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(State or Other Jurisdiction of Incorporation)
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(I.R.S. Employer Identification No.)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
|
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Trading
Symbol(s)
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Name of each exchange on which registered
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Essex Property Trust, Inc.
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Emerging growth company
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Essex Portfolio, L.P.
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Emerging growth company
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Exhibit No.
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Description
|
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Press Release and Supplemental Information for the three and twelve months ended December 31, 2021.
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104
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Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
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Date: February 2, 2022
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ESSEX PROPERTY TRUST, INC.
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/s/ Barbara Pak
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Name:
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Barbara Pak
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Title:
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Executive Vice President and Chief Financial Officer
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ESSEX PORTFOLIO, L.P.
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By:
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Essex Property Trust, Inc.
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|
Its:
|
General Partner
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/s/ Barbara Pak
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Name:
|
Barbara Pak
|
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Title:
|
Executive Vice President and Chief Financial Officer
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Three Months Ended
December 31,
|
Year Ended
December 31,
|
|||||
%
|
%
|
|||||
2021
|
2020
|
Change
|
2021
|
2020
|
Change
|
|
Per Diluted Share
|
||||||
Net Income
|
$2.10
|
$1.47
|
42.9%
|
$7.51
|
$8.69
|
-13.6%
|
Total FFO
|
$4.30
|
$3.24
|
32.7%
|
$13.98
|
$12.78
|
9.4%
|
Core FFO
|
$3.25
|
$3.02
|
7.6%
|
$12.49
|
$12.82
|
-2.6%
|
• |
Reported Net Income per diluted share for the fourth quarter of 2021 of $2.10, compared to $1.47 in the fourth quarter of 2020. For the full-year, the Company reported Net Income
per diluted share of $7.51.
|
• |
Reported Total FFO per diluted share of $4.30, a 32.7% increase over the fourth quarter of 2020. The increase is primarily attributed to an unrealized gain related to the Company’s
investment in technology co-investments and a one-time legal settlement.
|
• |
Core FFO per diluted share improved by 7.6% compared to the fourth quarter of 2020. For the full-year, Core FFO per diluted share declined by 2.6%, exceeding the high-end of the
Company’s original guidance range.
|
• |
Achieved same-property gross revenue and net operating income (“NOI”) growth of 4.0% and 4.7%, respectively,
compared to the fourth quarter of 2020. For the full-year, same-property gross revenue and NOI declined by 1.2% and 2.7%, respectively, both exceeding the high-end of the Company’s original guidance range.
|
• |
On a sequential basis, same-property revenues and NOI improved by 1.6% and 3.5%, respectively, representing a second consecutive quarter of positive
improvement.
|
• |
Acquired or increased ownership interest in four apartment communities during the fourth quarter of 2021 for a total contract price of $347.5 million. For the
full-year, the Company acquired or increased its ownership interest in six apartment communities for a total contract price of $432.3 million, exceeding the midpoint of the Company’s full-year guidance range.
|
• |
For the full-year, the Company sold four apartment communities for a total contract price of $330.0 million.
|
• |
Committed $60.0 million in two structured finance investments in the fourth quarter of 2021. For the full-year, the Company committed $117.2 million in five
structured finance investments at a weighted average return of 11.2%.
|
Q4 2021 vs.
Q4 2020
|
Q4 2021 vs.
Q3 2021
|
% of Total
|
||||||||||
Revenue
Change
|
Revenue
Change
|
Q4 2021
Revenues
|
||||||||||
Southern California
|
||||||||||||
Los Angeles County
|
9.0%
|
3.4%
|
18.7%
|
|||||||||
Orange County
|
9.6%
|
2.1%
|
11.9%
|
|||||||||
San Diego County
|
5.6%
|
-3.0%
|
8.9%
|
|||||||||
Ventura County
|
7.8%
|
1.0%
|
4.3%
|
|||||||||
Total Southern California
|
8.3%
|
1.5%
|
43.8%
|
|||||||||
Northern California
|
||||||||||||
Santa Clara County
|
-0.4%
|
2.6%
|
17.6%
|
|||||||||
Alameda County
|
1.6%
|
2.7%
|
6.5%
|
|||||||||
San Mateo County
|
-4.9%
|
1.3%
|
4.8%
|
|||||||||
Contra Costa County
|
2.8%
|
-1.8%
|
5.8%
|
|||||||||
San Francisco
|
-1.2%
|
-1.7%
|
2.8%
|
|||||||||
Total Northern California
|
-0.2%
|
1.4%
|
37.5%
|
|||||||||
Seattle Metro
|
3.4%
|
2.3%
|
18.7%
|
|||||||||
Same-Property Portfolio
|
4.0%
|
1.6%
|
100.0%
|
|
Q4 2021 vs. Q4 2020
|
YTD 2021 vs. YTD 2020
|
||||||||||||||
Same-Property Revenue Components
|
$ Amount
(in Millions)
|
%
Contribution
|
$ Amount
(in Millions)
|
%
Contribution
|
||||||||||||
Prior-Period Same-Property Revenues
|
$
|
317.5
|
$
|
1,304.4
|
||||||||||||
Scheduled Rents
|
6.7
|
2.1%
|
-20.0
|
-1.5%
|
||||||||||||
Delinquencies
|
2.5
|
0.8%
|
1.2
|
0.1%
|
||||||||||||
Cash Concessions
|
5.2
|
1.6%
|
-5.3
|
-0.4%
|
||||||||||||
Vacancy
|
-1.6
|
-0.5%
|
6.1
|
0.5%
|
||||||||||||
Other Income
|
0.0
|
0.0%
|
1.8
|
0.1%
|
||||||||||||
2021 Same-Property Revenues/Change
|
$
|
330.3
|
4.0%
|
$
|
1,288.2
|
-1.2%
|
Year-Over-Year Change
|
Year-Over-Year Change
|
|||||||||||||||||||||||
Q4 2021 compared to Q4 2020
|
YTD 2021 compared to YTD 2020
|
|||||||||||||||||||||||
Revenues
|
Operating
Expenses
|
NOI
|
Revenues
|
Operating
Expenses
|
NOI
|
|||||||||||||||||||
Southern California
|
8.3%
|
3.4%
|
10.6%
|
3.2%
|
1.9%
|
3.7%
|
||||||||||||||||||
Northern California
|
-0.2%
|
1.2%
|
-0.9%
|
-5.6%
|
2.7%
|
-8.9%
|
||||||||||||||||||
Seattle Metro
|
3.4%
|
3.0%
|
3.7%
|
-1.7%
|
2.4%
|
-3.5%
|
||||||||||||||||||
Same-Property Portfolio
|
4.0%
|
2.5%
|
4.7%
|
-1.2%
|
2.3%
|
-2.7%
|
Sequential Change
|
||||||||||||
Q4 2021 compared to Q3 2021
|
||||||||||||
Revenues
|
Operating
Expenses
|
NOI
|
||||||||||
Southern California
|
1.5%
|
-2.7%
|
3.3%
|
|||||||||
Northern California
|
1.4%
|
-2.0%
|
3.0%
|
|||||||||
Seattle Metro
|
2.3%
|
-3.3%
|
5.1%
|
|||||||||
Same-Property Portfolio
|
1.6%
|
-2.6%
|
3.5%
|
Financial Occupancies
|
||||||||||||
Quarter Ended
|
||||||||||||
12/31/2021
|
9/30/2021
|
12/31/2020
|
||||||||||
Southern California
|
96.2%
|
97.1%
|
96.8%
|
|||||||||
Northern California
|
96.1%
|
95.9%
|
96.5%
|
|||||||||
Seattle Metro
|
95.7%
|
95.8%
|
95.8%
|
|||||||||
Same-Property Portfolio
|
96.1%
|
96.4%
|
96.5%
|
Range
|
Midpoint
|
|||||||
Net Income
|
$4.62 - $5.10
|
$4.86
|
||||||
Total FFO
|
$13.46 - $13.94
|
$13.70
|
||||||
Core FFO
|
$13.46 - $13.94
|
$13.70
|
||||||
U.S. Economic Assumptions
|
||||||||
GDP Growth
|
3.7%
|
|||||||
Job Growth
|
2.9%
|
|||||||
ESS Markets Economic Assumptions
|
||||||||
Job Growth
|
4.1%
|
|||||||
Market Rent Growth
|
7.7%
|
Estimated Same-Property Portfolio Growth based on 49,369 Apartment Homes
|
Midpoint
Cash-Basis
|
Midpoint
GAAP-Basis
|
|||||||
Revenues
|
7.0% to 8.5%
|
7.8%
|
8.3%
|
||||||
Operating Expenses
|
3.5% to 4.5%
|
4.0%
|
4.0%
|
||||||
Net Operating Income
|
8.0% to 10.8%
|
9.4%
|
10.2%
|
2022 Core FFO Per Diluted Share Guidance versus 2021
|
Low-End
|
High-End
|
||||||
2021 Core FFO Per Diluted Share
|
$
|
12.49
|
$
|
12.49
|
||||
NOI from Consolidated Communities, Excluding Straight-Line Concessions
|
1.25
|
1.62
|
||||||
Change in Straight-Line Concessions from Consolidated Communities
|
0.12
|
0.05
|
||||||
Net Interest Expense
|
(0.09)
|
(0.01)
|
||||||
Interest and Other Income
|
(0.10)
|
(0.07)
|
||||||
FFO from Co-Investments
|
(0.11)
|
(0.05)
|
||||||
G&A and Other
|
(0.03)
|
(0.02)
|
||||||
Impact from Weighted Average Shares Outstanding
|
(0.07)
|
(0.07)
|
||||||
2022 Core FFO Per Diluted Share Guidance
|
$
|
13.46
|
$
|
13.94
|
• |
Acquisitions of $500 - $700 million, subject to market conditions and cost of capital.
|
• |
Dispositions of $100 - $300 million, subject to cost of capital.
|
• |
Structured finance commitments of $50 - $150 million.
|
• |
Redemptions of structured finance investments expected to be approximately $350 million in 2022.
|
• |
Total development spending in 2022 for existing projects under construction is expected to be approximately $30 million at the Company’s pro rata share. The Company does not
currently plan to start any new developments during 2022.
|
• |
Revenue generating capital expenditures are expected to be approximately $100 million at the Company’s pro rata share.
