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 or Organization)
|
(I.R.S. Employer Identification Number)
|
Essex Property Trust, Inc. Yes x No o
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Essex Portfolio, L.P. Yes x No o
|
Essex Property Trust, Inc. Yes x No o
|
Essex Portfolio, L.P. Yes x No o
|
Large accelerated filer x
|
Accelerated filer o
|
Non-accelerated filer o (Do not check if a smaller reporting company)
|
Smaller reporting company o
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer x (Do not check if a smaller reporting company)
|
Smaller reporting company o
|
|
(Do not check if a smaller reporting company)
|
Essex Property Trust, Inc. Yes o No x
|
Essex Portfolio, L.P. Yes o No x
|
· | enhances investors' understanding of the Company and the Operating Partnership by enabling investors to view the business as a whole in the same manner as management views and operates the business; |
· | eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both the Company and the Operating Partnership; and |
· | creates time and cost efficiencies through the preparation of one combined report instead of two separate reports |
Page No.
|
||
PART I. FINANCIAL INFORMATION
|
||
Item 1.
|
||
Condensed Financial Statements of Essex Property Trust, Inc. (Unaudited)
|
||
2
|
||
3
|
||
4
|
||
5
|
||
Condensed Financial Statements of Essex Portfolio L.P. (Unaudited)
|
||
7
|
||
8
|
||
9
|
||
10
|
||
12
|
||
Item 2.
|
27
|
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Item 3.
|
38
|
|
Item 4.
|
39
|
|
PART II. OTHER INFORMATION
|
||
Item 1.
|
40
|
|
Item 1A.
|
40
|
|
Item 2.
|
52
|
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Item 5.
|
52
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Item 6.
|
53
|
|
54
|
ASSETS
|
September 30,
2014
|
December 31,
2013
|
||||||
Real estate:
|
||||||||
Rental properties:
|
||||||||
Land and land improvements
|
$
|
2,453,093
|
$
|
1,083,552
|
||||
Buildings and improvements
|
8,820,657
|
4,360,205
|
||||||
11,273,750
|
5,443,757
|
|||||||
Less accumulated depreciation
|
(1,469,991
|
)
|
(1,254,886
|
)
|
||||
9,803,759
|
4,188,871
|
|||||||
Real estate under development
|
363,193
|
50,430
|
||||||
Co-investments
|
1,043,277
|
677,133
|
||||||
Real estate held for sale, net
|
107,772
|
-
|
||||||
11,318,001
|
4,916,434
|
|||||||
Cash and cash equivalents-unrestricted
|
17,877
|
18,491
|
||||||
Cash and cash equivalents-restricted
|
70,123
|
35,275
|
||||||
Marketable securities
|
108,147
|
90,084
|
||||||
Notes and other receivables
|
22,973
|
68,255
|
||||||
Acquired in place lease value and other assets
|
98,381
|
33,781
|
||||||
Deferred charges, net
|
31,060
|
24,519
|
||||||
Total assets
|
$
|
11,666,562
|
$
|
5,186,839
|
||||
LIABILITIES AND EQUITY
|
||||||||
Mortgage notes payable
|
$
|
2,258,010
|
$
|
1,404,080
|
||||
Unsecured debt
|
2,745,487
|
1,410,023
|
||||||
Lines of credit
|
222,628
|
219,421
|
||||||
Accounts payable and accrued liabilities
|
167,160
|
67,183
|
||||||
Construction payable
|
38,453
|
8,047
|
||||||
Dividends payable
|
87,609
|
50,627
|
||||||
Other liabilities
|
32,330
|
24,871
|
||||||
Total liabilities
|
5,551,677
|
3,184,252
|
||||||
Commitments and contingencies
|
||||||||
Redeemable noncontrolling interest
|
21,442
|
-
|
||||||
Cumulative convertible Series G preferred stock
|
-
|
4,349
|
||||||
Equity:
|
||||||||
Cumulative redeemable Series H preferred stock at liquidation value
|
73,750
|
73,750
|
||||||
Common stock, $0.0001 par value, 656,020,000 shares authorized 63,229,790 and 37,421,219 shares issued and outstanding
|
6
|
4
|
||||||
Additional paid-in capital
|
6,569,442
|
2,345,763
|
||||||
Distributions in excess of accumulated earnings
|
(608,498
|
)
|
(474,426
|
)
|
||||
Accumulated other comprehensive loss, net
|
(51,408
|
)
|
(60,472
|
)
|
||||
Total stockholders' equity
|
5,983,292
|
1,884,619
|
||||||
Noncontrolling interest
|
110,151
|
113,619
|
||||||
Total equity
|
6,093,443
|
1,998,238
|
||||||
Total liabilities and equity
|
$
|
11,666,562
|
$
|
5,186,839
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Revenues:
|
||||||||||||||||
Rental and other property
|
$
|
268,118
|
$
|
152,177
|
$
|
683,749
|
$
|
446,017
|
||||||||
Management and other fees
|
2,361
|
1,771
|
6,856
|
5,812
|
||||||||||||
270,479
|
153,948
|
690,605
|
451,829
|
|||||||||||||
Expenses:
|
||||||||||||||||
Property operating, excluding real estate taxes
|
55,900
|
35,787
|
145,410
|
102,170
|
||||||||||||
Real estate taxes
|
31,768
|
14,535
|
77,452
|
42,773
|
||||||||||||
Depreciation
|
102,184
|
48,227
|
254,211
|
142,687
|
||||||||||||
General and administrative
|
11,479
|
6,263
|
28,621
|
19,852
|
||||||||||||
Merger and integration expenses
|
3,857
|
-
|
46,413
|
-
|
||||||||||||
Acquisition and dispositions costs
|
51
|
237
|
1,555
|
792
|
||||||||||||
205,239
|
105,049
|
553,662
|
308,274
|
|||||||||||||
Earnings from operations
|
65,240
|
48,899
|
136,943
|
143,555
|
||||||||||||
Interest expense
|
(45,830
|
)
|
(29,192
|
)
|
(117,021
|
)
|
(86,661
|
)
|
||||||||
Interest and other income
|
2,992
|
2,387
|
8,685
|
9,326
|
||||||||||||
Equity income in co-investments
|
4,910
|
40,802
|
21,065
|
52,295
|
||||||||||||
Gains on sale of real estate and land
|
31,372
|
-
|
39,640
|
1,503
|
||||||||||||
Gain (loss) on early retirement of debt
|
-
|
(178
|
)
|
-
|
846
|
|||||||||||
Income from continuing operations
|
58,684
|
62,718
|
89,312
|
120,864
|
||||||||||||
Income from discontinued operations
|
-
|
13,157
|
-
|
14,289
|
||||||||||||
Net income
|
58,684
|
75,875
|
89,312
|
135,153
|
||||||||||||
Net income attributable to noncontrolling interest
|
(3,720
|
)
|
(5,719
|
)
|
(8,971
|
)
|
(12,112
|
)
|
||||||||
Net income attributable to controlling interest
|
54,964
|
70,156
|
80,341
|
123,041
|
||||||||||||
Dividends to preferred stockholders
|
(1,296
|
)
|
(1,368
|
)
|
(3,977
|
)
|
(4,104
|
)
|
||||||||
Net income available to common stockholders
|
$
|
53,668
|
$
|
68,788
|
$
|
76,364
|
$
|
118,937
|
||||||||
Comprehensive income
|
$
|
61,139
|
$
|
76,112
|
$
|
98,749
|
$
|
142,206
|
||||||||
Comprehensive income attributable to noncontrolling interest
|
(3,789
|
)
|
(5,732
|
)
|
(9,345
|
)
|
(12,493
|
)
|
||||||||
Comprehensive income attributable to controlling interest
|
$
|
57,350
|
$
|
70,380
|
$
|
89,404
|
$
|
129,713
|
||||||||
Per common share data:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Income from continuing operations
|
$
|
0.85
|
$
|
1.51
|
$
|
1.41
|
$
|
2.84
|
||||||||
Income from discontinued operations
|
-
|
0.33
|
-
|
0.36
|
||||||||||||
Net income available to common stockholders
|
$
|
0.85
|
$
|
1.84
|
$
|
1.41
|
$
|
3.20
|
||||||||
Weighted average number of common shares outstanding during the period
|
62,892,601
|
37,320,562
|
54,250,104
|
37,206,895
|
||||||||||||
Diluted:
|
||||||||||||||||
Income from continuing operations
|
$
|
0.85
|
$
|
1.51
|
$
|
1.40
|
$
|
2.83
|
||||||||
Income from discontinued operations
|
-
|
0.33
|
-
|
0.36
|
||||||||||||
Net income available to common stockholders
|
$
|
0.85
|
$
|
1.84
|
$
|
1.40
|
$
|
3.19
|
||||||||
Weighted average number of common shares outstanding during the period
|
63,069,772
|
37,436,983
|
54,443,227
|
37,295,691
|
||||||||||||
Dividend per common share
|
$
|
1.30
|
$
|
1.21
|
$
|
3.81
|
$
|
3.63
|
Series H
Preferred stock |
Common stock
|
Additional
paid-in |
Distributions
in excess of |
Accumulated
other |
Noncontrolling
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
capital
|
earnings
|
loss, net
|
Interest
|
Total
|
||||||||||||||||||||||||||||
Balances at December 31, 2013
|
2,950
|
$
|
73,750
|
37,421
|
$
|
4
|
$
|
2,345,763
|
$
|
(474,426
|
)
|
$
|
(60,472
|
)
|
$
|
113,619
|
$
|
1,998,238
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
80,341
|
-
|
8,971
|
89,312
|
|||||||||||||||||||||||||||
Reversal of unrealized gains upon the sale of marketable securities
|
-
|
-
|
-
|
-
|
-
|
-
|
(841
|
)
|
(45
|
)
|
(886
|
)
|
||||||||||||||||||||||||
Change in fair value of derivatives and amortization of swap settlements
|
-
|
-
|
-
|
-
|
-
|
-
|
7,426
|
306
|
7,732
|
|||||||||||||||||||||||||||
Change in fair value of marketable securities
|
-
|
-
|
-
|
-
|
-
|
-
|
2,479
|
112
|
2,591
|
|||||||||||||||||||||||||||
Issuance of common stock under:
|
||||||||||||||||||||||||||||||||||||
Stock consideration in the Merger, net
|
-
|
-
|
23,093
|
2
|
3,777,644
|
-
|
-
|
-
|
3,777,646
|
|||||||||||||||||||||||||||
Stock option and restricted stock plans
|
-
|
-
|
154
|
-
|
6,511
|
-
|
-
|
-
|
6,511
|
|||||||||||||||||||||||||||
Equity distribution agreements, net
|
-
|
-
|
2,527
|
-
|
449,499
|
-
|
-
|
-
|
449,499
|
|||||||||||||||||||||||||||
Equity based compensation costs
|
-
|
-
|
-
|
-
|
5,756
|
-
|
-
|
1,672
|
7,428
|
|||||||||||||||||||||||||||
Reclassification of noncontrolling interest to redeemable noncontrolling interest
|
-
|
-
|
-
|
-
|
(19,823
|
)
|
-
|
-
|
(1,067
|
)
|
(20,890
|
)
|
||||||||||||||||||||||||
Changes in value of redemption value of redeemable noncontrolling interest
|
2,126
|
2,126
|
||||||||||||||||||||||||||||||||||
Conversion of Series G preferred stock
|
-
|
-
|
34
|
-
|
4,349
|
-
|
-
|
-
|
4,349
|
|||||||||||||||||||||||||||
Contributions from noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
1,419,816
|
1,419,816
|
||||||||||||||||||||||||||||
Retirement of noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,419,816
|
)
|
(1,419,816
|
)
|
|||||||||||||||||||||||||
Distributions to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(12,821
|
)
|
(12,821
|
)
|
|||||||||||||||||||||||||
Redemptions of noncontrolling interest
|
-
|
-
|
-
|
-
|
(2,383
|
)
|
-
|
-
|
(596
|
)
|
(2,979
|
)
|
||||||||||||||||||||||||
Common and preferred stock dividends
|
-
|
-
|
-
|
-
|
(214,413
|
)
|
-
|
-
|
(214,413
|
)
|
||||||||||||||||||||||||||
Balances at September 30, 2014
|
2,950
|
$
|
73,750
|
63,229
|
$
|
6
|
$
|
6,569,442
|
$
|
(608,498
|
)
|
$
|
(51,408
|
)
|
$
|
110,151
|
$
|
6,093,443
|
Nine Months Ended
September 30,
|
||||||||
2014
|
2013
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
89,312
|
$
|
135,153
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
254,211
|
143,662
|
||||||
Amortization of discount on marketable securities
|
(6,555
|
)
|
(4,664
|
)
|
||||
Amortization of premium and debt financing costs, net
|
(4,987
|
)
|
8,111
|
|||||
Gain on sale of marketable securities
|
(886
|
)
|
(1,767
|
)
|
||||
Company's share of gain on the sales of co-investment
|
(3,213
|
)
|
(41,252
|
)
|
||||
Gain on the sales of real estate and land
|
(39,640
|
)
|
(14,161
|
)
|
||||
Non-cash merger expense
|
7,562
|
-
|
||||||
Equity in income in co-investments, net
|
(14,903
|
)
|
(1,892
|
)
|
||||
Equity-based compensation
|
4,996
|
3,137
|
||||||
Gain on early retirement of debt
|
-
|
(846
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Acquired in place lease value and other assets
|
8,923
|
(19,689
|
)
|
|||||
Accounts payable and accrued liabilities
|
44,775
|
19,091
|
||||||
Other liabilities
|
1,393
|
199
|
||||||
Net cash provided by operating activities
|
340,988
|
225,082
|
||||||
Cash flows from investing activities:
|
||||||||
Additions to real estate:
|
||||||||
Acquisitions of real estate
|
(409,018
|
)
|
(205,539
|
)
|
||||
Improvements to recent acquisitions
|
(13,512
|
)
|
(14,374
|
)
|
||||
Redevelopment
|
(35,361
|
)
|
(32,488
|
)
|
||||
Revenue generating capital expenditures
|
(20,560
|
)
|
(2,165
|
)
|
||||
Lessor required capital expenditures
|
(7,562
|
)
|
(4,320
|
)
|
||||
Non-revenue generating capital expenditures
|
(29,070
|
)
|
(21,885
|
)
|
||||
Acquisitions of and additions to real estate under development
|
(108,659
|
)
|
(13,963
|
)
|
||||
Proceeds from insurance claim for property damage
|
29,160
|
-
|
||||||
BRE merger consideration paid
|
(555,826
|
)
|
-
|
|||||
Dispositions of real estate
|
61,331
|
33,666
|
||||||
Dispositions of co-investments
|
13,900
|
-
|
||||||
Contributions to co-investments
|
(128,268
|
)
|
(150,852
|
)
|
||||
Distributions from co-investments
|
40,421
|
117,103
|
||||||
Changes in restricted cash and deposits
|
(39,482
|
)
|
(17,246
|
)
|
||||
Purchases of marketable securities
|
(15,516
|
)
|
(16,442
|
)
|
||||
Sales and maturities of marketable securities
|
6,275
|
22,830
|
||||||
Purchases of and advances under notes and other receivables
|
-
|
(56,750
|
)
|
|||||
Collections of notes and other receivables
|
76,585
|
53,438
|
||||||
Net cash used in investing activities
|
(1,135,162
|
)
|
(308,987
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Borrowings under debt agreements
|
1,737,322
|
641,892
|
||||||
Principal repayment of debt
|
(1,327,840
|
)
|
(536,926
|
)
|
||||
Additions to deferred and financing costs
|
(16,941
|
)
|
(3,836
|
)
|
||||
Proceeds from issuance of common stock
|
450,812
|
122,905
|
||||||
Equity related issuance cost of common stock
|
(1,348
|
)
|
(616
|
)
|
||||
Proceeds from stock options exercises
|
6,526
|
4,756
|
||||||
Distributions to noncontrolling interest
|
(13,217
|
)
|
(14,108
|
)
|
||||
Redemption of noncontrolling interest
|
(4,707
|
)
|
(5,113
|
)
|
||||
Common and preferred stock dividends paid
|
(177,400
|
)
|
(134,146
|
)
|
||||
Net cash provided by financing activities
|
653,207
|
74,808
|
||||||
Net decrease in cash and cash equivalents-unrestricted
|
(140,967
|
)
|
(9,097
|
)
|
||||
Cash acquired in the BRE merger
|
140,353
|
-
|
||||||
Cash and cash equivalents-unrestricted at beginning of period
|
18,491
|
18,606
|
||||||
Cash and cash equivalents-unrestricted at end of period
|
$
|
17,877
|
$
|
9,509
|
|
Nine Months Ended
September 30,
|
|||||||
|
2014
|
2013
|
||||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest, net of $17.8 million, and $12.7 million capitalized in 2014 and 2013, respectively
|
$
|
93,342
|
$
|
76,596
|
||||
Supplemental disclosure of noncash investing and financing activities:
|
||||||||
Issuance of Operating Partnership units for contributed properties
|
$
|
1,419,816
|
$
|
-
|
||||
Retirement of Operating Partnership units
|
$
|
(1,419,816
|
)
|
$
|
-
|
|||
Transfer from real estate under development to land and building
|
$
|
71,496
|
$
|
68
|
||||
Transfer from real estate under development to co-investments
|
$
|
81,332
|
$
|
27,906
|
||||
Mortgage notes (excluding BRE merger) assumed in connection with purchases of real estate including the loan premiums recorded
|
$
|
70,480
|
$
|
-
|
||||
Change in accrual of dividends
|
$
|
45,605
|
$
|
5,434
|
||||
Change in fair value of derivative liabilities
|
$
|
(1,175
|
)
|
$
|
3,649
|
|||
Change in fair value of marketable securities
|
$
|
2,186
|
$
|
2,958
|
||||
Change in construction payable
|
$
|
30,405
|
$
|
1,544
|
||||
Reclassification to redeemable noncontrolling interest from additional paid in capital and noncontrolling interest
|
$
|
18,764
|
$
|
-
|
||||
Assets acquired and liabilities assumed in BRE merger:
|
||||||||
Cash assumed in merger
|
$
|
140,353
|
$
|
-
|
||||
Rental properties and real estate under development
|
$
|
5,618,067
|
$
|
-
|
||||
Real estate held for sale, net
|
$
|
107,772
|
$
|
-
|
||||
Co-investments
|
$
|
218,402
|
$
|
-
|
||||
Acquired in-place lease value
|
$
|
80,358
|
$
|
-
|
||||
Other assets
|
$
|
15,676
|
$
|
-
|
||||
Mortgage notes payable and unsecured debt
|
$
|
1,747,382
|
$
|
-
|
||||
Other liabilities
|
$
|
94,976
|
$
|
-
|
||||
Redeemable noncontrolling interest
|
$
|
4,798
|
$
|
-
|
||||
Consideration issued
|
$
|
3,777,646
|
$
|
-
|
September 30,
2014
|
December 31,
2013
|
|||||||
ASSETS
|
||||||||
Real estate:
|
||||||||
Rental properties:
|
||||||||
Land and land improvements
|
$
|
2,453,093
|
$
|
1,083,552
|
||||
Buildings and improvements
|
8,820,657
|
4,360,205
|
||||||
11,273,750
|
5,443,757
|
|||||||
Less accumulated depreciation
|
(1,469,991
|
)
|
(1,254,886
|
)
|
||||
9,803,759
|
4,188,871
|
|||||||
Real estate under development
|
363,193
|
50,430
|
||||||
Co-investments
|
1,043,277
|
677,133
|
||||||
Real estate held for sale, net
|
107,772
|
-
|
||||||
11,318,001
|
4,916,434
|
|||||||
Cash and cash equivalents-unrestricted
|
17,877
|
18,491
|
||||||
Cash and cash equivalents-restricted
|
70,123
|
35,275
|
||||||
Marketable securities
|
108,147
|
90,084
|
||||||
Notes and other receivables
|
22,973
|
68,255
|
||||||
Acquired in place lease value and other assets
|
98,381
|
33,781
|
||||||
Deferred charges, net
|
31,060
|
24,519
|
||||||
Total assets
|
$
|
11,666,562
|
$
|
5,186,839
|
||||
LIABILITIES AND CAPITAL
|
||||||||
Mortgage notes payable.
