1162003 8K Exhibit 99-1

EX-99.1 4 exh99-1.htm EXH99-1 1162003 8K Exhibit 99-1 Exhibit 99.1

FOR IMMEDIATE RELEASE

Michael J. Schall, Chief Financial Officer, (650) 849-1600

Mary C. Jensen, Director of Investor Relations, (650) 849-1656

Essex Announces Fourth Quarter and Annual 2002 Results

FFO Per Share Increases 2.5% for the Year

Palo Alto, California-February 5, 2003-Essex Property Trust, Inc. (NYSE:ESS), a Real Estate Investment Trust (REIT) with apartment communities located in targeted West Coast markets, today reported operating results for the fourth quarter and year ended December 31, 2002. For the quarter ended December 31, 2002, Funds From Operations (FFO) amounted to $23.0 million, or $1.09 per diluted share, compared to $23.5 million, or $1.12 per diluted share, for the quarter ended December 31, 2001, representing a 2.7 percent decrease in FFO per share. For the year ended December 31, 2002, Essex reported FFO of $94.6 million, or $4.50 per diluted share, a 2.5 percent increase from FFO of $92.3 million, or $4.39 per diluted share, for the year ended December 31, 2001.

Keith R. Guericke, President and Chief Executive Officer commented that, "The economic environment continued to be challenging in 2002, which affected most companies across the country as well as Essex's business activities. During the year, the Company increased its real estate investments within its strong Southern California region, while maintaining its solid financial condition. Looking forward, we continue to believe that Essex's core strategy of investing in supply-constrained markets will generate favorable long-term results."

The Company's financial results are summarized as follows:

	Quarter Ended December 31,			Year Ended December 31,
	2002	2001	Percent Change	2002	2001	Percent Change
	(Dollar in thousands, except per share amounts)
Revenues	$ 50,934	$ 52,187	-2.4%	$ 200,122	$ 203,539	-1.7%
Funds From Operations (FFO)	$ 22,980	$ 23,487	-2.2%	$ 94,588	$ 92,277	2.5%
Net Income	$ 9,605	$ 11,070	-13.2%	$ 52,874	$ 48,545	8.9%
Per Diluted Share:
FFO Per Share	$ 1.09	$ 1.12	-2.7%	$ 4.50	$ 4.39	2.5%
Net Income Per Share	$ 0.51	$ 0.59	-13.6%	$ 2.82	$ 2.59	9.3%

Funds From Operations (FFO) was positively impacted by miscellaneous non-recurring income of $1.5 million, or $0.07 per diluted share, for the quarter ended December 31, 2002 and $4.9 million, or $0.24 per diluted share, for the year ended December 31, 2002.

Portfolio Composition

The following table compares Essex's regional concentrations for its multifamily portfolio as of December 31, 2002 and December 31, 2001.

	As of December 31, 2002		As of December 31, 2001
	Number of Apartment Homes	%	Number of Apartment Homes	%
Southern California	13,654	58	11,295	54
San Francisco Bay Area	4,023	17	4,023	19
Seattle Metro. Area	4,073	17	4,073	20
Portland Metro. Area	1,371	6	1,371	7
Other	578	2	-	-
Total	23,699	100	20,762	100

Property Operations

The following results omit properties in development or lease-up, properties owned less than a year, and properties that are accounted for under the equity method of accounting.

A breakdown of the same-property net operating income results relative to the prior comparative period for Essex's multifamily properties is as follows:

	Quarter Ended December 31, 2002			Year Ended December 31, 2002
	Revenues	Operating Expenses	Net Operating Income	Revenues	Operating Expenses	Net Operating Income
Southern California	7.5%	5.6%	8.4%	3.6%	3.7%	3.5%
San Francisco Bay Area	-11.4%	9.6%	-17.8%	-12.5%	3.0%	-16.8%
Pacific Northwest	-6.7%	13.1%	-14.9%	-6.9%	1.8%	-10.7%
Same-Property Average	-3.3%	9.1%	-8.1%	-5.3%	2.9%	-8.3%

A breakdown of the same-property financial occupancies for Essex's multifamily properties is as follows:

	For the Quarters Ended
	12/31/2002	9/30/2002	12/31/2001
Southern California	96.3%	96.4%	92.8%
San Francisco Bay Area	96.1%	96.8%	94.3%
Pacific Northwest	93.8%	94.8%	92.2%
Same-Property Average	95.5%	96.1%	93.2%

A breakdown of same-property concessions for Essex's multifamily properties is as follows:

	For the Quarters Ended
	(in thousands)
	12/31/2002	9/30/2002	12/31/2001
Southern California	$116.2	$124.5	$172.3
San Francisco Bay Area	160.2	270.9	244.1
Pacific Northwest	323.2	289.7	197.7
Same-Property Average	$599.6	$685.1	$614.1

Total concessions decreased for the Company's consolidated portfolio to $741,600 for the quarter ended December 31, 2002, compared to $894,400 for the quarter ended September 30, 2002, and $820,500 for the quarter ended December 31, 2001.