|
Three Months Ended
|
Year Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
Funds from Operations attributable to common stockholders and unitholders
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
Net income available to common stockholders
|
$
|
136,874
|
$
|
95,745
|
$
|
488,554
|
$
|
568,870
|
||||||||
Adjustments:
|
||||||||||||||||
Depreciation and amortization
|
132,179
|
130,127
|
520,066
|
525,497
|
||||||||||||
Gains not included in FFO
|
-
|
(25,716
|
)
|
(145,253
|
)
|
(301,886
|
)
|
|||||||||
Impairment loss
|
-
|
1,825
|
-
|
1,825
|
||||||||||||
Depreciation and amortization from unconsolidated co-investments
|
16,467
|
13,403
|
61,059
|
51,594
|
||||||||||||
Noncontrolling interest related to Operating Partnership units
|
4,788
|
3,369
|
17,191
|
19,912
|
||||||||||||
Depreciation attributable to third party ownership and other
|
(159
|
)
|
(132
|
)
|
(571
|
)
|
(539
|
)
|
||||||||
Funds from operations attributable to common stockholders and unitholders
|
$
|
290,149
|
$
|
218,621
|
$
|
941,046
|
$
|
865,273
|
||||||||
FFO per share – diluted
|
$
|
4.30
|
$
|
3.24
|
$
|
13.98
|
$
|
12.78
|
||||||||
Expensed acquisition and investment related costs
|
$
|
39
|
$
|
1,487
|
$
|
203
|
$
|
1,591
|
||||||||
Deferred tax expense (income) on unrealized gain on unconsolidated co-investment (1)
|
10,277
|
(105
|
)
|
15,668
|
1,531
|
|||||||||||
Gain on sale of marketable securities
|
(901
|
)
|
(2,007
|
)
|
(3,400
|
)
|
(2,131
|
)
|
||||||||
Unrealized gains on marketable securities
|
(9,332
|
)
|
(10,300
|
)
|
(33,104
|
)
|
(12,515
|
)
|
||||||||
Provision for credit losses
|
251
|
587
|
141
|
687
|
||||||||||||
Equity income from non-core co-investments (2)
|
(36,336
|
)
|
(916
|
)
|
(55,602
|
)
|
(5,289
|
)
|
||||||||
Loss (gain) on early retirement of debt, net
|
28
|
(937
|
)
|
19,010
|
22,883
|
|||||||||||
Loss (gain) on early retirement of debt from unconsolidated co-investment
|
7
|
-
|
25
|
(38
|
)
|
|||||||||||
Co-investment promote income
|
-
|
-
|
-
|
(6,455
|
)
|
|||||||||||
Income from early redemption of preferred equity investments and notes receivable
|
(209
|
)
|
-
|
(8,469
|
)
|
(210
|
)
|
|||||||||
Accelerated interest income from maturity of investment in mortgage backed security
|
-
|
(11,753
|
)
|
-
|
(11,753
|
)
|
||||||||||
General and administrative and other, net
|
261
|
9,316
|
1,026
|
14,958
|
||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
(35,044
|
)
|
(150
|
)
|
(35,234
|
)
|
(81
|
)
|
||||||||
Core Funds from operations attributable to common stockholders and unitholders
|
$
|
219,190
|
$
|
203,843
|
$
|
841,310
|
$
|
868,451
|
||||||||
Core FFO per share – diluted
|
$
|
3.25
|
$
|
3.02
|
$
|
12.49
|
$
|
12.82
|
||||||||
Weighted average number of shares outstanding diluted (3)
|
67,480,346
|
67,398,487
|
67,335,261
|
67,725,692
|
(1) |
Represents deferred tax expense related to net unrealized gains on technology co-investments.
|
(2) |
Represents the Company’s share of co-investment income from technology co-investments.
|
(3) |
Assumes conversion of all outstanding limited partnership units in Essex Portfolio, L.P. (the “Operating Partnership”) into shares of the Company's common stock and excludes
DownREIT limited partnership units.
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Earnings from operations
|
$
|
101,262
|
$
|
111,931
|
$
|
529,995
|
$
|
491,441
|
||||||||
Adjustments:
|
||||||||||||||||
Corporate-level property management expenses
|
9,068
|
8,549
|
36,188
|
34,573
|
||||||||||||
Depreciation and amortization
|
132,179
|
130,127
|
520,066
|
525,497
|
||||||||||||
Management and other fees from affiliates
|
(2,431
|
)
|
(2,286
|
)
|
(9,138
|
)
|
(9,598
|
)
|
||||||||
General and administrative
|
17,092
|
23,144
|
51,838
|
65,388
|
||||||||||||
Expensed acquisition and investment related costs
|
39
|
1,487
|
203
|
1,591
|
||||||||||||
Impairment loss
|
-
|
1,825
|
-
|
1,825
|
||||||||||||
Gain on sale of real estate and land
|
-
|
(25,716
|
)
|
(142,993
|
)
|
(64,967
|
)
|
|||||||||
NOI
|
257,209
|
249,061
|
986,159
|
1,045,750
|
||||||||||||
Less: Non-same property NOI
|
(26,911
|
)
|
(29,201
|
)
|
(94,755
|
)
|
(129,158
|
)
|
||||||||
Same-Property NOI
|
$
|
230,298
|
$
|
219,860
|
$
|
891,404
|
$
|
916,592
|
Page(s)
|
|
Consolidated Operating Results
|
S-1 – S-2
|
Consolidated Funds From Operations
|
S-3
|
Consolidated Balance Sheets
|
S-4
|
Debt Summary – December 31, 2021
|
S-5
|
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – December 31, 2021
|
S-6
|
Portfolio Summary by County – December 31, 2021
|
S-7
|
Operating Income by Quarter – December 31, 2021
|
S-8
|
Same-Property Revenue Results by County – Quarters ended December 31, 2021 and 2020, and September 30, 2021
|
S-9
|
Same-Property Revenue Results by County – Years ended December 31, 2021 and 2020
|
S-9.1
|
Same-Property Operating Expenses – Quarter and Years ended December 31, 2021 and 2020
|
S-10
|
Development Pipeline –December 31, 2021
|
S-11
|
Capital Expenditures – December 31, 2021
|
S-12
|
Co-investments and Preferred Equity Investments – December 31, 2021
|
S-13
|
Assumptions for 2022 FFO Guidance Range
|
S-14
|
Reconciliation of Projected EPS, FFO and Core FFO per diluted share
|
S-14.1
|
Summary of Apartment Community Acquisitions and Dispositions Activity
|
S-15
|
Delinquencies, Operating Statistics, and Same-Property Revenue Growth with Concessions on a GAAP basis
|
S-16
|
2022 MSA Level Forecast: Supply, Jobs, and Apartment Market Conditions
|
S-17
|
U.S. Increases in Permitting Activity During the Pandemic
|
S-17.1
|
Reconciliations of Non-GAAP Financial Measures and Other Terms
|
S-18.1 – S-18.4
|
Consolidated Operating Results
|
Three Months Ended
|
Twelve Months Ended
|
||||||||||||||
(Dollars in thousands, except share and per share amounts)
|
December 31,
|
December 31,
|
||||||||||||||
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Rental and other property
|
$
|
369,165
|
$
|
359,787
|
$
|
1,431,418
|
$
|
1,486,150
|
||||||||
Management and other fees from affiliates
|
2,431
|
2,286
|
9,138
|
9,598
|
||||||||||||
|
371,596
|
362,073
|
1,440,556
|
1,495,748
|
||||||||||||
|
||||||||||||||||
Expenses:
|
||||||||||||||||
Property operating
|
111,956
|
110,726
|
445,259
|
440,400
|
||||||||||||
Corporate-level property management expenses
|
9,068
|
8,549
|
36,188
|
34,573
|
||||||||||||
Depreciation and amortization
|
132,179
|
130,127
|
520,066
|
525,497
|
||||||||||||
General and administrative
|
17,092
|
23,144
|
51,838
|
65,388
|
||||||||||||
Expensed acquisition and investment related costs
|
39
|
1,487
|
203
|
1,591
|
||||||||||||
Impairment loss
|
-
|
1,825
|
-
|
1,825
|
||||||||||||
|
270,334
|
275,858
|
1,053,554
|
1,069,274
|
||||||||||||
Gain on sale of real estate and land
|
-
|
25,716
|
142,993
|
64,967
|
||||||||||||
Earnings from operations
|
101,262
|
111,931
|
529,995
|
491,441
|
||||||||||||
Interest expense, net (1)
|
(47,849
|
)
|
(52,625
|
)
|
(192,351
|
)
|
(209,900
|
)
|
||||||||
Interest and other income
|
49,988
|
28,303
|
98,744
|
40,999
|
||||||||||||
Equity income from co-investments
|
51,029
|
12,998
|
111,721
|
66,512
|
||||||||||||
Deferred tax expense on unrealized gain on unconsolidated co-investment
|
(10,277
|
)
|
105
|
(15,668
|
)
|
(1,531
|
)
|
|||||||||
(Loss) gain on early retirement of debt, net
|
(28
|
)
|
937
|
(19,010
|
)
|
(22,883
|
)
|
|||||||||
Gain on remeasurement of co-investment
|
-
|
-
|
2,260
|
234,694
|
||||||||||||
Net income
|
144,125
|
101,649
|
515,691
|
599,332
|
||||||||||||
Net income attributable to noncontrolling interest
|
(7,251
|
)
|
(5,904
|
)
|
(27,137
|
)
|
(30,462
|
)
|
||||||||
Net income available to common stockholders
|
$
|
136,874
|
$
|
95,745
|
$
|
488,554
|
$
|
568,870
|
||||||||
|
||||||||||||||||
Net income per share - basic
|
$
|
2.10
|
$
|
1.47
|
$
|
7.51
|
$
|
8.69
|
||||||||
|
||||||||||||||||
Shares used in income per share - basic
|
65,164,191
|
65,133,112
|
65,051,465
|
65,454,057
|
||||||||||||
|
||||||||||||||||
Net income per share - diluted
|
$
|
2.10
|
$
|
1.47
|
$
|
7.51
|
$
|
8.69
|
||||||||
|
||||||||||||||||
Shares used in income per share - diluted
|
65,331,744
|
65,145,117
|
65,088,874
|
65,564,982
|
(1)
|
Refer to page S-18.2, the section titled "Interest Expense, Net" for additional information.