|
$
|
2,258,010
|
$
|
1,404,080
|
||||
Unsecured debt
|
2,745,487
|
1,410,023
|
||||||
Lines of credit
|
222,628
|
219,421
|
||||||
Accounts payable and accrued liabilities
|
167,160
|
67,183
|
||||||
Construction payable
|
38,453
|
8,047
|
||||||
Distributions payable
|
87,609
|
50,627
|
||||||
Other liabilities
|
32,330
|
24,871
|
||||||
Total liabilities
|
5,551,677
|
3,184,252
|
||||||
Commitments and contingencies
|
||||||||
Redeemable noncontrolling interest
|
21,442
|
-
|
||||||
Cumulative convertible Series G preferred interest (liquidation value of $4,456)
|
-
|
4,349
|
||||||
Capital:
|
||||||||
General Partner:
|
||||||||
Common equity (63,229,790 and 37,421,219 units issued and outstanding at September 30, 2014 and December 31, 2013, respectively)
|
5,963,493
|
1,873,882
|
||||||
Series H Preferred interest (liquidation value of $73,750)
|
71,209
|
71,209
|
||||||
6,034,702
|
1,945,091
|
|||||||
Limited Partners:
|
||||||||
Common equity (2,155,783 and 2,149,802 units issued and outstanding at September 30, 2014 and December 31, 2013, respectively)
|
45,439
|
45,957
|
||||||
Accumulated other comprehensive loss
|
(49,503
|
)
|
(58,940
|
)
|
||||
Total partners' capital
|
6,030,638
|
1,932,108
|
||||||
Noncontrolling interest
|
62,805
|
66,130
|
||||||
Total capital
|
6,093,443
|
1,998,238
|
||||||
Total liabilities and capital
|
$
|
11,666,562
|
$
|
5,186,839
|
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Revenues:
|
||||||||||||||||
Rental and other property
|
$
|
268,118
|
$
|
152,177
|
$
|
683,749
|
$
|
446,017
|
||||||||
Management and other fees
|
2,361
|
1,771
|
6,856
|
5,812
|
||||||||||||
270,479
|
153,948
|
690,605
|
451,829
|
|||||||||||||
Expenses:
|
||||||||||||||||
Property operating, excluding real estate taxes
|
55,900
|
35,787
|
145,410
|
102,170
|
||||||||||||
Real estate taxes
|
31,768
|
14,535
|
77,452
|
42,773
|
||||||||||||
Depreciation
|
102,184
|
48,227
|
254,211
|
142,687
|
||||||||||||
General and administrative
|
11,479
|
6,263
|
28,621
|
19,852
|
||||||||||||
Merger and integration expenses
|
3,857
|
-
|
46,413
|
-
|
||||||||||||
Acquisition and dispositions costs
|
51
|
237
|
1,555
|
792
|
||||||||||||
205,239
|
105,049
|
553,662
|
308,274
|
|||||||||||||
Earnings from operations
|
65,240
|
48,899
|
136,943
|
143,555
|
||||||||||||
Interest expense
|
(45,830
|
)
|
(29,192
|
)
|
(117,021
|
)
|
(86,661
|
)
|
||||||||
Interest and other income
|
2,992
|
2,387
|
8,685
|
9,326
|
||||||||||||
Equity income in co-investments
|
4,910
|
40,802
|
21,065
|
52,295
|
||||||||||||
Gain (loss) on early retirement of debt
|
-
|
(178
|
)
|
-
|
846
|
|||||||||||
Gains on sale of real estate and land
|
31,372
|
-
|
39,640
|
1,503
|
||||||||||||
Income from continuing operations
|
58,684
|
62,718
|
89,312
|
120,864
|
||||||||||||
Income from discontinued operations
|
-
|
13,157
|
-
|
14,289
|
||||||||||||
Net income
|
58,684
|
75,875
|
89,312
|
135,153
|
||||||||||||
Net income attributable to noncontrolling interest
|
(1,904
|
)
|
(1,730
|
)
|
(5,529
|
)
|
(5,075
|
)
|
||||||||
Net income attributable to controlling interest
|
56,780
|
74,145
|
83,783
|
130,078
|
||||||||||||
Preferred interest distributions
|
(1,296
|
)
|
(1,368
|
)
|
(3,977
|
)
|
(4,104
|
)
|
||||||||
Net income available to common unitholders
|
$
|
55,484
|
$
|
72,777
|
$
|
79,806
|
$
|
125,974
|
||||||||
Comprehensive income
|
$
|
61,139
|
$
|
76,112
|
$
|
98,749
|
$
|
142,206
|
||||||||
Comprehensive income attributable to noncontrolling interest
|
(1,904
|
)
|
(1,730
|
)
|
(5,529
|
)
|
(5,075
|
)
|
||||||||
Comprehensive income attributable to controlling interest
|
$
|
59,235
|
$
|
74,382
|
$
|
93,220
|
$
|
137,131
|
||||||||
Per common unit data:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Income from continuing operations
|
$
|
0.85
|
$
|
1.51
|
$
|
1.41
|
$
|
2.84
|
||||||||
Income from discontinued operations
|
-
|
0.33
|
-
|
0.36
|
||||||||||||
Net income available to common unitholders
|
$
|
0.85
|
$
|
1.84
|
$
|
1.41
|
$
|
3.20
|
||||||||
Weighted average number of common units outstanding during the period
|
65,057,157
|
39,467,492
|
56,484,589
|
39,333,100
|
||||||||||||
Diluted:
|
||||||||||||||||
Income from continuing operations
|
$
|
0.85
|
$
|
1.51
|
$
|
1.41
|
$
|
2.84
|
||||||||
Income from discontinued operations
|
-
|
0.33
|
-
|
0.36
|
||||||||||||
Net income available to common unitholders
|
$
|
0.85
|
$
|
1.84
|
$
|
1.41
|
$
|
3.20
|
||||||||
Weighted average number of common units outstanding during the period
|
65,234,328
|
39,583,913
|
56,677,712
|
39,421,896
|
||||||||||||
Distribution per common unit
|
$
|
1.30
|
$
|
1.21
|
$
|
3.81
|
$
|
3.63
|
General Partner
|
Limited Partners
|
Accumulated
|
||||||||||||||||||||||||||||||
Preferred
|
Other
|
|||||||||||||||||||||||||||||||
Common Equity
|
Equity
|
Common Equity
|
Comprehensive
|
Noncontrolling
|
||||||||||||||||||||||||||||
Units
|
Amount
|
Amount
|
Units
|
Amount
|
(Loss) Income
|
Interest
|
Total
|
|||||||||||||||||||||||||
Balances at December 31, 2013
|
37,421
|
$
|
1,873,882
|
$ |
71,209
|
2,150
|
$
|
45,957
|
$
|
(58,940
|
)
|
$
|
66,130
|
$
|
1,998,238
|
|||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||||||
Net income
|
-
|
76,364
|
3,977
|
-
|
3,442
|
-
|
5,529
|
89,312
|
||||||||||||||||||||||||
Reversal of unrealized gains upon the sale of marketable securities
|
-
|
-
|
-
|
-
|
-
|
(886
|
)
|
-
|
(886
|
)
|
||||||||||||||||||||||
Change in fair value of derivatives and amortization of swap settlements
|
-
|
-
|
-
|
-
|
-
|
7,732
|
-
|
7,732
|
||||||||||||||||||||||||
Change in fair value of marketable securities
|
-
|
-
|
-
|
-
|
-
|
2,591
|
-
|
2,591
|
||||||||||||||||||||||||
Issuance of common units under:
|
||||||||||||||||||||||||||||||||
Common stock issued as consideration by general partner in merger
|
23,093
|
3,777,646
|
-
|
-
|
-
|
-
|
-
|
3,777,646
|
||||||||||||||||||||||||
General partner's stock based compensation
|
154
|
6,511
|
-
|
-
|
-
|
-
|
-
|
6,511
|
||||||||||||||||||||||||
Sale of common stock by general partner
|
2,527
|
449,499
|
-
|
-
|
-
|
-
|
-
|
449,499
|
||||||||||||||||||||||||
Equity based compensation costs
|
-
|
5,756
|
-
|
29
|
1,672
|
-
|
-
|
7,428
|
||||||||||||||||||||||||
Reclassification of noncontrolling interest to redeemable noncontrolling interest
|
-
|
(19,823
|
)
|
-
|
(23
|
)
|
4,017
|
-
|
(5,084
|
)
|
(20,890
|
)
|
||||||||||||||||||||
Changes in value of redemption value of redeemable Non-Controlling Interest
|
2,126
|
2,126
|
||||||||||||||||||||||||||||||
Conversion of Series G preferred stock
|
34
|
4,349
|
-
|
-
|
-
|
-
|
-
|
4,349
|
||||||||||||||||||||||||
Contributions from noncontrolling interest
|
-
|
-
|
-
|
8,561
|
1,419,816
|
-
|
-
|
1,419,816
|
||||||||||||||||||||||||
Retirement of noncontrolling interest
|
-
|
-
|
-
|
(8,561
|
)
|
(1,419,816
|
)
|
-
|
-
|
(1,419,816
|
)
|
|||||||||||||||||||||
Distributions to noncontrolling interest
|
-
|
-
|
-
|
-
|
-
|
-
|
(3,462
|
)
|
(3,462
|
)
|
||||||||||||||||||||||
Redemptions
|
-
|
(2,382
|
)
|
-
|
-
|
(291
|
)
|
-
|
(308
|
)
|
(2,981
|
)
|
||||||||||||||||||||
Distributions declared
|
-
|
(210,435
|
)
|
(3,977
|
)
|
-
|
(9,358
|
)
|
-
|
-
|
(223,770
|
)
|
||||||||||||||||||||
Balances at September 30, 2014
|
63,229
|
$
|
5,963,493
|
$
|
71,209
|
2,156
|
$
|
45,439
|
$
|
(49,503
|
)
|
$
|
62,805
|
$
|
6,093,443
|
|
Nine Months Ended
September 30,
|
|||||||
|
2014
|
2013
|
||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
89,312
|
$
|
135,153
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
254,211
|
143,662
|
||||||
Amortization of discount on marketable securities
|
(6,555
|
)
|
(4,664
|
)
|
||||
Amortization of premium and debt financing costs, net
|
(4,987
|
)
|
8,111
|
|||||
Gain on sale of marketable securities
|
(886
|
)
|
(1,767
|
)
|
||||
Operating Partnership's share of gain on the sales of co-investment
|
(3,213
|
)
|
(41,252
|
)
|
||||
Gain on the sales of real estate and land
|
(39,640
|
)
|
(14,161
|
)
|
||||
Non-cash merger expense
|
7,562
|
-
|
||||||
Equity in income in co-investments, net
|
(14,903
|
)
|
(1,892
|
)
|
||||
Equity-based compensation
|
4,996
|
3,137
|
||||||
Gain on early retirement of debt
|
-
|
(846
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Acquired in place lease value and other assets
|
8,923
|
(19,689
|
)
|
|||||
Accounts payable and accrued liabilities
|
44,775
|
19,091
|
||||||
Other liabilities
|
1,393
|
199
|
||||||
Net cash provided by operating activities
|
340,988
|
225,082
|
||||||
Cash flows from investing activities:
|
||||||||
Additions to real estate:
|
||||||||
Acquisitions of real estate
|
(409,018
|
)
|
(205,539
|
)
|
||||
Improvements to recent acquisitions
|
(13,512
|
)
|
(14,374
|
)
|
||||
Redevelopment
|
(35,361
|
)
|
(32,488
|
)
|
||||
Revenue generating capital expenditures
|
(20,560
|
)
|
(2,165
|
)
|
||||
Lessor required capital expenditures
|
(7,562
|
)
|
(4,320
|
)
|
||||
Non-revenue generating capital expenditures
|
(29,070
|
)
|
(21,885
|
)
|
||||
Acquisitions of and additions to real estate under development
|
(108,659
|
)
|
(13,963
|
)
|
||||
Proceeds from insurance claim for property damage
|
29,160
|
-
|
||||||
BRE merger consideration paid
|
(555,826
|
)
|
-
|
|||||
Dispositions of real estate
|
61,331
|
33,666
|
||||||
Changes in restricted cash and deposits
|
(39,482
|
)
|
(17,246
|
)
|
||||
Purchases of marketable securities
|
(15,516
|
)
|
(16,442
|
)
|
||||
Sales and maturities of marketable securities
|
6,275
|
22,830
|
||||||
Purchases of and advances under notes and other receivables
|
-
|
(56,750
|
)
|
|||||
Collections of notes and other receivables
|
76,585
|
53,438
|
||||||
Dispositions of co-investments
|
13,900
|
-
|
||||||
Contributions to co-investments
|
(128,268
|
)
|
(150,852
|
)
|
||||
Distributions from co-investments
|
40,421
|
117,103
|
||||||
Net cash used in investing activities
|
(1,135,162
|
)
|
(308,987
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Borrowings under debt agreements
|
1,737,322
|
641,892
|
||||||
Principal repayment of debt
|
(1,327,840
|
)
|
(536,926
|
)
|
||||
Additions to deferred charges
|
(16,941
|
)
|
(3,836
|
)
|
||||
Equity related issuance cost of common stock
|
(1,348
|
)
|
(616
|
)
|
||||
Proceeds from stock options exercises
|
6,526
|
4,756
|
||||||
Net proceeds from issuance of common units
|
450,812
|
122,905
|
||||||
Distributions to noncontrolling interest
|
(3,462
|
)
|
(6,234
|
)
|
||||
Redemption of noncontrolling interest
|
(308
|
)
|
(1,819
|
)
|
||||
Common units and preferred units and preferred interests distributions paid
|
(191,554
|
)
|
(145,314
|
)
|
||||
Net cash provided by financing activities
|
653,207
|
74,808
|
||||||
Net decrease in cash and cash equivalents-unrestricted
|
(140,967
|
)
|
(9,097
|
)
|
||||
Cash acquired in the BRE merger
|
140,353
|
-
|
||||||
Cash and cash equivalents-unrestricted at beginning of period
|
18,491
|
18,606
|
||||||
Cash and cash equivalents-unrestricted at end of period
|
$
|
17,877
|
$
|
9,509
|
|
Nine Months Ended
September 30, |
|||||||
|
2014
|
2013
|
||||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest, net of $17.8 million, and $12.7 million capitalized in 2014 and 2013, respectively
|
$
|
93,342
|
$
|
76,596
|
||||
Supplemental disclosure of noncash investing and financing activities:
|
||||||||
Issuance of limited partner common units for contributed properties
|
$
|
1,419,816
|
$
|
-
|
||||
Retirement of limited partner common units
|
$
|
(1,419,816
|
)
|
-
|
||||
Transfer from real estate under development to land and building
|
$
|
71,496
|
$
|
68
|
||||
Transfer from real estate under development to co-investments
|
$
|
81,332
|
$
|
27,906
|
||||
Mortgage notes (excluding BRE merger) assumed in connection with purchases of real estate including the loan premiums recorded
|
$
|
70,480
|
$
|
-
|
||||
Change in accrual of distributions
|
$
|
45,605
|
$
|
5,434
|
||||
Change in fair value of derivative liabilities
|
$
|
(1,175
|
)
|
$
|
3,649
|
|||
Change in fair value of marketable securities
|
$
|
2,186
|
$
|
2,958
|
||||
Change in construction payable
|
$
|
30,405
|
$
|
1,544
|
||||
Reclassification to redeemable noncontrolling interest from general partner and limited partners common units
|
$
|
(18,764
|
)
|
$
|
-
|
|||
Assets acquired and liabilities assumed in BRE merger:
|
||||||||
Cash assumed in merger
|
$
|
140,353
|
$
|
-
|
||||
Rental properties and real estate under development
|
$
|
5,618,067
|
$
|
-
|
||||
Real estate held for sale, net
|
$
|
107,772
|
$
|
-
|
||||
Co-investments
|
$
|
218,402
|
$
|
-
|
||||
Acquired in-place lease value
|
$
|
80,358
|
$
|
-
|
||||
Other assets
|
$
|
15,676
|
$
|
-
|
||||
Mortgage notes payable and unsecured debt
|
$
|
1,747,382
|
$
|
-
|
||||
Other liabilities
|
$
|
94,976
|
$
|
-
|
||||
Redeemable noncontrolling interest
|
$
|
4,798
|
$
|
-
|
||||
Consideration issued
|
$
|
3,777,646
|
$
|
-
|
September 30, 2014
|
||||||||||||
Cost/
Amortized
Cost
|
Gross
Unrealized
Gain
|
Carrying Value
|
||||||||||
Available for sale:
|
||||||||||||
Investment-grade unsecured bonds
|
$
|
14,396
|
$
|
(51
|
)
|
$
|
14,345
|
|||||
Investment funds - US treasuries
|
5,018
|
7
|
5,025
|
|||||||||
Common stock
|
22,523
|
957
|
23,480
|
|||||||||
Held to maturity:
|
||||||||||||
Mortgage backed securities
|
65,297
|
-
|
65,297
|
|||||||||
Total
|
$
|
107,234
|
$
|
913
|
$
|
108,147
|
||||||
December 31, 2013
|
||||||||||||
Cost/
Amortized
Cost
|
Gross
Unrealized
Gain (Loss)
|
Carrying Value
|
||||||||||
Available for sale:
|
||||||||||||
Investment-grade unsecured bonds
|
$
|
15,446
|
$
|
509
|
$
|
15,955
|
||||||
Investment funds - US treasuries
|
3,675
|
3
|
3,678
|
|||||||||
Common stock
|
13,104
|
(1,304
|
)
|
11,800
|
||||||||
Held to maturity:
|
||||||||||||
Mortgage backed securities
|
58,651
|
-
|
58,651
|
|||||||||
Total
|
$
|
90,876
|
$
|
(792
|
)
|
$
|
90,084
|
Change in fair
value and amortization
of derivatives
|
Unrealized
gains/(losses) on
available for sale
securities
|
Total
|
||||||||||
Balance at December 31, 2013
|
$
|
(59,724
|
)
|
$
|
(748
|
)
|
$
|
(60,472
|
)
|
|||
Other comprehensive income before reclassification
|
1,428
|
2,479
|
3,907
|
|||||||||
Amounts reclassified from accumulated other comprehensive loss
|
5,997
|
(841
|
)
|
5,156
|
||||||||
Net other comprehensive income
|
7,425
|
1,638
|
9,063
|
|||||||||
Balance at September 30, 2014
|
$
|
(52,298
|
)
|
$
|
890
|
$
|
(51,408
|
)
|
Change in fair
value and amortization
of derivatives
|
Unrealized
gains/(losses) on
available for sale
securities
|
Total
|
||||||||||
Balance at December 31, 2013
|
$
|
(58,148
|
)
|
$
|
(792
|
)
|
$
|
(58,940
|
)
|
|||
Other comprehensive income before reclassification
|
1,487
|
2,591
|
4,078
|
|||||||||
Amounts reclassified from accumulated other comprehensive loss
|
6,245
|
(886
|
)
|
5,359
|
||||||||
Net other comprehensive income
|
7,732
|
1,705
|
9,437
|
|||||||||
Balance at September 30, 2014
|
$
|
(50,416
|
)
|
$
|
913
|
$
|
(49,503
|
)
|
Cash assumed
|
$
|
140
|
||
Rental properties and real estate under development
|
5,618
|
|||
Real estate held for sale, net
|
108
|
|||
Co-investments
|
218
|
|||
Acquired in-place lease value
|
80
|
|||
Other assets
|
16
|
|||
Mortgage notes payable and unsecured debt
|
(1,747
|
)
|
||
Other liabilities
|
(94
|
)
|
||
Redeemable noncontrolling interest
|
(5
|
)
|
||
4,334
|
||||
Cash consideration for BRE merger
|
$
|
556
|
||
Equity consideration for BRE merger
|
3,778
|
|||
Total consideration for BRE merger
|
$
|
4,334
|
Pro forma (unaudited)
three months ended September 30
(in thousands, except per share data)
|
||||||||
2014
|
2013
|
|||||||
Total revenue
|
$
|
270,479
|
$
|
238,668
|
||||
Net income available to common stockholders (1)
|
$
|
59,341
|
$
|
59,361
|
||||
Earnings per share, diluted (1)
|
$
|
0.91
|
$
|
0.95
|
||||
Pro forma (unaudited)
nine months ended September 30
(in thousands, except per share data)
|
||||||||
2014
|
2013
|
|||||||
Total revenue
|
$
|
776,761
|
$
|
699,701
|
||||
Net income available to common stockholders (1) (2)
|
$
|
214,549
|
$
|
66,806
|
||||
Earnings per share, diluted (1)
|
$
|
3.34
|
$
|
1.07
|
Pro forma (unaudited)
three months ended September 30
(in thousands, except per unit data)
|
||||||||
2014
|
2013
|
|||||||
Total revenue
|
$
|
270,479
|
$
|
238,668
|
||||
Net income available to common unitholders (1)
|
$
|
59,341
|
$
|
59,361
|
||||
Earnings per unit, diluted (1)
|
$
|
0.91
|
$
|
0.95
|
Pro forma (unaudited)
nine months ended September 30
(in thousands, except per unit data)
|
||||||||
2014
|
2013
|
|||||||
Total revenue
|
$
|
776,761
|
$
|
699,701
|
||||
Net income available to common unitholders (1) (2)
|
$
|
214,549
|
$
|
66,690
|
||||
Earnings per unit, diluted (1)
|
$
|
3.34
|
$
|
1.07
|
(1) | The supplemental unaudited pro forma net income available to common stockholders were adjusted to exclude $3.9 million and $46.4 million of merger related costs incurred by Essex during the three and nine months ended September 30, 2014. The 2013 supplemental unaudited pro forma net income available to common stockholders was adjusted to include the above adjustments plus $4.3 million of merger related costs incurred by Essex during the three months ended December 31, 2013. The supplemental 2014 and 2013 unaudited proforma earnings per share, diluted, was adjusted by approximately 23.1 million shares due to the common stock issued in connection with the merger. |
(2) | The supplemental unaudited pro forma net income available to common stockholders for the nine months ended September 30, 2014, include approximately $105 million from discontinued operations related to the sale of three BRE properties during the quarter ended March 31, 2014 that are non-recurring transactions. |
September 30,
2014
|
December 31,
2013
|
|||||||
Membership interest/Partnership interest in:
|
||||||||
Wesco I
|
$
|
135,875
|
$
|
142,025
|
||||
Wesco III
|
53,411
|
39,073
|
||||||
Fund II
|
2,578
|
4,166
|
||||||
Expo
|
8,305
|
12,041
|
||||||
The Huxley
|
11,784
|
11,224
|
||||||
Connolly Station
|
47,661
|
45,242
|
||||||
Wesco IV
|
95,338
|
-
|
||||||
BEXAEW
|
89,504
|
-
|
||||||
Total operating co-investments
|
444,456
|
253,771
|
||||||
Membership interest in:
|
||||||||
Limited liability companies with CPPIB that own and are developing Epic, Mosso I and II, Park 20, The Emme, and The Owens & Hacienda (1)
|
364,779
|
256,296
|
||||||
One South Market
|
30,498
|
17,115
|
||||||
The Dylan
|
8,396
|
7,321
|
||||||
Century Towers
|
13,491
|
-
|
||||||
Total development co-investments
|
417,164
|
280,732
|
||||||
Membership interest in Wesco II that owns a preferred equity interest in Parkmerced with a preferred return of 10.1%
|
95,934
|
94,711
|
||||||
Preferred interest in related party limited liability company that owns Sage at Cupertino with a preferred return of 9.5%
|
16,471
|
15,775
|
||||||
Preferred interest in a related party limited liability company that owns Madison Park at Anaheim with a preferred return of 9%
|
13,824
|
13,824
|
||||||
Preferred interest in related party limited liability company that owns an apartment development in Redwood City with a preferred return of 12%
|
10,148
|
9,455
|
||||||
Preferred interest in a limited liability company that owns an apartment development in San Jose with a preferred return of 12%
|
9,710
|
8,865
|
||||||
Preferred interest in a limited liability company that owns 8th & Thomas with a preferred return of 10.0%
|
12,816
|
-
|
||||||
Preferred interest in a limited liability company that owns Newbury Park with a preferred return of 12.0%
|
12,754
|
-
|
||||||
Preferred interest in a limited liability company that owns Century Towers with a preferred return of 10.0%
|
10,000
|
-
|
||||||
Total preferred interest co-investments
|
181,657
|
142,630
|
||||||
Total co-investments
|
$
|
1,043,277
|
$
|
677,133
|
(1) | Epic Phase I and II are currently in operations. The co-investment will be moved to operating co-investment with the completion of Phase III. |
September 30,
2014
|
December 31,
2013
|
|||||||
Balance sheets:
|
||||||||
Rental properties and real estate under development
|
$
|
3,084,852
|
$
|
1,953,328
|
||||
Other assets
|
110,752
|
61,578
|
||||||
Total assets
|
$
|
3,195,604
|
$
|
2,014,906
|
||||
Debt
|
$
|
1,285,954
|
$
|
667,641
|
||||
Other liabilities
|
83,344
|
125,479
|
||||||
Equity
|
1,826,306
|
1,221,786
|
||||||
Total liabilities and equity
|
$
|
3,195,604
|
$
|
2,014,906
|
||||
Company's share of equity
|
$
|
1,043,277
|
$
|
677,133
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Statements of operations:
|
||||||||||||||||
Property revenues
|
$
|
51,725
|
$
|
24,796
|
$
|
128,469
|
$
|
78,913
|
||||||||
Property operating expenses
|
(18,759
|
)
|
(10,170
|
)
|
(48,875
|
)
|
(29,872
|
)
|
||||||||
Net property operating income
|
32,966
|
14,626
|
79,594
|
49,041
|
||||||||||||
Gain on sale of real estate
|
-
|
137,845
|
11,369
|
146,663
|
||||||||||||
Interest expense
|
(9,838
|
)
|
(6,052
|
)
|
(25,283
|
)
|
(18,924
|
)
|
||||||||
General and administrative
|
(1,840
|
)
|
(1,419
|
)
|
(5,039
|
)
|
(4,472
|
)
|
||||||||
Equity income from co-investments
|
4,808
|
-
|
14,351
|
-
|
||||||||||||
Depreciation and amortization
|
(21,357
|
)
|
(8,718
|
)
|
(49,935
|
)
|
(29,314
|
)
|
||||||||
Net income
|
$
|
4,739
|
$
|
136,282
|
$
|
25,057
|
$
|
142,994
|
||||||||
Company's share of net income
|
$
|
4,910
|
$
|
40,802
|
$
|
21,065
|
$
|
52,295
|
September 30,
2014
|
December 31,
2013
|
|||||||
Notes receivable, secured, bearing interest at 4.0% per annum, principal and accrued interest due December 2014 (1)
|
$
|
3,212
|
$
|
3,212
|
||||
Notes and other receivables from affiliates (2)
|
9,086
|
60,968
|
||||||
Other receivables (3)
|
10,675
|
4,075
|
||||||
$
|
22,973
|
$
|
68,255
|
(1)
|
The borrower funds an impound account for capital replacement.
