|
|
|
|
|
|
(State or Other Jurisdiction of Incorporation)
|
(I.R.S. Employer Identification No.)
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Title of each class
|
Trading
Symbol(s)
|
Name of each exchange on which registered
|
||
|
|
|
Essex Property Trust, Inc.
|
Emerging growth company
|
|
Essex Portfolio, L.P.
|
Emerging growth company
|
|
Item 2.02. |
Results of Operations and Financial Condition.
|
Item 9.01. |
Financial Statements and Exhibits.
|
Exhibit No.
|
Description
|
|
Press Release and Supplemental Information for the quarter ended March 31, 2022.
|
||
104
|
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.
|
Date: April 26, 2022
|
ESSEX PROPERTY TRUST, INC.
|
|
/s/ Barbara Pak
|
||
Name:
|
Barbara Pak
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
|
ESSEX PORTFOLIO, L.P.
|
||
By:
|
Essex Property Trust, Inc.
|
|
Its:
|
General Partner
|
|
/s/ Barbara Pak
|
||
Name:
|
Barbara Pak
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Three Months Ended
March 31,
|
%
|
||||||||
2022
|
2021
|
Change
|
|||||||
Per Diluted Share
|
|||||||||
Net Income
|
$1.12
|
$2.59
|
-56.8%
|
|
|||||
Total FFO
|
$3.36
|
$3.23
|
4.0%
|
|
|||||
Core FFO
|
$3.37
|
$3.07
|
9.8%
|
|
• |
Reported Net Income per diluted share for the first quarter of 2022 of $1.12, compared to $2.59 in the first quarter of 2021. The decrease is largely attributed to a gain on sale recorded in the prior-year
period.
|
• |
Grew Core FFO per diluted share by 9.8% compared to the first quarter of 2021, exceeding the midpoint of the guidance range by $0.07 due to better-than-expected operating results.
|
• |
Achieved same-property revenues and net operating income (“NOI”) growth of 6.5% and 7.3%, respectively, compared to the first quarter of 2021. On a sequential basis, same-property revenues and NOI improved 2.6%
and 2.4%, respectively.
|
• |
Increased the dividend by 5.3% to an annual distribution of $8.80 per common share, the Company’s 28th consecutive annual increase.
|
• |
Recognized $17.1 million of earned promote interest as part of the amendment and extension of the Company’s joint venture, Wesco III, LLC (“Wesco III”).
|
• |
Subsequent to quarter end, reinvested approximately $37.2 million of promote interest as a part of the amendment and extension of the Company’s joint venture, Wesco IV, LLC (“Wesco IV”), increasing the
Company’s ownership stake in the joint venture to 65.1%.
|
• |
Increased full-year 2022 earnings guidance:
|
o |
Increased full-year Net Income per diluted share guidance by $0.11 at the midpoint to a range of $4.79 to $5.15.
|
o |
Increased full-year Core FFO per diluted share guidance by $0.25 at the midpoint to a range of $13.77 to $14.13.
|
o |
Raised the midpoint of full-year same-property revenues and NOI by 0.85% and 1.25%, respectively.
|
Q1 2022 vs.
Q1 2021
|
Q1 2022 vs.
Q4 2021
|
% of
Total
|
||||||||||
Revenue
Change
|
Revenue
Change
|
Q1 2022 Revenues
|
||||||||||
Southern California
|
||||||||||||
Los Angeles County
|
8.5%
|
|
2.4%
|
|
18.7%
|
|||||||
Orange County
|
8.8%
|
|
-0.2%
|
|
11.0%
|
|||||||
San Diego County
|
11.4%
|
|
5.6%
|
|
8.7%
|
|||||||
Ventura County
|
5.0%
|
|
-0.8%
|
|
3.8%
|
|||||||
Total Southern California
|
8.8%
|
|
2.1%
|
|
42.2%
|
|||||||
Northern California
|
||||||||||||
Santa Clara County
|
3.1%
|
|
3.1%
|
|
18.6%
|
|||||||
Alameda County
|
4.1%
|
|
2.1%
|
8.3%
|
||||||||
San Mateo County
|
1.8%
|
|
4.5%
|
|
4.7%
|
|||||||
Contra Costa County
|
3.2%
|
0.3%
|
5.5%
|
|||||||||
San Francisco
|
5.7%
|
|
5.5%
|
|
2.8%
|
|||||||
Total Northern California
|
3.4%
|
|
2.8%
|
|
39.9%
|
|||||||
Seattle Metro
|
8.5%
|
|
3.2%
|
|
17.9%
|
|||||||
Same-Property Portfolio
|
6.5%
|
|
2.6%
|
100.0%
|
Q1 2022 vs. Q1 2021
|
Q1 2022 vs. Q4 2021
|
|||||||||||||||
Same-Property Revenue Components
|
$ Amount
(in Millions)
|
%
Contribution
|
$ Amount
(in Millions)
|
%
Contribution
|
||||||||||||
Prior-Period Same-Property Revenues
|
$
|
334.4
|
$
|
347.4
|
||||||||||||
Scheduled Rents
|
15.3
|
4.6%
|
5.2
|
1.5%
|
||||||||||||
Delinquencies
|
-0.6
|
-0.2%
|
-1.1
|
-0.3%
|
||||||||||||
Cash Concessions
|
7.1
|
2.1%
|
3.6
|
1.0%
|
||||||||||||
Vacancy
|
-1.8
|
-0.5%
|
0.6
|
0.2%
|
||||||||||||
Other Income
|
1.9
|
0.6%
|
0.6
|
0.2%
|
||||||||||||
Q1 2022 Same-Property Revenues/Change
|
$
|
356.3
|
6.5%
|
$
|
356.3
|
2.6%
|
Year-Over-Year Change
|
||||||||||||
Q1 2022 compared to Q1 2021
|
||||||||||||
Revenues
|
Operating
Expenses
|
NOI
|
||||||||||
Southern California
|
8.8%
|
5.4%
|
10.4%
|
|||||||||
Northern California
|
3.4%
|
4.5%
|
2.9%
|
|||||||||
Seattle Metro
|
8.5%
|
4.2%
|
10.7%
|
|||||||||
Same-Property Portfolio
|
6.5%
|
4.8%
|
7.3%
|
Sequential Change
|
||||||||||||
Q1 2022 compared to Q4 2021
|
||||||||||||
Revenues
|
Operating
Expenses
|
NOI
|
||||||||||
Southern California
|
2.1%
|
1.6%
|
2.3%
|
|||||||||
Northern California
|
2.8%
|
3.3%
|
2.6%
|
|||||||||
Seattle Metro
|
3.2%
|
4.8%
|
2.5%
|
|||||||||
Same-Property Portfolio
|
2.6%
|
2.9%
|
2.4%
|
Financial Occupancies
|
||||||||||||
Quarter Ended
|
||||||||||||
3/31/2022
|
12/31/2021
|
3/31/2021
|
||||||||||
Southern California
|
96.3%
|
96.2%
|
96.7%
|
|||||||||
Northern California
|
96.5%
|
96.1%
|
96.7%
|
|||||||||
Seattle Metro
|
95.9%
|
95.7%
|
96.6%
|
|||||||||
Same-Property Portfolio
|
96.3%
|
96.1%
|
96.7%
|
Per Diluted
Share
|
||||
Guidance midpoint of Core FFO per diluted share for Q1 2022
|
$
|
3.30
|
||
NOI from consolidated communities
|
0.03
|
|||
FFO from Co-Investments
|
0.03
|
|||
G&A and other income
|
0.01
|
|||
Core FFO per diluted share for Q1 2022 reported
|
$
|
3.37
|
Previous
Range
|
Previous
Midpoint
|
Revised
Range
|
Revised
Midpoint
|
Change in
Midpoint
|
||
Per Diluted Share
|
||||||
Net Income
|
$4.62 - $5.10
|
$4.86
|
$4.79 - $5.15
|
$4.97
|
$0.11
|
|
Total FFO
|
$13.46 - $13.94
|
$13.70
|
$13.76 - $14.12
|
$13.94
|
$0.24
|
|
Core FFO
|
$13.46 - $13.94
|
$13.70
|
$13.77 - $14.13
|
$13.95
|
$0.25
|
|
Same-Property Growth on a Cash-Basis(1)
|
||||||
Revenues
|
7.0% to 8.5%
|
7.8%
|
8.1% to 9.1%
|
8.6%
|
0.85%
|
|
Operating Expenses
|
3.5% to 4.5%
|
4.0%
|
3.5% to 4.5%
|
4.0%
|
-
|
|
NOI
|
8.0% to 10.8%
|
9.4%
|
9.7% to 11.6%
|
10.7%
|
1.25%
|
(1) |
The revised midpoint of the Company’s same-property revenues and NOI on a GAAP basis are 9.1% and 11.4%, respectively, representing a 85 and 125 basis point
increase to the Company’s original guidance midpoints.