|
Consolidated Operating Results
|
Three Months Ended
|
Twelve Months Ended
|
||||||||||||||
Selected Line Item Detail
|
December 31,
|
December 31,
|
||||||||||||||
(Dollars in thousands)
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
|
||||||||||||||||
Rental and other property
|
||||||||||||||||
Rental income
|
$
|
363,979
|
$
|
353,503
|
$
|
1,410,197
|
$
|
1,462,161
|
||||||||
Other property
|
5,186
|
6,284
|
21,221
|
23,989
|
||||||||||||
Rental and other property
|
$
|
369,165
|
$
|
359,787
|
$
|
1,431,418
|
$
|
1,486,150
|
||||||||
|
||||||||||||||||
Property operating expenses
|
||||||||||||||||
Real estate taxes
|
$
|
44,959
|
$
|
44,647
|
$
|
180,367
|
$
|
177,011
|
||||||||
Administrative
|
21,427
|
21,799
|
86,901
|
89,290
|
||||||||||||
Maintenance and repairs
|
23,958
|
22,575
|
91,673
|
91,566
|
||||||||||||
Utilities
|
21,612
|
21,705
|
86,318
|
82,533
|
||||||||||||
Property operating expenses
|
$
|
111,956
|
$
|
110,726
|
$
|
445,259
|
$
|
440,400
|
||||||||
|
||||||||||||||||
Interest and other income
|
||||||||||||||||
Marketable securities and other income
|
$
|
5,627
|
$
|
4,680
|
$
|
23,065
|
$
|
15,206
|
||||||||
Gain on sale of marketable securities
|
901
|
2,007
|
3,400
|
2,131
|
||||||||||||
Income from early redemption of notes receivable
|
192
|
-
|
4,939
|
-
|
||||||||||||
Provision for credit losses
|
(251
|
)
|
(587
|
)
|
(141
|
)
|
(687
|
)
|
||||||||
Unrealized gains on marketable securities
|
9,332
|
10,300
|
33,104
|
12,515
|
||||||||||||
Accelerated interest income from maturity of investment in mortgage backed security
|
-
|
11,753
|
-
|
11,753
|
||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
34,187
|
150
|
34,377
|
81
|
||||||||||||
Interest and other income
|
$
|
49,988
|
$
|
28,303
|
$
|
98,744
|
$
|
40,999
|
||||||||
|
||||||||||||||||
Equity income from co-investments
|
||||||||||||||||
Equity (loss) income from co-investments
|
$
|
(1,343
|
)
|
$
|
(362
|
)
|
$
|
(4,832
|
)
|
$
|
3,938
|
|||||
Income from preferred equity investments
|
15,169
|
12,444
|
56,589
|
48,357
|
||||||||||||
Equity income from non-core co-investment
|
36,336
|
916
|
55,602
|
5,289
|
||||||||||||
Legal settlement from unconsolidated co-investment
|
857
|
-
|
857
|
-
|
||||||||||||
Gain on sale of co-investment communities
|
-
|
-
|
-
|
2,225
|
||||||||||||
(Loss) gain on early retirement of debt from unconsolidated co-investment
|
(7
|
)
|
-
|
(25
|
)
|
38
|
||||||||||
Co-investment promote income
|
-
|
-
|
-
|
6,455
|
||||||||||||
Income from early redemption of preferred equity investments
|
17
|
-
|
3,530
|
210
|
||||||||||||
Equity income from co-investments
|
$
|
51,029
|
$
|
12,998
|
$
|
111,721
|
$
|
66,512
|
||||||||
|
||||||||||||||||
Noncontrolling interest
|
||||||||||||||||
Limited partners of Essex Portfolio, L.P.
|
$
|
4,788
|
$
|
3,369
|
$
|
17,191
|
$
|
19,912
|
||||||||
DownREIT limited partners' distributions
|
2,046
|
2,114
|
8,301
|
8,507
|
||||||||||||
Third-party ownership interest
|
417
|
421
|
1,645
|
2,043
|
||||||||||||
Noncontrolling interest
|
$
|
7,251
|
$
|
5,904
|
$
|
27,137
|
$
|
30,462
|
Consolidated Funds From Operations (1)
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||||||||
(Dollars in thousands, except share and per share amounts and in footnotes)
|
||||||||||||||||||||||||
|
2021
|
2020
|
% Change
|
2021
|
2020
|
% Change
|
||||||||||||||||||
Funds from operations attributable to common stockholders and unitholders (FFO)
|
||||||||||||||||||||||||
Net income available to common stockholders
|
$
|
136,874
|
$
|
95,745
|
$
|
488,554
|
$
|
568,870
|
||||||||||||||||
Adjustments:
|
||||||||||||||||||||||||
Depreciation and amortization
|
132,179
|
130,127
|
520,066
|
525,497
|
||||||||||||||||||||
Gains not included in FFO
|
-
|
(25,716
|
)
|
(145,253
|
)
|
(301,886
|
)
|
|||||||||||||||||
Impairment loss
|
-
|
1,825
|
-
|
1,825
|
||||||||||||||||||||
Depreciation and amortization from unconsolidated co-investments
|
16,467
|
13,403
|
61,059
|
51,594
|
||||||||||||||||||||
Noncontrolling interest related to Operating Partnership units
|
4,788
|
3,369
|
17,191
|
19,912
|
||||||||||||||||||||
Depreciation attributable to third party ownership and other (2)
|
(159
|
)
|
(132
|
)
|
(571
|
)
|
(539
|
)
|
||||||||||||||||
Funds from operations attributable to common stockholders and unitholders
|
$
|
290,149
|
$
|
218,621
|
$
|
941,046
|
$
|
865,273
|
||||||||||||||||
FFO per share-diluted
|
$
|
4.30
|
$
|
3.24
|
32.7%
|
$
|
13.98
|
$
|
12.78
|
9.4%
|
||||||||||||||
Components of the change in FFO
|
||||||||||||||||||||||||
Non-core items:
|
||||||||||||||||||||||||
Expensed acquisition and investment related costs
|
$
|
39
|
$
|
1,487
|
$
|
203
|
$
|
1,591
|
||||||||||||||||
Deferred tax expense (income) on unrealized gain on unconsolidated co-investment (3)
|
10,277
|
(105
|
)
|
15,668
|
1,531
|
|||||||||||||||||||
Gain on sale of marketable securities
|
(901
|
)
|
(2,007
|
)
|
(3,400
|
)
|
(2,131
|
)
|
||||||||||||||||
Unrealized gains on marketable securities
|
(9,332
|
)
|
(10,300
|
)
|
(33,104
|
)
|
(12,515
|
)
|
||||||||||||||||
Provision for credit losses
|
251
|
587
|
141
|
687
|
||||||||||||||||||||
Equity income from non-core co-investments (4)
|
(36,336
|
)
|
(916
|
)
|
(55,602
|
)
|
(5,289
|
)
|
||||||||||||||||
Loss (gain) on early retirement of debt, net
|
28
|
(937
|
)
|
19,010
|
22,883
|
|||||||||||||||||||
Loss (gain) on early retirement of debt from unconsolidated co-investment
|
7
|
-
|
25
|
(38
|
)
|
|||||||||||||||||||
Co-investment promote income
|
-
|
-
|
-
|
(6,455
|
)
|
|||||||||||||||||||
Income from early redemption of preferred equity investments and notes receivable
|
(209
|
)
|
-
|
(8,469
|
)
|
(210
|
)
|
|||||||||||||||||
Accelerated interest income from maturity of investment in mortgage backed security
|
-
|
(11,753
|
)
|
-
|
(11,753
|
)
|
||||||||||||||||||
General and administrative and other, net
|
261
|
9,316
|
1,026
|
14,958
|
||||||||||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
(35,044
|
)
|
(150
|
)
|
(35,234
|
)
|
(81
|
)
|
||||||||||||||||
Core funds from operations attributable to common stockholders and unitholders
|
$
|
219,190
|
$
|
203,843
|
$
|
841,310
|
$
|
868,451
|
||||||||||||||||
Core FFO per share-diluted
|
$
|
3.25
|
$
|
3.02
|
7.6%
|
$
|
12.49
|
$
|
12.82
|
-2.6%
|
||||||||||||||
Weighted average number of shares outstanding diluted (5)
|
67,480,346
|
67,398,487
|
67,335,261
|
67,725,692
|
(1) |
Refer to page S-18.2, the section titled "Funds from Operations ("FFO") and Core FFO" for additional information on the Company's definition and use of FFO and Core FFO.
|
(2) |
The Company consolidates certain co-investments. The noncontrolling interest's share of net operating income in these investments for the three and twelve months ended December 31,
2021 was $0.7 million and $2.9 million, respectively.
|
(3) |
Represents deferred tax expense related to net unrealized gains on technology co-investments.
|
(4) |
Represents the Company's share of co-investment income from technology co-investments.
|
(5) |
Assumes conversion of all outstanding limited partnership units in the Operating Partnership into shares of the Company's common stock and excludes DownREIT limited partnership
units.
|
Consolidated Balance Sheets
|
||||||||
(Dollars in thousands)
|
||||||||
|
December 31, 2021
|
December 31, 2020
|
||||||
Real Estate:
|
||||||||
Land and land improvements
|
$
|
3,032,678
|
$
|
2,929,009
|
||||
Buildings and improvements
|
12,597,249
|
12,132,736
|
||||||
15,629,927
|
15,061,745
|
|||||||
Less: accumulated depreciation
|
(4,646,854
|
)
|
(4,133,959
|
)
|
||||
10,983,073
|
10,927,786
|
|||||||
Real estate under development
|
111,562
|
386,047
|
||||||
Co-investments
|
1,177,802
|
1,018,010
|
||||||
Real estate held for sale
|
-
|
57,938
|
||||||
12,272,437
|
12,389,781
|
|||||||
Cash and cash equivalents, including restricted cash
|
58,638
|
84,041
|
||||||
Marketable securities
|
191,829
|
147,768
|
||||||
Notes and other receivables
|
341,033
|
195,104
|
||||||
Operating lease right-of-use assets
|
68,972
|
72,143
|
||||||
Prepaid expenses and other assets
|
64,964
|
47,340
|
||||||
Total assets
|
$
|
12,997,873
|
$
|
12,936,177
|
||||
Unsecured debt, net
|
$
|
5,307,196
|
$
|
5,607,985
|
||||
Mortgage notes payable, net
|
638,957
|
643,550
|
||||||
Lines of credit
|
341,257
|
-
|
||||||
Distributions in excess of investments in co-investments
|
35,545
|
-
|
||||||
Operating lease liabilities
|
70,675
|
74,037
|
||||||
Other liabilities
|
393,069
|
395,174
|
||||||
Total liabilities
|
6,786,699
|
6,720,746
|
||||||
Redeemable noncontrolling interest
|
34,666
|
32,239
|
||||||
Equity:
|
||||||||
Common stock
|
7
|
6
|
||||||
Additional paid-in capital
|
6,915,981
|
6,876,326
|
||||||
Distributions in excess of accumulated earnings
|
(916,833
|
)
|
(861,193
|
)
|
||||
Accumulated other comprehensive loss, net
|
(5,552
|
)
|
(14,729
|
)
|
||||
Total stockholders' equity
|
5,993,603
|
6,000,410
|
||||||
Noncontrolling interest
|
182,905
|
182,782
|
||||||
Total equity
|
6,176,508
|
6,183,192
|
||||||
Total liabilities and equity
|
$
|
12,997,873
|
$
|
12,936,177
|
Debt Summary - December 31, 2021
|
|||||||||||||||||||||||||||||||||||
(Dollars in thousands, except in footnotes)
|
|||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||
Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:
|
|||||||||||||||||||||||||||||||||||
Weighted
Average
Interest Rate
|
Percentage
of Total Debt
|
||||||||||||||||||||||||||||||||||
Weighted Average
|
|||||||||||||||||||||||||||||||||||
Balance Outstanding
|
Interest Rate
|
Maturity in Years
|
Unsecured
|
Secured
|
Total
|
||||||||||||||||||||||||||||||
Unsecured Debt, net
|
|||||||||||||||||||||||||||||||||||
Bonds public - fixed rate
|
$
|
5,350,000
|
3.3
|
%
|
8.7
|
2022
|
$
|
-
|
$
|
43,188
|
$
|
43,188
|
3.6
|
%
|
0.7
|
%
|
|||||||||||||||||||
Unamortized net discounts and debt issuance costs
|
(42,804
|
)
|
-
|
-
|
2023
|
300,000
|
2,945
|
302,945
|
3.4
|
%
|
5.1
|
%
|
|||||||||||||||||||||||
5,307,196
|
3.3
|
%
|
8.7
|
2024
|
400,000
|
3,109
|
403,109
|
4.0
|
%
|
6.7
|
%
|
||||||||||||||||||||||||
Mortgage Notes Payable, net
|
2025
|
500,000
|
133,054
|
633,054
|
3.5
|
%
|
10.6
|
%
|
|||||||||||||||||||||||||||
Fixed rate - secured
|
413,562
|
3.5
|
%
|
4.3
|
2026
|
450,000
|
99,405
|
549,405
|
3.5
|
%
|
9.2
|
%
|
|||||||||||||||||||||||
Variable rate - secured (1)
|
224,363
|
1.1
|
%
|
16.1
|
2027
|
350,000
|
153,955
|
503,955
|
3.3
|
%
|
8.4
|
%
|
|||||||||||||||||||||||
Unamortized premiums and debt issuance costs, net
|
1,032
|
-
|
-
|
2028
|
450,000
|
68,332
|
518,332
|
2.2
|
%
|
8.7
|
%
|
||||||||||||||||||||||||
Total mortgage notes payable
|
638,957
|
2.7
|
%
|
8.5
|
2029
|
500,000
|
1,456
|
501,456
|
4.1
|
%
|
8.4
|
%
|
|||||||||||||||||||||||
2030
|
550,000
|
1,592
|
551,592
|
3.1
|
%
|
9.2
|
%
|
||||||||||||||||||||||||||||
Unsecured Lines of Credit
|
2031
|
600,000
|
1,740
|
601,740
|
2.3
|
%
|
10.0
|
%
|
|||||||||||||||||||||||||||
Line of credit (2)
|
340,000
|
1.0
|
%
|
N/A
|
2032
|
650,000
|
1,903
|
651,903
|
2.6
|
%
|
10.9
|
%
|
|||||||||||||||||||||||
Line of credit (3)
|
1,257
|
1.0
|
%
|
N/A
|
Thereafter
|
600,000
|
127,246
|
727,246
|
3.2
|
%
|
12.1
|
%
|
|||||||||||||||||||||||
Total lines of credit
|
341,257
|
1.0
|
%
|
N/A
|
Subtotal
|
5,350,000
|
637,925
|
5,987,925
|
3.2
|
%
|
100.0
|
%
|
|||||||||||||||||||||||
|
Debt Issuance Costs
|
(32,913
|
)
|
(1,466
|
)
|
(34,379
|
)
|
NA
|
NA
|
||||||||||||||||||||||||||
Total debt, net
|
$
|
6,287,410
|
3.1
|
%
|
8.5
|
(Discounts)/Premiums
|
(9,891
|
)
|
2,498
|
(7,393
|
)
|
NA
|
NA
|
||||||||||||||||||||||
Total
|
$
|
5,307,196
|
$
|
638,957
|
$
|
5,946,153
|
3.2
|
%
|
100.0
|
%
|
|||||||||||||||||||||||||
|
(1)
|
$224.4 million of variable rate debt is tax exempt to the note holders.