|
(2)
|
The Company had $9.1 million of short-term loans outstanding and due from various legacy and BRE joint ventures. See Note 5, Related Party Transaction, for additional details.
|
(3)
|
The Company has BRE and legacy receivables for utilities, rents and other tenant receivables.
|
September 30,
2014
|
December 31,
2013
|
Weighted Average
Maturity
In Years
|
||||||||||
Bonds private placement - fixed rate
|
$
|
465,000
|
$
|
465,000
|
4.5
|
|||||||
Term loan - variable rate
|
350,000
|
350,000
|
2.4
|
|||||||||
Unsecured Bonds - fixed rate
|
1,930,487
|
595,023
|
7.3
|
|||||||||
Unsecured debt
|
2,745,487
|
1,410,023
|
||||||||||
Mortgage notes
|
2,258,010
|
1,404,080
|
5.8
|
|||||||||
Lines of credit
|
222,628
|
219,421
|
4.5
|
|||||||||
Total debt (1)
|
$
|
5,226,125
|
$
|
3,033,524
|
||||||||
Weighted average interest rate on fixed rate unsecured bonds
|
3.6
|
%
|
4.0
|
%
|
||||||||
Weighted average interest rate on variable rate term loan
|
2.4
|
%
|
2.5
|
%
|
||||||||
Weighted average interest rate on line of credit
|
1.7
|
%
|
2.2
|
%
|
||||||||
Weighted average interest rate on mortgage notes
|
4.6
|
%
|
4.7
|
%
|
(1)
|
Includes total unamortized premium of $118,940 and $6,553 as of September 30, 2014 and December 31, 2013, respectively.
|
Remaining in 2014
|
$
|
7,388
|
||
2015
|
94,580
|
|||
2016
|
391,481
|
|||
2017
|
688,683
|
|||
2018
|
320,080
|
|||
Thereafter
|
3,382,345
|
|||
$
|
4,884,557
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Revenues:
|
||||||||||||||||
Southern California
|
$
|
118,242
|
$
|
65,805
|
$
|
302,380
|
$
|
195,272
|
||||||||
Northern California
|
94,643
|
54,189
|
238,564
|
156,983
|
||||||||||||
Seattle Metro
|
47,066
|
27,212
|
120,089
|
79,443
|
||||||||||||
Other real estate assets
|
8,167
|
4,971
|
22,716
|
14,319
|
||||||||||||
Total property revenues
|
$
|
268,118
|
$
|
152,177
|
$
|
683,749
|
$
|
446,017
|
||||||||
Net operating income:
|
||||||||||||||||
Southern California
|
$
|
76,725
|
$
|
43,237
|
$
|
198,873
|
$
|
130,398
|
||||||||
Northern California
|
66,287
|
37,466
|
166,983
|
108,481
|
||||||||||||
Seattle Metro
|
31,715
|
18,047
|
80,125
|
52,453
|
||||||||||||
Other real estate assets
|
5,723
|
3,105
|
14,906
|
9,742
|
||||||||||||
Total net operating income
|
180,450
|
101,855
|
460,887
|
301,074
|
||||||||||||
Management and other fees
|
2,361
|
1,771
|
6,856
|
5,812
|
||||||||||||
Depreciation
|
(102,184
|
)
|
(48,227
|
)
|
(254,211
|
)
|
(142,687
|
)
|
||||||||
General and administrative
|
(11,479
|
)
|
(6,263
|
)
|
(28,621
|
)
|
(19,852
|
)
|
||||||||
Merger and integration expenses
|
(3,857
|
)
|
-
|
(46,413
|
)
|
-
|
||||||||||
Acquisition and disposition costs
|
(51
|
)
|
(237
|
)
|
(1,555
|
)
|
(792
|
)
|
||||||||
Interest expense
|
(45,830
|
)
|
(29,192
|
)
|
(117,021
|
)
|
(86,661
|
)
|
||||||||
Interest and other income
|
2,992
|
2,387
|
8,685
|
9,326
|
||||||||||||
Equity income from co-investments
|
4,910
|
40,802
|
21,065
|
52,295
|
||||||||||||
Gain (loss) on early retirement of debt
|
-
|
(178
|
)
|
-
|
846
|
|||||||||||
Gains on sale of real estate and land
|
31,372
|
-
|
39,640
|
1,503
|
||||||||||||
Income from continuing operations
|
$
|
58,684
|
$
|
62,718
|
$
|
89,312
|
$
|
120,864
|
September 30,
2014
|
December 31,
2013
|
|||||||
Assets:
|
||||||||
Southern California
|
$
|
4,323,148
|
$
|
1,746,434
|
||||
Northern California
|
3,698,020
|
1,614,159
|
||||||
Seattle Metro
|
1,635,274
|
741,533
|
||||||
Other real estate assets
|
147,317
|
86,745
|
||||||
Net reportable operating segment - real estate assets
|
9,803,759
|
4,188,871
|
||||||
Real estate under development
|
363,193
|
50,430
|
||||||
Co-investments
|
1,043,277
|
677,133
|
||||||
Real estate held for sale, net
|
107,772
|
-
|
||||||
Cash and cash equivalents, including restricted cash
|
88,000
|
53,766
|
||||||
Marketable securities
|
108,147
|
90,084
|
||||||
Notes and other receivables
|
22,973
|
68,255
|
||||||
Other non-segment assets
|
129,441
|
58,300
|
||||||
Total assets
|
$
|
11,666,562
|
$
|
5,186,839
|
Three Months Ended
September 30, 2014
|
Three Months Ended
September 30, 2013
|
|||||||||||||||||||||||
Income
|
Weighted-
average
Common
Shares
|
Per
Common
Share
Amount
|
Income
|
Weighted-
average
Common
Shares
|
Per
Common
Share
Amount
|
|||||||||||||||||||
Basic:
|
||||||||||||||||||||||||
Income from continuing operations available to common stockholders
|
$
|
53,668
|
62,893
|
$
|
0.85
|
$
|
56,347
|
37,321
|
$
|
1.51
|
||||||||||||||
Income from discontinued operations available to common stockholders
|
-
|
62,893
|
-
|
12,441
|
37,321
|
0.33
|
||||||||||||||||||
$
|
53,668
|
$
|
0.85
|
$
|
68,788
|
$
|
1.84
|
|||||||||||||||||
Effect of Dilutive Securities (1)
|
-
|
177
|
54
|
116
|
||||||||||||||||||||
Diluted:
|
||||||||||||||||||||||||
Income from continuing operations available to common stockholders
|
$
|
53,668
|
63,070
|
$
|
0.85
|
$
|
56,401
|
37,437
|
$
|
1.51
|
||||||||||||||
Income from discontinued operations available to common stockholders
|
-
|
63,070
|
-
|
12,441
|
37,437
|
0.33
|
||||||||||||||||||
$
|
53,668
|
$
|
0.85
|
$
|
68,842
|
$
|
1.84
|
Nine Months Ended
September 30, 2014
|
Nine Months Ended
September 30, 2013
|
|||||||||||||||||||||||
Income
|
Weighted
Average
Common
Shares
|
Per
Common
Share
Amount
|
Income
|
Weighted
Average
Common
Shares
|
Per
Common
Share
Amount
|
|||||||||||||||||||
Basic:
|
||||||||||||||||||||||||
Income before discontinued operations available to common stockholders
|
$
|
76,364
|
54,250
|
$
|
1.41
|
$
|
105,421
|
37,207
|
$
|
2.84
|
||||||||||||||
Income from discontinued operations available to common stockholders
|
-
|
54,250
|
-
|
13,516
|
37,207
|
0.36
|
||||||||||||||||||
76,364
|
$
|
1.41
|
118,937
|
$
|
3.20
|
|||||||||||||||||||
Effect of Dilutive Securities (1)
|
-
|
193
|
-
|
89
|
||||||||||||||||||||
Diluted:
|
||||||||||||||||||||||||
Income from continuing operations available to common stockholders (1)
|
76,364
|
54,443
|
1.40
|
$
|
105,421
|
37,296
|
2.83
|
|||||||||||||||||
Income from discontinued operations available to common stockholders
|
-
|
54,443
|
-
|
13,516
|
37,296
|
0.36
|
||||||||||||||||||
$
|
76,364
|
$
|
1.40
|
$
|
118,937
|
$
|
3.19
|
(1) | Weighted average convertible limited partnership units of 2,164,556 and 2,146,929 which include vested Series Z-1 incentive units, for the three months ended September 30, 2014, and 2013, respectively, were not included in the determination of diluted EPS because they were anti-dilutive. Income allocated to convertible limited partnership units, which includes vested Series Z-1 units, aggregating $1.8 million and $4.0 million for the three months ended September 30, 2014 and 2013, respectively, and $3.4 million and $7.0 million for the nine months ended September 30, 2014 and 2013, respectively have been excluded from income available to common stockholders for the calculation of diluted income per common share since these units are excluded from the diluted weighted average common shares for the period as the effect was anti-dilutive. The Company has the ability to redeem DownREIT limited partnership units for cash and does not consider them to be potentially dilutive securities. |
Three Months Ended
September 30, 2014
|
Three Months Ended
September 30, 2013
|
|||||||||||||||||||||||
Income
|
Weighted-
average
Common
Units
|
Per
Common
Unit
Amount
|
Income
|
Weighted-
average
Common
Units
|
Per
Common
Unit
Amount
|
|||||||||||||||||||
Basic:
|
||||||||||||||||||||||||
Income from continuing operations available to common unitholders
|
$
|
55,484
|
65,057
|
$
|
0.85
|
$
|
59,620
|
39,467
|
$
|
1.51
|
||||||||||||||
Income from discontinued operations
|
-
|
65,057
|
-
|
13,157
|
39,467
|
0.33
|
||||||||||||||||||
Income available to common unitholders
|
$
|
55,484
|
$
|
0.85
|
$
|
72,777
|
$
|
1.84
|
||||||||||||||||
Effect of Dilutive Securities (1)
|
-
|
177
|
54
|
116
|
||||||||||||||||||||
Diluted:
|
||||||||||||||||||||||||
Income from continuing operations available to common unitholders (1)
|
$
|
55,484
|
65,234
|
$
|
0.85
|
$
|
59,674
|
39,583
|
$
|
1.51
|
||||||||||||||
Income from discontinued operations
|
-
|
65,234
|
-
|
13,157
|
39,583
|
0.33
|
||||||||||||||||||
Income available to common unitholders
|
$
|
55,484
|
$
|
0.85
|
$
|
72,831
|
$
|
1.84
|
Nine Months Ended
September 30, 2014
|
Nine Months Ended
September 30, 2013
|
|||||||||||||||||||||||
Income
|
Weighted-
average
Common
Units
|
Per
Common
Unit
Amount
|
Income
|
Weighted-
average
Common
Units
|
Per
Common
Unit
Amount
|
|||||||||||||||||||
Basic:
|
||||||||||||||||||||||||
Income from continuing operations available to common unitholders
|
$
|
79,806
|
56,485
|
$
|
1.41
|
$
|
111,685
|
39,333
|
$
|
2.84
|
||||||||||||||
Income from discontinued operations
|
-
|
56,485
|
-
|
14,289
|
39,333
|
0.36
|
||||||||||||||||||
Income available to common unitholders
|
$
|
79,806
|
$
|
1.41
|
$
|
125,974
|
$
|
3.20
|
||||||||||||||||
Effect of Dilutive Securities (1)
|
-
|
193
|
-
|
89
|
||||||||||||||||||||
Diluted:
|
||||||||||||||||||||||||
Income from continuing operations available to common unitholders (1)
|
$
|
79,806
|
56,678
|
$
|
1.41
|
$
|
111,685
|
39,422
|
$
|
2.84
|
||||||||||||||
Income from discontinued operations
|
-
|
56,678
|
-
|
14,289
|
39,422
|
0.36
|
||||||||||||||||||
Income available to common unitholders
|
$
|
79,806
|
$
|
1.41
|
$
|
125,974
|
$
|
3.20
|
(1) | The Operating Partnership has the ability to redeem DownREIT limited partnership units for cash and does not consider them to be potentially dilutive securities. |
(2) | Stock options of 8,343 and 42,518 for the three and nine months ended September 30, 2014, respectively, were not included in the diluted earnings per share calculation because the effects on earnings per share were anti-dilutive. Stock options of 38,825 and 38,825 for the three and nine months ended September 30, 2013, respectively, were not included in the diluted earnings per share calculation because the effects on earnings per share were anti-dilutive. |
As of September 30, 2014
|
As of September 30, 2013
|
|||||||||||||||
Apartment Units
|
%
|
Apartment Units
|
%
|
|||||||||||||
Southern California
|
22,168
|
46
|
%
|
13,656
|
46
|
%
|
||||||||||
Northern California
|
14,601
|
31
|
%
|
9,427
|
32
|
%
|
||||||||||
Seattle Metro
|
10,216
|
21
|
%
|
6,645
|
22
|
%
|
||||||||||
Arizona
|
902
|
2
|
%
|
-
|
-
|
|||||||||||
Total
|
47,887
|
100
|
%
|
29,728
|
100
|
%
|
Three months ended
September 30, |
||||||||
2014
|
2013
|
|||||||
Southern California
|
95.9
|
%
|
95.7
|
%
|
||||
Northern California
|
96.3
|
%
|
95.6
|
%
|
||||
Seattle Metro
|
95.5
|
%
|
95.7
|
%
|
Number of
|
Three Months Ended
September 30, |
Dollar
|
Percentage
|
|||||||||||||||||
Properties
|
2014
|
2013
|
Change
|
Change
|
||||||||||||||||
Property Revenues (dollars in thousands)
|
||||||||||||||||||||
Quarterly Same-Property:
|
||||||||||||||||||||
Southern California
|
59
|
$
|
67,230
|
$
|
63,560
|
$
|
3,670
|
5.8
|
%
|
|||||||||||
Northern California
|
38
|
55,377
|
50,498
|
4,879
|
9.7
|
|||||||||||||||
Seattle Metro
|
34
|
29,106
|
27,200
|
1,906
|
7.0
|
|||||||||||||||
Total Quarterly Same-Property revenues
|
131
|
151,713
|
141,258
|
10,455
|
7.4
|
|||||||||||||||
Quarterly Non-Same Property Revenues (1)
|
21,173
|
10,919
|
10,254
|
93.9
|
||||||||||||||||
Legacy BRE Portfolio Property Revenues (2)
|
95,232
|
-
|
95,232
|
-
|
||||||||||||||||
Total property revenues
|
$
|
268,118
|
$
|
152,177
|
$
|
115,941
|
76.2
|
%
|
(1)
|
Includes eleven communities acquired after January 1, 2013, two sold communities and one redevelopment community.
|
(2)
|
Includes 55 properties acquired from BRE as of April 1, 2014.
|
Nine Months Ended
September 30,
|
||||||||
2014
|
2013
|
|||||||
Southern California
|
96.2
|
%
|
96.0
|
%
|
||||
Northern California
|
96.3
|
%
|
96.1
|
%
|
||||
Seattle Metro
|
96.0
|
%
|
96.1
|
%
|
Number of
|
Nine Months Ended
September 30, |
Dollar
|
Percentage
|
|||||||||||||||||
Properties
|
2014
|
2013
|
Change
|
Change
|
||||||||||||||||
Property Revenues (dollars in thousands)
|
||||||||||||||||||||
2014/2013 Same-Properties:
|
||||||||||||||||||||
Southern California
|
59
|
$
|
198,488
|
$
|
188,423
|
$
|
10,065
|
5.3
|
%
|
|||||||||||
Northern California
|
38
|
161,368
|
147,422
|
13,946
|
9.5
|
|||||||||||||||
Seattle Metro
|
34
|
85,419
|
79,431
|
5,988
|
7.5
|
|||||||||||||||
Total 2014/2013 Same-Property revenues.
|
131
|
445,275
|
415,276
|
29,999
|
7.2
|
|||||||||||||||
2014/2013 Non-Same Property Revenues (1)
|
52,605
|
30,741
|
21,864
|
71.1
|
||||||||||||||||
Legacy BRE Portfolio Property Revenues (2)
|
185,869
|
-
|
185,869
|
-
|
||||||||||||||||
Total property revenues
|
$
|
683,749
|
$
|
446,017
|
$
|
237,732
|
53.3
|
%
|
(1)
|
Includes eleven communities acquired after January 1, 2013, three sold communities and one redevelopment community.
|
(2)
|
Includes 55 properties acquired from BRE on April 1, 2014 and March 31, 2014.
|
(a)
|
historical cost accounting for real estate assets in accordance with GAAP assumes, through depreciation charges, that the value of real estate assets diminishes predictably over time. NAREIT stated in its White Paper on Funds from Operations “since real estate asset values have historically risen or fallen with market conditions, many industry investors have considered presentations of operating results for real estate companies that use historical cost accounting to be insufficient by themselves.” Consequently, NAREIT’s definition of FFO reflects the fact that real estate, as an asset class, generally appreciates over time and depreciation charges required by GAAP do not reflect the underlying economic realities.