|
Three Months Ended
March 31,
|
||||||||
Funds from Operations attributable to common stockholders and unitholders
|
2022
|
2021
|
||||||
Net income available to common stockholders
|
$
|
73,254
|
$
|
168,444
|
||||
Adjustments:
|
||||||||
Depreciation and amortization
|
133,533
|
128,587
|
||||||
Gains not included in FFO
|
-
|
(100,096
|
)
|
|||||
Depreciation and amortization from unconsolidated co-investments
|
18,115
|
14,729
|
||||||
Noncontrolling interest related to Operating Partnership units
|
2,563
|
5,947
|
||||||
Depreciation attributable to third party ownership and other
|
(353
|
)
|
(129
|
)
|
||||
Funds from Operations attributable to common stockholders and unitholders
|
$
|
227,112
|
$
|
217,482
|
||||
FFO per share – diluted
|
$
|
3.36
|
$
|
3.23
|
||||
Expensed acquisition and investment related costs
|
$
|
8
|
$
|
15
|
||||
Deferred tax (benefit) expense on unconsolidated co-investments(1)
|
(2,754
|
)
|
508
|
|||||
Gain on sale of marketable securities
|
(12,171
|
)
|
(2,611
|
)
|
||||
Change in unrealized losses (gains) on marketable securities, net
|
24,585
|
(6,276
|
)
|
|||||
Provision for credit losses
|
(62
|
)
|
38
|
|||||
Equity loss (income) from non-core co-investments(2)
|
8,844
|
(1,627
|
)
|
|||||
Loss on early retirement of debt, net
|
-
|
2,517
|
||||||
Loss on early retirement of debt from unconsolidated co-investment
|
86
|
3
|
||||||
Co-investment promote income
|
(17,076
|
)
|
-
|
|||||
Income from early redemption of preferred equity investments
|
(858
|
)
|
(3,513
|
)
|
||||
General and administrative and other, net
|
448
|
257
|
||||||
Insurance reimbursements, legal settlements, and other, net
|
-
|
(182
|
)
|
|||||
Core Funds from Operations attributable to common stockholders and unitholders
|
$
|
228,162
|
$
|
206,611
|
||||
Core FFO per share – diluted
|
$
|
3.37
|
$
|
3.07
|
||||
Weighted average number of shares outstanding diluted (3)
|
67,621,842
|
67,272,839
|
(1) |
Represents deferred tax (benefit) expense related to net unrealized gains or losses on technology co-investments.
|
(2) |
Represents the Company’s share of co-investment loss (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
March 31,
|
||||||||
2022
|
2021
|
|||||||
Earnings from operations
|
$
|
109,850
|
$
|
197,381
|
||||
Adjustments:
|
||||||||
Corporate-level property management expenses
|
10,172
|
9,013
|
||||||
Depreciation and amortization
|
133,533
|
128,587
|
||||||
Management and other fees from affiliates
|
(2,689
|
)
|
(2,249
|
)
|
||||
General and administrative
|
12,242
|
9,812
|
||||||
Expensed acquisition and investment related costs
|
8
|
15
|
||||||
Gain on sale of real estate and land
|
-
|
(100,096
|
)
|
|||||
NOI
|
263,116
|
242,463
|
||||||
Less: Non-same property NOI
|
(15,355
|
)
|
(11,580
|
)
|
||||
Same-Property NOI
|
$
|
247,761
|
$
|
230,883
|
Page(s)
|
|
Consolidated Operating Results
|
S-1 – S-2
|
Consolidated Funds From Operations
|
S-3
|
Consolidated Balance Sheets
|
S-4
|
Debt Summary – March 31, 2022
|
S-5
|
Capitalization Data, Public Bond Covenants, Credit Ratings, and Selected Credit Ratios – March 31, 2022
|
S-6
|
Portfolio Summary by County – March 31, 2022
|
S-7
|
Operating Income by Quarter – March 31, 2022
|
S-8
|
Same-Property Revenue Results by County – Quarters ended March 31, 2022 and 2021, and December 31, 2021
|
S-9
|
Same-Property Operating Expenses – Quarter ended as of March 31, 2022 and 2021
|
S-10
|
Development Pipeline – March 31, 2022
|
S-11
|
Capital Expenditures – March 31, 2022
|
S-12
|
Co-investments and Preferred Equity Investments – March 31, 2022
|
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
|
Return-to-Office, Increased Travel, and the Unwinding of COVID-era Restrictions are Spurring Demand Growth in the Bay Area
|
S-17.1
|
Reconciliations of Non-GAAP Financial Measures and Other Terms
|
S-18.1 – S-18.4
|
Consolidated Operating Results
(Dollars in thousands, except share and per share amounts)
|
Three Months Ended
March 31,
|
|||||||
2022
|
2021
|
|||||||
Revenues:
|
||||||||
Rental and other property
|
$
|
379,216
|
$
|
352,876
|
||||
Management and other fees from affiliates
|
2,689
|
2,249
|
||||||
381,905
|
355,125
|
|||||||
Expenses:
|
||||||||
Property operating
|
116,100
|
110,413
|
||||||
Corporate-level property management expenses
|
10,172
|
9,013
|
||||||
Depreciation and amortization
|
133,533
|
128,587
|
||||||
General and administrative
|
12,242
|
9,812
|
||||||
Expensed acquisition and investment related costs
|
8
|
15
|
||||||
272,055
|
257,840
|
|||||||
Gain on sale of real estate and land
|
-
|
100,096
|
||||||
Earnings from operations
|
109,850
|
197,381
|
||||||
Interest expense, net (1)
|
(47,833
|
)
|
(48,805
|
)
|
||||
Interest and other (loss) income
|
(7,567
|
)
|
14,387
|
|||||
Equity income from co-investments
|
21,171
|
17,011
|
||||||
Deferred tax benefit (expense) on unconsolidated co-investments
|
2,754
|
(508
|
)
|
|||||
Loss on early retirement of debt, net
|
-
|
(2,517
|
)
|
|||||
Net income
|
78,375
|
176,949
|
||||||
Net income attributable to noncontrolling interest
|
(5,121
|
)
|
(8,505
|
)
|
||||
Net income available to common stockholders
|
$
|
73,254
|
$
|
168,444
|
||||
Net income per share - basic
|
$
|
1.12
|
$
|
2.59
|
||||
Shares used in income per share - basic
|
65,275,775
|
64,989,620
|
||||||
Net income per share - diluted
|
$
|
1.12
|
$
|
2.59
|
||||
Shares used in income per share - diluted
|
65,339,378
|
65,114,933
|
(1)
|
Refer to page S-18.2, the section titled "Interest Expense, Net" for additional information.
