%
|
||||||||||||||||||||||||||||||||
San Francisco
|
817
|
1.9
|
%
|
2,486
|
2,422
|
2.6
|
%
|
95.4
|
%
|
94.7
|
%
|
0.7
|
%
|
6,092
|
5,833
|
4.4
|
%
|
5,994
|
1.6
|
%
|
||||||||||||||||||||||||||||||||
Other Northern CA
|
96
|
0.3
|
%
|
2,738
|
2,495
|
9.7
|
%
|
98.5
|
%
|
97.7
|
%
|
0.8
|
%
|
814
|
726
|
12.1
|
%
|
801
|
1.7
|
%
|
||||||||||||||||||||||||||||||||
Total Northern California
|
13,892
|
37.5
|
%
|
2,573
|
2,524
|
1.9
|
%
|
96.7
|
%
|
96.2
|
%
|
0.5
|
%
|
109,100
|
106,177
|
2.8
|
%
|
107,962
|
1.1
|
%
|
||||||||||||||||||||||||||||||||
Seattle Metro
|
10,238
|
17.8
|
%
|
1,768
|
1,665
|
6.2
|
%
|
96.2
|
%
|
95.9
|
%
|
0.3
|
%
|
57,086
|
53,575
|
6.6
|
%
|
56,192
|
1.6
|
%
|
||||||||||||||||||||||||||||||||
Total Same-Property
|
46,128
|
100.0
|
%
|
$
|
2,160
|
$
|
2,084
|
3.6
|
%
|
96.4
|
%
|
96.0
|
%
|
0.4
|
%
|
$
|
304,662
|
$
|
293,093
|
3.9
|
%
|
$
|
302,125
|
0.8
|
%
|
YTD
|
Average Monthly Rental Rate
|
Financial Occupancy
|
Gross Revenues
|
|||||||||||||||||||||||||||||||||||||||||
Region - County
|
Apartment Homes
|
2017 %
of Actual NOI |
YTD 2017
|
YTD 2016
|
% Change
|
YTD 2017
|
YTD 2016
|
% Change
|
YTD 2017
|
YTD 2016
|
% Change
|
|||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
8,523
|
19.3
|
%
|
$
|
2,353
|
$
|
2,281
|
3.2
|
%
|
96.0
|
%
|
95.9
|
%
|
0.1
|
%
|
$
|
120,782
|
$
|
117,076
|
3.2
|
%
|
|||||||||||||||||||||||
Orange County
|
5,553
|
11.4
|
%
|
2,084
|
1,986
|
4.9
|
%
|
96.4
|
%
|
96.1
|
%
|
0.3
|
%
|
70,181
|
66,713
|
5.2
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
4,961
|
8.9
|
%
|
1,822
|
1,741
|
4.7
|
%
|
96.2
|
%
|
95.8
|
%
|
0.4
|
%
|
55,233
|
52,512
|
5.2
|
%
|
|||||||||||||||||||||||||||
Ventura County
|
2,577
|
4.7
|
%
|
1,703
|
1,624
|
4.9
|
%
|
97.1
|
%
|
96.3
|
%
|
0.8
|
%
|
27,254
|
25,807
|
5.6
|
%
|
|||||||||||||||||||||||||||
Other Southern CA
|
384
|
0.5
|
%
|
1,239
|
1,193
|
3.9
|
%
|
96.9
|
%
|
97.0
|
%
|
-0.1
|
%
|
2,998
|
2,845
|
5.4
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
21,998
|
44.8
|
%
|
2,070
|
1,989
|
4.1
|
%
|
96.3
|
%
|
96.0
|
%
|
0.3
|
%
|
276,448
|
264,953
|
4.3
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
5,925
|
16.8
|
%
|
2,660
|
2,618
|
1.6
|
%
|
97.1
|
%
|
96.4
|
%
|
0.7
|
%
|
96,475
|
93,691
|
3.0
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
2,954
|
7.2
|
%
|
2,460
|
2,402
|
2.4
|
%
|
95.3
|
%
|
95.7
|
%
|
-0.4
|
%
|
43,758
|
42,934
|
1.9
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
1,830
|
5.5
|
%
|
2,816
|
2,734
|
3.0
|
%
|
97.2
|
%
|
96.0
|
%
|
1.3
|
%
|
31,742
|
30,452
|
4.2
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,270
|
5.4
|
%
|
2,255
|
2,185
|
3.2
|
%
|
97.3
|
%
|
96.6
|
%
|
0.7
|
%
|
31,386
|
30,244
|
3.8
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