|
(2)
|
This unsecured line of credit facility has a capacity of $1.2 billion, with a scheduled maturity date in September 2025 with three 6-month
extensions, 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 0.775%.
|
(3)
|
This unsecured line of credit facility has a capacity $35.0 million, with a scheduled maturity date in February 2023. 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 0.775%.
|
Capitalization Data, Public Bond Covenants, Credit Ratings and Selected Credit Ratios - December 31, 2021
|
||||||||||||
(Dollars and shares in thousands, except per share amounts)
|
|
|
||||||||||
|
|
|
|
|
||||||||
Capitalization Data
|
|
|
Public Bond Covenants (1)
|
Actual
|
Requirement
|
|||||||
Total debt, net
|
|
|
$
|
6,287,410
|
|
|||||||
|
|
|
Debt to Total Assets:
|
36%
|
< 65%
|
|||||||
Common stock and potentially dilutive securities
|
|
|
||||||||||
Common stock outstanding
|
|
65,248
|
|
|
||||||||
Limited partnership units (1)
|
|
2,239
|
|
|
||||||||
Options-treasury method
|
|
85
|
Secured Debt to Total Assets:
|
4%
|
< 40%
|
|||||||
Total shares of common stock and potentially dilutive securities
|
67,572
|
|
|
|||||||||
|
|
|
|
|
||||||||
Common stock price per share as of December 31, 2021
|
$
|
352.23
|
|
|
||||||||
|
|
|
Interest Coverage:
|
514%
|
> 150%
|
|||||||
Total equity capitalization
|
|
$
|
23,800,886
|
|
|
|||||||
|
|
|
|
|
||||||||
Total market capitalization
|
|
$
|
30,088,296
|
Unsecured Debt Ratio (2):
|
272%
|
> 150%
|
||||||
|
|
|
|
|||||||||
Ratio of debt to total market capitalization
|
|
20.9
|
%
|
|
||||||||
|
|
|
Selected Credit Ratios (3)
|
Actual
|
||||||||
Credit Ratings
|
|
|
|
|||||||||
Rating Agency
|
Rating
|
Outlook
|
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized:
|
6.3
|
||||||||
Moody's
|
Baa1
|
Stable
|
|
|||||||||
Standard & Poor's
|
BBB+
|
Stable
|
Unencumbered NOI to Adjusted Total NOI:
|
94%
|
||||||||
|
|
|
||||||||||
(1) Assumes conversion of all outstanding limited partnership units in the Operating Partnership into shares of
the Company's common stock.
|
(1) Refer to page S-18.4 for additional information on the Company's Public Bond Covenants.
(2) Unsecured Debt Ratio is unsecured assets (excluding investments in co-investments) divided
by unsecured indebtedness.
(3) Refer to pages S-18.1 to S-18.4, the section titled "Reconciliations of Non-GAAP Financial
Measures and Other Terms" for additional information on the Company's Selected Credit Ratios.
|
Apartment Homes
|
Average Monthly Rental Rate (1)
|
Percent of NOI (2)
|
||||||||||||||||||||||||||||||||||||||
Region - County
|
Consolidated
|
Unconsolidated
Co-investments |
Apartment
Homes in
Development (3)
|
Total
|
Consolidated
|
Unconsolidated
Co-investments (4)
|
Total (5)
|
Consolidated
|
Unconsolidated
Co-investments (4)
|
Total (5)
|
||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
9,327
|
1,418
|
-
|
10,745
|
$
|
2,477
|
$
|
2,199
|
$
|
2,457
|
17.9
|
%
|
13.1
|
%
|
17.5
|
%
|
||||||||||||||||||||||||
Orange County
|
5,439
|
1,149
|
-
|
6,588
|
2,398
|
2,119
|
2,371
|
11.3
|
%
|
11.2
|
%
|
11.3
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
4,824
|
795
|
264
|
5,883
|
2,159
|
2,155
|
2,159
|
8.7
|
%
|
6.8
|
%
|
8.5
|
%
|
|||||||||||||||||||||||||||
Ventura County and Other
|
2,600
|
693
|
-
|
3,293
|
2,040
|
2,360
|
2,080
|
4.9
|
%
|
8.5
|
%
|
5.2
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
22,190
|
4,055
|
264
|
26,509
|
2,337
|
2,198
|
2,325
|
42.8
|
%
|
39.6
|
%
|
42.5
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||
Santa Clara County (6)
|
8,749
|
1,774
|
-
|
10,523
|
2,718
|
2,694
|
2,715
|
19.6
|
%
|
16.2
|
%
|
19.3
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
3,959
|
1,512
|
-
|
5,471
|
2,481
|
2,468
|
2,479
|
8.0
|
%
|
15.6
|
%
|
8.6
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
2,454
|
195
|
107
|
2,756
|
2,850
|
3,472
|
2,874
|
4.9
|
%
|
2.5
|
%
|
4.7
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
-
|
-
|
2,619
|
2,499
|
-
|
2,499
|
5.4
|
%
|
0.0
|
%
|
5.0
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
1,342
|
537
|
-
|
1,879
|
2,764
|
3,145
|
2,828
|
2.7
|
%
|
5.5
|
%
|
2.9
|
%
|
|||||||||||||||||||||||||||
Total Northern California
|
19,123
|
4,018
|
107
|
23,248
|
2,659
|
2,704
|
2,663
|
40.6
|
%
|
39.8
|
%
|
40.5
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,341
|
2,184
|
-
|
12,525
|
1,968
|
1,906
|
1,962
|
16.6
|
%
|
20.6
|
%
|
17.0
|
%
|
|||||||||||||||||||||||||||
Total
|
51,654
|
10,257
|
371
|
62,282
|
$
|
2,383
|
$
|
2,331
|
$
|
2,379
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
(1)
|
Average monthly rental rate is defined as the total scheduled monthly rental income (actual rent for occupied apartment homes plus market rent for
vacant apartment homes) for the quarter ended December 31, 2021, divided by the number of apartment homes as of December 31, 2021.
|
(2)
|
Represents the percentage of actual NOI for the quarter ended December 31, 2021. See the section titled "Net Operating Income ("NOI") and
Same-Property NOI Reconciliations" on page S-18.3.
|
(3)
|
Includes development communities with no rental income.
|
(4)
|
Co-investment amounts weighted for Company's pro rata share.
|
(5)
|
At Company's pro rata share.
|
(6)
|
Includes all communities in Santa Clara County and one community in Santa Cruz County.