|
(b)
|
REITs were created as a legal form of organization in order to encourage public ownership of real estate as an asset class through investment in firms that were in the business of long-term ownership and management of real estate. The exclusion, in NAREIT’s definition of FFO, of gains and losses (including impairment charges on depreciable real estate) from the sales of previously depreciated operating real estate assets allows investors and analysts to readily identify the operating results of the long-term assets that form the core of a REIT’s activity and assists in comparing those operating results between periods.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Net income available to common stockholders
|
$
|
53,668
|
$
|
68,788
|
$
|
76,364
|
$
|
118,937
|
||||||||
Adjustments:
|
||||||||||||||||
Depreciation
|
102,184
|
48,487
|
254,211
|
143,662
|
||||||||||||
Gains not included in FFO, net of internal disposition costs
|
(31,372
|
)
|
(49,044
|
)
|
(41,664
|
)
|
(51,410
|
)
|
||||||||
Depreciation add back from unconsolidated co-investments
|
9,986
|
3,723
|
23,060
|
11,342
|
||||||||||||
Noncontrolling interest related to Operating Partnership units
|
1,816
|
3,989
|
3,442
|
7,037
|
||||||||||||
Depreciation attributable to third party ownership
|
(335
|
)
|
(327
|
)
|
(996
|
)
|
(981
|
)
|
||||||||
Funds from operations
|
$
|
135,947
|
$
|
75,616
|
$
|
314,417
|
$
|
228,587
|
||||||||
Funds from operations per share - diluted
|
$
|
2.08
|
$
|
1.91
|
$
|
5.55
|
$
|
5.79
|
||||||||
Non-core items:
|
||||||||||||||||
Merger and integration expenses
|
3,857
|
-
|
46,413
|
-
|
||||||||||||
Cyber intrusion expenses
|
1,249
|
-
|
1,249
|
-
|
||||||||||||
Acquisition and disposition costs
|
51
|
237
|
768
|
792
|
||||||||||||
Gain on sales of marketable securities and note prepayment
|
-
|
-
|
(886
|
)
|
(2,611
|
)
|
||||||||||
Co-investment promote income
|
-
|
-
|
(4,904
|
)
|
-
|
|||||||||||
Utility reimbursement income accrual
|
-
|
-
|
(1,807
|
)
|
-
|
|||||||||||
Acquisition fee income
|
-
|
-
|
(500
|
)
|
-
|
|||||||||||
Gain on sale of land
|
-
|
-
|
(400
|
)
|
(1,503
|
)
|
||||||||||
Earthquake related and other
|
-
|
-
|
1,571
|
-
|
||||||||||||
Loss on early retirement of debt, add back from unconsolidated co-investments
|
-
|
-
|
197
|
-
|
||||||||||||
Loss (gain) on early retirement of debt
|
-
|
178
|
-
|
(846
|
)
|
|||||||||||
Income from early redemption of preferred equity investments
|
-
|
(412
|
)
|
-
|
(1,358
|
)
|
||||||||||
Core FFO
|
$
|
141,104
|
$
|
75,619
|
$
|
356,118
|
$
|
223,061
|
||||||||
Core FFO per share-diluted
|
$
|
2.16
|
$
|
1.91
|
$
|
6.28
|
$
|
5.65
|
||||||||
Weighted average number
|
||||||||||||||||
shares outstanding diluted (1)
|
65,234,328
|
39,583,912
|
56,677,712
|
39,456,163
|
(1) | Assumes conversion of all dilutive outstanding operating partnership interests in the Operating Partnership. |
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Earnings from operations
|
$
|
65,240
|
$
|
48,899
|
$
|
136,943
|
$
|
143,555
|
||||||||
Adjustments:
|
||||||||||||||||
Depreciation
|
102,184
|
48,227
|
254,211
|
142,687
|
||||||||||||
General and administrative
|
11,479
|
6,263
|
28,621
|
19,852
|
||||||||||||
Merger and integration expenses
|
3,857
|
-
|
46,413
|
-
|
||||||||||||
Acquisition and dispositions costs
|
51
|
237
|
1,555
|
792
|
||||||||||||
Management and other fees
|
(2,361
|
)
|
(1,771
|
)
|
(6,856
|
)
|
(5,812
|
)
|
||||||||
NOI
|
180,450
|
101,855
|
460,887
|
301,074
|
||||||||||||
Less: Non same-property NOI
|
(14,178
|
)
|
(6,550
|
)
|
(33,495
|
)
|
(19,194
|
)
|
||||||||
Less: Legacy BRE Portfolio NOI
|
(62,004
|
)
|
-
|
(120,375
|
)
|
-
|
||||||||||
Same-property NOI
|
$
|
104,268
|
$
|
95,305
|
$
|
307,017
|
$
|
281,880
|
Carrying and
|
Estimated Carrying Value
|
|||||||||||||||||||
Notional
|
Maturity
|
Estimated Fair
|
+ 50 |
- 50
|
||||||||||||||||
(in thousands)
|
Amount
|
Date Range
|
Value
|
Basis Points
|
Basis Points
|
|||||||||||||||
Cash flow hedges:
|
||||||||||||||||||||
Interest rate swaps
|
$
|
300,000
|
2016-2017
|
$
|
(1,406
|
)
|
$
|
1,772
|
$
|
(4,804
|
)
|
|||||||||
Interest rate caps
|
156,904
|
2014-2018
|
-
|
3
|
-
|
|||||||||||||||
Total cash flow hedges
|
$
|
456,904
|
2014-2018
|
$
|
(1,406
|
)
|
$
|
1,775
|
$
|
(4,804
|
)
|
For the Years Ended
|
2014
|
2015
|
2016
|
2017
|
2018
|
Thereafter
|
Total
|
Fair value
|
||||||||||||||||||||||||
(in thousands, except for interest rates)
|
||||||||||||||||||||||||||||||||
Fixed rate debt
|
$
|
7,388
|
94,580
|
191,481
|
538,683
|
320,080
|
3,193,126
|
$
|
4,345,338
|
$
|
4,464,278
|
|||||||||||||||||||||
Average interest rate
|
4.6
|
%
|
5.1
|
%
|
4.5
|
%
|
3.3
|
%
|
5.5
|
%
|
4.2
|
%
|
4.2
|
%
|
||||||||||||||||||
Variable rate debt
|
$
|
-
|
-
|
200,000
|
(1)
|
150,000
|
(1)
|
-
|
189,219
|
(2)
|
$
|
539,219
|
$
|
520,370
|
||||||||||||||||||
Average interest rate
|
-
|
-
|
2.4
|
%
|
2.4
|
%
|
-
|
1.9
|
%
|
2.2
|
%
|
(1)
|
$300.0 million subject to interest rate swap agreements.
|
(2)
|
$156.9 million subject to interest rate caps.
|
· | cash flow may not be sufficient to meet required payments of principal and interest; |
· | inability to refinance maturing indebtedness on encumbered apartment communities; |
· | inability to comply with debt covenants could cause an acceleration of the maturity date; and |
· | paying debt before the scheduled maturity date could result in prepayment penalties. |
· | the Combined Company has incurred substantial expenses related to the merger; |
· | the Combined Company may be unable to integrate the businesses of Essex and BRE successfully and realize the anticipated synergies and other benefits of the merger or do so within the anticipated timeframe; |
· | the future results of the Combined Company will suffer if the Combined Company does not effectively manage its expanded operations following the merger; |
· | counterparties to certain significant agreements with Essex or BRE may exercise contractual rights under such agreements in connection with the merger; and |
· | the Combined Company’s joint ventures, including joint ventures entered into in connection with the merger, could be adversely affected by the Combined Company’s lack of sole decision-making authority, its reliance on its joint venture partner’s financial condition and disputes between the Combined Company and its joint venture partner. |
· | the general economic climate; |
· | local economic conditions in which the communities are located, such as oversupply of housing or a reduction in demand for rental housing; |
· | the attractiveness of the communities to tenants; |
· | competition from other available housing; and |
|
· | the Company’s ability to provide for adequate maintenance and insurance. |
· | funds may be expended and management's time devoted to projects that may not be completed; |
· | construction costs of a project may exceed original estimates possibly making the project economically unfeasible; |
· | projects may be delayed due to, without limitation, adverse weather conditions, labor or material shortage; |
· | occupancy rates and rents at a completed project may be less than anticipated; and |
· | expenses at completed development projects may be higher than anticipated. |
· |
regional, national and global economic conditions;
|
· |
actual or anticipated variations in the Company’s quarterly operating results or dividends;
|
· |
changes in the Company’s funds from operations or earnings estimates;
|
· |
issuances of common stock, preferred stock or convertible debt securities;
|
· |
publication of research reports about the Company or the real estate industry;
|
· |
the general reputation of real estate investment trusts and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate based companies);
|
|
· |
general stock and bond market conditions, including changes in interest rates on fixed income securities, that may lead prospective purchasers of the Company’s stock to demand a higher annual yield from dividends;
|
· |
availability to capital markets and cost of capital;
|
· |
a change in analyst ratings or the Company’s credit ratings;
|
· |
terrorist activity may adversely affect the markets in which the Company’s securities trade, possibly increasing market volatility and causing erosion of business and consumer confidence and spending; and
|
· |
Natural disasters such as earthquakes.
|
· |
consummate a merger, consolidation or sale of all or substantially all of our assets; and
|
· |
incur additional secured and unsecured indebtedness.
|
· |
authorize or create any class or series of stock that ranks senior to the Series H Preferred Stock with respect to the payment of dividends, rights upon liquidation, dissolution or winding-up of the Company’s business; or
|
· |
amend, alter or repeal the provisions of the Company’s Charter, including by merger or consolidation, that would materially and adversely affect the rights of the Series H Preferred Stock; provided that in the case of a merger or consolidation, so long as the Series H Preferred Stock remains outstanding with the terms thereof materially unchanged or the holders of shares of Series H Preferred Stock receive shares of stock or other equity securities with rights, preferences, privileges and voting powers substantially similar to that of the Series H Preferred Stock, the occurrence of such merger or consolidation shall not be deemed to materially and adversely affect the rights of the holders of the Series H Preferred Stock.
|
· |
80% of the votes entitled to be cast by holders of outstanding voting shares; and
|
· |
Two-thirds of the votes entitled to be cast by holders of outstanding voting shares other than shares held by the interested stockholder with whom the business combination is to be effected.
|
· |
directors may be removed, without cause, only upon a two-thirds vote of stockholders, and with cause, only upon a majority vote of stockholders;
|
· |
the Company’s board can fix the number of directors and fill vacant directorships upon the vote of a majority of the directors;
|
· |
stockholders must give advance notice to nominate directors or propose business for consideration at a stockholders’ meeting; and
|
· |
for stockholders to call a special meeting, the meeting must be requested by not less than a majority of all the votes entitled to be cast at the meeting.
|
· |
that the value of mortgaged property may be less than the amounts owed, causing realized or unrealized losses;
|
· |
the borrower may not pay indebtedness under the mortgage when due, requiring the Company to foreclose, and the amount recovered in connection with the foreclosure may be less than the amount owed;
|
· |
that interest rates payable on the mortgages may be lower than the Company’s cost of funds; and
|
· |
in the case of junior mortgages, that foreclosure of a senior mortgage could eliminate the junior mortgage.
|
A. | Exhibits |
10.1
|
Form of Equity Distribution Agreement between Essex Property Trust, Inc. and various entities, dated August 28, 2014, attached as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed September 2, 2014, and incorporated herein by reference.
|
10.2
|
Form of Amended & Restated Equity Distribution Agreement between Essex Property Trust, Inc. and various entities, dated August 28, 2014, attached as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed September 2, 2014, and incorporated herein by reference.
|
Ratio of Earnings to Fixed Charges.
|
|
Certification of Michael J. Schall, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Michael T. Dance, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Michael T. Dance, Principal Financial Officer of General Partner, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Michael J. Schall, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Michael T. Dance, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Michael J. Schall, Principal Executive Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Certification of Michael T. Dance, Principal Financial Officer of General Partner, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
Press Release issued by Essex Property Trust, Inc. dated August 6, 2014, announcing the financial results for the second quarter of 2014 (furnished pursuant to Item 2.02 of Form 8-K).
|
|
Supplemental Information issued by Essex Property Trust on August 6, 2014 and accompanying August 6, 2014 earnings release (furnished pursuant to Item 2.02 of Form 8-K).
|
|
Transcript of the conference call discussing the second quarter of 2014 results (furnished pursuant to Item 2.02 of Form 8-K).
|
ESSEX PROPERTY TRUST, INC.
|
||
(Registrant)
|
||
Date: November 6, 2014
|
||
By: /S/ MICHAEL T. DANCE
|
||
Michael T. Dance
|
||
Executive Vice President, Chief Financial Officer
(Authorized Officer, Principal Financial Officer)
|
ESSEX PORTFOLIO, L.P.
By Essex Property Trust, Inc., its general partner
|
||
(Registrant)
|
||
Date: November 6, 2014
|
||
By: /S/ MICHAEL T. DANCE
|
||
Michael T. Dance
|
||
Executive Vice President, Chief Financial Officer
(Authorized Officer, Principal Financial Officer)
|
Quarter
ended |
Years ended December 31,
|
|||||||||||||||||||||||
2014
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||||||
Earnings:
|
||||||||||||||||||||||||
Income from continuing operations
|
$
|
58,684
|
$
|
140,882
|
$
|
127,653
|
$
|
46,958
|
$
|
47,424
|
$
|
41,244
|
||||||||||||
Gain on sales of real estate
|
-
|
-
|
-
|
-
|
-
|
(103
|
)
|
|||||||||||||||||
Interest and amortization expense
|
45,830
|
116,524
|
111,888
|
103,168
|
87,584
|
86,016
|
||||||||||||||||||
Total earnings
|
$
|
104,514
|
$
|
257,406
|
$
|
239,541
|
$
|
150,126
|
$
|
135,008
|
$
|
127,157
|
||||||||||||
Fixed charges:
|
||||||||||||||||||||||||
Interest and amortization expense
|
$
|
45,830
|
$
|
116,524
|
$
|
111,888
|
$
|
103,168
|
$
|
87,584
|
$
|
86,016
|
||||||||||||
Capitalized interest
|
6,187
|
16,486
|
10,346
|
8,240
|
9,486
|
10,463
|
||||||||||||||||||
Preferred stock dividends
|
1,296
|
5,472
|
5,472
|
4,753
|
2,170
|
4,860
|
||||||||||||||||||
Perpetual preferred unit distributions
|
-
|
-
|
-
|
1,650
|
6,300
|
6,300
|
||||||||||||||||||
Total fixed charges and preferred stock dividends and preferred unit distributions
|
$
|
53,313
|
$
|
138,482
|
$
|
127,706
|
$
|
117,811
|
$
|
105,540
|
$
|
107,639
|
||||||||||||
Ratio of earnings to fixed charges (excluding preferred stock dividends and preferred unit distributions)
|
2.01
|
X
|
1.94
|
X
|
1.96
|
X
|
1.35
|
X
|
1.39
|
X
|
1.32
|
X
|
||||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends and preferred unit distributions
|
1.96
|
X
|
1.86
|
X
|
1.88
|
X
|
1.27
|
X
|
1.28
|
X
|
1.18
|
X
|
Quarter
September 30ended
|
Years ended December 31,
|
|||||||||||||||||||||||
2014
|
2013
|
2012
|
2011
|
2010
|
2009
|
|||||||||||||||||||
Earnings:
|
||||||||||||||||||||||||
Income from continuing operations
|
$
|
58,684
|
$
|
140,882
|
$
|
127,653
|
$
|
46,958
|
$
|
47,424
|
$
|
41,244
|
||||||||||||
Gain on sales of real estate
|
-
|
-
|
-
|
-
|
-
|
(103
|
)
|
|||||||||||||||||
Interest and amortization expense
|
45,830
|
116,524
|
111,888
|
103,168
|
87,584
|
86,016
|
||||||||||||||||||
Total earnings
|
$
|
104,514
|
$
|
257,406
|
$
|
239,541
|
$
|
150,126
|
$
|
135,008
|
$
|
127,157
|
||||||||||||
Fixed charges:
|
||||||||||||||||||||||||
Interest and amortization expense
|
$
|
45,830
|
$
|
116,524
|
$
|
111,888
|
$
|
103,168
|
$
|
87,584
|
$
|
86,016
|
||||||||||||
Capitalized interest
|
6,187
|
16,486
|
10,346
|
8,240
|
9,486
|
10,463
|
||||||||||||||||||
Preferred interest distributions
|
1,296
|
5,472
|
5,472
|
4,753
|
2,170
|
4,860
|
||||||||||||||||||
Preferred unit distributions
|
-
|
-
|
-
|
1,650
|
6,300
|
6,300
|
||||||||||||||||||
Total fixed charges and preferred interests and preferred unit distributions
|
$
|
53,313
|
$
|
138,482
|
$
|
127,706
|
$
|
117,811
|
$
|
105,540
|
$
|
107,639
|
||||||||||||
Ratio of earnings to fixed charges (excluding preferred interests and preferred unit distributions)
|
2.01
|
X
|
1.94
|
X
|
1.96
|
X
|
1.35
|
X
|
1.39
|
X
|
1.32
|
X
|
||||||||||||
Ratio of earnings to combined fixed charges and preferred interests and preferred unit distributions
|
1.96
|
X
|
1.86
|
X
|
1.88
|
X
|
1.27
|
X
|
1.28
|
X
|
1.18
|
X
|
1. | I have reviewed this quarterly report on Form 10-Q of Essex Property Trust, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure control and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Michael J. Schall
|
1. | I have reviewed this quarterly report on Form 10-Q of Essex Property Trust, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) | Designed such disclosure controls and procedures, or caused such disclosure control and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5)
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Michael T. Dance
|
3. | I have reviewed this quarterly report on Form 10-Q of Essex Portfolio, L.P.; |
4. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
5. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
6. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure control and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
f) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
g) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
6. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
c) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Michael J. Schall
|
1. | I have reviewed this quarterly report on Form 10-Q of Essex Portfolio, L.P.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
e) | Designed such disclosure controls and procedures, or caused such disclosure control and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
f) | Designed such internal control over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
g) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
h) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5) | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Michael T. Dance
|
Date: November 6, 2014
|
/s/ Michael J. Schall
|
|
Michael J. Schall
|
||
Chief Executive Officer and President
|
||
Essex Property Trust, Inc.
|
Date: November 6, 2014
|
/s/ Michael T. Dance
|
|
Michael T. Dance
|
||
Chief Financial Officer, Executive Vice President
|
||
Essex Property Trust, Inc.
|
Date: November 6, 2014
|
/s/ Michael J. Schall
|
|
Michael J. Schall
|
||
Chief Executive Officer and President
|
||
Essex Property Trust, Inc., general partner of
|
||
Essex Portfolio, L.P.
|
Date: November 6, 2014
|
/s/ Michael T. Dance
|
|
Michael T. Dance
|
||
Chief Financial Officer, Executive Vice President
|
||
Essex Property Trust, Inc., general partner of
|
||
Essex Portfolio, L.P.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
June 30,
|
%
|
June 30,
|
%
|
|||||||||||||||||||||
2014
|
2013
|
Change
|
2014
|
2013
|
Change
|
|||||||||||||||||||
Per Diluted Share
|
||||||||||||||||||||||||
Total FFO
|
$
|
1.72
|
$
|
1.91
|
-9.8
|
%
|
$
|
3.41
|
$
|
3.88
|
-12.2
|
%
|
||||||||||||
Core FFO
|
$
|
2.08
|
$
|
1.88
|
11.1
|
%
|
$
|
4.11
|
$
|
3.74
|
9.7
|
%
|
||||||||||||
Earnings per Share
|
$
|
0.08
|
$
|
0.67
|
-88.1
|
%
|
$
|
0.54
|
$
|
1.35
|
-60.0
|
%
|
· | Selected to be included in the S&P 500 as of April 1, 2014. |
· | Grew Core FFO per diluted share by 11.1% compared to Q2 2013, which is ahead of initial guidance assumptions. |
· | Increased same-property gross revenues and net operating income (“NOI”) by 7.2% and 9.1%, respectively, compared to Q2 2013. |
· | Realized a sequential increase in same-property revenue growth of 1.6%. |
· | Achieved pro forma same-property revenue growth of 6.7% in the legacy BRE portfolio, narrowing the revenue growth differential to the Essex portfolio from 1.6% to 0.5% from the first quarter 2014 to the second quarter 2014, respectively. |
· | Increased financial occupancy in the legacy BRE same-property portfolio by 92 basis points to 95.3% in Q2 ‘14 compared to Q2 ‘13 and 76 basis points since Q1 ‘14. |
· | Completed the lease-up of four development communities and began the lease-up of two additional properties. |
· | Increased the Essex portfolio full year same-property revenue growth guidance range to 6.4% to 6.8%, raising the midpoint by 100 basis points and increasing the same-property NOI growth range to 7.7% to 8.4%. |
· | Raised the full year Core FFO per diluted share guidance range to $8.31 to $8.47, raising the midpoint by $0.09 per share. Established Core FFO guidance range for the third quarter of 2014 of $2.05 to $2.11 per diluted share. |
Q2 2014 vs. Q2 2013
|
Q2 2014 vs. Q1 2014
|
% of Total
|
||||||||||
Gross Revenues
|
Gross Revenues
|
Q2 2014 Revenues
|
||||||||||
Southern California
|
||||||||||||
Los Angeles County
|
5.5
|
%
|
1.1
|
%
|
17.2
|
%
|
||||||
Ventura County
|
5.5
|
%
|
1.3
|
%
|
8.9
|
%
|
||||||
Orange County
|
4.7
|
%
|
0.7
|
%
|
11.1
|
%
|
||||||
San Diego County
|
5.9
|
%
|
1.8
|
%
|
5.6
|
%
|
||||||
Other Southern California
|
5.9
|
%
|
-0.4
|
%
|
1.7
|
%
|
||||||
Total Southern California
|
5.4
|
%
|
1.1
|
%
|
44.5
|
%
|
||||||
Northern California
|
||||||||||||
Santa Clara County
|
9.1
|
%
|
2.0
|
%
|
18.4
|
%
|
||||||
Contra Costa County
|
7.6
|
%
|
1.5
|
%
|
6.4
|
%
|
||||||
Alameda County
|
11.4
|
%
|
2.5
|
%
|
5.9
|
%
|
||||||
Other Northern California
|
9.9
|
%
|
2.4
|
%
|
5.7
|
%
|
||||||
Total Northern California
|
9.4
|
%
|
2.1
|
%
|
36.4
|
%
|
||||||
Seattle Metro
|
7.3
|
%
|
1.9
|
%
|
19.1
|
%
|
||||||
Same-Property Portfolio
|
7.2
|
%
|
1.6
|
%
|
100.0
|
%
|
Year Over Year Growth
|
||||||||||||
Q2 2014 compared to Q2 2013
|
||||||||||||
Gross
Revenues |
Operating
Expenses |
NOI
|
||||||||||
Southern California
|
5.4
|
%
|
3.2
|
%
|
6.4
|
%
|
||||||
Northern California
|
9.4
|
%
|
2.4
|
%
|
12.4
|
%
|
||||||
Seattle Metro
|
7.3
|
%
|
4.0
|
%
|
9.1
|
%
|
||||||
Same-Property Portfolio
|
7.2
|
%
|
3.1
|
%
|
9.1
|
%
|
Sequential Growth
|
||||||||||||
Q2 2014 compared to Q1 2014
|
||||||||||||
Gross
Revenues |
Operating
Expenses |
NOI
|
||||||||||
Southern California
|
1.1
|
%
|
1.2
|
%
|
1.0
|
%
|
||||||
Northern California
|
2.1
|
%
|
2.3
|
%
|
2.0
|
%
|
||||||
Seattle Metro
|
1.9
|
%
|
0.8
|
%
|
2.4
|
%
|
||||||
Same-Property Portfolio
|
1.6
|
%
|
1.5
|
%
|
1.6
|
%
|
Financial Occupancies
|
||||||||||||
Quarter Ended
|
||||||||||||
6/30/2014
|
3/31/2014
|
6/30/2013
|
||||||||||
Southern California
|
96.3
|
%
|
96.4
|
%
|
95.8
|
%
|
||||||
Northern California
|
96.0
|
%
|
96.5
|
%
|
96.1
|
%
|
||||||
Seattle Metro
|
96.0
|
%
|
96.5
|
%
|
96.1
|
%
|
||||||
Same-Property Portfolio
|
96.1
|
%
|
96.5
|
%
|
96.0
|
%
|
Q2 2014 vs. Q2 2013
|
Q2 2014 vs. Q1 2014
|
% of Total
|
||||||||||
Gross Revenues
|
Gross Revenues
|
Q2 2014 Revenues
|
||||||||||
Southern California
|
||||||||||||
Los Angeles County
|
6.0
|
%
|
2.4
|
%
|
15.8
|
%
|
||||||
Orange County
|
3.7
|
%
|
0.8
|
%
|
18.8
|
%
|
||||||
San Diego County
|
5.8
|
%
|
2.4
|
%
|
17.1
|
%
|
||||||
Other Southern California
|
2.0
|
%
|
-0.2
|
%
|
1.0
|
%
|
||||||
Total Southern California
|
5.1
|
%
|
1.8
|
%
|
52.7
|
%
|
||||||
Northern California
|
||||||||||||
Santa Clara County
|
8.7
|
%
|
3.1
|
%
|
5.5
|
%
|
||||||
Contra Costa County
|
8.0
|
%
|
0.6
|
%
|
4.3
|
%
|
||||||
Alameda County
|
11.1
|
%
|
3.1
|
%
|
8.6
|
%
|
||||||
Other Northern California
|
9.8
|
%
|
1.8
|
%
|
12.5
|
%
|
||||||
Total Northern California
|
9.7
|
%
|
2.2
|
%
|
30.9
|
%
|
||||||
Seattle Metro
|
6.6
|
%
|
1.7
|
%
|
16.4
|
%
|
||||||
Same-Property Portfolio
|
6.7
|
%
|
1.9
|
%
|
100.0
|
%
|
||||||
Joint Venture Portfolio (1)
|
5.3
|
%
|
1.0
|
%
|
(1)
|
The joint venture portfolio includes 17 properties, containing 4,175 apartment homes, which were contributed to three joint ventures in connection with the merger with BRE.
