7302003 8K Exhibit 99-1

EX-99.1 4 exh99-1.htm EX-99.1.HTM 7302003 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 Second Quarter 2003 Results

6.8% Decrease in FFO Per Share

Palo Alto, California-July 30, 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 second quarter 2003.

Net Income for the quarter ended June 30, 2003 totaled $10.7 million, or $0.50 per diluted share, as compared with $21.4 million, or $1.14 per diluted share for the quarter ended June 30, 2002. Comparative results for the quarter ended June 30, 2003 were impacted by gains from asset sales of $9.5 million, or $0.50 per share, which were reported for the period ended June 30, 2002.

Funds From Operations (FFO) for the quarter ended June 30, 2003 amounted to $25.6 million, or $1.09 per diluted share, compared to $24.7 million, or $1.17 per diluted share, for the quarter ended June 30, 2002, representing a 3.7 percent increase in FFO and a 6.8 percent reduction in FFO per share. FFO was negatively impacted by a $1,596,000 decrease in miscellaneous non-recurring income, which decreased from $1,880,000, or $0.09 per diluted share in the quarter ended June 30, 2002 to $284,000 or $0.01 per diluted share in the quarter ended June 30, 2003.

FFO is a supplemental financial measurement used by real estate investment trusts to measure and compare operating performance. A reconciliation of FFO to net income (the most directly comparable GAAP measure) is included in the financial data accompanying this press release. For a more comprehensive definition of FFO please refer to the last page of this press release.

The Company's financial results are summarized as follows:

                                         Quarter Ended June 30,
                              ---------------------------------------------
                                                                 Percent
                                    2003             2002         Change
                              ---------------------------------------------
                            (Dollars in thousands, except per share amounts)

Revenues                     $     58,447      $    50,983            14.6%
Net Income                   $     10,650      $    21,358           -50.1%
Funds From Operations (FFO)  $     25,581      $    24,672             3.7%
Per Diluted Share:
  Net Income Per Share       $      0.50       $     1.14            -56.1%
  FFO Per Share              $      1.09       $     1.17             -6.8%

Portfolio Composition

The following table compares Essex's regional concentrations for its multifamily portfolio as of June 30, 2003 and June 30, 2002.



                                 As of                   As of
                               June 30, 2003           June 30, 2002
                        ------------------------------------------------
                              Number of               Number of
                           Apartment Homes    %    Apartment Homes    %
                        ------------------------------------------------
Southern California          14,810        59        10,302        52
San Francisco Bay Area        4,293        17         4,023        20
Seattle Metro. Area           4,073        16         4,073        21
Portland Metro. Area          1,371         6         1,371         7
Other                           578         2           -           -
                         ------------------------------------------------
Total                        25,125        100       19,769        100
                         ================================================

Property Operations

The following operating 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 compared to the quarter ended June 30, 2002 for Essex's multifamily properties is as follows:


                          Quarter Ended June 30, 2003

                                                 Net
                                   Operating  Operating
                        Revenues   Expenses    Income
                       ---------------------------------
Southern California         4.1%      4.3%        3.9%
San Francisco Bay Area     -7.9%      6.5%      -12.6%
Pacific Northwest          -3.3%      7.0%       -8.4%
                       ---------------------------------
Same-Property Average      -1.9%      5.7%       -4.9%    
                       =================================

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



                              For the Quarters Ended

                        06/30/2003  03/31/2002  06/30/2002
                       ------------------------------------
Southern California       95.9%       95.2%       94.4%
San Francisco Bay Area    95.3%       95.8%       95.1%
Pacific Northwest         95.2%       94.5%       93.0%
                       ------------------------------------
Same-Property Average     95.5%       95.2%       94.3%
                       ====================================

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


                               For the Quarters Ended
                                  (in thousands)

                         06/30/2003   03/31/2003   6/30/2002
                        ------------ ------------ ------------
Southern California    $   188.5    $   125.3    $   287.5
San Francisco Bay Area     172.3        176.6        333.4
Pacific Northwest          366.1        297.1        368.5
                        ------------ ------------ ------------
Same-Property Average  $   726.9    $   599.0    $   989.4
                        ============ ============ ============

Total concessions, for the Company's consolidated portfolio, increased to $925,800 for the quarter ended June 30, 2003, as compared to $801,800 for the quarter ended March 31, 2003. Total concessions for the quarter ended June 30, 2002 were $1,063,900.