|
Operating Income by Quarter (1)
|
||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||
|
||||||||||||||||||||||||
|
Apartment
Homes
|
Q4 '21
|
Q3 '21
|
Q2 '21
|
Q1 '21
|
Q4 '20
|
||||||||||||||||||
|
||||||||||||||||||||||||
Rental and other property revenues:
|
||||||||||||||||||||||||
Same-property
|
47,090
|
$
|
330,330
|
$
|
325,153
|
$
|
314,949
|
$
|
317,806
|
$
|
317,473
|
|||||||||||||
Acquisitions (2)
|
2,091
|
14,850
|
14,789
|
13,948
|
13,673
|
13,924
|
||||||||||||||||||
Development (3)
|
1,168
|
8,783
|
8,055
|
7,500
|
6,930
|
6,094
|
||||||||||||||||||
Redevelopment
|
620
|
4,588
|
4,340
|
4,149
|
4,590
|
4,280
|
||||||||||||||||||
Non-residential/other, net (4)
|
685
|
12,075
|
11,319
|
11,156
|
13,246
|
13,866
|
||||||||||||||||||
Straight-line rent concessions (5)
|
-
|
(1,461
|
)
|
(3,036
|
)
|
(2,945
|
)
|
(3,369
|
)
|
4,150
|
||||||||||||||
Total rental and other property revenues
|
51,654
|
369,165
|
360,620
|
348,757
|
352,876
|
359,787
|
||||||||||||||||||
Property operating expenses:
|
||||||||||||||||||||||||
Same-property
|
100,032
|
102,671
|
96,306
|
97,825
|
97,613
|
|||||||||||||||||||
Acquisitions (2)
|
4,744
|
4,956
|
4,459
|
4,614
|
4,476
|
|||||||||||||||||||
Development (3)
|
3,569
|
3,411
|
2,983
|
2,687
|
2,438
|
|||||||||||||||||||
Redevelopment
|
1,650
|
1,763
|
1,685
|
1,774
|
1,845
|
|||||||||||||||||||
Non-residential/other, net (4) (6)
|
1,961
|
2,530
|
2,060
|
3,579
|
4,354
|
|||||||||||||||||||
Total property operating expenses
|
111,956
|
115,331
|
107,493
|
110,479
|
110,726
|
|||||||||||||||||||
|
||||||||||||||||||||||||
Net operating income (NOI):
|
||||||||||||||||||||||||
Same-property
|
230,298
|
222,482
|
218,643
|
219,981
|
219,860
|
|||||||||||||||||||
Acquisitions (2)
|
10,106
|
9,833
|
9,489
|
9,059
|
9,448
|
|||||||||||||||||||
Development (3)
|
5,214
|
4,644
|
4,517
|
4,243
|
3,656
|
|||||||||||||||||||
Redevelopment
|
2,938
|
2,577
|
2,464
|
2,816
|
2,435
|
|||||||||||||||||||
Non-residential/other, net (4)
|
10,114
|
8,789
|
9,096
|
9,667
|
9,512
|
|||||||||||||||||||
Straight-line rent concessions (5)
|
(1,461
|
)
|
(3,036
|
)
|
(2,945
|
)
|
(3,369
|
)
|
4,150
|
|||||||||||||||
Total NOI
|
$
|
257,209
|
$
|
245,289
|
$
|
241,264
|
$
|
242,397
|
$
|
249,061
|
||||||||||||||
|
||||||||||||||||||||||||
Same-property metrics
|
||||||||||||||||||||||||
Operating margin
|
70
|
%
|
68
|
%
|
69
|
%
|
69
|
%
|
69
|
%
|
||||||||||||||
Annualized turnover (7)
|
36
|
%
|
47
|
%
|
45
|
%
|
40
|
%
|
46
|
%
|
||||||||||||||
Financial occupancy (8)
|
96.1
|
%
|
96.4
|
%
|
96.6
|
%
|
96.7
|
%
|
96.5
|
%
|
(1)
|
Includes consolidated communities only.
|
(2)
|
Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2020.
|
(3)
|
Development includes properties developed which did not have comparable stabilized results as of January 1, 2020.
|
(4)
|
Non-residential/other, net consists of revenues generated from retail space, commercial properties, held for sale properties, disposition
properties, student housing, properties undergoing significant construction activities that do not meet our redevelopment criteria and two communities located in the California counties of Santa Barbara and Santa Cruz, which the Company
does not consider its core markets.
|
(5)
|
Same-property revenues reflect concessions on a cash basis. Total Rental and Other Property Revenues reflect concessions on a straight-line basis
in accordance with U.S. GAAP.
|
(6)
|
Includes other expenses and intercompany eliminations pertaining to self-insurance.
|
(7)
|
Annualized turnover is defined as the number of apartment homes turned over during the quarter, annualized, divided by the total number of
apartment homes.
|
(8)
|
Financial occupancy is defined as the percentage resulting from dividing actual rental income by total scheduled rental income (actual rent for
occupied apartment homes plus market rent for vacant apartment homes).
|
Same-Property Revenue Results by County - Fourth Quarter 2021 vs. Fourth Quarter 2020 and Third Quarter
2021
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands, except average monthly rental rates)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Average Monthly Rental Rate
|
Financial Occupancy
|
Gross Revenues
|
Sequential Gross
Revenues
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Region - County
|
Apartment
Homes
|
Q4 '21 %
of Actual
NOI
|
Q4 '21
|
Q4 '20
|
% Change
|
Q4 '21
|
Q4 '20
|
% Change
|
Q4 '21
|
Q4 '20
|
% Change
|
Q3 '21
|
% Change
|
|||||||||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
8,526
|
18.2
|
%
|
$
|
2,479
|
$
|
2,435
|
1.8
|
%
|
95.8
|
%
|
95.9
|
%
|
-0.1
|
%
|
$
|
61,834
|
$
|
56,733
|
9.0
|
%
|
$
|
59,777
|
3.4
|
%
|
|||||||||||||||||||||||||||
Orange County
|
5,439
|
12.3
|
%
|
2,398
|
2,234
|
7.3
|
%
|
96.3
|
%
|
97.2
|
%
|
-0.9
|
%
|
39,246
|
35,809
|
9.6
|
%
|
38,447
|
2.1
|
%
|
||||||||||||||||||||||||||||||||
San Diego County
|
4,582
|
9.1
|
%
|
2,153
|
1,999
|
7.7
|
%
|
96.7
|
%
|
97.7
|
%
|
-1.0
|
%
|
29,358
|
27,804
|
5.6
|
%
|
30,281
|
-3.0
|
%
|
||||||||||||||||||||||||||||||||
Ventura County
|
2,253
|
4.6
|
%
|
2,016
|
1,895
|
6.4
|
%
|
97.1
|
%
|
98.7
|
%
|
-1.6
|
%
|
14,084
|
13,064
|
7.8
|
%
|
13,942
|
1.0
|
%
|
||||||||||||||||||||||||||||||||
Total Southern California
|
20,800
|
44.2
|
%
|
2,336
|
2,228
|
4.8
|
%
|
96.2
|
%
|
96.8
|
%
|
-0.6
|
%
|
144,522
|
133,410
|
8.3
|
%
|
142,447
|
1.5
|
%
|
||||||||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
7,408
|
18.2
|
%
|
2,695
|
2,739
|
-1.6
|
%
|
96.4
|
%
|
96.9
|
%
|
-0.5
|
%
|
58,262
|
58,506
|
-0.4
|
%
|
56,772
|
2.6
|
%
|
||||||||||||||||||||||||||||||||
Alameda County
|
2,954
|
6.6
|
%
|
2,493
|
2,515
|
-0.9
|
%
|
95.9
|
%
|
96.3
|
%
|
-0.4
|
%
|
21,625
|
21,282
|
1.6
|
%
|
21,054
|
2.7
|
%
|
||||||||||||||||||||||||||||||||
San Mateo County
|
1,962
|
4.5
|
%
|
2,819
|
2,938
|
-4.1
|
%
|
95.6
|
%
|
95.9
|
%
|
-0.3
|
%
|
15,860
|
16,677
|
-4.9
|
%
|
15,664
|
1.3
|
%
|
||||||||||||||||||||||||||||||||
Contra Costa County
|
2,570
|
5.8
|
%
|
2,457
|
2,409
|
2.0
|
%
|
96.5
|
%
|
97.6
|
%
|
-1.1
|
%
|
19,031
|
18,506
|
2.8
|
%
|
19,384
|
-1.8
|
%
|
||||||||||||||||||||||||||||||||
San Francisco
|
1,178
|
2.5
|
%
|
2,697
|
2,794
|
-3.5
|
%
|
95.4
|
%
|
93.3
|
%
|
2.3
|
%
|
9,391
|
9,502
|
-1.2
|
%
|
9,552
|
-1.7
|
%
|
||||||||||||||||||||||||||||||||
Total Northern California
|
16,072
|
37.6
|
%
|
2,635
|
2,673
|
-1.4
|
%
|
96.1
|
%
|
96.5
|
%
|
-0.4
|
%
|
124,169
|
124,473
|
-0.2
|
%
|
122,426
|
1.4
|
%
|
||||||||||||||||||||||||||||||||
Seattle Metro
|
10,218
|
18.2
|
%
|
1,968
|
1,911
|
3.0
|
%
|
95.7
|
%
|
95.8
|
%
|
-0.1
|
%
|
61,639
|
59,590
|
3.4
|
%
|
60,280
|
2.3
|
%
|
||||||||||||||||||||||||||||||||
Total Same-Property
|
47,090
|
100.0
|
%
|
$
|
2,358
|
$
|
2,311
|
2.0
|
%
|
96.1
|
%
|
96.5
|
%
|
-0.4
|
%
|
$
|
330,330
|
$
|
317,473
|
4.0
|
%
|
$
|
325,153
|
1.6
|
%
|
Same-Property Revenue Results by County - Twelve months ended December 31, 2021 vs. Twelve months ended
December 31, 2020
|
||||||||||||||||||||||||||||||||||||||||||||
(Dollars in thousands, except average monthly rental rates)
|
||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||
Average Monthly Rental Rate
|
Financial Occupancy
|
Gross Revenues
|
||||||||||||||||||||||||||||||||||||||||||
Region - County
|
Apartment
Homes
|
YTD 2021
% of Actual
NOI
|
YTD 2021
|
YTD 2020
|
% Change
|
YTD 2021
|
YTD 2020
|
% Change
|
YTD 2021
|
YTD 2020
|
% Change
|
|||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
8,526
|
17.7
|
%
|
$
|
2,441
|
$
|
2,467
|
-1.1
|
%
|
96.1
|
%
|
95.1
|
%
|
1.1
|
%
|
$
|
236,896
|
$
|
235,531
|
0.6
|
%
|
|||||||||||||||||||||||
Orange County
|
5,439
|
12.1
|
%
|
2,310
|
2,236
|
3.3
|
%
|
97.1
|
%
|
96.3
|
%
|
0.8
|
%
|
150,475
|
142,897
|
5.3
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
4,582
|
9.3
|
%
|
2,071
|
1,995
|
3.8
|
%
|
97.3
|
%
|
97.0
|
%
|
0.3
|
%
|
115,746
|
110,444
|
4.8
|
%
|
|||||||||||||||||||||||||||
Ventura County
|
2,253
|
4.5
|
%
|
1,957
|
1,890
|
3.5
|
%
|
97.8
|
%
|
97.3
|
%
|
0.5
|
%
|
54,789
|
51,899
|
5.6
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
20,800
|
43.6
|
%
|
2,273
|
2,240
|
1.5
|
%
|
96.8
|
%
|
96.0
|
%
|
0.8
|
%
|
557,906
|
540,771
|
3.2
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
7,408
|
18.4
|
%
|
2,680
|
2,818
|
-4.9
|
%
|
96.5
|
%
|
96.4
|
%
|
0.1
|
%
|
229,153
|
245,690
|
-6.7
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
2,954
|
6.5
|
%
|
2,477
|
2,577
|
-3.9
|
%
|
96.1
|
%
|
95.7
|
%
|
0.4
|
%
|
84,728
|
88,556
|
-4.3
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
1,962
|
4.8
|
%
|
2,818
|
3,063
|
-8.0
|
%
|
95.2
|
%
|
96.0
|
%
|
-0.8
|
%
|
63,620
|
70,130
|
-9.3
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,570
|
6.0
|
%
|
2,429
|
2,430
|
0.0
|
%
|
96.6
|
%
|
97.1
|
%
|
-0.5
|
%
|
75,402
|
74,262
|
1.5
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
1,178
|
2.6
|
%
|
2,680
|
3,007
|
-10.9
|
%
|
95.8
|
%
|
94.1
|
%
|
1.8
|
%
|
37,610
|
41,108
|
-8.5
|
%
|
|||||||||||||||||||||||||||
Total Northern California
|
16,072
|
38.3
|
%
|
2,620
|
2,755
|
-4.9
|
%
|
96.2
|
%
|
96.1
|
%
|
0.1
|
%
|
490,513
|
519,746
|
-5.6
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,218
|
18.1
|
%
|
1,914
|
1,931
|
-0.9
|
%
|
96.2
|
%
|
96.0
|
%
|
0.2
|
%
|
239,819
|
243,900
|
-1.7
|
%
|
|||||||||||||||||||||||||||
Total Same-Property
|
47,090
|
100.0
|
%
|
$
|
2,313
|
$
|
2,349
|
-1.5
|
%
|
96.4
|
%
|
96.0
|
%
|
0.4
|
%
|
$
|
1,288,238
|
$
|
1,304,417
|
-1.2
|
%
|
Same-Property Operating Expenses - Quarter and Year to Date as of December 31, 2021 and 2020
|
||||||||||||||||||||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Based on 47,090 apartment homes
|
||||||||||||||||||||||||||||||||
Q4 '21
|
Q4 '20
|
% Change
|
% of Op. Ex.