|
Consolidated Operating Results
|
Three Months Ended
|
|||||||
Selected Line Item Detail
|
March 31,
|
|||||||
(Dollars in thousands)
|
2022
|
2021
|
||||||
Rental and other property
|
||||||||
Rental income
|
$
|
373,425
|
$
|
347,305
|
||||
Other property
|
5,791
|
5,571
|
||||||
Rental and other property
|
$
|
379,216
|
$
|
352,876
|
||||
|
||||||||
Property operating expenses
|
||||||||
Real estate taxes
|
$
|
47,242
|
$
|
45,328
|
||||
Administrative
|
22,089
|
22,271
|
||||||
Maintenance and repairs
|
22,964
|
22,013
|
||||||
Utilities
|
23,805
|
20,801
|
||||||
Property operating expenses
|
$
|
116,100
|
$
|
110,413
|
||||
|
||||||||
Interest and other (loss) income
|
||||||||
Marketable securities and other income
|
$
|
4,785
|
$
|
5,356
|
||||
Gain on sale of marketable securities
|
12,171
|
2,611
|
||||||
Provision for credit losses
|
62
|
(38
|
)
|
|||||
Change in unrealized (losses) gains on marketable securities, net
|
(24,585
|
)
|
6,276
|
|||||
Insurance reimbursements, legal settlements, and other, net
|
-
|
182
|
||||||
Interest and other (loss) income
|
$
|
(7,567
|
)
|
$
|
14,387
|
|||
Equity income from co-investments
|
||||||||
Equity loss from co-investments
|
$
|
(1,332
|
)
|
$
|
(1,311
|
)
|
||
Income from preferred equity investments
|
13,499
|
13,185
|
||||||
Equity (loss) income from non-core co-investments
|
(8,844
|
)
|
1,627
|
|||||
Loss on early retirement of debt from unconsolidated co-investments
|
(86
|
)
|
(3
|
)
|
||||
Co-investment promote income
|
17,076
|
-
|
||||||
Income from early redemption of preferred equity investments
|
858
|
3,513
|
||||||
Equity income from co-investments
|
$
|
21,171
|
$
|
17,011
|
||||
Noncontrolling interest
|
||||||||
Limited partners of Essex Portfolio, L.P.
|
$
|
2,563
|
$
|
5,947
|
||||
DownREIT limited partners' distributions
|
2,154
|
2,124
|
||||||
Third-party ownership interest
|
404
|
434
|
||||||
Noncontrolling interest
|
$
|
5,121
|
$
|
8,505
|
Consolidated Funds From Operations (1)
|
Three Months Ended
|
|||||||||||
(Dollars in thousands, except share and per share amounts and in footnotes)
|
March 31,
|
|||||||||||
2022
|
2021
|
% Change
|
||||||||||
Funds from operations attributable to common stockholders and unitholders (FFO)
|
||||||||||||
Net income available to common stockholders
|
$
|
73,254
|
$
|
168,444
|
||||||||
Adjustments:
|
||||||||||||
Depreciation and amortization
|
133,533
|
128,587
|
||||||||||
Gains not included in FFO
|
-
|
(100,096
|
)
|
|||||||||
Depreciation and amortization from unconsolidated co-investments
|
18,115
|
14,729
|
||||||||||
Noncontrolling interest related to Operating Partnership units
|
2,563
|
5,947
|
||||||||||
Depreciation attributable to third party ownership and other (2)
|
(353
|
)
|
(129
|
)
|
||||||||
Funds from operations attributable to common stockholders and unitholders
|
$
|
227,112
|
$
|
217,482
|
||||||||
FFO per share-diluted
|
$
|
3.36
|
$
|
3.23
|
4.0%
|
|||||||
Components of the change in FFO
|
||||||||||||
Non-core items:
|
||||||||||||
Expensed acquisition and investment related costs
|
$
|
8
|
$
|
15
|
||||||||
Deferred tax (benefit) expense on unconsolidated co-investments (3)
|
(2,754
|
)
|
508
|
|||||||||
Gain on sale of marketable securities
|
(12,171
|
)
|
(2,611
|
)
|
||||||||
Change in unrealized losses (gains) on marketable securities, net
|
24,585
|
(6,276
|
)
|
|||||||||
Provision for credit losses
|
(62
|
)
|
38
|
|||||||||
Equity loss (income) from non-core co-investments (4)
|
8,844
|
(1,627
|
)
|
|||||||||
Loss on early retirement of debt, net
|
-
|
2,517
|
||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
86
|
3
|
||||||||||
Co-investment promote income
|
(17,076
|
)
|
-
|
|||||||||
Income from early redemption of preferred equity investments
|
(858
|
)
|
(3,513
|
)
|
||||||||
General and administrative and other, net
|
448
|
257
|
||||||||||
Insurance reimbursements, legal settlements, and other, net
|
-
|
(182
|
)
|
|||||||||
Core funds from operations attributable to common stockholders and unitholders
|
$
|
228,162
|
$
|
206,611
|
||||||||
Core FFO per share-diluted
|
$
|
3.37
|
$
|
3.07
|
9.8%
|
|||||||
Weighted average number of shares outstanding diluted (5)
|
67,621,842
|
67,272,839
|
(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 months ended March 31, 2022 was $0.7 million.
|
(3) |
Represents deferred tax (benefit) expense related to net unrealized gains or losses on technology co-investments.
|
(4) |
Represents the Company's share of co-investment loss (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.
|
March 31, 2022
|
December 31, 2021
|
|||||||
Real Estate:
|
||||||||
Land and land improvements
|
$
|
3,032,678
|
$
|
3,032,678
|
||||
Buildings and improvements
|
12,651,423
|
12,597,249
|
||||||
15,684,101
|
15,629,927
|
|||||||
Less: accumulated depreciation
|
(4,779,581
|
)
|
(4,646,854
|
)
|
||||
10,904,520
|
10,983,073
|
|||||||
Real estate under development
|
112,815
|
111,562
|
||||||
Co-investments
|
1,144,542
|
1,177,802
|
||||||
12,161,877
|
12,272,437
|
|||||||
Cash and cash equivalents, including restricted cash
|
108,553
|
58,638
|
||||||
Marketable securities
|
169,702
|
191,829
|
||||||
Notes and other receivables
|
205,420
|
341,033
|
||||||
Operating lease right-of-use assets
|
68,158
|
68,972
|
||||||
Prepaid expenses and other assets
|
56,591
|
64,964
|
||||||
Total assets
|
$
|
12,770,301
|
$
|
12,997,873
|
||||
Unsecured debt, net
|
$
|
5,308,841
|
$
|
5,307,196
|
||||
Mortgage notes payable, net
|
637,778
|
638,957
|
||||||
Lines of credit
|
98,000
|
341,257
|
||||||
Distributions in excess of investments in co-investments
|
28,846
|
35,545
|
||||||
Operating lease liabilities
|
69,801
|
70,675
|
||||||
Other liabilities
|
449,090
|
393,069
|
||||||
Total liabilities
|
6,592,356
|
6,786,699
|
||||||
Redeemable noncontrolling interest
|
39,738
|
34,666
|
||||||
Equity:
|
||||||||
Common stock
|
7
|
7
|
||||||
Additional paid-in capital
|
6,930,072
|
6,915,981
|
||||||
Distributions in excess of accumulated earnings
|
(987,333
|
)
|
(916,833
|
)
|
||||
Accumulated other comprehensive income (loss), net
|
14,237
|
(5,552
|
)
|
|||||
Total stockholders' equity
|
5,956,983
|
5,993,603
|
||||||
Noncontrolling interest
|
181,224
|
182,905
|
||||||
Total equity
|
6,138,207
|
6,176,508
|
||||||
Total liabilities and equity
|
$
|
12,770,301
|
$
|
12,997,873
|
Scheduled principal payments, unamortized premiums (discounts) and (debt issuance costs) are as follows - excludes lines of credit:
|
|||||||||||||||||||||||||||||||||||
Unsecured
|
Secured
|
Total
|
Weighted
Average
Interest Rate
|
Percentage
of Total Debt
|
|||||||||||||||||||||||||||||||
Weighted Average
|
|||||||||||||||||||||||||||||||||||
Balance Outstanding
|
Interest Rate
|
Maturity in Years
|
|||||||||||||||||||||||||||||||||
Unsecured Debt, net
|
|||||||||||||||||||||||||||||||||||
Bonds public - fixed rate
|
$
|
5,350,000
|
3.3
|
%
|
8.4
|
2022
|
$
|
-
|
$
|
42,284
|
$
|
42,284
|
3.6
|
%
|
0.7
|
%
|
|||||||||||||||||||
Unamortized net discounts and debt issuance costs
|
(41,159
|
)
|
-
|
-
|
2023
|
300,000
|
2,945
|
302,945
|
3.4
|
%
|
5.1
|
%
|
|||||||||||||||||||||||
5,308,841
|
3.3
|
%
|
8.4
|
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
|
412,846
|
3.5
|
%
|
4.1
|
2026
|
450,000
|
99,405
|
549,405
|
3.5
|
%
|
9.2
|
%
|
|||||||||||||||||||||||
Variable rate - secured (1)
|
224,175
|
1.1
|
%
|
15.9
|
2027
|
350,000
|
153,955
|
503,955
|
3.3
|
%
|
8.4
|
%
|
|||||||||||||||||||||||
Unamortized premiums and debt issuance costs, net
|
757
|
-
|
-
|
2028
|
450,000
|
68,332
|
518,332
|
2.2
|
%
|
8.7
|
%
|
||||||||||||||||||||||||
Total mortgage notes payable
|
637,778
|
2.7
|
%
|
8.2
|
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)
|
98,000
|
1.1
|
%
|
N/A
|
2032
|
650,000
|
1,903
|
651,903
|
2.6
|
%
|
10.9
|
%
|
|||||||||||||||||||||||
Line of credit (3)
|
-
|
1.1
|
%
|
N/A
|
Thereafter
|
600,000
|
127,246
|
727,246
|
3.2
|
%
|
12.1
|
%
|
|||||||||||||||||||||||
Total lines of credit
|
98,000
|
1.1
|
%
|
N/A
|
Subtotal
|
5,350,000
|
637,021
|
5,987,021
|
3.2
|
%
|
100.0
|
%
|
|||||||||||||||||||||||
|
Debt Issuance Costs
|
(31,761
|
)
|
(1,394
|
)
|
(33,155
|
)
|
NA
|
NA
|
||||||||||||||||||||||||||
Total debt, net
|
$
|
6,044,619
|
3.2
|
%
|
8.4
|
(Discounts)/Premiums
|
(9,398
|
)
|
2,151
|
(7,247
|
)
|
NA
|
NA
|
||||||||||||||||||||||
|
Total
|
$
|
5,308,841
|
$
|
637,778
|
$
|
5,946,619
|
3.2
|
%
|
100.0
|
%
|
||||||||||||||||||||||||
(1) |
$224.2 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%. Subsequent to quarter end, the borrowing spread will be reduced by 2.5 basis points to LIBOR
plus 0.75% as a result of achieving the Enhanced Sustainability Metric Target for 2021 as defined by the facility's sustainability-linked pricing component.