817
|
1.9
|
%
|
2,479
|
2,414
|
2.7
|
%
|
95.3
|
%
|
94.1
|
%
|
1.3
|
%
|
12,085
|
11,586
|
4.3
|
%
|
|||||||||||||||||||||||||||
Other Northern CA
|
96
|
0.3
|
%
|
2,738
|
2,477
|
10.5
|
%
|
98.0
|
%
|
98.0
|
%
|
0.0
|
%
|
1,614
|
1,435
|
12.5
|
%
|
|||||||||||||||||||||||||||
Total Northern California
|
13,892
|
37.1
|
%
|
2,562
|
2,504
|
2.3
|
%
|
96.7
|
%
|
96.1
|
%
|
0.6
|
%
|
217,060
|
210,342
|
3.2
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,238
|
18.1
|
%
|
1,751
|
1,642
|
6.6
|
%
|
96.4
|
%
|
95.8
|
%
|
0.6
|
%
|
113,279
|
105,648
|
7.2
|
%
|
|||||||||||||||||||||||||||
Total Same-Property
|
46,128
|
100.0
|
%
|
$
|
2,147
|
$
|
2,067
|
3.9
|
%
|
96.4
|
%
|
96.0
|
%
|
0.4
|
%
|
$
|
606,787
|
$
|
580,943
|
4.4
|
%
|
Based on 46,128 apartment homes
|
|||||||||||||||||||||||||||||||||
Q2 '17
|
Q2 '16
|
% Change
|
% of Op.
Ex. |
YTD 2017
|
YTD 2016
|
% Change
|
% of Op.
Ex. |
||||||||||||||||||||||||||
Same-property operating expenses:
|
|||||||||||||||||||||||||||||||||
Real estate taxes
|
$
|
32,392
|
$
|
31,195
|
3.8
|
%
|
35.9
|
%
|
$
|
63,988
|
$
|
62,570
|
2.3
|
%
|
35.4
|
%
|
|||||||||||||||||
Maintenance and repairs
|
16,869
|
16,870
|
0.0
|
%
|
18.7
|
%
|
34,267
|
33,484
|
2.3
|
%
|
19.0
|
%
|
|||||||||||||||||||||
Administrative
|
16,048
|
16,326
|
-1.7
|
%
|
17.8
|
%
|
32,017
|
31,868
|
0.5
|
%
|
17.7
|
%
|
|||||||||||||||||||||
Utilities
|
15,119
|
14,116
|
7.1
|
%
|
16.7
|
%
|
30,126
|
28,104
|
7.2
|
%
|
16.7
|
%
|
|||||||||||||||||||||
Management fees
|
6,928
|
6,943
|
-0.2
|
%
|
7.7
|
%
|
13,857
|
13,880
|
-0.2
|
%
|
7.7
|
%
|
|||||||||||||||||||||
Insurance
|
2,952
|
2,943
|
0.3
|
%
|
3.2
|
%
|
6,508
|
5,884
|
10.6
|
%
|
3.5
|
%
|
|||||||||||||||||||||
Total same-property operating expenses
|
$
|
90,308
|
$
|
88,393
|
2.2
|
%
|
100.0
|
%
|
$
|
180,763
|
$
|
175,790
|
2.8
|
%
|
100.0
|
%
|
Development Pipeline - June 30, 2017
|
|||||||||||||||||||||||||||||||||||||||||||||||||
(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 (3) |
% Leased (3)
|
Construction
Start |
Initial
Occupancy |
Stabilized
Operations |
|||||||||||||||||||||||||||||||||||
Development Projects - Consolidated (4)
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Station Park Green - Phases I & II (5)
|
San Mateo, CA
|
100
|
%
|
320
|
30,000
|
$
|
106
|
$
|
133
|
$
|
239
|
$
|
239
|
$
|
693
|
0.0
|
%
|
0.0
|
%
|
Q3 2015 | Q1 2018 | Q4 2018 | |||||||||||||||||||||||||||
Gateway Village (6)
|
Santa Clara, CA
|
100
|
%
|
476
|
-
|
54
|
172
|
226
|
226
|
475
|
0.0
|
%
|
0.0
|
%
|
Q3 2016 | Q3 2018 | Q4 2019 | ||||||||||||||||||||||||||||||||
Total Development Projects - Consolidated
|
796
|
30,000
|
160
|
305
|
465
|
465
|
584
|
||||||||||||||||||||||||||||||||||||||||||