|
Project Name
|
Location
|
Total Units
|
ESS Ownership
|
% Leased as of 7/30/14
|
|||||||||
Epic Phase II
|
San Jose, CA
|
289
|
55
|
%
|
97.6
|
%
|
|||||||
The Avery
|
Los Angeles, CA
|
121
|
100
|
%
|
97.5
|
%
|
|||||||
The Huxley
|
Los Angeles, CA
|
187
|
50
|
%
|
94.7
|
%
|
|||||||
Solstice
|
Sunnyvale, CA
|
280
|
100
|
%
|
98.9
|
%
|
|||||||
Wilshire at La Brea
|
Los Angeles, CA
|
478
|
100
|
%
|
68.8
|
%
|
|||||||
Radius
|
Redwood City, CA
|
264
|
100
|
%
|
36.0
|
%
|
|||||||
Mosso I
|
San Francisco, CA
|
181
|
55
|
%
|
42.5
|
%
|
|||||||
Total/Average % Leased
|
1,800
|
75.3
|
%
|
Per Share
|
||||
Projected Midpoint Core FFO per share for Q2 2014
|
$
|
2.00
|
||
NOI from ESS consolidated communities
|
.03
|
|||
NOI from BRE consolidated communities
|
.02
|
|||
Co-Investment income
|
.01
|
|||
Interest expense and other
|
.02
|
|||
Core FFO per share Q2 2014, reported
|
$
|
2.08
|
Three Month Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
Funds from Operations (In thousands)
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Net income available to common stockholders
|
$
|
4,989
|
$
|
24,946
|
$
|
26,901
|
$
|
50,149
|
||||||||
Adjustments:
|
||||||||||||||||
Depreciation
|
97,510
|
48,031
|
147,822
|
95,175
|
||||||||||||
Gains not included in FFO, net of internal disposition costs
|
--
|
(2,366
|
)
|
(10,292
|
)
|
(2,366
|
)
|
|||||||||
Depreciation add back from unconsolidated co-investments
|
8,314
|
3,777
|
13,074
|
7,619
|
||||||||||||
Noncontrolling interest related to Operating Partnership units
|
209
|
1,547
|
1,626
|
3,048
|
||||||||||||
Depreciation attributable to third party ownership
|
(332
|
)
|
(327
|
)
|
(661
|
)
|
(654
|
)
|
||||||||
Funds from Operations
|
$
|
110,690
|
$
|
75,608
|
$
|
178,470
|
$
|
152,971
|
||||||||
Merger expenses
|
26,497
|
--
|
42,556
|
--
|
||||||||||||
Acquisition and disposition costs
|
529
|
168
|
717
|
555
|
||||||||||||
Gain on sales of marketable securities and note prepayment
|
(459
|
)
|
--
|
(886
|
)
|
(2,611
|
)
|
|||||||||
Co-investment promote income
|
(1,056
|
)
|
--
|
(4,904
|
)
|
--
|
||||||||||
Utility reimbursement income accrual
|
(1,807
|
)
|
--
|
(1,807
|
)
|
--
|
||||||||||
Acquisition fee income
|
(500
|
)
|
--
|
(500
|
)
|
--
|
||||||||||
Gain on sale of land
|
--
|
--
|
(400
|
)
|
(1,503
|
)
|
||||||||||
Earthquake related and other
|
--
|
--
|
1,571
|
--
|
||||||||||||
Loss on early retirement of debt add back from
unconsolidated co-investments
|
--
|
--
|
197
|
--
|
||||||||||||
Gain on early retirement of debt
|
--
|
(1,024
|
)
|
--
|
(1,024
|
)
|
||||||||||
Income from early redemption of preferred equity investments
|
--
|
(523
|
)
|
--
|
(946
|
)
|
||||||||||
Core Funds from Operations
|
$
|
133,894
|
$
|
74,229
|
$
|
215,014
|
$
|
147,442
|
Page
|
|
Consolidated Operating Results
|
S-1 – S-2
|
Consolidated Funds From Operations
|
S-3
|
Consolidated Balance Sheets
|
S-4
|
Debt Summary – June 30, 2014
|
S-5
|
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – June 30, 2014
|
S-6
|
Property Operating Results – Quarters ended June 30, 2014 and 2013
|
S-7
|
Property Operating Results – Six Months ended June 30, 2014 and 2013
|
S-7.1
|
Revenue by County – Quarters ended June 30, 2014, June 30, 2013, and March 31, 2014
|
S-8
|
Revenue by County – Six Months ended June 30, 2014 and 2013
|
S-8.1
|
Revenue by County for Legacy BRE Portfolio – Quarters ended June 30, 2014 and proforma for June 30, 2013.
|
S-8.2
|
Development Pipeline – June 30, 2014
|
S-9
|
Redevelopment Pipeline and Capital Expenditures – June 30, 2014
|
S-10
|
Co-Investments – June 30, 2014
|
S-11
|
Summary of Consolidated Co-Investments and Noncontrolling Interest – June 30, 2014
|
S-12
|
Assumptions for 2014 FFO Guidance Range
|
S-13
|
Summary of Apartment Community Acquisitions and Dispositions Activity
|
S-14
|
2014 MSA Level Forecasts: Supply, Jobs and Apartment Market Conditions
|
S-15
|
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
June 30, |
Six Months Ended
June 30, |
||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Revenues:
|
||||||||||||||||
Rental and other property
|
$
|
256,614
|
$
|
148,781
|
$
|
415,631
|
$
|
293,839
|
||||||||
Management and other fees
|
2,836
|
2,034
|
4,495
|
4,041
|
||||||||||||
259,450
|
150,815
|
420,126
|
297,880
|
|||||||||||||
Expenses:
|
||||||||||||||||
Property operating
|
83,220
|
48,296
|
135,192
|
94,623
|
||||||||||||
Depreciation
|
97,510
|
47,673
|
147,822
|
94,459
|
||||||||||||
General and administrative
|
9,558
|
6,589
|
17,142
|
13,588
|
||||||||||||
Merger expenses
|
26,497
|
-
|
42,556
|
-
|
||||||||||||
Acquisition and disposition costs
|
529
|
168
|
1,504
|
555
|
||||||||||||
217,314
|
102,726
|
344,216
|
203,225
|
|||||||||||||
Earnings from operations
|
42,136
|
48,089
|
75,910
|
94,655
|
||||||||||||
Interest expense
|
(42,151
|
)
|
(29,327
|
)
|
(71,192
|
)
|
(57,468
|
)
|
||||||||
Interest and other income
|
2,814
|
1,917
|
5,693
|
6,939
|
||||||||||||
Equity income from co-investments
|
5,629
|
7,282
|
16,155
|
11,493
|
||||||||||||
Gain on early retirement of debt
|
-
|
1,024
|
-
|
1,024
|
||||||||||||
Gain on sale of real estate and land
|
-
|
-
|
8,268
|
1,503
|
||||||||||||
Income before discontinued operations
|
8,428
|
28,985
|
34,834
|
58,146
|
||||||||||||
Income from discontinued operations
|
-
|
590
|
-
|
1,132
|
||||||||||||
Net income
|
8,428
|
29,575
|
34,834
|
59,278
|
||||||||||||
Net income attributable to noncontrolling interest
|
(2,125
|
)
|
(3,261
|
)
|
(5,251
|
)
|
(6,393
|
)
|
||||||||
Net income attributable to controlling interest
|
6,303
|
26,314
|
29,583
|
52,885
|
||||||||||||
Dividends to preferred stockholders
|
(1,314
|
)
|
(1,368
|
)
|
(2,682
|
)
|
(2,736
|
)
|
||||||||
Net income available to common stockholders
|
$
|
4,989
|
$
|
24,946
|
$
|
26,901
|
$
|
50,149
|
||||||||
Net income per share - basic
|
$
|
0.08
|
$
|
0.67
|
$
|
0.54
|
$
|
1.35
|
||||||||
Shares used in income per share - basic
|
61,884,963
|
37,292,720
|
49,857,233
|
37,149,120
|
||||||||||||
Net income per share - diluted
|
$
|
0.08
|
$
|
0.67
|
$
|
0.54
|
$
|
1.35
|
||||||||
Shares used in income per share - diluted
|
62,059,762
|
37,390,987
|
50,087,161
|
37,241,968
|
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 |
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||||
(Dollars in thousands)
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
Rental and other property
|
||||||||||||||||
Rental
|
$
|
237,920
|
$
|
138,746
|
$
|
385,914
|
$
|
274,258
|
||||||||
Other property
|
18,694
|
10,035
|
29,717
|
19,581
|
||||||||||||
Rental and other property
|
$
|
256,614
|
$
|
148,781
|
$
|
415,631
|
$
|
293,839
|
||||||||
Property operating expenses
|
||||||||||||||||
Real estate taxes
|
$
|
30,345
|
$
|
14,165
|
$
|
45,684
|
$
|
28,238
|
||||||||
Administrative and insurance
|
17,567
|
11,313
|
31,064
|
22,029
|
||||||||||||
Maintenance and repairs
|
15,740
|
10,397
|
25,961
|
19,748
|
||||||||||||
Utilities
|
14,538
|
9,123
|
24,007
|
18,065
|
||||||||||||
Property management
|
5,030
|
3,298
|
8,476
|
6,543
|
||||||||||||
Property operating expenses
|
$
|
83,220
|
$
|
48,296
|
$
|
135,192
|
$
|
94,623
|
||||||||
Interest and other income
|
||||||||||||||||
Marketable securities and other interest income
|
$
|
2,314
|
$
|
1,863
|
$
|
4,725
|
$
|
3,487
|
||||||||
Notes receivable
|
41
|
54
|
82
|
841
|
||||||||||||
Gain from sale of marketable securities and note prepayment
|
459
|
-
|
886
|
2,611
|
||||||||||||
Interest and other income
|
$
|
2,814
|
$
|
1,917
|
$
|
5,693
|
$
|
6,939
|
||||||||
Equity income from co-investments
|
||||||||||||||||
Equity income from co-investments
|
$
|
1,061
|
$
|
586
|
$
|
1,043
|
$
|
545
|
||||||||
Income from preferred equity investments
|
3,512
|
3,807
|
6,997
|
7,636
|
||||||||||||
Gain on sale of co-investment
|
-
|
2,366
|
3,211
|
2,366
|
||||||||||||
Co-investment promote income
|
1,056
|
-
|
4,904
|
-
|
||||||||||||
Income from early redemption of preferred equity investments
|
-
|
523
|
-
|
946
|
||||||||||||
Equity income from co-investments
|
$
|
5,629
|
$
|
7,282
|
$
|
16,155
|
$
|
11,493
|
||||||||
Noncontrolling interest
|
||||||||||||||||
Limited partners of Essex Portfolio, L.P.
|
$
|
209
|
$
|
1,547
|
$
|
1,626
|
$
|
3,048
|
||||||||
DownREIT limited partners' distributions
|
1,211
|
1,169
|
2,355
|
2,344
|
||||||||||||
Third-party ownership interest
|
705
|
545
|
1,270
|
1,001
|
||||||||||||
Noncontrolling interest
|
$
|
2,125
|
$
|
3,261
|
$
|
5,251
|
$
|
6,393
|
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
(Dollars in thousands, except share and per share amounts) |
Three Months Ended
June 30, |
Six Months Ended
June 30, |
||||||||||||||||||||||
2014
|
2013
|
% Change
|
2014
|
2013
|
% Change
|
|||||||||||||||||||
Funds from operations
|
||||||||||||||||||||||||
Net income available to common stockholders
|
$
|
4,989
|
$
|
24,946
|
$
|
26,901
|
$
|
50,149
|
||||||||||||||||
Adjustments:
|
||||||||||||||||||||||||
Depreciation
|
97,510
|
48,031
|
147,822
|
95,175
|
||||||||||||||||||||
Gains not included in FFO, net of internal disposition costs
|
-
|
(2,366
|
)
|
(10,292
|
)
|
(2,366
|
)
|
|||||||||||||||||
Depreciation add back from unconsolidated co-investments
|
8,314
|
3,777
|
13,074
|
7,619
|
||||||||||||||||||||
Noncontrolling interest related to Operating Partnership units
|
209
|
1,547
|
1,626
|
3,048
|
||||||||||||||||||||
Depreciation attributable to third party ownership
|
(332
|
)
|
(327
|
)
|
(661
|
)
|
(654
|
)
|
||||||||||||||||
Funds from operations
|
$
|
110,690
|
$
|
75,608
|
$
|
178,470
|
$
|
152,971
|
||||||||||||||||
FFO per share-diluted
|
$
|
1.72
|
$
|
1.91
|
-9.8
|
%
|
$
|
3.41
|
$
|
3.88
|
-12.2
|
%
|
||||||||||||
Components of the change in FFO
|
||||||||||||||||||||||||
Non-core items:
|
||||||||||||||||||||||||
Acquisition and disposition costs
|
529
|
168
|
717
|
555
|
||||||||||||||||||||
Gain on sale of marketable securities and note prepayment
|
(459
|
)
|
-
|
(886
|
)
|
(2,611
|
)
|
|||||||||||||||||
Gain on sale of land
|
-
|
-
|
(400
|
)
|
(1,503
|
)
|
||||||||||||||||||
Utility reimbursement income accrual
|
(1,807
|
)
|
-
|
(1,807
|
)
|
-
|
||||||||||||||||||
Earthquake related and other
|
-
|
-
|
1,571
|
-
|
||||||||||||||||||||
Loss on early retirement of debt add back from unconsolidated co-investments
|
-
|
-
|
197
|
-
|
||||||||||||||||||||
Gain on early retirement of debt
|
-
|
(1,024
|
)
|
-
|
(1,024
|
)
|
||||||||||||||||||
Acquisition fee income
|
(500
|
)
|
-
|
(500
|
)
|
-
|
||||||||||||||||||
Merger expenses
|
26,497
|
-
|
42,556
|
-
|
||||||||||||||||||||
Co-investment promote income
|
(1,056
|
)
|
-
|
(4,904
|
)
|
-
|
||||||||||||||||||
Income from early redemption of preferred equity investments
|
-
|
(523
|
)
|
-
|
(946
|
)
|
||||||||||||||||||
Core funds from operations
|
133,894
|
74,229
|
215,014
|
147,442
|
||||||||||||||||||||
Core FFO per share-diluted
|
$
|
2.08
|
$
|
1.88
|
11.1
|
%
|
$
|
4.11
|
$
|
3.74
|
9.7
|
%
|
||||||||||||
Changes in core items:
|
||||||||||||||||||||||||
Same-property NOI
|
$
|
8,552
|
$
|
16,320
|
||||||||||||||||||||
Non-same property NOI
|
62,550
|
64,667
|
||||||||||||||||||||||
Management and other fees, net
|
302
|
(46
|
)
|
|||||||||||||||||||||
Equity income from co-investments
|
4,717
|
5,511
|
||||||||||||||||||||||
Interest and other income
|
438
|
479
|
||||||||||||||||||||||
Interest expense
|
(12,824
|
)
|
(13,724
|
)
|
||||||||||||||||||||
General and administrative
|
(2,969
|
)
|
(3,554
|
)
|
||||||||||||||||||||
Discontinued operations
|
(947
|
)
|
(1,847
|
)
|
||||||||||||||||||||
Other items, net
|
(154
|
)
|
(234
|
)
|
||||||||||||||||||||
$
|
59,665
|
$
|
67,572
|
|||||||||||||||||||||
Weighted average number of shares outstanding diluted (1)
|
64,233,304
|
39,576,663
|
52,357,189
|
39,391,820
|
(1)
|
Assumes conversion of the weighted average operating partnership interests in the Operating Partnership into shares of the Company's common stock.