|
(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 (1)
|
Actual
|
Requirement
|
||||||||||
Total debt, net
|
$
|
6,044,619
|
|||||||||||
Debt to Total Assets:
|
34%
|
|
< 65%
|
||||||||||
Common stock and potentially dilutive securities
|
|||||||||||||
Common stock outstanding
|
65,332
|
||||||||||||
Limited partnership units (1)
|
2,282
|
||||||||||||
Options-treasury method
|
64
|
Secured Debt to Total Assets:
|
4%
|
< 40%
|
|||||||||
Total shares of common stock and potentially dilutive securities
|
67,678
|
||||||||||||
Common stock price per share as of March 31, 2022
|
$
|
345.48
|
|||||||||||
Interest Coverage:
|
528%
|
> 150%
|
|||||||||||
Total equity capitalization
|
$
|
23,381,395
|
|||||||||||
Total market capitalization
|
$
|
29,426,014
|
Unsecured Debt Ratio (2):
|
283%
|
> 150%
|
||||||||
Ratio of debt to total market capitalization
|
20.5
|
%
|
|||||||||||
Selected Credit Ratios (3)
|
Actual
|
||||||||||||
Credit Ratings
|
|||||||||||||
Rating Agency
|
Rating
|
Outlook
|
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized:
|
6.1
|
|||||||||
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 (3)
|
Unconsolidated
Co-investments
|
Apartment
Homes in
Development (4)
|
Total
|
Consolidated
|
Unconsolidated
Co-investments (5)
|
Total (6)
|
Consolidated
|
Unconsolidated
Co-investments (5)
|
Total (6)
|
||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
9,327
|
1,797
|
-
|
11,124
|
$
|
2,511
|
$
|
2,331
|
$
|
2,495
|
18.0
|
%
|
14.3
|
%
|
17.6
|
%
|
||||||||||||||||||||||||
Orange County
|
5,439
|
1,149
|
-
|
6,588
|
2,447
|
2,157
|
2,419
|
10.8
|
%
|
10.7
|
%
|
10.8
|
%
|
|||||||||||||||||||||||||||
San Diego County
|
4,824
|
795
|
264
|
5,883
|
2,216
|
2,201
|
2,215
|
9.1
|
%
|
7.3
|
%
|
9.0
|
%
|
|||||||||||||||||||||||||||
Ventura County and Other
|
2,600
|
693
|
-
|
3,293
|
2,074
|
2,404
|
2,116
|
4.8
|
%
|
7.8
|
%
|
5.0
|
%
|
|||||||||||||||||||||||||||
Total Southern California
|
22,190
|
4,434
|
264
|
26,888
|
2,380
|
2,276
|
2,370
|
42.7
|
%
|
40.1
|
%
|
42.4
|
%
|
|||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||
Santa Clara County (7)
|
8,749
|
1,774
|
-
|
10,523
|
2,746
|
2,733
|
2,744
|
19.7
|
%
|
17.7
|
%
|
19.6
|
%
|
|||||||||||||||||||||||||||
Alameda County
|
3,959
|
1,512
|
-
|
5,471
|
2,502
|
2,483
|
2,498
|
7.8
|
%
|
15.2
|
%
|
8.4
|
%
|
|||||||||||||||||||||||||||
San Mateo County
|
2,561
|
195
|
-
|
2,756
|
2,921
|
3,540
|
2,944
|
5.2
|
%
|
2.5
|
%
|
5.0
|
%
|
|||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
-
|
-
|
2,619
|
2,520
|
-
|
2,520
|
5.2
|
%
|
0.0
|
%
|
4.8
|
%
|
|||||||||||||||||||||||||||
San Francisco
|
1,342
|
537
|
-
|
1,879
|
2,774
|
3,215
|
2,847
|
2.7
|
%
|
5.5
|
%
|
2.9
|
%
|
|||||||||||||||||||||||||||
Total Northern California
|
19,230
|
4,018
|
-
|
23,248
|
2,690
|
2,739
|
2,695
|
40.6
|
%
|
40.9
|
%
|
40.7
|
%
|
|||||||||||||||||||||||||||
Seattle Metro
|
10,341
|
2,184
|
-
|
12,525
|
2,002
|
1,945
|
1,996
|
16.7
|
%
|
19.0
|
%
|
16.9
|
%
|
|||||||||||||||||||||||||||
Total
|
51,761
|
10,636
|
264
|
62,661
|
$
|
2,419
|
$
|
2,380
|
$
|
2,416
|
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 March 31,
2022, divided by the number of apartment homes as of March 31, 2022.
|
(2) |
Represents the percentage of actual NOI for the quarter ended March 31, 2022. See the section titled "Net Operating Income ("NOI") and Same-Property NOI Reconciliations" on page S-18.3.
|
(3) |
Includes one community consisting of 107 apartment homes that is producing partial income due to lease-up.
|
(4) |
Includes development communities with no rental income.
|
(5) |
Co-investment amounts weighted for Company's pro rata share.
|
(6) |
At Company's pro rata share.
|
(7) |
Includes all communities in Santa Clara County and one community in Santa Cruz County.