Land Held for Future Development - Consolidated
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Other Projects (5)(7)
|
Various
|
100
|
%
|
115
|
-
|
115
|
115
|
||||||||||||||||||||||||||||||||||||||||||
Total Development Pipeline - Consolidated
|
796
|
30,000
|
275
|
305
|
580
|
580
|
|||||||||||||||||||||||||||||||||||||||||||
Development Projects - Joint Venture (4)
|
|||||||||||||||||||||||||||||||||||||||||||||||||
The Galloway (at Hacienda)
|
Pleasanton, CA
|
55
|
%
|
251
|
-
|
83
|
3
|
86
|
47
|
343
|
58.0
|
%
|
69.0
|
%
|
Q1 2015 | Q1 2017 | Q1 2018 | ||||||||||||||||||||||||||||||||
Century Towers
|
San Jose, CA
|
50
|
%
|
376
|
2,006
|
155
|
17
|
172
|
86
|
456
|
54.0
|
%
|
58.8
|
%
|
Q3 2014 | Q1 2017 | Q1 2018 | ||||||||||||||||||||||||||||||||
500 Folsom (8)
|
San Francisco, CA
|
50
|
%
|
545
|
6,000
|
131
|
284
|
415
|
208
|
751
|
0.0
|
%
|
0.0
|
%
|
Q4 2015 | Q2 2019 | Q4 2020 | ||||||||||||||||||||||||||||||||
Total Development Projects - Joint Venture
|
1,172
|
8,006
|
369
|
304
|
673
|
341
|
$
|
569
|
|||||||||||||||||||||||||||||||||||||||||
Land Held for Future Development - Joint Venture
|
50
|
%
|
13
|
1
|
14
|
7
|
|||||||||||||||||||||||||||||||||||||||||||
Total Development Pipeline - Joint Venture
|
1,172
|
8,006
|
382
|
305
|
687
|
348
|
|||||||||||||||||||||||||||||||||||||||||||
Grand Total - Development Pipeline
|
1,968
|
38,006
|
$
|
657
|
$
|
610
|
$
|
1,267
|
928
|
||||||||||||||||||||||||||||||||||||||||
Essex Cost Incurred to Date - Pro Rata
|
(470
|
)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Essex Remaining Commitment
|
$
|
458
|
(1)
|
The Company’s share of the estimated total costs 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 June 30, 2017. As of July 24, 2017, The Galloway (at Hacienda) was 78% leased and 70% occupied and Century Towers was 69% leased and 63% occupied.
|
(4)
|
For the second quarter of 2017, the Company’s cost includes $3.0 million of capitalized interest, $1.4 million of capitalized overhead and $0.4 million of development fees (such development fees reduced G&A expenses).
|
(5)
|
Development of phases one and two are reflected under Development Projects - Consolidated. Costs incurred for phases three and four, which consist of 279 apartment homes, are included in Land Held for Future Development - Consolidated.
|
(6)
|
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.
|
(7)
|
Cost incurred to date does not include a deduction of $6.3 million for accumulated depreciation recorded during the period when one property was held as a retail operating asset.
|
(8)
|
Estimated costs incurred to date and total cost is net of a projected value for low income housing tax credit proceeds and the value of the tax exempt bond structure.