|
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) |
||||||||
June 30, 2014
|
December 31, 2013
|
|||||||
Real Estate:
|
||||||||
Land and land improvements
|
$
|
2,354,585
|
$
|
1,083,552
|
||||
Buildings and improvements
|
8,517,728
|
4,360,205
|
||||||
10,872,313
|
5,443,757
|
|||||||
Less: accumulated depreciation
|
(1,384,726
|
)
|
(1,254,886
|
)
|
||||
9,487,587
|
4,188,871
|
|||||||
Real estate under development
|
422,372
|
50,430
|
||||||
Co-investments
|
964,970
|
677,133
|
||||||
Real estate held for sale, net
|
107,772
|
-
|
||||||
10,982,701
|
4,916,434
|
|||||||
Cash and cash equivalents
|
47,538
|
53,766
|
||||||
Marketable securities
|
106,358
|
90,084
|
||||||
Notes and other receivables
|
66,522
|
68,255
|
||||||
Acquired in place lease value and other assets
|
145,244
|
58,300
|
||||||
Total assets
|
$
|
11,348,363
|
$
|
5,186,839
|
||||
Mortgage notes payable
|
$
|
2,250,510
|
$
|
1,404,080
|
||||
Unsecured debt
|
2,748,494
|
1,410,023
|
||||||
Lines of credit
|
66,975
|
219,421
|
||||||
Other liabilities
|
286,636
|
150,728
|
||||||
Total liabilities
|
5,352,615
|
3,184,252
|
||||||
Redeemable noncontrolling interest
|
23,566
|
-
|
||||||
Cumulative convertible preferred stock, carrying value
|
-
|
4,349
|
||||||
Equity:
|
||||||||
Common stock
|
6
|
4
|
||||||
Cumulative redeemable preferred stock, liquidation value
|
73,750
|
73,750
|
||||||
Additional paid-in-capital
|
6,414,258
|
2,345,763
|
||||||
Distributions in excess of accumulated earnings
|
(575,772
|
)
|
(474,426
|
)
|
||||
Accumulated other comprehensive loss
|
(53,794
|
)
|
(60,472
|
)
|
||||
Total stockholders' equity
|
5,858,448
|
1,884,619
|
||||||
Noncontrolling interest
|
113,734
|
113,619
|
||||||
Total equity
|
5,972,182
|
1,998,238
|
||||||
Total liabilities and equity
|
$
|
11,348,363
|
$
|
5,186,839
|
Scheduled principal payments and unamortized premiums (excludes lines of credit) are as follows:
|
||||||||||||||||||||||||||||||||||||||||
Weighted
|
||||||||||||||||||||||||||||||||||||||||
Percentage
|
Weighted Average
|
Average
|
Percentage
|
|||||||||||||||||||||||||||||||||||||
of Total
|
Balance
|
Interest
|
Maturity
|
Interest
|
of Total
|
|||||||||||||||||||||||||||||||||||
Debt
|
Outstanding
|
Rate
|
In Years
|
Secured
|
Unsecured
|
Total
|
Rate
|
Debt
|
||||||||||||||||||||||||||||||||
Mortgage Notes Payable
|
||||||||||||||||||||||||||||||||||||||||
Fixed rate - secured
|
41
|
%
|
$
|
2,061,321
|
4.9
|
%
|
5.0
|
2014
|
$
|
-
|
$
|
-
|
$
|
-
|
-
|
-
|
||||||||||||||||||||||||
Variable rate - secured (1)
|
4
|
%
|
189,189
|
1.8
|
%
|
18.7
|
2015
|
66,694
|
-
|
66,694
|
5.3
|
%
|
1.3
|
%
|
||||||||||||||||||||||||||
Total mortgage notes payable
|
45
|
%
|
2,250,510
|
4.6
|
%
|
6.1
|
2016
|
12,250
|
350,000
|
362,250
|
3.3
|
%
|
7.2
|
%
|
||||||||||||||||||||||||||
2017
|
181,396
|
518,888
|
700,284
|
3.0
|
%
|
14.0
|
%
|
|||||||||||||||||||||||||||||||||
Unsecured Debt
|
2018
|
317,634
|
-
|
317,634
|
5.6
|
%
|
6.4
|
%
|
||||||||||||||||||||||||||||||||
Bonds private - fixed rate
|
9
|
%
|
465,000
|
4.5
|
%
|
4.7
|
2019
|
633,433
|
75,000
|
708,433
|
4.3
|
%
|
14.2
|
%
|
||||||||||||||||||||||||||
Bonds public - fixed rate
|
38
|
%
|
1,933,494
|
3.5
|
%
|
7.5
|
2020
|
805,983
|
-
|
805,983
|
4.8
|
%
|
16.1
|
%
|
||||||||||||||||||||||||||
Term loan (2)
|
7
|
%
|
350,000
|
2.4
|
%
|
2.7
|
2021
|
47,377
|
524,410
|
571,787
|
4.3
|
%
|
11.4
|
%
|
||||||||||||||||||||||||||
54
|
%
|
2,748,494
|
3.5
|
%
|
6.4
|
2022
|
-
|
297,462
|
297,462
|
3.8
|
%
|
6.0
|
%
|
|||||||||||||||||||||||||||
Unsecured Lines of Credit
|
2023
|
-
|
585,733
|
585,733
|
3.7
|
%
|
11.7
|
%
|
||||||||||||||||||||||||||||||||
Line of credit (3)
|
1
|
%
|
60,000
|
1.7
|
%
|
2024
|
-
|
397,000
|
397,000
|
4.0
|
%
|
8.0
|
%
|
|||||||||||||||||||||||||||
Line of credit (4)
|
-
|
6,975
|
1.7
|
%
|
Thereafter
|
174,168
|
11,576
|
185,744
|
1.7
|
%
|
3.7
|
%
|
||||||||||||||||||||||||||||
Total lines of credit
|
1
|
%
|
66,975
|
1.7
|
%
|
|||||||||||||||||||||||||||||||||||
Total
|
$
|
2,238,935
|
$
|
2,760,069
|
$
|
4,999,004
|
4.0
|
%
|
100.0
|
%
|
||||||||||||||||||||||||||||||
Total debt
|
100
|
%
|
$
|
5,065,979
|
4.0
|
%
|
||||||||||||||||||||||||||||||||||
(1)
|
Variable rate debt of $179.2 million is tax exempt to the note holders and $156.9 million is subject to interest rate protection agreements.
|
(2)
|
The unsecured term loan has a variable interest rate of LIBOR plus 1.05%. The Company has entered into interest rate swap contracts with a notional amount totaling $300 million, which effectively converts the interest rate on $300 million of the term loan to a fixed rate of 2.4%.
|
(3)
|
The unsecured line of credit facility is $1 billion and the line matures in December 2017 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 0.95%.
|
(4)
|
The unsecured line of credit facility is $25 million and matures in January 2016. 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 0.95%.
|
Capitalization Data
|
Public Bond Covenants
|
Actual
|
Requirement
|
||||||||||||
Total debt
|
$
|
5,065,979
|
|
||||||||||||
|
Debt to Total Assets:
|
40%
|
< 65%
|
||||||||||||
Common stock and potentially dilutive securities
|
|
||||||||||||||
Common stock outstanding
|
62,301
|
|
|||||||||||||
Limited partnership units (1)
|
2,171
|
|
|||||||||||||
Options-treasury method
|
204
|
|
Secured Debt to Total Assets:
|
18%
|
< 40%
|
||||||||||
Total shares of common stock and potentially dilutive securities
|
|
64,676
|
|
||||||||||||
|
|||||||||||||||
Common stock price per share as of June 30, 2014
|
$
|
184.91
|
|
||||||||||||
|
|
|
Interest Coverage:
|
356%
|
> 150%
|
||||||||||
Market value of common stock and potentially dilutive securities
|
$
|
11,959,239
|
|
||||||||||||
|
|||||||||||||||
Preferred stock
|
$
|
73,750
|
|
Unsecured Debt Ratio (1) :
|
286%
|
> 150%
|
|||||||||
|
|
|
|||||||||||||
Total equity capitalization
|
$
|
12,032,989
|
|
||||||||||||
|
|
Selected Credit Ratios
|
Actual
|
||||||||||||
Total market capitalization
|
$
|
17,098,968
|
|
||||||||||||
Ratio of debt to total market capitalization
|
|
29.6%
|
|
Indebtedness Divided by Adjusted EBITDA (2):
|
7.4x
|
||||||||||
|
|||||||||||||||
(1)
|
Assumes conversion of all outstanding operating partnership interests in the Operating Partnership into shares of the Company's common stock.
|
|
Unencumbered NOI to Total NOI:
|
63%
|
|||||||||||
Credit Ratings
|
|
(1) Unsecured Debt Ratio is unsecured assets (excluding investments in co-investments) divided by unsecured indebtedness.
|
|||||||||||||
Rating Agency
|
Rating Outlook
|
(2) Adjusted EBITDA is annualized current quarter NOI adjusted for non-recurring items and proforma NOI for current quarter acquisitions.
|
|||||||||||||
Fitch
|
BBB+ Stable
|
|
|
||||||||||||
Moody's
|
Baa2 Stable
|
|
|||||||||||||
Standard & Poors
|
BBB Stable
|
|
Southern California
|
Northern California
|
Seattle Metro
|
Other real estate assets (1)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||
2014
|
2013
|
% Change
|
2014
|
2013
|
% Change
|
2014
|
2013
|
% Change
|
2014
|
2013
|
2014
|
2013
|
% Change
|
|||||||||||||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Same-property revenue
|
$
|
66,176
|
$
|
62,808
|
5.4
|
%
|
$
|
54,159
|
$
|
49,528
|
9.4
|
%
|
$
|
28,418
|
$
|
26,480
|
7.3
|
%
|
$
|
-
|
$
|
-
|
$
|
148,753
|
$
|
138,816
|
7.2
|
%
|
||||||||||||||||||||||||||||
Non-same property revenue (2)(8)
|
4,571
|
2,295
|
4,024
|
3,561
|
2,126
|
-
|
6,505
|
4,109
|
17,226
|
9,965
|
||||||||||||||||||||||||||||||||||||||||||||||
Legacy BRE portfolio property revenue (3)
|
44,096
|
-
|
30,015
|
-
|
13,838
|
-
|
2,686
|
-
|
90,635
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||
Total Revenues
|
$
|
114,843
|
$
|
65,103
|
$
|
88,198
|
$
|
53,089
|
$
|
44,382
|
$
|
26,480
|
$
|
9,191
|
$
|
4,109
|
$
|
256,614
|
$
|
148,781
|
||||||||||||||||||||||||||||||||||||
Property operating expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Same-property operating expenses
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate taxes
|
$
|
5,689
|
$
|
5,496
|
$
|
4,973
|
$
|
4,825
|
$
|
2,891
|
$
|
2,539
|
$
|
-
|
$
|
-
|
$
|
13,553
|
$
|
12,860
|
5.4
|
%
|
||||||||||||||||||||||||||||||||||
Administrative and insurance
|
5,785
|
5,668
|
3,120
|
3,159
|
1,951
|
1,981
|
-
|
-
|
10,856
|
10,808
|
0.4
|
%
|
||||||||||||||||||||||||||||||||||||||||||||
Maintenance and repairs
|
4,509
|
4,409
|
3,323
|
3,181
|
1,846
|
1,892
|
-
|
-
|
9,678
|
9,482
|
2.1
|
%
|
||||||||||||||||||||||||||||||||||||||||||||
Utilities
|
3,689
|
3,464
|
3,021
|
2,966
|
1,991
|
1,952
|
-
|
-
|
8,701
|
8,382
|
3.8
|
%
|
||||||||||||||||||||||||||||||||||||||||||||
Management fees
|
1,422
|
1,394
|
1,028
|
971
|
750
|
706
|
-
|
-
|
3,200
|
3,071
|
4.2
|
%
|
||||||||||||||||||||||||||||||||||||||||||||
Total same-property operating expenses
|
21,094
|
20,431
|
3.2
|
%
|
15,465
|
15,102
|
2.4
|
%
|
9,429
|
9,070
|
4.0
|
%
|
-
|
-
|
45,988
|
44,603
|
3.1
|
%
|
||||||||||||||||||||||||||||||||||||||
Non-same property operating expenses (2)
|
2,141
|
976
|
1,483
|
1,525
|
658
|
-
|
696
|
1,192
|
4,978
|
3,693
|
||||||||||||||||||||||||||||||||||||||||||||||
Legacy BRE portfolio property operating expenses (3)
|
16,277
|
-
|
10,027
|
-
|
4,931
|
-
|
1,019
|
-
|
32,254
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||
Total property operating expenses
|
$
|
39,512
|
$
|
21,407
|
$
|
26,975
|
$
|
16,627
|
$
|
15,018
|
$
|
9,070
|
$
|
1,715
|
$
|
1,192
|
$
|
83,220
|
$
|
48,296
|
||||||||||||||||||||||||||||||||||||
Net operating income (NOI):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Same-property NOI
|
$
|
45,082
|
$
|
42,377
|
6.4
|
%
|
$
|
38,694
|
$
|
34,426
|
12.4
|
%
|
$
|
18,989
|
$
|
17,410
|
9.1
|
%
|
$
|
-
|
$
|
-
|
$
|
102,765
|
$
|
94,213
|
9.1
|
%
|
||||||||||||||||||||||||||||
Non-same property NOI (2)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legacy BRE portfolio (3)
|
27,819
|
-
|
19,988
|
-
|
8,907
|
-
|
1,667
|
-
|
58,381
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||
Redevelopment communities
|
1,457
|
1,319
|
-
|
-
|
-
|
-
|
-
|
-
|
1,457
|
1,319
|
||||||||||||||||||||||||||||||||||||||||||||||
Development communities - 2014 (4)
|
95
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
95
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||
Acquired communities - 2013 (5)
|
878
|
-
|
2,541
|
2,036
|
598
|
-
|
-
|
-
|
4,017
|
2,036
|
||||||||||||||||||||||||||||||||||||||||||||||
Acquired communities - 2014 (6)
|
-
|
-
|
-
|
-
|
870
|
-
|
870
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||||
Other real estate assets (1)
|
-
|
-
|
-
|
-
|
-
|
-
|
5,809
|
2,917
|
5,809
|
2,917
|
||||||||||||||||||||||||||||||||||||||||||||||
Total non-same property NOI
|
30,249
|
1,319
|
22,529
|
2,036
|
10,375
|
-
|
7,476
|
2,917
|
70,629
|
6,272
|
||||||||||||||||||||||||||||||||||||||||||||||
Total NOI
|
$
|
75,331
|
$
|
43,696
|
$
|
61,223
|
$
|
36,462
|
$
|
29,364
|
$
|
17,410
|
$
|
7,476
|
$
|
2,917
|
$
|
173,394
|
$
|
100,485
|
||||||||||||||||||||||||||||||||||||
Same-property operating margin
|
68
|
%
|
67
|
%
|
71
|
%
|
70
|
%
|
67
|
%
|
66
|
%
|
69
|
%
|
68
|
%
|
||||||||||||||||||||||||||||||||||||||||
Annualized same-property turnover percentage
|
56
|
%
|
55
|
%
|
52
|
%
|
55
|
%
|
48
|
%
|
57
|
%
|
53
|
%
|
56
|
%
|
||||||||||||||||||||||||||||||||||||||||
Average same-property concessions per turn (7)
|
$
|
140
|
$
|
90
|
$
|
129
|
$
|
117
|
$
|
98
|
$
|
72
|
$
|
128
|
$
|
94
|
||||||||||||||||||||||||||||||||||||||||
Reconciliation of apartment units at end of period
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Same-property apartment units
|
12,914
|
8,840
|
6,537
|
-
|
28,291
|
|||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated apartment units
|
13,870
|
13,656
|
9,430
|
9,431
|
7,175
|
6,720
|
30,475
|
29,807
|
||||||||||||||||||||||||||||||||||||||||||||||||
Legacy BRE portfolio (3)
|
8,337
|
-
|
4,339
|
-
|
2,821
|
-
|
902
|
-
|
16,399
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||
Joint venture (9)
|
4,957
|
2,039
|
2,066
|
1,378
|
1,958
|
1,290
|
-
|
-
|
8,981
|
4,707
|
||||||||||||||||||||||||||||||||||||||||||||||
Under development
|
184
|
492
|
2,035
|
1,728
|
-
|
-
|
-
|
-
|
2,219
|
2,220
|
||||||||||||||||||||||||||||||||||||||||||||||
Total apartment units at end of period
|
27,348
|
16,187
|
17,870
|
12,537
|
11,954
|
8,010
|
902
|
-
|
58,074
|
36,734
|
||||||||||||||||||||||||||||||||||||||||||||||
Percentage of total
|
46
|
%
|
44
|
%
|
31
|
%
|
34
|
%
|
21
|
%
|
22
|
%
|
2
|
%
|
-
|
100
|
%
|
100
|
%
|
|||||||||||||||||||||||||||||||||||||
Average same-property financial occupancy
|
96.3
|
%
|
95.8
|
%
|
96.0
|
%
|
96.1
|
%
|
96.0
|
%
|
96.1
|
%
|
96.1
|
%
|
96.0
|
%
|
(1)
|
Other real estate assets consists mainly of retail space, commercial properties, boat slips, two Phoenix properties acquired as part of the merger with BRE and properties sold during 2014. The operating results are classified in non-same property results.
|
(2)
|
Includes properties which subsequent to January 1, 2013 were either acquired or in a stage of development or redevelopment without stabilized operations.
|
(3)
|
Properties acquired as part of the BRE Properties merger on April 1, 2014, excluding 17 properties contributed to joint ventures.
|
(4)
|
In March 2014, the Company purchased The Avery, a pre sale development community that is in lease up.
|
(5)
|
Acquired communities during 2013 includes Fox Plaza, Bennett Lofts, Slater 116, Vox, and Domain.
|
(6)
|
Acquired communities during 2014 includes Collins on Pine and Piedmont.
|
(7)
|
Average same-property concessions per turn is the dollar amount per unit resulting from the same-property concessions divided by the product of the same property turnover percentage for the quarter times the same-property apartment units.
|
(8)
|
Other real estate asset revenues for the three months ended June 30, 2014, includes $1.8 million related to a change in accounting policy related to accrual of utility reimbursement revenue.
|
(9)
|
Includes BRE properties contributed to joint ventures.
|
Southern California
|
Northern California
|
Seattle Metro
|
Other real estate assets (1)
|
Total
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
2014
|
2013
|
% Change
|
2014
|
2013
|
% Change
|
2014
|
2013
|
% Change
|
2014
|
2013
|
2014
|
2013
|
% Change
|
|||||||||||||||||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Same-property revenue
|
$
|
131,651
|
125,239
|
5.1
|
%
|
$
|
107,213
|
97,989
|
9.4
|
%
|
$
|
56,313
|
52,231
|
7.8
|
%
|
$
|
-
|
-
|
$
|
295,177
|
$
|
275,459
|
7.2
|
%
|
||||||||||||||||||||||||||||||||
Non-same property revenue (2)(8)
|
8,783
|
4,604
|
7,915
|
5,870
|
2,872
|
-
|
10,249
|
7,906
|
29,819
|
18,380
|
||||||||||||||||||||||||||||||||||||||||||||||
Legacy BRE portfolio property revenue (3)
|
44,096
|
-
|
30,015
|
-
|
13,838
|
-
|
2,686
|
-
|
90,635
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||
Total Revenues
|
$
|
184,530
|
$
|
129,843
|
$
|
145,143
|
$
|
103,859
|
$
|
73,023
|
$
|
52,231
|
$
|
12,935
|
$
|
7,906
|
$
|
415,631
|
$
|
293,839
|
||||||||||||||||||||||||||||||||||||
Property operating expenses:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Same-property operating expenses
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real estate taxes
|
$
|
11,410
|
11,007
|
$
|
9,963
|
9,643
|
$
|
5,800
|
5,137
|
$
|
-
|
-
|
$
|
27,173
|
$
|
25,787
|
5.4
|
%
|
||||||||||||||||||||||||||||||||||||||
Administrative and insurance
|
11,541
|
11,264
|
6,104
|
6,118
|
3,821
|
3,815
|
-
|
-
|
21,466
|
21,197
|
1.3
|
%
|
||||||||||||||||||||||||||||||||||||||||||||
Maintenance and repairs
|
8,835
|
8,520
|
6,463
|
6,176
|
3,649
|
3,529
|
-
|
-
|
18,947
|
18,225
|
4.0
|
%
|
||||||||||||||||||||||||||||||||||||||||||||
Utilities
|
7,319
|
6,814
|
5,999
|
5,817
|
4,011
|
3,932
|
-
|
-
|
17,329
|
16,563
|
4.6
|
%
|
||||||||||||||||||||||||||||||||||||||||||||
Management fees
|
2,843
|
2,788
|
2,050
|
1,938
|
1,500
|
1,412
|
-
|
-
|
6,393
|
6,138
|
4.2
|
%
|
||||||||||||||||||||||||||||||||||||||||||||
Total same-property operating expenses
|
41,948
|
40,393
|
3.8
|
%
|
30,579
|
29,692
|
3.0
|
%
|
18,781
|
17,825
|
5.4
|
%
|
-
|
-
|
91,308
|
87,910
|
3.9
|
%
|
||||||||||||||||||||||||||||||||||||||
Non-same property operating expenses (2)(8)
|
3,908
|
2,045
|
2,960
|
2,421
|
902
|
-
|
3,860
|
2,247
|
11,630
|
6,713
|
||||||||||||||||||||||||||||||||||||||||||||||
Legacy BRE portfolio property operating expenses (3)
|
16,277
|
-
|
10,027
|
-
|
4,931
|
-
|
1,019
|
-
|
32,254
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||
Total property operating expenses
|
$
|
62,133
|
$
|
42,438
|
$
|
43,566
|
$
|
32,113
|
$
|
24,614
|
$
|
17,825
|
$
|
4,879
|
$
|
2,247
|
$
|
135,192
|
$
|
94,623
|
||||||||||||||||||||||||||||||||||||
Net operating income (NOI):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Same-property NOI
|
$
|
89,703
|
$
|
84,846
|
5.7
|
%
|
$
|
76,634
|
$
|
68,297
|
12.2
|
%
|
$
|
37,532
|
$
|
34,406
|
9.1
|
%
|
$
|
-
|
$
|
-
|
$
|
203,869
|
$
|
187,549
|
8.7
|
%
|
||||||||||||||||||||||||||||
Non-same property NOI (2)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legacy BRE portfolio (3)
|
27,819
|
-
|
19,988
|
-
|
8,907
|
-
|
1,667
|
-
|
58,381
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||
Redevelopment communities
|
2,911
|
2,559
|
-
|
-
|
-
|
-
|
-
|
-
|
2,911
|
2,559
|
||||||||||||||||||||||||||||||||||||||||||||||
Development communities - 2014 (4)
|
82
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
82
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||
Acquired communities - 2013 (5)
|
1,882
|
-
|
4,955
|
3,449
|
1,100
|
-
|
-
|
-
|
7,937
|
3,449
|
||||||||||||||||||||||||||||||||||||||||||||||
Acquired communities - 2014 (6)
|
-
|
-
|
-
|
-
|
870
|
-
|
870
|
-
|
||||||||||||||||||||||||||||||||||||||||||||||||
Other real estate assets (1)
|
-
|
-
|
-
|
-
|
-
|
-
|
6,389
|
5,659
|
6,389
|
5,659
|
||||||||||||||||||||||||||||||||||||||||||||||
Total non-same property NOI
|
32,694
|
2,559
|
24,943
|
3,449
|
10,877
|
-
|
8,056
|
5,659
|
76,570
|
11,667
|
||||||||||||||||||||||||||||||||||||||||||||||
Total NOI
|
$
|
122,397
|
$
|
87,405
|
$
|
101,577
|
$
|
71,746
|
$
|
48,409
|
$
|
34,406
|
$
|
8,056
|
$
|
5,659
|
$
|
280,439
|
$
|
199,216
|
||||||||||||||||||||||||||||||||||||
Same-property operating margin
|
68
|
%
|
68
|
%
|
71
|
%
|
70
|
%
|
67
|
%
|
66
|
%
|
69
|
%
|
68
|
%
|
||||||||||||||||||||||||||||||||||||||||
Annualized same-property turnover percentage
|
51
|
%
|
50
|
%
|
49
|
%
|
50
|
%
|
43
|
%
|
47
|
%
|
48
|
%
|
49
|
%
|
||||||||||||||||||||||||||||||||||||||||
Average same-property concessions per turn (7)
|
$
|
130
|
116
|
$
|
149
|
145
|
$
|
111
|
95
|
$
|
132
|
121
|
||||||||||||||||||||||||||||||||||||||||||||
Average same-property financial occupancy
|
96.4
|
%
|
96.2
|
%
|
96.3
|
%
|
96.3
|
%
|
96.3
|
%
|
96.3
|
%
|
96.3
|
%
|
96.3
|
%
|
(1)
|
Other real estate assets consists mainly of retail space, commercial properties, boat slips, two Phoenix properties acquired as part of the merger with BRE and properties sold during 2014. The operating results are classified in non-same property results.