|
Apartment Homes
|
Q1 '22
|
Q4 '21
|
Q3 '21
|
Q2 '21
|
Q1 '21
|
|||||||||||||||||||
Rental and other property revenues:
|
||||||||||||||||||||||||
Same-property
|
49,369
|
$
|
356,273
|
$
|
347,353
|
$
|
341,744
|
$
|
331,221
|
$
|
334,437
|
|||||||||||||
Acquisitions (2)
|
268
|
1,747
|
916
|
1,004
|
319
|
-
|
||||||||||||||||||
Development (3)
|
1,275
|
9,427
|
8,785
|
8,055
|
7,500
|
6,930
|
||||||||||||||||||
Redevelopment
|
164
|
1,435
|
1,498
|
1,533
|
1,506
|
1,632
|
||||||||||||||||||
Non-residential/other, net (4)
|
685
|
12,918
|
12,074
|
11,320
|
11,156
|
13,246
|
||||||||||||||||||
Straight-line rent concessions (5)
|
-
|
(2,584
|
)
|
(1,461
|
)
|
(3,036
|
)
|
(2,945
|
)
|
(3,369
|
)
|
|||||||||||||
Total rental and other property revenues
|
51,761
|
379,216
|
369,165
|
360,620
|
348,757
|
352,876
|
||||||||||||||||||
Property operating expenses:
|
||||||||||||||||||||||||
Same-property
|
108,512
|
105,503
|
108,405
|
101,771
|
103,554
|
|||||||||||||||||||
Acquisitions (2)
|
556
|
324
|
373
|
121
|
-
|
|||||||||||||||||||
Development (3)
|
3,922
|
3,571
|
3,411
|
2,984
|
2,685
|
|||||||||||||||||||
Redevelopment
|
687
|
590
|
619
|
600
|
598
|
|||||||||||||||||||
Non-residential/other, net (4) (6)
|
2,423
|
1,960
|
2,531
|
2,060
|
3,576
|
|||||||||||||||||||
Total property operating expenses
|
116,100
|
111,948
|
115,339
|
107,536
|
110,413
|
|||||||||||||||||||
Net operating income (NOI):
|
||||||||||||||||||||||||
Same-property
|
247,761
|
241,850
|
233,339
|
229,450
|
230,883
|
|||||||||||||||||||
Acquisitions (2)
|
1,191
|
592
|
631
|
198
|
-
|
|||||||||||||||||||
Development (3)
|
5,505
|
5,214
|
4,644
|
4,516
|
4,245
|
|||||||||||||||||||
Redevelopment
|
748
|
908
|
914
|
906
|
1,034
|
|||||||||||||||||||
Non-residential/other, net (4)
|
10,495
|
10,114
|
8,789
|
9,096
|
9,670
|
|||||||||||||||||||
Straight-line rent concessions (5)
|
(2,584
|
)
|
(1,461
|
)
|
(3,036
|
)
|
(2,945
|
)
|
(3,369
|
)
|
||||||||||||||
Total NOI
|
$
|
263,116
|
$
|
257,217
|
$
|
245,281
|
$
|
241,221
|
$
|
242,463
|
||||||||||||||
Same-property metrics
|
||||||||||||||||||||||||
Operating margin
|
70
|
%
|
70
|
%
|
68
|
%
|
69
|
%
|
69
|
%
|
||||||||||||||
Annualized turnover (7)
|
34
|
%
|
36
|
%
|
47
|
%
|
46
|
%
|
41
|
%
|
||||||||||||||
Financial occupancy (8)
|
96.3
|
%
|
96.1
|
%
|
96.4
|
%
|
96.6
|
%
|
96.7
|
%
|
(1) |
Includes consolidated communities only.
|
(2) |
Acquisitions include properties acquired which did not have comparable stabilized results as of January 1, 2021.
|
(3) |
Development includes properties developed which did not have comparable stabilized results as of January 1, 2021.
|
(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).
|
Average Monthly Rental Rate
|
Financial Occupancy
|
Gross Revenues
|
Sequential Gross Revenues
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Region - County
|
Apartment Homes
|
Q1 '22 % of
Actual NOI
|
Q1 '22
|
Q1 '21
|
% Change
|
Q1 '22
|
Q1 '21
|
% Change
|
Q1 '22
|
Q1 '21
|
% Change
|
Q4 '21
|
% Change
|
|||||||||||||||||||||||||||||||||||||||
Southern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Los Angeles County
|
8,982
|
18.2
|
%
|
$
|
2,506
|
$
|
2,415
|
3.8
|
%
|
96.2
|
%
|
96.0
|
%
|
0.2
|
%
|
$
|
66,513
|
$
|
61,282
|
8.5
|
%
|
$
|
64,927
|
2.4
|
%
|
|||||||||||||||||||||||||||
Orange County
|
5,439
|
11.3
|
%
|
2,447
|
2,239
|
9.3
|
%
|
96.2
|
%
|
97.1
|
%
|
-0.9
|
%
|
39,180
|
36,024
|
8.8
|
%
|
39,246
|
-0.2
|
%
|
||||||||||||||||||||||||||||||||
San Diego County
|
4,582
|
9.1
|
%
|
2,210
|
2,007
|
10.1
|
%
|
96.7
|
%
|
97.1
|
%
|
-0.4
|
%
|
30,998
|
27,818
|
11.4
|
%
|
29,358
|
5.6
|
%
|
||||||||||||||||||||||||||||||||
Ventura County
|
2,253
|
4.4
|
%
|
2,052
|
1,908
|
7.5
|
%
|
96.0
|
%
|
98.0
|
%
|
-2.0
|
%
|
13,962
|
13,294
|
5.0
|
%
|
14,081
|
-0.8
|
%
|
||||||||||||||||||||||||||||||||
Total Southern California
|
21,256
|
43.0
|
%
|
2,379
|
2,228
|
6.8
|
%
|
96.3
|
%
|
96.7
|
%
|
-0.4
|
%
|
150,653
|
138,418
|
8.8
|
%
|
147,612
|
2.1
|
%
|
||||||||||||||||||||||||||||||||
Northern California
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
Santa Clara County
|
8,177
|
19.2
|
%
|
2,719
|
2,687
|
1.2
|
%
|
96.7
|
%
|
97.0
|
%
|
-0.3
|
%
|
66,210
|
64,189
|
3.1
|
%
|
64,212
|
3.1
|
%
|
||||||||||||||||||||||||||||||||
Alameda County
|
3,959
|
8.1
|
%
|
2,502
|
2,455
|
1.9
|
%
|
96.1
|
%
|
96.6
|
%
|
-0.5
|
%
|
29,570
|
28,409
|
4.1
|
%
|
28,971
|
2.1
|
%
|
||||||||||||||||||||||||||||||||
San Mateo County
|
1,962
|
4.5
|
%
|
2,860
|
2,855
|
0.2
|
%
|
96.1
|
%
|
95.4
|
%
|
0.7
|
%
|
16,575
|
16,283
|
1.8
|
%
|
15,860
|
4.5
|
%
|
||||||||||||||||||||||||||||||||
Contra Costa County
|
2,619
|
5.4
|
%
|
2,520
|
2,447
|
3.0
|
%
|
96.6
|
%
|
97.4
|
%
|
-0.8
|
%
|
19,735
|
19,124
|
3.2
|
%
|
19,668
|
0.3
|
%
|
||||||||||||||||||||||||||||||||
San Francisco
|
1,178
|
2.5
|
%
|
2,710
|
2,691
|
0.7
|
%
|
96.6
|
%
|
95.3
|
%
|
1.4
|
%
|
9,912
|
9,381
|
5.7
|
%
|
9,391
|
5.5
|
%
|
||||||||||||||||||||||||||||||||
Total Northern California
|
17,895
|
39.7
|
%
|
2,657
|
2,619
|
1.5
|
%
|
96.5
|
%
|
96.7
|
%
|
-0.2
|
%
|
142,002
|
137,386
|
3.4
|
%
|
138,102
|
2.8
|
%
|
||||||||||||||||||||||||||||||||
Seattle Metro
|
10,218
|
17.3
|
%
|
2,005
|
1,886
|
6.3
|
%
|
95.9
|
%
|
96.6
|
%
|
-0.7
|
%
|
63,618
|
58,633
|
8.5
|
%
|
61,639
|
3.2
|
%
|
||||||||||||||||||||||||||||||||
Total Same-Property
|
49,369
|
100.0
|
%
|
$
|
2,402
|
$
|
2,299
|
4.5
|
%
|
96.3
|
%
|
96.7
|
%
|
-0.4
|
%
|
$
|
356,273
|
$
|
334,437
|
6.5
|
%
|
$
|
347,353
|
2.6
|
%
|
Based on 49,369 apartment homes
|
||||||||||||||||
Q1 '22
|
Q1 '21
|
% Change
|
% of Op. Ex.