Results from the fourth quarter 2002 compared to the third quarter 2002 continue to reflect negative rental growth, a decrease in occupancy levels, and lower concessions.

The following is the sequential percentage change in same-property revenues for the quarter ended December 31, 2002 versus the quarter ended September 30, 2002:

	Revenues
Southern California	1.2%
San Francisco Bay Area	-1.7%
Pacific Northwest	-2.8%
Same-Property Average	-0.9%

Acquisitions

On December 17, 2002, the Company acquired, by merger, John M. Sachs, Inc. resulting in the acquisition of a real estate portfolio which consisted of 18 apartment communities comprising 2,683 apartment homes located in San Diego County, California, a 302-unit apartment community located in Houston, Texas, a 276-unit apartment community located in Riverside County, California; five recreational vehicle parks totaling 1,717 spaces, of which 1,581 spaces are located in either San Diego or Riverside County, California and 136 spaces are located in Las Vegas, Nevada; two manufactured housing communities totaling 607 sites, of which 450 sites are located in Las Vegas, Nevada and 157 sites are located in San Diego County, California; and two small office buildings totaling approximately 7,200 square feet located in San Diego, California.

The merger was structured as a tax-free reorganization with real estate assets valued at approximately $301 million. Consideration provided in the merger was in the form of a common stock issuance, assumption of liabilities and cash, as follows:

Issued 2,719,875 shares of Essex common stock.
Assumed mortgages on four of the newly acquired properties for approximately $64.6 million with a fixed interest rate of 5.51% maturing in December 2012.
Repaid liabilities in the amount of approximately $33.0 million.
The balance was paid in cash.

Development

As of December 31, 2002, the Company had ownership interests in development communities, which have a combined estimated construction cost of approximately $176.7 million. These projects exclude development projects owned by the Essex Apartment Value Fund, L.P.

The Essex on Lake Merritt - During the quarter the Company continued its leasing efforts to stabilize its 270-unit high-rise luxury apartment community located on the shores of Lake Merritt in Oakland, California and subsequently stabilized operations in January 2003 with the property being 95 percent leased.

The San Marcos (formerly Vista del Mar) - Construction and leasing activities continue at the Company's 312-unit apartment community located in Richmond, California. Stabilization is anticipated during the third quarter of 2003.

On November 19, 2002, the Company sold a portion of land adjacent to its San Marcos development project, for approximately $2.4 million to a third-party single-family home developer, which did not result in a gain or loss to the Company. As a result of the sale, the number of units that the Company can build in a second phase has been reduced to 120 units from 192 units.

Hidden Valley-Parker Ranch - The initial stages of construction continue on the Company's 324-unit multifamily community located in Simi Valley, California. Initial occupancy is expected to take place during the fourth quarter of 2003. The Company has a 75 percent ownership interest in this development project.

Redevelopment

The Company considers redevelopment of existing properties to be an important element of its real estate strategy - focusing on its redevelopment activities in West Coast submarkets where new housing construction is limited. Many of these markets have older properties in premier locations with lower density, and large apartment homes. The Company seeks to improve the financial and physical aspects of these assets through a redevelopment program that seeks to achieve a minimum 15 percent return on the incremental renovation investment.

During the fourth quarter of 2002, the Company completed two redevelopment communities,

Le Parc Luxury Apartments (formerly Plumtree) and The Lofts at Pinehurst (formerly Villa Scandia), aggregating 258 units with combined renovation costs of approximately $6.9 million.

Financing Activities

On November 14, 2002, the Company refinanced variable rate loans that were in place on Coronado at Newport-North and South, a combined 1,447-unit apartment community, located in Newport Beach, California. The principal balance of these variable rate loans at the time of payoff was approximately $71.7 million with interest at the rate of LIBOR plus 2.25%. The new loans are non-recourse mortgages totaling $106.9 million, with a 5.30% fixed interest rate, that matures in December 2012. The asset is owned by the Lend Lease co- investment, in which the Company is a 49.9 percent partner.

On December 11, 2002, the Company obtained $33.9 million of long-term variable rate debt that bears interest at a floating rate tied to short-term tax-exempt revenue bonds and matures in December 2032. These revenue bonds will finance the development and operations of

Hidden Valley-Parker Ranch, a 324-unit apartment community in Simi Valley, California. The Company's liability for this indebtedness will increase from $600,000 at December 31, 2002 to $33.9 million as project-related costs are incurred.