|
Redevelopment Pipeline - June 30, 2017
|
|||||||||||||||||||||||||||
(Dollars in thousands)
|
|||||||||||||||||||||||||||
Region/Project Name
|
Apartment
Homes
|
Total
Incurred
To Date
|
Estimated
Remaining
Cost
|
Estimated
Total
Cost
|
Project
Start Date
|
NOI
|
|||||||||||||||||||||
For the six months ended
|
|||||||||||||||||||||||||||
2017
|
2016
|
||||||||||||||||||||||||||
Same-Property - Redevelopment Projects (1)
|
|||||||||||||||||||||||||||
Southern California
|
|||||||||||||||||||||||||||
Hamptons
|
215
|
$
|
14,700
|
$
|
8,900
|
$
|
23,600
|
Q1 2014 | |||||||||||||||||||
Kings Road
|
196
|
1,700
|
10,500
|
12,200
|
Q4 2016 | ||||||||||||||||||||||
The Palms at Laguna Niguel
|
460
|
1,600
|
6,600
|
8,200
|
Q4 2016 | ||||||||||||||||||||||
Northern California
|
|||||||||||||||||||||||||||
Crow Canyon
|
400
|
1,500
|
5,300
|
6,800
|
Q1 2017 | ||||||||||||||||||||||
Total Same-Property - Redevelopment Projects
|
1,271
|
$
|
19,500
|
$
|
31,300
|
$
|
50,800
|
$
|
11,362
|
$
|
10,541
|
||||||||||||||||
Non-Same Property - Redevelopment Projects
|
|||||||||||||||||||||||||||
Southern California
|
|||||||||||||||||||||||||||
Bunker Hill Towers
|
456
|
$
|
62,900
|
$
|
24,500
|
$
|
87,400
|
Q3 2013 | |||||||||||||||||||
Total Non-Same Property - Redevelopment Projects
|
456
|
$
|
62,900
|
$
|
24,500
|
$
|
87,400
|
$
|
3,956
|
$
|
3,514
|
(1)
|
Redevelopment activities are ongoing at these communities, but the communities have stabilized operations, therefore results are classified in same-property results.
|
Revenue Generating Capital Expenditures (1) (2)
|
Q2 2017
|
Q1 2017
|
Q4 2016
|
Q3 2016
|
Trailing 4
Quarters |
|||||||||||||||
Same-property portfolio
|
$
|
16,519
|
$
|
9,345
|
$
|
14,910
|
$
|
13,534
|
$
|
54,308
|
||||||||||
Non-same property portfolio
|
3,987
|
2,310
|
5,114
|
6,691
|
18,102
|
|||||||||||||||
Total revenue generating capital expenditures
|
$
|
20,506
|
$
|
11,655
|
$
|
20,024
|
$
|
20,225
|
$
|
72,410
|
||||||||||
Number of same-property interior renovations completed
|
760
|
589
|
511
|
731
|
2,591
|
|||||||||||||||
Number of total consolidated interior renovations completed
|
768
|
594
|
581
|
855
|
2,798
|
|||||||||||||||
Non-Revenue Generating Capital Expenditures (3)
|
Q2 2017
|
Q1 2017
|
Q4 2016
|
Q3 2016
|
Trailing 4
Quarters |
|||||||||||||||
Non-revenue generating capital expenditures (4)
|
$
|
16,473
|
$
|
9,381
|
$
|
19,224
|
$
|
18,520
|
$
|
63,598
|
||||||||||
Average apartment homes in quarter
|
49,429
|
48,900
|
48,712
|
49,053
|
49,024
|
|||||||||||||||
Capital expenditures per apartment homes in the quarter
|
$
|
333
|
$
|
192
|
$
|
395
|
$
|
378
|
$
|
1,297
|
||||||||||
(1)
|
The Company incurred $0.3 million of capitalized interest, $2.9 million of capitalized overhead and $0.2 million of co-investment fees related to redevelopment in Q2 2017.
|
(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.
|
Co-investments - June 30, 2017
|
Essex
Ownership
Percentage
|
Apartment Homes |
Total
Undepreciated
Book Value
|
Debt
Amount
|
Essex
Book
Value
|
Weighted
Average
Borrowing Rate
|
Remaining
Term of
Debt (in Years)
|
For the Three
Months Ended June 30, 2017
|
For the Six
Months Ended
June 30, 2017
|
|||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||||
Operating Non-Consolidated Joint Ventures
|
NOI
|
|||||||||||||||||||||||||||||||||
Wesco I, LLC
|
50.0% |
2,275
|
$
|
571,981
|
$
|
302,464
|
$
|
92,237
|
3.8
|
%
|
8.0
|
$
|
9,812
|
$
|
19,380
|
|||||||||||||||||||