|
|||||||||||||
Same-property operating expenses:
|
||||||||||||||||
Real estate taxes
|
$
|
42,781
|
$
|
41,441
|
3.2
|
%
|
39.4
|
%
|
||||||||
Maintenance and repairs
|
21,663
|
20,794
|
4.2
|
%
|
20.0
|
%
|
||||||||||
Administrative
|
16,747
|
16,370
|
2.3
|
%
|
15.4
|
%
|
||||||||||
Utilities
|
22,154
|
19,482
|
13.7
|
%
|
20.4
|
%
|
||||||||||
Insurance and other
|
5,167
|
5,467
|
-5.5
|
%
|
4.8
|
%
|
||||||||||
Total same-property operating expenses
|
$
|
108,512
|
$
|
103,554
|
4.8
|
%
|
100.0
|
%
|
||||||||
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
3/31/22 (3)
|
%
Leased as of
4/22/22 (3)
|
Construction Start
|
Initial Occupancy
|
Stabilized Operations
|
||||||||||||||||||||||||||||||||||||||||||
Development Projects - Consolidated (4)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Station Park Green - Phase IV
|
San Mateo, CA
|
100%
|
107
|
-
|
$ |
92
|
$ |
2
|
$ |
94
|
$ |
94
|
$ |
879
|
12%
|
47%
|
76%
|
Q3 2019
|
Q1 2022
|
Q2 2022
|
|||||||||||||||||||||||||||||||||||||
Total Development Projects - Consolidated
|
107
|
-
|
|
92 |
2
|
94 |
94
|
879 | |||||||||||||||||||||||||||||||||||||||||||||||||
Land Held for Future Development - Consolidated
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Projects
|
Various
|
100%
|
-
|
-
|
21
|
-
|
21
|
21
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Total Development Pipeline - Consolidated
|
|
107
|
-
|
|
113 |
2
|
115 |
115
|
|||||||||||||||||||||||||||||||||||||||||||||||||
Development Projects - Joint Venture (4)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scripps Mesa Apartments (5)
|
San Diego, CA
|
51%
|
264
|
2,000
|
49
|
53
|
102
|
52
|
383
|
0%
|
0%
|
0%
|
Q3 2020
|
Q4 2022
|
Q3 2023
|
||||||||||||||||||||||||||||||||||||||||||
Total Development Projects - Joint Venture
|
264
|
|
2,000
|
|
49 |
53
|
102 |
|
52 |
$
|
383 | ||||||||||||||||||||||||||||||||||||||||||||||
Grand Total - Development Pipeline
|
371
|
2,000
|
$
|
162
|
$
|
55
|
$
|
217
|
167
|
||||||||||||||||||||||||||||||||||||||||||||||||
Essex Cost Incurred to Date - Pro Rata
|
(138
|
)
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Essex Remaining Commitment
|
$
|
29
|
(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 first quarter of 2022, the Company's cost includes $0.8 million of capitalized interest, $0.6 million of capitalized overhead and $0.3 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.
|
Revenue Generating Capital Expenditures (2)
|
Q1 '22
|
Trailing 4
Quarters
|
||||||
Same-property portfolio
|
$
|
10,405
|
$
|
44,608
|
||||
Non-same property portfolio
|
231
|
1,195
|
||||||
Total revenue generating capital expenditures
|
$
|
10,636
|
$
|
45,803
|
||||
Number of same-property interior renovations
|
737
|
2,722
|
||||||
Number of total consolidated interior renovations
|
741
|
2,758
|
Non-Revenue Generating Capital Expenditures (3)
|
Q1 '22
|
Trailing 4
Quarters
|
||||||
Non-revenue generating capital expenditures
|
$
|
24,233
|
$
|
105,903
|
||||
Average apartment homes in quarter
|
51,708
|
51,651
|
||||||
Capital expenditures per apartment homes in the quarter
|
$
|
469
|
$
|
2,050
|
(1) |
The Company incurred $0.1 million of capitalized interest, $3.8 million of capitalized overhead and $0.1 million of co-investment fees related to redevelopment in Q1 2022.
|
(2) |
Represents revenue generating or expense saving expenditures, such as full-scale redevelopments, interior unit turn renovations, enhanced amenities and certain resource
management initiatives. Q1 2022 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.
|
Weighted
Average Essex
Ownership
Percentage
|
Apartment
Homes
|
Total
Undepreciated
Book Value
|
Debt
Amount
|
Essex
Book
Value
|
Weighted
Average
Borrowing Rate
|
Remaining
Term of
Debt (in Years)
|
Three Months
Ended
March 31, 2022
|
||||||||||||||||||||||||||
Operating and Other Non-Consolidated Joint Ventures
|
NOI
|
||||||||||||||||||||||||||||||||
Wesco I, III, IV, V, and VI (1)
|
52%
|
6,186
|
$
|
2,148,721
|
$
|
1,389,003
|
$
|
221,781
|
2.3
|
%
|
4.0
|
$
|
26,507
|
||||||||||||||||||||
BEXAEW, BEX II, BEX IV, and 500 Folsom
|
50%
|
3,083
|
1,237,375
|
518,765
|
267,338
|
2.5
|
%
|
8.9
|
(4) |
13,865
|
|||||||||||||||||||||||
Other (2)
|
52%
|
1,367
|
555,100
|
405,689
|
112,548
|
3.0
|
%
|
3.0
|
6,079
|
||||||||||||||||||||||||
Total Operating and Other Non-Consolidated Joint Ventures
|
10,636
|
$
|
3,941,196
|
$
|
2,313,457
|
$
|
601,667
|
2.5
|
%
|
4.9
|
$
|
46,451
|
|||||||||||||||||||||
Development Non-Consolidated Joint Ventures (3)
|
50%
|
264
|
49,266
|
89,250
|
11,836
|
0.9
|
%
|
38.2
|
(5) |
|
-
|
||||||||||||||||||||||
Total Non-Consolidated Joint Ventures
|
10,900
|
$
|
3,990,462
|
$
|
2,402,707
|
$
|
613,503
|
2.4
|
%
|
6.2
|
$
|
46,451
|
|||||||||||||||||||||
Essex Portion of
NOI and Expenses
|
|||||||||||||||||||||||||||||||||
NOI
|
$
|
24,101
|
|||||||||||||||||||||||||||||||
Depreciation
|
(18,113
|
)
|
|||||||||||||||||||||||||||||||
Interest expense and other
|
(7,320
|
)
|
|||||||||||||||||||||||||||||||
Equity loss from non-core co-investments
|
(8,844
|
)
|
|||||||||||||||||||||||||||||||
Loss on early retirement of debt from unconsolidated co-investment
|
(86
|
)
|
|||||||||||||||||||||||||||||||
Co-investment promote income
|
17,076
|
||||||||||||||||||||||||||||||||
Net income from operating and other co-investments
|
$
|
6,814
|
|||||||||||||||||||||||||||||||
Weighted Average Preferred Return
|
Weighted Average Expected Term
|
Income from Preferred Equity Investments
|
|||||||||||||||||||||||||||||||
Income from preferred equity investments
|
$
|
13,499
|
|||||||||||||||||||||||||||||||
Income from early redemption of preferred equity investments
|
858
|
||||||||||||||||||||||||||||||||
Preferred Equity Investments (6)
|
$
|
502,193
|
10.1
|
%
|
2.7
|
$
|
14,357
|
||||||||||||||||||||||||||
Total Co-investments
|
$
|
1,115,696
|
$
|
21,171
|
(1) |
As of March 31, 2022, the Company’s investment in Wesco I was classified as a liability of $28.7 million due to distributions received in excess of the Company's investment.
|
(2) |
As of March 31, 2022, 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 $89.3 million of long-term tax-exempt bond debt that is subject to a total return swap that matures in 2025.
|
(6) |
As of March 31, 2022, the Company has invested in 23 preferred equity investments.