|
YTD 2021
|
YTD 2020
|
% Change
|
% of Op. Ex.
|
|||||||||||||||||||||||||
Same-property operating expenses:
|
||||||||||||||||||||||||||||||||
Real estate taxes
|
$
|
38,798
|
$
|
38,266
|
1.4
|
%
|
38.8
|
%
|
$
|
155,047
|
$
|
151,358
|
2.4
|
%
|
39.1
|
%
|
||||||||||||||||
Maintenance and repairs
|
21,690
|
20,050
|
8.2
|
%
|
21.7
|
%
|
82,803
|
81,580
|
1.5
|
%
|
20.9
|
%
|
||||||||||||||||||||
Administrative
|
15,349
|
15,713
|
-2.3
|
%
|
15.3
|
%
|
62,518
|
64,745
|
-3.4
|
%
|
15.8
|
%
|
||||||||||||||||||||
Utilities
|
19,282
|
19,056
|
1.2
|
%
|
19.3
|
%
|
76,816
|
72,660
|
5.7
|
%
|
19.4
|
%
|
||||||||||||||||||||
Insurance and other
|
4,913
|
4,528
|
8.5
|
%
|
4.9
|
%
|
19,650
|
17,483
|
12.4
|
%
|
4.8
|
%
|
||||||||||||||||||||
Total same-property operating expenses
|
$
|
100,032
|
$
|
97,613
|
2.5
|
%
|
100.0
|
%
|
$
|
396,834
|
$
|
387,826
|
2.3
|
%
|
100.0
|
%
|
Development Pipeline - December 31, 2021
|
||||||||||||||||||||||||||||||||||||||||||
(Dollars in millions, except per apartment home amounts in thousands and except in footnotes)
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
Project Name
|
Location
|
Ownership %
|
Estimated Apartment Homes
|
Estimated Commercial sq. feet
|
Incurred to Date
|
Remaining Costs
|
Estimated
Total Cost
|
Essex Est.
Total Cost (1)
|
Cost per Apartment Home (2)
|
Average % Occupied
|
%
Leased as of
12/31/21 (3)
|
%
Leased as of
1/31/22 (3)
|
Construction Start
|
Initial Occupancy
|
Stabilized Operations
|
|||||||||||||||||||||||||||||||
Development Projects - Consolidated (4)
|
||||||||||||||||||||||||||||||||||||||||||||||
Station Park Green - Phase IV
|
San Mateo, CA
|
100%
|
|
107
|
-
|
91
|
3
|
94
|
94
|
879
|
0%
|
0%
|
0%
|
Q3 2019
|
Q1 2022
|
Q2 2022
|
||||||||||||||||||||||||||||||
Total Development Projects - Consolidated
|
107
|
-
|
91
|
3
|
94
|
94
|
879
|
|||||||||||||||||||||||||||||||||||||||
Land Held for Future Development - Consolidated
|
||||||||||||||||||||||||||||||||||||||||||||||
Other Projects
|
Various
|
100%
|
|
-
|
-
|
21
|
-
|
21
|
21
|
|||||||||||||||||||||||||||||||||||||
Total Development Pipeline - Consolidated
|
107
|
-
|
112
|
3
|
115
|
115
|
||||||||||||||||||||||||||||||||||||||||
Development Projects - Joint Venture (4)
|
||||||||||||||||||||||||||||||||||||||||||||||
Scripps Mesa Apartments (5)
|
San Diego, CA
|
51%
|
|
264
|
2,000
|
44
|
58
|
102
|
52
|
383
|
0%
|
0%
|
0%
|
Q3 2020
|
Q4 2022
|
Q3 2023
|
||||||||||||||||||||||||||||||
Total Development Projects - Joint Venture
|
264
|
2,000
|
44
|
58
|
102
|
52
|
$
|
383
|
||||||||||||||||||||||||||||||||||||||
Grand Total - Development Pipeline
|
371
|
2,000
|
$
|
156
|
$
|
61
|
$
|
217
|
167
|
|||||||||||||||||||||||||||||||||||||
Essex Cost Incurred to Date - Pro Rata
|
(134
|
)
|
||||||||||||||||||||||||||||||||||||||||||||
Essex Remaining Commitment
|
$
|
33
|
(1) |
The Company's share of the estimated total cost of the project.
|
(2) |
Net of the estimated allocation to the retail component of the project, as applicable.
|
(3) |
Calculations are based on multifamily operations only.
|
(4) |
For the fourth quarter of 2021, the Company's cost includes $1.1 million of capitalized interest, $1.1 million of capitalized overhead and $0.2 million of development fees (such
development fees reduced G&A expenses).
|
(5) |
Cost incurred to date and estimated total cost are net of a projected value for low income housing tax credit proceeds and the value of the tax exempt bond structure.
|
Capital Expenditures - December 31, 2021 (1)
|
||||||||
(Dollars in thousands, except in footnotes and per apartment home amounts)
|
||||||||
|
||||||||
Revenue Generating Capital Expenditures (2)
|
Q4 '21
|
Trailing 4
Quarters
|
||||||
Same-property portfolio
|
$
|
11,859
|
$
|
38,038
|
||||
Non-same property portfolio
|
1,987
|
7,038
|
||||||
Total revenue generating capital expenditures
|
$
|
13,846
|
$
|
45,076
|
||||
Number of same-property interior renovations
|
468
|
2,293
|
||||||
Number of total consolidated interior renovations
|
505
|
2,390
|
||||||
Non-Revenue Generating Capital Expenditures (3)
|
Q4 '21
|
Trailing 4
Quarters
|
||||||
Non-revenue generating capital expenditures
|
$
|
26,052
|
$
|
98,890
|
||||
Average apartment homes in quarter
|
51,593
|
51,669
|
||||||
Capital expenditures per apartment homes in the quarter
|
$
|
505
|
$
|
1,914
|
(1)
|
The Company incurred $0.1 million of capitalized interest, $3.7 million of capitalized overhead and $0.1 million of co-investment fees related to
redevelopment in Q4 2021.
|
(2)
|
Represents revenue generating or expense saving expenditures, such as full-scale redevelopments, interior unit turn renovations, enhanced
amenities and certain resource management initiatives. Q4 2021 excludes costs related to smart home automation.
|
(3)
|
Represents roof replacements, paving, building and mechanical systems, exterior painting, siding, etc. Non-revenue generating capital expenditures
does not include expenditures incurred due to changes in governmental regulations that the Company would not have incurred otherwise, costs related to the COVID-19 pandemic, retail, furniture and fixtures, and expenditures in which the
Company expects to be reimbursed.
|
Co-investments and Preferred Equity Investments - December 31, 2021
|
||||||||||||||||||||||||||||||||||
(Dollars in thousands, except in footnotes)
|
||||||||||||||||||||||||||||||||||
|
Weighted Average
Essex
Ownership
Percentage
|
Apartment
Homes
|
Total
Undepreciated
Book Value
|
Debt
Amount
|
Essex
BookValue
|
Weighted
Average
Borrowing Rate
|
Remaining
Term of
Debt (in Years)
|
Three Months
Ended
December 31, 2021 |
Twelve Months
Ended
December 31, 2021 |
|||||||||||||||||||||||||
Operating and Other Non-Consolidated Joint Ventures
|
NOI
|
|||||||||||||||||||||||||||||||||
Wesco I, III, IV, V, and VI (1)
|
52%
|
5,807
|
$
|
1,962,643
|
$
|
1,262,730
|
$
|
168,198
|
2.3
|
%
|
3.1
|
$
|
24,333
|
$
|
90,947
|
|||||||||||||||||||
BEXAEW, BEX II, BEX III, BEX IV, and 500 Folsom
|
50%
|
3,083
|
1,235,663
|
519,657
|
270,550
|
2.5
|
%
|
9.1
|
(4)
|
13,560
|
52,945
|
|||||||||||||||||||||||
Other (2)
|
52%
|
1,367
|
554,170
|
405,926
|
126,503
|
2.9
|
%
|
2.6
|
4,816
|
15,710
|
||||||||||||||||||||||||
Total Operating and Other Non-Consolidated Joint Ventures
|
10,257
|
$
|
3,752,476
|
$
|
2,188,313
|
$
|
565,251
|
2.5
|
%
|
4.4
|
$
|
42,709
|
$
|
159,602
|
||||||||||||||||||||
Development Non-Consolidated Joint Ventures (3)
|
50%
|
264
|
43,451
|
89,250
|
11,076
|
0.8
|
%
|
38.4
|
(5)
|
-
|
-
|
|||||||||||||||||||||||
Total Non-Consolidated Joint Ventures
|
10,521
|
$
|
3,795,927
|
$
|
2,277,563
|
$
|
576,327
|
2.4
|
%
|
5.8
|
$
|
42,709
|
$
|
159,602
|
Essex Portion of NOI and Expenses
|
||||||||||||||||||||||||||||||||||||
NOI
|
$
|
22,166
|
$
|
82,776
|
||||||||||||||||||||||||||||||||
Depreciation
|
(16,467
|
)
|
(61,059
|
)
|
||||||||||||||||||||||||||||||||
Interest expense and other
|
(7,042
|
)
|
(26,549
|
)
|
||||||||||||||||||||||||||||||||
Equity income from non-core co-investment
|
36,336
|
55,602
|
||||||||||||||||||||||||||||||||||
Loss on early retirement of debt from unconsolidated co-investment
|
(7
|
)
|
(25
|
)
|
||||||||||||||||||||||||||||||||
Legal settlement from unconsolidated co-investment
|
857
|
857
|
||||||||||||||||||||||||||||||||||
Net income from operating and other co-investments
|
$
|
35,843
|
$
|
51,602
|
Weighted Average Preferred Return
|
Weighted Average Expected Term
|
Income from Preferred Equity Investments
|
||||||||||||||||||||||||||||||||||
Income from preferred equity investments
|
$
|
15,169
|
$
|
56,589
|
||||||||||||||||||||||||||||||||
Income from early redemption of preferred equity investments
|
17
|
3,530
|
||||||||||||||||||||||||||||||||||
Preferred Equity Investments (6)
|
$
|
565,930
|
10.2
|
%
|
2.6
|
$
|
15,186
|
$
|
60,119
|
|||||||||||||||||||||||||||
Total Co-investments
|
$
|
1,142,257
|
$
|
51,029
|
$
|
111,721
|
(1)
|
As of December 31, 2021, the Company’s investment in Wesco I was classified as a liability of $35.3 million due to distributions received in
excess of the Company's investment.