|
(2)
|
Includes properties which subsequent to January 1, 2013 were either acquired or in a stage of development or redevelopment without stabilized operations.
|
(3)
|
Properties acquired as part of the BRE Properties merger on April 1, 2014, excluding 17 properties contributed to joint ventures.
|
(4)
|
In March 2014, the Company purchased The Avery, a pre sale development community that is in lease up.
|
(5)
|
Acquired communities during 2013 includes Fox Plaza, Slater 116, Vox, and Domain.
|
(6)
|
Acquired communities during 2014 includes Collins on Pine and Piedmont.
|
(7)
|
Average same-property concessions per turn is the dollar amount per unit resulting from the same-property concessions divided by the product of the same property turnover percentage for the quarter times the same-property apartment units.
|
(8)
|
Other real estate asset revenues for the six months ended June 30, 2014, includes $1.8 million related to a change in accounting policy related to accrual of utility reimbursement revenue. Other real estate asset expenses for the six moths ended June 30, 2014, includes $1.6 million related to earthquake and flood damage at two communities.
|
Three months ended
|
Three months ended
|
Three months ended
|
||||||||||||||||||||||||||||||||||||||||||
Average Property Rental Rates
|
June 30, 2014
|
June 30 2013
|
March 31, 2014
|
|||||||||||||||||||||||||||||||||||||||||
Region
|
Units
|
QTD
2014 |
QTD
2013 |
% Change
|
Property Revenue
|
Financial Occupancy
|
Property Revenue
|
Financial Occupancy
|
Property Revenue
% Change |
Property Revenue
|
Sequential % Change
|
|||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
4,439
|
$
|
1,891
|
$
|
1,810
|
4.5
|
%
|
$
|
25,517
|
96.4
|
%
|
$
|
24,186
|
95.6
|
%
|
5.5
|
%
|
$
|
25,237
|
1.1
|
%
|
|||||||||||||||||||||||
Ventura County
|
2,898
|
1,467
|
1,394
|
5.2
|
%
|
13,185
|
96.5
|
%
|
12,496
|
96.5
|
%
|
5.5
|
%
|
13,016
|
1.3
|
%
|
||||||||||||||||||||||||||||
Orange County
|
2,887
|
1,917
|
1,821
|
5.3
|
%
|
16,582
|
95.8
|
%
|
15,840
|
95.7
|
%
|
4.7
|
%
|
16,467
|
0.7
|
%
|
||||||||||||||||||||||||||||
San Diego County
|
2,067
|
1,294
|
1,235
|
4.8
|
%
|
8,334
|
96.4
|
%
|
7,870
|
95.5
|
%
|
5.9
|
%
|
8,186
|
1.8
|
%
|
||||||||||||||||||||||||||||
Santa Barbara County
|
347
|
1,762
|
1,679
|
4.9
|
%
|
1,880
|
98.3
|
%
|
1,775
|
97.3
|
%
|
5.9
|
%
|
1,892
|
-0.6
|
%
|
||||||||||||||||||||||||||||
Riverside County
|
276
|
800
|
801
|
-0.1
|
%
|
678
|
96.1
|
%
|
641
|
91.3
|
%
|
5.8
|
%
|
677
|
0.1
|
%
|
||||||||||||||||||||||||||||
Total same-property
|
12,914
|
1,679
|
1,602
|
4.8
|
%
|
66,176
|
96.3
|
%
|
62,808
|
95.8
|
%
|
5.4
|
%
|
65,475
|
1.1
|
%
|
||||||||||||||||||||||||||||
Los Angeles County
|
3,499
|
2,034
|
18,842
|
2,295
|
||||||||||||||||||||||||||||||||||||||||
Orange County
|
2,899
|
1,680
|
14,631
|
-
|
||||||||||||||||||||||||||||||||||||||||
San Diego County
|
2,895
|
1,785
|
15,194
|
-
|
||||||||||||||||||||||||||||||||||||||||
Non-same property
|
9,293
|
1,846
|
48,667
|
2,295
|
||||||||||||||||||||||||||||||||||||||||
.
|
||||||||||||||||||||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
4,279
|
2,136
|
1,960
|
9.0
|
%
|
27,539
|
95.6
|
%
|
25,231
|
95.8
|
%
|
9.1
|
%
|
26,992
|
2.0
|
%
|
||||||||||||||||||||||||||||
Contra Costa County
|
1,720
|
1,806
|
1,677
|
7.7
|
%
|
9,446
|
95.9
|
%
|
8,776
|
96.4
|
%
|
7.6
|
%
|
9,305
|
1.5
|
%
|
||||||||||||||||||||||||||||
Alameda County
|
1,542
|
1,806
|
1,619
|
11.6
|
%
|
8,719
|
97.2
|
%
|
7,826
|
97.1
|
%
|
11.4
|
%
|
8,504
|
2.5
|
%
|
||||||||||||||||||||||||||||
San Mateo County
|
768
|
2,198
|
2,003
|
9.7
|
%
|
5,189
|
96.3
|
%
|
4,799
|
97.4
|
%
|
8.1
|
%
|
5,106
|
1.6
|
%
|
||||||||||||||||||||||||||||
San Francisco MSA
|
301
|
2,278
|
2,058
|
10.7
|
%
|
2,064
|
95.5
|
%
|
1,774
|
91.7
|
%
|
16.3
|
%
|
1,968
|
4.9
|
%
|
||||||||||||||||||||||||||||
Other
|
230
|
1,712
|
1,596
|
7.3
|
%
|
1,202
|
97.3
|
%
|
1,122
|
97.1
|
%
|
7.1
|
%
|
1,179
|
2.0
|
%
|
||||||||||||||||||||||||||||
Total same-property
|
8,840
|
2,014
|
1,843
|
9.3
|
%
|
54,159
|
96.0
|
%
|
49,528
|
96.1
|
%
|
9.4
|
%
|
53,054
|
2.1
|
%
|
||||||||||||||||||||||||||||
Santa Clara County
|
1,229
|
2,505
|
8,458
|
-
|
||||||||||||||||||||||||||||||||||||||||
Contra Costa County
|
550
|
2,125
|
3,355
|
-
|
||||||||||||||||||||||||||||||||||||||||
Alameda County
|
1,295
|
2,225
|
8,417
|
-
|
||||||||||||||||||||||||||||||||||||||||
San Mateo County
|
1,094
|
2,683
|
8,533
|
-
|
||||||||||||||||||||||||||||||||||||||||
San Francisco MSA
|
590
|
2,336
|
4,024
|
3,561
|
||||||||||||||||||||||||||||||||||||||||
Other
|
171
|
2,344
|
1,252
|
-
|
||||||||||||||||||||||||||||||||||||||||
Non-same property
|
4,929
|
2,403
|
34,039
|
3,561
|
||||||||||||||||||||||||||||||||||||||||
Seattle Metro
|
||||||||||||||||||||||||||||||||||||||||||||
King County
|
6,072
|
1,402
|
1,306
|
7.4
|
%
|
26,903
|
95.9
|
%
|
25,146
|
96.2
|
%
|
7.0
|
%
|
26,409
|
1.9
|
%
|
||||||||||||||||||||||||||||
Snohomish County
|
465
|
1,012
|
949
|
6.6
|
%
|
1,515
|
96.9
|
%
|
1,334
|
93.1
|
%
|
13.6
|
%
|
1,487
|
1.9
|
%
|
||||||||||||||||||||||||||||
Total same-property
|
6,537
|
1,374
|
1,280
|
7.4
|
%
|
28,418
|
96.0
|
%
|
26,480
|
96.1
|
%
|
7.3
|
%
|
27,896
|
1.9
|
%
|
||||||||||||||||||||||||||||
King County
|
2,951
|
1,526
|
13,507
|
-
|
||||||||||||||||||||||||||||||||||||||||
Snohomish County
|
508
|
1,549
|
2,457
|
-
|
||||||||||||||||||||||||||||||||||||||||
Non-same property
|
3,459
|
1,529
|
15,964
|
-
|
||||||||||||||||||||||||||||||||||||||||
Other real estate assets (1) (2)
|
902
|
9,191
|
4,109
|
|||||||||||||||||||||||||||||||||||||||||
Total same-property revenue
|
28,291
|
$
|
1,713
|
$
|
1,603
|
6.9
|
%
|
$
|
148,753
|
96.1
|
%
|
$
|
138,816
|
96.0
|
%
|
7.2
|
%
|
$
|
146,425
|
1.6
|
%
|
|||||||||||||||||||||||
Total non-same property revenue
|
18,583
|
$
|
1,845
|
$
|
107,861
|
$
|
9,965
|
(1)
|
Other real estate assets consists mainly of retail space, commercial properties, boat slips, and two Phoenix properties acquired as part of the merger with BRE.
|
(2)
|
Other real estate asset revenues for the three months ended June 30, 2014, includes $1.8 million related to a change in accounting policy related to accrual of utility reimbursement revenue.
|
Six months ended
|
Six months ended
|
|||||||||||||||||||||||||||||||||||
Average Property Rental Rates
|
June 30, 2014
|
June 30, 2013
|
||||||||||||||||||||||||||||||||||
Region
|
Units
|
YTD 2014
|
YTD 2013
|
% Change
|
Property
Revenue
|
Financial
Occupancy
|
Property
Revenue
|
Financial
Occupancy
|
Property
Revenue
% Change |
|||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||
Los Angeles County
|
4,439
|
$
|
1,878
|
$
|
1,796
|
4.6
|
%
|
$
|
50,755
|
96.5
|
%
|
$
|
48,293
|
96.2
|
%
|
5.1
|
%
|
|||||||||||||||||||
Ventura County
|
2,898
|
1,454
|
1,389
|
4.7
|
%
|
26,201
|
96.7
|
%
|
24,941
|
96.7
|
%
|
5.1
|
%
|
|||||||||||||||||||||||
Orange County
|
2,887
|
1,903
|
1,808
|
5.3
|
%
|
33,049
|
95.8
|
%
|
31,484
|
96.0
|
%
|
5.0
|
%
|
|||||||||||||||||||||||
San Diego County
|
2,067
|
1,284
|
1,228
|
4.6
|
%
|
16,519
|
96.3
|
%
|
15,697
|
95.9
|
%
|
5.2
|
%
|
|||||||||||||||||||||||
Santa Barbara County
|
347
|
1,756
|
1,674
|
4.9
|
%
|
3,772
|
98.9
|
%
|
3,554
|
97.4
|
%
|
6.1
|
%
|
|||||||||||||||||||||||
Riverside County
|
276
|
796
|
800
|
-0.5
|
%
|
1,355
|
95.9
|
%
|
1,270
|
90.4
|
%
|
6.7
|
%
|
|||||||||||||||||||||||
Total same-property
|
12,914
|
1,667
|
1,592
|
4.7
|
%
|
131,651
|
96.4
|
%
|
125,239
|
96.2
|
%
|
5.1
|
%
|
|||||||||||||||||||||||
Los Angeles County
|
3,499
|
2,098
|
21,228
|
4,604
|
||||||||||||||||||||||||||||||||
Orange County
|
2,899
|
1,680
|
14,630
|
-
|
||||||||||||||||||||||||||||||||
San Diego County
|
2,895
|
1,788
|
17,021
|
-
|
||||||||||||||||||||||||||||||||
Non-same property
|
9,293
|
1,871
|
52,879
|
4,604
|
||||||||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||
Santa Clara County
|
4,279
|
2,106
|
1,934
|
8.9
|
%
|
54,531
|
96.1
|
%
|
49,941
|
96.2
|
%
|
9.2
|
%
|
|||||||||||||||||||||||
Contra Costa County
|
1,720
|
1,789
|
1,662
|
7.6
|
%
|
18,750
|
96.1
|
%
|
17,395
|
96.4
|
%
|
7.8
|
%
|
|||||||||||||||||||||||
Alameda County
|
1,542
|
1,782
|
1,600
|
11.4
|
%
|
17,223
|
97.2
|
%
|
15,470
|
97.1
|
%
|
11.3
|
%
|
|||||||||||||||||||||||
San Mateo County
|
768
|
2,172
|
1,982
|
9.6
|
%
|
10,295
|
96.5
|
%
|
9,454
|
97.3
|
%
|
8.9
|
%
|
|||||||||||||||||||||||
San Francisco MSA
|
301
|
2,257
|
2,026
|
11.4
|
%
|
4,033
|
94.5
|
%
|
3,515
|
91.9
|
%
|
14.7
|
%
|
|||||||||||||||||||||||
Other
|
230
|
1,698
|
1,584
|
7.2
|
%
|
2,381
|
96.8
|
%
|
2,214
|
96.5
|
%
|
7.5
|
%
|
|||||||||||||||||||||||
Total same-property
|
8,840
|
1,988
|
1,821
|
9.2
|
%
|
107,213
|
96.3
|
%
|
97,989
|
96.3
|
%
|
9.4
|
%
|
|||||||||||||||||||||||
Santa Clara County
|
1,229
|
2,505
|
8,458
|
-
|
||||||||||||||||||||||||||||||||
Contra Costa County
|
550
|
2,125
|
3,355
|
-
|
||||||||||||||||||||||||||||||||
Alameda County
|
1,295
|
2,225
|
8,417
|
-
|
||||||||||||||||||||||||||||||||
San Mateo County
|
1,094
|
2,683
|
8,533
|
-
|
||||||||||||||||||||||||||||||||
San Francisco MSA
|
590
|
2,304
|
7,915
|
5,870
|
||||||||||||||||||||||||||||||||
Other
|
171
|
2,344
|
1,252
|
-
|
||||||||||||||||||||||||||||||||
Non-same property
|
4,929
|
2,399
|
37,930
|
5,870
|
||||||||||||||||||||||||||||||||
Seattle Metro
|
||||||||||||||||||||||||||||||||||||
King County
|
6,072
|
1,386
|
1,289
|
7.5
|
%
|
53,311
|
96.2
|
%
|
49,549
|
96.4
|
%
|
7.6
|
%
|
|||||||||||||||||||||||
Snohomish County
|
465
|
1,001
|
934
|
7.2
|
%
|
3,002
|
97.3
|
%
|
2,682
|
94.9
|
%
|
11.9
|
%
|
|||||||||||||||||||||||
Total same-property
|
6,537
|
1,358
|
1,264
|
7.4
|
%
|
56,313
|
96.3
|
%
|
52,231
|
96.3
|
%
|
7.8
|
%
|
|||||||||||||||||||||||
King County
|
2,951
|
1,526
|
14,252
|
-
|
||||||||||||||||||||||||||||||||
Snohomish County
|
508
|
1,549
|
2,458
|
-
|
||||||||||||||||||||||||||||||||
Non-same property
|
3,459
|
1,529
|
16,710
|
-
|
||||||||||||||||||||||||||||||||
Other real estate assets (1) (2)
|
902
|
12,935
|
7,906
|
|||||||||||||||||||||||||||||||||
Total same-property revenue
|
28,291
|
$
|
1,696
|
$
|
1,588
|
6.8
|
%
|
$
|
295,177
|
96.3
|
%
|
$
|
275,459
|
96.3
|
%
|
7.2
|
%
|
|||||||||||||||||||
Total non-same property revenue
|
18,583
|
$
|
1,544
|
$
|
120,454
|
$
|
18,380
|
(1)
|
Other real estate assets consists mainly of retail space, commercial properties, boat slips, and two Phoenix properties acquired as part of the merger with BRE.
|
(2)
|
Other real estate asset revenues for the three months ended June 30, 2014, includes $1.8 million related to a change in accounting policy related to accrual of utility reimbursement revenue.
|
Ownership %
|
Estimated Units
|
Estimated Retail sq. feet
|
Incurred to Date
|
Remaining Costs
|
Estimated Total Cost
|
Essex Share of Estimated Total Cost
|
Apartment Cost per Unit
|
Construction Start
|
Initial Occupancy
|
Stabilized Operations
|
|||||||||||||||||||||||||||||||||||||
Development Projects - Consolidated (2) (3)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Project Name
|
Location
|
||||||||||||||||||||||||||||||||||||||||||||||
MB 360 (4) (5)
|
San Francisco, CA
|
100
|
%
|
360
|
11,500
|
195
|
80
|
275
|
275
|
(1)
|
|
744
|
|||||||||||||||||||||||||||||||||||
Radius
|
Redwood City, CA
|
100
|
%
|
264
|
-
|
151
|
20
|
171
|
171
|
649
|
Q2 2012
|
Q3 2014
|
Q1 2015
|
||||||||||||||||||||||||||||||||||
Total Development Projects - Consolidated
|
624
|
11,500
|
346
|
100
|
446
|
446
|
715
|
||||||||||||||||||||||||||||||||||||||||
Land Held for Future Development - Consolidated
|
|||||||||||||||||||||||||||||||||||||||||||||||
Project Name
|
Location
|
||||||||||||||||||||||||||||||||||||||||||||||
Other Projects
|
various
|
100
|
%
|
-
|
-
|
76
|
-
|
76
|
76
|
||||||||||||||||||||||||||||||||||||||
Total Development Pipeline - Consolidated
|
624
|
11,500
|
422
|
100
|
522
|
522
|
|||||||||||||||||||||||||||||||||||||||||
Development Projects/Land Held for Future Development - Joint Venture (2) (3)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Project Name
|
Location
|
||||||||||||||||||||||||||||||||||||||||||||||
Epic - Phase III
|
San Jose, CA
|
55
|
%
|
200
|
-
|
44
|
52
|
96
|
53
|
480
|
Q3 2013
|
Q3 2015
|
Q1 2016
|
||||||||||||||||||||||||||||||||||
The Dylan
|
West Hollywood, CA
|
50
|
%
|
184
|
12,750
|
75
|
-
|
75
|
38
|
(1)
|
|
363
|
Q4 2011
|
Q3 2014
|
Q4 2014
|
||||||||||||||||||||||||||||||||
Mosso I
|
San Francisco, CA
|
55
|
%
|
181
|
5,030
|
86
|
15
|
101
|
56
|
(1)
|
|
538
|
Q2 2012
|
Q2 2014
|
Q1 2015
|
||||||||||||||||||||||||||||||||
Mosso II
|
San Francisco, CA
|
55
|
%
|
282
|
4,270
|
134
|
16
|
150
|
82
|
(1)
|
|
525
|
Q2 2012
|
Q3 2014
|
Q2 2015
|
||||||||||||||||||||||||||||||||
Park 20
|
San Mateo, CA
|
55
|
%
|
197
|
-
|
60
|
16
|
76
|
42
|
386
|
Q3 2012
|
Q4 2014
|
Q1 2015
|
||||||||||||||||||||||||||||||||||
One South Market
|
San Jose, CA
|
55
|
%
|
312
|
6,000
|
63
|
82
|
145
|
80
|
(1)
|
|
458
|
Q2 2013
|
Q3 2015
|
Q2 2016
|
||||||||||||||||||||||||||||||||
The Village
|
Walnut Creek, CA
|
50
|
%
|
49
|
35,000
|
50
|
31
|
81
|
41
|
(1)
|
|
769
|
Q3 2013
|
Q3 2015
|
Q4 2015
|
||||||||||||||||||||||||||||||||
Emme
|
Emeryville, CA
|
55
|
%
|
190
|
-
|
46
|
16
|
62
|
34
|
326
|
Q3 2012
|
Q4 2014
|
Q1 2015
|
||||||||||||||||||||||||||||||||||
Total Development Projects - Joint Venture
|
1,595
|
63,050
|
558
|
228
|
786
|
426
|
$
|
449
|
|||||||||||||||||||||||||||||||||||||||
Grand Total - Development Pipeline
|
2,219
|
74,550
|
$
|
980
|
$
|
328
|
$
|
1,308
|
948
|
||||||||||||||||||||||||||||||||||||||
Essex Cost Incurred to Date
|
(722
|
)
|
|||||||||||||||||||||||||||||||||||||||||||||
Essex Remaining Commitment
|
$
|
226
|
(1)
|
Excludes the estimated allocation to retail square feet.
|
(2)
|
The company incurred $8.0 million of capitalized interest, $1.8M of capitalized overhead and $1.3M of co-investment development fees related to development in Q2 2014.
|
(3)
|
Epic Phase II, Avery and the Huxley were completed during Q2 2014 and transferred from development to land and building. The total cost of such transfers was approximately $210M. Solstice and Wilshire La Brea, development properties acquired as part of the BRE transaction, were completed during Q2 2014 and transferred from development to land and building. The total cost of such transfers was approximately $437M.
|
(4)
|
The cost incurred to date includes $45M of expected insurance proceeds related to the fire.
|
Construction Start
|
Initial Occupancy
|
Stabilized Operations
|
||||||||||
MB Phase I
|
Q2 2012
|
Q4 2014
|
Q2 2015
|
|||||||||
MB Phase II
|
Q3 2014
|
Q3 2015
|
Q1 2016
|
Total
|
Estimated
|
Estimated
|
NOI
|
|||||||||||||||||||||||||
Incurred
|
Remaining
|
Total
|
Project
|
For the six months ended
|
||||||||||||||||||||||||
Region/Project Name
|
Units
|
To Date
|
Cost
|
Cost
|
Start Date
|
2014
|
2013
|
|||||||||||||||||||||
Same-property - Redevelopment Projects (1) (2) (3)
|
||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||
Hamptons
|
215
|
$
|
120
|
$
|
19,361
|
$
|
19,481
|
Q1 2014
|
||||||||||||||||||||
Monterras
|
292
|
2,209
|
24,174
|
26,383
|
Q1 2014
|
|||||||||||||||||||||||
Total Same-Property - Redevelopment Projects
|
507
|
$
|
2,329
|
$
|
43,535
|
$
|
45,864
|
$
|
3,721
|
$
|
3,581
|
|||||||||||||||||
Same-Property Redevelopment Vacancy Loss
|
$
|
1,269
|
$
|
1,309
|
||||||||||||||||||||||||
Non-same property - Redevelopment Projects
|
||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||
Bunker Hill Towers, Los Angeles
|
456
|
5,353
|
70,791
|
76,144
|
Q3 2013
|
|||||||||||||||||||||||
Total Non-Same Property - Redevelopment Projects
|
456
|
$
|
5,353
|
$
|
70,791
|
$
|
76,144
|
$
|
2,959
|
$
|
2,560
|
(1)
|
Redevelopment activities are ongoing at these communities, but the communities have stabilized operations, therefore results are classified in same-property operations.