Wesco III, LLC
|
50.0% |
993
|
251,126
|
132,859
|
47,496
|
3.4
|
%
|
3.5
|
4,021
|
7,919
|
||||||||||||||||||||||||
Wesco IV, LLC
|
50.0% |
1,116
|
305,380
|
198,000
|
40,272
|
3.7
|
%
|
4.4
|
4,933
|
9,816
|
||||||||||||||||||||||||
BEXAEW, LLC
|
50.0% |
2,191
|
406,525
|
280,000
|
46,728
|
3.5
|
%
|
4.4
|
7,232
|
14,204
|
||||||||||||||||||||||||
BEX II, LLC (3)
|
50.1% |
871
|
307,113
|
130,373
|
(36,025
|
)
|
3.2
|
%
|
4.4
|
4,196
|
8,191
|
|||||||||||||||||||||||
CPPIB
|
50.0% - 55.0% |
2,232
|
862,912
|
-
|
461,872
|
-
|
-
|
12,812
|
24,716
|
|||||||||||||||||||||||||
Other
|
50.0% - 55.0% |
753
|
273,351
|
185,867
|
41,053
|
3.1
|
%
|
3.5
|
3,921
|
7,743
|
||||||||||||||||||||||||
Total Operating Non-Consolidated Joint Ventures
|
10,431
|
$
|
2,978,388
|
$
|
1,229,563
|
$
|
693,633
|
3.5
|
%
|
5.1
|
$
|
46,927
|
$
|
91,969
|
||||||||||||||||||||
Development Non-Consolidated Joint Ventures (1)
|
50.0% - 55.0% |
1,172
|
382,103
|
93,878
|
126,119
|
3.3
|
%
|
4.4
|
194
|
250
|
||||||||||||||||||||||||
Total Non-Consolidated Joint Ventures
|
11,603
|
$
|
3,360,491
|
$
|
1,323,441
|
$
|
819,752
|
$
|
47,121
|
$
|
92,219
|
|||||||||||||||||||||||
Essex Portion of NOI and Expenses
|
||||||||||||||||||||||||||||||||||
NOI
|
$
|
24,392
|
$
|
47,567
|
||||||||||||||||||||||||||||||
Depreciation
|
(13,627
|
)
|
(26,481
|
)
|
||||||||||||||||||||||||||||||
Interest expense and other
|
(6,370
|
)
|
(11,438
|
)
|
||||||||||||||||||||||||||||||
Net income from operating co-investments
|
$
|
4,395
|
$
|
9,648
|
||||||||||||||||||||||||||||||
Weighted
Average Preferred Return |
Weighted
Average Expected Term |
|||||||||||||||||||||||||||||||||
Income from Preferred Equity Investments
|
||||||||||||||||||||||||||||||||||
Income from preferred equity investments
|
$
|
5,665
|
$
|
11,311
|
||||||||||||||||||||||||||||||
Income from early redemption of preferred equity investments
|
248
|
248
|
||||||||||||||||||||||||||||||||
Preferred Equity Investments (2)
|
$
|
225,307
|
10.6
|
%
|
2.7
|
$
|
5,913
|
$
|
11,559
|
|||||||||||||||||||||||||
Total Co-investments
|
$
|
1,045,059
|
$
|
10,308
|
$
|
21,207
|
(1) |
The Company has interests in three development co-investments, which are detailed on S-11.
|
(2) |
As of June 30, 2017, the Company has invested in thirteen preferred equity investments.
|
(3) |
This co-investment was classified as a liability as of June 30, 2017.
|
($’s in thousands, except share and per share data) (1)
|
Six Months
Ended June 30, 2017
|
2017 Full-Year Guidance Range
|
||||||||||||
Low End
|
High End
|
Comments About Guidance
|
||||||||||||
Net Operating Income (“NOI”)
|
||||||||||||||
Total NOI from consolidated communities
|
$
|
472,156
|
$
|
939,500
|
$
|
951,500
|
Includes actual results through June and the revised range of same-property NOI growth of 3.3% to 4.6%.
|
|||||||
Management Fees
|
4,532
|
8,900
|
9,300
|
|||||||||||
Interest Expense
|
||||||||||||||
Interest expense, before capitalized interest
|
(112,885
|
)
|
(227,800
|
)
|
(226,200
|
)
|
||||||||
Interest capitalized
|
6,585
|
13,400
|
14,400
|
Updated to reflect timing of development spend.
|
||||||||||
Net interest expense
|
(106,300
|
)
|
(214,400
|
)
|
(211,800
|
)
|
||||||||
Recurring Income and Expenses
|
||||||||||||||
Interest and other income
|
10,483
|
21,700
|
22,300
|
|||||||||||
FFO from co-investments
|
47,440
|
95,600
|
98,100
|
Reflects actual results through June and investment activity completed through July.