|
(2)
|
As of December 31, 2021, the Company’s investment in Expo was classified as a liability of $0.2 million due to distributions received in excess of
the Company's investment. The weighted average Essex ownership percentage excludes our investments in non-core technology co-investments which are carried at fair value.
|
(3)
|
The Company has ownership interests in development co-investments, which are detailed on page S-11.
|
(4)
|
$132.0 million of the debt related to 500 Folsom, one of the Company's co-investments, is financed by tax exempt bonds with a maturity date of
January 2052.
|
(5)
|
Scripps Mesa Apartments has $89.3 million of long-term tax-exempt bond debt that is subject to a total return swap that matures in 2025.
|
(6)
|
As of December 31, 2021, the Company has invested in 22 preferred equity investments.
|
Assumptions for 2022 FFO Guidance Range
|
|||||||||||||
The guidance projections below are based on current expectations and are forward-looking. The guidance on this page is given for Net Operating
Income ("NOI") and Total and Core FFO. See pages S-18.1 to S-18.4 for the definitions of non-GAAP financial measures and other terms.
|
|||||||||||||
2021
|
2022 Full-Year Guidance Range
|
||||||||||||
($'s in thousands, except per share data)
|
Actuals (1)
|
Low End
|
High End
|
Comments About 2022 Full-Year Guidance
|
|||||||||
Total NOI from Consolidated Communities - Excluding Straight-Line Rent Concessions
|
$
|
996,970
|
$
|
1,081,000
|
$
|
1,106,000
|
Includes a range of same-property NOI growth of 8.0% to 10.8%
|
||||||
Straight-Line Rent Concessions from Consolidated Communities
|
(10,811
|
)
|
(2,600
|
)
|
(7,600
|
)
|
Reflects the non-cash impact of recording lease concessions on a straight-line basis
|
||||||
Accretion from Acquisitions/Dispositions/Preferred Equity
|
-
|
4,300
|
6,300
|
Assumes reinvestment of preferred equity redemption proceeds into new acquisitions and new preferred equity investments
|
|||||||||
Management Fees
|
9,138
|
10,400
|
11,400
|
||||||||||
Interest Expense
|
|||||||||||||
Interest expense, before capitalized interest
|
(198,510
|
)
|
(199,300
|
)
|
(195,700
|
)
|
|||||||
Interest capitalized
|
6,159
|
600
|
2,600
|
||||||||||
Net interest expense
|
(192,351
|
)
|
(198,700
|
)
|
(193,100
|
)
|
|||||||
Recurring Income and Expenses
|
|||||||||||||
Interest and other income
|
23,065
|
16,400
|
18,400
|
||||||||||
FFO from co-investments
|
112,816
|
105,600
|
109,500
|
||||||||||
General and administrative
|
(50,812
|
)
|
(53,000
|
)
|
(55,000
|
)
|
|||||||
Corporate-level property management expenses
|
(36,188
|
)
|
(40,000
|
)
|
(41,000
|
)
|
|||||||
Non-controlling interest
|
(10,517
|
)
|
(12,000
|
)
|
(11,000
|
)
|
|||||||
Total recurring income and expenses
|
38,364
|
17,000
|
20,900
|
||||||||||
Non-Core Income and Expenses
|
|||||||||||||
Expensed acquisition and investment related costs
|
(203
|
)
|
|||||||||||
Deferred tax expense on unrealized gain on unconsolidated co-investments
|
(15,668
|
)
|
|||||||||||
Gain on sale of marketable securities
|
3,400
|
||||||||||||
Unrealized gains on marketable securities
|
33,104
|
||||||||||||
Provision for credit losses
|
(141
|
)
|
|||||||||||
Equity income from non-core co-investments
|
55,602
|
||||||||||||
Loss on early retirement of debt, net
|
(19,010
|
)
|
|||||||||||
Loss on early retirement of debt from unconsolidated co-investment
|
(25
|
)
|
|||||||||||
Income from early redemption of preferred equity investments and notes receivable
|
8,469
|
||||||||||||
General and administrative and other, net
|
(1,026
|
)
|
|||||||||||
Insurance reimbursements, legal settlements, and other, net
|
35,234
|
||||||||||||
Total non-core income and expenses
|
99,736
|
-
|
-
|
||||||||||
Funds from Operations (2)
|
$
|
941,046
|
$
|
911,400
|
$
|
943,900
|
|||||||
Funds from Operations per diluted Share
|
$
|
13.98
|
$
|
13.46
|
$
|
13.94
|
|||||||
% Change - Funds from Operations
|
9.4
|
%
|
-3.7
|
%
|
-0.3
|
%
|
|||||||
Core Funds from Operations (excludes non-core items)
|
$
|
841,310
|
$
|
911,400
|
$
|
943,900
|
|||||||
Core Funds from Operations per diluted Share
|
$
|
12.49
|
$
|
13.46
|
$
|
13.94
|
|||||||
% Change - Core Funds from Operations
|
-2.6
|
%
|
7.8
|
%
|
11.6
|
%
|
|||||||
EPS - Diluted
|
$
|
7.51
|
$
|
4.62
|
$
|
5.10
|
|||||||
Weighted average shares outstanding - FFO calculation
|
67,335
|
67,700
|
67,700
|
(1)
|
All non-core items are excluded from the 2021 actuals and included in the non-core income and expense section of the FFO reconciliation.
|
(2)
|
2022 guidance excludes inestimable projected gain on sale of marketable securities, loss on early retirement of debt, political/legislative costs,
and promote income until they are realized within the reporting period presented in the report.
|
2022 Guidance Range (1)
|
||||||||||||||||||||
1st Quarter 2022
|
Full-Year 2022
|
|||||||||||||||||||
2021
|
||||||||||||||||||||
Actuals
|
Low
|
High
|
Low
|
High
|
||||||||||||||||
EPS - diluted
|
$
|
7.51
|
$
|
1.03
|
$
|
1.15
|
$
|
4.62
|
$
|
5.10
|
||||||||||
Conversion from GAAP share count
|
(0.25
|
)
|
(0.04
|
)
|
(0.04
|
)
|
(0.16
|
)
|
(0.16
|
)
|
||||||||||
Depreciation and amortization
|
8.63
|
2.21
|
2.21
|
8.84
|
8.84
|
|||||||||||||||
Noncontrolling interest related to Operating Partnership units
|
0.24
|
0.04
|
0.04
|
0.16
|
0.16
|
|||||||||||||||
Gain on sale of real estate
|
(2.12
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Gain on remeasurement of co-investment
|
(0.03
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
FFO per share - diluted
|
$
|
13.98
|
$
|
3.24
|
$
|
3.36
|
$
|
13.46
|
$
|
13.94
|
||||||||||
Expensed acquisition and investment related costs
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Deferred tax expense on unrealized gain on unconsolidated co-investments
|
0.23
|
-
|
-
|
-
|
-
|
|||||||||||||||
Gain on sale of marketable securities
|
(0.05
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Unrealized gains on marketable securities
|
(0.49
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Provision for credit losses
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Equity income from non-core co-investments
|
(0.83
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Loss on early retirement of debt, net
|
0.28
|
-
|
-
|
-
|
-
|
|||||||||||||||
Loss on early retirement of debt from unconsolidated co-investment
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Income from early redemption of preferred equity investments and notes receivable
|
(0.13
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
General and administrative and other, net
|
0.02
|
-
|
-
|
-
|
-
|
|||||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
(0.52
|
)
|
-
|
-
|
-
|
-
|
||||||||||||||
Core FFO per share - diluted
|
$
|
12.49
|
$
|
3.24
|
$
|
3.36
|
$
|
13.46
|
$
|
13.94
|
(1)
|
2022 guidance excludes inestimable projected gain on sale of real estate and land, gain on sale of marketable
securities, loss on early retirement of debt, political/legislative costs, and promote income until they are realized within the reporting period presented in the report.
|
Acquisitions (1)
|
Essex
|
Total
|
||||||||||||||||||||||||
Apartment
|
Ownership
|
Contract
|
Price per
|
Average
|
||||||||||||||||||||||
Property Name
|
Location
|
Homes
|
Percentage
|
Entity
|
Date
|
Price
|
Apartment Home (2)
|
Rent
|
||||||||||||||||||
The Village at Toluca Lake (3)
|
Burbank, CA
|
145
|
100%
|
|
EPLP
|
Jun-21
|
$
|
31,750
|
$
|
438
|
$
|
2,294
|
||||||||||||||
|
Q2 2021
|
145
|
|
|
$
|
31,750
|
$
|
438
|
||||||||||||||||||
|
|
|
||||||||||||||||||||||||
Martha Lake Apartments
|
Lynwood, WA
|
155
|
50%
|
|
JV
|
Sep-21
|
$
|
53,000
|
(4)
|
|
$
|
342
|
$
|
1,628
|
||||||||||||
|
Q3 2021
|
155
|
|
|
$
|
53,000
|
(4)
|
|
$
|
342
|
||||||||||||||||
|
|
|
||||||||||||||||||||||||
Monterra in Mill Creek
|
Mill Creek, WA
|
139
|
50%
|
|
JV
|
Oct-21
|
$
|
55,000
|
(4)
|
|
$
|
396
|
$
|
1,786
|
||||||||||||
The Rexford
|
Fremont, CA
|
203
|
50%
|
|
JV
|
Nov-21
|
112,500
|
(4)
|
|
549
|
$
|
2,835
|
||||||||||||||
Silver (5)
|
San Jose, CA
|
268
|
58%
|
|
JV
|
Nov-21
|
132,400
|
(4)
|
|
494
|
$
|
2,569
|
||||||||||||||
Canvas Apartments
|
Seattle, WA
|
123
|
100%
|
|
EPLP
|
Dec-21
|
47,600
|
387
|
$
|
1,721
|
||||||||||||||||
|
Q4 2021
|
733
|
|
|
$
|
347,500
|
$
|
473
|
||||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
2021 Total
|
1,033
|
|
|
$
|
432,250
|
$
|
448
|
Dispositions
|
Location
|
Apartment
Homes |
Essex
Ownership |
Entity
|
Date
|
Total
SalesPrice
|
Price per
Apartment Home |
|||||||||||||||||||
Hidden Valley
|
Simi Valley, CA
|
324
|
100%
|
|
EPLP
|
Feb-21
|
$
|
105,000
|
$
|
324
|
||||||||||||||||
Park 20
|
San Mateo, CA
|
197
|
100%
|
|
EPLP
|
Feb-21
|
113,000
|
574
|
||||||||||||||||||
Axis 2300
|
Irvine, CA
|
115
|
100%
|
|
EPLP
|
Feb-21
|
57,500
|
500
|
||||||||||||||||||
|
Q1 2021
|
636
|
|
|
$
|
275,500
|
$
|
433
|
||||||||||||||||||
|
|
|
||||||||||||||||||||||||
Devonshire Apartments
|
Hemet, CA
|
276
|
100%
|
|
EPLP
|
Aug-21
|
$
|
54,500
|
$
|
197
|
||||||||||||||||
|
Q3 2021
|
276
|
|
|
$
|
54,500
|
$
|
197
|
||||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
2021 Total
|
912
|
|
|
$
|
330,000
|
$
|
362
|
||||||||||||||||||
|
|
|
||||||||||||||||||||||||
|
|
|
(1)
|
In November 2021, the Company purchased a managing interest in a single asset entity owning a 179-unit apartment home community
located in Vista, CA for a contract price of $44.0 million, at the Company’s pro rata share.