The following is the sequential percentage change in same-property revenues for the quarter ended June 30, 2003 versus the quarter ended March 31, 2003:



                        Revenues
                       -----------
Southern California        0.4%
San Francisco Bay Area    -2.4%
Pacific Northwest         -1.0%
                       -----------
Same-Property Average     -0.9%
                       ===========

Same-property operating expenses increased 5.7 percent in the quarter ended June 30, 2003, compared to the quarter ended June 30, 2002. The Company expects same-property operating expenses for the year to increase in the range of 2.5 to 3.5 percent as previously disclosed.

Development

As of June 30, 2003, the Company had ownership interests in development communities, which have a combined estimated construction cost of approximately $122.2 million. These projects exclude development projects owned by the Essex Apartment Value Fund, L.P., which are described in the following section.

The San Marcos (formerly Vista del Mar) - The Company has completed construction at its 312-unit apartment community located in Richmond, California. As of June 30, 2003, the property was 72 percent leased and 62 percent occupied. Aggressive leasing initiatives continue with stabilization anticipated in September of this year.

San Marcos (phase II) - During the quarter construction began on an additional 120 units, which are located directly adjacent to the first phase. The cost of the additional units is estimated at $23.9 million, and stabilization is anticipated in the fourth quarter of 2004.

Hidden Valley-Parker Ranch - Construction continues 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 defines redevelopment communities as existing properties owned or recently acquired which have been targeted for investment by the Company with the expectation of increased financial returns through property improvement. Redevelopment communities typically have apartment units that are not available for rent and, as a result, may have less than stabilized operations.

Hillcrest Park II - The second phase of redevelopment commenced in the beginning of the second quarter on the Company's 608-unit apartment community located in Newbury Park, California. The Company plans to spend $3.4 million on upgrading common area amenities, such as renovating two existing clubhouses and building one new clubhouse - renovating two pools, removing four others and replacing them with tennis courts. The third and final phase of the redevelopment plan is being considered, upon approval, to add 60 new units on the premises.

Financing

Subsequent to the quarter end the Company expanded its existing $165 million unsecured revolving credit facility to $185 million. No other terms of this facility were revised.

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. Currently, the Fund is approximately 90 percent invested.

On April 11, 2003 the Fund obtained a non-recourse mortgage on Ocean Villas, a 119-unit apartment community located in Oxnard, California, in the amount of $10.0 million with a 5.42% fixed interest rate for a 9-year term and a 1-year floating/prepayment window.

On May 1, 2003 the Fund purchased Huntington Villas, a 400-unit apartment community located in Huntington Beach, California, for a contract price of approximately $58.2 million. In connection with this transaction the Fund obtained a non-recourse mortgage in the amount of $39.9 million, with a 4.64% fixed interest rate, which matures in May 2010.

On May 1, 2003 the Fund purchased three multifamily properties comprised of 288 apartment homes located in San Dimas, California. The Villas at San Dimas Canyon, 156-unit apartment community, was purchased for a contract price of $20.0 million. In connection with this transaction the Fund obtained a non- recourse mortgage in the amount of $13.0 million with a 4.67% fixed interest rate, which matures in May 2010. The Villas at San Bonita, a 102-unit apartment community, was purchased for a contract price of $12.7 million. In connection with this transaction the Fund obtained a non-recourse mortgage in the amount of $8.3 million with a 4.67% fixed interest rate, which matures in May 2010. The Villas, a 30-unit apartment community, was purchased for a contract price of $3.9 million and is not encumbered by a mortgage.

On May 29, 2003 the Fund purchased Villa Venetia Apartments, a 468-unit apartment community located in Costa Mesa, California, for a contract price of $74.0 million. In connection with this transaction the Fund obtained a non- recourse mortgage in the amount of $54.0 million with a 4.58% fixed interest rate for a 9-year term and a 1-year floating/prepayment window.

The Fund began redevelopment on the 174-unit apartment community located in La Mirada, California, which was purchased by the Essex Apartment Value Fund ("The Fund") in 2001. Redevelopment costs are expected to total approximately $3.5 million. Part of the redevelopment activities entails interior upgrades to the units, which will be completed during the normal course of apartment turnover.

On July 14, 2003, the Fund acquired an ownership interest in Coronado North and South, located in Newport Beach, California, for approximately $33.7 million from an unrelated co-investment partner.

Other Company Information

Essex's total market capitalization at June 30, 2003 was approximately $2.4 billion. The Company's mortgage notes payable had an average maturity of 8.6 years and an average interest rate of 6.5 percent. As of June 30, 2003, the Company's debt-to-total-market-capitalization ratio was 34.7 percent and interest coverage before minority interest for the second quarter of 2003 was 3.7 times EBITDA.