|
Three Months
|
|||||||||||||
Ended March 31,
|
2022 Full-Year Guidance Range
|
||||||||||||
($'s in thousands, except per share data)
|
2022 (1)
|
Low End
|
High End
|
Comments About 2022 Full-Year Guidance
|
|||||||||
Total NOI from Consolidated Communities - Excluding Straight-Line Rent Concessions
|
$
|
265,700
|
$
|
1,098,000
|
$
|
1,117,000
|
Includes a range of same-property NOI growth of 9.7% to 11.6%, an increase from the prior range of 8.0% to 10.8%
|
||||||
Straight-Line Rent Concessions from Consolidated Communities
|
(2,584
|
)
|
(4,200
|
)
|
(6,800
|
)
|
Reflects the non-cash impact of recording lease concessions on a straight-line basis
|
||||||
Management Fees
|
2,689
|
10,400
|
11,400
|
||||||||||
Interest Expense
|
|||||||||||||
Interest expense, before capitalized interest
|
(48,776
|
)
|
(198,200
|
)
|
(195,000
|
)
|
|||||||
Interest capitalized
|
943
|
1,300
|
2,300
|
||||||||||
Net interest expense
|
(47,833
|
)
|
(196,900
|
)
|
(192,700
|
)
|
|||||||
Recurring Income and Expenses
|
|||||||||||||
Interest and other income
|
4,785
|
17,000
|
18,600
|
||||||||||
FFO from co-investments
|
30,282
|
114,000
|
117,300
|
Reflects updated preferred equity redemption expectations and includes investment activity completed through mid-April
|
|||||||||
General and administrative
|
(11,794
|
)
|
(53,000
|
)
|
(55,000
|
)
|
|||||||
Corporate-level property management expenses
|
(10,172
|
)
|
(40,000
|
)
|
(41,000
|
)
|
|||||||
Non-controlling interest
|
(2,911
|
)
|
(12,200
|
)
|
(11,200
|
)
|
|||||||
Total recurring income and expenses
|
10,190
|
25,800
|
28,700
|
||||||||||
Non-Core Income and Expenses
|
|||||||||||||
Expensed acquisition and investment related costs
|
(8
|
)
|
(8
|
)
|
(8
|
)
|
|||||||
Deferred tax benefit on unconsolidated co-investments
|
2,754
|
2,754
|
2,754
|
||||||||||
Gain on sale of marketable securities
|
12,171
|
12,171
|
12,171
|
||||||||||
Change in unrealized losses on marketable securities, net
|
(24,585
|
)
|
(24,585
|
)
|
(24,585
|
)
|
|||||||
Provision for credit losses
|
62
|
62
|
62
|
||||||||||
Equity loss from non-core co-investments
|
(8,844
|
)
|
(8,844
|
)
|
(8,844
|
)
|
|||||||
Loss on early retirement of debt, net
|
-
|
-
|
-
|
||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
(86
|
)
|
(86
|
)
|
(86
|
)
|
|||||||
Co-investment promote income
|
17,076
|
17,076
|
17,076
|
||||||||||
Income from early redemption of preferred equity investments
|
858
|
858
|
858
|
||||||||||
General and administrative and other, net
|
(448
|
)
|
(448
|
)
|
(448
|
)
|
|||||||
Insurance reimbursements, legal settlements, and other, net
|
-
|
-
|
-
|
||||||||||
Total non-core income and expenses
|
(1,050
|
)
|
(1,050
|
)
|
(1,050
|
)
|
|||||||
Funds from Operations (2)
|
$
|
227,112
|
$
|
932,050
|
$
|
956,550
|
|||||||
Funds from Operations per diluted Share
|
$
|
3.36
|
$
|
13.76
|
$
|
14.12
|
|||||||
% Change - Funds from Operations
|
4.0
|
%
|
-1.6
|
%
|
1.0
|
%
|
|||||||
Core Funds from Operations (excludes non-core items)
|
$
|
228,162
|
$
|
933,100
|
$
|
957,600
|
|||||||
Core Funds from Operations per diluted Share
|
$
|
3.37
|
$
|
13.77
|
$
|
14.13
|
|||||||
% Change - Core Funds from Operations
|
9.8
|
%
|
10.3
|
%
|
13.2
|
%
|
|||||||
EPS - Diluted
|
$
|
1.12
|
$
|
4.79
|
$
|
5.15
|
|||||||
Weighted average shares outstanding - FFO calculation
|
67,622
|
67,750
|
67,750
|
(1) |
All non-core items are excluded from the 2022 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)
|
||||||||||||||||||||
Three Months
|
2nd Quarter 2022
|
Full-Year 2022
|
||||||||||||||||||
Ended March 31,
|
||||||||||||||||||||
2022
|
Low
|
High
|
Low
|
High
|
||||||||||||||||
EPS - diluted
|
$
|
1.12
|
$
|
1.18
|
$
|
1.30
|
$
|
4.79
|
$
|
5.15
|
||||||||||
Conversion from GAAP share count
|
(0.04
|
)
|
(0.04
|
)
|
(0.04
|
)
|
(0.17
|
)
|
(0.17
|
)
|
||||||||||
Depreciation and amortization
|
2.25
|
2.25
|
2.25
|
8.98
|
8.98
|
|||||||||||||||
Noncontrolling interest related to Operating Partnership units
|
0.03
|
0.04
|
0.04
|
0.16
|
0.16
|
|||||||||||||||
Gain on sale of real estate
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Gain on remeasurement of co-investment
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
FFO per share - diluted
|
$
|
3.36
|
$
|
3.43
|
$
|
3.55
|
$
|
13.76
|
$
|
14.12
|
||||||||||
Expensed acquisition and investment related costs
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Deferred tax benefit on unconsolidated co-investments
|
(0.04
|
)
|
-
|
-
|
(0.04
|
)
|
(0.04
|
)
|
||||||||||||
Gain on sale of marketable securities
|
(0.18
|
)
|
-
|
-
|
(0.18
|
)
|
(0.18
|
)
|
||||||||||||
Change in unrealized losses on marketable securities, net
|
0.36
|
-
|
-
|
0.36
|
0.36
|
|||||||||||||||
Provision for credit losses
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Equity loss from non-core co-investments
|
0.13
|
-
|
-
|
0.13
|
0.13
|
|||||||||||||||
Loss on early retirement of debt, net
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Loss on early retirement of debt from unconsolidated co-investments
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Co-investment promote income
|
(0.26
|
)
|
-
|
-
|
(0.26
|
)
|
(0.26
|
)
|
||||||||||||
Income from early redemption of preferred equity investments
|
(0.01
|
)
|
-
|
-
|
(0.01
|
)
|
(0.01
|
)
|
||||||||||||
General and administrative and other, net
|
0.01
|
-
|
-
|
0.01
|
0.01
|
|||||||||||||||
Insurance reimbursements, legal settlements, and other, net
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Core FFO per share - diluted
|
$
|
3.37
|
$
|
3.43
|
$
|
3.55
|
$
|
13.77
|
$
|
14.13
|
(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
|
||||||||||||||||||||||||
Property Name
|
Location
|
Apartment
Homes
|
Essex
Ownership
Percentage
|
Entity
|
Date
|
Total
Contract
Price (1)
|
Price per
Apartment Home
|
Average
Rent
|
||||||||||||||||
Vela
|
Woodland Hills, CA
|
379
|
50%
|
|
JV
|
Jan-22
|
$
|
183,000
|
$
|
483
|
$
|
2,729
|
||||||||||||
Q1 2022
|
|
379 |
|
$ |
183,000
|
|
$
|
483 |
(1) |
Represents the contract price for the entire property, not the Company’s share.
|
Delinquencies for First Quarter 2022
|
Same-Property
|
Non-Same Property and
Co-investments
|
Total Operating Communities
|
Commercial
|
Total
|
|||||||||||||||
Operating apartment community units
|
49,369
|
10,947
|
60,316
|
N/A
|
N/A
|
|||||||||||||||
|
||||||||||||||||||||
Cash delinquencies as % of scheduled rent
|
2.2
|
%
|
2.8
|
%
|
2.3
|
%
|
N/A
|
N/A
|
||||||||||||
Reported delinquencies as % of scheduled rent (1)
|
2.2
|
%
|
2.8
|
%
|
2.3
|
%
|
N/A
|
N/A
|
||||||||||||
Reported delinquencies in 1Q 2022 (2) (3)
|
$
|
(7.8
|
)
|
$
|
(1.2
|
)
|
$
|
(9.0
|
)
|
$
|
0.6
|
$
|
(8.4
|
)
|
||||||
Reported delinquencies in 1Q 2021 (2)
|
$
|
(7.2
|
)
|
$
|
(0.7
|
)
|
$
|
(7.9
|
)
|
$
|
(0.4
|
)
|
$
|
(8.3
|
)
|
|||||
|
||||||||||||||||||||
YoY impact to 1Q 2022 Core FFO per share
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
$
|
0.01
|
$
|
(0.00
|
)
|
||||||
YoY impact to Core FFO per share growth
|
-0.3
|
%
|
-0.2
|
%
|
-0.5
|
%
|
0.5
|
%
|
0.0
|
%
|
||||||||||
|
||||||||||||||||||||
Total cumulative cash delinquencies (4) (5)
|
$
|
(68.2
|
)
|
$
|
(7.7
|
)
|
$
|
(75.9
|
)
|
N/A
|
N/A
|
|||||||||
Net accounts receivable balance
|
$
|
4.4
|
$
|
0.3
|
$
|
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 March 31, 2022.