On December 17, 2002, the Company obtained four non-recourse mortgages totaling $64.0 million with a weighted average interest rate of 5.64%, maturing in December 2012 on four previously unencumbered properties.

On December 27, 2002, one of the Company's equity method investments obtained a second non-recourse mortgage for $8.1 million, with a 4.25% fixed interest rate on Highridge Apartments. The June 2007 maturity is concurrent with the existing first non-recourse mortgage on the property. Highridge Apartments, a 255-unit apartment community located in Rancho Palos Verdes, California, is owned by five partnerships, which Essex Management Corporation, an unconsolidated preferred stock subsidiary of the Company ("EMC"), is a 1% general partner and the Operating Partnership holds a 1% special limited partnership interest.

On December 27, 2002, the Company repaid a non-recourse mortgage that matured in the amount of $8.3 million. The interest rate on this loan was 8.78%.

Essex Apartment Value Fund, L.P.

The Fund was organized to add value through rental growth and asset appreciation and to utilize the Company's development, redevelopment and asset management capabilities.

The Fund completed its final closing on February 15, 2002 with total equity commitments of approximately $250 million. An affiliate of the Company, Essex VFGP, L.P. ("VFGP"), is the Fund's one percent general partner and is a 20.4 percent limited partner. Essex Portfolio, L.P. (the "Operating Partnership") owns a 99 percent limited partnership interest in VFGP. At December 31, 2002, the Fund has approximately $400 million of investment capacity.

Fund Activities

On October 3, 2002, the Fund purchased Ocean Villa, a 119-unit apartment community located in Oxnard, California for a contract price of $13.3 million, and unencumbered of mortgage debt.

On November 26, 2002, the Fund purchased The Villas at Carlsbad, a 102-unit apartment community located in Carlsbad, California for a contract price of $14.3 million.

Other Company Information

Essex's total market capitalization at December 31, 2002 was approximately $2.2 billion. The Company's mortgage notes payable had an average maturity of 8.7 years and an average interest rate of 6.8 percent. As of December 31, 2002, the Company's debt-to-total-market-capitalization ratio was 36.4 percent and interest coverage for the fourth quarter of 2002 was 3.8 times EBITDA.

During the quarter, the Company's Board of Directors declared a regular quarterly cash dividend of $0.77 per common share or $3.08 per common share on an annualized basis. The dividend was payable on January 15, 2003 to shareholders of record as of December 6, 2002 and represents a 10 percent per share increase compared to the fourth quarter 2001.

The Company reiterates its previous guidance for estimated FFO per diluted share of $4.33 to $4.45 per share for calendar year 2003.

Conference Call with Management

An earnings conference call with management is scheduled for tomorrow, Thursday, February 6, 2003, at 11:00 a.m. Pacific Time - 2:00 p.m. Eastern Time, which will be broadcast live via the Internet at www.essexpropertytrust.com, and accessible via phone by dialing (800) 231-9012 - a passcode is not required.

A replay of the call is also available via the Internet for two weeks following the live call. You can access the rebroadcast via the Internet at www.essexpropertytrust.com.

Supplemental financial information is available via e-mail by sending requests to the investors relations department at investors@essexpropertytrust.com.

Essex Property Trust, Inc., located in Palo Alto, California and traded on the New York Stock Exchange (ESS), is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast communities. Essex currently has ownership interests in 113 multifamily properties (23,969 units), and has 1,251 units in various stages of development. Additional information about Essex can be found on the Company's web site at www.essexpropertytrust.com. If you would like to receive future press releases via e-mail, please send a request to investors@essexpropertytrust.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release includes forward-looking statements, including statements regarding FFO per diluted share estimates, our portfolio allocations, statements regarding when property developments and redevelopments will be finished and stabilized, statements regarding future leasing activities, statements regarding future construction costs, and statements regarding estimated values of properties. The Company's actual results may differ materially from those projected in such forward-looking statements. Factors that might cause such a difference include, but are not limited to, changes in market demand for rental units and the impact of competition and competitive pricing, changes in economic conditions, unexpected delays in the development and stabilization of development and redevelopment projects, unexpected difficulties in leasing of development and redevelopment projects, total costs of renovation investments exceeding our projections and other risks detailed in the Company's filings with the Securities and Exchange Commission (SEC). The Company assumes no obligation to update this information. For more details relating to risk and uncertainties that could cause actual results to differ materially from those anticipated in our forward-looking statements, and risks to our business in general, please refer to our SEC filings, including our most recent Report on Form 10-K for the year ended December 31, 2001 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002, June 31, 2002 and September 30, 2002.

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