During the quarter, the Company's Board of Directors increased its regular quarterly cash dividend to $0.78 per common share or $3.12 per common share on an annualized basis. The dividend was payable on July 15, 2003 to shareholders of record as of June 30, 2003.

The Company is narrowing its previously stated guidance ($4.33 to $4.45) for estimated FFO per diluted share to $4.28 to $4.34 per share for calendar year 2003.

Conference Call with Management

The Company will host an earnings conference call with management, which is scheduled for Thursday, July 31, 2003, at 11:00 a.m. PDT - 2:00 p.m. EDT. The call 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, and can be accessed through the company's website at www.essexpropertytrust.com.

If you are unable to access the information via the Company's Web site, please contact the Investor Relations department at investors@essexpropertytrust.com or by calling (650) 849-1600.

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 118 multifamily properties (25,125 units), and has 1,368 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

Funds from Operations

Funds from Operations, as defined by the National Association of Real Estate Investment Trusts ("NAREIT") is generally considered by industry analysts as an appropriate measure of performance of an equity REIT. Generally, FFO adjusts the net income of equity REITS for non-cash charges such as depreciation and amortization of rental properties, gains/ losses on sales of real estate and extraordinary items. Management considers FFO to be a useful financial performance measurement of an equity REIT because, together with net income and cash flows, FFO provides investors with an additional basis to evaluate the performance and ability of a REIT to incur and service debt and to fund acquisitions and other capital expenditures. FFO does not represent net income or cash flows from operations as defined by generally accepted accounting principles (GAAP) and is not intended to indicate whether cash flows will be sufficient to fund cash needs. It should not be considered as an alternative to net income as an indicator of the REIT's operating performance or to cash flows as a measure of liquidity. FFO does not measure whether cash flow is sufficient to fund all cash needs including principal amortization, capital improvements and distributions to shareholders. FFO also does not represent cash flows generated from operating, investing or financing activities as defined under GAAP. Further, Funds from Operations as disclosed by other REITs may not be comparable to the Company's calculation of FFO.

(Dollars in thousands) Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

This press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward- looking statements include statements regarding FFO per diluted share estimates, expected same-property operating expenses, our portfolio allocations, anticipated timing of completion and stabilization of property developments and redevelopments, future leasing activities, regarding future construction costs, and 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, 2002.

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


Operating Results                                                      Three Months Ended                 Six Months Ended
(Dollars in thousands, except per share amounts)                           June 30,                           June 30,
------------------------------------------------------------------------------ ----------------  ---------------- ----------------
                                                                    2003             2002              2003             2002
                                                              ---------------- ----------------  ---------------- ----------------

Revenues:
  Rental                                                      $        53,538  $        41,769   $       107,700  $        83,888
  Other property                                                        1,743            1,396             3,477            2,712
                                                              ---------------- ----------------  ---------------- ----------------
    Total property revenues                                            55,281           43,165           111,177           86,600
  Interest and other                                                    3,166            7,818             6,265           13,795
                                                              ---------------- ----------------  ---------------- ----------------
                                                                       58,447           50,983           117,442          100,395
                                                              ---------------- ----------------  ---------------- ----------------
Expenses:
  Property operating                                                   17,954           11,995            36,401           24,576
  Depreciation and amortization                                        11,556            9,114            23,165           18,100
  Interest                                                             10,531            8,652            21,330           17,441
  Amortization of deferred financing costs                                318              147               492              295
  General and administrative                                            1,692            1,565             3,530            3,265
                                                              ---------------- ----------------  ---------------- ----------------
    Total expenses                                                     42,051           31,473            84,918           63,677
                                                              ---------------- ----------------  ---------------- ----------------
Income from continuing operations before minority interests
  and discontinued operations                                          16,396           19,510            32,524           36,718

Minority interests                                                     (5,746)          (6,285)          (11,643)         (12,349)
                                                              ---------------- ----------------  ---------------- ----------------
Income from continuing operations                                      10,650           13,225            20,881           24,369

Discontinued operations (net of minority interests):
  Operating income from real estate sold                                   --               69                --              225
  Gain on sale of real estate                                              --            8,064                --            8,061
                                                              ---------------- ----------------  ---------------- ----------------
Net income available to common stockholders                   $        10,650  $        21,358   $        20,881  $        32,655
                                                              ================ ================  ================ ================

Net income per share - basic                                  $          0.51  $          1.15   $          0.99  $          1.76
                                                              ================ ================  ================ ================
Net income per share - diluted                                $          0.50  $          1.14   $          0.98  $          1.75
                                                              ================ ================  ================ ================