|
(2)
|
Price per apartment home excludes value allocated to retail space.
|
(3)
|
In June 2021, the Company purchased its joint venture partner's membership interest in the BEX III, LLC co-investment that owned The
Village at Toluca Lake based on a property valuation of $63.5 million. In conjunction with the acquisition, $29.5 million of mortgage debt that encumbered the property was paid off.
|
(4)
|
Represents the contract price for the entire property, not the Company’s share.
|
(5)
|
In November 2021, the Company converted its existing $11.0 million preferred equity investment in Silver into an equity ownership
interest in the property. Based on a VIE analysis, the Company accounts for this investment under the equity method.
|
Delinquencies for Fourth Quarter 2021
|
Same-Property
|
Non-Same
Property and
Co-investments
|
Total
Operating
Communities
|
Commercial
|
Total
|
|||||||||||||||
Operating apartment community units
|
47,090
|
11,935
|
59,025
|
N/A
|
N/A
|
|||||||||||||||
|
||||||||||||||||||||
Cash delinquencies as % of scheduled rent
|
1.6
|
%
|
2.0
|
%
|
1.6
|
%
|
N/A
|
N/A
|
||||||||||||
Reported delinquencies as % of scheduled rent (1)
|
1.9
|
%
|
2.8
|
%
|
2.0
|
%
|
N/A
|
N/A
|
||||||||||||
Reported delinquencies in 4Q 2021 (2) (3)
|
$
|
(6.2
|
)
|
$
|
(1.5
|
)
|
$
|
(7.7
|
)
|
$
|
0.8
|
$
|
(6.9
|
)
|
||||||
Reported delinquencies in 4Q 2020 (2)
|
$
|
(8.7
|
)
|
$
|
(1.6
|
)
|
$
|
(10.3
|
)
|
$
|
(1.2
|
)
|
$
|
(11.5
|
)
|
|||||
|
||||||||||||||||||||
Impact to 4Q 2021 Core FFO per share
|
$
|
0.04
|
$
|
0.00
|
$
|
0.04
|
$
|
0.03
|
$
|
0.07
|
||||||||||
Impact to Core FFO per share growth
|
1.2
|
%
|
0.0
|
%
|
1.3
|
%
|
1.0
|
%
|
2.3
|
%
|
||||||||||
|
||||||||||||||||||||
Total cumulative cash delinquencies (4)
|
$
|
(57.0
|
)
|
$
|
(9.7
|
)
|
$
|
(66.7
|
)
|
N/A
|
N/A
|
|||||||||
Net accounts receivable balance
|
$
|
4.3
|
$
|
0.4
|
$
|
4.7
|
N/A
|
N/A
|
(1)
|
Represents total residential portfolio delinquencies as a percentage of scheduled rent reflected in the financial statements for the
three months ended December 31, 2021.
|
(2)
|
Co-investment delinquencies reported at the Company's pro rata share.
|
(3)
|
Commercial delinquencies in 4Q 2021 includes a reduction of the straight-line rent reserve of $0.7 million and includes
co-investment amounts at the Company's pro rata share.
|
(4)
|
Represents cash delinquencies from the period of April 1, 2020 to December 31, 2021. This includes $4.7 million of the net accounts
receivable balance.
|
Operating Statistics
|
Same-Property Revenue Growth with Concessions on a GAAP basis
|
|||||||||||||||||||||||
|
Preliminary Estimate
|
|
||||||||||||||||||||||
Same-Property Portfolio
|
January 2022
|
4Q 2021
|
|
4Q 2021
|
4Q 2020
|
YTD 2021
|
YTD 2020 |
|||||||||||||||||
Cash delinquencies as % of scheduled rent
|
2.7%
|
|
1.6%
|
|
Reported rental revenue (cash basis concessions)
|
$
|
330.3
|
$
|
317.5
|
$
|
1,288.2
|
$ |
1,304.4 |
|||||||||||
|
Straight-line rent impact to rental revenue
|
(1.4
|
)
|
3.4
|
(10.2
|
)
|
19.4 |
|||||||||||||||||
New lease rates (1)
|
17.2%
|
|
17.1%
|
|
GAAP rental revenue
|
$
|
328.9
|
$
|
320.9
|
$
|
1,278.0
|
$ |
1,323.8 |
|||||||||||
Renewal rates (2)
|
12.2%
|
|
10.7%
|
|
|
|||||||||||||||||||
Blended rates
|
15.4%
|
|
13.9%
|
|
% change - reported rental revenue
|
4.0
|
%
|
-1.2
|
%
|
|||||||||||||||
|
% change - GAAP rental revenue
|
2.5
|
%
|
-3.5
|
%
|
|||||||||||||||||||
Financial occupancy
|
96.4%
|
|
96.1%
|
|
|
(1)
|
Represents % change on a net-effective basis, including the impact of leasing incentives.
|
(2)
|
Represents % change in similar term lease tradeouts, including the impact of leasing incentives.
|
Three Months Ended
December 31,2021 |
||||
Net income available to common stockholders
|
$
|
136,874
|
||
Adjustments:
|
||||
Net income attributable to noncontrolling interest
|
7,251
|
|||
Interest expense, net (1)
|
47,849
|
|||
Depreciation and amortization
|
132,179
|
|||
Income tax provision
|
61
|
|||
Co-investment EBITDAre adjustments
|
23,398
|
|||
EBITDAre
|
347,612
|
|||
Gain on sale of marketable securities
|
(901
|
)
|
||
Unrealized gains on marketable securities
|
(9,332
|
)
|
||
Provision for credit losses
|
251
|
|||
Equity income from non-core co-investment
|
(36,336
|
)
|
||
Deferred tax expense on unrealized gain on unconsolidated co-investment
|
10,277
|
|||
General and administrative and other, net
|
261
|
|||
Insurance reimbursements and legal settlements, net
|
(35,044
|
)
|
||
Income from early redemption of preferred equity investments
|
(209
|
)
|
||
Expensed acquisition and investment related costs
|
39
|
|||
Loss on early retirement of debt from unconsolidated co-investment
|
7
|
|||
Adjusted EBITDAre
|
$
|
276,653
|
(1)
|
Interest expense, net includes items such as gains on derivatives and the amortization of deferred charges.
|
Three Months Ended
December 31, |
Twelve Months Ended
December 31, |
|||||||
Interest expense
|
$
|
50,487
|
$
|
203,125
|
||||
Adjustments:
|
||||||||
Total return swap income
|
(2,638
|
)
|
(10,774
|
)
|
||||
Interest expense, net
|
$
|
47,849
|
$
|
192,351
|
|
January 31, 2022
|
|||
Unsecured credit facility - committed
|
$
|
1,235
|
||
Balance outstanding
|
265
|
|||
Undrawn portion of line of credit
|
$
|
970
|
||
Cash, cash equivalents & marketable securities
|
219
|
|||
Total liquidity
|
$
|
1,189
|
Total consolidated debt, net
|
$
|
6,287,410
|
||
Total debt from co-investments at pro rata share
|
1,132,320
|
|||
Adjustments:
|
||||
Consolidated unamortized premiums, discounts, and debt issuance costs
|
41,772
|
|||
Pro rata co-investments unamortized premiums, discounts, and debt issuance costs
|
6,539
|
|||
Consolidated cash and cash equivalents-unrestricted
|
(48,420
|
)
|
||
Pro rata co-investment cash and cash equivalents-unrestricted
|
(28,100
|
)
|
||
Loans to unconsolidated co-investments
|
(169,675
|
)
|
||
Marketable securities
|
(228,021
|
)
|
||
Net Indebtedness
|
$
|
6,993,825
|
||
|
||||
Adjusted EBITDAre, annualized (1)
|
$
|
1,106,612
|
||
Other EBITDAre normalization adjustments, net, annualized (2)
|
2,106
|
|||
Adjusted EBITDAre, normalized and annualized
|
$
|
1,108,718
|
||
|
||||
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized
|
6.3
|
(1)
|
Based on the amount for the most recent quarter, multiplied by four.
|
(2)
|
Adjustments made for properties in lease-up, acquired, or disposed during the most recent quarter and other partial quarter activity, multiplied
by four.
|
Three Months Ended
December 31, |
Three Months Ended
December 31, |
Twelve Months Ended
December 31, |
Twelve Months Ended
December 31, |
|||||||||||||
Earnings from operations
|
$
|
101,262
|
$
|
111,931
|
$
|
529,995
|
$
|
491,441
|
||||||||
Adjustments:
|
||||||||||||||||
Corporate-level property management expenses
|
9,068
|
8,549
|
36,188
|
34,573
|
||||||||||||
Depreciation and amortization
|
132,179
|
130,127
|
520,066
|
525,497
|
||||||||||||
Management and other fees from affiliates
|
(2,431
|
)
|
(2,286
|
)
|
(9,138
|
)
|
(9,598
|
)
|
||||||||
General and administrative
|
17,092
|
23,144
|
51,838
|
65,388
|
||||||||||||
Expensed acquisition and investment related costs
|
39
|
1,487
|
203
|
1,591
|
||||||||||||
Impairment loss
|
-
|
1,825
|
-
|
1,825
|
||||||||||||
Gain on sale of real estate and land
|
-
|
(25,716
|
)
|
(142,993
|
)
|
(64,967
|
)
|
|||||||||
NOI
|
257,209
|
249,061
|
986,159
|
1,045,750
|
||||||||||||
Less: Non-same property NOI
|
(26,911
|
)
|
(29,201
|
)
|
(94,755
|
)
|
(129,158
|
)
|
||||||||
Same-Property NOI
|
$
|
230,298
|
$
|
219,860
|
$
|
891,404
|
$
|
916,592
|
Annualized
Q4'21 (1) |
||||
NOI
|
$
|
1,028,836
|
||
Adjustments:
|
||||
NOI from real estate assets sold or held for sale
|
481
|
|||
Other, net (2)
|
2,281
|
|||
Adjusted Total NOI
|
1,031,598
|
|||
Less: Encumbered NOI
|
(58,996
|
)
|
||
Unencumbered NOI
|
$
|
972,602
|
||
Encumbered NOI
|
$
|
58,996
|
||
Unencumbered NOI
|
972,602
|
|||
Adjusted Total NOI
|
$
|
1,031,598
|
||
Unencumbered NOI to Adjusted Total NOI
|
94
|
%
|
(1)
|
This table is based on the amounts for the most recent quarter, multiplied by four.
|
(2)
|
Includes intercompany eliminations pertaining to self-insurance and other expenses.
|
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