|
||||||||||
General and administrative expense
|
(20,938
|
)
|
(41,400
|
)
|
(42,600
|
)
|
||||||||
Non-controlling interest
|
(5,106
|
)
|
(10,600
|
)
|
(10,200
|
)
|
||||||||
Total recurring income and expenses
|
31,879
|
65,300
|
67,600
|
|||||||||||
Non-Core Income and Expenses
|
||||||||||||||
Gain on sales of marketable securities
|
1,618
|
1,618
|
1,618
|
|||||||||||
Acquisition and investment related costs
|
(830
|
)
|
(1,100
|
)
|
(1,700
|
)
|
||||||||
Other non-core adjustments
|
293
|
293
|
293
|
|||||||||||
Total non-core income and expenses
|
1,081
|
811
|
211
|
|||||||||||
Funds from Operations
|
$
|
403,348
|
$
|
800,111
|
$
|
816,811
|
||||||||
Funds from Operations per diluted share
|
$
|
5.93
|
$
|
11.71
|
$
|
11.96
|
||||||||
% Change - Funds from Operations
|
8.8
|
%
|
5.3
|
%
|
7.6
|
%
|
||||||||
Core Funds from Operations (excludes non-core items)
|
$
|
402,267
|
$
|
799,300
|
$
|
816,600
|
||||||||
Core Funds from Operations per diluted share
|
$
|
5.91
|
$
|
11.70
|
$
|
11.96
|
||||||||
% Change - Core Funds from Operations
|
9.0
|
%
|
6.0
|
%
|
8.3
|
%
|
||||||||
EPS - Diluted
|
$
|
3.80
|
$
|
5.75
|
$
|
6.00
|
||||||||
Weighted average shares outstanding - FFO calculation
|
68,058
|
68,300
|
68,300
|
(1)
|
All non-core items are excluded from the YTD actuals and included in the non-core income and expense section of the FFO reconciliation.
|
2017 Guidance Range (1)
|
||||||||||||||||||||
Six Months
Ended June 30, 2017 |
3rd Quarter 2017
|
Full-Year 2017
|
||||||||||||||||||
Low
|
High
|
Low
|
High
|
|||||||||||||||||
EPS - diluted
|
$
|
3.80
|
$
|
0.96
|
$
|
1.06
|
$
|
5.75
|
$
|
6.00
|
||||||||||
Conversion from GAAP share count
|
(0.12
|
)
|
(0.03
|
)
|
(0.03
|
)
|
(0.20
|
)
|
(0.20
|
)
|
||||||||||
Depreciation & amortization expense
|
3.81
|
1.91
|
1.91
|
7.65
|
7.65
|
|||||||||||||||
Noncontrolling interests related to Operating Partnership units
|
0.13
|
0.03
|
0.03
|
0.19
|
0.19
|
|||||||||||||||
Gain on sale of real estate and remeasurement of co-investment
|
(1.69
|
)
|
-
|
-
|
(1.68
|
)
|
(1.68
|
)
|
||||||||||||
FFO per share - diluted
|
5.93
|
2.87
|
2.97
|
11.71
|
11.96
|
|||||||||||||||
Gain on sale of marketable securities
|
(0.02
|
)
|
-
|
-
|
(0.02
|
)
|
(0.02
|
)
|
||||||||||||
Acquisition and investment related costs
|
0.01
|
0.01
|
0.01
|
0.02
|
0.03
|
|||||||||||||||
Other non-core adjustments
|
(0.01
|
)
|
-
|
-
|
(0.01
|
)
|
(0.01
|
)
|
||||||||||||
Core FFO per share - diluted
|
$
|
5.91
|
$
|
2.88
|
$
|
2.98
|
$
|
11.70
|
$
|
11.96
|
(1)
|
2017 Guidance Range excludes projected gain on sale of real estate and land and projected gain on sale of marketable securities until they are realized within the reporting period presented in this report.