|
(2)
|
The Company incurred $0.8 million of vacancy loss for the same-property portfolio, and $1.0 million of vacancy loss for the total portfolio during the three months ended June 30, 2014. The Company completed the redevelopment of interiors totaling 437 units for the same-property portfolio and 693 units for the total portfolio, during the three months ended June 30, 2014.
|
(3)
|
The company incurred $0.4 million of capitalized interest, $1.8M of capitalized overhead and $0.1M of co-investment redevelopment fees related to redevelopment in Q2 2014.
|
Non-revenue Generating Capital Expenditures
|
Q2 2014
|
Q1 2014
|
Q4 2013
|
Q3 2013
|
||||||||||||
Non-revenue generating capital expenditures
|
$
|
10,623
|
$
|
4,416
|
$
|
5,153
|
$
|
9,536
|
||||||||
Average apartment units in quarter
|
34,158
|
29,886
|
29,833
|
29,646
|
||||||||||||
Capital expenditures per apartment unit in the quarter
|
$
|
311
|
$
|
148
|
$
|
173
|
$
|
322
|
||||||||
Capital expenditures per apartment unit-trailing four quarters
|
$
|
870
|
$
|
918
|
$
|
906
|
$
|
1,235
|
Co-investments - June 30, 2014
|
Essex
|
Total
|
Essex
|
Weighted
|
Remaining
|
For the Quarter
|
For the Six Months Ended
|
|||||||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
Ownership
|
Undepreciated
|
Debt
|
Book
|
Average
|
Term of
|
Ended June 30,
|
Ended June 30,
|
||||||||||||||||||||||||||||||||||||
Percentage
|
Units
|
Book Value
|
Amount
|
Value
|
Borrowing Rate
|
Debt/(in Years)
|
2014
|
2013
|
2014
|
2013
|
||||||||||||||||||||||||||||||||||
Operating Non-consolidated Joint Ventures
|
Net Operating Income
|
|||||||||||||||||||||||||||||||||||||||||||
Essex Apartment Value Fund II, L.P. (Fund II) (1)
|
28.2
|
%
|
96
|
$
|
14,428
|
$
|
6,261
|
$
|
2,484
|
5.6
|
%
|
0.4
|
$
|
312
|
$
|
4,042
|
$
|
617
|
$
|
8,067
|
||||||||||||||||||||||||
Wesco I, LLC (2)
|
50.0
|
%
|
2,713
|
676,638
|
367,241
|
136,100
|
4.0
|
%
|
9.0
|
9,185
|
8,363
|
18,124
|
16,455
|
|||||||||||||||||||||||||||||||
Wesco III, LLC (2)
|
50.0
|
%
|
993
|
228,369
|
119,830
|
54,059
|
3.2
|
%
|
6.4
|
2,911
|
801
|
4,880
|
1,430
|
|||||||||||||||||||||||||||||||
Wesco IV, LLC (2)
|
50.0
|
%
|
1,116
|
297,683
|
148,000
|
97,840
|
3.2
|
%
|
6.7
|
3,757
|
-
|
3,813
|
-
|
|||||||||||||||||||||||||||||||
BEXAEW, LLC (2)
|
50.0
|
%
|
2,723
|
516,105
|
295,000
|
94,958
|
3.2
|
%
|
6.7
|
6,922
|
-
|
7,030
|
-
|
|||||||||||||||||||||||||||||||
CPPIB (3)
|
55.0
|
%
|
878
|
253,544
|
-
|
168,447
|
-
|
-
|
3,175
|
-
|
5,027
|
-
|
||||||||||||||||||||||||||||||||
Other (4)
|
50.0
|
%
|
462
|
135,680
|
105,535
|
23,146
|
2.0
|
%
|
6.2
|
1,403
|
920
|
2,519
|
1,305
|
|||||||||||||||||||||||||||||||
Total Operating Non-consolidated Joint Ventures
|
8,981
|
$
|
2,122,447
|
$
|
1,041,867
|
577,034
|
3.4
|
%
|
7.4
|
$
|
27,665
|
$
|
14,126
|
$
|
42,010
|
$
|
27,257
|
|||||||||||||||||||||||||||
Essex Portion of NOI and Expenses
|
||||||||||||||||||||||||||||||||||||||||||||
NOI
|
$
|
13,923
|
$
|
6,182
|
$
|
21,122
|
$
|
11,870
|
||||||||||||||||||||||||||||||||||||
Depreciation
|
(8,314
|
)
|
(3,777
|
)
|
(13,074
|
)
|
(7,619
|
)
|
||||||||||||||||||||||||||||||||||||
Interest expense and other
|
(4,548
|
)
|
(1,804
|
)
|
(7,005
|
)
|
(3,691
|
)
|
||||||||||||||||||||||||||||||||||||
Gain and promote income
|
1,056
|
2,366
|
8,115
|
2,366
|
||||||||||||||||||||||||||||||||||||||||
Net income from operating co-investments
|
$
|
2,117
|
$
|
2,967
|
$
|
9,158
|
$
|
2,926
|
||||||||||||||||||||||||||||||||||||
Development Joint Ventures (5) (6)
|
50/55
|
%
|
1,595
|
$
|
558,240
|
$
|
59,900
|
243,127
|
1.5
|
%
|
32.4
|
$
|
-
|
$
|
(15
|
)
|
$
|
-
|
$
|
(15
|
)
|
|||||||||||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||||||||||||||||||||||||||||||
Average
|
Average
|
|||||||||||||||||||||||||||||||||||||||||||
Preferred
|
Expected
|
|||||||||||||||||||||||||||||||||||||||||||
Return
|
Term
|
Income from Preferred Equity Investments
|
||||||||||||||||||||||||||||||||||||||||||
Preferred Equity Investments
|
144,809
|
10.2
|
%
|
3.6
|
$
|
3,512
|
$
|
4,330
|
$
|
6,997
|
$
|
8,582
|
||||||||||||||||||||||||||||||||
Total Co-investments
|
$
|
964,970
|
$
|
5,629
|
$
|
7,282
|
$
|
16,155
|
$
|
11,493
|
(1)
|
The Company has a 28.2% interest as a general partner and limited partner in Fund II, and may earn promote income if Fund II exceeds certain financial return benchmarks. As of Q2 2014, 13 of the 14 properties in Fund II were sold. The remaining property is expected to be sold in 2014.
|
(2)
|
The Company has a 50% interest in Wesco I, III, IV, BEXAEW and the Company may earn promote income if the co-investment exceeds certain financial benchmarks.
|
(3)
|
The Company has a 55% interest in CPPIB, and the Company may earn promote income if the co-investment exceeds certain financial benchmarks.
|
(4)
|
The Company has a 50% interest in other various joint ventures, and the Company may earn promote income if the co-investment exceeds certain financial benchmarks.
|
(5)
|
The Company has interests in eight development co-investments, which are detailed on S-9.
|
(6)
|
The Dylan has a $59.9 million long-term tax-exempt bond debt that is subject to a total return swap that will mature in 2016.
|
Operations for the six months ended
|
||||||||||||||||||||||||||||
Balance as of June 30, 2014
|
June 30, 2014
|
|||||||||||||||||||||||||||
Investment in
|
Related
|
Noncontrolling
|
DownREIT
|
Operating
|
||||||||||||||||||||||||
Real Estate
|
Debt
|
Interest
|
Units Outstanding (1)
|
Revenue
|
Expenses
|
NOI
|
||||||||||||||||||||||
Noncontrolling Interest - DownREIT:
|
||||||||||||||||||||||||||||
Barkley Apartments
|
$
|
8,170
|
$
|
16,402
|
$
|
1,696
|
74,248
|
$
|
1,373
|
$
|
477
|
$
|
896
|
|||||||||||||||
Avery (2)
|
36,558
|
10,000
|
2,568
|
58,884
|
402
|
319
|
83
|
|||||||||||||||||||||
Brookside Oaks
|
31,526
|
19,483
|
2,183
|
78,903
|
2,083
|
402
|
1,681
|
|||||||||||||||||||||
Capri at Sunny Hills
|
15,782
|
-
|
2,945
|
158,665
|
1,319
|
356
|
963
|
|||||||||||||||||||||
Hidden Valley (3)
|
36,343
|
30,040
|
6,089
|
62,647
|
2,863
|
882
|
1,981
|
|||||||||||||||||||||
Highridge Apartments
|
29,459
|
44,807
|
2,746
|
262,505
|
3,528
|
752
|
2,776
|
|||||||||||||||||||||
Montejo Apartments
|
7,684
|
12,938
|
1,216
|
29,319
|
978
|
261
|
717
|
|||||||||||||||||||||
The Elliot at Mukilteo
|
15,102
|
10,750
|
1,212
|
100,713
|
1,888
|
660
|
1,228
|
|||||||||||||||||||||
Magnolia Square
|
36,771
|
17,958
|
6,101
|
54,938
|
2,039
|
519
|
1,520
|
|||||||||||||||||||||
Fairhaven Apartments
|
12,296
|
16,791
|
2,951
|
67,728
|
1,386
|
378
|
1,008
|
|||||||||||||||||||||
Valley Park Apartments
|
13,042
|
21,966
|
30
|
2,156
|
1,579
|
565
|
1,014
|
|||||||||||||||||||||
Villa Angelina Apartments
|
18,935
|
26,779
|
1,593
|
43,552
|
2,129
|
513
|
1,616
|
|||||||||||||||||||||
$
|
261,668
|
$
|
227,914
|
31,330
|
994,258
|
$
|
21,567
|
$
|
6,084
|
$
|
15,483
|
|||||||||||||||||
Other Components of Noncontrolling Interest:
|
||||||||||||||||||||||||||||
Hillsdale Garden Apartments (4)
|
$
|
106,027
|
21,645
|
$
|
9,278
|
$
|
2,831
|
$
|
6,447
|
|||||||||||||||||||
Operating Partnership Units and Other
|
60,759
|
|||||||||||||||||||||||||||
Total Noncontrolling Interest
|
$
|
113,734
|
(1)
|
Generally, DownREIT units are redeemed for cash at a value equal to Essex's common stock.
|
(2)
|
Avery was acquired on March 28, 2014 as the replacement property for Brentwood which completed a 1031 exchange transaction. Attributable to the 1031 exchange, the partnership underlying the noncontrolling interest remains in place. The Avery is in lease-up.
|
(3)
|
The DownREIT has a 75% interest in this community and a joint venture partner has a 25% interest.
|
(4)
|
The Company has an 81.5% interest in this community and the joint venture partner has an 18.5% interest.
|
($'s in thousands, except share and per share data)
|
YTD
|
2014 Revised Guidance Range
|
|||||||||||||
Actuals
|
Low End
|
High End
|
Changes from Q1 '14 Guidance
|
||||||||||||
Net Operating Income ("NOI")
|
|||||||||||||||
Total NOI from consolidated communities
|
$
|
280,203
|
$
|
636,700
|
641,700
|
Increased same-property revenue growth to a range of 6.4% to 6.8% and NOI range to 7.7% to 8.4%. Updated to reflect acquisitions occurring subsequent to quarter end.
|
|||||||||
Management Fees
|
3,995
|
8,100
|
8,700
|
Excludes dev. and redev. fees which are now an offset to G&A.
|
|||||||||||
Interest Expense
|
|||||||||||||||
Interest expense, before capitalized interest
|
(82,856
|
)
|
(187,400
|
)
|
(185,400
|
)
|
Interest expense dependent on timing of capital markets activities.
|
||||||||
Projected interest capitalized
|
11,664
|
20,300
|
21,700
|
||||||||||||
Net interest expense
|
(71,192
|
)
|
(167,100
|
)
|
(163,700
|
)
|
|||||||||
Recurring Income and Expenses
|
|||||||||||||||
Interest and other income
|
4,807
|
9,600
|
10,000
|
||||||||||||
FFO from co-investments
|
21,311
|
51,700
|
53,100
|
Updated to reflect investment made through July.
|
|||||||||||
General and administrative expense
|
(17,142
|
)
|
(36,600
|
)
|
(38,000
|
)
|
Reduced G&A by dev. and redev. fees from co-investments which were previously recorded as mgmt fee revenues.
|
||||||||
Preferred dividends and non-controlling interest
|
(6,968
|
)
|
(14,000
|
)
|
(14,000
|
)
|
|||||||||
2,008
|
10,701
|
11,101
|
|||||||||||||
Non-Core Income and Expenses
|
|||||||||||||||
Promote income from co-investment
|
4,904
|
6,000
|
7,000
|
||||||||||||
Gains on sales of marketable securities, land, note prepayment
|
1,286
|
1,286
|
1,286
|
||||||||||||
Earthquake related and other
|
(1,571
|
)
|
(1,571
|
)
|
(1,571
|
)
|
|||||||||
Loss on early retirement of debt
|
(197
|
)
|
(197
|
)
|
(197
|
)
|
|||||||||
Merger and integration expenses
|
(42,556
|
)
|
(73,000
|
)
|
(67,000
|
)
|
|||||||||
Utility reimbursement income accrual and acquisition fee
|
2,307
|
2,307
|
2,307
|
||||||||||||
Acquisition costs
|
(717
|
)
|
(1,100
|
)
|
(1,600
|
)
|
|||||||||
(36,544
|
)
|
(66,275
|
)
|
(59,775
|
)
|
||||||||||
Funds from Operations
|
$
|
178,470
|
422,126
|
438,026
|
|||||||||||
Funds from Operations per diluted Share
|
$
|
3.41
|
7.18
|
7.45
|
|||||||||||
% Change - Funds from Operations
|
-55.1
|
%
|
-5.4
|
%
|
-1.9
|
%
|
|||||||||
Funds from Operations excluding non-core items
|
$
|
215,014
|
488,401
|
497,801
|
|||||||||||
Core Funds from Operations per diluted Share
|
$
|
4.11
|
8.31
|
8.47
|
|||||||||||
% Change - Core Funds from Operations
|
-46.0
|
%
|
9.3
|
%
|
11.4
|
%
|
|||||||||
Weighted average shares outstanding
|
52,357
|
58,800
|
58,800
|
Acquisitions
|
Essex
|
||||||||||||||||||||||
Ownership
|
Purchase
|
Price per
|
Average
|
||||||||||||||||||||
Property Name
|
Location
|
Units
|
Percentage
|
Entity
|
Date
|
Price
|
Unit
|
Rent
|
|||||||||||||||
The Avery
|
Los Angeles, CA
|
121
|
100
|
%
|
EPLP
|
Mar-14
|
35,000
|
289
|
2,386
|
||||||||||||||
Q1 2014 Total
|
121
|
$
|
35,000
|
$
|
289
|
||||||||||||||||||
Piedmont
|
Bellevue, WA
|
396
|
100
|
%
|
EPLP
|
May-14
|
76,750
|
194
|
1,386
|
||||||||||||||
Collins on Pine
|
Seattle, WA
|
76
|
100
|
%
|
EPLP
|
May-14
|
29,200
|
384
|
1,884
|
||||||||||||||
Q2 2014 Total
|
472
|
$
|
105,950
|
$
|
224
|
||||||||||||||||||
Paragon
|
Fremont, CA
|
301
|
100
|
%
|
EPLP
|
Jul-14
|
111,000
|
369
|
2,090
|
||||||||||||||
Q3 2014 to date
|
301
|
$
|
111,000
|
$
|
369
|
||||||||||||||||||
Dispositions
|
Essex
|
||||||||||||||||||||||
Ownership
|
Sales
|
Price per
|
|||||||||||||||||||||
Units
|
Percentage
|
Entity
|
Date
|
Price
|
Unit
|
||||||||||||||||||
Vista Capri
|
106
|
100.0
|
%
|
EPLP
|
Jan-14
|
14,350
|
135
|
||||||||||||||||
Davey Glen
|
69
|
28.2
|
%
|
Fund II
|
Mar-14
|
23,750
|
344
|
||||||||||||||||
Q1 2014 Total
|
175
|
$
|
38,100
|
$
|
218
|
||||||||||||||||||
Pinnacle at Queen's Creek
|
252
|
35.0
|
%
|
EPLP
|
Jun-14
|
33,300
|
132
|
||||||||||||||||
Q2 2014 Total
|
252
|
$
|
33,300
|
$
|
132
|
BRE Properties Contributed to Joint Ventures as of April 1, 2014
|
Essex
|
|||||||||||
Ownership
|
||||||||||||
Location
|
Units
|
Percentage
|
Entity
|
MSA
|
Purchase Price
|
|||||||
Regency at Palm Court
|
Los Angeles, CA
|
116
|
50.0
|
%
|
Wesco III
|
Los Angeles
|
||||||
The Summit
|
Chino Hills, CA
|
125
|
50.0
|
%
|
Wesco III
|
Los Angeles
|
||||||
Windsor Court
|
Los Angeles, CA
|
95
|
50.0
|
%
|
Wesco III
|
Los Angeles
|
||||||
Wesco III Total
|
336
|
|||||||||||
Bridgeport Coast
|
Santa Clarita, CA
|
188
|
50.0
|
%
|
Wesco IV
|
Los Angeles
|
||||||
City Centre
|
Hayward, CA
|
192
|
50.0
|
%
|
Wesco IV
|
San Francisco
|
||||||
Fairways at Westridge
|
Valencia, CA
|
234
|
50.0
|
%
|
Wesco IV
|
Los Angeles
|
||||||
Verandas
|
Union City, CA
|
282
|
50.0
|
%
|
Wesco IV
|
San Francisco
|
||||||
Vistas of West Hills
|
Valencia, CA
|
220
|
50.0
|
%
|
Wesco IV
|
Los Angeles
|
||||||
Wesco IV Total
|
1,116
|
|||||||||||
Ballinger Commons
|
Seattle, WA
|
485
|
50.0
|
%
|
AEW
|
Seattle
|
||||||
Bothell Ridge
|
Bothell, WA
|
214
|
50.0
|
%
|
AEW
|
Seattle
|
||||||
Canyon Creek
|
Northridge, CA
|
200
|
50.0
|
%
|
AEW
|
Los Angeles
|
||||||
City Walk
|
Seattle, WA
|
102
|
50.0
|
%
|
AEW
|
Seattle
|
||||||
Enclave at Town Square
|
Chino Hills, CA
|
124
|
50.0
|
%
|
AEW
|
Los Angeles
|
||||||
Esplanade
|
San Diego, CA
|
616
|
50.0
|
%
|
AEW
|
San Diego
|
||||||
Parkside Court
|
Santa Ana, CA
|
210
|
50.0
|
%
|
AEW
|
Orange County
|
||||||
The Havens
|
Fountain Valley, CA
|
440
|
50.0
|
%
|
AEW
|
Orange County
|
||||||
The Heights
|
Chino Hills, CA
|
332
|
50.0
|
%
|
AEW
|
Los Angeles
|
||||||
AEW Total
|
2,723
|
|||||||||||
Total Joint Ventures
|
4,175
|
$ 888,000
|
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 Dec-
Dec
|
% Growth
|
Estimated Rent
Growth
|
||||||||||||||||||||||||
Los Angeles
|
9,000
|
4,100
|
13,100
|
0.6
|
%
|
0.4
|
%
|
87,000
|
2.2
|
%
|
5.3
|
%
|
||||||||||||||||||||
Ventura
|
650
|
400
|
1,050
|
1.0
|
%
|
0.4
|
%
|
5,100
|
1.8
|
%
|
4.3
|
%
|
||||||||||||||||||||
Orange
|
3,550
|
3,600
|
7,150
|
0.9
|
%
|
0.7
|
%
|
29,000
|
2.0
|
%
|
4.6
|
%
|
||||||||||||||||||||
San Diego
|
4,000
|
2,700
|
6,700
|
0.9
|
%
|
0.6
|
%
|
29,000
|
2.3
|
%
|
4.4
|
%
|
||||||||||||||||||||
So. Cal.
|
17,200
|
10,800
|
28,000
|
0.8
|
%
|
0.5
|
%
|
150,100
|
2.1
|
%
|
4.8
|
%
|
||||||||||||||||||||
San Francisco
|
4,500
|
600
|
5,100
|
1.2
|
%
|
0.7
|
%
|
32,650
|
3.1
|
%
|
8.0
|
%
|
||||||||||||||||||||
Oakland
|
2,000
|
3,100
|
5,100
|
0.6
|
%
|
0.5
|
%
|
20,850
|
2.1
|
%
|
8.1
|
%
|
||||||||||||||||||||
San Jose
|
4,300
|
1,800
|
6,100
|
1.7
|
%
|
0.9
|
%
|
33,300
|
3.5
|
%
|
7.9
|
%
|
||||||||||||||||||||
No. Cal.
|
10,800
|
5,500
|
16,300
|
1.3
|
%
|
0.7
|
%
|
86,800
|
3.0
|
%
|
8.0
|
%
|
||||||||||||||||||||
Seattle (2a)
|
8,500
|
6,500
|
15,000
|
1.9
|
%
|
1.3
|
%
|
42,600
|
2.8
|
%
|
5.6
|
%
|
||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Weighted Average (4)
|
36,500
|
22,800
|
59,300
|
1.2
|
%
|
0.7
|
%
|
279,500
|
2.6
|
%
|
6.2
|
%
|
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