|
(2) |
Co-investment delinquencies reported at the Company's pro rata share.
|
(3) |
Commercial delinquencies in 1Q 2022 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 March 31, 2022. This includes $4.7 million of the net accounts receivable balance.
|
(5) |
The Company, including its co-investments, has received Emergency Rental Assistance payments of $12.3 million and $36.1 million for the three months ended March 31, 2022
and the period from April 1, 2020 to March 31, 2022, respectively.
|
Operating Statistics
|
Same-Property Revenue Growth with Concessions on a GAAP basis
|
||||||||||||||||
Preliminary Estimate
|
|||||||||||||||||
Same-Property Portfolio
|
April 2022
|
1Q 2022
|
1Q 2022
|
1Q 2021
|
|||||||||||||
Cash delinquencies as % of scheduled rent (1)
|
0.2
|
% |
2.2
|
%
|
Reported rental revenue (cash basis concessions)
|
$
|
356.3
|
$
|
334.4
|
||||||||
Straight-line rent impact to rental revenue
|
(2.7
|
)
|
(3.1
|
)
|
|||||||||||||
New lease rates (2)
|
22.0
|
% |
20.0
|
%
|
GAAP rental revenue
|
$
|
353.6
|
$
|
331.3
|
||||||||
Renewal rates (3)
|
10.7
|
% |
11.7
|
%
|
|||||||||||||
Blended rates
|
17.4
|
% |
16.1
|
%
|
% change - reported rental revenue
|
6.5
|
%
|
||||||||||
% change - GAAP rental revenue
|
6.7
|
%
|
|||||||||||||||
Financial occupancy
|
95.9
|
% |
96.3
|
%
|
(1) |
The Company's same-property portfolio has received Emergency Rental Assistance payments of $4.3 million and $11.5 million in April 2022, and for the three months
ended March 31, 2022, respectively.
|
(2) |
Represents % change on a net-effective basis, including the impact of leasing incentives.
|
(3) |
Represents % change in similar term lease tradeouts, including the impact of leasing incentives.
|
|
■ |
Demand in Essex's core(1) Bay Area markets significantly improved as a result of the statewide reopening in July 2021
|
■ |
Return-to-office announcements by the largest tech companies have accelerated job growth in the Bay Area and Seattle, with San Francisco leading year-over-year growth
in Q1 across Essex markets, significantly outpacing the national average
|
Essex Portfolio Migration Trends for Bay Area Submarkets
TTM Net Moves into/out of Bay Area region
Essex Markets Job Growth vs. U.S.
Metro employment growth, T3M average
Year-over-year job growth
|
|||
MSA
|
Q1 2021
|
Q1 2022
|
Change
|
San Francisco
|
-12.2%
|
8.9%
|
+21.1%
|
San Diego
|
-8.5%
|
8.0%
|
+16.5%
|
Los Angeles
|
-10.1%
|
7.9%
|
+18.1%
|
ESS Average
|
-8.8%
|
6.7%
|
+15.5%
|
Orange County
|
-9.0%
|
6.4%
|
+15.5%
|
San Jose
|
-7.7%
|
6.1%
|
+13.8%
|
Seattle
|
-7.8%
|
6.1%
|
+13.9%
|
Oakland
|
-8.0%
|
5.5%
|
+13.5%
|
Ventura
|
-7.9%
|
4.7%
|
+12.6%
|
United States
|
-5.4%
|
4.7%
|
+10.2%
|
|
Source: Essex Property Trust, Inc., U.S. Bureau of Labor Statistics
1)
|
"Core" defined as the counties of San Francisco, San Mateo, and Santa Clara, plus the Oakland and Fremont submarkets of Alameda county.
|
Three Months Ended
March 31,
2022
|
||||
Net income available to common stockholders
|
$
|
73,254
|
||
Adjustments:
|
||||
Net income attributable to noncontrolling interest
|
5,121
|
|||
Interest expense, net (1)
|
47,833
|
|||
Depreciation and amortization
|
133,533
|
|||
Income tax provision
|
(93
|
)
|
||
Co-investment EBITDAre adjustments
|
25,322
|
|||
EBITDAre
|
284,970
|
|||
Gain on sale of marketable securities
|
(12,171
|
)
|
||
Unrealized gains on marketable securities
|
24,585
|
|||
Provision for credit losses
|
(62
|
)
|
||
Equity loss from non-core co-investment
|
8,844
|
|||
Deferred tax benefit on unconsolidated co-investment
|
(2,754
|
)
|
||
General and administrative and other, net
|
448
|
|||
Co-investment promote income
|
(17,076
|
)
|
||
Income from early redemption of preferred equity investments
|
(858
|
)
|
||
Expensed acquisition and investment related costs
|
8
|
|||
Loss on early retirement of debt from unconsolidated co-investment
|
86
|
|||
Adjusted EBITDAre
|
$
|
286,020
|
(1) |
Interest expense, net includes items such as gains on derivatives and the amortization of deferred charges.
|
Three Months Ended
March 31,
2022
|
||||
Interest expense
|
$
|
50,377
|
||
Adjustments:
|
||||
Total return swap income
|
(2,544
|
)
|
||
Interest expense, net
|
$
|
47,833
|
April 22, 2022
|
||||
Unsecured credit facility - committed
|
$
|
1,235
|
||
Balance outstanding
|
160
|
|||
Undrawn portion of line of credit
|
$
|
1,075
|
||
Cash, cash equivalents & marketable securities
|
217
|
|||
Total liquidity
|
$
|
1,292
|
Total consolidated debt, net
|
$ | 6,044,619 | ||
Total debt from co-investments at pro rata share
|
1,240,792 | |||
Adjustments:
|
||||
Consolidated unamortized premiums, discounts, and debt issuance costs
|
40,402
|
|||
Pro rata co-investments unamortized premiums, discounts, and debt issuance costs
|
7,402
|
|||
Consolidated cash and cash equivalents-unrestricted
|
(98,107
|
)
|
||
Pro rata co-investment cash and cash equivalents-unrestricted
|
(50,814
|
)
|
||
Loans to unconsolidated co-investments
|
(32,788
|
)
|
||
Marketable securities
|
(201,166
|
)
|
||
Net Indebtedness
|
$
|
6,950,340
|
||
Adjusted EBITDAre, annualized (1)
|
$ | 1,144,080 | ||
Other EBITDAre normalization adjustments, net, annualized (2)
|
(1,575 | ) | ||
Adjusted EBITDAre, normalized and annualized
|
$
|
1,142,505
|
||
Net Indebtedness Divided by Adjusted EBITDAre, normalized and annualized
|
6.1 |
(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
March 31,
2022
|
Three Months Ended
March 31,
2021
|
|||||||
Earnings from operations
|
$ | 109,850 | $ | 197,381 | ||||
Adjustments:
|
||||||||
Corporate-level property management expenses
|
10,172
|
9,013
|
||||||
Depreciation and amortization
|
133,533
|
128,587
|
||||||
Management and other fees from affiliates
|
(2,689
|
)
|
(2,249
|
)
|
||||
General and administrative
|
12,242
|
9,812
|
||||||
Expensed acquisition and investment related costs
|
8
|
15
|
||||||
Gain on sale of real estate and land
|
-
|
(100,096
|
)
|
|||||
NOI
|
263,116
|
242,463
|
||||||
Less: Non-same property NOI
|
(15,355
|
)
|
(11,580
|
)
|
||||
Same-Property NOI
|
$ | 247,761 | $ | 230,883 |
Annualized
Q1'22 (1)
|
||||
NOI
|
$
|
1,052,464
|
||
Adjustments:
|
||||
NOI from real estate assets sold or held for sale
|
-
|
|||
Other, net (2)
|
7,175
|
|||
Adjusted Total NOI
|
1,059,639
|
|||
Less: Encumbered NOI
|
(62,686
|
)
|
||
Unencumbered NOI
|
$
|
996,953
|
||
Encumbered NOI
|
$
|
62,686
|
||
Unencumbered NOI
|
996,953
|
|||
Adjusted Total NOI
|
$
|
1,059,639
|
||
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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