|
Summary of Apartment Community Acquisitions and Dispositions Activity
|
||||||||||||||||||||||||
Year to date as of June 30, 2017
|
||||||||||||||||||||||||
(Dollars in thousands, except average rent amounts and in footnotes)
|
||||||||||||||||||||||||
Acquisitions
|
Essex
|
|||||||||||||||||||||||
Apartment
|
Ownership
|
Contract
|
Price per
|
Average
|
||||||||||||||||||||
Property Name
|
Location
|
Homes
|
Percentage
|
Entity
|
Date
|
Price
|
Apartment Home
|
Rent
|
||||||||||||||||
Palm Valley(1)
|
San Jose, CA
|
1,098
|
100.0
|
%
|
EPLP
|
Jan-17
|
$
|
183,000
|
$
|
333
|
$
|
2,566
|
||||||||||||
Sage(2)
|
San Jose, CA
|
230
|
40.5
|
%
|
EPLP
|
Mar-17
|
90,000
|
391
|
2,485
|
|||||||||||||||
Q1 2017
|
1,328
|
$
|
273,000
|
$
|
343
|
|||||||||||||||||||
Dispositions
|
Essex
|
|||||||||||||||||||||||
Apartment
|
Ownership
|
Sales
|
Price per
|
|||||||||||||||||||||
Property Name
|
Location
|
Homes
|
Percentage
|
Entity
|
Date
|
Price
|
Apartment Home
|
|||||||||||||||||
Jefferson at Hollywood
|
Hollywood, CA
|
270
|
100.0
|
%
|
EPLP
|
Jan-17
|
$
|
132,500
|
$
|
491
|
||||||||||||||
Q1 2017
|
270
|
$
|
132,500
|
$
|
491
|
(1)
|
In January 2017, the Company purchased the joint venture partner’s 50.0% membership interest in the Palm Valley co-investment for a purchase price of $183.0 million.
|
(2)
|
In March 2017, the Company converted its existing $15.3 million preferred equity investment in Sage at Cupertino into a 40.5% equity ownership interest in the property. The Company issued DownREIT units to the seller for the remaining equity based on an estimated property valuation of $90.0 million and an encumbrance of $52.0 million of mortgage debt. Based on a VIE analysis performed by the Company the property was consolidated.
|
2017 MSA Level Forecast: Supply, Jobs, and Apartment Market Conditions
|
||||||||||||||||||||||||||||||||
Residential Supply (1)
|
Job Forecast (2)
|
Market 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 |
||||||||||||||||||||||||
Los Angeles
|
10,750
|
6,550
|
17,300
|
0.7
|
%
|
0.5
|
%
|
69,800
|
1.6
|
%
|
3.7
|
%
|
||||||||||||||||||||
Orange
|
6,550
|
4,650
|
11,200
|
1.6
|
%
|
1.0
|
%
|
15,850
|
1.0
|
%
|
3.5
|
%
|
||||||||||||||||||||
San Diego
|
3,200
|
3,900
|
7,100
|
0.7
|
%
|
0.6
|
%
|
24,150
|
1.7
|
%
|
4.5
|
%
|
||||||||||||||||||||
Ventura
|
450
|
375
|
825
|
0.7
|
%
|
0.3
|
%
|
7,500
|
2.5
|
%
|
4.5
|
%
|
||||||||||||||||||||
So. Cal.
|
20,950
|
15,475
|
36,425
|
1.0
|
%
|
0.6
|
%
|
117,300
|
1.6
|
%
|
3.9
|
%
|
||||||||||||||||||||
San Francisco
|
4,750
|
700
|
5,450
|
1.3
|
%
|
0.8
|
%
|
22,500
|
2.1
|
%
|
2.2
|
%
|
||||||||||||||||||||
Oakland
|
2,850
|
5,250
|
8,100
|
0.9
|
%
|
0.8
|
%
|
19,000
|
1.7
|
%
|
2.4
|
%
|
||||||||||||||||||||
San Jose
|
3,250
|
2,350
|
5,600
|
1.4
|
%
|
0.8
|
%
|
17,300
|
1.6
|
%
|
2.6
|
%
|
||||||||||||||||||||
No. Cal.
|
10,850
|
8,300
|
19,150
|
1.2
|
%
|
0.8
|
%
|
58,800
|
1.7
|
%
|
2.5
|
%
|
||||||||||||||||||||
Seattle
|
10,950
|
8,650
|
19,600
|
2.3
|
%
|
1.6
|
%
|
44,600
|
2.7
|
%
|
4.6
|
%
|
||||||||||||||||||||
Weighted Average (4)
|
42,750
|
32,425
|
75,175
|
1.3
|
%
|
0.9
|
%
|
220,700
|
1.8
|
%
|
3.5
|
%
|
All data are based on Essex Property Trust, Inc. forecasts. | |
U.S. Economic Assumptions: 2017 G.D.P. Growth: 2.2%, 2017 Job Growth: 1.6% | |
(1) |
New Residential Supply: total supply includes the Company’s estimate of actual multifamily deliveries including properties with 50+ units and excludes student, senior and 100% affordable housing communities. Single family estimates based on an average trailing 12 month single family permit. Previous presentations had included multifamily deliveries of 100+ units and excluded student, senior and 100% affordable housing.
|
(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) |
Market Forecast: the estimated rent growth represents the forecasted change in effective market rents for full year 2017 vs 2016 (excludes submarkets not targeted by Essex).
|
(4) |
Weighted Average: markets weighted by scheduled rent in the Company’s Portfolio.
|
Three Months Ended
June 30,
2017
|
||||
Net income available to common stockholders
|
$
|
70,759
|
||
Add: Net income attributable to noncontrolling interest
|
5,036
|
|||
Net Income
|
75,795
|
|||
Adjustments:
|
||||
Acquisition and investment related costs
|
274
|
|||
Depreciation and amortization
|
117,939
|
|||
Equity income from co-investments
|
(4,395
|
)
|
||
Gain on sale of marketable securities
|
(13
|
)
|
||
Gain on remeasurement of co-investment
|
(2,159
|
)
|
||
Income from early redemption of preferred equity investments
|
(248
|
)
|
||
Interest expense, net (1)
|
54,281
|
|||
Adjusted EBITDA
|
$
|
241,474
|
(1) |
Interest expense, net includes items such as gains on derivatives and the amortization of deferred charges.
|
Three Months Ended
June 30,
2017
|
Six Months Ended
June 30,
2017
|
|||||||
Interest expense
|
$
|
56,812
|
$
|
111,395
|
||||
Adjustments:
|
||||||||
Total return swap income
|
(2,531
|
)
|
(5,115
|
)
|
||||
Interest expense, net
|
$
|
54,281
|
$
|
106,280
|
Total debt, net
|
$
|
5,663,395
|
||
Adjustments:
|
||||
Unamortized premiums, discounts, and debt issuance costs
|
(10,958
|
)
|
||
Cash and cash equivalents-unrestricted
|
(183,885
|
)
|
||
Marketable securities
|
(151,995
|
)
|
||
Net Indebtedness
|
$
|
5,316,557
|
||
Adjusted EBITDA, annualized (1)
|
$
|
965,896
|
||
Other EBITDA normalization adjustments, net, annualized (2)
|
(8,312
|
)
|
||
Adjusted EBITDA, normalized and annualized
|
$
|
957,584
|
||
Net Indebtedness Divided by Adjusted EBITDA, normalized and annualized
|
5.6
|
(1) |
Based on the amount for the most recent quarter, multiplied by four.
|
(2)
|
Adjustments made for properties acquired or disposed of during the quarter, multiplied by four.
|
Three Months Ended
June 30,
2017
|
Three Months Ended
June 30,
2016
|
Six Months Ended
June 30,
2017
|
Six Months Ended
June 30,
2016
|
|||||||||||||
Earnings from operations
|
$
|
112,247
|
$
|
105,873
|
$
|
221,478
|
$
|
205,868
|
||||||||
Adjustments:
|
||||||||||||||||
Depreciation and amortization
|
117,939
|
109,673
|
233,442
|
219,380
|
||||||||||||
Management and other fees from affiliates
|
(2,296
|
)
|
(2,028
|
)
|
(4,532
|
)
|
(4,052
|
)
|
||||||||
General and administrative
|
10,337
|
9,698
|
20,938
|
18,880
|
||||||||||||
Acquisition and investment related costs
|
274
|
267
|
830
|
1,095
|
||||||||||||
NOI
|
238,501
|
223,483
|
472,156
|
441,171
|
||||||||||||
Less: Non-same property NOI
|
(24,147
|
)
|
(18,783
|
)
|
(46,132
|
)
|
(36,018
|
)
|
||||||||
Same-Property NOI
|
$
|
214,354
|
$
|
204,700
|
$
|
426,024
|
$
|
405,153
|
Annualized
Q2'17 (1)
|
||||
NOI
|
$
|
954,004
|
||
Adjustments:
|
||||
Other, net (2)
|
(11,915
|
)
|
||
Adjusted Total NOI
|
942,089
|
|||
Less: Encumbered NOI
|
(288,159
|
)
|
||
Unencumbered NOI
|
$
|
653,930
|
||
Encumbered NOI
|
$
|
288,159
|
||
Unencumbered NOI
|
653,930
|
|||
Adjusted Total NOI
|
$
|
942,089
|
||
Unencumbered NOI to Adjusted Total NOI
|
69
|
%
|
||
(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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